Credit Counseling Corp knows all to well that more and more consumers are finding themselves overwhelmed by their credit cards and looking to file bankruptcy. If at all costs, you can avoid bankruptcy, there are viable alternatives to bankruptcy. In fact, if a consumer files for bankruptcy, they are required by the bankruptcy court to attend a debtor education course, and many consumers can complete this online.
Typically, there are two parts to the debtor education class, one part you take prior to filing for bankruptcy, the second part you take after your filing, but must be completed prior to any debt being discharged (if filing a Chapter 7). I am going to cover the first part, as it will offer you great information on how you may be able to take charge of your finances, debt and financial future on your own, and you can take swift and immediate action with this information and advice.
The first part of this debtor education class is considered a credit counseling course. In this course, you walk through your finances in great detail, completing exercises in which you tally up your income, expenses, calculate your net worth and, of course, list your creditors including total balance and monthly payment. You end up with your debt to income ratio, which ideally should be about 15-20%. You also get a budget breakdown and tips to reduce your expenses.
This can be a very eye-opening exercise, and one that you can do very quickly yourself. The true trick to this? BE HONEST. All too many of us have an “idea” of our budget, but do you know where every single dollar that you earn goes? Only with a firm understanding of your finances can you create a budget today, with your loved ones, that might get you on the right track before it is too late. At the dinner table tonight, bring a pad of paper. The topic of the evening should be “10 Things I Will Do to Save Money”. Everyone should commit to what they can do, whether it is cutting out daily coffee runs (those add up!) to taking shorter showers (saving water is good thing, too!) and more.
Furthermore, you are asked to contemplate your financial goals. Even when one is in debt, feeling overwhelmed and completely confused, you have to be able to step back, take a deep breath and look for the light at the end of the tunnel. You should have short term, mid term and long term goals. Short term financial goals could include taking your highest interest rate credit card and paying it off first. A mid term goal could be to pay off your car. Finally, a long term goal could be to pay off your mortgage, or save for a child’s college education.
Again, this can be an exercise to do with your family, as a family unit to get everyone on the same track. It can be uncomfortable to discuss finances with your family, especially children. But the sooner that they learn how to budget and create financial goals of their own, the better off they will be once they are on their own and making critical decisions. Don’t allow your children to one day get trapped by debt. Teach them now, and give them goals to succeed.
You will receive information on all of your options on how you can best handle your debt, your finances, and your budget. Some options are easier than others, but they all have one common thread: to fix your debt situation, you will have to work really hard. It probably took you years to get into debt, it may take you years to get out of it as well. But if you have a plan that you visit every day, you stay committed to the plan, your family is partners in this plan and you make it your unwavering goal to see your option to its successful end, you will find yourself out of debt.
Handle the debt on your own: You can try to handle the debt on your own, by borrowing from friend and family to try to get your debt paid off. You can try to negotiate with your creditors on your own. Many consumers find it to be incredibly frustrating, and not always successful. However, the squeaky wheel gets the grease, and you may find that by being professional and persistent, you may get your interest rate lowered, even your monthly minimum payments lowered so you can try to stay on track.
You could try to obtain a debt consolidation settlement. Get Credit Card Debt Help. and live more with less debt. You could borrow money from friends and family, even try to negotiate on your own with all of your creditors.
Borrow against or sell your valuables and assets: You could try to obtain a debt consolidation loan, refinanceyour home, even liquidate your assets on your own. Many consumers have used sites such as Ebay or Craig’s List to sell valuable items that they may no longer even be using and applying that cash toward their debt. I have seen many garage and “estate” sales in my area, and personally know people that have done this with the purpose of paying off their debt…some, raising thousands of dollars toward that end!
Debt management plan: If you work with a debt management agency, first of all, make sure that they are a legitimate organization. All too many unscrupulous characters have crawled out from under their rocks to prey on consumers who are scared, worried, and confused. This may help you pay all of your bills off much faster than you could do on your own. Basically, you will have an agency that helps you negotiate with your creditors, knock down the interest rates, and you pay ONE payment each month, paying off your debt usually within 5 years.
Bankruptcy: Of course, the last resort is filing for personal bankruptcy, and deciding between Chapter 7 (in which your debts are discharged) or Chapter 13 (in which you work out a repayment plan). Click here if you need a Bankruptcy Lawyer as you should make this decision with the advice of a bankruptcy attorney in your area. Ask A Lawyer Online Now.
Get an Answer ASAP. 12 Lawyers Are Online! Law.JustAnswer.com.
You will also get information on your rights as a consumer, as creditors cannot harass you, nor threaten you. For example, did you know about the Fair Debt Collection Practices Act? This law prohibits your creditors from calling you before 8 am or after 9 pm. Creditors also cannot use foul language with you or threaten you in any way. If creditors are harassing you, you can end it by telling them on the phone, “Pursuant to the Fair Debt Collection Practices Act…” and end that statement telling them that they cannot treat you in the the specific ways in which they are harassing you.
