How to Become Debt Free With Debt Consolidation Counseling

Posted on 26th July 2010 in Best Debt Consolidation

Every person today is managing one debt or the other. With easy availability of loans, and indiscriminate use of credit cards, most of the people find themselves in knee-deep debt before they realize it. For a person who has a source to pay back the debts, debt management is not an issue. However, a person without any source to clear his debt finds himself trapped in a debt snare. Such people can seek debt consolidation counseling from reputed debt consolidation companies to help them manage their debts.

Why Go For Debt Consolidation Counselling

Debt brings with it numerous other problems too. A person who is in debt lives in constant fear of losing his assets and valuables. His creditors constantly harass him for repayment of loans. He lives a life of anxiety and desperation, which may cause him to acquire more debts. He may take more loans to pay off the previous loans. He is thus caught in a vicious circle of acquiring more and more loans to reduce his debt burden. These people can therefore go in for debt consolidation counselling to find a way out.

Today most of the debt consolidation companies offer free debt consolidation counseling. The debt counselors help to choose the best way out of debt problems. They assess the nature and volume of the outstanding loans, their financial position and repayment capability before making any suggestions. Based on their assessment they suggest various debt consolidation options like debt consolidation loans, debt settlement or debt management. Once the debt counselor has evaluated all the options, he can develop the best debt consolidation program to suit the needs of the borrower.

Importance Of Debt Consolidation Counselling

When the debt situation gets out of hand it is advisable that the borrower seek the counseling services of a reputed debt consolidation company. A reputed company will have the knowledge to assess the various debts, evaluate the various options available and develop the best debt consolidation program. Here it is necessary to understand that each debt is different and need to be handled differently. For e.g. credit card debt consolidation, which is an unsecured debt, has to be handled differently from a secured debt like an auto loan. All this reiterates the fact that debt consolidation will be more efficient if the right professional help is sought. Therefore, extreme caution has to be exercised while selecting the right debt consolidation company. The borrowers can seek debt consolidation quotes from various companies and then select that company that offers the most competitive rates.

Apurva Shree
http://www.articlesbase.com/debt-consolidation-articles/how-to-become-debt-free-with-debt-consolidation-counseling-180746.html

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What is Accelerated Debt Consolidation?

Posted on 17th July 2010 in Best Debt Consolidation

Are you burdened with debts? Are you finding it harder each month to meet the minimum payments for your debts? Your debts are piling up every month, creditors’ calls make your feel very stressing; and you are praying every day hoping some miracle will happen and get you out of debt. If you in such bad debt situation, accelerated debt consolidation could be the best solution for your debt dilemma.

In the debt consolidation, you are combining multiple, high-interest loans (debt) into a loan with a single monthly payment on a lower interest rate. Debt consolidation allows you to pay down more principle each month, often lowers monthly payments, and allows the balance of your debts to be cleared faster.

Your debts can be categorized into two types, unsecured debts and secured debts. Unsecured debts are the money you borrow from your creditors without the need of any collateral. Common unsecured debts include credit cards and personal loans. Secured debts, on the other hand, are loans or finance packages that are only approved with a pledge of your collateral in exchange for a certain amount of money and the creditors have lien on the pledged collateral. Common types of secured debts include mortgages, car finance, and loans on personal property. If you fail to pay your creditor in this case, you will lose your car or house or property.

Accelerated debt consolidation is quit similar with regular debt consolidation but it only counted in your unsecured debts. Although there is some exception, most accelerated debt consolidation programs will not include your secured debts; they will only take your unsecured debt.

When you enroll into an accelerated debt consolidation program, the counselor from the debt consolidation company will first understand your current financial situation and they will group all your debts into secured and unsecured debts. The counselor will only works on your unsecured debt and proposes a repayment plan after communicating and get the term and conditions from your creditors.

If you have a relatively bad credit score and unmanageable, massive debts, accelerated debt consolidation is probably your best option because this type of debt consolidation only takes your unsecured debts, which are in general at smaller amount if compare to secured debts (home loan or car loan amount normally is larger than credit card balances) and it can enabled you to put a debt consolidation plan in place with a short period of time, regular debt consolidation normally takes longer process.

Most of unsecured debts are high interest debts (credit card interest rates may range from 10%-18% and a personal loan may have interest rate as high as 12%), hence it good for you to put a plan to handle these high interest debts as soon as possible to avoid further worsen the situation. And an accelerated debt consolidation can be your best choice on this purpose.

