Beyond The Bank » Debt Consolidation

Debt Crisis: Emergency Action Steps

T. L. Lindemood — Mon, 20 Feb 2012 16:23:34 +0000

Most Americans are used to living with a certain level of debt. Its an unfortunate, but all-too-common fact of life.

If asked, most people would say they’d like to get out from under the debt they have hanging over them. However, wanting to get rid of extra debt is not the same as being in a true “debt crisis.”

What is a “Debt Crisis?”

If you are in danger of (or are actually) losing your possessions or if you are on the verge of declaring bankruptcy – it’s time to take some emergency action steps to get yourself out of trouble.

The first, and most obvious, step is to drastically cut unneeded expenses.

Start by making a detailed budget for your spending. Be brutally honest here – understand in advance that your budget will probably add up to a lot more than you can afford. (You already know you need to start making cuts – so the more honest you can be with yourself at this stage, the better).

Look carefully at the items of your budget and decide whether you really need what you’re spending money on. When it comes to a crisis state, extras like cable and eating out are probably going to have to go.

Once you’ve removed all the items you don’t need, then cut down your bills on the things you have to maintain. Work on cutting your energy and grocery bills. You can also cut out unneeded parts of needed bills like extras on your phone plan.

Next, return things you can’t afford. Many people reach a budget crisis because they were living outside their means. Often, this can be somewhat reversed. If you’ve made recent purchases you don’t need, try to return them to the store. If you can’t return the things you don’t need, you can sell them in a garage sale or on Craigslist.

Contact credit card companies and other debtors and ask them to reduce your debt.

Many people consider this a futile effort. The debtor doesn’t care about your problems, so why would they work to make things easier on you?

It’s quite simple. Most creditors would rather receive part of something than all of nothing. While they may not be willing to lower your total debt, you may be able to negotiate a lower interest rate or even have them temporarily stop adding interest until your finances improve.

QUICK TIP: Before you pick up the phone to talk to credit card companies, BE PREPARED.

You can find all kinds of resources online for how to talk to creditors. They know what they’re doing – you don’t. If you’re uncomfortable talking to them yourself, there are agencies that can do this for you.

If you’ve worked out everything you can and still can’t make ends meet, you probably want to look into getting another job. Even if you don’t have a lot of free time, you can often find valid work on the Internet or pick up odd jobs for your neighbors.

When everything else fails, get help.

If you’ve tried everything above and nothing’s working, it’s time to get help. For whatever reason, many of us don’t want to see help from others, but when it comes down to being able to afford necessities like food and shelter, sometimes it’s your only option. Utility companies, charities, churches, and various other organizations are willing to help you if you ask for it.

Closer Look at Credit Card Debt Relief Solutions Almost all individuals in the U.S. are infected with the...

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Closer Look at Credit Card Debt Relief Solutions

Diana Degarmo — Fri, 30 Dec 2011 15:03:48 +0000

Almost all individuals in the U.S. are infected with the habit of making the indiscreet use of credit card that eventually incur them an overwhelming credit card debt. According to the U.S. Census Bureau, U.S. citizens have over $886 billion in credit card debt and the figure is expected to rise to $1.177 trillion this year.

If you are also the one among the staggering number of debt stricken individuals, then you may consolidate credit card debt. But credit card consolidation involves certain eligibility criteria and other factors, so if you cannot qualify for it, you may look for other credit card debt relief options.

Credit Counseling: If you are under the pressure of insurmountable amount of credit card debt and are unable to manage it all by your self, then it is advisable to seek help from a credit counselor.

Credit Counselors can aid you manage your finances and pay off your debt as soon as possible. They will review your fiscal situation and will discuss with you about your debt problems in order to determine a suitable solution. They will even assist you in preparing your budget and provide you with free educational workshop in order to make you aware how to manage finances.

All these help in managing the debt and achieve a long term financial goal for future. These counselors are certified and trained in the areas of consumer credit, debt management, debt consolidation and budgeting. So they can also provide you with a personalized plan to consolidate your credit card debt and solve your debt problems.

Credit card debt consolidation: Credit card debt consolidation is a debt relief solution that consolidates all your debts into a lower monthly payment. This lowers the interest rate on the outstanding balance of debt and therefore reduces the monthly payment extending the length of the loan.

Typically, to take a consolidation loan, you will have to submit collateral in order to secure the consolidation loan. Any time you default on your loan, you may lose all your assets put as collateral.

Credit repair: Credit repair is a good option if you have any erroneous information on your credit. To find that out, order your credit report from the three credit report bureaus, TransUnion, Equifax, and Experian and take a close look to find out if there is any inaccurate or incomplete information.

If there is, hire the services of a credit repair company who will correspond with your creditors and repair it for free.

However, remember, it’s not so essential to hire someone to do this; you can do it by yourself as well. Improve your credit through a constant effort and sticking to personal debt repayment plan.

