Preparing yourself with vital information before choosing a debt relief company will save you money, time and frustration.
AAA Debt Relief Reviews offers advice, tips and strategies on budgeting, credit card use, debt relief systems and above all how to choose the right debt relief company.
Take a moment to become more informed before making one of the most important decisions in your life
It might sound silly but don’t laugh some people in fact use a pay day loan to pay an instalment of a credit debt.
If done carefully and with consideration there is nothing wrong with a pay day loan used in this fashion but one should look very carefully at the monthly budget to ensure that the pay day loan will be extinguished before the next instalment of the credit loan. Preferably this would be done at the beginning of a monthly credit loan cycle and only if by the time the next credit payment is due it can be made without the need for further pay day loans.
The biggest problem of course is that generally once a person uses a pay day loan to pay credit debt they are already in financial trouble and the pay day loan only exacerbates the problem.
Pay day loans can have very severe consequences if not used correctly. This type of loan is designed for very short term use and if defaulted upon attracts very high rates of interest. Consequently, this is how debt can spiral out of control in a very short amount of time. A pay day loan should only be used by people who have little or no credit debt and have the ability to pay the pay day debt quickly.
If someone is considering a pay day loan to help pay credit debt, I say stop. Look at you budget and seek professional help urgently. A pay day loan in these circumstances is the worst option and must be avoided.
One method to help bring the finances back under control is to enter into a debt relief program and there are a number of different programs available depending on the circumstances and many good companies that provide the services.
While Debt Relief can provide you with the comfort of knowing that your debts have been brought under control, that there is a way forward in gaining financial freedom and independence one must also consider any tax consequence of debt relief.
I am not an accountant or tax consultant but I should draw your attention to the fact that it is possible that where your debts have been forgiven there is a corresponding tax burden. That is you may be liable for income tax to the extent of the amount of debt forgiven. For example if you have had $20,000 of debt cancelled you may have an extra $20,000 of taxable income. This is the hidden tax sting.
It sounds unfair and may come as a shock to many people when it happens. It’s like getting out of the fire only to get into another fire but the rationale for it fairly simple.
If you have borrowed say a total of $40,000 through credit and other loans and, after paying back $10,000, come to the point that you can no longer continue the payments then decide to enter into a debt settlement scheme and have your loan cut by 50% (where the other 50% has been forgiven or wiped off), you then have a remaining $15,000 loan which you are happy with and can pay off.So far, so good.
But what happens to the other $15,000 you don’t have to pay back? Well, in fact you have been able to keep it, or the benefit of it. Even though you don’t have the cash anymore you got the benefit of the cash, such as buying the car, the holiday or whatever else the money was spent on. The tax department looks at that $15,000 as income. Therefore you have an extra $15,000 of income which must be taken into account for taxation purposes. And that is the hidden tax sting.
Bear in mind that everyone’s circumstances are different and if you’re considering debt relief, particularly if you are attempting debt relief by yourself, there may well be a tax consequence depending on which method of relief you are using. It may be that tax consequences are insignificant compared to the benefits of the chosen debt relief method but on the other hand the tax consequence may outweigh the gains and alter your choice of the best debt relief method.
It is very important therefore to obtain advice from your accountant, or tax consultant, and your debt relief expert as to any possible tax consequence before formalising a debt relief agreement.
According to Howard Dvorkin, founder Consolidated Credit Counselling Services, “If you haven’t paid your bills in six months, don’t care about your credit rating, don’t care if you get sued or not, and have no plans to buy a home, that’s who’s a good candidate.”
In my opinion, that type of person is probably not a good candidate for debt relief services.
First of all that candidate has no concern about their credit rating now or in the future, which also implies that the person does not intend to seek credit services in future. On the other hand a person who cares about their credit rating and sees there may be a future need for credit services is more likely to do whatever is necessary to repair their current financial position so as not to unduly jeopardize their credit rating any further.
