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Are you aware of the benefits of debt management plan?

Posted on September 24, 2012 by admin| Leave a comment

Debt management plan can be beneficial for you, if you’re struggling to keep up with your monthly payment. The credit counselors associated with the debt management companies can help to negotiate with the creditors to lower the monthly payment. The counselor may determine a budget plan after reviewing your financial situation. He may conduct a credit counseling session in order to guide the consumers to inculcate a good spending habit. Therefore, enrolling in a debt management program can help you avoid filing bankruptcy. In order to know about other benefits you need to continue reading the article.

Here are some of the advantages of debt management plan:

1. Negotiation with the creditors: The credit counselors associated with the debt management company can negotiate with the creditors on your behalf to lower the interest rate on the principal balance. Your monthly payment is reduced once you manage to lower the interest rate. The skilled counselor can negotiate to waive off late fees and penalty charges in order to make the owed amount affordable to pay off. Therefore, a debt management plan can help you pay off the debts quickly.

2. Reduce in the number of collection call:
There is a significant reduction in the number of collection calls when you enroll in a debt management program. If you get harassing calls from the creditors, then the debt arbitrator may sent a certified letter to the creditors requesting them to cease communication. Therefore, the creditors may avoid contacting you when you’re represented by the debt arbitrators.

3. Lower your monthly payment: The debt arbitrators negotiate with the creditors to lower the interest rate on the principal balance. When the interest rate is lowered it may help to reduce the monthly payment to make it affordable to pay off.

4. Freeze on interest as well as other
charges: During a debt management plan, the lenders may give their consent to freeze in interest and other charges. In this situation, you may have to prolong the repayment term but you’re not required to pay more on the interest rate. Therefore, a large portion of the payment goes towards paying the debt, rather than the interest. As a result, you can pay off your debts more quickly than you actually imagine.

5. Improve your credit history and score:
The effect of DMP is not as severe as filing bankruptcy on your credit history or score. When you enroll in a debt management program your unsecured delinquent accounts may be closed and it may affect your credit history. Generally, consumers who have defaulted on payment enroll in a debt management program. Therefore, enrolling in a debt management program may not further affect your credit report. Once you start paying off your debts, you can manage to improve your credit score.

Therefore, the above mentioned advantages of debt management plan are enough to avoid filing bankruptcy. Remember, filing bankruptcy may blemish your credit report for 7 to 10 years. You may not get a new loan as your potential lenders may consider your high risk borrower.

By Andrew
Jackson

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Debt Collection Laws USA

Posted on August 28, 2011 by admin| Leave a comment

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from debtor.  Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

The Act covers personal, family, and household debts, including money debtor owe on a personal credit card account, an auto loan, a medical bill, and debtor mortgage. The FDCPA doesn’t cover debts debtor incurred to run a business.

A debt collector may not contact debtor at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless debtor agree to it. And collectors may not contact debtor at work if they’re told (orally or in writing) that debtor is not allowed to get calls there.

If a collector contacts debtor about a debt that debtor may decide after contacting the debt collector that debtor don’t want the collector to contact debtor again, tell the collector – in writing – to stop contacting debtor. Make a copy of debtor’s letter. Send the original by certified mail, and pay for a “return receipt” so debtor’ll be able to document what the collector received. Once the collector receives debtor’s letter, they may not contact debtor again, with two exceptions: a collector can contact debtor to tell debtor there will be no further contact or to let debtor know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector debtor owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue debtor to collect the debt.

If an attorney is representing debtor about the debt, the debt collector must contact the attorney, rather than debtor. If debtor don’t have an attorney, a collector may contact other people – but only to find out debtor address, debtor home phone number, and where debtor work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about debtor, a debt collector generally is not permitted to discuss debtor debt with anyone other than debtor, debtor spouse, or debtor attorney.

Please read the complete article at Debt Collection Law USA 

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Debt collection practice in California

Posted on August 23, 2011 by admin| Leave a comment

From the year 1977 California had certain laws that protected the interest of consumers from unethical practices of unscrupulous debt collectors. Rosenthal Act was initiated in 1977 which is now strengthening Fair Debt Collection Practices Act in California. These laws regulate the methodologies of both original and secondary debt collection practices. They lay down strict instruction and guidelines of colleting debt in the proper way. They also clearly describe and categorize what methods and approaches of debt collection agencies would be deemed as unethical or illegal pertaining to debt collection efforts. There is procedure that ought to be followed by a debt collector right from the time of his first contact with a debtor.

 A creditor has all the right to sell an account of a debtor to a collection agency at a discount price. Thereafter, the collection agency pursues the debtor in their effort to collect the amount of debt. Many times original creditors do not intimate the debtor about selling of his account. As per law, creditors in California do not need to inform a debtor about this account transfer. But, the only exception is with regard to Health Clubs. Health clubs are obligated to inform a debtor about the selling of their debt accounts.

