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Help With Debt Negotiation and Settlement (Consumer Law & Fraud)

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• Mon, 27 Feb 2006 07:52:00 GMT(1)
• Some of the most common ways to resolve unsecured debt include debt settlement, debt consolidation, a home equity loan, Consumer Credit Counseling, and bankruptcy. From what you wrote, I would recommend a debt settlement program, though you should consider all options to determine which is right for you.
  
  Debt Settlement is a process in which both debtor and creditor settle or resolve a debt for less than what is owed. If negotiated properly, a debtor's debt can be quickly, and in some cases, significantly reduced.
  
  To ensure a successful settlement is brought to fruition, funds need to be readily available to pay the settlement amounts as negotiated by the debt settlement program on behalf of its client. And because these agreed upon settlements must be immediately paid in full or according to an agreed upon payment schedule following negotiations, the client's funds are held in a third-party trust account to ensure an expedient transfer. In the unlikely event that the debt settlement program is unable to negotiate with a particular creditor to settle a client's debt, the account would be dropped from the program. This action, in turn, would shorten the client's program length, reducing their administrative fees.
  
  While the successful completion of the debt settlement program will ultimately result in the elimination of debt owed, an improved debt-to-income ratio, and credit report enhancements through the removal of inaccurate or baseless credit marks, a client's credit profile may be negatively affected during the duration of the settlement program. Additionally, there are associated risks with this type of program such as the possibility of lawsuits by creditors, a credit score that will drop during the early stages of the program, and the debt that is settled will be identified on a client's credit report as "paid as agreed" or "settled for a lesser amount" rather than simply "paid in full". While these risks are valid, we believe that for some consumers, the risks associated with choosing an alternate solution other than debt settlement could potentially have a greater detrimental affect on their long-term financial stability and well being.
  
  Debt Consolidation entails taking out a single loan to pay off many others. This action is often undertaken to secure a lower or fixed interest rate or for the convenience of servicing only one loan. For some, debt consolidation may be a viable option. However, for many consumers with large amounts of debt, the benefits are short lived and people find themselves worse off following their consolidation. Why? Well, to begin, all of the debt that the consumer consolidated is still there. This option generally leaves consumers in a more vulnerable position since they may be tempted to continue spending - worsening their debt problems. On the other hand, a debt settlement program eliminates your debt and makes use of safeguards that keep you from getting deeper into debt.
  
  Bankruptcy: Filing bankruptcy, or Chapter 7, will completely absolve the consumer from any debt. While the stipulations of Chapter 7 vary from state to state; the most beneficial outcome of this action is that debt collection efforts must cease.
  
  Bankruptcy, however, has its downsides. To begin, this course of action will remain on your credit report for up to ten years. Secondly, once bankruptcy is filed, a debtor loses all property except what is exempt from law. In addition, the new bankruptcy reform act that became effective on October 17th, 2005, requires more from debtors, including pre-filing consultations with an approved consumer credit counseling service in an attempt to force consumers to pay their debts outside of bankruptcy. Additionally, in order to file, a debtor needs certification from that particular credit-counseling agency. Also, more documentation from the debtor will be required, subsequent filings will be discouraged, the waiting period between Chapter 7 bankruptcy filings will be extended from 6 to 8 years, and a debtor's final discharge will be subject to completing a course in financial management. Clearly, debt settlement offers a viable alternative to the long and arduous process of filing bankruptcy.
• Mon, 31 Oct 2005 09:04:00 GMT(2)
• Why not just declare bankruptcy? Why drag out these proceedings which will do almost as much damage (and, the way you describe, perhaps more and perhaps over a longer term) than seeking a discharge?
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