Money From Home - Debt Fixes
Everywhere you go it seems that people are talking about
the economy. How interest rates, home prices, gasoline, healthcare, and
food prices are going up. If our job incomes were also going up at the
same rate, at least we would be staying level. However, for most people
that is not the case. A car accident can even put a family’s budget a
risk. Because this and so many other factors, consummer debt has become
a major problem for a growing number of people. Let’s take a look at
some of the possible fixes and some a scam that many people are getting
caught in.
Debt Elimination Scams. Consumers seeking debt
assistance are faced with a bewildering assortment of debt companies,
services, programs, books, eBooks, and websites. So, how do you tell
the scams from the legitimate options? There is a new debt elimination
scam being seen on the internet. This scam is based on the bogus "no
money lent" argument, where the claim is made that credit card banks
cannot loan money legally. Through strange leaps of logic, the scammers
claim that credit card banks are actually operating illegally, and so
you never really borrowed any money when you used your credit cards and
therefore, you don't really need to pay anything back. You just have to
follow their system and the debts will go away. I couldn’t understand
how anyone would really believe this. These con artists are really very
convincing and start quoting federal code and such. For 15% of the
total debt, they will make it go away. About the only thing going away
here is more of your hard earned money and your credit. Then you have
all the creditors suing you for payment. Basically, the scammers are
telling you to walk away from your debts, don't pay, and duck and
cover. That's it. It's a lot of hot air and bogus nonsense. It only
works because debt-weary consumers are desperate for solutions. If you
have become the victim of a debt elimination scam, I urge you to take
action. Demand a refund in writing. Complain to the Better Business
Bureau where the company is located (assuming you can even find them),
complain to your state Attorney General and the Federal Trade
Commission. And then get on the phone with your creditors and explain
that you were misled and that you would like to work things out in good
faith. It may be necessary for you to formally retract any
documentation that the scammers sent to your creditors.
Debt Reductions Options. Let’s look at debt
consolidation and credit counseling. Debt consolidation allows you to
lower interest rates and payments on your own. Credit counseling can
help you find other ways to reduce your debt and develop goals for your
financial future. Debt consolidation is a quick way to reduce your
interest charges and monthly payments. With secure loans, like a
cash-out refinance, your rates can drop by half or more. You can also
select terms that give you a reasonable monthly payment. Remember
though that the longer the loan, the higher the total interest charges
will be. Selecting a fixed rate loan also gives you the security of
knowing what your payments will always be. Do your comparison shopping
for a consolidation loan. There are differences in rates and loan fees
which can mean savings of thousands of dollars. Online lenders and
broker sites can help you get a quote in just a few minutes. Credit
counseling uses several techniques and having an unbiased opinion
helps. As experts in debt reduction, credit counselors can help you
develop strategies for eliminating your debt. This might mean
developing a budget with a debt consolidation loan. Or they may suggest
using the services of a debt manager.
Credit counselors can point out areas where you can save money, such as
switching account holders. They also help you plan for the future by
developing a savings strategy. Credit counselors aren’t simply focused
on reducing your debt; they look at your entire financial picture.
Credit counseling is best for those who want to do a total makeover of
their finances. It’s ideal for those who want to make long term
changes, but need help in deciding what are their best financial
choices. For those who strictly want to get out of debt, consolidating
your loans is a good choice. In a short amount of time, you can save
yourself money with better rates.
Debt Settlement. (also called debt negotiation) is
another option. Debt settlement is a more aggressive strategy for
eliminating your debt. And it is not right for everyone. The process of
debt settlement is designed for consumers who are behind on their
payments, and wish to avoid bankruptcy. The consumer would make an
offer to pay off the balance at a reduced amount, often 40-60% of the
original balance. Why would a creditor accept such an offer? They get a
lump sum of money rather than monthly payments.
How do you know if debt settlement is the right strategy for you? For
anyone considering bankruptcy, debt settlement is a good alternative.
While debt settlement does get recorded on your credit report, it is
usually considered less damaging to your credit than bankruptcy. For
anyone behind on their payments, debt settlement is also a good option
to consider. Since late payments are already considered a negative mark
on your credit, settling your debts allows you to finally pay off the
debt. For anyone who just has not made any progress paying off their
debts, but still pays on time, debt settlement can be considered. While
the process of settling debts does work against your credit score, so
does a high amount of debt. So, keep in mind that the main benefit of
debt settlement is to pay off your debt as quickly as possible, saving
you money in both interest and in principal, and allowing for greater
financial flexibility. After all, having good credit is worthless, if
you don’t have any money to spend!
Bankruptcy. Many people who are overwhelmed
with debt think that filing bankruptcy is the easiest way out. If at
all possible, consider this the last alternative due to your credit
rating which can remain on the credit report up to 10 years. Creditors
will consider personal bankruptcy when evaluating you for a personal
loan. You may receive credit but only if a predetermined amount of time
has passed, or if the filing is no longer on your credit report.
Attaining a loan after you file for bankruptcy is more difficult and
could cost you higher interest rates. Each year more than 900,000
Americans file for protection under Federal Bankruptcy Laws.
Unfortunately, some are credit abusers or just not financially
responsible, but on the average, the person or persons filing for
bankruptcy relief are just average working individuals or families who
are trying to pay all of their bills. Somehow, they find themselves in
financial trouble. Be it the sudden loss of a job or income, mounting
medical bills, a divorce or even a natural disaster can quickly wipe
out a life's savings. For many, bankruptcy provides a second financial
chance. In some cases, it can shed tremendous stress and provide the
opportunity to rebuild from scratch. Generally, filing a bankruptcy is
a last resort. While it should not be entered into lightly, it may
prove itself to be a positive solution for you.
We have looked at several options being used today to either eliminate
or decrease your debt. These are very difficult and confusing decisions
for most people. If the best option for you is not readily obvious, I
suggest you consult a financial expert. Remember that saying, “If you
continue to do what you have always done, you will continue to get what
you have always got.”
Here’s to a brighter financial future,
Karen Kelley