Debt consolidation

Debt Consolidation
Making Smart Payments
Debt Consolidation
by Hector Jayat
Brought to you by Finance Tips
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Debt Consolidation
Why Consolidate Debt?
People consolidate debt in order to reduce their monthly payments. With a
consolidated loan, financial institutions such as banks and credit unions pay off
all of a consumers loans and replace them with a single "consolidated" loan of
all the combined debt, usually at a lower, fixed interest rate. Consumers can
use consolidated loans to pay of debt on automobiles, credit cards, student
loans, medical bills, etc.
If you can't meet your minimum monthly payments, if your loan or loans still
have a lot of life left to them, or if you can get a lower, fixed rate, then it may
be worth it to consolidate. But there are some questions to ask yourself first:
Are you willing to extend the life of your loan in exchange for lower
payments? This is typically how financial organizations are able to offer
consolidated loans at such lower rates.
Are you ready for a new 20 or 30 year commitment? And most importantly, are
you aware that when you consolidate your debt and extend the repayment term,
while it reduces your monthly payments, it will actually increase the total
dollar amount of interest youÕll pay over the long haul?So ask yourself, how
close are you to paying your loans off? It may be more trouble than itÕs worth,
and way more costly, to consolidate for a lower rate if you only have a few
more years of payments under you existing loans.One of the most common
ways to consolidate loans is to use the equity in your home. This can be as
risky a venture as it is convenient. To consolidate this way, you would be
turning unsecured debt into secured debt. You now have even more to lose than
before if you should default on your new consolidated loan. At least with your
current loans you donÕt have the items you purchased on your credit card
taken away from you. But with a home equity consolidated lender will not
hesitate to take your house if you fail to make your payments.
Another type of consolidated loan to beware of is the consolidated loan that
offers you an unbelievably cheap interest rate even if your credit is lousy. The
catch with this type of consolidated loan is the exorbitant application fee. If
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you can afford the application fee, you're better off applying that same amount
to paying off your debt. Plus, there are so many wolves in sheep's clothing
offering these types of consolidated deals, you may never actually see you
consolidated loan when all is said and done.With those warnings in mind, it
may still be well worth your while to consolidate debt, and to do it sooner than
later. For one, the opportunity to consolidate debt may not be around for very
much longer. Both congress and the President are considering legislation that
could turn fixed interest consolidated loans into variable rate loans, or get rid of
consolidated loans altogether.
If you chose not to consolidate your loans, or are unable to for any reason to
consolidate, you could also consider having payments automatically deducted
from your bank account on a regular basis. While it doesn't lower your
expenses like a consolidated loan, it does ensure that your payments are made
on time, and it will help you improve your credit score.
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Why Do You Have To Consolidate?
The primary reason to consolidate debt is to make your monthly payments
smaller. When financial institutions, like credit unions and banks, offer
consolidated loans, what they are offering to do is pay off in full all of a
consumer's loans (credit cards, car loans, hospital bills, student loans, etc.) and
lump the entire debt into one single "consolidated" loan that generally has a
fixed interest rate that is much lower than the cumulative finance charges of all
the smaller loans.
So if your monthly payments are getting out of control, if you've got decades
left of payments ahead of you, and if there's an attractively lower, fixed interest
rate you find yourself eligible for, a consolidated loan may be just the thing for
you. But it may not be. Read on:
While a consolidated loan offers you smaller monthly payments, you're
typically agreeing to years, possibly decades, more of debt. This is how such
low interest rates are even able to be offered in these consolidated packages.
Do you want to be paying off this debt for 20 more years? How about 30?
And don't forget: when you consolidate debt, you end up paying more in
interest for having stretched your payment period out an extra decade or more.
Is it really worth it to commit to all those finance charges just to have a bit of
extra cash month to month, especially if the terms of your loans are almost up?
It might be.
