How to resolve your debt

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Debt Consolidation - Truth Revealed
Debt Consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom.

Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt i... Read debt consolidation article



Get out of debt forever
The financial and psychological burden of being in debt causes us and our families continuous emotional stress. That stress eats away at the quality of our lives and leaves us feeling powerless, angry, depressed and helpless. But there is a way out - in fact, there are five simple and straightforward ways out of debt - and if you apply this five point plan to your life today you will ha... Read debt consolidation article



How to resolve your debt
In the last section we covered your rights against harassment and abuse by collectors. We also covered some options that your creditor may have to help you resolve your delinquent debt. Again I repeat that this is not legal advice but a guideline of your rights and options. Before we begin I would like to share a little info about myself. I was a collector for about 10 years until health problems forced me to leave the profession in 2003. I was really proficient and often resolved account no one else could. My supervisors would sometimes have poor performers sit next to me and the next month they would be getting bonus money. With that experience I may have some insight to share.

If your account is in collections and you simply can't catch them up you still have options. We will explore all of them.

1) Check with your creditor to see what programs they may have to assist.

2) Pay the furthest past due payment each month.-This doesn't catch you up ever but it keeps the situation from getting worse

3) Consumer Credit Counseling--- there are many different organizations that do this. Some of them are businesses, some are not for profit. Check with the United Way. You simply pay them a set amount each month and they disperse it to your creditors. Most creditors will give special benefits to someone on this program. Typically they will bring the account current after 3 consecutive payments.(Similar to the cure program discussed in previous chapter) Since your account is current then, there are no late fees assessed. Additionally and perhaps even more beneficial is that most will reduce interest. Typically they drop the interest rate, usually to 6%-9%. Your creditors policy may be different. Your creditor will probably close your account for future charges with this option. In some case this option may save your creditor from being ruined by late payments.

4) Bankruptcy--This is also an option. Individual bankruptcy can be either 1 of 2 chapters. 7 is a straight liquidation. In other words, all of your unsecured debt is wiped out if the court approves your bankruptcy. You still must pay for your secured debts if you wish to keep them. The court MAY force you to sell some of your assets. But just because you file Chapter 7 doesn't mean you will lose your home or car. If you are at this point I strongly advise you to consult an attorney on what filing would mean to you. Chapter 13 is similar except that your delinquent payments are paid over a period of 3 to 5 years in addition to your current payments. You may have to pay all, none or a small percentage of your unsecured debt over the term of the plan. Again if you feel this is an option then consult an attorney. If you decide this is the option for you then be aware of these facts. Once you notify your creditor that you have retained an attorney for bankruptcy and give them the attorneys name and a way to contact them, the creditor MUST stop all collection activity for " a reasonable time". Once the case has been filed thay must stop all collection activity against you.

FAQ

Q I mentioned to the collectors that I may file bankruptcy. They said not to because my credit will be ruined for 10 years. Is this true.

A. First lets look at who told you that. A collector. His/her job is to get you to pay the debt. He may or may not get a bonus off getting you to pay. What is true is that it will report on your credit bureau for up to 10 years. Maybe even less. Will you ever be able to get credit again? Most likely. It depends on many factors. What is true that it may be more difficult to get credit but not impossible. You may also pay a higher interest rate than you would if you had never went past due. I personally had to file a chapter 7 in 1996 after my son was in accident with medical bills over ' million dollars. 30 days after the case was finalized I was able to get financed on a 1 year old truck with no money down. 18 months later I had credit cards and had purchased a house and got it financed. There are lenders whom will finance you but they charge higher interest rates This is called "sub-prime lending" Just because you are behind on your bills and cant catch up the past due payments doesn't always mean you should file bankruptcy. Communicate with your creditor first and see what options are available, look into credit counseling to see if they can help. New laws coming into effect may make that a requirement before bankruptcy can be filed.

Q I got 4 months behind on my bills when I lost my job. I got caught up but my creditor will not fix my credit. What can I do to make them remove the bad mark against me.

A Nothing. If you where 4 months past due and they are reporting that, they are following the law. If a creditor reports they must report accurately

This quote is from the Fair Credit Reporting Act

"Reporting information with actual knowledge of errors. A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or consciously avoids knowing that the information is inaccurate. "

In other words, they can't report that you wheren't past due if you where and vice versa. The only way they can change a report is if it was due to the fault of the creditor. (i.e. payments posted to wrong account)

However you can place a statement into your credit file that explains any derogatory info. (i.e I was behind because of unemployment) As long as that negative information is on file that statement must accompany it. It is up to the person with whom you applied to for credit who makes the decision of if you are granted credit or not. The credit bureaus do not determine if you get credit. They simply relay your score which is based a many factors such as payment history, recent inquiries, % of total credit available to you that you have used, and income to debt ratio.

