Debt Clear Direct

by DimitraTzanos

Avoiding Credit Card Debt Problems – Debt Advice And Support
Credit cards are a way of life for people all around the world. Credit cards can be a useful tool which support us all when we are needing a little financial help. When waiting those extra couple of days before pay-day it can also help to have the ability to buy that treat for ourselves.

While it can be useful to have a credit card because you actually can use credit cards without racking up credit card debt as long as you have the knowledge and the will to do so. While most people will use the their credit facility wisely many have found themselves using the card to pay for the day-to-day cost of living, especially when they are out of work or having financial problems already.

The best way to manage your credit card debt is to manage your finances. This means setting up an income and expenditure to be able to see how much money is left over each month. Sometime people may find that they have less money at the end of each month than they did to begin with. In these instances reductions in expenditure will be required if possible.

Start by writing down all of your income and expenses. Household expenses include your phone, gas, electric, tv and any other household costs. Now subtract your expenses from your income. If you have a negative income you will need to cut what expenses you don’t need to come into a positive. It is also a good idea to figure in money for emergencies (if you don’t have an emergency fund) and money to put into savings.

Now that you have your budget set, you will need to stick to it and not over spend where it is unnecessary to do so. If in debt then it would be best not to use credit facilities (until after the debt has been resolved) which could further your problem.

If this method doesn’t work/help then it would be best to seek professional debt advice from a charity/company who will be able to offer a range of solutions including general advice, debt management, iva, trust deed, lila, debt relief order, bankruptcy and sequestration. For some of these solutions a person may need to have more debts than credit cards but it would not be exclusive.

While a lot if these solutions can be hard to understand or to asses but there is help available to those who want to know what options they have at their disposal.

What are the problems with our current money system? Part 1 of Money as Debt III – Evolution Beyond Money, takes a critical look at the fundamentals of today’s money system, conceptually and in terms of its design arithmetic. chapters The Challenge; Interest, Stock & Flow; Money Lent Twice. Part 1 is a review, and an expansion upon, information provided in Money as Debt, and Money as Debt II – Promises Unleashed. It is advantageous to have seen the first two movies of the Trilogy because it is quite unfamiliar material for most people.

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You could take an extra vacation or buy that HDTV youve been begging your husband to purchase, only to get the Im sorry, honey, but we cant afford it response.

I dont mean to be clichd here, but every penny really does count unless youre one of those fortunate enough to have the money to spend on whatever you want.
Read more…

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by eric731

Is Debt Negotiation for You? – Debt Settlement Advice

Debt negotiation is a relatively new form of debt relief that is gaining popularity for its results in reducing credit card and consumer debt and because the process can also help homeowners avoid foreclosure by making home loan modifications more likely to be approved. There are two schools of thought on the subject; one that focuses on broken settlements, credit scores and direct negotiations while the other centers on the short and long term benefits of the practice. First, the arguments against debt negotiations:

* Broken settlements A settlement can be broken by either the party executing the negotiation or the customer. True, there have been instances were companies didnt follow through on their promises to see the negotiation from beginning to end. The percentage of customers involved in those situations has been small and could have been prevented with some due diligence. Many companies have been drawn into the debt relief industry by the sheer numbers of borrowers and their escalating debt starting in the late 90s. What had started as debt counseling run by a few non-profits mushroomed into an industry populated with thousands of new and inexperienced companies offering services far beyond the scope of the original mandate of assisting indebted customers with their debts Within those thousands of companies were those that didnt deliver on debt negotiations, counseling, or consolidation. Customers can also break a settlement by not making enough payments to settle the negotiation. Whether by circumstance or intention, some will stop making payments during the 18 to 48 months of the settlement process.

* Credit scores A debt negotiation will likely decrease the credit score of a borrower that enters a debt negotiation, but it depends on what that score is at the time the process starts. A vast majority of borrowers that start a debt negotiation are already behind on payments and are consequently taking hits on credit scores so the negotiation wont have as much of an effect. The second issue on credit scores is that the negotiation stays on the report for up to seven years. While that can be true, doing nothing will leave charge-offs and open balances on the report indefinitely. Finalized, settled, and closed accounts are ultimately a much better reflection on a credit report than accounts that appear intended and/or neglected.

* Direct negotiation Borrowers can initiate direct negotiations and, in fact, may be contacted by their lenders to do so. One problem with going direct is that there are normally several accounts to be negotiated, all of which will need to be done independently. A second issue is that the offers in direct negotiations are usually for lump sums or for payoffs within a few months of agreement. Those types of payments are often unworkable for the borrower, especially if there is more than one lump sum agreement at a time.

The benefits of debt negotiations are as follows:

* Immediate relief Upon initiation of the debt negotiation, the borrower will immediately experience an approximate reduction of 50% on payment obligations for all accounts involved in the negotiation. Reductions can vary, depending on the borrowers ability to pay. By making payments in excess of the 50% reduction the borrower may be able to pay off the negotiated balances faster.

* Debt balances cut by 40 to 60% – Depending on the creditor, balances can be negotiated down by 60% or more. For a negotiation covering multiple accounts the average reduction for the total is 50%. Once the negotiated balances have been settled the accounts are considered to be paid in full with no further obligation by the borrower to the lender.

* A wide spectrum of accounts which can be negotiated A debt negotiation can include credit cards, signature loans, department store debt, unpaid medical bills, unpaid utility bills, and more. This effectively gives the borrower a chance to wipe the slate clean without the disadvantages of filing bankruptcy.

