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Is Getting Out of Debt Impossible?
July 16, 2009 by DebtGeniusNo Comments Tweet this post
Is Getting Out of Debt Impossible?
As of the moment we are in the midst of a pretty bad economic recession. People have been losing their jobs, businesses have been going under, and we are hitting record numbers with home foreclosures. To top all of this off we are seeing American consumers hit a record high with credit card debt. Now what most people do not know is that getting out of debt is not all that hard if you take the right steps.
For starters most people do not know what options they have available to them in order to get out of debt, however before going into any of those options debtors must be made aware that pretty much anything they do to get out of debt will have a negative credit effect. Unless the debtor has the money to pay off the debt in full, which ninety nine percent of people do not. The number one priority when trying to get out of debt should be exactly that, getting out of debt, not worrying about keeping a great credit score. A credit score is something that changes like the wind and can be repaired at a later date, and besides when you’re in debt you should not be worrying about how to get yourself into more debt in the future.
With that being said there are two main debt relief programs available to people trying to get out of debt. There is consumer credit counseling and there is debt settlement. Both have their respective pros and cons.
A credit counseling program is one that boasts the benefits of reducing interest and consolidating payments into just one. So instead of making numerous payments throughout the month to your creditors you just make one to the credit counseling agency and they will pay the creditors for you. Plus the creditors will lower the interest on these types of plans. The problem is that for many people the payments will still simply be too much. Often times the payments are just as much if not more than what people are putting out on monthly minimum payments.
With credit counseling people can look to get rid of their debt within 5-7 years and look to pay back around 135% of what they currently owe. Another issue with credit counseling is the low success rate, because if just one payment is missed often times the creditors will kick the consumer off of the program, thus bumping the interest back up. And yes there is a negative effect on the credit, a credit counseling plan will be shown as a code 7 on the credit report which looks bad. But the bottom line is to get out of debt and with this plan money and time will be saved when compared to riding out the monthly minimum payment scheme for what could be decades.
Now there is another debt relief plan called debt settlement. The benefits of this program are the savings of money and time. Most debtors find themselves saving around fifty percent of what they owe today, and can realistically get out of debt in just a few years. The downside to this program is that in order to achieve a debt settlement the consumer must let the accounts fall into default, thus putting the creditors in a position to negotiate a settlement. So obviously this will have a negative effect on the credit score. However once the settlements start coming in the credit score will rebound and repair itself naturally.
Visit our website for additional tools and resources for debt-free living.
Filed under Debt Free Stories, Debt Management, Information on Personal Debt
Conquering Credit Card Debt
July 16, 2009 by DebtGeniusNo Comments Tweet this post
Conquering Credit Card Debt
How much do YOU owe on your credit cards?
The average American family is now over $7000 in debt just on their credit cards. That debt generates an interest charge of over $105 each month if your card charges the average 18%. If you have missed a payment or made a late payment (even by one day!), you may be paying up to 27% interest or over $157 each month.
Most credit card companies require a modest payment towards the card balance. Modest meaning from $10 to $20 a month. To pay off a $7000 debt at $20 a month you will not pay off this debt for 29 years.
And what about those interest charges? Paying off a $7000 credit card debt charging an interest rate of 18% and paying $20 a month towards the debt, you will pay over $18,400, more than TWICE the original debt, just in interest.
What if you have more than one card? What if your debt is over $7000? What can you do? How can you get out of this hole?
There are some techniques that can help you pay off your debt and do not require expensive loans, invasive credit checks, or expensive financial planners and accountants. You can also save on interest charges by paying off your debts in a certain order.
The most effective technique is sometimes called the “snowball” method. The snowball method suggests that when you pay off one debt you apply that payment amount to the next debt. Thus the amount you pay on a debt grows like a snowball rolling down a hill.
For example, you have three credit cards with debts of $5000, $4000, and $3000 which are charging you 18%, 27%, and 12%, respectively, and you are paying $150, $125 and $100 each month. By paying these required monthly amounts you will pay off your $3000 credit card first.
Now that the $3000 card is paid off you have an extra $100 a month. Put that extra $100 toward paying off your next credit card debt. Now you are paying $225 a month on the $4000 card and the $150 on the $5000 card. With this accelerated payment on the $4000 card you will pay off the card earlier and save some money on interest charges.
