A competitive advantage could simply be defined as the advantage or ability a firm has over its rivals in the industry; or the ability a firm has to outperform its industry rivals.

A firm is said to have a competitive advantage when it has the capabilities or means to push out its rivals in striving for the favour of customers. This applies internationally or locally as well as to both services and products.Thus, a sustainable competitive advantage is the persistence the firm applies despite efforts by competitors or potential entrants to copy or overtake it. Sustainability therefore, requires that strategic assets are not easily available to others and imperfectly mobile. This will be considered later.

Porter (1990) states that, though not all nations are in the forefront of competition, the home nation which shapes the competitive advantage is the starting point for a firm’s competitive advantage and also from which it must be sustained. However, in whatever field of endeavor, competitive advantage creation must be a choice of management and it must really fit to achieve results. It must be noted here that competitive advantage can normally be traced to one of three roots:

Superior resources, superior skills and superior positions.

Competitive strategy is one of the ways in which a business relates to its environment by competing with other firms who are also trying to adapt within the operating environment. It is with this aspect- the competitive strategy which if appropriately chosen and implemented appropriately give the firm a competitive advantage over its rivals.

It must be noted here that the prescriptive view of strategic planning emphasizes the importance of the organizational environment as a source of threats and opportunities and the need for effective responses by the organization if survival was to be assured and the success achieved. The response is later formulated into plan which formulates major decisions about entry into new markets or development of new products and services guided by set goals. Under the influence of Porter’s writings in the 1980s the emphasis shifted from the plan to the selection of an appropriate generic strategy to position the business unit in its competitive environment. Porter, arguing that the environment poses threats and brings opportunities than with trends and events, suggested that the environment could be analyzed using the five forces analysis to identify the issues which affect the level of competition in an industry; after which a strategy is formulated to combat it.

The resultant strategy, which he referred to as generic, distinguished some strategic options the firm can possess:

Cost leadership: the business could position itself as offering a low cost product as a standard price i.e. cost leadership strategy. Costs are reduced at every element of the value chain. Producers can exploit the benefits of a bigger margin than the competitors. Toyota is a good example of an organization that produces quality cars at low price coupled with a brand and marketing skills to use a premium pricing policy.

It could offer a product that was different from that offered by rivals. I.e. differentiation. This allows companies to make prices less sensitive and focus on value that generates a comparatively higher price and a better margin. Even though additional costs will be incurred pursuing differentiation, it is possible that this will be offset by the increased revenue generated by the sales.

By focusing on a small but well-defined part of the market, for instance a particular buying group or product area or geographical area. Also known as niche, this is usually suitable for a small company i.e. focus strategy.

Generic Competitive strategy, usually used after competitive analysis or as a response to competitors advantage, is defined as the basis on which a strategic business unit (SBU) might achieve or counter competitive advantage in its market. (Johnson and Scholes, 5th Edition.)

Building on Porter’s (1980) generic competitive strategies, Bowman et al argues that organizations achieve competitive advantage by providing their customers with what they want, or need better or more effectively than competitors and making it difficult for competitors to imitate. This was later developed into five generic strategies which would be used in this discussion. Thus, the generic competitive strategies are the fundamental activities on which an SBU seeks to achieve a lasting advantageous position in its environment and gaining the favor of stakeholders by meeting the expectations of buyers, users or other stakeholders

The following are Bowman’s five-generic competitive strategy options and examples of organizations who applied them to gain competitive advantage: no frills strategy, low price strategy, hybrid strategy, focused differentiation strategy and added value or differentiation strategy.

In brief, a no frills strategy combines a low price, low perceived added value and targets a price-sensitive market. No frills strategy is now a popular strategy with low-cos airlines Easy Jet and Ryanair seeking to enter the airline industry to compete with likes of Virgin and is a determinant in the market. This, therefore, affords the firm the needed competitive edge over its competitors who charge higher price. This strategy is a success because there could possibly be a segment of the market that overlooks the low quality of the commodity provided it fulfills the same purpose.

To obtain the competitive advantage using no fills strategy revenues must increase and the product must really be price-sensitive. Easy Jet frills strategy seems to be going on well as a result of the cost savings techniques they are using. For instance no ticketing, no ticket agents, no in-flight food or drink for customers as well as the short-haul flight. Now, almost all supermarkets in the UK use no frills strategy by introducing own brands the price of which have been reduced to attract customers in order to gain a competitive advantage.

