Debt Management Plans

July 19, 2010 by Leave a Comment

Debt Management Plans

Debt Management Plans

debt management

Currently, most of us have taken loans and are facing a major problem of debt. The amount is so high that sometime it becomes really very difficult for us to repay our debts easily. So, most of us are searching some effectual ways with the help of which they can overcome from the problem of debts. Nowadays there are numerous options available that you can opt in order to repay your debts. Among so many options available the most beneficial way is the debt management plans. But it is equally important to know more about the management plans and how to avail their service in order to get out from your debts.

If you really desire to eliminate your debts then it is better to opt for a management plan. This plan will help you to settle and repay your debts and also these plans are used in almost all the countries across the globe. These debt management plans are handled by the companies that help the people to get rid from their debts. Typically these companies are the third party organization and they evaluate the paying capability and the debtor’s income. These companies negotiate with your creditors on behalf of you in terms of monthly repayment of your loan.
On the other hand it is not essential that all types of financial liabilities and debts can be eliminated by this management plan. This type of management plans only help to repay your debts that are unsecured like personal loans, credit card debts etc. Normally there are two types of companies out there carrying out management programs. One of such debt management companies offering quality service and in return they will not charge you a penny for their service and other will ask you to pay huge amount as their fee. The companies that will not ask you for fee are the governmental companies or may be they are some charitable entities.

These management companies keep records about your financial details before your creditors approach you for the purpose of renegotiation of the repayment. In such management plans you may also be asked to save some amount in order to plan your finances perfectly. It is for your kind knowledge that these debt management programs will only be carried forward if your creditors agree with it or else you have to find some other way to decrease the burden of debts. For further details regarding management plans you may refer internet.

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Debt counseling-the wise way to get rid of debt trap

July 16, 2010 by Leave a Comment

Debt counseling

Debt counseling

Debt counseling

debt counseling
There are a lot of people who are under huge burden of large debts. Due to these worries, they are not able to lead a normal life which affects their performance at the job or profession and also has an adverse impact on their family life. Debt counseling is the mechanism through which a person can get rid of his mounting debts in a convenient manner. Debt counseling is provided by the experienced and well qualified persons in the field of finance and debt management. These expert advisers tell you a number of preventive measures to stay away from debt trap by planning their expenditure in a prudent manner. Apart from this, these experts also devise various means to lessen your burden of debt repayment through effective debt management plans. To get proper help and assistance, you should provide all the relevant particulars about your existing debts to the debt counselor. You should not conceal any vital fact from your debt counselor in your own interest.

Through debt counseling, your advisers negotiate with the creditors on your behalf for reduction in rate of interest or for a relaxation in the original repayment period or in some cases, a portion of debt can also be waived off altogether. Debt counseling guides a person having debts to repay all his debts by loan consolidation or mortgage loans. In some cases, credit cards companies agree to accept lesser amount of monthly repayment as per terms of agreement under a debt management plan to provide a substantial relief to the debtor. Most of the debt management companies claim to get the 40 to 50 per cent concessions for their clients in respect of credit card dues but in reality, 10 to 20 per cent discounts in total amount have been seen to be given by the creditor companies. Before engaging the services of a debt counselor, you should thoroughly enquire into the reality of his claims about various concessions and facilities.

While every person wants to get rid of his debts as early as possible, there are a few precautions to follow before you choose a person or agency for debt counseling. First of all, you should collect the relevant information about various debt counseling companies to assess their capabilities to help you in settling your debts in a convenient manner. For this purpose, you may collect feedback on these companies from their previous clients about their past performance. You should not get attracted to a company which charges nominal fees as lesser fee does not necessarily imply better services. Debt counseling also helps you to get the rate of interest reduced in certain cases. With a lesser rate of interest, your monthly repayment obligation is reduced and you can repay a debt earlier than compared to the original repayment period. This results in a lot of mental peace for you besides saving a substantial amount of money for you.

In the year 2005, with the introduction of some major changes in the laws related to the bankruptcy in the United States, debt counseling was made mandatory in the cases where the debtors chose to file a petition for bankruptcy. As per the provisions of these rules, a person has to obtain the services of a non-profit credit counseling company during the 180 days period prior to the filing for bankruptcy. One of the various counseling sessions with the engaged company may be conducted over telephone or online through the internet. There are various websites where you can get useful information about different aspects of debt counseling along with the necessary particulars about the companies providing the services of debt counseling. You should be cautious from various newly emerging credit counseling companies who allure customers and then dupe them by misappropriating their money and not depositing it with the creditors. Debt counseling companies are often funded by the creditors in the form of 5 to 10 percent of collections paid to them in the form of Fair Share. Some credit counseling companies advise their clients not to deposit any money directly with the creditors and when they receive the first repayment installment, they retain it with them as their fees for debt counseling. This unfair practice adversely affects the financial interests of the person who is already under huge burden of debt.

