http://www.destroydebt.com/blogs/mbrazier.html Freedom Debt Management www.destroydebt.com Thu, 11 Mar 2010 09:39:50 GMT webmaster@destroydebt.com webmaster@destroydebt.com http://www.destroydebt.com/blogs/mbrazier/2427-a-look-inside-debt-consolidation-credit-counseling.html http://www.destroydebt.com/blogs/mbrazier/2427-a-look-inside-debt-consolidation-credit-counseling.html Thu, 11 Mar 2010 09:39:50 GMT One of the biggest questions is, how does debt consolidation credit counseling work? A nonprofit credit counseling agency that abides by state regulations and creditor guidelines will begin with a free counseling session reviewing your financial addendum. A financial addendum is an ou...
A nonprofit credit counseling agency that abides by state regulations and creditor guidelines will begin with a free counseling session reviewing your financial addendum.

A financial addendum is an outline of your debt to income ratio on a monthly basis, assets and liabilities. This is also known as a household budget. A certified credit counselor reviews your monthly expenses versus your income to properly assess a monthly payment for your credit counseling plan that is affordable and falls on a due date that comfortably fits within your other bills and pay schedule.

This is done first to help consumers identify where they are currently with their finances and help establish where they want to go long term with their goals. A financial addendum also helps your credit counselor qualify you for a monthly payment that you can easily manage and ensures a successful completion of your program. Some creditors utilize the financial addendum to determine how much interest will be reduced.

From there, a credit counselor will then ask for the accounts you want to enroll, names and current balances.  This data is used to find out what your monthly payment will be on the debt consolidation plan. The monthly payment is based on pre-established creditor guidelines nonprofits must abide by for their clients to receive program benefits such as interest reductions and the stopping of fees.

Eventually a credit counselor will want to review your statements for current fees, finance charges, and due dates in an effort to compare to the rates on the program and show the potential savings with enrollment.

At this point, a certified counselor should have provided you a budget analysis of your financial addendum, a breakdown of the total monthly payment in the program, and the potential difference in the savings between your current terms and the proposed modified terms under a nonprofit credit counseling plan. You now have a solid accounting of where you are, where you want to be, and how you can get there with a debt consolidation program.

If the payment is affordable and the savings are there and proven it is then time to select a payment date to begin your plan. Once you select a date and have committed to a plan a credit counselor should then send you any paperwork to finalize an agreement and working relationship between you and the agency to manage your debts.

After you have submitted your paperwork it is then recommended to make one last call to your creditors and close the accounts as – closed by account holder- rather than the creditor closing the account in the enrollment process. Whoever closes the account should not affect your actual credit score however some lenders may use such verbiage on your credit report to justify charging you a higher interest rate on a loan.

Keep in mind: There are some things that do hurt your credit and some things that do not that a lender will try and use to justify higher rates and fees from the affiliated banks and agencies.

Once you are enrolled in the program the credit counseling agency should be handling any communiqués with your creditors on your behalf and providing you updates as needed with regard to the status of your accounts enrolled in the program.

35 percent of your credit score is factored by timely payments every billing cycle. Another 30 percent is accounted by the amount of debt you owe. A debt consolidation credit counseling plan helps improve your credit in these two areas each billing cycle, building your credit score while lowering your debt amounts.

You see, as long as you make your payment each month a true nonprofit credit counseling agency will in turn then disburse funds to your creditors each and every month, satisfying the demand for 35 percent of your credit score, timely payments.

As your interest rates are reduced from their original rates your regular monthly payment through the credit counseling agency then applies more to the principle than the finance charges each month, bringing your balances down much faster than paying it on your own at high interest rates. This reduces the amount of debt you owe faster and further assists that 30 percent factor of your credit score in a positive direction.