The next generic strategy is the low price strategy. This strategy pursues a lower price than pertains in the market whilst trying to maintain similar value of product or service as those offered by competitor alike. There is the potential of price war among competitors and in the long run consumers are likely to lose as the firms might not be able to sustain the lower-price-good-value strategy. Notwithstanding the price war and low margins, there are some suggested ways in which a low-priced strategy can bring about a firms competitive advantage. The market segment must be low-price sensitive, and also the SBU has a cost advantage over its competitors.

However, in practice, the lower price strategy usually brought about by lowering operational cost alone does not give the firm the competitive advantage if the firm is not able to sustain it in the long-term as there are now more firms entering the market because of low or no entry barriers like small capital requirements and also how efficient the staff might be.

Hybrid competitive strategy seeks to achieve differentiation and a price lower than that of competitors simultaneously. This is not an easy strategy to pursue because to differentiate a product or service involves some money and increases cost the very thing the low price seeks to reduce. This strategy is fit for the DIY industry as the likes of Robert Dyas are not able to stand the competition. The success of this is dependent on providing unique more efficient products or services to consumers whilst at the same time operating at a lower cost to be able to lower its price below the industry level. The success of this strategy could further be enhanced if the firm has economies of scale and can increase volume of sales more than its competitors, thereby, reducing its base cost as a result. Asda’s George brand is an example of a generic hybrid strategy in a SBU.

Another strategy is differentiation strategy. This seeks to provide products or services completely different from those of its competitors by adding features valued by consumers. The main objective of using this is to either maintain the market share or increase market share relative to its competitors. A clear example of this is aircraft manufacturer Airbus’s wider fuselages, cockpits designed for use in more than one aircraft and electrical rather than mechanical flight controls.

Those features have helped Airbus win customers like New York-based Jet blue; although Jet Blue is staffed with former employees from Boeing. (Fortune, Europe Edition 22 November 17th 2003; pp34) This strategy could be used to achieve a competitive advantage which is its ultimate aim by the firm investing more in R&D, unique designs and features. The marketing-based approaches in terms of good marketing communication (example advertising the products or services) as well as the brand power to win the loyalty of consumers. (Example Airbus)

The fifth generic competitive strategy is the focused differentiation strategy which seeks to provide high perceived value; justifying a substantial price premium usually to a selected market, segment. It is usually adopted to counter or to compete others in seemingly similar segment. This could therefore be argued that focused differentiation is just an extension of any of the four strategies so far considered depending on the competitors in this new segment which is usually middle to high income earners. A convincing example is the introduction of Lexus in 1989 by Toyota to compete with other luxury brands of BMW and Mercedes Benz new series.

For the focused differentiation strategy to be used to obtain a competitive advantage over competitors in the industry, the business unit must find ways to make the production more efficient to be able to pass on the savings to customers. The business unit must identify new segments and must also be prepared to aggressively create new market segment where it is believed first movers get huge advantage. Again Toyota prides itself in this by being the first to introduce a brand,scion,specifically for young buyers in January, 2003 which was a success and the introduction of hybrids in 1997 selling 127,000 far more than Honda.( Hybrid uses two engines and is environmentally friendly.) (Fortune, Europe Edition, Number 24 December 22 2003; pp57).

The essence of the various strategies discussed so far is to create or add value to the products or services in order to give improved and or enough satisfaction to the customer so that the firm will gain a competitive advantage over its rivals. However, it is one thing for a firm to gain a competitive advantage and another to sustain the competitive advantage so gained. So when a firm is able to get a competitive advantage over its competitors, it becomes expedient to try to sustain this advantage.

Some of the ways to sustain the competitive advantage is by what is described as isolating mechanism. This is the application of forces like barriers of imitation which limit the extent to which a competitive advantage can be duplicated or matched or even possibly scrapped through the resource creation activities of other firms. Though similar in principle to the barrier of entry force, whereas the entry barriers protect profitability of an entire industry, isolating mechanisms sustain the competitive advantage of a single firm. For example legal barriers like trademarks, patents or intellectual property rights as in Microsoft’s case.

It could also be for the mere fact that the leading firm makes it difficult for the competitor to catch up with the firm’s technology because it entered the market earlier and it continues to research and might be able to move to a superior position by the time its competitors catch up. This is known as the early mover advantage. Because the business unit has entered the market earlier, the past success in the market is believed to sustain the firm.

Nevertheless, no matter how discrete the strategy adopted to gain the sustainable competitive advantage or enough satisfaction that the customer may get as well as the mechanisms put in place to sustain the competitive edge, simple economics has proved that man’s needs are insatiable and with the information technology age, there is an improved dynamism in business that products and services can become obsolete before they even reach the next user.

