Beginning with industrialization, governments sought to expand their economies by replacing the long-term and slow growth modality of capital creation with the faster and more expedient means of debt creation. But as economies expanded, debt ballooned. Over time, as a nation's market expanded at a fairly steady pace (with the occasional downturn and setback), ensuring a commensurate increase in incomes, apparent wealth and living standards, the total debt increased at an exponential rate exceeding by many magnitudes the growth rate of the economy. As a result, at any major downturn and national or regional setback, nations businesses and individuals are left foundering in a sea of debt.
There can be no "fix" to an economy based on debt nor for a business' or individual's debt load unless the "fix" originates from the capital creation side of economic philosophy. However, as capital creation is slow and uneven this solution is unpalatable to nations and peoples accustomed to quick repairs, fast connections and instant gratification. To be told that a solution to debt can be guaranteed, but only after 10 or 20 years of hard work, with very little to show for the first half of that period, people and nations may opt for the more expedient solution of expanding their debt. Although this solution seems to solve the immediate debt, the existing debt doesn't go away, it is merely subsumed within the new debt. This seems to solve the immediate debt situation but in fact only moves the problem to a future date.
There is no solution to a debt crisis using the current model of debt creation. Under this model, current debt never goes away, it is only added to future debt. The only solution to a crisis of debt is debt that provides periodic income in excess of the periodic payments necessary to acquire that debt. Debt based on this new model is based on tangible assets, i.e. hard, fixed assets which cannot be easily dismantled or destroyed.
There are only four asset classes of production. These four classes are land (or real estate), labor, capital (cash), and intellectual property. In the modern era, each of these asset classes bears varying degrees of mortality risk based on the further distinction (subcategory) of that asset category, its location on the planet, competition and the market from which its revenues are derived. No place is absolutely safe; fires, earthquakes floods and storms can destroy a factory, warehouse or subdivision just as surely as war, a terrorist attack, competition or market decline.
Investment in debt is never a safe option. Debt is a soft asset, an intangible or paper asset which can lose value or be destroyed as easily as it was created. Whether the soft asset is student loans, mortgages, commodities, foreign exchange or highly leveraged derivatives, there is no assurance that any investment made today will be secure tomorrow. The characteristic of a soft asset which makes it easy to generate high returns over short periods of time is leverage. However, this leverage of return also leverages the degree of risk. The farther removed an asset is from a hard asset to a soft asset, the more inherent the risk built into the structure of that asset. Although this risk also leverages the potential rate of return, the increase in the return is simply not worth the increased risk as the current real estate crisis, worldwide currency crises, the slow decline of the dollar and international governmental debt crises all attest.
Income generating assets exist in a variety of forms and their return can exceed that of the more familiar debt model based asset vehicles. One of the most popular forms is stock ownership. Although this seems a contradiction in the capital creation concept, it is in fact a core concept; buy assets, not debt, buy ownership, not a promise. With stock, you are buying a piece of the company; when buying a student loan package, you are buying a promise.
Equity in a commercial enterprise is perhaps the easiest, least expensive and lowest risk means of initiating a capital creation strategy. To assure the proper perspective on equity purchases, an investor must view the asset for the periodic income it generates, not the projected cash-in value of the asset at some indeterminate time in the future. Each investor must view the asset as one that they will hold forever and then pass onto their heirs because of the income it generates (and additionally the value it adds to their estate). No investor should view such an asset as one they plan to sell in 10, 20, 30 or 40 years.
Indivduals, businesses and governments must all adopt the long view. This long view rests on a foundation of capital creation. Capital creation is the acquisition of assets which produce periodic, current income in excess of the payments required to purchase that asset.
Wednesday, December 7, 2011
Friday, December 2, 2011
Building Wealth, Making Money
Beginning with industrialization, governments sought to expand their economies by replacing the long-term and slow growth modality of capital creation with the faster and more expedient means of debt creation. But as economies expanded, debt ballooned. Over time, as a nation's market expanded at a fairly steady pace (with the occasional downturn and setback), ensuring a commensurate increase in incomes, apparent wealth and living standards, the total debt increased at an exponential rate exceeding by many magnitudes the growth rate of the economy. As a result, at any major downturn and national or regional setback, nations businesses and individuals are left foundering in a sea of debt.
