Credit Card Debt Refinancing: Facts And Alternatives

Debt consolidation loans can be hard to come by these days. Even so, to refinance credit card debt, depending on your situation, remains an important technique for helping to reduce borrowing costs and organize debts. Let’s look at the different ways of refinancing credit card debt:

Unsecured or Personal Loans

If you do not own a home, a choice to refinance credit card debt is the unsecured loan, also known as a signature loan. These loans are not secured by any collateral. Because of this, they will have a higher interest rate which may cost you more in the long run. Unsecured loans are harder to qualify for since there is no surety for the lender. The interest rate is determined by what the lender feels his risk is in providing the signature loan, which is a combination of many factors including the loan amount and your credit rating.

Home Equity or Secured Loans

Home equity loans are usually the next option for refinancing credit card debt.  These loans are obtained by borrowing against the equitable portion of your home’s value. This gives you the advantage of lower interest rates than most other options. Plus, interest paid on home equity loans is generally tax deductible. When borrowing against your home equity, be sure to remember that you would be converting an unsecured loan into a secure one and defaulting on your home equity loan can result in losing your home.

Moreover, statistics reveal that 65 to 70% of people who borrow money to pay off credit card debt end up with a new debt load within 2 years.

Debt Consolidation Programs

Debt consolidation programs do involve a loan, basically the purpose of these programs is to combine all your debts  into one big debt.  Rather than paying several monthly bills, you pay one large monthly bill, which could be less or more than what you were paying before and may take longer to repay.  Debt consolidation programs are available through consumer credit counseling agencies such as Care One Credit. .

There are additional methods you can use to refinance credit card debt without taking out a loan:

Credit Card Balance Transfers

Use your lower-interest credit cards for debt consolidation. List your credit card balances, interest rates, and credit limits. Act to move balances to the cards with the lowest interest rates to the extent their credit limits will allow. Be sure to monitor this monthly, since both interest rates and credit limits are subject to change.

Prioritize Payments by Credit Card Terms

If the credit limits on your low-interest cards don’t allow you to consolidate all your credit card debt there, at least target the cards with the highest rates for the largest monthly payments. Be sure to keep up with the minimum payments on all your cards, so you don’t damage your credit rating and blow the lower interest rates on your other cards.

Debt Management Plans

Debt management programs are also available through consumer credit counseling services (CCCS).  The agency negotiates with your creditors to try to lower your interest rates and eliminate late fees.  The first step in this program,  if you are dealing with a legitimate and honest CCCS,  should be a counseling meeting with you and a counselor to determine if a DMP is needed.

It is critically important that you proceed with caution before signing up for this type of program, since a lot of these companies have been under fire lately for blatantly ripping off consumers.

Cascading Debt Elimination System

Alternatively, if you need motivation and want to pay off each debt faster, you might want to check out the cascading debt elimination system, which entails paying off the debt with the smallest balance first.

These methods won’t solve your problems all in one move, but they are alternatives to getting a loan to refinance your credit card bills and if you follow any of these systems diligently, over time you will find yourself  gravitating more and more toward the reduction of your debt level.

ZipDebt – #1 Source For Do-It-Yourself Debt Elimination

If you need a solution to your financial problems and have explored all bankruptcy alternatives and decided that these options are not appropriate for your situation, you might want to find out the differences between chapter 13 vs chapter 7 bankruptcy.  If this is your case please read on as this article will outline the main differences.

Bankruptcy is a legal process available to people who have serious financial problems and are no longer able to pay their bills.  Depending on the type of bankruptcy you file or qualify for, you will either be required to pay all or some of your debts or be released from all or most of them.

Chapter 13 Bankruptcy

This is a legal arrangement in which you pay all or some of your unsecured financial obligations free of interest and late charges through the court trustee over a period of 3 to 5 years.  Your creditors must abide by the terms of this plan and cannot collect from you.  You must have a steady source of income to qualify for chapter 13.  If you are behind on your mortgage this plan may stop your creditor from foreclosing your home by allowing you to consolidate your mortgage arrears with your other debts and make payments to the court while making your regular mortgage payments to your creditor.

Are you behind on your car payments?  This plan also may stop your creditor from repossessing your car by consolidating the late payments and the remaining balance with the rest of your debts.