The question is can the firm continue to create more economic value than its competitors now than then?

Now with the advent of information systems and technology, this traditional way of competitive advantage or competitive edge has, therefore, taken a different turn. Information gathering and I mean a competitive information gathering in deed can to some large extent make a difference to a firm’s position in an industry and for that matter affect its competitive advantage one way or the other.

A good and recent example is Asda installing radio frequency identification (RFID) system, a device which could be used to scan bar codes of incoming goods which could save Asda $8.35 billion annually through improvement in its supply chain management. Fortune, Wal-Mart keeps the change, November 10,2003pp 23.

Firms can either use their own database or an informational gathering software to track its operations and get the required information like inventory, customers, and trends of competitors’ performance and about the fast moving products to formulate their strategies or form what is known as information partnerships for the purpose of sharing information to gain competitive or strategic advantage; and even link their systems with some competitors to achieve synergies.

This is becoming important as a result of the fact that competition in the business world today is not only within a particular industry one operates but can also be cross-competition with people in other related industry like universities and publishers competing due to forward and backward integrations. Baxter Healthcare International is known to offer medical supplies from its competitors and office supplies through its electronic ordering channel to its customers. By doing this the firm increases its customer base as well as loyalty of its customers is enhanced.

At this juncture, the statement that “there is no such thing as a sustainable competitive advantage” can be considered in relation to the circumstances that happened in Sears, which used to be USA’s largest retailer until Wal-mart overtook it after a diversification strategy went bust in spite of the fact that it (Sears) has been heavily computerized with more expenditure going into information technology and networking than all other non-computer firms in the United states apart from Boeing. So why couldn’t this huge amount spent in computers and networking been able to give them the competitive edge over its rivals? Is it due to the fact that the hardware alone is not sufficient to provide the information needed unless it is integrated with the appropriate software? Sears did exactly that.

Trying to reinvent itself, Sears started to explore almost all strategies including low pricing strategy, delayering, improved marketing ploys as well as embarking on a $4billion five-year store renovation to make the stores more attractive. All to no avail.

Then Sears noticed that, its merchandise buyers do not have reliable information on precisely what customers were buying at each store. Management was relying on 18 separate systems that often gave conflicting and redundant pricing information. They could only view a division’s daily performance. This was not good for a firm of Sears’s stature. Sears later tightened its grips over the business once again by building a larger database involving the consolidation of information on transaction records,90 million households,31million Sears’ card users, their credit status, and other related data.

The database houses the company’s Strategic Performance Reporting System (SPRS).Now Sears’ 1,000 buyers and managers know what hot-selling merchandise to replenish right away. This competitive information gathering to some extent helped turn around Sears. Its store sales started rising and planned to join partnership with AOL to boost its online business by targeting AOL’s 21 million customers by developing content for AOL on subjects such as how to build a deck, tips on home decorating and other home improvement topics; and also move its suppliers to an electronic ordering system similar to that described for Baxter Healthcare, by linking its computerized ordering system directly to that of each supplier to eliminate paperwork completely for an improved flow of goods into its stores.

As previously discussed, if a firm can keep or maintain its lead on creating value, leveraging strategic assets for example access to efficient distribution channels, maintain market position and may be low cost advantage then it can be said to have a sustainable competitive advantage. This is absolutely not possible in this dynamic business world. The most difficult part of this is that the firm must create more economic value than its competitors every now and then. Will its competitors be looking on without doing anything?

Microsoft for example is spending billions of dollars to develop its own search engine that will be incorporated in both its online service MSN and its new operating system due in 2006 to combat Google’s dominance in the search engine industry. (Fortune, 22 December 2003pp 17).

In my own opinion based on the discussions above, if really sustainable competitive advantage is the persistence of a firm’s ability to outperform its industry, then suffice it to say that, as much as gathering and use of competitive information as illustrated in the Sears’ story above can give a firm a (sustainable) competitive advantage, it is really difficult if not impossible to sustain any competitive advantage for a very long time. This is so because of the rate of technological changes, changes in business strategies, and the fact that customers’ loyalty can wane and affect sales leading to a fall in market share and thus competitive advantage. Boeing was overtaken by Airbus in the aviation industry at some time. Sears’ leadership was taken away by Wal-mart.

In spite of the availability of choice of the five generic strategies, it is supposed that the onus of their success rests with management and how the technology and the information gathered are blended for use. This is so because a careful monitoring and evaluation constantly and the right identification and proper timing of a particular segment are keys to the success of these strategies due to market dynamism.

REFERENCE

Can Sears reinvent it? A case study taken from London South Bank University IS.

