It never fails to amuse me to hear critics of debt settlement warning those who are considering this form of debt relief that they may be facing a tax liability as a result of canceled debt. Even funnier are the warnings about the effect that debt settlement will have on your credit score.

Why do I find this amusing? Well, apparently these so-called “experts” have never been in a situation where they’re forced to choose between bankruptcy, debt consolidation, debt settlement or consumer credit counseling. When you’re faced with tough financial decisions, and you’re unable to make ends meet, the last thing you should be concerned with is your credit score. Rather, it’s time to find a solution to put your debt and sleepless nights behind you.

If you’re contemplating debt settlement, but have heard some negative feedback you may have some legitimate concerns. That being said, please understand that your concerns relating to debt settlement should lie strictly in the area of some debt settlement firms out there who want nothing more than to take your money and provide little to no service. This should be your number one concern, not your credit score or tax liability. We’ll talk more about debt settlement firms in a moment, but first let’s take a look at those factors which seem to have the critics so concerned.

Will you have a tax liability if you should decide to seek relief through debt settlement? You may or may not. Creditors are required to report all canceled debt over the amount of $600 to the IRS, and you will be required to report that canceled debt as income, and will likely be provided a Form 1099 from each creditor from whom you have received relief in the form of debt settlement. Keep in mind, however, that an “insolvency” rule exists for individuals who are considered insolvent at the time they settled their debts. This means that if your liabilities exceed your assets at the time of each settlement with your creditors, you are classified as insolvent, and will not likely face a tax liability. I highly recommend that you talk with a professional tax advisor to see where you stand with regard to the insolvency rule. Even if you are faced with a tax liability, what’s the big deal? Owing taxes due to debt settlement is simply because you realized a savings, and no doubt you’ll be much further ahead than would be the case if you remained thousands of dollars in debt, barely keeping your head above water each month.

As for your credit score, again, I don’t quite understand why this would be a concern. You’re in debt, you’re losing sleep and you don’t know how you’ll do it from one month to the next. Why worry about your credit score? One of the major perks of good credit is to obtain more credit - I think you’ll agree that you probably don’t want or need anymore credit at this particular time. Put your debt behind you and then start thinking about your credit score. In any case, the impact on your credit score through debt settlement is only temporary, and most people see a much improved score within 6-9 months of completing a debt settlement program. As a matter of fact, I talked with a former client just eight months after she paid off her final settlement, and she already had a 681 credit score. Not bad, considering had she not chosen to negotiate with her creditors she would still be borrowing from one credit card to pay another, and the cycle could have continued for several more years.

Some critics wonder what the actual savings through debt settlement really is, considering that interest and late fees continue to accrue prior to reaching a settlement agreement. Well, in most cases people do realize a significant amount of savings - even after late fees and interest, tax liabilities and debt settlement firm fees. Let’s say, however, that you’re $50,000 in debt, enter a debt settlement program and in the end (after paying taxes and professional fees) you only end up saving $10,000 (which is not very likely). So what? You still saved $10,000, which is a lot of money. You’re no longer paying minimum monthly payments, which could take up to 40 years to pay off. You saved thousands and thousands of dollars in interest that you would have ended up paying had you decided to continue making your monthly payments. You’re out of debt much sooner than you would have been if you had chosen another path. And best of all, you’re out of debt - period.

So, as you can see, debt settlement in itself is not necessarily the evil that some people would like you to believe it is. Some debt settlement firms, however, are. Because of this it’s very important to properly research this area prior to hiring a firm to represent you. First, please check the Better Business Bureau record of each company you’re considering. After you’ve narrowed it down, talk to those remaining companies and find out how their fee structure works, and if it sounds like they can be trusted. If a company you’re considering wants their fee up front - prior to providing a service - move on. It may take some extra time, but you can find reputable firms that will not charge you a fee until they have reached satisfactory results.

Hopefully I’ve cleared up some misconceptions about debt settlement for you. If you have additional questions regarding debt settlement, please visit http://donaldsonwilliams.com/Debt_Settlement.html. Congratulations on taking the first step toward a debt-free lifestyle.



By: Marie Megge

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Trapped by many credit card debt, not finding any solution, disturbed with creditors phone calls, fed up with the inaccuracies of bills want to use credit cards without pressure- manage your credit cards with Credit card debt management policy. Credit cards are the most commonly used mode of payment in the present scenario. No doubt, with a credit card, one can easily and freely make the purchases. Most of the Americans are in the habit of purchasing via plastic money; their shopping habit put them under the burden of credit cards. In such you can think of availing the services of credit card debt management. There is no harm in using credit card but one must be aware of certain basic tricks of managing credit card debts. It would definitely save the customers from financial debt.

