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The Truth About Debt Relief

Posted on April 13th, 2014 by Chris Hardy  |  No Comments »

It is common for people to find themselves faced with debt burden because the world’s economy is in recession and the cost of living is rising day by day. The problem is that it may be easy for people to rack up a little debt, but paying it back can prove to be downright difficult. However, no one wants to stay in debt so they usually seek the help of debt relief companies that are constantly advertising these days. These advertisements usually promise to help people in reducing or even eliminating their debt completely. This claim is true for the most part as legitimate companies will aid people with their management services.

In the long run, these companies will help people in saving money by enrolling in their programs rather than dealing with the debt without their expert assistance. However, it is not always easy and straightforward to achieve these results as promised by the television commercials. The first thing that individuals need to keep in mind is that all businesses and organizations, even non-profit ones, tend to collect revenue in order to survive. These companies are no different. While these firms use a debt management program to help people in effectively saving money, they don’t offer their services for free.

When people enroll in such programs, they should expect to have to pay program and administrative fees and even asked to make voluntary contributions as well. Certainly, it is reasonable for taking fees for rendering services. Nonetheless, individuals should consider that they have to pay the cost of the program and also service their outstanding debt at the same time. A common misconception of individuals is that they will be able to fix their debt problems overnight when they choose to seek the services of a reliable debt relief. But, the reality is that it can take even months or years for people to pay off the debt.

Even after enrolling in the program, it can take several weeks for people to see any progress. Individuals will have trouble completing the program if they aren’t committed, patient and disciplined. Individuals will also have to make lifestyle adjustments because it is usually poor financial management that leads people to rack up high credit card bills. If people wish to complete their debt management program, they will have to make some adjustments to their lifestyle and spending. Individuals should be prepared to make a budget, reduce their living expenses and also downgrade their living situation for reducing their monthly expenditure.

Some surprising tactics are used by debt programs for functioning and operating effectively. Such techniques are used by debt settlement groups, which prove to be highly effective in negotiating with the creditors for reducing the balances. However, they might cause a little bit discomfort for the people. They will offer creditors a settlement that will be lower than the amount to be paid, but it will have to be paid immediately. There are also credit counseling agencies that are able to obtain lower interest rates on the behalf of people from their creditors. This is a better option as compared to debt settlement because the latter has a negative impact on one’s credit card report, which means that getting any loans in the future will be difficult while lowering interest rates will provide quicker debt relief.

Do Debt Relief Programs Work?

Posted on April 13th, 2014 by Chris Hardy  |  No Comments »

Getting into debt is very easy for people and doesn’t require any effort; you simply rack up your credit card bill and not pay it on time or you take out a loan and pay interest on it. The actual difficult task is to get out of debt, which becomes next to impossible for people when they have a fixed income and also have to pay interest. In this case, there are various debt relief programs that can be used as they are primarily designed for helping people who feel as if they are drowning in debt. When people are in a position where they have to pay a large amount of debt, they find promises made by debt management and relief companies very attractive. However, they can be scams so people have to be wary of them.

Many companies in the market that are established for aiding people with their debt woes offer debt settlement programs as their main option. In this particular program, the company will negotiate with an individual’s creditor on their behalf. They negotiate with the creditors and get them to accept an amount that’s less than the total sum if a lump sum payment is made. Then, the client of the company is required to give them the said lump sum amount and they will deal with the payment to the creditor. A percentage of the money will be kept by the company and the rest will go to the creditors.

There are also credit counseling companies, which can aid people in reducing their debt through a debt management plan. In this plan, again people give credit counseling companies the responsibility of negotiating with their creditors for reducing the interest rate that has to be paid on the debt. This is relatively a slow method of debt relief. Monthly payments are set up by the individual, which are sent to the credit counseling service. Then, the appropriate amount of money will be sent by the credit counseling company to each respective creditor. A fee is taken by the company from each payment in return of providing this service. It will take individuals several years to pay off their debt with this type of plan.

