Here are some sobering statistics about American debt.

• About 1.6 million U.S. households -- one of every 73 -- filed for bankruptcy in 2004.

• Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts.

• Some 40 percent of American families spend more than they earn each year.

• Average personal wealth of a 50-year-old American, including home equity: less than $40,000.

• Nine of 10 Americans claim credit card debt has never been a source of worry.

• But 47 percent would refuse to tell a friend how much they owe.

• Twenty-three percent of Americans admit to maxing out a credit card.

• Eleven percent of Americans admit card debts went to collection.

• Thirteen percent of Americans have been 30 days late paying credit card bills in the past year.

• The average graduate student has six credit cards and one in seven owes more than $15,000.

• The personal savings rate in the United States has dropped from 8 percent in the 1980s to just below 2 percent since 2000.

I’ve seen several articles recently (most likely sponsored by the big banks) really trashing the debt settlement industry and debt settlement companies in general saying that they don’t work which is absolutely not true.

Just like in any industry, there are good companies and bad ones.  Not all companies are the same and who you choose to work with will make a big difference in how successful you will be.

Debt settlement works and it works well for the right person.  Each situation is unique and debt settlement is not a one-size-fits-all solution.  It must be the right solution for you and you must be committed to making it work.

Many people want to look at debt settlement as a “magic pill” or “get out of debt free” card.  It’s not like that.  It’s a serious program that takes 2-3 years to complete that will save on average 50-60% of the debt owed.  But it doesn’t happen overnight and it’s not without its drawbacks.  

A legitimate company will explain the program thoroughly along with the other options available to make sure that it is the right choice for you.  They will also explain exactly what to expect and what you need to do to be successful.  If you can’t commit to doing what it takes then it’s not right for you.  Here are a few tips to make sure that you are successful if you choose the debt settlement route.

1. Do your homework and find a legitimate company that follows all state and federal guidelines and is a member of one of the professional trade organizations like IAPDA, TASC, or USOBA.  Check them out with the secretary of state to make sure that they are a legitimate and licensed business.
2. Be completely candid and honest with the settlement company about exactly how much you owe and what you can realistically afford.  They are there to structure a program that works for you and need to know the specifics to do that.
3. Comply with the terms of the contract and know what they are.  Read the contract before you sign it and ask questions if you have any.
4. Make your payments each month.  You can’t get out of debt if you aren’t fully committed.
5. Don’t talk directly to your creditors or interfere with the negotiators efforts.  The creditors are professionals and know how to intimidate you and coerce you.  Professional negotiators know how to “talk” the talk and that’s what you are paying for.
6. Be Realistic.  Remember the amount of time you signed up for the program.  That’s how long it takes to get out of debt.  Don’t sign up for 36 months and then get mad when you aren’t out of debt in four months.  Be patient. 
7. Start saving and cutting back on any unnecessary expenses.  You are trying to get out of debt and the faster you save money, the sooner it will happen.

Being in debt is a very stressful situation and one that requires immediate attention before it gets even worse.  Finding the right company with trained, caring financial consultants is the first step to navigating a path to financial freedom.  Debt settlement, done properly by a reputable company, WORKS.  It will get you out of debt much faster than you could just paying your bills normally and you will pay back far less.  You'll also have a chance to 'start over' without the stigma of a bankruptcy.

The economy is in the tank and Americans are suffering.  It’s a natural response for the government to step in to “help”.  Last year we saw bail-outs, takeovers, and new laws all in an attempt to help stop a big problem from getting worse.   Some were probably necessary but others maybe not. 

Look at the new credit card laws.  There is no argument that Credit Card companies have been taking advantage of consumers for years.  But in the days when credit was plentiful and interest rates were low, no one really seemed to care.  It only got ugly when the economy tanked and large banking institutions started to look for ways to minimize their losses (at the expense of their credit card customers).  Banks that were losing millions in foreclosures could make up some of the loss by raising interest rates, increasing late fees, and doubling the minimum payments due.   But at what cost?   Most card issuers didn’t have to give the consumer much notice before changing these terms and therefore it took a lot of Americans off-guard and placed them in a bad financial situation.

The President, in an effort to stop consumers from being taken advantage of, signed a new law that will force the card issuers to give consumers more notice before changing terms.  In response, most credit card companies have already raised rates, increased fees and changed terms BEFORE the new law goes into effect.  And these banks have not just penalized borrowers with bad payment history--almost everyone was hit and many have even had their cards cancelled without warning further hurting their financial situation.

But this is probably just the beginning.  In the future we will most likely see all credit cards come with stiffer terms and gone are the days when you could hop from one 2.9% offer to another.  It’s likely as well that most banks will go back to cards with annual fees and offer fewer perks to customers who use their cards frequently.  In fact, a study by Synovate, a market research firm, found that U.S. households are already receiving dramatically fewer card offers in the mail.

Hopefully in the end, it will all even out but I would rather see the consumer have the option to have a card with high fees, low fees, or whatever perks are offered rather than to see the credit market so tight that you have to “take what you can get”.   Sometimes regulations end up hurting the very people they are designed to help.

