Why Debt Settlement is a Bad Option

Introduction
Debt settlement is considered a good alternative to bankruptcy, but is it really that good? Find out the answer from debt management services.

How Debt Settlement Works
Debt settlement companies act as savings account for debtors. They offer to save up a lump sum of your money, and, once it attains maturity, they negotiate with creditors to pay off your unsecured debt. It is one of the debt management services agencies offer to get you out of debt.

Debt Settlement – More Misleading Than Relief
Until now, this debt management option was regarded as a substitute for bankruptcy. A bankruptcy declaration can have a negative effect on your credit report and your future prospects for bank loans, insurance and even jobs. That’s why the debt settlement scheme was devised. But some thing things are too good to be true.

There are several debt management services agencies who charge exorbitant fees in the name of the negotiation and debt settlement process. They also don’t offer you any legal protection against the lawsuits of collection agents. This can make one question the true objective of these agencies. In fact, due to their steep fee structure, these debt settlement companies are being outlawed in many states.

Success Rate of the Debt Settlement Process
You might find this surprising, but debt management experts report that the success rate for debt settlement is very low. Of all the people approaching these self-proclaimed debt settling companies, only 2% manage to settle their debt successfully. Most debtors are forced to leave the settlement process mid way through because they become involved in lawsuits or debt garnishments from creditors. 

Impact on Taxes
Debt management experts also bring attention to another important issue – the consequences of tax on forgiven debt. The government considers this forgiven debt to be income and hence deducts tax from it. So if your debt settlement company gives you the idea that you can make a good profit, then you are being misguided. The profit you will make from forgiven debt will ultimately be taxed according to government income policy. 

Debt settlement is a good option only when handled by an efficient and genuine agency. Check with a licensed attorney who can guide you with good advice.

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Get Debt Relief for Your Small Business

Introduction
Are you contemplating the idea of declaring your small business bankrupt? Well, there are other debt management solutions available to handle your debt situation.

Impact of Recession on Small Businesses
The recent economical recession has had a tough impact on small businesses. As most businesses take unsecured loans, when they aren’t able to pay the accumulating debt and the high interest rates, they opt for bankruptcy. However, bankruptcy can have its own share of repercussions and hence should be the last resort to be debt-free. Just because you are unable to pay off your debt, you can’t lose all the goodwill you have worked so hard to earn with your business. In such a scenario, debt management solutions offer many strategies to handle your small business’s debt issues.

Debt Management Plan
Under a debt management plan, debt experts usually bargain with your creditors to reduce the debt amount in a certain clause so that the payable amount will be lower than the current debt amount. It’s a legal procedure in which your creditors enter into a new agreement with you. Thanks to debt negotiation, you can eliminate up to 60% of your unsecured debt.

Debt Settlement
Debt settlement is a very good debt management plan for small business owners who have more than $10K in unsecured debt. Unsecured debt creditors are apprehensive about collecting their delinquent accounts, so debt analysts take advantage of this through negotiation and settlement.

Relief Network
Debt management analysts often suggest a liability relief network for small business debt settlement. In fact, it’s considered a better choice than settlement companies. This network only enlists effective debt management companies with a successful track record. Hence, small business owners can expect some significant developments in their quest toward being debt-free.

Here are some dos and don’ts for small business owners:

• Debt management planners strongly suggest not opting to borrow to repay your current debt. If you already feel the heat of debt, further borrowing will only add to your unsecured debt.
• Be punctual in your tax payment. Debt management planners prepare charts to help you maintain your tax details. Remember, even one tax non-payment can earn you an asset penalty from the Revenue Department.
• Maintain a separate bank account. In this way, you can save a compensatory amount from your creditors in case of a drastic situation like bankruptcy.

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How to Fix your Debt Problem

• Introduction 
  Is your debt problem strangling you? Well, you don’t have to live with it forever. Debt management programs can offer many strategies to handle various debt related issues.
   
  Reasons for Debt Problems
  Most debt problems occur because of bad management of personal finances. Credit cards offer the most convenient way to borrow money, but this often turns negative for cardholders. Credit cards also offer the easiest option for buying, not to mention the safest because you don’t have to worry about losing your money. But if not used wisely, credit card usage can lead to serious debt problems. Debt management programs offer many strategies to deal with a debt crisis.
   
  Debt Management Programs
  Debt handling agencies offer debt management programs in which they educate debt-stricken consumers. Starting with counseling, negotiation and finally settlement, experts from agencies can cover every stage to make you aware of your debt problems. They can also teach you how to get rid of debt. But the initial wake-up call has to happen on your end. How serious are you about your debt problem? Are you looking for a way to get rid of your debt? If the answer to both of these questions is yes, then approaching debt agencies can be quite useful.
   
  Below are some effective strategies for conquering your debt problem: Stop paying with credit cards all the time. Most people buy things they want, not need, which augments the debt problem. Consider credit cards as extra money, not a necessity.
• Always check the interest rate and other administrative fees before signing up for a credit card. The market is flooded with various credit card companies showcasing attractive offers, but you need to choose the offer  with the lowest interest rate.
• Debt management planners suggest checking whether reward points are available as partial payment of your credit card debt. You may be able to save some money by trading your reward points.
• If you have multiple credit cards, transfer most of your debt to the lowest annual percentage rate (APR) card. As the interest rate is low, you can save a good deal in paying off other debt.
• Make a deal with yourself. Debt management planners suggest either you increase your income from additional sources such as a part-time job, or put a stop to your unnecessary expenses to get rid of your debt problem. Ultimately, the choice is yours. 

Debt Fighting Tricks to Control Debt

Introduction
Worried about how to get rid of debt? With these debt management tricks you can give your debt problems a tough fight. 

Debt can happen in a number of ways. Unexpected medical bills, accidental expenses of a spouse, extended sick leave, mortgage loan, credit card bills – all these are circumstances that can push you towards debt one way or another. Debt is like an avalanche – if not handled in time, it can blow right over you. Debt management agencies are there to help you in your fight against debt.

Stop the blame game.
You might not realize it, but 99.9% of the time we tend to blame others for our debt situation. Be it for reasons like student loans, mortgage payments or credit card issues, nobody can force you to be in debt. These factors could have aided you, but if you are not able to control your expenses and get out of debt, you know whom to blame. Once you accept the responsibility, the next stage is to seek debt management solutions. 

Know your debt.
It might be surprising, but there are people who actually have no idea how much money they owe to creditors. Ironic, isn’t it? Well there are debt management analysts to help. They add up your credit card bills, student loans, car loans, home loans, etc., to prepare a detailed debt payoff structure. 

Make a smart move.
Don’t let irresponsible finance related decisions spoil your chance of becoming debt-free. Just because something is on sale doesn’t mean you have to buy it, especially if you don’t need it in the first place. The idea of “saving money” by buying on discount is illogical. So strictly follow the debt management plan. It will help you streamline your expenses. 

Be consistent in interest payment.
Does it matter if you miss an interest payment one month? Or if you make a late payment? It does, a lot. You might make it up in your next payment, but it will generate a bad credit rating for you anyway. And a bad credit report can have a negative impact on your credibility with creditors. That’s why debt management analysts recommend being consistent in debt payments. 

These are not hidden secrets, but tested debt management tricks which, if followed with dedication, can bring you into debt free territory.