What is Better, Bankruptcy or Debt Consolidation?
August 26, 2010
Debt Consolidation Vs. Debt Settlement
August 21, 2010
Using Debt Consolidation To Take Control Of Your Debt
August 20, 2010
What Are the Impacts of Debt Settlement Or Debt Consolidation on Your Credit Score?
For people who are carrying too much debt and are having difficulty making their payments, debt consolidation or debt settlement can be viable options. While it is generally known that falling behind in your payments or missing payments will result in damage to your credit rating, many people are unsure how debt consolidation or debt settlement will affect their credit score. To see the ramifications, let’s begin by understanding the two processes.
Debt Settlement
Let’s say you have three credit cards with a total balance of $18,000. At an average annual percentage rate (APR) of 23%, you must pay a minimum of $525 per month to avoid default. It will take you 411 months (over 34 years!) to pay off your debt, and you will pay $33,844 in interest. If these numbers seem shocking, you can go to any free online credit card debt calculator website and run the numbers for your own credit cards.
There is a better way. Before you contact a debt settlement company, try to settle your debts yourself. To pay off an account, call your credit card provider. Say that you cannot make your payments and that you want to close the account and pay off the balance with a settlement. Say that if the card company won’t do this, you will default and they may get nothing. Your credit card provider will make you an offer. Your account will be closed and you will be put on a payment plan. You must stick to your payment plan; if you fall behind, your credit card company will re-instate the penalty interest rate, which will be over 20%. But if you stick to the plan you will save yourself the $33,844 in the example above.
If your account has already gone to a collection agency, you may need to make a lump payment to the collection agency before the credit card company will offer you a settlement.
What effect will settling have on your credit score? Closing your own account is not a negative action. The three credit reporting bureaus (TransUnion, Experian, and Equifax) offer credit management advice on their websites. They recommend that you do not cancel several accounts at the same time. Close one account, make your payments, and check your credit score. They recommend that if possible you keep the oldest account active, because the older the account, the more positive weight it has on your credit score. Close newer accounts first. Also, don’t over-consolidate balances onto one card. You are rated according to how much of your available credit you access. If your credit balances are more than 35% of your available limits, your credit score may be negatively affected.
Debt Consolidation
If you need to act quickly because you are facing severe financial difficulties, you may consider a debt consolidation loan or debt management counseling. You may enter into an arrangement whereby you write a check each month to the credit counseling service, and they pay your creditors. The Fair Isaac Corp. (FICO) assures consumers that while a notation may be placed on your credit history, if you pay your debts through a debt consolidation agency or credit-counseling agency your score will not be affected.
By: Beth Stewart
Debt Consolidation Q&A
Secured Loans and Remortgages When Used For Debt Consolidation
Worrying about money takes away all enjoyment in living.
This is not an uncommon situation nor is it a surprising one, as it takes such a lot of money to pay for the basic cost of living these days.
Electricity for lighting and heating are essential aspects of life.The basics in life are costly and absolutely necessary for living.
Food is expensive, and often people get quite a surprise in the supermarket when they go to pay for the groceries in their weekly shop, when they discover the total of the food bill for the week
Another essential item is of course clothing, and added to the cost of the other essentials of life, the majority of ordinary human beings wait anxiously for pay day every month and by that time their wallets are thin, if not empty.
Everyone needs, and is surely due a holiday yearly.
We are social creatures who thrive in the company of others, and as such, every one has a right to either go out with friends for a drink or a meal, or to sometimes, every so often, entertain friends at home.
Even this mixing with others can strain the purse strings with the cost of even a decent bottle of wine being high these days
A car is also a fairly basic necessity of life that allows us to travel around getting more experiences out of life, as well as expanding our knowledge.
After paying for all the basic essentials of life, many people have to use credit cards to pay for entertainment, a holiday, etc.
The majority have a loan or hire purchase to buy the car.
It comes as no surprise, that most people long to receive their salary, while at the same time being unsure if it is sufficient to pay all their debts.
The time to face up to your true financial position has come.
This can be achieved by consolidation loans which perform the task of debt consolidation which clears off all credit card debts, etc. and leaves a single lower repayment in the place of the many troublesome high interest debts.
Homeowners can best go about this by arranging either a remortgage or a secured loan which have very low rates of interest compared to the high rates for credit cards, etc.
To give an example of how much can be saved, if we take a person with credit card balances of 30,000 which will cost a minimum of 900 each month, and when this minimum repayment is made it will take about twenty six years to clear.
By paying off all these cards with a secured loan at about 9% APR, the payment every month would be in the region of less than 400,over a ten year period.
The payment would be less than half, and after ten years the debt is finished.
With the credit cards, there will still be sixteen years to run.
As such it is not only more than a fifty percent saving, but an absolute fortune that can be saved by consolidation loans via secured loans.
With remortgages from less than 2%, even greater savings can be made.
It is certainly a win win situation with debt consolidation loans.
By: Liz Moir
August 16, 2010
Chapter 13 Bankruptcy or Debt Consolidation: Which Is Better?
August 9, 2010
Debt Consolidation Home Loan – Life After Debt
A debt consolidation home loan is one of the many options available to those overwhelmed by mounting debt problems. It is understandable that after what has happened to the economy lately, many people find themselves deep in debt problems. What’s more, their monthly income simply cannot cover the amount they need for the loans each month. This kind of financial problem has caused thousands of Americans extreme stress and it often leads to further unintentional accumulating debt.
There are different solutions available to people in this situation. If you are one of them, a debt consolidation home loan is one that you might want to look into. If you have a not so impressive credit score, securing this kind of loan against your home is the best way for you to acquire a low interest and APR (annual percentage rate). You use the equity you get from your home to pay off all your existing debts. Then you are left with only your home mortgage to deal with.
Ideally, the amount you would want to loan from a debt consolidation home loan is an amount that would be enough to pay off all existing loans and other mortgages. This way you get to pay off all your debt regardless of how many different creditors you owe money to. When applying for this loan, you have to make certain that the interest your creditor will give you is much lower than the interest rates of your existing loans and mortgages. In this manner, not only will you be conveniently paying just one loan at a time, you will be paying considerably less on your monthly loan payments.
There are many advantages and benefits of a debt consolidation home loan. The first obvious one, of course, is that you get to avail of a lower interest rate as compared to the interest rates you are paying to your different existing loans. This loan will help you significantly pay off all your debts slowly but surely.
Most importantly, with a debt consolidation home loan, you can make a considerable improvement on your credit rating. Or at least you can prevent it from further deterioration. Unlike a credit settlement or declaring bankruptcy, this kind of loan will not affect your credit score adversely. As long as you get to pay the minimum, or better yet over the minimum requirement each month, then you are well on your way to acquiring a better financial report in the near future.
A debt consolidation home loan is probably the best method to give yourself a new slate in your financial life as long as you manage it wisely. Once approved, this loan will immediately take off the pressure of being harassed by numerous creditors. You will finally get to sleep better at night. More so, you will be dealing with only one loan that is significantly more affordable. Once managed properly, then you will be debt-free in no time at all. With this kind of loan, there definitely is “life after debt”
By: Benjamin Dale
