Financial Future

An IVA is an Individual Voluntary Arrangement, which is a formal agreement you make with your creditors. They are arranged through specialist companies and are an agreement you make to pay a certain amount of money to your creditors for a set period of time. Once this amount of time is up any debt you still have is written off completely. When you enter into an IVA you will only need creditors who are owed 75% of your debts to agree to the arrangement, because it is a legally binding formal agreement your remaining creditors will have to follow it as well. The number of creditors who agree is not a factor, so if a single creditor is owed 75% of your total debts you may only need to get that single company to agree to the terms. An IVA gives you more control over the situation than a bankruptcy, and you pose less risk of losing your home or other assets. Generally in an IVA your interest is frozen from the time it starts so the debt can no longer increase. You can even continue business trading and are able to have a bank account under an IVA. The specialist company that sets up your IVA will factor their fees into the payments you make each month under the agreement, though IVAs cost money to maintain it will cost you less than filing for bankruptcy. Not all debt is best controlled by IVAs, when you contact a debt management company beware that some may encourage you to get one simply so they can receive the fees and not because it was actually your best option. With this in mind make sure you go to a reputable company and they are giving you advice for your situation that is actually relevant and not just a way to get money from you. The right company will advise against an IVA unless it truly is your best option. Research IVA specialists and see which ones come most highly recommended and have a reputation for successfully helping people become debt-free. Approach only these established and reputable companies and perhaps apply to a handful of them. Wait and see who comes up with the best deal for you and follow through with it if you feel it is the best solution. This is the safest way to go about finding a trustworthy IVA specialist with your best interests in mind.

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Accounting techniques are the different ways in which a business will organize their financial records in preparation for financial reports. There are two main methods to choose from, which are called the accrual basis and the cash basis. The method chosen will depend on a number of factors, including IRS (Internal Revenue Service) tax requirements, sales volume and if the business gives credit to customers.

Although these records are needed by law, they can also be useful for business owners when it comes to business decisions based on financial situations. The method chosen by small business owners is important because although the technique can be changed at a later date it can be difficult to make the change over. With this in mind small business owners need to really think about which technique most suits their business.

The cash basis recognizes expenses and income as a real time cash flow. Income is not based on when it is earned but rather on receipt of funds, while expenses are not recorded when they are incurred, but rather when they are paid. This technique allows for flexibility when it comes to taxable income, you can delay bills so you do not get the money until after the current tax year, or you can pay bills the moment they are received or before they are due in order to accelerate your expenses.

You can get a lot of benefits with the cash method; namely, compared to accrual method, it is a far easier to look at, it gives you a much better idea of how your finances are doing, and you do not have to get taxed on certain expenses till the following year. Due to the fact that you are altering the times at which you pay and take in money, though, you might tend to adjust details of how your company is doing financially, which can be misleading. What’s more, accrual methods work harder to show when you actually spend and took in money.

With the accrual basis of accounting. you record income and payments when you actually earn them, instead of when you choose to pay them. With the accrual method, you will have a much better notion of how you are doing financially in the long term. However, it is far more complicated to figure out and record, and you might have to pay income taxes on the money you bring in before you actually get it, which can be unfortunate to go through.

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Is debt settlement right for you? This may give you the answer….

Hi, my name is Joshua Rodriguez I am the founder and editor to 1-2-3-CreditCards.com. In working with a financial help website viewed by thousands of people all over the country by thousands of people every day, I have come across many questions about debt settlement. The most prominent of these would be “Is debt settlement the right option for me?”. In most cases, the answer to that is no but I cannot say that without knowing your current financial situation. So, instead of trying to steer you in the right direction without knowing your unique needs, I am going to give a series of questions and answers. I do hope that this will serve to be a very use full guide to you in your battle to become debt free.

Question: Will debt settlement hurt my credit?

Answer: YES!!! I do hate to be the bearer of bad news but, settlement programs are designed to be a last ditch effort before having to file bankruptcy. These programs will indeed harm your credit. However, if you are considering settlement, then you are having an extremely hard time meeting your current financial obligations. You are noticing your payments being sent in late and calls from charge card account companies asking when the payment will arrive. If you are not experiencing this, then debt settlement would not be the right choice, however, if you are experiencing this, then if you do not act fast you are just prolonging the negative effects that your current financial hardship is going to cause to your credit. So a simple answer to this would be “yes debt settlement will harm your credit, however if you are truly in need of debt settlement, then your credit is the last thing you are worried about at the moment.

Question: How long will the effects of debt settlement last on my credit?

Answer: Debt settlement causes the banks to go through a charge off process on your debts. This means that, the bank has deemed you debt to be a lost cause. Charge offs are the worst thing other than bankruptcy and judgments that can show on your credit. While it does vary from state to state, charge offs stay on your credit for about 7 years.

Question: How does debt settlement work and why does it have such a negative effect on my credit?

Answer: Debt settlement is actually a fairly simple concept to follow. When working with a debt settlement corporation, the payments that you send are not going to your charge card account accounts. Instead, these payments will go into a sort of trust fund and be saved while gaining interest and preparing for the settlement to take place. All the while, your charge card account company is not receiving a dime. This process can last 36 months or longer. After 3-12 months, the bank decides to charge off on the debt and sell it to a collections agency. This is where the severe effect on your credit starts. Once you have enough money saved up in the trust fund, the debt settlement corporation will start negotiating a settled amount with the collections agency. The collections agency that baught your debt for about 10 cents on the dollar will now negotiate a payoff amount usually around 45 cents on the dollar. This makes everyone happy, the collections company gets paid and you pay off your debts at a tremendous savings. On your credit report, you will now see that account as “paid at a settled amount” instead of “paid in full”! This will stay on your credit for up to 7 years. Now put yourself in a lenders shoes, if you only had a set amount of money that you could loan in hopes to make a profit, and someone applied for credit from you with this on their credit report, would you loan them the money? This is something that will harm credit and now I hope you understand why.

Question: This brings me back to the first question “Is debt settlement right for me”?

Answer: After reading this article, do you think it is?

Some credit card companies like Discover cards and Chase credit cards will help you in hardship situations. I advise speaking with your credit card company before working with a settlement company.