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May 19, 2009

Finding Relief to Credit Card Debt

Credit card debt is a widespread problem nowadays. With the economy the way it is, the situation is bound to get worse. As a result of the credit card crisis, cardholders are turning every which way to find a way to settle their debts.

Getting out of debt is not impossible and there are many ways to do it. However, not all lead to debt resolution. Case in point – the recent controversies regarding debt settlement companies. Many cardholders have fallen victim to these companies that are big on promises and nothing else. The problem is serious enough that attorney general of New York State, Andrew M. Cuomo, announced recently that it will investigate over a dozen companies offering debt settlement.

Still, the problem remains – where can cardholders turn to for credit card debt respite?

Self Help

A very simple yet often overlooked solution to debt settlement is by simply calling your creditor to check if they have programs for customers who are having trouble paying their bills. Experts, however, warn that such a move can negatively affect your credit score. This particular solution is also more suitable for those who have debts in a small number of credit lines.

Financial Counseling

One of the problems with having credit card debt is having to understand the intricacies of the credit card agreement between the cardholder and the creditor. The problem also multiplies as more and more credit cards are involved. Credit counseling can greatly simplify the problem for the customer.

Financial counseling or credit counseling helps the customer visualize their entire financial situation. With a clear financial picture, the counselor and the customer can find a viable plan for dealing with the debt. The ultimate aim of financial counseling would be a workable debt management plan.

For those looking for credit counselors, the reliable ones are usually members of legitimate organizations, such as the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Credit Counseling. Counseling fees are very reasonable and even people who cannot afford the fee are still entertained.

Debt Settlement

Debt settlement companies should be the last choice that anyone with debt problems should consider. Debt settlement companies are very expensive and will require a large payment at the very start. Some companies may do away with large upfront payments, but they usually get their high fees from their customers in some other way.

Experts have agreed that the business model that debt settlement companies follow is very bad for the customer in the long run. Debt settlement plans may actually increase what the customer has to offer and hurt the customer’s credit score. Some credit companies also do not deal with debt settlement outfits.

May 17, 2009

Settle Your Debts Easily with Debt Consolidation Loans

If you are one of many Americans having debt problems, then you know that the situation is becoming worse and worse as the economic crisis continues. As the available cash in American households begin to dwindle, the more debts a household has, the more problematic the situation gets. If you have a similar problem, you might want to consider consolidating your loans.

Credit Cards and Debt

Credit cards have become the de facto standard for a large number of financial transactions in the U.S. The ease of use and convenience that credit cards offer is incomparable to having to carry a large amount of bills and coins on your person whenever you have to go and make a purchase. Unfortunately, that convenience and ease of use also makes credit cards financial traps that many people have fallen into.

Credit card transactions have a way of making the cardholder forget that the transaction actually translates to debt. This debt often adds up alarmingly and, before they know it, cardholders find themselves deep in debt.

High Interest Debts and Multiple Debts

The interest rates of credit cards have been soaring these past few months. Although some cards still offer affordable and low interests, they are the exception rather than the rule nowadays.

Paying off your debt also becomes doubly hard when you owe debt to multiple lines of credit. Usually, each line of credit you have to pay off will have a different set of rules and interest rates.

Debt consolidation can answer your debt problems.

If you find yourself having to deal with large debt payments and juggling multiple debts every month, you ought to see what debt consolidation can do for you.

Basically, debt consolidation can do two things for you to make your life easier. First, it can greatly reduce your monthly debt payments. This can help you catch up with your debts without sacrificing necessary expenses. Secondly, a debt consolidation program can simplify your debt payment scheme so that you have to deal with only one or two debt payments every month.

How does it work?

Debt consolidation is basically the same as taking out a loan to pay off all your debts. You will then have to pay only the loan that you took out instead of all the debts that you previously had. This can help you in a number of ways.

Usually, the loan that you take out in a debt consolidation program will demand lesser monthly payments from you. Also, by taking out one loan to pay off all your other loans, you will now have only one loan to pay off.

Debt consolidation can be a lifesaver in this troubled economy. If you are someone who is getting hit bad with debts, you should visit a debt consolidation agency and see what they can do for you.

May 14, 2009

The Dangers of Debt Settlement Companies

The Dangers of Debt Settlement Companies If you are one of the many Americans who have found themselves having to deal with large debts, then you probably have given some thought on getting help from debt settlement companies.

If you do not know this yet, debt settlement companies offer help for people with debt problems. Usually, they negotiate with credit companies to give their customers a lower monthly payment rate or to write off a part of their debts. It may seem like a good deal but the reality of the matter is actually less comforting.

A credit counselor from The Village Family Service Center in Fargo says, “Most of the time, it doesn’t work out very well.”

Unfortunately, the current economic situation offers a great market for those who want to make quick money out of debt settlement schemes. Some are even frauds that just take money without really helping their clients. Others are newcomers to the industry and are not capable of offering a good deal to their clients and may actually make matters worse for them.

