When you’re in debt there is much stress on your mind as well as on your physical body. For that reason many want to get out of the situation any way they can, and after searching through your different options, and ruling out bankruptcy, you may find that it’s wise to try to negotiate a debt settlement.
Some people will tell you that it’s a bad idea, but when you’re in a deep mess it actually can be very helpful.
You first need to educate yourself on the entire goings on when it comes to negotiating a debt settlement.
You need to realize that the lender really gets no real benefit to settle your debt; after all, you promised to pay back what they lent you. This was a contract made in good faith, however it’s understandable that sometimes things just happen and we cannot repay what we owe. Every one has a personal finance dilemma now and then.
So you may still be wondering if this whole debt negotiation thing is a good idea or not. Basically, yes if you’ve been through the ringer, trying to pay off your debts and it’s impossible then it is a good idea. After all, why keep a blemish on your credit report when a little negotiation can go such a long way for saving your financial future.
At your disposal is also debt consolidation, which may be a bit more appropriate for you. If you can find a reliable credit counselor they can help you obtain your credit consolidation loan, and go about things the correct way. If everything goes as planned, you’ll end up with a loan that has a longer period, and a smaller monthly payment. It’s important to note however that this false sense of security that a smaller payment gives you can actually create extra trouble for you, since you may just go right back to your regular way of reckless spending.
Sometimes, if you’re an industrious person, and are very motivated to turn your life around, you can call your creditors yourself and try to negotiate a debt settlement. Often, if you’re nice and let the lender know that you really want to try to fix things, they will help you out in a big way. Don’t go into it defensively.
Again, there is the fact that the debt negotiation is going to lower your credit score, however when you obtain the negotiation loan the lender is required to let the creditor know that you have paid off your debt in full, and it is noted as so on the credit report.
Some of the debt negotiation companies also offer a service, usually for a fee to have a credit repair service remove the negative items on your report caused by the program itself. It’s a very good option though you have to pay.
Be careful in choosing your debt negotiation company, and be sure to recognize your second chance and treat it with respect.
Watch the video related to credit consolidation
www.CreditRepairPublishing.com CREDIT COUNSELING and DEBT CONSOLIDATION What you need to know before you sign up. “(NPR News, May 15, 2006). The Internal Revenue Service is revoking the tax exempt status of some of the largest credit counseling agencies in the country. An IRS investigation disclosed that the firms solicited business from people seriously in debt and that they didn’t provide counseling or consumer education, as required. Prodded in part by a congressional oversight committee and consumer advocates, the IRS began investigating dozens of credit counseling agencies — most holding non-profit status — two years ago. IRS Commissioner Mark Everson says the companies “poisoned an entire sector of the charitable community.” Everson says in many instances, companies were organized merely to funnel business to loosely affiliated for-profit companies. Many of the firms spend millions of dollars on commercials that urge anyone with debt to call them to solve their financial woes. And because tax-exempt organizations are not bound by the federal do-not call list, the firms were able to randomly call consumers, pitching their services under the guise of a non-profit counseling service. The IRS investigations are also likely to affect consumers, thanks to a new bankruptcy law that requires consumers considering bankruptcy to get counseling before they are allowed to file. The IRS wants to ensure that only legitimate non-profit agencies are doing the counseling. In <b>…</b>
Help answer the question about credit consolidation
What is a really good credit card consolidation company?I have about 6000 dollars in credit card debt and high intrest rates, does anyone know of a good credit card consolidation company? One that does not charge huge fees? I know there would be some fee's for this service, just need some good advice please help!
all i have heard on answers are nightmare stories — my advise to you is run not walk away from any of these companies!!! example they will tell you to not pay your bills which in turn will make the credit cards companies post all kind of true but awful remarks in you credit report which will lower your score lower than a snakes belly and than the company will try to settle with the credit card company and all the time you are pouring money into them so they can destroyed your credit!!!
I've considered debt consolidation, the problem with debt consolidation companies is you have to pay them a lot to help you. If you really want to get your credit cards under control I suggest using Prosper.com. Join my lending group and see for yourself if Prosper is a good choice.
http://www.prosper.com/public/groups/group_home.aspx?group_short_name=creditwars
http://prosperloans.blogspot.com
I would call and demand to talk to a supervisor. I would explain what you just said here and see if it is possible to have someone else work the account. Keep going up the ladder if you have to. Good luck.
2500 in debt with a great job — living with parents you should be out of debt in 4 months and on your way to having a savings account == quit charging borrowing and do away with wants and get those bills paid!!!
Per your update that your accounts are already defaulted/charged-off:
Paying back defaulted, charged-off credit card accounts is a tricky matter and it might not be in your best interest to pay it back, as doing so may stir up more trouble than it’s worth. Here’s why:
- When a credit card is charged-off as bad debt, you need to understand that the damage to your credit is already done and there is no undoing it. Don’t make the mistake of simply cutting a check to whatever collection agency has the debt for the charge-off and assume that your credit rating will be magically restored…Doing so will not remove it from your credit reports. It will simply be updated to a "Paid Charge-Off," which, while slightly better, is still a seriously derogatory item. Per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a consumer's credit reports for up to seven years. This does not mean that you will have bad credit for the entire 7 years though.
