Can Your Debt Be Enough Reason to Lose Your Home?

There are already many people who lost their homes because of their debts, and this absolutely is the heaviest consequence of all. Losing a home has a great impact on one’s life. It can bring depression and public humiliation, and another sad thing is that the problem may not end there. Being able to sell your home doesn’t necessarily mean that you will already be able to pay off all your debts. There are some that lose their home and still remain indebted.

This is a very depressing situation, but the good news is that this seldom happens. Foreclosure of property is actually the very last possible option of few creditors. Debts, such as credit cards or bank loans fall under unsecured loans, and this means that your valuable properties are never considered as collateral, therefore, leaving them safe in your possession.

Foreclosure of property can only be applied on secured loans and on debts owed to the government like unpaid taxes, but then again, this rarely happens. You will likely lose your home if your are unable to update your, let’s say, mortgages or other property loans.

Lending institutions strictly implement foreclosure, but this option is not, in any way, so desired by creditors for they will not profit much from it, and that they do not want to be known as a company with no heart.  Foreclosing a property is a long process. You usually need to have at least 6 months of unpaid instalments before you are given a foreclosure notice.  The 6-month period is enough time to make you decide to either avail of remortgage or debt consolidation. This, likewise, is enough time to negotiate with the lending institution regarding debt restructuring.

There are certain steps that need to be followed in the foreclosure of property, and here they are:

1.    You will be given a notification letter stating that you have an overdue account. You will also be asked to contact them and discuss possible ways on how you can repay them.
2.    In case you have ignored the first letter or if you did not abide by the revised terms, you will again receive a letter that will serve as a warning.
3.    If you still fail to settle your overdue accounts or at least negotiate with the lending institution, a final letter, which is known as the solicitor’s letter, will be delivered to you. This letter states that you need to settle you account or come up with an agreeable proposition on how can repay your debt.
4.    If, again, you fail to reply to the final letter, your case will then be brought to court. The court will then give lending institution the right to foreclose your property. However, the court will still try its best to resolve the case through a reasonable agreement. This is true if there are children who will be affected by the foreclosure.

Continue Reading

Avoiding Unsecured Credit Card Debt

Most people know that the best way to avoid credit card debt is to use a credit card for purchases only if they know they will be able to pay for them when the statement comes, and pay the balance of the card in full every month.

However, people are human and don’t always do the wise thing when it comes to finances. They may purchase a costly item that they consider to be a bargain or have a reduction in income and cannot pay the credit card balance when it is due.

Whatever the reason is for your debt to get out of hand, there are debt solutions to help you get debt free. When you discover that you will not be able to pay the minimum balance on a credit card, contact the company and explain your situation to them. You may be able to negotiate a plan that will lower the amount you owe, or they may accept lower payments. Do not wait to call them until they start harassing you. If you put it off too long, they may turn your account over to a collection agency that will be harder to deal with.

If you are unable to negotiate with your credit card company, a debt settlement company may be able to clear your debt for you so you can get back on your feet again. If you have more than $10,000 in unsecured debt, the debt settlement company may be able to convince the credit card company to lower your outstanding balance by as much as 60%. Reducing a $10,000 balance to $4,000 would lower your payments to make them manageable again.

If you decide to use the services of a debt management company, be careful to choose a company that is experienced and reliable. Contact the Better Business Bureau, your state Attorney General and your local consumer protection agency for information about the company, and read the contract carefully before signing anything.

There are a few negative aspects of eliminating a large part of your debt. If your credit card company writes off part of your debt, the IRS may consider that amount the same as income and require you to pay taxes on it. Your credit rating will be lower because you were not able to pay your debt in full, so you will have difficulty getting a loan until you can build your rating back up again.

If your debts have become unmanageable, don’t ignore them, because they won’t go away until you take some type of action.

Continue Reading

Should You Consolidate Your Debt?

There are a few considerations to make when determining whether or not to consolidate your debt.  First, debt consolidation is a practice generally availed by those who are having trouble making their monthly payments.  If you have no such trouble, but are interested in lowering your interest rates, it is probably better that you approach your creditors individually and negotiate for lower rates.  Often, if you have been paying your bills on time, your creditors might offer you some interest relief.  Such an arrangement has no reflection on your credit score.

If you are beginning to have some difficulty making your monthly payments and your future financial prognosis is not looking good, now may be the exact right time to consider debt consolidation.  Since debt consolidation can require equity and/or a good credit score, you want to get into it before you begin to fall behind on monthly payments.

There are probably many banks and lending institutions in your local community who specialize in debt consolidation.  Certainly, there are hundreds online.  Do a little research and come up with the three lenders you think you would most like to work with.  Contact each lender individually and discuss your situation in regard to debt consolidation.  They will be able to advise you as to what they think are your best tactics and offer you a proposal on a specific agreement for you.

Before making a choice for or against debt consolidation, consider the three most important elements of a debt consolidation loan, and what you consider to be the most important among them.  The three basic elements of a debt consolidation loan are interest rate, term (length) of the loan, and the amount of your monthly payment.  Also, be sure to compare these elements when choosing the lender for your debt consolidation loan.

Not everything about a debt consolidation loan is hearts and flowers.  You will want to keep in mind that unlike your credit card bills, a debt consolidation loan may require collateral.  The most obvious collateral would be your home or car, and you could lose them if you default on your obligation.  Also, the greatest impact on your monthly payments will be the term, or length, of your loan.  The term will, no doubt, be extended in order to realize the lowest monthly payments.  Be aware that this means that you will be paying this loan over a longer period of time.

