Relief from Credit Card Debt – My Story

On December 1, 2009, In debt management

About 5 or so years ago, I found myself deep in credit card debt and in desperate need of relief. I fell behind on my payments, which not only earned me a hefty late fee on every single account, but also caused my credit card companies to raise my interest rates to ridiculously high levels. Worst of all, I had no idea where I could turn to for legitimate credit card relief from a trustworthy source.

I honestly thought that there was no way for me to get caught back up. I considered just ignoring the bills piling up and let my credit score go down the tubes, but I had been dreaming about buying my own home and didn’t want to let that dream die just yet. I also briefly considered filing for bankruptcy, but I knew I could avoid it if I could just find a way to get back on track.

To tell the truth, I was very lucky in my quest for help. I was very naive back then, and was a prime candidate to get ripped off by any scammer looking to prey on those in desperate need of financial help.

Luckily for me, debt settlement companies weren’t advertising everywhere you looked back then like they are today, or I would have eagerly believed every false promise they made and handed over my money like a sucker.

A friend of mine at the time, who is now my beautiful wife, told me about how a debt management plan could reduce debt, help me get caught up by getting rid of the late fees, and get my interest rates back down to reasonable levels. Like I said, I was naive at the time, so I immediately went along with this.

Fortunately for me, my wife knew what she was talking about. The debt management plan brought my monthly payments back down to an affordable level. More importantly, my interest rates were reduced and I got out of debt in less than 4 years (I was on track to never get out of debt, because I simply got further and further into debt on my own) and probably saved around $50,000 in interest.

Best of all, my credit is now in great shape and last year we finally moved in to our very own beautiful home.

I would like to say that a debt management plan is not for everyone, but can help many people. If you feel that you do need help getting out of debt, speak to a certified credit counselor who can give you all your options and help you make your own decision, without pressuring you. While I got pretty lucky in my situation, chances are that you will get ripped off if you don’t do your homework when looking for credit card relief.

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Importance of money management in debt consolidation

On September 9, 2009, In debt management

Debt consolidation is an effective way to repay your existing dues. With the help of this process, you can combine all your monthly debt payments and replace them by a single payment every month. Having an idea on money management is quite necessary while you’re consolidating your debts. It will help you to save a substantial amount of money, which in turn, will help you to repay your debts. At the same time, you can also avoid falling into debt problems in future if you know how to manage your money.

Debt consolidation – How to repay debts

You can consolidate your debts in 2 ways, which are discussed below.

  • Debt consolidation program: There are a number of companies that offer debt consolidation program. When you enrol in any of them, a debt consultant will evaluate your financial condition and decide upon a monthly payment with the help of which you can repay your dues. The consultant will also negotiate with your creditors to reduce the interest rate on your loans, which will help you to repay debts fast.
  • Debt consolidation loan: Apart from enrolling in a consolidation program, you can also take out a consolidation loan equal to the amount of your outstanding dues. In this way, you can repay all your debts and replace them by a single loan.

Money management – How to budget

Budgeting is the basic step of money management. You can avoid debt problems if you know how to manage your income in a way to save a substantial amount every month. You can create a budget in the following way.

  • Calculate your monthly income: While calculating your monthly income, make sure you take into account your fixed as well as additional income.
  • Calculate your monthly expenses: You should calculate your fixed as well as your variable expenses. At first, make a list of your fixed expenses, such as, your monthly mortgage payments, credit card payments, etc. Then, list your variable expenses, such as, money spent on medical bills, grocery bills, etc. Then, assign how much you need to spend on your variable items.
  • Compute your savings: Deduct your expenses from your income and examine how much you’re able to save each month. If required, cut down your expenses in order to increase your savings.

You can get money management tips from your debt consultant. Apart from helping you to repay your dues with the help of debt consolidation, he/she can suggest suitable ways on how you can manage your money in a way to build a solid financial footing for you and your family.

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Debt Consolidation Loans – Pros And Cons

On September 1, 2009, In debt management

With very low interest rates over the past few years many consumers have been lured into taking on extra debt leaving many in a situation where they can’t keep up with repayments. The consolidation loan promises to be the answer to all your problems but they can create just as many
problems as they solve.

What is Debt Consolidation?

Debt consolidation is the combining of all your current debts into one loan making your debts seem more manageable.

