March 2003 ~ Credit And Debt Management

Monday, March 31, 2003

Can They Go After a Husband's Wages If They Garnish a Wife's Wages?

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The extent that a husband's wages can be garnished for a wife's debt or in addition to attachments to the wife's wages depends on the type of debt, where they live and the account terms. Some states prohibit wage garnishment for most unsecured consumer debt, while others allow wage garnishment, liens and bank levies for almost any debt. Regardless of state laws, federal law prohibits garnishment of more than a set amount.

Most states that allow wage garnishment limit the attachment to the person named on the account. Additionally, the Fair Debt Collection Practices Act prohibits debt collectors from making false statements to debtors. Consult with a legal professional or contact your State Attorney General regarding wage garnishment laws in your area. If a debt collector tells you they can garnish your husband's wages or otherwise threatens you with actions prohibited by state law, you retain the right to file a complaint with the Federal Trade Commission or your State Attorney General's Office.

If both spouses jointly hold the account, creditors may pursue the husband, wife or both for the same debt. Subject to court approval, both wages may be garnished. Authorized users on credit cards did not enter into an agreement with the creditor and are therefore not liable for the debt. Married couples living in community property states may be subject to garnishment and other collection attempts for either spouse's debt. The husband's responsibility for the debt depends on state laws regarding debt made prior to or during the marriage.

Once an account goes into collections, creditors attempt to obtain payment by contacting the responsible party. When other collection attempts fail, creditors may file a lawsuit. During the lawsuit, a creditor may request wage garnishment to ensure repayment. Once a judgment for garnishment is in place, the debtor's employer receives a copy of the order and withholds a portion of each paycheck until the debt is paid. Creditors may garnish up to 25 percent of your weekly wages for most consumer debt.

Generally, creditors can garnish joint bank accounts for debts owed by one party. The non-liable spouse may file an exemption with the court to protect their funds. Back taxes may result in liens, wage garnishment or bank levies from either spouse in community property states or for jointly filed taxes. Additionally, joint federal tax refunds may be withheld for spousal or child support debt and back taxes. A spouse may file an "innocent spouse" or "injured spouse" claim with the Internal Revenue Service to protect their assets.

Who is Responsible for Credit Card Debt in Divorce?

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When couples divorce, their debt will be divided either by mutual agreement or a judge's decree. Regardless of how the finances are settled in a divorce, creditors may still pursue both spouses for jointly held or community property debt.

If a spouse holds a credit card in her name only, she will generally be held responsible for paying off the card by her creditors. However, in community property states, all debts acquired during a marriage by either party becomes the responsibility of both parties. Both parties can be pursued for this debt, and the credit reports of both parties can likewise be affected.

The lawyers of divorcing couples will usually request the couple's financial records to determine a fair financial settlement. The divorce settlement will state which partner is responsible for paying off any credit card debt accumulated during the marriage.

Although a divorce settlement may make one spouse responsible for paying off credit card debt, creditors do not have to abide by this agreement between spouses. If a spouse fails to make payments on debt that is jointly owed, the creditors can go after both spouses. The only recourse that a spouse has in this situation is to go back to court to ask the judge to force the other spouse to meet her responsibilities.

The Best Way to Repair Credit

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Your credit is affected by a number of factors, including the amount of debt you carry in credit cards, loans and balances due. Other factors include your income, number of missed payments and other major financial situations like foreclosures, bankruptcies and repossessions. If you want to rebuild or repair your credit you need to start reducing the amount of money your owe and continue making timely bill payments.

One strategy to repair damaged credit is to pay off credit card balances. This is effective because it will improve your overall debt to income and debt to credit ratios. If you have a lot of extended credit--new store credit cards, major credit cards, car loans and home loans--it will adversely affect a credit score.

Many people charge everything and then figure they will pay down the credit card balances all at once. This can actually damage your credit score because there is the possibility that you won't pay the card's balance. Carrying a high balance on your credit card throughout the month also gives you a higher monthly average balance, which is reported to the credit reporting agencies. The faster you stop using the credit cards, the faster you can pay the balances down completely.

Checking your credit is the best way to repair a score that has erroneous information on it. You should always check your credit score and order a complete report to see what has been reported to the major credit bureaus. Sometimes, balances that have already been paid off still remain on the report. The companies that collected the balance may have simply not reported the new information, because it costs them money to make the reports. Or, there could have been an error in the information they reported. Once you have your credit report, go through each item and dispute it directly with the credit reporting agency on its website. The site will tell you how to do this. When these are removed, your credit can improve significantly.

Once your erroneous reports are removed make sure it never happens again by ordering a credit score watch. This will reduce the chance of more errors on your report. It is also a great way to repair a damaged score, because it prevents any more false bad reports from being added to your account. This will keep your score low and can negate all the positive things you do to repair the credit.

How to Deal With Collection Agencies Filing Court Papers

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A debt collection agency filing court papers against you can result in spending a day in court and having a possible judgment on your credit report. Due to the significant consequences of a judgment on your record (tarnished report for seven years, inability to get loans, higher finance fees), it's imperative to avoid a possible lawsuit and work with collection agencies.

Instructions

Negotiate before the agency files papers for a court hearing. The judge in your case will side with the collection agency if you legitimately owe the money. Avoid this whole ordeal by paying off the collection account or asking the agency to accept installment payments.

Defend yourself and ask for proof. Don't pay a collection account simply because an agency threatens a lawsuit. If you can't recall a debt and feel that the agency contacted you in error, write a letter disputing the validity of the balance and tell the agency to send something in writing as evidence that you owe the money.

Prevent legal troubles with a debt collection agency with a bankruptcy filing. Creditors and debt collectors cannot file court papers and are prohibited from communicating with you once you file bankruptcy.

Go to the hearing to deny the debt; plead your case in front of the judge. Meet with an attorney prior to discuss a plan of action. Bring supporting evidence to the hearing such as a payment receipt or canceled check.

How to Build Company Credit Not Based on Personal Credit

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Building credit in the name of your business allows you to keep your personal credit separate from your business. However, don't expect to build business credit as fast as you built your personal credit. Credit lines for new business accounts are often tiny--sometimes as little as $100--as creditors monitor the progress of your company. As you apply for business credit, never include your Social Security number on the application. Keep everything in the name of the business and never personally guarantee any business credit cards or loans. Personal guarantees allows creditors to come after you if the company goes out of business or fails to pay.

Instructions

Establish a structure and name for your business if necessary. There are many business structures, with many entrepreneurs choosing to create their businesses as limited liability companies (LLC). The LLCs are perfect for keeping your business credit and personal credit separate. Do not create a sole proprietorship. Income from a sole proprietorship is included on your personal federal income tax returns and you could be held liable for any loans or credit cards taken out by a sole proprietorship that you own. Also apply for an Employer Identification Number--also known as a Federal Tax Identification Number--through the Internal Revenue Service (see Resources).

Open a business checking account and get a telephone number in the name of your business, if you haven't already done so. The checking account and phone number further establish your company as a legitimate business, making credit approval easier.

Apply for business credit. Fill out applications for credit using the name of the business and its physical address, which could be your house if it is a home-based business. Start small with gas cards or cards from office supply stores. Don't let low initial credit lines disappoint you. Keep balances low on the cards and never miss a payment as you build a credit history. Apply for more credit cards after a few months from other vendors and also use them responsibly.

Apply for a business credit card and business installment loan from your bank. The bank may ask you to personally guarantee the loans. Don't do that. Instead, offer to place money in a business savings account to serve as collateral for the credit card and loan. With the collateral in place approval should be easy. Keep a small balance on the business credit card and never miss a payment on it or the installment loan.

Use your existing business accounts to build your business credit history over about two years. Then start applying for other credit cards and loans without having to put up personal guarantees or collateral. Continue with a perfect credit history as you open accounts with much larger credit lines.

How to Increase a Credit Limit

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One part of improving your credit score is credit availability. This essentially the amount of revolving debt you have outstanding divided by your total credit limit on those accounts. By increasing your credit limit you decrease your credit availability. It is also helpful to have substantial credit lines at your disposal if you invest in real estate or make large purchases.

Instructions

Call your credit card company and just ask for a higher limit. Often times they will just give it to you if you have a good record of paying on time.

If they refuse, ask what it will take to increase it. Try to strike up a deal. For instance, if you pay on time 3 months in a row, they can increase your limit.

Make your payments on time on all accounts. This helps bolster your case for being creditworthy.