Companies that offer debt settlement are also known as debt arbitrators or debt negotiators. Debt settlement companies are usually ‘for pay’ companies. Most of the time, their clients have to pay a considerable sum even before their debt arrangements are actually changed. Some debt settlement companies can also ruin their clients’ long term credit.

As more and more Americans go into debt, debt settlement companies are seeing a rise in demand for their services. Critics are also becoming more vocal in their condemnation of the shady practices of some debt settlement companies. Even the debt settlement industry itself sees and acknowledges these practices.

President of The Association of Settlement Companies, Chris Kesterson had this to say, “There are bad actors in our industry. There are bad actors in every industry.” Kesterson also serves as chief executive of Debt Settlement America, a debt settlement outfit based in Dallas. Chris Kesterson’s association boasts 155 members.
Although acknowledging the grimier side of the debt settlement industry, Kesterson also state that debt settlement companies that have the proper experience and competence are also working in the industry. These companies offer solutions to people with deep debt problems, especially when no other option is available.

If you are one of those who are looking into debt settlement as a solution to your debt problems, the best thing that you can do is to research the background of the company that you plan on seeking help from. Beware of companies that are not forthcoming when you ask them questions. You should also ask around and listen to the advice of people who have used debt settlement companies before. If you plan on approaching a new company, make sure that they have experienced people working for them. However, you are probably best served by a company that has been in the business for a long time and has a long list of previous clients.

May 11, 2009

Say No To Bankruptcy

701012_68282226 According to industry experts, credit card debt is one of the leading financial problems that many Americans are facing today. The economic crisis that began last year has resulted in massive unemployment, rising interest rates and an ongoing economic instability which the U.S. government is still trying to contain. All of these things mean only one thing to the common American, they are now struggling to make ends meet and every “cash drain” has to be plugged. One of the biggest drain that most Americans have to deal with is credit card debt.

To put it bluntly, there is really only two ways that you can deal with credit card debt. You can pay it all up or you can declare bankruptcy. Of the two, the easiest way out would be declaring bankruptcy. It is also the most ruinous. True, declaring bankruptcy can lower your payment rates. It might even absolve you of it entirely. However, in the long run, it can hurt more than it can help. For instance, if you declare bankruptcy, you’ve tarnished your credit record permanently. So, every time you try to take out a loan, credit card companies will check your records and, more likely than not, you will get turned down.

Obviously, the best way to deal with credit card debt is to pay it. Of course, that is easier said than done, especially with the current economy. Dealing with it on your own can be daunting and confusing, to say the least. With the amount of fine print that credit companies put in their agreement forms, you can go blind just looking for how much your monthly interest rates should be. A good idea for those with credit card debt would be to go for credit counseling.

The people in credit counseling are people who have dedicated eight hours a day, five days a week to the task that everyone else is relegating to a few minutes every time the budget comes up, understanding the credit industry. Thus, when you go to them for help regarding your credit card debt, you can be sure that they know several solutions that can ease your credit card burden. Of course they won’t make your debt disappear. They will just make it easier to handle so that you won’t be losing three quarters of your monthly take home pay to credit card debt payments.

Credit counseling agencies will investigate every minute detail of your finances to find out how to help you. They will be looking into your credit history and it really helps if you have a good one. They will consider your monthly take home pay and compare it against your monthly debt payments. Depending on how you rate, they can negotiate a lower monthly rate for you with your credit company.

May 10, 2009

Finding Your Way Out Of Credit Card Debt

Credit card debt is one of the biggest problems for American consumers nowadays. With rising interest rates and the state the economy is in, credit card debt problems are a dead weight that any credit cardholder would want to get rid of.

Finding Your Way Out Of Credit Card Debt Like any problem, to begin fixing your credit card debt problem, you first need to determine how big the problem is. Unfortunately, some people are not very clear about the details of their credit card debt. Understandably, some people find rummaging through all the fine print and the mathematical confusion that credit card bills carry to be too daunting. However, you will never truly understand why your monthly payments are as high as they are unless you understand the details of your credit card.

Credit card transactions carry many details that credit cardholders need to be aware of. Transaction fees, for instance, are automatic fees that you pay for every transaction. Your interest fees are the interest you pay for your debts. Credit cards also charge fees for any penalties that you can usually find in the fine print of your bills. These are just a few items that you need to be aware of.

One of the best ways that you can help yourself to get out of credit card debt is to consult a financial counseling outfit. There are many financial counseling outfits out there offering their services to help you get out of debt and stay out of it. Some of them are also non-profit agencies that can be very helpful for people who are really tight on their budget. Financial counseling outfits can analyze your credit card debt details for you, explain it to you more effectively, and lay out several steps for you to follow so that you can get out of debt. Consulting them should certainly be at the top of your list if you want to get out of debt.

Aside from consulting the experts, there are also some “common sense” steps that you can take to get out of credit card debt. The most obvious one is to stop using your credit card while you are deep in credit card debt. If at all possible, pay cash. If not, use a debit card instead of a credit card.

