Archive for the ‘Debt’ Category
Does Debt Consolidation Affect Credit Rating?
Are you considering a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is 3 reasons why debt consolidation affects credit ratings in a positive way.
Tip #1
If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card companies don’t tell you is that if you carry a balance on your cards and it is over 25% of your credit limit, then you are actually penalized on your credit rating, even if you pay your payments on time. So if you consolidate debts that include credit cards with high balances, then you are doing yourself a favor and helping your credit.
Tip #2
You can consolidate not only credit cards, but if you have a car or a personal loan, then when you consolidate those and pay them off you will improve your credit rating. The credit companies love to see that you paid off a car or a personal loan. It helps to boost your credit score quite a bit.
Tip #3
If you have enough debt that you are considering consolidating it, then it is obvious that you need to. The key is that if you consolidate your debt and payoff credit cards, then you need to stop using the credit cards and get rid of them. If you consolidate your debts and then you run your credit cards back up to their limits you are doing nothing to help yourself. You will end up in a worse situation, then you were in to begin with.
So if you are considering consolidating your debts keep in mind that debt consolidation will affect your credit rating and it can be in a positive way if you are responsible and smart with your debt consolidation
Article Source: http://EzineArticles.com/965240
Debt Resolution For Credit Card Debt Relief! Can it Help?
First I would like to say thank you for reading what I have to say on what may be a very important decision for you or your family. I have been working in the credit card debt relief industry for over a decade now and have quite a large knowledge base as to how the industry works. If you are serious about finding a solution to what could be a very bad and detrimental debt problem then you may find the information in this article to be very helpful.
This article is going to be rather lengthy, I want to state that right up front; I am going to address the most popular credit card debt relief programs on the market today. I feel it is necessary to address both the positive and negative aspects of each option. In addition I would like to go over another option a lot of people do not know about. This is debt resolution, a process very similar to debt settlement with the end results of saving money and time; however the negative aspects of debt settlement will be greatly diminished with debt resolution.
The first option is the most common and this is to do absolutely nothing. Which surprisingly is the exact thing most people do and may be what you have been doing up until now, before realizing you must take action to resolve the situation. Most people in debt and this could be including yourself are running on what is called the “credit treadmill”. The credit treadmill is a ruthless and endless cycle of monthly minimum payments and high interest.
This is perhaps one of the worst places to be financially. If you just pay your monthly minimum even if your interest rate is moderately low, you will be stuck in debt for over 38 years! During the course of the decades it takes to pay off this debt you will pay back over five times the original balance in interest alone! If your APR (interest rate) happens to be where millions of other people find theirs, up in the high twenties if not thirties, it will take much, much longer to get out of debt. And naturally you will be losing A LOT more money.
I don’t really feel I need to address the first option anymore. There are no positive aspects to being stuck in debt and doing nothing about it but paying minimum payments.
Once people are made fully aware of the situation they are in, and have come out of denial to the fact that they do indeed have a problem with credit card debt the first option many people look into is debt consolidation.
There are two ways about which debt consolidation can be achieved. There are debt consolidation loans, and then there is consumer credit counseling.
Let me first explain the option of getting a debt consolidation loan. A debt consolidation loan is a loan taken out to pay off the balances on your credit cards. The benefit from doing this is that there will be only one monthly payment made on the loan. Thus taking away the headache of juggling multiple payments to the various creditors. The second benefit is that the loan may come at a lower interest rate.
This is however in my opinion the riskiest of all the credit card debt relief options. Why? Because in the vast majority of cases the only possible way to obtain a debt consolidation loan is by using your home for security; essentially taking out a second mortgage to pay off your credit card debts! What you will be doing is transforming your low risk unsecured credit card debt into a high risk loan secured by your HOME!
The sad fact is that over 80% of people who end up in this situation and use the equity in their home to pay off their credit card debts find themselves within the same situation in less than five years.
The old cliché “no pain no gain” applies greatly to this method of debt relief. It is just too easy to use the money in your home, pay off your balances and get on with life. The problem is first you are not out of debt and second nobody ever does the right thing and cuts up their credit cards. It’s just too easy to get back into more credit card debt; you will have your little plastic cards with zero balances practically begging you to charge on them again.
