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Debt Settlement Programs vs. Debt Counseling Programs

For many people, even those who are not currently in serious debt, the thought of not being financially stable is nearly debilitating. Along with putting a dampening mood on your outlook for the future, it also just seems confusing with so many debt relief options available. Many people get stuck between two popular options — debt settlement vs debt counseling. Both have their list of benefits for different people, and Liberty Debt Relief wants to make sure that you pick the choice that is right for your situation. Find out if you should choose debt settlement or debt counseling below.

Debt Counseling

It is easy to see why people want as much guidance as possible when it comes to handling their finances. Between understanding the various interest rates and fees, understanding how to work with multiple lenders simultaneously, and knowing how to effectively manage your income and expenses, it can be extremely stressful, especially if your experience is limited. Debt counseling is a good choice if you believe that you need some additional advice. Program counselors will help you outline exactly what you can implement in your life to try and help you stay out of debt for the long haul.

With a debt counseling program, you can receive specific information regarding your budget so that you can not only address your current financial situation but also plan for the future. Under this program, also known as a debt management plan, you can also seek consolidated loans or other forms of debt relief.

Working with this instead of a debt settlement program, however, is essentially working within an educational seminar. Many credit counseling companies are nonprofits that provide free information regarding getting out of debt but do not actually take any active steps to help you eliminate the debt you are concerned about. Rather than working on your behalf to settle accounts you owe money to, reduce interest rates and fees, or consolidate multiple debts, they simply teach you daily, weekly and monthly tasks that can help prevent debt in the future.

Debt Settlement

While some people prefer more structured guidance with debt counseling, the truth is that debt settlement programs are often the most cost-effective and helpful option. At the end of the day, debt counseling puts the actual process of short term debt relief completely in the hands of the customer. Debt settlement, on the other hand, allows you to adopt a solution that works in the long term while also inadvertently teaching you how to better manage your finances in the future.

The beauty of debt settlement is also that you can actually lower the amount of unsecured debt you owe, which is usually the most pressing part of any debt relief program. With debt settlement, a debt relief consultant with years of experience will work with you one on one to come up with a plan that you can afford and that actually benefits you financially for the years to come. After meeting with you to understand the state of your finances, they will allow you to take a step back from the debt relief process and work on your behalf to contact lenders and banks.

Debt counseling specialists, however, do not negotiate a lower overall payment amount with your lenders. At most, they will convince your lenders to extend your repayment period. While this may not lower your monthly payment, it adds more money to your total debt. If they extend your repayment period from three years to five years, for example, you have an additional 24 months of compounded interest on your loan, which can actually be several more thousands in debt. Essentially, if you are looking to actively reduce your current outstanding balances, debt settlement may be the best choice vs debt counseling.

Take Action Now

Implementing healthy financial tasks into your everyday life is a great way to create a secure a sustainable future for you and your family. While this sustainability is crucial, there is no way to prevent debt if you are already buried within it. When it comes to choosing debt settlement vs debt counseling, the best thing you can do if you are struggling financially is to get started with a settlement program. Liberty Debt Relief will not only help you lower your outstanding balance, waive fees, and reduce your interest rate, but will make sure that you can restart your financial well-being with the essential skills for success. Call us today to find out how you can abolish your existing debts with a debt settlement program and get started on your way to a successful future of wealth, health, and happiness.

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Buying Assets After Receiving Personal Loans For Debt Consolidation

Overwhelmed by debt? Looking for a long-term solution? For those with good credit, personal debt consolidation loans could be excellent options. But what does debt consolidation mean and how does it affect your purchasing power? If you want debt consolidation advice, Liberty Debt Relief is here to break it down for you. Read this before attempting to buy a home or make any other large purchase after debt consolidation.

What is Debt Consolidation?

This type of loan typically offers a lower interest rate and a single monthly payment to combine several unsecured debts, such as payday loans, credit cards, or medical bills. They are often a great option for those with good credit but a few high-interest loans. Just to reiterate, in order for this method to be effective, the new loan would have to offer better terms than the previous loans.

