STOP HARASSMENT FROM CREDITORS: Federal and state debt collection laws protect you from abusive and harassing debt collector conduct. You probably already know that creditors aren’t in business to help you. It does not matter to them what unfortunate circumstances have befallen you – they are all the more pleased about your financial difficulties as it means more fees and higher interest rates for them. Even if you have every intention of paying what you owe – given a little more time – they are not usually going to give you the time you really need to make everything work out.
Is Debt Counseling for You?
The notion of “counseling” for debt problems sounds reasonable. But that’s what it’s supposed to do: “Sound reasonable.”
Participating in credit or debt counseling is somewhat like filing for a type of bankruptcy (Chapter 13).
What happens is that the debt “counseling” agency will help you come up with a plan to pay back your creditors over time, somewhat like a Chapter 13 plan. The good news is that such counseling has one advantage over formal bankruptcy: No bankruptcy will actually appear on your credit record.
However, a debt “counseling” (or debt management) program has some important disadvantages, when compared to Chapter 13 bankruptcy.
Disadvantage Number 1: If you miss a payment, Chapter 13 bankruptcy protects you from creditors who would start collection actions. However, a debt “counseling” (or debt management) program has no such protection.
In other words, if you miss a payment, any one creditor can pull the plug on your plan (and it’s in their best interest to do so).
Disadvantage Number 2: Debt “counseling” (or debt management), usually requires you to repay your debts in full. In Chapter 13 bankruptcy, you typically pay only a small fraction of your unsecured debts.
Disadvantage Number 3: In a blatant conflict of interest, these debt “counseling” (or debt management) agencies receive most of their funding from the creditors themselves. (If you were being paid by a credit card company to help people with credit card debt – who are you actually working for?)
Negotiate With Your Creditors
Debt negotiation is distinctly different than debt counseling. In fact, it’s NOT what creditors want you to know about or do. Debt counselors will counsel you against such a practice (since they are paid by the creditors).
Negotiation your debt with your creditors can buy you some time to get back on your feet. On top of that, your creditors may agree to settle your debts for less than you owe. If you have some income, or you have assets you’re willing to sell, you may be a lot better off negotiating with your creditors than filing for bankruptcy.
However, many people aren’t comfortable negotiating with their creditors or with collection agencies and rightfully so, since those collectors are trained to NOT give you what the law outlines in your circumstances. Furthermore, even if you are a confident and able negotiator, the creditors and collectors are so hard-nosed that the process is too unpleasant for most people to want to contend with.
A better solution is to use a professional debt negotiation service. These agencies can work with you to help you repay your debts and improve your financial picture. Since they understand the laws as well as the games, strategies and limits of the creditors, they are able to negotiate considerably lower repayment rates than you could on your own. What that means is that you end up paying a fraction of the unsecured debt (especially from credit cards) that you owe to completely satisfy the debt.
For more information on professional debt negotiation services and for a free debt consultation, click “Contact” to email or call a professional service today and find out what they can do for you.
Don’t let creditors take advantage of you.