As mentioned previously, the first direction most consumers will go to is self help. The idea here is to handle credit card problems independently as an individual. One resource that many consumers use is the website http://www.bankrate.com/ This is a database of credit cards and consumer based products which can be of value when handling personal debt. One tool available on the Bankrate site, is the ability to find low-rate transfer offers. A consumer can often transfer a balance from a high interest card to a low interest card. Sometimes these transfers are for a limited time period, some extend the life of the debt. It is very important to read the terms carefully to make sure you understand all fees and conditions of the transfer offer.
Another avenue of self help can be borrowing funds from family or friends. The value of this method is often times family and friends will not charge interest on the borrowed funds. If interest is added to the borrowed amount often times it would be substantially less then going to an additional credit card. A benefit of going with a credit card transfer could be to further establish a positive paying history on a credit report.
Budgeting is an excellent tool for getting out of personal debt, but is often overlooked. I would highly recommend doing a budget to determine what expenses are adjustable and can be reduced. Should you need budget forms, they are available on the CACC website:
http://www.creditadvocates.org/Budget_Worksheets.pdf
Lastly, prior with going to a Consumer Credit Counseling Agency try calling the creditors first. Often times creditors have internal hardship programs, which can offer better terms for the individual if they qualify.
We will go over the remaining 4 solutions to consumer debt in our next installment of Consumer Credit Q & A.
Friday, April 24, 2009
Monday, April 13, 2009
5 solutions to consumer debt.
I often meet with consumers who are very confused about what to do about
their credit card debt. Usually these consumers have been snowballed with all types of information, both true and false. What I will attempt to do here is break down the 5 possible solutions to credit card debt in a clear way that most consumers can understand. The 5 possible solutions include the following:
1. Self Help - Consumers attempt to repay their creditors simply by managing their cash flow.
2. Debt Management Plans - A credit counseling agency negotiates with the client's creditors on the client's behalf to set up a plan for paying off the debts.
3. Debt Consolidation - This should only be considered by consumers who can consolidate their debt with a lower interest rate, and not take on any new debt. Be careful trying to consolidate unsecured debt with secured debt, many times this can be a mistake.
4. Debt Settlement - The process where a debt settlement company negotiates with a consumer's creditors in order that the creditors will accept reduced payment in lieu of full payment. I would not recommend working with a debt settlement group, but handle this individually for many reasons.
5. Bankruptcy -This should be the last alternative to dealing with being overextended with credit card debt.
I will go into greater detail with each of these solutions over the next few days in order to provide a deeper understanding of these different debt reduction strategies.
their credit card debt. Usually these consumers have been snowballed with all types of information, both true and false. What I will attempt to do here is break down the 5 possible solutions to credit card debt in a clear way that most consumers can understand. The 5 possible solutions include the following:
1. Self Help - Consumers attempt to repay their creditors simply by managing their cash flow.
2. Debt Management Plans - A credit counseling agency negotiates with the client's creditors on the client's behalf to set up a plan for paying off the debts.
3. Debt Consolidation - This should only be considered by consumers who can consolidate their debt with a lower interest rate, and not take on any new debt. Be careful trying to consolidate unsecured debt with secured debt, many times this can be a mistake.
4. Debt Settlement - The process where a debt settlement company negotiates with a consumer's creditors in order that the creditors will accept reduced payment in lieu of full payment. I would not recommend working with a debt settlement group, but handle this individually for many reasons.
5. Bankruptcy -This should be the last alternative to dealing with being overextended with credit card debt.
I will go into greater detail with each of these solutions over the next few days in order to provide a deeper understanding of these different debt reduction strategies.
Wednesday, April 1, 2009
Consumer Credit Questions and Answers
I would like to give a quick hello to all that have found this blog. My name is Steven Burman. I have been working in the consumer credit industry since 1992. I currently serve as President to Credit Advocate Counseling Corp., a non-profit consumer credit counseling agency based in New York. I have been spending a good deal of my time putting financial literacy programs together with local public schools here in New York and helping consumers with debt management programs. I find it very personally rewarding helping people gain a sense of clarity to the many hurdles of consumer credit. The purpose of this blog is to provide realistic solutions to credit questions that many consumers have but do not have the resources available to find the answers to. I will provide information on many consumer credit topics, but feel free to ask questions and I will do my best to provide some answers if I can. Please visit my agency website as well www. creditadvocates.org for additional information. Thank you very much for taking the time to visit my blog!
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