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Should I consider debt settlement?

Creditors will not even discuss settlement arrangement on any account that has not reached a charge-off status (I9, R9 or O9) meaning that your credit must get trashed before you can reach a settlement. 

Along the way you will experience overwhelming collection calls, potential lawsuits, judgements and maybe even garnishment and liens.   Adding insult to injury, the interest rates and late fees keep piling up such that by the time you settle for ½, your bill has doubled.   Do the math.  You saved nothing and paid the settlement company a fine fee.  

And finally don’t forget you will be presented with a W-2 for the forgiven amount over $600 meaning, yes, you will owe taxes on whatever is settled.   Don’t be fooled.  Settlement is good for very few people except the settlement company.

Should I get a debt consolidation loan?

To obtain a low interest loan to pay off debts usually means pledging the most valuable item a person owns, such as their house. These types of consolidation loans are used to pay off high interest credit cards and concentrate on paying off the secured house loan. Now, while this option may be good for some people, there are a few fundamental problems:

  1. You are betting your most valuable item in the world that you can make all your payments on time, your home. Although almost all debt consolidation programs insist on timely, regular payments, they are likely to be more willing to work with you if you need to make one or two late payments due to a medical or some other emergency. Pledging one’s very home to pay off excessively high interest payments and debt should be avoided.
  2. By taking out a loan, you’re not taking advantage of the breaks on interest and sometimes even the principal that a credit counseling service can negotiate on your behalf.
  3. Finally, research shows that within a year after consumers transfer credit card debt to a secured loan the credit cards continue to be used and actually have higher balances than before the home loan. The FDIC concluded, “…some consumers will increase credit card and other consumer debt after a debt consolidation package is completed, thereby weakening their ability to repay outstanding debts and increasing the likelihood of bankruptcy.”

A debt management plan is easier to obtain than a consolidation loan, as there is no qualification for a DMP.

Should I consider debt settlement?

Creditors will not even discuss settlement arrangement on any account that has not reached a charge-off status (I9, R9 or O9) meaning that your credit must get trashed before you can reach a settlement. 

Along the way you will experience overwhelming collection calls, potential lawsuits, judgements and maybe even garnishment and liens.   Adding insult to injury, the interest rates and late fees keep piling up such that by the time you settle for ½, your bill has doubled.   Do the math.  You saved nothing and paid the settlement company a fine fee.  

And finally don’t forget you will be presented with a W-2 for the forgiven amount over $600 meaning, yes, you will owe taxes on whatever is settled.   Don’t be fooled.  Settlement is good for very few people except the settlement company.

 

Should I get a debt consolidation loan?

To obtain a low interest loan to pay off debts usually means pledging the most valuable item a person owns, such as their house. These types of consolidation loans are used to pay off high interest credit cards and concentrate on paying off the secured house loan. Now, while this option may be good for some people, there are a few fundamental problems:

  1. You are betting your most valuable item in the world that you can make all your payments on time, your home. Although almost all debt consolidation programs insist on timely, regular payments, they are likely to be more willing to work with you if you need to make one or two late payments due to a medical or some other emergency. Pledging one’s very home to pay off excessively high interest payments and debt should be avoided.
  2. By taking out a loan, you’re not taking advantage of the breaks on interest and sometimes even the principal that a credit counseling service can negotiate on your behalf.
  3. Finally, research shows that within a year after consumers transfer credit card debt to a secured loan the credit cards continue to be used and actually have higher balances than before the home loan. The FDIC concluded, “…some consumers will increase credit card and other consumer debt after a debt consolidation package is completed, thereby weakening their ability to repay outstanding debts and increasing the likelihood of bankruptcy.”

A debt management plan is easier to obtain than a consolidation loan, as there is no qualification for a DMP.

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Credit Advisors has been offering debt consolidation programs longer than anyone else. Our certified debt counselors can help you with credit card debt relief, credit card consolidation, consumer credit counseling, bankruptcy certification, bankruptcy questions and all other kinds of help with debt. If you want to get out of debt and have been considering debt settlement, credit management, debt management, credit repair, bankruptcy or consolidation, we provide the best debt counseling and steer you toward a plan that is in your best interest. We are not a loan company, debt settlement company or credit repair organization. We provide credit counseling and plans that work to get you on the road to debt free living.

Credit Advisors Incorporated is licensed to provide debt management plans in the states of Arizona, Colorado, Iowa, Indiana, Kentucky, Michigan, Nebraska, Oregon, and South Carolina.  They are approved or otherwise compliant in Alaska, Florida, Missouri, Ohio, Texas, and Washington.

Credit Advisor logo 4

Credit Advisors has been offering debt consolidation programs longer than anyone else. Our certified debt counselors can help you with credit card debt relief, credit card consolidation, consumer credit counseling, bankruptcy certification, bankruptcy questions and all other kinds of help with debt. If you want to get out of debt and have been considering debt settlement, credit management, debt management, credit repair, bankruptcy or consolidation, we provide the best debt counseling and steer you toward a plan that is in your best interest. We are not a loan company, debt settlement company or credit repair organization. We provide credit counseling and plans that work to get you on the road to debt free living.

Credit Advisors Incorporated is licensed to provide debt management plans in the states of Arizona, Colorado, Iowa, Indiana, Kentucky, Michigan, Nebraska, Oregon, and South Carolina.  They are approved or otherwise compliant in Alaska, Florida, Missouri, Ohio, Texas, and Washington.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

530 W Allegan Street, 7th Floor
Lansing, MI  48909-7720
877-999-6442

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