Zero Debt Expert

An economic crisis is gripping the world as of the end of 2008. Families around the world are squeezed and finding it increasingly difficult to meet their obligations. In order to provide a home for their family, transportation to get them around, a means to a better education and nice products for personal enjoyment, many families will extend additional debt beyond their means to pay them back.

In our credit rich, easy money culture we’ve conditioned ourselves to think about the size of a loan and the size of the monthly payments and not pay due attention to the interest charges. Even though they seem small, a few percent, the amount in interest you pay monthly can become significant when you have large loans or many loans outstanding.

You can take out a loan to help yourself without going even deeper into debt which seems to fly in the face of the rule stated above. If you have a number of loans already such as car payments, credit cards, money due on lines of credit and the like the total monthly payments can become overwhelming and you find yourself robbing Peter to pay Paul. A debt consolidation loan can be the answer here.

Debt consolidation loans are of course a form of borrowing but the difference here is, if done correctly, you borrow no more than you already owe and you pay a lower rate of interest and make lower, possibly much lower, monthly payments. So you haven’t gone any deeper into debt and find yourself in a little better position financially than you were before.

There are other approaches you can try. Either on your own or with help of a responsible third party you can seek to have loan terms revised, with lower interest rates and lower monthly payments being the things usually pursued. You’ll normally owe the same amount but will get payment terms which are more in your favor. If you are successful in doing this you need to make sure that you are applying discipline to your money management habits. If you default you probably won’t get a second chance.

The consolidation loan most widely used is probably the home equity loan. On the plus side you can usually get a lower interest rate with a lower total monthly payment and have only one loan to make payments on. On the negative side the available equity in your home will be reduced (which can at times cause huge problems) and your home becomes the collateral for the loan.

Just be aware that if you’re putting your home up for collateral it’s imperative that you make your payments or foreclosure may be in your future. Losing your car is one thing, losing your home is something else. As enticing as a home equity loan may seem, and they are actively promoted, make certain you’ll be able to handle the payments. Above all, don’t start borrowing all over again. It’s time to start cutting up the plastic

Whatever you do it’s imperative that you structure your household budget to be able to pay off the loan and change your spending habits by avoiding the habit of using credit to pay your way. If you don’t do these things you’ll soon be back from where you started only worse off. If you to change your habits you have a much better chance of getting through these hard times unscathed.

Late payments are not created equal; a 90 day and 120 day late pay will cause your score to be dramatically lowered. However with a 30 day or 60 day late pay it will cause very minimal damage to your score.

You can remove a 30 or 60 day late pay by contacting the lender directly and asking them to erase it. Often they will do this as a gesture of good will and to keep your business.

We suggest making a phone call and writing a follow up letter. In your letter you should supply a brief explanation and be polite and respectful, after all they do not have to remove the mark.

A 90 and 120 day late pay is much more difficult to remove. However if your account is still open then you should contact the lender, and ask for removal of the mark.

It is a good idea to make sure your account is up to date before making this request. Typically if the lender sees a history of late payments they will not remove it.

If you can not get the mark removed we suggest you dispute it directly with the credit bureaus. This is done by creating a dispute letter and mailing it to each bureau or you can hire a service to do this on your behalf.

This item will be on your report for a maximum of seven years. Additionally your account will be charged off after 180 days of delinquency.

A lender can remove this mark because they report monthly to the bureaus and can choose what to report to them. Thus if they do not report your late payment the next month then it will not be on your credit history.

If your account is not in good standing, it will be very difficult to convince the lender to remove the mark from your report. Also there is a lot of information that says a negative item must stay on your report for seven years.

This is false, seven years is the maximum amount of time most negative items can remain on your report. The Fair Credit Reporting Act passed by Congress made this law. There is no minimum amount of time a negative item has to be on your report.

In sum the first step is contacting the lender, if you still have the account, and then if that is unsuccessful dispute it directly with the bureaus.

The Centennial card is issued by The First Premier Bank a member of the FDIC. This is an unsecured card created for individuals looking for a second chance.

It offers easy approval and thus has some fees. These include a one time account set up fee of $29, $48 annual fee, and a one time $95 fee.

These charges are assessed to your available credit limit. When you receive your card you will have these charges shown on the balance.

You will have an initial $250 credit limit. Additionally you have a 9.9% APR.

It is issued as a Visa or MasterCard your choice. If you apply online you will have an application response in less than 60 seconds.

When making your monthly on time payments you will create a positive payment history on your credit report.

Additionally your utilization ratio is very important. This is the amount of debt you have compared to your available credit. If you can keep your monthly balance at roughly 30% of you limit it will help the most.

If your card has a limit of $250 then you want to keep the monthly balance around $75. After you have paid on time for 6 months you will be eligible for a limit increase.

The First Premier Bank is in Sioux Falls, South Dakota. They are a member of the Better Business Bureau and have served over 3 million people.

Your card is accepted worldwide and everywhere you see the Visa or MasterCard logo. You can qualify for approval if you are over 18 and have a valid social security number.

