People looking for ways to clean up their credit reports sometimes turn to credit repair services because they promise to dispute your bad credit and have it taken care of for you in no time.  What a lot of them don’t realize is that many of these services will simply take your money and dispute every negative account in your profile, in the hopes that one of them might fall off.

As you can imagine, this isn’t exactly the best way to go about improving your credit score.  Disputing every account on your credit report not only is a waste of time (unless the account you’re disputing is actually inaccurate), and in some cases can land you in a world of trouble.  If there’s a collection on your report, and you dispute the account information, you’ll not only have wasted time and money, but you could open yourself up to lawsuits by claiming an account isn’t your own.

So what’s the better method for cleaning up your credit history?  If you’ve got accounts and debts on your file that you don’t recognize, don’t dispute them – validate them with a debt validation letter.

Rather than claiming information about an account is inaccurate and refusing to take care of it, find out the creditor or collector’s contact information (usually listed in the report) and write them a letter requesting verification of the debt, and that the collector provide proof that you owe the money, and that they have the right to collect it.  If the collection agency is unable to verify the debt, problem solved.  If they are able to verify it, your next course of action should be to set up some type of payment plan to get rid of the debt (and put an end to those annoying phone calls).

Remember that debt validation letters are only a means of verifying an existing debt, not a way to eliminate the debt entirely.  You shouldn’t try to validate a debt that you know for a fact is yours, as it could land you in deeper trouble with collectors.

The other day, I made my bi-monthly trek down to my mailbox to collect my mail, and was more than a little bummed to find that most of the mail that wasn’t a Penny Saver or flyer offering to buy my unused gold was composed entirely of bills.

Yeah, I know, welcome to the club.  This is certainly nothing new for me; but having so many unpaid debts piling up all around you (in my case, medical bills, car insurance, credit card bills, and more) can be more than a little daunting when the debt collectors come demanding payment NOW.

So what are some of your best options for taking care of your mountains of unpaid debt?  Take a few tips from the leader in San Diego credit repair services for the best way to find debt relief:

Pay it yourself

If you’re feeling up to tackling the giant all on your own, you can certainly do so.  Gather up all the necessary paperwork for the bills and work on a payment plan tailored for each outstanding debt you have.  Don’t be afraid to call your creditors to try and work out a payment schedule that works for the both of you.  Most creditors can be pretty accommodating – especially these days, with so many people facing financial troubles.

Hire a debt settlement firm

If the very thought of even looking at your bills causes you to involuntarily shudder in disgust, consider contacting a debt settlement firm to help you set up payment arrangements with your creditors and lenders.  Our own service is quite skilled at settling unpaid debts for as low as 50 cents on the dollar, as well as successfully setting up agreements such as pay for deletions.

If you’ve already fallen behind on your debt payments, and want to learn how to get back on track, give one of our specialists a call to find out how you can get your finances back on track and under your control.

Thousands of Americans are looking for some form of debt relief these days, if your typical financial blog or news story is to be believed.  With so many people living from paycheck-to-paycheck and swimming up to their eyes in unpaid debts, it can be hard to even begin to swim towards drier land.

To better help you deal with whatever debt crisis you may be facing, here are some tips to help you find debt relief on a budget:

•    Stop spending more than you can afford. Start your road to debt settlement by drafting up a budget for yourself, if you haven’t already.  Be sure to compile all of you monthly bills and other expenses.  If you find that your net income is barely enough to keep you afloat every time the check comes in, now would be a good time to evaluate your spending priorities.

•    Stick to your budget. One thing I like to try and remind people who get discouraged that their efforts at debt settlement aren’t going as smoothly or as quickly as they’d hoped is that the process doesn’t take place overnight; you won’t wake up tomorrow with all of your debts forgiven or wiped out and perfect credit score.  The same applies to your budget.  You can’t expect to draft one up and let it work itself out each month.  If life were that easy, I wouldn’t even be writing this blog.  If your monthly budget still isn’t working for you, it could be because…

•    You’re not adjusting it. You shouldn’t think of your budget as a binding contract that isn’t open to negotiation.  On the contrary, you’re budget could see dramatic changes at any point in time, for any number of reasons (pay raise, job loss, marriage, baby on the way, etc.) and should be adjusted for these occasions.  If you’re not factoring these changes and others like them, into your budget, you’re only hurting yourself.

