Credit Card Debt Negotiation

Struggling with your credit card debts can leave you tired, frustrated and deeper in debt than you were to start with. If you have admitted to yourself that you are in debt then you are ready to start to move yourself into a more beneficial situation. This is where credit card debt negotiation comes into play.

The first thing you need to do is contact your credit card company, if you have been struggling with payments then they will probably be contacting you on a regular basis but do not wait for them to call you get on the phone and talk to them first. Many people are worried that when they call they will be told that there is no hope. This is not true it is within the credit companies best interest to help you out of debt and put you in a better financial situation, that way they can try and get you to spend more on your card (Which you are not going to do once you are out of debt are you?).

When you call them tell them your situation and ask them what they can do for you, if they say nothing then you need to move onto the next stage which is to get credit counseling. A credit counselor will assist you in your credit card debt negotiation. They will help you create a budget as well as work with creditors to reduce your monthly payments, finance charges and late fees if you have accrued any.

A credit counselor will not only look at your credit card debt negotiation but also allow you to pay them one simple payment for them to distribute between your creditors. There is normally a one off fee but in many cases this is waived.

Do not continue to struggle on with your debts you will only end up deeper in than you are right now, your debts an also have an effect on your health and relationships. Credit card debt negotiation is something that you need to do in order to live a more care free life.

Talk Your Way Out of Credit Card Debt!: Phone Calls to Banks That Saved More Than $43,000 in Interest Charges and Fees by Scott Bilker Learning how to talk your way out of credit card debt is the quickest, easiest, and most efficient way to start saving money!

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Don’t Get Into Debt This Christmas

Christmas can be an enormous strain on the family budget. It’s not just presents that you have to worry about – which itself can be a nightmare as you battle with pressure from the kids for the latest must-have toys and gadgets – but also food, drink and entertainment. It’s therefore not surprising that Christmas is the time of year when we notch up the most debt – although most of us really start to feel the pinch in the start of the new year when we struggle to keep up with household bills while continuing to pay for our Christmas indulgence. Here are some tips on how to save money and avoid debt over the festive season.

First and foremost, remember that your family and friends will be understanding if you are on a tight budget over Christmas and can’t afford to be very extravagant. If anyone is expecting large gifts, manage their expectations, especially kids. Let them know that Santa can’t bring everything that they want – but that he’ll bring them very good gifts all the same if they’ve been well behaved.

Don’t forget your normal budget – ensure that regular household bills are paid as usual, such as council tax, utility bills, rent etc. Remember that your priority is to keep a roof over your head.

Work out how much money you have left to spare for Christmas after your normal budget and set your Christmas budget. Save small amounts regularly throughout the year. You could even open up a bank account specifically for Christmas savings to ensure that it stays separate from the rest of your finances and to avoid the temptation to spend it.

Try to spread your purchases throughout the year, even as far back as January – you can get great bargains in the January sales! Leaving it to the last minute means you’re more likely to panic and spend more money – or put more on your credit card.

Don’t be tempted by credit offers in shops – this is just storing up trouble for the future. If you can’t afford it, don’t buy it. Also beware of cheap deals and rates before Christmas – chances are the APR will be hiked up in the new year.

If you have to get a loan or a credit card, shop around for the best deal as you would at any other time of year, and leave yourself plenty of time so that you don’t sign up for anything in a panic at the last minute.

Make deals with family or friends not to give each other presents, or agree on a fixed maximum price that you will spend on each other. Do a present exchange – a secret Santa or a lucky dip – with groups of friends or colleagues so that everyone in the group buys just one
gift. It can be fun getting together to do the exchange. In a secret Santa, everyone’s names are put in a hat and each person pulls out a name for whom they must secretly buy a present. It’s quite good as you know who you’re buying for so you can get them something you think they’ll like. With a lucky dip, everyone simply buys a present that would be suitable for anyone, and they all get put into a sack and pulled out one by one at random.

If you can’t afford to do rounds on your Christmas night out with work colleagues or friends, just ask if you can pay for your own drinks – they won’t be offended. An even cheaper option is to go tee-total and drive!

If you’re entertaining others at Christmas, you don’t need buy and prepare all the food and drink yourself – you could agree to share the cost with your guests. Someone could organize the starter, someone else the dessert, another person could bring the cheese and biscuits and yet another could supply the drinks. In this way it can be a nice surprise for everyone to see what everyone else has brought and you’re sure to have plenty of variety!

Look out for postage and packaging costs if you’re doing your Christmas shopping online – sometimes this can add a lot to the price. Try to find a site that sells what you want with the cheapest postage costs, or try to plan your purchases and buy them all in the one order so that you’re only charged once for delivery. Make your own Christmas cards or perhaps even your own presents if you’re the creative type – the personal touch is often nicer anyway. You could make up your own gift hamper, bake your own cakes or chocolates or buy a photo frame and fill it with a collection of special memories for someone.

