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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..

Friday, October 31, 2003

How to Avoid Legal Issues With Debt Collectors

How to Avoid Legal Issues With Debt Collectors

Avoiding legal issues with a debt collector is key to averting a day in court and a possible credit judgment. Not every debt collector pursues an unpaid debt in court. However, if threatened with a lawsuit, it is important to contact debt collectors immediately to resolve the issue. Several methods can help you avoid legal issues with debt collectors. Know your options, and then take action.



    Keep up with monthly minimum to avoid a lawsuit. You can keep debt collectors at bay by simply paying the required minimum on an account or paying off the balance completely. Resume payments if you've stopped to avoid legal issues.


    Discuss new payment options. If you cannot afford your payments, avoid legal issues by calling your debt collector and asking for new terms. Request a decreased minimum payment, better rate or ask about skip payment options (forbearance or deferment).


    Eliminate your balance with a settlement. If you have access to a lump sum of cash, call your debt collector and offer an amount to settle the debt and avoid legal issues. Debt settlements are for less than the unpaid balance. For example, if you owe a debt collector $5,000, you can offer to settle the debt for $3,000. Get any agreement in writing prior to making your final payment.


    Dispute debts that you don't owe. Avoid legal issues with a debt validation letter asking the debt collector for information regarding the unpaid balance. Request written evidence that you owe the company money within 30 days of receiving a statement. Mail this letter directly to the debt collector by certified mail.


    Avoid lawsuits with a bankruptcy filing. Debt collectors, lenders and other creditor cannot sue for a debt once you file a petition for Chapter 7 or Chapter 13 protection. Know the consequences of bankruptcy, and talk with a bankruptcy lawyer first. Consequences include a damaged credit history for 10 years and a decrease in FICO credit score.

The Consequences of Not Paying Debt

To purchase some big ticket items, such as cars and houses a certain amount of debt is acquired by the average consumer. This is in addition to unsecured debt, such as credit cards and personal loans. If the amount of debt becomes overwhelming, it is tempting to not repay your creditors. However, not repaying your debt can have serious financial consequences that can affect many areas of your life.

Credit Score

    Your credit score is directly affected by the amount of debt you have and the timely repayment of said debt. If you fail to make payments on your debt it will have a negative effect on your credit score. Creditors report delinquent payments to the credit bureaus who in turn lower your credit score accordingly. A low score can impact your ability to get housing, buy a car and in some cases gain employment.

Interest Rate Increase

    Most creditors issue penalties and additional fees for not making timely payments. In addition to a monetary charge, the creditor will often raise the current interest rate on your outstanding debt at their discretion. The result is a balance that increases with each passing month. It is possible for the debt to increase to a level that you may not be able to repay. In that case, both the new balance and the higher interest rate will be reported to the credit bureaus.


    Once you stop paying your debts, the creditors may sue you to get the money you owe them. Once a court of law finds that you are liable for the debt, the creditor can then have your paychecks garnished until the debt is repaid. This means a certain percentage of your paycheck will be applied to the debt you owe the creditor, lowering your take home pay.


    If you stop paying your debt, the outstanding balances may balloon to the point that you may have to file for bankruptcy to get relief. Although bankruptcy does stop collection agency calls, garnishment and erases most debt, there are also negative consequences to filing for bankruptcy. A bankruptcy can remain on your credit report for up to 10 years after filing, and will reduce your ability to acquire new credit and financing for many years.

Thursday, October 30, 2003

Laws on Unpaid Credit Card Debt

Laws on Unpaid Credit Card Debt

If you were to poll people who had recently filed for bankruptcy about their reasons for doing so, you would find unpaid credit card debt ranked high on the list. During times of financial trouble, paying off credit card debt is not as much of a priority as basic necessities. If you find yourself with any unpaid credit card debt, it is important to understand the laws that regulate it in order to prepare for the consequences you might eventually face.


    The two types of credit cards are secured and unsecured.

    Two types of credit card debt exist: secured and unsecured debt. When you apply for a secured credit card, you must pay cash to cover the limit on the card. If you cease making payments on a secured card, the credit card company does not lose money, and, because of this, will not take legal action against you (See Resource 1). An unsecured credit card is a card that is extended to you with no collateral. Debt on an unsecured card that is left unpaid is subject to legal action.

Time Frame

    Pay by the due date or risk paying extra in late fees.

    If you do not make your credit card payment by the due date, you will incur a late fee. If your payment is 30 days late, you will receive a late payment notation on your credit report. You will continue to receive late notations every month until the debt is either charged off or 180 days have passed. A credit card company is not required to charge off your debt, but most will do so after 180 days as the loss is considered a tax write-off for the company.


    You can stop creditors from calling you at home.

    After your debt is charged off, it will be sold into collections. Collection agencies are bound by the Fair Debt Collection Practices Act (FDCPA) to participate in ethical debt collection practices. They may send you letters notifying you of the debt and offering settlement plans. Collection agencies are allowed to call you at home unless you send them a letter forbidding them from doing so. As the owner of a debt, a collection agency may initiate a lawsuit against you in an effort to recover the funds (See Resource 2).


    Show up in court or risk a judgment.

    Although a collection agency might sue you for your unpaid credit card balance, they can only do so if the debt is still within your state's statute of limitations for collection. After the statute of limitations expires, the debt is no longer legally enforceable. If the collection agency files a lawsuit anyway, you must appear in court to tell the judge that the debt is outside of the statute of limitations or you might end up with a judgment against you. If your debt is within statute and you are sued, you should still show up in court. As long as you appear, the creditor is required to prove that you legally own the debt. Many are unable to do this. Fail to appear in court, and the creditor is not required to provide proof that the debt belongs to you, but you will be automatically ruled against. If you lose the lawsuit, a judgment will be levied against you, and your wages might be garnished unless your state prohibits garnishment for unsecured debt.

Credit Score

    Check your credit report to make sure creditors are abiding by the FCRA.

    Any time you are over 30 days late on a payment to a creditor, this information will be placed on your credit report and your credit score will drop. Each additional month that you do not pay will result in more late notations appearing on your report. When the debt is sold to collections, a new trade line will appear on your credit report identifying the debt as defaulted. This will also harm your overall score. The worst-case scenario for your credit score when dealing with credit card debt is if you are successfully sued and a judgment is entered on to the report. Judgments have almost as negative an impact on your credit to the same degree as a foreclosure or bankruptcy would.

    According to the Fair Credit Reporting Act (FCRA), negative trade lines can only remain on your credit report for up to seven years from date of the original charge off. After the seven years have passed, the debt cannot legally reappear on your credit report (See Resource 3). Monitor your credit reports frequently to ensure that all creditors are abiding by FCRA laws.

What Is the Difference Between a Personal Loan & Debt Consolidation?

Navigating through a debt consolidation loan sometimes takes time before you feel comfortable with the details. A personal loan is simply a single loan you can choose to use for debt consolidation or other purposes. If you want to consolidate your debts, you should evaluate various options before agreeing to take on a new loan.

Personal Loan

    A personal loan is a loan a lender gives a borrower, typically for a low amount and without requiring a security agreement or collateral. For example, if you take out a car loan, the lender typically requires that you give it a security interest -- a lien -- in the car. If you take out a personal loan to buy a car, the lender doesn't usually require you to provide collateral or a security agreement. Personal loans, for this reason, often come with higher interest rates than secured loans.

Debt Consolidation

    If you want to combine your debts so you can make one monthly payment instead of several, you must obtain a new loan and use it to pay off your other debts. For example, you can take out a home equity loan (which is a secured loan) and use the money to pay off any other debts. Once this is done, you no longer have to make payments to the old creditors. Instead, you have to pay the creditor who gave you the home equity loan. Debt consolidation is helpful if the interest rate of the consolidating loan is lower than the rates of the debts you intend to pay off.

Loan and Consolidation

    You can use a personal loan to consolidate debts. For example, if you take out a personal loan and use the money to pay off two credit card balances, you've effectively consolidated your credit card debt with the personal loan. However, because personal loans usually come with higher interest rates than secured loans, they are not always a suitable choice for a consolidation loan, as they cost you more in the long run.


    Whenever you take out a personal loan to consolidate debt or any other kind of loan, you should evaluate the loan terms carefully. A personal loan is still a loan and you must pay it back. Consider the terms of any loan agreement with regard to your needs and ability to repay the loan. If you need help, talk to a credit counselor or financial adviser in your area.

About Bad Credit Loans

About Bad Credit Loans

When times are tough, and credit scores are low, a bad credit loan can seem like an ideal opportunity. Although they have their advantages, borrowers of these loans will find it more to their benefit to educate themselves before signing on the dotted line. While some companies involved in subprime lending have a reputation of following through with their promise to help at-risk borrowers, others prey upon the borrower's past, causing more trouble than the loan was worth in the long run.


