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Debt Management Agreements-The Pitfalls Debt Management Agreements: The Pitfalls
Credit counseling is not a very well-regulated industry today. In the past, credit counseling was operated more like a social service rather than as a business designed to make a profit.
The industry was known by the general term CCCS (Consumer Credit Counseling Service) and operated under the general guidelines of the NFCC (National Foundation for Credit Counseling).
The lay of the credit counseling landscape has changed. As more and more consumers find themselves deeper and deeper in unsecured debt (think credit cards), more and more for profit credit counseling services have sprung up. Some of these services are very good and very fair, but be aware that not all of them are.
Some credit counseling services are good, others are bad, and then there are those that are just evil.
1. The debt management service that you choose should be a member of the BBB (Better Business Bureau). You can check with the BBB to see if the company has a good record and if there have been any complaints filed by others. Membership in the NFCC (National Foundation for Credit Counseling) or AICCA (Association of Independent Consumer Credit Counseling Agencies) is also acceptable.
2. If the debt management service promises you that it will take 20 minutes or less to solve all the financial problems, you need to run as fast as you can. They are referring to THEIR financial problems and not yours. It takes time and effort by a debt management service to help with your financial problems and get you the best deals possible.
3. Be certain that the debt management company can help with all of your unsecured debt and don't just deal with a few companies. Half a fix is often worse than no fix at all.
See Also:
Debt Management Experts - Helping you deal with your IVA & Bankruptcy
| Debt Consolidation Loans and Debt Management Debt Management and Interest Rates
It is sometimes just amazing, but people have no idea what interest rate they are paying on loans -- even on their mortgages. Interest rates matter.
Interest on credit card debt is the highest. Credit card interest rates are higher than bank interest rates that you may have for your car loan or the installment loan for furniture or appliances.
Another very amazing thing is that the majority of people do not understand what simple interest is and the difference between simple interest and compound interest. Every high school in America should teach this and the course should be a graduation requirement. Not understanding interest rates costs Americans hundreds of billions of dollars every year.
I do not have the space here to teach a course about interest rates. Remember this: simple interest is less than compound interest. The compounding frequency determines how much higher. Interest that is compounded monthly will be less than interest that is compounded weekly or daily.
Your credit score determines what interest rate you will be offered, and it will also determine just how much interest rate negotiating power that you have. The people with the highest credit scores will always be able to get lower interest rates than people with lower credit scores.
No credit history is viewed in the same way by lenders as a poor credit history, in that the interest rates that are offered will be virtually the same. Build a good credit history and you will get a lower interest rate.
First-time borrowers may have to pay higher interest rates, but it is to their advantage to make their payments on time and in full. If payments can be made prior to the due date, that will raise the credit score. Paying a loan off early will also raise a credit score. |
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| Credit Card Debt Management Debt Management Makes a Comeback
Not really! It would be nice, of course, if everybody suddenly became excellent debt managers and such nasty little things as late notices and harassing phone calls by bill collectors became things of the past.
If everybody only took on debts that they could pay on time and in full each and every month, the debt management companies and the consolidation loan companies could just fold their tents and slip away into the night. That hasn't happened, and there isn't any indication that it
is going to happen in the near (or far) future.
More and more people are finding themselves in financial holes more and more often today. When discussing this situation with a group of my peers, the consensus was that instant gratification and less than adequate financial education are the two principal causes.
In days gone by, parents taught their children about financial responsibility. Children were given small allowances and then instructed how to spend it. They were required to save 10%, give 10% to charity, and to make sure they had enough to cover their necessities until allowance day came around again. If the kids ran short, they were not allowed to dip into their savings. They simply did without until allowance day. Mom and dad did not pony up to cover the shortfall if junior had blown his allowance on ice cream.
There was no such thing as instant gratification. If a kid wanted a bicycle, he had to save for it. It didn't just appear because he begged mom and dad for it.
It really is time for parents to again begin teaching children about financial responsibility and debt management, and the schools need to do their part as well. We have become a nation of borrowers without a plan to repay our debts. |
Related Topics: Debt Consolidation Loans-Yes or No,
Debt Management and Family Crisis, Taking Control with Debt Management
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