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Project Debt Relief FAQ - Get Your Questions Answered!

There are many frequently asked questions as far as debt relief and debt management are concerned. Instead of scattering this information throughout a variety of articles, we have decided that it would be beneficial to keep the bulk of it in a single place: Our Debt Relief FAQ Section.

It is important to review the frequently asked questions involving debt relief because it is filled with quality information. You might just find what you are looking for without having to ask the question yourself.

The answers to the frequently asked questions in debt relief are compiled by experts. The advice and information that they offer is second to none. Reading up on debt relief FAQs is a quick and easy way to gain a thorough understanding of the subject. It can be a very beneficial way to gain a basic sense of what is going on before delving into the topic deeper.

How do I know if I am in debt?

Ask yourself the following questions to determine if you are in debt:

Am I unable to meet minimum payments on my bills?

Do my expenses exceed my income?

Do I find myself falling behind on my monthly payments?

Have I surpassed my credit limit?

Have I lost track of my payments?

Am I considering filing for bankruptcy?

If you answered “yes” to any of the previous questions, you are most likely in need of debt relief help.

How can I get out of debt?

There are a number of options open to help people who are struggling with debt. The following programs exist to help people pay off their debts.

Debt Settlement

Debt Consolidation

Debt Management Plan

How long will it take to get out of debt?

This depends on what method you choose. Typically it will take you several years to pay off your debts. If you seek help from a credit counseling agency, a counselor can help you figure out a plan that will help you pay off your debts in the quickest possible fashion.

How can I pay off my debts? Will I be forced to take out another loan?

If you are already in debt, it is an extremely bad idea to take out another loan to pay it off, as you may find yourself back in the same situation when it comes time to pay off your loan to the loaner company. It is best to pay off your debt through settlement, consolidation, or a management plan that takes into account a realistic appraisal of your assets: the money you already have, the money you are currently in a position to earn, and the money you are likely to make in the near future.

The one exception to this rule is a debt consolidation loan. A debt consolidation is a loan with low interest rates that is designed to help cover your consolidated debt, and is decided upon typically with the help of a debt management company.

Who can help me with my debt?

A credit counseling agency can provide you with a free counseling session to assess your debt situation. Credit counselors can advise you on budgeting and financial planning and can negotiate a debt settlement or debt management plan with your creditor. Beware of scams, and make sure that your agency is licensed by the state and will take good care of the confidential financial and identification information you will have to provide them with. However, you can also negotiate with your creditors yourself.

What is a DMP?

A DMP, or Debt Management Plan, is a debt relief method that involves negotiating with your creditors to devise a long-term plan over which you will make consistent monthly payments to pay off your debt. A debt management company can review your financial information and negotiate with your creditor to create the best possible payment plan for your income, assets, and debts.

Can a DMP be adjusted?

Yes, if you find that your income is too low to cover your monthly payments, you can negotiate with your creditor company to adjust your debt payments so that you pay off your debt in fewer amounts over a longer period of time. Conversely, if your income increases, you can choose to make greater payments to pay off your debts in less time.

What is Debt Consolidation?

Debt consolidation is a debt relief method that involves combining all your debts into one total sum which you can pay off at a lowered interest rate over a certain period of time. The way this works is that you pay a debt management company a sum which they will then pay the creditor. The company will help negotiate a debt consolidation plan with your creditors under which your interest rate will be lowered.

What is Debt Settlement?

Debt settlement is a debt relief method which involves negotiation of your total debt down to a lower amount. Instead of paying your debt off through monthly payments, debt settlement offers you, the debtor, the option to then pay off this decreased total in a lump sum. Sometimes, this lump sum is paid through several smaller payments, but these sorts of cases are rare, and still, these multiple payments differ from the usual monthly payments.

Why should I choose to settle my debt?

Debt settlement is a good option to consider if you are finding yourself regularly falling behind on monthly payments or if you know right away that you will not be able to continue to pay off your debts at your current rate for the next two to three years. By paying a lump sum upfront, you can rest easier knowing that your debt is settled.

