Counseling / Consolidation Archives

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What To look For In a Consumer Credit Counseling Service

Today there are a large number of debt management plans and consumer credit counseling service
companies operating today. In fact, it may seem as though your mailbox, telephone and television are
littered with them. When choosing the right company for you; however, it is important to keep several
important tips in mind.

Determining if You Need a Consumer Credit Counseling Service

You may not even need a consumer credit counseling service. These questions will help you determine
if a consumer credit counseling service is applicable to your situation. First, realize that these
companies should really only be used if you have a serious debt problem and not what is considered to
be a small problem. So, how do you know if your debt problem is serious or merely small potatoes?
Well, one of the first indicators can be that your minimum monthly credit card payments are taking up
at least 15% of your take home pay. If you have more than one delinquent revolving credit account this
can also be a good indication that you have a serious problem. Other tips include maxed out credit limits
on all your cards and the need to take cash advances just to pay your bills.

So, if any of these scenarios fit you then you may determine that you do in fact have a serious debt
problem and would benefit from a consumer credit counseling service. Be sure to choose the right
company; however, by doing your research first. If you choose the wrong company you could actually
have a bigger problem than you started out with.

Always check to see what kind of rating the company you are considering working with has with the
Better Business Bureau. If their rating is unsatisfactory, look for another company.

Selecting the Right Consumer Credit Counseling Service

It is also important to always make sure you understand exactly what kind of fees they will charge. Even
though they claim to be non-profit, and most of them do, debt consolidation services are not free. They
must charge a fee in order to cover the counseling services and monthly processing. You should not pay
any more than $50 a month in service fees.

Try to get a feel for how much time they are willing to spend with you. Companies that promise a fast
enrollment generally won’t be of much help to you. Look for a company that is willing to spend some
time with you to make sure you understand everything and are comfortable working with them.
Make a point to find out what the payment schedule will be for your bills. After all, regardless of who
sends out the payment, you will still be responsible to your creditors and if they send it out late if will be
you the creditors call. Stay on top of things and make sure your payments are being mailed timely.

Finally, make sure any company you consider has been in business for at least ten year and are
accredited by the Council on Accreditation. You can also look at reviews online for consumer credit
counseling service companies.

Related Article: Using A Debt Settlement Company

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Debt Settlement – Using A Debt Settlement Company

Using a Debt Settlement Company Can Simplify Settling Your Debt

Have you considered using a debt settlement company? If you have found yourself with more debt than you care for or can handle you may be considering ways in which you can consolidate and/or pay off your debt. The term debt settlement is frequently heard in connection with debt consolidation; however, before you jump in feet first it is important to fully understand what is involved in debt settlement.

Basically, debt settlement is the process of eliminating outstanding debts. As much as 60% of your debt can be actually reduced using this process. A debt settlement company is used in order to negotiate the exact percentage with your creditors. This allows you to more easily pay off the remaining amount of debt.

You may ask yourself why any creditor would agree to such an arrangement. In reality, it is much cheaper than trying to collect all of the original debt through collection agencies and agents. Keep in mind that you do not necessarily have to be several months behind on your payments in order to settle your debts. Waiting until you are several months behind on the debt or even until you are the point where the creditor is threatening to sue you could mean that a large amount in late fees and financial charges have been added to the original amount, which means that even if you do settle the debt, the amount remaining will be more than if you had settled it earlier.

The Advantages of Settling Your Debt

There are actually a number of advantages to settling your debt. One of the most important benefits is reducing the total amount that is owed, especially before additional fees are accumulated to the original amount. In addition, if you use a debt settlement service for more than one account you gain the advantage of paying just one monthly installment instead of several payments. A debt settlement service also gives you the option to negotiate the repayment of your debt over an extended period of time. Generally, you can extend this period from about two to four years, perhaps even more, depending on your situation. For many people, one of the best benefits of debt settlement is avoiding debt collectors and harassing phone calls.

If you make the decision to settle your debt, always make sure you do your homework first in regards to the debt settlement company you choose. Check with both the Better Business Bureau and your state’s Attorney General to ensure you are dealing with a reputable company.

Related Article: Understanding A Debt Consolidation Loan

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Understanding A Debt Consolidation Loan

The facts for a debt consolidation loan

Unfortunately, many people wait far later than they should to consolidate their debt and manage it. One of the main reasons for this is that some people perceive debt consolidation to be negative when in reality it actually provides a number of advantages. Like any other important financial decision; however, you should fully understand the advantages and disadvantages of consolidating your debt.

First, understand that the process of consolidating your debt involves obtaining one loan to pay off all of your other debts and then paying off the single loan rather than the multiple loans. One of the major advantages you can gain through a debt consolidation loan is a lower interest rate.

Credit card companies frequently charge 18% interest or more, making it very difficult to pay off the original debt. A consolidation loan; however, can be obtained with a lower interest rate. This lowers your monthly payments making it much easier and affordable to pay them.

You should be aware if you are considering a debt consolidation loan that by doing so you are giving the consolidation lender the authority to take over all dealings with your creditors. The advantage of this; however, is that you no longer have to deal with it and can avoid further problems such as collection attempts.

Qualifying for a debt consolidation loan

Not everyone can qualify for a debt consolidation loan. In order to qualify you generally must have a steady source of income that you can use to repay the loan. Depending on the lender you may also be required to have either collateral or a co-signer. You will also need to turn over all information regarding your monthly budget, including expenses and income.

In addition, it is important to understand that not necessarily all types of debt can be consolidated with such a loan. Generally, the most common types of debts that can be consolidated with one loan include medical bills, credit card bills, department store cards, student loans, personal loans and checks that have bounced.

Like any other major financial decision there are certain facts you need to find out before you make a final decision. One of the most important decisions you must find out is how much will be charged for the loan. While it is quite common to pay a small fee, you should not work with any company that charges a large fee for a consolidation loan. You should also find out how much interest will be charged on the loan. Generally, it will be lower than what you have been paying. If the rate is higher, it will not benefit you much. Whenever possible, try to obtain a fixed interest rate. Finally, don’t forget to find out exactly how much your monthly payment will be and what kind of effect the consolidation loan will have on your credit.