Credit Counselors - What They Can Do for You

Credit counselors are professionals who help and guide consumers manage their finances and debt. They educate consumers on how to plan their budget and how to manage their debt wisely. If you are struggling with paying off your bills, thinking of filing for bankruptcy or tired of debt collectors calling; this will be a helpful article for you. I will discuss how credit counsellors can help you manage your debt or monthly finances of your home or company.

There are many consumers who forget or skip making payments for many reasons. I strongly recommend such consumers to use a counselor who will help them fulfill their monthly obligations. When you miss payments, it affects your credit score. When your credit score is low, it means you are a risky debtor. When creditors lend you money, they will offer you a higher interest rate. It makes sense to use a counselor who will guide you with your finances and help you maintain a healthy credit score.

In 2005, the USA government passed the new bankruptcy law and they made it mandatory to go for credit counseling before filing for bankruptcy. This is very important because many consumers do not really understand what bankruptcy means or its implications. If you are thinking of filing for bankruptcy, you have to look for a credit counselor who will educate you on the whole process and all the implications. A counselor will also help you look at other options to pay off your debt like debt settlement, debt consolidation, debt negotiation or other repayment plans available.

When you consult your credit counselor, they will assess your overall financial status. Normally they will look at five essential items given below:

1. Gross monthly income

2. Total debt amount

3. Interest rates on different loan accounts or credit cards

4. Minimum payments for credit cards

5. Other financial obligations like medical expenses, insurance premium, child support and many more

After assessing your financial status, the counselor will prepare a repayment plan for you. The counselor will send the proposed plan to each of your creditors for approval. Once your creditors approve the plan, you will start making payments to the credit counseling agency. The agency then distributes the payment to each of your creditors according to your repayment plan.

The counselors will also recommend other debt repayment programs like debt consolidation, debt settlement or debt negotiation depending with your situation. These programs have advantages and disadvantages. It is very important to take your time to discuss all the options available to you. Many consumers have saved thousands of dollars by making the right decisions.

Hints To Find a Quality Debt Counsellor

Getting out of debt can be quite overwhelming and the last thing a person needs to worry about is whether or not their debt counsellor is actually going to help them or dig you into a deeper hole. Here are some important tips to make sure you that you made a wise choice by going with a debt counsellor rather than just filing bankruptcy or working out a settlement with your credit companies.

It's important to check out that they're a reputable company through the Better Business Bureau and it will help you gain some confidence in your decision. This is not a guarantee because they are one-sided with their information, only having access to filed complaints. If they're a new company, they may not have any cases against them. Nonetheless, this is the best place to start your search for a credible debt counsellor.

The other way to search out reputable debt counsellors is through word of mouth from previous clients. If they are confident in their service, the counselling company will not mind providing you information about their prior clients. Beware though, it could be false or inaccurate information. If they are actually a reputable company, there should be a release form that will allow them to provide you with information about other clients' experiences.

If the debt counselling company is near your neighbourhood, you may even have acquaintances that have used their services. Also consider background checking the company through the Attorney General's Office to ensure that the company you are considering has not done anything illegal or against the requirements of good standard business practices.

One hint: if the debt counselling centre is not willing to provide you with prior information about their successes and references, it is best to just move on and find a service centre that is willing to cooperate. Sometimes this gesture of refusal to provide references could mean they have something to try to cover up. Look for someone that is cooperative, honest and straightforward about their previous clients.

Another tip is to use the Internet search capabilities to find a debt counsellor. If a company has a poor reputation, more than likely, you can uncover information through a forum, blog, or social network. People often set up websites for the sole purpose of being able to post complaints about a company. But they can actually be quite helpful. Don't go based on one negative rating, but if there's a collection of poor ratings, consider another company. These people are more than likely ranting online because they were in fact treated poorly by a debt counselling business.

Use these tools wisely, but more than likely, if you are seeking out debt counselling, you probably don't have money just to throw away toward some fly-by-night business that may get you in deeper than you already are. Do whatever it takes to protect yourself against someone trying to scam you or promise you results that they can't accomplish. Keep in mind that if they really are a fly-by-night type of business, you won't be able to take them to court to collect damages if their company has dissolved.

Choose a company that will work in your best interest, is cooperative, has a great rapport with previous customers, has a record of those clients and truly is in the business with the sole mission to help you rather than rob you.

Improve Your Financial Situation With Debt Counselling

Managing and budgeting your finances can be just straight up daunting and a nightmare. It always seems like more is going out than what's trickling in when it comes to money. As with anything though, and though it's hard to admit, there's always somebody who can manage things more efficiently than you can and that's why there are debt counsellors.

Some people are more organised and frugal with their money and can easily balance payments such as credit cards, bank loans, auto loans, medical bills and mortgages. Those are the people with excellent credit ratings usually and are able to be obtain more credit down the road. However, not everyone can manage it quite as well and that's how we find ourselves in the midst of a financial disaster with debts adding up and we spend money that we simply don't have. This can haunt us and our credit ratings, making it nearly impossible to gain more credit because we're already too far in over our heads. It happens and that's life. To help start with a fresh, clean slate takes a lot of work and sometimes when we are so overwhelmed, we find ourselves looking to others for assistance who are experts in helping us to rebuild our record and have stronger credit ratings.

Debt counselling can usually be obtained from a non-profit organisation but make sure they are what they say! Some agencies are actually out for profit only and can turn your finances upside down, putting you in the midst of an even worse financial disaster. These for-profit credit counsellors may promote themselves by offering outrageous promises and upfront fees are sometimes just out for the money rather than to help you and before you know it, you are scammed. And often, the money that you paid in to obtain their services initially just disappeared into thin air and you are nowhere near closer to financial stability. They may not even be experts at financial advice, just good at reeling people in and trapping them. Look out for bad reputations and suggestions they give you that seem a little shady.

Non-profit agencies do usually provide the advice they were intended to. They will help you to re-establish your finances through a long and organised process. Improved credit won't happen overnight. It could take years of steady payments but you will soon be able to learn the discipline it takes to stand on your own two feet. Instead, be patient and listen to their advice when making financial decisions and payment plans. So, obviously, steer clear of anyone that promises an easy, convenient way out of your financial burden.

High quality debt counselling services not only offer one-on-one customisable advice based on your particular needs, but also may offer classes and other materials to educate yourself on better money management and eliminating current debts and will teach you how to form a budget and stick to it, keeping in mind your recurring payments with creditors and lenders. This will eventually enable you to make these decisions for yourself for the rest of your life, giving you the capability to make sound financial plans and anticipate positive outcomes. The education that they provide you will not be a simple fix but will instead, provide you with the information you need down the road to continue to proceed with confidence when dealing with your debts and budgets all on your own.

Advantages to Debt Counselling

Debts keep piling higher and higher and it's a similar story with many people. The economy is weak, the value of a dollar isn't as strong as it once was either. People are finding themselves absolutely sunk in debt. They try to make promises to themselves to keep their debt from adding up, to keep their spending lower, but one little shopping spree, and that promise is broken. If you slip up once, you'll do it again. And whatever you've chipped away at your debt month by month has now been replaced with brand new debt. No hoorays here.

The more you spend, the harder it will become to continue to repay your debts. Your minimum payments will increase and if you don't keep close tabs on your payment schedules, your annual percentage rates could increase too.

Debt counselling is a helpful tool to help you take grasp of your problems and can advise you on what you can do to rid yourself of any personal debts you have. Through counselling, people are given knowledge about finances and learn options about reducing their debts. They're taught to change their mentality about spending habits and face their credit and debt issues rather than become overwhelmed and try to hide from them. You will gain knowledge about current, past and future debts and how to keep up with them, get away from them and move past them. People can go to classes or have individualised counselling sessions with a financial expert.

