Trying to juggle a large number of high interest debts can prove very stressful and difficult, and these days, with consumer debt spiraling out of control, many people and households have found themselves struggling with an array of loans, credit cards, and other forms of credit. If your bills and debts and piling up, and you are looking for some form of debt relief, a professional counceling or consolidation could be the ideal solution for you.
Debt relief consolidation can really help in a number of ways:
* You can wrap up all of your higher interest debts into one lower interest loan.
* You will also find it easier to manage your finances because you will only have to make one monthly repayment rather than a number of repayments to a variety of creditors.
* A credit consolidation loan is available on both a secured and unsecured basis, so you should be able to find one that suits your needs and your pocket. By taking out this type of finance to clear your debt loans, cards, catalogues, outstanding bills, and other forms of credit can all be paid off, leaving you with just one loan to deal with.
* Debt and bill consolidation can really reduce the amount you have to pay out each month, thus relieving the stress and worry of dealing with your debts.
An alternative to consolidation
For those that do not wish to consolidate their debts or those unable to take out another loan due to their financial status or credit history, there is an alternative that can also prove very effective. Debt relief companies specialize in helping consumers that are dealing with high levels of unsecured debt, and are unable to keep up with repayments on their debts.
The experts and professionals that work at these agencies can offer valuable advice and assistance when it comes to debt settlement, and they can offer advice on the different debt relief programs that may suit your needs and circumstances. You can meet up with a personal credit counselor in order to go through your financial situation, debts, income, and outgoings, and together you can come to an agreement with regards to how much you can afford to repay in order to avoid financial hardship yet still continue to pay your debts at a more feasible rate. Your counselor will liaise with creditors on your behalf so you won't have to worry about the stress of hassle and pressure from lenders.
Which is the best solution for you?
If you are able to take out a consolidation loan, and you can afford the monthly repayments on the loan, then this could be the most suitable solution, as it will not have any effect on your credit history and rating. You should look into the cost and possibility of taking out a loan to consolidate your debts, and work out whether it will ease the financial strain. However, if you cannot get a loan, it is important that you seek advice with regards to settlement of your debts and the different debt management programs that could help you. This will help you to avoid actions such as bankruptcy or court actions, and can help to ease the stress of dealing with your debts with the help of experts and professionals in the field.
Source
Wednesday, October 17, 2007
Knee Deep in Debt
Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?
You’re not alone. Many people face a financial crisis some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.
If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. Debt negotiation is yet another option. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.
Self-Help
Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.
Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.
Contacting Your Creditors: Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.
Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.
Managing Your Auto and Home Loans: Your debts can be unsecured or secured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.
Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoid the added costs of repossession and a negative entry on your credit report.
If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.
If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you
Credit Counseling and Debt Management Plans
Credit Counseling: If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Debt Management Plans: If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan.
Protect Yourself
Be wary of credit counseling organizations that:
* charge high up-front or monthly fees for enrolling in credit counseling or a DMP.
* pressure you to make “voluntary contributions,” another name for fees.
* won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit card account numbers, and balances.
* try to enroll you in a DMP without spending time reviewing your financial situation.
* offer to enroll you in a DMP without teaching you budgeting and money management skills.
* demand that you make payments into a DMP before your creditors have accepted you into the program.
Debt Consolidation
You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home.
What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.
Bankruptcy
Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can’t satisfy their debts.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Attorney fees are additional and can vary.
Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.
Debt Negotiation Programs
Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.
The Claims
Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, say $4,000.
The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.
The Truth
Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.
While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.
Damage Control
Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you’re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.
Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.
In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan — or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you’ve received the loan.
You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.
If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.
Source
You’re not alone. Many people face a financial crisis some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.
If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. Debt negotiation is yet another option. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.
Self-Help
Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.
Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.
Contacting Your Creditors: Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.
Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.
Managing Your Auto and Home Loans: Your debts can be unsecured or secured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.
Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoid the added costs of repossession and a negative entry on your credit report.
If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.
If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you
Credit Counseling and Debt Management Plans
Credit Counseling: If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
Debt Management Plans: If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan.
Protect Yourself
Be wary of credit counseling organizations that:
* charge high up-front or monthly fees for enrolling in credit counseling or a DMP.
* pressure you to make “voluntary contributions,” another name for fees.
* won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit card account numbers, and balances.