Later in the future when you enter round two against credit card debt you will have not one but two secured financial obligations tied to your home that must take priority over your credit card bills. You also may have other secured financial obligations such as a car loans that must take priority over the new credit card bills as well. Except this time there will be no more equity in your home to get another loan. What happens to many people is they either must file bankruptcy, or risk foreclosure.
I cannot even begin to tell you how many times I have seen this happen over my years of working in this industry and it’s very sad. This is why I said in my opinion a debt consolidation loan is the riskiest and the worst option to use when trying to get out of debt.
This brings me to the next option which is very often confused with debt consolidation because it is quite similar. Consumer credit counseling shares many of the same benefits as a debt consolidation loan but without taking the risk of losing your home. A credit counseling agency will look to get your interest rates lowered, and they will have you make one monthly payment to them which they will disperse to the creditors for you; thus giving you the convenience of one monthly payment.
A reputable credit counseling service may very well be the best option for some debtors. However many of these programs will not be feasible. With a credit counseling program you are still paying back 100% of what you owe plus interest and there are service fees involved. Lots of people realize they will not be able to manage the payments on this type of a program, in some cases the payments may be even more than what you are putting out towards the monthly minimums.
Unfortunately consumer credit counseling programs have a very high failure rate, over 70%! The reason being if you miss more than one payment on this type of a program the creditors will kick you out of the program, thus revoking the benefits of one monthly payment and a low interest rate.
The reality is that for a lot of people credit counseling programs will just cost too much money. The program will take between 5-7 years; can you guarantee that over that time period you will not have any financial difficulties that will cause you to miss payments? Especially, if it is quite hard to budget the program in the first place.
Thankfully for those of us who don’t want to or can’t manage credit counseling there are other options available. Bringing us to debt settlement, this process has been helping millions of people get out of debt during this terrible recession. The benefits of debt settlement are different from any of the above options. With debt settlement you may find yourself saving up to half of what you currently owe, and by that I mean the actual balance owed, this has nothing to do with interest rates. In addition you can realistically expect to get out of debt in three years or less; this is a far cry from over three decades running on the credit treadmill.
Saving a lot of time and money while getting out of debt may sound great, and while these are very nice benefits debt settlement also comes with its respective drawbacks.
The problems associated with debt settlement are due to the fact that you must fall behind on your debts in order for the creditors to be willing to negotiate a settlement. There are no creditors in the world that will negotiate on current debt and why would they? If you are current and are paying them their monthly minimum payments with high interest why in the world would they negotiate, they have your precisely where they want you; running on the credit treadmill.
Naturally if you are current with your payments this will have an adverse affect on your credit score. And sadly a lot of people will allow that reason alone to keep them from debt settlement, thus keeping them stuck on that treadmill. For those who are already behind then this is somewhat of a moot point, the damage done to the credit has already taken place.
Another negative effect of falling behind is dealing with collections calls, some debt settlement companies claim they can get the calls stopped, but many lie about that because by law no debt settlement company can stop calls.
When falling behind there is the chance that the creditors can issue a lawsuit. Now from my experience in this industry I can confidently tell you this is not the mainstay for the creditors. It simply costs them too much money and time to bring everyone who falls behind to court, with no guarantee of collecting any money. However, lawsuits are still a possibility and I feel that it is necessary for people to understand this before using debt settlement.
So with debt settlement the benefits are clearly the best, but they do come with their own negatives mentioned above.
This now brings us to another method of credit card debt relief. Like debt settlement, it is designed for people who have become heavily indebted and need to save money in order to get out of debt quickly. This process is known as debt resolution.
Debt resolution is very similar in structure to debt settlement, debt resolution is basically debt settlement handled through the hands of a law firm. According to recent law suits, a law firm does not offer the client any more protection under the law from the negative aspects of the debt settlement process than a debt settlement company can. In fact you will achieve the same end results of saving time and money like debt settlement, however many law firms will charge you upfront legal fees and retainers, on top of their settlement fees.
