4 Benefits of Debt Consolidation

By: Dave Galahad

Debt consolidation is the process of combining all your monthly debt payments into one manageable monthly payment. So many people just keep doing the same thing and end up putting themselves farther behind. There are at least four benefits well worth consideration when trying to decide the best way to get out of debt.

First and foremost, you need to be committed to what you are doing. For any debt plan to work, you first have to fully commit to avoid taking on any extra debt while you are trying to dig your way out of the current situation. Have you ever heard the expression "If you find yourself in a hole, stop digging"? If you're not committed, then any debt plan you enter into is doomed to failure which means the hole you are currently in will only get deeper. If you're ready to make that commitment and stick to it, then you're ready to be free of your bad debts, and put the money towards something else that will benefit you instead of your creditors. Read on.

In using this method, you pick a specific day of each month that you would like to make your payment. Part of the stress of carrying debt is remembering to pay everyone on time. Of course, when your payments are late, you incur late charges, over the limit charges, higher finance charges and your once low interest rate may skyrocket because you are now perceived as a higher risk. With a debt consolidation plan, you make only one debt payment per month, which is usually set up as an automatic draft from your bank account. Making it automatic is a great carefree way to make sure the funds get where they need to be on time.

This also brings welcome stress relief because you are condensing multiple debt payments into one manageable monthly payment. The great benefit here is now you don't have to remember multiple debt payments on different days throughout each month. As long as you make your one debt payment per month for the life of the plan, all is well. All you have to do is make sure there is money in the account when the monthly draft is made.

You may be able to lower your overall debt payment. Would you like to use the extra cash to be put back into your consolidation plan? Maybe you'd rather sock away the extra funds and begin a savings account or dedicate more money to your retirement plan. People who enter into debt consolidation plans usually have several high interest debts they are trying to overcome. Depending on the method of consolidation (professional help, consolidation loan, refinance, etc.) the repayment terms of your loan are set for a fixed period and the interest rate is considerably lower.

Perhaps the best benefit of debt consolidation is lowered interest. Here's another chance to use extra cash for something constructive. Whether you secure a debt consolidation loan, complete a cash-out refinance, or work with a not-for-profit agency that has established relationships with your creditors, paying less interest on your debt means more money stays in your pocket. Also, more of your hard earned income can go directly to the principal balance. This allows you to pay your debts quicker and with less interest charged over the life of the plan.


About Author
Dave Galahad is a freelance writer for ABCMoneySource.com on topics of banking, finance, investing, credit, savings, and debt.

Bankruptcy Tips And Helpful Alternatives

Copyright © 2005 Dean Shainin

Before you file bankruptcy, it is a good idea to look into other alternatives if at all possible. New bankruptcy laws make it more difficult to file than it used to be.

Why Has Filing For Bankruptcy Doubled?

From the period of 1994 to 2004, filing for bankruptcy has doubled. Bankruptcy filing has spun out of control with consumers being targeted with easy credit. This has become a major cause for bankruptcy cases.

New Bankruptcy Laws?

There is now a new law for bankruptcy that was passed called the “Bankruptcy Abuse Prevention and Consumer Protection Act”. People struggling to pay their credit debts are now going to have to deal with this new bankruptcy law.

Bankruptcy Can Stay On Your Credit Report For 10 Years

Filing for bankruptcy can be on your credit for up to a decade. It’s a good idea to look into alternatives for bankruptcy. Buying anything on credit can be a real challenge for many years after you file bankruptcy.

Alternatives To Filing Bankruptcy

Contacting creditors is an alternative to bankruptcy. Instead of filing for bankruptcy, you work out payment options with your creditors. In many cases they are very willing to work with you. It’s to their advantage to keep you as a customer. The creditors know the alternatives for bankruptcy will bring them more profits if you don’t file for bankruptcy.

Getting a debt consolidation loan is a good alternative for bankruptcy. Financial services can combine all your debts into one loan payment every month. A consolidation loan as an alternative for bankruptcy, can help pay off debts. For bankruptcy consolidation loans, you can shop online for the best terms and rates. Lenders are very competitive to earn your business online.

You may also consider a debt workout for bankruptcy alternatives. With a debt workout, an attorney contacts your creditors and makes arrangements. In most cases the monthly payments will be less than if the credit account was settled in full. For some cases they want the payment in full, but over a longer period of time than originally stated on the credit agreement.

Bankruptcy alternatives are a good idea to consider, before you rush off to file for bankruptcy. If you look into some of these alternatives, at least you will know you tried your best to avoid bankruptcy. Having bankruptcy on your credit report for 10 years can be a long time.

How To Find A Bankruptcy Lawyer?

If you have decided there is no alternative to filing bankrupty,you may be asking yourself, "how do I find a good bankruptcy lawyer? The best way to find a good bankruptcy lawyer is through referrals. Family members and friends who filed bankruptcy in the past can refer you to a good bankruptcy lawyer. The yellow pages in a phone book is another great place to find reputable bankruptcy lawyers. Another invaluable place to find a good bankruptcy lawyer and services in on the Internet. When you search for a lawyer, try to find a lawyer that deals with your type of bankruptcy. You can get free advice with the first meeting.