Clearly the person who has no interest in their credit rating should at least be informed of the benefits of having a reasonable credit rating but depending on their circumstances it will be a matter for their personal choice. There is obviously no rule that says a person MUST have a good credit rating and many people survive quite happily without it.
Secondly if the person doesn’t care about getting sued or not they are probably in the position of having nothing further to lose and conversely the creditor has nothing to gain by suing and therefore any judgement in the creditors favour will be expensive and hollow which in itself is often a deterrent from suing. If the person signs up for debt relief services, which in my opinion is highly unlikely, the debt relief company may well face the same prospects as the creditor ie nil return on the services rendered.
Thirdly, the comment “have no plans to buy a home” is absurd. Millions of people live in rented accommodation and are satisfied and do not want the burden of purchasing and maintaining their own home. This type of statement is nothing more than a misguided comment reinforcing the Great American Dream of home-ownership and thus fuelling the finance industry’s debt economy which was the cause of the current economic crisis. Obviously, there are many people who “have no plans to buy a home” but will in fact benefit significantly from debt relief services.
If there is any merit in the statement of Dvorkin it lies in the fact that some of those people he refers to may be in a situation of financial depression and in this case there may well be benefit in counselling services and debt relief services. On the other hand if the person has made an informed choice not to pursue debt relief and continues to default on payments then the worst that can happen is a creditor will institute bankruptcy proceedings against the debtor which will in the long run have a beneficial effect upon the debtor. Of course there are other legal options available to the creditor but that is not the subject of this article.
In my opinion the people most likely to benefit from debt relief are those who care about their credit rating, care about being sued because they stand to lose significant amounts and have plans to purchase property in the future (although this is somewhat a moot point). Above all though, the pre-requisite to this is the person not only ‘hasn’t paid’ the bills but in fact ‘can’t pay’ the bills.
Unfortunately there have been too many Debt Relief companies that have been exploiting consumers for far too long by charging hefty upfront fees then doing little to assist the consumer and often leaving the consumer in a far worse position of debt or indeed bankrupcty. Finally there is some relief.
The Federal Government will implement new rules from October 27, 2010 that will prevent debt relief companies, who sell their services over the phone, from collecting an upfront fee until there has been a successful re-negotiation of the terms of the credit contract, a settlement or reduction of credit debt due or other change to the contract. In addition there must be a written contract between the consumer and the creditor and the consumer must have made at least one payment to the creditor under the new terms of the contract that has been negotiated by the debt relief company.
Further, there are also new rules that require the debt relief company to disclose how much the service will cost and how long the consumer can expect for the company to provide a result and any negative implication that the company may reasonably know of, and prohibit debt relief companies from misrepresenting their success rate or claiming they are non-profit.
This is good news for consumers because it adds another level of protection from unscrupulous companies and ensures that the debt relief company does in fact provide a service to the consumer without giving false promises.
However, you should note that the rules appear to only benefit consumers who have signed up to a debt relief company during a telephone conversation and this is because the rules have been implemented under the Telemarketing Sales Rules.It does not matter whether the debt relief company approaches the consumer first or the consumer contacts the debt relief company as a result of advertising, the rules still apply.
Unfortunately however, it may well be that a debt relief company can continue to charge upfront fees during a face to face meeting with the consumer and if a consumer finds this to be the position they should be very hesitant about accepting the first offer before doing some further phone research. That way at least the consumer will not be committed to an upfront fee and will have the benefit of several, if not more, quotes for services. Above all, no company, whether it be by telesales marketing or direct face to face marketing, should pressure a consumer into signing up for services.
I have reviewed a number of debt relief companies and ethical behaviour was a specific consideration. You can read my reviews at AAA Debt Relief Reviews or go straight to my number 1 choice for debt relief services.
We live in an age of technological marvels. There are so many things available today that our parents only ever dreamed about and what makes the purchase of these new and exciting products easy is the development of credit through the use of a plastic credit card. Credit cards are available to almost every person and the use of the credit card has become crucial to modern economics. However as with anything there are also some downsides, namely in the form of credit card debt.
