Bad credit can’t stop you from consolidating your debt

Debt consolidation is a process by which you can combine your credit card debts into a single monthly payment. But credit card consolidation can be difficult with poor credit report. You might not get consolidation loan on affordable interest rate so it is advisable not to consolidate your high interest debts with high interest loan. But here are a few essential tips that will help you consolidate your debts despite your poor credit report.

Here are three ways you can get loan on affordable interest rate:

1. Home Equity loan: You can take out a home equity loan if you have low credit rating. The interest on the home equity loan is low so it will be easier to consolidate your high interest debts.

2. Secured loan: You can apply for a secured personal loan if you have low credit score. The interest rate is low when you take out loan against security deposit. But if you default on you new payment then you might lose control over your assets.

3. Use your savings: You can use your savings account to consolidate your debts. If you use your savings account then you are not required to pay interest on the amount. Then it will be easier to consolidate your high interest debts with your emergency fund.

How you can consolidate your debts?

1. Make sure that you calculate the total amount you owe to the creditor along with the interest rate on each debt. Prepare a list of the debts and estimate the total amount you owe to the creditors.
2. If you are unable to consolidate your debts then you should hire the services of a debt consolidation expert. The debt arbitrators will negotiate with the creditors to lower interest rate on the principal to make it affordable to pay off. The consolidation expert will formulate a single monthly payment in accordance with your financial situation.
3. Make sure that you design a budget plan so that you can keep track of your finances. When you prepare a budget it will easier to save money and use the money towards paying off your debts. Make sure that you continuously review your budget so that you avoid dissuading from your budget plan.

Therefore, these are a few ways that will help you consolidate your debts despite your poor credit.

By Diana Degarmo

Bad credit can’t stop you from consolidating your debt

How to Lower Credit Card Debt and Manage Credit Repair

Most individuals incur bad credit scores without actual intent. Unfortunately the majority do not know how to repair their poor credit once finding themselves in that situation. In fact, a high percentage of people don’t know how to lower credit card debt and consider credit repair to be impossible since it demands a complete change in lifestyle. As a result, they lose their financial freedom because they either become bankrupt or continue paying high interest rates to loans borrowed and to bills made with even more credit card debt. Therefore, this article will briefly outline a few tips that can be implemented to enable such individuals to raise their credit score.

The process of credit repair requires individuals to make a serious self-evaluation and consider how they spend their money so they can prioritize their needs and wants. The first step of the process should involve a deep consideration of how they spend their money is spent and whether it is necessary to use money in that manner. The self-inventory process should start the idea curbing the wrong habits of spending money. This is because individuals will now be able to determine whether they are making purchases to satisfy their emotional needs or whether they are using money for vital reasons.

The next step should involve the formulation of a budget to enable individuals to stick to only their good spending habits that they determined through their self-evaluation. This budget should help them to single out their most important needs. As a result, they will be able to determine the amount of money they need to take care of those needs before spending it on other things. This should be followed up by an evaluation of those bad credit card spending habits so they can finally get lower credit card debt. Individuals should realize that the credit card is not an additional source of income. Therefore, if they plan to use the credit card it should be included in the budget.

Lastly, individuals should ensure they offset all their bills on time. The money that was previously used to engage in unnecessary spending habits should be geared towards paying the bills. If these few tips are followed to book within a short period of time individuals will begin to see the fruits of the credit repair process.

Lower Credit Card Debt and Manage Credit Repair

How to Select a Worthy Credit Repair Attorney or Company

Among the factors that alter the financial wellbeing of individuals includes having bad credit scores. This may be caused by an array of factors including credit card or medical bills, credit card report errors and identity theft. A poor credit scores curbs the ability of an individual to get loans, home mortgages or credit cards. Even when they can get credit, individuals with poor credit scores are given credit at a higher interest rate and therefore end up paying more than they would if they had had good credit scores. Such detriments call for immediate implementation of credit repairs sometimes through a credit repair attorney or credit repair company.

