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Are There Risks Involved With Debt Consolidation Services?

Are There Risks Involved With Debt Consolidation Services?

Are you currently carrying a massive debt load? Do you wonder if it’s another bill collector every time your telephone rings? Do you wake up at night wondering if you’ve forgotten to pay something? If so you may want to consider seeking the help of debt consolidation services.

And if you choose a debt consolidation services that do not charge a fee, one that is already subsidized by many of the creditors that they aim to help repay, you could benefit even more because they will be putting the entire amount that you pay towards your outstanding debts instead of keeping part of it as their payment.

However, non-profit debt consolidation services offer many other services than just debt consolidation and repayment. They also offer consumers advice on keeping their finances on target, developing workable monthly budgets, and how to repair a poor credit rating.

Getting your finances straighten out is of course the first step. The debt consolidation services will help you make a list of all your outstanding unsecured debts, how much you owe to each of them, and what the total amount you should be paying every month is.

The next step is to work out what your monthly expenses are. These include your mortgage or rent, your utility bills, child care expenses, and any other mandatory payments you must make, especially if they are guaranteed by your property. Once your budget is done you can decide how much you can spend each month to pay towards your debt consolidation.

Once you know how much you can actually afford to spend each month in repaying your debts, the debt consolidation services will contact each of your creditors and ask them to agree on a lower repayment amount each month. Sometimes they can even get your creditors to lower their interest rates or eliminate some of the fees that they have been charging you for being late or over your credit limit. Most creditors will want to work with you because they realize that if they don’t negotiate a lower payment, they are unlikely to receive any money for the outstanding debt.

Now let’s talk about what risks are involved in using a debt consolidation service. Basically, the only risk is if you use a debt consolidation service that is not legitimate or professional. Do some research and even ask your creditors if there is a specific company they work with regularly that they can recommend.

Beyond that, there really is no downside. And the upside is that you will have peace of mind in knowing that your bills are being paid on time every month.

Debt Consolidation Loans: A Last Resort

Debt Consolidation Loans: A Last Resort

No one ever wants to be in debt but it happens and at that point, debt consolidation loans are the answer. It can help take back control of your finances and stop letting that debt the quality of your daily life. Debt can occur through unexpected medical bills, education expenses, credit cards, personal loans, and homeownership. If you have not been able to handle the debt yourself, it is first important to assess your situation and the total amount of debt to determine the best way to pay it off. Debt consolidation is more than likely the way to go as compared to the option of bankruptcy and it should be considered, but you very well could handle your debt on your own which is why it is important to evaluate your financial situation.

Included in your evaluation of your options and the best route to take in paying off your debt is the importance of understanding the basics of debt consolidation loans. Simply put, debt and bill consolidation is the process of totaling your outstanding debt, and assessing your situation is a determination of the amount you can afford to apply each month to this debt. Look at your income, total monthly debt, total monthly payments and the total amount of debt to be included in the bill consolidation.

You should next determine the percentage of your debt and consolidation total for each creditor, which is important in order to find the best offer the creditors make to reduce your payments. Lower interest, reduced payments, and sometimes a reduced payoff amount are all possibilities during negotiations with creditors. For example, if your debt and bill consolidation total is $5,000 and you are required to repay a particular creditor $400 per month, take the $400, dive it by $5,000, and multiply the result by 100. This will give you a percentage, which is 12.5% in this example. You then know that 12.5% of your debt and bill consolidation total is due to that creditor. If your disposable income after subtracting essential expenses is $1,000 per month, you can afford to pay this creditor $125 per month.

One thousand multiplied by 12.5%. The average amount paid each month from debt consolidation, as compared to paying the creditor yourself, may or may not be less than, for example, the $125 above. If it is not, debt consolidation may not be the best way to pay off this creditor while it may for others. Or, the negotiations the consolidator is able to make with the creditor may result in a much lower payment, and reducing your debt through debt consolidation is probably your best solution in this case.

It does not hurt to contact the creditors yourself and try to negotiate a lower interest rate and reduced payments. Often if you explain your situation, they will work with you. It goes without saying that bankruptcy should be the last resort but debt consolidation may not something to jump into right away.

