What is a Charge Off? Contrary to what it may initially sound, a charge off is a negative item on your credit report. Although a charge off
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What is a Charge Off? Contrary to what it may initially sound, a charge off is a negative item on your credit report. Although a charge off in your balance sounds like
If you are looking for a way to manage your debt, then debt relief programs are great options. These programs help you to get back to a good financial standing. You will get a way to pay off your debts and get relief from all the stresses and worries. There are different debt relief programs available. You should be careful in choosing them because not all of them do what they promise. Before you get into this program, you should know the following things about it.
Debt relief program is a third party payment system
When you are in this program, you need to pay just one payment every month. It is the debt settlement company’s duty to distribute the money to all the creditors. A debt settlement company will help you to negotiate down the debt. You will have to pay 10% to 50% of the total debt eventually. The rest will be written off as bad debt. This program will not only pay off your debt on time but will also educate you regarding debt management.
Various types of debt relief programs
There are mainly five kinds of debt relief programs. You should have good knowledge of all these programs so that you can also decide yourself which would be the best option under specific circumstances. Here are some of the debt relief programs you should know about.
Debt consolidation loan
You can get debt relief by getting a debt consolidation loan. You can use this money to pay off your previous debts. You can choose from unsecured or secured loans. You can get loans with very low interests. You can also get home equity loan if you own a home. Before you apply for a loan you need to find out first whether your debt consolidation loan will help you to get debt relief. You should compare the average interest rates you are paying now and the interest rate you will be paying for your new debt consolidation loan. For example, if your current average interest rate is 17.5% and you get a personal loan at 9% interest rate then you will need to pay lower monthly interests.
If you have multiple high interest credit cards then you can transfer the balances of these cards to a new one that has lower interest rate. You will find many 0% balance transfer cards where you get up to 18 months’ interest-free period. In case you don’t get such card, you will need to compare the interest rate to see if it’s lower than that of your current ones.
Debt management plan
A consumer credit counseling agency can give you a good debt management plan. They can negotiate a lower amount of debt with your creditors. So, you actually end up paying less than what you owe. The disadvantage of this is that you might lose all your credit cards. You may just keep one card for emergency situations. With this plan, you will need to make only one fixed payment every month instead of paying varying amounts to multiple credit cards.
This is the last resort for debt relief. You need to hire an attorney for filing bankruptcy. With Chapter 7 Bankruptcy all your unsecured loans will be discharged which includes credit card loans, personal loans, payday loans, medical bills, etc. You will still have to pay the secured loans, like the mortgage or auto loan. The information about your bankruptcy will remain on your credit report for about 10 years. So, you won’t be able to take any more credits; even if you do so, the interest rate will be very high. Your credit score will also go down once you file a bankruptcy.
You should do some research before you choose which type of debt relief program you want to go for. It is better to seek an expert’s opinion regarding this matter.
Get counseling before thinking of loan consolidation
Loan consolidation is not the best option for everyone. You first need to work out whether or not you can pay your basic expenses. You should subtract your expenses from your income and see that you have enough cash in hand to pay off your debt. It is wise to visit a counselor who can assess your current condition and suggest you the best option. Another thing you should know about loan consolidation is that you will be only able to pay back your debt using consolidation loan if your loans are unsecured. For the best loans like tax debt or unpaid parking tickets, this is not a good option.
Debt relief program is hassle free
Debt relief programs are simple and efficient. You only need to pay one fixed payment every month until you pay off the entire debt. Once one of your creditors get the full payment, the other creditors will get larger payments and your debt will be paid out soon.
It affects your credit report
If your monthly payments are lower now than before then it can affect your credit score. The creditors will be able to find out that you are paying through a third party and they might not offer you further loans.
When you get into a debt relief program, it means that you won’t be able to use your credit cards unless you pay off the balance. You may keep one card for emergency purposes. You will need to make sure that you are able to pay the fixed amount every month until all your debts get cleared out. Instead of going to a counseling agency for debt relief program, you can take some steps yourself. You can request your creditors to reduce your interest rates. You should review your budget and see what expenses you can cut down so that you can save some money to pay more to your creditors. You should try to live your life with whatever you earn and stop using credit unless it’s absolutely necessary.
Lawliet Being overwhelmed with debt will never be a pleasant experience. If you’re currently in this kind of situation, you probably considered hiring debt consolidation companies to help you negotiate payments with each of your creditors. If so, here’s what you need to know about this.
What Is Debt Consolidation?