    Bad credit loans are specifically designed to target those individuals with less than perfect credit. The criteria of a bad credit loan varies depending on credit history and the amount of credit requested. Interest rates on bad credit loans tend to be higher than that of traditional loans offered to those with positive credit scores. The payback conditions may differ as well, consisting of weekly or biweekly payments, as opposed to once a month.


    Bad credit loans usually fall into two categories, secured and unsecured. In most cases lenders that service bad credit loans will seek collateral to offset the possibility of the loan not being repaid. This is a secured loan. And although the interest rates are higher than average, they are less than an unsecured loan. Bad credit loans can be secured by allowing the lender to place a lien on your home, although this type of scenario can be quite risky in cases of job loss or other unexpected circumstances. Unsecured loans require no equity but usually involve character references, detailed contact information, high fees and escalated interest rates.


    For those faced with extenuating circumstances that involve an urgent need for cash, bad credit loans can be beneficial, especially, if the borrower's goal is to improve his credit score. At-risk borrowers who are looking to get their credit back on track and are in need of cash can sometimes have a hard time finding a lender that will trust their willingness to pay, based on their past history. In this case, a bad credit loan can fit the bill, and if repaid according to the details set forth in the contract, can be effective in raising credit scores.


    Bad credit loans are commonly viewed as pitfalls with potentially damaging, long-term effects and predatory in their terms and conditions. This is not completely true. While it is a fact that bad credit loans and other subprime lending practices can lead the borrower down a path of financial crisis, if used wisely these loans can help a borrower update her credit history in a positive way. Bad credit loans that are taken out and repaid quickly, in full, can help to improve credit scores and prove the borrower more worthy in the eyes of other lenders.


    Avoid companies that make promises that seem too good to be true. Companies that employ predatory lending tactics can make a financial crisis even worse. These lenders prey upon individuals in need of a loan, with promises of very low interest rates and fast cash. In most cases, these lenders charge astronomical application fees and rarely end up qualifying the applicant for the intended loan. The lender makes money on the fee, and the applicant loses all together.

Does Credit Card Debt Go Away After 7 Years?

Does Credit Card Debt Go Away After 7 Years?

Some credit-card debts are removed from consumers' credit files after seven years. However, that doesn't mean the debt itself goes away. Unpaid credit-card balances are still collectible even after they have been removed from consumer credit reports. As a result, some debts people have forgotten can turn up for collection at a debt-collection company.

Debt Settlements

    Credit-card debt is not truly erased unless it's paid off or discharged in a bankruptcy. Credit-card companies also may forgive debt by allowing cardholders to pay less than they owe to settle delinquent accounts. Cardholders may believe they're free of a debt that's been forgiven by a creditor, but balances that aren't paid in full might reappear years after a credit-card account has been settled.

Debt Buyers

    Debt buyers purchase delinquent debts from credit-card companies to try to collect the amounts owed on past-due accounts. Delinquent debts are turned over to the buyers without regard for how old they are or whether any of the debts were forgiven by creditors. As a result, a debt collector could contact you to recoup the remaining balance on a credit-card debt that you thought you settled with your creditor. In such cases, you should consult with an attorney before dealing with the collection company.

Credit Files

    Delinquent credit-card accounts eventually are removed from credit reports. The U.S. Fair Credit Reporting Act requires credit bureaus to remove closed accounts that were sent to collection agencies from consumers' credit files after seven years. Closed credit-card accounts that show no late payments or other negative information remain in credit files for 10 years or longer. Nonetheless, delinquent accounts that haven't been paid off may still be sought for collection by debt buyers even if the accounts have been removed from consumers' credit files.

Old Debts

    Old debts that have been removed from credit files might reappear if you decide to pay them. For example, you may decide to pay off an old credit-card debt you thought was settled just to get a debt collector off your back. However, you essentially reactivate the account if you make a payment on it. Therefore, the old debt may reappear in your credit file. Late payments made on a reactivated credit-card debit also might appear in your credit file if you reach an agreement with a collector to pay off the debt in installments and miss a payment.

How to Report a Skip Tracer

How to Report a Skip Tracer

The business of skip tracing has been made easier in recent years as computerized databases have become comprehensive storage repositories for data of every type. It has also made skip tracers responsible for ever-increasing quotas of productivity. This sometimes tempts them to use illegal shortcuts. The federal Fair Debt Collection Practices Act (FDCPA), as well as various state regulations, are intended to eliminate harassment, threats and false representations by debt collectors by regulating such activities as the time of day (only between 8:00 a.m. and 9:00 p.m.), number of calls a skip tracer or debt collector can make to a debtor's residence and limiting the information they can disclose to friends and family who they contact in an attempt to find the debtor.



    Log all calls you receive from a skip tracer or debt collector. Write down the caller's name, and get the name and address of the organization for whom they work. Also write down the time of day the call was initiated and which debt the caller was calling about, as well as the pertinent details you discussed. If you're not home when a call is received and there is a voicemail message from the skip tracer, write down all of the information you can from that call as well. This log will be important later, as evidence for your harassment allegations.

    According to the FDCPA, a skip tracer may not "engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." These actions can include threats of physical harm, harm to the debtor's reputation or property, use of profanity, publicly announcing your debt, advertising the sale of your debt or causing your phone to ring or calling you with "intent to annoy, abuse or harass any person at the called number."


    Inform the skip tracer in writing (using the address info you obtained in the previous step) you either refuse to pay your debt, if that is truly the case, or that you wish the debt collector to "cease further communication" with you. After that, the FDCPA prohibits further communication with you with respect to that debt, except in very limited circumstances. Send the correspondence via registered mail so you have proof the skip tracer received the letter.


    File a complaint with your state attorney general or state Office of Consumer Protection. When writing your complaint letter, use the notes and copies of correspondence you've been keeping in your log to describe in detail the skip tracer's actions that are FDCPA violations or violations of your state's laws. Include pertinent copies of all correspondence, and make copies of the entire complaint letter before you mail it. Send it via certified mail.


    File a complaint with the Federal Trade Commission (FTC). To do this, use the FTC Complaint Assistant on the FTC website. Be aware, however, that the FTC does not resolve individual consumer complaints. According to the FTC, "The FTC enters all complaints it receives into Consumer Sentinel, a secure online database that is used by thousands of civil and criminal law enforcement authorities worldwide." It takes action itself only for the most egregious abuses and illegal practices.


    Hire an attorney to advise you. It may be time to file for bankruptcy. If you do, your creditors must stop all communication with you until the bankruptcy case is adjudicated.

Wednesday, October 29, 2003

What Is a Stand-by Letter of Credit?

According to the site Credit Management World, a stand-by letter of credit is a written obligation from a bank to pay a sum of money to a beneficiary on behalf of the bank's customer in the event that the customer does not pay.

Bank Guarantee

    A stand-by letter of credit can help facilitate a transaction by providing comfort to the beneficiary.The stand-by letter acts as a guarantee from the bank that the beneficiary will be paid for his goods or services.

A Solid Agreement

    The stand-by letter obligates the bank to make payment, even if there are disputes between the customer and the beneficiary.


    The customer applying for the stand-by letter of credit must have a credit line or collateral equal to the value of the letter. The assets are frozen by the bank until the transaction is completed.

Popular in America

    The stand-by letter of credit is used primarily in the United States and is often called a non-performing letter of credit, because it serves only as a backup should the buyer fail to pay as agreed.

Typical Uses

    Stand-by letters of credit are used to guarantee repayment of loans, to ensure fulfillment of a contract, and to secure payment for goods delivered by third parties.

How to Use a Simple Interest Calculator to find Your Payment Amount

How to Use a Simple Interest Calculator to find Your Payment Amount

Knowing how to calculate your interest rate can help you to make a better informed decision when purchasing a big-ticket item. Many websites that offer online applications for loans also offer a payment calculator to help you better understand your options. There are also some free software programs on the web that you can download for your computer. If you know how to use these calculators, you will be able to get a good idea of what your payment will be before you buy.


Using the interest calculator


    By either using a loan calculator or a mortgage loan website, you can easily calculate your interest and monthly mortgage payment. You can also download a program like "Tiny Mortgage Calculator" from the site listed in the Resources below. This will give you an easily accessible simple calculator that you can put on your desktop and use anytime.


    In the amount box, enter the total amount of the loan before interest.


    Next, enter the annual interest rate that the bank has offered for your loan.


    You will also need to input the length of the loan in months. For instance, a four-year loan would be 48 months.


