Why are debt settlement companies protesting BBB’s new rating system?

Author: Robin Williams


Debt settlement is one of the debt relief options that many cash strapped debtors opt for. In this debt help option, the total debt you owe gets reduced by as much as 40% to 60%. This is usually made possible by debt settlement companies that negotiate with creditors to reduce the outstanding balance. And when a debt settlement or a debt relief company is hired for their services, the consumers usually check the Reliability report of the Better Business Bureau to find out if the debt settlement company is worth being hired.

The Better Business bureau earlier rated businesses as “satisfactory” or “unsatisfactory”. However, since 2009, it has changed the way it rates companies. Under the new system, the BBB will grade a company on a scale ranging between A+ and F. There will be 16 categories on the basis of which a business will be rated. The new grading system has been applied to around 4 million companies listed in the database of Better Business Bureau.

The TASC or the Association of Debt Settlement Companies warns that “Under the BBB’s new rating system, it is virtually impossible for a debt settlement company to be rated anything other than a ‘D’ or ‘F’”.

In a letter that was addressed to National Council of Better Business Bureau, the Association of Settlement Companies said that “there are critical flaws in the BBB’s consumer grading system as it applies to settlement firms.”

Consumers are of the opinion that debt settlement which is an alternative to bankruptcy can prevent many from declaring themselves bankrupt if they can derive benefits from a debt settlement program.

However, under this grading system almost all debt settlement companies will be given a poor rating. TASC is of the opinion that the main reason why the debt settlement companies are being rated low is due to the fact that Better Business Bureau doesn’t consider debt settlement as an effective debt solution that can help debtors get rid of debts.

If you are planning to hire the services of a debt settlement company, it is best to do a bit of homework and then settle for a company that is reliable. A BBB rating may mislead you due to the low grade it gives to a debt settlement company.

Credit Card

Most of the credit card companies now offer 0% interest for 6-12 months if you did not pay up in full for the month. Please take note that its stated very clearly that it will only last you for 6-12 months and not always 0% interest.

So if you are not careful, you will end up paying interest and if you are not able to pay in full at the end of the 12 month period, this will become your credit card debt.

Credit Card Debt Interest.

Anyone know what is the interest charged by the credit card company when you don't pay in full for the month bill? In Singapore, it 24% per annum.

That means if you owed them $1000 after paying the min amt, you will have to pay them a interest $19.72. It going to compound till you pay off in full. Call the credit card company up and you will get the formula, as not all company will use the same formula.

So pls use the credit card wisely. Don't spend on things you can't afford and thinking that you can sign and pay by using next month salary.

Credit Card Debt

I have talked about this topic in one of my post but still I have friends who still having credit card debt.

Why is this still happening? The only reason I can think of is that this friend of mine doesn't have self-discipline and self-control.

He did clear the credit card debt once but due to him having at least two credit cards, after clearing the temptation came back and he couldn't resist it.

So how can this friend of mine clear this credit card debt and not having it again?

The only way out is to terminate all the credit card, since he doesn't have self-discipline and self-control, then do a debt consolidation. Look for a financial company and talk to them about your problem. They will be able to advise you according.

Alternatively, leave me a comment and I try my best to help.

Debt Consolidation Loans: No More Multiple Loans Worries

As many loans are offered to everyone today, it is very easy for a borrower to take wrong decisions and become a prey. Borrowing several loans takes one into a severe debt situation and it is a common mistake done by many debtors. You have to take some serious efforts to overcome these debts and the best option is debt consolidation loans. A debt consolidation loan works in a highly practical setup for the borrower’s convenience. You can borrow debt consolidation loans for paying off previous debts to multiple lenders and convert your debt into a single debt and paying a single installment.

A debt consolidation loan provides many advantages that are helpful to you. When compared with your earlier debts, with high rate of interest the debt consolidation loan will be offered at a very less interest rate. By this way you can save a lot of money that you would have been spent as interest for multiple lenders. As a borrower you will be making a single installment payment instead of multiple payments for different lenders. Debt consolidation loan reduces your monthly money outflow and makes it comfortable for you to repay.

