First I would like to say thank you for reading what I have to say on what may be a very important decision for you or your family. I have been working in the credit card debt relief industry for over a decade now and have quite a large knowledge base as to how the industry works. If you are serious about looking a explication to what could be a very bad and detrimental debt problem then you may find the data in this record to be very helpful.
This record is going to be rather lengthy, I want to state that right up front; I am going to address the most popular credit card debt relief programs on the shop today. I feel it is needful to address both the certain and negative aspects of each option. In addition I would like to go over another selection a lot of people do not know about. This is debt resolution, a process very similar to debt village with the end results of salvage money and time; any way the negative aspects of debt village will be greatly diminished with debt resolution.
Credit Cards For People With No Credit
The first selection is the most tasteless and this is to do no ifs ands or buts nothing. Which surprisingly is the exact thing most people do and may be what you have been doing up until now, before realizing you must take performance to decide the situation. Most people in debt and this could be along with yourself are running on what is called the "credit treadmill". The credit treadmill is a ruthless and endless cycle of monthly minimum payments and high interest.
This is maybe one of the worst places to be financially. If you just pay your monthly minimum even if your interest rate is slowly low, you will be stuck in debt for over 38 years! while the course of the decades it takes to pay off this debt you will pay back over five times the former equilibrium in interest alone! If your Apr (interest rate) happens to be where millions of other people find theirs, up in the high twenties if not thirties, it will take much, much longer to get out of debt. And plainly you will be losing A Lot more money.
I don't no ifs ands or buts feel I need to address the first selection anymore. There are no certain aspects to being stuck in debt and doing nothing about it but paying minimum payments.
Once people are made fully aware of the situation they are in, and have come out of denial to the fact that they do no ifs ands or buts have a problem with credit card debt the first selection many people look into is debt consolidation.
There are two ways about which debt consolidation can be achieved. There are debt consolidation loans, and then there is consumer credit counseling.
Let me first explain the selection of getting a debt consolidation loan. A debt consolidation loan is a loan taken out to pay off the balances on your credit cards. The benefit from doing this is that there will be only one monthly payment made on the loan. Thus taking away the ill of juggling multiple payments to the discrete creditors. The second benefit is that the loan may come at a lower interest rate.
This is any way in my belief the riskiest of all the credit card debt relief options. Why? Because in the vast majority of cases the only possible way to get a debt consolidation loan is by using your home for security; essentially taking out a second mortgage to pay off your credit card debts! What you will be doing is transforming your low risk unsecured credit card debt into a high risk loan secured by your Home!
The sad fact is that over 80% of people who end up in this situation and use the equity in their home to pay off their credit card debts find themselves within the same situation in less than five years.
The old cliché "no pain no gain" applies greatly to this recipe of debt relief. It is just too easy to use the money in your home, pay off your balances and get on with life. The problem is first you are not out of debt and second nobody ever does the right thing and cuts up their credit cards. It's just too easy to get back into more credit card debt; you will have your little plastic cards with zero balances approximately begging you to fee on them again.
Later in the hereafter when you enter round two against credit card debt you will have not one but two secured financial obligations tied to your home that must take priority over your credit card bills. You also may have other secured financial obligations such as a car loans that must take priority over the new credit card bills as well. Except this time there will be no more equity in your home to get another loan. What happens to many people is they either must file bankruptcy, or risk foreclosure.
I cannot even begin to tell you how many times I have seen this happen over my years of working in this industry and it's very sad. This is why I said in my belief a debt consolidation loan is the riskiest and the worst selection to use when trying to get out of debt.
This brings me to the next selection which is very often confused with debt consolidation because it is quite similar. consumer credit counseling shares many of the same benefits as a debt consolidation loan but without taking the risk of losing your home. A credit counseling branch will look to get your interest rates lowered, and they will have you make one monthly payment to them which they will disperse to the creditors for you; thus giving you the convenience of one monthly payment.
A reputable credit counseling aid may very well be the best selection for some debtors. any way many of these programs will not be feasible. With a credit counseling schedule you are still paying back 100% of what you owe plus interest and there are aid fees involved. Lots of people realize they will not be able to carry on the payments on this type of a program, in some cases the payments may be even more than what you are putting out towards the monthly minimums.