Furthermore, you have the right to review one free credit report each year, as well as dispute items that are not accurate on your credit report. Use Your Rights! Repair Your Credit Today! Let LexingtonLaw.com Help! You also have the right to dispute any issues on your credit card statements directly with your creditors as well.
You will receive detailed information about credit. For example, what is the true cost of credit? If you charge something, what does it really cost you by the time that you pay it off? How can you improve your credit score? How can you reestablish your credit? Do you even know your current credit score? Get involved, as knowledge is power when it comes to your credit! Credit Crisis Concerns? Get 20% off FICO credit scores now.
At the end of this type of course, you should truly be far more knowledgeable about credit, how to deal with your debt, how to create a budget, and how to be a better, more savvy credit consumer. Many of us need credit, however, all too many of us use credit not for what we NEED, but for what we WANT.
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Credit Counseling Corp presents the following article about prepaid MasterCard and Visa cards. Prepaid credit cards afford you the luxury of using a credit card for a variety of purposes, without any issues of carrying debt or paying interest as your ultimate limit is how much you have prepaid for the card. It is a great way to budget and ensure that you stay within your means.
Here is a Prepaid MasterCard resource that we use and recommend:
In these times of financial difficulty, people are looking for more ways to manage their finances properly and limit their spending. This need has given rise to the popularity of prepaid Visa and Master cards. These cards are used like a regular credit card, but the principle it uses is that of a debit card. You deposit a certain amount in an account, after which you are issued a credit card.
Read more…
Click on the Silver Prepaid MasterCard logo below for more details:
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Credit Counseling Corporations and Credit Counseling Resources offers the following article from The Buffalo News. This is an important warning to stay on top of credit card payments, or reach out for help before it becomes more serious and more difficult to control. There are legitimate credit counseling and debt consolidation companies and options out there to keep your from being harrassed by collectors.
When collectors call: Fight, compromise or pay up?
By Fred O. Williams
The tree is down, the cookies are a memory—the holidays are over. ’Tis the season of trying to pay the bills. But in this faltering economy, many households are falling behind, bringing the headache of debt collection calls.
Dealing with debt collectors can seem overwhelming, especially when more than one bill is late. But experts say it’s important to take charge of the situation, know your rights and face debt problems before they snowball out of your control.
"The next step is a summons," said Larry Curtis, director of counseling at the Consumer Credit Counseling Service in West Seneca.
Creditors are sending more overdue bills to court, in order to seize assets and wages, he said. Once a collection action reaches the courtroom, your options become narrow and unpleasant.
Adam Wisniewski of Niagara Falls didn’t even know that a collector was after him until he went to the bank and his ATM card wouldn’t work.
It turned out that a collection lawyer had obtained a judgment against him for a credit card debt that wasn’t even his. Wisniewski had to find a lawyer of his own to fight the case and get his bank account unfrozen.
"Now I go online and check my credit card and bank once a week, to make sure there’s nothing going on," the 33-year-old retail manager said.
Fortunately, Wisniewski’s story is an extreme example, financial counselors say. Most people slide into collections by avoiding even thinking about bills. Others try asking for an extension but run into problems—some have difficulty communicating with call center workers overseas —so they drop it, Curtis said. But instead of going away, the problem escalates.
"The creditor sends [bills] to a collection agency or right to an attorney’s office," he said. Most creditors, including banks, credit card issuers, utilities and even doctors’ offices, will turn over a bill for collection when it reaches 60 or 90 days past its due date.
Dealing with collection agencies is different than dealing with the creditor. Collectors work on a contingency basis, meaning they get a slice of whatever they’re able to collect. While that means they’re aggressive, they may also be willing to work out a deal.
"Lenders are negotiating for a lot less than they were a couple of months ago," said David Chadwick, attorney at the Legal Aid Bureau of Buffalo.
In exchange for a prompt payment, collectors are often willing to write off a big chunk of the bill. Some bills that were settled for 60 percent, for example, may now be whittled down to 50 percent, he said, knocking off half the original amount.
Of course, many debtors are too tapped out to take advantage of a settlement, or they would have paid the bill in the first place.
Consumers need to take stock of their situation, debt counselors say. If the financial hole is too deep to pay current bills, they’ll have to think about bankruptcy, which will stop collection and may wipe out many debts.
But if there’s enough income to meet regular expenses, consumers may work out a repayment plan that salvages their credit history. Paying off the entire debt, even if it takes longer, will look better on your credit report than paying a settlement for a reduced amount.
Consumer Credit Counseling Service, a nonprofit, specializes in setting up repayment plans, some of which extend three to five years, Curtis said.
