Thoughts of a looming depression are causing widespread panic for the average citizen, here in the U.S. and globally. While the President conducts secret meetings and aids big businesses (even those that have committed high end fraud), the risk of hundreds of thousands of jobs are on the line. The normal citizens have been (so far) left out of the equation but left to pay for the years of greedy Wall Street capitalization and the like.
i. Simply keep plugging: Continue paying what you can when you can until everything is paid off. (Pay back 291% on average)
ii. Consumer credit counseling: These programs contact your creditor and workout a repayment plan (usually 5-7 years) The counselor will then negotiate mainly on the interest to reduce a portion of the debt owed. C.C.C. programs do not handle medical and not all creditors participate in the programs. Any account that has gone to a collection agency cannot be included into a C.C.C. program. Generally, C.C.C. programs have a certain list of creditors that they can and cannot work with. Some of your creditors may not be on every C.C.C. program's list. One of the key points about CCC programs is that you still pay 100% of the principal plus interest. When all costs are considered, it usually works out to be about the same as your current minimum payments. (162% repayment)
iii. You can apply for a debt consolidation loan: Which entails taking out one loan to pay off several others. This is done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan instead of managing several accounts. However, if you are struggling with making your minimum payments, it is uncommon for one to qualify for this solution. In order to qualify, you usually have to have good credit, a good debt-to-income ratio, and some form of assets to secure the loan (a house or car is the most common). Just being able to make the monthly payments on your cards does not signify good credit because you may have a high debt-to-income ratio. If a person with poor credit due to being overextended were to be able to get a debt consolidation loan, it would carry with it a higher than normal interest rate and would, consequently, not offer much of a savings. Additionally, with the loan usually tied to your homes equity, failure to repay could result in foreclosure on your home. When you are overburdened by credit, debt consolidation loans are rarely an option. (Long term plans can take up to 30 years to complete and pay back 162% average)
iv. Bankruptcy: This should be considered a complete last option due to the harsh credit impacts, expensive fees, lawyer costs, possible exclusion to future employment, high interest rates for future credit, risk of foreclosure and probability of dismissal. In our experience many people can find other options to avoid bankruptcy.
v. Debt Settlement: Debt settlement is for individuals and families who are or will be falling behind in unsecured payments. It benefits people considering bankruptcy, people that can only make the minimum payments on their credit card debt and/or medical bills and people that can't qualify for a loan to avoid falling behind. People experiencing financial hardships such as divorce, hospitalization, loss of family, etc. would ideally be in legitimate scenarios to qualify. Debt settlement is the fastest way to get out of debt and has the least impact on one's credit rating. This program is designed to minimize the amount paid and substantially decrease the time line of becoming debt free. The object is not to increase a person's credit score, although after all accounts are settled it is relatively easy to have a great score afterwards, usually within 6-10 months. (Pay back 55%>
Only a qualified professional should give you advice after conducting a financial analysis as to which program will be best suited for you. If you are considering any of these options make sure you are dealing with companies that have a good rating with the B.B.B. and have a reputation of getting the job done.
How Will Debt Settlement Affect My Credit Score?
The most frequent question that is asked is how are credit scores affected while enrolled in a debt management program. Let me first start off by stating that any and every debt relief or management program will negatively affect your score. In fact, anything short of paying off debt in a timely manner will negatively affect ones credit score. Now, that “disclaimer” is out of the way, let’s get to the facts.
Credit Card Companies Crackdown- What Does This Mean For You?
With all of the banks in a panic to reduce their losses to their mostly fraudulent practices, many of the larger lenders are putting into place more restrictions to yet again deter the hard working citizens from escape of the debt trap. Recent news coverage and yet more to come are announcing changes that will affect life as we know it- even for the responsible card holders and especially for the predatory lending practices for high interest consumers today. So be on the lookout and be very wary of up and coming changes to your credit, may it be bad or good.
Predatory Lending and Criminal Credit Card Corporations
More and more families are relying on credit cards to weather the storm during economic dowmnturns and are being lasered in on by billion dollar credit card companies and their criminal practices. Recent emphasis on this topic has been making headlines but little has been done to crack down on predatory lending practices, in fact our "government" have given them $700 billion...
