Not All Debt is Bad

So you are in debt-who isn't these days? We live in a society that encourages people to go into debt. Credit card commercials tell us that a trip to Jamaica is just what we need, regardless of whether we can afford it. (That's what your gold card is for, right?)

Loan brokers want us to borrow up to 125 percent against our home equity. Even the federal government just had its first balanced budget in a generation and now faces the enormous task of paying off over trillions of dollars in debt.

Yet not everyone is in debt. Many people know how to deal with money. Their debts are manageable, and they have money in the bank. That sounds nice, doesn't it money in the bank? That is what you deserve. In order to get there, however, you are going to have to change some of your thinking about money and learn a few new methods of dealing with it.

Why Are You in Debt?
People who are not in debt think about and treat money differently than the rest of us. They know a few things about money and debt that escape the rest of us. Let's call them the "financially literate." If you can begin to relate to money as they do, you will be well on your way to a life that is not only debt-free, but also prosperous. What we hope to do in this book is to show you some of their secrets so you can adapt a few of these ideas and tools to help you get out of debt.

Do not feel too badly if you are not good with a dollar, a lot of people aren't. Money literacy is not taught in schools, and too often parents are too busy trying to dig themselves out of their own financial hole to help much either. Yet, unfortunately for many of us, we learn more about money from our parents than anywhere else. The good news is that learning how to get out of debt and become more financially literate is not all that complicated.

The first step in the process is to figure out how you created so much debt, because if you don't figure out how and why you got yourself into this pickle, you might get out of debt, but you certainly won't stay out. So the first question to ask yourself is: Why did you go into debt in the first place?

Sometimes going into debt is unavoidable, but often it is not. When money is tight, you have several options; going into debt is just the easiest. Instead of choosing more debt, you might have decided to work overtime and make more money, or possibly you could have tightened your belt and spent less money. Debt was not your only choice.

There are many reasons people go into debt: some are good reasons, and some are bad. It doesn't matter. Did you buy luxuries you could otherwise not afford? Did an illness or a divorce set you back financially? Was debt your way of dealing with some other sudden, unexpected expense? When you look at the reason why you went into debt, the important thing is to notice whether your spending habits follow a pattern. If you can see a pattern, you need to address that pattern as much as the underlying debt.

Consider Mark and Diane. They both make a good living: he's a psychiatrist, and she's a psychologist. They have two kids to whom they are devoted. They send both to private school, which costs a total of $15,000 a year, and both kids go to summer camp. This expense adds up.

Mark and Diane don't buy luxuries, they don't travel much, and, except for the kids' expenses, they are very frugal. Yet the only way they can pay for everything is by going into debt. They use their home equity line of credit and credit cards to stay afloat. Although they would like to move to a less expensive neighborhood, they can't because they have no equity in their home, so they are stuck.

What are they to do? If they are going to get out of debt, something in their lives is going to have to change. The private school is going to have to go, camp may be out, or they are going to have to start making more money. The same is true for you. If you want to get out of debt, you are going to have to identify why you went into debt and change that behavior or pattern.

Good and Bad Debt
Debt in and of itself is not a bad thing. Both of us (the authors) were able to start our own businesses because of debt; Steve began his own law practice, and Azriela began her own entrepreneurial consulting business. So we understand what debt is and why some debt is great debt.

Debt allows you to do things you otherwise normally could not do, such as start a business, go to college, or pay for a home. Debt constructs buildings and funds investments and entire corporations-even the government is funded by debt. The trick is to foster debts that help the cause and banish the ones that don't. Not all debts are bad debts.

Good Debt
Debt that helps you, enriches your life, is manageable, and is not a burden can be called good debt. For example, student loans are good debt if they enabled you to get through school and further your life goals. They are bad debt if you dropped out of medical school after one year to become a writer. A good debt helps; a bad debt hinders. We want to help you get rid of that bad debt.

Other examples of debt that may be considered good include:
1. Home loans. A mortgage can be a great debt. Not only does it permit you to own your own home, but it also allows you to build home equity. People who are financially savvy earn interest and equity. People who are not financially savvy pay interest and create money for others. For example, charging groceries means that you will pay about 17 percent interest on items that will be consumed within a week. A financially literate person would never do that.

