Your Debt Expert - Top Debt Tips

In order to become a debt expert, you are required to offer free certified and professional advise regarding debt. Help and guidance in financial matters can be easily obtained from a diverse range of sources, including businesses who demand exorbitant fees for their services and charitable organizations that operate on a not-for-profit basis. To find a solution to severe money issues, complicated financial challenges demand the assistance of debt specialists from California. In this article, we look at ten guidelines that, when followed, will make it much simpler for you to comprehend debt aid and guidance and will steer you in the right direction as you work toward becoming financially independent.

Before you read the hints, it is essential that you do some research and figure out which debt firms you want to work with, as well as shop around for the best advise.

1. How can you increase your income?

Are you obtaining the appropriate amount of income? You could be qualified to get additional perks and credits. You should also double check that the tax code you entered is valid.

2. Ensure that you are well-prepared with your knowledge.

Many people are unwilling to acknowledge the extent of debt they are in or the fact that they want assistance and guidance on their financial situation. If they do so, it is frequently an indication that the person does not comprehend the monetary issues they are facing. If you make the decision to negotiate the repayment of your debt, it is essential that you have a general idea of your monthly income and expenditures, as well as the total amount of debt you currently owe. The more assets you have, the better off you will be.

3. There is a workable solution.

Don't worry about a debt expert not being able to assist you since there is always a solution to every problem. There are several alternatives to filing for bankruptcy, including filing for an Individual Voluntary Arrangement (IVA) or a Protected Trust Deed. Other options include.

4. What are the most significant debts?

Important debts include those labeled as priorities. In order for you to be able to maintain your standard of living, you are going to need to make sure that all of your important debts, such as your mortgage or rent, gas, and electricity, are paid. Your unsecured obligations, which include credit cards, overdrafts, personal loans, and the like, are not necessary in any way. You cannot be sent to jail for failing to pay the balances on your credit cards.

5. Draft your SOA, which stands for statement of affairs.

You need to do an analysis of your statement of affairs. Here is where you will determine your income, expenses, assets, and obligations for the current period. You have to make a list of every one of your obligations and jot down the account reference numbers.

6. Creditors who are owed money by you

Make a list that includes the names, addresses, account information, the total amount of money owing, and the sort of debt (credit card, overdraft, etc.) you have with each of the persons that you have a debt with. In the event that you owe more than one obligation to a single entity, such as two loans to the Bank, you must report each liability individually.

7. Keep in touch with your financial backers.

Make sure you keep in contact with your creditors (those to whom you owe money) to prevent them from pursuing legal action against you. It is of the utmost importance for priority debts, such as those in which you risk losing your house if the payments on it are not kept current.

8. Educate yourself about possible financial options.

You may seek assistance with your financial issues from debt specialists, but you need to be sure that you are getting the appropriate debt solution. You can make sure that the counsel you are receiving is appropriate by reading up on the various debt solutions that are available, in addition to doing some comparison shopping to find the best bargain possible.

9. What happens if there is not enough money?

During the course of the recession, a significant number of individuals will either have been laid off from their employment or will be unable to work as a result of an illness or disability. In this particular scenario, declaring bankruptcy or entering into a sequestration agreement is the one and only choice available to alleviate the strain of one's debts. A debt expert can provide you with sound financial guidance and point you in the right direction to relieve yourself of the stress caused by your mounting debt.

10. Locating an authority on financial obligations

Finding the correct financial advise business that provides specialized assistance with debt may be a challenge. Make sure that you are not paying for the guidance that you are receiving. In addition to this, check to see if the firm possesses a consumer credit license. Do not sign anything until all of the steps involved in the debt solution have been thoroughly explained to you. You may do a search for debt specialists using Google, Yell, or money discussion forums.

People may get out of debt with the assistance of Alleviate Financial Solutions for a price that is less than what they owe. We will help you pay off your debts in a stress–free manner using our more than a decade's worth of expert knowledge in consumer debt relief.