Alertness While Using Credit Cards

First of all, be sure about your expenses and that should remain within the limit. Keeping in mind the criteria of leaving at least one-fourth of the total amount as balance will save you from extravagance. A complete record of the expenses is another surefire way of credit card debt management. However, in case the amount spent through the credit card is not equal to the statement submitted by the bank, it must be brought to their knowledge.

Apply Your Own Mind or Take Help from Debt Managers

Sometimes, it does happen that one is unable to manage credit card debts, then do not worry. There are certain agencies that show you the right direction; some of them even offer free credit card debt management for the consolidation of debts. One can hire credit card debt manager who advises on how to pay the debts but it is advisable that you do not fully depend on a credit card debt manager either. Apply your own mind otherwise it may worsen the situation. It is so because at times they may suggest taking bank loans or mortgaging to pay off the debts.

So, even if you are trapped under credit card debts; continue using your credit cards while focusing on credit card debt management and avoid any harassment calls from the creditors with the best available options of your choice. It is the most easy and convenient way to handle credit card debt consolidation by which you can save not only money but also manage the limit of your credit card.



By: Apurva Shree

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If you are reading this then that means that you are probably in need of some credit repair or credit consolidation. Taking care of your personal finance situation is the key to getting your life back together. If you have a bad credit score then you might not be able to do a lot of important things that you need to do such as rent an apartment, become qualified for a mortgage, apply for student loans, and many other important things that you need to do in your life. You get a bad credit report when you don’t pay your bills on time or don’t pay the monthly minimum. A credit bureau will have all of the information from each company that you’ve done business with and if you have bad credit they will rate you negatively and send out this information from any other company that you are looking to get some financial assistance from.

If you have a high credit score it will be easier for you to get the money you need to buy a new car, get a mortgage, go back to school or anything else you need money to do. If you have a low credit score then you will miss out on more financial opportunities and it will be harder to move ahead with your life. If you have to file bankruptcy this will be on your record for 10-15 years. If you choose to use a debt consolidation company to help you then you might be adding on extra fees to your situation rather than getting out of debt. You have to be very careful with whomever you deal with to handle your debt. You need to make sure that they have your best interest at heart and will help you to get out of debt without trying to take advantage of your situation.

The best thing to do if you find yourself in debt or a bad credit situation is to try to make a budget and stick to it. It doesn’t matter if you are on welfare, working, or on disability you need to live within your means and try to get out of debt as soon as you can. The longer you are in debt the more missed opportunities you will have in your life for you and your family. There are several different ways to figure out a budget for your family. You can use computer software to help in the process or just stick to pen and paper. It is important to get the whole family involved when it comes to sticking with the budget. You want everyone to feel like they are making a contribution to your family. You can hang it on the fridge so you remember to stay within your budget each and everyday. There are many great resources and people out there to help you get out of debt right now, so why not give it a try and shoot for your dreams of debt free living.



By: Jack Blacksmith

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If you are dealing with mounting debt and old unpaid bills, you may be a candidate for debt settlement. Some individuals have found it to be the best way to get out from under a large amount of debt. Debt settlement is most successful with unsecured debt such as credit cards, medical bills, and store credit. It is not as effective with secured debt such as a car loan because the asset the debt is secured against, in this case the car, will be repossessed, if the loan isn’t paid in full. And of course debt settlement is not at all appropriate with mortgages.

You should consider this alternative when you find that you are unable to keep up with current credit card payments or have credit cards that are frequently over limit. Once these things start to occur, it is very difficult to break the cycle. Over the limit fees, late charges, and other fees start to kick in and increase your debt total.

Debt settlement is just that: settling your debt with each of your creditors. Not surprisingly, many creditors would rather accept partial payment on a debt, as opposed to no payment at all. When accounts reach a critical point credit card companies realize the odds of receiving payment in full drastically decrease. Many debtors consider bankruptcy at that point which legally eliminates the debt.

If you consider debt settlement as an option, you have the choice of working with a debt settlement company or performing the task yourself.

Settlement companies charge a fee to contact and make arrangements with all of your creditors. Sometimes the fee is in advance of reducing your debt. You pay regardless of whether the settlement company is successful or not. Others charge a portion upfront and the remainder when the settlement is complete, and still others charge a percentage of your entire debt load paid after the settlement is completed. These companies are skilled at performing this service and may you countless hours of negotiation and frustration.

Many creditors are more inclined to negotiate with a company rather than the individual consumer. They have even been known to lower interest rates and remove late charges and over limit fees. It’s easier on you if you don’t negotiate with the creditors. Some creditors may try to browbeat you into a higher settlement or no settlement or threaten you with legal action. Creditors are less likely to do that with a settlement company.