* try to enroll you in a DMP without spending time reviewing your financial situation.
* offer to enroll you in a DMP without teaching you budgeting and money management skills.
* demand that you make payments into a DMP before your creditors have accepted you into the program.
Debt Consolidation
You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home.
What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.
Bankruptcy
Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can’t satisfy their debts.
There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Attorney fees are additional and can vary.
Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.
Debt Negotiation Programs
Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.
The Claims
Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, say $4,000.
The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.
The Truth
Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.
While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.
Damage Control
Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you’re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.
Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.
In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan — or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you’ve received the loan.
You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.
If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.
Source
Tuesday, October 16, 2007
Bad Credit Loans
When it comes to loans there are plenty of choices available for consumers these days, from secured and unsecured loans to short term loans and more. One type of loan that has become more and more popular over recent years is the bad credit loan, and this is because many people have found themselves in difficulties when it comes to managing debts, and this has led to a poor credit scoring.
With the increase in the number of people with poor credit over recent years, more and more lenders have started to cater to those with adverse credit with bad credit loans. The availability of bad credit loans has made it possible for even those with a low credit score and a bad credit history to get the money they need when they need it, and you can actually get some very competitive rates on bad credit loans these days thanks to the range of financial products and lenders available.
One thing to remember when looking for bad credit loans is that although you can get some very competitive rates you will not get rates as low as those available for those with good credit. With bad credit loans, lenders have to take a bigger chance on lending money, because your poor credit rating indicates that you have already had problems in repaying finance and debt. The lender therefore has to raise the interest charged on bad credit loans in order to provide more security for the company in the event that you do default again.
In most cases you will find that bad credit loans are secured ones, and are usually available to homeowners. Again, this is because the loan is a high risk to the lender because of the borrower’s past credit history and therefore the lender needs some form of security in case the borrower fails to make repayments.
Source: lendance.com
With the increase in the number of people with poor credit over recent years, more and more lenders have started to cater to those with adverse credit with bad credit loans. The availability of bad credit loans has made it possible for even those with a low credit score and a bad credit history to get the money they need when they need it, and you can actually get some very competitive rates on bad credit loans these days thanks to the range of financial products and lenders available.
One thing to remember when looking for bad credit loans is that although you can get some very competitive rates you will not get rates as low as those available for those with good credit. With bad credit loans, lenders have to take a bigger chance on lending money, because your poor credit rating indicates that you have already had problems in repaying finance and debt. The lender therefore has to raise the interest charged on bad credit loans in order to provide more security for the company in the event that you do default again.
In most cases you will find that bad credit loans are secured ones, and are usually available to homeowners. Again, this is because the loan is a high risk to the lender because of the borrower’s past credit history and therefore the lender needs some form of security in case the borrower fails to make repayments.
Source: lendance.com
Casino Review
Looking for the BEST Online Casino Reviews guide list? iCasinoreviews.com it is... They provide the best of online casino review guide list. It is a casino directory of trusted casinos on the Internet. They have spent the better part of the last four years searching the Internet for the best online casinos.
At iCasinoreviews.com you can actually find out which are the best casinos and and who has the largest casino bonuses for you to cash in. They also offer internet betting tips and information for newbies on how to select a quality online casino.
They usually update it's online casino reviews on a monthly basis, so you can feel comfortable knowing that you are reading an up-to-date information on iCasinoreviews.com. They rate each of the online casinos based on payout percentages and customer support. In addition to this, what they really like for an online casino are the ones offering realistic games, generous bonuses, and an impeccable reputation. The online casino reviews listed at iCasinoreviews.com are it's favorite online casinos.
So if you are a perfectionist... iCasinoreviews.com is the only one. The BEST online casino reviews... You can find online casinos with Excellent Bonuses and Free Software Downloads only at i Casinoreviews.com
At iCasinoreviews.com you can actually find out which are the best casinos and and who has the largest casino bonuses for you to cash in. They also offer internet betting tips and information for newbies on how to select a quality online casino.
They usually update it's online casino reviews on a monthly basis, so you can feel comfortable knowing that you are reading an up-to-date information on iCasinoreviews.com. They rate each of the online casinos based on payout percentages and customer support. In addition to this, what they really like for an online casino are the ones offering realistic games, generous bonuses, and an impeccable reputation. The online casino reviews listed at iCasinoreviews.com are it's favorite online casinos.