A debt consolidation credit counseling plan can positively help eliminate debt while improving your credit score. Whether you are current on your accounts or behind, if you are paying more than 15 percent in interest you are paying way too much. A $5k debt at 15 percent interest could take 100+ payments and 3xs the amount actually spent to pay off the debt in full outside a credit counseling plan. Call our BBB rated A+ nonprofit credit counseling agency today for a free budget counseling session and debt consolidation quote. Visit our website freedomdm.org or call us at 800.905.1563. See how we can help you be debt free with Freedom Debt Management, Inc.]]> http://www.destroydebt.com/blogs/mbrazier/2426-debt-consolidation-calls-creditors-to-action.html http://www.destroydebt.com/blogs/mbrazier/2426-debt-consolidation-calls-creditors-to-action.html Mon, 08 Mar 2010 06:20:03 GMT The two main benefits of a debt consolidation credit counseling plan are the reductions in finance charges and a reduced monthly payment that is more affordable for the client to manage monthly. While a reduction in interest is a primary long term benefit, a lower monthly payment is usually more...
Some creditors have introduced new debt management plans (DMP) referred to as –Call to Action- that offer low or now interest rates to people who can qualify under extreme financial hardship. These new debt consolidation plans allow consumers to save from $25 to $200 more a month than a regular debt management plan.

But not everyone can qualify for this modified debt management plan. The criterion for enrollment into the CTA DMP is decided on a case by case basis by a certified credit counselor with the final acceptance coming from the individual creditors. A certified credit counselor helps determine a consumers eligibility for the CTA by administering a financial analysis covering sources of income, living expenses, and monthly debt obligations. This is also referred to as a budget counseling session or a household budget. If client qualifies by expressing extreme financial hardship a CTA DMP is recommended instead of a regular debt management plan.

Participating creditors, not all just yet, waive late and over limit fees and make favorable adjustments to the APR (finance charges) so that the CTA DMP will not extend longer than 60 months just like a regular debt management plan. While all creditors aside from Dell and Credit One participate in regular debt management plans not all are technically able to offer the CTA alternative.

In its infancy there have been no recorded success reports or percentages of completions under these new debt management plans but the NFCC advises that an initial review will be conducted and available by early August 2010.

Consumers who want to repay their debt through a DMP can truly benefit from this new hardship plan, especially those with a very tight monthly budget. Obviously a creditor would rather get some return than none and the efforts being put forth by banks show such as bankruptcy filings increase and creditors are reaching for new solutions.

To see if you qualify for a CTA DMP or a regular DMP speak to a certified credit counselor today for a free consultation and budget counseling session. Non Profit debt solutions are available to those serious about getting out of debt. A debt consolidation program can provide a lower monthly payment and interest reductions from 0 percent to 10 percent and have you debt free in five years or less. Speak to a certified counselor about your options and long term financial goals at 800-905-1563 or visit our website freedomdm.org and complete our application. You can also utilize our LIVE CHAT feature and speak to a live counselor online with no obligation.]]> http://www.destroydebt.com/blogs/mbrazier/2423-improve-your-credit-with-a-secured-credit-card.html http://www.destroydebt.com/blogs/mbrazier/2423-improve-your-credit-with-a-secured-credit-card.html Thu, 25 Feb 2010 04:05:49 GMT Sadly, Visa is now accepted in more places than cash. Millions of credit cards are being used daily for purchases. Visa, MasterCard, & AMEX, are in just about every household worldwide and the trend is not going to die anytime soon. There are people though who do not have the means to ob...
There are people though who do not have the means to obtain a regular credit card, be it a lack of credit in general or too much bad credit combating the application process. Here, a secured credit card can come into play as an asset to building your credit rating and history.

A secured card works just like a regular credit card with the exception of having to deposit your own funds initially to open the account and utilize as available credit. Some banks require a minimum amount be deposited to obtain a secured credit card while other banks simply do not offer the option. The average deposit requirement ranges between $200 - $500. Whatever amount you decide to deposit will be the available spending amount for the secured credit card.

Just like a regular credit card, a payment is due each billing cycle and interest fees are applied to purchases and cash advances as applicable. Yes, this means you will be paying interest to spend your own money. While this may seem asinine, for some consumers it is the best way to build a good credit score or help combat a bad credit rating.

It is a good idea to know who you are getting into bed with before making any commitment. You could say the same about establishing credit with big banks. There are some things you want to consider when shopping banks for a secured credit card. Terms and conditions are just as applicable and enforced as they are with regular credit so it is important to see what you will be facing after the honeymoon phase.

Fee Fi Fo F… What are the fees for the secured credit card?! Is there an activation fee? Is there an annual fee? Is there a fee for speaking to a customer service rep? Will you be charged for inactivity if you do not use the card one month? Payment processing fee? Make sure your initial deposit is not eaten alive by enrolment fees, etc. Secured card fees can add up quickly so watch OUT!