    The simple interest calculator will then figure the total and give you a monthly payment, yearly payment and total payment over the life of the loan. Knowing your options can save you from accepting a loan payment that may be more than you can handle.

Tuesday, October 28, 2003

Will Credit History Follow a Consumer From the US to Canada?

A person's credit history includes factors such as credit cards, debt levels, collection accounts and bankruptcies. The three major U.S. credit bureaus, Experian, TransUnion and Equifax, record this information on documents known as credit reports. Additionally, the bureaus use credit report data to determine a person's credit score, which is a numerical value of a person's creditworthiness. An individual moving from the U.S. to Canada should consider the impact on his credit history.


    Although Canada has a similar system of credit reporting and scoring as the United States, Canada does not use the same credit bureaus as the U.S. Instead, Canada's major credit bureaus are Equifax Canada and TransUnion Canada. These companies base their credit reporting on information contained in Canadian credit reports. Even though these companies are subsidiaries of their U.S. namesakes, they do not typically share credit reports or identity info with their parent companies. Additionally, Canadian credit reports are tied only to consumers' Social Insurance Numbers (SIN), rather than their U.S. Social Security numbers.


    Most U.S. consumers moving to Canada will not have their old credit histories follow them up north. Instead, they will start new Canadian credit reports and receive credit scores of zero, the staring point for individuals with no credit history. Consumers wishing to use their U.S. financial information to establish credit histories in Canada must provide their American credit card information to the Canadian credit bureaus.


    A financial judgment is a United States court order in favor of a creditor against a person's assets due to an unpaid debt. Like other negative financial history items, judgments end up on consumers' American credit reports. Unlike other credit history items, creditors can pursue individuals moving to Canada by transferring their judgments from United States to Canadian jurisdiction. Although an individual in this situation will see his American credit score drop, it will usually not have any effect on his Canadian credit score, although it could possibly affect the score in some cases, according to a June 2010 article from Bills.com.


    Although an immigrant from the United States to Canada gets a fresh start in her credit history, she is still legally liable for her American debts and financial contracts (if any). Failing to pay her old U.S. debts while residing in Canada will ruin her American credit score, making it very difficult for her to obtain credit, find housing or seek employment should she ever decide to return to the States.

Monday, October 27, 2003

Negative Effects of Bad Credit on Employment

Bad credit can have a variety of negative effects on your life. It can prevent you from obtaining future mortgages, credit cards and auto loans. It can also hinder your ability to rent an apartment. In some cases, bad credit can also have negative effects on your ability to secure and maintain employment.

Employment Denial

    After you interview for a job, an employer may require you to consent to review of your credit report as a condition of a job offer. If you provide consent, your prospective employer may obtain and review your credit file. Employers in any industry may refuse to offer you a job or rescind an existing job offer if your credit report contains negative entries, including bankruptcies. However, a credit review is particularly important for jobs that involve handling finances or cash, such as insurance, banking and retail cashier jobs.

Work Performance

    Bad credit may interfere with your work performance -- if you have poor credit, you likely experience stress caused by creditor calls and letters, inability to obtain loans for needed items and worries about how you will restore financial stability. Credit-related stress can increase fatigue caused by sleep problems, lead to work absences because of illness and decrease your ability to focus on work tasks. These factors can cause you to miss deadlines and produce substandard work, which can put your job in jeopardy.

Creditor Communication

    Under the Fair Debt Collection Practices Act, a creditor may not contact you at work if forbidden to do so by you or your employer. However, your manager or human resources representative may learn of your creditors' attempts to contact you at work before you have the opportunity to forbid such attempts. Employers typically view creditor calls as a workplace disruption -- your manager or human resources representative may view you in a negative light and may begin scrutinizing your work performance to look for reasons to terminate the company's relationship with you.


    If your credit payments become sufficiently delinquent -- usually six months or more -- a creditor may file a lawsuit to obtain a judgment against you for the debt. In most states, a legal judgment allows a creditor to obtain authorization to garnish your wages. Wage garnishment creates substantial paperwork for your employer, and the employer's payroll personnel must monitor your earnings to make sure the proper portion of your wages is sent to the court. Although you cannot be fired for one wage garnishment, federal law does not protect your employment status if your employer receives garnishment orders from more than one creditor in a 12-month period.

Debt Acknowledgement Agreement

Debt Acknowledgement Agreement

A debt acknowledgment agreement is an agreement by someone that they indeed owe a debt. It can include a confirmation of the amount and a promise to pay the debt. A debt acknowledgment agreement can be separate from the loan documentation or promissory note.


    Many financial forms are considered debt acknowledgment agreements.
    Many financial forms are considered debt acknowledgment agreements.

    Debt acknowledgment agreements are a standard requirement for real estate mortgages. Signing a debt acknowledgment agreement is considered proof that someone knowingly and willingly entered a mortgage. A bill of exchange is a form of debt acknowledgment. The goods are exchanged for a promise to pay for the goods later. An IOU is a debt acknowledgment agreement; it confirms that a debt is owed to a specific person.


    A signed debt acknowledgment agreement can be used as proof that a debt is owed. However, it cannot be collected by a court unless the debt acknowledgment agreement states the specific amount owed, the interest rate and when the debt must be paid.

Statute of Limitations

    Different types of debt agreements have varying statute of limitations. The statute of limitations also depends on the jurisdiction where the agreement was signed. Signing a debt acknowledgment agreement for an expired debt restarts the statue of limitations.

Sunday, October 26, 2003

How to Speed Up the Loan Modification Process

The recent national housing crisis and resulting recession caused many homeowners to declare bankruptcy or end up in the foreclosure process. In response to the foreclosure crisis, Congress enacted a home loan modification program to help homeowners stave off foreclosure. Although banks can offer their own private modification programs to homeowners struggling to pay their mortgage, banks can use their own internal guidelines. Banks are not required to expedite the modification process. However, homeowners who apply for the federal Making Home Affordable Modification Program (HAMP) may receive an expedited review of their modification applications.


Establishing Eligibility


    Determine whether you qualify for a federal modification. The government imposes strict financial requirements to qualify for a HAMP modification, and applicants must have first liens originating before Jan. 1, 2009. Furthermore, a homeowner's mortgage payment must exceed 31 percent of his monthly pre-tax income, including any homeowners' association fees, insurance premiums and real estate taxes.


    Contact your loan servicer or lender to tell them you are applying for HAMP by written correspondence. Since the HAMP modification program expires at the end of 2012, all lenders providing Fannie Mae and Freddie Mac loans must process their applications to meet the deadline.


    Ask your lender or loan servicer to contact you by mail for further documentation. Since lenders must cease any pending foreclosure actions during the application process, they often seek to quickly process borrowers' applications. If your lender needs additional documents from you, do so in writing to avoid any future problems.

Complete and Submit a Modification Packet


    Obtain a copy of the Request for Modification packet from your lender or download an electronic copy from the official MakingHomeAffordable.gov website.


    Complete the modification request by providing your personal and financial information. Complete the request form in its entirety, including supplying co-borrower information, as applicable.


    Complete your Modification Affidavit. This is the official hardship affidavit that your lender will review to determine whether your current financial situation qualifies as a financial hardship.


    Complete your tax form request or Form 4506T. By completing this form and submitting it to the Internal Revenue Service, you are permitting the IRS to send your tax returns for the last few years to request to your bank. Your bank will let you know if you need to request more than one year of tax returns on line 6 of the form.


    Complete the income verification process. As specified on the modification request form, your bank will ask for at least the last 60 days of your most recent pay information, which includes your gross pay and deductions.


    Complete the Dodd-Frank form to certify that you have not been convicted of federal money laundering, theft, forgery, evading taxes or felony larceny within the last 10 years. By signing the certification under oath and penalty of perjury, you understand that the U.S. Department of the Treasury and federal agents can conduct background investigations.


    Sign and date your entire packet. Send your packet to your mortgage company listed on the MakingHomeAffordable.gov website.

I'm Trying to Establish Credit

I'm Trying to Establish Credit

Establishing credit is one of the first tasks young adults face upon completing high school or undergraduate studies. A strong credit history will make obtaining loans for major purchases such as a car or a house easier. It also will enable you to qualify for an apartment without a cosigner and will reduce your insurance rates.

Open a Bank Account

    Although your bank account information is not included in credit reports, credit agencies often require a bank account number on credit applications, according to Bankrate.com. A bank account will enable you to pay bills online or by check if you open a checking account. A bank account can help you manage your finances in an organized manner to prevent yourself from falling into debt, thus helping you build a solid credit history.