No one is forcing anybody to debt head on but it's best before you ruin your future and become all tied up in owing money you'll never have. You can improve your debt status. These woes are self-created. Budgeting your income is a great start, allotting funds where they need to go, toward necessities rather than wants and needs. Your annual income, assets, expenditures (both expected and unexpected) as well as the cost of the standard of living are discussed throughout counselling and it's important to be honest.

Five Advantages of Debt Counselling

One-on-one counselling

You, as a client, will have access to all sorts of debt management educational tools and materials such as books, guides, seminars, and meetings. One downfall to their access is that they're almost too generalised and it takes some self-motivation to even pick it up. However, with debt counselling with an adviser, you are able to discuss your particular situation with specific details and come up with solutions specialised to meet your needs.

Self help

You obviously haven't been able to get yourself out of debt on your own and you can't turn to professional help EVERY time you need to make a financial decision. It's time to take the bull by the horns and start to learn how to take control on your own. Don't allow debts to continue piling up or ignore them. Also, keep your spending habits under control by buying necessities and avoid splurges. Change your mentality and take control of your debt and financial responsibilities by starting to take control of this problem rooted: you.

Debt repayment plans

Through the help of a debt counsellor, you are able to formulate repayment plans. A good, honest debt counsellor will look for various options that truly suit what you have in debt compared to what money you have to start making repayments to start chipping away at those debts and rebuilding your financial stability. If the counsellors try to push their own products on you to try to repair your debt, beware. They could be scam artists looking more to make a buck than to help you.

Negotiations with creditors

Making and keeping up with continuous monthly payments can be daunting. Consider a debt settlement option that will maybe provide lenders and creditors with a lump sum of money initially to put toward your account while continuing to make other additional payments. Based on their negotiations, they will in return slash what you owe them.

Continued help and advice

People still struggle with finances even after they've sought counselling services. Debt counsellors are always looking for new methods to deal with and educate about financial services when people find themselves in over their head. They do this through case studies and surveys of previous clients to see how the counselling has improved their lives.

You won't be left out in the ocean without a lifeboat in this process. Financial debt issues are nothing to be fearful of because they can be avoided. As long as you continue to maintain a responsible debt management plan, you will eventually whittle away that debt over a period of time. Don't let it control your life; you take control of it. The relief of finding a solution is invaluable.

The Credit Card Valve Is NOT Easy to Control

During a recent edition of CNN's Your Money Matters a caller shared that they had exceeded their credit card's maximum line of credit thus triggering the default 29.9% interest rate and was trying to solicit advice as to how to deal with this daunting financial problem. One of the guest pundits responded first by stating that the caller had fallen into a trap largely of their own making.

The show's host, Ali Belshi, obviously taken aback by such a pointed response by his guest, countered that at least when the mob was in the loan shark business, the victims didn't have to put up with that kind of self-righteous nonsense. As his guest smiled at Belshi's sharp reply Belshi went on to allege that the banks and credit card companies prey on the poorest of us and by doing so this constitutes an almost criminal act. He added that personally he has no credit card debt and has not carried a balance on any of his cards for a long, long time but he is well-compensated by CNN and also has a good education. Belshi's concluding statement on the matter was that in these difficult economic times, it's not easy for the large majority of folks that haven't been as lucky as he.

Belshi's allegory brought to mind a picture of the 1960's stereotypical loan shark and got me wondering just how we got from there to here. After a little bit of research I discovered that back in the sixties and early seventies most states capped not only the amount of a loan but how much interest lenders could charge. If you needed more than the bank would provide you either had to scale back your needs or seek out a more "creative avenue" for financing. This "creative avenue" often led to the neighborhood loan shark.

However, in 1978 the United States Supreme Court made a ruling that resulted in the elimination of the usury laws that created the limits I cited previously and the lenders haven't looked back since. As a result, most neighborhood loan sharks vanished around the same time disco died.

This landmark decision helped expand the availability of credit, which has been a double-edged financial sword for most all Americans. Consider this: In 1977 according to the Federal Reserve only 38% of households even had a credit card; now over 75% of us do. Most telling of all however is the fact that in 1977 just under 10% of those considered part of the "lower class" had a credit card; today that number is north of 40%.

Not surprisingly, as the availability of credit soared, so did the number of bankruptcies. Shockingly though, instead of reinstating the laws that existed up until the Nixon administration or, at the very least, instituting interest rate caps of some kind, Congress simply made it more difficult for most families to declare bankruptcy.

The delighted lending industry took advantage of the situation further by extending even more credit to these folks by sending out more than a billion credit card offers every year.

Especially heinous was the fact that with these mailings, they took special aim at the highest-risk households (defined by this industry as those that already had used more than 30% of their available credit line). Is there any wonder that this whole "house of cards" collapsed in 2008 resulting in the worst economic failure this country has experienced since "The Great Depression"?

Admittedly, Congress did pass legislation in 2010 that has put an end to some of the credit card companies' most egregious practices however these entities have very powerful lobbyists in Washington, so there still remains plenty of loopholes for them to exploit American households through. As a result, the best way to beat them at their own game and protect yourself along the way is to not carry any balances on your credit cards.

Credit cards by themselves are not evil; in fact, when responsibly used, they can be a huge convenience. They remain the very best vehicle for building a credit history not to mention the ability to get cash 24/7/365 via any ATM machine. But if you become addicted to this convenience and begin carrying balances on multiple cards, they can become an economic cancer with disastrous consequences. Unlike in the past, these potential ramifications now transcend every income bracket which is the main reason why it's so important for every responsible consumer to learn to live within their means.

Funding An LLC - 4 Facts About Raising Capital For Your LLC

More and more people are starting to realize the importance of the small business. There is a new business entity that many of those individuals are considering as the foundation on which their company is to be built. Unfortunately, due to the relatively recent arrival of this business entity, many individuals aren't especially familiar with the limited liability company (LLC) and are often worried about finding an LLC. In this article, we'll discuss 4 facts about funding your LLC.

It is first important for us to realize that the entity to which we refer is a relatively flexible form of business. It easily blends various elements of both the partnership corporate structures. It is actually a legal form of the company that enables those individuals who are part of that entity to limit the extent of their liability. This liability is limited for each of the owners, at least in the vast majority of the jurisdictions in the United States. It is also important to realize that LLCs do not have to be organized for profit.

Individuals often incorrectly identifiy this entity as a limited liability corporation. However, LLC stands for "limited liability company." This is an unincorporated entity. Of course, like a corporation, the LLC does share the ability of a corporation to limit the liability for each of the individuals involved. In addition to its simplicity, this form of entity provides the ability to have "pass-through income taxation. Due to its flexibility, it is often much easier for a single owner to own and operate such an entity.

However, as is true with any business entity, it is important to understand that the liability offered is not complete. No individual will be relieved from "personal" liabilities. Furthermore, courts can and sometimes will "pierce the veil"of either a corporation or LLC if fraud is suspected.

Now let's discuss the facts about raising capital to fund your LLC. Naturally, the easiest way to raise capital to fund your project is to have other individuals join the LLC with you. Those individuals who would become part of that venture would contribute either cash or sweat equity, customarily, as a means of becoming a part of this particular group. The amount of liability borne between each of the individuals in that venture is customarily limited to the amount of their investment initially.

A second way in which an individual may seek funding is to look for investors who are interested in pursuing either the same or similar projects. In fact, it is not uncommon for individuals to get involved with joint ventures in an effort to assist those in a particular industry.