Then apply the $225 payment to the $5000 card for a monthly payment total of $375. Soon this card will be paid off and you will have $375 extra each month to pay off other debts or better yet, INVEST!
So, which debts should get paid off first?
Generally, you want to pay off the debts that are charging you the highest interest rates first. In the above example you could have added the $100 payment to the $5000 credit card rather than the $4000 credit card. But the $4000 credit card is charging you 27% where the $5000 credit card is charging 18%. By paying off the card charging the higher interest rate first, you will save some money on interest charges.
Visit our website for additional tools and resources for debt-free living.
Filed under Debt Relief, Information on Personal Debt
Bankruptcy 101
July 15, 2009 by DebtGeniusNo Comments Tweet this post
Bankruptcy 101
Bankruptcy - The last option for debt problems
Bankruptcy is a federal court procedure that is designed to aid businesses as well as the consumers to wipe out their debts or repay them under the protection of the bankruptcy court.
Why do people declare bankruptcy?
Sudden disasters: Majority of people in America file for bankruptcy due to ill or failing health.As per the Harvard Study half of the US bankruptcies were caused by medical Bills. The result of the research was published online in February of 2005 by Health Affairs. The Harvard study concluded that illness and medical bills caused half (50.4 percent) of the 1,307,857 personal bankruptcies in 2001. Other issues such as unemployment or loss of job, sudden accident, natural disasters or even crime can easily cripple any one’s bank account.
Careless mistakes or other decisions that went wrong: These are the reasons for bankruptcy that stem from our own irresponsible behavior. Loss of self restraint, gambling, extravagant lifestyle, bad investments, divorce or may be bad relationships can lead to overwhelming financial problems.
What are the different types of bankruptcies?
There are three types of bankruptcies Chapter 7, Chapter11 and Chapter 13. However Chapter 7 and 13 are the most common types of bankruptcies.
What is Chapter 7 bankruptcy?
Chapter 7 is also known as a straight bankruptcy or liquidation proceeding. As per this chapter, the debtors are allowed to keep certain type of property, this kind of asset is known as exempt property and the property they must give up is known as non exempt property. When you file a petition for Chapter 7 almost all your debts are discharged in exchange of certain property. In Chapter 7, all your non exempt property is handed over to the court appointed trustee who in turn sell some of these assets and distributes the cash to the creditors.
Non exempt property may include:
1. Pricey musical instruments provided the debtor is not a professional musician.
2. Family heirlooms.
3. Collections of valuable items like stamps and coins.
4. Bank accounts, bonds, cash and other investments.
5. A second or vacation home
6. A second car or truck.
Exempt property include:
1. Household appliances.
2. Vehicles, up to a certain value.
3. Reasonably priced requisite clothing.
4. Reasonably priced requisite household goods and furnishings.
5. Jewelry, up to a certain value.
6. Pensions.
7. A part of unpaid but earned wages.
8. Equipments (up to a certain value) that are needed in the debtor’s profession.
9. Damages awarded for personal injury.
10. A part of equity in the debtor’s home.
11. Public benefits, including social security, and unemployment compensation, public assistance (welfare) that is accumulated in a bank account.
What is Chapter 13 bankruptcy?
Chapter 13 is also known as reorganization where you file a repayment plan with the bankruptcy court proposing how you will repay your defaults to your creditors.The amount of money you’ll have to repay depends on how much you earn, the amount of debt you owe, the types of debt you have, and how much property you own. In a Chapter 13 bankruptcy, you don’t have to hand over any of your assets to discharge your debts, but you must utilize your income to pay off your debts over the due course of time – it’s usually three to five years, depending on the amount of your debts and your income.
What are the reasons to file for Chapter 7 Bankruptcy?
Usually a Chapter 7 bankruptcy case is opened and closed within four to six months.
Although you have to give up your non exempt property in Chapter 7 bankruptcy, but it lets you keep most of the necessities. Usually Chapter 7 is filed in cases where the debtor has no assets to lose.
What are the reasons to file for Chapter 13 bankruptcy?
If you are having problems in paying off the secured loans (such as cars or houses) and need to catch up before foreclosure or repossession.
It may also be appropriate if you have a tax obligation or a student loan that can not be discharged in Chapter 7. You can include these debts in the Chapter 13 repayment plan and pay them off over time.
