http://articles.mychoicedeals.com/ Articles at The Article Planet en-us http://articles.mychoicedeals.com/finance/debt/how-debt-makes-slaves-out-of-consumers.html http://articles.mychoicedeals.com/finance/debt/how-debt-makes-slaves-out-of-consumers.html Thu, 10 Sep 2009 05:07:28 -0500
It started when he was in college. He didn't buy a lot of stuff, but he did charge a few things here and there - some meals, a few books, some clothes over the years - without realizing that meeting his minimum payments on his cards only paid the interest on his balance.

Mihalik, author of Debt is Slavery and 9 Other Things I Wish My Dad Had Taught Me About Money from October Mist Publishing (www.debtisslavery.com), started using credit cards when he was 18.
By the time he was 24, he discovered that credit card debt had crept up on him like a thief in the night, and he found himself so deeply in debt that he was working 50 hours each week just to service his minimum payments. Barely two years later, he had worked himself out of debt. Now, Mihalik wants everyone in debt trouble to learn from his experience, as well as how he got out of debt and how he is able to live comfortably today.

According to the federal government:

• Today's consumer has an average of 13 debt obligations on their credit report
• The total amount of debt owed by Americans is more than $2.5 trillion. $8,500 per person on average.
• 38% of the $2.5 trillion comes from credit card debt
• The average amount of credit card debt per card holder is $12,500
• 74.9% of families have credit cards and 58% of those carry a balance.

Debt has a dramatic impact on people's lives, and Mihalik was no exception.

"When I was trying to pay off my debt, I certainly felt like a slave to my credit cards," Mihalik said. "For more than a year, every penny I earned went to loan payments. I worked 50-plus hours a week and the beneficiary of my labor wasn't me but the banks and credit card companies. Then I discovered that before I could change how I handled my finances, I had to change the way I thought about money."

Once he changed his attitude, he realized his first step toward personal economic recovery was to stop accumulating debt.

"I came up with this idea when I realized that every time I spent money, I was spending the time it took me to earn that money," he said. "For example, let's say I make $10 an hour and I buy a leather jacket for $400. At $10 an hour, it takes me 40 hours to earn $400. Therefore, I just spent 40 hours of my life for that leather jacket. If I think of the price of the leather jacket to be 40 hours of my life instead of $400, I'd definitely think twice about the purchase. Will I get enough enjoyment out of the jacket to justify a week of my life working at a job I may not even like? And it's important to realize that time is more valuable than money. Time, once spent, can never be regained."

Mihalik's lesson is simple: You don't have to charge expensive items on you credit card to get into trouble. Unchecked spending - a few dinners, some clothes and maybe a short vacation - can result in balances you can never pay back on your existing cash flow. The result is that every hour you spend at work, you are actually working for the credit card companies, because they've spent your paycheck before it's cashed. That's how debt becomes slavery. You are now a slave to the bank, with your debt as the ball and chain that binds you."

"You can't get out of debt by simply changing the way you handle your money, or making a savings plan or hiring a credit counselor," he said. "In order for any tactic for getting out of debt to work, you must first change the way you regard money, and understand how to be its master, as opposed to allowing debt to master you." ]]> http://articles.mychoicedeals.com/finance/debt/bankruptcy-faqs.html http://articles.mychoicedeals.com/finance/debt/bankruptcy-faqs.html Thu, 10 Sep 2009 04:20:14 -0500
Will I lose my self respect?

Every bankruptcy is a matter of public record and so details of all bankruptcies are published in local and national newspapers. It is therefore difficult to "hide" a bankruptcy from friends and family.
In the past there has been something of a social stigma attached to bankruptcy but with it becoming increasingly common this is not as true today.

Will I lose my kids?

Bankruptcy will not result in the loss of your children. The consequences of bankruptcy are likely to affect your children's day to day life but they will not be taken from you.

Bankruptcy may lead to you having to sell your property and move home. You will also lose all non-essential assets and so it is conceivable that high value items in the home will be possessed by the Trustee.

However, if you do have children living with you it may be possible to postpone the sale of the house for up to a year after you are declared bankrupt. This will allow you to make alternative living arrangements in order to minimise the disruption caused by having to move home.

