Getting Advice On Consolidating Debt
Be cautious of debt consolidators who charge fees or get commission for their services. You can often get the same help for free.
ASIC’s MoneySmart website provides information about managing debt. This includes how to:
- check your credit report to confirm the information is correct and fix any mistakes
- get help with a repayment plan if youre struggling
- find free financial counselling services in your state or territory
- find free legal advice services in your state or territory.
Review Your Reports For Errors
Fact: 1 in 20 credit reports contains an error that would decrease a consumers credit score by 25 points or more.
So, you want to read through each copy of your credit report carefully to identify mistakes or errors. Look for:
- Missed payments that you made on time
- Duplicate accounts, which throw off your debt-to-income ratio
- Outdated account statuses, such as charge-offs
- Collection accounts that are either paid or not really your debts
Any of these types of errors can contribute to a lower score. Simply asking the credit bureaus to correct these mistakes can help you achieve the score you want.
Dealing With Debt Collectors
If you owe money, debt collectors generally have a right to seek repayment. There are laws in place to protect you from being treated unfairly by debt collectors.
Watch the video on how to deal with debt collection to:
- check your rights when dealing with debt collectors
- find out where you can get help with debts.
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Settling Credit Card Debt
If you’ve maxed out your credit cards and are getting deeper in debt, chances are you’re feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce or even erase your debt for pennies on the dollar. Sounds like the answer to your problems, right?
The Federal Trade Commission , the nation’s consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.
Implement A Debt Reduction Plan
You basically strategically arrange your bills and make the largest payments possible on one debt at a time. You find as much cash flow as possible in your budget by eliminating expenses, then target each debt successively.
We offer resources that describe how to implement an effective debt reduction plan.
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Get A Written Copy Of Your Agreement
If you choose to move forward with a financial relief option, its important to understand the terms of the agreement before agreeing to anything. Once youve accepted a relief option, make sure to get a copy of the agreement in writing.
During the relief period, you want to make sure to look at your statement each month for any errors or inaccuracies, and if you see anything, make sure to refer back to the agreement so you can dispute it.
Debt And Grants Due To Education
Many of the families are not able to manage the basic needs of their family and thats why for them it is very tough to handle the expenses of their childs education. And when this type of situation has come in front of them, they do not need to worry. Because the government has countless grants for debts schemes. And those schemes can help the people to put their children in school and college for their further education.
But these scheme-related grants have one drawback. The drawback is that a student has to take a loan for their study and in the future, he or she has to pay the loan. If they do this then they can able to get the grant under the schemes to pay off debt.
It comes where many of the private programs and schemes support the families who are unable to afford the cost of the education. These valuable assistance grants are provided to them, so their children will get a proper education. These schemes provide scholarships and these are given to those children or students who need them and also who is deserves them. Because many of the students need the opportunity to show their talent and with this, they can fulfill their dreams and chase them.
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What Is Debt Consolidation
If youre wondering about the difference between debt settlement and debt consolidation, here are some details to keep in mind. Where debt settlement involves working with a debt relief company to settle your debts for less than what you owe, debt consolidation requires you to take out a new financial product to consolidate all your existing debts.
With debt consolidation, youll move all your old debts to the new loan with a lower APR or better terms. While the goal of debt consolidation is saving money, debt consolidation can also help you go from paying multiple debt payments each month down to just one.
Managing Debt Collectors And Scammers
People with debt and little money are prime targets for scammers.
The Fair Debt Collection Practices Act sets rules for debt collectors, including:
- How often and when they can call
- No abuse or deception
- Must provide amount of the debt, name of current creditor, how to get name of original creditor.
There are also strict rules for debt settlement companies. If they do any of these, its a debt elimination scam:
- Charge fees before providing service
- Tout a government debt elimination program
- Guarantee credit card debt will disappear or be paid off for pennies on the dollar.
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Avoid Any Actions That Would Hurt Your Score
The key to building credit is that you dont want to take any action that incurs a negative item now. Its easy to offset negative items in the past with positive actions now. If you incur a negative item now, it will be bad for your score.
