Looking for information on government-funded debt relief? Stop wasting your time. There is no government program that provides funding for a borrower who wishes to pay off her debts. However, there is help available for those willing to work to pay it off or suffer the consequences of bankruptcy. Remember, with debt relief, there are no easy answers if you're serious about eliminating debt.
Grant Scam
The Federal Trade Commission takes the threat of fake grant criminals so seriously that it has issued a warning to consumers. These thieves may tell you that they're calling from the "Federal Grants Administration" -- there's no such organization -- to tell you that you're eligible. Do not, under any circumstances, give a caller or a website personal information like your checking account number, your Social Security number or your credit card numbers. The worst thieves use this information to steal your identity. Real grant information is available for free. In addition, grants are not used to pay personal debts; they're used to improve the public good. The government does not consider the elimination of your debt as good for the public.
Real Help
Discouraged? Don't be. There is legitimate help. If you're overwhelmed with credit card and other types of debt, call a certified credit counselor. There are a variety of nonprofit financial organizations whose sole purpose is to educate and assist the public in managing their money. Each organization provides a free, personalized one-hour consultation. Some organizations also provide housing and bankruptcy counseling. They won't reach out to you; you must take the first step. The National Foundation for Credit Counseling is one such resource; it is the nation's oldest credit counseling organization, and it partners with local agencies so that you can have an in-person meeting if you prefer.
Debt Management Plan
The credit counselor's primary weapon is the debt management plan. In the DMP, the counselor negotiates with the lenders on your behalf. It's not uncommon for lenders to reduce or eliminate interest rates, as well as lower payments. The debt is paid in full in about three to five years. If the borrower decides to enroll, he must include every account in the plan (an exception may be made for a corporate-sponsored card used only for work). The accounts are closed, and the borrower makes payments to the credit counselor, who distributes it on his behalf. The accounts are paid in full by the end of the program.
Settlement and Bankruptcy
Settlement is another legal alternative, but it's risky. In debt settlement, a delinquent borrower makes a lump-sum payment to the creditor that's a fraction of the total outstanding debt, often between 30 and 50 percent. It's devastating to credit history; settlements stay on the credit report for seven years. If you're really desperate, there's bankruptcy, in which unsecured debts are usually eliminated. Depending on the type of bankruptcy you file, you may have to sell assets to repay creditors. It's the worst-case scenario for a borrower, and it stays on your credit report for 10 years.
0 comments:
Post a Comment