•    Don’t leave out any details. This is a pretty common mistake a lot of people make when they’re setting up a budget for the first time: Forgetting to include every extra expense on their budget, even the small ones.  Smaller expenses are easy to overlook when creating a budget and are usually the reason you come up short when checking your spending vs. your income.  Refer to your bank statements every chance you get to make sure your numbers add up to theirs.

•    Don’t leave any of it to chance. If you’re still having trouble paying your debts down on an adjusted budget, and you’re left feeling like you can’t make any headway on your own, consider contacting a debt settlement company to help you free up your finances.

I know it can be tricky to pick the right debt settlement company to help – what with the wealth of scams out there – so it’s probably a good thing you’ve already found a credit repair company that offers such a comprehensive debt settlement program, huh?

Before we get into the topic at hand, I have a story to tell that actually ties into said topic; so if the four or five people who may read this will indulge me for a moment…

A couple of weeks ago, I drove over to my parents’ house for dinner.  My mom had sent me a text message early on in the day stating that she’d be making fajitas, and since my only alternative for dinner that night was a couple of hot sauce packets from Taco Bell that I’d stumbled upon in a kitchen drawer, so my decision was clear.

Five o’ clock rolls around, and I’m pretty much starving.  I make a mad dash for my car and tear down the freeway like a madman on a mission (I like to think that if I’d been pulled over for speeding, all I’d have had to do was mention I was on my way to Fajita Central and I’d have gotten a police escort to my parents’ house).

By the time I get there, I’m ready to ravage a plate.  I load up a flour tortilla with chicken, steak, assorted greens and beans, and healthy heaping of hot sauce.  I sit down to begin appeasing my taste buds with the monstrosity I’ve created, take a pretty massive bite out of the beast….and immediately have trouble swallowing it.  I take a gulp of soda to help smooth the process out and, whoops THAT was a mistake, I think as I rush to the sink and heave some of it back up.

As some of you can imagine, things didn’t really get any better from there, as the food remain lodged in my throat and refused to go down or come up.  I’ll skip many of the gory details and cut to about 6 hours later, where I was waiting in the ER with my dad, holding a Princess and the Frog bucket to catch any wayward saliva that crept its way out of my mouth (swallowing it was completely out of the question).

Fast forward to today.  I’ve learned the value of chewing your food thoroughly before swallowing, and have started receiving medical bills in the mail for my visit.

Now that that’s all out of the way, let’s get to the point of this blog – namely, how to deal with medical bills before they deal with you.  Here are a few tips:

Don’t ignore it.

No one likes the thought of paying off medical bills, especially if you have no health insurance to help cover the outrageous costs, but pretending the bills got lost in the mail isn’t going to help matters much either.  Hospitals typically only care to try and collect on a bill for a few months before they send it off to collection agencies, and we all know you don’t want to deal with THAT hassle.

Make sure the procedure is covered by your insurance.

Medical bills make about as much sense as student loans; they can be pretty hard to navigate if you don’t know what you’re looking at.  Make sure to follow up with your insurance company and make sure all the right paperwork is in the right place.  No sense in having to pay more for a simple procedure because one hand didn’t talk to the other.

Make sure you set up payment arrangements.

Like I said earlier, medical bills are a lot like student loans in the sense that they can be pretty confusing, and can keep you paying for years to come if the bill is big enough – which they typically are.  Unless you plan on paying the bill off in one lump sum (you lucky SOB), you’ll want to go out of your way to contact both the doctor’s office and your insurance company to set up a workable payment plan.  Again, the last thing you want is a bunch of medical collections showing up on your credit report to drag down your credit score along with your spirits.

Want more advice on how to tackle outstanding debts and repair your credit?  Speak to a specialist at My Credit Group.

Having a lot of debt in your name can be a hassle, to say the least.  While you’re busy devoting a sizable chunk of your paycheck aside to paying off credit card debts and other bills, the fun stuff you could be buying with your money seems to just slip further and further away.

Since no sane individual wants to stay mired in unpaid debt any longer than they absolutely have to, we’ve put together this handy list of 5 easy-ish tips to help you get out of debt NOW.

1. Come up with a plan. As any 20+ year old with a credit card can attest, building debt is very easy to do.  And your efforts at repaying that debt, especially if you have a lot of it spread out over multiple cards, probably won’t make a lot of waves unless you come up with a plan to help you pay them down.

