Debt Management Consolidation Info

Debt Management Consolidation Info offers the following advice and thoughts about how to best consider your options if you are thinking that debt consolidation may be the right route for your to conquer your debt worries.  Consult with a financial planning professional or attorney if you have more questions and need to ensure that you have covered all of your options for your specific financial situation. 

It isn’t difficult to find that you are way over your head in debt. Making the monthly payments is not budging the balances at all, and the interest rates are astronomical. You are not alone and it isn’t hard to do. Thankfully, you have the option to consolidate your debts and with the tips included here you will know exactly how to make sure that everything goes off without a hitch.

Take some time, don’t be rushed or interrupted and go through your financial situation. Find out what the main culprits are. You can’t fix something if you don’t know where it is broken. Log who you owe money to and how much you owe. This is the most critical and number one step.

Once you have put all of this together it is time to start your quest for the best debt consolidation company. Keep this in mind; all debt consolidation companies are not equal! Some people do hire a company to help them or even possibly an attorney but it is not necessary. You can do the whole process by yourself!

Make sure that you shop around for the best deal and to ensure that the place you are going to give your business to is well established and see how long they have been in business. Basically, just check out their reputation. Also, make sure that they have modest fees in comparison to the other companies.

Don’t be fooled if your company claims to be non profit, it means nothing in terms of your consolidation. Always double check with the BBB to ensure that the company is legitimate. Another reason to check with them is because you want to make sure that you are not handing over your life to a loan shark lender.

The main goal here is to take all of your high interest credit cards and to consolidate all of them into one account. This new account will have a much nicer interest rate and you will only have to make one payment. Anytime that you are paying 20% or higher in interest, you need to consider other options.

If it is at all possible, consider debt settlement over debt consolidation. Of course this will only work if you can get your hands on some cash to settle the debts with. If not, then go through with the consolidation process. Chill out and look at the bright side! You will have lower payments, lower interest rates, the phone will stop ringing from bill collectors, and no more harassment!

Author: Chimezirim Chinecherem Odimba

Chimezirim Odimba is a finance expert.

Article Source: http://EzineArticles.com/?expert=Chimezirim_Chinecherem_Odimba

What is Credit Counseling and is it Right for Me?

Are you unable to make your monthly minimum payments on your credit cards?

Are you late paying any of your bills?

Have you tried to contact your creditors? Have those efforts brought no solution, or a solution that you still could not meet?

Are you being chased down by creditors and collection agencies? Avoiding phone calls, and deleting emails?

Do you have a steady, reliable income stream, but it is simply not enough to make those minimum monthly payments?

Can you reasonable restructure your debt and pay it off within about 2-5 years? If you are unable to meet that timeframe, you may be better off opting for bankruptcy.

What is Credit Counseling?

In a nutshell, credit counseling is a process through which consumers are offered education about how to deal with their debt, how to avoid accumulating additional debt and often involves negotiating with creditors to create a debt management plan. A DMP is a plan in which the consumer repays their debt on a repayment schedule. Often, DMPs include the ability to reduce payments, interest rates and fees. After the DMP is created, the creditors close the consumers’s credit accounts to cut off the consumer’s ability to continue to accumulate debt with that creditor.

How do DMPs help a consumer with overwhelming debt?

DMPs can be advantageous for the consumer struggling with debt as the credit counseling agency helps to consolidate the monthly payments of the debtor into one single payment. Typically this payment is less than the sum of each of the individual payments made each month by the consumer. In fact, many consumers find that after having tried to negotiate this on their own, it is only with a DMP that the same credit card bank will now accept this lower monthly payment.  

DMPs are also helpful to the consumer as they may also achieve reduction in the interest rates they are charged by their creditors. Some consumers who are behind on credit card payments find themselves paying interest rates in the upper ranges of 20%, close to 30%! By joining a DMP, consumers can find themselves with annual percentage rates lowered to 10% or less, sometimes even eliminating the interest charges all together! This justifies the claims of many counseling agencies that their customers will be debt free in a short range of time as when the interest rates are dramatically lowered, the consumer is able to pay the debt off more quickly. Note that if you are simply looking to reduce your interest payments but you are current with your accounts, you probably should not look into a DMP as the creditors may carry that debt as "past due" in exchange for the lowered interest rate.

DMPs also help customers’ accounts that have become delinquent to a current status and help to impact their credit rating over time. This is also known as "curing" and account or "reaging" the account. The consumer making the payments dictated by the plan on a consistent basis will have these accounts reported to the credit bureaus as current. This, however, does not simply erase the past delinquencies. But with time and the continued payments with the debt management plan in place, the consumer will begin to rebuild a more positive credit history. Participation in a DMP does appear on a consumer’s credit report, and it can impact the consumer’s ability to obtain home or car loans. Some lenders will see this as a negative, as it can indicate that a consumer has not managed their debt well. On the other hand, other lenders can see it as a step in the right direction as it can also indicate that the consumer is taking care of their debt obligations and may be worth the lending risk.

Did you know that Credit Counseling is a requirement for filing for bankruptcy?

Credit counseling is now a requirement for any consumer filing for bankruptcy, as per the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. To meet this requirement, the consumer must complete a program with a nonprofit consumer counseling agency with at least one counseling session. Furthermore, they also have to complete a post-filing education credit counseling session before their debts are fully discharged.

What do I need to know about Credit Counseling Agencies and the negative statements about the industry?

Credit counseling has come under a lot of scrutiny lately with charges that consumers have paid hidden fees, excessively high fees, poor service and many other complaints. Many feel that the agencies take the sides of the creditors more often than the consumers. There are also charges that credit counseling agencies hire employees with little to no formal credit counseling training. So, you are putting your financial future in the hands of an employee who may have no more knowledge financial management than you do!

Beware of any agency that asks you to pay high upfront fees. They will claim to be "debt settlement" specialists and they tell consumers that they will negotiate their debt to "pennies on the dollar", we have all seen the ads and commercials. This is typically NOT a legitimate claim, and by the time they take your upfront fee, and the fees of thousands of others, they have enriched themselves, and preyed on consumers desperate for debt solutions.

While you may be desperate and want to hear postive, hopeful news and advice about your debt, do not fall prey to the con artists that make unrealistic promises. A legitimate credit counseling agency will tell you all of the details of how you and your credit will be impacted, even with the DMP. Make sure that they are accredited, and you can check that through the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

Do your due diligence and you can find a reputable Credit Counseling agency that will help you understand the process realistically, charge appropriately, truly do what they say, and assist you in your Debt Management Plan. This can be a viable alternative to bankruptcy, and get your on a path of financial success and security and freedom from debt in the future.

Credit Counseling Corporations and Credit Counseling Resources will offer information and updates on how credit counseling may be the right fit for you, and how you can work with a reputable credit counseling agency to your advantage.   While we do not offer credit counseling services, we will do everything possible to make sure that you can make an informed decision with the information that we provide to you.  This also does not constitute legal or financial advice.  If you are in need of legal or financial advice, it is always best to take the information you have gathered to an attorney or financial advisor for their input, interpretation and possible legal representation.