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  • Consumer Credit Counseling

    Consumer Credit Counseling

    There are a numerous options for consumers who want to start getting their finances under control after accumulating large amounts of debt, which could inevitably lead to credit problems further down the road.

    Consumers who are in control of most aspects of their finances, but still feel like they could use additional help managing their debt burden, could certainly benefit from the assistance of a consumer credit counseling service.

    With a consumer credit counseling service, consumers enroll in a program that will educate them about the inner workings of their monthly finances, putting them in the driver’s seat to fixing their current credit situation with a solid debt management plan.

    It will also put them on the road to a healthier financial future, since they will apply their newfound financial knowledge to make better decisions going forward and to avoid their previous fiscal mistakes.

    Unfortunately, unlike other debt management methods, consumer credit counseling does not allow consumers to cut any of their debt, or even reduce their interest rates on current balances. They still have to pay off the entire amount of their outstanding debt. Consumer credit counseling simply teaches consumers methods that will help them improve their money management in the future, which will free up cash to pay down their current debt levels.

    Consumer credit counseling services can also help consumers learn how to set a monthly budget that will work for their personal situation that they can adhere to. Tracking their monthly financial incomes and outflows will allow consumers to cut back on unnecessary expenditures and apply the money they save to paying down the outstanding debts that forced them to seek consumer credit counseling services in the first place.

    However, as with most debt management options, consumer credit counseling does have a few drawbacks. In addition to having to repay the entire amount of their outstanding debt without any decrease in the interest rate, enrollment in such a program will appear on the consumer’s credit report, even though it will have no bearing their credit score.

    Enrollment in a consumer credit counseling service on a credit report can make it more difficult to obtain a loan or even an unsecured line of credit, such as a new credit card, for some time thereafter. Lenders tend to be more wary of a consumer who has run into debt problems in the past, punishing them with a higher interest rate, even if he or she has made considerable headway in repairing his or her financial situation.

    A consumer who chooses to enroll in a consumer credit counseling program should carefully research both the process itself and the organization through which they will receive the help. Not to mention, carefully evaluate the negative ramifications it might have on obtaining future loans or credit cards with higher interest. Such evaluation will not only help determine whether the process is best for their current financial situation, but also for any future considerations such as car or home purchase.

  • How Do I Get Out of Debt

    How Do I Get Out of Debt

    Now that the national economy is beginning to recover and people are having a better time dealing with their personal finances, many consumers who found themselves sunk deep in debt over the last few years may be asking themselves the question, “How do I get out of debt?” Fortunately, there are a number of avenues consumers can take to get out of debt, each with benefits and drawbacks depending on how quickly people need to fix their financial problems.

    For those asking themselves, “How Do I Get Out of Debt”, and desiring to do it the old- fashioned way, by paying their bills on time – the key is to reduce the amount they owe to lenders by increasing their monthly payments every month. One can go about this by using the “snowball method”. Consumers start by paying off their credit card with the highest interest rate first. Maximum funds are applied to this card’s monthly payment only, while just making the minimum payment to the others. Once the first card is paid off, its time to move onto the next. This method may take long, but it is more effective than making the minimum payment on all their cards, which could take a life time! In addition, they would also benefit from cutting their credit card spending. This can be accomplished by creating a monthly budget that identifies areas where money may be wasted every month.

    Some consumers can establish a healthy, sensible budget by working with a credit counselor. However, enrollment in such a service would likely be viewed negatively by a lender even though it doesn’t affect their credit score. A Consumer credit counseling (CCC) program is a method of debt relief for those who are unable to make minimum payments and undergoing financial difficulties. However, CCC programs could take participants up to 6 years or longer to complete and their debt is not reduced when compared to a debt resolution program. They may still have to pay back 100% of the debt they owe plus interest. In addition, if a monthly payment is missed, they could be dropped from the program altogether.

    Consumer Credit Counseling Services, on average, have very high rates of client cancellation, which does not bode well for their delivery of a successful debt management program. With that being said, a CCC program may be a viable option for those with under $10,000 in unsecured debt, or for those that are able to afford higher monthly payment obligations and are well disciplined to remain in the program.

