debt-settlement

Avoid spending money that you don’t have

It’s a beautiful word when it comes to using your credit cards. The word “avoid” is a great weapon in reducing or completely eliminating your credit card debt. Here are some avoids you can practice:

• Avoid getting more than one or two credit cards. Cancel extra cards that you don’t use.
• Avoid borrowing to pay debt. This is a vicious circle that you can’t get out.
• Avoid credit cards that start charging interest from the day you make a charge. If you have to use a credit card to make a purchase or you are applying for a card, see that they offer an interest free grace period. Pay down the balance within the grace period so that you get out of your debt.
• Avoid spending money that you don’t have.
• Avoid charging everyday expenses such as groceries, gas and other items to your credit card. If you have a credit card that earn airline miles or other gifts based on charges, use it to purchase your groceries, gas and other items and pay up the entire balance at the end of the month.
• Avoid using your credit card to make a purchase when you have cash to pay for it.

Tips to Avoid Credit Card Debt

Plastic money, as they call it, can either give you more power or cause you to spiral down in debt.  In most cases, the latter always happens not unless you are disciplined on your spending habits.

And so, here are some tips by which you can curb excess spending and use of your credit cards:

Tip #1: When choosing a credit card, always find the one with low interest rate and with low or no annual fees.

Tip #2: Be sure that whatever you spend, you can pay off in full each month. If you cannot do this, make sure that you spend what you can afford to pay.

Tip #3: Do not miss a credit card payment, no matter what.

Tip #4: Cash advances are an immediate no-no, thanks to large interest rates and fees that are a part of this transaction.

Tip #5: Very simply, another choice is to opt for a debit instead. This means you get to spend whatever amount you put in your card.

Tip #6: Make a spending budget on your credit cards and stick to it. If you do not do this, then all the other tips will not matter.

Tip #7: If you are currently struggling with credit card debt, then you have to search for low interest credit cards and switch over immediately.

Debt relief pitches are not always what they seem

Article by Robert Tikoyan of Business and Finance Net

The numbers of letters that come in the mail claiming that a person has been selected to be part of an exclusive debt relief option are not always what they appear to be. The recession has caused these companies to start doing a brisk business and to undergo heavier regulation by the Obama administration. The new rules protect consumers, but the buyer beware rule applies to this situation.

Even though the rules prevent the companies from collecting their own fees until they provide debt relief for the consumer, the companies often charge high fees or cannot offer the same amount of debt reduction the letters in the mail promise to prospective customers. Companies can also no longer put money into an account for debt relief unless the account is maintained at a third party institution.

The above rules apply to legitimate consumer debt relief agencies that operate on a for-profit basis. Even though the rules were put in place to prevent the abuses of the industry, there are still a number of companies that are fraudulent and do not offer legitimate services. A consumer may not always find out which ones are legitimate and which ones are not before the debt relief agency takes a consumer’s money. 

The Federal Trade Commission can help a consumer avoid legitimate companies, but the best bet is to avoid such conflicts in the future. The best way to avoid falling for debt relief scams is to not use the services. Non-profit consumer credit counseling agencies work just as well.

5 Important points to remember during debt settlement

The number of people having problem with credit card and other debts are increasing regularly. Debt collectors have to file hundreds and sometimes thousands of lawsuits every year to collect money when most of these debts could be collected without litigation. If you are a financially stressed debtor looking for settling your debts through a debt settlement company, then read on to know the 5 points that you should remember during the process.

1.Debt settlement affects your credit score: If you are keen on settling your debts through a debt settlement company, then consider the effect that it has on your credit score. Debt settlement affects your credit score in a significant way and therefore, this process is best considered when you have no other option but to file bankruptcy.

2.Savings through debt settlement can be taxable: Whatever amount you save through debt settlement will be subject to tax. If you owe $20,000 and you end up paying only 50% of the amount, then you save $10,000. This savings will be considered as an income and it will be subject to tax by the IRS. Thus you may feel that you can save a huge amount through debt settlement, but actually the savings become taxable. So, beware of the tax limits.

3.Know the new debt settlement laws: Be well informed about the recent debt settlement laws so that you are not cheated by the debt settlement companies. After the new debt settlement laws, the companies can no longer subject you to upfront fees. This new law goes into effect October 27, 2010. They can not even charge late fees due to no-payment to creditors. Take into account the new laws to safeguard yourself.

4.Check your credit report throughout the process: As you are making regular monthly payments to the debt settlement company, you are totally unaware whether or not the company is making timely payments to your creditors. To check this get your credit report and check if the payments are made on the credit report.

5.Write a debt settlement letter: If you are considering do-it-yourself debt settlement, then it is necessary for you to write a debt settlement letter to your creditor, mentioning the amount you offer to pay and the time required for you to pay.

Thus, before considering debt settlement, take into account the above mentioned points throughout the process.