Debt Settlement
Debt Settlement questions and answers
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Q: debt settlement?
I just posted a question a few minutes ago about my wife having to go to court over her credit card. Like I said before we have all ready settled 2 w/ a debt settlement company. Her's is the last one we are settling and now she has to go to court. She has lost her job because of plant closure. We have a small amount built up in our acct. with debt settlement company, but nowhere near what the lawyers say we may have to pay. Does anyone have any thoughts of what might happen?
A: The worst thing that can happen to you is that you will lose the case.
If your wife doesn't have a job, they can't garnish her wages.
If you own Real Property, they can put a lien against it.
Otherwise, lawsuit judgements can also be "settled" if the creditor agrees. Just because the plantiff wins the case doesn't mean you have to pay the entire judgement amount-it just gives the creditor more options to come after your assetts.
Q: Will debt settlement ruin my chances at getting a new job?
I am going to go through a debt settlement with my significant other as an alternative to bankruptcy. We're both young, and planning on advancing in our careers. Would a debt settlement work against our odds of landing the perfect job, even if we are the most qualified??
A: Possibly, but less so than a bankruptcy would. Many companies now check credit records. Various HR studies have shown that on average, people that maintain their credit the best also tend to be the best employees (for various reasons- they have less drama at home, they are more organized, they can manage resources better, or whatever). So if it negatively impacts your credit, it may keep you from getting a job, at least until it washes off your record in about 7 years time. But like I said, I'd far rather have debt settlement on there than a bankruptcy.
Q: What is the best debt settlement for $12,000 and lower debt?
I recently switched jobs making significantly less money. Now I am past due with bills and am getting some pretty rude calls from creditors. I want to pay them but am having a hard time. I have been seeing commercials about debt settlement and needed some help deciding who to go through. I have a little less than $12,000 to pay off. Please site sources when you can and THANKS ahead of time!
A: The best thing to do is get a copy of "The Total Money Makeover" by Dave Ramsey.
Get yourself a written budget, where everything you make next month is spent on paper this month.
Nobody gets a dime until the essentials are paid for:
Food, shelter, utilites, transportation.
Then see what you can cut. Food = Beans & Rice. No restaruants, no steaks, etc.
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To quote from Dave Ramsey's web site:
History also teaches us that debt wasn't always a way of life. In fact, three of the biggest lenders today were founded by people who hated debt. Sears now makes more money on credit than on the sale of merchandise. They are not a store; they are a lender with some stuff out front. However, in 1910 the Sears catalog stated, "Buying on Credit is Folly." J. C. Penney department stores make millions annually on their plastic, but their founder was nicknamed James "Cash" Penney because he detested the use of debt.
Henry Ford thought debt was a lazy man's method to purchase items, and his philosophy was so ingrained in Ford Motor Company that Ford didn't offer financing until 10 years after General Motors did. Now, of course, Ford Motor credit is one of the most profitable of Ford Motor's operations. The old school saw the folly of debt; the new school saw the opportunity to take advantage of the consumer with debt. "
Q: How do I know if the debt settlement company I'm working with is competent?
I'm so worried about getting screwed by an incompetent company. Also, I checked with Debtmerica and they're trying to charge me a 15% fee to do the debt negotiation. I've checked with a few other places too and somebody recommended going with an attorney-based debt settlement company to get better results. Any help would be appreciated.
A: I've recently looked up some debt settlement companies for my sister so let me give you a little info:
1) Always ask if the company is a member of TASC (The association of Settlement Companies) They are the Better Business Bureau of Settlement companies and make sure these companies are operating within compliance regulations.
2) Always ask how much it costs. Usually there's a setup fee, a servicing fee, and a negotiation fee. The setup fee will usually range from $100-$200. The servicing fee can go anywhere from $70-$10/month. The negotiation fee ranges from 8%-15%.
3) It would definitely behoove you to check out any attorney or attorney-based company to handle all your debt settlement as they are stricter on compliance guidelines.
Try going to: www.tascsite.org and looking up some companies.
A good blog I read: http://iclosem.wordpress.com has some great articles on debt settlement. I would definitely look into that.