That means you should be extremely vigilant to avoid actions which would result in more negative items in your report:
- Dont miss any payments by more than 30 days
- Stay on top of things like out-of-pocket medical bills to avoid new collection accounts
- Never run up your account balances to their credit limit
- Avoid opening multiple new accounts within a six-month period
- Dont close your oldest accounts
- Stay away from alternative financial services , such as payday loans
Although the two factors mentioned above account for 65% of your score calculation, theres still another 35% left over. The remaining factors include the number of new accounts opened, length of credit history and types of credit. Thats why you want to avoid opening too many new accounts at once. Closing old accounts can also decrease your score since you shorten the length of your history. And lenders also consider types of credit that you use, so you want to avoid bad debt, such as payday loans.
Learn more about the factors that make up your score.
Need Help With Your Credit Card Debt Start With Your Credit Card Company
If youre struggling to keep up with credit card bills, youre not alone. According to a 2017 Bureau report, from 2015 to 2017 overall credit card debt increased by 13 percent, while people with very low credit scores saw their debt rise by 22 percent.
Even if youve hit a rough spot, lost your job, are dealing with family illness, or facing emergencies, you still have options. The earlier you act on those options, the better your chances are for avoiding a debt in collections, damage to your credit report, a potential lawsuit or bankruptcy.
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Does Consolidated Credit Adhere To These Guidelines
Yes. Consolidated Credit is a registered 5013 nonprofit organization. We are nationally accredited through the Financial Counseling Association of America . We are also approved by the Department of Justice to provide pre-bankruptcy counseling in our home state of Florida.
Connect with a certified credit counselor to get the help you need to get out of debt.
All articles and educational content on Consolidated Credit are written by and carefully reviewed by certified credit counselors, HUD-certified housing counselors and financial coaches.
Consolidated Credit follows strict sourcing guidelines and only links to reputable sources for information, such as government websites, credit bureaus, nonprofit organizations and reputable news outlets. We take every step possible to ensure all information comes solely from certified financial professionals.
If you feel that any of our content is inaccurate, out-of-date or otherwise questionable, please let us know through the feedback form on this page.
Researching Debt Settlement Companies
Before you enroll in a debt settlement program, do your homework. Youre making a big decision that involves spending a lot of your money money that could go toward paying down your debt. Check out the company with your state Attorney General and local consumer protection agency. They can tell you if any consumer complaints are on file about the firm youre considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.Enter the name of the company name with the word “complaints” into a search engine. Read what others have said about the companies youre considering, including news about any lawsuits with state or federal regulators for engaging in deceptive or unfair practices.
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How Does Debt Relief Work
Debt relief refers to a variety of solutions designed to help make your payments more affordable so that you can ultimately become debt-free. It might include a replacement loan that lowers your interest rate or modifies your repayment term, or you may even see a reduction of the total amount you owe. Specific modifications vary based on the solution you opt for.
If you decide on a debt solution thats right for you, youll want to make sure you make any payments according to the terms of the new agreement of your debt relief plan.
Use Credit Card Debt And Interest Calculators
Try to find an app that offers a credit card debt calculator. It can help you uncover exactly how much you owe and how long it might take to pay it off. You could also look into a . This helps you better understand how interest impacts your total credit card balance. If youre like most, you might be surprised to learn how much interest actually costs.
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How Do I Check Out A Credit Counseling Organization
Just because an organization is a non-profit doesnt guarantee its services are free or affordable, or that its legitimate. Some credit counseling organizations charge high fees, which they might not tell you about.
- A reputable credit counseling organization should send you free information about its services before you say anything about your situation.
- You can check out organizations youre considering with your state attorney general and local consumer protection agency. They can tell you if they have any complaints about the organizations. Even if there are no complaints, its not a guarantee that theyre legitimate. Also ask your state attorney generalif companies are required to be licensed to work in your state. If so, ask whether the companies youre considering are licensed.
- The U.S. Trustee Program keeps a list of credit counseling organizations approved to give pre-bankruptcy counseling, but it doesnt endorse any particular organization on the list.
