Debt Negotiation may be cheaper than filing a Chapter 13 bankruptcy

I just had a client that was interested in doing a debt negotiation program. They checked with their attorney to see what the monthly payback would be and it worked out that it was cheaper to do a debt negotiation program than a chapter 13 bk. From my understanding it is that the laws for bankruptcy have gotten a lot tougher so it may be cheaper to do a debt settlement program. If you are considering a bankruptcy, you may want to check with a debt negotiation company just to compare what the payments would be.

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Debt Negotiation

Universal Default Rate on Credit Cards, Suze Orman

I got a good tip from watching Suze Orman the other night. Consumers don’t realize that when you default on one debt it can affect other credit use. There are a lot of people that are losing their homes due to foreclosure. They feel that the mortgage is hopeless yet they want to keep their credit cards for emergency use. While this is understandable, consumers fail to realize what the impact to their credit is across the board. Your creditors are checking your credit all the time. If they see that you are having trouble on one of your credit accounts, they have the right to raise your credit card interest rate to the universal default rate. It is in your contract. If you don’t believe me, then believe Suze Orman. I’ve seen her tout this fact a few times on her show. Your rates can go as high as 29% just because you are late on your mortgage. The reality is that you need to keep up on everything. If you are having financial difficulty you need to be aware that your credit cards may not be your safety net.

For additional credit articles go to GetPrequalified.com

The Fair Debt Collection Practices Act

If you are falling behind on your bills or are already in collections you do have rights. Creditors cannot harass you. To view a summary of the Fair Debt Collections Practices Act go to GetPrequalified.com.

Debt Negotiation does not hurt your fico score

I keep hearing reports that doing debt negotiation hurts your credit score. I would like to set the record straight. The truth is that debt negotiation does not hurt your credit score. Having too much debt and not paying your bills will hurt your credit score. If you are current on all your bills and stop paying them, your score will go down, no question about it. Debt negotiation is for people that are in serious financial hardship and possibly considering a Bankruptcy. Debt negotiation is not a way to get out of paying your bills. So if you think you are going to run out and charge up a bunch of debt and then let it go, you may have a problem. That could be considered a fraudulent act. Debt negotiation is for people that may have experience a medical emergency or even a job loss.

Bottom line, debt negotiation does not hurt your credit, having too much debt and not paying it is the culprit. Actually the more old debt that you pay off, the better it is for your credit score. So settling your debt actually helps your credit score not hurt it.

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