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What is debt and how to avoid bankruptcy?

    IndianMoney.com Research Team | Saturday, September 12,2009, 06:13 PM
 

In this Article we are introducing you a new concept Called “Debt Doctors”. Debt Doctors are very common in foreign countries like UK & US. But it is not common in India we expect this will be a reality in India very soon. Debt Doctors help individuals to solve their debt related problems such as home loans, car loans, bankruptcy, etc. In India every year thousands of people are committing suicides because of debt related issues. Proper planning and expert advice from a qualified person or institute will help to save these lives. Here in this article we are trying to educate you about Debt Doctors.

What is Debt?

Debt is the money borrowed from an outside source with a promise to repay the principal (borrowed amount) with an agreed rate of interest. There are times during that people will get into huge debt. In though time people can get into debt from personal or secured loans, mortgages etc. Many people are unable to repay monthly payments on credit cards and other types of loans. All these things happen because of miss management of money or lack of financial planning. A debt is created when a person/institution agrees to lend a sum of assets to a debtor. In modern society, debt is normally granted with expected repayment along with an interest.

The causes of debt

  • Ignoring the debt problem
  • Not working out a budget
  • Be unrealistic about basic needs
  • Ignoring letters, reminders or default notices from lenders.
  • Borrowing more money to pay off existing debts.
  • Bad Health
  • Gambling
  • Credit card debt
  • Disability
  • Ill Health
  • Mortgage shortfalls
  • Car financing
  • Loss of work
  • Failure of Business
  • Poor money management
  • Underemployment
  • Financial illiteracy

Who are Debt Doctors?

Debt Doctors are those people or institutions who are committed to help you in getting out of debt. They understand the power of debt and its effects such as stress, sleepless nights, distraction, destruction of family life, etc. In simple terms we can say that Debt Doctors provide expert advice on finding real financial solutions for your money problems. Many individuals have different problems related to debt in their lives. Where ever you feel difficulty related to debt, Debt Doctors can help you. But in India Debt Doctors are not in action. If Debt Doctors start their service in India it will be a great relaxation for the people who are suffering from debt problems.

What a Debt Doctor Can do for You

As we have mentioned earlier the major services provided by debt doctors are related to clearing of debts. There are different types of debts caused by a number of reasons. Getting into debt is very easy but getting out of it is not that easy. Debt Doctors are the experts in solving difficulties related to Debt. They will analyse your position and will drat detailed plan to get out of the debt. Below given are some of the major things a debt doctor can do for you.

  • Help to stop harassing phone calls
  • Help to save your house even if it is in foreclosure
  • Help to save your car even if it is about to repossess
  • Help you in clearing credit card debts
  • Help to Increase Your Credit Score

Help to stop harassing phone calls


Normally if you have an unpaid debt, you will get a number of harassing calls from the lender. But once you start working with a Debt Doctor you can get way from these harassing calls. Debt doctors will negotiate with your lender and find a solution for your problem.

Help to save your house even if it is in foreclosure


In majority of the cases debt doctors can help from losing your house. There are many variables when dealing with a mortgage company. If you are behind your mortgage payment it is better to approach a Debt Doctor before you are in foreclosure.

Help to save your car even if it is about to repossess


In this case also Debt Doctors work in the same way how they work in case of mortgages. If you are in a position to lose your car because of non-payment of premium you can contact the debt doctors, they will negotiate with your lender and find a reliable solution to prevent losing of car.

Help you in clearing credit card debts


Credit card providers will do far more for Debt Doctors than for any individuals. They will reduce interest, decrease late charges and over limit fees, etc. If you are consulting the Debt Doctors, they can make a huge difference in how fast you will get out of debt.

Help to Increase Your Credit Score


Credit scores have a significant importance in your life. If your credit scores are less, it will affect you in future while approaching a bank for a loan. If you do not have good credit history, Debt Doctors can help you. Within a few months with Debt Doctors most of your creditors will bring accounts up to date and that will help to improve your credit rating.

Information to be provided for Debt Doctors

A debt doctor should have ollowing are the information that you have to provide to the debt Doctors

  • Your Annual income
  • Sources of Income
  • Assets and secured liabilities
  • Family Budget you are using
  • Priority debts such as Mortgage, car loans, etc.
  • Other unsecured creditors.

You have to provide detailed information about your financial position, liabilities, total debts, total assets, etc. Using all these information they will prepare a detailed plan for you that you wish to achieve in the near future. All the information you give is treated as private and confidential

Three basic things to do if facing a debt crisis

  • Protect yourself from creditors by opening a joint account with somebody who is not associated with your debt.
  • Protect yourself from harassing phone calls from collection agents by requesting them to do collection attempts only in writing.
  • Protect yourself and your partner by understanding your rights.

Common mistakes to avoid filing for bankruptcy

Here is a list of some of the common mistakes people make while filing for bankruptcy. Understand all the options available for you contact a lawyer at the Debt Doctors and prepare yourself for life after debt;

  • Taking a home equity loan to pay off high interest credit card debt.
  • Continuing to pay credit card balances when there is a loss of income
  • Borrowing from retirement savings to pay off credit card debt.
  • Accepting legal advice from a bill collector. They do not have your best interests in mind when pursuing a debt.
  • Getting worried by collection calls.
  • Getting disturbed when your account is referred to an attorney for collection. Make sure you are contacting an attorney at the Debt Doctors who can guide you on a path to financial recovery.
  • Paying for a vehicle that has been repossessed
  • Failing to file tax returns just because you cannot afford to pay.
  • Pledging your residence as collateral for business debt

Tips to Avoid Bankruptcy

Following points will help you in understanding the points that will help you in controlling your spending.

  • Always budget for expenditure and follow it
  • Budget to save atleast 10% of your income and invest it wisely
  • Try to reduce the number of shopping you do in a day
  • Don’t Use more than one credit card
  • Minimize the use of credit card
  • Pay more than the requested minimum monthly payment to your credit card

We believe that this article has helped you in imparting knowledge about ‘Debt Doctors’. In future we will come out will more articles on the same topic so that you can understand more about the Debt doctors. For any queries related to this article please feel free to contact IndianMoney.com. You can write down your queries in the comment box so that we can provide you further information on your query.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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