Everything I’ve ever read about debt settlement has been extremely negative and, for the most part, ugly. It’s because debt settlement is designed for people in very dire circumstances.

A friend of mine recently got into the debt settlement business since he was working with a lot of individuals in weak financial situations. We spent the better part of three hours discussing how debt settlement worked, why debt settlement made sense to some people, and why the business had such a bad reputation. My friend is a stand-up guy, I trust him, and so it was refreshing to hear about the business, warts and all.

In this Foundation series article, I hope to pass on some of that knowledge to you.

The Fair Debt Collection Practices Act has been around in different forms for several decades, but is rarely well-known by the average consumer. While I won’t be covering each and every piece of information in the document, I do want to summarize some of the key sections.

If you are currently struggling with debt and have fallen behind, there is a large chance you are dealing with collectors on a regular basis. In this situation, it is vitally important that you have a firm grasp on your rights. Violations of these rights occur on a daily basis, fueled by the lack of knowledge from the average consumer.

I’m Current On My Debt. Why Should I Care?

Even if you aren’t struggling with debt, I’d be willing to bet there is someone in your life who is. Nothing gets my blood boiling more than stories about debt collectors taking advantage of people in desperate financial situations. If someone you care about finds themselves in this situation, you will be glad you have the information to help them!

(click here to continue reading…)

This morning I wrote about the different types of individual bankruptcy but I didn’t discuss how much they cost.

Yep, even if you don’t have any money left and want to file for bankruptcy, there are costs involved! There are costs involved because bankruptcy involves the courts and the employees of the court have to get paid! The cost of filing for bankruptcy breaks down into three types – required credit counseling, bankruptcy filing fees and attorney fees.

(click here to continue reading…)

Despite being in a recession, I haven’t seen a lot of personal bankruptcy stories. Many businesses are folding and personal bankruptcies have increased, but the mainstream media hasn’t published many sensational articles spotlighting a remarkable spike in bankruptcies.

Does that mean it’s on the horizon? Or is it simply not news when you can talk about an domestic auto manufacturer calling it quits? Either way, I think it’s important to understand the different types of bankruptcy, even if it is a dirty word, because it could one day help you if you’re in trouble.

(click here to continue reading…)

Debt.

Some see it as a tool to be used to help them improve their financial situation. Some see it as a temptation to get more than you should be allowed to. And some see it was an insidious monster lurking around the corner, waiting for you to slip and make a mistake. Some see it as something the never want to touch.

Today we’re not going to talk about any of that stuff. Today I want to share with you some “fun facts” about debt that you might find useful at your next trivia night!

(click here to continue reading…)

Following up on Jim’s guide to social lending networks, this is my story of doing business with Prosper, which is a lot like Lending Club. Although Prosper is in a quiet period, my experience with them is indicative of the basic social lending process, and should mirror what you’d get at other active social lending sites.

I hired a local landscaper and dirt mover last June to correct a horrible grading job in my back yard. For the basic hardscaping (dirt removal, retaining wall, and grading), he quoted $5,000. Of course, I needed the cash on hand. I looked at my local credit union first, which could go as low as 9%. Then I heard about Prosper on Clark Howard’s show, and checked it out. After registering and verifying the usual stuff, I created my loan page. Within a week, my loan had been funded.

(click here to continue reading…)

With us firmly entrenched in a recession, the topic of loaning money to family and friends has really come to the forefront. With the holidays coming up, higher heating bills, and the potential of a layoffs (if they haven’t occurred already), turning to family and friends may be the last resort. If you can’t, or don’t want to, get a loan from a bank or through a peer to peer lending service like LendingClub, family and friends may be the only option for some.

(click here to continue reading…)

Debt is a bitch and student loans have taken center stage recently as the credit crisis threatened the ability of students to get loans. However on this day, I read a story about how some people have resorted to moving overseas to avoid paying their loans, a step that seems like a lot until you realize the size of their loans.

Initially, I felt bad. Then I thought about it some more and realized that we all make choices and trade-offs in our lives and education is merely one of those choices you make. The story talks about Chris, who graduated with $160,000 in student loan debt and a master’s degree in music. Chris admits he could’ve (he didn’t say he “should’ve,” he said he could’ve) gone to a cheaper school but that he’s “most angry at the fact that for anyone who has debt that’s not student loan debt, there’s relief. You can get into $150,000 worth of credit card debt and you can declare bankruptcy and you can go on with your life. But with student loans, you’re being punished for being a better person.”

First, I’m sorry Chris, but you’re not a better person and someone with $160,000 worth of credit card debt is not a worse person; you both made your choices and are now are forced to live with them. It doesn’t matter what the money was spent on, it was spent and now you owe it. There is no woe is me, you can’t blame someone else, it’s all on you.

Second, $160,000 is a lot of schooling. Let’s say he went for six years (4 years undergraduate, 2 years master), that’s about $27,000 a year. He could’ve gone to a public school, he could’ve paid off more while in school, he could’ve done a lot of things. $160,000 for a M.S. in music seems very expensive to me (but I have no experience in that, it could be spot on).

Third, bankruptcy is not a panacea. It’s not like you walk into some courthouse one day, declare bankruptcy, and you’re free to do what you want the next day. When you declare bankruptcy (and prove it, which is not a simple task), it stays on your record for the next seven years. At a minimum, you can’t get a loan for anything. No car loan, no mortgage, no credit cards, no 0% financing… the list goes on.

Finally, and I know everyone is thinking it, but how could you expect to pay $600 a month? At 0% interest, it would take you 22.2 years to pay off a sum of $160,000. As a testament to how off his estimate was, his payments were four times as much – $2400 a month.

Running from your problems doesn’t solve them, it makes those problems harder to solve.