The facts about debt consolidation and the things you might not know.

Over the years various people have struggled with debt of one kind or the other. Over that span there have been various tools in helping them deal with this situation. Recently it seems that the number of people drowning in debt has increased considerably. This has brought the various debt relief programs to the forefront of our minds both because of our heightened awareness of topic and because of increased media coverage and advertisements.

For the most part many of the debt relief programs that are available to people have been around for a long time. Of course there are always those fly by night “eliminate your debt” scams that crop up then go away. For an example the idea you can go to court and threaten to sue the creditors if they don’t eliminate your debt. Beware, that is no better than snake oil and can put you in a much worse situation then what you are right now.

The debt relief programs I am speaking of are valid and legal and have been put in place to assist people in dealing with an unmanageable debt situation. But it is important to know all the details of these options and how each one works.

Being in the industry for many years I have head countless clients say they are looking to do debt consolidation. What they don’t realize is that almost all of the credit card debt relief options are debt consolidation programs.

The definition of a debt consolidation program is a plan that will allow you to consolidate all of your payments into one so that you are not making individual payments to each of your creditors. Now I understand that the way I worded it might not be exactly what you were looking for and the reason for that is that you are thinking of one particular form of debt consolidation, not the broad category.

Let me explain to you each of the debt relief options and how each one of them will help you to consolidate your debt into one monthly payment.

Let’s start off with one of the oldest forms of debt help, which is called Bankruptcy. This option has been around for many years and more recently was amended to make it more difficult to qualify for. What many people do not realize is there are various forms of bankruptcy. Most commonly thought of is chapter 7, where your debt is forgiven and you do not have to pay back anything to the creditors. This however is the most difficult to qualify for. More common is the chapter 13 bankruptcy. This is a debt consolidation program where the courts decide how much you can afford to pay on a monthly base and you pay the trustee who distributes the payments to the creditors. You could end up paying 100% of the debt and that option will be on your credit for the longest amount of time.

The next debt relief option is consumer credit counseling and is commonly thought of by people as a debt onsolidation program. This is where you hire an agency to negotiate your interest rates down on all of your creditors, then you mane one monthly payment to the agency. You end up paying back about 130% of what you owe over 5 to 7 years and the monthly payment you make is typically close to what your minimum payments were for the creditors.

Debt resolution is another option that has gained popularity in recent years. Essentially you hire an attorney or law firm to negotiate your debt for less than what you owe. You then make one monthly deposit into a trust account which is used to settle with the creditors. Since the FTC regulations that were passed in October 2010, this option has gained in popularity throughout the debt relief industry as a way to get around the regulations ban on charging upfront fees.

Many of these debt settlement lawyers will charge you a retainer to start and then charge legal fees that they deduct from each of your monthly deposits throughout the entire program on top of their settlement charges. First of all this will increase your total program cost. Second people assume that by having a debt settlement law firm negotiate their debt, they are protected more and will be able to do a better job.

The reality is that the law firm is not doing the negotiating. They sub contract debt settlement companies to do all of the maintenance and work on your account. Also, they do not protect you since they are only representing you for the purposes of negotiating your debt and nothing more! They do not represent you in court and in many cases will not even help you answer a summons should you receive one. This is evident by the number of class actions law suits and states’ attorneys that are going after these lawyer bases settlement debt consolidation companies.

The final debt consolidation program available is called debt settlement. This is where a reputable accredited company will negotiate with your creditors on your behalf and will allow you to settle for less than your full balances with your creditors. Companies that follow the regulations will not charge you any fees until they have successfully negotiated your accounts. You save your money in a dedicated account which you have full access to and as each creditor is settled with they are paid from that account.

If you would like to hear more details about all of your options then you can speak to a debt analyst with years of experience who can review your situation and give you the information you need to make the right choice. Simply fill out the short form on the right column or click the green button.

February 21, 2011

Why Debt Settlement Works Best in Texas

Why Debt Settlement Works Finest in Texas

Debt settlement, also known as debt negotiation or debt reduction, is a comparatively new way for dealing with your debt troubles. In a debt settlement program, by negotiating with a creditor, a client can reduce their debt by as much as 50 percent and be debt free of charge in as small as 12 to 36 months.

Debt settlement is a great remedy for customers feeling overwhelmed with credit card debt that find themselves either falling behind on their payments or just able to afford the minimums. Thinking about the savings, in most cases it is worth doing if you discover yourself in any of the aforementioned situations. As with any debt solution, even so, there are prospective downsides to debt settlement that need to often be regarded as prior to enrollment. Initial, debt settlement may well have an adverse impact on your credit, particularly whilst you’re in the program. To put this point in perspective, however, it is critical to bear in mind the following: 1) any third party debt counseling program and even debt consolidation loans from finance businesses like Advantageous might have an effect on your credit negatively in the eyes of lenders, 2) the effect on your credit in the long-term is minimal, given the truth you’ll be eliminating all your credit card debt (amount owed is 30 percent of your credit score, compared to credit history, which makes up 35 percent of your score) and 3) if you’re falling behind or about to fall behind anyway, then your credit has been or will be affected negatively anyway.

