A couple of friends of mine who are experts in the debt relief industry came together recently to put a together a powerful tool for consumers and industry experts. The calculator and additional tools you will find discussed and linked below will help you determine what debt elimination option may be right for you. I like this tool. It focuses on the math of each option first. In debt relief, if you cannot make the numbers work, you cannot make the solution work.
You may still need to discuss your particular situation with a professional service provider to discuss program benefits and drawbacks, but by starting with the calculator and determining what your financial abilities are first, you will be able to narrow your options and save yourself quite a bit of time.
Every single day I help people for free to find good solutions for problem debt. Not long ago I was talking with some friends and it occurred to me there was no one single tool people could use to better understand all of their options to tackle their debt. Why not?
So in collaboration with the smart technology people at USDR we created just such an online calculator to give people a somewhat personalized side-by-side comparison of the options, costs and payments of the different approaches to eliminate their debt.
We’ve just launched the How to Get Out of Debt Calculator and I think it gives people an impartial and detached view of what they can do to tackle their debt.
The use of the calculator is free and does not require people to share any personal identifying information.
Each option for getting out of debt certainly has plusses and minuses. But through education and awareness each person can make a better choice about the approach that’s right for them.
The calculator is not designed to be the creator of a final plan to implement, in fact we don’t sell any debt relief services at GetOutOfDebt.org.
At GetOutOfDebt.org what we do is provide information, education, free help and resources for people dealing with debt. This new free online educational tool helps us to further that mission.
The unique online calculator is designed to give people a wider eyed view of the logical solutions available so they can have an educated discussion with any for-profit or non-profit debt relief provider they ultimately choose to work with.
And now, without further fanfare, I invite you to try and enjoy The Amazing How to Get Out of Debt Calculator. I think you’ll find it to be pretty amazing in the distilled education it presents users.
Feel free to link to the How to Get Out of Debt Calculator in an effort to help people better understand their options. Your link to the calculator simply helps us to help people.
And in the interest of educating consumers further I’ve also just recently released another online tool that provides comprehensive information to show consumers the regulation, licensing, and registration required of debt relief companies on a state-by-state basis. It’s yet another free resource available through GetOutOfDebt.org to protect consumers looking for debt help. You can find links to this in the resource section at GetOutOfDebt.org.
Good news for struggling home owners in Massachusetts came this past week in the form of money released to assist in making mortgage payments. The press release below gives some details. The downside is that the program has a narrow window of time for residents of the state to seek qualification to receive no interest loans designed to prevent home loss. If you or someone you know in MA could benefit from the program outlined below, get them in touch with Cambridge ASAP at: 1-888-544-3457.
Cambridge Credit Awarded HUD Funding to Help Unemployed Homeowners Avoid Foreclosure
Deadline for Emergency Homeowners’ Loan Program applications is July 22, 2011.
Cambridge Credit Counseling Corporation, a professional housing and credit counseling agency based in Agawam, Massachusetts, has been awarded funding from the U.S. Department of Housing and Urban Development to help Commonwealth residents avoid foreclosure. The Emergency Homeowners’ Loan Program (EHLP) is designed to help ease the current housing crisis, in which more than 6.3 million homeowners are threatened with foreclosure. Homeowners who have experienced a substantial loss of income due to unemployment, underemployment, or medical condition can receive interest-free, forgivable loans to pay their mortgage, property tax and insurance bills for up to two years, or until they exhaust the maximum EHLP loan amount of $50,000 – whichever comes first.
Approved homeowners are eligible to receive one-time EHLP assistance to bring their mortgage current, as well as ongoing monthly assistance. If a homeowner is selected to receive a loan through the EHLP program, payments will subsidize their monthly mortgage bill; allowing them to pay just 31% of their income or $150, whichever is greater – EHLP will pay the balance. No payments are due on the 5-year term of these loans, providing that the homeowner meets all the conditions of the program. If so, the loan will be forgiven in 20% increments each year.
“This is great news for homeowners who’ve lost their jobs, are underemployed, or are suffering from challenging medical conditions,” remarked Cambridge president Christopher Viale. “We’re happy to be able to provide meaningful help to homeowners throughout Massachusetts.”
Homeowners applying for an EHLP loan will have to complete a Pre-Applicant Screen Worksheet, which is available by calling Cambridge at 888-544-EHLP (888-544-3457). The worksheet must be submitted to an EHLP counseling agency by July 22, 2011. Applicants will need to work with an approved EHLP housing counseling agency and provide required documentation. A checklist of these documents is listed in the Pre-Applicant Screen Worksheet.
