Monday, November 28, 2011
Make It Real for Yourself With Debt Consolidation
Debt consolidation combines all of your multiple debts into one big debt and enables the debtor to reduce several monthly payments to just one fixed monthly payment. It becomes easier for the debtor to keep track of his finances and pay off his debts when he has to invest in one monthly payment towards paying off his debts. This is the prime goal of debt.
Debt consolidation is similar as dieting. It is like shedding off your extra calories only here you get rid of your debt over burden. It can help you in emergency to cure your problem but your financial health is in your own hands. Debt consolidation involves patience, sacrifice and discipline. It needs support and co-operation from your near and dear ones. Most importantly, just as one should be careful not to regain weight after losing the extra fat through dieting and routine, one should also be careful not to be over burdened with debts soon after you eradicate your debts through debt.
Procedure of debt
Firstly in order to make debt work, it is important that the debtor gathers all his financial information and is aware of his debts. Most often people are unaware as to how much debt they are in or how much interest is accrued on their accounts due to making late payments.
Secondly do not be afraid to take help and discuss the situation with a financial planner on the course to frame the plan of action. It is always advisable to seek professional help as they are trained and experienced to help people with debt and can ideally help a debtor regain the economic freedom. They can effectively plan viable and suitable option for families which they can do in real life, even with a tough financial condition. It would be better for a debtor not to try and plan on his own if he has little or no idea about debt consolidation and how it works.
Thirdly, in order to minimize the probability of getting into debts once again or getting rid of the need of consolidation is to close all of your credit card accounts except one for emergency. Have all the credit cards consolidated and then pay off all the debts as these debts are very expensive and might lure you to spend more than what you should spend to prevent the hole I your pocket.
Finally plan an effective budget and follow it. Plan it sensibly so that you are not too hard on yourself or your family but also curb any over spending or spending on unnecessary things. If you spend unnecessarily you are prone to get into debt once again and debt consolidation might not work for you all the time if you get into a habit of debt consolidation all the time. Try to live a healthy and planned life to make a better future for yourself and your family.
Monday, November 21, 2011
Should Consumers Go With Credit Counseling or Debt Settlement?
The housing crisis, the recession, and the resulting job losses from both have many consumers seeking assistance for debt of all kinds. Add to these challenges the fact that credit card companies have been raising rates, fees, and payments in reaction to the passage of the Credit Card Accountability, Responsibility, and Disclosure Act and the distress for consumers is at highs not seen since the Depression. For consumer debt, borrowers now have several options including debt consolidation, credit counseling, bankruptcy, and debt settlement. As the circumstances surrounding debt consolidation and bankruptcy have resulted in fewer benefits for consumer, many are now making the choice between credit counseling and debt settlement.
Credit counseling is generally the best known of the pure debt relief options, having been around since the early 1990's. The service was originally provided to consumers by non-profit organizations like The National Foundation for Credit Counseling and its affiliates, Consumer Credit Counseling Services. While mostly unknown to consumers, the organizations were designed and backed by the credit card companies to act as a mediator between consumers and credit card companies. The counseling organizations would then "negotiate" lower interest rates and monthly payment plans for consumers that had fallen behind on their payments to keep them on track with payments instead of walking away from their debts. These marginally lower payments are the primary benefit of credit counseling.
The services were widely advertised and offered in cities across the country. As a side note, if consumers defaulted on their credit card debt, the vast majority of accounts would end up going to arbitration as a condition of the terms of the credit card contract. The two biggest arbitration firms, as it was revealed recently, were also backed by the credit card companies with an astounding 97% of rulings going against credit card holders.
As consumer debt began to increase rapidly in the late 90's, hundreds of opportunistic new companies set up shop in the area of credit counseling to provide similar services on a "for-profit" basis. Many of the new companies positioned themselves as credit counselors and alluded to being non-profit organizations while operating very much like any bottom line oriented corporation. To broaden their offerings with higher profit margin services, many of the firms began offering services that weren't considered to be credit counseling at all including referral agreements with bankruptcy attorneys, mortgage brokers, and real estate agents which were often not disclosed to the borrowers which had signed up for "counseling".
