All about Credit Card Debt Settlement

Debt settlement gives them a distorted impression of what this process is really all about. Do not get us wrong. However, we need to paint the right picture for you so you will be relieved of any false assumptions about your expectations of this program.

Creditors will not always say yes. This is heartbreaking for some people but this is the truth. The chances of your creditor saying NO the first time we approach them is possible. But this is why you hired us in the first place. We will not give up.

Typically, the settlement requires you to pay a certain percentage of the debt you owe immediately, in exchange for forgiveness of the remainder of the debt. For example, if you owe a credit card company $10,000, you might be able to negotiate a settlement in which the company will accept $6,000 as payment in full.

Why would a company accept such a deal? If it seems unlikely you’ll be able to pay off the full balance, some companies may accept a “take-what-we-can-get” attitude. In other cases, the cost involved in taking you to court for the full amount owed may exceed the money lost in a settlement offer.

Credit Scores and Taxes

If you settle a debt for less than what you owe, your credit score may be affected, as you’ve shown that you’re either unwilling or unable to pay off debts. With low credit scores, you may have to pay higher interest rates on car loans, home mortgages and credit cards in the future — and that’s if a company is willing to extend you a loan in the first place.

Before you get involved in a debt settlement plan, learn how to find your credit scores. 

Many banks and financial firms offer free access to your credit scores, which contain a detailed history of your credit activity and accounts. You’re also entitled to a free report if you’re ever denied credit.

One of the hidden dangers of negotiating a debt settlement may not become apparent until you file your taxes. Since the IRS considers forgiven debt to be income, you’ll have to pay income tax on the amount of debt you don’t repay. For example, if you negotiate a $20,000 debt down to $14,000, that remaining $6,000 becomes taxable income to you.

Counseling and Debt Payoff Options

Sometimes, using a debt settlement firm to negotiate a deal may do more harm than good. The problem is that many creditors won’t work with settlement firms, and you’ll be assessed late fees, penalties, and interest charges while your debt goes unpaid each month. At the end of the day, you may be left with lower credit scores and even higher debts.

Debt Settlement Pros and Cons

Long-term debt settlement is dangerous for consumers.

When you’re struggling financially, I can’t stress enough to you how important it is for you to make an informed decision about how you choose to deal with it. A long-term debt settlement approach is no picnic.

It is important to understand how Debt Settlement works before you enroll. Here we outline the key benefits and considerations of Settlement to help you further in your decision process about the best service for you.

Debt Settlement Pros

• May reduce your total debt drastically

• You save each month an amount you can afford to use to fund settlements

• Provides flexible payment arrangements (changes can be made if needed)

• An attractive alternative to bankruptcy

• Settlements typically completed in 3-5 years

Debt Settlement Cons

• Credit profile will be negatively impacted

• Debt is not repaid in full

• Creditors are not required to accept settlement offers

• Debt balances are likely to increase (i.e. late fees, interest) while settlements are being negotiated

• Collection activity will escalate

• It typically takes 6+ months before the first settlement occurs

• May you be taxed on the portion of the debt you don't pay back?

How do I Choose a Settlement Provider?

Selecting the right provider is a critical component to your success in becoming debt-free through Debt Settlement.

What to Look For In A Settlement Provider

• In business long enough to have built a solid reputation

• Electronic payment processing to ensure consistency

• Existing relationships with most creditors and collection agencies

• Support network to connect with other community members and find out how they are handling the day-to-day challenges of being in debt

• Robust educational resources to help you build your money management skills

Annuity Contract in Structured Settlement

Annuities offer a great way to plan for the future because they provide the promise of regular, monthly money that can supplement Social Security and pension income. When someone buys an annuity contract from an insurance company, the income earned inside that annuity grows and can be on a tax-deferred basis until it is withdrawn. Annuities work out 90% of the time, but the other 10% of the time there are unforeseen occurrences and life gets in the way. Sometimes you need finances urgently instead of waiting for a check every month.

Annuities can be structured as immediate or deferred annuities. With an immediate annuity, the money that is deposited into the annuity contract is turned into an income stream right away. The period while you are collecting funds inside the agreement is known as the accumulation phase. First, if you want to withdraw money from a qualified annuity before you reach the age of 59 ½, you can expect to pay the penalty. You may also have to pay a surrender charge.

