Free Credit Counseling

Don’t Look For Debt Relief From Credit Card Rules Change Legislation

    By now every credit card holder has experienced the following scenario You have very good credit, pay your monthly credit card bill like clockwork but then receive a letter telling you that your interest rate is going from 7% to 21%. You call the credit card bank thinking this is surely a mistake, only to be told it is not an error, and due to changes in the general market they have raised your rate. Not to worry, it doesn’t mean you are a bad person, it’s just the way  things are.

  

    So, to remedy this the Federal Reserve has proposed new rule changes which would change the way banks currently do business. The rules proposal may take effect as early as the end of 2008. What is proposed?  For one thing, banks would no longer be able to hike up interest rates on existing debt, Also, card companies would have to split required monthly payments evenly between the high- and low-rate balances on a card. (Currently, card companies allocate payments to the lowest interest-rate balance first, which leaves a lot of cardholders unable to make a dent in balances at higher interest rates. That's a recipe for rapidly accruing interest and a feeling of helplessness about managing debt, say cardholders. Additionally, cardholders would get a longer grace period.

   

       So, reading this you say finally! Well, not so fast. As reasonable as the changes sound, the banks are not fond of them. In fact, their position is that, if the proposed rules go into effect, they will be forced to simply stop offering low interest cards. That’s right, now they say as a result of this misguided attempt to reign there rip-off practices in, everyone will now have to suffer. The banks have posted their response on the Federal Reserve Website.

  

      So, what is the bottom line? The more things change the more they stay the same. It is still time to get out of debt. If you can, debt management, if not debt settlement, but do not look for any help from anyone else. Empower yourself with debt freedom.

 

Written By:

Steven Ciantro

American Debt Enders

help@americandebtenders.com

Member National Association of Certified Credit Counselors

 

This article may be reprinted provided the entire signature line including this permission line is used.

How To CreateYour Own Debt Management Program

Yes, it is possible to create your own Debt Management Program. It will take some self motivation
on your part, and knowledge of a few guidelines. The purpose of this article is to provide you with those guidelines. This will only work if you have enough money every month to at least cover minimum payments.

First, evaluate your current unsecured debt status by pulling out all of your statements. Get a pen a paper and write down your balances low to high, and corresponding interest rate and minimum payments. Also, and very importantly, look at the statement to see if you have or are being charged
for "Credit Card Protection Insurance". This is an insurance policy many credit card companies slip in
for a monthly fee of anywhere from 5.00 to 15.00 per month. It is supposed to protect you in the event you can no longer work, not if you quit your job, by making the minimum payments for you for a period of time. These policies are full of swiss cheese holes, and not worth it. If you find you are paying for a policy like this call your credit card company immediately and cancel it.

Second, check the interest rates you are currently paying. Chances are you may not be able to negotiate a lower rate on your high interest cards, but, it is worth trying, especially if you have a good payment history.

Third, make a monthly budget. You need to be sure you can stick to the plan and the best way to do this is to layout your monthly income and expenses. Try to find unnecessary expenses so you can apply more money to your monthly payments.

Fourth, Realize that you are no longer going to use any of the credit cards you want to pay off--absolutely no cheating, or this will not work. Keep out one card which is going to be your only credit card.

Fifth, You are going to pay the same minimum amount of money every month until all the cards are paid off. Starting with the lowest balance, only because when you pay it off you will feel a sense of accomplishment and want to keep going. On the first, lowest balance card try to make the minimum plus, 50.00 per month and on all the other cards just the minimum. The extra 50.00 is equal to the fee you would be paying to a debt management company and you should have little trouble finding it, if you are motivated. When the first card is paid off, apply all the money you were paying on it to the next card plus the minimum payment on that card. Repeat this process until all the debt is cleared up.

A note of caution, do not close any of the cards as this will lower your credit score. This approach works best if your interest rates are not higher than say 18%. If they are , you may want to consider enrolling in a debt management program to get them lowered. If you are behind on your payments and are having trouble meeting just your monthly minimums, then, you may want to explore a debt settlement program.

Written By:

Steven Ciantro
American Debt Enders
Help@americandebtenders.com
Member National Association of Certified Credit Counselors

 

Debt Settlement-Tax Ramifications-What's The Real Deal?

        As you may or may not be aware one of the arguments put out by those opposed to debt settlement programs is that in the end you will not save money because you have to pay taxes on the portion of the forgiven debt. So here is the truth concerning this point.

