Debt settlement to avoid bankruptcy – debt negotiation and debt consolidation solutions
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Build a game plan to pay down debt Academic studies show getting out of debt is primarily about having a definitive plan. Debt Goal lets you personalize a Smart Pay Plan that fits your budget and financial goals. Your plan will tell you exactly what to pay on each debt account each month, so you don’t have to worry about losing money on interest payments through inefficient allocation.
Track progress to accelerate payoff you know that keeping track of multiple debt accounts and payment accounts can be difficult. Debt Smart Pay Plan does this work for you, so you know exactly where you stand each month. You can also track your “debt-free date” and see how small changes to your plan affect how long you’ll be in debt.
You can’t get out of a hole until you stop digging and it’s impossible to get out of debt until you stop borrowing. The fastest way to get out of debt
If you’re knee deep in debt, cannot pay your bills, and wish to avoid collection calls you may want to consider debt settlement (also known as debt negotiation). This is where you negotiate with your creditors to reduce your outstanding debt the creditor forgives the rest of the debt, helping you to get out of debt faster
Avoid bankruptcy: With debt settlement solutions, you can resolve your debt problems and don’t have to worry about losing your home or car as in Chapter 7 bankruptcy.
Single payment: Instead of paying multiple bills each month, you’ll only have to make a single monthly payment to the settlement company. You avoid the stress of paying debts at different rates and dealing with several creditors.
Avoid unfair collection practices: You can avoid unfair collection practices and harassment by debt collectors if you negotiate a settlement.
Eliminate extra charges: The debt settlement help company can eliminate late fees and any over-the-limit fees on credit cards.
Avoid lawsuit & other legal actions: Your creditors or the collection agencies can file suit to get a judgment lien and garnish your wages.
You will be able to avoid collection suits if your debt settlement program is successful.
How to choose best debt Settlement Company!
In order to find the best debt settlement companies in USA, you need to check out the following:
Company profile: You need to check the profile and service background of the debt settlement companies you are considering and choose the one that suits you the best.
Company accreditations: These include the certifications that the debt settlement companies have obtained so far, such as their Better Business Bureau report. There are other accreditations available for businesses, such as TASC, IAPDA certification etc.
Program fees and costs: You need to find out what debt settlement companies charge. Compare their fees and choose the best debt settlement companies you can deal with.
Client testimonials: Look for testimonials and feedback given by past debtors. You can also ask your friends and associates about reputable debt settlement companies they have dealt with.
How settlement works
Debt settlement companies offer a wide range of settlement programs where they negotiate with your creditors and collection agencies to settle your debt for less than what you owe. Some companies charge an upfront fee for their services. How a settlement program (or credit card settlement) works:
Let’s say someone owes a total debt of $90,000 on 4 credit cards and finding it difficult to keep up with the minimum payments. He consulted a credit counseling agency, but the monthly payments they negotiated with creditors were too high for to pay. That person doesn’t want to file bankruptcy, so he enrolls with a credit card settlement company EX. Here are the 4 steps that most debt settlement companies use to settle their client’s debt
Essentially, debt settlement is the process of negotiating with creditors to reduce overall debts in exchange for a lump sum payment. A successful settlement occurs when the creditor agrees to forgive a percentage of total account balance. Only unsecured debts not secured by real assets like homes or autos can be settled. Unsecured debts include medical bills and credit card debts – not student loans, auto financing or mortgages. For the debtor, this makes obvious sense, they avoid the stigma and intrusive court-mandated controls of bankruptcy while still lowering, sometimes by more than 50%, their debt balances. Whereas, for the creditor, they regain trust that the borrower intends to pay back what he can of the loans and not file bankruptcy (in which case, the creditor risks losing all monies owed).
Negotiating with a collection agency or junk debt buyer is somewhat similar to negotiating with a credit card company or other original creditor. However, many collection agencies (or junk debt buyers) will agree to take less of the owed amount than the original creditor, because the junk debt buyer has purchased the debt for a fraction of the original balance. As a part of the settlement, the consumer can request that collection is removed from the credit report, which is generally not the case with the original creditor. Even if the removal of the collection account from the consumer credit report has been successfully achieved as a condition of settlement during negotiations, the negative marks from the original credit card company will still remain, according to Maxine Sweet, a spokeswoman for credit reporting agency Experian.
- Stop paying creditors: The representative at the credit card debt settlement company asks him to stop paying his creditors and deposit a certain amount every month into a trust account that EX creates for him.
- Handling collection calls: When he starts falling behind on his payments, he will receive collection calls. Because he is enrolled with a settlement company, the calls will be handled by the representative at the credit card settlement company. He doesn’t have to handle harassing calls on his own.
- Negotiation starts soon after: When he has accumulated a certain amount in the trust account, the representative at the settlement company starts negotiating with his creditors one by one.
- Debt is reduced by 40-60%: Her creditors agree to accept a reduced amount, say around 40-60% of his outstanding bills as payment in full.
While He is paying off her debt she makes sure that any extra money coming is used to pay her bills. Finally, after a period of 2 years, all of her credit card debt has been settled with her creditors.
Whether it’s a credit card debt settlement program or one which includes other debts, you should stop paying your creditors. Instead, send in those payments to the settlement company to save towards a lump sum settlement.
Once you have enough funds deposited into the trust account, online settlement companies negotiate with your creditors/CA and attempt to stop all collection efforts. Find out how to negotiate your settlement from the 6 steps in debt negotiation program article.
Debt settlement, also known as debt arbitration, debt negotiation or credit settlement is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.
As long as consumers continue to make minimum monthly payments, creditors will not negotiate a reduced balance. However, when payments stop, balances continue to grow because of late fees and ongoing interest.
Consumers can arrange their own settlements by using advice found on web sites, hire a lawyer to act for them, or use debt settlement companies. In a New York Times article Cyndi, an associate professor at the University of Illinois law school, states “Done correctly, (debt settlement) can absolutely help people”. However, some settlement companies may charge a large fee up front; or take a monthly fee from customer bank accounts for their service, possibly reducing the incentive to settle with creditors quickly. One expert advises consumers to look for companies that charge only after a settlement is made, and charge about 20 percent of the amount by which the outstanding balance is reduced.