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Do You Have to Pay Back the Debt?

The most widely held misconception about bankruptcy is that it’s the debtor’s version of the “get out of jail free” card in Monopoly. While most people know that bankruptcy affects your credit for 7 to 10 years, very few people know that it’s possible that you’ll have to pay back the debt anyway, even if you file a Chapter 7 “straight” bankruptcy. The formal definition of bankruptcy is “a proceeding in federal court in which an insolvent debtor’s assets are liquidated and the debtor is relieved of further liability.” On the other hand, the commonplace definition of bankruptcy is probably “the process of completely wiping out your debts for free.” In the majority of cases, the latter definition may be appropriate, but in some scenarios, it’s likely that even with bankruptcy, you’ll still have to pay back at least a portion of the debt.

So when is it likely that you’ll have to pay back your debts? Here are the most common scenarios when you’ll get all the negatives of filing bankruptcy (severe credit impact for 7 to 10 years), but none of the benefits (you’ll still have to pay back at least part of the debt):

• You make more than the average person in your state. If this is the case, then it’s likely that you’ll be forced into a Chapter 13 bankruptcy plan. In a Chapter 13 bankruptcy, the court orders that you pay all your disposable income to a court appointed trustee, who in turn disburses payments to your creditors. Keep in mind that the court determines your disposable income by national and county statistics on average necessary expenses, not what you’re paying. So just because you’re paying a lot for a car doesn’t mean the court will approve it. There are numerous cases when a judge ordered families to stop sending their children to private schools so they can have more money to pay back their creditors. In Illinois, here are the latest statistics on the Illinois median income by size of household:

                Illinois                      Estimate
           1-person families              41,650
           2-person families              52,891
           3-person families              62,176
           4-person families              72,368

• You have assets. If you own a home or car, then it’s possible that the bankruptcy court will force you to sell them to generate sufficient cash to pay back your creditors. Chances are if have a good chunk of change invested (unless it’s in a tax-exempt account like an IRA) then you’ll also be forced to liquidate it. If you have a second home or another vehicle (assuming you own both completely), then you’re really out of luck. Fortunately, there are some safeguards to protect consumers from bankruptcy hell. In Illinois, every resident is entitled to at least $7,500 of the value of their home, $1200 of the value of their vehicle, and $2,000 for anything that they want (known as the wildcard exemption). Also, these values double if you’re married (assuming the property is in both of your names).
  
  What does this actually mean? Consider the following example.
  
  Let’s say you have a house that’s worth $250,000, and it’s in both yours and your wife’s name. You still owe about $200,000 on your mortgage, and you decided to file Chapter 7 bankruptcy. In this example, you would be forced to sell your home, and with the proceeds you would pay back the mortgage company what you owe on the outstanding balance of the loan ($200,000), you’d pay yourself the Illinois real estate exemption ($15,000), and then you’d pay back your other creditors whatever was left ($250K-200K-15K=$35,000).
  
  Let say your house was only worth $215,000, but everything else in the above example remained the same. In this case, you wouldn’t be forced to sell your home because the proceeds from the sale wouldn’t amount to anything after you paid back the mortgage company and then paid back yourself the Illinois real estate exemption.
• The creditors can prove that you were fraudulent and never had any intention of paying them back.

For the majority of us it means that unless a) you don’t have a lot of equity in any of your property, b) you don’t have any investments like stocks, real estate, ect., c) you don’t care about having to sell anything mentioned in points a and b, or d) you don’t care about having to give up your disposable for 5 years in a Chapter 13, then bankruptcy may not be your best option.

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Do You Need Debt Consolidation Counseling?

In average American receives his first credit card at the age of 18 and statistic shows that every American household is holding about $10,000 in total debts. Credit cards are the major contributors to these debts seeing that so many people are seeking for credit card debt consolidation. In order to avoid yourself to be one of the contributor to the statistic, that's why you need a debt consolidation counseling to get more understanding on your debts and your available options in handling your debt issues.

Many people who are in debt will think of debt consolidation as their debt solutions, but unfortunately, even the best debt consolidation program can't be of any help if you keep falling into debt continuously. That's why debt consolidation counseling would be helpful to educate you on the weak points of your financial handling and prevent you from potential debt trap. It will keep you alert on any potential financial crisis and get you more prepared for future so that you continue stay out of debt.

During the debt consolidation counseling, the debt counselor will get to understand your current financial situation. He will ask you a lot of personal questions like the current state of your debt, how far you are behind on your payment, your incomes and spending budget for each month. It is very important that you let him know the truth of your debt situation so that he can give you the necessary advices based on your financial facts.

