Archive for the ‘Debt Solution Options’ Category
Tuesday, October 4th, 2011
When your credit score is high you are considered a credible investor and your objective is to maintain your score to the highest number possible. How to do that? Follow these proven steps to do it:
1. Order individual reports rather than ordering in group. This will lessen your chance of getting involve in future problems. You can also start a dispute over the internet faster this way as ordering by bulk takes some time. Don’t worry too much about how much it would cost by doing individual credit reports purchase because when you already get the score that you want, every investment you made will be paid off!
2. Credit card agencies give the best customer service to their clients, so take advantage of this. Call them to increase your credit card lines so you can have the chance to earn up to 60 points which will improve your credit to more available ratio amounts on your bank account.
3. The ideal ratio to attain the cheapest debt-to-available-credit is 25%-35% You can achieve this by reorganizing your debt.
4. Your credit card reports determine your ratio. Keep reorganizing your debts by paying your debts at the soonest possible time you can.
5. The reason why your credit score decreases is because of the high debts shown on your credit reports. You can change this by looking for lenders who don’t mind tracking records or making reports of your debt. You may seek help from good friends and family who trust you with these matters. Just remember to invest your money wisely and don’t break the trust given on you!
6. There are really times where you can receive wrong credit reports that affect your score but it is easy to alter this. You can fax the incorrect credit report to the credit agency and in most cases they would correct your credit reports immediately.
7. Initiate a dispute over the internet for negative offensive reports about you. This will end your being reprieved due to some derogatory information on your credit reports. You will be surprised with the increase of your score when the issue is solved.
8. Of course you want your highest score to be pulled off by lenders on your purchases, but it doesn’t always get selected. Your middle score is the most significant score of all as it is the one being selected almost all the time by lenders. So always try to increase your middle score. Once you do this the maximum score that you had before will become your middle score!
9. Find people with good credit history. Family and friends are the best pick. Ask these people to put in your social security number to their account so all the years of good credit history will show up on your credit reports. When this happens, your credit score will increase accordingly. It won’t harm the people who added you to their account because they won’t have to add their social security number on your card, thus protecting their credibility.
10. There are also cases where you receive reports showing that there are debts which haven’t been paid yet. If you are in this situation pay the full account to clear out those items from your credit report. Have the company delete those items to avoid future problems.
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Monday, April 18th, 2011
This is another popular, and very expensive, option for getting out of debt. Basically there is no attempt made to reduce the principal balance owed, only to negotiate more favorable interest rates and perhaps lower monthly minimum payments. The typical program in this option takes 60 months and you will end up paying back more than the total debt you originally started with.
Using our earlier blog posts figure of $40,000 in credit card debt paying 18% interest and making payments of $1,200 a month we can see how the costs add up in a credit counseling program. It is possible that you could get the interest rate reduced to an average of 10% and set up a payment plan for 60 months. Using a credit card debt calculator found at http://www.federalreserve.gov/creditcardcalculator/ we can determine that you would now be paying $850 each month and a total interest of $10,993. The total of payments and interest then would be $50,993 to be debt free in five years.
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Monday, April 18th, 2011
Due to plummeting real estate values, this option has lost popularity as a debt relief choice in recent years but is still is an obtainable option to a very few people who qualify. Even though the low monthly payments available under this option can seem attractive, don‘t be fooled by this option because it is by far the most expensive option to for getting out of debt.
Since in this option you will be paying one hundred cents on the dollar, you would have to borrow $40,000 plus pay closing costs of about $1,200, for a total loan of $41,200 to be paid back at 9.5% interest over the next 15 years. This option would have a monthly payment of about $431, but it would last for a full 15 years, or 180 payments. The total amount paid back would be the $41,200 principal plus interest of $36,240 for a total amount of $77,440, or 194% of the original debt!
