Here's a great question that we get all of the time.

"Why would my creditors settle my debts for less?"

If you don't know mych about the process of Debt Settlement, you might be skeptical of the claims that your creditors are willing to significantly reduce your debt. It may be hard to believe at first, but it is TRUE! Through the debt negotiation process, creditors are willing to settle your debt for a substantially smaller amount than what you owe. (usually less than HALF of what you owe)

Why are they willing to settle your debts for less? It's very simple... To Get Paid! Your creditors would rather get some of your money than none of your money. It makes perfect sense. If you end of filing for bankruptcy, your creditors will not be able to collect any of the debt you owe them. So, if you’re behind in making your payments, your creditors are probably willing to listen to negotiation offers for settlement.

Your creditors have to make a decision to either settle your debt, or risk not collecting any money at all (in the event that you file bankruptcy). Debt Settlement is NOT too good to be true — it’s just basic economic sense for everyone involved.

This news clip shows a real life Debt Consolidation success story.  Check it out!

What's your new years resolution? If you're like most people out there you have probably vowed to exercise more, spend more time with family, or even simple learn something new.  I did a little research and one of the top ten new years resolutions being made of 2011 is to become more financially stable.

Here are my top 5 tips to get you financial success in the new year!

#1 REVIEW YOUR CREDIT REPORT - Much of your financial future depends on the contents of your credit report. It is incredibly important to obtain your report, review it for accuracy and dispute any errors. Everyone is allowed one free report from each of the three major bureaus once every twelve months. You can access all three of your credit reports at www.annualcreditreport.com. 

#2 REDUCE YOUR DEBT - If you’ve dug a deep financial hole, stop digging. Piling new debt on top of old is a red flag that you are living beyond your means. Lock up the credit cards until they’re paid in full.  If that is not an option, or you need your credit cards just to maintain your monthly bills, you might need the help of a trained Debt Solutions Specialist.  They can help you determine what options are available to you and work with you to eliminate your debt fast!   

#3 TRACK YOUR SPENDING FOR ONE MONTH – Have everyone in the household participate. Write down every penny that is spent. It’s the small, miscellaneous expenses that often wreck the best of plans. At the end of the month, come together to review your spending. This is the only way you can truly know where your hard-earned money is going.

#4 MAKE A SPENDING PLAN – Once you’ve tracked your spending, you can then make decisions as to how you want to allocate the money. Continue tracking with the new plan in place. Keep doing so until you find a plan that is right for your family. Click on the link below for a FREE BUDGET WORKSHEET!

#5 COMMIT TO SAVE -  If you are anything like me, you are great spender and a lousy saver. However, without a well-funded savings account, you are on a very slippery slope, one that becomes treacherous with the next unplanned expense. Put 10 percent of each take-home check into a savings account. Make this a non-negotiable bill and have it automatically withdrawn from your checking acount. You can also find extra money to dedicate to saving by putting all raises, bonuses, birthday checks, into savings. This will create a cushion that should see you through most short-term emergencies.

Good luck on becoming financially organized in the new year. Let's talk next year and you can let me know just how well you did!

What is the best debt elimination plan?

• A new year
• Too much unsecured, credit card debt
• Time for a plan

The holidays are almost over and for most people, they find themselves with more credit card or other unsecured debt than they can handle.

DEBT ELIMINATION PLAN:

Know exactly where you stand, financially.

The first step in any debt elimination plan is to take the time to complete a thorough BASIC HOUSEHOLD BUDGET.

Be honest with yourself!

If you are spending $100/month on stuff like:

• Starbucks
• Fast food
• Video poker
• other non-essential stuff

Maybe it is time to get tough on yourself and make some cuts!  If you are serious about eliminating debt, this is critical!

Attack the Credit Cards!

Are you serious about you Debt Elimination Plan?

Then it's time to destroy those cards!  Keeping those cards available will only lead to more debt.

The credit card industry preys on people by offering:

• Easy credit
• Low monthly payments
• Earn "points" to be used to buy more stuff!

What they don't tell you is that if you only make the minimum payments due on the cards, you will most likely end up paying back 3-4 times the original amount you borrowed and may take you 10-15 years to do so!

Know what?

Each case will be different (that's why it is so important for you to complete the BASIC BUDGET WORKSHEET.

Let's say you have $25,000 of total credit card debt.  With the average credit card allowing you to only pay 2% of the balance, your total minimum payment would be $500/month.

Let's say you have $650 at the end of each month:

Although there are many "Snowball Plan Calculators" available online, the concept is simple:

Apply the extra $150 to the lowest balance while keeping up with the other card's minimum balances due.

Once this card is paid off (you'll be surprised to see how fast), then take the extra $150 PLUS the normal minimum balance you were paying on that card you just paid off PLUS the normal minimum payment on card #2 and apply to card #2.  

If you keep this going (always a total of $650/month), you will get these cards paid off in an average of 48 months or so and save thousand of dollars in interest and fees!

But, what if you don't have any extra money at the end of the month?  In fact, you can barely make the minimum payments now!

Then you are should seek the help of a Debt Management Company that can evaluate  (for FREE) your situation and recommend the proper program.

If you are serious about a Debt Elimination Plan, you will find a way to be DEBT FREE!

If you need help with your credit card debt, you are not alone.

