Debt Relief Legal Center
Consulting a debt relief legal center may be a good option for anyone who struggles with too much debt, but not every organization has the client's best interests at heart. There are two major types of financial counseling services, non profit agencies and for profit agencies. These agencies have their pluses and minuses and a wise client will do careful research before choosing a service. The difference between a non profit and a for profit debt relief legal center is mainly keyed into the source of an agency's income. For profit financial counseling centers will receive most of their compensation from the client. This will usually mean that the rates that they charge are higher than those that are charged by non profit centers. They may also make exaggerated claims and employ hard sell tactics. Non profit agencies, on the other hand, will usually charge the client lower fees. They can do this because they will generally receive payment from the creditors that agree to work with them. While the lower fees can be beneficial to the client, some centers will push for terms that are more favorable to the creditor since the creditor is the paying customer in this scenario. For this reason, the option of bankruptcy is seldom discussed with a client since bankruptcy would not generally be beneficial to the creditor.
Overwhelming indebtedness does not occur overnight. In the same way, finding a lasting answer to the issue of mounting debts will not involve any kind of quick fix miracle cure. While the specific reasons for unmanageable indebtedness may vary, the help of a skilled professional can make a difference for any struggling consumer. Turning to a quality debt relief legal center might be the best choice for many individuals. Bankruptcy laws have changed a great deal in recent years. A counselor who understands these changes and who can also offer realistic alternatives to bankruptcy is important. In general, organizations that advertise heavily on television or the Internet may not be the best places to turn to for financial advice. Buried deep in the fine print of any agreements that a client might sign with an unscrupulous organization can be all kinds of unfair penalties, fees, and alterations to the original terms. The Better Business Bureau and the Federal Trade Commission can be good sources of information on the quality of a specific debt relief legal center. In addition to these centers, a local bank might be able to help an account holder find financial answers. Homeowners in particular might be able to find solid solutions to debts in a home equity loan.
When a consumer feels that they are being harassed by collection agencies, the services of a debt relief legal center can be invaluable. Once a debt consolidation or settlement effort has been agreed to, collections activities must cease. There are specific laws that limit what a creditor can do to try to obtain repayment on defaulted loans. Advice from counselors who are trained in the legalities of collection practices can make all the difference in a debtor's peace of mind. Actions to gain repayment on a debt are governed by the Fair Debt Collection Practices Act. If a creditor or collection agency should do anything that violates this law, a consumer can sue the offending organization. There is, however, a one year statute of limitations on any violation. Among the actions that are prohibited by this law would include any kind of threat of violence or intent to cause physical harm to a debtor or the debtor's property or public reputation. Obscene language on the part of the creditor or collection agency in any communication with the debtor is against the law. Repeated harassing phone calls, or calls that come early in the morning or late at night are not permitted under the law. If a client has any questions regarding whether not they have been harassed by a creditor or collection agency, a counselor at a debt relief legal center should be able to answer those questions and provide needed assistance.
Sometimes a debt relief legal center will help a client obtain a consolidation loan. If the debtor's credit is still reasonably intact, this may be the wisest course of action. This will of course depend on whether or not an individual has accumulated a large amount of indebtedness. If the sum total of all unsecured liabilities is too high, obtaining an approval for a new loan could prove to be very difficult. When this is the case, a trained counselor will explain any other options that might be available to the client. Whatever options a client might choose, relief from financial pressures can be a real blessing. The Bible discusses the blessings available to the faithful. "A faithful man shall abound with blessings: but he that maketh haste to be rich shall not be innocent." (Proverbs 28:20)
There are some basic goals that a client should keep in mind when seeking a solution to economic dilemmas. A qualified counselor at a debt relief legal center should be able to help the client understand those goals and make them a reality. Whenever negotiating a new loan or a settlement of debts, a counselor should work to get the client the lowest interest rates that are possible. In addition, a plan to pay off outstanding debts should not extend beyond three to five years. A skilled professional will make sure that a client understands all the options that lay before them as well as the positive and negative consequences of each option.