Get a Credit Card

    Possessing a credit card is one of the fastest ways to build a credit history. However, it is also one of the fastest ways to fall into debt. To stay on top of your finances and keep your credit score high, start with a card that has a relatively low credit limit, such as $500. A card with a low credit limit will not allow you to charge more than the specified limit to the card, essentially making it impossible to fall into credit card debt higher than the card limit. Use your credit card to make small purchases, such as gas or groceries, and pay the bill on time every month. Bankrate.com recommends applying for a department store credit card. These cards have less strict requirements than major credit card companies so you are more likely to qualify for them.

Pay All of Your Bills on Time

    Pay all of your bills, no matter how large or small, on time every month. Neglecting to pay your phone bill, electric bill or any other bill for more than a month can cause the company to collect on your account. This may be done internally or your information may be given to a third-party collection agency. If you neglect to pay after your debt has gone into collection status, your debt may be reported to the credit bureau, which will harm your credit. Paying on time will show that you are responsible with money, build your credit history and make companies more likely to provide a positive reference for you on credit applications in the future.

Take Out a Loan

    Take out a small loan for an expense such as a used car or new furniture to help establish your credit history. Be aware that there are interest rates associated with loans and you will be required to pay back the loan in full in addition to paying the interest rates. Receiving a small loan from your bank and then paying the loan back in a timely manner will help you build positive credit.

Saturday, October 25, 2003

Statute of Limitations on Credit Card Debt in Illinois

Statute of Limitations on Credit Card Debt in Illinois

For every possible case that comes into the court houses of Illinois, there is a statute of limitations established. This prevents the overburdening of the court system with cases that would have otherwise been forgotten. Plaintiffs have limitations on how long to file a lawsuit, and credit card companies are no exception.


    The purpose of a statute of limitations is to prevent lawsuits from occurring years after the debt accrued. If credit card companies were free to pursue legal action against a debtor at any time, without limitation, then many individuals would find themselves in court for a debt they thought was long gone. Therefore, state regulations put a limitation on the amount of time that a credit card company, or the collector it hires, can file a lawsuit for an alleged debt.

Time Frame

    A credit card account falls under the heading of a written contract with the credit card company because you signed your name to the credit card application, thus agreeing to abide by the credit card agreementa contract. Under Chapter 5, Article 13, Section 206 of the Illinois Compiled Statutes (ILCS 5/13.206), a statute of limitations in the amount of 10 years is set over cases regarding a written contract or evidence of indebtedness in writing, such as credit card statements.


    Per the Illinois statute of limitations, a credit card company has 10 years to sue you for any alleged unpaid balance on your account. The time frame for this statute of limitations generally begins on the date of the last statement the credit card company sent to you in which they claim you did not make a payment.


    You can prove the expiration of the statute of limitations if the credit card company waits until the last minute to file suit. You will need to provide documentation showing that the limitations started earlier than the creditor claims or that you paid the debt in full, including proof that the credit card company received the payment and cashed your check. Additionally, according to ILCS 5/13.206, should you make payment arrangements with the credit card company at any time after establishment of the unpaid debt, then the statute of limitations commences from the date of that payment or promise to pay.


    When a credit card company files a lawsuit against you within the statute of limitations, the goal is to obtain a judgment against you in order to collect the unpaid debt. This judgment will likely contain the addition of compound interest, attorney's fees and court costs that you will have to pay. A judgment will allow the credit card company to garnish your wages or bank account in order to collect the money.

How to Evaluate and Raise Your Credit Score

How to Evaluate and Raise Your Credit Score

When you want to get a loan, you might become curious about what your credit score and credit history are. These credit markers will determine whether you will qualify for a loan and what interest rates you will pay. But the time to worry about your credit score is before you need a loan. You can improve your financial outlook by understanding what your credit score is and how to improve it.



    Get your credit report and score. You can get your credit report and score from one of the three major credit bureaus: Equifax, Experian and TransUnion. Their websites are located in the Resources section. You can receive a free credit report once per year from each of the three credit bureaus via www.annualcreditreport.com, but you have to pay extra for your credit, or FICO, score.


    Understand the FICO score. The Fair-Isaacs Corporation's FICO score rates people on a scale of 300-850,with 850 being the best and 300 being the worst possible credit. A score below 600 means it will be difficult for you to get a loan with a decent interest rate, and a score below 500 means it will be difficult to get a loan at all.


    Examine your credit report. Check for outdated information; for example, federal law says bankruptcies can only be included on your report for 10 years, and closed credit card accounts for five years. Also, contact the credit bureau about any incorrect information on your credit report. Once the credit bureau has been notified, it may take 30 days before the change is noted on your credit report and score. If the changes don't appear, contact them again.


    Pay your bills on time. Being late on credit card or loan payments counts against you on your credit report. According to myFICO.com, your payment history represents 35 percent of your credit score. Once you are up-to-date, that will be reflected in your credit report and score the next time the credit card or loan sends information to the bureau--usually at least monthly.


    Mange your credit-to-debt ratio. Your FICO scores takes into account both the amount of credit you have available and the total debt you have accrued. You can raise your credit score by lowering your total debt. A good rule is not to owe more than 10 percent of your credit limit. Your total debt amount counts for 30 percent of your credit score. It may take a a month or two for all the changes in debt amounts to be counted on your report and score.


    Refrain from opening several new accounts. You may think the more credit you have the better, but the FICO score takes into account how long you have had various types of credit. Long credit relationships are good for your score, if they are paid on time, but several new open credit accounts could act as a red flag. A sudden opening of several accounts can affect your score immediately.

Is the Bank Obligated to Refund Stolen Money From My Debit Card?

Is the Bank Obligated to Refund Stolen Money From My Debit Card?

Debit cards offer consumers the convenience of paying for items immediately without having to carry cash. However, if thieves get a consumer's debit card number, they can wreak havoc with a customer's finances by draining his bank account through fraudulent purchases. In most cases, banks must refund the money as long as the customer follows fraud reporting procedures.

Risk When Using Debit Cards

    When using a debit card, the money is automatically and immediately withdrawn from your checking account. If you report a fraudulent transaction, the bank must replace the money; however, you may find yourself without funds until it does so. In contrast, if someone makes fraudulent charges on your credit card, you can dispute the charge prior to paying the bill.

Time Frame

    Privacy Rights says that banks may take up to two weeks to refund stolen money after you report the theft. The policy as to how quickly stolen money is replaced differs from bank to bank. Some banks may replace the money as soon as the theft is reported, while others wait until they have completed an investigation and verified that charges are fraudulent.

Liability for Fraudulent Charges

    Federal law as of 2010 limits your liability for fraudulent charges using your debit card to $50. To take advantage of this law, you must report the fraudulent charges within two business days of the charge. After two business days, your liability goes up to $500. If you do not report the theft for more than 60 days after receiving your statement, the bank has no obligation to refund your money at all.

How to Limit Your Liability

    Many banks allow you to check your balance online. Make a habit of doing so daily so that you can catch fraudulent charges immediately. If you do not recognize a charge on your online statement, call the merchant to try to find out more about the charge. If you do not recognize the charge after taking this step, call your bank's 800 number immediately and report the fraudulent charge. Ask your bank to cancel your debit card and issue you a new one to stop thieves from continuing to use your account.

    When you sign up for a debit card, ask your bank about how to enroll in fraud protection programs. Some banks automatically freeze your account and require you to verify charges if you spend over a certain amount or spend money in an unusual location such as a different state.

Friday, October 24, 2003

Can a Collections Company Garnish Wages in Pennsylvania?

If you owe someone money, he may resort to employing a collections company in an attempt to collect the debt. The creditor may also eventually file a lawsuit against you for the money owed. Once a judgment is entered against you by a court, many states allow the garnishment of your wages. Pennsylvania, however, only allows wage garnishment in a few limited circumstances.

What is Garnishment?

    Garnishment is a legal tool used by a creditor to satisfy a debt owed by you. Garnishment applies to both bank accounts and wages when applicable. When a wage garnishment order is in place, your employer will be notified of the order and must comply by holding money from your paycheck each pay period. Your wages will continue to be garnished until the court notifies your employer that the order is no longer in effect or the debt is satisfied.

Garnishment Procedure

    Before a creditor may garnish your wages, a court must enter a judgment against you. This is accomplished by the creditor filing a lawsuit against you in the appropriate court. You have the option to defend the lawsuit if you feel you do not owe the money. In some limited circumstances, such as for federal debts, a wage garnishment may be ordered without a preceding lawsuit and corresponding judgment.

When Can Wages Be Garnished?

