Get Out Of Debt

Debt consolidation and consumer credit counseling are both ways of eliminating your debt. Consumer credit counseling is actually a form of combining your bills, but it does not involve a loan. Sometimes the term debt consolidation can also refer to a home equity loan that is used to pay off outstanding obligations. Consolidating your bills refers to a solution that consolidates your debts and allows you to make one monthly payment to cover all your debts.

A debt consolidation loan is a viable means of paying off your debt, but I do not recommend it. If you have credit card debt or are enrolled in credit counseling and do nothing, your creditors can report you to the credit bureau and make numerous collection calls, but that is about it. However, if you have a debt consolidation loan and cannot make the payments, the consequences are much more severe. Your creditor can start foreclosure proceedings on your home. Many people have debt consolidation loans, but there are better ways.

Consumer credit counseling is a form of consolidating your debts, but it does not require a loan. Debt counseling is a way for people to get out of debt without incurring additional debt. A debt management agency can help you get on a plan that will help you have your unsecured debts paid off in five years or less. If it takes longer than five years, you may want to consider other debt relief options.

Your credit counselor will interact with you lenders and they will no longer be allowed to make collections calls to you as long as you follow the terms of the plan. There are many benefits to debt consolidation with a debt service. Here are just a few of the benefits you will see by consolidating with a credit counseling agency:

*Reduced and possibly eliminated interest rates
*One convenient payment each month
*No more collection calls
*No more fees
*Budgeting and financial education resources

The biggest part of being successful with a debt management plan is not getting into something that you don’t think you can manage. If you are given a quote that you don’t think you can handle, you are setting yourself up for failure if you accept the proposal.

Debt relief is something you need to go into with an open mind and the attitude that you are going to do what it takes to become debt free. The most difficult part of getting out of debt is recognizing that there is a problem and asking for the necessary debt help.

Consumers struggling with a high debt burden are reminded that research is required before enrolling in any debt relief program. While there are hundreds of legitimate companies that can help individuals eliminate their debt, there are also plenty of scams circulating within the industry which should be avoided. Before enrolling in any program it is important to investigate the company and the process they claim to use to eliminate debt. Here we are going to take a closer look at a potential scam that has cost some consumers hundreds or even thousands of dollars.

What is the National Debt Relief Program Scam?

It appears many consumers have received a letter in the mail claiming to be from the National Debt Relief Program. Victims of this scam have stated the letter at first glance appears to be from a government agency. Upon closer inspection it becomes clear the letter is not from a government agency but rather GHS Solutions, a debt settlement company. Jennifer Wallis is a Consumer Credit Counseling Service employee in central Oklahoma. She has clients who have received this letter which states the National Debt Relief Program can “reduce monthly payments by up to 50 percent”. Why is this letter considered a scam? Since the letter is designed to look like correspondence from a government agency, many consumers fail to realize it is actually from a debt settlement company. The information is misleading and many consumers who are desperate for a solution to their debt problem may enroll in a program that can have serious negative consequences.

GHS Solutions is a debt settlement company based in Delray Beach, Florida. The Better Business Bureau has given the company a F rating and reports 102 consumer complaints in the past three years. Of the 102 total complaints against the company, 88 are about the company agreeing to perform according to their contract.

GHS Solutions is not the only debt settlement company linked to the National Debt Relief Program scam. It appears consumers have also complained about a company named National Debt Relief and the program they offer to consumers. In this instance consumers have actually enrolled in the program and claim the company did not perform as promised. Clients claim National Debt Relief failed to stop collection calls and did not begin negotiating debt immediately. Other complaints claim the company misrepresents itself to appear like a government agency which leads consumers to believe they are working with a government program designed to assist individuals facing financial hardships.

It is important for all consumers to understand what type of debt relief program they are committing to before moving forward. Debt settlement is a legal process where individuals or companies hired on their behalf, negotiate with creditors to reduce delinquent balances in order to eliminate debt. Anyone considering this process must thoroughly research both the method and any company they consider hiring. There are several risks involved in the process however it can be the best option for people facing a serious financial hardship who would otherwise have to look toward bankruptcy to address their debt situation. It is unfortunate that some debt settlement companies continue to mislead or misrepresent themselves in order to enroll clients in their programs. Consumers are urged to carefully read any correspondence as well as contracts prior to enrolling in a debt settlement program to avoid confusion and disappointment down the road.

As of the moment we are in the midst of a pretty bad economic recession. People have been losing their jobs, businesses have been going under, and we are hitting record numbers with home foreclosures. To top all of this off we are seeing American consumers hit a record high with credit card debt. Now what most people do not know is that getting out of debt is not all that hard if you take the right steps.

For starters most people do not know what options they have available to them in order to get out of debt, however before going into any of those options debtors must be made aware that pretty much anything they do to get out of debt will have a negative credit effect. Unless the debtor has the money to pay off the debt in full, which ninety nine percent of people do not. The number one priority when trying to get out of debt should be exactly that, getting out of debt, not worrying about keeping a great credit score. A credit score is something that changes like the wind and can be repaired at a later date, and besides when you’re in debt you should not be worrying about how to get yourself into more debt in the future.

With that being said there are two main debt relief programs available to people trying to get out of debt. There is consumer credit counseling and there is debt settlement. Both have their respective pros and cons.

A credit counseling program is one that boasts the benefits of reducing interest and consolidating payments into just one. So instead of making numerous payments throughout the month to your creditors you just make one to the credit counseling agency and they will pay the creditors for you. Plus the creditors will lower the interest on these types of plans. The problem is that for many people the payments will still simply be too much. Often times the payments are just as much if not more than what people are putting out on monthly minimum payments.

