Recently it was reported that over 30,000 people became insolvent in England and Wales during the first three months of 2007 - a new record. Levels of consumer debt also represent a problem in the U.S.
The root of the trouble is that financial institutions are making it too easy for people to spend beyond their means. We are bombarded with offers of loans, overdrafts, credit cards, store cards
Its all too easy to hit the shops snapping up every offer we come across in the safe knowledge we can take it home today and pay (some time) later. Trouble is, when that day comes too many find it beyond their means and seek to take out further loans - and so the problem grows
Prevention is better than cure. The golden rule, expressed so eloquently by Dickens through the words of Mr Micawber, is: Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Or more simply, spend no more than your income.
Credit cards are a great invention. Theyre highly convenient, avoid the need to carry too much cash and used properly allow us a discount on expenditure in the form of a (short-term) interest free loan. But the key to effective credit card use is DISCIPLINE.
If you do find yourself getting into debt that you think you cant manage - do something about it. Tighten you belt, move your debt to the lowest available interest rate, talk to your creditors, get advice but dont whatever you do ignore it.
If you really cant meet your repayment commitments there is an alternative to bankruptcy. It involves coming clean with your creditors and reaching an agreement with them as to what exactly you can pay. Very often creditors are open to such arrangements as it is better for them to recover some of their money than the likely zero theyd get in the event of your bankruptcy.
August 3rd, 2007
Individuals often feel overwhelmed when they come to a point in life where they must ask for help from a credit counselor or debt management specialist. Without some specific guidelines to assist them along the way, many may make poor decisions and, in the long run, only compound their original financial problems. But what is debt management, and what does it really involve?
Debt Management, defined simply, is a process by which debt is eased and eventually reduced through the managing of consumer assets and direct negotiation with creditors. Debt management is usually offered by qualified debt counselors or a certified debt management company. These debt management companies use what are called debt management plans (DMPs) by which consumers deposit set funds each month into specific accounts that are then used by the debt management company to pay off consumer credit card bills, student loans, medical bills or any other form of unsecured debt.
Choosing a debt management provider is not something that should be taken lightly. What do you look for when choosing a credit counselor or debt management firm? There are dozens of factors to consider, but these 7 key rules to choosing a credit/debt management firm can make the process less stressful and may get you much closer to financial comfort faster and easier then you ever thought possible.
1. Get a Referral Ask someone who has been in a similar situation. Take time to ask questions, to determine if they had a good experience with a particular firm or a bad experience. Getting information directly from another consumer who has used credit counseling or debt management in the past is an excellent way to learn before you agree to pay for services. In addition, a reputable company should be willing to provide examples of good results, without revealing another person’s private information.
2. National Accreditation While no specific national or state accreditation will guarantee success, there are organizations in the U.S. with the soul purpose of promoting high standards and ethical practices in the consumer credit industry. The American Association of Debt Management Organizations are one of the most prominent in this industry. Members of this organization specialize in credit counseling, debt management plans, budget/finance industry education and much more.
3. Better Business Bureau Membership Contact the Better Business Bureau in your city or region and ask for information about the credit counselor or debt management firm you are considering. You may also want to talk to someone in the State’s Attorney or Attorney General’s office to see if the company has been the subject of any regulatory action. Finally, if the firm in question has a website, check to ensure its a member of the online arm of the BBB and has been awarded its coveted Reliability Program Online Seal.”
4. For Profit vs. Non-Profit Experience Many consumers have a misunderstanding about Not-For-Profit debt management companies vs. For-Profit companies. They both offer concessions for the consumer whereas some states require non-profit status before the company can do business in the state. Credit card companies fund most Not-For-Profit credit counseling companies with Grants and Fairshare deductions as a way for them to recover money from consumers who are currently not making their payments. The biggest difference is that a Not-For-Profit does not pay taxes whereas a For Profit does. Study the company carefully to see if it uses “non-profit” status simply as a marketing tool.
5. Excessive Costs - In recent years, credit card companies and other lenders have reduced some of the funding for credit counseling. This has led counseling firms to increase their fees. Some of these increases are reasonable, but consumers should be careful not to get involved with a company that charges a large upfront payment just to establish an account. A baseline of $50 per month is a good guideline for an initial new debt management plan. In contrast, a credit counselor or debt manager should probably not charge a fee of more than $100 to establish your account and negotiate with your creditors. Some companies will waive their initial enrollment fees entirely if you can’t afford them.
6. Real Education Try to find a credit counselor or debt management professional who is sincere about giving you information that will help you deal with financial problems. You should not have to pay extra for CDs or videos that require you to learn on your own. If the person you are talking with does not or cannot provide satisfactory answers to your questions, find another company.
7. A Written Plan A reputable credit counseling firm or debt management company will take time to review your situation, help you with budgeting and money management, and put your individual plan in writing. This personalized plan should include details on how creditors will be paid, as well as realistic goals for returning you to full financial health. Some firms even offer a free debt comparison quote which is an excellent way to see how much money you can save, what your new interest rate may be and how long it will take you to get debt free on your debt consolidation program right out of the gate. Unrealistic promises should not be part of the plan. For example, a debt management or credit-counseling firm does not have the authority to change your credit report nor should it ever imply it has done so in the past.
Coming face-to-face with financial trouble may seem to be more than you can handle, at first blush. Fortunately, there are many reputable credit counselors and debt management companies out there who can help get you started again in the right direction. Following these 7 simple guidelines when choosing a firm will go a long way in ensuring your final choice is also the best choice for your current financial circumstances.
August 3rd, 2007
Having multiple debts is certainly not a pleasant situation to be in. If you are suffering from multiple debts and want to get rid of them then take a debt management advice. With the help of debt management advice you can pay off all your multiple debts.
There are many banks, financial institutions and lending firms that offer debt management advice. Debt management advice helps you to consolidate all your debts into one. This way you have to pay only one monthly installment instead of many. Also it helps you to get rid of nagging calls of your creditors. Company offering you debt management advice may suggest you to opt for debt consolidation loan. With debt consolidation you will be accountable to only one lender instead of many. If you are having many credit cards all with high interest rate, you can merge all of them into one credit card with zero or very low interest rate with the help of debt consolidation loan. Debt management advice can also be availed by people suffering from bad credit status due to arrears, defaults, CCJ, IVA, bankruptcy etc.
Company offering you debt management advice will also suggest you the names of lenders for availing debt consolidation loans. Debt consolidation loans are both secured and unsecured. You can choose either secured or unsecured debt consolidation loan depending upon your needs. Secured debt consolidation loans can be availed by placing collateral against the loan amount. On the other hand unsecured debt consolidation loans can be availed without placing any security.
You can avail large amount of money with secured debt consolidation loans but if you require an amount less than 25000 then unsecured debt consolidation loans are best for you. With debt consolidation loans lender not only offers you good amount of money but will also negotiate with your previous creditors in order top reduce the interest rate of your loan. Financial experts on behalf of your lender will help you manage your debts and tell you ways to control your expenditure so that you dont get trapped in multiple debts in future.
There are various banks, financial institutions, lending firms and non profit organizations that offer debt management advice. You can avail debt management advice easily for a very low fee. You can use internet to search for lenders offering debt management advice.
August 3rd, 2007
