Tag Archive | "debt relief"

Relief From Debt What Are Your Options?

Being in over your head in debt is one of the most overwhelming and stressful thing you will have in your life. Constant streams of calls from bill collectors, arguments with family over impending bills, even getting sick from worry and stress can all be par for the course. If you’ve come to the realization that you need help to get your debt under control and paid off, then you need to be made aware of what options there are for getting out of debt and staying that way. If you want to sleep easy knowing you’ve made the right decision for you and your family, then take a few minutes to read through this article which explains what your options are and how each works to get you one step closer to financial freedom.

The three options available to you are credit counseling, debt settlement and bankruptcy. All three are excellent ways to get on the road to erasing your debt for good, but each have pros and cons to them as well. Not all methods are good for all situations, so you should be sure to evaluate your wants and need before making a decision on which option to choose. Let’s take a look at the first option.

Credit counseling. The most commonly known method of debt relief help, in this type of program, you will be paying down your debt in monthly installments via a third party company. You will have lower interest and payments on all your outstanding balances to creditors. Lower interest and monthly payments mean that you will be able in theory to pay off your loans much quicker than if you were paying the creditors directly yourself. The third party company will charge a fee that is tacked onto the monthly payment. Some people are very successful with this type of program, others not so much. You may find this program useful if you have a smaller amount of total debt.

Debt settlement. In this option, a third party company will work with your creditors directly to negotiate a settlement amount that is a percentage of the total balance owed. Consumers pay into a separate account and these funds are used to pay off creditors. You do not make monthly payments to your creditors when you are in this type of program, rather pay monthly agreed amounts into your savings account. It will affect your credit score negatively. You will also want to be sure to read all fine print for details of policies, procedures and fees the company will charge.

Our last option is bankruptcy. This is a last resort for most people with large amounts of debt. There are two types of bankruptcy you can file for, Chapter 7 and Chapter 13. Chapter 7 eliminates all debt owed, while Chapter 13 attempts to restructure debt to be paid back. You should talk to a reputable lawyer about your case to see which is the best option for you. Each state has different filing requirements.

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Top 5 Tips For Helping With Debt

Having a colossal amount of debt is frightening. Many of us feel overwhelmed that we owe so much and don’t know what to do or where to turn for help. It’s time to get educated on how you can get out of debt and into a financially free future where you don’t have to worry about those collectors and bills every month. How to do it? Read on for out top 5 tips to help with debt.

1. Remain focused. Remember, this is debt we’re talking about, not a decision on whether to launch a nuclear warhead. This problem can be solved rationally and methodically without any extra fuss or drama. There is no need to be constantly worrying about it. Millions of people are in the same situation as you, but you have the advantage over them by educating yourself on how to get ahead of the pack and get rid of debt once and for all.
2. Look at the big picture in black and white. This means right now, yes right now, go to your desk and get a piece of paper, a pencil and a calculator. Draw up a simple chart and write down every single debt you owe. List companies, amounts owed and interest rates and fees. Next write down what your net income is each month. Compare the two and look to see where your money is going.
3. Now you have both your net income and balances owed written down, look over it and digest for a minute. How long will it take for you to pay it all back? 5 years? 10 years? 40 years? Bear in mind that each month balances will rise with interest rates and fees, even if you’re not spending any more money on those accounts.
4. Next comes the plan. There are four options available for the debtor to use to pay off their creditors. Debt repayment, debt negotiation, credit counseling and bankruptcy. Each works differently and some may work for some consumers but not for others. Each situation is unique and often it’s prudent to talk to an expert on which method will work best for your situation. Although your credit rating will take a hit, know that it can be repaired over time.
5. Keep your eyes on the prize. Although any form of help is going to look appealing, don’t just cut to the chase. Take the time to sit and evaluate each company’s policies, procedures and plan for your debt. Ask for references and to see all paperwork in black and white before you sign on the dotted line.

Debt relief doesn’t have to be complicated, you just need to be educated and focused. In no time you could be debt free and enjoying life as it’s meant to be! Take all these tips in hand and run with them. Being educated about debt and spending habits is only half the battle. Remember to remain positive and focused throughout the process and you’ll be debt free a whole lot faster.

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What Should You Do When Collection Agencies Call?

For millions of Americans, debt is an ever looming black cloud in their day to day lives. It can creep up on you slowly, or in some cases can happen all at once. If you become unemployed or have a medical emergency, one wrong move can send you over the edge and into the financial abyss. It’s frustrating to have to deal with so much debt and even more so when you start receiving those phone calls from collectors daily and even hourly things can get even scarier. How do you deal with phone calls from collectors, what rights do they have? What rights do you have? Luckily for us, the government has been able to step and help us out by passing the Fair Debt Collection Practices Act. Read on to find out how this affects us the consumer.

