Apr/110
Debt Law – What You Should Know
Many consumers do not have the knowledge or do not know what laws are there to protect them when they are in debt. It is important for any individual to know their legal rights so that creditors do not take advantage of the situation and leave you worse off than you already are.
If your creditors have hired the services of a debt collector or a debt collection company then you need to know a few ground rules before you can give into their demands. The first thing, you need to know is how the debt collector is allowed to contact you. They may be in touch with you via phone, e-mail, telegram, fax or mail as long as the time and the place are convenient. They may also contact you in person as long as the terms have been agreed to by you and the creditors.
Every consumer should be aware that debt collectors are not allowed to talk about your debt to friends or family members. If a lawyer is representing you, then he should contact the lawyer on your behalf. The only information, a debt collector is allowed to collect form other people, may be your home address or phone number. They are allowed to contact other parties besides you, only once.
Should a debt management plan fail to work for you and your creditors fear you have no assets to repay them; they may file a bankruptcy suit against you. At this point bankruptcy proceedings are unavoidable, but it is up to you to know what your legal rights are. You should know you have a choice to file either a chapter 7 suit which stated that all your assets are liquidated but you are debt free or chapter 13 which allows you to keep your assets and have a payment plan with the creditors.
Jul/100
Debt Settlement
A debt settlement is an agreement between a debtor and a creditor to satisfy a debt for a reduced payoff amount. A debt settlement is usually reached when the debtor is unable to fully meet debt obligations because of financial difficulties. Debt settlement is also called debt negotiation and it means the process through which both parties reach the agreement.
Debt settlement and debt negotiation are usually for-profit businesses. Debt settlement is different from debt management firstly because debt settlement companies do not send regular monthly payments to creditors. They commonly hold consumer’s funds in separate accounts till the company believes it can settle the consumer’s debts for the less than the full amount of money owed. There are some companies that advise consumers to stop paying their debts if they want to take part in program.
Almost all companies have a minimum debt requirement. The National Consumer Law Centre took an investigation of debt settlement companies. Of their survey of thirteen debt settlement companies, nine specifically stated a minimum amount ($5,000 – $10,000) of debt required for the program. All of the investigated programs handle unsecured debt only.
The National Consumer Law Centre say the company have different ways of doing business, but almost all of them demand the consumer to set aside money monthly. Some of the debt settlement companies establish the account for the consumer or they ask the consumer to show proof of the account.
The companies want the consumer to deposit a definite amount in the account each month to create a fund that can be used to settle debts. It happens that the consumer stops making payments on his/her debts and as a result can face pressure from debt collectors. Debt settlement companies promise to assist consumers to deal with aggressive, confrontational and abusive creditors or collectors.
Most consumer debtors have less income than expenses each month. Some are able to collect some additional money from their budget each month. Debt settlement companies negotiate settlements for the consumers. They promise that consumer’s current level of unsecured debt will be skillfully negotiated, and essentially the consumers will end up paying a fraction of the debt. They also promise to reduce consumer’s debt by 40 – 60% of the current total.
Debt settlement companies set their clients with monthly payment, which is determined on a client-by-client basis between the consumer and the counselor of the debt settlement company. The duration of the program will depend on how much the debtor can afford to settle aside each month. Throughout the program the companies promise to communicate with consumers’ creditors on their behalf.