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May 20th, 2010

Alternatives to Banktruptcy

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Consumer bankruptcy filings in the U.S. rose 18.2% in the first quarter of 2010 from a year earlier, according to the Administrative Office of the U.S. Courts. Total bankruptcy filings for  the 12-month period ended March 31, 2010, jumped 27% compared with the previous period.

Bankruptcy should be a last resort to digging out of debt. Before you go this route, consider some alternatives that can help get your finances back on track.

Debt Consolidation

Juggling multiple debts can be exhausting. A debt consolidation loan can allow you to combine those debts, lower the overall interest paid, and decrease your monthly payment. You can consolidate bills with a debt consolidation loan, credit card balance transfer, or home equity line of credit. (HELOC). Once debt is consolidated commit to paying it off without taking on new credit card debt or loans.

Debt Settlement

Don’t avoid creditors if you are having trouble paying debt and other bills. Call creditors and propose a debt settlement plan. If you can get your hands on a lump sum of cash, use it to offer a settlement plan. Some lenders may be willing to accept a smaller payoff that is a fraction of what is owed. Be wary of companies that claim they can settle debt for you. Most of the time you are better off handling a debt settlement on your own.

Get Help with Debt

Not sure where to start with a debt reduction plan aimed at keeping you out of bankruptcy? Find a reputable debt counseling service to help sort out your options. There is nothing wrong with asking for help with debt. It just might be the thing that keeps you out of bankruptcy court and allows you to begin repairing your credit.

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May 18th, 2010

Credit Card Debt: Breaking More Than Your Budget

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Financial problems can be the undoing of family relationships. Common problems include hiding debt or assigning blame  when debt reaches critical levels.  If you’re having problems with credit card debt, don’t procrastinate.

Credit Card Debt and Divorce Court: Don’t Go There

Typical scenarios the compromise relationships include hiding debt, running up unmanageable credit card debt, or using shopping as retribution toward a partner’s slights, real or imagined. High credit card balances can grow quickly due to accruing interest and fees.

Debt Management, Debt Consolidation, and Credit Counseling

Homeowners may qualify for home equity loans or lines of credit that they can use to pay off high cost consumer debt but need to make sure they can make the payments. Your ability to borrow against home equity depends on how much home equity you have; this is determined by what your home is worth and how much you owe against it.

If you can’t borrow against your home, you may qualify for a debt consolidation loan. Financial institutions are not as willing to make personal loans for debt consolidation, but it’s worth a try if you have good credit .

Anyone carrying major credit cards knows about balance transfers; in an effort to take your business from your current credit card issuers, companies offer new credit cards with low or no interest charged to transfer your balances to the new card. Before making balance transfers, read the fine print to determine actual costs. If you have problems managing credit card debt, balance transfers may lead to more debt.

If you’re in too deep or cannot otherwise commit to paying down credit card debt, a credit counseling and debt consolidation program can help in three ways:

  • Evaluating your income and obligations to create a cash-based budget: You can learn how to budget according to your income to meet household expenses without using plastic to get through the week before pay day. Credit counselors can show you how to budget responsibly, including saving for emergencies and retirement.
  • Contacting creditors and negotiating affordable repayment terms: Credit counseling services work with credit card issuers to develop affordable repayment plans. Although your balances owed won’t be reduced, your creditors may agree to reduce interest rates and fees; this allows you to reduce debt faster.
  • Developing an affordable repayment and debt consolidation plan: After your creditors have agreed to repayment terms,  your credit counselor develop a repayment plan. When you agree to the terms of the plan, you  pay a specified amount to your credit counseling service as scheduled. Your credit counseling service deducts a fee for its services and sends the rest to your creditors. All you have to do is pay your credit counseling service as agreed.

Money trouble creates problems in all aspects of your life. Getting debt help can help manage credit card debt.

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.

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