The debt counselor will advise and point out your financial weak points, create a budget and help you to help yourself to learn how to live on your income. Through the debt consolidation counseling, you will be able to learn some important financial planning skills and how to break your bad spending habits. You will learn up how you can consolidate your high interest credit card debts with a consolidation loan that has lower interest rate and end up with only one monthly payment. In order to be able to effectively resolve your debt issue, you need to put into a plan that is easy to manage so that you are on track in making payments; combining all your debts into one is a good decision. Often counselors also act as intermediaries between you and your creditors, getting easier repayment terms for you.

There are many companies offers debt consolidation counseling services and often this service is free. You will only be charged if you decide to enroll into any of their debt consolidation program. So, you can make use of this free service to have better understanding on your debts.

In Summary
With debt consolidation counseling, you can be saved from the trauma of the crisis that you are undergoing. It allows you to weigh all the pros and cons of your situation well and with professional help. Hence, if you have credit card debt need debt consolidation counseling and start to handle your debts as early as possible before the situation goes worst.

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Easing Your Debt Worries & Get You Out of Debt

Throwing money at you're debt is like going on a crash diet. If you don't plan well you may end up back ware you were or even in more debt. Here are some good questions to ask you're self before you start planning.

• How many credit card accounts do you have?
• What is the interest rate on each card?
• Which one do you owe the most?
• How long has the account been open?

The next step is to figure out a manageable plain that will get you out of debt. You may want to look into some of the financial software packages such as Microsoft money or Quicken.

You should pay off the card with highest interest rate first, or a debts that are delinquent or about to be written off. After you have paid off the one with the most interest then go to the next highest, and so on. If you want to have the good feeling that comes from success, pay off a card with a low balance. The good feeling you get from getting out form one debt may just give you the motivation to take care of the rest of you debt.

Reduce the amount of interest you pay.
Most credit cards have an interest rate of 16% to 20%. This is where you're money in going.- You can negotiate with your creditors. If you have had a credit card for a couple of years call the company and ask for a lower rate. They may give it to you just for being a loyal customer. You may be able to bring down you're interest rate to 11% or 12%. Sometimes it's just as easy as asking. If the company is unwilling to lower you're interest rate today ask them at what point they will lower it. You maybe able to work that goal into you're plan.

Consolidate debt
Once you know what the interest rate is and how much you owe for each of your cards, and you have gotten the best rate you can, the Next step to consider is combining your debts. You should try to place your debt onto the cards with the lowest interest rates. This can save you a lot of money. All you have to do is call the credit card company and ask how to transfer funds. Be carefully of offers to transfer balances at low rates to new cards. In most cases the low rate only lasts for a short period of time and then you back to where you started from.

Always pay more than the minimum
The credit card companies are not being nice by letting you pay a small minimum payment. The minimum payment is designed to extend your payments for as long as possible so they can make the maximum amount of money from you. If you only pay the minimum payment you maybe paying for those new shoes years after they have worn out.

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Is Debt Consolidation A Good Idea?

If you have lots of debt, consolidation may save you time and money. Depending on your financial situation, there may be a solution that's right for you.

When you're struggling with lots of debt, debt consolidation may be an attractive solution. This term refers to combining your debts into one, and making one monthly payment to one creditor instead of making multiple payments to many creditors. You might even get out of debt faster and save money along the way. Debt consolidation comes in several forms, including credit counseling, balance transfers, and debt consolidation loans, so review your options carefully before making a decision.

Credit Counseling
When you're experiencing financial distress, these companies, also referred to as debt management companies, work with your creditors to restructure your unsecured debt. Through a debt relief plan, you make one monthly payment to them, and they pay your creditors. Companies that offer credit counseling do not loan you money. Instead, they negotiate with your current creditors to get you debt relief. Debt relief plans offer many benefits that may help you get a handle on your unsecured debts, such as:

• Lowered monthly payments
• Reduced or eliminated interest rates
• Eliminated late fees
• Accounts brought current (re-aging your account)

Balance Transfers
Transferring debt from a higher interest rate credit card to one with a lower rate can save you money. If you have a credit card with a low interest rate, you might consider transferring the balance from a high-rate credit card to the lower rate one. Or, you might apply for a new credit card with a lower interest rate. Be careful about introductory rates, also called teaser rates. Make sure you know what rate will be in effect after the first couple of months. If it's too high, this option may not be your best choice.

More About Teaser Interest Rates
Read the small print about credit card teaser rates. Teaser rates are often used to entice you to transfer a balance. Be sure to consider the following before you fill out the application:

• Introductory rates typically last a short period of time
  • While some may last up to a year, it's not uncommon for the low introductory rate to expire after three or six months. After the introductory period is over, the interest rate will increase, sometimes to a very high rate.
• The credit limit may not be high enough
  • Companies that offer balance transfers may not give you enough credit to transfer all of your debt. You'll be paying part of your debt at the original higher interest rate and part of it at the lower introductory rate.
• There may be a balance transfer fee
  • Be sure to find out if there is a balance transfer fee and how much it is.

