Federal Debt Reliefs is here to assist you!

Debt may seem complex and the very thought of debt settlement even more intricate. However we are here to shed light on the entire situation. You no longer have to battle your financial situation alone. Debt relief or debt settlement is the process of negotiating the final amount that can result in a reduction of debt up to 65%. Our consultants are available not only to inform you of the options, but also to assist you in choosing the path that best suits your lifestyle.

In most cases we recommend debt settlement to most of our clients, due to effectiveness. However there are other options we like to keep open for clients. When selecting the right option for you, three key factors must be kept in mind: The amount of debt, the type of debt, and your ability to repay the debt you owe.

Your options:

  • Debt Settlement
  • Credit Counseling
  • Debt Consolidation
  • Minimum Payments
  • Bankruptcy

For further information on the five debt relieving options or for answers to your questions, feel free to contact us.

Debt Settlement

Debt consolidation can be a viable solution, but it’s not right for everyone, particularly if you don’t own a home or are unable to make high monthly payments. For many consumers, debt settlement (aka debt negotiation) is the most cost-effective option to pay off debts and avoid filing for bankruptcy.

By allowing Federal Debt Reliefs to negotiate your debt with each of your creditors, you can cut down your debt to a fraction of what you currently owe. Our program is custom-built for each client’s current personal and financial situation in order to make the process as affordable as possible.

Our dedicated team of financial professionals has spent years developing, testing, and adjusting our negotiations process in order to produce optimal results for our clients. Through the relationships we’ve established with creditors, we are able to successfully negotiate the debts of our clients for substantially less than what they owe. We are professional, cooperative, and unlike other credit counseling programs, we work directly for you, not the creditors.

For more information, please complete our brief form for a free, 10-minute evaluation. A representative will contact you soon to discuss how to get started, with no obligation.

Debt Consolidation: Combining Your Debt

Debt consolidation is one of the most common consumer debt resolutions available. It can be a good solution for some; but as with all financial decisions, it’s important to be 100% informed before committing to a debt consolidation program.

How does debt consolidation work?

Debt consolidation is the process of transferring unsecured debt into secured debt, or relocating debt from one place to another. In most cases, this involves transferring all your credit accounts into one line of credit. Other times, debt consolidation firms will advise you to refinance your home as collateral in order for you to make your creditor payments.

While this may not sound like such a bad idea, remember: This does not change the actual principle amount of the debt owed. You will pay 100% of the debt in due time, including the accruing interest. And if payments are not met, you may risk losing your home.

Debt consolidation can be suitable for consumers who have minimal debt, and are fully capable of making payments. Otherwise, we recommend an alternative solution.

Debt Consolidation vs. Debt Settlement

Unlike debt consolidation, debt settlement will actually reduce the debt you are required to pay your creditors. Federal Debt Reliefs can negotiate the amount you owe on each of your creditor accounts, significantly minimizing your balance on each one.

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Consumer Credit Counseling

Be cautious of credit counseling companies!

Often, consumer credit counseling involves negotiating with creditors in order to minimize payments and interest rates. Yes, it can be effective, but only for clients who are able to pay off the entire debt. Unlike debt consolidation, this process does not minimize the amount of debt.

Many credit counseling services claim to be non-profit organizations; however, a little-known secret is that many receive payments from creditors. In other words, many credit counseling services are clandestine collection agencies that can actually hinder your ability to get out of debt, especially if the creditors who pay them “work with you” by charging you a higher interest rate. For organizations like this, the goal is not to minimize your debt; instead, their goal is to prolong it.

Beware of credit counseling services that:

  • Charge high, up-front or monthly fees for enrolling in their program
  • Pressure you to make “voluntary contributions”
  • Refuse to send you free information about the services they provide until you provide your personal credit information
  • Try to enroll you in a debt management plan (DMP)* before they have reviewed your financial situation

Instead, trust Federal Debt Reliefs to provide consumer credit counseling that is ethical and honest, resulting in the most favorable outcome possible. Our debt counselors never ask for your personal information until you are ready to begin receiving our services; and, they make sure you thoroughly understand the process prior to getting started. Our program is affordable, manageable, and can easily work into your existing credit card budget.

For more information, We can be reached through the contact form.

*A DMP is an arrangement with unsecured creditors that prolongs the period during which the debt can be paid. This resulting in smaller monthly payments, but far higher interest rates.

Bankruptcy: Why To Avoid?

Lawyers and other advisors may suggest that bankruptcy is the only suitable way to get out of debt, but this is not the case. Bankruptcy results in consequences for years to come, not the least of which is a damaged credit score.

Rising Bankruptcy Fees

New bankruptcy regulations have added to the complicated requirements in order to file for bankruptcy. Today, filing for bankruptcy is a more time-consuming process than ever, a process you pay for in the form of high legal fees. New regulations also mandate that your legal representative must personally vouch for the accuracy of the information that you provide. Of course, your legal representative will charge you accordingly for this extra time and effort. It stands to reason that with new bankruptcy legislation proposals occurring all the time, this is only the beginning of the rough ride that is to come.

