If your credit report has a debt collection on it, it lowers your score. The most damage will be done during the first two years that it is on your report, but it will linger there for 7 years total. And, due to some unscrupulous collectors, maybe longer. But, there are some steps you can take to remove debt collections from your credit report.

Is it Really Your Debt?

First of all, make sure it is really your debt. You can file a credit report dispute with the credit bureaus if it is not your debt. For instance, collectors are not allowed to list debt on your credit report if the debt is your spouse’s, unless your name is on the loan or credit card, too.

What if it Is Your Debt?

The debt collector who reported you to the credit bureau can’t legally collect from you, even if it is your debt. If the collector has made contact with you within the last 30 days, you can request a debt validation. This will be a notice, in writing, proving that the debt is really yours. You have 30 days from the first notice to send a written dispute. The collector cannot report his collection actions to the credit bureau until this is resolved. You can dispute all or part of the debt. You can also ask for the name of the original entity that you owed money to, because sometimes the collection agencies sell accounts to one another.  If the collector can’t prove that the debt is truly yours, or if he ignores your letter, he has to remove the claim from your credit report.

Dispute the Claim When Your Account is Sold

Collectors sell accounts back and forth, and some of them will try to keep the claim date current on your credit report. This is called “re-aging”. If you know a debt is over 7 years old, dispute it’s appearance on your report. These account sales take place about twice a year. So, if you’ve had a claim on your account for a while, it is probably far removed from the original creditor and collectors. You can often have these accounts removed from your credit report by disputing them with the credit bureau.

Negotiate

If you are trying to clean up your credit report and raise your credit score, it is possible to negotiate with creditors to have their claims removed from your credit report. Contact that creditor or collector and agree to pay the bill if they clear their claim from your report. If they agree, wait until you have the agreement in writing before you make a payment. When you send the payment, and any other communication, make sure to send it in certified mail, requesting a return receipt, so that you have proof of the correspondence. If the collector does not remove his claim after your payment, dispute it.

One really good way to handle these problems is to hire a credit repair company. They know how to spot questionable claims, and dispute them.

So you’re strapped for cash…the next paycheck is still a week away but you already have a notice from the electric company that today is your last chance to settle your bill; and you stand to spend the night in darkness and cold if you don’t come up with the money. Is there any other option left?

It’s an undeniable fact that a lot of people have been in such desperate predicament – needing financial assistance but seem to have nowhere else to go; they just don’t have a clue where else to find the money. It’s no wonder that some enterprising people and entities are quick to make the most of the opportunity for a very lucrative business.  Thus, in recent years, Payday Loan – a.k.a. Check Cashing, Payroll Advance, Deferred Deposit – have proliferated the scene. You can see these types of lending outlets at every turn; prowling on areas where hapless, low-income groups are usually found – with fantastic offers to provide moderate amount of quick cash that is supposed to tide you over till you get your next paycheck.

A Quick Look at the So-called Benefits of Payday Loan

In essence, Payday Loan is an unsecured, short-term, moderate-amount loan that a borrower pledges to repay out of the subsequent paycheck. This type of loan – mostly provided by pawn shops, storefront money lenders, and even on the internet – has become a very popular method of obtaining quick cash in exchange for a post-dated personal check, held by the lender to be deposited on the stated date therein.

Typical Payday Loans range from $100 to $1500; depending on the amount of the borrower’s paycheck; the short duration of which is mostly two to three weeks (usually in-synch with the next payday). Because it is short-term, lenders are more willing to give instant payday loans without going through credit check. All that is required to qualify for a payday loan is for you to be at least 18 years old, have a bank account with debit facility and proof that you have a full-time employment or source of income. So where’s the bad news in that? As a matter of perception, when you’re in dire financial situation, this would seem a quick and hassle-free solution – like an oasis amid a parched desert. That might be so at a swift glance; but Payday Loan isn’t quite as straightforward as that.

Gateway to a Vicious Cycle of Long-Term Debt

Once approved for a Payday Loan, the borrower is required to write a personal check in favor of the lender, in the amount applied for plus all fees that apply. And this is where and when Payday Loan woes may start rearing its ugly head.

