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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..

Saturday, January 31, 2004

Does Credit Card Debt Affect Credit?

Does Credit Card Debt Affect Credit?

Understanding credit

    When people talk about their credit, what they actually mean is their credit rating.
    A consumer's credit rating is an estimate of the creditworthiness of an individual, that is, her ability and willfulness to pay back her debtors.
    If you've got a credit card and you've got an outstanding balance on that card, you can expect it to affect your credit. Actually even a credit card without an outstanding balance can still affect your credit.

Payment history

    Lending institutions use a complex formula of ratios to determine your creditworthiness.
    For instance, while paying your bills on time is the best way to maintain good credit, if your debt surpasses a certain amount (typically 25%) of your income each month, your credit score may go down.
    Credit card debt plays a major role because it is the primary way that credit bureaus track your payment history, which is by far the biggest factor that lenders use in making a decision on whether to let you borrow.
    If you've missed payments and burdened yourself with multiple cards, lenders may consider you too risky to extend credit to, and your credit score will go down.
    To raise your scores, the practical thing to do is to pay off your debts, starting with the smallest amount first, until you have eliminated your credit card loans. The process will establish a favorable payment history and raise your credit score.

Debt management

    When most consumers think of debt, they usually think of it as bad, but that is not necessarily so with financial institutions. Sound investments, which usually cost borrowers tremendous debt, can be considered good debt. If you're paying for a mortgage, for example, then the amount you owe can be considered good debt.
    To put it another way, banks and lending institutions usually won't hold it against you for paying for a roof over your head, especially if you're making the payments on time.
    Also, homes around the United States, at least historically, tend to appreciate in value--rapidly in some places. So lenders look favorably upon homeowners when it comes to extending credit.
    But homes and large investments are best not charged to a credit card, but through a processed loan. Consumers who pay for items that don't appreciate are usually creating bad debt (but if you pay it off before interest kicks in it is considered good practice).
    Bad debt is everywhere: electronics, automobiles, and clothes, to name a few. If you pay for these items with your credit card, then make sure you pay the balance off every month.
    Even if you have credit cards with no debt you still can be considered risk-averse to lenders and your credit will go down.
    Open and stagnant credit card accounts are not considered good debt management to the credit bureaus, who use such information when calculating your credit score.

Friday, January 30, 2004

Hardship Information for Credit Issues

If you are experiencing a hardship such as unemployment, serious illness, the birth of a child, death of a loved one or excessive credit card or medical debt, it can create havoc with your finances. Many creditors will work with you and make some adjustments or amendments to your credit accounts.

Significance

    You can contact your credit card companies and let them know you are experiencing a hardship and they may be able to get the interest reduced on your credit cards as well as a reduction in your monthly payments.

Considerations

    A mortgage company may process a modification for your loan. A modification will reduce the interest and lower your monthly payment.

Features

    Sometimes a mortgage company will defer a portion of the principal balance to the end of the mortgage term if you are facing a hardship. This amount gets paid back at the end of the mortgage term.

Effects

    You can also contact an organization within your area that offers a consumer credit counseling program. Many of these programs do not charge you a fee. There is an opportunity to get your payments and interest reduced.

Warning

    A hardship situation can also force you into bankruptcy if you cannot recover. The majority of your debts which don't have any collateral or security attached will be discharged in bankruptcy court. You do not have to repay discharged debts. Bankruptcy is always your last resort if you cannot be helped with any action plans.

Credit Cards to Improve Credit Rating

Credit Cards to Improve Credit Rating

Understanding the elements that make up your credit score will help to build your confidence about using your credit cards appropriately. Creditors are looking for consumers who know how to handle their finances responsibly. By using your credit cards wisely, you'll see a boost in your credit ratings and you'll feel in control of your money.

Opening a Credit Card

    For those who don't have a credit card, opening an account helps to add to credit diversity, which makes up 10 percent of your credit score. Having installment loans, such as a mortgage or car loan, and credit cards shows that you are capable of responsibly handling your debt. If you don't qualify for a traditional credit card at first, you may build up your credit by using a store or gas card. Otherwise, you can get a credit card that uses money you've deposited into an account as collateral, called a secured credit card. Once you build your credit through these cards, you will qualify for a traditional credit card. Don't apply for more than one card at a time, or else you'll look desperate. Leave at least a couple of months between applications.

Payments

    The number one thing you can do to improve your credit rating is to consistently make on-time payments to your credit cards and other bills. The timeliness of your payments accounts for 35 percent of your credit score, which is the biggest category in your score calculation. An easy way to make sure you make your monthly due dates is to set your accounts up with automatic payments so that you don't have to think about scheduling individual payments each month.

