Category: Credit

Budget, Credit, Debt, Parachute Services, Student Loans

Latest News: January 2024 Financial Update

Governor Hochul introduces legislation to protect New Yorkers from “bad actors” and medical debt;

New report highlights significant issues with student loan repayment after an unprecedented 3 year period

Parachute Credit Counseling Offers FREE Assistance and Counseling

Parachute Credit Counseling, formerly known as Consumer Credit Counseling Service of Buffalo (CCCS), is the Western New York region’s premier organization providing our community with the best strategies to master their credit. Today they announce a number of notable financial news items emerging this month. Along with these new items, Parachute reminds residents that beginning the new year with a financial “check up” is an invaluable service to their families and themselves.

Call 716-712-2060 or visit https://parachutecreditcounseling.org/  for more information.

The State of Student Loans

On October 1st, Americans resumed paying their student loans, after a 3 and a half year break in payments. Financial experts predicted issues with payments after such a long period, stating that about 20% of student loan borrowers had risk factors that indicated they could struggle when payments resume. These issues have been worse than predicted, confirmed when the Department of Education announced in December that nearly 9 million borrowers–roughly 40% of the 22 million borrowers who had bills due in October–missed their first student loan payment.

Outstanding student loan debt presently exceeds outstanding auto loan debt and credit card debt.

Earlier this month, the Consumer Financial Protection Bureau (CFPB)—the federal government agency that ensures that consumers are treated fairly by banks, lenders, and other financial companies—issued a report  on the agency’s monitoring activities of federal student loan servicers since the restart of required payments. Per the CFPB, many borrowers are making their first payment ever on their student loan, and many are also navigating their loan repayment options, including options that allow borrowers to make lower payments based on a percentage of their income. The report discusses challenges faced by borrowers with respect to contacting their servicer, enrolling in alternative repayment options, and billing statement errors. According to borrowers, there have been many problems navigating loan repayment since restarting on October 1st.

The CFPB pledges to work on this situation and to continue to carefully watch loan servicers and work with federal and state agencies to hold accountable those that violate laws protecting borrowers. The CFPB also has resources for student loan borrowers needing more information. Borrowers can also visit the Department of Education’s Federal Student Aid website for more information on restarting student loan payments. In addition, consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Parachute Credit Counseling recommends that borrowers contact their office to enroll in their free Student Loan Counseling program, available to all residents of the eight counties of Western New York. Parachute’s Certified Financial Counselors will help WNY residents consolidate their student loans and review other potential relief options and changes to existing programs available to help borrowers reduce or eliminate their debt as well as assist them in making payment plans. Call 716-712-2060 or visit https://parachutecreditcounseling.org/  for more information on our Student Loan Counseling Program and other financial counseling services we provide.

Proposed Consumer Protection Legislation

Governor Hochul has proposed a few pieces of new legislation designed to protect New York residents from unfair and negative business practices and from the all too common issue of medical debt.

Governor Hochul introduces consumer protection legislation

“Buy Now Pay Later” loans have become popular as a low-cost alternative to traditional credit products to pay for everyday and big-ticket purchases, but they remain unregulated and can charge hefty fees. Legislation proposed will require “Buy Now Pay Later” providers to get a license to operate in the state, and to authorize the New York State Department of Financial Services to propose and issue regulations for this rapidly growing industry.

The Governor has additionally called for increased protection measures that strengthen the state’s ability to enforce consumer protections and to penalize “bad actors”.

Governor Hochul introduces legislation to protect New Yorkers from medical debt

Medical debt is a critical issue for many, including over 700,000 New York residents who currently have medical debt in collections. Those with medical debt often forego necessary medical care and historically minimize important social determinants of health, including food, heat, and rent. Overall, this threatens the health and financial stability of New Yorkers. The proposed legislation will limit hospitals’ ability to sue patients earning less than 400 percent of the Federal Poverty Level ($120,000 for a family of four), helping to eliminate medical debt lawsuits filed against low-income New Yorkers. Per the Governor’s office, the legislation would also “expand hospital financial assistance programs for low-income New Yorkers, limit the size of monthly payments and interest charged for medical debt and implement other protections to improve access to financial assistance and mitigate the deleterious effects of medical debt on New Yorkers.”

Regional Bankruptcy Update

Bankruptcy rates up by 2.7%: first year-over-year increase for Buffalo since 2018

The Buffalo News recently reported a rise in bankruptcy filings, based on data from the federal bankruptcy court. According to financial experts at Parachute Credit Counseling, they have been seeing people with higher levels of debt which, coupled with higher interest rates, stagnant wages, and inflation can cause financial stress and instability. Bankruptcy can be attributed to some of these issues.