A common way many homeowners consolidate their debt is by borrowing
against the equity in their homes. This type of consolidated plan, while
convenient, is not without its inherent risks. Currently, your debt is unsecured,
but if you consolidate it all under a home equity consolidated loan, it becomes
secure debt. If you default on this new, consolidated loan, you have much more
to lose.
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At least under your current loans you wouldn't, for example, lose the education
you received thanks to all that financial aid you got, should you be unable to
pay it off. With a home equity consolidated loan, lenders won't hesitate to seize
your home if you don't pay.
You have probably seen and heard many of those consolidated loan ads
appealing to the hand-to-mouth set with abominable credit scores. If you've
always thought there was a catch to these consolidated loan package
promotions, you were absolutely right. The initial application fees for these
types of consolidated loans are tremendous, and it is entirely possible you will
never see the consolidated loan promised you.
But not all consolidated loans fit these scenarios. You may still be the perfect
candidate for a consolidated loan, and there are many legitimate consolidated
loan companies out there to help you consolidate right. If you do decide to
pursue applying for a consolidated loan, you may wanted to get started as soon
as you can. Congress and the President both are tossing around ideas for
possible legislation either curtailing or eliminating such consolidated loan
packages.
But if you can't or don't want to consolidate your loans just yet, you do have
other options, not necessarily for lowering your monthly payments, but if
nothing else for helping you stay on a path to good credit. Most lenders will
now assist you in setting up automatic payments from your checking account.
You still have to make sure the money is there to be withdrawn, but the
chances are certainly greater that you will make your payments on time and get
that much closer to being debt-free.
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Debt Consolidation
What is Debt Consolidation?
Debt consolidation what is it? It is a process by which credit counseling
copanies can negotiate with your creditors to obtain the lowest monthly
obligation they can needed to satisfy all of your current credit card accounts.
So what you would do is pay a one low monthly to the debt consolidation
company, in turn they then portion out that payment to your creditors for you.
This monthly payment will in most cases be lower than the sum of your
individual account obligations that you have now.
Our credit counseling web site is designed to help you in take charge of your
credit card debt.
Most Creditors will recognize that people who enter a debt consolidation
program are trying to repay the debt they have in good faith. Creditors will be
more willing to extend favorable terms to such clients in the hope that they can
avoid the significant expense of turning the account over to their collections
department or avoid an extended drawn out process if the account holder
decides to goes through the expense of declaring bankruptcy.
Most debt consolidation companies only deal with unsecured debt which is
when a creditor holds no collateral. For example, an unsecured debt is usually
in the form of: credit cards, department store cards, medical bills, and gas
cards. No form of collateral such as a home or car was utilized to secure the
"loan" for services rendered or goods received. With a secured loan, and as a
precaution against "default" (non payment) what is used as "collateral" for the
loan could be liquidated
This is not a loan, so no credit checks are needed. Debt Consolidation is
confidential and discreet, so there's no need to worry about employment,
reference verification or credit history assessment. This can be accomplished
from the comfort and privacy of your home, so there's no need to worry about
transportation, sitter arrangements, time away from work or embarrassing
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face-to-face consultations. We provide the total debt solution when it pertains
to credit counseling and you becoming debt free.
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Debt Consolidation
What is Debt Management
Debt Management is a very simple financial concept hire a qualified Debt
Counselor or certified Debt Management Company to pay your unsecured
debt.
The Debt Management Company you hire will relieve and eventually reduce
your debt by managing your assets effectively and negotiating with your
creditor regarding interest rates and monthly payments. This is not a loan so
you are no obligated by any contract or other binding paperwork associated
with a Debt Management Plan.
When choosing a Debt Management Company you want to make sure and
beware of several things. First, make sure the company registered with the
Better Business Bureau (BBB) and has been rewarded the "Reliability
Program Online Seal." Second, beware of any companies who want to charge
more than $50.00 a month to open your account and work with your creditors.
Third, make sure the company is able and willing to answer all your questions,
if you feel that the company is "beating around the bush" don't waste your
time; find another company. Last, if you feel pressured by the Debt
Management Company, run, more than like that feeling will not go away.
