Here are 10 Tip-Offs that you’re heading for a debt disaster. See how you score.

1. Your bank account is consistently overdrawn.

If you keep getting those thin envelopes in the mail from your bank telling you that your checking account is overdrawn, it’s time to regroup and find out why you’re not keeping up.

If you keep getting those thin envelopes in the mail from your bank telling you that your checking account is overdrawn, it’s time to regroup and find out why you’re not keeping up.

2. Your credit card balances are rising.

Compare the balances on your credit cards from six months ago with your balances today. Are they bigger now? If so, why?

Tip: While periodic fluctuations in your loan balances are normal, if they’re consistently rising, you’ve got to stop, examine your spending and find out why.

3. You’re only making minimum payments on your credit cards.

You’ll never get ahead by borrowing money at 15% on your credit cards every month and taking years — even decades — to pay them off. Paying interest on purchases translates into paying more for the things you buy. That new jacket you bought for $80 will end up costing up to $240. Do that long enough and you’ll go broke.

Tip: ALWAYS pay more than the minimum. If you can’t, you’re likely already heading toward a debt disaster. Talk to a credit counselor.

4. You and your partner are arguing about money.

Money is an emotional issue. It sometimes causes a power struggle between partners who have different ideas on how money should be handled. If you and your spouse or partner are haggling over bills more than usual, it’s probably because your bills are higher than usual.

Tip: Agree on a budget and a spending allowance, if necessary. Then stick to it. And if money is an issue, communicate about it more often, not less often.

5. Your savings account is busted.

Money experts agree that a savings reserve equal to half your annual salary is mandatory to ride out rough economic times, like the loss of a job or a serious illness. If you don’t have any money at all in your savings account, it’s time to re-examine your budget and see where your money is going every month.

Tip: When you get paid, pay yourself first. Use automatic withdrawal to take 10% of your check and stash it in a savings or money market account.

6. You’re juggling your monthly bill payments.

If you’re applying selective reasoning to your monthly bill payments (”Hmmm — we’ll pay the phone bill this month, but skip the cable bill”) then you’re in over your head financially.

Tip: Lose the cable and any other luxury item on your “to pay” list. In tough times, stick to the staples: home, car, groceries and utilities. You might not think about it, but 20 years ago, nobody had an Internet bill or a cell phone bill. Cut out everything until your income is greater than your out-go.

7. You don’t know how much you owe.

You undoubtedly know how much you make. Not knowing how much you owe — especially not wanting to — is a sign that you’re burying your head in the sand.

Tip: Pay as much attention to what you owe as what you make. Don’t keep your debt out of sight — or out of mind.

8. You’re keeping secrets.

If you’re unwilling to share your spending with your spouse, that’s a sure sign you’re afraid of trouble ahead.

Tip: Come clean. Keeping debt a secret won’t improve your situation. But it will keep you up at night.

9. You’ve got a credit card collection.

There’s only one reason to keep a full deck of credit cards in your wallet — because one or two isn’t enough.

Tip: Even allowing for specialty and cash-back cards, you don’t need more than three. Pay off the rest and close the accounts. And when you close an account, do it right.

10. You’re near the limit on your credit cards.

Credit cards should be for convenience only, not as the source of a continual high-interest loan. If you’re using more than 30% of the available balance, you could be hurting your credit score and heading for a problem.

We hope you’re not experiencing too many of these disaster signs. If you are, however, now’s the time to take control. First step? Sit down and look at exactly what you have, what you owe and where your money’s going. Then map out a written plan to reduce your debt.

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The President and CEO of National Debt Resolution, Ira Call said, “I am extremely delighted & pleased to have Mrs. Spragins Harris working with us. She brings a world of industry knowledge and will be a tremendous asset to our debt settlement company”.

Mrs. Harris spent several years practicing in the private sector of Arizona and Oklahoma, as well as two years working as a State’s Attorney for the Child Support Enforcement Division where she gained countless hours of in-court litigation experience. Harris’s experience and legal knowledge is profoundly beneficial to NDR and all its clients.