Get interested in interest: Check the interest rate before signing any tri-folds and make sure the rate is not going to detonate after a certain promotional time frame or period. Obviously, look for a low interest rate and compare rates. AND…make sure it is in writing.

Read between the lines and the lines between those. Those 3 font tri-folds were not developed on accident. Most banks make it difficult and irritating to read all the terms and conditions, usually in an attempt to sway you away from reading the terms definitively.

Apply accordingly. Try not to apply for too many secured credit cards. One or two will suffice. Going overboard could cause your credit rating to decrease instead of increase over time. To spell it out, applying for too many secured cards is contradictive to the mission of building better credit.

Checka checka check it out. Ok. So you have your fancy secured credit card. You are done cursing about the fees and using your own money to establish credit and have come to terms with your position in the credit game. Now we need to make sure someone is keeping score.

Be sure to check your credit report a couple months after establishing the secured account. The account should be reporting to the credit bureau and positing with all 3 credit reports. If not, contact the lender and find out WTF the problem is and how they can fix it – ASAP. If possible, it is a good idea to find this out before establishing the account. Honestly, if the activity is not reported to the credit bureau on a consistent basis the effort is then a waste.

There are many ways to build a better credit score. A secured credit card is just 1 of a few ways a consumer can begin to establish credit or rebuild a bad rating over time. Consolidating unsecured credit cards can also help combat bad scores and help improve credit over time. Unsecured accounts consolidated with a non-profit receive a lower fixed interest rate and usually a lower monthly payment. This enables a consumer to pay off their credit debts at an affordable cost and a decent rate, lowering the debt amounts faster and establishing a positive consistent payment history. Utilizing both can accelerate your efforts to build a better credit score and help you be debt free from unsecured debts. Contact a certified credit counselor at 800.905.1563 or visit our website for more information about debt consolidation and building a better credit score.]]> http://www.destroydebt.com/blogs/mbrazier/2420-debt-consolidation-dodges-new-credit-card-law.html http://www.destroydebt.com/blogs/mbrazier/2420-debt-consolidation-dodges-new-credit-card-law.html Tue, 16 Feb 2010 02:17:55 GMT New regulations are being finalized and you’ll want to take your current account terms and conditions into consideration. A lot of creditor terms have changed in the last few months so it is important to be aware of what to beware of. Take these five tips to keep your financial health in g...
Take these five tips to keep your financial health in good condition and avoid the fever of February 22nd.

ONE. Don’t apply for new credit until March 1st. Let Feb 22 pass, allow creditors to get all their fancy new terms and conditions into place and go from there. New accounts will be protected from interest rate increases for the first year open. Good credit consumers can still get a deal on a credit card; it will just be a harder find.  

TWO. Not that I encourage robbing Peter to pay Paul, but this may be the time to consider balance transfers. If you are consistent with your payments and follow your due dates from the dotted i to crossing the T, balances transfers may be a viable option for you to move high interest rate credit debt to lower rated cards. Make sure you read the T and Cs on balance transfers before executing. You will want to note how long the transfer rate will last, what the rate will be when the promotional plan ends, and what default repercussions you may incur should you miss a payment.

THREE. Keep an emergency card handy, one you do not use on regular purchases. Check your creditor terms though as some creditors are now issuing an –inactivity- charge for people not using the card.

FOUR. Make minor purchases with the cards you carry and try and pay off that monthly balance each month along with anything additional to the outstanding balance. This will help you avoid inactivity fees and the possibility of a creditor closing your account for not using it.

FIVE. Credit is no longer for kids- directly anyway. College kids will now require a co-signer of someone 21 years of age or older if they are not themselves. The young adult may also be required to show proof of the ability to pay the debt. Taxable income- allowances not included, sorry. If you are not of age you will need to find someone who is. Lean on a relative or friend you can trust to co-sign. Their credit rating will be on the line so make sure it is someone solid in your life.