Fixed Annuities Offer You a Financial Safety Net

Another type of annuity contract is a fixed annuity. As its name implies, a fixed annuity offers a fixed rate of interest for contributed assets. In most cases, there is a guaranteed minimum interest rate. One of the most popular features of fixed annuities is that they come with a guarantee that the annuity owner will not lose their money (assuming the insurance company behind the contract stays in business).

Distribution Options for Your Annuity Payments

Some insurance companies do not let you withdraw funds out of your annuity. Instead, the payments must be paid out on a monthly basis per the contract.

Many people choose to take a guaranteed monthly income stream for life. If you are married, it is also possible to take a guaranteed income stream for your life and your spouse’s lifetime. When you choose one of these options, the insurance company is assuming the risk that you may live for years after the original annuity contribution and earnings have been distributed. When an annuity is still in the accumulation phase, you can either take lump-sum distributions or schedule periodic distributions. However, when the money inside the contract has been paid, the annuity will end.

What to Expect from Life-Contingent Annuities

In some cases, life annuities can also provide benefits for a spouse’s lifetime after the annuitant dies. A life-contingent annuity contract can be a great deal – or a not-so-great deal. The amount of each monthly or annual payment is based on your life expectancy. For example, if you die unexpectedly two years into receiving payments, the annuity just stops. However, if you live ten years longer than your life expectancy, you are earning ten free years of extra payments.

Annuities are described as “reverse life insurance” contracts. Life insurance is a contract between the insurance company based on the life of an insured person. A benefit becomes payable when a person dies, thus protecting against the risk of dying too soon and not having enough money to care for those left behind.

An annuity operates in reverse. The contract, between the insurance company and the annuity owner, based on the life of the annuitant . The risk being protected by an annuity is that of living too long and outlasting your financial resources to maintain and continue in a comfortable lifestyle.

How Annuities are Used

Charitable Gift Annuities – A type of annuity used in estate planning. It permits the owner to direct payments to a designated charitable organization as beneficiary and provide immediate and future tax benefits to the annuity owner.

Retirement Annuities – A type of annuity funded with a single payment or a series of payments over a period, up to the annuity payout, at which point payments cease, and a stream of income is paid for a predetermined time.

Structured Settlement Annuities – A type of annuity that is used to structure the payment of a significant, lump-sum amount, over time, such as a legal settlement or lottery winnings.

Equity-Indexed Annuities - A type of fixed annuity that is often confused with variable annuities is the equity-indexed annuity or EIA contract. EIAs credit interest rate based on the performance of an underlying index, such as the S&P 500. Contract holders often, however, do not earn the full amount of returns of the underlying index.

This is because as a fixed annuity, the insurance company takes on the performance risk and must pay some return up to include no return while absorbing any negative returns of the underlying index. Individuals buying EIAs do so with an understanding that some or all of the underlying performance of their chosen annuity index may not be credited as a tradeoff for the guarantee of no negative returns. Negative returns may, however, subject you to inflation risk, that is the risk that the overall performance of your annuity may be well below the prevailing rate of inflation and thus, in fact, lose money to time.

Understanding How Annuities Work

Ideally, a person who is looking to supplement or enhance their income in retirement and who has exhausted all available avenues for saving, such as an employer-sponsored retirement plan or individual retirement account. Annuities provide an excellent way to ensure a stream of income for retirement and protect against the risk of living too long; it is essential that you ask questions about how an annuity being proposed works and if such product is appropriate for your situation. There is no one size fits all solution when it comes to the use of annuities but careful planning and diligence on your part, including requesting and reading all disclosure material and buyer’s guides, can go a long way in protecting your interests and making you a savvy annuity buyer.

Settlement Depot | Structured Settlement Social Media Road Kill | Illiterate to Basic Facts

  When it comes to misinformation about structured settlements,  the leader, in my opinion, is Einstein Structured Settlements, a brand of JRR Funding, a Washington DC area company, whose putative  "bag of sh*t against the wall" marketing strategy is undermined by the clear inability to discern between "sticks" and "stinks".   Classic examples of "stinks" have been posted here for the entirety of Einstein's existence.

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Other wings to the museum will be built to showcase and dispense the appropriate dosage of irreverence to other companies and individuals who have contributed their own pock marks to the structured settlement industry landscape.

Plenty of "Whine" and "Cheese" will be "served" 

The Social Media Road Kill Museum Einstein Structured Settlement Road Kill Exhibit is now open 24/7!

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Seven Big Reasons that Settlement Depot is unreliable for structured settlement advice

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