Call your credit card company and just ask for a higher limit. Often times they will just give it to you if you have a good record of paying on time.

Ways of Getting Out of Debt

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If you accumulate too much debt, you have to find a way to get out of it before the debt becomes overwhelming. There are a number of strategies that you can put into action to help you get out of debt. Some of these methods work better than others. Take some time and review all of the methods to see which ones are the most effective and efficient for your situation.

To get out of debt, the first thing you should do is stop accumulating more debt. If you are using your credit cards, stop immediately. This will keep you from accumulating any new debt.

List all of your creditors on a piece of paper, starting with the smallest balance first. Pay off your smallest balance and apply that payment to the next balance. Every time you pay off a debt, that monthly payment should go to the next debt in addition to the payment you are already paying.

Call all of your creditors and negotiate a lower interest rate. With a lower interest rate, more of your payments will go to the principal balance and less to interest. This allows you to pay down the balances faster.

If you receive any bonuses, incentives, commissions or even tax refunds, apply them to your debts.

You can call your creditors and offer to settle the debts. Settlements can reduce your balance by 50 percent or more. However, if you do settle with your creditors, it will show up on your credit file in a negative way and lower your credit score.

Do a balance transfer. If you can find a credit card that offers a zero percentage interest rate for a year, you can save money on finance charges. Your entire payment will go toward reducing the principal balance. When your promotional rate expires, do another balance transfer to another credit card with a promotional rate.

Can a Debt Collector Sue Me in Small Claims Court?

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When you face action from a debt collector, the threat of a lawsuit can be intimidating. If you only owe a small amount of money, the debt collector can file a lawsuit against you in small claims court. When this happens, you will have to show up in court to defend yourself.

Small claims court is a system that is administered by the state governments. Every state has a small claims court system and it is used to collect smaller debts. Each state has a dollar limit on what can be included in a lawsuit for small claims. For example, the collector may only be able to file a lawsuit if the debt is less than $5,000. If the debt is more than that amount, the debt collector will have to take other action.

Debt collectors will try to use small claims court whenever possible to try to get their money. With this type of lawsuit, you do not have to hire a lawyer to represent you. This allows the collection agency to save a substantial amount of money on legal costs. They can simply show up to the hearing, represent themselves and then get a judgment.

When a debt collector files a lawsuit against you in small claims court, you will have to go through the correct process before the debt is enforced. You will be served a summons by the court. Then you will have to appear to the court on the specific date that is set. The clerk-magistrate will look at the facts of the case and unless you can come up with a valid reason that you should not have to pay the debt, it will be enforced. For example, if the statute of limitations on the debt has expired, this would represent a legitimate defense against paying the debt. In that case, you would not have to pay the creditor.

If you believe that you should not have to pay the debt, you may want to hire legal representation to help you with the process. In many small claims courts, they have so many cases that they do not always stop and hear every detail of a case. This often pushes the case in favor of the debt collector. Without legal representation, you may not have a chance to fight the ruling by the court.

How to Make a Plan to Be Debt Free

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You've had enough of interest rate changes, monthly maintenance fees and overlimit fees, and you've decided it's time to get a plan to be debt free. Nice job. You're going to join over half of all Americans who have a no credit-card lifestyle. Now that you've resolved to do it, how do you find the debt-free promised land? It's going to take perseverance and patience, but you can take steps to help you down the path to a debt-free life.

Instructions

List your debts, using a spreadsheet program or paper. Include the amount owed, interest rate and monthly payment. Having all this in one place will allow you to make critical decisions about your plan of attack.

Save $1,000 fast. Financial guru Dave Ramsey recommends this step because during your journey to a debt-free life, the washing machine is going to break down or your muffler is going to drag behind your car. If you don't have an emergency fund, where will you go for funds? Probably back into debt. To avoid this, put $1,000 into a money-market account separate from your main bill-paying fund.

Explore debt consolidation opportunities.

Consolidate your debt. Can you find lower interest rate opportunities? If so, explore these opportunities. Don't apply for debt unless you're nearly sure you'll get accepted and use the credit. Credit scores are partially based on the number of credit applications.

Prioritize payments. Choose a small account with a high interest rate and pay all extra dollars to this bill. Make a minimum payment to all others until this account is paid. Once this account is paid and closed, add this payment amount and all extra dollars to the minimum payment of the next highest interest-rate debt. This allow you to make larger payments over time to your largest debts.

Use a "cash only" strategy. Consolidating debt payments won't matter if you don't change your spending habits. Don't use credit cards to make purchases. By sticking with cash, you'll know that you'll be able to afford any purchases you make. Cut unnecessary cards and close unused credit accounts.

Household Debt Vs. Income

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All Americans owe some level of debt -- there is no use denying or hiding the fact. How much you owe, though, will impact your financial health and future. According to the website SmartMoney, the average American in her 40s, making between $50,000 and $100,000, owes about $108,000 in household debt. Owing more than that, or having a debt load that eats more of your monthly income than recommended, might be a sign of financial trouble brewing. Simple debt-to-income ratios can help you gauge your financial health.

As you start looking at your financial health, you'll need to first understand what goes into determining your debt-to-income ratio. Debt, for most debt calculations, tabulates how much you owe, including mortgage, rent, credit card and department store debt, auto and education loans, and home equity loans or lines of credit. That figure is then measured against your after-tax monthly income. What is left is the amount you have remaining for savings, everyday expenses and emergencies.

Whether you listen to the federal government's recommendations or pundits writing on financial sites such as CNN, the Wall Street Journal or MSN's MoneyCentral, the recommended healthy debt load for households to carry is around 40 percent of income earned or less, before taxes. Factoring in taxes at an average of 20 percent and savings at a recommended level of 15 percent leaves you with about 25 percent of your monthly income for all other expenses. If you are bringing in $1,000 a week, as an example, that leaves you with about $250 per week for food, utilities, gas, medical bills and anything else.

If a 40 percent debt-to-income ratio is deemed healthy, just a few percentage points above puts you at risk. According to US News, a debt ratio between 43 percent and 49 percent could you lead you on a fast track toward financial difficulties. Taking the $1,000-a week-income example, more of a debt load carves into either the recommended savings ratio of 15 percent or the $250 buffer you have built in each week for expenses. The other factor that places you at risk is the type of debt. If your 49 percent amount includes a large percentage of credit card debt, your credit rating could be at risk since many lenders see holding a large amount of revolving debt as a sign of an income struggling to meet expenses.

The standard amount signaling financial trouble for many debt-to-income ratio calculators, including those offered by the SmartMoney and US News websites, is around 50 percent. If you have a debt ratio higher than 50 percent, you are considered as needing financial help. Having about 10 percent of your income allocated for monthly expenses, or cutting into your monthly savings to pay for expenses, puts you at risk of overextending your finances or falling short in the event of an emergency.

How to Pay Off Credit Card Companies Fast

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Whether you've had pricey hospital stays, accidents or other expenses, it's easy to fall into credit card debt. Although this debt can be small when it first accumulates, it isn't long until it can snowball into a stressful financial situation. Luckily, credit card debt is manageable, and there are numerous solutions to help you accomplish your financial goals. Pay off credit card companies fast and become debt free for good.

Instructions

Lower your interest rates. Call your credit card companies and ask whether they can do this for you. Some companies offer lower interest rates when you transfer a balance from one company to another. Research the current interest-rate trends and see if they match those that appear on your credit statement. Write down this information and use it when you speak with the credit card representative.

Stop buying things on credit. It's impossible to pay off debt if that debt keeps increasing. Make a rule to use your credit card only for emergencies.

Pay on time. Late charges not only raise your balance but affect your credit score as well. Try to pay as early as possible so you don't forget about the deadline. Set up an online bill-pay account to avoid having to mail payments.

Cut down on expenses. Set up a monthly budget and strictly adhere to it until the debt has been paid off. This includes limiting dining out, going to the movies, and incurring other extra expenses.

Pay more than the minimum balance. By doing this you'll be able to offset the interest charges. Take a set amount out of your paycheck and put it toward your debt. Pay off more of the balance when you have extra money.

Go to a reliable credit counseling service. For a fee you can meet with a representative who will create a plan to eliminate your debt. This is also useful to lower interest rates if you were unable to do this on your own.

