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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.

You can always find the latest identity theft news circulating around but how do you protect yourself from it? Identity theft is a crime that is committed against another person by a criminal who obtains the individual’s personal information such as credit card number, driver’s license numbers or Social Security number to use these for nefarious reasons. Sometimes identity theft can provide the thief with false credentials for immigration. The most ironic part of it all is that there are times when the victim is the cause of the very crime.

There are two main types of identity theft: Account takeover where in another person disguises himself as the victim and uses her information to gain access to her existing personal accounts. The thief can get away with this because he changes the address so that the real owner will never see the credit card bills. True Identity theft is where in the thief uses the personal information to open new accounts. The internet provides the thief an access to use freely the information that he have without any real verification if that is really the real person. Some enterprising thieves hack into databases to steal personal information.

To get the latest identity theft scams you can check the online resources under the Federal Bureau of Investigation site, Federal Trade Commission site and your local Business Bureau Chamber of Commerce. Some identity thieves do steal cards by robbing your purse or back pocket. Sometimes these thieves work from the inside of retail stores by paying store employees for customer’s card numbers and creating fake cards to sell in the Black Market. Another technique that thieves use is to intercept pre-approved credit card offers and apply for credit using your name. To avoid this only provide little information as possible.

How do you prevent identity theft?

• Protect your personal information and identification from prying eyes. Keep your personal files at home. If you often use the internet keep your passwords in a secure place.
• When dealing with payment on the internet, only conduct business with a secure socket layer protected site. For sites that are protected their URL starts with htpps://. When it is unsecured the URL starts with http://.
• Never respond to emails or snail mails that request for your personal information such as passwords, your personal identification number(PIN) , Social security numbers and your mother’s maiden name since these information can be used against you.
• Keep important documents with you under lock and key.

How do you damage control when you have been a victim of credit card identity theft?

• Report the fraud within sixty days or you will be liable for the debts otherwise you will only pay $50 for the amount stolen. The law protects you if you are a victim of identity theft.
• Repair the damage on your credit report by submitting a written letter stating the fact that you are a victim of identity fraud.
• Request for a new credit card.

Protecting Yourself Against Credit Card Scams

The news may always contain credit card frauds but internet credit card fraud is also on the rise. Online shoppers are aware that it is much safer to enter your credit card number on a secure line order form than giving your credit card to a waiter in the restaurant where you eat. Research studies show that the fraudulent practice of making purchases with the use of the mobile phone is much higher compared to credit card fraud on the internet.

Here are some ways to prevent you from falling for credit card scams:

• Sign your credit cards as soon as you have them. This safeguards your credit card from those who might steal it
• Never write your Personal Identification Number (PIN) code in your credit card since when your wallet gets stolen it will be easy for the thief to use this to shop for things. Keep this information in a safe place in your home.
• Shield your credit card number from others who might copy it
• Do not let your credit card get out of your sight for a longer time than is necessary keeping an eye on the person swiping it since it would be easy for them to write down your credit card number then use it to make a purchase on the phone
• Do not just give out your credit card information to anybody especially when it was not you who initiated the call.
• For online users, never respond to emails that ask you to verify your personal credit card information. Never hand out your information on a website that you are not sure whether it is secure or not
• Check your credit bills to make sure that these are the charges that you have personally made. Saving your receipts can help you compare them later on. If in case you find some charges that you know is not yours then place your request in writing address to your credit card issuer
• Carry your credit card in a separate pouch or bag not in your back pocket
• Inform your credit card issuer of changes in your address or other personal information

In case your credit card was stolen or lost contact your credit card issuer immediately. A lot of them have their 24 hour service to help you deal with these types of emergencies. Based on the U.S. law once you made a report of credit card lost, you are not liable for the charges made during this time that the card was not in your possession. You will only be charge $50 for each lost credit card and some issuers are not even charging their good customers for this.

Unauthorized credit card charges are when somebody other than yourself uses your credit card without your permission. The first thing to do is to ask anybody from your family member who might have used your credit card about the charges. If you find out that none of them made the charges, the next step would be to get in touch with your bank in writing, aside from making a phone call to notify your bank about unauthorized charges that was made in your account. There is a 30 day grace period for notification about unauthorized charges but beyond this time your credit card issuer may hold you liable for the charges incurred.

After receiving your notice the bank with conduct their investigation to trace whether there is a basis to your claim. Upon their review the bank will notify you about their findings. Most banks have a 24-hour customer care support.

To verify your claim of unauthorized bank charges the bank will:
• Request a signed written request from you, the cardholder/authorized user
• Request proof that validates your claim. So better take a look over the credit card statement with the unauthorized charges. You can photocopy this and highlight the portion were unauthorized charges were made. Do include the date of the transaction, name of the merchant and amount that was charged.

Call the merchant on the listed charges to find out what branch it was charge. It also helps your confirm that the charges were not made by you. These unauthorized charges are often done in places that are either far from you or were you don’t usually go.

• Request any knowledge that you might have on who is using your credit card(if applicable)
• Verify if the signature on the credit card slip is the same as the authorized user
• Request a police report
• See if the purchase goods were delivered in your place of address on your credit card record

Illicit credit card usage is rampant. Under the Electronic Fund Transfer Act, your liability is zero if you report the credit card lost or stolen. After two business days and you realize that your credit card is lost the bank will charge you $50. If you fail to notify the bank but do notify the bank within 60 days after your bank statement is mailed to you, you will be charge $500. The final step would be the removal of these charges from your credit card report. Ask your credit card company a copy in writing that you were cleared of the so called charges. Give each of the major credit bureaus a copy of this valuable information so that they could also make corrections on their credit report.

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.