Credit Card convenience vs. Credit Card debt
We see the credit card used for an enormous amount of transactions, everything from the corner store to the car yard to the internet. In fact credit card use over the internet is almost mandatory for any purchase. There is no doubt that the use of a plastic card has made transactions much easier and simpler, swipe the card through a box and sign or enter a pin and the deal is complete. No need to carry wads of cash with the associated risk of losing it or worse, being robbed. This very fact of the ease of use can lead to a false sense of financial security by not keeping a close eye on the balance of credit debt. And this fact is brought home when the bill arrives.
In simple terms, credit is not a bad thing it is only how it is managed and when not managed correctly is when the problems set in.
We have seen daily how the banks are posting record profits but it is not difficult to understand where these profits are coming from. It is not from real estate investments but from financial investments and those big rewarding financial investments the banks make are the supply of credit to anyone who accepts. Because the credit card works on the principle of borrowing money from the banks there is a resulting debt owed to the bank and those loans supplied by the banks are paid for by charging interest on the debts. Quite clearly, the more the banks give credit the more debt there will be and the more interest will be received by the banks resulting in those massive profits. If everyone paid their debts immediately after using the credit facility there would be no incentive for banks to continue supplying credit as there would be no profit in it.
Of course not everyone can pay their debts immediately but to avoid a personal debt crisis the borrower must be cautious and prudent but unfortunately this is not always the case and even while exercising caution a borrower may be faced with a situation that causes debt levels to rise unexpectedly such as a medical emergency. All card holders should look to their personal financial situation and assess whether there are any issues that need to be addressed, because to take pre-emptory action early is to avoid painful remedial actions later.
Indeed, paying off credit card debt may take a long time especially in circumstances where interest rates are high. But it doesn’t mean that you can’t take action to efficiently manage credit card debt and if you are overwhelmed by credit debt seek all the help you can to avoid falling into depression. Look for tips and techniques on how to pay off the debts easier, how to manage frequently encountered problems, find free debt consultation companies that can help you and, step by step, learn to re-discover ways to reduce debt and regain financial freedom.
The power to eliminate credit card debt
People who are having problems managing their credit card debt or those who are near in bankruptcy often don’t realize that the power to eliminate their credit card debt troubles is totally in their hands. Today, more and more Americans need credit card debt help badly. The main problem is that these families are having difficult times paying high interest for credit card debt. And instead of lifting the burden of credit card debt, more and more people are paying more in interest every month than that of the actual expenditure.
Apart from knowing your weapons in terminating credit card debt, it is very important that you develop a sense of control and
perseverance first. Since the credit card debt elimination process requires organization, clarity, and commitment to your own growth, it is a must that you are ready for the responsibility to stand free and independent.
For those people who consider having a credit card indispensable but afraid of getting one because of the possibility of credit card debt nightmare, you must remember that credit cards can be a powerful tool in managing your finances but there will always be problems when not used properly. Of course, there are countless reasons why you should and shouldn’t get one depending on your needs. Whether you decide to get one or not, managing finances still takes a sense of good budgeting, willingness to change spending habits, and the humility to avail low interest consolidation loans when you are already burdened by too much credit card debt.
The economic crisis has apparently led to a shift in thinking on whether a person would pay their mortgage debts first or their credit card debts first.
Traditionally a person, when faced with financial crisis, was likely to pay their mortgage in preference to their credit card. This was because of the value placed on the family home, you might lose the car or television but at least you had a home to live in.
According to a February 2010 study by TransUnion there has been a shift to paying the credit card first. Researchers were of the opinion that once the economic crisis eased there would be a shift back to the traditional debt choice of paying the mortgage before the credit card. However this is not occurring and it seems that there is a slow constant shift toward paying the credit card before the mortgage.
