Achieving Debt Relief Through Debt Settlement

There are several different ways to achieve debt relief. If you have a decent credit history you could get a personal loan and use the funds to pay off all of your other debts. That way you would have consolidated your debts and would now have just one payment to make a month, which should be less than the sum of the payments you’re now making.

Another way to consolidate debts is by getting a home equity loan or home equity line of credit. Of course, you would need to have enough equity in your home that you would be able to borrow enough to pay off all your other debts. Again you should have a much lower payment than the sum of your current payments as well as a fixed term.

If most of your debt is credit card debt you might be able to transfer all of your balances to a new card with a lower interest rate or even better one of those 0% interest balance transfer cards.

If you owe more than, say, $7500 and can’t see any way to repay it within the next two or three years you might choose to hire a debt settlement company to handle your debts for you. For example, National Debt Relief has been able to successfully settle the debts of more than 100,000 families and individuals and has saved them millions of dollars in the process.

How we work with our customers

If you choose to work with National Debt Relief you’ll first talk with one of our debt counselors who will review your debts and explain how we handle debt settlement. To be a good candidate for debt settlement you must have had a financial hardship such as losing your job, having your salary reduced or being divorced so that it would be unrealistic to think you could repay all of your debts. An ideal candidate for debt settlement would owe more than $10,000 in unsecured debts with a balance of $1000 or more on each. Unsecured debts are those where you were not required to provide any collateral. This includes credit card debts, personal loans, lines of credit, past-due rent (if you no longer live in that house or apartment) and vet bills.

If you’re a good candidate

If it turns out that you would be a good candidate for debt settlement your National Debt Relief counselor will offer you a program designed to help you become debt free in 24 to 48 months. Assuming you accept the program you will no longer be required to pay your creditors. You will send National Debt Relief a payment each month instead of paying them. National Debt Relief will deposit this money into an escrow account that you control. When enough money has accumulated in the account we will begin contacting your lenders to discuss settling your debts. In most cases we are able to settle debts for about fifty cents on the dollar. Of course, we cannot guarantee this as every lender approaches debt settlement differently. In fact, there are a few that won’t discuss debt settlement at all.

When we are able to successfully settle one of your debts we will contact you and ask you to release the funds from your escrow account to pay for the settlement.

Why you can trust National Debt Relief

National Debt Relief has been in business since 2007. We are certified by the Better Business Bureau where we have an A rating. We belong to the American Fair Credit Council (AFCC), which is the watchdog of the debt settlement industry. To maintain our membership in this Council we are required to treat our customers fairly, honestly and transparently. As noted above we have helped more than 100,000 Americans find relief from their debts. And we are ranked number one for debt settlement companies on the site TopConsumerReviews.com.

How debt settlement will affect your credit score

, Whether you choose National Debt Relief or some other debt settlement company it’s important to understand that debt settlement will have a negative effect on your credit score. How much this will affect your score will depend on what your score was prior to having your debt settled but it is thought that it will lower it by around 80 points. Of course, if you owe $7500 or more and have been unable to pay your bills for the past several months your credit will already have been severely damaged so that the 80 points may not make that much of a difference. Regardless of this, debt settlement is better than a bankruptcy, which could lower your score by as many as 250 points and leave a stain in your credit reports that will last 10 years.

Get started today

If you believe you would be a good candidate for debt settlement, don’t wait. Call us today to get started. The very worst thing you can do is to do nothing, as your problem with debt is only going to get worse.

What Credit Score Do You Need To Get A Personal Loan?

You’ve found your personal finances are a bit, well, cramped. Maybe you’ve had an emergency like an automobile accident or serious illness or maybe it’s just that your electric range quit working. You know that you could use your credit cards but if you got a personal loan you’d get the money at a much better interest rate. And that’s true. Check your credit card interest rates and you could be paying 15%, 19% or even more. In comparison, you might get a personal, unsecured loan online from Lending Club at 9.4% or CircleBack Lending at 9.1%. Your bank or credit union might have personal loans at this rate or even better – depending on your credit score. And up jumps that old devil – your credit score.