Sometimes all it takes for consumers to realize they have a debt problem is a quick look at their credit card statements, followed by a glance at their available funds.  However you get your wake-up call, follow it up with a plan to break the cycle of debt, instead of worrying about it whenever some extra cash comes in.

2. Consider taking on another job. If you’ve got as LOT of unpaid debt following you around (i.e., the kind that’ll take more than a few months to pay off), and have the time, you might consider taking up a second job to supplement the income from your full-time position.  Devoting a few extra hours to a part-time job can speed up the time it takes you to get out from under the debt that’s weighing you down.

3. Pay the high interest down first. Some experts like to recommend you pay your debts down in order of smallest to largest dollar amount.  Doing so is meant to give you a psychological “boost” every time you pay off a small debt to encourage you to keep going and pay off the rest.  The problem with this kind of solution is, it’ll take much longer to repay the debt this way, and the “boost” you get from repaying those smaller debts won’t likely be enough to keep you going to pay off the bigger debts.

Instead, prioritize your debts in order of highest to smallest interest rate.  This can take a while to pay – as you’re essentially tackling your biggest debts right out of the gate – but the reward is far greater: You won’t be stuck paying high interest fees on top of the debt you already owe, meaning you’ll save more money in the long run.

4. Create a monthly budget for yourself. Some consumers tend to trip up on this step, mostly because they’ve never actually budgeted anything like this before.  And while any credit repair service worth their set-up fee can certainly help you put a payment plan together, you can just as easily get the job done yourself by gathering your monthly bills and income check stubs to help gauge what you’re spending vs. what you’re earning.  Allot a sizable chunk of your income to paying off the debt (remember to leave some duckets for food, gas, and other necessities), and stick to your plan.

5. Reprioritize your spending habits. Once you begin making major headway on paying off your debt, hopefully you’ll take the time to also think about your spending habits (you know, the ones that got you in debt in the first place) and realize that maybe they weren’t the best habits to fall into.   Some people like to switch to paying for all future purchases with cash only, but if you want to maintain a decent credit score, that isn’t the best option.

Rather than swear off credit entirely, switch to paying for most of your major purchases with the money you have on you (so you don’t fall back into debt), and keep your cards open for miscellaneous purchases, such as gas and groceries, and pay them off every month to help build your credit score back up.

Related Articles:

• Should I pay off credit cards or student loans first?
• Should I combine my two credit cards?
• Will paying off credit cards raise my credit score?
• Will closing a credit card lower my credit score?

If you have questions or would like a free consultation, please feel free to call mycreditgroup today

The new debt settlement rules the FTC recently passed have sure made things interesting in the debt settlement industry, to say the least.  For those of you unaware, the FTC ruled that companies can no longer charge upfront for debt settlement services.  They’re also barred from telling you that they can completely wipe out your debts, meaning most of them will probably be scrambling to come up with a new way of getting you to pay down your debts.

Instead of following the rules though, it seems most debt settlement companies are looking for the best ways around it.  The FTC’s new debt settlement rule falls under their Telemarketing Sales Rule, so many settlement companies have switched up their practices by continuing to make the same empty promises of wiping all of your debts out – they just don’t do it over the phone anymore.

Some debt settlement companies have taken to texting consumers or speaking in online chat rooms, and pretending to be a survey company, asking people if they have over $10,000 in debt that they’d like to reduce.  If you respond “yes” to the survey, you’re then asked if you’d like to speak with a “debt resolution advocate” – once you pay their fee, of course.

Other firms have taken on an even sneakier tactic – having their debt settlement companies pose as law offices, which are exempt from the new FTC rules.  They’ll then continue to charge new clients outrageous upfront fees, while the debt itself sees very little working progress.

The Association of Settlement Companies, a group made up of nonprofit debt counseling services, have alerted the FTC about the increasing number of debt settlement scams that are looking for ways to avoid the laws that would put them out of business.  Sadly, the scams still exist, and seem to show no signs of stopping.

If you’re looking for a service to help you settle your outstanding debts, don’t fall for any service that will try and charge you a fee before they promise to wipe out all of your existing debts.  Look for services that work with you to come up with a payment plan that fits your budget and goals.

For further information, contact a credit and debt specialist at My Credit Group.

Often times, people looking for debt relief find themselves so overwhelmed by the seemingly endless amount of debt in their name that they often have trouble getting started on repayment. 

