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How Long to Keep Credit Card Statements

How Long to Keep Credit Card Statements

At least once a month, you get statements from a wide variety of vendors, either through email or paper mail. Did you know that, by law, you need to keep some of these records for a certain amount of time?

And once you no longer need them, what’s the best way to dispose of them? Those pieces of paper contain a huge amount of personal information.

Also,  what’s the best way to store these records?

If you have a business, you will have additional requirements, but this article will be geared towards consumers rather than businesses.

Call us today and speak to our debt experts for FREE! We can help answer any questions you may have.

How to Organize Your Bills

Get three file boxes or a three-drawer filing cabinet and a stack of file folders. Sort the bills into biller and year. Check through each bill to see if it contains tax related purchases. One is the current year, one is shred by date, one is tax related.

While some of the records only need to be kept for one month, you’ll keep them for slightly longer (unless you really like doing paperwork).

Current Year

In the current year box, you’ll have files for this year’s tax information, credit card statements, insurance policies, bank statements, pay stubs, investment statements, mortgage paperwork, medical bills, financial records, and utility bills. You’ll want to label them clearly!

  • Credit card statements and receipts
  • Car insurance policy
  • Home insurance policy
  • Bank statements and slips
  • Pay stubs
  • Investment statements
  • Mortgage statements
  • Home improvement receipts
  • Medical bills
  • Utility bills
  • Retirement plan statements
  • Personal records (these should be kept in fireproof box)
  • Marriage, divorce, adoption, birth, wills, paid mortgages, keep until death
  • Loan receipt payoffs, keep 7 years
  • Shopping receipts
    • Cash receipts – shred as desired
    • Credit card receipts – match to bills and shred
    • Large ticket items – attach receipts to user manual or warranty information

As you sort through those piles of bills and shoe boxes of receipts, place them in the correct file.

Shred Box

In the shred box, you will have roughly the same files with a label along the lines of “Name of Credit Card Statement, 2019, shred 2021” etc.

  • Credit card statement, 2019, shred 2021
  • Insurance policies, shred as desired
  • Bank Statements, 2019, shred 2021
  • Pay stubs, shred as desired
  • Investment statements, 2019, shred 2021
  • Medical Bills, 2019, shred 2021 unless planning to deduct
  • Utility Bills, 2019, shred 2021 (if you have a home business, you will keep these)
  • Retirement plan quarterly statements, 2019, shred 2021
  • Paid Loans, 2019, shred 2027

Unless you own a serious shredder, you’ll probably find it easier to shred all your documents once a year. Do not throw away these items. They contain enough personal information for a thief to steal your identity.

Taxes Box

In the Taxes box, you will place your filed tax returns and all paperwork associated with it. You’ll also need a file titled W2s and others for past tax filing and related paperwork.

  • Tax receipts, 2019, shred 2027
  • Bank statements related to taxes
  • Credit card related to taxes
  • W2s (remove each year and place into W2 save file)
  • Medical bills if planning to deduct
  • W2 file, do not shred
  • Investment annual statements, shred after sale of investment
  • Mortgage paperwork, shred seven years after sale of house
  • Home Improvement receipts, shred seven years after sale of house
  • Mortgage statements, shred after sale of house
  • Annual Summaries, shred after retirement
  • Roth IRA contributions, keep to prove tax status

Now that you have everything set up and you are sorting through your receipts, let’s take a look at how to handle each file individually.

How Long to Keep Credit Card Statements

Technically, you only need to keep most credit card statements for 60 days, that’s according to Investopedia. If you are incredibly organized, shred them after 60 days. If your statements have tax related purchases on them, you will keep for 7 years.

Each month match your monthly statements against your receipts and for accuracy. Separate the statements and receipts into three categories. One is statements and receipts that are tax related; the second are receipts for miscellaneous items, and the third are all other statements.

Place the first pile into the labeled file in the tax box. Place the second into the shred file in the shred box. Place the third into a labeled file in the current year box. When the current year ends, place that file in the shred box.