Why your credit score is importantbad credit personal loans are difficult to get

Your credit score might not be the only thing that prospective lenders take into consideration but it will certainly be one of the most important. It will definitely govern your interest rate if you are able to get a loan. This is because that little three-digit number tells prospective lenders how trustworthy you are as a borrower or conversely how risky you are. It also represents a picture of your debts and repayment history.

Your credit score is a sort of snapshot of your credit report, which is a very detailed summary of how you handled credit over the years. You have three credit reports because there are three credit-reporting bureaus – TransUnion, Experian and Equifax.

How your credit score is calculated

Credit scores are based on a scoring system that was pioneered by a company called Fair Isaac Corporation and is now known just as FICO. Scores range from 350 to 800 and as you might guess the higher the number the better. In fact, if you have a high `number you should not only be able to qualify for a lower interest rate but also get a larger loan. A swing of just 50 points could affect your interest rate by several points. For example, one credit union reports that it offers unsecured personal loans at interest rates based on your credit score as follows.

  • Customers with 750+ scores receive a 10.99% APR
  • 700-749 scores receive a 11.99% APR
  • 660-699 scores receive a 12.99% APR
  • 620-659 scores receive a 15.99% APR
  • If your score is under 620, your rate will be 17.99% APR

As you can see from this list if your credit score were to drop 20 points from 702 680 your loan would cost you a full percentage point more. And if it were to drop below 660, it would cost you 4% more in interest.

Have you seen your credit reports recently?

Potential lenders are likely to consider your employment history and income in determining whether to give you a loan. Your credit report could be a deal breaker so it’s important to get a copy of at least one of your reports and review it carefully before applying for a loan The biggest reason for this is there could be items on your report you’re not aware of that are bringing down your credit rating. This could include unfavorable information from someone who has your same name or maybe you’ve been victimized by identity theft. When you review your report you also want to look for things that might send up a danger alert to potential lenders. This typically includes late payments, instances where you’ve gone 30% over your credit limit, have closed older credit cards or have only one source of credit. If you find too many of these items on your credit report it’s likely that you will be turned down for the loan or will receive a very unfavorable interest rate.

Raising that credit score

You should also know your credit score. More and more of lenders are routinely including credit scores in their monthly statements. If yours aren’t doing this you can get your score free from websites such as CreditKarma and CreditSesame. You may also be able to get it free from one of the three credit reporting bureaus.woman looking for debt reduction

If you find your credit score is less than good, you might need to change your financial habits. Beyond this, it’s important to correct any errors you find on your credit reports as this could quickly boost your score. You might also pay down outstanding debts as this would improve your credit utilization ratio, which makes up 30% of your credit score. Finally, you might set up automatic payments so you will always pay your bills online. Your bank may offer online banking that would make this very simple. If not, it’s likely your creditors offer ways for you to pay your bills automatically.

In Debt To The IRS? Get A Fresh Start

Are you afraid to get your mail because you’re scared you’ll find yet another dunning letter from the IRS? Is it threatening to garnish your wages or put a lien on your house? It is scary to get in trouble with the IRS because it has so much power. You might feel as if you were David versus the Goliath that is the IRS and there you stand without even a slingshot. You may be waking up with the night sweats or maybe you can’t sleep at all. Owing the IRS back taxes is one of the worst things that can happen to you financially and what’s even worse is that the problem will never go away – until you make the IRS happy. The harsh truth is that it holds all the cards because it has all the power. While it can’t send you to debtor’s prison anymore it can make your life a living hell and maybe even take your home.