- Renewing contact with debt collectors out of the blue can stir up all sorts of problems. It’s my position that a tiny increase in your credit score is not worth the risk of triggering aggressive collection activity against yourself. Your effort could be met with threatening, abusive collection calls…threats of lawsuits…and once they find out that you are willing to pay they will probably add on all sorts of fees and they’ll come after you for two or even three times the original amount of debt. Even worse, they might decide to take you to court to try to get a judgement against you for the debt…leading to possible wage garnishment of 25% of your wages.
- There are two reasons that you may want to consider paying back a charged-off account:
1) You are applying for a new mortgage, loan or apartment and the creditor is insisting that all defaulted items be paid off
2) There is a confirmed lawsuit pending on the debt
If neither of these apply, then it’s often best to take a "Don't Ask/Don't Tell" approach…just sit tight and let the charge-off fall off your credit report naturally in 7 years.
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If you're going to pay off old-charged-off debt anyway, then you might as well negotiate the lowest, rock bottom settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report, regardless of whether the charge-off is paid or unpaid. …Offer 25%. Mail them a vaguely worded statement like:
I am willing to settle this matter for 25% of the original amount. This is in no way an admission of this debt, but rather an attempt to settle this matter. Your firm must send me a written agreement on your company's letterhead that you will accept this amount as "payment in full" and that is issue will be settled. Upon receipt of this agreement, I will mail you a money order for this amount.
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- Settled/Forgiven debt is treated like earned income with the IRS…any debt that is forgiven must be added to your next year's income and you'll have to pay whatever additional taxes
First off – thanks for your husband service to and your sacrifice
Debt consolidation is a bad idea. The things they do you can do on your own and you don't have to pay them. Majority of them are scams anyway.
Paying them off is going to be tough but you'll need to adjust your lifestyle ie get on a budget. Pay your lowest debt first (keeping all debt current).
In order to settle, you will need to go at least 6months without paying. The debt will be sent to collectors who pay pennies on the dollar. At this point you could negotiate on a settlement (you could negotiate to 50 cents to the dollar). Be sure if you settle you will need to get the settlement in writing send it certified mail and make your payment via money order (something without your bank info on it).
Be warned you could also be sued and they can garnish your checking account (based on your SSN).
Check out daveramsey.com
$9,000 is not a big deal at all.
If any are seriously past due, you can call them and make an offer for much less than she owes. Just make sure to get the agreement in writing, then mail a money order (not a check) along with a copy of the letter. Keep the original letter and copy of the money order FOREVER.
For the rest, make all the minimum payments every month. Take EVER EXTRA DOLLAR you have and put it to the lowest balance. Once that is paid off (which should be quickly), start applying that amount to the next one. Continue the debt snowball until you are out of debt.
To do this you have to cut out ALL unneeded expenses. Don't eat out, don't buy new clothes, get rid of the cable, get rid of the cell phone, etc..
If needed, get an extra part-time job (or two).
Just buckle down and pay it off. IF you booth work hhard at it you could easily pay it off in less than a year.
In the meantime PAY ONLY CASH OR DEBIT for everything.
DON'T CONSOLIDATE. Rolling everything into one payment does NOTHING to get you out of debt, and it frees up all those credit cards so she can charge up more junk. Your problem is not having to write a bunch of checks each month so consolidation won't help.
I highly recommend debt consolidation, but only through a bank. If you continue to keep paying the minimums on the cards, you will never be debt free. I went to my bank, explained my situation honestly and asked for help. They paid off all of my credit cards and bills and put it all into one payment. It freed up a great deal of money each month, as I only had one payment. Then they gave me a visa with a lower limit that I agreed to pay off each month. It's the smartest move I ever made, believe me, you will never get out of debt the way you are going….you need your bank's help, and if they won't do it, find someone who will. You will have the money to purchase a home much quicker than you think if you ask them to help you come up with a savings plan….also if the bank knows you will get your mortgage through them, they will be more willing to help you.
Bad credit debt consolidation loans are quite popular with those with poor credit history. If your loan application is rejected by a lender, bad credit debt consolidation loans are there to help. If you want to repair your credit history by repaying a loan, which has simple terms and low monthly installments, again bad credit debt consolidation loans are for you. They save you after rejection and help you regain your financial credibility, so that you can again enter the mainstream credit market.
Bad credit debt consolidation loans are of two types:
1. Secured bad credit debt consolidation loans:
These types of bad credit debt consolidation loans are secured by a collateral usually some property or a guarantor. Since, the lenders find something to bank upon in case you default on payments, the interest rates on secured bad credit debt consolidation loans are cheaper, the lending amounts are higher and the repayment period can be long.
2. Unsecured bad credit debt consolidation loans:
Persons who do not have anything to offer as the collateral or security, can take unsecured bad credit debt consolidation loans. The lenders find themselves at increasing level of risk while giving such loans. The existing bad credit situation and lack of a collateral, make them charge high interest rates and offer low loan amounts to offset the risk involved. But, a person who has a bad credit and cannot provide a collateral has little choice, but to take these high interest loans. At least by repaying these the borrower can rebuild his credit history. Read more from: http://www.credit-card-gallery.com/article/198,Get_over_bad_credit_problems_with_bad_credit_debt_consolidation_loans