If you want to retain the non exempt property.
If you have a co debtor on a personal loan. Filing for Chapter 7 bankruptcy will cause a big trouble for your co debtor (Incase you have a co debtor) on a personal debt. Your creditors will undoubtedly go after the co debtor for payment of the debts. If you file for Chapter 13 bankruptcy, the creditor will not disturb your co debtor for payments as long as you keep up with your repayment plan.
Who can file for bankruptcy?
Individuals as well as businesses may file for bankruptcy.
In certain incidents, a creditor (can be a person or business) who owes money through an involuntary procedure may force the filing of a bankruptcy proceeding. However, this is a very rare case.
Does Bankruptcy discharge all of your debts?
When you file for bankruptcy it will discharge all your debts, so that no further legal action can be taken against you on those debts. However, bankruptcy be it chapter 7 or 13, does not discharge all of your debts.
For additional resources concerning debt, come and visit our website.
Filed under Debt Relief, Information on Personal Debt
Reducing Debt
July 15, 2009 by DebtGeniusNo Comments Tweet this post
Reducing Debt
So you want to know how you can reduce debt.
Paying off debt is a good thing to do, and living without debt gives you a freedom that most people don’t even dare to dream of. You might say that it can’t be done, that you have too much debt. Having too much debt suck, I know that first hand. But you have to start somewhere, and you have to start where you are now. Below is a proven plan that works, and it will work in your situation.
The steps on how to reduce debt:
Change your way of thinking.
It’s easy to give up and live in a state of mind where you say to yourself that this is hopeless. Change always starts with yourself first. Start telling yourself that this situation is only temporary. Don’t say it can’t be done, say: how can it be done?
Get an overview of you situation and finances.
Make an account of your income and expenses. How much money do you make each month and how much money do you spend. Include every income and every expense you know of and be honest with yourself. This is the most important step of all steps as it’s critical to have a good overview of your current situation. At the bottom, you will see your months total cashflow (total income – total expense). Chances are your cashflow might be negative but don’t give up, this is only temporary.
My friend Dave Ramsey came up with this plan, and many people are now living a life of financial freedom, free of debt. All thanks to this plan.
Build up emergency fund.
Your first goal is to get an account with $1000 for emergencies. We call it emergency funds and they are for emergencies only. You are only allowed to touch it when there is a real legitimate emergency. Everything that can be planned for is not an emergency; your wife’s birthday or Christmas is always at the same date. This account will make you sleep well at night as you know that if your refrigerator breaks down or something happens to your car, you have money to pay for it. This account is for emergencies like that, and only such emergencies. Be disciplined on this.
For some people, this step is easy as you already have more than $1000 in savings. Simply move $1000 into this account and you are done. For others, it is much harder as you might not have a single dollar left.
This is the time to take action, reduce your expenses as much as you can. Winners make sacrifices to reach their goal. You can make sacrifices too: stop eating out, reduce your expenses. Eat rice for dinner if you have to. Take an extra job delivering pizzas, do whatever it takes to reduce your expenses and increase your income. I didn’t say it would be easy, but I said that it can be done.
Start rolling the debt snowball.
List all your loans ordered by smallest to largest and pay minimum on all loans except the smallest one. Use all your excess money to pay extra on this loan until it is paid off. Once it’s paid off, take the extra money from it and add it to your payment on the second smallest (which is now the smallest one). Your debt snowball is getting bigger and bigger until there are no loans left to pay.
Don’t order by highest interest even if it sounds better mathematically. Mathematics, real life and your discipline and perseverance doesn’t always work together over an extended period of time.
For more on debt reduction, visit our website.
Filed under Debt Management
Student Loan Consolidation Tips
July 14, 2009 by DebtGenius1 Comment Tweet this post
Student Loan Consolidation Tips
A student debt consolidator provides a debt relief by suitably merging together the undergraduate’s exceptional loans. The meaning of this is that the debt consolidator will get in touch with all your lenders, “pay off” the balances on your behalf and subsequent to this instead of two or more credits, you only be indebted to one lender! By signing up with an student debt consolidation curriculum, you will be in favor to begin a new credit with the lender.
Fundamentally, this kind of curriculum falls under 2 categories:
1) Unsecured consolidation loan
2) Secured consolidation loan
The earlier category of debt consolidation loan does not force you to raise collateral. Though you will require putting more finance for your monthly refund, you can induce this consolidation loan in a moderately rapid time.
