Posts Tagged ‘Debt Negotiation’
Credit Card Companies Willing to Deal Over Debt
The New York Times published a new interesting Article on Credit Card Debt and Banks willingness to negotiate.
Bank of America says it eased off on more than 700,000 credit card holders in 2008, lowering interest rates and some balances.
Lenders are not being charitable. They are simply trying to protect themselves.
Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. Besides, the sooner people get their financial houses in order, the sooner they can start borrowing again.
So even as many banks cut consumers’ credit lines, raise card fees and generally pull back on lending, some lenders are trying to give customers a little wiggle room. Bank of America, for instance, says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008.
American Express and Chase Card Services say they are taking similar actions as more customers fall behind on their bills. Every major credit card lender is giving its collection agents more leeway to make adjustments for consumers in financial distress.
“Consumers have never been in a better position to negotiate a partial payment,” said Robert D. Manning, the author of “Credit Card Nation” and a longtime critic of the credit card industry. “It’s like that old movie ‘Rosalie Goes Shopping.’ When it’s $100,000 of debt, it’s your problem. When it’s a million dollars of debt, it’s the bank’s problem.”
Debt Settlement Companies like www.netdebt.com should gain from this change in philosophy.
Subscribe to the comments for this postWhat You Need to Know About Debt Settlement Programs
Millions of Americans are currently struggling with bad debt, including credit cards and other unsecured loans. The climate calls for unique debt solutions that can help indebted individuals climb out of sink holes of bad debt quickly and efficiently. One such solution is offered by debt settlement companies. They offer debt relief programs that can reduce your total debt by up to 50% and help you get back on track with your payments if you have fallen behind.
Okay, So How Does it Work Exactly?
Step 1. You will fill out an online debt consolidation questionnaire that gives the debt relief company the information they need to determine how to proceed with your debt negotiation process. The online process saves you the embarrassment and time of having to go back and forth with a human counselor over the phone with a detailed history of your debts and obligations.
Step 2. The debt relief company will then set up a trust account, similar to an escrow account, in your name with a reputable debt relief attorney in your area. From that point forward, you will make your regular debt payments to this trust account.
Step 3. Meanwhile, skilled debt negotiation attorneys will be working on your behalf to come to an agreement with your creditors. Debt settlement companies can reduce your debt by up to 50% off the bat. They will prioritize your debts based on the interest rate (highest first) and whether it is a revolving or installment account.
Step 4. Once your trust account reaches a certain level, the debt relief attorney who is working on your behalf will settle with your first creditor and scratch that debt off of your list. You will continue to pay into your trust account until all of your debts are settled.
Your Requirements and Responsibilities
- You have to stop using your credit card accounts. Your credit card debts will never go away if you continue to use them. You simply cannot succeed with a debt relief program if you plan to keep making charges on those accounts.
- The interest rates on your unsecured debts generally have to be over 10% to qualify for debt settlement programs.
- Continue making your agreed upon monthly payment to your trust account each month in full. The quicker your trust account reaches the balance where a creditor can be paid off, the quicker you will be out of debt.
Important Considerations
Ask Yourself These Questions. When you are looking into debt settlement programs, you have to first ask yourself exactly what you are trying to accomplish.
- Are you looking to reduce your monthly payments?
- Are you trying to get rid of your debt more quickly?
- Are you looking for a debt solution because you have fallen behind and are tired of creditor calls?
It may be a combination of all three, but one of these questions applies to your situation more than the others. When you are truthful with yourself and figure out what your main motivation is for seeking debt reduction strategies, debt settlement companies can design a solution for you that is tailored for your exact situation.
Fees. All of the fees for your participation in a debt relief program are already built into the agreed upon low monthly payment that you and your debt negotiation attorney have decided on. There are no additional costs.
Your Credit Rating. A common question from those who are looking into debt relief programs is “What will happen to my credit report?” When you stop paying your debt payments to your creditors and begin to make your payments to a trust account instead, of course this is going to cause your creditors to raise an eyebrow. You may experience a temporary increase in creditor calls. You will inform them that you are now working with a debt settlement law firm and direct them to the attorney’s office. After your creditors have been duly notified that you are on a debt relief program, most consumer protection laws state that they should no longer be harassing you. Your credit accounts will show as “not current” on your credit report until the accounts are settled in full. The good news is that after a while your credit rating may actually go up after your debts are paid off since your debt percentages will be reduced. Compared to the crippling effect of a bankruptcy on the average consumer’s credit score (10 years of bad credit), working with debt settlement companies is a mostly preferred alternative.
