As Americans continue to struggle with the economy more and more evidence of the toll it has taken on families is showing up in bankruptcy courts all across the country. While most of America has been trying desperately to handle their debt consolidation problems with many even seeking the resources of debt management programs through credit counselors, it is more and more often leading to the last resort of bankruptcy.

There is some new hope being offered for those struggling with credit card debt through the new legislation being introduced by two Senate members. In January Sens. Sheldon Whitehouse, D-R.I. and Richard Durbin, D-Ill., introduced a bill seeking to give financially distressed consumers another source of intervention that would wipe out credit card debt for those that are forced into bankruptcy.

Consumer advocate groups that have been lobbying congress aimed at the FTC to crack down on the predatory lending practices of leading credit card companies and banks were successful in getting new legislation passed. The bad news is that they will not go into effect until next year for reasons that are not clear to consumer advocate groups who lobbied for more stringent reprimands and immediate actions.

The bill is aimed at the credit card companies who raise the interest rate higher than the 18.5 percent currently allowed, through increased penalty rates and fees, which is seen by congress as pushing more people into bankruptcy. The bill is meant to give consumers who are struggling to avoid bankruptcy more leverage with their creditors, as they would have their credit card debt wiped out if they are forced into bankruptcy and therefore creditors are more apt to make reasonable settlement agreements with the consumer.

Under the current bankruptcy laws for those filing Chapter 7 or Chapter 13 you would still be obligated to pay your credit card debt as well as your secured debt. This bill would eliminate that provision in the law that mandates that consumers who meet a certain income requirement must file Chapter 13 (instead of Chapter 7 which requires them to use only their liquidated assets to pay off debts), which requires them to agree to using their future income to pay off their debts. With this provision gone credit card companies would certainly be more prone to working with their customers rather than to see the account go into bankruptcy, where they could receive little or no payment at all.

Send your emails in support of this bill to The Federal Trade Commission, the Office of Thrift Supervision and the National Credit Union Administration or the Senate Judiciary subcommittee regarding the measure that would wipeout credit card debt for people filing for bankruptcy sponsored by Sens. Whitehouse and Durbin.

Debt Reduction – Your Personal Credit File

There are two types of personal credit files: standard and investigative. A standard credit file contains a more or less complete outline of a consumer’s financial history. Chances are you won’t ever have to deal with anything besides a standard credit report.

Investigative reports are much more detailed and may contain information about a person’s lifestyle. Investigative reports are usually prepared for companies that want a really thorough investigation of a person’s background. For example, an investigative report may be prepared on someone trying to take out a million-dollar insurance policy, or an executive being considered for a high-level job, or someone applying for a job requiring a security clearance.

There are four parts to a standard credit report:

Personal Information

Your name, address, previous addresses for the past five to ten years, your date of birth, your Social Security number, your spouse’s name and Social Security number, the names and addresses of your previous and present employers, and your phone number can appear in the personal information section of a credit report.

Tradelines

A tradeline is industry lingo for a credit account. In this section, you will find a list of most of your credit accounts, the date each account was opened, whether you have paid each account on time, how much you still owe, whether you share your accounts with someone else, and any negative information about the account (for example, if it was included in a bankruptcy filing).

Public Record Information

Monetary judgments (if you were sued in court and lost, a judgment would order you to pay the person who won), state and federal tax liens, and bankruptcies appear on credit reports. Past-due child support may also be listed. Public record information is usually collected by companies that go to courthouses and gather financial public record information, and resell it to credit bureaus and other interested parties. Debt Reduction is covered in other articles found on this site.

By the way, information in credit reports is reported in a factual and straightforward manner. For instance, if you filed bankruptcy, your file would list the date and court particulars of your bankruptcy filing, but it wouldn’t say you’re a “deadbeat.”

Inquiries

A listing of everyone who has seen your credit report recently will appear on your credit report. Each listing is called an inquiry. There are three kinds of inquiries:

One kind is usually generated when you apply for some type of credit, insurance, or a job. Another kind of inquiry is a promotional (sometimes listed as a “PRM”) inquiry. These are usually created when lenders ask the credit bureau for lists of people who fit a certain profile so they can mail them pre approved credit card offers. These companies don’t actually receive your report, only your name and address if you match their guidelines. (And they don’t actually get that either, since the names and addresses go to a mailing house that sends the solicitations.)

While you would receive the names of the companies that were involved in a promotional offer under the inquiry section, those types of inquiries are not included on the reports that are sent to credit granters and other companies that get a copy of your report.

