Are your eyes popping out as you see the post-holiday credit card bills? Your overwhelming bills could be a result of some lavish holiday shopping, or a little financial mismanagement. Therefore, here are a few tips for personal debt consolidation as a part of debt management plan to eliminate your financial woes at the beginning of 2012.

1. When you are planning to pay off your debts, then your primary task will be to prepare a list of the debt that you owe to the creditors currently. Make sure that you create a list in descending order of the interest rate so that you can promptly consolidate the high interest debts.
2. If you have multiple high interest credit card debts, then you can transfer your balance to a low interest credit card to make it affordable to pay off. You can avail yourself of the introductory or teaser offers on a card to take advantage of the zero percent interest rate on it.  But make sure that you pay down your debts quickly before the introductory rates end. If you are unable to pay off your balance during the introductory period, then the interest rate bounces back to the similar level to what you had been paying before you opted for a 0% balance transfer.
3. When you are working on consolidating your debts, then you can avoid using your credit card so that you do not incur more debt.  Your post-holiday credit card statement might be a reason for your current stress, but instead of being panic-stricken, you should strategically plan to eliminate your financial blues.
4. Make sure that you prepare a budget so that you can save more to pay off your debts. Budgeting helps to track your expenses to eliminate your financial woes. When you save money through budgeting, then you can diligently work towards paying off your debts.

There are three ways to consolidate your credit card debt:

1. Home Equity Loan: You can take out a low interest home equity loan to pay off the debts. Instead of making multiple credit card payments, you can simply make a single monthly affordable payment.
2. You can apply for a low interest personal loan from the bank to utilize the money to pay off the debts. But if you have a low credit score, then you might require a co-signer with a good credit report in order to get an affordable interest rate loan.
3. If you have a poor credit score, you can apply for a secured loan in order to get a low interest rate loan. The interest on this loan will be low as the lenders will provide you a loan against collateral. But if you default on this payment, then you might lose possession of your assets.

Have you ever opened a credit card account just because you were offered a free promotional gift just for applying? If you did, chances are that you have quite a few revolving credit lines that carry balances. These balances are costing you money in service charges and interest each month and are probably responsible for a large chunk of the credit debt that you carry. The cold numbers may be the first step in realizing that you need to find credit debt help before you run the risk of not being able to make your payments on time.

Revolving Credit Debt Help Tips

People often do not realize that when they add up all of the money that they will have paid out by the time they have paid off their credit cards, they really have nothing to show for the large chunk of money that they owe. This single fact is enough for many to take the first steps to change their spending habits and attempt some do it yourself credit debt help.

Knowing that your credit cards are not really being used to benefit your long term financial plan should empower you with the resolve that you need to put the cards away and stop using them for small purchases that could end up costing you many times the value in service charges, interest and even penalties. Once you get in the habit of paying down the overall debt by paying more that the minimum balance owned on each account on a regular basis, you will find that your overall debt is slowly being reduced.

Contact each credit card company and ask if there is a way to have the interest rate on your revolving credit lines reduced. Although they are not required to do so, you may find that some will agree to keep you on as a satisfied customer, especially if you have a good credit history. Any successes will mean that more of the amount of money that you put toward the account each month will be applied to the original balance. You can also negotiate the payments so that you will be in a position to pay less on the lower interest accounts and more on the higher ones.

The steps that you have taken to reduce your overall revolving credit help reduce your long term debt, but it is important that you stay on top of your progress by paying attention to your monthly budget. As you make adjustments to each category to be able to meet expenses besides your credit account payments, you may find that you have less left over every month. Do not run the risk of letting your budget fail. If you find that you are getting close to the point of not being able to make your monthly payments on time, no matter how much you play with the numbers, you may need help from a credit counselor. A reputable credit counselor can help you devise a workable plan that will not only help you pay down your credit debt, but also find ways to lower your other expenses by showing you how to change other spending habits.

Simple steps taken early to address the problems you have made for yourself by the use of revolving credit lines will help keep you financially stable, reducing the risk that you may need serious debt help in the future.

If you still owe on the mortgage for your home, it’s possible that this is the largest debt that you carry. The possibility finding debt help through the process of lowering the mortgage payments that are paid each month would not only make it easier to prevent the homeowner from becoming delinquent and risk losing the investment on the home, the lower payments would free up funds to contribute toward the paying down of credit debt.

Finding an opportunity to refinance the home after you have lost your job is difficult, but it can be done. Look for help immediately. Once you have missed mortgage payments, it only more difficult to find the debt help that you need in order to prevent foreclosure on your home and damage your credit history.