A third way in which individuals are able to fiund their LLC' is to look for any government grants that may be available to encourage individuals in that particular industry assist in furthering the government's goals. It is often helpful to seek advice from individuals at a local university who are familiar with grant proposals. This author would encourage you to steer clear of those online-specialist swho state that they will get you a grant for a specified fee.

A fourth way to obtain the capital that you seek is to perform services that will generate cash in exchange for the services rendered in a very rapid manner. Of course, this would be contingent on the industry in which you are involved. However, individuals who get involved in various endeavors (e.g., real estate), are often able to engage in such things as obtaining hard money loans to assist them for a short period of time and then findi individuals who are willing to actually purchase the property/product at issue.

There are in fact numerous ways in which individuals are able to find funding for their LLC. We have merely scratched the surface in this article. If you are in need of further assistance, you're encouraged to contact the Senior Corps of Retired Executives (SCORE). Another source of funding and assistance is the Small Business Administration.

The Psychology of Bad Credit

The mindset of damaging our credit can be attributed in many cases to the same basic nature found in many self-destructive tendencies, and many of these have a basis in psychological addictive behavior disorders. Knowing that we are surpassing our limits by overextending ourselves is in many ways the same as the alcoholic thinking that the first drink will be all right, or the gambler going for one more big hand of cards or one more big roll of the dice. In fact, society as a whole has taken on the overall viewpoint of wanting more, to the point that it becomes akin to an addictive personality. "A fool and his money are soon parted" has taken on a whole new perspective in modern society. Enjoying something now and paying later has become a dangerous norm. Cash on the barrel head has almost completely lost its meaning. "Credit is King" is the new coin of the realm. Many believe that money (or at least our present monetary system) may soon become a thing of the past. But even considering this, the payment will still come due.

From a very young age, we are conditioned to want more. Status and authority is an achievement to be admired. Much of our status is ultimately determined by what we have and own (our possessions). The credit mentality of having things now and worrying about paying later becomes an addictive behavior. In fact, in many cases, it becomes a vicious cycle. One that ultimately ends in" hitting rock bottom".

This is not to say that all excess spending can be directly attributed to the type of addictive behavior described above. The rising costs of house, transportation and gas prices, food, and health care, all contribute to our own economic pitfalls. The "want" in this equation becomes one of need. But in all, this too may ultimately lead to a depressive state in which we simply say "I just don't care", thus leading back to the vicious cycle.

Is there an answer to all this? Many of these factors are beyond our control. The parts that are within our control are our responsibilities. The question is, do I accept this responsibility? Just like with any addictive behavior, the "rock-bottom" can be viewed as a new beginning. For every ending there is a new beginning is a good way to look at it. Come up with a plan. The true power of any 12 step program lies in the plan to counter those old habits and replace them with attitudes and actions directed towards repair and growth. This is the same mentality needed to repair our credit.

The first step is admitting our powerlessness over our condition and that our lives are unmanageable. Like that first drink, the next" shiny object" is not the answer to make our lives better or more tolerable. Turning our will over to a new attitude or way of thinking is the beginning of the solution. There are no quick fixes or if there are, they are just that.... quick fixes, here and then gone. They do not change the mindset that got us into trouble in the first place.

In this circumstance, this begins with getting a credit report. Like an inventory, this gives us a clear image of what we have done wrong and need to make amends for.

The next step is choosing a sponsor. This may take the form of finding a software program to guide us in our effort to repair our credit, or in finding a professional credit repair organization to do so. Debt consolidation may be another important aspect in our plans, or in this case, another form of sponsorship.

In summation, damaged credit takes on many of the personality traits found in any form of addictive behavior. To repair this, a solid plan of action must be initiated and carried out to the point of not only credit repair, but also a daily inventory of our actions to attain and maintain a solid financial stability. Keep it simple, one day at a time.

All About Debt Counseling Programs

No one really wants to have debts. It is financial situations (bad of course) that find many people estranged in debts they would surely not been able to get themselves out of. To many people, debts are an unavoidable evil. Sometimes, people find themselves in debt because they either spent their money frivolously and they have to get their lives moving by taking debts. Others (who are the majority) find themselves in circumstances that call for extra money which must come from taking debts. Whichever the circumstances, all these people need debt counseling. They need someone to show them how to spend according to their budget and most importantly, how to get themselves out of debt.

Debt counseling is all about instilling discipline into a person's spending habits. It is tailored in such a way that it makes all people with debts understand that debt is a symptom and not a problem. The person is also made to understand that to tackle it, he/she must reduce his/her spending habits and also find a way out to stop borrowing more and instead, concentrate on repaying more. At the end of the day, it is all about sacrifice to the debt owner's side. Debt counseling programs specialists also do a thorough check up on the debt owner's accounts so as to see the exact kind of advice that he/she deserves.

Some people are entangled in very bad debts such that to repay them, they need to have all their year's earnings dedicated to them. Others have debts they can surely not explain where they came from. The latter is the most worrying because they spend more than they are earning which means that at the end of the day, they might find themselves in a debt spiral which can be so hard to get themselves out. To be able to help such people and all debt owners alike, debt counseling programs advocate for a 'no borrowing to get out of debt approach'.

This is a very effective method as it not only streamlines the debt owner's spending habits, it also makes sure that if he/she makes attempts to borrow, it will be at cheaper rates and not rates that will become problematic for him/her to settle. Such people can highly benefit from getting loans say from friends who would not give very tough paying conditions. In such cases, there is hardly no interest to be re-paid and if there is, it is definitely in small manageable amounts which the debt owner can no doubt repay.

Debt counseling programs provide the debt owner with advice which if taken, can help a great deal. For instance, they advice on effective communication between the lender and the debt owner. This makes both parties understand one another which is a positive step towards effective debt repayment. Other options include looking for grants from the various organizations that offer this kind of help to people with big debts or better still getting interest free social loans to help in repaying the debt. All said and done, debt counseling programs have and will continue offering refuge to debt owners who need a helping hand in resettling their debts.

Taking A Look At How To Get A Credit Report

Most people work hard and try to pay their bills on time, which can make them prime targets for thieves who want to steal their personal, financial information. By following a few simple steps, they will know how to get a credit report to make sure they are not victims of identity theft. It can be done easily, on a yearly basis for no charge.
The copy of the person's financial history shows where they have lived, and for how long. It also lists the companies they have borrowed money from and the history of their payments. The paperwork can also show other, negative details, such as if the person has ever been arrested, sued in court, or filed for bankruptcy. Any consumer show finds mistakes in the data should make every effort to have it corrected.
The data contained in the paperwork is used by lenders to get a snapshot of a consumer's borrowing habits. They also want to know if the person makes a habit of paying their bills on time, or whether they appear to be having a cash flow problem. If the lender sees too much negative information, they can decide to charge a potential customer a higher interest rate, because they are a higher risk.
U. S. Federal law allows every individual to receive one free copy of their data from the three largest reporting companies. The businesses do not automatically mail out the forms on a yearly basis. Consumers must request it to have it mailed to them.
Anyone requesting their copy directly from each of the reporting agencies will have to pay a small fee. There are also many other businesses that will provide the service for a nominal charge. Consumers can also contact the Federal Trade Commission, based in Washington, D. C. They can be reached online, by phone or via mail. The Commission has all the information consumers need to get their free copy.
The Federal Trade Commission also has a pamphlet that consumers can request. The agency will send the brochure, called the "Annual Credit Report Request, " directly to the person requesting it. Once the individual fills it out, they can mail it back to the agency.
Besides the one free copy each year, consumers are allowed to get additional ones for several other reasons. Anyone who is getting unemployment benefits or other forms of public assistance can receive ones for no charge. There are also several states that have passed laws, allowing residents to get additional copies.
One item that is not contained in the information is the person's overall, credit score. It is a number, containing three digits, that is based on a person's borrowing and repayment history. Consumers who want to know that number must contact a credit bureau.
Almost every week, there are headlines in newspapers around the world about another gang of thieves, who have stolen the personal financial information of innocent victims. It is important for consumers to know how to get a credit report. It can help them monitor their financial information to discover if someone is illegally using their good credit history.

