Welcome to our website credit and debt managementr.

New offers options to American consumers who need an effective debt reduction plan. We have settled over 150 million dollars worth of unsecured, credit card debt while saving clients thousands of dollars. AmeriGuard believes it is important to make an informed decision especially when it affects your financial health. Understanding your options can be overwhelming; that’s why we offer experienced, knowledgeable guidance along the way. provides the information you need to participate in creating a better future..

Thursday, July 31, 2003

Consolidating Credit Vs. Not Consolidating Credit

Consolidating Credit Vs. Not Consolidating Credit

Credit debt can sometimes get out of control and consumers are forced to consider their debt management options. One option is debt consolidation. Consumers who are not familiar with the process of consolidation may not consider taking advantage of it. Understanding the process of consolidating credit versus not consolidating credit will assist consumers in making that financial decision.

Taxes

    You can help your tax situation when you consolidate debt, depending on how you get your debts under one payment. If you use a home equity line of credit or a refinanced mortgage to finance your debt consolidation, then your debt has moved into an account where the interest is tax deductible, according to Geoff Williams, writing on the Wallet Pop website. If you do not use home loans or lines of credit to consolidate your credit card debt, then you lose that deduction because credit card interest cannot be deducted from your taxes.

Service Charges

    If you have six credit card accounts, you are paying six sets of service charges. You are also subject to six sets of penalties and fees if your payments are late. With debt consolidation, you reduce the amount of service charges you pay by reducing all of your active debt from one account down to just one. Even if your payment is late from time to time with your debt consolidation account, you are only subject to one set of penalties and fees.

Improving Your Credit

    The amount of money you have charged against your credit limits is one of the factors that lenders use to determine whether you can afford a new loan, according to the Lending Tree website. When you consolidate your debt you are removing the balances from your credit accounts but keeping the credit accounts open. That means that you are increasing the amount of available credit you have available. That can increase your credit score and give you access to financing for a new home or new car.

Lowering Your Interest Debt

    You consolidate debt with a loan or program that has a lower interest rate than your credit cards. If the average interest rate on your current credit cards is 18 percent, and your consolidation account is 10 percent, you reduce your interest debt. Also figure that multiple credit card balances compounding interest individually are going to cost significantly more than a single balance compounding at a lower interest rate.

Tennessee Consumer Rights When Sued by a Collection Agency

The Consumer Credit Protection Act protects the rights of a consumer sued by a debt collection agency in Tennessee and other states across the country. This law caps the amount of money a collection agency or creditor may pursue through wage garnishment, allowing a consumer to keep funds necessary to meet living expenses. Each state, including Tennessee, also sets a statute of limitations providing a set amount of time a creditor has to legally collect.

Statute of Limitations

    The statute of limitations for debt collection in Tennessee is six years for all written contracts and open accounts. The most common debts associated with these types of accounts are credit cards, personal loans, lines of credit and medical bills. A collection agency has this amount of time to legally sue a debtor in civil court. If a collection agency sues a debtor after the particular statute of limitations expires, the debtor gains a legitimate defense. The debtor simply makes the court aware of the time-barred status of the debt and the court dismisses the case. The court may also bar the collection agency from bringing future suits against the debtor for this particular account.

Wage Garnishment Rights

    Wage garnishment is legal in Tennessee. This means a collection agency winning a judgment against a debtor could file to garnish wages for the payment of a debt. The state follows federal guidelines for wage garnishment allowing a creditor to seize up to 25 percent of a debtor's disposable weekly income or the equivalent of 30 times the federal minimum wage in weekly income---whichever is less. Tennessee law allows a collection agency with a domestic judgment up to 10 years to recoup the debt in question.

Maximum Interest Rates

    State law caps the interest rate a creditor or collection agency may charge a debtor when collecting on a judgment resulting from a lawsuit. According to BCS Alliance's website, as of June 2011, the interest rate a creditor or collection agency may charge on debt collection caps at 10 percent or the specific rate of the original contract. This means the interest tacked on to a judgment resulting from a lawsuit could be higher than 10 percent if the debtor originally agreed to a higher amount when he received the loan or line of credit.

Negotiating Payment Terms

    A consumer sued by a collection agency in Tennessee or other states in the country may be able to lower judgment and garnishment amounts by claiming the seizures of funds leaves too little to support essential life activities. For example, a construction contractor needs enough income to purchase equipment and operate her business. Additionally, federal law protects an employee from retaliatory termination for any judgment, including wage garnishment, brought for a single debt.

What Can You Use As Collateral for Personal Loans in Texas?

What Can You Use As Collateral for Personal Loans in Texas?

State laws govern commercial and personal loan transactions. In Texas, the Office of the Consumer Credit Commissioner enforces the state's lending laws protecting consumers from deceptive lending practices. The unique homestead laws in Texas prohibit personal loan lenders from taking exempt homestead property as collateral. Lenders cannot collect certain types of personal and real property from borrowers who default on their personal loans.

Homestead Protection Statutes

    The Texas homestead real property protections allow lenders to accept real property as collateral from borrowers if they secured loans to improve property, to initially purchase the home, for nonpayment of property or federal income taxes or nonpayment of debt secured to improve the property. Other lenders cannot require borrowers to pledge their real property as collateral for their loans. Debt collectors cannot take homestead real property, defined as one acre of land and a residential house in urban areas or up to 200 acres of rural land and a house in agricultural areas.

Homestead Real Property

    The first Texas homestead protection laws were passed in 1839 by the Texas Legislature in response to the frequency in which Texas families lost their farms and homes during the Panic of 1837. Due to the dismal state of the economy at that time, the legislative assembly adopted homestead laws protecting families from foreclosure of their homes and agricultural property. Today, the Texas Constitution prohibits lenders from foreclosing on homestead property for specific types of debt. Since most personal and real property is exempt under the homestead protection statutes in Texas, creditors are generally unable to collect their collateral and unable to enforce their collection judgments when borrowers default on their loans.

Homestead Personal Property

    Texas law also prohibits lenders and judgment creditors from taking certain personal property under the homestead protection laws. The Texas personal property homestead laws exempt most personal property from debt collections. Exempt personal property is limited to $60,000 for married debtors and $30,000 for single debtors. In addition to protecting all personal property up to $30,000 or $60,000, Texas law exempts specific types of personal property above the maximum limits. The Texas personal homestead exemptions include home furnishings, food, one vehicle for each family member able to drive, domestic pets, clothing and jewelry limited to one quarter of value, tools and equipment. Furthermore, family heirlooms, farm animals and feed, sports equipment, boats and cars used for business, books and children's toys, two handguns and life insurance policies are exempt from collections.

Considerations

    Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

Wednesday, July 30, 2003

A Plan to Pay Off Debt

A Plan to Pay Off Debt

Creating an effective plan to pay off debt requires carefully evaluating your debt and finances, and choosing a path that's right for your situation. There are clear advantages to eliminating debt, such as a higher credit score and easier loan approvals. You didn't accumulate debt overnight, so don't expect quick results. Be patient and stick with your plan to gradually reduce balances.

Start With the Lowest Balance

    There are several methods to getting rid of credit card debt; and while some people choose to start with the credit card with the highest interest rate or highest balance, paying off your lowest balance first can provide a sense of accomplishment and motivate you to continue your debt elimination efforts. You can pay off a credit card with a $500 balance quicker than a credit card with a $2,000 balance.

Talk Down the Interest Rate

    Get on the phone with your credit card companies and start negotiating the interest rate on your cards. The interest you pay plays a major role in debt elimination. Interest incurs monthly, and the amount of interest charged by your card company effects how fast you're able to reduce your principal. Ask for a rate reduction on the spot, and inquire about any promotions such as zero percent interest for six to 12 months. A good payment history -- no late payments -- and a good credit score helps you qualify for better rates.

Increase Minimum Payments

    Credit card companies do not request large payments, and they base the minimum on a percentage of your card balance. But even if your card company only asked for $20 or $30 a month, aim to send in higher monthly payments to start bringing down your balances. For example, take the extra $200 you have a month and pay down a $1,000 balance in about five months.

Avoid New Debt

    Resisting the urge to use your credit cards or take out new loans is key to paying off debt. Include a "cash-only" policy in your plan to pay off debt and do not pull out your credit cards. Shop when you have money to pay for an item with cash; and if dealing with self-control issues, use scissors to cut your card in two or place them in a card shredder.

What Can Happen if I Have a Warrant for an Unpaid Loan in Oklahoma and I Don't Pay It?

When a person owes money to a creditor, the creditor has the right to take the person to court, as long as the statute of limitations on the debt has not expired. However, according to U.S. federal law, a person cannot be arrested for failing to pay a loan. That said, if a person in Oklahoma, as in other states, violates a judge's directives in a case, he can be arrested or have a warrant issued for his arrest.

