Tag: debt relief

A Bunch Of Tips To Help Debtors With Setting Up A Debt Management Plan

A debt management plan can help someone whose credit history and credit rating have likely already suffered either because their debt-to-credit limits are out of whack or because they have started to pay some of their bills late. As personal finance advice goes, a debt management program can help you improve your credit history and FICO rating by helping to encourage you to pay their bills on time and in full. However, some debt management programs are really scams and they will take your cash instead of helping you pay your bills. Look for a reputable credit counseling service provider.

Q: I am a business owner and due to economic downturn our business receipts are down by almost 40 percent. I’ve been using my charge card account to help keep the business afloat and my charge card account debt has gone very high.

I am starting to have difficulty paying my home home loan each month. I have contacted consumer credit counseling services and they are working on helping me with a charge card account repayment plan. They also suggested I apply for a home loan modification.

Am I taking the right steps or are there some other alternatives I should think about? Also, how will my credit rating be affected by these moves?

A: If you have maxed out your charge cards, and are having trouble making your home loan payments, you need help in figuring out how to get these amounts in line with your income.

As difficult as it might be, the best personal finance advice I can give you is that a properly designed and administered debt management plan is a good way to go. If you need a debt management plan, your credit history and credit score have likely already suffered either because your debt-to-credit limits are out of whack or because you have started to pay some of your bills late.

Joining a debt management plan shouldn’t affect your credit negatively and as you start making your payments on time and in full through the plan, your credit history and credit score should improve, as you chargel more in control of your debt. In some cases, debt management plans will hurt your ability to get new credit but should make it easier for you to get yourself back on track financially.

But you need to make sure you work with a reputable credit counseling service provider. Many people choose to work with credit repair companies or others who claim to assist people that have credit and cash management problems. But in some cases, these companies will take a cut of the money they take in and renegotiate debts or manage the payment of the debts to creditors, but then they pay late or pay less that what is owed, or they do nothing at all.

When you pay less than what is owed to a credit card company or other creditor, that short payment will cause your credit history and FICO rating to suffer.

If you qualify, getting a loan modification should help your credit history and score as well – once your loan modification is finalized and you make your payments in full and on time, your credit history should show that you are current on your loan and paying on time.

Homeowners have been concerned about how loan modifications will be reported on their credit history. According to the mortgage servicer portal administered by Fannie Mae, if you’re current on your mortgage payment when you enter a loan modification, you should be reported as current through the trial loan modification period, even if you’re paying less than you were previously. If you are delinquent on your mortgage when you enter the trial period, the loan servicer may continue to report you as delinquent on your payment and workout status.

According to the Consumer Data Industry Association, lenders can report payments on a loan modification using an existing “Special Comment Code AC (paying under a partial agreement) and during a trial loan modification, the code is included on the borrower’s credit report.” This code can be used after the trial loan modification is made permanent.

As of November 1, 2009, mortgage lenders will be able to use a new Special Comment Code – CN (loan modified under a federal government plan). This new code is “not intended to be negative or impact current credit ratings,” writes Demitra Wilson, an Equifax spokesperson. She adds that most likely, “modeling companies will wait until sufficient history has been collected to determine how this new code should be treated.”

“Generally speaking, the impact on a borrower’s credit score depends on the specific FICO score used (i.e. FICO, Vantage Score, PLUS Score, etc.),” Wilson noted in her email. “In addition, a number of other factors such as a consumer’s overall credit history and their credit mix can also affect the impact of a loan modification on a consumer’s FICO score.”

What does this mean for you? The mixed messages suggest that the home loan industry itself isn’t all that clear on what a loan modification means in terms of risk. You’d think that lowering someone’s home loan payment and making it more affordable would be a good thing – that the borrower would be less likely to default.

But so far, 68 percent of those receiving loan modifications do re-default. The bottom line is that if you’re having trouble making your mortgage payment and your lender agrees to give you a loan modification that lowers your monthly payment, hopefully it will be simpler for you to make those payments on time.

And paying your bills on time and in full is the cornerstone to a solid credit history and a good FICO score.


A Few Tips To Help Consumers With Regards To Getting Out Of Debt Fast

Becoming debt free is a major task for most people. While it’s easy to get into debt, getting out of debt is much harder. The fastest and best ways to become debt free will depend on your situation.

The first step is to get a handle on your overall financial condition. Make a list of all of your debts, and rank them in order of annual percentage rate, starting with the highest-rate debts. These are the accounts you should work on first, with the goal of eliminating all of your high-interest debts, then your lower-interest debts. At this stage, focus on your unsecured debt, such as credit card accounts and installment debt, not secured debt, like cars or real estate.

The easiest way to eliminate the high-interest debts is to pay them down at a higher rate. Keep in mind that the minimum payments on charge card accounts are kept low to keep you in debt longer. If you increase your payments, then you will be able to pay off the debt faster. This is especially true for high-interest credit card accounts. These accounts should be paid off as quickly as possible, and then closed. That will keep you from being tempted to use those high-interest cards again in the future.

