1) Use your Assets
If you have assets with some significant equity, such as a home
or a car you may be able to use these to get control of your
debt. For example, you could get a loan on your home sufficient
to pay off your debts. You could be saving a considerable amount
of money on interest if you pay off high interest credit card
debt in return for lower cost debt.
If you have a car, consider selling it, paying off your debts
and buying a cheaper car. Be careful though! Your don't want a
"cheaper" car that will cost you a fortune in repair costs.
2) Get a Second Job
Use the money from this job to only pay off your debts. List
your debts noting the interest rates. Pay off the debts with
the highest rates first and work your way down the list.
3) Put your Credit Cards on Hold
One of the best steps you can take to get out of debt is to
immediately stop using credit cards. At the very least destroy
all your cards keeping just one card for emergencies.
4) Set up a Repayment Plan
Cut back on your expenses and/or use freed up cash to pay down
your debts. Pay off the debts with the highest rates first and
work your way down the list.
5) Get a Consolidation Loan
A consolidation loan can make lots of sense. Get a loan to pay
off all your many debts and have just one payment to make. The
new loan usually has a smaller payment and a lower interest
rate.
6) Use the Services of a Credit Counselor
There are two types of credit counselor, for profit and
"nonprofit". We do not distinguish between the two as they
provide similar services and both charge a fee. Credit
counselors can assist you in acquiring the discipline you need
to get control of your debt. Be careful! Many people do not
fully understand all the ramifications involved such as:
Impact on your credit rating
The credit bureau will record that a plan is in place.
Are your payments too high?
Your payments should be high enough to significantly reduce
your debt but not so high that you have "no life". If you do
not have money left over at the end of the month to pay for the
small pleasures in life you may find that you end up defaulting
on your payments.
For how long should you pay?
Most experts feel that the term should be three to four years.
It is a stipulation in the new Bankruptcy Reform Bills that the
term be 3-5 years. Terms longer than this have a very high
failure rate, because people cannot see a "light at the end of
the tunnel".
7) Informal Proposal - Payments over time.
In some cases you can make a proposal to your creditors to set
up a payment plan that will allow you to pay your creditors in
an orderly way and thus help preserve your credit rating. This
operates similar to a debt consolidation loan except you do not
borrow the money to pay off your creditors.
8) Informal Proposal - Lump sum payment.
You may be able to pay less than 100 cents on the dollar. For
example, a relative may be willing to pay a lump sum to the
creditor of say 50% of the amount owed in order for the balance
of the debt to be written off. Your creditors will be more
willing to accept this offer rather than have you file Chapter
7.
This works best when there are few creditors.
9) Chapter 13 Bankruptcy
You are probably a good candidate for Chapter 13 bankruptcy if
you are in any of the following situations:
1. You have a sincere desire to repay your debts, but you need
the protection of the bankruptcy court to do so. You may think
filing Chapter 13 is simply the "Right Thing To Do" rather than
file Chapter 7.
2. You are behind on your mortgage or car loan, and want to
make up the missed payments over time and reinstate the
original agreement. You cannot do this in Chapter 7 bankruptcy.
You can make up missed payments only in Chapter 13 bankruptcy.
3. You need help repaying your debts now, but need to leave
open the option of filing for Chapter 7 bankruptcy in the
future. This would be the case if for some reason you can't
stop incurring new debt.
4. You are a family farmer who wants to pay off your debts, but
you do not qualify for a Chapter 12 family farming bankruptcy
because you have a large debt unrelated to farming.
5. You have valuable nonexempt property. When you file for
Chapter 7 bankruptcy, you get to keep certain property, called
exempt. If you have a lot of nonexempt property (which you'd
have to give up if you file a Chapter 7 bankruptcy), Chapter 13
bankruptcy may be the better option.
6. You received a Chapter 7 discharge within the previous six
years. You cannot file for Chapter 7 again until the six years
are up.
7. You have a co-debtor on a personal debt. If you file for
Chapter 7 bankruptcy, your creditor will go after the co-debtor
for payment. If you file for Chapter 13 bankruptcy, the creditor
will leave your co-debtor alone, as long as you keep up with
your bankruptcy plan payments.
8. You have a tax debt. If a large part of your debt consists
of federal taxes, what happens to your tax debts may determine
which type of bankruptcy is best for you.
10) Chapter 7 Bankruptcy
If these alternatives will not work for you, bankruptcy may be
the only way for you to get a fresh start. Chapter 7 Bankruptcy
offers a quick solution to getting out of debt.
About The Author: Nathan Dawson writes for
http://www.mybankruptcycounseling.com, a great online source
for bankruptcy information
Wednesday, September 14, 2005
Tuesday, September 13, 2005
Planning To Become Debt Free With A Consolidation Loan
If you have multiple debts, and are struggling to meet the
monthly payments, then there's a good chance you will want to
consider, now or later, a consolidation loan to become debt
free.
If you have already studied your monthly expenditure and can
see no way to make savings, and find you have no way of earning
extra money, then your next option may be a free debt
consolidation loan.
