69% of 2018 college graduates took out student loans to pay for school. The average amount of debt for those graduates is $29,800. As you may already know, millions of former college students are defaulting on the federal student loans. To counter this issue, the U.S. government is taking this matter into their own hands.
If you find yourself in a large amount of credit debt, the idea of using a debt settlement company to help you get out of the red may sound like a good idea. They make it seem like they are there for you and will work with you to manage your debt balance. In some cases, using a debt settlement company can be a good option, but make sure to know what you are getting yourself into before you make that choice. Credit card companies normally are just as willing to work with you even if you owe large sums, as it is ultimately in their best interest for you to be able to pay back as much of the balance as you can.
The FDCPA has been instrumental in the protection of consumers from predatory debt collection practices. However, it is over 40 years old and many believe it is time for an update. There has been a minor change or two in the last 4 decades, but nothing that addresses the newer business practices of debt collectors. Now, creditors and collectors have the internet which gives them access to just about anyone at just about any time.
Most of us are familiar with the terms “good debt” and “bad debt”, but what do they mean? It may seem counterintuitive to consider any debt “good”. However, the health of your credit score greatly relies on debt and your ability to handle it. To better understand what types of debt you want, you have to know which kinds help you the most.
Married couples often share the same debts, but that is not always the case. There are bankruptcy filing options for both situations. One partner may need to wipe out their debts but want to avoid harming the other partner’s credit. In some states, it can be beneficial to file for bankruptcy jointly. Before deciding, you should know the pros and cons of each filing option for married couples.
One Spouse Filing for Bankruptcy
If a couple is in a situation where only one of the two partners needs to file for bankruptcy, filing individually may be the right choice. An individual can file for chapter 7 or chapter 13 bankruptcy.
Debt collection can be an uncomfortable topic for many small business owners. Very few people get into business to pursue debt. There are many ways to approach debt collection and almost all of them require some level of finesse. If you are having issues collecting receivables, keep your cool.
Do Not Take It Personally
Too often, small business owners get upset right away when a client misses a payment. There are tons of simple reasons why this could happen:
- Sometimes people just forget things;
- The client could have misunderstood the payment terms;
- You could have forgetting to send them the invoice;
- There could have been a technical issue for the payment.
Before you raise arms against the client, make sure you cover your bases by checking on the simple stuff.
There is a growing debate over the student loan debt problem in America. Millions of former students struggle to keep up with their student loan payments which have a carry over effect in areas such as car loan and mortgage payments. It is widely accepted that student loan debt repayment is as sure as death and taxes, but is that really the case?
The Student Loan Debt Problem
If you are one of the 44 million people in America that have student loan debt, you know what it feels like to be frustrated with this seemingly unforgivable burden. Currently, the total student loan debt in this country amounts to $1.5 trillion. The average debt for each student is $37,172. With so many people struggling with this debt, what can be done?
Let’s be honest, if you are eagerly awaiting your tax return, you are not planning to spend it on the right things. Too often people get a chunk of money they usually do not receive at any other time in the year and their eyes light up. If you are really excited to get your refund this year, it is doubtful that you plan to pay off credit card debt, take care of healthcare-related expenses, or pay down your car loan. Read on to find out why you should do exactly those things.
PLEASE Use Your Tax Refund to Pay Down Credit Card Debt
If there is one good thing you do with even a portion of your tax return, make it credit card debt annihilation. You would be hard pressed to find a loan with a higher interest rate than that of a credit card. Use this year’s tax refund to reduce the savage interest payments you make every month and lower the principal balance. The average tax refund in 2017 was about $3,000. The average credit card debt was approximately $6,375. If you are average, you could save yourself a lot of money in interest payments by cutting that debt in half.
The most common debt on a person’s credit report is that of medical expenses. Medical expenses are the number one cause of bankruptcy. Medical debt is often passed around from collector to collector until something is done about it. Every day people are hassled and sued for medical debt worth less than $1,000. If this is you, please use your tax refund to pay it off. Negotiate with the collector and save yourself some money, but most importantly, improve your life by stopping the phone calls and snail mail associated with this sort of debt.
