Archive for August, 2010
(credit repair counseling)
johnmilligan4 asked:
www.GetWealthyWithJohn.com John Milligan credit repair counseling (credit repair counseling) credit repair counseling creditrepaircounseling support at http 1. Fast Credit Repair FoxSymes.com.au As seen on ACA. Fix bad credit & eliminate debts. Free consultation Search Results Results include your SearchWiki notes for credit repair counseling. Share these notes Copy and paste this link into an email or IM See a preview of the shared page 1. Spotting Credit Repair, Counseling Scams – The Early Show – CBS News 7 Feb 2008 … The Early Show: Spotting Credit Repair, Counseling Scams – Ray Martin On How To Avoid Getting Taken When Seeking Help. www.cbsnews.com – Cached – Similar – 2. Free Credit Reports Credit Repair Counseling Increase Your Credit … 12 Oct 2009 … Credit information on free credit reports you can use in credit repair. Understand consumer credit counseling and debt consolidation credit … www.creditinfocenter.com – Cached – Similar – 3. CreditRepairCounseling.com – Credit Report Repair Services Debt … We average repairing 10 negative items from consumer credit reports in 90 days! Information, advice and professional debt relief and consumer credit repair … www.creditrepaircounseling.com – Cached – Similar – 4. Credit Repair: Consumer credit counseling for credit solutions Get consumer credit counseling service for credit repair and find credit solutions to your problems. Let the community guide you on how to fix bad credit. www.creditmagic.org – Cached …
Eddie
Consumer Credit Counseling Industry Grows
Leroy C. Calstard asked:
The emergence on consumer credit counseling over the past few decades is mainly due to the increasing number of Americans who continue to charge their way into unmanageable debt. This is not to say that there aren’t some families and individuals who have ended up in debt due to no fault of their own – whether it is due to high medical bills, illness, death or a change in family status. But most end up in debt because of charging too much on credit cards and store cards and buying things on credit that they wouldn’t otherwise be able to afford. At some point you just can’t keep up with even the minimum monthly payments, which in turn causes a huge amount of the debt to be just the interest owed.
For many individuals and families who find themselves in over their heads, bankruptcy can seem like the only answer. As a result of this consumer credit counseling organizations have emerged to try to deal with this growing problem by helping people manage their debts and make arrangements to get them out of debt. This is often the last step before bankruptcy.
In fact, recent bankruptcy laws have been introduced that require individuals to obtain consumer credit counseling before filing for bankruptcy in an effort to reduce the high cost of lawyers and court fees. Consumer Credit counseling is usually the best option because it allows to you manage and clear your debt without the negative impact of a bankruptcy on your credit report. Bankruptcies can stay on your credit file for up to 10 years and can seriously hinder your ability to obtain any type of credit or loan, and will bring down your credit score which can make it difficult for you to do anything from renting a house to getting a job that requires a security clearance. It can even affect your ability to open a bank account with an overdraft feature.
However, consumer credit counseling is not provided free of charge and not everyone can afford to obtain these services. Some are so deeply in debt that they can’t even afford help to get out of debt. But if you can go this route, you can get relief. Consumer credit counseling agencies can help you by getting your monthly payments reduced, getting interest rages reduced, getting over-limit charges and late charges waived and can help you consolidate all your payments into one payment to them. This will enable you to eliminate your debt entirely and clear your name, as well as rebuild your credit.
Joe
The emergence on consumer credit counseling over the past few decades is mainly due to the increasing number of Americans who continue to charge their way into unmanageable debt. This is not to say that there aren’t some families and individuals who have ended up in debt due to no fault of their own – whether it is due to high medical bills, illness, death or a change in family status. But most end up in debt because of charging too much on credit cards and store cards and buying things on credit that they wouldn’t otherwise be able to afford. At some point you just can’t keep up with even the minimum monthly payments, which in turn causes a huge amount of the debt to be just the interest owed.
For many individuals and families who find themselves in over their heads, bankruptcy can seem like the only answer. As a result of this consumer credit counseling organizations have emerged to try to deal with this growing problem by helping people manage their debts and make arrangements to get them out of debt. This is often the last step before bankruptcy.