Benefit From Proper Medical Hospital Bills Settlement Service

There are certain expenses that we cannot avoid at any cost. One of those expenses is medical expense but sometimes it becomes so high that it results into bad debt. It may not be possible for us to pay the bill until and unless we go for medical hospital bills settlement. Today many hospitals are ready to provide debt settlement solutions for medical bills, as they understand that the bill amount is often quite high. This is similar to credit card settlement and a debt settlement company can help you in this.

Many consumers go for bankruptcy when they need to settle their medical bill or credit card bill. This is because most of the illnesses are costly to treat and this expense is always unplanned. Most of the people do not have the necessary income to pay the medical debt but they do not have any other way that taking the treatment for themselves or their loved ones. Some take a medical bill consolidation loan paying a low rate of interest while other chooses settlement. This is a debt settlement solution offered by different companies experienced in this. With this kind of settlement service, it is possible to avoid up to 50 percent of the bill amount.

When choosing a debt settlement solution it is important that you check the pros and cons of the service and the fees that you need to pay the service provider. Some people think that bankruptcy is the ultimate solution but the humiliation attached to this is not easy to tackle. At the same time, you have to start everything from the beginning, which is not easy after bankruptcy actually happens. A good company will assist you with the service appropriate for you.

Business Debt Consolidation Is a Simple Process

There are people who get bouts of anxious feelings thinking about the ways of business debt consolidation. At a time when the entire business community is reeling under economic slowdown, their need for finance is often met by taking debts from financial sources.

However, while the taking of loans is not a cumbersome process, it is the payment obligation that keeps them on tenterhooks. Under these circumstances taking help of consumer credit counseling service gives them the much needed help and respite. Moreover, this is one service that has become a popular choice for its flexibility. Ordinarily people end up taking different kinds of debts that includes for personal and business needs.

When the borrower finds it very difficult to shoulder the burden of these debts, credit card debt consolidation appears to be one feasible option for them. Resorting to this measure undoubtedly brings a reduction in monthly costs. By adhering to stipulated measures laid down in this regard, you stand a great chance to consolidate different types of debts.

The manner in which the debt consolidation companies operate is very interesting to know. For instance, they make arrangements for consolidating different accounts to one Single Low Interest Account. As a result of this vital measure taken by them, your monthly payment comes down to a very satisfactory level. Besides this, you can also buy your peace of mind because you are not required to remember your debts schedule due to the fact that you have only one debt to pay! This option absolutely suits the best that own more than two credit cards.

When to Seek Credit Counseling Help

It is a common knowledge that taking any form of counseling helps to come out of a troubled situation. This is particularly true when the mind is in a state of confusion and grappled by worries. People tend to take various kinds of loans and debts in different situations. For instance, while some might choose to take it for meeting their living standards, there are some who take it in urgent medical situation such as hospitalization. Whatever be the case, it is the option of looking for credit counseling help that takes them away from troubled waters.

Such is the popularity of credit counseling help; it has allowed scores of people to buy their peace of mind. Managing of these debts and loans is a harrowing task often making the life of the borrower filled with tensions. For, they are required to maintain appropriate payment schedule. Failure to do so often lands them up in trouble in the form of imposition of increased interest rates.

Therefore, finding no concrete solution to their problem, they often resort to availing debt consolidation help. The greatest advantage of taking this option lies in the consolidation of numerous loans and debts into a type of Single Loan. This means, instead of keeping a tab on their various payment obligations, the borrowers are just compelled to make one monthly payment..

The debt consolidation help offered by these companies are praised for a special reason. It is believed they arrange for consolidation of different accounts after having understood your requirements. Because this arrangement made by them results in reduction of debt amount, it becomes easy and comfortable for make timely payment. This type of service is particularly beneficial for those who maintain different credit cards.

When You Should Choose Bankruptcy Debt Relief

Many people think bankruptcy is the best possible debt relief option available to them. It is because you will not need to pay any amount to the creditors ever for the past dues but at the same time, the court will liquefy your assets in order to pay off the creditors. The process itself takes a long time and not everyone is eligible for the same. This is a legal status of a person who is not in a position to pay anything to the creditor and that is when the court administers bankruptcy. Bankruptcy debt relief is the last option left for any debtor, as he will lose all he has made till date.

There are many websites and agencies that provide bankruptcy advice based on your current financial condition and ability to pay the debt. There are different laws regarding bankruptcy in different countries when debt settlement is concerned. In some countries, bankruptcy is limited to individuals while in some other countries it can be applicable on the organization. Though it gives you a complete relief it is not an ethical option and you must check all the points before going for one. First of all you need to check your credit report and check how much amount is due and how much your asset value is. You should also check the amount you owe and if the debt settlement is possible or not.

Bankruptcy debt relief may take several days to actually take place. You first need to apply for it and the jurisdiction of your country will judge if you are eligible or not for the debt relief. The judge is the top most authority which judge this based on your financial condition and ability to pay the debt.

The Secured Credit Card Solution For Bad Credit

A bank secured credit card is a great tool for individuals that need to enhance their credit history or have no credit history and need to start creating one. Secured cards require an upfront cash deposit but you can actually earn interest while your money sits securely in a savings account. That savings account is the banker's guarantee that the money they lend to you will be paid back as agreed between you and the lender.

In effect, the bank makes the amount of the loan up to the amount you have in your savings account. You agree to a payment plan and interest rate. Usually, because it's your money being used as the guarantee, the interest will be much lower than a standard credit card interest rate. Plus, your savings will earn interest. That savings interest slightly reduces the net amount of interest you will pay during the term of the loan. Secured cards usually carry either a Visa or MasterCard logo so nobody will know that it's a secured credit card and not a standard credit card.

Since you are putting up your money to guarantee the lender will be paid back, if you miss a payment the lender will automatically deduct the payment, including interest, from your savings. However, a missed payment or late payment will show up in your credit bureau history so you need to make payments on time. Just because it is your money, you do not have the right to miss payments. This is still a credit card and is subject to the same credit reporting rules as a traditional credit card even though the bank has no risk.

Secured credit cards are an ideal tool if you have gone bankrupt or have really poor credit history or you are a young person who is just beginning to build credit.

When you pay your monthly payments as agreed, you will be building your credit score. After a while of good payment history, your lender might upgrade you to an Unsecured Card and release your savings from being held as collateral. Your goal should be to get an unsecured credit card. This means you have become a good credit risk and this opens many financial doors for the future. It will be easier to get a home mortgage, get a car loan, or make other major purchases on credit.

Keep in mind that your credit limit will be based on the amount of money you have in savings with the bank. You can never charge over that amount. This limit prevents you from charging more than you have in savings but you still need to worry about penalties such as late fees. Secured cards are no different from unsecured cards in this respect. Late fees can still be charged and your lender can demand a higher interest rate should you become unreliable in your payments. Even with a secured card, it still takes about 12 months of payment history to see an improvement in your credit score if you have a spotty credit history. For those people just beginning, the time frame is shorter because you have nothing negative to overcome.