Balance

    The amount of debt you're carrying makes up roughly one-third of your credit score, so paying down your credit card balances helps to boost your score significantly. The Better Business Bureau recommends keeping your balance to 25 percent of your card limit, or less if possible. Motivate yourself by paying off the card with the lowest balance first, so that you can see your payments impacting the debt faster. Or save money on interest by paying off the card with the highest interest rate first.

Use

    You need to use your credit cards to keep your credit score healthy; it's just using them irresponsibly that gets you into trouble. If you stop using a credit card, the creditor may stop reporting your account to the credit bureaus, since there isn't any activity to report. Bankrate writer Leslie McFadden recommends using each card once every six months to keep it active. Just make sure you keep your balances low, or that you pay off the balance completely each time.

Is a Gambling Loss a Tax Write-off?

Is a Gambling Loss a Tax Write-off?

Unlike many aspects of the U.S. tax code, the sections that deal with gambling losses are relatively straightforward. To the Internal Revenue Service (IRS), nonprofessional gamblers can write off losses, but only if they keep records and itemize deductions. Professional gamblers may deduct their losses as long as they show their activities are full-time. Failure to follow these basic strictures may result in audits, fines and penalties that can easily exceed the original loss.

Basic Guidelines

    Nonprofessional gamblers can find the basic guidelines in Topic 419 of the IRS's official website, IRS.gov. According to the IRS, gambling winnings count as income, and gamblers must include them on Line 21 of Form 1040. Examples include winnings from casinos, dog and horse races, lotteries and raffles, or fair market value of such non-cash prizes as cars, houses and trips. Nonprofessional gamblers may report losses on Line 28 of Schedule A of Form 1040. However, they cannot use the 1040A or1040EZ forms.

Claiming Losses

    From the IRS's standpoint, the gambler is responsible for documenting all activities related to their passion. To simplify things, the IRS recommends that taxpayers keep a diary of their wagering activities. For proper credit, taxpayers must provide receipts, statements and tickets showing actual winnings and losses. Acceptable records might include written logs showing the amount, date, time and location of their wagers, according to bankrate.com. They also recommend hanging on to losing bingo cards or lottery tickets.

Professional Gamblers

    In January 2011, the U.S. Tax Court allowed professional gambler Robert Mayo to claim $10,968 in deductions for expenses -- such as car travel to racetracks -- against $120,463 that he netted for his wagers, according to a "Las Vegas Review-Journal" report. However, legal experts did not expect the ruling to affect many gamblers. The IRS allows professional gamblers to declare winnings and losses on Schedule C forms and deduct losses larger than earnings. However, to qualify, the taxpayer must show that gambling is their principal, full-time livelihood, the newspaper reported.

Writeoff Amounts

    By IRS rules, the best that nonprofessional gamblers can do is use their winnings to offset whatever losses they rack up. Even then, those allowances are limited. According to bankrate.com, for example, if someone spends $100 on lottery tickets but wins $75, he cannot deduct the additional $25. These issues make it all the more important to keep detailed wagering records. Although the taxpayer need not submit them with a return, such documentation can prove helpful should the IRS ever contest the claim.

Thursday, January 29, 2004

How Is My Future Damaged by Filing Bankruptcy?

There are numerous valid reasons to file for bankruptcy protection. But prior to contacting an attorney and filing the necessary papers with your local court system, consider the damages and consequences that result from a bankruptcy. Based on this information, determine whether you can or should avoid the bankruptcy process.

Purpose of Bankruptcy

    As an individual debtor you can file either Chapter 13 or Chapter 7 bankruptcy protection from creditors. Applying for and obtaining loans and credit cards involves an agreement to repay these debts. Even with the best intentions, some debtors find it difficult or impossible to pay outstanding balances. Creditor calls, letters and lawsuits prompt many to file bankruptcy to possibly eliminate debts and start over. A judge hears and reviews the bankruptcy filing, and he may decide to discharge debts through a Chapter 7 bankruptcy, which eliminates all debt obligations to creditors. With Chapter 13, debtors develop a plan to repay creditors over a period of three to five years. Both bankruptcies damage credit scores equally; however, a Chapter 7 bankruptcy stays on credit reports for 10 years, whereas a Chapter 13 bankruptcy only stays on reports for seven years.