Whenever a person is under the huge burden of several debts, he should immediately contact a renowned and experienced debt counselor as any delay in going for debt counseling shall only make his financial condition worse. A timely help from a capable debt counselor may result in lot of convenience in repaying your dues but you should follow the instructions and advice of your debt counselor in a regular and disciplined manner. A competent debt counselor is your greatest friend and well wisher to save you from unnecessary monetary loss and severe mental stress resulting from huge burden of debts. A debt counseling agency or person chosen with a little care, caution and prudence can save you a lot of trouble and financial loss at the later stages.

Debt counseling saves you from a lot of stress and mental worries. When you have a large number of creditors you have to talk to them either personally or over telephone at least once in a month. With the help of debt counseling you have to deal with just a single person. You have to pay a consolidated amount to the agency per month and it shall take care of all your monthly repayments as and when these fall due. Debt counseling also educates you about various ways to manage your finances in a better and planned manner to avoid debts as far as possible. This is the preventive role of debt counseling agencies. Many debt counseling agencies advice to go for debt consolidation for repayment of all your dues but you should properly assess all the pros and cons of a loan consolidation as you might have to repay the amount over a longer period than the original one in case of separate debts. Role of debt counselor in these cases is of advisory nature only and you are under no obligation to follow his advice. You should discuss all the aspects related to your indebtedness with the debt counseling agency in an open and candid manner.

Before engaging a debt counselor for management of your debts you should properly ascertain whether he is capable of helping you in a significant manner. You should verify the past record of credit counseling agency from a number of reliable sources. Debt counseling not only helps you to repay your debts with convenience in a planned manner, but it also educates you to keep your expenditure below your income level so that you are not a victim to debt trap. In a few cases where the debt burden is so high that it is not possible for the indebted person to repay his dues with his present earnings, debt counselor may advice you to go for bankruptcy proceedings. Mortgage loan is also another option to clear your various debts of smaller amounts but you should exercise this option after much thought and with a great caution. A few debt counseling agencies mislead the innocent clients to fall in the trap of debt consolidation which might make their financial status worse than earlier. You should be cautious from these selfish persons who watch their own interest at the cost of their clients.

One of the most important tips given during the debt counseling is to classify all your debts in high priority and low priority sections and plan your repayments in the order of priority. Secondly, you should always aim to spend less than what you earn so that your financial balance is not disturbed and you are not a victim to the debt trap. Besides this, you should also make constant and vigorous efforts to augment your sources of income to be able to repay your debts in a shorter period. Debt counselors help you to plan your monthly budgets in a useful manner. Debt counseling also provides required help in the direction of improving your credit rating. If you follow the debt management plan in a disciplined way and meet your repayment obligations in time, you are sure to improve your credit scores in a significant manner. You should always choose the debt counseling company which has a sound standing and good reputation in the market. While an experienced and trusted debt counselor may lessen your worries of debt repayments, an unprofessional debt counselor may make the situation even worse for you.

You should also make a periodical review of all your existing debts and also keep a close watch on the prevailing market conditions to explore the possibilities of a loan with cheaper interest rate which could be utilized to repay the existing higher interest bearing debts. Debt counselors suggest both types of loans- secured debts and unsecured debts. In the case of secured debt, you have to mortgage your immovable property with the creditors in the form of collateral security whereas in the case of unsecured debts, no collateral security is asked for. In case of an unsecured debt, you can get limited amount of loan and generally these loans carry a very high rate of interest. If you do not have sufficient disposable monthly income for debt repayment, you might not be able to repay your debts easily and coupled with the burden of higher rate of interest, such types of loans may thrust you deeper in the trouble.

With the increasing passion for all the luxuries, a person sometimes incurs some expenses without caring for his resources. This results in his indebtedness as more and more financial institutions allure the consumers to avail loans for several non productive purposes also. The increasing tendency of buy now pay later has left thousands of people in every city highly indebted. To come out of this debt trap, one has to seek the help of debt counseling. Debt counseling equips you in a better manner to manage your finance and repay your debts at attractive terms and conditions with much ease and convenience. On the one hand, a debt counselor educates you to spend and save judiciously to avoid debts and on the other hand, it also helps you to come out of the debt trap if you have already fallen into it. Thus, a double advantage of debt counseling helps you to manage your personal financial status in a better and well organized manner.

