One of the most widely known credit card debt relief programs in existence is debt consolidation. Simply put, debt consolidation is the process of combining multiple existing loan payments into a single, more manageable monthly payment. A debt consolidation company has the expertise and knowledge to work with multiple lenders and extract more favorable terms. The end result is is a program and monthly payment that you can afford.

Pitfalls

Credit card debt is unsecured debt. There is no collateral tied to it. If you were suffering a financial hardship and could not for a time or for the foreseeable, future pay your credit card bills, you could be subject to harassing phone calls from the credit card company and collection firms. You could also be sued for repayment of this credit card debt. Lawsuits over credit card debt depend on many factors including:

•Whether or not there is a co-signer on the account(s) which the credit card company can pursue
•The length of time at your current job for a long period of time or not
•Age of the customer
•Total dollar amount of the debt owed
These factors and other determine whether a credit card company decides to pursue a lawsuit against a customer that has defaulted on credit card debt. But generally, credit card issuers are usually willing to work with their customers towards repayment of the debts owed.

However in the case of debt consolidation loans for homeowners, you are essentially exchanging unsecured debt for secured debt. And this security almost always comes in the form of a home equity loan. If a consumer goes down the road of a credit card debt consolidation loan, and it is in the form of a home equity loan, and they do find themselves unable to make their new payments at some time – they risk losing their home. Therefore, for debt consolidation to work and be successful, you must have reached a point where you are on sufficiently stable financial footing to be able to continue to make your new payments – because the stakes are high.

Consumer Credit Counseling

If you are in a position where you find yourelf beginning to slide down that slippery slope of credit card debt, then consumer credit counseling can be extremely beneficial. Credit counselors are able to analyze every aspect of your finances and budget. Based on this in-depth evaluation they can craft a personally tailored strategy for paying down credit card debt.

One of the key methods employed by credit counseling is the creation of a personal or family household budget. In order to understand and follow the money trail it’s important to lay down on paper or on an Excel spreadsheet every expense that comes up. Seeing in black & white how much is being spent and on what every month can be a real eye-opener. Those gourmet morning coffees surely add up, as does dining out, entertainment, etc.

A household budget designed with the aid of a skilled credit counselor can therefore be extremely beneficial for those whose credit card debt issues have not yet reached critical stage. And many consumer credit counseling services are in fact non-profit groups, so you can rest assured the credit counseling service has your best interest at heart.

Debt Settlement

A newer program and method of debt relief that has been gaining in popularity and getting much media attention of late is known as debt settlement. The program differs greatly from debt consolidation. For starters unlike debt consolidation which simply seeks to gain a lower monthly payment with a lower interest rate and/or extended payment terms, debt settlement works to actually reduce the principal that a consumer owes.

Here’s how it works. A cosumer will authorize a debt settlement firm to negotiate on her behalf with her creditors. Also known as debt arbitration or debt negotiation, this type of program can typically achieve reductions of debt as high as 50% to 75% off of the original amount(s) owed. What is even more amazing is that this reduction in debt is achieved without all the harmful effects of a bankruptcy filing.

Debt Relief Takes Time

Even a debt settlement program however takes time to complete and to eliminate one’s debt. Consumers in debt need to realize that their personal credit card debt issue did not arise overnight; it grew over time, typically several years. And it will take a few years to complete any debt relief program. The good news is that there are indeed many programs in which those who are struggling with credit card debt can use to their advantage beginning with today.  Call SYD Financial at 866 364-9161 for a free consultation today!

The federal government noticed that Americans were in over their heads. So they invented a plan and called it ‘Credit Counseling’. Credit counseling was created as a means for the average American to find out what steps he could take in order to relieve his debt. The credit counseling companies were supposed to set up a payback plan that would get the average American out of debt within 10-15 years. This plan failed miserably.

Nobody has ever gotten out of debt using a credit counseling plan. In fact, those that joined the plan found themselves in the same amount of debt 10 years later. Credit counseling had failed. So the federal government steps in again.

