Category: Debt Settlement Companies

Debt can be overwhelming and stressful, especially when it starts to pile up. Fortunately, there are several debt relief programs and strategies that can help you manage your debt and regain control of your finances. In this blog, we will discuss some of the best debt relief programs and strategies that you can use to manage your debt with the help of a debt relief agency.

The Debt Settlement Process Explained

Debt settlement is a debt relief program that involves negotiating with your creditors to settle your debts for less than what you owe. This can be an effective way to reduce your debt and get back on track financially. The debt settlement process typically involves the following steps:

Assess your debt: The first step in the debt settlement process is to assess your debt and determine which debts you want to settle.

Save money: You will need to save money to pay off the settlement amount. This may involve setting up a payment plan or making lump sum payments.

Negotiate with creditors: Once you have saved up enough money, you will negotiate with your creditors to settle your debts for less than what you owe.

Pay the settlement amount: If you reach an agreement with your creditors, you will need to pay the settlement amount to finalize the debt settlement process.

Some of the Benefits of Using Debt Settlement

There are several benefits to using debt settlement to manage your debt. Here are some of the most significant advantages:

Reduce your debt: Debt settlement can help you reduce your debt by negotiating with your creditors to settle your debts for less than what you owe.

Avoid bankruptcy: Debt settlement can be an effective alternative to bankruptcy, which can have long-term negative consequences on your credit score and financial future.

Stop collection calls: Debt settlement can put an end to the collection calls and letters from your creditors, giving you some much-needed relief from the stress of dealing with debt.

Improve your credit score: While debt settlement can initially have a negative impact on your credit score, once you have settled your debts, you can start to rebuild your credit and improve your score.

Should You Get Debt Counseling?

Debt counseling can be an effective way to manage your debt and get back on track financially. A debt counselor can help you develop a debt management plan that is tailored to your specific needs and financial situation. Here are some signs that you may benefit from debt counseling:

• You are struggling to make minimum payments on your debts

• You are falling behind on your bills and other expenses.

• You are using credit cards to pay for necessities like food and rent.

• You are receiving collection calls and letters from your creditors.

 

Debt counseling can provide you with the tools and resources you need to manage your debt and improve your financial situation. A debt counselor can help you understand your options and develop a plan to pay off your debts over time.

How to Use Credit Counseling

Credit counseling is a service that can help you manage your debt and improve your financial situation. Here are some steps to follow when using credit counseling:

Find a reputable credit counseling agency: Look for a nonprofit credit counseling agency that is accredited by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

Schedule a consultation: Contact the credit counseling agency and schedule a consultation. During the consultation, the credit counselor will review your financial situation and recommend a debt management plan.

Develop a debt management plan: If you decide to move forward with credit counseling, the credit counselor will work with you to develop a debt management plan. This plan may involve consolidating your debts, negotiating with creditors, and creating a budget.

Stick to the plan: Once you have a debt management plan in place, it is important to stick to it. This may involve making regular payments to the credit counseling agency, paying off your debts on time, and following a budget.

Declaring Bankruptcy as a Strategy

Declaring bankruptcy is a strategy that can help you get rid of your debt and start fresh financially. However, it is important to consider the potential consequences of bankruptcy before making this decision. Here are some things to keep in mind:

Types of bankruptcy: There are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves liquidating your assets to pay off your debts, while Chapter 13 bankruptcy involves creating a repayment plan to pay off your debts over time.

Impact on credit score: Declaring bankruptcy can have a significant negative impact on your credit score and financial future. It can stay on your credit report for up to 10 years and may make it difficult to obtain credit or loans in the future.

Eligibility: Not everyone is eligible for bankruptcy. Your income, expenses, and assets will be evaluated to determine whether you qualify for bankruptcy.

Consult with a bankruptcy attorney: If you are considering bankruptcy as a strategy, it is important to consult with a bankruptcy attorney. They can help you understand your options and navigate the bankruptcy process.

Use a Savings Calculator

A savings calculator can be a useful tool when managing your debt. It can help you determine how much you need to save each month to pay off your debts and reach your financial goals. Here’s how to use a savings calculator:

Enter your debt information: Enter the total amount of debt you have, the interest rate, and the minimum payment amount.

Set a savings goal: Determine how much you want to save each month to pay off your debts and reach your financial goals.