A secured consolidation loan in contrast, requires appropriate collateral and since you are not expected to hold properties of your own, you might require enrolling for assistance from your parents or custodian. With security, you can have a loan of more money but do make a note of the fact that the repayment phase for this loan group is typically longer than normal ones.
With the help of student debt consolidation loans you begin with one loan with a small interest charge which is reasonable and which will assist you to perk up your credit score
Accepting this loan will discontinue any collection mediators harassing calls and provide you a strain free future to construct your credit for upcoming borrowing. Thus for easy repayment of the debts one should go for secured debt consolidation loans.
We’re here to help. Visit our website for more on becoming debt-free, and restoring your financial peace of mind.
Filed under Debt Management
The Fight Against Debt
July 14, 2009 by DebtGeniusNo Comments Tweet this post
The Fight Against Debt
None of us are perfect when it comes down to bad habits, but some are worse than others; not understanding your debt or finances is one of them. Kicking these bad habits into touch means that you can look towards becoming debt free:
1: Too many credit cards – Did you know that there are more credit cards than people in the UK? According to APACs, at the end of 2007 there were 73m credit and charge cards compared with around 60 million people.
Having too many credit cards means that you have the potential to get into too much debt. Although introductory offers many tempt you in, it is important that you take control of your credit card debt. Start by paying off the highest APR cards means that you can look forward to becoming debt free in a much quicker time.
2: Spending more than you earn – Spending more than you earn by living beyond your means is a financial habit which you need to nip in the bud right now. This is the quickest way to get into debt, especially if you regularly have to relay on your credit card the week before pay day.
3: Missing credit card payments – Always make sure that you meet your credit card, store card or catalogue payments as they fall due. Missing these payments not only means that you will have to pay late fees but any missed payments will also show on your credit file, which could make it more difficult to get accepted for credit in the future.
4: Losing touch of your finances – Being unaware of how much cash you have in the bank to how much debt you have outstanding means that you have lost touch with your finances, which will make it harder to become debt free. Checking your credit report is a good way to see your own credit history.
5: Not seeking debt help when you need it – Sadly debt problems will not sort themselves out, and if you are missing credit card, store card or even mortgage payments then you need to seek help as soon as possible.
For additional debt-free solutions, visit our website.
Filed under Debt Free Stories, Debt Management, Information on Personal Debt
Payday Loans - Some Advice
July 13, 2009 by DebtGeniusNo Comments Tweet this post
Payday Loans - Some Advice
These days, payday loans tend to offer some of the greatly-required financial assistance towards salaried individuals for the purposes of meeting their small financial emergencies. Indeed, as the loaning procedure hardly requires any kind of prior paperwork, it is known to be quite popular amongst the non-executive salaried working class, as the loan applicant will simply need to fill in an online application form for obtaining the loan in question. Further, such loans can even be acquired through some simple and easy telephone calls.
Thanks to some of their easy application procedures, payday loans also sometimes prove to be greatly advantageous to those who might require cash as soon as possible. During emergencies, people will simply want to avoid seeking more conventional loan possibilities, as these loans will come along with certain more time consuming procedures attached to them. In such situations, it will always be a wiser decision to opt for some of the long-term payday loans available.
In fact, nowadays, the greater majority of people usually find themselves uncertain about taking out a long term payday loan, as the repayment structures linked to these will usually have certain higher interest rates. Nonetheless, certain more suitable long-term payday loans can easily be obtained with a little additional research.
Key Suggestions For Obtaining Long Term Payday Loans:
By bearing certain essential points in mind, borrowers will be able to strike some of the most suitable deals in getting long term payday advances. Below are a few tips that can very much assist borrowers in obtaining certain valuable long term payday loans:
Finding A Company With Substantial Cover - Firstly, borrowers will need to find the most appropriate company that will be able to provide them with sufficient cash to be able to cover the expenses, when they will most require it. This can effectively be carried out through internet, as certain intensive research of various payday advance lender companies will more easily be carried out over the web. Nevertheless, borrowers will be able to get up to $1,500, provided they have a genuine checking account and a outstanding salary. Therefore, for obtaining such comparatively bigger payday loans, lending companies will also require from the borrowers to be able to fax some personal reports and documents, though it will usually not take over too much of their time and efforts.
