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» Your Options.. |
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| I’m sure by now you realize that it is much easier to get into debt than it is to get out, but don’t worry, there’s hope. Here at Setlan Financial we understand that everyone’s situation is different, and in knowing this so is our approach to dealing with your problems. There are several ways to tackle your current financial state, and getting familiar with your options is the only way to make the decision that is right for you. With that being said let’s review some of your options. |
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| Debt Consolidation is also sometimes referred to as a consolidation loan. In this process you may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home or property as collateral so the risk can be great. If you can't make the payments — or if your payments are late — you could lose your home. Once more, the costs of consolidation loans can add up. In addition to interest incurred on the loans, you may also have to pay what is known as points "points," with one point equal to one percent of the amount you’ve borrowed. I know, I know, this sounds bad, but in certain cases these loans may provide tax advantages that are not available with other kinds of credit, thus making them a viable option for some. |
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Also known as Debt Negotiation, Debt Settlement is an aggressive approach to debt reduction. This is often appropriate for individuals with a serious amount of debt, or as an alternative for those who are considering bankruptcy. In this process we would negotiate and work with creditors to settle your debt for a lower amount than owed. You will be required to save your money until a lump-sum settlement payment can be made. After the debt is settled, the creditor will send a letter stating the debt obligation was fulfilled, and will report to the credit bureaus that the debt has been “Settled for less than full amount”, “Paid” or “Settled”.
Did you know that creditors will usually settle for an amount less than what is owed when the debtor is under serious financial strain? They will often times do this because if the debtor chooses to file bankruptcy, then the creditor gets nothing. Creditors generally want to get as much money back as they can. Debt Settlement is a way of getting out of debt in the shortest amount of time, with the least amount of money involved without filing for bankruptcy. |
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| Let’s face it, some of us have a hard time creating and sticking to a workable budget. If you can't work out a repayment plan with your creditors, or can't seem to keep track of mounting bills, you may want to consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and will work with you to solve your financial problems. With that being said be aware that, just because an organization says or claims to be "nonprofit," there's no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make "voluntary" contributions that can cause more debt.
Take into consideration that the vast majority of so called credit counselors offer their services through local offices, the Internet, or by telephone. If at all possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs and they would be a good place to start. Most financial institutions, local consumer protection agencies, as well as friends and family may be good sources for information and referrals.
Once you find a reputable credit counseling organization they can further advise you on how to manage your money and debts, show you how to develop a budget, and offer free educational materials and workshops that you may find helpful. Their counselors should be certified and trained in the areas of consumer credit, money and debt management, and budgeting. A counselor will discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically can last up to an hour, with an offer of follow-up sessions as needed.
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| First let it be said that many people are under the misinformed belief that filing for bankruptcy is an easy way out of debt. In actuality nothing could be further from the truth and that is why personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. If you file for bankruptcy it will stay on your credit report for 10 years. You should know that in doing so it can affect your ability to obtain credit, buy a home, get life insurance, or sometimes even get a job. Still, for some it is a legal procedure that offers a fresh start for those who absolutely can't satisfy their debts. People who follow the bankruptcy rules will receive a discharge — a court order that says they do not have to repay certain debts, please note that I said certain debts which does not necessarily mean all.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. The filing fees run about $185 for Chapter 13 and $200 for Chapter 7. Attorney fees are additional and can vary.
Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, which they otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
The other form of personal bankruptcy is known as straight bankruptcy or Chapter 7. This involves liquidation of all assets that are not exempt. Exempt properties may include automobiles, work-related tools, and basic household furnishings. Some of your property may be seized and sold by a court-appointed official — a trustee — or turned over to your creditors. You can receive a discharge of your debts through Chapter 7 only once every six years.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts will vary. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on your property. Source: http://www.ftc.gov/bcp/conline/pubs/credit/kneedeep.htm
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This will sound quite simple and in truth it is but you must ask yourself this important question. If the path you have been taking has not successfully led you to the goals you wish to achieve, then isn’t it time to choose a different path?
You see, we often compound our problems by either idly sitting by, doing nothing to fix them or by making the same mistakes over and over again. Why hurt yourself when you can help yourself? With a little bit of knowledge, self discipline, and help you can get back on the right path and free yourself from the shackles of debt.
Most people don’t realize just how misleading credit cards or even credit in general can often times be to the consumer. Many of us make the mistake of only making the minimum monthly payments. By doing this you are actually not getting any closer to achieving your goal of getting out of debt. If this pertains to you then it’s time for a change! Simply put, continuing to make minimum monthly payments can take years to pay back, and cost thousands of dollars in interest alone. If you are only making minimum payments on $20,000 in credit card debt, at a 19.0% interest rate, it will take you over 50 years to pay it off and you will pay over $50,000 in interest? |
| - CNN Money |
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Setlan Financial, L.P. does not provide legal, tax, or investment advice. We do not assume or pay any consumer debts. Individual results may vary and are dependent upon several factors. Program is not available in all states. Read and understand all our contract terms prior to enrollment. |
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