August 2003 ~ Credit And Debt Management

Sunday, August 31, 2003

Collection Agency Recovery

11:54 PM No comments

When a job loss, divorce or financial emergency strains the budget, some individuals opt to pay their most relevant debts, such as rent and utilities, and ignore unsecured loan payments, credit card bills and medical bills. Leaving debts unpaid, however, can result in the creditor sending the debt to a collection agency.

A collection agency either aids the original creditor in collecting the debt or purchases the debt from the original creditor for a significantly reduced amount. By transferring or selling the debt to a collection agency, the original creditor does not need to expend its own resources attempting to collect the delinquent debt. If the collection agency owns the debt, it keeps the full amount it collects from the debtor. If the original creditor merely transfers the debt to the company, however, the collection agency may only keep a percentage of the debt it collects and must send the remaining amount back to the creditor.

Collection agencies gather the information they get from original creditors to contact the debtor about his account. In some cases, the information is outdated or incorrect and the collection agency must use a skip-tracer. Skip-tracers are individuals that track down a debtor's personal information to make him easier for debt collectors to contact (See References 2). Once a collection agency has the debtor's telephone number, address and Social Security number, it may call him, send him letters about his debt and report the collection account to the credit bureaus.

According to CNN Money, creditors don't typically sell debts to collection agencies until the account holder is at least six months behind on her payments. The more time that passes since the debtor's last payment, however, the more difficult it is for a collection agency to collect the full amount. For older debts, debt collectors often offer consumers settlement agreements to coerce them to satisfy at least a portion of the debt they owe.

Some debt collectors work on commission. Because they receive a portion of the debts they collect, they may take extreme measures to procure payments from debtors. Doing so, however, can leave the company vulnerable to a lawsuit. The Fair Debt Collection Practices Act (FDCPA) was established to protect consumers from abusive debt collection tactics. The FDCPA strictly prohibits collectors from collecting a debt by misrepresenting the collection agency's intentions, verbal or physical abuse and threats. Should a debt collector violate the FDCPA, the debtor may sue for damages.

If a debtor ignores a collection agency's request for payment, it may sue him. The collection agency must notify the debtor of the lawsuit and give him the opportunity to defend his position. If the statute of limitations in the individual's state has expired, he can use this as a successful court defense against a collection agency lawsuit. The statute of limitations is responsible for regulating the length of time a company or individual has to file a lawsuit to collect a debt. Should the debtor defend himself and lose, he could face significant financial consequences. Depending on the individual's state, the collection agency may be able to request a wage garnishment or bank account garnishment after a lawsuit.

Advantages and Disadvantages of Credit Card Consolidation

9:31 PM No comments

Debt consolidation is one strategy for eliminating your credit card debt, and you may see lots of advertisements that suggest consolidation will save you money. However, debt consolidation isn't a one-size-fits-all solution. It's important to evaluate your specific financial situation and spending habits before committing to fighting your debt by taking on even more debt.

You may consolidate your credit cards in three different ways: through a debt consolidation loan, a zero interest credit card or a line of credit based on equity (usually of your home). Consolidation involves using one of these three methods to gather multiple debts under one new form of credit. Generally, you need to have good credit to qualify to take on a new form of credit for consolidation.

The biggest advantage to utilizing debt consolidation is the convenience of paying only one debt each month rather than having to keep track of multiple payment due dates. Also, if you manage to find a debt consolidation loan or home equity line of credit with a lower percentage rate than your current debt, you may save money on your total debt owed. Also, debt consolidation may help your credit score by raising the amount of credit available for you, which positively influences your debt utilization ratio.

Debt consolidation can be dangerous if you are easily tempted into overspending. Consolidation loans and lines of credit free up your credit, and the only thing stopping you from continuing to spend is your own willpower. According to credit union manager Chris Viale, 70 percent of individuals who take out consolidation loans end up with the same or more credit within two years. Also, consolidating through a zero-interest rate credit card means that you need to pay off your debt over the short introductory period. For all three methods, it's vital to keep in mind that you're battling your debt by taking on more debt, which may lead to a vicious cycle of spiraling farther into the red.

A credit counselor may be able to help you become secure in your decision on whether to attack your credit card debt with consolidation or an alternative method of debt elimination. Reputable credit counseling organizations will review your financial situation, then offer you options for getting out of debt, such as paying your debt down with a payment plan, using a debt management plan or even filing for bankruptcy.

How to Get Rid of College Debt

8:07 AM No comments

Most college students do not worry about the amount of debt they accumulate while in school. However, once they graduate the debt payments begin to add up. Student loans are not cleared during a bankruptcy, which means that the only way to get rid of college debt is to pay it off. Setting up a payment plan and putting extra money toward college debt will speed up the process of getting rid of college debt.

Instructions

List all of your student loan debts and other debts incurred while going to college. List credit card debt accumulated during college as well. Include the minimum payment amount and the total amount of the debt, as well as the interest rate on the debt.

Put your debts in order from the highest interest rate to the lowest. This is your debt payment plan. Paying off the highest interest rates first will save you money in interest payments. Some people do smallest amount to largest amount as well.

Write down a budget listing your monthly expenses and income. Make sure you are spending less than you earn, and then look for areas you can cut so you can put extra money toward your college debts. The more money you find the more quickly you can pay off your college debt.

Apply the extra money you find to the first debt on your list, while continuing to make minimum payments on all of your other debts. Continue to apply the extra money each month until the debt is paid off, then move on to the next debt on your list and pay the extra money you have toward it.

California Laws on Garnishments From a Debt Collector

1:41 AM No comments

A creditor or debt collector cannot take it upon himself to garnish your bank account or wages; he must first get a judgment against you for the money you owe. The Internal Revenue Service is exempt from this limitation, but all other creditors have to take certain legal steps before they can garnish your wages or accounts. In California, you have the advantage of state laws that favor debtors a little more than creditors.

California makes it very difficult for a debt collector to take anything other than traditional W-2 income. Even then, the collector is limited as to how much she can garnish. Federal law exempts the equivalent of 30 times the minimum hourly wage each week. As of 2011, the federal minimum wage was $7.25 per hour. California's minimum wage was $8 per hour in 2011, but California defers to federal law on this issue and will only protect the equivalent of $7.25 per hour, or $290 a week for a 40-hour workweek, minus tax deductions. At least this much of your paycheck is safe from garnishment. If you earn significantly more than minimum wage, the debt collector can take 25 percent of your earnings after taxes. If your net take-home pay each week is $1,000, the creditor can take $250.

Debt collectors can also garnish your checking, savings and investment accounts for the money you owe. In this case, there are fewer limitations. A creditor must first get a writ of execution from the court, but then he can seize the entire amount of your debt. If you owe $5,000 and your checking account contains $2,000 to use toward next month's bills, the creditor can take all of those funds. However, California does give you the right to prove that the creditor is not entitled to all of the money if some of it came from exempt sources other than your regular income.

According to California law, many sources of income are exempt from claims by debt collectors. If a creditor garnishes your checking account and it contained any money from exempt sources, you can probably get it back if you can prove where the money came from. For instance, California protects all money you receive from pensions, IRAs, public assistance, worker's compensation, unemployment benefits, union benefits and insurance proceeds. If you just received a pension payment in the amount of $1,000 and it went into your checking account, then the debt collector garnished the entirety of your checking account, she can't have that money. You'd have to prove through deposit slips and documentation that your pension was the source of the money. A creditor also can't garnish such checks directly.

The protection that California gives debtors can be complex. If a creditor or debt collector gets a judgment against you, or if you receive notice that he is applying to the court for a writ of execution, you should immediately contact an attorney to make sure you understand all the exemptions and alternatives that California offers you. Some lawyers offer free consultations, but ask when you call for an appointment to make sure.

The minimum wage/25 percent garnishment rule only applies to consumer debt. For instance, if you owe delinquent taxes or past-due child support, your creditor can usually garnish more.

How to Levy Someone's Bank Account

12:33 AM No comments

When you lend someone money and that person does not repay the debt, you don't have to accept the loss as a lesson learned. Unpaid creditors, both private and commercial, can petition the court for permission to seize the amount the debtor owes directly from his bank account through a bank levy. Provided the individual's bank account balance meets or exceeds the amount of the debt, the bank will freeze his accounts, withdraw the amount he owes and remit it to you.

Instructions

Visit the county courthouse in the county where the debtor lives. File a lawsuit against the debtor by filing a summons and complaint with the county clerk. Serve a copy of both the summons and the complaint upon the debtor in accordance with your state laws.