Mrs. Harris acquired her B.A. (cum laude) from the Southwestern Oklahoma University in December 1999 with a double major in Biology and Sociology along with her J.D. (with Distinction) from the University of Oklahoma College of Law in May 2003. Harris is an active member of the Oklahoma and Arizona Bar Associations and a member of the North Phoenix Bar Association and an active member of the Association of Corporate Counsel. Harris was also recently appointed to the Board At Large and the Legislative Committee of TASC (The Association of Settlement Companies).

When Harris was asked about her new appointment she commented: “I’m eager to help National Debt Resolution and our clients continue to reach their financial goals. In this economy, it is more important than ever to be proactive in managing financial affairs and I am committed to assisting National Debt Resolution in the growth and the expansion of their debt relief services.”

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“There are many good debt settlement companies who are helping tens of thousands of consumers resolve their debt when no other help is available,” David Leuthold, executive director of TASC, said. “Characterizing the entire industry negatively is wrong and only misleads consumers in the end.”

TASC is correcting the following statements made either by Madigan and/or that appeared in a April 12, 2010 article in the Sun-Times:

Misstatement: Labeling debt settlement companies as “scam artists.”
Fact: In 2009, TASC members alone settled more than $1 billion in debt. Consumers paid approximately $400 million to creditors to resolve that debt owed, saving approximately $600 million, thus showing the efficacy of debt settlement.

Misstatement: Companies charge “large up-front fees … (of) 15-20 percent” of the debt before a single debt is settled.
Fact: TASC limits the fees that can be taken in the early part of the program and supports fees that are spread out over time, typically 18 months or longer and average only around 6-7 percent per year.

Misstatement: “Approximately 65 percent of people who sign up drop out before any of their debts are settled” and only “1-3 percent of people who sign up have all their debt settled.”
Fact: TASC statistics show that approximately 35 percent of people finish the entire program, a rate higher than Chapter 13 bankruptcy and significantly higher than debt management plans offered by non-profit credit counseling companies.

Misstatement: Madigan’s bill “doesn’t outlaw debt (settlement).”
Fact: The permitted fees for performing debt settlement under this bill would not cover the costs of the service and effectively bans debt settlement. Meanwhile, non-profit credit counseling companies can charge fees of up to 300 percent more than that permitted for debt settlement companies under the bill.

Misstatement: Consumers should turn to credit counseling instead of debt settlement.
Fact: Many consumers cannot afford credit counseling since the service only reduces the interest rate and not the principal amount owed.
Fact: Debt settlement is an additional option, not a replacement for other debt relief help.

“TASC supports the open and honest disclosure to consumers of both the risks and benefits of debt settlement programs,” Leuthold said. “We wish the press and the Illinois Attorney General would do the same.”

About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for the debt settlement industry. TASC, founded in 2005, serves to protect consumers through an organization seal that represents best practices and standards of reputable companies. The organization also protects its member companies through lobbying efforts at the state and national levels, as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association bylaws governing business practices and ethics. For more information, visit www.tascsite.org.

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National Debt Resolution is a member of The Association of Settlement Companies [TASC]. This company has demonstrated the required business practices and standards required by TASC to display the TASC seal. To find out more about TASC, please visit us at www.tascsite.org or e-mail at info@tascsite.org.

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The good news is that you have options, but with all of the companies out there trying to make a quick buck, it is in your best interest to educate yourself to avoid being scammed. Countless articles on the Internet warn consumers of unscrupulous credit counseling and debt settlement companies. They are completely different services and can benefit you in different ways. Researching these options and educating yourself before you choose the right option for you can save you a lot of time & money.

