Don’t Fall For Debt Relief Scams: Tips To Avoid & Protect Yourself No ratings yet.

Millions of Americans are currently indebted on credit cards, medical bills, student loans, and various other unsecured loans or bills. These people are not able to make even minimum monthly payments on what they actually owe. Even all those people who are managing their payments would choose to pay less. Such circumstances tend to make the consumers, with debt, an easy target for debt relief and debt relief scams.

Make sure you have the right knowledge so that you can save yourself from debt relief scams that may cost you more and end up increasing your debt. Such scams often lead to identity theft. The best way is to get familiar with the common debt relief scams and the important tips on how to protect yourself from such scams.

 Debt Relief Scams Tips To Avoid Protect Yourself

Following are some of the common signs that confirm you can be a prey of debt relief scams –

  • They will promise reduced interest rates

You must have come across such claims in promotions on different websites, via emails or phone. First and foremost thing you should know is that no company or law firm can give you an assurance that they will successfully negotiate with your creditor to have a reduced interest rate. You can consider these claims and assurance as red flags.

10 Invaluable Credit Card Debt Consolidation Tips To Help You Get Out Of Debt

  • They will charge upfront fees

If the company is asking you for some amount upfront prior to offering any kind of service then it is completely illegal practice. If the company is not disclosing what they will do and don’t share the charges for offering their services, then also these actions are considered against the law. Such fake companies and firms are only concerned with gaining your personal details and your money.

  • They will claim their programs are backed the government

If it is a fake company, they will advise you to have the legal right to settle your accounts and the government has passed a legislation providing you a right to settle your accounts. Some claims tend to make some people believe that their debts will be reduced, but in actuality, all these are false claims and do not have any relevance.

  • They will offer a fee-based program for bringing down the student loan payments

With a significant rise in the student loans, the scams associated with these loans have also surged. These counterfeit companies will charge for the programs that the student loan programs are already offering for free at www.studentaid.gov. Federal programs offering abridged monthly payments include flexible and income-based repayment plans.

Your Best Options For Paying Off $20,000 in Credit Card Debt?

  • They are not a member of BBB and US Chamber of Commerce

You can easily make out the authenticity of the debt relief company by visiting their official website. Such companies have to be registered with Better Business Bureau and US Chamber of Commerce. A legitimate company will also be a part of associations such as American Fair Credit Council and their official website will have BSI Certificate of Registration. This certificate suggests that they are offering services in accordance with Best Practices for Accredited AFCC Members Checklist.

How to Avoid Debt Relief Scams

If you don’t want to be a victim of debt relief scams, then make sure you have followed the following tips to avoid and protect yourself from debt relief scams

  • Make sure you had a word with the customer support executive. There are chances that these executives are also as sneaky as the details mentioned on the website, but at least you can ask them about the details repeatedly to check the authenticity.
  • Make sure you keep an eye on your accounts. The moment you witness any suspicious activity, immediately cancel your card and file a report.
  • If you are thinking of trusting the reviews given on their official website, then think again. Make sure you have checked the reviews on other websites as well to have authentic information. If the reviews are not in favor then you will know what to avoid.
  • Make sure you have read the complete document thoroughly before you sign up. You should also be aware of any hidden fees that may surface in the later stages.
  • If you want to know the legitimacy of the debt relief company, make sure you have checked its BBB ranking.
  • Make sure you have used a prepaid debit card for your account. That way, the company won’t be able to charge more than what you actually authorize. Above all, they won’t have any access to your funds.

How to choose the best debt relief company

You will come across various companies promising you an average debt reduction. Without a doubt, the results are something you should consider, however, fees, general transparency, and customer support are some of the key factors that you should not overlook.

  • Accreditation

The best and professional debt relief company will be accredited by various organizations such as AFCC (American Fair Credit Council), BBB (Better Business Bureau), and IAPDA (International Association of Professional Debt Arbitrators).

  • Longevity

All those companies which are in business for a longer duration have a reputation to uphold and fewer chances of being involved in malpractices. You can also inquire about the company from your friends and family members about the company’s standing.

  • Clear and Comprehensive Website

When you are in debt, you have so many questions about the debt settlement process. The best debt relief companies will have all the information on their official websites such as fees, services, and related FAQs.

  • Low Fees

You don’t worry about the fees as the best debt relief companies will keep their fees low as compared to their competition.

  • A variety of debts  

All debt settlement programs will settle medical bills and credit card debts. But the best companies will go ahead and settle whether you have student loan debt, business debt or any other particular secured debt.

  • A reasonable timeline

Generally, the duration for settling a debt is two to four years. If you are taking the services of one of the popular debt settlement companies, then there are no specific timelines as the settlement can be done quickly as well.