Debt Consolidation Plus Consumer Counseling Benefits

Debt Consolidation Plus Consumer Counseling Benefits

Consumer counseling has many benefits that are often taken for granted. Know that credit card debt consolidation is not a difficult process. It involves combining all of your outstanding balances into one debt to be paid by only one monthly payment. After you have contacted a debt consolidation company, they will pay off your outstanding balances. You will pay one single payment each month at a lower interest rate. This is a great option for those individuals seeking to save money on interest, improve their financial situation, repair their credit, or simply put into action a credit card debt settlement plan.

In addition to the consumer counseling benefits above, you will also have access to professionals in consumer counseling who can give you advice on budgeting and managing your finances.

The following are some factors to consider when choosing a debt consolidation plan for your existing debt:

• Interest Rate. You should try to lower the interest rate for the consolidation loan in order to most efficiently settle the debt and maximize the benefits of the consolidation. Since the loan will be a long-term loan, a reduced interest rate will result in a significant amount of savings. Note, though, that the interest rate is often associated with your credit score. The higher the credit score, the lower the interest rates you will receive as the consolidation company will have greater faith in your ability to repay the loan.

• Tenure of the loan. There is a strong relationship between the length of the payments to be made on the consolidation loan and the ultimate amount you will pay on that loan. Do not move too quickly on accepting a low installment alone. With that, you must consider whether the term of the loan results in the consolidation costing too much in the end.

• Amount of installment. Typically, any loans you take out will be a secured loan against your home which opens to the possibility of repossession of your home should you default on the consolidation loan. This is why it is very important to commit to a loan that is manageable within your budget not only in the short-term but also in the long-term. If it is not, avoid committing no matter how favorable the loan terms or payments may be.

If you are paying extremely high-interest rates on your credit cards, you should consider the option of consolidating your balances into one loan and one single payment. This could be the solution to your debt problem, providing you with a more manageable single payment with a lower interest rate and favorable terms.

Don’t Despair With Credit Score Repair

Don’t Despair With Credit Score Repair

Just because you have a poor credit report doesn’t mean you won’t be able to get credit. Creditors set their own credit-granting standards and not all of them look at your credit history the same way. Thankfully, credit score repair is available to give you hope.

Some creditors may look only at more recent years to evaluate you for credit, and they may grant credit if your bill-paying history has improved. It may be worthwhile to contact creditors informally to discuss their credit standards.

If you’re not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it’s a “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees or hide their fees by pressuring consumers to make “voluntary” contributions that only cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

If you are considering filing for bankruptcy, you should know about one major change to the bankruptcy laws: As of October 17, 2005, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy relief. You can find a state-by-state list of government-approved organizations at the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, credit score repair, money and debt management, and budgeting.

Counselors discuss your entire financial situation with you and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Consolidating your debt, paying your bills on time, cutting on the frivolous expenses, and preparing a budget for your discretionary income will help you overcome the mountain of credit card debt.

It may look bleak – even impossible – but if you stick to your plan, you will be able to dig yourself out of this hole.

Don’t Pay Extra For Debt Relief Consolidation

Don’t Pay Extra For Debt Relief Consolidation

If you have a high balance of outstanding debt, you may want to consider debt consolidation. By using debt consolidation services, you can reduce your interest rate, the amount you are repaying, and ultimately reduce the stress caused by this debt. The choice is yours, though. You can choose debt relief consolidation services that are either “for-profit” or “free”. For-profit services usually charge a flat monthly fee but with other charges applied beyond that flat fee On the other hand, free consolidation services are associated with creditors and therefore only charge the flat fee per month. This, obviously, saves the debtor money in the end. He or she is, in fact, trying to reduce their debt and incur additional unnecessary expenses when alternatives are available.

A benefit to free debt consolidation companies is that their services go far beyond just the consolidation of credit cards and debt loans. The subsidies they receive from their supporting creditors give them more freedom to more thoroughly help those with poor credit. They are able to afford the risk. This is one reason why those with poor credit ratings prefer these services over the for-profit consolidation companies. Those with poor credit will benefit from those companies offering education on consumer debt repair. Repairing your credit rating is an important aspect of improving your entire financial future.