Your lender is your best credit adviser. Touch base personally with your lender. Talk about your credit history and your score and ask what you can do to make improvements. They want your business, now and in the future, so they are more than happy to give advice. It is in their best interests to keep good customers so use that to your advantage. Nothing beats a "hometown banker" as opposed to big banks that offer secured cards online. You are just a number to them. When you are building or fixing your credit you need that personal touch that only your local lender can provide.

Tips to Help You Survive These Tough Economic Times

Most of us are feeling some sort of strain from the current economic situation, even those who are good with money. The loss of a job or a cut in pay to keep a job are both real events happening all around us. How are we to make "ends meet" with money so tight and not negatively impact our credit?

There is no easy answer to that question. However, here are nine suggestions that may offer an option to your personal financial situation.

Look at your spending habits and determine what are real NEEDS vs. WANTS.

Reduce your spending to only needs, and learn to live within your new means.

Stop using your credit cards. If you can't "part" with your credit cards, here is a suggestion: Take a plastic container, fill it with water and place your credit cards in the container. Place the container in the freezer, and let it freeze. This is putting a "freeze" to your credit card spending.

Create a weekly meal plan. Make a list of the foods that you will need for your food plan. When you go shopping, ONLY buy what is on the list.

Clip coupons. Did you know that the average household could save almost $100.00 a month by using coupons?

Stop eating out. Statistics show that we spend an average of 14% of our income on eating out. This can be in restaurants, vending machines, snack bars or fast food.

Avoid the temptation to spend money by avoiding the malls or stores just for entertainment. If you need something, make a list and take only enough money for the items you need.

Trim your "entertainment" expenses. Everyone has a hobby or something that they enjoy doing, but if it costs money and your budget is tight, you might need to suspend your hobby for the time being until your finances are stable once again.

Take a walk through your house and look at all of the things you don't need or use anymore. Turn them into money that you can use now by having a yard sale or selling them on the internet via numerous free websites.

While these are all ways to help get your "financial feet" back on the ground by curbing spending, there are also suggestions on how to possibly bring extra income into your budget.

Do you have a talent or skill? Can you write resumes, decorate cakes, tutor students, create web designs, sew or do alterations, for example? There might be a possibility to create a little extra income with a talent or skill that you possess.

Do you have a little extra free time? There are always people looking for someone to do odd or routine jobs. Maybe it's something like babysitting, running errands, checking on an elderly relative, fixing or moving things, dog or house sitting. All of these could provide you with a little additional income to help ease the stress and strain of your financial burden.

If you feel that you just can't "make ends meet" and need someone to help you organize your financial life, seek the help of a financial and/or credit counselor. You don't have to be in desperate times to ask for help. Credit/Financial Counselors help you assess your current financial situation and offer a solution you may never have thought about that will keep you from destroying your credit. Besides, sometimes just talking to a credit/financial counselor will help things become clearer in your mind just because you said them out loud. A counselor will listen and ask questions; they will offer suggestions and options that you may not have considered, but most of all...a counselor can become your guide, your cheerleader, and your friend.

How to Find a Good Financial Adviser?

Sometimes a business might not be performing to the owners' satisfaction even though they have plenty of ideas and profitable strategies. Sometimes the large businesses fall short of funds, in such cases the owners feel tied and confused. These are the times when they need to find trustworthy people who are ready to purchase partial business ownership.

Equity financing is involved in transferring of the management rights or selling part of the profits to third party persons. This might lead to looses especially when one ends up with a con artist. A person may loose his/her claim over investments and returns in the future. To avoid this one should hookup with a well known and established multinational firm which manages private equity services. This is more common in the big enterprises. When one finds themselves in such a position they should immediately consult a professional financial advisor for guidance and professional advice. This influences the business in positive way, determines the success or failure of the entity together with the long term strategies.

It is therefore very important to hire an experienced financial advisor especially if the business is new. This is important in budgeting, share handling, resource utilization, and monitoring ups and downs of stock market.

Before hiring a financial advisor the most important factor to consider is there will be plenty of profits to the business that will come in as a result of business advisor ideas, if the professional selected has the relevant skills and knowledge to carry out the activities of the enterprise. The person should be able to be solid in decision making. The relevant qualities should be established.

A good professional who is understanding and resourceful should be able to understand all aspects of business planning. The aspects include: taxes, insurance necessities, investments, returns among other financial aspects. There for one needs a qualified financial advisor who is able to figure out the state and position of the business entity.

Budgeting is very important in making the final arrangements in the deal hence one should make sure they seek an expert with reasonable rates.

There are plenty of financial advisors in the market who are ready to offer their services to clients who are in dire need of them. So one should not be hesitant in getting a professional who will help to salvage the business entity if it is not performing well. They give advice concerning various financial issues and maximization of wealth.

4 Ways To Reduce Financial Stress and Have More Money

A lot of people are facing financial stress because of the layoffs and cutbacks companies are doing across the country. Even if your job is secure, a lot of corporations are reducing or eliminating the benefits once offered to employees. If you are someone who is experiencing financial stress there are some steps you can take to help reduce your financial burden. One way is to set aside a certain amount of money from each paycheck so you gradually build up a buffer or safety net. You might be wondering how to save money when it seems as though you do not have enough to go around already.

To begin a savings plan you need to assess your incoming monies with your outgoing payments. Making a list of the necessary items you need to pay for on a weekly or monthly basis will help you determine how much you actually need to spend every month. A lot of people spend money on small items such as video rentals and pizza delivery that they can easily stop doing. If you want to eliminate financial stress, you need to find alternative means to use for your entertainment purposes. Instead of renting movies or buying magazines and books, you can get them for free by using your public library.

Another way to reduce your financial stress is to create a secondary source of income. People who have some type of skill in making crafts they can sell often do this. Through this method you can alleviate financial stress by selling items you make to earn money online. You do not need to have a lot of business knowledge to sell products over the Internet successfully. There are a number of sale and auction sites offering the use of their services to people from all walks of life to use. Many of these sites do not charge a fee unless you actually make a sale.

When trying to get rid of financial stress by selling items online, you can also create your own website where you can place your products up for sale. This requires more effort on your part because you need to design the site and also monitor it on a daily basis to keep on top of anything that is purchased. There are a few free tools on the Internet you can use to help create and market the items you wish to sell, which can also help reduce your level of financial stress and worry.

For those people who do not possess any type of craft skills, there are a lot of other items you can submit to sites for sale. Many people earn a nice second income by getting people to buy their used books, movies and video games. The bottom line is that anyone facing financial stress can find ways to make their situation a little better so they can relax and begin to enjoy their life again.

Whom Should I Pay? Original Creditor or Debt Collector?

When you are involved in your own credit repair, it can be confusing to decide how to lay out your plan for debt repayment - especially when you start getting calls from aggressive debt collectors. Consumer credit repair is something that can be done but it does take a plan, as well as time and effort to follow through on the task necessary.

Dealing With Debt Payoffs

Setting out to pay off your balances and eliminate debts requires a plan of action. You must start by ordering your credit report and reviewing the details it contains. Most importantly, you need to make a list of your creditors, their contact information, your account numbers, and the amount you still owe on the account.

The next step involves your own finances and figuring out how much money you can afford to pay off certain debts. You will likely only be able to cover a few debts at a time so you must prioritize which debts are to be paid off and when. Develop a timeline for yourself so you are more likely to stay on track.

You'll then need to contact the appropriate party to discuss debt negotiations and pay off. This is where is can be confusing. Since most consumers will feel their repayment obligation lies with the original creditor, they may make a mistake in paying the wrong person. It is important to get the most up to date and accurate information concerning your debts and your credit report and monthly statements will be what you need to rely on for this information.

