Debt Free Solutions

Companies that deal in debt free solutions offer consumers the opportunity to see loan indebtedness reduced as they work toward clearing balances on unsecured debts. Presented as an alternative to bankruptcy, these programs can mean the difference between ruined credit and financial stability. Counselors will work with clients and creditors to help to find a positive solution when economic issues have gotten out of control. There are a variety of different approaches when it comes to handling such stressful monetary issues. An individual may find themselves in need of financial counseling because of careless spending or unrealistic lifestyle expectations. Illness, injury or the death of a family breadwinner may have also contributed to the client's current situation. A qualified, professional counselor will provide practical help without judgment. Regardless of how a borrower has arrived at a place of extreme financial difficulty, the main objective should be to set things right. Getting back on track with creditors and learning better fiscal practices should be the goal of any type of credit counseling program. The many available debt free solutions could include; credit card consolidation, various consolidation loans, settlement with creditors, and, in extreme cases, bankruptcy. Whatever approach a family or individual might choose, taking constructive steps to correct a troubled fiscal situation is always a good idea.

When working toward debt free solutions, learning to create a solid budget is always a good place to start. A budget will lay out an economic road map for families and individuals to follow. Living within the confines a reasonable budget may not seem, to some individuals at least, like an enjoyable way to exist. Sensible guidelines and limits can keep spending under control and ensure that a family is not living beyond its means. Ultimately, the knowledge that things are not going to spiral out of control will be more than worth the discipline needed to live within the budget's boundaries. One of the first steps in creating a budget would involve keeping track of cash flow. Cash flow is the amount of money coming in as compared to the amount that is going out. In general, it is relatively easy to come up with a total of all monthly income. Figuring out how much is going out and where it is going can be more challenging. By gathering all bills and looking through the checkbook to track other expenditures such as groceries, gas, or personal needs, a consumer can begin to get a picture of where all the money goes. It is also wise to list any regular cash expenditures. If the amount of money coming in exceeds the amount that is going out, the budget is sound and things are under control. However, if the amount of money going out exceeds the amount coming in, this could explain the need for debt free solutions.

Another concern that counselors who offer debt free solutions will want to consider is the client's debts to income ratio. This is an important area since most lenders will evaluate this before granting a loan. Any client who wishes to obtain any kind of debts consolidation loan will need to examine this ratio closely. A debt to income ratio is simply a comparison between the amount of debts that family or individual has accumulated compared to their regular income. If a family brings in roughly $3000 per month, but has payments on debts of around $600, that family's debt to income ratio will be calculated at 20 percent. When a family's debts to income ratio is extremely high, that family will have a very hard time obtaining a loan, and most likely has a very hard time paying their monthly bills. Looking into debt free solutions can help to improve this ratio and pay off the indebtedness that is causing the financial pressure. Ways to control this ratio before it becomes a problem can include taking care before adding to charges to existing credit card accounts, making more than the minimum monthly payments on credit card bills, and making all payments on any bills in a timely manner.

There are specific practices that can keep a family on track financially and eventually eliminate the need for debt free solutions. These practices can include shopping for the best interest rates on loans of any kind, paying bills on time, and applying discipline whenever credit cards are used. If compulsive shopping is a problem, a consumer should cut up credit cards or leave them at home so that they will not be tempted to over use them. Anyone who has struggled with a poor credit rating knows the value of a good name. The Bible talks about the purity and value of God's word. "The words of the Lord are pure words: as silver tried in a furnace of earth, purified seven times." (Psalm 12:6)

When all else fails, turning to extreme debt free solutions such as bankruptcy may be the only viable answer. A few years ago, bankruptcy laws were changed. This tightening of the law has made it more difficult to discharge debts while retaining certain assets. In general, a debtor can choose between filing for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. A consumer will usually have to pay back a larger amount of defaulted loans under a Chapter 13 filing. This filing will usually involve a reorganization of debts and a plan for paying them off rather than a liquidation of assets and a discharge of indebtedness.

Debt Free Consolidation

With debt free consolidation, debtors can be on the way to a secure financial future by combining overdue balances into one manageable loan. Not only will this loan help lower monthly payments, but also they will free up cash each month so debtors can begin working on a saving and spending plan. Many companies are available to help set up debt free consolidations. However, every debtor should pray for wisdom in deciding on what to do about their financial burdens. "With Him is wisdom and strength, He hath counsel and understanding" (Job 12:13).

A lower interest rate as well as a longer period are two common results of debt free consolidation. Thus, consolidating is best for people who are accepting of having to make payments on the same bills for a longer amount of time. On the flip side, though, monthly payments will become lower, freeing up cash in the debtor's budget each month to begin a saving and spending plan that will help him or her stay free from overdue balances.

Those who are stressed about meeting financial obligations each month may want to consider debt free consolidation. These services are meant for those who find themselves unable to meet their monthly financial obligations, but whose financial burdens are mostly current as well. Those robbing Peter to pay Paul may need to consider consolidating. However, those who have fallen behind on paying bills, by three months or more may not be able to find any debt free consolidations that will work. It's best for anyone considering this option to talk with a financial counselor to see what choices are really available.

Debtors should check with their bank or credit union for debt free consolidations. It's also not a bad idea to check with other financial institutions both locally and nationally. These lenders may try to earn the debtor's business with consolidating services. Furthermore, many companies advertise on the Internet, in which case one can view many options and compare them without feeling obligated. Those who decide to work with a company that advertises on the Internet should check them out with the Better Business Bureau before committing their finances to them, to insure the lender is a legitimate and viable debt free consolidation company.

There are several advantages to debt free consolidations. First, the annoying and troubling collection calls will stop as the lending company deals with the creditors for the debtor. Second, the debtor can receive a fresh start because consolidating will reduce and eventually eliminate debt. Finally, borrowers can face the future with greater confidence knowing that they are on the way to a financially stable future.

A debt consolidation and credit counseling service may be the answer to how people who have suffered serious financial shortages can restore their credit rating or reduce the monthly payments that are burdening them. Whether a job loss or serious illness is the problem, or unexpected expenses not covered by insurance have left a debtor short of cash, a counseling service can provide the lifeline out of this quagmire. Creditors usually will not deal with the debtor to reduce the bill, but a third party can often get results. A financial counselor is an effective third party. Utilizing this service will provide the consumer with lower interest rates and lower monthly payments. "Take counsel together, and it shall come to nought; speak the word, and it shall not stand: for God is with us." (Isaiah 8:10)

Counselors can establish an account where the debtor's payments are deposited, and the service then distributes the money to the various creditors. This arrangement can be set up for three to five years. At the end of that time the debtor will have paid all his creditors, and will be debt free. During the time current bills are being paid off, no credit purchases are allowed. Any debt consolidation and credit counseling service will require the debtor to divest of all credit cards. It isn't hard to find a credit counseling service, especially with the help of the Internet. A debtor should ask questions of any service he is thinking of engaging to be sure he is not being led to bankruptcy court. Bankruptcy leaves a debtor with a bad credit rating for a long time. There will be the added cost of a bankruptcy attorney. It should be an absolute last resort.

In an effort to prevent this from happening again, especially if some of the debt has been the result of simple over consumption, the debt consolidation and credit counseling service will counsel the debtor on better ways to handle his/her finances. For most, it is a matter of establishing a budget that is used at all times. Priorities for spending are recognized, and "wants" separated from "needs," as a first step. The credit counseling service is probably the first instructor in financial responsibility that many debtors have had. If it hasn't been a priority in the family they came from, they were not taught fiscal responsibility. Once a debtor has benefited from these services, they have the tools for a financially secure life.





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