Debt reduction or debt relief companies promising that debts can be settled for pennies on the dollar are probably scams. Photo Credit: Jon Sullivan/released to Public Domain.

Over the past few years, some may have noticed a greater number of advertisements and other media relating to debt relief or debt settlement companies. Though many of these companies are legit, there are a number that are scams. Despite increased regulations, there are still a lot of fraudulent debt relief companies out there.

Crooks ignore Federal Trade Commission regulations

More than half a year ago, the Federal Trade Commission created new regulations to help deal with the growing number of complaints about ineffective or fraudulent debt settlement and debt relief companies. Debt servicing companies, according to KNDU, an NBC affiliate in Washington state, are prohibited from asking for an advance fee, have to make specific information available up front and cannot misrepresent themselves in any way. Companies have to give customers realistic estimates of how much money the could save and disclose exactly what fees are included in the service. However, some companies are not following the law.

Large debt relief company busted

Freedom Debt Relief was stung recently by the states of Washington and New York for not following laws regarding debt services, according to WalletPop. The California firm was found to have misled consumers in those states. The company agreed to a settlement of nearly $2 million to be paid to its customers in both states. The company previously settled similar cases with four other states and is currently part of a class action lawsuit. The Federal Trade Commission, according to the Wall Street Journal, recently won large settlements against two debt management companies illegally “robocalling” customers with automated phone messages. Advanced Management Services NW and Dynamic Financial Group were found to have robocalled customers and told those who responded they could reduce debt for a hefty upfront fee. Advanced Management Services offered a refund if efforts were unsuccessful, but both companies would just pocket the cash and send a card telling customers to pay credit card bills on time.

Too good to be true

The old maxim that “if it looks too good to be true, it probably is” holds true when it comes to debt settlement companies. The Federal Deposit Insurance Company and Federal Trade Commission both warn that any company promising to remove negative items from credit reports or a settlement for “pennies on the dollar” is probably a scam. Also, it is illegal for any debt settlement or debt reduction company to ask for any money whatsoever until after the debt is reduced or somehow changed. There are also plenty of nonprofit debt counselors who can help consumers come up with a debt reduction plan. The FDIC advises consumers look at a not-for-profit credit counseling service before looking at any for-profit debt reduction service. For instance, check with the National Foundation for Credit Counseling to find qualified financial advisers in the area.

Sources

WalletPop

KNDU

Wall Street Journal

FDIC

FTC

National Foundation for Credit Counseling

Are old charge-offs still giving you the blues? (Photo Credit: CC BY/Caitlin Doe/Flickr)

Maintaining good credit can be challenging, particularly after a life-altering event like job loss. Understand that if a creditor throws in the towel and charges off one of your debts, that doesn’t mean that you’re in the clear. It’s quite possible that you will still be liable for that bad debt – even after it disappears from your credit report.

Charge-offs: The light side

Imagine this scenario involving a charge-off on your credit report. While the credit item may say it’s going to drop off your credit report at a certain time, that debt may still have legs because the rules for collecting a debt and the rules for reporting a debt aren’t the same, reports Bankrate. The Fair Debt Collection Practices Act (FDCPA) provides the guidelines for debt collection, while the Fair Credit Reporting Act (FCRA) holds jurisdiction over how a charge-off is reported.

On the plus side, the FCRA mandates that a charge-off must be removed from your credit report after 7 years. That includes whatever debt collection agency owned the debt. Check your credit report about a month after the charge-off is supposed to occur. If the bad debt is still there, dispute it with the three credit reporting agencies: Equifax, Experian and TransUnion.

Student loans, tax liens and Chapter 7 bankruptcies cannot be charged off.

Charge-offs: The dark side

Thanks to the FCRA, bad debt will disappear from your credit report. Unfortunately, the FDCPA makes it possible for debt collectors to pursue your debt almost in perpetuity. As there is a lucrative secondary market that purchases bad debt, there is still cause for concern on the part of the consumer who needs debt repair. Each collection agency will likely try to collect at least once before selling your charge-off.

Can a consumer escape from that bad credit card debt amassed during a span of unemployment? Because there is typically a statute of limitations, the answer is yes. The amount of time in which a debt is subject to collection via the court system varies by state, although it is usually 4 to 6 years for credit cards and 6 to 10 years for installment loans, payday loans or auto loans. Contact your state’s attorney general for more specific information.

Know your debt collection rights

If a charged off debt is past your state’s statute of limitations for collection, it cannot be legally pursued and you can ask not to be contacted against regarding that debt. If a debt collector continues to chase, you may have the option to levy a counter-suit.

Legal action will require time, money and the advice of a lawyer, however. The best way to get out from under a debt collector that is pursuing your debt in a legal fashion is to either pay what you owe in full or come to a settlement.