Once you choose a company and feel comfortable working with them. They
will get you started on your way to a debt free future. There are several steps
that are generally followed by Debt Management Companies. The first step is
listing all your creditors and the amounts owed for each. Remember, not all
creditors are eligible to be included in a Debt Management Plan. The second
step is listing all incomes and expense i.e. mortgage, car payments and cost of
living payments. The third step is deciding how much of your income is
available to contribute to your Debt Management Plan. Your Debt Counselor
will try their best to settle any debt and eliminate interest rates. The fourth step
is reviewing and approving your Debt Management Plan. Make sure you
understand everything and read the fine print. This last step is crucial; it
ensures that you're not in the dark regarding the amount of money being paid
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out.
As with any financial product there are advantages and disadvantages working
with a Debt Management Company. One advantage is the company can lower
or eliminate the high interest rates and fees associated with credit card debt.
The company can also settle your debts for nearly half of the balance. You only
have to make one monthly payment instead of five or ten. The biggest
advantage is you will no longer have to communicate with creditors via mail,
phone or Internet.
One disadvantage is that creditors to not have to agree to participate in your
Debt Management Plan or lower your interest rates. This would still allow
some of your creditors to communicate with you and take legal actions against
you and still charge you interest and other fees regardless of payment efforts.
Also, any settlement agreed upon between your Debt Management Company
and your creditors will show on your credit report.
Keep in mind that this is your decision so it is important for you to be
comfortable with it. Ask around, see if any of your friends have worked with a
Debt Management Company or know anyone who has. Remember, your
Debt Management Company will get your started but it is up to you to finish it.
Hopefully you will learn how to make educated financial decisions, which will
keep you on a debt free path.
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Debt Consolidation
When Your Debts Get Tougher
Financial problems are ones of the most difficult to solve.
We cannot do away with them because there will be points of our lives when
we need to ask somebody to lend us some amount: big or small. Inevitable
situations like death of the breadwinner in a family, terrible sickness or any
emergency for that matter and so many credit cards to pay for. These push
someone to lend money.
You can lend money in the fastest way available now. With an advanced
system of money lending today, you will really be tempt to give it a try.
Borrow fast and pay slow or possibilities may not be favorable to you. Worst,
you will have a hard time paying for them. This is where bankruptcy knocks
on. Bankruptcy is fatal. Yes, it is a figurative way of telling how bankruptcy
may bring the most negative effects to a person or to a home.
When one faces this so tough problem, the bankruptcy laws with a lawyer’s
help may ease the burden. Your lawyer may give u good advice like talking to
your creditor asking them to lower down a bit or ask them to give you more
time to pay. Another option is to seek advice from a credit counseling service.
Private or public, they will help you deal with this situation and may help you
negotiate with your creditors. The last available option is debt consolidation.
US bankruptcy laws offer two options for bankruptcy. One can choose between
liquidation plan and repayment plan. These have both advantages and
disadvantages. Consider all the sides of the situation and choose what suits you
best.
You start your move to survive against bankruptcy by bankruptcy proceedings.
This is commenced by filing bankruptcy forms. One gives his or her personal
information. This includes your list of assets and liabilities. A meeting with
one’s creditors will happen after a month. In most cases, creditors do not show
up. This meeting aims to ask and confirm what one has written on the form. An
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interrogation will let you answer questions regarding your assets and liabilities.
One’s lawyer is always there to help him or her out.
Under the bankruptcy laws, its will protect you from the harassment of your
creditors before the proceeding starts It means you will not experience all those
pressing calls forcing you to pay as soon as the next day. Creditors are not
allowed to contact you during unreasonable hours. In addition, creditors must
not leak your situation in your workplace. It will just modify the way your
work image to your boss. Moreover, creditors are asked to cancel any means of
hurrying you up to pay. Another important point is that your current employer
is not allowed to use your bankruptcy as a reason for firing you out of a
company.