Almost everywhere I turn, I find an article of editorial chronicling the mounting dissatisfaction that consumers have with their credit card companies.  And for good reason.  Card issuers have slapped more than half of Americans with higher interest rates, unexpected fees, lowered borrowing limits, and higher late payment fees.  And if you haven't been hit yet, your time may be coming soon.

More and more consumers are trying to fight back by switching to other cards or negotiating their rates.  But for some, getting a new card is becoming increasingly difficult and the higher interest rates are making it almost impossible to pay off their balances.  If you pay your cards off every month, you can probably apply for a new card and transfer your balance without too much trouble.  Remember--you are the customer!  If you are one of the 46% who carry a balance though, that solution may not be so simple--especially if your cards are maxed out and you are using them to meet your monthly expenses.  If that is the case, you need to address your situation right away before those fees force you into a bad situation financially.

A growing number of Americans are carrying high balances on their cards just to make ends meet and aren't sure when (if ever) they will be able to pay them off.  These high balances are hard to make the minimum payments but as card issuers jack the minimum payments from 2% to 5% and the interest rates from 11%-14% up to as high as 27%-30%, that can literally push these people to the brink of bankruptcy. 

If you find yourself in this situation, contact your credit card company immediately and try to negotiate a lower rate.  If that doesn't work, it may be time to turn to the experts.  The sooner you address the problem, the better chance you have of success.

This is a very common question and one that is easily explained.  In almost all cases, secured debts are not negotiable and in almost all cases, unsecured debts are.  That’s the short answer, but here’s the difference.

All debts are either secured or unsecured.  A secured debt is usually tied to an asset, like a car for a car loan or a house for a mortgage. If at any time you stop making payments, the lender (or lien holder) can repossess your car or foreclose on your house.  Secured is the same as collateralized and they just take the collateral if you can’t pay the debt.

An unsecured debt is not tied to any asset and includes most credit cards, bills for medical care, signature loans, private student loans, and debts for other types of services such as cell phone service and other utilities.

Some examples of unsecured debt that are not negotiable are:  government backed student loans, taxes (current or past due) and other government loans.  If you owe money to the IRS, you are most likely going to get a payment plan (best case) unless you file for bankruptcy.

One example of a secured debt that might actually be negotiable is your home mortgage.  Over the past year, we have had tremendous success with home loan modifications.  In most cases, we were able to negotiate a new lower payment for our clients significantly improving their ability to pay and therefore avoiding foreclosure.

There are many reasons why people get into debt and only just a few solid ways to get out.  The most important step in getting out of debt is acknowledging your situation and analyzing your finances to find out if you really have a problem and if so, how big is it.

The first step is to make a budget.  In one column write down all the money you earn in one month and in another column, write down everything you spend including your Starbucks habit and any other seemingly small incidentals that can really add up.

Total the two columns and that’s your first snap-shot into your finances.  Then start to work on the difference.  If you are spending way more than you are earning, you are headed for serious trouble.  How big of trouble depends entirely on the difference between the two numbers.  If it’s less than 10% difference, you can probably cut back and make it work by cutting back on some of your expenses like going out to dinner, shopping, and other extras.  If the difference is between 10-20% you may need to sell something like a car or cancel your cable service to really balance your budget.  Anything from 20-50% may require a restructuring of debt.  Anything higher than 50% may mean a possible bankruptcy.

To get yourself out of debt follow these simple tips:

1.     Write down every single thing that you spend money on for a month...everything!

2.      At the end of the month, cross off all the things that you know you can do without and stick to it.

3.      Don’t buy anything that you don’t absolutely need and look for the best deal on what you do need.  Use coupons at the grocery store and only buy the meats cuts and produce that are on sale that week.

4.      Evaluate all of your utility expenses.  Cut back on water, electricity, gas use and cancel your cable or reduce the package to save money every month.

5.      Don’t drive anywhere that you don’t need to go and combine all of your errands into one trip or even at one store to save on gas.  Carpool for school and work if possible.

6.      Try to negotiate with any of your credit cards that you are carrying a balance on to lower the monthly interest rate.

7.      Save aggressively to start paying down any debt you may have accumulated and leave your credit cards at home so that you won’t spend anything more.

8.      Prepare for the once a year expenses like auto insurance and property tax.  If you have a little money left over at the end of the month, save it for those expenses or any type of emergency.

Have you seen the movie? A typical Hollywood entertainment piece that depicts a young woman living in New York City who loves shopping and fashion so much that the mannequins actually speak to her and beckon her to buy more than she can afford. Today’s marketing tools are sometimes just as seductive enticing people to buy things that they both don’t need and can’t afford. After she maxes out every credit card and has no money to pay her bills, she ironically gets a job as a columnist for a money magazine.

The movie had all the right elements; the love story, the conflict, and the villain. The bad guy is a tenacious and nasty bill collector who calls daily and is stalking the poor girl trying to get her to pay her debt. For anyone who is actually living that nightmare, the movie would not be very entertaining but it did highlight the harsh realities of being in debt.

