Debt Relief USA

FICO Credit Scores: What Do They Mean

noreply@blogger.com (Cole Collins) — Thu, 02 Sep 2010 14:45:00 +0000

FICO credit scores remain a source of confusion to the average American consumer. Surveys have indicated that most of our countrymen know little more than that a number between three hundred and eight hundred shall impact future lending opportunities. In actuality, however, the process by which your FICO credit score are calculated remains - if not, technically, simple - relatively easy to understand, at least in the abstract.

Still, if you're already struggling under the yoke of ever enlarging credit card debt and prone to feeling battered about by outsized forces beyond your control, a lack of comprehension regarding the famously circuitous FICO credit scoring system can often add to the overall despair. However, even though elements of the FICO credit rating may take a bit of time for newcomers to the world of debt analysis to fully appreciate, the ability to change credit scores for the better remains within the power of most every consumer given sufficient time and discipline.

Your credit rating is an important tool for lenders to determine your eligibility for a loan, as well the interest rate assigned. Those with the best credit ratings receive the best credit opportunities at the lowest rates. In general, lenders will look at the past two years of your credit history, but negative actions like late payments remain in your credit report for seven years. It is important to note that there is a difference between a credit report and a credit score. A credit report is a record of your credit activity; a credit score is a number calculated according to your credit history. Whether or not you have a sterling credit rating, there are a number a number of things you can do to improve both.

1) Limit credit card applications

Though it is advisable to maintain healthy credit activity (the average consumer has eleven credit obligations, four of which are loans such as auto or student loans), it is detrimental to your credit score whenever a lender requests a copy. Each time you apply for a credit, your credit score will be looked into.

2) Pay bills on time

A consistent record pf paying the credit card bill on time or early will raise your credit score. If you are 30 days late in making a payment, it will drop your credit score by as much as a hundred points. Arranging with your bank to have your bills made by automatic payment can help reduce this risk.

3) Manage the number of accounts

It is to your benefit to maintain accounts with long histories, but keeping too many credit accounts open that you don't use increases your risk of identity theft.

4) Keep balances low

It is advisable to spend only thirty percent of your available credit limit; maxed out credit cards can lower your credit score. Try to distribute spending amongst all cards.

Your credit rating is a direct and accurate reflection of your money management habits. Actively raising your credit rating will save you a great deal of money in the long run. Just as importantly, employers and landlords are looking at these scores when choosing candidates. Keeping up and maintaining the numbers can only have a positive impact on your financial future.

Liberate Yourself From Debt: Debt Consolidation

noreply@blogger.com (Cole Collins) — Wed, 01 Sep 2010 19:05:00 +0000

How does it work?

It's all too common a story for a growing number of Americans. Credit card debts spiral helplessly, ordinary consumers find themselves overwhelmed by the crushing debt load, and, almost before they know it, their finances are out of control. Money management is so important to overall life satisfaction, but the ease and availability of credit cards have combined to destroy the financial stability of too many families. Those borrowers who've realized they can no longer right their debt situations alone MUST seek debt consolidation assistance. In this article, we explain the basics of debt consolidation and what every debtor should know, but, make no mistake, this is only a very brief view of a very difficult subject. Every debtor considering help should search out a nearby debt consolidation professional for a consultation.

Additional Resources:

Student Loan Debt Settlement College student loan - Debt settlement programs are useful to the content to reduce the problems of the financial crisis of all. Student loans can be resolved through negotiations. Who is buying credit, education, wants to repay the loans. ...

Considerations for future Homeowners - Guest post by Melanie Taylor of Loan specialists Think Money. These are strange times for would-be homeowners. On one hand, property prices have dropped, bringing the dream of homeownership within the grasp of many who couldn't afford ...

Debt to Income Ratio By The Numbers

noreply@blogger.com (Cole Collins) — Tue, 31 Aug 2010 15:09:00 +0000

Debt To Income ratios - the prized DTI ratio that influences credit analysts as much as FICO scores for large debts - look at what percentage of gross monthly earnings is taken up by monthly minimum debt payments. Sounds easy to figure out, but borrowers should consider DTI just a nickname for a more complex (and, depending on the lender, greatly varying) series of calculations. For some creditors, taxes and insurance payments and certain types of utilities could be included within the debt side of the equation; others purely highlight the revolving debt. To make things simpler, let's just separate the two sorts of DTI ratios that lenders generally discuss.

Debt To Income Ratios from the front and back

There are two primary types of Debt To Income that credit analysts and underwriters utilize when examining borrowers' prospects - typically, they're expressed as 'the front ratio' and 'the back ratio'. The front ratio generally concerns how much of an individual's earnings are used for shelter whether mortgage payments (including interest payments as well as minimum monthly portion of the mortgage 'principal', homeowner taxes, and all necessary insurance premiums) or rent. The so-called back ratio looks at the portion of earnings earmarked to monthly minimum debt payments (this can include the mortgage used in the front ratio) from credit card accounts, auto loans, credit lines, student loans, judgments from criminal penalties, child or familial support and other such obligations. There are a thousand different ways to calculate debt to income ratio depending on the lender and the sort of loan in question, but understanding the 'front' and 'back' should at least give applicants some idea of what the creditors will be considering.

What Credit Scores Mean the Simple Definition

noreply@blogger.com (Cole Collins) — Tue, 24 Aug 2010 21:46:00 +0000

Whatever one may feel about their accuracy, there’s no denying the usefulness of credit scores: also known as FICO scores, named after the Fair Isaacs Corporation’s method of calculating the ability to repay debts. Certainly, the heads of loan companies have no doubts about the importance of credit scores. According to leading debt analysts (and the mathematicians employed by the Fair Isaacs Corporation), the FICO credit scores will extract in numerical form the odds of debt worthiness, employing a specific equation drawn up for the purpose. The credit score numbers are constructed to allow lending companies a speedy and essentially verifiable prophecy of the chances that money will be paid back. Remember, FICO credit scores would not have gained so much value so quickly if the heads of corporations did not truly believe that the numbers obtained by using the Fair Isaacs protocol had lasting import.

As unfair as parts of the FICO credit scoring system may seem to modern day consumers, this sort of credit rating was actually considered fairly progressive just two generations ago. Since the FICO credit scores do not look at the amount of money that someone may earn or how much they have in the bank, rendering everything along the same numerical lines has made the process of applying for loans substantially more democratic across the board. Furthermore, since almost everything depends upon the three digits immediately calculated by the FICO credit scoring matrix, it’s also made everything run that much more efficiently. The popularity of FICO credit ratings as a pillar of loan approval has enabled many more Americans to garner acceptance for home mortgages, for example, than would otherwise have been deemed permissible.

New Debt Relief Bill Passes What Does it Mean?

noreply@blogger.com (Cole Collins) — Mon, 02 Aug 2010 22:17:00 +0000

Recent legislation has been passed regarding the debt relief industry. Starting October for profit debt relief companies can no longer charge up front fees in order for a consumer to enroll. This comes after harsh scrutiny of the debt relief industry and the various debt relief scams. Debt elimination companies can only collect fees from consumers after the debt settlement process has begun.

Many wonder if this will put the debt relief industry out of business. This is not necessarily true. While it is true a lot of for profit companies will go out of business there are many legitimate debt relief companies that will still prosper. The law was made to protect consumers not put the debt relief industry out of business. It will help the overall debt settlement industry have better negotiation \practices and ensure they are successfully eliminating debt on their customer's behalf.

This does not mean consumers in debt will be safe from all debt relief scams. They should still show caution when choosing a debt relief company and check the various credentials available.

For right now the debt relief industry isn't going anywhere

Declining American Credit Card Debt Totals

noreply@blogger.com (Cole Collins) — Wed, 28 Jul 2010 14:41:00 +0000

For more than thirty years, the credit card debt bill for all Americans has gone in only one direction: up and up and up. Indeed, most commentators on economic conditions have warned that the financial strength of the United States will inevitably suffer as a result since other nations examine the solvency of our citizens as an indicator of the health of the overall economy. Still, regardless of such very real concerns, our countrymen and women continued spending and attracting credit card debt like there was no tomorrow. Monetary analysts had reason to worry that such reckless and unchecked purchasing habits would continue to expand the unsecured revolving credit card debt loads at the same rate of the past decade until the nation’s credit ratings hit bottom and our financial system collapsed.

Well, looking at the credit card debt figures for 2009, it appears that the wavering faith in the ability of United States households to alter their more destructive behaviors has been misplaced. All of sudden, without clear cause – and during the relatively flat economic growth that followed the recession, at that – the total amount of the unsecured credit card debt sums owed to creditors fell sharply. Headlines trumpeted a decline of more than ten percent, and, even though such calculations include corporate write offs, consumer actions accounted for a surprising percentage of the credit card debt drop.

Whenever economists talk about the money owed to credit cards, they’re essentially adding together all of the individual balances owed to unsecured lenders who must regularly report their holdings to agents of the United States government. As people pay back the money borrowed, the balances will go down, of course, but the credit card debt totals will also show signs of decrease whenever the lenders charge off unpaid accounts in order to gain the tax benefits. The Internal Revenue Service quietly encourages corporations – so long as they are otherwise running a sizeable profit – to formally discharge their credit card debt holdings.

Once a company announces to the government that they have reason to believe that a consumer has no ability or intention of every satisfying their legally held credit card debt accounts, they can then deduct the amount of the debts from the gross earnings and thereby be liable for a significantly smaller amount of taxes. With that understood, what’s so remarkable about this recent decline in the overall credit card debt has been the relatively minimal charge off totals. From January to April of 2009, fewer than eighteen billion of the sixty five billion dollar reduction in unsecured burdens were even partially the consequence of credit card debt charge offs through corporations.

Writing off credit card debt accounts that do, after all, still exist and had only temporarily disappeared thanks to creative accounting practices might lower the credit card debt bills for the United States on paper, but the artificial elimination of delinquent loans actually suggests a greater problem. In fact, once the loans have been charged off, the borrowers are that much closer to an eventual credit repair and the restored FICO scores sufficient to take out even more credit card debt. The same holds true for equity mortgage loans or any similar consolidation program that switches unsecured debt from revolving credit lines to a lien on tangible property. Second mortgages and credit lines are considerably more difficult to obtain following the recessionary decline in property values, but the most successful companies can still manage to technically erase credit card debt by transferring the balances to the title of a residence should enough equity still exist. It counts as an erasure of credit card debt accounts, but it could lead to additional deficit spending once the balances return to zero.

The Three Keys to Protecting Credit Scores after the Death of a Spouse

noreply@blogger.com (Cole Collins) — Thu, 22 Jul 2010 20:19:00 +0000

Dealing with economic concerns following the loss of a husband or wife will inevitably be difficult. Faced with overwhelming sorrow, the spouse left behind to take care of the household bills will have sufficient trouble just keeping up with the monetary needs of the domestic budget beyond the greater worries about credit scores over the forthcoming days. Hard enough just to wrangle with the intricacies of credit bureaus and FICO scores during the best of times, but crafting a new credit persona absent the help of a life partner could seem unimaginably nerve wracking. Still, as you’ll likely hear too often in the days after your spouse has passed away, life truly must go on, and there are some crucial actions that must be taken during this time of mourning.

Protecting the identity of the deceased, though this may well appear to be the least of the family’s worries, has actually a newfound importance since scavengers of financial detritus and credit offerings will immediately leap upon death notices to further their malevolent plans. Obituary notices, sadly enough, have been the entrance point toward criminal actions for a new breed of credit scavengers, and the surviving spouse must do what they can to shield their husband or wife’s financial legacy from thievery.

For so many spouses surviving the death of the family bread winner, the trick will be not just preventing household accounts from falling into the hands of financial predators but also establishing a new credit portfolio essentially from scratch. So many older men and women realize only too late that they had left the details of the domestic budget to their partners and failed to earn any proper credit history of their own.

There are a number of different acts that have to be initiated from virtually the morning after the funeral proceedings have finished, and, below, we’ve singled out some of the most important steps each surviving spouse should follow for the security – and, in some cases, the origination – of the family credit rating.

1.) Even during the days of mourning just after the death of a loved one, the spouse (or whomever has been put in charge of the household affairs) must take the initiative to contact the credit reporting agencies in popular usage around the United States of America: Experian, Equifax, and TransUnion. Ideally, this will be a formal request with some paper trail for protection of assets in the event of identity theft.

2.) As a vital action, every credit card and revolving debt account must be individually contacted whether through telephone, internet, or the old fashioned postal system. Once again, however, it’s in the best interest of all involved that there be some documentation of the notification, meaning that a traditional typed and mailed piece of correspondence may be most suitable (for that matter, many of the creditors shall demand that the official death certificate be Xeroxed).

3.) For any credit lines jointly held by both spouses, there still needs to be the same attention paid to alerting the lender representatives about the tragic circumstances, but, unfortunately, in most cases, the surviving wife or husband will still have to make payments from then on until the account is fully satisfied. Generally, at the time that the credit card company changes the formal record of obligation, the newly responsibly party could ask for the spending limit and interest rates to be re-priced, but, with lessened income available, the resulting terms could well be worse than they were originally.

Consolidating student loans

noreply@blogger.com (Cole Collins) — Tue, 07 Apr 2009 17:38:00 +0000

College tuition costs are higher than inflation and as a result so has student debt. The Project on Student Debt reports that two thirds of students graduating from a four year institutions have debt averaging $ 19,200 [source:Singletary]. With the amount of money invested for the future, that student loans offer,however most starting salaries for graduates are not up to the rise in debt[source:The Project on Student Debt].

Any new graduate always needs money, and lowered monthly payments, through debt consolidation would help. Luckily, restrictions cap interest rates for former students who want to combine their federal student loans through the Direct Consolidation Loan government program. The maximum interest rate for a federal Direct Consolidation Loan is 8.25%.

Under a federal consolidation loan, and you have a private student loan and a federal loan, these loans cannot be rolled together. It’s also not a good idea to combine them under a private loan because most likley your intrest rates will rise [source:Fin Aid].In addition, you would miss out on important perks that could come in handy for your federal loans including advantages repayment, forgiveness and cancellation opportunities [source:FinAid].Also in having a federal student loan the interest you pay is tax deductible.

For whatever reason, you still want to consolidate your loans, you can with any institution not just the one where the loan was originated.If you shop around you’ll see the companies that offer lower interest rates than the federally instituted maximum. In reading the fine print, some companies state that payments must be paid on time or if you don’t adhere to the agreement your interest rate will increase.When considering how long your loan is for it undoubtly will be harder to accomplish.

Unless your credit report score is above the 500s a bank or credit card company will not be able to offer a good deal on any loan, look out for finance companies that only look after themselves and that is not in your best interest.Note that some alumni associations have been accomplices in loan consolidation companies.In exchange for payments, some associations have been providing alumni lists to Nelnet, a company that specializes in education loans [source:Paley].To learn more about scams involving debt management, and the possibility of hidden fees could put you more in debt , read the article below.

