5 Steps When Choosing A Debt Program

After much discussion and financial stress, you’ve decided that it’s time to get some help getting out of debt. You are taking that first step towards financial freedom by realizing that you just can’t do it alone, and someone needs to give you a helping hand. So, now what? Where do you turn? How do you even begin to search for a reputable company that will help you out of debt without emptying your bank account and wallet.

The most important thing that you can do when beginning your debt settlement research is to be informed. Do your homework! I’ve written many, many articles on the debt settlement industry, and I can’t stress enough how crucial it is that you check out your company before you hire them. Remember, you’re hiring them. It’s not the other way around.

1. Two websites that I would recommend checking out when making your debt settlement decision are the United States Organizations for Bankruptcy Alternatives (USOBA), and the American Coalition of Companies Organized to Reduce Debt (ACCORD). These two organizations have proven track records and allow only reliable and credible debt settlement companies to enroll.
   
   
   
   1. USOBA, the older of the two organizations dedicated to equally protecting both the consumer and the industry, and ACCORD have strict guidelines for enrollment. These guidelines include complete transparency when negotiating with consumers, avoiding the urge to make promises to consumers, and being completely realistic when estimating expected time until settlement. If the debt settlement company you’re investigating is not a member of either one of these organizations, it might be best to continue your search.
   
   
   2. The most important factor regarding membership with USOBA or ACCORD is that the debt company must be transparent. This means that they cannot make a promise about what your settlement balance will be and they cannot promise a time frame. In this industry, there is so much negotiation that needs to be done it is nearly impossible to promise exact settlements and time. If the company you’re talking to promises to save you 50% on your balance, run for the hills.
   
   
   3. Is the debt settlement company asking you the right questions? Does this debt company adequately pre-screen its potential clients before enrolling them? One of the most overlooked steps in the process is the qualification of potential clients. Many times a debt settlement company will quickly qualify, get you to sign the contract as they make the big promises, and then realize that they cannot help you after you have gone through the process. It can be the most heartbreaking thing to have to go through, because in many cases you won’t find out until you’ve made many payments.
   
   
   4. Ask what the charges are, and exactly where your money is going. A fraudulent debt company will give you some small percentages and tell you again and again that they will get you out of debt no matter what. If they charge large upfront fees for initiating the program, run for the hills. The FTC is beginning to consider demolishing all upfront fees for debt settlement services, so if your company is still charging you might want to consider looking for a company that does not.
   
   
   5. Are you comfortable with their customer service agents? In most cases, you will be assigned a debt negotiator and/or customer service agent. This person will be your go-to-guy, and you’ll probably talk to them as much as you talk to your husband or wife. Be sure that you are completely comfortable with this person, and that your gut feeling tells you to trust them. If they’re supportive, informative, blunt, and experienced, then you’ve got the right person. If they are aloof and simply tell you what you want to hear, as much as you want to hear the perfect answers, it will not help you in the long run.
      
      
      
      1. How often will they contact you? Will this debt company not only help you to get out of debt, but coach and counsel you on your spending habits. The best debt settlement companies will do more than just negotiate your debt; they will attempt to help you change your spending habits.
      
      
      2. A huge red flag to be aware of, which should be common sense, is if the debt settlement company enrolls you without a contract. You must sign a contract! That contract must lay out exactly what your enrollment entails.
      
      
      
      
   
   
   
   

Finding a debt settlement company that’s reliable and accredited is easier than you might think. Sure, there are hundreds out there who just want to take your money, but there still are the good guys who only want to help you get out of debt. I can assure you that there are still those negotiators and services out there that genuinely enjoy getting that final phone call from their client, that final phone call where the client is nearly in tears from happiness because they received their settlement letter. It just takes a little work to find those debt services. But it’s worth it in the end.

DIY Debt Recovery

I have no doubt that everyone has asked themselves this question at one time or another, especially in this climate. The answer is simple; of course you can get out of debt on your own. If you have the drive, the commitment, and the financial means, then go ahead and get moving on getting out of debt the DIY way. It’s completely possible.

What a debt settlement program or debt negotiation company can do for you is exactly what you can do for yourself. Sure, the debt negotiators are trained and experienced in settling debt and dealing with unruly creditors, but if you have the courage it can be done DIY style.

Here’s what you need to do:

1. Take a few hours to sit down, get out all of you credit card statements, figure out your take home income each month, and configure your budget. Whether you go DIY or you talk to a debt counselor or negotiator, they will have you do the same thing. You have to start out knowing where you’ve been, what you are spending, and what you’re able to put towards getting out of debt. You have to have something to negotiate with, like any other game.


2. After figuring out your budget, do a little research. Know what your interest rates are and what you feel they should be based upon your budget. Be realistic in deciding on a number to negotiate with. In doing your research, look up the rules and regulations regarding your debt rights in your state. Each state has its own rules when it comes to creditors and debt.