Get happy

There have been a number of songs dedicated to the idea of getting happy. In fact, there’s a song from the 1950s titled “Get Happy” and more recently there was the Pharrell Williams’s song “Happy”. If you’re in big time trouble with the IRS you might not think you’ll ever be able to get happy. But there is good news. It’s because believe it or not the IRS actually wants to help you. In fact, it wants to give you a fresh start and yes, literally, a fresh start with a program of the same name.

What the IRS has said

The Internal Revenue Service has said through Commissioner Doug Shulman that, “This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years … It is part of our multiyear effort to help taxpayers who are struggling to make ends meet.” A simpler way to explain the Fresh Start program is that it’s designed to make it easier for you to pay your back taxes and avoid tax liens. Here are the three most important parts of this program

1. Tax liens

First, the IRS has increased the amount that you owe before it will file a Notice of Federal Tax Lien. That amount is now $10,000 though in some cases you could get a tax lien notice if you owe less than $10,000. In addition, you might qualify to have your notice withdrawn if you are paying your tax debt through a Direct Debt Installment agreement.

2. Installment agreements

The Fresh Start program has now expanded access to and streamlined its installment agreements. If you owe up to $50,000 you can now repay your debt through monthly direct debt deposits for up to six years (72 months). You probably will not need a financial statement to take advantage of its Installment Agreement but you may need to provide some financial information. If you are interested in applying for a payment plan the IRS has an Online Payment Agreement available on IRS.gov. There is also IRS Form 9465, Installment Agreement, which you could use to apply if you don’t have access to the Internet.

Note: If you owe more than $50,000 and need more than six years to repay your debt, you will be required to provide the IRS with a financial statement.

3. Offers in Compromise

You could get caught up on your IRS tax debt through an Offer in Compromise (OIC). This is where you would be allowed to settle your tax debt for less than the full amount. Fresh Start has expanded this program so that the IRS now has added flexibility when analyzing your ability to pay. This makes the program available to more taxpayers. In general, it will accept an OIC if it believes that it cannot expect the full amount from you within a reasonable amount of time. However, the IRS will not accept an OIC if it believes you could pay the amount owed through a payment agreement or as a lump sum. Before approving an OIC the IRS will look at several different factors including your income and assets before making a decision regarding your ability to pay. IRS.gov has a tool called the Offer in Compromise Pre-Qualifier you could determine whether or not you might be eligible for an OIC.

In as few as two years

The changes that have made to the Offers in Compromise could help you resolve your tax problems in as few as two years compared to the four or five years in the past. These changes include:

  • The calculation for your future income has been revised
  • You are now allowed to repay your student loans
  • You are also allowed to pay delinquent state and local taxes
  • The Allowable Living Expense allowance category has been expanded. For example, you can now include as part of your allowable living expense things such as credit card payments and bank fees and charges.

Other things you need to know

There are some other important things you need to know about paying your back taxes. One is that you now may be able to get a short amount of additional time to pay your tax in full. You can request this through the Online Payment Agreement application at www.IRS.gov or by calling 1-800-829-1040.

Use a credit card

Second, you can now pay your tax bill by using a credit card. This could be a good deal if the interest rate on your card is lower than the interest and penalties you would be required by the Internal Revenue Code. If you think this idea might make sense, contact Link2Gov at 1-888-9PAY-TAX or www.payUSAtax.com.

Online payment agreement

If you owe $25,000 or less in combined tax, interest and penalties you can ask for an installment agreement using the Online Payment Agreement application at www.IRS.gov.

User fees

If you request an installment agreement and the IRS approves it, you will be charged a one-time user fee. If it’s a new agreement the fee will be $105 or $50 if you have the payments deducted directly from your bank account.

You don’t need professional help

Finally, you may have heard those radio commercials offering to solve your tax problems for you. Some even refer to the Fresh Start program. You really don’t need to go to any of those companies for help. You could go to IRS.gov site, review the information available and then determine if and how Fresh Start could help you. The IRS does want to give you a fresh start and it provides all the information you would need to take advantage of this program.

