Posts tagged: debt settlement

Tips for When You Can No Longer Afford Your Debts

avoid debtsIf you’ve reached the point where you have so many debts that you can simply no longer afford to make even the smallest minimum repayments, don’t worry and don’t bury your head in the sand! For sure, it’s a sticky situation to find yourself in, but if you take action now, you won’t be worried every time the phone rings nor will you need to worry that the repo men will turn up on your door.

Here are some of the best things you can do to sort out your situation when you can no longer afford your debts:

Evaluate Your Finances

Before you do anything else, it’s worth reevaluating your financial situation to make absolutely sure that there is no way you can afford to pay off your debts. If you can, for example, cut cable for a while or redirect some of your salary that usually goes into savings into paying off your debts, it will be worth it because your credit score won’t take a hit.

Call Your Creditors

If you’re confident that your current financial difficulties are only going to be an issue short-term,perhaps because you’ve been hit with an unexpected expenditure or the cost of heating your home has runaway with you, it’s always a good idea to get in touch with your creditors straight away. If you can explain the situation, and make clear that it will resolve itself soon, there is a good chance that they will work with you to come up with a solution that works for both of you.

Consider Debt Consolidation

Debt consolidation, which you can find out more about at debtconsolidation.co, is a great solution for those of you who are struggling to make your monthly repayments simply because they are so high. By consolidating all of your debts into one, if you do it right, the monthly repayments should fall somewhat, and you’ll be able to start tackling your debts once again.

Talk to a Debt Counselor

If things are so tough that you don’t think you’ll be able to make your repayments even with a little extra help, it might be worth taking to a debt counselor, like the ones at moneymanagement.org/, who will be able to analyze your personal financial situation and give you some ideas as to how you can proceed. If you go down this route, you will need to be totally open and honest with your counselor, sharing personal and financial details with them, so that they can really help you, but in the end,it is worth it because they are great at saving people who are drowning in debt and they are pretty good at convincing creditors to give their clients some slack too!

Bankruptcy

If all else fails, you might need to think about filing for bankruptcy, something you can find out more about at uscourts.gov/services, but this should really be a last resort. Don’t file for bankruptcy before thoroughly exploring all your options because you never know what might happen!

When You’re struggling to repay debt, you must act quickly to try and resolve your situation, lest the problem became worse and more difficult to deal with. The steps above will help you with this, so take action now!

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A Short-Term Struggle For A Long-Term Gain: Three Steps To Getting Out Of Debt Quickly

rub your debtsThere are many resources online that show you the impact of being in debt, from the personal to the professional, to your overall quality of life. But the task of managing your debt and the emotional impact is something that cannot be underestimated, especially when it comes to asking the question if we can actually get out of debt quickly. The vast majority of people would argue that it cannot be done. However, it is possible, but there are a few impacts on the parts of your life (as mentioned above). So, if you endeavor to get out of debt quickly, here are some things you should do, but beware that it will impact on your life in the short term, but the long-term benefits are infinite.

The First Step: Confronting Your Debt

This is possibly the hardest step of all, much like an addict needs to admit to themselves they have a problem, by tackling your debt and realizing the magnitude of what it is that you owe to your creditors may be the thing to wake you up and put you on the right route to consolidating your debt. It’s very simple, the way to confront this is to add up every single debt you have. Discounting your mortgage, but every credit cards, auto loan, student loan, everything. It all has an impact on your credit score and your ability to borrow in the future, if you needed to buy something essential like a mortgage.

The Second Step: Calculating Your Debt To Income Ratio

This is a common step to calculating whether organizations would lend you money or not. But there are plenty of debt to income ratio calculators you can find, one is on bankrate.com, and by calculating this, you can figure out how much you are in debt in comparison to how much you earn. It’s simple, almost too simple, but a lot of people don’t think about the amount of debt they have in comparison to what they earn. For a lot of people, it doesn’t hit home until they see the figures in front of them. From here you can start to make positive changes.

The Third Step: Identifying Behaviors And Getting Out Of Debt

By looking at how you got into debt in the first place, you can start to make positive changes in respect of these behaviors so you can start to dig yourself out of the hole effectively. A site like debtrelief.xyz can show you the best ways of consolidating your debts, but you need to think about your spending behaviors first before you get to this point. For many, it’s simply about asking yourself if you buy things that you cannot officially afford. If you know you cannot afford these items on your salary, you then need to ask yourself if the items you are purchasing are essential to your life. Most of the time they are not. You then need to find ways to get yourself out of debt in a healthy manner. This may have an impact on your personal and social life, but one of the best ways to get out of debt is simply to earn more and spend less. The thing you need to remember with this is that you may think that you’ll have to get a second job working nights somewhere, but there are many ways to earn money at home now so you can get out of debt without it impacting on your overall health.

Getting out of debt quickly is feasible, but you have to have the right attitude. It’s going to be hard, but it’s a short-term struggle for a long-term gain.

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Debunking the Myths About Debt Settlement

settle your financesThe debt settlement industry is growing – and it’s no surprise given that consumer debt is on the rise. However, there are a lot of myths and unsubstantiated rumours surrounding debt settlement, which we hope to debunk for you today. Let’s take a closer look at everything you need to know.