There are lots of companies out there that have people who call nonstop 7 days a week to those who owe their client’s money. Unfortunately, some of them are not as ethical as you would hope they are. Aggressive tactics seem to be the norm for these companies and they will use any and every trick in the book to get someone to pay up. At this particular juncture, the government has stepped in with the Fair Debt Collection Practices Act (FDCPA), which protects consumers from these type of antics. You need to educate yourself on what is right and acceptable when it comes to collection calls, otherwise you stand to be harassed and bullied by agents. Even if you feel ashamed of what you owe, you still have rights and you should enforce them.

The FDCPA protects consumer’s rights and dictates what the collection agencies can and cannot do. An agent may not use profanity or use threats, they can only call between specified hours of the day, they are not allowed to call family, friends, neighbors or coworkers to locate your whereabouts, they cannot call you at your place of employment. Also, you should be aware that you can issue them a written notification to request that they do not call you any further regarding your outstanding debt. You can find all these rules and regulations regarding the act on government websites. Make sure you familiarize yourself with your rights before speaking with an aggressive agent.

Once you make the decision to take control of your debt, there are good options available for you to be able to get on the right track. A lot of people choose to go through a company that specializes in debt relief help either by counseling, repayment and negotiation. The good news for you is that once you begin the process with a professional, you can expect calls from collection agencies to stop. The third party is now dealing directly with your creditors, both saving you the hassle of dealing with calls, and the reassurance you are paying down your debt and heading towards financial freedom.

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Best Options For Credit Card Debt Help

Best Options For Credit Card Debt Help

credit card debt
Did you know the average American owns 8 credit cards? Average American debt grows higher and higher every year. If you are one of the many millions who carry a high amount of revolving debt from month to month, getting out of the debt cycle can seem impossible. Experts advise us not to carry a credit card balance at all to avoid interest and fees, but sometimes it’s just not practical. One lost job or medical emergency can send all well intentioned goals to the wind. So what can the consumer do to get credit card debt help that actually, well, helps? The good news is that there are several options available to the debtor.

The simplest way to pay down your revolving debt is to overpay the balance every month. This is easy to do and doesn’t have to involve any sort of middle man. The problem with this solution, is actually the fact that the credit card issuer will apply any extra funds to your interest on the balance instead of the principal. If you’ve missed a payment or two you may also find that the interest rate has skyrocketed to an outrageous figure. One bank actually charges an astonishing 49.9% APR to all balances. It doesn’t help to pay all that extra money into an ever increasing interest rate right? So what are the other options available?

If your credit score is still good, usually in the 700 range, you may want to look into consolidating your credit card debt into one single loan at a much lower interest rate. Apply for a fixed term, low interest rate loan and pay off the credit card debt you have all in one go. Banks and credit unions are able to help you in this area. Make sure you shop around to make sure you get the best deal for your needs. If your credit score isn’t quite so stellar, you may want to consider calling your credit card issuer directly and negotiating a lower interest rate with them. Most are willing to help their consumers with their payment needs.

If your debt is becoming completely unmanageable, your next step would be to contact a credit counseling agency. The way these work are to take your balances and work with the credit agencies as a third party entity. Their arrangement with credit card issuers allows them to negotiate lower rates on your behalf and pay more towards the principal balances you owe. Make sure you do your due diligence before signing on with any company. Check references and any industry standards they adhere to. The last two options we’ll discuss are settlement directly with credit card companies and filing bankruptcy. Settling directly with a creditor is usually done through a company that specializes in this technique. They contact creditors on your behalf and negotiate an amount to settle (or close) your account. Payments are made through a savings account you have with the company.

Bankruptcy. Only use this option as your last resort for credit card debt. It can help you if you owe a very large sum of money and have tried other methods that are now not working for you. There are two types, Chapter 7 and Chapter 13. Both require a competent and knowledgeable attorney to handle your case. Seek references and ask lots of questions. All states have different filing and debt counseling requirement attached to them. Again, it’s advised that you seek knowledgeable legal counsel.

Successful credit card debt help is out there, but you need to take action to see results. Consider each and decide which one fits your financial profile best.

