My Personal Finance Blog

It can be extremely stressful to be called at every hour of the day by creditors who want to be paid.  The difficulty for most people in this situation is that they cannot afford to pay the creditors the money that is owed, but do not know how to make things any better.  The best solution to this problem will partly depend on your exact circumstances, but one of the most effective ways to deal with debt can be negotiating settlements with creditors.

There are two approaches you can take to achieving debt settlements.  One is to use a professional debt settlement organisation to do it all for you and the other is to undertake the negotiation with creditors personally.  There are pros and cons with both options.  The advantage of using a settlement company is that they are experts in this field and know exactly how to get the best deal, but you will need to pay them something for their help.  The advantage of doing it yourself is that you can maximise the benefit from the saving you make, as there is no third party to pay.

Debt settlement companies only tend to get involved with situations that are really quite serious.  You will usually need to have debts in excess of $10,000 and these debts need to be to a few different creditors.  Debt settlement negotiation is most frequently used by people whose situation is too severe for a debt management plan to work.  When people cannot afford the monthly payments on a debt management plan, they often find that debt settlement is the most appropriate solution.

When you use a professional company for negotiating settlements with creditors on your behalf, they will use their experience and knowledge to seek agreement to settle your debts for much less than the full amount you owe.  It is not unusual for a good debt settlement company to get agreement to having 60% of your debt written off.  Creditors have their own procedures to work to, which in some circumstances can end up with having to write a debt off completely as a bad debt.  They have to weigh up what course of action is going to get them the best return overall.  If they think that getting half of the debt in an up front payment is better than perhaps spending many more months chasing it and ending up with nothing if you go bankrupt, they will agree to a settlement.

While the negotiations are going on you make no payments to any of your creditors.  Instead you put a fixed amount each month into a new account, where it accumulates and is then used to make payments to creditors when settlements deals are reached.

The most reputable debt settlement companies will only take a proportion of the amount they get written off as remuneration for their services.  By learning to negotiate settlements with creditors yourself you can save this amount and pocket the full benefit of the reductions you manage to negotiate.

If you try negotiating settlements with creditors yourself without any help or advice, it is highly unlikely that you will manage to get very good agreements.  Much depends on knowing about the procedures that different companies work to, which will dictate how you plan your actions and approaches.  When you choose to make an offer to a creditor can significantly affect the result you achieve.  A good guide to debt settlement negotiation will tell you exactly how and when to make your approaches, tell you exactly what you need to say and even provide scripts for phone calls and drafts of letters you need to send.

If you do decide to use the services of a debt settlement company, it is sensible to exercise a degree of caution about selecting a company to work with, as there is an element of the industry that has a reputation for being somewhat disreputable.  This is probably no more so than with any other industry, but it is particularly bad when it involves taking money from people with serious debt problems.

There are plenty of excellent debt settlement companies to choose from, just be sure to stick to the reliable ones that have been around for many years and you will be absolutely fine.  The easiest way to find a company is follow recommendations for the most reliable companies and apply online to perhaps three different ones, so that you can then choose whichever makes the best proposal.

Read advice on how to negotiate debt on the author’s website, where you can also find recommendations for the most reputable debt settlement companies. K D Garrow has worked as a senior manager with significant financial responsibility for the last twenty years. His Debt UK/US website offers free, unbiased advice on a range of debt related issues, including the debt management plans, UK IVAs, budgeting advice, loans and bankruptcy.

Short sale refers to real estate properties sold “short” of the balance due on the mortgage loan. When borrowers fall behind on payments and cannot afford to maintain future payments, some mortgage lenders will allow the property to be sold to repay the loan.



Short sale transactions are multifaceted and require approval from the lender. Short sales are managed by the bank’s loss mitigation department. Employees who work in this department are known as loss mitigators and act as a mediator between lenders and borrowers.

Loss mitigators do not have the authority to approve or disapprove short sale requests. Instead, they gather and review financial documents provided by the borrower and make recommendations to the bank based on the borrower’s ability to make good on their loan.

There is no law requiring banks to engage in short sale transactions. However, lenders who received bail-out money are encouraged to offer short sales to eliminate non-performing loans from their books. The only way to know if your lender offers short sales is to contact them to discuss policies and procedures.

When real estate enters into foreclosure the property is ineligible for short sale approval. Borrowers who are struggling to maintain mortgage payments or have become delinquent on their loan should contact their lender immediately to discuss the option of short selling.