A trustee appointed by the court will work with you after you have filed your
bankruptcy forms. In the liquidation proceeding and repayment option, the
trustee portrays different roles. He has the role to sell your assets and the
money acquired will be distributed among your creditors. That is his role on
the former. On the latter, he has the role of collecting payments from you and
he will distribute them to your creditors. He also takes control in approving any
of your new credit obligations.
After the bankruptcy proceedings, the court will end your accountability to
dischargeable debts. For a span of ten years, all your bankruptcy proceeding
records will be noted. Within this span of time, this record will be considered
by any agency or person you wish to transact business with. The proceeding
and all is not for free but one will not pay too much. An amount for the forms
is the only thing to pay for. For a repayment option, one needs to pay like 10%
of the amount you paid for the creditors. Lawyer’s fee may soar but the result
will send one to greater heights.
Bankruptcy is inevitable. It may be the test of fate. But do not even let it test
you.
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What Is Debtor Education?
A debtor education course by an approved provider should include information
on developing a budget, managing money, using credit wisely, and other
resources. Like pre-filing counseling, debtor education may be provided in
person, on the phone, or online. The debtor education session might last longer
than the pre-filing counseling – about two hours – and the typical fee is
between $50 and $100. As with pre-filing counseling, if you are unable to pay
the session fee, you should seek a fee waiver from the debtor education
provider.
Once you have completed the required debtor education course, you should
receive a certificate as proof. This certificate is separate from the certificate
you received after completing your pre-filing credit counseling. Check the U.S.
Trustee’s website to be sure that you receive the certificate from a debtor
education provider that is approved in the judicial district where you filed
bankruptcy. Unless they have disclosed a charge to you before the counseling
session begins, debtor education providers may not charge an extra fee for the
certificate.
Important Questions to Ask When Choosing a Credit Counselor
It’s wise to do some research when choosing a credit counseling organization.
If you are in search of credit counseling to fulfill the bankruptcy law
requirements, make sure you receive services only from approved providers for
your judicial district. Once you have the list of approved organizations in your
judicial district, call several to gather information before you make your
choice. Some key questions to ask are:
What services do you offer?
Will you help me develop a plan for avoiding problems in the future?
What are your fees?
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What if I can’t afford to pay your fees?
What qualifications do your counselors have? Are they accredited or certified
by an outside organization? What training do they receive?
What do you do to keep information about me (including my address, phone
number, and financial information) confidential and secure?
How are your employees paid? Are they paid more if I sign up for certain
services, if I pay a fee, or if I make a contribution to your organization?
For More Information and Assistance
The U.S. Trustee Program promotes integrity and efficiency in the nation’s
bankruptcy system by enforcing bankruptcy laws, providing oversight of
private trustees, and maintaining operational excellence. The Program has 21
regions and 95 field offices, and oversees the administration of bankruptcy in
all states except Alabama and North Carolina.
If you have concerns about approved credit counseling agencies or debtor
education course providers, such as the failure to provide adequate service,
please contact the U.S. Trustee Program by email, or in writing at Executive
Office for U.S. Trustees, Credit Counseling and Debtor Education Unit, 20
Massachusetts Avenue, N.W., Suite 8000, Washington, D.C., 20530. Provide
as much detail as you can, including the name of the credit counseling
organization or debtor education course provider, the date of contact, and
whom you spoke with.
The FTC works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to help
consumers spot, stop, and avoid them. To file a complaint or to get free
information on consumer issues contact the FTC toll-free, 1-877-FTC-HELP
(1-877-382-4357). The FTC enters Internet, telemarketing, identity theft, and
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other fraud-related complaints into Consumer Sentinel, a secure online
database available to hundreds of civil and criminal law enforcement agencies
in the U.S. and abroad.
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Debt Consolidation
Using A Loan For Debt Consolidation
If you have a variety of debts, then you may find it hard to keep up with when
and where you should pay money, and you may also be paying more than you
need to. If this is the case, then you should think about getting a debt
consolidation loan. This means you can take all your debts and put them into
once place, which will make it easier to budget each month and also reduce
your monthly payments.
