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Debt Consolidation

Consumer Credit Counseling of Oregon

The goal of consumer credit counseling of Oregon is to educate individuals about the dangers associated with improperly used credit. One method of avoiding bankruptcy is debt consolidation.

We have all heard it – DEBT CONSOLIDATION. Just what does it mean? There are several types of debt consolidation, and consumer credit counseling of Oregon can help you to better understand them. They include home equity lines of credit, home equity loans, debt consolidation loans, personal unsecured lines of credit, Chapter 13 bankruptcy, and debt consolidation through consumer credit counseling of Oregon companies.

Unfortunately, there is no magic bullet to get out of debt through debt consolidation. It requires great discipline, and often guidance from consumer credit counseling of Oregon. Using the equity in a home can work if the person is disciplined and does not get back into credit card type debt. Unfortunately, the behavior that originally created the debt problem usually exists after putting up the equity in a home for security for a new loan. The result is that the debt load gets worse. Consumer credit counseling of Oregon can help to prevent this. If you use the new loan technique, you will end up paying the same total amount but over a longer period of time. You will probably reduce your monthly payment but will probably spend more in the long run to pay off the debt.

Debt consolidation companies are springing up all over the place. Some are legitimate - some are not. Many debt counseling companies...

  • Do not send your payment in to the credit card companies and when they do, it is very late.
  • They deposit your payment in interest bearing accounts and pocket the interest while your creditors wait and wait.
  • They often keep the first $1000 to $3000 of your payments for themselves before they start to pay the credit card companies. Meanwhile, your credit suffers even more because the credit card companies are not receiving any money.
  • They charge hidden fees in addition to their commission.

Under bankruptcy law, a person can file under Chapter 13 in certain situations. The person files a plan with the court which provides that the person pay a portion of the unsecured debt over a period of 3-5 years. In contrast to debt consolidation through private companies, once the plan is approved by the bankruptcy court, the creditors are forced to accept the payment specified in the plan. During the repayment period, there is usually no interest and no late fees. Any balance remaining at the end of the plan is discharged. The fact that a person filed bankruptcy can stay on person’s credit history for a maximum of 10 years. Consumer credit counseling of Oregon is required prior to filing bankruptcy.

A new trend in a related area is debt settlement or debt negotiation. The difference is that the goal is to settle the account with a lump sum payment saving 40% or more of the total debt. Companies and lawyers frequently will handle the negotiations – for a fee, of course. To use this process, the debtor should be prepared to pay 50% of the balance owing in one payment.

Bankruptcy is never a good thing. As such, consumer credit counseling of Oregon can help you to prevent it from happening again with proper planning. By carefully evaluating your finances, and working with consumer credit counseling of Oregon, you can prepare a budget that can help you to avoid more costly mistakes.

For more information about consumer credit counseling of Oregon, please contact Oregon Fresh Start HERE.

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