Debt consolidation lead

Do you have a great deal of unsecured debt? What can you do about it? Here are all the options available to you:

1) Bankruptcy, Chapter 7:

The pluses: Wipes out all of your debt without paying any of it! How much debt you pay off? $0 (however you would have to pay legal fees).

Minuses: It costs you money to file for bankruptcy, it will affect your credit score dramatically. Apart from that, you may not qualify based on factors like your income and assets.

Suggestions: Consider this is your last option. Talk to a bankruptcy lawyer to get all the details upfront. Bankruptcy lawyers often offer free consultations.

2) Debt Consolidation:

This is also known as: debt relief, debt management, and consumer credit counseling.

The pluses: Credit damage is not that bad, it saves you considerable money overall, and no calls from creditors as they get paid every month. How much debt you will pay? 100% plus 8 to 15% annual interest for 2-6 years totalling around 150%.

Minuses: You pay off all the debt plus interest, you have to close your accounts down, its a long time frame typically, and being in such a program will prevent you from qualifying from many loan programs.

Suggestions: If your credit is perfect or near perfect and is very important to you over coming few years and your interest levels on your credit cards are over 20% it would be worth considering this program.

3) Bankruptcy, Chapter 13:

Pluses: Pays off all your debts. Helps those who make too much money to qualify for Chapter 7 Bankruptcy. How much debt you will pay? Depends on your income and ability to pay + lawyer fees. Minuses: the federal government takes over your finances and decides who you pay and when! Stays on your credit for 7 years from the date after you’ve paid everything off.

Suggestions: Speak with a bankruptcy lawyer. There are only a few circumstances in which Chapter 13 is the wisest decision. Consider other options first.

4) Do nothing and make double and triple payments:

Also known as: strategic payment plans, budgeting, snowballing, etc

Pluses: Pay off your debts much faster, no credit damage. How much debt you will pay? All your debt + fees (albeit over shorter time frame.)

Minuses: can be very costly, especially in the short term. A lot of people cannot afford this approach.

Suggestions: If you can afford to pay well beyond the minimum payments each month this strategy is very effective.

5) Debt Settlement:

Also known as: Debt relief, debt audit, debt negotiation, debt mediation, etc.

Pluses: pays off your debt much faster and at about half of debt amount. Has a flexible payment plan (unlike all other options). How much debt will you pay? Usually about half of your total debt.

Minuses: Credit damage is severe if your credit is presently very good. Calls from creditors and collectors can persist depending on the program.

Suggestions: If your minimum payments far exceed your ability to pay and live your life then this is a good option to consider.

6) Just don’t pay them anymore:

Also known as: Not answering the phone. Pluses: you have much less bills to pay! (for now at least). How much debt you pay? you pay nothing now but can be forced to pay a lot more later if you get sued.

Minuses: severe credit damage. Persistent credit calls. You may get sued and your paycheck can be garnished/ assets taken away.

Suggestions: if you have gone through a dramatic loss in income that is temporary and your creditors won’t work with you well it’s better to stop paying than to become homeless to pay the debts. Do not risk this with secured debt like mortgage or car loan! Consider another approach once your finances rebound. Be sure to prioritize use of your money. You have to eat before you pay the credit cards.

7) Working with creditors yourself:

Also known as: Do-it-yourself. Pluses: no cost of hiring neither any lawyers nor debt relief companies. How much debt do you pay? Depends on how successful you are (results will vary).

Minuses: Many creditors won’t negotiate with individuals to consolidate debt. Working with collectors is very frustrating and time consuming. Setting up pay plans with collectors will lead to lawsuit if and when you miss a single payment.

Suggestions: best to hire a professional who will actually save you money above and beyond that which you will save yourself including their fees. Also you will save a lot of time and frustration. If you are going to try things yourself do research first.

Bottom line is that you should carefully consider all of your options before choosing any of them. Bankruptcy should be the last option. Please chose wisely, as it could make a huge difference. You can get out of debt rapidly if you choose the right path.

By: Vishal Verma

What is Debt Consolidation?

Debt Consolidation is a means by where you can take all of your existing loans, credit card payments and outstanding bills and consolidate them into one loan. This loan is spread over a term that will enable you to comfortably afford to pay the set monthly amount. This way you know exactly how much you need to pay and have only one monthly payment going out of your account each month.

The hardest thing to deal with when you have many different outstanding debts is not being able to keep track of each debt as they all come out of your account at different times of the month and they are all for different amounts.

What is a Bad Credit Debt Consolidation Loan?

A Bad Credit Debt Consolidation Loan is much the same as a consolidation loan but the difference being that the origional debt was defaulted on in some way, thus putting the candidate in a higher risk bracket.

