Free Debt Help & Advice

Use debt settlement, credit counseling, debt consolidation or bankruptcy to eliminate your mounting debt. As of July 28, 2010, the United States Federal Trade Commission passed the Credit Card Debt Settlement Act, granting the growing number of distressed consumers relief from personal debt. This includes credit card debt, doctor bills, collection accounts and personal loans. It does not include alimony, mortgages or student loans.

Who Qualifies

You qualify for a credit card debt settlement program if you have more than $10,000.00 (U.S. dollars) in unsecured debt and can prove that you are experiencing financial hardship.

If you qualify, you can expect to eliminate up to 50 percent of unsecured debt with the aid of a professional debt settlement company.

Consult a Debt Relief Specialist

The United States Credit Card Debt Settlement Act of 2010 has reshaped the debt settlement industry into a performance-based service. The result is that you can now obtain a free debt consultation with a debt relief specialist from debt consolidators like freedebtsettlementadvice.com, debtdecreaser.com or moneymanagment.org, for example.

A debt relief specialist will advise you on how to best create a plan to eliminate your debt based on your particular circumstances.

You can also contact:

United Debt Associates

425 N. Front Street

Columbus, OH 43215

U.S.A.

877-853-6466

Debt Settlement

Debt settlement will negatively impact your credit for up to six years, whereas a bankruptcy will negatively impact your credit for up to 10 years. In 2009, the average debt settlement was negotiated for 50 percent of the actual balance owed. You can expect to eliminate a substantial amount of your debt with the help of a federally approved debt settlement company. Your debt settlement company will negotiate on your behalf with your creditors to reduce your balance and monthly payments to avert bankruptcy.

Credit Counseling

Consult a debt consolidation company to find out what your credit options are and for help in reducing your dependence upon credit. A credit counselor may advise you to sell unused assets to pay down your debts or even to get another part-time job to supplement your income. A licensed credit counselor will assess your credit situation and give you timely options as to how you can consolidate and pay down your debt before it gets out of control.

Debt Consolidation

Debt consolidation is an accelerated repayment plan. A certified credit counselor will advise you on how to consolidate your debts. The credit counselor will work to negotiate with your creditors in creating a plan to consolidate existing debt and facilitate timely and affordable repayment of your overdue bills.

Bankruptcy

You may have to choose bankruptcy if the previously mentioned options do not work for you. Chapters 7 and 11 bankruptcies involve the selling of your primary assets and using the money from the sale to cover existing debt. You will generally be able to keep your car and home in most states, as long as they are not considered luxury items. Bankruptcy will make it difficult for you to obtain affordable credit for up to 10 years. After bankruptcy, you may receive offers of credit, but at significantly higher rates.

Read More

Free Help With Low Interest Rate Credit

Consumers may often find themselves inundated with credit card offers in their mailboxes, but it can take some effort to get one with a low interest rate. Consumers with good credit ratings should shop around to ensure they're getting the lowest rates possible and be willing to negotiate with creditors to get the best deals.

Existing Accounts

You may be your best source of free help for reducing the interest rates on your credit cards. Just making a phone call to your card issuer to request a lower rate could save you hundreds of dollars in interest charges over time if the issuer agrees. You may have unsuccessfully asked for lower rates before, but it doesn't hurt to ask again. If you have kept your accounts in good standing by paying your bills on time and not exceeding your credit limits, play up those points with your card issuer's customer service department to try to get a better rate.

New Accounts

Consumers should seek better deals on credit card rates even before they open new accounts. Contact a credit card company's customer service department and tell the representative you're interested in opening an account but you first want to know what interest rates are available. Don't be afraid to ask for a rate that's lower than the ones quoted. If you have a good credit rating, emphasize that with the representative to justify your request for a lower interest rate.

Online Offers

Some financial websites allow users to shop online for low interest credit cards. For instance, the Bankrate website allows people to compare low interest offers and apply for a credit card if they find a deal they like. However, the card issuers display an interest rate range on the site, such as 11.9 to 19.9 percent. There's no guarantee you will receive the lowest rate so contact the companies with the best offers to find out how high your interest rate would be before you apply.

Considerations

People who don't have a good credit history to qualify for low interest credit cards can use free advice provided online to improve their credit scores. Raising your credit score can help you qualify for low interest cards in the future. Fair Isaac Corporation created the FICO scoring model that's used by creditors and lenders to judge people's creditworthiness. The company's website includes tips for improving FICO scores, such as paying bills on time since late payments can have a significantly negative impact on a FICO score.

