debt

Financial Tips for Debt Consolidation

Financial Tips for Debt Consolidation

If you are having problems with debt and find that you are not able to keep up with those monthly payments, then debt consolidation could be an option.debt consolidation

Debt consolidation is where all your loans are combined into just one loan, which means that you will only need to pay one monthly payment.

So why should you consider debt consolidation? Here are some great tips and the reasons why.

Save Money on Lower Monthly Payments

Debt consolidation is actually able to reduce the monthly payment that you make. This reduction could be due to a reduced interest rate, a longer repayment term or both of these.

However, many credit cards and store cards will only need you to make small repayments each month. This means that your repayment term is longer and you will in effect pay more in interest.

When all your debts are combined into a single loan, you pay less than what you would on separate loans.

Save Money on Credit Card Interest Payments

When you have a number of loans with high interest and credit cards that are due a repayment every month, it will make sense to consolidate your debts so that you have just one loan with a lower interest rate.

An option to pay credit card debts is to use the balance transfer method, where you could take advantage of a zero interest promotional period that is for 12 to 18 months. If you choose this option, you will need to be sure that you are able to pay back your debt in this time period.

Simplify your Finances

Debt consolidation is convenient, as all your debts are unified into one loan. You will then be relieved of the stress and hassle of keeping track of a complicated repayment schedule.

Your finances are then simplified, as you will just need to keep track of one loan repayment. Taking a fixed interest loan for debt consolidation simplifies finances further as you know the exact amount that you have to pay each month.

Improve Your Credit Score

You are able to improve your credit score with debt consolidation. As you save money by paying a lower monthly amount, you can use this to pay other debts that you didn’t consolidate or invest the money.

With debt consolidation you will need to choose your repayment plan wisely and stay current on the payments so that you are able to increase your credit worthiness.

All together you can improve your credit rating and increase your chances of getting another loan in the future.

Debts Are Repaid Sooner

With debt consolidation you are able to meet your financial obligations sooner then if you had multiple loans as you will have a lower amount to pay each month and a reduced interest.

You are then able to become debt free a lot sooner, which feels good and is good for your credit score.

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Habits To Change To Get Out of Debt

Habits To Change To Get Out of Debt

It is not easy to go from deep in debt to being debt free, but it is possible. The first thing that you will have to do is change your habits. Take a look at these habits that you have to change if you want to be debt free.

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forbes.com

Face Your Debt

You will need to first determine where your debt stands. The quickest way to do this is to calculate your debt to income ratio. This is a number that tells you how much of your income goes towards paying your debt. If you have a high debt to income ratio then it shows that you have too much debt. You may already know this, but having the figures can help you to face your debt reality.

Don’t Take On New Debt

The hardest habit that you will have to break is using your credit cards. If you have been using your credit cards for a long time then you are probably use to relying on it and paying for things that you don’t have the cash for. If you want to become debt free then you need to stop using them and taking on new debt. You need to learn to live on your income.

Make a Budget

You should create a budget of how you plan to spend your money. You may feel that you are managing your budget fine without a budget, but if that were true you probably wouldn’t be in debt. A budget will help you to see the best way to use your income and put together a plan to pay off your debt.

Live Within Your Means

People usually end up in debt because they spend more than they earn and this could be because of credit cards and loans. In order to pay off your debt you have to spend less than your income. This could involve adjusting your lifestyle and spending less on luxuries.

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Debts to Consider Not Paying Off

Debts to Consider Not Paying Off

So you have found yourself in debt and you are not able to pay off all of your debts, what do you do?

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money.usnews.com

Let’s first say that debts should not be ignored and the at least the minimum should be paid on all your debts especially for those that impact your credit score, but the fact is not all of us are able to do that so something has got to give.

You should then look at the consequences of not paying each debt and determine which ones you can bear and the ones you can’t.

You will first like to pay for your essentials like housing and food as these impact your life and then your car if you need it and then the things that you can’t avoid like taxes and alimony before you pay your bills.

It is also an idea to call your debtors and ask them for more favorable repayment terms so that you are able to lower your bill or have monthly payments that are lower.

There are also debts that could be less painful not to pay off if you are having trouble to pay the minimum on all your debts. Lets take a look at these debts that you could consider not paying.

Unsecured Debts

You could consider not paying off one of your unsecured debts like a credit card bill or a hospital bill.

With a secured debt an asset backs it so if you don’t pay these you can lose your asset, but with an unsecured debt you don’t have an assets to lose.