🎧 Podcast: https://pod.co/podcastlive/top-tips-to-help-with-credit-card-debt

Credit Card Debt Settlement! What Is The Procedure?

I've worked in the credit card debt settlement profession for nearly a decade and have helped thousands of individuals find their way out of debt. I will note right away that this will be a lengthy piece because I will go over what credit card debt negotiation is, the benefits of the process, the drawbacks of the procedure, and the distinctions between how a debt negotiation organization works vs. a legal firm. There are significant variances in crucial aspects of the debt negotiation process, and it is critical to understand these distinctions before making a decision.

I'd also want to point out that this method is not for everyone; some individuals just lack the financial wherewithal to make it happen, while others lack the correct mindset.

To begin, what exactly is the debt negotiating process? This is the process of negotiating past-due accounts in order to reduce the amount owed from the original balance; the benefits of doing so include saving money on what is owed (in many cases, debtors save up to half of what they owe) and getting out of debt much faster than paying monthly minimum payments.

You'll see that I mentioned "negotiating on past-due debts." For creditors to be willing to negotiate on an account, you must fall behind. Why would they accept less than what you owe if you are current? When you only pay the bare minimums, they have you exactly where they want you. Many refer to this as the "credit treadmill," or the loop of making monthly minimum payments at exorbitant interest rates; these schemes are designed to trap clients in debt for more than three decades and lose at least five times the original total in interest alone. As a result, the idea that you may get out of debt in 2-4 years through debt negotiation is a huge motivator for many people who are caught in this situation.

Unfortunately, many borrowers are terrified of falling behind on their payments. Naturally, if you fall behind on your credit card payments, your credit score will suffer; there is no way around it. The cost of saving thousands of dollars on your debt is a momentarily lower credit score. Now, I say temporarily because the harm is not permanent, and if you begin negotiating and demonstrate that you owe no more credit card debt, your score will automatically return. Your "debt to credit ratio," which accounts for around one-third of your credit score, will be considerably better when you pay off your bills.

This takes me to the point where a credit card debt settlement law business may provide a radically different and more advantageous service than a typical corporation; because the majority of the benefits a law firm can provide deal with the negative consequences of falling behind on these accounts.

One of the bad consequences of falling behind on payments is that creditors will seek to collect the debt, which means they will phone and harass you, the debtor. For the first several months after falling behind on payments, the debt remains with the original creditor, and no one can legally prevent them from phoning to collect the amount. However, things can change after the original creditor transfers the account to a third-party collector. If you have a law firm representing you, they will tell the collector that you have been retained. According to the FDCPA (Fair Debt Collections Practices Act), at this stage the collector is not permitted to contact you and must only interact with the law firm. This is a significant benefit that can significantly lower the amount of collection action you will face while going through the debt settlement process.

A normal debt settlement firm lacks the legal authority to prohibit collection calls. They will frequently instruct you to go write stop and desist letters on your own time, which is the limit to which they will assist you with calls. Any companies who are not law firms and claim to be able to halt calls are not giving you the truth and should be avoided.

Another disadvantage of being past due is the chance of being sued. In order to recover the debt, the creditors have the legal power to take you to court. However, you must comprehend that this is not their usual line of action; it simply costs too much money and time to take you to court with no promise of success.

Nonetheless, a lawsuit is a possibility, and you should check all of your bases before making any major financial decisions. If you engaged a law firm, they will still have the legal right to contact the opposing collectors' attorney and negotiate a settlement, avoiding the need for you to appear in court. Collectors prefer this method because they know they will receive money without having to go to court. On the other hand, if you employ a normal debt negotiation organization, they will be unable to legally help you if you are sued; they cannot provide legal advice or contact the opposing attorney to work out a settlement. You will be on your own to figure out what to do, and you may wind up with a judgment. This is a significant advantage that a legal firm has over a corporation.

