Maria asks…
Debt Reduction?
I have recently been introducted to a debt reduction program- which sounds to good to be true. I need some advise.
This program is where i stop paying my bills in order to get the credit card companies to settle. In the mean time, I am setting money away into an account known only to me. When enough money is set aside the Debt reduction company will try and settle with my creditors.
Are there any legal consequences I should be aware of?
admin answers:
This will ruiin your credit. If you wait to long before settling the account, they can take legal action against you.
Ken asks…
What debt reduction /consolidation agency that will give high discount to help pay off credit card debts?
I need help with paying off my credit card debts. There are so many debt reduction /consolidation agencies that I don’t know which one is good/authentic and will give the best rate (discount). For those who had gone through this experience, please advise. Thanks.
admin answers:
I wouldn’t use any of them they are rip off artists. They take your money and do nothing, been there done that. Go to Consumer Counseling, in every city or county, it is free, non profit and they don’t charge but they will contact all the places you owe money to and get you with lower payments and great ways of getting out of debt !! They are well known by all companies and acknowledge Consumer Credit Counseling as serious and good to work with .
John asks…
Do debt reduction services make you file bankruptcy?
I’m in about $4,000 in debt and was considering a debt reduction service. I heard that you have to file for bankruptcy to complete them. Is this true and what all is required to follow through and complete a reduction service. Is it worth it?
admin answers:
Many debt reduction services charge large fees. They also often times make you save all the money up (including their fees) before they contact the creditors. This can make someone with good credit get bad credit because some of these services recommend to people to stop paying off their debt completely. I wouldn’t use any service except maybe a credit counselor. A credit counselor will help you set a budget and create a payoff plan for your debt. Use the below link to help you find a reputable one.
You could even get away with doing everything yourself.
First pull your credit reports from the three major credit bureaus:
Experian, TransUnion, and Equifax
You can get free ones at www.annualcreditreport.com.
Then take note of how much money you owe and to whom.
If the account(s) is delinquent:
Order the accounts by either smallest to largest amount (makes you feel like you are accomplishing something quicker), or largest to smallest interest rate (will end up saving you money in the long run).
Start saving up what you owe for each account. Keep making payments on any that are still open or in good standing.
After you have saved a total to pay off the first amount contact the creditor and see if you can negotiate a reduced payoff amount…if not then you can pay in full.
If the account(s) is in good standing:
Make all of your payments on time.
Order the accounts by either smallest to largest amount (makes you feel like you are accomplishing something quicker), or largest to smallest interest rate (will end up saving you money in the long run).
Pay the minimum on all the accounts below the first one listed, then pay all the other money you have devoted to paying off debt to the first account listed.
Once the first account is paid off apply all of the money you were paying on the first account and start paying off the second account on the list. Repeat until everything is paid off.
You may want to go to the library and check out The Total Money Makeover by Dave Ramsey. It explains everything I just told you in greater detail.
Richard asks…
Does a debt reduction increase or decrease your tax refund?
I received a 1099 debt reduction for the first time, and i truly don’t know what to make of it. Is it going to hurt my federal tax refund or help it. Could someone please explain it so I can understand why I am receiving this and what it means. Thanks a lot!
admin answers:
It hurts it.
If you owed $10,000 in credit card debt and settled for $4,000; the $6000 you didn’t pay is income to you for tax purposes. You list it on form 1040, line 21 as other income.
There are exceptions for bankruptcy and insolvency. See irs pub 4681 to see if you are eligible to exclude any of it.
Powered by Yahoo! Answers