The federal government paved the way for debt consolidation companies to join the mix. Debt consolidation allows you to take out a loan, using your equity, to join all of your debt into one lump-sum loan with one payment. Sounds great right? WRONG!

Debt consolidation allows you to take out a loan against your equity to pay for a non-equity debt. Sounds great at first, until you miss a payment. Now you’ve lost your house. You used your credit cards to buy non-equity items, and now you’ve lost your equity to pay these things off. You’ve given everything you had to become debt-free, and now you have nothing, but your debt still exists.

The debt problem in America is ongoing to this day, and has gradually gotten worse. It seems that nobody has a way to help. It seems that nobody is able to clear your debt. And now, with the new bankruptcy laws in place, you are in even more trouble trying to become debt-free. So what is the answer?

DEBT SETTLEMENT! You have the option of choosing a debt settlement company to settle your debts for you. This option provides debt relief like no other program can. Instead of paying 100% of your debt total and running the risk of losing your equity, you can now pay about half that amount and not have to worry about the difference.

Credit card companies are very aware of the debt problem in America. They know that nobody is able to pay back these debt accounts. They also realize that if they don’t collect any money, then they will go broke. They need to be able to collect payments to stay in business. With the debt problem being so big, they have to take a few cuts in order to help resolve the problem.

Debt settlement companies settle your unsecured debt (credit card debt) for a fraction of the total debt amount. For example, if you owe $20,000 to a creditor, then a debt settlement company will offer $10,000 to pay that debt off without owing the other $10,000.

Credit card companies are reluctant to take this type of offer if they think that they can collect the whole amount. They use ‘scare tactics’ to try to get consumers to pay in full. They will threaten to take your house, your car, your kids, and garnish your wages. These are all smoke and mirror threats, but they don’t want you to know that.

A debt settlement company intervenes and works directly with the creditors, taking the calls for you. They are not scared by these tactics, and they know how to respond to them. That is how they are able to settle your debt for a fraction of the debt amount.

If you need to contact a debt settlement company that will fight for your right to become debt-free, then see www.sydfinancial.com for more information

Debt consolidation

Credit counseling

Debt settlement

While these approaches can help you pay off your existing debts they won’t necessarily help you avoid getting back in debt. The strategy you choose depends on the amount of debt and urgency of your financial situation. Filing bankruptcy is a legal proceeding that has gained popularity recently. Once reserved for the most extreme debt situations, bankruptcy and personal bankruptcy have reached epidemic proportions in many states. If you have tried conventional approaches to getting out of debt then it might be best for you to consider bankruptcy. Remember bankruptcy should be used as a last resort.

The spiral of debt is often reborn after managing or paying off debt. Once you settle your debts, you can prevent future debt by tracking your spending and following a monthly budget that prevents you from spending more than you earn more that you can afford.

This is where the rubber meets the road for many people. Living in debt or living beyond your means becomes a way of life. This culture and its philosophy is often born with your first new credit card, usually around your 18th birthday. Credit card companies insist through their advertisements that your life will be better, especially if you buy the things you’ve always wanted and that you deserved with a credit card. That simple strategy in advertising unfortunately loops in many people to an introduction to debt.

If you have spent a number of years living the life of a credit card abuser or a personal loan abuser you can expect the challenge of living without credit cards to be significant. If you are married it will take a total commitment to living debt free. If you are single it may be even more difficult. We have talked with many people in their 50s who have gone through several debt spirals. The cycle of debt is vicious and relentless. Use caution when you get a handle on your debt not to get back in.

Obviously debt problems almost always lower your credit score. While that will not be a priority when you are involved in managing your debt it is something you should consider once on solid financial ground. Improving your credit score is best accomplished by simply paying your bills on time. That sounds too easy doesn’t it? You will likely find many companies that offer credit repair services. The fact is you do not need a credit repair service if you structure a plan and follow your plan to pay your bills on time. Over time your credit score will improve naturally and prove to lenders that you are indeed a good credit risk in the future.

