Debt Management: Is Settling Right for You?

You've probably heard the claims of companies able to "settle your debt for pennies on the dollar." If you feel like you're drowning in debt, that probably seems like an attractive option. Though the financial relief that comes from no longer having your debt is a huge step forward, the hit that your credit score will take may make you change your mind. Carefully consider all of your options before you make a decision to settle debt.

Debt Settlement Companies

A debt settlement company acts as an intermediary between you and the companies to which you owe money. They'll ask you to stop paying your bills and send them a monthly payment, instead. Part of this monthly payment is a fee to the company, and the other part goes into an escrow account for making the settlement. The settlement company will then contact your creditors and offer to make a settlement.

Perhaps the biggest downside to this method is that you're actively ignoring your bills without telling the creditors what you're doing. All of these missed payments will go on your credit report, where they will stay for seven years. As your payment history accounts for almost 35% of your credit score, even a single delayed payment can drastically lower it. This can be especially devastating for those with good credit. However, the debt relief that can come from settlement is significant and may be the only option for one who has found themselves deep in debt. A bad credit score can be recovered, while debt may increase over the years if it is not taken care of early on. 

DIY Debt Settlement

Another option is to eliminate the middle man and contact your creditors by yourself. To do this, you need to be able to pay the settled amount immediately, so save up a chunk of money or use your tax refund. When you have that money saved up, call the company and make them an offer. Like working with a debt settlement company, this method typically works better when you've missed several payments. At that point, the creditor may have written off your debt, or feel that it's better to take whatever amount they can get. This method may work better on debt that came from a sudden unexpected expense, such as medical expenses. Those who have incurred debt over time, as is often the case with student loans, would do best to seek professional financial advice for their settlement.

Not everyone is equipped to handle their own settlement. Unless you have considerable financial knowledge (and, preferably, a legal background), you should seek professional advice before you go forward on settling your own debts. When it comes to debt and money management, a small mistake can end up costing your for years to come. 

Impact on Your Credit

Not paying your bills has a huge impact on your credit score, and in order for debt settlement to work, you usually have to stop making payments for a while. For example, a payment that's 30 days or more late can reduce your credit score by 50 points. When a payment is delayed even longer—and you have more than one account that's reporting late—the results can be even more significant. The company will also report that you've settled to the credit bureaus, which some might perceive as a risk.

Debt settlement can work for many people, while others should look into other options. Consulting with a financial advisor, who can assess your unique financial situation, is the best way to know where you stand and what option is the right one for you.

Informational Credit to Hudson & Company Insolvency Trustee Inc.

Thinking of Improving Your Finances, Here are 5 Things you Need to Know

One of the most sensitive topics in the lives of most people is finances. Now more than ever, the majority of people are struggling to stay afloat. As a result, more and more people are coming out to get loans and they do this without taking any precautions. In the long run, they end up making costly mistakes. To avoid this, you should be better prepared by taking the following into account. 

Get to Know what is Available

Because of the ever increasing number of lenders, the process of applying for a loan has become complex. While it is possible to come across fair lenders, there are others who are out to take advantage of people in dire need of cash. There are different options to choose from and these include short term, same day and personal loans. Some of these are processed fast and don’t require credit checks. Additionally, they are calculated on the basis of how much one earns.

Lenders Credibility

With so many lenders to choose from, you need to check the credibility of your preferred lender. Use the internet to compare different kinds of lenders and pick one capable of meeting your needs. Read reviews about the lenders and if there are any negative comments or testimonials about them, countercheck and confirm their credibility. Carrying out a thorough background check on the lender will save you from making unavoidable mistakes.

Evaluate the Payment Terms

Some lenders tend to be slew in their dealings. Therefore, always countercheck their payment terms carefully. Do not make any rushed decisions. Rather, ensure you read the terms with a clear and relaxed mind. This will ensure you do not end up trapped in debt. Depending on the kind of loan you get, make payments in time and take into account the interest rate. 

Note that if you extend the terms or roll over to the following month, you will be expected to make higher payments. In the same manner, there are lenders who offer a higher amount than you need. Do not be tempted to accept this. Borrow what you need only.

Be on the Lookout for any Hidden Fees

Before signing any documents, make sure you read the agreement carefully. Pay special attention to the fine print since this is where the hidden fees are. For instance, there are lenders who don’t charge interest on the first payment installment, but charge high service fees to cushion this. Others will give you lower rates, but increase processing fees. Exercise caution and use your own judgment to decide which deal is better. Always compare terms and ensure you are fully aware of what you are getting.