In fact, recent bankruptcy laws have been introduced that require individuals to obtain consumer credit counseling before filing for bankruptcy in an effort to reduce the high cost of lawyers and court fees. Consumer Credit counseling is usually the best option because it allows to you manage and clear your debt without the negative impact of a bankruptcy on your credit report. Bankruptcies can stay on your credit file for up to 10 years and can seriously hinder your ability to obtain any type of credit or loan, and will bring down your credit score which can make it difficult for you to do anything from renting a house to getting a job that requires a security clearance. It can even affect your ability to open a bank account with an overdraft feature.
However, consumer credit counseling is not provided free of charge and not everyone can afford to obtain these services. Some are so deeply in debt that they can’t even afford help to get out of debt. But if you can go this route, you can get relief. Consumer credit counseling agencies can help you by getting your monthly payments reduced, getting interest rages reduced, getting over-limit charges and late charges waived and can help you consolidate all your payments into one payment to them. This will enable you to eliminate your debt entirely and clear your name, as well as rebuild your credit.
Joe
Fast Facts About Consumer Credit Counseling
Adi Hartono asked:
Consumer credit counseling companies come in different variations. Some are non-profit, some charge small fees. No consumer credit counseling company should charge excessive fees or take a large amount out of payments that you make. There are some unethical companies out there that will do this, so it’s a good idea to check for reliable agencies.
The AICCCA (Association of Independent Consumer Credit Counseling Agencies) is one organization that can assist you in finding a reliable choice. There are also christian faith-based consumer credit counseling companies that appeal to some people who are looking for spiritual advice as well.
If you know someone who’s used a consumer credit counseling company you can ask them who they used. You should also refer to the Better Business Bureau and even after making a decision closely review the monthly statements you should be receiving from your counseling company.
The purpose of these services is to not only manage and negotiate your debt, but provide you with a new strategy for how to use your credit in the future. This is important to make sure you won’t have the same issues later down the road.
You should be willing to learn a new budget and change your spending habits, as the process generally takes years and your having needed help to deal with your credit will show in your credit report to future lenders. That being said it can be very beneficial to learn a new financial plan based off of your income and expenses.
A credit advisor is an expert that will work individually with you, and will keep your personal information between you. Sometimes consumer credit counselling may also involve a class you can attend on spending habits or a pamphlet with information that can help.
One way your debt may be managed is with what is called a DMP (Debt Management Plan.) It’s important to keep in mind that the FTC warns about any institution that offers this as your only option. With a DMP, your credit counselor will negotiate with your creditors to waive fees and lower your interest rate. By doing this they can lower your monthly payments, allowing you to repay your debt in full over some time.
While you are paying off your debt you will have to agree not to take out more. Usually a DMP involves sending payments directly to the institution providing your consumer credit counseling. These payments will then be sent to your creditors one by one. When this occurs you should review your statements for accuracy.
There are also other things that are offered during good consumer credit counseling. You may be presented with a plan for debt restructuring. You might also be spoken to about debt settlement, where a lump sum payment is made.
Alternatively in consumer credit counseling you may be suggested debt consolidation. In any case you should be sincere in wanting to solve your debt issue and involved in the details of your agreement when made. With a little attention to detail and a serious ambition to get back on track, you can restore your credit.
Hazel
Consumer credit counseling companies come in different variations. Some are non-profit, some charge small fees. No consumer credit counseling company should charge excessive fees or take a large amount out of payments that you make. There are some unethical companies out there that will do this, so it’s a good idea to check for reliable agencies.
The AICCCA (Association of Independent Consumer Credit Counseling Agencies) is one organization that can assist you in finding a reliable choice. There are also christian faith-based consumer credit counseling companies that appeal to some people who are looking for spiritual advice as well.
If you know someone who’s used a consumer credit counseling company you can ask them who they used. You should also refer to the Better Business Bureau and even after making a decision closely review the monthly statements you should be receiving from your counseling company.