Sources

Bankrate.com
Equifax dispute form
Experian dispute form
TransUnion dispute form

How to deal with collections

Credit card debt relief plan

As stated previously, a plan is essential to recovery associated with credit card debt. Think of this as your bailout plan. When creating this plan, you must examine your current expenses as well as how you spend your money. This will require some record keeping, so it is important to establish a means of tracking where your money goes. Many individuals may use a ledger, and others may benefit from making an Excel document to track expenses. The choice is yours, but remember that the goal is to track where every penny goes so that you understand exactly how you are spending your money. By having this type of record, you will be able to discover ways to curb your expenses so that more money is invested into paying off credit card debt.

Emergency fund

When creating a plan to eliminate credit card debt, it is essential to ensure that you have a sufficient emergency fund set aside. Though putting all of your extra money into paying off your debts might sound logical, it could actually result in incurring future debts when you run into an emergency that requires fast cash. It is best to open a bank savings account for emergency funding. This way, you can also accumulate interest payments — which results in more money.

Life Insurance Policy

If you are interested in recovering from credit card debt, you should look into the life insurance policy that you have. If you find that you have one that is described as being “Whole Life,” you will also find that you have the option of borrowing some of the money that is considered to be the value of the policy. You could use some of that money to pay down some of your credit card balances. Once you get your financial affairs in order, you may pay back the loan from your life insurance, and repayments typically do not have any interest added to them.

Minimum monthly payments

As you know, when you have credit card debt you are expected to make a minimum monthly payment each month. While making the minimum payment will avoid incurring more interest and penalty fees, it is important that you consider making more than a minimum payment each month. You may simply live a bit below your means or cut back on something that is not considered to be a necessity. Doing so will ensure that you have extra money to pay more on your credit cards.

Live frugally, save energy, money

In order to save more money to put toward paying off your credit cards, it is important to learn how to live frugally. You must become an expert at making a penny go as far as possible. For example, instead of using a clothes dryer, you can use a clothesline to save electricity. You can conserve energy by unplugging items when not in use, using energy-efficient light bulbs and reducing the electricity you use overall. You can also grow your own food, make your own soap and use solar lights instead of lighting that requires electricity.

Additional streams of income

There are many ways to create additional streams of income. Creating additional income will provide you with more money to put into your emergency fund. More importantly, it can provide the money you need to put toward your debt. You could work overtime, get an additional job or learn ways to make money online. You can clean out your attic, closets and garage to find items to sell.

Buy used products

When making certain purchases, consider purchasing used products because they are usually cheaper than newer ones. Yard sales, thrift stores, flea markets and online websites such as Amazon and eBay are wonderful places to purchase used clothing, movies, games, electronics, jewelry and more. The money you save could be used for payments on your credit card.

Skip entertainment

If you enjoy entertainment products such as movies and books, you should look for more frugal ways to enjoy them. For example, if you enjoy reading, go to the library instead of the bookstore. If you enjoy watching television shows or movies, there are many websites that offer those shows for free. You should use these alternatives instead of renting movies or paying for cable services. Doing so will save you a tremendous amount of money that can be applied to credit card debt.

Walk instead of drive

If you live in an area that is close to stores and your job, you should consider walking or riding a bike instead of driving a vehicle. This can help save on car insurance, fuel and vehicle maintenance.

Credit card debt relief

As you can see, there are many different methods of creating more cash for credit card debt relief. By following the steps outlined in this guide, you can easily pay two to three times more than your minimum monthly credit card payment and eliminate that debt.

Black Friday shoppers this year preferred instant cash over credit cards. Image from Wikimedia Commons.

Black Friday shoppers used more cash than credit cards. As the need to keep debt levels down came into sharp focus over the past couple years, Americans have been learning the value of only using their own money. In fact, use of fast cash increased by 50 percent.

More using instant cash than credit cards

Black Friday is usually one of the biggest binges for use of credit cards. Black Friday shoppers fill malls and stores nationwide, trying to score great stuff at rock bottom prices. Fewer people, however, are willing to forgo the use of their payday cash in hand in lieu of adding to their debt burden with credit cards. It’s better, after all, to cut back and maybe skip buying the new iPod for a week or two, rather than get out the VISA, MasterCard or Discover and wind up running for a payday loan come January. Not only are Americans aware of that, they are starting to leave the cards alone, according to Reuters. A study by America’s Research Group and UBS estimated that only 16.3 percent of Black Friday shoppers used credit cards on Black Friday 2010, whereas 30.9 percent did in 2009.

More responsible purchases

Not only did fewer people send themselves running for payday loans and hurtling down the road to needing debt relief from credit cards,  they also cut back on how much they spent. This year, the average amount paid per purchase — with the rise in use of cash, checks and debit cards — was about $41 per purchase, compared to $87 per transaction with credit cards. Consumer spending overall is up, and it appears that it is mostly responsible spending.

Most debt is bad

Debt is not such a great thing. More people seem to be getting acutely aware of this idea. People restraining themselves from getting massive installment loans from the card companies, and saving up for big purchases is an incredibly healthy thing.