How to Pay a Settlement Difference

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A settlement difference is actually a specific amount of money a debtor has agreed to pay to resolve a debt. Credit card companies and other unsecured creditors sometimes settle delinquent debts for less than the full balance. The New York Times reports credit card companies will sometimes settle delinquent accounts for 20 to 70 percent of the balance. A settlement at 20 percent would indicate an 80 percent discount off the balance. That represents the difference in the settlement amount and the balance before negotiations. Debtors can negotiate settlement agreements or hire a reputable consumer affairs attorney. The Federal Trade Commission advises against using for-profit debt settlement firms because some engage in unethical business practices.

Instructions

Negotiate the settlement by telephone or mail. Letters offer a paper trail but telephone negotiations are much faster. Offer to settle for 20 percent of the balance; paying more won't help your credit score. Keep negotiating if the debt collector balks at 20 percent. Call or write once a month for several months if that's what it takes to get a settlement offer you can afford.

Negotiate the terms of the payment once you decide on an amount. Some debt collectors may insist on a lump sum payable within 30 days. Others may allow you to pay in a few installments.

Get terms of the settlement in writing, including a stipulation that the debt collector will update your credit report to show the account as "settled."

Pay by cashier's check. Obtain a cashier's check from your bank. Make a copy and then send the original check to the debt collector by certified mail, with a return receipt requested.

Follow up by telephone after allowing time for delivery to confirm that the debt collector received payment and is updating your credit report. Keep other documentation, such as the return receipt and a copy of the check, for your records.

Can Retirement Accounts Be Used As Collateral?

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Trying to use retirement assets as collateral or security for a loan has two major problems. First, the Internal Revenue Service expressly forbids it in the case of IRAs, Roth IRAs and IRA-based retirement plans. Second, lenders are reluctant to lend against retirement plans when much of the plan receives protection against creditors that would make it difficult or even impossible for them to collect the collateral if the loan were not repaid.

You may not borrow from an IRA or any IRA-based plan, nor may you pledge the IRA as collateral for a loan. If you do, the Internal Revenue Service will disallow the entire IRA, and deem you to have taken a distribution. This distribution would be fully taxable as income, and come with an additional 10 percent penalty if you are under age 59 1/2.

If your employer plan allows it, you can borrow from a 401(k). In this case, you call or write the 401(k) plan administrator. They send you a check, and you pay your own 401(k) plan back with interest. The remainder of the 401(k) balance serves as collateral for the loan.

When you borrow against a 401(k), you must pay yourself back with after-tax money, even though you borrowed before tax money. The money you use to repay a loan will be subject to tax again when you take it out in retirement. This would, in effect, subject that portion of your 401(k) to double taxation. In addition, if you have a loan outstanding with your 401(k) and you lose your job, you may have to pay back the entire loan immediately. If you do not, the IRS will deem you to have taken a distribution and hit you with income tax and a 10 penalty if you are under age 59 1/2.

A margin loan is a loan from a broker, using your account as collateral. However, since the IRS does not allow you to use a retirement account as collateral for a loan, you will not be able to open up a margin account using your retirement assets as collateral. You must open an account separate from your retirement accounts and use that as collateral instead.

Minnesota Statute of Limitations for Collecting Credit Card Debt

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Credit card debt can rack up quickly, forcing a consumer to become delinquent on this debt. But even if you do become delinquent on a credit card account in Minnesota, you won't legally owe the money forever, thanks to the statute of limitations.

Minnesota recognizes four types of debt for its statute of limitation on debt: open-ended accounts, oral accounts, written accounts and promissory notes.

Credit card debt fits under the definition of an open-ended account, because of its revolving nature. These accounts have a statute of limitations of six years in Minnesota. All other loans have an end date, which is when the loan is paid off; but a credit card account continues until either the borrower or the lender closes the account. Until that time, the card holder can borrow from the remaining credit limit and pay it back.

Once the six year statute of limitations is up, you are no longer legally liable for the debt and cannot be forced to pay by the court system. This is true even if you move to a state with a longer statute of limitations for open-ended accounts.

How to Buy a New Computer With Bad Credit

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Buying a new computer with bad credit isn't difficult. Financing for new computers is available for bad-credit borrowers. Having a steady income and ability to make the payments may outweigh past credit problems.

Buying a new computer on bad credit means you'll likely receive a high interest rate on the loan or credit card. That means you may spend more on finance charges than you would if you had good credit.

Buying a new computer on bad credit could help your credit score over time---if you make all payments on time. Timely on-time payments are considered one of the best ways to improve your score. By improving your score you could position yourself to buy your next computer with good credit.

Many electronics stores and department stores selling new computers offer their own credit cards, and these cards may be easier to qualify for with bad credit. Secured credit cards and secured installment loans offer another option. You can qualify for these loans at your bank or credit union by depositing money into a savings account and allowing it to be held as collateral.

How to Take on a Parent's Debt

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If your parent is aging or in need of financial assistance, you might consider helping her by taking over her debt. In most cases, you are not legally obligated to do so unless the debt is also in your name. However, many children who have the means like to take financial stress out of their parents' lives. Do not overextend yourself financially to take over your parent's debt; help out only as much you can afford.

Instructions

Have a conversation with your parents about their debt. Some parents might be more open to this talk than others; some are happy to talk openly about financial issues, while others prefer to keep it private and might be embarrassed about it and hesitant to talk to you. Do not be confrontational or speak down to them; be open and honest and express your desire and ability to help them. If a conversation is not possible, speak to the person in charge of your parent's finances.

Make a list of all debt your parents have. List the amount due for each debt, the organization the money is owed to, the interest rate and the regular monthly minimum payment amounts. Prioritize this list by listing the most crucial debts, such as those that are past due, the most expensive or have the highest interest rate, at the top of the list.

Analyze your own financial situation. Look at your monthly budget and cut expenses out of your budget that you can live without temporarily, like higher priced cellphone or cable packages. Determine exactly how much you can afford each month to help pay your parent's debt without putting yourself in a financial bind.

Set financial goals with your parents or with their financial adviser. Keep the goals realistic. The goals provide motivation to work to pay off the debt. If your parents are still working or have the ability to work, include goals for them as far as how much they can afford to contribute to paying off their debt.

Contact the creditors or organizations your parents owe. Negotiate payment plans with lower interest rates if possible and set up monthly payments with them based on how much you can afford to help. You can add your name to the debt, so the bills come directly to you, though that adds more legal obligations, and if the debt defaults, then your credit will be affected.

Information on Paycheck Garnishment

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If you fall behind on a debt, one of the worst things you can do is ignore it. A creditor serious about securing payment of a debt will use any means to do so. One avenue they can pursue is the paycheck garnishment. If you understand how garnishment works, you may be able to avoid it.

A creditor asks for garnishment of your paycheck to recover money from a debt that you refuse to pay after he has made previous attempts to collect it. If you fall behind on child support or alimony, the court may garnish your pay. The government can demand garnishment if you default on taxes or a government-backed student loan or business loan. A company that grants consumer credit may also petition to garnish your paycheck if it wins a judgment for debt you owe.

Obtaining a garnishment is a relatively easy process. Once a creditor obtains a judgment for the debt you owe, he simply goes to the court or clerk's office and fills out a form called a request and writ for garnishment. Once the court signs the form, the creditor pays a small filing fee, often only $15. The creditor gives the writ of garnishment to the local sheriff, who handles the duty of officially delivering the writ to your employer. Your employer must then take a certain amount from your paychecks and deliver it to the sheriff.

The Consumer Credit Protection Act limits how much of your paycheck can be garnished. Creditors may take the lesser amount of 25 percent of your disposable income or the amount by which your earnings are greater than the amount of minimum wage multiplied by 30. Your disposable income is the amount you make after tax (federal, state and local), Social Security, unemployment insurance and state employee retirement program deductions. For child support or alimony, the garnishment may be up to 60 percent of your disposable income, plus an additional five percent if the payments are more than 12 weeks past due.

The best way to avoid a garnishment is to pay your bills. If you cannot pay your bills, make payment arrangement with the creditor. Most creditors dont want to go through the trouble or expense of forcing payment through the courts. If your creditor does get a judgment and starts the process of getting a garnishment, you can pay the full amount of the judgment or ask the court for a slow-pay motion. Some states allow use of the motion, which lets you propose a weekly or monthly payment amount on the debt. The judge or your debtor may approve the amount or ask that you pay more.

North Carolina, Pennsylvania, Texas and South Carolina only allow garnishments for child support, unpaid state and federal taxes, court fines, student loans or restitution for a crime.

The government does not need a court order to garnish your paycheck.

