Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Keep in mind, too, that contrary to popular belief, closing credit accounts won't immediately impact the length of your credit history and the mix of account types in your credit history. Closed accounts can stay on your credit reports for up to 10 years, and they can continue to impact your credit history's length and credit mix during this time. As a result, closing accounts as part of a DMP (or for any other reason), won't have an impact on these scoring factors for a long time.

If you have equity in your house, you may be able to use a home equity loan or line of credit (HELOC) to get the cash you need to pay off your other debts. This method is popular because home equity loans and lines of credit offer low interest rates, as they use your home as collateral for the loan. But that's also where the danger lies: You risk losing your home if you default on your payments.
Our debt settlement process begins when we accept a person into our program. He or she then begins sending National Debt Relief money to fund an escrow account over which they have total control. When a sufficient amount of money has accumulated in the escrow account we begin contacting the client’s lenders to negotiate settlements. The way it works is that one of our debt counselors will offer to settle the debt with a lump sum payment but for less than the debt’s face value. As an example of this, our counselor might negotiate with a credit card company to get our client’s debt reduced from $10,000 to $5000. In the event the lender agrees to our settlement offer we will then ask our client to release enough money from his or her escrow account to pay the settlement. Of course, not all lenders will agree to settle for less than the total amount of the debt. However, we will never give up. We will continue contacting that lender until we are able to successfully settle the debt or it becomes absolutely clear that the lender will never negotiate.
Your income. Lenders may require a minimum annual income and will consider your debt-to-income ratio. A debt-to-income ratio is the percentage of your gross monthly income that goes toward paying your debts. A lower ratio is better because it shows that you don’t spend too much of your income paying debts. Some debt consolidation loan companies allow debt-to-income ratios as high as 50%, meaning your monthly debt obligations should add up to no more than half of your gross monthly income.

This approach focuses on your debts like credit card and student loan debts with the highest rate of interest. The goal is to pay off the highest interest rate debt as quickly as possible, because it’s costing you the most. While it may not feel like you’re making progress, this method will help you eliminate your costliest debts first—which can save you money in the long run. 
Start With Counseling: The first step of a debt consolidation program is counseling. You’ll speak with staff at the service provider to determine whether or not they can help and to lay out a plan. It is a good opportunity to learn about your debt—and to ask about fees and how the organization works. If you get a bad feeling, try a different company.

A better idea? Freeze your card in a block of ice that you keep in your freezer. That will prevent impulse purchases with your credit card while keeping it available for emergencies or more thoughtful purposes. As long there are no fees for keeping the account open (or a minimum interest charged per month), there’s no harm in keeping the card in your freezer.


Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates ("APR") may vary based upon LendingPoint's proprietary scoring and underwriting system's review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint's final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customer are paid on a biweekly schedule and thus this may better align the loan payment dates with our customer's actual income receipt schedule. We also offer monthly and bi-monthly pay schedules.

By clicking on the "Contact Me" button above, you consent, acknowledge, and agree to the following: Our Terms of Use and Privacy Policy. That you are providing express "written" consent for Debt.com or appropriate service provider(s) to call you (autodialing, text and pre-recorded messaging for convenience) via telephone, mobile device (including SMS and MMS - charges may apply depending on your carrier, not by us), even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list. We take your privacy seriously and you may receive electronic communications, including periodic emails with important news, financial tips, tools and more. You can always unsubscribe at any time. Consent is not required as a condition to utilize Debt.com services and you are under no obligation to purchase anything.