How Long to Keep Tax Returns and Tax Receipts

Keep your tax returns for seven years. The IRS can audit for good faith errors up to three years, and six years if they think you have underreported your income, or unlimited if investigating fraud.

Keep your W-2s until you begin earning Social Security.

Place the tax returns in the tax box. Shred then in 7 years, so tax records from 2019 are shredded in 2027.

How Long to Keep House and Car Insurance Policies 

Shred the old policies when you receive new policies.

Place in the current year box. Move to the shred box when you get a new policy.

How Long to Keep Bank Statements

Keep your paper bank statements for 1 year unless they contain tax related information, then 7 years.

Keep your paperless statements for 7 years – they don’t take up space, except on your hard drive, and you may want them for a quick reference.

You can shred ATM receipts, deposit and withdrawal slips after reconciling.

On a monthly basis, reconcile the slips against the bank statements, then shred the slips. Separate paper statements into non-tax related and tax related. Place the tax related ones into a labeled file in the tax box.

Place the rest of the statements in the shred box and shred in one year (2019, shred 2021).

How Long to Keep Pay Stubs

Keep your pay stubs for a year. Match them to W-2 and then shred.

Keep the pay stubs in a file in the current year box. When you receive the W-2, match them and then shred the pay stubs. Place the W2 in the tax box. Keep W2s until you begin collecting Social Security.

How Long to Keep Investment Statements

Keep the yearly summaries for as long as you own the security, plus 7 years. This provides you with capital gain or loss for your tax returns.

Monthly statements, you can shred them monthly or after one year.

Place monthly statements in the current box. After the year has ended, place them in the shred box labels “Investment statements 2019, shred 2021.”

How Long to Keep Mortgage Statements

Keep all your paperwork regarding the purchase of your home until you sell the house plus 7 years.

Keep all your home improvement paperwork and receipts until you sell the house plus 7 years.

Keep any of the mortgage statements until you sell the house, then shred them.

How Long to Keep Medical Bills

Keep your medical bills for one year unless you plan to deduct them.

Start in the current box, move them to the shred box at the end of the current year, then shred them at the end of the next year. If you plan to deduct them, place them into the tax file.

How Long to Keep Financial Records

Keep your retirement plan quarterly statements for one year.

Keep the annual summaries until retirement.

Keep your Roth IRA contributions until retirement to prove tax status.

Store them in shred on the schedule.

How Long to Keep Utility Bills

Hold onto your utility bills for a maximum of one year unless you have a home business. If you have a home business, store them in the tax file for that tax year.

How Long to Keep Personal Records

Safely store any of your personal records like wills, marriage and divorce certificates, birth and death certificates, automobile titles, security ownership documentation, mortgage and loan paperwork, passports, etc. in a fireproof box (hard earned hint: place some desiccants from pill bottles or frozen items in the file box! The box can retain moisture and mold really likes passport paper.)

Keep these these documents until you die. Your heirs will either shred or use them to prove a will.

How Long Should You Keep Receipts

Keep your tax related receipts for seven years.

Keep all the home improvement receipts like sale of house.

Keep your large ticket items until returned or you need for the warranty.

Shred all other documents after reconciling with bank statement or credit card.

What Is the Safest Way to Dispose of Old Bank Account Statements?

The single safest way to dispose of old documents is to cross-shred them. Cross shredding not only cuts the documents into strips but then cuts then into miniscule pieces of paper.

It is also sometimes worth the extra expense of hiring a service to turn your personal information into confetti.

Banks and credit unions may offer an annual document shredding service.

Hard drives and other computer related storages devices can also be shredded. Even if you erase a hard drive, a knowledgeable thief may be able to resurrect the data.  

Pacific Debt, Inc.

If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t pay, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years. We have settled over $250 million in debt for our customers since 2002.Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners

What Is The 50 30 20 Budget Rule

What Is The 50 30 20 Budget Rule?

