In 2010 the mortgage industry was exposed for “robo-signing” foreclosure papers on millions of American Homeowners.  When it first came out there was a huge uproar and publicity blitz by the banking industry. Sadly, this story has slipped into the shadows of American Consciousness as foreclosures continue to climb unchecked.

Many don’t realize that “robo-signing” is the norm for the banking industry, not the exception.  Collection Agencies have used pre-signed affidavits for years to validate and confirm debts, many of which are overstated or not even owed at all.  This interesting article in the Wall Street Journal – titled Dead Soul Is a Debt Collector chronicles just how bad it is.  

Thousands of affidavits, signed by a woman who died in 1995 have been used in court to legally validate and document debt.  There is no oversight, no morals, no compass for doing a job well.  Because it’s in a computer somewhere, right or wrong, consumers are harmed daily by these companies.  

Dead Soul Debt Collectors

Most consumers that I talk with want to get pay off their debt.  They simply run into brick walls when attempting to work with collection agencies or original creditors. These tactics clearly outline why it’s important to hire reputable professionals whose objective is to facilitate the mine fields for you.

One such company is Debt Pros Group, consumer debt consultants in Redding, California.  

Technorati Tags: credit card debt relief, Debt Settlement, eliminate Credit card debt, paying off credit card debt

In the ongoing discussion of credit scores, it a common belief that credit counseling does not impact the consumer credit score. In fact, some credit counseling companies make the claim that their services do not affect your “Fico Score.”   This is normally not an accurate claim.  If you had available credit on your accounts, when you enroll in credit counseling, all of your accounts are closed by the creditors. This leaves you with “no available credit” on those accounts and reduces your credit score.

Having maxed out credit cards can also be detrimental to your credit profile. The NFCC states “A DMP [Debt Management Plan] could have a negative impact on a credit worthiness decision by a potential creditor, landlord, or employer because it is an indicator that you are or have experienced financial difficulties. 

In addition, creditors may report that you are on a DMP and are not paying as originally agreed although they have accepted the reduced payment.” In other words, if you ask an auto dealer or mortgage company, they may tell you they consider credit counseling similar to a bankruptcy.

Please visit the following links for more information:

National Foundation for Credit Counseling

www.fico.com

Technorati Tags: Credit Counseling, credit score, Debt Settlement

Pros:   Debt Settlement Save Time and Money.

• Typically, debt settlement programs last from 2 – 4 years.  
• Debt is usually settled for less than the principal balance.  This means that a significant amount of interest is saved over the life of the debt

Technorati Tags: Debt Settlement, Legal Implcations of Debt Settlement, Pros and Cons of Debt Settlement

Credit Scores can be re-built.  

It is sad that many people have no savings, no investments and very little money left over at the end of the month because they are concerned with only their credit scores.  I see people struggle to barely make the minimum payments just to keep a credit score.

Credit scores can be rebuilt but the damage to a family and lost money thrown away to high interest cannot.   Most of us learned in school that if we invested $1000 a month combined with the power of compound interest, most people could easily retire a millionaire. Many elderly people have contacted us with stories how they struggled to pay debt most of their lives and retired below the poverty line. Credit scores will not help you retire, what you do with your money today will.   We will be writing on this topic in depth in future posts.  It’s important to understand that the credit score, while important, is not always the most important number in your financial profile.

Technorati Tags: credit score, Debt Settlement, Fico, Rebuilding Credit

If you are current on all of your payments, debt settlement will negatively affect your credit score. With that said, if you can afford to pay off your debt in full on your own, you should do so. There are non hardship programs available that can help you get your spending under control.

It is important to note that even if you are current with your payments but your credit cards are maxed out, your credit score profile can be negatively impacted.

If you are struggling, are already behind in your credit card payments or feel you may be in the near future, your first goal should be to get out of debt then rebuild your credit profile.  As you move through the debt settlement program, each time a debt is settled, the creditor is required to report a 0 balance owing on the credit report.

Every credit situation is unique.   We cannot predict or make any promises regarding your individual credit outcome after debt negotiation.