People are more likely to spend more and get into debt when they use credit cards vs. cash for buying products and services.[7][8][9][10][11] This is primarily because of the transparency effect and consumer's "pain of paying."[9][11] The transparency effect refers to the fact that the further you are from cash (as in a credit card or another form of payment), the less transparent it is and the less you remember how much you spent.[11] The less transparent or further away from cash, the form of payment employed is, the less an individual feels the “pain of paying” and thus is likely to spend more.[9] Furthermore, the differing physical appearance/form that credit cards have from cash may cause them to be viewed as “monopoly” money vs. real money, luring individuals to spend more money than they would if they only had cash available.[10][12]
Debt settlement programs typically are offered by for-profit companies, and involve the company negotiating with your creditors to allow you to pay a “settlement” to resolve your debt. The settlement is another word for a lump sum that's less than the full amount you owe. To make that lump sum payment, the program asks that you set aside a specific amount of money every month in savings. Debt settlement companies usually ask that you transfer this amount every month into an escrow-like account to accumulate enough savings to pay off a settlement that is reached eventually. Further, these programs often encourage or instruct their clients to stop making any monthly payments to their creditors.
To get started with Accredited Debt Relief, you'll need to enter your first and last name, email address, state of residence, phone number, and the amount of debt you're looking to manage (from $1 to over $100,000). You'll receive a call from one of ADR's representatives, and you are asked to have a recent copy of your credit scores and credit reports on hand to prepare for the discussion. You can get that information for free on the page after you enter the information described above, by clicking on the “Get My Free Credit Scores Now” button. During the phone call, the debt specialist will go through your credit profile, to get a feel for your situation and help you to understand the available options.

Lower interest rates and monthly payments. A debt consolidation loan or debt management program should reduce the amount of interest you pay on your debt, plus get you a monthly payment that is more in line with your income. The stability of knowing that you have an affordable monthly payment that eventually will eliminate your debt can remove a lot of the anxiety associated with the problem.
Debt validation is similar in nature to how a speeding ticket can get dismissed, even if the person was speeding. However, when it comes to debt there are many laws that regulate debt collection companies. There are a multitude of debt collection and credit card related laws available to use when disputing a debt, like the Credit Card Act, FDCPA, Fair Credit Billing Act and the FCRA. All of these laws make it faily easy for a debt validation program to dispute a debt and prove it to be legally uncollectible. Especially when it comes to credit card debt, where statistically, more than 90% of credit card lawsuits can get dismissed after being disputed, due to flaws in the paperwork, according to a Brooklyn Judge.
Accredited Debt Relief is a reputable company that helps customers reduce their debt obligations by matching them with partner services. Just by looking at their "Proven Results" page, it's easy to see the advantages of working with ADR. For example, their customers with debts owed to Bank of America were able to reach settlements that saved them anywhere from 52-80% of the original amounts owed. Similar results are listed for clients of HSBC, The Home Depot, Sears, and many other businesses. According to the fine print at the bottom of the page, Accredited Debt Relief tells clients to expect to pay up to 75% of their enrolled debt balance, which includes any fees charged by ADR's debt relief partners, over the course of two to four years.
Many people find it hard to negotiate with their creditors. A debt relief program has expert, experienced negotiators that know how to deal with creditors. They take the hassle and heartache out of a fraught situation. Additionally, because debt relief companies deal with a lot of debt in different accounts, they have more leverage and can bulk their deals to get better settlements.
At the household level, debts can also have detrimental effects — particularly when households make spending decisions assuming income will increase, or remain stable, in years to come. When households take on credit based on this assumption, life events can easily change indebtedness into over-indebtedness. Such life events include unexpected unemployment, relationship break-up, leaving the parental home, business failure, illness, or home repairs. Over-indebtedness has severe social consequences, such as financial hardship, poor physical and mental health,[16] family stress, stigma, difficulty obtaining employment, exclusion from basic financial services (European Commission, 2009), work accidents and industrial disease, a strain on social relations (Carpentier and Van den Bosch, 2008), absenteeism at work and lack of organisational commitment (Kim et al., 2003), feeling of insecurity, and relational tensions.[17]
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." Her articles and insights are featured in such publications as The Wall Street Journal, Pregnancy, Babytalk, Redbook, Bank Investment Consultant, Prosper.com, MSN Money and Dow Jones MarketWatch. An active television and radio commentator, Sandberg is the credit and money management expert for San Francisco’s KRON-TV, a frequent guest on Forbes Video Network, Fox Business News, Bloomberg TV and all Bay Area networks. Prior to launching her own reporting and consulting business, she was affiliated with Consumer Credit Counseling Services of San Francisco where she counseled individuals, conducted educational workshops and led the media relations department. Sandberg is a member of the Society of American Business Editors and Writers and on the advisory committee for Project Money.
