It has been two years since the Federal Trade Commission (FTC) implemented new rules regulating the debt relief industry. According to a recent report on WTEN-TV, Albany, now consumers can more easily find and work with trustworthy debt resolution companies. Easing the burden of debt can be a lifeline to Capitol Region families overwhelmed with consumer debt.
Making just monthly payments
Making just the minimum monthly payments may free up your cash flow, but this
radically increases your total cost and the length of time you stay in debt. Credit cards
are revolving debt. That means that unless you pay them off every month, you are paying interest on interest. At a minimum, don’t reduce your payment as your balance drops. If you can afford to pay more each month, consider an accelerated pay down strategy. If you cannot make your minimum payments, you may want to explore credit counseling or debt settlement.
Debt settlement provides consumers with serious financial hardships an alternative to
bankruptcy. In debt settlement programs, instead of making your minimum monthly payments to your creditors, money is saved in a personal dedicated account. The accrued funds are used to negotiate settlements for less than the amount you currently owe.
For those who can afford higher monthly program payments than debt settlement, credit
counseling offers a manageable way to become debt free with minimal impact to your credit score. Typically, this type of plan will lower your interest rates for each creditor, but will not lower the amount you owe. For a small monthly fee, a credit counselor will review your financial situation and create a debt management plan (DMP). You pay a single fixed monthly payment into the program.
For consumers who have overwhelming IRS debts ($10,000+), a tax relief service may
be appropriate. Reputable firms will work on your behalf to determine your back tax liability and prepare and file past due tax returns. A service can perform a detailed financial analysis and recommend and prepare the optimal tax resolution.
The debt industry, as elsewhere, has gained a stranglehold on Capitol Region consumers. Solutions are available for families and individuals to regain control of their lives.
Dave Balog works in financial services. Contact him at email@example.com