Finding debt relief solutions is not easy,  but not impossible.

Before we discuss various options to eliminate debt, it may be helpful to examine why you have too much debt.

Most consumers fall prey to the credit card industries tricks to charge outrageous interest rates and fees for the use of their cards. 

They make offers such as:

• 0% interest
• No interest for 6 months
• Earn $$$ every time you use your card
• Double flier miles with each purchase
• No payments until…

But before long, you realize that the easy-to-make, minimum monthly payment is not even reducing the balance!  In fact, in many cases, after you make your minimum payment, your balance may actually increase.

What can you do?

Cut up all of your credit cards!  If you are serious about eliminating credit card debt, you have to stop the main problem…easy credit!

Determine what it would take to pay your credit card debt off in 12-24 months.  You can find several debt calculators online.

You will be amazed at how quickly you can pay off your card(s) and how much you will save just by adding an extra $25-$50 each month.

If you are in such a financial hardship that you can barely afford the minimum payment, and there is no way you could afford any more, then you should consider a Debt Management or Debt Settlement Program. 

Photo by Kory Hodek

Credit Card Debt Negotiation

When faced with extreme financial hardship, making it almost impossible to pay the minimum payments due on your credit cards, you may want to try credit card debt negotiation. 

But before you jump in, you need to understand a few things:

1. Credit card companies, and especially collection agencies, DO NOT CARE about you or your financial circumstances! Don’t waste time trying to explain.  
2. If your account has not been charged off, you are probably not going to get a very good offer or any offer at all.  Creditors usually wait 120-180 days before giving up and charging off an account. 
3. Once the account has been charged off, it most likely will be assigned to a collection agency.  The agency will begin to call (incessantly) in order to get as much money from you as possible. 
4. Collection agencies can make agreements (within their client’s guidelines) to settle accounts for less than the full amount.   
5. But BE AWARE!  The collection agent has been trained to get as much money out of you as possible!  They will use all kinds of tactics (many that violate the FDCPA) in order to intimidate you. 
6. You may be told that they never settle for less than the full amount, but this is not true. 
7. They may say that they settlement agreement must be in a lump sum and usually by the end of the month.  This is not true.  Term settlements can be arranged. 
8. If you agree to a settlement, GET IT IN WRITING!  Do not be tricked into a verbal agreement. 
9. Keep records of payment.  If there are any discrepancies or disputes in the future, you must have proof.

Credit card debt settlement is not easy!  It takes many hours and precise follow up to successfully negotiate with your creditors, so you may want to consider seeking the help of a Debt Settlement agency.

Photo By SqueakyMarmot

        Debt Consolidation

                    vs.

          DebtSettlement 

It is very important to know exactly how much money you have coming in and how much is going out each month before you decide if a Debt Consolidation or Debt Settlement Program is best for you. A basic home budget does not have to be complicated.  You just need to know:

1. How much money (from all sources) do you have after all deductions?
2. How much money do you spend each month? Things like the mortgage or rent, utilities, groceries, auto payments, insurance, etc.  Be sure to write down everything. 

When you know exactly how much money you have (or how little) after paying all of your bills, then we help you decide which program would be best for you. 

Now that you know where you stand financially, does it really make sense to continue making just the minimum payments required by each of your creditors? 

The Credit Card Industry does not want, nor expect you to ever fully repay your accounts! Billions of dollars of interest and fees are earned from the millions who only pay the minimum payment each month. It is estimated that in takes the average consumer 15-20 years to repay a single account at a cost of 3-4 times the total amount charged! There must be a better solution, and there is.  

Debt Consolidation  

In order to determine if you qualify for a Debt Consolidation Program (DCP), you will need some basic information about the debts that you owe. (name of creditors, current balances, minimum payments, etc.) 

Once that information is gathered, a reputable Debt Consolidation Company can tell you what your monthly payment will be and how long it will take to get the debt paid off.  In a DCP: 

• You will have one monthly payment
• Lower your average APR
• Pay off your accounts in 3-5 years 
• Stop creditor calls
• Maintain or even Improve your credit score! (Although your credit score may decline slightly while you are in the program, once you have completed the program, your scores should improve. For more information, visit www.myfico.com )

But what if you cannot afford the minimum payment required by a DCP? 

Debt Settlement

Debt Settlement is a program designed for those who:

• Are facing severe financial hardship due to circumstances beyond their control (loss or lower income due to unemployment, lay-offs, divorce, disability, insufficient retirement income, etc.)
• Have considered a Debt Consolidation Program (above), but simply cannot qualify or afford the monthly payment required.
• Do not want to file for bankruptcy. 

If you have fallen behind in making your minimum payments (or are about to), Debt Settlement might be the best choice for you. Through this program, each month you will deposit an amount you can afford (based on your budget) into savings-settlement account.

As your savings-settlement account grows, offers are being made by the Debt Settlement Company for a settlement of your debts.  Although the final settlement amount cannot be guaranteed, it is usually much less than the balance. 

