The most frustrating thing about being in debt is not the worry that comes with the pressure of repaying debts, but working out how to afford the repayments. Often, a salary seems to be enough to cover everything, but somehow vital dollars get sucked away to other things. When creditors come calling, there is a way to alleviate the pressure, however - debt settlement consultants.
There is a major difference between debt settlement and bankruptcy, but the problem is that most people seem to want to negotiate their settlements deals on their own. This does not always help the situation, and hiring professional debt clearance services is the surest way to secure the best possible terms.
Of course, seeking debt settlement through a company of professionals does mean paying service charges, but in the long run this can be a deal. But what are the signs that warn it is time to secure these services from.
What is Debt Settlement?
First of, it is important to understand what exactly debt settlement consultants should be able to do, and why the process they help to negotiate in is an alternative to bankruptcy. Bankruptcy is seen as the last option for someone with debts, with consequences including an inability to secure financing for as long as 2 years.
Settling debts has less severe consequences, with a share of the debt actually paid to creditors. These can range from 10-15% right up to 50-60%, but your negotiating skills will decide on the share of the debt to be paid. This is where getting a professional debt clearance service can be so beneficial.
It is a bit like representing yourself in a court of law - the chances of getting the best outcome is less than if an experienced lawyer is hired. But it is equally important that money is not wasted on the consultant. When it comes to debt settlement, the best terms can save thousands.
Signs A Professional Is Needed
The first clear sign is that your budgeting seems to make no real difference. No matter what is done, the debts continue to mount and the situation to get worse, and your total monthly expenses are higher than income. By getting debt settlement consultants in, they can take a more strict view of what needs to be done.
Another sign is that little headway is being made in negotiations with creditors. Meeting people who want to get as much money as possible out of your pocket. After all, they want to recover as much as they possibly can. But a professional debt clearance service can play hardball with creditors and hammer them down to the lowest possible percentage.
A third sign is a shortage of knowledge on the rights borrowers have, as well as the terms and legal conditions that come into play. Creditors are likely to take advantage of inexperience. However, a professional brings experience to the table when negotiating debt settlement terms.
A fourth is the need to stay on track once a decision is made. The temptation to break a strict budget and eat out, or maybe do a little shopping, can be too much to resist after 2 or 3 months of denying yourself such luxuries. A debt settlement consultant is able to set strict terms, ensure your debts are cleared and that no money gets wasted.
Of course, the choice to pursue your own terms and conditions is within your rights. However, without sufficient knowledge of the industry and your own rights, the chances of getting a good deal is highly unlikely. Hiring a professional debt clearance service can help to make huge savings on debt repayments, and the debt settlement agreement can be a success.
Showing posts with label Settlement. Show all posts
Showing posts with label Settlement. Show all posts
Friday, July 20, 2012
Monday, July 16, 2012
How Debt Settlement Programs And Chapter 13 Bankruptcy Differ
When the pressure of debt gets too much to handle effectively, there are solutions out there. The only real question is which to choose. The best options are constructive repayment agreements, and the two most common are debt settlement programs and a bankruptcy agreement under the terms of Chapter 13.
The two are quite similar in principle, with their core reasons being to facilitate the repayments of debts, either in full or in part. The result is to lift the burden of debt off the debtor. But which is the best option to choose? Is a Chapter 13 bankruptcy plan going to damage a credit reputation? Or is a settlement program the right way forward?
These are just some of the issues to consider, and while old bankruptcy options were taken advantage of, creditors are now better protected. Clearing debts effectively comes down to two key choices, both of which can see debts cleared with just 30% to 50% of the sum repaid, to so which is actually better?
Debt Settlement
There are some great advantages to adopting a debt settlement program to ease the financial burden, not least the fact that what is paid to clear the debt is lowered. But when compared to the alternative bankruptcy, there are some negatives. For example, settlement is more expensive, costing up to ,000 in service fees.
The greater expense comes down to the fact that debt settlement companies charge a fee based on the size of the debt involved, so a larger debt will mean a higher fee. Chapter 13 bankruptcy is a fixed rate. Also, the term of a settlement is usually 3-4 years, which means payments can be larger.