You might of heard about the 50/30/20 budgeting rule. It’s one of many budget suggestions and may work to help you get your spending under control. The basic concept is that you divide your monthly needs, wants and savings or debt up and try to limit each to a specific percentage. It may sound complicated, but it is really very simple.

You would allocate 50% of your monthly income towards your needs, 30% to your wants, and 20% to your savings or debts. Let’s take a look at each category before we get into more budgeting tips.

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Needs (50%)

Needs are the things you need for survival. This includes housing, groceries, utilities, car payments, car insurance, and health insurance. You’ll also want to include prescription medications. Minimum payment on debts and bare minimum for clothing are also needs. Take a look at your spending and identify your needs.

Write each need down along with the monthly payment. There are many examples of a need versus want worksheets available online. Be honest as you go through your needs. You can live without cable and a new cell phone. You can’t live without groceries! If it is not a survival need, move it to the wants category.

Wants (30%)

Wants are things that may make your life easier or more pleasant. These might include dining out, alcohol, cable TV and internet, shopping, vacations, memberships and subscriptions, gifts, entertainment and similar expenses.

Write down all your wants and the monthly amount you’ll need to spend on them.

Savings or Debt (20%)

The final category is savings or debt. This category is money that is set aside for future use or to pay down debt more quickly. This money can go into an emergency fund, retirement investments, or towards your debt.

Most experts suggest saving at least 10% of each paycheck. The 20% suggested here will just help you build up your savings account faster or pay off debt faster.

Budget Percentages

Your next step is to write down your monthly income after taxes (your take home pay). Add back in any deductions for health insurance or retirement plans. Subtract your wants and needs spending and record that number as savings/debt.

Now that you have the totals for your wants, needs, and income, you will figure out the percentages for each.

Take your needs total, divide it by your income, and multiply by 100. This will be your percentage spent on your needs. Write down that percentage on the needs sheet. Do the same with wants and savings or debt. Now compare those percentages to the 50/30/20 rule. Your needs should be 50% or less, wants should be 30% or less. Anything left over is considered savings and should total 20%.

A sample 50/30/20 budget

In order to calculate how much money you can allocate to each category. Let’s say you make $5,000 per month after taxes. You would have $2500 to pay for your needs, $1,500 for your wants, and $1,000 to put towards your savings or debt.

Median Monthly Income: $5,000

Needs (50% of $5,000): $2500

Wants (30% of $5,000): $1500

Savings or Debt (20% of $5,000): $1000

Making a Budget

Did you hit all those numbers? Good job! If you didn’t, look at your needs and wants. Your first step is to eliminate some wants. Remember that this may be just temporary until you get your spending under control. Work out what you can cut to get your wants percentage to 20%.

Check out your needs. Is there anything you can cut? Can you decrease spending on clothes, move to less expensive housing or buy a cheaper car? Your goal is to increase your savings so you can work towards being debt free and having a nice nest egg built for emergencies.

Once you have eliminated any over spending, make yourself a budget. For the next few months, live by the new budget and write down every single penny you spend. Start making your budget a priority and keep checking your percentages to make certain that you are staying on track..

Does the 50 30 20 Rule Work for Everyone?

The 50/30/20 budget has some real benefits. It simplifies your budgeting and makes your expenses and savings crystal clear.

For people living in expensive regions, 50% may not cover the living expenses and the 50 30 20 rule might not work for you. Lastly, if you have a higher income, you may want to adjust the percentages to reflect more savings over wants or needs.

What to Do with the 20% Savings

Once you are putting away 20% of your paycheck each month, decide what you want to do with your savings. Remember that you can have multiple savings accounts at most financial institutions or even in online banks. Set up a harder-to-get-to emergency fund and save up $1000. Your goal will be to have at least 3 months of living expenses saved up, but the $1000 is your first goal. Next, set up a debt repayment account. Start saving to make payments above your minimum payments on all debt. You can pay down each debt or pay off one debt at a time. You can also set up retirement/investment savings and work toward an IRA type retirement plan.