This following point is critical to comprehend; many individuals do not and end up finding out the hard way. This has to do with how the organization is set up to function in accordance with your state's debt negotiation rules and regulations. The great majority of regular debt settlement organizations are not properly set up to operate in all states, and many of them are not even properly set up to operate in their own state. This can cause major issues for their clients! Why? Because the FTC (Federal Trade Commission) has been harshly clamping down and rapidly closing down debt negotiation organizations that are not properly set up. When this occurs, the firm sometimes lacks the finances to repay its clients' payments for services that they will no longer be able to provide. People are still in debt, with no one to negotiate on their behalf, and have lost thousands of dollars in fees in some situations.

When you choose a legal company, they will be in compliance with all state laws in order to carry out the discussions correctly; they will also have a solid working understanding of how the laws function in your specific state, which many national debt negotiation businesses do not. Please do not fall into this nightmarish scenario; it might be the difference between losing money and having to file for bankruptcy or effectively obtaining debt independence through credit card debt settlement. 

Visit: https://alleviatefinancial.com/debt-negotiation-services/

Another thing to maintain mind is that a legal practice must provide full information to potential clients. That is, they must completely explain both the good and bad aspects of credit card debt negotiation before thoroughly reviewing your unique financial circumstances to evaluate whether this is the best approach for you.

Many debt negotiation firms just go on and on about how amazing their program will be, without mentioning any of the potential drawbacks. This is frequently what gives the debt negotiating sector a poor name.

I know I've been focused on the bad sides of credit card debt negotiation because I believe it's vital for people to see the complete picture; yet, this procedure is assisting millions of individuals in escaping a financial nightmare. People, especially given the current situation of the economy, are in desperate need of saving as much money as they can and getting out of debt as soon as possible in order to go forward in life. And the facts are that credit card debt settlement, when done correctly, may save you a lot of money and get you out of debt quickly. Imagine being able to keep all of the money you put out each month for minimum payments in your pocket. What difference would that create in your life?

As I previously stated, I have been in this profession for about a decade and presently work for an incredible legal company with a long history and an excellent BBB rating. Whether you want an upfront and honest assessment of your circumstances to determine if this is the correct fit of consumer debt relief for you, fill out an application using the link below in the signature file. I will go over how this procedure works and whether you are an excellent candidate in great detail. I hope that after reading this post, you are better informed about how this process works and what to look for when interviewing organizations to potentially assist you.

Alleviate Financial Solutions negotiates debt settlement solutions to assist consumers by negotiating with your creditors on your behalf so that you can pay less on the current amount you owe and in less time.

🎧 Podcast: https://pod.co/podcastlive/top-tips-to-help-with-credit-card-debt

Can a Debt Collector Contact Me at Any Time During Debt Relief?

Can a debt collector contact me at any time or from any location if I am enrolled in a debt reduction or debt settlement program? The answer is simply no.

Debt collectors are not permitted to contact you at inconvenient hours.

They may not phone you before 8:00 a.m. or after 9:00 p.m.

They are also not permitted to phone you at work if they are informed that they are not permitted to contact you there.

Any concerns should be reported to the state attorney general's office, the Federal Trade Commission, or the Consumer Finance Protection Bureau.

If you want to know more about debt relief or debt settlement, please visit our website at alleviatefinancial.com.

What is the Process of Debt Relief and Debt Settlement?

Debt relief and debt settlement are negotiated agreements in which a creditor accepts less than the whole amount due in order to legally satisfy a debt.

Settlement programs normally span between 24 and 48 months and are heavily influenced by factors such as delinquency, creditor rules, the number of accounts, and the overall cash amount of the debt.

Debt settlement services have been in some form or another since the beginning of time.

The contemporary sector has grown significantly in the twenty-first century, owing partly to banking institutions' relaxation of lending regulations.

Furthermore, today's borrowers incur substantially more debt than their parents did at a similar period in life, and they repay that debt at a slower rate.