Debt consolidation loans are offered to the debtors in two ways. If you don't wish to pledge collateral as well as want to obtain a debt consolidation loan, then the best way for you is to opt for unsecured debt consolidation loan. If you are ready to pledge collateral so that you can get low interest rates for the debt consolidation loan, then you can choose secured debt consolidation loan.

With credit card dues and many outstanding loans, only debt consolidation loan will save you from going bankrupt. Bad credit score along with bankruptcy will make your life difficult and you cannot obtain any fresh loan. Hence it's recommended for everybody to avoid bankruptcy. A debt consolidation loan is generally referred to as a safe loan when compared with your existing unsecured personal loans and credit card dues. Therefore you will have advantage by replacing your other loans of high rates of interest with a debt consolidation loan with lower interest rates.

The debt consolidation loan provides you a lot of advantages like:
A single loan facilitates single monthly installment payment and you don't have to deal with multiple lenders. Debt consolidation loans can be easily managed. The interest rate of debt consolidation loan is comparatively less and the loan is also secured. As the interest rates are low in this loan your monthly installments will be also small. Debt consolidation loan gets you tax benefits for the interest you pay on the loan.

Though you have many advantages by obtaining debt consolidation loan there are also few disadvantages. They are:
Your loan period will be longer than your existing unsecured loans and hence you may have to pay large amount as loan interest. If you pledge collateral for debt consolidation loan, if any default occurs in payment the lender may take possession of your property.

Selecting right debt consolidation loan can solve all your debt woes. For all your current financial problems you can find easy solutions with debt consolidation loan and if the borrower follows proper thought with action in the future, he will avoid becoming a debtor again.

Visit http://www.cashguru.info for a completed understanding of several debt consolidation methods. Also, check out http://www.debteraserzone.com to find out how to manage credit card debts in a better way.

First Step to Financial Freedom.

I will reach the stage of financial freedom when I don't have to worry about money. That also mean that, I am debt free, my saving can support me till I die and my investment is still bring in money. I can do with or without a job.

The big question is how can we reach the stage of financial freedom? How long will it take to be financial freedom?

All this will depend on your spending habit and also your financial education.

If you like to spend all your paycheck within the month and have not receive any financial education, then it will take a life time to attain financial freedom or even not able to attain it.

But if you have all the financial education from financial and investment books and financial educated person, then you may take shorter route to financial freedom. That is because the financial and investment books will teach you the financial theory and the financial educated person will teach you the financial practical. So what is the first step the financial and investment books will teach?

First step:

- From financial and investment books:

* Clear your debts, eg. credit card debt, personal loan debt. But how?

- From financially educated person:

* Stop buying things or using services that you have no money to pay for.
* do a debt consolidation and approached a bank or financial insitution that offer lowest interest rate loan to settle all the debt with this bank loan. This will make you pay less money per month and also less interest.

After you have achieved the first step then we will proceed to the second step to financial freedom.

Debt

Debt is the money you owed. Many people will think that debt is bad and have cause many to bankrupt. If debt is bad, then why most of the organisation is having debt on their financial statement?

The truth is, if you know how to make use of debt, then its a good debt. If you borrow money just for spending or gambling, then its a bad debt.

Company borrow money from banks that charges interest but the company in turn use this debt to earn more than the interest charged by the bank. That is why its a good debt.

I have many friends who is having debt due to gambling and over-spending.

Gambling for leisure like playing mahjong for small bets with friends and family occasionally is fine and I am sure you won't end up in debt for this. Buying little bit of lottery to try your luck is fine as well.

So how did my friend ended up in debt? That is because they will spend their weekend staying over night to play mahjong and the bets is big. Sometime when they don't have money to pay, they will start to give excuse and the debts start here.

Shopping for necessity is also healthy as it will make you look fresh in your new clothes and make-up and accessories. But buying what you don't need is a waste of money. The worst will be buying with other people money because you have not get your paycheck yet. That is when you use your credit card to pay for stuff you don't have money to pay for. Beware of the interest rate that you got to pay if you don't pay in full for the month.

I am not saying credit card is bad, as I like to use credit card very much as it give me petrol and dining discount, it will give me a monthly statement on what I have spend on. It will give you rewards point that can be exchange for shopping vouchers.

So my advise is: Don't Gamble and Don't Spend unnecessarily.