Who to Pay?

When an original creditor finds they can no longer hope to collect on a debt, they will often enlist the services of a debt collector to work their magic. You may feel it is more important to get the payment to the original creditor but it may not be the right choice.

Debt collectors do work as third-party help but in some cases, the collection agency actually buys the debt from creditor for a smaller fee than owed. The debt collector then sets their sites on getting more money back from you than they paid for the actual debt from the creditor. This is one reason that debt collectors tend to be really aggressive about their efforts to get money.

Paying the creditor is your first priority as long as the debt has not been sold. You will be able to tell on your credit report by the status of your account shown. If a creditor sells the debt, they will report back to the credit reporting agencies that the debt was charged off. The debt collection agency information will also now appear on your credit report as being the owner of the debt.

When you make the payment, you should pay only the company who is holding the debt to ensure it is satisfied and reported correctly. Your credit report and score will already take a hit from the debt being charged off to a third party by the original creditor so you need to work hard to ensure you are not causing it any more damage.

Follow Up Pays Off

It is not enough to send in a payment and consider the case closed. You will need to reorder your credit reports a few months after final payment is made to be sure that your accounts are accurately reported and you have officially eliminated the debt satisfactorily. Many people fail to take the final steps to check back in with their creditors and collectors and just assume things have been handled properly. It is the consumers responsibility to make sure things are as they should be so credit reports and scores will be able to benefit from the debt elimination.

If things are not as they should be, start writing letters and making contact with the creditor or collector to request the change. If nothing happens, you can dispute the information listed on your credit report with the credit reporting bureaus to make sure you have cleared your credit as effectively as possible.

Business Credit Card - Are They Worth The Deal?

Consider a situation that you need to purchase machinery or any other important asset for setting up a business, but do not have adequate cash. You may ask a bank for a business loan, but have to wait weeks to see if your loan is approved or not. In such a scenario, taking a business credit card will be an ideal option to bridge a gap in funds.

A business credit card can be secured by the self-employed professionals as well as small or big organizations for the growth of their business operations. These cards are indispensable for a growing business as they reduce the need of using your personal money to manage business finances. Just imagine how difficult it would be if you have to control both the business and personal costs using just one account. By having a business card, you easily distinguish between the business and personal expenses.

One of the best things about this card is that it enables you to manage your complete business expenditures with just one card. They also come up with various types of incentive plans such cash back reward program, frequent flyer, hotel rewards, advance cash in case any emergency and much more. Credit card companies provide these benefits to their star customers.

You get a better chance to build a good credit history through business cards. Once you start paying the bills within due date, it creates a good impression in front of the lenders. They will find no hesitation in offering you a better deal in the future.

A business credit card is like using others money and it must be paid back in due time so as not to damage goodwill of your company. It must not also be used for personal reasons otherwise you will be locked in a situation from where it is difficult to get out.

It is very important to research for a best business cards because not all banks offer reasonable interest rates on these cards. You must read the fine print thoroughly and also inquire about the late payment fees, grace period, favorable terms and conditions, payment details and incentives before signing the dotted line.

It is very important to evaluate your financial requirements before choosing a card for the business. If you have a tight budget and do not have the cash to cover the expenses, then resist the temptation for the business credit cards.

What Exactly Is Credit Counseling?

We've all borrowed money at some point in our lives, and maybe a little later realized that we overextended ourselves as far as the payments or terms were concerned. If you have chosen to go with a credit counseling agency to handle some of your financial debt problems your credit counselor will negotiate with your creditor to make sure that your debt is more manageable.

Credit counselors are skilled at the art of negotiation, and over the years the credit counseling agency has developed a knowledge base of creditors and how to successfully negotiate with each individual creditor. Some creditors like Capital One are more difficult to negotiate with and the credit counselor will have inside scoop on how to negotiate with Capital One. The first goal for you will be to get you into a debt management plan, which is going to be a useful tool when you approach your creditor to negotiate your debt.

The repayment plan needs to be worked out with your creditor, this may be the hardest part of the whole credit counseling process but your credit counselor should be able to assist you with this part.

Make sure you have your Debt Management Plan ready when you approach your creditor. Your DMP will be drawn up by your credit counselors and is going to be used as a tool of negotiation.

The goal of credit counseling is to evaluate your expenses, income and debt so you can negotiate lower interest rates with your creditors. From there the counselor can get you set up on a payment plan that your lender can agree on.

Credit counseling is all about being pro-active and not re-active. You don't have to wait for events to shape your life; after speaking with a credit counselor and getting enrolled in a DMP you will be in control of your finances and your creditors will no longer command your life.

There are many Americans that are in terrible credit card debt and simply borrowed because they could afford to, and were on a spending spree. Now that the economy has turned for the worse there are many people deep in debt without a job or potential income.

With this drastic change in the current US economy there has been a complete paradigm shift from a culture of spending on credit to a culture of spending cash that is only available in savings. For all the consumers that have an excessive amount of debt and now they're wondering what their options are besides continuing to make their minimum payments, they may want to give credit counseling a shot.

UK Debt - Statistics and Some Causes

The UK is creaking under an individual personal debt burden unheard of in recent times. In September 2010 Credit Action released it's UK Debt - Facts and Figures Report:

The average household debt in the UK excluding mortgages is £8,628. This figure increases to £18,000 if the average is based on the number of households who actually have some form of unsecured loan.
The average household debt in the UK including mortgages is £57,789.
Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,467 per average UK adult at the end of July 2010.
23m plastic card purchase transactions will be made today with a total value of £1.101bn. The Office for Budget Responsibility (OBR) predicts that household debt will be £1,823bn by end 2015 which is a growth of £159m a day. This would take the average household debt to £72,341 per household
Total UK personal debt at the end of July 2010 stood at £1,456bn. The twelve-month growth remained at 0.8%. Individuals owe more than what the whole country produces in a year.
103 properties were repossessed every day during Q2 2010
The Insolvency Service said there were 34,743 individual insolvencies in England and Wales (381 people a day or 1 every 3.78 minutes) in Q2 2010 on a seasonally adjusted basis. This was a decrease of 2.6% on the previous quarter and an increase of 5% on the same period a year ago. Source: Credit Action

So what are the causes of debt?

Debt can be caused by innumerable situations, in fact far too many to list here, however some of the more important causes, which we will look at here are those such as bereavement, redundancy, relationships breakdown, ill health, gambling and lender actions.

Bereavement

This is a far more common cause of debt than is readily recognised. Funerals are expensive and many people find themselves having to take on debt in order to pay for the funeral costs of the deceased. Commonly, most funerals have to be paid before any inheritance is received. Other situations where debt can be incurred after death are when, a) an outstanding debt was in joint names and the remaining party becomes liable for the full balance, b) third party guarantees; the debt will pass to the guarantor and c) any debt has to be paid out of the estate of the deceased.

Redundancy

Debt due to loss of work can cause significant difficulties within the family unit. The underlying psychological problems associated with unemployment only serve to exacerbate the difficulties when having to confront problems of outstanding debt. The lack of insurance provision such as mortgage and rent payment protection has also contributed to the increase in the numbers of people incurring debt as a result of unemployment.

Breakdown in Relationships/Divorce

The situation caused by a breakdown in a relationship can lead to financial hardship for both sides of the dispute. Debts from joint account personal loans, credit cards, catalogues all have to be divided up adding to the stress already endured. Add to this legal costs and the inevitable relocation costs for at least one of the parties, it is easy to see how debt can be incurred.