It is important to remember that a bankruptcy is a personal matter and will therefore not appear on the credit file of your children.

Will I lose my job and will my boss know?

Unless it is a stipulation of your contract it is not an obligation for you to tell your employer of your bankruptcy. However, as bankruptcies are a matter of public record it is conceivable that they will find out. In addition, HM Revenue and Customs will usually apply a 'nil tax' code to you for the rest of the tax year in which you were declared bankrupt and so this is another way in which your employer may find out about your bankruptcy.

There are some professions in which bankrupts are excluded. These include the licensed trade, estate agents and some legal and financial professions. You may also be ineligible to hold some public offices.

Your employment contract should contain the information you need to decide on your course of action and if not you should take advice from you HR or personnel department.

Will I be discriminated against?

It is unlikely that you will experience any kind of personal discrimination simply due to the fact you are a bankrupt. However, it is true that you will find it more difficult to obtain credit in the future as the bankruptcy is held on your credit file for six years. Many companies won't offer banking, credit card, loan or mortgage facilities to bankrupts and those that do are likely to charge higher rates of interest for the borrowing.

Will I lose my freedom?

Bankruptcy by its nature does place a person under some restrictions. Whilst a bankrupt doesn't lose and personal freedom, they may well lose some financial freedom due to the terms of a bankruptcy order. For example, you will normally have to inform the Trustee of any changes in your circumstances during the period of bankruptcy.

When a bankruptcy order is made, your bank account will be frozen and all cheque books and bank cards handed to the Official Receiver. It will therefore be more difficult to manage your personal affairs until the bankruptcy order is lifted. For example, if you made any application for credit over £500 you must declare your status as an undischarged bankrupt. ]]> http://articles.mychoicedeals.com/finance/debt/mounting-credit-card-debts-in-the-uk.html http://articles.mychoicedeals.com/finance/debt/mounting-credit-card-debts-in-the-uk.html Wed, 09 Sep 2009 21:45:04 -0500
Causes of debt

Kiran Mistry an insolvency practitioner from WMProserv said there are several reasons why credit card debts accumulate. Firstly, many people have multiple credit cards with different providers and so missed payments and high interest rates on some of these cards can lead to a build up of debt. Many people don't change their credit card provider when an initial offer rate expires and this leads to high interest charges, increasing the amount owing on the card.

Another main reason for credit card debt is general overspending. Many people spend significant sums on credit cards with the expectation that they can pay off the debts in future by, for example, bonuses or by remortgaging their home. The credit crunch impact on both income and property values has left many people with high levels of unsecured credit card debt that they are unable to repay.

Shopping around

For those people with a number of credit card balances it is often prudent to shop around and find providers offering low rates of interest for "balance transfers". Many credit card providers offer an initial period with 0% interest and may offer a low interest rate for the lifetime of the balance.

By transferring debt to another provider it will significantly reduce your interest payments and allow you to repay the actual credit card debt more quickly.

Budgeting

Moe Nawaz from UKAdvice.com advises, the first step when dealing with spiralling credit card debts is to devise a monthly budget planner. This will help you work out how much is available for repaying these debts after other essential bills and living expenses have been taken into account.

Another key step is to prioritise the credit card debt. It is important to look closely at the interest rates and charges being levied by your various credit card providers and to make steps to repay the most expensive cards first.

It is also important to set up an automatic direct debit or standing order payment for your cards. This will ensure that the minimum payment is made every month to avoid any additional charges.

Freezing interest

Once a budget planners has been created it is often a good idea to speak to your credit card providers to discuss the possibility of them freezing the interest payments on your debt. By presenting them with a carefully constructed budget planner (which also includes all other loans, cards and unsecured commitments) you can make a strong case to the provider and negotiate a payment regime that suits your budget.

Many people find their minimum payment is only slightly higher than their monthly interest costs meaning it would take years to repay the debt. By negotiating payment terms with the card providers it is possible to ensure that the capital is repaid much more quickly.

