Debt Settlement – What You Need To Know
January 30th, 2009 | 
Author:
Are your credit card payments more than you can afford to pay each month? If so, it’s not likely that you’re able to afford to pay extra money toward each account, which would enable you to pay off your credit card debt at a much faster rate than if you simply pay the required minimum payments. If you’re frustrated and feeling like you’ll be in debt forever it’s time to take a realistic approach to determine what path toward a debt-free lifestyle you should take.
Even before you start looking at your options, however, take a few moments to cut up your credit cards because those little pieces of plastic have done you absolutely no favors. As a matter of fact, they’ve very likely led to numerous sleepless nights and constant worry due to significant financial concerns.
Now, if you’re in serious financial trouble due to credit card debt, and you’ve considered bankruptcy, consumer credit counseling service, debt consolidation and debt settlement as possible solutions to help eliminate your debt, you may have decided that debt settlement sounds like your best option to become debt-free. If so, you probably have some questions or concerns regarding debt settlement, and who can blame you? After all, each potential option has both pros and cons, which should be examined closely.
Let’s start with the potential negative effects of debt settlement:
 Credit Score – If your credit score is pretty decent, it’s likely that it will be reduced during the process of debt settlement. You see, if your accounts are current, and you attempt to negotiate with your creditors to achieve a reduced pay-off amount, you won’t be taken seriously. It’s unfortunate, but creditors don’t really care if you’re having difficulty meeting your financial obligations and, therefore, won’t cooperate with you – that is, unless your account is seriously delinquent. Only after you’ve demonstrated just how serious your financial troubles are (by not making your payments for a few months), will creditors begin to make an effort to assist you. So, yes, if you have a decent credit score debt settlement may have a negative impact.
 Tax Liability – Debt settlement may also result in a possible tax liability when it’s time to file your income taxes. You see, creditors are required to report any forgiven debt, which exceeds $600.00, to the IRS. You’ll receive IRS Form 1099 for the amount of the forgiven debt, but it’s important to speak with a tax professional because if you’re classified as “insolvent” at the time you negotiated and paid your settlement(s) you will not be liable for any income tax. In order to qualify for this classification, your liabilities must exceed your assets.
 Sufficient Funds – If you’re contemplating debt settlement it’s crucial to understand that you must have access to sufficient funds to follow through with a reached settlement agreement with your creditors, otherwise, the negotiated settlement agreement will become null and void. In other words, if you have an account balance of $40,000 and your creditor agrees to accept 50% or less as payment in full, you must have the ability to make that payment by the given deadline.
Oftentimes, creditors agree to accept the settlement amount in 4-6 installments in order to ensure that the settlement agreement is successfully completed
While the aforementioned potential effects of debt settlement are common, there are also many positive effects of debt settlement, which should be taken into consideration, as well.
 Debt-Free Status is Accomplished Over Shorter Period of Time – Unlike debt consolidation, consumer credit counseling or Chapter 13 Bankruptcy, the process of debt settlement can be completed in a matter of months, depending on your ability to access funds to pay the reduced settlement balances to your creditors. You see, consumer credit counseling and debt consolidation loans both consist of long-term payment agreements, which can last from 5-10 years. Chapter 13 Bankruptcy also involves a long-term repayment schedule, usually about five years. So if you’re anxious to put your debt behind you sooner rather than later, you’ll be pleased with your decision to choose debt settlement to resolve your various creditor accounts.
 Improved Credit Score – While debt settlement may initially impact your credit score, the end result will be a much improved credit score. You see, one of the major factors taken into consideration in credit scoring is the amount of outstanding debt you actually owe. Once your creditors notify the credit bureaus of your updated status, and that your accounts have zero balances, you’ll see an immediate increase in your credit score. Also, as each month passes, the negative marks on your credit report will have much less of an impact on the actual score. Chances are, you’ll have a higher score within a year of completion of the debt settlement process than you had prior to entering to a debt settlement program.
 Debt Settlement Leads to Financial Freedom – Making the decision to commit to a debt settlement program can be difficult; after all, you’ve been struggling to pay your bills for a long time and changing your “money methods” can be unsettling. That being said, the majority of individuals who choose debt settlement find that they feel a great sense of relief once the process begins, and an even greater sense of relief after all of their accounts have been paid in full, and no further money is owed. No price can be put on a worry-free lifestyle and financial freedom.
Just as with most decisions you’re faced with, the solution to your financial problems has many factors to be addressed and considered – both positive and negative. In the end, it’s important to base your decision on your own personal needs and ability.
Posted in eliminate credit debt | 
Tags: consumer credit counseling, consumer credit counseling service, credit card debt, credit card payments, Credit Counseling Service, credit score, creditors, debt consolidation, debt settlement, Extra Money, Financial Concerns, Financial Obligations, Financial Trouble, Financial Troubles, Free Lifestyle, Little Pieces, Minimum Payments, Possible Solutions, Realistic Approach, Sleepless Nights
I need some answers about debt settlement and companies who do debt settlements.?
I have some serious debt issues and need some help. I talked to a debt settlement company, but I can't find any specific information about them. Does anyone know about American Financial Services or Axiom Financial Solutions? And does debt settlement really screw up your credit as badly as some would have you believe? It seems to me if you have unsecured debt you can't pay that would damage your credit just as badly. Help! I need info from somebody who knows about these things.
