Debt Relief - Debt Reduction » debt relief

Can debt relief services affect your credit if you use them to lower your interest rate?

admin — Wed, 17 Feb 2010 01:53:59 +0000

I am planning to sign up for Care One debt relief services to help me consolidate my CC debt. Do you think this will actually work? will this affect my credit rating? Does anyone have an opinion about this company and their services. I was reading their blog and for the most part it sounds like it really works but I’m trying to search for more answers.
Thank you in advance for any suggestions or feedback.

CareOne offers two services: credit counseling and debt settlement. Being enrolled in a debt management program would cause your credit report to state "enrolled in debt management." This does not specifically damage your credit rating but it would make it virtually impossible to qualify for new credit while you are enrolled in the program…but that’s the whole point of being enrolled in a debt management program to begin with…to stop using credit.

CareOne also does does debt consolidation/debt settlement. Stay away from any "debt consolidation" company that promises to cut your debt and payments in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator’s fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.

Many people who sign up with “debt consolidation” firms incorrectly assume that they have the power to force your creditors to accept settlements…they don’t. Your creditors have the right to refuse settlements and take you to court.
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If you want to enroll in a non profit debt management program then I would advise to use the real one….CCCS. Contact your local Red Cross for a referral to the local Consumer Credit Counseling Services (CCCS). They can negotiate reduced interest and payments. They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to "enrolled in debt management." This does not damage your credit, but it may make it difficult to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would might be denied while you’re enrolled in the CCCS debt management program…

CCCS counselors will often tell people to not file for bankruptcy when they really should. If your debt is overwhelming relative to your income/assets and the reduced payments negotiated by CCCS simply will not work, then you should think about filing for Chapter 7 bankruptcy

What is the best method for consumer credit card debt relief?

admin — Sun, 14 Feb 2010 01:52:59 +0000

We started a program with "Consumer Credit Counselors" This progarm has us pay the Consumer Credit Counselors, then they pay the credit cards every month. All they do is lower some of the interest rates. They don’t negotiate amount owed. The payments are too high for us, so we looked into other alternatives. We found one company that will do it differently for less. They have you pay into an escrow account, and they pay off each credit card individually. They say they negotiate lower balances and interest rates. The payment would be lower and the payoff time cut in half. Does anyone know of any reason we shouldn’t do this? Are there any other better ways? WHAT IS THE BEST WAY TO GET CONSUMER debt relief with no loans?

I am not saying that debt settlement/negotiation is the wrong way to go. However, it will damage your credit further.

If you choose to settle on your debts, you can do this without paying enormous fees to a debt settlement company. Keep in mind that any forgiven debt of $600 or more is automatically reported to the IRS, in which you would owe taxes on it as a form of income.

If you can continue to make the payments on your current plan, then that is likely the best option for you. If you are having trouble, give your credit counselor a call to discuss possible changes to your account.

What does debt relief companies do for you?

admin — Wed, 20 Jan 2010 01:52:59 +0000

How do they proper? Is what they do legal and does it really stop collection calls? What if a person is already in a payment program where they have access to your checking account and you turn your debts over to a debt relief company? What is the procedures. Is using a debt relief really worth it to get out of debt?

It depends. Many debt relief companies out there are scam. Even the non profit one. The one I recommend is http://www.loansmarter.com/creditsolution , they are the best in the industry. This year alone they settled $200million in debt and last May they received Ernst & Young awards for their accomplishment.

Is foreclosure debt relief still taxed or not?

admin — Mon, 04 Jan 2010 01:52:59 +0000

Recently, there was talk that the IRS was changing its rules so that debt relief experienced by persons who lost their homes to foreclosure would no longer be taxed. What’s the status on this rule change?

Mortgage foreclosure is still considered to be taxable by the IRS.