Why get a debt consolidation loan?
The main reason to get a debt consolidation loan is to get out of immediate
debt the fastest way possible. By borrowing a large lump sum of money, you
can pay off your existing debts and then pay back one monthly repayment.
Although this payment may be lower than your current repayments, it is likely
to take longer to pay off. Despite this, it gives you a fresh start and allows you
to begin to move out of debt.
How can I consolidate debt?
Although the simplest way to consolidate your debt is to get one large loan,
there are many other ways that you can consolidate your current debts and so
reduce your monthly payments:
Credit card transfers
One way to reduce your monthly payments is to transfer credit card balances to
new cards with a 0% fee. This can be useful if you can pay the debt off within
the special offer timeframe, although it can be time consuming to keep
switching between cards.
Home equity loans
One of the best ways to consolidate your debts is you’re a home equity loan.
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By securing a loan against your home equity, you will get the best interest rates
and also be eligible for tax deduction against some of the interest. The only
problem is that if you cannot make the repayments, you will lose your home
equity or even your entire property.
Another problem is that home equity loans are usually over a longer period,
meaning that even if you save money in interest, the additional length means
you might end up paying more back than your current debts.
Retirement funds
You can often access your retirement funds as a loan from your employers,
although this should only be used in an emergency of if you have nowhere else
to turn. Using your retirement fund can speed up the debt repayment, but may
leave you with less money in the future, and if you quit your job then the loan
will be recalled in full with immediate effect.
Renegotiate with your current lender
If your debt problems relate to your mortgage, then the only way to consolidate
your debts or improve your situation might be to negotiate your current terms.
Most mortgage lenders would rather renegotiate than repossess your home, as
they will lose out if you default. Stretching out payments may help you to
better manage your debt when you need to the most.
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What Are Debt Consolidation Benefits?
Today, most people are holding more than one credit card and many people are
taking loans such as home loan, personal loan, auto loan & etc. Different
monthly due of each credit card and loan may make you hard to manage your
payment. This may cause late payment or miss payment occur which may
impact your credit rating. The situation becomes even worse if you just make
the minimum payment each month, the interest and financial charges are
stacked over the debt. If you are in this situation, debt consolidation is your
option to bring your financial back to manageable stage.
Let review what are the major benefits of debt consolidation you can enjoy by
choosing this option.
1.Consolidate multiple payment into one monthly payment
Each credit card and loan has different monthly due date, with the debt
consolidation, you can combine these multiple monthly payment into one.
After the debt consolidation, you will only need to remember only one due date
and make only one payment, debt consolidation has made your life easier in
management your debts and the chance of being late is minimized.
2. Reduction or elimination of the accrued interest and penalties
When you are making only minimum payment each month on your credit card
accounts, the interest and financial charges are stacked over the debt. Hence the
total debt amount continues to grow like mushroom. What a debt consolidation
program can offer is eliminates the portion of your total debt built up by
interest and other financial charges; hence, the total debt amount is reduced
consequently.
For example, if your $3000 debt has accumulated to $5000 which the $2000 is
incurred by interest and financial charges, the debt consolidation program will
first eliminate or reduce the $2000 from your debts.
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3. Reduced interest rate
The counselor will be able to negotiate on your behalf with your creditors to
get a much lower interest rate. With the new lower interest rates, the monthly
payments are also less than what used to be earlier.
For example, you have 3 credit card accounts with 18%, 12% and 9% interest
rate, you are paying an average of (18%+12%+9%) / 3 = 13% of interest rate.
If your consolidation program can reduce your interest rates to 12%, 10% and
7%, you are paying an average interest rate of 9.67% after your debt
consolidation.