The purpose of these services is to not only manage and negotiate your debt, but provide you with a new strategy for how to use your credit in the future. This is important to make sure you won’t have the same issues later down the road.
You should be willing to learn a new budget and change your spending habits, as the process generally takes years and your having needed help to deal with your credit will show in your credit report to future lenders. That being said it can be very beneficial to learn a new financial plan based off of your income and expenses.
A credit advisor is an expert that will work individually with you, and will keep your personal information between you. Sometimes consumer credit counselling may also involve a class you can attend on spending habits or a pamphlet with information that can help.
One way your debt may be managed is with what is called a DMP (Debt Management Plan.) It’s important to keep in mind that the FTC warns about any institution that offers this as your only option. With a DMP, your credit counselor will negotiate with your creditors to waive fees and lower your interest rate. By doing this they can lower your monthly payments, allowing you to repay your debt in full over some time.
While you are paying off your debt you will have to agree not to take out more. Usually a DMP involves sending payments directly to the institution providing your consumer credit counseling. These payments will then be sent to your creditors one by one. When this occurs you should review your statements for accuracy.
There are also other things that are offered during good consumer credit counseling. You may be presented with a plan for debt restructuring. You might also be spoken to about debt settlement, where a lump sum payment is made.
Alternatively in consumer credit counseling you may be suggested debt consolidation. In any case you should be sincere in wanting to solve your debt issue and involved in the details of your agreement when made. With a little attention to detail and a serious ambition to get back on track, you can restore your credit.
Hazel
The Danger of Consumer Credit Counseling
Ted Batron asked:
One topic that I sometimes cover generates more hate male than any other. And I’m glad they hate me for it. It means I’m touching a nerve. The subject is the Credit Counseling or Debt Management companies that make the claim that they are non profit, or operating in the consumers interest.
Many of these companies charge up to 20% of the debt as a fee. That means that a consumer with $20,000 in credit card debt (not at all uncommon), would be charged up to 4000.00 – are you kidding me!
No wonder these companies spend so much on advertising. They can afford it. However, the tide is changing.
The IRS has begun revoking the tax free/non-profit status of many of these companies because they didn’t do what they said they were going to do, PROVIDE COUNSELING. Most companies that have debts owed to them will accept a reduced amount in order to get paid.
If you are behind in your debts and were to call your creditors now, explain your situation to them, and ask for a reduction in the balance vs. bankruptcy – most will accept immediately. So why should you pay an exorbitant fee just to get someone to make a phone call for you?
Proper negotiation requires knowledge of the law, what your rights are, forms and some instruction. It would be even better if these companies offered some assistance in the form of advice. But most don’t! No advice, no counseling, no education.
A few years ago the IRS begin investigating several of the largest credit counseling services, many with a non-profit status. The IRS commissioner, Mark Everson, stated that those agencies “poisoned an entire sector of the charitable community”.
The commissioner wet on to say that in many cases, all these agencies did was direct business to for-profit companies. Several of these agencies spent millions of dollars on ads to convince anyone with debt to solve their financial problems with a phone call to them.
Unfortunately, the IRS investigations may also affect the clients of these companies. New bankruptcy laws require that consumers get professional debt counseling before they file. Since many of these companies are not considered to be professional debt education companies, they did not qualify under the new statutes. What a mess!
Since most CCC and Debt Consolidation companies say that they are non-profit, and the consumers that use them are under duress, the consumer usually goes in with their defenses down a little. Homeless shelters, and churches are non-profit, so it has to be a good thing, right?
Most of these companies are for profit. The exist to make money off of people who are desperate to solve their debt problems, desperate to save their homes, their cars, their credit, their financial future, their families. The prey on fear, and do little to solve the problem.
Some companies out there do have your best interest at heart. Don’t work with the first one you see just because they claim to be non-profit.
The best way that you can solve the problem, is to learn how to negotiate with creditors. Educate yourself. You have rights, find out what they are! Find a company that will provide that education, and will answer questions and offer guidance when you need it.
That is the solution to permanent debt reduction, debt control, and debt elimination.
