Category Archives: Debt
There are reputed debt settlement firms providing a flurry of feasible debt settlement options and services that help you to negotiate with creditors. This is done to lower some debt. You also have the option of debt consolidation, but you must be aware of the pros and cons surrounding it. There are cases where you’ll find that even a complete debt management program is unable to pay back your debt completely. If your debt has attained a point when it’s just not possible to repay all that you owe, you can opt for debt settlement options. The firms provide a formal or organized consumer proposal alongside standard debt settlement contract.
Adherence to regulations
In the recent past, the concerned industry entailed little or no legal bindings, stringent rules or ceilings which fuelled many fraudulent and hawkish firms to do brisk and often unbridled business. The new time-bound regulations and stipulations underline the fact the settlement firms cannot collect fees until the debtors make a minimum payment to the creditor. You do this after the negotiations initiated by the settlement company. The company has to negotiate successfully, settle or reduce in some way to amend one debt’s term. There should a written settlement, associated agreement or debt management plan between the debtors and creditors. The former needs to approve of this communion.
As time passes by, you’ll find that both the options are finely tailored to the precedents of debt settlement for a given amount. It’s comparatively lesser than the one you owed. Consumers need to make a sum payment or consent to a partial repayment fixture. It’s an affirmative that debt settlement does affect your credit score or rating to a good extent, but is often more feasible and viable than a bankruptcy alternative. Creditors typically hunt for proof that you have explored every option in field. Only then will your settlement attempt be deemed feasible.
A step-wise approach
Your first step should be to seek assistance when you actually need it. For those continuing for 5-6 months sans making any debt payment, creditors get a free hand in marking and charging it off in the credit report. They can also make tax deductions related to a charge-off segment as loss. You need to know that this charge-off label is a red signal to possible or potential creditors. It’s very important to keep track of all financial records as you need to prove that you’re really unable to pay those debts off. Opening your bills and notices can be difficult during debt, but it’s clinical to stay informed about the intricacies of debt relief. Click here to know more about the same.
The related aspects
There’s no need to create a far-fetched or unrealistic plan and you must refrain from building castles in the air. There should be no slack or lassitude with records as well. Choosing the company that makes sky-high and tall promises will not fetch you anything because you need to r remember that these companies don’t have a cache of money in the backdrop. This is a fiscal ambit, which is regulated by the financial apparatus of the region.
When you lag behind your payments, it might appear like you have nowhere to turn or rest. You can find a potential option of entailing organized and streamlined bills through full-scale debt consolidation. It’s fiscal dynamic enabling you to roll various debts into one loan with a minimized rate of interest and an enhanced and lengthier payment term. As a result of this, you can pay less each month to one lender only and not a flurry of money lending companies. While it’s not as drastic or obscure as debt settlement or debt management, debt consolidation includes a fair amount of pitfalls or sneak peeks that you need to remember.
Considering the aspects
You need to conceive the aspects of debt consolidation before you actually rope in one. There are private lenders and financial institutions that give these loans. These firms have a clean and transparent website with easy to seek rates and fees, a clear description of the lending pattern and a streamlined rate-quote mechanism. These companies don’t require an overwhelming credit line and slightly stricter requirements for devising a loan. Your debt-to-income ratio essays a crucial role in this regard. You need to pay some processing fee every time you pay check. There are competitive rates as well.
The credit card loan consolidation patterns entail a balance of flexible terms, reduced fees and minimized rates of interest. There’s a wide gamut of loan amounts. You have different lenders who cap their loans at comparatively low amounts to shut out prospective borrowers. The most notable ones will approve these loans for a sum of $25, 000-$35, 000. The loan terms entail wide range as well. Some lenders are also strict pertaining to the span of the loan terms provided. The best ones are certainly more flexible as they enable shorter terms like a year. The longer timeframes are 72 months or even more.
Competitive rates of interest imply obtaining loans depending on the credit. You’ll find that most lenders in the market keep their field of prospective of possible rates very competitive. The fees are kept reasonable too. If the lender charges rates other than the interest one like origination fees, late payment fees and defaulting payment fees, you need to know that these are always reasonable when compared to those charged by surreptitious competitors. The key factor here is transparency. Instead of imploring consumers to put their personal information and details, trustworthy lenders actually ask you about the extent to which you’re allowed to borrow. They also underline the loan amount alongside the exact rate at which you can qualify for the loan. They mention the potential terms and fees as well.