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5 Important Questions To Ask Your Debt Relief Counseling Company

There are hundreds of credit counseling companies out there all clamoring for your business. The crumbling economy has got everyone in some state of financial trouble. But, how do you know which company you should go with if you’ve decided that credit counseling is the way to go? Obviously you don’t want Joe Schmoe down the street that operates out of a shoe box, but there are many companies that look virtually identical. What questions should you ask to make sure that this a great fit for both parties involved? Read on for some of the key things you need to ask before signing on the dotted line.

Question number 1. What’s Your Plan To Eliminate My Debt? There are two main types of debt relief amongst these types of companies. Firstly, there is debt repayment which involves contacting creditors and negotiating a much lower interest and monthly payment on a fixed monthly plan. The second type is debt negotiation. Like it’s name implies, this involves negotiating a settlement amount with the credit card companies for a lower amount that is pennies on the dollar and less than the total amount due. Both are effective strategies for eliminating debt.

Question 2. Do you have written policies and procedures in place within your company? Written in black and white, a strict code of ethics, rules, policies and procedures is the difference between our Joe Schmoe and a professional, knows-what-it’s-doing company. There is absolutely no question on how things are done with a written policy in place. Ask to see these documents and read them through to make sure you understand how things work.

Onto Question number 3. How do I know what’s going with my account once you start work on my case? One of the most important factors when working with debt relief counselors is the follow up. Ask them how you will check to see what’s going on from month to month. One of the most popular methods is to log onto a secure account portal to see where payments and balances are each month. Other companies may provide paper statements in the mail for their clients.

Question 4. How much does it cost to work with you? Everything may seem fine and dandy with policies and procedures, but if the fees they want to charge you seem outrageous then it may be time to walk away. Keep in mind your current balances and what they will do for you in the debt repayment and negotiation process. If your gut tells you it’s too high, then it probably is. Walk away and find another company.

Last question. Are your results guaranteed? Credit is a tricky business, it is constantly changing and flexing with the economy. A truly honest and integrity based debt relief counseling company will tell you that no results are absolutely guaranteed. It just can’t happen. What they should be able to guarantee is their procedures and work done. A company that tells you that they absolutely guarantee their results is taking you for a walk in the magic woods. Put down that pen, politely decline and go to another company for your debt relief needs.

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Steps You Can Take With Credit Card Help

Want to fix it yourself? There’s a tool for that. Change your oil? There’s a store for that. How about repairing your credit card debt? Yep, you guessed it, there’s a tool for that. Several in fact. Debtors can feel good and empowered about getting the information they need without having to call in the big guns. But, if you want to call in the big guns you can do that too. Here are 5 steps you can take to put yourself ahead of the game when it comes to your credit card debt.

Some of these steps seem simple, but are often overlooked. Don’t skip them, you need to see the big picture to repair the little details. If you want to get ahead of the ever growing mountain of debt, then buckle down and follow each step diligently.

1. Step number one. Write down on a piece of paper or spreadsheet ALL the money you owe. This includes your monthly expenses like coffees at Starbucks or Sunday newspapers, as well as your credit card balances. Some may even find it helpful to jot down what they spend each day in a small notebook. Total everything at the end of the month. Seeing spending in black and white can be true revelation.
2. Funnel any frivolous spending towards paying down your debt instead of wasting it. Do you really need that extra, extra, extra, triple shot, vanilla chai soy latte every day? No, didn’t think so. Most experts agree that you should pay down the smallest balance first, then take that money and snowball it into your next smallest balance, and so on and so forth. Personally, I think this is the best way to pay down balances. If I see my debt paid from extra funds in a few months, do you think I’m going to be motivated? You bet.
3. Call your creditors and request a lower interest rate. Now, this sometimes does not work if you have been late on payments in the past. Most companies however want to get paid, so they will issue a temporary (sometimes permanent) lower interest rate on your account. You may also consider transferring a balance from a higher rate card to a lower rate card. Be careful though, juggling balances and interest rates can sometimes have a negative effect on your credit score overall.
4. If you find you’re still having difficulty contacting your creditors directly to negotiate, then you will want to look into a debt consolidation loan. This can work in your favor and help boost how quickly you pay down your debt. Most banks and credit unions offer a personal or credit loan that have lower interest rates than the credit card companies offer. You can pay off all your balances with one loan and avoid all the interest and fees headache you get with credit cards.
5. As a last resort, you may be able to negotiate a settlement on your account with the creditor. They will offer an amount they feel is reasonable to settle and close your account. There is no guarantee that your creditors will do this for you, but if you are lucky enough to have an understanding creditor, you can negotiate an amount that is quite a bit lower than the amount you currently owe on your account. You can also hire a debt negotiation company on your behalf to do the dirty work for you.

