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    Posted January 26, 2014 by
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    Get Financial Freedom For The Struggling Borrowers - Bad Debt Relief?


    Get Financial Freedom For The Struggling Borrowers - Bad Debt Relief?


    One of the most clichéd questions people ask is the way out of insurmountable debt. Due to the continued the socio-economic crisis, growing inflation and high unemployment rate, it is quite obvious for everyone to struggle to pay for what they have borrowed till date. When people are in financial crisis it has been found that they begin to lose their conviction and start freighting over various debt relief options. In this situation, people begin to weigh debt consolidation vs debt settlement as the most suitable debt relief options for them. Topic 453 - Bad Debt Deduction


    However, debt relief options cannot alone act as a panacea for all sorts of financial problems. One has to learn how to manage one’s financial resources smartly that will help him to avoid incurring debt in the future.


    Debt relief programs


    Here are some of the debt relief programs that can help financially distressed people gain freedom from the vicious cycle of debt:


    Debt settlement – People with unsecured debts like credit cards, medical debt, personal loans, payday loans, etc can negotiate with the creditors on their own or opt for specialized services offered by debt relief companies. These sorts of processes are better handled by professionals since they have the requisite qualification and experience. Considering that one chooses to work with a debt settlement firm, the first thing these companies provide is a free and no obligation pre-enrollment counseling session. In the counseling class, debt negotiators evaluate the financial health of the clients before proceeding further into the actual program.


    After that debtors have to open a trust account on which they have to put in a definite amount of money for a certain period of time. Moreover, debtors have to provide an authorization letter to the debt negotiators so as to empower them to negotiate with the creditors. Debt negotiators will convey the financial hardship of the debtor and ask them to accept the trust account fund that is lower than the actual amount owed by them.


    Individual Voluntary Arrangement (IVA) – Under this debt relief program, debtors can make affordable monthly payments for a fixed period of time, for example 60 months. After that any remaining outstanding balances are wiped out from the debtor’s account. People enrolled in this program, will have to answer question related to their personal financial condition. On the basis of this information provided by debtors, a debt repayment schedule is prepared by the IVA professionals. Since this is a legal settlement, the schedule will have to be verified and approved by the debtors before they are put in front of the creditors. Here, insolvency practitioners (IP) will send an analytical report of the debtor’s financial health to the creditors along with a copy of the repayment schedule.


    A meeting of all the creditors will be summoned who will vote for or against the proposed repayment plan. The IVA has to receive atleast one positive vote in order to get the approval. Moreover, in the event of a single negative vote and the objecting creditor owes more than 25% of all the debt then the IVA will stand as null and void. Creditors holding a minimum of 75% out of the total outstanding balance have to vote in favor of the plan in order to get the IVA approved. In addition to that, if all the creditors do not vote for or against the motion, then the IVA stands approved.


    Debt consolidation – Debtors will have to take out one big loan in order to consolidate their multiple lines of credit. The loan money will be used to make the debt payments. The payments are not uniform. This is because few creditors will receive full payments whereas some of them are going to get partial payments. Debtors can approach the debt consolidation companies who can help them to settle their debts. However, those of who do not want any such services will need to contact and negotiate with the creditors on their own. Debt consolidation is a method of streamlining multiple loans and making single monthly payments. It has been observed that these issues are better handled by the debt consultants.


    Finally, debtors must understand all the pros and cons of the above discussed debt relief programs CLICK HERE before enrolling into any one of them. Moreover, it is very important to check the license and registration of the debt relief companies before enrolling in their programs. or Visit to - http://inpersonalfinance.com

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