Debt Help

Anyone who has paid attention to the mounting credit card crisis afflicting modern Americans should not be surprised by the sudden explosion of debt management firms in the last decade. The debt management industry has grown exponentially over the past few years, assisting any number of borrowers with their financial burdens, but, as with any new business that concerns itself with debt and credit cards, a breed of predatory debt service ‘professionals’ seek only to exploit the economically desperate households by promising savings they could never deliver and sometimes even defrauding them altogether. Scam artists are an unfortunate consequence of any profession, and the debt relief industry is no better or worse. However, since word of mouth and a reputation for honesty and competence can make or break a company – especially a finance company – these nefarious loan workers don’t last long. However, just in case you’re unlucky enough to meet one of the less reputable debt management workers, here are a few tips to identify the worst sort.

Since debt consolidation loan programs are the most popular form of debt management, let’s start with loan officers and how they can trick unwary homeowners into borrowing more than would be advisable upon their property. Essentially, this sort of debt consolidation depends upon home equity. Credit ratings (above 700 FICO scores, ideally), debt to income ratios (less than forty percent of gross months income should go to home mortgage payments and revolving debt payments), and employment histories (clients most likely to be approved should have worked the same job for two years as provable by W-2 tax returns) are, of course, important. However, the most important element for mortgage debt consolidation will be the amount of home equity the homeowner currently enjoys.

Now, not only is home equity a tricky subject at present with property values falling all over America, but this drop in values is largely the fault of mortgage companies themselves. With an absence of regulation somewhat absurd in retrospect, criminally negligent loan officers and mortgage brokers (together with processors that looked the other way and appraisers that exponentially bumped up home values) gave loans to borrowers that should never have deserved them. The resulting mortgages proved more than the homeowners could possibly afford, and the glut of foreclosures (which should have been expected) drove down home prices which only worsened the potential refinance and debt management solutions homeowners would ordinarily presume to be available. Furthermore, these same foreclosures cost the original mortgage lenders (within a debt industry dependant upon constant cash flow for their bottom line) tens of millions of dollars and a previously inexplicable number of mortgage companies simply faded away. Though many of these businesses deserved to go under, the sudden failure of so many mortgage companies had a dire effect upon the American economy and our newly skyrocketing unemployment is but one consequence.

This is not to say that all of the mortgage refinance options are to be avoided. While it is much harder to take out a mortgage loan under current conditions, some homeowners – facing adjustable rates or balloon payments – simply have no choice. On the other hand, it is NOT necessary for them to include their credit card debts within their refinance no matter what the more aggressive loan officers would try to convince them of. Home mortgage refinancing is a form of debt management, of course, and making sure that what will be the average American consumer’s largest lifetime debt falls under acceptable (and formally fixed) interest rates should be of the utmost priority. However, what trustworthy mortgage professionals will explain is that the longer the term the more money you pay with even a locked prime interest rate. That’s just the way compound interest works. For that reason, mortgage professionals attempting to explain debt management should do whatever it takes to make borrowers have the lowest terms that would be comfortable for their household budget.

Not, you understand, that they should try to find the lowest payments for borrowers (obviously, it would be rather the opposite), but rather the fewest payments that they would have to pay over the course of the loan. A fifteen year term, if applicable, should be advised before the thirty, and biweekly payment programs that add up to essentially thirteen months of payments every year with accompanying years off the loan pay-off should also be strenuously encouraged. Perhaps most importantly, the loan officers should always ensure that the lender did not include some provisions against early pay-offs. Prepayment penalties, though technically legal, are the most underhanded strategies of less than trustworthy mortgage brokers. Anyone who tries to force through a prepayment penalty on unsuspecting homeowners or tries to convince them of the merits – often they’ll knock a few hundred dollars off the loan fees – should be avoided no matter their (evidently overstated reputation).