I was listening to the Howard Stern show the other day and it looks like KC armstrong just signed up for debt settlement with this company called Envision Debt Solutions (www.envisiondebtsolutions.com). I ended up sending my sister there as they answered all my questions right. They have an 8% retainer fee (since they're an attorney based company) and all the contracts you sign are with the attorneys. They were actually very courteous and professional and guided my sister through the whole process. Give them a call at: 800-515-9603
Q: How good is debt settlement over debt consolidation? Is it a more reliable method? ?
What I am interested to know is if Debt Settlement really works and if you know of anyone who has been through it.
A: Debt Settlements are very different from Debt Consolidations.
Typically, you can do Debt Consolidation *BEFORE* you get into too much trouble with your creditors. It is a way of reducing your multiple monthly payments into a single lower payment. The objective is to get your monthly budget more manageable. Debt consolidation only works though if you do not incur any new or additional debt after you complete the consolidation.
Debt Settlements are agreements (typicall entered into at some point after the debtor has defaulted on payment) with a creditor or the collection agency representing a creditor where the creditor agrees to accept an amount lower than the stated debt. While this seems like a good deal for the debtor, it has and can have many drawbacks.
Often the creditor and or collection agency have tacked on a significant sum to the original debt, so much so that even the discounted amount may be more than you originally owed at default. While it is legal for the creditor and/or collection agency to add interest, fees, and penalties, some of these additions can be quite high (in some cases they may even exceed the legal maximums). Further, if the agreement is to begin a payment schedule, the interest, fees and penalties may continue to accrue (often making it impossible for the debtor to ever pay off the debt). Don't forget that the dollar amount of the "discount" must be reported as taxable income by the debtor.
If entering into a debt settlement agreement , be sure to have everything in writing and be more than sure you understand everything you are agreeing to.
While many debt collection agencies are honest and sincere in helping you resolve your debt problem, some are not and can make things much worse.
Be careful out there.
Q: Does anyone know the difference between Debt Settlement Companies and CCCs Companies? Which is better?
I have some credit card debt and I don't know what credit card company to consider, either a "CCCS" or Debt Settlement company. Is there a better alternitive to either?
A: i personaly work for the credit card collections department of a large UK based bank, and am faced with people in financial trouble everyday. rather than constantly harrass our customers we are trained to recomend debt management companies to card holders who are in financial trouble. consolidation loans like you would see on the televisoin, basically loan you the ammount you would need to pay off all your card debts, and then you pay them back over a period of time, many people find this easier because its only one bill to pay every month, rather than 1-10 credit card bills each going out on different days, however the interest on these cards is usualy higher than the cards interest, and as such costs more in the long run, they attract people by offering low monthly re-payments, however this just allows them to drag out the loan even longer, earning them even more money. as a collections specialist i never recomend consolidation loans
now for debt management compaines, these companies are a little different, they will usualy produce a financial assesment for yourself (the card holder) also known as an income and expenditure report. they will then decide how much you can pay to each creditor each month, they send the details to all your creditors and then if your offer is accepted you usualy get the interest and charges frozen on your credit card, and are allowed to pay back a lower ammount than usual for a fixed period of time.
one thing i will say is read your contract through very closely, as some debt management companies (such as gregory pennington ) actually wait 3 months before paying any of your creditors, even though you will be paying them money every month to sent to the creditors (and to pay for thier service) this pushes you further into arrears, and has caused some people to be issued default notices, the company do this to both earn interest on the money in thier holding accounts, but also to pro;long the ammount of time you will need thier services. in my job i only ever recomend FREE debt management compaines such as payplan, the CCCS (consumer credit counceling service) and your local CAB (citizens advice bureau) all of these comapines provide equal or better service than those you would pay for. hope this helps you out.
Q: How do I find an honest debt settlement company to work with?
If you have had success working with an honest, reliable, authentic debt settlement please let me know
A: Debt settlement companies work with you to declare bankruptcy. That part is not in the commercial, you don't find it out until you are already "working" with them.
My advice is to go see your banker. Not the teller, a bank officer.