Debt Help by Making the Home More Affordable

When a person becomes unemployed it doesn’t mean that he or she is freed from paying the mortgage payment every month. Instead, for the people who need the mortgage modifications the most, being unemployed puts them in the position of not being able to be approved for a refinancing loan that would allow them to take advantage of lower interest rates and also lower the monthly payment.

The Home Affordable Unemployment Program can give temporary debt help to the unemployed homeowner by providing at least three months suspension of mortgage payments. This will allow some breathing room as you use the time to continue your search for employment with out the stress of missed mortgage payments.

Contact your mortgage servicer as soon as possible to see if you qualify. Although eligibility is not the same in all circumstances, you may be eligible for the debt help if you are eligible for unemployment benefits and you make your inquiry before you have missed three mortgage payments. In addition, the home you are requesting debt help for must be your primary residence and you mortgage must have been obtained before January 1, 2009.

You can only use the Home Affordable Unemployment Program (UP) once, so if you have already used this benefit or other HAMP modification, you will not qualify for this program.

If your mortgage is held by Fannie Mae or Freddie Mac, the UP will not be an option for you. Both of these programs have their own programs for homeowners who are unemployed, so contact your mortgage company to see what type of debt help is available to you.

The U.S. Department of Housing and Urban Development (HUD) sponsors agencies throughout the country that can help you avoid a foreclosure on your home. These HUD approved housing counseling agencies can not only help you in the area of defaults, they can give advice on renting, buying a home and other credit issues.

If you have a FHA loan, check with the Federal Housing Administration when you find yourself unable to make your mortgage payments because you have lost your job. There are a number of resources to help the unemployed with loss mitigation programs and resources for information if you are a FHA insured homeowner who may have a mortgage that is at risk of default.

The FHA Forbearance for Unemployed Homeowners now requires that  the leniency time limit is extended to 12 months. The guidelines have also changed so that it is easier for unemployed borrowers to qualify for the loans.

If you or someone in your family suffers from an illness, the medical bills can pile up and quickly add to your overall debt. As the economy outlook worsens, many people are losing health insurance. Those who are able to keep their jobs and their medical coverage through their employer are seeing higher premium costs, higher co-pays and higher deductibles. In some cases, they are even seeing a reduction in the types of medical care that the insurance will pay for. Medical debt can quickly place an enormous load onto your already existing debt load.

Medical debt help begins with knowing how to save money on medical care in the first place, to keep the cost of staying healthy within the limits you can afford. It does not pay to avoid the doctor when you or a family member gets sick. It can also cost money in the long run if you put off the yearly checkups because of your out-of-pocket expense. The best way to avoid medical debt is to take steps to stay healthy in the first place.

If your family member is not covered by medical insurance, you may be able to negotiate a lower rate when you make an appointment with the medical care provider. Do not be afraid to ask–all they can say is no. There is a possibility that you can get a lower rate though. Medical facilities negotiate lower rates with insurance companies and an insured patient reaps the benefit because their percentage of the overall reduced charge is less. Many medical care providers recognize that it is not quite fair to charge an uninsured person more for medical care than they do for those patients who have insurance.

It costs money for a medical practice to deal with insurance companies. Many providers offer discounted rates and refuse to deal with the insurance paper work at all. You may be able to take advantage of the attempts of the medical facility to lower their overhead costs by eliminating the insurance paper work and lower the cost of medical care.

Even if the medical care provider offers a discount to uninsured patients, it may hinge on the ability to pay the entire charge at the time of the visit. That puts the possibility of paying the reduced amount out of reach for many. Do not let that possibility prevent you from asking about the options that might be available to you.

If the doctor advises medication, ask for a prescription that your medical coverage will pay for. Better yet, ask if there is a generic version of the drug on the market to save money.

If the doctor advises tests at another facility or even refers you to a specialist, again bring up the subject of health care coverage or lack of it. Your doctor or the medical staff can often direct you to the best medical care that will not unduly add to your financial burden.

If you have medical bills that you simply cannot pay, take immediate steps to keep them from being reported to credit bureau and causing damage to your credit report. Call the medical provider and let them know that you are having problems paying the bill before it becomes overdue.

If you do not have an itemized statement of all of the services that were provided, ask for one at this time. If you do have it, go over it to make sure that you have not been charged for services that you did not receive.

Be honest with about your financial situation with the billing department. Often they have special policies for patients who are facing financial hardships. You may qualify for a write off of your medical debt if you fall within certain guidelines. It may mean a lot of paperwork for you, but any way that you can remove items from your debt load will help you recover from your financial difficulties.