Anyone can settle

One of the biggest myths about debt settlement is that anyone can reduce the cost of their liabilities by a significant amount. It’s an excellent idea in theory, of course, but it’s far from the truth. Good debt settlement companies will only work with people who are genuinely facing financial hardships, and if you’re earning $250,000 and just don’t fancy paying the money back, your lenders will take a dim view.

It will improve your credit score

Settling a debt can still hurt your credit score, unfortunately. Once a lender reports they have accepted a settlement offer, the chances are they will make a note on your file. It’s also worth bearing in mind that it’s a new report, and will stay on your file for seven years.

It’s a cheap way out

While the sum total of your debts will be reduced in a settlement, it can still be expensive. Debt settlement companies charge you a percentage of the amount you owe or the amount you are forgiven. You also need to bear in mind that reducing your debts also means you might have to repay tax for the breaks you received for your interest payments in the past. It all adds up to a significant amount of money.

You can go it alone

Make a phone call to a lender and ask them to consider a settlement and they will tell you to join a long and growing queue. And the chances are that they will scoff at your offer. According to debtsettlement.co, using a professional company can help you make an offer that is likely to be agreed as they have a lot of leverage and expertise. The DIY route is an option – but it can often end up costing you more than you need to pay.

You need professional help

Conversely, with the right approach, it’s possible to get a good settlement deal yourself – as long as you work hard, get to know the rules, and play the game accordingly. While having an experienced negotiator by your side is advantageous, it’s not impossible to go it alone and get similar results. Ultimately, it’s all about how much time you can afford on the task at hand – and how well you can state your case.

Not settling means the debt is there forever

A final point on debt in general: as stated on consumerfinance.gov, there is a statute of limitations that can run out, meaning your debt is unenforceable in court. This vital point means that if you are being chased for an old, time-barred debt, you aren’t legally obliged to pay it back. There aren’t many advantages of doing so, either, as the settlement you pay will not be recorded on your credit card.

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4 Different Strategies For Managing Debt

manage your money burdenDebt management is more personal than you might think.

Put simply: there is no “tried and true” method of fixing a debt problem you might have. Everyone is different; different ways of coping work for different people. What helps one person to clear their debts in a short amount of time can leave another flailing and confused. Understanding that you have to find your way to debt management is key to understanding how to unpick the tangle of your personal finances.

Below, we’ll discuss four different ways you can tackle your debt problems. Read through them and see which might work well for you.

1. Redirecting Your Income

If you feel you are able to cut back on luxuries — such as entertainment costs — in your monthly budget and redirect your income to debt repayment, then you should be able to make a significant dent into your debt. When you have paid all essential bills and allowed yourself a small amount to live on, all your other finances should be directed toward debt repayment. It’s tough, but if you can embrace the necessary frugality, then it will work. You can find some tips about living more frugally on morningchores.com to help you along the way.

2. Debt Consolidation

Debt consolidation as discussed on consolidatingdebt.co is a rather simple process, which may be worth undertaking if you are struggling with managing various different credit accounts. The process tends to involve taking out a loan, with which you then pay off all your existing debts — leaving you with one, manageable monthly payment instead. This can also save you money spent on interest repayments, too. If you struggle to keep a handle on all the different payments you have to make, this might be the best choice for you.

3. Negotiating With Creditors

If you want to stave off bankruptcy, then negotiating with creditors is an absolute must. This means making phone calls or writing letters, explaining your situation and asking for their assistance in putting together a management plan that can help you pay off your debts quicker. There’s no doubt that talking to creditors is nerve-wracking, but you will likely find they are more understanding than you might otherwise expect.

4. Making Minimum Payments

Making minimum payments to your debts and nothing more might not sound like a debt management strategy, but it can be if you do it right. If you just make minimum payments and spend the rest of your income on whatever you please, then no, that’s not the best idea in the world. However, if you use the money you save to build an emergency fund — and thus reduce your reliance on credit in the future — then this could be a sound financial move. Just ensure that when you have got a decent emergency fund built up, you then begin paying back more than minimum payments on your debts.

When you find the strategy that works for you, then your way to a clearer financial future should become much more obvious.

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Swamped With Statements? A Five Step Guide for Controlling Credit Card Debt

credit card debtYou can’t deal with another credit card bill, you feel stressed when you check your bank balance, and the word “interest” makes you flinch in any context. Chances are good you’re suffering from credit card debt! Thanks to the ease with which most of us can get credit cards and the temptation of what seems like free money, there are a lot of people in your shoes, but many more have managed to control and eliminate credit card debt, too.

No five-step program can address all situations, so don’t take every step in this program as law, but chances are good some of these steps might help you get to a debt-free life once again.

1. Tally up your debt and your assets.

It seems like both the most boring step and the most frustrating, but before you begin to get out of debt, you need to know exactly how far you are in the hole. Without an idea of what you have and what you owe, you’ll stagnate and you won’t have the motivation to keep making progress on your credit card bills.