Debt Relief In Idaho

noreply@blogger.com (Cole Collins) — Wed, 25 Feb 2009 18:07:00 +0000

In Idaho and around the country, it has been remarkably easy for borrowers to find themselves in a situation where credit card bills may spiral out of control, and the need for debt relief has been never more important. Even during the boom times of the last few years, when the economy of Idaho and the rest of America was blithely spinning along (and, perhaps unfortunately, credit was too freely given), our citizenry continued spending more than they earned, and, now that our financial system teeters upon the brink of total collapse, these personal debt balances threaten the household stability of countless Idaho residents. With these debt loads continuing to grow – the inevitable consequence of compound interest rates set as exceedingly high as the credit cards would allow – all but the most self destructive of Idaho families have begun researching their debt relief alternatives. Most of them are more than familiar with the Chapter 7 and Chapter 13 bankruptcy protections, though a surprisingly large percentage of Idaho borrowers seem unaware of the dramatic changes that have been written in to the United States bankruptcy code following the passage of 2005 legislation by the congress, but there are a good variety of other Idaho debt relief plans out there with which consumers may be able to finally liquidate their loans for good. When examining their household budgets many Idaho families will find out that they have honestly no other choice but to employ Chapter 7 bankruptcy protection for successful debt relief, but that does not mean there are not further solutions available which could offer the same eventual elimination of unsecured loans without the problems (everything from lowered credit scores to attorney costs to property seizure) that bankruptcy necessarily entails.

We mention unsecured loans because these sort of loans tend to have the highest interest rates and the least possibility of some benefit to the Idaho borrowers. Loans that are secured to actual property like home mortgages and car loans should feature considerably lower rates of interest, and, in many instances, they may even serve as effective tax breaks (mortgage loans on primary residences, particularly) for borrowers with sufficient levels of income to have that inform their debt relief strategies. Moreover, when we talk about unsecured loans, we are really talking solely about those unsecured loans (medical bills, charge cards, consumer loans, and, the greatest hindrance to Idaho borrower’s personal finances, credit card accounts) which could potentially be eliminated through a Chapter 7 bankruptcy discharge. Once again, given the aftermath of the 2005 congressional legislation which weakened bankruptcy protection and made it far more hazardous for any consumers to successfully file for bankruptcy and then endure the privations, we do not entirely encourage the procedure for most borrowers. As a matter of fact, under the new bankruptcy code, Idaho borrowers would find it hard pressed to even enter the Chapter 7 debt relief program if they have earned more than the median income for residents of the state in the half year prior to filing for bankruptcy declaration. That’s right, no matter the amount of debt that the Idaho borrowers are carrying (which, for an extended period of hospitalization could easily run to the high six figures in virtually no time at all), they could be prevented by national laws from even attempting to liquidate their applicable financial obligations through bankruptcy simply because they had a particularly good run at business and even if, with current economic indicators appearing so dismal, there is no likelihood the profitability would continue.

There are a few different things that borrowers still desperate for bankruptcy protection may do to reclaim Chapter 7 eligibility despite their income – specifically, there is a means test that allows Idaho residents who earn a bit too much to claim neediness by showing that, after deducting all necessary expenses (counting utilities, household cost of living purchases, and all debt payments both secured and unsecured), they would not be able to pay one hundred dollars a month to their assembled creditors for the next five years – but, unfortunately, the new bankruptcy laws limit the analysis and leniency with which the trustee appointed at random by the Idaho courts evaluate each case. Even more potentially bothersome, those cost of living expenses do not take into account the actual expenses of a given household but instead solely use the figures that were set by the Internal Revenue Service for average Idaho families which, for borrowers living in a particularly nice part of Boise, could be extremely misleading. Attorneys experienced in both Idaho bankruptcy law as well as the new federal regulations could be incredibly useful when helping borrowers figure out the most effective way to utilize Chapter 7 bankruptcy protection as a method of debt relief, but, with the clamor for bankruptcy declarations seemingly growing by the month as the economic situation worsens nationwide (Idaho very much included), the fees charged by these experienced lawyers have increased alongside. Alongside the administrative costs and the debt relief courses (another side effect of the 2005 legislation) now required before bankruptcy declaration as well as again before bankruptcy discharge which the potential bankruptcy filers must pass and pay for themselves, it turns out the poorest Idaho consumers who most need debt relief could be effectively disallowed from even considering the bankruptcy protection.

For those borrowers who earn a low enough income compared to other Idaho households that they would qualify for the Chapter 7 debt relief bankruptcy while still maintaining enough disposable income or funds tucked away in savings that they could potentially use to pay for the law firm (do not expect the bankruptcy attorneys, as should seem utterly reasonable, to accept credit), the newly designed problems of Chapter 7 debt relief bankruptcies do not end there. Borrowers in Idaho and across the country have grown accustomed to the notion that some of their more high priced assets – a boat, say, or a stake in a liquid investment opportunity – would be at the mercy of the court trustee and could theoretically taken by local court officials for eventual auction to attempt to repay the various creditors whose claims to unsecured debts had otherwise been eliminated through the bankruptcy process. That threat still stands, but, according to the way the code is now written and forcibly carried out, the Idaho borrowers shall have to list all of their personal possessions by degree of potential replacement value rather than the far more lenient resale value. The repercussions of that detail, barely reported at the time of legislation, could mean that virtually every thing that the borrowers would own may be seized upon the discretion of the courts. Residents of Idaho are rather luckier than their borrowers across the country when it comes to dealing with this particular problem as the state exemptions set down under Idaho law shall guarantee that the most important aspects of household furnishings and family mementos will be rendered safe from government intrusions. None the less, there’s a clear limit to how much could be exempted, and many Idaho borrowers interested in debt relief bankruptcies shall have to gird themselves for the possibility of losing property that may range from second cars to home entertainment systems to even, after a certain amount of recognized value, their clothing and furniture.

Stacked up against the costs that we have shown bankruptcy debt relief to inevitably contain, the potential for property forfeiture, and the clear damage to Idaho filers’ credit reports and FICO scores, Chapter 7 may not be the best alternative even for those borrowers who manage to qualify for the program. Chapter 13 shall be another option – one that boasts the same monetary expenditures and similar difficulties regarding credit scores – which should let alone the borrowers’ possessions and assets, but, since the Idaho borrowers shall have to repay a majority of their debts while subjecting their household to a budget drawn up by Idaho court trustees that will have to use the same (again, almost always drastically low when set against the true figures) expenses that have been calculated by IRS bean counters, this can result in grave changes in life style. Honestly, aside from those Idaho borrowers that truly believe they have to chance the Chapter 13 debt relief program to save their home from foreclosure, there’s simply not much that this sort of bankruptcy could offer the ordinary Idaho consumer. We do appreciate how important their primary residences should seem for ever resident of Idaho, and, of course, we have seen how the falling real estate market and rising unemployment rates combined with the previous actions of predatory mortgage lenders to drive home foreclosures to unprecedented levels in Idaho and across America. Nevertheless, if at all possible, borrowers should begin their own attempts at debt relief well before this sort of decision about whether or not bankruptcy’s needed would even come in to play.

Of course, most of our Idaho borrowers have likely tried some variance of debt relief on their own, and, from our discussions with consumers throughout Idaho, they have likely repeatedly attempted to quell spending instincts on a regular basis to avoid just such an eventuality. Unfortunately, leaving aside the good number of consumers in Idaho that need debt relief assistance because of medical problems or some similar familial emergency, it has simply been too easy for households to blithely ignore the mounting pressures from their escalating debts and indulge poor spending habits; indeed, some research suggests that borrower may actually spend more when confronted with out of control credit card bills as a way to alleviate stress and tensions. Much of the fault lies with initial budgeting procedures. Every Idaho family has some idea of what their monthly obligations are supposed to look like as well a vague idea of how much money they could reasonably plan to earn over the coming financial quarter, but, beyond that, a depressing portion of Idaho consumers have little to no idea where their funds actually go and only actively focus upon debt relief solutions once personal economic troubles have essentially precluded homemade debt relief remedies. At once, all Idaho households should take the time to list all of their expenses. We’re not talking about just the utilities and debt payments (including secured debts that could be advantageous to maintain for as long as possible), though borrowers should write down those as well and even call representatives of the creditors to make sure that they attain the accurate information about their various accounts, but, as well, each Idaho household should take efforts to compile some record of their actual purchasing history so that both they have some idea of where to cut spending and a realistic notion of what they would be able to expect when planning their budgets. Too many Idaho borrowers, fired up by the notion of debt relief, plan out a system of spending that does not take into account the potential spikes in expenses throughout the year (heating bills, particularly in this economic age of pricing uncertainty, tend to rather dramatically escalate in the winter months) nor indulge the occasional lapses of discipline that every family should occasionally come to expect.

Unfortunately, no matter how greatly the Idaho family may want to fully achieve a lasting system of debt relief on their own, the limitations of income or excesses of past loans may sadly not allow the personal solution for all borrowers. Indeed, this (along with the failure of modern bankruptcy to successfully deal with the debt relief needs and desires of many of the consumers that such a program was initially started to fulfill) has caused the explosion of different debt relief alternatives within Idaho and across the United States. Consumer Credit Counseling shouldn’t require much in the need of explanation to Idaho borrowers who have turned on a radio or television in the past few years thanks to the Consumer Credit Counseling industry’s seemingly ubiquitous advertisements. Much as the larger attractions of the CCC approach are widely known – consolidation of unsecured bills with lower interest rates and, ideally, the waiver of fees that the credit cards or other accounts had previously assessed – but the costs of this program are considerable and the effects upon credit reports are nearly as ruinous as those seen from bankruptcy protection. Furthermore, media attention in Idaho and throughout America have increasingly centered upon the growing realization that Consumer Credit Counseling companies, though they may indeed be not for profit (an essentially meaningless designation that merely points out that they pay as much to their employees as they receive in funds), these firms are raking in the dollars by double dipping fees by demanding extravagant money from not only their clients but also their clients’ credit card companies.

Although Chapter 7 debt relief programs are, as we have hopefully demonstrated, currently less than palatable for almost any Idaho borrower, the chance of bankruptcy still puts the fear of all that’s holy into lending corporations, and, as a result, they will do whatever seems financially possible – including propping up the Consumer Credit Counseling industry – to limit the desirability of debt liquidation through bankruptcy. On the other hand, because of this lingering threat, another debt relief approach has grown more popular around Idaho. The debt settlement negotiation program attempts to convince lenders (predominantly, once again, credit card companies and their representatives) that they must forego a significant percentage of the funds owed to the companies themselves just to ensure that the borrowers will not even consider bankruptcy protection. Through successful negotiations, experienced debt settlement professionals have been able to reduce borrowers’ entire debt loads by as much as sixty percent in just a matter of days following the signing of papers. Now, along with the massive cuts of credit card balances, the Idaho household will still have to agree and essentially prove their capacity to repay the totality of their remaining obligations within a period generally below five years or sixty months.

Obviously, these levels of payments may just be out of the control of some families (and, in rare circumstances, borrowers would also be unable to comply with the debt settlement program because they hold cards with those few lenders still adamantly resisting any negotiations), but it certainly seems worth any attempts to try and see whether the debt settlement approach could be successful for debt relief. Even if there is not a settlement professional operating out of the borrowers’ particular area of Idaho, more and more of the settlement firms are working primarily from internet web sites, and, provided the companies have a sterling reputation and have been certified by the national debt settlement board, there should be no longer any suspicions about entrusting family finances to a remote analysts: especially, considering that the actual negotiation work will similarly be handled over the telephone. As any Idaho borrowers who have let their finances fall to such an extent where they need external help should already be aware of, there are no guarantees in this field of debt relief, but, when attempting to eliminate past credit card balances, something has to be done and done soon.

Credit Card Debt: Fact Vs. Fiction

noreply@blogger.com (Cole Collins) — Mon, 09 Feb 2009 21:16:00 +0000

There seems to be this good vs. evil two faced idea in the credit card world. Everybody hears the same warnings for credit cards along with their perks. Yes, not paying the full amounts will rack up massive debt amounts, while on the other hand you want to use your credit card in order to better your credit score. Then you here all the experts say as long as you pay your credit card debt in full and spend wisely you will be a o.k. Yea well we’re human and sometimes things happen. Whether your car you use to get to work every day breaks down and you need to get it fixed or you just really wanted that new stereo system. The point I’m trying to get at is most people will always find themselves in debt, it’s a part of life. Knowing that the average American consumer will find themselves in debt, it is important for them to distinguish fact vs. fiction concerning credit card policies. Below is a list credit card misconceptions along with an explanation of the truth.

1) So when I write “see i.d.” on the back of my credit card that will take away my liability of fraudulent charges.

Nope sorry, actually when you write that the card is technically not valid. A credit card is not active until it is signed by you with your name. The clerk ringing up the charge should ask the person to sign the back of the card and compare it to the signature on your driver’s license. We all know that your average store clerk probably doesn’t care that much and wants to get things done as fast as possible. If your card is stolen and fraudulently charged you are still liable to up to $50 dollars even if you sign it “see i.d.” To sum things up it really doesn’t matter when you write that on the back of your credit card.

2) Some places don’t take certain kinds of credit cards, so that means I should just get all the major ones just in case.

That’s just a bad idea. For one thing having too many credits makes balancing your budget a pain. Just when you think you have paid all your credit card debt you realize you forgot about one of your cards and now the payment is late, meaning now you have to pay the interest along with the principle amount. In actuality you only really need two major ones and you will be alright. If you are at a store that doesn’t accept two of the major credit cards, then you probably shouldn’t be shopping at that store. Also, a little personal finance tip, you should always carry an emergency $20-40 cash with you. Hey life happens and sometimes you find yourself in unfortunate situations. Just remember cash is king.

3) I want to boost my credit score so sometimes I pay the credit card companies more than I actually owe.

It does not work this way. This has the ability to increase your credit availability. It’s also true that keeping the debt to credit ratio percentage low will help your credit score. The Credit companies see this as a temporary situation. Essentially you can have a bill of $1000 and pay $1500 and this will be seen as a balance of zero to the credit scorers. The credit card companies will see this as a credit of $500. Your FICO credit score does not change. In conclusion just pay the amount that is owed for credit cards.

NOTE: this is not true for all other kinds of debts.

4) I went to a bar last night and they had a sign that said “$20 minimum for credit cards”, they are allowed to do this.

We’ve all been to stores and restaurants that have a minimum sales amount for purchasing with a credit card. They are absolutely not allowed to this under their contract with the credit card companies. So why do they do this? Well for every transaction that takes place with a credit card, stores are charged an average 2% of the total sales amount. If you buy a $5 drink, the restaurant pays the credit card company $1. In order to get more bang for their buck, stores and restaurants require a minimum purchase amount when using a credit card. So next time a store says you have to pay a certain amount when paying with a credit card, you can object. They might go tell you to take a hike, but you can call the credit card company and they will take actions into their own hands since it is a violation of contract.