    Consumers may also find a solution to the question, “How do I get out of Debt” by calling a credit card lender and simply asking for a lower interest rate. If they have a good enough credit score, their current lender may be inclined to drop the interest rate on the account to keep their business. If that does not work, it may be beneficial to transfer the balance to a new account with a low or 0 percent introductory interest rate, which would allow them to pay off their other debt more quickly. A consolidation loan transfers the debt they owe and bundles it into a package that seems affordable with an overall lower payment. But use caution as a lot of debt consolidation companies offer very low rates to start, but within a few months, those rates may go right back up to 10 – 24%, and one can end up back in the place they started.

    Another potential method for getting out of debt is enlisting the help of a debt settlement service. With this program, professional negotiators work with the consumer’s lenders to explain their financial situation and achieve debt relief. Client programs are custom-tailored to provide individuals with one low monthly program payment and target a fairly quick time frame for resolving the debt. This option could be one of the fastest ways for people to become debt-free from their unsecured debts as enrolled accounts may get settled in as little as 24-48 months. Keep in mind, this process will also cause damage to the participant’s credit score, though it may also allow him or her to repair a credit rating fairly efficiently after the program is completed.

    While its all too common these days for consumers to be asking the question, “How do I get out of debt,” the good news is that there are sensible alternatives for those that do their research and choose a path that fits with their financial goals.

  • Getting Out of Debt

    Getting Out of Debt

    Many consumers across the country are finding themselves drowning in an endless pile of bills these days and would like to be getting out of debt. While some are in the position to reduce the amount of debt they owe to creditors by placing themselves on a strict budget, others are finding that a loss of job or a decrease in pay is making it nearly impossible to make ends meet. As a result, many are turning to professional help to get themselves out of debt: Consumer Credit Counseling, Bankruptcy, and Debt Settlement.

    Consumer Credit Counseling

    One sensible way for consumer to be getting out of debt is to enroll in a consumer credit counseling program. Consumer credit counseling focuses on financial advising and the consolidation of debt. A company is hired to manage your consumer debt for a period of time. This method can take up to 4-5 years before the consumer completes the program and is done paying off all of your debt. The program works on placing consumers into a repayment plan while negotiating the reduction of interest rates, late fees and penalties. Similar to other debt programs, this solution may not be suitable for everyone. Since, the program works on only the reduction of interest rates, late fees and penalties and does not reduce work on reducing principal balances, some may find that the monthly payment to complete the program is still too high. Debt being paid through the program is noted on the credit report as “not being paid as agreed”. Although, this notation is not supposed to impact your actual credit score, it may prevent you from getting approved for a new credit card or mortgage. Most lenders and creditors frown upon such marks on your score.

    Bankruptcy

    When it comes to getting out of debt, bankruptcy, commonly described as “liquidations” or “reorganizations” is a legal process that helps consumers eliminate debt entirely or repay debt under the discretion of the courts. Although bankruptcy can permanently eliminate consumer debts and provide a means for the consumer to have a fresh start, there are serious financial hurdles one will face after filing for bankruptcy. One of the main obstacles is the inability to obtain a mortgage loan or credit. Typically speaking, a bankruptcy will be disclosed on your credit report for up to 10 years. Most lenders and creditors will not offer loans or credit to someone with this mark on their credit report. And if they do, the interest rates will be incredibly high. Due to the long term damage that bankruptcy can cause to your credit, bankruptcy should generally only be considered if all other debt management options have been considered or if you are in an urgent financial situation.

    Chapter 7 Bankruptcy

    Chapter 7 Bankruptcy, also known as a liquidation bankruptcy, is filed when the debtor has mostly consumer debt. In Chapter 7 bankruptcy, a trustee is assigned and is responsible for collecting and selling non-exempt property. The proceeds from the sale are then allocated to creditors and the debtor is then discharged for all dischargeable debts. As all debts are typically discharged, this may be the fastest way for people who want to be getting out of debt.

    Chapter 13 Bankruptcy

    Chapter 13 Bankruptcy, also known as the reorganization bankruptcy focuses on placing consumers into a repayment plan where their debts are paid off over a span of three to five years. This type of bankruptcy is a better option for individuals who have non-exempt property that they do not want to lose. And is an option for those who have a steady income with enough coming in to spend on reasonable expenses with some left over to pay off their debt.