However, this doesn’t mean that you should stop paying your unsecured debts, as this will have an effect on your credit score. If you find yourself in a situation though and not able to pay all your debts then consider not paying unsecured debts before secured debts.

If you need to choose, which unsecured debts then take a look at what you owe and see which of these will hurt the least if you do not pay it off.

Underwater Mortgage

When we say underwater mortgage it means that you owe more than what the home is worth.

If you are in this situation and are having problems making payments on this and your other debts then you should consider walking away. If you are not heavily underwater then it could make sense not to pay.

This will damage your credit score, but you shouldn’t be wasting money on a home that may take years and years to be worth what you have paid.

Determine what your home is worth and what homes close by are selling for.

However, it is still better to satisfy a mortgage or have the terms modified by your lender then just walk away. If you are able to pay then you should.

Very Old Debts

Most debts are removed from your credit report after seven years. So if you have a debt that has been delinquent for say 6 and half years then you may not want to pay it off and rather pay for more pressing debts.

The old debt has already affected your credit score and if you start to repay it after years of leaving it then you will start the debt all over again and this can other complications.

A debt should not be ignored, but if you are having problems then you need to make compromises. You can also inform your creditors of your problems and they may be willing to work with you so you can afford your debts.

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Tips for Negotiating with Creditors

Tips for Negotiating with Creditors

If you are behind with your bills then you are probably getting calls from creditors and debt collectors. Even though you probably don’t want to talk to them, you may find that it can be useful to as they might be willing to work with you.

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credit.com

If you are going to negotiate with creditors then you might find these tips helpful.

Sticking to Your Story

The person that you are talking to will not want to hear every detail of why you are unable to pay your bills, but they do need to know if you are going through a hardship and what you are doing to get back on track.

You should tell the truth, because a lie is bound to backfire, so be honest with your creditors.

Keep Calm

You need to stay calm no matter what is being said. If you lose your temper you wont get anywhere. If you do feel like you are going to lose it then rather tell the creditor or collector that you will speak to them later. It is also a good idea to make sure the conversation is recorded so that they also keep themselves in line.

Ask Questions

You need to ask as many questions as you can especially if the collector is threatening to sue you or take your property. There are actions that are illegal for a debt collector to d so when you are armed with information you will be in a better standing.

Write It Down

Take written notes when you are speaking to a collector. You should take down their name, the time that you spoke and what you discussed with them. This ensures that you have a record if the collector or creditor breaks the law in their attempts to collect what you owe.

Keep your Mail

The mail that you receive from a creditor should be opened, read and saved in a file for reference.

What You Can Afford

You need to go over your income and expenses thoroughly so that you can determine what you can afford and only agree to pay a realistic amount.

You can usually negotiate the best settlement when you are able to come up with a lump sum in order to resolve the debt.

If you do agree to a payment plan then you will end up paying more over a period of time. You also need to understand the total amount that you will pay when you agree to a payment plan.

Deal with Creditors not the Collectors

You should try and work out an agreement with your creditors before a bill is sent to collectors. Late payments will affect your credit score, but collection accounts will do more damage.

Put It In Writing

When you have come up with a payment arrangement then you need to get in writing before you pay anything.

Help Negotiating with Creditors

If you are having issues with negotiating with your creditors then it might be wise to get some help in the form of a credit-counseling agency. They are then able to negotiate on your behalf and come up with the best plan moving forward.

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Getting Out of Debt on a Limited Budget

Getting Out of Debt on a Limited Budget

Debt can be daunting for anyone especially for those that are trying to pay down debt on a very limited budget.

When you don’t have much money spare, making debt payments can seem like a waste of money or just impossible.

However, it is better to make even a small payment rather than no payment at all. If you do not have an emergency fund or you are scraping by then you need to focus on these issues. If you do have available funds then you should be paying off your debt.

Here are ways that you are able to get your debt down whilst on a limited budget.

Create a Payment Plan

If you plan on getting out o debt especially when you are on a strict budget you will need a plan.

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lds.net

You will first need to figure out how much debt you have and write down the different lenders that you owe money to.

Order your payments by the ones that you think need to be paid off first.

Next see what you are able to afford each month. Once you know how much you can pay each month you need to know how much will got to each loan. You also have the option of negotiating a repayment plan with your lenders and you may even receive better loan terms.

Automatic Deductions

If your budget is limited then you may feel that small payments aren’t really worth it, but every little bit helps.

Automatic deductions will stop you from making excuses to make debt payments.

If the money is taken out of your bank account each month at the same time then you will need to put it in your budget.

