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Archive for October, 2011

Is debt settlement a better option than debt consolidation?

Debt for consumers is growing by leaps and bounds. More than a billion individuals are truly in debt they cannot handle. In order to understand what type of debt management plan may be best for you, you need to know what they are. Debt Settlement vs. Debt consolidation talks about the two choices you have with a debt management plan. Debt settlement varies in use to the debt consolidation in several ways, which we will look at below. Remember that creditors want to receive payment from you rather than seeing the entire account lost because of a bankruptcy.

How Debt Settlement Works

The first thing you should know regarding settlement vs. consolidation is how settlement works. Settlement will allow a person to lower their debts by 40 to 80 percent depending on the companies you are dealing with, as well as the credit standing you currently have.

Once the debts have been paid off they will be marked paid in full or settled in full. This helps with your credit report and history. During the settlement you will be experiencing a reduction on your credit score, which you will need to repair once the debts are settled completely. It usually takes two to three years for debts to be cleared under this management plan. Debt settlement also allows you to save interest on the debts because you have a smaller amount of debt you owe and are settling at a certain amount. One problem with debt settlement is the tax liability on canceled debt you may owe. This can be as much as 600 dollars.

What is Debt Consolidation?

Consolidation uses your home equity to pay off debts. When you use consolidation vs. settlement you are obtaining one loan, a reduction in interest, and one payment. Debt consolidation is not a reduction of the amount you owe, just the interest unlike Settlement. Usually under debt consolidation it takes three to five years to pay off the balance. The credit score is also going to have a short term affect and the debts will be marked paid in full. A con to debt settlement is the slow pay status you may receive on your credit report as a result of the debt consolidation. However, these marks go away in time, much faster than your original debt would.

Debt consolidation uses a loan which is not considered a secure loan. In some cases you are able to get a secure loan through the home equity loan you will take out. This could pose a small problem as you are endangering your home if you cannot make the repayments.

Take Action!

Debt settlement vs. Debt consolidation is something you need to consider when you end up in debt. We have outlined what each debt plan is as well as looking at the pros and cons of each. It is important that you take action early whether you are using debt settlement vs. consolidation to solve your problems. The longer you wait to take advantage of either debt settlement or consolidation the harder it will be for you to seek help. Companies recognize a proactive stance and are more willing to help you out than if you wait until you are two steps away from bankruptcy court.

Certificate of deposit interest rates are at a low. As I write this article, interest rates at my credit union, who is normally much higher than traditional banks is only 1.50%. Is a certificate of deposit or CD a good investment right now?

The financial meltdown of 2008 has left all kinds of victims behind. The stock market investor who lost sometimes all of their investment, the homeowner who saw the value of their home reduced by more than half in some cases, and the small business owner who can no longer get a loan. These are only a few.

We can’t forget about the fixed income investor. There are some investors who have saved their money for many years by using vehicles such as the CD. When certificate of deposit interest rates were more than 5% for longer term CDs, an investor who didn’t want to try their hand at the stock market would simply buy a series of stacked CDs (CDs with varying mature dates so money was always available) and live off of the compounding 5% return.

Have you thought about how much money can be made with an annual rate of return of 5%? A lot of stock market investors aren’t making that kind of return. Mutual funds often don’t make that.

But let’s look at the current problem. 5% is a healthy rate of return. Put $1,000,000 in a CD for 12 months at 5% interest and you’re making $50,000 each year. That’s not a bad yearly income. Sure, most of us don’t have that kind of money to set aside for a CD, but for those who have saved for many decades, it’s easily attainable.

When we do a little more math, we find that the same $1,000,000 CD with an interest rate of 2% is now only making $20,000 each year. That’s a drastic change for the person who was living on the interest and let’s not forget about everybody else who saw their returns cut in half.

With certificate of deposit interest rates so low, is now a good time to purchase a CD? If a fixed income investment like this is the only kind of investment you’re comfortable with, then yes. Investing is a habit and staying in the habit is important. The other option available to you is to hire a financial advisor. They can give you some options that are just as safe but need a little more management.

For example, they could tell you about the covered call option where you basically rent your stocks to other investments. With very little work, that 1 million could be $250,000 in annual income! Because you are renting your stocks, you have a limited amount of risk and virtually no risk if you purchase good stocks that you’re happy to hold for a long period of time.

Certificate of deposit interest rates will go back up but not any time soon. You might consider looking at other types of investments for now. It might just force you to try something different.

Debt settlement is a very important term in the present world and has become an intense concept along with the present world financial crisis. Many consumers are in a constant search for the best debt relief options that can lead them out of massive debts. So, debt settlement companies are highly in value. But, every settlement company does not provide consumers with expected results. In fact, there are many fraudulent relief services disguised as outstanding debt reducers promising success.

Therefore, the FTC or the Federal Trade Commission of the United States has come out with a great plan that can lead not only consumers but also legitimate debt relief services towards success. Under the latest measures by the FTC, debt settlement is regulated and it is stated that no legitimate relief service provider can charge any upfront fee from consumers. There weren’t such regulations before and many consumers faced enormous worries due to fraudulent relief services.

But, today these latest inventions have relieved consumers in a great deal. These new measures have thrown fraudulent debt relief services out of track while the most legitimate and proven settlement companies are invited to perform under supremacy. Therefore, these new laws have certainly become confidence boosters for debt ridden consumers who live in the present world.

Due to these restrictions done by the FTC, consumers are also able to select the best companies with ease. Therefore, one may name these measures as perfect relief options in the present world that provide consumers with much cushion when it comes to the point of eliminating massive debts.