Why would a credit card company agree to Debt Settlement?

It might seem counterintuitive for a credit card company to want to agree to lower your overall debt. Wouldn’t they be able to get more money out of you by continuing the vicious cycle of raising interest rates and charging late fees indefinitely?

However, a credit card company knows that it can only hound a debtor so far. If your debt is increasing at a rate that will be impossible for you to financially outrun, you will simply have no money left to make your payments or the accrued fees and be left with two options: either declare bankruptcy or never pay off your debt. Neither of these two options is beneficial to the credit card company, because if you have nothing left to give, this means that they will just not get paid. So, a credit card company might agree to settle your debt for a lower rate, and know that they will ultimately receive at least some payment as opposed to none.

Can debt affect my credit score?

Yes, debt will affect your credit score. If you are falling behind on or failing to make monthly payments, your credit score will plummet. Your credit score will only start to recover once you have either paid off your debt in full or slowly as you make consistent payments on time. If you file for bankruptcy, note that your credit score will be damaged for seven to ten years.

Who qualifies as a debt collector?

A debt collector is someone who is responsible for collecting debt payments from debtors and who is not your creditor, such as an attorney.

What restrictions are debt collectors held to?

Debt collectors are prohibited by law from calling you at your place of employment, and they cannot tell any third party a) that they are a debt collector, and b) that you are in debt. They may not contact you after 9 pm or before 8 am. They can, however, contact you through typical forms of communication, such as phone, email, snail mail, and fax, or in person. There are also various laws stating that a debt collector cannot harass you.

Will my taxes be affected by Debt Settlement?

Under IRS law, your settlement will be considered subject to taxes at the end of the year, as forgiven debt is regarded as taxable income. However, it is possible to file a specific form, known as Form 982, which may exempt you from these taxes in situations of extreme hardship.

Should I just file for bankruptcy?

Bankruptcy should be an absolute last resort. Not only will your credit score be negatively impacted in the long-term, but you may be denied insurance, employment, and even apartment tenancy on the basis of your past bankruptcy. Furthermore, you will find yourself unable to take out any kind of credit or loans in future.

Will I lose my home or car?

No, you will not lose your home or car as a result of personal debt. Your home and car count as secured assets, meaning that if you do not keep up with your mortgage or auto loans, your loaner has the right to repossess the item. Credit card debt, personal and medical loans all qualify as unsecured assets.

Will being in debt prevent me from taking out mortgage or credit in future?

While there are some companies that are willing to loan to people in debt, it is still not a good idea to increase your financial obligations while you are in the precarious financial position which your debt has created. It’s best to pay off your debts in full before you make any more financial obligations. And while it will take a few years, once your credit score recovers, companies will be more willing to loan to you again, so it’s important to be good at following through on payments.

How to Negotiate a Credit Card Debt if You Are Being Sued

When you go past due on a credit card, the worst threat a creditor can make is that they will sue you.

If the creditor won’t work with you then there’s a good chance that lawsuit will show up at your doorstep one day.

Now you’ve got a real problem: instead of just getting collection calls and letters, you’re at risk of a judgment against you.

What do you do now? Is it too late to settle the credit card debt and make it go away?

If you’re organized and proactive, you can still settle the debt and avoid the judgment. Here are our best tips for making it happen.

Set Your Timer

You’ve got only a certain amount of time to file an Answer to the lawsuit. Miss that window of opportunity and the creditor will file for a default judgment.

The default judgment allows the creditor to start a wage garnishment and freeze your bank account. Once the judgment is in place, you’ve got not leverage to negotiate the debt.

Best to set your clock and keep a close watch on it. Every minute counts.

Assess Your Liability

Take a look at the lawsuit papers and take careful notes. Is the company suing you the one you borrowed money from? Does the amount of money they say you owe match up with your records?