Possible benefits of Debt Consolidation

1.Reduction in stress as consolidation results in only one fixed payment a month to worry about.

2.Transferring high interest debts such as credit cards to a consolidation loan can reduce the overall cost of paying off your loan.

3.A consolidation loan could reduce the amount you have to pay each month by lower interest costs allowing you to resolve debt problems more easily.

4.Payment can be arranged to take place over a longer period further reducing monthly payments.
5.There’s a possibility that a consolidation loan will prevent further damage to your credit rating.

Dangers of the Debt Consolidation Loan

1.The Consolidation Loan is usually secured against your home meaning you could loose the roof over your head if you fail to keep up with payments.

2.Although monthly payments are lower, the actual amount repaid may be higher due to the repayment period being extended.

3.Rarely will a debt consolidation get to the root of the problem ie. unearthing the reasons you are in debt in the first place, meaning things will probably only get worse in the future.

4.The debt consolidation companies that advertise on television charge for the service which will result in you actually getting deeper into debt.
When considering a consolidation loan get in touch with the Citizens Advive Bureau for impartial advice, before you make any concrete decisions.

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Filing For Bankruptcy

On August 28, 2009, In Financial Advice, debt management

If you are having severe financial difficulties then you may have come to the realization that you are going to have to get around to filing for bankruptcy. If that’s the case you will probably be asking a lot of questions regarding how to go about this as bankruptcy is something that few of us think about until it is happening to us.

You’ll be pleased to hear that things have become much easier for persons in the UK who find themselves in this situation thanks to new legislation.

It used to be the case that your creditors would start the bankruptcy proceedings when you couldn’t pay them but these days its possible to do this yourself with voluntary liquidation as long as your creditors agree to the action.

If you go through with this you should be aware that most of your assets will be handed over to a trustee who will be in charge of them from that moment and they will endeavor to find out how much you are worth and how your cash should be divided up amongst your creditors.

The major advantage of filing for bankruptcy is that your creditors can no longer pursue you for the money they owe you, and the money you owed is written off.

The major disadvantage is that you may find it very hard to get access to credit in the future. For this reason you should think very hard about initiating proceedings.

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Getting To Grips With The Debt Management Plan

On April 17, 2009, In debt management

For individuals who find themselves with an unmanageable debt problems a debt management plan may be a possible solution.

The debt management plan is an arrangement between you and your creditors, but managed by a third party, in which you agree to repay your debts at a rate you can afford. Debt management plans can be an effective way of relieving pressure on your financial situation allowing you to repay debts as quickly as possible without requiring the borrowing of more money.

With the debt management plan there is only one payment to make each month to the debt management organisation who then distribute the money between the creditors. Interest and additional charges are often stopped when a debt management plan is conducted taking even more pressure off the situation.

The disadvantages of the this type of consolidation loan are that although you’ll find your payments more manageable, you may end up paying more in the long run as your debts will invariably take longer to pay off. Before agreeing to such a plan make sure you work out the total cost of repayments instead of merely looking at the attractive new monthly payment.

Be extremely careful that you set up a debt management program with a reputable company, and don’t let anyone talk you into borrowing even more money on top of your current debts. This will obviously only make matters worse.

For free, independent and impartial debt management advice in the UK contact The Citizens Advice Bureau.

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Getting To Grips With The Debt Management Plan

On April 17, 2009, In debt management

For individuals who find themselves with an unmanageable debt problems a debt management plan may be a possible solution.

The debt management plan is an arrangement between you and your creditors, but managed by a third party, in which you agree to repay your debts at a rate you can afford. Debt management plans can be an effective way of relieving pressure on your financial situation allowing you to repay debts as quickly as possible without requiring the borrowing of more money.

With the debt management plan there is only one payment to make each month to the debt management organisation who then distribute the money between the creditors. Interest and additional charges are often stopped when a debt management plan is conducted taking even more pressure off the situation.

The disadvantages of the this type of consolidation loan are that although you’ll find your payments more manageable, you may end up paying more in the long run as your debts will invariably take longer to pay off. Before agreeing to such a plan make sure you work out the total cost of repayments instead of merely looking at the attractive new monthly payment.

Be extremely careful that you set up a debt management program with a reputable company, and don’t let anyone talk you into borrowing even more money on top of your current debts. This will obviously only make matters worse.

For free, independent and impartial debt management advice in the UK contact The Citizens Advice Bureau.

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