Month: September 2013 | Debt Management Credit Counseling Corp.

Bankruptcy Facts

December 8, 2022September 25, 2013 by Aldo Gonzalez

While bankruptcy may be a life vest for most people drowning in debt, choosing to file is never an easy decision. For some financially distressed debtors, bankruptcy may not always be the best option.

Several events can cause individuals to lose control of their financial situation. Divorce, job loss, lawsuits, foreclosures or credit card debt can drive a person over the financial edge. Generally, filing bankruptcy allows people who are having financial difficulties to wipe out their debts. In most cases, people filing bankruptcy can keep all of their property. Thus, bankruptcy helps people wipe out their debts, keep their property and get a fresh start.

Many people filing for bankruptcy have accumulated a huge credit card debt and in some cases are trying to prevent a foreclosure on their home.

Ten Years of Bad Credit

Although bankruptcy can wipe out all unsecured debts through an order of the court called a discharge, bankruptcy information remains on a credit report for 10 years. Any negative information that appears on a credit report may prevent an individual from buying a home or car, or from obtaining a credit card or loan.

Bankruptcy serves two main purposes:

1. It gives creditors a fair share of the money that the debtors can afford to pay back.

2. It gives debtors a fresh start.

There are two ways in which bankruptcy can provide for payments to creditors and a discharge for debtors – Chapter 7 and Chapter 13.

Chapter 7

In a Chapter 7 bankruptcy, known as the liquidation chapter, debtors give up certain property when they file for bankruptcy. A trustee appointed by the court sells the property and uses the proceeds to pay the creditors. A trustee is usually a lawyer or accountant who specializes in bankruptcy cases. The debtor receives a discharge shortly after the case is filed.Debtors are allowed to keep any money earned after filing for bankruptcy, as well as most other property obtained after the filing. Under this chapter, all unsecured debts are wiped out. These debts include credit card bills, medical and legal fees, utility bills, deficiency balances (the difference between the amount owed and the value of the property), loans from friends and some student loans.

There are some debts that cannot be discharged through the bankruptcy process. These debts, known as non-dischargeable debts, include alimony, child support, some student loans, certain federal, state and local taxes, debts from fraud, larceny, theft, and fines and penalties for items worth over $1,000.

Chapter 13

Chapter 13 is designed for individuals with regular income who want to pay their debts but are currently unable to do so. The purpose of this chapter is to help individuals, under court supervision and protection, to propose and carry out a repayment plan under which creditors are paid over an extended period of time. Under this chapter, debtors are permitted to repay creditors in full or in part, in installments over a three-year period.

Try the following measures before declaring bankruptcy:

• Control spending, either with the help of a credit counselor or a debt consolidation plan.

• Set up repayment plans with creditors.

• Get credit counseling and learn about financial management.

Most experts advise against filing for bankruptcy and recommend finding alternative ways to pay off debt. Most consumers should try paying off their debts through a repayment plan before choosing bankruptcy. These types of programs will teach the consumer ways to reduce expenses and save money.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt. Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email contact@dmcconline.org.

Organize Your Finances And Do Your Research

December 8, 2022September 22, 2013 by Aldo Gonzalez

If you are considering debt consolidation or consumer credit counseling agencies for credit help, start by getting your act together. Organize your finances and do your research. You will begin to learn the skills you need to fix your money problems and avoid getting in this situation again. Your active participation is key in the success of your financial future.

Visit a credit counselor. There are credit counseling companies who help consumers by offering debt reduction plans to tackle debt. An advisor will work with you to lay out a plan to repay your loans. The counselor will negotiate with lenders on your behalf for the lower rate which, in turn, will reduce your monthly payments as well as keep your credit rating intact. Read the fine print to make sure you understand any fees involved; make sure that your credit rating is not adversely affected too.

Credit counseling is all about you and your financial situation. Make sure to ask the credit counseling organization about what type of customer service they provide. Credit counseling organizations should have someone available for you to talk to during all business hours of the day. Be sure to ask about counseling fees and the type of management and education programs they have in place.

Use cash as much as possible. Paying with cash has a more significant psychological impact than plastic. It feels like you’re spending more money so you spend less.

