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October 14th, 2009:

Debt Consolidation – your First Step to Financial Responsibility

In today world, almost everyone owning at least one credit card and most of people owning more than one card. Credit card has enabled you to buy things with electronic money, what you need to do is just sign your signature on the credit card receipt. It has made your life so easy until you may not aware that you might over spending each month. If you not manage it probably, you may trap into credit card debt like most of Americans. According to statistics over 40% American families spend more money than they earn and the average American household has nearly $10,000 in credit card debt.

The worst case option for unbearable credit card debt is by declaring bankruptcy. But if you start to serious look at your debt problem and handling it properly, you will have a better option to get rid of credit card debt without the need of bankruptcy. Don’t choose this option unless you really need to do so, debt consolidation is always your better options.

Debt consolidation is simply the process of combining all accumulated debt from all the various creditors into one smaller, more manageable payment. It could be in the form of another credit card or some sort of loan but the best solution really boils down to what works best for you and your current situation.

Debt consolidation will enable you to organize your credit card debt, pay much less in interest and even drop a portion of your debt in some circumstances. Debt consolidation will combine all your debt in one manageable monthly payment with a single due date. With that, you only need to remember one payment due date, miss payment or late payment can be avoided. This will help you to rebuild your good credit records and eventually improve your credit ratings.

If you have home equity, you are lucky because your actually can opt for a home equity loan and use it to pay off your credit card debt. Home equity loan has a much lower interest rate and it can be spread over more years and the interest is tax deductible.

By consolidating your debt into one payment, your credit cards are now free and clear. At this time, your credit card will be back to maximum credit limit for you to use again. If you are not changing your spending behavior, you may trap into to another credit card debt. Hence, a good first step is to cancel most, if not all of your current credit cards. You may keep one for gas and groceries and another one for emergency backup purpose. Pay off your balance each month to develop a good credit rating.

In conclusion, don’t let your credit card debt goes into worse situation where bankruptcy is the only option. Start your first step to financial responsibility and look at your credit card debt seriously; consolidate them to one smaller and more manageable payment. Do a little research and find the best debt consolidation deal you can for your situation and then change your spending behavior so you can get rid of your credit card debt in a few years down the road.

Cornie Herring is the Author from “StudyKiosk-Credit Basics” is an informational website on credit basics and debt consolidation. To see recommended, credible lenders and loan service companies, visit: Recommended Bad Credit Debt Consolidation Services and Lenders

Cornie Herring is the Author from “StudyKiosk-Credit Basics” is an informational website on credit basics and debt consolidation. To see recommended, credible lenders and loan service companies, visit: Recommended Bad Credit Debt Consolidation Services and Lenders

Good Debt Management Will Help You With Debt

Just when you are about to buy a car, or request a mortgage for your house, is not the time to find out that you have bad credit. If you have been behind in paying many of your bills, or if you have never checked your credit report and there are some negative things on it, this may be the case. Usually bad credit results from failure to pay off your credit card bills on time. Everyone has to realize that once you have high debts on your credit card, and you can only afford to pay the minimum, you have to stop using them and start paying them down. Otherwise, watch your credit rating sink. There is one way to improve your credit, and that is through a debt consolidation loan.
A debt consolidation loan company will do two important things for you. First they will negotiate with your creditors to lower interest rates so you can better afford to pay the monthly bill. Then they will put all of the bills onto one larger bill so that you only have to face one total, lower payment.
There is a big benefit to having only one bill. It is very stressful to have to face all of those bills piling up on your desk each month. With a debt consolidation loan, you pay the one big bill on time, and, since you will be able to pay that bill on time, you will cancel all of the negative marks on your credit report over time. Once you are viewed as a good credit risk, you will no longer have the same problems getting a loan of any type and at a good interest rate.
Doesn’t make sense to you? Are you asking “How do I take out a loan for a loan?” A debt consolidation company does, indeed give you a loan, totaling more than your total credit card debt. From the proceeds of that loan, you pay off all of the credit cards, There are many types of debt consolidation loans. As a homeowner, you may want to consider an equity loan on your home in order to consolidate all of your other debt.
As with any financial decision, you should make sure you check all the facts completely on a debt consolidation loan. Make sure you understand the interest rate, the repayment terms and make sure that they are actually better than the situation you are in now.
One of the fastest and easiest ways to consolidate your debt is to do it online. There are those who are not familiar with the concept of debt consolidation loans, and may spend a lot of time and money searching all over for a good loan. Meanwhile, with the use of the internet, they could be searching hundreds, if not thousands of places that offer debt consolidation loans. And they never have to leave their desks.
If you have decided to consolidate your debt, there are plenty of sites to help you, and they are just a click away. No matter how or why you have decided to consolidate your debt, be it using your home as equity, be it to assist in the educational goals of you or your children, you can find a debt consolidation counselor. A debt consolidation counselor will assess all of your needs, your income and expenses, your assets and liabilities and then find the best program and rates based on your personal circumstances.
These specialists will also help you form a budget so that you can stay within your goals and continue to pay your debt on time. There are many different types of debt consolidator specialists, ranging from credit report analysts, financial education specialists, housing advisers, debt management services and personal credit card counselors.

