Some interesting new research from the National Endowment for Financial Education has surfaced regarding debt consolidation loans. Research highlights that debt restructuring often leaves a consumer with a greater overall debt burden to the length of time and interest rate of the new loan. Highlights from the new research: NEFE says, a five-year loan for $20,000 at a 10% interest rate would cost about $425 a month and total interest payments of $5,496 for the life of the loan. Extending the debt to 15 years in a consolidation loan would knock down the monthly payment to $215, but it would increase the total interest payments to $18,685 b a fact that is conveniently left out of most debt consolidation advertisements. “Typical ads tell consumers that the monthly payments will be low and that their debt will be reduced, and although the ads sometimes tout lower interest rates, most people who…
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The credit crisis has lead to many Americans facing increasingly out of control debt. People looking for a solution often consider debt consolidation as an alternative to bankruptcy. Each approach has distinct advantages and disadvantages, but not everyone understands the legal and technical consequences involved in deciding between the two. Debt consolidation or debt management usually means working with a credit counseling company who specializes in working with creditors to arrange lower interest rates and/or monthly payments on delinquent credit accounts. Generally, you enter into an agreement with the credit counseling agency and make your payments directly to the agency, which then pays your creditors. Debt consolidation may also refer to obtaining a large loan to pay off smaller loans, which does not reduce debt unless you obtain a better interest rate. However, debt consolidation can be expensive and full of problems the counselors may not fully disclose. Not every…
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The axiom, “If it sounds too good to be true, it probably is!” remains an enduring and unassailable truth. But during the stubbornly long-running downturn, desperate people suspend disbelief. Number 4 on this list caught our eye today as we see clients all the time who fall victim to debt reduction or debt consolidation scams. Get Out Of Debt Now It’s not just the government that has debt issues many Americans are carrying debt that can take decades to pay off. So an opportunity to help consolidate, renegotiate and reduce those debts would seem worth the initial fee that many debt-consolidation scammers require. But as with most recession scams, the up-front fee is a red flag. Once debt-relief scam artists get that fee, most don’t negotiate with creditors at all. The same new FTC rule that prohibits up-front fees for mortgage modification bans them for debt-reduction services, which is good…
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*Credit card payments will not be accepted for bankruptcy cases, unless pre-approved by The Sader Law Firm. If you have a question about a credit card payment, please call our Office Manager at (816) 561 1818.
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