If you want something, save for it and then buy it. You should only finance items that are absolute necessities (home and car). Don’t finance furniture, small appliances or vacations. If you can’t afford to pay cash for it–you can’t afford it! Also, paying cash for items is a safe way to avoid any financial errors and bank fees. If you only take $50 to the store, that’s all you can spend.

When paying down debt remember: Minimum payments lead to the maximum amount of money paid over time. Paying more than the minimum applies more money to the balance, which decreases the amount of money you will end up paying overall.

If you are going to use any settlement companies be sure that they are registered members of the BBB (Better Business Bureau) and that they have little to no complaints. And if there are any complaints make sure then were resolved to the clients liking.

Chronic spending and debt can be a harmful habit, just like alcoholism or any other addiction. Consult a professional and/or Debtors Anonymous if you feel you might have a problem.

Make Getting Out Of Debt Your #1 Priority

December 8, 2022September 18, 2013 by Aldo Gonzalez

Although it is extremely easy to get into massive amounts of debt very quickly, it takes time, discipline, and commitment to get out of debt. You have to make a life-changing decision that you no longer wish to be in debt because getting out of debt is going to affect every area of your life.

The first thing you need to do is to complete a spending inventory to find out where you are right now. A spending inventory is simply a list of everything you spend for an entire month, whether by check, charge, or cash. This will help you locate the waste in your budget. Most everyone can find $100 to $200 a month in wasteful spending that can be cut. This additional money can be used in your plan to get out of debt.

When you make getting out of debt your top priority, it affects your thinking, decision making, and habits. If you usually walk around the mall at lunchtime and end up compulsively buying things, then you will no longer go to the mall. Instead, you will take a brown bag lunch to work or eat in the company’s cafeteria. You will begin to analyze every purchase to decide if it is really necessary. You will cut unnecessary expenses and learn to live frugally. It’s important, as you start your plan of action, that you do not incur any new debt. Begin to only purchase things that you can pay for in cash.

One of the biggest benefits of being debt-free is peace of mind. You will no longer have to be stressed out about money.

DMCC Providing Homebuyer Education Workshop to South Florida Hispanic Community

April 24, 2015September 17, 2013 by jstokes

Debt Management Credit Counseling Corp (DMCC) (http://www.dmcconline.org), a nonprofit organization, is providing a Spanish language homebuyer education workshop in Boca Raton on September 21, 2013. Attendees will receive credit towards completion of the homebuyer education required to qualify for various financial assistance programs.

Ways People Waste Money

December 8, 2022September 14, 2013 by Aldo Gonzalez

Wasting money is not only detrimental to your overall financial well being, it’s irresponsible. Your house and living expenses make up the major portion of your personal budgeting plan. If you are not careful, they will leave you with little or no money to build financial security, or play with. Just like spending cash unnecessarily, paying for home expenses that are unnecessary is just wasting money. Here are some ways people waste money on household expenses.

Paying for the same service twice.

Most households subscribe to cable T.V. A good portion of cable subscribers also pay additional money for one or more movie channels. It’s not unusual for these same families to rent movies from video stores and/or subscribe to a movie service via mail. In this scenario, there are now three resources included in the household budget for movie viewing entertainment. Which, by the way, is technically a discretionary expense, not even a necessary expense.

You can save by trimming down this expense to one good service that best meets your family’s movie entertainment needs. List and analyze your movie viewing options. Determine which service gives you the most benefit for your money. Then, make an informed decision on which service to keep. Reducing this household expense could save hundreds of dollars per year.

Paying for services that you don’t use or really don’t need.

This is most common with home phone services. Features like call waiting, caller ID, return call service, long distance packages, etc, etc, etc. are extra expenses that you could possibly live without. Is the convenience of caller ID worth a fee of nearly $8 per month? Do you really need it? Eliminating little money leaks like this adds up to significant yearly budget savings. Review all of your household expense bills to see if you’re paying extra for services you don’t need. Eliminate extra services and the fees that go with them whenever possible.

Sometimes making lifestyle changes can reduce expenses significantly. You can minimize costs on essential household expenses by simply being more aware. During Summer months, don’t turn on the air conditioner until you can’t take it anymore. Not using the air conditioner will save the most on home energy expenses. Many gas and electric providers offer energy efficiency evaluations for your house, free of charge. Take advantage of this service to see where you can make home improvements that could mean substantial savings in energy costs. They may also offer suggestions for lifestyle changes that can reduce energy expenses even further. During winter months lower your thermostat a few degrees and dress warmer if necessary.