Is The Law Firms Bankruptcy Lawyer Experienced?

Find out if your type of bankruptcy case is right for the law firms lawyer. Has the bankruptcy lawyer handled similar cases in the past? Take time to look over the alternatives to bankruptcy with your lawyer. There may be a way out of bankruptcy. A good bankruptcy lawyer can give you free advice on what chapter bankruptcy you should file. Bankruptcy lawyers will have you fill out a bankruptcy evaluation to see what is right for your debt and financial situation. To save yourself from wasted time and frustration, discuss in detail, options available to you with your bankruptcy lawyer.

What Information Will I Need For A Bankruptcy Lawyer?

With your first visit, it’s important to bring everything you can on the first consultation. You will need a list of all the creditors and how much you owe for your bankruptcy lawyer to consider. This includes any insurance, medical bills, auto loans, taxes, student loans and any personal loans. Your bankruptcy lawyer can give you the advice you need with this important information. This will make the filing process easier if you do decide to file bankruptcy.

Dean Shainin offers online bankruptcy and debt advice. For more information, articles, news, tools and valuable resources on bankruptcy and debt solutions, visit this site: http://bankruptcy.deans-knowledgebase.com

Why It Has Become So Essential To Know Your Credit Score?

Written by Francis Mwendo


Your credit score like your reputation follows you around. This is more true if you are embarking on a new venture like moving to another town or starting a new business. What you have achieved in the past remains significant. There would be very few occasions when it would not matter.

You may not realize the importance of having a good credit history in the early years but be sure it will become extremely valuable at a later date. A good credit history will help you obtain loans at lower interests, get a better job, get help in renting an apartment, secure finance for white goods and even get great financial references when starting a new business.

You have to therefore keep track of your credit scores and to do this you must obtain a copy, either free or paid of your credit report and score. From the report you can read the contents and understand how it is affecting you.

Your credit score tells the lender what the chances of getting his money back from you would be. To understand this let's relate it to the rank your child would show on his report card. One glance and you would know the total number of students in the class and the number at which your child is placed. The determining factor here would be his performance in studies.

Similarly, the lender will have a good idea of how you manage your debt, your past record in the same and any defaults or issues you have had.

So just how is this score calculated? All related information like your income, credit history, employment details and the like are logged into a computer and a score is obtained. If you get a higher score, the lender knows that you are a good person to loan the money to i.e. you have a better credit risk. If the scores are lower then that spells trouble.

Your score can be lowered due to late payments, deferments, tax liens, delinquent accounts and similar issues. If you have settled the same, these issues continue to be mentioned on your report for up to seven years.

Some people may think if they cancel their credit cards their score will be bettered. This is not true. Your credit score actually shows how well you have managed your credit. The key is to keep one or two credit cards and manage that debt rather than having multiple cards and ending in a mess.

While credit scoring only puts you into a bracket, it is ultimately up to the lender to decide on the actual course of action. Based on your low score your request can be rejected. If you do get through, you may be offered the loan at a higher rate of interest.

As in any kind of lending, the lender takes a chance with his money, in that he may not get it back. As the borrower you get a provision that you otherwise could not afford. The rate of interest secures the risk for the lender and pays for the facility for the borrower.

Article Source: http://www.ArticleBlast.com

About The Author:
Francis Mwendo is an Internet consultant, publisher and marketer focusing on Debt/Loans items. To FIND cutting-edge products on Debt Consolidation Services, primarily, Payday Loans, and Student Loans Consolidation, -- VISIT THIS SITE

Understanding The Basic Concepts Of Debt

By Hazel Leong

Remember: Running away from your creditors is not the answer. It is not a solution, and may in fact lead you to bigger problems. If you are having trouble paying off your debts, address this immediately with your creditors.

By accelerating the payment structure on your loan, the life of the loan is reduced:
In a normal 30 year fixed rate loan situation, your monthly payment is applied towards principle and interest. It is amortized over the course of 30 years.

In national accounting debts are added according to those who are indebted. Household debt is the debt held by households. "National" or Public debt is the debt held by the various governmental institutions (federal government, states, cities ...). Business debt is the debt held by businesses.

For many Americans debt is an overwhelming problem, a stressor that can quickly take hold of ones life. When there are bills attached to house, boat, automobiles, college tuition, and daycare, its not hard to imagine that many folks can quickly be swept under the current of spending which can unexpectedly whirl into deep debt.

Understanding the basic concepts of debt

Reduce debts today for a better life! Budgeting is an important aspect of living and a person who knows how to budget will go a long way in this commercialized society. Budgeting has a lot to do with keeping the expenses less than the total income of the household. Those who are very good at budgeting can even come up with savings even if they have meager incomes. The problem sets in when a person fails to make an efficient financial plan and his expenses exceeds his earnings. When this happens, a person has no choice but to borrow money to make up for his financial deficiencies. Borrowing once or twice because of a mismanaged financial plan is normal but when borrowing becomes a regular thing then that can put a person in serious debt problems.