Read More

How to Reduce Loans

The best way to reduce your loans is to pay them off on time. Most borrowers intend to do this when they take debts, but circumstances can arise to make repayment challenging, if not impossible. If this is the case, the next best method is to apply debt reduction strategies to begin digging yourself out of debt. These strategies may include settlement, consolidation or modification. Each strategy has its downside, however. Be careful when you begin exploring debt reduction, keeping in mind creditors do not like to change the terms of contracts.

Instructions

1

Keep paying your debts. Even when you are attempting to modify or close a loan, you must maintain payments in order to avoid racking up additional financing fees. Do not stop payment unless you have been granted forbearance or have determined you will be entering default.

2

Research federal assistance programs. Often, these programs are the most affordable methods for reducing your debts. Programs are available for student loan consolidation, mortgage refinancing and foreclosure alternatives.

3

Contact your lender. Inform your lender you will be seeking loan modification in order to reduce your total debt. If your lender participates in federal programs you qualify for, such as the Home Affordable Modification Program for mortgages, the lender must consider your application.

4

Apply for modification directly with your lender first. You will need to provide income verification to show that circumstances have changed that will prevent you from meeting your current payments but will let you make adjusted payments after modification. The goal is to convince the lender it stands to benefit from your modification. If the lender knows you will default without modification, but you will be able to repay the loan if it is modified, the lender is more likely to work with you. Lenders will not often reduce your principal loan sum unless your property has decreased in value substantially. They will be more likely to reduce your interest rate and financing fees, which can still save you thousands of dollars.

5

Consider third-party modification. If your lender refuses your application to reduce your debt, you may want to work with a credit counseling service. These services often issue you a loan to pay off your existing debts. The counselor will work with your current lenders to negotiate a low payoff quote, reducing your total debt. However, the new debt may have high interest rates, and you will still need to repay this loan in order to truly reduce your debt.

Read More

Is Debt Consolidation Right for Me?

When multiple creditors call you expecting payments, you may be overwhelmed financially and not know where to turn. One option to consider is debt consolidation. Debt consolidation involves borrowing money from one source to pay off all of your debts. While common, debt consolidation is not for everyone.

Debt Consolidation Process

With debt consolidation, the goal is to get all of your debts into one single package. This way, you can make one payment every month instead of multiple debt payments throughout the course of the month. You could do this by taking out a loan and using the money from that loan to pay off all of your other accounts. You could also use a credit card to pay off multiple accounts, which would put the entire balance on one card.

Saving on Interest

Consider consolidation if you are paying very high interest rates on most of your accounts. If you have several credit cards with balances, you may be paying very high interest rates. If you borrow money through a home equity loan or some other type of personal loan, you can usually get a much lower interest rate. This could save you thousands of dollars over the course of paying off the debt.

Reducing Your Accounts

Another reason to consider consolidating your debt is to reduce your number of accounts. When you only have to worry about making a single payment every month, it is much easier compared to making multiple payments. If you do not keep up with all of your payments, it can lead to late charges and credit score damage.

When to Avoid

Even though debt consolidation can help eliminate interest and accounts, it is not always the best approach. When you pay off your credit accounts, this opens the balances back up for use. If you are not disciplined enough, you may accumulate even more debt. If you do not have good credit, debt consolidation may not even be an option, because you cannot take out any additional loans to pay off your debt.

Read More

Can They Put You in Jail for a Civil Suit for Credit Card Debt?

When credit card debts go unpaid, the credit card company or its debt collector may sue you to get its money. Because civil suits are legal actions between two or more parties and not actions taken by the court, you won't be sent to jail as a result of being sued for credit card debt. You may be ordered to pay the debt by the court, however.

Credit Card Collections

Before civil suits are filed by a credit card company, the company attempts to settle the debt out of court. If collections efforts don't succeed, the debt is turned over to a collection agency and written off by the credit card company. If the collection agency is unable to collect, it may file a civil suit against you seeking the total amount due plus collection costs.

Judgment

If a judge rules in favor of the credit card company or collection agency, you'll be ordered to pay the debt plus any administrative fees or court costs. Credit card debt is considered a breach of contract, not a criminal act provided the debt wasn't attained through fraud, so you will not be sent to jail as part of the judgment.

