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• Credit Self Help
  Posted on Friday, June 5th, 2009 in Do It Yourself Debt Settlement - Comments: (0)
  Credit self help strategies need to begin with pulling your credit report so you know what is being reported about you and your debts.All Americans are now eligible to receive a free copy of each of the three major credit reports on an annual basis.  This is to help consumers manage their credit, but most importantly monitor it to ensure they have not fallen victim to identity theft.  I encourage everyone to make this part of their annual financial planning.Here is the website:      https://www.annualcreditreport.comThey will take you through a series of questions to make sure you are who you say you are, and the questions they ask only you would know the answer to, as they pull them from your credit reports.You will be given the option to purchase one or all 3 of your FICO scores too.  I also recommend you do this, as this will tell you how banks view your credit report from a lending stand point.
• Debt Reduction Tools
  Posted on Monday, June 1st, 2009 in Debt Management Software - Comments: (0)
  There are many different debt reduction tools on the market, both free and paid.  If you only have a few debts to manage, and your situation is fairly simple, then a free tool will work just as well as a paid tool.  If your situation is complex, either you have many debt accounts or you have business and personal debts you want to manage, a paid version may be a better alterative for the long run.For a simple debt reduction tool, you can find several templates in Google Docs, which is online storage for personal or business documents that you can share with others.  When you sign up for a Google account, and access Google Docs, they have templates that are public tools available to be used by an any user.    Once in Google Docs, you can access under New, From Template.Here is a link to a loan amortization calculator.
• How to Eliminate Credit Card Debt
  Posted on Tuesday, June 9th, 2009 in Do It Yourself Debt Settlement - Comments: (0)
  How to eliminate credit card is really dependent on the amount you owe and your cash flow.If you have been consistently making your payments on time, and continue to have the cash flow to support the payments, then this simple strategy will help tremendously.Step 1Make a list of all your debts, including: who is owed, balance, interest rate, minimum payment required.Step 2Evaluate your cash flow.  How much do you have to put toward your debt load each month.  Look at your income, less your usual expense (mortgage or rent, utilities, discretionary, savings). Step 3Take the amount you have to pay towards your debt each month, and apply the minimum monthly payment against each debt.  Then, take the additional amount you have left, and apply it to the credit card with the highest rate first until this debt is paid off.  Once you have paid off your first debt, then take the freed up cash flow, and apply it all to your next highest interest rate debt.
• IRS Debt Help
  Posted on Wednesday, June 3rd, 2009 in IRS Debt Settlement - Comments: (0)
  This is an informative website that can help with some of your IRS debt help questions.
• Bankruptcy Self Help
  Posted on Thursday, June 11th, 2009 in Do It Yourself Debt Settlement - Comments: (0)
  Can I File For Bankruptcy Self Help?Though technically you can enter into bankruptcy on your own, I DO NOT recommend it.  It will be well worth the time and stress in hiring a specialized bankruptcy attorney to help you through the process.To file Chapter 7, which is a full liquidation (if you qualify), attorney fees can run around $1700 and up, depending on the complexity of your case.To file Chapter 13, which is a wage earners plan, basically a reorganization of debt with a repayment plan of 3-5 years, attorney fees can start at $3000 and up.  It is more expensive to file for Chapter 13 because your case is open for 3-5 years through the repayment plan, which requires attorney involvement throughout the process.Filing for bankruptcy is not an easy decision, but you may be faced with it.  And if so, I encourage you to find 2 - 3 of specialized bankruptcy attorneys in your area that offer a free initial consultation for you to meet them and ask questions, and find out what all your options are.

I have reviewed several debt management software tools on the market - some free, some not.

This is one that comes with a price tag of $47, but I think its well worth it.  If you are someone with debt, and has the ability to pay more than your minimum monthly payments, then this tool will help you get out of debt faster and save you money.  It also comes with several freebies that will help you get out of debt and stay out of debt. 

Money management isn’t just a skill set, it’s a way of thinking.  And until you change how you think about money, you will always be in debt. 

This tool comes with a money back guarantee - so if you try it and it doesn’t meet your needs, then just request a refund, no questions asked.