Calculate your savings: The savings calculator will calculate how long it will take you to pay off your debts and how much you need to save each month to reach your goal.

Adjust your plan: If the savings goal seems too high or too low, adjust your plan accordingly. You may need to increase your monthly savings or adjust your debt management plan to reach your financial goals.

Request a Consultation With the Law Offices of Robert S. Brandt, For Debt Relief Agency Help

If you are struggling with debt and need professional help, request a consultation with the Law Offices of Robert S. Brandt, and our debt relief agency can help you put yourself back on financial track.

Debt settlement companies are smart.  They know your weakness. They know that for the majority of folks out there, filing for bankruptcy is the last thing in the world they would ever consider doing.  Debt settlement companies understand all too well that there are people out there like my Dad who would rather cut off his left hand and go without food and water for a week then be branded “bankrupt.” For most, filing for bankruptcy is simply viewed as not an option. Debt settlement companies know this, and they play on your vulnerability. Debt settlement companies purport (strong emphasis on purport) to offer you an out that will be your salvation while at the same time relieving you of the need to file for bankruptcy. The problem is, debt settlement simply does not work.

In theory, debt settlement is supposed to work as follows: Rather than paying the full amount that you owe to your credit card companies, debt settlement companies, using their “savvy business skills” will negotiate with your credit card companies and get them to accept only one half of the amount you owe.

Now, let’s look at the disadvantages with debt settlement companies.  First, debt settlement companies will claim that using their services will save your credit score.  That simply is not true.  Debt settlement companies might be telling you, or you might be telling yourself, that filing for bankruptcy will destroy your credit score whereas using the debt settlement route will avoid this huge blemish on your credit report. What’s the problem with this logic? Well…ah…it’s wrong. The majority of people when they are at the crossroad of bankruptcy vs. debt settlement have a credit score that is, well, how should I put this, pretty bad. Filing for bankruptcy at this point will not harm your credit score. If you credit score is below 600 there is not a whole lot left to harm.  In fact, filing for bankruptcy will stop the bleeding and give you the opportunity to start to rehabilitate your credit score.

What about the people who are still hanging on, making their minimum monthly payments and have a credit score that is 600 or higher? Aren’t they better off choosing debt settlement to avoid bankruptcy? Well, that brings me to my next point; using a debt settlement company will destroy your credit score.  One of the first things a debt settlement company will tell you is to stop paying your credit card companies and start making monthly payments to them instead.  They will go on to explain that once they have accumulated 50% of your outstanding credit card debt they will then enter into negotiations with your credit card companies to settle your debt. For most people that typically means several years of payments to their debt settlement company. What’s the problem with this seemingly logic tactic? Well, within 2 to 3 months your credit score will be severely damaged.  After 1 year, it will be completely destroyed.  Credit card companies want timely payment from you every month and they can care less that you are working with a debt settlement company.

And here comes problem number three; debt settlement companies leave you exposed. If you think that credit card companies are going to sit idly by while you are making payments to your debt settlement company then, I hate to tell you, you are simply mistaken. Credit card companies will eventually sue you, get judgments, and seek to garnish your wages, all while you are making payments to your debt settlement company. And what happens when you complain to your debt settlement company? After a whole bunch of nonsense and run around, your debt settlement company may have the temerity to suggest that you should file for bankruptcy.  In fact, here comes the kicker, they might even encourage you to retain their services for the filing of your bankruptcy as well.

The remaining problem with working with a debt settlement company comes down to dollars and cents. They want a whole lot of money and they want it upfront.  Moreover, the money is non-refundable, regardless of whether you successfully complete their payment program! Meaning, during those initial six to twelve months of payments, virtually all of that money is going into their pockets.   Debt settlement companies typically want 15% of your credit card debt as their fee, plus some additional junk fees.  For instance, if you have $40,000 in credit card debt, expect to pay them at least $6,000 for playing the middle man.  Not to mention the fact that for most folks being put on a payment plan of anywhere between $500-$1000 per month for several years is next to impossible.

So, are there any benefits to using debt settlement companies? Does my article speak the truth or offer you a biased opinion of a bankruptcy lawyer? Are you wondering what sort of track record do debt settlement companies have? Read the following articles to see for yourself: The New York Times article Peddling Relief, Firms Put Debtors in Deeper Hole as well as

A Shocking Peek Inside the Seedy World of Debt Settlement Companies by Avvo.