2. Car loans. A car loan can be a fine debt because you get something long-lasting out of the debt. If you need a nice car for your job (if you are a real estate agent, for example), a car loan may be considered good debt because it helps you in your career. However, a car loan that you cannot afford is a bad debt because it detracts from your life.

3. Business loans. If you can service the loan, and it helps you make more money, the loan is good debt, but if the loan is nothing but a source of problems for you, the debt is bad.

4. Credit cards. Credit cards are fantastic. They are convenient and easy. They can help finance a business or even medical emergencies. The problem with them, as you probably know only too well, is that it is too easy to fall under their siren spell and get in over your head before you know it. That's when they begin to hurt your life more than help it.

Bad Debt Blues
How do you know if your debt is good debt or bad debt? Easy. Bad debts cause stress. You sleep poorly because of them. They cause fights and foster guilt. Supreme Court Justice Lewis Powell was once asked to define obscenity. Hard-pressed to come up with a definition, Powell uttered the famous line, "I know it when I see it." The same could be said for bad debt: You know it when you see it, and it certainly can be obscene.

Bad debt seems impossible to pay back. You create bad debt when you charge things you don't need or when you borrow for things that you consume quickly, such as clothes, meals, or vacations. The things quickly disappear, but the debt has a nasty habit of sticking around, seemingly forever. Bad debts can become very bad debts because of interest and penalties. For example, if you buy a CD player for $200 and don't pay it off by the end of the year, and your credit card company charges a usurious 20 percent APR (20 percent per year), you owe $220 by the end of the year. If you do this with five items, you owe $1100, and that's a lot of money.

Money Talks
Tight for money? Here are some simple ways to save a little extra: Don't use ATMs at other banks and avoid $2 user fees; cancel your movie channels on cable and save about $20 per month; put all of your change at the end of the day in a jar and save about $50 a month; hold a garage sale and make about $200; cancel your cell phone and save $50 a month.

You can create bad debt when you agree to pay these crazy interest rates that some creditors charge, because the debt seems to grow exponentially. Credit cards are the prime culprit, but they are by no means the only one. High interest can also come with personal loans, business loans, or unpaid taxes.

You know what the bad debt dance looks like, anyone reading this book does: New bills are coming in before you've cleared out those from last month. You're surprised to find that the phone bill is still unpaid. Somehow the dentist was never sent his check. You know what past-due notices look like. Your Visa and MasterCard bills include late payment penalties. The hardware store sends a letter telling you you're past due and requests that you send a check at once. There is more month left at the end of your money, and payday seems far away. Worst of all, these things don't surprise you anymore.

Avoidance is a common coping mechanism to deal with a budget that doesn't balance. The problem is, it can create even more problems than you already have:

Your property could be repossessed. The finance company can come take your car. The electronics store can come take its TV back. You could get sued. If that happens, your wages could be garnished, or your bank account could be levied upon. Imagine your surprise when you go to get that $1,000 out of your checking account to pay your mortgage and you find that it has been seized by one of your creditors.

A lien can be placed on your real estate. Failure to pay a bill now means that a creditor can get a judgment against you and force you to pay it later when you sell your house, only then you will pay it with 10 percent interest per year.

Loss of services. You could lose your insurance or your utility services if you avoid paying those bills.

Yet, as much as you have been avoiding the problem, the truth is that your debts are neither crushing nor hopeless. They are simply a problem-one for which there is a solution. But no one ever eliminated a problem until he or she recognized and admitted that there was a problem. You began to do that the moment you read this articles. As you read it, you will need to begin to formulate a debt-reduction plan that will work for you. As you do, you need to determine which debts are necessary and which are not.

Debts You Want to Keep
Steve, one of the authors of this book, is a bankruptcy attorney. One day, an old acquaintance named Bill came into his office and said that he needed some help getting out of debt, but he also wanted to avoid bankruptcy if at all possible. They talked, came up with a plan of action, and Bill went on his way. About four years later, Steve ran into Bill again and asked how things were; Bill relayed the following story.