In addition to choosing the right company, the actual debt relief consolidation program will also be extremely important in your decision-making, especially for those severely in debt. For individuals in such a situation, accelerated debt consolidation is probably the best consolidation program. The accelerated program is similar to regular consolidation but rather separates the debt into unsecured and secured, only consolidating the unsecured debts. You can get lower rates and a faster repayment plan through accelerated consolidation programs, but the more secured debt you have, the more difficult it will be in obtaining this plan. The most common types of unsecured debt today are personal loans, credit cards, and department store cards. Secured debts involve collateral or an asset to secure the loan such as a house or car.

Whether you choose accelerated or regular debt consolidation, do not underestimate the benefits of a free debt consolidation organization. Not only are you saving money in unnecessary fees, but the services they are able to offer the consumer can also equip you with money management skills to better secure your long-term financial health by eliminating debt and repairing your credit.

Getting Out of Debt With Credit Counseling

Getting Out of Debt With Credit Counseling

If you are deep in debt and it seems that there is no way out, there is hope. Credit card counseling and/or debt consolidation may be the best solutions to get out of debt. A credit counseling professional can help you establish a plan to fix this problem and help you learn ways to stay out.

Credit counselors will work with you to create a debt management program, which may include consolidation, and they will also educate you on how to avoid the careless spending and lax payments that landed you in debt in the first place. With the help of a credit counselor, it won’t be long before you are transformed into a responsible and reliable consumer.

When you begin a debt management program, your objective is to completely eliminate all of your debt. Therefore, you must do whatever it takes to reach this goal. So don’t be afraid to ask questions and don’t worry about appearing unknowledgeable. The credit counselor is there to help you and answer any questions you may have. So ask plenty of questions, and if you still don’t understand something, simply ask your counselor to explain again.

If your debt management program includes consolidation, be sure to ask about any conditions, such as whether you will be able to continue using your credit cards after the debt is consolidated. Oftentimes, consolidation programs stipulate that you must forfeit the cards once the debt is consolidated. This may or may not be the best decision for you. However, if you really want to resolve this issue once and for all, you may want to consider not racking up any more credit card debt.

Lastly, feel free to do some of your own research. After all, you want to make sure that you are with the right debt counseling company.

Good Money Management Is The Only Way Out Of Debt

Good Money Management Is The Only Way Out Of Debt

Establishing a budget, keeping on track with it, and keeping a record of all of your expenses is the real solution for rebuilding and repairing your credit once it has been damaged. Don’t be tempted to file for bankruptcy; you will only ruin your chances for the future. Even the solution of a debt consolidation loan will only add more and a continued debt burden. You have to pay interest on the loan, and you will just be worried about making it until it is finally paid off. The best solution is to save your way out of debt by establishing good money management skills. It is a much better idea to keep track of your expenses so you know what you are spending your money on and then you can eliminate unnecessary expenses and start to save.

A small first investment you might want to make is a software program that will assist you in budgeting and saving. By making it easier to keep track of things, this small expenditure will save you a lot in the long run. The first thing you need to do is establish a budget. A software program will ask you all the questions you need to establish a budget. By answering the questions, the program will put all of your income and expenses in the correct categories and show you what you have leftover. You can also do this on your own, by using a form where you write all of your income on one side and all of your expenses on the other.

Each week write down what you spend on each item, how much you put in your savings account or retirement fund, taxes, etc. Record your earnings and track how much you have left. If you see that each week you have nothing left to pay an essential bill, you will have to change your payment system. Each week as you pay your bills, try to make as large a payment as you can on each of your necessary bills, such as rent or mortgage, electric, water, phone, etc. Then you have to survive on what is left by cutting back on non-essentials. You may have to stop going to the movies for a while and just rent inexpensive ones from the library.