Locating A Company With Nominal Loan Extension Charge - Before deciding about long-term payday loans, borrowers will need to find a company that will be able to charge nominally for the purposes of extending the repayment timelines. Therefore, the lending company might request a little fee for the purpose of extending the borrowers’ loans for 30 days. Although it generally proves to be a costly affair, this will be the only way through which long-term payday loans will possibly be gathered. A loan extension fee shouldn’t ever exceed $15 per month in any case; otherwise it would definitely be considered by many as too costly. It will also need to be confirmed that the repayment will need to minimize the borrowed amount together with the interest.
Finding The Flexible Loan Plans - In order to ensure optimum long-term payday loans, borrowers will need to seek certain loan plans that will be extended according to their requirements. Although the proposition might sometimes prove to be a bit expensive, it will nonetheless always ensure an easier pay day loan for those most in need. Furthermore, borrowers could also spread the repayment structures for over 30 days, which in turn would assist them towards managing their monthly budgets.
Visit our website for more information on becoming debt-free.
Filed under Information on Personal Debt
Seniors In Debt
July 13, 2009 by DebtGeniusNo Comments Tweet this post
Seniors In Debt
When you consider that retirement income is usually less than a working income (and often fixed), increased inflation affects purchasing even basic commodities… and it can be staggering. Consider the increase cost of oil. Heating oil is bad enough. But think about the cost of vehicle operation besides just your car. Everything must be transported and the increased cost of transporting even basic commodities has to be made up from someplace. The only place it can come from is the consumer’s pocket. Everything you purchase has an increased cost. That can of peas or the new sofa costs far more than it use to along with the gasoline to go purchase it.
But there is more. The younger generation grew up with wide-open credit but the senior did not. Many times there is a cultural difference between someone who grew up with credit cards and someone who did not. Many seniors are bringing credit debt into their retirement with retirement dollars straining to meet the budget.. Add to that increased late fees, over the limit fees, even back charge fees and you have a potentially catastrophic arena.
But there is also a longer life, increased health costs, deteriorating health and a credit card industry willing to open the doors of credit to nearly anyone that’s still breathing. When you are desperate, it is not an implausible thought that a credit card might look like the solution even for basic purchases. Unfortunately, all a credit card does is increase the inevitable. Like everyone else, seniors are paying for today with tomorrow’s dollars… dollars that are definitely shrinking form a fixed income.
So what can be done? The obvious answer is to plan early… the earlier the better. But what if early planning did not occur. Then tragically the only solutions left are the exact same solutions for every other consumer- increase income or decrease expenses.
Ahhh but therein lies the catch. How can you increase income when it is fixed? Often times this can be accomplished through imagination and creativity. Perhaps the senior can develop consulting opportunities or an online business. Perhaps something can be sold. Hundreds of additional ideas can be gleaned form online resources, written publications, and senior advisors. The point is, plans must be developed and enacted.
If increasing income is not an option then the only recourse is decrease expenses. Call creditors and request a decrease in interest rate. This may sound absurd but it is done every day. There are also scores of magazines offering ways to stretch your dollar. Similarly your favorite search engine will produce more frugal sites than you can ever read. Each of these sites informs the reader of ideas to save money and to accomplish exactly what you are already doing but for less.
For more on becoming debt-free, visit our website.
Filed under Information on Personal Debt
Avoiding Unnecessary Debt
July 12, 2009 by DebtGeniusNo Comments Tweet this post
Avoiding Unnecessary Debt
Many Americans are, unfortunately, living with a mountain of debt. And with many people losing their jobs, it’s more important than ever to keep the amount you owe down to a bare minimum. Unfortunately, creditors are seldom merciful when it comes to getting their loans repaid, and those bills will just keep on showing up in the mailbox whether you are working or not.
If you are presently in the position of drowning in debt, don’t wait to act! Playing possum and pretending the problems aren’t there won’t make them magically disappear. You need to work to consolidate and eliminate what you owe quickly before interest and penalties and bad credit ratings loom up in front of your face.
Most of us don’t have a clue as to where to begin when it comes to addressing our debts. A great solution is to seek advice from a credit counselor. This financial professional and his team will meet with you, go over your money issues, and work out a repayment plan that you can live with that will help you resolve your present crisis. But in order to avoid future trouble, you may need to change your lifestyle and your spending habits. You need to begin now: it’s never too late!