A garnishment can affect Social Security payment and veterans benefits.

An employer cannot ignore a writ of garnishment and must deduct the amount from your paychecks as often as you receive them until the debt if resolved.

Debt Relief That Doesn't Hurt Your Credit

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When getting out of debt is a top priority, you may come across several ways to accomplish this goal. Whether you choose to work with a debt relief company or do it yourself, choosing the method that is best for you depends on several factors, including whether or not your chosen form of debt repayment will hurt your credit. Because improving your credit situation is generally one of the major goals of debt relief, this is an important consideration.

Enrolling in a debt management program with a reputable agency that customizes a particular plan to your financial situation can provide you with debt relief without hurting your credit, according to the Bankrate website. These programs stipulate that you write them the check and they in turn make sure your creditors are paid. These programs usually span three to four years, according to the site, and may only limit your ability to get new credit accounts. However, it doesn't drag your score down in the least.

According to Financial Web, debt consolidation does not negatively impact your credit, particularly since it appears that more than one account has been paid in full, despite the opening of a new account. In fact, debt consolidation can help to raise your credit score if you create a positive credit history over time. However, be careful not reduce the amount of debt you have to pay when consolidating your bills, since this can hurt your credit.

According to the "Consumer Reports" website, paying a settlement amount for less than what's owed will result in a hit on your credit. This is because creditors look at this as an irresponsible form of borrowing, since you bit off more than you could chew and then didn't make it right with the company from whom you received credit. Working with shady debt tell you to stop paying while they negotiate can hurt your credit too, because disreputable companies may sometimes take your money and fail to work with your creditors at all. Meanwhile, your score is hitting bottom because you aren't paying a penny.

In the end, the best way to ensure that your chosen path to debt relief doesn't hurt your credit is to pay attention to what's going on. If you've contracted with a debt relief agency, check on them to make sure the job is being done properly. According to Bankrate.com, even if the debt relief company is at fault for paying a creditor late on your behalf, your credit will still take a hit for the late payment. Stay in communication with your debt relief company and your creditors, carefully monitor your credit report and get everything in writing from the debt relief company to ensure that your credit isn't on the decline.

How to Respond to a Credit Card Default in Florida

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Defaulting on a credit card in Florida could result in a lawsuit being filed against you. If you are sued, you must respond or face a court judgment and possible garnishment of your wages and bank account. The best solution for a defaulted credit card agreement is to pay it off in full by contacting the credit card company or debt collector. If full payment is not possible, try to work out a payment plan or other solution to end the threat of being sued.

Instructions

Contact the credit card company to confirm that you have defaulted on the account. It's possible that the account is still being managed by the bank's internal collections department---or it may have been sold or assigned to a debt collector.

Offer to settle the account with the credit card company or the debt collector. Debt settlement is a legal option for resolving delinquent debt. Credit card companies and debt collectors will often settle for 20 to 70 percent of the balance. Offer to settle for 20 percent and continue negotiations until you have a deal.

Respond to the lawsuit if the credit card company or debt collector has filed a civil case. Community Legal Services of Mid-Florida reports that you have 20 days to respond to the notice of a lawsuit called a summons. The summons can be hand-delivered to you at your home or place of business. Additional information, called a complaint, will be attached to the lawsuit and will explain why you are being sued. Type your response to the lawsuit, called an "Answer" (see Resources). The answer should contain your point-by-point response to all the allegations made in the lawsuit.

Deliver the lawsuit in person to the Clerk of Court. The address will be on the summons. Also send an address to the party filing suit against you. Then wait for notice of a court hearing to appear before a judge.

The Best Ways to Consolidate Finances

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Consolidating finances consists of placing all of your debt in one place. This creates a scenario where payments become smaller, interest rates decrease and overall debt management becomes less cumbersome. However, not all consolidation strategies are created equal. It pays to know the best ways in which to consolidate your debt and the steps to take that will result in the best payment and overall scenario for your long-term financial health.

One of the most popular ways to consolidate high interest debt and credit card payments is to take out a home equity loan. The equity in a home is determined by the current balance on the loan subtracted from an estimated market value that is validated by an independent appraiser.

A home equity loan is typically requested through the primary mortgage holder, who validates the equity in the home, and will make an extension of credit that can be used and re-used (revolving) as needed. While most home equity loans will come with a price tag carrying a higher rate of interest than a first mortgage, and will typically require an interest only payment. This means that payments will be substantially lower when compared to high interest credit cards or personal loans. Typically, this type of loan will only be approved if a homeowner has 20 percent or more equity in their home.

For consumers possessing strong credit, a personal debt consolidation loan could be a good answer for individuals not meeting the equity requirements for a home equity loan, or for individuals who do not wish to borrow against their home's value.

These are considered a personal loan and will normally offer an attractive interest rate. In many cases, a debt consolidation loan will request payoff information on all other financial obligations during the application process. This allows the lender to pay off current obligations directly from the newly opened account and then begin their billing cycle to the consumer once the other debts have been settled.

Another good option for consolidating finances comes in the form of a 0 percent interest credit card. Many creditors will offer an introductory rate of between six and 12 months with no interest, allowing a consumer to pay off current debt obligations and negate interest charges. Simply move the current debts owed to the new card, and potentially save thousands in interest charges over time by paying them off during the introductory period.

Can the Bank Take My IRA Account on a Foreclosure?

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If you are having trouble paying your mortgage, you may be worried that your retirement assets are at risk. The specifics vary by state law. A number of states restrict mortgage lenders' ability to collect on assets other than the home itself. Additionally, Congress has granted a good deal of judgment protection to retirement accounts, including individual retirement arrangements.

Federal law exempts the first $1 million in IRA assets from the claims of creditors. This is as a result of the Bankruptcy Reform Act of 2005, which also made it more difficult for debtors in some circumstances to qualify for bankruptcy, especially under Chapter 7. Some states provide additional protection to IRA accounts via state law. IRA protection is unlimited in the state of New York.

Some states restrict mortgage lenders from pursuing borrowers for money in excess of the value of the foreclosed home. These states are called nonrecourse states. If the lender forecloses and then sells a home, and the sales proceeds are not enough to pay off the debt outstanding, lenders in nonrecourse states do not have recourse to sue to attach other assets. These states include Alaska, Washington, Arizona, Utah, California, Texas, Connecticut, North Dakota, Florida, Idaho and Minnesota.

If you do not live in a non-recourse state above, you could owe the difference between your loan balance and the sales proceeds of the home after a foreclosure. If so, the lender could sue you for the difference. If the lender wins, you will have a judgment against you, and you can even be forced into bankruptcy. However, even if the lender has a judgment, you cannot be forced to surrender anything in your IRA up to $1 million, and in some states, even more than that.

If your IRA has more than $1 million in it, some of that money may be at risk, depending on your state. You may wish to move a portion of your IRA into annuities, which may receive additional creditor protection under state law, or keep a balance in a 401k plan rather than rolling it over into an IRA. 401k plans have unlimited creditor protection. Consult an attorney before making any transfers under creditor pressure, because transfers made solely to shield money from legitimate creditors can sometimes be ruled "fraudulent conveyances," and disallowed by courts. In some circumstances, you can save a home, or at least buy time to catch up on mortgage payments, by filing for Chapter 13 bankruptcy.

How Does a Debt Crisis Happen?

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When a country faces the prospects of being unable to make good on its outstanding debts, this is a debt crisis. The effects of a debt crisis can be severe. It can downgrade the country's credit rating, making it harder to borrow money, and it may force the country may to slash services. A number of factors can cause debt.

Many countries have suffered debt crisis throughout history. In the early 1980s, a number of Latin American countries, which took on a heavy debt burden in the preceding decade to finance infrastructure development, found they were unable to repay their debt owed to Western nations. More recently, in 2010, Greece faced a danger of default after officials discovered the debts were much larger than realized, precipitating a bailout by the European Union.

The definition of a debt crisis is when a country has significant enough debt that it is in imminent danger of defaulting, if it has not done so already. For a debt crisis to happen, the country must have taken out a significant amount of loans. In many cases, this may have been in good faith, with the belief that the country could pay it back.

A debt crisis can result from many causes. In the case of Latin America, the increase in the size of the economy was not enough to match the interest payment on the loans. When interest rates rose, many countries were unable to service their debt successfully. In the case of Greece, the government expanded social services to a point where it was no longer able to pay for them.