Every attempt to consolidate the multiple debts of a debtor fails because the action is not set in a well planned manner. Debt is a serious issue and demands to be dissolving with rational policies, and considering the debt management program is one of such deliberate advice that concentrates to dispose the debts to zero. The earlier steps taken regard them past, and approach for the debt management program for a rewarding and effective resolution. The objectives and principles of debt management program are adopted after assumptions and speculations which can stabilize or aid to rebuild the badly affected financial score in a sparing manner. Tactically and subtly, the policies are fused and carried out in a managerial way to consolidate the single or multiple debts as they are stronghold enough. Being a debtor is not a wrong sign; in order to qualify all the varied financial needs, inadequacy of required finance compels a person to take monetary support in the form of loans. However taking debt is considered bad in the society. Debtors, gradually, go in fix of debt trap due to mismanagement of repayment planning. Considering the fact of the matter, the lending authority has come up with the generous provision of bad debt management. Under the plan, debt elimination process is worked out.
Debt management program can be subscribed in a straightforward procedure. The practice of advancing debt management program is traditional and online, but the later is given the preference as it provides instant results to the applicants. While applying for a debt management program furnish data in an elusive manner and accurately in order to avoid delay. The services of debt program management reinstate and assist to supervise the future debts along with realizing demands.
Some people do not know how to manage their money. Others turn a deaf years despite warning signs of poor money management. However, getting out of debt is a function of learning and consistently applying good money bad debt management practices.
First of all, individuals must truly acknowledge they need help managing their debts. Once they truly decide to do something about their debts, they need a plan. Subsequently, figure out exactly how much they have owed. Write down all on a piece of paper. If unable to understand, then it is better to take help of any financial expert available nearby.
In prospect of providing a good bad debt management service, there are many lenders available in the money market for this generous cause. However with the advent of the internet, availing bad debt management has become very simple and easy. Henceforth, debtors have to fill in simple application forms available right online. Thereafter, a lender works for the debtor.
The lender gives entire of the debts into a single entity name, and calculates the amount and interest rates thereupon. After matching your dues and the amount you have, the lender makes a single monthly repayment scheme considerably. In such a way that both the creditors and the lender may not have to bear up any financial burnt. Debtors find their elimination of their debts under the provision of bad debt management very easy and simple.
The results of this debt management program are creditable. In short, the explicit advice deducts the monthly burden which you are obligated to different lenders. Multiple debts will be cut down to a single and debtors will have to be answerable to a particular creditor adding to the shedding of mental stress. In the market, the service of debt management program is provided by finance lending institutions in an easy way and the eligibility criteria is to be a victim of debts. The debt management program is released or functioning under different names, debt management service, debt management advice, debt consolidation program, debt consolidation advice and such, so that debtors can easily consolidate the debts. With the sustenance of such program debtors can also spot a lender who allocates finance at marginal rate of interest.
References :
http://loan–house.blogspot.com/2008/03/debt-management.html
Rachna gave a good answer, the old true meaning of debt consolidation, one company paying off debts if you qualify, but the terminology of debt settlement companies and debt consolidation companies has become confused, much to the liking of the debt settlement companies.
The question is about debt settlement companies, companies that tell you to cease communication, and paying your creditors. If in a short period of time, the Natl foundation for credit counseling http://www.nfcc.org will reccomend one of these companies, if small debt and no upfront fees, fees paid after services completed. Most debt settlement companies, that take up front enrollment fees and setup fees, don't tell you about the approx 1/3 additional fees, if they settle any of your accounts. Put 10 grand in their program , 1,300 dollars general "set up" fees plus 49 dollars a month to transfer your funds from your checking acct. to your "debt savings acct", now lets see they say they usually save you 40% of what you owe…….but if they settle the 10 thou for 6 thou, you pay the 6 to the creditor, owe them two for settling (which you can do yourself) and the 1,300 setup fees, at 9,300 now, and we haven't counted the monthl "transfer" fees. When you get the paperwork after the salespitch it says you won't pay more than you owed. What if you get sued? They rely on you violating the terms of the agreement which require no contact w/whom you owe, but most people when a garnishee is placed on their wages, start panicking, call the debt settle co. and they will not return your calls, knowing you will communicate w/attrny, trying to sue you, uh-oh cancallation fees, you violated terms, most are considered scams and states are beginning to ban them from doing business, most recently New York, and many go out of business. Search the forums (consumer related) and read the horror stories these companies have created for people. If you owe $15,000 and a creditor knows where you work, own a home, and where you bank, the creditor won't sue you? When these firms contact you hang up, read their claims on their advertisements, yes settlements are possible, you can do them yourself, even after judgement, if the judgement has not been executed.
Debt settlement companies prey on the uneducated and the educated gent who posted above I think misunderstood your question, if you qualify to consolidate loans to one pmt, great, but I think you were asking about debt settlement programs, and from them,,,,,,,,,,,,,run, don't walk away. Get educated, learn combinations of credit counseling, debt settlement, and credit repair, and implement them on your own, if you can't consolidate, under the true meaning of consolidate, as posted above.
References :
Experience as Real Estate Broker, Credit counselor, and student loan advisor- author-http://www.answersfordebt.com
Ive mentioned this before on one of these threads i used a company called Aftersense and they offer various financial services. They helped me obtain a loan when i had hardly any income. I think they also offer Debt Management aswell. you can fill in a form on their website and they will give you a call back. Hope this sorts your problem out.
References :
http://aftersense.net/debt.php
Hi,
I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58%.It's legitimate.I came across this company on NBC News Special Edition.Check it out here:
http://d6b0.easyurl.net
References :