According to the Illinois Attorney General, there is no difference in the process between debt resolution and your standard debt settlement company so there is no reason they should be violating the recent rulings that state that a company offering debt settlement should not charge any of its fees before a settlement has been negotiated. Quite simply, you are not given any more protection or services for the extra money you are paying them
Another big Misconception is that there is that resolution has an advantage over your typical settlement company in how a law suit can be addressed. What these law firms do not tell you is that they will not represent you in court and many will not even assist you with answering the summons. You hired them to simply negotiate your debt and that’s it. What most debt settlement companies will do is contact that creditor and attempt to work out a settlement with them so that they will drop the law suit. This does not require an attorney to accomplish.
Using debt resolution through a law firm does not give you more protection. Anyone can legally contact and negotiate a settlement even after a law suit has been issued; thus keeping the client from ever going to court and from possibly getting a judgment. The reality is the collectors know when they are suing that they will not recoup the whole debt and are very keen on settling. It is much easier for them to deal with a reputable company that complies with the regulations, where they know they will be getting money back. This is a HUGE advantage of going with a company that does not charge its fees in advance.
Credit Card Debt Help – Where Consumers Can Turn For Reliable Credit Card Debt Help
The penguin shines across the loving hydrogen.
in the present, no one can manage without credit cards. With the development of new technology and science, there can be seen many things in the market. So, the things which are needed to lead a comfortable life are increasing day by day. Even though we do not need all the things in the shop, at least we have to buy what our kids need. At the same time, we are used to pay even our bills through cards. But, unconsciously what we do using it, affects our future and make us debtors.
So, with this bad habit of buying everything using the credit cards causes a huge sum of credit card debt which sometimes cannot be settled. So, if you are looking for credit card debt help, you have to get advices from a professional.
As a matter of fact, you should know where the consumers can turn for reliable debt help because all the debt settlement companies are not ready to treat you as you think. In other words, no company is ready to serve you if you don’t give what they want from you in return. But, still, if you find a reliable one, you can settle your credit card debts soon.
First, one of the informal ways of finding reliable help is to find about it from your known ones. They may know many good places if they too have been trapped in this in the past.
Then, you can join a network where you can reach for professional debt relief advices. But, join a network which does not charge from you! Once you get the advices in how to choose the right one, double check it by visiting to one of the offices of Better Business Bureau.
When you find a reliable credit card debt help using these strategies, you can then become debt free after few years. You can also pay the fees in installments so that you don’t need to get into debt over and over again. But, where you should be careful is when choosing the correct company. Once you find it you can then dream for a debt free tomorrow!
Advice From a Debt Relief Expert – Is Debt Settlement a Better Idea Than Bankruptcy?
Debt relief is undoubtedly is the most recommended and efficient way to see off your loans. But the hurdle appears in the form of finding the best relief program that can heal all your injuries.
If you do not have a good and deep knowledge of the legal terms associated with the relief programs, it is recommended not to take things for granted. As we know, nothing is as smooth as it looks; the real complication arises when we start with the process of debt negotiation or settlement. If you are still on Is debt settlement a better idea than bankruptcy? You should first of all go through the statistics that show the percentage of people successfully wiping off their debts.
The bankruptcy process although offers a safe way of finishing all your debts, it has earned the dubious distinction of being risky and posing threat to your credit scores. You should not have the misconception that once you undergo bankruptcy, you are relieved of all your dues. You still have to take care of some of your loans even after filing for bankruptcy. While comparing to the settlement processes, you can easily make out the difference. Now you can easily state is debt settlement a better idea than bankruptcy?
Coming to settlement process, as discussed earlier we are recommended to take guidance of experts. All these debt programs have a lot of legal clauses that are known to play with words. If you are not capable to understand the hidden meanings, you might end up suffering further losses. So, whatever step you take to eliminate debt, keep in mind to consult an expert.
The debt relief experts not only show you the right direction, they also tell you what action is appropriate and at what time. You should not get bogged down with pressure exerted by the credit card companies; rather answer then with wit. You never know; a good and well planned debt negotiation can give you with unbelievable deal allowing you to eliminate all your debts by just paying 60 percent of the original amount; making the remaining task easy for you.
An Effective Way to Eliminate Credit Card Debt Now & Get Your Feet on Solid Ground!