Top 3 Debt Settlement Pages

noreply@blogger.com (Cole Collins) — Thu, 05 Feb 2009 21:39:00 +0000

Over the past few months this blog has posted a lot of information on debt management. We know there is a lot of information out there on debt management. Well we decided to gather what we think are some of the best resources on debt settlement. There is a lot speculation going on about what debt settlement is and how it works. In these troubled economic times it's important to get the facts. We looked through these pages and made sure that they have legit information. Posted below are the top 3 pages we think deserve to be read by those in search of debt relief. Enjoy!

Debt Relief - This is an overview on debt in general. It gives a little background on how debt affects the average American and gives you insight on the options that are available to you

State Debt Relief - This concentrates more on specific state by state debt relief information

Avoid Bankruptcy - Get a little background on why to even avoid bankruptcy in the first place and choose an alternative

Florida Bankruptcy

noreply@blogger.com (Cole Collins) — Fri, 30 Jan 2009 19:40:00 +0000

With the state of the national economy suffering such dramatic tidings of late, the number of borrowers in Florida who’ve come to the realization that they need assistance eliminating their collected loans has steadily increased over the past year. Unfortunately, too many proud Floridians are still wrapped up in unnecessary guilt about the supposed embarrassments of bankruptcy and all forms of debt relief. For generations, bankruptcy protection had been considered a disgrace to the borrower’s family that spoke of financial collapse and carefree spending. Indeed, for a Florida debtor to even think about bankruptcy was tantamount to an admission of weakness that would linger for decades and prevent the household from ever again enjoying the opportunities of more theoretically upstanding Americans. However, alongside the spiraling popularity of credit cards and new availability of accounts for prospective Florida borrowers who had not demonstrated any ability to repay such loans nor any recognition of the consequences as to defaulting, the conception of bankruptcy in Florida and the nation at large has changed as well. Almost every Florida resident knows at least one friend or family member who has successfully undergone Chapter 7 or Chapter 13 protection, and there should be utterly no embarrassment about investigating the process. Certainly, for a select group of Florida consumers, Chapter 7 debt elimination bankruptcy may be the preeminent solution to their economic dilemmas – however dear the deprivations and harsh the penalties – and, despite the recent alterations to the federal bankruptcy code which greatly increased the complexity (and, alas, cost) of the program, it’s still a relatively swift and easy process should things go well. In this essay, your authors merely wish to provide a cursory explanation of what bankruptcy protection shall mean for the Florida borrower this day and age and, as well, to list some of the popular alternatives that many debtors may find better suiting their household’s specific needs

Remember, whether the Floridian consumer chooses bankruptcy or another form of debt relief, there should be no worries about ethics. These are legal programs to protect citizens of Florida against the manipulations of mercenary conglomerates whose sole purpose has been to attract unknowing consumers with the promise of unlimited credit and little warning about the repercussions should household calamities (or, as the current economic climate has shown, a sudden and devastating recession) prevent easy payments each month not to mention the effects of compound interest upon balances when debts are left to fester. While bankruptcy may no longer be the fresh start once promised by the United States government, there’s still a very good reason that the program was originally implemented, and, much as the bankruptcy statutes have been weakened in recent years, the new debt relief alternatives so many Floridian consumers find so successful were initiated with exactly the same motivation in mind. Do not confuse protection with welfare. The point of bankruptcy or similar debt relief motions has always been and remains the rehabilitation of honest Americans who’ve simply fallen into trouble with over sized obligations, and any reputable counselor or bankruptcy attorney will do everything that it takes to help the borrowers regain household stability and get back on their feet. By removing the associated stresses that helpless submission to debts indulges, the borrowers will only be more productive members of society and – with the added ability to save and invest – genuinely better able to help the economy of Florida in the years to come.

Chapter 7 debt elimination bankruptcy is, by far, the most prominent form of bankruptcy. Indeed, most people may not even be aware there are other Chapters available (in reality, there’s a number of different bankruptcy types ranging in subject from businesses to family farmers to municipalities). Within Chapter 7 protection, all applicable debts are completely and forever eliminated. There’s also a somewhat lesser known sort of bankruptcy called Chapter 13 that forces the consumers to repay the majority of these debts under the guidance of a trustee selected arbitrarily by the Florida courts. In almost every case, Florida borrowers only intend to enter a Chapter 13 bankruptcy when they are threatened with foreclosure proceedings for their residence. Considering that, once again, debts must actually be paid back while the filers face all of the negative credit repercussions of bankruptcy plus the potentially life changing (negatively, of course) budgetary restraints imposed by the Florida trustee under the laughable low cost of living expenses as calculated by the Internal Revenue Service, there’s really no reason for Florida consumers to even contemplate the Chapter 13 program unless they have missed a succession of payments and are worried that their home may be taken away. If nothing else, Chapter 13 bankruptcies will automatically stave off foreclosure and allow the home owners to make up the lapsed payments, but the drawbacks are severe.

However, should the home mortgage be in good standing without danger of foreclosure, Floridians will almost certainly – and for very good reason – opt for the Chapter 7 mortgage plan. If successfully petitioned (and this is by no means a guarantee), the Chapter 7 debt elimination program will eliminate all of the borrowers’ unsecured debts, but this forgiveness comes at a price. Any assets not explicitly protected by the federal exemptions or those provided by the state of Florida will be seized by the courts for eventual sale. Florida residents are significantly more fortunate than other citizens across the country. The state exemptions are not only far more indulgent as regards personal possessions, but the filers’ primary residences will be absolutely guaranteed under the homestead exemption no matter how much equity they have stocked away in past years. Statutes in the Florida constitution provide any number of similar exemptions that greatly outweigh anything that the federal government vouchsafes. Automobiles, provided there’s no more than a thousand dollars of value (which, given vehicle depreciation, shouldn’t be much of an issue), are exempt, and Florida further allows each filer for bankruptcy a thousand dollars worth of personal possessions. As well, borrowers who have permanent residency in Florida and are considering bankruptcy should not worry about any pensions, 401k plans, Individual Retirement Accounts, or other retirement plans that the Internal Revenue Service deems acceptable. Also, any funds earned but not collected from wages or commissions alongside all public benefits (veterans, social security, Medicare, and so on) are protected under Florida law.

While, as we have earlier written, the bankruptcy exemptions guaranteed by the state of Florida are considerably more lenient than the national alternative, borrowers should still think about just how far a thousand dollars will stretch when concerning personal property. Things are a bit different as regards secured assets (meaning those assets that still have loans attached to them), and borrowers shall have another decision to make. Vehicles, houses, home furnishings and entertainment systems, even jewelry – so long as they are still under contract or mortgage – could be protected as long as the loan is reaffirmed within forty five days from the filing of bankruptcy. The reaffirmation is essentially a formality, no lender wants to go through the hassle of repossession or foreclosure or reclamation of property, but, nevertheless, Florida borrowers have to ensure that they meet the requirement else the bankruptcy proceedings could be halted and the borrowers penalized. Conversely, for borrowers who are not quite as interested in ensuring that these debts be maintained, under Florida bankruptcy statutes it would be possible to surrender the secured assets along side the related debts through Chapter 7 protection. Even if there’s been a depreciation or some other loss of value in the property, the Florida bankruptcy statutes will render such disputes null and void, and the borrower will not be liable for any damages regardless of actual costs. In fact, within bankruptcy protection it is even possible for those filing to reaffirm their obligations to credit card accounts so long as the lenders agree, and, since the borrowers are agreeing the bills owed will be repaid, there’s absolutely no reason that they would not agree. Some Florida borrowers, worried about their eventual credit ratings or simply wanting to ensure that they’ll have credit opportunities after the bankruptcy discharge, think reaffirming these unsecured debts would help their future, but there are better ways to improve credit reports that do not feature a maintenance of loans that would otherwise be eliminated.

We do not wish to downplay the damage that bankruptcy will do to the borrowers’ credit ratings. The notation of bankruptcy will remain on the credit reports maintained by the three primary credit bureaus (Equifax, TRW, and TransUnion) for seven to ten years and FICO scores (the mysterious calculation upon which each bureau rates an individual’s payment history and credit availability) shall suffer a drastic and immediate fall. However, counter intuitive as it may seem, many Florida borrowers have reported a steady and substantial increase in their scores and credit opportunities within just a year or two following bankruptcy discharge provided they take the necessary steps and treat the process with all due diligence. Seems hard to believe, but, even after the credit card companies have had their previously owed funds liquidated by Chapter 7 bankruptcy debt elimination, they are more willing than ever to offer fresh credit accounts to the newly bankrupt. This may be difficult to understand, but, remember, once borrowers petition for bankruptcy protection they are legally prevented (in Florida and across the nation) from filing again for another seven years. If anything, the dangers presented by the recently bankrupt are less than those offered by normal consumers. After filing for bankruptcy, credit card companies can freely harass the new clients and – though the current backlog in Florida courts rather disable legal procedures – the lenders can freely pursue judgments that would result in seizure of property or even garnishment of wages

If bankruptcy’s no longer an option, there’s nothing that the borrowers could do in return to stop such actions: programs such as debt settlement, without the threat of bankruptcy behind them, are equally toothless. For these reasons, consumers are deluged with credit card applications even before their bankruptcy is discharged. Now, in order to repair credit ratings and raise FICO scores, obviously the borrowers must take out a card or two, borrow small amounts, and repay the balances on time each month. However, this should only be done in the interest of bringing up credit scores to a decent amount – above seven hundred and fifty, say – and consumers must remember that they cannot fall back into their old spending habits else they find the same problems of accumulated debt loads will soon reassert themselves. Much as it is important to maintain a small number of credit accounts, whether for emergencies (though, ideally, families will put savings aside to take care of unforeseen events) or simply to heighten credit scores (for home loans or employment opportunities) or to take advantage of the necessities that credit cards represent (airplane reservations or vehicle rentals are virtually impossible without such), borrowers should still take every pain to minimize the balances and prevent credit card obligations from becoming a problem in the future. Many debtors, even after they have successfully eliminated their unsecured debts through Chapter 7 bankruptcies, helplessly surrender to their own purchasing instincts and recreate the prison of financial burdens anew.

This is, to be sure, one of the greatest tribulations of bankruptcy protection facing Florida families. Should Chapter 7 bankruptcy debt elimination be entered into without due sacrifice, too many households find themselves repeating poor behaviors. Chapter 13 protection, on the other hand, much as it may indeed save the borrowers’ homes and prevent foreclosure, has its own problems. As with Chapter 7 protection, simply sending the petition (alongside the three hundred dollar money order) does forbid any representatives of the lender or even the collection agencies supping upon the lender’s spillage from communication with the borrowers through phone or mail. Much as your authors recognize the importance of this sort of endeavor, there’s still more to consider. Once the trustee chosen by the Florida courts places a borrower within the Chapter 13 program, the borrower’s forced by penalty of law to pay a certain amount each month for a period no longer than five years in order to repay the assembled debtors and clear up all arrears. The amount of money to be paid each month and the length of time in which borrowers shall be at the mercy of the Florida courts depends entirely upon the budget worked out with the trustee and the household affected. Obviously, much of this depends upon the whim of the individual official handling the case (and, once again, the Internal Revenue Service estimates of Floridians’ cost of living) as well as the gross income shown from a previously determined period of the filer’s earnings, and, as a result, the amount of money that the trustee calculates the debtor could spend through their bankruptcy may be far different than the reality of their situation. Because of this, unlucky borrowers may have to actually move to a less expensive part of Florida in order to comply with the IRS guided expenses.

As you can see, while no borrower should genuinely feel embarrassed about filing for bankruptcy, the process may still not necessarily be in their best interest of every Florida household. Considering the potential loss of possessions that Chapter 7 engenders and the severe restrictions of lifestyle effectively forced by the Chapter 13 protection – and, all of this is without even mentioning the incredible costs charged by ever more necessary bankruptcy attorneys – it should come as no surprise that many borrowers have started to examine the other potential debt relief solutions around Florida. While the Consumer Credit Counseling program isn’t far different from Chapter 13 bankruptcies (plus, believe it or not, CCC can be even worse for your credit) and debt consolidation loans should be thought of as especially dangerous these times of falling interest rates, the relatively new debt settlement alternative has garnered rave reviews from all of the Florida residents that have implemented the program. Within debt settlement negotiation, counselors talk to credit card representatives and convince them to offer significant – by as much as sixty percent! – reductions in their clients’ balances. Of course, this will only work with the unsecured lenders who have true reason to fear that the Florida borrowers may indeed risk Chapter 7 bankruptcy protection (student loans, tax debts, mortgages and vehicle loans remain unaffected), but, since studies have shown that the average Floridian considering bankruptcy does so primarily to erase their credit card accounts, this should have an obvious appeal for any resident that does not want their possessions or household budgets threatened. Better yet, unlike the services of any reputable bankruptcy law firm, most of the certified debt settlement counselors are more than willing to provide initial consultations free of charge, and, if there isn’t one nearby your part of Florida, there’s a number of debt settlement companies operating primarily from websites available over the internet which have demonstrated the same level of success. There will be a cost, of course, and not every applicant will be approved for the process, but, given the potential drawbacks of modern bankruptcy, we do encourage every Florida resident to at least talk to a debt settlement professional and determine for themselves.

Colorado Debt Relief

noreply@blogger.com (Cole Collins) — Mon, 19 Jan 2009 18:40:00 +0000

With all of the troubles affecting the Colorado economy, credit card burdens are becoming an increasing concern for a great number of families throughout the area. Indeed, many of the Colorado households your authors have spoken with realize that something must be done about their outstanding financial burdens and have begun to consider a professional approach toward debt relief. Among the Colorado consumers that have responded to our questions and concerns, the new debt settlement industry has attracted the most glowing responses from families that have successfully fought through the thicket of unsecured debt loads. Virtually every Coloradan familiar with the debt settlement industry has found success with the program, but, sadly, that’s far from all of the consumers who would most benefit from its assistance. The debt settlement process is still a relatively new program, essentially invented twenty years ago to protect the assets of well off borrowers who could no longer easily meet their monthly minimum responsibilities, and, though it’s become increasingly popular among borrowers of all segments of society in Colorado and across the nation, an unfortunately large percentage of debtors don’t know much about debt settlement beyond the program’s name. In the following article, we would like to discuss at greater length precisely how debt settlement works compared to some of the different (and more publicized) alternatives so that every Colorado staring down the pile of unpaid bills should have a full and unbiased understanding of each solution available so as to effect a true and lasting elimination of all of their revolving debts.

