If you have significant debt and are finding it difficult to reduce your financial burden, then negotiating with your creditors can help you manage your finances better. An important aspect in any plan involving financial management is working to lower your interest rates or even possibly having some of your debt forgiven.

Assemble your credit statements. Financial documents such as your credit card and loan statements can be useful in helping you determine what you owe and how much interest you are being charged for each debt. Review your statements and come up with a plan to have your high interest rate credit cards reduced. (see The Wall Street Journal: Credit Woes Hit Home)

For example, if you are paying 21.9 percent for one credit card, you can save money monthly simply by having that rate reduced to a more manageable 12 percent. That lower interest rate means that less money is being paid out monthly to cover interest charges while a larger portion of your payment can be used toward the loan principle. You may be able to reduce the amount you pay on your debt every month while helping yourself get out of debt faster.

Contact your creditors. Each of your statements includes contact information outlining how to reach your creditors. Contact your creditors and ask that your interest rate be reduced. According to Brad Dakake, a consumer advocate with Massachusetts Public Interest Research Group, “There’s no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil.”

Will you get the lower rate? That’s hard to say. But, you won’t get a lower rate unless you ask. You may be paying a higher rate because you were late making payments or you deemed as a higher credit risk. No matter, credit card companies will sometimes reduce your interest rate just because you asked.

What about loan forgiveness? Now for the tricky part: can you get your loan balance reduced or forgiven? If so, what will that mean when it comes to your personal credit?

A lender may write off your loan if you have no way of making payments. But that comes with a price: your credit will take a major hit which means that you’ll have this mark on your credit for many years to come. While you did not declare personal bankruptcy, some lenders will view this action similarly.

Your credit score will be reduced and you may find it difficult to obtain new financing, rent an apartment, buy a home, even get a job. Yes, even employers can check up on your credit to see if you are a responsible with your debt.

Planning Ahead

Finally, if you are deeply in debt, what got you there? Poor spending habits? Job loss or reduced income? Mortgage problems? Seeking the assistance of a qualified financial adviser such as a debt consolidation specialist can help you resolve these issues and put you back on the path to financial freedom. (see SmartMoney.com: 4 Ways to Help Shrink Your Debt)

Just make sure that the person you find has the skill sets you need (degree, licensing, references) and presents a plan that will repair your credit not destroy it.

Tags: Bankrate.com, credit, Credit Cards, Debt Consolidation, Debt Management, interest rate

Tens of millions of consumers today are facing financial difficulties ranging from late payments on their utility bills to foreclosure on their homes. Job loss, illness, overspending, and other problems can weigh in, putting untold pressures on the American family.

Not every financial situation should mean imminent ruin, although taking action sooner rather than later can go far in turning your condition around. Smart budgeting, credit counseling, debt consolidation, and bankruptcy are four do it yourself (DIY) avenues for you to explore; chances are you’ll be taking one or more paths in order to improve your financial condition.

Smart Budgeting

What is smart budgeting? Essentially, it is a budgeting plan that makes sense for you. This means being realistic and developing a plan that works. That doesn’t mean setting pie-in-the-sky goals, near impossible requirements whereby you think you’ll correct many years of financial problems in twelve months or less or pay off your mortgage quicker when you’re still on the brink of foreclosure.

Step by step changes can bring about real results, helping your conquer your problems gradually. This also means negotiating payments with creditors or finding out a way to work with bill collectors. Print out a money tip road map to help you get back on track.

Credit Counseling

Although a “do it yourself” method can work for some people, others may find that professional assistance can go far in helping them conquer the debt monster. Credit counseling organizations can help you develop a repayment plan with your creditors, help you track your bills, an develop a workable budget for you.

A few things to keep in mind: not all credit counselors are on the up and up, some charge very high fees, while others may promise more than what they can deliver. For example, when a creditor says you can pay just pennies on the dollar for your debt, be suspicious. Learn about fees and other costs before agreeing for assistance and check references!

Debt Consolidation

One way to reduce your credit costs is to consolidate your debt, oftentimes by taking out a second mortgage or a home equity line of credit. You’ll be putting your home up as collateral which means that if you stop making payments or make them late you could lose your home.

Certain tax advantages exist when consolidating a loan; check with your financial adviser to learn more.

Personal Bankruptcy

One way to discharge all or some of your debt is to file for personal bankruptcy. Chapter 7 bankruptcy is liquidation of your assets, whereby mostly everything you own is sold off except for exempt assets, which vary from state to state. You’ll be required to take a “means test” to ensure that your income does not exceed a certain amount.

Chapter 13 bankruptcy is less drastic, allowing you to keep a car or your home as long as you keep up payments, while discharging some if not all of your unsecured debt. Changes to the US Bankruptcy Code in 2005 has made personal bankruptcy a less desirable option as some previously forgiven obligations remain in place. Contact an attorney familiar with tax law who can advise you.

Financial Resolution

There is no magic solution to financial problems which means patience and adjusting as you go are important attributes for the person who wants to get back on his feet again. Creating a sensible plan and sticking with it is a good start; seeking professional guidance may be the best choice that you make.

Tags: budget, credit counseling, Debt Consolidation, finances, personal bankruptcy, tax attorney

With the financial markets having basically collapsed and with personal credit tighter than it has been for years, thinking about a debt consolidation loan seems like sheer lunacy to some. After all, wasn’t it irresponsible consumers and greedy lenders who got us into this mess in the first place?