The problem with credit cards is that it’s easy to abuse them. That is what makes them a very popular sinkhole. Many Americans continue to use their cards without thinking about how they will pay their balances. The appeal of instant gratification, of getting stuff they want immediately and without having to pay at the time, can be a tempting scenario for many shoppers.
I always suggest starting with credit counseling because it is the lowest risk option, but I am biased too (my salary comes from a credit counseling agency). I would suggest checking out credit counseling agencies with the Better Business Bureau and talking with the two highest rated. If either one gives you no options other than a debt management plan you can be sure that you have a bad counselor. Listen to the options presented by good counselors, which should include self-management and bankruptcy and then decide on your plan of action.
Contact a credit counselor. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
As you'll see prominently advertised on the site, Credible offers a best rate guarantee. If you find a lower rate elsewhere, you can get $200 from Credible. But, as you might imagine, there are certain terms and conditions that have to be met to be eligible for that promotion. For example, any lender you use can't offer pre-qualified options, and you have to submit your claim within 10 days. You also have to go ahead and close with the competing lender before submitting your request to Credible. Finally, this $200 Best Rate Guarantee only applies to personal loans; Credible doesn't make it 100% clear whether or not Credit Card Consolidation loans qualify as personal loans, so keep that in mind (but we're pretty sure they count!).
Crisp and clean - all the makings of a fresh start. What else does one look for when hoping to consolidate their credit card debt and find financial solutions? Avant's page offers all of these and more. Doing business since 2012, Avant is accredited, boasting an A+ rating with the Better Business Bureau and has been featured in articles in reputable publications such as Bloomberg and The Wall Street Journal. Though young, this company knows how to provide quality service.
Search for potential lenders. Now that you know the condition of your credit and how much money you hope to borrow, you’re ready to begin searching for lenders that may be a good fit for your situation. Credit score requirements vary by lender, but many lenders want a borrower with a FICO score of at least 650. However, some debt consolidation loan companies work with consumers with scores in the low 600s or even high 500s, so don’t assume that a lower credit score will disqualify you.
Debt-free people know that they have the freedom to live and give generously. They know that the more they keep their hands open, the more fun they can have with money. Whether they’re helping their family, friends, church or a mission they believe in, it’s always more fun to contribute to a bigger cause than stockpile it for themselves. Rachel Cruze says, “Giving is the most fun you’ll ever have with money.” Try it and see for yourself!
If you focus on paying off low interest debt first because it has a smaller balance, you'll take much longer to repay high interest debt than you would if you'd begun putting your extra cash towards that high interest loan. In some cases, it could take you years to pay off your low balance debts at low interest before you finally begin aggressively repaying high interest debt. This could result in substantial additional interest being paid.

Portfolio Recovery just got a judgment against me for 10000 – it was a motion for summary judgment and it was pre determined before I got to say anything..no mediation was offered…..I am on 100 percent disability and only work about 12 hrs per wk so they cannot touch my earnings either – I am co owner of house in Fl but we have homestead…..I will be 60, husband is 66 — so exactly what do they hope in getting this judgment? The alleged debt was in my name alone..
Fast Track Debt Relief offers one debt settlement service for both business and personal debt. While the website was bright and attractive, it lacked the transparency we like to see related to fees and program specifics. We found several customer complaints related to Fast Tracks inability to successfully negotiate down debt but still taking fees, leaving the customer worse off than before.