No matter the disguise, consumer treats always come with creditor tricks. The new Credit Card Act was to be put in place to help protect consumers but it unfortunately will also further enable big banks to create new rules and fees to follow. A debt consolidation plan will allow you to keep one account open for emergencies and consolidate your other accounts to help you get out of debt faster and at a much lower cost. With a non-profit agency, your creditors reduce their finance charges to fixed rates, stop late and past due fees and usually accept a lower monthly payment. This enables consumers to not only pay off their debt at a faster rate, but to also help build a better credit score by ensuring timely monthly payments and paying down their balances faster.

The credit game was not designed for the consumer to win. If you are ready to call it quits and consolidate your debt call one of our certified credit counselors today for a free confidential consultation. Our BBB rated A+ service has helped thousands of consumers get out of debt and build a better credit score. Visit our website freedomdm.org or call 800.905.1563 for a free quote.]]> http://www.destroydebt.com/blogs/mbrazier/2418-nonprofit-budget-counseling-debt-consolidation.html http://www.destroydebt.com/blogs/mbrazier/2418-nonprofit-budget-counseling-debt-consolidation.html Tue, 09 Feb 2010 06:18:05 GMT If you are looking to get rid of your unsecured debts there are many debt management options available today that can help you be debt free. The first thing that should be reviewed and covered with a certified credit counselor is your household budget. Also referred to as a financial analys... The first thing that should be reviewed and covered with a certified credit counselor is your household budget. Also referred to as a financial analysis, a household budget outlines your debt to income ratio on a monthly basis along with an accounting of assets and liabilities. A reputable company covers your monthly budget for two main reasons.

An agency that has your best interest in mind wants to ensure they can provide an affordable payment that not only fits your budget but also falls on a date that works with your pay scale and other monthly obligations. Knowing what you have to work with and what type of payment is affordable ensures a successful completion from the start.

Some creditors require an agency to provide a financial analysis with the proposed payment plan to be reviewed for optimal benefits. A detailed financial analysis can help a creditor definitively assess where their card holder is currently at and how much help they really need in the reduction of fees and interest.

In contacting an agency they should offer a free budget counseling session before any commitment is made from the client. If this service is not provided you are most likely dealing with a profit agency that does not have your best interest at hand. Best to check them out with the BBB and ensure they are in fact a reputable company.
Debt Management has branched off into different means of eliminating debt, mainly debt consolidation and debt settlements.

So which one is for you? Knowing where you are currently at and where you want to go will help you better understand how you can reach your financial goals.

Current, paying more than the minimum at high interest rates.

Current but paying minimums and not seeing balances drop.

Living off credit cards and near max out on accounts.

Behind by 1-4 months.

Behind by 5 or more consecutive months.

All accounts in collections.

Unemployed and unable to make payments.

Considering bankruptcy.

Scenarios 1-4. If this is you, a consolidation program – not a settlement program – is probably more beneficial to you. A consolidation program makes payments to your creditors each month as your payment comes in and clears. The consecutive monthly payment plan keeps you current or can bring you current if you are a few months behind, helping improve your credit score over time. A consolidation program also reduces interest rates to lower fixed rates than what most people are currently paying. If you are behind a few months the late, past due, and over limit fees stop once the accounts are enrolled into a program. The stopping of fees and reduced finance charges allows more of your monthly payment to go towards the outstanding debt, principle balance, rather than the creditor fees each billing cycle. This helps you pay off your debt faster and rebuild your credit score with consecutive monthly payments.

Scenarios 5-8. If you’re behind more than 5-6 months chances are your creditors have ‘charged-off’ the debt as a bad debt. Whether you pay this debt or not, this charge off status reflects negatively on your credit for SEVEN years. At this stage the accounts have probably been referred to or sold to a collection agency or could be facing legal measures to satisfy the debt. A Settlement program only pays back a fraction of the debt, settling for a reduced payback amount. A settlement can only be negotiated on accounts that have already charged off. This is why it is not an option until your accounts are 5-6+ months past due. A settlement plan will have you make monthly payments to them and place funds each month in a trust account. This is done to build up a reasonable amount of funds to negotiate a settlement amount that the creditors will accept. Your payments do not get sent monthly to your creditors and collection calls usually continue until the debt is settled on by the settlement agency. Any amount settled on over $500 is also considered taxable income the following tax year. Because the accounts have to charge off, a settlement program can have an adverse affect on your credit for 7 years.