4. Your debt free life is accelerated
A successful debt consolidation program can make one debt free within 2 to 4
years and saves some money for you. Debt free life is a dream for many
debtors, debt consolidation with an effective repayment plan in place, you will
be able to realize your dream and enjoy your debt free life sooner than you ever
dream of.
5. Get rid of collection calls
By placing your debts under debt consolidation program you can avoid
harassing collection calls too. The consolidation company you are working
with will notify your creditors that they will be representing you from then on.
6. Obtain a good credit
Late payments and charged-off accounts make your credit report look bad and
your credit score goes down consequently. With the debt consolidation
program, your accounts start to get paid off eventually. As a result, you will
building a good credit into your credit report and rise your credit score.
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In summary
Don't let your debt lead you into financial crisis, consolidate all your hard to
manage monthly payments into single payment with the reduced interest rates
not only can save you some money, it will help you to bring your financial into
a manageable level.
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What Is Accelerated Debt Consolidation?
Are you burdened with debts? Are you finding it harder each month to meet the
minimum payments for your debts? Your debts are piling up every month,
creditors' calls make your feel very stressing; and you are praying every day
hoping some miracle will happen and get you out of debt. If you in such bad
debt situation, accelerated debt consolidation could be the best solution for
your debt dilemma.
In the debt consolidation, you are combining multiple, high-interest loans
(debt) into a loan with a single monthly payment on a lower interest rate. Debt
consolidation allows you to pay down more principle each month, often lowers
monthly payments, and allows the balance of your debts to be cleared faster.
Your debts can be categorized into two types, unsecured debts and secured
debts. Unsecured debts are the money you borrow from your creditors without
the need of any collateral. Common unsecured debts include credit cards and
personal loans. Secured debts, on the other hand, are loans or finance packages
that are only approved with a pledge of your collateral in exchange for a certain
amount of money and the creditors have lien on the pledged collateral.
Common types of secured debts include mortgages, car finance, and loans on
personal property. If you fail to pay your creditor in this case, you will lose
your car or house or property.
Accelerated debt consolidation is quit similar with regular debt consolidation
but it only counted in your unsecured debts. Although there is some exception,
most accelerated debt consolidation programs will not include your secured
debts; they will only take your unsecured debt.
When you enroll into an accelerated debt consolidation program, the counselor
from the debt consolidation company will first understand your current
financial situation and they will group all your debts into secured and
unsecured debts. The counselor will only works on your unsecured debt and
proposes a repayment plan after communicating and get the term and
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conditions from your creditors.
If you have a relatively bad credit score and unmanageable, massive debts,
accelerated debt consolidation is probably your best option because this type of
debt consolidation only takes your unsecured debts, which are in general at
smaller amount if compare to secured debts (home loan or car loan amount
normally is larger than credit card balances) and it can enabled you to put a
debt consolidation plan in place with a short period of time, regular debt
consolidation normally takes longer process.
Most of unsecured debts are high interest debts (credit card interest rates may
range from 10%-18% and a personal loan may have interest rate as high as
12%), hence it good for you to put a plan to handle these high interest debts as
soon as possible to avoid further worsen the situation. And an accelerated debt
consolidation can be your best choice on this purpose.
In Summary
Accelerated debt consolidation is slightly different from regular debt
consolidation; it only takes into consideration on your unsecured debts. The
accelerated debt consolidation can be your best option if you are at the critical
financial situation and urgently need a plan to put in place and get your debt in
control.
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When To Use A Collection Agency
What is a collection Agency?
A collection agency is a specialized organization that acts on behalf of a
creditor to collect overdue amounts. A collection agency usually does not take
ownership of the debt but just acts on behalf of its clients to organize the
collection activity. It does not guarantee the collection.
Why do people fail to pay?
There are many reasons why people do not pay on time. A lot of the time
people just don’t want to pay. Sometimes genuine financial difficulties,
particularly of a temporary nature, are among the causes. In such cases, the
person is likely to pay as soon as his financial problems are over.