Don’t Forget Penalties

One of the common mistakes people make when borrowing cash is overlooking penalties. This should be the first thing you look at taking into account that it is easy to default on payment. The reason you are borrowing is because you have a shortage of cash. Therefore, it is essential to be fully aware of the penalties that will come your way once you default. Penalties tend to be quite stiff and they are costly. They can keep you on track as far as making payments is concerned. Make sure you keep a list of your lenders penalties handy as they will help you make timely payments.

It is inevitable that at some point, you might have to borrow cash in order to keep going and meet your financial obligations. However, this does not mean you should go about the exercise blindly. By looking at all these aspects, it will be considerably easier to make an informed decision on which options are suitable for your needs.

Book an appointment with the financial lender and ask them questions about the offers they have. This way, you will be in a position to get loans that are suitable for your financial needs and which are easier to pay off.

Top Financial Advice to Help You After Graduation

Being a graduate may seem all rosy on the surface; however, it is certainly just the beginning of a rat race wherein you need to struggle for a good couple of years to prove your mettle. Needless to say, your first task is to get yourself a decent first job. This, in itself, is a challenging feat with thousands of other graduates vying for a spot that only can enjoy. However, at a certain point, after acquiring your very first job, you may have to pay careful attention to your finances for several reasons. Although the sound of being independent may seem like music to the ears, you need to realize that there is immense responsibility on your shoulders as well. To make sure that you make the best of your financial resources from your first job after graduation, this compilation of financial tips will help you in the process.

1.) Ensure that you save more and spend less:

This is the most important rule that every recent college graduate must swear by. Although you have landed your first job after graduation, your career can take a turn for the worse if you do not handle it with care. The first step to ensure this is by saving all the money you earn instead of splurging it on things that you do not require. Although you have finished your graduation, you must continue living like a student by being far more frugal than you may want to. By doing this, you stabilize your career for the near future. Essentially, you must save a lot more than you actually spend. Besides, you must make sure that you spend only for what is an absolute necessity. The rest of your money should be transferred to a savings account. You will be surprised at the interest you will receive in the coming years. it is an excellent way to add value to your savings.

2.) Avoid using a credit card; save up for emergencies instead:

A credit card may seem like the only means of salvation but you must realize that it can cause more harm than good. While it can take care of an emergency situation, it can lead to horrid financial troubles later in life. Therefore, it is best that you do not resort to this means for providing for an emergency fresh after your graduation. Instead, you could save up a small amount every month to build up an emergency fund that can be used if you meet with emergency situations like an accident.

3.) You should be prompt in the payment of your student loan:

It goes without saying that paying for college can be a daunting task and therefore, most of the students prefer to opt for a student loan to get them through graduation. Some students prefer waiting it out before repaying their loans. However, you must refrain from doing so. Being prompt is the key and therefore, you must ensure that you start paying off your student loan immediately to avoid being hit by interest rates that will cause your overall balance payments to rise. You must meticulously plan out the time that you will require to pay off your debts in order to be on the safer side.

4.) Take advantage of your employee benefits:

If you are an employee of a reputable firm, you will avail of impressive employee benefits that will help you save an enormous amount. This is particularly helpful for you since you have only just recently graduated and are not completely equipped to handle every financial situation well. Therefore, employee benefits like health insurance, life insurance and other such benefits can help you immensely when you are just starting out.

Author’s bio:Patricia Wilkinson is an employee with a well known firm. She graduated 3 years ago and has a professional degree in finance with the help of graduate schemes. Besides, she is also a blogger of http://www.graddiary.com/ and loves to eat. She also loves reading extensively on finance and always stocks up on the latest financial journals and magazines.

Dealing With Your Children's University Expenses

Better Now Than Never

One thing that many parents face with tremendous peril is how to help their children with university expenses. Sadly this peril could have been altogether avoided no matter how financially well off the parents are. It's true, parents that begin saving for college funds when their children are still toddlers rarely have issues with college funding. Though many parents are wise and do this, many do not start as early, but it's better late than never when it comes to this financial issue.

When Starting a Bit Too Late

While saving for university costs is best done over the entire course of a child's earlier school years, there is still hope for parents eager to help their children get through higher education learning. One way parents can help is by assisting their child with applying for federal student aid where available. There are many local and nationwide organizations that provide financial support through grants to individuals attending or applying to attend college.

When Federal Aid May Not Be Enough

Though many financial aid programs pay a good portion of tuition costs and aid with book purchases, the help may not be enough to cover all of the finance issues students have. This is when parents can turn to other forms of funding to meet their children's university related financial needs. There are several financial institutions that loan money to cover the costs of higher education. Most of these loans can either be obtained directly in the parents name or under the potential student's name.