        It is true that creditors are required to report forgiven debts in excess of $600.00 on form 1099 to the IRS. While it is required, it does not always happen. So, what about when it is reported. Well lets look at the facts. The fact that you are required to report the savings in the first place means that you saved a considerable amount of money. Additionally, the fact that you had to enroll in a debt settlement program also means that you are probably just getting by, even though you have thankfully resolved your debt or debts. That means that the great majority of people who settle their debts are not required to pay taxes on the forgiven part of the balance. That's because of the "insolvency" rule, described in IRS Publication 908, "Bankruptcy Tax Guide." Don't let the title fool you. You don't need to have filed a formal declaration of bankruptcy to take advantage of the insolvency rule.

        Insolvency basically means that you owe more than you own.It does not mean you are bankrupt, and it is easier to claim insolvency  than you may think. If you have enough equity in a home (or other property) to outweigh the total of your liabilities (debts), then you have a positive net worth, and will likely have to pay taxes on the forgiven debt amounts. However, the majority of people in serious debt trouble have a negative net worth, and are therefore insolvent. The way it works is that you can offset the canceled debt up to the amount by which you were insolvent at the time you did the settlement.

        Remember, your goal is to achieve self empowerment through debt freedom. If you are in a settlement program and need more information on this topic, please consult your tax professional for guidance.

Written By:
Steven Ciantro
Certified Credit Counselor
Member National Association of Credit Counselors
516-476-5903

This article may be reproduced in whole provided the entire signature line is used including this permission line.

Debt Relief Internet Communities

       As those of you who read my newsletter and blog articles know I am always interested in bringing youhelp for debt relief and knowledge for self empowerment. In the interest of doing so I have come across an internet community with 117,000 members strong, all chatting and supporting each other in their quest to lead debt free lives. Whether you have questions about debt settlement, IRS issues, student loan debt or anything else related to debt and would like to know you are not alone, please feel free to visit:
http://www.debtconsolidationcare.com/credit-counseling.html, register and jump into a forum. And, of course, you can always email me directly with a question.

Written By:
Steven Ciantro
American Debt Enders
Help@americandebtenders.com
Member National Association of Certified Credit Counselors

This article may be reproduced in full provided the complete signature line is used including this permission line.

Exactly When Do My Creditors Get Paid In A Debt Settlement Program?

   

      So much confusion surrounds this issue, that it is time for this article to be written, and hopefully read. When debt settlement bashing takes place by the less informed, it almost always contains the following “I was told to stop paying my creditors and just pay them (them being the settlement company or settlement attorneys) but they just kept the money and never paid my creditors. Another one is “I owed more money after 6 months, then I did when I started the settlement program”. Do these statements mean that the settlement program was a scam? The answer is, no, at least not based on the former two assertions.

 

      Debt Settlement can be tricky business, but it also can be an absolute lifesaver. he key is understanding the settlement program guidelines. So, to answer the title question, your creditors do not get paid on a monthly basis in a debt settlement program. And sometimes your creditors, whether the original creditor, or a collector can be less than cooperative. In a debt settlement program a monthly payment is made to the debt attorneys or the settlement company on a monthly basis. That money is used to do two things. 1-pay any fee you are being charged for the service , and two-accumulate in a savings account or settlement trust account until it reaches enough money to settle one of your debts. Did I say one? Yes, unless you have a bunch of money to fund the actual settlement account, the money has to accumulate and then each of your creditors is settled with. Again, except for unusual circumstances, your creditors will not be receiving any monthly installments. So, they will be reporting you late on your credit report and probably still attempting to collect the debt, to varying degrees.

 

      All of the fees and the exact distribution of money that you pay and where it is going must be completely disclosed to you at the outset of the program If it is not, I suggest you run for the hills and find another settlement company. A reputable settlement company will make full fee disclosure as well as any guarantees at the outset. They will also make a full program disclosure, things like, how will this program effect my credit report. Will I receive creditor phone calls? How should I handle credit and collection phone calls? If you are currently paying your unsecured debt on time, and expect to be able to continue to do so, then enrolling in a debt settlement program because you want to save money, is very foolish, and you are only inviting trouble. Debt settlement programs are for people who are drowning in debt and cannot make minimum payments, and are not candidates for bankruptcy or have a moral aversion to it. If you need credit restoration services after the program is done please visit: vrtechmarketinggroup.com/aciantro/  The programs work, but please go in with your eyes open, and maybe we can together stop the naysayers and propagandists.

 

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Written By:

Steven Ciantro

Member National Association of Certified Credit Counselors

American Debt Enders

Help@americandebtenders.com

 

This article may be reprinted in its entirety provided the entire signature line is used including this prrmission line.