Scott
One topic that I sometimes cover generates more hate male than any other. And I’m glad they hate me for it. It means I’m touching a nerve. The subject is the Credit Counseling or Debt Management companies that make the claim that they are non profit, or operating in the consumers interest.
Many of these companies charge up to 20% of the debt as a fee. That means that a consumer with $20,000 in credit card debt (not at all uncommon), would be charged up to 4000.00 – are you kidding me!
No wonder these companies spend so much on advertising. They can afford it. However, the tide is changing.
The IRS has begun revoking the tax free/non-profit status of many of these companies because they didn’t do what they said they were going to do, PROVIDE COUNSELING. Most companies that have debts owed to them will accept a reduced amount in order to get paid.
If you are behind in your debts and were to call your creditors now, explain your situation to them, and ask for a reduction in the balance vs. bankruptcy – most will accept immediately. So why should you pay an exorbitant fee just to get someone to make a phone call for you?
Proper negotiation requires knowledge of the law, what your rights are, forms and some instruction. It would be even better if these companies offered some assistance in the form of advice. But most don’t! No advice, no counseling, no education.
A few years ago the IRS begin investigating several of the largest credit counseling services, many with a non-profit status. The IRS commissioner, Mark Everson, stated that those agencies “poisoned an entire sector of the charitable community”.
The commissioner wet on to say that in many cases, all these agencies did was direct business to for-profit companies. Several of these agencies spent millions of dollars on ads to convince anyone with debt to solve their financial problems with a phone call to them.
Unfortunately, the IRS investigations may also affect the clients of these companies. New bankruptcy laws require that consumers get professional debt counseling before they file. Since many of these companies are not considered to be professional debt education companies, they did not qualify under the new statutes. What a mess!
Since most CCC and Debt Consolidation companies say that they are non-profit, and the consumers that use them are under duress, the consumer usually goes in with their defenses down a little. Homeless shelters, and churches are non-profit, so it has to be a good thing, right?
Most of these companies are for profit. The exist to make money off of people who are desperate to solve their debt problems, desperate to save their homes, their cars, their credit, their financial future, their families. The prey on fear, and do little to solve the problem.
Some companies out there do have your best interest at heart. Don’t work with the first one you see just because they claim to be non-profit.
The best way that you can solve the problem, is to learn how to negotiate with creditors. Educate yourself. You have rights, find out what they are! Find a company that will provide that education, and will answer questions and offer guidance when you need it.
That is the solution to permanent debt reduction, debt control, and debt elimination.
Scott
Consumer Credit Counseling Services – The Basics
Cole Collins asked:
Credit counseling agencies offer debt management programs that can you get back on track. They exist to help people when they are at their most desperate in their financial situations. Their purpose is to negotiate with your credit card companies to get a lower interest rate on your credit cards. This will ultimately allow you to pay a lesser amount each month and can help you get back on your feet. They can also negotiate options where late payment fees and over-limit fees are wiped off your record. This last item usually happens after you have been making consistent payments for 6 months or more.
To have a successful experience with a debt management program, you need to have enough income to pay your bills and not miss a payment to the credit counseling service. This is another form of debt consolidation as it consolidates all your credit cards into one payment which is then paid to the credit agency helping you, who in turn makes your payments to your outstanding credit card companies.
If you make it through the program successfully, you will find that all of your debt is paid off and your creditors will appreciate the fact that you have paid off your accounts. You will be required to close your credit card accounts; however, this may be a wise decision. After a period of time has passed, you will be able to get a new credit card – just remember the warnings.
If you have ever made late payments or had over-limit fees, your credit card companies have probably raised your interest rate as high as they are allowed to. They now consider you to be a credit risk. This means that your rates could be as high as 28-32%. If you are in a debt management program, you will be able to have those high rates lowered substantially – probably in the 6-8% category. This is a reasonable expectation when working with a debt management program.
Be advised that it can take a long time to pay off all your debt through a debt management program. There are faster options, such as bankruptcy or debt negotiation, but joining a program can be more emotionally heartening and you will get the results you seek.