When people are signing up with any company for relieving their debt, they should consider the impact it will have on their credit score. There will be a negative impact on your credit report if you use a debt settlement plan. This is due to the fact that settling the debt means that you are actually breaking off your original agreement with the creditor. This will be reported by the creditor and will eventually lower your score. As far as a debt management plan is concerned, there will be no ill effects to be seen on your credit rating. However, while you are enrolled in this program, you will not be allowed to take any additional credit.

Furthermore, individuals also need to exercise caution because there are a lot of companies out there that promise debt relief, but are nothing more than scams. They will charge upfront fees and will not fulfill the claims they have made. Therefore, when people are signing up with a company, they should ensure that it is legitimate and has a good reputation in the market rather than a negative one.

The Ins and Outs of Debt Relief

Posted on April 13th, 2014 by Chris Hardy  |  No Comments »

In these financially trying times, people are faced with the burden with their debts. While the introduction of credit cards has made our lives easier in several aspects, they have also created problems at the same time. You might find yourself with a huge credit card bill, which you may not be able to pay off immediately. Once the payment is delayed, interest will have to be paid and this will make the debt larger. Likewise, debt may also rise because of the loans that people may have to take out for dealing with their needs. Either way, the burden of debt increases until people feel as if they are drowning in it.

Debt can actually turn out to be the heavy anchor that has the power to sink families and individuals. However, there is help available for those that are in desperate need of debt relief. There are different programs that can be used for this purpose, some of which involve waiver of partial debt amount or putting a halt to the process of debt growth. Nevertheless, there are some programs that have unscrupulous practices due to which they should be completely avoided. The first step that should be taken by individuals who are dealing with debt related problems is to find a certified consumer credit counselor.

They can provide people with the financial education they need, which includes advice on budget, debt and credit, debt management, delinquent mortgages, bankruptcy and home buying. People can work with a credit counselor via email, phone or even in person. The primary aim of credit counselors is to put a stop to any legal action that the creditor might be taking against an individual and to come up with a payment plan that would satisfy the demands of all the parties involved. Not only will the counselors provide debt relief, but will also offer individuals proper financial education and planning tips for dealing with the current financial crisis in order to ensure that finances can be managed in the future in a better way.

In the case of severe debt, the option that’s available to individuals is to enroll in a debt management plan in which they make monthly deposits to their credit counseling company for paying down their debt systematically. In turn, the company is responsible for distributing the payment to the creditors. Typically, a debt management plan is spread over 30 to 60 months depending on the amount of debt for it to be finally repaid to the creditors. Even though these debt management programs may seem very helpful, there are also some pitfalls that can be associated with some of them.

There are some programs, which claim to reduce the amount of debt or the interest rate that’s being charged. But, most of the time, they aren’t based on the truth and individuals are left with the same amount of debt and even a greater cost in the form of penalties and fees. People should beware of companies that claim to reduce debt by 50 to 70% or give a one-time settlement. It is best for individuals to find a reputable and well-known credit counseling agency to get the best services in regard to debt relief. They should make sure that there aren’t any complaints about the company they have selected to avoid getting scammed.

Exploring Different Debt Relief Options

Posted on April 13th, 2014 by Chris Hardy  |  No Comments »

Debt has become an individual as well as national problem, which stems primarily because of the rapid use of credit cards. Each month, we aim to pay off our credit card bill in full, but are unable to succeed. Stagnant incomes, rising cost of living, undisciplined spending and unexpected life events are only some of the reasons that have increased the number of people who are struggling to get out of their debt. Consider the high interest rates that are usually charged by creditors, and it becomes an impossible task to manage debt effectively. One of the most important steps for achieving debt relief is look at the different options that can be used for solving the problem.

Each solution that can help people in relieving their debt is unique. People need to learn the facts about each and every option before deciding which one is suitable for their financial situation. Some of the options are as follows:

Mortgage Refinance

People have the option of going for mortgage refinance or home equity loan for consolidating their debt. Debt consolidation refinance loans are considered to be the best option for individuals when they wish to reduce their payments and also lower the cost of interest, as long as they are confident that they would be able to make regular payments without adding more credit card debt. A homeowner has to have excellent credit if they wish to qualify for a mortgage refinance loan and their home should also have significant equity.

