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Winning a debt settlement negotiation is mainly about knowledge and talent (See CuraDebt review). Knowing what to say and how to say it, you can always get a lender or collecting agency to cut your delinquent bills in half. Before contacting your creditor, think about how you will negotiate your credit rating, what should be included in the agreement, how you would pay them, what will happen if you still fail to pay, how to stop the creditor if they try to collect the difference, and how the IRS is involved.

How will I negotiate my credit rating?

In exchange for your payment, you can ask the creditor to cancel the negative entry on your report. If you cannot get a deletion, why not go for a paid as agreed, unrated status, or current account? Avoid negative listings such as account closed, paid charge off, settled or repossessed. In addition, you want ‘paid in full’ with no more collection on your account indicated in the agreement. If your creditor will agree with your requests, then don’t pay them.

What should be included in the agreement?

First, find a lawyer to review your agreement, and ensure that all your terms are in the agreement before you send any money. Draw up the settlement, or wait for your creditor to send it to you. Send out your agreement and wait for the lender or collection agency to sign it before returning it. Ask the financial agency to send the agreement by fax, then by a letter.

How about paying them?

After the lender signs the settlement agreement, you can send your payment with a copy of the agreement by a wire transfer, overnight mail, quick collect, or Fed Ex. Do not use a check as the creditor will acquire your checking information and you do not want them taking out payments, would you? Rather, use a cashier’s check, a prepaid credit card, or money order with the exact amount. Be sure you keep and store receipts out of harm’s way.

What if I cannot keep my agreement? What can ensue?

If you do not strive to meet your commitment, your creditor will reinstate your original terms, adding late and over the limit fees. Moreover, interest rates will go up, and you can probably even be sued.  Then once again the phone calls will begin and they will try to collect the debt from you.

What if the creditor tries to collect the difference in my settlement?

Believe it or not creditors try these unethical tactics more than you think.  In certain states, this is illegal, and you’ll have to write your creditor, letting them know that. Other states permit creditors to come after you to collect the difference. In this case, you’ll find that the creditor has written or stamped the words “without prejudice” or “under protest” on your check.

How is the IRS involved in your debt settlement?

When a creditor settles an obligation for less than what’s owed, they have forgiven the difference on what you owed. A creditor has to report any amount forgiven above $600 to the IRS for taxes. The creditor also has to send you a 1099-c form showing the amount deducted in the settlement. The IRS considers the money a gain to you and for that reason, is income. You are required to pay taxes on this gain by law.

To wrap up, be sure to always be in control when it comes to negotiations, so you can realize your ultimate purpose, which is saving money and protecting your credit rating. Now you have this vital information, you can go out there and take action.

Sick and tired of dealing with your debt problems?

Pay the creditors 30-40% of you debt and stop the phone calls.

As a consumer you know the importance of establishing good credit rating with your creditors. Whether you will shop for a new car or home, or looking for the best deals on a summer holiday, credit worthiness will be judged by credit score or credit rating.
Bad credit history or habits will put “black marks” on your credit profile. These things include late payments, having your account assigned to a collection agency, and well, bankruptcy.
As you establish good credit habits and hence a good credit score, you will improve credit worthiness. This will reflect in potential lenders offering considerably lower interest rates and better deals on upcoming credit offers.

Here are 4 tips in creating a shining credit profile:

1) Pay Bills Promptly
Creditors only have your past payment history on which they will decide the kind of credit risk you will be. How you previously paid off your debts indicates how you will pay off your next debts.

2) Don’t Use So Many or So Few Credit Cards
How much do you think is too much? And how little is too little? Some financial planners and credit experts say two to four cards is just right.

3) Pay at Least the Minimum Due
Always strive to pay at least your minimum due payment, but not less. But remember, paying just the minimum means you will take years – which you wouldn’t like– to pay off your credit.

For example, you can pay off a $2,000 credit payment at 18% APR with minimum monthly payment of 2% or $40 dollars or less, but see, this will take you 30 years to pay it off including  interest.

4) Evaluate Your Credit Report Periodically
Make sure you monitor your credit report from the three major credit bureaus – Equifax, Experian, and TransUnion, regularly. Check your credit profile at least every year. Make sure that any past mistakes or dispute s have been corrected by reviewing carefully.

If you notice a listed account that you know you haven’t opened yourself, contact the creditor and the credit bureaus right away. This could be a sign your identity might have been stolen. Request to have a fraud alert placed on your account and profile to protect yourself and your credit. Identity theft is among the fastest growing consumer crimes these days, with some one million people victimized each year.  Establish good credit habits early and reap the benefits of your good credit rating.

Like most Americans who have a bad credit rating they are desperate for a credit repair in order to improved their credit score. But in the middle of your ardent desire for a credit repair they are left vulnerable to a quick fix through the “help” offered by these credit repair companies. Be aware and beware!
Credit repair organizations are governed by the Credit Repair Organizations Act.  Their prime role is to protect consumers from unscrupulous practices by organizations who claim that they can repair their credit. The Act seeks to ensure that consumers are aware of their rights so that they are these consumers can make an informed decision on which credit repair company to choose from.
A credit repair organization (CROA) is any person or business who takes money in exchange for improving your credit. But they are restricted to lie about your credit history to your current or future creditors. They cannot change your identity to try to get a new credit history. They also cannot ask you to pay for services if they had not provide it to you yet. Before they can perform any services for you they must let you sign a contract. You are allowed a 3-day business day cancellation period.  Some are actually longer like 10 days.

What does the contract contain?