You may have to cut back on eating out. Next, examine all of your essential bills to see how you can save money there. If you start to limit the phone calls your family makes, if you make sure to turn off lights and stop wasting water, you can probably save a lot of money. Making these cutbacks and sacrifices will pay off big if you can catch up on all of your bills. You will not even remember which movies you missed while you were putting money away to pay off all of your bills.

Another way to ensure that you build a good money management skill is to make a survival budget. What is the absolute minimum you and your family need to survive? Cut every expense down to its lowest, like budget meals every night, no entertainment except whatever is free, basic water, basic T.V. cable, basic telephone. Follow this survival budget for a few months and you will be shocked at how much extra you will have to pay off your bills and debts. Certain items are important to keep up, such as health insurance and your rent or mortgage, so you don’t end up with no roof over your head or medical bills you can’t pay. But everywhere you can cut back, you should. Any savings can be applied to catch up on bills or debt.

The other strategy for good money management is to look at is your income side. Can you ask for a raise, or can you find a better-paying job, or perhaps you can find a second job? Find any way you can (any honest way, that is!) to increase your income while you cut down on your expenses, and you will repair your credit before you know it.

How Debt And Bill Consolidation Work

How Debt And Bill Consolidation Work

Although you probably won’t find anyone who says that want to get heavily into debt, the reality is that many people find themselves in that situation for a variety of reasons, including taking on too many credit cards and personal loans, high medical bills, your children’s or your education expenses and just not paying close enough attention to your personal financial situation. If you find yourself in that situation and are wondering what you should do, you might want to consider a debt or bill consolidation. What is debt consolidation? It is simply that – consolidating all your debt into one payment and taking the hassle out of it so that you can become debt-free and avoid an awful lot of stress in the meantime.

So how do you get started on a bill and debt consolidation plan? The first thing you do is find out exactly how much in debt you are. To do this you will need to collect all of your account statements and write down the name of the creditor, the total amount that you owe that creditor, and the number of your monthly repayments.

The next thing you do is make up a realistic monthly budget. Go over all over your monthly expenditures such as rent or mortgage payments, utility bills, car loans, insurance payments, child care costs, grocery money, and upkeep for your car. Then add in some for miscellaneous expenses such as hair cuts and birthday gifts, things that don’t come up every day. Total it all up and that is the amount of money that it costs you every month to maintain a basic living.

The final part of organizing yourself is to subtract your monthly budget from your take-home pay. The amount left over is the amount that you have available to pay off your creditors each month. Now, this amount is likely to not be enough to make the minimum payments, which is why you need a debt and bill consolidation plan.

Now that your finances are organized and you know exactly what you can afford to pay in debt repayments each month, you need to contact each creditor and negotiate with them a lower payment amount. Most creditors are quite used to this and willing to help you out as long as you are willing to pay them what you can. Obviously, they realize that you can’t give them what you don’t have. Just be straight forward with them – you’ll be surprised at how accommodating they can be!

How To Choose A Credit Card To Meet Your Needs

How To Choose A Credit Card To Meet Your Needs

It will take a little work if you choose the right credit card that is most suitable for your needs, but it certainly will prove to be worthwhile in the long run. Whether you want it so that you don’t have to carry cash with you, or you are a businessperson who is looking to have an accurate record of all business-related expenses, there will usually be one card that is a little more beneficial to your situation than others.

Here are some things to look for to help you choose that perfect credit card

Determine Your Primary Use of The Credit Card

Probably the most important question to ask upfront is what do you want to use your credit card for most? This should largely determine what kind of card you need to look for. For instance, if you are in business for yourself, or if you travel a lot for your business, then there are a couple of cards that will really help you save some money.

If you fly a lot, then go for a credit card that will give you a lot of air miles upfront, and will also give you a lot of options that you can use the points for. It should also have the option of allowing your points to be used for hotel rooms and possibly car rentals.

If you drive a lot, then go for a gas card that gives you rebates on your gasoline, and make sure your points can go toward car rentals, or towards a new car. There are also business credit cards that will not only help you with these things but will also allow you to use your points toward the purchase of new office equipment and other similar things that every business needs.