Another important factor in using a debt management program is the effect it will have on your credit report. It will show as a negative mark and will stay there for up to 10 years. As you start making steady payments, you will be slowly rebuilding your credit and your score will start to rise. This, however, takes time.
A final note, make sure before joining any type of program, that it offers the services you need.
Troy
Credit counseling agencies offer debt management programs that can you get back on track. They exist to help people when they are at their most desperate in their financial situations. Their purpose is to negotiate with your credit card companies to get a lower interest rate on your credit cards. This will ultimately allow you to pay a lesser amount each month and can help you get back on your feet. They can also negotiate options where late payment fees and over-limit fees are wiped off your record. This last item usually happens after you have been making consistent payments for 6 months or more.
To have a successful experience with a debt management program, you need to have enough income to pay your bills and not miss a payment to the credit counseling service. This is another form of debt consolidation as it consolidates all your credit cards into one payment which is then paid to the credit agency helping you, who in turn makes your payments to your outstanding credit card companies.
If you make it through the program successfully, you will find that all of your debt is paid off and your creditors will appreciate the fact that you have paid off your accounts. You will be required to close your credit card accounts; however, this may be a wise decision. After a period of time has passed, you will be able to get a new credit card – just remember the warnings.
If you have ever made late payments or had over-limit fees, your credit card companies have probably raised your interest rate as high as they are allowed to. They now consider you to be a credit risk. This means that your rates could be as high as 28-32%. If you are in a debt management program, you will be able to have those high rates lowered substantially – probably in the 6-8% category. This is a reasonable expectation when working with a debt management program.
Be advised that it can take a long time to pay off all your debt through a debt management program. There are faster options, such as bankruptcy or debt negotiation, but joining a program can be more emotionally heartening and you will get the results you seek.
Another important factor in using a debt management program is the effect it will have on your credit report. It will show as a negative mark and will stay there for up to 10 years. As you start making steady payments, you will be slowly rebuilding your credit and your score will start to rise. This, however, takes time.
A final note, make sure before joining any type of program, that it offers the services you need.
Troy
Credit Counseling — Why It Doesn’t Work For Most Debtors
Charles Phelan asked:
“Cut Your Payments in Half!” the headline screams. “Consolidate Your Bills into One Low Monthly Payment!”
When you see ads like this, they are often from Credit Counseling firms. In this article, I’ll explain the principles behind the Credit Counseling approach and discuss the main problem consumers face when they join one of these programs.
First, let’s get our definitions straight. The term “Credit Counseling” is actually quite misleading, since it has nothing to do with preserving or improving your credit score. In fact, Credit Counseling will often damage your credit, an unpleasant reality that is sometimes downplayed by industry representatives.
Credit Counseling is a debt management program where you make a single monthly payment to an agency. In turn, that agency distributes the money to your creditors on your behalf, ideally at lower interest rates so you can pay off the debt faster. Credit Counseling should not be confused with Debt Consolidation, Debt Settlement, or Debt Termination. Each of these debt programs takes a very different approach from Credit Counseling.
Of all the available debt options, Credit Counseling is by far the most popular, with millions of Americans participating. Does this mean it’s the best choice for most people struggling with debt? No! There are numerous problems with this approach.
In recent years, the Credit Counseling industry has been heavily criticized by impartial consumer groups like the Consumer Federation of America. But these criticisms often miss the mark entirely. They usually focus on the aggressive companies that use their non-profit status to trick consumers into thinking they are charitable organizations, or even that their services are free of charge. In reality, these outfits charge hefty “voluntary” contributions, often adding up to hundreds of dollars, plus steep monthly fees as well.
However, I’m not talking here about the bad companies who provide little or no actual “counseling,” or the ones that are only in business to make their owners rich. No, I’m talking about serious problems with the actual business model itself. So let’s take a closer look at how Credit Counseling works.
Let’s say you owe $25,000 on several different credit cards. Let’s also assume your average interest rate before you enrolled was 20% (which is actually low these days, especially if you’ve missed any payments). Your minimum monthly payments are $500, which you’ve been struggling to keep up with. At this rate, it will take a whopping 109 months (more than 9 years) to pay off your debts, assuming you don’t miss a single payment along the way.