Debt consolidation offers numerous benefits. First, a they could provide a lower interest rate than your current credit card debt. Second, a simplified payment structure because you are now making one payment instead of keeping track of several payments. Debt consolidation can also allow you to stretch out payments over a longer period of time, providing relief in your monthly obligation. But, beware, stretching out the loan term could lead you to pay more over the life of the loan, even with a lower interest loan. Be sure to compare total payoff amounts for all of your debts and compare them to the consolidated options before making a decision. If your goal is to get out of debt as quickly as possible and at the lowest cost, a personal loan for debt consolidation may or may not be the answer.

What Happens After Debt Consolidation?

When consolidating debt, the best option is the one that does the least damage to your credit rating while providing genuine financial relief. Your purchasing power after debt consolidation depends on several factors, including your credit score before you started the process and your performance on the new loan. If your score is already low, taking out a loan to refinance others might damage your credit further, making it more difficult to obtain financing for a home, car, or investment afterwards.

However, if your credit is strong before consolidation, your purchasing power may not be significantly affected. As with all loans, your ability to make on-time payments on your new, consolidated loan will certainly affect your credit. It’s important to remain in good standing on all your loans to avoid negative credit impact.

Things to Consider

Whether or not you’ve recently used personal loans for debt consolidation, there are several factors to consider:

Do I Need to Make this Purchase?

Sounds pretty simplistic but this is a pretty big deal. Whether it’s a house, car, or any other asset, you should be honest with yourself about whether it’s in your best interests to purchase this “asset.” In the months following debt consolidation, it might be more prudent to focus on paying off existing debt rather than accumulating more debt. If you’ve recently used personal loans for debt consolidation, that might indicate a less-than-stellar financial situation. Adding debt can severely affect your daily life, making it more difficult to pay off in the long run.

What can I really Afford?

This is a question many potential asset-buyers struggle with. Your dream home, stock, business, or vehicle may or may not be comfortably within your reach, but being honest about your financial position is critical to making the choice that’s best for you. Large purchases can quickly become financial burdens if you do not have the means to maintain them. You might consider finding a personal financial advisor to help you really figure out your financial health and make sense of the dollars and cents.

What’s My Credit Score?

This pesky little number will determine how much banks are willing to lend you and at what interest rate. If your credit score is so low that you are facing low borrowing power and extremely high interest rates, it may not be the time to make that purchase.

What is the True Cost?

Often times, purchasing an asset comes with expenses in addition to the advertised price. Between taxes, fees, and insurance, the true cost can be tens of thousands of dollars more than the sticker price. Before jumping into a large financial obligation, take the time to figure out every single expense and whether or not you can truly afford this commitment.

Debt-to-Income Ratio

Banks or private lending companies often calculate the ratio of your monthly expenses to your monthly income to determine your ability to afford a loan. Keeping this number as low as possible will show them that you can comfortably afford to take on new debt.

Liberty Debt Relief

Need some more help understanding personal loans for debt consolidation? Still not sure what happens after debt consolidation? Contact Liberty Debt Relief for expert debt consolidation advice. We have the knowledge and experience to help you regain your financial freedom. Whether you are looking to negotiate a debt settlement or need a game plan for debt consolidation, Liberty Debt Relief can help you develop a customized financial plan to meet your exact needs and set you on the path to success.

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How Should I Budget Once I Get Debt Consolidation

Life After Credit Card Debt Relief

Getting out of debt is a process, but the moment you get approved for debt consolidation is the moment you take your first step toward a better financial future. As wonderful as this is for getting credit card debt relief, it is crucial to balance out your new plan with a budget. Doing so will make sure that you not only pay off your debts in a timely manner but will also ensure that you do not end up back in the same situation. Liberty Debt Relief is here to help you discover how to stick to a budget in a way that is easy to follow and that teaches important money management skills.

Choose Your Budgeting Method

Before you can begin planning your new budget, you need to figure out a system that will help you stay on track. After all, if you know you won’t follow your system, there is no way you will stay accountable. There are plenty of options to choose from to get this first step done, such as using an online program or creating a spreadsheet.