Davenport, T.H; Prusak, L. (1998) Working Knowledge: How Organizations Manage What They Know. Havard Business School Press, Boston, Ma.

Fortune, December 13,2004, pp59

http://informationr.net/ir/8-1/paper144.html

Laudon, K.C; Laudon, J.P. (2004) Management Information Systems: managing the digital firm, 8th edition, USA: Pearson Prentice Hall.

Scholes, K.and Johnson, G (1999) Exploring corporate strategy, 5th Edition. London: F.T Prentice Hall.

Sheila,C.Main Article: Knowledge Management, issue 18,2004

Yogesh, M. B. The Company, – What Really is Knowledge Management? Crossing the Chasm of Hope. Gartner Group Inc.,October 1996

Many college students and graduates are looking for a solution for their student loan debt. While borrowers may be having difficulty paying back student loans, there is help. Solutions for paying back student loans are available.

What causes difficulty in paying back student loans?

New college graduates may find that it takes them longer to find a job than they expected. While there’s a six month grace period from the time students graduate until repayment begins, sometimes it takes six months or longer to find a job.

Many recent graduates who are employed are underemployed — working part-time or temporary jobs until they find a permanent position. During this time they may need help in making loan payments.

New college graduates can use several strategies to help with student loan repayment. Taking on additional part-time jobs or freelancing may be an option.

It is also wise to keep living expenses low the first few years out of college. Graduates can live with a roommate, or downsize into a smaller apartment. If new graduates are still looking for a job, it may be a good idea not to move until permanent employment is found. Then it will be easier to move to an area closer to the job.

Applying for a forbearance may be an immediate solution for times of difficulty making loan payments. A forbearance is temporary period of suspension of payments on a federal or direct loan after repayment has begun, and if the student does not qualify for deferment.

This means that if a student has already started paying back loans, they can apply for a suspension of payments on the grounds of financial hardship. A forbearance must be applied for through the lender. Being able to hold off payments for a few months can be a big help during a time of financial hardship.

Another student loan debt solution is to consolidate payments. Unless consolidated, each student loan is accounted for and paid separately. When a student graduates they will receive paperwork and payment slips for each loan. 2, 5, 12… no matter how many loans were taken out, they will be billed separately. Adding up all of these individual loan payments could total $300-$1000 per month or more! Not many students can afford such payments.

That’s where consolidation comes in. Consolidation is a process that combines all of the student loans into one loan. Borrowers can dramatically reduce monthly payments of student loans by consolidating. Average monthly payments could be less than $100 to around $250 per month. This is just an estimate. The monthly payment depends on the total amount borrowed, the interest rate and the way that loans are consolidated.

Consolidating through The Income Contingent Repayment plan is designed to help make repaying student loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. The monthly payment amount is adjusted annually, based on changes in family size and annual income. This program is only available through the US Department of Education, not a lender or bank.

Finally, the Graduated Repayment Plan starts the payments at a low level (usually interest only) and gradually increases the payments until the balance is paid. This is helpful for graduates because payments are low when the first graduate, and increase as earning power increases over the years. This plan is available by consolidating through a bank or other lender.

It is important to note that according to current regulations student loans may only be consolidated once. So borrowers who have already graduated and consolidated with a standard plan cannot take advantage of the income contingent or graduated plans. For borrowers who have already consolidated, a forbearance may be the best option for temporary relief of student loan debt.

Use the student loan repayment calculator from finaid.org to find out what loan payments could be using different types of consolidation.

College graduates can find student debt relief using one of the solutions mentioned above. Discuss loan repayment options with your lender and see what can be done to help you repay student loans.

Bad credit personal loans help people who do not have good credit scores to get personal loans for taking care of their financial needs. So, if you have poor credit, how can you ensure that your application for a personal loan is approved?

There are many lending institutions which are available today who are willing to offer loans to people with poor credit ratings. These specific loans are given on different terms and conditions. In such cases, the lenders usually expect some form of collateral from the borrowers, which may be in the form of a house, jewelry or a car. Generally, the terms of repayment on such secured loans are more flexible and convenient for the borrower, which helps them to repay their debts without too much financial strain.

However, those individuals with bad credit history seeking personal loans without any security may face some difficulties in securing and servicing the loans, especially since they have to pay a higher rate of interest on the loans. Besides, these individuals may also be able to get only low amounts of money for the loan, which has to be repaid within a shorter time frame. Many people prefer secured loans as the best option, which helps them in managing their finances well so that they can pay all their outstanding debts easily.