There is perhaps some logic in the shift given there are many mortgages that are in fact higher than the value of the property. The thinking being, why pay for something that’s not worth it. But this is questionable because even though property values have declined it is more than likely that over the longer term the values will significantly increase in a sustainable way. If the stock market is any example it is clear that stocks rise and fall all the time and often riding through the dips yields significant results. Clearly though the consequence of defaulting on mortgage payments will be foreclosure and if the property is worth less than the mortgage there will remain an outstanding liability for which the debtor could face bankruptcy proceedings instigated by the creditor. On the positive side, by paying the credit card first and keeping it under control there will be credit/money to pay for food, rent, utilities and other essentials. Of course the credit card should never be used to pay the mortgage.
On the other hand by paying the mortgage first you will have somewhere to live but you may not be able to pay the credit card which may have been a support for the utilities and other essentials, so where does this leave you? Unless credit card debts are reduced and brought under control any creditor could bring a bankruptcy proceeding against you in the belief that there is collateral in the home that could satisfy the debt. Thus whilst maintaining the mortgage you could still end up losing your home through unrepaired credit card default.
One should also consider interest rates when deciding which debt to pay first. On purely financial logic the biggest savings will be made when the higher interest debt is discharged. As credit cards can be two to three times the mortgage interest rate it would make sense to attend to the credit card first. Another consideration is where the mortgage is greater than the property value a bank maybe somewhat reluctant to foreclose if there is a possibility of the debtor continuing to make payments even if at a reduced rate for a period. Thus there is room for negotiation and the same applies for credit card companies.
The choice is clearly a difficult one and everyone’s circumstances will be different so no hard and fast conclusions can be made suffice it to say that it may be more prudent to make a multi-pronged attack on keeping the home and reducing credit debt rather than opting for one or the other. As it is such a complex question it will no doubt be in the consumer’s best interests to seek professional help.
Courtesy of the Author P. Dehlsen and published by EzineArticles
Choosing a debt relief company is an important decision but how do you go about it? The debt relief company is offering a service and that service is to find ways to help you out of financial stress. As debt relief is a service and not strictly a product choosing a debt relief company is more akin to engaging a tradesman, like a plumber to fix the leaking faucet. Even though they are vastly different services and hopefully the debt relief company will be a once-in-a-lifetime choice, there are some common decision making processes involved when deciding on who will best carry out the service for you. Some things to consider:
Recommendations by friends
Friends can be a good source of information, but when it comes to money handling and debt reduction strategies you want to be sure that you are getting the best service available. While it is of little or no consequence which brand of washer the plumber uses to fix the faucet, not so with a debt relief company as small things can have a big impact. So, listen to the suggestions then start making more inquiries.
Reputation
Firstly, and foremost, is the debt relief company accredited or licensed with federal agencies to perform the service? The fact is not all debt relief services require licensing or accreditation and as laws vary from State to State the only reliable way to find out is to contact your State Attorney Department. Secondly, reputation can also be ascertained by referring to various Industry Associations such as The Association of Settlement Companies (TASC) and the United States Organization for Bankruptcy Alternatives (USOBA). Furthermore, you can check with the Chambers of Commerce in your State. Not all debt relief companies are members or listed with every consumer organization and this alone should not deter you from making a choice. However, at the very least, the debt relief company should be a member of the TASC and USOBA which set industry standards for the companies.
The amount of complaints registered against a debt relief company will certainly have a bearing on your decision. However raw data on the number of complaints must be viewed with a lot of caution. According to the FTC, a company with no complaints doesn’t mean it must be legitimate. In reality complaints are simply a part of everyday life and business and, as the saying goes “You can’t please all the folk all the time”.
The more important data though, is the number of resolved complaints. If the number of un-resolved complaints is nil to low it is a good indication of the fairness of the complaints handling process and that the company is working to satisfy the consumer.
Price
Again according to the FTC you need to be aware that, just because an organization says it’s “non-profit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some “non-profit” credit counselling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt. On the other hand, you should expect to pay something for the service. After all you are engaging experts to perform a service on your behalf which can be ongoing for several years and the main aim is to reduce your debt and save you money. So money paid to save more money does make economic sense.