Ill Health

The occurrence of ill health can lead to many additional expenditures which can cause a person to fall into debt. Extra medicinal costs, extended periods off work, caring costs or rehabilitation all take their toll. To make matters worse in some cases, it is the actual indebtedness that can cause to a great extent, a person's illness. Add to this the fact that a person who is unwell may not be able to face up to their financial problems and you have a recipe for serious financial difficulty.

Gambling

Gambling is a recognised disorder and perhaps should be treated as any other illness. However the compunction to spend money gambling is accentuated when the gambler starts to borrow more money in order to maintain his or her habit. This is a vicious circle of the worst kind. For the gambler there is no other solution other than to keep borrowing, keep betting, keep borrowing, keep betting. Looking for the ever elusive way out and knowingly yet unavoidably racking up unsustainable debts.

Lender Actions

When a person in debt starts to miss their monthly contractual payments, their lender will naturally and legitimately levy charges and additional interest until the account is brought up to date. This in turn creates a snowball effect which only leads to more debt and less ability to pay. There is a great deal of argument over whether these surcharges have been excessive or unfairly implemented, or not, as the case maybe. Indeed, has credit been to easy to come by? However, I'm not here to knock the lenders. Where would we be without them?

Finally, the debtors own attitude can be a significant factor when faced with increasing debt. Refusing to face up to the situation, keeping the creditors in the dark and not explaining personal circumstances or not attending court hearings will all contribute to a worsening of the situation. In the majority of cases, indebtedness has nothing to do with irresponsibility but is caused by factors beyond the person's control. If we were more aware of this then perhaps many of the distressing situations so common nowadays could be avoided.

Protect Your Credit Score Against More Damage

Just because your credit score has dropped a little doesn't mean it has to plummet. Credit scores range from 300 to 850. Bad credit starts around 620, but there are many scores between 300 and 620. At 620, you still have some hope of getting approved for credit, you may have to pay a higher interest rate or accept a credit card with a high annual fee. However, when your credit score reaches the 300s and 400s, it will be close to impossible to find a lender that's willing to give you a credit card or a company who'll approve you without requiring a security deposit. Here are a few ways you can keep your credit score from falling even lower than it already has.

Stay current on the credit cards that are in good standing. There may be just one or two debts you can't afford to pay. If you decide to let those accounts go, don't let your others go, too. Keep making payments on the accounts you can afford to pay and those positive payments will help keep your credit score from dropping to the absolute lowest.

Remember that late payments don't get reported to the credit bureau until they're 30 days past due. If you miss a payment by just a few days, don't wait until your next bill comes to get caught up. Instead, send your payment as soon as you can afford to. You'll have to pay a late fee, but at least the late payment won't go on your credit report.

Avoid taking out cash advances. Often people face credit problems when they're short on cash and don't have enough money to make ends meet. In that case, you may be tempted to take out a cash advance and use it to pay expenses or even to make your credit card payment. It's a bad idea and a risky transaction. Unlike credit card purchases, cash advances have a fee, accrue interest at a higher rate, and do not have a grace period. They're one of the worst types of transaction to make on a credit card.

Don't apply for credit out of desperation. If you have bad credit already, chances are you'll be denied for new credit card applications. Continuing to apply for credit hoping you'll finally be approved will backfire. Credit card issuers are suspicious of consumers who apply for a lot of credit cards in a short period of time, so they may deny you just because of all the applications you're putting in. Not only that, the extra inquiries will have a negative impact on your credit score.

Your credit may have suffered a little, that doesn't mean it has to suffer a lot. Protecting the credit score you do have will make it easier to get to a better credit score. There's only 100 points standing between a 620 credit score and a 720 credit score. On the other hand, there's 300 points between a 420 and a 720.

I Have Student Loans - Do I Qualify For Debt Relief?

Do I qualify for debt relief for my student loans?
Any individual who is unable to pay back his student loans would have this question running through his mind and for most it will be a relief to find that loans taken for education and related expenses are eligible for inclusion under the debt relief program. As a rule, most unsecured loans can be added to this plan. Secured loans taken for home, car, etc. does not qualify under debt relief. Here are some frequently asked questions related to debt relief on student loans.

Do I qualify for debt relief on all my student expenses?
Usually most schools have an estimated COA (Cost of Attendance) worked out that covers tuition fee, allowance for your room and food expenses in school and off campus, costs of books and other educational material, utility bills, personal loans,transportation and miscellaneous expenses that could be incurred such as buying a personal laptop or medical expenses. All these expenses can be consolidated into a single account under the debt relief program to manage your student debt better.

Do I qualify for debt relief under the federal student loan consolidation program?
If you have taken a private funded loan for your education, then you will not be eligible for debt consolidation under the federal program. The federal student loan consolidation program is only applicable to federal student loans that were taken. The students or their parents who have been granted a federal student loan can get relief if they consolidate all their loans in a single account as the interest rates are much lower and only a single consolidated payment needs to be made every month.

I have a private student loan. Do I qualify for this?
Private loans carry higher interest rates and usually have shorter payback periods. It is advisable to consolidate your private student loans to help you manage your debt better. Consolidation could lengthen your payback period and ease your credit burden every month, as you have to make only a single payment. Student loan debt can be included and paid through the same plan.

Do I qualify for debt relief on the credit card bills that I incurred as a student?
A personal credit card gives students their first taste of financial freedom. However, it ends up being misused in most cases and quite often students use their loan money to pay off credit card debt, as the interest rates and late payment fees are higher. However, a debt counselor can also get your credit card bills included in your debt consolidation and advise you on overdraft protection accounts and how to use your credit card better. In fact, any unsecured loan can be included to your debt consolidation program to make it easier for you to pay back your debts in the long term without going into bankruptcy or having to face legal action from your creditors.

The Debt Validation Letter (DV Letter), Collection Companies, Junk Debt Buyers, And Your Credit

A debt validation letter (also known as a "DV letter") is simply a letter you can send to a presumed creditor (or debt collection company) requiring them to show proof that they either own the debt in question, or are otherwise legally authorized to collect on the debt.

If you owe a debt, under the Fair Debt Collection Practices Act (FDCPA), you have the right to require that collection companies validate that debt before you proceed to pay.

There are a few important reasons why you should formally validate a debt before you proceed to payment.

1. Establish The Ownership Of Debt

Before you pay any collection agency, you can use a debt validation letter to figure out whether your debt was purchased by the collection agent, rather than merely assigned. This is important because if the debt was assigned, and your original loan documents did not specifically grant rights to your creditor's "assigns", you do not technically owe the collector any money because they do not own the debt.

Even if a collection agency has purchased the debt outright, your correspondence to them can require them to show you proof of that purchase. One thing to remember is that as long as they are not the original owner of the debt, the collection agencies are subject to the Fair Debt Collection Practices Act regardless of their ownership status.

2. Establish the Accuracy of Reported Debt and Debt Records

Not only is it important for you to establish the ownership of the party you are dealing with, it would be to your advantage to make sure that the reported figures and records of your financial transaction are accurate.

3. Establish Proof Of Authority to Collect

Any representative of a creditor seeking to collect a debt from you should be able to provide legal documents to prove that they have the legal authority to collect on the debt. Such documents may include paperwork like account statements (from the original creditor), copies of original signed loan agreements, or copies of the original application.

4. Stop Debt Collection Activities

Under the FDPCA, collection of the debt must cease after you have notified creditors that you have a dispute, or when you request debt validating documents. These activities can only resume after the creditor or collection agency has mailed the relevant information to you.

5. Stop Debt Reporting Activities

If a creditor is unable to validate a debt, they are prohibited by the Fair Credit Reporting Act (FCRA) from reporting the debt to the credit reporting agencies.

