Debt Settlement Programs Or Bankruptcy: How To Choose Wisely

Debt Settlement Programs or Bankruptcy: How to Choose WIsely by Joycelyn Crawford

When managing debts becomes too much, a choice needs to be made. Should a file for bankruptcy be made, or should one of the debt settlement programs be applied for? This is a choice that needs to be thought over deeply before any move is made.

The reason this decision is not that simple is that there are serious repercussions to choosing bankruptcy, and even if that is the only logical option, there are a number of bankruptcy chapters under which debtors can file. Increasingly, a Chapter 13 bankruptcy plan is becoming the preferred option, but other chapters are 7, 11, 12, and are just as efficient in ridding oneself of debt.

However, while debt settlement is more expensive and less damaging to credit histories, they do not always turn out to be the saving grace that applicants would like them to be. So, when clearing existing debts, which of the two is the right one to choose?

Check Your Own Status

The first step in ascertaining the best choice is not to look at the options, but to look at yourself. Depending on your credit and financial status, either bankruptcy or a debt settlement program will provide the most effective solution. And reading your credit report is the starting point.

Once the true extent of your debt problem is confirmed, it is possible to work out what the right debt relief option is, based on what kind of deal is affordable. When debts are slightly greater than income, then a Chapter 13 bankruptcy plan is likely to be the right choice. When it is very much greater, Chapter 7 might be the most plausible choice.

However, if there is still some income more than debts, then a settlement deal is likely to be affordable. The complication is that, while a settlement involves clearing existing debts for a fraction of their worth, it still requires a lump sum payment to complete the deal. Saving up that lump sum is the problem.

Terms of Bankruptcy Chapters

There are four chapters to the Code of Bankruptcy that any bankruptcy case can be filed under: chapters 7, 11, 12, and 13, The key differences between them relate to the extent of the poor financial situation an applicant has, and the likelihood that a debt settlement program cannot be approved.

Chapter 7 is filed by those seeing liquidation or straight bankruptcy where debts are completely written off. The other options relate to reorganizing debt, with Chapter 11 filed by businesses seeking to reorganize their debt, but not to liquidate. Chapter 12 is applicable to family farmers seeking to reorganize.

However, a Chapter 13 bankruptcy plan is sought by individuals who earn the average income or higher in the state the case is filed in. The court decides on the terms of the debt reorganization, and continuously monitors the repayment progress. So, clearing existing debts is done under strict conditions.

Bankruptcy or Settlement?

The basic deciding factor is cost, with the fees associated with a debt settlement program almost double that of the costs of filing for bankruptcy. But there is also the matter of monthly repayments and other terms associated with the type of bankruptcy. If the Chapter 13 bankruptcy plan is more affordable than the settlement plan, it makes sense to choose the former.

But the consequences of the decision need to be considered too. For example, clearing existing debts through a settlement plan will reduce a credit score by around 50 points, but bankruptcy cuts it by a minimum of 200 points. And it will be on your record for 10 years, while with a settlement plan, credit is returned after 2 years.

Joycelyn Crawford is the author of this article. For more information about Easy Loans for Bad Credit and Bad Credit Home Loans please visit her site http://www.easyloanforyou.com

Article Source: Debt Settlement Programs or Bankruptcy: How to Choose WIsely

Debt Consolidation Or Debt Settlement: How Best To Clear Your Debts

Debt Consolidation or Debt Settlement: How Best to Clear Your Debts by Joycelyn Crawford

Debt can become a crippling weight on the shoulders of honest borrowers, so much so that eventually a deal is needed to clear the debt. Bankruptcy should always be the last resort, and before that stage, debtors can choose whether debt consolidation or debt settlement is the right course of action.

Deciding which of them is the right option has a lot to do with specific circumstances, and whether the entire debt can be covered by a single consolidation loan, or if only a percentage of the debt can be handled.

Choosing debt consolidation may be more expensive in the short term, but unlike debt settlement programs, they do not have a detrimental effect on credit records.

So, which is the best one to choose? Which can be of the greater benefit? Understanding the difference can help in making the right decision.

The Consolidation Option

When choosing whether debt consolidation or debt settlement is the right option, it is important to look at the advantages and the mechanics of the two options. There are definite benefits to both, but depending on the financial situation, one can be more suitable than the other.