Most every Coloradan over the age of eighteen – and, sadly, even some below should their parents have co-signed credit cards – will likely already have begun their own relationship with consumer debt. The time to start worrying about debts, obviously, should’ve started the moment that you first realized that you couldn’t pay the entire balance owed from petty cash, but, as we all know, life events and a society borne upon foolish spending moves up the accumulated burdens exponentially. According to studies done in the past year, the average Colorado household now holds twelve separate credit accounts and struggles to support an average debt load just under twenty thousand dollars of unsecured (meaning unattached to any collateral; wasted funds, really) debts. Should you have already started to borrow from one credit card to repay another, should you have trouble meeting the minimum expectations of any card regardless of method, it would be more than dangerous for your family’s financial stability not to begin a concerted effort at debt settlement. In a nutshell, the settlement approach consolidates the clients various credit card debts and then negotiates with representatives of the credit card companies in order to attempt a significant reduction of what’s owed in return for a promise of swift repayment (less than five years or sixty months) and guarantee that no attempts toward Chapter 7 bankruptcy debt elimination will be filed. In most cases, bankruptcy remains an empty threat given current statutes, but the lenders must still respect the potential of debt elimination and react accordingly.

As you should already be aware, recent legislation has severely weakened bankruptcy protection for individual borrowers. To be more clear, Colorado consumers earning more than the median income of the state would not even be considered for the Chapter 7 program, and, for the lucky few that manage to convince the Colorado court trustee of their eligibility requirements, the bankruptcy attorney charges and associated fees (there are now credit courses to be completed at the filers’ expense before petitions will be even accepted in Colorado) make bankruptcy unaffordable for the poorest borrowers even though they’re the debtors that need assistance the most. Honestly, from the potential loss and eventual court auction of household furnishings and prized possessions to the lingering destruction of credit ratings and FICO scores, there are a number of reasons for borrowers to avoid bankruptcy even if the exemptions allowed under Colorado law are rather less stringent than those faced by ordinary American citizens. Chapter 7 debt elimination bankruptcy has become less of a fresh start for most of the borrowers currently filing for protection than an inevitably poisonous lodestone fastened to the financial security of any family suffering through bankruptcy declaration.

For those Colorado borrowers that are deemed legitimate risks for a debt settlement program, there’s virtually no reason for any eligible debt settlement candidate to spend dollar one discussing their problems with a bankruptcy lawyer for lord only knows how much money charged per hour. Reputable debt settlement firms shall offer either a free initial consultation or, at worst, ask only a minimal fee to discourage the pointlessly curious. These meetings – and, while there are not debt settlement storefronts yet open for business in every corner of Colorado, our respondents have had nothing but positive interactions with the online debt settlement websites (provided they’ve been thoroughly vetted and their certifications assured) popping up around the internet – do more than just forge a detailed explanation of what debt settlement may offer the Colorado household. Unfortunately, not every lender will be amenable to debt settlement negotiation. The number of creditors holding the line against debt settlement balance reduction shrinks every day, but, nevertheless, there’s no way of knowing whether your debt portfolio will be applicable without actually speaking directly to professionals within the debt settlement industry. Furthermore, considering that each time that the debt settlement company negotiates on the Colorado borrower’s behalf (and, along the way, agrees to essentially consolidate the borrower’s unsecured loans), the debt settlement company must also completely trust that their new client would both have the capacity to repay whatever remains of their debt balances within five years and also maintain the discipline to deliver their payments to the debt settlement company each month so that the funds could then be dispersed to the various lenders.

Your authors certainly do not want to give the impression that debt settlement would be the only alternative available for borrowers wading through economic burdens they cannot soon repay. There are also, as we’re sure you are aware, any number of different supposed debt solutions available to Colorado households, but, much as their representatives may highlight the benefits (which may even be accurate, depending) of each program, enlightened borrowers should be just as concerned about the potential drawbacks. For instance, most any consumer who has taken sufficient interest in their debt loads to read this far in the article shall surely have credit card accounts sufficient to – presuming they still maintain correspondence with the lenders – receive regular pitches about the transfer of balances from one card to another. In the same way, Coloradan home owners report hourly phone calls from their mortgage companies (or whichever lender now holds the secured debt) insisting upon an equity based debt consolidations which will minimize interest rates without affecting credit. Neither of these alternatives are fraudulent, exactly, but nor do they actively settle any existing debts. In fact, these forms of consolidation are intended only to extend the debt balances that much longer with the hope that the debts shall never be fully repaid. Every Colorado borrower should remember that the effects of compound interest (no matter how low the promised interest rate may be) increases the debt balances exponentially. Furthermore, especially in the case of credit card balance transfers, the interest rates are generally adjustable after a certain period, and, much as the salesmen may flatter consumers with notions of a speedy payback, Coloradan households generally find themselves in the position of needing to settle their debts because they hadn’t the discipline originally to pay back their loans under traditional means.

This leads us to another problem with debt consolidation (as opposed to debt settlement or other forms of credit management). While we certainly recognize that many of the Coloradan families suffering through untenable debts do so because of an unanticipated catastrophe – whether sudden bouts of unemployment, which affects so many Coloradans currently given the nation’s larger economic problems or medical emergencies – that forced them to deal with seemingly insurmountably burdens after a lifetime of responsible budgeting and controlled spending, the majority of debtors requiring assistance have come to this position because of their own rampant purchasing absent proper perspective or caution. Given this continuing problem, there’s no reason to believe that Colorado consumers allowed freshly vacated credit card balances with little to no immediate penalty on the party of the consumers would change past corrosive behaviors. For debt consolidation handled through mortgage equity loans, the situation is even more potentially ruinous. The home owners will still have every temptation available to spend upon their open credit card balances as they had before, the consolidated debts will still exist and be drawn out over even longer terms (with most mortgages lasting thirty or forty years), but there’s an even more serious consequence to consider. For most every Colorado home owner, their primary residence also doubles as their most precious investment asset, and, during this time of falling real estate values, few things could be more inevitably foolish than mucking about with home equity merely to save a point or two on interest rates nor temporarily lower payments while putting off debt loads until decades down the line. With property markets plummeting in all areas of Colorado, particularly the greater Denver area, and leading economic indicators hardly showing a rebound anytime soon, equity should be viewed as sacred for every Colorado borrowers no matter their debt quandaries.

If anything, when figuring out some domestic version of debt settlement, home mortgage payments should be the first thing that every Colorado household must try to satisfy. Budgetary plans, if need be, could let the household utility payments go for a while. These tend to be the lenders least likely to report defaulted accounts to credit bureaus and collection agencies, especially if they are publicly owned, and it takes several months for any of the utilities to actually withhold services. Within debt settlement, as the borrowers concentrate upon the truly worrisome obligations, some things must often be sacrificed. High interest, unsecured, revolving debts (credit card accounts, in all likelihood) shall be the primary trouble, and, when listening to the success stories of Colorado families who’ve accomplished debt settlement of their own accord, there are regularly mentioned series of steps all consumers should consider. While we would still counsel each creditor in Colorado to most strenuously investigate the professional debt settlement options, there are other alternatives which could be beneficial. If nothing else, a full comprehension of family debts should only aid future analysis of the greater problem and allows the heads of household to work with the debt settlement counselors as true partners.

First of all, every borrower has to know exactly what he or she would be dealing with in terms of the total financial narrative. Collect all appropriate debts, even the secured loans such as home mortgages that you may want to leave alone for the time being, and write down the information. You may even want to talk to the credit card representatives to garner the most precise data available, but do not try to negotiate debt settlement on your own accord. Even beyond the importance of experience and national board certification that the lenders would respect, settlement is fundamentally impossible for individuals because the credit card representatives would not believe that the lone borrower has managed to achieve mutual agreements from each and every creditor (and nobody – especially multinational conglomerates – likes to think that they’re making less than their competitors). Once that data has been recorded, try to figure out a budget that takes into account the family’s potential earnings and estimated expenses over the coming years. This aspect requires a bit more in the way of guesswork. Again, considering the extreme fluctuations within the Colorado economy, who’s to say what incomes would be like for any of us even months from now, and the price of gas and other household necessities in Colorado and across the country make costs of living impossible to predict.

Nevertheless, it shouldn’t be too hard to at least come up with some idea of what a personal round of debt settlement could garner if all household expenses are cut to the bone and every potential income source for the family is fully exploited (we’re presuming that all assets of true value have already been sold to free up funds for debt repayment). After these initial figures have been completed – we recommend employing one of the internet debt calculators for more accurate estimations – it’s then and only then time to see if the worst of your loans could be reasonably expected to be satisfied in a normal amount of time. Economists differ on whether or not settling the accounts with the lowest balance (to improve morale among the Colorado household in question and further motivate borrowers toward the coming deprivations debt settlement techniques require) or those with the highest interest rates (to preclude further debts from arising through the processes of compound interest) should attain greater priority, but there has to be a considered approach decided upon before committing to any specific course of action. Much as we have heard wonderful stories from Colorado borrowers who have taken it upon themselves to settle their consumer debts through a rigorous program of budgeting and rapid payments, the majority of Coloradans unfortunately realized that they would actually need the assistance of a professional company to satisfy their outstanding financial burdens. Amateur debt settlement approaches too easily forget about the seasonal jumps in utility bills (especially a problem in our state given Colorado winters) or ignore the small necessities such as dental visits or automobile tuning. Furthermore, these attempts could in fact worsen your overall situation and hope for eventual debt reparations.

For Colorado households suffering through serious debt problems who want to clear their overarching burdens, it’s of an obvious importance to understand the depths of their potential obligations before deciding a thing, but, once the necessary data has been recorded and after a cursory household budget has been calculated, discussions with a debt settlement professional simply makes the most sense. As long as your family is confident, after checking the debt settlement company’s qualifications with the Colorado attorney general’s office and (for the increasingly popular internet approach) validating the firm’s national certification, why not spend the time asking direct questions from the horse’s mouth? Done correctly, debt settlement negotiation has been proven to instantaneously lower borrowers unsecured debt balances by as much as sixty percent in just a matter of phone calls from experienced counselors, and the Colorado families we’ve spoken with – those that were, again, admitted to the program – have almost universally found success through debt settlement. Once again, your authors cannot promise every Colorado household shall enjoy similar results, much more research must be completed before initiating any financial decision of such magnitude, but, as long as creditors continue to carve away consumer debts in the face of steadfast and skillful settlement negotiation, this approach should at the very least be considered by every Colorado family serious about erasing past burdens.

For Those Asking If Debt Settlement Companies Can Help

noreply@blogger.com (Cole Collins) — Mon, 12 Jan 2009 17:38:00 +0000

Yes there are a lot of debt settlement companies out there that will take advantage. But for all these people to say that no company will help you is just plain ignorant. Like everything in life there are two sides to every story. The reason why a lot of people had bad experiences with these companies is there own fault. When they signed up for a debt relief company they thought all their debts would just be eliminated and they didn't have to do anything. You still have to make payments even when you sign up for these programs. For the most part they are just trying to reduce a portion of your debt amount. Typically when people sign up for these programs they make a few payments and fall into old habits and stop making payments. Then after 4 or 5 months they wonder to themselves why isn't my debt eliminated? ...Well cause once again you didn't pay your bills.

So in conclusion yes there are viable companies to help settle and negotiate your debt. You just need to do a bit of research. Make sure any settlement companies are a part of TASC (the association of settlement companies) also check with the bbb which was stated in another answer. Most of these companies offer free consultations so check and see what there all about. If it sounds like its not legit don't do it and try the next company. Also, these companies will typically only work with you if you have $10k in credit card debt or more.

Debt Relief For California Households

noreply@blogger.com (Cole Collins) — Fri, 09 Jan 2009 17:52:00 +0000

Talking to consumers struggling to pay bills in California after recent problems personally and nationally, the desire to diminish personal debt loads has only grown over the past few years as borrowers’ credit card balances continue to climb and the larger American economy slowly falls apart. Unfortunately, considering surrounding forces unfortunately depressing the California financial picture, any consumer longing to eliminate all financial burdens runs against the too commonly sad practicalities for ordinary families losing equity and wage potential by the day. For this reason, many of the new debt relief firms can seem undeniably attractive to Californian borrowers that otherwise may feel beset by the depths of their financial crises. This is especially true when such borrowers only bother to read the debt relief companies’ promotional materials or glance at the various advertisements that fantastically over promise solutions and downplay very real drawbacks that accompany most every debt relief approach. For California consumers who’ve any worries about their escalating interest rates and cannot absolutely guarantee that their household income will not continue to decline, relieving unsecured or high interest debts must absolutely be a priority, and any domestic financial strategy that aims to limit familial obligations must not be entered into because of laziness or desperation no matter the potential for salvation.

With that said, though, the responsibility for any California family’s towering bills should not begin and end with strangers. Debt relief can and does help countless borrowers in every corner of California to eliminate unwanted credit card balances as well as those more difficult accounts. We do not want to unfairly stigmatize the debt relief industry simply because of the effectiveness of their commercials and billboards. We do not wish to elide past the very real troubles that a failing economy may have wrought nor diminish the personal tragedies an unfortunate number of Californian family may have to suffer through. Calamities happen, and the most fragile borrowers too often pay the brunt of the Californian and American weaknesses. No matter the sense of helplessness that must inevitably ensue following such problems and the arguably systemic failings of our current theories about credit (not too mention the absence of a coherent health insurance policy though California residents are at least partially protected by state regulations compared to much of the nation), households shouldn’t ever feel driven to debt relief companies by despair. All borrowers in California should not only learn more about the professional debt relief possibilities that now exist, but, as well, they should take the effort to see what steps toward diminishing credit burdens that they could take on their own watch.

Still and all, there’s much that Californian borrowers can do for their own selves without paying the money necessary to hire a specialty company for debt relief. We see how tempting it may be for the average debtor to believe that a counselor could solve their every need. Listening to the de facto pitch from such businesses, the true costs of debt relief are either barely mentioned during introductory meetings or conceptually shelved a long way down the road to be paid only after all other and even the more pressing financial obligations have been fully satisfied. As we all should realize, Californians are especially easy prey to these sales (that is what they are, essentially, even if debt relief shall actually be involved) techniques from experienced professionals. Even beyond most Californians’ famed receptiveness to new and unfamiliar industries and potential get rich quick – or, in this case, get out of debt relatively sooner – schemes, the dynamic economy and ridiculous housing bubble the Golden State enjoyed over the past decade brought any number of talented financiers to California. Now that the economy is stagnating and even the real estate values of the Bay Area or Southern California which were previously viewed to be invulnerable to any larger national recessions (not to mention the fire sales going on in Stockton, Sacramento and the entire Central Valley area), many of them have jumped ship to fight for clients in the ever more competitive worlds of debt relief and debt management.