    Debt Settlement

    Debt settlement provides a way for consumers to pay down and reduce their debt while avoiding bankruptcy. Since its focus is to reduce principle balance, it is more aggressive at lowering debt than consumer credit counseling. Debtmerica, a debt settlement company, offers debt reduction programs that aggressively attack credit card debt and may enable debtors to get our of their financial rut in about 24-48 months. Although this option has a short-term negative impact on one’s credit, this option is best for consumers who want a more aggressive approach than credit counseling and want a second chance without having to go through the grueling process of filing for bankruptcy.

    For those individuals looking to be getting out of debt, there are many alternatives. The key for those consumer is to thoroughly research all of the available alternatives and choose the plan that fits in with their overall financial goals.

  • Debt Consolidation – Everything You Need to Know

    “Debt Consolidation” is one of the most commonly misunderstood and misinterpreted personal finance strategies that consumers inquire about all the time. While some view it as a method of taking on new loans, others see it as a debt relief alternative. It is more important than ever for inquisitive consumers to have a very strong understanding of exactly what debt consolidation entails, and the impacts it can have on personal finances.

    There are many benefits to consumers from debt consolidation, including lower payments, lower interest rates, fewer accounts, and the peace of mind of dealing with only one creditor. However, with all the misinformation available on the web, learning about all the pros and cons of debt consolidation can be a time consuming and confusing process, when in fact it is relatively simple and straightforward.

    We have compiled the vital information that consumers need in order to make a well informed decision regarding debt consolidation as a potential strategy to resolve credit troubles and improve their finances.

    What is Debt Consolidation?

    Debt consolidation is a process that allows qualified consumers to take out a new loan that pays off most or all of their outstanding debt. This new debt consolidation loan, by aggregating all of the individual debts and paying them off, often becomes the only debt consumer makes payments to. Debt Consolidation loans usually come with interest rates considerably lower than those loans that consumers are currently saddled with and are trying to pay off, usually consisting of car loans, personal loans, student loans, and high interest rate credit cards.

    By taking out a debt consolidation loan, consumers can potentially save thousands of dollars over the life of the loan, since debt consolidation programs offer relatively low annual percentage rates on their loans making the savings substantial and immediate.

    More Debt Consolidation Information

    1. What are the pros and cons of debt consolidation?

    2. How to find the best debt consolidation loans?

    3. How to differentiate between debt consolidation programs?

    4. Is consolidating credit the same as debt consolidation?

    Once consumers have a solid understanding of debt consolidation they can compare and contrast it with other debt relief options like debt settlement, credit counseling, debt roll-up, or filing bankruptcy.

    In addition to fully understanding debt consolidation, every consumer should thoroughly research all of these alternatives, so they can make an informed decision as to what solution is the right choice for their particular situation and financial goals.

  • Debt Counseling

    Debt Counseling

    For consumers whose debt is somewhat manageable and don’t need to seek drastic measures to resolve it, there may be a benefit in seeking the assistance of debt counseling, also known as credit counseling.

    With debt counseling, consumers learn how to properly handle their finances, so that they can recognize what led to their debt problems, and learn to practice financial strategies to prevent it from happening in the future.

    In addition, debt counseling can help them understand how best to approach repaying their current outstanding debts in a way that makes financial sense for them and their families. Consumers who enroll in a debt counseling service can establish a plan to allocate more of their paychecks to paying their bills each month in order to quickly reduce their balances.

    Unfortunately, using a debt counseling service may not be helpful to consumers with more substantial debts because it will not eliminate or reduce outstanding balances. However, it will help consumers create a monthly budget for paying off their balances responsibly. Debt counseling may be more beneficial to consumers whose debt load isn’t totally unmanageable because, unlike some other forms of debt elimination, it will have no bearing whatsoever on their credit score. However, participation in a debt counseling program will show up on a consumer’s credit report, which can still affect his or her chances of getting a loan with a fair interest rate.

    For example, lenders may view consumers who apply for an auto loan or mortgage, and have used a debt counseling service, as a risky investment because of their history of mismanaging money. Thus, lenders may increase the amount of interest a consumer may have to pay on a loan if they qualify. The debt counseling may also make it difficult to qualify for a credit card or other type of unsecured debt for a certain period of time.