Many articles on the Internet misconstrue what debt settlement and credit counseling services offer and focus on how these debt relief options may make your situation worse. Some articles claim that both solutions can be costly and dangerous. The truth is that if you choose a company that has high fees and does not have the expertise or established relationships with creditors, you could be asking for trouble. Any service company you use should have your best interest in mind. Choosing a company for your debt relief needs, without doing the necessary and proper research, could possibly make your current financial situation worse, rather than helping it.

This article will go in depth about how debt settlement can be used as a tool in helping you to become financially free of your overwhelming unsecured debt, along with explaining the facts of debt settlement for your better understanding. There are certain aspects of debt settlement that are very important. Keep these aspects in mind when considering a company to help you in settling your debts.

First, you need to know what debt settlement is and how can it help you. Debt settlement, also known as debt negotiation, is the process in which a skilled and experienced person negotiates with your creditors, to settle your unsecured debt for less than what you owe. Only unsecured debt qualifies for debt settlement. Unsecured debt is defined as: credit card bills, medical bills, past due utility bills, personal loans, store cards, etc. Most experts agree that federally backed student loans, mortgages, car loans, taxes, child support and things of that nature, do not qualify for a debt negotiation program. So, before you even think about debt settlement, you need to know where your debt is and what type of debt it is. Knowing whether or not your debt was a loan, line of credit or credit card may be important, as not all debt can be settled in the same manner. In addition, many poorly managed debt settlement companies will outsource their negotiation services and promise relief that they are not capable of fulfilling.

You also need to know what a good debt settlement company should have to offer you. A solid debt settlement company should have 3 basic, but very important components; an in-house negotiation team managed by legal counsel, great customer service, and proven results. Ask to see settlement letters that they have obtained through their services; personal info removed of course. It is very important that all of these components should be offered in-house and not outsourced to other companies in other locations. Any debt settlement company worth their salt will also post examples of their settlement letters to their website or some sort of publication so you can effectively see the amount of savings that may be possible if you decide to take advantage of a reputable debt settlement program.

One stipulation of debt settlement is that you must be behind on your payments to your creditors, which can take a temporary toll on your credit rating. This does not mean you should purposely go delinquent on your unsecured debt and then choose a debt settlement firm to eliminate it, however, if your credit has already been impacted by delinquent unpaid debts, this may a good time to consider debt settlement as a debt relief option. A reputable debt settlement company will analyze your debt and review your household budget to make sure that this is the right option for you.

Debt settlement companies charge a fee for their services, but in return can save you up to 65% of what you owe to your creditors. The fee is usually not outrageous and if you do your research beforehand, you won’t be overcharged. Most fees are based on the amount of unsecured debt you enroll in a program. By and large, these fees are negligible when the thousands of dollars you can save is considered. Most debt settlement companies charge between 15%-25%, but if you do your research, you can find reputable programs in the range of 12-14%, reducing the possibility that you may be overcharged.

Resources available to you, through your debt settlement company, can also help you avoid being sued by your creditor while you are saving the money for your debt to be negotiated. This does not mean that your creditors can’t or won’t sue you. Overall, creditors consider debt settlement less costly and more effective than bankruptcy.

When you find yourself falling behind on bills and feel the pressure mounting, you might be confused about what to do. You have choices which may include options other than debt settlement. Some of these options might include different forms of bankruptcy or consumer credit counseling, all of which are dissimilar.

Bankruptcy is the choice most consumers want to avoid entirely. The different bankruptcy options could have various adverse effects on your credit rating and may create public legal records that can remain for 7 to 20 years. Most people investigating debt relief, choose debt settlement because they want to preemptively seek help, before making a decision that can stay with them for such a long period of time.