There can be no "fix" to an economy based on debt nor for a business' or individual's debt load unless the "fix" originates from the capital creation side of economic philosophy. However, as capital creation is slow and uneven this solution is unpalatable to nations and peoples accustomed to quick repairs, fast connections and instant gratification. To be told that a solution to debt can be guaranteed, but only after 10 or 20 years of hard work, with very little to show for the first half of that period, people and nations may opt for the more expedient solution of expanding their debt. Although this solution seems to solve the immediate debt, the existing debt doesn't go away, it is merely subsumed within the new debt. This seems to solve the immediate debt situation but in fact only moves the problem to a future date.
There is no solution to a debt crisis using the current model of debt creation. Under this model, current debt never goes away, it is only added to future debt. The only solution to a crisis of debt is debt that provides periodic income in excess of the periodic payments necessary to acquire that debt. Debt based on this new model is based on tangible assets, i.e. hard, fixed assets which cannot be easily dismantled or destroyed.
There are only four asset classes of production. These four classes are land (or real estate), labor, capital (cash), and intellectual property. In the modern era, each of these asset classes bears varying degrees of mortality risk based on the further distinction (subcategory) of that asset category, its location on the planet, competition and the market from which its revenues are derived. No place is absolutely safe; fires, earthquakes floods and storms can destroy a factory, warehouse or subdivision just as surely as war, a terrorist attack, competition or market decline.
Investment in debt is never a safe option. Debt is a soft asset, an intangible or paper asset which can lose value or be destroyed as easily as it was created. Whether the soft asset is student loans, mortgages, commodities, foreign exchange or highly leveraged derivatives, there is no assurance that any investment made today will be secure tomorrow. The characteristic of a soft asset which makes it easy to generate high returns over short periods of time is leverage. However, this leverage of return also leverages the degree of risk. The farther removed an asset is from a hard asset to a soft asset, the more inherent the risk built into the structure of that asset. Although this risk also leverages the potential rate of return, the increase in the return is simply not worth the increased risk as the current real estate crisis, worldwide currency crises, the slow decline of the dollar and international governmental debt crises all attest.
Income generating assets exist in a variety of forms and their return can exceed that of the more familiar debt model based asset vehicles. One of the most popular forms is stock ownership. Although this seems a contradiction in the capital creation concept, it is in fact a core concept; buy assets, not debt, buy ownership, not a promise. With stock, you are buying a piece of the company; when buying a student loan package, you are buying a promise.
Equity in a commercial enterprise is perhaps the easiest, least expensive and lowest risk means of initiating a capital creation strategy. To assure the proper perspective on equity purchases, an investor must view the asset for the periodic income it generates, not the projected cash-in value of the asset at some indeterminate time in the future. Each investor must view the asset as one that they will hold forever and then pass onto their heirs because of the income it generates (and additionally the value it adds to their estate). No investor should view such an asset as one they plan to sell in 10, 20, 30 or 40 years.
Indivduals, businesses and governments must all adopt the long view. This long view rests on a foundation of capital creation. Capital creation is the acquisition of assets which produce periodic, current income in excess of the payments required to purchase that asset.
Article Source: http://EzineArticles.com/6729612
There can be no "fix" to an economy based on debt nor for a business' or individual's debt load unless the "fix" originates from the capital creation side of economic philosophy. However, as capital creation is slow and uneven this solution is unpalatable to nations and peoples accustomed to quick repairs, fast connections and instant gratification. To be told that a solution to debt can be guaranteed, but only after 10 or 20 years of hard work, with very little to show for the first half of that period, people and nations may opt for the more expedient solution of expanding their debt. Although this solution seems to solve the immediate debt, the existing debt doesn't go away, it is merely subsumed within the new debt. This seems to solve the immediate debt situation but in fact only moves the problem to a future date.
There is no solution to a debt crisis using the current model of debt creation. Under this model, current debt never goes away, it is only added to future debt. The only solution to a crisis of debt is debt that provides periodic income in excess of the periodic payments necessary to acquire that debt. Debt based on this new model is based on tangible assets, i.e. hard, fixed assets which cannot be easily dismantled or destroyed.