You can also call your credit institution and see if they can renegotiate a better monthly payment rate for you. Some banks can offer you better rates, especially if you have good credit standing. However, be careful of offers where you transfer your existing debt balance to a low interest credit card. Although the rates are attractive, you’ll be paying a much higher balance should you miss payment.
Finally, when you are paying your debt, make sure to pay first the card with the highest interest rate. You should also depend more on electronic or online payment rather than through the mail to ensure that your payment does not come in late.

May 8, 2009

Pull Yourself Out Of Debt

With rising credit interest rates and ever increasing credit fees, everyone desperately wants to get out and stay out of debt. Unfortunately, more than it has ever been before, this is something that is much easier said than done. Still, there is hope. With a bit of belt-tightening, some smart spending decisions and keeping an eye on the details, it is possible for you to live debt free, even with the current economic climate.

Pull Yourself Out Of Debt According to industry insiders, the average American family owns at least one credit card. Credit cards are very convenient when it comes to payment. They can even be lifesavers in situations where there is no cash immediately available. However, credit cards can be deceptively convenient when it comes to purchases. So much so that most credit card owners find themselves surprised by the amount that they have to pay after they’ve gone through a spending spree.
Sooner than they think, they find themselves deep in debt.

According to experts, if a person’s take home pay loses 20% to nonhousing debt, then he is overextended. Another indicator of overextension is when 30% of a person’s monthly income go directly to paying the rent or the house mortgage. Other indicators include not knowing the total amount of debt, paying only the minimum balance in credit card bills and borrowing in order to pay debts.

If you find out that you are overextended and unable to keep up with your debt payments, don’t panic. You can still get yourself out of debt, though it will require some effort.

The first step to get out of debt is to keep track of where the money is going. This is not as trivial as it sounds. Little purchases, bank fees and other small amounts that most people take for
granted often add up to a considerable amount at the end of the month. It is best if you keep a written record of the month’s expenses. This makes it easier to track where the month’s budget is going.

By keeping track of your expenses, it is then easier for you to find out where the money is going and whether some of it can be diverted to payoff your debts. This often mean that you will have to get creative. For instance, you might consider bringing lunch instead of buying lunch from the cafeteria or your favorite fastfood place. The main goal is to minimize your monthly spending. This way, you can free up money to pay off debts.

When paying of your debts, make sure to prioritize debts with higher interest rates. If at all possible, transfer your high rate debts to your low rate credit cards. Look for low rate cards and transfer to them. Try to minimize using your credit cards and, if you really have to, comparison shop. Also, limit your credit card purchases to necessities as much as possible.

May 3, 2009

Number of People Sued by Credit Card Companies Increasing: Here’s What to Do If You Are Sued

lawsuit It’s difficult to track exactly how many debt collection cases for defaulted credit card debt are filed because they are filed along with all civil cases through the prothonotary’s office. Capital One, a credit card company known for lending money to individuals with less than perfect credit histories, have filed a large number of cases. In Lancaster, Pennsylvania, of 255 cases filed during the first three weeks of April, Capital One filed 45% of them (a total of 114). Neither the attorney representing most Capital One lawsuits in court, Paul Klemm, nor Capital One representatives returned phone calls from reporters regarding this issue.

Attorneys who have counseled clients facing bankruptcy or credit card defaults have stated that more credit card companies than ever before are attempting to recoup some of their financial losses by taking card holders to court. In previous years, credit card companies would sell off their debts (for pennies on the dollar) to debt collectors and collection companies. Lawsuits, if filed, would be filed by debt collectors – not the credit card companies themselves. Now that the economy has nosedived and credit card companies are having trouble finding buyers for their unpaid debts, they are becoming more aggressive about collecting on defaulted accounts themselves. A successful lawsuit means a greater recovery rate for the credit card company.

The credit card industry states that the changes made by the U.S. House of Representatives on Thursday, April 30^th, would cost the industry more than $10 billion per year in interest payments. The figure was obtained through a study by the law firm Morrison & Foerster. Changes to the credit card laws include restriction of interest rate increases and prevention of credit cards given to anyone under the age of 18.

If a creditor takes you to court, here is what you can do to build your case:

Prepare a Budget: list all of your monthly expenses and obligations from utility statements, invoices, receipts, and billing statements and show proof of your monthly income.

Document Medical Conditions: if a medical condition has made it difficult for you to keep up with your payments, or medical expenses are eating up all of your income, get documentation of your medical condition from your doctor(s).

Respond to the Court By the Due Date: do not ignore the situation as it will not go away. If you don’t respond to the court prior to the date listed on your letter, the creditor will automatically win due to your inaction. There are sample response letters you can use online, or call and talk to the court clerk for assistance in how to respond to the court regarding your credit card suit.

Document Changes: many people are unemployed or laid off at this time, which makes it difficult or impossible to pay your bills on time. Get documentation if this has happened to you. Other life changes can also contribute to the inability to pay for bills, from having a baby, becoming depressed, medical conditions, etc. If they can be quantified by doctors or employers, these are all viable reasons and should be mentioned in court.

Document What You’re Doing: If you’ve joined a debt relief solution, such as a debt management company or a credit counseling service, obtain proof from the company. This shows you aren’t just sitting back and skipping out on your bills and that you’re making an attempt to remedy the problem.