Two types of short sale options are available. The first and most common, is referred to as a Deficiency Judgment. This is the worst case scenario and should be avoided at all costs. The way short selling works is lenders allow borrowers to sell the home at a discounted price to attract buyers. Let’s say you owe $200,000 on your mortgage note and sell the property for $185,000. This results in a deficiency of $15,000.

When borrowers are unable to pay the deficiency amount, lenders issue a deficiency judgment for the balance. The judgment remains on your credit report until it is repaid. How long would it take you to repay $15,000?

Deficiency judgments can cause serious financial fall-out that can haunt you for years to come. Having an attached judgment places debtors in the “high-risk” category and can prevent them from obtaining credit of any kind. Those who can obtain credit usually pay a higher rate of interest and lower credit limits. Higher interest rates can amount to several thousand dollars over the course of time.

The second type of short sale is referred to as Payment in Full without Pursuit of Deficiency Judgment. This means the bank accepts the sale price as payment in full toward the mortgage note. Once the home sells, the borrower turns the keys over to the new owner and walks away from the property without owing additional funds. Obviously, this is the preferred short sale strategy.

Most banks require borrowers to have a buyer lined up before granting short sale approval. A few lenders allow borrowers to list their home through a realtor and provide a grace period of two to three months to locate a buyer.

Locating a realtor to list short sale real estate can be challenging. Short sales require a considerable amount of work. Oftentimes, realtors must accept less commission or forego their commission altogether in order to close the deal. Few realtors want to work harder for less money.

One under-utilized source for locating buyers is real estate investors. Many investors are attracted to short sale real estate because properties are sold below market value and can provide a good return on their investment.

An extra bonus of short selling to investors is many purchase real estate with cash. As everyone knows, cash is king. In this case, cash can expedite the transaction and help borrowers qualify for short sale approval.

Many elements are involved with short sale homes. The best defense for borrowers is to become knowledgeable about the process. If necessary, consult with a short sale specialist or real estate attorney for advice and guidance.

Simon Volkov is a real estate investor, short sale specialist and author of “Short Sale Hardship Letter eBook Course”
; a concise guide which can improve borrowers chance of obtaining short sale approval. Simon offers a unique short sale program and is currently accepting a limited number of participants. Learn more about Simon’s program by submitting information about your property via the “We Buy Houses” form available at Simon Volkov.

What’s home equity loan? Before you dwell into that, you must understand first the concept of home equity. By definition, it’s the home’s value, the amount of which is more than the balance of your loan. For example, if the total worth of your home is $500,000, and you’re remaining balance is only $200,000, it means that the equity of your home is $300,000. On the other hand, if you’ve completely paid your mortgage, the equity of your home is equivalent to the total value of your mortgage. Home equity loans happen when you decide to apply for a new loan. Because your equity is viewed as your own asset, you can make use of this as collateral so you can secure a loan.

It’s quite obvious that in such loan, your home is on the line. It’s your responsibility therefore to make sure that you don’t suddenly lose it because you haven’t been really too careful with your decisions. To save you from future problems on your home equity loan, consider the following tips:

1. Learn to compare. Usually, home owners will likely work with their old lenders when they’re going to apply for a loan. This is okay; however, you should also keep in mind that you may be losing some excellent options if you forget to shop around. You can make use of the table for home equity loan to determine the possible rates you can find within your area. You wouldn’t realize it but you can actually save so much with smaller interest rate.

2. Talk to your financial advisors. Learn to understand the many options you have regarding your loan. To get an unbiased opinion, talk to your financial advisors. They are the best ones who can provide you the best options for your loan. You can get a better picture of the financial market as well as other factors that can affect your loan. They may also suggest some lending companies where you can get the best deals for your loan. Another person that you may like to talk to is a tax professional. You have to also understand how your loan can affect your tax payments.

3. Read the terms of the loans. This is very important, and you shouldn’t dare miss it. Oftentimes, people get tricked into paying more for their home equity loan simply because they have failed to read the terms and conditions. Reading them will also be a form of double-checking things that have been agreed between you and the lending company. The terms should also specify all the interest rates and costs related to your loan. For example, if you’re applying for a HELOC, or a home equity loan line of credit, you should determine the ceiling and floor rates. Also, you must determine if there is a teaser rate and who much it will be. This can greatly increase as time goes by. You need to know if it’s something you can afford.

Visit Home Equity or Home Equity Loan today to get the opinion of the experts who can stay with you every step of the way to come up with the best decision regarding your loan.