These are a few of the questions you need to ask yourself as you try to figure out whether you have a good defense to the case.

Remember it’s no defense to just say that you can’t pay the debt – that’s a question of ability, not liability.

By reviewing the Complaint you can put together a list of defense that may be helpful when you call to negotiate the debt.

Review Your Financial Situation

You need to know what the creditor can take from you if they get a judgment against you. For example, they can’t take your home if you rent. And they can’t freeze a bank account if all you get is Social Security income.

If you’re working then you should calculate how much they can take in a wage garnishment. If that amount won’t make too much of a dent in your ability to live your life then you might not care about the judgment.

If the judgment would do too much damage to your wallet then you will need to figure out a way to offer a better deal to the creditor.

Make A Realistic Offer

In order for a creditor to accept a settlement, you’ve got to offer more than they’d get with a judgment. If you offer less, or make it more difficult for the creditor to get the settlement money, then they’ll deny the offer.

To put together a realistic settlement offer, look to everything you’ve got. Check bank balances, look around for things you may be able to sell, and decide how much money you can give for a settlement.

Your settlement offer can take the form of a lump sum or monthly installments, depending on the creditor. Some will take only a lump sum settlement, others will let you pay it out over time.

One thing’s for sure, though – cash is king. Offering a lump sum settlement will always get you a better deal than an installment plan.

Prepare To Defend The Lawsuit

Sometimes, settling a credit card lawsuit before filing the Answer just doesn’t happen. That doesn’t mean it won’t ever settle, though – it just means that the timing isn’t right.

Most creditors will give you a much better deal if you defend the lawsuit. If you defend the lawsuit, the creditor knows you’re serious.

When you fight the lawsuit, the creditor also starts to get worried about losing the case. The judge could decide that they don’t have enough proof to win, or that something else is wrong with their case. If that happens, you win and they get nothing.

No matter what you decide to do, there are always opportunities for you to settle a credit card debt.

Understanding the best time to enter into a settlement isn’t easy. If you take the time to map out a strategy then you stand a better chance of success.

Debt Consolidation | Debt Settlement | Credit Card Debt - Toll-free: (877) 676-5878 Complete Debt Solutions

Debt is like a messy pet that you forget to lock up before going on an extended vacation. Left free to do what it pleases, it’s sure to make a mess of everything that you hold dear.

While your debts can’t rummage through your clothes closets or eat all the food in your pantry, they can still cause plenty of trouble. In fact, your mounting debts could wind up forcing you to declare bankruptcy.

You may have heard about various debt consolidation agencies that advertise quick relief from your unsecured obligations. Since there are several different methods of debt relief out there, it’s important that you seek out the type of help that’s right for your situation. You need a trusted source of debt consolidation advice to help you do this.

Don’t believe anyone who tells you that you can’t pay down your debts on your own. It’s entirely possible to muster the financial resources required to shrink and eventually eliminate your balances for good. To do this, you’ll need to pay down your debts one at a time. Begin with a particularly high-interest credit card or loan and work your way down the debt ladder until you’ve paid off your least expensive debt.

This process can save you hundreds of dollars in potential interest charges and reduce your payoff period by several years. However, it’s hard to muster the discipline to stay on schedule during a self-managed debt repayment plan. Such a plan might also require you to make uncomfortable cuts to your household budget. Your family might not be willing to make such sacrifices.

If you’re looking for a professionally-managed program of debt relief, you have several potential choices. Before making your decision, take the time to absorb a few key bits of debt consolidation advice.

First, it’s important to remember that debt consolidation can help you reduce only your unsecured debts. Since secured obligations like your car note or home equity loan are connected with physical assets that can be forfeited during default or bankruptcy, they can’t be consolidated or reduced by normal means. To alter the terms of a mortgage or auto loan, you’ll need to enter a program of refinancing.

Then again, a debt consolidation program that reduces your burden of unsecured debt could still prove useful. In fact, it could mean the difference between a devastating declaration of bankruptcy and a stable financial future. Unsecured debts that can be reduced by debt consolidation include medical bills, personal credit lines, court judgments, retail-store cards and regular credit cards.