It seems like everywhere that you turn, there is a service available that promises you the financial relief you are seeking with their amazing offer of debt help. While a lot of people need the assistance of a financial professional when their finances are overwhelming them and the budget is impossible to stick to, do not be tempted to hire a company to help you dig your way out of debt without proper research and an attempt to solve your problems on your own.

The trick is not to put it off. If you cannot quickly see how you arrived in the financial quagmire that you find yourself in, you may need the advice of a credit counselor. You cannot build a stable financial future if you do not know the dangers of the spending habits that put you on shaky ground in the first place. You may unwittingly make the same mistakes again.

Luckily, there are a lot of safe and low-cost options for credit counseling. Many not-for-profit organizations offer the services, but that does not mean that the counseling is free or that there will not be hidden fees involved. Make sure that you check out the credentials of any credit counselor before you share any of your personal information.

Once you have found a counselor that you trust with your financial information and know exactly how much your session is going to cost you, gather up your information and be prepared to give the counselor complete honesty and an open mind. It is possible that by quickly going over your monthly household budget and tracking where your income really goes, you can come away with a new understanding and a plan to work your way out of your present financial troubles and start digging your way out of debt. Help yourself by making a commitment to follow the financial advice of the counselor.

If your monthly payments and living expenses exceed your income, you may have to take more drastic measures. Debt help may be in the form of debt management. The credit counselor may advise you to seek professional debt help or give you tips on how to lower your payments on your own.

Call your creditors quickly and see if it is possible to work out a payment plan that you can commit to. This will keep your accounts in good standing and give you time to come up with a long term plan. If you are unable to work anything out with your creditors on your own, you may be tempted to enlist the services of a company that promises you credit repair. Again, be careful and research them carefully before you commit. Do not pay a big fee upfront to a company who promises that they will settle your accounts and whom you will then pay smaller monthly payments. There are a lot of companies set up to scam people who are looking for help to get out of debt.

A reputable credit counselor should be able to direct you to another service that can help you with your finances if your situation has gotten to the point where counseling alone is not enough.

Do your research and proceed with caution when seeking professional debt help for your finances. There are many reputable agencies available, but there are also places that are looking to make money from your circumstances.

When making a loan application, whether for a mortgage, auto loan, or personal loan, people worry about being approved. They worry about their credit history, and how it’s going to affect their approval. What most people usually don’t consider is their debt-to-income ratio. This can be a costly mistake, as it is one of the primary factors that lenders consider for approval.

What is a debt ratio? It is your total monthly debt divided by your total income. For example, if you pay $1,000 per month in bills and your income is $3,000 per month, your debt ratio is 1000/3000 or 33%. In other words, about one-third of your total income is taken up by monthly bills.

More goes into this equation, however. Lenders usually calculate your debt ratio using your gross monthly income. Some, though very few, will calculate debt ratio with net income. If they do use net income, they will usually take 75% of your gross income.

On the debt side of the equation, usually only debts that are reported on your credit report are counted against your debt ratio. That means, for example, your car insurance payments or your gym memberships aren’t taken into account. As well, many utility companies, such as electrical, gas, and water, will report your monthly payments on your credit report. However, utility bills and cell phone bills are usually not counted against debt ratio, even if they are on the credit report. In any case, debt ratio is not a good indication of your debt levels.

How does debt ratio affect your approvals? Lenders have different criteria for debt ratio. They might give a front end/back end ratio of 28/33. This ratio means that no more than 28% of your gross income can be allocated towards a mortgage payment. As well, your total debt load, including your credit cards, auto loans, and the new mortgage, cannot exceed 33%.

This ratio has several implications. First, the value of the house you can shop for cannot exceed a certain amount. Second, if you have a high debt load, it will limit your price range. Further, if you have an extremely high debt load, your debt ratio will not support any kind of price on a house. In other words, you’ll be denied no matter how good your credit if you have too much debt. This is the power of the debt ratio.

Debt ratio is not a good indicator of what you can or cannot afford. Debt ratio only applies to what the lender sees on paper. If you have a side business that generates a good amount of income, you might be able to afford a house in a higher price range. However, without the proper documentation, lenders cannot count your business income.
What can you do about debt ratio? You have a couple of options, but both point to manipulating your ratio in some way. First, you can pay down your debts. By paying down or eliminating some debts, you can improve your debt ratio and increase your buying price range. Obviously, the higher the payment you can knock out, the better for your debt ratio.