So if you are a perfectionist... iCasinoreviews.com is the only one. The BEST online casino reviews... You can find online casinos with Excellent Bonuses and Free Software Downloads only at i Casinoreviews.com
Friday, October 12, 2007
The 7 biggest mistakes when getting a mortgage…
A home loan is the biggest debt, and most costly monthly bill, most of us ever have.
That’s why the seven biggest mistakes borrowers make when shopping for a mortgage can cost so much money and aggravation. Avoid them and you’re a much happier and smarter home buyer.
Mistake Number One is not aggressively looking for the best deal. Check the interest rates and fees dozens of lenders are offering on our mortgage rate charts. Obtain bids from local banks or mortgage brokers. Getting the right loan, at the right interest rate with reasonable fees, can save hundreds of dollars a month and tens of thousands of dollars over the life of the mortgage. Click here for step-by-step advice on how to find the best interest rate and home loan.
Mistake Number Two is applying for a loan without checking your credit history for mistakes that make it more difficult to qualify for a loan, or require a higher mortgage interest rate. To get a free credit report from each of the three major credit reporting bureaus go to www.annualcreditreport.com. Each credit report shows how to correct mistakes or submit an explanation for legitimate black marks that appear on the report.
Mistake Number Three is spending too much and saddling yourself with payments you can’t afford. Avoid that by looking at all of your bills and deciding how much you can comfortably spend. Include a realistic estimate for taxes, insurance and condo or association fees. From that, calculate the amount that could be borrowed at prevailing mortgage interest rates. Add the size of the down payment and that should be the limit. Don’t let real estate agents repeatedly show you homes outside this price range. Don’t work with mortgage brokers who push you to borrow more than you can afford. Click here for more help deciding how much to spend on a home..
Mistake Number Four is not getting pre-approved for a loan. This is an important reality check and it’s free. A lender will look at your credit history, income, savings and debts, and decide on a loan cap. The entire amount doesn’t have to be borrowed. But if you can’t get pre-approved, or can’t get pre-approved for as much as you want to borrow, that’s a big red flag. Click here to learn all about getting pre-approved.
Mistake Number Five is using a dangerous loan to buy a more expensive home than you can afford. Hundreds of thousands of buyers took out interest-only loans or option ARMs because they promised lower monthly payments than other types of mortgages. They were shocked when those payments began going up — sometimes only a month or two after they’d moved in. Now many of those buyers are facing foreclosure. If you can’t afford the payments on a 30-year fixed-rate loan, that’s a good sign you’re borrowing too much.
Mistake Number Six is agreeing to a pre-payment penalty. More than seven out of every 10 subprime mortgages — those given to borrowers with poor credit — charge thousands of dollars if the loan is paid off in the first several years. That’s preventing many borrowers from refinancing or selling their homes when they canâ??t keep up with the ever-rising payments on their adjustable-rate loans. Congress and the Federal Reserve are considering whether pre-payment penalties should be banned or restricted in some way. Until then, just tell lenders you don’t want a pre-payment penalty in your mortgage.
Mistake Number Seven is taking out “piggyback” loans instead of paying for private mortgage insurance. If you put less than 20% down you’ll have to buy PMI, which protects your lender against default. To get around that realtors and mortgage brokers often recommend two loans — a primary mortgage for 80% of the debt and a home equity loan for the remaining 20%. The home equity loan acts as the down payment and negates the need for PMI. That made sense when home equity loans cost less than 5%. But with interest rates now averaging more than 8%, most buyers will save by getting a single loan and buying PMI. Expect the premiums to be about 0.5% of the outstanding principal, but those payments are tax deductible if the policy is taken out in 2007.
Source
That’s why the seven biggest mistakes borrowers make when shopping for a mortgage can cost so much money and aggravation. Avoid them and you’re a much happier and smarter home buyer.
Mistake Number One is not aggressively looking for the best deal. Check the interest rates and fees dozens of lenders are offering on our mortgage rate charts. Obtain bids from local banks or mortgage brokers. Getting the right loan, at the right interest rate with reasonable fees, can save hundreds of dollars a month and tens of thousands of dollars over the life of the mortgage. Click here for step-by-step advice on how to find the best interest rate and home loan.