Until the debt is actually settled, not just agreed to, but the payment has been made, the creditor can still take legal action. Or the creditor can turn the account over to a collection agency which means the settlement process starts all over again.

There are several valid reasons to consider debt settlement. First and foremost, you get a fresh start. All your unsecured debt is gone. That means that with hard work and timely payments on any new credit you can re-establish a good credit standing.

Because the majority of creditors are willing to settle for less than the total balance due, your mountain of debt will be paid off more quickly as well. The downside is that each creditor will most likely report the short pay to the credit bureaus and that will hinder you in obtaining new credit.

Debt settlement can stop the credit nightmare if used wisely.



By: Dee Power

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Debts, Debts and more Debts? Taken lot of debts…??? Facing problem in managing your monthly payments and you budget? Or facing trouble in getting loans with bad credit?

Here is the solution - Debt Consolidation Loans with bad credit.

Debt consolidation loans are those loans, which helps you to convert all your existing debts into one single debt. In simple words you can pay off all your existing debts with the loan amount so that there remains only one single debt on you. This enables you to manage your finances more efficiently as you have to make a single fixed monthly installment rather than calculating and paying for each debt separately. These loans come at low interest rates, which make them attractive as it cuts off your monthly expenditure.

Bad credit - the word means a lot when it comes to meet your financial needs through loans. A bad credit history may even stop you from taking a loan. Bad credit occurs due to various reasons like non-payment of bills, late payments, outstanding debts, outstanding credit card bills, and other unpaid expenses.

Bad credit debt consolidation loans help you in improving your credit score with the time as when you make regular monthly payments of your debts or pay off your debts completely. It helps you to improve your credit history by reducing the number of debts you have taken.

Debt Consolidation Loans also help in reducing the interest payments made for existing debts. When you are paying too many debts separately they have different interest rates, which jointly add a large amount to your monthly expenditure. And if you fail to make any such payment, it adds to your bad credit score. Whereas in case of a debt consolidation loan you just have to pay on a single interest rate that is low and wouldn’t affect much to your monthly bill.

If you are having collateral to offer you can get a secured bad credit debt consolidation loan easily. As the loan amount is secured its not much difficult for this loan to be approved. The collateral reduces the risk of a lender hence the interest rate is also low

You can also apply for an unsecured debt consolidation loan for bad credit in the absence of collateral. You can even qualify for the bad credit debt consolidation loan even without security. The interest may be a little higher but this is the best option for people not having security to offer.

So if you are looking for a solution to your increasing debts and monthly bills and also want to get a relief from your bad credit history, debt consolidation loans would be an option you can rely upon.



By: Alex Jonnes

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Which is right for you? That depends on many factors, mainly your current and projected financial situation. There are many misconceptions about these two options and in this article I will explain the positives and negatives of each.

Credit Consolidation is to combine outstanding debts into one or several loans. The important thing to remember is that with a consolidation you are not reducing the principal debt amount you owe. In most cases your principal debt will increase at first because of closing costs or transfer fees. A Credit Consolidation can be a good move but only if the new loan is at a lower interest rate than the individual debt items. Over the years I have advised hundreds of clients on how to get out of debt. It seems that initially most people want to consolidate their debts to not only reduce interest but to make their lives easier by making only one payment. I recommend that if you get approved for a consolidation loan to only accept if the interest rate is substantially lower than the loans you are consolidating. It makes no financial sense to consolidate loans to make your life easier. This is especially true if you refinance your mortgage to pay off credit cards. Remember, only consolidate for a lower interest rate and take all closing costs into consideration. Another potentially useful situation to consolidate is if you are struggling with minimum monthly payments. In some cases you can buy yourself some time if you’re able to consolidate and have a substantially lower payment, although this will generally prolong the amount of time it takes to actually pay the debt off.

Debt Settlement is also known as Debt Reduction. Debt Settlement is different than Credit Consolidation because the goal is to reduce your principal debt amount. This is done through negotiating with your creditor to lower your debt amount based off your specific financial hardship. If you are not in a hardship the program will not work because the creditors will have no reason to lower your debt amount. What qualifies as a hardship? As always, this depends on your situation. Some people are already behind and can’t afford their minimum monthly payments; this is definitely a financial hardship. If you’re current but are in danger of falling behind in the near future, you also might qualify for Debt Settlement. Debt Settlement is usually the fastest way to get rid of unsecured debt besides bankruptcy. The main tradeoff is that it’s not good for your credit score. If you have decent credit, your payment history will be negatively affected which is enough to pull your credit score down into the “poor” range. In order for Debt Settlement to make sense for you, the benefit of paying off your unsecured debt in less than three years must outweigh the fact that your credit score will be compromised. Once the debt is paid off you can begin to rebuild your credit.



By: Adam Jasa

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