Debt settlement: Debt settlement is one of the best debt relief solutions for unsecured debts, like credit card debt. Debt settlement involves negotiating with creditors in order to lower the pay off amount by upto 30 to 60 percent.

Most debt settlement companies charge fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a fee for a percentage of money that has supposedly been saved.

Bankruptcy: Bankruptcy is a legal status of an insolvent person who cannot repay the debt owed to the creditors. It is designed in such a way that a portion of debt is waived off through an order of the court. On the other hand, it is also designed to allow creditors to get their designated share of debt owed by the debtors.

In conclusion, if you are finding yourself under a knee-deep credit card debt, you may consider any of the above discussed credit card debt relief solutions.

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4 Smart Tips to Save Money on Credit Card Consolidation

Neil R. Williams — Tue, 22 Jun 2010 11:18:47 +0000

This guest post is by Neil R Williams. Neil is a financial consultant by profession and a finance niche writer. He consults with clients to pay off debt and repair their credit.

He writes articles on many financial issues and problems, including debt settlement, debt consolidation, refinancing and reverse mortgages. He has been published on many financial sites and blogs.

Unfortunately, credit card debt is a way of life for many. Too often, people buy things they couldn’t otherwise afford with the help of credit cards. The problem arises when consumers become overburdened with their credit card debts and they fail to pay their outstanding balance on time. Often, they look to credit card consolidation to consolidate their debts and repay their debts more easily. The most common method of consolidating credit card debts is the balance transfer method. This way you can save a lot of money but there are some fine print traps.

Here are 4 smart tips to save money on credit card consolidation:

Fees on balance transfer: There are some credit card issuers who charge balance transfer fees on credit cards. The fee may be as high as 4 percent of the outstanding balance. This means the higher the balance you transfer, the higher the transfer fee will be. Beware of such extra fees on credit card consolidation through balance transfer method.
Teaser rate: Teaser rate is the interest rate offered during the introductory period. Make sure before opting for balance transfer, what your annual percentage rate will be after the introductory period expires. It is best to pay down the transferred balance before the teaser rate expires. Or else you may be subject to high interest rate where you will find it difficult to pay off your debt.
Check carefully: Your new credit card company may tell you that your balance is transferred. But it is your duty to recheck whether the balance has been actually transferred. Check with the old credit card company and ask them to give you a billing statement with a zero balance written on it.
Cancel old cards: There are plenty of people who have a habit of opening new credit lines. You should know that opening new credit accounts increases the risk of drowning in debt. Too many credit card accounts and outstanding debts lower the chance of your qualifying for a mortgage or a car loan. Most lenders view open credit lines as potential outstanding debt. So to save money, cancel old cards and close those accounts.

Credit card consolidation is the most common way to eliminate credit card debts. But it depends upon you on how much you can save while consolidating your credit card debts. These smart tips will help you to save those extra dollars on debt consolidation.

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Debt Consolidation – Can It Work For You?

T. L. Lindemood — Mon, 30 Mar 2009 21:20:25 +0000

Debt Consolidation may be a great option for you if you have a number of outstanding credit card and loan balances.

If your outstanding balances are racking up high interest fees, you could find yourself sinking deeper and deeper in debt. In that case, debt consolidation could offer a viable way to get back on track. Debt consolidation involves combining a number of smaller balances into one larger debt (at a lower interest rate) – thereby rolling a number of monthly bills into a single more manageable payment. When used correctly, debt consolidation can save you hundreds of dollars each month and simplify your bill payment process.

One way to consolidate your debt is through traditional methods, such as a home equity or other bank loan. With the current credit crunch, these loans are more difficult to obtain than they once were. However, if you have a good credit rating (i.e., FICO score of 700+) and you have enough equity in your home, you may be able to qualify.

A home equity loan wouldn’t be my first choice, however. If the recent real estate meltdown taught us anything, it should be that using your home as an ATM can have serious financial consequences. I would ONLY consider this option if you have the discipline to cut up the newly paid off credit cards and guard against running up additional balances elsewhere.

With other types of bank loans, you will still need some type of collateral in most cases. However, some banks do offer smaller loan amounts (less than $5k or $10k) without this requirement. The terms (length of loan and interest rates) will depend on your credit history and FICO scores.

Social lending (aka Peer Lending) is a newer and very interesting alternative to traditional loan options for credit worthy applicants. A variety of lending networks have popped up in recent years, with Lending Club among the most popular. Membership is free for both lenders and borrowers and the online application process is fairly simple and straightforward.

Within these networks, borrowers can make a loan request to consolidate their outstanding debts. Private lenders (individuals) within the network can then make offers to lend all or part of the requested amount. With Lending Club, loan amounts range from $1,000 to $25,000 with a fixed repayment schedule of 3 years. Once approved, funds are usually deposited into the borrower’s account in less than two weeks.

This option is not available in all states and is open to those with FICO scores greater than 660 and with a debt-to-income ratio of less than 30% (excluding mortgage). To learn more , visit Lending Club.

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