Bill had $30,000 in credit card debt and was behind two months on his mortgage when he left Steve's office. That day, Bill finally decided that something had to change. He wanted to pay everyone back, put some money in savings, and keep his house. His mortgage was his largest, and favorite, debt because he loved his house.

Bill's first order of business was to prioritize his debts. Wanting to save his house, Bill called his lender and found out that it had a program that would enable him to roll his mortgage arrears onto the end of his loan. He was therefore able to keep his most important debt and focus his energies on getting rid of the debts he didn't want anymore.

Bill put together a credit card repayment plan. He started living a bit more frugally, making some extra money by moonlighting, and paying more on his credit cards than the minimum. He was diligent, but not always perfect. Although it took him several years, he finally did get out of debt. He also kept his house and even created a little nest egg. Bill did it, and you can too.

Debts to Get Rid Of
If you want to prosper financially, there are plenty of debts that you will want to wipe out. The most obvious are those where you are paying high interest and penalties, things such as credit cards, lines of credit, taxes, or any other debt that is much higher than inflation. In this articles, you will see how to formulate a plan that will enable you to get out from under these burdensome debts. But as you contemplate this plan, you also need to prioritize certain debts and pay them on time:
1. Rent or mortgage. Make paying your rent or mortgage a top priority. Payments on a home equity line of credit or second mortgage are also essential because you can lose your house if you don't pay.
2. Car payments. Make the payments. If you don't, the car will be repossessed.
3. Utility bills. These services are important, and the bills usually have heavy late payment penalties.
4. Child support or alimony. Not paying these debts can land you in jail.
5. Taxes. Taxes may be put off for awhile if necessary, and we show you how to do so later on in the book, but if the IRS is about to take your paycheck, bank account, house, or other property, you should set up a repayment plan immediately.

The First Rule of Holes: Stop Digging!
The goal of this articles is to help you get out of debt within the context of making your life work. You will not be asked to make radical, unreasonable changes in your life because doing so rarely works. Instead, important, sometimes gradual, small but significant changes can make a big difference.

If you are going to start getting out of debt, you have to stop going into debt. One way to start is to begin to wean yourself from the credit card teat if you think that is part of your problem. You don't have to cut up all your credit cards; that would be impractical and unreasonable. Start slowly, but build up to it and get strong. You can do it. The only way to stop going into debt is to stop going into debt. You might as well start now because the sooner you start, the sooner you will get out of debt. The longer you wait, the longer it will take.

We will show you how to easily trim your budget (well, almost easily) so that you need not incur more debt to stay afloat. But begin now. You are going to have to stop sooner or later. Down the road you will see that this is one of the most important steps you can take in getting out of debt. You will thank yourself for this gift. Remember the first rule of holes: Stop digging!

Long-Term Goals
Now is the time to begin to think about your long range financial vision. What is it you hope to accomplish by getting out of debt? Changing some habits?

Paying off your MasterCard? Probably what you really want is a less stressful life, one that's free from money worries. But you can have even more. Getting out of debt is one thing, but prosperity is another thing altogether.

You have read this once already, and you will read it again in this book: If you don't begin to do some things differently, to change the way you think and treat money, you might get out of debt, but you won't stay out of debt. If you do make some simple changes to your thinking and your behavior, not only will you get out of debt, but you also will get ahead. You will get what you deserve: a life of abundance.

The Least You Need to Know
1. Going into debt for essentials makes financial sense; doing so for nonessentials does not.
2. Not all debt is bad debt.
3. You may want to keep debts that enhance your life and get rid of the rest.
4. Stop adding to your debt right now.
5. Cultivate a long-term plan of action.

Student Can Easily Consolidate Their Student Loan

A student debt consolidator provides a debt relief by suitably merging together the undergraduate's exceptional loans. The meaning of this is that the debt consolidator will get in touch with all your lenders, "pay off" the balances on your behalf and subsequent to this instead of two or more credits, you only be indebted to one lender! By signing up with an student debt consolidation curriculum, you will be in favor to begin a new credit with the lender.

Fundamentally, this kind of curriculum falls under 2 categories:

1) Unsecured consolidation loan

2) Secured consolidation loan

The earlier category of debt consolidation loan does not force you to raise collateral. Though you will require putting more finance for your monthly refund, you can induce this consolidation loan in a moderately rapid time.

