Consumer Debt Solutions

Seeking solid consumer debt solutions is always a wise step for anyone facing the crushing weight of an overextended budget. There are a wide variety of options that are available for anyone who needs to deal with indebtedness and find a workable plan to keep financially on track. Consolidation loans can bring all debts under one loan and one monthly payment. Many consumers opt to take out a home equity loan to consolidate debts. This approach has the added benefit of providing an extra tax deduction for borrowers. Professional counselors can also work to negotiate with creditors and condense unsecured debts into one payment that is dispersed by the counseling agency. Any assets that can be sold and used to pay off indebtedness can also provide a viable solution. In a worse case scenario, bankruptcy may be the only solution, but should be seen as a last resort that is only to be used when all other avenues fail. Of course, there are a number of web sites that offer help for personal financial dilemmas. Whatever choice among the many consumer debt solutions an individual might make, they should not be too quick to sign on with any of these organizations. While many agencies are reputable, others could put a potential borrower in danger of paying exorbitant fees or even identity theft.

One of these consumer debt solutions is credit counseling. Turning to a professional counselor for advice on budgeting and other fiscal management tools can be a wise move as long as the organization that is providing the counseling is reputable. While some counselors will work with a client on basic issues such as budgeting and cutting expenses, many organizations take a different approach. Contacting creditors and negotiating a plan for paying back debts is a service that is offered by bill consolidation agencies. The negotiations are aimed at reducing interest rates, putting a halt to collection agency harassment, curtailing costly late fees, and combining the monthly payments on all applicable debt into one. Often, a creditor will participate in these negotiations because they realize that this may be the only way to recover even a part of the money that is owed them. In the event of a bankruptcy filing on the part of the debtor, the creditor will most likely receive no further payments. An important point of negotiation should be the re-aging of the debtor's accounts. Once the accounts are reflected as up to date, a borrower's credit score will generally not be impacted unfavorably by the consolidation. When attempting to find workable consumer debt solutions, loan consolidation may be a reasonable choice.

Another method of consolidating debts is the secured loan. These loans involve some kind of collateral that can be repossessed in the event of a default. Home equity loans are common consumer debt solutions. The equity in a home is basically the difference between the value of the property and any remaining balance on the mortgage. Sometimes called a second mortgage, this loan can be used to pay off a borrower's debts in full. Then the borrower will simply make one monthly payment on the home equity loan. Careful budgeting and planning for monthly expenses must go hand in hand with a loan consolidation approach. If not, the individual may find themselves repeating the same mistakes that got them in over their head in the first place. Often, a borrower may pay extra on a home equity loan if they are able to afford it. By paying extra, more money will be applied to the principle debt and less to interest charges. These extra payments can also help a borrower retire the debt earlier than scheduled. Such consumer debt solutions can also provide welcome tax deductions. The Bible talks about the way that God views the prayers of believers. "The sacrifice of the wicked is an abomination to the LORD: but the prayer of the upright is his delight." (Proverbs 15:8)

Basic money management tips should not be ignored when a borrower is on the lookout for consumer debt solutions. Most borrowers need to take a long look at their buying habits and lifestyle expectations. Necessary adjustments that bring these expectations in line with income are always a positive step. The careful and sparing use of credit cards can also help bring family budgets in line. Using cash advances on credit cards to meet expenses or pay other bills is a habit that should not be indulged. When purchases are necessary, comparison shopping to find the best possible price can help make ends meet while also meeting material needs. A reasonable budget that is adhered to while avoiding impulse purchases can go a long way toward handling pressing financial problems.

When dealing with consumer debt solutions, there are a few things that a borrower should look out for. Unfortunately, there is little oversight of businesses that offer debt counseling. As more and more families struggle with mounting debts and the possibility of bankruptcy, some organizations seek to take advantage of desperate borrowers. In general, if an organization contacts a debtor via telephone solicitation or spam e-mail, that organization should be avoided. An individual should check to see if an organization is a member of the National Foundation of Credit Counseling. The NFCC has strict guidelines for all members. A debtor should never disclose sensitive information such as credit card numbers or bank account numbers over the telephone and certainly not to any agency that has not been carefully researched.

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