What is a Re-age?

When a creditor re-ages your account, they agree to restore current status. This change in status provides multiple benefits.

First, you no longer are required to pay for arrears. Instead of catching up through sending in back payments in addition to your current month’s payment, you can now send one payment each month. This is important when your budget is already stretched.

Second, you can say goodbye to late fees. That $39 to $45 a month that you were getting charged as a penalty goes away when your account is current.

A third major benefit to an account re-age is that your creditors can now report your current status to the credit bureaus. While your late payments will still be on record for 7 years, your scores will jump when your current status is reported. This current status will outweigh older late payments in your credit report, which will allow your scores to continue to climb as long as you maintain that current status.

Major credit card companies are restricted in how often they can re-age an account. You should understand that you may only get a maximum of 2 chances over a 5 year period to re-age your accounts. Therefore, they will not make the decision lightly. They want to make sure that you are serious about maintaining your account.

When you enroll in a debt management program, it provides proof to your creditors that you are committed to getting back on track. They will compare your program summary with your credit report to make sure that you are enrolling all of your credit card accounts. If they see multiple accounts with balances left off the program, there is a possibility that they may deny benefits until you have added those accounts. That is why it is imperative that you include all of your unsecured debt for maximum benefit.

To see how re-aging through credit counseling can benefit you, imagine this scenario. You have a credit card with a $200 a month payment. If you miss a payment, your next month may require $447 as a minimum payment rather than your usual $200. This includes 2 months payments, additional finance charges on your higher balance and a late fee. If you dare fall 2 months late, your interest rate will skyrocket to 29.99% or more, depending on the penalty rate on your account.

By enrolling in a debt management program, your creditor can re-age your account. Instead of a $447 minimum payment, your new monthly payment might be $160. Your payment could be lower or higher than this example. Your new payment primarily depends on which creditors you owe as well as specific details on those accounts.

If you fail to receive credit counseling before your accounts are charged off as bad debts, you lose the right to a re-age as well as the other benefits of a debt management program, such as lower interest rates, reduced payments and a rebuilding of your credit rating. You only have a limited window to act. Once an account approaches 4-6 months late, you can expect your lender to provide final notice of charge-off. If you miss their ultimatum, you get to deal with the nasty collection agents that will pursue collection of the defaulted debt. For more information about re-aging your past due credit cards, contact our financial counselors today.

We recommend meeting face-to-face with a financial counselor whenever possible. CCCS of Northeastern Ohio provides face-to-face counseling. However, we also understand that navigating downtown Cleveland is not always the easiest chore.

Our counselors know how to deal with high limit credit cards that are burdened by heavy balances. Juggling multiple accounts can be stressful, since late payments are not an option.  Transferring balances have also become more expensive due to 4-5% upfront balance transfer fees.

Our counselors are certified as Accredited Financial Counselors and understand the types of benefits that major credit card companies frequently provide through debt management programs. Many of our clients were surprised at how they could successfully manage tens of thousands of dollars in high interest credit card debt.

Being in debt does not have to mean that you will have to file for bankruptcy. If you take action while you still can, you may be able to avoid the embarrassment and expense of bankruptcy.

We cannot promise that you can avoid bankruptcy. We cannot promise that all of your interest rates will be lowered. We cannot even promise that we can lower your rates. These are benefits typical of our debt management program and are enjoyed by our current clients, but they cannot be guaranteed.

This might be different from what you see on television from many of the so-called “debt relief” companies that profit from your misfortune. Of course, if you look at their Better Business Bureau rating, you might find that they cannot back up their extraordinary claims.

We at Vision Credit Education will help you evaluate your situation. We will help you develop a budget, analyze your debt situation and provide feedback based on our years of experience with other clients in similar circumstances. Of course we also know that no two clients are exactly alike.

That is why we take the time to tailor a plan to meet your needs. You cannot feed MasterCard before you feed your family. We will help you prioritize your needs and answer your questions about your available options.

We cannot tell you what to do. Instead, we discuss your options with you and support your decision on how to handle your situation.