But hold on. What about the interest deduction available on the home equity loan from my taxes? Based on a total interest payment of $36,240 and again assuming a 15% federal tax bracket, you would save a total of about $5,436 in taxes over the 15 years. Even if we deduct this sum from the total paid you would still end up paying $72,004 back on $40,000 in credit card debt – this is a very poor deal.
Tags: Cost of debt consolidation
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Friday, April 15th, 2011
For many people, bankruptcy has seemed like the only way out of difficult financial situations, but before people consider bankruptcy they ought to contemplate what it will truly cost. Many times understanding the true costs will lead people to look for another solution. Before making a choice to move forward in bankruptcy for yourself you should at least consider more than just the costs for the initial filing of the bankruptcy. You should consider the other fees that will inevitably come about such as unexpected filing fees and unforeseen lawyer fees. Also, it is important to know that bankruptcy filing fees have gone up as part of the recent Deficit Reduction Act. The filing fees were $200 for a Chapter 7 and $185 for a Chapter 13 filing, but now they have gone up to $300 and $325 respectively.
In addition many bankruptcy filers will find that they are required to make changes to their case or proposal by adding items or actions, which will increase cost slightly. And you will have to pay for missing financial records and writing faulty checks to keep from adding to the bill.
In general, just filing for a bankruptcy case can cost you in ten ways:
1. Attorney fees
2. Credit counseling
3. Petition fees
4. Reopening fees
5. Amendment fees
6. Likely Conversion from a Chapter 7 to a Chapter 13
7. Splitting fees
8. Abandonment of property costs
9. Withdrawing the reference fees
10. Miscellaneous Trustee fees
You should know that you will be paying much more than those items. For the next 10 years you will have to pay a higher interest rates on all loans you are able to obtain. If you want to purchase real property such as a home, you will certainly have to shop the sub-prime market, which automatically by design means higher interest rates from lenders.
You will also pay increased insurance premiums as insurance companies glance at your personal credit history and notice the bankruptcy remarks on your credit. People with bad credit and especially bankruptcy remarks on their file are considered more likely to issue a claim therefore they are charged a higher premium.
You may be required to sell your home, automobiles and personal belongings to straighten out your debts with creditors. You may find that even after your debt obligations are satisfied and your credit history is on the way to repair, you will still be powerless to secure credit from your earlier lenders. Most lenders will keep the information on file for ten years from the moment in time the bankruptcy is discharged, not from when it was filed.
Bankruptcy isn’t something to be taken lightly without due consideration. There is no doubt about it, it will cost you a lot of money and lost sleep. These kind of reasons is why if you are able to find a way to avoid bankruptcy, you should. Under the new law established in October 2005, you will be required to attend a credit counseling class to be able to file for bankruptcy. You will have to pay for this, usually $50 to $75 per session.
It is not mandatory that you have an attorney to represent you in bankruptcy, but the paperwork can pile up fast and overwhelm you especially if you are not familiar with all the legal terms and requirements of the court. There can be a broad range of fees for attorney services, but you can expect to spend at least $1200 for competent legal counsel.
Generally, the total fees for the first filing itself, credit counseling, and attorney fees can run anywhere from $1200 to $3,000. If you shop around, you ought to be able to cover all the costs for about $1,500.
But of course just paying the costs does not relieve you of your debt, not by a long shot. If you are required to move into a Chapter 13 filing, you will be forced to pay your creditors back typically between 40 and 60 cents on the dollar, plus the court appointed Trustee fees.
Don’t be fooled, bankruptcy is something that is difficult to recover from, both emotionally and financially. So, when looking into the bankruptcy pro’s and con’s be sure to look at it not as a way to start over, but a long pause in your life. Nothing will be the same in your finances, everything will change. You should make a good effort to avoid it. The total Cost of bankruptcy is just too much to be a temporary fix for your financial troubles.
