Consumers are bombarded through the media with credit card debt options everyday. Unfortunately, little information is actually presented along with these ads about debt consolidation. All consumers are left to know is you can reduce your debt and lower your payment . Obviously that is not enough to make a well-informed financial decision. First, a consumer must understand that there are several forms of debt management:
- Credit counseling - This involves working with an organization, typically a non-profit agency , to reorganize your unsecured debts. Along with restructuring your debt, they can actually work with creditors to get late fees waived and interest rate concessions. By working with a debt counselor you can become debt free in four to five years, which is a significantly shorter timeframe than the minimum payment route.
- Debt settlement - This type of debt consolidation service involves negotiating with credit card companies to get a consumer's balance lowered, in some cases by as much as 40-60% of what is owed. You can also see a dramatic reduction in your payment. Also known as debt negotiation or debt reduction, settling your debt is a great method for consumers who are experiencing a financial hardship and want to avoid bankruptcy.
How To Find A Good Company
The debt management arena is relatively new and unregulated. To verify the legitimacy of any company you should first and foremost check out their background with the Better Business Bureau (BBB). Companies with a lot of complaints are generally best to steer clear from. Another good resource to check out are industry trade organizations. For debt settlement services, the prominent trade organization is TASC, and with credit counseling, the leading trade organizations are the NFCC, AICCCA , AADMO. You can also use PayingPaul.Com to get matched with a reputable provider. Simply fill out a form and start getting out of debt today!
Debt Reduction Alternatives
Using the help of a debt service is not necessarily for everyone. Sometimes some simple budgeting and a plan to get out of debt are enough to help people cut down their debt.
Step 1: Add up your monthly expenses and compare it to your income. If you are spending to the point where you aren’t able to save each month, evaluate whether cutting back on any unnecessary expenses will be enough to be able to do this. If not, a debt management service is most likely your best course of action.
Step 2: Get your free report at annualcreditreport.com . Consumers are allowed to pull one credit report every year for free. See what outstanding debts you have and check to make sure that all of the information being reported to the credit bureaus is accurate.
Step 3: Negotiate deals with your creditors. One study shows that unsecured lenders were willing to reduce their interest rates in over 50 percent of the cases when a consumer asked for this type of help.
Step 4: Figure out if you have any way to find extra income or money to start paying off your debts. Maybe it’s an extra job. Maybe it’s liquidating some assets or selling a car you don’t need. With credit card interest as high as it is, you must think outside of the box and potentially let go of a possession to get out of personal debt.
Debt Consolidation Questions & Answers
I am looking to consolidate my credit cards , but want to get some advice for my situation. What should I do?
If you want to speak with a credit advisor , all you need to do is submit your contact information on the left and PayingPaul.Com can match you with a company to explain their program for free. It’s that easy!
I am in the airline industry, and I have a severe debt problem that is the result of a reduction in my income due to 9/11. Which option do you suggest?
You sound like you could potentially be a good candidate for debt settlement. Since much of the ability of the settlement company to obtain favorable offers rests on proving that their client is hardship case, you may be a good fit. Also, depending on what your definition of severe is, you may not be able to afford a debt management plan (DMP).
I missed one payment and the credit card companies jacked my interest up to 32 percent! I tried to get a consolidation loan but could not qualify for anything with good rates. What do you suggest for my situation?
This sounds like a case of someone who should enroll in a debt counseling service. Assuming you haven’t tried to get your interest rates lowered on your own, they can send proposals to your creditors to get interest rate concessions and possibly even your late fee waived.
Think that a debt consolidation alternative is what you need? Let PayingPaul.Com match you with a company that can help. Start today!