An overall study
In its totality, credit card debt consolidation is certainly true to its aspects and terminology. While consolidating your debts, you are actually roping in a new, bigger loan for paying off a handful of current debts. Its short-term relief since the single loan with a marginalized interest rate is used for longer span of time. It can minimize the amount to be paid each month quite drastically. Click here to learn more.
Many people in the US, especially freelance workers, struggle to keep their personal finances organized. But with working from home on the rise, freelance workers are set to reach 40 percent of the workforce by 2020. So, whether you work as a developer, designer, translator or manager, if you want to manage your money better, check out these few tips.
Don’t get dragged down by bad credit
Before you worry about your credit rating, make sure that you get an accurate copy. There are several credit rating bureaus you can check, including Experian and TransUnion. Study your report carefully, as it may contain some errors or even include debts that you have already paid. How do you go about setting the record straight? Send a letter to the credit report company that explains the error so that they can remove it and clean your slate.
Learn how to manage your debt
Learning to manage your personal finances is about learning how to set a budget. But, before you can realistically put money aside for certain expenses, you need to pay your debt off first. This can be particularly hard for college students who graduate with thousands of dollars to pay off. But, debt can also be disguised in other forms, such as credit card debt. Start paying off the higher interest debts first and allocate money each month to pay off your debt. Later on, you can simply continue to pay out this money – into your savings account.
Set your budget
Setting a budget is vital if you want to make sure that you live to your means. When you’re a freelance worker, you may not always have the same amount of income every month. So, separating your fixed costs, such as rent and utilities, from your miscellaneous expenses, like clothing and whim purchases is vital. Cut out any spending that isn’t completely necessary, such as your daily coffee or candy bar. You can live without those, right? And every little helps.
You may need to change your habits, if you’re better at spending money than saving it. So, try to put a part of your monthly income aside, for emergency use if needed. Also, consider your mid and long term saving goals, such as taking a vacation or saving up for a deposit on a house. Consulting with a financial advisor, or downloading a savings tracking app, like Mint or Level Money can be a great help.
Get a side-line job
If you’re lucky enough to be in a position where you don’t need to take on a second job, then good for you. But, if you want to boost your income temporarily, think about taking on more clients or extra work. Thanks to technology, there’s a plethora of jobs that you can do online, from writing and design, to customer service, or even selling homemade crafts on sites like Etsy. If you’re skilled in a second language, you could apply to work with an online translation service. You’ll need to have excellent command of at least two languages and, in some cases, an additional specialty.
Look for free activities
They say that the best things in life are free. While you may crave a night in a luxury hotel or a 5-star all-inclusive, your budget may not accompany you right now. So, try to enjoy your life and include activities in it that don’t involve spending money. Take up a sport, like running or cycling – cycling to work can even help you save on bus or gas fare. Check out local events where you live and invite friends to you, rather than going out.
Learning to become finacnailly smart takes some common sense and a lot of dedication. But, if you can instil these disciplines in your spending habits today, you’ll be learning how to manage your personal finances now and for your future.
Christina Comben is Content Manager at translation and localization services provider, Day Translations. Multilingual and qualified to MBA level, Christina is passionate about writing, traveling and continued education.
The hard truth about debt is that there’s no quick fix. Anything that promises you immediate freedom from debt will probably only get you into more debt in the long run. That doesn’t mean that it’s impossible to get rid of your debt and gain financial freedom, though. Follow these tips to save money, pay off debt, and start on your path to living debt-free.
1. Check into your insurance plans to find out if you can lower any of your plans. Look at your cable package – do you need everything you’re paying for? You may be able to lower the package or even get rid of it altogether. Check out all of your recurring payments to determine if anything can be lowered.
2. Learn about your debt. What exactly do you owe and who do you owe it to? Are there any mistakes on your credit reports? Getting a handle on the true state of your debt is a must before you can begin to take care of it.
3. Make a plan. How will you tackle your debt? Some people like to pay off the smallest creditors first because they get a feeling of accomplishment. Other people prefer to pay off whatever debt is charging the highest interest rate. The key is to do it in a way that’s sustainable over the long run. If you need to find out more about handling your debt, talk to a specialist.
There’s no big secret to paying off debt. Spending less, saving more, and dedicating part of your earnings to your debt is the only way to get it paid off.
Many financial institutions will first do a credit check on you and then calculate how much your debt to income ratio is before lending you their money. You can check your own debt to income ratio before applying for a loan. Follow these steps and know your debt to income ratio.