If you have steady income and some savings, you might consider debt settlement. Today, charge card companies and banks are making deals to settle your outstanding debt. In some cases, you can pay as little as 30% of your outstanding balance to pay off your charge card or installment debt. Be prepared to explain your financial hardship, and make sure you have the cash on hand to make a lump sum payment. You may also be able to break up your settlement payments, but this option is not always offered by creditors.

Selling assets to pay your debts is an option, but the market is not so good for sellers these days. Many people have had to sell their belongings in this economic crisis, so you are competing with others who are having to sell their possessions to recover as much as they can. If you have items that are easy to sell and you can find buyers, then it may be a good option for you.

If you have a 401K or other retirement savings, you could cash that account in to pay debts. However, that should be a last resort, because you will pay tax penalties, and it will be harder to rebuild your savings in the future. Also, keep in mind that 401K accounts are exempt from bankruptcy. That means that you could file bankruptcy and keep all of your 401K savings.

Bankruptcy is also a think aboutation for becoming debt free. Although it is a drastic step compared to the other options discussed here, bankruptcy is a legal and practical option for those who have little or no income and high debts from medical bills, lawsuits, or other serious debt problems. If your situation seems unlikely to change in the future and you want to eliminate all of your unsecured debt, then bankruptcy is a realistic think aboutation.

If you make an honest evaluation of your situation and follow these guidelines, you can set a course to become debt free in the near future.


A Few Things Regarding Credit Card Debt Settlemnt Consumers Should Know

There are times when no matter how tight a rein you put on using your charge card, your Unsecured debts still pile up one after another. If you find yourself desperately transferring charge card balances or figuring out how much minimum payment to make on each credit account, you might be in more debt than you can really keep on top of.

If this is the case, you would need to take drastic action when it comes to managing your debt. One option is for you to hire a debt advisor who will then walk you through the steps of how to become debt-free. On your behalf, the debt advisor will be negotiating with your creditors for a lower monthly payment so that all your debts will be consolidated.

But what if you don’t want to call in the experts just yet? Fortunately, you can prepare a personal financial statement and talk with the creditors yourself. This step in tackling your debts is a viable option for those who would like to regain control of their finances, without having to hire financial experts just yet.

Basically, a personal Credit Card Debt statement is a document which sets out all your monthly or yearly income and expenditure, depending on how much you earn and what your regular living expenses are. When you prepare this kind of financial statement prior to negotiating with your creditors, you can give them a clear picture of exactly where your finances are currently.

Having a personal financial statement is also a great way to start budgeting and to track your expenses, get yourself out of a serious debt situation, and help you establish an effective savings plan for the future.

Now, what are the things that you need to do when creating a financial statement for yourself? To give you an idea, here is a list of the important elements that you should include:

Your list of income (Salary, benefits, maintenance, contributions from family members, etc.)

Your list of expenditures (Mortgage or rent, secured loans, taxes, utility bills, food allowance, etc.)

Your other living expenses (Vehicle maintenance, travel costs, childcare costs, insurance policies, medications, etc.)

Once you have added together your list of income and your list of expenses – which should be combined with your other living expenses – see how much you have left over to pay your creditors. This is what you will use to make offers to creditors. Your personal financial statement will show them clearly that the offer you are making is fair, and all you can afford.

As you create your personal financial statement, you can see which aspects of your living expenses you can cut back on. It is also possible for you to look at other ways of increasing your income by taking up a lodger, for example.

If you think that the financial statement that you made yourself is still not that detailed, go online and look for free forms that you can download.

At the end of the day, the point of making a personal financial statement is for you to have a general look at your finances. Upon doing so, you can determine what you can do in order to slowly but surely dig yourself out of the debt situation that you are currently in.


A Few Tips With Regards To Credit Card Debt Consolidation

The charge card industry’s response to recent legislation designed to protect consumers from unfair practices and egregious fees and interest rates on credit cards has inspired some credit card account issuers to raise rates and fees prior to the legislation taking effect in August 2009 and February 2010. If you’re carrying credit card account debt, now is the time to get debt help or make a plan for debt consolidation.

Debt Consolidation and Balance Transfers: Watch Those Fees!

US News & World report notes that several major credit card issuers are raising balance transfer fees. In the past, a three percent fee for each balance transfer was typical, but some companies are raising balance transfer fees to four or five percent of each amount transferred. If your credit is good enough to qualify for zero percent “teaser rates” on balance transfers for a few months, it can still be worthwhile to transfer balances from high APR cards. Using balance transfers judiciously can help you create your own debt consolidation plan without taking out loans requiring your home or car as collateral.

Getting Debt Help: “I Can’t Afford My Minimum Payments!”

In addition to raising balance transfer fees, some credit card companies are increasing minimum monthly payments from two or three percent to as much as five percent of the balance owed. If you’re carrying thousands of dollars of credit card account debt, this increase can render your family budget “toast.” Getting debt help through a credit counseling service may help in negotiating an affordable plan for consolidating debt and paying it off faster. Credit counselors work with you and your creditors to establish a repayment plan that may include waiving fees and reducing annual percentage rates. It will also require closing your charge card accounts, but this is preferable to the consequences of filing bankruptcy.

