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A Review of: Debt Settlement Could Cost More Than You Think Part 1: Section 1 “The Basics,” and Section 2 “The Problem With Debt Settlement Companies”

In this article featured on Yahoo! Finance, Aleksandra Todorova explores the debt-settlement industry and offers information on the service and the risk. In a financial world wrought with debt consolidation companies wanting your business, Todorova sheds some light on the most popular consolidation alternative.

The Basics
Todorova divulges in her article that debt settlement, in most states, is a perfectly legal alternative to debt consolidation or bankruptcy. Each debt situation is unique and for those finding themselves in foreclosure, unable to make minimum payments on credit cards or on the verge of bankruptcy, debt settlement is a viable option.

Todorova quotes debt-expert, Gerri Detweiler, advising her readers that creditors would rather settle for a lower amount, typically 20 percent to 75 percent of the debt, than receive nothing from a bankruptcy filing.

Outrageous Fees – Well, Not So Much
Our wary author warns her readers of scams and “outrageous fees.” One must remember there are sharks and predators in every industry. These companies, though they may have scorned many, do not represent the debt-settlement industry as a whole.

Debt settlement companies make money by saving you a lot of money. Some have established relationships with creditors and can work to significantly lower how much you owe. Generally, the process is faster than services such as debt consolidation because you pay less than your entire outstanding balance.

Tips:
Know how the program works – talk to a representative. A reputable company will be upfront about what their program entails and how much the service will cost. Understand your current debt situation before you call. Have your most recent bills and statements on hand. The more information you can provide your representative, the more detailed they can be about how they can help you.

Debt relief programs can be of great value to a person seeking to rid himself of an enormous debt “backlog.” The value of such programs have been demonstrated time and again by people whose financial lives have been changed for the better. The help available through a debt relief program can prove to be a boon in getting the financial portion of your life back in order. On the other hand, living under the daily weight of debt is a great burden on most any individual. Fortunately there are options.

During the past couple of decades, thousands of debt relief companies have sprung up from which one can choose, and their services vary depending on needs. When soliciting the assistance of a debt relief program, you should prepare by gathering all your bills and be able to discuss them and your spending practices. Though during such a personal meeting you may feel like you are financially “undressing” in front of a stranger, such honesty will prove to be imperative for gleaning the most benefit from their programs.

However, prior to that initial conversation, you must actually find a good debt relief program to work with. Since they can do you great benefit – or conversely, a scam can do you major harm - you must take care in your selection process. Research the companies before entering into a contract with one. Get free quotes, and compare them against each other.

When choosing a debt relief program, bear in mind the following considerations.

1. Choose from companies that have pioneered the industry. Try to avoid those that are upstarts. An established company will be familiar with industry nuances and has a track record you can investigate. It’s not that a new company is necessarily unprofessional or provides poor quality, but you are simply mitigating some risk by going with one that has a lengthier history.

2. Write out on paper a detailed analysis of your financial situation. List your debts and payments. Rank the priority of each. How much do you have saved? Invested? What do you owe, and to whom?

3. Target your financial goals. Do you want to be completely debt free, or rather are you simply striving to get your finances under control?

4. Evaluate the types of financial strategies these companies offer. There are many options available, so take the time to absorb some of their information and compare pros and cons.

5. Visit two or three offices and determine which seems the most helpful and flexible working with your particular needs.

6. Step back from the information and preliminary meetings for a couple of days to take it all in so you can make a well-informed, clear-minded decision concerning the company you ultimately select.

If you adhere to the recommendations provided by a reputable debt relief company, that may well be your best opportunity to become debt free or, at the very least, a little more well prepared in dealing with credit problems.

Credit cards are a very easy and convenient means of incurring debt in today’s market. Whatever you buy, whatever you do, wherever you go, once you swipe the credit card you are in debt – even if only temporarily. Whenever you have bills to pay or are allowed to repay a charge over extended periods of time, this means you are in debt. And while using credit cards, few even realize that they are accumulating debt. However, below are some tips on managing your credit card usage to keep your debts from getting out of hand.

