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.

WHEN DOES DEBT CONSOLIDATION MAKE SENSE?

Debt consolidation makes the most sense when a consumer is very deep in debt with high interest rates and large monthly payments.  Debt consolidation combined with a debt repayment plan and/or credit counseling can help a consumer pay off all of his debts and be debt free within 3 to 5 years.

Although, this isn’t the case for everyone that is in debt it can offer some relief and give consumers the opportunity to reorganize their finances and in some cases even save a little money.  If a consumer feels that debt consolidation is the best option it is very important that he choose a consolidation company that teaches methods on changing spending habits not one that simply reorganizes the debt.

It is equally important that the counselors work with consumers on maintaining the new habits even for a period of time after the conclusion of the consolidation.

The wrong debt consolidation company will make a lot of promises, but not deliver. They will promise lower monthly payments, lower interest rates and the convenience of a single payment. But, in reality they can be associated with high fees, greater debt and potentially more interest payments.

Things to Consider:

 

Things to Consider

Things to Consider

  1.  Debt consolidation is not a cure all.  The consumer must work on new habits.  It wasn’t the debt that got the consumer in the position that he was in it was the consumer’s choices.
  2. The most expensive service is not always the best service.  A good debt consolidation company will not cost the consumer more in the long run.  A consumer should beware if the company charges hefty fees for their services in areas such as high-interest rates, high upfront fees, and/or high monthly fees.
  3. The consumer will be paying more interest over time than if continuing to make their usual payments.  Consumers need to be careful because lower monthly payments could result in extending payments which can be more expensive over time.

Unfortunately, the prospect of being debt free is highly romanticized and in most cases debt consolidation doesn’t make sense.  Debt consolidation companies are the same as any other financial institution; they are in business to make money.  A few tips for consumers to avoid being taken advantage of include:

Tips for Consumers

Tips for Consumers

  1. Consumers should calculate how much they owe and their current interest rates and then determine how long it would take them to pay off the debts by maintaining their current rates.  Once all calculations are done consumers should compare their figures with the length of time they would be in debt consolidation.  In most cases a lower interest rate is more expensive than simply increasing the current payment.
  2. Consumers should also check to see what the monthly payment on a debt consolidation loan would be.  If the loan payment is more than what the consumer is currently paying it might be more beneficial for the consumer to increase the current payment.  If the loan payment is less than what the consumer pays each month the consumer could end up paying more in interest in the long run.
  3. Consumers should make sure that if they choose debt consolidation that the company will incorporate credit counseling so the consumer can learn how to use credit responsibly once the debt consolidation loan is paid in full.
  4. If the consumer is being pressured into a debt-management plan that he pays through the company he should be weary.
  5. Consumers should watch out for imposters.  Any deal that appears to be too good to be true, it probably is.
  6. Consumers should shy away from companies that promise to remove negative items from their credit reports.  If an item on a consumer’s credit report is true there is no way to remove it.  The only thing that the consumer can do is make it less negative.
  7. If a company promises to eliminate debt through obscure laws it probably is not legitimate.  A consumer’s debt is a legal obligation and it should be paid back.

Mathematics and Behavior Are the Key to Financial Freedom

 

Mathematics & Behavior are key to financial freedom

Mathematics & Behavior are key to financial freedom

Although, it may be very enticing to only deal with one monthly payment it is important for consumers to realize thatthere are instances where they can do the same things for themselves that a debt consolidation company can do for them and be able to save the money they would be paying the company.

The first thing that a consumer needs to do is to create a realistic budget.  The second thing that a consumer needs to do is decide whether to pay the highest interest or the lowest balance debts first.  Finally, the consumer would need to set up auto-pay and pay more than the minimum payment each month.

If a consumer decides that debt consolidation is the best route he needs to be aware of his behavior. Paying off debt with a loan doesn’t eliminate the debt it simply combines it and the consumer is still responsible for it.

Consumers who truly want help should do what they can to get it without worrying about what others may think.  Debt repayment and credit counseling are great resources to assist consumers in negotiating lower interest rates, establishing realistic budgets, and with gaining control of their debt instead of the debt controlling them.

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.