The Pros of a Fixed Rate Educational Loan

When mentioning the word loan many people tense up and get ready for an outrageous interest rate. This is not the case with many student loans; in fact many are designed to be set at a steady rate of interest with low monthly payments no matter the period within the loan term. A fixed rate student loan is one of the best to apply for because both the parent and student already know what is in store for them when it comes to repaying the loan.

Other Methods of Affording University Costs

Many parents would love to afford their children the luxury of having nothing more to concentrate on other than course work, but that is not a luxury all parents can offer. Some parents have had to encourage their children to get a part time job outside of school to help pay for extra educational costs such as clothing, supplies and other things that are not covered under student loans and grants. Most parents view this as an opportunity to teach their children to stand on their own two feet and to become a person with high work ethics.

When Loans and Part Time Jobs Are Not Covering the Costs

Unfortunately certain circumstances such as car payments, insurance, and other similar bills can keep parents and children struggling to pay for educational costs. Some parents have even taken on an additional job and stay at home moms have re-entered the work force to help their children with university costs. Other ways of helping college bound children is to buy them an inexpensive vehicle and perhaps open up a small line of credit to be used for gas and emergency purposes.

Credit Cards Can Help Pick Up the Slack

A lot of parents have found that by providing their child with a low interest credit card they monthly payments are far less than the outright costs of necessary things. Sure the cost will eventually have to be paid off, but using credit to help float through tougher times sure helps. The goal should always be to keep the charges down and to pay a little more than the payment requires each month to avoid higher payback costs.

Using Common Sense to Make Dreams Come True

There are numerous other ways parents can assist their children get through college, even ways such as getting roommates, carpooling, going to local universities, and many more. So, no matter when higher education costs become part of the budget, parents can play a significant role in aiding their children to become who they always dreamed to be.


Author Bio
Ryan Ayers is a writer who creates informative articles in relation to education. This article offer financial advice for university students and aims to encourage further study with an OU Civil Engineering Masters Online. 

Should You Be A Cosigner On Your Kids College Loans

 (Photo credit: Occupy* Posters)

If your child is getting ready to head off to college, you are probably wondering if cosigning his loan is a good idea. Although you want to help your child get an education in any way you can, you are wondering if cosigning a student loan can come back to bite you in the future. For example, if your child is not able to start paying back on his student loans, you will be responsible for them. This will be a real burden to you, especially if you are trying to save for retirement. Before you decide to cosign your child's student loan, you really need to think it over carefully.

What Student Loan Options Can I Cosign?

Parents have two options for student loans: a parent plus loan and a private student loan. Parent Plus loans are federal loans that are created to supplement federal aid. Good credit is required to get approved for this loan and the student is not required to sign for it. Before you decide to cosign this loan, make sure your child has taken advantage of all available financial aid, scholarships and federal funding. Private student loans are offered by private lenders. To get approved for a private loan, a minimum income and credit history are required. Even if your child qualifies for a private loan, cosigning the loan could give him a lower interest rate. 

What Are the Benefits of Cosigning a Student Loan?

If financial aid or scholarships do not cover the entire cost of your child's tuition, cosigning a Parent Plus loan or private loan will benefit him. He likely does not have the credit history or enough income to qualify for a loan on his own. In addition to helping your child pay for his education, you will also be helping him establish a credit history. 

What Are the Negatives of Cosigning a Student Loan?

The biggest negative of cosigning for a student loan is that you are financially responsible if your child is not able to pay it off. If the loan is not paid as agreed, you will have collection agencies aggressively calling you until it is paid. This can negatively affect your credit history and might even put you up against a lawsuit. If you have weighed your options and decided that you do not want to cosign your child's student loan, you can inform him how to get a student loan without a cosigner. For example, your child can apply for a Stafford loan. This federal loan is easy to qualify for because you do not need an income or credit history. Government loans, however, do not allow a student to borrow as much as he wants. If your child has a full-time job and some established credit, you can also advise him to apply for a private loan to cover the rest of the costs. A private loan is more difficult to qualify for than a Stafford loan, but it doesn't hurt for him to try. 

Chad is a seasoned writer on topics such as student loans and saving money for college. You can follow him on twitter @studentloanansw.

Related articles

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• A New Life Full of Debt? How to Cope with Student Loans When Over Fifty (50plusfinance.com)
• 5 Mistakes I Made in College and Wish I Could Do Over (whatisa529plan.com)
• The Student Loan Debt Bubble - Infographic (whatisa529plan.com)

A New Life Full of Debt? How to Cope with Student Loans When Over Fifty

(Photo credit: Occupy* Posters)Student loan payments are an easy way to rack up debt and to feel discouraged about one's financial obligations. New graduates are facing years of hefty premiums to pay off their four years of studying at a local college. 