This is not to say that Californians should be necessarily suspicious of every counselor or debt relief business opening or expanding opportunities within their particular region – nor, for that matter, that they should doubt the many debt relief firms that operate largely on line through the internet. On the contrary, many consumers in California that we have spoken with gave only glowing recommendations of the various debt settlement business currently operating around the state. Consumer Credit Counseling companies have, yes, come under increased scrutiny by the media, consumer watchdog groups and all levels of government (including the state and various California municipalities) for their ties to the credit card conglomerates and the funds apparently paid by the lenders directly to Consumer Credit Counseling firms for their services to the lenders. Even those CCC companies that have genuinely earned and continue to maintain a true non profit status can easily enough fudge the books by paying their counselors and partners additional sums, it turns out. Nonetheless, the debt settlement industry has garnered extremely positive reviews from all California respondents who have responded to our questions. Please understand that your authors do not want to unfairly paint all debt relief (particularly, again, the debt settlement approach) businesses as unneeded or overly mercenary. Most of the certified and reputable debt relief companies do excellent work and aid thousands of borrowers in California and around the country in their strivings to achieve freedom from consumer loans. However, don’t be too readily convinced that employing the services of another company could be your only salvation to out of control bills and foolish spending.

When Californians examine their accumulated debt portfolios, there’s quite a bit that they can do to help relieve their own burdens before paying the quite substantial fees that any relevant debt relief company will most certainly charge. This won’t be easy, of course, and shall take a good deal of time for borrowers who are already likely working several jobs and have the usual household responsibilities to contend with. Furthermore, for ordinary citizen consumers with no special training in the complexities of finance and compound interest, they can quite reasonably expect to be more than confused by some of the greater difficulties exacerbated by the purposefully perplexing verbiage utilized by the credit card companies to prevent regular attempts at debt relief from their clients in California and across the nation. Also, to be fair, we do not want to suggest that every borrower armed with a telephone, calculator, and pen and paper could simply solve their life long debt problems by tackling their problems no matter the amount of will or enlightened motivation. Some debts can only realistically be aided by the assistance of debt relief companies who’ve evolved to counter these specific predicaments, and their liquidation deserves the concentrated efforts of professionals with experience and a peculiar love of consumer debt relief.

More to the point, while many families could through sufficient time and struggle, inevitably manage to pay off their credit card and revolving unsecured debt balances given enough hard work and more than a little luck (and the absence of any future calamities to throw off even the most carefully planned attempts at budgeting), some households will yet be forced into that most painful of all debt relief maneuvers: Chapter 7 personal bankruptcy protection and the elimination of credit debts as well as the loss of credit privileges for up to a decade and the seizure of all assets and most household possessions. Nevertheless, it simply makes sense for California borrowers to at least try their hand at personal debt relief before meeting up with one of the professional companies. Every consumer should also simply want to give an honest attempt at, if nothing else, forcing a true and accurate realization of the problems that you and your family are facing. Even if you find that debt relief assistance will be necessary, even if you sadly recognize that meeting with bankruptcy attorneys may be in your household’s best interests, you will then be able to meet with the debt specialists completely informed about the problems and able to help the professionals take down the credit card bills as an active partner.

While every debt scenario is different and your authors wouldn’t pretend to know what would be the best solution for you and your family, we’ve talked with quite a few borrowers in California, and there are some elements of personal debt relief that most every consumer who has successfully navigated their way through the worst morasses of financial obligations mention time and again. Of these, the first and most important aspect for a self imposed regimen of debt relief should be the prioritization of your financial burdens. Gather up all of your bills and write down the interest rate or APR, the total balance, the monthly payment requested, and the due date for each and every credit card and debt burden and write those in a ledger or type them up on one of the computer programs intended to aid household budgeting and debt relief. Even in the case of those debts, like a low interest thirty year home mortgages, that could be actually beneficial in the long run through tax purposes and which you do not to wish to eliminate any time soon, the same information should also be recorded – although probably on a different page or in a different file. The more data that you are able to glean about precisely what you owe and what the parameters of your budget may be could only help you through the debt relief process.

Of course, normally, each California borrower should be able to discern most of their debt information from the bills sent by the credit card company each month. Never depend upon the original paperwork you’ve kept from the time that you first took out the debt, though all of the initial documents should nonetheless be filed away just in case of corporate malfeasance, because the information could rapidly change. For that matter, it wouldn’t be a bad idea to contact representatives of your credit card company to ensure that your data is fresh and beyond question even if your account has suffered lapsed payments or, worse yet, formally noted with the credit bureaus as closed by the lenders. For those borrowers who know that they have defaulted upon their legally recognized loans, this could be understandably treacherous ground, but you should simply explain to the representatives your desire to make everything right in bounds of the law with details to follow. California statutes dictate a wide range of safeguards to protect debtors from harassment by creditors and their collection agency lackeys. As long as you have not sought to specifically defraud any company, you should have nothing to worry about, and the company (and their employees) should be pleased to learn of your new plans to relieve debts.

At the same point, though, you do not want to be too friendly with the creditors nor reveal too much about your personal information that need not, at this juncture, concern them directly. Experienced lender reps shall be paid upon their ability to twist your fears of bankruptcy and passions for a new start into a sudden declaration of intent to full and sudden payment (for which the reps shall receive hefty commissions, make no mistake) of those funds owed. Do not give them your bank account number nor freely swap work information unless you are absolutely confident that the representatives or their superiors won’t bend every rule to force satisfaction. Indeed, while they will almost certainly offer some form of debt relief, write down all details about such offers but promise nothing in return. Though, once again, California provides a good deal more security for their troubled borrowers than most states in the union, the conglomerates that hold the world’s pocketbooks in check and the officials they have trained to follow their specific and researched guidelines will know more than you about the potential for relieving debts.

More to the point, the lenders will have no reason to value any lingering moral qualms about debt relief that continue to exist for so many of the Californian debtors we’ve spoken with. Indeed, to resolve their own debts, credit card company representatives are effectively bound to their positions and the predatory mechanisms of their employers. These reps are trained to tweak such (thoroughly out dated; multinational corporations feeding upon the compound interest of desperate borrowers’ payments absent proper regulation need no one’s sympathy) ethical misgivings from their borrower clients, remember, and, even aside from their motivational failings, representatives forcibly educated by solely the credit card companies shan’t be the best avenue toward understanding debt relief nor the benefits for different sorts of familial problems nor the drawbacks for initiating debt solutions with only one of what we shall assume to be a variety of lenders. If anything, speaking your mind too freely and letting slip important financial information to servants of the lenders may effectively disable your future attempts toward a total cleansing of credit card bills. With the debt settlement solution, especially, borrowers that say too much can irrevocably damage their eventual assistance from professional debt negotiators who need the illusion of solidarity among all lenders to forge consumer debt relief.

Certainly, there’s a point to be made about every Californian’s regular discussions with their lenders’ representatives. Verifying all information about your current credit accounts and recording the results on an easily checked notebook or computer spreadsheet has to be considered an important element of functional debt relief. However, much as an analysis of the relevant data with an eye to your family budget should be viewed as an integral aspect of the process, these communications should only be seen as a small part of the overall mission of discovery. Next, you’ll have to examine each financial obligation with an eye to the most sensible path for thorough elimination of the varied burdens, and this portion of debt relief depends almost wholly upon the specific scenario of the borrower’s family – not only what they owe at present but what they plan to accomplish. Freedom from debts requires a clear headed order to all obligations that prioritizes unsecured consumer debts (these tend to have the worst interest rates and lenders that have the greatest likelihood of informing credit bureaus about their clients’ defaults) with a variety of alternatives. No one method of debt relief will be the same for any one household. As we have said, Californians enjoy special privileges purely drawn from their state of residence, but, still, the choice of which loan borrowers should first liquidate could be argued indefinitely. While it may seem to make the most sense upon first reading to eliminate the highest interest rates in order to decrease the potential for greater problems in the future, some economists have determined that household debt relief would better be achieved through the erasure of the smallest debts to inspire that household toward eventual success.

Arranging debts by priority of elimination demands the attention of all members of the borrowers’ family who are affected by changes within the potential household budgets. Moreover, much as self reliance should be sought by all borrowers with regards to financial obligations knowingly entered into, genuine and realistic debt relief solutions may require the help of California certified professional counselors who have worked with these companies before and fully understand the tendencies of lenders you may need to one day barter with. Formal debt settlement negotiation, as your authors have previously mentioned, should be an excellent resources for all borrowers who remain confused – even after the specificities of their debts have been logged and even if the familial income truly shows no signs of weakening despite the economic failings of California and the nation as a whole – about the correct method of abolishing financial burdens. While we’ll always want to encourage all Californians to examine potential savings that could be found from their own household budgets and to check the accuracy of their own information through creditor correspondents (and, gingerly, talk to the representatives of their credit cards to better verify results), take a moment to think about the actual repercussions of every one of the conversations with a notion that external debt relief could be at risk.

While self sufficiency remains an asset to be prized, there’s more to effective debt relief than just leg work and proper desire. Borrowers should search out a respected debt settlement provider in their areas of California or, should access or hours be a problem, one of the on line professionals from quickly burgeoning internet sites that would offer a relatively free consultation to help their household figure out just which sort of debt relief solution should work most comfortably within their own guidelines. Every Californian suffering through the tortuous resolution of unsecured revolving loans – most every resident of California, should recent studies be proven to be true – shall want to research various companies and take the time to search out a distinct debt relief solution that works best for their own family. By all means, your authors suggest every California debtor should attempt to relieve their own burdens with whatever information’s at hand (or painstakingly gathered) before consulting with debt specialists. However, after spending more than a decade discussing every form of credit resolution that every sort of California borrower happily utilized and learning a good deal about the successful debt relief programs that have been taken to culmination, we’ve also grown to believe that the debt settlement negotiation industry has grown to be an excellent resource. Much as we’d wish for consumers to tend to their own finances before gravitating toward professional help, all Californian consumers should considering indulging debt settlement for the complete and enduring relief of their household economic obligations.

Bankruptcy Alabama

noreply@blogger.com (Cole Collins) — Thu, 04 Dec 2008 20:51:00 +0000

As more and more Americans from around the country come to realize that their unsecured credit card debts have accumulated out of control, many of them have started thinking about the need for bankruptcy protection, and the citizens of Alabama are no exception. Of course, just because the various debtors have decided that looking into Chapter 7 or Chapter 13 bankruptcy protection may be in their best interest, there’s a little more information to be understood about the program before spending the money to talk with a bankruptcy attorney. Remember, declaring bankruptcy has changed greatly in the past few years, after congressional alteration of the United States Bankruptcy Code in 2005, in ways that many borrowers have yet to thoroughly recognize. More confusingly, each state maintains their own regulations and ever evolving additions to the bankruptcy code. In this article, we’d like to explore some of the changes that have been made nationally as well as those rules specific to the Alabama bankruptcy courts.

Every state maintains their own peculiar exemptions, of course, and Alabama’s hardly any different. When looking at the bankruptcy option, it’s of obvious importance to figure out the particular rules for your state of residency. Speaking of that particular guideline, you may be surprised to find out even the state you’ve been living in needs to be proven. No matter your ties to the state of Alabama, you can only file for bankruptcy for that state if you can legally demonstrate that you had lived in Alabama for seven hundred and thirty days – or, you know, two years – before declaration; otherwise, you’ll have to file in the state where you lived most of the six months prior to those two years. Regardless of those regulations, of course, every American citizen can still take advantage of the federal government’s exemptions, but, as you shall see, the Alabama exemptions are rather more profitable for the ordinary consumer.

Now, conversely, if you do use the Alabama exemptions you will not be able to make the federal ones available, but, once again, it will almost certainly make sense for Alabamans that qualify to claim that state as their primary residence to avail themselves of the Alabama regulations. Primary among these, as you’d imagine, would be the Alabama homestead exemption. Within Alabama, presuming you purchased your home more than three and one third years ago, you should be able to fully protect the value (meaning your stake, not the market value) therein. If you have lived in your primary residence for less than the past twelve hundred and fifteen days, you will be able protect only a hundred and twenty five thousand dollars worth of home equity based upon current mortgage loan debts and recent appraisal value. The reason for this should be clear: the Alabama state government doesn’t want its citizens buying houses just before they declare bankruptcy so as to hide any money. There are still further complications, of course. An exemption to the previously named exemption would be possible if you switched primary residences during the past three and a half years for essentially lateral values. However, if you’ve been convicted of a felony or owe any debts resulting from a violation of fiduciary law, racketeering, or similar crimes within the past five years, it will be much more difficult to take advantage of the Alabama homestead exemption unless it’s reasonably demonstrable that the individual or couple filing require the property for the support of the debtor or any dependents.

Now, remember Alabama, even though your equity in the home will be shielded from creditors’ seizure through successful Chapter 7 bankruptcy declaration, that does not mean that you can simply stop paying your mortgage bills and consider yourself protected from foreclosure. Instead, think of the homestead exemption as placing the property and mortgage outside the purview of bankruptcy protection and court oversight. Any liens which you have chosen to put on the home, such as trust deeds or equity loans or mortgages, are still thoroughly valid (and, of course, any liens attached by the Internal Revenue Service are to be considered completely untouchable regardless of Alabama law). The mortgage lender can still take possession of your home if you default upon payments for a succession of months, but this is hardly what they would prefer. Especially considering the current climate for foreclosures, mortgage loan companies would much rather opt to negotiate some new payment schedule or more advantageous terms to work with you during the bankruptcy so as to ensure that you keep your house and they need not suffer the ever growing legal costs or extended time line foreclosure would take. Speak to the mortgage representatives, keep them informed of your plans to declare bankruptcy, and figure out the best solution for both parties.

Sadly, for many debtors, this advice may come too late, and foreclosure proceedings may have already started for the home owner. In this case, you may want to think about entering a Chapter 13 bankruptcy instead of the more traditional Chapter 7 debt relief bankruptcy program. Chapter 13 bankruptcies essentially restructure your existing debts, including secured debt like mortgages, and even pay back the arrears that you had previously missed. In Alabama, a successful Chapter 13 would therefore force the mortgage lender to accept whichever plan you have worked out with the court trustee and, even if the lender has already started foreclosure proceedings on your property, effectively guarantee that it would be protected under the new debt payback solution. Now, in the case of secured loans like mortgages, Alabama bankruptcy statutes don’t allow a new restructuring of the existing mortgage beyond ensuring that the lender would allow you to repay what’s already owed (something many lenders would ignore if you’ve been sufficiently delinquent to engender foreclosure warnings), and this means you’ll still have to maintain payments as usual once you have caught yourself up with past defaults.