“Many of our member churches have been trying to offer support to parishioners facing these serious circumstances,” noted Archbishop Timothy Paul of the Council of Churches of Greater Springfield. “The lack of effective government programs has made it difficult, but Cambridge’s participation in EHLP offers new hope to our congregations.”
If you live in Massachusetts and are facing foreclosure due to a substantial loss of income arising from unemployment, underemployment, or medical condition, call 888-544-EHLP (888-544-3457) to talk to a HUD-certified housing counselor who can help you determine your eligibility for the new Emergency Homeowners’ Loan Program.
ABOUT CAMBRIDGE CREDIT COUNSELING CORP.
Cambridge Credit Counseling Corp. is a professional housing and debt counseling agency dedicated to educating young adults on the importance of sound financial management, and to providing financially distressed Americans with education and debt management services appropriate to their needs. Visit Cambridge Credit Counseling Corp. online at http://www.cambridgecredit.org.
I generally begin any consultation I do with people who reach out to my company in search of help with debt with this question: “What has you reaching out to a perfect stranger? What is going on with you financially”? Then, I shut up and listen. I am sometimes the first person the caller has ever spoken to about the situation they are in.
The responses I hear vary, as does the time someone will take to outline the details of their hardship. By listening closely, I am able to hear the stress and fear they have about their debt. I often hear the struggles they have gone through to try and keep current with credit card bills, or the difficulty they have had in communicating with creditors and collectors.
The other day, I heard one of the simplest and shortest answers to my initial question that I have had to date.
“My Debt Is Crippling Me.”
While this response does not provide details I generally look to key off of in order to identify the debt pieces or solutions to putting the person’s financial puzzle back together, it said a great deal in a very powerful way.
Struggles with debt DO feel crippling. In the very sense that someone with a physical disability is forced to deal with every day of their lives. The stress and fear with debt problems are debilitating and can often manifest into actual maladies. The worry and frustration about money, and the lack of money, carries over from one day to the next. What am I going to do at the end of the month when these other bills are due? When will I ever be out of credit card debt? How did I get trapped in a home now worth far less than I owe? What if I get laid off with no savings? How would I get by with maxed out credit cards and no income?
One of the overwhelming benefits to people we talk with is that we can reduce, or even remove the stress and fear they have about their debt problem in one phone call.
This gentleman did not feel crippled when we finished talking about his problem because I plainly laid out the facts of his finances (after several additional questions to be sure), and was able to point out to him the mathematical rational solution to his debt. His solution did not involve needing to engage my company for a product or service, as he was past the point of debt settlement or a creditor sponsored hardship plan being a viable option.
He learned that, unlike someone who has a physical disability for the rest of their life, his crippling debt could actually be cured and with little fuss or expense. He was not at all excited to know that his only real option was to file for chapter 7 bankruptcy, but he saw the wisdom in doing so and hung up the phone with no fear and less stress.
I asked him before we hung up from the call “How crippling is your debt now?”.
He replied “Not at all.”
There is always and answer to recover from debt. The answers do often involve tough choices and some action steps that are not exactly a thrill to take, but can be arrived at through the process of elimination. Generally, I can walk through the following things and eliminate 3 or 4 out of the 5:
Creditor monthly payment concessions
Debt Management Plans through a credit counseling group
Bankruptcy
Debt Settlement
Doing nothing (sometimes the right thing for brief period – couple months)
Knowledge removes the fear of the unknown, and unemotional, boring, old arithmetic is the compass to find your way to healthier finances.
My advice to anyone feeling crippled with debt boils down to the “Four Gets”:
Get real about your finances;
Get informed about your options;
Get a plan in place; and
Get started
If you would like to start getting informed the same way the man who inspired this article did, send me an email to schedule a consult: michael@consumerrecoverynetwork.com. I will consult with you personally.
I can also recommend scheduling time to speak with any member of the American Association of Credit Counselors (AACC) who are a diverse group of debt relief service providers committed to excellence working with people in debt.
I have covered credit reporting on other posts here on debt bytes, but mostly as it applies to people who need some form of debt relief due to a financial hardship. While that is an important topic and a concern for more and more people as a result of our tough economy, what about the furnishing of bad data on people who are managing their debts well? What affect does bad information supplied to the credit reporting agencies have on them?