By free, I mean no extra charges or arrangement fee for the
consolidation loan; your chances of getting an interest free
consolidation loan are just about zero, unless you have a rich
relative or friend. Should you go down the debt consolidation
route, try to avoid any loan arrangement which involves upfront
fees, or any extra fees at all for that matter. Whether that is
possible will depend on where you live, but in the UK, it is
not difficult to get a free debt consolidation loan.
One benefit of a consolidation loan is that it does give you a
chance to plan your finances in a way that could, if you're
careful, make you debt free by the end of the period of the
loan. By debt free, I will be realistic and mean "debt free
apart from home mortgage", which most people have little option
about, and mortgage debt can be worthwhile financially anyway.
Taking out a debt consolidation loan will not, of course, make
you instantly debt free. However, it may be that such a loan
will give you a chance to structure your finance plan over a 3,
5 or 7 year period. With the correct attitude and perseverance,
this may be an excellent opportunity to improve your finances
in the long term, resulting in being debt free by the end of
the loan period.
The consolidation loan will reduce your monthly outgoings, thus
giving you the opportunity to save. By getting into the saving
habit instead of debt habit, you will be able to set aside
money to pay cash for the things you need in the future; if you
are determined and disciplined, even that next car purchase can
be in cash, rather than an expensive loan. The result: you
become debt free.
In the financial reality of a consumer, if you cannot to afford
to pay cash for something, then you probably cannot really
afford it at all. The one exception is the house, where the
investment potential and rent saving change the financial
aspect.
Can you imagine, waking up at the end of the consolidation loan
term and finding yourself debt free? What a nice feeling!
About The Author: This debt consolidation article was written
by Roy Thomsitt, the owner and author of
http://www.eliminate-credit-card-debt-now.com/Consolidate_Debt.htm
Formerly a finance professional and credit controller, Roy is
now a full time online author.
monthly payments, then there's a good chance you will want to
consider, now or later, a consolidation loan to become debt
free.
If you have already studied your monthly expenditure and can
see no way to make savings, and find you have no way of earning
extra money, then your next option may be a free debt
consolidation loan.
By free, I mean no extra charges or arrangement fee for the
consolidation loan; your chances of getting an interest free
consolidation loan are just about zero, unless you have a rich
relative or friend. Should you go down the debt consolidation
route, try to avoid any loan arrangement which involves upfront
fees, or any extra fees at all for that matter. Whether that is
possible will depend on where you live, but in the UK, it is
not difficult to get a free debt consolidation loan.
One benefit of a consolidation loan is that it does give you a
chance to plan your finances in a way that could, if you're
careful, make you debt free by the end of the period of the
loan. By debt free, I will be realistic and mean "debt free
apart from home mortgage", which most people have little option
about, and mortgage debt can be worthwhile financially anyway.
Taking out a debt consolidation loan will not, of course, make
you instantly debt free. However, it may be that such a loan
will give you a chance to structure your finance plan over a 3,
5 or 7 year period. With the correct attitude and perseverance,
this may be an excellent opportunity to improve your finances
in the long term, resulting in being debt free by the end of
the loan period.
The consolidation loan will reduce your monthly outgoings, thus
giving you the opportunity to save. By getting into the saving
habit instead of debt habit, you will be able to set aside
money to pay cash for the things you need in the future; if you
are determined and disciplined, even that next car purchase can
be in cash, rather than an expensive loan. The result: you
become debt free.
In the financial reality of a consumer, if you cannot to afford
to pay cash for something, then you probably cannot really
afford it at all. The one exception is the house, where the
investment potential and rent saving change the financial
aspect.
Can you imagine, waking up at the end of the consolidation loan
term and finding yourself debt free? What a nice feeling!
About The Author: This debt consolidation article was written
by Roy Thomsitt, the owner and author of
http://www.eliminate-credit-card-debt-now.com/Consolidate_Debt.htm
Formerly a finance professional and credit controller, Roy is
now a full time online author.
Monday, September 12, 2005
Beware Of Using Your Credit Card Abroad!
It's summer. And for some lucky Americans, this means going vacation
to a far off land in hopes of relieving the stress of everyday life.
In general, it is a very happy couple of months for the regular
American family but it can also be an even happier time for credit
card companies. This is because of the fact that credit card companies
are making a killing off the money Americans spend on their foreign
vacations through questionable fees.
Imagine this situation. You and your family are in Paris, France on
vacation. Your wife sees a lovely pair of shoes that she "must have"
and so being the good husband that you are, you purchase the $300 pair
of shoes using your credit card. Two weeks or so later, your credit
card statement shows up and instead of you seeing a charge for $300
dollars, you statement shows a charge for $309. How did this happen?
The answer is that you were charge 1% foreign currency-conversion fee
by Visa or Master to convert your foreign-currency purchase into
American dollars and were also charged an addition 2% foreign
transaction fee by your credit card issuer.