Mistake Number Two is applying for a loan without checking your credit history for mistakes that make it more difficult to qualify for a loan, or require a higher mortgage interest rate. To get a free credit report from each of the three major credit reporting bureaus go to www.annualcreditreport.com. Each credit report shows how to correct mistakes or submit an explanation for legitimate black marks that appear on the report.
Mistake Number Three is spending too much and saddling yourself with payments you can’t afford. Avoid that by looking at all of your bills and deciding how much you can comfortably spend. Include a realistic estimate for taxes, insurance and condo or association fees. From that, calculate the amount that could be borrowed at prevailing mortgage interest rates. Add the size of the down payment and that should be the limit. Don’t let real estate agents repeatedly show you homes outside this price range. Don’t work with mortgage brokers who push you to borrow more than you can afford. Click here for more help deciding how much to spend on a home..
Mistake Number Four is not getting pre-approved for a loan. This is an important reality check and it’s free. A lender will look at your credit history, income, savings and debts, and decide on a loan cap. The entire amount doesn’t have to be borrowed. But if you can’t get pre-approved, or can’t get pre-approved for as much as you want to borrow, that’s a big red flag. Click here to learn all about getting pre-approved.
Mistake Number Five is using a dangerous loan to buy a more expensive home than you can afford. Hundreds of thousands of buyers took out interest-only loans or option ARMs because they promised lower monthly payments than other types of mortgages. They were shocked when those payments began going up — sometimes only a month or two after they’d moved in. Now many of those buyers are facing foreclosure. If you can’t afford the payments on a 30-year fixed-rate loan, that’s a good sign you’re borrowing too much.
Mistake Number Six is agreeing to a pre-payment penalty. More than seven out of every 10 subprime mortgages — those given to borrowers with poor credit — charge thousands of dollars if the loan is paid off in the first several years. That’s preventing many borrowers from refinancing or selling their homes when they canâ??t keep up with the ever-rising payments on their adjustable-rate loans. Congress and the Federal Reserve are considering whether pre-payment penalties should be banned or restricted in some way. Until then, just tell lenders you don’t want a pre-payment penalty in your mortgage.
Mistake Number Seven is taking out “piggyback” loans instead of paying for private mortgage insurance. If you put less than 20% down you’ll have to buy PMI, which protects your lender against default. To get around that realtors and mortgage brokers often recommend two loans — a primary mortgage for 80% of the debt and a home equity loan for the remaining 20%. The home equity loan acts as the down payment and negates the need for PMI. That made sense when home equity loans cost less than 5%. But with interest rates now averaging more than 8%, most buyers will save by getting a single loan and buying PMI. Expect the premiums to be about 0.5% of the outstanding principal, but those payments are tax deductible if the policy is taken out in 2007.
Source
Tuesday, October 9, 2007
Express Endowment
What is an Endowments? It is a fund that is made up of gifts and bequests that are subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Donors may require that the principal remain intact in perpetuity, or for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose.
Now you can sell your endowments at Endowmentexpress.co.uk, no doubt you’ll have found a number of online financial services sites. No doubt, you’ll be confused and your head will be full of jargon. No doubt, you’ll want an alternative.Endowment Express is that alternative!
They won’t blind you with science, charge you any kind of fee, or pressure you into accepting it's endowment policy quote. You’ll get support every step of the way from their expert team. You’ll be quoted a figure far in excess - as much as 35% - of the life company quote. And they get your money into your bank as soon as the legal work is complete.
Get your no obligation quotation now and make Endowment Express your choice for selling endowments!!! Sell your endowment policy for 35% or more and endowment express will smash your surrender value!
Now you can sell your endowments at Endowmentexpress.co.uk, no doubt you’ll have found a number of online financial services sites. No doubt, you’ll be confused and your head will be full of jargon. No doubt, you’ll want an alternative.Endowment Express is that alternative!
They won’t blind you with science, charge you any kind of fee, or pressure you into accepting it's endowment policy quote. You’ll get support every step of the way from their expert team. You’ll be quoted a figure far in excess - as much as 35% - of the life company quote. And they get your money into your bank as soon as the legal work is complete.
Get your no obligation quotation now and make Endowment Express your choice for selling endowments!!! Sell your endowment policy for 35% or more and endowment express will smash your surrender value!
