Debt Consolidation Ideas



Roberts & Roberts answer your
Frequently Asked Questions

Q) My credit card balances seem to be going nowhere every month. My credit report says I have good credit but I owe too much. What do I do?

Keeping you credit cards current is important but national statistics tell us that it takes over one year for every thousand dollars owed to pay creditors at a 20% Annual Percentage Rate on debts over $5000.

Sooner or later, your debt will overcome your ability to pay your bills on time. Your credit ratings may eventually deteriorate due to debt-to-income ratios.

That is, if you divide the amount you owe by the amount you make each year, you will get a rough idea of where you are. If you are over 50%, you are obviously in need of debt management and debt consolidation.

Q) How long does it take to pay off my credit card debts after debt consolidation?

Most people are able to get out of debt in 3 to 5 years after the interest rates on their debts have been reduced under a debt management plan.

Frequently, debt consolidation also results in the reduction of the total monthly payment amount. Those who would have been making payments for 15 to 25 years before debt consolidation are able to lower their monthly payments but, nevertheless, get out of debt in a fraction of the that length of time.

Q) Will debt consolidation affect my credit rating?

It may be that you have not missed payments but you still realize that you will never be able to get out of debt by paying only the minimum amount every month. In this case, you are in financial danger but your credit rating may still be very good.

Once you have begun Roberts & Roberts debt management program, Your credit report may show a remark such as "under debt management" or "managed by credit counseling".

Generally, this indicates that you have found yourself struggling with debts but have taken prudent measures to solve the problem, a beneficial indication. When you have completed the debt management program, your credit rating will not have suffered.

If you have bad credit at the time you begin a debt management program, your credit rating can only improve over time. Credit card companies and other creditors usually re-age accounts that have undergone debt management, credit counseling and bring them up to "Current". As you make timely payments, you begin establishing a sound credit report. Credit repair and good credit reports can only be established over time.

Q) Is your debt consolidation program expensive?

No. We charge a small debt management fee which is included in your monthly payment. Even with Roberts & Roberts fee, your monthly payments are usually less and your interest expense is greatly reduced from what you would have been paying under your original creditor's terms.

Reasonably quick debt reduction and credit repair would never be possible if our debt consolidation program were expensive.

Q) Do I need a credit report to have you help me get a debt consolidation?

No. We work with the creditors you SAY you owe. A credit report may be useful as there may be items that appear that you may have forgotten such as bad credit comments, bad credit loans, credit card debts, collection agencies, student loans, medical bills, and taxes. We can help you consolidate all debts that are unsecured!

Q) Why don't credit card companies have their own debt reduction programs for people like me?

They do! However, debt reduction, credit counseling and credit repair are entirely different functions than what the credit card companies do best.

Credit card companies would prefer that people dealt with specialized debt consolidation firms who take on the substantial burden of individual repayment agreements and terms as well as all the attendant paperwork.

For these reasons, the credit card companies have special programs only for use by debt management companies such as Roberts & Roberts.

Q) Are all creditors willing to reduce interest rates?

Most credit card companies or other creditors have their own debt management programs. However, they will not do this on an individual basis.

Since Roberts & Roberts deals with thousands of clients and creditors continually, our enhanced ability to lower your interest rates and negotiate a new debt management plan is our strength – and yours too!

We will advise you about your personal accounts and provide you the best options for getting out of debt as quickly as possible.

Q) Does Roberts & Roberts provide debt consolidation loans to pay creditors?

No. We strongly caution you against using a debt consolidation loan. Instead, Roberts & Roberts will:

bulletNegotiate with your creditors to reduce your interest rates and monthly payments.
bulletPresent you with a reasonable agreement for repaying your debts, taking into account your household budget requirements.
bulletAccept your single payment every month and disburse it to your creditors on time.

Q) How does debt consolidation differ from declaring bankruptcy?

The objective of bankruptcy is to absolve oneself of debts altogether. This financial strategy, however, has serious and long-term drawbacks which may negatively affect your life for decades.

For example, applying for life insurance, purchasing a business, buying a home, applying for a job, etc. can all be negatively affected by a prior bankruptcy.

Under a debt management plan, you commit to repaying your debt obligations. Thus, one can repair bad credit, maintain a good credit rating and return to a debt free lifestyle quickly and without frustrating negative consequences.

Q) What about the mortgage on my home and my car loan? Can I consolidate those debts together with my credit card debts?

No. Only unsecured debts are considered for a debt management program. You home mortgage and your car loan are secured by your home and car respectively as collateral.

Q) So far I am not behind on any payments, but I can only afford the minimum and I realize that I will never be able to pay off my debt. Should I still seek credit counseling and a debt management program?

Yes, you should. If you wait, you will inevitably fall behind and your good credit rating will suffer. If you enter a debt management plan now, you can save your credit rating. A good credit report is always worth saving.

Q) I am being called constantly by pushy and aggressive collection agencies. Can you stop collections agency harassment?

Yes, if collections agencies are still calling you after the first few payments, we may use The Fair Credit Reporting Act, a Federal Law, to make them stop calling. If collection agencies are calling you at work and jeopardizing your job, they may not be in compliance with the law.