Q: Is credit card debt settlement bad for your credit?
I am a senior in college, I have no job now as I am finishing school. I start work in June, and I actually have good credit, over 700, and 5k in credit card debt. I've paid my bill in full always in the past until my last killer spring break. Debt settlement sounds cool to cut the debt in half which I would pay off with a lump sum, or should I just stomach it for another month where I can pay it all off entirely in full. Thanks.
A: You have not provided enough information but, if I understand correctly, your credit cards have not yet become delinquent, otherwise your credit score would not have been over 700.
If you have paid at least the minimum payment on EACH of your credit cards for every statement, you are in good shape, as far as your credit history goes. Your credit score could be slightly damaged by your higher debt-to-credit ratio, but that is a minor concern, because it will be corrected as soon as you either pay off some of the balance due or increase your credit line. Or open another credit card. And with a score above 700 you will have no problem opening a credit card with a 0% balance transfer interest rate to transfer some, or all, of the balance on your current credit card. That should take care of the problem until you start getting paid. You will need to be careful though, as all banks charge a balance transfer fee of 3% of the total amount. Some banks, however, like Citibank and Bank of America offer credit cards with 0% balance transfer rate and $0 balance transfer fee on some of their credit cards. I would recommend browsing through their credit card offers.
What will seriously damage your credit history for a long time is missing a credit card payment. It will stay there for 7 years, even after you settle with your creditor.
Q: My boy friend is in debt what is his best option debt settlement or declare bankruptcy?
He owes about $12,000 we want to get married when he is debt free. Do you know any reliable settlement companies that are trust worthy? What are the procedures?
He is a full time student and has a job he works full time with minimum wage.
A: Receiving help from debt reduction services normally helps you avoid
bankruptcy, pay off your debt in full and get your finances under
control. Bankruptcy should be your final choice, and debt reduction
services prefer to help you to eliminate your debt completely, instead
of running from your debt.
Q: looking for attorney in NJ to help me start a debt settlement company?
anyone out there ever start a debt settlement company and researched the legal aspect in the state of NJ? I need legal advice from an expert.
A: If you want legal advice, you will need to speak to an attorney.
Q: Can anyone personally recommend a debt settlement company that actually works?
Does anyone have personal experience with a debt settlement company and was it successful?
A: Hum...tell you frankly do not trust anyone in this matter, as I have a bad experience of this thing. Don't rely on someone for the same, because I got the same problem in my past. Thanks to Michel he recommend this : http://www.debtreduction123.net finally, and I got free from debt than.....
Thanks Micheal....thank you very much. I wish k you don't believe me but juts go there and try it out fill out their form and see..They have good services. Their executives will come to your place or they call you and than you discuss with them. I m not 100% sure but hopefully you solve out this problem.
Q: Is it possible to negotiate with your credit card companies on your own for debt settlement?
I've been researching debt settlement programs and they sound like a good option. Has anyone been able to negotiate with CC companies on their own to avoid the several thousand dollar fees?
A: Of course it very possible. I settled with several credit card companies and they forgave a large portion of my debt. This is on cards that i hadnt paid at all in over a year or so. One thing you do need to keep in mind is that the entry will stay on your credit reports for 7 years.
Also, its important to save any documents from collection agencies just in case they try to come back to you at a later time and ask for the money.
One more thing...i had to pay taxes to IRS on the amount that they forgave. When you get a settlement letter, it says at the bottom that "any write off amount of $600 or more will be reported to IRS." So, I settled and now I am completely debt free just patiently waiting to get my credit score up. - Good Luck !
Q: Is it better to go through the debt settlement agency or not pay my credit cards?
Is it good to tell the judge that I'm in the debt settlement program?
A: What you need to know about debt settlement firms:
Your credit card companies are not going to offer you settlements like 50%, for example, if you are current (not behind) on your payments. If credit card companies offered settlements to people who are current on their payments, then everyone would be calling them up and asking for 50% settlements. Basically, the only way you can get into a position to negotiate settlements is to deliberately let your accounts go into default. This is exactly what debt settlement firms do....They take a monthly amount from you and use that to build a “settlement” account, which will go towards paying the “settlement” at a later date. Whatever monthly payments you make will go directly to the debt settlement firm for their fees and your settlement account. All of your accounts will go unpaid for several months and will default. This is not an accident. It's a deliberate default as an incentive for the credit card companies to accept settlements.