Minimum Credit Card Payments

A very dangerous financial strategy for people is to make only minimum monthly payments on their credit cards. This means that people are simply putting off the problem for another month. Individuals should try making their full monthly payments if they want to get off the debt treadmill and achieve debt relief. Otherwise, they will have to deal with the lifetime cost of the debt in the form of high interest payments.

Credit counseling

This is basically a debt relief program, which begins with a detailed and thorough financial review. If people have serious debt problems that cannot be resolved without outside help, the credit counselor will suggest that they opt for a debt management plan. In this program, the credit counselor has the responsibility of consulting your creditors for obtaining concessions in interest rates. The major benefit of a credit counseling program is the lower interest rate it can offer to individuals.

This debt management plan is a very straightforward debt consolidation program. Individuals are only required to make one single payment to the credit counseling agency instead to the creditors. The payment is then distributed by the agency to the different creditors of an individual.

Debt Settlement

This service involves negotiating and settling the debt of an individual for an amount that’s less than what they owe. This can even reduce debt by nearly half and it is an option for those individuals who find it difficult for making their monthly payments, aren’t worried about their credit rating and only want to achieve debt relief.

Bankruptcy

This should always be the last option for individuals and should be chosen after every other alternative has been exhausted because it will stay on their credit report for at least 10 years and will also mean that people have to give up some of their assets.

Considering Debt Management?

Posted on April 13th, 2014 by Chris Hardy  |  No Comments »

Taking a loan or using credit is not something anyone likes doing. However, some circumstances arise that force people to take the plunge and resolve their monetary problems by borrowing money. The problem is that interest has to be paid on these debts and if the rate is high, people may realize that it seems impossible for them to ever get free of debt. People may end up getting embroiled in the cycle of debt by taking out more debts to pay off another. The good news is that it is not impossible to get relief from debt. Proper planning can be done for making a debt manageable and this will help people in achieving debt relief in the long run.

The first thing that people can do is to consult a specialist or financial adviser who can assess an individual’s unique situation and help them in finding out the most effective way for relieving their debt. Apart from consulting an expert, there are some things that people can do by themselves, which can help in getting out of debt faster. The first thing to do is to stop accumulating any further debt. The debt cycle will continue if you don’t stop using your credit cards and also overdraw your account on a regular basis.

If people stop accumulating additional debts, they will be able to reduce their debt level even by making the minimum monthly payments. Nonetheless, debt management may seem impossible for some people when they have to deal with several debts and each has a different interest rate. One possible solution for eliminating multiple debts is to roll all of them into a single loan, which will have just one interest rate. This procedure is called debt consolidation and can help people in saving a lot of money and reduce their debt burden by a significant extent.

It can often be difficult for people to manage their debts when they are spread amongst overdrafts, credit cards, payday loans, store cards and personal loans, which have a high interest rate. People can save on interest liabilities by consolidating them into one loan for the purpose of achieving debt relief. Another effective method that can be used is budgeting. People will have better control of their finances if they choose to write down their income and expenditure. Budgeting will help people in identifying areas where their money is being wasted and where cutbacks can be made for better finance management.

People might be surprised to discover how much money they end up wasting every month and it could be a considerable amount in the long run. Reducing the interest and principal is essential when people want to reduce their debt. Consolidation can reduce the interest, but the principal remains constant. The best way to do so is to use your savings for paying off the debt. Even though savings are very important, your first priority should be getting debt relief. Once this goal is achieved, one can then focus on wealth accumulation.

Will Debt Consolidation Help Me?

Posted on April 6th, 2014 by Chris Hardy  |  No Comments »

More and more  people are finding themselves with outrageous amounts of debt. They are so deep in this debt that it seems like the amount of money they owe will never be paid off. There are companies that claim they can help a person get out of debt. These companies are debt consolidation companies. The companies state that they can help a person avoid bankruptcy and get back on the right financial track. There are many different debt consolidation options and types of debt consolidation loans. These programs and loans can help a person make one low monthly payment towards their debts. Many people wonder if debt consolidation is right for them.