Parachute Financial Counselors assure the WNY community that, despite some environmental concerns, there are simple, proven techniques to facilitate economic security. Now is the time for borrowers to seek unbiased counseling. Parachute counselors will provide expert strategies for attaining financial stability including any financial assistance needed, from budgeting help to credit education, to buying a home. Call 716-712-2060 or visit https://parachutecreditcounseling.org/  for information on financial counseling services.

Credit, Debt, Parachute Services

Ways to Reduce Debt

Reducing debt can be a challenging task, but it is definitely achievable with the right mindset and strategies. Here are some effective ways to reduce debt:

Create a budget and track your spending: The first step to reducing debt is to understand your spending habits. Create a detailed budget that includes all of your income and expenses. Track your spending for a month or two to see where your money is going. This will help you identify areas where you have budget leaks and can cut back, if even on a temporary basis. 

Pay more than the minimum payment: Paying more than the minimum payment on your credit cards can significantly reduce the amount of interest you pay over time. Even an extra $25 or $50 per month consistently can make a big difference, especially on high interest credit cards.

Prioritize high-interest debts: When paying off multiple debts, it’s important to prioritize those with the highest interest rates. This is because you’ll pay more in interest on these debts over time. There are two main strategies for paying off high-interest debt: the debt avalanche method and the debt snowball method. The debt avalanche method involves concentrating on paying off your highest-interest debt first, followed by the debt with the next highest interest rate and so on. This method may help you reduce the high interest charges. The debt snowball method is where you gradually pay off your debts, smallest to largest and gain momentum while doing so. As one debt is paid off, you add those funds to your payment of the next highest debt and so on. It snowballs!

Increase your income: One of the most effective ways to reduce debt is to increase your income. This could involve getting a second job, taking on freelance work, or starting a side hustle.

Reduce your expenses: There are many ways to reduce your expenses, such as cooking at home instead of eating out, canceling unnecessary or unused subscriptions, finding cheaper ways for entertainment, and reducing habitual habits like coffee/snacks and personal care practices like getting your nails done. Even changing these habits in the short term (6-9 months) can help. 

Avoid taking on new debt: The best way to reduce debt is to avoid taking on new debt in the first place. This means using your credit cards responsibly and only making purchases that you can afford to pay off in full each month.

Negotiate with your creditors: If you’re having trouble making your debt payments, don’t be afraid to contact your creditors and try to negotiate a lower interest rate or monthly payment.

Consolidate your debt: If you have multiple debts with different interest rates, you may be able to consolidate them into a single loan with a lower interest rate. This can simplify your debt repayment and save you money on interest.

Seek professional help: If you’re struggling to manage your debt on your own, consider seeking professional help from a credit counselor at an agency like Parachute. We can help you create a debt management plan and provide you with additional guidance on how to reduce your debt. A debt management plan is a structured payment plan to repay your debts in full in five years or less, by lowering interest rates, minimum payments and stopping fees.

Stay motivated: Reducing debt takes time and effort, so it’s important to stay motivated. Set realistic goals and celebrate your progress along the way. Keep your eyes on your future goals and think about how good you will feel when your debt is reduced or gone!

Remember, reducing debt is definitely a journey, not a race. Be patient with yourself and the process and work to keep your focus on your end goal. 

If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/

Would you like to meet one-on-one with one of our Financial Counselors to talk specifically about your budget? Check out our Financial Coaching Session https://parachutecreditcounseling.org/services/credit-budget-counseling/#financial-coaching  or call 716-712-2060.

Credit, Debt, Parachute Services

How to Improve Your Credit Score

Your credit score is a number that lenders use to assess your creditworthiness. It is based on a variety of factors, including your payment history, the amount of debt you have, and the length of your credit history. A good credit score can help you get approved for loans and credit cards with lower interest rates, which can save you money in the long run.

There are a few things you can do to improve your credit score:

  • Pay your bills on time. This is the most important factor in determining your credit score. Make sure to pay your bills in full and on time each month.
  • Keep your credit utilization low. Credit utilization is the amount of debt you have compared to your total available credit. Aim to keep your credit utilization below 30%.
  • Avoid opening too many new accounts. Hard inquiries, which are requests for new credit, can temporarily lower your credit score. Try to limit the number of new accounts you open each year.
  • Get a copy of your credit report and dispute any errors. Review your credit report for any errors, such as accounts that are not yours or late payments that you did not make. Dispute any errors with the credit bureaus.