But perhaps the biggest negative is that the creditor is in control when it comes to negotiations. This is because the agreement is a voluntary agreement, so the debtor has every right to reject proposals. Sometimes clearing debts effectively means holding out for better terms, but the creditor car pull the plug at any time and seek legal action instead.
Chapter 13 Bankruptcy
When it comes to fees, bankruptcy is actually a lot less expensive than a debt settlement program. The reason is partly down to the fact that practically no negotiations are needed, just to have the necessary paperwork prepared and legal representation. So, expect costs of between ,500 and ,000.
The term of a Chapter 13 bankruptcy agreement has recently been extended to a maximum of 5 years, so the task of clearing debts constructively is greatly improved. Principally, the monthly repayments are lowered thanks to the longer term.
With a court taking on the case, neither party can act independently. So, creditors cannot take legal action once the Chapter 13 process has begun. For the most part, the plan leading to clearing debts effectively, and once the final ruling is made, it cannot be repealed.
The After Effects
But how does the eventual ruling actually affect the debtor? Through a debt settlement program, the creditor will get at least a share of the money owed to them. However, the credit record will state that the debt was paid through a settlement plan and the credit score will be lowered significantly. The good news is that credit worthiness can be regained after just 2 years.
With a Chapter 13 bankruptcy plan, the decision goes on the credit report and stays there for as long as 10 years, severely damaging the credit score. Also, when any bankruptcy ruling is made, the records are made available publicly, so people have access to relevant records. So, clearing debts effectively can have its price.
The two are quite similar in principle, with their core reasons being to facilitate the repayments of debts, either in full or in part. The result is to lift the burden of debt off the debtor. But which is the best option to choose? Is a Chapter 13 bankruptcy plan going to damage a credit reputation? Or is a settlement program the right way forward?
These are just some of the issues to consider, and while old bankruptcy options were taken advantage of, creditors are now better protected. Clearing debts effectively comes down to two key choices, both of which can see debts cleared with just 30% to 50% of the sum repaid, to so which is actually better?
Debt Settlement
There are some great advantages to adopting a debt settlement program to ease the financial burden, not least the fact that what is paid to clear the debt is lowered. But when compared to the alternative bankruptcy, there are some negatives. For example, settlement is more expensive, costing up to ,000 in service fees.
The greater expense comes down to the fact that debt settlement companies charge a fee based on the size of the debt involved, so a larger debt will mean a higher fee. Chapter 13 bankruptcy is a fixed rate. Also, the term of a settlement is usually 3-4 years, which means payments can be larger.
But perhaps the biggest negative is that the creditor is in control when it comes to negotiations. This is because the agreement is a voluntary agreement, so the debtor has every right to reject proposals. Sometimes clearing debts effectively means holding out for better terms, but the creditor car pull the plug at any time and seek legal action instead.
Chapter 13 Bankruptcy
When it comes to fees, bankruptcy is actually a lot less expensive than a debt settlement program. The reason is partly down to the fact that practically no negotiations are needed, just to have the necessary paperwork prepared and legal representation. So, expect costs of between ,500 and ,000.
The term of a Chapter 13 bankruptcy agreement has recently been extended to a maximum of 5 years, so the task of clearing debts constructively is greatly improved. Principally, the monthly repayments are lowered thanks to the longer term.
With a court taking on the case, neither party can act independently. So, creditors cannot take legal action once the Chapter 13 process has begun. For the most part, the plan leading to clearing debts effectively, and once the final ruling is made, it cannot be repealed.
The After Effects
But how does the eventual ruling actually affect the debtor? Through a debt settlement program, the creditor will get at least a share of the money owed to them. However, the credit record will state that the debt was paid through a settlement plan and the credit score will be lowered significantly. The good news is that credit worthiness can be regained after just 2 years.
With a Chapter 13 bankruptcy plan, the decision goes on the credit report and stays there for as long as 10 years, severely damaging the credit score. Also, when any bankruptcy ruling is made, the records are made available publicly, so people have access to relevant records. So, clearing debts effectively can have its price.
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