New York NY is the 3rd largest state in the United States by population with just over 19 million residents.
Lately, many New Yorkers have been looking for debt relief in the form of New York debt consolidation and credit counseling in New York.
Debt consolidation in New York
Residents from New York City, Buffalo, Rochester, Yonkers and all over the state of New York want to know more about what debt consolidation companies in New York can do for their out of control medical and hospital bills, credit card bills and other unsecured personal loans including payday loans and cash advance loans. Since the average credit card debt for each New York household is almost $16,000 this relief could not come at a better time.
The latest consumer reports show that the average New Yorker’s median income is just $53,843, which is down 5.8% since its peak year of 1989. The average credit score for New Yorkers is only 704. A full 60% of New Yorkers graduating from college have student loan debts and owe an average of $28,631. In addition, New Yorkers have an average mortgage debt of $194,910. When you add together their average mortgage debt and credit card debt residents of the state that have no student loans are still carrying an average of $210,010 in debt and those with student loans have an average debt of $238,641.
Consumer reports also show that New Yorkers are charging more and more everyday expenses to their credit cards out of necessity. Wages are stagnant, the global economy is still shaky and job growth is not where it needs to be to provide millions of Americans with the income they need to pay all their bills. Unemployment is also a problem for New Yorkers, as it currently stands at 5.7%, which ranks it 31st in the nation.
When you have to charge bread, milk and eggs to your American Express, Visa or MasterCard then it’s time to look for debt relief programs that can help in your time of need. Fortunately, there is no lack of options when you need help with your unsecured debt.
Many New Yorkers are living paycheck to paycheck. There is not money left over after paying bills and debts for saving or investing. When the economy took a fall, many people who lost their jobs, did not have a safety net.Their accumulated debt, made it impossible for them, with reduced incomes to make payments. Even those who were able to keep their homes and property may have taken a hit to their credit scores because of late payments.
Why debt consolidation programs?
The biggest benefit of a debt consolidation program is that it allows people to reduce the amount of money they have to pay each month on their debts. The way this is done is by taking out a loan, transferring their balances, getting professional credit counseling or hiring a debt consolidation company like Debt Consolidation USA. When people’s monthly payments are reduced they are better able to manage their debt and free up some of their income to help with the other necessities of life such as groceries, clothing and entertainment.
The idea behind debt settlement is very simple. You hire a debt settlement company that contacts your lenders and offers them lump-sum payments to settle your debts but for less than you owe. For example, if you owed $10,000 on a credit card the debt settlement company would contact the card issuer and settle the debt for maybe $5000. The benefit of this is pretty obvious – you can save a lot of money through debt settlement. Plus, you would have the debt paid off. Some of the other benefits of using a debt settlement company include the fact that there will be no upfront fees and you should have a very affordable monthly payment. With the top-rated debt settlement companies you should even be able to pick your payment plan. The more you can afford, the faster you will get out of debt. If you need more time to save up funds to negotiate and settle with your creditors that should also be an option.
If you choose to work with a debt settlement company you may also be able to get the New York debt collection agencies off your back what with their harassing phone calls at all hours of the day.
The downside of debt settlement
Debt settlement represents a great way to get debts paid off and for less than their balances. However, there are some negatives to using a debt settlement company. For example, not all of your lenders may agree to the settlement offers. You could end up paying the debt settlement company as well as several of your creditors, which could put you right back to struggling to make your payments.
Debt settlement will also have an adverse affect on your credit score. While your lenders will treat your settled debts as paid in full this is not how they will report them to the credit bureaus. Instead, they will report them as “settlement,” “settled” or “settled for less than full amount. This will not only ding your credit score but these notations will remain as a stain in your credit reports for seven years.
Last but not least, debt settlement companies do charge for their services. Some will take a percentage of whatever amount of money they save you but the more reputable ones charge a flat fee. This fee can be anywhere from 15% to 25% depending on the amount of your debt. However, when you factor in the amount of money that a good debt settlement company will save you, you would still come out ahead even after paying a fee.
Debt consolidation loans
A second way to consolidate debts is through a debt consolidation loan. Depending on your financial circumstances you might be able to get an unsecured consolidation loan, which is basically where all you do is sign a note and then get the funds. If you’re unable to get an unsecured loan due to your financial circumstances but you own your home and have some equity in it, you could probably get a secured loan. This could be either a home equity loan or a homeowner equity line of credit. Whether you get a secured or unsecured loan you would use the money to pay off all of your other debts. This would certainly help your finances because the payment on that new loan should be much less than the sum of the payments you’re currently making. And instead of having to juggle many different payments each month with all of their different due dates you’d have just one payment to make a month.