Having several types of debt can make prioritizing a nightmare.  Do you start with credit card payments?  With secured or unsecured accounts?  What about any outstanding loans?  Picking the wrong kind of debt could end up costing you more in the long run, so where’s the best place to begin when trying to get out of debt?

Start with the roof over your head

More than anything, you’ll probably want to hold onto the house you’re living in, so make paying your mortgage – including any lines of credit tied to it – a top priority.  If you default on your payments, you’ll run the serious risk of losing your home through foreclosure and not being able to rent because of the serious hit your credit report will take and we can’t have that, can we?

In addition, you’ll want to property taxes to avoid having a tax lien placed on your home (meaning you’ll owe back taxes in addition to your mortgage), and make sure you don’t fall behind on homeowner’s insurance payments so your policy isn’t put into jeopardy as well.

Move on to other major loans

You’ll want to devote your time and resources to secured debts (such as auto and student loans, or medical bills) over unsecured debts. Much like your mortgage payments, your car loan is tied to something you likely use every day and can’t really get by without, so make sure to stay current on it.

If you fall too far behind on student loans or medical bills, you could face the possibility of wage garnishment and lose the ability to secure other loans until your debts are settled (or at least under some measure of control).  This can be an even bigger pain if you plan on going back to school or the same doctor again.

And all the rest…

When it comes to unsecured debt, start with any and all credit card debt that comes with a high interest rate.  Trying debt settlement on a card that’s already maxed out with high interest can be a nightmare if you don’t stick with it.  If you ignore credit card debts for too long, your account will get sold to a collection company, which is one of the worst things that can happen to your credit report (not to mention your finances in general).  Do all you can to pay these cards down to at least 30% of their available balance and make sure they stay that way.

For more information, as well as comprehensive debt settlement options, contact a representative at My Credit Group.

Often when clients contact us about our debt settlement plans, when asked about their current financial situation, they run through a laundry list of accounts that have gone from manageable to overwhelming that generally sounds like a perfect example of what you shouldn’t do.  Most of them realize how they got to where they are, whether by their own fault or not, and want to take steps to get out of debt quickly and get their finances back on track. 

So what’s stopping them from achieving their goals?  Many are more than willing to try debt settlement and credit repair services, but say they haven’t made any progress because they’re unable to save any substantial sum of money to help them make more than a dent in their overall debt.  They’re afraid they’ll be stuck in an endless cycle of paying the minimum balance on their accounts for the rest of their lives.

A serious plan

If the above scenario sounds all too familiar to you, it could be because you don’t have much in the way of a savings plan.  Have you ever been able to successfully save a significant sum of money over an extended period of time, as in 4 or 5 years?  If not, the problem could be you don’t have a good savings plan to help you get to where you need to be. 

Saving money can be hard at times, but these days it’s pretty mandatory.  Having little to no extra money set aside in a savings account can lead to big problems whenever life throws a curveball your way, usually in the form of auto repair, a sudden illness, or job loss.  If you’re living paycheck-to-paycheck, how will you be prepared for, well, life?

How to get out of debt

Start by building a fund for emergencies only (i.e., something like the examples listed above, not an “I left my wallet in my other pants” emergency) by setting aside leftover funds and any other money that comes your way; if you have no leftover cash from your paychecks, you may want to consider a second job.  Dedicate a set amount from each paycheck to this fund so you can build it up to at least a couple thousand dollars.

Once you have a sizable emergency fund in place, get to work on a debt fund as well.  For the time being, continue to pay the minimum balance on your accounts (assuming that’s all you can afford), while setting aside money for your overall debt fund.  Save as much as you can over the next 10-12 months (or at least until you have enough to make some real headway on debt repayment) and then throw everything you’ve got at your outstanding debts.

Remember to at least keep paying the minimum amount due each month.  Stopping everything to build this fund may seem like a good idea, until you realize you’ll be adding problems to your credit history in the long term.

As always, for more info on all credit and debt inquiries, contact a rep at My Credit Group.

I moved into a new house a few months ago, and only just got around to finishing unpacking a couple of weeks ago.  Now that I’ve finally my kitchen set up and am eating more than just take-out every night, the place finally feels like home.

Part of the reason I held off on fully unpacking for so long is because I’ve got quite a few large boxes that were (and kinda sorta still are) packed full of paperwork that I’ve rarely looked over, but held on to because I know I need them for my records.  Otherwise, it’s all just so much clutter.

