Credit Counseling, Debt Consultants, Debt Negotiators: Do Debtors Need Their Services?

Hi,
Credit counseling services are quite good at giving people an organized look at their financial situation. After that, their usefulness is limited due to the fact that they have absolutely no legal right to enforce their suggested remedies to any of the creditors. In general, the offers credit counseling agencies make to creditors are unrealistic and many times rejected outright by the creditors. Exploratory conversation is usually an effective way to initiate the process of finding solutions to problems. However, in most instances, credit counselors will only deal with creditors in writing. Therefore any successful re-negotiations of initial proposals are highly unlikely to happen. Additionally, in many cases, debtors are not informed by credit counseling agencies that they have no binding authority to get a creditor to accept a repayment proposal. Debtors may mistakenly assume that credit counseling agencies have more leverage and standing than they actually do when contacting creditors on their behalf. The information that debtors need is available from debt consultants and debt negotiators. These professionals charge either an hourly fee or a contingency fee based upon the money saved to the debtor. From the standpoint of a creditor, a long drawn-out repayment proposal is not a sensible solution to resolving the account of a debtor. Debt professionals have the ability to analyze various situations and offer solutions acceptable to creditors. Credit counseling services and debt negotiation companies tend to strike long-term relationships with debtors that are of little or no value to the people in debt. Most people who find themselves mired in debt have achieved this situation over a long period of time. A helpful solution for the debtor is a quick one. Not one in which the debtor is required to continue down the same road, repaying the debt over a long period of time, sometimes with the added cost of several thousands of dollars. Credit counselors have their place in the credit world, but are sometimes asked to do things they lack the experience or knowledge to accomplish, which can be a detrimental situation for the debtor.
Until later,
Alan

Young Adults: First Credit Card

Hi,
When young adults apply for their first credit card, they need to be aware of hidden costs and fees, interest rate fluctuations, and the minimum payment trap. If ever it's the time to read the small fine print on the back of forms, applying for a credit card is when to do it. No one should feel embarrassed if he or she does not understand all the verbiage on the back of one of those forms. It's important to ask someone who does understand to explain all the terms and conditions to the prospective card holder. Here is a list of some of the items typically included in the small print:
1) If payment is late, by even one day, the interest rate may rise to the maximum allowed by state law in which the card is issued. For example, if the card is offered at 6% and the payment is one day late, the credit card holder reserves the right to reserve the interest rate to 19.9%+.
2) Most credit cards assess a $35.00 additional fee for any payment that is late.
3) If the credit limit is exceeded by even a penny, a $35.00 fee is assessed.
4) On many cards, when only the minimum payment is made, the principal is not reduced at all and only interest is being paid. Paying only the minimum payment is the start of falling into the minimum payment trap.
Tomorrow I will write more about the minimum payment trap.
Until then,
Alan