  • Extensive customer support

With a popular debt settlement company, it is far more convenient to get in touch with the representatives of the company via email or phone. Having chat will be an added bonus. The best companies will assign a program manager, who will function as your contact and advocate the moment you sign up. Such companies will allow you online account management as well.

  • Savings to you

As far as the savings are concerned, the best companies will help you save a minimum of 30% on your debt after paying the company’s fees.

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Credit Card Debt Settlement Process No ratings yet.

Being in debt isn’t great. Being unable to pay your debt is even worse. While no one likes dealing with debt collectors, doing so can help make your debt more manageable—and maybe even reduce how much you owe through the process of debt settlement.

Debt Settlement

Debt settlement is a process of negotiating with one or more creditors to reduce the balances owed by debtors. Also known as debt resolution, the process can benefit all parties, although the scales are tipped on the side of the person who owes money.

debt-settlement-process

When settling makes sense?

Debt settlement is not for everyone, but it can be a good solution if your only other option is Chapter 13 bankruptcy.

“I recommend that anyone thinking about debt settlement talk to a bankruptcy attorney to see what their options are, especially if they owe more than $10,000,”. “If you do qualify under the new rules to do a Chapter 7 bankruptcy, that could make more sense.”

Changes in the bankruptcy law in 2005 made it difficult for many people to file for Chapter 7 bankruptcy, which liquidates debts. If you have regular income and there is some leftover after you pay basic expenses, then you must go to Chapter 13 bankruptcy, which requires that you pay back some or all of what you owe over five years under a very rigid payment structure.

One way to resolve your credit card debt or other debt is to enlist the help of a debt settlement company. Debt resolution companies often are experienced at negotiating with creditors and may have relationships with major creditors, specifically credit card companies.

The first step in the debt settlement process is for a consumer to reach out to a reputable company that can help. These debt arbitration firms are staffed by credit counselors, people who are accredited in analyzing personal finances. They also have a keen understanding of the current marketplace, including how and why creditors will negotiate debt settlement.


People also ask

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Pros and Cons of Your Debt Consolidation Options No ratings yet.

We shall start up with understanding what is DEBT CONSOLIDATION –In simple terms it means to get a single loan to pay all of your smaller loans. The ideology behind debt consolidation is that making one payment every month seems easier to manage & the new loan may result in lower interest rate, lower monthly payment or a combination of both.

Debt consolidation loans are of 2 types:

Secured loans:

Under secured debt consolidation loan borrower can avail the loan amount depending upon the value of collateral pledged against the loan. Secured debt consolidation loan can be availed by anyone who agrees to place some valuable collateral i.e. regardless of their credit history borrower with good or bad can apply for secured debt consolidation loans.

Unsecured Loans:

In unsecured loans, the asset is not required as collateral. If the borrower fails to pay the money of the loan, the lender can eventually obtain a court order in an attempt to recover the money. The added risk for lenders results in higher interest rates. Approval of such loans are primarily based on borrower’s credit score (in addition to income and total debt).

People pitch to debt consolidation by highlighting 3 salient features:

LOWER’S YOUR MONTHLY PAYMENT AMOUNT

By consolidating all the debts they might lower your monthly payment amount but the reality is by lowering the monthly payment it is likely to take longer time to clear the debt.

REDUCES YOUR INTEREST RATES

It might be possible that the new loan may be available at lower interest rate but it often ends up with higher total interest to be paid.

MANAGEABLE MONTHLY PAYMENTS

We get enticed by the idea that instead of multiple we only have to pay one amount each month. But there is lot more in picture which seems unseen.

So to decide whether Credit card Consolidation is a Good idea or not: One must work on planned budget & improve savings & spending habits.

A very famous financial author once quoted-“DEBT IS NOT A PROBLEM; IT IS THE SYMPTOM OF OVERSPENDING & UNDER SAVINGS”.

Get rid of pending debts and liabilities

Debt consolidation is one of the competent ways to get away with your current debts. As per this, all your debts are rearranged into one single loan where the interest rate is on a lower side. If you are striving hard to break out of debt, a consolidation loan will surely deliver you from this situation.

It can also be said that debt consolidation allude to a loan which is, particularly, taken to get rid of pending debts and liabilities. There will only be one single loan for which there will be a single monthly payment.