Consumer credit counseling (CCC) is another debt relief option that is available to consumers in trouble. Most people mistake debt settlement and consumer credit counseling for the same type of service, which it is not. Consumer credit counseling can be costly, and in order to use these types of services, you must be willing to announce publically that you cannot manage your finances and need someone else to pay your bills. Because it is designed for people in need of a structured way of managing their money, the CCC company must report to the various credit bureaus that the consumer is not in control of their own finances and that the CCC company is paying the bills. This is often looked at by lenders as if you have filed a Chapter 13 Bankruptcy. It is considered 3rd party assistance. The consumer creates a plan with the counseling company and pays as much as they are able, for the entire length of the loan. The counseling company has control of the account, in which you deposit money that you set aside to pay your debts, which means that if you have an emergency, you may not be able to get your hands on your money for days. With consumer credit counseling you still pay ALL of your unsecured debt, the monthly fees and interest, but possibly at a reduced rate. This can double the number of years that it would take to pay off your unsecured debt, compared to debt settlement or bankruptcy, therefore costing the consumer much more in time, fees and interest.

Debt settlement and consumer credit counseling services are on different ends of the spectrum when it comes to debt relief. In a debt settlement program, you are expected to repay a reduced portion of what is owed to your creditors. Because of the relationships that some settlement companies have and their ability to negotiate to a lesser amount, to hear of a consumer saving thousands of dollars is not uncommon. Accounts entered into a debt settlement program are typically settled within 1-3 years.

With the many options that you have available and the resources you have to help you decide what is best for your situation, you might find that debt settlement is the fastest way to satisfy your creditors and restore you piece of mind. Calling a debt settlement counselor is the best way to decide if debt settlement is the right option for you. A few minutes of your time could help you save thousands of dollars and help give you a jump start to a financially secure future.

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The end of tax season is near and National Debt Resolution wants to give back and show its commitment to consumers by offering a discounted rate on their services. The company realizes that in this economy consumers need as much relief they can get.

National Debt Resolution, LLC, will offer this discount through April 15th, 2010. Interested persons are encouraged to contact National Debt Resolution, LLC,  to speak to a debt settlement specialist. National Debt Resolution, LLC,  offers a free consultation to determine your eligibility for the program.

“People are hurting financially and NDR wants to help. If everyone pitches in, we’ll get through this together. We’re putting people to work and reducing rates during tax season! I challenge others to join us!”, says Ira Call, President and CEO of NDR, Inc.

Debt Settlement is one of the quickest ways for consumers to reduce or eliminate unsecured debt. When a reputable and effective debt settlement program is employed, the debt is negotiated, thereby reducing the amount of money  and time that it will take to repay the debt. Consumers who find themselves lacking the funds to repay their debt should investigate their debt relief options and request a free consultation.

National Debt Resolution. LLC,  was founded in 2006 to assist people who are struggling with repaying their unsecured debt. The company is dedicated to its clients and to helping them on their way to a financially stable future. Competitive rates, years of experience and a team of dedicated debt professionals is what sets National Debt Resolution, LLC,  apart from the competition.

National Debt Resolution, LLC,  is a member of International Association of Professional Debt Arbitrators’ (IADPA) , the NetCheck Commerce Bureau, & the Greater Phoenix Chamber of Commerce. They are listed on Dunn & Bradstreet with a Platinum profile.

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updated 1:19 p.m. MT, Wed., Dec . 30, 2009

NEW YORK - Your past is never really behind you. Or so it seems when it comes to credit reports.

As you prepare to shape up your finances in 2010, you’ll find that improving your credit score is among the more complicated tasks.

You may be bewildered by what helps or hurts your score, by how much and for how long. Regardless of whether you understand how it’s calculated, the number you’re tagged with can play a big hand in your financial fate.

Banks use credit scores to help decide whether to extend loans, and if so, at what price. A lower score will likely mean higher interest rates on credit cards, student loans and mortgages. In the latter scenario, the difference could amount to hundreds of dollars a month.

Generally speaking, a score below 620 is considered poor; 620-659 is fair; 660-749 is good, and 750-850 is excellent. It costs $15.95 to get your score at MyFico.com.

Here are some actions you can take, now and over time, to raise your number.

