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2. File Bankruptcy
Bankruptcy is not always an option and, while it
may eliminate debt in the most desperate cases, it can have disastrous
long-term consequences that are worse than the current problems.
3. Use Consumer Credit Counseling
Consumer Credit Counseling organizations are often
funded by the credit card companies. If your debt is small, they can
offer good advice but often result in costing you 110% of your debt.
4. Debt Consolidation Loans
This is a secured bank loan or mortgage used to
consolidate and pay off other debts. If your credit rating and assets
make this possible, it may be an option.
5. Debt Negotiation and Settlement Program
If you have severe credit card debt problems, this
is your best debt reduction option. It can reduce the stress and may
drastically reduce what you owe through debt negotiation with saving up
to 60%. For information: www.nldc.us/register.html
1. Hope for the best and do nothing
Many people become immobilized with fear and do not
understand they do have options. This is the choice for many tens of
thousands of people across the country that are suffering in silence and
struggling with their debts. It is estimated that nearly 1 in 6 people
are in financial distress and many will do whatever they can to continue
making minimum payments for the rest of their lives.
The main reason for this is that it offers the
opportunity to avoid the embarrassment, humiliation and stigma that
could be involved in CCC companies, consolidation loans and bankruptcy
or even just letting their friends and family know about their
situation.
However, this is where most consumers face the
hostility of the collection agencies. If they continue to ignore their
situation, they can end up with judgments and garnished wages as well as
liens against their property. This, in itself, is sometimes enough to
drive consumers into the bankruptcy courts to stop the continuous
harassment, phone calls, abusive letters and threats of wage
garnishments. Unfortunately, deciding not to face your debts, not paying
or just struggling along with the minimum monthly payments will
eventually catch up with you. When it does, you're left with a much
worse financial problem than before.
If you are just ignoring the constant calls and
letters from the creditors, some of them will eventually take it all the
way to the courts and possibly get a judgment against you which could
result in wage garnishments or liens on your property. Action is needed
to completely eliminate your debt. Just hoping things will get better
will not resolve the problem. In the meantime, the creditors will tack
on late fees and over-the-limit fees and bleed you financially for the
rest of your life.
If this sounds like you, the best solution is to
take action, seek help and give us a call. Ignoring your debts or just
struggling by is not a way out and will catch up with you. Take action
now! Click on the following website: www.nldc.us/register.html
2. File Bankruptcy
Bankruptcy is the last resort in trying to eliminate
debt. The majority of people who file for bankruptcy say they wish they
had found an alternative method of resolving their problems and would
not do it again if they had the chance. Even so, unscrupulous collectors
and the high pressure tactics applied by creditors eager to collect
their profits are driving people into the bankruptcy courts in record
numbers. Last year bankruptcy filings went from 1.1 million to 1.6
million!
Most people do not realize the difference between
the various types of bankruptcy and could easily find themselves paying
back a large proportion of their debt anyway, forced by the courts to
make those payments. Although some types of bankruptcy may get rid of
unsecured debts completely and help stop foreclosure on your home, stop
garnishments by creditors and debt collection activities, be aware that
there are still many areas it does not help with. Bankruptcy will
normally not help in areas like child support, alimony, current taxes,
and most government-backed student loans, etc.
On top of this, you have also just ruined your
credit for the rest of your life. Not only does bankruptcy stay on your
credit report for 10 years and stay in the court records for 20 years,
but many people do not realize that applications for home loans and many
employment forms require you to answer the annoying question: "Have you
ever filed for bankruptcy?" So, in effect, it follows you for the rest
of your life. A bankruptcy can also hinder you in many major areas of
your life, such as finding a job, buying or even renting a home,
acquiring insurance, security clearance and buying or leasing a car. It
should be considered as an absolute last resort.
As a note on bankruptcy: Credit card companies are
constantly trying to get Congress to change the various bankruptcy laws,
making it much harder to take the so-called "easy way out." These
organizations have spent over $75 million on "educational programs" for
Congress over the last couple of years. They are "educating" them on the
reasons why such changes are needed. As a result, Congress is currently
trying to pass new laws to make it much harder for consumers to take
the option of bankruptcy and to force people into paying the creditors
regardless of their personal situation. (Remember creditors only make
money when you are in debt. The more debt you are in, and the longer you
stay there, the more money they make!)