Pay Down Your Car Loan
Maybe you have always had a monthly car loan payment and you do not know what is like to exist without one. Let me tell you, it is possible, and it is SWEET. Imagine a world where you get paid and you do not have to fork over 25% of your paycheck. Take your tax refund and pay off even a few months of your loan term. Down the road, you will be so happy you did. This will save you from paying expensive interest if your rate isn’t great.
Paying off debt with your tax refund is one of the best things you can do for yourself (albeit not fun). If you are ready to take your debt seriously but you do not know where to start, contact Elias Dsouza. Elias can help you plan and negotiate the elimination of your outstanding debt.
It is always important to read the “fine” print when agreeing to anything. This is especially true when signing up for a payday loan. Interest rates are often 300% – 1000%. Sometimes referred to as “predatory loans”, payday loans are designed to give the customer money quickly and allow them to pay the loan and interest back over time. Read on to learn about two truly terrible scenarios in which desperate people agreed to terrible payday loan terms.
Payday Loan Victim Number One – “Bob”
Bob’s story began over 12 years ago. Due to a medical emergency, Bob became the only earner in the family. Medical bills totaling at over $20,000 and recent events, forced Bob to take out five payday loans which totaled at $2,500. These loans required Bob to make two $95 payments each month per loan. Keep in mind the principal balance of each loan was only $500. It took Bob and his wife 5 years to pay off the loans and, in the end, they paid over $50,000 in interest. As a result, Bob and his wife lost their home.
Payday Loan Victim Number Two – “Ed”
Ed, a veteran and Social Security beneficiary, ran into some car trouble. The repairs were estimated at $400. Unable to cover the costs, Ed went online and took out a $400 14-day loan. In most cases, if a person cannot pay off a 14-day loan in the agreed upon term, there is a renewal option. When the loan is renewed, the borrower must pay a fee and interest continues to accumulate. In an attempt to pay off the existing loan, cover his rent, and avoid bank overdraft fees, Ed took out more online loans. In the end, Ed borrowed over $3,000 and owed well over $12,000. He subsequently lost his apartment and became homeless.
Payday Loan Quick Facts:
- Over 12 million payday loans are handed out each year in the United States.
- The 12million loans have fees totaling at over $9 billion.
- A 14-day loan averages $55 in fees if paid off on time.
- The average payday loan borrower is in debt for 5 months of the year due to loan fees and interest.
Before you subject yourself to the horrors that come with payday loans, take a look at your other options. If you have unsecured debt such as credit card or medical bills, you may be able to get it forgiven utilizing a tool such as bankruptcy. Contact Elias Dsouza today for a free consultation and take control of your financial situation once and for all.
Having credit card debt is just a way of life for most people in America. However, there may come a time when those people are ready to be free of the burden. People with credit card debt that own a home or have equity in their financed home often look to their home equity for a way out. This can be a great tool, but sometimes a refi leads to a higher monthly payment.
Why Would Someone Choose to Use Home Equity to Pay off Credit Card Debt?
On paper, it may seem obvious that having a loan with a much lower interest rate (mortgage) is better than one with a much higher interest rate (credit cards). People may consider this option because:
- Credit cards often carry an interest rate 3 to 4 times higher than that of a mortgage.
- Credit cards carry the stigma of “bad” debt.
- Loan consolidation is often thought of as a good thing.
When Using a Home Refi to Handle Credit Card Debt Is a Bad Idea
Some experts say it is always a bad idea. When you utilize a cash out refinance loan to pay off credit card debt, you convert unsecured debt (credit cards) to secured debt (mortgage/home equity loan). Secured debt is linked to an asset. If payments are missed and the bank decides to foreclose, they can take the home as collateral and sell it to offset debt. Because it is unsecured, credit card debt can be forgiven or settled using a tool such as bankruptcy.
When Refinancing Your Home to Pay off Credit Card Debt Is a Good Idea
For a home refi to be a good choice, there are considerations:
- The “rule of thumb” when considering a home refi to offset any debt is to avoid it if the resulting refinanced loan value equals more than 80% of the value of the home.
- If the resulting monthly loan payment is lower than the sum of the mortgage payment and credit card payment each month.
If you are feeling overwhelmed with debt or you are behind on payments, a debt restructuring could be the answer. Before you make a decision regarding a home refinance, contact Elias Dsouza to discuss, bankruptcy, debt settlement, credit counseling, and much more. Elias has been assisting people with credit card debt for over 15 years.