How to Get a Good Mortgage Interest Rate
The factors driving the ebbs and flows of mortgage rates are largely unknown to the general population. You may be inclined to blame-or commend-your mortgage lender for the low or high rate she offers you; but in actuality, it’s not her decision. Today, the true drivers of mortgage rates are the investors in the secondary market.
To the layman’s eye, mortgage rates seem to move up and down without explanation. But just like the ocean tides that wash up and back by the pull of the moon’s gravity, mortgage rates have their own driving force, even if they have a less cosmic source.
The mortgage rate basics
The mortgage lender that funds your loan is called the originator. A loan originator may be a bank, credit union, or other type of financial institution. On the date of funding, the money flows out of the originator’s hands and into yours. You then turn that money over to the seller of the home.
Once the loan is funded, the originator has the option of keeping that loan in its portfolio or selling it on the secondary market. If the originator keeps the loan, it makes money by way of the interest you pay each month. If the loan is sold, the originator replenishes its funds and can make more loans to other homebuyers. Basically, the secondary market investors keep funds circulating so that loan originators don’t run out of money for new mortgages.
Who are these mortgage interest rate folk?
Today’s secondary market investors include government-chartered companies like Fannie Mae and Freddie Mac, plus insurance companies, pension funds, and securities dealers. Although Fannie Mae and Freddie Mac are different organizations, they participate in similar activities. Both can buy mortgages, and both can group mortgages together for resale in what’s called mortgage-backed securities. These are highly liquid investments, meaning that they can be readily bought and sold.
Investor demand
Here’s how the secondary market affects you as a would-be homebuyer. Investors want to earn the best return possible. That level of return is determined by the current and anticipated condition of the economy. When the economy is on an upswing, future yields are expected to be better than current yields. Investors, therefore, will hold off buying until higher yields materialize. This drives mortgage interest rates up, because lenders cannot sell their loans at lower yields.
Conversely, when the economy is in a downturn, investors buy up what’s available to avoid being stuck with lower yields later. This drives mortgage rates down, as investors are clamoring to buy before yields get too low.
What it means to you
By staying on top of financial trends and planning accordingly, you can time your rate lock to compare and get the best mortgage rate possible. In other words, when the tide is low, put a call into your lender and lock in that rate. You’ll enjoy waves of prosperity if you do.
Source
To the layman’s eye, mortgage rates seem to move up and down without explanation. But just like the ocean tides that wash up and back by the pull of the moon’s gravity, mortgage rates have their own driving force, even if they have a less cosmic source.
The mortgage rate basics
The mortgage lender that funds your loan is called the originator. A loan originator may be a bank, credit union, or other type of financial institution. On the date of funding, the money flows out of the originator’s hands and into yours. You then turn that money over to the seller of the home.
Once the loan is funded, the originator has the option of keeping that loan in its portfolio or selling it on the secondary market. If the originator keeps the loan, it makes money by way of the interest you pay each month. If the loan is sold, the originator replenishes its funds and can make more loans to other homebuyers. Basically, the secondary market investors keep funds circulating so that loan originators don’t run out of money for new mortgages.
Who are these mortgage interest rate folk?
Today’s secondary market investors include government-chartered companies like Fannie Mae and Freddie Mac, plus insurance companies, pension funds, and securities dealers. Although Fannie Mae and Freddie Mac are different organizations, they participate in similar activities. Both can buy mortgages, and both can group mortgages together for resale in what’s called mortgage-backed securities. These are highly liquid investments, meaning that they can be readily bought and sold.
Investor demand
Here’s how the secondary market affects you as a would-be homebuyer. Investors want to earn the best return possible. That level of return is determined by the current and anticipated condition of the economy. When the economy is on an upswing, future yields are expected to be better than current yields. Investors, therefore, will hold off buying until higher yields materialize. This drives mortgage interest rates up, because lenders cannot sell their loans at lower yields.
Conversely, when the economy is in a downturn, investors buy up what’s available to avoid being stuck with lower yields later. This drives mortgage rates down, as investors are clamoring to buy before yields get too low.
What it means to you
By staying on top of financial trends and planning accordingly, you can time your rate lock to compare and get the best mortgage rate possible. In other words, when the tide is low, put a call into your lender and lock in that rate. You’ll enjoy waves of prosperity if you do.
Source
Subscribe to:
Posts (Atom)