Many 401(k) plans will let you borrow against your retirement savings at relatively low interest, and you pay that interest to yourself. But if you quit your job or get fired, the entire 401(k) loan becomes due immediately, and there’s a 10 percent penalty added if you fail to repay and you’re under age 59.5. It’s also worth considering that you’ll lose out on anything your investments could have earned if you left them in the 401(k).
Some debt settlement companies will take a percentage of the money they are able to save you. They argue that this is the fairest way to charge because the more they save you the more money they will earn. However, many debt settlement companies – including National Debt Relief – charge a flat fee that is a percentage of 15% to 25% depending on the amount of your debt. We think this is the fairer of the two options because you will know before we begin settling your debts exactly how much it will cost you. While a fee of 25% might seem steep it’s important to remember that we’re probably cutting your debt by 50%. If you were to owe $20,000 our fee would be $5000. However, if we were to reduce that $20,000 debt to $10,000 you would still come out ahead by $5000. Plus, you would be completely debt-free and how good would that feel?
If you find yourself laboring under a huge load of credit card bills, do not despair. There are programs and companies that exist that could help you recover. You have a lot of options to choose from but the most important thing is to understand your current situation. But you also need to know your options and what your next step should be. Plus, you need to understand what not to do with your credit card debt.
The average credit card interest rate is 19.02 percent for new offers and 15.10 percent for existing accounts, according to WalletHub research. If you’re carrying high-interest credit card debt, moving it to a balance transfer credit card that offers a low or zero percent introductory rate can help you save money in interest payments while you pay off the debt. (One caveat, though: most balance transfer credit cards charge an upfront balance transfer fee of typically 3 percent to 5 percent of the transfer amount.)
Crisp and clean - all the makings of a fresh start. What else does one look for when hoping to consolidate their credit card debt and find financial solutions? Avant's page offers all of these and more. Doing business since 2012, Avant is accredited, boasting an A+ rating with the Better Business Bureau and has been featured in articles in reputable publications such as Bloomberg and The Wall Street Journal. Though young, this company knows how to provide quality service.
As noted above, debt consolidation is the process of using different forms of financing to pay off other debts and liabilities. So when a consumer is saddled with different kinds of debt, they can apply for a loan to consolidate those debts into a single liability and pay them off. Payments are then made to the new debt until it is paid off in full.
In situations where a debt has both a higher interest rate and higher balance than another debt, the debt-snowball method will prioritize the smaller debt even though paying the larger debt would be more cost-effective. Several writers and researchers have considered this contradiction between the method and a strictly mathematical approach. Writing in Forbes, Rob Berger noted that "humans aren’t really rational creatures" and stresses that research tends to support the debt snowball method in real-world scenarios.[5] The primary benefit of the smallest-balance plan is the psychological benefit of seeing results sooner, in that the debtor sees reductions in both the number of creditors owed (and, thus, the number of bills received) and the amounts owed to each creditor. In a 2012 study by Northwestern’s Kellogg School of Management, researchers found that "consumers who tackle small balances first are likelier to eliminate their overall debt" than trying to pay off high interest rate balances first.[6] A 2016 study in Harvard Business Review came to a similar conclusion:
Colorado's shortage of mental health providers means 70% of the residents seeking mental or behavioral health care are not receiving those services. Minimum federal standards require that there be at least one psychiatrist for every 30,000 residents. For Colorado to reach that threshold, they would need to add more than 90 mental-health professionals.
By submitting your information above, you consent, acknowledge, and agree to the following: Our Terms of Use and Privacy Policy. That you are providing express "written" consent for Consolidated Credit to call you (autodialing, text and pre-recorded messaging for convenience) via telephone, mobile device (including SMS and MMS - charges may apply depending on your carrier, not by us), even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list. We take your privacy seriously and you may receive electronic communications, including periodic emails with important news, financial tips, tools and more. You can always unsubscribe at any time. Consent is not required as a condition to utilize Consolidated Credit's services and you are under no obligation to purchase anything.