It’s common knowledge that too much clutter is bad for you.  It can keep you from finding things when you really need them, even those of you (like me) who believe we have a method to our madness.  I mean, we kinda do, but having too much clutter can make finding something important (like, say, a cable bill that you’re pretty sure is due in the next couple of days) a hassle.  It can also be one of the biggest reasons you’re still in debt.

How so?

It’s probably safe to say that if your home office is filled with piles of papers laying around in no real order at all, that lack of organization extends to other aspects of your life, like finances.  Odds are you don’t have a monthly budget for yourself, and so spend money freely on whatever comes your way, and worry about the bills whenever they come in (assuming you can find them, of course).  

Having stacks of papers scattered over every table or really any hard surface in your house makes it incredibly difficult to locate any misplaced bills or statements when you need them, which can end up in late payments, raised interest rates, and promises to finally clean this dump up for real this time, so help me God! 

Okay, so how do I fix it?

Start by clearing up your clutter so you can actually find your bills and statements.  Come up with a plan to help you find debt relief sooner rather than later.  Remember that no one can get completely organized in a day, and work towards setting up a monthly budget for yourself based on your income and expenses.

If you find that you’re behind on some of your accounts, work up a payment plan to get your account(s) back on track.  Remember to take it one step at a time, and stick with your financial plan, and you’ll be able to clear up the clutter.

For more information on all your credit and debt questions, contact a specialist at My Credit Group.

Being overwhelmed by outstanding debts can be one of the most stressful times in anyone’s life.  But this doesn’t mean that it’s the end of the world.  Debt relief isn’t necessarily easy, but if you’re willing to put in the time and hard work, it’s well worth it.  These are the 3 most important steps of debt settlement.

Step #1:  Get Y ourself Organized

It’s important that you’re patient and pay very close attention to every detail.  All the important information regarding the account in question has to be readily available.

You are also going to want to have an idea of what you can pay them, whether it be in a lump sum or broken down over payments.  Do not agree to pay more than you know is possible or you’ll just end up in the same predicament a few months down the road.

Step #2:  Prepare for the Phone Call

Collection agencies and creditors aren’t generally the nicest of people if your account happens to be overdue.  Their tone will be harsh and they will try to direct the phone conversation in the manner they’ve been taught.  State your purpose from the beginning; that you are looking to negotiate a payment with them.

Do not get irate or use profanities no matter how upset you become.  It’ll get you nowhere, and will likely end with worse results.  Try to have the call out through to a supervisor if at all possible since they’re much more likely to reach a deal with you.

Step #3:  Keep a Record of Every Correspondence

Every correspondence or agreement you make should be in writing before you actually start making payments.  Collection agencies are notorious for telling you one thing on the phone, then forgetting that the conversation ever happened.  If you reach an agreement that you are happy with, get it in writing first.

If you’ve been trying to duck your government student loans you should realize that you can’t outrun them forever.  Eventually they will catch up to you.  If you’ve defaulted on your federal student loan debt — that is, gone at least a year without payments — you may feel as if you have no options other than drowning in debt.

But you may be able to negotiate a settlement with the collection agency to pay less than what you owe, especially if you’ve been in default for years. Debt relief can certainly help you, but don’t expect the type of “pennies on the dollar” settlement you might get with credit card debt.

Financial aid expert Mark Kantrowitz discusses student loan settlement options in his article titled Secrets to Settling Defaulted Federal Student Loan Debts for Less Than What You Owe.  Mr. Kantrowitz’s three major suggestions, which he said were based on his own experience in helping students obtain debt settlement help, explain the types of compromises collection agencies can offer without having to get approval from the Department of Education.

Ask for a Waiver of Collection Charges – This adds up to about 25 percent of every monthly payment after you’ve defaulted.  If the settlement is a lump sum payment of the amount due, collection agencies will often waive the collection charges, Mr. Kantrowitz said.  In such cases, the borrower would just pay the current principal and the accrued, unpaid interest.

Ask for a Reduction – Either a 10 percent reduction in the total amount due or a reduction of half the accrued, but unpaid, interest.  Which reduction will lead to a lower payoff, Mr. Kantrowitz said, will depend on your individual situation.

Get the Settlement Offer in Writing – This should be the case with any settlement agreement that you make.  If it’s done by a debt relief company they’ll make sure that it holds up legally. 

