Why would a creditor settle for less??

Q. Why Would a Creditor Agree To Accept Less?

A: The primary reason a creditor will accept a settlement is because it is cost effective for the creditor, plain and simple. The degree of the discount (how much they will forgive) will vary case-by-case; therefore, a creditor will take into account many factors when determining their bottom line on accepting a settlement.

The primary factor creditors take into account is what percentage of the debt is likely to be collected in the future if they do not accept an offer now. The other factor creditors look at is what is the likelihood of collecting the full debt through normal collection activity or through the legal system.

Before they agree to any settlement, they will often take into account, debtor's income, the state they live in, the age of the debt, type of debt, debtor's assets, etc.

Professional negotiators will put a case together that will make the creditors understand that it is in their best interest to settle the debt and accept their offer.

Bankruptcy Vs Debt Settlement

Q. Is Debt Settlement like Bankruptcy?

A: There is a major difference between Debt Settlement and Bankruptcy in many areas. Chapter 7 Bankruptcy remains on your credit report for a minimum of 10 years, whereas your charged-off accounts (the derogatory accounts) may remain on your credit file for only 7 years. Sometimes, these may be removed by a competent credit repair firm earlier. But be advised that most credit repair companies will just take your money and not deliver the promised results.

Never enter a Debt Settlement program, under the assumption that you will get the negative accounts removed in less than 7 years. To be safe, base your decision on the 7 year rule, then, if you are successful in removing negative accounts earlier, it will just be frosting on the cake.

Bankruptcy reporting on your credit file may also affect other areas of your life. Bankruptcy is a PUBLIC RECORD. Most counties report recent bankruptcies in the newspaper every month or every quarter. The is also a publication that most lenders subscribe to the provide them all the recent filings. Bankruptcies filings can be found at the county registry as it is considered public information.

So its important to understand that a bankruptcy is not easy to hide from and is considered public information.Most employers pull credit files on potential candidates. It is likely that the candidate without bankruptcy will have a better chance at the position. Additionally, some employers will not hire an individual with a bankruptcy on their credit file, period. Lastly, some positions will absolutely exclude a candidate with a bankruptcy. This is especially true for security jobs, high level management jobs, jobs at banks and financial institution and many other types of positions.

Bankruptcy can also cause issues with renting. Many landlords will not rent to individuals with a bankruptcy file. While, landlords cannot discriminate, they may legally not rent to someone based on their credit profile.

Bankruptcy can also exclude you from loans in the future. While its true that some creditors will grant credit after a person files bankruptcy, (although there is typically a waiting period) some creditors will not grant a loan to anyone with a bankruptcy on their credit file. Most loan applications ask if you have filed bankruptcy in the past 10 years, and some actually ask if you have ever filed for bankruptcy. Although the question – have you ever filed for bankruptcy may not be a lawful question, nonetheless, if you do not answer it, it will raise a red flag and if you answer “no” you will not be truthful.

No matter how you cut it, bankruptcy can affect many areas of your life and should be avoided at all cost. It should be your last resort. You should not file bankruptcy until all your options have been exhausted or at the very least explored, unless you have come to the decision that you have no other viable options.

Holiday Spending Habits

The holiday season is just around the corner and you may be thinking about all the holiday costs. We agree that Christmas should be a wonderful time of year and can be if you keep spending under control.

Many people sacrifice quite a bit to supply Christmas gifts for loved ones. A recent article on British news site “24/7” stated that the average Britain spends $351 dollars per family for holiday gifts. In contrast, American families spend an average $859 per holiday according to the American Research Group.

Are Americans too caught up in “keeping up with the Joneses”? It is a good question, especially when considering the credit card debt that builds after each Christmas season.

While many may make a point of saving for a car or for their child's education, few people plan ahead for their annual holiday spending. If you are paying down debt, it may be time to cut back on the Christmas spending. You don’t have to skip the holiday, just be more like the British and spend less. Or you could decide to make a gift or give a gift of your time to a family member rather than spending cash.

But we understand that holiday cash requirements can arise and times get a little tougher around the holidays. Therefore, Achieve Security has programs designed to help get you through the seasonal crunch.

Too often, we see clients drop out of their debt program entirely without discussing their options. We would be happy to discuss reducing your payments during November and December. But remember, any decrease in payments will increase the time necessary to free you from debt. Still, it is better to stay with your program through the holidays so that next year can truly be a happier New Year!

Please call our client services department at any time for more details.

Consumers Say Recession is Here, Focus Shifts to Debt

According to credit and collection news “A recession has occurred whenever the Sentiment Index has declined as much as it has fallen during the past year, including the recessions occurring from the mid-1950s to the early 2000s,” remarked Richard Curtin, director of the survey, which found that consumers were nearly unanimous in the opinion that the economy had already slipped into recession.

Consumers have adopted much more cautious spending plans, and are shifting more toward repaying debts and rebuilding their savings. The expectations index fell over 31% in March of 2008. This same index fell by 24% prior to the 1990 recession.

The majority if consumers receiving the tax stimulus package show indications that they plan to pay off debt and rebuild savings.

“Consumers are now more in favor of repaying credit cards and rebuilding their reserve funds so they have the needed financial flexibility to handle any future twists and turns in the economy,” Curtin said Friday.

As we pointed out last month Achieve Financial Security encourages this plan and suggests that in the long run you are much better off putting your money towards paying off your debt NOW rather than spending it on something else that could wait.

Especially with declining home values hitting a 20 year high. Over 35% of homeowners surveyed reported declines in home value as compared to 18% one year ago and only an only 3% 2 years ago.