Debt Management- the effective Solution to Debt Problems

July 16, 2010 by 1 Comment

debt management
In this modern age, needs for comforts and luxuries have increased greater than ever. Every person wants to own a beautiful house, a luxury car and to lead a lavish life- style. To satisfy these desires, most of the people prefer to raise loans which are to be repaid over the years along with the interest amount. The repayment of loan is projected on the future income to be generated through the employment or business. Sometimes, due to a number of unforeseen circumstances, you are not able to repay your debts in time and the burden of interest coupled with the principal amount keeps on mounting which gives you a lot of mental stress, besides adversely affecting your credit in the market and society. These days, majority of the Americans are facing the problem of high debts. To overcome this problem, concept of debt management was introduced a few years ago.

Debt management denotes the engagement of a designated agency to counsel and help you to manage and repay your debts in the most convenient manner within the shortest possible period with minimum additional expenses or charges. For the persons facing the acute problem of high debt burden, this solution is like a boon. With the significant changes in the law of the United States regarding the bankruptcy since the year 2005, agencies engaged in debt management services have gathered all the more importance than earlier. There are a few non-profit earning debt management companies which provide related services for a nominal fee which is affordable for all. There are also some profit oriented professional debt management companies which provide multiple services and charge a considerable amount as their fees in the form of certain percentage of the debt amount to be repaid.

When ever you plan to get rid of your worries of high debts, you should thoroughly search for a trusted and renowned agency engaged in debt management services as there are several companies in this field which make high claims and false promises but ultimately prove to increase your financial troubles instead of providing you some relief. After carefully selecting a competent agency, you should discuss your problems in detail with the representatives of the company. In your best interests, you should not conceal any fact and should present a true and correct picture of current financial status along with the plans for future for settlement of debts. The debt management agency or company will first of all prepare a comprehensive list of all your debts and then discuss with you the probable course of action for early and effective solution for your debt burden problems.

Few of the measures adopted by the debt management companies to reduce your burden of debt are as under:

Organize meetings with your creditors and discuss about lowering down the rate of interest or allowing moratorium of interest during the repayment period. This can substantially reduce your debt burden.
Make a detailed study of your income from all sources and also the expenditure over mortgages, rent, food and utilities to arrive at the net amount which shall be available for repayment of dues on monthly basis.
Work out the amount payable monthly dues in respect of your existing debts and collect it from you for onward payment to the creditors on due date.
Discuss with the creditors regarding any possible relaxation or discounts in case of lump sump payment as one time settlement.
Advise you to plan the repayment of your debts in the order of priority.
Exploring the possibility of transferring your existing liability at lower rate of interest or with a longer repayment period to reduce the burden of monthly payments of existing debts.
Arranging finance for repayment of all the debts immediately thus, clubbing all your financial liabilities to one source.
To conduct educational programs for the persons facing difficulties with debt traps.
To refer your case to some other appropriate forum in case the agency is not able to handle it or advice you to apply for bankruptcy if in their opinion, the debt is too large to be paid by you in the given number of years with your limited resources.
Whereas these debt management companies advise you to spend less than you earn, the services of these companies can not be obtained in the case of secured loans like a car loan or housing loan. The debt management agencies can be engaged to find effective solution for the problems arising through accumulated burden of credit card repayments, personal loans, stores card loans. Overdraft facilities, etc. if in the opinion of the agency, they are not able to solve your debt problems with the solutions they have, they may refer your case to some other effective forum or advise you to go for bankruptcy proceedings. It is important to understand that taking the services of a debt management company may temporarily hamper your credit ratings and you may be ineligible to raise a loan for a specific duration. Further, if your all debt obligations are less than US $ 10000, you are not entitled for the services of a third party agency for managing your debts.

With the United States Bankruptcy laws coming under vital changes in October, 2005 many indebted people now prefer to undergo long term debt management plans. Before deciding about engagement of any particular debt management agency, you should ensure that the same is properly registered with the Better Business Bureau and it does not charge any exorbitantly high fees for their services to devise a debt management plan for you. While non- profit companies charge a negligible sum for their services, profit making debt management companies charge a certain percentage of total debt amounts to be repaid as their fees for services provided by them. If you have a large portfolio of debts, this fee can be substantially higher. You should stick to the schedule of repayment on monthly basis as it shall improve your credit rating and will help you to get the relief from debt burden in a speedy manner.