Repairing credit card debt by yourself is absolutely doable, just make sure you are prepared and know what the big picture before diving into a method. Follow through and you should be debt free and on the road to financial freedom in no time falt!

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The Benefits of Debt Relief Counseling

We’ve all heard of debt relief counseling. We probably all know how it works and why we need it. In fact many of us consider this to be a solution to our financial woes, and in all honesty it really is. But, debt relief counseling can mean a whole lot more than just getting rid of debt. It can instill in us new habits that can actually help us avoid falling into the same old money trap in the future. How awesome is that! Let’s delve deeper into some of the benefits going through debt relief counseling can give us.

Have you ever had that moment where something has just dawned on you? An Eureka! Moment or seeing someone you’ve known for years with brand new eyes? This perfectly describes the moment of realization for many people who looking at their mountain of bills declare “I need help!” And not a moment too soon. The debt relief counseling company can be your ally in the crusade against debt. They are much more than a negotiator, they are an educator. Expect to see lots of classes and literature when you firs sign up with your debt relief company. Consider this to be the roadway to learning how to get your spending and saving habits in check.

Credit counseling companies offer a wide range of services from literal counseling to paid services to help you get rid of your debt faster. With a credit counseling service, your debt will be repaid in monthly installments to your lenders. The credit counseling company will go in as a third party entity on your behalf and negotiate the interest rate and monthly payment down to an acceptable rate. Expect to pay the credit counseling service a fee on top of your monthly payments. The other type of service available is the debt negotiation company. They work differently than a simple repayment program. The debt negotiator will contact your creditors directly to settle with them for a portion of what you owe. Typically, this is pennies on the dollar and the account is closed once all debt is settled. Make sure you do your due diligence when it comes to paying the firm a fee for negotiating on your behalf.

These are the two main services that a debt relief company will offer, but in fact there are more benefits to working with them than just the repayment of loans involved. Expect the company to give you literature on how to manage your money effectively from day to day. Learn how to spend and save effectively, so that you don’t fall into the same credit trap again. You will learn how to save for emergencies and how to be financially prepared for any crisis that falls in your lap. Debt relief companies want to help you on the road to financial freedom, and although debt repayment services are the mainstay of these companies, the education you receive on money management is the true benefit to working with them.

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Avoid These Costly Mistakes When Seeking Help With Debt

Temptation can be your worst enemy both when accumulating your debt and trying to pay it off. Moves that seem like a good idea at the time can quickly turn in to a full blown nightmare. Make sure you educate yourself and seek professional expertise before you embark on any debt relief tactics. This can save you money in the long run and a whole ton of hassle.

Here is the biggest mistake seen when trying to pay down debt. Borrowing out of retirement funds to pay of debt. Simply put, don’t do it. Borrowing against your retirement strategy can actually end up costing you a lot more money than you had intended too. If you still want to be paying off fees well into your golden years, by all means go ahead and do it, but if you’re like the average American, you need to stop and regroup on debt repayment strategies. Taking money from retirement funds before a certain age will actually incur fees and penalties. You’re going to have to take a hit on your taxes too. Not really the best remedy for paying off your debt right?

If you still think this strategy is a worthwhile endeavor, you need to sit down with your financial adviser to see where your portfolio will be in 30 to 40 years time. Weigh the difference between spending your money now on revolving debt and having a lot more spendable money in the future when you enter into retirement. The difference can be thousands of dollars. Not looking like such a good idea now is it? If you still want to follow through, it is heavily advised to talk your strategy through with your plan administrator, the best types of plan to borrow against are 401k and 403b for the least repercussions.

The next consumer trap we want to talk about is the payday loan. The ads are flashy, the stores are flashy. Don’t be fooled by all the glitz, a payday loan is possibly the worst type of loan you can get. The company will issue you a set amount of money in return for your next payday check. Although good in theory, these companies are more often than not predatory lenders and charge astronomical interest rates. The highest I’ve seen lies at about 800%, although I would hedge a bet that some charge even higher than that. What happens if you don’t get your paycheck when the payment is due? These lenders will do everything and anything in their power to get funds loaned back. Not a good idea at all.

Instead, focus on building a small emergency fund practically so you don’t have to be privy to borrowing one source of money against another. Sell what you can from your own house. Post items on Craigslist or eBay and pocket that money into a savings account that you can’t touch. Pick up odd jobs or do whatever it takes to get to your small goal. $500 is a practical and useful amount that can cover any small emergency.

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