Avoid Bankruptcy with Credit Card Debt Settlement
Author: justin narin
Debt settlement is just one of numerous ways to climb out of debt. Debt consolidation and credit counseling are both preferable to debt settlement, but debt settlement may help you avoid bankruptcy or foreclosure if your situation is very serious.
Unfortunately, sometimes it’s not possible to repay your debts in full. If you’ve suffered an extended job loss, an expensive medical emergency or illness, or a death in the family, you may not be able to recover from the debt created by the situation. Rather than file for bankruptcy, which will ruin your credit for 7 to 10 years, you could try debt settlement first.
How Debt Settlement Works
You have the option of settling your debt yourself, but you’re more likely to be successful if you hire a professional debt settlement service to handle your paperwork and negotiations. A debt settlement company will review your debts and determine which are most likely to be settled. Credit card debt settlement is the most common form. Medical debts are often negotiable. Student loans are not negotiable and mortgages are almost never negotiable.
When you apply for debt settlement, the service will review your accounts and then contact your creditors to negotiate a settlement. Settlements are typically for 30-50% of the balance, but can be as high as 75-80%. In rare cases, your settlement can be as low as 20%. A reputable debt settlement service won’t guarantee a specific rate and won’t offer “credit repair” services in addition to the settlement.
The settlement process can take anywhere from a few months to a few years, depending on the level of your debt. Some services ask you to make debt payments to their escrow service or ask you to set aside the money yourself. Some services require lump sums to pay off negotiated debts while others let you pay over time.
Credit Card Debt Settlement and Your Credit Rating
Debt settlement will affect your credit rating. Your creditors will report your accounts as “account settled” or “account settled for less than the full balance.” Although these statements aren’t positive, they’re better than a bankruptcy or multiple current delinquencies. If you’re considering credit card debt settlement, it’s likely that you’re already behind on payments, facing collection, or considering bankruptcy, so debt settlement may actually help you start to restore your credit.
Like debt management plans, debt settlement can also help you learn to change your spending habits and approach to credit card debt. Most settlement services require that you stop using credit cards or taking out loans while you’re in the program. Once you learn to stop relying on credit, you’ll be less likely to fall into debt again.
The Downsides of Debt Settlement
In addition to the ding on your credit rating, debt settlement has another negative side effect: higher taxes. The IRS requires that all settlements over 0 be reported as income, which means you could be taxed on the amount of the debt you didn’t pay. When combined with settlement fees, you may find that the settlement won’t save you much money over paying the debt in full.
You should also know that creditors are not required to settle your debts. You may have to pay some or all of your debts in full if the settlement service isn’t able to negotiate with your creditors. Creditors will generally make their decision based on your income, payment history, financial situation, and the number and amount of the debts being settled. They’re unlikely to negotiate a greatly reduced settlement if you’re able to pay most of your other debts or own a home with equity. They’re more likely to negotiate if you’re in collection, about to file for bankruptcy, or have several debts in delinquency because they’d rather receive something than face debt cancellation in bankruptcy court.
Credit card debt settlement should be reserved for dire situations. If you’re on the verge of bankruptcy, then debt settlement is appropriate for you. If you have the means to repay your debts, seek debt consolidation or credit counseling instead.
For more articles on Credit Card Debt Settlement, visit: http://www.bills.com/credit-card-debt-settlement/
Article Source: http://www.articlesbase.com/personal-finance-articles/avoid-bankruptcy-with-credit-card-debt-settlement-901805.html
About the Author
Justin has 5 years of experience as financial adviser; his key areas are consolidation, insurance, debt relief, mortgages etc. For more free articles and advice visit http://www.Bills.com.
Poor credit rating What can I do?
Recently, I have been turned down for jobs, housing, and an auto loan due to bad credit. The only thing on my credit is medical bills. Very large ones and lots of them that I can not afford to pay. I have no medical insurance and can not get medicaid because I am not pregnant, under 21, or over 65, or disabled. I was born with a genetic disorder that often results
in trips to the emergency room,hospital stays, etc.
I need a job, have been turned down 8 times because of credit.
I can’t file bankruptcy because I can’t afford to pay for credit counseling and filing fees – even on an installment plan. That
would not improve y credit anyway.
What can I do ? I can’t get any credit, a job, or anything.
I am so depressed….?
I have been trying for over 4 months to get a job. I can’t get a job anywhere–even walmart or fast food. Everyone says they are fully staffed. I am college educated and am very qualified. My husband is in the same boat. We have no income and no way to get income without jobs! We are having to borrow money from family. We had to file bankruptcy 1 year ago due to a medical emergency, so we have no credit. I have no friends and no life. No matter what I do it seems that life screws me over. My husband is not very supportive of my feelings and thinks I should just “not be depressed”. I am on medication for depression, but can’t afford counseling because we have no insurance. I feel so alone. I no longer believe that through hard-work you can get ahead. Sometimes no matter what you do, you get screwed. I just don’t know what to do anymore
Have any Republicans opposing health care done any research to see if their claims are true?