Credit repair can be accomplished solely through an individual, though, for fast and effective results it is advisable to rely on the services provided by a reputable credit repair attorney or credit repair company. Such organizations for example the Consumer Credit Counseling Service (CCCS) enable individuals to financially evaluate and organize themselves to obtain their financial goals. However, only highly qualified companies can actually enable an individual to repair their poor credit. Therefore, extreme care and consideration should be made when choosing which company to rely on to avoid wasting time, money and confidence.

When selecting a credit repair company it is important to determine exactly what needs to be done in order to raise your credit score. This will enable individuals to choose an all rounded company that will be able to meet all their needs while at the same time acting in accordance with the Fair Credit Reporting Act. The Fair Credit Reporting Act allows debtors or their proxies to directly negotiate items on a credit report with credit bureaus to either eliminate or change unverified, incomplete or erroneous information. A reputable credit repair company or attorney should also be able to negotiate with credit bureaus to maybe even only report positive accounts on a client’s credit report.

The next step involves determining the credibility of the credit repair company. This can be done by references, but also by looking at the company’s better business bureau (BBB) report. Most of the unscrupulous companies never report to the BBB. In addition, individuals should study the Credit Repair Organization Act to know their rights against fraudulent credit repair companies.

Selecting A Credit Repair Attorney Or Company

Debt consolidation services offer loans…

Debt consolidation services offer loans that allow you to borrow to refinance or restructure to wipe out debt. Refinancing your mortgage or getting a home equity loan, equity loans, personal loans, etc., are all options you have to consolidate credit cards.  You have to borrow money, and then make one monthly payment for getting rid of debt.

Consolidating Credit Cards With A Loan

Consolidating credit cards with a loan involves applying for the loan, being approved, and then revising your budget to remove the paid debts (including payment for new loans). It is important for your financial future, that you don’t incur any more debt while making consolidation loan payments. If you do, you could find yourself back in over your head, and on your way to bankruptcy.

Quick Tips For Debt Consolidation Loans

If you haven’t already done a Debt Worksheet, do it now. Review your Debt Worksheet so you know how much you need to borrow, and what interest rates you are currently paying.

• Do an Income Worksheet and Monthly Budget so you know how much of a payment you can afford.
• There should be NO FEE, or obligation, when you apply online for a consolidation loan, so you can shop around for the best rate, and payment terms, you can get.
• Allow yourself some leeway in your budget when calculating payments on consolidation loans. This will help you to pay it off faster and save interest.

Compare Secured & Unsecured Debt Consolidation Loans

If you own a home, vacation property, or other real estate that can be used as collateral, you may qualify for a first or second mortgage, home equity loan, or refinancing of an existing mortgage to consolidate your debt. Consider these plus and minuses for secured consolidation loans before choosing between a secured and unsecured loan.

• + Rates on secured loans are lower
• + Ability to borrow more money
• + Smaller monthly payments
• -  Longer repayment terms
• -  Risk of losing house if unable to maintain payments

Unsecured Consolidation Loans

If you don’t own real property, you may qualify for personal loans that can be used to consolidate debts.  Here are the plus and minuses for unsecured loans should you qualify.

• + No risk of assets
• + Shorter payment terms
• -  Higher monthly payments
• -  Higher interest rates

Debt Consolidation Services

People who have problems getting rid of debt, especially those facing garnishment or repossession, often consider eliminating credit card debt by declaring bankruptcy. This is the basics of bankruptcy law as one of several debt relief solutions.

Eliminating Credit Card Debt With Bankruptcy?

Bankruptcy is a way to temporarily suspend (during the course of the proceedings), and later prevent, all debt collection actions and wipe out debt and clear credit card debt for debts you had at the time you filed your bankruptcy petition.

Once a person files for bankruptcy, the federal court grants an “automatic stay.” This prevents creditors from attempting to collect on any outstanding debts. Creditors may petition the court for relief from the automatic stay. Often, creditors whose loans are secured by property are permitted to take possession of that property.

