debt settlement advice

Last year, the government approved a bill called "The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". Under this new set of laws, the court decides whether an individual files Chapter 7 (forgiveness of all debt owed) or Chapter 13, where a debtor would have to repay at least part of their debt within five years from the time the bankruptcy case is filed. These new set of laws were passed in an effort to curb the number of people filing for bankruptcy as a means of financial management.

A Five Year Low As reported by Reuters and Bloomberg News, U.S. bankruptcy filings fell to the lowest level in five years since the new bankruptcy laws went into affect in October 2005. Personal filings fell to 1.45 million-down from 1.6 million the previous year. Total filings fell to their lowest levels since the year ending September 2001when 1.44 million filings were reported. Projections are that filings over the past year will be at 1986 levels.

In addition to a decrease in personal filings, individuals are also changing the way that they are filing. About 60% of individuals now file under Chapter 7, which allows people to wipe out their debts; this is down approximately 80% from the four months leading up to the new law. The remaining file Chapter 13, which requires debt repayments.

Debt Settlement is a process in which both debtor and creditor settle or resolve a debt for less than what is owed. If negotiated properly, a debtor's debt can be quickly, and in some cases, significantly reduced.

To ensure a successful settlement is brought to fruition, funds need to be readily available to pay the settlement amounts as negotiated by debt settlemet company on behalf of its client. And because these agreed upon settlements must be immediately paid in full upon completion of negotiations, the client's funds are held in a third-party trust account to ensure an expedient transfer. In the unlikely event that debt consolidation company is unable to negotiate with a particular creditor to settle a client's debt, the account would be dropped from the program. This action, in turn, would shorten the client's program length, reducing their administrative fees.

While the successful completion of Financial Program will ultimately result in the elimination of debt owed and an improved debt-to-income ratio, there are associated risks with this type of program such as; the possibility of lawsuits by creditors, a credit score that will be negatively affected, and the debt that is settled will be identified on a client's credit report as "paid as agreed" or "settled for a lesser amount" rather than simply "paid in full". While these risks are valid, we believe that for some consumers, the risks associated with choosing an alternate solution other than debt settlement could potentially have a greater detrimental affect on their long-term financial stability and well being.

Throughout the duration of the debt settlement process, Quote advisor clients will have immediate access to their Client Services representative via our toll free number or Email. We even have extended office hours for those clients who reside on the west coast.