Trying to find a way to eliminate credit card debt has become a crucial issue for uncounted Americans as their earnings have plummeted while interest rates have soared. They are discovering to their dismay that it can be a very difficult goal to achieve. Adding to the difficulty is the fact that these companies do not want to help them because they are benefiting from the high interest rates.
There are some recommended methods that are supposed to help the unfortunate borrowers become debt-free, but too often they are unusable by the people who need help the most. I will examine some of the methods that are often mentioned as good ways to begin to eliminate credit card debt, and tell why they usually are unworkable.
Make a budget and use the extra money each month to pay down the debt – sounds good, doesn’t it? The reality, however, is that most credit card users have maxed out their cards, are drowning in debt, and their incomes are lower now than they were just a few months ago. Trying to pay off a load of debt with a lower income than when you accrued the debt generally is not possible, as there is nothing left in the budget to apply to the debt.
A second touted method is to stop using the credit cards – another good sounding idea that doesn’t usually work. Many of those people are still depending on their credit to augment their income. And the reality is that they are not using them for luxuries, but for basic necessities, for food, heat, and electricity.
A third method is to work out a plan with the credit card companies – right! These companies are too busy counting their profits to want to make a deal. It doesn’t bother them if you lost your job, got sick, had unexpected medical bills, or anything else that makes it impossible to keep up. They want their money, on time, and will come after you if you don’t pay it.
These methods that are so highly recommended as ways to eliminate credit card debt simply do not work in today’s depressed economy. The financial straits that people are in make budgeting and not using their credit impractical, if not impossible.
But there is one method that does work, and that is having a third party bargain with your credit card company to reduce and eventually eliminate credit card debt. It works like this:
The third party should be a 501(c)3 organization. That means they are a non-profit company. And that means that when they bargain with the card company for you, whatever allowances they get for you are tax write-offs for the credit card company. So even though they will not do anything for you at your request because they don’t profit from it, the write-offs they get from the third party may be enough to make them help you reduce your credit debt.
This is often done by reducing the interest charges on your outstanding debt. Sometimes the interest rate is even lowered to 0%. They may also set up a lower monthly payment for you, one that you can pay.
It used to be that you were alone in your effort to eliminate credit card debt. But with the fallen economy, more companies are coming forward to help consumers stay afloat. The best course you can take as a consumer overloaded with debt is to seek help in finding a solution suitable for all parties involved. A 501(c)3 non-profit organization is a great partner to have on your side as you search for a way to eliminate credit card debt.
Debt Cures Review – Is Kevin Trudeau's Latest Book A Scam?
Anyone staying up late at night has probably seen an infomercial promoting one of Kevin Trudeau’s latest “cures” books – weight loss cure and natural cures. I saw the infomercial for his latest one, Debt Cures, and wanted to see what it was about. This article will highlight my experience with ordering Debt Cure$.
Love him or hate him, Kevin Trudeau pushes people’s buttons and gets them talking. Type in the title of one of his books and you’ll see several complaints about his practices and then you’ll also see some people praise his books.
So I was skeptical about this new book and wanted to offer a review.
I do not like ordering on the phone because the people on the other line have to try and sell you stuff related to the product you are purchasing because it is their job but when I ordered Debt Cures online I can imagine how bad it was for the people who have to call in.
The book sells for $29.95 and $11.95 shipping and handling. Why so much for shipping and handling? Amazon can give you free shipping for orders over $25 so why does this book cost so much to ship?
On the website, debtcures.com, it says due to higher shipping costs, higher fuel costs and inflation that they have to charge higher shipping and handling costs.
Alright fine. So after I order the book, I expect to be upsold a few other items. And I was not let down. On the website, Kevin Trudeau tried to sell me 5 additional products that if you bought would add over $200 to your order. That to me does not sound like a way to get out of debt. Not off to a good start.
Two weeks later the book arrives in a small box just like in one of the boxes you get from Amazon when you order some books.
The infomercial states that you’ll learn stuff that has never been revealed before anywhere else about the credit and lending industry. After just reading the first 2 chapters I would have to disagree. Most of the stuff he wrote about is available for free online.
