Consumer Debt Services
Consumer debt services are riding high as the American consumer continues to try and ply more debt payments into shrinking personal budgets. Charge account loans are approaching a trillion dollars according to Federal Reserve information and so the noose tightens dramatically for those who are seeing sixty or seventy percent of their monthly income going for both revolving credit accounts and installment loan accounts. Installment loan accounts cannot generally be altered because they are secured debts using some sort of collateral for the security of the loan. Having something to secure the loan such as a new car, an appliance, orthodontics or other property lowers the loss risk and lowers the interest rate. Consumer debt services, often called credit counseling services cannot negotiate lower interest rates with the lenders of these secured loans. But in the arena of unsecured loans, aka credit card accounts, debt services of America can offer real relief, at least temporarily, to hurting consumers.
Before beginning the formal process of seeking out and securing the help of such a service, a pause needs to be made for some heavy news to be delivered. The most negative action a person can ever undertake to affect one's credit score is to file for bankruptcy, either chapter seven or chapter thirteen. Chapter seven legal action is the "stop this rollercoaster I am getting off and never getting back on" move and the chapter thirteen is the "slow this thing down because I want to stay on and have fun but its speed is taking my breath away" move. Chapter seven is almost total liquidation of assets and thirteen is negotiating better interest rates for all consumer loans and spreading them out over more time so they aren't so oppressive every month. Pssst! Chapter thirteen actions are what consumer debt services do without the judge and attorney. Credit counseling costs less in legal fees, but you have to bear the same huge black mark usually for the same amount of time as Mr. Seven and Thirteen live on one's credit history which is years.
The best advice for getting out from under the borrowed money mountain is to start selling off property. Put up most everything a person has for sale on EBay or a garage sale or both. Quit being so attached to things that collect spider webs and break down and quit shining after a while. Jesus said the very same thing, only a lot better. "Lay not up for yourselves treasures upon earth , where moth and rust doth corrupt and where thieves break through and steal, but lay up for yourselves treasures in heaven where neither moth nor rust dot corrupt and where thieves do not break through nor steal." (Matthew 6:19) Just thinking about living that way can make blood pressure go down thirty points! The other way to best get rid of borrowed money accounts is to go out and get a second job and put the entire wages right smack on charge account principle.
Some are screaming at this website after that paragraph, but those are the best ways to attack debt without using consumer debt services which can hurt a person's financial reputation. But perhaps there already is a second job and there isn't much to sell. If a person has had more than two 30 days late charge account payments in the last two years or if personal credit payments each month (including the mortgage) are more than forty percent of one's monthly income, then any kind of bank or credit home equity loan is off the table. And loan companies' interest rates will end up being nearly as high as credit card rates, so not much has been saved. It's when a person is at this point that consumer debt services or credit counseling can provide immediate help to stop the bleeding.
A phone call to either a non-profit agency or a debt consolidation company will begin with getting as much personal information as what the company needs for negotiating with a person's particular lenders. But stop, hold it for a minute! Was there thorough checking of this company's reputation, it's practices and was the Better Business Bureau contacted and the Chamber of Commerce called before using this service? Some of these consumer debt services can be hucksters and some are genuine through and through so make sure of their pedigree. Now, go ahead and tell them your personal information so they can do their work.
After the representative talks at length with the consumer, the rep will probably be able to tell within minutes about how much the unsecured debt payments can be lowered. Between thirty and fifty percent is the norm. Consumer debt services, as a standard operating procedure, will ask that the consumer pay a much lower monthly payment to them than all of the individual credit card accounts had been in the past. A handling fee is taken out and the money is then sent on to each of the lenders. Then each month the lender sends a report directly to the consumer so that debt reduction progress can be monitored.
Consumer debt services all offer the same basic strategy. The good thing is that someone deciding to do this is not signing a contract with anyone meaning anyone can opt out at any time. But why? Once a person has started the credit damage has been done, so why not stay with it and get all unsecured debt dissolved within five years. Alas and alack, only thirty to forty percent of all clients stay with the program to its completion. Opting out means the lenders will pour the interest on again and the monthly savings will be gone. Dad always said "If you take an entire plate of mashed potatoes, you will eat every spoonful." That's good advice for starting credit counseling.