You enroll in a Credit Counseling program that promises to get you out of debt faster. But does it? Assuming your creditors agree to participate in the program (not always the case), the real key is the concession they will grant on your interest rates. In prior years, creditors looked more favorably on Credit Counseling and they offered steep discounts off the normal interest rates. But lately they have squeezed the industry, and the concessions are not so good any more. Currently, most of the major players will reduce interest rates down to a range of 7% on the low side to 18% on the high side. We’ll use 12% as the average.
So if you keep your payments at $500 per month at the new 12% rate, how long will it take? First, we need to deduct the monthly fee charged by the agency. In this example, we’ll use a fee of $25 per month, so $475 of your $500 will go toward debt reduction. The good news is you’ll be out of debt faster. The bad news is that it will still take 75 months (more than 6 years) to become debt-free.
But what happens if you can’t keep up with that $500 per month? After all, you sought help from a credit counselor because you were struggling financially, right? Let’s say you drop down to $450 per month. After deducting the $25 monthly fee, that leaves $425 toward your debt plan. Now you’re looking at 90 months (7 years & 6 months), which is not much better than the 109 months you started out with.
So how can credit counselors claim to cut your payments in half? Good question. If you dropped down to $250 per month, you’ll never pay off your debt! At 12% interest, the debt will climb faster than your $250 per month can reduce it. The lowest you could go would be $300 per month. However, it would now take 20 years to pay off the debt, hardly an improvement!
In order to truly cut your payments in half, down to $250 in this example, the agency would need to completely eliminate all interest! And even then, it would still take more than 9 years to pay off the balance! So the ads claiming you can cut your payments in half are simply false.
Bear in mind here that in our example, we’re assuming you’re working with a good company that charges low fees and actually obtains good interest rate concessions from all of your creditors. Even with the best of credit counselors, you’re still looking at a 5-9 year program to pay off your debts.
That’s why Credit Counseling is usually only effective for people with short-term financial problems. Consumers with long-term financial instability have trouble keeping up with the regular payment stream required to make these programs work. The result? Even the most favorable statistics show that about 3 out of 4 people drop out of Credit Counseling programs before completing them.
If you do decide to join one of these programs in order to obtain some short-term relief, be sure to do your homework first. Here are a few tips to help in your selection:
1. Look for a company that actually provides old-fashioned budget advice and counseling. If they want to sign you up right away without first understanding your budget situation, move on!
2. Obtain copies of the contract and read it carefully before signing up. Make sure you understand all of the fees involved. Are there enrollment fees? “Voluntary” contributions? Monthly fees? Extra fees per account? These hidden fees can add up to big bucks.
3. Make sure they work with all the creditors on your list and not just some of them.
4. Don’t be fooled by “non-profit” status. That doesn’t guarantee you’re dealing with a good company. And it certainly doesn’t mean the service is free!
5. Aim to find a local company that you can visit in person. Check out your target company with the local Better Business Bureau.
6. Make sure they provide support after the sale. Try calling their customer service number to see if you can get through promptly.
Remember, you can eliminate your debts if you take a disciplined approach to your finances, make a budget and stick to it, and don’t use your credit cards unless you can pay off new balances in full each month.
Good luck in your financial future!
Carolyn
“Cut Your Payments in Half!” the headline screams. “Consolidate Your Bills into One Low Monthly Payment!”
When you see ads like this, they are often from Credit Counseling firms. In this article, I’ll explain the principles behind the Credit Counseling approach and discuss the main problem consumers face when they join one of these programs.
First, let’s get our definitions straight. The term “Credit Counseling” is actually quite misleading, since it has nothing to do with preserving or improving your credit score. In fact, Credit Counseling will often damage your credit, an unpleasant reality that is sometimes downplayed by industry representatives.
Credit Counseling is a debt management program where you make a single monthly payment to an agency. In turn, that agency distributes the money to your creditors on your behalf, ideally at lower interest rates so you can pay off the debt faster. Credit Counseling should not be confused with Debt Consolidation, Debt Settlement, or Debt Termination. Each of these debt programs takes a very different approach from Credit Counseling.