National Foundation for Debt Management has been set up to provide assistance to the persons seeking help in the chronic cases of huge debt burdens. This foundation runs regular seminars and educational programs for the benefit of people in general. Proper guidance and advice is also provided at this foundation by the experts to face the problem of heavy debt burden in an effective manner. One can also get useful help online through the website of this foundation. This is a non- profit group organization which has been formed on a membership basis. It offers on course membership for debt help. Apart from this, there is an additional facility of Right Track personalized debt help programs to help highly indebted people. So far, more than 50,000 people have already benefitted through this program. NFDM also organizes free of cost chartered course in a personalized way for its members to impart education about proper and effective debt management techniques.

While a few management companies aim at reducing your burden of debt only, there are a few others which besides helping you to repay your debt also educate you about the various aspects of debt management in an effective manner. These programs also guide you to get the loans at best possible rate of interest to reduce the burden of repayment. A debt management company negotiates on your behalf with the creditors to get the amount of interest reduced or for some other concessions which can make it easy for you to repay your debts in the most convenient way. While selecting a debt management company, you should select one which is well established and has a proven track record. You should also compare the charges proposed by different companies to select the one with most reasonable charges which are also easily affordable for you.

With the increasing trend of raising multiple loans at a time and due to some recessionary economic trends, incidences of high indebtedness have increased in the recent times. Simultaneously, there has been a sudden spurt in the number of companies which are coming up almost another day and claiming to get you rid of your debts in quick time. Before falling prey to these unrealistic claims you should enquire about the background of the company. As debt management is not a simple task and it takes a few years for a company to get itself established in the market, you should select a debt management company which has sufficient experience in this field. By paying regular installments of your debt as per the terms of agreement decided by the debt management company on your behalf with your creditors, not only you lessen the burden of debt gradually, but also improve your credit scores in an effective way.

Another important aspect of proper debt management is to keep a periodical watch over your current liabilities and review the status regularly. If you keep a close watch over the market conditions and other offers for loan at attractive rate of interest you can avail these cheaper loans to square off your existing debts at higher interest rates and this can save a lot of money for you.

Regular savings are also a part of an effective debt management program. If you can set aside a small portion of your earnings every month, you can plan to buy your desired car or house from your own sources or you can thus minimize the amount of loan required. If you have got moderate financial liabilities, these can be effectively met with a proper planning and regular repayment on due dates. Further, in case of credit cards, you should always prefer to entire amount due on monthly basis as paying the minimum amount due sounds lucrative; it becomes costlier in a long run and can lead you into severe financial stress over a period. Meeting your financial commitments on the due dates is the key to effective debt management.

While some debt management programs are designed to reduce your debt burden through negotiations, alternative loan facilities or arranging for some concessions in the rate of interest etc., there are few specialized programs which provide education about various methods of debt management and also tell you about various ways to remain out of the debt trap as preventive measures. You can find a number of websites regarding various debt management companies but you should carefully choose one according to your need and suitability. Further, you should also take into account the fee to be charged by these companies as a company with high fee structure may worsen your financial condition further. You can find a number of advertisements in the local newspapers and financial magazines and journals about various debt management companies. You should verify the credentials of the company you want to engage, from some reliable sources.

With proper education and guidance about various debt management programs, you can organize your debts in a better and more effective manner. With a little prudence and strict financial discipline along with proper planning, you can be sure to clear your debts easily and speedily with the minimum extra cost and the least stress and worry. An effective debt management plan can take care of your worries related to burden of debt in a proper and beneficial manner. You have to just select the most appropriate debt management company having a professional approach and adequate experience and expertise in this field.

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Debt relief options & programs

July 16, 2010 by Leave a Comment

Debt relief

Debt relief

Debt relief

debt reliefDebt refers to the monetary obligation that a person owes to the other. It generally connotes the payment of a loan that the debtor owes. Generally when a person lends the other, money or any kind of service that is to be paid back in the monetary terms in a certain period of time; he also levies a certain amount of interest on the same. At times because of unforeseen losses or difficult times, the debtor may find himself or herself unable to pay back the amount. This is where debt relief comes in.

Before a debt is lent, it is in imperative that both the debtor and the creditor should agree on the schedule and modalities of the payment. This payment is usually denoted in terms of currency, but at times it can also be denominated in terms of goods and services. Payments can be made either in terms of equated monthly installments or as lump sum amount paid at the end of the term. Generally speaking, it is the first option which is the more preferred way of payment because it does not hurt the pocket to pay a little of the amount every month.