Related – 13 Carcinogenic Debt Consolidation Myths You Ought To Know In 2017

Pros of debt consolidation 

  • Getting rid of bill collectors – Collection agents can really unsettle your daily schedule, this is where enrolling for a debt consolidation loan can prove beneficial. This will put an end to all annoying calls & letters and you no longer have to deal with the collection agents.
  • Organizing bill payment – With the help of debt consolidation, you get to reorganize your repayment to varied creditors, thus making one single monthly payment. When you have one single bill to pay in a month, you have to care less about making minimal payments to different organizations. Moreover, you get to extricate yourself from remembering the due dates every single month. All you need is to pay a bill every single month and you no longer have to take care of the accruing late or missed payments.
  • Fixing the credit – If you are not able to cope up with the monthly payments of your credit card, there are strong probabilities that your credit rating is descending. While your credit report card may undergo a primary ding, all the negative records of missed payments instantly stops when you enroll yourself in a credit relief program.
  • The prime most advantage of debt consolidation is that all our debts are in one place, so we have only 1 interest rate to keep track of & one payment to make every month.
  • Debt consolidation aids in managing debts effortlessly because you have to make 1 monthly payment to your financial institution, rather than bunch of different payments to different lenders.
  • Using debt consolidation one can also close down other credit cards & loan accounts which will revamp their credit rating by showing lenders that your finances are managed properly.
  • Since the interest rate of the new loan is generally lower than the existing small loans, you will pay less of your money to interest, getting you out of debt faster.

Related – Private & Federal Student Loan Debt Consolidation and Settlement

As and when your consolidation agency receives timely monthly payments, they further update leading credit bureaus, thus helping your overall credit ratings to improve.

  • Constant Instructions – A reputed debt consolidation agency will not only provide you loan so that you can pay off your creditors, instead they should impart information that will help you to make you more responsible towards your finances in the coming times.

You should acquire knowledge of setting up a budget, set financial goals for the coming future and plan an emergency fund by taking guidance from a reputed credit card consolidation company.

Cons of Debt Consolidation 

  • Unjustified Fees – There are consolidation agencies which charge high fees and interest rates are also on a higher side. This will mean that you will use majority of the monthly installment to pay off the interest, thus making it difficult to pay off the debt. The interest rates can also rise unexpectedly, worsening the things for you.
  • Low Interest Rates – Majority of the people are of the view that the low rate of interest will help them to save more which is not correct. Usually the term for debt consolidation loans stretches for a longer duration, this will mean that your total interest payments will amass to pricey debt.

If you think that paying off short-term debts such as personal loans or credit cards over a longer duration, with a lower rate, will be a good idea, think again. In real terms, this actually means that you will have to pay more interest in the future

Related  – Which Are The Best Ways To Consolidate Your Student Loan Debt?

  • Additional debt – Some people have a wrong illusion that debt consolidation is a way through which they can get rid of the debt. Alas, majority of the consumers are of the view that the zero balance is actually a green signal for them to go extravagant while spending. But, all this will only end up making things worse.
  • Cutting down the debt – Debt consolidation replaces current debt with another debt which most of the people don’t realize, so this cannot be a solution for all those consumers who are over-indebted. There are certain things that you should follow for financial well-being – spend less, save money and pay your debts with your money.
  • One of the main disadvantages of debt consolidation is that one might end up paying more interest than you need to on some of your borrowing. Debt consolidation can make debts more expensive and may take longer to pay them off. One must remember when we consolidate debt we end up owing same amount of money but the difference being that the length of the term increases which indicates paying more money through interest.
  • Debt consolidation may reduce your monthly installment & give you short term breathing space but it will result in paying interest for longer tenure.
  • It’s a myth that debt consolidation reduces your debt rather it may lead to more debts by giving you an illusion that the debt is being paid off.
  • If you have used your house or any other valuable asset as collateral you can risk losing it if you are unable to pay the loan installments.
  • Therefore debt consolidation is not a solution for over indebted consumers. In order to get on track of financial well being one must spend less, save for emergencies & pay off their debt with their own money.
  • Next point to be taken into account is that how do you qualify for debt consolidation loan:
  • To see if you are eligible for consolidation loan the lender would examine your credit rating because lending institutions will use your credit score & payment history to determine risk. If borrower has bad credit history or large debts, the borrower may offer a secured loan.
  • The lending institutions also delve into the regular source of income of the borrower to analyze whether you will have enough cash to pay the loan installment after meeting your daily living needs.
  • Lending institutions may need a cosigner for the loan or provide collateral such as house or car, which borrower will pledge as security to ensure he pays back the loan.

Related  –  Credit Card Debt Negotiation – An Expert Guide

Should I choose debt consolidation

At the end of the day, it is your personal decision whether the debt consolidation is right for you or not, if yes than our credit card debt specialists are availaible to you for providing expert advice on how to pay off your credit card debt. Now that you have a fair knowledge of the pros and cons of debt consolidation, you can make decision on your own. All you need is to consider the above discussed information and you cannot go wrong.