Before you decide to do a bankruptcy, our attorneys will help you to explore your options. Click on the following website: www.nldc.us/register.html
3. Use Consumer Credit Counseling
These type of organizations are now going under many
names from Consumer Credit Counseling, debt Consolidation, debt
management or "Make Only One Payment" Companies.
CCC companies were established back in the early
80's when credit card companies started to notice that many people were
having problems making their minimum payments and were starting to
default on their debt. At that point there was very little a consumer
could do to get financial relief (except for filing bankruptcy) so the
credit card companies helped establish and fund CCC organizations in
order to recover their money from people struggling to make ends meet.
Acting as separate organizations from the creditors, they were able to
put on a friendly face and claim they were established to help the
consumer.
Since then, many types of CCC organizations have
sprung up. Besides the nonprofit or not-for-profit Consumer Credit
Counseling companies there are CCC companies that go by the name of
"Such and Such Consolidation Company" because of the bad reputation of
some consumer credit counseling companies. This can be a little
misleading because these companies do not make consolidation loans.
Consolidation, in this case, refers to the act of "consolidating" your
many payments into the one payment you pay to their company—just like
any other CCC company.
There are still other "CCC" companies out there that
claim to lower your payments by "negotiating" down the interest rates
and payments on your behalf. While we can't speak for every company out
there that advertises this way, this is usually a gimmick. These
companies are still a variety of CCC and as such already have
pre-established interest rates that individual creditors will allow.
(Don't be confused—this type of company NEVER negotiates down the
principle balance of your debt.)
As stated earlier, these CCC organizations basically
work for the creditors—not you—just like a collection company. In
addition to what the creditors pay the CCC company, they charge you a
monthly service fee for dispersing your money to your creditors. Until
recently these companies were paid a commission of around 12% to 15% by
the creditors for recovering the debt for them. That means for every
dollar you give to them, the creditor was giving 15 cents back to the
CCC company. This changed in 1999. According to an article in the Los
Angeles Times "too many people were using CCC companies just to lower
their interest rates" and as a result the creditors were cutting the
commissions paid to the CCC companies to 8%. (Does this make sense to
you? In our experience, people will do almost ANYTHING to hold on to
their credit cards and if they are willing to give them up—they are in
real trouble!)
The net result of cutting the commission to CCC
programs was that many of the CCC companies became unstable (thus the
poor reputation that ensued). Some of them could not make the consumer's
payments to the creditors on time or, in rare cases, at all. Consumers
started seeing late charges accumulate, and in the worst-case scenarios
payments were either far less than what was agreed to or some payments
were missed altogether. (This situation seems to have been corrected to
some degree now.)
A CCC organization works by looking at your income,
all of your regular expenses and your debts. Then, they let you know
what they think they can do for you or if they can accept you. They have
predetermined figures from each creditor as to what interest rates and
payments they are able to agree to. The interest rate will average
around 8%. Some creditors will lower their rate to 0% while others will
not go below 20% to 25%. Not all of your cards may accept the plan.
(Several well-known and commonly held cards refuse to work with ANY CCC
company.)
The main problem with CCC programs, and the main
reason for failure in this type of program is that your monthly payments
are usually going to be higher than your original minimum monthly
payments AND you are going to have to SUSTAIN that payment for many
years. If you are already having problems making your minimum monthly
payments now, how are you going to afford a higher amount over a period
of many years? For this reason it is very rare that anybody will
complete the program in the specified time originally stated (4 to 5
years).
In many cases, it takes up to three times as long as
the original estimate to complete. The majority of people will drop out
or be dropped at some point from the program for not being able to keep
up with their payments. Having no other alternative other than filing
bankruptcy, these people will try to sign up with a new CCC program and
the clock starts all over again (with a slightly smaller payment). Many
people fall off the program two or three times, thus extending the
original 4 to 5 year plan to 7 to 12 years!