First you need to figure out your gross monthly income. You will find it in your pay stub or in your leave and earning statement. You can also use the W-2 form given at the end of the year by your employer.
Then you need to calculate your minimum monthly payments that you do towards your debts. Go through all your monthly bills and statements to calculate the minimum due each month. You can also check your credit report to calculate your minimum payments for each month. If you don’t have a copy of your credit report, you can get a free copy once in a year from all the three credit bureaus.
Once you know the gross monthly income and your total minimum payments of your debts, divide your total minimum payments by your gross monthly income.
- For example:
Total Minimum Monthly Payments (debt) =$1,000
Gross Monthly Income (income)=$2,000
Divide $1,000 by $2,000 =.50 or 50% debt to income (D/I) ratio
According to this example, 50% of your money goes towards paying your debts. It must be a great feeling for you. If you have a 100% debt to income ratio, this means that you have no money left for your essential needs like food, clothing, etc. Having 50% of the debt to income ratio means that you are living paycheck to paycheck, but you are able to pay all your bills on time every month, go for an outing once in a while, or go on vacation. These numbers are perhaps good.
When you apply for a new credit with this debt to income ratio, many financial institutions know that you need some debt in order to rebuild your credit scores. They prefer your debt to income ratio to be below 50%. An ideal number will be below 30% and 10% is the best because this means that you have more money available to pay back your loans.
Be careful of the lenders who are willing to loan you money even if you have a very high debt to income ratio. They are going to charge you a lot of money in very high interests and fees and it will be very difficult to pay them back. You can always shop with different companies and see what their terms are in offering a lower interest rate loan.
Debt collectors are tough, seasoned professionals and they are well trained in collecting consumer debts. When you are getting regular collection calls from the different debt collectors, you need to be well prepared on how to tackle the situation and negotiate with them for a settlement amount. These collectors are talking with many people on a daily basis and they are used to hear the common reasons given by other debts, so you need to give a very convincing logic while you initiate negotiations with them.
Before starting your negotiations with the debt collectors, you need to study your sources of income, savings and the amount of your debt and how much of it can you afford to repay. Also you need to look at your current expenses and see which bills are most unavoidable and needs to be paid, while allocating the amount for repayment. You can go through your credit report provided by the credit bureaus and check for any inaccuracies or outdated information. Incorrect information on your credit report will hurt your credit scores, so get it fixed at your earliest. You should be aware about your rights as a debtor by going through the debt collection fair practices act. It will make you as an informed consumer, and if any collection agency is violating the federal or state laws, you can take immediate actions against them using the laws as your legal weapon against them.
When you start a negotiation with a creditor, start with the lowest amount and then you can increase it, as and when required. You can start with a settlement offer of 40% of your original debt, and explain them about your situation why you had fallen behind in your payments in the past and other things that forced you to get into a situation like this in the present. Do not give out your personal information like your place of work, name and address of your bank and your banking details. While talking with these people, stay calm and focused and be polite during your conversations.
It is a good idea to tell the creditors that you are recording the conversations for future proof. This will keep them in the best of their behavior. You must maintain a creditor call log and put details about every person you speak with from that company with date and time. During the negotiation process, you can ask the creditor to remove any negative information reported by them to the credit bureaus and insist them to do a fair reporting on your credit report.
Once the settlement amount is finalized, you must ask for the settlement proposal in writing with details on the new amount agreed on, new terms of the repayment, as well as any other terms agreed by both of you. Keep the information in your file for future records. Do not make any sort of payment until you have proof of the settlement offer in writing.
Debt settlement is a legitimate alternative to filing bankruptcy. If anyone is going through serious financial hardship and has overwhelming debts on their heads, it is time to get professional help.
Debt settlement consumer protection act has many benefits for the individuals. After the Federal economy was hit by the one of the biggest recessions, thousands of people became jobless in no matter of time. Many people had to go through great financial crisis. They were not able to repay their debts and became defaulters. They were eventually forced to file for bankruptcy and had to compromise with their high credit scores. Once they lost their credibility, they failed to get any good deals from the future lenders for the next 7 – 10 years that followed.
On the other hand, the creditors also took the hit of the recession. As the number of people of people filing for bankruptcy was increasing alarmingly, the creditors lost their liquidity and they failed to manage their costs. The financial equilibrium was disbalanced and almost reached the verge of bankruptcy. The economy took the biggest hit of all times and rolled further back into recession. The federal government had to take immediate steps to curb this situation.