Effects of Bankruptcy

    Some debtors do everything possible to avoid bankruptcy to protect their personal credit rating. The average credit score drop after bankruptcy is 100 points or more, according to the Consumer Credit Counseling Services website. Credit scores impact several areas of life, including mortgage and auto loan approvals, credit card approvals and interest rates. People with high credit ratings are more likely to obtain loan and credit card approval and at lower interest rates than people with poor credit. A bankruptcy also can affect your ability to rent a house or apartment, increase your insurance rates and limit employment opportunities (especially in banking and government jobs). Typically, considerable damage has already been done to your credit score before filing bankruptcy as a result of the delinquencies, collection accounts and judgments that led to your bankruptcy. One advantage of bankruptcy is that it erases negative items such as judgments, late payments and collections from your credit report.

Postpone Buying Home

    Because bankruptcy significantly damages personal credit scores, obtaining approval for a mortgage loan afterward is often difficult. In fact, most lenders will not approve someone with a recent discharge of debts on his record. Instead, these borrowers typically have to wait two years after a discharge, and qualifying for a mortgage will require rebuilding a low credit score. Credit damage that results from filing bankruptcy gradually dissipates over time, especially if debtors improve their credit habits by paying bills on time and keeping debts low. The negative effect of a bankruptcy is almost gone by the time it is removed from your credit report (in either seven or 10 years), assuming you have made payments on time in the meantime.

Avoiding Bankruptcy

    Bankruptcy is inevitable in some situations. But, if possible, avoid filing bankruptcy by satisfying your debts. Creditors lose money when debtors file bankruptcy, and, as a result, creditors may be open to negotiating a debt settlement to avert a bankruptcy filing. A debt settlement allows you to satisfy your debt obligation by paying less than the amount you owe.

Does Debt Come Off My Credit in 7 Years?

Credit reports are easy to damage and hard to fix. You can spend years steadfastly making payments on time only to have financial catastrophe wipe out years of credit building. Negative items on your credit report stay on your report for varying lengths of time, but the range is from seven to 10 years.

Items

    Your credit report is a file that lenders and public institutions use to report information about your financial obligations. It's maintained by three credit reporting organizations: Equifax, TransUnion, and Experian. Your credit report has sections for your payment history, personal information, public records and a list inquiries third parties have made about your credit report. Your payment history is a record of payments you have made in the last seven years. Your personal section contains information about your name, address, Social Security number and other personal information. Your public record is a list of court liens, bankruptcies or other public information that is filed in your name.

Seven Years

    Most negative items in your credit report remain there for seven years. These items include late payments, court liens, closed accounts and any comments put on your credit report by you or third parties. Credit reporting agencies are legally obligated to keep this information on your report for no more than seven years. Negative information that is incorrectly put on your credit report can be disputed with no damage to your credit report.

Exception

    There are two exceptions to the seven-year rule. Bankruptcies can stay on your credit report for up to 10 years, and information about criminal convictions can stay there indefinitely. In the case of bankruptcies, credit reporting agencies are legally required to report the details of the proceedings if it is a Chapter 11 bankruptcy. If the status of the bankruptcy changes, credit reporting agencies must immediately adjust the information in your credit report to reflect this change.

Disputes

    Consumers have the right to dispute inaccurate information in their credit reports. The Fair Credit Reporting Act (FCRA) is a law that outlines how inaccurate information in a credit report must be handled. You're entitled to a free copy of your credit report from each bureau every year through AnnualCreditReport.com, and you are allowed to see a list of every party that has requested your information in the last year. If you detect mistakes in your credit report, you can file a dispute with the credit reporting agency. The agency is required to investigate any dispute, unless it is deemed frivolous, and if the agency fails to verify the validity of the item, it must be removed from your credit report.

How to Establish a Credit File

How to Establish a Credit File

Opening credit accounts is relatively easy, but establishing good credit isn't. As Shakespeare said, "Aye--there's the rub." It's easy to feel free about spending when you have a few credit cards in you wallet, so treat your credit with caution, and avoid too much debt. Shakespeare also said, "neither a borrower, nor a lender be," but today, if you don't borrow, you can't establish credit. And without a healthy credit file, modern life is challenging. You can't even rent a car without a credit card, let alone buy a house. But tread carefully into the waters of spending into debt.

Instructions

    1

    Open a bank or credit union account, if you don't have one. Credit card companies often ask for your account number when you apply for a card, so you will need a bank account.