Assessing a budget plan can help you determine what you have to work with so you can begin weighing your options. Try finding a non-profit agency for a free budget counseling session and always check out the reputation of the agency with the bbb.org. If you need to run your credit report annualcreditreport.com will provide a free credit report once a year without signing up for any trials or giving any credit card information.

For more information on what options would be best for you please contact one of our certified credit counselors at 800.905.1563 or visit our website freedomdm.org. Rated A+ with the BBB, we provide an honest, affordable consolidation plan that has your best interest in mind. Get free from debt with Freedom Debt.]]> http://www.destroydebt.com/blogs/mbrazier/2412-credit-card-act-what-you-should-know-.html http://www.destroydebt.com/blogs/mbrazier/2412-credit-card-act-what-you-should-know-.html Thu, 28 Jan 2010 05:21:10 GMT The credit card reform bill, Credit CARD Act, gets under way February 22, 2010. This legislation is designed to help consumers but like any other bill there are loopholes big banks will jump through to make sure their pockets are nicely lined with your greenbacks. Here we go loop de loo. ...
Here we go loop de loo.

No cap on interest rates. NO…CAP. Credit card companies cannot hike the rates on existing balances unless you are 60 days late on your payment, but they can raise rates on future purchases whenever they feel like it- justified or not. No worries though, you are sure to be advised of such changes to your policy. Unfortunately the advisement will come in the mail smudged in between and looking like junk mail in hopes you toss it out like another useless offer. If you do happen to open it have a magnifying glass handy. Just because they have to put it in writing does not mean they have to make the writing at a readable font size.

This notice is required to be sent within 45 days of the change. Lenders can instill the new rate within 2 weeks after the notice has been sent. You have options sure. Pay the new finance charges, pay your account in full every billing cycle, or stop using the credit card all together. Choices, but choices few in this current economic state are really able to amend to.

The CARD Act has thankfully stepped in and helped Joe Public by placing limits on the severity of penalty fees you can be charged. New fees however, can be created at any time with whatever charges they choose to implement. So lenders can sit around the table and make up new rules and what they justify are–applicable- fees to coincide.

How would you like a new annual fee for your account? How about being charged for the paper and ink to generate your statement that comes in the mail without the option of online billing? Have a card in the dresser for emergencies only? Inactivity fee, there ya go. A fee for not using your card.

Backing up the bus a bit, and right over the consumer mind you, card companies are allowed to raise existing fees. Balance transfers, purchases, cash advances, you name it. The only ones who are safe from this are those with fixed rates versus variable rates. This is a very small fraction of credit card holders and they are usually able to maintain a fixed rated because of a promotional plan or a consolidation plan with a third party non-profit. You MAY have HAD a fixed rate but recently many credit card issuers are switching that over to variable rates to do just this- raise fees on existing balances. You were probably mailed something about it, it just was presented as unimportant like junk mail and discarded.

Wait wait wait, it gets better. Some changes you do not have to be advised on. A creditor can lower your credit limit or close your account without warning. This silent killer can destroy your credit rating by increasing your outstanding debt amounts against your available credit limits. And then guess what? When your credit score goes down your next financial endeavor will be at a higher interest rate as you are now a liability in the lenders eye.

While the Credit CARD Act seems like a fine and dandy helping hand to consumers rest assured any Act that deals with big banks is not going to leave them in the cold so you can feel all warm and fuzzy. What options are there then? Stop using credit cards. A non-profit consolidation company will close your credit cards and reduce the interest rates and finance charges to lower, FIXED rates, rates that cannot be increased with this new Credit CARD Act. If you are ready and willing to close your accounts and not start this very viscous cycle coming consolidate and start improving your credit while paying your balances down faster at lower fixed rates.

