Category / Debt Management

Debt Management

Bankruptcy Need not be Your First Choice

Debt and Bankruptcy Debt Advisory LineSerious economic challenges can exert a high degree of psychological pressure. Especially when expenses are exceeding the available income for extended periods of time, strain levels in a household can get insufferable. During this period, many will consider bankruptcy their only available option. In itself, this need not be a problem. After all, declaring bankruptcy means all financial obligations owed to lenders will be dismissed if your filing is decided in your favor. Choosing to file, however, is a serious matter and will seriously affect your life for years to come. Ahead of declaring bankruptcy you should therefore take numerous aspects into account – especially since debt and bankruptcy don’t have to go hand in hand.

The first question you should ask yourself is whether you may be able to restructure and get rid of your debt by yourself. When debts are too much to handle, after all, you are going to struggle to pay the lender commitments you agreed to. In this case, bankruptcy can be an option. Before arriving at that conclusion, however, you should take all available steps into consideration to improve your financial situation: Is there a car which can be traded in? Can the house be refinanced for a decrease in the mortgage payment? Are there higher paying jobs that can be added to the household income? There are also a variety of practical steps you can take to at least return to breaking even: Cut back on household expenses and instead of going on expensive vacations, go for cheaper alternatives. This can often help to relieve the stress of debt for you and your family. Try cutting back on extras like cable, cell phones and eating out before deciding to declare bankruptcy.

Mostly, though, bankruptcy is something best handled by experts and you should consider getting professional help. A debt consolidation company can help you negotiate with creditors to reduce the amount you have to pay each month, for example, and thereby avert bankruptcy. They can help create a plan to get you out of debt and back on the right path towards a sound financial situation. They will also assist you to determine how much debt you actually have. Although it may sound hard to believe, many people tend to hold an exaggerated view of their financial misery. You may be one of them.

The Debt Advisory Line have years of experience in helping you establish a precise picture of your debt and systematically reducing it. If you’re in need of debt management, contact us now to find out how we can assist you.

Debt Management

A trustworthy debt relief company can only help you – Know more

Most of us won’t like to begin the New Year looking at a long list of debt relief services. However, restricting your debts is one of your primary concerns if you truly wish to improve your personal finances.

Your credit situation can certainly be improved if you follow the tips mentioned below. A majority of us don’t have the time to look after our personal finances, although it really helps when we check out our individual credit situations. That’s one reason why so many of us are now reaching out to debt relief services,  keeping control of the debts owed to you by businesses and acting fast and with the protocol way as managed by this professionals.

Look for an organization of good repute.

Acquiring memberships of esteemed organizations or quality accreditations demand adequate time and dedication from a service provider. A company that wants to draw quick money and make a fool of its customers won’t spend too much time into this. Inferior services don’t engage trained professionals or complete paper-works. NFCC and AFCC are amongst organizations that have websites presenting lists of renowned debt relief services. Once you go through these lists, it will be easier for you to pick the right company. Reliability of these services can be easily understood once you read through the membership criteria of these organizations.

Acquire referrals from the ones you love.

Earning referrals of quality debt relief services from your loves ones is a natural thing, since many of them may have gone through similar situations in the past. You may find effective guidance under a certain company that had helped a friend or relative in the past. At the same time, you’ll need to go through the situation experienced by your loved one and not rely too much on such referrals. A referral doesn’t guarantee an experience that will surely yield positive outcomes. Success often depends on the particular agent that handles your case and your individual financial situation. You must look for a different debt relief company in case a particular company doesn’t feel right.

Conduct your own research before arriving at a contract.

You must study the way your chosen company works, even when you’re about to work with a reputable organization. Doing your own research may bring out facts about your chosen debt relief company that you must take into account. All reputable debt relief companies reflect the true nature of their services through testimonials and reviews posted by their past customers. You may come across positive reviews or complaints filed against your chosen company while searching for accreditations offered by renowned bodies like the BBB.

Understand the law and identify your rights.

There are laws governing the operations of any debt relief company, hence you must identify your rights. Websites like FTC.gov are likely to show you through the telemarketing rules governing various sales processes. Scammers often pose as legitimate businesses and rob consumers of their hard-earned money. Promising outcomes that don’t quite seem realistic and demanding charges upfront mostly signify such scams. Rules have been imposed to protect consumers from such attempts. You’ll need to analyze the overall financial situation and trust your instincts before you pay for these debt relief attempts. Feel free to express your concerns, if you feel skeptical about something. You may choose to work with a different debt relief agency if the policies of your favorite agency don’t seem agreeable. In the end, a reliable service provider can only pull you out of your debt burden.

Debt Management

Advice on Secured Loans

When you are searching for options to fund a new purchase, you have to make a choice between unsecured and secured loans. There are advantages to each of these, and it ultimately depends on the financial condition of the borrower, as to which alternative becomes preferable.

Unsecured Loans versus Secured loans

Unsecured loans are a recent innovation in finance, unlike secured loans which have been around for centuries. Even in the older days, people used to borrow money after keeping their land as security. This was the way most farmers were able to get money to finance buying of seeds and fertilizers for their activities. Unsecured loans have led to larger risks being taken by lenders and this has led to rates and terms for such loans being far more costly and stricter. Mortgages are a form of secured loan, because the property being acquired itself is offered as collateral, to guard against default in payment.