    State laws vary widely with regard to what income or wages can be garnished. Pennsylvania only allows wage garnishment for a limited number of debts. Your Pennsylvania wages can be garnished for spousal or child support, as well as for any other divorce distribution obligation. Additionally, federal student loans and some taxes qualify for garnishment, as does criminal restitution and past due rent under a residential lease agreement. Other commercial debts cannot be the basis for a wage garnishment in Pennsylvania.

Collections Company and Wage Garnishment

    Typically, a collections company is employed to assist a creditor collect on a past due debt. Often, the collections agency becomes involved before filing a lawsuit; however, a collections company can also assist in collecting a post-judgment debt. The collections company itself cannot garnish your wages. If the debt is for one of the limited reasons for which wages can be garnished in Pennsylvania and the court has authorized a wage garnishment, then your wages will be garnished. The garnishment order, however, comes from the court, not a collections company.

Thursday, October 23, 2003

How to Stop Judgment Collections

When a creditor tries to pursue you to satisfy a debt, one of the creditor's options is to file a civil lawsuit against you. At this point, the creditor can take you to court and get a judgment against you. Once a judgment is issued by the court, the creditor can use several options to try to collect the debt from you. When you are faced with this situation, you can try a few different things to stop the collection actions.



    Appeal the judgment with the court system. If you have a legitimate reason to appeal the debt, such as you did not accumulate it, you could win the appeal. If you do not have a legitimate reason to appeal, this is simply a way to delay the inevitable payment of the debt.


    Pay the debt within 30 days of the court judgment. Typically, when you have a judgment issued against you, the court gives you 30 days from that date to pay the debt. If you can come up with the money in some way within that time period, you will not be subjected to further collection actions by the creditor. For example, you might be able to take out a personal loan or use money from a credit card to repay the debt you owe.


    Work out a payment plan with the creditor. After the creditor has a judgment, you must do something to resolve the debt, or the creditor has the legal right to take further action against you. The creditor might be willing to accept payments from you to pay off the debt.


    File for Chapter 7 bankruptcy with your local court system. If you have no way to pay off the debt, bankruptcy might be your only legitimate option. This should only be used as a last resort as it can lead to serious financial problems in the future. When you file for Chapter 7 bankruptcy, it eliminates any outstanding debt and judgments that you may have against you.

Wednesday, October 22, 2003

What Is Revolving Debt?

What Is Revolving Debt?

Revolving debt occurs when a consumer borrows money and is required to pay back only a certain percentage of the balance owed each month. Revolving debt differs from non-revolving debt such as mortgages and car loans, where the borrower pays a predetermined amount each month for a specific time period until the obligation is paid in full. Revolving debt offers advantages to the consumer, but also includes some pitfalls.


    Revolving debt allows you to carry a balance from month to month as opposed to paying it off in full at the end of the month. Interest is assessed on the balance and you can continue to borrow up to a predetermined limit. There is no set period of time where the balance must be paid off. The amount of payment due each month is typically based on a percentage of the remaining balance. As you pay off your balance, you regain the availability of that amount of credit. For example, if you have a credit line of $5,000 and your balance due is $500, your amount of available credit returns to $5,000 when you pay the $500 balance.


    Debtors benefit from revolving debt because it allows them to purchase items without having to pay the full purchase prices up front. This can be helpful in emergency situations, such as when the refrigerator breaks down and you don't have the cash to buy a new one. Creditors benefit from revolving debt by earning interest on the balances that are carried over.


    Perhaps the most common type of revolving debt is the use of credit cards. Credit card companies allow you to charge items to your account up to your credit limit and charge interest on your balance. Another typical type of revolving debt is a home equity line of credit where you borrow against the equity in your home.


    With revolving debt you can increase the amount of available credit without having to reapply for another loan or card. For example, as long as you have used your credit card responsibly and make your payments on time each month, you can request that your credit card company raise your credit limit.


    Misuse of revolving debt can have harsh financial consequences. According to MSN Money, the average American household carries about $8,000 in credit card debt as of 2010. With the required minimum monthly payment typically at 2 percent, that means a payment of $160 is required. The number of personal bankruptcies doubled from 2000 to 2010, in large part due to easy access to revolving debt.

Tuesday, October 21, 2003

How Do Medical Bills Effect Your Credit?

How Do Medical Bills Effect Your Credit?

Medical Debt and Credit Impact

    First, the good news: Medical debt may not have much of an effect on credit scores. Because it's often not factored into the utilization ratio that composes a FICO credit score, that number doesn't change. However, this isn't the case if the bill is presented to a collection agency. The collection agency purchases the debt for pennies on the dollar, then profits from obtaining payment on the past due amount. If they're not paid, the collection agency may then file a negative report against the debtor. Fair Isaacs senior scientist Ethan Dernholm says, "The precise impact to the FICO score will depend on the other info contained in the credit file."

The Reality of Medical Debt

    Even people with insurance can find themselves in a bad spot with medical debt. Due to caps in lifetime spending, a serious illness can result in hundreds of thousands of dollars in treatment that quickly top expenditure ceilings. "Over 60 percent of families who report having medical debt problems are covered by medical insurance. In fact, 75 percent of people who filed for bankruptcy because of medical debts had health insurance," writes Emily Davidson of Credit.com. Many patients attempt to avoid trouble by obtaining charity care or by signing up for payment plans, but those remedies may be hard to obtain, or may even increase debt in the long run.

Ways to Avoid Medical Debt Problems

    The best way to avoid credit impact from medical bills is to avoid the bills in the first place. This means taking good care of yourself, taking advantage of preventive treatment and medicine, and getting the best insurance your money can buy. Review hospital bills before signing off after treatment to catch billing mistakes and double charges, and try to pay some of the expense with lower-interest credit, if need be. Explore alternative treatments that may have a lower cost, and don't be afraid to be honest with doctors about financial realities and ability to pay debt. Simply being educated and focused on the financial process can help in avoiding problems post-treatment.

How to Block Your Social Security Number

How to Block Your Social Security Number

You may want to block your Social Security number to prevent unauthorized people from accessing information that's confidential or tied to your number. The popularity of this service is on the rise due to identity theft and other risks. Blocking your number may be helpful, along with freezing your credit report to prevent unwanted information requests and other fraudulent activity.



    Log on to the Social Security Administration's website at ssa.gov. Click on "What You Can Do Online" in the right-hand corner of the website.


    Click on "Choose your password or block electronic access." Click "Block electronic and automated telephone access." Click "Continue."


    Enter your Social Security number in the blank field, along with your date of birth in the second field using the drop-down menu. Click "Continue."


    To confirm the request, click "Yes, block electronic access" when the page asks "Are You Sure..."

What Are ACH Payments?

What Are ACH Payments?

ACH, or Automatic Clearing House, is a network that is accessed millions of times throughout the day without our being aware. You may see the term when making payments, but you may still not know what really goes on behind the scenes.

The Facts

    ACH is a national clearing house network for batch processing electronic fund transfers. ACH payments include direct deposit of payroll, tax payments and refunds, e-checks and many other processes that take place everyday behind our purchases. The ACH network operates in the United States and is governed by the Federal Reserve and NACHA (National Automated Clearing House Association)-The Electronic Payment Association.

Pros and Cons

    The advantages to accepting ACH payments are lower transaction costs, faster processing than paper checks and as another option for your clients. Disadvantages would be the possibility for fraud, insufficient funds and closed accounts. Plus, payments do not go through immediately like they do with credit card processing.


    If you know a few terms, it will help you decipher the fine print associated with ACH payments.

    The "originator" is the individual, corporation or other entity that initiates an ACH payment. The "receiver" is the individual, corporation or other entity that has authorized an originator to initiate a credit or debit entry to a transaction account held at an RDFI.

    The "Originating Depository Financial Institution," or ODFI, is the participating financial institution that originates ACH entries at the request of and by (ODFI) agreement with its customers. The "Receiving Depository Financial Institution," or RDFI, or is the financial institution qualified to receive ACH entries.

How It Works

    ACH functions as the middle man in the electronic transfer process, moving money out from the customers' bank account and into the business' bank account.

    The payer, which can be an individual or a business, starts the transaction by making a payment using the ACH option provided by the biller.

    The biller sends this request with your authorization to deduct the funds to ACH.

    ACH requests the funds from your bank account which then sends the money to ACH.

    ACH then sends the funds to the biller's bank for deposit.


    While everything appears to happen right away, there is a potential for delay in the transaction. The ACH network operates on the same days as the bank so requests made after business hours, on the weekends or over holidays will take an extra day or two to process or clear. Unlike credit cards, there is also a chance that a business can run into an issue of insufficient funds, along with cases of fraud or closed accounts.