If you are in Lorain, Avon Lake or Elyria, give us a call to discuss your financial situation. You may contact an Accredited Financial Counselor at 1-800-379-4720. Find out how you might benefit from the interest rate reductions and lower payments available through our program.

A substantial number of companies that provide for-profit debt relief companies as well as some nonprofit charities are AADMO members. Many of these organizations will either join another trade association or become independent.

No reason has been provided for AADMO disbanding. AADMO has not issued a press release to confirm these reports.

AADMO reportedly is not renewing memberships for its members as of November 1, 2009. Members up for renewal after this date have begun to receive written notifications that AADMO is no longer renewing its memberships.

Many creditors that view trade association membership favorably will also have to make adjustments to account for the breakup of AADMO. Any AADMO members should refer all questions  to AADMO to receive clarification on their membership status.

* This story may be updated as more information is obtained.

Chase is providing very good benefits to its cardholders that take the step of getting out of debt by completing credit counseling and enrolling in a debt management program. Its almost as if Chase is giving an ultimatum for cardholders that may be overextended on their credit accounts.

Cardholders with good credit may opt to pay off the accounts quickly or transfer the balances to another lender to avoid the 5% minimum payment requirements. However, those with lower credit scores and those who are having trouble making all of their monthly minimum payments may need to seek credit counseling.

What Chase is Providing

These are the main benefits that Chase is currently  providing to eligible cardholders through a debt management program:

• Lower Monthly Payment: Chase can lower the required monthly minimum payment from 5% down to 2.2% of the balance, which can reduce the minimum payment by more than half. In addition, Chase allows credit counselors the flexibility of making further cuts in the monthly minimum payment through a process known as call to action. This places additional discretion at the hands of a credit counselor that is trying to help a distressed cardholder balance their budget. A call to action label on an account can lower the minimum payment further. A standard call to action may allow for an even lower minimum payment of 2% of the balance. If the client has endured a hardship and is on the brink of financial ruin, then a hardship call to action may lower the minimum payment to as low as 1.75% of the balance.
• Lower Interest Rates: Chase is reducing interest rates on most accounts to as low as 7% APR through debt management. This may save hundreds or thousands of dollars each year while repaying the debt. Depending on the level of hardship, a client may be eligible for further reductions in their rates based on the call to action guidelines.
• Reage: Clients that have fallen behind would not have to catch the account up before receiving benefits. This would also help the client avoid fees, which Chase usually agrees to waive through a debt management program.

The higher minimum payments that Chase has imposed on certain accounts has certainly put some clients at risk of financial problems. However, these clients may get relief by taking action right away. Either they need to repay it quickly on their own, transfer the balance to avoid the higher minimum payments or get help through credit counseling.

Chase has indeed lost popularity points based on their changes to cardholder agreements. Those clients that are seeking credit counseling are finding though that the benefits have actually improved for Chase accounts.

Our Consolidation Plan

By partnering with Consumer Credit Counseling Service of Greater Denver, we bring you some of the most knowledgeable and reputable allies in credit counseling. That way, you may always get the face-to-face counseling you need as well as benefit from the lower interest and reduced payments that are available for eligible consumers.

Most major credit card issuers provide lower payments when you enroll in a debt management program. This is made possible because they tend to lower the interest substantially for cardholders that commit to the program. That way, more of your money goes toward the principal even though your monthly payment is lower than before.

Our program is a bit different than others. For one, we do not charge you for counseling. That means you may meed with an Accredited Financial Counselor for an hour or more without charge. If you need to join the debt management program, you only pay a nominal fee of up to $29 each month. There is no set-up fee either.

Face-to-Face Counseling Option

We provide credit counseling on a private and confidential basis. Your friends, neighbors and coworkers need not know about your financial situation. Even your family members must have your permission before we can disclose private information that you discuss with us.

It’s very simple. Call and make an appointment so that you can meet directly with one of our Accredited Financial Counselors. Bring all of your bills so that we can gain an understanding about the types of debt and your current situation. We will even help you prepare a budget to see what your monthly capabilities include.

If you are able to make a few adjustments in your monthly habits, you might be able to improve your situation on your own. We can coach you on that. If you qualify for a debt management program, then you can consolidate all of your credit card debts into a single monthly payment, one that is likely a fair amount less than you are currently paying.