If you have any questions please email me: cinbud2004@comcast.net or post a message in our forum:

http://xsorbit29.com/users5/jaxconnectsmessageboard/index.php I am also available for personal consultation.

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Credit repair - What you must know

We've all seen them. "Send me 99.95 and I'll fix your credit and you can get a one million dollar credit card tomorrow." Ok so I am being a little dramatic. This article is to give you some insight into repairing your credit. It is not meant in any way to be legal advice. We will discuss several things in this article such as how credit works, paying or settling debts, credit repair companies, and establishing new credit. Before we begin I want to share a few things. I was a collector for almost 10 years until bad health forced me to leave the profession. I have also had my credit messed up by a bankruptcy after my son was hit by a car and had over ' million dollars in medical bills. Yet within 18 months I had purchased a new car, a home, had credit cards and some other accounts. So you see credit can be damaged but it can be repaired.

Before you can fix your credit report you have to know what is on it.

www.annualcreditreport.com

www.equifax.com

www.transunion.com

www.experian.com

Some of the bureaus have an online score calculator that will allow you to see how your credit score will rise if you pay a debt off, or begin making payments. Check it out and become familiar with it. Although there are 3 credit bureaus, and in a perfect world they would all say the same thing, they may each have slightly different info. Review your reports to make sure there are noinaccurate entries.

When I was collecting I often had people say to me "My credit is ruined so why should I pay ?" After I explained to them how the credit bureau worked, and showed them that they could fix the damage they where happy to pay. Many people get behind on their bills, figure their credit is ruined and just give up and never pay the bills. So it reports bad to the credit bureaus and they never make any payments on them so it stays bad. Many think that if they get behind that they automatically can't get credit for 7 years. While it is true that it may report for 7 years so will any payments you make after the time the account went past due. It is similar to a stack of boxes. If the last box says bad then it lowers your score and all your future creditor can see is the bad box. But if you make payments after that it pushes the bad box down the line. The creditor can still see it but it has less importance. So even if you got behind or haven't paid it for a long time either beginning to pay on it or paying it off or settling it will help your credit score.

I have often seen people who thought their credit was ruined and all they had was a few hundred dollars in unpaid medical bills or a small credit card. I advise people that they should just pay off small accounts either in full or by payments. In some case making payments on the debt may be better for your credit than just paying it off in full. The reason is that the credit bureau is really just a record of how consistently you make your payments. If the account isn't charged off and in collections then you are probably best to just make payments. If they don't update the bureau until it is paid for then by all means go ahead and pay it off.

If you have larger debts you may be able to settle the debt. If the debt is charged off and with a collection agency your chances are better. Why ? Because they get the accounts and they get a percentage of what if recovered. They like it when they don't have to spend a lot of time and money to recover the money. I have seen them accept anywhere from 80% down to 30%. It depends on the agency and the age of the account. BEWARE BEWARE. If you settle with an agency you still may hear about the debt in the future. Let me explain why. Then original creditor assigns it to the agency. You settle with them. The account is sent back to the creditor. The creditor isn't aware it was settled, just that the balance is lower. In some cases it gets reassigned to a secondary agency who is also unaware that it was settled. So they attempt to collect on the lower balance. If you settle a debt make sure you get documentation that it was a settlement. Make sure your credit bureau is updated to reflect that. Make sure you KEEP that documentation. If you are ever contacted by another agency in the future you will need that to prove that you settled that debt.

That bring us to credit repair companies. There are some that are legit and honest and some that are just a ripoff. Be careful. They will promise you that they will fix your credit, get you new credit, the sun will shine, the grass will grow and the birds will sing and the flowers bloom yada yada yada. They use the dispute process with the credit bureaus to do this and it isn't always effective. You can also do that for yourself. They may know a little more about it tho. If you use one I would find out how they plan to fix your credit, can they negotiate settlements for you, can they refer you to getting new credit established and most important, will they refund your money(less any actual expenses) if they fail to improve your score.

It is possible to establish new credit without going through the steps I mentioned. You can get secured credit cards. www.cardreport.com These cards do report to the credit bureau but they are secured. Typically they open an account for $250. The fees they charge usually come up to the same amount. So they aren't really assuming any credit risk. But they will report to the bureau. Make your payments on time or ahead of time. Also pay more than the minimum. There are other variations of the secured card. The best one is one secured by a bank account since you aren't just giving money away to get a credit card.

If you have any questions please email me: webmaster@jaxconnect.com or post a message in our forum:

http://xsorbit29.com/users5/jaxconnectsmessageboard/index.php. I am also available for personal consultation.


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How to resolve your debt
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