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Debt Collection

Is Debt Consolidation Right for You?

There are many reasons why people are struggling with debt and seek options that will help them get out of it. Your Marietta Debt Consolidation attorney Matthew Cherney can help lower and pay off any current unsecured debts that you have. If you are looking for a way to get out of debt, debt consolidation may be the best option.

Reasons Behind Debt

You will need to figure out when you started accumulating debts so that a solution can be found. There are several reasons why people experience debt such as:

  • Unemployment
  • Emergencies
  • Medical bills
  • Student loans
  • Auto loans/Repossession
  • Overdue mortgages/Foreclosure
  •  Bankruptcy
  • Among many other reasons

The best thing to do while going through the process of debt consolidation loan is to make a budget plan so that your bills and creditors will be paid on time. It is also important to remember that you should not spend more than what is within your means.

What is Debt Consolidation?

One of the first things to understand is knowing what debt consolidation is and learning how it will help to clear your debts. Debt consolidation is a legal opportunity that allows debts to be lowered, grouped together, and paid with a consolidation loan. You will be able to pay off debts by paying a fixed amount every month until your credit is cleared. Debt consolidation is an option that is open to everyone, and this even includes those with secured debt with collateral or unsecured debt.

Applying for Debt Consolidation

Having the option to pay off accumulated debt by applying for a loan can seem easy at first, but not everyone is eligible. Lenders require a certain credit score before they will approve an application. A low credit score is considered a risk to lenders, so there is a chance you may not be approved. The higher your credit score is, the more likely a consolidation lender will approve your application.

Another factor that is considered by lenders is the total amount of debt you have. If your debt is too low and does not reach the minimum threshold for a consolidation loan, a lender is less likely to approve the loan. A debt consolidation lender will also consider the amount of the loan to be paid back, monthly fees, and how long it will take for you to pay back the loan.

How does Debt Consolidation work? 

It is important to keep in mind that a debt consolidation loan can help relieve debt, but it is not an overall solution. You will still have to pay back the loan through a debt consolidation lender in addition to paying any recurring monthly bills such as a mortgage, rent, electricity, water, or cable bills. It is necessary to know if you can afford to pay off the loan and still live fairly comfortably; you should not have to struggle unbearably while paying off your debts.

Debt consolidation can be a perfect option if you are well organized and can follow a budget plan that will help avoid overspending. This alternative solution to clear your debt should be considered as a temporary aid. It is designed to provide a better start for managing your financial difficulties.

Making A Budget Plan

Having a budget plan will help keep financial transactions well organized so that creditors will be paid on time. It is also a good idea to consult a professional financial lawyer or advisor for help. An attorney can help you devise an effective plan to remove debts as quickly as possible.

By assessing all of your spending habits, it will be much easier to determine the crucial spending necessities. Once a spending pattern has been observed, a financial plan can be made so that you can pay off the consolidation loan as soon as possible.

Learn More About Debt Consolidation

By understanding what debt consolidation is and how it works, the better the chances to get out of debt. It is not a good idea to wait until you are almost bankrupt to apply for a consolidation loan, but instead, identify the problem at an earlier stage where debts are more manageable. Take the time to decide if this type of loan is right for you and consult a professional Marietta debt consolidation attorney to find out what steps you need to take to start your path towards financial recovery.

Don’t Fall Victim To Illegal Debt Settlement Companies!

Anyone who is in deep debt could be especially vulnerable, which is one reason why they may seek aid at the end of his or her wits. Most of the time it is debt adjusters who answer and provide assistance.

It would be nice to say debt adjusters were always honest, but that is not always the case. Some of the companies do not pay on time and violate the Debt Adjustment Act that says creditors must be paid within 30 days after receiving the money.

Of course, the consumer now has the right and should definitely pursue legal action against the debt adjuster for blatant violation of the Act.

The company may be forced to return all fees that you ended up paying or charges that resulted from their negligence. The violation itself could also award you a restitution, which could be as high as $5,000, and that is a helpful amount no matter what.

How Debt Collecting Companies Lure Customers In?

The debt adjustment industry is growing dramatically, which is making room for illegal debt settlement companies. It is no secret that many Americans are suffering and looking for solutions, which is what these companies take advantage of.

Most people who are having trouble paying their debts often consider bankruptcy as an option. However because of many misconceptions of bankruptcy, debt collecting agencies can play upon that fear. Debt adjusters often times advertise themselves as an alternative solution, claiming that they could clean up your credit in a short period of time.

Debt settlement companies have been know to tell clients to stop paying all unsecured creditors. The client is then told to send all the money owed to debtors to the debt settlement company itself. The fees for the company’s services are collected upfront before any debtors are paid.

Most of the unscrupulous actions taken by debt settlement companies were declared illegal by the Federal Trade Commission since October 27 back in 2010. This was probably done because many of these solutions are riddled with discrepancies that are withheld from the client.

The Part that is Withheld From You

What makes debt settlement companies potentially bad for you is that working with them does not guarantee that the credit cards companies that you owe money to won’t file a debt collection lawsuit to get their money from you.

Some credit card companies do not go after you and decide to bundle up all the money you owe into a portfolio that is labeled uncollectable. This does not mean your debt is gone. In fact, sometimes, it is sold off to junk debt buyers for a fraction of what is owed. These junk debt buyers are a shady bunch who make it their business to collect what is owed. They do this by filing derogatory credit entries against you or by making harassing calls to you. These calls are so bad that they usually violate the Fair Debt Collection Practices Act.

Of course, it is possible that the debt settlement company you hired ends up paying off your bills, but this also means you may be issued an IRS 1099-C. Consumers have to report any debt that has been forgiven if that debt exceeds $600, which may end up hurting you.

Furthermore, at least in the state of Georgia, these debt settlement companies have been made illegal. So, the first lie they are telling you is that they are still a viable option in this state. Those who have fallen victim to these companies should consider fighting with your Marietta Debt Relief attorney at Cherney Law Firm. Do not fret, the free consultation offered comes with no strings attached.