Debt Settlement: Don't Get Fooled

A few weeks ago I visited a local vocational school to talk to students about credit and to provide them with individual credit counseling assistance. One of the gentlemen, Steve, who stayed after to have an individual appointment, said he wanted to know what his credit looked like now that he was using a debt consolidation service. Steve is a single, 32 year old. He has worked in the construction trade all of his life, but was a casualty of the housing crisis and is now unemployed. I asked him how long he had been using the service and he said it was about six months. He said his payments on the debt consolidation program were half of what he had...

Posted on Jul 21, 2011

Paying the Debts of a Deceased Relative: Who Is Responsible?

We often hear from clients struggling to deal with debt collectors seeking repayment of debts incurred by deceased relatives. This article, from the Federal Trade Commission, outlines your rights and responsibilities when faced with this situation. FTC June 2009 Paying the Debts of a Deceased Relative: Who Is Responsible? After a relative dies, the last thing grieving family members may expect are calls from debt collectors asking them to pay their loved one’s outstanding debts. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, a surviving relative usually has no legal obligation to pay the debts of a family member who has died. In fact, the rights of surviving relatives are covered by the Fair Debt Collection Practices Act (FDCPA),...

Posted on Aug 24, 2009

Pros and Cons to Debt Settlement

A debt settlement is when a creditor agrees to accept less than what is owed on a principal balance of a debt. Many agencies offer Debt Settlement Services, often charging high upfront or ongoing fees when individuals are already experiencing financial distress. An individual can work directly with a creditor to settle a debt on their own but must have a lump some of money to offer the creditor(s) and be prepared for settlement negotiations. For example; Molly is behind on her store charge card and owes $1500. Molly negotiates with the creditor to pay 65% of her total debt and the creditor agrees. Molly pays the lump sum settlement amount of $975. What are the Incentives? For creditors, the primary incentive is to recover...

Posted on Aug 24, 2008