There are only four asset classes of production. These four classes are land (or real estate), labor, capital (cash), and intellectual property. In the modern era, each of these asset classes bears varying degrees of mortality risk based on the further distinction (subcategory) of that asset category, its location on the planet, competition and the market from which its revenues are derived. No place is absolutely safe; fires, earthquakes floods and storms can destroy a factory, warehouse or subdivision just as surely as war, a terrorist attack, competition or market decline.
Investment in debt is never a safe option. Debt is a soft asset, an intangible or paper asset which can lose value or be destroyed as easily as it was created. Whether the soft asset is student loans, mortgages, commodities, foreign exchange or highly leveraged derivatives, there is no assurance that any investment made today will be secure tomorrow. The characteristic of a soft asset which makes it easy to generate high returns over short periods of time is leverage. However, this leverage of return also leverages the degree of risk. The farther removed an asset is from a hard asset to a soft asset, the more inherent the risk built into the structure of that asset. Although this risk also leverages the potential rate of return, the increase in the return is simply not worth the increased risk as the current real estate crisis, worldwide currency crises, the slow decline of the dollar and international governmental debt crises all attest.
Income generating assets exist in a variety of forms and their return can exceed that of the more familiar debt model based asset vehicles. One of the most popular forms is stock ownership. Although this seems a contradiction in the capital creation concept, it is in fact a core concept; buy assets, not debt, buy ownership, not a promise. With stock, you are buying a piece of the company; when buying a student loan package, you are buying a promise.
Equity in a commercial enterprise is perhaps the easiest, least expensive and lowest risk means of initiating a capital creation strategy. To assure the proper perspective on equity purchases, an investor must view the asset for the periodic income it generates, not the projected cash-in value of the asset at some indeterminate time in the future. Each investor must view the asset as one that they will hold forever and then pass onto their heirs because of the income it generates (and additionally the value it adds to their estate). No investor should view such an asset as one they plan to sell in 10, 20, 30 or 40 years.
Indivduals, businesses and governments must all adopt the long view. This long view rests on a foundation of capital creation. Capital creation is the acquisition of assets which produce periodic, current income in excess of the payments required to purchase that asset.
Article Source: http://EzineArticles.com/6729612
Wednesday, December 15, 2010
Debt Elimination Help - The Basics
Debt elimination help isn't just available for people who are struggling with personal debt, the methods used can be utilized by anyone and when these debt elimination methods are applied and adhered to they can be very successful at helping people become totally free of debt.
It doesn't really matter if you are struggling to manage your debt or if you are more than comfortable maintaining your financial obligations; your goal should always be the same - total elimination of your debt!
I am sure you already know that the freedom that debt elimination would provide you with would make your life a whole lot easier to enjoy. Imagine what it would be like if you did not have a mortgage, car loan, or student loans to repay, a lot less stressful I bet.
Where Can Debt Elimination Help Be Found?
The question shouldn't be so much where you find help eliminating your debt but knowing what you can do to start eliminating debt yourself.
There is and never will be a means of totally clearing debt overnight other than being the beneficiary of a large windfall which, let's face it, is a remote possibility to say the very least.
The initial step in obtaining financial freedom is to understand completely how your money is being used. You can do this by completing a personal budget sheet that outlines all of your income and expenditure, no matter how insignificant.
Once you have compiled this budget sheet and assuming there is no way to increase your income, you will need to find ways of paying off more of your debt in order to reduce it quicker and achieve your goal of debt elimination.
There are a number of methods that can be utilized to reduce your debt quicker but generally, they all come back to the same thing, lowering interest rates.
Get out of debt by building an online business.
Reducing Interest Rates On Debt is the Quickest Way to Eliminate Debt
It goes without saying that if we didn't have to pay interest on our debt we would all be debt free a whole lot quicker, unfortunately the financial institutions need to make a profit so this will never be the case. However, we can work towards reducing interest rates using various methods and techniques which will, in turn, reduce the amount of time we spend in debt.
An excellent way to reduce the amount of interest we pay is to pay off all your high interest borrowing with a single low interest loan. This is often referred to as debt consolidation and is a well proven method of debt reduction and elimination.