With credit counseling people can look to get rid of their debt within 5-7 years and look to pay back around 135% of what they currently owe. Another issue with credit counseling is the low success rate, because if just one payment is missed often times the creditors will kick the consumer off of the program, thus bumping the interest back up. And yes there is a negative effect on the credit, a credit counseling plan will be shown as a code 7 on the credit report which looks bad. But the bottom line is to get out of debt and with this plan money and time will be saved when compared to riding out the monthly minimum payment scheme for what could be decades.

Now there is another debt relief plan called debt settlement. The benefits of this program are the savings of money and time. Most debtors find themselves saving around fifty percent of what they owe today, and can realistically get out of debt in just a few years. The downside to this program is that in order to achieve a debt settlement the consumer must let the accounts fall into default, thus putting the creditors in a position to negotiate a settlement. So obviously this will have a negative effect on the credit score. However once the settlements start coming in the credit score will rebound and repair itself naturally.

Right now with the state of the economy debt settlement has been a very lucrative debt relief method for many people. The creditors have been negotiating very low settlements, much lower than they do when the economy is doing better. Many people are finding they are saving a tremendous amount of money with this option and find themselves getting out of debt very quickly.

Like I said in the title, getting out of debt is not all that hard. The vast majority of people would be able to manage one of these two types of programs. The only thing that holds most people back is the apprehension of their credit score being affected. This is quite a shame that the creditors have so many people kneeling at the alter of FICO, that they do not realize they are losing thousands of dollars to the credit card companies with no end in sight. With the way things have been going in the economy people are going to need all the money they can get and throwing away money to high monthly minimum payments may be the straw that breaks the camels back for millions of American families and puts them into very precarious financial situations.

What can a credit debt counseling program do for you? Amid the oft misleading ads, hype and outright scams, it is important for you to know the truth about credit counseling before diving in.

A credit counseling program may be just the thing you need to begin your journey to being debt-free. And a journey it is. You see, there is no easy solution or quick fix to debt problems. Anyone who tells you otherwise may not have your best interests in mind.

What a good credit counseling agency does is look at your case from a professional perspective and offer you options for resolving your debt issues.

You are expected to provide all details about your finances including credit, debt and income, as well as your short-term and long-term personal financial goals. This is in order to provide you with the best possible option(s) to suit your situation and lifestyle.

The first thing you need to do is find a reputable credit counseling service. This can be challenging as scam companies are galore. But if you know what to look for you can narrow down your search and make the task much easier.

It is advisable to go for a nonprofit agency. But note also that some so-called nonprofit agencies have been caught in crooked practices, so you should not stop here.

Check with the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA) as they have a list of reputable nonprofit agencies you can choose from.

Here are some red flags to look out for when shopping for a credit debt counseling program;

1. Upfront fees. Most legitimate credit counseling agencies will not ask for a fee before talking to you.

2. Claims to make you debt free today. It takes time, even with the best help in the world.

3. Erase, or cut your debts by 50% or more. A reputable debt counseling service will expect you to meet your obligations as this is the honorable thing to do. If an agency promises to erase or cut your debts by a huge percentage, this is likely to be a debt settlement plan which can potentially cause you other problems including tax problems.

4. Charges a high monthly fee based on your total debt. If you enroll in a continuous program such as debt consolidation and/or educational program, you can expect a monthly fee. But this should be a flat rate that you should know upfront.

5. If the agency’s employees work on commission, run!

It should also be pointed out that a credit debt counseling program can impact on your ability to obtain new credit. Typically, it will show on your credit report that you are in counseling. Some creditors just will not want work to with you if you are in counseling.

Also, though your counselor will negotiate for lower interest rates on your behalf, some rates could actually go up. If you choose to take the debt consolidation route, you will be required to close some accounts which will like negatively affect your credit score.

To get out of high interest bad credit personal loans quickly, check out the various online debt consolidation programs that have helped many people. You may think that you are able to eliminate debts on your own, but may probably end up getting overwhelmed by all the details such as debt negotiation procedures and repayment computations required in getting all the various loan creditors to agree to reduce interest terms or loan forbearance.

There are both free and paid approaches to debt consolidation and management. For example, some get debt help from the many government sponsored consumer credit counseling groups operating in every city in the United States. These debt counselors can help you apply for payment protection against your creditors or file bankruptcy, if you meet their financial hardship criteria based on your current income and debt ratio. Since they are non profit debt help organizations, many people are queuing to seek their assistance to eliminate debts so the waiting list is kind of long. These non profit credit counseling will not be suitable for those that are in a hurry to repair credit and restructure their debts.

If you can afford professional debt consolidation assistance, it is perhaps not appropriate for you to approach non profit debt counseling services. Debt consolidation companies can provide very comprehensive debt elimination, debt negotiation and settlement services, for a price. For those with many different loans from various creditors, the different loan repayment deadlines and interest rates are probably making it difficult for you to reduce debt in a systematic way. And if you need to repair your credit fast because you needed to apply a large loan soon, such scenarios are where the best debt consolidators can come in to help. By helping you to quickly restore your personal credit reports, you become eligible for lower interest rates in the long run and that means you pay less for your current and future loans.

When you are in financial hardship and the debt repayments seem never ending, either secured or unsecured debt consolidation loans are good financial tools to regain control over your debts. People with bad credit frequently have problems getting loans due to their creditworthiness, so do not wait until your credit score are badly hit by the many missed loan repayments. By that time it will be difficult to turn your debts around.