Formal solutions

If you simply cannot manage the level of credit card debt after taking the steps above it may be necessary to consider a more formal solution to your debt problem. This might take the form of an Individual Voluntary Arrangement (IVA) or even bankruptcy. In these situations it is vital that you seek professional advice from an insolvency practitioner or turnaround consultant in order that you can determine exactly the right option for you. ]]> http://articles.mychoicedeals.com/finance/debt/precious-metals-experts-bring-new-level-of-professionalism-to-cash-for-gold-industry.html http://articles.mychoicedeals.com/finance/debt/precious-metals-experts-bring-new-level-of-professionalism-to-cash-for-gold-industry.html Mon, 07 Sep 2009 21:53:07 -0500
Walt Luhrman states, "Selling unwanted jewelry and other precious metals can be a sensible economic decision. But consumers need to know they are receiving fair compensation based on the best technology and sound processes. That is the basic idea behind Walt Knows Gold."

At Walt Knows Gold, consumers can send in their unwanted gold and jewelry using a free FedEx label provided at WaltKnowsGold.com or by requesting a secure envelope for shipment. For your piece of mind, your items are insured by FedEx. Once received, Walt Knows Gold uses state-of-the-art x-ray technology to evaluate the gold or platinum and to provide a fair-value offer to the consumer. Walt Knows Gold also guarantees that it will exceed the offer of any other nationally advertised cash-for-gold provider by 25%.

Luhrman added, "Technology, experience and transparent, consumer-oriented service are what set us apart. We can guarantee higher payments to consumers because we are not trying to take advantage of anyone - we are simply trying to create a win-win scenario where consumers get value for their unwanted possessions, and we can unlock the intrinsic value of the metals themselves."

Mr. Luhrman brings over 35 years of experience to the enterprise, having founded Ohio Precious Metals Inc (OPM), which has become one of the largest gold and silver refiners in the United States. The Walt Knows Gold company has been evaluated by former Director of the US Mint and Supervisor of Ft. Knox, Jay Johnson, who commented, "My wife and I decided to sell some of our old gold and jewelry, so we sent it to Walt, because Walt Knows Gold. We were very pleased with the results. We got a check back in a few days, and it was for more than we thought. I know Walt, and Walt Knows Gold."
]]> http://articles.mychoicedeals.com/finance/debt/individual-voluntary-arrangements.html http://articles.mychoicedeals.com/finance/debt/individual-voluntary-arrangements.html Thu, 03 Sep 2009 17:21:25 -0500 IVAs find them to be quite flexible and less restricting than some other extreme options of getting debt help, such as bankruptcy. It is quite simple to begin the IVA process.

Prior to seeking an IVA, time should be spent organizing and obtaining your financial documents. These could include taxes, bank statements, pay stubs and the like. You will need to submit these along with your application. Complete the application and turn it in along with the requested documentation. After the information is received, a consultant will contact the consumer who submitted the application. The consultant will then determine the eligibility of the consumer for the IVA. This information will be relayed to the consumer by the consultant. Once eligibility has been determined, the consumer must secure the services of an insolvency practitioner, who will guide you through the IVA process. Your creditors will be notified of this, typically by the insolvency practitioner. The purpose of this notification signals your creditors that any legal action on their part cannot be commenced.

A meeting between your creditors and your representative, the insolvency practitioner, is arranged. The purpose of this meeting is to officially present the IVA that was drawn up by the consumer. The IVA document is a proposed plan for dealing with the debt. All of your creditors will be invited to the meeting. Some creditors may choose to not attend, while other creditors will send a representative. A vote is taken following the presentation of the individual voluntary arrangement. In order for the IVA to be approved, a certain percentage of creditors must agree. Creditors that hold a total of 75% of your debt must agree. If the proposed IVA does not obtain this percentage of votes, then it is not accepted. However, if the votes obtained are adequate then the IVA is approved and becomes legally binding. No long can your creditor legally contact you regarding your debts. All you must do now, is make your monthly payment as outlined in the IVA. ]]> http://articles.mychoicedeals.com/finance/debt/emotional-response-than-that-of-and-%23145%3Bbankruptcy.html http://articles.mychoicedeals.com/finance/debt/emotional-response-than-that-of-and-%23145%3Bbankruptcy.html Tue, 01 Sep 2009 06:52:55 -0500
Bankruptcy carries with it subtle and not so subtle connotations of personal failure and a loss of hope. As much as the notion of bankruptcy denotes a financial and legal situation, it is also has a strong underlying social (and some even feel a moral) meaning for many.