This will also help you with unnecessary spending, as you know you can’t rely on that money. You need to determine what you can afford to pay on your debt each month and have that paid automatically.

Cut Costs

If you are on a tight budget you cant get out of debt if you don’t cut costs. Take a look at your monthly spending and see what you can change. When you cut costs you will have more money to pay off debts.

So stop eating out, stop your gym membership and stop your cable TV.

If you already have a limited budget then it can be hard to find places to cut down, but it will help you pay off debt faster. Don’t look at the big things also take a look at the smaller costs that add up.

Change Spending Habits

There are many reasons that you may have debt such as home mortgages or school loans.

Your debt may also come from poor spending choices in the past, no matter how you got your debt you need to make the decision to stop spending now especially if you want to get out of debt quickly.

Work towards paying your mortgage and stay away from stores if you have credit card debt. Make the choice not to spend.

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The Purpose of Debt Consolidation Loans

If you find that you are juggling payments and are looking to clear your debt then you might want to consider a debt consolidation loan.debt consolidation loans

Debt consolidation loans allow you put all of your loans under one loan that is more manageable.

Who Are Debt Consolidation Loans for?

The fact is that many of us live in debt, each debt will have a minimum payment that needs to be made, but instead of doing this you can bring all your debts together and rather pay just one monthly payment that is more manageable. However, you need to look at all the factors involved with a debt consolidation loan before you decide if it is the right move to make.

What are Debt Consolidation Loans?

A debt consolidation loan will transfer the money that you owe into one loan and this loan will only have one monthly payment.

All of the money that you owe will need to be paid back, but with a loan consolidation you might be able to reduce the amount of money that you pay out each month, pay a lower interest rate or be able to spread the costs out over a longer period of time.

The Benefits of Debt Consolidation

Your monthly payments should be reduced when you spread your debt out over a longer term. Many will just pay the minimum payments that are due on the existing debts, but this essential means that the interest is covered and the actual amount of the loan is unchanged.

If you are able to pay the loan off and get no extra debt then your credit rating will improve. Before you apply for debt consolidation loan, it is a good idea to check your credit report.

If there is a high interest rate on your debts whether it is with a credit card or store card then you will generally be able to reduce the interest on your debt with a loan.

The Dangers of a Debt Consolidation Loan

With a debt consolidation loan you may find that you will be in debt for a longer period of time, so you do need to look at the alternatives to reducing your debt or paying off your existing ones.

You should first look at your budget and see what you can afford to pay back on your current debts first.

Applying for a Debt Consolidation Loan

The lender will look at the amount of dent you have and your credit risk.

If you have a history of bad credit or large debts, the lender might offer a secured loan.

A secured loan is where your property is used as security against the loan, which will reduce the risk of the lender. However, you need to be sure that you can afford a secured loan as your house might be at risk.

Personal loans can be used to consolidate loans and the lender will look at the amount that you want to borrow, your credit history and the amount of time that you need to repay the debt.

A personal loan could help to consolidate and reduce your debt if the amount you owe is not too high and there are no problems with your credit rating.

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Debt Advice / Tips and Industry

Is a Debt Consolidation Loan the right choice for you?

Do you have a high credit score (780+)?

Do you have minimal debt you are looking to consolidate?

Do you have equity in your home?

Can you afford a payment for the next 10-20+years?

Are you willing to put your home at risk to securitize unsecured debt?

If you answered NO to any of these questions, a Debt Consolidation Loan is probably not the right choice for you.

Is Consumer Credit Counseling the right option for you?

Can you afford the payments you are making right now on your credit card debt?

Can you continue to afford these payments for the next 4-8 years?

Do you have the discipline to stay in a program for 4-8 years?

Are you ok with your credit report reflecting the equivalent of a bankruptcy?

Are you willing to pay 100% of your principal plus a slightly reduced interest rate AND finance charges?

Do you understand you cannot include any accounts in collections or medical bills?

If you answered NO to any of these questions, Consumer Credit Counseling is probably not the right option for you.

Is Bankruptcy the right option for you?

Can you afford $2,000 to $2,500 just to file for bankruptcy?

Are you aware of the new laws that make a Chapter 7 complete liquidation bankruptcy very difficult to qualify for?

Are you prepared to pay back a significant amount of your debt back if you qualify for a Chapter 13 Bankruptcy?

Are you willing to give up your assets such as your car or other property to qualify for a Bankruptcy?

Are you willing to deal with the stress and negative stigma of someone who is going through bankruptcy?

Do you understand your credit will reflect a Bankruptcy for up to 10 years?

Are you willing to pay high interest rates on future lines due to a Bankruptcy?