An account review inquiry is created when lenders want to review the credit of some of their customers. Say, for example, your department-store card issuer wants to increase customers’ credit lines before the holidays. They may go to a credit bureau and ask them to run criteria through a certain group of customers’ credit reports to find out who meets their qualifications. Those who do will get credit-line increases. Again, this type of inquiry is not reported to lenders.

If you’ve ordered your own credit report recently, you may also see consumer inquiries. Those just indicate that you reviewed your own file. They aren’t sent to lenders, either.

The previous three types of inquiries—promotional, account review, and consumer—are called “soft” inquiries because they will appear only when you order your own report, not when a lender orders it for review.

In addition to these soft inquiries, there are several distinct types of “hard” inquiries that will appear on your credit report whether you order it or a lender does. Mortgage-related inquiries, auto-loan-related inquiries, credit inquiries, insurance company inquiries, and employer inquiries are examples of hard inquiries.

Under the credit reporting law, employment inquiries are reported for two years, all others for one year. Debt can create a huge set of problems in your life, so its best to avoid it. Otherwise your options are debt management, or debt consolidation. If you’re interested in debt reduction look for other free informative articles on our site.

Great ways to avoid credit card debt

Credit card debts are becoming the most common forms of debts today. The process of settling the credit card debts is much simpler and hence should be settled faster.

Debts and credit cards

Credit cards are the most essential financial tool provided to consumers today. Immense competition in the world of banking and financial tools has resulted in easy availability of the same. Having multiple credit cards is no big deal with 0% charges and no balance prerequisites for getting a credit card. But this facility is often used in the wrong way by consumers. The benefit of paying later and buying now is an appealing prospect but leads to high interest payments with bills piled. Credit cards are used for payments of utility bills, medical bills, grocery bills and all kinds of bills. These pile up and result in debts. If not paid on time the high interest rates can make the financial situation worse. Hence avoiding debts of credit cards is the best way out.

Avoiding credit card debts

The best way to avoid debts on credit cards is to limit the use of the same. Also reducing the number of credit cards is another way out. Generally if card has overdrawn its limit then another card is used. This results in a repetitive chain of debts which are never ending. Hence by reducing the number of credit cards and trying to make payments by cash are the best ways to avoid debts on the credit cards.

Settling smaller bills

The credit card debts result in poor credit rating which can be a problem for future financial investments and loans. Credit rating can be improved through the settlement of smaller bills. Usually the smaller bills are piled on because they are less in amount and the general conception is to settle these all together. But by settling smaller bill amounts the credit rating can be improve and also unnecessary interest charges on these bills can be saved. Settlements of smaller amounts of bills are the best ways to avoid credit card debts.

Negotiations for credit card settlements

Even though avoiding debts are the best way out of credit card debts there are unavoidable circumstances like illnesses and loss of employment which leads to the same. In such circumstances negotiations are the best way out to avoid further debts. Negotiations can lead to reduction of the credit card debt. The amount can sometimes be reduced to almost 50% which is a benefit only on credit card debts. It helps to improve the credit rating and the remaining amount of the debt can also be paid in installments.

Using common sense is also always a very good option.

Budgeting - 5 Tips to Avoid Debt

No Debt - No Problem 

1. Make a budget, this is the most important thing you can do. Having a budget will help keep track of your spending which in turn will help you stay debt free. When making a budget, it should include how much money you have coming in, and how much you have to spend each month on bills and essentials. Whatever is left on your budget sheet when you take the outgoings from the incomings is your budget for the month. Every time you spend something, no matter how small put it on your budget sheet and work out how much you have left. Small items add up quickly, just a few extra bars of chocolate or some non essential items in town can end up making you spend money you don’t need to be spending, and that you often forget you have spent.
2. When buying an item in town, don’t buy it straight away, go around to different shops, have a look at other items, look for the cheapest you can find or try and find a similar item within the price range of your budget. Going around to different shops will help the impulse go, if at the end of shopping around you still feel you need the item then make sure you can afford it. If you can’t afford it and you don’t need the item, then be strong and do not buy it.
3. Make a shopping list. It may seem like something only old people do, but making a shopping list really works. It not only helps you stick to your budget, it makes sure you only buy the items you intended to buy when you set out. Stores are designed to make us buy things we don’t want or need, and often when shopping we end up coming back without what we set out for. Make a list, stick to it. It will help.
4. Set a budget for each shopping trip. If you are going into town to shop, take out $100 from the bank or whatever you can afford and set this as your budget for the day. Only spend the money in your wallet or purse. Having cash will make you stick to your budget. Don’t buy anything on card even if it’s a debit card. Only spend what you have. Even a few small extra payments on cards, it will mount up. If you absolutely must have something that is out of your budget range for the day, check tip 2.
5. To save some extra cash, take around 10% of what you earn every week or month, and put it somewhere safe like a separate bank account. The money will soon grow and can be put towards something your saving for. 10% isn’t so much money that you will notice it being gone from your main spending budget.