Please visit the following links for more information:

www.fico.com

www.creditcards.com

Technorati Tags: credit score, Debt Settlement, fico score

With debt settlement the principal balances of your credit cards are negotiated and settled at a lower balance.  This means that you typically repay less than the balance.

By contrast credit counseling programs do not negotiate your balance, they reduce your interest rates, though not all creditors may give you a reduction. There is data that shows fewer people graduate these programs because the payments are often about the same as making minimum payments. Also the debts are typically paid down – usually over 5-7 years, which can be faster than just making minimum payments. Although they may claim to be non-profit, credit counseling companies are paid by the creditors themselves for collecting the debt on top of the fees they charge the consumer. In the past, many have had their non-profit status revoked by the IRS.

Here is an article from the Washington Post that talks about this issue.  

Technorati Tags: Credit Counseling, Debt Settlement, Getting Out of Debt

Often, I will get calls from clients who have been told that the credit card company told them won’t settle. In most cases, this is absolutely NOT true.  Collectors may try to tell you that they do not settle with negotiation companies or even attorneys. That is simply untrue. They often use many unscrupulous practices to try to collect as much as they can from you. Individual collectors are often paid a commission on what they collect from you. 

If you are legitimately struggling and/or do not foresee being able to pay your debt in the near future, creditors would generally much rather settle than risk getting nothing or risk that you file bankruptcy. Also, it is common practice for credit card companies to sell delinquent accounts to collection agencies, often for just a few cents on the dollar. A settlement tends to make economic sense to creditors. Debt settlement helps them recover a portion of money that they otherwise may not have. Also, most people who have been struggling for years have already paid their creditors back more than what they borrowed in just fees and interest.

Consider this scenario while keeping in mind that you have probably already paid back what you owe your creditors because of all the interest.

Let’s say you loaned your neighbor 400 dollars a year ago. In this example, your neighbor has never re-paid you anything. Imagine you knew your neighbor lost their job. Then you saw a moving truck outside of their house. That day, your neighbor comes to you offering you $200 because they simply could not afford to pay the full $400, would YOU settle?

Technorati Tags: Credit Card Negotiation, Credit Card Settlement, Debt Settlement

Typically you will qualify for debt settlement if you have a minimum of $10,000 in unsecured debt. There is no cap on the amount of unsecured debt that may be enrolled, as we have had clients with several hundred thousand in credit card debt alone. Unsecured debt is typically credit cards, but can also include medical bills and most loans that are not tied to collateral. Our programs cannot negotiate car or mortgage loans because the lender can repossess the car or foreclose on the property. We can help you if your car or home has already been repossessed or foreclosed on, and you are left owing the bank money which is called a “deficiency balance.” We cannot help you with student loans because they are usually secured by the federal government.

You must also be in a financial hardship. This could be a range of circumstances. Some clients have experienced a job loss or other reduction of income; a medical condition or even just unable to afford to pay off the credit cards because of rate and payment increases. Some clients have to struggle just to make minimum payments, they always carry credit card balances and borrow from one to pay another, and some may have already fallen behind. If you qualify, you can enroll whether you are current or behind in your payments.

Request a debt analysis to see exactly how the program will work for you.

Technorati Tags: Debt Help, Debt Settlement

Often it creates a win/win scenario for both the creditor and the consumer.

The process is simple, but important, as not everyone will qualify for the program.

1. Your professional debt consultant will evaluate your situation and complete a debt analysis. If you qualify for debt settlement, they will work with you to determine a monthly payment plan, estimate the length of your program and prepare your agreement. You will be able to set the date of your monthly draft which can be deducted from a checking or savings account.
2. Once your agreement is received, it is sent for final approval. After you are approved you will receive a welcome call to confirm that you completely understand the program and have no unanswered questions.
3. Depending on your program and creditors, your creditors may or may not be immediately contacted after you are enrolled.
4. You will receive a welcome packet with important information on what to do if you take a call from a creditor. There may be some additional details you will need to provide and send back to your program provider.
5. As money accrues in your special purpose account, debts are negotiated and settled one at a time. You will receive notification each time an account is settled and when all accounts are settled you will receive a graduation package with copies of all settlement letters provided by the creditors as well as other valuable information and resources.

Technorati Tags: Debt Negotiation, Debt Settlement