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October 4th, 2009:

Debt Consolidation: When? Why? Who?

Debt Consolidation is not such a complicated process. However, there are some basic concepts that you need to know in order to fully understand its consequences. If you think that debt consolidation might be the solution to your debt problems and you want to know more about it, read on.

We do not intend to do a thorough explanation of complex financial concepts but to give an idea of what you are facing when your debt grows too much and you need to reduce it. Debt consolidation provides the necessary tools for debt reduction and aids people to manage their finances more efficiently.

When Should You Consolidate?

When it comes to debt consolidation, timing is essential. You should undertake a debt consolidation program if your debt has grown too much and you have lost control over it. If you fear you won’t be able to pay even the minimum on your credit card balances, if you are struggling to afford necessary things and honor your debts, then it is time to think about debt consolidation.

However, if your creditors have taken collection a bit further and you’ve already been contacted by their attorneys, you should better contact a debt settlement agency or a lawyer of your own. They will handle this situation more efficiently and you would otherwise be spending money for nothing since debt consolidation cannot help you when your debt has become a legal problem.

Why Should You Consolidate?

The reasons to consolidate are varied: You can consolidate to reduce the amount of money you spend on debt on a monthly basis, to save thousands of dollars by reducing the interest rate you pay and get debt reductions or to reduce the amount of bills and monthly payments and thus avoid the risk of missing payments or paying late.

The above reasons are all good enough to undertake a debt consolidation program. However, if your debt is not that big and you think you could handle it yourself provided that you had the necessary information, you can contact a debt counseling agency instead and get them to aid you in making a budget and controlling your spending.

Who Should You Contact To Get Started?

In order to get started, you have to get in touch with a debt consolidation agency. But don’t go for the first one you find. Search around, get contact information and ask them to explain you what they can do and how they work. There are many things that these agencies can do that may affect your credit. There are even some agencies that force you to close accounts, cancel credit cards, etc. Make sure that that is what you really want.

There are certain agencies that are more flexible than others, some handle payments on your behalf and others give you more control and let you make more decisions. Which one you choose will depend on your needs. In any case, a good place to get started is the internet. You can do a search for debt consolidation and consult the many results that will be presented to you. Most of these agencies have online sites and you can even contact them by email and avoid making phone calls. Once you decided which one you are going to work with make sure to read the contract thoroughly before signing anything.

Melissa Kellett is an expert loan consultant who has worked for twenty years in the financial industry and helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and many other types of loans and financial products. If you want to learn more about <a href="” rel=”nofollow”>Guaranteed Loans for Bad Credit and <a href="” rel=”nofollow”>Unsecured Loans you can visit her site
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Christians Debt Solutions Can Change Your Life