Unpaid Debt

    When a person fails to pay a debt, the creditor has the legal option of suing him for breach of contract. When a person is sued, he is obligated to appear in court and, once in court, to comply with a judge's directives in the case. In a debt lawsuit, a judge may order the defendant to do many things, including provide financial information, such as bank account numbers.

Warrants

    While a judge cannot legally jail a person for failing to pay a debt, he can jail a person for failing to comply with orders designed to aid the plaintiff in a case in the collection of that debt. For example, if a defendant fails to provide a plaintiff with a complete record of his bank accounts, a judge may order him jailed for contempt. If he does not show up at a required hearing, the judge may issue a bench warrant.

Oklahoma Law

    In Oklahoma, a person who has an outstanding warrant will, if discovered by law enforcement, be arrested and placed in jail until he can appear in court. However, a person should not confuse a warrant for his arrest with a notice from a court demanding that he appear before the court on a certain day. The later is known as a summons, not a warrant, and will not result in the person's immediate arrest.

Considerations

    A person will never be arrested and jailed simply for failing to pay a loan. If a lender or other party threatens a person with arrest for not paying a loan or states that there is a warrant out for the person's arrest, then the person is lying and acting in violation of federal law. Also, if a warrant is out for an offense stemming from a debt lawsuit, then it may be honored in other states, or it may be ignored.

The Debt Relief Options When Debt Settlement Is a Better Option Than Bankruptcy

Consumers who find themselves deep in debt and unable to pay their bills need a solution to their debt problems. Daily, non-stop phone calls from collectors or pending lawsuits or judgments against you can create crippling stress levels. You could look to bankruptcy for relief, but debt management may be a better option.

Circumstances

    Bankruptcy allows a debtor to discharge their debts under the supervision of the bankruptcy court, in exchange for the surrender of all non-exempt property for sale with a Chapter 7 bankruptcy, or submitting to a court ordered re-payment plan for up to five years with a Chapter 13. If you have property that you do not want to lose in a bankruptcy, or you find the repayment plan to be too restricting, then debt settlement may be a better option for you.

Debt Management

    A debt management plan is a debt repayment strategy worked out using a credit counselor's assistance. The counselor helps you develop a budget determining how much money you have left over to pay creditors. The counselor can often negotiate reduced interest rates or payments with creditors, and facilitate civil communication between all of the parties, making the process go smoothly. Debt counselors can also provide you with training on how to manage your finances, providing more help over the long term.

Debt Settlement Companies

    Many people deeply in debt turn to debt settlement companies as a solution to their financial troubles. You make payments to the debt settlement company, and it accumulates the money until there is enough to negotiate a settlement with a creditor. Then, they attempt to negotiate a lump sum settlement in full with the creditor. In the meantime, creditors will continue try to collect, and could even sue you before the settlement company gets around to paying them. Many debt settlement companies charge enormously high fees before they do anything for you. Unfortunately, many companies offering "easy" debt settlement are just scams.

Do It Yourself

    You can arrange your own debt settlement without involving anyone else. Save up money to work a settlement. When you have enough saved to pay off half of the balance on one bill, call the creditor and offer a settlement. Depending on the type and age of the debt, you can start negotiating at about 20 percent of the balance. You will probably settle the debt for a 20 to 70 percent one-time immediate payment. This will only work with bills that are past due, but it can be an effective way to clean up older debts.

How to Get a Garnishment Removed From My Checking Account

Your checking account can be frozen and garnished by creditors looking to collect on owed debts. The creditor obtains a court order permitting the removal of funds from your checking account to satisfy a money judgment, tax debt or support order. The order is served on your bank, freezing your account. You cannot access your money while the account is frozen, and once the time dictated by state law has passed for you to challenge the action, the money owed is removed from your account. Your checking account can be brought down to zero or a negative balance due to bank fees because of a garnishment unless you take immediate action.

Instructions

    1

    Contact the creditor garnishing your account immediately. Ask what you need to do to have the lien released or the account unfrozen. Some creditors will offer you a payment plan and request a small down payment in return for ceasing a collection action against your checking account. Negotiate with the creditor for payments you are able to afford. Get any repayment agreement you make in writing.

    2

    File for bankruptcy. This grants you an automatic stay against collection actions from creditors. Inform the court and your attorney of the filing to ensure your checking account is released as soon as possible.

    3

    Visit your bank if some or all of the funds in your checking account are exempt from garnishment. Some types of funds cannot be garnished under federal law, like Social Security benefits. Ask for a copy of your checking account history for proof of deposits of exempt funds.

    4

    Contact the creditor if you have exempt funds in your account. Inform the creditor the funds cannot be garnished under federal law. Submit proof of the exempt deposits.

    5

    Contact an attorney if the creditor will not release your checking account with exempt funds. Contact the bar association in your area for a list of attorneys who handle fair debt collection cases.

How to Settle Credit Card Debt for 50 Percent

Settling your credit card debt for 50 percent of your total balance is possible, but the degree of difficulty will vary depending on the individual situation. For example, someone who appears to be in good financial condition will have a hard time convincing the credit card company to settle the debt for 50 percent. However, if they feel they may lose the entire debt to a bankruptcy or charge off, the company may be willing to work with you.

Instructions

    1

    Begin saving every spare dime you can to pay off your debt. Credit card companies may be willing to settle the debt for 50 percent, but you should be prepared to pay that 50 percent in full at the time of negotiation. If your debt is $20,000 and you want to try and settle for half of that amount, be prepared to have the $10,000. In the case of higher balances, you may be able to negotiate two or three payments to pay off the credit card debt for 50 percent.

    2

    Call your credit card company and ask them about working out a settlement. They may inquire as to why you need to settle your debt, so be prepared. If you have bank statements and pay stubs, they may ask to see copies. Very often the credit card company will want to mail or fax you over a packet of paperwork for you to complete before they will work with you.

    3

    Consult a debt settlement attorney if your credit card company will not work out a settlement agreement for you. Remember, this may cost you a little money up front, so be sure it is something you can succeed at. Most attorneys offer a free consultation, during which they will inform you if you have a good case or not.

    4

    Contact a credit counseling service for an appointment. They have negotiating power with credit card companies, as that is their speciality. Explain what you need, and see if they are able to help. Find a reputable company that will not charge you any money by calling your county's job and family services department.

    5

    Speak to a superior at the credit card company. Call every day and always ask to speak to the operator's supervisor. At some point, you will reach someone who is willing to negotiate with you.

Tuesday, July 29, 2003

How Often Can I Petition for Bankruptcy?

Job loss, divorce or illness can reduce income, and if you're unable to pay your bills, you may consider bankruptcy as a solution to overwhelming debts and creditor harassment. However, there are consequences to filing bankruptcy and limits to how often you can petition the courts for help.

Definition

    Consumers can file either a Chapter 7 or Chapter 13 bankruptcy. Both types of bankruptcies help with debt management. Under a Chapter 7 bankruptcy, debtors can possibly have debts eliminated or discharged by a court, whereas a Chapter 13 bankruptcy reorganizes debts and debtors must repay a percentage of outstanding bills through a repayment plan. Bankruptcy can help debtors get back on track and give them a fresh start.

Consequences

    The dissolution of some or all debts is a major advantage of filing bankruptcy. But it comes with a hefty price. Credit scores decrease significantly after a bankruptcy. Some debtors cannot qualify for mortgage loans, auto loans and credit cards until they rebuild their credit history and raise their low credit scores. In addition, bankruptcy information stays on credit reports for 10 years.

Time Frame

    Debtors can file bankruptcy multiple times. However, there are limits to how often a debtor can submit a petition for bankruptcy. Debtors who have filed a previous Chapter 7 bankruptcy can file for another Chapter 7 after eight years. On the other hand, if filing a Chapter 7 after a prior Chapter 13, debtors must wait six years before petitioning the courts. Debtors can petition for another Chapter 13 two years after a prior discharge, and four years after a previous Chapter 7.

Considerations

    Bankruptcy is severely damaging to your credit history. Even if you're behind on existing payments to creditors, working with creditors to negotiate an affordable payment amount or plan can help rectify your debts without a bankruptcy petition. Once aware of your financial hardship, your creditors may reduce your interest rate on loans, decrease your monthly payments or defer payments until your finances improve.

Acceptable Consumer Debt Ratio

The acceptable consumer debt ratio is an elusive number, with no real agreement amongst experts as to how much debt, if any, a person should carry. American society has also become enamored with debt, and people justify high debt loads in many different ways. Personal finance is personal, and you must make your own decisions as to what is acceptable with the help of solid guidelines, and by ignoring other people's foolish decisions.

Credit Utilization

    Consumers interested in having the highest FICO credit score possible need to either carry some debt or use credit cards and pay them off monthly. An important component of your credit score is the credit utilization ratio. For the highest possible FICO scores, you should use no more than 30 percent of your available credit in any given month, with 10 percent being even better. If the credit lines on all of your credit cards total $5,000, you should never have a total balance higher than $1,500, with $500 being even better.

