SHOULD I TRY TO SETTLE MYSELF, USE A LAWYER, OR A SPECIALIST COMPANY?

This question most debtors ask themselves

This question most debtors ask themselves

This is the question that most debtors ask themselves when trying to figure out the best way to go about clearing their debt. Each situation is different and the circumstances of your debt will determine whether you will have to settle by yourself or if you will have to hire the services of a lawyer or the services of a specialist company. Debt settlement is a situation whereby you negotiate with your creditors, using lawyers or specialist companies or by yourself, to have the amount owed reduced.

Hiring a lawyer will come in handy when you need someone to analyze your situation and give you legal advice that is practical. A lawyer will be able to advise you if you will have to settle your debts or file for bankruptcy, depending on your situation. Also, should the creditor sue you, a lawyer will be able to defend your case in court. Ensure that your attorney is licensed and one who values integrity by upholding the ethical standards.

Opt a company to help you to consolidate

Opt a company to help you to consolidate

You may opt to use a company to help you to consolidate your credit card debt and make the process of clearing debt easier. The debt settlement companies require that you pay them a monthly amount while they negotiate with your creditors. The amount that you pay is then divided into savings that will be used in paying off your debt as well as the service fee charged for the work they are doing on your behalf.

When you have a number of credit card debts, you may opt to take a credit card consolidation loan and worry about one payment. When you consolidate credit cards, you will be able to get the lowest interest rates and benefit in making lesser payments over time as compared to paying the credit card debts individually.

The debt consolidation companies will be able to advise you on how to consolidate credit card debt. This will enable you to sort your finances as there will be no more hassle of making multiple credit cards and debt payments and you will be able to possibly increase your cash flow because bill consolidation reduces the monthly expenses.

Hire the services of a lawyer

Hire the services of a lawyer

You may opt not to hire the services of a lawyer, specialist companies such as a debt settlement company or to settle for debt settlement so as to get credit card debt relief.

This may be because you are wondering how you may afford such services yet you are already struggling with your debts. Should you choose to settle yourself, you will have to equip yourself with the knowledge and laws related to debt collection.

It is better to do debt settlement by yourself when you are certain that this is the choice that you will settle for and if your creditors are yet to start suing you for the debt owed.

While considering debt settlement, the option that you will settle for depends on your financial situation. Also, while you may hire the services of a lawyer or specialist companies, be sure to get legitimate ones so that you may not end up losing your money to scams.

HOW TO FIND A REPUTABLE PAYDAY LOAN CONSOLIDATION COMPANY

There are three common types of debt consolidation:  debt consolidation companies, debt management companies, and debt settlement companies.

Types of debt consolidation

Types of debt consolidation

A debt consolidation company purchases all of a consumer’s debt and the consumer then makes one payment to the company.  The benefit of this is that it sometimes lowers the consumer’s interest rate and combines multiple payments into a single payment.

A debt management company is a third party that attempts to negotiate lower interest rates and payments on a consumer’s current debts. A debt settlement company is a third party that attempts to negotiate lower principal balances on a consumer’s current debts.

Although each of the companies provides very different services they are often confused or jumbled together.  When conducting an internet search for debt consolidation companies there are limited resources that are produced that exclude debt management and settlement companies because they tend to be more risky and often have a negative effect on consumer finances.  Debt consolidation is not without risk but with a consumer’s total debt being purchased and all debts combined into one affordable monthly payment the risk is lower than with other services.

There are methods in which consumers can consolidate their own debts without involvement from a consolidation company but it does require a credit score of 660 or higher anything lower will require the services of a reputable debt consolidation company.