For borrowers who had already demonstrated problems with payments, this might not seem like a perfect solution. After all, you’ll have to pay out even more each month to the mortgage company (as well as keeping up with your homeowners insurance) while continuing to pay their regular bills with the additional funds owed to the Chapter 13, but, at the least, it’s a method by which you may be able to keep your home when things look their most bleak and one of the more advantageous aspects of the Alabama bankruptcy exceptions. Even if you still miss a payment or two after declaring bankruptcy, the trustee may still be able to talk with the mortgage company though this would be more difficult and far from guaranteed. Also, unfortunately, the bankruptcy must be filed before the foreclosure auction and subsequent sale of the home; once that happens, there will be no way for the Alabama courts to have any legal say on the property. The Chapter 13 process will require a careful attention to budgeting and what may seem like harsh deprivations for your household – it may even require a second or third job for those filing to earn enough money – but, at the end of the day, it may be your only chance to hang on to your primary residence.

There is, however, another element to be considered. By agreeing to the Chapter 13 bankruptcy debt restructuring program, you foreswear your rights to be considered for the Chapter 7 debt elimination plan, and, for borrowers who have amassed sufficient consumer debts, the exchange may not, in the end, be worth even the most beloved of properties. Of course, after the 2005 congressional alterations to the federal bankruptcy code, you may not even qualify for the Chapter 7 bankruptcy regardless of your amassed debts. Under the current regulations, each citizen must pass a so-called ‘means test’ that calculates whether or not they would be eligible for the debt elimination program by examining the median income for your state of residence. In Alabama, as of the first of February 2008, according to census bureau statistics (and these will, as you should expect, be regularly updated), the median income for individual heads of household was assessed to be just over thirty six thousand. It’s around forty five thousand when one dependent’s added, fifty two thousand for two dependents, sixty two thousand for three dependents, and an additional seven thousand should be added for each extra dependent. As long as your income is provably below such in Alabama for the six months previous to filing – with up to fifteen hundred dollars total deduction for secured loan payments such as homes and automobiles, expenses for education, tax liens, and court mandated obligations like taxes or alimony – then you would qualify for the Chapter 7 program. Otherwise, you’ll be handed over to Chapter 13 and forced to pay the majority of what’s owed.

Even if you do manage to qualify for Chapter 7 debt liquidation under the Alabama Chapter 7 statutes, it’s still a difficult process for most consumers. By agreeing to have the applicable debts (credit card accounts, generally) eliminated, you also allow the courts free rein to seize your assets for auction and eventual compensation to the affected lenders. Along with the other recent changes made to the federal bankruptcy code – credit counseling courses are also now required to be passed by those seeking to file at the borrowers’ own (rather substantial) costs – the court trustee now must determine the value of your possessions by estimating their replacement price instead of the considerably lower resale price. For many borrowers, this means they may lose every household object of worth from family heirlooms to jewelry with immense sentimental value. Depending upon the amount of your overall consumer debt, you may, once again, have no other real alternative, but this should certainly be fully understood before starting any such program.

As with most of these regulations, the exemptions allowed by the Alabama bankruptcy code are somewhat more lenient than the federal guidelines: though, remember, you have to choose between Alabama’s exemptions and what’s offered by the American government. We’ve mentioned the homestead exemption which protects residences under one hundred and sixty acres. Pension and retirement plans, compensation plans that had been deferred, health insurance, funds that had been invested for an heir’s education at least one year prior to filing (with a cap at five thousand for educational accounts contributed to less than two years prior), and three quarters of wages already earned but yet to be paid should be considered safe. Annuity and disability income up to two hundred and fifty dollars a month are also ruled exempt as well as life insurance benefits for the immediate family. Any property that is deemed necessary by the trustee for your employment as well as military equipment for acting servicemen are also exempt. Unlike what’s protected by the national government, Alabama’s far more lenient in exempting those items of personal worth (church pews, burial plots, books, family pictures and portraits as well as up to three thousand dollars of personal possessions, not counting the aforementioned life insurance). Your primary vehicle should be protected, but, if payments are still owed upon the automobile, you’ll have to reaffirm the debt within forty five days of the initial declaration of bankruptcy. Otherwise, the court trustee will not allow you to continue to repay the vehicle’s lender, and you will be open to repossession for the eventual delinquency.

Considering all of this, it’s of an obvious temptation to transfer any assets (from investments to actual property to the title of cars or homes) to friends or family, but this would be a grave error. The Alabama court trustee can block any such transfers that they feel were made fraudulently with the intention of deceiving the lenders. With the changes to the bankruptcy code, court trustees working under federal laws can examine past transfers for the past two years, but, here again, this flexibility greatly depends upon the state in question. Within the Northern District of Alabama, court trustees can (and generally do) analyze all such property transfers for up to a decade! Genuinely necessary transfers are still recognized as such, of course, but the bankruptcy documents must make mention and you must provide the proper paperwork alongside. Assume any transactions of note for the past ten years will be closely looked at, and prepare your documents accordingly. If, for what ever reason, the trustee believes that there was attempted fraud, you can almost be assured of criminal charges – as well as potential charges for whomever else accepted the transfer. Even if the bankruptcy has been already accepted, trustees continue to analyze the case throughout the term, and you may find yourself unable to receive a discharge and once again be open to harassment or lawsuits from the various lenders.

If the combined value of your assets is simply more than you wish to risk, if you want to make sure that the assets are protected from court seizure, a Chapter 13 bankruptcy may well make more sense. However, like so many elements of financial proceedings, it is hard for your authors to offer detailed advice without more knowledge of your specific situation. Even with the Alabama exemptions we have mentioned, this has been, as you should assume, far from a complete list of

what’s available for borrowers to take advantage of. For this reason as well as the increasing complexity of the paperwork involved (and the potential criminal charges for not understanding precisely what to notate), it truly behooves the ordinary borrower to talk with a bankruptcy attorney licensed within the state of Alabama no matter how expensive the lawyers’ assistance may be. Also, while you are first considering your various options, it would probably be a good idea to opt for a free consultation with one of the debt settlement companies in Alabama or one that you may find on line. These companies attempt to negotiate an overall reduction of credit card balances by utilizing the threat of bankruptcy and the promise of a heightened payment schedule typically less than five years. As ever, it won’t be the best alternative for every Alabaman borrower, but, before you potentially risk your assets through Chapter 7 bankruptcy, you should take a look at every other option possible.

Ways To Maintain Healthy Debt Management Partnerships

noreply@blogger.com (Cole Collins) — Mon, 01 Dec 2008 17:05:00 +0000

When your authors talk to people from every day walks of life about their financial circumstances - which, considering the all inclusive troubles currently affecting ordinary Americans, seems increasingly difficult for the average consumer – the topic of debt management comes up more and more frequently. It’s easy to understand why, of course. With credit card bills piling up and lenders clawing at the door (or, at least, blowing up your phone lines through the associated collection agencies), it can seem beyond imaginings for borrowers to actually clean up all of the accumulated debts within their lifetimes, and the idea that certified companies could step in and aid them with debt elimination quite reasonably can sound like an answer to their prayers. Within all of these discussions with ordinary consumers, however, we notice that many of the most excited applicants have very little understanding as to what debt management companies actually do. In this essay, we would like to go over a brief explanation of what debt management truly means as well as to explain how borrowers can get the most successful results from taking advantage of the programs offered. After all, while these sorts of businesses can be very helpful when attempting to lower your overall debts, there will be a good deal of work and discipline that you will have to undertake as well in order to become genuinely debt free (leaving aside home mortgages or investment loans) for the remainder of your life.

Essentially, debt management companies – more specifically, debt consolidation companies – take on all of the unsecured debt that has been amassed, and, once all of the details have been agreed upon and the contracts have been signed, the borrower then has to mail their unsecured debt payments to whichever debt management company they have chosen to with. In general, so that you understand, unsecured or credit card debts are the only ones that make sense; secured loans like home mortgages or car loans have no reason to agree to barter their terms with management professionals and they tend to have fairly low rates even without debt management help or refinancing. In any event, the debt management companies then work on negotiating a reduction of interest rates and/ or waiver of whatever fees and charges the creditors have collected during the previous spending problem months when payments may have been late and balances may have accidentally been charged over their limit. With Consumer Credit Counseling companies, they are generally able to significantly lower your payments as well as reducing the rates, but you have to be carefully about lowering your payments too much. While the decreased interest rates and waived fees help, of course, the most effective way of lowering payments is by extending the term of the debt consolidation, and you have to be sure you are not only pushing back the eventual debt management for the future. Also, by unnaturally lowering the payments, you sometimes leave yourself open to actually worsening your overall financial picture by means of the additional money made available. Lowering payments should only be used to either temporarily help you and your family through hard times or to allow a full and quick repayment of the worst debts.

Debt settlement companies take a similar tactic with rather different results. While they also consolidate unsecured consumer debts with the hope towards eventual debt elimination – and also greatly lower the interest rates by so doing – their negotiation technique insists upon reducing the balances. Sounds too good to be believed, but credit card representatives are all too aware that borrowers who think they cannot properly meet their payment or properly take charge of their loans will be more likely to avoid paying them entirely or, even worse, attempt the increasingly destructive Chapter 7 bankruptcy alternative. To ensure that the debtors maintain timely payments of their existing obligations, many representatives of the credit card lenders will cut the balances that the borrowers owe by as much as fifty, sometimes even sixty percent, when approached by a experienced debt settlement professional. That’s right, debt settlement consolidation can effectively shave off half of the borrower’s entire consumer debt burden through little more than negotiation, a relatively small fee paid by the borrower, and the discipline needed to brave budgetary constraints

Before you get too excited, though, things are not always quite that easy, and nothing is ever guaranteed of success. Some credit card companies will still refuse to barter with debt management professionals nor ever cut their balances even if they recognize that they risk losing everything from bankruptcy protection after changes in the bankruptcy code have made this option so unpalatable for ordinary borrowers. Also, even for successful debt negotiations, the going exchange for (what could be) tens of thousands of dollars of legally actionable debt balances suddenly erased tends to be a heightened payment structure that should clear up all current credit accounts in three to five years. For obvious reasons, this should be of far more benefit to borrowers than allowing balances to linger around for decades through ever lower payments, but, sad to say, it’s just not within the workable budgets of every American consumer. These sorts of artificially increased payments, depending upon the debt loads involved, could be far more than the minimum payments that the borrowers who had been seeking out debt management were originally unable to satisfy.

In terms of finances, there is another disadvantage to consider. Neither approach (nor any effective method of debt management) will be offered for free, of course. Borrowers should expect debt management firms to charge a pretty penny for their services both in terms of a charge at signing and relatively limited regular administrative fees. For any reputable company, however, the charges should be included within the overall consolidation package so that they never need make any large cash payment of significance; small initial consultation fees are sometimes requested so as to discourage the time wasting questions of attention seekers but they should not be above or fifty or seventy five dollars. Also, you should take into consideration that any of these debt management methods will effectively disable your credit options for a number of years. While debt settlement isn’t nearly as disruptive to FICO scores and credit ratings as Consumer Credit Counseling (which rivals Chapter 7 bankruptcy protection for destructive potential), all forms of debt management have some negative affect upon credit scores. For that matter, you must also remember that both Consumer Credit Counseling and debt settlement negotiations will require that you surrender all current credit card accounts for the duration of the programs which, as we have reported, can last several years, and the competent debt management authorities will also ask that you from opening new accounts during your work with the company so as to prevent further liability.

For this reason, it’s is so important that you take all necessary time when selecting a debt management program carefully to make sure that you pick the right one that best fits your needs. Go on-line or talk with the Better Business Bureaus and similar agencies to verify that the firm you are considering is legitimate and to be trusted with safeguarding your financial secrets as well as the eventual payments they must make on your behalf to the credit card companies and associated lenders. As happens with any successful burgeoning industry, the companies involved with debt management are hiring and training new professionals every day, and some of the debt counselors are bound to be less than trustworthy. Don’t worry, word of mouth and reputations above reproach are so important to all aspects of the financial community that any negligent or predatory debt management specialist will soon be found out and black balled from any reputable firm. Still and all, you have to be continually on guard to make sure that you are not being taken advantage of from one of the practitioners of sleazy business strategies. Desperate borrowers are always at the mercy of these scavengers, and, with unsavory programs or counselors, even debtors that are doing their best to eliminate their past obligations could be subject to the machinations of such scoundrels.

Of course, before even considering debt management, the smart and thrifty borrower will do everything necessary to put their bills in order and shore up the household economy to see if they can indeed solve their own domestic financial crisis without requesting the assistance of an external company. Even you do decide that you and your family require the need of debt management professionals, you should first cleave your expenses so as to see what sort of budgetary room actually exists. With the example of debt settlement negotiations, to take one instance, you must be absolutely positive that you will be able to regularly satisfy the payment schedule that they put in front of you. As well, it behooves the consumer looking into these programs to realistically take an assessment of their earning potential over the next year or two. For borrowers with small businesses or bonus laden salaries or even those that work in industries that may be hit hardest by the coming economic storm, this may be a tough pill to swallow – a proper mindset and positive outlook does so much to aid debt management; motivation really is the key to sticking with any successful approach to debt relief – but, nevertheless, it will have to be done. It does no one any good to be brave about household deprivation or promise the debt counselor funds you won’t be able to one hundred percent guarantee. Default on a debt management plan, and you will be in even worse trouble than if you had never attempted debt management in the first place.

Along with bringing your own copy of a workable budget to your first meetings with the debt management counselor, you should also carry away with you some documentation of what they promised. Clearly, for initial consultations, you should not expect the debt management company (or, at least, a reputable debt management company) to be able to offer much more than vaguest of estimations as to what your eventual interest rates or consolidation payments would be. It would even be a bit suspicious for the debt management company to hesitate a guess as to their actual costs for the services before they’ve sat down and fully analyzed your credit report and current unsecured debt burdens. While it’s important to be a cautious consumer, one must realize that the best of companies specializing in finance will want to be absolutely certain of every last detail regarding you and your debts before picking numbers out of the air. Still and all, at a certain point, it will come the time for good faith estimates as to what you should be able to expect for pricing, and, at that point, you need to get every single promise in writing to compare the contract not only against other debt management offers but also to vouchsafe your rights should anything go awry or the costs suddenly rise. For instance, make sure that there are not several different fees for what seems to be the same labor – a common practice is to list a relatively minimal monthly charge for administrative duties that is then repeated, in totem, as an annual expense – before you enter any working relationship with a debt management firm or counselor. If possible, bring the written estimate to any trusted professionals (whether friends or family or even work acquaintances or your other business partners) who’ve had previous dealings with this sort of enterprise to gauge their approval and advice.

