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Benefits of Debt Settlement

“There are many benefits of using a debt settlement service to get your financial affairs back in order. Some of these are minor and some of them are major. The first benefit you get from debt settlement is free debt counseling. Most of these companies offer this if you wish help with it. The counselor will help you to see your situation clearer, and discuss options to getting you out of it. It will help to make sure you chose the plan that is right for you.

It will get all your bills combined into one monthly fee for you. You will just make one payment to the service and they will make the payments as necessary to pay off each account you owe. They will divide your payment up in other words. You will not have to worry about different due dates, different interest rates etc.

When working with a settlement company they will also usually get a reduction or elimination of late fees. We all know when you default on an account penalties add up and interest continues to accrue. A good settlement company will get these costs reduced or maybe even eliminated.

You will get a reduced interest rate on your bills. The settlement company will negotiate these with your creditors for you. The restructured payments will make it easier to manage your debt.

You will get a repayment plan from your creditors. This will have lower interest rates, which will help you to afford to pay off the balances along with some of the interest.

Another benefit that many people are surprised about is the fact that their credit often improves. Having late payments, defaults and the like on your credit report have a negative effect on your credit score. Once you're working with a debt settlement service and the accounts begin to get paid off it appears on your report and helps raise your score.

The last benefit, while small, is that you will be done with the calls from the collection agencies and credit card companies. The settlement companies handle all of that for you.”

Three Keys to Your Budgeting Success

For many people, the word "budget" has a negative connotation. But, without a budget many people struggle week to week, literally living from paycheck to paycheck. A budget is the only way to ensure that you stay one step ahead of your bills.

Budgeting involves understanding how much money you earn and spend over a particular period of time. When you create a budget, you are creating a plan for spending and saving money.

So, what makes a budget a good one? A successful budget is one that is well planned and reasonable. Here are a few tips to help you create your own successful budget that you can live with:

1. Categorize Wisely: Many people use software packages or pre-formatted budget worksheets to start their budget without much long-term success. Choose categories that fit your personal situation and your spending habits, not a generic sheet or list. The key to categorizing is to choose enough categories to paint a realistic picture, but not too much detail that the budget becomes a burden.

2. "For a Rainy Day" Expenses: Be sure your budget includes expenses that you do not pay on a regular basis, but may have to come up with from time to time. For instance, car repairs, household items, or unexpected medical bills. These expenses can sneak up on you and leave you tight for cash in hard times. In addition, your budget should allocate some money towards a savings plan every month. If you don't set aside money specifically for investment purposes, you never will.

3. Re-evaluate Your Spending & Set Realistic Goals: Budgeting is not simply tracking costs; it is about setting financial goals and finding ways to meet them. Instead of struggling with an unrealistic plan to save thousands of dollars, simply learn how to spend better. After all, spending is what we do most, and spending less is easier than saving more. Smart spending is better than cutting back and doing without, but you still need to know where your money is going.

In the end, a budget will tell you whether or not you are living within your means. Before the widespread use of credit cards, you could tell if you were living within your means because you had money left over after paying your bills! The use of credit cards has made this much less obvious. But, by creating and adhering to a realistic budget, you'll improve your cash flow, free up money that you didn't think you had, and more importantly, you'll have a plan. Sure, we all get caught off guard every now and again with a surprise automobile or home repair. But, if you don't set up guidelines for reaching your financial goals or a means to measure your progress, you may end up going so far in the wrong direction you may never get ahead.

Debt Settlement Success

Few people realize that there is another solution to burdensome debt, an approach that puts YOU in the driver’s seat, which levels the playing field between you and your creditors, without having go to court. That solution is debt negotiation–good old fashioned American haggling. Haven’t you ever haggled over the price of a purchase? Well, exactly the same thing can be done for your debts!

Just imagine. If you could wave a magic wand and turn that $40,000 of credit card debt into $15,500 or even as little as $10,000, wouldn’t that make a HUGE difference to your financial future? You bet it would! Most people are skeptical that this approach is possible. But if you have a professional debt negotiator on your team, the odds are very good that he or she can cut your debt in HALF or less.