If you are form the U.S., when you make a purchase abroad with your
credit card, your credit card issuer will convert the charge to U.S.
dollars before it appears on your statement. Usually, this is done
through the Visa or MasterCard networks, which charge a 1-percent
foreign currency-conversion fee for converting your foreign-currency
purchase into American dollars. According to Kristin Arnold, a writer
for Bankrate.com, this is a good deal since changing your money in
almost any other manner will probably cost you a lot more.
What is unsettling, however, is the additional foreign transaction fee
which your credit card issuer charges. This fee can range from 2-3%.
According to Linda Sherry, the editorial director for Consumer Action
in Washington, "Banks have been making a profit off their customers
for a long time, while providing no service." In Agreement, Ed
Perkins, a syndicated travel columnist and author of "Business Travel
When It's Your Money," says that these fees are "pure gouging that
credit card companies know they can get away with". Foreign
transaction fees do not relate to any service that the credit card
issuer provides but instead is buried deep in the fine print of the
credit card agreement between the issuer and the customer. So in
retrospect, while Visa or MasterCard may have done you a favor by
converting your foreign-currency purchase into American dollars for a
fee of 1%, your bank's additional charges were driven by pure greed.
So what can you do to avoid these fees? The answer is to do your
research. Currently there is no standard rate at which all banks and
corporations charge, so you could possibly find a card that does not
add on any additional fees for overseas purchases. For example Bank of
America, Citibank, MBNA and JP Morgan Chase all charge 2 percent on
overseas purchases while Household Credit Services, Providian
Financial Corp and Capital One do not.
Another way that one can protect themselves from being overcharged is
to know and keep up with the latest currency exchange rates. Visiting
currency conversion sites like http://www.gocurrency.com is a great
way to do this. Having a general idea of the exchange rate will help
you make more informed decisions when you purchase goods and services
from local vendors.
In the end, credit card companies are in the business to make money,
however, it is up to you whether they get it from you honestly or
through underhanded practices.
Gerron Woodruffe is a contributing writer for GoCurrency.com
http://www.gocurrency.com . GoCurrency provides information on global
exchange rates, movements and news related information.
to a far off land in hopes of relieving the stress of everyday life.
In general, it is a very happy couple of months for the regular
American family but it can also be an even happier time for credit
card companies. This is because of the fact that credit card companies
are making a killing off the money Americans spend on their foreign
vacations through questionable fees.
Imagine this situation. You and your family are in Paris, France on
vacation. Your wife sees a lovely pair of shoes that she "must have"
and so being the good husband that you are, you purchase the $300 pair
of shoes using your credit card. Two weeks or so later, your credit
card statement shows up and instead of you seeing a charge for $300
dollars, you statement shows a charge for $309. How did this happen?
The answer is that you were charge 1% foreign currency-conversion fee
by Visa or Master to convert your foreign-currency purchase into
American dollars and were also charged an addition 2% foreign
transaction fee by your credit card issuer.
If you are form the U.S., when you make a purchase abroad with your
credit card, your credit card issuer will convert the charge to U.S.
dollars before it appears on your statement. Usually, this is done
through the Visa or MasterCard networks, which charge a 1-percent
foreign currency-conversion fee for converting your foreign-currency
purchase into American dollars. According to Kristin Arnold, a writer
for Bankrate.com, this is a good deal since changing your money in
almost any other manner will probably cost you a lot more.
What is unsettling, however, is the additional foreign transaction fee
which your credit card issuer charges. This fee can range from 2-3%.
According to Linda Sherry, the editorial director for Consumer Action
in Washington, "Banks have been making a profit off their customers
for a long time, while providing no service." In Agreement, Ed
Perkins, a syndicated travel columnist and author of "Business Travel
When It's Your Money," says that these fees are "pure gouging that
credit card companies know they can get away with". Foreign
transaction fees do not relate to any service that the credit card
issuer provides but instead is buried deep in the fine print of the
credit card agreement between the issuer and the customer. So in
retrospect, while Visa or MasterCard may have done you a favor by
converting your foreign-currency purchase into American dollars for a
fee of 1%, your bank's additional charges were driven by pure greed.
So what can you do to avoid these fees? The answer is to do your
research. Currently there is no standard rate at which all banks and
corporations charge, so you could possibly find a card that does not
add on any additional fees for overseas purchases. For example Bank of
America, Citibank, MBNA and JP Morgan Chase all charge 2 percent on
overseas purchases while Household Credit Services, Providian
Financial Corp and Capital One do not.
Another way that one can protect themselves from being overcharged is
to know and keep up with the latest currency exchange rates. Visiting
currency conversion sites like http://www.gocurrency.com is a great
way to do this. Having a general idea of the exchange rate will help
you make more informed decisions when you purchase goods and services
from local vendors.
In the end, credit card companies are in the business to make money,
however, it is up to you whether they get it from you honestly or
through underhanded practices.
Gerron Woodruffe is a contributing writer for GoCurrency.com
http://www.gocurrency.com . GoCurrency provides information on global
exchange rates, movements and news related information.
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