If you are looking to work with a credit counseling company, your financial advisor can help you determine what works best for you, or you can simply try out a few different methods to see what fits your lifestyle best. People who are new to budgeting and really are not too sure how they are going to stick to a budget may be better suited for a software program that will walk you through the steps and provide electronic reminders. Others, like experienced budgeters or even those who simply retain information better from writing it out, may do better with the pen and paper method.

Know Your Goals

No plan can be well developed without an objective in mind. With debt consolidation loans and credit cards, one of your primary goals should be to make your monthly payments in full and on time so you can be well on your way to debt relief. Other common objectives people have are to put more money into their savings account, invest more in the stock market, or even improve their credit score.

There are also short-term goals, such as getting ahead on your utility bills, getting a new laptop for graduate school, or maybe even planning a vacation. Once you know your long- and short-term goals, write them down, along with how much money is needed for each item and the time frame you have to collect the funds.

Understand Your Cash Flow

Now that you know what you want, you need to know what you have to get started. Take a look at your regular income and expenses, as well as any extra income or expenses you may encounter throughout your debt consolidation plan. Your income list should include your regular wages and/or salary, part-time work, and any bonuses you can expect, while your expense list should include your utility bills, rent, mortgage, food, gas, and, of course, your debt consolidation loan payment.

Pulling up your bank statements, credit card and loan statements, utility bills and pay stubs can help ensure that you get on the right track for debt relief at the start. All of these records are available for free, and, if you work with a debt relief counselor, bringing these documents to your meeting will ensure you get accurate information.

Determine the Essentials

The best way to effectively learn how to stick to a budget is by understanding what items in your life are essential. While your consolidation payment, utility bills, groceries, and gas are definitely crucial while you pay off your debts, more leisurely items are not. Many people find that they spend a lot more on these non-essential activities every month than they thought. Getting your nails done every few weeks, going to the movie theater regularly, eating out at restaurants, shopping sprees, and even choosing to grocery shop at artisanal stores rather than larger grocery chains can quickly add up.

While you are in the process of relieving debt, you will need to cut back. You do not have to necessarily cut them out completely, but limiting them will allow you to put more money towards paying off debts in a shorter amount of time. For instance, if you usually eat at a restaurant twice a week where you spend $30 each time, you can choose to only go to a restaurant twice a month. This simple change would save you $180 a month and you can allocate those funds toward your loan payment.

Keep Yourself Accountable

The most crucial aspect of seeking out credit card debt relief is keeping yourself accountable. In the end, your budget will not be helpful if you don’t stick to it. Working with a debt management counselor is a great way to accomplish this, as they can offer valuable tips and resources to make sure you stay on track every month.

Keeping yourself accountable also means rewarding yourself. Even though your budget may be tight, make sure to factor in treating yourself every so often. This could be through budgeting a night out every month or maybe even a vacation eight months after you start your debt consolidation plan. However you choose to do so, just make sure that you factor these rewards with income funds, not with credit card funds, so you don’t get yourself in more debt.

Where There’s a Will, There’s a Way

Budgeting is an important step in getting out of credit card debt and getting the financial relief you deserve. Liberty Debt Relief can provide you with more advice on these topics, as well as debt settlement services that could significantly help your financial situation. Contact us today to get started working toward your goals.

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Reasons You May Get Turned Down For Debt Consolidation

Debt Consolidation Options

With lower interest, a single monthly payment, and no immediate ding on your credit score, it is definitely no mystery why people can’t resist applying for a debt consolidation loan. The problem is, however, that a solution with high benefits also has high expectations for borrowers. If you are one of the millions of people denied a consolidation loan, there may still be options, such as debt settlement. While every situation is different, Liberty Debt Relief has narrowed down the most common reasons people may not qualify for such a loan.

Lack of Security

A potential pitfall for people looking into a debt consolidation loan with some banks or credit unions is the possible collateral requirement. Even if the debts you are looking to consolidate are all unsecured — meaning that you did not have to put forth any collateral when you signed up for them — a secured debt consolidation loan requires you to do so.