If not, why haven’t they?
Here is a brief debunking from Mediamatters.org
Myth: Health care reform will provide health insurance to illegal immigrants.
Fact: No federal benefits go to those who are not legally in the United States.
House Bill: “No Federal Payment for Undocumented Aliens.” According to America’s Affordable Health Choices Act of 2009, Page 143, Line 3, Section 246: “No Federal Payment for Undocumented Aliens. Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.” [America's Affordable Health Choices Act of 2009]
Myth: A government-run plan will encourage seniors to choose an early death.
Fact: Counseling will be offered to seniors on a voluntary basis.
“Sec. 1233 of the bill, labeled ‘Advance Care Planning Consultation’ details how the bill would, for the first time, require Medicare to cover the cost of end-of-life counseling sessions. According to the bill, ’such consultation shall include the following: An explanation by the practitioner of advance care planning, including key questions and considerations, important steps, and suggested people to talk to; an explanation by the practitioner of advance directives, including living wills and durable powers of attorney, and their uses; an explanation by the practitioner of the role and responsibilities of a health care proxy.’” [PolitiFact.com, 7/16/09]
MYTH: The government-run plan will allow taxpayer funds to pay for abortions.
Fact: Private insurance companies decide whether or not to cover abortions and consumers can choose a plan in line with their own beliefs.
Abortion Is Not Mandated In The Reform Legislation. According to Planned Parenthood: “Nothing in any of the current health care reform bills mandates abortion coverage – or any other type of medical procedure – in the Exchange. Abortion is not mandated any more than any other medical procedure in health care reform.” [PlannedParenthood.org, accessed 7/30/09]
MYTH: We don’t need an overhaul of health care.
Fact:…there are millions of people who can’t get health insurance. And those people cost you, and everyone else with insurance, more because they often can’t pay for the care they do receive. Your premiums go up each year in part to help cover the cost of those who can’t afford to go to the doctor and end up having to go to the emergency room instead.
MYTH: A public option will result in Americans being forced out of their current plans.
Fact: House Bill Allows For Continuation Of Current Coverage. According to PolitiFact.com: “The House bill allows for existing policies to be grandfathered in, so that people who currently have individual health insurance policies will not lose coverage.” [PolitiFact.com, 7/22/09]
MYTH: A government option will result in health care rationing for Americans.
Fact: Health care is already rationed by insurance companies.
Private insurance companies ration care to Americans every single day. They reject applications based on pre-existing conditions and family history. They rescind coverage after an illness has been diagnosed. Their premiums and deductibles are so high that millions of Americans are forced to delay care or declare bankruptcy due to high costs.
MYTH: Government-run health care will put a bureaucrat between you and your doctor.
Fact: There is already a bureaucrat between you and your doctor. It’s called the insurance company.
The private health insurance industry bureaucrats are standing between you and your doctor right now. They hire outside firms to determine how much you might cost them. Private insurance companies make decisions on who does and does not get health care based solely on how much they value your life.
MYTH: A government option will force private insurance companies out of business.
Fact: It will provide competition for insurance companies where there is currently a lack of competition.
The introduction of more competition in the health insurance market will not put private companies out of business – it will force them, in true free-market style, to meet the demands of consumers and to start providing quality coverage to all Americans.
[...]
Senate Democrats Have Proposed That Public Health Care Should “Comply With All The Rules And Standards That Apply To Private Insurance” To Ensure That Private Insurance Can Compete. According to the New York Times: “In an effort to defuse the most explosive issue in the debate over comprehensive health care legislation, a top Senate Democrat has proposed that any new government-run insurance program comply with all the rules and standards that apply to private insurance. The proposal was made Monday by Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democra
About bankruptcy protection in the state of Georgia? Know a bit about chapter 7 &13 ,but need to know-?
First of all, if you file and it immediately stops the foreclosure on a primary residence, is there a way later at the hearing to decline to pursue the filing, say if the repayment option is not financially feasible. I would think that would put the property back eligible for foreclosure, but I did not know if there is a way to not follow through completely with bankruptcy after it is filed. Is there a way and if so how, how can I verify that? I am trying to delay a sale date until I have time to vacate the premises or find a buyer to payoff the mortgage. Thanks and any other advice would be helpful. Also, I have been contacted by legal firms that say they can do same day emergency filing-Is this true in Georgia or must you do a credit counseling service first.
Would filing bankruptcy be a good option for me after my divorce, which was caused by my wife accrued debt?
