Blog Layout

Debt settlement companies: your best friend or worst foe?

admin • Sep 30, 2013

Given the current condition of our economy, financial debt has become a pitfall for many consumers. These conditions have brought forth many consumers. These conditions have brought forth many who claim to be offering a helping hand to such consumers, a way out of their tangled web of financial despair. Just as there are legitimate resources available to consumers, there are just as many, if not more, deceptive practices that will only drive you deeper into financial distress. I’m sure we’ve all seen and heard the countless commercials for debt settlement companies that promise to “settle your debts for pennies on the dollar.” But you really need to think about the statement. “Pennies on the dollar” could actually amount to 50 to 70 cents on the dollar. Put it that way, it doesn’t sound quite as appealing, does it?

Let us dig a little deeper into this phenomena. Did you know that any debt that a debt settlement company settles which exceeds $600 will need to be claimed by the consumer as an income to the Internal Revenue Service? So, if a consumer settles $100,000 in debts, $50,000 of that must be claimed as income with the IRS. In addition, the debt settlement company must receive a fee for their service, which is a percentage of the total debt and is often deducted prior to the actual creditors. So let’s put this all together: if you are paying the debt settlement company a percentage of your debt, paying creditor, and having an additional portion of funds claimed as income by the IRS, how much money are you really saving?

In the past three years I’ve encountered countless consumers who have fallen victim to some of more unscrupulous settlement companies, making monthly payments to them for over a year while no payments were being made to the actual creditors- which in many cases caused the accounts to be referred to collections, thus inflicting even more damage to the creditor’s history.

Furthermore, a debt settlement company cannot prevent a creditor from sending an account to collections or even pursing legal actions against a consumer during the settlement process if they are not being paid.

While there surely are legitimate debt settlement companies that do indeed help consumers escape their financial dilemma, many of them are under government and local state agency investigation for illegitimate practices, so know what to look for and what to avoid.
Most importantly, ask questions. Get all the facts before you sign on the dotted line.

Red light camera tickets a credit risk

By admin • 02 Oct, 2013
Red light camera tickets a credit risk – About a month ago I started getting calls from banks and mortgage companies that their loans all over Albuquerque were falling through for auto and mortgage loans. The reason? Years of red light camera tickets recently went into collections, all at one time, and thus put on the credit reports of Albuquerque consumers. Sure enough, I had many clients come in to have meetings to see if they were credit ready wise. Scores were knocked down between 35 and 45 points for each collection entry for these red light tickets.

Keep lease judgments off credit history

By admin • 02 Oct, 2013
Keep lease judgments off credit history – I have seen many cases on my office of consumers with judgments on their credit reports due to early termination of a lease. In many cases the lease was walked out on due to a hostile living environment. Whatever the case, there are things to get this mark removed from your credit history.

Don’t let someone else’s credit problems slow you down

By admin • 02 Oct, 2013
Don’t let someone else’s credit problems slow you down – Cross-referencing of others on your credit report – credit information that erroneously shows on your report because another person shares identical or similar name – can cause great financial hardships and has become an epidemic. I get one to two cases of cross referencing, and if the person you’re being cross referenced with has negative credit history, this will completely shut down your ability to get A+ credit.

Your own personal credit FAQ

By admin • 02 Oct, 2013
Your own personal credit FAQ – I get a lot of questions at Credit Rescue Now, Where we counsel consumers about financial landscape and how to make sure their credit remains strong and sound. I thought it would be helpful to put together a list of frequently asked questions and answers. I hope this information is helpful.

Take care of your credit while renting

By admin • 02 Oct, 2013
Take care of your credit while renting. People know what major financial step home ownership represents, but we often overlook the financial and credit implications of renting an apartment or home. There are some important things to consider.
More Posts
Share by: