Why Debt Settlement is More Advantageous Than Bankruptcy – Debt Relief Tips
Author: smith archer
When you are subjected to immense pressure under huge loan amounts, you are bound to take some action to free yourself. Virtually you don't have much open options except that you take up some traditional measures to see yourself clear of debt. Here are the options that you can go for:
a)The first but not much recommended option is to consider filing for bankruptcy. The reason why it is not recommended is that they have a lot of influence on the credit ratings. Once you adopt to file for bankruptcy, you have a bad impact on your credit history. Also you do not get a 100 percent relief on all your existing debts. Apart from that you will qualify for bankruptcy once in 6 years further narrowing your options.
b)The second option sees you through debt settlement process. Here are some advantages you get from debt settlement:
i) Your credit ratings are not affected and you do not face difficulty in availing loans in future.
ii) Your accounts are not seized and there is a transparent process that ensures to overcome all your outstanding commitments.
iii) You have a better chance of regaining control over your distorted economy since there are financial advisors supporting you.
iv) You stand a good chance to get a good waiver on your principal amount. There is a fair chance that more than 50 percent of the debt amount is removed and you are left with other half to pay.
v) On a good negotiation, you might also end up with an extension in the time given to you for repayment of bills.
vi) The interest rates associated with the negotiated amount is affordable and is worthy of giving a try.
vii) Apart from all, the best advantage you get is that you will have a control over your expenses resulting to which you will be able to track your spending well. You will be left out with one account that will give you a better status of your money.
So we see that debt settlement is more advantageous than filing bankruptcy. So take the wise decision and leap forward in stabilizing your financial status.
Article Source: http://www.articlesbase.com/finance-articles/why-debt-settlement-is-more-advantageous-than-bankruptcy-debt-relief-tips-2847405.html
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Is debt consolidation considered the same as bankruptcy?
I’m considering consolidating my debt with the consumer credit counseling agency in my town but someone told me that it’s considered (i guess by potential creditors) the same as filing bankruptcy? Is this true?
How to respond to a collection agency?
I have a CA calling me about a charged off CC debt. I sent a certified validation letter to a collection agency. I have not heard back from them. What is my next step. Do I wait on validation. If they do validate, Do I make a payment offer in writing? If it gets to this, what do you do if they refuse payment?
The man from the agency left a message on my machine and said “your either have two choices 1. you can call me back today or 2. I will turn this back over to the creditor and you can suffer the consequences. He also said that I could not file bankruptcy or work with a counseling agency because it was too late for that. With a second message he treatened to sent it to a law firm (in Georgia) and have me served with papers. My 30 days is still not up to request validation. I know they recieved the letter (I got the green slip back a couple days ago)
If anyone has ever been in this situation, please advise.
Bankruptcy, Credit restoration, or Credit Counseling services?
I am 26 yrs old. I lost my job in August of 2007. I have been employed through temp agencies since mid october of 2007, with temp employement at one company since Nov 2007. Job will end Mid May 2008. What is the best way to get my finances back on track? I am very confused about the best route to take. I have heard that the counseling serviecs have a negative effect on my credit score and they don’t do anything I can’t do myself. I have heard that the credit restoration companies are gimmicks and that bankruptcy is the worst thing that can happen to me finacially… I have a copy of my credit report from all 3 credit bureaus. I don’t know my score currently, but in July 2007, it was in the mid 400 range. Please help.
I am 26 yrs old. I lost my job in August of 2007. I have been employed through temp agencies since mid october of 2007, with temp employement at one company since Nov 2007. Job will end Mid May 2008. What is the best way to get my finances back on track? I am very confused about the best route to take. I have heard that the counseling serviecs have a negative effect on my credit score and they don’t do anything I can’t do myself. I have heard that the credit restoration companies are gimmicks and that bankruptcy is the worst thing that can happen to me finacially… I have a copy of my credit report from all 3 credit bureaus. I don’t know my score currently, but in July 2007, it was in the mid 400 range. Please help. ( oh and by the way, I have been looking for permanent work… DUH. I live with my father and pay all utilities. I don’t spend money on wants… Oh yeah I could move to a shelter… Please, no smart remarks. It’s a serious issue. I have made mistakes, but want to do better
Took a 50% pay cut to stay employed, should I file bankruptcy?
