Are We To Blame For Our Debts?

Unfortunately, in today's world, debt in very nearly at endemic levels and is very much a way of life – of which to be fair, the finger cannot be pointed at any one single source to blame, but rather the blame must be shared by all involved to some extent.

Outside my online businesses, I also run a Financial Services Company – who, I would point out, are not involved in issuing or creating debt, but rather it is a part of our business that we often see it, and how it easily affects lives of many people, to the extent that they become blinded and even apathetic.

Debt can (and sometimes does) cause absolute devastation – occasionally to the point of suicide in the rare few.

We (and I’m speaking from a macro perspective) cannot simply stop debt or right it all off. The very fiscal nature of the world means that economies could not stand a wipe-out. Economies need debt to survive, just as any economy must have an element of unemployment to be sustainable (and I know as I live somewhere with zero unemployment – and it’s more a curse than a blessing).

Instead, we should look to try and tackle this in three ways:

1. Intensive education to ensure everyone is fully aware of the potential problems associated with and sometimes caused by debt. This could be done by Consumer Groups, Government and especially the institutions behind the debt – Credit Card companies, Banks etc.

2. Greater restrictions placed on the issuers of debt (Credit Card companies, Banks etc.) to make it harder to people to get into debt in the first place, increased requirements / Due Diligence tests, enforcement of positive action support by these companies as soon as they spot a problem with a customer (get them to help more, rather than threaten action) and independent overseeing of companies with higher than average customer default rates to ensure fairness.

3. For those in debt and with problems – the marketing / promotion to them to know they can (and should) speak to someone about it as soon as possible. Debt Counseling (often provided by charities / self-help groups) are a good start. They have a great deal of experience – and it’s highly unlikely they haven’t heard YOUR situation before 100’s of times – and they usually have good advice and guidance.

Don’t ignore it. Don’t stick your head in the sand. Act!

Debt can be a cascading problem, and it can overtake you in no time. Often, people consider debt as ‘taboo’ – a bad thing – don’t talk about it. A little like having an addiction…… and society doesn’t like addicts, does it?

It doesn’t have to be that way.

We all need to play a part – and especially be understanding / supportive of those in debt – because very often, it’s circumstances beyond their control which got them into this mess.

How Can You Survive the Debt and Win? Debt Management Plans to the Rescue

Debt Management Plans

Debt Management Plans (DMP) is placed one step beyond credit counseling and a stone’s throw short of bankruptcy. If you are too deep into debt and unable to pay them, a credit counseling agency may recommend Debt Management Plans. This is a serious step that should be considered carefully along with better money management skills and budgeting disciplines.

Similar to prescription medication that you would only take after consulting a licensed physician, Debt Management Plans should start only after you have talked it over with a certified credit counselor. Your certified credit counselor spends the time to review your financial situation, consider alternatives, and help you learn to handle money better. You want to stay out of debt after you get out of it.

What is Debt Management Plans?

In simple terms, your credit counseling organization begins to manage your debts on your behalf through direct interaction with your creditors. They come between you and most of your unsecured creditors, negotiate lower interest rates, eliminate certain fees, arrange payment amounts and prioritize which creditors gets paid first. In short, almost everything that could be done to get you out of debt fast. These plans cover most unsecured debts, like credit card bills, student loans, and medical bills. But secured debts such as real estate loans fall outside of these plans.

Before signing up with a credit counseling organization for a DMP, verify any concessions your particular creditors offer to that organization. All these concessions from your creditors amount to one thing: Lower your monthly payment and still get out of debt faster. In some cases, you will be able to pay you debts, years earlier. Ask your credit counselor how much earlier you will get out of debt if you stayed on course.



When DMP starts, you agree to send one monthly payment to the credit counseling organization and they in turn make all the payments to your creditors for you. In the meantime, you may have to agree not to use or apply for credit while you are participating in the plan.

Is a Debt Management Plan Right For You?

Cover the following with your credit counselor before you decide to participate in a Debt Management Plan.

Find out if there are other options besides the DMP available to you. Is your DMP handled by the same organization that also provides you assistance with money and budget management during and after DMP? If a Debt Management Plan is handled by one organization and another handles your ongoing credit counseling, how will you coordinate the two? Remember you want to stay out debt later.

Find out how enrolling in a Debt Management Plan impacts your credit and your credit score. Negative and accurate information on your credit record is not easy to remove despite any promises made.

Confirm what your monthly payment amount is and if you can afford it. Do not commit to something you cannot follow through.

Credit counseling organization promises concessions they can get from your creditors, such as lowering or eliminating interest charges and late fees. Confirm these with your creditors and see if there is a waiting period before these concessions kick in or do they start as soon as you enroll in a DMP.

Verify that your creditors are paid within the correct billing cycles and before their required payment due date.

Clarify the steps involved in getting status reports on your account from your credit counseling organization. How often? How detailed? Is it accessible by phone? Any hesitancy on behalf of the credit counseling organization to let you verify your account status is a big red flag that means you need to find another organization to help you.

Find out if your creditors are willing to reset the clock on your past-due accounts, wiping out the record of missed and late payments if you sign up with a Debt Management Plan. This process is called re-aging your account. How many payments should you make before your creditors are willing to do this?