Improving your credit score takes time and effort, but it is worth it in the long run. By following these tips, you can improve your credit score and get the best possible terms on loans and credit cards.

Here are some additional tips to help you improve your credit score:

  • Get a secured credit card. A secured credit card is a good option for people with bad credit. With a secured credit card, you will need to make a deposit, which will be your credit limit. Using a secured credit card responsibly can help you build your credit history and improve your credit score.
  • Pay down debt. The less debt you have, the better your credit score will be. Make a plan to pay down your debt as quickly as possible.
  • Be patient. It takes time to improve your credit score. Don’t get discouraged if you don’t see results immediately. Just keep working at it and you will eventually reach your goal.
  • Contact Parachute! Here at Parachute, we offer one-on-one Credit Report Review, and Financial Counseling sessions to review your specific credit situation and can offer individualized results that align with your goals.

www.parachutecreditcounseling.org 716-712-2060

Budget, Credit, Debt, Parachute Services

The Link Between Money and Mental Health

May is Mental Health Awareness Month, and there is a clear connection between financial wellness and mental health. Financial problems are a major source of worry and anxiety for many people, and can lead to mental health struggles. If you’re worried about money, then you’re not alone! Here are some ways that financial issues can affect your mental health:

  • Stress. Money worries can be a major source of stress, and chronic stress can have a negative impact on mental health, and even physical health.
  • Anxiety. Financial problems can lead to anxiety about the future, and about being able to meet basic needs.
  • Depression. Financial problems can lead to feelings of hopelessness and despair, which can contribute to depression.
  • Substance abuse. Some people turn to drugs or alcohol, or other addictive behaviors, to cope with financial stress. You are not alone, and there are resources available.
    • SAMHSA’s National Helpline, 1-800-662-HELP (4357), or TTY 1-800-487-4889, also known as the Treatment Referral Routing Service, is a confidential, free, 24/7/365, information service, in English and Spanish, for individuals and family members facing mental and/or substance use disorders. This service provides referrals to local treatment facilities, support groups, and community-based organizations.
  • Suicidal thoughts. Financial problems can be a major risk factor for suicide. Please reach out for help AS SOON AS POSSIBLE if you are having suicidal thoughts.
    • If you’re thinking about suicide, are worried about a friend or loved one, or would like emotional support, the Lifeline network is available 24/7 across the United States. The 988 Suicide & Crisis Lifeline (formerly known as the National Suicide Prevention Lifeline) is a United States-based suicide prevention network of over 200+ crisis centers that provides 24/7 service via a toll-free hotline with the number 9-8-8. It is available to anyone in suicidal crisis or emotional distress. The caller is routed to their nearest crisis center to receive immediate counseling and local mental health referrals. The Lifeline supports people who call for themselves or someone they care about.

If your finances are negatively affecting you mentally, emotionally, and/or physically, there are a number of things you can do to improve your mental health, such as:

  • Talk to someone. Talking to a friend, family member, therapist, or financial professional who can help you cope with your financial problems and develop a plan to improve your financial situation. Getting involved in your community can help you to feel more connected and supported, which can also buffer the effects of financial stress.
  • Seek professional help. If you are struggling with mental health problems as a result of financial stress, it is important to seek help from a trained professional. A therapist can help you manage your stress, anxiety, or depression.

Take care of yourself. Make sure to get enough sleep, eat a healthy diet, and exercise regularly. These things can help improve your overall mood and well-being, putting you in a better position to be able to manage the stresses in your life.

Budget, Credit, Debt, Parachute Services

April is Financial Literacy Month!

Financial Literacy Month is a national observance held every April to promote financial education and responsibility. Financial Literacy Month is a great time to learn more about financial literacy and to start taking steps to improve your financial well-being.

Financial literacy is the ability to understand and manage personal finances, and includes the awareness and knowledge to make informed financial decisions. Financial literacy can be improved by seeking to understand basic financial concepts such as budgeting, saving, and investing.

Financial Literacy Month is a great time to start taking steps to improve your own financial well-being. Here are some tips to get started:

  • Set financial goals.

What do you want to achieve financially? Do you want to buy a house, save for retirement, or start your own business? Once you know what you want to achieve, you can start making a plan to reach your goals.

  • Create a budget.

(…and stick to it!). A budget is a plan for how you will spend your money. It can help you track your spending and make sure you are not spending more than you earn. You can’t make progress toward your financial goals if you don’t know where your money is going each month.

  • Save money.

Start by setting aside a small amount of money each month and gradually increase the amount you save as you get more comfortable with it. Set up auto pay to direct deposit a realistic amount to a savings account out of each paycheck.

