As regards to debt reduction there are many terms that can easily confuse those who are not used to them: Debt relief, debt negotiation, debt settlement, debt consolidation, debt consolidation loans. All this concepts, though related, are different and each one has serious implications in your finances both advantageous and not.

Whenever someone accumulates too much debt and finds it too difficult to repay, resorting to some kind of debt elimination program is the smart way to go. Each one has different success rates that can sometimes achieve up to a 70% debt reduction helping the debtor in the process of becoming debt free.

Debt Relief

”Debt relief” just like “debt elimination” are concepts that refer to a wide range of services. Most companies who advertise themselves as debt relief providers actually offer a debt consolidation service, a debt negotiation service, debt consolidation loans, debt settlements or a combination of two or more of them.

Should you want to hire their services, make sure to know beforehand what is exactly what they do. Otherwise you may be letting them to dispose of your finances and they may affect your credit score negatively providing little help to your debt problem.

Debt Negotiation

Debt negotiation implies agreeing with the debtor’s creditors new repayment programs with debt reductions, interest rate reductions and extensions on the repayment schedules so as to ease the situation of the debtor by providing lower monthly payments he will be able to afford.

Debt negotiation can be done by an individual (even yourself) or a debt negotiation company. These companies have expert negotiators that can obtain the creditor commitment of showing the debt fully paid after negotiation so your credit report will not be affected negatively. However, during the process your credit score may be affected.

Debt Settlement

Debt settlement has two possible meanings: It can refer, as debt negotiation, to the process of agreeing with creditors new repayment programs or it can imply some sort of legal settlement. This means that if to some extent your debt problem has become a legal problem, a debt settlement company (usually a law firm or a company with expert lawyers) will be able to reach an agreement with the creditors and take your debt problem out of courts.

Debt Consolidation And Debt Consolidation Loans

Debt consolidation agencies also negotiate with your creditors but generally have agreements made with credit card providers and loan lenders, so the process is a lot simpler. Once you contact a debt consolidation agency, just by seeing who you owe money to, they can tell you to what extent your debt can be reduced. Usually, in order for the lenders and financial institutions to agree to debt reductions, they commit to take care of payments themselves. So, each month you will pay a lump sum to the debt consolidation agency and they will take care of the rest.

Sometimes, in order to provide you with this single monthly payment, you are approved for a debt consolidation loan with a lower interest rate than the average of your debt’s rates and a longer repayment schedule too. This kind of loan can also be requested directly to some lenders but approval is easier if the lender knows for sure you will use it only to cancel debt and that can only be done through a debt consolidation company.

How can you begin with your bankruptcy? If you want to declare yourself bankrupt you have to start the process by filing the official bankruptcy forms. You must know the several methods on how to file for bankruptcy. Your objective is to get the most inexpensive bankruptcy solution and save huge money on legal expenses. This article will give you an overview of the different process of filing for bankruptcy. This article is not a substitute for legal advice, and it is not intended to give you specific legal advice on your financial situation.

The Safest Method

This is the easiest and safest way to file personal bankruptcy — retain a bankruptcy lawyer full-time. The attorney will guide you through the whole bankruptcy process. It is the lawyer’s job to evaluate, prepare and file your case. During the creditors meeting your attorney will handle all the tough issues that may arise. The only negative in using this method is that it costs more. You must find a way on how to filter attorneys the right way for you to get the best workable deal if you want to use this method.

The Hybrid Method

This method is the most followed technique in filing for bankruptcy. The hybrid method normally works best in filing Chapter 7. The key component here is to hire the services of a lawyer or law firm to prepare your forms. You need to pay the service provider with a fixed fee. Once they file your documents you’re on your own. You can save large amount on legal fees because half of the solution is a do-it-yourself work. You should look for a bankruptcy preparation service that will also give you a mini seminar on how to manage the do-it-yourself portion as part of the package.

The Cheapest Method

This method is a full do-it-yourself (DIY) solution or “pro-se” filing. You need to educate yourself with the complexity of the bankruptcy laws. You can download the official bankruptcy forms free but it is usually easier to do this method if you buy an up-to-date bankruptcy book or a bankruptcy kit. If you try to ask instructions from your local court clerks they will say they can’t help you. They will not give you advice on how to fill up the forms because that would be “practicing the law” — a task reserved only for licensed bankruptcy lawyers.

What To Do Next?

Now that you know the different ways of filing personal bankruptcy, which method are you going to select? The new bankruptcy law does not require you to have an attorney, but it is in your best interest to seek the advice of an seasoned bankruptcy attorney. If you choose to file bankruptcy without the help of a lawyer, you will need to have to exhibit a lot of patience and diligence. Keep in mind and remember that when it comes to personal bankruptcy, you either liquidate your assets or you protect them.

A recent survey by the District of Columbia government identified top 10 cities in the U.S. that have the lowest overall tax burden. The survey was conducted on the state and local tax burden of families in the largest city in each of America’s 50 states and Washington, D.C. The survey provided the stat on the state/local income, sales tax, real estate tax and auto/personal property tax incurred by couples at various income levels.

Kiplinger’s Personal Finance Magazine provided the rankings of the lowest-tax cities for dual-income couples with one school-age child earning a combined gross income of $75,000. The property tax shown for each city is the estimate of a hypothetical home that a couple earning $75,000 would own. Similarly, the auto tax of the top 10 cities is based on the assumption that the couple owns two cars. The auto tax is an estimate of the registration fees, state and local gasoline taxes and personal property taxes all put together.

While the national median tax burden for such families is 9.1 %, all the top ten cities had an overall state and local tax burden that ranged from 4.1 % to 6.7 %. Not surprisingly, seven of the top ten tax friendliest cities are in states that do not have income tax.

The following are top 10 tax friendliest cities in the U.S.

1. Anchorage, Alaska: Anchorage has the lowest tax burden at 4.1 %. The estimated property tax is $2,872 and the auto tax is $176 in this city that is home to 42 % of Alaskan residents.

2. Cheyenne, Wyoming: This second most low-tax city enjoys a tax bite of 4.3 %. The property tax and auto tax estimates are $1,047 and $564 respectively.

3. Jacksonville, Florida: The city has a low tax burden of 4.6 % while the property tax and auto tax estimates are $1,869 and $333 respectively.

4. Las Vegas, Nevada: The fourth tax friendliest city in the list, Las Vegas has a tax bite of 5.4 %. The property tax and auto tax estimates are $2,416 and $610 respectively.

5. Honolulu, Hawaii: Honolulu has a total tax burden of 5.6 %. The city’s property tax and auto tax estimates are $1,279 and $425 respectively.

6. Memphis, Tennessee: At sixth position is Memphis with an overall tax bite of 6.1 %. Its property tax estimate is $2,084 while the auto tax estimate is $355.

7. Sioux Falls, South Dakota: With a tax bite of 6.3 %, and respective property tax and auto tax estimates at $2,701 and $325, Sioux Falls occupies the seventh position among the top 10.

8. Fargo, North Dakota: At number eight is Fargo with a tax burden of 6.3 %. Its property tax estimate is at $2,188 and auto tax estimate at $317.

9. Houston, Texas: Houston has a tax bite of 6.3 %. The city’s property tax and auto tax estimates are at $2,778 and $310 respectively.

10. Billings, Montana: Rounding out the top 10 tax friendliest cites is Billings with a tax bite of 6.7 %. The property tax and auto tax estimates are at $1,983 and $682 respectively.

Source: Kiplinger Personal Finance (05/07)