Review, remove, and reduce expenses to stop wasting money and trim your household budget. Analyze each household expense for necessity and the costs associated with it. Make an effort to reduce each expense to the minimum amount possible, while still meeting your family’s needs. Before you know it you’ll be saving hundreds, if not thousands, of dollars on your household budget expenses each year.

Use Budgeting To Reduce Debt

December 8, 2022September 13, 2013 by Aldo Gonzalez

Many Americans live their daily lives without a budget, possibly why the average American household is over $8,000 in credit card debt. People in these difficult financial situations often say that the reason they have fallen upon hard times is because they do not make enough money. More money does not always solve the problem; more money often leads to more problems. The real solution to financial problems is planning, or budgeting.

With a little knowledge and effort, anyone can begin creating a budget to reduce their overall debt.

First, stop adding debt upon debt. It’s of the upmost importance that you quit accruing debt immediately. Use cash for your purchases, not your credit cards. If you can’t pay cash, you don’t buy it. Period.

Next, figure out how much you pay per month total for all of your expenses. This includes rent/mortgage, car payments, car/home insurance, utilities, credit card debt, other personal loan debt, food, gas, Internet, cable television, clothes, eating out, and entertainment – everything.

Now, determine your total income. Subtract this total from your monthly income total. Where do you stand? Are you comfortably in the positive, or barely? Or are you in the negative?

If you’re barely in the positive, or if you’re in the negative, it’s time to reduce your overall expenses.

What can you get rid of? Eliminate extraneous expenses. Also, shop around for better telephone rates, cell phone rates, and insurance rates. Make changes where you can.

Phone your credit card companies and try to get your interest rates reduced; sometimes they’re even willing to negate past due and over the limit fees. Consider contacting a non-profit credit counseling company. Debt consolidation or debt settlement might be a consideration for your situation. Your goal here is to reduce your overall debt from your credit lenders.

If you shift your focus from short term to a long term point of view, you will find that you will eliminate many of your wasteful spending habits. Furthermore, you may find that you are saving money for a rainy day, possibly even investing. Once your financial maturity reaches this point, you will no longer fall prey to life’s unexpected expenses. This is the only way to reach financial independence.

Credit Card Debt Relief Act 2010

December 8, 2022September 9, 2013 by Aldo Gonzalez

Many Americans are struggling with out of control credit card debt. As a result, several debt relief options have been introduced to the market including debt consolidation, debt settlement, and credit counseling. The Federal Trade Commission (FTC) recently passed provisions regulating the credit card debt relief industry, mainly targeting for-profit debt settlement companies. Many of these companies promised they could help consumers “cut credit card debt in half”. The problem was, however, that there was no guarantee for consumers, many of which had to pay large upfront fees to the debt settlement companies. Too many of these companies, instead of leaving consumers better off, push them deeper into debt, even bankruptcy.

The Credit Card Debt Relief Act 2010 prevents settlement companies from charging heavy fees even before the completion of the deal. This legislation is intended to provide significant protection for consumers who enter into a debt relief program and stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.

The purpose of the Act is to give consumers with over $10,000 in unsecured debt, who are facing financial hardship, a real and legitimate option for achieving debt relief. Since creditors and card issuers receive nothing in a bankruptcy filing, they are eager to work with genuine debt settlement companies to collect at least some of their money back.

Other provisions of the Act require settlement companies to specify to the defaulter exactly how long the total process will take and also the cost in such a circumstance. Moreover, the borrower can, at any point in time, choose not to continue with the program and in such a case, all his or her funds have to be refunded. The FTC debt settlement provisions also make it mandatory for the companies to inform the concerned customer about the negative effects, if any, of going for such a program.

Will these new regulations put legitimate debt management companies out of business along with the abusive, deceptive, and unfair debt companies? It’s very possible that this Act will have a detrimental effect on consumers, leaving many of them to resort to bankruptcy instead of debt management. Although the intention of the FTC is to protect consumers, it’s yet to be seen if the Credit Card Debt Relief Act will achieve the Commission’s desired result.