Tips for Finding a Reputable Debt Consolidation Company

 

Tips for Finding a Reputable Debt Consolidation Company

Tips for Finding a Reputable Debt Consolidation Company

  1. Check with the Better Business Bureau.  By checking with The Better Business Bureau consumers may find a lot of companies that are not rated probably because of limited to no available information.However, consumers will be able to see what companies are accredited with the Better Business Bureau, what complaints have been filed against various companies with the Better Business Bureau, and any legal actions that have been taken against various companies.
  2. Check to see what companies are registered with The Association of Independent Consumer Credit Counseling Agencies or The National Foundation of Credit Counseling.
    Reputable companies will make their reputation and customer service a priority and will be associated with some type of governing body.Consumers checking with these two agencies will be able to see what companies are registered as well as any positive or negative feedback associated with the companies.
  3. Consider services through a nonprofit agency.  Just because a company claims to be nonprofit does not automatically make it reputable.  A true nonprofit company will have a 501(c) (3) certificate.  Although nonprofit companies are less expensive they still have to charge for their services in order to stay in business.

Avoiding Scams

 

Avoiding Scams

Avoiding Scams

Although, there is no certain way to determine the legitimacy of a company there are signs that consumers can look for:

  1.  They are selling things other than debt consolidation.  These companies will market themselves as debt consolidation services but once the consumer is in their office they present other services such lowering the total amounts that are owed and working out deals with lenders.  True debt consolidation companies do not negotiate with current lenders they simply transfer a consumer’s debt to a new loan with different terms.
  2.  They are aggressive or pushy.  Anytime a consumer is encouraged to make a rash decision the consumer should have concerns because it is very likely that the company is more interested in profits than what is in the best interest of the consumer.
  3. The company markets a quick fix.  Any company that markets their services as a painless and quick process is simply dishonest because getting out of debt is never quick nor is it without some type of sacrifice.
  4. They make the consumer feel uncomfortable. Consumers considering debt consolidation needs to be comfortable with the companies they have chose because once the agreement is signed it is binding.  A good company will listen to their consumers, be honest with their consumers, maintain the consumer’s best interest, and will educate their consumers on making better financial choices in the future.

How to determine if debt consolidation is the right choice

 

How to determine if debt consolidation is the right choice

How to determine if debt consolidation is the right choice

Despite whether a consumer chooses a for-profit or a nonprofit agency there will be applicable fees because neither agency will lend money for free.  However, reputable companies will be honest about their fees, interest rates, and terms.

  • Fees: a reputable debt consolidation company will be upfront about their fees.  Some charge fees upfront while others simply make money off of the interest paid by the consumer.
  • Interest Rates: most reputable debt consolidation companies will offer lower interest rates than the consumer was paying but it can vary by company.
  • Terms: a reputable debt consolidation company will be upfront about the terms they offer consumers by disclosing interest rates, the length of the services provided, and will disclose if the consumer is going to be paying more in fees and such than simply attempting to take care of the issues personally.

Prior to making such a large decision consumers should weigh the positives and negatives of debt consolidation to determine if it is an answer to a problem or if it will create a bigger problem. This option should only be considered if it is truly a means to an end. If the consumer is going to continue being in debt after the consolidation has ended this is not an option to consider.

Locating a reputable debt consolidation company is possible but at the same time it is difficult because there are many more disreputable companies than reputable ones. It is more important for consumers to do their homework and make a good decision than to make a hasty decision that is regretted later.

ALL ABOUT PAYDAY LOAN CONSOLIDATION

How does payday loan consolidation work?

How does payday loan consolidation work?

How does payday loan consolidation work?

Payday loan consolidation occurs when a borrower has all of his payday loans combined into one loan so that there is only a single monthly payment.  Once the borrower has chosen consolidation company a representative from that company will meet with the borrower to discuss monthly income and expenses and then help the borrower determine the amount of money that needs to set aside each month.

The borrower will then begin to deposit the amount determined into a savings account that is opened and managed by the consolidation company.  Once the savings account reaches a certain balance the consolidation company will start to negotiate with the payday lenders on the borrower’s behalf in order to get a single monthly payment that is manageable for the borrower.

