many Us citizens are confronted with increasing credit card loans, high minimum month to month repayments and it’s becoming harder and harder to pay our monthly obligations. As we start to drop behind with our pay back we become conscious that if don’t take steps we could end up in a awful situation that will be very tricky to resolve. There are a number of options/services that can aid you take control of your finance and help you get out/reduce your debt. Here are some of them to get you started on the trail to recovery.
First you can go on to do nothing but pay your smallest amount of payments but your debt will continue to rise since you are paying interest on interest in other words there is a compounding affect to your debt, the larger the debt the larger the interest.
This tends to happen when you only pay minimum payments but continue to use your card. let’s take an example: you have a new c/card with ten thousand dollars limit and you start using it after the 1st installment your minimum payment for a $1000 dollar would probably be pretty small no big issue next statement you increase your debt to $3000 and the minimum repayments increase substantially you repay the minimum repayments and go on using your card. At the end of the circle you’ve spent your $10,000 but since you only paid minimum repayment, you only paid the interest on the outstanding balance not the principle, now you are left with ten thousand dollars debt plus interest on your 10k principle debt .As you can see a snow ball effect is taking place here. When you are late or miss repayments that payment is added to your total debt and the interest is calculated on the total amount.
Continue doing that and your debt will rise in leaps and bounds. The main option you have when you get to this stage is some form of debt consolidation.
here’s a small piece of information that will give you food for fought.This has been taken from bankrate.com on a thirty thousand dollar debt it will take nearly 60 years to repay your loan and it will cost you over $100K in interest that’s probably not where you want to be . I’m sure you can find better things to do with our $100k instead of giving it away as interest to credit card companies. Next option is to look for debt consolidation loan. Here again you have a number of option you can go with a highly regarded debt consolidation company and they will consolidate your loans into one and set up a month to month payment timetable for you to follow. Your interest rates will probably be smaller and the time frame of the loan will be determined in accordance with your financial position. You will pay the firm their fees and on average you should end paying your debt between 3-7 years.
an additional option is to use nonprofit organizations also known as Consumer Credit Counseling these corporations do the same job as paid debt consolidation businesses but getting paid by credit card companies themselves. A word of warning here while the title says nonprofit not all companies are free so ensure you know upfront what you are getting into. Sadly these programs are not very successful due to the fact that your credit report has a reputation which is parallel to bankruptcy and most people drop after 24 month at best.
Another option is Debt Settlement negotiations. This is a popular program because of its many benefits to customers. Debt Settlement Firms are professionals at negotiating your debt down, on average all debts are reduce from 40% to 70% of what you owe depending on who your banks are.
Once you signed with a debt settlement firm you can direct all your debt collectors to deal directly with them. Similar to any debt consolidation plan you will have to pay a monthly repayment into a trust fund that will pay back your loan. The down side as you might think is the firm’s fees unlike the CCC that get paid by credit card companies these debt management companies charge anywhere from 15-20% so on a 30k debt you can expect to pay around $5k in costs but if you where to save 40-50% of your debt you still save around $10k after charges. Turnaround time to finish your loan is also much shorter between 12-36 months
In all probability one of the most important advantages is that through this time, the creditors will be reporting late pays on your credit report while you are paying your debt. As settlements are reached with each creditor, the creditors will report a “settled in full “or “paid with a zero balance.” So, ultimately, at the end of the program, your debt to income ratio will have improved and your credit will begin to repair itself for the future.
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c card,
credit card loans,
dollar debt,
leaps and bounds,
minimum repayment,
snow ball