A secured consolidation loan in contrast, requires appropriate collateral and since you are not expected to hold properties of your own, you might require enrolling for assistance from your parents or custodian. With security, you can have a loan of more money but do make a note of the fact that the repayment phase for this loan group is typically longer than normal ones.

With the help of student debt consolidation loans you begin with one loan with a small interest charge which is reasonable and which will assist you to perk up your credit score. Accepting this loan will discontinue any collection mediators harassing calls and provide you a strain free future to construct your credit for upcoming borrowing. Thus for easy repayment of the debts one should go for secured debt consolidation loans.

How to Attract Clients to Your Debt Company

With the hundreds of other lending companies around, it would be a sheer luck for your company to attract enough clients to itself without doing any marketing strategies. That’s why there are techniques and tips already proven effective to help you get the costumers’ interests and make them seek out help from your company’s hands. Here are the basic tips that we would want to share to help you attract clients to your Mortgage or Lending Company.

Effective Advertisement - Advertising your lending company plays a major role in making your business a successful one. The more you advertise, the more people feel comfortable with your company’s name; and the possibility of you company to be remembered when people need help with their debts also increases. Advertisements should not only be frequent, but every time it appears on papers, on air or in the internet, your ads should effectively draw people to you by its clever and direct-to-the-point contents.

Referrals from Clients - People who have been to your company and tried your company will refer you to their friends and contacts once they are satisfied with your services. That’s why it is very important that you don’t just deal with your clients as one-time costumers but also as potential advertisers (and even critics) for their words may greatly affect your popularity.

Referrals from Affiliate Companies - You can also benefit from other companies related to Lending and mortgages. You may consider asking investment groups and other companies that cater to the basic needs of homeowners.

Debt Issues: Welcome to Iva Uk

When asking prospective clients in the UK if they have ever been in an IVA the most common response I get is 'what's an IVA?'

20 years ago in 1986 the insolvency act introduced the IVA. IVA stands for Individual Voluntary Arrangement A formal, it is court ratified, process that allows somebody struggling with unsecured debts to make a payment proposal to their creditors.

IVA numbers are increasing dramatically at the time of writing. A record number of people in England and Wales went insolvent between July and September 2006. The Insolvency Service said 27,644 people went bankrupt or entered into Individual Voluntary Arrangements to manage their debts.

Why are IVA's proving to be 'popular'?

Creditors like them because it can often provide greater returns than would normally be realised if the debtor went bankrupt.

Debtors like to make use of an IVA because it freezes interest on debts, it makes the payments more manageable, it protects their home, it is a very discreet debt solution (unlike bankruptcy) and allows company directors to retain their position.

After a period of normally 60 monthly payments, any outstanding amounts of unsecured debts included in the IVA are written off.

That sounds great, how do I organise an IVA?

Well initially your unsecured debts need to be in excess of £15,000. If you have more than £15,000 of unsecured debts and are struggling with debt repayments then it's time to talk to a professional.

Only qualified professionals can administer an IVA. This is usually an insolvency practitioner but there are a number of firms that have sprung up to effectively 'package' an IVA ready for the insolvency practitioners to complete the IVA. The insolvency practitioner then becomes the trustee for the IVA.

To get an IVA agreed, a clear statement of your financial position will need to be drawn up. This will include all assets (house(s), cars, endowment policies, cash plans, pension details, etc) and then details of your monthly income and expenditure.

All these details are put to your creditors along with a proposed monthly payment.

What about my house?

Importantly, if you own your own home, then any equity you have available in the property will form part of the IVA proposal as part of the repayment offer. A secured charge is applied to your property equivalent to the proposal put to the creditors. The charge is normally applied to your property during the first year of the IVA and normally realised in the fourth year of the IVA.

If the property is jointly owned then only the debtors share of equity is normally considered under the IVA.

So what happens when the creditors vote on my IVA?

The creditors vote on whether to accept the IVA proposal or not. If more than 75% by value of unsecured creditors vote in favour of the IVA then it has to be accepted by all the unsecured creditors.

What do you mean more than 75% by value?