What you can do now
One of the fastest ways to improve your score is to pay down your balances. How much of a lift you’ll get will depend on your overall credit profile. But paying off all balances could push someone in the 650-range into the 700-range, said Craig Watts, a spokesman for FICO, which formulates the most widely used credit scores.

This is because the portion of your credit line that you’re using — your so-called credit utilization — is a big component of your score, accounting for about 30 percent.

If you buy the standard FICO score package at MyFico.com, you can access a simulator that tells just how much certain actions will lift or lower your score. For some scenarios, you can see how your score would change over one month, versus six months or two years.

In the case of paying down your balances, note that it provides a one-time benefit. You don’t get any extra points for keeping your credit usage at a low level.

Also keep in mind that your report could reflect a high utilization even if you pay your bills on time. This could happen if your lender reports your balance to the credit bureau before you pay your bill. To avoid this scenario, pay off charges as soon as you can — don’t wait for due dates.

Another way to have a short-term impact on your score is to make payments on time. If you’ve been chronically late in the past several months, paying all your bills on time for just one month could boost your score by as much as 20 points.

You’ll also want to check for any mistakes on your credit report, since your score is calculated based on the information it contains. You’re entitled to one free credit reports a year a year from each of the bureaus — Equifax, Experian and TransUnion. To get your free reports, go to www.annualcreditreport.com (beware of sites with similar names).

To correct any information, contact the credit bureau and the lender that reported the error. The Federal Trade Commission provides a sample letter on www.ftc.gov (click on “Credit & Loans” under the “Quick Finder” tab, then “Credit Reports & Scoring” and scroll to the bottom).

Digging in for the long haul
Once you pay down your debt, improving your score becomes a game of long-term vigilance.

“One week’s good behavior isn’t indicative of future risk,” Watts said. “To improve a poor score is a long-term project.”

The key is keeping your report free of any negative marks, which can take years to recover from. For someone with a score of 680, for example, a foreclosure can zap away as much as 105 points, while a bankruptcy can shave off 150 points. A single late payment of 30 days or more can drop your score by 80 points.

Just how steeply your score falls depends on factors such as how much you owe and how late you are. But repeat offenses aren’t as damaging as the initial infraction, since your riskiness is already reflected by a lower score. So a second or third late payment shouldn’t hammer you as much as the first.

The negative marks, including late payments, on your credit report for seven years. Chapter 7 bankruptcies, which wipe clean unsecured debt such as credit card bills, remain for 10 years. And the repercussions recede only over time, assuming you stay current on all your payments.

Applications for new credit ding your score too, although to a far lesser degree — usually around five points

Finally, think twice before closing any accounts. The length of your credit history counts for about 15 percent of your score, so it’s a good idea to hold onto any cards you’ve had for a long time. Those older cards, coupled with a steady history of prompt payments, should provide a good path to an improved score.

“The people who have really high scores are the least interesting,” Watts said. “They have few accounts and always keep low balances. For a risk manager, these people are the ones who are as reliable as a Swiss watch.”

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The credit card reform bill tries to help cash-strapped customers, but companies are coming up with new ways to boost profits.

The Bill

Credit card companies are socking it to consumers left and right.

They’re hiking interest rates to as much as 36% and doubling minimum monthly payments, frustrating customers who are already cash-strapped and credit-crunched.

In an effort to curb these abusive practices, President Obama signed into law a credit card reform act in May that’s rolling out in three parts over 12 months.

At the same time, credit card companies have been hard at work coming up with new ways to boost profits while sidestepping the reforms.

“Card issuers are making sure they can make up the lost money in new ways,” said Bill Hardekopf of Lowcards.com, a research company funded by a commercial debt collector.

The first part of the law, which took effect in August, requires banks to give customers more notice ahead of major changes to their accounts, like rate hikes. Starting in February, limits will be imposed on when issuers can raise rates on existing card balances, and on new cards. In August 2010 some credit card penalty fees will be will reined in.