The downside of using a collection agency
The persons owing the money generally view using a collection agency with
apprehension. This makes them view the approach by a collection agency in a
negative light. This might cause them to resist any attempts to collect money
from them, even if it’s genuine. Moreover, it might result in loss of genuine and
valuable customers, from whom the money would come to you in course of
time, although they might have delayed the payment temporarily or in a
particular case.
It is, therefore, apparent that using a collection agency should generally be the
last resort. There are a few collection agencies that specialize in early
intervention on a diplomatic basis.
Use a collection Agency when the case is clear
The thing that can be inferred straightaway from the above is that you should
use a collection agency when you are reasonably certain that the party has the
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capacity to pay, is obliged to pay the amount, and is refusing or is unwilling to
pay. Also the debt should be due – in fact overdue. It’s always better to wait for
a short while and make your own attempts through reminders and follow up
with the party before you approach a collection agency.
When not to use a collection agency
You should also consider when it is inappropriate to use a collection agency.
There are many situations in which the debtor may have her own defense, and
initiation of any formal or legal proceedings may become counterproductive
and lead to unnecessary delays and complications. First of all, you should
consider whether the debtor – the person owing the money to you – has, or
thinks he has, a valid reason for not paying. If this is the case, it is very likely
that he would be prepared for a fight even if it means a prolonged legal battle.
This works to the advantage of neither of you. In such cases, it is better to first
try and sort out the issue, if possible. Among other things, this is going to
happen if the amount in question is under dispute. If this the case find out the
cause for the dispute and try to settle it through proper communication and
discussion. Another thing that might happen is that there is another claim
against you that the debtor is trying to adjust against the current debt. In this
case it is better to sort out the issue in totality.
Other difficulties and issues
Even where the debtor has no valid reason there might be circumstances under
which it might become difficult to recover the amount legally. For example the
debtor might not be solvent enough to pay the amount. Legal recourse would
only establish your right at the most, but would not obtain the payment to you.
Bankruptcy also prevents collection activities.
The cost of using the services of a collection agency
You must remember that using a collection agency involves payment of fees to
the agency itself. Another consideration is the fact that legal proceedings
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initiated by the collection agency under circumstances similar to the ones
outlined above could make your life more difficult and make the collection
process long drawn out and of uncertain outcome. Because of this, it is better
that you retain control over this process and over the decision as to if and when
to proceed legally.
When you have security
If you possess a collateral security, it is best not to proceed legally or engage a
collection agency if you can use the security to recover your amount.
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Will New Bankruptcy Laws Benefit You?
There are 2 sides to the changes in bankruptcy rules.
It will be a lot harder to file bankruptcy under chapter 7 and get a totally clean
slate.
For businesses, relying on issuing credit, the new personal bankruptcy law is
doing great, reducing personal bankruptcy claims from the thousands to double
digits.(In the short run).
However, lawyers working with the actual people filing for bankruptcy say that
the new law is seriously flawed because it puts more financial burdens on
already broke clients and reduces potential debt repayment to small businesses.
And then of course you have the credit card companies charging high interest
rates which in quite a few cases caused the bankruptcy in the first place.
According to some financial specialists, much of the debt people accumulate is
a result of keeping up with the Joneses and not thinking ahead.
For 80% of clients counseled each month, the debt is credit card related and
averages $32,000 - a result of six to eight cards.
Consumer credit organizations say the new law provides debt-reducing
strategies for those considering filing bankruptcy and curbs abuse.
Under the new law it has become a requirement that the person filing
bankruptcy obtains credit counseling both before and after filing for which that
person will be charged..
So now the consumer would then know the advantages and disadvantages of
declaring bankruptcy. Yet it seems merely another expense for an already
financially stressed individual.
People filing bankruptcy in general are not overspenders, but merely faced with
temporary financial disasters such as medical costs, layoffs, a divorce,
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Debt Consolidation
gambling debts or other crises.
Before you can file bankruptcy,you are now required to complete credit
counseling with an agency approved by the U.S. Trustees office.