Gather any evidence you have that illustrates how much the debtor owes, such as the original contract between you and the debtor or copies of receipts you gave to the debtor for past payments.

Present your evidence to the judge on the hearing date specified on the summons and complaint. If the debtor does not appear at the hearing, or she appears but lacks enough evidence to refute your claim, you win the lawsuit and the court awards you a civil judgment. The civil judgment gives you the legal right to levy the debtor's bank accounts.

Return to the court clerk's office. Ask that the clerk schedule a post-interrogatory hearing. The post-interrogatory hearing is mandatory for the debtor and forces her to appear in court and answer any questions you may have about her assets.

Appear in court for the post-interrogatory hearing. Ask the debtor for the location of each of his bank accounts. You must know where the debtor banks are before you can levy funds directly from his accounts.

Visit the court clerk's office. Give the clerk the case number of your previous lawsuit against the debtor. This proves you have the legal right to seize assets from the debtor. Request that the court clerk issue a writ of execution.

Hire a process server to serve the writ upon the debtor's bank. The bank will freeze the debtor's accounts to prevent her from withdrawing any money prior to the levy. After your state's mandatory freeze period, the bank will lift the freeze and withdraw the amount of the levy from the debtor's bank accounts and remit it to you.

Legitimate Debt Relief Programs

8:24 AM No comments

Every day people find themselves in a financial situation that they feel they cannot get out of because they have large amounts of debt. Whether the cause is due to a misuse of credit cards, an increase in an adjustable mortgage, a health emergency or any other reason it is important to be aware of debt relief programs that are available to consumers. However, it is even more important to choose a reputable debt relief program to fix your financial situation.

The Curadebt company has been providing debt relief solutions nationwide since the year 2000. According to Topconsumerreviews.com list of best debt relief programs, Curadebt is the best choice for consumers looking to address their debt. The company specializes in handling debt that is more than $10,000. Once they are hired, they take over all conversations between client and debt collectors and can either set up a payment plan or negotiate a lump sum. To set up a free consultation, go to Curadebt's website.

Curadebt
12707 High Bluff Drive 200
San Diego, CA 92130
(877) 850-3328
curadebt.com

CareOne Services was rated by Topconsumerreviews.com as being the second best debt relief program for several reasons. First, the Better Business Bureau (BBB) gives CareOne an A+ rating on its website. This rating indicates that according to the BBB, CareOne is a legitimate and smart choice for consumers looking for debt relief. Secondly, CareOne is actually a group of credit counselors. This means that CareOne can handle customers who have low levels of debt (less than $2,500) to customers that have high levels of debt (more than $10,000) and everything in between. Furthermore, the high amount of customers gives CareOne leverage when negotiating with creditors. In other words, they can take a single customer's debt and combine it with another customer's debt to negotiate a more favorable deal for both customers involved.

CareOne Services, Inc.
8930 Stanford Blvd.
Columbia, MD 21045-5805
(410) 910-1735
(410) 423-2605
careonecredit.com

The third best debt relief program as rated by Topconsumerreviews.com is Debt Options. The Better Business Bureau (BBB) rates this company as an A- corporation and states that they have given "proper consideration to complaints presented by the Bureau." In other words, they have resolved any complaints made by consumers. The company also provides a very educational website (godebtfree.com) that consumers can reference to find out information on credit counseling. Overall, Debt Options has superior customer support and a variety of options for customers to choose from.

Debt Options
3350 NW 53rd St. 101
Fort Lauderdale, FL 33309
(800) 523-0102
(954) 484-6653
123bedebtfree.com

Legal Issues Involving Overdraft Charges on Checking Accounts

5:19 AM No comments

There are many legal issues associated with overdrawing a checking account that consumers should take into consideration. Customers often take advantage of overdraft fee protection. This coverage protects them from fees associated with overdrawing their account. Understanding the laws concerning overdraft charges can protect you from excessive fees.

Overdraft protection is a financial institution's promise to cover charges if a customer overdraws their account. There is usually a monthly fee for this coverage, and the institution specifies the maximum amount it will cover. Customers must tell the bank or financial institution if they wish to take advantage of overdraft protection.

Always check your account balances before using an ATM or even writing a check. You may have deposited money recently, but it may not clear right away. Your account can be overdrawn when you think you still have enough money to cover the payment or withdrawal. Most deposits are processed overnight, but it is important to be sure the money is actually available in the account.

Your bank has two options if you write a check that exceeds the balance in your account. It can either cash the check or return it to you. Banks usually charge fees both to both parties for returned checks. Ask your bank what its policy is for handling a check in an overdraft. The bank can also charge you a fee if it cashes a check and there are insufficient funds.

Customers sometimes feel that they should be notified if a check bounces. That way, they know not to write more bad checks. However, the bank is under no obligation to do so. You are responsible for any bounced checks and it is your responsibility to check your balance regularly.

All members of a joint account will be liable for any fees in the event of an overdraft, even if only one person was responsible. Also, only one member of the account needs to opt in to overdraft protection to receive coverage.

How to Defend a Warrant in Debt in Virginia

6:27 PM No comments

It is not absolutely necessary to be represented by legal counsel when you have to answer to a Warrant in Debt in the state of Virginia. If you know that you owe the amount being requested by the creditor then there is no reason to fight it. Making an appearance in court is not an admission that you owe the money, but not showing up after you have been notified may be assumed to be admission and a judgment will probably be granted. In most cases further steps must be taken by the creditor to collect on the judgment.

Instructions

Bring your statements and documents pertaining to the debt to the court with you. If you do not disagree with the amount the creditor is asking for they will be given a judgment. If at all possible pay the amount owed before you come to court. This judgment will be reported to the credit bureaus and will remain on your record for seven years even if it's paid.

Use your statements, payment receipts and documents to prove your case if you disagree with the amount the creditor is asking for. Present your receipts to the judge or court and let the judge decide what the correct balance is.

Make payment arrangements with the creditor through the judge to rectify the situation. This will avoid the creditor going further and seeking a garnishing of your wages.

How to Pay Off Judgements

4:31 PM No comments

Most people incur bad debt at some point in their financial life. Sometimes this debt is in the form of judgments, which are debts that a court has mandated that you pay. These judgments show up on your credit report and negatively affect your credit. Paying off judgments will increase your credit score and help you get out of debt.

Instructions

First, read through your judgment and find out how much money you owe and to whom you owe it.

Collect the needed funds, either through your current paycheck or by taking on extra work to be able to afford the payment.

If you were unaware of the judgment, you can file a motion to vacate the judgment for improper service if you never received the summons to appear in court. Remember, you will have to file this with the court that processed the judgment.

Contact the debtor, and find out their process for payment.

Once the payment is made, make sure to report it to the court to show the judgment as paid in full. You will need to prove the payment through a receipt and fill out a request to vacate judgment form.

Legal Action for Debt

7:56 AM No comments

If a consumer owes a debt that he cannot or will not pay, his creditor will use a variety of methods to coerce him to pay what he owes. This can include sending letters to the individual about the debt, calling him on the telephone and making derogatory reports to the credit bureaus. If the debtor still neglects to make a payment on the account, the creditor can opt to take legal action against the consumer.

A creditor can file a civil lawsuit against a debtor for the amount that she owes plus the attorney fees and court costs the creditor incurs by filing the suit. The creditor must notify the debtor of the pending legal hearing by serving the individual with a summons and complaint. Service procedures vary by state. The debtor can arrive in court with a defense or decline to appear at the hearing. Should the debtor decline to appear or defend herself but lose the case, the court will grant the creditor a judgment.

The amount of time a creditor has to collect a delinquent debt via a lawsuit is governed by the statute of limitations for debt collection in the debtor's state of residence. The statute of limitations goes into effect 180 days from the day the individual made his last payment on the debt. Depending on the type of debt the individual owes and where he lives, the statute of limitations can range from two years to 15 years. Although an expired statute of limitations doesn't stop a creditor from filing a lawsuit, it can result in the lawsuit being dismissed if the debtor uses the expired statute as a defense in court.

Should the creditor win its lawsuit and become a judgment creditor, it gains the right in some states to force the debtor to pay what she owes involuntarily. A creditor can use the judgment to obtain a wage garnishment order or bank levy against the individual. This allows the creditor to demand a portion of the debtor's wages from her paychecks or seize funds directly from her checking account. A creditor also can place a real estate lien against the individual's home. The consumer must pay off the debt to remove the lien before she can gain a clear property title to sell or transfer the property.