How would it feel to have zero debt again? You may have forgotten what that is like after years, even decades of debt payments. Once you have made the conscious decision that you are no longer going to be enslaved by outrageous balances of unsecured debt, your debt solution is waiting.
How to Pay Off Debt Most Efficiently
For most of us it starts in college. For some of us, it begins when we start our first major job and move into our first apartment. In other cases, the debt load starts to pile up when we forge out on our own and attempt to start a new business.
But no matter how you have managed to accumulate your debt, the only question that needs to be addressed at this point in time is “How do I get rid of it?” Now that you have come to the realization that something needs to be done about your debt situation, your next task is to put an effective debt reduction plan in place. This is step by step guide for how you can eliminate your debt most efficiently.
Step 1. Form a “ Pay Off Debt “ Chart
It is much easier to form a plan to eradicate debt when you have a visual representation of what you are up against for reference purposes. Create a debt chart or table that is formatted in a way that is easy for you to follow. At the top of the page write today’s date, and for each of your creditors list the following information:
- Creditor Name and Phone Number
- Account Number
- Current Balance
- Interest Rate/APR
- Minimum Payment
- Rank (leave blank for now)
Once you have all of this information written down in your “ pay off debt ” chart, take about 20 minutes to absorb the information. Total up all of the balances so that you can know how much total debt you currently hold, and then move onto the next step.
Step 2. Figure Out What Type of Debt Account You are Dealing With
Once you have all of your debt accounts listed, you then have to determine whether they are revolving accounts or installment accounts. Installment accounts are commonly tied to property, such as houses and cars. They have a set, fixed monthly payment that ends at some point in the future, such as a car loan that ends in 60 months. Revolving accounts, such as credit cards, are the tricky ones, because you can always add additional debt to them, and the payments can go on forever if you continue to use them. That is why it is important to pay off your revolving accounts first, then start working on installment accounts.
Step 3. Rank Your Debts in Order of Interest Rates
Remember that “rank” section that you were supposed to leave blank earlier? In this step you’re going to start filling that column in. First, you want to look at all of your revolving accounts since those are the priority. Rank them in order starting with the highest interest rate account at number “1.” Once you finish with your revolving debts, you can then continue the ranking process with your installment loans (highest interest rate accounts first). This rank is the order in which you will pay off your debts. Important note: if your installment loans have a prepayment penalty clause, you do not want to include them in this process.
Step 4. Dedicate all Extra Income to Paying Off Debt
Once you have your debts lined up and ranked, you are going to start dedicating every extra dime you have available on a monthly basis to paying off the debt, even if it’s just $100. Start with the account you ranked at #1. Pay the minimum amount due PLUS the extra $100 towards that debt each month until it is paid off, while continuing to pay the minimum on all of your other accounts. Once the balance on that first debt is “0” you can draw a big black line through it and start putting that extra $100 towards the next debt on your list. This process is called “snowballing.” You continue this process until all of your debts are at a zero balance. Clearly, the more extra cash you are able to dedicate to this process, the quicker you will be finished with your debt.
Step 5. Stop Using Revolving Accounts
This step is quite possibly the hardest feat to accomplish when attempting to pay off debt. You have to make a commitment that you will stop using those credit cards and other revolving accounts from this point forward. Let’s face it – when you use credit lines that cannot be paid off immediately within the same billing cycle, you are living outside of your means. That behavior pattern must be stopped if you are going to be serious about paying off debt. Most credit counselors agree that it is good for your credit score to keep some credit card accounts open after paying them off, but you simply cannot continue to use them. So slice up your credit cards and take on a “cash only” mentality. Adopt the following thought process when you are out shopping: if I don’t have the cash to pay for this, then I cannot afford it at this point in time.
If you do not feel that you are disciplined enough to implement this method of paying down your debt on your own, or are still somewhat confused by the process, debt settlement companies like NetDebt.com can not only help you pay off debt, but also slice your debt by up to 50% off the bat.
How, you may ask, is that possible? NetDebt.com has a team of qualified debt settlement attorneys on hand who will represent you in a debt negotiation with your creditors. These attorneys are very good at what they do; they understand how creditors operate. A creditor will always prefer to settle with a customer rather than risk netting $0 from a possible bankruptcy proceeding or chasing down a customer who simply decides to stop paying. The NetDebt attorney will then pay off credit card bills and other unsecured debts on your behalf from an online debt consolidation trust account established in your name. All that you are responsible for is paying the amount you would normally put towards your debt into the trust account on time every month.
No matter how you choose to pay off debt, it’s important that you remember that you are not alone in your efforts; millions of Americans are in the same boat. You are one of the intelligent few who have decided that it’s finally time to take back the reigns of your out of control debt situation.