A debt free couple is often a happy couple.

Financial issues can be a real cause for divorce in the U.S. as 20% of the separation cases take place within the first five years of marriage. Therefore, these newly wed couples need to regain control over their financial situation in order to protect their marriages. If you have incurred insurmountable amount of debt then it is advisable to enroll in a debt consolidation program to eliminate your debt.

Here are a few effective ways to manage your financial stress and guide you avoid your financial blues:

1. You should remember that splitting your debt will not solve your problem therefore you should jointly work on paying off your debt. Most cases the partner who has less debt forces his/her spouse to divide the debt in order to avoid blemishing his/her credit report.

In this situation, you should support your spouse and formulate a repayment plan so that you can jointly put money towards paying off your debt. Allot a specific amount of money each month that you can use for paying off your obligations. You can curb your expenses and postpone your honeymoon until you eliminate your debt.

2. You should analyze your financial situation and formulate a stringent budget plan so that you can tackle your financial situation effectively. You can track your monthly expenses and if your expenses exceed your income then you need to redesign your budget according to your current financial state. You should curb your extravagant lifestyle and use the extra fund to pay off your debts.

3. You should open an emergency account and deposit a specific amount from your income in your savings account. You can increase the source of your income and this extra fund can be saved to manage your financial emergencies in future. You can give a room of your apartment on rent or work as a freelancer on weekends as it will help to boost your emergency fund.

4. You can consult a financial expert who can help you manage your catastrophic financial situation. He will analyze your financial situation and suggest some suitable debt relief solution.

These are a few effective ways a couple can manage their problem without filing divorce. If you work jointly towards paying off your debts then it will help to strengthen your bond with your spouse.

Regina King is a financial writer and currently associated with Oak View Law Group. She has been consistently providing people with unique advice on investment,budgeting and debt settlement since 2007. You can reach me at: regina.king85(at)gmail(dot)com.

1.) Consumers must be homeowners in order to qualify.

This is NOT true. Debt negotiation is a service that does not involve a loan; therefore, no collateral is necessary and all consumers are eligible for the service, which can help those in debt reduce the amount they owe and avoid bankruptcy.

2.) Debt reduction lowers interest rates and consolidates all of a consumer’s debts.

This is actually the service offered by credit counseling companies. A debt reduction firm is different; it can actually lower the amount owed instead of just reducing the interest rates. It should be noted, however, that interest will keep accruing until the debt is paid in full.

3.) Debt reduction and credit counseling will not lower a consumer’s credit score.

This is also not true. While FICO, the company that calculates most credit scores, does not look at debt reduction programs or credit counseling in a negative light, many lenders do. Some even compare it to a Chapter 13 bankruptcy filing.

4.) The reduction in a consumer’s credit score is permanent.

While it is true that a debt reduction program is likely to have a negative impact on a consumer’s credit score in the short term, the effect will not be permanent. Negative marks on a credit report can only be retained for a period of seven years. After that they must be removed. In addition, the positive impact of paying off debt will boost the score over time.

On September 27, 2010, President Obama signed the Small Business Jobs Act, which was designed to help boost small business across the country. Government officials and people working for the Small Business Administration are acting as speakers in the Jobs Act Tour, which is taking place around several cities in the country.

Called “the most significant piece of small business legislation in over a decade,” the Jobs Act aims to bring much needed help for small merchants who need ways to fund their businesses and save money at the same time. Savings come in the form of $12 billion in tax relief with 8 separate tax cuts. Although the legislation was enacted in 2010, it takes effect this year. And since it’s tax season, small business owners should keep these in mind:

• Increment in expense limits for 2010 and 2011 to $500,000. This applies to business owners who declare property as an expense instead of a capital expenditure (an expense that creates future benefits).
• Temporary increment of start-up expenditures that owners can deduct. This applies for taxable years starting after December 31, 2009, and must be filed under “other deduction” or “other expense.”
• General business credits for 2010 may be carried back 5 years (previously, they could only be carried back 1 year). If you have a net operating loss, you can offset that over the next 5 years with credit carryback.
• Limitations on penalties for errors made on tax reports. Changes in the law begin this year (2011), with
• Tax relief for cell phones—Cell phones and similar devices used for business can now be deducted as an expense, similarly to property.
• Small business owners have the ability to deduct health insurance costs on self-employment tax. Deductions extend to owners and their families.
• Temporary elimination of all 2010 gain taxes for those who invest in a small business. This particular section aims to give more incentive to investment in the small business community. Investors can exclude up to 100% of capital gain after selling the stock.
• Bonus depreciation—Owners can recover the cost of their property over a period of time through depreciation expense. As of 2010, additional depreciation was added for qualified property. Furthermore, the Tax Relief Act of 2010 extends first-year depreciation deduction for the years 2012 and 2013.