Even if you over fifty, the prospect of having to pay student loans when you should be enjoying retirement can be daunting. While it is not possible to defer loans, or make them go away, there are some things that you can do to make your life easier. 

The following list will help give you a better idea on how to deal with student loans if you are over fifty.

1) Take Advantage of Grace Periods

Did you just graduate from a program or school? If yes, then take advantage of the grace period you have after graduation to find a job. Even if you already have employment, there are things you can prepare for once the six months are over. 

First, save every extra penny you have. These savings should go back into your loan so that you do not have to worry about scrambling for your first few payments. Also, see if the loan accepts early payments without a penalty. If it does, then pay as much as you can so that you will have a lower obligation once interest starts to accumulate. 

Grace periods are designed to give new students a leverage. This time will allow you to look for work and save money without any faults. Use this period as you see fit in order to make sure you do not fall behind on your first payments. Take full advantage of the grace period because it will not last long.

2) Do Not Stress Out

If you have not found employment as soon as you would have liked, then do not stress out. As you are older than most new graduates, the stress can wear on you particularly hard. It is best that you keep up your health, and do the best you can to pay your bills.

Unfortunately, you do not have the luxury of changing careers every couple of years due to your youth. Thus, it is important to find a career or job that you will love doing as soon as possible after graduation. It may take longer than necessary to find the right position for you. 

In the mean time, take on a part time job or the first offer you get in order to make an income while looking. Thanks to your income you will be able to pay your premiums each month. Once you secure an offer from your dream job, then you will be one step ahead of your financial problems.

Whatever happens, do not worry about paying off your student loans. You will get rid of them sooner than you think as long as you pay on time and in full.

Tyler R. is a freelance writer from Washington D.C and contributor to DegreeJungle's best online college rankings. At the moment, Tyler lives in Europe and speaks 3 languages.

Related articles

• Why Students Default on Their Loans (whatisa529plan.com)
• The Student Loan Debt Bubble - Infographic (whatisa529plan.com)
• College Loan Defaults Increasing (savealittlemoney.com)

When Student Loans are in Default - There are Options

Student loan default is a growing problem in the U.S. today. As much as a quarter of all student loan borrowers are one to two months behind on their monthly payment according to the Consumer Financial Protection Bureau. 

Add to that millions of federal student loan borrowers have already defaulted on their loans.

A lack of jobs is one of the reasons for this happening. The unemployment rate for college students that have recently graduated is more than twice that of the regular workforce. 

Because of this, one-third of college students under age 25 have jobs that do not use their recently acquired degree.

Over the past decade, student debt has grown to an average of over $22,000 for graduates of public colleges and universities and over $28,000 for private school grads. 

That’s a 20% increase. A growing number of borrowers – greater than one in eight – have debts of $50,000 or more. For too many, this grim economic reality makes making each loan payment in-full and on-time a monthly struggle.

Student Loan Debt Collection

These college students, who are in default, do not realize there can be thousands of dollars of fees and penalties they are liable to pay. 

Their credit will be damaged for many years to come and it will keep them from acquiring new debt like consumer loans, car loans, and mortgages. They have no choice but to refinance student loan programs and take control of their student loans.

The worse part they do not realize is that even through bankruptcy you can not discharge a student loan. The debt you have acquired will be with you until you pay it off.

The only good point to being in default is you cannot qualify for income-based repayment, an alternative payment plan can have a monthly payment as low as zero for extremely low income borrowers.

If you’ve fallen behind on your loans, check out the new web tool, available on ConsumerFinance.gov and at the new StudentAid.gov, launched by the U.S. Department of Education.

What is Student Loan Forgiveness and Where Can I Apply?

Image by AJC1 via Flickr

Your just out of college and you have a large student loan. What can you do about. Under certain circumstances the federal goverment will cancel all or part of you student loan. This is what "Loan Forgiveness" is. To qualify you must do one of these four things:

• Perform volunteer work.
• Perform military service.
• Teach or practice medicine in certain types of communities.
• Meet other criteria specified by the forgiveness program.

Volunteer Work

These volunteer organizations offer loan forgiveness:

AmeriCorps. Serve for 12 months and receive up to $7400 in stipends plus $4725 to be used towards your loan. Call 1-800-942-2677.

Peace Corps. Volunteers may apply for deferment of Stafford, Perkins and Consolidation loans and partial cancellation of Perkins Loans (15% for each year of service, up to 70% in total). Volunteers make a real difference in the lives of real people with two years of service in more than 70 developing countries. Contact the Peace Corps at 1111 20th St., NW, Washington, DC 20526 or call 1-800-424-8580 or 1-202-692-1845.