Mortgage Accepted Amounts

    If you are applying for a conventional mortgage, the loan underwriter will have his own idea about what an acceptable consumer debt ratio is. Generally speaking, you should pay no more than 36 percent of your total before-tax income in debt payments, including your proposed mortgage. The government is willing to take a bigger risk with Federal Housing Administration loans, and may let that total debt ratio rise as high as 41 percent, or even higher if you have excellent credit.

Debt-Free Living

    To some consumers, there is no acceptable consumer debt ratio. These people say that any amount of debt is unacceptable, and that you should strive to live debt-free. They make a good case for this lifestyle. You can financially prosper in the long term when you don't make payments every month including interest. People live a more peaceful life when they are not worried about making payments, and what will happen if you do not make them. Also, without consumer debt payments, you can fund an adequate retirement and emergency fund, and be ready when a financial problem, such as a job loss or illness, affects your life.

You Can Do It

    Skeptics say that debt free living is not possible today. "You will always have a car payment" is a phrase commonly used by such people, usually as a way of justifying a new car purchase. They may also justify credit card use by the rewards or benefits that they receive. With some effort, any person can live a debt-free lifestyle. You may need to drive used cars, and save some money to pay cash for them. You may have to use your debit card or cash, or maybe carry one credit card with a low limit that is paid off each month. For many, these sacrifices are not sacrifices at all, and are a way to live a free, happy life.

5 Positive Uses for Credit

Many people have lines of credit, whether in the form of loans or credit cards. Many, however, fail to use such lines of credit wisely. But lines of credit can work to your advantage. In some circumstances, a line of credit is the only way to increase your net worth or get yourself out of risky situations.

Home Purchases

    When purchasing a home, credit comes in the form of a mortgage. Not only does owning a home remove the obligation of paying rent, but it also gives you your own piece of collateral that can be used for future financial decisions. Owning a home also gives you personal benefits, as it is difficult calling rented accommodation your family's own. Furthermore, most people do not have the cash available for purchasing a home outright, and the money spent on rent may be used for a mortgage instead.

Emergencies

    Credit also comes in handy during times of emergency. If you need to purchase a plane ticket on very short notice, you can use a credit card for the transaction. You can then pay off your purchase either when your next paycheck arrives or in manageable chunks. Having a credit card and paying it off diligently will also increase your credit score.

Auto Loans

    Another form of positive credit is in the form of an auto loan. But, as with any loan, some auto loans have very high rates of interest for those with bad credit. Avoid such loans and consider saving for a cheap used car instead.

Investments and Business Ventures

    Most investments use lines of credit for project financing. An example would be a real estate development project. In such projects, a selection of investors usually put up portions of the collateral, but the majority of the project is funded by construction loans. Such loans are designed to be paid back after the project is completed and the development is sold off. The project's revenue minus the construction costs results in the project's profit, which would not be realized without the use of a loan. Like investments, many businesses get off the ground with the use of a start-up loan. Such loans are only given to businesses deemed financially viable.

Student Loans

    If you cannot afford the full tuition bill for four years of university, a student loan, backed by the federal government, may come to your aid. Such loans tend to have favorable lending terms such as low interest that is compounded on a simple, rather than compounded, basis. Repayment terms begin at 10 years and may be extended through consolidation. You can also use student loans to expand on your existing qualifications by pursuing graduate degrees.

Monday, July 28, 2003

How to Get a Debt Discharged

As time goes by, an unpaid debt will age. Although a statute of limitations is present in each state that regulates the amount of time an individual or company has to file a lawsuit against you to recover the debt, that does not change the fact that you still owe it. The only true way to legally discharge an outstanding debt is to have that debt included in a Chapter 7 bankruptcy. If you file bankruptcy on your debt, the court may dispose of your legal liability to repay what you owe.

Instructions

    1

    Find out if the debt is eligible to be discharged in a bankruptcy. Some debts, such as unpaid child support, student loans and felony judgments cannot be discharged.

    2

    Compare your current annual income to the median household income for your state. If your annual income is higher than the median household income, you will not be eligible to discharge your debt in a Chapter 7 bankruptcy. You must also not have had a bankruptcy dismissed at any point during the last six months. The median household income for each state can be found on the U.S. Trustee Program's website.

    3

    Compare your debts to your assets. In a Chapter 7 bankruptcy, all of your nonexempt assets will be sold and the proceeds will be used to pay your debts. If your assets are worth more than your debts, a discharge of debt may not be possible.

    4

    Seek credit counseling with a government-approved credit-counseling agency. Although credit counseling may seem redundant if you are attempting to discharge debt rather than repay it, this is required by law before you will be permitted to file for bankruptcy.

    5

    File for bankruptcy at the county clerk's office. You will be asked to provide a list of your assets and income, your legal exemptions, your debts and a list of the creditors that you owe. You will then be notified of the date of your creditor meeting.

    6

    Attend the meeting of creditors. If you do not attend, your bankruptcy will be dismissed and your debt will not get discharged. Your creditors have the option to attend the meeting and question you about your financial situation.

    7

    Attend any following hearings that are scheduled to evaluate your case. The hearings scheduled may differ depending on the complexity of your bankruptcy. The standard Chapter 7 bankruptcy is complete after three months. Any outstanding debt owed beyond what your assets will cover will be discharged.

Sunday, July 27, 2003

Can Unemployment Garnish My Federal Taxes?

When a person is laid off from his job, he will often, if eligible, choose to receive unemployment benefits from his state government. These benefits are used to pay basic bills. However, if the person is awarded benefits incorrectly or through fraud, he may owe the state money, which can be collected through garnishment.

Unemployment Benefits

    Unemployment benefits are only eligible to certain workers, namely people who have been laid off for reasons that were not their fault. These benefits are free -- a person does not have to pay any kind of fee to receive benefits -- although she must usually pay taxes on them. However, if she receives more money than she should, the money she owes back constitutes a debt to the state.

Garnishment

    Wage garnishment is when a creditor seizes money out of a person's paycheck or siphons it off from another source of income. Garnishment will often be used by creditors when a debtor is unwilling to pay what he owes. Garnishment is available to state governments who are owed money as well as private creditors. However, some forms of income cannot be legally garnished.

Federal Taxes

    If a person overpays to the IRS on his federal taxes, then the person may be provided with a tax refund -- a check from the government in the amount of the overpayment. According to federal law, only the United States federal government agencies are allowed to garnish a person's income tax refund. A state government agency cannot garnish this money, although it might be able to take it out of the debtor's bank account.

Bank Account Seizure

    When money is deposited in a bank account, it is sometimes available to creditors. Much like the receipt of a garnishment order, creditors can receive an order from a judge that allows them to take money out of a person's bank account if she owes them money. While tax refunds are protected against seizure through garnishment, they are not protected once they have been deposited in an account.

Saturday, July 26, 2003

How to Avoid Creditors Seizing Your Bank Account

If a creditor threatens to seize or levy your bank account, take action. You have several options for protecting your funds, including working out a payment plan, segregating protected funds and proving financial hardship to the court. As a last resort, you can also file for bankruptcy, which stops all collection activity, including asset seizures.

Instructions

    1

    Contact your creditor directly to work out a payment plan or negotiate a settlement. Ideally, you should do this before the creditor files a lawsuit, as most creditors must win a lawsuit against you before they can seize your assets. If you prevent a lawsuit from occurring, you eliminate the risk of a bank account levy. If a creditor successfully sues you, you should still attempt to work out a direct payment arrangement. Since levying an account requires additional paperwork and trips to court, your creditor may still be willing to work with you.

    2

    Segregate protected funds from the rest of your assets. Some assets cannot be garnished by most creditors, including Social Security income, unemployment compensation and, in many states, retirement and pension funds. However, it is up to you to protect these funds by placing them in a separate account from your other assets and then notifying the court, and your creditor, that the funds in this separate account cannot be levied.

    3

    File a hardship exemption request with the court. In many states, you can protect your financial assets by showing the court that their seizure would result in a serious financial hardship for you or your family. Forms for requesting a hardship hearing are available at the courthouse. Be prepared to document your hardship claim with copies of recent bills, pay stubs and bank statements that show your household income and expenses.

    4

    Talk to a bankruptcy lawyer. If you truly cannot pay your debts and do not anticipate being able to do so in the near future, bankruptcy may be your best option. Once you file for bankruptcy, an "automatic stay" against your creditors goes into effect. This prevents your creditors from contacting you about your debt and stops wage and bank account garnishments.