Well if you have 4 creditors but say one of them is owed 76% of your total amount of unsecured debts then it is only their vote that counts. If they accept the IVA proposal then the others will have to accept payments. Equally, if the 76% creditor declines the IVA proposal then the whole proposal has been rejected.

What happens if my IVA is rejected?

Well first thing, remain calm. There is an opportunity to submit an improved IVA proposal if your funds allow. Failing that it may be time to consider an informal payment plan or perhaps even bankruptcy. This is best discussed with a debt help and advice professional.

What if I miss any of my IVA payments?

A well drawn up IVA will allow for one or two missed payments in the IVA but missing payments is a serious business. The IVA is a court ratified agreement. Missing payments in an IVA runs the real risk that the trustee will legally have to force you into bankruptcy.

What happens to the IVA if my circumstances alter?

If your circumstances alter then this needs to be reflected in your IVA. That means should your income fall then the repayments should also be reduced. Equally, where your income improves then more money will be made available each month to your creditors.

Well I made it to the end of my IVA, what now?

The trustee will issue a 'Statement of Completion' normally within 3 months of the last payment of the IVA. The trustee will also notify the Insolvency Service and reflect this in their records.

Finally, do be aware and get proper IVA advice.

Do sit down and get an experienced professional to go through everything in detail. Be aware of all the factors that will affect you if you decide to enter into an IVA. Whilst this article is accurate, it cannot be used to replace advice from a professional organisation.

Break These 5 Financial Habits To Become Debt Free

None of us are perfect when it comes down to bad habits, but some are worse than others; not understanding your debt or finances is one of them. Kicking these bad habits into touch means that you can look towards becoming debt free:

1: Too many credit cards – Did you know that there are more credit cards than people in the UK? According to APACs, at the end of 2007 there were 73m credit and charge cards compared with around 60 million people.

Having too many credit cards means that you have the potential to get into too much debt. Although introductory offers many tempt you in, it is important that you take control of your credit card debt. Start by paying off the highest APR cards means that you can look forward to becoming debt free in a much quicker time.

2: Spending more than you earn – Spending more than you earn by living beyond your means is a financial habit which you need to nip in the bud right now. This is the quickest way to get into debt, especially if you regularly have to relay on your credit card the week before pay day.

3: Missing credit card payments – Always make sure that you meet your credit card, store card or catalogue payments as they fall due. Missing these payments not only means that you will have to pay late fees but any missed payments will also show on your credit file, which could make it more difficult to get accepted for credit in the future.

4: Losing touch of your finances – Being unaware of how much cash you have in the bank to how much debt you have outstanding means that you have lost touch with your finances, which will make it harder to become debt free. Checking your credit report is a good way to see your own credit history.

Debt Reduction Services

Debt reduction is definitely possible and all is not lost if that's what you have been thinking of. It is fair that the burden of debts might actually be taking its toll on you, but to go for bankruptcy is not the only way. But this situation has been avoided by reducing your debts. Everyone must understand importance of debt reduction and try their best to reduce their debts. They required to some basic fact regarding the debt reduction.

Credit card debt consolidation is regarded as the first step towards getting rid of credit card debt. Credit card debt consolidation loan is one of the ways of consolidating credit card debt. Besides, credit card debt consolidation loan, you can also go for balance transfer to another credit card. In fact, due to the publicity by credit card suppliers, balance transfers seem to be more talked about than credit card debt consolidation loan.

This type of Credit Card Debt Reduction requires you to pledge a security e.g. the home owned by you or something else that has a value which is comparable to your credit card debt consolidation loan amount. So, worse the credit rating, the more difficult it is to get a credit card debt consolidation loan.

Dealing With Debts

Are you struggling to work out how you should be dealing with debts? Rest assured you are not alone, as more and more people are struggling to deal with their unsecured debts due to rising living costs and a lack of willingness to lend by most high-street banks.

You don’t have to worry about dealing with debts alone, there are companies our there that are willing to help you leave your debt worries behind and look forward to a debt free future. No matter how much debt you have or how many unsecured creditors you owe money to, it is never too late to seek out ways of dealing with debts.