Sources

Reuters

Ignore debt relief ads and consider getting rid of credit card debt by taking out a personal loan with a much lower interest rate. Image: CC TheTruthAbout/Flickr

If you need credit card debt relief, pay no attention to the ads on the Internet or late-night TV. The best way to get rid of credit card debt is to do it yourself, perhaps with a personal loan. Take independent action to boost your credit score faster so you can save money on future borrowing with lower interest rates.

Why credit card debt is so expensive

To find a more manageable way to pay off credit card debt, consider a personal loan. Compared to a credit card, a personal loan can have a much lower interest rate, depending on your credit score. Interest on credit card debt overwhelms so many people because not only are the rates very high, the interest is compounded daily. Some credit cards sock consumers with interest rates as high as 29 percent. Imagine having $10,000 in credit card debt at 29 percent interest. If you paid the minimum monthly payment of $250 every month it would take 143 months to pay off — that’s 12 years.

Why personal loans are so interesting

Using a personal loan for credit card debt relief can save a lot of money with a lower interest rate. Shop around for the best rate possible. Some banks and credit unions have personal loans at between 5 and 8 percent. Call at least three financial institutions. Be honest, and don’t be afraid to explain your situation. If you can manage to find a lender who will give you a personal loan at 6 percent, that $10,000 could be paid off in 45 months (less than four years) with the same monthly payment.

How good credit saves money

By getting rid of credit card debt and faithfully paying down the personal loan, a better credit score will bring many future benefits. For example, a person with good credit can get an auto loan right now for about 6 percent interest. A person with bad credit will pay about 13 percent. That amounts to thousands of dollars over the life of the loan. For a mortgage loan on a $300,000 home, a good credit score will save hundreds of dollars a month in interest and could add up to $100,000 when it’s all over.

Sources

CreditLoan.com

WTOL.com

The Crystal Cathedral church intends to continue operating during bankruptcy. Image: Flickr / Paul!!! / CC-BY-ND

One of the original megachurches, the Crystal Cathedral, has filed for bankruptcy. Founder Rev. Robert H. Schuller built the Crystal Cathedral and “Hour of Power” telecast. The Crystal Cathedral bankruptcy owes more than $43 million to various creditors.

Crystal Cathedral bankruptcy

The Crystal Cathedral bankruptcy has been a possibility for several months. In April of this year, a committee of creditors agreed to a moratorium. This was intended to give the creditors and Crystal Cathedral church a chance to negotiate repayment plans. The moratorium, however, fell apart. The Crystal Cathedral owes $7.5 million to vendors and $36 million in mortgage payments.

Crystal Cathedral’s creditors

The chapter 11 bankruptcy that the Crystal Cathedral is filing for allows reorganization. If chapter 11 is granted, the Crystal Cathedral would be allowed to continue operations while attempting to pay off creditors. There are currently several lawsuits and writs on the Crystal Cathedral, including one $50,000 debt owed to a woman who rents out camels for the Crystal Cathedral’s yearly nativity pageant. The Crystal Cathedral bankruptcy would provide a modicum of protection for the church while it attempts to re-organize and pay off debt.

Crystal Cathedral’s bankruptcy plan

While attempting to pay off creditors and file for bankruptcy, Crystal Cathedral is taking on a new financial plan. The church is paying cash for all expenses, out of the nearly $2 million it receives each month in donations. The church has slashed 50 employees and several stations from the “Hour of Power” broadcast. The church and its leaders say that they have every intention of paying off all creditors, eventually. The courts would be the overseer of the debt repayment while Crystal Cathedral is in bankruptcy. For a megachurch that encourages financial responsibility, this will be the ultimate test of whether Crystal Cathedral can practice what it preaches.

Sources

AP News
Christianity Today

Since DVD has replaced VHS tape, rental stores like Blockbuster have been losing ground. Image from Wikimedia Commons.

Blockbuster Video has filed for bankruptcy, as diminishing returns and mounting debt have put the company out of the reach of any loan modification. The company has been predicted to fail for years. Since the advent of Netflix and Redbox, people have been able to get the DVD of their choice faster, and for less instant cash for rentals. The video rental chain is losing ground in the U.S., but still does fairly well worldwide, but the international branches filed for the same protection as well.

Blockbuster wants to rewind on debt

The biggest reason for Blockbuster going bankrupt, besides losing a lot of revenue, is that the company has a lot of debt. The company is filing for bankruptcy, according to the Christian Science Monitor, to get a little debt relief. The company owes over $1 billion, and has not been able to keep up on the payments. Since there isn’t a loan lender that lends debt consolidation loans that big, the company has decided to restructure instead. Blockbuster Video will be trading shares for debts owed to creditors as part of the restructuring.