Of course, it had a “Happy Hollywood” ending where the girl was able to get herself out of debt with no help but that’s not how is usually works in the real world. In the real world, there is no easy way out but fortunately First Rate Debt Solutions has real solutions that do work for real people. Debt Settlement or Debt Management is the most effective way to get out of debt, escape the nasty bill collectors and avoid bankruptcy. Call us today for details on what we can do for you. 877-332-8730

If you're one of the thousands of Americans struggling just to make their minimum payments on their credit cards each month, I have bad news.   Citibank, MBNA, and Bank of America recently announced that they are raising the minimum monthly payment from 2% to 4% of the outstanding balance.  That's double and it may be just enough to send tens of thousands more Americans into serious delinquency.  Other major banks are expected to follow suit as well.

So what can you do?  The first thing is to figure out if you can continue to make your payments.  If not, you need to address the situation immediately.  The longer you wait, the more the interest, late fees, and balance will grow.

If you have savings, you may want to take some to pay down the balances but if you are truly cash-strapped and can't make ends meet then a debt settlement or debt management program may be in order.  The key to any effective debt program is to be qualified by an expert and then to get into the program before your debt escalates to the point of bankruptcy.

At First Rate Debt Solutions, we have trained experts who will analyze your situation and customize a program to meet your financial goals and budget.  Times are tough but there are answers out there for people in trouble.  If you need help, give us a call.  Toll Free (877) 332-8730.

It seems like almost every day I see either an article or a news story on companies that are targeting vulnerable and desperate consumers and taking advantage of them. The last one I read was about a local company being shut down for fraudulent loan modifications after taking money from clients and never pursuing the lender for the modification at all.  Aside from the disturbing fact that these businesses are out ripping people off, it offends me so much because it hurts the credibility of the many legitimate businesses that are out there operating legally and ethically and truly trying to help consumers in an economic recession.

A loan modification can truly be a life-saver for homeowners that have loans that have adjusted beyond where they can pay and it's a valid an legitimate service when you hire a professional.  But the program is not for everyone.

Here are a few tips to help make sure that you don't get scammed.

• Carefully check the company's reputation.  A loan modification should be done by an attorney.  You can verify with the state bar association if the attorney is in good standing.  If the company you hire is not attorney-based, they should be licensed by the state and you can check that license as well to make sure they have the proper credentials to be in business.
• Make sure you are evaluated and pre-qualified before you sign or pay anything.  A loan modification doesn't work for everyone and a legitimate company will pre-qualify you to make sure you have a good chance at success before they sign you up.
• Avoid ads that "promise" or "guarantee" results.  No one can guarantee the results as it must be negotiated with the bank.  The company's success rate is more important.
• Make sure they have experience.  Don't hire someone who has no experience in the lending/real estate or legal fields to do your loan modification.  There are too many new "fly-by-night" companies that just opened and have no interest in long-term success (yours or theirs).
• Read your contract.  Do not sign anything with blanks not filled in and never sign anything that would turn over the deed of your house (the worse type of scam out there).

Remember, to qualify for a loan modification, you must be able to pay the "new" modified payment which means some type of income.  If you are out of work and have no income, you are not going to qualify.  Beware of anyone who tells you otherwise.  By following a few common sense tips and asking a lot of questions, you should be able to locate an honest and legitimate company that will explain their program in detail, answer all of your questions and help you determine if a loan modification is right for you.

The consultants at First Rate Debt Solutions are always happy to provide a free consultation with no obligation or commitment.

Debt settlement has been around for years but a lot of people really don’t know about it.  After hearing how the program works, the first question is usually, "can the debt settlement process/program really be legal?"  The answer is absolutely YES!  Debt settlement is a legal and effective solution used by thousands of Americans to help avoid bankruptcy.  The basic idea behind debt settlement is very simple: negotiate deals with credit card companies that are mutually beneficial for both parties.

If a consumer cannot pay their debts in full and is considering bankruptcy protection, there is a good chance that the creditor will not get any or very little payment.  With debt settlement, we negotiate with the credit card company for the consumer to pay a lump sum to satisfy the outstanding balance but usually only a small percentage of what the original balance was thereby benefiting the consumer as well.

The greatest advantage for the credit card company is that they avoid any future problems with collecting the debt, and any concession made on the creditor's part is most obviously tax deductible.  If the consumer files for bankruptcy, the creditor is most likely out of luck so this is the perfect example of “something is better than nothing.”

So then why are so many skeptical of the program and its results?  The problem with debt settlement is not the legality of the practice, but the ethics of some who practice it.  Unfortunately, a number of unethical debt companies have been found to take advantage of consumers' financial strife to boost business.

Some companies with no experience in the finance industry are just popping up over-night, taking money, making promises, but rarely delivering.  Those few “bad apples” make it harder for those of us that are operating ethically to gain the trust of the public.  The debt settlement industry is no different than any other and you need to do your research before you sign up.  We have been in the financial industry for years and we are committed to helping consumers find real solutions to the debt problems.

Debt Settlement has worked for thousands of Americans to help them get out of debt legally, honestly, ethically and most of all quickly.  If you think you might need help, one of our Debt Settlement consultants is here to answer any questions you have and provide a free, no obligation quote on what we can do for you.