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Friday, April 15th, 2011
Frequently people have become confused between Price and the Cost of a particular debt resolution option. Before making a decision on what makes up the Price and what makes up the Cost of something it is important to understand the different options available to you. You might be asking yourself, -But aren’t Cost and Price the same thing? Well actually they are very different and only once you have understood the difference can you make a decision that will save you thousands of dollars in savings on your path to getting out of debt.
The Price of something is only a number, or a figure that can be used to establish comparative worth. For example it can be like the advertised sticker Price of a vehicle. The Cost is the actual dollar amount of money you will have to take out of your pocket to actually own the merchandise or pay for the service wanted. This is similar to totaling the overall monthly payments for financing the vehicle and comparing it to the sticker purchase Price of the vehicle.
For instance, let‘s say that the sticker Price of a new car is offered at $30,000. Once rebates and discounts are added in, the final Price a buyer will pay is, say $25,000. Then than in addition to that add in sales tax, dealer documentation fees, licenses, etc. and the finishing Price is now $27,000. The buyer puts $1,000 as down payment, finances the remaining $26,000 at 9% for 60 months, and drives off the car lot thinking she just purchased the car for a Price of $27,000 (at least that is what she tells her family and friends!)
But Wait! With a close review of all the related numbers we now know the true final purchase Price is $27,000 – but what was the true Cost? The $1,000 down payment plus 60 additional payments at $540 ($26,000 principal balance at 9% for 60 payments), equals a total real Cost of $33,400. The difference between the $27,000 Price and the amount paid of $33,400 is the difference between the Price and the Cost. To put it in other words, the Cost was in fact 20% higher than the Price!
From the above vehicle purchase example hopefully you will see that if you were to pay for something over a period of time, with some kind of finance charges or interest added in the total amount you will have paid for it will always exceed the initial purchase Price. The higher the interest, or the longer you finance the vehicle and make payments, the more the Cost will be greater then the Price.
Now after having considered the differences between the Price and the Cost of something, we can start to comprehend the true cost of various debt relief options available to consumers. But before we start, remember as we discussed earlier people will usually want the lowest Cost option, but they will tend to buy what they perceive is the lowest Price option. Although as we demonstrated earlier in the vehicle purchase illustration above, Price should not be the only determining factor when choosing something to purchase – it should instead be the total real Cost involved of the purchase.
So when contemplating a debt relief option be sure to understand Cost vs Price of the choice you make.
The following are the debt relief options that we will be discussing Price vs Cost on in future Blogs.
Bankruptcy Option
Debt Settlement Option
Debt Consolidation Option
Credit Counsiling Option
Asset Protection & Debt Resolution Option
Tags: cost of bankruptcy, Cost of debt consolidation, cost of debt counsiling, Cost of Debt Settlement, Debt Relief Options, Debt Reslolution
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Thursday, January 20th, 2011
Alright so you have read my blogs criticizing the system; that can only help you go so far. You probably still want to know what the real secrets are to be free of the debts you have. First we suggest to our clients to stop focusing on the amount of debt they have and second stop focusing on lowering expenses and instead begin to focus more on a few other more important matters, like expanding their means by increasing their income (without finding a second job) and start spending time shopping for assets to acquire, and we don’t mean a second vacation home in California.
You probably realize that everyone has very different strengths and capabilities to buy assets; however everyone can at least hunt the market and shop for assets. I am convinced you can shop because you shop for restaurants to eat at; you shop for automobiles, home or apartments, furniture, health insurance, and interest rates on your credit cards or savings accounts. You are a consumer who shops so over time you buy stuff but when is the last time your purchases assets? Let me give you and idea of what an asset is; it is ownership in something that puts money in your pocket on a ongoing basis without leaving you in a position to have to work for that money on a per hour basis. At first it takes a lot of work shopping for the right asset, but when you find it and buy it, it should produce income for you and pay you until you decide to sell.
So, you’re probably asking, where do you find these assets? Right away what comes to most peoples mind is buying assets like stock on the open stock exchange, or they think that their IRA or 401k is an asset. A 401k is definitely not an asset; it is more like a leach sucking the blood out of its helpless victim. You are the victim of the leach and the leach is the wealthy corporation depleting your saving through funds owned by their 401k and inflation.