There are a number of debt solutions on the market which are all designed to help you deal with debts and reduce your monthly payments to your creditors. These include:

Debt Management Programme – The debt management programme is offered by many financial solutions companies across the country. They are designed to offer you a reduced payment to your creditors. Making your unsecured debts more affordable means that you can keep to a good standard of living without having to worry about missing payments to your unsecured debt, but it is likely that the length of time you will be paying back this debt will increase.

Debt management programmes are only really suitable for those with debt which is less than £12,000, if your debt is higher than this level and you are struggling then you may be more suitable for an IVA.

IVA (Individual Voluntary Arrangements) – IVA's were introduced as a more realistic alternative to bankruptcy for those who are struggling with high levels of debt. Once accepted onto an IVA, the average term is 60 months. During this IVA term you must commit to making a set reduced payment to your IVA. This will be distributed amongst your creditors who will write off any unpaid debt upon completion of an IVA.

An IVA is a legally binding contract between you and your unsecured creditors so it is essential that you continue to make the payments to your creditors so you do not have to risk bankruptcy.

These are just two of the ways which you could be dealing with you debt. The best way to go about dealing with your debts and to become debt free is to get in contact with a company which can offer you the full range of debt solutions.

How Badly Does Debt Consolidation Hurt Credit

Consolidating credit card debt comes in a variety of shapes and sizes. Not matter what your current credit score is and how much debt you have, you can find a loan that will fit your needs. Here are some common ways that people consolidate their debts.

If you own your home, a home equity loan is one type of consolidation loan you may want to consider. Many people who are struggling with high interest credit card debt turn to these consolidation loans. Because a home equity loan is a secured loan backed by the value you have built in your home, the interest rate will be substantially lower with this type of loan than you would have with a personal loan.

Home equity consolidation loans do have one danger. If you do not pay off your loan on time, you will lose your home. The bank has the right to repossess your home and sell it to claim what you owe. Only use this type of loan if you know you will be disciplined to pay it off when it is due.

Unsecured consolidation loans are an option if you do not wish to put your home at risk. These have higher interest rates than secured loans like home equity loans, but you will not risk losing a valuable asset if you should end up in trouble. You can get unsecured consolidation loans from most lenders.

If you have a bad credit rating, you may need to shop for bad credit consolidation loans. These can be either secured or unsecured, but they typically carry a higher interest rate than loans for those with good credit. However, they give you the ability to manage your debts without the strain that comes from overwhelmingly high credit card interest rates.

Consolidating credit card debt is a good way to help manage your finances. Just remember to stop adding to your debt once you get a loan. The loan will only make your debt worse if you continue accumulating debt after getting it.

Unsecured Debt Consolidation

Needless to say, the inability to manage increasing debts owing to a financial crunch causes constant worry, anxiety, and tension. Although there are many ways to come out of the debt trap or bad debt conditions, the best one is the unsecured debt consolidation. It is, in fact, the perfect solution to all your financial problems. All you need to do is leave your bad debt-management habits, save money, and make timely repayments each month.

Debt consolidation allows you to consolidate all your debts and mortgage payments into a single, larger mortgage payment with a much lower interest rate. It is of 2 types - secured and unsecured. The former requires a collateral security against the loan. In most cases, the loan is issued against your home as the collateral. However, this option is disadvantageous as you might lose your house if you fail to make the monthly repayments within the stipulated period. Therefore, the low-risk, unsecured loan, which requires no collateral, is usually recommended.

Following are some of the main advantages of applying for an unsecured debt consolidation:

1) It is a low-risk loan lending process, wherein the lender bears all the risks of the loan issued.

2) The terms and conditions involved are more or less flexible and apt for those who are trapped in bad debt conditions.

3) It helps you to easily consolidate all your unpaid debts on to one single convenient loan with an interest rate that you can conveniently afford.

4) It also saves a lot of time as you need not worry about repaying multiple loans to multiple lenders. Instead you remain responsible to just one lender. Thus, you can also get rid of the maddening and infuriating phone calls from all your previous lenders.

5) If you have a good credit history, you can get a very good deal at very low interest rates.

6) Even if you have a bad credit history, you need not worry. The loan amount can also be accessed by those with a poor credit score. Moreover, if you manage to repay the monthly installments on time, it offers you a golden opportunity to improve your credit record.