Exorbitant “Fees”
It’s interesting to note that financial establishments in Payday Loans business don’t call consequential finance charges for this type of loan as “interest”; they simply charge a “fee”, most likely because this lets them off the hook when it comes to standard usury laws that regulate interest rates. In the U.S., finance charges for Payday Loans are in the range of $15 to $30 per $100 loan amount (read 15% – 30% interest rate) for a two-week period, which roughly translates to Annual Percentage Rate (APR) between 390% and 780%. Can you say outrageous!?

Not-so-short Term
Remember that check you wrote (postdated to your next payday) to cover the amount of loan plus fees? You have the option to pay the face value and redeem the check or you may allow the check to be cashed; conversely, you can opt to authorize the lender to automatically debit your bank account. In the event that you fall short to cover the check amount when it becomes due, you may request to extend or “roll-over” the loan; in which case you stand to carry the burden of higher fees (twice as much or even more).  If you think that this is a good thing…think again! This is a sure-fire formula to get into the vicious and expensive cycle that can evolve into a spiraling pattern of escalating, recurrent, long-term debt. As you pay off one Payday Loan, you’ll need another to get you through the next payday or the succeeding month; which could lead to a need for another loan to pay off the previous one…and so it goes on and on.

Caution: Payday Loan Is Bad Idea; Avoid the Trap

Contrary to what those Payday Loan ads claim, Payday Loan shops don’t exist to help you through a single moment of financial emergency. They thrive on repeat/regular clients. More often than not, the first Payday Loan becomes the gateway to an inextricable debt. Look at this way: if you cannot pay your current bills with existing paycheck, how do you expect to extricate yourself from this financial bind by promising part (or the whole) of your next paycheck? Chances are you’d always end up behind. If you borrow your pay in advance, it’s tantamount to a 15% – 30% cut in your paycheck; moreover, if you’re already spending your next paycheck, how do you think you’d survive through the next two weeks without getting another loan?

Payday Loan is one of the worst ways to sidestep a financial squeeze. Despite the enticements offered by Payday Loan shops, the fact remains that spending money before you earn it; not stopping to think about the cost of money; and not budgeting well enough to save some amount for unexpected expenses or emergency are totally incongruous to a sound financial plan.

The rule of thumb should be: a) earn money; b) pay yourself – by setting aside a portion of your earnings into savings or other investments; then c) spend. It may take some time to get the hang of budgeting but it becomes easier once you hurdle the initial pain.

Here’s another worthwhile suggestion: If you really have to use Payday Loans, stick to an amount that you can afford to pay with your next paycheck and still have something to spare for you to make it through the next payday. Don’t allow yourself to become the lending predators’ “dream-payday-loan-client” – always coming back for more each payday.

Are you a card holder who loves to keep several credit cards in your wallet? Do you have the habit of swapping them every time you go out for shopping? If yes, then it is quiet common that you have fallen into credit card debt problems. Credit cards have become an overwhelming concern for most of the Americans in this tough economy. Credit card debt is increasing more and more with every passing day. The reason behind this is that the people are unaware about its importance and when they should use it. In situations, when you get entangled with serious credit card debt problems, you may take the help of debt consolidation so that you pay off your outstanding dues with ease and live a debt free life.

How does credit card debt work?

When you make it a tendency to use your credit cards as soon as you step out of your home, you fall into unnecessary credit card debt problems. Having credit cards doesn’t mean that you may use it to buy every thing you see around. This is the reason why you get entrapped into credit card debt burden. The credit card companies charge interest from you on your borrowed money and as such, borrowing high money from your credit card means high credit card debt and you will be charged high interest rate on the borrowed amount. The card provider expects you to make at least the minimum payment every month even though the amount is very low.

If any customer pays back only the minimum amount every month, the interest rates on your borrowed amount will increase more with the passing of time and you will take much longer time period to pay off the entire credit card bill. Paying high interest rate for high credit card debt will increase your financial problems more and you may end up making late payments. High interest rate and additional fees for late payments are some of the main reasons due to which you fall into credit card debt problems.

What are the 4 things you need to know before buying a credit card?

Have a look at the 4 things you need to know before buying a credit card.

• 1. Purchase the right card – Before purchasing a credit card, it is important that you research thoroughly so that you buy the best card according to your need.

• 2. Pay before due date – A car holder should make it a point to pay off the outstanding credit card balance before due date to avoid paying high interest rate.

• 3. Read the clauses properly – You should read the clauses of the credit card properly before you decide to buy the card from a company.

