Tuesday, July 1, 2008

How to make Debt Settlement

Truly, once a debtor begins to take the debt settlement approach, he will seek the forgiveness of the creditor so that the latter will agree to coming up with terms which will benefit both parties, such as lesser or total relief from the payment of interest rates and / or late payment fines, fulfillment of the main amount only, to deduction of the main amount by as much as as much as sixty-five percent.

The question most people ask about debt settlement seems to be this: will creditors accept the said terms ?

The answer is: of course. Creditors would rather recover what they have given - despite condition which may be unfavorable for them - rather than witness the amount the borrowed down the drain, like, for example when the debtor travels to another country, goes underground, or begins to seek a declaration of personal bankruptcy.

Debt settlement is an often neglected debt relief option, which comes as a surprise considering the fact that it's one of the most practical and one the easiest debt cures a debtor can ever take.

Debt settlement does not exempt the debtor from the satisfaction of the main obligation. Debt settlement only provides easier terms for the debtor so that there be higher chances that he will pay his debt.

Debt settlement is certain to damage the debtor's credit rating. These days, a person's credit rating is treated as a digest of his level of of financial diligence. If a person has a low credit rating, he is said to be financially irresponsible and this summons a lot consequences, like, for example, a more difficult time in getting new borrowings and smaller chances of being accepted in good jobs, to mention but a few.

Debt settlement may reduce the amount of the borrowing to be fulfilled, however, such difference must be declared as earnings won when processing your ITR. Indeed, you will be taxed correspondingly for the difference you managed to salvage.

Nevertheless, debt settlement remains as a good option for people who are in dire need to acquire some debt relief.

Source : Proper Steps In Debt Settlement

Sunday, May 11, 2008

What Are The Risks Of Debt Consolidation ?

Debt consolidation is not such wonderful solution as it may seem. There are many consequences implied in undertaking a debt consolidation program that can really affect your finances and credit situation for many years. And even though sometimes the only other solution is bankruptcy, you need to take many precautions before hiring the services of a debt consolidation agency.

If you think that debt consolidation will solve all your debt problems, you need to think again. It is true that debt consolidation can solve some terminal credit situations but that is mainly because things couldn’t be worse. Debt Consolidation can be very risky, if you are not careful enough when selecting your debt consolidation agency and you don’t control the things they do with your finances, you may end up in a worse situation than when you started.

When Should I Consolidate My Debt ?

A debt consolidation program should be undertaken only if your debt cannot be refinanced any further. It is always better to refinance your current debt than to contact a creditor and tell them that you can’t repay your debt and you need to negotiate new loan terms or else you’ll have to file for bankruptcy and he may never recover his money (This is what debt consolidation is, to make things clear).

Though most lenders will agree to new terms, the approach that debt consolidation implies will destroy your ability to get finance in the future. For a long time, you won’t be able to get approved for a loan or credit card again without the aid of your debt consolidation agency.

Thus, only if your debt has become unbearable and you can no longer meet your monthly payments should you consider joining a debt consolidation program. Moreover, you’ll loose control over your finances, you probably won’t be able to use your credit cards and store cards anymore and you’ll have to learn to live by the day as all the efforts will go towards eliminating your debt.

Beware Of Secure Debt Consolidation Loans

Debt consolidation agencies usually suggest that you take a debt consolidation loan in order to pay off your debt. The advantage of this kind of loans is that the interest rate charged is lower and that the repayment program is a lot longer. Thus your monthly payments will be affordable and you will recover a significant part of your income so you can save money, repay other debt or pay for necessary expenses.

However, on the dark side of these loans, the fact that these loans are secured implies that you are risking your home because if you fail to meet the loan installments, the lender can always recover his money by taking legal action and claiming the property. Secured consolidation loans are an excellent solution to combine with other forms of debt consolidation and obtain debt relief, but the risks involved should be considered carefully.

Choosing The Debt Consolidation Agency Carefully

There are many companies that have been working for many years in the financial industry and know how to provide consolidation services affecting your finances and credit score the least possible. But there are others with less experience that may ruin your credit score for many years during this process. And, sadly, there are even others that are nothing but scams. So, you should be extremely careful when choosing the company you are planning to work with.

About the author:
Melissa Kellett is an expert loan consultant who has worked for twenty years in the financial industry and helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and many other types of loans and financial products. If you want to learn more about Debt Consolidation Loans and Personal Loans you can visit her site http://www.speedybadcreditloans.com/

Article Source: http://www.Free-Articles-Zone.com

Wednesday, January 30, 2008

Personal Debt Consolidation Loan – 3 Benefits Of Debt Consolidation

If you have never considered a personal debt consolidation loan, maybe now’s the time. Each year, millions of people file bankruptcy as a means of eliminating their consumer debts. Although bankruptcy may seem like an easy fix to credit problems, the effects are long-term. Before taking drastic measures, explore other debt reduction options.

Understanding Debt Consolidation Loans

Debt consolidation loans are intended to help people manage their credit, and pay off debts sooner. Without consolidating debts, some people are able to reduce their debts. However, this long process takes several years. Instead of paying on a high interest credit card for ten or twenty years, it may be more beneficial to consolidate debts. This way, the balance in paid within a few years

Convenient and Lower Monthly Payments

The convenience of a debt consolidation loan is an attractive feature. If you are burden with several creditors, making payments to various lenders may be time consuming and frustrating. Furthermore, having too many creditors makes it easier to forget a payment.

Through debt consolidation, all your credit balances are combined into one loan. This alleviates submitting several payments each month. Rather, you make one payment to the debt consolidation lender.

Debt Consolidation lowers monthly debt payments by reducing interest rates. For example, if you have four high interest credit cards, minimum monthly payments for all four credit accounts may be around $200. However, if you consolidate the four balances and obtain an interest rate of 9 or 10 percent, monthly payments may be reduced up to 50 percent.

More Money Goes to Reducing the Principle

Many people are unable to reduce their credit card balances due to high interest rates. In some instances, the minimum payment is lower than the finance fees. Thus, the balance continually increases, even if you are not using the credit card.

By obtaining a lower interest rate, a large portion of your monthly payment is applied to the principle balance. If possible, attempt to secure a debt consolidation loan with an introductory zero percent interest rate.

Restores Credit Rating

If your credit score was suffering because of late payments or a exceeding credit limit, a debt consolidation may quickly improve credit score. A better credit rating will make you eligible for lower rates on home loans, auto loans, etc.

About the Author:

Go to www.abcloanguide.com/debtconsolidation.shtml for information on Debt Consolidation. ABC Loan Guide's lenders are reputable and offer great service.