Not all states allow creditors to use legal force to collect a debt from consumers. States such as Pennsylvania and South Carolina, for example, only permit wage garnishment to be levied against individuals for debts they owe to the government. Creditors in these states still have the right to file a civil lawsuit against debtors, but have limited means of enforcing a successful judgment.

Each state has different guidelines for how defendants of a lawsuit must be notified of the impending hearing. If proper notification guidelines are not followed, the debtor can contest any resulting judgment against him and might be successful at having it vacated. Unethical debt collectors have been known to intentionally fail to properly notify individuals of a lawsuit with the goal of obtaining a default judgment when the debtor does not appear in court. This gives the creditor the ability to legally enforce the debt without granting the debtor an opportunity to defend himself.

Who Do I Pay If My Credit Debt Has Been Sold?

6:31 AM No comments

Debt you incur on credit, such as a home equity line of credit or credit card debt, serves as a liability to you but an asset to your lender. If you do not pay the debt and holding your account is no longer profitable for the creditor, it has the option to sell your credit debt to another company. Creditors typically sell unpaid credit debt to third-party debt collection agencies.

After your creditor sells your debt to a collection agency, you must pay your credit debt to the collection agency rather than your original creditor. The original creditor no longer legally owns the debt and has already claimed the unpaid balance of your account as a business tax loss. After the sale, the collection agency is the legal owner of your account and your new creditor.

Banks and credit card companies sometimes have an in-house collection department responsible for recovering delinquent balances. Although your creditor will eventually sell your account to an outside agency, if the company employs an in-house collection department it will transfer the debt to its own collectors for recovery before selling it.

Because consumers often take third-party debt collectors more seriously than their original creditors, creditors sometimes give in-house collection departments a different name in order to give the department the appearance of being an outside agency. Thus, by paying the in-house collection agency when it contacts you, you are really just paying your original creditor.

Each company's collection strategy differs and, rather than selling unpaid accounts outright, a company has the option to hire a collection agency to collect the debt and pay the company a commission for doing so. If your creditor transferred your credit debt to a collection agency for recovery but still legally owns the account, you have the option to either pay the collection agency or make payments directly to your original creditor.

Whichever company owns your credit debt has the right to sue for a court judgment if you neglect to work out a payment plan. Judgments give creditors in most states the right to garnish your wages in lieu of payment. If your creditor is currently garnishing your wages, you do not need to make payment arrangements because the periodic garnishment serves as involuntary payment.

In an effort to avoid further garnishment or prevent it from occurring, you can pay off the full amount you owe. You can either pay the debt owner directly or pay your debt to the court, which will then send the payment to your creditor.

If you are not sure if the original creditor still legally owns your debt or if it sold the debt, leaving you liable to a third party, call the original creditor and ask if you can make a payment on your account. If the creditor sold your account and cannot legally accept your payment, it will inform you of the debt's current owner and provide you with your new creditor's contact information so that you can make immediate payment arrangements.

How to Default & Settle Credit Card Debt

10:26 PM No comments

If you're feeling overwhelmed by your monthly debt payments or you feel as if your debt reduction efforts are going nowhere, debt settlement may be an appropriate alternative. While you can choose to hire a debt settlement company, you can also settle debts on your own if you understand the process and the consequences of default.

Instructions

Make a list of all your creditors, including the account numbers, the outstanding balances, the monthly minimum payments, and what you're actually paying. Decide which debts on the list you want to try to settle. You may choose to only settle the highest balance or debts with the highest interest rates, or you may want to settle all of your accounts. Choose which one you will attempt to settle first.

Stop making your monthly payments to that account. If your account is current, then your creditors will not consider a settlement. Your account must be delinquent before you can make an offer, and the longer it is delinquent, the more likely you are to have an offer accepted. Be aware of when a creditor will charge off a debt as this may vary. Once a debt is charged-off, it may be assigned or sold to a debt collector.

Funnel all of the money you would have been paying to your debts into a money market or high-interest savings account. Debt settlement requires that you have cash on hand to pay your debts when you make an offer. How long it takes you to save the money depends on your particular financial situation, and you will be subject to collection efforts during this time. You may consider selling personal property or other assets to generate funds more quickly.

Draft a debt settlement proposal letter. The letter should include your account number, the outstanding balance and the terms of your settlement offer. You should clearly outline how much you are offering, what method you will be using to pay and how you want the account reported to the credit bureaus. You must also make a case to convince the creditor that the settlement is in its best interest, but do not threaten to claim bankruptcy or offer false information.

Verify the owner of the debt, i.e., the original creditor or collection agency. Send the proposal letter via certified mail to the creditor, requesting that it responds to your offer in writing. The creditor will either agree to your terms, make a counteroffer of its own, or reject the idea completely. If your offer is rejected and no counteroffer is proposed, simply move on to the next creditor on your list. When more time has passed, approach the initial creditor again with another offer.

Come to an agreement with your creditor regarding the repayment terms. Most creditors require that you make a lump-sum payment, however, some will allow you to make a series of payments if the amount is large. Before making your first payment, request that your creditor send you a copy of the payment schedule, including the date and the amount due, as well as its acceptable payment methods. Many creditors will tell you they will only do an automatic draft from your bank account, but under no circumstances should you give this information out. Offer a money order, cashier's check, or wire payment instead, as these protect your account information and provide documentation of your payment.

Make your payment, and keep copies of any receipts or other information related to the payment. File this with all other correspondence you have regarding the account. Request that the creditor send you a statement saying that the debt has been settled to its satisfaction and that you are no longer under any obligation. The creditor may also send you a 1099 for the remainder of the debt, as any amount of forgiven debt of more than $599 is subject to federal income tax.

What Are the Types of Debt?

5:07 PM No comments

The two main types of debt are secured and unsecured debt. Secured and unsecured debts are created through either revolving or non-revolving lines of credit. Understanding the difference between these types of debt and lines of credit is extremely important for your financial well-being.

Unsecured debts are not backed up by any tangible asset such as a house or car, according to the Federal Trade Commission. The most common types of unsecured debts include credit card charges, medical charges and signature loans. Unsecured debt is a major problem in the United States with close to $1 trillion of outstanding unsecured debt, according to the U.S. Census Bureau. If an individual defaults on an unsecured debt payment, it can drastically hurt their credit score.

Secured debts are debts that are tied to an asset such as a house or a car, according to the Federal Trade Commission. Creditors can repossess a debtor's car or foreclose their home if the debtor stops making payments on either. The majority of auto financing agreements give creditors the right to repossess a car any time a debtor misses a payment and is in default. The finance company usually gives the debtor an opportunity to catch up, but it has the right to repossess the car without notice. For the debtor to get the car back after it's repossessed, he usually has to pay the outstanding balance on the loan along with towing and storage costs. If the debtor cannot pay these fees, the car is usually sold at auction. Mortgages are the next most common type of secured debt, but foreclosing a home usually takes a little longer and the length of foreclosure varies by state.

Revolving credit is the opposite of non-revolving credit. Credit cards are the most common example of revolving credit and provide borrowers with a repeatedly available line of credit. Once the balance on a credit card is paid down, the borrower still has the option to use his line of credit again. However, with a non-revolving line of credit, the borrower would not have the option to use her credit line again for additional purchases.

Non-revolving credit is essentially an installment loan where the borrower has to pay a fixed monthly payment to the lender. The main difference between non-revolving and revolving credit is that once a borrower makes a payment on a non-revolving line of credit, additional credit is not extended to him. Student loans are a perfect example of non-revolving credit. The borrower provides the student with a certain amount of money and the student has to make fixed monthly payments. As the student makes monthly payments, the principal of the loan goes down. Unlike a credit card, credit is not "replenished." Once the principal is paid off, the agreement is over and the borrower no longer has a line of credit with the lender.

Consumer Credit Fundamentals

8:07 PM No comments

Practicing good credit fundamentals helps avoid excessive debt and other financial problems. No strategy is foolproof, however, as divorce, job loss or illness can lead to financial problems for anyone, no matter how careful they are with credit. People who make a habit of practicing good credit fundamentals arguably have a greater chance of making a successful comeback from financial hardships happening through no fault of their own. With strong credit fundamentals, they know just how to get back on track.