Whether borrowers in default will be able to settle might depend on their income.  If you earn enough to pay off the loan normally, for instance, you’re not likely to get a settlement, according to Mr. Kantrowitz.  And in most cases, he said, borrowers who have been able to settle have been in default for more than five years and “there just is no hope of that borrower ever being able to repay the debt.”

Even after a settlement, you won’t see a large reduction. You’re likely, in fact, to still have to pay at least 90 percent of the amount owed. “It’s a little bit of a discount – it’s not going to be a huge discount,” Mr. Kantrowitz said.

Make Payments to Yourself – You won’t always need to purchase something.  But just because you’re not actively saving for a specific item, doesn’t mean you get to go spend frivolously.  Start putting that money into savings instead.

Don’t get me wrong, this isn’t exactly a perfect scenario to make purchases.  But it certainly beats being overwhelmed with debt.  It’ll keep you on track, secure in the knowledge that you’re planning for you financial future.

Yesterday’s blog post touched on “the Good.”  Basically what you’re looking for in an ethical, reliable debt relief company.  Today we’ve got the flip side of that same coin.  Today we have what to expect from the rotten apples in the industry.

The Bad

The red flags are out there, you just need to know what to look for.  Now, this doesn’t mean that what these debt settlement companies are doing is illegal.  It just means I think they’re going about it all wrong.  They’re worried more about their profit than their ability to help clients.

Large upfront fees aren’t the best way to help you get out of debt.  If they’re charging 15% – 20% of your total debt then it could take you months, sometimes years just to pay them off.  And who knows what can happen over that time.  These types of companies want to lump all of your debt into “one easy payment.”  You might need to address your credit card debts one at a time.  Find a company that’ll be able to do that for you.

Needing a minimum amount of debt just to enter their program is an ineffective way to help people.  It’s easy to see why they’d do this though: taking 15% from your $500 is only going to net them $75.  They don’t consider that worth their time.  That being said, a company with a minimum shouldn’t be worth your time.  All they really care about is lining their wallets. 

Having the debt relief company explain the legal implications of your actions is vital.  While debt collectors are usually willing to settle outstanding debts, they want to be kept up to date with what’s going on.  Avoiding them entirely might just lead to lawsuits and wage garnishment

The Ugly

If it sounds too good to be true, then you should probably sense that it is.  A recent government investigation into debt settlement companies found one particular debt representative saying “We help 100% of the people who enter this program eliminate their debt, uh, in less than 3 years.”  Obviously if you join their program you’re guaranteed to eliminate your debt.  And if you believe that I’ve got a bridge in Brooklyn to sell you.

Any company that tells you to stop paying your creditors and instead pool all of your money into an account set up to settle your debts shouldn’t be dealt with.  Ever.  This advice is just plain bad! 

What they’re not telling you is that you’re absolutely ruining your credit profile and your ability to borrow for the next several years. in fact most consumers who come to us for credit repair are doing so to fix the mess made by a debt settlement company.  Once you decide to stop paying all of your creditors not even credit repair is going to help your credit scores.  Consider those scores trashed. 

The Verdict

I’m sure that when you’re ready to do your taxes you go over your finances with your accountant.  When you opened a checking account, you probably discussed which banking products were best for you.  Your communication with a debt relief company should be the same type of give and take.  Demand a consultation to discuss your specific needs.  And don’t invest your hard earned money unless you come away feeling comfortable with the steps that both you and your debt relief company are taking to secure a better financial future.

So you’ve actually decided to stop hoping that your debt will just go away and actually do something about it.  Congratulations.  If you kept turning a blind eye to your debt problems it would’ve eventually led to lawsuits, wage garnishment or even bankruptcy.

However, just because you’ve decided to finally take care of mistakes from the past, doesn’t necessarily mean that it’s all smooth sailing from now on.  You need to formulate a plan, stick to it and avoid the most common mistakes of debt relief.

Mistake #1:  Choosing the Wrong Type of Debt Relief

There’s debt consolidation, credit counseling, debt settlement … and trust me, they’re all different.  You need to understand how each one is trying to get you out of debt if you plan on succeeding.

Debt Consolidation – You take out a loan to pay off your debts now with one low monthly payment.  The problem is that you end up paying more over time because of the length of the loan and you’re not helping repair your credit.  As a result, you won’t be able to apply for a credit card or loan for several years.

Credit Counseling – This is a somewhat beneficial service if you qualify.  The truth is that most people are considered “too far gone” for credit counseling and are advised that bankruptcy is their only option.  Since this is a service that’s largely funded by the credit card companies, they deal exclusively with credit card debt.  If you have medical bills, mortgage problems, personal loans, or anything that’s not credit card debt, then credit counseling probably isn’t for you.