Losing ground

It has not been a secret that Blockbuster has been losing market share to Netflix, and also to Redbox. The selection that Netflix has to offer is gargantuan compared with Blockbuster. One of the complaints that has been lodged over time about Blockbuster and similar chains is that only popular movies are offered, instead of a wide and varied selection. Redbox doesn’t offer nearly the selection of Netflix, but is available in many locations and doesn’t require membership or having to drive too far.

Late fees canceled on debt payments

Blockbuster in the early 1990s was one of the largest video rental chains in the world. However, as pay per view and then DVD rental by mail became more prevalent, it started to lose ground. Blockbuster has tried to play catch up, but the company has yet to be able to regain lost ground.

Sources

Christian Science Monitor

Why should students strive so hard only to disappear into a black hole of debt? Image fom Wikimedia Commons.

There are many components to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, and one of the big items concerns aggressive marketing of credit cards to college students. College is an increasingly expensive undertaking, and many a student has wanted for debt relief upon graduation having to pay back the money lenders that helped finance their education as well as high credit card premiums. The State University of New York system, or SUNY, the state network of public universities that has 68 campuses, has decided to put barriers in place to help keep Joe and Jane college student and their credit scores out of harm’s way.

SUNY says no to marketing practices

According to CNN, SUNY has placed restrictions on marketing practices relating to credit cards on SUNY campuses. The action was spearheaded by Mario Cuomo, the State Attorney General. SUNY schools cannot provide information to credit card companies for the purpose of offering cards to students, without the written prior consent of students. Also, schools cannot receive any funds for doing so. Cuomo has recommended all universities in New York schools adopt the same reforms. Credit card company advertising on campus will also be monitored and controlled by the university.

Students uniquely susceptible

College students are one of the most vulnerable groups when it comes to credit card debt. Sallie Mae found that the average college student carries more than $4,000 in credit card debt upon graduation, on top of their unsecured loans to finance college. There are students that end up dropping out of college to pay off debt or go through lengthy loan modification in order to boost credit scores after graduation. Many employers check credit scores, and students that have had their credit score shot by cards have to put off their dream jobs even longer as a result.

The American Dream becoming a debt nightmare

The American Dream of going to college, getting a good job and making a start in this world is getting further out of reach for the middle class. It seems logical to address the spiraling cost of tuition.

Sources

CNN Money

More people are freeing themselves from the prison that credit card debt can become. Image from Wikimedia Commons.

Some of the good news about the recession is that many Americans are wanting to tighten their belts and get rid of debt. Many are adjusting their budgets so that a little fast cash can get applied toward debt, especially toward one of the most common and expensive sources of debt. Fewer people are using credit cards these days, and smaller balances are being carried. Not only that, but there are also fewer delinquencies. It seems that people are able to get debt relief by their own bootstraps.

Balances fall for credit cards

For the fifth financial quarter in a row, the average balance carried on credit cards has fallen. The level of outstanding credit card debt has not only continually fallen, it has fallen to a new eight-year low, according to CNN. That’s a low point in the economy that you want to have. Not having a credit card bill every month that can send you running for a payday loan is something that a lot of people are aspiring to, and it seems that the American people are doing something about it. Not only do your bills decrease, your credit score starts to increase. It’s like giving a cash advance to yourself.

Even better news

On top of that, there are fewer credit card delinquencies.  Defaults on credit cards, or 90 days past due payments, have plummeted to just 0.92 percent nationwide. That is a decrease of 17.1 percent from the previous quarter and a 21.3 percent decrease from last year. That means that a lot of people invested their tax return money wisely. Instead of buying a new flat screen or cellular phone, their returns went toward paying down debt. This is great for consumers, and credit card companies have to be somewhat happy about some more instant money coming in.

Lean mean saving machines

Something that has been made clear during the recession, it is that too much consumer debt is bad for you. It makes a person very vulnerable in case anything goes wrong, which is why it’s a great thing to see people tightening up on their borrowing.

Further Reading

CNN Money

Some may need a submarine in this real estate market. Image from Wikimedia Commons.

A recent survey indicates that just more than 20 percent of American homeowners are underwater on their mortgages. That means that one in five people who own their homes would be no better off with mortgage loan modification, even if they could get it. The number of people who owe more than their homes are worth is slowly but surely declining. However, some areas are worse off than others, as large metropolitan areas are still experiencing greater numbers of foreclosures.

A fifth of all homes underwater

According to CNN Money, a real estate survey indicated that just more than 20 percent of American home owners owed more on their mortgages than their homes are worth. However, the 21.5 percent who are currently underwater is down from 23.3 percent from the previous quarter, which means some homes gained more than a payday loans worth. This means there is less negative equity. That said,  one in five people still probably won’t get offered mortgage loan modification, as it would do them no good. As less equity means less debt relief in a depressed market, some would be better off if they were to get a personal loan to get out of a house inching closer to foreclosure.