For more information call our BBB Rated A+ non-profit financial counseling agency. We provide free budget counseling and a free consolidation quote to assess an affordable monthly payment in our program.  Call 800-905-1563 or visit our website http://freedomdm.org  - Michael Brazier]]> http://www.destroydebt.com/blogs/mbrazier/2406-take-charge-of-your-credit-debt-solutions.html http://www.destroydebt.com/blogs/mbrazier/2406-take-charge-of-your-credit-debt-solutions.html Wed, 20 Jan 2010 07:35:59 GMT We charge up a lot of debt with credit cards and debit cards, but have you purchased with a charge card yet? Not a credit card. Not a debt card. Yes, a charge card. The primary plastic pusher of charge cards is American Express (AMEX). AMEX charge cards require cardholders to pay off their b...
The primary plastic pusher of charge cards is American Express (AMEX). AMEX charge cards require cardholders to pay off their balance in full each month and-or billing cycle. There is usually an annual membership fee for the charge card but no interest or other monthly fees like regular credit cards as the account holder is not able to hold an outstanding balance for more than the month it was charged on the account. This also, for the more disciplined, reduces the ability for impulse purchases and fast spending habits credit has graciously provided at the cost of your home and happiness.

AMEXs campaign –Take Charge- intends to capitalize on consumers consumed by annoying outrageous creditor fees. The way it goes, the campaign boasts the benefits of charge cards as a way to control debt during a period where such is much needed and desired by the average Joe. AMEXs goal is to spark that furious fire within consumers against harsh creditor fees and never ending debt. 

As stated earlier, for the more disciplined, the charge card is not for everyone. Aside from being in control of your spending habits, in order to get a charge card you must show that you have a good history of controlling your spending habits. Yup, it takes credit to get a charge card and rest assured you have to have a pretty solid score to be approved by AMEX.

And then comes the fees. While you may not be charged interest monthly we brushed upon annual fees in the start of this. Annual fees can range from $25, to $40, to $450 and it depends on what card you choose from AMEX so read your terms carefully when applying. The good news? These fees also cover membership to the rewards program and additional perks per plastic.

One of the hardest things people have with using a charge card instead of credit is their spending habits and the realization of paying the balance in full each month. Like any other creditor, late fees will be applied to your account if the balance is not paid in full every month. AMEX late fees range from $35 to 2.99 percent of the balance (whichever is greater) …yikes.

PRO: Unlike the majority of credit cards, you have 40 to 50 days to satisfy your bill. Regular credit cards give 25 to 30 days for the billing cycle.

PRO: A flexible payment option is also available that allows you to carry a balance for travel purchases over $200. In this instance though, minimum payments and interest fees are applicable…so you may as well just consider it a credit card should you need to make payment options.

PRO: There are no cash advance options with a charge card. Foreign exchange transactions are charged a 2.7 percent fee. On the other side, Citi and BOA charge 3 percent. 

Your spending limit is adjusted via your spending habits and AMEX monitoring your credit report. You are not advised what your cap is but can speak to a service rep for tips regarding your accounts and spending abilities. 

Even though the rules of charging are different than credit the game is still the same when it comes to how your credit score is affected. Both are considered revolving credit on your credit report. 

For the right person a charge card is a great alternative to –Take Charge- of ones credit and avoid incurring massive amounts of credit debt with credit cards. If you have a decent credit score and can be disciplined with your spending, check out the options available through AMEX charge cards. Consolidate your other credit cards for  lower interest rates and get out of the credit game altogether. With raising rates and tougher terms maybe it is time we all took charge of our credit card woes. A charge card with AMEX can still help you build a solid credit history without falling deeper into debt with credit cards.]]> http://www.destroydebt.com/blogs/mbrazier/2399-credit-counseling-debt-consolidation-does-affect-your-credit.html http://www.destroydebt.com/blogs/mbrazier/2399-credit-counseling-debt-consolidation-does-affect-your-credit.html Tue, 29 Dec 2009 07:27:26 GMT Most Americans are looking for a solution to absolve their debts and improve their financial health. In eliminating debt everyone has heard of the many alternatives in debt management. In joining these programs the primary concern most consumers have is how their credit score will be affected lo...
Consolidation Loan: Everyone wants to pay back less in interest and consolidation loans have provided a debt management plan for those who qualify. A consolidation loan provides a line of credit to the consumer in which all their other unsecured debts can be transferred and combined for the convenience of one monthly payment at one interest rate.  The amount of debt you owe is not decreased but consolidated into one account to avoid paying various rates to various lenders. This doesn’t necessarily help improve your credit score as you are not decreasing the overall debt, but have taken on one great debt to zero out a few smaller ones. If you have good credit and are having a hard time keeping up with multiple statements and payments a consolidation loan could be beneficial. Run the numbers, see what the rate offered is for the loan and then see when that rate expires and what the default penalties are.