How is this possible? It’s very simple, actually. Put yourself in the shoes of a manager of a collection department for a major credit card bank. You know that bankruptcies are at an all-time high, that consumers file bankruptcy at the drop of a hat these days, and that the chances of collecting any money gets worse as the debt ages. You have the opportunity to close your books on a delinquent account by collecting 50 pennies for every dollar owed by the debtor, or take a chance on never collecting a single penny by trying to hold out for the full account value. You also realize that once the debt leaves your bank (usually after six months or so), it will go to a third-party collection agency. The agency will take at least 20%-25% commission right off the top of whatever they collect, and they are unlikely to collect more than 70% of the debt even with the most aggressive tactics. So you’ll probably never retrieve much more than half the money anyway. When you look at it this way, collecting 50% now doesn’t seem like such a bad prospect.

Now, the way we’ve described it above, it sounds like a piece of cake. You might be thinking, "OK, I’ll get on the phone and do this myself." What will happen? You’ll reach the "customer assistance team" described above, and the representative will inform you that other banks may settle for 50%, but their bank never settles for less than 85%, under any circumstances. But, of course, they do have that wonderful hardship program for you.

After you’ve called five or six banks and received the same treatment, you’ll probably end up with the idea that debt negotiation doesn’t work. The problem is that the banks will rarely take a debtor seriously. Unfortunately, they simply don’t believe you and they think your hardship story is phony. The banks are quite prepared for the amateur do it yourself negotiator. They have the telephone scripts all set up so that by the time the conversation is over, the caller feels guilty about the money owed, and their lame hardship plan sounds like a great deal after all.

We’re professionals, but if one of us ever got into a financial pickle, we’d never try to negotiate our own debts. Instead, we’d hire one of our colleagues to do the job for us. We can’t emphasize this enough. Just having a third-party professional on your team makes all the difference in the world. There is something almost magical about this simple approach. Once the banks realize that they are talking to a professional, someone who knows the rules and regulations, and then they quickly change their tune. A negotiator will obtain better results than you could ever obtain on your own, simply because all of the bank’s tactics are stymied by the fact that they can’t talk directly to you. They can’t apply psychological pressure to you, since your representative filters this out.

Besides, there’s no shame in seeking help. Look at it this way: the banks pull out all the big guns when you fall behind. They have an army of collectors ready to pressure you with carefully scripted techniques. They have collection agencies and attorneys waiting in the wings to go after you full throttle. Doesn’t it make sense to level the playing field? Doesn’t it make sense to concentrate on improving your finances and let someone else deal with the aggravation of the incessant phone calls that start flooding in once you get behind?

Let’s go over the negotiation process in a little more detail. When you become a client of a professional debt negotiator, he or she will impose two simple rules for you to follow:

Rule No. 1: Don’t talk to your creditors.

Rule No. 2: Save as much money as possible.

Do you think you can handle those rules? They’re tough, aren’t they? Let us explain exactly why these rules are so important.

Rule No. 1 is important because only one person can negotiate your debts for you. If you only allow the negotiator to handle some of the phone calls while you make other calls yourself, the odds are high that you will say something that is not in your best interests, thereby undermining your negotiator.

You’ve seen the cop shows on TV, where they always read a suspect his or her rights while they’re being arrested. "You have the right to remain silent," and so forth. Well, in debt collection, there is a similar rule. A debt collector is supposed to tell you the following: "This is an attempt to collect a debt. Any information you give us will be used for that purpose."

Your debt negotiator knows exactly what information to disclose, when to disclose it, and when to withhold information. The average person, on the other hand, has no idea what to say in that particular situation. We tend to respect authority. Collectors have a lot of nerve and present themselves authoritatively. They ask you where you work, how much you make, how much you pay in rent every month, and so on. The answers, quite frankly, are none of their business. But most people feel compelled to answer, in a misguided attempt to establish rapport with the collector.

So, the first rule is KEEP QUIET, and let your negotiator do the talking.

Rule No. 2 is even more basic. Successful negotiation of your debts will require a reasonable compromise with your creditors. It’s important that you save as much money as possible each month for your negotiator to work with.


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