Sunday, October 19, 2003

How to Write Off Debt

When credit card companies write off debt, they report uncollected monies to the IRS as lost income. Most credit card companies turn over delinquent accounts to collection agencies after 6 months of non-payment. Writing off your debt by not making regular payments should be considered a last resort, as your credit report will be affected negatively. Settling with the credit card company can help preserve your credit score and allow you to repay some or all of the debt.



    Keep in mind the pros and cons when considering writing off debt. Pros include no additional late or overage fees, the ability to negotiate low settlements with collections agencies, and no tax may be owed on credit card balance. Cons include lowered credit scores, loss of credit card privileges and harassment from collection agencies.
    Before writing off debt, contact the credit card company to see if they will work with you. Many companies will lower monthly payments, lower interest rates or reduce monthly fees.


    Print out credit card statements for the last 6 months. If you've recently lost your job or can't pay your bills due to an injury or other medical issue, gather layoff notices, unemployment information, medical bills and other documentation to prove your inability to pay the credit card balance in full.


    Obtain a copy of your credit report. If you've maintained good credit, you may be able to negotiate a lower settlement with credit card companies.


    Negotiate with the collection agency to get the lowest settlement possible if the credit card company turns your account over to them. Depending on your circumstances, you may not owe any money.


    Ask for negotiated settlements in writing and retain them for your records.


    Check your credit report every 6 months to ensure that the settlement was recorded properly. Report any discrepancies immediately.

How to Make an Offer to a Debt Collector

A debt collector's goal is always to collect the full amount of a debt. However, collectors realize that is not always possible and are usually willing to negotiate. Just as a debt collector wants to collect as much as possible, a debtor should seek to pay as little as possible. By the time a debt collector takes on a debt, damage is already done to the debtor's credit report because of late payments, and other notations on credit reports such as charge-offs and collection accounts. Paying the debt in full usually won't erase the damage, and that's one incentive for trying to resolve the debt for less than the full balance -- a process called debt settlement.



    Review correspondence from the debt collector to determine the amount due. Then judge how much you can afford to pay in a lump sum to settle the debt. The Wall Street Journal's SmartMoney writer Aleksandra Todorova reports that debt collectors will often accept 20 to 70 percent of the balance for unsecured debt such as credit cards. Prepare to make an initial offer of 20 percent by doing the math in advance.


    Call the debt collector. Control the conversation by making a specific offer while not answering any questions about your employment or assets. Tell the debt collector you have a small amount of money to settle the debt immediately. Tell the debt collector how much you are willing to pay.


    Increase your offer to about 35 percent of the debt if the debt collector balks at 20 percent. Politely end the conversation if you cannot strike a deal at 35 percent.


    Follow up with a letter in writing asking the debt collector to reconsider your offer if you weren't able to reach a deal. Tell the debt collector that if you don't hear back from him within 10 days you will offer the money to another debt collector for a separate debt.


    Contact the debt collector each month for more negotiations until you have a deal. Each time tell the debt collector you're looking to settle a debt and will take the offer to another debt collector if necessary. Once the debt collector accepts, ask for terms of the deal in writing. Review the agreement after receiving it and then make payment by mail using a cashier's check.

Reasons for Requesting Debt Forgiveness

Debt forgiveness is when you convince a creditor to take less money than you owe them as full payment for the loan. Exactly how much will vary from situation to situation. Common options include a percentage of the balance, all the money you've paid so far and even no money at all. When considering whether or not to ask for debt forgiveness, consider the following pros.

Help Your Bottom Line

    The math on debt forgiveness is basic. If you owe a total of $50,000 to various creditors and get one to forgive a $7,000 debt, then your total debt is only $43,000. This makes a palpable difference in your financial bottom line.

Creditors are More Open Than You Might Think

    Remember that creditors have to go through a long, expensive process to force you to pay off a debt. Legal fees, collections fees and the wages of their employees all add up to a sizable expense. Forgiving a thousand dollars of your debt might save the company two thousand of expenses if it looks like you're unable to pay.

    Individual companies are more or less willing to forgive debt. As a rule, credit card companies aren't willing to negotiate over your basic bills, but will often forgive late fees and even some of the interest. Small businesses are often more willing to forgive debt, while your federal student loan will only be forgiven if you die with a balance still due.

Helps Your Credit Score

    If you can negotiate forgiveness before a company sends you to collections, you can avoid adverse reports appearing on your credit record. Even better, the reduced debt helps your debt-to-income ratio, which many banks use to decide whether or not to give you a loan and at what interest.

Allows You to Service Other Debt

    If you get one debt removed from your load, you can use that money to pay off other loans. If you're paying $1,500 a month on three loans and get a $300 per month loan forgiven, you can use that $300 to pay off one of the other two loans that much faster. The end result is freedom from debt months or even years earlier than you had expected.

How Much Can You Spend on a Debit Card at a Time?

Debit cards allow you to purchase items and access funds without having to go to the bank. You can withdraw funds from most ATMs using a debit card, although your bank may charge you a withdrawal fee. You can also use your debit card at the cash register of most stores to purchase items. Some banks limit how much money you can withdraw or spend in a day using your debit card.

Set by Banks

    Bank rules vary as to how much money you can spend at a time using a debit card. When you sign up for your card, ask your bank representative to go over the rules with you. You will also get a printed copy of your debit withdrawal limit and other rules related to use of your card when you receive your card. Many banks limit spending and withdrawals to a few hundred dollars per day.

Ultimate Limit

    You cannot spend more money using a debit card than you have in the bank account linked to the card. If you have overdraft protection on your account, such as a linked savings account or a line of credit, you may be able to access additional funds by drawing on your overdraft protection. If a transaction does go through for some reason despite lack of funds, your bank may charge you an overdraft fee.


    Although you cannot spend money you do not have in your bank account using a debit card, you may find yourself in financial trouble if you don't use your card wisely. It is easy to overspend because you do not see the money exchange hands when you use a debit card. Always keep track of your expenses when using a debit card to avoid overspending and related financial problems.

Withdrawing vs. Spending

    Banks often have separate limits for withdrawals and spending. For example, a debit card provider may limit you to withdrawing $400 per day but allow you to spend up to $1,000 dollars per day in stores. You can sometimes continue to use the card to purchase items even if you have exceeded your withdrawal limit for the day. Contact your bank for details regarding how much you can spend using your card if you have already withdrawn the maximum daily amount.

How to Build a Debt-Free Life

Building a debt-free life has numerous advantages. People with fewer debts may enjoy more disposable income to build their personal savings. The less debt a consumer carries, the higher his FICO credit score. Excessive debt doesn't mean you're enslaved to a life of paying creditors. Specific techniques can help eliminate debt.



    Buy with cash. Don't cancel credit cards, but pretend you don't own one, and use cash to avoid accumulating extra credit card debt. The less you spend with credit, the quicker you can eliminate balances and live debt-free.


    Pay more toward debt. Paying a little more toward your debt balance each month can make a difference and help reduce principal quicker. Send two or three times the minimum payment when paying credit cards, and if you have an installment loan, consider rounding up to pay extra each month. For example, if your car payment is $350, consider rounding up and paying $400 each month.


    Earn extra money to become debt-free. Forfeit your free time and apply for a part-time job to help get rid of your debt quicker. This short-term sacrifice can help provide the funds necessary to become debt-free. Earn an additional $75 to $100 a week, and you will increase monthly earnings by approximately $300 to $400 a month.


    Renegotiate your interest rate. Take charge of your debt and credit, and ask your card companies for a better rate. Some companies quickly oblige and offer on-the-spot reductions. If a rate reduction is not possible, start searching for a low-rate card and transfer your balance, although be aware of the fees required to make those transfers.


    Speed up debt elimination with biweekly payments. Paying credit cards, mortgages, auto loans and other installment loans every two weeks rather than monthly can save money on interest and help pay off the principal quicker. A quicker payoff helps you build a debt-free life sooner. Pay half of your payments every two weeks. Discuss plans to make biweekly payments with your creditors and lenders first. Some companies do not accept this type of payment schedule.

Saturday, October 18, 2003

Loans & Bad Credit History

In the United States, the three major credit bureaus -- Transunion, Equifax and Experian -- keep track of your financial history by serving as a reporting medium between government agencies, companies, credit unions and banks to whom you can or do owe money. They give a uniform report of your credit worthiness with a numerical credit score. When you fail to meet your financial obligations, this damages your credit score and makes it more difficult to get loans.