Values climb but so do foreclosures

Real estate values are starting to climb in some areas. Granted, one can never expect to buy a house for a cash advance, but home prices are starting to climb. Major metro areas where most homes are underwater benefited most. However, the number of foreclosures increased for 75 percent of all major cities despite home values creeping up. Las Vegas, Nev., is still the worst city in America for real estate. Unemployment there is higher than 14 percent, and almost 74 percent of homes in Sin City are underwater. About one in 15 homes are in foreclosure.

Slow and steady

There are few relative improvements to speak of. The unemployment rate has dipped slightly, and some people are not as bad off as they used to be on their mortgages. What recovery has taken place is doing so at a very slow pace.

Further Reading

CNN Money on Underwater Mortgages

CNN Money on Foreclosures

Credit cards can weigh a person down like an anchor, and fewer people are using them these days. Image from Wikimedia Commons.

As the recent unemployment and jobs report came in, so did some other data. Fewer people are using their credit cards this year, and people are using them less. As there is less short term credit available, fewer people want to use their credit cards as a source of instant cash. People are also saving more than they used to. Since consumer goods are such a large part of the economy, a counterproductive side effect of the recession is that less money gets spent on the frivolous goods that keep the economy rolling.

Credit card use falls

According the Wall Street Journal, fewer people are using their credit cards for consumer purchases. The amount of revolving credit (like credit cards or bank lines of credit – not like mortgages, payday loans, cash advances or student loans) being used in the U.S. has been declining. In fact, the use of revolving credit has dropped every month for the past 21 months consecutively. At this rate, the credit card companies are going to need a payday loan themselves.

Unemployment has a lot to do with it

One of the side effects of recessions is that people have less reason to justify non-essential purchases. They especially cannot justify making purchases with anything other than cash. If a person makes a big purchase like a new refrigerator or living room set on a credit card, making minimum payments for the next 50 years is not as palatable. The national savings rate, on the other hand, went up. It is currently at 6.4 percent, according to the Commerce Department, up from 6 percent in April.

Less security equals less frivolity

There is no point in buying unnecessary goods, particularly if you don’t know if you’ll be able to afford the payments a few months down the road. If you want to get out of debt and have some security, it makes no sense to incur further debt to do it, unless of course you can get a debt relief loan with an interest rate that’s manageable.

Further Reading

Wall Street Journal

To save on interest and get out of debt faster, debt consolidation takes careful planning. (Photo: Thinkstock)

Debt Consolidation loans could be a good way to simplify your debt. But it’s only the first step on your way to debt relief. Without changing your spending habits, a consolidation loan will only borrow your way away from debt, which makes no sense. Bundling all your debt into one payment makes sense, as it lowers your rate of interest. But if the only reason for the lower interest rate is a longer term, you could end up paying a lot more money in the long run.

Real debt reduction takes preparing

To save on interest and get out of debt faster, debt consolidation takes careful planning. Numerous debt consolidation calculators are available for free online. You can consider all the factors that will show whether or not consolidation makes sense with one of these calculators. Use an online debt consolidation calculator to research through different interest, payment and term scenarios to develop a plan of action.

Some of the best debt consolidation moves

Some debt consolidation approaches are better than others. At MSN MoneyCentral, M.P. Dunleavy offers some of the stronger debt consolidation methods. Consider a home equity loan for those who have equity in their homes. Home equity loan interest rates are low (high single digits) and the money you pay in interest is tax deductible. Refinance your car, if it has a secured loan, and use the additional cash to pay off debt. A personel loan to pay down credit card debt is a great choice, with less interest than you are paying to the credit card company.

Debt reduction snowball theory

When it comes to debt consolidation, many financial advisors believe that for real debt reduction, you have to formulate a plan to settle each debt separately. Dave Ramsey, a financial advisor, likes what he calls the “snowball approach.” With the snowball approach, debts are paid off one at a time, from the smallest to the largest. Ramsey advocates listing your debts in order. Start with the smallest debt as the first priority. The snowball can give you some success fairly easily knocking off the easier debts and motivate you to continue with the larger debts. The debt snowball works for dealing with debt, but it takes a lot of financial discipline, budgeting and saving money.

More information available at these websites:

- http://moneycentral.msn.com/content/savinganddebt/managedebt/p36230.asp

- http://www.daveramsey.com/new/baby-step-2/

Debt consolidation with careful planning to make sure you don't end up paying more in the long run can be a good strategy for debt relief. Flickr photo.

Debt Consolidation loans can be a good way to simplify your debt. But when it comes to debt relief, it’s only the first step. You have to change your spending habits as well, or you’re simply trying to borrow your way out of debt, which doesn’t make any sense no matter how you look at it. Debt consolidation makes sense if, by grouping all individual forms of debt into one place, the interest rate is lower. But if the only reason for the lower interest rate is a longer term, you could end up paying more money in the long run. In that case, you may be improving your cash flow, but debt reduction is a mirage.

Debt consolidation takes good planning

Debt consolidation takes careful planning to save on interest and get out of debt faster. Numerous free debt consolidation calculators are available online. A debt consolidation calculator helps you consider all the factors that determine whether it makes sense to consolidate. Use an online debt consolidation calculator to experiment with different interest, payment and term scenarios to develop a plan of action.