Bankruptcy As Debt Relief Solutions

At the end of the legal proceedings, the “bankruptcy adjudication” (a finding that a person is “bankrupt”) discharges the person’s debts to wipe out debt. The discharge acts as a forgiveness of personal liability for all debts incurred prior to filing. In most instances, creditors can’t try to collect debts that have been discharged. Once discharge is granted, former creditors also have no claim on future income.

In exchange for this “fresh start,” a debtor must turn over all non-exempt property to a court-appointed trustee. The trustee is required to sell the property and distribute the proceeds to the creditors.

A debtor can be denied a discharge for certain “bad acts” such as concealing or fraudulently transferring assets prior to filing.

Even if a discharge is granted, certain debts can never be discharged. These include: alimony and child support, student loans, taxes, and any debt incurred through the debtor’s fraud or theft.

Your Filing Options

Individuals may choose several different types of bankruptcy based upon the amount and nature of the debts, the exemptions available, and the types of assets they own. The different bankruptcies are named after the corresponding chapter in the code.

Chapter 7 is referred to as “straight” or “liquidation.” In a liquidation, the debtor turns all of their assets over to a trustee.

The trustee then liquidates (sells) all the assets and distributes the proceeds to the creditors. The person is then discharged of all debts, except those which cannot be discharged.

Bankruptcy Facts: Every state allows a debtor, even in a liquidation, to keep some small amount of property.

Creditors must look solely to the assets held by the trustee for payment. Creditors can’t come back later and try to collect their claims from the discharged debtor. A debtor can receive a Chapter 7 discharge once every seven years.

Chapter 13 debtors pay their debts through future income rather than liquidation of their current assets. This chapter usually allows the debtor to keep much of his or her property.

Under Chapter 13, the debtor presents a plan for repayment, which is reviewed by the trustee, the creditors, and the Bankruptcy Court.

Bankruptcy Facts: Chapter 13 is available to those debtors with unsecured debts (usually credit cards) less than $100,000, and secured debts less than $350,000 (home mortgages and car loans).
Over time, the plan must provide creditors with an amount at least equal to what they would receive under a Chapter 7 filing, and must be feasible based on the debtor’s income. If the plan is approved, the debtor makes payments to the trustee, who then pays the creditors. Plans usually run at least three years, and cannot run longer than five years.

While a debtor under Chapter 13 gets to keep much of his or her property, there are certain disadvantages:

• Debtors remain under court supervision for the life of the plan (up to five years), and are forbidden to make new debts or sell assets without court permission.
• Debtors who propose less than full payment to unsecured creditors will be forced to live on a budget for the life of the plan and pay all excess income to the creditors.
• Even if the debtor pays all of the creditors in full, the bankruptcy will still appear on the debtor’s credit record.
• If the debtor doesn’t complete the plan payments, then any creditor may petition to have the court convert the case to a Chapter 7 liquidation.

Chapter 11 is a reorganization proceeding, usually involving corporate debtors. It’s also available to individuals who have engaged in commercial enterprises. This chapter is used when the owner desires to stay in business, restructure existing debts, retain assets, and attempt to reorganize under court supervision.

Bankruptcy Facts About Taxes

Filing bankruptcy under either Chapter 7 or Chapter 11 will stop all IRS or state tax collection activities. But if a Chapter 7 is filed, the tax collection activities resume shortly after filing because the tax obligation cannot be discharged in bankruptcy. Furthermore, interest and penalties continue to accrue. Under Chapter 13, on the other hand, filing halts the accumulation of interest and penalties, and taxes may be paid over the life of the plan.

What About Co-Debtors?

Bankruptcy Facts: If you are married and your debts arose during the marriage, both spouses need to file or all the debts will be transferred to the other spouse.

A bankruptcy filing often involves other persons who have cosigned notes or mortgages with the debtor. The filing of a Chapter 13 plan can be used to stop all creditor actions against certain co-debtors. This is true even if the co-debtors are solvent and do not join the Chapter 13 petition. This protection can become permanent if the plan provides for payment of the cosigned debt in full and is fully performed.