• 4. Know about customer care - You should purchase your credit card from a company who can offer you 24-hour free helpline service so that you can take their help in times of need.

By considering the above things, you will be able to get hold of the right card and stay away from credit card debt problems.

What happens when you make late credit card payments?

Making late credit card payments hurts your credit score to a great extent. Every late payment that you make gets recorded in your credit report and the lenders will check your credit score before approving your loan request in order to see whether or not you’ll be able to repay the loan amount. However, with low credit rating, the lender may decline your loan request or if, by chance, they approve, you’ll have to pay high interest rate on the borrowed amount. Make sure you boost your credit score and become credit worthy before you apply for credit card or mortgage loan so as to get it approved easily.

When you are struggling with huge debt burden, you look for all possible ways to ignore it. But, it would be a wise decision if you take the necessary steps to pay off your credit card dues and solve your debt problems. Take help of debt consolidation so as to eradicate your credit card debt problems with ease and free yourself from the clutches of debt burden.

CuraDebt Helps Get You Out of Debt

The worst case scenario that you can encounter when you enter any debt settlement program is that you pay in advance thinking that you are guaranteed that there will be favorable results. However many times the company will not able to deliver the debt reduction that you are aiming for! But, if you are reading this CuraDebt review you are probably asking yourself do they actually work? CuraDebt is not that kind of company that will take your money and do little to nothing. They will offer you a sensible and friendly approach to make sure that you will get the best results. Other debt settlement companies want to be paid for their work without really empathizing with their clients. CuraDebt on the other hand is paid on a commission basis so they will only get a certain percentage of the amount that they manage to save you. This simply means they do the work and they get paid for it. They have an unusual policy of written guarantees and can provide you with “real” results. This assures you that they will do their best to get you the best offer or else they will not charge you for services.

 

Get A Free CuraDebt Consultation Today

 

To give you a background about CuraDebt here are the facts. CuraDebt is one of the most established and well known debt reduction companies in the United States. They have been in business since 1996. Before the company was established those who are behind CuraDebt have already 25 years of experience in this industry. They pioneered the concept of debt settlement. Their online service started operating since 2000. Their company is based in San Diego, California.

There are many advantages being in business for a long time and CuraDebt has already helped people save millions of dollars. Since CuraDebt has a good relationship with most of the major creditors this gives them the leverage and the edge over the other companies offering the same service. Rather than negotiating for just one deal their combined negotiations for their customers(including you) allows them a sizeable discount which in turn helps you get a better deal.

CuraDebt’s initial application process is so simple. You just need to visit their website online to complete a very basic inquiry form (click here to fill out that simple form). After you fill this up with your complete information and contact details a CuraDebt advisor will get in touch with you to review your financial situation so that they can help you arrive with the best solution possible. CuraDebt offers a wide range of debt reduction solutions so there are lot of option to choose from. CuraDebt also offers services for those who are in business so if your debt encompasses both your personal and business areas these can be evaluated and consolidated for easier resolution.

If ever you decide to avail of their services, they will assign a well experienced counselor to help you deal to the whole process. These counselors does not just act as financial advisers, they can also offer you practical support as well as emotional support too. The CuraDebt support team is compose of lawyers, credit arbitration experts, financial advisers and psychologists. If you need legal advice, they have a network of local lawyers across the country to assist you. What we really like about CuraDebt is they are more personal than any other debt consolidation company.

More On CuraDebt

In 1996, CuraDebt began serving individuals and small businesses in California by offering financial and creditor negotiations, debt settlement and arbitration services for them. The people behind these credit repair service company have been in business for almost 25 years now and has extensive knowledge about the credit card companies, and mortgage banks. CuraDebt has been negotiating for both the lender and borrower so that they can both benefit when an amicable settlement has been decided by both parties involve.
In the year 2000, CuraDebt’s presence was felt by those people whom they have helped with their bankruptcy problems. The standout features of CuraDebt are as follows:

• One of the Country’s Top Debt Help Companies Based on their credentials and overall successful rates of clients that this company has been able to help with their credit repair problems.
• Free online debt analysis in just 30 seconds.
• Your personal information is safe with this company.
• Helps you save almost up to 70% on your unsecured debts.
• A company with solid reputation.
• Dedicated service to help you achieve your ultimate goal of having a higher credit score.
• Written guarantee of their commitment to do their best to help you with your credit concerns.
• One stop shop debt settlement/consolidation with credit counseling services.
• Genuine and active involvement in helping their clients with their respective debt challenges.
• FTC compliant which makes their counselors transparent with the services that they offer.
• You are assured of having financial peace of mind.