Really, this should go without saying, but just keep proper records of all communications and make sure to get everything in writing no matter how much you may trust your debt management provider. As the old joke goes, a verbal contract isn’t worth the paper it’s printed on, and, even if your debt management counselor and company is thoroughly above board, the process may last quite a while and you may end up dealing with different specialists (or, for that matter, they may have different bosses with different priorities). Even with the best of companies, their costs may also rise in this period of recession and they would pass along the additional debt management expenses to you if you give them the chance. Certainly, for the terms discussed and the payments that are expected to be passed along to the credit card companies but are still often liable to the borrower’s credit, it couldn’t be of greater importance to the borrowers to make sure that they have recorded documentation of the debt management firm’s promises. Even when starting out upon the debt management program, you should remember to continue paying the lenders as scheduled until the time that you have received notices from the credit card company that are now accepting payments from whichever debt management company you decided to work with. Even if you are already in contact with the creditors about your plans and they have agreed to the new program (and open lines of communication should be maintained throughout proceedings), it’s still a good idea. While this may result in a superfluous payment or two, the credit cards will still be happy to receive the money and either put it towards the funds owed or the checks will be quickly returned.

We understand that most applicants considering debt management have already had trouble meeting their minimum payments, but it will only take a month or two for the debt consolidation to go into effect and you honestly do want to keep your FICO scores as high as possible. Once again, the meaning of debt settlement changes for every borrower, but it is never – particularly once debt consolidation is involved – a painless procedure. Typically, debt management bruises credit ratings for up to two years past total satisfaction of all outstanding unsecured bills, but this is not bankruptcy and, should you play your cards right, things will get better. Remember that the debt management authorities are only assisting you on the unsecured consumer loans and revolving debt. Utilities, mortgage payments, automobile loans, and, especially, above all else, tax liens are not affected or even noticed by most debt management counselors once they’ve put together your monthly and annual budgets, and you will still be responsible for putting away money to take care of the bills and sending those checks on time. Debt management companies, the more professional ones, should send out statements each month that detail exactly what has already been spent toward the accumulated consumer debts and what burdens remain to be eliminated. There should also be copies made available on the internet for your private records. With this known, keep close tabs on the payments back and forth to be completely convinced that everything’s working out on both sides of the equation, and be sure to keep track of things with the creditors as well: don’t always blindly trust the debt management company before you’ve verified accurate numbers.

No matter what, you shouldn’t let an oversight from the debt management company worsen your credit rating more than has already been accomplished through the escalating credit accounts. Sometimes the debt management billing cycles don’t quite match what the credit card company expects, and, through the explosion of business you could presume the more established debt management companies are now receiving, there’s some lag time with payments even though you have sent your own money to the consolidation address on time. In a perfect world, this should not be left up to the borrower, but it is our advice that you discover the payment schedule planned from the debt management company and square it with the lenders’ expectations of receipt. Of course, this is only meaningful if you do not disappoint the debt management programs through avoiding the payments you’re supposed to make to them through the course of the loan. Over a period of years of successful stipends, some debt management companies may allow you to miss a payment or two (with appreciable penalties, you understand) with prior warning, but, even if they know in advance that some financial mishap has disrupted your budgeting, do not presume that debt management companies will allow you to be slipshod with your responsibilities. They have consolidated your debts and, while acceptance to their programs means that you will not be allowed to declare Chapter 7 bankruptcy protection afterwards, they will still bear the brunt of your delinquencies should you abandon obligations. It’s a sort of relationship that you are entering with debt management, and, like all relationship, you want to make sure that both partners maintain their ends of the bargain.

The Advantages And Disadvantages Of Debt Settlement

noreply@blogger.com (Cole Collins) — Mon, 24 Nov 2008 23:46:00 +0000

What’s Good And Bad About Debt Settlement

In past years, an industry has developed around the debt settlement negotiation process. With debt settlement, professional debt specialists talk to credit card companies and credit line lenders in order to attempt to lessen the overall debt balances of each interested borrower. Whenever debts are successfully settled, the total balance can be decreased by percentages approaching half of the original. The negotiation process helps the lenders as well as the debtor – credit card companies are assured that the borrower will not go bankrupt (which would leave the lenders with no possibility of ever collecting their debts) while the borrower sees their debt load suddenly dissipate. As balances are lowered, payment schedules are also simplified and extended. This makes it much easier for borrowers to deal with their accumulated debts and attempt to finally eliminate all funds owed.

Credit Card Debt Settlement As Compared To Refinanced Loans

While trustworthy debt settlement firms successfully eliminate not only borrowers’ financial burdens but reduce their tensions and worries, similarly styled companies have appeared that maintain close ties with the lenders they are supposed to be working against. Obviously, any debt settlement agency that takes money from a credit card company should not be relied upon. They may still offer several alternatives toward repayment that could seem promising, but these options are rarely the most beneficial for the borrower.

Specifically, the worst sort of purported debt relief organizations advise consumers to take out a second mortgage or equity loan. Refinancing their home can be incredibly dangerous for even the most thoughtful borrower. The money owed to credit card companies should always remain separate from home loans. Even if the interest is much lower with an equity loan than what credit cards may charge, the potential for disaster should render this option beyond consideration. In rare cases (those borrowers who’ve only recently acquired debt, maintain healthy credit ratings and FICO scores, and soon plan to sell their home for great profit), equity loans or a mortgage refinancing may make sense in the short term. Most borrowers, however, should avoid ever touching the security of their home, and any debt settlement firm or consumer credit counseling agency that would dare suggest such an action should not be trusted.

Get Out of Credit Card Debt - Debt Consolidation Loans

noreply@blogger.com (Cole Collins) — Fri, 21 Nov 2008 20:23:00 +0000

Credit card debt is one of the greatest difficulties that the average American must deal with on a daily basis. Unchecked spending and the new availability of credit have conspired to tempt ordinary consumers into financial obligations that – considering the effects of compound interest and the sheer balances given to borrowers compared to their incomes – they may never be able to repay through expected means. Minimum payments barely cover the interest for most cards, and there are always new purchases to be had. Much as the notion of consumer credit has helped low income Americans turn their lives around and allowed many self employed businessmen to invest in themselves, exponentially more of our citizens find themselves crippled by their credit card debt burdens.

Once borrowers have become accustomed to living with high levels of credit card debt, the problem becomes that much harder to fix. Admitting to an addiction to spending can be very humiliating, particularly for heads of household, and many consumers do whatever they can to try and ignore the situation even as things get worse. For most of us, the time to tackle credit card debts starts as soon as the balances rise to an amount that you could not easily pay from savings. At the moment, however, when you start borrowing cash advances from one card in order to pay the minimum of another, getting rid of credit card debt should become the consumer’s primary concern.

Of course, eliminating credit card debt is easier said than done – although speaking aloud about the problem is itself an important factor. Once the bills start piling up and the credit card representatives begin to harass borrowers over the telephone, too many consumers feel that they have no options beyond hiding their heads in the sand. This is honestly no longer the case. Many different alternatives have opened up over the last few years that provide resources for otherwise helpless borrowers struggling under the weight of their accumulated credit card obligations. Debt consolidation can take many forms, but even the least advantageous of these are still better ideas than simply avoiding the growing problem.

In the most basic sense, debt consolidation should not require much in the way of explanation. At essence, all of your various smaller debts are consolidated into one larger loan. If correctly calculated, this should lower your interest rates across the board. Beyond that, this also helps the borrowers maintain their payment schedules since their monthly burden will be minimized after consolidation and, most obviously, they will only have to worry about a single due date. Sounds almost foolish, but keeping track of payment dates can be a wearying stress for households attempting to keep an eye on multiple bills all with their own different calendars.

Add to the lone due date the significance of a single payment, and most borrowers find their new programs far easier to manage. Keep in mind that most cards’ minimum payments rarely go below twenty dollars regardless of the actual balance, and, for most borrowers suffering the rigors of out of control credit card debt, the accumulation of different accounts can lead to so called minimum payments in the hundreds of dollars. Once debt consolidation has been successfully actualized, the new minimum payments – and, it should not need to be said, borrowers should always pay more than the minimum – will be simply a percentage of the overall balance for the eventual loan. Aside from those few debtors that only hold one or two cards with very low interest rates (and those borrowers would not necessarily be best advised to consider the debt consolidation solution), most every consumer will find their minimum payments greatly reduced. More importantly, with less money having to go out every month, the household should be able to concentrate the funds now available to savings or investments or – in the best circumstance – paying down their consolidated balance.

Debt Elimination Tip of the Day

noreply@blogger.com (Cole Collins) — Tue, 04 Nov 2008 22:12:00 +0000

It appears almost everyone thinks about debt relief through bankruptcy at one time or another. Unemployment keeps rising, consumer debt is up and bills are stacked every which way. However, before falling for the lure of a quick way out, everyone should think about the cold hard facts regarding bankruptcy. Yes, things could be worse, but declaring bankruptcy is still pretty much a last resort and a dangerous one at that.

For those of us worried about our mounting debt, knowing the facts of bankruptcy can help us make sure those we owe won't take our assets once we file for the protection of bankruptcy. Luckily, once you complete bankruptcy proceedings, it's a fact that you no longer have to worry about any future bills from those you claimed protection against. Another fact of bankruptcy is that collections agents won't be able to talk to you about old debt payments. Although, if you owe anything based on a loan after the bankruptcy is completed, you will still be liable for those payments.

You should know that another fact of bankruptcy is that your (the borrower) assets can possibly be auctioned off to pay any past creditors should the court determine it is necessary. Typically, the court will randomly assign a bankruptcy officer to help the borrower repay their prior debts as best they can. If it is determined that your property should be auctioned and it has completed the sale, the funds generated are usually spread equally between those you owe. This is simply an alternative to pay back what you owe. There are hundred of other facts regarding bankruptcy that can help you if you are in debt. Consulting with a lawyer specializing in bankruptcy can help you through the maze.

There are a lot of types of debt that are not covered by bankruptcy protection. There are specific guidelines that must be followed before assets are liquidated. Debts that do not qualify for protection should not motivate you to file for bankruptcy. In fact, those types of debt can only be removed by an exception sometimes allowed by the courts, lenders who don't mind releasing the debt, and there are additional time restrictions that vary from state to state. The majority of these types of debts depend on the exceptions in the specific state you file in for any hope of discharging them.

The Advantages Of Debt Management For Erasing Credit Card Debt

noreply@blogger.com (Cole Collins) — Fri, 31 Oct 2008 19:30:00 +0000

Countless consumers across the nation have been harried of late by the ravages of credit card debt, and many Americans are desperate for any kind of debt relief. As they seek to take care of a seemingly unending string of bills, more and more Americans are turning to debt management solutions to provide some help in ridding themselves of the burden of credit card debt. Now, as you probably know, debt management can refer to a whole host of different techniques with which borrowers and their debt manager professionals may try to take charge of their household economics. In this article, we will briefly run down some of the more popular methods for debt management. It is important to remember, however, that this is only the tip of the iceberg as regards the information every borrower must know before they enter the world of debt management. Much as it may help to read some cursory explanations of the various alternatives available, smart debtors must investigate every single option before they begin to alleviate their own financial difficulties.

For the entire lives of virtually all Americans, bankruptcy has existed as the final solution to unchecked debts. However, over the past generation, more and more changes to the United States Bankruptcy Code have seriously weakened the protections previously available to all consumers. About twenty years ago, the first blow to bankruptcy protection was struck when the congress removed student loans (both public and private) from the type of debts that bankruptcy could effectively deal with. Then, in 2005, pressured both by lobbyists from the multinational credit card conglomerates and their own Internal Revenue Service, the government drastically changed nearly everything about Chapter 7 protection as it was formerly understood. Bankruptcy was never a glamorous choice – indeed, it has always been considered disastrous for credit and embarrassing to personal reputation. Nevertheless, American borrowers always assumed that bankruptcy would remain a final resort for debt management and that, sadly, is no longer the case.

One thing, however, has not changed. Bankruptcy still has irrevocably (at least, for up to a decade) ruinous consequences as to FICO scores and overall credit ratings. If anything, the modern breed of debt analysts who have been specifically trained to look over credit reports for findings above and beyond the Fair-Isaacs score will treat borrowers who have declared bankruptcy even worse. These sorts of notes can have repercussions for debt management that linger well past the bankruptcy has been cleared. In even the best of situations, twenty four months will have to pass after the formal discharge before consumers would qualify for new loans or new credit accounts, and, even then, those that have declared bankruptcy will face interest rates beyond horrendous. It has always been a difficult road to pursue – taking into account the loss of assets and credit privileges that Chapter 7 associations usually necessitate – but nowadays it is almost unthinkable for borrowers with any other choice.

While recognizing all of the negative consequences regarding credit that follow borrowers who have filed for bankruptcy, it is still not surprising why the notion of Chapter 7 protection yet appeals to so many Americans. Even taking into account the not inconsiderable costs that ever more expensive bankruptcy attorneys will charge (and even for the initial consultation!), the temptations to eliminate most unsecured debts have an obvious attraction. As has been said, some debts are immune to bankruptcy proceedings. Student loans would not be able to be included under Chapter 7. Most tax liens, familial support, funds owed from criminal proceedings, and assorted other debts are also ignored. Still, to be sure, Chapter 7 bankruptcy protection, when successfully declared, can be a powerful tool even though, under the current guidelines, borrowers would risk the loss of most salable assets or possessions. However, with these new strictures in place, borrowers would only qualify for the Chapter 7 program if they earned less than half of the average income of their state of residence as determined by an arbitrarily chosen period. Not only will bankruptcy protection be more corrosive and eliminate fewer debts than before, as things stand many debtors might not even to be able to declare!

Repairing Credit Without Bankruptcy

noreply@blogger.com (Cole Collins) — Mon, 27 Oct 2008 20:55:00 +0000

As the number of Americans suffering increased debt loads rises exponentially during these dark economic times, more and more of our citizens have been forced to consider the debt relief alternatives available to them. Consumer debt (particularly the increase across the board in credit card debts) is a very real national crisis. Your authors understand this and urge every borrower concerned about their spiraling debt balances to take the steps required to handle what can quickly become a very serious problem. By attacking the credit card debt problems at their source, it is almost never too late to turn things around by the means at hand. However, too many borrowers simply give up at the first sign of trouble and hand over their various financial difficulties to be managed by a high priced ‘supposed’ authority. Whether through a Consumer Credit Counseling company or firm of attorneys specializing in bankruptcy law, there is an obvious temptation to help out one’s household by availing oneself of debt professionals, but there are debt strategies that do not need external assistance.

However, despite what news coverage (propped up by the journalists’ minimal recognition of the problems involved) may imply or the constant barrage of those promises that media advertisements out and out proclaim, there are very real negative consequences to most of these programs. Chapter 7 (the debt elimination process most Americans are familiar with) bankruptcy protection will ruin credit ratings for up to a decade and prevent borrowers from employment opportunities, security clearances, and even personal relationships should they be asked if they have ever declared bankruptcy. Furthermore, a stint of changes in the bankruptcy code a few years past spurred on by mercenary Political Action Committees that were funded by the multinational conglomerates that control credit card accounts (and decisively helped along by the sotto voce assistance of the Internal Revenue Service) have fundamentally altered just what bankruptcy means. Now, all but the most indigent and eternally unemployed are denied Chapter 7 protection. Instead, most borrowers are directed toward the Chapter 13 debt restructuring program which barely cuts the debts affected in any way and at the same time imposes harsh repayment plans designed by court appointed trustees with help from, once again, Internal Revenue Service guidelines.

