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Debt

Coping With Debt and Retirement

Get professional debt advice

Research conducted by the Prudential recently showed that one in five people hoping to retire in the UK this year will do so with more than £30,000 worth of debt. Wales was at the top of the list in terms of numbers, with 26% of people retiring with significant outstanding debts.

Unfortunately the average retirement income from an annuity is at a 6-year low and as a result thousands of retirees will find themselves with much less to live on each year than they need to pay their household bills, living expenses and debt payments.

If this sounds like your situation then you should seek professional debt advice as soon as you can. A qualified financial advisor can help you to make the most of any pensions and investments you have while also showing you where you can save money in everyday life. In addition though, debt advice, Wales in particular, is vital if your entire retirement income is insufficient to cover your outgoings including your debt payments, and if things are very bad a debt advisor can explain the debt options available to you.

Claim the benefits you’re entitled to

A lot of people reaching retirement age are entitled to benefits they know nothing about, and again a debt or financial advisor can provide vital information. Among other benefits you may be entitled to you can include:

Pension credits
Rent or council tax benefits
Winter fuel payments
Attendance allowance
Carer’s allowance

There is no shame in claiming benefits during your retirement years and if the extra income helps to pay your debt commitments then so much the better. Again, professional debt advice will provide more information on the benefits available and whether you are eligible to make a claim.

Claim your freebies

Most people of retirement age are eligible for things like a free bus pass, free health care and in later years a free TV license. These things are all worth claiming because the money you save in terms of prescription costs, dental fees, optician fees and bus fares can be used for other things, including paying off your debts. Again there is absolutely no shame in claiming what you are entitled to and over the course of a year you can save several hundred pounds in healthcare costs alone.

Struggling With Debt

There has been a huge increase in the number of families relying on food banks this winter to keep them afloat during the cold months. It’s a difficult position to be in when you find yourself choosing between turning on the heating or stocking up the fridge.

Families that are struggling with debts will find their financial position even tougher, because they don’t only have to contend with soaring food and fuel prices, but huge chunks of income are eaten away by debt repayments every single month.

People that are unable to cover their usual household expenses, including shopping and heating, because of unmanageable debt, need to take action. The longer financial difficulties are ignored, the harder the problem becomes to resolve, so it’s imperative that people start as soon as possible. Facing up to debt worries and financial problems can be really scary – to the point that some would prefer to shuffle them under the carpet. It’s important that families in this sort of trouble remember that there are plenty of debt solutions out there that could help the strain on their income.

With food and heating devouring through more and more income each month, there is bound to be less cash leftover to put towards debt repayments. Although the demanding letters can often be frightening, people with debt need to prioritise their spending and ensure that the family are kept healthy and warm.

Families struggling with debt in Scotland are able to access a number of debt solutions that can cut the cost of debt repayments. One of the most popular schemes is a Trust Deed, which is an alternative to bankruptcy.

If debts are reaching unmanageable levels, above £10,000 and to multiple creditors, you may be able to enter into a trust deed. This debt solution was introduced by the Scottish Government just a few years ago to help people in difficult financial situations.

You will need to work with an insolvency practitioner (IP) to work how much you can afford to repay each month, once your household expenses have been accounted for. Your IP will apply for a trust deed on your behalf; they will submit a proposal to your creditors which details how much you are able to repay.

The trust deed will usually last for three years and as long as you have kept up to date with your repayments, any remaining debt will be written off.

Effective Debt Management Advice

Troubling situation

Although many financially indebted consumers do not look forward to seeking out professional financial consultants on eradicating their financial dilemma, there are limited alternatives for their consideration if their debt level has escalated to an uncontrollable volume.

Consumers in debt usually run away from the facts and belie themselves that they can work out their financial problems personally. Embarrassment is the main factor of seeking professional financial assistance; ego is another. However, the sooner the financially troubled consumer seeks the assistance of professional financial experts, the faster they can be eased of their embarrassment and financial burden.

When a consumer gets into debt that is running out of control, it is crucial to seek professional financial assistance as the situation has gone beyond a personal control. Proper financial and legal knowledge, skills and actions must be undertaken as quickly as possible to keep the debt situation in good control.

Professional sources

The market has plenty of professional financial consultants who are well versed and qualified on debt management. Their services include providing the best advice to ease the financially troubled consumer of the current financial circumstances as best as possible.

