Alabama Debt Consolidation
Debt Help in Alabama
There are many reasons that individuals face overwhelming problems with debt. For some, debt problems stem from poor budgeting and spending habits. For others, medical bills creep in and create debt problems, or a change in income from loss of a job turns their family’s financial situation upside down. When you come to the place where you cannot pay even the minimum payments on your debts, it may be time to seek help.
Alabama Debt Consolidation & Credit Counseling
Alabaman debt consolidation or credit counseling is often the first option to consider. Debt consolidation programs roll all debt into one loan. Often the loan has a lower interest rate than the credit card debt, which makes the monthly payment much lower than the total of the minimum payments on the credit cards. This can work well, if you are disciplined enough not to add to the debt after consolidating it.
Debt consolidation may not be possible if your credit is extremely poor, but if you have managed to maintain a fairly decent credit rating, look into your options for debt consolidation. If you own your own home, consider a refinance or home equity loan to pay off your credit cards. However, do not roll your credit card debt into your home loan unless you are certain you can pay the monthly bill. You do not want to sacrifice the security of having a home for your credit card mistakes.
Credit counseling programs help you work with you to help you create a working budget and find a workable solution to your debt situation. Interview credit counseling agencies to find one that offers the most support for your situation. Consider looking into the ones approved by the U.S. Courts for credit counseling in Alabama. These can be found here: http://www.uscourts.gov/bankruptcycourts/approvedagencies.html.
All credit counselors on this list have the approval of the federal government to work with those facing bankruptcy. You do not have to be facing bankruptcy to use their services, but the federal approval gives you the security of knowing you are working with a legitimate company.
Alabama Debt Relief Programs
Alabama debt relief programs go a step further than credit counseling. While the goal of credit counseling is primarily education for the consumer, teaching them about debt and budgeting so they can get out of debt or avoid future debt problems, debt relief programs will work with consumers and their creditors to find a workable solution to their current debt, including consolidation, settlement, or a restructuring of the repayment terms.
Alabama debt relief programs are not free. Be sure you know exactly how and when the debt relief agency will be paid, and what services you will receive for that payment. Watch out for companies that over-inflate their fees in order to make a huge profit off of your difficult situation. Also, avoid any debt relief programs that offer too-good-to-be-true guarantees. No company can guarantee, for instance, that you can settle your debt, as debt settlement requires an agreement from your creditor.
Alabama Debt Collection Laws
Alabama operates under the Fair Debt Collection Practices Act (FDCPA), which limits harassing actions taken by debt collectors or creditors. Under the law, creditors cannot:
- Call before 8:00 a.m. or after 9:00 p.m.
- Call your employer if this is prohibited by the employer
- Communicate with you if you have sent a letter stating you wish the debt collections communications to cease. (Note: this does not eliminate the need to pay the debt, but it does stop the calls)
- Use or threaten violence or any other criminal means to collect the debt.
- Use foul language.
- Advertise a debt for sale to force payment.
- Call repeatedly with the intent to annoy, abuse or harass the debtor.
If you feel that a creditor or debt collector is breaking this law, tape record any conversations with the debt collector. Alabama’s state debt collection laws allow you to do this without the permission of the debt collector. If you have problems, you must contact the Attorney General at:
Consumer Affairs Division
Office of Attorney General
Alabama State House
11 S. Union St.
Third Floor
Montgomery, AL 36130
800-392-5658
Alabama has a few other laws that affect people who struggle with too much debt. Under state laws, the maximum interest rate a collection agency can charge is six percent, unless your original contract stated otherwise. The statute of limitations on delinquent debts, or the period of time under which legal proceedings must be initiated for delinquent accounts, is six years for all types of contracts and three years for open accounts.
Alabama Mortgage Assistance Programs
If you would like to buy a home in Alabama but think you cannot afford it, there are several programs that can help. Even if you have bad credit, you may be able to get a bad credit mortgage with assistance from the FHA. FHA-backed loans rely less heavily on your credit score and more heavily on your current income as a basis for determining whether or not you can afford the loan.
Alabama’s First Step program offers 30-year mortgages at lower-than-market interest rates. To qualify, you must be a first-time homebuyer and be in the low- to moderate-income brackets. The program is not always available, but you can check https://www.ahfa.com/First_Step/What_is_First_Step_.aspx to see if funds are available and if you qualify.
The Step Up program is Alabama’s down payment assistance program. Through Step Up, families earning $97,300 or less can get down payment funds through a 10-year second mortgage to use as a down payment. The Alabama Housing Finance Authority organizes the mortgage so homeowners only need to pay one check each month, even with the additional mortgage. Some families who qualify for Step Up may also qualify for Mortgage Credit Certificates, which reduce the amount of federal income tax homebuyers pay, freeing up more funds to help them pay their mortgage. Find out more at https://www.ahfa.com/Step_Up/What_is_Step_Up_.aspx.
Alabama Government Assistance Options
While you will not find a “get out of debt free” card offered by the Alabama state government, you can find a few federal government assistance for dealing with debt problems. For instance, if you are facing problems paying your mortgage, the federal government offers several government-assisted refinancing options that could allow you to keep your home. These can be found at http://makinghomeaffordable.gov/.
Alabama Debt Consolidation, Settlement & Relief Agencies by City