There are a number of debt counselors in each city who provide various types of services related to debt counseling. Of these, there are a few who insist upon raising a debt consolidation loan or debt consolidation mortgage loan. You should be aware of such type of agencies as these are watching their own interest in the disguise of helping you to clear your debts easily. There are a few genuine individual debt counselors and debt counseling agencies which strictly follow the rules stipulated by the Financial Services Authority in this regard and provide you proper guidance and help in a fair way. For effective management of your debts, you should also improve your spending habits to save extra amount of money every month to repay your debts early which will help you to save a lot of money in the form of interest and other costs, besides giving you much desired mental relief of clearing all your debts in time.

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Debt Management- the effective Solution to Debt Problems

July 16, 2010 by 1 Comment

debt management
In this modern age, needs for comforts and luxuries have increased greater than ever. Every person wants to own a beautiful house, a luxury car and to lead a lavish life- style. To satisfy these desires, most of the people prefer to raise loans which are to be repaid over the years along with the interest amount. The repayment of loan is projected on the future income to be generated through the employment or business. Sometimes, due to a number of unforeseen circumstances, you are not able to repay your debts in time and the burden of interest coupled with the principal amount keeps on mounting which gives you a lot of mental stress, besides adversely affecting your credit in the market and society. These days, majority of the Americans are facing the problem of high debts. To overcome this problem, concept of debt management was introduced a few years ago.

Debt management denotes the engagement of a designated agency to counsel and help you to manage and repay your debts in the most convenient manner within the shortest possible period with minimum additional expenses or charges. For the persons facing the acute problem of high debt burden, this solution is like a boon. With the significant changes in the law of the United States regarding the bankruptcy since the year 2005, agencies engaged in debt management services have gathered all the more importance than earlier. There are a few non-profit earning debt management companies which provide related services for a nominal fee which is affordable for all. There are also some profit oriented professional debt management companies which provide multiple services and charge a considerable amount as their fees in the form of certain percentage of the debt amount to be repaid.

When ever you plan to get rid of your worries of high debts, you should thoroughly search for a trusted and renowned agency engaged in debt management services as there are several companies in this field which make high claims and false promises but ultimately prove to increase your financial troubles instead of providing you some relief. After carefully selecting a competent agency, you should discuss your problems in detail with the representatives of the company. In your best interests, you should not conceal any fact and should present a true and correct picture of current financial status along with the plans for future for settlement of debts. The debt management agency or company will first of all prepare a comprehensive list of all your debts and then discuss with you the probable course of action for early and effective solution for your debt burden problems.

Few of the measures adopted by the debt management companies to reduce your burden of debt are as under:

Organize meetings with your creditors and discuss about lowering down the rate of interest or allowing moratorium of interest during the repayment period. This can substantially reduce your debt burden.
Make a detailed study of your income from all sources and also the expenditure over mortgages, rent, food and utilities to arrive at the net amount which shall be available for repayment of dues on monthly basis.
Work out the amount payable monthly dues in respect of your existing debts and collect it from you for onward payment to the creditors on due date.
Discuss with the creditors regarding any possible relaxation or discounts in case of lump sump payment as one time settlement.
Advise you to plan the repayment of your debts in the order of priority.
Exploring the possibility of transferring your existing liability at lower rate of interest or with a longer repayment period to reduce the burden of monthly payments of existing debts.
Arranging finance for repayment of all the debts immediately thus, clubbing all your financial liabilities to one source.
To conduct educational programs for the persons facing difficulties with debt traps.
To refer your case to some other appropriate forum in case the agency is not able to handle it or advice you to apply for bankruptcy if in their opinion, the debt is too large to be paid by you in the given number of years with your limited resources.
Whereas these debt management companies advise you to spend less than you earn, the services of these companies can not be obtained in the case of secured loans like a car loan or housing loan. The debt management agencies can be engaged to find effective solution for the problems arising through accumulated burden of credit card repayments, personal loans, stores card loans. Overdraft facilities, etc. if in the opinion of the agency, they are not able to solve your debt problems with the solutions they have, they may refer your case to some other effective forum or advise you to go for bankruptcy proceedings. It is important to understand that taking the services of a debt management company may temporarily hamper your credit ratings and you may be ineligible to raise a loan for a specific duration. Further, if your all debt obligations are less than US $ 10000, you are not entitled for the services of a third party agency for managing your debts.