These financial professionals have the right knowledge and tools to guide the consumer out of a debt situation without getting the heat from creditors and the law. The debt management advice is always the best to suit the respective consumer’s financial situation without too much generalization. The recommended resolution steps of action would be in accordance to the state law that would offer protection to the consumer from creditors’ harassment.

There would be confidentiality in the debt control advice offered; the best solution is worked out with the consumer’s understanding and consent to resolve their debt issues.

There would also be an assigned debt advisor who is trained and qualified to walk through the whole debt management journey with the consumer until the latter is put back on their feet.

Negotiating Debt Settlement Options

Understanding Your Financial Situation

When you seek help from a credit company, the manager will initially fetch the complete profile of your finances. You will have to make sure that the credit company and you are in sync with each other. It should not happen that the credit company comes across more debts related to you when they search through your profile.

You can make a file containing all the bills for the last three months including the interest rates, service charges and the balance that remains after all such deductions take place. If you take all these papers and documents with you to your first meeting, it will save a lot of time and you’ll be spared with more time.

Get Someone to Speak on Your Behalf

When you are considering a debt negotiation, it will be better if you could hire a debt attorney from your end. A debt attorney will consolidate and make all preparations beforehand that need to be presented to the credit companies.

Get Someone on Your Side

When you are preparing for debt negotiation, you will want to get a debt attorney on your side. An experienced debt attorney will know exactly what information the credit companies will want to see, what kind of concessions the credit companies would be willing to make and how to talk to a credit company representative to get the results you want.

A debt settlement is a sensitive negotiation that is taking place between you and the credit company. In this settlement, you ask the credit company to lower the payment rates and come down to a level where you can pay off the debts that you owe. Therefore, a debt settlement firm or an experienced attorney would help you negotiate the terms.

Consequences of Debt Settlement

  • Proof for Debt Settlement: Before you go ahead and relax about your debt settlement, you should have a hard copy from the creditor that states that all your debt has been cleared off. You should obtain an authorized and certified copy that says you have been let off and that your creditor will no longer bother you.
  • Effects on Credit History: Damage of your credit history goes hand in hand when you choose for a debt settlement. If you miss payments on purpose, your credit history will take a hit. Even if you have cleared off all your debts, it will always be called a “settlement” and not considered “paid off.” Though, debt settlement does not leave a scar like filing for bankruptcy does; however, it does sent a message to the creditors you might contact in the future that you had chosen to settle your debts instead of paying them off. You credibility as a borrower is hit here.
  • Opening up new account might help in improving your credit history. However, the accounts that you had put your name down during debt settlement are not accounted here. Those accounts will be considered as closed once you settle your debts. You will have to open some new accounts, and maintain them. For instance, you can opt for credit card accounts from time to time; but, make sure that you clear off the payments before the date of billing.

There are some additional debts that you might have opted for, like – student load, mortgage and even medical bills. However, you should try and pay them on time and on a regular basis till they are paid off. There will be some debts that will be disregarded during debt settlement. But, student loans, alimony and even child support does not come under debt settlement.

Ways To Deal With Debt During Tough Times

If you’re having debt problems

If you are experiencing problems with debt, there are things you can do to ensure yourself of a better financial future. Here are six things you could do to brighten your financial picture regardless of the state of the economy. But do understand that doing a better job of managing debt requires you to change how you think about spending your money and must be open to utilizing the professional and educational resources that are available.

Be ready to make sacrifices

The first and probably most essential step if you’re stressed by credit card debt is to determine where you can make spending cuts. You will have to look at what luxuries you could give up and your decision-making process, especially if you feel you’ve been making bad decisions.

Learn how to do things differently

You’ve probably heard the old saying, “if you keep doing what you’re doing, you’ll keep getting what you’re getting”. You will need to learn how to change your habits to get out of debt, which means changing the way you approach your finances. You must stop overspending as you did in the past

Take advantage of the financial tools now available

There are a number of great money management tools available either as apps you can use on your smart phone or tablet or as software for your computer. As an example of these the very popular Mint.com could help you develop a budget, keep track of your spending, monitor your investments and will even send you an alert if it finds a financial product that’s better or cheaper than one you’re currently using. Websites such as InCharge.org offer a myriad of educational materials and interactive tools including home budgeting calculators and even financial games where you can have fun while you’re learning to make better decisions.