Most people in excessive debt do not have collateral to offer, but lenders want some kind of insurance that your debt to them will get paid in some way, shape, or form. The offered collateral is usually a car, investments, or some other large financial asset that the lender can cash in if you fail to make your payments. It is also a significant factor in the significantly lower interest rate that collateral loans offer.

Of course, there are plenty of companies out there that offer unsecured debt consolidation options, so it may benefit you to check these out before moving away from this solution. Reach out to Liberty Debt Relief for clear advice today!

Low Credit Score

It is possible to have a good credit score while being in debt. Not being able to do so, however, is a big reason why a lot of people can’t instantly get a debt consolidation loan. Your score is comprised of multiple money management factors, including how often you meet your monthly payments, how often you utilize your current accounts, the time you have held your accounts, and your debt-to-income ratio, all of which lending companies use to determine your ultimate financial value. Having a lower credit score leads companies to believe that you cannot handle your debt and, in turn, makes you a liability as a borrower.

To keep a high credit score and benefit from debt consolidation options, make all of your monthly payments and continue to use your credit cards for small purchases you can afford. For example, use it to pay for groceries and gas, and then simply put the money you would normally use toward those purchases on your card. You can also look for additional income opportunities, such as freelancing or selling miscellaneous items from your home to get additional funds that you can apply to your current debts.

If your score is low because of an error or unfair mark on your credit report, you can seek credit repair assistance. This service includes collecting proof that supports your claim and speaking to creditors on your behalf in order to get them to remove mistakes. It is especially beneficial in situations of identity theft, incorrect late payment marks, and even debt that appears on your report more than once under various creditors due to your debt changing hands.

You Don’t Earn Enough Money

While not all debt relief options have an income requirement, debt some consolidation loans do. The reason lenders do this is so that you can pay off the cost of the loan in a certain amount of time, usually between three to five years. If you cannot prove an income that would allow you to make a payment every month after accounting for your other expenses, including rent, mortgage, insurances, car payments and more, then you likely will not qualify for the consolidation loan.

Luckily, there are plenty of other options that do not require a certain income level. A settlement, for example, can help you negotiate your debt so you pay less than what you originally owed. This can be very beneficial for those who sometimes struggle to make monthly payments.

There is Too Much Debt

Some people simply have too much debt for a consolidation loan to work effectively. This debt relief option is best suited for those who have unsecured debt that is less than 50 percent of their income. That ratio ensures you will be able to afford the lender’s payment guidelines and avoid owing excessive interest or fees. If you do not earn enough of a regular income to make the large payments for a new debt consolidation loan, then it is best to look for other options.

The Solution is out There

Understanding why you can’t simply get a debt consolidation loan right away is important in moving forward with your financial goals. While it may be disheartening at first, consolidation loans are not your only option. Talk to Liberty Debt Relief to find out how we can help you take the next step to eliminate your debt without more loans.

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Debt Management Vs. Debt Consolidation: Which One Is Best For Me?

Getting into debt is easy, but getting out of debt usually takes more effort. If you find yourself in a situation where you need a debt management solution, you will need to do some research to find out how to make the best plan of financial attack. While there are dozens of options available, many people narrow it down to only two, debt management and debt consolidation. By understanding the differences between these two options, Liberty Debt Relief can help you figure out what is the best debt relief option for your needs.

The Ins And Outs of Debt Management

The constant bombardment of credit card offers can be difficult to avoid and turn down, which is why millions of people end up in excessive credit card debt. For those who end up with multiple cards and seemingly endless repayments, a debt management plan may work for their situation.

Under this plan, borrowers can compile all of their credit card debts into a single sum that they make payments on every month. A plan usually takes up to five years and can eliminate a lot of the stress that accompanies being largely indebted to multiple companies. If you choose to work with an accredited debt relief company, the person you work with can oftentimes negotiate a lower amount owed on your individual accounts, have late and other types of fees waived, and can even lower the interest on the new debt account, saving you money in the long term.

To qualify for a debt management plan, you must be looking to rectify credit card debt, as this debt management solution cannot be used for private student loans, medical bills, utility bills, mortgages or other types of loans. Generally, using a debt management plan requires compiling unsecured collateral. There are really no other overall requirements for debt management plans, although borrowers considering one should note that it is crucial to make all debt management plan payments on time every month.