You could choose to take out a debt consolidation loan to help pay down your debts. Although it might seem unwise to open yet another line of credit while you’re trying to get a handle on your current debts, this method of debt relief might meaningfully reduce your total burden.

Once you agree to the terms of your loan, your debt consolidation lender will pay off your existing unsecured creditors and leave you responsible for a single larger loan. This greatly simplifies your repayment arrangements by requiring you to send just one monthly payment to your lender.

Unfortunately, debt consolidation loans can carry high rates of interest. Unless you have a good credit score, the interest rate on your loan could be as high as 20 percent. This might be even more expensive than the average rate on your old debts. Due to their expense and other factors, most borrowers who listen to unbiased debt consolidation advice from financial experts choose not to take out debt consolidation loans.

Rather than take out a costly loan that many produce limited long-term savings, opt for a proven debt relief program from a trusted provider. Complete Debt Solutions, one of the country’s foremost authorities on debt consolidation, has been providing debt settlement services for years.

Like a debt consolidation loan, the debt settlement process can help you reduce and pay down your debts in less time than a self-managed program of debt relief. Unlike a debt consolidation loan, it can actually reduce the principal balances on your existing debts.

In other words, Complete Debt Solutions Debt Relief can dramatically cut the total amount that you owe to your creditors. Once you enroll in a debt settlement program, you won’t owe your creditors another dime until all of your debts have been settled.

The process often takes less than 3 - 36 months and requires no upfront payments. You’ll only owe Complete Debt Solutions for its services once your debts have been settled and you’re well on your way to financial freedom.

Get debt consolidation help by calling 877.676-5878 www.completedebtsolutions.ca

To learn more about the debt settlement process, call Complete Debt Solutions at 1-877-676-5878 or complete the no-obligation debt consultation form today. You’ll receive more debt consolidation advice and discover how to get your finances back on track.

Ten Things Debt-Free People Do - Call Debt Free Associates (877) 676-5878 Canada

Ten Things Debt-Free People Do - Call Debt Free Associates

1. They are detail-oriented and very organized

Paying off debt means knowing what you owe, developing a budget and sticking to it. Debt-free people keep track of their bills, how much they earn, how much they save and how much they invest. They speak to experts and have a tracking system in place, whether it’s an Excel file or another program. Demers went to a financial planner when he started a new job in 2008. “I went to a financial planner to get my house in order and set up a debt repayment plan, as well as placing a portion of my paycheque to an RRSP.”

2. They’re stress-free

Debt creates stress. People worry about money, they dread next month’s bills, they can’t sleep at night which leads to poor work performance… the list goes on. Getting rid of debt gets rid of stress as Demers experienced when he finished paying off his debt. He says, “It felt amazing. It was like this huge weight was off my shoulders. I didn’t go out to celebrate, though. I’m merely modifying my plan now.”

3. They operate within a budget

Just because they have disposable income doesn’t mean they spend haphazardly. If they can afford it, they’ll spend. If not, they’ll wait or forgo spending.

4. They pay cash

One of the reasons I was able to pay off my debt was because I chose to pay with cash. If I didn’t have the money, I didn’t use credit as that would increase my debt load.

5. They don’t have a lot of credit (and they understand credit)

Credit, when understood and used properly, is a good thing. Debt-free people aren’t afraid of credit. Instead they use it properly to build their personal credit and pay their cards off every month to avoid interest. Demers uses his grandparents’ attitude towards credit. He says, “Never, ever use them as a substitute for cash. They must be paid off every month. My card’s limit has been set deliberately very low for that reason.”

6. They understand value

Do you really need ten tops from a fast-fashion store or one very good, high-quality top that will be worn for years? Debt-free people consider the value of items before purchasing versus mindlessly buying stuff.