As a part of the debt settlement consumer protection act, the government introduced tax breaks for the creditors and also released billions of US dollars into the economy. It was made public that those creditors who will agree for settlement with the consumers will get huge discount in taxes and can use the stimulus money released in the market to cover up the costs and the loss that they incur.
As a result of these changes in the laws, many creditors offered debt settlement deals and wiped out a certain percentage of the debts of the consumers. They had to incur loss but that was later covered by the government policies of tax breaks and stimulus cash.
Consumers on the other hand, were able to reduce their debts by a great margin through debt relief options. The only condition that they had to fulfill was to have an overall consolidated loan of $10,000 or more. Anything less than that is not entertained for settlement. Once a good deal is offered to the debtor, they need to pay the remaining amount of the debt to the creditor in one single payment. In this way, many consumers were benefitted by the debt settlement consumer protection act.
People having significant amount of unsecured debt more than $10,000 can try the debt settlement option as a legitimate way of eliminating their debts. You can talk with a trained debt counselor and gain more knowledge in this regard. The debt counselor will point you in the right direction as per your situation.
Going into debt is never an ideal situation, but more and more Americans find themselves in a deep financial hole that is difficult to get out of. Many things can cause debt. Here are some of the most common debt triggers in the U.S.
More than half of married U.S. citizens will get a divorce, and many people find themselves going through it multiple times. There are only a few things that are more expensive than a divorce, which makes it a top debt trigger. From lawyer fees to court fees to child support to supplementary income, there are dozens of fees that come your way when you want to get a divorce. Unfortunately, divorce is something that is often unavoidable. However, if you have a large amount of assets before you get married, a premium may bee a good idea in order to protect your wealth and avoid debt.
- Banking on a Windfall
It is an all too common mistake to spend tomorrow’s money today. This can be done through many ways, payday loans being one of the worst. Thinking in terms of the money you will have in the future is a horrible mistake that is one of the easiest ways to fall into debt. The future is not set in stone, and you have to be prepared for the unexpected. Don’t rely on that bonus until it is in your hands.
- Medical Expenses
Due to the immense gaps in coverage, the lapsed policies and the increasing costs of alternatives, medical expenses are a top debt trigger in America. Most doctors now take credit cards not because of convenience, but to ensure that they get paid for their service. The medical field knows that if they don’t get paid immediately, the chances of them ever getting paid drops substantially. Getting into an accident or contracting a disease without adequate health insurance is one of the easiest ways to fall into debt.
- Poor Money Management Skills
Having a monthly spending plan is one of the best ways to stay out of debt, but sadly many Americans do not have the money management skills to create one. This can be a one-way ticket to debt. Many Americans spend hundreds of unnecessary dollars ever month, which they could have avoided if they had taken the time it takes to write down their income and expenses and then reconcile the two.
Being deep in debt can cause a number of problems – everything from damaging your credit score to making it difficult to get loans. Luckily, there are some fairly easy ways you can get rid of that debt and get back on the road to fiscal fitness.
- 1. Cut spending
Obviously, there are things you have to buy, such as food and clothing, but getting serious about getting out of debt requires that you cut down on other things. For instance, maybe you can cut out a weekly pub visit or two and direct the savings toward paying off your debt.
- 2. Cut up your cards
This is a drastic move, but if you don’t have ready access to credit cards, you are unlikely to spend money you don’t have. Keep one card for emergencies, and destroy the rest.
- 3. Get a plan
To get rid of your debt, you’ve got to have a plan for paying it down. There are different methods you can use. Some people like to concentrate on paying off the smallest debt first, because you get it paid off faster and get a psychological boost. Another method is to pay off the debt with the highest interest rate first, which saves you the most money in the long run.
- 4. Don’t pay late
Making late payments not only hurts your credit score, it also adds late fees and finance charges to your bill that make it more difficult to get it paid off.
- 5. Ask about lower interest rates
If you have good credit and have been making your payments on time, ask your credit card company if it will consider lowering your interest rate. This will lower the amount of finance charges you have to pay every month, which will help you pay off your debt faster.
- 6. Consolidate balances
If you get an offer for a balance transfer with a lower interest rate, take a good, long look. If it offers a significantly lower interest rate, it’s likely worth it, even if there are fees involved. The lower interest rate will save you money over the long run.
- 7. Direct any extra money to debt
If you get a bonus at work or unexpectedly inherit money from aunt Frances, use all or most of it to pay off debt. It may be tempting to buy a new TV or finally get season tickets for your local football club, but paying debt should be your priority.
