April 20th, 2011, 08:33 AM
Goodbye, Sir. Thank You
Join Date: Jun 2005
Location: MESA! :thud:
Love Ultra Edit--took about 15 seconds, tops:
You have five options for getting out of debt. Depending on your circumstances and what you are most comfortable with you should be able to find a solution that works for you.
Note: With the exception of paying the total balance of your debt off all at once, all of the following options have an initial negative impact on your credit. What generally hurts your credit the most is owing the debt itself. Your credit score, credit profile and debt to income ratio are most greatly impacted by the total amount of your debt so by removing your debt your credit should be vastly improved.
Here are your 5 options:
1) Pay the creditors back the usual way:
If at all possible pay much more than the minimum payments. The best way is to pay off the entire balance in full. If you only pay minimum payments you can potentially pay up to 10 times the original debt amount. Example: If you pay 30% interest on a card you are paying off the entire original loan amount about every three years. Since you are mostly just paying finance fees you can potentially pay for up to 20-30 years. Your $10,000 debt just turned into $100,000.
Use the following CNN’s debt calculator. The website is http://cgi.money.cnn.com/tools/debtp...ebtplanner.jsp - plug in your exact figures and see if you keep doing what you’ve been doing how long it will take you to pay off those cards and how much you will pay in interest, assuming you don’t spend another dime on the cards and they never raise your rates.
Chapter 13: also known as reorganization, Chapter 13 allows debtors to keep property, like a mortgaged house or a car, that they otherwise might lose. Reorganization may allow you to pay off a default during a three-to-five-year period, rather than surrender any property.
Chapter 7: known as straight bankruptcy, Chapter 7 involves liquidation of all assets that are not exempt in your state. Exempt property may include work-related tools and basic household furnishings. Some of your property may be sold by a court-appointed official or turned over to your creditors. You can file for Chapter 7 only once every six years.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary from state to state.
Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes and some student loan obligations. And unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it. Both forms of Bankruptcy will show on your report for 7 to 10 years.
A true consolidation is basically a bank loan. You would usually need to secure this loan by tying it into equity like your house, car, property, etc.. This is a good way to get your bills in order, have one monthly payment and to get lower interest. The downside is you that you have just made your unsecured debt secured. You need to make sure you can keep up with the payments or you could potentially lose whatever property is now tied into the loan.
4) Consumer Credit Counseling (Also known as CCCs)
CCCs will help you reduce your interest. You will still pay the principal but will not pay as much towards finance fees. With each payment you will actually be reducing the balance instead of just covering the fees each month. You will pay the CCCs one monthly amount which will then be distributed to each one of your creditors. Their programs normally last 4-7 years. The downside is that CCCs are reported to the Credit Bureau as 3rd party help. Lenders look at 3rd party help as the same risk factor as a chapter 13 bankruptcy.
5) Debt Settlement (This is what we do)
Debt settlement will typically reduce your total debt by as much as half and will substantially reduce your minimum payment each month. These programs usually last 24 -36 months but can be as short as you can afford to pay each month. Debt settlement firms negotiate directly with your creditors to reduce your debt total and use many different strategies to accomplish this. The initial downside is that you usually have some “past dues” that will show on your credit report (temporarily). In most cases the negative is reversed quickly by zeroing out your debt balance with the negotiated settlement. This is because “FICO” tabulates 30% of your total credit score by factoring in how much debt you owe. By removing debt you will help your score and your credit profile which is made up heavily of your debt to income ratio. Some debt settlement firms (Us) will set you up with credit cleanup. This will help remove any “past dues” that may still show on your credit report by the end of their program.
If you would like a more complete overview of debt settlement, let me know and I can provide you with more details. You can contact me via PM.
Final thought: Where will you be financially in two years? Drowning in debt or debt free? There are other options besides us to choose but pick some type of plan or you’ll end up paying your unsecured debt like it’s a mortgage for the next 30 years. Let me know if settlement is still an option you want to look into or if one of the other solutions is better suited for your situation, thanks and have a great day!
Last edited by Linderbee; April 20th, 2011 at 08:39 AM.