Credit Card Consolidation

Who wouldn’t like to go on a shopping spree, simply splurge and spend around? All of us do, and when we want to purchase something knowing that we have the liberty to pay for it at a later date and time, a credit card becomes our best friend. Without realizing how much we are spending, the bills pile up, and the credit card ends up as our greatest enemy.

Initially maybe you had one or two credit cards, and before you knew it, you were heavily burdened with paying off the debts for all the credit cards. Debt for many people is similar to a hole, where the slopes are too gentle and soft to climb. The more they try to come out of it, the deeper you are pulled in.  People now days forget their budget limits and take credit cards for granted, resulting in large debts over the years. Credit card consolidation is the securest and best way to get a low interest rate, in place of the credit cards with high interests. Actually you gain a credit card consolidation loan with a low interest in place of the credit card debt. A credit card consolidation can be without or with collateral. What is most important is maintaining the discipline. Once your debts are cleared, you do not owe any money to anyone, and your financial position is all under control, it is very easy to go in for new fiscal commitments. Without realizing, you fall in debt again making you realize that there was no use of a credit card consolidation. You do not have to create such credit problems, take the help of credit card consolidation, make a new beginning with the money issues.

Credit card consolidation enables and allows you to pay back your current debts within a period of 3-6 years, depending upon the terms and conditions. The main purpose of credit card consolidation is to lower the monthly bills and your time to pay up. There are mainly two types of credit card consolidation. The first is via a secured loan or a home equity loan, which is done by exchanging a debt that is insecure like a credit card debt, for a debt that is secure. The second is by a credit card counseling firm, who assist the consumers, by helping them merge their payments made monthly, into one payment, and dispersing it to the creditors, on the consumer’s behalf, until they are free of debt.

There are two types of loans; the variable rate debt consolidation loan which allows you to repay extra anytime without any cost, and the fixed rate debt consolidation loan which accepts fixed repayments only till the loan duration. A credit card debt consolidation service, many times expects you to arrange for a system of automatic deductions where the money would come out of your bank account to them. This method saves time, provided you have the money in the bank each month and are aware that it is going out as well. Once your payments are sent, they in turn forward it to the creditors.

Remember, if you do not go in for credit card consolidation, it will take you years to clear off your debts!

Bankruptcy – What To Consider Before Filing

Some people think of bankruptcy as an easy way to offload a crushing debt burden, and it’s sometimes the first method they reach for. Well, it may well relieve the burden, but it’s far from easy and should be the very last thing you use to do so.

While the law has made it relatively easy to actually file papers, the process - like any legal proceeding - is far from painless. You will have to justify your filing, exposing all your financial history to a judge and opening it to objections by creditors. If you genuinely owe the money, they’re unlikely to settle happily for 10 cents (or less) on the dollar.

Even if you’re successful, there are multiple long-term impacts that you’ll want to consider carefully before taking such a drastic step.

You will lose any credit cards that have outstanding balances, and others may choose to close your accounts. You’ll also find it near impossible to get a home loan or other large credit line (except possibly at the kind of ruinous interest rates that probably led, in part, to your current situation).

Also, not all debts are covered even by a bankruptcy filing. Student loans, back taxes within the past three years and select other debts are generally exempt from bankruptcy protection.

That situation will persist for 10 years, during which time you will need to maintain a near perfect credit record in order to work your way back to a useful level of trust. Potential creditors will regard any bankruptcy as the most negative criterion on any credit report - even beyond a low FICO score.

Beyond the credit impact, you may actually be required to forfeit real assets - a boat, expensive jewelry and other items - depending on when they were acquired. Most states make an exception for the primary residence and your auto. If you have secondary property, that may not be protected, however.

Finally, of course, the bankruptcy procedure itself is not free. Courts always have required fees and if you use an attorney that too will cost you. That can add the final straw to an already very bad financial situation.

On the upside, you will obtain relief from debt collection efforts (provided they receive notification). Your wages can not be garnished and any foreclosure action will be stopped. By taking action sooner rather than later, you will start to build a new credit history that can be better than the past one.

Since you won’t have access to new credit cards, this can actually be an advantage. There are some people who simply should not have access to easy credit, until and unless they can find a way to change their habits.

It can serve as a huge wakeup call to change any bad money management habits. For some, it’s necessary to hit rock bottom before they find the inner strength to make large, positive, long-term changes.

But, hitting rocks is painful. Consider carefully before you take the plunge.