In some situations, you might be in an unreversable situation that requires more drastic measures. Even then, we will coach you on what options are available as well as help you understand those options.

To schedule your free counseling session, call us at 919-338-0882. Our office is conveniently located near Interstate 40 and the Interstate 440 beltline in West Raleigh. We look forward to your visit!

These are not all necessarily for everyone. In fact, you will probably only find that one or two of these methods will apply to your situation the best.

1. Sell an Asset

This may sound like a non-option, but selling an unneeded asset can do wonders to your finances. Consider that extra vehicle that you keep around. Sure it is convenient to have a truck for those 2 times a year you need to haul something. Once you factor in the license fees and insurance costs, you still might be talking about a few hundred dollars a year just to keep it on the road. It might be much cheaper to rent or borrow a truck when you need it.

A boat also a common off-limits asset. I see people frequently that refuse to give up their boat even though they can barely afford to put gas in it. Remember that boats are notoriously expensive to maintain. Also, keep in mind that the 2 best days in a boat owner”s life are the day you bought it and the day you sold it! Extra cash can be used to pay off your higher interest debt in a lump sum payment.

2. Increase your Payments

If your credit card minimum payment is $30, chances are $25 of it is interest. You don’t have to be a rocket scientist to know that it takes a long time to pay down a $1,000 balance at $5 a month!

Just an extra $5 a month can allow you to repay the debt in half the time. Keep in mind we are still talking in terms of years to repay it at this rate. Sending an extra $30 can allow you to repay the debt in a little over 2 years. This option assumes that you have extra money each month, but may sometimes lack the discipline to send more than minimum payments.

3. Work More

A second job can burn you out. So can overtime. Temporarily increasing your income in order to find more money for repaying debt can give you additional resources for eliminating your debt quickly. The extra stress from working more may be offset by the sense of relief you get by paying off a debt.

The best additional work is one that provides you with reasonable pay and satisfies some of your social needs. Bartending and waiting tables are often overlooked, but they provide some of the higher earning part-time jobs available. Best of all, these pay the most during the hours when you are probably away from your regular job anyway. Thursday through Saturday nights tend to carry higher tips, so use your time wisely. In addition, you can have fun on the job if you find the right work environment. Carefully choosing a schedule can help you limit any impact on your current job and any family or friends.

4. Complete Credit Counseling

Credit counseling is more than just helping you budget and manage your money. The common stigma that people place on credit counseling is that it is just for people that cannot manage their money. The truth is that over half of credit counseling clients were able to manage their money, but they fell victim to life changing events that made debt payment difficult.

Credit counselors also have a pretty effective tool for eliminating debt. It is called a debt management plan and it utilizes a special program available through major credit card companies where you can get a break on interest, fees and payments.

Most people that enroll in a debt management plan are able to repay their debt by making lower payments than before. This may seem counterintuitive, since repaying debt faster typically means that you have to increase your payments. However, these programs are so effective because participating creditors lower your interest rates by so much that your finance charges are often less than half what they were before. Where before you saw $5 of your $30 minimum payment go toward principal, a debt management plan could allow for your finance charges to drop to only $10 a month. Even if they reduce your payment from $30 to $22 on the account, you have just increased your principal payment to $12 from $5. Under the program, your payment also stays the same, so that even though your balance is dropping you keep sending in the same amount. Every single month, your finance charges end up less than the previous month and your principal payments increase, much like they do on an installment loan. That way, you can normally eliminate your debt in 3 to 5 years while making lower credit card payments.

5. File for Bankruptcy

At some point, you might need to consider throwing in the towel. Bankruptcy is an ugly option and it has all sorts of public humiliation often associated with it. It even has rather high costs, since most attorneys charge at least $2,000 to help you file for bankruptcy.

Still, bankruptcy may need to be one of your options. The biggest sign that you might need protection from your creditors is if you have several creditors in which you owe very large balances that are threatening legal action. Since it is illegal to threaten legal action without a reasonable expectation to follow through with it, you should consider such threats to be credible.

