Elimination of Credit Card Debt

As the economy continue dithering about bouncing back, more people continue to be mired in credit. Credit card debts, personal loans, store cards, student loans, medical bills, mortgage loans, etc. You name it, many people got it. These people certainly are in dire need of sound debt advice. Hence, the proliferation of debt management companies and debt advice experts, like Suze Orman, offering a selection of services, counselling and other debt recovery programs, many of which can be found online. Let us take a look at some of these.

Most debt management companies reach out to distressed consumers by offering free financial counseling to help the consumer better understand their situation. After which, they suggest particular solutions, usually a debt management plan, to help them face creditors on the negotiation table and get a grip of their obligations. Most debt solution firms would charge a monthly fee and other charges when you avail of their programs.

Not all free services can benefit you. Scams are all over this industry. They step out of line and employ dirty tactics to trick unsuspecting citizens. Some organizations prefix the word “Christian” to their business name. But beware, charity is the last thing on the minds of fraudulent companies that claim to be Christian or not-for-profit. To avoid these cons, always check with the Better Business Bureau for records of complaints. If you find an agency is not certified by the BBB, it could be a sham.

Before panicking over your spiraling financial obligations and jump on the first solution offered to you, consider some debt reduction techniques to help you get a grip of your finances. Avoid using the cards especially for unnecessary purchases. Pay more than the minimum due each month. Paying just the minimum due will not take you anywhere. For more tips, follow the next pointer in this discussion.

Credit card debts top the list of unsecured debts with which consumers struggle. Perhaps the best and frequently given pointer for people entangled in plastic credit is to cut the cards to stop consumers from using them. No debt relief service can fully address your financial problem if you cannot put your spending under control. If this the case, seek money counselling to help you manage your debts and financial situation. If you have several credit cards, try to steer the bulk of your debt to the account charging the least interest rate. This will somehow slow down the escalation of your credit card balance.

This is not for everyone. Seek this debt remedy only if you can secure a new loan with interest rate that is lower than the average rates of your current debts. To avail of low interest rates, a good credit rating is required. Debt consolidation may be a bad idea for those with low credit scores as they may not obtain a low interest rate from their consolidation loan or home equity loan. Beware of low interest rates that have an expiry date. Be sure to pay off your balance before this rate lapses, but if you cannot afford to do so do not agree to consolidate your debts. This could just exacerbate your financial problem.

Some debt management companies propose the debt settlement route to eliminate debt. To do this, you have to come up with a substantial amount of money, about 30 to 50 percent of your total debt, and offer it to your creditor as one-time payment to write off your debt. Afterwhich, you are free from any financial obligation. While it sounds simple, the debt settlement has its share of drawback. First, you have to come up with the amount. Second, not all creditors may agree to it. Third, this strategy includes defaulting on your monthly dues so that creditors will be forced to approve the settlement for fear that you can no longer pay your debt. This will hurt your credit score.

Americans are not in monopoly of debt problems. Many citizens in UK are also entangled in this credit mess. To guide them on how to deal with their woes, British consumers can go to Citizens Advice Bureau (CAB), an independent charity that provides free impartial guidance and other confidential information to assist individuals with their money, consumer, legal and other issues. Consumers can visit their blog, forum or centre. In the US, CAB is present in Bronx, New York.

The British national government has initiated the Individual Voluntary Agreement to help consumers pay off debt. This program works best for consumers owing more than £15,000 in unsecured debts. The debt is restructured and an affordable monthly payment is scheduled. This should be paid for 60 months, afterwhich the debtor becomes free from the obligation of paying the remaining balance which is written off. Debt management companies across the UK, from London, to Nottingham, Sheffield, Lancashire, Glasgow and other cities. Debt help legislation in Scotland is a little different and its version of IVA is called Protected Trust Deed or Deed of Trust. Under this program, debtors are to pay off debt within 36 months, after which, no collection can be done for the remaining balance.