Getting Out Of Debt Slowly But Surely

We all have borrowed money at one point or another to meet unanticipated expenses in our lives hence everyone has had a debt to repay. Getting out of debt is also something that a majority of people have had to struggle with perhaps because they don’t have the required funds to meet the payment commitment they gave. At the same time, the daily bills tend to weigh them down. Nonetheless, all these are situations that can be put together.

Simple ways of getting out of a debt

The amount of debt does not matter, but the following methods are applicable. However, it is important to analyze keenly the income versus how much must be slashed out to recover the debt versus the time it will take to clear it out. First things first, the building of a realistic budget is firmly recommended. It helps put bills together in a consistent manner and based on particular basic needs. Nonetheless, keeping to and maintaining the budget requires discipline

Defaulted unsecured debt attracts high penalty rates. At the worse scenario on how to recover them, credit counseling companies can help. They intervene to have the interest rates reduced. At the same time, they are handy in putting up a necessary and manageable budget. But note, they charge a monthly fee for this and other services but nevertheless, the help they offer in getting out of debt is worth the price.

NerdWallet: Do debt management plans work?

Francine Bostick, a Manhattan, Kansas, woman who paid off more than $120,000 in credit card debt in 2012, says she emerged with credit scores good enough to buy her first-ever new car.

#x201c;It was exciting and made me a little nervous when they did the credit check,#x201d; says Bostick, 66. #x201c;We got zero percent interest for the life of the loan.#x201d;

Yet Bostick is also an example of what may be wrong with credit counseling. Some consumer advocates were appalled when the National Foundation for Credit Counseling named Bostick and her husband, Jim, as the agency#x2019;s 2012 #x201c;Clients of the Year#x201d; because of the couple#x2019;s age and the fact that he had Alzheimer#x2019;s disease. Bostick worked 12-hour days to earn the money to make debt payments while caring for her increasingly incapacitated husband, who died in May. Critics say the Bosticks should have been encouraged to file for bankruptcy so Francine could spend more time with her dying husband and use any extra money to shore up her own retirement savings.

Bostick says her credit counselor told her she could file for bankruptcy, but Bostick didn#x2019;t consult a lawyer about that option.

#x201c;I still feel we made the right decision for us,#x201d; says Bostick. #x201c;I believe if we had filed (for) bankruptcy I would probably be in the same boat as a few people I know who filed (for) bankruptcy and are buried in debt again.#x201d;

The lack of disclosure about bankruptcy#x2019;s potential benefits isn#x2019;t the only problem with debt management plans. Other issues include:

#x2022; They aren#x2019;t designed to tackle many other types of debt, such as mortgages, car loans, student loans and most medical bills.

#x2022; Borrowers should expect to live without much access to credit during the repayment period. Their credit card accounts are typically closed and they agree to not apply for new credit, whether it#x2019;s for another card, a new car or a mortgage refinance. A new account appearing on their credit reports may lead creditors to cancel the debt management agreement.

#x2022; There#x2019;s little leeway for missed payments, which can lead to the plan#x2019;s cancellation.

Some people find that they simply can#x2019;t afford the payments on debt management plans, while others drop out because of setbacks such as job loss or unexpected expenses.

That is reflected in newly released data by the NFCC. Of the people who enrolled in its debt management plans in 2010, 42 percent had completed repayment by the end of 2014 and 12 percent were still making payments, says Bruce McClary, the spokesman for NFCC, the largest and oldest nonprofit credit counselor.

The foundation is trying to boost its success rate in two important ways: by making payment plans more flexible and by adding a savings component, says Susan Keating, NFCC#x2019;s president and chief executive.

The Washington, DC-based foundation intends to offer three repayment options based on clients#x2019; ability to pay, rather than the current one-size-fits-few option that critics call too rigid. Each option would allow clients to put money aside for emergencies, Keating says. Traditionally, creditors wanted every possible dollar to go to them, which can impede the ability of debt management clients to save for emergencies or retirement.

NFCC#x2019;s changes, coming later this year or in 2017, make the plans #x2014; especially the savings component #x2014; much more attractive. Having money set aside to deal with emergencies can make it easier for people to stay on the plans. Plus, emerging debt-free but without an emergency cushion may put many people back in the same situation that got them into trouble in the first place.

Yet there#x2019;s one change needed that isn#x2019;t coming: Borrowers need to be told that bankruptcy could be a faster, cheaper solution.

A typical debt management plan requires people to repay thousands of dollars over time. The average debt level of the people who participated in 2013 was nearly $20,000, according to Cambridge Credit Counseling Corp., another large nonprofit. In addition, the counselors levy an average fee of $24 a month, according to the NFCC, or $1,440 over five years.

By contrast, a Chapter 7 liquidation, which erases credit card debt and most other consumer debt, typically takes four months and costs roughly $1,500, depending on the area. Bankruptcy stops collection actions such as lawsuits and wage garnishments, and battered credit scores typically rise after a filing. Bankruptcy can also give people a fresh start.