Negatives of Debt Negotiation

If you have extremely high credit card balances and interest rates, negotiating with your creditors to force a settlement seems like a logical path to save money and solve your financial woes. However, merely suggesting to a creditor that you wish to negotiate your outstanding debt can cause problems, and the impacts can become even more severe in the future. Whether you choose to negotiate with the creditors yourself or with the fee-based assistance of a third party, the negative consequences of this approach are far-reaching.

Account Closure

    Sometimes, just the indication to your creditor that you wish to negotiate and settle your outstanding credit card balance is reason enough for the creditor to immediately close your account and put it into a default status. This may mean higher interest rates, inability to use your credit account for future purchases, and loss of available credit. Having your account closed may also result in the loss of your reward points or outstanding cash-back rebates. Even if you were just curious as to what your negotiation options may be, the creditor may panic and simply close your account to limit future liability.

Negative Credit Reporting

    Creditors are not likely to negotiate with you as long as your account is in good standing. If monthly payments are coming in, even if only the minimum amount and you don't exceed the credit line, creditors are typically happy. Often, getting your creditor's attention for a negotiation means missing payments and getting your account placed into a charge-off or high-risk status. At this stage, the creditor is more likely to talk to you about possible debt settlement. Unfortunately, being delinquent on your payments for 90 or 120 days is a negative on your credit report. Expect further damage to your credit after a negotiated settlement.

Tax Liability

    If you settle a credit card debt for less than what you owe, you may find yourself on the wrong side of a tax liability. When a creditor receives the negotiated payment, he may issue a 1099-MISC IRS tax form to you for the debt written off. The creditor views this as income to you since you never repaid the funds he advanced. This will result in additional income you must report on your tax return.

Collection

    Although you paid the settlement as an agreement to close the account legally, you still owe the remainder of the money. Credit card issuers will often turn over the balance written off to a collection agency. You may receive collection calls and aggravating notices in the mail. You may also see notes of collection showing up on your credit report, and some debt collectors may even try to obtain a court judgment against you for the money.

Inability to Obtain More Credit

    Negotiating your debt via a settlement will negatively affect your credit score and harm your creditworthiness. Fortunately, your credit score can recover with a good display of payments and use of credit in the future. Plus, these charge-off comments drop off after seven years. However, the individual creditor may keep a record of this on file, which may permanently disqualify you from ever obtaining future credit from this particular lender.

How Do I Lower My Credit Card Bills?

The average household credit-card debt in the United States stood at $8,329 at the end of 2008, according to the 2009 Nilson Report. That figure is all the more incredible when you consider that it includes households that don't have any credit cards at all. If your credit-card debt has spiraled out of control, don't panic; there are steps you can take to lower these bills.

Change the way you pay

    Your credit-card company would like you to pay the same way every month, by sending in your minimum payment once every billing period. Problem is, by paying this way, it'll take you a long time to pay off your credit-card debt. This is good for your credit-card company because it'll be able to collect more interest from your debt.

    If you owe the household average of $8,329 on your credit card with an industry standard, according to indexcreditcards.com, interest rate of 14.58 percent, it will take you 59 months to pay off your debt if you send a minimum payment of $200 each month. That's assuming, of course, that you're not adding additional debt to the card.

    It's wise, then, to change the way you pay your credit-card company.

    First, never send in only the minimum required payment. If you do this, you'll barely pay off any of your principal each month. Instead, most of your money will go toward interest. This is no way to reduce your balance, and simply sends more money to your creditors over time. Search your budget and find some way to at least double your minimum monthly payment each time you send in a check. This will dramatically reduce the amount of time it takes you to pay off your credit-card bill.

    In the example above, it will take you just 25 months to pay off that $8,329 debt if you send in $400 each month instead of $200.

Pay more often

    You can cut down the amount of time it takes to pay down your credit-card debt by sending in the same payment as usual, but by breaking it into two smaller payments that you send your credit-card company every two weeks. This helps on two fronts: First, you'll reduce the amount of interest you are charged over the life of your debt. Secondly, you'll make 13 payments during the year instead of 12.

    Before taking this strategy, though, you should check with your credit-card company to make sure that it allows this payment strategy.

Cut down those interest rates

    According to credit-card information source indexcreditcards.com, the average interest rate for credit cards stood at 14.58 percent as of early November 2009. If possible, lower the amount of interest you pay during the lifetime of your credit-card debt by transferring your unpaid balances from high-interest-rate cards to ones with lower rates. This can save you a significant amount of money as you pay down your credit-card debt.

    Be careful, though, before switching your balances. Make sure that you read the fine print that accompanies your new card. That interest rate of 5.5 percent might not last more than a month.

    By taking these simple steps, you'll make paying down your credit-card debt less stressful. Remember, though, that you won't eliminate this debt if you continue to add more to your cards each month than you can afford to pay off.

Friday, July 25, 2003

Does the Debt Have to Be All Mine For a Debt Consolidation Loan?

Generally a debt consolidation loan allows you to pay off only debts that you are responsible for. However, a variety of loans can be used for debt consolidation that offer more flexibility. Debt consolidation helps reorganize finances, but it is important to note that your personal debt level increases if you use a consolidation loan to pay someone else's debts.

Home Equity Loans

    Home equity loans are often used for debt consolidation loans and allow you to determine how the money is spent. You can pay off your own debts as well as the debts of a spouse, partner or friend. However, the Federal Trade Commission urges extreme caution in using using home equity loans. The loans create a second mortgage, and your house could be foreclosed if you default on the loan.

Credit Union Loans

    Credit unions generally take a very conservative approach to loans taken out specifically for debt consolidation. The credit unions may confirm that the loan is being used properly by making payments directly to your creditors. In this situation you would be unable to use the loan to pay another person's debts without disclosing it to the credit union. Some banks may follow the same guideline.

Credit Cards

    Using credit cards to consolidate debt can be very expensive, because interest rates are typically higher on credit cards than other types of loans. However, it is possible to use a credit card cash advance to consolidate debts for you and someone else. Note that cash advances add additional finance charges to your account through special fees and higher interest rates on the cash advanced.

Considerations

    Advice from a government-approved credit counselor may be helpful if you are considering debt consolidation for you and someone else. The credit counselor can analyze your situation and offer advice. The advice could include referring you to local banks or credit unions offering the best rates on loans suitable for your purpose. The counselor may also talk with you about the dangers of borrowing money for someone else. Find a credit counseling agency in your area by contacting a local charity such as the United Way or Salvation Army.

Does a Judgement Have to Be Repaid?

A judgment is created when someone takes you to court, sues you and wins. A judgment is expected to be paid and can be collected by alternative means if you don't willingly pay it yourself.

Significance

    A judgment can be collected by various means, including wage and bank account garnishment. Wage garnishments are limited to a certain percentage of your income, which varies by state. People who don't have a bank account and who don't hold a regular job may be able to escape these collection methods.

Time Frame

    Each state has a statute of limitations for judgments, which is the amount of time a judgment holder has to collect the debt. Once this time limit has passed, a judgment holder can no longer use alternative methods to collect the debt and you do not have a legal obligation to repay it.

Warning

    Some states allow judgment holders to renew their judgment, which allows the statute of limitations on the debt to start over.

Can Debt Collection Agencies Send You a Summons to Appear in Court?

Your inability to pay off your collection accounts does not negate the debt collection agency's right to recover the unpaid balance you owe. In an effort to collect your debt, the collection agency can file a lawsuit against you. A summons serves as a formal notification of the impending lawsuit directing you to appear in court on the hearing date.

Summons Delivery

    Collection agencies have the right to sue you for any unpaid balance you owe if you do not pay the debt voluntarily. Upon filing a lawsuit, the company must notify you of the suit, giving you the opportunity to defend yourself in court. This notification comes by way of a formal summons and complaint. State laws vary regarding the way the plaintiff must deliver a summons to a defendant. Typically, a summons will arrive via certified mail.

The Summons' Contents

    Each state has its own requirements for the information a summons must contain. In general, a summons lists the name and address of the plaintiff and the defendant, the date, the case number and the time set for the hearing. The summons also has instructions for properly filing a formal answer with your local court. Summons from debt collection agencies arrive with a formal complaint. The complaint details the charges levied against you and the amount you supposedly owe.

Responding to a Summons

    If you receive a summons and complaint from a collection agency, you can either respond to the summons or ignore it. Ignoring the summons, while common among debtors, results in an automatic judgment in favor of the collection agency. This is a "default judgment." The court views your failure to submit a timely response as your agreement to the collection agency's claim. You must respond to the summons within the time frame specified in the paperwork. If you have a valid legal defense, such as you do not owe the debt in question, you must specify your defense in your answer. You must also arrive in court on the hearing date to present your defense to the judge.