These massive debt loads and slower payoffs, along with today's high interest rates, indicate that many borrowers may be paying off these loans for decades if no action is taken.

While there are several interconnected factors for these changes, industry analysts point to growing availability to higher amounts of credit along with a decrease in the societal stigma associated with debt.

Debt Settlement Calculator | Reduce Financial Stress Your Complimentary Debt Analysis

Potential consumers discuss their financial condition with a professional debt consultant.

The debt professional assesses the caller's financial position and recommends the best debt reduction solution.

Clients who want to participate in our debt relief program are then taken through the enrolling procedure.

Use Our Debt Settlement Calculator | Reduce Financial Stress by Enrolling in Our Debt Relief Program

Signed registration forms are processed, and the new customer is contacted by a member of our specialized account management staff to welcome them to the program.

Account managers are available around the clock and maintain constant contact with customers throughout the program.

Discuss the Debt Settlement Calculator with Us | Reduce Financial Negotiations & Settlement

Our skilled negotiators go to work on client accounts right away.

When settlement offers are received, they are checked for correctness before being offered to customers for acceptance.

This procedure is repeated until all client accounts are settled.

Debts have been paid off!

Your debts will be paid off in a few years or even months, allowing you to start over financially.

Alleviate Financial Solutions negotiates debt settlement solutions to assist clients by negotiating with creditors on their behalf so that you can pay less on the current amount owed in less time.

🎧 Podcast: https://pod.co/podcastlive/how-to-release-an-irs-wage-garnishment-and-work-with-debt-settlement-companies

Do I Need To Worry About Being Scammed If I'm Working With A Legitimate Debt Relief Company?

In order to determine if you are dealing with a legitimate debt relief or debt settlement organization or whether you are being scammed, you must first determine whether you are in debt.

According to the Federal Trade Commission, a genuine debt relief firm will not charge any up-front costs for its services.

You have been scammed if you believe you have been charged an up-front fee by a debt reduction or debt settlement firm. This is against the law. Notify the Federal Trade Commission (FTC) as soon as you can.

In addition, no debt reduction or debt settlement organization can guarantee that your creditors will agree to a settlement with you.

We question you to visit our website at Alleviatefinancial.com if you are experiencing finance difficulties and would want more information on debt relief or debt settlement.

What is the Method of Debt Relief and Debt Negotiation?

debt relief and debt settlement are bargained agreements in which a creditor agrees to take less than the entire amount due in order to legally fulfill a creditor's claim.

Settlement programs often run between 24-48 months and are heavily reliant on criteria such as delinquency, creditor policies, the number of accounts, and the overall monetary amount of the debt owed to the creditors.

Debt settlement services have been around in some shape or another since the beginning of time.

It is partly owing to the loosening of lending regulations by financial institutions that the contemporary sector has witnessed tremendous expansion in the twenty-first century.

Furthermore, today's borrowers are accepting on substantially more debt than their parents did at a similar period in their lives, and they are repaying that debt at a significantly slower rate as a result of that debt.

Because of these massive debt loads and delayed payoffs, along with today's high interest rates, many borrowers might be paying off their debts for decades if nothing is done to help them.

In spite of the attribute that there are several interwoven factors for these developments, industry analysts point to growing availability to higher amounts of credit, combined with a reduction in the societal stigma associated with being in debt.

Set up a time for your complimentary debt analysis.

Interested parties consult with a professional debt specialist regarding their financial position.

The debt specialist assesses the caller's financial condition and makes recommendations for the most effective debt reduction method available.

Our debt relief program guides clients through the registration process after they make the decision to participate.

Using our debt settlement calculator might help you save money and reduce your financial stress.

Our team of dedicated account managers will call to welcome the new customer to the program after the registration paperwork have been received and processed.

Throughout the program, account managers are available to customers at all hours of the day and in constant connection with them.

Consult with Us About the Debt Settlement Calculator | Reduce the Stress of Financial Negotiations and Settlements

Right away, our expert negotiating team gets to work on our clients' cases.

