Debt Solutions - Avoiding Debt Scams

Debt SolutionsIf you are looking for a way to pull yourself out of debt, you may want to consider the debt solutions that are available to you. You first need to realize the choices you have to help you pay off those bills and get your life back to normal. There are various solutions to choose from and, many times, your choice of a solution will depend on the severity of your debt.

Debt Consolidation

Debt consolidation is one of various debt solutions that can help you get back in control of your debt. While consolidating your debt will not lower your debt in any way, it will help you pay off the debt faster and allow you to get a better interest rate on your debt as well.

There are many different ways to consolidate your debt, including credit cards with low interest rates, home equity loans and debt consolidation loans. Whatever way you choose to consolidate your debt, it will help stabilize your finances and may keep you from having to go with more drastic solutions.

The web communications revolution has provided many unprecedented opportunities for commerce – and unfortunately, quite a few opportunities for swindlers to prey on the gullible. This is just as true for debt consolidation as for anything else. Here are some debt consolidation scams to stay away from:

1. “Free Debt Consolidation Services”

Why are these guys doing it for free? How are they making money? Do be aware, though, that cheap debt consolidation services are not always a rip-off, although it would be a good idea to take a second look at anything that sounds too good to be true.

2. Consolidate Your Debts Using Free Government Grants

Yeah, right. The woods are thick with companies that offer information about “free government grants”. Haven’t you heard? Uncle Sam is giving away money like candy (which explains our high taxes!). And you can use this money any way you like – for example, to consolidate your debts. It’s true that the government gives loads of grant money, but I have yet to hear of a Citizen Lifestyle Enhancement Fund. It’s not easy to qualify for government grants, you have to spend the money for a particular purpose, and using it to consolidate your bills might just win you a free bonus – a five-year vacation at the Club Fed.

3. “No Repayment Necessary”

I don’t quite know quite why I included this one, except for entertainment value – if you can read then you’re probably too smart to fall for it. Anyway, here goes: Did you know that banking laws prohibit the charging of interest, and that the Supreme Court has backed this up with several decisions? You can borrow money, fail to pay it back, and then retain a smooth attorney to get you out of paying it back – after all, they had no legal right to lend you the money. Would you like to know how? Well, for the low, low price of $69.95…

Liquidating Assets

Liquidating AssetsAnother way to get rid of your debt may mean converting into cash any assets that you may have to avoid collection distress or bankruptcy. If you have property that you can sell, including extra cars, snowmobiles, or household items, you can sell them and use the money to pay off your high interest debts. While this may seem like one of the drastic debt solutions, selling your valuable property may be the best way to keep from going bankrupt in the future. With the strain of mounting debt it is difficult to avoid filing for bankruptcy.

Bankruptcy

This should always be your final solution to your debt problems. Many times, bankruptcy may be the only solution that you can come to. It is important that you remember that bankruptcy will be around to plague your credit report for up to seven years in the future. If this is the only way to deal with the debt that you have, it can help you and allow you to start again to rebuild your credit file.

Credit is so easy to gain nowadays – it’s not wonder why so many people are in unmanageable debt. If you are slow in making payments or often miss payments, you are not alone. Before you file for bankruptcy, you should consider the following options.

Debt Consolidation Loan

One solution is to get a debt consolidation loan. Simply put, you will find a lender who will loan you the entire amount of your debts. You pay off your creditors and make one monthly payment on your consolidation loan. The purpose of doing this is to avoid having to pay many different creditors.

If you find a consolidation loan with a lower interest rate than the current rates that you are paying, you will save money in the long run.

Some individuals get consolidation loans in the form of home equity line of credit or a personal loan from the bank. Again, as long as the interest rate is lower, you will save from having to pay for finance charges. If you are having a hard time getting an unsecured loan, you might want to opt for a secured loan. A secured loan is backed up by collateral, usually your home or other personal possessions.

Credit Counseling

Another solution to debt problems is to contact a credit counseling agency. A qualified agent will review your current financial state and take the steps necessary to help you get your debt under control. They will most likely contact your current creditors to negotiate repayment terms in the form of a lower interest rate or reduced monthly payment. To find a good credit counseling agency, conduct a search online or browse your local phone book. Remember to check the agency for legitimacy by asking questions about fees and accreditation.

A credit counselor will also sit with you to discuss your financial future. They will teach you basic personal finance management skills and will help you create a budget you can live with. Sometimes, they may ask you to cut up your credit cards so you can avoid future debts.

Debt Management Programs

You can usually enlist in a debt management program through a credit counseling agency, or find one for yourself. In such a program, an agent will review your financial situation and ask you a few questions to make sure you qualify. They will likely negotiate repayment terms with your creditors to lighten your obligations. They will then add up the total amount of debt and figure out a monthly payment for all your bills combined. You simply send the agency a payment and they will make sure that your creditors are paid the right amount.

Again, you should do your research to find a good debt management program. Find a not-for-profit agency that has been accredited or recommended by trusted associations. Enlisting the help of a less-than-legitimate firm can get you in further financial trouble because some agencies will hold your payment longer than necessary so your money can gain interest for their own profit.

While there are various solutions available to help you if you owe a great amount of debt, the best solution is to learn how to avoid getting into debt. Take on debt you can easily pay back, and avoid debt that may strain your monthly income. Saving for high ticket items like home appliances, cars, and recreational equipment can also mean paying cash for such items.

Paying cash for lifestyle and high ticket items means you wouldn’t need a debt solution. Limiting your debt and paying off your debt monthly can help you keep away from nasty debt collectors who can make your life miserable. On the other hand, if you take measures early on to avoid debt and to deal with it before it gets out of hand, you can avoid having to sell your assets.