Of all the available debt options, Credit Counseling is by far the most popular, with millions of Americans participating. Does this mean it’s the best choice for most people struggling with debt? No! There are numerous problems with this approach.
In recent years, the Credit Counseling industry has been heavily criticized by impartial consumer groups like the Consumer Federation of America. But these criticisms often miss the mark entirely. They usually focus on the aggressive companies that use their non-profit status to trick consumers into thinking they are charitable organizations, or even that their services are free of charge. In reality, these outfits charge hefty “voluntary” contributions, often adding up to hundreds of dollars, plus steep monthly fees as well.
However, I’m not talking here about the bad companies who provide little or no actual “counseling,” or the ones that are only in business to make their owners rich. No, I’m talking about serious problems with the actual business model itself. So let’s take a closer look at how Credit Counseling works.
Let’s say you owe $25,000 on several different credit cards. Let’s also assume your average interest rate before you enrolled was 20% (which is actually low these days, especially if you’ve missed any payments). Your minimum monthly payments are $500, which you’ve been struggling to keep up with. At this rate, it will take a whopping 109 months (more than 9 years) to pay off your debts, assuming you don’t miss a single payment along the way.
You enroll in a Credit Counseling program that promises to get you out of debt faster. But does it? Assuming your creditors agree to participate in the program (not always the case), the real key is the concession they will grant on your interest rates. In prior years, creditors looked more favorably on Credit Counseling and they offered steep discounts off the normal interest rates. But lately they have squeezed the industry, and the concessions are not so good any more. Currently, most of the major players will reduce interest rates down to a range of 7% on the low side to 18% on the high side. We’ll use 12% as the average.
So if you keep your payments at $500 per month at the new 12% rate, how long will it take? First, we need to deduct the monthly fee charged by the agency. In this example, we’ll use a fee of $25 per month, so $475 of your $500 will go toward debt reduction. The good news is you’ll be out of debt faster. The bad news is that it will still take 75 months (more than 6 years) to become debt-free.
But what happens if you can’t keep up with that $500 per month? After all, you sought help from a credit counselor because you were struggling financially, right? Let’s say you drop down to $450 per month. After deducting the $25 monthly fee, that leaves $425 toward your debt plan. Now you’re looking at 90 months (7 years & 6 months), which is not much better than the 109 months you started out with.
So how can credit counselors claim to cut your payments in half? Good question. If you dropped down to $250 per month, you’ll never pay off your debt! At 12% interest, the debt will climb faster than your $250 per month can reduce it. The lowest you could go would be $300 per month. However, it would now take 20 years to pay off the debt, hardly an improvement!
In order to truly cut your payments in half, down to $250 in this example, the agency would need to completely eliminate all interest! And even then, it would still take more than 9 years to pay off the balance! So the ads claiming you can cut your payments in half are simply false.
Bear in mind here that in our example, we’re assuming you’re working with a good company that charges low fees and actually obtains good interest rate concessions from all of your creditors. Even with the best of credit counselors, you’re still looking at a 5-9 year program to pay off your debts.
That’s why Credit Counseling is usually only effective for people with short-term financial problems. Consumers with long-term financial instability have trouble keeping up with the regular payment stream required to make these programs work. The result? Even the most favorable statistics show that about 3 out of 4 people drop out of Credit Counseling programs before completing them.
If you do decide to join one of these programs in order to obtain some short-term relief, be sure to do your homework first. Here are a few tips to help in your selection:
1. Look for a company that actually provides old-fashioned budget advice and counseling. If they want to sign you up right away without first understanding your budget situation, move on!
2. Obtain copies of the contract and read it carefully before signing up. Make sure you understand all of the fees involved. Are there enrollment fees? “Voluntary” contributions? Monthly fees? Extra fees per account? These hidden fees can add up to big bucks.
3. Make sure they work with all the creditors on your list and not just some of them.
4. Don’t be fooled by “non-profit” status. That doesn’t guarantee you’re dealing with a good company. And it certainly doesn’t mean the service is free!
