Max Fay is an entrepreneurial Millennial whose thoughtful writing shows he has a keen eye on both. Max has a genetic predisposition to being tight with his money and free with financial advice. At 25, he not only knows what an “emergency fund” is, he already has one. He wrote high school and college sports for every major newspaper in Florida while working his way through Florida State University. That experience was motivation to find another way to succeed financially and he has at Debt.org. Max can be reached at email@example.com.
Tip: If you are having trouble making payments on your debts, a credit counselor may be able to help you with advice or by organizing a “debt management plan” for all your debts. Typically, under a debt management plan you make a single payment to the credit counseling organization each month or pay period and the credit counseling organization makes monthly payments to each of your creditors. Under debt management plans, credit counselors usually do not negotiate any reduction in the amounts you owe–instead, they can lower your overall monthly payment. They do so by negotiating extensions of the periods over which you can repay a loan and by asking creditors to lower the interest rates and waive certain fees.
Finally, if you or the credit counseling agency fail to make payments on time under the debt management plan, those late or missed payments will appear on your credit report. Because your DMP can cover many debts, one late payment to the credit counseling agency may be reflected as a late payment for each account that is part of the DMP on your credit report. A late payment will also harm your credit scores.
Student loans:The federal government and private lenders issue loans to cover education costs. Federal student loans generally have a low interest rate and important borrower protections. Working in a qualifying public-service job entitles you to loan forgiveness after 120 on-time payments. Income-based payment plans also cap payments and allow a portion of your loan to be forgiven. While private student loans don't come with all these protections, rates may still be relatively low. And if your income is below $80,000 as a single or $165,000 if married filing jointly, you can deduct up to $2,500 in student loan interest from your taxes. Because of these perks, you may not want to pay off student debt early.
We value transparency in a debt settlement company, and National Debt Relief was one of the most forthcoming with information. When we spoke on the phone with a customer service rep, they explained the program in detail, spelling out the benefits and drawbacks and offering recommendations on alternatives. They were quick to respond to our follow-ups and provided some of their onboarding information for us to look over.
Under a DMP plan, the consumer deposits money each month into an account within the credit counseling organization. The organization then uses the funds to pay the unsecured debt, such as credit card bills, student loans, and medical bills. Paying off of debt follows a payment schedule the counselor and consumer develops. Often creditors will need to agree to the scheduled repayment plan. Creditors may decide to lower interest rates or waive fees. A successful DMP requires regular, timely payments. It may take 48 months or more to complete a debt management plan.
Debt Settlement is making a deal with creditors to pay less than the total balance owed. As attractive as that sounds, there are some severe penalties, notably to your credit score and tax liabilities. Debt settlement costs include attorney fees (typically 10-20% of amount settled) and taxes owed on forgiven debt. Debt settlement negatively impacts credit for several years.
I’m also going to start back up my college business. I ran a small business in college that brought in a couple hundred dollars a month. Although in college I did it by travelling, I could provide similar resources and work via a web site. I only work 14 days a month at my job, so I know I have time to build this and work towards it. Hopefully it can generate an additional $500 per month for me as well which will greatly help!
In my debt relief practice I am coming across more and more consumers who have used National Debt Relief to help them manage their debts and negotiate settlements on their behalf, only to regret the decision to sign up with National Debt Relief at a later date. With that said National Debt Relief is licensed in the State of Washington and appears to be complying with the Washington Debt Adjusters Act under RCW 18.28 which requires debt adjustors to charge no up front fee’s and limit their fees to 15% of the total debt listed on the signed contract which includes payments for any third party trust accounts used for holding client funds and making disbursements. If a consumer decides to cancel services with National Debt relief and debts are not settled, any funds in a third party trust account must be refunded. Consumers should know that attorneys such as Symmes Law Group, PLLC are exempt from the Washington Debt Adjustors Act and do not need to meet its requirements as attorneys are not considered debt adjustors.
InCharge Debt Solutions boasts one of the most polished websites of the companies I evaluated. The company’s debt management FAQs and financial education resources are very thorough. They are clear about fees ($50 to enroll and $49 monthly). They are also among the few companies that give you an idea of how much your interest rates might drop under a debt management plan (6% to 9%). InCharge is accredited by the BBB with A+ rating; other certifications include the NFCC and COA.
Consumers with multiple sources of debt – credit cards, mortgage, student loans, etc. – often try and address each one every month. Bad move! Remedy: Go back to your budget, trim spending to bare bones on everything but essentials, and create a $100 (or preferably $1,000) surplus that goes directly at the credit card with the highest interest rate. When that’s paid off, go after the card with the next highest interest rate and keep going until all credit card debt is eliminated.
Try to put some money down on your higher interest student loans. The way I paid off my bachelor loans was whenever i got a refund back from the college or from taxes a portion of that went to the student loans. The more you tackle your higher interest loans the better your credit. Now if you have like tiny ones like 1,000 try paying those off if your not financially ready to tackle the bigger interest rates ones.
Accept a plan only if you can fulfill your requirements. If you can't make the monthly payment the program requires, don't enroll. Ask if they can get it any lower, contact your creditors yourself, and/or check with another debt management agency. Again, be aware that many debt management plans require you to avoid taking on any additional debt or at least any additional revolving credit debt (i.e. credit cards, store charge accounts). Understand the terms and conditions, and make sure you can follow through on them.
Bankruptcy: While National Debt Relief can’t actually file bankruptcy for you, it can help you through the steps you will need to take in order to file for bankruptcy. The first step is a detailed explanation of what bankruptcy is and if you should even consider filing for it. This information is all offered free on the National Debt Relief website before you even sign up. The next step is walking you through the procedure of filing for bankruptcy, which National Debt Relief has a lot of experience doing.
Chapter 7 bankruptcy allows you to discharge most debts, which means the debt disappears after bankruptcy proceedings. But there are strict income limits to be eligible -- generally your income must be below the median in your state -- and you might have to turn over some of assets to be sold so proceeds can be used to repay creditors. Your house, a very low-value automobile, and tools used for business are usually exempt from being sold.
American Consumer Credit Counseling (ACCC) is a non profit credit counseling agency offering services such as debt advice, debt consolidation programs, and consumer bankruptcy counseling. We have provided thousands of families with financial counseling and helped them with consolidating bills and paying off credit cards. For consumers in need of bankruptcy counseling, ACCC is approved by the Department of Justice to provide both pre bankruptcy credit counseling and post-bankruptcy debtor education.
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