Many people, just like you, face a financial crisis from time to time.  It could be caused by personal or family illness, loss of job, cut in pay or just overspending.

As bad as it may seem, it can be overcome.

The first step you must take is to get a realistic financial picture of where you are.  It does not have to be complicated or too exhaustive at this point, but you have to know where you stand.

You may want to use a simple Household Budget that will help you determine your total income and outgo.

In a time of financial crisis, you need to ask yourself some tough questions:

• Do you really need all the "bells and whistles" of your cable TV?
• Can you cut back on your heating/cooling/water and other utility bills?
• What about miscellaneous spending?  Do you really need to be spending $5/day for that latte? I know, but...
• How about putting a hold on that gym membership you rarely use?

Starting to get the idea? 

If you find out that there is just not enough money at the end of the month to pay all of the bills, you must make some tough decisions.

There is a HUGE difference between SECURED and UNSECURED debt.

Secured debt includes things like your mortgage, auto loan and possibly furniture or appliances if you financed through a finance company.

Failure to pay these debts could result in foreclosure or repossession.  So, make sure these are your primary bills that have to be paid each month. 

Your unsecured debts including credit cards, personal loans, any debt that is not secured by collateral, can be treated differently in time of crisis.

This is not the time to be overly concerned with your credit score!

We're talking about survival here.  The credit score issue can be dealt with later!

If you can service the secured debts, but there is not enough for the unsecured debts, contact each of those creditors and ask for a lower payment and/or interest rate.

Some creditors will work with you, but don't be surprised to discover that they really don't care about you or your situation!

If that is the case, you may want to contact a professional Debt Management Company to help.

You may qualify for a Debt Management Program or a Debt Settlement Program.  A qualified company will go over you situation and budget very thoroughly before making a recommendation. 

Be aware that most companies only offer one solution.  No one program will fit every situation, so be very careful.

In a Debt Management Program, each of your unsecured creditors will be contacted and a lower payment/interest rate will be arranged.  You will have ONE MONTHLY PAYMENT and it will be disbursed to each of the creditors accordingly.

These programs will usually take 48 months or so, but each of your debts will be repaid and you will not be receiving calls from collectors.

If you do not qualify for the DMP, then the Debt Settlement Program may be your best option.

In the DSP, negotiations will be made with each of your creditors for a reduced amount.  As you cannot afford to keep paying the monthly amount, these accounts will ultimately charge off and go to a collection agency.

You will receive phone calls which can be very annoying, but there is a way to stop these calls. Click here for a FREE REPORT.

These amounts will vary, but should be around 50% of the balance at the time of settlement.

Of course, you will need to set aside an amount your budget can handle to have funds to negotiate, so make sure you can be disciplined to make those deposits each month.

If after going over you budget and examining your options, you may be forced with the ultimate decision of seeking bankruptcy protection.

You should consult a bankruptcy attorney to find out which plan would be best for you.

Regardless of which option you choose, taking control of your situation will help put an end to the worry and frustration that financial pressure brings.

Most people find that after going through all of the steps above and choosing the appropriate solutions, it was not as bad as it seemed.

Check out this great video with a few simple steps to create a budget!

Step 1: Have a goal!

Step 2: Make a plan!

Step 3: Track every dime you spend!

If a judgment has been entered against you for a delinquent, unsecured debt, you may be offered a stipulated agreement.

Are Stiplated Agreements a good deal?

It depends.  When you signed up for your credit card or took out an unsecurred loan, you agreed to the terms and will be held accountable if you don't pay.

Most creditors will try several tactics to get you to repay what you owe, but if unsuccessful, they may decide to file a complaint in your local county court.

You'll receive a summons and since you owe the money, there is really no reason to answer (respond) or appear to explain yourself.

The creditor (the plaintiff) will be awarded a default judgment in the future if you do not arrange a plan to repay the debt you owe.

With the judgment in the creditor's favor, they can now seek:

• to garnish your wages or
• levy your bank account

But before they do, they would most likely agree to a stipulated agreement, whereby you agree to repay all or a portion of the debt owed.

Each state has a maximum interest rate that can be charged during a stipulated agreement.  In many cases you should be able to negotiate a 0% rate.

A Stipulated Agreement is not a bad deal if:

• you currently receive W-2 income from your employer or
• if you usually keep a substantial amount of fund in your bank account

In a wage garnishment, an employer would be forced to deduct an average of 25% of your net take home pay each pay period!

For most people, this would prevent them from paying the important bills like the mortgage or rent, food, utilities, etc.

So, by accepting a stipulated agreement for a lot less than the wage garnishment would be might be in your best interest.

However:

• If you are retired and receiving a pension or Social Security, these funds are exempt from garnishment.
• If you are receiving unemloyment income, these funds are exempt.
• If you are disabled and receiving Disability Income, these funds are exempt.
• If you are self-employed, it is very difficult for a wage garnishment to be enforced as most self-employed people take a very small "income" and in most states, this would be exempt from wage garnishment.

In those cases, you would NOT agree to a stipulated agreement but should negotiate a settlement, usually a a substantially reduced amount.

Before accepting a stipulated agreement, you should seek the advice of a debt management or debt settlement specialist.

In most cases, a settlement agreement can be negotiated before the creditor decides to seek legal action.

A stipulated agreement should only be considered if all other options have been exhausted.

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

        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.