  • Start thinking about investing.

Investing money is a way to grow your money over time. There are many different ways to invest, so it is important to do your research and choose an investment strategy that is right for you. Contact a financial planner or advisor for specific advice and guidance.

  • Get help.

If you are struggling with financial literacy, there are many resources available to help you, both online and in your community. You can take a financial literacy class, read books or articles about financial literacy, follow reputable financial sources on social media, subscribe to financial newsletters, or listen to personal finance podcasts. Meeting with a financial professional is a great way to assess your own situation, and work together to create a plan on how to achieve your personal financial goals and stay on track moving forward.

Parachute Credit Counseling is dedicated to promoting financial literacy and well-being, and to help minimize the stigma associated with debt.  We offer many different services to assist individuals and families achieve their personal financial goals, and to provide financial education.

  • More information on Parachute’s Workshops and Events to promote financial literacy:
Workshops & Events
  • Essential information compiled by Parachute to promote making wise budgeting choices and maintaining good financial health:
Educational Articles

Contact us at (716) 712-2060 to speak with a certified financial counselor and review your personal situation and create a plan to take specific steps to improve your own financial literacy.  We are offering appointments all through the month of April, and beyond!

Credit, Debt, Parachute Services, Uncategorized

Can I Negotiate Credit Card Debt?

Many of us have been there… our credit card debt is mounting. The increased interest rates aren’t helping matters, and we are starting to feel like we need a plan.

When you are first starting out on your path to become debt free, it can be very overwhelming. After internet searches, and reading some articles, you see that debt management and debt settlement come up often. But what is the difference and how do you know what is right for you?

Debt Management Plan (DMP)

Debt Management Plans (DMP) are typically offered by non-profit credit counseling agencies (like Parachute!) It’s a plan between you and the credit counseling agency designed to repay your unsecured debts in full within 5 years or less. The agency will negotiate with your creditors to lower your interest rates, lower monthly payments, and stop fees.  One monthly deposit is made to the credit counseling agency, then your funds are distributed to your creditors every month. You don’t have to be behind on your debt to enroll, and since the companies offering DMPs are typically non-profit, the fees for service are low. You will review your finances, credit and goals with a certified credit counselor who can help you understand your options.

Debt Settlement

Debt Settlement is when your debt is settled for less than the full amount you currently owe, typically in one lump sum payment. You usually cannot settle your debts without being significantly past due, or in default. Any amount of debt forgiven over $600 is considered taxable income by the IRS. For example, if owe $8,000 on a debt, and the creditor agrees to a settlement amount of $5,000, you will owe taxes on the $3,000 forgiven by the creditor. You can negotiate a debt settlement yourself, but there are for-profit companies that you pay to hold your money to save up enough to settle the debt, and to help with negotiations. Fees can be high, and you risk further damaging your credit and lawsuits from creditors that are not willing to settle or wait until you’ve saved enough money to pay the settlement.

What is the difference between a DMP through a credit counseling agency and a Debt Settlement Company?

Credit Counseling Agencies that offer Debt Management PlansDebt settlement companies
Usually non-profit organizationsUsually are for-profit companies that charge a fee for their services. Generally, these companies cannot charge you until after they perform services
Advise you on managing your money and debts and help you budget your paymentsOffer to arrange settlements of your debts with creditors or debt collectors
Reach agreed upon payment plans or agreements with your creditors to ensure that the creditors will not pursue collection efforts or charge late fees while on the planOften have no up-front agreements with creditors. Some creditors will not negotiate with debt settlement companies
Usually do not negotiate any reduction in the amounts you owe – instead, they can lower your overall monthly paymentTypically offer to pay off your debts with a lump sum payment that you save up in an independent account that you control
Do not advise you to stop paying your debt, but may help negotiate your monthly paymentsUsually advise that you stop paying your creditors until a debt settlement is negotiated with creditors, which may damage your credit and result in your being sued
Payment plans do not usually have tax implicationsDebt settlement may involve debt forgiveness, which may have tax implications

As always, your financial situation is unique to YOU! There is no one-size-fits-all solution to resolve debt. In fact, these are only two options that we’ve highlighted here.

In order to start your debt free journey, we encourage you to speak one-on-one with a Certified Financial Counselor who will thoroughly review your income and expenses, explain your credit report and score, analyze your debts, and provide you with expert action steps to resolve your debt. Parachute is here to help! Contact us to start your debt free journey! 716-712-2060 or www.parachutecreditcounseling.org

Dare to be Debt Free!