Good debt consolidation moves

Some debt consolidation approaches are better than others. M.P. Dunleavy at MSN moneycentral reports on some of the best debt consolidation moves. If you own a home and have some equity in it, consider taking out a home equity loan. A home equity loan carries a fairly low interest rate, currently in the high single digits, and the interest you do pay is tax-deductible. If your car has a secured loan, you can refinance it and use the extra cash to pay off debt. A personal loan can be a good option because the interest rate will be a lot less that what you’re paying to the credit card company.

The debt reduction snowball

When it comes to debt consolidation, many financial advisers believe that for real debt reduction, you need to formulate a plan to pay off each debt separately. Financial adviser Dave Ramsey likes what he calls the “snowball approach.” With the snowball approach, debs are paid off one at a time, from the smallest to the largest. Ramsey advocates listing your debts in order. The smallest balance should be your number one priority. The snowball can give you some success fairly quickly knocking off the easier debts and motivate you to continue with the larger debts. Ramsey said personal finance is 20 percent knowledge and 80 percent behavior.The debt snowball works for dealing with debt, but it takes a lot of financial discipline, budgeting and saving money.

Credit card debt relief scams have infested the Internet during the long economic downturn, but the best way to reduce and manage debt is to do it yourself. Flickr photo.

Debt reduction scams and debt relief scams have been spreading like mildew for some time now during this painful and prolonged economic downturn. The terrible economy has put millions of people in financial trouble and one of the biggest problems is credit card debt.  People drowning in debt are easy targets for unscrupulous debt reduction services promising relief from all that stress and anguish. Even so-called legitimate debt reduction services charge hefty fees for something people can do themselves with financial discipline and effort.

The debt reduction mirage

To provide debt reduction services, most companies pitching these programs offer loan consolidation plans in which you take out another loan to pay off existing debt. Other debt reduction services will offer to negotiate with your creditors to arrange a payoff for less than you owe. All they care about is signing you up, not whether or not their programs will actually work. And one thing they won’t tell you is that paying less than you owe shows up on your credit report as failure to pay off your debt in full, which wreaks havoc on your credit score.

Debt relief predators

It should be no secret that many companies promising to help consumers overwhelmed by credit card and other debts are financial predators that charge high fees but deliver little or nothing in return. The Los Angeles Times reports that investigators for the Government Accountability Office posed as distressed consumers seeking help from debt management companies. The companies gave them wildly exaggerated descriptions of the firms’ success rates and sometimes promised savings of as much as 50 cents on the dollar.

Debt reduction false promises

After paying big up-front fees to debt management companies, often running to several thousand dollars, many consumers end up deeper in debt than they were before. MSNBC tells the story of a woman in North Carolina who was promised by a debt management company that they would lower her interest rates enough to pay off credit card, mortgage and car loan debt three to five times faster. She was assured that for $499 she would save $2,500,  and savings from lower interest rates within the first 30 days would more than cover the fee. No interest rates were reduced, the company would not refund the $499 fee as they promised and the Federal Trade Commission sued the firm.

Common debt relief scams

A common trick played by debt relief scam artists today is “government approval.” The Los Angeles Times article reports that advertisements by debt management companies, as well as statements by company representatives to GAO investigators, provided evidence that the firms lead clients to believe their services are part of a government program similar to the recent bailout of troubled banks. One company that shows up at the top of search engine rankings for debt relief calls itself the Federal Debt Relief Program. Another is called “U.S. National Debt Relief Plan.”

Do it yourself debt relief

There are hundreds of debt reduction and debt relief companies infesting the Internet, but there is no government backed credit card debt relief program. Debt relief has become a huge industry designed to kick people when they’re down.The best way to debt reduction is to get on a budget, pay down your debt and pay your bills on time. If you’re struggling to make payments, contact your lenders to see if you can negotiate better terms, lower payments or refinance a car loan or home loan.

Free debt management advice

If you fall behind on payments and aren’t sure how to solve  your debt problems, contact the
national foundation for credit counseling. The NFCC is a nonprofit community organization that provides free and confidential debt management advice to anyone that needs it. You can consult with them over the phone or in person. To find a counselor in your area go to nfcc.org.

Personal installment loans online are a practical solution for debt consolidation when overall monthly payments can be lowered with one payment. Flickr photo.

Personal installment loans allow you to borrow cash for whatever you want. You can now apply for personal loans over the Internet, where there are an infinite amount of choices and terms. Personal loans can be used for all types of financial needs . Personal installment loans can be a practical solution for debt consolidation and debt relief, especially if the loan has a lower monthly payment than credit card debts. A secured personal loan requires you to provide the lender with an item or items of collateral. with unsecured personal loans the lender cannot take any of your assets if you default. More risk for the lender makes the interest rates higher.