Causes of Bad Credit

    Your existing loans can be a contributing factor to your current credit history dilemma in two different ways. First, if you have a number of outstanding loan debts, this may mean that your debt-to-income ratio is high, and a high debt-to-income ratio hurts your credit score. Second, part of your credit score calculation comes from your debt payment history. If you have outstanding auto loans, home loans, student loans, business loans or any other kinds of loans, they probably require you to pay a certain amount of money every month. If you fail to do so in a timely manner, they will report this to the credit bureaus, and every delinquent payment will hurt your credit score.

A Low Credit Score

    For most conventional lenders, such as banks and credit unions, a good credit score would be 700 or above, while a poor credit score would be below 600. If your score is between 500 and 600, you may be able to get a loan, but it will be difficult. If your score is below 500, you probably will not be able to get a loan from a conventional lending institution.

Interest Payments

    Some lenders are willing to give loans to people with poor credit scores. However, they know that lending to people with poor credit scores comes at a high risk of not being able to collect on the loan. For this reason, in order to make an aggregate profit, lenders charge higher interest rates to borrowers in this bracket.

Securing the Loan

    If you have a poor credit score but you need a loan, one way of getting one at a relatively low interest rate is by securing your loan. When you secure a loan, you pledge something of value as collateral for the loan. In this way, you agree that, if you fail to make payments, the lender can seize whatever you have pledged as collateral to collect on the loan. While securing your loan means a higher risk on your end, the fact that it means a lower risk on the lender's end translates to higher probability of approval and lower interest rates.

Unconventional Lenders

    As opposed to banks and credit unions, some companies specialize in making specific types of loans, even to people with poor credit scores. Such companies might specialize in making auto loans, home loans, title loans, payday loans and other loans to individuals who face difficulties in getting loans from conventional lenders. Beware of such lenders, though. While many are legitimate businesses that offer fair market interest rates for someone in your situation, some are predatory in nature and may look for ways to drastically increase your interest rates without provocation. Before agreeing to such a loan, do some research on the company. Even if you are dealing with a legitimate business, though, remember that the market interest rate for loans to people with poor credit scores is going to be high.

Can a Power of Attorney Open Credit in My Name?

Can a Power of Attorney Open Credit in My Name?

If you grant someone power of attorney, that person, called your agent or attorney-in-fact, can legally act on your behalf. The only limit on the kinds of things your agent is allowed to do is up to you and the laws of your state. If you want to allow your agent to be able to open credit in your name, you can. Talk to a lawyer for legal advice about using powers of attorney and what powers to grant your agent.

Agent's Powers

    When you grant a power of attorney, you name someone else as your agent. This agent, also known as an attorney-in-fact, can do whatever it is you allow him to do under the terms of the power of attorney (POA) document. For example, you can give your agent the ability to prepare your yearly tax return or rent an apartment on your behalf while you are out of the country.

Power Limitations

    You can give your agent as much or as little power as you wish. If you want your agent to have the broadest possible powers, you can grant a general power of attorney. This allows the agent to do anything you can do. You can also give the agent limited powers, such as power to perform one specific task. Your agent can open credit in your name if you grant general financial powers of attorney, or limited powers that make provisions for opening credit.

Time Frame

    Your agent can only act while the power of attorney is effective, and you can decide when this happens. For example, you can grant your agent the right to open credit on your behalf immediately upon signing the power of attorney document. You can also make the agent's powers contingent on certain conditions, such as granting the right to open credit if you ever become incapacitated or ill. Furthermore, a principal has the right to terminate an agent's power at any time, or include provisions in the POA that terminate the power automatically.

Other Considerations

    Some states have by statute designated requirements for certain kinds of powers granted to a power of attorney. These so-called "hot powers" must be specifically granted through a power of attorney document or the agent will not be able to exercise them. Even if a principal grants an agent general financial power of attorney, the agent cannot exercise hot powers unless specifically allowed to do so. What powers fall into this category differ between states, but a principal can always make specific provisions in a POA if he wants to allow an agent certain powers.

How to Build Credit After Declaring Bankruptcy

How to Build Credit After Declaring Bankruptcy

Declaring bankruptcy is one of the most damaging things you can do to your credit score. According to Consumer Credit Counseling Services of St. Louis, a bankruptcy can lower your credit score by 100 points or more. Plus, bankruptcy remains on your credit report for up to 10 years for all potential creditors to see. However, all is not lost. You can begin immediately rebuilding credit after a bankruptcy by responsibly using the credit you have and can get.



    Stay current on any debts that survived bankruptcy. Some debts, such as student loans, can't be discharged in bankruptcy, so to rebuild your credit, it's important that you keep these accounts current by paying on time and paying at least the minimum payment due. Positive credit history is a significant part of your credit score, and staying current on debts that precede your bankruptcy can help boost your score.


    Get a credit card. Most people, even after a big financial setback such as bankruptcy, can qualify for a credit card. A good option may be a secured credit card, in which you put down an initial deposit and you can't spend more than that amount. Liz Pulliam Weston, a personal finance columnist for MSN Money, says to make sure you get a card that reports to credit bureaus and has no or low fees.


    Use the card lightly to help build credit. Pay for regular expenses such as gas and groceries--items you would otherwise pay cash for--with your credit card. Using your card for everyday items ensures you have the money to pay your bill and are not overspending.


    Pay your credit card bills on time. Payment history makes up the biggest portion of your credit score--35 percent, according to myfico.com--so you can damage your credit score the most by being late on payments. It's good to get in the habit of paying several days in advance to ensure your payment arrives on time. Though your credit score won't get dinged for payments that are a few days late, the credit card company will charge you a fee if your payment is even a day late.


    Pay your bill in full every month if possible. Amounts owed make up 30 percent of your credit score, so it's best to carry as small a balance as possible. By paying the card off every month, you will not only keep your amounts owed low, but you will also avoid interest charges.


    Get an installment loan. Pulliam Weston, the MSN Money columnist, says you can rebuild your credit faster by having an installment loan such as a car or home loan than just by using credit cards. She says many people can qualify for these loans a few months after bankruptcy; however, be prepared to pay high interest rates. And don't get a loan just for the sake of it. If you don't need a new car, don't buy one simply because you can qualify for credit.

How to Get a Note From a Collection Agency for Removal From a Credit Report

A collection on your credit report can negatively impact your borrowing ability. Creditors who see the collection may be less inclined to approve your loan applications. Removing a collection from your credit report requires negotiation with the collection agency and the creditor. Since both parties are interested in getting paid, it is in their best interests to work with you, if possible. They may agree to remove the collection or state it as "Paid" in exchange for you satisfying the balance due.



    Call the collection agency. You can get its phone number from payment demand letters you have likely received in the mail.


    Tell the collection agency you agree to pay the balance, if it removes the collection from your credit report. If the collection agency refuses, you can suggest paying another creditor instead. The collection agency may state it needs to confer with the creditor.


    Ask for "Paid or "Settled." If the creditor and collection agency state they are unable to change the collection in your credit report, ask them to state it as "Paid" only. This is much better than "Paid Charge-off" or "Paid Collection." Another option is to have the creditor list the account as "Settled." While this is less attractive than "Paid," it is not as negative as "Paid Charge-off" or "Paid Collection."


    Get the agreement in writing. If the creditor and collection agency agree to accept payment in exchange for the removal of the collection from your credit report, make sure you get a letter stating this. Inform them you will not pay until you receive this letter.

Will Requesting a Credit Line Increase Hurt My Credit Scores?

Requesting a credit line increase will prompt a review of your credit and could hurt your credit score. However, everyone's credit situation is different, and no one can say definitely if your score will be affected. Your score could drop by a few points or not at all. Most people apply for credit only a few times a year at most. Multiple applications for installment loans, credit cards and credit limit increases suggest that you are loading up on credit, and that could lower your score.


    A credit inquiry is placed on your report each time a creditor reviews your report. Applications for credit or for credit limit increases result in what is known as a "hard" inquiry. "Soft" inquiries occur when creditors make cursory reviews of your credit to consider you for special offers or to confirm that your credit score still meets certain standards.

Automatic Increases

    Soft credit inquiries often lead to periodic credit limit increases without you asking. Calling to request a credit limit increase usually leads to a hard inquiry, but not always. If you are concerned about hard inquiries ask about the card company's policy before requesting an increase, The representative will tell you if the request will result in a hard or soft inquiry. Paying all your bills on time while keeping balances low is the best way to qualify for automatic credit increases.

Excessive Debt

    Aggressively seeking credit limit increases can lead to excessive debt. Some don't people reject credit limit increases for that reason. Some will call the card company to insist that a credit limit increase be reversed and that they not receive future increases unless they ask. People with high credit scores often have high credit limits but very small balances.

