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DELETED-USER
Forum GURU
Joined: 20 Jan 2004
Posts: 421
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 Posted: Tue Jan 09, 2007 11:56 pm Post subject: Debt Reduction, Debt Settlement, Bankruptcy |
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I've been working with clients who have high credit card bills and are fully leveraged on their homes. While thinking of ways to help them, I've tuned in to some commercials on the radio, and searched some websites on debt reductions...
What's the difference between debt reduction, debt consolidation, and bankruptcy?
Can you really be current on your bills, have a high credit score, and negotiate payoffs with the credit card companies? Can you retain your high credit score and also show the accounts as paid, closed, but in good standing, without a 'settlement' tag? |
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jtrower
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Joined: 31 Aug 2006
Posts: 43
Location: Wrigleyville
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| Posted: Wed Jan 10, 2007 1:25 pm Post subject: Re: Debt Reduction, Debt Settlement, Bankruptcy |
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| Nick Papafotopoulos wrote: | I've been working with clients who have high credit card bills and are fully leveraged on their homes. While thinking of ways to help them, I've tuned in to some commercials on the radio, and searched some websites on debt reductions...
What's the difference between debt reduction, debt consolidation, and bankruptcy?
Can you really be current on your bills, have a high credit score, and negotiate payoffs with the credit card companies? Can you retain your high credit score and also show the accounts as paid, closed, but in good standing, without a 'settlement' tag? |
To answer some of your questions,
Debt reduction is the process of paying down debt and/or negotiating a lower payment, interest rate or principle amount based upon payments already made toward it.
Debt consolidation is taking out one loan to pay off many others. This process usually entails moving unsecured debt (i.e. credit cards) to secured debt (home equity) or another unsecured bank loan. However, many people are in credit card debt because they spend more than their income. If that habit continues, the consolidation will not benefit them much because they will simply increase their credit card balances again. Many predatory lenders go after people like this, and it gives a bad rap to investors like us.
Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, bankruptcy is initiated by the debtor (the bankrupt individual or organization). Chapter 7 and Chapter 13 are the most common for individuals and Chapter 11 for businesses or individuals with substantial debts and assets. The primary purpose of bankruptcy is: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.
Bankruptcy allows debtors to resolve debts through the division of non-exempt assets among creditors. Additionally the declaration of bankruptcy allows debtors to be discharged of most of the financial obligations, after their non-exempt assets are distributed, even if their debts have not been paid in full. During the pendency of a bankruptcy proceeding, the debtor is protected from extra-bankruptcy action by creditors by a legally imposed stay. Creditors cannot pursue lawsuits, garnish wages, or attempt to compel payment.
Q:Can you really be current on your bills, have a high credit score, and negotiate payoffs with the credit card companies?
A:Yes, but you must be able to prove to the credit card companies that you are under some sort of financial duress. Similar to what is shown when you are working on a short sale. By carrying a high balance on your credit cards, this will already be lowering someone's credit score. If you communicate with the credit card companies, they will almost always allow for a reduction in the interest rate in exchange for the customer ceasing to use the card for a specified period of time. This will have no affect on the customers credit score except to show that the account is open and is paying down their debts.
Q:Can you retain your high credit score and also show the accounts as paid, closed, but in good standing, without a 'settlement' tag?
A:Yes, you simply have to ask. If you remain in constant and open communication with the lender and show financial responsibility and simply 'ask'. Occasionally a credit card company will refuse, but you have a legal right to attach a 100 word statement to your credit reports showing you have made attempts to work with this creditor and they have refuse. This statement will be sent along with your credit report to anyone who checks your credit. Usually an honest account backed up with proof is enough to convince a lender you are a good credit risk.
For more on credit repair, go to
http://awaytogrow1.wordpress.com/2007/01/09/repair-and-protect-your-credit/
If you have any more questions please contact me and I will walk anyone through how to do this or consult with anyone in need.
Jeff
_________________
Jeff Trower
Investor/Wholesaler
773-857-2399 (office)
480-231-9426 (mobile)
jtrower1@gmail.com
http://awaytogrow1.wordpress.com/ |
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BryanMcDonald
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Joined: 08 Nov 2005
Posts: 83
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| Posted: Fri Oct 10, 2008 8:52 pm Post subject: |
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| Nick, If you are still running across these scenarios you should call me |
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