The contract contains information on the payment that they will charge from you. A description of the services that they will offer you. The contract will also contain the estimated time to complete the services for you.And lastly, a statement stating that you can cancel your contract with them within 3 days. They cannot forced you to sign any form waiving your rights  since this is against the CROA policy. If in case this credit repair organization violates the law they can be sued for actual damages. You have five years from the date of when the date of the violation occurred to take action against the organization.

How to detect if your being scam?

• You are not given a copy of the Consumer Credit File rights under the Federal and State Law. You have the right to obtain a credit report and dispute it in case you find some discrepancies.
• You are not given a copy of the contract before you sign it.
• The contract does not contain all the information that is needed as previously explained above.
• The company promises to remove accurately reported information from your credit report.

Have you been  victimized by Credit Repair Organizations?

Do not be embarrass to admit that you have been a victim. Remember you have your rights. Report them with proper documentation. For all you know you might be helping other people who are in the same situation.

There are alternatives that you can take to attain credit repair:

• Order all the three credit reports from the three credit bureaus. It is possible that they each have different information. This can give you a complete view of your credit history.
• Examine your reports carefully. Sometimes credit bureaus generate information that they receive from your creditors without properly making a thorough verification.
• Dispute if you believe that there are discrepancies found. Like mistakes on what the report have. Make a copy and highlight these mistakes. Proper documentation is the key.The credit bureau will now start to investigate, after 30 days they will give you the reply to your dispute.
• Devised a spending plan that will enable you to dissolve your debt.
• Add stability to your credit file.  Some creditors may not report your credit history to these credit bureaus like local banks, credit unions etc. Pay on time to re-establish good credit so that you credit score will improve.

Depending on your counselors, you’re likely to get a lot of contradictory information on how having multiple credit cards can hurt your credit score. Even experienced credit counselors can occasionally be mistaken on what does and does not help your credit score.

  How Credit Rating is Calculated

?  The three main credit reporting bureaus are Equifax, Experian, and TransUnion. Many variables and the particulars of your situation may affect the balance of the calculation somewhat, but on average, here is the breakdown of factors that figure into your credit rating.

• Payment History – 35%
• Total Debt – 30%
• Length of Credit History – 15%
• Types of Credit Used – 10%
• New Credit Applications – 10%

The credit score carries a lot of weight, but according to a current study, 75% of Americans are not aware of their credit score and about 20% haven’t even seen their own personal credit report. Are not these numbers overwhelming, considering the impact of their score on their daily lives!

  Credit rating affects everything you do money-wise. When applying for any type of credit, lenders use credit rating to decide whether to approve your credit or not, how promptly you get approved, your credit limit, and your interest rate for the money lent.

So How Does Having Multiple Credit Cards Hurt Your Rating?

Several credit cards can hurt credit rating if your balance goes beyond 30% of your available limit on one or more of your cards. When credit bureaus compute your credit score, a major figure they look at is the balance-to-credit-limit ratio. If your card balance exceeds 30% of your total credit limit, the bureaus may think you may be an irresponsible spender, and are a risk to lend money to. 

For example, let’s say you have $8300 in credit card debt spread out over five kinds of credit cards with an average credit limit of $2500 on each. That shows you have a credit limit of $12,500 but you have used $8300 of it, or about 66% of your accessible limit.

Credit reporting agencies play the averages. $8300 might not seem like irresponsible spending for you, but on average, people that go over 30% of their available limits tend to have a higher rate of default. See how multiple cards can hurt your rating, even if you are ever so careful about paying bills promptly?  

Should You Close Credit Card Accounts You Hardly Use?  

Maybe not. Although you may not have used an old account in years, the credit limit on that card still figures into the total amount of available credit for you. If you close it, your percentage of debt to available credit may increase, thus making you a higher risk in credit bureaus’ eyes.

If you will close an account, let the creditor report to the agency that you personally requested the account to be closed. When accounts are closed, credit bureaus normally presume it was closed by the lender, which unconstructively affects your credit rating.

What is Repossession and why should it cause you to worry? Repossession is a legal process that happens when a lender gets a court order to take your property (possession) because you were not able to pay your mortgage. You will receive a letter reminding you that you have missed payments and that you are asked to get in touch with your lender so that you can discuss the situation and how you will be able to catch up on your arrears.

If in case you do not respond to the initial request or if they are not satisfied with your proposals they will write to you again. This second letter will advise you to clear your debts, make contact with them or else their solicitors will be the one to get in touch with you. The next step that your lenders will take is to go to court to file for a possession order so that they can take over your property.

Repossession does not happen in an instant. The best thing for you to do is to stop the process or else the worst case scenario would cause you to be homeless and your credit rating will be greatly affected so in effect you will not be able to buy your new home ever again or finance a car loan. The good news is that there is still hope in a seemingly hopeless case.

Your options in removing repossession from your credit report:
•    Work directly with your creditors to negotiate the removal or amendment of repossession. Your creditors will report it as “paid in full” upon receiving payment or partial payment of any money due.
•    Write a dispute letter. If in case your repossession was inaccurately reported in your credit reports then you can dispute this directly with the credit bureaus. If your creditor fails to verify this then it can be removed in your credit report.

May this teach you a valuable lesson to learn from your mistakes to avoid in making it happen again. You can avoid financial hardships such as this if you live within your means. Apply for only those loans that you can afford to pay. Exert an effort to clean up your debt so that life can be easier from now on. To stay financially stable make a budget and stick to it.

Once you have your credit repaired you can start anew financially. If you are unsure that you do not have the ability to make the payments then learn to wait until such time that you can pay in cash by saving. The next time you apply for credit be careful when and where to use this.