Debt Consolidation loans are the most widely used method to help debt elimination as they provide a low interest alternative to high interest debt such as credit card debt and unsecured borrowing and if you are a homeowner you should be able to obtain a loan without too much hassle.
Debt consolidation loans along with an improved personal spending plan will take years off the lifespan of your debt, therefore helping you to become debt free a lot sooner than if you carried on the way you were.
There are methods of debt elimination than can be used that can have you free of debt in as little as three years and this is without you having to increase your income.
These perfectly legal methods of debt elimination, although old, are extremely effective at clearing debt and are not widely known simply because the financial institutions have kept a lid on them!
For more about the methods of debt elimination mentioned above and further debt elimination help visit http://www.creditcardconsolidationloanssite.com
Article Source: http://EzineArticles.com/?expert=Daniel_Major
It doesn't really matter if you are struggling to manage your debt or if you are more than comfortable maintaining your financial obligations; your goal should always be the same - total elimination of your debt!
I am sure you already know that the freedom that debt elimination would provide you with would make your life a whole lot easier to enjoy. Imagine what it would be like if you did not have a mortgage, car loan, or student loans to repay, a lot less stressful I bet.
Where Can Debt Elimination Help Be Found?
The question shouldn't be so much where you find help eliminating your debt but knowing what you can do to start eliminating debt yourself.
There is and never will be a means of totally clearing debt overnight other than being the beneficiary of a large windfall which, let's face it, is a remote possibility to say the very least.
The initial step in obtaining financial freedom is to understand completely how your money is being used. You can do this by completing a personal budget sheet that outlines all of your income and expenditure, no matter how insignificant.
Once you have compiled this budget sheet and assuming there is no way to increase your income, you will need to find ways of paying off more of your debt in order to reduce it quicker and achieve your goal of debt elimination.
There are a number of methods that can be utilized to reduce your debt quicker but generally, they all come back to the same thing, lowering interest rates.
Get out of debt by building an online business.
Reducing Interest Rates On Debt is the Quickest Way to Eliminate Debt
It goes without saying that if we didn't have to pay interest on our debt we would all be debt free a whole lot quicker, unfortunately the financial institutions need to make a profit so this will never be the case. However, we can work towards reducing interest rates using various methods and techniques which will, in turn, reduce the amount of time we spend in debt.
An excellent way to reduce the amount of interest we pay is to pay off all your high interest borrowing with a single low interest loan. This is often referred to as debt consolidation and is a well proven method of debt reduction and elimination.
Debt Consolidation loans are the most widely used method to help debt elimination as they provide a low interest alternative to high interest debt such as credit card debt and unsecured borrowing and if you are a homeowner you should be able to obtain a loan without too much hassle.
Debt consolidation loans along with an improved personal spending plan will take years off the lifespan of your debt, therefore helping you to become debt free a lot sooner than if you carried on the way you were.
There are methods of debt elimination than can be used that can have you free of debt in as little as three years and this is without you having to increase your income.
These perfectly legal methods of debt elimination, although old, are extremely effective at clearing debt and are not widely known simply because the financial institutions have kept a lid on them!
For more about the methods of debt elimination mentioned above and further debt elimination help visit http://www.creditcardconsolidationloanssite.com
Article Source: http://EzineArticles.com/?expert=Daniel_Major
Wednesday, May 26, 2010
The minor towers next to the citizen.
I don't know about you, but if I had a few minor towers for my short sales, I could be rich. In a short sale, the owner owes more on the mortgage than the property is currently worth. With declines in incomes, major layoffs and a stricter credit picture, many people are struggling to make their monthly mortgage payments and many are just giving up.
Another option is the short sale. You can try this on your own, but it is not recommended. The bankers and lenders can be obstinate, procrastinating until the very last minute in hopes of getting a better deal. A lot of possible deals are lost this way and everyone loses. The homeowner loses his home, the banks and lenders lose any possibility of income from the property and are now stuck with it and the community loses another family.
Professional short sale specialists are becoming more prevalent. A search in any good search engine will reveal hundreds in your area. If you need one, do the research to ensure they are legitimate and can do what they claim, and remember the aphorism "If it looks too good to be true, it probably is."