The Small Business Administration offers more tax incentives and deductions that apply to a wide range of business, so check if yours qualifies at the IRS website and find the forms you need.

*Photo courtesy of OhioProgressive

-Cecilia Camps
Editor & Small Business Funding Expert
www.cashprior.com

For some people, debt is an unavoidable circumstance because of some conditions. There are people that may be in debt because their lifestyle is too loaded for what they are earning. Some have simply failed to invest their money properly. There are also people who may find themselves with a large credit because of unexpected situations. No matter what the reason is, it is still an unfortunate circumstance and everybody should be given a chance to avoid it. The answer for this may be to make some time to take some debt management courses.

People who will be filing for bankruptcy may find themselves attending debt management courses, but you don’t have to reach this point to start taking classes. Experts would recommend this course to adults because this is one way for people to learn how to manage both their debt and their investments. You can say that taking this lesson early on will help you prevent bankruptcy. Since you would have a better idea how to take care of your finances, the fewer mistakes you will make. It can even help you from making any bad investment decisions on the first place.

Though taking this course will not stop you from going in debt in the future, it does have a lot of benefits you should consider. For its many advantages, you won’t have to spend too much of your time. Though some courses may be held in your local community college, there are many accredited websites that can teach you this course. Just like in real classrooms, you would be given a complete syllabus of what you can learn. Before you sign up for a program, you can check out this list so that you would have a clear idea what to expect.

Some people would unfortunately be bankrupt at one point of their lives. If you are one of them, you don’t have to be anxious because most people have bounced back from this unfortunate case. Taking a debt management course can easily help you prevent making the same mistakes all over again. It would only take you a couple of hours, so you should sign up and consider it as a great investment.

Credit Counseling

If you are not disciplined enough to create a workable budget and stick to it, cannot work out a repayment plan with your creditors, or cannot keep track of mounting bills, consider contacting a credit counseling organization. Many credit-counseling organizations are nonprofit and work with you to solve your financial problems.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Regardless of your particular need, selecting the right credit counselor is vital. Unfortunately, some organizations, including some that label themselves “nonprofit credit counseling agencies,” can be underhanded and more concerned with helping their own bank accounts than helping yours. An April 2005 report by a U.S. Senate investigating committee reported, “Some new entrants to the industry, however, have developed a completely different business model – a ‘for-profit model’ designed so that their non-profit credit counseling agencies generate massive revenues for for-profit affiliates.

Consumers need to know and understand the differences when selecting a credit counselor. They must know the warning signs. The following information can serve as a valuable guide to help consumers “know the difference” when choosing a credit counseling agency.

1. Ask the BBB (Better Business Bureau) and other third parties about the agency. A number of independent or government organizations work to protect consumers by collecting complaints and making the information public. The BBB is one such agency.

2. Be skeptical of extravagant promises. Some organizations claim they can “fix” a bad credit report or credit score. Others say they can settle a consumer’s debts for relatively little money. If an agency sounds too good to be true, it probably is. Reliable credit counselors help people manage their money better and, if appropriate, can set up a realistic repayment plan that is acceptable to creditors.

3. Make sure counseling sessions are substantial. The length of a counseling session will vary from agency to agency, but consumers need to make sure the counselor takes enough time to understand your personal situation

4. How does the agency protect consumers’ money? Consumers need confidence that any funds they hand over to an agency for debt repayments are secure. Consumers need to ask for evidence that an agency is bonded or has insurance that protects their money from fraud or the agency’s own financial difficulties.

Debt Management Plans

If your financial problems stem from too much debt or your inability to repay your debts, a credit-counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone.

You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.

In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you.

A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you are participating in the plan. As above, here are also things to look for when looking for a Debt Management Plan.

1. ALL payments sent to the agency should go to creditors and be disbursed in a timely manner. Some agencies may take the entire first month’s payment and call it a “fee” or “donation.” Consumers should ask whether this is the agency’s policy. It is also a good idea to ask whether the agency holds payments or disburses them shortly after receipt. The success of a DMP relies upon full and timely payment to creditors to reduce a client’s debt.

2. Does the agency provide a full range of services, or is it just trying to push a profitable Debt Management Plan? Consumers should seek out an agency that provides a full range of services and tailors plans to each consumer’s personal circumstances.

3. The full amount of Debt Management Plan repayments should go to creditors. Some agencies may take a portion of a consumer’s debt repayment and call it a fee or “donation;” others may even take the entire first month’s payment. Consumers should find out how much of each monthly payment is going to creditors and how much is going to the credit-counseling agency. The full amount of those payments should be paid to creditors to reduce the client’s debt.

4. Make sure the agency will work with all of your creditors. Before entering a DMP, consumers should make sure the agency would work with all of their creditors. Some agencies may refuse to work with creditors unless the creditor agrees to a certain level of financial support for the agency. No agency can require creditors to recognize a DMP program, but the agency should be willing to reach out to every creditor.