Here is what you get:

• Rapid Debt Reducer! Is the most comprehensive personal debt management software available anywhere. This is the main program, which helps you develop a precise debt repayment plan. It stacks your debts and makes suggestions regarding the quickest repayment strategies. 
• Basic Budgeting! creates, a simple step-by-step budget. Making it easy to manage where your money goes each paycheck is vital to getting a handle on your finances and is a key part in eliminating your need for credit. 
• Investment Calculator! How would you like to be a Millionaire? Have fun with this built in investment calculator. Try inputting the amount that you are currently paying on your debts and see what you could have in a few short years in a tax-deferred account. Once all debt are paid off create an emergency fund first and then start saving for your American Dream.  
• Financial Tools! The Rapid debt reducer comes with ten financial calculators presented as scenarios, Loan comparator, Money Saving Tips, and money/time saving charts.

BUY NOW

Can I File For Bankruptcy Self Help?

Though technically you can enter into bankruptcy on your own, I DO NOT recommend it.  It will be well worth the time and stress in hiring a specialized bankruptcy attorney to help you through the process.

To file Chapter 7, which is a full liquidation (if you qualify), attorney fees can run around $1700 and up, depending on the complexity of your case.

To file Chapter 13, which is a wage earners plan, basically a reorganization of debt with a repayment plan of 3-5 years, attorney fees can start at $3000 and up.  It is more expensive to file for Chapter 13 because your case is open for 3-5 years through the repayment plan, which requires attorney involvement throughout the process.

Filing for bankruptcy is not an easy decision, but you may be faced with it.  And if so, I encourage you to find 2 - 3 of specialized bankruptcy attorneys in your area that offer a free initial consultation for you to meet them and ask questions, and find out what all your options are.

photo credit: laura padgett

How to eliminate credit card is really dependent on the amount you owe and your cash flow.

If you have been consistently making your payments on time, and continue to have the cash flow to support the payments, then this simple strategy will help tremendously.

Step 1

Make a list of all your debts, including: who is owed, balance, interest rate, minimum payment required.

Step 2
Evaluate your cash flow.  How much do you have to put toward your debt load each month.  Look at your income, less your usual expense (mortgage or rent, utilities, discretionary, savings). 

Step 3

Take the amount you have to pay towards your debt each month, and apply the minimum monthly payment against each debt.  Then, take the additional amount you have left, and apply it to the credit card with the highest rate first until this debt is paid off.  Once you have paid off your first debt, then take the freed up cash flow, and apply it all to your next highest interest rate debt.

Now, if you have credit card debt and mortgage debt, do not apply extra payments towards your mortgage until all credit card debt is paid.  Mortgage debt is still currently tax deductible, and consumer debt is not, so the net interest rate you are paying on your mortgage is actually less than the actual interest rate because of the benefits of the tax deduction.

Credit self help strategies need to begin with pulling your credit report so you know what is being reported about you and your debts.

All Americans are now eligible to receive a free copy of each of the three major credit reports on an annual basis.  This is to help consumers manage their credit, but most importantly monitor it to ensure they have not fallen victim to identity theft.  I encourage everyone to make this part of their annual financial planning.

Here is the website:      https://www.annualcreditreport.com

They will take you through a series of questions to make sure you are who you say you are, and the questions they ask only you would know the answer to, as they pull them from your credit reports.

You will be given the option to purchase one or all 3 of your FICO scores too.  I also recommend you do this, as this will tell you how banks view your credit report from a lending stand point.  Are you credit worthy?  I will discuss the details of FICO in a later post.  For now, in order to get your credit in shape, you need to know where you currently stand.

Once you pull each of the credit reports, go through them in their entirety and ensure there are no problems, issues or mistakes.  Highlight anything unusual, and I will provide steps in a later post on how to deal with any inaccuracies.

This is an informative website that can help with some of your IRS debt help questions.  This website was developed with the help of the IRS to provide a free Tax Literacy Toolkit that will help with the following issues:

• Understand basic tax information
• Determine if you need an Individual Taxpayer Identification Number (ITIN)
• Learn about special tax credits
• Help prevent identity theft
• Understand why it’s important to follow the tax laws
• Learn more about the tax end of starting a small business
• Understand your options when you owe the IRS money
• Get your tax refund quickly and fairly

Tax Payer Advocate

photo credit: ColumbusCameraOp 

There are many different debt reduction tools on the market, both free and paid.  If you only have a few debts to manage, and your situation is fairly simple, then a free tool will work just as well as a paid tool.  If your situation is complex, either you have many debt accounts or you have business and personal debts you want to manage, a paid version may be a better alterative for the long run.

For a simple debt reduction tool, you can find several templates in Google Docs, which is online storage for personal or business documents that you can share with others.  When you sign up for a Google account, and access Google Docs, they have templates that are public tools available to be used by an any user.    Once in Google Docs, you can access under New, From Template.