Debt Consolidation Loan
You can apply for a debt consolidation loan at most financial institutions, like banks, credit unions, and finance companies. There are two types of loans:

• Unsecured - no collateral is required
• Secured - collateral is required

Unsecured loans are commonly referred to as personal or signature loans. Examples of a secured loan include a home equity loan or a second mortgage since your home is used as collateral.

Is a Debt Consolidation Loan for You?
When you consolidate your existing debt and pay it off with a debt consolidation loan, you are trading several debts for a single debt. Even though you still have the same amount of debt, you may find this beneficial if you:

• Get a loan with a lower interest rate than the rate(s) you are paying on your existing debts
  • This could save you money during the life of the loan depending on the term and amount of monthly payment. Don't forget to do your homework when investigating interest rates and monthly payments. A small difference can impact you greatly. For example:

                                                    Credit Card               Loan
Balance                                          $5,000.00              $5,000.00
Minimum Monthly Payment              $100.00                $140.00
Annual Percentage Rate (APR)         18%                     15%

Payoff Timeframe                   39 Years and 4 Months    4 Years

Total Amount Paid                         $18,396.67            $6,664.59

Total Interest Paid                         $13,393.67           $11,664.59

In this example, switching from a revolving credit card debt with 18% interest to an installment loan with 15% interest, and only increasing your monthly payment by $40, saves you over $12,000 in interest payments.

• Close your credit card accounts
  • Paying off multiple credit cards with a debt consolidation loan may be a good idea, but be careful about racking up more debt on the open accounts. Think about keeping one account open for an emergency and closing the others. Not only will that ensure you're not tempted to charge additional items, it'll also look good to future lenders who review your credit report.

Be Careful with Finance Companies
If you're having difficulty getting a loan from a bank or a credit union because you have too much debt or a negative credit history, you may be able to get a loan from a finance company. Be careful if you decide to use finance companies. While finance companies typically make it easier for you to get a loan, there are things you should know, including:

• Interest rates are often high
  • Higher interest rates typically mean a higher amount paid over the course of the loan.
• Loan term may be lengthy
  • The longer length of the loan results in lower monthly payments, but it causes you to pay more interest.
• Other fees may be present
  • It's not uncommon for finance companies to charge application or processing fees.
• Future creditors may not look favorably on your credit profile
  • Even if your credit rating is good, potential creditors may perceive you as a bad risk if they see a finance company among your listed creditors. Since most people use finance companies if they don't qualify for a loan from a bank or a credit union, creditors may think you've had financial problems in the past.

If you're thinking about consolidating your debt, consider the pros and cons for your situation. Remember to shop carefully and compare costs. The U.S. Federal Trade Commission has several articles for consumers in debt, including Knee Deep in Debt and For People on Debt Management Plans: A Must-Do List.

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Debt Help & Financial Problem

No matter how hard we try, sometimes we find ourselves in serious financial trouble because of our debts. This happens often to young people who don’t understand the concept of buying only what they need or who don’t take consider any possibility of a change in income that may affect their ability to pay their bills.

It can be something as simple as an increase in rent, electric, car insurance, or gasoline that can put you over the edge financially if you are already on the borderline.

What kind of help is available when you find that your debts are beginning to be unmanageable?

One of the first things you should do when you find out that your debts are beginning to create havoc with your budget is to cancel your credit cards – at the very least, remove them from your wallet or purse and do not use them any more until you get your finances back in control.

If you recognize the signs early enough, you will be able to make some concessions and get yourself back on the right track. It may mean staying home a little more for awhile, taking your lunch to work, eating breakfast and dinner at home, and learning to grocery shop on a budget.

On the other hand, if you don’t realize in enough time that your debts are out of control, you may be forced to obtain debt relief from a debt management company.

Depending on the company, they may require that you cut up your credit cards and cancel them during the course of the program.

On the positive side, they can negotiate for a lower interest rate, some eliminate your interest rate completely, allowing you to pay off the balance in a much shorter period that you would have been able to do otherwise.

Do be careful with this type of an arrangement because if the company you choose decides to work out a settlement with the creditor without your knowledge, you will find that it has the same effect on your credit score as a bankruptcy.

You can usually preserve your credit if you’re making payments unless you fell behind before the agreement was initiated. In addition, since there is a reduction in the original interest rate, that will automatically make the minimum payments lower on credit cards.

If you have other debts as well, you will need to make some inquiries, because not all debt management companies handle secured debt or debt other than that of credit cards

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