While all of this should be fully recognized by homeowners before they start talks with any mortgage lender or broker, your authors are aware that debt management this day and age primarily concerns itself with credit card debts. There are many other sorts of financial burdens for consumers to worry about, but the average American’s greatest worry tends to be the overload of credit card bills. Student loans, for example, generally boast the lowest interest rates of all types of debts. Hospitals and insurance companies, whatever their public perception, regularly work with their debtor clients to make sure that their medical bills are not an undue burden, even offering stays of payment. Auto loans, it is true, sometimes have higher interest rates, but they’re still rarely above those offered from mortgage loans or home equity loans. Nevertheless, even if there is a significant different between the interest rates (and, for credit card debts, there is almost always a steep drop once consolidated), the smart borrower has to remember the effects of compound interest. It is easy to see why loan officers would try to sugar coat the debt consolidation program, their pay is based around the overall size of the loans that are refinanced or taken out, but that is no reason to willfully ignore the borrowers’ true needs.

Not to belabor the point, but the worst suggestion that an unscrupulous loan officers can inflict upon their homeowner clients would be advising them to throw their credit cards debts onto a mortgage consolidation lasting decades. This is not debt management, this is debt avoidance. Borrowers will find that they are still paying their debts, but, after the interest continues to multiply, they will be paying their debts many times over. Worse still – especially in these trying times – homeowners are surrendering their ever more precious equity for only a temporary fix. Credit scores will fall from the sudden amount of credit card accounts now open, and, more to the point, how many consumers, once they have moved their debts over to a different loan source, would be able to resist the temptation to revisit their former spending habits and once again rack up bills through thoughtless purchasing. The key to any true and lasting debt management must be the debt professional working with the consumer to actually pay off their debts! Simply moving them to an equity loan that, for the moment, lowers their payments (however much longer and how much more they will inevitably pay) does nothing to assist the borrowers’ long term financial stability. Any viable program for debt relief must concentrate not only upon education to prevent such debt from occurring in the future but on actually eliminating the borrowers’ debts!

There are many other varieties of debt management, of course – not all debtors, after all, own their own homes. Consumer Credit Counseling companies have been exploding in popularity of late, but they contain their own string of suspicious activities each consumer must keep an eye out for. Since the industry does not tend to care so highly for certification, they attract more than their share of con artists and shady ‘corporations’. For this reason, borrowers must be incredibly diligent when investigating the bonafides of any business that they consider dealing with. Do not be fooled by flashy web sites or nice offices in well regarded areas. Debt management is about the people that you work with and many of the best debt professionals and debt management films, working in such a new industry, will not spend the time or money on advertisements while trying to make their way through a career or business with the best of motives.

Once again, though, even for those Consumer Credit Counseling companies that actually are legitimate, so much of the industry still depends upon credit card conglomerates (the very creditors that your debt management representatives are ostensibly fighting against) for half of their payments. Have you ever wondered why there are so very many Consumer Credit Counseling commercials on the television urging unsuspecting debtors to take a change at easing their financial burdens? As it turns out, above and beyond the sky high fees initially charged to the debtor clients themselves, the CCC firms get even more money from the various lenders. It is all part of a ploy by the credit card companies to prevent borrowers from attempting to declare bankruptcy. Chapter 7 bankruptcy protection has been greatly lessened over the last few years of an unfettered congressional deregulation, but the option does still attract a number of desperate debtors, and, though the chances are slim to none under the newest changes to the bankruptcy code statutes, some may have even have a chance to successfully wipe clean their unsecured debts (though it would also mean basically erasing the entirety of their possessions).

Because Chapter 7 bankruptcies do still remain a threat to their eventual bill collection, the credit card companies help fund the Consumer Credit Counseling companies so as to convince hapless borrowers to maintain and try to repay their loans, albeit in a different form. There are benefits to signing up with the program, to be sure. Interest rates are lower (not that they could actually be higher) and many of the creditors will agree to waive some of the fees assessed from over limit accounts or payments that arrived too late. However, considering the amount of money Consumer Credit Counseling professionals would charge for the opportunity – and, also, keeping in mind how damaging the Consumer Credit Counseling approach would be to the prospective client’s credit ratings once entered – most every applicant should be able to search out a better route to debt management success.

