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New Horizons Debt Relief- Debt Settlement
New Horizons Debt Relief is a debt settlement company. Debt Settlement is an aggressive approach to debt reduction, which is appropriate for debtors with a serious amount of debt or who are considering bankruptcy. New Horizons Debt Relief, negotiates with the creditors to settle the debt for a lower amount than owed, as the debtor saves their money for a lump-sum settlement payment. After the debt is settled, the creditor will send a letter stating the debt obligation was fulfilled, and will report to the credit bureaus that the debt has been, "Paid", "Settled", or "Settled for less than full amount".
Creditors will usually settle for less than owed when the debtor is under serious financial strain because if the debtor chooses to file bankruptcy, then the creditor gets nothing. Creditors want to get as much money back as they can.
Debt Settlement is a way to get out of debt in the shortest amount of time, and with the least amount of money without filing for bankruptcy. There are some drawbacks such as Debt settlement can also be harmful to a debtor’s credit-rating while they are in the process of settling their debts because creditors won’t agree to settle on an account that remains current. The debtor’s credit report will reflect that they are behind in payments until the debts are settled.
Credit Counselors do not tackle the root cause of the debt problem itself,
...which is the principal balance owed. That's why this method doesn't work for most debt-burdened consumers. Most people struggling with debt simply cannot afford to pay back the full balances, plus interest and agency fees.
Credit Counseling is where you make a single monthly payment to a debt counseling agency. In turn, that agency distributes the money to your creditors on your behalf, ideally at lower interest rates so you can pay off the debt faster. Of all the available debt options, Credit Counseling is by far the most popular, with millions of Americans participating. Does this mean it's the best choice for most people struggling with debt? No! There are numerous problems with this approach, and in recent years, Credit Counseling has come under heavy criticism from impartial consumer groups and government regulators. One of the most misleading aspects of Credit Counseling is the "non-profit" status of most agencies. Consumers often think that "non-profit" means there are no fees involved, but this is not the case. Another huge problem with Debt Consolidation is the divided loyalty of the agencies. Credit Counseling organizations are dependent on creditors for the majority of their income (in the form of kickbacks of 7-15% of the monthly payments), yet the agency supposedly represents the consumer. How can the consumer expect truly objective advice from an agency that directly accepts compensation from his or her creditors? That's why one of the criticisms of the Credit Counseling industry is that it acts like a big collection agency for the credit card banks.
The FTC defines Debt Consolidation as:
You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can't make the payments — or if your payments are late — you could lose your home. What's more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit. http://www.ftc.gov/bcp/conline/pubs/credit/kneedeep.htm
It sounds great in theory, but there's one huge problem: Who will lend you the money at that low rate of interest? The odds are greatly against your being able to borrow enough to satisfy the balances on the smaller accounts unless you borrow against your house. This is a very risky strategy. It's quite popular, of course, but that doesn't make it safe. Why? Because you'll have traded unsecured debts (which are backed only by your signature and not tied to your home or property) for secured debts (which are usually backed by your home). That means if you run into trouble again and have difficulty making the payments on the new loan, you could lose your house to foreclosure! It's almost always a bad idea to pay off unsecured debts (like credit cards or medical bills) by borrowing against your house.
Remember, you got into trouble in the first place by borrowing money, right? You cannot borrow your way out of a debt problem without creating another debt problem!
What The FTC’s Website Has to Say About Bankruptcy:
Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can’t satisfy their debts.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Attorney fees are additional and can vary.
Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.
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To find out whether or not you qualify for New Horizons Debt Relief Program, please take a moment to fill out our online inquiry form, or pick up the phone and call one of our professional representatives toll-free at 866.200.4141. During your FREE, no-obligation consultation, we will discuss your financial situation and explain to you how our program can help you achieve a debt free life!
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