Credit cards are a leading cause of financial problems with abuses leading to bankruptcy for some people. Credit card debt easily spirals out of control because of missed payments and excessive balances. Missing payments and exceeding the credit limit causes higher interest rates and fees. The snowball effect can turn into a crisis if left unchecked, especially for accounts with larger balances. Making charges mostly for necessities and paying off balances each month prevents problems. Many people with high credit scores of 720-plus never carry a balance.

Credit scores range from 350 to 850 with scores less than 620 considered below par. A 620 score generally is borderline for approval on on home mortgage loans and auto loans at somewhat favorable rates. Scores in the 700s and higher usually lead to much better rates. The difference over a lifetime is significant, with people with outstanding credit saving as much as tens of thousands of dollars in finance charges compared to people buying homes and other big-ticket items with poor credit.

A notation or inquiry is placed on credit reports each time the report is viewed or checked. Two types of inquiries exist -- hard and soft. An excessive number of hard inquiries can cause a drop in credit score. Hard inquiries occur when people apply for credit and give permission for a credit check. Many people apply for credit only once or twice a year. Multiple credit inquiries throughout several months could indicate financial problems. Soft credit inquiries are not harmful to credit scores. They occur in several ways, including when people check their own credit report and when their creditors make a cursory check of the report. Some creditors regularly review credit reports as they make decisions about increasing or decreasing credit lines based on information on reports.

The Federal Trade Commission recommends people check their credit reports several times each year. Regularly checking reports help prevents credit fraud. People who view reports regularly can check for the presence of unknown accounts suggesting fraud or for other incorrect information accidentally placed on the report. The Annual Credit Report website (see Resources) is endorsed by the FTC to offer three free credit reports a year -- one from each of the major credit bureaus.

What Are the Steps for Wage Garnishment in Illinois?

11:29 PM No comments

If you owe money for credit card bills or other unpaid debts, your creditors can file a civil lawsuit against you to get you to pay. Creditors can pursue garnishment of your bank accounts or wages if they win their case. The laws on wage garnishment vary from state to state. In Illinois, wage garnishments or deductions are covered under Article XIII, Part 8 of the Code of Civil Procedure.

Before a creditor can seek a wage garnishment in Illinois, it must first file a lawsuit in small claims court. The creditor must provide you with notice of its intent to sue in the form of a Summons and Complaint. This document includes pertinent case information, including the creditor's name and address, the amount of the lawsuit, their grounds for bringing the suit and the date of your court appearance. You must file an answer to the summons with the court prior to the hearing. Failure to do so may result in a summary judgment being entered against you.

Once the creditor secures a judgment, it must then file a wage deduction affidavit with the court. Before filing the affidavit, the creditor must send you written notice informing you of an intent to seek a wage garnishment. The creditor must also provide your employer with a set of written questions designed to determine how much of your wages can be garnished each week. Your employer must file a response to these questions with the clerk of court and forward a copy to you and your creditor. Once the answer is filed, the employer must begin withholding your wages and continue to do so until the judgment is satisfied.

State law limits the percentage of your wages that can be garnished each pay period. As of 2011, a creditor may garnish your wages for up to 15 percent of your disposable income or the amount by which your weekly income exceeds 45 times the federal minimum wage. Your employer is required by law to use the calculation that results in the lesser garnishment amount. If your net income each pay period is less than 45 times the federal minimum wage, your pay cannot be garnished.

If your wages are being garnished for unpaid child support, Illinois law permits garnishment of up to 65 percent of your disposable weekly earnings. State law prohibits your employer from terminating your employment due to a single wage garnishment. However, if you have multiple garnishment orders in place, this protection does not apply. Creditors cannot garnish wages or income from public assistance benefits, Social Security or Supplement Security Income, veteran's benefits, workers' compensation, unemployment, pensions, domestic support obligations, victims' compensation, wrongful death settlements, life insurance proceeds or personal injury compensation.

Debt Settlement Vs. Credit

8:30 PM No comments

When you've fallen behind on debt and face endless calls by collections agencies and creditors, it can be hard to try to get a handle on your financial problems. Even the terms involved can be confusing. When dealing with financial issues, you need to be clear of the different between credit and debt, as well as understand what debt settlement is and the impact it has.

Whenever you borrow money from someone, you're using credit. Credit comes in many forms, from traditional loans for buying a home or a car, to lines of credit and credit cards. You even use credit when you, for example, go to the doctor's office and incur medical expenses that you pay back at a later time. Your ability to obtain credit is largely based on your history with using it in the past, which creditors use to determine whether to give you a new loan or form of credit.

As long as you pay your debts on time and don't run into financial difficulties, such as losing a job, you are unlikely to ever have to use any kind of debt settlement. When you fail to pay back your debts, however, you face negative consequences. For example, your ability to get new credit is damaged, as creditors will be less likely to give you a new loan if they see you haven't been able to pay back your old loans.

In some situations, people fall so far behind on their debt payments or experience financial hardships to the extent that there is almost no way they will ever be able to pay back their debts. Sometimes, such debtors and their creditors agree to settle some or all of the debt. Debt settlement is simply an agreement between a creditor and a debtor in which the creditor agrees to accept new repayment terms. The debtor, in turn, agrees to pay back the creditor for less than the amount the debtor originally owed.

Settling your debts affects your finances in two key ways: by making it harder to get new loans and by reducing the amount of money you owe. Debt settlement allows consumers to pay back debts for less money, costing the consumer less and making more money available for other needs. On the other hand, when you and your creditor agree to settle a debt, you are effectively failing to repay all the money you owe. Other creditors will then be less likely to lend you money because you failed to meet your previous obligations.

Can Creditors Garnish Wages for Charge-off Amounts?

3:31 AM No comments

Creditors who charge off credit account balances do not forgive the account holder for the debt. They can attempt to collect the debt amount through the court system in accordance with the laws of the account holders state of residence. Federal garnishment laws CCPA Title III dictate the amount of wages that creditors with legal court orders may garnish.

A charge-off is nothing more than an accounting entry that creditors often make when the balance of a credit account is significantly past due and in default. For most creditors, the time line is 180 days past due before the account is charged off. The charge-off entry transfers the account designation on the creditors internal books from a potential profit to a loss. Creditors can take these losses as tax write-offs. Creditors who designate accounts as a charge-off often report the negative account entry to credit reporting agencies.

Creditors who charge off an account balance may still sue the debtor for a civil judgment to pay the past-due amount, plus any accrued interest and incurred legal fees. A judgment is a court order that enables the creditor to collect the amount due on the account by garnishing the account holders wages, seizing their property and levying any bank accounts. Judgment laws differ by state, but creditors who win a judgment from a charge-off or other account can pursue collection for as long as the judgment is valid. For example, if you live in a state that considers judgments valid for 20 years, the creditor can garnish your wages at any time for the life of the judgment. This gives creditors the benefit of waiting to collect until the debtor is in a better financial position.

Garnishment is a legal process of taking an amount of wages or income as payment for a debt. According to the CCPA, a limited portion of a debtors disposable wages is subject to garnishment. Disposable income is the amount of wages left after the required deductions, such as taxes, unemployment contributions and Social Security contributions have been taken from gross wages. The maximum amount of disposable wages that may legally be garnished for a creditors charge-off account is 25 percent or any other amount that exceeds the current federally mandated minimum wage by 30 times.

CCPA Title III protects a debtor from being fired as the result of having one creditors wage garnishment. CCPA does not prevent employers from firing debtors who have more than one wage garnishment imposed. Other types of income, in addition to wages, are protected from garnishment. These include Social Security income, unemployment compensation and certain government pensions.

Could I Negotiate a Settlement With My Credit Cards?

2:39 AM No comments

Credit card debt settlement is an enticing term many companies use to persuade you to hire them. While you can hire someone to try to settle your credit card debt with your creditors, there is no reason you can't obtain a settlement yourself. You should consider talking to a credit counselor or financial adviser before you pursue debt settlement.

When you try to settle a credit card debt, you try to convince your credit card company to accept terms that are different from those to which you agreed when accepting the credit card. Usually, you do this by proposing to pay the creditor a portion of the current debt in exchange for the creditor considering the entire debt paid. For example, you might be able to settle a $7,000 debt by paying $3,500 in a single payment.

If you want to settle a credit card debt, you have to convince the credit card company to accept settlement terms. When you signed up for your credit card, you and your company negotiated the terms of the loan and agreed to abide by them. Typically, this happens when the card company makes you a credit card offer, which you accept. While you may not have changed any of the offer's terms, you and the company entered into that agreement voluntarily.