Debt Settlement: A settlement program is a debt management plan that also manages and consolidates credit debt into one monthly payment. The settlement agency makes settlement offers to the creditors on your behalf in an effort to have the outstanding balance reduced by 60-70 percent. In order to settle with a creditor for a reduced payback amount the debt must first be charged off. A creditor will charge off a debt after it has been delinquent for an extended period of time, usually 5-6 consecutive months. A charged off debt is a serious negative mark on your credit report and remains on your credit for seven years, regardless if the debt is paid back or not. Imagine you loan someone $5k and after a couple of years they only wind up paying you back $2500. Would you be willing to lend that person money again? Probably not and that is how most banks look at charged off debts. Someone concerned about their credit score or looking at purchasing a home or an auto loan in the next ten years may want to reconsider this option. For those who have debts in the rears for more than 6 months, the accounts are already charged off, and are looking at bankruptcy may benefit from a settlement plan versus bankruptcy or credit consolidation.

Debt Consolidation: Like other options, your unsecured debts are consolidated into one monthly payment and the debts are managed by a third party. A consolidation program negotiates rates and interest with the creditors, not the outstanding balance. This allows consumers to pay back the amount they owe but at reduced rates to allow more of each payment to go to the principle balance over creditor fees and interest. The interest rates are reduced to fixed rates, usually between 0-10 percent.  The reduced fees allow the balances to drop faster, lowering the consumers overall debt amount at an accelerated rate. 30 percent of your credit report is determined by the total amount owed. Another 35 percent of your credit score is affected by consecutive payments. Therefore, a consolidation plan can actually improve your credit score over time with consecutive monthly payments and faster balance reductions.

Speak to a certified credit counselor for a free budget counseling session and credit consolidation consultation. An initial counseling session with a non-profit will help assess what your situation is, your long term financial goals and what option best suits you based on your specific situation. Call a certified credit counselor today 800-905-1563 or visit our website freedomdm.org for a free counseling session.]]> http://www.destroydebt.com/blogs/mbrazier/2398-credit-debt-solutions-understand-the-different-options.html http://www.destroydebt.com/blogs/mbrazier/2398-credit-debt-solutions-understand-the-different-options.html Tue, 22 Dec 2009 09:03:46 GMT There are many different ways to eliminate unsecured debts and it is important to know how to differentiate between your options to make certain the one you have chosen best fits your needs and financial goals long term. We will outline the various ways available in the debt management market. ...
THE LONE LOAN: A consolidation LOAN- not a plan or program – is a loan obtained to pay off all unsecured debts by consolidating them all into one loan for one rate and monthly payment. This can be effective for some people but the term –robbing Peter to pay Paul- comes to mind as all you are really doing is taking out another unsecured debt to merge a multitude of debts. Something to keep in mind as well, the rate of the loan. You will want to know and understand your default terms as most lenders take a delinquent or missed payment as an opportunity to increase your rates. Now you are back to square one.

SETTLE FOR LESS: Debt Settlements, ahhhh –debt relief…for the right person based on your financial situation and long term credit goals. A debt settlement program is another way to eliminate debt that utilizes similar terminology like, just one monthly payment, debt management,  debt consolidation, and debt relief. A settlement program pays back the debt at a reduced amount from the original amount owed, usually between 30%-60% less. While this may sound appealing to everyone it is only beneficial to a certain few. In order to settle a debt it must first –charge off- A charged off debt reflects poorly on your credit for 7 years as a bad debt, paid in full or not. An account does not charge off until it has been delinquent for 5-6 months of non-payment. Collection calls are usually consistent and some creditors will still take legal pursuit to resolve the debt. When the debt is settled upon the difference is then considered taxable income the following year and the debtor is issued a 1099 form to claim the amount as taxable income.

If you have had a financial analysis on your monthly budget and are extremely over-extended a settlement plan may help you avoid filing bankrupt. If your primary concern is eliminating your debt and you have no major purchases to consider for the next 7 years then your credit score is not your primary concern and this could be the best available option for you.

