Brooklyn, New York (PressExposure) November 08, 2010 -- YOU HAVE FOUR OPTIONS
The first is Bankruptcy. Currently more than 6,000 people file for Bankruptcy protection in America every single day. Unfortunately, the creditors were able to lobby congress and the Bankruptcy laws were changed about three years ago. Now most people find themselves filing for a Chapter 7 expecting to get out from under their unsecured debts only to find themselves bounced into a Chapter 13 after several months, which is basically a government controlled consolidation. They will be put on a 60 month plan to give back as much of the debts as possible and the whole program is very intrusive, with the Trustee and the creditors knowing every dollar coming into and going out of their household every month for the next five years. To make matters worse, after all that they still get the negative mark of Bankruptcy on their credit report for 7-10 years. On average, only 33% of people that file for Bankruptcy Chapter 13, successfully complete it.
The second option is Debt Consolidation. Consolidation will close the consumers accounts and only reduce their interest rates while they pay off 100% of the current balance plus consolidation fees. It will post negative on their credit throughout the process and will show on the credit report upon graduation for several years, similar to Bankruptcy.
The third option is Consumer Credit Counseling. Sometimes done by a non-profit company, Consumer Credit Counseling is similar to Debt Consolidation [http://www.debtsettlement2day.com]. Money is sent to the credit counselors or through them to the creditors each month and each creditor has agreed to close the consumers accounts and only reduce their interest rates while they pay off 100% of the current balance plus counseling fees. It will post negative on the credit report throughout the process and will show upon graduation for several years, also similar to a Bankruptcy. Additionally, Consumer Credit Counseling companies are paid by the creditors, thus causing a clear conflict of interest. Furthermore, less people complete this program successfully than any of these options.
The fourth option, and the best for most people, anyone who cannot get a Chapter 7, is getting into a legitimate debt settlement hardship program run by one of the handful of reputable companies that have been doing these programs for over ten years. To insure that your company is the right one, refer to The Association of Settlement Companies (T.A.S.C.) and make sure the organization is a member. Also, as per the Federal Trade Commission, here are the crucial points that one should be advised of by the company that is being considering:
- All program fees and costs must be discussed with prospective clients prior to the start of a debt settlement program.
- Prospective clients must be committed to saving money to fund settlements.
- Negotiations occur on an ongoing basis and all offers of settlement will be presented to the customer for their exclusive approval.
- Results of the debt settlement [http://www.debtsettlement2day.com] program cannot be guaranteed.
- Client funds are not escrowed by the company.
- The Internal Revenue Service (IRS) classifies any amount of settled debt above $600 and greater in value of the individuals assets as taxable income.
- Creditors may exercise the right of offset and its potential impact must be explained to the client.
- Payments are not made by the debt settlement company to the clients creditors.
- Clients should continue making payments to their creditors if they have the means to do so.
- Creditors may continue to call even after a Limited Power of Attorney (LPOA) has been signed between the client and the debt settlement company.
- Credit bureaus may still report Settled for Less than Full Amount, or other similar language, even after paying settlements to creditors.
- A debt settlement program will probably have an adverse impact on the clients credit score.
- Clients should always review their budget to determine if they can afford to be in the program based on their expected income and expenses.
- The company only works for the clients, not any other third party from whom they might be receiving referrals or placements.
Here is how a debt settlement Hardship program works:
The debts are negotiated and settled for less than 100% of the balances owed (usually 40-60% of the total debt) including the program fees and the negative credit report postings are short term. Then the credit score levels off and improves as each account is negotiated and settled throughout the program. The consumer is then able to get the best results not just with how much money they will pay to resolve the debts but also regarding their credit report because the creditors will post that the account was paid as agreed by the client, in full, with a zero balance. The programs are designed to give folks the fresh start they deserve; getting them out from under the debts they are having trouble with, back on their feet, and in control of their finances and financial future again. A fresh start!
To make it clearer and easier to understand, here is an example using $30,000 in unsecured debt:
The bottom line is very simple. A Hardship Program with a legitimate and reputable company is absolutely the best option and choice for anyone who is considered Bankruptcy. If a person is already behind and dealing with creditor phone calls, or about to be, now is the time for them to get into a Hardship Program.
Learn about the terms of our program, some of which are:
Automated system with a secure log in access that guides you through the settlement process.
Automatically generates settlement proposals to creditors in attempt to satisfy the outstanding balance. In some cases offers sent as low as 20%.
Provides Creditors and 3rd party agencies access to view and submit offers on your accounts, as well as complete settlements in bulk.
Cease and Desist letters are automatically sent to all enrolled creditors/3rd party collection agencies.
Nationwide Law Firm accessible to you should you need additional assistance. (No additional cost.)
DAAN Module Debtor Activated Account Notification System.
Up to $1,500 in legal fees, equivalent to approximately twenty (20) hours of court attorney representation through FBL Associates (matters involving registered debt)
You will be provided a contractor attorney in your state to assist you with any legal advice. (No additional cost.)