In Summary

Accelerated debt consolidation is slightly different from regular debt consolidation; it only takes into consideration on your unsecured debts. The accelerated debt consolidation can be your best option if you are at the critical financial situation and urgently need a plan to put in place and get your debt in control.

Cornie Herring
http://www.articlesbase.com/debt-consolidation-articles/what-is-accelerated-debt-consolidation-95212.html

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Is there really a way to eliminate half of credit card debt if you have over 10,000 in unsecured debt?

Posted on 14th July 2010 in Eliminate Credit Card Debt

I have heard on the radio about a program that, if you have over 10,000 in credit card debt, will cut your debt in half as part of the Recovery Act. Wouldn’t something like that hurt your relationship with the card issuer

The answer to your question is: YES, there is a way to eliminate (more than) half of your credit card debt if you have over $10,000 in unsecured debt.. but it doesn’t have anything to do with The Recovery Act. That ad is most likely a marketing ploy by a debt settlement company. And yes, debt settlement will hurt your relationship with the card issuer, as well as your credit score, and debt settlement companies can’t guarantee those results. I would not do business with any debt settlement company, but not necessarily for the reasons that that most people will give you. Some will tell you that all the debt settlement companies are scams (many of them are, by the way – but there are legitimate companies as well). Others will tell you that you can do just as well negotiating the debt yourself. Still others will give you the ‘holier-than-thou’ answer of ‘stop spending money, get a 2nd or 3rd job, and put everything you make into paying down your debt’ – and they’ll say this without any knowledge of your individual circumstances. If you can manage to pay your debt as agreed, that it almost always the best option. But for some people, their current circumstances simply won’t permit that. And the fact that most credit card companies have recently raised interest rates to 20%, 30% or more (even on historically good paying customers) doesn’t help the situation. So settling debt is a perfectly legal and legitimate method of solving the problem without going the bankruptcy route – which will demolish your credit for years to come.

The reason I tell you that you should not choose a debt settlement company is because – even if you find a high-integrity, ethical company that is truly interested in helping you – there is a far superior alternative available: DEBT RESOLUTION. The concepts are similar, but Debt Resolution provides benefits that debt settlement simply cannot offer, and it does so at a better price, with guaranteed results. There is only room for a limited explanation here, but I’ll try to highlight some of the key (and extremely important) differences between debt settlement and debt resolution.

Basically, debt settlement companies operate by acting as a collection agency for the credit card company. They get involved before the creditor actually refers the account to an outside agency, collect a bundle of money from the borrower over time, take out some hefty fees, and offer the balance to the creditor in an effort to settle the account, hoping the creditor will accept 50 or 60 cents on the dollar. These debt settlement companies are just that – private companies offering a service. They do not and can not represent the borrower.

Debt resolution, on the other hand, is an attorney-managed process whereby an attorney can actually perform the negotiation with the creditor on the borrower’s behalf. This is a legal transaction that only an attorney can perform, and it means the attorney can request a settled mitigation on the borrower’s behalf. There are some critical advantages to this, which I’ll cover shortly.

Key differences between debt settlement and debt resolution:

PERFORMANCE GUARANTEE – Debt settlement companies cannot typically guarantee a settlement amount. Debt Resolution guarantees settlement at 45% of the original debt (which also includes the attorney fees). Also, with Debt Resolution, no additional fees will be requested if the debt increases after the agreement is signed. This is written right into the contract with the attorney, and is very important because once credit card payments get behind, huge fees and interest rate hikes may be applied to the account, and can significantly increase the amount of the debt. Debt settlement companies may take advantage of this by basing their fees on the account balance when the account is settled, not the original balance. And since some plans may take several years to complete, those balances (and the accompanying fees) can increase dramatically.

TAX CONSEQUENCES – Debt settlement companies generally won’t point this out to borrowers, but when a creditor agrees to a settlement, they will generally issue the borrower an IRS Form 1099 for the amount written off. As an example, if the borrower has $50,000 in unsecured debt, and the creditor agrees to accept 60%, or $30,000 to settle the account, they will send the borrower (and the IRS) a Form 1099 which shows that $20,000 write-off as income to the borrower. So even though the borrower didn’t receive any actual cash from the creditor, the borrower may still have to pay taxes on $20,000 of additional income that year. With the attorney-managed Debt Resolution program, the resolved amount is a legal agreement between 2 parties, and since no cash was provided to the borrower in the form of actual income from the creditor, THERE ARE NO TAX CONSEQUENCES.

CREDITOR HARASSMENT – Since debt settlement companies cannot represent the borrower, they cannot promise to s

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