| How to avoid credit counseling scams (debt consolidation)
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How to avoid credit counseling scams
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Debt reduction guide
Many people may say that the process of debt reduction is common sense and obviously, the best way to handle your finances is to pay with cash. Just because you have incurred debt, doesn't necessarily imply that you've mismanaged your entire financial life. Once you suspect that your debt is starting to get out of control, you may want to consider a quick diet for debt reduction.... Read debt consolidation article
Debt problems and consolidation - Is your future bright
Most people have taken out plenty of loans and other forms of credit, from various sources over the years. These could include student loans, credit cards, store cards, a bank overdraft, car loan, goods bought on a buy now pay later basis. All of these sources of credit will have different terms depending on who you borrowed from and how much. One important factor with all these loans is that they... Read debt consolidation article
How to avoid credit counseling scams
Credit counseling is a useful service for anyone with problem debt. A good counseling agency can provide advice regarding money management and debt consolidation. They can also help arrange a repayment plan with your creditors to help you get out of debt. A bad agency can charge excessive fees, pocket money that was intended to pay your bills, and steer you into greater debt than before. Predatory credit counseling has become a multibillion dollar industry, and with the recent passage of the Bankruptcy Abuse and Consumer Protection Act, credit counseling will soon become mandatory for anyone filing for bankruptcy. How can you avoid becoming a victim of credit counseling scams? How can you choose a helpful and reputable credit counselor?
Here are a few tips that can help you avoid becoming a victim of predatory agencies:
Many agencies claim to be nonprofit, but that doesn't mean they don't charge money or work with for-profit companies. Inquire about the fees the company charges. Is there a setup fee? Monthly payments? Does the company keep the first payment, or does some of it go towards your debts? Fees should fall within your ability to pay, and any agency that is trying to help you will know this. A company that charges hundreds or thousands of dollars in setup fees is probably not interested in anything other than your money.
Ask the counselor how he or she is compensated. A salary or hourly wage is a good answer, but you should be suspicious if they are on commission or earn incentives by steering you towards expensive debt consolidation programs. A good counselor should direct you towards solutions that help you, not solutions that earn them more money.
Will your creditors work with this agency? Call your creditors directly and ask them if they will negotiate with the specific agency you're seeing. Counselors often state that they can get your creditors to lower fees, restructure debt or lower interest rates. Can they? Call the creditors yourself to be sure.
Make sure that you get all of the counselors promises and terms in writing. Anything that he or she tells you verbally isn't binding, so don't believe it if it isn't written down.
Make sure your agency provides you with monthly reports that state how much you have paid them and who is receiving the payments. Don't take them at their word that your bills are being paid; verify it.
Check with your local Chamber of Commerce or Better Business Bureau to make sure that there are no outstanding complaints against this agency. The counseling business is full of fraud, and complaints are common. It's smart to inquire.
By taking your time, asking the right questions, and doing proper research, you should be able to find a helpful and reputable credit counselor who can help you reduce or eliminate your debts. Thousands of Americans are victimized each year by predatory counseling firms, but there's no reason why you should become a victim of one. If you have problem debt, you have trouble enough already without looking for more.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to establishing credit, debt consolidation and credit counseling.
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Debt free with debt consolidation loan
If you have multiple debts, and are struggling to meet the monthly payments, then there's a good chance you will want to consider, now or later, a consolidation loan to become debt free.
If you have already studied your monthly expenditure and can see no way to make savings, and find you have no way of earning extra money, then your next option may be a free debt consolidation loan.
By free, I mean no extra charges or arrangement fee for the consolidation loan; your chances of getting an interest free consolidation loan are just about zero, unless you have a rich relative or friend. Should you go down the debt consolidation route, try to avoid any loan arrangement which involves upfront fees, or any extra fees at all for that matter. Whether that is possible will depend on where you live, but in the UK, it is not difficult to get a free debt consolidation loan.
One benefit of a consolidation loan is that it does give you a chance to plan your finances in a way that could, if you're careful, make you debt free by the end of the period of the loan. By debt free, I will be realistic and mean "debt free apart from home mortgage", which most people have little option about, and mortgage debt can be worthwhile financially anyway.
Taking out a debt consolidation loan will not, of course, make you instantly debt free. However, it may be that such a loan will give you a chance to structure your finance plan over a 3, 5 or 7 year period. With the correct attitude and perseverance, this may be an excellent opportunity to improve your finances in the long term, resulting in being debt free by the end of the loan period.
The consolidation loan will reduce your monthly outgoings, thus giving you the opportunity to save. By getting into the saving habit instead of debt habit, you will be able to set aside money to pay cash for the things you need in the future; if you are determined and disciplined, even that next car purchase can be in cash, rather than an expensive loan. The result: you become debt free.
In the financial reality of a consumer, if you cannot to afford to pay cash for something, then you probably cannot really afford it at all. The one exception is the house, where the investment potential and rent saving change the financial aspect.
Can you imagine, waking up at the end of the consolidation loan term and finding yourself debt free? What a nice feeling!
This debt consolidation loan article was written by Roy Thomsitt, owner author of the Eliminate Credit Card Debt Now website.
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