Things To Know About Debt Consolidation

Debt consolidation is a way to collect all your individual debts and lump them into a single loan. It works well to combine overdraft, credit card, and automobile loans. By consolidating your debt you only make one payment to one creditor. Usually, you can negotiate better terms, a lower interest rate, and quicker payoff times. But is debt consolidation always the best idea for you?

When you consolidate your debt make sure you know if it is an unsecured or a secured loan. An unsecured loan is like a signature loan or a good will loan from a friend. You are not required to put anything on the line to guarantee the loan in the event you don’t pay. Money is loaned to you solely on your ability to repay. A secured loan requires that you offer a piece of collateral as insurance, in order for the bank to lend you money. That collateral could be your house, your boat, or a sum of money in an account. If for any reason you don’t pay the loan back, or default,  the bank has every right to take whatever you may have secured the loan with.

It is also important to know whether the interest rate on your loan is fixed or variable. A fixed interest rate remains the same until the loan is paid off. The interest rate you start out with will be the interest rate you end with. If the lender’s rates go up and down, it doesn’t matter, because you will have a fixed interest rate. The other type of loan is the variable interest rate. These usually have an introductory offer. The offer can last anywhere from three months to five years. After the offer expires your rate will adjust to a new rate. These loans are popular because the introduction rate is so much lower than other rates. It’s tempting to get a variable rate, but it’s a risk because ultimately you can be negatively affected by rate changes. Consider these carefully.

When you consolidate your debt, look at the bottom line. Many people don’t realize that their debt can cost them 200% more after they’ve made payments over time. The car you bought for $15,000 could end up costing you $45,000 in the end. If possible, get an amortization table on your loan. This will tell you how much interest and how much principle you are paying with each payment. If you can make more than the minimum payment on your loan, you will get out of debt quicker and cheaper.

As with many life choices, the more you know about your financial options, the more likely you’ll be to make the right decision.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Organize Your Finances And Do Your Research

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.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Use Budgeting To Reduce Debt

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.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Credit Card Debt Relief Act 2010

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.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Advice For Dealing With Creditors

At one time or another, all of us have forgotten to pay a bill or fallen behind on payments to credit cards, mortgages, autos, medical bills, or other situations involving bills. We have all therefore been contacted by a bill collector, ether through the mail or telephone call.  Some these calls and correspondence can become a terror attack from creditors.  Some creditors call at all hours at home and work. Some even may call the neighbors, the family, and/or employers.  Some collectors can be obnoxious, condescending and downright rude.  Despite laws governing their actions, many creditors and collection companies feel that an individual will not have the time, money or emotional strength to pursue them in court.  Therefore, they get away with the outrageous and, sometimes, illegal acts.

If you have filed bankruptcy, and received an automatic stay, it is against the law for the creditor or his collection company to contact you without permission of the Bankruptcy Court. If your case is discharged, then creditors and their collection companies are permanently barred from contacting you unless they have received special permission from the Bankruptcy Court, or your debt is one that is excepted from your discharge.

If you have entered into debt consolidation or debt settlement with a non-profit debt counseling service, make sure you know your rights for protection from creditor calls from your representative.

You have other legal rights which protect you against certain collection practices.  First, you should know what to do when you start getting bills. If you feel you do not owe the debt, or the amount the bill collector is claiming is incorrect, you should write a letter to both the collection company and the original creditor stating you do not agree you owe the money, or that the amount owed is incorrect. You should also ask for a record of your payments.

If the bill collectors report the debt to a credit reporting agency, you should write to the credit reporting agency and tell them the bill is in dispute. Whenever you write to a bill collector or to the reporting agency, you should sign the letter, date it, and keep a copy for your own file. Remember, just calling the bill collector to say you do not owe the money may not leave a permanent record of the call. Like most bureaucracies, if it is not in writing, it does not exist.

You can stop annoying collection. If the collectors continue to call you, you can send them a letter requesting they cease communication with you under the terms of the Fair Credit Collection Practices Act, 15 U.S.C.S. Section 1692. When you write your letter, do not forget to date it, sign it, and keep a copy. If you really want them to pay attention, send the letter CERTIFIED.    By sending the letter CERTIFIED, you have proof that you sent the letter. If you send this letter, it will not only stop letters to you, but will also stop telephone calls to you.