Lack of a Summons

    Sometimes, collection agencies sue debtors because they cannot locate the individuals to conduct collection activity. If the agency cannot locate you, it will serve its summons and complaint upon your last known address. If you no longer live there, this can result in the court levying a default judgment against you without your ever realizing there was a lawsuit pending. Some unscrupulous collectors have intentionally served a summons inaccurately -- or not at all -- in an effort to secure a default judgment against consumers who would otherwise raise a valid defense in court. If you discover a judgment against you, but never received appropriate notice of a lawsuit, you can file a motion to vacate with the court that awarded the judgment. You can ask that it overturn its previous decision due to the collection agency's failure to follow proper legal procedure.

Thursday, July 24, 2003

How to Keep Your Home When Financial Problems Arise

There are a number of options for keeping your home when financial problems arise, but it is important to stay in touch with your mortgage company and honestly explain your situation. Some homeowners make the mistake of remaining silent about their problems until foreclosure is imminent. By then the homeowner may have fallen behind by several mortgage payments and is battling other financial problems as well. A lack of flexibility at that point could make it impossible to prevent a foreclosure.

Instructions

    1

    Contact your lender about a special hardship program called forbearance. Take this step before you're on the verge of missing mortgage payments. Forbearance allows you to skip several mortgage payments without penalty while you work through temporary problems such as a job layoff or a brief illness. Bank of America reports that forbearance agreements usually last for about three months.

    2

    Make an appointment with a housing counselor certified by the U.S. Department of Housing and Urban Development. Counselors are available nationwide, and they can inform you of other programs you may qualify for. For example, in 2011, the U.S. government offered the Home Affordable Unemployment Program, which allowed homeowners to miss up to three mortgage payments without penalty while looking for work. However, getting into the program at the start of your problems is essential. Locate a housing counselor in your area by seeking a referral from a local charity such as the United Way.

    3

    Contact all other creditors to explain your situation, and ask for reduced monthly payments for as long as possible. Credit card companies, for example, may agree to slash your minimum monthly payments, although they are not obligated to do so.

    4

    Slash discretionary spending on things such as cable television, hobbies, eating out and traveling. Sell a second car that is paid for to raise money for mortgage payments.

    5

    Schedule free consultations with bankruptcy attorneys if you have excessive debt beyond your mortgage payments. Consider bankruptcy a last option for avoiding foreclosure. Meeting with bankruptcy attorneys allows you to learn about the process before you get to that point. Bankruptcy won't end your mortgage problems, but it can eliminate other debts, and, in some cases, it can allow you to keep your home.

How Many Points Does Moving a Collections Account Count Towards My Credit Score?

Collection accounts are considered part of your payment history by credit scoring formulas. Payments are a heavily weighted area that makes up 35 percent of your overall score, according to Fair Isaac, a leading credit score provider. Your score goes up significantly if you move collection accounts off your Experian, Equifax and TransUnion credit reports because they no longer count toward your score.

Definition

    A collections account is a delinquent bill that was turned over to a debt collector. Some lenders hire collectors, while others stop internal collection efforts and charge off unpaid accounts after about 180 days. The old accounts are then sold to outside collection agencies. Your original past-due account stays on your credit reports with the three credit bureaus, and the debt collector typically adds an entry showing the collection account.

Effect

    Collection accounts, like other past due bills, lower your credit score between 70 and 120 points, depending on the other data on your credit reports, according to the Electronic Privacy Information Center. Your credit score runs between 850 and 300, and a significant point deduction can drop you into the sub-prime range if your score is already borderline. A low score means lenders charge you high interest rates because you are a risky borrower or reject your applications.

Moving Collections Accounts

    You can sometimes move collections accounts off your credit reports if there are errors in the data. Debt collectors sometimes have incomplete records and report incorrect dates, account balances or other bad information to Experian, Equifax and TransUnion. You can catch this by ordering free credit reports through AnnualCreditReport.com, which provides them once a year without any catches, according to the Federal Trade Commission. Complain to the credit bureaus about any mistakes you notice in the collection entries, and in any other negative items, via their online dispute forms. They must investigate and respond to you within 30 days, and they remove any entries they cannot verify within that time period. Your credit score goes up as soon as the collections accounts are gone.

Settling Collections Accounts

    You can move a collections account off your credit report by settling if the debt collector agrees. Offer a lump sum amount of less than what you actually owe. Collection agencies often agree to give discounts if you pay a lump sum because they pay very little for bad debts. You might end up paying as little as half, according to Bankrate writer Lucy Lazarony. Get an agreement from the agency to remove its entry from all three of your credit reports as part of your settlement, and confirm the details in writing. You regain your lost credit score points once the collection agency cleans its entry off your reports.

How to Register My Prepaid Visa Debit Gift Card

How to Register My Prepaid Visa Debit Gift Card

Visa prepaid debit cards are used by many different people for many different reasons. It has become a way to budget money, have a form of payment for those that do not have a bank account and even a great way to give a cash gift. The prepaid Visa debit card also offers security for card holders. By registering your prepaid Visa debit card you protect yourself and your money in case of a lost or stolen card. Registering your card is an important part of guaranteeing your financial security.

Instructions

    1

    Look to see who issued the card. Each prepaid Visa debit card will have a different institution that issued the card. This institution will regulate how the prepaid Visa debit card can be registered. The institution name will be on the pamphlet that came with the card, or on the card itself.

    2

    Read the documents that came with the prepaid Visa debit card. Each card comes with a set of instructions and numbers to call to activate and register the prepaid Visa debit card. These instructions will be unique to your type of card and the institution that provides it. There is no single way too activate or register a prepaid Visa debit card, so you will have to follow the instructions provided.

    3

    Visit the website provided in the pamphlet. Most institutions make registering a card possible online.

    4

    Call the phone number provided. If there is no website provided, then you can call the number available in the instructions or on the back of the card. The bank or other institution will be able to register the prepaid Visa debit card or provide you with other instructions on how to register your card.

How to Self-Check Your Credit History

How to Self-Check Your Credit History

The Federal Trade Commission (FTC) advises checking your credit at least once a year to guard against informational errors and identity theft. Incorrect or suspicious activity can alert you if something is afoot. Federal law requires each of the three credit reporting bureaus--Experian, Equifax and TransUnion--to provide you with your credit report, free of charge, once a year.

Instructions

    1

    Determine the method you would like to use to obtain your free annual credit report. The FTC notes that you can accomplish this in one of three ways: online, over the phone or through the mail.

    2

    Go to annualcreditreport.com to obtain your report online. After you follow the prompts, which include entering basic information about yourself and verifying your identity, you will be able to view your credit report from all three agencies online. The FTC explains that you can choose to view only one or two of your reports at a time. This will allow you to come back at a later date in the same year to review the remaining reports for free.

    3

    You can also obtain your free annual credit report by calling 1-877-322-8228. Alternatively, as of March 2010, you can download the "Annual Credit Report Request form" available at the FTC's website, complete it, and mail it to the following address: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. This will allow you to secure your credit report via the United States Postal Service.

    4

    Look over your report upon receipt. It includes various personal information. Be sure that your name is correct, your address is current and your employment information is accurate. Your credit summary shows information, such as total debt, delinquencies and public records. Your credit history lists all of your accounts, noting amount owed, minimum payments and payment history, including if you have been past due on bills 30, 60, 90, 120 or more days. It also shows recent inquiries made to your credit file.

    5

    Follow the instructions that come with your report to dispute information you believe is inaccurate. The FTC notes that the credit bureaus are required to provide these instructions.

When Do Credit Card Balances Impact Credit?

Credit card balances can negatively impact credit scores, and maintaining a higher FICO credit score involves keeping your balances in check and using credit cards responsibly. Smart credit habits open the door to finance opportunities, such as mortgage loans and lower premiums on insurances. Do your homework and understand how credit card balances can reduce credit scores.

Balances and Scoring

    Credit scores range from 300 to 850, and several factors contribute to maintaining a high score. Some consumers are unaware of the relationship between credit card balances and credit scoring. When applying for mortgage loans, auto loans and other types of credit, lenders review credit reports and credit scores. The amount owed on existing debt at the time of applying for loans can lower scores and negatively impact approvals. Outstanding balances make up 30 percent of credit scores, according to Myfico.com. With this said, carrying high credit card balances is more likely to bring down your personal score.

Credit Card Utilization

    You don't need a zero balance to improve your credit score or maintain a good credit score. However, you do want to keep your credit card balances to a minimum. Low balances signal a measure of control; and when seeking new credit, lenders and creditors will view you as less of a risk due to your good credit and debt management skills. Credit card balances should remain below 30 percent of your credit limit, according to MSN Money. For example, if given a credit limit of $3,000 on your credit card, your balance should not exceed $900.

Inactive Cards

    Some consumers choose to avoid credit card use altogether to keep from accumulating debt and to maintain a good credit score. However, locking credit cards away and never using them doesn't help your score. In fact, this method can harm your score because credit card companies may stop reporting the account to the credit bureaus. Instead of avoiding credit cards, periodically use your cards for small purchases and then pay off the balance quickly to avoid high balances and interest charges.

