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May 22, 2010


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Does anyone think that regular readers of this blog would need to consider debt settlement? Bankrupcty is different. Why do I say this? Medical bills, an adverse lawsuit decision, and the like are possibilities that are not forseeable.

Still, a valuable piece for the random reader, I guess.

This is an excellent post with the pros and cons among Chapter 7, Chapter 13 bankruptcy, and debt settlement fully explained. It will be worthwhile for anyone in this predicament to read and understand this post before taking action because though bankruptcy and debt settlement leave one's credit record in some kind of mess, there are times when one is better than the other.

I would hope this blog is about helping people at all stages of financial enlightenment.
If this helps even one person struggling with this type of decision, then it is worth posting.
Those of us who are in a better spot and can add encouragement and guidance rather than judgement.
To those struggling with these decisions, CCCS should always be your first stop for advise. They are without agenda, and very good at being objective and giving you education and options. All of the other "debt/credit" services available require a THOROUGH investigation.
I haven't heard of any who have a good reputation.
Second is the realization that it took some time to get into this situation and it should take some time along with introspection and education, to solve the problems. As a financial counselor, the quicker the fix the the greater the chance of relaps.
Good luck to everone contemplating these actions.

So important to factor that settlement can result in a reduction in the amount owed. Consolidation and counseling are the big buzz words when it comes to debt relief. Settlement, when possible is could be a dream come true for those facing troubling debt.

as you said, for some people settlement is the best option, and i would say that bankruptcy of any kidn should be your last option. Getting a chapter 7 filing is very hard nowadays, and most will not qualify. And using CCCS or a consoldiation does nothing to help you reduce how much you owe. If you already cant afford your monthly payments, CCCS will not work, and a reputable debt seetlement company should be found to help you out of your financial problems.

Preferred Financial Services

As a debt counselor, I never recommend a debt settlement company. If you do want to do debt settlement, you should do it yourself. Generally the only way it works is if you owe small amounts, have limited income, and have a lump sum available to pay the amounts in full. You generally have to be at least 3 months behind for your creditors to settle with you. Also, you will owe taxes on any difference. If you owe large amounts or have a steady income, your creditors are likely to sue you before a debt settlement company (even a reputable one) actually pays them anything.

If the total amount owed is less than $5,000, I definitely suggest debt settlement over bankruptcy. But again, do it yourself. Don't pay a company 10% and wait for some future "result".

It would appear that this blog is infested with CCCS employees. Some of what is stated above, is accurate, or close enough to accurate. But there are many things stated that are completely false. To begin with, CCCS (many times confused with consolidation)leaves a consumer absolutely untaouchable in the credit world; a credit leper. Having spent many years as a credit underwriter and loan originator, it is almost a unilateral understanding that with an inordinately high drop out rate from CCCS (the only drop out rate that is higher is Chapter 13 Bankruptcy, itself), generally, the next step for the consumer, usually, is Bankruptcy; and which lender wants to see their loan dragged into a BK? Yes there are times when CCCS could prove to be benficial. When you're dealing with a low debt load that can be managed in a relatively short period of time. Not all creditors go along with CCCS as a viable option. (Some will actually deal with a settlement team and NOT a CCCS group)Similarly, many creditors will not deal with a consumer, with regards to settlement, due to the unstable nature of the transactions. Spend all that time dealing with a consumer on a settlement percentage and then they want to break it into payments for the next couple of years. Creditors want it in lump sum, most times.

CCCS companies are generally set up for the benefit of the credit card company, not the consumer. Yes you will have to pay back 100% of the balance PLUS interest (at a reduced rate - instead of 29%, you might even see 15% or lower) plus the CCCS fees (of course most of their compensation is derived from the credit card company themselves, not unlike some collection agencies.

But lets not overlook the reason that any of these programs are in place. Especially in these times, it is for people who are undergoing a financial hardship and cannot pay their bills. Maybe they lost one of their household incomes and cannot replace it. Maybe major medical has reduced their income to the meager pittance that SSI provides. Maybe there are a host of reasons why there is a financial hardship. Bottom line is, many of these folks cannot, or will not be able to continue along the same path without certain financial ruin. CCCS, Settlement, Consolidation, even BK. They're all there to help. Some cicumstances provide better assistance, both long term and short term. Other remedies fixate on one or the other (long term or short) If an individual can pay back their debts in a reasonable period of time, then they should. When circumstances happen beyond their control and makes that impossible, then it's nice to know that their are resources available. Settlement isn't always the best solution. CCCS isn't always the best solutions. Consolidation isn't always the best solution. BK (7 or 13) maybe sometimes (though rarely) be the best solution. The point is, a family in financial trouble shouldn't always fall prey to the preacher who has a vested interest in the final outcome. They should consult with a professional that can unbiasly consider all options, without prjudice, and advise in the best interest of the consumer. PERIOD. All this mudslinging and mis-information. It's no wonder the consumer is so confused. Yes, there are some bad actors out there that will give a black eye to any industry; settlement, CCCS, banking, congresspersons, etc., but there are many well trained professionals with integrity and grit that will delve into an individuals specific circumstances and report the true findings AND provide information regarding the pitfalls of each election.

Hi Jessica

Well, we have some highly opinionated people commenting here including DannyM. The truth of the matter is some people need these services, in many cases they have no other choice and will listen to the first person who says that they can help.

What most people do not understand is that the "credit repair agency" is making money off their situation and that many credit granting companies will work directly the client if they know that this is the only way to get paid.

DannyM is right when he says "They (consumers)should consult with a professional that can unbiasly consider all options" but I am not aware of very many professionals who will provide free advice.

The bottom line is that consumers really need to be more responsible for their credit situation and if they have a real problem, do the research before you commit to any type of debt settlement program.

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