Chapter 7 Bankruptcy

Because of a new bankruptcy legislation effective October 2005, very few people qualify for Chapter 7 since your income must be lower than the average income in your state.  Nevertheless, under this plan most if not all, types of unsecured debts are eliminated.  You may be required to liquidate your assets to satisfy your debts, but in some cases your attorney may try to exempt certain assets.

These are the main differences between chapter 13 vs chapter 7 bankruptcy, however there are certain debts that cannot be discharged through bankruptcy including student loans, child support, alimony, and income taxes.

Bankruptcy Disadvantages

• The record of your filing will stay with you for 10 years.
• It is a matter of public record, thus you have no privacy.
• The court is in control.
• The court determines your monthly payments according to allowable living expenses based on IRS schedules, not based on your actual living expenses.
• You have to appear in court.
• It is a complicated process and it is recommended that you hire an attorney.

Because of its long term damaging effect and some privacy issues, bankruptcy should be the last debt relief option you should seek.  If after exploring other debt elimination alternatives you determine that this is your only option,  you should consult a  bankruptcy attorney so he can guide you through all the confusing stages of this complex process and inform you about the detailed differences of chapter 13 vs chapter 7 bankruptcy.

Cascading vs Snowball Debt Systems

If you are wondering about the differences and similarities of the cascading vs  snowball debt systems wonder no more.  Both methods are very similar, except for two major differences, however they both work well as long as you have the discipline and motivation to stick to one of these programs. Keep in mind that not all the steps might apply to everyone.  Let’s take a look at  Cummuta vs Ramsey two major differences:

The cascading debt elimination system, which is part of John Cummuta‘s Transforming Debt Into Wealth® program promotes starting a savings plan after all your debts are paid off.  This system also favors  paying off you mortgage along with the rest of your debts.

Dave Ramsey’s snowball system, which is incorporated in his seven baby steps included in his Financial Peace book, encourages people to start a savings plan as the very first step even before you start paying off your debts.  Ramsey also advocates to start paying off your mortgage later in the program.

Since sometimes emergencies happen without warning, extra money that you are using to pay off the first debt might be used to resolve your emergency, thus setting back your debt elimination plan.  Hence, it seems logical to save funds before you start your debt elimination plan.

If you are still undecided about the cascading vs snowball debt systems, consider this:  saving money and/or paying off the mortgage at the beginning or at the end of your debt elimination program depends on your particular situation and sometimes it is a personal choice.

You may be interested in a service called See Beyond 20/20 .  This program combines these two approaches and analyzes the whole picture.  They own a proprietary software that calculates the best way to payoff your balances by analyzing your high balances, high interest rates and high and smaller principals.  Then they come up with the most beneficial plan for your particular situation.

Charles Phelan’s Debt Settlement Success Seminar

In this uncertain economy, many folks drowning in unpaid bills are wondering whether debt elimination without bankruptcy is possible, in other words, is there an alternative to bankruptcy?  If so, is that alternative less damaging on your credit?  Is it less intrusive?  If you want to know the answers to these and other questions you may have, please read on.

Debt Settlement, also known as debt negotiation is the best, and probably the only option to bankruptcy chapter 13.  Debt Settlement consists of negotiating your unsecured debts with your creditors to settle for 50% or less of what you owe.  Here’s why debt settlement is a better option to bankruptcy:

• It is less intrusive than bankruptcy since it is not a public record and there is no court involvement.
• Unlike consolidation or consumer credit counseling,  you only pay a portion of what you owe and get out of debt faster.
• Since this is the fastest way to eliminate debt, you can start re-building your credit sooner.
• It usually takes 2-3 years to complete, compared to other programs including chapter 13 bankruptcy which take 5-10 years.
• Unlike other programs,  you have payment flexibility and control.
• You can do it yourself with the help of a reputable coaching and training program and save the high fees the debt negotiation companies demand. Check out Charles Phelan’s Debt Settlement Success Seminar

Debt negotiation is an excellent option to chapter 13 bankruptcy, however as with bankruptcy and any other program,  your credit will be negatively affected,  but the good news is that you can start re-building your credit as soon as you complete the program.

Some debt settlement companies claim that  if you sign up with them you won’t have to deal with your creditors collection calls, the fact is no one can stop all your creditors from calling you.  Nevertheless, some of the best companies can reduce the number of calls you receive.  If you are willing to endure these temporary inconveniences in exchange for debt relief and piece of mind, perhaps you should find out how to download a free 32-page report titled “How to Eliminate Your Debt Quickly and Safely Without Filing Bankruptcy” .

