Debt Settlement is Alternative to Bankruptcy
So, you’re in over your head and you’re considering a route known as debt settlement (debt negotiation), whereby your creditors will agree to accept less than the full balance owed on your accounts. You’ve probably heard or read about many different opinions relating to debt settlement and you’re not sure if this is the way you really want to go. You’re probably also questioning all that you’ve heard and are likely confused and unsure of what’s fact and what’s actually fiction. So, let’s attempt to clarify the process of debt settlement by starting with the “bad.”
Obviously, your creditors will not accept less than what you owe them without a little pain on your part. Unless your accounts are already delinquent, don’t even attempt to work out a settlement agreement with even one of your creditors because it simply won’t happen. Period. Unfortunately, your accounts must be at a certain stage of delinquency prior to negotiating a settlement. If you’d like to attempt to work something out while your accounts are current, or even 30-60 days delinquent, I urge you to do so because at the very least you’ll find out the truth and realize the end result won’t be pretty. So, yes this is one of the ugly components of debt settlement. Your accounts must go delinquent, and subsequently, your credit score will be reduced for a few months.
Perhaps you’ve also heard that you may have a tax liability as a result of debt settlement. True? Maybe. You see, creditors are required by the IRS to report all canceled debt over the amount of $600 on Form 1099. Now, you may or may not be liable for income taxes as a result of debt settlement due to the fact that an “insolvency” rule exists for individuals who are classified as insolvent at the time of their various settlements. In order to be considered insolvent your liabilities must exceed your assets. If you’re not sure where you stand, I recommend that you speak with your tax professional to find out if this is the case for you.
Well, we’ve covered the negative aspects of debt settlement; now let’s take a look at the good that can result from negotiating with your creditors.
Let’s face it – if you’re considering debt settlement, you’re struggling to meet your monthly financial obligations, or your accounts are already seriously delinquent and you’re even contemplating bankruptcy. Debt settlement is an excellent alternative to bankruptcy because it allows you to become free from debt without allowing your personal information to become a matter of public record, as would be the case with a bankruptcy filing.
Additionally, while the reported delinquencies on your various accounts will have a temporary negative impact on your credit score, the effect won’t be nearly as severe as that of a bankruptcy filing. If you’ve managed to keep your accounts current, and your credit score is reduced during the process of debt settlement, your score will continually increase as your accounts reflect zero balances, which will occur with each final settlement payment. In most cases, individuals find that their credit score is back up between 600 and 700 within 6-9 months of completing the process of debt settlement.
Probably the most relevant benefit regarding debt settlement is that you’ll be free from debt. No more sleepless nights and constant worry, trying to figure out how you’ll get through the next month with a positive balance in your checking account.
Hopefully this piece has assisted you in figuring out if debt consolidation is right for you.
How to Get Debt Consolidation?
Can you really achieve credit card debt consolidation to help you get out of debt? Many people want to know the answer to this question, because obviously debt consolidation is a very appealing process, and debt consolidation companies can help you with this difficult process. This is because they will keep track of paying off all your creditors for you, and all you have to do simply make them a one-time payment each month.
While obtaining credit card debt consolidation is probably not possible, you can certainly attain it for reasonable prices. You do not have to break the bank to get the service. Here are some important tips to help you to find the right debt consolidation company for you.
First of all, probably the best place to start looking is the Internet. Quite simply, you can do research on far more companies online at the click of a button then you ever could by calling them on the phone. When you call them on the phone come it will take you a long time to get someone on the phone, quickly.
The Internet is by far the best avenue to help you do this, as you can do research on literally hundreds of different companies in one sitting. Now, once you’ve narrowed it down to the credit card debt consolidation companies with the best price, now you can give them a call and find out more about them.
The thing you should be evaluating when you call them is their customer service. If you do your research thoroughly on the Internet, you will certainly be able to find a company with a reasonable price for you very easily.
Also, keep in mind that as Napoleon Hill said, with every so-called challenge there is a seed of equal or greater opportunity. In other words, you can either keep going further and further in debt by beating yourself up, or you can accept the fact you are in debt and learn any possible lessons that might be offered from it.
The first lesson you need to learn is that you should never spend more money than you are bringing and. While this may seem like an obvious statement, the vast majority people don’t do this.
How else can you explain the fact the average American is $8,000 in credit card debt today? You can do this by keep better track of your finances, such as putting them in a balanced sheet or income statement, and tracking a monthly.
Also, you might like consider starting a home business along with your full-time job. Eventually, the full a home business will be able to replace your full-time jobs income, and actually help you to earn much more money than you are currently making.
With a job, your income is relatively limited, as there is only so far you can advance. However, with a home business your income is relative is virtually unlimited; it is only limited by your work ethic.
Therefore, while achieving credit card debt consolidation may not necessarily be possible, you can certainly attain it for a very reasonable price when you do your research Hopefully these tips will help you to find a right company for your credit card debt consolidation and help you get out of debt as fast as possible.