If debt has consumed you, and your life is getting more difficult by the day, then Debt management and credit counseling are probably two very important choices to consider. If you have severe debt, you may be eligible to enroll in a Debt Management Plan. It takes approximately 36-60 months to repay debts through a DMP. This is sometimes the best alternative to debt freedom.

How Debt Consolidation Programs Work (The Truth)

You’ve probably seen those commercials which state that you can consolidate your debt into one easy payment each month. It sounds like a great deal, right? Well, that’s certainly the case for some people, but debt consolidation isn’t the ideal solution for every situation.

Here we take a look at how debt consolidation works, its benefits and disadvantages.

When a lot of people enter into or consider debt consolidation, they really don’t understand how debt consolidation programs work. They assume that it’ll fix every problem for them and that they won’t have to worry about the debt, which isn’t the case. That’s why anyone who is even remotely considering debt consolidation programs should arm themselves with all necessary information. In this article, we’ll cover the basics of how debt consolidation programs work.

Debt Consolidation – The Basics

Debt consolidation is not at all like debt management plans. That’s because with a debt management plan, a credit counseling agency contacts the creditors and gets them to lower interest rates. Then you give money to the credit counseling agency and they disperse it to creditors. That’s not the case with debt consolidation.

With debt consolidation, you are essentially taking out one big loan and then placing all your other loans on this loan, thus creating one big loan which has to be paid off. Depending on the interest rates of your debt, this can be quite beneficial—if you can get a big loan with a fair interest rate. You’ll be paying one big monthly payment each month which takes care of your debt for that month.

So, to sum it up, you’ll be transferring all your debt to one loan and then repaying that.

How Does It Work?

You’ll have to first find a financial institution that offers debt consolidation. Don’t think, though, that they will grant you a huge loan without anything being done on your part. You’ll have to put up some sort of collateral to make the deal worth their while. This collateral usually comes in the form of a house.

Once you secure a loan, they’ll basically put all your debt on the loan and they’ll tell you how much to pay each month for the loan. How much you pay depends on the interest rate, time and total amount of debt.

Should I Consider Debt Consolidation?

There really isn’t a one-size fits all answer to this question. Who should and shouldn’t consider debt consolidation depends on the situation. Before considering debt consolidation, you should ask yourself the following questions:

• Is it best for me to get a loan than to pay off the debt on my own?
• Have I looked into alternate methods of paying off my debt like debt management plans? Would these plans be a better fit for me?
• Am I comfortable with the possibility of losing my home if I miss a payment on my debt consolidation loan?
• Am I OK with potentially hurting my credit by getting a debt consolidation loan?
• Have I fully researched debt consolidation loans and do I know the possible harmful effects of them?

If you’ve carefully and thoroughly gone through the above questions and still feel as though you should go with debt consolidation, then it’s time to go over the benefits and hazards of debt consolidation.

Benefits of Debt Consolidation Programs

If you have several credit cards, it’s probably hard for you to remember to pay each one every month. In fact, it can be downright impossible to get everything straight month after month. The bills seem to just keep piling up and you’re overwhelmed by it.

Debt consolidation can change all this. It can consolidate all your bills into one easy to remember monthly payment. It’s very convenient.

Another benefit to debt consolidation, besides the convenience, is that it can actually take care of your debt in a quicker time than you could by paying it off by yourself. That’s because you can usually get a debt consolidation loan with an interest rate of between 3% and 10%. Considering the fact that most credit cards feature rates of 10-25%, debt consolidation can result in big savings and a quicker repayment time.

Debt consolidation loans can also be pretty flexible. Depending on the financial institution, you may be able to set up the loan so that it can be repaid over a set period of time. This allows you to somewhat tweak the loan depending on your unique situation.

Hazards and Pitfalls

Just like the song says, every rose has its thorn. Debt consolidation, while a great solution for some, has its downsides. The most obvious downside is that you’ll have to put up collateral, such as a house and vehicle. If you miss even one debt consolidation loan payment, you risk having your house taken away from you. That’s a huge risk.

Another bad thing about debt consolidation is that it initially negatively affects your credit score. That’s because you are taking out a huge loan (and taking out a loan always initially hurts your score) at one time. Even after you’ve paid off your loan, it’ll still show up on your credit report for a period of time and potential lenders may be inclined not to grant you credit if they see that you had to resort to a debt consolidation program to pay off your debt.

Where Can I Get a Debt Consolidation Loan?

Many financial institutions (banks, credit unions etc.) offer debt consolidation loans. If you want to get the best possible deal on your loan, you should try several different places.