Consumer Installment DebtThe difference between consumer installment debt and consumer credit card debt is the difference between a ferry ride to Staten Island and a root canal trip to the dentist's office. The one has a definite beginning and end, but the other one seems like you'll never get out of that chair! The latest statistics from the Federal Reserve have the installment loan debt at one trillion six hundred and seventeen billion dollars and credit card debt at nine hundred and sixty nine billion dollars and climbing. It's no wonder the "Feed the Pig" ads run by the government are so prevalent on the airways! Installment accounts always have the buyer dreaming of the day that the loan will be paid off, with the knowledge of the exact day it will occur. Revolving charge accounts have the consumer looking at a large bill every month and thinking, "Will I ever get out of this hole I am in?"
Consumer installment debt is the result of "Just forty-eight easy monthly payments of _____" advertising. Car dealers use the term on almost every commercial for a lease agreement and when the salesman asks, "Well, how much a month do you think you can afford?" that's the installment loan staring at the potential buyer with its very haughty smirk. Imagine eighty four months of consumer installment debt on the same vehicle that will have rust and rips in the upholstery and needing two brake jobs before it is paid off. The forty eight easy monthly payments is how carpet dealers get their new fall line sold before Christmas and the dentist's office can make Rebecca's four year orthodontist safari seem palatable. Installment loans do have the blessed ending date and that may be their only redeeming quality.
The fact remains that consumer installment debt is still borrowed money that has to be paid back. It's the freight train that comes by every month and all its cars are in tow. The revolving stuff is a single engine where the borrower can choose whether to hitch a few more cars on or not, but the installment is an all or nothing deal. And both have put consumers in more of a debt black hole than ever before. This has brought Americans into a state of not being able to save much money for emergencies and other unexpected issues. In fact, living pay check to pay check is a common experience to almost seventy percent of all households. Jesus warned all of us of being too materialistic when He said, "Take heed and beware of covetousness: for a man's life consisteth not in the abundance of the things which he possesseth." (Luke 12:15)
Getting out of consumer installment debt is always the dream of those who are in it, when looking for that big day when the last coupon in the book is sent away becomes an almost daily occurrence. Listening to the many credit gurus leads a person to the conclusion that all solutions have at least some pain attached. The first way experts suggest of jettisoning debt is to sell stuff. Look at all the property that has been acquired and start selling some of the stuff collecting dust or that really isn't as revered as before. Put it on EBay or have an auction or a garage sale, but raise money by biting the bullet and jettisoning possessions to get rid of the debt. The second way is for the consumer to get an additional job and put the extra money on the loans. Stop groaning and get going!
Most experts in the financial arena don't like any borrowing to cover borrowed money, but if consumer installment debt is closing off a person's financial windpipe, then the gurus do suggest a home equity line of credit. These lending agreements are offered at banks, credit unions and loan companies, but they are not the same in value. Banks and credit unions are demanding higher and higher credit scores because of the recent bank closures and their bar for loan qualifying was already high before that happened! The good news is that their interest rates are at least as good and may be better than most installment loans, and the payments can be spread out over ten years or more, drastically reducing a person's total monthly payment outlay if all the debts are consolidated. Loan company home equity lending agreements will often have a higher interest rate than many of the installment loans already in hand. A person will have to do the math to see if his consumer installment debt can be rid by a loan company home equity lending agreement.
Perhaps after reading this article, the reader might take a little while to ponder what got him to the place of having so much debt in the first place. It is certainly understandable why a person might find himself in a high consumer installment debt situation. Products are continually being upgraded and made to be more efficient. Advertising reminds us that we all deserve the latest and the shiniest. The American economy was not built on consumers being content with what they own. Chapters seven and thirteen bankruptcies are a devastating blow to a consumer's financial integrity for ten years and are clearly not the answer for someone struggling with the ethical and moral dilemmas these legal filings produce. Clearly, the best answer is a person changing his entire perspective on what is most important in life and living within the means provided by today's circumstances.