After youve done your background investigation, interview the final candidates. Choose an organization that:
- does not charge you in advance for help that it hasnt given yet
- has credit counselors that are accredited or certified by an outside organization
- offers a range of services, including budget counseling, debt management classes, and free educational materials
- will give you a specific quote in writing for any one-time or monthly fees
- will help you even if you cant afford the fees or contributions
Orderly Payment Of Debt Program
Consolidated Payment at 5% Interest
If youre a resident of Alberta or Nova Scotia, you may qualify to enter into a consolidation order known as an Orderly Payment of Debt program . Other provinces used to offer this program, but have stopped offering them because non-profits have been doing such a good job at helping consumers through their credit counselling and debt management programs.
Through an OPD program, you pay back the full amount that you owe on your unsecured debts typically over a period of 3 years. The interest rate is set at 5% and you are able to keep your assets. Your creditors must agree to your OPD program and the courts must approve it.
To find out if OPD is a good solution for you, contact the agency that administers your provinces OPD program.
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Dispute The Mistakes To Repair Your Credit
As much of a bad rap as the credit repair gets for scamming, the process is 100% legit and legal. Per the Fair Credit Reporting Act, you are legally permitted to ask the bureaus to correct mistakes in your report. Thats all credit repair is.
To complete the repair process on your own, follow these steps:
Thats all the credit repair does. So, you can do all of that on your own and avoid paying a company fees to do it for you.
Find more step-by-step instructions for credit repair.
Find A Reputable Counselor
Find a reputable credit counseling organization by contacting LSS Financial Counseling Service at 577-2227 or www.lssmn.org or the National Foundation for Credit Counseling at 388-2227 or www.nfcc.org. Before you use any credit counseling organization, also check with the Better Business Bureau at:
Better Business Bureau of Minnesota and North Dakota220 South River Ridge CircleBurnsville, MN 55337
Try to find an organization that will help you for free as part of its mission.
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Know Your Balance: Can You Meet Your Minimum Payments
Using your minimum credit card payments, add up each of your monthly credit card bills. Is your monthly bill total larger than your monthly income or does your income out earn your bills? Use your knowledge of your overall balance to select a credit card debt consolidation solution that fits your situation:
Government Grants For Dependent Expenses
There are lots of works and responsibilities that a person has to handle in their house. But because of their low income, they cant able to handle all the expenses and one and more important thing is the child care for them. Also, the government gives priority to child care and makes sure that they will able to handle these essential duties. Because several families did not have any income source or homeless and because of this they are unable to take care of their child. They also dont afford to fulfill their basic needs because of their low income.
These are the families which are not able to handle the expense of anyone extra thing even it is cheap. Thats why with the grants and schemes these families will get extra assistance with the financial help, so they can get out to pay off debt. For this, many states have the authority that they can provide specific help to those families. With their grant and scheme, they help them to pay off a debt to those people who need it. So, with the use of the grant, they can support their child and also care for them.
Now, you see that there are different classes for the grants and one can take advantage of those grants. But only on one condition that they will be eligible for the grant. And for this, they have to first check the eligibility criteria, and then they have to move their step forward in the direction of applying for the grant.
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Work With Your Creditors
Reach out to your creditors to explain your situation. A credit card issuer may be willing to negotiate payment terms or offer a hardship program, especially if youre a longtime customer with a good track record of payments.
If your issuer offers a hardship program, it may provide relief when circumstances beyond your control like unemployment or illness impact your ability to manage payments. Whether you negotiate with your issuer or accept the terms of a hardship program, either option could lead to more affordable interest rates or waived fees, depending on the issuer.
These small changes might be just enough to help you get a handle on your debt, and the worst that can happen is they say no.
Whats The Difference Between Chapter 13 And Chapter 7 Bankruptcy
Generally, Chapter 13 lets people with a steady income keep property, like a mortgaged house or a car, which they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that lets you pay off some of your debts in three to five years, rather than give up any property. After you make all the payments under the plan, the court discharges your debt so you dont owe anything else.
Chapter 7 is known as straight bankruptcy. In general, Chapter 7 involves liquidating all of your assets that arent exempt. Exempt assets might include cars, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official, called a trustee, or turned over to your creditors.
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