Another option is the short sale. You can try this on your own, but it is not recommended. The bankers and lenders can be obstinate, procrastinating until the very last minute in hopes of getting a better deal. A lot of possible deals are lost this way and everyone loses. The homeowner loses his home, the banks and lenders lose any possibility of income from the property and are now stuck with it and the community loses another family.
Professional short sale specialists are becoming more prevalent. A search in any good search engine will reveal hundreds in your area. If you need one, do the research to ensure they are legitimate and can do what they claim, and remember the aphorism "If it looks too good to be true, it probably is."
Debt Settlement - Your Questions Answered
For many people, the decision to eliminate credit card debt through debt settlement is a difficult one to make. This is due to the fact that most consumers aren't well-educated in the area of debt settlement.
Over the past several years I've been asked numerous questions regarding the process of debt settlement, and have summarized those inquiries below:
What type of debt can be negotiated through debt settlement?
The majority of the debt you're attempting to negotiate with your creditors would be unsecured credit card debt, as it allows a greater amount of leverage when negotiating, and the end result will likely be a satisfactory settlement to both the debtor (consumer) and creditor. Department store charge cards, financing contracts, medical bills and miscellaneous debts are also negotiable, even though it's been my experience that the results are not quite as predictable as standard credit cards. 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 then forwarded to that creditor. It's important to understand, prior to signing up for a debt settlement program, that the settlement funds must be available once a settlement agreement has been reached with a creditor. If it's unlikely that you can realistically accumulate these funds, either from a savings account, retirement account, home equity loan or a friend or relative, unfortunately you simply won't qualify for this type of program. Fortunately, most creditors will accept settlement payments via 4-6 monthly installments. This has helped many individuals successfully follow through 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 settled appear positively on credit reports when compared to bad debt, or a bankruptcy. Your credit rating may decline initially, but only until the debts can be removed from your credit report. It's important to remember, however, that your credit rating will improve due to the fact that one of the most important 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 an overall improvement in their credit score within twelve months. If you've found it difficult to keep up with the minimum monthly payments to your creditors, there's a very good chance that the debt has already been reported as delinquent, which has most certainly affected your credit rating already. Generally this also means that you have a high amount of debt appearing, further contributing to a poor credit score. Remember a lender looks at many factors to determine credit worthiness, your credit score is just one of them. If you eliminate your outstanding debt, your credit worthiness 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 to report 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. Unless you have a positive net worth (highly unlikely if you are deep in debt) then you usually won't have to 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 a financial situation that they just haven't been able to pull out of. When you enter a debt settlement program, most firms will require that you discontinue any further use of your cards. Some debt settlement 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 you'll be relying on for settlement funds. Some individuals can complete the process of debt settlement within 30 days, while others can take as long as three years. Your individual situation is what determines how long the entire process 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 making smaller payments over a longer time period. Because credit counseling makes its money by earning a percentage of the amount you pay your creditors, their incentive is to get you to pay 100% of your debt, rather than to sit down and negotiate a reduced settlement amount with your creditors. Unlike consumer credit counseling, debt settlement allows you to be free from monthly payments after you've paid the entire negotiated settlement amount via a lump sum payment or a few monthly installments.
What amount of money will I need to enter a debt settlement program?
While many debt settlement firms have seen excellent results through debt settlement using tested and proven procedures, just like a good surgeon can't guarantee the outcome of an operation, most can't guarantee what each settlement with your various creditors will be. Reputable firms have consistently produced some very positive success stories for their clients, and while past performance is a good indicator of 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 by yourself is possible, but it's not likely that the end result will be a positive one. Banks rarely take debtors seriously and are well prepared for the amateur do-it-yourself negotiator; as a matter of fact, most representatives at your credit card companies have prearranged scripts waiting for your phone calls. You'll hear a lot of "we do not settle debts under any circumstance" and "I can transfer you to a department that may be able to help you qualify for our hardship program." Most consumers simply give up at this point because they feel that debt settlement isn't possible and there's no end in sight. Not to worry - there are many reputable firms who will be more than happy to assist you. Hopefully your questions regarding debt settlement have been answered. Whatever path 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 has assisted many individuals in resolving their debt-related matters. For more information regarding credit and debt visit http://www.donaldsonwilliams.com
To learn more about debt settlement and your credit score, click here.