* Paying off all debts within four years As credit card balances have accumulated for consumers over time, making payments that materially reduce the principle balance has become difficult, if not impossible. For those that can only afford to make minimum payments, a full payoff could take twenty five years or more. Calculated out over that time a borrower would pay many times the actual balance in interest alone. Contrast that scenario with a full payoff of debts over four years or less at approximately half the balance amount and the merits of debt negotiation become very apparent.

* Increased odds of approval for home loan modifications A debt settlement can enhance an application for a home loan modification by showing a reduction of consumer debt payments which allows for a greater availability of a homeowners income toward mortgage payments. In fact, a debt negotiation could be the difference between a successful loan modification and foreclosure.

You will continue to hear pro and con arguments regarding debt negotiations. One thing to keep in mind is that credit counselors have been and still are backed by credit card issuers. When listening or hearing about debt negotiations, always consider the source. If you are contemplating a debt negotiation, be sure to conduct some due diligence before selecting a firm to act on your behalf. Visit the firm and ask enough questions to get comfortable with the partnership. Insist on a law firm experienced in debt negotiations and, if applicable, home loan modifications. Getting back on your feet will take partnering with the right firm and a commitment to seeing the process through to its completion. Take care of those issues, and youre on your way to financial freedom.

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by Fergal OP

Negotiating Debt With Original Creditors (DIY)

How would the consumer know if the account is still with the original creditor?

You can tell by the fact that you are still getting letters and bill statements from the original creditors, but if you are not receiving letters, you can always just call the creditors. If the account has been passed on to the collection agencies, the creditors would actually refuse to speak with the consumer, but if it is still with them they would entertain settlement talks.

Accounts may go into collection agencies if the payment is delayed by more than 90 days.

When should the consumer try to settle accounts?

This varies per creditor
Some settle for the lowest percentage whe the account is between 150 and 180 days past due.
Others settle for the lowest percentage after the account has been with several collection agencies.

Creditors would not negotiate if the consumer’s account is current; they would refuse to discuss settlements unless the consumer is at least three to six months behind.

How does debt settlement work?

Banks usually forgive 20%-75% of the consumer debt because it is better to collect something rather than nothing; although they would not announce it.
The consumer can stop making payments to the creditors to put aside money on his/her savings account. Once the creditors agreed on a settlement you can pay it with the money that you have been saving.
When the one-time payment amount is finalized and the debt has been paid off, the creditors then report the account to the credit bureau as “settled.”

What are the advantages of going at it alone?

It is cheaper. Debt Settlement companies, on the average, charge 15% of what the consumers owe the creditors. This or 20-25% of the settlement amount.
Some credit card companies do not like working with debt settlement companies. There are many instances in which the creditors pass the account to an attorney upon learning that the consumer enrolled in a debt settlement program.
Creditors also do not want to deal with collection attornies. They complicate matters and they charge high fees based on what they collect.
Most creditors would rather collect something rather than nothing.
Creditors do not like the term bankruptcy because then they would receive no repayment at all. Some debt settlement companies advise the consumer to threaten the creditors with a declaration of bankruptcy because they almost always yield.

What are the disadvantages of doing it on your own?

Many debt settlement companies are not transparent. Typically, debt settlement companies charge 15% of the debt but others charge a percentage of the debt savings (25%) upon settlement, plus monthly charges and an initial sign-up fee. Then there are those that charge a flat monthly fee throughout the length of the program.
There are cases in which the creditors agree on a partial payment and then all of a sudden would turn back on their word, and hire the services of a collection agency, to retrieve the remaining balance. In many states that practice is considered illegal, the creditors cannot come after the consumer for the balance, although they may attempt to.
Partial payment means just a “Settled” rating but the consumer could always try to negotiate a better rating. Although of it may help to know that “Settled” is better than “charged off”.

Don’ts

Do not disclose where you work or what your bank is.
The consumer may say “no comment” if the creditor asks where he/she maybe contacted. This is necessary to protect the consumer from the possible collection from a judgment. This is one of the first processes that a debt settlement company would advise its customer too (they usually requests the customer to change the address, phone, and email address to that of the company).
Do not pay your settlements with a personal check
Top protect the consumer’s financial status and other bank account numbers, he/she is advised to not issue a personal check. The consumer may issue a cashier’s check or money order instead from a different bank.

Do’s

Keep a copy of the money order or cashier’s check
Put simply, it is proof of transaction, and should any dispute arise, the consumer has something to hold up against the creditors.
Record the conversation. Creditors do not give out a written copy of the agreement but for security purposes, the consumer must somehow have proof that the agreement happen. If the consumer is going to record he/she must inform the other parties that the conversation is going to be recorded. The consumer must log the phone calls, write down the name of the person who took the call, and note down everything. The two party state. In some states, it is acceptable that only one party on needs to give permission to have the conversation recorded.

Can I still settle my debt if I’m currently being sued by a debt collector or creditor?

It is still possible to negotiate even in the middle of litigation or after a judgment has been filed.

What is Favorable Negotiation?

The idea is to be able to lower down the payment to a manageable number so that it can be paid off as quickly as possible. One of the best ways to achieve this is to get the creditor to wave finance charges, late and over the limit fees, which usually amounts to 30-40% of the total debt. Some creditors may accept but some will refuse. If that happens, decline politely and buy time. In many instances, the creditor will send you a more favorable deal within a few weeks. Collection agencies are paid to collect debts, so their goal is to get as much as possible as quickly as possible.

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