As soon as settlement proposals are received, they are checked for correctness before being submitted to the customers for acceptance.

This process is repeated until all customer accounts have been settled.

We've paid off our debts!

Your obligations will be paid off in a matter of years, if not months, and you will be able to start over financially from the ground up.

This standard is created from the very beginning of the relationship with a client at Alleviate Financial Solutions since we are a firm that communicates directly with clients. It is important for us to maintain our high levels of service by using professional communications, financial planning, debt management techniques, and reports.

🎧 Podcast: https://pod.co/podcastlive/how-to-choose-reputable-debt-relief-companies

Credit Card Interest Rates: Tips for Lowering Your Rate

Do You Have Credit Card Debt Settlement That You Can't Get Out Of?

Does it feel that no matter how diligently you pay your credit card bills each month, your debt never seems to go down?

The key reason for this is the interest rate at which you are borrowing. Interest rates on credit cards are quite high.

According to the Federal Reserve, the average claim rate on a credit card is 13.8%, while the average interest rate on a mortgage is 3.80 percent.

If you are only making the minimum payment on your credit card debt settlement, the vast bulk of your charge will be applied to the interest rate alone.

In fact, by March 2019, Americans will have spent $110 billion on interest and fees associated with credit card debt settlement.

In order to get out of credit card debt settlement, interest costs are your number one adversary to contend with.

The good news is that there is a technique to get your interest rate down, and it is easy enough that anyone can accomplish it.

If your monthly payments are only barely covering your interest costs, contact your provider and request a lower interest rate.

The worst they can say is that they cannot help you. However, there is a potential that you may receive a YES and that your interest rates will be reduced.

CreditCards.com conducted a study in 2017 and found that 69 percent of respondents who requested a reduced interest rate were granted one.

On top of that, 84% of those who inquired obtained a higher credit limit as a result of their request.

Another 84 percent of those who were late on their payments had their fees waived. In addition, 70 percent of those who inquired were successful in having their yearly charge waived or lowered.

The fact that so few people do it is one of the reasons why it is so successful.

According to Creditcard.com, just one in every four consumers has ever requested a reduced interest rate from their credit provider.

Many people believe that asking is not an option–that is, they do not believe they have the right to ask–while others believe they do not know how to ask or negotiate.

We will show you four effective methods for requesting a reduced interest rate that are both effective and efficient:

What Factors Make You Eligible For A Reduced Interest Rate?

When you submit your request, the following factors are taken into consideration by your credit card company:

How long have you had your card, and how loyal are you? Do you utilize it on a regular basis? Your corporate loyalty and frequent usage of your credit card provide you a significant advantage over the competition. Credit card firms place a high value on recurring clients since it costs them a lot of money to acquire new consumers. The company is more than prepared to lower your fee if it means keeping a long-term customer happy.

Depending on how much you've spent so far, your credit card company may decide to lower your interest rate since they believe you've spent less than 35 percent of your credit limit. They will also check your credit limit on other cards, as well as how much money you have spent on them in the past. The same 35 percent guideline applies here as well.

Finally, the credit card firm wants to know how many times you've been late on a payment in the last year. If you pay on time your bills every time, you have more bargaining power.

If you believe you are eligible for a lower interest rate, phone the lender. Even if you do not meet the requirements, phoning gets you on their radar anyway.

Customer service representatives frequently inform consumers that they should contact back after a few more months of continuous payments.

However, before making a decision, conduct some preliminary study. Investigate the interest rates that other firms are willing to provide to someone with your credit score.

As you'll see in our script below, you may utilize this knowledge to your advantage when negotiating a better bargain.

Begin with the oldest card in your collection. Loyalty pays off, so start with the card that you've been using the most frequently.

Call the customer support phone number that is printed on the back of your credit card.

Explain to the customer support representative that you'd want to get your interest rate lowered and identify yourself.