Credit Card Warning

    In order to increase credit card rewards points or airline mileage, some consumers use their credit cards for every purchase and then pay off their balances in full each month. While paying off high balances each month is responsible, this method can harm credit scores. Using the same card for purchases each month can result in a high balance always appearing on your credit report. Credit card companies update credit reports monthly, and they update your file with your current account balance. Regardless of whether you pay off your card each month, your report may always reflect a high balance. Rather than use the same card each month, rotate among two or three cards. Thus, your cards will reflect a zero balance for at least a month, which indicates that you're paying off your balances each month.

Wednesday, July 23, 2003

Can a Salary Be Garnished From a Credit Card After Many Years?

Because credit cards carry fees and high interest rates in the event of late payment, it is relatively easy to rack up a large amount of debt. Credit card companies generally have the right to sue for recovery of the money charged against a card. However, the company must file the lawsuit before the state's statute of limitations runs out. If the lawsuit is filed, garnishment may be an option.

Credit Card Debt

    A credit card company is allowed to sue for the recovery of a debt that stems from the use of a credit card. Generally, these lawsuits will be based on the fact that the borrower breached his credit card contract when he took out an unsecured loan from the company and didn't pay it back. This lawsuit must be filed in a civil court located in the state in which the borrower lives.

Statute of Limitations

    While a debt stemming from a credit card has no statute of limitations on its collection, there is a statute of limitations on how long a company can file a lawsuit against the borrower for the debt. This length of time varies from state to state. If a credit card company does not file a lawsuit, then it will not be allowed to garnish the debtor's wages to collect on the debt.

Garnishment

    Garnishment is only available in certain instances. First, the credit card company will have had to win its case against the debtor in court and been awarded damages. At this point, the debtor will be given a chance to pay. If the debtor still will not pay and, under state law, he is eligible for garnishment, then the credit card company can petition the judge to have the debtor's salary garnished.

Considerations

    So, a person can have his salary garnished if the credit card company filed a lawsuit against him before the state statute of limitations expired, he refuses to pay, and he is eligible for garnishment. There are many individuals, particularly low-income individuals, who are exempt from garnishment, because they meet certain rules set by the state. In addition, not all states allow garnishment for the collection of private debts.

Monday, July 21, 2003

Cheapest Way to Consolidate Debt

If you have borrowed money through credit cards or personal loans and do not have the ability to pay them back, you may be at the mercy of high interest rates and finance charges that never allow you to be free of the debt. A debt consolidation loan can help you pay off your debts faster by making small monthly repayments to only one lender. This is a popular strategy for consolidating your debt at a low cost and can give you more flexibility with your finances. Heres how to get started on the loan consolidation process:

Instructions

    1

    Use a debt calculator to determine the total amount of debt you are carrying. Use your most recent statements for each debt; this will help you determine which debts you want to include on your payment plan.

    2

    Apply for a free debt consolidation loan. Select a debt consolidation lender online, or obtain a recommendation from your personal banker.

    3

    Complete your loan consolidation application. Your application will need to include all credit cards and loans you are interested in consolidating, their total balances and personal information that will be used to run a credit report.

    4

    Begin making monthly payments. Selecting a loan with a low monthly payment can save you money in the short term, but you can consolidate debt faster if you pay much more than your minimum requirements.

    5

    Stop using other credit cards. Avoid using credit cards that were not part of your debt consolidation process so that you can manage your finances better and avoid accumulating additional debt.

    6

    Create and maintain a monthly budget. Create a realistic budget that includes your debt consolidation loan payment so you can organize your finances and pay off as much as possible in a short period of time. This will reduce the accumulation of interest payments, making your overall loan consolidation as cheap as possible.

Can a Hospital Go After My IRA to Pay Medical Bills?

Medical expenses can be a severe hardship. Even for those with medical insurance, a course of treatment for cancer can run up to more than $100,000. If you have an 80/20 plan -- also known as "20 percent coinsurance," that can still leave you with a $20,000 bill at the end of the year, plus a deductible. A 2005 Market Watch survey found that medical expenses contributed to 17 percent of all bankruptcies in America. However, Congress recognizes that while bills need to be paid, you also need to provide for yourself in retirement. Congress has therefore granted significant creditor protection to retirement accounts, including IRAs.

Bankruptcy Abuse Prevention and Consumer Protection Act

    Among other provisions, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, also known as the Bankruptcy Reform Act of 2005, provides significant protection for assets held in IRAs from most creditors, including medical care providers. Specifically, federal law protects up to $1 million in IRA assets from the claims of creditors.

Other Retirement Assets

    The law applies to both Roth IRAs and traditional IRAs. However, the law provides even greater protection for assets held in workplace-sponsored retirement plans, such as 401(k) plans, 403(b) tax-sheltered annuity plans, profit sharing arrangements and traditional defined benefit pension plans. Congress has provided unlimited creditor protection for these kinds of arrangements. Even the IRS may have trouble accessing these plans, depending on plan rules, though they may place a levy on any income that comes out of these retirement plans.

State Laws Apply

    The $1 million protection that applies to IRAs is a minimum under federal law. Some states allow higher exemption limits. New York has unlimited creditor protection for IRAs, for example. Contact an attorney in your state for details about how state law may apply to your particular situation.

Considerations

    It may make sense to convert a traditional IRA to a Roth IRA, especially if you have more than $1 million in the account, your state does not provide a higher exemption for IRA assets than the federal law requires, and paying income taxes on conversion would bring your account balance within the allowable $1 million eligible for creditor protection. You also want to think twice about rolling over any workplace retirement plan balances that would put you over the $1 million limit in IRAs. Depending on your state's laws, you can also supplement your creditor protection by using annuities, trusts and cash-value life insurance.

Sunday, July 20, 2003

Does Getting a Debt Consolidation Loan Mess Up Your Credit?

Some people get a debt consolidation loan to try to rebuild their credit scores or to help deal with debt problems. While a debt consolidation loan can help in both areas, it also can hurt your finances and credit scores in some cases. How you handle your debt consolidation loan is the key factor in determining how the loan will impact your credit.

New Loans

    Anytime you take out a new loan, you're likely to experience at least a slight drop in your credit score. Credit scores are based on various factors, one of which is the number of new loans you have. If, for example, you take out a debt consolidation loan and open several new credit cards in a short period, your score will likely drop. If you only take out a single new loan, you may experience a slight drop in your score. Another factor in the credit scoring formula involves credit inquiries. Each time you apply for a loan, the lender will check your credit report -- which is called an inquiry -- and that drops your credit score slightly.

Closing Accounts

    When you take out a debt consolidation loan, you use the loan money to pay off other creditors. For example, you can take out a home equity consolidation loan to pay off multiple credit cards. Once you pay off those cards, you shouldn't necessarily close the accounts, even though you no longer carry a card balance. Part of your credit score depends on how long you've had your accounts. The longer you've had an account, the better it is for your score. Also, closing accounts affects your credit utilization ratio, which is the amount of debt you carry relative to your available credit (your credit limit). A low credit utilization ratio improves your credit score. If you close your accounts that have zero balances because they are paid off, you are forfeiting a lot of available credit, and, therefore, increasing your overall credit utilization ratio and hurting your credit score.

Decreasing Debt

    When you take out a consolidation loan, the key factor impacting your credit score is not obtaining the loan, but your ability to make payments later on. People often take out consolidation loans because the interest rate on the consolidating loan is lower than the rates of the loans that will be paid off. That decreases the amount of your monthly payments. If you take out a consolidation loan and make all your payments on time and use the loan to give yourself increased cash flow by decreasing your monthly payments, you generally improve your score.

Missing Payments

    However, if you take out the consolidation loan and start using the extra money to purchase more items, you may quickly fall behind on payments and end up damaging your score. Being 30 days late on a payment can decrease your credit score between 60 to 100 points, according to Yahoo! Finance. If you fall further behind and default on your loan, get sued by your creditor or have your account sold to a collections agency, this will cause even more damage.

Credit Counseling Through Employers

Employers do not directly counsel employees who are having debt management problems, but they often help workers find appropriate credit counseling assistance. Many non-profit credit counseling companies help you get a handle on your debt for free or at affordable rates, but some charge excessive fees or try to push you into inappropriate programs, the Federal Trade Commission warns. Employers make referrals to legitimate counselors.

Referrals

    Start with your company's human resources department for a credit counseling referral. The department may be able to provide this information or refer you to another source, like an Employee Assistance Program. EAPs help with various personal problems, including debt management. Credit unions often provide credit counseling or referrals to legitimate firms, according to the New Jersey Division of Consumer Affairs, so this may be a good source if your employer has an affiliated credit union.