As of late, we have seen a jump in interest rates even on prime credit cards. These rates are increasing to close to 30%, and without fault. This means even with on time payments the good credit cards are raising their interest rates to 30%.

In sum we suggest you explore all your options for credit if you have made some mistakes. It may be more cost effective to get a secured or prepaid card, and take other steps to repair your damaged score.

The Green Dot Visa is a pre paid debit card. Often this is used by individuals that do not have a bank account.

This is a result of card holders having free direct deposit, which can save hundreds of dollars a year on check cashing fees. It is accepted world wide and is a real debit card.

There is no bank account required or credit check. It does have a monthly maintenance fee of $4.95 but this fee is waived if you deposit $750 or more monthly.

You can access cash at over 900,000 ATM’s in 120 countries and it is accepted online and over the phone.

It does have a reload fee of $4.95 when you use a MoneyPak. Common criticisms are; the amount of fees and poor customer service.

These are purchased at retailer locations such as Walgreens, Wal-mart, Kroger, CVS and more. There is also a $2.50 ATM Withdrawal fee and a $9.95 activation fee.

This card is issued by Columbus Bank and Trust Company and comes as a Visa or MasterCard.

You can upgrade your account to Premier Membership; the benefit is priority customer service. The fee for this is a one time payment of $20.

You can purchase this card at retail locations or you can fill out an application online and have a card sent to you within 7-10 business days.

Frequently parents will use this card to teach a child how to manage money. It also gives parents an easy way sending financial help to students that are away at school.

Your money will be protected if your card is ever lost or stolen. It is a much safer alternative than carrying cash.

You use it to pay your bills. Additionally it will give you a convenient way to track your spending and stay within a budget.

In sum this card can help individuals without a bank account and parents. However we are alarmed that there are additional fees for priority service. We feel that when it comes to your money you are entitled to priority service.

Taking into account individual differences, the vast majority of people would prefer to pay the debts required to maintain a roof over their heads and transport needs before seeing to any others.

In some cases, you may find that your financial situation is so bad that your cannot even maintain required payments to those high priority debts. Your income, for example, may not be enough to pay the mortgage and the car loan.

Some people mistakenly pay their smaller, lower priority debts when they realise they can’t maintain the payments on their higher priority debts. They tend to think, “If I can’t pay my car finance, at least I can pay my credit cards.”

Not a good idea at all. Virtually every strategy to keep your home and your car will mean you have to resume repayments again in the future. If you can’t make the payments just now, get in touch with your creditor and see if they will accept partial payments in the meantime.

If you absolutely cannot make the payments, it is by far and away the best decision to put the money aside to be used to pay the cost of moving home or to buy a second hand car for cash.

Although difficult, really do try to avoid making poor choices. It is hard to face the fact that you may lose your home or your car, but the consequences of poor choices can sometimes be far worse.

An example would be to refinance your low interest rate mortgage with a high interest rate mortgage in order to take the pressure off in the short term (the next few months), although ultimately it will quite likely prove to be hopeless

Most times you stand a much better chance of arranging something with your existing lender than you do with a finance company who gives out high interest rate loans, and might very well be more inclined to foreclose.

There are many strategies for dealing with debt problems discussed throughout this course. Occasionally, though it is best to step back and accept the inevitable change which money problems sometimes require.

Perhaps you can no longer afford to live in the home you are currently in, or maybe you need to sell the car you have now and replace it with a much cheaper one. At this point there are things you can do to make the changes in your life more bearable.

These may include selling the property at a good retail price to avoid a low foreclosure sale price or giving up the property in exchange for a promise that the creditor will not make you pay any deficiency.

These are not easy choices and you really do need to base these on your own unique circumstances and future prospects. After making your decision, it is the best thing to cease payments on that debt and focus instead on servicing other urgent debts.

You absolutely do not want to pay debt on a property that you realise you cannot hold onto at all in the long run. You do not want to throw your hard earned money into a lost cause.

Feelings of moral obligation to particular creditors.

When you are analyzing your priorities you might feel that some creditors deserve repayment more than others. You might like some creditors whilst really loathing others.

You should never let these feelings become a factor in your decision making. Having your family thrown out of their home with nowhere to go just to pay your local dentist and accountants bill is far too much of a sacrifice.

If a creditor is sympathetic or has done you favors in the past, they are more likely to be patient as you work out your financial problems.

A related issue comes up in small communities where there may only be one store or one doctor or one pharmacist with whom you can do business. You may not want to lose your ability to obtain services from that particular creditor and you may feel you have no choice other than to pay that debt first. This may be true, but only in limited situations.

You should not assume that a business or a doctor will cut you off from future service right away if you don’t pay. Explain the situation and ask for patience.

Also, you may find there are other creditors nearby who you can use as alternatives should the need arise.

The vast majority of people experience financial difficulty at some point in their lives. It really is nothing to be embarrassed about. Ask for help if you need to from those creditors who you have a good relationship with, and promise to do all you can to pay them back quickly as soon as you get back on your feet.