If you've been a customer for a long time, now is the moment to express your gratitude.

Also, note that you are usually on time with your payments or that you have a good credit card score.

Here's An Example Of A Script You May Use

Hello there, my name is _________ . (After exchanging greetings.) I'd want to speak with someone about my current interest rate with the bank. For the last ________ years, I've been a faithful consumer of the Company's name. And I'd like to continue to be one, but my APR is too high. For example, I receive offers from–insert name of competitor company–, and they offer a cheaper APR to people with my credit score. I make purchases with this card on a regular basis and pay the bill on time each month. I feel I am eligible for a lower interest rate than I am currently paying. Whom should I contact in order to obtain one?

Either the customer support representative will take care of your request or will send you to a supervisor.

If they agree to cut your interest rate, express your gratitude and ask for the specifics of your new interest rate. Inquire as to whether the increased rate will take effect immediately.

And make it clear that the new rate is your annual percentage rate (APR) going forward, not merely a promotional deal that will expire after a certain period of time.

The Ability To Persevere Is Essential

What happens if they say no? Please call again.

The person who answers the phone is frequently the difference between a yes and a no.

If the first representative you talk with tells you no, call back.

This time around, you might be able to speak with someone who is more receptive.

Upon hearing "no" for the second time, request to speak with a supervisor.

If they also decline, you might inquire as to what you can do to put yourself in a better position to receive a rate decrease.

They could impose certain limitations and/or ask you to call back in a few months, but this is a step in the right direction.

How many times are you allowed to call? There are no restrictions.

However, once every six months–or until you receive a yes–is OK.

If you make an excessive number of phone calls, you may be placed on a blacklist. After you've received your first rate reduction, you might want to wait a year before requesting another.

As a firm that deals directly with clients, Alleviate Financial Solutions has a duty to deliver the finest services available in a professional way. This standard is created from the very first time we talk with a client and continues throughout the relationship. Professionally written letters, financial plans, debt settlement methods, and reports help us to maintain our high levels of service while being accountable to our clients.

🎧 Podcast: https://pod.co/podcastlive/how-to-release-an-irs-wage-garnishment-and-work-with-debt-settlement-companies

Settle Your Debt on Your Own versus Using a Pro

If you have too broad a debt than you can manage and are struggling and overwrought out to pay your creditors back, there is help.

A decision that many people take is the lengthy path of “just surviving,” having nothing in savings and barely scraping by to create ends meet.

The trouble with this choice is that when one bump in the road arises, such as a surprising medical bill, job loss, or financial shift, then filing bankruptcy is gazing you in the face.

However, living paycheck to paycheck is like residence on the advantage of a financial calamity.

In fact, you may exactly be in one as you read this.

So, what should you do if you desire to get out of debt when you owe crushing amounts of money?

Most people don’t realize the alternative of resolving their debts which is better than filing bankruptcy.

Yet even then, most people are not completely educated on how to settle debts on their own or the benefits of keeping a professional debt settlement business to take care of it all for them.

Here are the distinctions between how to settle your debt on your own verse utilizing a professional.

Steps To Assistance You Settle Debts On Your Own

1. Keep track and understand your debt amount: It is crucial to know exactly how great you owe creditors, including the claim rates and overall debt amount. If you do not understand this, then it will be tough to negotiate with creditors.

2. Arrange with the creditors: Once you have your total debts and interest rates in order, the next step is to phone up your creditors and have a talk. Just be honest and explain your circumstance to them. They should see the hardship you are facing and figure out a strategy for you to pay your bills back. Negotiation is the most significant component of the debt settlement procedure because it will decide the amount you will payback.

3. Payback approach: You must have a payback strategy and if you would rather pay back your loans in increments or all at once. Depending on what you arrange, you may be able to decide on which possibilities are ideal for you. After all, if you file bankruptcy, then the creditors will not gain from any negotiation.

If you cannot avoid the desire to spend when you see money in your hand, create a bank account only for settlement purposes.