One of the main points of the first two chapters is that the banks, credit card companies, and the federal government are all in cahoots to try and keep you and me in debt so we can keep making them rich. This part is true. The credit card companies love it when you just make the minimum payments on your bills. They do not want you to get out of debt. They especially like it when you miss your payment or go over the limit so they can assess a hefty fee and even raise your interest rate.
This is all true and can be read about on many credit related websites.
He talks about the practices of the banks and credit card companies and how the government lets them get away with charging high interest rates and fees because they contribute money to their campaigns. Reading these chapter will get you mad if you are not already at how much debt you have and how the lenders try and squeeze more money out of you.
Chapters 4 and 5 are where Kevin Trudeau starts to deliver on his Debt Cures promises. He offers actionable points on how to eliminate your debt, negotiate your debt down and reduce your interest rates. Some of this is also available online elsewhere but in the folksy way that Kevin talks, he makes it easy to understand and easy to take action by providing examples of what to do and say.
If you have a few thousand dollars and debt and use one of these methods to lower the amount you have to pay then the cost of the book is already paid for even if you are overcharged for shipping and handling.
In a follow up article, I will cover the remaining chapters of the book and point out the remaining good and not so good points.
Debt Cures has a passing vote so far even though Mr. Trudeau has a less than stellar reputation. But do no let that get in the way of getting help with your debt problems. This book and others like it can provide practical solutions to lowering what you owe and getting you out of the many burdens debt can put you in.
Debt Options and Solutions
All debt problems can be resolved one way or another. It might not be painless or quick but there is always a way. The earlier you recognize that you have problems and deal with them the easier it should be. The first thing to do is sort out the way you spend money and reduce your outgoings. If you have credit card debt for example, you may find that switching cards to those with a lower interest rate may help to save you money but this should only be a short term debt solution because the low rates may only last a few months and then you are back to square one. Doing this too often will send out a warning sign to credit agencies that you could be a bad risk with regard to credit.
After working out your monthly income and expenditure contact your creditors directly and inform them of the difficulties you are in and see if they will agree to a repayment plan. Once agreed, stick to the plan and do not initially agree to pay more than you can afford on a monthly basis.
Contacting a debt solutions company or agency may be of help. They would deal with the creditors on your behalf and devise a plan that should be mutually beneficial. It may be suggested that you consolidate your debts, which effectively means rolling all your debts into one loan. The debt management company would shop around to find the cheapest interest rate for the loan, making your monthly repayments cheaper. Be aware that this consolidated loan may be taken out over a longer repayment term which may ultimately make the loan more expensive.
Debt management companies also usually have charges or fees relating to the loan so always shop around for the best deals available. There are also debt solutions companies or agencies who will give free advice. These are usually sponsored by a government or charitable agency.
Stop Paying Your Credit Card Debt – How Debt Settlements Work
The United States economy is crashing down like a house of cards. A lot of amendments have been made in the past to improve the situation but nothing has worked out. The United States government had a clear vision of the situation that the relationship between loan takers and loan givers was turning from bad to worse because of bankruptcies expected to be filed because of this recession. To prevent financial condition from worsening, people had to stop making payments. If you have decided to stop paying your credit card debt this could lead to more financial problems unless you have applied for a settlement. Debt Settlements have taken over the economy and they let you to stop paying your credit card debt legally.
The following points should be checked by loan debtors before they opt for debt settlements.
· The minimum liability balance should be ten thousand dollars, if this is not the condition, continue paying your regular installments.
· Search for suitable relief networks for hiring settlement companies
· Make a list of the firms which are providing you a suitable package. You should focus on the combination of cost and quality. Do not be restricted to one factor.
· Design a comparison process and implement it on the selected companies
· Initiate communication with the firm which you find best and stop paying your credit card debt.
All these steps will teach you how to get the right legal firm. However, you need be sure about the firm status. The term status does not refer to the scalability of the company. In other words, you do not need to see the capital invested by the firm. As a customer, you need to see that all the company operations are conducted legally. Do not keep any doubts to yourself as it can land you in a lot of trouble.
Have you heard about the association of settlement companies (TASC)? An example will explain you what it does and how it works. This association will advise you to stop paying your credit card debt.
