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Debt

Debt Management Companies

This makes the first logical question that someone dealing with this issue would ask and it would be something along the lines of why they should in fact pay for a service they can get for free? Obviously the free choice on the surface appears to be the way to go and it then simply becomes a matter of locating the particular charity that one will be working with.

The fact of the matter is though that in the UK there are still over four hundred of these debt management companies doing business for profit. This fact should raise the next question which should be how are they maintaining their business when others are giving away the service for nothing? There has to be some sort of viable explanation explaining this. Exactly what are the specific differences that separate these two different potential options?

Let’s try to take a look at both and see if the answer to this question can be discovered. The charity debt management companies offer online at no charge their anonymous advice. The counselling they offer is truly impartial. In many cases for those that feel they require even additional assistance there is often a telephone number provided which they can call. One of the problems with this is that anytime a call is made to that number provided the odds are in favour of the fact that it will be a different person the one calling will be speaking with.

Dealing with a different person every time one calls for further advice and direction complicates the efforts to gain debt negotiation and management resolutions. This is probably the biggest differential between the commercial debt management company and the non-profit charity. The services one is actually paying for are more personalised for exactly that reason. One is assigned to a specific debt counsellor and unless there is some sort of conflict preventing them from getting along well they will stay exclusively with that same person as they work through the entire process.

Although most of the people working for the non-profit charities are well qualified and caring individuals, the fact of the matter is there are also some who lack total knowledge of how to properly deal with the issues. This is not something that happens regularly but it certainly is a consideration to be reckoned with.

It is vital that the final plan arrived at be one that all involved are comfortable working with and in total agreement on continuing. These matters are going to go on for some time and it is important one is totally at ease with that which will eventually lead to a positive conclusion. It is a big decision and only you can make it, as choosing a debt management company can make or break your financial future.

Debt Settlement Companies

Now, how do the debt settlement companies work? These companies work in close collaboration with the banks and financial institutions. Once you approach them they will let you know about their debt settlement help services, which starts with debt counseling. If you are not in favor of this then they go for negotiation with the banks where you have a loan or own a credit card. You may be paying the credit card bills for a quite a long time now but your debt has not decreased due to the high rate of interest. In all such scenario, the amount of time you are paying the due is taken into consideration. If you are paying the card dues for more than 10 years you may possibly get a discount of 50 t0 60 percent of the amount that is remaining and will be able to pay the due within 12 to 60 months in easy EMI and low interest rates.

When choosing a debt settlement company the most important thing is to check for the fees that they are offering. There are many companies that will promise you a service but will fail to deliver. It is best to choose a company that has good experience in this field or gives you a service guarantee.

Debt. This four-letter word can ruin your peace of mind when it becomes bad and takes away all your income and comfort. Debt can arise from many situations such as a divorce in the family, medical expenses, or a legal problem in the family. It can also result from over spending using the credit cards. But when it starts hampering your life, you look for debt relief help, which is the only way out when you want to lead your normal life again.

Debt relief can be attained in many ways from debt consolidation, debt negotiation and reduction to bankruptcy. There are many agencies that will tell you to go for bankruptcy but you need to remember that this is the last option that you may take. Though it may seem the easiest option, the frustration and humiliation that it may bring is not possible for everyone to bear. The good debt relief companies will rather make you go for debt consolidation and credit card debt negotiation.

The debt consolidation measure taken by debt relief companies includes consolidating the debt into one single account with low rate of interest or asking you to take a loan that can repay all the debts. If that does not help you get relief of the debts then you can even go for credit card debt negotiation that can even save 50 percent of the money that you needed to pay to the credit card companies. This is possible only when you have paid the credit card companies for quite a lot of time. You need to pay the remaining due within maximum 60 months in easy installments. The last option is bankruptcy but for that, there are certain processes to follow. The fee company charges depend on the service and you may need to pay them only when you get the benefit.

Negative Aspects of Consolidating Debt

Finding a debt consolidator company right for you

When you are in the market of consolidating your debt, the number of companies available is not the problem that you have to worry about. Finding the right consolidator for you is what will become the major task.

It will be in your best interest if you compare and contrast multiple companies before making a final decision. The interest rates in which you will have to pay can vary depending on the debt consolidator. What you want is the lowest interest rate possible. If you rush too soon you may miss out on a great opportunity to not only pay back your debt, but save money in the long run.

High interest Rates Can Increase

Unfortunately, it seems that high interest rates are justification of the risk of helping your business. However false this assumption may be, if you miss a payment and do not consult with your debt company or agent specifically to set an alternative payment date, the interest rates could skyrocket even more. This is not a situation you want to be in as you are trying to pay off debt, so make sure that your monthly payments are manageable. In the worse case scenario, call your company and inform them of the situation at the moment.