What to do after Debt Management Plan starts?

Once you sign up with a Debt Management Plan continue to be active with the process, even though emotionally, you may want to wash your hands away and stay away. DMP does not relieve you of your responsibilities; it only helps you manage it better.

Keep in touch with your creditors and pay your bills until the DMP goes into effect. If you haven’t had any negative entries in your credit report by now, any late payments, late and penalties can still be entered into your credit report.

Contact your creditors and confirm that they have accepted the proposed Debt Management Plan before you send any payments to the credit counseling organization for your DMP.

Call each of your creditors on the first of every month to make sure the agency has paid them on time and verify this by checking your monthly statements. Your monthly statement should also reflect any changes in your interest rates, waiving of the late fees and any other concessions you were expecting.

May you be granted freedom from debts both physical and Spiritually.

Debt Relief - Know Your Rights!

Any person that uses credit cards (me included), owe money on a personal loan, or pays a home mortgage is a “debtor.” Taking loans and making payments has become a standard practice among home buyers, people looking to buying a car, or attending college, university or any higher learning institutions.

When a person fails to repay his or her creditors or has an error in their accounts, they may be contacted by a “debt collector.” When this happens, generally most people tend to become very distraught and undergo a lot of anxiety and anguish. No kidding, who likes to be called and told they owe money?

To reduce this kind of anxiety, it is very helpful, empowering, and educational to know your rights under the Fair Debt Collection Practices Act, which requires that debt collectors treat you fairly and prohibits certain methods of debt collection. As you know, they don't always follow the Act.



Under the Fair Debt Collection Practices Act, debts that are covered include personal, family, and household debts. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts. Debt collectors are people that regularly collect debts owed by other people and they can include attorneys.

Debt collectors frequently contacted people in person, or via telephone, fax, or mail. Under the Act, a debt collector can only contact you between regular hours from 8am-9pm. Any other times are strictly prohibited unless the person gives permission to the debt collector to contact them.

Also debt collectors cannot contact you at work unless you give them permission (really?). Debt collectors can be prevented from contacting people if the person in reference, writes a letter requesting that the collector stop contacting them (so easy!). Once the collector receives the letter, they may not contact the person again except to say there will be no further contact or to notify the person that the debt collector or the creditor intends to take some specific action.

Writing a letter of course, does not eliminate the debt. It only eliminates any harassment incurred from creditors or debt collectors. A debt collector can also contact the attorney of the person involved and also investigate the person’s background further, to obtain information such as the telephone number, the residence, and place of employment of the person concerned.


Debt collectors are allowed to contact such third parties one time and are prohibited from further intrusions upon the said person’s privacy.

Within five days after the person is first contacted regarding their debt, the collector must send the person a written notice telling them specifically how much money they owe, the name of the creditor to whom they owe this money; as well as what action to take if the person does not believe that they owe this money.

A debt collector is also by law, not able to contact the person again, if within thirty days of receiving the written notice, the person writes a letter stating that they do not owe the money. A debt collector can renew collection activities if they are sent proof of the debt, such as a copy of a bill for the amount owed.

How You Can Solve Your Debt Problems - 3 Tips To Reduce Your Debts

Being Well informed about credit is one of the better ways to guarantee the best and lowest rates on mortgages, auto loans, personal loans and student loans. Unfortunately, millions of Americans don't qualify due to bad credit. They acquire a huge amount of debt, and instead of creating a plan to reduce debts, they totally ignore the problem, hoping that it will go away. However, your debt will not disappear with a sleight of hand. Here are some tips to help you reduce your debts and become financially free.

Unsecured Credit Cards: Get Rid of the Plastic

Credit cards account for a big portion of consumer debts. In fact, most people with debt problems have several credit cards stretched to the limit that total thousands of dollars. While the average household has a credit card debt of about $6,000 to $8,000, some consumers are carrying credit card balances over $20,000, ouch!

 First step to reducing credit card debt involves getting rid of the card (easier said that done I know!). Do not close credit card accounts. Instead, slice the cards in half. This way, you no longer have the ability to shop freely (although it is not free!).

Next, outline a realistic plan for repaying the debts. People who earn a good income may be able to allocate their disposable income toward paying down balances. If not, consider obtaining short-term second employment.


Take Advantage of a Home Equity Loan or Mortgage Refinancing

If you own a home, getting a home equity loan or refinancing your current mortgage may provide you with enough funds to get rid of your unnecessary consumer debts. Both loans are protected by your home; thus, these loans are easy to qualify for.

Common uses of home equity loans and cash-out refinancing include debt consolidation, home improvements, education expenses, weddings, funerals, etc. Furthermore, by using the funds to pay credit cards, you will also boost your personal credit rating. Not a bad thing!

 

Debt Management and Credit Counseling Services 

Using a debt management and credit counseling services to reduce debts is very smart and very effective. Although these agencies accept all types of credit, individuals with poor credit and non-homeowners can greatly benefit from these services.


Debt management agencies will provide applicants with valuable information to help them use credit responsibly. Moreover, agencies will contact creditors and negotiate lower interest rates, and attempt to get late fees waived. Through a debt management agency, you can expect to be debt-free within a few years if you go along and follow the rules.