Free assessments are usually what they say ie free. A company that asks for payment for an assessment should be viewed with caution, equally the company that provides a free assessment but with conditions. Of course pricing information can only be found by inquiring from the individual companies and you would need to make your own inquiries with each company prior to making your decision.
Reviews
Many organizations and business’s offer reviews of debt relief companies either online or through magazine publications. You can get a good indication of what the company is like and rest assured it is guenuine because all advertising and promotion of any company is governed by laws about misleading and false advertising. Debt relief reviews have often done the legwork of finding legitimate companies that offer good solid services thus saving you time, money, frustration and more confusion and therefore are definitely worth checking.
Summary
It can be a long and tiring process going through and checking each and every debt relief company’s credentials. The first place to start though would be to check the company’s website to see if they are registered with industry bodies like the TASC and USOBA and what services they offer. By narrowing down your choices to perhaps 2-3 companies you could then commence further due diligence if still in doubt.
Reprinted with kind permission of the author, P. Dehlsen
To help get you started in your search for a debt relief company read my reviews of the top debt relief companies who all pass the authors criteria at AAA Debt Relief Reviews or go straight to my number one choice Curadebt
There have been a number of companies soliciting people by sending letters to them titled the ‘consumer debt initiative’ or something of the like. These letters appear to be from government agencies but a closer examination of them will reveal the sender of the letter is not in fact a government agency.
The letters also use many buzz words such as ‘rapid tax rebates’ and ‘relieving consumer debt’, and that these debt relief strategies form part of a government debt relief initiative for the consumer. The letters may also go on to refer to companies such as Fanni Mae and Freddie Mac or other mortgage lenders.
The question then arises, is it a scam of some sorts?
The truth is that there is no consumer debt initiative set up by the government to reduce consumer debt. The closest program set up by the government is the Recovery Rebates and Economic Stimulus for the American People Act of 2008.
The unsolicited letters are nothing more than attempts to lure people into debt relief programs or worse still are a form of debt collection under false pretence. On no account should you respond to this form of advertising.
Let’s de-construct the phrase consumer debt initiative. It is simply initiatives that can be applied by, or for, consumers in need of debt relief.
Such initiatives can be, for example:
• Setting a monthly budget; something that can be done by yourself or someone else.
• Debt settlement, debt counselling, debt consolidation; usually better handled by professionals
• Bankruptcy; clearly the most extreme initiative and should be handled by professionals.
These consumer debt initiatives all rely on the consumer taking the initiative to look at their financial situation and decide if something needs to be done. Should the consumer form the opinion that their financial situation is not what it could be, or is in fact suffering, then the next step should be to contact a professional for further assistance.
On the face of it the consumer debt initiative is not a scam. However the strategy has been used by unscrupulous companies for dubious reasons and therefore can be reasonably argued as a scam. To avoid being caught by the trap, as mentioned above, one should not respond to any unsolicited mail.
Debt Relief Reviews has done research on many debt relief companies and you can read about our reviews of the best debt settlement companies.
Or go straight to our number one choice, for a FREE assessment.
If you have bad credit card debt, you will have to deal with debt collection agencies sooner or later, and these companies often present the most persistent and unpleasant problem for those with bad credit. Debt Collection agencies are basically companies
that work on behalf of credit card companies to try to recoup money that is owed.
If you owe your credit card company a payment that has not been made in some time, your credit card company will
eventually ask a collection agency to speak with you about the credit card debt. In many cases, collection agencies try
to get money for their clients through phone calls. Some collection agencies are quite reasonable and will try to work with you. However, some will use threatening or harassing techniques – including verbal threats and daily phone calls – to try to get you to pay.
To prevent the stress that debt collection agencies can cause, learn to deal with collection agencies.You should always get the
full name of whomever you speak with at a collection agency. You should try to be honest about your ability to repay and try to work out a payment schedule or payment options. If at any point you feel threatened or harassed, say so. Hang up the phone if the collection agent persists and contact the company who is trying to recoup money from you directly.