Here is a link to a loan amortization calculator.  You can enter in your debt information, and calculate various scenarios including how long it will take to pay off a debt based on a certain monthly payment and inertest rate.  Or, if you want to pay off a debt within a certain timeframe, calculate the monthly amount you would need to pay to achieve that goal.

Loan Amortization Calculator

• Debt Settlement Companies
  Posted on Friday, May 8th, 2009 in Debt Negotiation Services - Comments: (0)
  Before you hire a debt settlement company, you need to do your research to ensure they are reputable and will not just take your money with no follow through on their promises.  Many people think all debt settlement companies are a scam, but if you read the general concerns about debt settlement, the most common problem identified is how your credit will be hurt by using one of these companies.  In all reality, if you are at a point of needing the services of a debt settlement company, I doubt your credit score is really a priority.  If you can’t pay your bills, it doesn’t matter if you have good credit.I recommend researching all companies though first, and this includes searching the company name in any search engine (Google, in example).  If you search for the company name in quotations (”Debt Settlement ABC”), this will narrow your search to the most relevant content.
• Ways to Get Out of Debt
  Posted on Tuesday, May 5th, 2009 in Credit Card Debt Solutions - Comments: (0)
  There are many different ideas about ways to get out of debt, and throughout this blog, I will educate you on various ideas and provide the advantages and disadvantages to each. But to start at a very simple point, you need to understand how you got into debt in the first place.  Unless you figure this out, all the tips and tricks in the world to get you out will be short lived.  I have worked with many clients over the years on debt management, and the bottom line is, getting to the source of the problem and developing a different way of thinking about money will truly help you overcome the debt burden for good.Before I go into how to get out, I want you to take a few hours and organize all of your debts and monthly bills.  I recommend using a spreadsheet or just simply writing it out on a piece of paper.
• Debt Management Spreadsheet
  Posted on Monday, May 11th, 2009 in Debt Management Software - Comments: (0)
  A simple and affordable way to get a handle on your finances while not requiring fancy software is by creating a Debt Management Spreadsheet in excel or any spreadsheet software program.The information you need to gather to effectively analyze your debts is the following: Due Date Creditor Name Total Amount Owed Minimum Payment Required Interest Rate Website Login InformationIf you compile all the information above, this will give you everything you need in one place to help effectively analyze and manage your debt situation.  You may consider adding all of your monthly bills to this spreadsheet (utilities, rent, mortgage, etc), and also do a similar exercise for your dictionary expenses (food, entertainment, etc) and establish a budget for each item to help control spending.
• Free Debt Management Software
  Posted on Thursday, May 7th, 2009 in Debt Management Software - Comments: (0)
  Throughout this blog, I will analyze various free debt management software tools.  Here is the first one I tested:Credit Federal Free Budget Calculator to help manage expenses. Also includes a Savings Calculator to determine interest earnings. I like this because it’s simple, and includes  several different calculators all bundled in one.  You can calculate your monthly budget, see how interest accrues when saving, and different loan calculators such as auto loans and mortgages.  This would not be recommended for managing cash flow long term, but its perfect for someone just getting started on trying to understand their current financial situaion.
• Podcat Alley Feed
  Posted on Tuesday, May 12th, 2009 in Freedom Debt Management - Comments: (0)
  My Podcast Alley feed!

Do you have IRS tax problems?  With today’s economic conditions, more and more people are finding themselves behind n payments to Uncle Sam.  This is more commonly found amongst small business owners.

Of all creditors, the IRS is not one you want to sweep under the rug in hopes it will just go away. 

As with most of my advice, I recoded you gain control of any debts you owe to the IRS.  I understand that you may not be able to pay it, but avoiding it will cost you more in the long run than dealing with the issue head on.

Here are a few FAQs with answers that I pulled direct from the IRS website.  This explains the importance of staying in contact with the IRS to best help them work with you in putting together a solution for your situation.

Why Should I File My Tax Return as Soon as Possible?

There are two advantages to filing as soon as possible:

Generally, if a taxpayer is due a refund for withholding or estimated taxes paid, it must be claimed within 3 years of the return due date or risk losing the right to it. The same rule applies to a right to claim a tax credit such as the Earned Income Credit (EIC).

Self-employed persons who do not file a return will not receive credits toward Social Security retirement or disability benefits. Failure to file results in not reporting any self-employment income to the Social Security Administration.

What If I Owe More Than I Can Pay?

Even if a taxpayer doesn’t have enough money to pay, returns should be filed to avoid further penalties for failure to file. The IRS will assist in finding a solution to the problem.