Because of the extended time period to repay their
debts, their credit card balances do not change significantly over a
period of many years and the consumer feels like they have just fallen
into yet another type of trap. Approximately 65–70% of the people who
enter a CCC program are unsuccessful and fall off before the program is
complete. These aren't very good odds!
The Three main complaints with CCCs are:
1) The high monthly payments.
2) Lack of headway made on account balances.
3) Payments not being made on time and late fees accruing.
This type of program is effective, however, for
people who want get out of the debt trap and can afford to make slightly
higher monthly payments (around 3% higher) and can do this relatively
comfortably for the next 3 to 5 years. If you can continue to pay the
higher monthly payments and do not foresee future financial problems,
this is an O.K. way to go. If you are currently struggling to make
minimum monthly payments, however, the odds are that you will not
succeed using this method.
Despite marketing efforts and glowing remarks to the
contrary, CCC programs do affect your credit report, so don't be
misled. When you are accepted into a CCC program your creditors will
close your accounts and report this to the credit bureaus. Additionally,
nearly all creditors will report to the credit bureaus that you have
entered into a "hardship" program and need help. Although this is far
less damaging than bankruptcy, it definitely does impact your credit
rating—don't let anyone tell you otherwise—just to sell you their
service! Instead, look into other options. Click on the following
website: www.nldc.us/register.html
4. Debt Consolidation Loans
Debt Consolidation Loans usually require you to secure
the loan against some form of asset, (i.e., your home, as in a second
mortgage or a home equity line of credit). At this point you have gone
from unsecured debt to a secured loan and put your personal assets (your
home) at risk. Many consolidation loans are spread out over a 30-year
period leaving you open to the loss of your assets over the entire
period.
With credit cards and other types of unsecured loans
there is less that a creditor can do if you fall behind on your
payments. With consolidation loans, if you cannot make the payments or
are even late on making your payments, you can very easily lose your
home. Why would you want to go from unsecured debt to a secured debt
over a longer period of time?
The main reason that 80% of the people who get
consolidation loans end up in worse financial trouble is they do not cut
up their cards or cancel them once they have been paid off with the
consolidation loan. Within a very short time, most people soon find
their cards maxed up to their limits. As mentioned, this happens an
incredible 80% of the time to people who say it will never happen to
them.
You then end up with not only the consolidation loan
to pay back, but struggling to pay the minimum payments on the newly
charged credit cards as well—all with the same amount of income as you
had before. This is the shortcut to financial ruin—and it happens to 80%
of the people who take out a consolidation loan.
Remember, being in any kind of debt leaves you less
spendable income than you probably need to buy life's necessities.
Although a consolidation loan may give you a lower payment and a little
more breathing room, is that really going to leave you with enough
spendable income to get you through the next 10 to 30 years?
As a word of advice, if you do get a consolidation
loan, after you pay off your account balances. Debt Consolidation is not
a way out, but in many cases, a way into deeper debt and worse
financial problems. However, in some cases it is the best option, when
done along with a debt negotiation and settlement program. To find out
more, click on the following website: www.nldc.us/register.html
5. Debt Negotiation and Settlement Program
This is rapidly becoming the preferred choice of debt
elimination for most people severely in debt or considering bankruptcy.
Our attorneys work for you—not the creditors and have your best interest
in mind at all times while solving your problems. Our average client is
often able to eliminate debt in just 24–36 months using our program. By
retaining an attorney, you can be assured your debts will be handled by
a licensed professional.
This is not a new type of program, but has been
around for over 25 years. Our team has helped many thousands of people
become debt free again. Using our extensive knowledge, we can take away
the constant worry of not knowing what is going to happen next, relieve
the stress and worry and give you back your life.
Unlike most CCC or debt consolidation programs, we
don't reduce the interest or lower the payments but take an aggressive
approach to eliminating the debt. We are usually able to reduce your
total debt owed to an average of around 55–60 cents on the dollar
including all fees and payments. To learn more, click on the following
website: www.nldc.us/register.html
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