From start to finish a payday loan consolidation can take anywhere from 6 – 18 months depending on the following variables: how many lenders the borrower owes and the borrower’s monthly income and expenses.  Although, there isn’t a magic wand that a borrower can wave to determine if a payday loan consolidation is right for him there are questions that the borrower can ask himself to determine if consolidation would possibly benefit him:

  1. Can the borrower repay the payday loans in full within the next 2 – 3 months without disturbing his budget?
  2. Can the borrower completely eliminate the need for payday loans within the next 3 months?

If the answer is no to either of the questions payday loan consolidation could possibly benefit the borrower.

However, before making the decision to utilize a payday loan consolidation company the borrower needs to be aware of the following facts:

 

Borrower needs to be aware of some facts

Borrower needs to be aware of some facts

  1. It’s a third-party payment system: The consolidation company does not make loans or settle a borrower’s debt.  They simply act as a middleman to negotiate for the borrower and distribute funds to the borrower’s creditors until the creditors are paid in full.
  2. Payday loan consolidation companies range in quality:  There are organizations that are designed to govern such companies such as the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA) to ensure that these companies follow certain standards set forth by the Council on Accreditation including employee training and certification protocol but it would still be wise to be picky.  A reliable company will be well organized, make timely payments on the borrower’s behalf, send statements to the borrower in a timely manner, and offer strong borrower education and support.
  3. All plans are created equal:  Financial institutions don’t provide preferential treatment all plans are structured the same way.  The consolidation representative will determine with the borrower what it will take for the borrower to fully repay his creditors in three to five years.  The standard payment is typically based on 2.5% of the total amount owed but under some extenuating circumstances other arrangements can be made.  The positive thing about these plans is that the borrower can pay more than the agreed upon amount when he has extra funds in order to get out of debt faster.

    Counseling before consolidation

    Counseling before consolidation

  4. Counseling before consolidation:  Before jumping into consolidation a borrower should attend financial counseling to ensure that all other alternatives have been exhausted and that the borrower will have enough money remaining in his budget to pay his basic expenses.   If the borrower has enough money left over after subtracting expenses from income consolidation as well as other options will be presented to the borrower.  A good counselor will be knowledgeable, compassionate, and encouraging to the borrower. Therefore, if a borrower is presented with a counselor who acts bored, judgmental, or pushy it would be advisable for the borrower to request a different counselor.
  5. Consolidation is not right for everyone:  The majority of the borrower’s balances should be in unsecured debts such as credit and charge cards, personal loans, and sometimes collection accounts.  If the majority of the borrower’s debts are associated with taxes and/or child support these plans would be of no help.
  6. Consolidation is simple, steady & efficient

    Consolidation is simple, steady & efficient

    Consolidation is simple, steady, and efficient: When a borrower is on a consolidation plan payments remain the same for the duration of the plan and he never has to wonder about the amount he is paying each month.  Also, once consolidation begins calls from creditors usually end.

  7. Record maintenance isn’t over: Despite the consolidation agreement creditors will continue to send borrower’s account statements that the borrowers will have to monitor and possibly even send in.  Agency reports will not reflect accruing interest so if the borrower fails to submit them the agencies balance will be drastically different from the borrower’s bank statements.  This can leave the borrower in mound of debt even after the consolidation services have ended.
  8. Charging must stop until the consolidation is paid in full: A common agreement with all consolidation companies is that borrowers must close all accounts and not open any new ones until the borrower is debt-free.
  9. Consolidation is not the same as bankruptcy:  Although borrowers are paying their debt in full lenders may still have a negative view on the service and the borrower’s credit report could still take a hit.  Some creditors will notate that the debt is being paid through a third party which can be viewed negatively as if the borrower needed help paying his bills.  Other creditors will look at consolidation as a positive thing because the borrower is making consistent and timely payments.

Clearly payday loan consolidation has positive and negative factors.  It is important for the borrower to determine if this option is going to be a good decision or not and act accordingly.  The one factor that is advisable prior to making any decision is that the borrower gathers as much information about his finances and options as possible to avoid making any hasty decisions.