A person who borrows money from another is said to be in debt. The debts of a person can be minimal or it can reach up to millions depending on the credit limits of such person. Sometimes, a person who has assets but isn't liquid can use these assets to get cash. Under this term, the person can be indebted for an amount mess or more than his assets.

There are laws which provide that a person can never be forced to render services as payment for his debts. This is already called undue servitude which is prohibited by the laws of some countries. However, there are situations when the person who is in debt opts to settle his obligation by rendering his services. This can happen if a person is so talented in his craft like painting and he opts to pay for his debts by creating a painting of the creditor or the assignee of the creditor. Sometimes, a person can pay his debts gradually or on an installment basis.

When a person dies, the law has provided for a hierarchy of preferences in the payment of such debts. Of course, payment of taxes to the government will always come first. The second priority for debt payments includes funeral expenses of the deceased and the payment for the wages of people.

Most creditors want the money and will extend your time to repay the debt, since they do not want to go through the hassle that comes along with reporting you. Most creditors want their clients to return and believe that if they give you a chance you will repay your debt and open a new account. All of the debt that an individuals owes appears on a credit report. Credit repots are used by financial institutions when a loan has been requested.

The UK attitude toward debt has received a major shift over the past few years. Where once the UK was seen as a nation that held up thrift as being virtue and considered debt a vice, it has now changed to owing 1.3 trillion on mortgages, credit cards and other loans. Find out how long it will take to become debt free and how much you'll pay in interest by making the minimum monthly payments.

There are a number of different types of debt consolidation loans: home equity loan, line of credit, or second mortgage. Debt is really just a simple concept which provides that a person who borrowed something from another is duty bound to pay that debt. However, the concept of debt becomes more complicated with the introduction of other concepts like mortgage, interest rates and other charges. Interest makes most debts double or even triple in amount. More often, the interest rates due for a certain debt is even higher than the principal amount borrowed.

A person who wants to get credit can do so in the form of a loan. A loan can either be secured to unsecured. A secured loan means the debtor borrowed some money and supported by collateral or a security for the loan. The security or collateral can come in the form of a house and lot, a car or any asset of the debtor. An unsecured loan means otherwise.

Most creditors require a security before granting a loan because it gives them something to hold on to or to forfeit in case the debtor defaults in payment. When the debtor fails to pay the debt within the agreed time frame then the creditor can foreclose the security or the collateral. However, having an unsecured loan doesn't mean that the debtor can renege on his debts. When the debtor fails to pay his loans, the creditor can still run after him by filing a case in court. When this happens, the debtor who has no cash can sell some of his assets to pay for his outstanding loan.

Being in debt is common even for the rich and the famous, the only difference between them and the common people is that their debts can be in the millions since they have more assets to support their loan. Unsecured loans most often have higher interest rates to make up for the lack of security. Even third world countries are indebted to more developed countries. However, the debts of a country can go on forever because they keep on paying their loan but they also get new credits as their credit ratings go up.

It may be more convenient to make one payment rather than several. Or you can improve your cash flow in the short term by reducing monthly outgoings. But this may cost you more over time because you are paying the debt off over a longer period of time.

Interest rates for credit card debt consolidation loans through traditional lenders may be based on your credit score. If high, you are likely to get a credit card debt consolidation loan at a lower interest rate.

The prospects of managing financial obligations have just gotten worse, as Congress has passed legislation that will make bankruptcy filings more difficult than ever.

Debt Elimination tips shows how Millions of Americans are living on the edge of financial disaster surviving only on the hope of next week's paycheck. The average American is dying under a load of debt, with little or nothing building in the bank or in investments.

About the Author:
Debt is a hard thing to live with, reduce debts today!

Personal Budget Planning Tips

By Sarah Freeland

Your personal money management is the key to your financial success; your method of reaching your goals and dreams. No one likes the term budgeting, but without it, you won’t know if you are getting the most from your income. Everyone wants to pay all their bills on time. Successful debt and asset management is a source of pride and of good credit. All of us want good credit whether we use it or not. Unless you have unlimited funds to spend however you wish, you will need a personal budget to pay off debts. Budgeting your money can be a difficult process.

In order to create a household budget, you must include all your monthly and yearly bills. You must also include your spending money, savings goals, and retirement funding. It doesn’t matter how much money you make; it’s how you spend it. A personal or household budget will help you make payments on time, provided you follow the plan.

When you don’t follow a debt management program, your debt may overtake your income and then you are forced to make late payments on bills or no payments at all because you don’t have the money. You can’t just spend money and hope you have enough for your bills. You must spend within a budget.

You can prepare a budget by using budgeting software on your computer. The program will ask you the same questions that a personal finance advisor asks during a financial planning interview. The questions concern your expenses, your spending habits, and retirement goals. They may include tips on debt consolidation and reasonable cash flow. Or you can choose a financial planner to help you with your personal finance concerns.

For more on debt management and credit repair visit the resource center at DebtControlExperts.com. If you are in the market for a home equity loan, auto loan or mortgage, visit FundingMarketplace.com for financing options.