- 8. Find ways to generate extra money
While unexpected found money is great, it’s not realistic to expect some. Instead, make your own luck. See if there are any extra shifts you can pick up at work or sell some stuff you don’t need.
- 9. Use a rewards card
This takes discipline, and if you are in debt because of out-of-control spending habits it could be risky, but getting a cash-back rewards card could help you cut your debt. The trick is only to use the card for necessary purchases — food, petrol, etc. — and then pay the bill in full every month. You can use the cash back you generate to help pay down your debt.
- 10. Ask for help
If your efforts aren’t paying off fast enough, don’t be afraid to ask a family member for help paying off your bills. The worst that can happen is they say no.
Do you know what a credit card debt lawsuit is? When a consumer defaults in making payments on his credit cards, the creditor will use all possible ways to recover the debt from the debtor. They will go to the extent of taking him to the court and get a debt judgment against him. Many people do not realize the importance of a lawsuit and hence they miss the chance to defend themselves.
Why will a consumer default in making payments on his credit card debts? There can be a variety of reasons for it. It may be due to unemployment, health problems, sudden death in the family or may be due to other reasons. If the judge understands that the consumer is going through real financial hardship, they might rule in his favor and hence forbid the creditor from collecting the full amount from the consumer.
If you are on the risk of being sued, it is important that you consult a lawyer who deal with judgment cases. Basically, when you receive the court summons, you have 20 days to file your answer to the court clerk. The summons will have the court date and time and its important that you show up on the hearing date. If you do not show up, there are more chances that the creditor will try to get a default judgment against you. It is a good idea to explain your situation to the judge with all necessary proof, and have the case turned in your favor.
A debt judgment is the creditors legal rights to garnish your wages, or put a levy on your bank account or personal property, until the debt is paid off. There are four states in which a creditor cannot garnish your wages. They are Texas, North Carolina, South Carolina and Pennsylvania. All states have their own set of laws regarding garnishment. In California, whatever your income is, up to 25% of your disposable income can only be garnished.
There are other states like New Hampshire in which wage garnishment is not the preferred method of judgment. They will either try to put a levy on your bank account or on your personal property. In most of the states, the creditor has the right to garnish between 10% to 25% of your disposable income as per the laws of the individual state.
If a consumer is receiving threats of judgment from several creditors, only one garnishment is allowed at a time on a first come, first served basis, who is able to contact the employer first.
There are certain exemptions to garnishment, like social security, pension payments, wages of the elderly and disabled cannot be garnished as per the laws.
- Helpful Resources:
The most common reason for anyone getting buried into debts is because they do not try to live within their means. Few of them get into debts due to other unfortunate reasons like loss of job or property, huge medical bills or other unexpected financial crisis. Whatever may be the reason, it is important to know effective ways to get out of debts as quickly as possible.
Everyone should keep a track of all their assets and liabilities, along with their income and expenses. In order to stay in control, you should cut off some unnecessary expenses. For instance, if you are in the risk of loosing your home, there is no point in buying other fancy things like a flat screen TV or a recreational vehicle. It is important to concentrate in saving your home from getting repossessed by your bank. Many people are sensible enough to identify their expenses that is very important in their everyday life.
If you are in overwhelming debt situation, selling off your assets will be a good option to pay off your debts. Sell off those assets that is not giving you any cash flow. It will be a wise decision to sell off those assets and use that money to pay off your existing debts. This will immediately reduce the amount of cash outflow from one’s account. When the liabilities and cash outflow goes down, their will be an increase in income and it will be sufficient enough to cover the living expenses and other monthly installments and also to pay off your debts.
You can consolidate multiple debts into one single monthly payment plan. A debt consolidation company can talk with your creditors and explain them about your present financial situation. They can negotiate with your creditors to reduce your current APR and combine everything into one monthly payment plan as per your budget. When all the debts are consolidated into one payment, it reduces the risk of missing any payments when you have multiple creditors to deal with.
If the APR on your home loan is high enough, you can look for a home loan modification program. The counselor will talk with your bank and make your home loan repayment plan a little easier by reducing the current interest rate.
It is very important to save a portion of your income every month so that you are prepared for any unexpected emergencies, like job loss, death in the family, health issues etc. even if you may not have to go through such tough situation, saving is still recommended because that is your money that can be used by you at later times.
These are some of the few effective ways to get out of debts. You can use all these methods to lead a debt free life and enjoy with your family.
Helpful Article: http://www.cbo.gov/publication/21625