The association of settlement companies maintains a record of all the firms operating legally. You can easily highlight scams by visiting TASC. In addition to that, the professionals working there will provide you relevant information about the performance of a relief firm. Once you get a legitimate company, getting your bills eliminated will be a piece of cake. Hence stop paying your credit card debt and save your finances.
Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.
Consolidating Your Credit Card Debt
Consolidating all the debt you have accumulated on your separate credit cards is perhaps one of the best things you can do for your financial health and well-being. Consolidating your credit card debt is helpful for several reasons and we will look at some of the best reasons for doing so.
Consolidation
- Makes it easier for you to improve your credit history and therefore, your credit score.
- Helps you get better rates on interest should you wish to opt for a balance transfer or even a new credit card.
- In fact, you can even get a more attractive rate on a consolidation itself. This helps you save quite a bit of money. For example, make a comprehensive list of the rates of interest charged on each of your cards. Then, calculate the average rate of interest by dividing the total accumulated interest by the number of credit cards you own. Compare this average rate with the new consolidated rate of interest you are being offered. More often than not, the new consolidated rate will be much lower than the average interest rates of the cards combined together.
- Helps you move from higher rates to lower ones. For example, during your consolidation calculations, if you see that some cards actually require you to pay lower interest, then don’t include those cards in your consolidation. Only give up the more expensive cards in exchange for a consolidated card and keep the cheaper ones also. This way, your average interest will be much lower than the consolidated interest you have been offered.
- Saves stress. Instead of paying several credit cards bills, you can pay only one consolidated bill each month.
- Gives you an opportunity to come out of the debt trap. Consolidated debt helps you pay lower monthly instalments which means your monthly outgoings are lower, which translates into savings. It may not be much, but it is a beginning.
If you can surrender your other credit cards also, then your savings and expenses will increase because the amount you pay for one consolidated debt is much smaller than payments made to several cards at a time. If you can, then try to get a few months as an interest free period. This, you will see over time, will really make a dent and will reduce your debt amount substantially. While you negotiate, ensure that you are not paying any hidden fees or extra amounts as transaction or handling costs, etc. This will add to your debt burden.
It is important to realise that by consolidating your cards it is possible that you may end up paying a larger amount over a longer period. Additionally, after consolidating your debts you should avoid additional credit card borrowing as this may amalgamate the situation and reduce the benefits associated with consolidation.
Tips To Cut Your Credit Card Debt
Credit card debt is the main financial problem facing Americans today and it is one of the major factors in many divorces, credit card debt is just getting bigger and bigger and the banks couldn’t be happier they are making more and more money from your interest payments.
The trouble is credit card’s just so convenient in fact it has become impossible to carry out some purchases without using a credit card, so what can you do to help yourself if you’re worried about your credit card debt.
Here are eight tips to help you reduce or even do away with your debt.
1. If you have already built up a sizeable debt take a look at arranging a consolidation loan, this will enable you to transfer the high interest credit card debt to a lower interest consolidation loan. Then you can use the spare income to reduce the debt even quicker.
2. Establish a budget and stick to it, make sure you have allowed for all the essential items you must pay every month. Use any free cash at the end of the month to reduce your outstanding credit card debt.
3. Use a debit card rather than a credit card, that way you can really control your spending, if you have no money in your account you cannot spend it.
4. Only use a credit card for emergency purchases, arrange to have a very low credit limit so that you can automatically limit the risk of overspending.
5. Establish a plan to pay back your debt, then keep a careful record of your payments showing the declining balance of your debt, this can be a very motivational and help you in clearing your credit card.
6. If you find that you are tempted to use your credit cards when out shopping then just leave them at home, I know this sounds simple, but it also take some willpower and if you can do it you will find it really works.
7. If all else fails cut your credit cards up and go to cash I know its drastic but if nothing else works then you have just got to do it.
8. Finally the most important tip, if you are in significant credit card debt don’t be ashamed, don’t think other people won’t understand, get help and now consult a credit counsellor and sort the problem out before it becomes too large.
Credit card debt is like an open sore, the longer you leave it the worse it will get, try using the tips I’ve listed above they will help you, but remember the most important thing you can do to help yourself if you are facing this problem is to get help from recognized credit counsellor and take positive steps to reduce and remove your credit card debt.