Bankruptcy can give you bad credit for up to 10 years. However, you might need to consider it as an alternative to judgments and garnishments that may be possible depending on your state of residency.

Non-Options for Eliminating Debt

Debt settlement is almost always a non-option. Companies that offer debt settlement services do nothing to shield you from legal action. They also pay themselves several thousands of dollars before they ever begin working on your behalf. If you were looking for help eliminating debt, then you just created another creditor for yourself by hiring a debt settlement company. Furthermore, every time you do settle on a debt, understand that the so called savings is considered a gift and is generally taxable as income. If your income is $40,000 a year and you save $5,000 by settling a debt, you will generally be taxed as if you earned an additional $5,000. Depending on your state and federal tax rates, this could result in up to $2,000 in additional taxes!

Credit repair is also a non-option for eliminating debt. Such companies promise to make these things just go away, but the only thing they do is file frivolous disputes to the 3 main credit bureaus every single month. These frivolous disputes are discounted as such by the credit bureaus, and they are ignored. Meanwhile, you keep paying them for something you could easily dispute on your own. If you through this money toward your debts rather than throwing it away, you could make your debts disappear and improve your credit.

The biggest mistake people make is to borrow money to eliminate debt. That’s like asking for a torch to put out a bonfire. You cannot eliminate debt by taking on more debt. This is why approximately 70% of homeowners that used home equity loans or a cash out refinance loan to repay credit card debt ended up in worse shape in as little as 2 years.

To eliminate debt, consider taking on one or two of the top 5 methods revealed above. The sooner you take action, the sooner you see results!

Nonprofit credit counseling organizations such as this one are being provided with certain discretion in helping distressed families fit credit card payments into their already stretched budgets. Whereas payment requirements before were fairly rigid, newer requirements often enable a credit counselor to go even further to lower credit card payments so that a family can avoid default or bankruptcy.

These call-to-action guidelines were released by several creditors in April 2009 following successful pilots at a handful of nonprofit credit counseling agencies. Since the initial announcement, several credit card issuers have updated their guidelines to provide this extra flexibility to credit counselors working with their clients.

While such reductions in the minimum payment can push repayment of their accounts to a 5 year repayment, it can help cardholders avoid the pain of collection calls and ruined credit. They can better find a payment that they can afford.

This will certainly enhance the effectiveness of credit counseling, especially for households that have experienced slight disruptions in income. While it may not be enough to help households who are jobless, it should provide enough help for those that have lost some income or have incurred extra expenses.

Households that are experiencing higher minimum payments and high rates of interest can really benefit from these newer guidelines. What we are finding is that many clients that were unable to afford a debt management plan just a couple of months ago are now finding that they can squeeze it into their budget.

It all depends on which creditors you have as well as your budget information. Your counselor can help you analyze your situation. If it is possible, we can help you find a way to eliminate your debt and improve your credit over time. To begin, gather your bills and contact us at 800-379-4720.

The methods for getting back on track vary, and it all depends on your individual earnings situation, your living expenses and your savings. The best way to see which method most applies to your situation is to draw up a quick budget to see if you are above sea level financially. Once you have done this, you can tell which options are most feasible.

Large Budget Surplus

If you come up with a sizable budget surplus each month and know that you have simply been overspending, you can easily get back on track. If you have never missed a payment until now, ask your credit card issuer to forgive the late payment and waive the fee. This could prevent a negative mark on your credit report (these stay on for 7 years). Try using online banking with automatic payments to avoid falling behind in the future.

If you know that you do not have a budget surplus but your budget shows lots of money left over each month, then you are likely underestimating some expenses or leaving others out entirely. I have seen families forget to include child support, groceries or even gasoline in their budgets!

Break Even

A break even means that you might need help getting back on track. It suggests that even in a good month, you are just getting by. Unless you have assets to sell or can work an extra job, you probably will not be able to come up with enough money to catch up on your payments. Continuing on this track can mean financial ruin, culminating in legal action that could include judgments or a bankruptcy filing.

You would need the re-aging benefits of a debt management plan just to restore your accounts to a current status. Many leading credit card issuers will “reset” your account so that it reflects as current when you enroll in a debt management program with a participating credit counseling agency. In addition to bringing your accounts current, you can benefit from and end to late fees and lower monthly payments on your accounts.