Improve your credit ratings using bad credit loan

These loans provide you with an opportunity to correct your past mistakes where you may have defaulted on making payments; made late payments or got involved in other things which might have affected your credit history. Remember, your past credit history can have a huge impact on your ability to get a loan quickly from the lenders, as most of them are not willing to take such big risks on borrowers. However, people with a poor credit score can still have access to loans for personal use, if they are willing to pay a high rate of interest.

These loans dedicated for people with poor credit ratings can allow you to resolve all your issues related to bad credit where you can use these loans to pay all your outstanding debts on time. If you want to get this type of a loan for personal use, then you need to shop around and look for lenders who are willing to offer you the best rates. It is important to read the terms and conditions carefully and see if it suits your budget and requirements. The best way is to find an affordable scheme that can help you to repay your monthly installments on time.

You need to be careful about lending companies whose sole motive is to make profit and dupe customers by charging them exorbitant interest rates and fees for lending them loans. Always make sure to verify the credentials of the company while dealing with them to see that you get a fair deal on your loan.

It helps to get a bad credit loan from the highly recommended lenders.

If you are on a journey towards creating Wealth and Financial Freedom there are two things you can do to get there faster. You can increase your income, which is by far the easier and bigger option, and you can cut your costs.

And if you have existing debts, then often these add unnecessary costs to your budget. This means if you can reduce or eliminate your debts, or at least your bad debts anyway, then you have more money for investment and creating Wealth.

So what is the best way to go about this?

Well firstly it helps to know exactly what you are dealing with, so write down a list of all your debts. Make a note of the creditor, the amount, the interest rate and your monthly payment.

Next look at how much you can allocate to paying down your debts. Include your existing monthly payments plus any more you can comfortably add.

From this total pay the minimum to all except the smallest debt, pay all the rest towards the smallest debt.

This way you will pay off your smallest debt fairly quickly.

Once you have paid it off use all the money you were using for that to pay the next smallest debt. Keep doing this until all your debts are paid off.

Of course you may if you are disciplined choose to start paying off the most expensive debt first. This is also OK as long as you can stick to it, and will reduce your costs the most whilst you are repaying.

Psychologically for most people it is best to pay the smallest first so that you can see the results quickly!

A useful website you can go to for free help and resources on reducing debts and saving on costs is Martin Lewis’ Money Saving Expert.

Many people suffering from deep debt obligations often look towards debt consolidation as the answer to their problems. Sometimes the debt is so painful, they don’t always look at both the pros and cons of this debt solution though, so we’ll take a brief look here.

First though, what is debt consolidation? Simply put, it’s the process of combining all your debts into one. If you have ten debts of $10,000 each, then you have a total debt of $100,000. Some of those debts however, might be generating an additional 10% interest, while others are generating 15%-20% interest. In other words: Some of your debt is more expensive than others.

This is where debt consolidation comes into play. In theory, you’d take out a loan for $100,000 at a reasonable – or hopefully low – interest rate. Then you’d use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt can be done with debt consolidation loans, by transferring your debt to zero or low interest credit cards, and by taking out a home equity loan.

Using the equity of your home to pay off debts can be risky, because if you default on the new loan, you could lose your home.

Likewise, using zero interest credit cards could also be problematic in the future, because these offers are usually designed to lure you in. The zero interest doesn’t last.

Debt consolidation loans might be helpful, but be aware that when you have debt problems to begin with, you might not qualify for low enough interest rates. So if you choose to go this route, be sure to do all the math: Figure out whether the consolidation loan actually will reduce your overall payments – including the total interest you’ll be paying for the life of your loan.

Some credit and debt counselors feel debt consolidation of any kind is a bad move to make though. In fact, it’s estimated that 70% of Americans who take out some sort of loan to consolidate their debt end up with the same or worse debt problems within two years.

A better, more long-term solution might be to consider using a debt counselor. Professional counselors negotiate with your creditors to lower your payments or interest rates, while at the same time coaching you to manage debt more effectively. The unfortunate side effect of using counselors though? Your credit report will take a hit because you’re not technically paying your bills as originally agreed.

So there you have a general overview of debt consolidation, the common solutions and options, along with pros and cons of each. Be sure to research all your options completely before making a decision of course, because you don’t want to make your debt problems worse in the long run.

You hear commercials about consolidation loans all the time on the radio and see them on TV. These are usually ads for debt consolidation loans that are typically used to consolidate consumer debt, such as credit cards, car loans, or store charge cards. The main advantage here is that you can replace many high interest loans with a single loan at a much lower interest rate. The disadvantage is that you have to put your house on the line as security for the new loan.

