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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.

Economic recession has caused many Americans to get faced with personal debt. Since the economic downturn happened, many individuals have lost their jobs which resulted to reducing their income.  Better yet their credit score has suffered.   This becomes the main reason as to why they cannot pay for their debts and forced them to file bankruptcy. What makes it worst is that they are no longer able to get fresh loans for the period of 7-10 years since the they have lost their credit scores as well as their eligibility.

Of course, anything can be avoided. In this situation, such bankruptcy and eligibility can be avoided through debt settlement. That is when debtors negotiates with their creditors and eliminates at least 50-70% of unsecured debt. Before the debtor is required to hire a debt settlement company, he must first have at least $10,000 unsecured debts and such debts must be in tack so as to keep it uncluttered.

The negotiation then starts. The debtor will be advised by the company negotiator to stop paying the creditor as a proof that the debtor in actually in financial incapability. Once this happens, the creditor will then call a collection agency, after 90-120 days, to recover the debt from the debtor. What the debtor can only wish for is that the creditor will be forced to pay in full after having several threatening calls from the collection agency.

The creditor will be taken advantage of by the collection agency by paying back only 20-30% of the debt of the creditor which will leave the creditor with no choice but to agree. Now here comes the negotiator who will offer 30-50% of debt repayment in one condition, and that is for the creditor to slash off remaining amount of debt (see CuraDebt review).

What will make the creditor accept and agree with the offer is the threat of the negotiator that if disagreement arises, the debtor will have to file bankruptcy. The creditor has just to choose between having a smaller or greater recovery, between the negotiator’s offer and the collection agency’s offer.

As the creditor agrees to the offer, the debtor should then pay the agreed amount in a specified time. Such negotiation is the best thing one could do in order to get rid of unsecured debt. Debt settlement is currently becoming a popular  option for the American’s with debts amounting to $10,000 and above. See link below to find a professional debt help in your place.

Sick and tired of dealing with your debt problems?

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

Have you negotiated with a creditor so that you can pay less than what you owe on a credit card debt? Your financial woes might not be over yet the IRS considers your forgiven debt as taxable income. Before you begin to negotiate for credit card debt settlement look for a good tax advice so that you can avoid being caught by surprise with tax due from debt cancellation. Most consumers after resolving their credit card debts have received 1099-C (IRS form for debt cancellation) tax notice in the mail. Currently there is no law that says that debt collectors must disclose that a 1099-C would be forthcoming after the debt settlement so it is up to you as the debtor to know these facts to help you comply.

Both creditors and debt collectors alike who have agree to accept at least $600 less than the original balance are required by law to file cancellation of debt form and send this notice to their debtors as well. Taxpayers (debtors) are obliged to report this “income” on their Federal income tax returns. But some people will dispute this fact since they would reason out that they are already broke so how come this is still considered as an income? What a debtor has to do is to indicate this information on Line 21 of Form 1040 tax form as” other income”.  The taxpayer will be facing a huge tax bill depending on how much his forgiven debt is since there are still some other things to consider like his level of income, deductions and other factors.

Consumer credit counsellors and tax lawyers said that most consumers are not aware of the tax implications of settling to pay a lesser amount than what they typical owe in a credit card debt. As a taxpayer you are qualified for one of several exclusions that are allowed to reduce your income from cancelled debts. If you are qualified for this exclusion you just need to file an IRS form 982 in addition to the 1099-C. These exclusions apply only to the amount by which the consumer is insolvent. Clarify with your debt collector or creditor the exact amount that will be declared on your 1099-C form. Some other exclusion of foreclosure applies to homeowners who had defaulted on their mortgage loans under the Mortgage Forgiveness Debt Relief Act.

This provision only applies to forgiven mortgage debts from years 2007 to 2012. Still some other exclusion may have to do with farm debt, student loans and real property business debts.
Make sure that the amount of cancelled debt listed in your 1099-C form is accurate. Make sure also that you have some written proof from your creditor that he will not report the extra amount that has been owed once he agrees to settle on that particular debt so that you can claim it as your own income when you file for your own taxes. Some people say that when it comes to the tax rules there is no free ride so consumers who borrowed money must be prepared to live up to their financial obligations.

If you are being pursued because you are being fondly admired the feeling will be euphoric but if you are being followed or pursued by your creditors it is another story. Who can sue you? Creditors can sue you under the law. Creditors can be anyone like those that has to do with credit card companies, hospital, banks or other organization that has the legal basis of chasing after you because of debts that you owe them. In court they are called the plaintiff and you are the defendant.

If you are being sued by a creditor you will received summons to appear in court that may have something to do with an old credit card debt that you forget to pay years ago. Do not ignore the action. Their actions might be justified after all. The creditor will not go easy on you their goal is to sue and win. They may go for garnishment wherein your wages will be use to pay your debts as well as the legal fees and any loan interest. Before this gets out of hand try to settle with your creditors, most of them are happy to settle with you.

If you received a summons and complaint you must give your reply within the period stated in the summons. If the summons was handed to you by a process server this gives you 20 days to reply. If it was by other means then you have 30 days to post a reply. If you do not reply within the prescriptive time the creditor can ask the judge for a decision because of your absence (default judgment). The right way to reply to the summons is by raising your defenses and counterclaims. Defenses can include your general denial of the creditor’s claim.