Once you are managing your current debt you can begin to build your cash reserves again. One of the most common things that we hear from people in debt is that they do not have enough money to pay their bills, how could they possibly save money. Again this is part of the new process you must adopt. Quite simply if you want to save money, pay yourself first. Think about that.

Let’s assume your paycheck is $500 for the week. A modest savings plan of 5% and you would take $25 and deposit them in a savings account or savings instrument of some type. That does not sound like a lot of money but over time you can increase the amount and what you are doing is developing a discipline of saving and not spending. That bears repeating develop the discipline of saving and not spending. Before you know it saving money will be the new priority in your life, and managing your debt will become much easier.

That tendency for people that are in serious is to think of hopelessly. To some extent it does feel that way. You must look beyond the present and to your future. As you know if you are in debt or in that hopeless situation, the stress and anxiety you feel on a day-to-day basis is overwhelming. Imagine yourself and your financial situation without that stress. That may be the motivation that you need to make a concerted effort to getting out of debt and staying out of debt.

Whether you choose debt consolidation, credit counseling, debt settlement or find it necessary to file bankruptcy, you must choose a plan that will get you on the road to recovery.

Do not fool yourself into thinking that you do not have debt problems because you are paying your bills. If you are paying the minimum payments on your credit accounts it is likely you will spend years and years paying off the debt. Generally speaking paying the minimum payments is risky. What if you miss a paycheck? What if you become unemployed? Both of those scenarios are happening to thousands of people every day.

If you can make your mortgage payments, make your car payment and pay off your credit card in full each month then you are among the minority. Essentially if you make your payments on time to your good debts and pay off your bad debts in full each month you may not need to use the debt strategies we have outlined.

Determining where you are with regard to debt is not difficult. Simply ask yourself and answer this question honestly. Am I in debt? An honest answer should provoke an honest action. Whether that is continuing on your present course or charting a new course for debt free living is up to you.

These reductions can range from 40 to 60% and play a major role in getting the client out of debt. Clients in a debt settlement also see their monthly payments decrease by approximately 50%. The process to pay off debts completely takes 12 to 36 months which is considerably shorter than a credit counseling that takes anywhere from 4 to 28 years.

Any debt that is unsecured can be settled using this process such as credit card debt, medical and hospital bill debt, business loan debt, personal loans, utility bills, department store credit cards etc. With negotiation, debt settlement companies like www.sydfinancial.com will try and convince creditors to lower the amounts you owe them.

You can avoid creditor harassment using the debt settlement process. Debt settlement companies normally contact all your creditors and inform them that you are working with them and that you are now being represented. This helps minimize or eliminate creditor calls. The standard practice is to communicate with the company that is representing you. However creditors do not have any legal obligation to do so.

Once you sign the power of attorney authorizing the debt settlement company like www.sydfinancial.com to negotiate with your creditors, the process begins. During the process, you must make a monthly deposit into a settlement account. The company will use funds collected in this account to repay your debts. Once all your debts are paid off, the account will be closed.

Credit card debt, medical and hospital bill debt, business loan debt, personal loans, utility bills, department store credit cards and generally any debt that is unsecured can be settled using this process. With negotiation, debt settlement companies will try and convince creditors to lower the amounts you owe them.

Therefore, first of all be a bit wary of organizations that claim to be a “non-profit” organization. The use of this word does not prove that the services will be free or even lower cost and worse yet, they may not be legitimate. Some non-profit credit counseling organizations have fees that are hidden as membership costs or charges for individual services that can add up to a hefty amount. Steer clear of firms that have a monthly charge or a pre interview membership fee. A reputable credit counseling firm will charge a fee that is determined upon the complexity of your individual situation and the business debt relief that needs to be dealt with. But the bottom line is not the cost but how reputable the counseling firm is. You want a firm that specializes in business debt relief, one that is well know by creditors and that will have a high recognition value with them that will result in their trust and eventual agreement to negotiate.