An IRS tax repayment plan is known as an Installment Agreement (IA for short). You and the IRS agree to a repayment schedule for one or more years of back taxes. You can set up these plans yourself through the IRS website. However, if you owe more than $10,000 or your tax debt is complicated, you may be better off hiring a tax resolution specialist.
Do you use credit cards to “get by” when you don’t have enough cash?Narrator: People often use credit cards to make ends meet when they have a limited cash flow. But that can lead to problems with DEBT Narrator: High interest rates on credit cards can double the cost of items if you’re only paying the minimum amount due each month. Renee amassed over $19,000 in credit card debt Narrator: For Renee, getting by on credit cards during graduate school put her on a treadmill of debt. Her credit card interest rates were between 15-20% Narrator: She was shelling out over $1,200 a month to her creditors, but getting nowhere fast 'On-screen quote from Renee' “I talked to a few companies first. Consolidated Credit stood out because I was still in control of my finances.” Narrator: Luckily, Renee found Consolidated Credit and enrolled in a debt management program. Debt Management Program: Before $1,200 per month; After $500 per month! Narrator: The program reduced her total monthly payments by almost 60 percent. 'On-screen quote from Renee' “The experience of living without credit cards really changed my mindset. It changed how I budget and spend my money now. Narrator: The monthly savings meant she didn’t need credit cards to get by anymore, because her budget was balanced. After her interest rates were reduced to 1%, Renee was debt free in 4 years! Narrator: And she could use part of that monthly savings to save up for a new house. Renee had this to say in closing: 'On-screen quote from Renee' It was a great feeling that I was no longer using credit to get by. If you feel like you’re barely keeping your head above water, pay your credit cards off. And there’s nothing wrong with asking for help!
When you are convinced that a debt consolidation program is your best option, select a trustworthy company to work on your behalf. A company that has a current working relationship with creditors and collection agencies will help you get better results. Because of this, a debt relief company that has been in the industry for a long time is a good choice.
People all over the US are in search of credit debt relief, especially as credit debt continues to rise. In the last 5 years alone, consumer credit card debt has risen 20.69%. Furthermore, 15% of households report spending more than they earn each month and 43% of these households rely on borrowing or credit cards to fill the shortfall in their incomes. This means that thousands of families in the US are facing not only rising debt, but also the rising fees that come with not being able to pay off that debt each and every month.²
As a last option to eliminating credit card debt, you may want to talk with a bankruptcy attorney. A downside with bankruptcy is that; in your future, if you apply to purchase anything on your credit, you’ll have a difficult time getting approved, or you will get charged the maximum interest rate. One way or another, with bankruptcy on your credit, you could be paying the price for a very long time ahead. You’ll have a difficult time using your credit even for simple purchases. With bankruptcy on your credit, you may not be able to rent a home or buy a new car. Future employers will also see that you filed for bankruptcy when evaluating whether or not to hire you.
2. Credit Score Boost. Consolidating from revolving credit (credit cards) to an installment loan will lower your overall credit utilization ratio. This is the percentage of your credit that you’re currently using, and makes up 30% of your total credit score, and also the second biggest factor when it comes to your credit score. The credit bureaus will consider your loan as having a lower level of debt, which can raise your score.
