Debt Consolidation

Debt Consolidation: Non Profit Credit Services

December 31, 2011 |

Author admin

It’s easy to become a bit confused when trying to find a reputable nonprofit Debt Consolidation program where the counseling services will actually get you out of debt and improve credit over time. If you have accounts that are current or past due less than 6 months a consolidation plan can help you save thousands in interest and improve your credit rating over time.

These frequently asked questions will help guide you down the right path to financial freedom and better explain the ins and outs of a debt consolidation program with a nonprofit organization.

Do I need a certain amount of debt to qualify? No. A true nonprofit organization will consolidate any amount of debt if there are potential savings found in the free consolidation consultation. Agencies requiring a certain amount of debt are for profit and sales agents make a hefty commission off large debt amounts, not small ones.

Will the creditors require I close all my accounts. Yes. Any account consolidated will have to be closed either before enrollment or in the enrollment process. They key to a debt consolidation program is to get out of debt.

Do I have to consolidate all my debts? No. You can choose which accounts you want to consolidate. Some creditors do require that all accounts be enrolled if theirs is in the program but the stipulation is few and far. A certified credit counselor will encourage you to close all accounts as the end goal is to get out of debt, but again, it’s not required.

Do you reduce my balances or payback the entire debt? A consolidation program pays back the full debt amount at reduced fixed interest rates. A settlement program pays back part of the debt but requires accounts to first charge off, leaving your credit tarnished for seven years with multiple negative marks.

Are my payments sent each month? YES. This is how you’re kept current and helps maintain and increase your credit score over time. Remember, timely payments account for 35% of your credit score so it’s important for a non profit organization to ensure such is maintained for you on the accounts consolidated.

How low do the interest rates drop to? This depends on the creditor as each have their own guidelines for consolidating debts with non profits. Typically, the APRs go anywhere between 0% and 10%, depending on the creditor.

How long will this take me to be debt free? A consolidation program is designed to get you out of debt in 5 years or less. A good non profit will allow you to pay off the debt faster as able without any additional fees.

Is the due date changed with my creditors in this program? Yes. A nonprofit consolidation org will allow you to select a due date that fits comfortably around your other monthly bills and pay schedule. This date is then modified with the other terms once enrolled into the program.

Who handles my creditor and collection calls? There should be customer service department if not an assigned certified credit counselor to manage your creditor calls. The customer service department should be –in house – and available during normal business hours so they can contact your creditors on your behalf.

How will I know my creditors are being paid? You’ll still receive your monthly statement from your creditors that show the payments being made on your behalf. A consolidation org can usually provide a breakdown of the payments as well if you do not receive statements from your creditors.

What happens if I miss a payment? A nonprofit agency should not charge you for missing a payment or making a late payment. A creditor on the other hand may take a missed payment as an opportunity to default back to the original rates and terms you had before consolidating.

What’s a financial analysis? A financial analysis, or budget counseling session, outlines your debt to income ratio on a monthly basis. This is done to ensure an affordable monthly payment is provided on a due date that works around your other monthly bills.

How will this affect my credit? A debt consolidation plan can improve your credit score over time. 35% of your credit score is contingent upon consecutive timely monthly payments. Another 30% of your score is affected by the amount of debt you owe. So by having a consolidation company make your payments for you at reduced interest rates you automatically help influence 65% of your credit score with timely payments that reduce your balances faster, at lower fixed APRs.

How do I get started? Freedom Debt Management, Inc is a BBB rated A+ nonprofit org specializing in budget counseling and debt consolidation. Contact a certified credit counselor by visiting our website freedomdm.org and complete a contact request form or speak to certified credit counselor on the LIVE CHAT feature. Call 800.901.1563 and see what counseling services are available for you based on your specific situation and long term credit goals. You can be debt free and improve credit, Freedom Debt can help.

Written by BrazierM

Solving Student Loan Problems with Debt Consolidation

October 1, 2011 |

Author admin

Student loans in the United States are of two types. The first is the federal student loans, which is given by the government, which the United States is the Department of Education Federal Student Aid. Another is private student loans, which is given by the non-governmental lending institutions. Interest rates are higher on private loans as federal loans. In addition, it is much easier to consolidate federal loans as non-governmental private loans. Most debt consolidators can not even commit to obtain private student loans consolidated.

Students with loans find themselves in bigger problems than students without loans. With a loan, the student must make monthly payments, in addition to various other bills. That is why many students are looking at debt consolidation as a viable method to solve their debt problems. Debt consolidation has become popular among students in various other names, such as bill consolidation, debt negotiation and debt settlement. In fact, debt consolidation is a simple process of combining all student loans into one loan with an interest rate.

When a student approaches a debt consolidation would require a bit of money the student and put in an escrow account. When a sufficient amount of money accumulated in this account, the consolidation would begin talks with creditors and ask them to lower their interest rates. Once this is done (and if it is done), the consolidation will pay their debts by the receiver. The student must then pay back only to the consolidation of the agent.

The schools themselves sometimes arise and suggest names of reputable debt consolidation organizations for their students. Alternatively, the government also helps to consolidate, provided the loans are federal loans. This is done by referring the student to a debt consolidator.

In cases where a student has a mix of federal and private loans, it is not advisable to group them together. The reason is that both types of loans may have different interest rates.

Obviously, the loan can be consolidated only when the student left the school. One condition is that the student should not be in default on payments and there is a minimum amount of loan that can be consolidated. In most states in the minimum limit is $ 10,000. Consolidation of private loans have more flexible rules, but the costs are higher. For those who do not want to consolidate their private loans, but want to ease the repayment, Citibank has a nice program, which can be accessed at StudentLoan.com.

Surveys have shown that the amounts paid on student loans tend to be higher than income students in the early years. Private institutions to offer loans to students to think they are an income higher than the level of education would be higher. But this is not always the case. Thus, students opting for debt consolidation as a way out of this vicious circle of debt.

Written by Lee_