Avoiding Bank Fees

December 8, 2022September 3, 2013 by Aldo Gonzalez

Watch Out for Those Overdraft Charges

Have you ever looked at your bank statement and felt like screaming at the top of your lungs? Do you feel like you are throwing money out the window? Maybe you purchased an item for $197.99 and you have $197.85 in your checking account. Congratulations, you have mastered the art of bouncing a check! Most banks will charge you anywhere from $30 – $36, for being short 14 cents. This has probably affected almost all consumers at one time or another.

According to a recent National Public Radio story by Chris Arnold, banks have always explored new ways to debit money from their customers. Almost all banks have adopted the policy of cashing your biggest transactions first, such as mortgage or car payments. This information will be provided in the terms and conditions of your account or in the account agreement. Here is a direct quote from a banks policy statement:

“When processing withdrawals from your account, such as those made through checks, in-person withdrawals, Automated Teller Machines, point of sale, or by any other electronic means, it is our policy to pay the largest item first.”

Let us assume you have $500 in a bank account and in one day, the bank debits your account for three of your checks and a cash withdrawal at an ATM. Chronologically, your account would be debited as follows: Check #1 for $25, Check #2 for $40, ATM debit for $22, and check #3 for $495, totaling $586. If the bank cashed the checks and ATM charge in the order they were processed, you would be charged only one overdraft fee ($30) for check #3 ($495). Instead, the banks clear the largest check first. By doing this you will be charged three overdraft fees totaling $90. This has been an expensive day.

How to Avoid Overdraft Fees

Overdraft fees are not only costly, but also aggravating, so learn how to use all the tools at your disposal to manage your accounts and avoid these charges. Most banks have a toll free automated system that provides 24-hour account access. You can check your balance, verify what payments have been processed and which checks have cleared. Most FDIC institutions offer online banking services as well, so take advantage of your banks website. Some banks can even issue alerts to your email or cell phone when bills are due and can automatically issue payments each month for your regular expenses, like car loans or mortgage payments. Almost all of the online banking services will archive your purchases and bill payments. This can help you keep track of which bills you have paid and on what date. Also, if you have the possibility to use a direct deposit feature through your employer, take advantage of it. Getting your paycheck transferred directly into your bank account can help tremendously. If using the internet is inconvenient, then just keep a small calculator with you and log each transaction into your checkbook. The most important part is to deduct every purchase from your total balance to avoid those overdraft charges.

I Keep Getting Overdraft Fees

The good news is that most institutions have some kind of overdraft protection plan. Overdraft protection is a service to help you prevent from exceeding your checking account balance with purchases. By being enrolled in overdraft protection, funds from a savings account, money market account or a line of credit can cover the amount of the transaction not covered by your checking. Most institutions offer this service free of charge for signing up, but can assess fees up to $25 for each overdraft. So if you are tired of acquiring overdraft charges and you have tried tracking your purchases, it may be a good idea to contact your institution to see what they have to offer for overdraft protection.

Facts About Debit Cards

December 8, 2022September 2, 2013 by Aldo Gonzalez

Debit cards also known as check cards, ATM cards, and express checking cards can be used to withdraw cash from your bank account via ATM and make purchases without using credit. They look similar to a credit card and work by taking the money directly out of your bank account.

Two types of Debit Cards

A traditional debit card is issued through your bank and requires a personal identification number, or PIN, to complete a transaction. A PIN-based or direct debit card removes a purchase price from your checking account almost immediately. These kinds of debit cards are accepted at gas stations, supermarkets and stores such as Wal-Mart, Walgreen’s and Target. A deferred debit card is also issued through your bank but bears a logo of a major credit card company. To use it you can enter a PIN or sign for the purchase as you would with a credit card. A signature-based or deferred debit card has a Visa or MasterCard logo. These cards are accepted anywhere Visa and MasterCard are accepted. Just hand the clerk your card and sign a sales slip and you’re done. The purchase amount will be removed from your bank account in two or three days. When you swipe your card through at the checkout line, you’ll be asked if you want to pay by debit or credit. If you hit “debit,” you’ll need to input your PIN number. If you hit “credit,” you’ll need to sign the sales slip.

PIN offers the best protection

Some consumer experts urge people to choose PIN-based, direct debit cards only. With a PIN-based debit card you have to know the PIN number to make a purchase. With a signature-based debit card, anyone could pick up the card and sign your name to it. It may limit the number of places you can use it. But that’s the tradeoff you make for extra security.