Unfortunately, even people in hock are being targeted by scams. Ads that promise to magically wipe out debts are circulating, giving false hopes that debt problems will vanish. Beware of debt consolidators that take an up-front fee and fail to begin paying your debts with it right away, consumer advocates say. The state attorney general’s office recommends sticking with nonprofit credit counseling agencies that are licensed by the state Banking Department.
Important questions to ask a counselor are: What fees will be charged?How will your information be safeguarded? And will employees earn bonuses if you sign up for extra services?
While businesses have a right to collect legitimate bills, consumers also have rights in the collection process, and knowing the rules of the game will at least level the playing field.
One area woman had fallen behind on a credit card, but she arranged to pay it off in installments of $75 a month. Then the post office box where she sent her checks was closed, and her mail was returned.
"Four years go by—then, out of the blue, they sue her," said Peter Dellinger, a consumer attorney in Rochester who represented the woman. The collector said that her $873 debt had mushroomed into $7,000 because of interest charges.
Fortunately, she had saved the documents connected with her repayment plan, Dellinger said, including her canceled checks, and even the envelope that was returned to her. With that evidence in hand, she was able to convince the court that the collector was the one in the wrong, not her.
Getting everything in writing and keeping the documents is one good rule of thumb. When a collector calls, you have the right to request proof of the debt. This is a good first step, Curtis said. Even if you are familiar with the debt, getting proof from the collector ensures that the agency is authorized to collect the bill.
If the bill is unfamiliar or the amount is wrong, you have 30 days to dispute it. It’s important to do this in writing. Once the agency receives your dispute letter it must provide written verification, or stop contacting you.
Harassment is forbidden. Agencies can’t call you before 8 a. m. or after 9 p. m. unless you agree. They also shouldn’t contact you at work if you say you’re not allowed personal calls.
Collectors may call your neighbors or relatives, but only to find ways of contacting you. It is forbidden for them to reveal your debt to others. It’s also forbidden to falsely threaten you, for example by saying they’ll seize your wages or bank account, unless they have court authorization to do so.
If you think a collector has stepped over the line, you can make a complaint to the state attorney general’s office. The number for help is (800) 771-7755. More information is on the Web site at www.oag.state.ny.us . The Federal Trade Commission also oversees debt collectors, with information and contact numbers on its Web site at www.ftc.gov .
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What is Credit Counseling and is it Right for Me? Is Credit Counseling right for you? 
Are you unable to make your monthly minimum payments on your credit cards?
Are you late paying any of your bills?
Have you tried to contact your creditors? Have those efforts brought no solution, or a solution that you still could not meet?
Are you being chased down by creditors and collection agencies? Avoiding phone calls, and deleting emails?
Do you have a steady, reliable income stream, but it is simply not enough to make those minimum monthly payments?
Can you reasonable restructure your debt and pay it off within about 2-5 years? If you are unable to meet that timeframe, you may be better off opting for bankruptcy.
What is Credit Counseling?
In a nutshell, credit counseling is a process through which consumers are offered education about how to deal with their debt, how to avoid accumulating additional debt and often involves negotiating with creditors to create a debt management plan. A DMP is a plan in which the consumer repays their debt on a repayment schedule. Often, DMPs include the ability to reduce payments, interest rates and fees. After the DMP is created, the creditors close the consumers’s credit accounts to cut off the consumer’s ability to continue to accumulate debt with that creditor.
How do DMPs help a consumer with overwhelming debt?
DMPs can be advantageous for the consumer struggling with debt as the credit counseling agency helps to consolidate the monthly payments of the debtor into one single payment. Typically this payment is less than the sum of each of the individual payments made each month by the consumer. In fact, many consumers find that after having tried to negotiate this on their own, it is only with a DMP that the same credit card bank will now accept this lower monthly payment.
DMPs are also helpful to the consumer as they may also achieve reduction in the interest rates they are charged by their creditors. Some consumers who are behind on credit card payments find themselves paying interest rates in the upper ranges of 20%, close to 30%! By joining a DMP, consumers can find themselves with annual percentage rates lowered to 10% or less, sometimes even eliminating the interest charges all together! This justifies the claims of many counseling agencies that their customers will be debt free in a short range of time as when the interest rates are dramatically lowered, the consumer is able to pay the debt off more quickly. Note that if you are simply looking to reduce your interest payments but you are current with your accounts, you probably should not look into a DMP as the creditors may carry that debt as "past due" in exchange for the lowered interest rate.