But no legislation can fully shield consumers from the credit card industry’s ongoing efforts to boost the bottom line.

The worst part? “All of these hikes are taking place simply because they can,” Hardekopf said.

1. Rate Hikes

Interest rates are out of this world.
“They’ve increased steadily over the past 5 years, and in general are higher than they’ve ever been,” said Josh Frank, senior researcher at the Center for Responsible Lending (CRL), who says he’s seen annual percentage rates as high as 36%.

No current laws cap credit card interest rates, according to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, so technically the sky’s the limit.

But the CARD act will help curb abusive practices. As of February, issuers won’t be able to arbitrarily raise rates on existing balances. But cardholders will still be subject to interest hikes for late payments and various other infractions.

And card companies will be able to raise their rates as high as they want, whenever they want, on future purchases even after the reform bill kicks in completely.

The act will bring protections for new customers; issuers will no longer be able to hike rates on new accounts in the first 12 months, unless the borrower is delinquent by more than 60 days or the increase is stated in the contract.

Keven Vallance recently saw the rate on his Sears card increase from 9.99% to 13.99% for no apparent reason. When Vallance called Sears Credit, which is owned by Citibank, a rep told him every cardholder’s rate is increasing by 4%.

Citi spokesman Samuel Wang said in an email that the company has “adjusted pricing and card terms for some customers as part of our regular account reviews.”

Consumer outrage is boiling over. Last month, a disgruntled Bank of America customer posted a YouTube video complaining her bank “jacked up my interest rate to a whopping 30% APR.” Her rant went viral, and BofA dropped her rate back to its original 12.99%.

2. New Fees

Fees aren’t just rising — they’re multiplying. Cardholders are getting slapped with fees they’ve never seen before.
The hitch: New laws can address only existing fees and business practices; they can’t predict what credit card companies will do in the future.

“Theoretically, they could create a fee for names that begin with ‘J,’” said Lowcards.com’s Hardekopf.

In reality, customers are seeing new annual fees, inactivity charges and more. Not of these charges are unheard of, but many fees that were unusual are becoming commonplace.

Earlier this month, for instance, some Bank of America customers were shocked to learn that their no-fee credit cards would be subject to a new annual fee.

BofA spokeswoman Betty Riess said the fees are part of a company test that affects 0.5% of all consumer accounts, and that the fees range from $29-$99.

The charges will be levied in February, and Riess said customers were chosen “based on risk and profitability” but have the option to reject the fees by canceling their accounts.

Fifth Third Bank recently introduced a $19 inactivity fee for customers who don’t charge anything for 12 months, and Citibank is hitting some consumers with a fee if they put less than $2,400 on their card annually.

To address this problem, House Financial Services Committee Barney Frank (D-Mass.) has proposed a new regulatory body, the Consumer Financial Protection Agency, which would approve new credit card fees. While the House Financial Service Committee approved the agency, it remains to be seen whether legislation will pass; lawmakers are battling over this and other reform proposals floating around Washington.

3. Higher Minimum Monthly Payments

Banks are also demanding bigger and bigger minimum payments. Chase has bumped up the minimum payment for some consumers to 5% of the monthly balance from 2%.

For someone who carries a $5,000 balance, that means the monthly payment of $100 skyrockets to $250 — a whopping 150% increase.

Consumer Union’s Pamela Banks says her organization has compiled a wealth of anecdotal evidence that indicates such increases in minimum monthly payments are widespread.

“This is making payments virtually impossible for some people,” she said. “It’s throwing people off when they were living on a tight budget anyway.”

Some good news is on the way, however. After February, card companies won’t be able to increase monthly minimum payments by more than 100%. For example, a bank cannot increase a 2% minimum payment to any higher than 4%. And this so-called “doubling” will be allowed only once during the life of the card.

4. Fewer Rewards

Say goodbye to beach vacations and new iPods just for swiping your card.