Contrary to what many believe, investing in this debt management solution also does temporarily lower your credit score. It is to be expected that your financial advisor will instruct you to stop using your credit cards and to not open any new accounts while you are committed to your debt management plan. This lack of revolving utilization will dampen your score throughout the plan’s duration, but in the end, you will be mostly, or completely in some cases, out of debt. Once the plan is over, you will be able to use your credit cards once again, and your score should be higher and safer in a short amount of time.

Deconstructing Debt Consolidation

Staying on top of dozens of bills, loan repayments, credit cards, and other types of debt can be very difficult to do. Sticking to repayment schedules is similar to time management and scheduling, and if either of those is something you struggle with, debt consolidation may be a good debt management solution to look into. What makes it one of the best debt relief options for so many people is that you can convert your multiple high-interest accounts into a single, low-interest account that has one due date every month, versus three or more.

When you work with a debt relief company to configure your debt consolidation, you will likely be faced with two options: One, to complete a balance transfer and put all of your outstanding debts onto a credit card; or two, get a loan to pay off all of your debts and then make payments only to the loan. With either of these options, you will have significantly lower interest and fees, but terms and conditions for these options will differ depending on your financial and credit situation.

Qualifying for this debt management solution is not necessarily difficult, but those who have good enough credit to qualify for a lower interest rate will benefit the most. For example, if you have a credit score of less than 650, you likely will not qualify for a loan or credit card that has an interest rate significantly lower than what you already have. If, however, you have a credit score of 700 or higher, you may be eligible for a credit card or loan with a lower rate, which could save you thousands of dollars in interest charges. Similar to debt management plans, it is also crucial to make sure you will be able to make your consolidation payments every month.

How to Choose Your Debt Management Solution

Knowing the differences between a debt management plan and debt consolidation is only one of the steps necessary in making the best decision for you. Look at how many credit accounts you have, the amount you owe for each, your interest rates, how often you are able to make the payments, what the minimum payments are, and all the other little details surrounding the accounts individually and as a whole. This is a lot of information to sift through, and if it seems like a little too much to come up with the right decision, Liberty Debt Relief is always available to help. Contact us today and we will get started on eliminating your debts and giving you the credit and future you deserve.

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What Are The Disadvantages of Debt Consolidation?

Debt Consolidation: Disadvantages

Many times, people are so relieved to find a solution to their debt problems that they focus on the positive aspects while ignoring or downplaying some of the potentially negative sides. To develop a comprehensive debt strategy, you will have to take a hard look at the advantages, but especially the disadvantages to see what makes sense for you. This is true when it comes to debt consolidation because this solution will have implications for your financial future and how you can manage your debt going forward. While debt consolidation may be a great debt relief option for some, there are disadvantages that need to be considered, including the following:

Debt is Not Paid Off

If you are having financial difficulties and can’t keep up with multiple payments, at least you can focus your efforts towards a single monthly payment with debt consolidation. Disadvantages include the fact that the full amount of your outstanding debt is still owed. The good news is, your interest rates will be lower, allowing you to put more towards the premium each month and to actually make headway with your payments.

Longer Repayment Period

When you consolidate your debt, remember that the full amount does not really change, it just gets stretched into smaller monthly payments. This longer repayment period is something to consider when developing a debt consolidation strategy, especially if you really planned on being debt free by a specific date.

Serious Penalties

There are hefty penalties when you miss payments for a debt consolidation loan. These can include very high late fees and penalties in addition to potentially losing any collateral (your home, car, or other asset) that you used to secure the loan. The penalty costs will add up, potentially causing you to pay more for your debt than you originally owed before entering into a debt consolidation program or loan agreement.

Gaining Control of Your Debt

While there are some disadvantages to debt consolidation, there are also many positive outcomes. Of course, a debt relief expert can help clarify exactly which solution will benefit you the most. You don’t have to live with debt forever. You don’t have to struggle to make ends meet every month. Take advantage of the tools available to help you gain control of your debt and start on the path to becoming debt free.

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