Debt relief is connoted by the partial or total forgiveness of the debt taken. It also includes either slowing down or completely stopping of the interest levied on such debts.

Generally the term debt relief relates to the domestic debts taken, but in today’s scenario it can also include the agricultural or the corporate debts taken. The need for debt relief essentially arises when the debtor is unable to pay back his loan on account of his poor financial condition. In such case the debtor faces the added burden of ever-increasing interest that is levied on the capital.

Debt relief and it’s various options are accounted in history as well, because lending and paying back have been a part and parcel of every society. In fact, no civilization can thrive if people stop lending and paying back. In recent times the personal credit and its payback has become an increasing problem. People are becoming more and more materialistic these days, and because of the easy credit and the financing options that are available to them, they do not wink an eyelid before going in for various kinds of loan. Problem arises when they are unable to pay back these debts for want of money. Things can also get worsened because of certain unforeseen calamities. But since it is the right of the creditor to get back the money lent, in the due course of time, he starts levying revised interest rates and late fees charges, thus aggravating the condition of the debtor further. It pays to work out a debt relief option for such debtor, instead of spending sleepless nights and getting jittery.

Apart from the personal loans, debts can be taken for other purposes as well. A farmer can take a loan for farming, an industrialist can take loan for running his company, a person can take a loan to buy cars, houses , for education; in fact anything can be purchased either on credit or by taking loans. Problems in debt repayment have compounded with the advent of credit cards. A consumer may unwillingly fall into the trap of incessant buying without realizing how much his or her total outstanding rises up to.

Debt repayment problems can get compounded in times of recession when people, after losing their jobs find it increasingly difficult to pay back loans. Debt relief programs are the order of the day. One can not turn blind eye and a deaf ear to the problem faced by thousands of people around. Though it may make dent in the creditors’ profits, but resorting to a debt relief option may at least ensure a certain part of recovery for the creditor, if not the complete amount.

Unpaid debts can become a source of great anxiety and stress for the individuals as well as for the family. There have been cases when the entire families have committed suicide because of such cases. Such an option turns out to be a win-win situation for both the debtor and the creditor. The debtor on one hand, can get rid of the fear of his ever accumulating outstanding on his debt, and the creditor on the other hand, can do away with the waste of his precious time and energy in pursuing a person, who he also knows would never be able to pay back his debt.

To avoid such a situation a debt relief program is worked out. Generally these programs are worked with the help of credit counselors. More often than not, such a program helps reduce the financial obligation of the debtor by a certain percentage. Some times it can be even reduced to half of the original outstanding. There are very few cases when the entire amount has been forgiven by the creditor, but working out such a formulae is actually a very difficult proposition.

When the debt can not be reduced or forgiven, things can be worked out with the help of another method called debt consolidation.

There are various ways in which the debt relief options can be worked out. Some of them are as following-

* Debt settlement- This is a kind of an option wherein the debtor is able to settle his dues quickly as compared to the rest of the methods. The method involves appointing a debt settlement lawyer who negotiates with the firms wherein the debtor owes money. It pays to appoint a debt settlement lawyer because it is not necessary that the debtor is armed with all the information and the tactics necessary to negotiate for the debt settlement, and since a specialized lawyer knows the tricks of the trade, he can give his clients a much better bargain that they actually can get, in case they decide to do the same themselves. That apart, a debt settlement lawyer also ensures that the consumer rights of his client are not violated by the money lending companies. Generally the clients are not aware of their rights as consumers in this regards.

After negotiating with the firm on the debtor’s behalf, the lawyer then works out a plan for his client, wherein he can pay the rest of the outstanding amount comfortably. When the reworked amount is paid to the last penny, the debtor’s credit report is wiped clean.

Worldwide this is most preferred form of debt relief because it does not require any collateral to be assigned for the outstanding, and hence is much hassle free than the rest of the debt relief options.

* Debt negotiations: This debt relief option entails reworking the interest rates and payment options. There are times when the debtors are not pay up their debts accounting to various reasons. In case they sit back and do not take any action, it will mean an increasing interest amount on the remaining outstanding. This is specially tried in the case of credit card payments. Therefore, if the debtor negotiates his debt, it can help both him and the company. For the purpose he can either do it himself or appoint an attorney.