Debt consolidation gives a person a loan so that they can pay off all their pre-existing debt. Instead of paying various bills a person will only have to pay this company  one monthly payment. Usually this type of payment plan is much less then their current payments and offers a lower interest rate. A person needs to research the interest rate before they sign with any company. Debt consolidation services cannot help a person raise their credit score right way. This will still take several years to repair. A person still needs to set a budget and live within their means. The debt consolidation loan will need to be paid every month.

When a person is looking into debt consolidation there are usually two types of loans offered. There is an unsecured loan, and a secured loan. If a person takes out a secure loan and fails to make a payment they can loose their valuables including their home. An unsecured loan still has to be paid on time but a person will not loose their house if they miss a payment. There will be consequences but not as drastic as with a secure loan.

Debt consolidation may help a person get on their feet again but there are specific terms that must be followed. Debt consolidation cannot reduce the total amount of debt owned. It cannot instantly bring up a person’s credit score. This is an alternative to bankruptcy and can help a person get on the right track to rebuilding their credit. Debt consolidation may allow a person to make lower monthly payment but they will end up paying more in the long run. The loans are usually for a longer period of time. To get out of debt once and for all a person needs to make a budget and be able to stick to it.

Can Debt Consolidation Really Help?

Posted on April 6th, 2014 by Chris Hardy  |  No Comments »

The answer is a firm yes and no. In order to determine if debt consolidation can really help you, you have to arm yourself with facts and commit to making it work for long term. Debt consolidation is not a quick fix. It can however, be a second chance at getting back on the road to financial health.

So, with that in mind, why do you want to consolidate your debt? if it’s just to have fewer checks to write, that may not be a valid reason. But, if you’re like many people today, the economy has taken a serious toll on your monthly budget. Ask yourself the following questions before deciding to consolidate your debt. Is consolidating my debt going to truly take a burden off my monthly budget, allowing me to purchase necessities, as well as, have money for emergencies? Am I going to use this option to make and put into practice, better spending habits and positive financial decisions? If you have honestly answered yes to both questions, then debt consolidation can really help you.

Credit card debt is one of the main reasons people begin to drown in monthly debt. Credit card companies are eager to offer lines of credit, even to those with poor or no credit. Your reasons for accepting the cards at the time may have been valid but, once you start to use them you become dependent on them. The revolving, merry-go-round, debt (being able to use instantly, the money you just paid) becomes almost impossible to get out of.

One day you wake up and realize that what started out as one, three thousand dollar card, has turned into seven varying maxed out limits. Your debt has climbed to ten, fifteen, or twenty thousand dollars. Now you have several payments of different amounts, due to various interest rates and amounts owed. A consolidation loan can corral all the payments into one. The singular payment is usually lower than all the other payments combined with a lower interest rate.

The amount of time you take to pay back the loan will affect the amount of interest you pay in the long run. Make a real effort to put extra on the principal of the loan every month. Even if you wind up taking the loan to full term, the definite payoff date shines a bright light on a once very dark tunnel.

Debt Consolidation Versus Debt Negotiation

Posted on April 6th, 2014 by Chris Hardy  |  No Comments »

Debt Consolidation and Debt Negotiation are two ways to manage outstanding debts. Whether from credit cards, loans or other accumulated debts, the decision to resolve this issue can go a long way to repair a damaged rating. There are some real differences between the two methods.

Debt consolidation can be done in several ways. One is to consult with a bank that specializes in this process and see what type of programs are available. In this case types and amount of interest will be the deciding factors. It is possible the lender can help negotiate terms with the creditors and lower amounts. It is important here to have accurate documentation and work to avoid penalties and defaults which will show up on credit ratings. You should try your best to find the best terms, payment schedules, and lowest interest, from the the bank you decide to work with. While many lenders advertise this service, it’s important to investigate their reputation, any complaints they may have, and other licensing issues.

The other method, debt negotiation is often attained through the services of an agency, usually a nonprofit, that assists debtors who want to earnestly pay off debt. Through agreements, the debtor and agency work to arrange payment terms, lowering interest rates, and often times the amount owed. The agency negotiates with the creditors and arranges terms and a payment schedule and monthly amount. The agency pays the creditors on behalf of the debtor and in time the debts are paid and credit score is restored or even goes higher. The advantages are numerous. Simplification, better terms and payment schedules, and often lessening of overall expenses are genuine benefits of this method.