Always pay on time

You’ve undoubtedly heard many times how important it is to pay on time but this cannot be over stated. It is definitely in the top five things you can do to have a better financial future. If you’re constantly paying over-limit charges and late fees, you’re spending money you shouldn’t be spending.

Do it now

How many times have you decided to do something about your finances but then just kept putting it off and did nothing? You need to create a budget and a spending plan today and start following them. Otherwise, you’ll just continue spending too much and never get your debt under control.

Aftermath of Debt Settlement

Definitely, the future will look a whole lot better now. That is for certain. The elimination of debt is one thing that you will really enjoy. But before you can wallow in that relief, the work is not yet over.

Before you go out and celebrate, you need to make sure you have in your hands the black and white copy from the creditor that certifies your debt had been written off. Get a written and authenticated copy that certifies your debts had been forgiven and you should no longer be bothered by your creditor for it. Some people receive collection notices even after a debt had been settled. This is the proof that you will show them so they will no longer communicate with you about this particular debt.

Debt settlement also damages your credit history. Since it requires you to miss payments deliberately, your credit score will definitely take a hit. Not only that, even after you have paid off your debts, it will be labeled as “settled” and not paid off. While that is not as damaging as a bankruptcy taint on your credit history, it still sends a message to future lenders that at one point, you had to settle your debts. It shows your credibility as a borrower.

There is nothing that you can do about that but after the settlement, it is a must that you work on your credit score to increase it. Next to bankruptcy, this is the debt relief program that has the most impact on your score. To help increase this rating, you need to keep some accounts open. Of course, this does not include the accounts that you enrolled in a debt settlement program. That will certainly be closed. But if you have other credit accounts, keep them open. Use the open credit card accounts occasionally but make sure that you have the cash on hand to pay for it in full once the billing statement arrives.

If you have current debts that has yet to be settled, like your mortgage, medical bill or student loan, you should try to pay for them regularly. Since you have had a few debts written off through debt settlement, you should be able to finance the remaining with more funds. You may have had to miss payments as you were going through the debt settlement program for the other credits that you owe. Now is the time to get yourself back on track.

It will also help your case to open a savings account. Since your credit score basically shouts how lousy you are with money, it is time to reverse that by proving that you have mended your ways. And what is the best way to show people you are financially capable and responsible now? By building up your savings. When you have a sizable amount on your savings account, your credit score will reflect that as well.

Debt Collection Letter

Long-standing debt is a nuisance for both creditor and debtor. It can damage their professional relationship and trust especially when the one who owes the money is not cooperating or communicating at all. Sending out a letter to the debtor is one way to call his attention and this can be done even before the assistance of a collections agency.

Mindful creditors are smart when it comes to letters requiring action and response from their debtors. One good example is a prepared reminder from a credit card company or a service provider clearly stating their intentions of hiring a collections agency if due payments are not forwarded within a specific period. Some creditors give at least thirty days for their delinquent clients to pay off their dues in full; while others may have a leeway of up to ninety days.

In a perfect word, no one wants to hire a collections agency to do the cold calling and drafting of debt collection letters. But these agencies can also be the last resort if all attempts to communicate with your debtor fail. And of course, a professional collections company will abide by the guidelines that protect customers – ensuring no one is abused or taken advantage during the process.

For business owners and creditors, it is important to lay out your conditions based on the guidelines and rights that protect your debtors. Make sure to draft a clear and concise letter stating the urgency of the problem and the possible solutions and options, so your client can pay off whatever is due. List down the exact amounts of payments that are due – ensuring the descriptions are there as well, to remind your debtors what those payments are for.

Remember that your goal is to communicate with your debtors in order for them to cooperate with you. If they need time or if they set certain conditions that will allow them to pay off without additional problems, it is best to discuss it with them instead of bombarding right away with a letter from a credit and collections company.

Ensure That Debt Settlement Will Work

There are reports showing that an estimate of 10% of those enrolling in a debt settlement program actually achieve what they set out to do – get a significant reduction in their debts, pay it off completely and have the rest forgiven. The other 90% either went out to complete payments on their own or give up entirely and file for bankruptcy. Some of them got themselves even further into debt than when they started.

Most of you reading this may be slightly discouraged at the figures and while it is a normal reaction, you need to know a few things. The first is debt settlement does work. We have the 10% to prove that. It may be a small statistic but it goes to show that there is nothing wrong with the concept.

So what happened to the 90%? Or probably the right question is, what did the 10% do to make this debt relief work for them?