Christian debt solutions can help a Christian to avoid bankruptcy through negotiations and consolidation of financial obligations. Some of the services they offer can teach you to learn to live within a budget. In cooperation with creditors you can work to lower interest rates and reduce the principle. The work of credit recovery involves the consolidation of invoices, and learning what the word of God says regarding debt- “No one should have nothing but love for a debtor,for who loves another has fulfilled the law”(Romans 13:8).
Negotiation of cash below a balance includes less interest. Consolidation can lead to a lowering of interest rates and a monthly payment of lessl instead. Credit Repair can help to improve your credit ratings, so that lenders offer lower interest rates and interest. A Christian debt repayment plan can help their finances in accordance with the churches teachings.
Consumers who are in financial difficulties need to pray and ask God to help them successfully manage the debts and to avoid future debt once all their bills are paid. You should consider a solution of the debt as a Christian solution to financial problems. In today’s world there are several options for those who need help. There are many companies including Christian Debt Solutions. The children of God often seek help from the companies listed on the word of God, the ethics and are honest and trustworthy. Those who pray for you are the kind of friends who to go ask for help.
Unexpected help sometimes occurs when life places the children of God in situations that are undesirable and stressful. Society encourages consumers to spend. Poor money management overruns good intentions. To many, the credit card offers great value and convenience. Most consumers apply for credit cards and find debt in a few months, which was created by a person that was employed and a good consumer. Once interest rates begin to climb and they become unemployed then is almost impossible to pay the bills. Other things that can contribute to the financial downfall can be higher house and car payments, fuel and the increase inliving costs and try to pay phone bills, cable bills, utilities. A Christian debt solution can be a good starting point for the search for answers on how to deal with creditors and reduce debt related stress.
One of the first things that most people think when they have financial difficulties is they don’t want to be left in bankruptcy. Chapter seven bankruptcy allows a person to cancel their debts including interest. Before a consumer can declare bankruptcy, he or she has to attend a class of consumer credit in a certified course. A certificate on completion of the class must be brought before the court. Bankruptcy can be very expensive, a lawyer must be retained and legal expenses must be paid. After the failure may be on the debtor of the credit report. This will be remembered as a public register of seven to ten years. A Christian debt solution can offer consumers a range of options for dealing with financial problems, so that he or she is not required to file for bankruptcy.
The Regulation and negotiating skills are necessary for dealing with financial obligations. Companies such as christian debt consolidators offer these services. Some creditors go to work much earlier to solve some of the problems to help the debtor avoid filing for bankruptcy. Companies will work in close collaboration with many creditors to negotiate a settlement for less than what is actually owed. In addition, the lender agrees to put an end to all fees and interest. Settlementscan be anywhere from 40% to 75% of what is actually owed. If the customer can furnish a lump sum to be paid immediately in an agreement to accept a lesser amount. It may include the negotiation of an agreement, in which the debtor pays monthly until the debt is completely paid in full. The important thing to remember is that this type of agreement requires that the customer must be ready to ensure that the payments are made on time or creditors may not honor the agreement.
Learning to live by a budget is essential to overcome the problems caused by poor management of money. A Christian debt solution employs professionals who understand how to create a budget for the customer, so that he or she will change their buying habits. The customer must be ready to write all the expenses and track every cent and budget all revenue and total debt. If the person has less than is in the budget he or she must do without in order to save elsewhere. Spending too much on food means less money for other things like entertainment.
Consolidation of debt is another service, which can help consumers pay for the purchase of a loan. Saving for a monthly payment and no more. We hope that the interest on the loan will be much lower while the debts are being paid off. When the monthly payment is significantly less, it is easier to manage getting the total debt paid off. You could apply for a second mortgage if there is enough equity, or you can use a credit line to pay the bills. Real estate property loans tend to have lower interest rates compared to personal loans. Christian debt consumer solutions provide valuable information to make the best decision and may provide the maximum benefit in the long run.

Nonprofit Debt Relief Companies

Consolidation is nothing but the process of negotiating the rate of interest that will ultimately determine by how much the borrower’s payments will be reduced and what his overall settlement will look like. So any money above and beyond your normal payment is applied solely towards the principle of the loan.
There are numerous types of debt, including basic loans, syndicated loans, bonds, and promissory notes. Debt, especially large sums of debt, can also be secured through a mortgage or other security interest over some of the debtor’s property, in which case the creditor will have some rights over that property in the event that the debtor becomes unable to repay the debt and defaults on the loan.
Debt is a hard thing to live with, reduce debts today! Debt consolidation allows a consumer to present their financial case to a lender who may be willing to take on the burden of paying off debts in exchange for one monthly payment made to the lender. You’re in for Disappointment If You’re Looking for Nonprofit Debt Relief Companies
In recent years, the Federal Trade Commission (FTC) has slapped fines on numerous fraudulent companies masquerading as nonprofit debt negotiation and debt relief organizations. The promises these companies make are tempting…but consumers who fall for it, hook, line, and sinker, are in for a disappointment.
Claims Made by “Nonprofit” Debt Relief Companies
Nonprofit Services – These organizations make a big show of helping you out of the goodness of their hearts.
Reduce Debt – No matter what type of debt you’ve incurred, these organizations are willing to promise they can reduce the amount of debt by a certain percentage (approximately 10 to 50%).
Better than Bankruptcy – Using frame psychology, these organizations give consumers the choice between do-or-die alternatives: work with them or risk bankruptcy. No Impact on Credit Rating – Working with a nonprofit debt relief company will supposedly have zero impact at all on an individual’s consumer rating.
What They’ll Ask You to Do
In return, these companies will ask you to pay a specific amount of fee for periodic intervals. For that fee, you can ignore your bills and stop paying your creditors. For that fee, you’ll let them do all the worrying.
The Truth about Nonprofit Debt Relief Companies
There are a number of different types of debt consolidation loans: home equity loan, line of credit, or second mortgage.
The main reason for this risk is that in order to secure a lower interest rate (and thus a cheaper overall payment rate), you’ll need to present some sort of collatoral to back the loan. There are numerous groups, individuals, or products on the market that are designed to help individuals dig their way out of and recover from debt. Although these products are available, there are still thousands of individuals that choose not to receive assistance. It is true that some individuals may be able to recover from debt on their own; however, it will likely take a large amount of time and stress.
If you have some cash handy, you might as well pay off some debt, especially the one that is on higher APR credit cards. Some people have expressed skepticism that you can actually negotiate with creditors using our strategy or other creative methods of reducing debts.
Take a step back and ponder carefully on the claims made by these companies. Do they ring true? Do they sound too good to be true? If so, they probably are. These companies might be nonprofit on paper but that doesn’t mean they’re not earning from their clients. They can just as easily overstate their operating expenses to make their balance sheets reflect illusionary break-even margins.
An Example of a Fraudulent Nonprofit Debt Relief Company
Early in 2005, the FTC had filed a complaint against the National Consumer Council, a front group of debt relief and negotiation companies, for deceiving almost 45,000 customers seeking instant freedom from debt. Under the NCC umbrella were other companies with nice-sounding names like London Financial Group and Financial Rescue Services. Falsely claiming that all their clients’ debt problems would be solved simply by depositing money into their accounts and getting their services aggravated the debt situation of their clients instead.
Are There Truly Legitimate Nonprofit Debt Relief Companies?
Yes, although they’re very rare. The best way to personally determine whether a debt relief company’s for real or not is to ask for information from the Better Business Bureau and other similar institutions. They’ll be able to tell you if there are already consumer complaints filed against the debt relief company you plan to transact with.
It may be more convenient to make one payment rather than several. Or you can improve your cash flow in the short term by reducing monthly outgoings. But this may cost you more over time because you are paying the debt off over a longer period of time. In a credit card debt consolidation, your average interest rate may be reduced. All your loans can also be transferred to one single card that has a lower interest rate than the ones you are currently paying.
Stop spending on things that aren’t absolutely necessary. Each individual will have to define what “necessary” means, but it may mean taking a sack lunch to work, bringing your own coffee instead of stopping at Starbucks, and canceling that subscription to HBO.
The first step toward taking control of your financial situation, is to do a realistic assessment of how much money you earn 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.

