Debt Settlement Blog

With credit card debt at an all time high, debt settlement and bankruptcy continue to soar in popularity as debt relief has hit “main street.” Many critics sneer at the fact that the bankruptcy offers the same level of financial protection that debt settlement offers. Both have a negative impact on the credit score and both help the individual.

Well, if the two concepts are compared in such a literal sense, there’s no doubt that both are debt relief options. However, as one of America’s most favorite President said, there’s a difference in the security offered by a grave and security offered by peace. In case of bankruptcy, you will enjoy the security of the grave. However, you will find it impossible to lead a respectable financial life after that.  It will become public knowledge that you opted for bankruptcy. You will be publicly ridiculed for having failed to keep your debts under control. On the other hand, debt settlement is a completely different thing. You receive a boost from your lender in the form of 50% to 70% waiver. Even more importantly, you are offered 2 to 3 years within which you have the opportunity of repaying the balance amount in full.

Your credit score will come down. However, prompt repayment of the balance amount will itself indicate that you have controlled the finances. They will quickly identify that you have successfully overcome the problem and have shown discipline for the past 1 to 2 years. Remember that lenders are in the business of assessing risk. There’s no such thing as zero risk. You just have to convince your future lenders that you pose a low risk. If that is done, you can be rest assured that you will get loans despite having a poor credit score due to settlement.  Hence, do not to worry too much about the risk of settlement. The only point you should take care of is to avoid dealing with fraudulent companies. Choose the right resources like the debt relief companies online and even this debt risk will come down to zero.

If you have over $10,000 in credit card debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called “Free Debt Relief Networks” that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below:

Debt settlement plans, chapter 7 bankruptcies and loan modifications continue to implode as unemployment rates rise and home equity decreases.  Borrowers are modifying their second mortgages in high volumes as well.  Second mortgage lenders are typically quick to renegotiate terms, because bankruptcy and foreclosures yield huge losses.

A sudden, drastic drop in income last year had Bob and Roxanne Curry fearing they would become another foreclosure statistic.  He works at a brokerage firm and she runs a child care business out of their Queen Creek home. In mid-2008, her weekly income fell from $1,000 to $300 as fewer parents could afford day care.“I was robbing Peter to pay Paul to make ends meet,” Bob Curry said. “I started charging up credit cards and taking money from my 401(k), and then, in November, there was finally no more money to rob Peter from. That’s when we started to get behind on our mortgage.”  

The couple’s loan servicer wasn’t interested in working with them until they were at least two months behind on the home loan. Bob Curry then compiled a 39-page document requesting a loan modification, with advice from Jeff Underwood, vice president for the Central Chapter of the Arizona Association of Mortgage Brokers. Underwood is also with AmeriFirst Financial in Mesa.  “It took two months from the time that we first faxed in the paperwork for it to finally come to a close,” Curry said. “We did all that we could do. We didn’t get into a home we couldn’t afford.”  The couple was able to get their mortgage interest rate cut from 7.45% to 5%, and all late fees and charges were moved to the end of the loan.“Basically we saved about $700 a month,” Curry said. “The mortgage loan is fixed for five years, and so hopefully when that time comes we’ll be able to do what we need to do.”

The Currys are part of a growing trend of distressed homeowners reaching deals with their lenders to get back on track with their mortgage payments and remain in their homes. “We’re seeing more (mortgage) modifications and we’re also seeing for the first time … balance write-downs as part of a modification to avoid any sort of foreclosure,” said Andrew Loubert, vice chairman of the Arizona Foreclosure Prevention Task Force. “What didn’t work six months ago is working today. We are seeing the lenders more proactive in their understanding that the market has substantially dropped and as a result they need to be more flexible with how they handle balances and things like that.”

In April, 270,000 modified mortgages and repayment plans were completed nationally, according to Hope Now, a private sector alliance of mortgage servicers, nonprofit counselors and investors. It was the largest number in any month since Hope Now began compiling data in July 2007. It has not yet released any 2009 figures for Arizona.  In the Valley, President Barack Obama’s Homeowner Affordability and Stability Plan prompted some increase in mortgage loan modifications, Underwood said. “I do think that banks have opened up a little bit to the reality that if we don’t work with these folks, it’s most likely going to go to a foreclosure process and that’s not what the housing market obviously needs,” he said.

