Call 1-719-520-0164 Today!

23 Jun 2013

FTC Offers Information about Consumer Debt Relief

If you are struggling with consumer debt such as credit cards, auto loans and student loans, it is important to be very cynical about quick debt relief strategies. Many consumers will simply "Google" a debt solution and click on the first ad that looks credible, but what they may not realize is how many companies are really out to cash in on their misfortune. But where can a person find the right credit counseling service or debt settlement without risking personal bankruptcy? It turns out that the Federal Trade Commission (FTC) offers a wealth of advice on their web site.


Depending on the type of service you need, several solutions are outlined on "Coping with Debt" page of the FTC's web site. (http://www.consumer.ftc.gov/articles/0150-coping-debt#debt) But before you sign an agreement with a debt relieve service, it is still important to check with your local consumer protection agency or your state Attorney General. These organizations can tell you about any consumer complaints on file and let you know if the company has the required licenses to work in your state.

If you think you need help to stabilize your finances, take the time to do some homework and ask questions. Find out what the business provides and how much it costs, and don't rely on verbal promises. A good credit counselor should be upfront about potential issues that might arise with your credit score and how long it might take to get the promised results. Be sure to get everything in writing and read your contracts carefully before signing.

What to expect from credit counseling

A reputable credit counseling service can help you manage your debts, develop a workable budget and offer workshops or educational materials. Counselors are trained in consumer credit, debt management and budgeting. Their certification allows them to develop a personalized plan to solve your financial issues. Typically, the first session lasts about an hour, but several sessions might be required to put a plan into place.

The majority of counseling services are set up as non-profit organizations that offer services through local offices but some offer online and phone counseling as well. The best case scenario is always to meet with a counselor face to face. Look for a credit counselor at larger universities, credit unions and military bases, or ask for a recommendation from your financial institution or local consumer protection agency.

A note of caution on non-profit organizations: Having non-profit status doesn't guarantee their services are free, or even legitimate. Some credit counselors charge high fees which may be hidden or they ask for voluntary contributions from clients. Steer clear of these services.

What is a debt management plan?

Rather than helping you pay the bills yourself, a DMP will require you to deposit money with their organization and they will pay your unsecured debts. The benefit of this is that creditors may agree to lower interest rates. The only condition is that you must not use or apply for any new credit while still enrolled in the DMP, which could take 48 months to complete.

If your finances are out of control and you lack the income to repay your debts, a counselor might recommend enrolling in a debt management plan (DMP). Unless a certified credit counselor has thoroughly reviewed your case, don't sign up for this type of plan. While it may work to reduce debt quickly, it could have a lasting impact on your credit score.

What is a debt settlement program?

Debt settlement might look similar to a DMP, but they are only offered by for-profit companies. The idea here is the company negotiates a smaller lump sum payment of your debt that is less than what you owe. In order to make that payment, the program requires a specific amount of money is set aside each month in savings and transferred into an escrow account until the payment can be made, but it also requires clients to stop making payments directly to creditors.

While a debt settlement firm might be able to settle your debts, it can take a long time to complete the process. Oftentimes, these programs require deposits into a special savings account for three years or longer before all the debt can be settled. Before signing up for such a program, be sure to review your budget carefully and make sure you can keep the payments up for the full term of the agreement. Also, keep in mind that creditors are by no means obligated to settle your debts, and you could continue to accrue interest on some accounts before they are paid off. Because the program will discourage you from sending payments to creditors, your credit could be severely impacted.

Debt Consolidation

Another way to reduce the cost of credit is through consolidation loans, particularly with a second mortgage or home equity line of credit. These loans may seem attractive but they require your home to become the collateral. This means you could potentially lose your home if the payments are missed or late. In addition to interest on a home equity loan, you will also have to pay points. Each point is equal to one percent of your loan amount. While they may be tax deductible they can still increase the cost of the loan.

Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net

Stephen H. Swift

Managing Attorney
Law Office of Stephen H. Swift, P.C.

Client Testimonials

  •  

    "My attorney (Matthew Hansen) is a very kind person.  I felt very confident in his skills. He is very knowledgeable and efficient.  He didn't make me feel embarrassed to be filing for bankruptcy.  Thank you Matthew!  Laura was very friendly, and everyone I interacted with was very nice and helpful as well." 

     

      –  Sherry M., Colorado Springs, CO

     

  •  

    "Steve explained things well so you know what you're doing.  The staff was very helpful with everything, including the paperwork." 

     

      – Raymond & Rhonda P.,                         Colorado Springs, CO

     

  •  

    "From the first time that I entered the office, I was treated with the utmost respect. It was like I had been knowing all of the employees for years!! Every person that I came in contact with was extremely courteous!!!

    I rate my overall experience a 12!! And I wouldn't change a thing on the website.

    Cris is absolutely wonderul!! While Alicia was extremely courteous and humorous!!!  Stephen (Swift) was extremely professional and courteous. One of the nicest gentlemen that I have Had the pleasure of working with. I can't thank him enough."
        

      – Pete, Colorado Springs, CO  

     

  •  

    "Upon my first visit to the office, I was in an unfamiliar part of town.  I was also bewildered and experiencing anxiety.  I was not even sure I should be there or how to proceed in a very new situation where my back was against a wall.  The first person I met in the office was the lovely receptionist.  I have to say that she has the absolutely right demeanor and is extremely successful in her position.  She has a slight but comforting smile and persona.  She is confident but not arrogant in processing the needs of clients.  I do not feel that this is a small achievement in any way.  I feel this person in many ways sets the tone for the office as the gate keeper of the office and emotional clients.  She definitely helped me thru this process with her silent and dedicated service to me, the clients and the office."

     

    John C., Colorado Springs, CO

     

  •  

    "Upon entering Steve's office, one immediately knows they have entered his "zone".  Steve will talk, think, contemplate, then act.  He then spins his chair around, garbs paper, types on the computer and zaps something thru the printer.  Occasionally, a document needs to be scanned or something else from outside the office is needed, and Zap someone appears without having to yell down a hall or call out.  There is definitely a team here that is in sync.  There may be a question out of the blue suddenly or a brief conversation about something else.  The whole time, Steve is on point.  I felt from day one, a trustworthy confidence in placing my future in his hands.  I was not wrong.  I also never once felt rushed, brushed off or that my concerns were not his.  I felt that Steve is in this for me and his clients.  I have a debt, gratitude and confidence in Steve and the Swift team that far exceeds the fees pain." 

     

      – John C., Colorado Springs, CO

     

  •  

    "Thank you to everyone who worked on my case.  My driving priviledges are now restored and I have a fresh start.  I am very grateful to the Swift Law Firm!   Everyone was very kind and helpful and easy to talk to.

    Ward was very knowledgeable and knows the pros and cons of your case. Definitely a man to listen to concerning your case, and he was very helpful!

    Matt Hansen is a good man, very helpful, gives good advice  AND he is willing to go the extra mile.  Steve Swift is a man of action who knows his profession.  He lifted a heavy burden, and I cannot thank him enough for an excellent job!"  

     

      - Henry R., Colorado Springs, CO  

     

load more hold SHIFT key to load all load all

Popular Blog Posts

 

Get In Touch

 733 E. Costilla St., Suite A

     Colorado Springs, CO 80903

 Phone: (719) 520-0164

 Fax: (719) 520-0248

          
 
No Internet Connection