Did you know that you can receive a dividend (return) from purchasing either publicly traded or privately owned companies such as Walmart, for as little as $50 at a time and receive a guaranteed dividend? Consider buying $50 of Walmart shares every month last year; you would have $600 of Walmart ownership, or close to it, plus a guaranteed dividend. This is not very exciting but this is where a lot of us people start out. Overtime you will learn to shop and purchase assets in the thousands of dollars and not put a penny out of your own pocket towards the deals.
Furthermore, everybody can raise their income and the fastest way, to raise a persons income is through sales. In Fact the highest paying profession on average, even higher than attorneys and doctors, is sales. Did you know that the Internet is the hottest tool to sell information? Selling information could increase you income help everyone and improve the lives of others. My case in point, you expect that I am selling a product, I am selling a service offered by our company but your are reading it for free and what price can you place on the benefits of this information?
We all sell, we sell each other on our thoughts, many of us have sold a company our labor by the hour and have sold the employer on our ability to do a specific type of job, and that was all in one sale. We sold and keep on selling our husband or wife or children on our beliefs and ideas. You have to have faith and believe that you can and should sell stuff, humankind would move very slowly without agents advertising and selling services and products for the suppliers of services and products.
Now you know Secret 4. Secret 4 is to focus on buying assets and increasing your income. Increase your earnings so you can continue buying more assets, but not to pay down your debts, at least from where you are starting at the moment. Keep in mind you received that money legally; it’s now time to move on. If this bothers you, perhaps you’re not prepared for the last 3 of the 7 secrets. But I think you are.
Tags: consolidation, consumer debt, credit card judgement, credit card lawyers, debt busters, debt forgiveness, debt free, debt lawyer, debt lawyers
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Monday, January 17th, 2011
Secret 3
Bankruptcy, settlement and lawyer sponsored debt assistance or relief programs are brands, not a solution. These systems are nothing but a payment plan, without regard to your individual level of risk; these systems are based only on what all your creditors command you pay. The reality about bankruptcy is that because of the new legislation from October 2005, the only people that qualify for a discharge in bankruptcy are those that have nothing to lose anyway. Bankruptcy is a system formed by creditors that will allow all of your creditors to sue you at the same time once you file. Bankruptcy attorneys won’t tell you these facts since they spend their whole career getting educated on how to file bankruptcy and that is all they know how to do. The frightening truth about filing bankruptcy is that it is the same as being sued by all of your creditors at the same time. It is mandatory that you list all creditors, even your uncle from whom you borrowed $300 last year and then you are required to inform them in writing of your bankruptcy filing. Each of your creditors will then file a verification or proof of claim (another word for a lawsuit) against you and the trustee will require you divulge all of your earnings, income, possessions, and real property, assets and then they come to a decision on what to sell and who will be paid first, all without your authorization and all in a very public fashion. It is degrading and humiliating and last for ten years! Envision standing at the front of an open court with complete strangers, often hundreds of strangers, and reviewing your financial restructuring plan by going through what you have and how you propose to pay all of your creditors! All that you discuss and everything you have on file as required by the rules of the court will be public information and open for all people to review for generations to come.
Furthermore, you will pay $3,000 to $5,000 dollars in legal and filing fees and be forced into a 3 to 5 year monthly pay back schedule. If you fail to make your all your monthly payments, all your debts will be converted into to due in full and must be paid at once, you’ll be unable to finish your bankruptcy filing and have to pay taxes on the remaining balances to creditors and will have the judgments on file from the proof of claims that were filed.