With the United States Bankruptcy laws coming under vital changes in October, 2005 many indebted people now prefer to undergo long term debt management plans. Before deciding about engagement of any particular debt management agency, you should ensure that the same is properly registered with the Better Business Bureau and it does not charge any exorbitantly high fees for their services to devise a debt management plan for you. While non- profit companies charge a negligible sum for their services, profit making debt management companies charge a certain percentage of total debt amounts to be repaid as their fees for services provided by them. If you have a large portfolio of debts, this fee can be substantially higher. You should stick to the schedule of repayment on monthly basis as it shall improve your credit rating and will help you to get the relief from debt burden in a speedy manner.

National Foundation for Debt Management has been set up to provide assistance to the persons seeking help in the chronic cases of huge debt burdens. This foundation runs regular seminars and educational programs for the benefit of people in general. Proper guidance and advice is also provided at this foundation by the experts to face the problem of heavy debt burden in an effective manner. One can also get useful help online through the website of this foundation. This is a non- profit group organization which has been formed on a membership basis. It offers on course membership for debt help. Apart from this, there is an additional facility of Right Track personalized debt help programs to help highly indebted people. So far, more than 50,000 people have already benefitted through this program. NFDM also organizes free of cost chartered course in a personalized way for its members to impart education about proper and effective debt management techniques.

While a few management companies aim at reducing your burden of debt only, there are a few others which besides helping you to repay your debt also educate you about the various aspects of debt management in an effective manner. These programs also guide you to get the loans at best possible rate of interest to reduce the burden of repayment. A debt management company negotiates on your behalf with the creditors to get the amount of interest reduced or for some other concessions which can make it easy for you to repay your debts in the most convenient way. While selecting a debt management company, you should select one which is well established and has a proven track record. You should also compare the charges proposed by different companies to select the one with most reasonable charges which are also easily affordable for you.

With the increasing trend of raising multiple loans at a time and due to some recessionary economic trends, incidences of high indebtedness have increased in the recent times. Simultaneously, there has been a sudden spurt in the number of companies which are coming up almost another day and claiming to get you rid of your debts in quick time. Before falling prey to these unrealistic claims you should enquire about the background of the company. As debt management is not a simple task and it takes a few years for a company to get itself established in the market, you should select a debt management company which has sufficient experience in this field. By paying regular installments of your debt as per the terms of agreement decided by the debt management company on your behalf with your creditors, not only you lessen the burden of debt gradually, but also improve your credit scores in an effective way.

Another important aspect of proper debt management is to keep a periodical watch over your current liabilities and review the status regularly. If you keep a close watch over the market conditions and other offers for loan at attractive rate of interest you can avail these cheaper loans to square off your existing debts at higher interest rates and this can save a lot of money for you.

Regular savings are also a part of an effective debt management program. If you can set aside a small portion of your earnings every month, you can plan to buy your desired car or house from your own sources or you can thus minimize the amount of loan required. If you have got moderate financial liabilities, these can be effectively met with a proper planning and regular repayment on due dates. Further, in case of credit cards, you should always prefer to entire amount due on monthly basis as paying the minimum amount due sounds lucrative; it becomes costlier in a long run and can lead you into severe financial stress over a period. Meeting your financial commitments on the due dates is the key to effective debt management.

While some debt management programs are designed to reduce your debt burden through negotiations, alternative loan facilities or arranging for some concessions in the rate of interest etc., there are few specialized programs which provide education about various methods of debt management and also tell you about various ways to remain out of the debt trap as preventive measures. You can find a number of websites regarding various debt management companies but you should carefully choose one according to your need and suitability. Further, you should also take into account the fee to be charged by these companies as a company with high fee structure may worsen your financial condition further. You can find a number of advertisements in the local newspapers and financial magazines and journals about various debt management companies. You should verify the credentials of the company you want to engage, from some reliable sources.

With proper education and guidance about various debt management programs, you can organize your debts in a better and more effective manner. With a little prudence and strict financial discipline along with proper planning, you can be sure to clear your debts easily and speedily with the minimum extra cost and the least stress and worry. An effective debt management plan can take care of your worries related to burden of debt in a proper and beneficial manner. You have to just select the most appropriate debt management company having a professional approach and adequate experience and expertise in this field.

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