A debt settlement company who is both reliable and honest is a priceless gem that is hard to find and you have found it with CuraDebt. With this company as a customer, you are treated like a personal friend in a comfortable environment with no complicated processes to add more worries to your already stress out brain. When you avail of their services you get a free analysis of your credit problems with a personal financial counselor to help you go through the process. CuraDebt can help you have enough money to settle or help you set up a good payment plan for saving enough so that you can settle with your creditor later on.

CuraDebt’s professionalism has made it a member of some professional organizations who offer good services to their clients. CuraDebt is a member of good standing with TASC which is one of the largest debt settlement companies in the world. There are a lot of key reasons why CuraDebt is chosen to be the number one in terms of professionalism which is displayed to through the services the company provides. Customers can feel that there is light and hope at the end of a long dark tunnel financially speaking. So I would HIGHLY recommend CuraDebt to conclude this review.

 

Get A Free CuraDebt Consultation Today

 

There are only a few things worse than getting a call from a collection agency demanding that you repay some kind of owed debt. For many people, the immediate reaction would be one of embarrassment, soon followed by either aggravation, or the need to settle the matter right away. Most collection agencies would like you to pay whatever it is that they ask as soon as possible so as to give you little time to think about the situation at hand. It is their hope that you will be caught off guard by the call, and will provide any and all information that they request without considering your rights in such a case. For these agencies, the less you know, the better. Whether you’ve dealt with collection agencies in the past or not, it is important that you know your rights, and have a good understanding of all the things that they don’t want you to know. By considering the following data points, you’ll increase your knowledge regarding interactions with debt collectors, and will be able to avoid stress, and also save yourself time and money.

You don’t really need to make a big initial payment

Most collection agencies will insist that you make a big immediate payment to rectify your unpaid debts. They will come up with a wide variety of reasons as to why you must pay a large down payment against your debt in order to pressure you to do so. Such reasons may include preventing even greater fees in the future, or that the agency’s manager requires a large payment in order to go about the process of eliminating the debt from record. While these debt collectors may seem very convincing, the truth is that you don’t need to make a huge upfront payment unless you want to help pad the agent’s commission check for the month. As you can probably now guess, most debt collectors are paid through commissions on the size of the down payments that they receive from the people that they contact.

You can break off communication with collection agencies.

Over the years, people have tried all sorts of tactics to avoid calls from collection agencies. Fortunately, there is now a federal law that states that if you request in writing for a collection agency to no longer contact you, the agency must abide by your request. In fact, if they ignore your request, and do continue to contact you, then you can sue them for a substantial amount of money as outlined in the law. It is important to clarify, however, that requesting a cease in contact does not eliminate the debt that must still be paid. The request simply gives you the opportunity to pay off the debt without harassing phone calls coming in on a consistent basis.

There is no such thing as a payment deadline

Many debt collectors will insist that you pay your debt within a certain timeframe. Some may even go as far as making threats of potential repercussions that may result in not paying the debt before the so-called deadline. The truth is that all the talk of a deadline is entirely fabricated, and is actually used as a scare tactic to coax you into paying the debt as quickly as possible. The debt collectors know that their best bet to collect the full amount owed is to make sure it is paid in a very timely fashion. The longer that they have to wait to receive full payment for the debt, the less likely it is that debt will actually be completely paid.

Their threats are exaggerated

The debt collector will want you to react to their call in fear; as such an emotion may drive you to pay your debt sooner than later. In order to scare you into making a larger payment, or even paying your debt in full, a debt collector may make exaggerated threats. They may threaten to destroy your credit score, or even cease all of your possessions. While these threats may seem scary, the truth is that the collection agency can’t really act upon them. The threat to your credit score is often made with the hope that you haven’t taken the time out to check it periodically on your own. If a collection agency is calling you, that means that your credit score is already severely damaged, and there is little to nothing that they can do to damage it even more than it already is. With respect to repossessing your possessions, such an action is illegal in many states, and is actually more costly than it is worth for the collection agency.