Much like the initial credit card agreement, you and the credit card company have the right to come to new terms regarding your card contract. However, the credit card company is under no obligation to agree to a settlement, just as you were under no obligation to agree to take the credit card originally. Your ability to successfully negotiate new terms with the credit card company depends both on you and the company's willingness to enter into a new agreement.

If you want to settle your debts, you must be able to offer the credit card company terms it will accept, such as offering a new repayment plan or lump-sum payment. The credit card company may or may not accept your offer, but if you are behind in payments and can show you've suffered a financial hardship that makes it unlikely you can make payments in the future, such as medical problems or unemployment, you are more likely to obtain a settlement. Credit card companies rarely agree to settlements if you are not delinquent on payments.

Debt Repair Companies

2:02 AM No comments

Debt repair companies claim to help you settle your bills for much less than you owe or to fix bad credit by erasing negative information from your TransUnion, Experian and Equifax credit reports. These firms often exaggerate the extent to which they can help you, the Federal Trade Commission warns, or perform no services once they get your money.

Credit repair involves disputing negative credit report information. The Fair Credit Reporting Act allows disputes to help you clear up mistakes on your reports. Its amendment, the Fair and Accurate Credit Transactions Act, requires the credit bureaus to give you free credit reports every 12 months. Credit repair firms exploit these laws by finding minor problems to dispute, since the bureaus must erase the whole negative entry if they are unable to verify the disputed part. You pay a fee for their service, although they cannot collect it by law until they are done, according to the FTC.

Debt settlement companies contact your creditors on your behalf and negotiate reduced amounts and they typically charge a percentage of your debt that can run up to 18 percent, according to MSN Money writer Liz Pulliam Weston. The cost is offset by your savings on the reduced amounts if the company does a good job.

Some credit repair companies abuse the FCRA by disputing everything negative on your credit reports, including accurate items. The credit bureaus can legally dismiss such complaints because they are obviously frivolous, meaning you pay for ineffective services. Unscrupulous repairers sometimes have you get an Employer Identification Number to use in place of your Social Security number so lenders do not see your bad credit records. The FTC warns that this illegal tactic subjects you to fraud charges.

Some debt settlement companies are unscrupulous, Pulliam Weston warns, and take your payment without doing any negotiation. The settlement process takes time, so your creditors may decide to send your accounts to collection agencies or sue you in the meantime. Your credit score takes a hit after successful settlements because your credit reports show that you paid less than what you originally owed.

Order and check your own credit reports through the official source, AnnualCreditReport.com, and file disputes with the credit bureaus yourself, the FTC advises. This process is free and simple, as the credit bureaus have dispute submission forms on their websites. Legally they have 30 days to attempt verification of the information and remove unverified entries from your credit reports. You can also negotiate your own settlements with credit card issuers, loan companies and other creditors or work with a nonprofit credit counseling firm to develop a manageable debt repayment plan.

How to Deal With Bill Collectors That Make Threats

1:31 AM No comments

Debt and bill collectors are not supposed to make threats when contacting you to pay a debt. However, some companies will employ abusive tactics in order to frighten you and get a payment. You can take action to stop harassment, inappropriate language and threats.

Instructions

Familiarize yourself with your rights. According to the Federal Trade Commission (FTC), bill and debt collectors are prohibited from using profane language, issuing threats and other unfair practices. If subject to abuse, remind the collector of unlawful practices and ask him to stop.

Stop phone calls to eliminate harassment. As a consumer you can tell a collector to stop calling you at home or work. Provide a verbal or written request, and keep a copy of the letter or record the time and date that you spoke with the collector.

Challenge the debt. Demand to see a copy of the statement or bill that you owe in order to verify the debt. Collectors must cease phone calls and letters if they cannot show proof.

Save voice messages and keep copies of letters. Bill collectors may speak abusively on your voice mail or leave a threatening message. Keep copies as proof of abuse.

Contact the FTC to file a complaint. Go to the FTC website or call 877-382-4357 to report abuse by a bill or debt collector.

Can Credit Card Debt Be Garnished From a Disability Retirement Salary in Connecticut?

12:52 AM No comments

If you receive an injury and have to go on disability in Connecticut, you may suffer a significant decrease in income. If you have no other source of funds to pay your bills, you may fall behind in some of your payments. Creditors such as credit card companies may eventually end up suing you for payment if your delinquency becomes significant. Fortunately, Connecticut typically protects disability income from creditors.

No creditor can simply decide to garnish your wages in Connecticut. The legal process that leads to garnishment can be lengthy and expensive, and most creditors will attempt other methods of collection, such as phone calls and letters, before they file a lawsuit. If your credit card company can prove to the court that you owe them money, the court will usually rule in favor of your creditor and issue a judgment against you. A judgment is a legal step that asserts the creditor's right to collect and paves the way for them to begin wage garnishment.

If a creditor wins a judgment against you in Connecticut, you may have to face garnishment of your regular wages. Connecticut follows a wage garnishment scheme that is slightly different than federal government standards. In Connecticut, you may face wage garnishment of the lower amount of either 25 percent of your disposable earnings or 40 times the federal minimum wage.

Fortunately, Connecticut offers special exemptions from garnishment for certain types of income. Most retirement or pension income, insurance payments and public benefits are shielded from wage garnishment in Connecticut. Disability payments, whether part of a retirement package or not, are included in the exempt category. Thus, if you receive disability retirement payments in Connecticut, they are not normally subject to seizure by a credit card company, even one with a judgment in hand.

If your credit card company does not succeed at garnishing your wages, it may attempt to seize some or all of your funds in a bank account. If you commingle your exempt disability wages with other income, distinguishing your exempt wages from your non-exempt assets may be difficult. Although you have the legal right to protect your disability funds in your bank account, it is your responsibility to demonstrate to the court that at least some of your commingled funds should be protected.

Does Consolidating Accounts Hurt the FICO Score?

4:43 PM No comments

If you're considering consolidation for your debt, you have several options, including consolidation loans, debt management plans and balance transfers. The way you use these tactics is what will have the most impact on your FICO score. Those who are responsible and committed to paying off their debt and keeping it off will see a positive impact on their scores. On the other hand, those who continue to contribute to their debt will spiral further into financial despair.

When you use a consolidation loan, you have to submit an application, which allows the lender to make an inquiry into your credit report. Inquiries create a minor negative effect on your credit score; however, if you use the loan to pay off your debt and keep it paid off, the positive effects far outweigh the inquiry. A consolidation loan wipes out your previous balances, which leaves you with newly freed credit. Many people fall prey to contributing further to their debt, which is bad news for your credit score.

To qualify for a debt management plan, you must already be delinquent on your accounts, which means that your credit score has likely already taken a hit. An inquiry decreases your score even further. A credit counselor must recommend that you sign up for a DMP, and you make one lump payment to the counseling company rather than your cards. If the counseling company doesn't pay your creditors on time, this delinquency may cause your score to sink further. You should check to see if your credit counselor is listed with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling before making any agreements.

Consolidating your accounts by transferring your credit card balances to cards with lower interest rates may damage your credit in several ways. First, opening a new account knocks about five points off your credit score immediately. Also, your FICO score heavily weighs your debt-to-credit ratio, so if your transfers bring the new card near its limit, it will also negatively impact your score. If you continually open new accounts and make balance transfers, this also reflects badly on your credit report and drags down your credit score.

Aside from the effects on your FICO score, these consolidation options may also make it difficult to obtain new credit. Debt management plans, in particular, are seen as a mark on your credit report because credit counselors usually negotiate lower balances for DMP users, meaning that you're not paying back all that you owe. Also, many DMPs prohibit you from opening any new credit while on the plan. Consolidation loans are also seen as negative information and may make it difficult to borrow. If you have a history of jumping from one card to another, creditors may be leery of taking you on as a client. It's important to take these factors into consideration when deciding whether or not to consolidate.

A Guide to Debt Relief

5:37 AM No comments

After the economic downturn, many Americans saw their adjustable-rate mortgages ratchet upward or saw the home equity they had planned to use to pay off debt practically disappear. Credit card defaults occurred in record numbers and those Americans affected searched for ways to get some relief. While scores of debt relief agencies sprang up quickly, many were dishonest or could not deliver what they promised. Yet debt relief has always been available for those that are willing to take action.

The best first step is to try to handle the situation yourself. The Federal Trade Commission recommends you create a monthly budget, tracking all of your expenses and income, so that you know how much you can realistically allocate toward your debt per month. Credit card companies and other creditors often ask how much you can afford and you need to be able to supply an answer. Many times you can find extra money you did not know you were spending.