You probably had thought before reading this blog post that paying to settle your credit card debt was a way out. Settlement companies are the opposite. Instead, the truth is that you are heading right into a corner where you will be trapped by the very monster you’re trying to stay away from. The settlement scheme was created by the banking system to persuade people to pay more than they would without it. It will drain your savings and cash streams and your delicate personal credit will be destroyed. Settlement also creates additional tax burdens for unpaid balances, depending on whether or not you make it to the finish of the three or five year program. Settlement companies also slap you with hidden charges of a massive 15% of your total debt. To make things worse they conveniently avoid explaining to you that some creditors like Citibank and Amex will not settle with anybody. Also, they avoid telling you that they hold your money for over a year prior to considering a first settlement offer to any creditor. Because of this you will have to deal with the bill collectors calls, harassing letters and any lawsuits.
Is it any wonder that debt settlement is outlawed in at least seven states? In fact debt settlements fees have recently been regulated and are now governed by the Federal Trade Commission. Still though in a typical example; imagine someone with $60,000 of credit card debt who is promised by a settlement service that she can eliminate half of it. If she stays with the three year payment commitment, she could perhaps pay her way debt free, in addition to losing her cash reserves. However, along with the service she is charged 15% of his total debt ($9,000)! So if she pays her way out of debt with her cash savings, she pays $30,000 plus $9,000. But wait that is not the end of it. You might think $39,000 free yourself of $60,000 of debt is a good deal, but wait until you get a 1099 and have to pay a tax on the unpaid balances. You’d be left with a tax bill on $21,000 the next year!
What is more frustrating is that no creditor has any legal responsibility to stop calling (without the proper notification), just because you are working with a settlement company. Creditors will continue to harass you by phone, and your credit history will continue to suffer. Yes, don’t believe or presume that paying off your debts will fix your credit. There is one more fact you must consider, a large growing number of creditors actually have written company policies stating that they must decline to accept settlements from anyone, Citibank and American Express are just two examples. Other examples include Capital One and Discover, and the list seems to be growing.
Bankruptcy is nothing more than a mechanism that allows huge corporations to unload their risk and debt liabilities onto the working class people, consumers, who can never file a Chapter 13, and never qualify for a Chapter 7 discharge unless they have nothing in the first place.
Settlement is just another way to be trapped in a payback plan; you’re left with bad credit, no cash or savings and more taxes burdens and it will cost you 15% of your total debt to get into this poorer situation.
Tags: debt help los angeles, debt money, debt resolution, debt restructuring, financial debt
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Monday, January 17th, 2011
Do you suffer from the feelings of being in bondage to your debts? Well, that’s been devised by design. Who and how it was devised like that is a discussion for another blog, but you will surely want to know about the 7 secrets that will free you from debt slavery. Actually, the only basis I’ve chosen for calling it this is because these seven secrets are what the wealthiest people and families have identified and practiced for generations. I believe what you will discover is that the focus on these secrets is not a great deal about debt, but about fresh new habits. The next six Blogs will give all the secrets so you will want to pay close attention to these posts.
Secret 1
Your individual debt was acquired lawfully, you didn’t steal from a bank, but the creditors took a risk on you, insured the account and they are adequate enough to deal with it. Count yourself lucky, this money was received legally and there are no tax ramifications to it unless you were trying to pay it. And, the single way you have any collection risk is if you persist with your same banking and credit habit behaviors.
Summary: Debts are insured by banks. Taxes are only a concern on debt forgiveness amounts, that is if you pay back the money at a settled amount.
Tags: credit card lawyers, debt bankruptcy, debt help, debt resolution, in debt, judgment credit, wipe out debt
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Tuesday, September 21st, 2010
A surprising number of people start thinking about bankruptcy when they fall behind on their credit card payments. Some people who are unfamiliar with our legal system believe they will go to jail if they stop paying. Not true. Furthermore, most creditors, including credit card companies, banks, and medical-care providers, can’t go after your wages, bank account, or home unless they first sue you in court and win.
Suing you takes time and money, and not all creditors are willing to take this step. If a creditor does sue you, you’ll be personally served with a summons and complaint, after which you’ll typically have 30 days to file a simple response that denies the allegations and makes the creditor prove its case at a trial months or even years down the road.