Recent Examples on the Web The world’s largest asset manager has been tapped by the Federal Reserve to oversee three expansive government debt-buying programs meant to stave off economic catastrophe, and is expected to make $48 million a year doing so. — Kate Aronoff, The New Republic, "Is BlackRock the New Vampire Squid?," 26 June 2020 Earlier this month, Macy’s completed it debt-financing deal, raising about $4.5 billion of new financing. — Washington Post, "Macy’s cuts corporate headcount by 3,900 as virus takes toll," 25 June 2020 The company joins the ranks of J.C. Penney, Neiman Marcus, J.Crew, Stage Stores, and Tuesday Morning—debt-laden retailers filing for bankruptcy protection after being pushed over the edge by weeks of closed stores during the pandemic. — Phil Wahba, Fortune, "GNC is the latest retailer to file for bankruptcy, closing up to 1,200 stores," 24 June 2020 The fundraising blitz and a recent share sale have made Reliance Industries debt-free, the company said in June. — Clare Duffy, CNN, "Asia's richest man, Mukesh Ambani, is now among the world's 10 wealthiest people," 22 June 2020 In May KKR injected €750m into the debt-laden business, which will eventually give the private-equity firm a 60% stake in a professional-beauty firm to be hived off from Coty. — The Economist, "The Reimann hypothesis A peek inside JAB Holding," 20 June 2020 Ambani had publically announced the goal to make RIL debt-free during the company’s annual general meeting in August last year. — Niharika Sharma, Quartz India, "Reliance Industries cleared its $21 billion debt in just 58 days—in the middle of the pandemic," 19 June 2020 The building is paid for, but even a debt-free building in the King William district of San Antonio is an expensive asset. — Michael Taylor, ExpressNews.com, "Liberty Bar owner in the age of coronavirus: ‘I feel like the tail struggling to wag the dog’," 12 June 2020 Many debt-laden companies began selling off forestlands. — Tony Schick, ProPublica, "Big Money Bought the Forests. Small Logging Communities Are Paying the Price.," 11 June 2020
I have too much credit card debt with high interest. I applied for a loan to consolidate all into one payment, I didn’t get it because of something on my credit report. My payments are always on time by using auto payments. Sears raised the interest to 16.24%, Chase raised theirs to 29.99% and there is no talking them down either. I plan not to use either of the cards again now or after they are paid off.
Fractional reserve banking has resulted in a transfer of wealth from the holders of currency to investors. Under fractional reserve banking the money supply is allowed to be increased whenever new interest-bearing loans are issued and is often constrained by a reserve ratio, which mandates that banks hold a portion of the wealth they lend out at interest in the form of real reserves. Many nations are in the process of eliminating reserve ratios.
The “Compromise of Arrears Program” or COAP (pronounced “cope”) is a program for eligible parents with past-due child support payments  to reduce the amount they owe to the government. This debt, called “arrears”, is owed to the government if your dependent children received public assistance (welfare) or were in foster care while you were not paying court-ordered child support. Those programs are paid for by the state using taxpayer dollars, and federal and state law require that you reimburse the state for supporting your children during that time.

Is debt validation right for me? Credit cards that have gone to a third-party debt collection company can easily get disputed and may not need to get paid. Although your debt is not getting paid back through this route, debt validation is one of the most popular debt consolidation options for 2018. Why pay a debt, before forcing the debt collector to prove that they are legally attempting to collect on the debt? Especially, when statistically more than 90% of credit card lawsuits are either inaccurate, missing documentation or flawed in one way or another.  By disputing an alleged debt, there’s a chance it may not need to get paid and can come off a person’s credit report entirely.


On November 4, 2009 Andrew Housser and Robert Linderman, general counsel, participated as panelists at the Federal Trade Commission's public forum on "Debt Relief Amendments to the Telemarketing Sales Rule." The forum discussed proposed fee regulation and rules to eliminate deceptive and abusive telemarketing of debt relief services. In a letter to the FTC Linderman stated in the first nine months of 2009 alone Freedom Debt Relief successfully settled approximately 40,000 accounts aggregating more than $206 million of unsecured debt with savings to consumers in excess of $120 million.[5] On November 11, 2009, the company announced it had settled more than $500 million in consumer debt since its founding.
Not only can you get out of debt, but you can get out faster and at a lower cost by adding additional principal to every payment. The results of this strategy defy intuition, but this Debt Reduction Calculator makes the math easy by showing you exactly how how long it will take you to get out of debt. It will also show you how much money and time you'll save by contributing extra principal with every payment.

You should consider others financial goals and risk factors besides just paying off debt as fast as possible. But, after you've decided what you can contribute to debt payoff each month, enter that amount into the calculator as your total Monthly Payment to see how long it will take with different strategies. Continue reading below for more information about the various debt reduction strategies.
