==== ====Are you deeply in debt with high interest rates or cant make your mortgage payments? Pleaseclick below for helpwww.dynamicsolutionsintl.com/ohall==== ====For many people, the decision to eliminate credit card debt through debt settlement is a difficultone to make. This is due to the fact that most consumers arent well-educated in the area of debtsettlement.Over the past several years Ive been asked numerous questions regarding the process of debtsettlement, and have summarized those inquiries below:What type of debt can be negotiated through debt settlement?The majority of the debt youre attempting to negotiate with your creditors would be unsecuredcredit card debt, as it allows a greater amount of leverage when negotiating, and the end result willlikely be a satisfactory settlement to both the debtor (consumer) and creditor. Department storecharge cards, financing contracts, medical bills and miscellaneous debts are also negotiable, eventhough its been my experience that the results are not quite as predictable as standard creditcards. Unfortunately, government sponsored student loans cannot be negotiated or discharged.How are my creditors paid when a settlement is reached?Once a settlement has been negotiated with a creditor, obviously the settlement amount is thenforwarded to that creditor. Its important to understand, prior to signing up for a debt settlementprogram, that the settlement funds must be available once a settlement agreement has beenreached with a creditor. If its unlikely that you can realistically accumulate these funds, either froma savings account, retirement account, home equity loan or a friend or relative, unfortunately yousimply wont qualify for this type of program. Fortunately, most creditors will accept settlementpayments via 4-6 monthly installments. This has helped many individuals successfully followthrough with their commitment to settle their accounts.Will my credit score be affected?Debt settlement is reported to the credit bureaus as "account settled for less than the full balance"or "account settled". Keep in mind, however, that credit card accounts that have been settledappear positively on credit reports when compared to bad debt, or a bankruptcy. Your credit ratingmay decline initially, but only until the debts can be removed from your credit report. Its importantto remember, however, that your credit rating will improve due to the fact that one of the mostimportant factors used when determining a credit score is the amount of debt you actually owe.Individuals who have successfully completed a debt settlement program generally experience anoverall improvement in their credit score within twelve months. If youve found it difficult to keep upwith the minimum monthly payments to your creditors, theres a very good chance that the debt
has already been reported as delinquent, which has most certainly affected your credit ratingalready. Generally this also means that you have a high amount of debt appearing, furthercontributing to a poor credit score. Remember a lender looks at many factors to determine creditworthiness, your credit score is just one of them. If you eliminate your outstanding debt, your creditworthiness improves dramatically.Will I owe income taxes on the forgiven debt?Banks are required to report canceled debts over $600 to the IRS and consumers are required toreport that canceled debt as income on their tax return. The IRS does permit you to write off any"income" from canceled debts up to the amount by which you were "insolvent" at the time. Unlessyou have a positive net worth (highly unlikely if you are deep in debt) then you usually wont haveto pay taxes on the forgiven amounts.Can I continue to use my credit cards?No, you will not be able to continue using your credit cards.Not necessarily a bad thing, since high interest credit cards have gotten many people into afinancial situation that they just havent been able to pull out of. When you enter a debt settlementprogram, most firms will require that you discontinue any further use of your cards. Some debtsettlement companies, however, do suggest that you keep one card available for emergencies,generally with quite a low credit limit to avoid getting yourself any further in debt.How long does the debt settlement process take?The length of time to complete your program will depend on the current status of your accounts,the amount of debt you owe and the source from which youll be relying on for settlement funds.Some individuals can complete the process of debt settlement within 30 days, while others cantake as long as three years. Your individual situation is what determines how long the entireprocess will take.Is debt settlement similar to consumer credit counseling?No. Credit counseling services usually work for your creditors, as they are (at least partially)funded by your creditors, earning a percentage of what you pay to your creditors. In most cases,you will be expected to pay 100% of your debt, sometimes with reduced interest, by makingsmaller payments over a longer time period. Because credit counseling makes its money byearning a percentage of the amount you pay your creditors, their incentive is to get you to pay100% of your debt, rather than to sit down and negotiate a reduced settlement amount with yourcreditors. Unlike consumer credit counseling, debt settlement allows you to be free from monthlypayments after youve paid the entire negotiated settlement amount via a lump sum payment or afew monthly installments.What amount of money will I need to enter a debt settlement program?While many debt settlementfirms have seen excellent results through debt settlement using tested and proven procedures,just like a good surgeon cant guarantee the outcome of an operation, most cant guarantee whateach settlement with your various creditors will be. Reputable firms have consistently producedsome very positive success stories for their clients, and while past performance is a good indicatorof the results you may expect, it is certainly no guarantee of future results.
Can I negotiate with my creditors without hiring a debt settlement firm?Negotiating your debt byyourself is possible, but its not likely that the end result will be a positive one. Banks rarely takedebtors seriously and are well prepared for the amateur do-it-yourself negotiator; as a matter offact, most representatives at your credit card companies have prearranged scripts waiting for yourphone calls. Youll hear a lot of "we do not settle debts under any circumstance" and "I cantransfer you to a department that may be able to help you qualify for our hardship program." Mostconsumers simply give up at this point because they feel that debt settlement isnt possible andtheres no end in sight. Not to worry - there are many reputable firms who will be more than happyto assist you. Hopefully your questions regarding debt settlement have been answered. Whateverpath you should choose to become free from debt, I wish you the very best.Marie Megge is a consultant in the credit services industry. Over the past several years she hasassisted many individuals in resolving their debt-related matters. For more information regardingcredit and debt visit http://www.donaldsonwilliams.comTo learn more about debt settlement and your credit score, click here.For more information regarding the possible tax consequences, itÂ’s highly recommended that youspeak with your tax preparer and/or click here.Article Source:http://EzineArticles.com/?expert=Marie_Megge==== ====Are you deeply in debt with high interest rates or cant make your mortgage payments? Pleaseclick below for helpwww.dynamicsolutionsintl.com/ohall==== ====