7. They’re patient

Debt-free people make the hard decisions. If they can’t afford something, they either wait until they can or choose to do without.

8. They comparison shop

They also cut coupons, wait for sales or buy second-hand. That’s not because they can’t afford it. They know that it’s silly to automatically pay full price for everything. Debt-free people have a habit of looking for realistic and pragmatic ways to save money.

9. They’re not materialistic

Debt-free people might like nice, shiny toys but they don’t define themselves by their possessions.

10. They think long and hard about taking on new debt

I was debt-free for a long time and was hesitant to take on new debt via a mortgage. It took a lot of thought, some calculations, a lot of research and talking to real estate and financial experts before making the choice to take on new debt. Thanks to my previous experience being debt-free, I continue to practice my debt-free habits as well as focus on paying off my new debt as soon as possible.

Demers would also take on new debt but with a few caveats, ”If I ever do take on debt, it will be exclusively with a credit line from a credit union or with an online bank like ING Direct. Their interest rates are favourable, and on top of that, I feel as if I’d be in a position to get a better deal.”

*Name changed by request

Businesses should not profit by preying on people struggling with consumer debt. When a business entices consumers by promising to save them thousands of dollars by signing up with their company, takes their fees up front and fails to resolve any of the consumer’s debts, these unconscionable practices must be put to an end. We cannot allow these unscrupulous businesses to prey upon the poor indebted members of our community.

Canada Life Solutions http://debtfreeassociates.ca Complete Debt Solutions

No More Debts Solutions - Toll-free (877) 676-5878 Canada: Credit Card Debt Settlement | Debt Relief | Complete Debt Solutions (877) 676-5878

Credit Card Debt Settlement | Debt Relief | Complete Debt Solutions (877) 676-5878

We can help you achieve credit card debt relief much faster than you may believe possible. Through our unsecured debt settlement services, we provide beneficial credit card debt consolidation alternatives to help our clients get out of debt. Our debt settlement services include direct negotiation with credit card companies and other creditors. At Complete Debt Solutions, we help clients avoid Bankruptcy.

You can complete the journey to becoming debt-free in as few as 12 to 36 months by employing credit card debt negotiation and debt settlement techniques.

To learn more about credit card debt relief through our unsecured debt settlement services, contact Complete Debt solutions today for a free consultation on (877) 676-5878.

We are confident that a careful analysis of your available options will reveal that — be it credit card or another form of unsecured debt — debt settlement is the most effective, and certainly most pragmatic, solution. Surprisingly, most debt consolidation companies work for and/or have been created by the credit card industry in an attempt to collect debts before attorneys get involved. This has proven a lucrative strategy for credit card companies, but it is important to realize that these organizations have no incentive to provide services that are in your best interest. A prudent financial planner would never recommend a mortgage refinance (one form of debt consolidation) to achieve credit card debt relief. It is substituting secured debt for unsecured debt and you now risk losing your home if you get injured or can't afford your new higher mortgage payments. At Complete Debt Solutions, our unsecured debt settlement services are designed to provide advice and guidance that is in the best interest of each client. If you are seeking credit card debt relief from experienced industry professionals, our firm can be trusted to help you determine if unsecured debt settlement is the best option for you.

What we do at Complete Debt Solutions:

No upfront fees
Free credit repair
Debt reduced by up to 80%
Debt free in 3 - 36 months

Call ourDebt Free Associates right now. We are here to help you 24 hours a day. There is a fix, we just need to understand your situation and can help you find a solution.

Do it now call (855) 773-3365 Debt Free! www.completedebtsolutions.ca We are a debt settlement company dedicated to providing the best possible service to our clients.

How To Avoid Debt Settlement Scams. Call Our Debt Free Associates (877) 676-5878

Complete Debt Solutions, a marketing service provider for debt settlement programs, debt relief services, and credit repair firm, gives useful tips for people looking at various debt relief/debt settlement options. Complete Debt Solutions is different than a lot of the debt settlement service providers in that they take the time to look at each individual case and provide professional solutions to their clients. Complete Debt Solutions only works with reputable creditors, collections agencies and law firms that have the best interest of the customer in mind. They will work with the customer to understand their specific needs and weigh the pros and cons of their options in order to make the best decision possible for each situation.