Click here to get your FREE Savings Estimate

How to Budget and Manage Your Money

Money is like any other activity – the more time you put into it, the larger the return. Budgeting can be no fun and managing money means you might not be able to splurge on a want. If you invest time into managing your money, you will see a return in either increased savings or decreased debt. There are many budgeting concepts and the 50/30/20 is one very simple one. It may be a perfect solution for you!

But if you find yourself behind on debts payments and unable to afford even the minimum payments, Pacific Debt, Inc can help you.

How Pacific Debt Can Help

Pacific Debt, Inc is one of the leading debt settlement companies in the US. We work directly with your creditors on your behalf in order to reduce your debt, often for substantially less than you owe. Your initial phone call is 100% free, and our debt experts will explain your options so you fully understand them. 

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners

Pacific Debt, Inc.

If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t pay, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years. We have settled over $250 million in debt for our customers since 2002.Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

What are the Different Types of Debt

What are the Different Types of Debt?

Debt is a nightmare for most Americans. Sometimes it seems as though debt is as inevitable as death and taxes. The average amount of household debt is over $100,000. But did you know that some debt is actually considered good? Let’s take a look at debt and how it affects the average American.

What is Debt?

The simple definition of debt is the amount of money borrowed to allow for purchases. If you look at Americans by age, you’ll find that each age group has a unique debt structure.

People under 35 average about $67,400 in debt with 20% of that credit card debt and 21% as student loans. This age group spends about 40% of their monthly income on discretionary spending – non-essential items like entertainment.

People between 35 and 44 average $133,100 in debt. Most of that is mortgage debt and about 50% of people in this age group have credit card debt. Student loans also contribute to their debt.

The next age group from 45 to 54 have the most debt, at $134,600. Their debt is generally similar to the previous group but with less student loan debt.

Within the 55-64 age group, debt drops to $108,300. Between 65 to 74, debt drops to $66,000 with much of that credit card debt. By age 75, debt is generally $34,500. Within this group, work force participation has increased by just under 10%. Experts speculate that many people are working after retirement in order to cover medical costs or because they have no retirement savings.

Get your FREE consultation with a debt expert today! We can help you understand all your options.

What Are the Different Types of Debt?

In the previous section, we mentioned several kinds of debt, including student loan debt, credit card debt and mortgage debt. All debt is classified into four different types of debt.

· Secured debt – this is debt that has an asset backing it. If you fail to pay the loan, the asset can be seized in exchange. This type of debt can include car loans.

· Unsecured debt – this debt has no collateral. Instead, you agree to repay the money. If you don’t, the lender can sue to recover the money. These debts can include credit cards, membership contracts, and medical bills.

· Revolving debt – a revolving debt is one where you have a limit and can spend up to that limit. You need to make payments that vary based on how much you have spent. This can be either secured (home equity line of credit) or unsecured (credit card).

· Mortgage – a mortgage is a form of secured loan with the real estate acting as the collateral.

Some of these debt types are considered “good” debt, while others are considered “bad” debt. What makes them good or bad and why?

Good Debt vs Bad Debt

Good debt is debt that helps you manage your finances and build wealth while allowing you to buy what you need and to handle emergencies. Bad debt is anything that decrease in value as soon as you buy it.

Examples of good debt includes mortgages, home equity loans, student loans, and small business loans. These loans can help you improve your life and should help you in the future. Of course, each of these loans can be a bad debt if they are not used properly. Buying an affordable house gives you somewhere to live while it hopefully increases in value. However, beware that buying too much house can be a very bad thing – think about the housing crash in 2007.

A home equity loan or line of credit (HELOC) can be a great way to pay off higher interest credit card bills or to make home improvements that increase the value of your home. Of course, you have to own a house with equity! Only use this loan as much as you can afford because the downside to using a HELOC is that your home is the collateral and it can be foreclosed on if you don’t make your payments.

Student loans can be very problematic. Education or additional training is a great opportunity. You can increase your earnings and improve your employment options. The secret is to balance your future potential income against your student loan debt. Going to an incredibly expensive school for a degree in something not very lucrative is not very wise. Laying out huge amounts of money to get an education that won’t repay you is a career path you may want to think carefully about.