Debt settlement is another form of debt management rising in publicity the past few years, and these types of companies have many similar features to Consumer Credit Counseling firms. Both industries, after all, ask borrowers to sign over their collected debts (once again, primarily those unsecured ones which would be affected by bankruptcy protection). The debt settlement industry, however, does have a national certification program with which borrowers may rely upon to ensure that the people that they are dealing with could be properly trusted. Furthermore, since the underlying principles behind debt settlement thoroughly guarantees that there will be no collusion between the debt management professionals and the credit card companies, consumers do not have to worry about their counselors serving two masters. With debt settlement, the specialists working upon the specific case maintain an adversarial (though, as you’d imagine, still friendly for business purposes) relationship with the credit card companies so as to negotiate a reduction of their clients’ total balances. The debt settlement representatives have no reason to ever do anything more than work for the debtors’ best interests. That’s the only way their careers and the industry as a whole will survive and thrive within the new economic realities.

No matter the foundations of the debt settlement industry’s guiding principles, however, there still exists (as always will, with any possible employment opportunity) desperate scavengers aiming to take advantage of their clients’ ignorance and neediness regarding complicated financial matters. As we have said, these few practitioners of economic scams are found sooner rather than later and let go, but borrowers must always be wary of any debt management specialist that insists upon his or her fees paid up front. Initial consultations, by industry standard, should always be free of charge. They are, after all, trying to impress the clients with their professionalism so as to win their business, and it is highly suspicious that they would ask for money before they have even begun to do their job. Debt management must garner the trust of both the debtors and the creditors. Do not take the advice of anyone that you believe would be purely out for the quick buck.

For that matter, there are also any number of less than legal financial ploys that may sound like normal business practices but, in actuality, would leave the borrower open to charges of fraud. In the same way the malfeasant loan officers may urge homeowners to go with appraisers promising to pump up home values to tens of thousands of dollars more than the properties are actually worth or fool with pay stubs and tax records to suggest greater gross incomes than the true earnings, some debt management professionals might even advice that their client ask for a different Employee Identification Number. The purpose of altering Employee Identification Numbers is purely to trick lenders into disregarding credit report information and would be thought of as highly fraudulent behavior punishable by the fullest extent of the law. Before signing off on any such activity, make sure that you contact an attorney or – at the least – read up on the consequences of such actions. Whatever minimal savings may result from these sort of tactics are hardly worth the legal struggles that may ensue.

All of these warnings are not meant to turn prospective borrowers away from the good that proper and law abiding debt management counselors could do for household dearly in need of debt relief. The overwhelming majority of specialists working in these fields obey the strict letter of the law and, even beyond that, the specific rules of their chosen field. Most debt professionals enter the industry because they enjoy helping borrowers climb through the thickets of debts and find a better life for themselves and their families. Do not assume, just because of a few bad apples, that debt management specialists should be considered suspicious solely because of the nature of their work. As with any profession – from mechanics to congressmen – there are always bound to be a few brigands only out for themselves, but, with careful study of their company and a close reading of precisely what they are attempting to do, it is not that difficult to figure out which ones you should trust.



By: Cole

About the Author:

Consumer and personal debt is, perhaps, the number one problem facing most American families today. The reasons behind the tremendous surge in debt have been related to emerging socio-economic patterns suggesting that we’ve become a nation obsessed with lifestyles and consumerism.

 

America has always been a nation of consumers and the American people have always enjoyed one of the highest standards of living in the world. Something else has contributed to this national crisis.

 

What has changed in the last several decades is that we have developed very sophisticated technology to acquire debt. Debt acquisition is as close as your cell phone or personal computer and can be accomplished in a matter of seconds.

 

However, we have been slow in developing such sophisticated systems to manage that debt at the consumer level. We have been the victims of a technological gap between debt acquisition and debt reduction.

 

If you do not manage your debt, it will manage you. Or more precisely, your creditors will manage your debt for you and they will, of course, manage it in a way that is most favorable to them, not necessarily you.