Financially speaking, bankruptcy protects individuals from collection and legal action by creditors and eliminates debts which are unsecured. As a consequence however, its effect on one’s credit rating is total and it can put many unprotected assets in the hands of a trustee. The considerable emotional and psychological stress and guilt the notion of bankruptcy carries is often as harsh as the financial ramifications that result.

The term unfairly and severely burdens many of the tens of thousands of individuals in North America who are forced into bankruptcy each and every year. Even those incredibly conservative with their spending habits can find themselves in danger of personal bankruptcy. One of the most common causes of bankruptcy is divorce.

The legal expenses associated with a messy divorce, especially when the custody of children is in dispute, can skyrocket far beyond what the total assets and incomes of the divorcing parties can manage. Unexpected health care costs can also put formally solvent and financially healthy families deep into a debt level they simply cannot get out of. Students who are burdened with large tuition and educational expenses, coupled with insanely high interest charges, often see no other recourse that to seek bankruptcy protection. As economic times worsen like they are now, and as more organizations tighten their belts and seek to cut costs by trimming staff, unemployment rates rise. That leaves many hardworking people, without the income needed to pay their bills and meet their financial obligations.

Recessionary times often put dedicated, hardworking people and families in situations where personal bankruptcy is the only option. It is amazing how quickly one’s savings can dwindle a steady paycheck no longer can be counted on to pay the bills. The fact that well-intentioned people often find themselves facing the emotional burdens carried by bankruptcy and the social stigma associated with it is unwarranted and counterproductive. The financial impact of bankruptcy is a heavy-enough burden in and of itself. It is possible to comeback from the financial abyss of bankruptcy, but the journey does not have to be full of intense guilt and shame. ]]> http://articles.mychoicedeals.com/finance/debt/another-option-for-debt-relief-orders.html http://articles.mychoicedeals.com/finance/debt/another-option-for-debt-relief-orders.html Mon, 31 Aug 2009 21:43:03 -0500
There are many advantages to obtaining a debt relief order. The document protects from debtor from any further legal action on the part of their creditors. Typically, a debt relief order lasts for only one year. Following this time period, the debtor is resolved of all of their debts. This is a quick solution as it only involves one year.

There are some obligations that debtors have when seeking a debt relief order. During the time period of the debt relief order, should the debtor's financial situation improve significantly, such as in a situation of obtaining a windfall, they must report this change. The debtor is then responsible for replaying their debts.

Other actions on the part of the debtor could possibly cause the debt relief order to be revoked. Being uncooperative when asked to produce financial records to the official receiver is just cause to revoke the debt relief order. Also, proof of selling off assets at significantly reduced prices is another cause for revocation. This would mean that you might sell off valuable assets to friends or family for the low sum of one pound in order to essentially hide your assets so you can qualify for a debt relief order. After all, to qualify for a debt relief order your assets can not exceed a designated amount. Also, amassing debt prior to the application of the debt relief order can be cause for revocation. This is viewed as intentional as a way in which to profit from the debt relief order.

Also, during the duration of the debt relief order, any type of actions occurring that feature frivolous spending or involve large sums of money can be suspect. After all, by filing a debt relief order, you are declaring that you cannot make payments on your debt. These might include gambling or large pension contributions. ]]> http://articles.mychoicedeals.com/finance/debt/qualifying-for-a-debt-relief-order.html http://articles.mychoicedeals.com/finance/debt/qualifying-for-a-debt-relief-order.html Mon, 31 Aug 2009 21:30:01 -0500
Recently the British government created debt relief orders as a new type of bankruptcy. The intent of this creation was to provide another option for those debtors that do not have much income or assets. There are certain criteria that a debtor must meet in order to qualify for a debt relief order.

First and foremost, the debtor must have assets amount to less than 300 pounds. They cannot also be a homeowner. They are able to retain their car so long as it is valued below 1000 pounds. They must make little income, totalling below 50 pounds each month after normal household expenses are subtracted from it. For the debtor to apply, they must find themselves in a situation where they cannot repay their debts. There are also limitations placed upon the amount of debt they may carry. Persons who have more than 15,000 pounds in unsecured debt are not eligible for a debt relief order.