For starters, you have to know what debt consolidation is. Debt consolidation is a type of loan wherein multiple debts are merged together into a single debt. The purpose of this is to simplify the repayment schedule, at the same time, lower the overall monthly payment amount. Usually, hiring a debt consolidation company is advised, because they can help you pay off your debt quickly. Likewise, you won’t get stressed in shouldering all of your bills. Thus, for those who have mounting unsecured debt, such as store cards, credit cards, medical bills, accounts in collection, student or personal loans, then you must work with a debt consolidation company to settle your financial problem once and for all.
What Do Debt Consolidation Companies Do For People?
Debt consolidation companies provide solutions to merge several debts, such as home loans, credit card bills, and other loans into a single monthly payment. This debt management solution may be beneficial for those with outstanding debts, especially if their debts already have high interest rates.
With their help, you’ll be able to come up with a workable budget, settle your debt, and even save enough money for retirement. Your debts would be combined into one, easy-to-manage monthly payment. Likewise, debt counselors also provide a number of services not only in their local offices, but online and over the phone as well. You’ll be able to discuss your debt consolidation plan with them, even without going to their office.
Some of the most common debt consolidation companies:
– Companies that consolidate credit cards and other unsecured debts
This is the most common debt consolidation company that can be found online, or when you simply type, “debt consolidation companies” in major search engines. This company covers store cards, credit cards, gas cards, medical bills, payday loans, and even unsecured loans.
– Medical Debt Consolidation Companies
These are firms that talk with medical debt collectors in order to settle your unpaid medical bills, usually for less than the original amount. You have to consider that it doesn’t work like other consolidate loans, because there are no interest charges applied here.
– Student Loan Debt Consolidation Companies
This can either be federal student loan debts, or one coming from a private lender that provides private student debt consolidation loans. These companies won’t consolidate your debt, but they would help you sign up and prepare the documentation for federal programs.
– Tax Debt Consolidation Companies
This is quite similar to medical debt consolidation. The penalties and interest are assessed by the IRS. That means instead of interest rate negotiation, it will be a penalty abatement instead.
Two of the Most Popular Debt Consolidation Companies
Here are the top 2 debt consolidation companies worth checking out.
Accredited Debt Relief
Accredited Debt Relief is best known for offering debt counseling and helps their client come up with the best debt management plans. They carefully assess the debt obligations, as well as the available resources to come up with a feasible financial plan.
Price: Accredited Debt Relief takes a percentage of the amount of debt being settled, which can go between 18-25%, depending on the debt.
Timeframe: Debt settlement should take place between 24-48 months; which is considered to be the average period for debt settlement.
What Made Them Popular: They’re considered to be one of the best companies when it comes to debt consolidation services and debt management tools. Their team of professionals would help you consolidate your debt and pay the lowest interest rate for it.
National Debt Relief
National Debt Relief could help you prevent bankruptcy as they will be the one to talk to your creditors and convince them to agree with debt settlement. Aside from that, they also offer financial consultation, as well as education to ensure that you won’t be a victim of debt again in the future.
Price: Similar to Accredited Debt Relief, National Debt Relief changes 15-25% of whatever debt is paid for you. No need to worry about any additional fees.
Timeframe: Debt settlement should take place between 24-48 months; which is considered to be the average period for debt settlement.
What Made Them Popular: They are widely used in almost 34 states within the US.
What is a Charge Off?
Contrary to what it may initially sound, a charge off is a negative item on your credit report. Although a charge off in your balance sounds like debt or another obligation has been taken off from you account, it isn’t that way. In fact, a according to AAA Credit Guide a charge-off is one of the things that can damage your credit report the most. A charge off is what a creditor calls it when a borrower hasn’t made a payment in a timely manner. This timeframe is usually 6 months for credit card payments and most debt, and 4 months for installment loans.
What Happens When You Have a Charge Off?
Obviously, your creditor has the right to collect what you owe them. When the debt is relatively small – below $2,000 -, they will hire a debt collection agency to do that work. When the amount is higherthan the above stated, the creditor can file a lawsuit to recuperate the money.
Why Do Charge Offs Ruin Your Financial Reputation?
A charge off indicates that you don’t pay your debts on time. This will show on your credit report and other financial institutions will be well aware of this fact. If you want to get a credit in the future, a charge off will make it very hard for you to get it. In fact, some may ask you to have it removed to do the loan application process. On top of that, you may have to deal with unfriendly debt collectors which is a nuisance in and of itself.