 

At the consumer level, we tend to keep our debts separated, divided, and isolated in separate accounts, making it impractical, until recently, to strategically manage that debt.

 

Automated debt management systems have been in use by banks, insurance companies, and other institutions as needed to maintain cash reserve requirements but, until recently, have not been available at the consumer level due to the cost of developing and supporting these specialized cash flow management systems.

 

Many people in other parts of the world have had access to various debt reduction systems. In this country, however, it is a relatively new opportunity to systematically manage our personal and consumer debt. We now have access to affordable technology to manage our debt rather than allowing it to manage us.

 

First, let me explain what a modern debt management system is not.

 

It is not a set of instructions or a “How To…” book available from a variety of well intentioned sources which simply overstate the obvious; instructing us to “stop spending so much money”, or “cut up our credit cards”. It is not a “makeover” system which painfully rearranges our daily spending patterns.

 

It is not a static spreadsheet or plan for debt reduction which does not consider our day to day personal financial circumstances.

 

It does not involve the refinancing of existing debt or consolidating smaller short term debts into larger long term debts. It is not a self administered or pre-calculated repayment acceleration plan. It does not involve negotiating with your creditors or any means of debt reduction which avoids the repayment of legitimate debt on a dollar-for-dollar basis.

 

Just like the bank model, modern debt management systems are integrated with your daily and monthly financial transactions. They are dynamic. Modern debt management systems have the ability to analyze and manage all of your debt, including your mortgage debt, side by side in a single environment and make strategic adjustments based on your daily or monthly cash flow.

 

A modern debt management system is programmed for liquidity. Liquidity is to debt what water is to fire. If you have an abundance of liquidity, you could be out of debt in very short order. On the other hand, if you have a shortage of liquidity, it could take decades to get out of debt.

 

A modern debt management system focuses on ways to harness current liquidity and seeks to fully develop your potential future liquidity. It utilizes that liquidity to systematically eliminate debt. It can develop multiple sources of liquidity and utilize that liquidity as leverage against debt.

 

Because of the importance of liquidity, modern and effective debt management and debt reduction systems are fully integrated with your current monthly income and expense cash flows. That is not to say that increasing your income and/or reducing your expenses is a requisite. A good debt management system takes advantage of existing cash flow, not necessarily changing it.

 

A modern debt management system is relatively painless to follow and does not require significant changes to your established spending patterns. It can be set to aggressively pay down debt, to maintain a certain level of debt but reduce the carrying cost, or fund a retirement or college savings plan.

 

Today’s sophisticated, versatile, and effective debt management systems are not inexpensive. However, in terms of future interest savings, they can make up the cost of the system in the first few months of use and, over time, produce interest savings in excess of the total amount of current and future debt.

 

An inexpensive or do-it-yourself system is probably not a good alternative. While you might be able to redirect some liquidity and do some good, you would not be able to recreate the integrated mathematical algorithms which drive a more sophisticated system producing the best possible results.

 

 

Any current financial plan worth its’ weight in paper should address both sides of the balance sheet and include a modern debt management system.

 

 

David Haslett is Senior National Director of the Freedom Equity Group. To discover how modern debt management technology can help you pay off your mortgage and other debt, go to: http://www.fastestmortgagepayoffplan.com

 

 



By: David Haslett

About the Author:

Garry Marshal asked:


The plan of the consolidaci? Of debt that was introduced considered poor repayment of debts. To provide effective debt help to people, so they could consolidate the money you hab? Borrowed an order, the plan of consolidaci? Of debt were first introduced. This was one m? Comparatively better that all the cr? Dito earlier advised the government that the inhabitants? To enter. While the advice of cr? Dito was called a measure of support for debt, was not noticed that the people really relieved of their debts. We found something in the same amount of debt to some years of below the l? Nea. But that is not always the consolidaci? No debt can be called as the best measure of support for the debt. In a measure of consolidaci? Of debt you take one pr? Stamos in equity to pay off their pr? Stamos of non-equity. But if you can not afford even one install? No, take her home and everything you have. Can land in such a situation? N even worse than before. The answer to their problems on the help of debt as a lie? in the hands of the comparison? as the establishment of debt. These comparisons? As it does not help pay the entire amount, but half of the amount of debt does not? Ar fairness in any way. The compa? As the establishment of debt claim half of the amount without having to the other half. The biggest? To the compa? Ace card cr? Dito did not accept this division if they can demonstrate that the entire amount to you. Assistance through the debt? S of these comparisons? As the establishment of safe and kick-off upset freely. You need no m? S worry about? s of? the creditor? who called several times or creditors knocking at your door. All this be? for you at the signing of the establishment of debt. If you want to help serve the debt of any of these signatures to the establishment of debt found in l? Or visit them online through? S from a friend, are an effective way to solve their debt problems.