Also, The Fair Credit Collection Practices Act forbids bill collectors from calling you at inconvenient times, such as before 8:00 a.m. or after 9:00 p.m..    The collectors or agents cannot communicate with third parties such as your neighbor, your friend, or your family members. They cannot contact you at work if they know (notice must be in writing) that your employer prohibits it.  They cannot threaten you with criminal prosecution or call you on the phone repeatedly with the intention of harassing you.

Document all your discussions and communications with any debt collectors. If the collection company continues to ignore your warnings and refuses to comply with the law then you could sue them.  But their behavior must be truly offensive, not just annoying.  You could bring an action in small claims court, or hire a lawyer.  But, you must have proof of their actions in order for any court to find in your favor.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Don’t Succumb To Financial Stress

Financial stress is common if you are facing economic distress as a result of a lost job, divorce, death in the family, or being over your head in debt. This can lead to feelings of insecurity, fear, anxiety, anger, and depression.

These feelings can cause you to continue to make poor money management decisions. These poor decisions can lead to even heavier debt loads, and start a vicious cycle that never seems to end.

If you reach the point where your feelings of helplessness and hopelessness become overwhelming, get the help you need. Talk to a friend, loved one, your doctor, pastor, a debt counselor , someone.

No situation is hopeless. With just a little guidance, a few well thought out goals, and emotional support from family and friends, you can take steps in the right direction. As with many obstacles you overcome in life, you will emerge with a new outlook, new skills, and best of all, a new feeling of self-esteem.

You may want to consider debt consolidation or debt settlement to pay off your credit cards. One payment, usually a lot lower than your credit card payments, can help you get back on track.

The well being of you, and your family, has to be your priority during times of financial stress. Make the decision now to learn how to cope, to make the changes you can, to stay focused and goal-oriented, and to let anxiety and financial stress go.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Goal Setting Your Way Out Of Debt

Everyone talks about the importance of setting goals, but how many people really understand the process of effective goal setting? Goal setting is the foundation for both personal and professional growth and should rank high on your priority list, especially when it comes to the area of finances. If you are in debt, ignoring it is not going to benefit you. You must first asses your situation so you can determine what your options are.

If you are barely getting by financially and have no money in savings, contacting a credit counselor, who can offer advice on how to manage outstanding debts and answer related credit questions, may help you head in the right direction. You may want to consider entering a debt management program to allow credit counselors to negotiate with your creditors for lower balance, no fees and a lower rate of interest. If you have over $10,000 in unsecured debt, you may qualify for debt settlement. Bankruptcy, although a last resort, may ultimately be your best alternative. Whatever your situation is, the first step is to determine the best path for you. Only then can you begin to set realistic goals that will give you your desired results.

Once you’ve achieved this, you are ready to set your goals. Start by prioritizing which goals you’d like to focus on immediately. Goals should be specific, measurable, action-oriented, reasonable, and timely. You should have laser focus on what you want to achieve, how you are going to achieve it, and when you expect results.

Another important aspect to successful goal planning is positive language. Too often goals sound like painful work! Instead of a “to-do” list, how about an “action list” or “an action plan”. Instead of thinking in terms of what you don’t have, celebrate what you do have. Proper language should inspire, motivate and give you solutions, not cause you stress and be something you dread.

Breaking a goal into manageable steps is another helpful tool. Often we set goals, get overwhelmed, and give up. If a goal seems too big, pump it into steps that are achievable, but still challenge you.

Plan your weekly and daily goals and rank them in order, from most critical, to least. Your goals should consistently be rotated up the priority level and to accomplish them more efficiently.

Finally, visualization is an amazing tool to have in your toolbox when it comes to goal setting. Seeing yourself debt free is a powerful motivator that will keep you energized and on track.

Whatever debt relief solution you decide to embark upon, goal setting is an important component in the success of your venture.

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. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.