Debt Settlement – Here you’ll try to negotiate with creditors and collection agencies to get the best settlement offer possible.  However companies go about it in two ways.  The first, where you put money into an account and stop paying creditors altogether is harmful to your credit and isn’t guaranteed to work. 

The second option is where a debt settlement company focuses on your debts one at a time, which generally yields better results.  You can concentrate on the more important debts and even try to have your creditors agree to remove the account from your credit reports.  Not only are you paying off your debts, but you’re potentially boosting your credit score as well.  If you can find a debt settlement company that charge about 5% of your total debt you’ll know that 95% of the money you’re spending is actually going to pay off your outstanding debts.

Mistake #2:  Closing Out Open Cards

I know that the credit cards are probably what got you into trouble in the first place and I certainly don’t think you should be using them during your debt relief process.  But closing out good accounts is a double whammy.

For starters, you lose any leverage you may have with the credit card company that you’re paying off.  If you’re not a customer they have no reason to go out of their way to help you.  It may not seem like they not doing that anyway, but if you cancel the card, their tone will be much frostier.

On top of that, closing your card may destroy your credit profile.  A large part of your credit score is made up of how long you’ve had open lines of credit.  Closing an older account can significantly hurt the average time that you’ve had good credit available to you.

Mistake #3: Giving Up Your Bank Information

Creditors and collection agencies are undoubtedly going to ask for your bank information, telling you that it’s a “convenience.”  They’ll explain that they’ll automatically deduct what you owe them each month; “you’ll never even have to think about it.”  Don’t do it. 

You can make your payments through your bank’s automatic bill pay program, use you the bank’s online payment methods, or even send a check.  But DO NOT agree to set up automatic payments where you give out your own bank information.  It gives them more leeway than you’ll want them to have when it comes to your bank accounts.

Mistake #4:  Not Sticking to Your Plan

This is the major reason that people fail when it comes to debt relief.  Whatever type of debt relief you decided on, and whatever the strategy was to get rid of your debt, stick to it.  If you keep flip-flopping on how it’s going to be done, you’ll probably never accomplish anything.

If you decide to use a company for your debt relief needs, research them with the Better Business Bureau and make sure they’re rated an “A.”  Discuss your situation in detail with them and don’t blindly agree to what they think is right.  They may have the experience, but this is ultimately your problem.  Listen to their suggestions, mull it over and then make the decision that’s best for you.

Schoooool’s out for summer!  Schoooool’s out forEVER!  No more pencils, no more books, no more teachers’ dirty looks!  Out till summer, out till fall, we might not come back at all!

That’s right, college grads, school’s out and summer’s here at last.  Now’s the time to look back and reflect on what were effectively the best four or so years of your life.  If TV and movies have taught us anything, it’s that your time at school – whether at your local community college or one of those fancy-pants Ivy League schools – is one giant toga party after another.  The keggers are overflowing, the test cheat sheets are never-ending, and if that party-pooping Dean ever shows up to shut us down, well, that’s why we filled up all these water balloons.  Also, there may have been some light learning required at some point.

If reality has taught us anything, it’s that the morning after all those parties – the morning after graduation is over and you realize you’re really out all on your own – comes with something much worse than a hangover: Student loans.  Reality bites.

Sure, you’ve known about these loans since you started school, and you knew the day would come when the lenders would come calling, but the beer pong team needed you, and who were you to refuse?  So what’s the best way to get rid of these thousands of dollars in student loans ASAP so you can go on with your life?  Read on and take notes – you just might learn something…

1.The first thing you’ll need to do is gather your notices (you did remember to save those, right?) so you can figure out just how much you owe and to whom.  You can check any contracts you have signed as well; both will show you how much you borrowed and how much you have left to pay.  If you don’t have any of your notices or contracts, you can contact your school’s financial aid office for your records.

2. The good thing about student loan repayments is you get your first 6 months after graduation off, without having to worry about making any payments at all.  When the bills do start coming in, you’ll generally be paying at least $50 a month until the debt is repaid.  You got 4 different options for paying:

• Graduated:  This option eases you in with minimal payments that gradually increase every couple of years until the debt’s fulfilled.
• Standard:  For those who want to get rid of the debt quicker and can afford steeper payments.
• Income-based:  For anyone working commission or freelance, anyone whose income fluctuates, this option is made proportional to your income.
• Long-term:  For the procrastinators who would only pay the bare minimum for as long as possible.  The bad news here, you’ll get screwed over in interest and end up paying twice as much in the end.

