Archive for November 13th, 2007
In the debt relief world one finds all kinds of people. One will find good people, caring people but one will also find liars and bad people. Not everyone that claims is going to help you, will. I will cite some examples of the tactics used to lure people to join debt relief programs, sometimes ending up in worse financial troubles then they are already in.
Beware of companies that tell you to stop making your payments to your creditors. This is an outright lie and it is against the law. No one can counsel a person and tell them it is ok to stop making their payments to their creditors. Beware of these agencies, they only have their best interest at hand.
Beware of companies that tell you they can keep your creditors and collectors off your back. This cannot be done 100%, one will still get some annoying phone calls filtering through then and again. No debt relief program is 100% proof of keeping collectors at bay.
Beware of companies that tell you they contact your creditors as soon as you enter their program. It is not even worth it to a debt relief company to contact your creditors until an account is 90 days past due. Anytime before that it is useless because there will not be a settlement deal on the table. Most debt relief programs let accounts age on purpose to get a better settlement deal for a greater commission to them, meanwhile the interest rate charges and late fees continue to accumulate. It is true the best time to settle an account is about 180 days delinquency before the account charges off. This means before the account is sent to a collection agency. Some creditors/banks will actually sell the account to debt buyers for pennies and declare it as a loss at this time.
Beware of companies that tell you if they cannot settle your accounts they will place you on payment plans. Here is where some companies make higher commissions from clients. It is often better for a debt relief company to set clients up on payment plans than settling their accounts. Even at a lower commission rate they make a higher commission keeping in mind the balance of the account. Beware, some companies are masters at doing this.
Beware of companies that tell you with about 2% savings on a monthly basis of your total debt, they will help you become debt free in about 36 months. I will tell you where you will be in 36 months. Your paycheck will be garnished, your house will have a lien on it, and most likely you will be sued. If your purpose is to negotiate, there must be funds available to do so. No one shows up to a gun fight without ammunition.
Beware of companies that tell you they will find legal council for you if you are sued. When you are sued, they are going to tell you to file a legal answer at your local courthouse. Debt relief agencies cannot give you legal advise, only lawyers can.
Beware of companies that tell you even if you have no money to pay your rent, gas and put food on the table they are going to help you become debt free. If you want to negotiate on your credit card debt, your income ratio must be at least two times higher than your debt. Then again if you had that much money you would not be in debt.
America, wake up! If you want to be debt free, first cut up your credit cards. Second, find an agency that will not tell you lies. Third, find an agency that will be affordable to your pocket. I will tell you what those high retainer fees are for, they are for the debt relief agency owner to drink Margaritas somewhere in Panama or Mexico. America, wake up!
America, stop being abused. If you cannot come up with the funds to pay your credit cards on time what makes anyone out there think they can come up with the funds to settle their accounts. Before anyone finishes paying the debt relief agencies fees they will be on poor street. America wake up and do your homework, sometimes the cure is worse than the illness. Seek help, but seek it in the right places. Remember you do not have to spend a ton of money to get the help you are looking for. Again, beware of the lies you are told, not the ones you are not!
Eric Gartle has worked in the debt settlement industry for the last 10 years and has vast experience negotiating personal credit card debt as well as business debt. For more information please visit our site at http://www.pemperandgartle.com
November 13th, 2007
One common concern that many individuals have regarding debt settlement programs is that according to IRS regulations any debt cancelled resulting in a savings of $600 or more must be reported as additional income on a 1099 Form. This means that savings could effectively be taxed and lead to you owing money to the government. While this is true, there are two great reasons why this won’t affect you greatly.
1. The good news: If you are paying taxes because you settled a debt, it’s because you saved money! If the government taxes you on this additional income, you will be required to pay a percentage of what you saved, not the entire amount. If you save $5,000 in the settlement and are taxed $1,000, you still saved $4,000. No matter how you look at it, in the end you still saved money, interest, and time.
2. Insolvency. According to IRS Publication 908, you are not required to declare cancelled debt if you are considered insolvent. Insolvent means that at the time of the settlement, you owe more in debt than you have in assets. This also means that you only pay taxes based on the amount of solvency you have. For example, if you save $10,000 at a time when you are $3,000 solvent, you only pay taxes on $3,000, not the complete $10,000. The fact is that most individuals considering debt settlement are insolvent during the process and thus never pay taxes on the money they save. A professional tax advisor can give you more specific details about this exception.
In conclusion, worrying about paying taxes on cancelled debt should be the least of your worries. The most important issue is to eliminate your high-interest credit card debt and avoid filing bankruptcy. For more information, contact a professional tax advisor or a Debt Settlement expert.
Scott Wallitsch is a certified IAPDA debt arbitrator for DebtorSolution. He provides Debt Relief and Debt Consolidation advice to clients who are looking to become financially free and economically independent.
November 13th, 2007
Fixing interest rates will give surety over repayment for the length of the fixed term. This can be a good option for those who are on a strict budget but ensure that you calculate costs plus the higher interest rate associated with fixed terms. To get out of such conditions, debt management services are offered by the lending authority these days considerably.
Companies of debt management services offer to pay off a debtor’s credit card bills, store cards, and other types of unsecured lending. The borrower then pays the company back through a loan. These services are financial attractive because debtors have to deal with just a single creditor. And the creditor makes monthly payments which are normally lower, and the loan is stretched over a longer period.
Generally, these services are offered seeing the financial feasibility of the debtors. These services are of two types i.e., secured and unsecured forms. However there is an increasing use of secured forms of debt management services by the debtors. They avail these forms on their homes to repay unsecured debts. While unsecured forms of these debt services are offered without any sort of pledging placing.
Apart from this, individuals having adverse credit i.e., CCJs, IVAs, bankrupts, arrears, and defaulters, too can avail the benefits of these services for their debt management without any sort of financial distinction. With the help of these services, they can return back to their previous credit track.
These services are blooming these days in the financial market of the UK. Market is flooded with uncountable lenders. These lenders are going in for providing their debt management services according to their projected plans of their scheme, and where from the variation in policies and plans of different lenders noticed.
To get out of such situation is very important at this point of time. For before going any further, individuals are required to know best before concluding any debt deal. Knowing better about these debt management services is a good applying tool. Through the method, debtors not only get all the information regarding these debts services, but also well from there they can apply for these management services of debt. Soon after your applying, processing at your debt is started working out. The method is simple and convenient.
Roger John works as financial advisor in Debt management services. He is offering loan advice for quite some time. With Debt Management Loan, it is very easy to take and settle debt consolidation loans. To know more about Debt management services, free debt management plan, individual voluntary arrangement, debt advice, bankruptcy visit http://www.debtloanmanagement.co.uk/
November 13th, 2007