While the services that may be offered as part of credit counseling has evolved considerably over the last ten years due to the companies that now populate the category, the relief option offers fewer benefits to the consumer than the newer, more aggressive option of debt settlement which has reduced its popularity considerably. In fact, current statistics show that 75% of consumers that enroll in credit counseling drop out before completing the program.
The dropout rate is very similar to that of bankruptcy workouts and much less than the rate seen in debt settlement proceedings. The best description of the benefits derived from a debt settlement was recently released in a study on the process out of Southern Methodist University. In the words of the team which conducted the study, debt settlements "...create the greatest consumer welfare of any approach."
The study, which covered 4,500 randomly selected consumers, found the following:
1) Completion rates of 40% over two years were much better than the estimated rate of 15% within one year. In fact, that rate is similar or better than other subscription based service industries, such as mobile telephone and cable television companies, which have Better Business Bureau certified members. The 40% of debt settlements being seen through to completion is 60% greater than the amount of consumers that complete payment schedules set up through a credit counseling arrangement.
2) Debt settlement offers as a rule came in under 50% of the original balance of debt versus no reduction in debt balances through credit counseling. The reduction in debt balances facilitates faster payoffs by indebted consumers.
3) Debt settlements can include credit cards, department store debt, unpaid medical bills, unpaid utility bills, and many other forms of unsecured consumer debt.
4) Debt settlement reduces payments immediately and by a far greater percentage than offered through credit counseling. Payments are typically reduced on all debts in the process by approximately 50%.
5) Balances are typically paid off within 18 to 48 months, much faster than credit counseling.
6) Debt settlement has an increasingly higher value to customers with higher account balances and higher total debt, potentially saving millions of dollars for consumers when compared against the full payoff of balances and the marginally reduced payments as seen in credit counseling.
7) Once "fair share" payments are taken into account for credit counseling fees on a consumer account can exceed 29% of the consumer debt, levels which the study calls "exorbitant."
Neither form of debt relief is the perfect answer for everyone but indebted consumers are increasingly finding that debt settlement can provide optimal results for their personal circumstances. Credit counseling is likely the best fit for those consumers that need a very small amount of assistance while the benefits of debt settlements can help consumers with higher amounts of debt as well as those needing bigger reductions in their monthly payments. Additionally, debt settlements can play a major role in getting home loan modifications approved when a consumer's overall debt might otherwise result in a non-approval. Be sure to consult a professional with experience in both debt relief solutions as well as loan modifications where applicable to determine which one is the best for you.
Credit counseling is generally the best known of the pure debt relief options, having been around since the early 1990's. The service was originally provided to consumers by non-profit organizations like The National Foundation for Credit Counseling and its affiliates, Consumer Credit Counseling Services. While mostly unknown to consumers, the organizations were designed and backed by the credit card companies to act as a mediator between consumers and credit card companies. The counseling organizations would then "negotiate" lower interest rates and monthly payment plans for consumers that had fallen behind on their payments to keep them on track with payments instead of walking away from their debts. These marginally lower payments are the primary benefit of credit counseling.
The services were widely advertised and offered in cities across the country. As a side note, if consumers defaulted on their credit card debt, the vast majority of accounts would end up going to arbitration as a condition of the terms of the credit card contract. The two biggest arbitration firms, as it was revealed recently, were also backed by the credit card companies with an astounding 97% of rulings going against credit card holders.
As consumer debt began to increase rapidly in the late 90's, hundreds of opportunistic new companies set up shop in the area of credit counseling to provide similar services on a "for-profit" basis. Many of the new companies positioned themselves as credit counselors and alluded to being non-profit organizations while operating very much like any bottom line oriented corporation. To broaden their offerings with higher profit margin services, many of the firms began offering services that weren't considered to be credit counseling at all including referral agreements with bankruptcy attorneys, mortgage brokers, and real estate agents which were often not disclosed to the borrowers which had signed up for "counseling".
While the services that may be offered as part of credit counseling has evolved considerably over the last ten years due to the companies that now populate the category, the relief option offers fewer benefits to the consumer than the newer, more aggressive option of debt settlement which has reduced its popularity considerably. In fact, current statistics show that 75% of consumers that enroll in credit counseling drop out before completing the program.