4. Get it in writing: Before you settle for anything, create sure to get it in writing. Some creditors may try to smuggle in other clauses in an agreement given to you. So, make sure anything you are reading is the same as what is settled upon in your conversation.

5. Make the amounts on time: It is vital to always create your payments on time. If you don’t, that may put the arrangement you negotiated with your creditors in peril. Hence, make sure you take the procedures necessary to back your debts as agreed upon.

Paying Back With The Help of Professionals

Now that you understand how to clear your debts DIY way.

What are the benefits of keeping a team of certified debt professionals working to settle your debts for you?

The key benefits you have when you choose to go with debt specialists are:

• Higher debt reductions

• Faster settlements

• Not having to worry or deal with irate creditors.

Here is how you have professional assistance you clear your debts:

Plan a free debt consultation with a team of debt experts.

It will take some time for the company’s staff to verify your paperwork and see the payments you have due.

You should also open an account to deposit the cash agreed upon to satisfy your debts until they are totally addressed. Once this is set, they will subsequently meet the creditors.

Typically, when a team of debt professionals agrees to take you on, they usually settle your debts between 24-28 months and decrease your debts as high as 40-50 percent.

They also do not charge a fee till the first settlement occurs. Any organization that asks for money up ahead is not a company you want to work with to have settled your debts.

When you remain with the program and are faithful in making your payments, you will then be debt-free and can start restoring your credit.

Conclusion

Hiring a team of experienced debt experts to settle your debt for you is always an easy technique because they normally handle everything for you.

The debt specialists will send veterans in who can optimize results in minimizing the loan payback amount for you.

However, it is always best for you to examine both possibilities, and if you are feeling like facing the creditor giants, get at it!

Alleviate Financial Solutions is a leading supplier of best-in-class performance-based consumer debt-relief services. Throughout our company, we are devoted to giving the best customer service possible. All facets of our program, from our performance-based fee structure and account management tools to our industry-leading service area, are created with our customers in mind. Each client's financial condition is taken into consideration when developing our plans, and we monitor their progress on a regular basis to ensure they are meeting our high standards. We have high expectations for ourselves and our service, and we won't stop working until we've paid off all of our clients' debts.

🎧 Podcast: https://pod.co/podcastlive/how-to-release-an-irs-wage-garnishment-and-work-with-debt-settlement-companies

What Are the Cons and Pros of Debt Consolidation

Do you find yourself in a condition of financial trouble due to consumer debt? You are not alone in your feelings. In accord withto the New York Federal Reserve, American consumers would be saddled with a total of $14.35 trillion in consumer debt by the third quarter of 2020.

If you are falling back on your credit card payments, then you could consider debt consolidation. Let’s go on to analyze the positives and disadvantages of debt consolidation to see if this is the right choice for you.

What Is Debt Consolidation, and How Does It Work?

Debt consolidation is the process of grouping all of your debts together into a single, manageable payment with a single interest rate. This means that all of your credit card payments, mortgage payments, vehicle loan payments, and student loan payments are now merged into a single payment.

As you can see, this option can be very enticing to folks who are becoming behind on their payments, especially considering the interest rate is reduced. Let’s glimpse at some of the positives and disadvantages of debt consolidation plan below.

The Advantages and Disadvantages of Debt Consolidation

Everyone has heard the adage "if anything sounds too good to be true," which suggests that it most likely is. It’s the same way with debt consolidation.

Even if it is a great remedy for people suffering from too much debt, there are both positives and cons to this debt consolidation plan. Let's delve a little deeper.

Pro Tip #1 You will benefit from a lower interest rate.

If you have a great credit score, you will nearly always be able to qualify for a reduced interest rate, which is a considerable advantage. This implies that you pay a single sum into your loan every month, and the interest rate on your loan is reduced.

For illustration, if you owe $9000 on your credit card and your interest rate is 25 percent, you will wind up paying $2500 in interest over the course of two years if you pay $500 per month toward the amount.