Debt negotiations would include negotiations on the interest rates, late fees and the payment plans. In case the problem of paying up is a phenomenon for a short time, the debtor can negotiate with the companies himself. But in case the amount is big and things have to be worked out in a bigger way, it is advisable to seek help of an attorney. Apart from bringing relief to the debtor, a debt negotiation can also put an end to the series of letters and the reminders that a debtor gets for his repayment. In the times of crisis, these letters can be very depressing.

* Bankruptcy: Bankruptcy law provides relief to the debtors who are unable to pay back to their creditors by way of liquidating their assets. This can be either initiated by the debtor himself or by the credit giving company. In case of bankruptcy, all creditors are treated equally, that is, debts are not settled one by one. As and when the assets are liquidated, all the companies get an equal share in the pie. Though liquidating the assets may not help the debtor to get of all his outstanding, but it can give him relief to a large extent.

There are two types of bankruptcy proceedings that are initiated: either the assets are liquidated completely by the appointed trustee who then uses the collection received to pay back the companies, or in some cases trustees are appointed who in turn supervise the assets and help the debtor pay off his debts from the income received from such assets.

* Loan modification: Loan modification option is a mortgage option type, which ensures permanent adjustment to one or more terms of the creditors. This is especially popular when adjusting home loans. The process entails either the reduction of the interest rate, or reduction in the principal amount or at times both. This can also extend to the late fee that is levied on the debtor. At times the monthly payment is calculated keeping in mind the total monthly disposable income of the debtor.

* Short sale: This method is adhered to, when the proceeds of the sale of a debtors real estate fall short of the balance owed to the creditors. This generally happens when the debtor can no longer pays back the mortgage loan, and the creditors decide to sell off his assets to avoid steep bank loans. The debtor is usually left to pay back the remaining of the loan.

These inputs are to be kept in mind when a debtor decides to go in for appointing lawyer or a company to pursue his debt relief option with the creditors.

~ Reputation of the company: how fast and what kind of bargains can the company work out for you. It might not happen that a wrong decision in short listing a company for your needs, you may end up either paying up more than what you have had with another debt settlement company.

~ The fees charged by the company: it is also important to ensure that the company does not charge a fee so exorbitant that it actually becomes an added liability on to you.

~ Speed of getting things done: any delay in either negotiating or striking an agreement with the creditors may mean an ever accumulating interest for you. The company that you choose to represent you in such cases should be the one who is able to work around quickly in such matters.

~ Suiting your need: is not necessary that the debt negotiations program of all the companies suit your needs. Pick up the one which can cater to you best. In case the one who you have zeroed upon is unable to do so, ask them about one of their affiliates who can do the work for you.

~ Guarantee of debt elimination: whichever company you choose, ensure that it guarantees debt elimination in a specified period of time, or else it does not serve the purpose of doing away with your worries.

Search the web and you will come across numbers of such companies who give assurances of working out the best debt relief program for you. Do your homework and then choose.

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Debt Relief Programs

July 16, 2010 by Leave a Comment

Debt Relief Programs

Debt Relief Programs

Debt Relief Programs

debt reliefLarge number of people in United States is facing the debt problem. These people are finding it difficult to deal with the trouble and burden of financial crisis in their life. With the rise in interest rates, not only in the mortgage sector but other financial sectors as well are finding it difficult to continue with their business. However, there are several debt relief programs in the market these days to help in such a crisis.

Especially if you have credit card late fees, or you have withdrawn money from the cash withdrawal limit of your card it will climb up in a compound manner as per the delay you make in the repayment. You need to find an immediate solution and debt relief programs can certainly help you in such circumstances. There are several options available now if you find yourself in financial trouble.

Negations in term of your debt, settlement by mutual agreement, arriving at a plan of repayment which is suitable to you, and consolidation of your overall debt are some of the measures you can undertake. Debt relief programs can be much more effective if you find the right company to take care of your financial problem and also arrive at the correct solution to resolve the situation.

While checking out on companies you need to do an in depth research as to whether a company has only one debt relief program or there are multiple choices. The company which has many choices will be the best for you as it can have a customized program to fulfill your need. Also you need to make sure the cost involved in hiring the services of such a company, the professional ones get paid a certain percentage from what they are able to save for you. This means that they will try to save you more to make an earning.

While making a choice between different companies offering various debts relief programs you need to see which is the most dependable one. Some companies do not have a firm standing and are short term operators in the area. You need to verify how long the Company has been doing business in the related field. Then only decide whether you can trust them with your financial aspects.

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