    2

    Apply for a credit card at the bank or credit union at which you have an account, as recommended by finance writer Amy Fontinelle in an article on Forbes' Investopedia. Your own financial institution will be more likely to trust you than a company that has no connection to you. They may ask you to deposit a sum of money in a savings account, and then give you a credit card with a limit up to the amount on deposit, or they may give you a credit card without asking you to do that.

    3

    Make a "spending plan," advises Bankrate.com's Steve Bucci. This will help you to budget so that you don't overspend with your new credit card.

    4

    Make your credit card payment every month on time. If you never spend more than you can pay off at once, you will avoid getting into debt and establish good credit at the same time. To ensure that you always pay at least the minimum or another sum every month on time, arrange for the payment to be taken from your checking or savings account automatically and concurrently with your paychecks.

    5

    Open a second credit card account after you have established good credit with your first card. You can get a regular credit card or open a department store account to do so. You want two credit accounts because some day when you are ready to make a big purchase, the lender will probably want to see more than one account.

Mortgage & Closing Help

Once you get to your mortgage closing, the rest of the process is fairly straightforward. Just shake hands with your lender and sign the final loan paperwork she's prepared. Though most of the process is complete, you still might have a few final details to tie up before you close on your new mortgage.

Seller's Assistance

    Some mortgage lenders allow you to get what is called seller's assistance from the seller of the home to help you close the loan. The seller's assistance covers a percentage of the closing costs -- usually up to 6 percent of the home purchase price. Sellers do this to make it easier for the buyer to afford your costs at closing. If this is a part of your deal, make sure you communicate this information to the lender well before closing, so that it's included in your final paperwork and you have the correct estimate of how much to bring to the table.

Good Faith Estimate

    About three days after you apply for a mortgage loan, you receive the good faith estimate. The purpose of a good faith estimate is to give you an idea of the estimated terms of the loan, including the interest rate. The lender then locks your rate for a certain number of days, usually about 30 to 60 days, so it should remain the same for that period (make sure you get this lock-in confirmation in writing). Contact your lender a few weeks or more before your closing date, when the loan paperwork is finalized, to double-check that the quoted rate is the same. If not, find out why. You may decide to pursue a different loan in advance of closing if an issue arises.

Schedule Closing Date

    To save money on interest, you should try to schedule your closing date as close to the end of the month as possible. The lender charges you prepaid interest as a part of your total closing costs for each day before the end of the month. The interest charge is prorated, so the earlier in the month you close and move in, the more prepaid interest you'll pay.

Review House

    One mistake some new buyers make is failing to do a final review of the home before going to closing. A day before the closing date or the day of, you should visit the house with your agent to do a final look through the property to ensure that it's clean and consistent with the terms of your sales agreement. If something is not taken care of per your agreement, you can take that information with you to the closing table to seek an adjustment. For instance, if the seller left furniture or a significant amount of trash in the home, you can ask for a small adjustment for the cost of removal at the closing table.

Wednesday, January 28, 2004

What Type of Agreement Are Credit Cards?

What Type of Agreement Are Credit Cards?

American consumers owned about 609.8 million credit cards, according to The 2008 Survey of Consumer Payment Choice developed by the Federal Reserve Bank of Boston, which is enough for about two cards for every man, woman and child in the country. Credit cards, as a form of credit, are subject to various state and federal laws, some of which are based on the categorization of credit cards as open accounts and not as written contracts.

Credit Card Agreements

    Whenever you apply for a credit card, the card company sends you a written agreement that details all the credit card's terms and conditions. This card agreement is a contract between you and the lender; and when you sign up for the card, you agree to abide by the terms of the contract. However, for the purposes of determining when creditors can sue on credit card agreements, states don not classify cards as written contracts.

Written Contract or Open Account

    When you and a lender enter into a debt agreement, the lender has a limited amount of time to sue you if you ever default on the loan. This time limit is known as the statute of limitations and is based on two factors: the kind of debt and the state in which you entered into the debt. There are four main kinds of debt: oral agreements, written contracts, open accounts and promissory notes. Credit cards are classified as open accounts because the amount of debt at issue changes over time.

Importance

    Whether states consider a credit card a written agreement or an open account has little impact on the average consumer's day-to-day life. It is important, however, if you are ever sued by a credit card company for your failure to pay back the debt. State statutes of limitations treat different debts differently. For example, according to Bankrate.com, the state of Alaska's statute of limitations on open accounts is three years, while the limit on written contracts is twice that -- six years.