Debtors seeking debt relief orders also must not have other effective debt remedies in the works or occurring soon prior to their seeking a debt relief order. For example, if the debtor seeks a debt relief order they must not have obtained one during the six years before this. Additionally, the debtor cannot be partaking in another remedy when seeking a debt relief order. This would include a bankruptcy, individual voluntary arrangement or other measures. And of course, the debtor must be a resident of the United Kingdom in order to seek a debt relief order.

With the strict qualification criteria, many suggest that the actual number of debtors that can be assisted with a debt relief order is quite small. The original intent of the debt relief order creation was to provide a quick and simple solution to dealing with cumbersome debt. Also, this measure was designed to be less expensive than other options to aid low income groups. Typically, the debtor only pays 90 pounds for the entire process. The debt relief order can be filed without the involvement of the courts, another manner in which this is a cheaper alternative.
]]> http://articles.mychoicedeals.com/finance/debt/credit-relief-proven-methods-to-eliminate-debt.html http://articles.mychoicedeals.com/finance/debt/credit-relief-proven-methods-to-eliminate-debt.html Sat, 29 Aug 2009 07:47:36 -0500
In many cases people really don't know what their options are. When we talk about seeking credit relief we can basically break it down into the most popular forms which are credit counseling and debt consolidation (the two terms have basically become synonymous) and debt settlement. Let us take a closer look at these two forms of credit relief down further as we explain how they work.

A person who seeks credit counseling and debt consolidation will find a company who can negotiate with creditors on their behalf. In doing so they may be able to get the creditor to lower the interest rate on the balance owed. This helps to keep monthly payments more manageable and prevents the debt from growing more rapidly than the individual can manage. The credit counseling agency often sets up a payment plan as well so that the individual can make one monthly payment rather than multiple.

This option will usually take 4 to 5 years to completely pay off the debt depending on how much the individual can afford to pay each month. There may be some negative marks on the credit history of the consumer but they will be erased in short time. The credit reporting agencies see that the individual is working with the creditors that they owe in a responsible manner and therefore do not levy any serious negative marks on their credit history.

Debt settlement however, works in a completely different manner. With debt settlement the borrower agrees to pay a percentage of the total amount that is owed to the lender and the remainder of the amount is forgiven. So for instance, if you owe $30,000 to a creditor that you can no longer afford to repay it is possible to negotiate that amount down to $20,000.

The reason that a lender or creditor would accept debt settlement as a debt solution is because they realize in many cases that getting something is better than getting nothing. Oftentimes finding effective debt solutions will keep an individual from filing for bankruptcy or defaulting on the money that they owe. Debt settlement will however negatively impact your credit rating and will remain as a negative mark on your credit history for many years to come.

In either case when seeking debt solutions be sure that you thoroughly check into the companies that you are considering doing business with. You can begin your search on the Internet and contact the companies that you feel may be a good fit for your financial situation. Write down any questions you may have in advance so that you will not forget to ask them. If you feel that your questions are not being answered fully or that the company is not completely forthcoming then eliminate that company from consideration.

You will then want to inquire with the Better Business Bureau (BBB) and other consumer protection organizations to make sure that the company has no outstanding complaints against it and that it is indeed a reputable organization. Credit relief is within your reach so by all means become proactive and seek out the best solutions available to you to help you become debt free. ]]> http://articles.mychoicedeals.com/finance/debt/uk-government-allows-you-to-write-off-up-to-and-%23163%3B15-000-of-debts-under-new-law-dro.html http://articles.mychoicedeals.com/finance/debt/uk-government-allows-you-to-write-off-up-to-and-%23163%3B15-000-of-debts-under-new-law-dro.html Mon, 24 Aug 2009 21:02:04 -0500
Debt Relief Orders (DROs) were introduced by the Government in their 2007 Tribunals Courts and Enforcements Act and they came into existence on 6th April 2009. They are designed to provide an alternative to formal bankruptcy or an Individual Voluntary Arrangement (IVA) and are a cheaper and easier alternative to formal court proceedings.