New Accounts

    Opening a new credit card account is an alternative to seeking a credit increase. The new application will also result in a hard inquiry, but if approved, the credit limit may be much larger than any credit limit increase you might have received. The key is not to go on an application spree regardless of whether you are applying for new credit or for a credit increase. Building credit slowly while using it responsibly is best.

Friday, October 17, 2003

What Tends to Aggravate Debt?

What Tends to Aggravate Debt?

Many people who own credit cards can attest to the fact that it is easy to become burdened with debt. People might make purchases without much thought to the eventual financial consequences, because the full amount does not need to be paid at the end of the month. In some cases, certain actions can make the debt problem even worse.

Paying Only the Minimum

    You may have noticed on your monthly credit card statement that the minimum amount is a small percentage of your outstanding balance, often about two percent. Credit card companies do this intentionally in an effort to keep you in debt for as long as possible. By paying only the minimum amount due each month, you may take years to pay the card off in full, even if the outstanding balance is relatively small. Paying even $10 or $20 more than the minimum each month can reduce your debt faster.

Teaser Rates

    Credit card companies sometimes offer attractive "teaser rates" to entice people to transfer other balances to their card. The new interest rate may be as low as zero percent in some cases. These rates only last for a short period of time, often six months to a year. After the introductory period, the cardholder then pays the "normal" interest rate, which may be much higher than the rate she had been paying on the previous card, further aggravating the debt situation.

Consolidation Loans

    Consumer finance companies offer consolidation loans that pay off existing debt like credit cards and allow the borrower to make one monthly payment. In some cases, these loans may include even higher interest rates than the credit cards. And while the monthly payment may be lower than the aggregate of the credit cards, this is usually because the payments are spread over an extended time period. As a result, the total interest paid by the borrower may also be greater.

Poor Saving Habits

    People who do not save money may need to rely on debt instruments like credit cards to meet unplanned expenses or emergencies. As debt continues to pile up, the opportunity to save money further diminishes as any spare funds. This can result in a vicious cycle where debt continues to spiral out of control while the chance to save money becomes virtually impossible.

Thursday, October 16, 2003

How to Contact a Collection Agency to Pay a Bad Debt

Paying a collection account has little financial benefit for consumers since satisfying the debt does not positively impact their credit scores. Certain lenders, such as mortgage companies, often require consumers to pay off outstanding debts before doing business with them. Some consumers pay collection accounts not because of a pending loan, but because of a moral obligation to satisfy their debts. Calling the collection agency and conducting payment negotiations over the phone my seem simple, but doesn't provide you with proof in the event the company later sells the debt or claims you did not pay. Communicating in writing eliminates this risk.



    Pull your credit report. The Federal Trade Commission notes that you can request a copy of your credit report for free online at AnnualCreditReport.com


    Locate the "Accounts in Collection" section of your credit report. Review it for the collection agency's tradeline. Write down the company's exact name and address as listed on your report.


    Write the company a letter noting your intent to pay. If you want to settle the balance, note that fact and how much you're willing to pay in your letter. Include that all communication concerning your payment must take place in writing and that it is inconvenient for you to receive collection calls at home. Federal law then prohibits the company from calling you at home -- forcing it to conclude negotiations with you in writing.


    Mail the letter to the address listed on your credit report. Use certified or registered mail and ask for a return receipt. Doing so forces a collection agency employee to sign for each letter you send and you receive a copy of that signature. This prevents the company from being able to claim it never received correspondence from you.


    Make a copy of your letter and any responses you receive from the collection agency throughout the negotiation process. Put the paperwork somewhere safe in the event you ever need to prove that you paid off the debt or that the collection agency agreed to accept a lesser amount as payment in full.

Can I Give a Copy of a Credit Report to a Customer?

If you deny credit to a customer, that customer has a right to a free copy of his credit report. This allows the customer to check his credit for errors or inaccuracies that negatively impact his credit, ensure that there has been no fraudulent activity related to credit and make arrangements to repair any problems. Customers can obtain their free credit report from you or from any of the three major credit bureaus (Experian, Equifax or TransUnion).

Customer's Right

    If you denied credit to your customer, he has the right to request his credit report for free. Customers can do this by contacting any of the three major credit bureaus. As of 2011, there are no laws stating that you, as a lender, cannot provide a copy of the credit report to your customer as well. In some states, you may have to provide the exact credit score to your customer when you deny him a loan.

Identity Theft

    If you choose to give a customer a copy of her credit report after denying her credit, you should verify that you are giving it only to the customer herself. If thieves obtain access to a customer's credit report, they can easily mine it for sensitive data. Therefore, do not issue credit reports to people claiming to be relatives of the customer or to people who cannot provide identification proving they have a right to see the credit report.


    The credit report you obtain when you pull a customer's credit report is not exactly the same as the one he gets from the credit bureau. Although both reports contain the same information, your report is organized differently and contains information specific to lenders, such as the customer's bankruptcy risk and lending risk scores. The customer may not be able to read the report you give him as easily as the report he gets from the credit bureau.

Fair Credit Reporting Act

    Under the Fair Credit Reporting Act, it is illegal to refuse to furnish the customer's credit report if she requests it after being denied credit. However, you may disclose to the customer your concerns about her getting a credit report from you rather than from the credit bureau and suggest that she get it from them instead. If the customer still wants to get the credit report from you after this disclosure, you must give it to her.

Wednesday, October 15, 2003

How Do You Bring Your FICO Score Up?

Your FICO (Fair Isaac Corporation) score is the numerical culmination of various credit data culled from the three credit bureaus: Experian, Equifax and TransUnion. Along with your income, job history and how much you're requesting, lenders take into account your FICO score before lending you money. Your FICO score is determined by payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), new credit (10 percent) and types of credit used (10 percent). FICO scores range from 300 to 850. The higher the score (725 is average), the better the interest rates and chances of credit approval.

Correct Errors

    You can increase your FICO score over a period of four to six months. Scores are updated monthly and financial planners suggest that consumers check their score at least annually or at least six months before planning a major purchase. The Wall Street Journal reported that a 2004 Public Interest Research Groups study found 79 percent of credit reports have errors, 29 percent of which were serious enough to cause credit denial. Increase your score by notifying a credit bureau of a mistake on your report.

Pay Down Your Cards and Work with Lenders

    To increase your FICO score, try to pay down any balances you can or pay off balances in full each month if you can. Maxing out your credit cards won't do your FICO score any favors nor does having multiple balances. If you have a good, long relationship with your lender, you should also talk to your lender to see if a late payment here or certain negative data there can be removed from your credit report. Explain the circumstances around the late payment, etc.

Do Not Close All Accounts

    The length of your credit history does count for 15 percent of your FICO score. Keep your score up by holding onto your credit card--even if you rarely use it. This shows that you stay loyal to a lender and is especially helpful if you always clear out the balance on it.

Tuesday, October 14, 2003

How to Get Out of Debt Without Filing for Bankruptcy

How to Get Out of Debt Without Filing for Bankruptcy

Many Americans live outside of their means. Whether it's keeping up with your neighbors or something unexpected, numerous people have gone outside of their budget and have plunged deep into debt. To dig out requires a lot of hard work, but after you have done so without calling a debt consolidation firm or filing for bankruptcy, you will feel like the wealthiest person in the world.



    Make a list of all debts you owe using the following format, preferably in Excel: Credit Card... Card Credit Number... Total Amount Owed... Minimum Monthly Payment. List all of the consumer debt you owe. Be honest with yourself! Be sure to include all credit card debt, student loan debt, mortgage payments, etc. Include everything.


    Devise a budget. What do you bring in per month versus what you pay? You need to account for everything - don't forget insurance payments, cable bills, daycare, minimum credit card payments, fun money, you name it. Basically every dollar you bring in should be accounted for. If you have extra - congrats! If not, you're like many people. Look into ways to make more money. It'll be tough for awhile, but the payoff makes it so worth it! Imagine living your life free of debt.


    Make a promise. Obviously, since you are in debt to begin with, you can't trust yourself with "just one" or only for "certain purchases." Just vow to put them in a drawer or a block of ice. Take your list of debts owed, and order it from the smallest balance remaining, to the largest. This is the order in which you will pay off debt.


    Pay down smaller debts first. What do you owe on the smallest credit card or other debt that you are going to pay off first? The goal is to get that paid off ASAP; paying down the smallest debt first earns you a small "win" and will entice you to pay off more. Your minimum monthly payment is already listed in the budget you made. Your goal is to put every available penny towards that ONE small debt, and pay the minimum on all others.


    Take that money that you were applying to the first credit card or debt, and after that first debt is paid off start paying that amount to your next debt. Continue this process until you are out of debt! The snowballing process is really fun once you get through the first few hard weeks!