A small business loan can be a terrific way to start your own business and create your own future. Having a good plan, the desire to work really hard, and some incredible luck can make a small business loan a fabulous idea.

Bad Debt

Bad debt includes anything that doesn’t increase in value. This includes clothing, appliances, entertainment, and vehicles. Bad debt also includes credit cards, payday loans, and automobile loans.

Most Americans have at least $2,000 in credit card debt and most households have a credit card debt of at least $15,000. Credit cards cost money for the convenience of using them. You pay finance charges, annual fees, late fees, overcharge fees. Plus the interest rates are generally high. If you use your credit card and do not pay it off in full each month, everything you buy is a lot more expensive when you add on interest and other fees.

Payday loans can be a very bad idea. Those short-term loans against future earnings come with high interest rates and finance charges. You may end up paying 400% a year in fees. This means for every $100 you buy you would repay $500!

Auto loans are a bad debt but also something most Americans need. As soon as you drive the car off the lot, the car loses value. Buying a car that is practical and with decent interest rates is a bad debt that you might actually need.

How Pacific Debt Can Help Reduce Your Debt

If you have too much unsecured debt and you are struggling with the minimum payments, Pacific Debt Inc. can help reduce your debt by a substantial amount. Pacific Debt is a debt settlement company that works directly with your creditors on your behalf in order to reduce your debt. Your initial phone call is 100% free, and our debt experts will explain your options so you fully understand them. 

Our debt settlement program can take anywhere from 24-48 months to complete depending on your current financial situation. However, if you are considering bankruptcy or are drowning in debt, give us a call immediately to go over your options.

Pacific Debt, Inc.

Pacific Debt Inc is one of the leading debt settlement companies in the US. We can help you understand your options and whether or not debt settlement is your best option. If it is not, we can refer you to a trusted partner who may be more appropriate for your specific situation.

If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t repay, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years and we have settled over $250 million in debt for our customers since 2002.Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

Pacific Debt is currently providing debt relief coverage in the following states:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners

For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will explain to you all your debt relief options.

How to build your credit after debt settlement

How To Build Your Credit After Debt Settlement

Debt settlement can be great for debt relief, but your credit score is likely to suffer. Once you have completed a debt settlement program, you can then focus on rebuilding your credit score. With care and following the steps outlined below, you can have your credit score repaired in as little as twenty-four months.

How Debt Settlement Affects Your Credit Score

When you decide to settle your debt, there are a couple factors that will negatively affect your credit score. First, your bills are probably being paid late, or they might not be getting paid at all, so those late or missing payments are reported to the credit agencies, affecting your score.

Second, your debts are often reported as “settled” and that typically lowers your credit rating a bit. If you do not pay your debts, they may be charged off (sold to a third party), and that affects your rating as well.

Don’t despair. There are a number of steps you can take to repair your credit rating. We’ll look at each one in no particular order. In fact, you can do most of these simultaneously.

Credit Repair

Credit repair involves getting copies of every credit report and fixing any errors they may include. There are three main agencies: Transunion, Equifax, and Experian and several smaller companies. Start with the big three.

As you receive copies of your credit report, check to see how your settled debts are labeled. The hit to your credit is worse if they are ‘charged off’ instead of ‘settled charge off.’ It will take some time, effort and letters to get this changed, but it can be done. Once your debts are correctly labeled, you may be able to request that settled accounts are removed from your credit report.

If there are errors, dispute them. Occasionally, old accounts are not removed from your credit score. For instance, if you had a foreclosure more than seven years ago, it should be removed. Correcting small errors can help improve your scores fairly quickly.

You can get one copy free once a year from annualcreditreport.com

Pay Bills On-time

Pay your bills in full and on time. This simple and very important action is worth roughly 35% of your credit score! Timely payments mean that you are using credit responsibly and that makes credit agencies very happy. Set reminders, ask to have due dates changed to more financially advantageous dates, maintain a budget – do whatever you need to show that you are being responsible.