As with debt taken on by individuals, government debt can often spiral out of control. As the government attempts to pay the interest on its loans, the country becomes unable to provide the kinds of services required to increase revenues. This causes the debt to go unpaid, meaning interest on the debt increases, pushing the country even deeper into debt.

There are a number of ways to stem a debt crisis. In some cases, to prevent the country from going broke, lenders may write off all or part of the debt. In other cases, other countries may bail out the nation, as a number of European countries bailed out Greece. The debtor country can then eventually repay the loan under more favorable terms.

Can a Massachusetts Collector Garnish Wages?

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Because pursuing wage garnishment for unpaid debt is expensive and time consuming for collections companies, they typically only use this strategy as a last resort for collection. However, if you allow a debt account to become severely delinquent -- usually, if you miss six or more payments -- a collector may use this strategy to force you to pay your debt. Massachusetts and federal law permit collectors to garnish your wages in certain circumstances.

Most collectors must file a lawsuit against you and receive a judgment from a Massachusetts court before executing a wage-garnishment order on your employer. However, garnishments involving child support or tax delinquencies do not require a judgment. After the collector files a lawsuit, the civil court will afford you an opportunity to contest the lawsuit; however, as long as an outstanding debt exists and the collector properly filed the lawsuit, the court will typically grant a judgment in the collector's favor.

After winning a lawsuit against you for your debt, the collector can file a motion with the Massachusetts court for a writ of garnishment. The garnishment order is served on your employer, which must withhold nonexempt funds from each paycheck pending further instructions, and file an answer with the court disclosing the amount of your pay that it has withheld. The court will then issue a trustee execution, which requires your employer to turn over all withheld funds for payment against your debt.

Massachusetts law exempts $125 per week of your pay from garnishment. However, federal law, which provides more generous exemptions, prevails over Massachusetts law regarding wage garnishments. Federal law exempts 75 percent of your post-tax earnings, which means the collector can take up to 25 percent of your income from wages. At the time of publication, if your weekly earnings are less than $217.50, all of your wages are exempt from garnishment.

If a collector has already won a judgment against you from a Massachusetts court, you have few options for avoiding garnishment. However, you may be able to prevent garnishment if you can show that you never received notice of the lawsuit or judgement. You may also avoid garnishment if the statute of limitations on judgment collection has expired. Because Massachusetts provides a 20-year statute of limitations for judgment enforcement, successfully raising this defense is unlikely.

How to Handle Past Due Medical Bills

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If you have uninsured medical bills that are past due, contact the agency that is attempting to collect as soon as possible. Even if you do not have the money to begin paying down the bills, acknowledging the debts and making a good-faith effort to discuss your financial situation may stop the hospital or collection agency from commencing a lawsuit to try to collect on the debt. If you have some disposable income, attempt to make regular payments on the medical bills. Even small monthly payments may be enough for the hospital to remove the delinquent status from your account.

Instructions

Contact the hospital or collection agency. Once you realize you are behind on your medical bills, contact the organization that is sending you notices and acknowledge that you are delinquent. Ask for an itemized copy of your bill and review it to make sure that all of the charges are accurate.

Make sure that your insurance will not cover any of the charges. If you had health insurance at the time that you incurred the medical bills, contact your insurer and review your past due charges to verify that you are, in fact, responsible for the payments.

Negotiate a payment plan or ask for a discount off the balance before even making a payment arrangement. Most hospitals and collection agencies will be willing to work out a monthly payment plan or offer a discount. Explain the situation that led you to get behind on your medical bills and discuss how much you can afford to pay every month. You might even be able to negotiate a drastic discount just by asking for the discount rate for those without insurance. It may be more helpful to speak directly with the hospital first instead of only the collection agency.

Work with a debt management agency. If you are unable to reach an agreement with the collection agency or hospital on your own, a licensed debt management group may be able to work with the creditors, negotiate a settlement and help you develop a budget that will allow you to pay off your past due medical bills.

File personal bankruptcy. If you do not have enough income to make regular payments or if collection agencies have filed a lawsuit against you to collect on your past due medical bills, bankruptcy may be your best option. Depending on the type of bankruptcy you choose, your past due medical bills may be erased or you may be able to set up a court-supervised debt repayment program.

How Do Debt Consolidation Programs Affect Credit?

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If your mailbox is brimming with bills for debts that you're unable to repay, there's a chance that debt consolidation programs can help alleviate some of the stress and financial burden associated with out-of-control debt. Make no mistake though, debt consolidation programs can negatively affect credit in some instances, at least in the short term.

Debt consolidation programs help consumers struggling to make large, multiple payments on debts streamline finances by consolidating obligations, sometimes at a discount. Through a debt management plan, consumers make a monthly payment to a credit counseling organization. Lump payments are dispersed by the organization to the consumer's multiple creditors for things like student loans, medical bills and credit card payments according to a negotiated repayment schedule. This may result in waived fees or lowered interest rates, since creditors may feel more confident doing business with a debt consolidation specialist than an unreliable consumer with a shaky payment history.

Although visiting a debt consolidation program counselor to discuss your options won't affect your credit, following their suggestions and guidelines will often result in a short-term negative impact for your credit. Lenders view debt consolidation efforts as a signal that a consumer is struggling to manage credit effectively. This may already be obvious and have negatively impacted your credit through late payments, missed payments or accounts turned over to collection agencies.

When managed effectively, debt consolidation programs can have a long-term positive effect if you're able to successfully make regular on-time payments, pay down debt with the help of waived fees and lower interest rates, avoid having accounts turned over to collection agencies and avoid filing for bankruptcy. However, missing payments that have been negotiated and arranged through debt consolidation programs can worsen your credit, because lenders have already given you a second chance and may require that accounts be closed, lessening the amount of available credit. Paying down debt without addressing underlying issues concerning spending habits or budgeting could land you back in the same indebted situation, facing another credit landslide.

Legitimate groups offering debt consolidation programs hire counselors who are trained and certified to help consumers address debt challenges with education and resources related to consumer credit, money managing and budgeting. Some unscrupulous companies misrepresent their fee scales or encourage consumers to enter debt consolidation programs without fully understanding or presenting a complete menu of options, according to the Federal Trade Commission. When first making payments through your credit counseling agencies, check with lenders to make sure payments are being received and credited to your account before continuing to make payments. Otherwise, you could be hurting your credit when these well-intended payments are misdirected into fraudulent accounts.

Can a Collection Agency Legally Add on Interest in Arizona?

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Although it might be difficult to settle an old debt through a collection agency, it is important to remember that they are governed by federal and state laws. These laws often prohibit them from charging debtors various types of fees.

Arizona collection agencies must adhere to the state's laws for financial institutions. Under these laws, collection agencies cannot add on any fees to an individual's debt that were not incurred as a result of their contract with a creditor.

Although Arizona state laws govern collection agency practices within the state, collection agencies across the country must also adhere to federal laws established under the Fair Debt Collection Practices Act. The FDCPA prohibits collection agencies from attempting to collect interest or any other fees that are not part of the debtor's original agreement with the creditor or that are not legally permitted.

Debtors should carefully review their loan or credit documents to determine whether a creditor has the right to charge interest on their unpaid debt. Debtors should seek legal advice if they feel that a collection agency is charging them interest or fees they're not responsible for. They may file a complaint with the attorney general, the Arizona Department of Financial Institutions and the Federal Trade Commission to have the agency investigated.

How to Get Out of the Telecheck System

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TeleCheck is a company that provides businesses with a network to protect against check fraud. When you write a check in an establishment that uses TeleCheck for verification, your account information is sent to TeleCheck at the time of purchase. The TeleCheck system verifies your information against its records and makes a decision on whether the transaction is risky to the business. The decision to accept or deny the check ultimately lies with the business, but TeleCheck helps it make educated decisions.

Instructions

Contact TeleCheck at the time your check is declined by a business. The retailer should have the number for TeleCheck readily available. They do not know the reason that TeleCheck has advised them to decline the transaction. You will have to resolve this directly with TeleCheck. The number provided by the retailer is the direct line for dealing with customer situations. Also be sure that the retailer gives you the control number in order to reference the transaction with TeleCheck.

Explain the situation to the TeleCheck representative and provide the the control number for the transaction. There are a couple of reasons why TeleCheck may have issued the denial. Perhaps you have a bad check at a retailer that was never cleared up. If so, write down the information. TeleCheck may also decline the transaction because it deems the account activity risky. Verify your identity to the operator and ask the reason why they deemed your transaction to be possibly fraudulent.