3. Prioritize your budget. I know this pre-planning seems time consuming, but it is necessary. Prioritize where your money should be going. Should you be heading out on Friday night or making sure you have enough for your mortgage? These are the things that got us into this economic mess in the first place; literally living beyond our means.


4. Stop using your credit cards! This one I cannot stress enough. If you want to do this DIY debt negotiation, then you have got to take the first step by giving up that addiction. I know it’s rough, but it is completely necessary.


5. Now comes the fun part; calling your lender. Take a deep breath, hold your head high, and find your confidence. Explain your situation. If you have had medical emergencies, a costly divorce, have lost your job, or any other uncontrollable circumstance that has led you into debt, be honest and tell them. If you were to call a debt negotiator today they would ask you about how you got into debt, and if you had an unforeseen circumstance it would be used by your negotiator to barter with the creditor.
   
   
   
   1. When you talk to your lender, be compassionate, honest, and genuine. I know it seems like a hard thing to do when they might just brush you off, but call again and again until you find results. This is where using a debt negotiator comes in handy, because they actually have the time and energy to call again and again.
   
   
   2. Ask your lender to lower your interest rates because you just can’t make those high payments. You want to pay down your debt, but you will not be able to do it with the high interest rates.
   
   
   3. Ask your lender if they will consider debt forgiveness. According to CNN, more and more card issuers are accepting dimes on the dollar as payment in full. Usually you have to be delinquent at least 90 days with a credit report that shows missing payments isn't common. Closing an account due to settlement will affect your credit score for years, and you'll pay tax if the forgiven debt is over $600.
   
   
   4. When getting out of debt on your own, it’s all about desire and commitment. Honestly, if you have those two things in your arsenal you will achieve results. It is entirely possible, but will take some time and a lot of effort. You will also have to change your spending habits, which is the hardest part of the entire process.
   
   
   
   

If you need help going the DIY route, or you’d like someone to do the work for you, don’t forget to contact us by filling out the form or giving us a call at 1-866-332-9312. And there’s always our debt services. Good luck!

Credit Counseling Services For The Consumer

Consumer counseling services are always a great route to take in your DIY attempts to get out of debt, however, it’s important to read the small print and keep in mind that your credit will not be fixed overnight.

Consumer counseling basically aims to lower your interest rates with your creditors while counseling you on how to manage your finances. A credit counselor will sit down with you a specified number of times a week or month, work with you on your finances and where you should and should not be spending money, and will negotiate with your creditors to lower your rates and your payments.

The downfall to all of this is that they do not negotiate your ending balance, and though your monthly payments may lower and your interest rates might look better, your ending balance will only continue to rise and you will be stuck once again.

Most consumer credit counseling services these days prey on people who have never even been late on a credit card payment, but are unhappy with their high interest rates. These days, who isn’t unhappy with their credit card rates? Where the credit counselor will get you is when you agree to listen to their plan, they suck you in and offer you debt settlement services instead, with outrageous upfront fees.

The shadiest part of the credit counseling route is that many companies get a “kick-back” from the lender themselves! Here’s the rub: according to MSN Money, most of the counseling services' fees are paid by the lenders themselves, which send back to the services a portion of the payments received. This has led some critics to charge that credit counseling is just a tool of the lending industry.

So, when do you need credit counseling? Almost never, in our opinion. If you are making your credit card payments on time, then there is no reason to answer the call when the credit counselor hits you up. Even if you have fallen behind slightly, it’s no reason to look to counseling. In most cases, you can go the DIY route and get yourself out of debt rather than use credit counseling.

If you are considering counseling, look for the red flags. Make sure that the company you’re researching is accredited with Association of Independent Consumer Credit Counseling Agencies or ACCORD. Also, if you are charged anything over $15 for the initial set-up fees, run for the hills. They are likely going to charge you for every little thing and take most of it for themselves if they start out by charging you ridiculous fees.

Finally, if the credit counselor makes any promises regarding your balance, interest rates, or credit score, turn around and walk out of his office. Every credited and respectable company knows that promises and guarantees are unfortunately not a part of the industry. While any debt settlement and negotiation company would love to tell you that they can make promises regarding your final balance and repayment time frame, in reality it just cannot be done. There is no way to guarantee results when it comes to negotiating debt, simply because there are too many parties involved to guarantee a final outcome.

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Cash For Clunkers Rejections

Cash for Clunkers was the incredibly successful program that offered consumers a rebate of up to $4,500 to turn in their ‘clunker’ for a more fuel efficient car. The program boomed car sales for a short time and gave the failing car companies some much needed (short-term) relief. Now that the program is over, consumers still have a multitude of questions regarding how the money was paid out, how it is going to be paid to those waiting, and who got rejected.