First of all, resolve to live within your income. This means paying cash for all expenditures and never, ever using a credit card except in extreme emergencies. By the time all of your bills are paid each month, you should have 5-10% left over to squirrel away in a savings account or somewhere else where your money can grow.
The only loans you should have are for a home mortgage, and possibly your children’s college education. This may mean no more buying new cars, and this may mean buying a smaller home than you intended. You should be able to purchase a good used car with cash, and that will probably mean waiting longer to get it, but you won’t have to face an outlandish car payment each month.
Staying out of debt will allow you to sleep better at night, knowing you can afford to stay in your home, take care of your family’s needs, and even have a little extra in case of emergencies at the end of each month. All of this with no creditors calling at all hours or coming to repossess your belongings.
Adjusting to a debt-free lifestyle requires some sacrifices at first: you may not always be able to run out and buy a new pair of shoes every time you want one, nor will you be in a position to show off that brand new sports car to the neighbors. But the peace of mind that comes from living frugally is priceless: once you’ve gotten rid of that mountain of debt, you’ll never want to go back there again.
To learn more about budgeting and becoming debt-free, come visit our website.
Filed under Debt Management, Information on Personal Debt
Debt Settlement and Bankruptcy
July 12, 2009 by DebtGeniusNo Comments Tweet this post
Debt Settlement and Bankruptcy
So many Americans find themselves in financial stress due to our current economic situation. The recession is a global one, making it nearly impossible to make enough money to pay the bills. Credit card debt only adds to the stress levels of many people world-wide. If you’re at the end of your rope and bills are cutting into your savings account, there is help. Debt settlement companies offer great one-on-one advice tailored to your specific needs. Every aspect of your lifestyle is taken into consideration by your personal consultant when they contact creditors on your behalf.
Lower Monthly Payments
When negotiations are made on your behalf, your payments may be cut as much as 65 percent. This is due, in part, to lower settlement terms your creditors will agree to when they fully understand this is a last ditch effort to pay them. In fact, all of your payments can even be wrapped into one monthly payment to be paid to the debt settlement company. Putting all of your payments into one easy-to-pay payment to the debt settlement company gives you the opportunity to avoid paying off your debts at varying interest rates, which again saves you money. It is very possible that you will have no more contact with your creditors after the settlements have been made.
Reduce Your Interest Rates
Interest rates can be outlandishly high, especially on credit cards and rental companies. The reason they can charge such high interest rates is because people will pay it for the added convenience of having what they want right now. As a nation, we are often drawn in by special interest rates and “buy now, pay later” marketing campaigns. Very often these campaigns have hidden costs or fine print that results in much longer payment terms or rising interest rates after a time.
Eliminate Collection Calls
Creditors reserve the right to contact their debtors if they haven’t received a payment within 30 days. If payments are delayed, whatever the reason, for more than 60 days, a creditor may call your home on a daily basis. Debt settlement companies work hard to negotiate with your creditors in effort to eliminate harassing collection calls. After negotiations are made and a payment plan is set, you’re free to answer your phone again; worry free.
Avoid Bankruptcy and Legal Action
Creditors may file a lawsuit and get judgments that allow them to garnish your wages or even place a lien on your home or other personal property. Filing bankruptcy is certainly a way to avoid such legal action, but it comes with 10-year consequences. Negotiators who call your creditors on your behalf are trained to handle situations leading up to judgments and help you avoid them without filing bankruptcy. Some debtors look at bankruptcy as an unethical solution to financial problems. Debt settlement companies are there to help ensure that creditors get paid and debtors don’t ruin their credit scores by filing bankruptcy as a quick way out of debt.
Learn to Manage Your Money and Become Debt Free
As an added advantage, debt settlement services have representatives that will work with you to help you understand where you went wrong. Financial responsibility isn’t something we’re born with. Like all other things in life, it takes education and practice to learn to manage our finances responsibly. The ability to learn from our mistakes is one of the many things that make us human. Why not take advantage of all of the services a debt settlement company provides? Financial education is the first step in learning to manage your money and becoming debt free.
For more on debt settlement, visit our website.
Filed under Debt Settlement