Possibility of spending more money than you should

Once you begin to re-build your credit after the consolidated debt the improvements in your score will occur. A top-notch credit score may seem like a number you can get more credit with, but it is important you do not get too comfortable. If you end up spending more money than you are putting towards your debt, then you will simply set yourself up for disaster financially and in regards to your credit score.

Debt Reduction Plan

Many people imagine that they could solve their financial problems if they only made more money. They wish for a raise or a better job and believe that would help them overcome issues they are facing. The truth is that they would likely end up with more issues if they had more money. The behavior of the spender needs to change rather than the income stream that they generate. Making more money is good if you use that cash to pay off existing credit, but it does not help if you continue to charge and spend beyond your means.

The first step in reduction plan is to track all of your consumer debt. This includes all credit cards, student loans and any vehicle loans. You do not need to include a home mortgage at this phase. After you have accounted for the source of your different debts, arrange them from smallest to largest. The trick is to begin paying off the smallest ones first while continuing to make the minimum payments on your other debts. You must attack the smallest debt as aggressively as possible. After that debt has been paid off, you can take the money you were throwing towards that debt and apply it to the next debt on your list. Motivation comes from seeing the smaller debts eliminated and this motivation is more important than any interest rates that may be involved.

An effective debt reduction plan must work to change the behavior of the spender. The snowball method of debt reduction works because it plays upon human nature. We naturally like to build upon our successes and seeing debts eliminated provides the needed incentive to keep going. Practitioners of this debt reduction plan will find themselves debt free and will gain the needed skills to remain debt free for the remainder of their financial lives.

Become a Corporate Authorised Representative

Organisations or companies holding a license (AFSL) are able to legally provide the full range of financial services, including providing advice on investments and financial products such as savings plans, pensions, RSA products and insurance or selling products directly to clients. They are also permitted to act as investment managers and can look after a portfolio of investments for clients and engage in dealing activities. They can invest and sell stocks, shares and commodities on behalf of their clients, alter financial products or underwrite securities and interests. Many also deal in foreign exchange contracts, securities and off-market Over-the-Counter (OTC) derivatives.

Since it is possible to sub-authorise individuals, some of these companies offer a programme under which they agree to train and appoint a corporate authorised representative under the terms of their license, allowing individuals to become accredited by the Australian Securities & Investments Commission (RG146) and start to offer some or all of the financial services provided by the licensee.

There are a number of benefits to talking this route to becoming accredited and fulfilling ASIC obligations. If you sign a contract to act as a corporate authorised representative and provide financial services under its license, the company will usually provide a full training program to teach you about the financial products, the benefits and drawbacks of each and will provide you with the knowledge you will need to be able to deal successfully.

Many even provide dedicated one on one support during training to make becoming accredited as easy as possible. It is worthwhile looking for a company that does offer this service as it makes it far easier if you ever need some assistance, and being trained one on one means you are able to take things at your own pace. This can be especially important when learning the ins and outs of some of the more complex products such as derivatives. You may also be able to carry on with training after becoming accredited to help you provide a better service to clients or develop your own business. Many companies offer a range of optional continuing professional development training sessions to its corporate authorised representatives, making it much easier than going it alone.

Eliminate Debt Forever

Most debts can be divided into good or bad debt, depending on whether it is tax deductible or not. You might decide to start with your bad debts before tackling the good debts, however you will eventually want to pay off all your debts, good as well as bad. True wealth comes from your net worth and the assets you own that bring you an income. Financial independence comes from making enough money from your assets to exceed your expenses. Remember, DEBT IS NOT WEALTH. Debt is debt and will eventually have to be repaid.

Firstly, work out what extra money you can put aside to add to your debt repayments. Any extra amount you can add to your repayments will help reduce the debts so much quicker.

Next, compile a list of all your debts. Include your mortgage, car loans, credit cards, store cards, loans from friends and family, school fees, anything that you owe basically.

Write them on a piece of paper down the page or put them into a spread sheet.

  1. Write down what it is, eg. home loan, credit card, car loan store card etc.;
  2. List the remaining balance owed (what is left to repay, not the initial loan amount, so unless you haven’t made any payments yet, this should be less than the value of the total loan);
  3. Then put the minimum monthly payment;
  4. You can also put in the interest rate for your information.

You should have four columns. You will need a fifth column. This is for your debt ratio calculations on each loan to work out your order of repayment.

Taking the first debt, divide your monthly payment into your debt balance. This should give you a number. So for example, if you have a $2,000 loan, and your monthly repayments are $100, the debt ratio is 20.