Clear up any outstanding bad checks. To improve your standing with TeleCheck, you need to pay all fees associated with the bad checks in addition to the original amount of the check. Fees for returned checks can range from $15 to $50 depending on the laws in the state the check was written. Allow seven to ten business days after paying bad checks and fees for TeleCheck to recognize it and clear you from the system. If the transaction was declined because of another reason, move to the next step.

Examine the transaction details closely for spending patterns you plan to repeat in the future. If the reason for decline is something you plan to do on a regular basis, it may be worthwhile to contact TeleCheck and explain your situation. If this was an isolated incident, such as forgetting your debit card one time and having to write a check instead, then it may not be an ongoing issue for you.

Manage your funds carefully. A history of returned checks can cause problems such as declined checks, negative credit ratings and bank account closings. Consider abandoning check writing in favor of a debit card. This will avoid the problem altogether and is faster in the check-out line. Another option is to arrange for overdraft on your checking account to avoid returned checks.

How to Place a Lien on Personal Property in Massachusetts

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When you get work done on your home, the contractor can place a mechanic's lien on the property if you do not pay him for the work. In Massachusetts, contractors can take the first step towards placing and enforcing a lien before the work is complete, but most don't because they don't want to alienate customers. In any case, if you don't pay the lien, the contractor can go to court to foreclose on your house. Massachusetts allows architects and designers to place liens on property as well; however, if there is more than one lien on the property, the designer's lien is considered a lower priority than the construction engineer's lien.

File a notice of contract with the register of deeds after you complete work on a Massachusetts property. As of July 2011, you have 90 days after the completion of work to file a notice of contract in Massachusetts. You have the option to file the notice of contract as soon as you begin working on the home; however, if you do so, it may make your customers uncomfortable and cause them to choose a different contractor to work with.

File a lien application with the court within 90 days of filing the notice of contract. The lien application provides information about the property, the work you did and how much the property owner owes you. Provide supporting documentation such as invoices or bills proving you did the work. You may wish to consult an attorney to help you file the contract, as the court can dismiss your lien if you do not file it correctly.

Sue the property owner to enforce the lien. This is similar to a regular mortgage foreclosure; you or your attorney basically asks the court to foreclose on the property to satisfy the debt. Show that you placed a lien and that the property owner did not pay. The property owner can stop the foreclosure by repaying the lien before the foreclosure process ends.

Contractors, design professionals, mortgage lenders and the Internal Revenue Service may all file liens against Massachusetts property to satisfy debts. If more than one creditor files a lien against the same piece of property, the court assigns priority to the lien holders. The IRS has the highest priority, followed by mortgage lenders and contractors. Design professionals are the lowest priority lienholders as of July 2011.

Can a Collection Agency Take My Car?

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Facing a collection agency is hard enough, but when the prospect of having your car repossessed looms, you need to know what your rights are. While a creditor is allowed to take your car in certain situations, it can only do so if it has met all legal prerequisites. Talk to an attorney if a creditor is threatening to take your car away or you need legal advice about your debt situation.

When a person's car gets repossessed, it is usually because the person had entered into a secured credit agreement. A secured agreement happens when, for example, you take out a car loan to buy a car and agree to pay the lender back with installment payments. In these transactions the lender "secures" the loan by taking a legal interest in the car, essentially taking the car as collateral. If you've entered into a secured agreement and have defaulted on the terms, the creditor probably has the right to repossess your car.

Let's say you haven't paid your credit card payments in a while and have been receiving endless calls from collectors. Further, you do not have a car loan and own your car without encumbrances. Can a collection agency take your car? Yes, if the agency gets a judgment against you. A judgment is a court order a court gives to the party that wins the case. So, a creditor has to take you to court, win the case and receive a judgment before it can try to come after your car. Once creditors win a judgment, they can attach your assets, impose a judgment lien on your car and take other actions.

So, suppose that you don't have a car loan, the creditor has not sued you and won a judgment and there are no other encumbrances on your car, such as going to a title loan company for some quick cash. In general, a creditor will not be able to take your car. The only way a collection agency can legally take your car is if it has a legal interest or right to take it. Otherwise, the car is your property and no one can take it without your permission.

Not only can a creditor or collection agency not take your car if there is no secured transaction or it has not sued you in court and won, but collectors cannot threaten to do so, either. The Fair Debt Collections Practices Act prevents creditors from using harassing or threatening language. If the collector threatens to take away your property, have you arrested or uses any other threats that are not within its legal authority to carry out, you can file a complaint against that collector. Further, you may be able to take it to court and sue it for money.

How to Consolidate Collection Debts and Garnishments

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Outstanding financial obligations, such as collection debts and garnishments, can be consolidated and managed successfully with a debt-consolidation loan. Debt consolidation reduces the number of debts owed and eliminates high interest rates associated with many debts. You can make one monthly payment at a lower interest rate, as opposed to making several payments each month. Several types of loans are available. Home-equity loans usually charge the lowest interest rates, but you might consider a personal loan if you don't want your house used as collateral. Shop around before committing to a consolidation loan.

Instructions

Make a list that contains the total amounts due on all of your current debts and garnishments. Do not include a mortgage.

Total up the monthly payments of each account. Use a six-month average on any payments that vary from month to month. The total represents the monthly amount that you now pay on debts.

Shop for loans to pay off the balances and consolidate the debts into one payment. Review the annual percentage rates, interest fees and monthly payment amount of each loan. Your goal is for the new monthly payment to be less than the total you have been paying each month.

Choose a loan type and apply for the loan.

Pay each of the balances owed in full upon receiving the loan check.

Control monthly spending and monitor the budget closely. This is a vital step in a successful debt consolidation plan.

What to Do When You Suspect Fraud on Your Credit?

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The convenience of electronic financing has unfortunately ushered in a new threat: credit fraud. The downside of easy money flows through computer systems is the easier access for hackers and petty criminals to this information who use it for personal gain. Victims of credit fraud face a long road of debt disputes and it can take a long time to get their credit score back on track. That is why it is important to take immediate action when there is even a suspicion of credit fraud.

There are three major credit bureaus in the United States: Equifax, Experian and Trans Union. In the event that fraud or identity theft is suspected, notify one of these three companies immediately. Request the credit report in question to be placed on fraud alert. A victim's statement also should be submitted at this time which will inform creditors to make a confirmation call before any new accounts can be opened.

Once you alert a credit bureau about a possible fraud, the other two companies are automatically notified of the discrepancy. Suspicion of credit fraud entitles a person to a free credit report from each of the three bureaus. Scan all credit reports thoroughly to detect inaccuracies and suspicious inquiries. If you find that an account has been opened fraudulently using your information, initiate a dispute with the individual creditor.

As soon as credit fraud or identity theft is suspected, close all compromised accounts immediately. If fraudulent accounts have been opened, close them immediately as well. Make the request to close the account to each creditor in writing.

If and when a creditor forgives fraudulent debts accrued during the period of credit fraud or identity theft, it is important to request a written statement clarifying that the debt has been forgiven.

Check your credit reports every few months, especially when fraud is suspected. This will help you monitor all inquiries and make sure resolved issues stay that way. One free report is allowed each year, but additional reports can always be ordered for a nominal fee.

States That Allow Garnishment of Wages

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All states permit wage garnishment for child support, alimony, student loans and to repay state or federal taxes. According to federal law, the maximum allowable amount for garnishment of wages is 25 percent of an employee's weekly disposable earnings. Some states only permit less than 25 percent of an employee's wages for garnishment. North Carolina, South Carolina, Pennsylvania and Texas allow wage garnishments for child support, alimony, student loans and tax repayments only.

According to California law, up to 25 percent of a debtor's net disposable earnings can be garnished. Once the courts have made a judgment, an employer must first receive a sheriff or marshall's levy. Employee's wages are subject to garnishment until the judgment has been repaid in full. In California, spouses of debtors are also subject to levies because California is considered a "community property state."

Florida has strict regulations on wage garnishment procedures. Debtors cannot face jail sentences for failing to pay a debt or judgment. If a judgment is entered against a debtor, creditors have the right to report a debtor's credit history to the credit bureau. Creditors who obtain a judgment against a debtor are also entitled to request that debtors disclose their income and assets. Although creditors have the right to garnish wages, under the "head of family" exemption, Florida garnishment law restricts creditors from garnishing wages if the head of a household's income is under $500 per week.