New Bankruptcy Laws

There are two types of bankruptcies that apply to most individuals: reorganization (Chapter 13) and liquidation (Chapter 7). In 2005, legislation was passed that allowed federal courts to change the order of Chapter 7 Bankruptcy into Chapter 13 Bankruptcy. Although Chapter 13 filers are required hand over all of their disposable income, they are also still required to calculate their disposable income using the allowed expense amounts dictated by the IRS, not their actual expenses. This means that debtors may be required to pay a much larger amount of their “disposable” income.

Bankruptcy and Property Values

Under the previous legislation, Chapter 7 filers could rate or value their property at what they could get for it at auction. Today, new laws have completely transformed the Chapter 7 filers are required to value their property. According to new law, the debtors are allowed to value their property according to what a retail buyer would have offered them, in other words, at a much higher number. Because of this, many of these debtors stand to have their property taken and sold by the trustee.

Eligibility Constraints for Chapter 7 Bankruptcy

Originally, a debtor had the right to choose from the type of bankruptcy that he saw fit. Mostly debtors prefer Chapter 7, but new laws have imposed some constraints. Now, debtors who are determined to be high income are often prohibited from filing Chapter 7 bankruptcy.

Depending on your monthly income and the median income in your state, you may be required to pass a complicated means test in order to qualify for filing Chapter 7.

New Requirements for State Exemptions

Today, those filing for bankruptcy must live in a state for at least two years prior to filing in order to use that state’s exemption laws (previously, they only needed to live in the state for three months). For those who have lived in their current state less than two years, the exemptions of the state in which they previously resided must be used.

Because exemption amounts vary widely from state to state, these new residency requirements could make a big difference in the amount of property bankruptcy filers are permitted to keep. For example: If you recently moved from California to Nevada and you have a fairly valuable car, you can claim Nevada’s $15,000 exemption for motor vehicles once you have been in the state for two years. If you have resided in Nevada less than two years, you are required to use California’s exemptions, only $2,300.

The only debtors who may be allowed certain bankruptcy exceptions are hurricane victims. If this applies to you, please read on:

Hurricane Victim Debt Relief

After Hurricanes Rita and Katrina, federal trustees announced enforcement guidelines to benefit those who filed for bankruptcy after these disastrous events. The goal of the guidelines was to provide leniency to bankruptcy filers who became displaced as a result of the hurricanes. Now, victims of natural disasters who file for bankruptcy enjoy the following exceptions:

Credit counseling will not be required.
Debtors who cannot provide required documents due to a natural disaster will not face enforcement actions.
Trustees have to consider the income loss, increased expenses, and other effects of a natural disaster as “special circumstances” that may allow a debtor who doesn’t otherwise pass the means test to qualify for Chapter 7.

Trustees will provide alternate means for debtors to attend creditors’ meetings, if necessary. More on these guidelines can be found “http://1.usa.gov/e43sYg” here.

Bankruptcy: The Bottom Line

Bankruptcy is not always the best option. By seeking debt relief from Federal Debt Reliefs, you can avoid bankruptcy and start over with a cleaner, more attractive credit record.

To avoid bankruptcy and seek credit counseling now, fill out our quick contact form for a prompt response. We look forward to helping you!

Minimum Payments

The Current Path

The chart below lists the number of years it can take to pay off a credit card balance, based on a 19% interest rate and a minimum monthly payment of 2.1% of the outstanding balance (most creditors require a minimum monthly payment of 2.0%-2.5% of the outstanding balance).

Source: CNN Money

Debt Amount Pay Back

(Including Principle & Interest) How Long Will It Take:

Debt Amount Pay Back
(Including Principle & Interest)
How Long Will It Take
$10,000 $26,276.59 42 yrs 9 mos
$15,000 $55,370.41 48 yrs 11 mos
$20,000 $74,464.22 53 yrs 3 mos
$25,000 $93,557.98 56 yrs 7 mos
$30,000 $112,651.77 59 yrs 4 mos
$35,000 $131,745.58 61 yrs 8 mos
$40,000 $150,839.39 63 yrs 9 mos
$45,000 $169,933.22 65 yrs 6 mos
$50,000 $189,027.02 67 yrs 1 mos
$60,000 $227,214.61 69 yrs 10 mos
$70,000 $265,402.22 72 yrs 2 mos
$80,000 $303,589.81 74 yrs 2 mos
$90,000 $341,777.43 76 yrs
$100,000 $379,965.06 77 yrs 7 mos
$110,000 $418,152.62 79 yrs
$120,000 $456,340.27 80 yrs 4 mos
$130,000 $494,527.82 81 yrs 6 mos
$140,000 $532,712.48 82 yrs 8 mos
$150,000 $570,903.04 83 yrs 8 mos