Rewards programs have been enticing shoppers to charge a purchase rather than paying cash — but card issuers are cutting back those perks.

“This is happening with a significant amount of cards,” Hardekopf said, adding that many consumers are now receiving 1% cash back instead of the 2% or 3% they once enjoyed.

American Express recently cut its Blue Card’s cash back policy from 1.5% to 1.25%. And all AmEx customers who make a late payment will no longer accrue points on their purchases — however, those points can be reinstated with a $29 fee.

5. Slashed Credit Limits and Canceled Accounts

Without so much as a call from the bank, some customers are learning their credit limits have been slashed by as much as 75%, or that their accounts have been closed altogether, according to the Center for Responsible Lending’s Josh Frank.

Citibank recently closed what a spokesman called a “limited number” of MasterCard gas cards co-branded with Citgo, ExxonMobil, ConocoPhillips and Shell.

“People go to make a purchase, and they find out about these huge changes only when they’re denied,” Frank said. “It’s a shock, and it’s been happening a lot.”

Even cardholders who don’t charge anything might find their accounts abruptly closed, Frank said. With credit losses at a record high, companies see inactive cards as a red flag and close the accounts to avoid the worry of future writedowns.

“Usually cardholders have this credit line available for an emergency, for this kind of current economic situation,” Frank said. “But now they’re turning to it when they need it, and it’s gone.”

What’s a Cardholder to Do?

Consumers must pay close attention to the terms of their contracts, staying alert to any changes.

“It’s boring reading, and it can be hard to understand, but that’s where everything is spelled out,” said Lowcards.com’s Hardekopf.

Of course, while there are laws aimed at helping consumers, legislation can’t do it all.

“As we close the loopholes on some things, they open up elsewhere,” said Consumer Union’s Banks. “Reform acts don’t cover everything, and cardholders have to watch out for their own accounts.”

And if you don’t like your credit card’s new terms? “Shop around — you are not married to your card,” Hardekopf said. “It’s a partnership, not a lifelong contract.”

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While all banking institutions, as permitted by state law, have the “right of offset” and may use it to collect on delinquent secured loans, i.e. automobile loans, not all institutions may collect on unsecured or open-ended revolving accounts. For example, federally chartered banks, such as Bank of America, Wells Fargo, J.P. Morgan Chase, etc. may not use “right of offset” to collect on delinquent credit card balances, but federally or state chartered credit unions have the freedom to do so. The important thing to remember is that if you are unsure of your banks policy or practices with regard to “right of offset”, it is very important that you pull out those contracts and read the fine print. If there is any question, MOVE YOUR MONEY. It doesn’t take much effort to change who you bank with, but the effort to get your money back when things go very wrong will be overwhelming and more often than not, you will just be out of luck!

This can happen to you:

• A husband and wife recently realized that they would no longer be able to make their $625.00 truck payment and still make their mortgage payment on time. After careful deliberation and a brief discussion with their credit union which holds their car loan, they were told that they could return their 2008 Ford Super Duty to a local dealership and avoid the repossession on their credit report. It wasn’t long before they took the truck down to the dealership and then called  the bank to inform them that it was there.

The very next morning, the wife noticed that all of their bank accounts with their credit union were empty. Every dime that had been saved for a long deserved family vacation, emergency lunch money, or any other need was gone.

Not only did the bank not tell them that the surrender of the vehicle would be treated exactly like repossession and that they would owe a deficiency balance on the account, they were not informed of the banks right to offset the remaining balance owed after the vehicle is sold. In most cases, the consumer is not notified when “right of offset” is applied. They are only informed when an explanation is need as to why their money is missing from their account.

Get back to basics. Never bank with an institution that you owe money. You know what they say about best intentions and best laid plans. Life happens and when it does, you want to be prepared.