Residents of Hawaii have the option of selecting to have their wages garnished using federal guidelines for wage garnishment or Hawaiian law. Under Hawaiian law, debtors can opt to have only 5 percent of their first $100 monthly disposable income garnished, 10 percent of their second $100 per month and 20 percent of anything over $200 per month.

Creditors in Kentucky must wait 10 days after obtaining a judgment against a debtor before they can request to obtain a wage garnishment from the court. After the 10-day waiting period, creditors can mail an order of garnishment to a debtor's employer. According to Kentucky garnishment regulations, employers have 20 days to respond to a court order and are subject to liability laws if they fail to respond within the 20-day period. Debtors have the right to contest garnishment of wages for funds that are exempt under Kentucky law. The state of Kentucky does not permit debtors to garnish non-wage, non-salary incomes such as pension benefits, health and disability benefits, insurance policies and public benefits like workers' compensation and unemployment benefits.

How to Stop a Department of Education Wage Garnishment

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If you've taken out student loans from the Department of Education and have missed payments, your loans can go into default. The Department of Education or a private collection agency hired by the department will attempt to contact you to resolve your debt. If the department determines that you're not willing to repay your loans, it may file to have your wages garnished. Before garnishment goes into effect, the department notifies you in writing 30 days prior.

Instructions

Develop a payment plan. You can contact the Department of Education or its representative agency to develop a repayment plan that works with your current budget. You need to provide the department with details of your personal finances, including your income and expenses. You need to have agreed on a plan and made your first payment prior to the garnishment start date to stop wage garnishment.

Repay the loan. If you have home equity or can take out a new loan through your bank or other lender, you may be able to save on fees and interest, as well as stop the garnishment by repaying the loan in full.

Refinance the loan. Banks or lenders sometimes buy distressed loans. You can also try to apply for a new loan and consolidate your old loan into it. If your loan is in default, you may need to be on a payment plan for several months before your loan is eligible for refinancing.

Ask for a hearing. If you believe that the amount you owe is incorrect or that you don't owe the money, you can request a hearing. You can also request a hearing if the wage garnishment will cause you undue financial hardship. Follow the instructions on the Notice of Intent to Garnish to request the hearing. This must be done prior to the deadline listed in the notice if you want to prevent the wage garnishment.

The Effects of a Judgment on Your Credit Report

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Your credit score is sure to drop once a judgment is added to your credit report. A judgment will remain on your credit report for seven years, according to the Federal Trade Commission, and cannot be removed sooner. The only remedy for the judgment is the passage of time, the FTC reports. The judgment will have less impact on your credit as it ages.

Your credit score is based on the information on your credit report, and your score will drop once the judgment is recorded. How much your score will drop will depend on the other information on your credit report, according to Bills.com. Excellent credit before the judgment could lead to a big drop in score, according to Bills.com, but the drop may not be as severe if your credit was already bad.

A civil judgment for an unpaid debt could make other lenders reluctant to lend to you -- especially while the judgment is recent. Because of the judgment, you could be forced to pay higher interest rates for credit cards and other loans. A mortgage lender could insist that you pay off the judgment before being approved for a home loan.

Your current creditors may freeze your credit lines at the current balances or close your credit card accounts once the judgment is added to your credit report. Most credit agreements give creditors the right to periodically review your credit, and a judgment could indicate that you are having severe financial problems. As a result, other creditors may start closing your accounts for fear that you may default on those agreements as well.

What Is a "Proof of Hardship" Letter for Chase Home Finance?

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Chase Home Finance requires "proof of hardship" letters from customers seeking help with their mortgage payments because of financial problems. Some people are unable to pay their mortgage and are at risk of foreclosure due to reasons including illness, divorce or unemployment. The hardship letter is an explanation of the problem backed by proof, such as a job layoff notice, divorce papers or medical bills. Chase uses the letter to help determine if the homeowner is eligible for loan modification.

People writing a hardship letter to Chase should include detailed information in the letter about their income, assets and debts. The disclosure should list complete information on the debtor's household budget, including all recurring obligations. Examples of recurring obligations are mortgage payments, car insurance, day care costs, utilities and groceries. A listing of all monthly credit obligations is also necessary, including installment loans, student loans and car payments. The debtor should also list all regular income sources, including the net received each paycheck by each borrower listed on the Chase loan. The debtor should list all assets, including money available in retirement accounts and ownership of other real estate, such as rental property. Chase will use the information to determine if the homeowner merits special consideration because of excessive debt or other hardship.

Chase Home Finance is one of more than 100 mortgage companies participating in the federal government's Make Home Affordable program as of 2011. The program encourages mortgage companies to help people avoid foreclosure by modifying the terms of their loans to make the payments affordable. Lenders call the process loan modification because it allows them to change any or all terms of the loan, including the interest rate. The first step in loan modification is contacting the lender. As of 2011, the MakeHomeAffordable.gov website lists 866-989-1356 as the contact number for loan modification requests at Chase Home Finance.

Make Home Affordable is a $75 billion program created to address a rise in missed mortgage payments, defaults and foreclosures in the United States caused in part by high unemployment and a drop in home values. The program remains active as of May 2011. Mortgage companies such as Chase receive payments from the government for each mortgage they modify to help homeowners avoid foreclosure.

Chase Home Finance and other lenders make individual decisions about loan modification based on proof of hardship letters and other information. In 2010 Pro Publica reported that Chase rejected an application from one woman after deciding that her hardship was "not of a permanent nature," according to documents secured by the news organization. In December 2010, the U.S. Treasury Department issued new guidelines for mortgage companies participating in the Make Home Affordable Program. The updated guidelines "explicitly prohibited" mortgage companies from distinguishing "between short-term and long-term hardships," according to Pro Publica.

People who want help writing a proof of hardship letter to Chase can contact a government-approved credit counselor. Counselors certified by the U.S. Department of Housing and Urban Development are available in most communities. The counselors can review the borrower's situation and offer advice on what to say in the letter. Counselors can also discuss how loan modification works. Initial conversations with the housing counselors are free. If necessary, the counselors can contact Chase Home Finance or other lenders directly to discuss loan modification. People can find counselors in their area by seeking referrals from local charitable organizations such as the United Way or Salvation Army.

Statute of Limitations of Dental Bill

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When a person gets dental work done, he agrees to pay the cost of the procedures that he receives from the dentist and his staff. After the procedures have been performed, the person is legally obligated to pay the amount of money that he is billed. If he does not, the dentist or a representative may sue him in court. However, the dentist must sue before the state statute of limitations expires.

Medical bills can be considered a type of written contract. This is because before a person receives treatment from the dentist, he will typically be required to sign a contract in which he agrees to pay for the cost of his treatment. A dental bill, therefore, is just as legally enforceable as any other type of written contract. A dentist can sue the patient in court for breach of contract if the bill goes unpaid.

The statute of limitations on debt collection is the length of time that the creditor -- in this case, the dentist or his bill collector -- has to file a lawsuit against the patient for failing to pay his bill. After this statute has expired and a lawsuit has not been filed, then, although the patient still owes the dentist for the work done, the dentist has limited means of collecting on the debt, as he cannot take legal action to seize the funds by force.

The exact length of time of a statute of limitations depends on the laws of the state in which the debt was taken out. States generally provide different statutes for different types of debts, such as oral contracts, written contracts, promissory notes and open-ended accounts, such as lines of credit. In addition, the start date of the statute of limitations will depend on the laws of the state. Usually, it will begin the date the account went delinquent.

Statute of limitations can, under different circumstances, be reset or extended. In many states, a statute of limitations will be extended if the status of the account changes. For example, if the account is written off, then the statute may reset. Or if the debtor makes a payment on the account, then the statute of limitations may similarly be reset. In addition, sometimes a judge can order a statute extended.

How to Pay Less on a Collection Agency Notice

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Creditors typically have more difficulty collecting old debts than recovering recently defaulted accounts. Most creditors, such as bank and credit card companies, consider a debt uncollectible after 180 days and send the account to a collection agency to recoup a reduced amount. Because collection agencies purchase debts for less than their total value, a collector can offer you a settlement and still make a profit on the account. You do not need to accept the first settlement offer the collection agency proposes. Instead, negotiate with the company for the lowest settlement balance possible.

Instructions

Examine your finances. Determine how much you can comfortably afford to pay the collection agency in a settlement before initiating negotiations.

Call the collection agency. Ask to speak with a supervisor or someone with the permission to negotiate a settlement. While some collection agencies grant this ability to all debt collection agents, others only permit supervisors to negotiate settlements with consumers.