An unsecured debt consolidation loan can be obtained from banks, local loan lending institutions, and financial services. Alternatively, you can also apply for the loan online, on the internet.

Credit Card Debt Consolidation

With interest rates rising steadily, millions of people across the United States are finding it increasingly difficult to meet their financial obligations. Lenders are taking full advantage of this fact and are presently offering enticing loans for all sorts of reasons to people thus ensuring that eventually end up in a massive credit card debt. If you find yourself dealing with a credit card debt, don't panic. Use the Internet to find the right type of debt consolidation program for your needs by comparing the features offered by various programs, the cost of the program, and the way it will affect your financial obligations.

The key to successful repayment of any kind of debt is to pay lower interest rates and pay off as much as you can each month to reduce the outstanding balance. However, most people tend to do just the opposite and pay the minimum amount required allowing interest to build on the balance amount. Debt consolidation experts strive to give you lower APRs so that you can settle your debt quickly.

There are number of reasons why you should consolidate credit card debt. It can be quite a task to manage all your credit card debts individually. But with a good debt consolidation program, you can combine all your debts into one monthly repayment. Debt consolidation services evaluate your financial situation critically to work out a plan that is acceptable to you as well as your creditors. These services talk to your creditors on your behalf, represent the circumstances that led to the debt, and negotiate in order to get lower interest rates.

Credit card companies may hesitate to provide you these deals directly considering your past repayment records. However, they are very comfortable dealing with a credit card debt consolidation company and are more than willing to offer flexible repayment plans once the company tells them how serious you are about becoming a responsible consumer.

Virtually all financial companies offer consolidation loans to individuals to help them deal with credit card debt. Some companies however are more inclined to offer loans to people who own a home that can be used as collateral, especially if the loan amount is huge.

The Best Debt Consolidation Loan

Many people are considering debt consolidation as a way to reduce or even eliminate their current debt load. Getting relief from debt through debt consolidation is already established as an effective way to reduce your debt. But, what is the best way to do it to ensure you really get the best deal and legitimately reduce your debt.

Is Credit Score Important?

As you know there are perks to a good credit score to help you find the best debt consolidation loan. If your credit score is good not only will you get a lower interest rate but you will have better terms and conditions all leading to a lower monthly payment and more favorable repayment terms.

What Makes The Best Debt Consolidation Loan?

When looking for a loan to consolidate your credit cards, personal loans, student loans or any other bills and debt that is eating you alive you need to look for things other than just a lower monthly payment. The things you should look for are a flexible payment term, lower interest rate, lower payment, lower payoff amount and low fees. You have to compare apples to apples. The ultimate scenario is paying a lower monthly payment at a lower interest rate and after its all said and done a lower overall debt.

What To Ask A Potential Company - they are required by law to answer these questions

  • Are there any fees annually?
  • Can you receive any discounts for anything?
  • What other fees are there?
  • What is their BBB record?

Another thing consolidating your debt by getting a loan like this is just the ease and peace of mind. Sometimes having to pay 20 different payments is enough to put you over the edge. Having just one loan with one interest rate makes things easier and you never run the risk of accidently not paying a bill and receiving a late payment which can REALLY hurt you.

Remember, there are lots of people all claiming to be the best debt consolidation loan out there and they will all be competing for your business which is a good thing for you. Make sure to get free quotes from more than one company so you can compare. Watch out for a company that is abnormally lower than the others.

Credit Debt Relief

Most credit debt relief lenders will allow people that own homes to put up their home against their debt for a loan. You would then use this money to pay off credit card debt, student loans or other bills you may have that you can't pay. These are all rolled into one credit debt relief loan with one interest rate which is usually lower. There are two ways to go about finding out which is your best option. You can grab the phone book and call each company individually or use online brokers who connect you to multiple debt consolidation companies. Obviously the latter is easier, more efficient and allows you to quickly compare many different offers.

Once you choose a credit debt relief company to help you reduce your debt you are usually assigned a counselor who will be the person to contact your creditors and arrange a deal. What happens? Lets pretend you are currently paying on multiple different loans and each one is a different monthly payment and interest rate. And just for example lets say your total bills added up to 1500 per month. The company you are working with will do all the legwork in getting that amount reduced and getting a lower interest rate. The reason it will be lower is because you will be getting a new loan with a lower interest rate and only paying one payment.