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Unsecured Versus Secured
Unsecured means unattached.  Credit cards are just one example of unsecured debt. Whether they are Visa/MasterCard or local merchant or department store cards, most of these balances can be negotiated down to a fraction of what you owe. Unsecured signature loans and lines of credit (those not attached to personal property) will also qualify for debt settlement. Debts such as medical bills, automobile repossessions, old utility bills and past due rent are additional examples of unsecured qualified debt.

Secured means attached. Some loans are attached to your home; some to your car. Other loans and accounts may be attached to various household property or equipment. These are examples of secured debt and if you default on your financial obligations with these types of accounts, your creditors’ option is to repossess those items and sell them for what they are worth, thereby lowering, but not eliminating your debt. In most cases, you will have a great deal of money already invested in that property that will be put at risk and furthermore, you will likely owe a good sum of money on those accounts even after the property is sold. It may be wise to try and protect those items and retain them as your personal property.
Student loans, while seemingly unsecured, are surprisingly secured against your tax return. Most student loans are government backed, therefore if you default, the lender can simply make a claim with the government and the result will be seen in your future tax returns or lack of, as the case may be. Student loans may not be negotiated in a debt settlement program, just as they would not be discharged in a bankruptcy.

Federal and State taxes owed are also not qualified to be entered into a debt settlement program. You must seek the help of a tax professional or tax relief agency to resolve this type of debt situation.

Child support and alimony cannot be settled for any reason. Believe it or not, these debts may be secured against your freedom.

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With that said, Debt Settlement will have the least negative impact of any debt relief option, especially when employed without a Third Party Assistance (TPA) notation on your credit report. This means that the company that you use to help you negotiate with your creditors will not be required to report your participation in their program to the 3 major credit bureaus, Experian, TransUnion and Equifax. THIS IS HUGE! Documentation of that nature will show that you gave up control of your finances and monthly obligations. It implies that you don’t know how to manage your money needed financial counseling and will affect you very similarly to Consumer Credit Counseling programs and Chapter 13 Bankruptcy. If your situation is just that you suddenly don’t have enough money to manage, RUN! A TPA type program is not for you.

TRUTH – A reliable, Non-Third Party Assisted, debt settlement program can help you eliminate your unsecured debt in 18 to 36 months without the long-term negative impact on your credit profile that is experienced with consumer credit counseling or bankruptcy.

Your creditors will not negotiate your balances if you are current. There is no reason for them to reduce and negotiate your balances for you if you are not truly in hardship. Delinquency is proof of hardship. Just look at what is happening in the mortgage industry; some homeowners have been required to be 3-4 months delinquent on their mortgage, near foreclosure, before they could even be considered for a loan modification.

It doesn’t matter what your credit score is if your ability to repay your debts is compromised by loss of income or unsecured debt load. Regardless of payment history, which is only 35% of your actual score, your credit score will fall if your unsecured revolving debt balances are over 50% of your credit limit. One of the credit bureaus scores on high credit, as opposed to high limit. Each consumer has a different scoring card. Not all actions will have the same consequences from consumer to consumer. For example, if a consumer had a spotty payment history in the past, they might be affected more by delinquency today, as opposed to someone who may have had a perfect history in the past, but may be experiencing difficulty for the first time.

The key to becoming a well qualified borrower in this economy is balance. You’ll need decent credit score, coupled with a good debt to income ratio. Often times, unsecured debt is the culprit when investigating why someone’s credit score has dropped like a brick off a building. It’s not rocket science. If your payment history is perfect or near perfect, yet your FICO score is struggling to stay above 660, you have a problem. Without eliminating your unsecured debt, your credit score will surely continue to drop and you can be sure, it won’t be coming back up until you do something about it. Don’t be mistaken, once you realize what is happening, the worst thing you can do for your credit is NOTHING!

If you have a good credit score and you have a good payment history and you STILL got denied for a line of credit, you need to take a serious look at debt settlement. It’s a way to eliminate your debt quickly, without having to announce publically that you are having difficulty with your finances.

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