Debt Settlement Company Advice

September 2nd, 2011 — Debt Consolidation

Choosing a debt settlement company is difficult unless the debtor has criteria he can use to discriminate between different companies. Debt settlement is a process by which the debtor settles for less than the full amount of debt that he owes. Obviously, his creditors do not like this very much, which is why debt settlement comes at a high price: damage to his credit rating. While this is unfortunate, debt settlement can have a positive impact, and the debtor can always take steps to rebuild his credit. Debt settlement companies can help the debtor negotiate with his creditors. Here is debt advice about what to look for in such a company.

Honesty About Downsides

The sizable downside to debt settlement is a trashed credit rating. Using this as a yardstick, it is possible to measure debt settlement companies according to how honest they are about this aspect. Legal consequences are also a possibility along with taxation. Any debt settlement company that is not completely upfront about this must be avoided. Reputable companies will disclose these details to potential customers as soon as they enter the negotiation process for potentially becoming a client. Companies that care more about making a sale will not make a point of informing their possible clients about them.

Recent Account Activity

A debt settlement company must investigate the debtor’s accounts thoroughly in order to do a proper job. Creditors may refuse to negotiate over an account and initiate legal action to recover the full balance. Creditors do not like suspicious actions prior to entering debt settlement. In an all-too-common example, the debtor transfers the balance through a large purchase, a loan or a cash advance and then enters debt settlement. The creditor rightly smells a rat and refuses to negotiate. A good company will investigate whether this has occurred beforehand and advise the debtor what to do.

Long-Term Programs

The only way to avoid legal action and bankruptcy with debt settlement is to settle the accounts before creditors get impatient. Debtors must avoid debt settlement companies that put them in a program lasting longer than 36 months (three years). Debtors in shorter programs have a higher probability of success than debtors who are in longer programs. Creditors may decide to forego negotiation and pursue legal action anyway. This possibility may be avoided with a reasonably short program, and the creditor will be satisfied with the result.

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Using Your Self Directed IRA for a Mortgage Investment

September 2nd, 2011 — Debt Consolidation

Having an Individual Retirement Account is a very good savings plan. There are several IRA options these days. One of them is the the self directed ira.

This is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan. IRS regulations require that either a qualified trustee, or custodian hold the IRA assets on behalf of the IRA owner.

Generally the trustee/custodian will maintain the assets and all transaction and other records pertaining to them. The custodian usually offers a selection of standard asset types that the account owner can select to invest in, such as stocks, bonds, and mutual funds. In addition, most custodians will also permit the account owner to make other types of investments.

There are ways to use a self directed IRA. You can purchase real estate that you own or use or real estate that is owned by a family member of lineal descent, such as your father. Also, it can be used for issuing a mortgage on a relative’s new residence purchased by a family member who is a disqualified person as listed above.

Real estate may include residential and commercial properties, farmland, raw land, new construction, property renovation, development, and passive rental income. Real estate purchased in a self-directed IRA can have a mortgage placed against the property, thus lowering the amount of total cash needed for a purchase; however, neither the IRA nor the account owner of the IRA can have personal liability on the mortgage.

FHA or Federal Housing Administration is a government agency whose primary purpose is to insure residential mortgage loans.

The FHA is introducing new guidelines on loan to value ratios and the minimum credit score required for FHA borrowers. In a detailed Mortgagee Letter from the Department of Housing and Urban Development (HUD), effective October 4, 2010, to be eligible for maximum financing, borrowers will need a minimum 580 credit score fha mortgage.

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