Debt relief service

When the bankruptcy laws changed in late 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act it was obvious that we would see a drop in the amount of bankruptcies. With over 1,700,000 non-business bankruptcies in 2005 it had dropped to just 777,000 in 2007. Business bankruptcy are also down only slightly because the new laws only affected personal bankruptcy.

So far in 2008 bankruptcies are up only 20% over but expect this number to be higher once the final numbers are in. The main reason for the increase in bankruptcy is the economy. Unemployment is up nationwide and with the recent surge in price of oil the cost of all consumer goods is on the rise. As the economy continues to suffer we will see more bankruptcies and more people using debt relief services.

What is Bankruptcy?

Bankruptcy is when a person can no longer afford to pay their bills and decides they would like to start over. For obvious reasons they will actually be starting in the negative when it comes to credit due to the fact that they showed terrible credit management in the past. Bankruptcy claims stays on your credit report and credit score for a very long time so it shouldn’t be taken lightly. It is best to try everything you can to not claim bankruptcy but sometimes it’s the only option. It is governed by the federal law and except for a few exemptions the same rules apply in every state.

Types of Personal Bankruptcy

Chapter 7 is far the most popular form of bankruptcy. This where someone is freed from outstanding debts and any non-exempt assets are sold in orders to pay creditors.

Chapter 13 is a repayment plan for people with regular income and less then $336,900 in unsecured debt and secured debt less than $1,010,650. The Person will keep property and makes regular payments to the Chapter 13 trustee who will then pay the creditors.

Some people are forced to claim bankruptcy because they can no longer afford their minimum payment or have already fallen behind and are being harassed by collectors and creditors. Usually this is due to job loss or health a related problem but it can be caused by poor budgeting habits. Many people don’t realize how much we depend on credit and how many of us abuse it. 20 Years ago people looked at credit cards as a payment method today people use them as funding methods. Credit card debt for the average American family is at an all time high even if you take inflation into account.

Other Debt Relief Options?

Homeowners who have good credit should be able to get a debt consolidation loan but even that is a maybe given the current credit crisis. When you take out a debt consolidation loan you usually end up using your home as collateral, which is fine as long as you keep up regular payments. The downfall to this is if you stop paying your debt consolidation loan payments the creditors could take your home.

Non-homeowners who are already behind on their payments may want to look at a debt settlement or negotiation service. This is where you and or a debt settlement company will negotiate with your creditors to have your total debt owed lowered. It can be a tricky process as banks want all of their money back nut it is possible. The only reason they will settle with you is because they suspect you might file for bankruptcy and they will end up with nothing.

People who are not in serious debt but still are having concerns may want to look at a credit counseling service. The services can teach you better budgeting skills and it may look good with your creditors that you are trying to get your finances back on track.

No matter what your situation is you can always use some help and advice. Many companies are now offering these services; just look in the yellow pages and you will find a few in your local area. You can also find lots of national debt relief companies online.

By: Jeff Dragt

People in Colorado are lucky in that they have a plethora of consumer credit counseling services available to them as an aid to getting their finances back on track. These services are needed now more than ever before. Credit card use – and abuse – is on the rise as people are depending more and more heavily on the cards in their possession.

Where once a credit card was used only in an emergency, or to finance a big or important purchase such as a set of living room furniture or a diamond engagement ring, today’s consumers are using their credit cards for their everyday living expenses such as a latte at Starbuck’s or a box set of “Get Smart” DVDs. It’s no wonder that so many people are finding themselves in financial trouble as they accumulate more and more debt.



Help Is Available

That’s where consumer credit counseling services come into the picture. Once consumers find out exactly what these companies can do for their financial problems, they are welcomed with open arms. People need someone to walk them through a solution to their problems. Many households are able to only pay the minimum balance due on their cards, and the high interest rates eat up most of that, leaving very little to go toward the principal. And, with the spending habits so many Americans have gotten themselves into, that minimum payment is almost like paying nothing at all.

Credit counseling services offer free consultation to harried Colorado consumers. Most will decide that debt consolidation is the solution for them, and with good reason. This option saves them money while at the same time, combining all of their credit card payments into one monthly payment that is almost always lower that the sum total of the bill amounts that they have been paying previously.

Colorado counselors can help their clients create a budget that is suitable for their household and their circumstances, teach them how to more efficiently manage their money, and prove to them that with a little diligence and care, they can take the reins and be in full control of their finances now and in the future.

If for some reason you are nervous about going into the offices of the credit counselors and discussing your personal business with a relative stranger, you have the privilege of telephone counseling. This is preferred by many people, especially busy business people, who are happy to discuss their finances on their lunch hour via the phone, instead of having to keep an after work appointment.

Colorado consumer credit counseling services have a goal to help the people of their state to learn about money management and how to best resolve their credit card woes. Financial difficulties have become a thing of the past for many families who have taken advantage of the marvelous services available to them.

By: Ann Richter

Debt reduction can take many forms, some easier to manage than others. The obvious way to reduce debt is simply to pay it off, however most people who are dealing with significant debt find that difficult to do. One of the most successful methods of dealing with debt is the Snowball Method (as named by Dave Ramsey).

This is really quite a simple technique. Basically, you need to list your debts from the smallest to the largest. Determine how much all the minimum payments add up to every month. Then decide how much more than that total you can afford to pay every month.

Take that “extra” payment and add it to the minimum payment on the debt with the lowest balance. Once that debt is paid off, take the amount that was being paid towards it every month and add it to the minimum payment on the debt that now has the lowest balance.

Continue to roll the payment into the next smallest debt until they are all paid off. Or, if motivation is an issue, you could take some or all of the “extra” money and buy yourself a reward after each debt is repaid. Then continue with the snowball process the next month. This reward can be a great way to keep motivated about paying off debt.

The great thing about this method is that you see regular progress in reducing your debt. Because you start with the lowest balances, you’ll see debts being cleared much quicker than by working on the larger ones first.

The disadvantage to this method is that by starting with the lower balances first, you’ll actually spend more in interest in the long run.

If minimizing interest is your top priority, order your debts by interest rate – highest to lowest – rather than the outstanding balances. Start repaying the debt with the highest interest rate first, and roll the payments into the next highest rate debt as each one is paid off.

This alternative method is still quite effective, but because you won’t see results (debts being cleared) as quickly, it may be more difficult to stick with it if motivation is a problem for you.

By: W. M. Blake