Unfortunately, many people in this situation contact debt settlement companies instead of bona-fide nonprofit credit counseling agencies. They quickly find that their situation continues to worsen after paying hundreds of dollars in initial and recurring fees. Insist on working with a qualified nonprofit organization to get help.

Substantial Budget Deficit

A permanent reduction in income or a life event that ramps up recurring expenses could put you well in the hole each month. This can be a dire situation that requires immediate attention.

You might still be able to make it work by receiving credit counseling. Any combination of increased income, reduced expenses and lower credit card payments through debt management could be enough to pay off your debt over time. Remember that debt management programs work by restoring current status to accounts that are up to 6 months late.

At the conclusion of your credit counseling appointment, you may find that you will need protection from creditors. While this is frequently not necessary for smaller debts, larger defaults could be at a greater risk of legal action. A judgment is a court order to repay the debt.

Several large debts in default could put you at a compounded risk of financial stress. This is the type of situation that should prompt you to speak with a qualified bankruptcy attorney. Whether you file for bankruptcy or not, you should understand the process and how it might apply to your situation.

Late payments on credit cards are a serious matter. They will force you to take some action to correct the situation. If you don’t, you face many years of poor credit and possible legal action!

Air Date: Wednesday, February 18, 2009

The 5:00 Evening News on WRAL-TV highlighted the types of debt consolidation that consumers might consider. Find out why some consolidation options work better than others. Also, you can learn why some types of organizations work better than others at consolidating your debt.

With credit markets still tight, it is difficult to find loans for consolidation purposes. Whether you are seeking an unsecured personal loan or tapping into your home equity, lending requirements are much more stringent than before. There can be additional options you may not have connsidered.

Debt settlement might sound good until you find out how high the fees are and how dismal their track record is. Most of their customers end up in worse shape as a result.

Find out why you should check with the Better Business Bureau before deciding to do business with any particular organization. A negative rating may be signs that the organization cannot deliver what it promises. Alternatively, an organization with an “A” or “A+” rating has demonstrated a commitment to service and is free of any unusual pattern of complaints.

Related Links

Here is the original story by WRAL–Debt Settlement Companies Can Lead to More Debt

Debt Settlement Companies Can Lead to More Debt

There are several reasons why waiting to manage your debt can backfire:

1. Interest will continue to accrue on your accounts. By the time you take action, your balances could be much higher and your minimum payments may rise beyond your ability to stay current.
2. Late fees can also cause the debt to balloon. At $39 a pop, these can easily boost your balances to levels you have never seen.
3. Minimum payments can increase substantially. Your minimum monthly payments can increase by $20-50 for every $1,000 that your balances increase.
4. You can lose the right to join a debt management program. Such programs require that you can reasonably afford the payment. If you wait until:
   1. Your debts are charged off as uncollectible, or
   2. Your minimum payments rise well beyond your ability to pay, then you might become ineligible for such a plan.
5. Your credit can get far worse if you do not address your financial problems. As your financial problems worsen:
   1. Your higher debt balances reduce your credit scores
   2. Your higher credit utilization rates will reduce your credit scores
   3. Any delinquent payments will reduce your credit scores for a minimum of 7 years
6. Finally, a domino effect can result through universal default. Most creditors are again paying attention to signs of weakness in how you handle your other credit accounts. Any increase in balance or missed payment could cause other creditors to revoke credit or dramatically increase your minimum payment. You could also see much higher finance charges.

Credit counseling is necessary to help you determine the extent of your financial problems and to design an action plan for correcting them. Even if you find that you are unable to continue a debt management program due to loss of income, at least you have lowered your balances and preserved your payment history up until that point.

It is a fact that the earlier you try to tackle your debt, the more options that are on the table. The later you become, the fewer choices that you will have. Furthermore, you may be opening yourself up to adverse action such as legal action or employment repercussions. The best thing to do is to gather your information and talk with an Accredited Financial Counselor through a nonprofit credit counseling organization. Let them know how unstable your employment situation might be. They can help you design a plan around it.