Creating A Budget To Reducing Debt!

Some very important factors, such as a grace period and subsidies, will also be part of the benefit package your consolidator can negotiate for you.
Many of these desperate consumers find themselves contemplating a bankruptcy filing, but bankruptcy can carry a legacy you will have to live with for years. A bankruptcy filing will stay on your record for a minimum of seven years, and you may find it difficult or impossible to obtain necessary credit in the interim. 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.
If your objective is to reduce interest rates and lower your monthly payments, avoid bankruptcy, consolidate your bills and have one monthly payment, or simply get out of debt the fastest way possible, then a debt consolidation loan could provide the answer.
Creation of a Budget
No man is an island. We all need help once-in-a-while. We’re not only referring to personal matters. We’re talking about financial matters. We reach a point where we have to buy something out of necessity, but we can’t pay in full just yet. An example of this is a home. Now the time has come for you to repay on what you own. You must have the discipline to plan out how much you should have saved so when your time is up and you have to shell out the money you owed there and then (plus interest), you wouldn’t have a hard time doing so.
Prioritize which of the debts must be paid first. Prioritize your bills. Make a list so it would be more organized because you could see it right in front of you. This is what you call establishing goals. Establish first what must be prioritized over those you could schedule paying some other time.
The essential debts are debts that should be on top of your list. These are
– Rent or mortgage. Of course, who in his right mind won’t pay up as soon as possible. Paying your rent or mortgage bills on time helps you have a roof over your head.
– Child support. If you don’t pay on time, there’s a possibility you can be held behind bars.
– Utility bills. As much as possible, set aside a budget on gas, heating, water, electricity or telephone when you get your paycheck. In doing so, when the bill comes, then you have something prepared.
– Car payments. This also includes car maintenance.
– Other secured loans. If you don’t repay collaterals, the creditor takes the property even without court interference.
The non-essential debts can be set aside because when these aren’t paid, they don’t have that much of a side effect. It’s a desired goal but not really a priority. The only concern that can be considered when you don’t pay non-essentials debts for a long period of time is the negative image it could project on your credit report.
– Department store and gasoline charges. Failure to pay these charges may result in losing credit card privileges. If it’s too large, you might be sued.
For many who buy wisely, the equity could be substantial. A home equity loan can be used to pay off high dollar items, pay for college tuition, and be used to pay off those high-end credit card accounts. How to address Debt Collectors. There is a law that gives certain conditions for debt collectors as to when and how they should ask you to pay. The federal law, Fair Debt Collection Practices Act, clearly states that those collecting debts may not bug you, give false assertions, or do practices that are not fair when they are getting to collect money from you. 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?
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. If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.
– Loans from friends and relatives. Morally speaking, there is an obligation to pay but sometimes since they’re family, we think that they will understand if we can’t. Check with them if you can delay the payment and ask them for how long.
– Newspaper and magazine subscriptions. Little by little, if you haven’t paid, they’ll amount to so much.
– Legal and accounting bills. If these remain unpaid after a long period of time, then that’s when you might be sued.
– Other unsecured loans. In unsecured loans, there’s no collateral for the debt. This means that the creditor can sue and then collect the debt.
Here’s the confusing part. Some of the bills border between essential and non-essential. If you let these bills defer for a long period of time, it could have consequences in your personal life.
– Auto insurance. The consequence in some states is losing your driver’s license.
– Medical insurance of bills. If you have a tainted record, you might have a hard time getting new insurance in the future.
– Credit and charge cards. If you don’t pay your bills on time, you might lose your credit privileges and would have a hard time applying for a new credit card.
Now that we laid out the groundwork on how you can prioritize which bill to pay first, we move on to having a time frame. It’s best that you have a calendar in front of you. A palm pilot or the calendar in your Microsoft Office program will do. Mark the dates wherein you would have to pay the specific debt – be it essential or non-essential. Then what you can do is set aside the bill that is allotted for that debt.
As for the budget, prevention is always better than cure. You know how much you get in a month. That being in mind, you must allot how much percentage of your salary shall go to which. Then do your best to stick to that budget. If this is how much you should spend for leisure, then that’s how much you should spend for leisure. If at one point, it went overboard, then there would have to be a sacrifice on another aspect, such as food. That seems off, right?
Debt is a hard thing to live with, reduce debts today! So even in budget, you must also list down which is number one for you. Have the discipline to stick to your priority, your budget and your time frame. If you succeeded, paying the bills won’t be any problem. 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. Interest rates for credit card debt consolidation loans through traditional lenders may be based on your credit score. If high, you are likely to get a credit card debt consolidation loan at a lower interest rate. 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. Debt is a hard thing to live with, but we all have it and deal with it everyday. Sometimes it is manageable, sometimes you feel like you can barely keep your head above water and unfortunately many times you feel like you are drowning in it!