The dropout rate is very similar to that of bankruptcy workouts and much less than the rate seen in debt settlement proceedings. The best description of the benefits derived from a debt settlement was recently released in a study on the process out of Southern Methodist University. In the words of the team which conducted the study, debt settlements "...create the greatest consumer welfare of any approach."
The study, which covered 4,500 randomly selected consumers, found the following:
1) Completion rates of 40% over two years were much better than the estimated rate of 15% within one year. In fact, that rate is similar or better than other subscription based service industries, such as mobile telephone and cable television companies, which have Better Business Bureau certified members. The 40% of debt settlements being seen through to completion is 60% greater than the amount of consumers that complete payment schedules set up through a credit counseling arrangement.
2) Debt settlement offers as a rule came in under 50% of the original balance of debt versus no reduction in debt balances through credit counseling. The reduction in debt balances facilitates faster payoffs by indebted consumers.
3) Debt settlements can include credit cards, department store debt, unpaid medical bills, unpaid utility bills, and many other forms of unsecured consumer debt.
4) Debt settlement reduces payments immediately and by a far greater percentage than offered through credit counseling. Payments are typically reduced on all debts in the process by approximately 50%.
5) Balances are typically paid off within 18 to 48 months, much faster than credit counseling.
6) Debt settlement has an increasingly higher value to customers with higher account balances and higher total debt, potentially saving millions of dollars for consumers when compared against the full payoff of balances and the marginally reduced payments as seen in credit counseling.
7) Once "fair share" payments are taken into account for credit counseling fees on a consumer account can exceed 29% of the consumer debt, levels which the study calls "exorbitant."
Neither form of debt relief is the perfect answer for everyone but indebted consumers are increasingly finding that debt settlement can provide optimal results for their personal circumstances. Credit counseling is likely the best fit for those consumers that need a very small amount of assistance while the benefits of debt settlements can help consumers with higher amounts of debt as well as those needing bigger reductions in their monthly payments. Additionally, debt settlements can play a major role in getting home loan modifications approved when a consumer's overall debt might otherwise result in a non-approval. Be sure to consult a professional with experience in both debt relief solutions as well as loan modifications where applicable to determine which one is the best for you.
At 800 Debt Settlement, we'll consider your personal circumstances in relation to each solution and then develop a strategy that provides the most optimal results to you both now and in the future. After years of experience and hundreds of debt settlements, we understand that as many paths as there are toward the accumulation of debt, there are just as many to consider when trying to come to terms with and get out from under it.
Sunday, November 20, 2011
Debit Consolidation Tips and News
If you are in a situation where you think the only way to stop debt lawsuit is through filing bankruptcy then you are on the wrong track. Many people don't actually know what filing bankruptcy could do to their financial situation. The truth is, filing bankruptcy does not always solve your economic crisis, in some cases it will even worsen the situation. So what is the best way to stop debt lawsuit without filing bankruptcy? You may have to look for an alternative to achieve this which will allow you to reduce the amount you owe your creditors and create a payment plan that you can work with.
Bankruptcy filing is a complicated process. One has to lose his power over his finances with this procedure. The decision on what will be done with ones assets will be left up to the appointed trustee which the court chose. This can be very degrading to some and what makes it even worse is that one will be forced to agree on whatever the trustee decides to do with the possessions, like selling some assets even if one doesn't want to. Debt lawsuits can't be stopped and debts are not decreased either. Instead one will be forced to disclose all his assets and sell them to pay creditors, which could mean losing all the remaining ownerships.
Companies that offer debt consolidation and credit counseling can somehow lessen a person's financial burden, however, they can't guarantee the protection one needs for his assets and can't stop debt lawsuits either. It is good to seek help to stop the harassment and threats of some creditors, but this can't really resolve the main problem. Aside from that, this process involves lawful means and hard evidences that a creditor's claims are valid. The negotiation process between a person and his creditors will be very risky also and one may need a third party to help him deal with the course of action.
The best thing to do to stop wage garnishments and stop debt lawsuits is to use a good debt relief service. There are several services that guarantee to help you achieve both but only a few can fulfill their promise. If you finally decide to use a service be sure that they can give you the maximum benefits you can get. A good service can decrease your credit balance and should be able to stop debt lawsuits while allowing you to get involved in making decisions with your finances.
Subscribe to:
Posts (Atom)