Your credit score and loan product modeling is calculated not just by your timely payment history, but is also based on your credit utilization, debt to income ratio and a few other key points.
Due to how information in your credit report is factored, mistakes made by those furnishing information about you to the reporting agencies can have a major impact on how much credit will cost you and whether you are approved for a credit product at all.
This morning, I read a good example of the type of damage that can be inflicted by a simple loan classification error:
Issue: Most scoring systems take data at face value with little or no interpretation. If you track the erroneous “Installment Loan” designation downstream, the credit scoring systems would see the following:
An installment loan for an extremely large sum (i.e. $200,000).
Duration of payments for these loans was reported as 30, however, the number reported for an installment loan is seen by Metro 2® as 30 months, whereas, the number reported for a mortgage is seen by Metro 2® as 30 years.
Result: Most credit scores would be calculated based on the facts reported — “Installment” loan of $200,000 with what looks like payment term of 30 months. In effect, a 30 month payback period would require each payment be approximately $6600, whereas a 30 year payback period would yield a monthly payment in the vicinity of $1000. The perceived debt of $6600 per month could potentially negatively impact multiple factors of consumer lending such as approval scores, debt ratios, bankruptcy scores, pre-screen scores, etc.
And those types of errors are just the tip of the credit reporting iceberg. From a potential litigation standpoint, data furnishers that do not invest the time and resources required to evaluate the accuracy and integrity of their credit reporting on an ongoing basis are making a potential titanic mistake.
This type of loan classification error would seem easy for the furnisher to fix. Indeed, common sense dictates that it should be fixed. It will cost money to do it though.
My experience with reporting agencies and furnishers is that they do not always think with “sense”, but think more in terms of dollars and “cents”.
The key to “common-cents” and violations of the Fair Credit Reporting Act (FCRA) is that it is more profitable to do the wrong thing than the right.
Some credit report information furnishers get it absolutely bass-ackwards.
They seem to be saying “We know we have a problem and that it screws people over, but we will continue to do so until it is more cost effective to fix the problem than to continue to get sued”.
The linked article above speaks to a specific case in the 9th circuit that allows a class action to proceed against one company that may end up costing them between 29 and 290 million. My guess is that their legal defense bill alone would have covered the costs of auditing and correcting their reporting systems on a regular basis which would prevent actions like this from occurring.
It is a small wonder to me that more legal action is not brought against furnishers of bad information about you to credit bureaus.
Similar to the economy of furnishers and reporting agencies making changes only when it makes “cents” to do so, suing them for their transgressions and missteps has long been about the costs for bringing the action and what can be gained from doing so.
Perhaps this attitude will change with the potential for more class action lawsuits that can lead to tens of millions in costs.
Perhaps there is a class out there forming to bring the particularly egregious practice of reporting a balance still due after a settlement on a past due debt is reached, accepted and funded, and where both parties agree that the debt is settled, there is no balance due, but the amount of debt forgiven remains on the trade line and shows that portion of the balance as outstanding when it no longer is! I wrote about this practice recently. Read more about it here: Why Does Capital One Screw People Who Settle Their Debt.
It is as important now as ever before for people to take responsibility for policing the accuracy of their credit profile. No one else is going to do it for you.
If you find inaccurate, erroneous or out of date information – You Can Fix It!
You have the ability to dispute bad information with the reporting agencies and you can also send direct disputes to the furnisher of the information. If they do not correct the discrepancies after sending your dispute certified mail return receipt it may be the best use of your time to next consult with a skilled consumer law attorney.
There are not that many attorneys experienced with FCRA violations around the country, but a case they may bring can be filed in federal court, which may make speaking with one you find with an office outside of your state worth the effort.
To locate an experienced FCRA consumer attorney you can go to www.naca.net and search using your zip code to find one nearest you.
Two attorneys I know that specialize in this area are:
“I was very impressed with...how the process works. It also gave me more self-confidence. I have been able to settle 5 of my 6 credit cards so far.”
“I would like to say that CRN provided a light at the end of the debt tunnel for me. I've only closed 1 account out of 4, but I can see and manage how I will close my debt. My debt specialist has been a huge help getting me set up on the right path. His consultation has been great in coaching me and giving me advice on how to handle my creditors and my finances. I would recommend CRN to my friends and family.”