CONSOLIDATE:  Debt consolidation, credit counseling, can be beneficial for someone looking to stop using their cards and improve their credit over time. Like settlements and consolidation loans, the same terminology is used to describe the services. One monthly payment, debt elimination, debt management, consolidate your credit, etc. A debt consolidation plan allows you to pay back the total debt amount with monthly payments at reduced rates with the stopping of other fees. Most consolidation companies have agreements with creditors and established guidelines for minimum monthly payment requirements, which can be less the minimums you are currently paying.  While making minimum monthlies in a consolidation plan the consumer is able to watch more of their monthly payment decrease the outstanding balance as the creditor fees stop once enrolled and the finance charges are reduced to fixed rates. Like the other plans it also allows the convenience of one monthly payment. A credit score can improve over time as 35 percent of your score is determined by timely consecutive payments. Another 30 percent contributes to the outstanding balance due between all accounts. With reduced interest the balances decrease much faster than if attempting on your own.

The accounts consolidated must be closed upon entering the plan but most plans allow you to keep one account open for emergencies. A consolidation plan can help increase your credit score with timely payments and eliminate your debt faster at reduced rates.

In doing your research you will first want to assess where you currently are with your finances, where you want to go, and how you will then get there. Going through a free budget counseling session with a certified credit counselor is a good start to help assess where you are currently at and what your options are. Working with a non-profit is your best bet and will help you avoid any extra costs going through a third party. A check with the Better Business Bureau of a company is always a good idea to see what type of reputation they have from previous clients.

Call 800-905-1563 to talk to a non-profit certified credit counselor today to explore what your options may be and for a free budget counseling session. You may also visit our website freedomdm.org and complete our online inquiry form for a counselor to contact you at a time you are available.]]> http://www.destroydebt.com/blogs/mbrazier/2395-budget-building-blocks.html http://www.destroydebt.com/blogs/mbrazier/2395-budget-building-blocks.html Tue, 15 Dec 2009 08:16:10 GMT Every financial plan starts with a solid budget. It doesnt matter if you live check to check or make six figures, you need to know where youre money is going in order to maintain your financial health positively. People hear budget and see hand cuffs and restraints but in fact a budget can provi...
First, you want to establish where youre currently at, your debt to income ratio. As most of us are paid on a weekly or bi-monthly basis, this is best identified by a monthly breakdown versus an annual assessment.  Start with your income.

How much money are you bringing in each month? You want to evaluate the net amount not the gross. The net amount is the amount received after taxes, social security, and any other deductions you may be incurring. An easy way to remember gross versus net: Its –gross- how much gets taken out of your check each pay period. You –net- what you take home, like what youve caught in a net. I like the gross taxes one myself, lol. Now, if you share household expenses with a spouse or roommate, etc youll want to account for their wages/contributions as well to properly coincide with your expenses.

Once youve established how much money youre bringing in youll then need to know how much money youre paying out each month. Start a list, beginning with the necessities: mortgage, rent, car note, insurance, medical, and any other bills youre required to pay each month at a standard rate. Then, start accounting for the expenses that are every month, but the amounts vary. These would include things like gasoline, utilities, food, etc.  Estimate an average monthly amount on these based on previous months and old statements and receipts. Ok, so you now have accounted for your living expenses that are required to survive. Youll now want to assess what other expenses you incur every month in your day to day dealings.

Are you a smoker? Do you eat fast food? Order out? Shop online? Go to the movies? Get your car washed? Groom the dog? These miscellaneous expenses are usually what put people over the top but can easily be regulated with a solid budget. An easy way to identify what youre spending your money on is to check your previous bank statements and see what youve previously purchased with a debit card or visa transactions.

Adding up all your monthly expenses totals your monthly debt ratio. Subtract this number from your monthly income amount to see if you have disposable income remaining or if youre in the negative. Being in the negative means youre overextended and some adjustments need to be made to keep a positive debt to income ratio and avoid further financial conflicts down the road. 

A certified credit counselor can provide a free budget counseling session and provide a free financial analysis to evaluate your budget and help find ways to cut some expenses and help you get back on track. There are tons of ways to cut costs and save on insurance plans, cell phone plans, etc that a certified credit counselor can advise on and help decrease your monthly expenses. Call one today at 800.905.1563 or visit our website freedomdm.org to learn more about budget counseling, debt consolidation, and how to improve your credit score. Our non-profit counselors are here to provide free advice and help you start building your financial future. ]]>