Choosing a debt management consultant is not as easy as it may seem. Unfortunately there are ruthless people who will take your money with a smile. These people have no morals and only care about fattening their wallet. They may position themselves as your friend, but they are a friend you don’t need.
The best way to get a person to help you with your debt problem is to get a referral from someone you trust. Perhaps you know someone who suffered from the burden of debt and has recovered. Maybe you could have a cup of coffee with them and discuss the experience they had with their consultant.
Beware of just picking someone randomly or from an ad on the internet. They may take all your credit information including your social security number and do unscrupulous things with the information. So instead of helping you with your debt they may in fact be hurting you. Be skeptical and ask for references. Then contact those references and ask them how their experience was.
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June 14th, 2007 | No comments
It’s hard to know exactly when you have a serious debt problem, but we will look at some situations that will clue you in to the fact that you do have a problem. First if the amount you have to pay for monthly minimum credit card payment is greater than 15% of your take home pay you have a serious problem. Second if you are delinquent in your revolving accounts this is a sign of a serious problem. If you have maxed out all of your credit card limits, this is a sign of a serious problem.
If you have indeed maxed out all of your credit limits it lowers your credit score, and in turn will increase the interest rates if you go to refinance your mortgage. If you take advances to pay off your credit card, this is a sign you have a serious debt problem. Every time you take a cash advance from one of your credit card companies you are charged a fee and the interest rate is usually astronomical You are essentially shifting your debt from one credit card company to the next. The unfortunate thing is the cycle is very hard to break.
You want to avoid the debt snowball effect where you keep transferring your expenses to the future by opening new credit card accounts, and taking advances from them to pay off your old account. At some point the amount of accounts you have open will be unmanageable. At this point even a debt management consultant may struggle to get you back to a successful financial path.
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October 24th, 2006 | No comments