Most creditors will accept a settlement, but there are some cases where a creditor may attempt to seek legal action in order to collect the full balance. However, successful settlements can still be made in spite of a judgment. Most creditors would rather accept a settlement offer than force you to consider bankruptcy.

As you can see, there are options available to help you eliminate your debt.  Both the Debt Consolidation and Debt Settlement programs work for different financial situations, but the end result is the same.  Eliminate your debt in a short period of time and save money in the proccess!

Click HERE to get your FREE Personal Debt Elimination Summary!

Photo by: SMJJP

Is Settling Credit Card Debt on Your own a Good Idea?

People call in asking about our Debt Settlement program every day.  Once we discuss the program and how it works we are often asked the question, " Why can't I just settle these debts on my own?" 

The bottom line is, you can settle your outstanding unsecured debts on your own.  All you need to do is call up your creditors, explain your hardship situation, and make them a settlement offer.  Sounds pretty easy, right?

It's not quite that simple.  You absolutely can settle your debts on your own, but you would be doing yourself and your wallet a disservice!  Debt Settlement programs offer you years of experience and expertise in dealing with your creditors and collections agencies, and most of the time they can get your debts settled for MUCH LESS than you can on your own. 

Why can Debt Settlement programs get you a better deal?

1. Years of practice: Good Debt Settlement negotiators have been settling debts for years on end.  This is what they do, and they have had a lot of time to hone their debt negotiating skills.
2. No emotional attachment: When you negotiate your own debt, you are emotionally attached to the situation. The debt collectors know this and will use it to their advantage. 
3. knowledge of the rules: Although Debt Settlement programs do not need to have any attorney on staff, they do have to have an understanding of the debt collection laws of each state.  They know what a creditor can and cannot do in a given situation, so the creditors cannot scare them into settling for more than they should.
4. Peace of mind:Collections agents can be extremely threatening and scary to deal with.  It is the Debt Settlement negotiators job to handle all communications with your creditors.  You have a highly qualified professional in your corner and that in itself is indispensable.  
5. Dedicated savings plan: Most people don't have thousands of dollars sitting around to use when negotiating with their creditors.  Debt Settlement programs put you on a dedicated savings plan to build the funds necessary to get your debts settled once and for all!

These are just a few of the reasons why settling your own debt could cost you in the long run. Using the resources of a Debt Settlement program will save you money and relieve the pressure of dealing with your creditors.  Although settling your debts on your own can work, Debt Settlement programs are most often the better choice.  

How to Stop Collection Calls

You've just sat down to dinner and the phone rings.  Another collection call. In fact, this may be the 10th time they have called today! Is there anything you can do about it? YES!

If a collector calls you about a debt, you need to talk to them at least once to see if you can resolve the matter. But be aware...

Collectors are professionals who have been trained with techniques to get you to send them money...PERIOD! They don't care about your circumstances or feel sorry about your problems, so don't wast time trying to explain.

If you cannot resolve the problem by phone (and most of the time you can't), then how can you get them to stop calling?

You will need to get the address of the collector in order to write a letter.  Asking the collector who called for this information usually is a waste of time as the collector knows that you are most likely going to send a request to stop calling you and they do not want you to do that.  Most collectors are paid by commission in relation to the amount of debt they can collect.

You should have received a statement or letter that will have the address of the collector. If not, you should receive one soon.  In the meantime, do not talk with them.  You may want to screen your calls using caller ID or simply turn off your ringer.  You can always listen to your messages later.

Once you have the address of the collector:

• Write a simple letter stating that you don't want the collector to contact you again. Be sure to include your name and account number.
• Make a copy of the letter for your records.  Send the signed orriginal letter by certified mail and make sure to pay for the "return receipt" so that you can document and prove that the collector received your request.
• When the collector receives the letter,they may only contact you once more. They will either call you to tell you that they received the letter and will not callyou again or to let you know how they intend to pursue collection of the debt in the future.

Common Collection Practices

Although the Fair Debt Collection Practice Act (FDCPA) was passed in order to protect a consumer’s rights during the collection process, many collection agents violate the law and you should be aware of what a collector can and cannot do.

According to the FDCPA:

• A collector may contact you in person (rare), by phone, mail, fax, or email (rare). 
• They are not to call before 8 am or after 9 pm. 
• They may contact someone else (friend, family member, neighbor), but again, according to the FDCPA, only to find out where you live, what your phone number is, or where you work.  They are prohibited from telling anyone else that you own money, but the phone call speaks for itself.
• They are not to call you at work, but we know they do.
• They are not to harass you by calling many times a day, over and over.  But, they do so by using a computer dialer, which although is annoying, is not illegal as they have a “business” relationship with you. 

If you feel your rights have been violated, you can:

• Report your problem to your state Attorney General’s office and the Federal Trade Commission . 
• You have a right to sue a collector in a state or federal court within one year from the date you believe the law was violated.  Although this may be a lengthy and costly option, if you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages, employment or medical bills.  It may be in your best interest to seek the advice of an attorney if you decide to sue the collector.