Volunteers in Service to America (VISTA). Volunteer with private, non-profit groups that help eradicate hunger, homelessness, poverty and illiteracy. Provide 1700 hours of service and receive $4725. Call 1-800-942-2677 or 1-202-606-5000.

Military

Students who are in the Army National Guard may be eligible for their Student Loan Repayment Program, which offers up to $10,000. (Note, the military and veterans' associations provide many scholarships and tuition assistance programs.

Teaching

Students who become full-time teachers in an elementary or secondary school that serves students from low-income families can have a portion of their Perkins Loan forgiven under The National Defense Education Act. This program forgives 15% of your loan for the first and second years of teaching service, 20% for the third and fourth, and 30% for the fifth. Contact your school district's administration to see which schools are eligible.

Legal and Medical Studies

Many law schools forgive the loans of students who serve in public interest or non-profit positions. For more information, contact Equal Justice Works (formerly the National Association for Public Interest Law) at 2120 L Street, NW, Suite 450, Washington, DC 20037-1541 (phone 1-202-466-3686 or fax 1-202-429-9766). The American Bar Association (ABA) also has a summary of Loan Repayment Assistance Programs (LRAP) and State Loan Repayment Assistance Programs.

The US Department of Health and Human Services offers loan forgiveness programs through the National Health Service Corps and the Nursing Education Loan Repayment Program. These programs offer loan forgiveness to physicians and registered nurses who agree to practice for a set number of years in areas that lack adequate medical care (including remote and/or economically depressed regions).

The US National Institutes of Health's NIH Loan Repayment Programs repays up to $35,000/year of student loan debt for US citizens who are conducting clinical medical research.

The US Department of Agriculture's Veterinary Medicine Loan Repayment Program (VMLRP) offers loan forgiveness of $25,000 per year for three years for veterinarians who commit to work in a veterinary shortage area for three years. The application deadline is June 30.

If you're a California resident, contact the Office of Statewide Health Planning and Development (State Loan Repayment Program, 400 R Street, Room 330, Sacramento, CA 95811; 1-916-326-3745). Other states may have similar programs.

Many hospitals and private healthcare facilities use loan forgiveness to recruit occupational and physical therapists. Contact the American Physical Therapy Association (1111 North Fairfax St., Alexandria, VA 22314-1488; 1-800-999-2782) or the American Occupational Therapy Association (P.O. Box 31220, 47200 Montgomery Lane, Bethesda, MD 20824-1220; 1-301-652-2682).

Other loan repayment programs for medical school students include:

• Nicholas J. Pisacano MD Memorial Foundation Inc. (American Board of Family Practice)
• American Academy of Family Physicians Foundation
• Disadvantaged Health Professions Faculty Loan Repayment Program
• Indian Health Service (IHS) Loan Repayment Program
• US Air Force, Army, and Navy Financial Assistance Programs
• The American Association of Medical Colleges (AAMC) maintains a database of state and other loan repayment programs for medical school students.

Other Paths to Forgiveness

Students who receive the Michael Murphy Loan to study law enforcement, law, probation and parole, penology, or other related fields are eligible to work off one-fifth per year as a State Trooper (or related law enforcement official) in Alaska. Contact the Alaska State Troopers, Director's Office Scholarship Fund, 5700 East Tudor Rd., Anchorage, AK 99507; 1-907-269-5511.

Maryland state and local government employees who earn less than $40,000 gross annually may be eligible for a loan assistance/repayment program to study law, nursing, physical and occupational therapy, social work and education. Contact the Maryland State Scholarship Administration, 16 Francis St., Annapolis, MD 21401; 1-410-974-2971 x146.

Federal Government Loan Forgiveness Programs

Perkins loans and Stafford Loans can be cancelled for full-time service as a teacher in a designated elementary or secondary school serving students from low-income families, special education teacher (includes teaching children with disabilities in a public or other nonprofit elementary or secondary school), qualified professional provider of early intervention services for the disabled, teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas, employee of a public or non-profit child or family service agency providing services to high-risk children and their families from low-income communities, nurse or medical technician, law enforcement or corrections officer, staff member in the educational component of a Head Start Program, service as a Vista or Peace Corps Volunteer and service in the Armed Forces (up to 50% in areas of hostilities or imminent danger)

These are but a few places that may suit your needs to help you pay back your student loans. There are more depending on your occupation.

Related articles

• Student Loan Forgiveness (studentloans.net)
• The Top 10 Student Loan Tips for Recent Graduates (education.com)
• Defer Student Loan Payments to Stay Afloat (usnews.com)