Jason Holmes asked:


Debt is an epidemic that affects individuals and families. Bite down and destroys the individual trust? financial and emotional welfare of the s? the one?. If you dip below debtfor the long period of time, after s programs of support of the debt can come to your rescue. A program of assistance for debt service on a solution? N est is feasible? suggesting individuals assembled after debt? of an s? lysis pr? practice of his position? current financial. The ages of the debt of a program of aid is not s? What their obligations but ensure their emotional well-being. An ideal program of aid to debt includes cr? Dito advising services, budgeting, patterns of env? Or creditor, debt calculators and the like. A program of support for debt works best for individuals who want to place their own debts. Although the process is not f? Cyl, the debt will help equip the databases required by the creditor with the letters of credit in the shows which smooth out the process and helps you better to do away their debts. A letter of credit in the shows? N est? providing coupled patterns env? or appropriate to help you manage your debts in a manner m? s career. The state? Curia Rationum show that the consolidaci? Of debts you help yourself? Except for at least twenty d? Dollars a month in comparison? N the utility's service consolidaci? Proportion of debt? by comparison? as. This is not s? What will help make up additional savings, but it could accelerate the whole process of repayment. The process of course involves the c? Mathematical calculation of figures? Complex tics and one is out to be a Herc? Read. In this case it is recommended to use calculators in l? Nea of debt to smooth out the task. Debt calculators are made to measure to help people get to the mathe figures? Complex policies and to assist individuals in the manufacture? Of a proper charge of their financial responsibilities. Apart from the m? Above all, a good n? Mere organization provides customer support to assist individuals and debt mounted to help in managing their finances. Providing the budget guidelines as well? N fall within the body of the aid program of debt. Plans budget is appropriate? N being checked out by experienced professionals then? S detailed study of income and monthly expenses. One step m? S made popular in the process of aid is debt counseling cr? Dito. Experienced professionals analyze the situation? Financial individuals later? S analyze your position? N asset and liability. Initially, the total amount of outstanding debt is est? checking. All fees for paying late? Inter oe? S is increased waive off later? S of the negotiation? N with creditors. The agency then env? A copy of the plan to individual creditors and once you get approved, require the debtor to make a contribution to cr? Dito advising the agency that in turn makes payments to the creditor. If you have been submerged under piles of debt for a long time and est? striving to improve on his account of cr? serve dito? a cr? dito advised that service could be the option? n for you. The usefulness of a cr? Dito advised that service has been made mandatory prior to filing bankruptcy seg? N patterns? 2005? of law? of bankruptcy. The above procedures provide a description? No plans on the help of the debt-driven organizations. Language pr? CTIC patterns help from debt var? An event of the case and are applied based on individual needs.

Jason Holmes asked:


You've been trying real hard to get out of debt. To their dismay, nothing seemed to work. Is absolutely likely that their right? t? of the wasnâ rapprochement. If you are sinking in debt and desperately needs a financial breather, get help from a debt professional. There are many companies offering debt help to borrowers who seek help with debt problems. If you have decided on a particular option of debt relief, the most important thing to do is have a thorough understanding of the process and be aware of what is really happening to their debts. How helpprogram of debt will help you become debt free? There are many options for support of debt and some of the options that are widely used by the debtors have been mentioned below. A brief explanation of each option to help the debt has been provided. Debt consolidation loan: You can choose or a debt consolidation loan or a program of debt consolidation. If you're opting for a debt consolidation loan, you take a loan equal to the outstanding balances of all debts taken together. After that, you pay off one lender. You can use collateral if you want a. Using collateral attract the reduced rate of interest. You can also opt for a consolidation loan unsecured debt, which is not required ninguÌ? No collateral. Program consolidation debt: If a program of debt consolidation you are opting for option help of debt, you combine all your debts together and treat it as one. You ready for a program of debt consolidation, where the company employs you work on your behalf and attempt to resolve a new repayment plan. You begin to make payments under the new plan. Not only lowers your interest rate but also lower their quotas. Establishment of debt: The debt is another option to help the debt that can make you debt free. The establishment of the debt, or debt negotiation, reducing its outstanding balance. Negotiate with the lenders and the company's establishment of debt that you hire makes all the trading on their behalf. The establishment of debt, you can reduce your outstanding balance by as much as 40% of the management program 60%. Debt (WMD) in a WMD, a claim which advises the company collects all information about your situation Current financial. Resolves a budget for you and educate you to manage debts better. When you ready for the DPP, the company negotiates with debtors working on their behalf. The trading company tries to convince lenders to April and the lowest fees. Select the debt relief you feel will solve their debt problems. If you are undecided about the options, talk to a credit counselor.

Jason Holmes asked:


Debt is an epidemic that affects individuals and families. Bite down and destroys the individual trust? financial and emotional welfare of the s? the one?. If you dip below debtfor the long period of time, after s programs of support of the debt can come to your rescue. A program of assistance for debt service on a solution? N est is feasible? suggesting individuals assembled after debt? of an s? lysis pr? practice of his position? current financial. The ages of the debt of a program of aid is not s? What their obligations but ensure their emotional well-being. An ideal program of aid to debt includes cr? Dito advising services, budgeting, patterns of env? Or creditor, debt calculators and the like. A program of support for debt works best for individuals who want to place their own debts. Although the process is not f? Cyl, the debt will help equip the databases required by the creditor with the letters of credit in the shows which smooth out the process and helps you better to do away their debts. A letter of credit in the shows? N est? providing coupled patterns env? or appropriate to help you manage your debts in a manner m? s career. The state? Curia Rationum show that the consolidaci? Of debts you help yourself? Except for at least twenty d? Dollars a month in comparison? N the utility's service consolidaci? Proportion of debt? by comparison? as. This is not s? What will help make up additional savings, but it could accelerate the whole process of repayment. The process of course involves the c? Mathematical calculation of figures? Complex tics and one is out to be a Herc? Read. In this case it is recommended to use calculators in l? Nea of debt to smooth out the task. Debt calculators are made to measure to help people get to the mathe figures? Complex policies and to assist individuals in the manufacture? Of a proper charge of their financial responsibilities. Apart from the m? Above all, a good n? Mere organization provides customer support to assist individuals and debt mounted to help in managing their finances. Providing the budget guidelines as well? N fall within the body of the aid program of debt. Plans budget is appropriate? N being checked out by experienced professionals then? S detailed study of income and monthly expenses. One step m? S made popular in the process of aid is debt counseling cr? Dito. Experienced professionals analyze the situation? Financial individuals later? S analyze your position? N asset and liability. Initially, the total amount of outstanding debt is est? checking. All fees for paying late? Inter oe? S is increased waive off later? S of the negotiation? N with creditors. The agency then env? A copy of the plan to individual creditors and once you get approved, require the debtor to make a contribution to cr? Dito advising the agency that in turn makes payments to the creditor. If you have been submerged under piles of debt for a long time and est? striving to improve on his account of cr? serve dito? a cr? dito advised that service could be the option? n for you. The usefulness of a cr? Dito advised that service has been made mandatory prior to filing bankruptcy seg? N patterns? 2005? of law? of bankruptcy. The above procedures provide a description? No plans on the help of the debt-driven organizations. Language pr? CTIC patterns help from debt var? An event of the case and are applied based on individual needs.