$2000 รท $100 = 20

Now do this for all your loans to give you your debt ratio number for each loan.

Rewrite your list or rearrange your spread sheet in order of the loan with the lowest debt ratio to the highest debt ratio.

This is the order in which the debts will be repaid. What’s important to note here is that the earlier debts to pay off are not necessarily the debts with the highest interest rates. The ratio lists the debts in the order that have the most impact on your cash flow.

Add the extra money calculated earlier to the first debt payments on the list, while still making the minimum monthly repayments on all the other debts. Keep paying off the number one debt on your list, with the extra payment until this one is paid off.

Now, if this was a credit card or store card debt, this does NOT mean that this is now available for spending again. Remember the goal here is to eliminate all your debts, not incur new ones.

In addition, this money is not available for you to spend yet. We’re on the path to financial independence remember, so we will have some short term pain for long term gain.

The entire amount that was used to pay down the first item is now available to be put into the second debt on your debt ratio list AS WELL AS the minimum monthly payment for this debt.

When the second item on the list has been repaid, the entire amount is now used to pay off the third item on the list.

So now the repayment amount is the minimum monthly payment for this debt PLUS the minimum monthly payment for the previous debts PLUS the extra amount you were able to put aside in a bid to actively reduce your debt.

You will find that because you are making extra payments, your repayment time is drastically reduced. You might even find that a debt further down the list which you haven’t gotten to yet, actually gets paid out before you have a chance to get to it, as you are still making the minimum monthly repayments into this debt. If this happens, add this minimum payment to your other debts.

Because you were already making minimum monthly payments to the other loans with just a bit extra into the current loan, you’ll find you don’t even miss the amounts you are directing into the next debt on your ratio list, as you were already making this payment anyway. Now it’s being put to a good purpose in reducing the amount of “dead money” interest you are paying.

Keep doing this until all your debts are repaid. Now, and this is very important, DON’T GET INTO FURTHER DEBT. Keep one of you credit cards if you must, and pay it off IN FULL at the end of each cycle.

Since you didn’t miss the money when it was being used for debt reduction, you can now redirect this “spare” money into your savings and investments.

Debt Of A Nation

In two distinct periods in our history has a sitting President tried to empower the public while reigning in the Nations debt. One during a time of the greatest internal struggle for national preservation namely the Civil War and another were we were headed into one of the greatest challenges that perplexed a nation primarily the Vietnam conflict. In 1861 President Lincoln needed money to continue to fund the Civil War. Bankers at the time were charging over 28% interest. Rather than pay up that high interest Lincoln pressed congress to authorize the Treasury Department to print full legal tender treasury notes [this is what the Constitution originally implied with no interest attached] to pay for the costs incurred form the war. When congress passed this legislation Lincoln stated ” We gave the people of this republic the greatest blessing they ever had. Their own paper money to pay their won debts.” Thus Greenbacks became the name this currency was called. To Lincoln’s credit the passage of the Merrill Tariff Revenue Act in 1861 along with establishment of the first ever income tax, a flat 3% on incomes above $800 [today equates to $19,000] all increased financial revenue to fund the Civil War.

Lincoln’s troubles began almost from the time he took office. By 1862 congress repealed the flat tax and instead established what was to become the basis of the complex tax system that we have today. A more progressive tax structure putting more of a burden on the less wealthy. Another set back was the National Bank Act of 1862. This act let banks become national in that they are charted by the Federal Government and authorized to issue interest bearing notes secured by Government bonds similar to what Alexander Hamilton did after the Revolutionary War in the creation of the First Bank of America. Passage of this bill ensured a market for the Federal Debt since the new National Banks would now be required to buy those bonds.

Had the National Bank Act failed to pass Congress Lincoln stressed that “Money is a creature of Law and the original issue should be maintained by the exclusive monopoly of national government. the Government should stand behind it’s currency, credit, and bank deposits of this nation. No individual should suffer a loss of money through depreciation or inflated currency or bank bankruptcy;” would have benefited the American public in a time of great uncertainty. Look what happened in 2008 with the Federal Reserve Bank running the show. Millions of our citizens suffered great financial loss. All the Federal Reserve does is loan money to the government at interest. What drives up our national debt higher are privately owned banks, the Federal Reserve, and a nation that continues to be engaged in armed conflicts anywhere in the world.

The London Times in 1863 who favored the Bank of England’s monetary policies wrote ” If that mischievous financial policy, which had it’s origin the North American Republic, should become indurate down to a fixture, then that Government will furnish it’s own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on it’s commerce. It will become prosperous beyond precedent in the history of the civilized government of the world. The brains and the wealth of all the countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.” The wealth of the United States is in the hands of the private bankers not the American public. It is no wonder that the English were trying to help the Confederacy. When Lincoln issued the Emancipation Proclamation in 1863 the British populace who were opposed to slavery quietly withdrew their support of the Confederacy while Russia grew more supportive of the Union cause which helped the North and Lincoln preserve the Union.