60,000 clunkers rejected from the Cash for Clunkers program?

This is the rumor that’s circulating around the internet the most today. For some reason, consumers are raiding Google to find out about these 60,000 rejected clunkers and how that could happen in a program that was suppose to help everyone. Well, it’s not all it seems to be. While the bloggers are having a field day with this one, the truth takes a little more research.

The government has paid or cleared $2.38 billion of the $2.87 billion worth of dealer vouchers submitted, the Transportation Department said today in a statement. The agency said it has rejected 8.8 percent of applications and is still reviewing 8.1 percent. (Bloomberg)

The truth of this matter is that the dealerships themselves dropped the ball somehow by not information their consumers of all the rules, and now they have the opportunity to make up for it by resubmitting applications. The main reason for many applications being rejected was due to minor details of the rules not being followed such as late car registration payments. Sure, it will take longer for consumers to get their Cash for Clunkers rebates, but the answer to this question is not exactly what it seems.

What do you do if your dealership has to resubmit?

If you are one of the many who purchased a vehicle under the Cash for Clunkers program from a dealership that has been rejected and must resubmit their application, all you can do is wait. If your waiting, and your dealer asks for you to pay in full for the car when you have not yet received your rebate, they are breaking the rules of the program and you have the right to turn them in.

How much did the program help the car companies?

While overall sales are still down compared to recent years, the Cash for Clunkers program has given car companies hope that things are turning around. For a few weeks, their numbers were up, and although they’ve dropped back down, it was encouraging to see consumers are still in need of new cars and are willing to buy if the incentives are there.

While foreign car companies did better in car sales, GM, Ford, and Chrysler accounted for almost 39% of the total 690,000 cars purchased through the program.

A preliminary analysis of the program by the Obama administration said that third-quarter economic growth has been 0.4 percent higher because of auto sales in July and August. In addition, G.M., Ford and Honda all announced that they would increase production at some United States plants because of the increased demand generated by cash for clunkers. (New York Times)

How are consumers feeling about the program?

Eight in 10 consumers said they were satisfied with the way the program was run with another 55 percent of consumers wishing that the program could be reinstated.(Reuters)

What cars were the top sellers?

The top four purchased cars under the Cash for Clunkers program was the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus. All foreign makes, these cars had the best fuel economy. The Ford Escape was ranked 5th, while the Honda CRV was 6th. The Chevy Silverado, far from a fuel efficient vehicle, ranked in the top ten, as well as the For F150.

For more information regarding debt, feel free to visit http://www.thedebtsettlementprogram.com or call 1-866-332-9312.

Consumers Learning To Balance Recession & Credit

While the economy was taking a tumble, and housing sales were plummeting to all time lows, consumers were struggling to make their credit card payments, in most cases choosing not to pay at all in order to keep food on the table or save their home from foreclosure. During the first quarter of this past year, credit card delinquencies were up to record-breaking levels.

Although people are still struggling, the good news in all of this economic mess is that consumers are starting to take back control. Like the tortoise and the hair, many credit card holders are learning the importance of making payments and regaining some financial dignity. Even as the economy slugs along, the most recent credit card delinquency numbers are showing a slight improvement.

Credit Card Delinquency Improvements

After five straight months of record highs and hurt credit card consumers, things might be turning around, according to Reuters.

Fitch's (Fitch Ratings) prime credit card charge off index, which measures the portion of credit card securitized loans that companies do not expect to be repaid, fell to 10.55 percent in July from 10.79 percent in June. (Reuters)

The first quarter of this year was extremely rough for homeowners and credit card holders. The record breaking credit card delinquency numbers show that without a doubt. But, even though the market hasn’t turned around yet, homes are still being foreclosed on all over the nation, and the unemployment has risen to over 10 percent at times, consumers are somehow managing to stay on top of things.

What is interesting to note is that as the credit card delinquency numbers improve slightly, the average credit card balance has literally stayed the same. Consumers are still using their credit cards to pay for the essentials, but are somehow finding a way to make those minimum payments at the end of every month.

This trend might not be a good sign. Sure, credit card holders are at least making their minimum payments and keeping things in order, but, according to the Associated Press, they are still using the credit to take care of groceries, bills, and gas, the very things that will get them into trouble with the credit card companies.

So, why are the credit delinquency numbers improving?

"Consumers are clearly managing their credit card obligations and lenders are clearly managing the risk in their portfolios," said Ezra Becker, director of consulting and strategy in TransUnion's financial services group. (AP)

Whether it’s the consumer or the credit card companies that are making changes to better delinquency numbers is unclear. But, what is clear is that something is slowly turning around, and with the new Credit Card Act that is taking effect it will be interesting to see how things end up in the next few quarters.

For more information on credit card debt, visit http://ping.fm/1qHeV.