Because the minimum payment on your transferred balances is now lower than it was before (since there’s no interest added), you can take the extra money you were previously paying each month and add it to the minimum payment on one of your other credit cards instead. That will help you get those other balances paid off so you’re not paying so much interest.
For recipients with multiple federal student loans or those individuals with several credit cards or other loans, consolidation may be another option. Loan consolidation combines the separate debts into one loan with a fixed interest rate and a single monthly payment. Borrowers may be given a more extended repayment period with a reduced number of monthly payments.
Check your credit reports and scores. It’s always wise to check your credit reports and scores before you apply for any type of financing, debt consolidation loans included. The condition of your credit is one of the primary factors that will determine whether you can qualify for financing and what interest rate and terms lenders are willing to offer you.
Alongside the unprecedented spike in personal debt loads, there has been another rather significant (even if criminally[clarification needed] under-reported) change: the new legislation in 2005 that dramatically worsened the chances for average Americans to claim Chapter 7 bankruptcy protection. As things stand, should anyone filing for bankruptcy fail to meet the Internal Revenue Service regulated ‘means test’, they would instead be shelved into the Chapter 13 debt restructuring plan. Essentially, Chapter 13 bankruptcies simply tell borrowers that they must pay back some or all of their debts to all unsecured lenders. Repayments under Chapter 13 can range from 1% to 100% of the amounts owed to unsecured creditors, based on the ability of the debtor to pay. Repayment periods are three years (for those who earn below the median income) or five years (for those above), under court mandated budgets that follow IRS guidelines, and the penalties for failure are more severe.
Consolidation almost always makes it difficult for you to breathe. Air can’t get through the consolidation, so your lung can’t do its job of bringing in fresh air and removing the air your body has used. This may make you feel short of breath. It may also make your skin look pale or bluish due to a lack of oxygen. Other symptoms, depending on the cause, can include:
You also may not want to close your old credit cards, as this can potentially ding your credit scores as well. By keeping your old credit cards open, you will not lower your credit utilization. Your credit utilization counts toward 30% of your credit score, and that’s why it’s important to keep that ratio low — under 30% and, optimally, less than 10% of your credit limits, overall and on individual cards.
Debt relief is not reserved for individual borrowers. Firms and even nations can find themselves in need of it. The Jubilee 2000, for instance, was a campaign in the 1990s by a host of nonprofit organizations, Christian organizations, and others to relieve developing nations of their debt by the year 2000. The petition had more than 21 million signers. Outcomes included wiping out approximately $100 billion of debt from 35 countries, along with increased awareness of the nature and scale of existing debt and the significant corruption behind lending and borrowing practices.
The financial expert Dave Ramsey invented the snowball method. The way it works is that you order your credit card debts from the one with the lowest balance down to the one with the highest. You then focus all of your efforts on paying off that card with the lowest balance, which will go fairly quickly. Of course, you will want to continue making at least the minimum payments on the other cards. When you get that first card paid off you’ll now have extra money available to begin paying off the card with the second lowest balance and so on. Dave calls this the snowball method because as you pay off each debt you gain energy and momentum to pay off the next – just like a snowball rolling downhill picks up momentum. Here is an example of how this method works. Let’s suppose you have the following debts
I have 5 CC’s, combined debt of $13,000. The utilization of these CC’s are over 30%. My overall utilization is around 45%. One card is at 70% because it was used for medical bills ($5000). This has been on deferred interest for the past 6 months and this offer is due to expire in August, which will give me a lot of extra interest charges. I need to do something to move the $5k off the credit card and am wondering how a debt consolidation loan would impact my score. I can’t balance transfer anything. Would it be better to just put $5000 on a loan? The other problem I have is that I also need to get a car loan ($6k) in August. I’m concerned about too many things hitting my report but I don’t really have a choice. Recently, one of my CC companies reduced my CL but after a conversation, they reinstated it. I’m anxious to clean up my report. My score is in low 700s. What should I do?
×