Junk Debt Buyers and Debt Validation

A massive industry of junk debt buyers (JDBs) has developed over the last two decades or so. It consists of companies of varying size that purchase portfolios of charge-off debts with the hope of returning a lucrative profit by collecting on a small portion of them.

When you consider that many of these loans are purchased for as little as a penny on the dollar, you can see why the industry of bad debt buyers has ballooned in scale. As a result of these developments, consumers should be more vigilant than ever in holding collectors to their responsibilities.

Under the FDCPA, these JDBs (or "zombie debt buyers"), are considered "debt collectors" and are required to follow the due process required of all such companies.

One of the strategies experienced credit repair organizations use in dealing with creditors and credit reporting agencies is to establish that all legally required documentation and process are followed to the letter.

The changes in the debt collection landscape make it more likely than ever that you can resolve your loan challenges in a way that helps you meet your financial obligations and your credit goals easier and faster.

7 Credit Protection Laws To Help You Improve Your Credit Scores And Handle Debt Collection Companies

As the economic downturn has progressed, credit repair companies (as well as credit repair scams) have proliferated. Given that the credit information industry is a multi-billion dollar annual business, it has become more important that you understand the laws that protect you in your transactions with corporate interests.

There are quite a few credit protection laws in place to shield consumers from abuses of credit reporting agencies, debt collectors and creditors. One of the biggest mistakes consumers make when seeking credit repair is to overlook the legal credit repair options they have based upon established consumer protection laws. Here are 7 credit protection laws to help guide your credit improvement decision-making.

The Fair Credit Reporting Act of 1970 (FCRA)
The fair credit reporting act is a federal law, originally passed in 1970, that governs how consumer information (and consumer credit information) is collected, distributed and used. It is this law that specifies the responsibilities consumer reporting agencies (CRAs) have toward consumers, as well as the responsibilities "data furnishers" (creditors) have towards the people whose information they share. The FCRA also set the time frames for which reporting agencies can hold consumer information.

Fair And Accurate Credit Transactions Act of 2003 (FACTA)
The Fair and Accurate Credit Transactions Act of 2003 introduced some big changes to the Fair Credit Reporting Act. Under the Fair Credit Reporting Act (FCRA), you are entitled to receive one free annual credit report as a credit consumer. Among the many consumer protections enacted in FACTA is the requirement that merchants truncate credit card, debit card, and social security numbers so that receipts would not include more than the last five digits of the card number.

Fair Debt Collection Practices Act of 1977 (FDCPA)
Questionable practices by debt collectors can range from making harassing phone calls to overstepping their bounds in how they collect information about you (like your contact phone numbers) to using deceptive debt collection letters and forms. The Fair Debt Collection Practices Act was enacted to protect you from false, deceptive, and misleading collection tactics as well as harassment and abuse. Section 807 of the FDCPA actually outlines 17 false or misleading tactics that are prohibited by law.

The Credit Card Act of 2009
This law issued in the most dramatic changes to consumer credit cards in decades and created extensive new protections that gave credit card customers more options for dealing with the banks. Ironically, they may also result in raising the threshold of difficulty for many lower-income families and people with bad credit to obtain credit. It significantly limits lenders' flexibility in issuing interest rate hikes, gave consumers the right to opt-out (with up to a 5 year repayment period on balances), and limited the practice of "universal default"; the practice of raising interest rates on customers based on their dealings with other unrelated credit issuers.

The Fair Credit Billing Act of 1974 (FCBA)
This law governs the conduct of credit issuers when inaccuracies are reported on billing documents. Credit card companies are required to promptly credit payments and correct mistakes without adversely affecting your credit score. It also empowers consumers to withhold payments for damaged goods and to dispute billing errors.

The Real Estate Settlement Procedures Act of 1974 (RESPA)
The Real Estate Settlement Procedures Act was enacted in 1974 to help consumers better clarify settlement costs and to eliminate hidden referrals and kickbacks that could skew the settlement process in ways that harm consumers.

One of our favorite strategies for helping people improve credit scores is to identify scenarios when mortgages have been re-sold to other lenders and to look for RESPA violations (or RESPA-required documentation trails) that give us a leg to stand on in demanding the removal of negative mortgage entries from client credit reports.

The Credit Repair Organizations Act of 1986 (CROA)
This governs the conduct of credit repair organizations in their dealings with you. It was designed to put the clamps on credit repair scams and requires credit repair organizations to provide you with a disclosure statement titled, "Consumer Credit File Rights Under State and Federal Law", and prohibits credit repair organizations from making "a variety of false and misleading statements".

It also requires credit repair organizations to provide their customers with a contract providing detailed description of services and the length contract time. This law has made it easier for legal credit repair companies to deliver services to consumers in greater and greater numbers.

Legal Credit Repair Vs Illegal Credit Repair And Credit Restoration Mistakes

The term "legal credit repair" implies that illegal credit repair has been a problem in the marketplace for credit restoration...and that insinuation is correct. Credit repair scams may not as blatant as they used to be, but many consumers still get seduced by the promise to "instantly" improve credit score profiles or to "improve credit reports" overnight.

Legal Credit Repair

Credit Repair organizations are governed by the Credit Repair Organizations Act of 1996 (CROA). This law was enacted to limit the advertising claims and fraudulent practices of unethical operators who did things like collect money for services they had not intention of rendering, or making claims of guarantees, and even engaging in illegal practices in the course of what they sold as "credit repair".

CROA instituted some of the following requirements on these companies:

They cannot make false statements or misrepresent their services.
They cannot advise you to create a new identity - false social security numbers, or employer identification number (EIN) to get new credit.
They must provide you with a written contract explaining the services to be provided and the cost of the services.
They must provide you with 3 copies of written notice of your right to cancel the contract for services within 3 days.
They have to provide you with written notice that, by yourself, you can dispute items that are inaccurate, unverifiable, or beyond the legal reporting period.

These requirements above are part of the CROA and were specifically intended to help consumers from being susceptible to credit scams. Any credit repair organization or company that violates any of the above may be involved in illegal activity, and you should steer clear of them.

Is Credit Repair illegal?

It should be obvious by now that the answer is a resounding "No". However, the scale of the need for credit restoration services in the consumer marketplace has drawn the attention of all kinds of financial criminals and "fly by night" operators who only need to buy a few business cards, a road sign, or a newspaper classified ad to claim they are in the "credit repair" business.

In addition to requirements listed above, consumers should also pay attention to the age old rule of thumb regarding things like this:

If it sounds too good to be true, it probably is.

If you are a consumer in need of a credit repair program, you should be wary of any business making guarantees of restoring your credit, or promises to "remove all negative items", or even "instantly fix your credit". To the best of my knowledge, there is no legal way to "instantly" repair your credit.

Instead, an ethical, knowledgeable, and legal credit improvement specialist will generally research your personal myFICO scores and the factors affecting you individually, identify any information that doesn't meet the standard of "accurate, complete, timely, and compliant", and provide you with a plan, process and tools for getting the credit agencies to act on your behalf.

Credit Repair Scams - What To Do If You Made The Mistake And Fell For These

Learning how to recognize risky credit improvement schemes and outright credit scams is one of the most important things you can do as a consumer to protect yourself. In addition to ensuring that operators you deal with are compliant with the list of requirements above, stay away from operators who imply that they are endorsed by the FTC, or who offer "guarantees" of credit repair, or who suggest "disputing everything negative" on your credit report.

Remember also that credit repair organizations are barred by law from demanding prepayment for credit restoration services. While there are some variations (in Florida, your payment can be put into an escrow account to be drawn after the work is done) in how this is done, the work must always be done before a company is paid.