Continue Reading

Where to go for Debt Advice

Personal debt is a growing problem in the developed nations. It seems that years of living on credit, or ‘buying now and paying later,’ and lending then spending is finally beginning to catch up. If you’re in debt, you are by no means alone.

But where can you go for free, confidential debt advice?

Of course, you can always ask people you know who have experienced similar difficulties for advice. But unless they are trained professional with experience of assisting others in debt, you cannot really guarantee that the advice is up to date and even accurate. New debt solutions are coming available all the time. There are now more alternatives to bankruptcy than there was even a year ago, since the introduction of the Debt Relief Order in April 2009.

So really, when it comes to getting up to date debt advice, the key thing is to speak to professionals. There are a couple of options readily available.

First of all, the Citizen’s Advice Bureau offers free debt advice over the phone and face to face. Specialists will be able to advise you of your legal options according to your own set of circumstances. The problem with this, of course, is that there is currently a particularly high demand for the service and so getting a face to face appointment can be difficult. There are also, however, a number of private debt companies who will offer free advice. Of course, the private companies eventually hope that you take out some form of debt solution with them. As they do have motives, it might be a good idea, if seeking advice from such companies, to do so from several to get an overview of all the options.

And of course, the Internet! The Internet has given us a wealth of resources at our fingertips and financial information is readily available. Be careful where you take such advice from though. To ensure that the advice is accurate and up to date, stick with the official government websites!

Continue Reading

Is it really possible to live without debt?

It seems like most people have some sort of debt that they have incurred over the course of their lives. Maybe you have a car payment, maybe you have a mortgage payment, maybe you have credit card debt or, maybe you started a business, and are paying off the loan while you get it started! What your debt is does not really matter, because debt all equals the same thing – money that we owe someone else. And when you have debt, it usually means paying money every month so that, one day, you can get them paid off. It also means interest, which makes the actual amount you pay off more than it originally was because you are doing it over time.

Is it possible for a person to live in today’s modern society without debt? Now, if a person were to do this, it would mean that they would have to forego a few things, but actually, it is very possible. Here are some ways in which you can eliminate debt in your life, and these are all things that people actually do. It is rare to find someone who is debt free nowadays, but you don’t have to be debt free to enjoy the benefits of less debt.

First of all, try buying used cars with cash instead of buying a new car. How would your monthly budget look if you had no car payment? That would be nice, right? Also, try getting rid of your credit cards. Make yourself a rule, saying that if you cannot buy it with money that is YOURS, you will not buy it. It may seem nice to pay things off over time, but trust me – there is a reward to buying things after you have saved up for them. You will appreciate them a lot more, and you will not think about how you wish you hadn’t bought it when the statements come in and money gets tight!

Continue Reading

3 Signs You Should Consider Debt Consolidation

Living with debt is something that no one truly wants to do. Month after month of watching more expenses pile up than can actually be paid out can make even the most patient person be ready for a change. Fortunately, there is a better way to finally get out of debt. Debt consolidation can be a great route for many people. However, it can be difficult to actually know when debt consolidation is right for you. There are really 3 major signs that you should consider debt consolidation for your situation.

The first sign is having a high number of bills that appear month after month, such as credit cards. Debt consolidation can actually pull those together for you into one single payment, so you don’t have to sent out 8-9 envelopes every month or remember to write checks. You make one payment that covers all the bills.

The second sign is having bills with high interest rates. When the interest rate is too high, it can be difficult to actually see any progress in paying down past bills. A good debt consolidation loan can actually carry a lower interest rate than what you’re currently paying, helping you save money.

The final sign is something so many people are all too familiar with: feeling like you just can’t keep up anymore. This is one of the biggest signs a debt consolidation plan is something you should look into — no one should have to feel that way about their finances when there are so many resources out there to help you move forward to a bright debt-free future!

Overall, everyone will have unique reasons why debt consolidation is a right step for them. However, if you’re seeing your situation reflected in these three signs, you might want to look into a good debt consolidation plan today!

Continue Reading

Debt elimination solution for $10

Everybody wishes that they could pay off their credit cards. However, not many of us have clue as to how we are ever going to be able to do that. So, here is a few ideas for starters so that you can begin the journey of paying off your credit cards, yes, that is possible.

First, stop using or at least reduce your credit card use. If you do not stop using them then you are simply adding to an already outstanding debt. Now, why would you want to add to your debt when you want to eliminate it?

This first threshold is difficult to pass. However, once you do it, you will be on your way to paying off your debts soon. Hence, make an effort and come out of this habit.  You can destroy your credit cards so that you cannot use them even if you wanted to use them. Alternatively, hide them somewhere and do not use them unless an emergency.

Second, begin to make more than minimum payments. Making only minimum payments every month is going to take you a very long time to pay off your credit card. Besides that, you will end up paying a lot more than your original sum.

Therefore, try to make more than the minimum repayments. Low monthly payments seem very attractive to credit card users. They think that it makes the purchase affordable.

However, lower the monthly payment, higher the amount you are actually paying in the end. Therefore, it is better to pay a higher amount every month. This will help you pay off your debt faster while also allowing you not to pay way too much more than your original sum.

Make some adjustments here and there in your monthly expenses and you will see that you have enough to make more than simply the minimum payment every month. You do not need more. You can simply add a mere $10 extra to your payment.

Paying only so much more will help you cut several months in payment as well as help you save hundreds in interest. You can certainly use this money for many other things including saving and also paying off other credit cards.

You do not need to make any big sacrifices or big payments. All it takes is a small addition to your monthly payment. Thus, with a little bit of planning combined with a little effort and you will be on your way to paying off that credit card debt.

Continue Reading