Secured Credit Cards

If you’ve gotten in the habit of overusing your credit card, take out a secured credit card. These cards have a credit limit backed by an upfront cash deposit you make before receiving the credit card. If you miss a payment, it comes out of the cash reserve. If you make the payments in full, it improves your credit report. Plus, the discipline will help you maintain a budget.

Calculate Your Debt to Income Ratio

The Debt to Income Ratio (DTI) is figured by dividing your monthly debt payments by your gross monthly income. The math is relatively simple.

Front-End DTI: Take your mortgage (principal, interest, insurance, property tax) or rent costs and divide by your gross monthly income – the entire amount you make before taxes are taken out. Multiply that number by 100 to get a percentage. Your front-end DTI should be less than 31%.

Front-End DTI Example
$1000 mortgage/ $1500 income = .66 x 100 = 66%

Back-End DTI: Add all your monthly debt payments including rent/mortgage (property taxes, and insurance payments), car loan/lease, revolving and installment credit (credit cards), and legal liability payments like child support, alimony, and tax payments. Divide this sum by your gross monthly income and multiply by 100. Your back-end DTI should be less than 44%.

Savings to Income Ratio: Add together all your monthly savings such as retirement, investment, and regular savings plans by your gross income. Multiply by 100. Your STI should be 10%.

Monthly Cash Flow: add together all monthly expenses, divide that by your gross income, multiply by 100. This number should be 100% or less. If it is more, you are spending more than you are bringing in.

Once you have these four numbers, you can see where you need to make adjustments to live within your means. This fairly simple math will help you to improve your credit rating indirectly.

How Long Does It Take to Rebuild Credit?

How long it takes to rebuild credit and improve your credit score after debt settlement depends on how your credit was before you started the debt settlement program. If you credit was thin (not much on it) or poor, it may take two years to see improvements, if you use your credit wisely and pay your debts on time.

Should I Settle or Pay Debts in Full?

If you can, always pay your debts in full. If you are in debt for more than $10,000 of unsecured debt and you are having trouble making even minimum payments, settlement may be your best possible option.

How Pacific Debt Can Help

Pacific Debt Inc is one of the leading debt settlement companies in the US. We can help you understand your options and whether or not debt settlement is your best option. If it is not, we will refer you to a trusted partner who may be more appropriate for your specific situation.

If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t pay, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years. We have settled over $250 million in debt for our customers since 2002.

Once you’ve completed our debt settlement program, your financial situation should start to improve. You’ll then be able to take the money you once had to pay towards your debt, and be able to use it for other purposes like saving it, investing, retirement, down payments, etc.

Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

Pacific Debt is currently providing debt relief coverage in the following states:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners

For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will explain to you all your options.

How To Get Debt Consolidation Loans For Bad Credit Scores

How To Get Debt Consolidation Loans For Bad Credit Scores

You have debts and want to roll all those debts into one payment. This is known as debt consolidation. Debt consolidation can be a great option to getting debt free. The problem is that debt consolidation can make your situation worse. If you have a great credit score, debt consolidation loans are readily available. If you have bad credit, debt consolidation loans can be expensive and difficult to get. Lenders usually charge unreal interest rates and fees.

What Credit Score Do I Need?

In order to get the best interest rates, you need a credit score of 700 or above. Interest rates range from 5.99% to 35.99%. The better your credit score, the lower the interest rate. If your credit score is between 640 and 699, you’ll be charged interest rates at the upper end of that range.

Are Debt Consolidation Loans for Bad Credit Scores Available

If your credit falls below 640, it is very difficult to get a debt consolidation loan with a decent interest rate. Unfortunately, many lenders who lend to people with poor credit scores are predatory. They take advantage of your situation and charge interest levels that will hurt you and your efforts.

Some online companies charge interest rates up to 400%. Payday loan consolidation interest rates often begin at 400%. This means that if you take out $100, you will pay a minimum of $400 to the loan company. There is no way that a predatory loan is going to help you! 