Because of the potential expense involved in bringing a lawsuit, many creditors instead will declare the debt as “uncollectable” and write it off on their taxes. If you don’t own real estate and have few assets that could be seized, or you are unemployed or receiving Social Security, this is likely to happen in your case. In other words, while bankruptcy can get rid of most debts, you may be able to just stop making your payments without any consequences (except lowering your credit score), and save the bankruptcy fees. If a creditor does sue you later and win, and you have assets or income to lose, you would benefit from specific asset protection and wage garnishment prevention techniques offered by FreedomFromCreditors.
If You Just Want to Stop Collections
Probably the most common reason people think of filing for bankruptcy is to put an end to the blizzard of telephone calls that comes your way once you stop paying on your credit card or other installment debts. While a bankruptcy filing provides a quick solution to this problem, so does a federal law called the Fair Debt Collection Practices Act (FDCPA). The FDCPA (Title 15 U.S.C. Section 1692c) and the laws of many states require creditors and collection agencies to stop calling you at your home or workplace if you ask them to. Or, as one judge of my acquaintance recently told a bankruptcy filer, “If you don’t want your creditors calling you, change your number.”
If You Need Help Deciding
It’s not always easy to weigh the pros and cons of filing for bankruptcy against the consequences of waiting it out and working with Plan B Consultants. Give us a call or leave your questions on this blog and we will happily provide information on your options free of charge.
Tags: attorney debt, become debt free, credit card debt help, credit debt help, debt free, debt free america, debt free living, debt free now, debt reduction calculator, debt repair, debt settlement program, filed loan modification, free debt relief, get rid of debt living, judgment, paying off debt
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Monday, May 11th, 2009
a recent article from “Consumer Reports” is of the same taste as many other articles regarding debt settlement, its a “scam.” It is the usual story, somebody signed up with a settlement company, then quits after feeling like they are not receiving results and finds a “trusted” debt counselor who helps them pay back their creditors for little fee and blah blah. First of all, I agree that the industry is riddled with corruption and I do not like typical debt settlement companies in the least. They are too expensive (as the article says) and often do not achieve the claimed results. In this article though, the lady dropped out after 5 months when the company likely said it would take at least a year or more to achieve anything so that means nothing to me as far as she got “scammed.” As for fees and such, if they were going to save her thousands more than they charged and she’d have to do nothing, how is that a “scam”? Instead she paid a non-profit credit counselor to decrease her interest rate and such, this after saying “you can do what settlement companies do on your own”, same goes for credit counselors!!
Here is where we come in… we are not a settlement company nor a credit counceling agency (as per their traditional definitions). We are a consultancy that helps individuals lower their principal balance on debts like settlement companies attempt to do while giving you the tools and resources to do these things on your own if you so choose. This, however, is not our primary goal (although may be yours as a client). Our goal is to give you control and protection over your financial situation and assets. We consult you on providing the means by which you may save substantially on debts, protect assets and gain the time necessary to “dig yourself out” of the troubling situation that has occured. Many have had us work with them as “risk prevention” before issues truly arise.
I agree with the article in the sense you can do these things yourself. Of course you can! You can also represent yourself in a court of law but people seem to hire attorneys a lot. No one is disputing that, just as you can do what “councelors” do, without paying them! The real question is, do you want to? We have created a “hybrid” solution with our consulting programs and tools to simplify the task while allowing you to “do it yourself” to the degree you choose, allowing us to charge MUCH LESS than any other debt solution out there. On top of that, we see better results!!
In the end, I agree with the article in that debt settlement companies are scams in most cases and I would search for solutions that allow more control (not necessarily credit counceling either as this actually has a lower success rate than settlement! They fail to mention that…). The article is the same boring flavor as many written before and seems more like a counceling ad than decent legitimate information…
Tags: credit counseling, debt settlement
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