Both debt consolidation and debt negotiation are convenient ways to deal with accumulated debt. Many Americans are trying to repair credit scores that were damaged during the recent economic downturn. In many cases the interest on credit cards, lost wages and jobs all added up to serious hardship. Being able to repair and rebuild credit will help restore the previous standard of living and contribute to the overall financial recovery and consumer confidence. Everyone will benefit from approaching debt responsibly. These two methods and the existence of reliable and ethical agencies are viable solutions to this issue.

How does Debt Consolidation work

Posted on April 6th, 2014 by Chris Hardy  |  No Comments »

Many people in debt wonder about debt consolidation. They often ponder what debt consolidation is, or whether or not it would be beneficial for them to take out a debt consolidation loan. Because debt is so prevalent in today’s world, debt consolidation is something that is important to think about.

Basically, debt consolidation involves taking debt to many different groups and turning them into one. People tend to manage one bill a lot better than they do three or four. Debt consolidation can also save people money because having one bill means a lower interest rate. Another benefit of debt consolidation is a lower monthly payment. Paying a lower monthly fee may cause people to pay more in the long run, but their monthly payment will be more manageable.

Student loans and credit card debt are the main reason why people consolidate their debt. However, debt consolidation may work with other types of debt. One can receive a debt consolidation loan from various places. Some places include:

  • Credit card companies
  • Banks and other lenders
  • Debt management companies

Another way to consolidate debt is with the utilization of a credit card balance transfer. This takes all the balance from all the credit cards and puts it onto one card. Balance transfers can be a good or bad thing depending on how quickly one can manage to pay off their debt. Banks generally offer a 0% interest rate for a number of months. If one manages to pay off the debt in that time, then it works out for them. However, if they cannot pay off the debt in that period, then they will start paying interest again. They may even have to pay on the part that they already paid off.

Peer-to-peer lenders tend to be the best option for those who cannot pay off their debt within the given time period. These lenders do not charge hidden fees and offer lower interest rates than traditional lenders.

It is essential that one does not use debt consolidation in order to make more credit available to them. This will only put them farther into debt. Debt consolidation is a way of reducing debt and paying it off in due time.

Many people today are thinking about debt consolidation. However, they need to think carefully before making the decision because it can lead to overpaying.

What is debt settlement exactly?

Posted on April 6th, 2014 by Chris Hardy  |  No Comments »

Debt settlement is an agreement between the debtor and the creditor which most likely will result in a reduced balance that then needs to be paid in full. Clients that choose to use the debt settlement method are debt free in a relatively short amount of time.

Debt settlement is not the same as debt consolidation or even debt management. These options do not lower your balance but rather change the monthly payment that you have to make to the creditor. Most-likely it will be either a longer term that you have to pay that debt back.

There are a few ways that you can start your debt settlement. You can do it yourself by searching the internet and fill out websites that handle it all for you. Another way is for you to call the company itself and try and arrange an agreement with the credit department.

The best way is to hire a debt settlement company and enroll in the program that they have. The first thing that the company will have you do it to stop paying the creditor. This is to show the creditor that you really cannot pay the fees anymore and that you are in trouble with other bills that you need to pay.

In 35% to 55% of all the cases the creditor will accept the debt settlement, but will not give you a loan ever again.

There are a few downsides to all of it. Yes, you will have the debt settled at a lower amount, but there is also a drop in your credit score, that can be at the lowest 65 points and at the highest rate you credit score can drop is around the 130 points. In some cases when that happens people are unable to get loans or get in trouble with paying every day bills. When your credit score takes a big hit certain things that you would think does not affect it will. Every company that you want to sign up for will ask for your social security number these days and they do run a credit check. Trying to get a new cellphone on a 2 year contract might not be possible because the Cellphone operator will reject you because of your low credit score.

When choosing debt settlement always read and inform yourself of all the details before singing up to have you debt settled.

 


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