Confirmation

    Do not automatically assume that a credit counseling firm is legitimate just because you got a referral from your employer or the company's credit union. Ask if it is licensed and affiliated with professional groups like the National Foundation for Credit Counseling, and inquire about its funding sources, the Better Business Bureau advises. Nonprofit firms should get the majority of their income from creditor contributions, not counseling clients. Request an up-front fee disclosure and confirm that the counseling company provides written contracts.

Results

    You may find a credit counselor through your employer's assistance program or credit union, but you are responsible for following through. The results depend on your financial situation and resources. The counselor may help you create a new budget that is enough to get things under control or refer you to money management classes. You may need structured assistance, like a debt management plan that requires monthly payments and erases your debt within five years if you make all the payments on schedule. Your counselor can often get help from your creditors, like better interest rates and late payment fee forgiveness, as part of the plan.

Considerations

    Your employer never has to know that you are going through credit counseling if you want to keep it to yourself. EAPs provide confidential assistance, so you can contact your company's EAP provider and get a credit counseling referral without disclosing it to anyone else if you wish. Your employer will not know if you get into a debt management program through a credit counselor because you set up the payment arrangements directly between you and the counseling firm.

Texas Debt Elimination Programs

Texas Debt Elimination Programs

Texas residents who are struggling with debt have access to debt elimination programs to help them turn their financial situations around. If you need assistance regaining control of your finances, you can select an available program through a non-profit or for-profit credit counseling agency or company to help you meet your goals. You can check with the Texas Office of the Consumer Credit Commissioner to locate licensed agencies in your area.

Debt Consolidation Progams

    One option for Texas residents is debt consolidation that involves taking out a new loan to pay off existing debt and being left with only one monthly payment. This type of program requires that you pay interest on the loan. The longer you take to pay back the loan the more the monthly payment will shrink, but the more the interest you will pay over the life of the loan. That could add up to a lot of money.

Debt Management Programs

    If you want help managing your debts and budgeting, you may consider credit counseling. Credit counselors can evaluate your spending and saving habits and, if necessary, place you into a debt management program designed to consolidate all of your debts into one monthly payment. In this program, the credit counselor approaches your creditors and negotiates reduced interest rates on your behalf to help you pay off the debts faster. The counselor takes your monthly payment and distributes it among your creditors for you. Some Texas credit counseling agencies charge initial and monthly fees for their services, so you should find out about the requirements for the agency you choose. You should also ask about the length of your repayment plan and whether you can get monthly statements to track your progress.

Debt Settlement Programs

    Texas residents also have access to debt settlement programs to help eliminate debt. This program involves paying a debt settlement company each month instead of paying your creditors. They will collect your monthly payments and when you have enough saved, the debt settlement company will contact your creditor and negotiate a lump sum settlement payment at a reduced amount to pay off your debt. You should be careful when selecting this program because your credit will decline and collection agencies will pursue you while you are not paying r creditors directly. You should also be aware of the fees charged in debt settlement programs.

Can Creditors Come After a Son After the Death of His Mother?

Can Creditors Come After a Son After the Death of His Mother?

The sole purpose of many creditors and collection agencies are to try and recuperate late payments or losses. In the event of a death, creditors may try to hold the surviving children of the deceased responsible for the debts owed by parents. Depending on the type of account and originating loan, some creditors may be accurate in trying to collect from other parties. However, there are instances where the children of the creditors are not liable or responsible, for this debt.

Obtaining Debt

    A debt is solely assigned to the person who has applied for and received the line of credit, utility or consumer loan. If a mother signs for a loan or service on her own, then the debt belongs to her alone. This debt cannot be passed down to a son once the mother passes away. If the son, however, is a cosigner of the debt, service or loan, then the debt is shared between both parties. When one party passes away, such as the mother, then the son is still liable for the debt.

Authorized Users

    If the mother obtains a line of credit, such as a credit card, on her own and designates her son as an authorized user, the son is not liable for the debt after she passes away. As long as he did not fill out the original application or become a cosigner, he cannot be liable for the debt.

Inheritance

    Determine whether you are liable before paying a bill.
    Determine whether you are liable before paying a bill.

    If property, money or other valuable assets are left once the mother passes away, the past due service, loan or other debt must be paid before the son may inherit these assets. If there is nothing of value left, the debt will remain unpaid without responsibility from the son. If there is little estate, it is liquidated to pay a partial amount of the balance and the creditors will not receive payment for the rest. Probate court is set up to handle the estate and designate the inheritance to the creditors and then the beneficiary.

Collection Agencies

    Some collection agencies and service providers still attempt to collect the debt from a son though he is not responsible to pay it. Before sending a payment, review the account to confirm you are not a cosigner or applicant on the line of credit, service or loan. Refuse to pay the debt once you have received the documents and find that you are not responsible for it. Send a death certificate to the creditor to prove the applicant and credit holder is deceased and attempt to close the account. If the creditors persist, ask for additional documentation showing where they believe you are liable for this debt.

Contacting an Attorney

    Speak with an attorney concerning debt if you feel you are not responsible for it. Gather the documents from the creditors along with information about the accounts, the balances and the purposes of the line of credit, services or loans. Present them to your lawyer for him to determine whether you owe the debt and how to stop the creditors from harassing you.

What Are the Advantages to Paying Off a Car Loan in Full?

What Are the Advantages to Paying Off a Car Loan in Full?

Paying off a car loan in full over a relatively short period is an excellent way to reduce costs and overall personal finance risks. Auto loans differ significantly from other secured loans like mortgages in that the asset by which the loan is secured constantly depreciates. If the car is involved in an accident, the value of that asset can decline even more precipitously. Repaying the auto loan faster than necessary reduces the pressure on the owner to sell the car to "trade up" to another one.

Lower Costs

    The most obvious advantage to paying off an auto loan early is the reduction in costs from interest payments. Car loans--particularly those for people with less-than-excellent credit--can charge relatively high interest rates, because the asset depreciates over time. Any increase in the principle repayment is an immediate boon for the personal finance bottom line.

Long-Term Ownership

    When you hold outstanding car loan debt--like when you take advantage of a 0 percent APR period by avoiding making any payments--there's high pressure to sell the car and buy a new one on credit immediately to roll over the existing auto loan. This keeps the car owner in debt perpetually, usually increasing the debt load year after year. By ending the debt cycle, it makes it more feasible to drive the same car for years at a time. This can significantly reduce overall expenditures, as long as the car is maintained in good condition.

Improved Credit Rating

    Paying back an auto loan in full has a powerful positive effect on the credit rating. This can lead to lower interest payments for other loans, access to special lending programs, better credit card deals, and a better overall state of financial health. Paying off an auto loan in full can also lead to a better future relationship with that particular auto lender. Lending officers tend to remember excellent customers. That company will most likely be more willing to extend credit to you in the future if you pay them off early.

Saturday, July 19, 2003

Debt to Savings Ratio

It can sometimes be confusing to figure out all the "appropriate" ratios for your finances. You may often hear terms such as "income to debt ratio" or "debt to savings ratio." Knowing what those terms means and how to apply them to your personal financial situation can be the difference between financial success and failure, especially if something happens unexpectedly and you need some quick cash.

What is Savings?

    While this may seem like an elementary question, savings is the amount of money you have in the bank that you can easily access in times of need. Everyone should have a savings cushion for those unexpected emergencies that arise, such as car or home repairs. If you have at least some money in a savings account, you can prevent yourself from getting further into debt.

What is Debt?

    Debt constitutes all the bills you pay every month that do not include utilities. Debt can be in the form of a mortgage, credit cards, personal or student loans or car payments. These bills need to be paid every month and usually have an interest rate attached. Interest is what you pay on top of the actual loan and can make the total amount you pay for something two or even three times the original amount.

What is the Ratio?

    A ratio is a comparison between two items, such as your savings account and the amount of debt you have. Obviously, you want your savings number to be higher than your debt number. Figure your ratio by setting up the amount of money you pay to debts each month to the amount of money you put into savings each month. For example, if you pay $1,000 in debt payments and put $250 in savings, you would set up your ratio as a fraction of 1,000 over 250. Divide 1,000 by 250, and you will find that your ratio is 25 percent debt to savings, or 4:1. Ideally, you want your savings to be higher than the debt. However, if you have a lot of high interest debt you may want to concentrate on paying that off by paying more than the minimum payment each month and only putting a little bit into savings. Paying down your debt is always good in the long run.

How Much Savings?

    One question many people have is how much money they should have in their savings account. This number will be different for every family, depending on the amount of money you make and the amount of debt you have. A good rule of thumb is to build up a savings account that will allow you to pay all of your bills for at least six months. Those six months allow you to keep your head above water should disaster strike in the form of an accident or loss of a job.

Can Pell Grant Funds Be Garnished?

If you have a judgment against you or you have defaulted on a debt, your creditors have a right to garnish your wages and seize your assets to pay off the debt. Should your bank account be subject to seizure, any funds deposited at the time will be frozen and unavailable to you, unless the source of the funds is exempt income. Many federal benefits, such as educational assistance, qualify as exempt income.