The Maze Of Debt Relief Options
The best way, obviously, to get rid of debt is to attack the balance with the highest annual percentage rate first. When that one is paid off, move onto the debt with the next-highest interest rate. Always attack that high-interest debt first. On that debt, you want to double, triple, or even quadruple minimum payments. When you’re done with that one, move on to the next one. But what if you’re falling behind more every month, which is what the debt relief options are really designed for.
In this seven part series, I will attempt to shine a light of reason on the subject in hopes of providing you with the knowledge necessary to make an educated and informed decision, as well as give you the peace of mind that you desire to become proactive (finally) and take the action necessary to do something about your debt burden.

In part 1, I will briefly touch upon each option (there are really only five) and give more detailed descriptions in the following daily parts (2 through 6) wrapping it all up in the final part on day number 7.

Debt relief is possible, but it requires determination and research on your part. Once you feel comfortable and sign on with a program, stick with it. If you are using the services of another company to help you obtain debt relief, make sure you read the small print and check out their references. Ultimately, your credit standing is in your hands. Do not trust it to those who are not actively working on your behalf.

4 Debt Relief Tips To Help You Get Out From Under Your Mountain of Debt
Debt consolidation loans are done by lending institutions. They first add up all of your debt, and if you meet the requirements, then you can apply for a debt consolidation loan. Once approved, your debt is paid to your creditors and the payments you would make go directly toward the consolidation loan. It is important to research your options before you choose a debt consolidation lender. Each company has different interest rates and terms of service. It is also important that you do not make any more debt for yourself when you are repaying a debt consolidation loan. Doing this could jeopardize your financial future and end up in bankruptcy court.

Debt Settlement is another way to obtain debt relief. This is done by contacting your creditors directly and negotiate a lump sum payment. If you debt is large, this may be an option worth looking into. It is recommended that you use a professional debt negotiator. He or she is trained to negotiate the lowest settlement. You may not get the results you want if you do it yourself. It is important that you pay the settlement amount quickly. Your creditors will require payment within twenty days of the date of settlement.

Bankruptcy is the last option. When you claim bankruptcy, it is a long drawn out process that can take years to complete. It will show on your credit score for ten years and it can cost you thousands of dollars that could be used to pay off your debt.

Is Emergency Debt Relief the Answer to Your Problems?
If your creditors are driving you crazy and you think you can’t handle one more phone call, you might want to try debt consolidation. By doing this, you are taking out one loan and paying off all of your debts with that loan. This makes your creditors happy and you don’t have to deal with them anymore. What you do have to do is be sure you make the payments on your new loan and don’t run up anymore debts.

Debt settlement and debt consolidation can both be done by you or you can hire a service to do the work for you. Services that offer help with debt are trained to do this type of work and are skilled at negotiating. If negotiating isn’t one of your strong points, you may need to consider hiring a service to handle your emergency debt relief.

Lots of the available systems can work, but if they don’t, it might not be your fault, but simply that you have too much debt, and the compounding interest is just burying you.

So What Are The Alternatives?

Under other circumstances, a good BBB (Better Business Bureau) affiliated credit counseling agency would be a good option, but if you’re in the situation that’s described above, then they’re not likely to suggest anything other than debt settlement or debt consolidation, with the exception of bankruptcy.

It’s not as easy to file for bankruptcy as it once was, and in nearly every case it should be your last choice of action. Better to at least try debt settlement or debt consolidation first, because bankruptcy will always be available if nothing else works.

Debt Settlement Explained

Debt settlement basically means that the creditor and debtor agree to new loan terms that are more favorable to the borrower and if the debtor sticks to the terms of the agreement then it’s something that’s good for both parties because the debtor pays less, and the creditor avoids forcing him into bankruptcy.

If only one creditor were involved then the process would not be overly complicated, but that’s rarely the case. The major complication is that every creditor wants the best deal that he can get and is not the slightest bit interested in other creditors or the deals that they’re making with the debtor.

What this means in practice, is that every deal has to be renegotiated a number of times before it’s finally signed, and because credit card companies and other lenders deliberately make it extremely difficult to speak to somebody with authority, the whole things becomes almost unbelievably stressful and frustrating.