    If consumers are burdened by a much heaver and insurmountable debt load, a reasonable alternative to debt counseling is debt settlement. Contacting a debt settlement company is one of the most common debt solution options available to consumers. These organizations have trained negotiators, who speak directly to a lender on a client’s behalf to reduce the total amount owed. Often, these debts can be reduced by roughly 50 cents on the dollar, and settlement programs can enable consumers to become debt-free from enrolled accounts in as little as 24 – 48 months. Generally, creditors will demand a lump-sum payment when a settlement is negotiated, although many creditors are also willing to structure settlements over time.

    Whether consumers chose debt settlement or opt to enroll in a debt counseling program, they should thoroughly examine whether either method is right for them. Consumers should also research debt counseling and debt settlement firms to determine the best provider in the market.

  • How to Get Out of Debt Fast

    Many Americans want to know how to get out of debt fast. Many Americans may be wondering how to get out of debt fast as their bills and credit balances have piled up in recent months and created a financial headache. How to get out of debt fast is a common question that has several answers which may allowconsumers to pay off or greatly reduce the amount they owe to creditors.

    One method to get out of debt is to seek the help of a debt settlement agency. Using this method, a consumer will have a trained negotiator assigned to them, who will negotiate with creditors on the debtors' behalf in an attempt to reduce the total amount they owe. Once the debt has been negotiated down to a lesser amount, lenders often require consumers to pay their negotiated debt amount in one lump sum. This will require the consumer to save up a lump sum payment before the debt can be settled, and the program usually lasts between 24 – 48 months. However, debt settlement is often successful in reducing a consumer's total original balance owed by up to 50 percent, making it a possible solution to the dilemma of how to get out of debt fast.

    Another way for consumers to get out of debt fast is to call their lender and ask to have the interest rates reduced on their account. While this may not work for everyone, it can't hurt to ask. Consumers may find this method to be particularly helpful if they have a credit score good enough to qualify for a credit card with a lower interest rate from another lender. The threat that a customer may leave and transfer their balance elsewhere could be enough to convince the lender to lower the interest rate to a rate that is much more manageable.

    If lenders are steadfast on the interest rate figures, and the consumers’ credit score is still high enough they may benefit from seeking a balance transfer to a card that carries a low, or zero-percent introductory rate. With this method, a consumer compiles interest on their existing balance much slower than they did in the past, which may allow them to cut their debt significantly before the introductory offer ends and the interest begins to accrue again.

    Yet another option for those trying to figure out how to get out of debt is to talk to a credit counselor, who can suggest a debt management plan that could help pay off debt within four to seven years. Although this method is not as fast as debt settlement, this type of program makes consumers devote considerable time to a financial education process that will also help draw up a sound financial budget and eliminate unnecessary expenditures to further chip away at their debt. In a credit counseling program, consumers will usually pay back every dollar of the principal they owe, but at a lower interest rate.

    Before arriving at any solution on how to get out of debt fast, consumers should first review their finances and research their options to ensure they choose a plan that best fits their financial situation. 

  • Get Out of Credit Card Debt

    There are several ways to get out of credit card debt. The national recession has had a profound impact on the finances of many Americans, and as a result, some have seen their credit card debt grow to the point it's become unmanageable.

    For these people, there are several ways they can get out of credit card debt and get their finances back on track within a relatively short amount of time.

    The simplest but most lengthy solution for a consumer to get out of credit card debt requires an increase in the amount of the monthly payments for their credit card bills and to dramatically decrease or cease using the credit cards altogether. A lot of consumers have already begun to do this effectively, curbing their spending and dedicating more of their paychecks to get out of credit card debt.

    People who cannot afford to increase their monthly payments to get out of credit card debt may benefit from working with a credit counseling service that can suggest a debt management plan that could help pay off your debt within four to seven years. Although this method is not as quick, many counselors make consumers devote considerable time to a financial education process that will also help draw up a sound financial budget and eliminate unnecessary expenditures to further decrease their debt.  In a credit counseling program, consumers will pay back every dollar of the principal they owe, but at a lower interest rate.

    But some consumers may need to take more drastic measures to get out of credit card debt. In this case, they may benefit from using a debt settlement service. With this method, a consumer enlists the help of a company that specializes in negotiating with lenders to help them reduce their debt.