This credit counseling is designed to help you determine whether or not
bankruptcy is appropriate.
Once you complete your bankruptcy, the law requires you to attend another
credit counseling session.
These are new requirements, before this law was passed the law did not require
a person to go through counseling either before or after the filing of
bankruptcy.
Second, under the old law, a person could decide to file under Chapter 7 or
Chapter 13. Under the new law, the court will look at your monthly income and
apply a means test relating to the state in which you live. If your income is less
than or equal to the medium income then you will be allowed to file Chapter 7
which in effect will give you a clean slate.
This medium income can vary from $28,000 in Missouri to $56,000 in Alaska.
If your income is greater, you may be forced to file Chapter 13 unless you can
demonstrate you do not have enough disposable income.
Under Chapter 13 you will not get a clean slate but will have to make payments
on your debts.
Also, your attorney now has to personally certify that your bankruptcy filing is
accurate. This means more work for the attorney, with higher legal fees.
Advantages of declaring Bankruptcy:
Legal protection from creditors
Takes care of all or most debt
In some cases, can keep home and car
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Debt Consolidation
May stop complete financial ruin
Provides a fresh start
Disadvantages of declaring Bankruptcy:
Bad credit
May have to repay partial debt load and return collateral to creditors
May lose assets, including house and car (If the house is worth more than a
certain amount).
Bankruptcy becomes public record, and
Remains on credit record for seven to 10 years
“In the past, a bankruptcy offered a fresh start for the filer,” said Columbia
attorney Gwen Froeschner Hart. “The new federal legislation offers language
directed at helping creditors.”
If you analyze credit card expenses for most people you'll see that they often
include medical bills and day-to-day expenses for the elderly or those earning
low or fixed incomes.
Records show that 50% of credit card holders do not pay their full credit card
bills every month.
33% of the population can't afford medical insurance so have to charge their
prescription drugs.
With the recent Medicaid cuts and rigid bankruptcy legislation who knows
what is going to happen to these people.
There are some who say consumers are abusing creditors.
The irony is that credit card companies are begging for customers and offering
large amounts of unsecured credit, yet at the same time, lobbying for stricter
debt controls.
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Debt Consolidation
What Exactly Does a Bill Consolidation Company Do
The burden of debt is becoming more and more common in the United States
than ever before, and many people simply can't find a way out. The reason for
this is that credit cards provide a stream of money that is so convenient, yet
extremely damaging at the same time if used improperly. Thankfully, bill
consolidation is a solution that is available from many companies, and is
becoming popular with people trying to conquer their financial troubles.
Some people would say we simply have to get rid of credit cards, as they are
obviously the biggest contributors to the epidemic of being in debt... but the
truth is, some people simply can't pay all of their expenses with cold, hard
cash. But others may spend excessively on things they don't need, while
putting themselves further and further into debt. Either way, with the high costs
of mortgages, car payments, student loans, and other costs, credit cards are here
to stay.
Eventually, your debts may add up to catastrophic amounts until you simply
can't make the minimum payments anymore. It can become difficult to even
remember when each payment is due. Also add into the equation the fact that
your interest rates could also be drastically increasing.
Bill consolidation provides a very convenient solution to this financial
nightmare. With a bill consolidation company that effectively does its job,
you'll no longer have to worry about multiple payments at all. They'll combine
everything into one convenient payment, and even deal with all of the
annoying creditor calls!
By negotiating with your creditors, they'll also drastically lower your interest
rates and monthly payments. They will be your representative and sit down
with the respective lenders in order to get the lowest rates possible. The goal is
to get you entirely financially free in the shortest amount of time possible.
Also provided by the bill consolidation company is a manageable payment
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Debt Consolidation
plan. It will lay out exactly how much you need to pay per month, and create a
simple budget that you can apply to your daily expenditures. You will then be
on your way to conquering your debt and achieving financial freedom.
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Debt Consolidation
Thanks for reading this book. Find more articles at Finance Tips
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Debt consolidation

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