Of course, those recurring television commercials for local bankruptcy law firms don’t tend to mention the damage bankruptcy will do to credit reports nor the lingering repercussions of the 2005 congressional legislation. You’ve seen these advertisements, we presume. They feature any number of actors pretending to be wise, trustworthy, grey templed bankruptcy attorneys who repeat the inevitable offers to guide their clients through the labyrinth of debt management (surely too difficult and convoluted for consumers to possibly figure out by themselves) by helping the borrowers to declare Chapter 7. They may even promise free consultations – though, as the need for the bankruptcy lawyer services continues to rise, that is less and less likely – while evading the mention of exactly how much these services will eventually cost. Even leaving aside the prices demanded by the attorneys and their firms (which can now reach four figures depending, as you would think, on the specific case and how much individual work will need to be done), just filing for bankruptcy will take a few hundred dollars and untold hours spent from those borrowers who can least afford them. It is not merely the amount of time each filer has to spend making sure that the massive amounts of paperwork are correctly documented with obsessive accuracy. Each borrower must remember that even the slightest mistake – forgetting to record a nephew’s car for which you had co-signed as an asset, say, or not knowing that your wife maintained a tiny holding in a family farm – could be considered fraud and leave the filer liable for criminal charges.

No, above and beyond such financial obligations necessitated by bankruptcy declaration and the man (or, like as not, woman) hours the filer must suddenly dedicate to the proceedings regardless of their family needs or job schedules – for borrowers that have found the need to take out a second or even third job this would be a particularly disastrous turn of events – there has been yet another change to the United States bankruptcy code presenting a uniquely irritating time waster. That’s right, even for those consumers declaring Chapter 7 who actually manage to successfully sneak in to the program, they must now take a course on debt management before their filing papers will be formally accepted and, as further insult, before their bankruptcy discharge will be formally announced. As you would expect, these classes – utterly without merit, by all accounts; something like learning annex tutorials on ethics taught by disinterested instructors likely trailing their own credit card debt burdens – have no actual point beyond forcing needy borrowers to abandon their hopes of debt elimination. The costs of these courses are to be paid strictly on the borrowers’ own tab (with, naturally, no chance of credit to be offered to them), and, since only a handful of ‘schools’ around each area are granted proper certification from the federal government, the courses hardly have incentive to bow to market pressure for reasonable costs. Many borrowers simply can not afford to attempt bankruptcy if for no other reason than they haven’t the money available. Sounds thoroughly backwards (if not genuinely corrupt), but this is the nature of bankruptcy protection in today’s world.

What Debt To Income Ratios Mean

noreply@blogger.com (Cole Collins) — Wed, 22 Oct 2008 21:38:00 +0000

Whenever prospective homeowners approach a mortgage lender about qualifying for a new home loan, they’re generally most concerned with two things – the down payment (the amount of cash they can initially pay for the home and the percentage of value that represents) and their credit score (the FICO rating – which should ideally be above seven hundred). However, many new homeowners are shocked to discover that the loan officers and underwriters care far less about credit scores and down payments than something call the DTI.

For mortgage lenders, DTI (or debt to income ratio) calculates precisely how much each borrower owes as a portion of their gross income. For reasons that should be clear, lenders prize this ratio as the best method of assessing what percentage of their available earnings (once taxes and monthly minimum debt payments have been deducted) would go toward the mortgage payments as well as figuring out which borrowers will best be able to pay back significant sums.

Now, when calculating the debt to income ratio, lenders do not look at the total balance owed. For the purposes of the ratio, they only care about the minimum revolving debt payments – what’s paid every month for auto loans, credit cards, student loans, charge accounts, credit lines, and similar debt burdens. Utilities, for example, are generally ignored. Payment histories and credit ratings still make a difference, of course, but they’re generally considered secondary when real estate financing is studied by debt relief professionals.

An explanation of debt settlement

noreply@blogger.com (Cole Collins) — Thu, 16 Oct 2008 16:50:00 +0000

Compared to the relative obviousness of debt consolidation loans once borrowers are aware they exist, debt settlement programs are far more difficult to explain within the space limitations of this essay. Debt settlement is, as you have probably guessed, a very new industry. Settlement negotiation originally began as a plaything for industrialists unable to pay their minimum bills after the late 1980s stock market crash but yet unwilling to surrender their assets to government mandated disposition. Bankruptcy was still then fully available to most every borrower, and a few financiers realized they could use this threat to their advantage. By repeatedly boasting about their decision to undergo governmentally protected debt elimination, they managed to have lenders cut the balances owed by more than fifty percent in exchange for an agreed upon payment schedule promising to pay back the remainder due in less than five years.

As you would assume, our current situation – national economy beholden to foreign powers, manufacturing jobs (or most any offering a living wage) vanishing every second, scarcities among gas and food and household necessities approaching critical levels – has created a small boom within the debt relief field. Consumer Credit Counselors ply their ever more suspicious trade (beholden, as they are, to their true masters Visa and Mastercard) for minimal advantage and maximum advertisements to the ultimate regret of the ever diminishing adherents to CCC ‘assistance’. The consumers, at least, are realizing the problems of depending upon credit counseling authorities better paid by the banks they are supposed to fight against; the credit card companies continue to fund better and brighter commercials.

Much as the Fair Isaac Corporation credit scoring system seems both ineffable and wholly unfair, that plan realized before anyone else just how little the Consumer Credit Counseling programs should be trusted, and FICO scores judged the CCC clients accordingly. Not only, within the CCC system, does the debtor have absolutely no chance for initial debt reduction, entry toward their program actively worsens credit ratings more effectively than Chapter 7 debt elimination. At least, with the Chapter 7 protection (rare as it may now be to achieve), lenders know that the prospective borrower cannot again file for bankruptcy for a number of years. The interest rates shall tickle usury, home ownership must wait a decade, but there are companies out there who will at least offer loans. For those borrowers who have mistakenly suffered Consumer Credit Counseling, every debt analyst that pulls up a credit report will instantly know that the borrower attempted to get out of their obligations. Even worse than that, debt analysts will recognize that the borrower did so stupidly, and that, considering there are no actual strictures to the plan similar to bankruptcy guidelines, the borrower may try again to artificially resolve financial burdens at any point.

It may seem a small distinction – even the most experienced and trustworthy debt settlement firms will charge their ounce of flesh from their debtor clients; indeed, if one company promises to charge nothing, that should be a warning sign – but certified debt negotiators do not accept funds from their adversaries. They work only for the borrowers whose debts they assume, and successful negotiators maintain a certain love for their work. Whether wheedling or threatening, any debt settlement professional who has managed to maintain a respected career (even this young field) does whatever necessary to slash his or her client’s balances to the bone. Within days of application, the appropriate borrowers might find sixty percent of their debts suddenly washed away with the glowing approval of their creditors.

There will be credit repercussions. There would have to be. Debts satisfied are not the same as debts paid in full. Through the convoluted science of the FICO score, nothing is nearly so pretty as minimum balances paid every month without fail for the entirety of a loan – even if revolving debts boasting negative amortization would mean such an obligation should never end. It’s not hard to imagine a future American society where an individual’s credit score depends upon maintaining his family’s unending burden – a new feudalism, borne upon the rigors of debt management and the unending struggle to raise one’s score. Still and all, compared to the torrential downpour washing credit scores down the gutter after borrowers file for Chapter 7 or Chapter 13 bankruptcy (or, again, purposelessly, the Consumer Credit Counseling approach), debt settlement negotiation should seem a slight drizzle. Every borrower would still want to investigate each different option possible, of course, but, set against the practical alternatives, there is a reason that debt settlement has so quickly become a part of American lives.

If this has not been sufficiently overstated, though your authors do dearly recommend the debt settlement solution, the program is not going to be for everyone. By this, we do not simply mean that some of our readers may have such sterling credit and heaping cash reserves and imminent largesse as to avoid the entire notion of debt relief as vaunting necessity. Many borrowers simply do not qualify. There’s a point toward income, of course. Since the debt settlement company acts as proxy, they do need to believe that whomever signs up as their client will truly pay back the sums as promised. And, as with any of modern financial dealings, credit scores simply cannot be discounted. Those borrowers who have willfully dismissed past lenders without attempts toward repayment must suffer far more scrutiny toward past actions.

There is, however, yet another element to be discussed. If we may return (please bear with) to the trash day metaphor, the recycling does not, truly, matter. No official will come to your door with a summons just because cardboard was thrown upon the refuse heap. If there has been illness or simply an absence of time available, everyone would understand that good households must sometimes do as they must. There are, still, exceptions. Pets should be buried or require municipal assistance for their destruction. In order to properly dispose of a computer monitor, someone must cart the beast to a reclamation center and actually pay for its disappearance. And, at the end of the day, that broken couch shall sit in the basement still just because nobody can lift the damned thing.

In the same fashion, debt settlement has very specific exceptions to the reach of its negotiators’ powers. Only unsecured debts, those not in any way or shape tied to physical collateral, could hope to be affected. Had their client borrowed money to purchase a house or boat or even, on installment plans, that broken couch, lenders will try every means necessary not to waste the man hours and money that repossession or foreclosure entails. Make no mistake, though, they will take their assets before ever haggling over the sums that they are legally entitled to collect. (in the case of the couch, this may be a good thing; in the case of the house, not so much) As well, any criminal penalties, any tax liens, any child support or alimony payments long past due … anything that would involve the debt settlement negotiator to dispute an authoritative court ruling should find the same success as nasty notes written to the Internal Revenue Service. Once the federal government has deemed something to be owed, it shall be, in all but the most unlikely of circumstances, inevitably repaid. If compound interest shall be thought a harsh mistress, imagine the financial branch of our judiciary to be an especially aggressive cell mate.

There are other odd exceptions. Past utility bills that have gone to collection generally do not garner much wiggle room during debt negotiations. Collection agencies typically have so little working capital once they have acquired debts and so much success tracking down past defaulters that they can afford to take the occasional tax break should their targets successfully declare Chapter 7 bankruptcy protection. At this point, as the economy changes and the Internal Revenue Service tries to make sense of the new forms of debt relief, as our government and the ever expanding multinational corporations that (to a large degree) influence our legislature and bureaucracy collude in efficiency and naked greed, those collection firms that discharge past debts still receive an inappropriate reward for simply letting these debts go unchallenged.

Student loans, in a bizarre twist, though they should symbolize the noblest elements of unsecured loans, are similarly immune to the pressures of debt settlement professionals. Though one cannot repossess an education – were there a way, be sure that the Stafford folks would be clamoring for the technology – the US Congress did slip another change to the Bankruptcy Code fifteen some years ago. At the time, once again, nobody paid much attention as other topics filled the news. A few columnists chortled at the hypocrisy of a legislature staffed to a large degree by Senators and Representatives that had failed to pay back their own law school obligations, but most people blithely ignored the consequences until they themselves attempted masters degrees or found their own children struggling with sudden debt loads. In any event, as we have outlined, governmental protection once taken away is rarely given back under current political practicalities, and student loans are no different. Since almost all student loans fall outside the boundaries of current Chapter 7 debt elimination programs, the folks holding the notes simply have no reason to even talk to debt settlement negotiators; better to garnish the unfortunate debtors’ wages for eternity.

Exceptions do still abound throughout the debt settlement process. Even among workaday negotiations with credit card companies that ordinarily would be leaping at the opportunity to reclaim some of their long awaited debt loads, certain corporations yet resist. US Bank and Chase are notorious for their calcified approach toward reclamation, but this sort of opposition crumbles by the day. It is impossible to imagine the next generation of creditors blinking twice about the notion of debt settlement negotiation – unless, of course, the legislature further weakens the bankruptcy protections available – but, as for now, some clients will be turned away from experienced debt settlement companies purely because they have unwittingly signed on to credit accounts with the wrong firms. There are other problems, other exceptions, but – much as we have reported upon the debt settlement field – there is a limit to any understanding for those interested parties that have not successfully negotiated debts for a number of years.

Whatever Happened To Bankruptcy Protection?

noreply@blogger.com (Cole Collins) — Tue, 14 Oct 2008 15:29:00 +0000

For the entire lives of virtually all Americans, bankruptcy has existed as the final solution to unchecked debts. However, over the past generation, more and more changes to the United States Bankruptcy Code have seriously weakened the protections previously available to all consumers. About twenty years ago, the first blow to bankruptcy protection was struck when the congress removed student loans (both public and private) from the type of debts that bankruptcy could effectively deal with. Then, in 2005, pressured both by lobbyists from the multinational credit card conglomerates and their own Internal Revenue Service, the government drastically changed nearly everything about Chapter 7 protection as it was formerly understood. Bankruptcy was never a glamorous choice – indeed, it has always been considered disastrous for credit and embarrassing to personal reputation. Nevertheless, American borrowers always assumed that bankruptcy would remain a final resort for debt management and that, sadly, is no longer the case.

One thing, however, has not changed. Bankruptcy still has irrevocably (at least, for up to a decade) ruinous consequences as to FICO scores and overall credit ratings. If anything, the modern breed of debt analysts who have been specifically trained to look over credit reports for findings above and beyond the Fair-Isaacs score will treat borrowers who have declared bankruptcy even worse. These sorts of notes can have repercussions for debt management that linger well past the bankruptcy has been cleared. In even the best of situations, twenty four months will have to pass after the formal discharge before consumers would qualify for new loans or new credit accounts, and, even then, those that have declared bankruptcy will face interest rates beyond horrendous. It has always been a difficult road to pursue – taking into account the loss of assets and credit privileges that Chapter 7 associations usually necessitate – but nowadays it is almost unthinkable for borrowers with any other choice.

While recognizing all of the negative consequences regarding credit that follow borrowers who have filed for bankruptcy, it is still not surprising why the notion of Chapter 7 protection yet appeals to so many Americans. Even taking into account the not inconsiderable costs that ever more expensive bankruptcy attorneys will charge (and even for the initial consultation!), the temptations to eliminate most unsecured debts have an obvious attraction. As has been said, some debts are immune to bankruptcy proceedings. Student loans would not be able to be included under Chapter 7. Most tax liens, familial support, funds owed from criminal proceedings, and assorted other debts are also ignored. Still, to be sure, Chapter 7 bankruptcy protection, when successfully declared, can be a powerful debt elimination tool even though, under the current guidelines, borrowers would risk the loss of most salable assets or possessions. However, with these new strictures in place, borrowers would only qualify for the Chapter 7 program if they earned less than half of the average income of their state of residence as determined by an arbitrarily chosen period. Not only will bankruptcy protection be more corrosive and eliminate fewer debts than before, as things stand many debtors might not even to be able to declare!