Return policies can vary

According to the ABA many merchants treat a debit card purchase as they would a personal check or cash. This means you may get several hundred dollars in store credit instead of a refund for debit card purchases. So as a dissatisfied debit card customer you’re pretty much stuck trying to resolve the dispute with a merchant on your own. It could go on for weeks or months and when it’s all said and done you may not get your money back. When you make a purchase with a credit card you have the option of withholding payment should you be unsatisfied with the quality of an item. This right is protected under the Fair Credit Billing Act. This federal law does not apply to debit card purchases. In summary it makes sense to use credit cards when ordering merchandise from the Internet or a catalog or for big-ticket items or expensive services. Debit cards are a great way to pay for everyday items such as gas or groceries. A debit card can also be a good money management tool if you’re diligent about recording every single transaction in your checkbook.

Fees

According to the Wall Street Journal one in five banks add a charge for each transaction completed by entering a PIN. Other fees are levied for minimum balance requirements, ATM use or even for having the debit card itself. The Board of Governors of the Federal Reserve estimates that 15% of all consumers with debit cards are subject to debit transaction fees. Therefore when you chose a debit card first find out what kind your bank offers and ask about the fees. If you chose to have overdraft protection, please refer to the overdraft protection article from DMCC for additional information.

Automobiles: Buying vs. Leasing

December 8, 2022September 2, 2013 by Aldo Gonzalez

There are many things to consider when deciding whether to buy or lease your next new automobile. To help you decide, we are reprinting an excerpt from www.leaseguide.com, with their permission. This website will give you the answers and information necessary for you to make an educated and informed decision.

Leases and loans are simply two different methods of automobile financing. One finances the use of a vehicle and the other finances the purchase of a vehicle. Each has its own benefits and drawbacks. It’s not possible to simply say that one is always better than the other because it depends on your own particular situation and preferences.

You must not only look at the financial comparisons but also at your own personal priorities. Is having a new vehicle every two or three years with no major repair risks more important to you than long-term cost? Are long-term cost savings more important to you than lower monthly payments? Is ownership more important to you than low upfront costs and no down payment?

Buying and leasing are different.

When you buy, you pay for the entire cost of a vehicle regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company. You make your first payment after you sign your contract.

When you lease, you pay for only a portion of the vehicle’s cost, which is the part that you “use up” during the time you are driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases you may also pay extra fees and possibly a security deposit that you do not pay when you buy. You make your first payment at the time you sign your contract.

If you lease a car that costs $20,000 but is worth only $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), the finance charges, and additional fees. When you buy, you pay the entire $20,000 plus finance charges. This is fundamentally why leasing offers significantly lower monthly payments than buying.

Lease payments are made up of two parts: a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle’s value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you are driving it. The principal pays off the vehicle purchase price, while the finance charge is loan interest. However, since vehicles depreciate in value by the same amount regardless of whether they are leased or purchased, part of the principal charge of each loan payment can be considered as a depreciation charge, just like with leasing. It is money you never get back, even if you sell the vehicle in the future.

The remainder of each loan principal payment goes toward equity. It is what remains of your car’s original value at the end of the loan after depreciation has taken its toll. Equity is resale value – what you get back if you sell the vehicle. The longer you own and drive a vehicle, the less equity you have.

So, buying a car with a loan is essentially like putting money into a declining-value savings account. You never get out as much as you put in. A portion of every payment you make is lost to depreciation, a terrible investment by any measure.

Leasing is similar to buying but without the “savings account.” You only pay for what you use. It is true that you’ll own nothing at the end of a lease, but what you do not own is the same part of the car – the depreciated part – that a buyer also does not own at the end of his loan.

There are hidden cost differentials to consider. Automobile insurance options may differ when you lease rather than own a vehicle. When you purchase a new vehicle and sell it or trade it in you will receive a dollar amount that has been determined by means of a book value. When you return a lease vehicle, although the dollar value has been determined at the time you signed the lease agreement, you may be assessed other costs (i.e. excessive wear and tear, mileage beyond the agreed terms, etc.). You will be liable for these cost at the termination of the contract. Therefore, it is imperative you review all documents before you sign the agreement.