That’s where student consolidation loans differ from standard consumer debt consolidation loans. Because most student loans are insured by the federal government, you are not required to use any security in order to consolidate them. You do however, get the same advantages you get with other consolidation loans; lower monthly payments and more convenience because you’re replacing many loans with only one. Therefore, you’ve got fewer possibilities for errors that can cause late or incorrect payments.

A major difference between consumer consolidation loans and student consolidation loans is that, in order to consolidate student loans a credit check is not required. In fact, the process is relatively easy, and well worth doing, as there is basically no down side. You get all the advantages of consolidating consumer loans without getting a credit check or putting up a home or other real estate as collateral.

According to recent government statistics, the average undergraduate college student now graduates with approximately $27,000 in student loans. This is because the dramatically increasing cost of a college education. This trend towards higher education costs is showing no sighs of slowing, so in the future students may have even a higher loan burden upon graduation. If that proves to be the case, the demand for student loan consolidation, and the payment relief it provides can only grow.

When looking to pay off credit card debt, one of the most overlooked options many people have are government grants. Many people do not look into these grants because they simply do not know about them. However, the government sets aside billions each year just for this purpose, to give them away. If you are one of the millions of people who are suffering from credit card debt, you definitely want to consider applying for a grant from the government.

Government grants are available, the key is finding them. If you are looking for debt relief, you should understand that there are ways to get out of this debt and it is up to you to seek the help you need and deserve. We all get into trouble now and then with our financial situation, however, if the help is available, why not take advantage of it.

Why do these grants make more sense when it comes to credit card debt elimination? Simply put, these grants are far easier to obtain than traditional loans. Traditional loans may require some form of collateral or security deposit, grants do not require these because they are provided by the government.

The key to grants is to be creative. The government is willing to jump-start the economy by providing small business grants. If you apply for and receive a grant for several thousand dollars, you can eliminate your debt by using the money earned in your business to pay them off.

In order to get the grant the people accepting your application will need to review your situation. In other words, they will be looking at many things. First, they will be looking at if you have the ability to pay the money you currently owe, then they will take a look at the debts you currently have, and finally your financial ability to repay what you owe and still maintain your current debt. If you can prove that you cannot pay back this money, the grant will likely be yours.

Government grants can do many things for you. First, they can provide you with the money you need for debt relief without having to provide security or collateral. Second, these grants can save you from having to file for bankruptcy. Third, no repayment is necessary, this is type of financial aid, and it cannot be taxed and does not accrue any interest. Finally, it can instantly make you debt free, which cannot be said about other types of debt relief solutions.

Overall, obtaining a government grant just makes sense when you are swimming in debt that you cannot get out of.

I have been working in the debt settlement industry for almost ten years now and have very extensive knowledge as to how it works. Before we begin I want to say this will be a rather long article and if you are not serious about finding a solution to your debt problem then stop reading now. The purpose of this article is to explain to you first how debt settlement works and what the process entails; both the good and the bad. Next I will explain the differences between how a debt settlement law firm works and how it compares to a standard debt settlement company. There are many differences between how this process is handled by the two. Because of this debtors should learn these differences before enrolling into any program. Many people may already know how a debt settlement company works but have no clue as to how a law firm works and this article will explain just that.

First of all, I would like to state that debt settlement as a means of credit card debt relief is not for everyone; some people simply do not have the right state of mind, while others may benefit more from bankruptcy.

To begin with I would like to go over the purpose of credit card debt settlement and how the process works. The purpose of debt settlement is for the debtor to get out of debt quickly without having to file bankruptcy and save a lot of money in the process. The goal of the debt negotiator is to negotiate a one time lump sum payment on the debtors’ behalf at a far reduced amount than what the debtor currently owes.

These benefits are tremendous. The debtor could save themselves close to half of what they currently owe and be out of debt in a few years. However as with most things in life there are drawbacks to this process and there is no way to avoid them.

In order for any creditor to be willing to negotiate a debt settlement on a debt the account must fall into default first. There are no creditors in the world willing to negotiate when you are current and up to date on your monthly minimum payments. If they feel you can maintain your monthly minimums than this is precisely where the creditors want to keep you. This is where their profit is made, by just paying the minimum each month you will be in debt for over thirty years, even if the interest rate is not all that high. If your rate is above 20%, you will be stuck in debt for well beyond thirty years and payback the creditors well over ten times the original balance alone in interest. That is exactly where they want you!