Once you know how much you can commit to paying, contact your creditors and tell them what is going on and how they can help you afford your payments. Contact any collection agencies who have contacted you about an outstanding debt and either work out a settlement amount or a repayment program, again for an amount you can commit to paying. Once you have made an agreement, get the terms in writing and make copies of any payments you make as proof of payment. To avoid any further repercussions, send all payments on time and as agreed.

If you do not have any luck talking to your creditors or lack fiscal discipline, your best bet is to work with a credit counseling service. These companies can help you manage your debt, negotiate with creditors on your behalf and make sure you pay your bills on time. The service can also help you create a monthly budget so you can avoid debt in the future. After a credit counselor sets up a repayment plan for you, you send the service one monthly check that it uses to pay your included bills. MSN Money's Herb Weisman advises you look for a service that charges no more than $50 upfront and a monthly fee of no more than $25. Check out any services you are considering with organizations, such as the National Foundation for Credit Counseling and the Better Business Bureau.

If the total of your debts is more than you can manage to afford in three to five years, you can choose to declare bankruptcy. In a Chapter 13 bankruptcy, the court steps in and creates a repayment schedule that you can afford to pay and the creditor must accept. Chapter 13 bankruptcy typically lets you keep assets, such as your home. You usually complete your court-ordered repayment within three to five years. A Chapter 7 is harder to get, but it completely forgives all included debt. While you will take a huge hit on your credit score, if you begin rebuilding your credit responsibly, your score will rebound within two to three years.

How to Dispute a Mailing Address in the Credit Reporting Act

12:09 AM No comments

Credit reports contain more than information about your history of credit repayment. They report whether you've been sued or arrested, filed for bankruptcy, and where you have lived. Consumer reports sell your information to creditors, employers, and anyone else who may have cause to know more about your credit background. The federal Fair Credit Reporting Act (FCRA) protects you by promoting the accuracy and privacy of information in the files of the nation's consumer reporting companies. As part of this crusade, FCRA also suggests that consumers check their credit report periodically for errors.

Instructions

Gather all documents and make copies. You will need to provide copies of documentation to support your correction. For an address change, this might include mail from a state agency or utility company. If the address is a house, you can provide proof of the current resident's tenure in the home. If the address was an apartment or leased, contact the landlord and explain your situation. They may be willing to verify your claim as well. Either way, you must obtain this proof in writing.

Compose a letter. Provide your complete name and address, and clearly identify which items in your report are incorrect. Explain why you are disputing the information and request to have it removed or corrected.

Enclose a copy of your credit report in the letter and circle the information in dispute.

Make several copies of your letter and send via certified mail with a return receipt requested.

Wait for a response. The consumer reporting agency must investigate the items in dispute generally within 30 days. They must also forward all data provided about the error to the organization which provided it. The consumer reporting company must provide you with the results of their investigation in writing along with a free copy of your corrected report.

Request the consumer reporting company to send notices of corrections to all organizations or persons who requested your report within the last six months. You are also allowed to request a corrected copy be sent to anyone who requested your information for purposes of employment over the past two years.

Secrets to Become Debt Free and Financially Free

9:32 PM No comments

Getting out of debt and having the financial freedom to live the way you want has become the new American dream for a generation that has become addicted to debt. For generations, according to the Bureau of Economic Analysis, Americans saved, reaching a pinnacle in the mid-1970s as families saved at a rate of 14 percent. However, in the time period between 1995 and 2010, the personal savings rate dropped to 3.4 percent as Americans became hooked on debt. Elimination of debt and finding financial freedom is not easy, but there are ways to rid yourself out of damaging debt.

Credit card debt, especially high-interest credit card debt, arguably is one of the biggest barriers to financial freedom. Paying the minimum on a revolving balance of credit can take a lifetime to pay down while piling up thousands of dollars in debt. Finding a method to eliminate credit card debt should be a major priority, unfortunately, there is no secret formula. Mathematically, however, you can find your way out of debt by applying a maximum payment to a single card at a time. You can either start with the lowest balance or the highest interest rate card first, and work your way through the debt balance, paying off one card at a time until you have eventually paid off your debt. This method takes patience and fortitude, but you will eliminate your debt.

According to the Bureau of Economic Analysis, personal saving rates dropped nearly 11 percent from 1959, with Americans having a savings rate as high as 14 percent in the 1970s, through 2010, in which Americans had a savings rate at a low of 3.4 percent. With the decline in personal savings rates, more Americans relied on debt as they continued to spend freely. To find financial freedom beyond your next paycheck, though, you'll need to reverse that trend in your own life and look toward savings. According to focusonthefamily.com, saving is one of the best habits you can adopt. Even if you are in debt, saving just a few dollars a week can add up. Having strong savings can help eliminate the need to spend with plastic and help build the foundation for financial freedom as you become less reliant on credit and more in control of how you spend your money.

Consider how you got yourself in debt. If your debt is not from a financial crisis, such as losing a job or from such unforeseen events as an expense from an unexpected illness then you can make a difference in getting out of debt. Start with examining your spending habits. According to an article on Oprah.com, a foundation to developing a spending plan starts with tracking every penny you spend, even on such trivial items as coffees and vending machine spends. Look for waste or unnecessary expenses and start cutting back. Create a family budget that is reasonable for you but also allows you to pay down debt and save for the future.

Sometimes becoming debt free and finding financial freedom requires a drastic change in your lifestyle. Perhaps you will need to make a change in your living arrangements, down sizing to a smaller home, moving closer to work to avoid costly commutes, or moving from an area with a high cost of living to a place that is less expensive. Perhaps you'll want to trade in your high-end vehicle for something more economical or make a choice to live a simpler life. Changing your lifestyle might be painful and difficult but can buy you the debt-free lifestyle you desire.

How Can I Clear Secured Loan Debts?

12:41 PM No comments

You can clear secured loan debts by negotiating directly with the lender or through bankruptcy. Secured debts are tied to collateral such as real estate or automobiles. The lender will not release the collateral unless the loan balance is paid. Clearing or settling the secured loan could mean forfeiting the collateral and making an additional payment as well.

Some people voluntarily default on secured loans, allowing their home, automobile or other collateral to be taken by the lender. The property is sold at auction or through a private sale, with the proceeds applied to the loan balance.

So-called "strategic defaults" occur in real estate when people voluntarily walk away to clear the secured debt. In most cases they have decided they no longer want the home because it has significantly declined in value or the neighborhood has deteriorated -- or both. Voluntary repossessions are so common on auto loans that some lenders offer appointments for turning in the car.

Surrendering the collateral doesn't always clear a secured debt. You may be held responsible for any balance remaining after the sale or auction of the property. This can lead to a lawsuit and a so-called "deficiency judgment." Example: Your foreclosed home is sold for $250,000 at auction, but you owed $275,000 on the mortgage. In most states this allows the mortgage company to file a lawsuit against you for the remaining $25,000.

Bankruptcy can be used to clear secured debt but should be used as a last resort. Chapter 7 bankruptcy and Chapter 13 are popular forms of bankruptcy and can clear secured debt by allowing the collateral to be foreclosed or repossessed by the lender. Deficiency judgments are not possible in bankruptcy. After the property is surrendered any remaining balance is treated as unsecured debt and eliminated, or discharged through the bankruptcy.

Avoid bankruptcy and judgments by selling properties yourself, if possible. You cannot transfer ownership of secured property until the balance on the loan is satisfied, however. That means you must create a strategy for selling the property and paying any remaining balance. This could be a long-range strategy as you gather the money needed for paying an anticipated balance. Clearing your secured debts in this manner will protect your credit and allow you to avoid bankruptcy.

How to Dispute Outdated Collections on a Credit Report

7:55 AM No comments

Every day, thousands of individuals, attempt to dispute with debt collectors collection accounts that appear on their credit report. Many are not successful because they are not familiar with their rights under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. Successfully disputing outdated collection accounts can be a challenge; however, if you have the right information to develop your plan and strategy, you can be successful.

Instructions

Get your three consumer credit reports--Equifax, Experian and TransUnio--for free at annualcreditreport.com (see Resources). This is a portal that will take you to each credit bureaus website to get access to your credit report.

Check each report to determine which credit bureaus are reporting the outdated collection accounts. Those will be the credit bureaus you will focus on.

Initiate an online dispute by going to each credit bureau's website that is reporting the outdated collection accounts (see Resources).