On the other hand, if you are a student, or a mother just wanting to use it for more simple expenditures, like gas, food, prescriptions, and some pizza money, then you just want a regular card that will reward you for these types of expenditures. On these items, you can expect to get up to a 3% rebate, possibly more on other types of purchases. Many cards may only give you 1% of a rebate, but by looking around, you can get the 3%.

Needs For Debt Consolidation?

If you have found yourself getting in debt pretty deeply from credit cards, then you can use a new credit card to actually help you eliminate some of the debt. Here’s how. Get a 0% APR interest credit card that will give you the opportunity to have balances transferred to it – but make sure that there are not any balance transfer fees.

Many credit cards have these fees, but there are just as many that do not have them. Why pay for it when you can get this option for free from someone else? You also want to be sure that the introductory benefits last for at least one year – some only last for three months. Then, if you still have debt on this card, be sure to get yourself another card before the year expires, and give yourself another year of 0% APR interest on it.

Getting The Most Benefits From Your Credit Card

No matter what benefits you have attached to your credit card, you will not enjoy much of them unless you do two things. The first thing that you need to be sure to do is to pay your credit card bills on time so that you do not pay the monthly late fees. Being late even once with some credit card companies is all the excuse they need to charge you the full amount of interest – from that point on. A second thing is to pay off the bill in full each month – in order to avoid the interest charges – after the introductory period expires.

Establish A Good Credit Rating

With something as simple as too much debt owed on a credit card, many people have wiped out the possibility of buying some of the bigger items they may really want – like that nice house that they have dreamed of for so long. The best credit card will also help you to build up, maintain, or repair your credit rating, too – if it is used wisely.

How To Deal With A Credit Bureau To Repair Your Credit

How To Deal With A Credit Bureau To Repair Your Credit

Good credit is crucial in today’s economy. Good credit allows you to have credit cards, obtain a car or home loan, and to take advantage of many other money-related conveniences. It is possible to live without good credit, but having a bad credit rating can affect you negatively for the rest of your life. It is crucial to deal with a credit bureau to repair your credit if you need to achieve these conveniences.

You might be surprised to know that only a handful of credit bureaus in North America hold the key to your credit rating, and therefore your financial future. These credit bureaus receive the positive and negative reports issued by your creditors and create your personal credit report and credit score based on the results. If your credit history is poor, it is important to repair your credit so that you don’t get turned down for a mortgage or even a department store credit card. In order to do this, you must first learn how to deal effectively with a credit bureau.

Begin by finding out what credit bureau has your file. This information will be on any rejection letters you may have from a declined credit application. Next, you’ll need to obtain a copy of your credit history. Remember that you are allowed, by law, to obtain a copy of your credit history if you’ve been denied credit, though some organizations might imply otherwise. You should only pay for a credit report if you want an instant copy, rather than to have one mailed to you, in which case a bureau will send you one for a fee.

It is important to remember that a credit bureau is in the business of collecting and selling information. This means that you should never provide them with any information that you are not required to by law unless you want them to use it against you. It is legally necessary for you to provide the following to get a copy of your credit report:

  1. Name
  2. Social Security Number
  3. Legal Address

The credit bureau might request copies of your social security card or your driver’s license. If they ask for a copy of your driver’s license as proof of address, it’s best to provide them with a copy of a bill or something else addressed to you instead. You should be careful when providing credit bureaus information because most own collection agencies and they will use any of the information that you provide to hassle you with the credit and collection issues that you are already trying to fix.

Examine your report closely and note any possible errors. If you have questions about a specific debt, you can mail a written request to the credit bureau that they investigate that particular debt to repair it as soon as possible. Legally, the credit bureau is required to document any discrepancies on your credit report, otherwise, if they don’t do this in 30 days, the entire item must be removed. Most of the credit repair companies out there will charge you fees to perform this service, but you can do it yourself for free with just a little bit of time and effort.

Learning to deal with credit bureaus will allow you to engage in successful credit repair without paying a credit repair company a high fee. When you educate yourself on what the legal obligations are that credit bureaus entail, in many cases, you can effectively repair your own credit just as quickly as a credit repair company.

Need more help to repair your credit score? Get some tips here!