First, gather all your bills. If you have debt on multiple credit cards, gather statements so you know exactly how much you owe on each card. Don’t know how much you have in the way of assets? Sign into your online banking account or visit your bank to get a tally of your finances, if you have anything invested or saved up.

Create a neat inventory that lists everything you owe, and to whom. Also, make a note of the interest rate on each credit card, as this will affect the order in which you pay down your debts. Try not to feel intimidated by the final number, whatever it is. You will figure out a way to control it and pay it down.

2. Create a budget.

If tallying it up wasn’t bad enough, you have to create a budget now? Don’t worry! It’s much simpler than it looks, and budgeting will help you get out of this mess much faster. You’ll also be able to avoid getting into debt in the future.

Despite the fact that budgeting seems like it will make you more stressed about your finances and able to relax less, the opposite is actually true. When you know how much you have to spend, you won’t have that nagging worry in the back of your mind that tells you this is a bad idea. You can spend guilt-free and not suffer negative consequences like you’re feeling now.

Create basic categories for each area of spending, including rent, utilities, tuition (if any), transportation (gas and auto maintenance), and so on. Downloading a basic budgeting software application will help you figure out these categories to start with, and you can later create your own based on your spending patterns.

Then, make a list of your regular expenses. If you know you will spend a fixed amount on rent, you can write that down. If you spend about the same amount each month on your electricity, write down a ballpark figure and round it up a bit to cover higher bills. Do the same for your income, averaging your last three to six months’ income if you make an inconsistent income (as a freelancer, for example).

When all is said and done, you should have a rough monthly figure of how much you spend and earn. You’ll already have spotted any problems that exist – more money spent on shopping trips than rent, for example. Again, don’t stress if the numbers are higher or lower than you wanted them to be. Frugal living advice will help you prune your expenses, and you can look at other sources of income.

3. Plan your debt repayments.

If you have more than one source of debt – credit cards, student loans, a mortgage, etc – you will have to prioritize your debt repayments. There are two main methods of doing this: by interest rate or by amount owed. If you are motivated by quick results, the snowball method is best; if you prefer to get the debt paid off more efficiently without wasting money on interest, the interest method is for you.

The snowball method works like this: arrange your debts in order from the smallest amount to largest. You’ll pay off the smallest debt first, then the next largest, and so on until you finally tackle the largest amount. By that time, you’ll have the motivation to really work on your last remaining debt.

The interest method is smarter money-wise, but it takes a lot more persistence and patience. Be honest with yourself – will you stick to it when it seems like you aren’t making much progress? If you choose this method, you’ll arrange your debts by the interest rate you’re currently paying on them and you’ll work on the highest interest rate first. The money you save on interest and payments will then help you pay off the next-highest rate, and so on.

4. Slash your expenses.

In order to pay down your credit card debt, you’re going to be putting aside as much money as you can! This means you should stop using your credit cards and pay only with cash from now until you’re out of the red. Be gentle, yet firm with yourself about it. If it helps, use the envelope system or take out a fixed amount each month, and set up your bank account to automatically withdraw the rest of your paycheck and transfer it to your credit card.

When you created your budget, did you honestly record about how much you spend each month, or did you round down the numbers to attempt to get yourself to improve? If you rounded everything down drastically, it’s going to take a lot more effort to pay off your debt, but you absolutely can do it.

Look at what’s essential – food, utilities, and so on – and what isn’t. Allow yourself one category in which you won’t cut down your spending. It might be going out for movies, restaurant meals, shopping for clothes, or books. This doesn’t mean you’re allowed to spend all the extra money you’ll have on it, but it ensures that you won’t be sacrificing everything fun for the sake of your future financial health. Everything else should be cut by a small amount – try ten percent.

5. Control your spending until your debt disappears.

As you go about your daily shopping, keep a small notebook with you. Write down everything that you buy, and don’t let yourself slack! Alternatively, you can keep your receipts and enter them in your budgeting program later, but don’t let this be an excuse to avoid thinking about your spending. The point is to consciously think about every decision you make to buy something.

If you want to get your credit card debt under control, relentlessly stick to your budget. Each time you exceed your budget, consider whether you were overspending for an impulse buy that you didn’t really need, or whether you need to allocate more money in your budget to this category. You will inevitably find things you can cut way back on, and things that you will have to loosen up a bit on.

Perhaps you find yourself tempted to buy things on a daily basis, and it’s hard for you to keep that long-term goal in mind. That’s true of everyone, and that’s often how we get into credit card debt in the first place! Keep a small Post-It note on your credit card. It doesn’t even have to say anything, but you want to, write on it your main reason for paying down your debt: freedom, your child’s name, etc.

The process of paying down your debt won’t be easy, but it is one of the most satisfying and liberating things you can ever do. You’ll find out more about your interests and what really matters to you, you’ll learn how to set goals and achieve them even when it seems impossible, and you’ll clear your credit record so that you can achieve any financial goals you’re now free to pursue!

Sam Jones, the author, had to use credit card consolidation after failing to manage his credit cards effectively.

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