With more Canadians finding themselves in debt, various companies attempt to take advantage of this market. Many companies attempt to 'scam' the customer. Complete Debt Solutions is providing red flags and warning signs to watch for when researching debt settlement options.

How To Avoid Debt Settlement Scams:

If a company does any of the following, be on the look out for a possible scam.

Misleading advertising
Company asks for customer's social security number, bank information, or other personal information without providing a quote beforehand
Company requires power of attorney and details of the settlement process are not given
Company insists that debt settlement is too difficult to do alone
Business fails to explain pros and cons of using debt settlement services
Makes guarantees that all debt will be settled or eliminated at a unrealistic rate
Names a new government program to help settle consumer debts
Guarantees harassing phone calls and mail will be stopped
Boasts that your credit will be repaired from their services…..we actually do repair our clients credit, no additional charges.

In order to avoid scams for companies utilizing these tactics, the consumer needs to do their research before deciding what is right for them. Debt settlement from any source comes with risks that every consumer needs to be educated about before proceeding with debt settlement services.

Complete Debt Solutions takes all of this into account before providing their services to a consumer because they understand that there are a lot of ways that debt settlement can be beneficial to an individual. Complete Debt Solutions is upfront about the terms and agreements of their services in order to truly focus on the individual and help them reach better financial stability. Our debt settlement program is totally transparent and the only debt relief program that benefits the customer.

No Upfront Fee
Free Credit Repair
Debt reductions up to 80%
Debt free in as little as 3 - 36 months

Too much debt weighs you down, more than you think. Let Complete Debt Solutions help you get debt off your back. It's confidential, it's free and it works. Call our debt free associates (877) 676-5878. All you've got to lose is your debt. www.completedebtsolutions.ca

Debt Consolidation | Debt Settlement | Credit Card Debt - Toll-free: (877) 676-5878 Complete Debt Solutions

Debt is like a messy pet that you forget to lock up before going on an extended vacation. Left free to do what it pleases, it’s sure to make a mess of everything that you hold dear.

Get debt consolidation help by calling 877.676-5878 www.completedebtsolutions.ca

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Credit Card Debt Consolidation: Know Your Debt Relief Options (877) 676-5878

Debt Relief Canada | Complete Debt Solutions Debt Settlement

Credit Card Debt Relief and Debt Consolidation programs and how they work is the subject of this story. Crippling growth in credit card debt has seen a steady rise ever since credit cards were first introduced in America over 50 years ago. Since then, Americans have had a lifelong love affair with credit cards and buying & spending on plastic. But that love affair how now run its course. Complete Debt Solutions Program discusses the issue of credit card debt and what the best debt relief options available today are.

It's not uncommon for individuals and families today to be using credit cards to make ends meet, using plastic to cover monthly deficits in their personal household budgets. Not only is this practice not uncommon, it's become a virtual necessity, especially when one suffers a job loss, illness, serious injury or other crisis.

Yet credit cards have their spending limits, and there are personal limits as well as to how much one can afford to pay each month. And this is where credit card debt relief programs can help.

Debt Consolidation - One of the oldest debt relief programs, debt consolidation is a program in which, typically, a new loan is taken out to pay off existing loans or credit card bills. This new, single loan offers the convenience of a single monthly payment to manage, and possibly a lower interest rate and/or a fixed rate.

Yet consumers need to be wary of debt consolidation loans that are packaged in the form of home equity loans. In these cases, one's home is used as collateral. This may or may not be a problem down the road, so long as the borrower is able to maintain making their monthly loan payments on time.

