Selecting The Right Debt Management Company

We have all experienced getting so far in debt we don't know how we're going
to get out. There are many different options that you have for quick relief
with benefits and consequences.

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.

There are numerous types of debt, including basic loans, syndicated loans,
bonds, and promissory notes. Debt, especially large sums of debt, can also
be secured through a mortgage or other security interest over some of the
debtor's property, in which case the creditor will have some rights over
that property in the event that the debtor becomes unable to repay the debt
and defaults on the loan.

Many credit card accounts come bundled with hidden fees and high interest
rates, accounts that many Americans have no hopes of ever paying off.

Selecting the Right Debt Management Company

Many mistakenly assume that debt management companies and credit counseling
programs are synonymous. Their not. Although both offer financial advice, a
debt management company, unlike credit counseling, may allow or require a
client to deposit a certain amount of money in a given account every month.
Afterwards, the debt management company will be responsible in paying off
its creditors.

How to Choose the Right Debt Management Company Nonprofit - Several states
require debt management companies to be "nonprofit" before they're allowed
to operate. Whether they really are nonprofit or not remains to be seen.
Check with the Better Business Bureau and see if they've received any
complaints about the company you're interested in.

Free Consultations - It must always offer this! Free consultations will
allow you to probe in depth without worrying how much it's costing you.

More than 1 Year in Existence - Avoid transacting with a newly established
debt management company; they're more than liable to commit mistakes that
old-timers are already aware of.

Proper Procedures - Be wary about companies that ask you no questions about
your finances or your personal background. If all they're asking of you is
when you're ready to make the payment, there's a good chance that they're
simply interested in swindling you of your money.

There are a number of different types of debt consolidation
loans: home equity loan, line of credit, or second mortgage.

If you use credit cards, owe money on a personal loan, or are paying on a
home mortgage, you are a "debtor." If you fall behind in repaying your
creditors, or an error is made on your accounts, you may be contacted by a
"debt collector."

The Consumer Credit Counselling Service (CCCS) reports that calls from
people worried about debt have been increased by 50% compared with last
year.

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.

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.

You should know that in either situation, the Fair Debt Collection Practices
Act requires that debt collectors treat you fairly and prohibits certain
methods of debt collection. Of course, the law does not erase any legitimate
debt you owe.

Affiliations - Make sure that the debt management company isn't allied or
affiliated with one of your creditors. It would put them in a compromising
position and the company might end up working against you, rather than for
you.

Ability to Listen - The ideal debt management company listens to your
concerns, takes notes of your problems, and doesn't ignore your personal
preferences.

Reviews or Testimonials - Don't trust the testimonials provided on their
websites or brochures. Instead, find someone you know or trust who can
honestly recommend the company or reviews in non-partisan websites.

How to Know If You're Dealing with the Wrong Debt Management Company On the
other hand, if you're already under contract with a debt management company,
here are some tips on how to learn if it's best to leave and switch
companies.

Periodic Reports - Debt management companies must always give you periodic
reports about the present status of your debts. If they've been silent all
the while, now's the right time to worry.

Express Approval - If you catch the company taking any action with direct or
indirect impact on your debt or credit without your expressed approval,
that's generally a bad sign.

Lastly, remember that the BBB doesn't possess all the information needed
regarding fraudulent debt management companies. Listen to what your
instincts are telling you as well when looking for the right debt management
company.

Having said that, many borrowers can benefit from consolidating their debts
on better interest rate terms. Some credit cards cost up to 17.9 % (e.g.
MBNA) and store cards can cost more.
Consolidating your debt could cut interest payments by up to two thirds.

If you've got a number of credit cards and insurmountable credit card debt,
then perhaps it's time to consider a debt consolidation loan. A
consolidation loan is a loan that you can use to pay off all your debts,
meaning that you can pay them off for less money without having to worry
about lots of different bills.

Stop spending on things that aren't absolutely necessary. Each individual
will have to define what "necessary" means, but it may mean taking a sack
lunch to work, bringing your own coffee instead of stopping at Starbucks,
and canceling that subscription to HBO.

Whatever your motivations, a decision to consolidate debt online may be the
solution but before you make your decision or offer detailed personal
information to debt consolidation companies check to see what they have to
offer.

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