In repealing the greenback law congress passed the National Bank Act in it’s place. All national banks were to be privately owned and the national bank notes they issued were to be interest bearing. The National Bank Act also provided that the greenbacks be returned as soon as possible as they came back in the payment of taxes. A hundred years later the United States Treasury Department computed the amount of interest that would have been paid if 400 million dollars would have been borrowed at interest instead of being issued by the Treasury Department as Abraham Lincoln initially did. Because of the greenback resolution the United States Government saved 4 billion dollars in interest. President Lincoln followed the exact interpretation of the United States Constitution by the government creating it’s own money interest free.

More recent President Kennedy in 1963 almost one hundred years after Lincoln undertook the gauntlet of reducing our national debt again following the Constitution issued Executive order 11110. This order circumvents the Federal Reserve Bank an makes possible the Federal Government not the banks print interest free money. In 1963 the Treasury Department under President Kennedy issued $4,292,893,825 interest free money. What is so startling is that not long after Kennedy’s death all the United States notes, which Kennedy had issued, were called out of circulation.

Info of Debt Counseling

The law states that clients who are no longer able to meet their debt obligations should choose debt counselling before any legal actions are filed against them. Also, see to it that you learn about the benefits and drawbacks of this service.

Once you choose debt counselling, your creditors will be notified by your debt counselor. This is an advantage on your part since you will be able to show your creditors that you are sincere about changing as well as serious about your predicament. Also, your debt counselor will help you organize your finances by merging all your existing loans into a single file. This will allow you to make only a single repayment per month. Your creditors, in turn, will send your payment to your creditors.

Your repayments are going to be restructured for any outstanding debts; but your debt counselor will still set aside a fair amount for your food, transport, and other necessities. Until you are under debt review, you will not be subjected to legal charges for non-repayment of debt. In addition, there is a good chance that your credit ratings will improve once you choose debt counselling.

This service also typically involves engaging in negotiations with creditors to set up a debt management plan for the client. This plan may help you have reduced interest rates, fees, and payments. Moreover, your debt counselor will help you avoid stressful situations such as having to deal with your creditors. Instead of answering calls or sending payments yourself, your debt counselor will do these things for you. He will even be the one to make clarifications with your creditors.

Keep in mind that although debt counselling offers plenty of benefits, it also has several drawbacks. Fees, for instance, are inevitable. Even if you choose a non-profit company, you will still have to pay a fee. Nothing is completely free since the company still needs to pay their employees, get legal requirements done, and file paperwork to stay in business. Also, you have to be very careful when choosing a debt counselling company. Choose one that will have your best interest at heart.

Many debt counseling companies are either funded by creditors or are in close ties with creditors; and even though your credit status can improve in the future, being under debt review can also hurt your credit score. Your credit score may go down because your creditors will tell the credit bureaus that a debt counsellor is handling your trade lines. You will also not be able to use your credit card and your accounts will be frozen. You will not even be allowed to apply for new credit or credit extension.

Grabbing Success From Debt

When I got my first credit card, I was so excited that I wanted to pay everything that I need through it though I have cash. I seemed to be able to handle things at first but after few months I lost control of my spending. I have been spending beyond my earnings. Since I was very busy during those days, I was not able to check my credit score. It was so bad that after about a year my credit score has gone low.

I started to hold things up. I began to live a very simple life trying not to spend a penny a day but it still didn’t work. I needed to ask for help. I started to look for solutions online and it seemed that I get no answers from forums and other group discussions until I decided to search for possible credit counselor or credit counseling service in my area. I was so happy that they were able to help me even though I was not talking to them in person. They helped me through the process online and everything seemed to work like magic.

My credit counselors worked with me in creating a working debt management plan and they also negotiated with the creditors to ensure that I could really pay on time and that I would not be paying the compounded rate that I was supposed to pay. The main thing that must be checked out when looking for a reliable credit counselor is to look for some companies or organizations that have good reviews and have been known for the services that they offer. They may be a bit expensive at times but they are worth the price.

Consequently, everything that failed should be a lesson learned and never go back to the same experience again. Experiences of other people can be a good guiding lesson that we must follow. Had I read about handling credit cards wisely before, I may not fall into this problem. But anyhow, I really learned a lot from it and I wanted to share the same experience that more people may avoid what had happened to me. Furthermore, I would just like to say that seeking help from credit counseling service really works most of the time!