Insurance premiums these days are really getting expensive every year. However, there are still vendors who are offering cheap and affordable rates even to those doctors and medical practitioners who have medical malpractice history. It is normal for companies and vendors to sell their insurances to people with history of malpractice at a high price. But, in the market today, one may still find a good and reputable company that sells cheap insurances.

These malpractice insurances are affordable but it the cover will not be similar to the ones that are sold in the normal market price. Of course, since the insurance is made affordable to these doctors we can never expect that the quality of the insurance would be the same as the expensive ones.

Usually when doctors with medical malpractice history buy insurances that are cheap allowing them to save more money, they would only get the cover that suits their needs. Different insurance policies differ in the type of coverage depending how cheap it is. For example, when you are getting an affordable insurance for this purpose, the cover may only be limited to getting security from the professional fees for lawyers when you are sued for the mistakes that you have done during the course of your operation with a patient. Moreover, you can also get cheaper insurance for medical malpractice by limiting the cover to paying damages to the plaintiff in the case whenever you lose in the case.

Another way to get affordable insurances for those with medical malpractice history is to search online. Over the internet, anyone can easily find a perfect insurance vendor that will provide cheaper insurance premium rates despite of professional liability history. As you search online, you can also get cheaper insurance quotes. Quotes are very popular in the internet. Many people would use this because this is a more convenient way of shopping for insurance online.

Doctors with medical malpractice history may also merge his malpractice insurance with his other insurances like health, real estate, and automotive. You can buy all these types of insurances from one vendor and combine them in one policy only. This is one of the best ways on how to save more on insurances.

Bankruptcy attorneys don’t often disclose just how difficult it may be to obtain good auto financing after bankruptcy. Getting a car loan with reasonable interest rates and good payment terms can seem like pulling teeth at times. If you find yourself in a situation what you need is to be pointed in the right direction.

Some lenders are easier to work with than others. This applies to all areas of credit and finance. Different loan companies have different standards, different requirements, and will approve some types and disapprove others. It’s really hard to know where you should apply for an auto loan when lenders do not openly advertise what type of requirements and standards that they use.

Many times, car dealerships advertise that they can get anyone approved regardless of their past credit. What they may not be disclosing to you is that frequently there are conditions. While some dealerships may actually have the resources to do this, you’ll save quite a bit of money and get a better deal if you arrange your financing outside the dealership. Even better, is when doing this dealerships have to ask for your business, rather than you asking for approval.

When you initiate financing outside of the dealership… you are in a much better position to negotiate the price of a car. Whether you are wanting to get behind the wheel of a new or used vehicle, you will do much better by taking this approach.

Remember that you do not have to accept any offer for credit, although it is always good to know what is available to you. Remember to always read the fine print on a finance contracts before you sign the paperwork and make a solid commitment. Obtaining auto financing is simple if you just use legitimate sources.

The world is in a severe credit crisis and the economies of the world are responding by dramatically contracting. Commercial mortgage lending, though in better shape than residential lending, is not immune to the problems. Deal flow in commercial real estate is down by 75% by some estimates and it’s not because there are not good deals out-there (there are some great deals out-there) it’s because sponsors can’t get deals financed. The institutional lenders such as banks, insurance companies and the Wall Street brokerage firms, are in survival mode. They won’t part with a dollar by lending it out because they fear insolvency if asset values continue to drop. If they can’t sell a loan today, they won’t write it. Commercial real estate, more-so than other industries, depends on leverage; virtually all commercial property is mortgaged.

So where can a property owner, investor and developer turn when the bank turns them down? The answer for an increasing number of borrowers is to private commercial mortgage lenders. Once referred to as “hard money lenders”, private lenders have not enjoyed a good reputation. Today however, private lenders are well respected and highly sophisticated. Private commercial mortgage lenders are often structured as limited partnerships and formed by small groups of wealthy individuals or business entities with large amounts of cash to invest. Hedge funds and private equity firms also form private lending companies or have commercial mortgage lending divisions. Some are set up as corporations others are limited liability companies (LLC). What defines a private lender and differentiates it from institutional lenders, is that private lenders are privately held entities lending their own money for their own benefit. They do not fall under the jurisdiction of Federal or State banking regulators and often “portfolio”, or hold the loans they write rather than selling them into the secondary mortgage market.

Private lenders are unique in-that they enjoy a measure of flexibility that conventional lenders do not. They can set their own lending standards without regard to the credit markets or cumbersome government regulations. They can make decisions fast and fund deals in a matter of days, instead of the months and months that it takes to close bank loans. Lending decisions are typically made by a small group of partners or managers who understand the commercial real estate landscape and act decisively when they like what they see. Private lenders are cash rich, opportunistic investors that are fulfilling an important role during this credit squeeze. Private money is filling some of the void created by the institutional firm’s inability to lend.

None of this is to say that privately funded commercial mortgage loans are necessarily easy to get, just that private money is still flowing while bank money is frozen. Private loans are generally equity based loans rather than balance sheet or credit driven. Loan-to-value (LTV) ratios are significantly lower in the private sector, which means sponsors must come to the table with more cash than they might be used to. It is rare to see a private lender offer to loan any more than 65% of a commercial properties value. Private loans also tend to be short-term in nature; borrowers must have a viable exit strategy in-place. Most private commercial mortgage loans act only as bridge loans until permanent, conventional funding can be secured. They are typically structured as interest only loans that come due in less than 36 months. Rates and origination points are also significantly higher for private loans when compared to conventional financing.

Private commercial mortgage lending is the fastest growing segment of the commercial real estate industry and for many investors it has become the only game in town. Until the overall credit situation improves borrowers will continue to seek alternative funding sources. When the bank says no, and it’s likely they will, commercial property owners do have a place to turn.