When comparing credit debt relief companies be sure to read ALL of their terms and conditions. Make sure you are comparing apples to apples. Compare how long and how much it would take to pay off the debt you currently have with the numbers that are presented in a debt consolidation loan. Just because your monthly payment is lower doesn't necessarily mean it's the best option. Also be sure to follow the advice above in comparing many different quotes. Many companies will give you a free quote online and will compete very hard for your business which is a good thing for you.

Consolidation For Payday Loans

Due to a sluggish economy, debts are being acquired everywhere. Moreover, credit card companies send humiliating warning letters and phone calls to people, asking them to repay the debt or suffer grave consequences. If you too are suffering from payday loan debts then consolidation for payday loans maybe the answer to your question.

This amazing option offered by payday loan companies can assist an individual to payoff their cash advances and consolidate all of the cash advances into one singular debt with a constant rate of interest. The payment has to be made every month. However, there will be no penalty for late payments. Moreover, the company will also not inflict any penalty if you plan on settling the whole amount earlier than the scheduled time.

There are often situations when people take extensive payday loans, to pay for unnecessary expenses. Sometimes they take these loans to invest in equity stock market. But soon after, they realize the amount of interest they need to pay back is immensely high. These debts tend to become very unsustainable. In such situations, consolidation for payday loans can be of great assistance. In fact, lenders providing these loans offer absolutely free counseling to help you manage your finances and debts well. Moreover, they negotiate with the payday loan lenders to lower the total interest rate so that you have to pay considerably less.

Loan Criteria :

Although consolidation for payday loan is easy and there is not a very strict and lengthy criteria. Still, there are elements, which if not fulfilled, can lead to rejection of the loan. The approval depends upon factors such as:

  • How regular you are with bill repayment.

  • The total money outstanding. If you owe more than $2000 then you may not get a consolidation.

  • Your current monetary condition.

  • Status of your income, whether you are capable of paying the installments.

  • The total risk in lending you the money.

  • The total number of payday cash advances you have taken
  • Benefits of Debt Consolidation:

    Below are the benefits one may receive if they go in for consolidation for payday loans:

  • Merger of all your payments into one single amount, which you have to pay back in easy installments, every month.

  • You only have to write one check and deal with only one lender.

  • Reasonably priced rate of interest

  • Assistance in budgeting

  • An end of annoying calls

  • Freedom form debt
  • Does Debt Consolidation Affect Your Credit Score and Rating?

    If you simple take out a lower interest consolidation loan and do not alter the debt amount on the credit cards you are paying off, this will not harm your credit. You simply have taken out a new loan with better terms and conditions than the ones you have been struggling with. While this does not reduce your debt, it can make it easier to handle. Plus, one payment per month can allow you to get a better handle on your budget. Again, this will not harm your credit rating.

    Now, if the debt consolidation plan your seek also includes negotiating down your debt with the promise of a lump sum payment, you will find your credit rating will decline. Now, some may wonder why you are penalized for trying to get yourself out debt. The answer is you have borrowed more than you can pay back and have, essentially, defaulted on part of your payments. This will be reflected on your credit score. However, this will only be a temporary issue. Remember, a poor credit score can be boosted and improved.

    This does not mean, however, that you will be able to improve your credit score overnight. It actually might take three or more years of paying all your debts on time in order to rehab your rating. However, this can be done provided you are diligent. Then, once your credit rating is restored to a decent score, and problems of past bad credit will be forgotten. So, while the impact a settlement and consolidation will have on your credit may be less than desirable, it will not be permanent.

    By the way, by researching and comparing the best debt consolidation companies in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper interest rates offered. Nonetheless, it is advisable going with a trusted and reputable debt counselor before making any decision, this way you will save time through specialized advise coming from a seasoned debt adviser and money by getting better results in a shorter span of time.

    Hector Milla runs the Best Debt Consolidation Company website - where you can see his best rated debt consolidation company recommendation.

    Visit for further information and read our full review of the best debt consolidation service, plus articles and video training about how to get the most of your debt consolidation process.

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