The IRS has streamlined its policies to offer alternative account resolutions if a taxpayer cannot pay in full with the return:

The IRS will help to set up an installment agreement when the situation warrants. Installment payments allow taxpayers to pay the tax debt over time.

The IRS will consider whether an offer in compromise is an appropriate solution.

What If I Don’t File Voluntarily?

The IRS is taking enforcement steps for those who repeatedly choose not to comply with the law. IRS employees will prepare returns when taxpayers do not file. The returns prepared by the IRS might not give credit for deductions and exemptions a taxpayer may be entitled to receive. Bills will be sent to those taxpayers for the tax due, plus penalties and interest.

People who repeatedly don’t comply with the law are subject to additional enforcement measures.

How Can I Avoid Owing Money on Next Year’s Return?

Many people don’t file tax returns because they don’t have enough money to pay the tax they owe. They find out after completing their return that their withholding or Estimated Tax payments do not equal their tax liability.

To help avoid this situation, the IRS can advise taxpayers how to ask an employer to withhold enough tax from their pay. For any income that is not subject to withholding, the IRS can provide information necessary to make quarterly payments to cover any amount to be owed. To make payments electronically, see Payment Options - Ways To Make a Payment or go to the EFTPS Web site.

Changes in financial circumstances could have an impact on taxes. For example, an increase in income, divorce, or selling an asset, may require adjustments to withholding or estimated payments.

By taking these steps, taxpayers will be better able to meet their tax obligations and avoid tax day surprises.

Will I Go to Jail?

A long-standing practice of the IRS has been not to recommend criminal prosecution of individuals for failure to file tax returns, provided they voluntarily file, or make arrangements to file, before being notified they are under criminal investigation. The taxpayer must make an honest effort to file a correct return and have income from legal sources. A letter from the IRS concerning taxes is not a notice that a taxpayer is under criminal investigation.

The IRS helps to get people back into the system as part of its long-term plan to improve voluntary tax compliance. The IRS wants to get people back into the system, not prosecute ordinary people who made a mistake. However, flagrant cases involving criminal violations of tax laws will continue to be investigated.

Visit the IRS website for more information.

Here is a sampling of a few different debt settlement letters:

#1 Unsolicited Offer to Creditor

Your Name
Your Address
Your Phone #

Creditor’s Name
Department
Creditor’s Address

Date

Dear Creditor,
Re: Account Number__________

After a long period of financial crisis, I’m finally in a position where I can take care of my debt whose account number is given above. I would appreciate in advance all efforts your company is willing to take in order to help me resolve my debt problems. I’m sincerely trying to settle this debt and pay it off faster.

The amount I would propose to pay towards full settlement of the debt is $___________. Additionally, I would request you to take off any late payment or charge-offs on this account from my credit report.

The fact is, I’m currently negotiating debt with several creditors and I have limited amount of money to pay the creditors. So, I have decided to settle only those debts for which I can satisfy the terms and conditions as mutually agreed between myself and my creditors.

I have already reached acceptable settlements with a couple of creditors and I doubt whether I will have enough funds available till the end of this month. However, I’d like to regain my credit rating and if you can help me do so, I’d be willing to offer you some more money as part of my settlement.

If you find the above terms and conditions acceptable, please sign this letter of agreement and send me a copy. Upon receipt of this agreement, I shall forward you the stated amount through money order.

Yours truly,

Your Signature
Your Name

#2 Request for Alternative Payment Plan

Your Name
Your Address
Your Phone#

Creditor’s Name
Department
Creditor’s Address

Date

Dear Creditor,

Re: Account Number__________

This letter is a written request for a temporary change in the repayment terms of my debt account. I am currently going through financial crisis and may not be able to follow the current payment plan. Neither do I plan to file a bankruptcy nor do I intend to default on this debt. 

I do have some income from [mention income sources]. However, when I examined my financial situation and planned a budget, it became necessary for me to request each of my creditors to accept a reduced/alternative payment plan for a number of months (specify the number, if possible). 

I would appreciate your co-operation in making this payment plan effective shortly. I request you to accept a monthly payment of $____________ instead of the regular payments of $____________ made on the [date] of each month. I hereby assure you that I shall not add to my debt till my financial situation improves. 

I shall begin making regular monthly payments as soon as I recover from this financial crisis. I hope you will understand my situation and co-operate with me. I shall surely notify you of any change in my financial situation.

Your co-operation during this difficult time is highly appreciated.

Yours sincerely,

Your Signature
Your Name