Save to your computer or print your dispute information. Make a note of the date you disputed the outdated collection accounts. After your submission, the credit bureaus have up to 30 days to complete an investigation of your dispute and send the results to you.

Call the credit bureaus to follow up if you have not received a response to your dispute after 30 days from your submission date. Before you call, make sure you have the credit report you used to dispute the outdated collection accounts. Each credit bureau's telephone number is located at the end of your credit report.

Send a dispute letter via certified mail if your online dispute is unsuccessful. If the credit bureau's response to your dispute does not result in removal of the outdated collection accounts, request a reinvestigation in writing and not online. Send the debt collector a copy of the letter.

How to Write a Dispute for a Credit Report

12:46 AM No comments

Writing a credit dispute letter notifies a credit reporting bureau about an error on an individual's credit report and asks them to correct the mistake. Writing such a letter is important to keep your credit report error-free to improve your odds at better interest rates on loan applications. You can write a dispute letter for a credit report by considering the section of your report that needs corrected and keeping a few points in mind.

Instructions

Write your name, address and phone number at the top of the letter along with today's date. Under your contact information, type the name of the credit bureau to which you are writing along with its address. Address the letter to the name of the credit bureau.

State in the first line of your letter that you are writing to dispute inaccurate information in your credit report, and provide the bureau with your Social Security number so a representative may look up your report.

Type in the second paragraph of your dispute letter the exact mistake on your credit report. Type what specifically your credit report states and that you would like to have it investigated. Include a quote from your credit report that includes the exact issue you are disputing.

Tell the credit reporting agency that you are attaching a copy of the page of your credit report that is erroneous and that the mistake is circled.

Ask the credit bureau to investigate the mistake in a timely fashion. Include this in the last line of your dispute letter. Inform the bureau that a representative may contact you at the address and phone number at the top of the letter, if he has any questions.

Sign the letter, and print your name below your signature.

Can a Creditor Be Removed From My Credit Bureau Report?

12:57 PM No comments

Everyone who has taken out any form of credit, from a line of credit linked to a credit card account to some types of auto insurance, will have a personal credit report. These reports indicate to lenders how creditworthy a borrower is. Maintained by credit reporting bureaus, these reports change constantly as new information is added and older information is removed. Records submitted by a specific creditor cannot be removed without a valid reason.

Most information on a person's credit report is reported to the credit reporting bureaus by parties that issue or collect on loans. Debts are categorized in a credit report according to the date they were issued, their size, the party that issued them and their payment status. A particular creditor may be responsible for listing one or more loans on an individual's credit report, depending on the number of former and outstanding loans the debtor has with the creditor.

Credit reporting bureaus trust creditors to provide correct information. The credit reporting bureau may choose to remove an entry if it determines that the creditor provides consistently incorrect information. However, an individual has no right to ask a credit reporting bureau to remove information provided by a particular creditor simply because he would prefer that it not appear on his report.

Negative information on a credit report has a limited shelf life. According to U.S. law, a single piece of negative information can exist on a credit report for a maximum of seven years, after which time it must be removed and can no longer affect the person's credit rating. An exception is made for bankruptcies, which can remain on the person's report for 10 years.

It is illegal for a credit reporting bureau to include information on a credit report that it knows to be incorrect. If a person detects inaccurate information on his credit report, he can notify a credit reporting agency of the error. The credit reporting agency will investigate the dispute and correct the entry if it cannot verify that the information is accurate. A person cannot request that a company remove the item, but it can request that the company verify the item's validity.

The Best Way to Pay & Remove a Charge off

5:05 PM No comments

Charged-off accounts show up on your credit report and stay there for seven years, dragging down your credit score and potentially hindering your ability to get new credit. However, what you may not know is that there is a way to legally remove charge-offs from your credit history. And best of all, you can do it on your own, without hiring an expensive credit repair firm.

A charge-off is a debt that the lender who originally extended the credit has been unable to collect on. When lenders decide that collection efforts are fruitless, they will sell the debt to a collection agency. The new account is called a charge-off.

Paying a charge-off may help you seem more creditworthy to other potential lenders than if you simply waited the seven years it would take for the charge-off to roll off your credit report. However, the paid off account typically still remains on your record for seven years from the time it was paid off and will still negatively impact your score while it remains on your record. A second problem is that charge-offs are reported separately from the original debt, so you may have two negative entries on your credit report for a single debt.

"Pay for delete" is a commonly used strategy for removing charge offs from a credit report. This entails contacting both the collection agency and the original creditor and getting written agreements from each stating that they will delete the accounts altogether or delete the negative information from your credit report immediately after receiving payment. However, be aware that larger companies may refuse to delete an account completely.

Once you submit payment, your credit history should stay "pay as agreed" or "account closed -- paid as agreed," unless the account was to be completely deleted. Make sure this is written into your agreement with the lenders, and check your report after paying the debt to ensure both the collection agency and original lender made the agreed-upon change to your report.

Accounts older than seven years from the date of charge-off should not appear on your credit report, although they are sometimes erroneously reported beyond the roll-off date. Rather than paying to have these deleted, simply contact the credit bureaus -- Equifax, Experian and TransUnion -- and dispute the accounts to have them deleted in accordance with the law.

Do-It-Yourself Debt Settlement

12:56 PM No comments

If you're feeling overwhelmed and are struggling to keep up with your monthly payments, debt settlement may be your best alternative. Debt settlement allows you to repay some of what you owe to your creditors, stop harassment by debt collectors and avoid bankruptcy. There are a number of companies that advertise debt settlement services, but it is possible to settle your debts yourself.

Debt settlement allows you to repay less than what you actually owe to your creditors. Typically, debt settlement can only be used to negotiate unsecured debts, such as credit cards, personal loans or lines of credit or unpaid medical bills. It's important to keep in mind that creditors are likely to consider a settlement only if your account is at least 60 days or more delinquent.

The debt settlement process begins by making contact with your creditors. Depending on the age of the debt, you may be negotiating with the original creditor or with a collection agency. While you can contact the creditor by telephone, it's always best to send a statement in writing that includes your name and contact information, the original account number and the total balance due. Your letter should also include the amount you wish to offer and the terms of payment, such as multiple payments or a lump sum. You can also negotiate how the debt will be reported to the credit reporting bureaus. The creditor will review your offer and either accept or make a counteroffer. Once you and the creditor agree on an amount, you can make arrangements for payment. You should also request that the creditor send written verification of the agreement and receipt of payment.

The primary benefit of debt settlement is that it can potentially save you a substantial amount of money. Depending on the creditor and the total amount you owe, you may be able to settle your debts for anywhere from 35 percent to 75 percent of the actual balance due, saving you hundreds or even thousands of dollars in fees and interest. Typically, the older your debt is the less your creditor may be willing to accept. If a creditor chooses to sue you, negotiating a settlement can help you to avoid incurring a judgment on your credit report or being subject to a wage or bank account garnishment. While debt settlement is damaging to your credit, the effects are not as severe or long-lasting as filing bankruptcy.

While there are several advantages to negotiating your debts, debt settlement does have its drawbacks. Until the debt is resolved, your creditor may choose to report the account as delinquent to the credit reporting bureau, which can cause your credit score to drop significantly. A drop in your credit score can make it more difficult to obtain new credit, open accounts for utilities or cell phone service in your name, make major purchases, such as a home or vehicle, gain employment or receive favorable interest rates. Additionally, any amount of debt over $599 that is forgiven may have to be reported as income on your taxes unless you can prove that you were insolvent at the time the settlement occurred.

Does Filing Small Business Bankruptcy Affect Personal Credit?

12:49 PM No comments

Filing for small business bankruptcy could affect your personal credit---if you personally guaranteed loans made to the business. Most banks and credit unions lending to small businesses require the owners to personally back the loans by pledging collateral, such as their primary residences, or by adding their signature as a guarantor on the loan. If you are responsible, the bank will expect you to pay the business debt following the bankruptcy.

Review your credit report to determine if you're personally responsible for the business debt. Business debt showing up on your credit report indicates the bank is also holding you responsible. Obtain a free copy of your credit report through AnnualCreditReport.com. The website makes free credit reports available under the terms of the Fair Credit Reporting Act. The website is endorsed by the Federal Trade Commission, and you're entitled to three free credit reports each year, one from each of the thee major credit bureaus: TransUnion, Equifax and Experian.

Your business can file for bankruptcy only if it is a distinct legal entity, such as a limited liability company, partnership or corporation. These business structures allow for the owner's finances and expenses to be completely separate from those of the business. However, a bank can still require you to personally guarantee a loan made to a corporation.