The biggest problem with either a home equity loan or homeowner equity line of credit is that it would put your house at risk. This is because if you were to default on the loan, your lender could foreclose on your house and you could find yourself scrambling to find a place to live. In addition, your new loan would have a much longer term than your current debts so you would end up paying more interest over its life. For example, the term of a home equity loan is generally 20 to 30 years and the term of a homeowner equity line of credit is usually either 7 or 10 years.
Finally, a debt consolidation loan will do nothing to reduce your debt. It just moves it from one set of lenders to a new one. If you owed $20,000 before you got a debt consolidation loan you would still owe $20,000 after you signed off on it.
Consumer credit counseling
Another way to consolidate debts is through consumer credit counseling – but only under certain circumstances. When you contact a consumer credit counseling agency – either in person or online – you will have a debt counselor who will spend 45 minutes to an hour reviewing your finances. If he or she determines that there is simply no way you can repay your debts given your current income, you will be offered a debt management plan or DMP designed around the payments you could afford to make. Once the two of you agree on a plan your counselor will begin contacting your creditors and attempt to have your interest rates reduced. Following this he or she will present your debt management plan to your creditors for approval. Assuming all or nearly all of them agree to your DMP you will no longer be required to pay them. You will pay the credit-counseling agency once a month and it will pay your lenders based on your DMP.
The upside of consumer credit counseling is that your debts will be consolidated in that you will have just the one payment to make a month. Again, this payment should be less than the sum of the payments you’ve been making. The downside of a DMP is that you will be required to give up all of the credit cards that are in your plan and you will be very strongly urged not to take on any new credit until you complete your DMP. It takes most people five years to complete a debt management plan, which can be a very long time to go without using credit. Nearly 50% of the people who sign up for a DMP never complete it, which says something about its effectiveness.
A fourth way to consolidate debts – at least credit card debts – is to transfer all of their balances to a new card with a lower interest rate. There are also 0% interest balance transfer cards. If you could get one of these you would have anywhere from six to 18 months interest-free. In other words, all of your monthly payments would go towards reducing your balance. If at all possible you should get that balance paid off before your promotional period ends because at that point your interest rate could go to 19% or even higher.
Another negative of a balance transfer is that it’s like a debt consolidation loan in that it does nothing to reduce your debt. Once again you’re simply moving your debt from one set of credit card issuers to a new one.
Debt consolidation companies
A final option to getting your debt under control and ultimately paid off is to sign up with a debt consolidation company. When you choose a reputable consolidation company such as Debt Consolidation USA there’s no credit check. It doesn’t matter whether your credit score is good, average or poor. You get all of the benefits of debt consolidation because there is no loan involved. Debt consolidation companies require no sign-up fee and most allow you to choose the payment plan that best fits your budget. Debt Consolidation USA as well as some other consolidation companies will work on your hospital, credit card and medical bills using debt negotiation to get them reduced dramatically. As an example of this, Debt Consolidation USA is usually able to get a customer’s balances reduced by thousands of dollars in as few as two years. Best of all, you tell us what you can afford to pay monthly and Debt Consolidation USA will set you up with the top debt consolidation plan it recommends based on your financial circumstances.
Debt consolidation usually takes anywhere from 24 to 48 months depending on the size of your debts. It also depends on how much money you can save for settlement offers. As you might guess, the more money you can save, the faster all your unsecured debts will be eliminated.
Debt consolidation isn’t free
It would be great if you could get all of your debts consolidated free but things just don’t work that way. Companies such as Debt Consolidation USA have the normal overhead of any business as well as trained counselors that must be paid. If you run into a consolidation or settlement company that claims it’s a nonprofit and doesn’t charge you anything, run for the hills. That just has to be a scam. Some debt settlement companies charge a percentage of the money they save you but the reputable ones generally charge a flat fee. In the case of Debt Consolidation USA the fee will probably be 25% of your debt plus a $50 monthly fee. But it you think that’s just too much, sit down and do the math. If you owe $20,000 on credit cards and Debt Consolidation USA is able to settle them for $10,000 and it costs you $5,000 (25%) you would still come out way ahead on the deal. In addition, good debt consolidation companies like Debt Consolidation USA don’t actually charge you anything until they have settled your debts to your satisfaction. In other words, their work is performance-based – if they can’t save you money, they charge you nothing.