Debt Settlement Process

Debt in general terms gives people and companies a nice opportunity to purchase things

that they wouldn’t be able to obtain otherwise.

A lot of companies consider loans as a means of increasing their investments and people use debt money to purchase cars, real estate and a lot of other things too costly to buy with cash.

And although many economists consider debt as a whole as a sign of a society being optimistic of its future earnings capacity – it is obvious that nobody likes to be in debt!

Nowadays many people easily get into a bad credit situation when they start living over the budget – don’t keep track of their income and expenditure. A variety of credit cards are being offered by different credit companies and there are always those who are lured by all the credit opportunities and may easily end up making lots of purchases on credit while making minimum payments on their cards. Then, all of a sudden they realize just how much they are in debt. When the situation is getting critical “Debt Settlement” may be the option to get out of a bad credit once and for all.

A “Debt Settlement” is an agreement concluded between a debtor and a creditor to fully satisfy a debt for a reduced payoff amount. A debt settlement agreement is achieved through debt negotiation process with a creditor in case when a debtor isn’t able to fully meet his/her debt obligations due to financial difficulties and attempts by the creditor to collect on the debt haven’t been successful. As a result, the creditor agrees to cancel part of the debt and accept the remaining sum as full repayment.

A lot of people are often asking: “Why would the creditor settle with me”? What’s his incentive?

The creditor’s primary motivation is to recover funds that would be lost otherwise if the debtor filed for bankruptcy. The other key motivation for the creditor is that he can recover even more funds this way than through other collection methods. Collection agencies and collection attorneys take commissions as high as 40% on recovered funds. Collection calls and lawsuits threats often push debtors into filing bankruptcy; in this case the creditor often recovers no funds at all.

People who use debt settlement services are those who are experiencing legitimate financial difficulties, cannot repay their debts through various debt management plans offered by consumer credit counseling agencies and who also aren’t willing to file bankruptcy. That is why, debt settlement programs can be viewed as a link between consumer credit counseling services and bankruptcy filing.

Debt settlement services are provided by third party debt resolution companies who set up payment plans, and then by means of debt negotiations with a creditor achieve a certain settlement amount to be paid by a customer. Most of debt settlement companies have rich experience in convincing creditors that this is their only chance to recover anything and that they won’t be able to collect anything from their client if they sue and even if they win in court.

Usually, debt settlement companies are able to cut the monthly payment contributions to approximately half of the typical monthly credit card payments, and get consumers debt free in a relatively short period of time.

Den Braun is an expert in finance. The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. Den Braun writes about <a href="” rel=”nofollow”> Debt settlement & debt negotiation and other related topics on the debt-settlement website.
To learn more about debt and finances in general, visit

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