Here’s a trick you can use to better your chances. For most people, the highest payment on their credit report, outside of a house payment, is a car payment or other type of installment loan. Many lenders will not count an installment loan against your debt ratio IF there are less than 10 payments remaining. If there is any possible way for you to pay down your installment loan to fewer than 10 payments, your debt ratio will improve dramatically. For example, if you have a car loan that has 13 payments left, you don’t have to pay off the entire loan to enjoy the improved debt ratio. You simply need to pay 3 payments; worth to get the balance down.

Three caveats to this trick. First, this only works if the lender utilizes the 10 payment rule. Second, this only applies for installment loans; that is, loans that have a fixed term and fixed monthly payment (car loans, student loans, and some personal loans). You cannot use this rule against credit cards and other revolving lines of credit. Third, most lenders will not apply this rule to a car lease, so even if you have less than 10 lease payments remaining, it will count against you. The lease payment rule is not industry-wide however, so check with the mortgage company.

Debt consolidation companies are a dime a dozen, especially today. These companies have been hugely-successful because the number of people in debt has been growing steadily. The same people would try to manage their debts through debt consolidation methods. Some succeed easily enough while others fall into more debt trap.

Before deciding that debt consolidation is right for you, make sure that you are well-informed about it. For starters, you should know that there are many debt consolidation dangers including the following:

False Promises
There are certainly plenty of debt consolidation companies which will offer you too-good-to-be-true deals and chances are, they are. These companies are in the business of advertising that debt consolidation loans will provide you with so much convenience, you will have to wonder why you never considered them from the beginning. Although debt consolidation is really an effective way to get rid all your debts, you should remember the responsibilities that come with it. Even though the consolidation company will offer to do everything for you, you will have to understand that it will take a deep lever of commitment in order for this to work.

Hard Money Loans
Debt consolidation loans are really designed for people with credit problems. These loans are usually offered with a higher-than-standard interest rate. Although you can arrange the monthly payments to be smaller compared to what you have been paying in total, you might end up paying more than what you initially thought. To determine whether you will actually be saving money, you should try and compare the offers of several different companies. You can simply request a quotation from these debt consolidation companies and look at their best offers side by side.

Falling for Balance Transfer
Applying for balance transfer can show up in your credit report and cause you to lose precious credit points. If your application for a balance transfer is denied, you will still have to deal with all your debts. Unfortunately, your credit score may have been affected already by the balance transfer application and taking out a personal or home equity loan will mean higher interest rates and bigger monthly payments. If you do get approved, you will only enjoy the low interest rate for a pre-determined period and if this period is over, you will be paying a much higher interest rate.

When considering debt consolidation, it is very important that you are aware of the current status of your finances. Weigh available options carefully and make sure that if you do decide to apply for a debt consolidation loan, you can shoulder the responsibilities of paying it. Otherwise, you are just asking for more problems and this time your luck might run out.

It is quite common for people to experience financial difficulties especially during times of unemployment, divorce or even during medical emergencies. Some people manage to get back on track and pay off all the debts incurred while others find themselves with a huge debt that they can not pay. For those people who want to be rid of their debts and be financially free, debt consolidation might be the answer.

When talking about debt consolidation, one should really consider the benefits it provides. Many people with bad credit have discovered that it could be the most effective way of managing debt, thus avoiding more serious financial problems. Debts owed on your credit card or mortgage could soar to exorbitant amounts. If you fail to pay on time, you will even be in more trouble as these credit card companies will charge you late payment and over-credit limit fees. The amount you originally owed will double in no time at all.

With debt consolidation, all these can be avoided. It is important, though, to understand that you will still have to de disciplined. To get rid of your debts, all you need to do is to take out a debt consolidation loan. This loan will be used to pay off all the money you owe your creditors, leaving you with just this loan to repay. Of course, you should expect that this debt consolidation loan would come with a higher interest rate. This is really understandable. Remember that the debt consolidation company will be taking a risk in approving your loan especially since you have poor credit rating.

Before considering debt consolidation, you should first sort out your finances. Make sure you are aware how much money you can shell out each month so you will also know how long it will take you to repay your new loan. If you need to cut back on your spending habits or change your lifestyle, then do so. In case you have difficulties working all these put by yourself, some debt consolidation companies can provide you with advices and tips in order for you to determine these things easily.

Once you have determined these things, you can now look for a debt consolidation loan provider. The best way to go about this is to compare offers from different companies. In fact, you can even ask for quotations for free. This quotation will show you in detail how much the company will be charging you for the interest and how long you are suppose to pay the debt consolidation loan.

Other companies would even provide information on the terms and conditions that you will enter into, should you decide to get one of these loans. It would also be to your advantage if you require your debt consolidation loan provider to include a guide on the process of debt settlement. If you make sure that you will not default on your loan then you are genuinely on your way to a financially free life.