How Filing Affects Your Credit

Not all creditors react the same way to bankruptcy, but your credit will be hurt. This does not mean that you will not be able to obtain credit. Some companies extend credit to individuals that have declared bankruptcy because they know that you can only file bankruptcy once every seven years. However, you can expect the interest rates on such credit to be high.

Eliminating Credit Card Debt With Bankruptcy

Consumer Credit Counseling helps you with budgeting and debt repayment options, as well as helping you to avoid filing bankruptcy.

Community Credit Counseling Debt Relief Solutions

The majority of consumer community credit counseling agencies offer confidential financial budget counseling, and debt management programs to help you find the best way to get out of debt. Debt management programs are also known as debt consolidation programs. Some of the best debt consolidation companies are available on the internet,  or by telephone and in person, at a nominal fee.

What Do Consumer Community Credit Counseling Agencies Do?

There are so many consumer community credit counseling agencies, it would be near impossible for us to tell you what each one will, and will not do individually for you, or to select the best one to help you clear credit card debt. Our review of community credit counseling agencies is an overall view of their offerings.

Most community credit counseling agencies have set up alliances with major creditors to:

• reduce or eliminate interest
• stop late payment fees
• reduce monthly payments
• educate consumers on money management
• negotiate debt repayment plans

Creditors participate because it is in their best interests for you get out of debt without bankruptcy. In most instances, if you file Chapter 7 Liquidation Bankruptcy, unsecured creditors won’t collect anything, or at least collect a lot less than they could.

How Does Credit Counseling Affect Your Credit?

Once you have made regular monthly payments to the Counseling Agency for several months, your debt counselor should be able to negotiate with your participating creditors to have your accounts re-aged and the status updated to current on your credit file. This will go a long way in keeping your credit file in decent standing while you get out of debt.

Consumer Community Credit Counseling

Between your credit scores, and your credit reports, your financial health depends on obtaining, and maintaining, a good credit rating.  You may be wondering why I used scores and reports, plural as opposed to the singular. Well, to answer your question, it is because the credit reporting agencies use different brand names for their implementation of the original FICO model.

Equifax’s version of the FICO model is known as the Beacon Score. Trans Union calls theirs TU FICO Classic. Experian likes “The Experian/Fair Isaac Risk Model”. If you hear any of these names, you are getting a FICO score. To make certain though, ask your lender if their score is a FICO score.

These are the industry standards for calculating a reliability factor (or creditworthiness) for credit applicants. Your score is the number one criteria that most creditors use to determine what interest rate you will be charged on your mortgages, loans, and credit cards.

It is calculated based upon the information available in your credit report. Your credit report is used to determine your eligibility to receive credit, along with other strategic information that each creditor determines. Between your score, and your credit report, your financial health depends on obtaining, and maintaining, a good credit rating.

You Can Have Different Credit Scores with Each Agency

Not only can you, but more likely than not, you do have a different credit score with each agency.  The three major credit bureaus, Equifax, Transperian (formerly TRW), and TransUnion, carry information about you and your credit. This can result in your having 3 different scores if the data is different from bureau to bureau, which is often the case.

It’s always a good idea, to check your credit reports, and credit scores, at least once a year with each agency. Despite what people will try and sell you, IT IS ABSOLUTELY FREE to check your scores once a year or when you’ve been denied credit. If good information is missing from one bureau, or incorrect information is present in another, you can request (rather demand) it be fixed so your credit scores and reports show the most accurate, and complete information available across all three major credit bureaus.

FICO ratings range from 350 to 850, with 850 being the best rating (which gets you the lowest interest rates). Below 600 is when you may have loans turned down, or see much higher interest rates than those commonly advertised. If you file bankruptcy with a higher credit score, it will have less of a negative affect than if you filed with a lower credit score and thus affects your debt relief solutions.

Your Credit Score Debt Relief Secrets