What is a DRO?

A DRO is a new alternative to an IVA or bankruptcy for people unable to pay their debts. As it costs just £90 it is also significantly cheaper than these other options. A DRO is issued by the Insolvency Service and is designed to "fast-track" the less complicated debt cases through the court system without the need for an individual to personally appear in court.

Who is eligible for a DRO?

DROs are aimed at the least complicated, smaller debt cases. Applicants for a DRO must have less than £15,000 of unsecured debt (credit cards, loans or overdrafts or debts relating to rent, council tax or other utilities) and have assets of under £300. This means that homeowners will be ineligible, as will anyone who owns a vehicle worth more than £1,000 (unless it has been specifically adapted for a physical disability).

Anyone applying for a DRO must also have less than £50 per month surplus disposable income after all their household expenses have been paid.

DROs are designed to be suitable for people with little surplus income and relatively low debt liabilities but who are unable to pay these debts off in a reasonable time.

Anyone who is already involved in court proceedings for an IVA or bankruptcy is ineligible for a DRO even if such an Order has not yet been forthcoming. Anyone who has had a DRO in the previous six years is also ineligible.

How do I obtain a DRO?

Moe Nawaz a turnaround consultant explains how to apply for a DRO, first you must speak to an authorised intermediary. This is likely to be a registered insolvency practitioner, turnaround consultant or debt counsellor who has been authorised to deal with DRO applications. These can be found through your local Citizen's Advice Bureau or online through the Insolvency service.

Once the advisor has helped you establish eligibility for a DRO an application must be made online and the £90 charge must be paid. This fee can be paid in six monthly instalments if required.
The Official Receiver then determines whether all the conditions of the DRO have been met and if so a DRO is issued. The Official Receiver may also ask for any additional information they deem necessary to make a decision on your application.

What does a DRO do?

Once a DRO has been granted you are protected from enforcement by the creditors involved and you no longer have to deal with them directly. During the period of the DRO (ordinarily twelve months) you do not have to make any payments towards these debts, although you will be expected to continue paying your rent and other household expenses (plus any debts not included in the DRO). You will also expect to have to contribute something towards the debts if your financial circumstances improve significantly during the DRO period.
You should remember that as with other debt relief solutions a DRO will remain on your credit file for six years and so will impact on your ability to obtain credit in the future.

Whilst not suitable for everyone (particularly anyone who owns their own home or has any significant assets) a Debt Relief Order is another useful method for dealing with debt issues. As there are now several options available it is important to obtain specialist advice from an insolvency practitioner or other debt specialist to determine which is the most appropriate path for you.

Kiran Mistry (Insolvency Practitioner)
Moe Nawaz (Turnaround Consultant)

Kiran Mistry and Moe Nawaz have a combined experience of over 30 years in the Insolvency and Turnaround business. They have helped and advised 10,000's of business owners in the UK.
]]> http://articles.mychoicedeals.com/finance/debt/manage-your-debts-with-care-to-avoid-bankruptcy.html http://articles.mychoicedeals.com/finance/debt/manage-your-debts-with-care-to-avoid-bankruptcy.html Sun, 23 Aug 2009 03:11:25 -0500
Put simply, debt consolidation involves replacing a number of smaller debts at varying rates and conditions with one single 'super' debt at a single (often lower) interest rate and set of conditions. For some people, consolidating debt may be a good thing - for other people it may be bad. Most of us are swamped with bills like credit cards and auto loans, so we're turning to debt consolidation services to help us regain control of our finances. And it's a good idea; since some debt consolidation services can also help you lower your interest rates and monthly payments.

Non profit debt consolidation programs can save you thousands of dollars in fees! You may not have heard much about these programs but there are legitimate non profit professionals who are passionate about helping you get out of debt. Good debt consolidation companies make money not through charging its customers monthly fees, but through kickbacks from the creditors (10% to 15%). This means that for every $100 that a creditor receives, $10 to $15 will be rebated back to the debt consolidator as profit. The professionals in this organisation will do all the debt consolidation work on behalf of the client. The client has to pay just a small amount as fee.