A debt collector must disclose his or her identity

If you receive a phone call from a debt collector, they must immediately provide full disclosure as to their identity. They absolutely cannot call you anonymously so as to make it impossible for you to avoid their calls. In fact, if they fail to fully disclose their identity when they contact you, you then may have justifiable grounds to sue the collection agency for a nice amount of money.

Conclusion

Collection agencies often act on the premise that the less the debtor knows, the better. They are in business to get your money, and will do whatever it takes to make that happen. Many people fall into their traps, causing them to pay unnecessary fees, and deal with harassing phone calls because they aren’t aware of their rights. By knowing all the things that collection agencies don’t want you to know, you’ll be prepared to best handle their phone call.  If you are interested in settling these debts check out my CuraDebt review.

If you have a substantial amount of debt, you’ve more than likely considered the services of a debt consolidation or settlement company (see this CuraDebt review). However, with so many stories of unethical practices and scams surrounding such companies, you may be wondering if all of them are dishonest, and strictly out for your money. That is certainly a legitimate concern, and quite frankly, should influence your decision when looking to reduce your debt.

Fortunately, not all debt consolidation companies are unethical and scam-artists. There are many out there that offer services that can be of assistance, particularly if you have a dire need. Rather than trusting the promises and guarantees of a debt consolidation company, though, you will need to do your homework and ask the right questions to ensure that you aren’t making a decision that could do you more harm than good. The majority of debt consolidation companies know that you are in a vulnerable state. After all, you wouldn’t need their services if you weren’t. However, just because you are in a vulnerable state does not mean that you can’t make an informed decision. There are a number of different things that you should find out from the debt consolidation or debt settlement company, and there are actions that you can take to ensure that you are choosing one that is both ethical, and has a serious interest in helping you get out of your situation.

What you should know

An ethical debt consolidation company will be entirely open with you throughout the entire process. If they aren’t open with you, particularly with respect to key matters, then there’s a good chance that they don’t intend to consider what would be in your best interest. First and foremost, an ethical debt settlement company will let you know before using their services as to why you are a strong candidate for debt relief. Most debt consolidation companies will recommend debt relief, as it is incredible profitable. However, a truly ethical company will tell you exactly why it is a recommended option. If they are unable to provide reasoning, they are most likely looking to scam you.

Although debt consolidation companies that make strong guarantees can be quite appealing, it is best that you stay away from them. These companies are often lying, and are, quite frankly, unethical in the way they do business. The truth is that creditors do not need to accept any kind of settlement offer. In fact, unless it is in their best interests, creditors won’t accept an offer. Furthermore, there is no way for a debt consolidation company to know exactly how much you will have your debt reduced. Each case is different, and thus, any company that makes any promise regarding the amount of money you will save is likely unethical. Finally, another key indication that a debt relief company is unethical is if they state that they can perform their services without harming your credit score. Debt settlement will hurt your credit score, and any company that states otherwise is giving you the answer that you want to hear so as to take your money.
A debt consolidation company should never tell you to stop speaking with your creditors. While they may tell you that they have everything under control, it is always best that you stay on top of what is going on with your debt. Any company that insists that you not talk to your creditors is probably unethical, and may be trying to hide any pending suits that may be filed against you. Furthermore, a debt consolidation company should not tell you that they could definitely prevent a suit from creditors, or even calls from debt collectors. If they may such a promise, they aren’t being honest with you.

A truly ethical debt settlement or consolidation company will open and honest with you throughout the entire process. They will give you information that you may not want to hear, but need to hear to make sure that you aren’t going to be scammed. They will walk you through the entire process to make sure that you know what is going to happen with your debt settlement, and how it will happen.

What you can do to avoid being scammed by an unethical company

Another way to avoid an unethical debt consolidation company is to do your research before you contact anybody. Seek out the reputation of various companies by looking at their profile with the Better Business Bureau. Avoid companies with a significant number of complaints, as you don’t want to be the next victim that needs to file one. Make sure that you get any information that you need from the debt settlement company in writing. Avoid getting pertinent information over the phone, and if you must, then it is crucial that you also receive the same information in writing. Never agree to any kind of action until you’ve seen details of that action in writing.

Finally, get to know everything that you can about the debt consolidation companies that you are considering. Such information as office hours, and a listing of all fees that will be charged are essential pieces of information that will help you know which company is ethical in their practice.