Debt Relief SolutionThree top debt relief solutions generally considered by those who owe considerable sums of money are bankruptcy, debt settlement and debt consolidation. Each is a very different procedure, with considerably different ramifications for the debtor's future financial situation. Taking a look at each in turn, debtors can discover the solution which will work best for their individual situations. When a person is in a difficult financial situation, it is tempting to grab the first solution which is offered. However, in most cases, to do so would almost certainly end up costing a person more than he or she should pay to retire the obligation.
Bankruptcy is sometimes the first of these debt relief solutions that pops into a person's head when financial problems seem overwhelming. This should actually be more of a last resort. When bankruptcy laws were changed to try to stem the flood of bankruptcies, this became a more complicated and annoying solution. Legal hurdles and requests for increased paperwork and documentation make bankruptcy much more difficult than it used to be. Also, mandatory credit counseling is a part of the process. One aspect remains unchanged: bankruptcies continue to have a major effect upon a credit score. Consequences could remain for about ten years in certain instances.
Debt settlement appears to present a better solution to a debtor's problem. In this scenario, a company will negotiate with creditors to obtain a reduction in the total amount owed. In some cases, a better interest rate may also be negotiated, and late fees or over limit fees are often dismissed. One monthly payment replaces a myriad of bills, and a home or property is no longer at risk. Most companies claim to be able to eliminate the problem in about 2-3 years. This program is beneficial in that it allows the debtor to avoid going through bankruptcy, and usually lowers the total amount owed to creditors. However, this solution also has a negative consequence. Like the process of bankruptcy, settlement has a negative impact upon a credit score which will take some time to overcome. Meanwhile, loans or credit may be nearly impossible to obtain, or come with exorbitant interest rates. This is understandable, because the debtor has become known as a bad risk. The positive side to this process is that with every on time payment, momentum is built towards obtaining a higher credit score. Settlements are perceived as debt relief solutions which are one step higher than declaring bankruptcy. Creditors would generally prefer debtors take this option rather than declare bankruptcy, because even if they are only able to collect a portion of the funds, the amount negotiated is probably more than they would received from a bankrupt account.
Consolidation sounds much the same as debt settlement or debt negotiation, but there are important differences from these types of debt relief solutions. With debt consolidation, all of the loans are gathered up into one loan amount, which requires just one monthly payment. Usually, this loan has a better interest rate than those of the former creditors, so there are some savings in interest costs. Perhaps more importantly, a person's credit rating is preserved, as the consolidation is considered to be a solution which is similar to receiving credit counseling. There is a more positive response to these types of debt relief solutions, because creditors do not view the debtor as one who is trying to escape his or her obligations, but one who is trying to take steps to repay the money that is owed. With each on time payment, credit scores continue to build towards a more positive rating.
Whichever solution is decided upon, be sure to take the time to carefully read all of the paperwork related to the process. The details can make the difference in whether a debtor pays thousands more in interest costs over the course of the loan. Note any fees which are charged for these services. Some plans have ongoing fees attached to every payment until the loan is retired. Needless to say, such fees can negate any lower interest rates which these debt relief solutions had promised.
Do some research before settling upon debt relief solutions. There are a great number of companies which advertise financial solutions, and not all of these are legitimate. Check with the Better Business Bureau to be sure that there are no complaints lodged against the organization. Free credit counseling is often available through local community or church organizations. Many Internet articles discuss the pros and cons of various alternatives for retiring financial obligations.
Whichever debt relief solutions are chosen, take the time to think about how to avoid further indebtedness in the future. Budgets can be helpful in assisting a person to remain creditor-free. Although some problems occur because of job layoffs or unexpected medical problems, much can be eliminated by a careful overhaul of small, poorly-made decisions which accumulate until they become a serious problem. Here again, much information is available online to learn how to live in a more frugal manner. The help of an encouraging online community can also assist a person in becoming (and remaining) debt free. The Bible is a source for obtaining financial principles which can help an individual make the best use of the resources which he or she has been given. The writer of Proverbs says, "He that refuseth instruction despiseth his own soul: but he that heareth reproof getteth understanding." (Proverbs 15:32) This promise is a great encouragement for an increasing number of people who may be overwhelmed by a complicated financial situation.