If you find yourself confused by what you've read about debt collections to this point, don't despair. Everything should be crystal clear by the time you finish.

This is true not only for a credit card debt consolidation company but for several other companies offering debt help in different forms. It may be debt settlement or debt management, etc. They provide debt consolidation loan at extremely low interest rates and flexible monthly repayment schedules. Their aim is to educate you on your ways to get rid of your debt. This is the reason why it is such a beneficial solution to think about debt consolidation.

Many companies offer debt consolidation for you, but none of them is as good as 3debtconsolidation.com. They will help you to solve your problem for sure. Many of the services for debt consolidation claim the process is simple and free of stress. However, it is frustrating since you must be organized to get the help you need. Debt counselling programs include free credit and debt counselling, certified counsellors and even debt consolidation services. You just have to know where to and what to search for.

The service of this is site is to handle all of your debt plus to give you the exact information on bill consolidation then it will provide you with debt consolidation programs. In this case, consider what debt consolidation can offer you. Before your debt gets out of hand, consider talking to your lenders about the process of debt consolidation - reducing all your debts into a single monthly payment. Standard scheme by debt consolidation services is to take your money, put it in escrow and not make payments. Then you get default notices and say what is going on and you call company.

The day will come when you can use something you read about here to have a beneficial impact. Then you'll be glad you took the time to learn more about debt collections. ]]> http://articles.mychoicedeals.com/finance/debt/proven-advice-to-freeze-your-interest-rates-and-reduce-your-monthly-payments-from-the-experts.html http://articles.mychoicedeals.com/finance/debt/proven-advice-to-freeze-your-interest-rates-and-reduce-your-monthly-payments-from-the-experts.html Wed, 19 Aug 2009 21:48:00 -0500
What is "debt management"?

Debt Management Plans are arranged by specialist debt management companies in order to agree reduced repayment terms with your creditors. Debt management companies agree reduced monthly repayments with your creditors on your behalf as well as negotiating with creditors to freeze the interest on your debts.
The idea is that a structured repayment plan is put into place that is both affordable to you on a monthly basis and agreeable to your creditors. You typically have to have at least two creditors and over £1,000 worth of debt to apply.

How can it help me?

There are many advantages to arranging a debt management plan through a debt management company. The first is that it simplifies your monthly commitments and removes the need for you to deal with each individual creditor. The debt management company will arrange for one affordable monthly payment to be made directly to them and they deal with all your various creditors on your behalf by allocating your monthly payment fairly between them. These monthly payments can also be altered quickly as and when your circumstances change.

Another main advantage of debt management is that it avoids the need for court action. Once a plan is in force it may stop the need for creditors to lodge "county court judgements" for unpaid debts and it also means that you do not have to obtain either an Individual Voluntary Arrangement or bankruptcy order through the courts.

What else should I know?

One of the main criticisms levelled at debt management plans is that they can run for long periods meaning it may be some years before you are fully out of debt. The interest payments on such plans can also be quite high meaning that the debts may not be repaid as quickly as through other methods.

Debt management plans are also not legally binding and so it is therefore possible for a creditor to change their mind and back out of an agreement at any time. It is rare that this happens however as most companies realise that professional debt management plans are affordable, realistic and sustainable.

Other disadvantages

When considering approaching a debt management company to discuss a repayment plan, be aware of the fee structure of the companies you are approaching. Many debt management companies charge an administration fee of between 10% and 18% of your monthly repayment although some aim to reclaim these fees from the creditors. There are organisations and charities that offer free debt management facilities so you must carefully research the options available to find the most appropriate scheme for you.

Moe Nawaz a leading business turnaround consultant view on is that, If you are struggling to keep up your repayments on loans or other debts there are many different options available to you. By speaking to a debt management professional or a Insolvency Practitioner it may be possible to agree an affordable monthly repayment plan with your creditors rather than having to suffer through court proceedings to tackle your debt issues.

Kiran Mistry (Insolvency Practitioner)
Moe Nawaz (Turnaround Consultant)
Kiran Mistry and Moe Nawaz have a combined experience of over 30 years in the Insolvency and Turnaround business. They have helped and advised 10,000's of business owners in the UK.
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