What Are My Debt Consolidation Loan Options with Bad Credit?

There are several options for best debt consolidation loans other than payday lenders and other predatory options.

If you belong to a credit union, you may be able to get a loan with better terms. Credit unions are not bound by the same rules as banks. It’s worth talking to a loan officer about qualifying for a personal loan.

Online lenders range from predatory to honorable. Take the time to investigate several companies and compare rates, terms, and all your options. Certain online lenders like LendingClub, Upstart and Avant have good reputations and may offer the best debt consolidation loans.

Chase Bank offers personal loans for bad credit. Chase calls this a signature loan (a type of unsecured loan).Their interest rates and terms vary based on credit score, amount, and other factors.

The last option is to take out a home equity loan. You must own a home with equity (what you’ve paid toward the loan or if the house has increased in value).

Home equity loans come in several types: the home equity loan or second mortgage; a home equity line of credit; and a cash-out refinance. The HELOC (home equity line of credit) works similarly to a credit card. You can borrow money up to a certain limit and must make monthly payments against the loan. The cash-out refinance is a new mortgage for more than you currently owe. The extra funds are used to pay off debt.

Home equity loans come with lower interest rates, but that is because the loan is secured by your house. If you fail to pay, your home can be foreclosed. 

Are There Any Debt Consolidation Loan Alternatives for Bad Credit?

There are some alternatives to taking out a loan for people with bad credit. One way is to take a look at your budget and cut costs if possible so you can free up money. Track your spending (including cash) for a month and see exactly where you are spending money. Cut what you can and then focus on paying off your debts.

You can also talk to your creditors to see if they will lower interest rates or work with you to lower what you owe. You may also ask to have your due date adjusted. If you have more money after one paycheck, ask to have your due date moved to just after that paycheck. You’ll save on late fees.

Credit counseling works with you to create a debt management plan. They will “consolidate” your debt and you will make one payment a month. Credit counselors will work with creditors to lower interest rates.

If you have an asset like a vehicle or other item of value, you may be able to take out a secured loan, using that asset as collateral. You generally get a lower interest rate, but you can also lose that asset if you default on your payments.

Another option is bankruptcy. Most of your debts could be wiped away with a BK and you might be able to enjoy a fresh start. However, bankruptcy proceedings are expensive, complicated, and may require hiring a lawyer. Your credit is destroyed for up to ten years and there is a huge stigma about declaring bankruptcy.

Tips to Getting a Debt Consolidation Loan for Bad Credit

Besides not taking a loan out with a predatory lender or trying some of the other options listed above, the best option might be knowing how to improve your credit score. Check your scores on Equifax, Transunion, and Experian. Request a credit report form each – you are entitled to one free report per year – and see what you can do to improve your credit score.

Once you know your credit score, you’ll have a better idea of your options. Shop around! Look at several lenders and the other options we’ve listed. Know the interest rate, fees, repayment terms, and read that pesky small print for hidden charges.

Would a Debt Consolidation Loan Actually Help?

The answer to this is up to you and your personal situation. If you take out a debt consolidation loan, pay off your debt, and develop a reasonable budget, yes, the loan can help you. If you pay off the loan and promptly run up more bills, debt consolidation won’t help much.

One Last Option

If you are in a position of financial hardship and need credit card relief for amounts exceeding $10,000, another option is debt settlement. In debt settlement, you negotiate to lower the total amount owed and then pay off the lowered debts. If that sounds complicated, check out Pacific Debt.

We will work with your creditors to negotiate lower payments while you build up a cash reserve. We’ll then pay down each bill or settle each account using our proven system.

There are some drawbacks – you have to stop paying some bills to convince creditors that you have serious financial hardship and desperately need to settle. This will affect your credit score but chances are your score isn’t that great to begin with.

If debt settlement sounds like an option or you have questions, contact one of our debt specialists today. They will explain all your options and even refer you to trusted partners if your needs don’t fit our solution.

