Archive for the ‘Debt Management’ Category

My life as Credit Card Debt Relief Agent

As a credit card debt relief agent I sometimes wonder what I would do if I were in financial trouble or one of my loved ones. What would I tell them? How would I guide them through the process? If I had to tell them to do it themselves this is how it would look:

First Things First

First I would help them take an inventory of their financial situation, and let them know how much easier their life would be without a heavy debt load. If they could not make the minimum payments on their bills I would tell them to settle some of the credit card debt themselves and to try to avoid bankruptcy as much as they can.

Settle the Highest Interest Rates First

Then they should settle their debt with the highest interest rates first. This would really help their monthly budget. If you cannot pay extra on the high interest debt I would tell them to get in contact with their creditors and try and negotiate a reduction.

Step by Step

I would have them:

Step #1 – Arrange the debts in order of the one with the most priority.
Step #2 – Then, calculate all possible means of income.
Step #3 – Then assess how much we can afford to pay off each month
Step #4 – Call all the creditors and check to see if any have been sent to a collection agency.
Step #5 – Any debt that has been sent to a collection agency will need to be validated first before payment could start.

Let the Debt Negotiations Begin

Then we would begin to negotiate with the creditors by try to get the interest rates reduce. This would lower the balance on the debt considerably. Next the late fees would have to be dealt with. Both of these are roughly 45% of most delinquent debt.

Transfer Balances

If there are many credit cards with low balances I would consolidate them by transferring balances. Making sure I transferred them to the card with the lowest interest rate.

Watch For Low Intro Rates

But, before any transfers I would make sure the low rate is not just an introductory rate. We would also not cancel any credit card because that would alert the feds that something fishy was going on.

One Step at a Time Aunt Jane

Now it is time to get those finances organized. We would do this by a little self debt management. So Aunt Jane remembers these steps:

• Find out how much you owe.
• Get the outstanding balances of unsecured debt.
• Make a list of all income
• Make a monthly budget
• Find out how much you can pay each month.
• Decide who to pay first. (High interest debt first)
• Make minimum payment on all debt except the targeted debt pay extra on those.
• While paying of the targeted debt do not stop paying minimums on other debt.
• When the targeted debt is paid for of aim at the next target
• Repeat steps until all debts are paid off.

Tags: Credit Card Debt, Debt Management
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Top 10 Tips to Avoid Bankruptcy

Bankruptcy is never the first choice of any individual or company who is facing a financial crisis. However, every year thousands of individuals are faced with this choice of filing for bankruptcy due to the protection it gives them to reorganize their lives and businesses. This may sound good on the face of it, but in reality, filing for bankruptcy severely restricts your purchasing power, as individuals must make stringent changes to get out of debt. In addition, filing for bankruptcy remains on your credit record for at least ten years.

There are some steps that individuals can take to avoid bankruptcy. This advice is not a legal binding, as individuals will face their own scenario and this will give the basic idea on how to handle situation when in bankruptcy. However to avoid bankruptcy, individuals can:

1. Good Financial management: The best way of avoiding bankruptcy is through good financial management. Always put away something for a rainy day. This money must only be touched only in cases dire emergencies.
2. Increase income: The first step in avoiding bankruptcy is to increase your monthly income. This can be achieved by getting a second job. It does not matter how small the salary is per week, it all adds up at the end of the month and can go a far way in reducing your debt.
3. Stop using credit cards: Credit cards encourage you to spend and are one of your main sources of financial demise. Do what you have to do, freeze them, hide them whatever, but remove them as a source of finance for your daily expenditure. You can keep one only for emergencies.
4. Debt consolidation: Refinancing is another good way of avoiding bankruptcy. Under refinancing, the refinancer will pay off all your existing debt and give you a new loan with a more reasonable repayment schedule over a longer period. This may also in the short-term increase your liquidity as more cash becomes available from the reduced monthly payments.
5. Taking a second mortgage: If you own a house and its value can cover the extent of your debt, a second mortgage loan is a good option. However, if its value does not cover your debt, this is not a good option.
6. Selling valuables: Being on the brink of bankruptcy is a dangerous time. As a result, serious decisions must be made. Assess what valuables you possess that if sold can bring in some much need money that can contribute to relieving your debt.
7. Selling your car: Unlike a house, the value of cars will depreciate. Selling your car now, will give you more money than delaying it until next year, or whenever the crisis becomes critical.
8. Budgeting: When bankruptcy comes knocking at your door, budgeting can be a life savior. Implement strict budgeting conditions. Every month write down what you need and not you want before going shopping.
9. Life style changes: One must adjust their lifestyles to suit their financial conditions. Do not go clubbing if you know your rent or credit card is not yet paid. Reduce your power consumption and other non-essential utilities.
10. Negotiate with creditors: If you have exhausted all your options in trying to streamline your finances, then try renegotiating with your creditors to give you more time or the ability to make smaller monthly re-payments.

Tags: Bankruptcy, Credit Cards, Debt Consolidation, Second Mortgage
Posted in Bankruptcy, Credit Card, Debt Management | 2 Comments »

Debt Management Skills – Do I need to be an Einstein?

Tags: Debt Management, Management Skills
Posted in Debt Consolidation, Debt Management, Personal Loan | No Comments »