If you answered NO to any of these questions, Bankruptcy is probably not the right option for you.

Is Debt Settlement the right option for you?

Are you experiencing a financial hardship due to reduced income, job loss, medical emergency, loss of family member, or because the creditors have raised your rates/minimum payments?

Are you having trouble putting enough money into your Savings?

Would you like to avoid bankruptcy?

Do you have at least $5,000 in unsecured debt (credit cards, personal loans, medical bills, or collections)?

Would you like to save hundreds of dollars on your monthly payments?

Would you like to satisfy your debt in 1-3 years?

If you answered YES to any of these questions, Debt Settlement is THE RIGHT CHOICE for you!!!

Which Types of Debt Can You Include In This Program?

Any unsecured debt that does not have any physical assets or property attached to it. You can include credit cards, department store cards, unsecured personal loans, medical bills, utility bills, or any balance owned on repossessed property. You cannot include student loans, child support, judgements, taxes, or any secured debts.

Which Types of Debt Can You Include In This Program?

Any unsecured debt that does not have any physical assets or property attached to it. You can include credit cards, department store cards, unsecured personal loans, medical bills, utility bills, or any balance owned on repossessed property. You cannot include student loans, child support, judgements, taxes, or any secured debts.

Where Do My Monthly Payments In The Program Go?

Each Month, your monthly payments are automatically deposited into an FDIC insured Savings Account that we set up for you in your name. You control this account and it acts as our settlement account, from which your settlements are paid one at time through the course of the program. You are able to receive monthly statements for this account the way you would for any other checking or savings account in your name. If you ever decided to cancel from the program, any money that has accumulated in that account will be refunded to your existing checking or savings account.

Why Is First Source Financial Not Accredited With the BBB (Better Business Bureau)?

Contrary to popular belief, The Better Business Bureau is not a government agency. It is a private, paid-membership organization that has no disciplinary power. Who we ARE accredited with is The Association of Settlement Companies (TASC) and The United States Organization for Bankruptcy Alternatives (USOBA). These two associations are purely dedicated to the Debt Settlement Industry and require strict ethical business practices and standards protecting the interest of consumer debtors and lobbying at State and Federal Levels.

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Why Choose Debt Reducution Us

Financial Management negotiation process has been tested and developed over years of experience by our team of professionals in the field of finance and credit card debt. Our professionals are highly skilled in each of their fields of expertise.

Through the established relationships that we have with the creditors and financial institutions, we are able to successfully negotiate the debts of our clients at a substantial discount. Creditors are willing to negotiate a debt with First Source Financial Management, on behalf of our clients, with the understanding that the settled amount will be paid in a timely manner.

Furthermore, creditors are always looking to avoid the ineffective and costly efforts of an outside collection company. First Source Financial Management continues to develop our relationships with creditors throughout the country, and we always maintain a very professional and cooperative relationship with the creditors in order to reach the most favorable settlement offers for our clients. We work directly, and 100% for you.

Debt settlement is a legitimate way of solving your financial problem. Our representatives work each case individually to determine your eligibility, and then, if you qualify, they will establish a program that allows repayment of the debt through affordable monthly payments. Our approach assists you by reducing the time to repay the debt to maximize savings.

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What is a debt settlement?

Debt settlement involves negotiating with a creditor to eliminate a percentage of your debt at an agreed upon settlement amount. Debt settlement companies traditionally employ negotiation strategies to help settle your debts. The most important part of debt settlement is to complete the settlement process with your creditors and or collection agencies. During the settlement process, you will make a monthly deposit into a “special purpose savings account” that will eventually be used for your debt repayment. As funds begin to accumulate in the account, First Source Financial Management will start to negotiate with your creditors. Once a debt settlement offer has been agreed upon, funds from your “special purpose savings account” will be sent to the creditor. Once the payment has been made, that debt is considered settled in full. You will no longer owe anything on that debt and the account will be closed.

Why do creditors work with Debt Settlement Firms?

Creditors know that roughly 30% of the 1.5 million bankruptcies that occurred last year were on debt that was reasonably current and should NOT have taken place. Traditionally, people survive by borrowing from one creditor to pay another. However, this process eventually fails when consumers run out of available credit lines and find themselves unable to make their minimum monthly payments.
If a consumer files for bankruptcy, it is very likely that the creditor will receive nothing of the balance that is owed to them. Therefore, a creditor is better off negotiating with a debt settlement company. Our debt settlement company works with customers that have legitimate financial problems and honestly need assistance or has some type of hardship.