Call your credit card company and tell them that the debt collection agency the company uses, has been using or is using abusive
or upsetting language and ask to resolve the issue with someone at the company directly. Also get the name of the collection agency and report them – and the agent you spoke with – to the Better Business Bureau. Refuse further calls from the collection agency and continue your communication with the creditor directly, noting each time the collection company contacts you with harassing or abusive calls.
Unfortunately, some collection agencies feel that intimidation yields the best results and since most collection agencies work through telephoning, they feel that they can say whatever they like (including making personal and false accusations) in order to try to recoup money for their clients. There is no paper trail and few people harassed by the agencies take these companies to court.
One further thing you could do with abusive phone calls, but you should first check with your State Attorney Department as laws vary, is to inform the caller that you will now start recording the conversation. Repeat their name, company, contact details and time of call and ask them if they consent to the call being recorded. It would be a foolish debt collector to then continue the abuse, whether the call was recorded or not.
Where the collection company has started entering your property without your permission you should tell them to leave immediately or call the police.
Some debtors feel so ashamed of their bad credit rating that they almost feel that they deserve the abuse. Both views are completely wrong. A bad credit rating does not make you deserving of abuse. Report collection agencies that offer harassment as a technique and make it clear to lenders that you will not work with a company that uses abuse as a technique of recouping money.
Some collection agencies will try to use your credit score against you, telling you that they can ruin your credit score at a glance or file a claim on your credit score. Don’t fall for this. Your credit score is instantly affected when you fail to make a payment or are reported to a collection agency, so there is nothing that the collection agency employee can do to make your credit score any worse beyond those two things mentioned.
Do not let false claims about your credit score intimidate you into accepting the abuse of a collection agency. You will still be eligible for credit in many cases.
If you’ve reached the situation where multiple debt collections agencies are calling on you then it is time to look at some form of debt relief as a solution. A debt relief company can design a program tailored to your individaul needs whereby your credit card debts can be managed into some form of a single payment scheme. The major benefit of this is not only will you save money but the debt relief company will contact your credit card companies and put an end to the harrassing and intimidating calls by the debt collection agencies once and for all.
Debt relief is available to many people but unless you know about it, or are told about it, you will be unable to take advantage of the options available to combat overwhelming debt.
Here’s a common scenario:
You’ve received a summons to Court because you couldn’t pay a bill either you ignored it, hoping it would go away, or were unable to settle it with the company you owe money to. You went to a lawyer who wanted to defend you for a considerable amount of money and, reluctantly you agreed because you thought there was no other option. The lawyer handled your case and the result is now you must pay the company you originally owed money to by instalments plus you need to find the money to pay the lawyers, both yours and theirs. Basically, a new debt (ie legal fees) on top of the existing debt. All this, in addition to trying to keep up the payments to your other credit card companies and your daily living expenses.
Has this helped your financial situation? Probably not. At best it may have helped forestall a bankruptcy application by that particular company.
Did your lawyer give you any broader advice as to your current financial situation? Did he warn you that unless you get your finances in order you could receive further summonses for failing to pay accounts? If your lawyer was aware of your finances, as he would have been when negotiating a settlement for the abovementioned Court action, he could easily understand that there is a likelihood that you will be back to have him defend further matters.
While it’s not in the realm of a lawyer to give you financial advice it would be nice for them to point out some possibilities to help you get your finances back in order.
Debt Relief – A Way Out
One of these possibilities is debt relief. And, even in the above situation, it is certainly not too late to take advantage of the relief available.
A debt relief company will assess your financial situation and offer a program designed for you which will free up your income and save you considerable money in interest payments and overdue penalties. Why wait?
A reputable debt relief company will have proper accreditation, good standing AND will give you a FREE consultation with no obligation.
You could spend a lot of frustrating time searching the internet or phone book for such a company however, I have done the footwork and reviewed the companies and you can read my reviews at my website AAA Debt Relief Reviews or go straight to my number 1 recommendation of a debt relief company, namely Curadebt.
You should check out the various competition but if you want a FREE consultation go right now to Curadebt
It’s FREE. So try it now. You’ve got nothing to lose.