Contempt of Court

In some cases, you can be found in contempt of court for failure to pay a credit card debt after a court judgment has been rendered. While this is rare, it can happen if upon review, the judge decides that you have put forth no effort to comply with the court's order. If you are found in contempt of court, you may be given additional fines or sentenced to time in jail. This is considered a separate charge from the lawsuit that led to the judgment.

Other Court Actions

Most judges will try other means to collect what you owe if you have not made payment by the time they review the case. The most common method is to garnish your wages, taking money from your paycheck. If your income is limited or you can't pay for some other reason, the court may adjust your payments lower or issue an order reducing the debt.

Read More

How to Avoid Debt Consolidation Scams

In a difficult economy, many people look for help managing spiraling debt. Loans that enable you to consolidate your debts are widely available, and solidly reliable financial institutions have offered such personal finance assistance for many years. A plethora of other businesses also offer debt consolidation loans. Among them are those that aggressively market what essentially boils down to a scam. Their tactics distinguish them from legitimate debt management mechanisms.

Instructions

1

Check to make sure the company is legitimate. Call your state's attorney general's office and the Federal Trade Commission. Check with the Better Business Bureau to see if any complaints have been lodged against the company.

2

Keep your financial information private. To provide a quote, a debt consolidation program only needs to know your creditors' names, balances and interest rates. They do not need to know your account numbers, Social Security number or other personal information.

3

Compare fees not monthly payments. You should receive the same rates from every debt consolidation program because they all get the same deals from creditors. If one company is offering you a lower monthly payment, it may be because it is extending the period of the loan. This may cause you to pay more in the long run.

4

Beware of extra fees. Do not pay for a quote or analysis. Many debt consolidation services charge high up-front fees or hidden fees that will pop up months after you begin. Some fees are built into the monthly payment. They take a payment from you and send it on to the creditors. Some agencies charge you as much as 10 percent more than what they send the creditors. Then they also get a 10 percent to 15 percent rebate back from the creditors.

5

Take a moment. Employees at many consumer credit counseling services are taught a script to play on your emotions and fears. When you go to talk to a counselor, take a friend who will promise to keep you from making an immediate decision to sign up. Tell your friend to make you leave and come back after you have talked it over and looked at all the details.

Read More

How Do Debt Relief Agencies Affect Credit Scores?

Utilizing Debt Relief Agencies

Many people turn to debt counseling agencies before considering debt relief agencies. This may be a better option because they have less of an effect on credit scores. With debt counseling agencies, your credit score is not affected, although a note is issued to the credit bureaus that you are paying your debts through a debt counseling or debt management agency. With debt relief agencies, you can often pay down your outstanding debt with one lump sum a month--minus any fees and penalties the agency was able to get waived--but you aren't able to use current credit cards or apply for any other credit services. This would require you to take on more debt. In addition to this, the credit bureaus are notified of your debt relief usage and, depending on your credit score, effectively lower your credit score by as little as 50 to more than 200 points.

Current Credit Score

How much your credit score is affected by a debt relief agency depends a lot on what your current credit score is. Scores below 560 are not generally affected as much as scores above 700. This is because a 560 score is not typically considered a good score to begin with. Lenders examining a loan for a person with a 560 credit score already know that there is some degree of risk when lending to this person. Conversely, lenders know that an individual with a 740 credit score has a solid record of being a responsible, credit-worthy borrower. All of this changes, however, if that individual must rely on a debt relief agency. In general, individuals with a credit score of 700 or better may want to consider refinancing or restructuring mortgages or loans. If these aren't options, debt consolidation services are the next alternative because they have less of an impact on credit scores than debt relief agencies.

Benefits

Even though a debt relief agency may initially negatively affect an individual's credit score, the benefits that may come with receiving this type of assistance are likely to improve one's credit score in the long run. Therefore, depending on one's circumstances, it's usually a better idea to take the short-term hit in order to get on the road to long-term credit benefits. The only time this may not be advisable is if an individual already has an application out for a loan that is badly needed. In this instance, it may be better to keep one's credit score solid than to take on the help of a debt relief agency. Remember, however, that you can always visit a financial counselor or adviser who may be able to provide advice or services that can help you with your debt, with no effect on your credit score.

Read More