Debt collection agency may contact a debtor but not before 8am in the morning and 9pm in the evening. A collection agency must tell the purpose of calling to the person on opposite end of the line. After telephonic conversation it is customary on part of the debt collector to send a mail to the debtor detailing the status of the debt, unpaid balance along with ways to dispute it.

Once the debtor is handed over the letter or mail from the collection agency, he is within his rights to dispute it. The debtor will dispute asking them to show proofs of original agreement. Then the collection agency is obligated to reply him and substantiate the validity of the debt by furnishing documents of proofs within 1 month’s time. Any unnecessary delay will only complicate the situation. If the dispute remains unsolved, both parties can take recourse to law to solve the issue.

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Pay Debt through Chapter 7 Bankruptcy

Posted on August 23, 2011 by admin| Leave a comment

If you are struggling to make your ends meet as your monthly repayments are relatively higher than your disposable income, chapter 7 bankruptcy can help you out. Although the chapter 7 bankruptcy laws were tightened in 2005 to prevent abuse and there are new restrictions on filing, it is still possible for most people to qualify under these new set of guidelines and attain a debt free life by declaring personal bankruptcy in just 4 to 6 months.

Chapter 7 Bankruptcy Laws

The Bankruptcy Abuse Prevention and  Consumer Protection Act 2005 came into effect to ensure that the people, who could afford to repay their debts, should pay it off. This also gave birth to a new test, which compares that person’s
income to the median for the state they live in. Those, who have their income below the state median, would qualify for chapter 7 bankruptcies.

Paying Off Credit Card Debt and Non-Exempt Assets

Although having non-exempt assets won’t refrain you from paying off debt under the new bankruptcy laws, it is a huge consideration. During chapter 7 procedure, you are entitled to keep exempt assets, such as a reasonably priced car or primary residence, but if you have a second home, luxury sports car or valuable antiques, you are expected to hand over those items to a trustee, so that these can be sold in order to repay your outstanding debts. As personal bankruptcy can lead you to the loss of your assets you must think twice about its alternatives like chapter 13 or debt settlement, before filing for chapter 7.

Alternatives to chapter 7

If you have a steady cash flow and have some disposable income to offer your creditors, you must consider other debt solutions like debt management plan or debt settlement program. These debt relief plans work by improving affordability or by reducing the amount owed.  Although paying off credit card debt takes longer than filing chapter 7 bankruptcies, it has less dramatic impact on your credit rating. Bad credit has its negative consequences as well. A bad credit means that the attainment of future credit will not only become more expensive, but also more difficult. However, it’s possible to get federal student loans, poor credit history finance or even a bankruptcy car loan shortly after discharge.

Keep the above mentioned points in mind and make sure you seek help and guidance of a reputed credit counselor, before you begin the proceedings of chapter 7 bankruptcies.

This article written by Donna Nell, USA specialising in chapter 7 bankruptcy.

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DEBT COLLECTION BUSINESS INDIA

Posted on June 17, 2011 by admin| 1 Comment

The debt collection business is a relatively new concept in India. Like many modern tools, this business was also introduced to India by foreign businesses who came to India in horde in early 90’s and brought with them myriad modern tools, practices and systems. Like other sectors, banking also witnessed a large scale foreign firms setting up their operations in India. Retail consumer loans became an important product in the portfolio of the banking industry. Easy availability of credit also bought with it the problem of payment defaults, which eventually led to the emergence of debt collection agencies.

In India, debt collection was never treated as a specialized job and was always treated as one of the jobs that legal departments of the banks and financials institutions were required to undertake. Legal department would approach the collection job strictly as a legal issue rather than doing it with the objective of revenue collection. For legal department, the only tool available was litigation and no other non-litigation tool was applied. Long and winding legal processes, the Indian legal system could not help the cause of the legal departments of the banks. On the other hand, foreign banking firms introduced the concept of specialized debt collection services. Debt collection services became one of the many services that began to be outsourced to specialized agencies. These agencies mushroomed  in metropolitan cities including Delhi and Mumbai. These agencies were initially supported by the respective banks; they were very small and their staff was uneducated, being not aware of anything about the concept of the debt collection. The agencies usually worked in a specific area of the city for only one client – mostly a bank.
The third-party debt collection industry plays an important role in the Indian economy. The industry employs  hundreds of thousands of Indians as collection professionals, who collect on past-due accounts referred to them by various credit grantors, such as credit card issuers, banks, retail stores, hospitals and other health care services, or by government departments. Business purchases of this industry and personal purchases by its owners and workers ripple through the economy, supporting hundreds of thousands more jobs across the country. Further, the industry benefits the economy by recovering billions of dollars in delinquent debt each year that would otherwise go uncollected. The economic benefits of third-party debt collection are significant. Citibank has been the pioneering company in India which started hiring the services of debt collection agencies to collect the debts.

Read the complete article at Debt Collection India

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