Finding a debt consolidation company that is ethical and out to help you can be taxing and stressful. However, it isn’t impossible. By avoiding companies that make overly confident promises, or any promises for that matter, as well as those that suggest highly aggressive debt reduction, you’ll find yourself feeling a lot more comfortable with the process.

This is a guest post by Kevin Craig who is a financial writer associated with Oak View Law Group. He has been providing advice on debt settlement since 2007. With his advice, many people are now living a debt free life.

If you are a Canadian consumer who is lying on the verge of financial collapse and receiving repeated harassing calls from the over-aggressive debt collectors then you must be frantically looking for a way out. Seventy to 80 percent of people are enticed by collectors out of fear and seldom realizes the consequences well. Don’t fall into this vicious trap set by the collectors. Remember, the collection agencies will not move down to lump-sum payments and smaller monthly repayment plan until they find some common ground. Believe it or not, you do have some leverage here as well. The debt collectors will be paid a commission on the amount they will be able to retrieve from you, therefore think logically and try to negotiate an affordable and convenient repayment plan with the debtors. To negotiate effectively with a debt collectors the first thing that you need is a thorough knowledge of consumer rights. Read on to know what the parliamentary Canadian system offers as consumer’s rights and how could you be benefited by them in dire need.

Debt collection in Canada is governed by the laws of provinces and territories but they are quite similar in nature. The laws are there to preserve the debtors’ rights to be treated with dignity and not to be unduly harassed by the creditors and collectors. They collection agencies are no way allowed to barge on you at unreasonable hours or jeopardize your job by interrupting at the working place.

Debt collectors are prohibited to…

Put up a charge or threat that has nothing to do with the debt collection.

• Use profane language to provoke the consumers.
• Contact your employer without your permission except for confirming your employment.
• Humiliate you, your family or your employer with an offending tone.
• Make frequent calls, more than once a day to harass the consumers.
• Issue a false document that is made to look like an official court statement in order to threaten you.
• Giving threats of violence, repossession or jail time

As a consumer, if you wish to complain about a collection agency, you should contact their provincial or territorial office of consumer affairs.

Keep in mind

Before a collection agency or creditor attempts to collect on a debt or start a legal procedure against you, you must be notified in writing about the debt amount.

Under the Credit Reporting Acts consumers’ rights are protected and no one is able to obtain a copy of the consumer’s creditor report without having written permission of the consumer, or notifying the consumer at least three days before obtaining the report. Consumers have the right and option to place a 100 word statement on their credit report to be given to any business, government agency, lender, landlord or other authorized individual or organization.

To conclude, you have to know what the truth is and what not the truth is so the consumers won’t be able to frighten you into agreeing to payment terms that you can’t afford. Don’t be intimidated by all these collection efforts and remember, you always have the law on your side.

Desperate borrowers try to seek professional help to settle their debts. There are many fly-by-night operators our there operating to worsen your credit situation instead of alleviating them. They usually use smooth talkers, who are highly trained salespersons that make promises to their customers that their debt will be reduced in the fastest time possible. Unsuspecting and gullible customers often faithfully send their monthly check payments to their lenders only to find out that there is no payment received on their behalf.

What is Debt Negotiation?

Debt negotiation is debt settlement in simple terms. This is negotiating with your creditors or collection agencies (CAs) in order to reduce your outstanding debt balance.  These organizations will help you in allowing your creditors to accept payment up to 40% to 60% what you owe while the rest is forgiven.

What are the Debts that can be settled?

• Unsecured credit cards
• Payday loans
• Personal loans
• Store cards
• Bounced checks
• Medical bills

What happens in Debt Negotiation?