Loans for people with bad credit

Personal loans online are available for just about anyone, even people with bad credit, a limited credit history or no credit history at all. In all these cases, you can qualify for a personal loan. The interest rate will be higher and the term shorter, but once you get a personal loan and always make the payments on time, you will boost your credit rating and future loans will be easier to get, with better rates and terms.

Fast cash loans no credit check

Personal loans online, unlike auto loans or mortgage loans, can be used at the borrower’s discretion. Any financial need — vacations, car repairs, school expenses, unexpected medical bills, emergency home repairs — can be addressed by setting up a personal loan online. The maximum loan amount for an unsecured personal loan online depends on the lender’s personal loan guidelines. the Best part about getting an unsecured personal loan online is that the entire approved amount appears in your bank account not in months, weeks or days, but right away.

Loan consolidation for debt relief

Debt consolidation and debt relief are some of the most practical reasons to get a personal loan online. Many people use these loans to consolidate other debts into a single monthly payment. The objective debt consolidation is to reduce overall monthly expenses. Before taking out the online personal loan, make sure the monthly payment is less than the total of the payments you were making on all the other debts.

Online loans for credit repair

Getting a personal loan online for debt consolidation is a sound solution for credit repair. A set monthly payment will free you from the endless minimum payment trap of credit card debt. But don’t borrow any more than you need and keep the term as short as possible. The longer the loan term, the more you end up paying. You have to be disciplined enough not to create more debt. Never apply for a personal loan online for debt consolidation until you make an honest commitment with yourself to stop spending more than you earn.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.

Consumers are cutting up their credit cards, as they're relying more on personal loans. Image from Wikimedia Commons

During economic recessions, you expect people to tighten their belts and cut down on their use of credit, of any form.  It is certainly true that some tightening has happened, but it isn’t as much as you’d think.  It is instead the case that some forms of consumer credit are being used more, while others are being used less.  Credit cards are being paid off, and fewer utilized, but personal loans are being utilized more.  One of the best forms of debt relief is to pay debts, and it seems that consensus is to pay off the cards and be on manageable plans for everything else.

Personal loans on the rise

For the second time in the last 14 months, there was an increase in certain amounts of consumer debt in the United States.  The credit products that were on the up and up were non-revolving sources of credit, such as student loans and personal loans, according to MarketWatch.  The amount of non-revolving credit, such as personal loans, went up $9.4 billion for April.

Credit cards fall

However, one of the most common sources of consumer credit is beginning to slip.  Credit card debt fell more than $8 billion in April, and the overall amount of credit card debt held nationally has not gone up since it peaked in June of 2008.  Non-revolving credit sources, however, have posted gains twice since then.  The result was an overall gain in consumer debt of slightly less than $1 billion overall, a gain of half of one percent.

Increase in other debts

The debt held by the government rose less than $2 billion, and the bulk of those loans are student loans.  The appearance of this economic data would be that consumers are becoming skittish about revolving sources of credit, and would rather stick to installment loan payments over time.  This is not unreasonable, as making the minimum payments on some credit cards can take years to pay off.

U.K. Prime Minister Gordon Brown has announced he will resign. Image from Wikimedia Commons.

After the defeat of the Labor Party at the polls in the U.K. election results, Prime Minister Gordon Brown has announced he will resign as head of the Labor Party and from his post as Prime Minister.  Currently, the Conservative and Liberal Democrat parties are working on a coalition government.  Labor is making a counteroffer to the Liberal Democrats, and it appears it will be months until a British Government is clearly established.  Part of the difficulty is that austerity measures will be part of the new government’s platform, as some debt relief is needed from spending deficits.

Gordon Brown offers himself as sacrifice

The move of Gordon Brown to resign from being Prime Minister could be taken as a sacrificial lamb of sorts to the Liberal Democrats, according to the Wall Street Journal.  Brown will remain in the post for the short term. In his present capacity as head of the Labor Party, which he will also be resigning, it could easily be construed as an offer meant to woo the Liberal Democrats away from the Conservatives and to forming a different coalition government with Labor instead.

Coalition governments present difficulties

The difficulty in this situation is that Nick Clegg and the Liberal Democrats have to reach an agreement with whichever party they will get the better deal.  Currently, The Liberal Democrats are working on forming a coalition government with David Cameron and the Conservative Party, in order to gain a majority, form a government, and solve the first hung parliament in 36 years.

Why this is bad

The United Kingdom, just as the United States, has been having problems lately.  The rate of taxation in the U.K. is higher than the U.S. (up to 50 percent of income) and there is a growing deficit, alongside other European economic woes.  Currently, a Greece bailout is being organized, but if European markets as a whole aren’t completely stable, it could make for serious repercussions worldwide.

Do something good for the planet on Earth Day. Photo from Wikimedia Commons.