Related  – What is Credit Counseling and How It Can Help You Reduce Debt Problems?

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Credit Card Debt Negotiation – An Expert Guide No ratings yet.

What is Credit Card Debt?

No doubt credit cards have become the most popular way amongst everyone for shopping and buying items from shops as well as paying online. As it gives us the liberty to pay back money installments later.

If used wisely it is definitely a useful tool, but  if you fail to do so then surely it can cause plenty of trouble for you and can prove to be an expensive way to borrow.

Let us know what are the risk and how can you manage your credit card debt and credit worthiness.

Credit card arrears- money that is due and should have been paid earlier.

If you due to any reason you are unable to pay the minimum amount on the due date every month, your account will go in deficit. You will definitely get calls from your creditor will contact you to get their default payment.If you still fail to make the demands meet then you will be stated as defaulter and further action may be taken against and the creditor can drag you to court.

Credit Card Debt Negotiation – An Expert Guide

Credit Card Limit

Whenever you get a credit card it comes with a credit limit. This credit limit is judged at various points. Such as people with a poor credit history and have a low limit. These cards have a high interest rate. You can portray a good credit image by paying off your credits on time also you can build up the creditors trust upon you. Irrespective of you having a low or high credit limit, you can have an affordable debts which takes a while to pay back.

You may come across times when your card provider will try to convince you to increase your credit score, especially if you have had a good repayment history. Though it is solely up to you whether to accept or not but you should think twice before agreeing to an increase in your credit limit,

Agree only if you genuinely think that you need it. As some people like to get a higher limit for fun or just for a show, there’s always the temptation to keep spending and but at the end of the day it happens that you run up a debt which you eventually can’t afford to pay back.

Settling Credit Card Debt

How much is the interest and charges on credit card debts that you pay?

  1. Interest rates varies from 10% to 70% or more. Remember that at the end the rate of interest you’re charged will depend on your credit rating.
  2. With few of the cards you may even get interest-free 60 days on purchases. This indicates that if you pay within this period you won’t be charged any interest.
  3. But most will charge interest straight away on money you withdraw from a cash machine.
  4. If you miss you’ll have to pay late payment charges on top of the interest.

 

Also read – Cost of Carry Credit Card Debt

Extras that you get when you spend on a credit card

While you spend on your credit card one important benefit that you avail is that you get extra cover on larger purchases.

If your purchases are between £100 and £30,000, then the credit card provider is also responsible for the goods or services provided.

Understand by this example: if you paid for a holiday with a credit card but the company went bankrupt then you can claim the money back. Or the most common example is when you order something online but they don’t arrive you could claim back your money that.This cover applies even if you only paid part of the amount with your card.

Private & Federal Student Loan Debt Consolidation and Settlement

Joint credit card debt

Unlike the joint accounts in the bank, there is no provision of having a joint credit card. The credit card account to be in one name. But you can surely avail another credit card for your partner. If your card provider has given you a second card, you will be liable for all of the money spent on both cards. Only you are liable to make payment for both the cards. Even if the 2nd card is for someone else still only you are supposed to make the payment. Hence do think nicely before getting a new credit card.

What is PPI on credit card debt?

Many credit cards have payment protection insurance (PPI) to cover the minimum payments if you became ill or lose your job.

There were many people who did not require these PPI policies still these were sold to them If you are also one of them, then you can ask the credit card provider to refund the payments to you. This could reduce your credit card debt.

Credit card balance transfers

You can transfer balance from your card to another. Though these are a feature of only some credit cards. YOu can try transferring a debt from a card with a high rate of interest to one with low or 0% interest as it can help you pay off the debt faster.

0% interest credit cards

Some cards have a special feature where no interest is charged for only a certain period or for an introductory period where no interest is charged. This period varies for 18 months or more. If you transfer to a 0% interest card, check the rate of interest when the 0% deal ends as this could be high.

Credit cards and your credit file

You can even get help from a genuine and trustworthy credit card debt settlement agency with whom you can share the information with, about the way you use your card. This information can further help other creditors to see and decide how risky it is to lend you money whether.

Your credit file will show the following information about your credit card debts:

  • The balance owed
  • Your payment history
  • Whether your account has defaulted

Other information that are showcased are

  1. Your credit limit
  2. How much you’ve spent each month
  3. How much money you’ve withdrawn from a cash machine each month

Credit Card Debt Negotiation

It remains very much possible to negotiate terms, interest rates and payments on credit card debt. You may also attempt to negotiate a settlement of the amount owed by you. The steps you employ and the options’ availability will depend to a large extend on your particular situation and the credit card company’s stance you’re dealing with.