Q) I am interested in credit repair and improving my credit reports. Can you help me repair my credit?

Be very skeptical of any company or organization who promises instant credit repair. No one can erase a negative credit report if it is indeed true.

Your credit rating will improve as you pay down debt and show a regular, timely stream of payments to you creditors.

Roberts & Roberts can ensure that your creditors provide a written acknowledgement that you have fulfilled your obligations to them once you have made your last payment.

Q) Why should I use Roberts & Roberts when there are non-profit organizations who can do the same thing?

Non-profit agencies are actually paid for their work by credit card companies and other creditors. That is a conflict of interest in our view.

Since Roberts & Roberts is paid by our clients, we WORK for our clients. Ask yourself this: If you found yourself involved in a legal dispute, would you let your opponents lawyer represent you?

Q) Will I receive regular statements from Roberts & Roberts as I pay down my debts?

Yes, you may request a fully detailed statement once every month. Roberts & Roberts will provide full disclosure as to how we are helping you. Of course, these statements will match the statements you are getting from your creditors showing that your balances are being impacted positively.

Debt Consolidation and debt reduction does not require a debt consolidation loan!

Credit card interest rates can be lowered... sometimes completely eliminated!

Debt management means lower credit card interest rates and more of the principal on credit card debts paid each month!

Debt Consolidation Loans

Many credit repair companies offer debt consolidation loans that people use to combine all their existing consumer debt or credit card debt into a single loan and one monthly payment.

These equity loans are often secured by some form of collateral, usually the family home, but the collateral could be any asset or any property of significant value.

A debt consolidation loan also may be secured by a co-signer who will be liable for the debt should the primary signer default.

Unsecured loans for bill consolidation also exist but the high interest associated with them may be even greater than your current bills.

The main advantage of a debt consolidation loan is that it allows you to make payments to a single creditor rather than to many creditors and collection agencies who aggressively compete for your limited dollars, often to the point of debt harassment.

Simplification is appealing to many people whose personal finances have become complicated and unmanageable, but true debt reduction or credit repair is usually NOT a benefit of such a strategy.

The disadvantages of such bill consolidation loans is that one transforms unsecured debt, which is not backed by any collateral, into secured debt, which is.

Since most people use the family home as collateral, essentially a home equity loan, they place the home at risk should they become unable to meet the conditions of the consolidation loan agreement.

If for any reason, you fall behind on monthly payments or become unable to make payments at all, the collateral asset may be taken by the lender.

Of course, risking the family home in such a debt management scheme is not recommended for the majority of people interested in credit repair, bill consolidation, getting out of debt and remaining debt free.

The interest rates associated with debt consolidation loans also are often in the 20 – 25 percent range, comparable to high-interest credit card rates, and therefore yield no advantage in reducing monthly payments or total interest payments.

The length of time to repayment and total interest usually increase under such a loan arrangement often taking 10 or 15 years or get out of debt.

Additionally, after finding themselves in dire financial straits, many people have implemented a debt consolidation loan only to run up further credit card debts and eventually completely founder, being led into bankruptcy and losing everything.

As a debtor, you should seriously and thoroughly study the consequences of entering into a debt consolidation loan using collateral such as the home before committing yourself and your family to it.

Debt management and credit repair can be accomplished faster and much more safely!

Debt Management Plans

A debt management plan is much different. If you qualify for such a plan, you may restructure your debt with existing creditors without transforming unsecured debt into secured debt.

In fact, secured debt such as a typical mortgage or automobile loan is generally NOT included in a debt management plan. Unsecured debts, usually credit cards, student loans, bank lines of credit, medical bills, department store credit cards and collection agency accounts, are more typically the kind of obligations considered for debt management.

Under a debt management plan, money is not loaned and all existing creditors remain the same. However, the terms and conditions under which creditors are paid are completely restructured.

Interest payments due creditors are re-negotiated and lowered or eliminated to allow more of the principal to be paid each month.

In fact, debtors may cut their monthly interest costs by as much as half what it had been before the implementation of the debt management plan.

This is the primary reason why someone pursuing quick debt reduction is able to get out of debt in only 3-5 years on average – much preferable to the 10 or 15 years a debt consolidation loan would have taken to repair credit or become debt free.

Many people struggling with debt problems are familiar with having to choose between which bills to pay and which bills to leave in arrears. Creditors commonly tack on heavy penalties for these late or skipped payments -- or worse, they raise the interest rate on the remaining balance, making the burden that much more difficult to bear and even further out of control.

A debt management plan eliminates this added complication to getting out of debt. Remember, the primary reason people enter into debt management is to LOWER OR ELIMINATE INTEREST RATES, not to watch them hopelessly increase.

As a general rule, if you are unable to make the minimum monthly payments on accumulated unsecured debt, you can benefit tremendously from a debt management plan accomplished by a reputable credit repair organization such as we at Roberts & Roberts provide.

Creditors and collection agencies who previously may have been aggressive and harassing in attempting to collect past due accounts actually bring accounts current shortly after implementing a debt management plan.

And since these companies report to various credit agencies, your credit reports have every chance to improve.

Obviously, the advantages of positive credit reports or credit references are invaluable in today’s business, career and consumer credit worlds.