Most of the people who think so negatively of debt settlement are usually those who did not succeed at it. For one, most of them complain of the service fee that debt relief companies charge.

First and foremost, they should have read the laws stated under the Telemarketing Sales Rule or TSR. It is stated there that no debt relief company is allowed to charge an upfront fee. Secondly, they are not allowed to ask for fees unless there is proof that they have successfully negotiated for a reduced debt with your creditor or collector. If you the company you are talking to now are asking for fees before results are shown, you should switch companies.

If the service fee is bothering you, remember that debt settlement is something that you can do on your own. While it can be stressful on your part, that is the price you pay for skipping on the professional fee.

Another complaint that we receive is the fact that people find themselves deep in debt once more. If you want to make sure that debt settlement will work for you, go to the root cause of the problem. This is actually a must for any type of debt relief that you will take on. Don’t concentrate on just paying off your debt. You need to create a budget and spending plan to make sure that you will not land in the same position again.

Debt settlement can provide real savings and benefits to debtors. However, it is not the only solution. Another problem that we can identify as to why people cannot find debt relief through this program is because of their attitude towards it. There is no magic solution wherein you do not pay for your debts at all – except for bankruptcy of course but you will find that the repercussions will echo for the next 10 years.

Any form of debt relief has pros and cons and the same is true for debt settlement. While there are creditors who accept debt reduction, it is not a guarantee. That is why the law states that the debt relief company should never ask for fees unless the debtor is shown proof of a successful settlement. You need to be patient if you get “NO” for an answer.

What we can assure you is this: debt settlement is a legal way of achieving debt relief but only for those who are in a real financial crisis and who are willing to address the root cause of their debts. Ultimately, your success will lie in how much you know about it. This may be a disconcerting and frustrating time in your life but you need to take a grip of yourself and get your wits together. Research and approach the right people/company who can truly help you.

Stop the Debt Cycle

The debt cycle begins with word play. If lenders offered customers the opportunity to owe them money, most would decline and run for the hills. Instead, the word credit is used to trick the mind into believing your not entering into an employment agreement. The term debt free bread means money owned not owed which everyone should want. When you acquire credit you begin to work for someone else instead of yourself. For example, most people aspire to obtain a mortgage which usually carries a 30 year sentence. Luckily, my family’s attempt to do the same changed our relationship with money forever.

After applying for a mortgage with Wells Fargo, we discovered we couldn’t get pre-approved without extra measures like a manual underwriting complete with letters of explanation. The feeling of being rejected was a much needed wake-up call. We realized our finances weren’t healthy, managing debt is idiotic, and paying minimum payments on time wasn’t enough. That day changed my life because it began my quest to learn more about money, credit, and buying a house.

As a result, we’re now on a debt free journey and never want to acquire credit i.e. debt ever again. So far, my husband and I have managed to payoff $9318.00 of student loan debt in just 7 months. We didn’t receive a windfall of money. Nor are we a family with two incomes or no children. In fact, my husband is a hardworking blue collar man averaging between $45,000 and $65,000 a year. Meanwhile, I stay at home with our two beautiful boys with special needs. I’d like to share the principals that allowed us to change our relationship with money. Below I’ve listed some questions to ask yourself to stop the cycle of unconscious spending.

Imagining leads to action which creates a readiness and desire to do something today. Whereas, dreaming exist in the walls of your mind, only coming to fruition at an unknown day and hour. Are you dreaming or imagining a debt free life? Your answer makes all the difference. Its well understood that all actions begin with a thought. So, decide to imagine a debt free future, then begin to build.

First, you need to understand why being debt free is important to you. If your reasons aren’t clear or easily forgotten when temptation arises, your debt free journey will come to a screeching halt. In order to increase your chances of success you need to remember why your relationship with money must change.

Start by getting small pieces of paper and a pen. If you have a significant other, they should do the same. Begin to write down all the reasons you need and want to become debt free. Then place the notes in a clear jar labeled, “Debt Free Dreams.” Everyday remind yourself why you’ve chosen a road rarely traveled by pulling out a note as soon as you wake-up.

This step is important because most of us are in debt due to unconscious spending. Allow your own thoughts cemented on paper to remind you of your financial goals. When you’re tempted to cheat yourself (and you will be tempted) the jar will allow you to draw strength from your own words. You can write similar thoughts in a small memo pad that can be carried in your purse or pocket while on the go.