It is of course possible to handle the whole process alone, but it’s highly nerve-racking if you’re personally involved, and if you’re not sure that you can handle additional stress then a debt settlement company that’s BBB (Better Business Bureau) affiliated might be the best way to go.

Debt Consolidation Explained

Debt consolidation means combining all your individual debts into just one debt, that will cost you less in interest and fees than all the separate debts combined.

Be aware that debt consolidation is normally only available to people who’s credit is still in reasonable shape, and if yours isn’t then debt settlement and not debt consolidation would probably be the better the way to go.

There are plenty of companies that offer consolidation loans to people with even terrible credit, but they’re usually very expensive, and if you’re still tempted by this route, then be sure to check out all the fine print in the contract.

If however, you’re credit score is still better than poor then a debt consolidation company might be the answer because it will;

a) Carry out all the negotiations, and get the best possible rates.

b) Stop the harassing phone calls and knocks on the door.

c) Arrange for one set amount that has to be paid every month.

d) Remove a tremendous amount of stress from a highly stressful situation.

But please be sure there are no upfront fees and do check the small print to see what happens if you can’t make the regular payments.

An additional upside to debt consolidation is that your credit score will be less affected than if you were to opt for debt settlement, provided you stay the course and don’t default.

The author of this article was a film producer, and award winning film sound editor for many years. He has a passion and a flare for economics, and one of his websites – Pay features the famous Get Free In Three system which has helped a huge number of people get out from under suffocating debts.

Article Source: http://EzineArticles.com/?expert=Michael_Redbourn

Lots of the available systems can work, but if they don’t, it might not be your fault, but simply that you have too much debt, and the compounding interest is just burying you.

So What Are The Alternatives?

Turning to a good credit counseling agency would be good of course, but if your present state mirrors the one described above, then it’s unlikely that they’d be able to suggest anything other than debt settlement or debt consolidation, with the exception of bankruptcy.

Bankruptcy has its place of course, and it’s always an option, but even that’s not as easy as it once was, and in any event, either debt settlement or debt consolidation should always be tried before filing for bankruptcy, which will ruin your credit rating for at least seven years.

Debt Settlement Explained

Debt settlement basically means that the creditor and debtor agree to new loan terms that are more favorable to the borrower and if the debtor sticks to the terms of the agreement then it’s something that’s good for both parties because the debtor pays less, and the creditor avoids forcing him into bankruptcy.

The process would not be overly complicated if only one creditor were involved, but that’s seldom the case. The major complication is that every creditor wants the best deal that he can get and is not the slightest bit interested in other creditors or the deals that they’re making with the debtor.

What this means in essence is that deals often have to be renegotiated several times before they’re finally signed, and given the fact that credit companies make it intentionally difficult to talk to anybody that can make a decision, it’s incredibly frustrating and stressful.

It is of course possible to handle the whole process alone, but it’s highly nerve-racking if you’re personally involved, and if you’re not sure that you can handle additional stress then a debt settlement company that’s BBB (Better Business Bureau) affiliated might be the best way to go.

Debt Consolidation Explained

Debt consolidation means combining all your individual debts into just one debt, that will cost you less in interest and fees than all the separate debts combined.

Be aware that debt consolidation is normally only available to people who’s credit is still in reasonable shape, and if yours isn’t then debt settlement and not debt consolidation would probably be the better the way to go.

There are plenty of companies that offer consolidation loans to people with even terrible credit, but they’re usually very expensive, and if you’re still tempted by this route, then be sure to check out all the fine print in the contract.

If however, you’re credit score is still better than poor then a debt consolidation company might be the answer because it will;

a) Carry out all the negotiations, and get the best possible rates.

b) Stop the harassing phone calls and knocks on the door.

c) Arrange for one set amount that has to be paid every month.

d) Remove a tremendous amount of stress from a highly stressful situation.

But please be sure there are no upfront fees and do check the small print to see what happens if you can’t make the regular payments.

An additional upside to debt consolidation is that your credit score will be less affected than if you were to opt for debt settlement, provided you stay the course and don’t default.