1. Planning

Before you consider any purchases, develop a plan ahead of time so you can be confident in your ability to pay for them afterward. You have to make sure that your income source is stable before making any large purchases or commitments. Give greater priority to your needs before your wants. Purchasing expensive discretionary items may make you feel good initially - especially when you do not have to pay with cash immediately - but you should not forget that such purchases will add to your existing debts. Develop the habit of only spending as much as your income affords.

2. Limit

Set a limit for your overall monthly spending on gifts and pleasures that you don’t really need, but simply want. Don’t go over that limit. Make a list of those items you want (or places you wish to go), and if you can’t afford to buy them this month, then perhaps you can wait for the next. Or save up money for it over the course of several months. The less you can spend, the better as you build up your savings to eventually buy what you really want or need.

3. Account Statement

Maintain a record of all your credit card purchases and payments. Check the statement thoroughly to protect yourself from possible mistaken charges or even fraud. And by keeping your own record and receipts, that allows you to compare them against the statement.

4. Debt remedies

In the event that use of your credit cards lands you more deeply in debt, you will then need to seek a way to remedy the situation so you can pay your creditors or at least seek help to escape the bondage of debt. There are preventive measures you can take to avoid this in the first place.

As you spend and pay, keep a log of those transactions and prepare your finances for any amount of credit you need to repay. That includes preparation for the actual payments themselves so that when they are due you are financially able to write the checks.

If necessary due to limited funds, you can pay the minimum amount on your monthly statement. Or in more adverse financial conditions, you can locate a debt consolidator and request available options or plans so that your payments per month will be more manageable. You can also seek professional financial advisors to help with your credit card management, or assistance from your bank, such as with a debt repayment loan. Whatever your choice, never go in blindfolded; always research your options to best arm yourself with knowledge.

However, the best approach to all of this is to bridle your spending. You should not simply pay for an item with a credit card without prior due consideration. Calculate in advance and spend only as much as you can comfortably afford to pay back, avoiding the ever-present temptation to spend beyond your income constraints.

An increasing number of Americans are turning to debt consolidation loans to turn all of their high interest credit card, student loan, and other debts, into one lower monthly payment. It has never been easier to reduce your interest rates and monthly payments than with a modern debt consolidation loan. So how do debt consolidation loans work and are they right for you? Read on to learn more about consolidating your debts.

Turn All Your Bills into One Lower Monthly Payment

Debt consolidation loan works by eliminating all of your current high interest debts, and replacing them with one lower interest, lower monthly payment, consolidation loan. Imagine how much easier paying your bills could be when you only have one low monthly payment, instead of several high interest bills every month. The money you save every month with a debt consolidation loan can be applied towards permanently paying off your debts, instead of just the rising interest.

Two Types of Debt Consolidation Loans

Consolidation loans come in two different varieties; secured and unsecured. Secured consolidation loans generally have lower interest rates than unsecured loans, but require some form of collateral, such as your home, to secure the loan for the lender. Unsecured loans do not tie up any of your assets, but generally make up for it with higher interest rates. If you have low credit you will have a harder time finding an unsecured loan, though it is still possible.

Compare Lenders and Save More Money

The debt consolidation market is currently seeing tremendous growth, with dozens of lenders offering different interest rates and terms. It can feel a bit overwhelming when shopping for a debt consolidation loan, but luckily there is a very easy way to find the best loan; compare free online quotes! The internet has made consolidation loan shopping a snap. Simply request free quotes from as many online lenders as you can, and compare the results.

Comparing free quotes is also a great way to find out if debt consolidation is right for your personal needs. You can see exactly how much a debt consolidation loan can save you every month, as well as your potential interest rates, terms, etc. A free quote will help you make an informed decision as to whether debt consolidation is right for you.

How do I Find the Debt Consolidation Loan that is Right for Me?

Many online consolidation loan companies can offer a free online debt consolidation quote to you. Your work is to find out about a company before you even get a free online debt consolidation quote from them. Learn about a company’s reputation, success rate, terms and interest rate.