When it comes to choosing debt consolidation, it is important to note that this means all debts are repaid in full. It does not involve agreeing any reduction in debt, and therefore no savings are made. Basically, a consolidation loan is secured to repay all of the debts in one go. And with the right loan terms, the monthly obligation becomes more affordable.

Basically, if 5 loan balances add up to $50,000, with their interest rates varying from 9% to 15%, and combined monthly repayments of $800, consolidation sees the balance replaced by a single loan of $50,000, with one interest rate and a longer loan term, ensuring repayments fall to perhaps $400. Debt settlement programs provide a very different solution.

The Debt Settlement Option

Whether opting for debt consolidation or debt settlement, the purpose is the basically same - the weight of debt is lifted, and hopefully for good. But while debt consolidation has its advantages, in some situations debt settlement is the best option, not least because only a fraction of the debt needs to be repaid.

The essence of settlement is the negotiation that takes place prior to it. This is where the savings are secured, with required payments sometimes falling to just 30% of the actual debt figure. Choosing consolidation loans means that 100% of the debt is repaid, so effectively no savings are made at all.

Central to any debt settlement program is the introduction of a strict financial regime, which effectively controls what is done with the limited finances available. And while bankruptcy sees the credit affected for 10 years, the settlement affects credit options for just 2 years.

Choosing The Right Option

So, which is the best option, debt consolidation or debt settlement? The answer is often a simple matter of mathematics. For example, calculating the amount of excess income by taking your total expenditure from your total income, is essential in any loan application - and choosing debt consolidation is much like choosing simple loan.

But in choosing a debt settlement program, it is important to note that a professional settlement negotiator is needed to hammer out a good settlement deal. These will charge a fee.

Also, the deal is dependent on the ability to make a lump sum settlement payment, so if the deal is to pay 40% of a $100,000 debt, $40,000 needs to be available to pay immediately.

Joycelyn Crawford is the author of this article. For more information about Easy Loans for Bad Credit and Bad Credit Home Loans please visit her site http://www.easyloanforyou.com

Article Source: Debt Consolidation or Debt Settlement: How Best to Clear Your Debts

Debt Consolidation Or Debt Settlement: How Best To Clear Your Debts

Debt Consolidation or Debt Settlement: How Best to Clear Your Debts by Joycelyn Crawford

Debt can become a crippling weight on the shoulders of honest borrowers, so much so that eventually a deal is needed to clear the debt. Bankruptcy should always be the last resort, and before that stage, debtors can choose whether debt consolidation or debt settlement is the right course of action.

Deciding which of them is the right option has a lot to do with specific circumstances, and whether the entire debt can be covered by a single consolidation loan, or if only a percentage of the debt can be handled.

Choosing debt consolidation may be more expensive in the short term, but unlike debt settlement programs, they do not have a detrimental effect on credit records.

So, which is the best one to choose? Which can be of the greater benefit? Understanding the difference can help in making the right decision.

The Consolidation Option

When choosing whether debt consolidation or debt settlement is the right option, it is important to look at the advantages and the mechanics of the two options. There are definite benefits to both, but depending on the financial situation, one can be more suitable than the other.

When it comes to choosing debt consolidation, it is important to note that this means all debts are repaid in full. It does not involve agreeing any reduction in debt, and therefore no savings are made. Basically, a consolidation loan is secured to repay all of the debts in one go. And with the right loan terms, the monthly obligation becomes more affordable.

Basically, if 5 loan balances add up to $50,000, with their interest rates varying from 9% to 15%, and combined monthly repayments of $800, consolidation sees the balance replaced by a single loan of $50,000, with one interest rate and a longer loan term, ensuring repayments fall to perhaps $400. Debt settlement programs provide a very different solution.

The Debt Settlement Option

Whether opting for debt consolidation or debt settlement, the purpose is the basically same - the weight of debt is lifted, and hopefully for good. But while debt consolidation has its advantages, in some situations debt settlement is the best option, not least because only a fraction of the debt needs to be repaid.

The essence of settlement is the negotiation that takes place prior to it. This is where the savings are secured, with required payments sometimes falling to just 30% of the actual debt figure. Choosing consolidation loans means that 100% of the debt is repaid, so effectively no savings are made at all.