With a debt consolidation method, you will pay $820 in interest at a 17 percent interest rate, as well as $445 in loan repayments per month, for a total of $1,080.

Due to the decreased interest rate, the amount you pay each month decreases, as can be seen in the table above. This is only applicable if you are able to secure the reduced interest rate.

Pro Tip #2: You will be able to simplify your finances.

In the case of a debt consolidation plan, you can greatly simplify your financial situation by having only one repayment plan, one amount to pay every month, and only one interest rate to worry about.

If you've ever had a lot of different loans and had to keep track of all of their payments, due dates, and interest rates, you'll understand how much of a bother and worry it can be to keep track of everything. No one has the luxury of time for that!

In addition, because your payment amount is the same every month, you know exactly how much money you need to set aside each month for savings. Also consider how much money you have available for discretionary spending.

Pro Tip #3: You will be able to pay off your debt sooner.

Usually, with debt consolidation plans, you may pay off your debt sooner, because you can acquire a reduced interest rate on all your consumer debt. Beginning and end dates are clearly marked on the consolidation loan contract.

You may pay it off using credit card installments during the course of your lifetime. There is no time limit in this situation. As long as you are only making the bare minimum payments on your credit card debt, you could be stuck with it until you die.

This is not the case with consolidation loans. This is why they are such an excellent alternative for anyone who wants to have more control over their finances and enhance their financial skills.

Pro Tip #4: You have the capacity to increase your credit score.

You can pay off your debt preferably with a debt consolidation loan. This has a beneficial impact on your credit score. Additionally, if you are punctual in making your loan payments on time each month, this will help to improve your credit score.

With consolidation loans, you are obligated to make all of your monthly payments on schedule. That is a rule that cannot be broken.

As settlement history accounts for 35 percent of your credit score, a debt consolidation plan helps you increase your credit score little by little every month.

Additionally, accounts owing account for 30 percent of your credit score, which will be considerably improved if you close down your credit card and loan accounts when you combine them all into a single debt consolidation plan.

Pro Tip #5: It is achievable that you will not be able to obtain a lower interest rate.

As previously noted, having a decent credit score is essential in order to qualify for a lower interest cost on your debt consolidation plan.

Having problems completing your loan payments on time, it is conceivable that you do not keep a strong credit score to begin with. Ascertain whether a debt consolidation program is a good fit for you by speaking with a debt consolidation company representative.

The second disadvantage is that this could be a band-aid solution to your impulsive spending habits.

If you are having issues paying off your debts, either as a result of poor spending habits or as a result of a tough time restricting your expenditures, a debt consolidation plan will merely function as a bandage for the larger problem.

It’s wonderful for you to acquire a debt consolidation plan, but only if you work upon your financial habits alongside the repayment plan. They should be in harmony with one another.

Gather with others who are on the same path as you, potentially through social media, and get serious about building healthy money habits!

In this manner, you may pass on these principles to your children as well, ensuring that they do not become locked in the cycle of poor financial management.

Inconveniently, there are up-front fees to worry about.

There are certain upfront charges that you will have to account for when signing up for a debt consolidation plan. Loan origination costs, balance transfer fees, closing costs, and annual fees are examples of fees that may be charged.

If you do not keep the financial capacity to handle all of these charges, a debt consolidation plan may not be the ideal option for you. The best line of action, once again, would be to contact an agency that can oblige you in selecting the best course of action.

Financial Independence Is Within Your Reach – With a Little Hard Work

Now that you know the positives and drawbacks of debt consolidation, you can make a more sensible judgment on whether this choice is for you or not.

If you are still perplexed, please contact Alleviate Financial Solutions right away for assistance. They have supported over 20,000 families on their journey to financial freedom, and they can assist you as well!

🎧 Podcast: https://pod.co/podcastlive/how-to-release-an-irs-wage-garnishment-and-work-with-debt-settlement-companies