Credit Counselling or Debt Management Plan

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Credit Counseling or Bankruptcy - Soon You May Have No Choice
If you are looking for a quick debt consolidation than you should be alarmed with the ongoing legislation to severely limit the ability to file bankruptcy in cases where people have the ability to pay.

If not bankruptcy then what? The credit counseling ... which pitfalls millions of unfortunate Americans are already facing.

If the pending bankruptcy bill is enacted, the new l... Read credit counseling article



Bad Credit Home Loan To Get You Out Of Debt
A "bad credit home loan" can help you climb your way out of debt and get you started back on the road to upstanding, good credit. There are many lenders who are willing to make bad credit home loans to you - a loan based on your equity in your home even if your credit has slipped or isn't as perfect as it could be. By taking out a bad credit home mortgage or home equity loan, you can consolidate a... Read article



Credit Counselling or Debt Management Plan
I am often asked to explain the various options for dealing with debt, and most of the time people want me to start with options that do not involve personal bankruptcy. Assuming a debt consolidation loan is not an option, people in debt want to know whether they should get credit counseling, do a debt management plan, or file a consumer proposal.

First, it should be noted that credit counseling and a debt management plan are often two different descriptions of the same service. A credit counselor works with you to deal with your debts, and that often means they file a debt management plan. That's why the phrases credit counselling and debt management plans are used interchangeably. A debt management plan is a negotiated settlement with the people you owe money to, called your creditors.

In most cases the creditors will agree to waive all interest if you pay off your debts in full, generally over a period of no longer than five years. Debt management plans work best with credit card debts, and with bank loans. Credit counseling and debt management plans are much less effective with government debts and some payday loan debts.

A consumer proposal, which is only available in Canada, and is similar to Chapter 13 in the United States, is also a negotiated settlement with your creditors. In contrast to a debt management plan, however, you do not necessarily need to repay your debts in full, and they are binding on government debts and payday loans. In addition, once a majority of your creditors accept your consumer proposal, it is legally binding on all unsecured creditors.

So which option should you choose? If you have a manageable amount of credit card debt, and you can afford to repay it over the next two or three years, a debt management plan through a credit counsellor, is probably a good option. However, if you cannot afford to repay the debt in full over a five year period, or if you have government debts, a consumer proposal may be a better option.

Each person's situation is different, so I always recommend that you meet with a professional advisor, such as a credit counselor or trustee in bankruptcy to review your finances and help you evaluate your options.

J. Douglas Hoyes is a chartered accountant, licensed trustee in bankruptcy, and co-founder of Hoyes, Michalos & Associates Inc., one of Ontario, Canada's largest personal insolvency firms helping people understand bankruptcy, and all of their bankruptcy alternatives. For information about consumer proposals visit http://www.hoyes.com/consumer-proposals.htm, and see also more information about consumer proposals and consumer proposals as a bankruptcy alternative

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Credit Repair Solutions

Having a good credit rating is important because it allows us many conveniences in life, such as renting property, having credit card, and qualifying for financing etc. However, if you do not pay a creditor on time, your credit report with the credit bureau will be affected, and when your credit rating becomes poor, the above conveniences will no longer be possible. It is imperative that you take immediate steps to repair your credit.

The first step in credit repair is to get your credit report from the credit reporting agency. Once you receive your credit report, examine it closely for any inaccuracies. If you find any discrepancies, you can request an investigation in writing to the agency. The agency must then either respond within 30 days with documentation of the particular discrepancy, or remove that item from your credit report.

An immediate solution to credit repair is to contact your creditor as soon as you become aware of your outstanding debts. Your credit report depends on whether your creditor decides to report you to the credit reporting agency. Usually your creditor will be willing to discuss with you alternate payment options and solutions, because they would prefer to get some payment instead of no payment at all from you. You should propose a realistic payment plan and convince them that you can stick to it.

If your creditor does not accept your new payment terms, then your debt will go to collection, and you will then have to deal with the collection agency. Collection agents are usually more aggressive and may even threaten to take you to court if you do not comply. Bear in mind that collection companies generally buy debts at about half their value, so any payment higher than that is a profit for them. Negotiate ASAP to pay less than the full value of your debt, and collection agents generally agree to a quick payment at a small discount of the value, as they are unwilling to have the process drag on.

Another option is for you to seek the help of a credit counselor. Credit counseling is usually done by non-profit agencies, and credit counselors will advise you on and make you stick to your long term credit repair plans. Good credit counseling organizations also provide workshops, educational materials, and counseling.

Of all the credit repair options, Avoid for-profit credit repair companies at all cost because they are often scams, and propose a one size fits all quick fix. There is nothing that a credit repair company suggests that you can't do yourself, such as obtaining your credit report etc.

It takes a long time to build a good credit rating, and just a short amount of time to destroy it. There are no quick solutions to a poor credit rating, and you will have to slowly and patiently build your credit rating again from scratch. If you avoid quick credit fixes, and instead focus on long term credit repair, you will eventually gain your good credit back.

To repair your Bad Credit visit Susan't sites at Credit Rating and Credit Repair.




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Credit Counselling or Debt Management Plan
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