Hopefully using these tips will help you get a better grip on your finance and help you budget for the future and avoid debt.

Online solutions for non profit credit card consolidation

There are options like non profit credit card consolidation online and through regular services also which help in eliminating all credit card debts. All of these services have one common goal; to essentially save a consumer money.

Online credit card consolidation

There are various companies which provide online non profit credit card consolidation so that debts can be settled and the consumer can get good credit rating. These companies function through online modes and the entire process from application to the settlement of debts is done online. Contacts are made through email and personally when required. These non profit companies check the credentials of the clients like their home addresses, employment status and other verifications and then begin the process of consolidation.

Benefits of online consolidation of credit cards through non profit companies

The online option of settlement of debts and credits is a very useful option. This process is much faster than the regular consolidation companies. The verification of the company and comparison of the services offered can be done in minutes and that too in the comfort of the house or office. There are more options to choose from and the time taken for the same is very less. Moreover these non profit credit card consolidation companies also give the benefit of free services like credit counselling which helps in better management of debts. There is no fees charged for the service and the users in dire strait can avail these services to get out of debts. Consolidation of debts against the credit cards is done with the same benefits like low interest rates and monthly repayment options.

Other non profit options for settling credit card debts

Apart from the non profit credit card consolidation there are also options like credit counsellors who help in negotiating with the banks and the service providers. There are expert negotiators who settle debts for their clients and also help in reducing the amount of the debts. Through these negotiations the debts on credit cards can be reduced to almost 50% in many cases. The reduction is done because of many debtors become defaulters and don’t pay any amount of their debts. In such cases the banks have little options left except legal battles. Hence with negotiations they have the chance of getting back a good amount of their money.

Selecting an online service

While selecting an online service for non profit credit card consolidation comparison and research on the companies is required. The services should be non profit with no hidden charges in their terms and conditions. Accreditations are also a vital factor while selecting online credit card consolidation options. It is common for these services (even though they are a non-profit) to have some minimal monthly service fee. If they didn’t charge something they wouldn’t be able to afford to continue the service. In most cases the fees are minimal. Any company that asks for a service fee that seem either too high or too low should be scrutinized carefully.

The stress free option of student loan consolidation

Students are out of college and get worried about paying back their educational loans. This leads to a lot of stress for them and getting frantic about paying back these loans.

With the new financial crisis our country is currently in, private loans (or additional loans issued to grads or new students) are going to begin to dry up. Student loans are usually a safe investment for financial institutions, however the interest rates (which are usually low) make them a less attractive investment vehicle compared to convertible debt.

The moment a course of a student is finished and they are out of college; their first worry is the repayment of their educational or student loan. The students are anxious to get jobs and try to clear off their loans. These student loans are like the other loans which may have an adverse affect on their future, if not paid on time. A record of poor credit can reflect badly on their future loans also. Hence the student loan consolidation proves to be an ideal way out. The main advantage of the same is the lower rate of interest.

Federal loans and private loans

The Federal loans have lots of advantages as compared to the private loans when it comes to consolidating the student loan. The loans provided by the Federal agencies are tax deductible. But the private loans by banks and other institutions are not given this benefit. When a student wants to opt for the student loan consolidation they are always suggested not to merge the Federal loans with the private loans. Instead it is suggested to consolidate them separately. The federal loans should be consolidated when the interest rates are low. The duration of the loan can also be fixed and can range from 10 years to 30 years. This again depends on the amount of the loan.

Problems if loans are not consolidated

If the student loan consolidation is not regarded as an option or the loans are not consolidated then the students have to be under the constant pressure of loan repayment. First of all there is the risk of getting poor credit history.  Then there are the aspects like not being able to get other comforts like getting loans for cars or using credit cards freely, and various other options. But by consolidating the loans the stress of different repayments and high interest problems can be avoided. The consumers just have to take care of one monthly payment and that too at very low interest rates.

Best time for student loan consolidation

The ideal time for consolidating the loans is during the 6 month grace period which the students are given after their graduation. At this time the fixed interest rate for the consolidation of the student loan apply the in-school rate of interest for their estimate, and this amount is very low. Students can also apply for the same when they are giving their monthly payments. Many companies don’t offer student loan consolidation services however they usually do offer other debt services that in many cases a student should investigate as to their ideal application and usefulness.