If you ever find yourself in a situation where money problems and debt threaten to take over your life, you’ll usually have to make an important and difficult decision. When you just can’t keep up with the payments and phone calls any longer, you’ll often be forced to make a choice between debt settlement and bankruptcy to fix the problem. Although bankruptcy is a frightening word to many people, some will gravitate toward that option because they feel it is the easiest solution or the only solution.

The thought of having all of your debts wiped out in one fell swoop is comforting for some people, regardless of any negative impact choosing bankruptcy may bring. The reality is that in most cases, opting for debt settlement over bankruptcy ends up being the wiser choice for a variety of different reasons.

Basically, debt settlement refers to coming to agreements with your creditors and reducing your debt load in an organized payment plan. A consumer proposal is one form of debt settlement that enables you to pay a portion of your debt, but have it count as being paid in full. This option will be discussed and likely offered as a solution if you visit a consumer proposal Toronto office when you have serious money problems. With bankruptcy, nothing is paid to creditors and you may even end up losing some assets in the process. The reason a creditor would even consider agreeing to a debt settlement situation is because they know that with bankruptcy they won’t be getting any of their money back, and with a consumer proposal Toronto or other form of debt settlement, they will at least get some of it back.

Your credit score is one of the primary reasons that debt settlement may be more attractive than bankruptcy. If you’ve let yourself get to the point of considering bankruptcy you likely have suffered some sort of credit damage, but it will get even worse if you choose bankruptcy over debt settlement. Of course, debt settlement will affect your credit score too, but the damage will be less and it won’t follow you around as long. Plus, as you continue to make the payments on the debt settlement agreement, your credit score will gradually start to bounce back. In some cases, bankruptcy will actually send your credit score back to zero, which makes it quite difficult to secure any type of credit in the future.

With debt settlement, your history will also show that you’ve paid off your debts in full, which is an attractive aspect for future lenders. The fact that not every type of debt is covered by a bankruptcy trustee is another advantage debt settlement enjoys. Only unsecured debts like credit cards, loans and lines of credit are covered by bankruptcy. Things like your home, car, spousal support or child support debt is not taken care of. Many people mistakenly believe that everything they owe or have ever owed will be wiped clean with bankruptcy in Toronto, but that just isn’t the case.

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What would it feel like to have your wages garnished for a debt that you didn’t even owe? This unfortunate scenario happened two times to a New Mexico woman who had no connection to the Target Bank account or to the collectors employed by Target. With an explosion of growth in the debt buying industry since the 1980’s, cases like these are becoming increasingly prevalent. Now the combination of technology and large debt buyer firms has created a profitable industry that also holds the record for highest industry complaints logged with the Federal Trade Commission. Consumers have very real options when faced with unscrupulous debt collectors, they can fight back by taking advantage of the statutes enacted in the Fair Debt Collection Practices Act.

Some debt collectors phoned Lucinda Yazzie, subjecting her to the unpleasant experience of hearing them claim that her Target card was carrying a late balance. She informed the collectors that she did not owe the debt and that there was another person in the area with the same name as her. Collectors received a garnishment order regardless of her efforts to inform the debt collection agency multiple times. Her employer insisted this was not the same employee and the garnishment was dropped. Yazzie was faced with further legal action by the same debt collector only two years later and her wages were garnished again. Until filing a lawsuit of her own for FDCPA violations, the former standing order was still considered in affect.

She received a settlement from a lawsuit in the amount of $1,260,000. In this particular instance the compensation is definitely worth considering. Lucina Yazzie took action to hold collectors accountable; but most Americans won’t defend themselves against an industry that’s very well funded and composed of very motivated agents who are always being pushed to the maximum on very noisy boiler room floors.

Owing its’ origins to the Savings and Loan Crisis of the 1980’s, the debt buying industry and third party debt collection has come a long way. After dealing with Savings and Loan assets the debt buying and collection industry known by insiders as the “Adjustable Receivables Management” industry, branched out into credit card and other consumer debts.

Until the recession in 2008 debt buyers and collectors grew slowly but steadily, and then analysts predicted an increase in the business. These estimations end up being true because in 2007 there were approximately 100,000 complaints. That figure jumped to 130,000 in 2009. Several factors influencing the rise in complaints include aggressive tactics that ignore legal boundaries, technology to increase calls to consumers and the increasing use of local courts to sue for delinquent credit card debts.

Creditors are required to hire collection agencies with a qualified attorney in the same state as the one who owes the debt, however the empty threat of “legal action” is a favorite among bill collectors. This is often an FDCPA violation if the collector does not have the immediate capability and intention to sue on the debt.

Research has shown that respondents who appear before the court for their creditor lawsuits are much more likely to have their cases dropped than those who did not. The study also states that the most important thing a consumer can do if sued by a creditor is to respond through the court system within the time allowed even if the debt is not theirs.

The courts are rejecting the legal actions of a lot of creditors, which shows that they are often unable to follow through with their threats. But this is a business that has a 58% increase of profits in the year 2010. Sometimes it helps to not follow all the laws and be aggressive.

Because of the high volume of complaints the Federal Trade Commission urges consumers to use the protection provisions in the Fair Debt Collection Practices Act to defend themselves against non-compliant debt collectors. In much a similar scenario to the intensely partisan legislative scene that exists today, the FDCPA barely passed after a tenuous debate, and was enacted in 1977. However Congress ultimately realized that there was a need to protect people from all parts of society against abusive debt collection practices that were also rampant in the Seventies. The need still exists today.

In an Article on money by CNN the proprietor of a debt collection agency notes that “Debt doesn’t go away as fast as it used to”. Debt is now a fact of life and a burden to manage for many Americans. Fortunately there are Certified Debt Specialists who have experience talking to hundreds of bill collectors. These people are professionals and are aware of the ins and outs of the system. More and more consumers are realizing the need for a specialist with technology that is certified to help negotiate with big debt collection companies that are continually growing.

Debt Settlement

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This article talks about how to get rid of credit card debt. Defaults on credit card accounts are at an all time soaring. A lot of consumers get hold of too many cards and then cannot keep up with the amount they owe. If a credit card company files a lawsuit against you after a default, they must provide evidence in certain issues in order to win their case.

First and foremost, they must prove that they are entitled to start a lawsuit against you. This can be made in several ways. The credit card company must produce some sort of documentation showing that you are of the same mind to establish an account with them. This typically would be by way of a written application that has your signature. If they fail to create such a document, you may have a justification or opposition to their lawsuit.

At present there are so many credit accounts opened over the internet, or via telephone. In those instances, the credit card company should be able to produce an electronic signature page for internet applications, or, they should be able to provide a written documentation that at a minimum summarizes the oral telephone application. If they fail to produce such credentials again, you may have a valid justification or opposition to the lawsuit.

The next thing that the credit company must prove is the terms of the account. This would comprise the terms of payment, the principal charges, the default rate, the interest rate, and the remedies in the event of a default. These terms are typically forwarded to you after you have opened your account, or are included with your written application. Often times, the credit companies are changing the terms of the agreement while your account is active, and they are constrained to send you a copy of the new terms of the agreement. This becomes a crucial factor of a credit collection case. The company must prove which terms apply to which charges on your account. A failure to do so on their part can provide a reasonable defense or objection for you as the customer.

Another thing that the credit card company must prove is that a default occurred, and that they are entitled to charge you. This can often be shown by merely presenting support of a missed payment. If a credit card company cannot provide enough proof of all of the foregoing, then you may have a valid defense to any lawsuit that may be filed against you. Please be sure to discuss with your local attorney regarding the laws of your state, as well as the credit card collection cases.

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