Don’t Turn Debt Consolidation Into your Next Credit Issues

Debt consolidation is one the most common debt solutions used by many debtors to plan for debt relief. By going through the debt consolidation, you are combining all your high interest debts into a single monthly payment on a lower interest rate. And most of time, debt consolidation will accompany by a debt consolidation loan. The debt consolidation loan will use to payoff all your debts and you only need to make payment on your debt consolidation loan.

With your debts payoff with the debt consolidation loan, all your credit cards’ balance will go back to zero and the credit card limit will go back to maximum for usage. If you do not control the uses of your credit cards and continue to swipe it and pay the minimum payment each month, you are at high risk to fall back to another debt issue.

If you are planning a debt free with a debt consolidation and accompany by debt consolidation loan, stick on your goal and don’t turn debt consolidation into your next credit issues. Things that you can do to avoid this tragedy from happening are:

1. Changing Your Spending Behavior

An impulse purchase is an unplanned or spontaneous purchase. And most of time, impulse purchase is made on items that are optional and it can causes you to spend out of you budget. If you tend to make such purchases, you need to change your spending behavior or else your effort to consolidation your debts and plan for a debt free will be a waste. When ever you go for shopping, write down the items you plan to purchase in a piece of paper and just buy the items in the list.

2. Make A Budget Plan

In order to avoid create new debts, you need to know how much you can spend with your existing earning after minus out your debt consolidation loan payment. A budget plan will definitely gives you a clearer picture on where your money will goes and how much. If you projected spending in your budget plan exceed your allocated budget, you need to cut away all the optional expenses such as entertainment, luxury vacations or downgrade your life style, for example if you use to buy branded cloth and shoes, you may now go for cheaper options so that you control your spending within your budget.

3. Avoid Swiping Your Credit Card

Use electronic money such as credit card may cause uncontrolled spending. Hence, avoid using your credit card again. If you are a type of person that hard to control the uses of credit card; then canceling most of your credit cards could be your wise decision, you can leave one or two credit cards for emergency uses.

4. Make Full Payment On Credit Card Balance

If you can’t stop using your credit card but you think that you can control swiping it just to buy items in your budget plan. Then, you must commit to yourself to pay full payment on your credit card balance each month. If you are just paying the minimum payment, your credit card debt will snowballing from month to month and will lead you to another debt issue one day.

In Summary

Debt consolidation is a debt solution that can get you out of debt, in contrary it can lead you to trap into second debt problem. Hence, you need to accompany debt consolidation with a proper spending management to ensure your debt issue resolve.

Cornie Herring is the Author from This is an informational website on credit basics, debt consolidation and bankruptcy. You can learn more about your money from our Money Lessons.
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