What You Need to Know About Credit Card Debt Repair

Many people call in asking us about credit card debt repair.There are many companies who call themselves "credit repair" companies.  They claim to be able to remove negative items from you credit report in order to improve your credit score. 

It is a big mistake in thinking that any company has the ability to remove a negative item on a credit report without adequate proof of erroneous information. Any item that is removed with fraudulent proof will most likely be placed back on the report.  This could produce a legal issue, so be careful.

The real question is, "Can I do this myself?"  The answer is YES!

You can contest and correct legitimate errors on your credit report by contacting the three major credit reporting bureaus yourself.  You can use the forms provided on their websites or you can write a simple letter stating the item that you are disputing. Make sure to include proof that your dispute request is legitimate such as:

• A statement from the credit company showing payment
• A letter from the credit company showing settlement
• A canceled check showing payment was received and proccessed

Mistakes on your credit report can significantly reduce your credit score, so make sure to review your credit report and dispute any errors as soon as you find them.  Here is the contact information for each of the three bureaus.

*You may be required to submit an additional form to TransUnion.  This form can be found at http://bit.ly/ctNrKE

Do you want to raise your credit score? Of course, we all do, but most of us simply don't know where to start.  Every situation is different and there is not one magic solution.  However, If you follow these 3 top credit score tips, you will be suprised at how quickly you can significantly increase your credit score. It's as easy as 1, 2, 3!

Tip #1: Pay your credit card and other debt payments on time every month! Late payments have the greatest negative effect on your credit score.  You absolutley must get organized and create a bill paying system that works for you. Try setting reminder alarms in your phone or computer for a few days before each bill is due.  Or you may want to write each bill's due date down on a big calendar that you see every day.  Whatever system you chose, get yourself organized and pay them on time EVERY month. No Exceptions!

Tip #2: Review your credit report at least once per year and correct any erros you find. There are three major credit reporting agencies. (TransUnion, Experian, & Equifax) You can get a free credit report each year atwww.annualcreditreport.com.  Once you have these reports, review them carefully for any mistakes such as collection items, incorrect credit limits, and late payments. These incorrect items lower your credit score. Getting them corrected doesn't take much time or effort and will start to raise your credit score immediately.

Tip #3: Don't close unused credit accounts. Few people realize that closing credit accounts will actually lower your credit score.  The length of your credit history makes up about a third of your credit score.  By keeping old accounts open, you credit history goes back further and thus helps your credit score.  Some credit accounts will automatically close if they go unused for long periods of time.  It is a good idea to use those old zero balance accounts from time to time as long as you pay them off immediately.

Following these three simple steps will help you to increase your credit score quickly and without too much effort or time on your part.  Good Luck!

“I’ve got too much credit card debt!  What’s the best way to eliminate it?”

 You have a few options:

• Hit the lottery and pay them off in a lump sum…yeah right!
• Continue making minimum payments…forever.
• A Credit Counseling Program or what is called Debt Management today.
• A Debt Settlement Program, or if all else fails…
• Bankruptcy

Short of paying off all of your credit card debt in a lump sum, you know that making minimum payments is a trick the credit card industry has been fooling consumers with for a long time.  Making the minimum payment on your cards could take 10-15 years and end up costing you 3-4 times the original amount you borrowed because of the interest rates and hidden fees.

Debt Management (formerly referred to as Credit Counseling) makes sense if you can afford the required payment of the program.  Legitimate DM programs will arrange repayment plans with each of your creditors that will lower your interest and fees and usually allow you to pay off all of your cards in about 48 months.  If you can afford the payment, this makes sense.

Debt Settlement is for those who cannot do any of the above.  Legitimate Debt Settlement companies will negotiate with your creditors to satisfy the debt for around 50% of the debt.  Your credit report will show this debt as having been charged off, but then it will show that it has been “paid as agree” or “account settled”.

If you cannot qualify for any of these programs, then bankruptcy may be your best or only option.  Be sure to seek the advice of a competent bankruptcy attorney.  It’s not a bad idea to get a couple of opinions when looking into bankruptcy.

The Fair Debt Collection Practices Act (FDCPA) clearly states what a debt collector may and may not do when contacting you in an attempt to collect a debt.  Harassment is the single most prohibitive action.  They cannot harass or use abusive language when speaking to you or when speaking to any third party that may be helping you.

For example:

• A creditor is NOT permitted to contact you before 8am or after 9pm.
• A creditor is NOT permitted to contact you at work after you have requested them not to by mail or fax.
• A creditor is NOT permitted to use obscene or profane language when speaking to you.
• A creditor is NOT permitted to make false statements, such as threatening to take actions that they cannot take or have not intention of pursuing.
• A creditor is NOT permitted to use threats of violence.
• A creditor is NOT permitted to publish a list of names of people who refuse to pay their debts.

If you feel a collector has violated your rights, you may contact your state Attorney General's office www.naag.org and the Federal Trade Commission www.ftc.gov.

To learn more about debt collection practices and your rights under the law, visit http://bit.ly/9SxgYF.