Pell Grants

    A Pell Grant is a federal program that provides financial assistance to low-income undergraduates, and some postgraduates, to attend institutions of higher learning. The grant is based on expected family financial contributions, the cost of the college and your enrollment status, whether full-time or part-time. The grant is paid directly to the educational institution, to the student, or a combination of both. If you deposit these funds into an account that is subsequently frozen, these funds could be unavailable to you.

Exempt Income

    Certain government benefits are exempt from wage garnishment, unless the creditor is the United States government. Pell Grants and other federal educational assistance are exempt, as are most federal retirement plans and disability benefits. If you have your Pell Grant direct-deposited, and believe you may be subject to an asset freeze order, you should notify the originator of the funds and have them stop direct deposits and send you a check until you go to court.

Remedy

    In some states you must be notified in advance that your bank account will be frozen. If you receive this notice, you have the opportunity to stop the freeze of your Pell funds. If you don't get notified in advance, when the seizure notice comes through, notify your bank that your account contains exempt funds and ask that it unfreeze those funds. If the bank refuses, you must go to court to get a judge's order. At the hearing, bring evidence of the source of the funds and, if the account commingles exempt and non-exempt income, proof of what has been disbursed of the exempt funds so the remainder of the exempt funds can be unfrozen.

New Legislation

    On May 1, 2011 new rules for banks went into effect that protect you to some extent should a creditor try to freeze your exempt funds. When the bank receives the garnishment order, it must look back at deposits in your account for the prior two-month period and determine if one or more exempt funds were direct-deposited into the account. If they were, the bank must allow you access to the lesser of either the amount of the account or the amount of the exempt payments in the account. This is the amount of money in your account that remains protected until the court rules on the status of your funds. The bank must notify you and give you clear instructions on the action it has taken, and the action you must take to prevent further garnishment of your Pell Grant.

Friday, July 18, 2003

I Need Help Paying for a Judgment

I Need Help Paying for a Judgment

When a creditor takes you to civil court for a debt and you lose the case, the judge awards a judgment against you. The judgment orders you to pay the creditor what's owed, in addition to court costs and filing fees. Certain states, including Tennessee, allow you to file a slow-pay motion to reduce the monthly amount you have to give the creditor.

The Hearing

    A judgment against you is a court order to pay a debt. Ignoring the order to pay can created additional legal problems. The creditor can have you ordered back into court to answer specific questions about your finances, income and assets and to answer questions about why you haven't paid the judgment. In addition, ignoring the asset hearing court date can lead to your arrest for failing to appear when ordered.

Financial Problems

    Often, by the time a creditor gets a judgment against you, your financial issues are pretty significant. Whether you lost a job, got caught in an economic downturn or simply took on more debt than you can comfortably pay, a court-ordered judgment commands you to produce the money for the debt. As you begin to rebuild and dig your way out of your financial problems, the judgment hanging over your head can cause stress.

Slow Pay

    Certain states have a slow-pay provision for civil judgments. A slow pay is filed in the same court where the judgment was granted. There's typically a nominal filing fee for the slow-pay motion, and you're given a court date. You need to bring evidence of your need to pay a reduced monthly amount. Such evidence can include bank statements, paycheck stubs and proof of paid living expenses. You explain to the judge why you're requesting a slow-pay order and show the proof of your financial situation. If the judge grants your request, the slow-pay order is filed in the court clerk's office, allowing you to reduce your payments to the creditor by the amount so ordered. This extends the length of time you pay off the debt, but as soon as you become more financially stable, you can always double up on the payments and get back on track. The Fair Debt Collection website lists which states allow slow pays, income exemptions and other rules regarding debt collections.

Work With Creditors

    Just because a creditor gets a judgment against you doesn't mean the creditor won't work with you to pay the debt. Call or write to the creditor and request reduced payments. Be sure to acknowledge the debt, court date, case number, your name and the total amount you're ordered to pay. Honesty about your financial situation with a request to temporarily cut the payments in half should be included in the communication. Be sure to get the name and position of whomever you speak with as future evidence that an agreement was reached. Offering to pay as ordered as soon as you can might help the creditor work with you in the meantime.

Relative Help

    If your state doesn't have a slow-pay provision and the creditor refuses to work with you on reduced payments, approach relatives for a loan. Judgments often come with interest attached, which means every month you don't make a payment, the size of the judgment increases. Borrowing what you need from a relative to pay the judgment in full and then make timely interest-free payments to repay your relative saves you money in the long run.

Exempt Income

    If you're a Vermont resident, you can have your income declared exempt if you can show in court that your income is entirely used for daily living expenses. The expenses must be reasonable and can include support for your legal dependents.

Thursday, July 17, 2003

How to Reduce Debt on Credit Card Loans

There are a number of things that you can do to reduce your credit card debt. Reducing credit card debt can get you on track to eventually becoming completely free of credit card debt and not having to worry about getting late or over-the-limit fees.

Instructions

How to Reduce Credit Card Debt

    1

    Stop charging items on your credit card. By not charging any more items to your cards, you will stop incurring debt on them. Instead, pay for everything with cash, and if you don't have the cash to pay for something, then wait to purchase it when you do have the money.

    2

    Pay more than your minimum monthly payment on your credit cards. The more money you pay on your credit cards each month, the quicker your debt will be eliminated.

    3

    Negotiate with your credit card companies to reduce your debt. You can negotiate paying half your bill if they will pay the other half to get the account paid. You can also offer to pay triple your minimum monthly payment if they would eliminate any fees that you have incurred.

    4

    Call your credit card companies to see if they will reduce your interest rates. With lower interest rates, you will not have as much credit card debt.

Credit Score Procedures

Credit scores help lenders determine whether you are a worthy borrower. Your credit score is derived from information obtained from your credit report each month. Creditors submit information to credit bureaus related to your payment history and current balance. Individuals looking to improve their credit scores should learn credit scoring procedures so they can find areas to make the biggest impact.

Percentages

    Credit scores are determined by many factors, but there are five primary categories. Each category carries a different weight based on its importance to creditors. The larger the percentage of a risk factor, the more it can help or hurt your credit score. "For particular groups--for example, people who have not been using credit long--the importance of these categories may be somewhat different," explains the MyFICO website.

Payment History

    Payment history is the largest factor used in calculating your credit score and accounts for 35 percent of the score. It includes "account payment information on specific types of accounts, e.g., credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.," states myFICO. You must pay as agreed on your accounts to ensure positive information is reported monthly. Your credit score will increase each month that positive payment information is reported to the credit bureaus.

Overall Report

    Available information on credit scoring procedures are estimates that apply to the general population and not to specific credit profiles. "As the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score," explains MyFICO. The percentages used to assess which factors affect your credit score are generic templates that can drive up your score by a few points or by dozens of points depending on your credit profile.

Time Frames

    Creditors report information to the credit bureaus monthly. If you dispute an item on your credit report, the creditor has 30 days to respond with documentation supporting the information. This means that even though you dispute information today, it could be several months before your credit score is updated to reflect the changes.

Debt Collection Laws and Limitations in Ohio

Debt Collection Laws and Limitations in Ohio

Like all states, Ohio regulates the actions creditors can take to collect a debt. If you default on a debt, you may receive calls or letters from creditors or collection agencies, and they may eventually file lawsuits against you. However, the law prohibits creditors from harassing you.

Your Rights

    If a debt collector calls you, he must send you a letter describing the debt within five days of the call. He must allow you 30 days to request verification of the debt. You also have the right to prohibit a debt collector from contacting you again, whether or not you owe the debt. However, if you do owe the debt, prohibiting further contact from the collector won't erase your debt.

Restrictions On Creditors

    Ohio prohibits debt collectors from using abusive or obscene language when speaking to you. The law also prohibits them from calling after 9 p.m. or before 8 a.m. If you ask the debt collector to refrain from contacting you during other hours, he must comply with your request. Finally, since Ohio law prohibits the imprisonment of an individual for unpaid debts, debt collectors can't threaten you with jail time.

Permitted Actions

    Though debt collectors can't harass you, the law doesn't prohibit them from calling you, sending you letters or filing a lawsuit against you. If a debt collector files a lawsuit against you in Ohio and you don't agree with his claim, you must respond to the complaint within 28 days. If you don't respond, the court may grant the creditor a default judgment. If you do respond, the court schedules a hearing. At the hearing, a judge decides whether to enter a judgment against you for the debt. Creditors can file lawsuits against you for up to 15 years after you default on a debt.

Judgments

    If a debt collector obtains a judgment against you for a debt you owe, he can garnish your wages, remove funds from your bank account, put liens on your real estate or seize your personal property. Creditors can garnish up to 25 percent of your wages for debt repayment, and they can remove all funds in excess of $400 from your bank account.