Central to any debt settlement program is the introduction of a strict financial regime, which effectively controls what is done with the limited finances available. And while bankruptcy sees the credit affected for 10 years, the settlement affects credit options for just 2 years.

Choosing The Right Option

So, which is the best option, debt consolidation or debt settlement? The answer is often a simple matter of mathematics. For example, calculating the amount of excess income by taking your total expenditure from your total income, is essential in any loan application - and choosing debt consolidation is much like choosing simple loan.

But in choosing a debt settlement program, it is important to note that a professional settlement negotiator is needed to hammer out a good settlement deal. These will charge a fee.

Also, the deal is dependent on the ability to make a lump sum settlement payment, so if the deal is to pay 40% of a $100,000 debt, $40,000 needs to be available to pay immediately.

Joycelyn Crawford is the author of this article. For more information about Easy Loans for Bad Credit and Bad Credit Home Loans please visit her site http://www.easyloanforyou.com

Article Source: Debt Consolidation or Debt Settlement: How Best to Clear Your Debts

Debt Consolidation Or Debt Settlement: How Best To Clear Your Debts

Debt Consolidation or Debt Settlement: How Best to Clear Your Debts by Joycelyn Crawford

Debt can become a crippling weight on the shoulders of honest borrowers, so much so that eventually a deal is needed to clear the debt. Bankruptcy should always be the last resort, and before that stage, debtors can choose whether debt consolidation or debt settlement is the right course of action.

Deciding which of them is the right option has a lot to do with specific circumstances, and whether the entire debt can be covered by a single consolidation loan, or if only a percentage of the debt can be handled.

Choosing debt consolidation may be more expensive in the short term, but unlike debt settlement programs, they do not have a detrimental effect on credit records.

So, which is the best one to choose? Which can be of the greater benefit? Understanding the difference can help in making the right decision.

The Consolidation Option

When choosing whether debt consolidation or debt settlement is the right option, it is important to look at the advantages and the mechanics of the two options. There are definite benefits to both, but depending on the financial situation, one can be more suitable than the other.

When it comes to choosing debt consolidation, it is important to note that this means all debts are repaid in full. It does not involve agreeing any reduction in debt, and therefore no savings are made. Basically, a consolidation loan is secured to repay all of the debts in one go. And with the right loan terms, the monthly obligation becomes more affordable.

Basically, if 5 loan balances add up to $50,000, with their interest rates varying from 9% to 15%, and combined monthly repayments of $800, consolidation sees the balance replaced by a single loan of $50,000, with one interest rate and a longer loan term, ensuring repayments fall to perhaps $400. Debt settlement programs provide a very different solution.

The Debt Settlement Option

Whether opting for debt consolidation or debt settlement, the purpose is the basically same - the weight of debt is lifted, and hopefully for good. But while debt consolidation has its advantages, in some situations debt settlement is the best option, not least because only a fraction of the debt needs to be repaid.

The essence of settlement is the negotiation that takes place prior to it. This is where the savings are secured, with required payments sometimes falling to just 30% of the actual debt figure. Choosing consolidation loans means that 100% of the debt is repaid, so effectively no savings are made at all.

Central to any debt settlement program is the introduction of a strict financial regime, which effectively controls what is done with the limited finances available. And while bankruptcy sees the credit affected for 10 years, the settlement affects credit options for just 2 years.

Choosing The Right Option

So, which is the best option, debt consolidation or debt settlement? The answer is often a simple matter of mathematics. For example, calculating the amount of excess income by taking your total expenditure from your total income, is essential in any loan application - and choosing debt consolidation is much like choosing simple loan.

But in choosing a debt settlement program, it is important to note that a professional settlement negotiator is needed to hammer out a good settlement deal. These will charge a fee.

Also, the deal is dependent on the ability to make a lump sum settlement payment, so if the deal is to pay 40% of a $100,000 debt, $40,000 needs to be available to pay immediately.