Secured Loans and Credit Ratings

Financial institutions always prefer to have clients that have good credit ratings. Even so, where collateral is offered as security for the loan, they may not give this credit rating too much of importance, as their risks are covered by the asset value of the pledged security. A good credit rating and a loan that is covered by collateral can lead the lender to offer much more generous terms. So, interest rates will be lower, conditions will be easier and payment concessions will figure in the final contract. A poor credit rating along with collateral will still allow you to get the required loan, but because of the poor history, terms are likely to be stiffer and more demanding.

Business Secured Loans

Most banks offer businesses secured loans that require some sort of collateral. This can be in the form of any property that the business has rights over. While property is the most preferred, banks will even offer such loans against equipment, vehicles and any other asset that the business has.  Before such loans are granted, the lender will insist on an independent valuation of the assets, so that they cover the full value of the loan being considered. In some cases, banks may even offer to give such loans against shares or stock, as long as the company has a history of being well traded in exchanges. Businesses even in case of secured loans, are expected to provide complete financial details and history, so that the lender can ensure that they have the necessary business acumen to run the business profitably. A well-run company can even further negotiate to get very advantageous terms, that ultimately lower the cost of such financing.

Secured loans must always be preferred by both individuals and businesses as the interest rates in them are much lower. It also enables an idle asset like a home or other property or collateral to realize its potential value, which otherwise lies dormant. Loans are normally offered that can go as high as a hundred percent of the value of the security offered, though eighty percent is more the norm. Click here if you need to get more information on secured loans.

Debt Management

Pay-day loans – the fast, convenient and user-friendly was of borrowing money

Payday LoansPay-day loans are like any other loan products in as much as they need to be treated with respect and due caution. The fact of the matter is that most people have to borrow money at some point in their lives. Whether that borrowing takes the form of a mortgage or a pay-day loan from payday loan giants Wonga – they’re all loans. They all involve paying back interest of the original loan amount, and they all have to be repaid within a certain time frame.

An alternative to traditional bank loans

Pay-day loans have received a certain amount of bad press, but it’s not the actual product that’s at fault as much as some of the borrowers. The fact of the matter is that pay-day loans offer a new, modern alternative to traditional borrowing. In an ideal world most people will approach their bank for a loan. They offer flexible loan amounts, flexible repayment periods, and good rates of interest. But there is a problem.

The problem with banks is that the majority are so staid and stuck in their ways. They’re trying to reinvent themselves, but their hearts are not really in it in the same way as they are in the new Fintech start-ups that are setting up shop and challenging the old financial regime.

The loan application process from a traditional banks can be long and drawn out, and quite invasive. A large percentage of loan applications never succeed. This is where pay-day loans really score. The application process is fast and efficient. In most instances it can be carried out entirely online, which is something that suits South Africa’s young generation down to the ground. Banking innovation is key according to the Africa Progress Panel, and South Africa is not short of innovation.

Higher interest but over a shorter period of time

Admittedly the amounts lent out are relatively small. The initial pay-day loan product that market leaders Wonga (South Africa) has a ceiling of R2500. Given the fact that the loan period is so short (typically no more than 47 days) the interest charged has to be much higher than the interest on traditional bank loans, but it has to be that way in order to be viable for the lender. Its why these products are referred to as high cost short term loans (HCSTLs).

The advantages of speed and convenience

The beauty of pay-day loans is their speed and convenience. This is their main attraction; but it can also open a loophole for unscrupulous borrowers too; those who have little intention of paying the loans back if times are tough, and this is how some of the bad press originates. Even though most pay-day loan companies are responsible lenders, in order to make the loan application process as fast and user-friendly as it is, it does open the door to some “fraudulent” applications.

Responsible lending and borrowing is good for the South African economy

The majority of people who apply for pay-day loans do so carefully. They weigh up their options, and make sure they can pay the loan back when it is due. Having done their research carefully, some people are now beginning to use pay-day loans to start up their own on line businesses. According to a recent article in The-South-African.com there is a tough start-up market emerging, mostly reliant on self-funding.

Pay-day loans are a good product that offers an alternative form of lending. With responsible lenders and responsible borrowers, they can add a significant boost to the South African economy.

Debt Management

Don’t Let Debt Overload You

Debt is a huge burden when it’s accumulated for the wrong reasons. Using credit cards to by the next big thing is never the way to go when it comes to being financially responsible.

However there are times when debt is ok. For instance, you want to buy a house. Yes it is possible to buy one with cash but that would probably take a decade if not more. So getting a loan for something like that isn’t a bad thing. If you can benefit from going back to school in order to be able to get a better job in the future, private student loans will also be debt that is ok as it may be impossible to pay a university outright.

A car loan also isn’t that bad because a car is a necessity for most people. Of course you should be getting it for it’s purpose if you’re going into debt and not necessarily because it’s the best looking sports car available.

And another time it’s ok to get a loan….a significant hit to your finances. For instance you lose your job and you’re about to be homeless. Getting a loan to cover your mortgage isn’t the worst thing you can do. Of course, you should have cut everything to the bone as far as your expenses.

Debt is everywhere and most people have it. But don’t let it take over your life.

Surprised at the state of UK consumer loans? View how quickly UK consumers accumulate debt with this live debt ticker.

Breaking down UK loans infographic

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