3. If the job market isn’t being as kind to you as you might like, and you’re starting to feel the pressure of those student loans piling up, you might also consider applying for loan forgiveness options.  With loan forgiveness, you basically commit to volunteer work in exchange for having some (or all) of your debt wiped out.  But before you sign up at the local soup kitchen, you should realize these programs require real commitment on your part.  Here’s a quick rundown of different loan forgiveness programs:

• AmeriCorps:  A government program on civic education and public service.  Committing a year to them will get you just over $4700 to pay towards your student loans.
• Peace Corps:  I’m sure you’re familiar with them, and if you commit up to 2 years to the program, you can defer most of your student loans until you’re out, and may even get your loans reduced by up to 70%.
• VISTA:  Volunteers in Service to America is a program dedicated to fighting poverty, homelessness, and illiteracy in the US.  If you commit up 1700 hours to the cause, you’ll get $4700 to pay off your loans.
• Military service:  Should you decide to join up with the National Guard or the Army Reserves after college, you can collect a whopping $20,000 to get rid of your loans.  If you’re feeling especially gutsy, ask to be stationed in a more hostile environment for even more money.

4. If none of those options sound like anything you’d want to pursue, and you still need help paying down these large loans, and don’t want to go into deferment, you may consider consulting a debt settlement firm.  Many are skilled at negotiating easier payment plans on your behalf, which can be a big help in easing the burden and freeing up your finances a bit.

Keep these tips in mind the next time you feel violated by the amount of loans you have to repay.  Who knows, you may even have it taken care of before anyone else notices what a horrible mistake you made the night before.

House hunting is possibly one of the most thrilling, yet most stressful times in a person’s life.  The end result of your hard work and saving money to own a home can be extremely rewarding.  The hoops you need to jump through in order to achieve that goal may not always be as exciting though.

The obstacle that so many Americans run into is with their home loan application.  You may have found the perfect house, you’re prepared to close the deal, but then you sit on pins and needles while some lender decides your fate. 

That’s why your decision to deal with past credit and debt mistakes should come long before you even begin looking for that perfect home.  Lenders determine whether you’re approved or denied based largely on your credit score.  If you’ve allowed blemishes on your credit report to stick around, you may find yourself scrambling to find a mortgage lender that’ll approve you in the 11th hour.

Outstanding Debt

If you have debts that are unpaid, you’re basically telling potential lenders that you’re unable to handle your finances responsibly.  You’ll want to consider paying off those creditors or collection agencies, or perhaps utilize debt relief services.  You may not be able to have those accounts removed, however an account listed as “paid” is going to appear better than one listed as a “collection account.”

Don’t let the first time you look at your credit reports be after a lender runs a credit check.  You want to be ahead of the game when it comes to what those reports are saying about you.  The older a paid collection that’s listed on your credit gets, the less impact it will have on your scores. 

Plan Ahead

Once you get the idea in your head that you’re going to want to purchase a home should be when you take a look at your finances.  Your credit reports are going to dictate how lenders perceive your ability to pay them back.  If you start verifying that all of the information on your reports is correct 6 months or so in advance, you’ll have a much better chance of coming away from the home loan application process with a smile. 

Whether you need credit repair or debt settlement is only something that you’ll know for certain.  But if you bury your head in the sand and hope for the best, you may end up disheartened by the whole house hunting process.  Make sure you’re completely prepared.  Best of luck and happy hunting!

Related Articles:

• Best way to improve your credit
• What is a good credit score
• Dispute letters that work
• Fixing credit errors

Well it appears home buyers are starting to cautiously enter the market. The number of clients signing up because they want to buy a home has certainly increased in the last few months.  There seems to be a common theme that resonates with many of them:  “I want to buy a home, but I think I might need a little credit repair first.”

Most of them are right; they do need a little help with their credit.  However, what none of them are saying is, “I want to buy a home, but I need to take care of some outstanding debts.”  Credit repair is just as much about resolving debt issues as it is about credit repair.  You’d be surprised at how willing creditors are to negotiate and how much it can boost your credit score.

If you want to find out about our debt relief services, you can read about them here. Debt Relief

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