Debt Settlement

Not being able to manage debt - which is just an extension of not being able to manage one's personal finances - is a major cause (through stress) of many health as well as marital difficulties. It's therefore important to learn how to effectively control your debt; and if it's already out of your control, what you can do to survive the situation.

Your Rights in Debt Collection

The federal government mandates specific rights for consumers with regard to debt collection and credit reports. Individual states may provide additional rights, as well. There are two federal laws with which you should become familiar in order to protect and exercise your rights: the Federal Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).

The Colors of Credit: Red Flags and Black Marks

Consumer debt today is at an all-time high, and it continues to grow. Throughout the early years of this decade, there has been steadily increasing apprehension among economists about these higher debt levels. Analyses (and common sense) suggest that higher levels of consumer debt will eventually lead to higher delinquency and default rates.

Two Types of Debt

When lenders evaluate your credit report to see what kinds of accounts you have, they'll look at some debts more favorably than they will others. If you're focusing on getting out of debt, you first need to understand which debts are considered bad and which ones are viewed as good.

The Trap of Easy Credit

As more people utilize it, more merchants come to the conclusion that they need to accept it. And, as more merchants accept it, more consumers tend to use it. That would explain why in today's marketplace everyone seems to want to offer credit. Many store employees have been trained to ask if you'd like to open a charge account whenever they see you attempting to pay by cash or check.

Secured-Debt Difficulties

Non-secured lenders are often more flexible about working with customers that are having financial difficulties because they basically have to be - their prospects of being repaid are only as good as the borrower's ability to pay). Conversely, secured lenders (creditors who've loaned money that's backed by specific collateral) are not always quite as agreeable.

Re-Aging Delinquent Accounts

Re-aging your credit accounts is a technique that can be used to help clean up your credit history, particularly if you only had a brief problem and are now back on firm financial footing. Basically, when an account is re-aged, it's no longer considered past due. The creditor simply reclassifies the account as "current."

Personal Bankruptcy

Far from a no-cost solution, bankruptcy can subject the debtor to the requirement of parting with at least some assets before the process is complete. However, it will not force the sale of everything that is owned. Previously, one of the first things that generally came to mind when discussing bankruptcy was the discharge of all debts.

Negotiating with Creditors

Negotiating with creditors is certainly not an easy task, and your job is to protect your own interests while at the same time honoring your financial and legal obligations. And despite what they may say, collection agents do not have your best interest at heart. They're not concerned about your problems; they simply want to get you to pay the money that's due them or the company that they represent.

Be Careful with Credit Counselors

There are a large number of companies and individuals that attempt to pass themselves off as credit counselors in order to capitalize on the misfortunes of those who are in severe debt. To help you identify who these unscrupulous entities are, the Federal Trade Commission (FTC) has developed a list of questions that you should ask to determine if a particular credit-counseling agency is reputable.