• Debt counseling. Here is the part when your debt counselor will review from your situation to find out what debt settlement will work for you.
• Realistic budget. The budget gives a clear idea on what to pay and how much the company needs to negotiate creditors on your behalf.
• Review of your program term. Depending on your available funds, a program will be made that covers 2 to 4 years so that you can pay off your debts.
• Bank account. The company will make a trust/bank account for you. They will save your money till it can be big enough to settle your debt. It is properly insured by the Federal Deposit Insurance Corporation) for an amount of $100,000. Monthly statements of transactions will be given to you so that you can see how much money you have saved for the debt negotiation later on.
  •    Negotiation. If you have saved half of the amount that you owe negotiation will start.
  •    Debt settlement. Once you approved the terms of negotiation drafted by the said negotiation company the final copy will be printed and ready for you to sign. Once the creditors accept the reduced settlement offer, the company will ask you to send your offer in writing. Based on the offer, you’ll be able to pay a lump sum from your saved funds. Your debt is settled at a much lower amount than what you owe.
• There are warning signs that you can see to detect these debt settlement frauds:
  •    These companies do not offer references. They have big promises that are too good to be true. Many of these companies have their “secret” method to share with you that says that they can make your debts disappear.
• Not a member of Better Business Bureau (BBB) or does not have good standing with the said bureau.
• Bad reviews on the web. Search for information by researching on reviews made by clients regarding their organization.  Visit websites such as ripoffreport.com. You can also file a report on the said website if you have been a victim through the Bad Business Bureau website at ripoffreport.com.
• Your intuition kicks in that this organization has unscrupulous dealings.
• Non Profit Organization. In attempt to lure customers who are struggling with their debt they post as a non-profit religious organization. They try to use scriptures from the Bible relating to debt but seek to take advantage of you.
• Research. Know which company to take your debt settlement. Trust only those sites that are properly researched and can be trusted through referrals from others who have used their service.

A Better Alternative for You

For example you have found a legitimate debt settlement organization try to ask for a credit counseling which is the best alternative than filing for bankruptcy. A good credit counselor will negotiate for the best terms for you placing you in a debt management program.  Debt management is better than debt settlement since the latter will hurt your chances to buy a home or get more credit.

How Does Credit Counseling Work?

A credit counseling program gives you the right instrument and knowledge on how to be debt free. What one usually does is consult a debt advisor or financial advisor on how to manage your finances more effectively. The first step would be to help you assess your present financial situation. The debt advisor will get detailed review of your income, expenditures and debts (both secured and unsecured) to establish your financial hardship.

The next step is to formulate a budget plan that will work for you so that you can pay your debts. You can decide if you want to proceed on enrolling in a Debt Management Plan (DMP), this can be advantageous for you since most creditors will reduce your interest rates and stop charging over-limit and late fees based on financial hardship. With all of these wise planning and putting your plans into action you may be debt free after several years or less. One good thing about making a sort of spring cleaning with your finances is that you will be happy to notice that your balances are dramatically decreasing.

A benefit of credit counseling is that they can help you change your unwise spending habits which “helped” you get in the situation you are in right now. Better start early and don’t wait until matters become too hard for you to handle before you find help. Some credit counseling services charge fees based on the improvement of your financial situation. They will not charge you if they see that there is no improvement yet as they promised. Look for those that charge a small fee that you can afford.

Some other benefits of credit counseling can be by helping you reduce your interest rates by helping you improve your credit score. They can help you become debt free and avoid bankruptcy. If you are one of those that are being harass by collection companies with constant phone calls your credit counselor can give you tips and educate you on your respective rights under the law.

There are some helpful tips from the Better Business Bureau on how to choose a good credit counseling service and they are:

• All services and the fees related to it must be disclosed. This can help you shop around for the most reasonable cost. What if you ask for an additional service would they charge you for that as well?
• Do they offer more than debt management planning and debt consolidation loans?
• Do they offer free counseling or budgeting services?

In order to qualify for credit counseling program you must have a total eligible unsecured debt of at least $3,000. A credit counselor does not require minimum number of accounts so even if you have only one of these you can still qualify. Money will always be an issue for people who do not want to change their ways, it pays to listen to sound advice on financial matters.

Before filing for Chapter 13 Bankruptcy, know more about it. There are aspects that are considered by the court before they approved the petition of the debtor.

First, know that Chapter 13 Bankruptcy only covers self-employed individuals and sole proprietors. It doesn’t work for partnerships and corporations.  Before you ask there is credit repair for bankruptcy.

Next, there are eligibility criteria. The law states that the total unsecured debts must not go beyond $336,900. For secured debts, the limit is at $1,010,650. The law also requires that the debtor must undergo credit counseling with an authorized credit counseling agency before they seek the court’s intervention for a Chapter 13 bankruptcy case. If the initial petition ended with a dismissal, the law bans another petition filed immediately within the next 180 days after the dismissal.