So understandably they will not negotiate with you when you are current and they feel they can still bank on your minimum payments for years to come. So the only way to ever negotiate is to fall behind on the monthly payments. Naturally once you do this you will be negatively affecting your credit score and will also be receiving calls from collectors; this is what may put some people off from doing debt settlement, thus why I stated above this process may not be for everyone.

For those people already behind this will not make a difference and their credit will not be damaged any more than it already is, however for those who are current this will adversely affect their credit. It is quite a shame that this point alone may stop some people from using debt settlement; thus dooming them to being financial servants to the creditors for decades to come.

You must also be made aware that this process in the end will begin to help rebuild your credit. Thirty percent of your MyFICO credit score is made up of your debt to credit ratio, which will look a lot better after you get out of debt. Additionally the negative remarks from falling behind will not hold much bearing on your credit score after two years. Your credit score is only a snapshot in time and only uses the last two years of payment history to determine the score.

Now during the process of falling behind your goal is to save up as much money as possible in the quickest possible time. This money is then used later on to pay off the settlement that is negotiated by the debt negotiator. The faster someone looks to save money and complete this process the better for many reasons. For one the faster you are out of debt the more money you stand to save and the less risk you take from the negative aspects of settlement such as lawsuit and further damage to the credit report.

This brings us to the title of the article “How Does a Debt Settlement Law Firm Work?” As I explained above there are great benefits to debt settlement such as saving lots of money and time; and there are also some downsides such as collection calls and the possibility of a lawsuit.

The main differences between how debt settlement is handled by a debt settlement law firm and standard debt settlement company is how they deal with the negative drawbacks. A law firm has much more legal power and is set up correctly to comply with their states’ laws.

Collection Calls

One of the first major differences in how debt settlement is handled has to deal with collections calls. When you first fall behind and your debt is still in the hands of the original creditor there is nothing legally that can be done to stop them from calling. However once the creditor passes the account off to a third party collection agency which will happen anywhere between 3-6 months after falling behind things change. Legally once in the hands of the collectors a law firm will have the power to have all calls to their client stopped, and if the collector continues to call and harass the client legal action can be taken against that creditor seeing as they will be in violation of the FDCPA (Fair Debt Collections Practices Act).

So the client’s first advantage by using a law firm will be a much decreased activity in collection calls, and this is very important for some people. Any regular debt settlement companies that claim they can stop the calls are simply not telling you the truth and you should be very weary of them because of this.

Lawsuits

The next major advantage a law firm has concerning debt settlement is how a lawsuit can be handled. In case you are not aware once you fall behind on your credit card debts the creditors/collectors do hold the legal right to pursue you through the courts to collect the debt. However I will mention, that suing is not the mainstay of the collectors and is not exercised very often; reason being it simply costs too much money and time on the creditor’s behalf with no guarantee of getting any money even if they were able to obtain a judgment anyway.

The advantage the law firm has is they can still legally contact and negotiate a settlement with your collector after they have issued a summons to court. A debt settlement company does not have this legal power. The collectors are very willing to negotiate a settlement even after the summons has been issued; they realize they may get very little if anything regardless, so being contacted by a reputable law firm who is willing to offer them money and settle the debt without wasting any time or money with going to court is very beneficial to the collector.

If you get sued and you only have a standard company representing you, you can expect to go to court and try to figure it out yourself. This often results in a judgment for the debtor!

Correct Legal Set Up

Perhaps the biggest advantage the law firm has over a company is how they are set up. The vast majority of debt settlement companies are not legally allowed to work in all the states; many are not even set up correctly to operate in their own state.

The states’ attorneys and the FTC (Federal Trade Commission) are cracking down severely on these companies and shutting them down as fast as possible. When this happens often times the company does not have the money to payback its clients for the fees they paid to a company that will no longer be in business and can no longer help to settle their debts. Now the debtor will be left holding the bag having paid thousands in fees but still be stuck in debt, and this nightmare scenario happens more than you may think. Thus making law firms a much, much safer option!

Another issue that many people have with debt settlement companies is they will not disclose how this process works and will simply sugar coats things and preach about the great benefits but never mention one downside. A law firm legally must disclose everything about how this works before being able to enroll anyone into any structured payment plan. A lot of companies do not have your interest at heart and will say whatever it takes to get you signed up even if they are fully aware that they are setting you up to fail.

Which brings me to my last point; a lot of unscrupulous companies will allow their clients to sign into a program and pay whatever they want and put them into programs that are set up for much longer than they should be. By stretching a debt settlement program out the savings will decrease and the potential for a lawsuit will increase. These companies cannot legally give the client advice or assistance if they get sued; it is considered unlicensed practice of law and this is what I mean by them knowing they will be setting you up to fail. If you can’t get this process done within three years, four max in special situations, then you should seriously consider bankruptcy. A law firm will be strait up and tell this to you, where many shady companies will keep trying to sign you up.