Realistically, the two principal draw backs of debt settlement that are special to debt settlement are the following: 1) the possibility of legal action being taken by the creditor to collect the full balance and 2) the possibility of creditors harassing you until the debt is settled.

Thankfully, if you’re doing debt settlement in Texas or even debt settlement in Florida these concerns are extremely a lot diminished. Why is Florida debt settlement so preferable compared to a lot of other states? The reason is Texas has highly favorable debtor laws that give customers a lot of rights and protections when it comes to past due unsecured accounts like medical bills, credit cards, repossessions, and personal loans.

How State Collection Laws Benefit Texas Debt Settlement

Every single state has laws that say if a collections agency is collecting a debt, they are legally obligated to quit contacting a consumer if the consumer sends a Cease and Desist letter and/or a Power of Attorney notifying the collection agency that a third party is responsible for handling all communications with the creditor. Texas law takes it a step farther and not only limits harassment from collection agencies, but also from the original creditor as well. In most states, when a consumer falls behind on their payments and the debt is still being collected by the original creditor (the bank that originally lent you the funds or the hospital that serviced you, for example), then the creditor is reserved the proper to call the debtor on a daily basis in order to collect whatever is owed, and though debt settlement organizations servicing these clients can quite effortlessly lessen the calls (changing of your phone number and address and notifying the creditor that you are seeking third party support, for example), no 1 can ever make the calls entirely stop.

This is not the case however for Texas debt settlement clients. In Texas, the identical law that deals with what collections agencies can and cannot do when collecting a debt also pertains to the original creditor. What does this mean in practice? It indicates that a debt settlement organization servicing someone from Texas can easily get the calls to not only decreased, but entirely eliminated all together (at times within days).

State Homestead and Garnishment Laws and How They Benefit Texas Debt Settlement

For Texas debt settlement clients, their wages and house are totally protected, which gives the creditor even a lot more incentive to settle. Given the fact that creditors already have every single incentive to settle even with clients who reside in states with less favorable debtor laws, Texas debt settlement clients are in an even stronger negotiating position with their creditors. What does this in fact mean? Usually it means even greater protection in the event of a lawsuit and greater savings than what is typical. Let me explain.

Though the vast majority of cases settle, as any person who has ever read a debt settlement contract will tell you—it is impossible for a debt settlement company to guarantee that a client won’t be the target of any legal action by their creditors. After all, creditors are usually reserved the correct to sue debtors to collect a past due account, regardless of whether the consumer is taking any action to resolve the outstanding debt.

In the event a creditor sues a consumer in court and wins a judgment, they’ll normally go about executing the judgment in 1 of the following ways:

1)Wage garnishment—contacting your employer and asking that they set aside a percentage of your wages each and every paycheck until the debt is paid back in full. (It is illegal for an employer to fire you for this unless much more than one creditor is garnishing your wages).

2)Lien on your property—obligates you to pay back the creditor with any proceeds from the sale or refinancing of the property. A creditor prefers to put a lien on your home because it generally increases in value over time, which means the proceeds from your home’s sale will be greater, and thus they’re far more most likely to actually get paid back.

3)Seizing your bank account—contacting your bank, showing the proof of judgment, and asking to withdraw any monies held in deposit under your name.

Fortunately, Texas laws protect debtors from having their wages garnished (unless you authorized in writing to enable your creditor to garnish your wages) and entitle Texas customers to 100 percent homestead protection in the event of a lien. (Note: this does not apply to tax liens, alimony, or contractor’s liens.) One downside, even so, is that bank accounts are not exempt under state law. That being said, for most consumers who are drowning in credit card debt, there possibly will not be significantly for the creditor to seize anyway, and if so, it’s unlikely that it will constitute sufficient to decline a settlement provide. On leading of that, bank account details can be tough for creditors to locate, in contrast to your house, which is public record.

In sum, these are main benefits for Texas debt settlement clients. Maintain in mind that the vast majority of circumstances are settled successfully regardless of the legal advantages of the consumer. When you contemplate Texas state laws, debt settlement makes even far more sense for the credit card organizations, debt collection agencies, and most importantly, for the consumer.

Debt Settlement in Texas and Community Property Laws

If you are married, reside in Texas, and are looking for debt settlement services, you need to enroll any and all debts that were accumulated throughout the marriage by both you and your spouse. Just simply because the debt is owned by only one partner the other partner is not exempt from having to pay for it as well under Texas law. Creditors know this and may possibly use it to their benefit in the collections process.

Robert Zangrilli is a debt consultant at Franklin Debt Relief, LLC in Chicago, Illinois. FDR is one of the nation’s leading provider of debt settlement for credit card debt, but FDR specializes in tailoring certain programs for Texas debt settlement clients. Debt settlement is a sort of credit counseling debt relief that entails negotiating with creditors to get them to lessen your debt.

Article from articlesbase.com

Tags: Best, Debt, settlement, Texas, Works.