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Debt Management Correcting the Course Debt Management and Consumer Counseling
It isn't very hard to get into financial difficulties. Getting out is a lot harder. It might be a bit painful, but it can be done.
And once you have breathed out-of-debt air, you will never again want to find yourself in deep debt waters again.
Most people do not view credit cards as loans, but that is precisely what they are -- loans. When you hand a credit card to a cashier, you have in effect borrowed the money to pay for your purchase.
The same is true when you enter your credit card information on websites to buy merchandise. It's true that credit cards are a convenience. They make buying things much easier and so much quicker, but they are loans.
When you engage the services of a consumer credit counseling service, you will be asked to supply a list of your debts. You will find that some debts can be renegotiated -- even some secured debts can be renegotiated, including mortgages. You will also find out that your unsecured debt (credit cards) can be renegotiated. But there is a catch there.
A credit counselor is usually in a position to stop the interest and late charges from continuing to mount on your credit card bills. Interest rates can be decreased and late charges can be eliminated altogether. The catch is that the accounts will be closed...permanently. You cannot continue to use those credit cards, and you cannot apply for another credit card until your debts have been paid off in full.
Your total monthly obligations can be reduced by quite a bit and you will be able to live within the budget that will be created for you. It sounds really painful, doesn't it? The truth! You are going to have to make some major adjustments, but that isn't necessarily a bad thing.
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| Good Debt Management Advice Debt Management and Credit Scores
There is so much information (and misinformation) out on the net about credit scores.
Some people are under the impression that a credit score and a credit report are one and the same thing. That is wrong. They are two entirely different things.
The credit SCORE is based upon the credit REPORT. Credit scoring is just a simplified method of identifying good credit risks from poor credit risks. You can bet that lenders will get a credit SCORE before they proceed with the loan process but before a loan process goes very far, the lender will get full credit reports and from all three of the credit reporting agencies.
The credit score is based only upon credit history. The things that determine a credit score are whether payments were made on time and in full as well as on other things that are contained in a full credit report like employment history and income level. Points are awarded for each of these things as well as many others.
You might say that the credit score is a snapshot of a credit report -- a summation, if you will, that gives lenders a good idea of whether an applicant is a good or bad credit risk.
Some people believe that if they stay out of debt and pay in cash as they go, they will have a good credit score and a good credit report, but that is just wrong. They will have no credit history, no credit score, and no credit report. All of these things are based upon credit -- payments of loans and debts. You must have been granted loans by banks, or you must have a credit card payment history, in order to have a credit score or a credit report.
The fastest (and least expensive way) of building credit history is to get a credit card, make charges, and then pay them off before any interest is added. |
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| Debt Management through Bankruptcy Debt Management Wiggle Room
Yes! If you are ever going to gain control over your finances, you are going to have to make a budget and learn to live within it. There aren't any other options for successful debt management.
You wouldn't start building anything without plans, would you? Even building a model airplane requires following a plan. Building a house always starts with drawing up the plans for the construction. There is an old saying that applies here: “Those who fail to plan, plan to fail.” Without a financial plan (a budget), you are certain to find yourself in debt up to your eyeballs and no visible way out.
Now, let's discuss the making of a budget. You cannot have every last penny of your net income allotted for providing for necessities and paying installment loans. That will not work. You must leave yourself some wiggle room. Stuff is going to happen. There WILL BE unexpected and unbudgeted expenses every single month. You can bet on it...you had BETTER bet on it.
There will be, without any doubt whatsoever, expenses that you will overlook when making your budget. They may seem like small items that aren't very important, but they have a way of multiplying.
For example: you suddenly realize that the inspection sticker on your car or truck is about to expire. There really isn't much of a choice about getting it renewed, is there? Will the vehicle pass inspection without two new tires? Are those in your budget?
It has been my experience that "miscellaneous" is usually the largest single expense in every workable budget that has ever been created. You need to allow room for unforeseen expenditures. When making your budget, be sure to leave yourself some wiggle room. Do not budget every single penny of your net income. |
Related Topics: Debt Management and Consumer Counseling,
The Debt Management Plan, Debt Consolidation Loans-Yes or No
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