Inform the debt collector that you cannot pay off the collection account in full, but would consider a settlement. Quote the agent a price lower than that which you can afford to pay. You're more likely to pay less by negotiating up from what you want to pay than negotiating down from what the collector wants you to pay.

Implement any negotiation tools at your disposal. For example, if the debt you owe is particularly old and your state's statute of limitations for lawsuits has already passed, you may point out to the collector that the company has no other collection options should it not accept your settlement.

Request that the collector send you the details of the agreement in writing and signed by a company representative once you reach a compromise. Without a written agreement, you possess no proof that the company offered you a settlement and you were not merely making a payment. Without a written agreement, unethical collectors can then continue pursuing you for the unpaid balance.

Send payment to the collection agency via a money order. This ensures that the collection agency receives payment without granting the company direct access to your bank account.

How to Stop Your 401(k) Contribution to Pay Off Debt

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Many individuals contribute tax-deferred income to their 401(k) retirement account through their job to take advantage of their employer's matching contributed funds. However, if you are trying to pay off debt, you may want to temporarily stop your 401(k) contributions to get some extra cash in your paycheck. Doing so is relatively simple, but there are certain things you need to consider and steps to take.

Instructions

Visit your human resources department and ask to stop your 401(k) contributions. Each human resources department has different procedures for doing so. In some cases, simply asking is enough to end your contributions. Most often, however, you will need to formally request in writing that the deductions stop. Some companies even have online websites where you can go to manage your 401(k) contributions. Your HR department is the best place to go since its staff can tell you exactly what you must do in your company.

Ask your human resources representative to calculate how much more money you will bring home in each paycheck by stopping your 401(k) contribution. Don't assume that just because you are contributing 10 percent of your income, your checks will be 10 percent higher. That is because 401(k) contributions are made with pre-tax dollars, while you are paid after FICA (for Social Security and Medicare) and other taxes are taken out of your check.

If possible, set up automatic withdrawals from your checking account that will go to the lender of the debt you are trying to pay off. Make the withdrawal equal to the amount of extra money you will be bringing home as a result of your stopped contributions. You want to do this to ensure that the extra money you bring home really does go towards paying off debt instead of being diverted towards other expenses. That way, you can get back to saving for your retirement as quickly as possible.

Credit Bureau Complaints

8:14 PM No comments

Consumers over the age of 18 rely on the ability to obtain credit for vehicles, homes and student loans. Consumers rely on the three consumer reporting agencies to collect and maintain their credit information. When consumers find errors or learn they have been victimized by identity theft, they need the credit reporting agencies s to be responsive in correcting the information.

All three consumer reporting agencies (Experian, TransUnion and Equifax) agreed to a cumulative $2.5 million settlement after the Federal Trade Commission found that each CRA violated certain provisions of the Fair Credit Reporting Act. Each CRA failed to maintain a toll-free phone number for consumers to ask about their credit reports. The FCRA requires the consumer reporting agencies to give consumers access during normal business hours. The complaint filed by the FTC claimed that the credit reporting agencies blocked millions of callers who needed to ask about entries in their credit reports. Some consumers who were able to reach the CRAs were kept on hold for "unreasonably long periods of time," and other consumers found their calls blocked based on the location and area codes where the calls came from.

Robyn Mueller filed suit against Equifax after the CRA failed to stop mixing up her credit information with that of her twin brother, Robert Mueller. Ms. Mueller sent several dispute letters to the agency beginning in 2006, telling them they were mixing her information up with her brother's information.

When the dispute letters had no effect, she resorted to sending copies of her brother's driver's license, pay stubs and other identifying information. The agency still did not make the requested corrections. Ms. Mueller's problems with Equifax and the errors in her credit report effectively caused her not to have a credit score, according to Give Me Back My Credit.

Consumers rely on accurate credit reports so they can access credit to buy vehicles, qualify to buy a home and obtain student loans. When they are unable to reach the CRAs to discuss inaccurate entries, suspected identity theft and how to resolve these issues, their rights under the FCRA are violated. In September 1997, Congress amended the FCRA to require each CRA to give consumers access to company representatives during regular business hours. Exquifax's failure to respond to and make corrections in Robyn Mueller's credit report effectively took her credit score away from her, denying her access to credit and making it impossible for her to obtain loans. Failure to correct incorrect entries in consumer's credit reports is a form of identity theft, according to Give Me Back My Credit.

Fair Credit Collection Act of Pennsylvania

8:14 PM No comments

Debtors who live in Pennsylvania are beneficiaries of federal and state laws that protect their rights against abusive bill collectors. While the federal Fair Debt Collections Practices Act (FDCPA) protects consumers against many collection tactics, including late-night and early-morning phone calls and violations of privacy, Pennsylvania's Fair Credit Extension Uniformity Act (FCEUA) offers debtors additional protections.

A bill collector cannot contact you at a time or place that is inconvenient for you to take his calls. Both Pennsylvania and federal law state that an inconvenient time should be assumed as before 8 a.m. or after 9 p.m. unless the collector has been informed otherwise. A bill collector cannot contact you at work if you have informed the collector that your employer does not permit you to take such calls. The collector may not contact you via postcard, and the FCEUA states that a collection agency's envelopes must only contain its name and return address: No other words or symbols are allowed.

If a bill collector has to contact third parties, such as friends, relatives, employers or neighbors, to locate you, the collector is not permitted to disclose that you owe a debt, and is only required to disclose his employer if asked. The collector cannot contact someone more than once to ask about your whereabouts, unless that person gives the collector permission to call, the collector has reason to believe that the person gave him inaccurate information or may have more information to give him.

Pennsylvania and federal law make it illegal for a bill collector to make empty threats against you. For example, a bill collector can't threaten to sue you if she doesn't actually intend to file a lawsuit. A bill collector also can't threaten to take an action that is not permitted under federal or state laws. Pennsylvania law does not allow wage garnishment, unless the debt is for a student loan, taxes or child support payments. If your debt doesn't fall under one of these categories, and you live in Pennsylvania, it is illegal for a debt collector to threaten to garnish your wages.

Bill collectors cannot require you to pay additional fees or interest unless the law allows for such charges, or your original contract permits such additional charges. The FCEUA also makes it illegal for the collector to deposit a postdated check before the date actually written on the check.

The Pennsylvania Attorney General's website advises consumers to avoid excessive debt altogether, and to keep good records of their regular bills and expenses. If a bill does not arrive in the mail, you should contact your creditor at once to avoid late fees and negative reporting to your credit reporting. Never ignore a bill from a creditor or a letter from a collection agency. If you think that the creditor or collector sent you a bill in error, contact the sender to get the matter cleared up. Ignoring a communication from a creditor or bill collector can make matters worse over time, and seriously damage your credit report.

Welcome to our website credit and debt managementr.

Monday, March 31, 2003

Facts

Joint Liability

Garnishment Process

Other Concerns

Joint Debt

Divorce Decree

Creditors

Pay Down Credit Car Debt

Stop Charging Everything

Check Your Credit

Order Score Watch

Saturday, March 29, 2003

Instructions

Friday, March 28, 2003

Instructions

Instructions

Benefits

Paydown Method

Interest Rate

Bonuses

Settlement

Balance Transfer

Thursday, March 27, 2003

Small Claims Court

Why Small Claims?

The Process

Legal Representation

Instructions

Factors in Determining Debt-to-Income Ratios

Healthy Debt Ratios

Debt Ratios Showing You May Be At Risk

Debt Ratios Signaling Trouble

Instructions

Wednesday, March 26, 2003

Instructions

IRA plans

401(k) Loans

Disadvantages of Borrowing Against a 401(k)

Margin Borrowing

Monday, March 24, 2003

Types

Identification

Benefits

Considerations

Benefits

Types

Sunday, March 23, 2003

Instructions

Causes

Process

Limitations

Avoidance

Considerations

Saturday, March 22, 2003

Debt Management Program

Debt Consolidation

Methods That Hurt Your Credit

Considerations

Instructions

Friday, March 21, 2003

Home Equity

Debt Consolidation Loan

0% Interest Credit Cards

IRAs and Creditor Protection

Recourse and Nonrecourse

Foreclosure in a Recourse State

Alternatives

History

Features

Causes

Effects

Solution

Thursday, March 20, 2003

Necessity of Judgment

Writ of Garnishment

Exemptions

Considerations

Instructions