Thinking Bankruptcy? Please Think Again

Collection calls and threatened lawsuits can drive consumers into filing for bankruptcy protection. Although filing bankruptcy provides legal protection from creditors, it has serious consequences. Before contacting a bankruptcy attorney, here are a few things to consider:

Bankruptcy appears on your credit reports for seven to ten years and ruins your FICO ratings

Your ability to rebuild credit will be limited due to bad FICO scores

You may have to wait several years to qualify for a mortgage loan or consumer credit

High finance charges associated with post-bankruptcy credit can lead you back into debt

A bankruptcy can even make you ineligible for certain jobs

Filing bankruptcy can impact your ability to get a job and car insurance, and should be used as a genuine last resort.

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A Bit Of Good Ways People Are Able To Get Debt Relief

If a person has accumulated a large amount of charge card debt due to multiple credit cards, the need for a proper counseling for credit card debt consolidation can’t be understated. Charge card account debt consolidation counseling helps a person get vital insights into the facts that can help him get control over the credit card account debt.

Credit card debt consolidation counselors are experts with a good knowledge of debt management, budgeting and behavioral patterns of charge card account holders. These services are vital for those struggling to manage their charge card account debts. Also called credit counseling or debt counseling the credit card debt consolidation counseling brings immediate relief to a charge card account holder.

A person seeking credit counseling can get it from two types of organizations. The professional or commercial organizations, and the non-profit organizations. As depicted by its name or categorization, the commercial organizations charge cash for their credit counseling sessions and consolidation help on the other hand the non-profit organizations offer free of charge services. Just because the non-profit organizations are free, it doesn’t undermine their quality of service. The persons associated with such organizations are thorough experts and have lived the trauma of being under charge card account debt themselves and hence bring their vital experience to the credit card account holder.

When a person approaches a credit counseling agency, the first thing it will do is to take stock of the situation and get various facts about the credit card debt. The credit counseling agency collects data about the income, expenditure and spending habits. It will guide the credit card account holder about budgeting benefits and try to inculcate good financial habits.

The actual process of credit card account debt consolidation then begins. The debt consolidation company tries to strike a deal by clubbing all your charge card debts into one and then negotiating the repayment deal with a new charge card account holder. What actually happens during a credit card account debt consolidation is that the charge card account holder gets rid of multiple charge card account debts and gets a single monthly re-payment schedule. If the charge card debt consolidation company is good enough, the charge card holder can get pretty simpler repayment terms.

Credit card debt consolidation counseling and actual credit card account debt consolidation are good instruments to get rid of credit card debt. However, they shouldn’t be misunderstood as things that get the credit card debt waived. The debt is still there and has to be repaid, the charge card account debt consolidation makes the repayment process easy and the credit counseling equips a credit card holder with the necessary financial skills to get over his charge card account debt and have a good financial future.


It Not At All Gets Too Late To Obtain Appropriate Debt Advice

Debt ridden borrowers often inquire that is there any use of debt advice when it gets too late? The answer is simple that there is never too late to get specialized debt advice even when you are standing at the verge of bankruptcy. It’s true that at this extreme position no debt advice can eliminate the debt pile in few seconds but it can at least make the condition less horrible for you to face and tackle. Therefore whatever the severity of your debt difficulties is you must seek specialized debt advice either through free online resources or through paid debt help companies to lessen if not eliminate your financial strain completely.

Easy Debt Advice to Sort out Tax Troubles Successfully

If you are eager to get adequate Free debt advice then you have to consider five significant options out of which you can decide one for paying off your IRS. First solution ‘installment agreement’ involves monthly repayments. Second solution ‘partial payment installment agreement’ calls for reduced monthly repayments for extended time period. Third solution ‘offer in compromise’ entails discount in total amount paid as lump sum or shorter payment arrangement. Fourth option ‘not currently collectible’ entails IRS voluntary settlement not to collect tax for one year. Fifth solution ‘filing bankruptcy’ calls for total debt discharge under chapter 7 or chapter 13. So now it’s up to you what option you like to choose in accordance to your financial conditions and payback capability.

Understanding the Reasons following Mounting debt problems

If we perform a survey to know the causes behind rising debt issues then we come to know that a couple of elements counting lack of conscientious attitude in financial dealings and lack of proper fiscal plan to tackle the available amount adequately is producing such financial distrust. If these aspects are handled carefully then we can cut the extent of increasing debt issues to smallest level. Therefore everyone confronting different kinds of debt issues needs to have control over these two factors because without removing these aspects out of our daily life we can’t reach a point where we can take pleasure in our life with no debt complication all around.

What are the Causes behind Individual debt relief Problems?

Individual debt issues have become a part of our life. Everyone is having these issues but severity varies from case to case. If you just have a look over causes beneath these individual issues you will come to recognize that there will be present at minimum one factor accruing the degree of personal debt difficulties counting medical bills, child care expenses, educational fees, utility bills and unpredicted job loss etc. Whatever the cause behind such problems, implications are same for all and everyone needs adequate guideline and timely planning to get out of this problem pool without reaching at the verge of bankruptcy.

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