If you are current on your accounts, this process will ruin your credit rating as your accounts will all go into default. Your creditors are under no obligation whatsoever to accept settlements from any debt settlement firm you hire. Their response might be to serve you papers and take you to court.
As your accounts all go into default...you will get increasingly aggressive collection calls from debt collectors. It is "typical" that creditors offer settlements for defaulted credit card debt....They often do this in lieu of loosing everything if you file for BK. HOWEVER, you can never predict how any one creditor will respond to defaulted debt. They might decide to take you to court and get a judgment against you. If they win, your wages may be garnished. Debt settlement firms have no power whatsoever to stop creditors from taking this action and they have no power to force creditors to accept settlements.
****If you have already defaulted on your cards....make your own settlement offers...you can do this on your own and it puts you in control. If you do...get all settlement terms IN WRITING PRIOR to paying them.
Q: Has anyone had luck with debt settlement companies for credit card debt?
I am in Ohio and do not want to file chapter 13. Looking to make settlement to credit cards. I am looking for reputation companies that do credit card settlement. What do these companies charge. 50,000 in credit card debt at 23% apr.
Do not want to go to consumer counseling, we can get a loan from family for 25,000 to pay off total. Can not afford to pay anymore. We need to help our son who has some medical issues.
A: Mom;
Sorry to hear about our situation.
Based on what you have revealed, it sounds as though you are a candidate for debt settlement. The fact that you have access to money right now in order to settle your debts is a positive thing and will certainly speed up the process.
Here is one tip that I offer to my readers at my website with regards to choosing a debt settlement company. Make sure you deal with a large company that negotiates on behalf of many people with the same credit card companies.
Why you ask?
Instead of negotiating with your credit card card company(s) to reduce just your $50,000, they will "pool" your debt with other people's debt and negotiate a much larger balance, sometimes well over $1 million. This gives them a greater amount of clout and will/should ultimately reduce the amount that you will have to pay your creditors to settle our debt.
A downside of debt settlement is that it will have a very negative affect on your credit. Keep that in mind.
Here is the company that I recommend for debt settlement ( http://www.curadebt.com/a/1602/ ) and I verified that they will work with you in Ohio.
Best of luck Mom.
If you would like further information on debt settlement and/or your other options please visit my debt information site, http://www.debt-elimination-guide.com
Q: Does a 1099C have to be filed the same year as the debt settlement?
I settled a debt in July of 2007 but didn't receive a 1099C until today (02/02/2009) for tax year 2008. Shouldn't the 1099C have been filed for tax year 2007 since the settlement occurred in July of 2007? What should I do?
A: Your best bet here it to consult a tax professional, but you could also contact the entity that settled the debt. They might have written off the loss in 08 which is why you got your 1099C later.
There is also a possibility that you don't have to pay taxes on this if you were insolvent.
Another common objection to debt settlement is that debtors whose debts are partially canceled outside the bankruptcy system will need to report the canceled portion of the debt as taxable income. (IRS Publication 908)
The IRS considers $600 or more of forgiven debt as taxable income.[citation needed] The forgiving creditor must provide the taxpayer with a 1099-C tax form. This form will list the amount of forgiven debt and interest in Box 2. Taxpayers with portions of personal loans forgiven may not subtract the interest reported in Box 3 from the amount of reportable income on this form.
However, the IRS does not require taxpayers to report forgiven debt if the tax payer was insolvent at the time the creditor forgave the debt. Being insolvent means that the amount of a debtor’s debts are greater than his/her assets (how much money and property the debtor owns). However, the IRS adds that “you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent.”
For example, if a taxpayer is $10,000 in debt and owns $3,000 in assets, he/she cannot exclude more than $7,000 of forgiven debt from his/her income tax. Any forgiven debt over $7,000 that year must be reported as taxable income.