It is close to that time of year to remember the Earth for a day – yes, it’s Earth Day on April 22.  Earth Day 2010, and indeed every Earth Day, is a good time to remember that we all should be good custodians to the environment.  After all, our children inherit what we leave behind, and I certainly don’t want my legacy to be litter.  There are also some great Earth Day Activities for Kids, if you want to include the little ones.  Plenty of things you can do are incredibly cost-effective, so doing something for Earth Day won’t make need debt relief.

Earth Day began April 22, 1970

The very first Earth Day was a teach-in.  Senator Gaylord Nelson (D-WI) started speaking at rallies for more attention to be called to environmental issues in the fall of 1969.  He put the idea forward for a nationwide grassroots effort for better environmental practices, and thanks to great media coverage, it picked up an incredible amount of steam.  On April 22, 1970, colleges and universities had environmental demonstrations and protests, along with many other organizations.  Over 20 million people participated, and Earth Day and Earth Week were born.  It expanded from there, and now Earth Day is celebrated on April 22 in many countries worldwide.

So what should I do?

There are plenty of activities that will properly commemorate Earth Day 2010.  Take grass clippings, leaves and so forth, and start a compost pile.  Plant a tree; not only do they spruce up a yard, they can add to property value.  (Check out the Arbor Day Foundation for more on that.) You can also do some recycling.  Depending on the policies in your area, you might be able to get some quick cash for certain materials, such as aluminum.  One couple made national headlines for their project Wedding Cans, paying for their wedding by recycling cans.

The EPA expands on Earth Day

The website for the Environmental Protection Agency has some activities in mind.  They suggest people Pick 5 for the Environment, and list activities one can do to conserve water, air, power and waste, as well as advocacy activities.  Going to the EPA website will give you some tips on conservation.

Clothes washers are included in the Arizona appliance rebate program. Image from Flickr.

As a part of the national appliance rebate program, the Arizona rebates for appliances program started this morning. The Arizona appliance rebate program is designed to help individuals who purchase new, energy-efficient appliances by providing debt relief through rebates on the cost of the appliance.

The Arizona appliance rebate system

Unlike the Texas Powerful Smart appliance rebate program, the Arizona appliance rebate includes a relatively small number of appliances. Arizona appliance rebates include only clothes washers, dishwashers and water heaters. The maximum Arizona rebates for appliances is $425, and the minimum Arizona rebates for appliances is $75.

Arizona rebates for appliances all reserved

As with most other state appliance rebate programs, the Arizona appliance rebate was quickly claimed. The reservation of appliance rebates began at 6 a.m. on April 12, 2010. As of 10 a.m. April 12, Arizona rebates for appliances had all been claimed. The Arizona appliance rebate program, however, had planned for this. There are waiting lists available. In other states, some of the reserved appliance rebates were not claimed. The Arizona appliance rebate has a “waiting list” where appliance rebates that are not claimed are doled out based on waiting list placement. It’s not overnight loans, but it is money that helps with the cost. To get on the waiting list for Arizona appliance rebates, go to arizonarebates.com.

Arizona rebates for appliances based on Energy Star

The Arizona appliance rebate is a program funded by the Reinvestment and Recovery Act. In Arizona, the recently-questioned Energy Star program provides the basis for deciding what appliances are energy-efficient. While the Energy Star logo may be easy to get, most new appliances are still more efficient than old appliances.

Other appliance rebate programs

While the Arizona appliance rebate program is already out of money, there are other state programs that have yet to start. The Alabama appliance rebate, Colorado appliance rebate, Missouri appliance rebate, and New Hampshire appliance rebate all start on April 19. April 22 is a huge day for appliance rebate programs. On that day, California, Kentucky, Maryland, Massachusetts, Mississippi, New Mexico, North Carolina, Oklahoma and Virgina all start their appliance rebate programs. There are other appliance rebate programs that start soon – see Energy Savers for a complete list.

Job losses continue to create loan defaults, foreclosure sales are still driving property prices downward, and mortgage interest rates are expected to rise. These things do not bode well for a  turn-around of the housing market, and with budget deficits dominating the political scene, further government interventions in the housing market are unlikely.

Things looked rosy for awhile

Last fall, things were looking up in the housing market. The homebuyer tax credit helped to increase sales and stabilize prices, while the purchase of mortgage-backed securities helped to hold down mortgage interest rates. New home construction gained some momentum, generating hope for the creation of jobs. The magic, however, was fleeting.

Sales are down and inventories are up

For three months in a row now, new and existing home sales have fallen. Inventories have increased as a result, and the Federal Housing Finance Agency reported national declines in home prices for December and January. Experts contend that lasting economic recovery is not possible without a healthy housing market. Concern is growing that the housing-market stabilization of 2009 was nothing more than a temporary result of government interventions which are about to end.

A second decline will have a ripple effect

A renewed decline of the housing market may not be inevitable, but fears of an aftershock are growing.  If prices drop again, household wealth and construction employment are both likely to fall, mortgage default rates are likely to rise, and the broader economic recovery — which has so far been fragile at best — is likely to suffer.