When Can You Negotiate With Your Credit Card Company?

In most instances your negotiation strategy is largely dependent on the timing. If you’re having no trouble whatsoever with your payments, you’re very likely to get a better interest rate, while if you find yourself in the midst of financial hot water, you might be able to get better payment terms dates, or even a short reprieve from payments.

  • When it’s all merry and good

If you’re all comfortable with your debts and have a reputable credit history, you may want to get in touch with your credit card companies and ask for a lower interest rate. While they may initially be reluctant to concede you any benefit. But if you give a slight hint to them that you would consider switching to a card with lower rate, they might agree to work with you.

  • When you’re under the burden of financial difficulties

Although credit card companies encourage people to call them in circumstances of financial hardship and with inability to pay off debt, some would be amenable to listen to your case than others; so it’s anybody’s guess as to how they’ll respond when you do call them.

Ideally, when you can foresee that there will be a slight delay in your payments or if you perceive making a few days’ change in your regular payment(say moving the date from the first of the month to the middle) would make it easier on you to pay on time, then by all means you should inform your credit card companies. A great number of companies are even generous enough to provide you with relief in case you find yourself out of work, or subject to some illness or family emergency that need tending to.

On the other hand, there are a lot of companies who won’t show any signs of clemency. The moment they get a hint that you’re in some financial difficulty and won’t be able to pay off your debt, they’ll waste no time in cutting off your credit. Therefore, you have to show utmost discernment as to when you plan to communicate, who you plan to communicate with and how much you communicate about your financial woes. So when you do call, get yourself absolutely prepared to respond to the credit card company’s inquiries. At last, don’t let an unpleasant experience with one creditor discourage you – others may take a totally different approach about negotiation credit card debt.

Also Read – Credit Counseling Can Help You Reduce Debt Problems

Credit Card Settlement Options

There are a myriad of options available for negotiating a credit card debt settlement. A few of them are mentioned below:

  • Moving a payment date
  • Reducing the interest rate, or
  • Asking for a temporary payment reduction

In case you’re seeking bigger concessions from the credit card company, the credit company will deem it appropriate to cut off your credit until you’re fully paid up, or maybe for an extended length of time too. But if your financial troubles aren’t showing any signs of relenting in a few months times, you’ll probably have to discuss the following possibilities with your credit card issuer:

Also Read – How To Get Out Of Credit Card Debt? Your Options

Who should you talk to at the Credit Card Company?

Who you talk to at the Credit Card Company largely depends on what you’re trying to negotiate:

  • Seeking change of payment date: If all you want is just a change in the regular payment date (likely to coincide with your payday etc), you can pretty much talk to anyone in the customer service to get assistance.
  • Interest rate reduction : When the purpose of your call is to ask for a reduction in the interest rate, it would necessitate getting the manager involved.
  • You expect a delay in your payment : Most companies have a dedicated department taking care of the calls on such matters. You could simply apprise them of your situation and approximately how late you’ll be in your payments. If you notify them in advance they may be kind enough to even waive off the late fee on your payment.
  • Negotiating settlements or long-term payment plans: If you’re calling to explain a more critical situation, the customer service department may not be able to help you at all, despite making claims that they can help. Communicate politely with the representative, but if the conversation seems to be taking a less agreeable direction, then you might inquire if there’s another department you could speak to or any other supervisor who might be able to provide further assistance. It might be a while after being transferred from one department to another you finally reach someone who has authority to negotiate.

Don’t forget to get the agreement in Writing

Irrespective of the outcome you reach, whether a less or a more favorable one, make sure you get it in writing and strive to stick to your payment plan. If you’re in still worse financial trouble, get in touch with your creditor so you may renegotiate before falling behind. If you wait too long and eventually default on the settlement payments, the creditor may be very unwilling to renegotiate with you.

Seek still further help!

If you find your credit card company isn’t helping you enough, you might consider getting help from outside sources, which include:

  • Credit Card Counselors : Go for the non-profit agencies that readily provide free or very low cost services. There is no shortage of scams, without doubt, so carefully assess which companies to use and get a clear understanding of which options to avoid for example debt management firms and variety of debt settlement companies.
  • Bankruptcy Attorneys :  A Chapter 13 bankruptcy allows you to keep your property intact while paying off all or part of your debt over a period of three to five years, mostly when the creditor doesn’t agree. Furthermore, by filing for Chapter 7 bankruptcy, many debtors can safeguard themselves against losing property of any proportion and discharge their credit card debt.

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