Joycelyn Crawford is the author of this article. For more information about Easy Loans for Bad Credit and Bad Credit Home Loans please visit her site http://www.easyloanforyou.com

Article Source: Debt Consolidation or Debt Settlement: How Best to Clear Your Debts

The Importance Of Debt Education Canada

The Importance of Debt Education Canada by Cedric Loiselle

A lot of people from Canada are facing an extraordinary and unusual situation these past months owing to the bad economic situation that has beleaguered the country in historical proportions. Millions of people are facing huge debts from multiple debtors as the economy struggles hard to get back on its feet. And some of them were forced to declare bankruptcy as they are unable to settle their numerous financial obligations. Such declaration will surely hurt people’s credit ratings and will definitely have a long-term impact on a person’s future. And while the debt situation of many Canadians seems to be at an alarming level, some can still be optimistic about being able to deal with the upsetting problems nonetheless.

And there could be reason for such optimism. Canada fortunately has good resources that can provide debt relief through some organizations or institutions with professionals who are expert in working people out of debts. These professionals are able to provide debt education Canada people need in order to avoid ending up in bankruptcy. With the proper information and advice, a lot of people who are in debt will be able to learn the different ways on how they can reduce their spending, plan their budgets and target financial goals towards full settlement of the existing debts. Though this help may come late for people who are already deep in debt, it will still help them in avoiding being in the same circumstances again in the future. Similarly, those who are not in deep debt yet, will be able to pull their reins back to control their spending activities.

For a start, the experts will introduce you to debt education Canada people seem to forget – and that is setting up a plan for your spending activities. This is one part which drives many people into huge credits and debt because they are spending more than their income or what they can financially afford. By focusing your attention on your spending budget, you know exactly what you can only spend every month without sacrificing your budget for the monthly expenses such as insurance payments, car mortgage, rent, tuitions, etc. It is important that all of these regular and repeating monthly payments have their allocation from the income. Hence, if there’s just little money left after paying all the dues, it would mean that you will have no capability to spend on unnecessary stuff.

The financial experts will also tell you that in keeping or determining a budget, you will learn how your financial goals can be achieved. And by keeping track of your financial goals, you are able to maintain a healthy and stress-free financial situation. Most of the people in debt are those who never gave importance on setting a budget and financial goal. If you are targeting something as your goal, you will learn to make the necessary adjustments in your spending, lifestyle, etc. Even if the financial goal is a short-term one, you still get to benefit from it because you are able to achieve it without forfeiting your other financial obligations. You were able to stay on your budget, pay your dues and achieve your goal.

Canadians at this time should take advantage of credit counseling offered by some financial institutions as it will help them learn various practices and ways to determine your financial status, work out a suitable and doable debt repayment plan and target to get out of debt the soonest time possible, as permitted by your financial capability. This way, people will be more informed and guided and will in turn avoid being in terrible and stressful debt situations.

For more information about debt education Canada visit our website or Click Here.

Article Source: The Importance of Debt Education Canada

Debt Consolidation Companies – Stay Away From These

Debt Consolidation Companies – Stay Away From These by Melissa Kellet

While debt consolidation companies cannot be found in every strip mall, they are out there. If you are interested in checking some out because of overwhelming credit card debt, go online. The nice thing about searching online is you will get an overview of each company so you can start weeding out those you should avoid. Use the warnings below to tighten your scrutiny. As with any industry, there are a few bad apples out there that you want to stay away from.

As you are probably aware, many consumers have had to resort to some extreme actions to get onerous debt off their backs. Bankruptcy, for instance. Part of the problem has been the recessionary nature of these economic times. Of course, the financial market has always been plagued by those who cannot manage debt responsibly. Whatever your situation, debt consolidation is a good way to get your monthly obligations reduced or more manageable. Just be careful, choosing the wrong debt consolidation firm could just dig your financial hole that much deeper.

Stay Away from Companies that Charge Huge Fees

Companies that charge huge fees are playing on your vulnerability to line their pockets in an excessive manner. Of course, these firms should receive some recompense for the service they offer, but some venture into loan shark waters with their high set-up and maintenance charges.

Realize that you are in debt rather deeply, but do not let that loss of face or embarrassment lead you into a financial situation worse than when you started. The minute a counselor says something to the effect that no one will be able to help you except their firm, it is time to ease out the door or hang up the phone.