However this is not a problem as banks and institutions are willing to help you out with a bad credit debt consolidation loan and get you back on track with your finances.

Bad Credit Debt Consolidation Loan or Bankrupcy?

Making a decision on which option to take in order to be debt free should not be taken lightly. This should always be discussed with your bank, financial advisor or a debt counselor. To help you in your quest, there are a few points I would like to make.

Bankrupcy should only be taken as a LAST option. Yes, to go for bankrupcy would be the fastest and easiest option in the short term but you need to remember that it will be held on your record for at least seven to ten years. This will affect any credit or borrowing during that period and possibly afterwards too. So it is a short term fix but will be a long term problem.

A Bad Credit Debt Consolidation Loan is a good solution all round. It allows you to initially gain control of your debt and then manage it in a responsible manner. There is however still the issue of how you came to lose control of your finances in the first place and this needs to be addressed to avoid a repeat performance in the future. There are many companies offering aid for this service and many offer free advice, so it’s definitely worth getting advice from a qualified debt counselor. They will also be able to advise the best place for you to apply for a Bad Credit Debt Consolidation Loan.

By: Nelson Smith

What is Credit: A creditable personality is associated with terms like authority, esteem, fame, good standing, reputation etc. And credit in the financial standing is associated with words like balance, bond, securities, stock, trust, wealth etc. Why we mention this is that very often a credit mess in finance harms creditability of the persona.

What is Bad Credit: A bad credit will largely be defined by the following:

o A F.I.C.O. score of 620 or lower

o Two (or more) 30 day late payments in the past 12 months

o One or more 60 day late payments in the past 24 months

o A foreclosure in the past 24 months

o A charge off in the past 24 months

o A bankruptcy in the last 60 months

o A qualifying debt-to-income ratio of 50% or higher

About 10% of all American people have a credit score of 800 or higher. The average is 710 points and about 10% of the population has a credit score of 575 or less. A credit score of above 730 is considered excellent and above 700 is considered good. With a credit score between 670 and 699, lenders will take a closer look at your file before approving or denying you a loan. With a credit score between 585 and 669 it will be considered a higher risk to grant you a loan. At below 585 points you might face problems even getting one. With a credit score under 550 concentrate all your efforts on improving your score first.

Bad Credit Debt Consolidation: Before the advent of credit counseling companies in the early 1980s, people had few options when it came to dealing with debt reduction other than filing for bankruptcy. Now specialists constantly advise you never to file for bankruptcy. Credit counseling organizations were set up by credit card companies as a way of getting money from thousands of people who were failing to make their monthly payments due to various reasons like health problems, unemployment, or simply too much debt.

Though they called themselves ‘non-profit’ organizations, most were working with credit card companies to collect money for the banks from consumers. Since credit counseling services were backed by the card companies, usually over 50% of the people who started a credit counseling program never completed paying off the debt they owed. What may happen even now is that many credit counseling services do not reduce the total debt you owe. Instead they sell unknowing consumers on the concept of just adding up the total monthly payments into one payment. This may sound appealing but the cost of the subscriptions for credit counseling companies can often be five times higher than the regular monthly minimums. Most people seeking debt assistance need immediate monthly cash relief. Their monthly bills are already too high and they need a solution instead of ending up paying for the additional exorbitant interest charges. Now debt consolidation for bad credit customers is the new mantra with debt arbitrators dealing with their creditors and negotiating for an operational payment strategy.

Well then, the situation is quite different now. The options are more and the competition bigger.

Here are some of the common features and services offered by the modern day credit counseling agencies:

1. Consolidate all bills

2. Immediate relief from creditors

3. Do not offer a loan. So no question of qualifying

4. A non-profit foundation

5. A reduction of up to 70% through debt negotiation and debt consolidation.

6. Deal directly with your creditors saving you a lot of hassles.

7. Promise to make you become debt free in 12 months.

There are numerous sites offering services for debt consolidation that claim to give you 30% to 75% debt reduction.

Avoid the Debt Trap: Debt consolidation as we have seen above does not give you a transparent picture about the costs involved and the final salvation. Our advice for you is to try not to fall in this debt trap. Credit cards allow us the opportunity to enjoy our lives first and pay later for just about anything. We set the highest standards and many a dreams for us as we do not have to pay immediately. Without having any cash on our hands we make purchases that allow retailers and manufacturers to collect money from the credit card companies. As a result we end up having multiple credit card accounts and multiple bills to pay each month, but only one income to handle it all. This income has to spread itself so thin there isn’t enough to go around. This could lead to high stress levels, marital tension, creditor harassment or even bankruptcy.

You can avoid falling into this trap if you really desire so and then you can fully concentrate on how to go on improving your credit score. Without bad credit you will never need debt consolidation.

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By: Chinmay Chakravarty