Unfortunately consumer credit counseling programs have a very high failure rate, over 70%! The fancy being if you miss more than one payment on this type of a schedule the creditors will kick you out of the program, thus revoking the benefits of one monthly payment and a low interest rate.
The reality is that for a lot of people credit counseling programs will just cost too much money. The schedule will take between 5-7 years; can you guarantee that over that time period you will not have any financial difficulties that will cause you to miss payments? Especially, if it is quite hard to allocation the schedule in the first place.
Thankfully for those of us who don't want to or can't carry on credit counseling there are other options available. Bringing us to debt settlement, this process has been helping millions of people get out of debt while this terrible recession. The benefits of debt village are separate from any of the above options. With debt village you may find yourself salvage up to half of what you currently owe, and by that I mean the actual equilibrium owed, this has nothing to do with interest rates. In addition you can realistically expect to get out of debt in three years or less; this is a far cry from over three decades running on the credit treadmill.
Saving a lot of time and money while getting out of debt may sound great, and while these are very nice benefits debt village also comes with its respective drawbacks.
The problems linked with debt village are due to the fact that you must fall behind on your debts in order for the creditors to be willing to negotiate a settlement. There are no creditors in the world that will negotiate on current debt and why would they? If you are current and are paying them their monthly minimum payments with high interest why in the world would they negotiate, they have your no ifs ands or buts where they want you; running on the credit treadmill.
Naturally if you are current with your payments this will have an adverse affect on your credit score. And sadly a lot of people will allow that fancy alone to keep them from debt settlement, thus retention them stuck on that treadmill. For those who are already behind then this is somewhat of a moot point, the damage done to the credit has already taken place.
Another negative corollary of falling behind is dealing with collections calls, some debt village companies claim they can get the calls stopped, but many lie about that because by law no debt village firm can stop calls.
When falling behind there is the occasion that the creditors can issue a lawsuit. Now from my palpate in this industry I can confidently tell you this is not the mainstay for the creditors. It plainly costs them too much money and time to bring everybody who falls behind to court, with no guarantee of collecting any money. However, lawsuits are still a possibility and I feel that it is needful for people to understand this before using debt settlement.
So with debt village the benefits are clearly the best, but they do come with their own negatives mentioned above.
This now brings us to another recipe of credit card debt relief. Like debt settlement, it is designed for people who have become heavily indebted and need to save money in order to get out of debt quickly. This process is known as debt resolution.
Debt resolution is very similar in structure to debt settlement, debt resolution is basically debt village handled through the hands of a law firm. According to up-to-date law suits, a law firm does not offer the client any more security under the law from the negative aspects of the debt village process than a debt village firm can. In fact you will perform the same end results of salvage time and money like debt settlement, any way many law firms will fee you upfront legal fees and retainers, on top of their village fees.
According to the Illinois Attorney General, there is no disagreement in the process between debt resolution and your thorough debt village firm so there is no fancy they should be violating the up-to-date rulings that state that a firm gift debt village should not fee any of its fees before a village has been negotiated. Quite simply, you are not given any more security or services for the extra money you are paying them
Another big Misconception is that there is that resolution has an benefit over your typical village firm in how a law suit can be addressed. What these law firms do not tell you is that they will not report you in court and many will not even aid you with answering the summons. You hired them to plainly negotiate your debt and that's it. What most debt village companies will do is palpate that creditor and effort to work out a village with them so that they will drop the law suit. This does not want an attorney to accomplish.
Using debt resolution through a law firm does not give you more protection. Anyone can legally palpate and negotiate a village even after a law suit has been issued; thus retention the client from ever going to court and from maybe getting a judgment. The reality is the collectors know when they are suing that they will not recoup the whole debt and are very keen on settling. It is much easier for them to deal with a reputable firm that complies with the regulations, where they know they will be getting money back. This is a Huge benefit of going with a firm that does not fee its fees in advance.
I hope after reading this record you feel more enlightened to how the credit card debt relief industry works and feel more educated to the discrete options ready to you. If you would like to see if debt resolution would be the most ideal model of credit card debt relief for your situation then I request you to corollary the link below and fill out an application requesting more information. I welcome the occasion to impart your current financial situation and see if this process will be the exact path for you.
Debt Resolution For credit Card Debt Relief! Can it Help? Credit Cards For People With No Credit
No comments:
Post a Comment