DMPs also help customers’ accounts that have become delinquent to a current status and help to impact their credit rating over time. This is also known as "curing" and account or "reaging" the account. The consumer making the payments dictated by the plan on a consistent basis will have these accounts reported to the credit bureaus as current. This, however, does not simply erase the past delinquencies. But with time and the continued payments with the debt management plan in place, the consumer will begin to rebuild a more positive credit history. Participation in a DMP does appear on a consumer’s credit report, and it can impact the consumer’s ability to obtain home or car loans. Some lenders will see this as a negative, as it can indicate that a consumer has not managed their debt well. On the other hand, other lenders can see it as a step in the right direction as it can also indicate that the consumer is taking care of their debt obligations and may be worth the lending risk.
Did you know that Credit Counseling is a requirement for filing for bankruptcy?
Credit counseling is now a requirement for any consumer filing for bankruptcy, as per the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. To meet this requirement, the consumer must complete a program with a nonprofit consumer counseling agency with at least one counseling session. Furthermore, they also have to complete a post-filing education credit counseling session before their debts are fully discharged.
What do I need to know about Credit Counseling Agencies and the negative statements about the industry?
Credit counseling has come under a lot of scrutiny lately with charges that consumers have paid hidden fees, excessively high fees, poor service and many other complaints. Many feel that the agencies take the sides of the creditors more often than the consumers. There are also charges that credit counseling agencies hire employees with little to no formal credit counseling training. So, you are putting your financial future in the hands of an employee who may have no more knowledge financial management than you do!
Beware of any agency that asks you to pay high upfront fees. They will claim to be "debt settlement" specialists and they tell consumers that they will negotiate their debt to "pennies on the dollar", we have all seen the ads and commercials. This is typically NOT a legitimate claim, and by the time they take your upfront fee, and the fees of thousands of others, they have enriched themselves, and preyed on consumers desperate for debt solutions.
While you may be desperate and want to hear postive, hopeful news and advice about your debt, do not fall prey to the con artists that make unrealistic promises. A legitimate credit counseling agency will tell you all of the details of how you and your credit will be impacted, even with the DMP. Make sure that they are accredited, and you can check that through the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.
Do your due diligence and you can find a reputable Credit Counseling agency that will help you understand the process realistically, charge appropriately, truly do what they say, and assist you in your Debt Management Plan. This can be a viable alternative to bankruptcy, and get your on a path of financial success and security and freedom from debt in the future.
Credit Counseling Corporation and Credit Counseling Resources will offer information and updates on how credit counseling may be the right fit for you, and how you can work with a reputable credit counseling agency to your advantage. While we do not offer credit counseling services, we will do everything possible to make sure that you can make an informed decision with the information that we provide to you. This also does not constitute legal or financial advice. If you are in need of legal or financial advice, it is always best to take the information you have gathered to an attorney or financial advisor for their input, interpretation and possible legal representation.
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Credit Counseling Corporations brings you the following information on how a credit counseling agency can assist you with credit counseling and debt management. Even if you are drowning in debt and it feels that there is no way out, there are credit counseling agencies that can help you get your head above water and possibly avoid bankruptcy.
Make sure that you do your due diligence. Unfortunately, there are scam artists that will prey on consumers in this challenging economic time.
The assistance and advice of the credit counseling agency can be a great help when you have debilitating debts and are fighting to take control of them. These agencies can be especially helpful when you are baffled about what to do next or lack self-confidence about your current ability to improve your financial situation on your own. The credit counseling agency may:
Assist you to set up a reasonable household budget.
Evaluate a household budget that you have already made to suggest necessary changes that will help you to get out of debt quickly, prevent the assets loss and so on.
Try to negotiate for lower payments with the creditors and put you into a helpful debt management plan.
Improve your skill to manage money and spending.
However, not all credit counseling agencies are reliable, so just take enough time to choose an agency that is reputable. That means working with a tax-exempt, nonprofit agency that charges you nothing or little for its financial services. I warn you against misidentifying a credit counseling agency for a debt settlement firm. If you are not cautious, it can be a serious mistake to make because a few debt settlement firms try to appear to the public as though they are credit counseling agencies; there are significant differences between the two.
The aim of debt settlement firms is to gain profit from financially stressed people – not to help them to fix their financial situation. They charge quite a lot for their financial services, and many of these firms don’t deliver on their advertised promises. People who employ debt settlement firms frequently end up in worse financial situation than they were before. When you owe too much debt relative to your current income, your most dependable option sometimes is the bankruptcy filing, especially if you are worried that one of the creditors is about to get hold of a precious asset that you own and do not want to lose. You may file the Chapter 7 liquidation bankruptcy, which cancels out most but not all of your bad debts, or the Chapter 13 for reorganization bankruptcy, which provides you 3 to 5 years to pay up what you currently owe and may also lower the amounts of some of your existing debts.
Author: Alan Buchanan
Article by Alan Buchanan of http://www.articlemonkeys.com.
Article Source: http://EzineArticles.com/?expert=Alan_Buchanan
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