If you think that you cannot handle all of this on your own you can find a lawyer for legal advice. Look for your original credit card contract. This is the long contract with fine print when you applied for your credit card application or loan for that matter. Some of the reasons to use in your defense are that you have paid the money that you owe but it was not properly reflected on your account.

You can also say that you do pay on time (if this is the truth). In case your creditor had made a wrong calculation of the amount that you owe you can use this in your defense. If your creditor tries to collect more than what you agreed to pay then you can use this in your favor. Although both sides have the right to trial the court can urge both parties to arrive at a settlement. If you think that this would serve you better then do settle.

For people who have declared bankruptcy a common misconception is that they will have to go to court where these creditors and a judge will embarrass them. The reality is that creditors rarely show up to attend the meeting with you. The court appointed trustee typically will ask you straightforward questions.

You must also understand the importance of a bankruptcy creditor index or matrix. This is an attachment to the bankruptcy petition. The index contains important information regarding each of the debtor’s individual creditors. A debtor must ensure that he has declared all the required information in the index.

The bankruptcy creditor index provides the court with the name and address of all of the debtor’s creditors. The index also includes the account number for all the balance that is due to each creditor. The bankruptcy court uses this information to notify all creditors of the bankruptcy and provides them a proof of claim form.  The index also gives an advice to the creditors of the exact time and location of the creditor’s meeting. This index form can be obtained from the clerk of the bankruptcy court.

A misconception is that this index allows you to leave some creditors off the list. Some people have an idea that they can directly deal with their creditor but such is against bankruptcy law. If you fail to prepare or file an accurate bankruptcy creditor index your case can be dismissed. The usual court decision requires the debtor to correct his deficiencies.

Another question that may concern a debtor is whether a garnishment on his wages initiated by a creditor is lawful. The truth is that different states have different laws whether a creditor is allowed or not to garnish your wages. Each state has their own laws on which property is protected from creditors and which properties can be seized by creditors. A few states do not allow wage garnishment but even those states who allow wage garnishment sets a limit on what they can take from a person’s wage since they need to allow the person to have something to live on with. Better check the law on your states regarding wage garnishments so that you will know whether this can be use against you by your creditors or not. There are ways of avoiding wage garnishments like when you file for bankruptcy. Filing Chapter 7 bankruptcy will stop a wage garnishment in progress and cancels them out provided that the court allows the debts to be discharged.

Another common creditor misconception is that they are after your house or car. This is far from the truth. Your creditors do not want to deal with the hassle of collections so they’d rather collect your money than to grab your car or house.

If you have arrived with a compromise agreement do follow through with it. Keep your word of honor when you say that you will pay them $100 a month then do so. If you are consistent with your payment your creditors will see your sincerity in settling your debts so they will not breathe in your neck as often as they once did.

People have different reasons for wanting to freeze their credit cards. Some reasons may have to do with identity theft or a stolen/lost credit card still others do not want a temporary easy access to their credit cards so that they will not exceed their credit card limit this is especially true for shopping addicts who love maxing out on their credit card limit. The latter is a good strategic move for short term relief from credit card debt so they do not want the temptation of a credit card access.

At present, some states in America provide their residents with the right to freeze their account if they suspect any identity theft. These states are California, Colorado, Louisiana, Nevada, Texas, Vermont and Washington.
What is the difference between credit card freeze and fraud alert? Fraud alert leaves your account active and even allows a credit issuer to approve anybody applying under your name if they verify that it was you who made the credit. The creditor usually contacts you on permission to issue a new credit card. But one negative thing about fraud alert is that creditors are not legally required to check the alert for any potential criminal who may open credit under your name. So using a credit card freeze is much better than fraud alert.

What is a credit card freeze? This is a credit card lock down of your report that prohibits anybody including you in having an access to your credit card. As soon as you place a freeze in your credit card account it becomes unavailable to credit card issuers, lenders and even employers. The freeze makes your credit card file inaccessible even for you unless you use a special PIN (Personal Identification Number) to lift the freeze.

A credit card freeze protects you from uncontrollable spending and from credit fraud which are both important for your personal safety and credit card rating. For whatever reasons that anybody can have the credit card “freeze” period can allow you to make a wise decision before the account is usable again.

How do you freeze your credit card?

• Get in touch with customer service by calling them. You are required to answer a set of security questions which is usually your date of birth, Social Security number, mother’s maiden name or a customized question. You also need to provide your credit card number for the account that you freeze.
• For an easier search give the customer service representative detailed information about when and where you last used the card before it was frozen. If in case you are a victim of identity theft fraud then this information can be helpful in tracking down the person who used your card which in turn will lead to him being caught by those in authority.
• Ask for credit card freeze on high interest credit card so that you can easily manage your credit card debts by limiting your access. You cannot unfreeze your account until the freeze period is over.
• Use the credit card freeze time as an opportunity for you to pay your outstanding debts reducing them to zero if possible.
• For credit cards that charge exorbitant annual fees or high rates of interest cancelling them is the wisest decision that you can make.