Now, let’s say that eligibility has been fulfilled; then, the next thing is to comply with the needed documents that the court requires. The debtor must only submit the petition in the court that has the jurisdiction over the area where he or she lives to avoid the case being dismissed for filing at the wrong court.

The needed documents are:

• List of assets and liabilities
• Details of present income and expenses
• Details of ongoing lease and other obligations
• Details of the current financial situation
• Certificate proving that the debtor has undergone counseling
• Copy of the detailed debt repayment plan that was drawn with the authorized credit counseling agency
• Evidence that the debtor has a continuous flow of monthly income
• Copy of the latest income tax return or transcripts for the most recent year

The above documents would be attached to a completely filled-out bankruptcy form. The form would define the list of creditors and their dues and the details about the debtors earning, personal property and monthly expenditures.

For the case, the court will charge a filing fee of $235 and a miscellaneous administrative fee of $39. If the circumstances suggest that the debtor cannot afford to pay the court and administrative fees, installment payments are allowed. On instances where it is a joint petition between a couple, whereby  the wife is designated as the co-debtor, the law protects the co-debtor if the debts were proven to arise from personal, family or household causes. This kind of debt is considered as consumer debts. It has a special provision under the Chapter 13 Bankruptcy Law.

The Chapter 13 Bankruptcy Law doesn’t relieve the debtor of his obligation to the creditor. The law works to recover the dues that the creditors are due to have but under a different payment scheme initially agreed upon. This is the purpose of the repayment plan that was drafted by the debtor and the credit counseling agency.

The law acknowledges the importance of the claims of the creditors that is why they are taken as priority by the court. The repayment plan must ascertain that the creditors are given back what is due to them unless the creditor is willing to settle for less. For secured claims, the law entitles the creditor to seize the asset if the dues aren’t paid. For unsecured claims, the law prescribes that the exact amount is returned back to the creditor or the debtor may chose to liquidate his or her asset.

Once the repayment plan is set by the debtor and the credit counseling agency, the law requires that the debtor would adhere to the plan and begin repaying the creditors within 30 days of filing based on the terms specified. This would be regardless if the plan is approved or denied by the court. Soon after, the repayment plan will be presented to the creditors during the case hearing with the intention that the terms are accepted. If the creditors object, the court will have to determine the feasibility of the plan within 45 days after the creditor’s meeting.

In a capsule, the Chapter 13 Bankruptcy Law is the debtor’s plan to settle all of his or her dues for a period of 3 to 5 years. This will protect the debtor from losing assets as he or she fulfills their obligation to their creditors.

Repossession is the seizure of property that you bought using credit for which you were not able to pay.  Car financing is a secured loan because your vehicle acts as collateral. Since your purchase contract or credit contract with your creditor gives him the right to take the property back the property is then sold to a financial institution or third party sellers such as debt collectors. In cases where the property to be repossess is your car, the vehicle can be confiscated even without your permission. A good delaying tactic is to verbally object when they try to repossess your car but this has its limits since if your creditors come with a court order you can do nothing about it.

You can prevent repossession by communicating with your finance company as soon as you cannot make the payment on time. The lender can agree to let you pay late for one month or change your due date so it coincides with your paychecks. Sometimes your delinquent payment can be added on top of your last loan payment. Keep all agreements in writing if it involves a contract and your signature.

Repossession takes about a month or two to appear in your credit history. This brings a drop of about 100 points on your credit history. This also has a very negative effect on your credit report even if you voluntarily give up your property this will still impact your score. Your credit score can erode further if your lender cannot sell the property at an auction equal to your balance (which is known as a deficiency). In addition to this if you cannot pay off your deficiency, the lender will get a court judgment which can slide down your credit score by another 100 points more.

Repossession has the notoriety of causing your credit score to drop from excellent to poor. This can be removed in your credit report after seven years. In cases where the repossession is not reported correctly, this gives you the chance to potentially remove it. Request for your credit reports from the major credit bureau and check everything up to the smallest detail. As a consumer you have the right to dispute any mistakes. If the lender cannot verify your reported mistake the repossession will be erased from your credit history within a month.

If you cannot find anything wrong with your credit report then the best thing that you can do is to try to find ways to repair your damage credit scores and credit history.  Two of these methods can be if you try to pay your huge debts and avoid paying this after the due date.