So there you have it.  I’m sure you’ll agree that it would be worth your time to get more in depth information about debt elimination without bankruptcy, in fact you can save a lot of money doing your own settlement with the help of a good reputable do it yourself program or you can hire a company if you don’t think you can handle it on your own, however if you choose the latter do a detailed research of the company and ask a lot of questions to avoid fraud.

Look Out For These Fraud Red Flags

While many consumers in the world today need help with their overwhelming debt, avoiding debt elimination fraud is very important. There are, in fact, many legitimate services that are available to help consumers manage their debts, such as the Charles Phelan’s Debt Settlement Success Seminar .   Nevertheless,  there are also those services that prey on the uninformed consumer. These types of services promise to help you handle your debt, but in reality, all they do is take your money and leave you and  your credit in a worse position than you ever were before. Therefore, consumers should be very careful when searching for a service that will help them with their debts.

The best way to avoid a potential debt elimination scam is to be informed about what to look for. It is important to realize that anyone can organize a website and advertise debt elimination services. It is up to the consumer to do the research and determine whether or not the debt service is a legitimate company that will actually aid the consumer with his or her debt.

Look out for the following signs of fraud when choosing a debt elimination company:

• Companies that promise to erase your unsecured debts. This is not possible and it is a clear indication of debt elimination fraud.
• Any service that requires a consumer to pay hefty monthly service fees.
• Promises to erase your existing bad credit information.
• Assures you creditors will never sue when you stop making payments.
• Asks for payments to be made to their organization, instead of your creditors.
• Tells you to stop communicating with your creditors, and stop paying them.
• Advises you that participating in their program will not result in any type of negative credit reporting.

If you happen to note any of the above red flags when researching a  debt elimination service, do not deal with that particular company. To do so could be harmful to your credit, and cost you a lot of money you may never recover.  These  companies that are engaged in debt elimination fraud sometimes call themselves “non-profit” to attract more debt troubled consumers.

If you are unsure of how to locate a reputable service to assist you with your debts, you can check out a company you are interested in through the Better Business Bureau to see if any complaints have been filed.  However if a given company is not a member of the BBB, it doesn’t necessarily mean it is a bad company.

ZipDebt – #1 Source For Do-It-Yourself Debt Elimination

In today’s uncertain economy the number of people who have turned to credit cards to pay for their basic needs is increasing, consequently many of those folks are now overwhelmed by debt and can’t pay credit card bills any longer. Sadly, they are being forced to file for bankruptcy, but there is a better alternative and this article will explore it and explain why you should considered it if you are among this group.

This better option is debt negotiation, better known as debt settlement, which entails negotiating with your creditors to settle for 50% or lesss of the amount owed. This alternative requires that you are experiencing financial hardship such as long illness, loss of employment or any other serious event that caused you a loss of income.

Here are the main benefits and advantages of using debt negotiation:

• Unlike the other programs, you only pay a percentage of your total debt.
  
• It is the fastest way to pay off unsecured debt. It normally takes 2-3 years or less depending on your situation.
  
• After paying off your bills, you can start to re-build your credit sooner.
  
• Unlike bankruptcy, there is no court involvement.
  
• You can keep your privacy since your record is not made public, unlike bankruptcy.
  
• You save thousands in comparison to other methods, however if you use a do-it-yourself expert training, you save even more.
  

• You are in control, you can even accept or decline each settlement offer.
  

Some people claim they can do their own debt settlement by surfing through the net and getting some information here and there as well as posting questions in forums. You can certainly do that and there are a few good websites on the subject, however if you are having financial problems and can’t pay credit card bills any longer, you need to implement a plan as soon as possible and if you don’t have a system your situation will get worse. This is specifically important if you are behind on your bill payments.

Another problem with the free do it yourself approach of visiting forums and websites is that most of the time you don’t know if this information is coming from a good legitimate source or it is just the opinion of a misinformed forum member. If you follow the wrong information, you may get in deeper trouble.

In conclusion, if you can’t pay credit card bills and are thinking about bankruptcy, consider the do it yoursel debt settlement approach as a better option. Although debt negotiation is not for everyone, you can easily find out if it is for you by downloading a free 32- page report that reveals all there is to know about do it yourself debt negotiation. Access the report by going to the Debt Settlement Success Seminar website.