How To Remove a Charge Off From Your Credit Report?
Now that you know how harmful a charge off can be to your financial reputation, it is time to go through the process of removing it. The best way to do so is to talk and negotiate with your original creditor given the fact that he is the only one in charge of reporting the charge off to the credit bureau. The first thing you have to tell the creditor is that you are interested in paying the whole amount owed if they remove the charge off status from your credit report.
By doing this, you will get their attention since this is what they finally want. If you have all the amount of money you owed, you are at a better position to negotiate. However, even if you don’t have all the money, you can also propose payment terms that you can afford to pay. Remember to always speak politely and clearly, and never raise a controversy on the issue as this will hurt your chances of having it removed.
Another way to remove it is to send a pay for delete letter. You can learn how to draft a credit repair letter here. This letter should tell the creditor that you want your charge off remove in exchange of the proper payment. Make sure to give the letter to a person that has a high position in the company. If the creditor doesn’t seem to accept your offer, ask them to at least change your status to “closed” instead of charge off – which will provide you in a better position than the latter.
As an adult, it is important to know how to properly budget, This will help you in accounting for all of your money. There won’t be any questions on where money should go or has gone. Some of the best budgeting tactics aren’t taught in school, but the following five tips will teach you how to budget like a pro.
1. Include Every Last Cent: Creating a budget means you need to include every penny you have come in as well as every penny you have go out Otherwise, you will make it difficult to compare budgets from month to month and visually see progress.
2. Build Your Budget By Importance: Your budget will probably include a lot of different things, but it should go in terms of importance. The first tier should include all of your basic necessities such as rent/mortgage, electricity, gas, running water, and food. Next should come medical and automobile insurance, and gas for your vehicle. Beyond those two tiers will be your luxuries.
3. Decide Which Tracking Method Works Best for You: There are many tracking methods available, but you need to use the one that works best for you There are plenty of apps and websites that can assist with keeping track of your budget, or you can choose to use a spreadsheet on your computer that you create and manage yourself.
4. Consider Using Separate Accounts: It may be difficult for you to account for all of your money when everything goes in and comes out of the same account. If this proves to be true for you, you may want to consider using a different account for each set of needs that need to be paid for in your budget.
5. Know and Control Your Weaknesses: Each of us has something that is a weakness we spend money on It is important we recognize what our weakness is so we can pay close attention to our spending habits surround those weaknesses. This will be vital in sticking to your budget. Budgeting can seem like a daunting task, but it will help you in becoming more financially secure.
You’ll know how much money is coming in and how much is going out. You be able to account for each penny without any confusion. This will be helpful in paying for your everyday needs as well as paying off any debts, saving up for something, etc. Learning how to budget like a pro will simplify your life.
Being around 30 years means you are in another phase in life. To be a career person, responsible parent and having the best family would be your next goals; well here are some tips to help you on that;
1. PAY YOUR DEBTS IN TIME
When you were in your 20s it would have been quite a task to pay all debts because you did not have a secure income now that you are in your 30s; you should focus on paying all the debts. That you had. All loans accumulate interest after a certain time and paying it in time you would just be saving yourself a lot.
2. GO THROUGH YOUR BUDGET.
Revisiting a budget has never been a bad idea to any one. Now that you are mature you have to prioritize some staff in favor of your budget. You have new responsibilities, children to look after thus clubbing would be an irrelevant way to spend money on compared to cooking for your family or spending time with your family, true isn’t it?
3. SPECIFY YOUR SAVINGS
When you were 20 years, having a saving for your emergency was your goal so that you can satisfy your short term desires such as buying the coolest car but as you grow older you realize there is more to that example you realize you have to save for your children’s education, you have to buy a house or even have a little more insurances, right? Hence clearly specifying your savings will help you manage your money to avoid future hiccups.
4. BEWARE OF YOUR INSURANCES.
When you are around 30 years or above, you realize that more people depend on you financially such as your children, right? You also have more assets such as cars house or even businesses to look after. Ensuring everything you love is insured would be the best thing to do just if anything unfortunate happens. You can have health insurances just in case a loved one falls sick , fire insurances if a house or a building is on fire and any other insurance according to your needs to make sure just in case of anything , there is someone who has your back.
5. THINK ABOUT YOUR RETIREMENT WISELY.
Your will get promotions over years and your salary will increase. Save at least 16 % of your salary. This will ensure you have a secure retirement. I am sure you don’t want to get frustrated after you retire so make sure you manage your savings wisely.
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