Many businesses are formed as sole proprietorships, meaning the owner includes business income and expenses on her personal federal tax return. You are completely responsible for the business debt if you have this type of structure. Business bankruptcy is not possible for sole proprietors. A sole proprietor can eliminate business debt only through personal bankruptcy, which obviously hurts credit.

Bankruptcy information remains on credit reports for 10 years, making it difficult to obtain new credit at competitive rates. Chapter 7 is considered the simplest form of personal bankruptcy, and eliminates unsecured debt in just a few months. Chapter 13, another form of personal bankruptcy, requires a payment plan lasting three to five years. If you are personally responsible for the business debt, it may be better to avoid bankruptcy by closing the business and paying off the debt over time. Unsecured business accounts can often be settled for around half the balance or even less. You can also sell off assets that aren't tied to loans to payoff debt. An experienced bankruptcy attorney will review your debts and business structure before recommending the best strategy for you.

What Does a Credit Counseling Company Do for You?

1:28 PM No comments

Consumers feeling a heavy debt load and paying high interest rates may find relief by engaging a credit counseling service rather than filing for bankruptcy. Credit counseling services are not debt settlement solutions or consolidation loans. Rather, these services are often not-for-profit and offer a complete approach to better managing your budget and reducing your debt.

Once you have enrolled in the plan, the credit counseling service will contact each of your creditors one at a time and negotiate your current interest rates. If you are subject to penalty interest rates, which can exceed 30 percent or higher, the counseling service will make every effort to have the interest rate lowered to something more manageable, which can be anywhere from 6 percent to 15 percent. The counseling service cannot guarantee acceptance by your creditors of any or all of your outstanding debt accounts into the program.

Provided the counseling service can negotiate more favorable terms with your creditors, you will be placed on a debt management plan. Your counseling service will indicate to you which credit accounts have been accepted, what the new interest rates are, and what the new monthly payment will be on each account. Additionally, the plan may come with stipulations set forth by the creditor. These may include closing an account or making a committment not to apply for new credit.

The credit counseling service will collect one monthly payment from you and disburse it to the creditors. This is not a consolidation loan, as the accounts still remain in your name. The counseling service, provided you send your single payment in on time, will ensure the payments reach the creditors on time. Creditors may require this as part of the plan. You are still allowed to pay your creditors directly, but you must first be sure to pay the counseling service the agreed upon monthly amount. This monthly amount is typically the sum of the new minimum required payments plus any fees or voluntary contributions.

The credit counseling service will provide tracking and reporting of your payments, often via web-accessible login. The service should provide you with a monthly statement indicating which credit accounts are on the program, the interest rate of each account, the payment sent to each account, as well as forecast of the remaining balance and time remaining on the program. Counseling services may also show you much money you are saving with the lower negotiated rates versus the higher rates.

Credit counseling also provides, well, counseling. When enrolled in a counseling service program, expect to receive information and pamphlets about managing your money, establishing a budget, and more details on the perils of debt. You may also be required to participate in workshops or counseling sessions -- either in person or via the phone -- to discuss your specific financial situation and develop a custom debt management solution for you.

Annual Credit History

7:13 AM No comments

Your credit history can change at any time. Creditors and credit bureaus are able to update and delete information as often as they deem necessary. While you are entitled to one free credit report from each consumer bureau annually, you should check your credit more often than once a year.

Credit bureaus are constantly receiving information from both creditors and public records searches. If there is a change in your credit behavior or someone has filed a lawsuit against you, a credit bureau can list this information in your credit report. Sometimes, the information added to your report isn't even yours, but gets added by mistake, so it is a good idea to keep regular tabs on what's in your credit reports.

Under the Fair Credit Reporting Act (FCRA), you can request a copy of your credit report from the issuing bureaus at any time. You can get one free report every 12 months, though you may have to pay for additional reports throughout the year. To order your free credit reports from the United State's major credit bureaus, you can visit annualcreditreport.com. Other consumer reporting bureaus, such as tenant screening services or checking account history companies, don't participate in this site, but you can contact them directly to ask for your free report.

After you have ordered your free reports, you can buy additional reports directly from the companies that issue them. In some cases, however, you are entitled to additional free copies. If you are on welfare, unemployed and looking for a job, or have been turned down for credit, housing, or employment because of something on a consumer or credit report, you have the right to request a free copy of your credit report.

Credit bureaus report the information that they get from outside sources, which may not always be correct. If you don't check your reports, you won't be able to spot errors that can hurt your credit. When you find errors in your credit report, contact the credit bureaus immediately. Under the FCRA, they must investigate any errors and make corrections if they can't verify the information. Credit and consumer reporting bureaus often have online dispute services that you can use to correct erroneous information.

Can Creditors Take Your Work Check?

6:29 AM No comments

If you do not make payments on your debt as they become due, you will likely experience the stress of receiving collection calls and letters from your creditor or a collection agency. However, ignoring a creditor's collection efforts can make your situation worse. Failing to bring your account current or establish a repayment plan with your creditor can force the creditor to take more drastic action, which may include taking a portion of your work check.

To take a portion of your work check for the payment of most debts -- except child support, taxes and alimony -- a creditor must first obtain a legal judgment against you for the debt by filing a lawsuit in a county or district civil court. When a creditor files a lawsuit, you will have an opportunity to defend yourself by proving that you have already satisfied the debt, if you have. If the court does not accept your defense, it will award the creditor a judgment. In most states, this allows the creditor to seek authorization to execute a garnishment.

After obtaining a civil judgment against you for the debt, the creditor may petition the court that awarded the judgment for a writ of garnishment. This permits the creditor to contact your employer and demand that part of your earnings be withheld from each paycheck to apply to your judgment debt. The employer must then determine the allowable garnishment amount and send the money from each paycheck to the court, which then forwards the funds to the creditor. The garnishment process continues until you have satisfied the debt or your state's judgment statute of limitations expires.

A judgment creditor cannot use a writ of garnishment to take your entire paycheck for payment of a private debt. Federal law prohibits wage garnishment if you earn less than 30 times the federal minimum hourly wage each week. If you earn more than this amount, the creditor may take earnings above this threshold or 25 percent of your earnings after taxes, whichever is less. However, federal law permits creditors to take a larger portion of your earnings for unpaid state or federal taxes, bankruptcy payments or child support. If you support a child or spouse who is not entitled to the support for which the garnishment is issued, up to 50 percent of your disposable earnings may be garnished. If you do not support such a spouse or child, up to 60 percent of your disposable income may be subject to garnishment.

As of 2011, four states -- Texas, South Carolina, Pennsylvania and North Carolina -- do not permit wage garnishment for private debts. Other states place restrictions on wage garnishment that are more stringent than the federal limitations. For example, Delaware allows a private creditor to take only up to 15 percent of each work check, and Missouri limits garnishment to 10 percent of earnings for a head of household.

Welcome to our website credit and debt managementr.

Sunday, August 31, 2003

Function

Features

Time Frame

Considerations

Effects

Definition

Advantages

Disadvantages

Considerations

Saturday, August 30, 2003

Instructions

Earnings

Bank Accounts

Exemptions

Tip

Warning

Instructions

Friday, August 29, 2003

Curadebt

CareOne

Debt Options

What is Overdraft Protection?

Pending Deposits

Different Bank Procedures

Notification of Bounced Check

Working with Joint Accounts

Thursday, August 28, 2003

Instructions

Instructions

Facts

Time Frame

Effects

Considerations

Warning

Payment

In-House Collection Agencies

Collecting on Commission

Post-Judgment Payments

Considerations

Wednesday, August 27, 2003

Instructions

Unsecured Debts

Secured Debts

Revolving Credit

Non-Revolving Credit

Tuesday, August 26, 2003

Credit Cards

Credit Scores

Credit Inquiries

Free Reports

Monday, August 25, 2003

Summons and Complaint

Judgment And Execution

Calculating Garnishment

Considerations

Credit and Debt

Paying Debts

Debt Settlement

Impact

Charge-off Definition

Civil Judgments

Garnishment Laws

Garnishment Protections

Settlement Basics

Negotiations

Agreements

Strategy

Sunday, August 24, 2003

Credit Repair

Debt Settlement

Credit Repair Problems

Debt Settlement Problems

Self Help

Instructions

Saturday, August 23, 2003

Collections Process

Wage Garnishment in Connecticut

Connecticut Garnishment Exemptions