Debt Settlement - One of the newer Debt Relief Programs today, debt settlement is a program which only works for unsecured debt such as credit card debt and medical bills. Mortgage loans, government loans, and student loans may not be eligible for debt settlement. In this type of program, outstanding debt is negotiated between a debt relief firm working on behalf of the consumer indebt, and their creditors. In many cases, unsecured debt can be reduced significantly, allowing for the balance to be paid off in much quicker fashion.

Consumer Credit Counseling - In this program, credit counselors work with those in debt to examine their finances, determine strengths and weaknesses, establish a budget, and possibly negotiate better payment terms for those in debt. Consumer credit counseling works best for those who are employed, and who are able to stick with a monthly household budget.
With this many options of credit card debt relief programs available today, there is no reason for anyone to continue to suffer under the weight of unbearable amounts of credit card debt which they are unable to pay.

Complete Debt Solutions Program offers a free debt evaluation and savings quote, which can be taken advantage of at their website: www.completedebtsolutions.ca

End the Vicious Cycle of Credit Card Debt Today And See How Easily We Can Settle Your Debt For Less and Leave The Stress Behind You.

Ontario: (416) 900-5594

Alberta: (587) 322-6734

Manitoba: (204) 800-9816

British Columbia: (604) 800-1674

California: (213) 375-3933

Toll-free: (877) 676-5878

www.completedebtsolutions.ca

Call free (877) 676-5878 No More Debts www.nomoredebtsolutions.ca

Will Debt Consolidation Wreck My Credit?

Dear Debt Adviser,

I have about $50,000 of debt on credit cards. My credit rating is still high. I am considering a debt consolidation loan. Will that adversely affect my credit rating?

- DT

Dear DT,

The cliche about rearranging the deck chairs on the Titanic came to mind when I read your question. Debt consolidation won't address the real issues that may sink your credit rating!

Moving the balances of your credit card accounts into an installment loan for purposes of consolidation may cause a slight dip in your credit score. The main reason is you will have a new inquiry and huge installment loan show up on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards. The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the opportunity to begin adding to your credit card balances again. And the fact that many people do just that is why the action will temporarily bring down your rating.

For the record, and for those who don't know the difference, a credit rating and a credit score are two different things. A credit score is derived from items reported in your credit file. It uses a complex mathematical algorithm to come up with a score that predicts whether you are more or less likely to default on your next loan. A credit rating is assigned by a person who looks at issues beyond your credit report before determining how creditworthy you are. These issues include income, job stability, your ability to use dormant credit lines and more.

I want you to concentrate on your overall financial health rather than on a score or rating. If your financial health is strong, the measures will reflect it. The real questions to be answered are: Why do you have such a large amount of credit card debt? Have you started an emergency savings account of six to 12 months' worth of living expenses, so you won't have to use credit for unexpected expenses? Do you have a workable spending plan that includes putting money aside for future financial goals?

If you don't know why or how you amassed $50,000 in credit card debt, start there. You need to understand how you got in that position if you are going to avoid getting there again and again. Only then will you steer clear of the financial disaster of racking up a new five- or even six-figure debt load after you consolidate.

Funding an emergency savings account should help you better manage unexpected expenses as they occur, but if your main problem appears to be that you're extending your income with credit, you need a spending plan. You need a plan that brings your expenses in line with your income and one you will commit to follow. Without taking these positive money-management steps, consolidating your debt will not help your credit rating in the long run but instead could create the potential for disaster.

In addition, your spending plan will help you determine if you can afford to consolidate your credit card debt. According to Bankrate, interest rates on personal loans currently average 9.51% (as of April 11). With your good credit rating, let's say you qualify for a loan at 10% interest. You would need to pay $1,062 per month for five years to pay off your $50,000 in credit card debt. Should you need to cut back on expenses in other areas to afford the consolidation loan payment, be sure you're willing to make the necessary sacrifices for the entire five-year repayment period, and be doubly sure you don't use those cards unless you can pay them off in full each month!

Complete Debt Solutions Toll-free (877) 676-5878