Stay Away from Companies that Charge for Initial Consultations

No above-board debt consolidation firm should charge you for an initial consultation. The up-front fee is akin to a house remodeler charging you for an estimate of the cost to add a new sun porch. Do not go there. Once you get hooked up with a firm such as this, you can bet any maintenance or miscellaneous fees are going to be unjustifiably high.

Stay Away from Companies that Charge High Monthly Fees

Again, the firms do provide some solid services by negotiating with your creditors. They should receive payment as they try to lower payments, void fees, lower interest rates, and change payment dates, but they should not be taking you for a wild taxi ride with the fare meter clicking away.

Look for These

The top-of-the-line debt consolidation firms in the U.S. have a solid Web presence that will give you all the information a prudent shopper would need. With some, the entire process can be completed online. Of course, that indicates that their overhead is a great deal smaller than a brick-and-mortar company which should translate into savings for you.

Also, be certain that the firm sets up an escrow account solely for you and to which you are allowed scrutiny. You will not be able to draw off the account but you should be allowed to see how the account is being used. This will also help you keep tabs on fees and miscellaneous charges.

Good Luck

Following these few rules should help you ease into a comfortable relationship with your consolidator. With a decent company your anxiety level should drop, the creditor calls should stop, and you could have your debt disappear in a few years or sooner without irreparable damage being done to your credit scores. Shop carefully when choosing a firm and keep your eyes open after you have engaged one.

Melissa Kellett has been a financial consultant for years. She specializes in Loans for Poor Credit People and Guaranteed Online Personal Loans. Visit her site at http://www.speedybadcreditloans.com

Article Source: Debt Consolidation Companies – Stay Away From These

Lower Your Monthly Student Loan Payments Fast Through Loan Consolidation

Lower Your Monthly Student Loan Payments Fast Through Loan Consolidation by Mary D Wise

If you have a ton of student loan debt, then you can benefit from student loan consolidation almost immediately. If you are like many recent college graduates, you have amassed a big load of student debt and may be just now entering the repayment phase of your student loan agreement. Or perhaps you have been out of school for several years and are finding it difficult to keep any money in your wallet once you have sent off your student loan payments each month. Loan consolidation can work very well for most grads and you can get almost immediate relief from huge payments that are eating a chunk in your monthly take home pay, leaving you very little left to meet your other bills.

Protect Your Credit Rating

Student loan consolidation is not a very complicated process. A student loan consolidation servicer will take the many student loans that you have and combine the total balance due on each one into one single loan that has one payment each month. This new loan can be written under friendlier terms that better suit your income and needs. Student loan consolidation is a fast way to reduce your monthly commitment to your student loan debt while allowing you to retain your credit rating and avoid defaulting on your loan obligations.

Negotiate For Better Terms

By consolidating your student loans payments under one loan, you can negotiate for better terms than you currently have with your existing loans. These improved terms include a lower interest rate in most cases that will offer you big savings over the life of your repayment schedule. As any financial advisor will tell you, a savings of just a percent or so on your loans can yield a huge decrease in the total interest paid over the course of time.

You can also pay for your student loans over a longer period of time. Paying for longer than the original plan that you had established with your previous lender will reduce the amount of money that you will be required to pay each month, leaving you with more money at the end of the pay period or at the end of the month to meet your other financial obligations. Best of all, by making your student loan debt more affordable, you can help protect yourself from negative impacts that might be realized if you should become in a default status with your lenders.

Avoid Default

Going into default on your student loan obligations can have serious and long term negative consequences on your credit score, which is used to determine your creditworthiness. One mistake now can leave a nearly immovable scar on your credit file that can last for years into the future.

In addition, student loans are one financial obligation that even bankruptcy cannot erase as federal student loans are not subject to discharge under the bankruptcy code of the U.S. And if you owe the federal government money in the form of unpaid, defaulted student loans, the government can seize any refunds that you might be entitled to when you file your income taxes, and they can garnish your wages. Student loan consolidation can put an end to all of these fears.

Mary Wise is a certified loan consultant who helps people get approved for Personal Loans for Bad Credit and Unsecured Bad Credit Loans. To get help with your financial situation you can visit her at http://www.badcreditloanservices.com

Article Source: Lower Your Monthly Student Loan Payments Fast Through Loan Consolidation