I’m in a situation and need some outside advice. Lost my job and am taking a 50% pay cut to get another job. Should I file bankruptcy or use a credit counseling agency to consolidate my bills? Am between 15,000 and 20,000 in debt. Didn’t file when I lost my job, but have now used all my savings while living with no income for 7 months. Any advice would be helpful.
Bankruptcy, credit counseling, or settlement?
I have about $15,000 worth of debt and have taken the first step to file bankruptcy. I’m not 100% certain it’s the best decision though. My debt is not current. It’s either in collections with the lender or transferred to a collection agency. Is settlement an option once the collection agency has it? Are there any other options? I personally know people that have been able to get credit soon after a bankruptcy being discharged as opposed to those who work on their credit for years and don’t get consideration. As of now, not looking to apply for credit in the next 2 years but soon after that I will. What is the best option at this point?
We have been in your situation except our cut was 75%. It was a no fun period but you can get through it without bankruptcy. Pleae do not use debt consolidation because it is nearly as damaging as a bankruptcy on your credit report. Here is a plan that can help you. If you work the plan, the plan will work for you.
A. Have a garage sale and sell whatever you don’t use or need and use that money to pay down your debt.
B. Consider getting a temporary part time job and use all of that salary to pay off your debt quicker. It is better to have a no fun year than a no fun decade.
1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.
2.First get current on all of you debts, if you are not already, and make no more late payments, if you have had any. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.
3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:
To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment
Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment
Debt #1: paid off
Debt #2: paid off
Debt #3: minimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.
That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.
4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.
5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.
5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.
5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.
Not at all. When you declare Bankruptcy, you aren’t paying back your debt. With Debt Consolidation, you are doing the right thing and paying back your debt.
It might bring your credit score down a bit and the cards in consolidation will be frozen.
Be careful you choose a reputable debt consolidator. Trying going on Suze Orman’s website, she gives great tips.
well with a score that low bk will not hurt it much – but a bk will cost about 2000 dollars for lawyer and fees — you are correct on the other two options — if it was me i would be looking for a job to replace the one i am losing in may and downsizing my life style to only needs and get rid of every want!!!!
Of course settlement is an option. If the original creditor still has it, offer 50%…if it’s with a debt collector, offer 25%.
If you can get 50% settlements…that takes the debt down to $7,500…then apply the $2,000 or so that you’d spend to file for BK and you’d have a very manageable amount of debt in the $5K range.
FYI:
- You can never predict how any creditor will respond to your settlement offer. They have the right to take legal action on any debt that is within the statute of limitations.
- Settling debt is still a huge negative on your credit…and even after paying back $7K+ you’re still going to have horrible credit.
- forgiven debt must be added to your next years income and you will have to paying higher taxes.
Tough decision to make about what is the best option. If you file for Chapter 7, make sure it’s REALLY a financial emergency. Once you file, you can’t file again for EIGHT more years.
DO NOT lose those recordings – they are golden !!!!!!
The threats on those recordings prove that the CA had violated your rights. With those recordings you have a legal right to request payment from the CA for their violations, through an intent to sue, or to go ahead and sue them.
You should also look over your credit reports, if they are reporting, for any further violations. If they are, send a dispute “NOW” to the CRA’s for the inaccurate info. If they are reporting the account as an open account, past due, claiming to be a factoring company, etc., etc., etc. (send the CRA dispute while the CA is still within the validation period)
If you sent your validation request within the first 30 days of contact and the CA had called after receiving your validation request – another violation.
If the CA had only made phone calls without sending something in writing within 5 days of the first phone call – another violation.
If the CA fails to validate properly, send a second validation request. Proper validation is not a computer print out or any paper from the CA – it must come from the original creditor through the CA. Then you might file complaints with the BBB, FTC, your AG and their AG.
Without knowing more (if the CA had sent a letter, if you had sent the validation letter within the first 30 days, etc., etc) it would be hard to say much more. Except that you should do some reading in the links I have listed in my profile – to the FDCPA, FCRA, etc (and especially do some reading and ask questions in the last link I have listed)
After you do the reading and you aren’t comfortable enough to file against them, you might speak with an attorney. Find one that is well versed in consumer law (the FDCPA, FCRA, etc) Many times they will give you a free first consult.