Of course, that mindset is like taking a broad brush and painting it across every lender and consumer you see. Most certainly, not every consumer is overwhelmed by debt and not ever lender is looking to abuse consumers. You’re certainly not likely to get a bunch of debt consolidation letters or credit card offers in the mail as was common as recently as last summer, but lenders will loan money to people who have maintained good credit all along. In this case the operative word is good so be prepared to have your credit history examined thoroughly before applying for a loan.

Your Doubts About Debt Consolidation

Even with good credit you may have some doubts about obtaining a debt consolidation loan. In the best case scenario, a debt consolidation loan would tackle all of your debt and replace it with just one, low monthly payment. At least that is what the advertisement says it will do!

In actuality, that may not occur. In fact, bad credit could sink your loan application or force you to compromise by accepting a higher interest rate for your consolidated loan. Just in case you don’t realized this, a debt consolidation loan is unsecured debt – just like your credit cards – which means your loan rate will be quite a bit higher than a loan that is secured by your home or other personal property. Thus, your hopes of securing a loan rate of 10, 12 even 15% isn’t likely. Expect 20% or higher instead!

Considering Your Financing Options

If you’re not careful about choosing the right loan you could end up going from several hard to manage debts to one impossible to control debt. Or, in a bid to procure a lower monthly payment you could find your loan dragged out for ten, fifteen even twenty years or longer. However, if you were to stop using your credit cards and began working toward reducing your debt, you might see your bills paid off in four or five years time. That’s a huge difference in repayment time and you would save on interest charges as well.

In the end, the big difficulty for you is changing your conduct. You may need to take on a second job to have the funds on hand to lower your debt or you could get hold of your credit card providers and tell them you are in a desperate financial situation. Yes, just by hinting that you are considering personal bankruptcy you may find your APR as if by magic reduced on the spot. You just don’t know, but it could be worth a try.

Adv. — Have you checked your credit report lately? How about your FICO score? As a consumer, you need to be on top of your credit history, checking for errors and making certain that the information in your consumer credit reports is accurate. Employers, banks, mortgage companies and other lenders base your credibility on a three digit score. Avoid surprises — check your credit report today!

Tags: Consumer Financing, credit, Credit Cards, credit history, Credit Reports, debt, Debt Consolidation, refinance

Do you feel as if you're in a money trap? Well, you're not alone. Lots of people are finding themselves in debt, but you don't have to stay there. Five tips to help you take control of your money and live a fuller, more enjoyable life.

We’re in a recession, we’re not in a recession. Depending on who you listen to and what barometer of measurement they use, we’ve either been in a recession since December 2007 or the country is still on the outside of one looking in. Perhaps we’re somewhere between the two.

Regardless of what the experts say, what it all boils down for the average consumer is where they’re at financially. Some people are employed and expecting bonuses this month, others are holding onto a job and facing a pay cut, salary freeze, or even the threat of losing employment, while still others are unemployed and are now looking for work.

For every consumer, controlling personal finances is the key to monetary health, a way to build up wealth and an important strategy in gaining independence. After all, if you’re in debt then you basically are owned by your creditors. And, forget bankruptcy as a viable option – changes to personal bankruptcy laws a few years back has made that a bad option for most people.

What can you do to get your debt under control? Several things including the following:

Pay off credit cards – Lots of people are carrying around credit card debt and paying big bucks in interest each month. If you are running balances on several cards, try not to add additional debt. Pay off the card with the smallest balance first and then use those funds to attack the next largest balance. Your debt repayment will “snowball” as you knock out one increasingly larger balance at a time.

Renegotiate interest rates – If your credit cards charge high interest rate and you cannot get a new card with a low rate (to transfer balances) consider asking your credit card issuer to lower your rate. Be careful if you ask for a “hardship rate” where your interest will be knocked down to zero in exchange for automatic monthly repayments – some card companies report this information to the credit bureaus which can adversely impact your credit report or score.

Pay down your mortgage – If you have a home equity loan or a mortgage (or both) work toward paying these debts down faster. Housing prices have dropped, a lot of homeowners have negative equity in their homes, and if you should need to sell, you’ll have more profit to show if your overall home debt has been reduced.

Trim spending – Whether laid off or on the receiving end of a salary drop, you’ll need to trim expenses accordingly. Now is the time to shop around for the best deals on insurance, communication, food, etc. in a bid to keep your expenses in line with what you make each month.

Take charge – Banks and other lending institutions are clamoring for consumer dollars, especially ever since credit has tightened. Make sure that you aren’t paying an annual fee for a credit card, that monthly bank fees are reasonable, and certainly don’t agree to pay other charges which are unreasonable. Threaten to take your business elsewhere if the lender won’t budge.

Some analysts are suggesting the current economic climate will last until next summer with others suggesting that early 2010 will be the soonest date when we’ll see some relief. No one can say for certain when the economy will improve, but don’t wait to act: you can take control of your finances today!

Adv. – How about a card you need that fits your financial objectives? Whether you are a savvy consumer or first-time user, there is a credit card that will meet your buying-power needs. Please visit nBuy.com to conduct your smart credit card search.

Photo Credit: Nusrin

Tags: credit, Credit Cards, debt, Debt Consolidation, employment, job, job loss, money, personal finances, recession