For more information regarding the possible tax consequences, it’s highly recommended that you speak with your tax preparer and/or click here.
Article Source: http://EzineArticles.com/?expert=Marie_Megge
Over the past several years I've been asked numerous questions regarding the process of debt settlement, and have summarized those inquiries below:
What type of debt can be negotiated through debt settlement?
The majority of the debt you're attempting to negotiate with your creditors would be unsecured credit card debt, as it allows a greater amount of leverage when negotiating, and the end result will likely be a satisfactory settlement to both the debtor (consumer) and creditor. Department store charge cards, financing contracts, medical bills and miscellaneous debts are also negotiable, even though it's been my experience that the results are not quite as predictable as standard credit cards. 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 then forwarded to that creditor. It's important to understand, prior to signing up for a debt settlement program, that the settlement funds must be available once a settlement agreement has been reached with a creditor. If it's unlikely that you can realistically accumulate these funds, either from a savings account, retirement account, home equity loan or a friend or relative, unfortunately you simply won't qualify for this type of program. Fortunately, most creditors will accept settlement payments via 4-6 monthly installments. This has helped many individuals successfully follow through 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 settled appear positively on credit reports when compared to bad debt, or a bankruptcy. Your credit rating may decline initially, but only until the debts can be removed from your credit report. It's important to remember, however, that your credit rating will improve due to the fact that one of the most important 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 an overall improvement in their credit score within twelve months. If you've found it difficult to keep up with the minimum monthly payments to your creditors, there's a very good chance that the debt has already been reported as delinquent, which has most certainly affected your credit rating already. Generally this also means that you have a high amount of debt appearing, further contributing to a poor credit score. Remember a lender looks at many factors to determine credit worthiness, your credit score is just one of them. If you eliminate your outstanding debt, your credit worthiness 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 to report 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. Unless you have a positive net worth (highly unlikely if you are deep in debt) then you usually won't have to 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 a financial situation that they just haven't been able to pull out of. When you enter a debt settlement program, most firms will require that you discontinue any further use of your cards. Some debt settlement 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 you'll be relying on for settlement funds. Some individuals can complete the process of debt settlement within 30 days, while others can take as long as three years. Your individual situation is what determines how long the entire process 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 making smaller payments over a longer time period. Because credit counseling makes its money by earning a percentage of the amount you pay your creditors, their incentive is to get you to pay 100% of your debt, rather than to sit down and negotiate a reduced settlement amount with your creditors. Unlike consumer credit counseling, debt settlement allows you to be free from monthly payments after you've paid the entire negotiated settlement amount via a lump sum payment or a few monthly installments.
What amount of money will I need to enter a debt settlement program?
While many debt settlement firms have seen excellent results through debt settlement using tested and proven procedures, just like a good surgeon can't guarantee the outcome of an operation, most can't guarantee what each settlement with your various creditors will be. Reputable firms have consistently produced some very positive success stories for their clients, and while past performance is a good indicator of 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 by yourself is possible, but it's not likely that the end result will be a positive one. Banks rarely take debtors seriously and are well prepared for the amateur do-it-yourself negotiator; as a matter of fact, most representatives at your credit card companies have prearranged scripts waiting for your phone calls. You'll hear a lot of "we do not settle debts under any circumstance" and "I can transfer you to a department that may be able to help you qualify for our hardship program." Most consumers simply give up at this point because they feel that debt settlement isn't possible and there's no end in sight. Not to worry - there are many reputable firms who will be more than happy to assist you. Hopefully your questions regarding debt settlement have been answered. Whatever path 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 has assisted many individuals in resolving their debt-related matters. For more information regarding credit and debt visit http://www.donaldsonwilliams.com
To learn more about debt settlement and your credit score, click here.
For more information regarding the possible tax consequences, it’s highly recommended that you speak with your tax preparer and/or click here.
Article Source: http://EzineArticles.com/?expert=Marie_Megge
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