Every year over one million individuals file for bankruptcy. This means that if an individual struggling with debt problems files bankruptcy, their debts are absolved.

What does this mean for a creditor?

It is in the best interest of a creditor to lower a debtors payments through debt settlement.  Otherwise, if the debtor files bankruptcy, the creditor gets nothing.

Obviously, this means that creditors would rather settle your debt by lowering your payments or amount owed rather than risk getting nothing if you were to file for bankruptcy.

Through debt settlement:

• The creditor does not get the full payment owed.  instead, they get something instead of nothing.
• The person in debt can restore their credit rating and avoid bankruptcy by making lower payments agreed upon.

The company/organization which takes care of the negotiations usually also earns a little off the new arrangements, but that's not normally a concern to those in debt, as long as it means lower monthly payments for them.

There is a relationship between debt and savings.  The more you save, the less in debt you will be.  At the same time, the more you save, the less you need to borrow.

Instead of borrowing money by using your credit card, you could save that same amount every month until you had enough to buy the item you used the credit card to purchase. Only you can decide whether having the item today is worth paying the extra amount of money it cost in interest to own it. Continue reading →

Are you worried that you can't pay your bills?  Is it keeping you from sleeping at night? Is it making you sick?

Don't worry, don't panic, there are a lot of things you can do help relieve some of the stress you've been facing lately.

First and foremost, no matter what troubles you may be facing financially, staying healthy and in a good frame of mind is important.  If you try to stay healthy and strong by eating well and exercising, you can face any challenge life throws at you.  despite your financial problems, don't give up on yourself and have faith that you will overcome your debt. Continue reading →

1. Get your whole family involved. Agree on a budget up monitor your progress
2. Stay disciplined and try to make budgeting a part of your daily routine
3. Start your new budget at the right time. It's hard to start new budget during the holidays, instead it's a lot easier to start it during the new year.
4. Find a budgeting system that fits your needs. For example, you can use special budgeting software such as Quicken .  Quicken is a perfect personal finance software designed to get you ahead of your budget.
5. Distinguish between expenses that are "wants" and "needs". Wants include shopping for shoes, a bigger TV, or a vacation. Needs include groceries, gas, and utilities.
6. Build rewards into your budget. Set yourself a goal, and if you meet your goal, reward yourself with a dinner out or a movie.
7. Avoid using credit cards to pay for everyday expenses:. It may seem like you're spending less, but your credit card debt will continue to increase.

Credit reports are often regarded with dread, especially by those who have entered turbulent financial waters. But reality is never your enemy, even when it is unpleasant. In order to promote financial health, and resolve any debt problems you may have, it's essential to have the best information possible about your credit status. That information is found - both by the lender and, more importantly, by you - in your credit reports. Continue reading →

FICO is an acronym for the Fair Isaac Corporation. It is a number between 400 and 800 (400 being worst and 800 being best) that your ranks credit worthiness according to a proprietary algorithm invented by the company.How does a FICO score effect you? 

Banks, mortgage companies, credit card issuers and other lenders will use your FICO score as a very important criteria for deciding whether to make a loan, and at what interest rate. Other things being equal the higher your score the better interest rate you can obtain.

What effects a FICO score?

Any score below about 620 is considered marginal and below 580 is decidedly poor. 720 and above is very good to excellent. A range between 620 and 720 represents a kind of gray area, where items other than your FICO will play a more significant role in loan decisions. Late payments will lower your score, and the more of them and the later they are, the more heavily the score is affected. The total amount of debt carried per month is another element. A less important factor is the number of credit cards and credit checks performed.

Of course, many times all other things are not equal. Prevailing interest rates in general, the current demand for loans, the general economy and other factors have a heavy influence on the willingness of lenders to lend and at what rate.

Also, the entire lending industry has undergone at least two significant shifts in the last 20 years. With the increasing use of computers and modern financial techniques, underwriting loans is done very differently today. Also, not surprisingly, the Internet has shifted finance to a very different mode of working.

Even with all these changes, though - or, perhaps in part because of them - the FICO score remains a primary tool for lenders. It may not determine the final decision, but it definitely influences the 'first cut' when presented with a stack of applications to approve or disapprove.

How can you fix your FICO score? 

Fortunately for those who have financially slipped, there are alternatives. Though your FICO may be low you nonetheless have several options. The first thing to do is set into motion a plan to improve your score.

As you work to remove those outstanding overdue debts - either through paying them off or negotiating with the lender - your FICO will gradually improve. The age of 30 day past due, 60 day past due (or longer) late payments is a factor in calculating your FICO.

At the same time, you can shop around for lenders willing to take a higher risk by lending you money. The downside is those loans almost always carry a higher interest rate. Your best approach is to try to forego borrowing for as long as possible while you work to improve your debt situation. Your FICO will follow suit.

The average American household has several thousand dollars of consumer debt, including credit cards and non-mortgage loans.  Therefore, avoiding debt is becoming essential to financial survival.

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As far as avoiding new debt, it doesn't take rocket science....simply don't buy what you can't afford. If you can't afford something, and don't have the cash to pay for it, you should not buy it.

If you want to avoid debt you have to see that a lot of what you buy are "wants" not "needs".  In our society we are programmed to equate possessions and spending with happiness. Simplifying your life, spending less, trying some free things may not only enrich your life, but help you avoid debt.

Few areas of credit are as complicated today as that of student loans. There are many types, with lots of terms, complicated conditions, and fine print.

One of the most common options is a Stafford loan. Hundreds of thousands of students have used these as a means of partially financing their education and they do have some positive aspects. Continue reading →

There are multiple ways to reduce your debt.

The most obvious one, is to simply pay down your debts. That's easier said than done, isn't it?

But there is one method that has been employed by many people in debt with great success. It is known as the Snowball Method a debt reduction method taught by Dave Ramsey.

Continue reading →

Are you looking to eliminate your unwanted debt? Maybe it's time to seek the assistance of a credit counseling company.

Credit counseling companies can help you develop a plan to reduce your debt and get your financial life back on track, but you should practice some caution when choosing the right company to work with. While there are many reputable companies, there are just as many companies ready to take advantage of your situation.

Here are some basic things too look out for when choosing a credit counseling company.

Continue reading →