Pacific Debt, Inc

If you’d like more information on debt settlement or have more than $10,000 in credit card debt that you can’t pay, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years. We have settled over $250 million in debt for our customers since 2002.Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin
* Other states can be connected to one of our trusted partners

For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will give you all your options.

New Study Finds Debt Settlement Helps The Economy

New Study Finds Debt Settlement Helps the Economy

Settling your debt can not only get you back in better financial standing but can help the economy as well. This is the finding of a study performed by John Dunham and Associates for the American Fair Credit Council (AFCC).

What is Debt Settlement?

Debt settlement is a service that Pacific Debt, Inc offers to consumers who find themselves unable to pay even the minimum amounts on their unsecured loans. A debt settlement company negotiates with your creditors on your behalf  in order to substantially lower the amount you owe. Currently, throughout the US, almost 400,000 consumers and $12 billion of debt are enrolled in debt settlement. This debt represents 2.9 million separate accounts. 

How Does Debt Settlement Help the Economy?

In 2018, there were 28,000 jobs in the debt settlement industry that accounted for over $700 million paid in taxes, which deems it vital for the economy. Debt settlement also helps people get over their financial crisis by providing a proven path to get back on their feet.

“Debt settlement truly helps consumers in need by offering a private sector alternative to bankruptcy. AFCC members help consumers make the best of a bad financial situation and – judging by these numbers – achieve outstanding results,” said AFCC President Robby Birnbaum

How Much Does Debt Settlement Help the Economy?

Adding all three of these factors together shows an annual economic impact of $4.9 billion or 0.02% of the GDP (gross domestic product). That is a surprisingly large percent of the GDP, the sum total of all the goods and services that make up the economy.

In 2018, about 902,450 accounts were settled. These were valued at $5.1 billion and settled for $2.5 billion. Settling allowed the debtors to put money back into savings. Most importantly, it allows them to buy other goods and services instead of just paying on past services, late fees and interest.

The Census of Consumer Finances reports that 11.5% of American families have filed for bankruptcy at some point. Since this is a complicated and expensive process, imagine the economic benefits if those families had been able to successfully complete a debt settlement program.

Not All States Allow Debt Settlement

Not all states allow debt settlement and according to the report, these states are missing out on a huge economic windfall. The study reports that, if all states were included, the economic impact would be an additional $1.4 billion in revenue. Employment would increase by 9,167 jobs. Debtors would save a $422.2 million in savings through debt settlements. Even creditors show a huge impact, collecting $629.9 million in payments that may never have been collected. 

The following states do not allow or severely limit access to debt settlement options include Connecticut, Georgia, Hawaii, Illinois, Iowa, Kansas, Maine, New Hampshire, New Jersey, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, Vermont, Washington, West Virginia, and Wyoming. If you live in one of these states, consider contacting your state representatives and sending them a copy of the linked report. It could have a huge positive impact on your state’s economy and residents.  

Can Debt Settlement Help You?

Absolutely! If you have more than $10,000 in credit card debt, contact Pacific Debt, Inc. We may be able to help you become debt free in 2 to 4 years. We have settled over $250 million in debt for our customers since 2002.

Pacific Debt, Inc is accredited with the American Fair Credit Council and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

Pacific Debt is currently providing debt relief coverage in the following states:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, Virginia, Wisconsin

For more information, contact one of our debt specialists today. The initial consultation is free, and our debt experts will give you all your options.

BBB accredited business

"My dealings with the Pacific Debt representatives was a most pleasant experience. I started the program in October of 2012, my goal being to pay off all my credit card debt as quickly as possible."

Cathy

"I just wanted to thank you for work you did for us on settling our credit cad debts. You were honest and explained everything you were doing in detail. I had a lot of confidence in you. I felt that I did the right thing in contacting your Pacific Debt and you to do by right by us."

Shirley

"I just wanted to send a quick thank you for all you have done! It wasn't an easy couple of years financially, but I made it through! Thanks to you, Pacific Debt, I can now make a fresh start."

Denise
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