    Debt settlement is the process of negotiating with creditors to achieve a payoff amount that is a substantial reduction to the current balances that are owed.  Creditors are very willing to negotiate on debt balances that are in arrears, because if a consumer were to file bankruptcy, they stand to get nothing.  In order to succeed in such a program, consumers need to diligently save the funds that are required to make settlements, which typically run around 50 percent of the total current balances and last between 24 to 48 months.

    While no reduction process is going to be easy, there are great companies that can help you get through a tough spot. Whatever option a person chooses to get out of credit card debt, they should always thoroughly research the method beforehand to ensure that it's right for their unique financial situation.

  • Eliminate Credit Card Debt

    Many consumers are trying to eliminate credit card debt. Many American consumers have run into economic problems during the last few years as a result of the nationwide recession, which may have led them to lean too heavily on their credit cards to make ends meet. For some families, this has brought financial challenges, as their credit card bills have piled up and become unmanageable. Fortunately for them, there are a number of options that can help eliminate credit card debt, and get one back on the path to debt freedom.

    Consumers who have maintained a high credit score may benefit from a credit card debt consolidation loan to help them eliminate credit card debt. Credit card consolidation is a viable solution for many, and it is a simple process that can serve to reduce the hassles of dealing with several credit card companies at once. In addition, the strategy often lowers monthly payments, and in doing so, reduces the total payback of principal and interesting over the life of the loan.

    Consumers that are carrying several unsecured debt obligations with high interest rates can apply for a debt consolidation loan, in which a bank issues a new loan for enough money to pay off all their outstanding debt balances at once. For consumers that are approved, they can consolidate their debt into one single monthly payment at a lower interest rate. If consumers choose to pay more towards their principal balance every month than the minimum payment, they can get out of debt more quickly.

    Another option for consumers to eliminate credit card debt is to seek a debt settlement or debt negotiation company that will work with their creditors to structure settlements at a reduced balance. While creditors may not normally consider settling if a consumer inquired directly, debt negotiation firms have relationships with the lenders to help structure these reduced settlements. Lenders would rather receive a partial payback of the balance they are due, rather than risk receiving no payment at all. 

    Debt negotiation companies can typically eliminate credit card debt by somewhere between 40 and 60 percent of what is owed at the time of settlement. The challenge to this method is that it requires a consumer to have accumulated sufficient savings to make the settlements, which many consumers might not have readily available. Hence, it is very important that individuals find a good debt settlement company that helps them save money from the outset of the program, and thereby represents their best interests.

    Consumers in search of the right strategy to eliminate credit card debt should research their options thoroughly and select a debt management solution that best fits their lifestyle and financial needs. 

  • Debt Solutions

    Many Americans are looking for a solution to get out of debt. Fortunately, there are a number of simple debt solutions that will allow consumers to take back control of their finances by managing their debt loads sensibly.

    Consumer credit counseling is a debt solution program for those who are unable to make their minimum payments and are undergoing financial difficulties. However, consumer credit counseling programs could take up to 6 years or longer to complete and they require an individual to pay back the full principal balance of the debt that is owed, albeit at a lower interest rate. Consumer Credit Counseling Services, on average, have very high rates of client cancellation, as clients often find that the payment relief is not enough to alleviate their hardship quickly enough. Another downside is that while working with a credit counselor will not affect the credit score, it will show up on a credit report, which could be viewed unfavorably by some lenders.

    Another debt solution for those who are in serious debt is to find a credit consolidation loan. These are given by lenders in lump sums large enough to pay off all of a consumer's outstanding debts at once. While this doesn't affect the amount of money they owe, it will reduce their total number of lenders to just one, and in some cases lower the interest rate. However, these loans are difficult to qualify for, and lenders may require borrowers with sub average credit scores to collateralize an asset before granting the line of credit.

    Contacting a debt settlement company is one of the most common debt solution options available to consumers. These organizations have trained negotiators, who speak directly to a lender on a client’s behalf to reduce the total amount owed. Often, these debts can be reduced by roughly 50 cents on the dollar, and settlement programs can enable consumers to become debt-free from enrolled accounts in as little as 24 – 48 months. Generally, creditors will demand a lump-sum payment when a settlement is negotiated, although many creditors are also willing to structure settlements over time. While it is possible for an individual to pursue this debt solution strategy on their own, there are many companies that professionally offer this service and can be much more effective in achieving positive results.