At first, you’ll want to go to your local credit union or bank. You can ask them what they offer in the way of debt consolidation loans. Also ask what kind of interest rate they would give you, as well as the repayment plan and what collateral is necessary. One tip is to go to a bank or credit union which you are not a member of. They may give you an excellent interest rate in order to win your business.

The online banking market is extremely competitive, so you’ll also want to look online for debt consolidation programs. You may be able to get an even lower rate online than you could by going to a local bank or credit union. Just make sure to do a lot of research on any online bank to make sure they are legitimate and won’t scam you.

Good Debt Vs Bad Debt

http://www.youtube.com/watch?v=b5Gfe2Pp3XE

There are two different categories of debt you can accumulate, Personal Debt and Investment Debt. Personal debt, often called “bad debt”, results from the purchase of an asset that will likely depreciate over time. This includes borrowing for such items as a new car, clothes, or furniture. With personal debt, it is important to note why you have it in the first place and to what degree it is necessary. Financing a car because it gets you to work or school may be an acceptable form of personal debt. Purchasing a new car on a whim is not. Each situation should be considered and analyzed in accordance to its situation.

Investment debt, often called “good debt”, results from the purchase of an asset that will likely appreciate over time. This includes borrowing for an education, the purchase of a new home, or starting a business. The tax deduction on mortgage interest makes investment debt one of the more acceptable types of debt.

Debt Payments

When it comes to making debt payments, some debts are more essential than others are. There are Essential debts to pay, that must be paid, to avoid court and legal actions, as well as maintain good credit, while Nonessential debts, while still affecting your credit if not paid, do not affect it nearly as much. Below, there is a table dividing the Essential and nonessential debts into an easy to understand chart.

Your financial situation must not be plagued with high personal debt. What determines that is your ability to understand the different types of debt and priorities of debt payments. They are important factors in determining your success. Below, there are examples for each type of debt, as well as suggested methods of taking care of these debts.

Non-priority Debts

Credit debts are classed as non-priority debts. This means the action that creditors can take against you to recover their money is usually less severe than for priority debts. For instance, you do not usually lose your home or risk imprisonment if you cannot pay back a credit debt. However, some non-priority creditors may take court action against you and, if you are a homeowner, this could result in a charge being put on your home. Types of credit debt include bank loans, credit cards, overdrafts, store cards, catalogues; other debts to banks, conditional sale agreements, interest free credit, bill of sale, debts to pawnbrokers, debts to individuals below are a few suggestions on what actions you can take if your credit debt is out of control.

Make a deal-Most creditors will accept a low repayment offer if it is all you can afford. Many times, monthly payments may even be lowered or dismissed. Ask for any interest to be frozen on your account and any administration charges to be waived. If this is the only way to pay off your debt properly, many creditors will understand and be sympathetic.

Make Some Changes-Consider changing your account if your bank is taking money from your current account to repay a debt such as a credit card. Also, make changes in the way you use your credit cards. Do not increase the debt that you have on them by continually using them.

Priority Debts

These types of debts are ones that will need to pay quickly or you may lose something or will be to your future disadvantage. Debts such as Mortgage or car payments or student loans all fall into this category. When trying to resolve these issues, most times, contact with the creditors is the best option for resolving your financing issues and reaching an acceptable medium between you and your creditor. Below are some words of advice on contacting your creditors.

Answer your phone - Don’t ignore letters or phone calls from your priority creditors. Get in touch with them as early as possible and explain to them why you are in debt. If you call them over the telephone, you should follow up the call with a letter, confirming what you said on the phone. Keep copies of any letters you write to them. An advice agency such as your local Citizens Advice Bureau can help you write to your creditors. If you have poor writing skills, or are unsure of proper terminology or correct structure, these facilities can be of paramount usefulness.

Holding Letters – If your priority creditors are threatening to take court action or have started to take court action against you and you need a little time to sort out your finances, send them a holding letter explaining your problems. Say that you will contact them again within two or three weeks. Ask them not to take any further action during this time. For more about negotiating with your creditors, see under heading Negotiating with creditors.

Make Payment Arrangements - Once you have paid off your mandatory expenses, (Food, clothing, etc.) contact each of your priority creditors and arrange to pay back what you what you owe. If you cannot pay back all of the debt at once, arrange payment plans satisfactory to both sides.

For example, you may be able to pay an extra bit each month until the debts are cleared. Another possibility is that you may not have any extra money now, but know you will have a lump sum in four months’ that will clear the debt completely. When it comes to these payment plan types, creditors are typically very understanding, helpful, and accommodating.

When you just can’t pay

If you cannot afford to pay anything to your priority creditors and your situation is not likely to get better, the outcome may be very serious. Examples of this could be being laid off on a job, or have received an injury preventing you from working. Get advice straight away. There are several agencies that specialize in these situations, and they may be able to help before your only choice is to file for bankruptcy.