Solve that tax debt with a fresh start and sleep better nights. Go to www.irs.gov, and learn all about the Fresh Start program and how you could use it to resolve your income tax problems. It could be a lot better than those night sweats.

Three And A Half Good Ways To Get Debt Relief And One Terribly Bad One

Are you having such a hard time with debt that you just can’t see anyway out and that the whole idea of debt relief seems like a joke? Well, it’s not. There are ways that you can get relief from those debts – depending on how much trouble you’re in.

1/2. If you have a reasonably good credit scorewoman needs debt solutions

We call this the one- half way to achieve debt relief because it’s based on the fact that most of your debts are credit card debts and that you still have a reasonably good credit score. If this is the case you should be able to transfer the balances on your credit cards to a new one with either a very low interest rate or a 0% interest rate. If you could qualify for a 0% interest balance transfer card you’d not only consolidate your debts but would have anywhere from six to 18 months interest-free. This would give you time to get your balance paid down or even paid off, which would definitely provide debt relief.

1. If you own your own home and have some equity

If this is the case you should be able to get either a home equity loan or homeowner equity line of credit to pay off your outstanding debts. However, you’ll need enough equity for the 80% rule, which is that you will be able to borrow only 80% of your equity. As an example of this if you have $20,000 in equity you’d be able to borrow only $16,000. However, there are several advantages to this beyond the fact that you would have consolidated your debts. For one thing you should have a lower monthly payment than the sum of the payments you’re currently making. And you will have much more time to pay off the loan. In fact, the typical term for a home equity loan is 30 years and for a homeowner equity line of credit 10 years. The downside of this is that because the loan has such a longer term you’ll end up paying more interest

2. If you’re willing to invest five years to get debt relief

A third way to get relief from those debts is by going to a consumer credit counseling agency and getting a debt management plan (DMP). If you choose this option you will be assigned a debt counselor and the two of you will work together to create a DMP designed around the payments you can actually afford to make. Your debt counselor will negotiate with your lenders to get any fees forgiven and for lower interest rates. If your lenders accept your DMP your debts will be consolidated in that you will now be required to make just one payment to the service agency each month. In return, it will pay each of your creditors monthly. Your credit card accounts will be closed and you will not be allowed to apply for or acquire any new debt until you complete your program, which as noted above will probably take five years. But at the end of those five years you will be debt free.

3. If you can make monthly payments for 2 to 4 years

The third or fourth option – depending on how you’re counting – is to have your debts settled. When you hire a debt settlement company such as National Debt Relief you will end up paying only about 50% of what you owe. Your debt will be consolidated because you will now pay just the debt settlement company once a month instead of all your creditors. You may be able to choose from several different repayment programs but regardless of the one you choose it will take you anywhere from 24 to 48 months to complete your plan depending on how much you owe. Last but not least, the debt settlement company will take responsibility for interacting with your lenders and any debt collectors freeing you from those annoying calls.

4. The terribly bad option

The ultimate answer to debt relief is, of course, bankruptcy. Choose to do this and you might be debt-free in less than six months. However, do understand that not even bankruptcy will free you from secured debts like an auto loan or mortgage and certain types of unsecured debts. For example, a bankruptcy can’t discharge student loans, alimony, spousal support, family support and tax debts. Plus, it’s a terribly bad option because of the stain it would leave in your credit reports for 10 years. A bankruptcy might drop your credit score by as many as 250 points making it very difficult for you to get new credit for two or even three years. Having a bankruptcy on your record would probably increase the cost of your insurance premiums and make it more difficult for you to rent a house or an apartment. Many employers now routinely check credit reports before hiring an employee so a bankruptcy in your credit history could even cost you a job.

Think before you leap

As you have seen there are options for getting debt relief. What’s important is that you sit down, compare the alternatives and think things through before choosing one. Compare the pros and cons of each to make sure you choose the one that will fit you best. Depending on the one you choose you might have to live with it for anywhere from two to 30 years so be sure to think before you leap.