    Whatever debt solution a consumer chooses, they should be aware that there are risks involved and do research on the company that is providing the service. While no debt solution process is going to be easy, there are good companies offering successful solutions that have lasting benefits. 

  • Lower My Debt

    Many Americans struggle when trying to lower their debt. A common question people have when they are struggling financially, is “How do I lower my debt?” Some solutions are more aggressive than others and depending on your individual situation; each one has its benefits. Making an assessment of your situation and calculating the amount of debtyou owe, how much you can afford to spend each month towards paying off that debt, and how quickly you want to tackle them will assist you in choosing which debt solution will work for you.

    “Lower My Debt” the Old Fashioned Way

    Spending less equates to saving more. This method requires a major lifestyle change and eliminating wasteful spending in order to save money and pay off debt. According to bankrate.com, below are the top 10 things that Americans waste money on: 

    1) Coffee- Most people spend about $4.00 a visit at Starbucks. If you’re visiting Starbuck’s every morning that equates to $20.00 per week on coffee. That’s approximately $80.00 per month and $960.00 a year spent on just coffee. 

    2) Cigarettes-According to tobaccofreekids.org, the average price for a pack of cigarettes in the United States is $4.54. If you smoke a pack a day, you’re a spending $1600 a year on cigarettes. Cutting down on smoking, not only is better for your pocketbook but will also be better for your health! 

    3) Alcohol-Going out to the bar or club during the weekend can add up. With, drink prices as high as $10.00; you are spending about $50-$100 a night on alcohol. The rounds of drinks you buy can add up, not to mention, having to tip your bartender. Doing this every weekend will equate to about $1200 spent each year on alcohol and a hangover you are sure to have the next morning. 

    4) Bottled Water-A bottle of Aquafina (20 oz.) can cost you about $1.00. If you’re buying a bottle a day, that’s about $365.00 a year spent on something that you can practically get for FREE. This is something simple that you can cut back on, why spend the extra cash if you don’t have to. 

    5) Manicures-Manicures and pedicures can cost anywhere between $30 and $50. Going to the nail salon about twice a month will cost you approximately $100. Limit your visit to the nail salons for only special occasions. Even cutting your visit to one time a month can save you $600 a year. 

    6) Car Washes-If you just want a standard wash and dry service, a car wash can cost you about $20 a visit. If you’re washing your car every week that’s about $100.00 a month spent on something you can do yourself at home. 

    7) Weekday Lunches out-Most people spend about $9.00 a day to eat lunch during the week. That comes out to about $2300 spent each year on lunch food. Take the extra time each night to pack yourself a lunch. Just spending a little time doing this, can save you a lot of money in the long run. 

    8) Vending Machine Snacks-Snacks sold at the vending machines usually cost about $.75-$1 and will sometimes require more than one bag to satisfy that craving appetite. Take the time out to buy snacks at the grocery store and bring it with you to work so that you’re not tempted to visit that machine every day. Remember, every little bit counts! 

    9) Interest Charges on Credit Cards-According to indexcreditcards.com the average consumer credit card rate is 14.03%. Typically, minimum payments are calculated to only pay 1%-3% of your balance. So, if you have a card that has a balance of $5000 and you are only making the minimum payments of 2% of your balance, it will take you about 22 years to pay off the debt. If you are one of those asking the question – how do I lower my debt – try to make more than just the minimum payments and get those cards paid off! 

    10) Unused Membership-Gym memberships can cost about $30 – $40 a month. If you are not using your gym membership, you are flushing about $480 a year down the toilet. Check with your gym, and see if they can place you on a “pay per visit” plan, where you can pay each time you come to their gym. Or, check with the area you live in, some apartment complexes have onsite gyms their residents may use free of charge. 

    As you can see, making a lifestyle change and saving can assist in helping those who are asking, “How do I lower my debt?” This method is the least aggressive. It is best for individuals who don’t have major debt challenges and are still current on their payments, as there are no negative credit consequences.