I really hope after reading this article you feel enlightened and now have a much better understanding of how debt settlement works and how a law firm can advantage you the most. I know for the most part I have been focusing on the negative aspects of debt settlement, but I feel it is important for people to understand both the good and the bad, allowing them to make an educated wise financial decision on how to get out of debt. But you must realize just how powerful the benefits of this process are! Saving close to half of what is currently owed and becoming debt free in a few years will be so beneficial to your current and future financial well being. Credit card debt has a way of destroying people’s finances and their lives and debt settlement is the perfect alternative for those who want to escape debt quickly and avoid the embarrassment of filing for bankruptcy.

If you are curious as to whether using a debt settlement law firm can benefit your financial situation then I invite you to follow the link below in the signature box and fill out an application. I welcome the opportunity to review your personal and unique situation to see if debt settlement will be the right fit for you.

There’s over millions of dollars in free grant money that is given away to everyday people through various government and private foundations. These are not to be confused with loans. That’s mainly because the money you are awarded by submitting a grant application never has to be paid back.

This free money was budgeted for through tax payer dollars and tax incentives provided to organizations, and it allows American citizens to obtain cash grants for their personal use.

Applying for some of this free government grant money and private foundation grants can be done by searching the online grant database program. There you’ll find many of the available programs with various funding amounts. Just review the eligibility requirements and qualifications to see if you feel you match the criteria for receiving these funds.

Often times many people can be awarded money for the same grant, so it doesn’t hurt to submit an applications. There is also no limit on the number of grants you can apply for or receive. If you feel there are a number of programs you can qualify for, then you are free to apply for all of them.

As a result, you could receive as much as $50,000 to build your own business, $13,000 to pay your bills, or even $19,000 to help you pay for school. There are hundreds of grant programs for various reasons. Single parents, college students, minorities, and many other groups may qualify to receive some of these funds. Once your application is reviewed and accepted, you’ll receive the cash grant you need that never has to be paid back.

My research into what type of writing help people are seeking online recently revealed that there has been a big upsurge in recent years of people looking for help and info for something called “financial hardship letters”. Prior to that, these types of letters were hardly on the radar screen. I believe that the increase in demand for these types of letters is directly attributable to the mortgage insolvency crisis in the USA and some of the spin-off effects as they affect the financial situation of many individuals.

A financial hardship letter is one that is written to a creditor for the purpose of explaining the financial trouble that you are in, and requesting that the addressee provide you with some sort of specific remedy, depending on the exact situation involved.

There are many different situations that can warrant a financial hardship letter. The two most common situations these days are: 1.) to request that your mortgage holder let you “short sale” your house, or 2.) request to your bank or credit card company to consolidate or restructure your debt.

Other typical financial hardship letters include: requests to a college or university to reduce their admission fees due to special circumstances, appeals to a hospital or medical care provider to reduce their billings for compassionate reasons, or, a request to an insurance company to cover the costs of an unusual medical procedure or treatment, and many others.

6 Tips For Writing Financial Hardship Letters

Regardless of the specific situation, ther are a few important guidelines that you should follow if you want to draft a financial hardship letter that will be taken seriously:

1. Keep It Short

Keep your letter short and to the point. Try not to exceed one page. A long, wandering letter will water down the essence of your case and will lose the reader.

2. Make It Personal

Make sure that you personalize your letter as much as possible by including details about you and your family that will get the reader to identify with your situation as a fellow human being.

3. Clearly State Problem

Early in your letter, summarize the specific situation that has prompted you to write the letter. Provide more details in the later paragraphs.

4. Give Enough Information

Your letter should provide enough detailed financial and related information so that the reader can easily understand your situation. Attach clarifying documents as necessary including: cash flow statements, bank statements, income tax statements, invoices, letters, etc.

5. Make Your Request

In the subject-line and the first paragraph of your hardship letter, state exactly what you are requesting. Reiterate this request in slightly different words at the conclusion of the letter.

6. Be Humble and Thankful

To reach the point where you have to write a financial hardship letter means that you are in deep financial trouble and this is basically your last resort. Don’t get into any blame games or side issues. Be respectful and thank the addressee in advance for considering your situation.

To see two sample hardship letters; one mortgage-related and the other credit card related, click on the following link:

http://www.writinghelp-central.com/write-hardship-letter.html