Suze Orman was wondering if you have you ever wondered why people continue to use credit cards even after letting them bury you in high rate interest? In this video Suze seems to be backing CCC (consumer credit counseling over debt settlement because the debt negotiation firms usually trash their credit. First of all Suze, as an experienced mortgage broker I have seen hundrerds of borrowers with credit that was significatntly impaired from consumer credit counseling, because with their programs the consumer stardts paying the creditors less than agreed.  Their credit rport starts reflecting that each month and it lasts a heck of a lot longer than debt setttlement. Second of all, the consumers that incurred the debt should have some responsibilty with regrads to their credit scores being trashed…

To your surprise, you actually need to have a credit card these days. But you do want credit card debt. Suze Orman explains the benefits of credit cards, but warns about carrying adjustable rate debt from these credit cards.

Is Debt Consolidation a SCAM?

If you really want to work with an company, look for one who can help you reduce your debt.  Consider, Debt Settlement, Consumer Credit Counseling or an Unsecured Bill Consolidation Loan or a Secured Home Equity Loan.

Serious “bottle necks” are being reported where properties are significantly delinquent, meaning loan payments are over 90 days past due. Potentially, this could make the foreclosure inventory explode, according to the data. About 6.3% of mortgage loans were seriously delinquent during the fourth quarter, compared with 3.62% during the same period a year earlier. The administration aims to help up to 9 million homeowners either refinance mortgages or attain a loan modification that keeps them out of foreclosure. 

The states that took the biggest losses continue to be California, Florida and Nevada, but Louisiana, New York and Georgia have also seen sharp increases in delinquencies, indicating that the recession is spreading, the group said.  On a related note, the House voted for legislation that enables bankruptcy judges to modify and restructure the home loans of distressed borrowers seeking mortgage relief for their owner-occupied property. The See the complete article > Obama Team Announces Loan Modification and Housing Relief Plan

Debt Leads -- & Types of Debt Settlement Leads You Should Consider for More Business

Debt Lead buyers can choose from real-time internet leads or live transfer leads that connect consumers directly with a debt advisor or broker. Visit  the Mortgage Lead Planet for debt consolidation leads online and read some of the debt settlement and mortgage refinance articles at the the Blog for Mortgage Leads and more lead generation.

Listen to Lead Planet Founder, Bryan Dornan as he discusses the opportunity for sales people to make money helping consumers eliminate their revolving debts.

This morning on the radio, I heard an ad that asked listeners if they knew they had a right to settle with credit card companies for a fraction of what they owed. Unfortunately, that’s not really how it works. No one has a “right” to settle with credit card companies for a fraction of what they owe. Anyone has a right to ask, sure, but the credit card company also has a right to say no.

In fact, debt settlement companies aren’t always as good a deal as they seem. While they can help negotiate with credit card companies for lower settlements, they also charge hefty fees, usually over 10% of the total balance owed. Settling a debt in other words, paying just a fraction of it also hurts consumers’ credit scores. Consumers also find themselves liable for taxes on the debts that were forgiven.

The National Foundation for Credit Counseling recently warned about the slew of advertisements taking over the airwaves promoting debt settlement. “The reality may be very different from the rosy picture painted by the commercials,” says the NFCC’s Gail Cunningham. She also warns that the debt settlement industry is largely unregulated, which can make it hard for consumers to select an experienced company.  See the original article >

In light of the credit crunch and the wave of foreclosures that have swept the country, buying a house after bankruptcy has become a lot more difficult. In most cases, mortgage lenders  not offer a home loan for someone who has filed bankruptcy in the last two years. Getting a home loan after that will largely depend on the size of the down payment you can make and whether your income is verifiable. That being said, even then the mortgage loan you will qualify for will likely have high mortgage rates and monthly payment. This being the case, maintaining on time payments and perfect credit history after bankruptcy is extremely important. Even the slightest sign of consistently delinquent payments, overuse of credit, or having too much debt and your eligibility for a mortgage loan will be thrown into question. Unfortunately, the subprime mortgage crisis has made life after bankruptcy even more difficult.

If you have already filed, there is no reason to dwell on the credit impact. Instead, you should start focusing on the ways that you can start improving it. Despite what you may have heard, removing a bankruptcy from your credit is unlikely (unless of course you filed Chapter 7 more than 10 years ago and it should be off your credit report anyway). Bankruptcy is intended to give you a fresh start, but from a credit standpoint, it will take time for you to rebound.

Here are a few tips to improve your credit score after filing for bankruptcy: First, always make on time payments to your creditors. Getting the credit in order to do this may be more difficult; however, getting secured credit cards or gas cards are easy ways to get credit again after declaring. Second, don’t max out your credit lines. This is a simple way for potential mortgage lenders to see if you have a problem abusing credit—if you are using the full line it is a huge warning sign that you may be a big spender. Third, don’t apply for too much credit. In the same light as the above, applying for several credit cards or loans at once is a warning sign you may be abusing your credit.  Read the original article >