In the face of debt challenges, unmanageable interest rates, job market challenges and more and more added expenses it seems unlikely to get out of debt. It is as if the light that is suppose to be at the end the tunnel gets smaller and further away the closer one gets. Bankruptcy is not the only option, in fact it should be the very last and desperate action. Before so consider the possibility of a debt settlement program.
How exactly do these debt settlement programs work?
Before looking into the dynamics of the program consider what other current alternatives might be available to you?
If you have not requested a credit report in the last 12 months, you are entitled to a free copy by the three credit agencies
Equifax: (800)-685-111 http://www.equifax.com
Experian: (888) 397-3742 http://www.experian.com
TransUnion (800) 888-4213 http://www.transunion.com
All Three: 877-322-8228 http://annualcreditreport.com
Keep in mind that while you can have access to a free credit report a year it does not include your FICO score, this will be an add service to your report.
Depending on your credit you might be available for a personal loan or signature loan to consolidate your credit bills.
If you currently own a home with equity considering a home equity loan or home equity line of credit. While this might be a good option for some it is critically important that the person applying for this type of loan is very confident they can make the payments or they put at risk loosing their home.
If after looking into your alternatives you have yet to identify a possible solution, debt settlement might be the solution if you qualify.
The best debt settlement programs have your main interest in mind, the process works by allowing your debts to default as much as possible, until you or the agency handling the process negotiates a total amount that they will accept to pay off the debt. In their own interest they rather lose 40% then the entire 100% of the balance if the person where to file for bankruptcy.
Your credit will be negatively impacted by the process because there is a time that no money is being paid off to the creditor, all this while you are putting money in an escrow account until you can make an offer to the creditor. While this is only temporary and in the long run the debt to income ratio plays a more important role in calculating credit score.
The government will also count the amount that was forgiven by the creditor as a gift and you will be taxed on that amount. If for example you owned $10,000 and the creditor settled for $6,000 the person would have to pay taxes on the $4,000.
A debt Settlement program or debt consolidation program is not for everyone it is only for a very specific niche.
Beware of a debt settlement company that asks for high fees upfront, promise they will clean your record, that they can guarantee their work, and they will eliminate more then 50% of your debt. Have you considered other options when it comes to credit card debt help ? be sure to go over each one of the programs and most importantly go over the BBB Rating to insure you are working with a company that has a track record of success.
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About Ethen Strauss
Having worked in the financial and debt industry for more then 10 years. Ethen has helped may people increase their income while eliminating their debt. He is able to do so by utilizing a few not so public strategies on how the banking and credit system work. You will discover techniques and tools that the pros use to help their customers.