I am recently divorced and the reason for my divorce was due to my wife obtaining numerous credit cards on line im my name, she then maxed them out and didn’t make payments on them. When I found out the cards existed the interest rates had went out of sight and late fees had became enormous. Due to the divorce and the credit card debt I turned the credit cards and one personal loan over to Consumer Credit Counseling Service. This is still a strain on my budget. I bring home 3,700 dollars a month and my total debt that I turned over to the credit counselors is now 18,700 dollars. After I pay my rent, child support (which is the mortgage on the house my x wife lives in), car payment, a home equity line payment, and other monthly bills I only have approximately 360 dollars left for groceries and gas, and other emergency expenses. Would I be a good candidate for bankruptcy, or does anyone know a better option?
I am ashamed of the fact that my country lets people like you slip through the cracks.
Even if you file bankruptcy, you will always have more medical bills due to the chronic condition, so I don’t see that as an option.
First, file an explanation with the credit bureaus, to be depicted on your credit report to anyone who pulls it up. Have an explanation of the medical problem and the resulting credit problems prepared and ready for any potential employer. But I can see how even then, it’s a tough way to go. Many employers will tell you its the credit, when really they don’t want you on their medical insurance.
Try getting it declared a disability.
Consider living in a country which provides healthcare.
Start your own business on a shoestring, most likely online, and that you incorporate the business and keep its books completely separate from your own. Done right, the corporation will be able to protect your business from the medical bills. Eventually, your company can build its own credit.
Best of luck.
Listen, you’re right, sometimes we do our very best and we still don’t receive what we deserve at the end of the line. We hear the term “life isn’t fair” all the time, but that doesn’t mean we’re not going to feel hurt, upset, and even depressed when things go wrong. Right now, a lot of people are having the same problems. I don’t know if it’s ever been this hard to get a job, because so many people are needing them like they haven’t in a very long time. You are probably wondering what all the hard work in college was for if you cannot even get a simple job. I am sorry that you have found yourself in such a difficult situation, you certainly do not deserve this kind of struggle. Lack of money can make us anxious and depressed. Not because without money we cannot pay the bills, but because we don’t realize just how much we need it until it is not there. You need counseling but cannot afford it, others need medical attention and cannot afford it, and this leads to anxiety and depression. First of all remember that you are not alone. It doesn’t always matter to us, because simply knowing others are out there isn’t necessarily comforting. But spend a few minutes a day thinking of others who feel the same way you do. It can help our outlook on the day. Remember that the greatest tool we have to help ourselves is us. Your mind and body are powerful tools. You can help yourself physically as well as emotionally. It is a proven fact that excersise can improve depression. Try going for a run or even just a walk every day. Don’t loose hope in it, try every day for a week and see if you feel better. Fresh air also helps us think more clearly, finding solutions that were not there before. There are many tools for helping depression, but I will name a few that seem most effective. Your life is stressful, I understand. Take a piece of paper at the end of every day, never forget, and right done everything you are thinking. If it takes ten pages, that’s okay. Don’t leave anything out. When you are finished, take a good long breath. Think about those words. Realize how much of the negative in your life can be changed. Not all, I know, but some. Fold up the paper, and either rip it to pieces or burn it. Don’t leave the task for the next day, always do it as soon as you are finished writing. This works more than you can imagine. Life is difficult, and you are probably angry at the situation. And you have the right to be angry. Find some alone time, and either scream into a pillow or simply curse outloud. Scream, kick the furniture, do whatever you feel like. Don’t keep anger inside, it’s like disease. You deserve the right to do a little cursing, or to break a glass every once and a while. And finally, remember that you and only you have the power to change your situation. Our government could care more, our counties could help us as individuals more, we could receive more assistance from the higher powers we believe in. All true. But we cannot always rely on others, even if we should be able to. If you have to go to each and every business in your city to find work, do it. Don’t give up hope. Never let your attitude appear any less enthusiastic or positive then it was at the last place. Tell yourself: I WILL get a job. Do not set time limits, you cannot control time. Do not be overly specific, we sometimes have to take whatever we can get. But never, ever tell yourself you won’t find a job. I have faith in you, as a fellow human being. I know you can be strong because I know I can be strong, too. Get up every morning and say “it may not be today, but I’m sure going to try my best”. Don’t stop, and don’t give up. Do what you need to do, and remember that we don’t stay where we are in life because anyone is making us. The decisions we make are our choice, always. After a hard day of job hunting, remember that you will not get where you’re going if you are too tired, emotionally as well as physically, to get there. Read a book, go the library and enjoy the silence. Take a bath every once and a while. Light a candle. Buy a pot of flowers and smell them every day. Food is not our only fuel, and you will find that the free things in life will benefit you more than you ever realized before. Take this unfortunate situation and turn it into something good.
Also, trained psychologists are not the only people who can help. The best person to help you is someone who knows where you’ve been, and can help you get where you’re going. Not all people can do that, doctorite or not. Try speaking with the people at http://www.takethislife.com/ once a day for at least ten or fifteen minutes. They are a wonderful bunch of people with great hearts and great ideas. You are not alone. Don’t forget that.
Good luck, and God bless you.
Apparently not the ones on Yahoo Answers.