Federal law requires people who file for bankruptcy to consult with a credit counselor. But people who sign up with credit counselors aren#x2019;t required to talk to a bankruptcy attorney. While potential NFCC clients may be told bankruptcy is an option, counselors aren#x2019;t lawyers and can#x2019;t give legal advice, Keating says.

That#x2019;s not enough, says attorney Ed Boltz, president of the Washington, DC-based National Association of Consumer Bankruptcy Attorneys .

#x201c;(Credit counselors) should say, #x2018;You should consult with a lawyer before you sign up with us,#x2019;#x201d; Boltz says. #x201c;Otherwise, you could be making some big mistakes.#x201d;

Borrowers also need to know that dropping out of a plan can have serious consequences. Creditors can resume collection efforts, and borrowers also have flushed thousands of dollars down the drain and might not have enough money left to seek legal help or file for bankruptcy.

So, those thinking about a debt management plan should make an appointment with an experienced bankruptcy attorney first. (Consultations are usually free.) That way, they will be able to understand the choice they make.

PNC settles with Justice Department over soured small business …

PNC Bank has agreed to pay $9.5 million to settle Department of Justice claims that it did not properly vet government-backed loans that went bad leading up to the financial crisis.

The Justice Department said the Downtown-based bank failed to adhere to federal lending standards when it approved 74 loans guaranteed by the US Small Business Administration.

The loans were initiated by a third-party broker, and when some of them started defaulting in 2006, PNC submitted claims to the SBA to recover losses.

The Justice Department said PNC did not demand adequate tax records from the borrowers and failed to “apply prudent lending standards” when it approved the loans.

“Banks that are trusted to make loans backed by the SBA have a duty to apply proper lending standards, because the United States is obligated to pay when federally backed loans default,” US Attorney Rod J. Rosenstein said in a statement. “The government will vigorously pursue lenders that fail to enforce reasonable lending standards and stick the taxpayers with the bill for bad loans.”

The broker that initiated the loans was Virginia-based Jade Capital Investments, whose owner, Joon Park, admitted in 2013 to using falsified documents to win $100 million in SBA-backed loans.

PNC spokesman Fred Solomon said the bank denies the allegations and was a victim of the fraud.

“We resolved the matter only to avoid the cost and risk of litigation,” Solomon said.

The Justice Department has cracked down on banks for shoddy lending practices preceding the financial crisis. In 2013, PNC agreed to pay $7.1 million to settle similar claims over SBA-backed loans that went bad.

Chris Fleisher is a Tribune-Review staff writer. Reach him at 412-320-7854 or cfleisher@tribweb .com.

Rilling identifies budget, tax relief and relieving school overcrowding as …

NORWALK — Mayor Harry W. Rilling plans to roll up his sleeves on the city budget, tax relief, school overcrowding and making City Hall more efficient when he starts his second term in office.

Theres the possibility that we might be able to consolidate positions so that we reduce duplication of effort, Rilling said. We want to make sure that we are running the government as efficiently and smoothly as possible.

The Best Small Business Loans To Grow Your Business

One of the biggest challenges faced by any small business is knowing when and how to expand. Expansion requires capital, and not every entrepreneur has the access to the amount of capital needed to grow their business. Unfortunately, without growth, it can be hard to turn a profit.

You can see how this could be a problem.

However, small business owners have been the latest beneficiary of the fintech revolution. A sector of companies that lend to small businesses have harnessed the power of big data and cloud computing to power sophisticated underwriting models. These algorithms allow lenders to inject capital to a wide spectrum of small business customers. For some entrepreneurs, access to capital is less than 24 hours away with these lenders.

You may have heard of companies like LendingClub Corp (NYSE: LC), which has facilitated nearly $2 billion in loans, and On Deck Capital Inc (NYSE: ONDK), but there are even more options available for people looking to give a little jolt to their business. Here are a few:

1. Credibly offers customized funding solutions through their Working Capital Loan with 6-17 month payment terms,and Business Expansion Term Loan with 18 or 24 month terms. Fixed payments are deducted from the business bank account on a daily or weekly basis, giving business owners better control over cash flow. Credibly is a pioneer in data underwriting, having used its model to fund over 7,000 small businesses with over $300m since 2010.

2. Smartbiz advertises loans with a variable rate of Prime Rate plus 2.75 percent to 3.75 percent up to $350,000. A $150,000 loan could be paid back as little as $1,684.20 per month with no pre-payment penalty.

3. Fundbox offers small businesses owners a different type of loan. Business owners create an account, add their unpaid invoices and an advance for the amount of the unpaid invoice is transferred to the business bank account.

4. BlueVine analyze cash flow and customer strength to offer flexible lines of credit.These can be as much as $50,000 with interest rates as low as 6.9%. BlueVine also factors invoices like Fundbox.