5. Aim to find a local company that you can visit in person. Check out your target company with the local Better Business Bureau.
6. Make sure they provide support after the sale. Try calling their customer service number to see if you can get through promptly.
Remember, you can eliminate your debts if you take a disciplined approach to your finances, make a budget and stick to it, and don’t use your credit cards unless you can pay off new balances in full each month.
Good luck in your financial future!
Carolyn
Consumer Credit Counseling Throws Dave Tanny To The “Wolves”!
paynemdp asked:
www.fixmyuglycredit.com Dave Tanny discovers the truth about Consumer Credit Counseling www.fixmyuglycredit.com
Lloyd
Are You a Casual Consumer?
Tom Palange asked:
When developing your budget, it is important to monitor your daily purchases because you may discover that you have developed some expensive habits. Take for instance the daily ritual of stopping for a cup of coffee. Without realizing it, you may discover that you have been drinking away a small fortune.
All too often, individuals unconsciously make purchases that seem insignificant, but over time add up to be a significant amount of money. If you think hard enough, there are probably many casual purchases that you make on a daily basis.
The average cost to buy a cup of coffee and a muffin is $5.00. If you were to stop at the coffee shop everyday during a 7-day week you would spend $35.00. Over time this equates to $150.00 per month or $1,800.00 per year. However, if you were to forego this daily ritual and instead invest that money at a rate of 10% annual return you would have about $1million after 40 years ($948,611.00 to be exact).
As you can see, habits such as this will open your eyes and you may be inclined to think twice the next time that you have the urge to buy a coffee. ACCC encourages you to keep a notebook with all of your daily expenses. Track all of the little items; coffee, takeout for lunch, and afternoon snacks. With just a few adjustments, you can better control your finances and become a better spender.
To download a household budget worksheet go to http://www.consumercredit.com/budget-sheet.htm.
Brought to you by American Consumer Credit Counseling (ACCC). ACCC is a non-profit credit counseling and financial education agency committed to promoting financial literacy. It is our mission to financially empower consumers to regain control of their lives through education and financial management. More information can be found by logging on to http://www.consumercredit.com.
Charlene
When developing your budget, it is important to monitor your daily purchases because you may discover that you have developed some expensive habits. Take for instance the daily ritual of stopping for a cup of coffee. Without realizing it, you may discover that you have been drinking away a small fortune.
All too often, individuals unconsciously make purchases that seem insignificant, but over time add up to be a significant amount of money. If you think hard enough, there are probably many casual purchases that you make on a daily basis.
The average cost to buy a cup of coffee and a muffin is $5.00. If you were to stop at the coffee shop everyday during a 7-day week you would spend $35.00. Over time this equates to $150.00 per month or $1,800.00 per year. However, if you were to forego this daily ritual and instead invest that money at a rate of 10% annual return you would have about $1million after 40 years ($948,611.00 to be exact).
As you can see, habits such as this will open your eyes and you may be inclined to think twice the next time that you have the urge to buy a coffee. ACCC encourages you to keep a notebook with all of your daily expenses. Track all of the little items; coffee, takeout for lunch, and afternoon snacks. With just a few adjustments, you can better control your finances and become a better spender.
To download a household budget worksheet go to http://www.consumercredit.com/budget-sheet.htm.
Brought to you by American Consumer Credit Counseling (ACCC). ACCC is a non-profit credit counseling and financial education agency committed to promoting financial literacy. It is our mission to financially empower consumers to regain control of their lives through education and financial management. More information can be found by logging on to http://www.consumercredit.com.
Charlene
Debt Relief & Management Tips : How to Apply for a Personal Loan
eHow asked:
When applying for a personal loan, budget a monthly payment and pull a credit report beforehand. Find out more about applying for a personal loan with tips from a consumer credit counselor in this free video on personal finance management. Expert: Maria Enomoto Contact: www.gotdebt.org Bio: Maria Enomoto works as a credit counselor for Consumer Credit Counseling services in San Jose, California. Filmmaker: Bing Hu
Catherine