Details

    In general, credit card companies cannot determine that a credit card agreement is a written agreement instead of an open account, but they can determine which laws apply. Credit card agreements typically come with a choice-of-law clause in the agreement that details which state's laws apply to the agreement. It should be no surprise to you that the company typically chooses a state whose laws extend the statute of limitations on open accounts, such as Rhode Island's 10-year limit.

Can Debt Be Forgiven Due to Financial Hardship?

Most consumers take out loans or incur other forms of debt with the intention of repaying the debt. However, the debt load can grow over time and become unmanageable. Creditors may be able to work with the debtor, depending on the circumstances. Often, a debtor must demonstrate some form of financial hardship to qualify for relief.

Financial Hardship

    A number of things can constitute financial hardship. Often, it results from an involuntary reduction in income or an unexpected and unavoidable expense. Examples of involuntary reductions of income include losing a job, becoming seriously ill or caring for a seriously ill family member, and marital troubles, such as a divorce. Unexpected expenses include medical bills, increase in tax rates and property repairs (such as for a home or car).

Debt Forgiveness Plans

    Creditors may be willing to work with you to resolve your debt troubles if you experience financial hardship. Debt forgiveness plans vary depending on the type of loan and the creditor's policies. According to Bills.com, debt relief programs may reduce, or forgive, your debts by 50 to 60 percent, as of the date of publication. In addition to your financial hardship, you may be eligible for additional loan forgiveness plans. The federal government offers incentives for volunteer work and military service, for example. Participating in these programs may result in receiving thousands of dollars that go toward reducing your loan balances.

Bankruptcy

    The ultimate form of debt forgiveness is bankruptcy. Under Chapter 7 -- the liquidation proceeding -- you must either make less than the median wages for your community or have significant amounts of debt such that you cannot meet the minimum obligations. If you qualify for bankruptcy, the courts will liquidate your nonexempt assets to pay off as many creditors as possible and then discharge your obligations for most other debts, with certain exceptions.

Tax Consequences

    If you qualify for debt relief and receive partial or full forgiveness on your loans, you may incur tax liability. Debts discharged during bankruptcy are not taxable income. Other debt forgiveness might be, however. For example, assume a credit card company forgives $4,000 of a $10,000 debt because of your financial hardship. Under the tax rules, the forgiven $4,000 represents income and must be reported to the IRS. This could affect your tax bracket. Prior to receiving debt relief, consider the other potential ramifications, and consult with a professional as necessary.

Will a Bank Consolidate Credit Cards?

When you consolidate credit cards, you take out a loan to pay off the current balances you owe to each credit card. By doing this, you transfer multiple debts to the lender who gave you the consolidation loan. Many consumers use bank loans of one kind or another to consolidate credit cards, though you should consider the loan terms carefully before agreeing to take on more debt.

Bank Loans

    To consolidate your credit cards, you need to find a lender willing to give you a loan. Whether the lender is a bank, another credit card company or anyone else doesn't matter significantly. All that matters is that you find the lender willing to give you the money and use that money to pay off your credit card balances. Banks typically give credit card consolidation loans in three main ways: a home equity loan, a credit card with a balance transfer program or a personal loan.

Bank Loan Requirements

    Each bank sets its own loan requirements, and any time you want to get a loan from your bank you must meet these standards. Banks typically use the same information to determine whether you're a good candidate for a loan: your credit score, debt-to-income ratio and income. If you qualify, inspect the bank's offer. You have to pay back your debt consolidation loan like any other loan, and if your bank is unwilling to give you competitive loan terms, consider looking elsewhere.

Credit Unions

    Like banks, credit unions also offer a range of credit card debt consolidation loan options, such as credit cards and home equity loans, and often at lower rates than a bank, according to MSN Money. Unlike banks, a credit union requires you to be a member to apply for a loan, but membership is usually free. Credit unions sometimes have less strenuous loan requirements, making it easier to get a loan.

Other Considerations

    If you're considering a credit card debt consolidation because you're facing financial difficulties and believe consolidation will solve your problems, you should consider other options as well. Consolidation does not automatically solve your financial hardships, and it can lead to more difficulty if you don't learn to manage your debt. Talk to a credit counselor if you need help getting you debt under control.

Tuesday, January 27, 2004

Is There an Amount Your Credit Card Debt Has to Be Before the Creditor Gets a Judgment Against You?

A judgment in a credit card case cannot be granted until a lawsuit is reviewed in court. In theory, a credit card company could sue you and win a judgment for any amount -- even a few dollars. However, from a business standpoint it isn't practical for card companies to sue for small amounts as it could incur several hundred dollars in expenses pursuing you in court. The card companies make individual decisions regarding when to sue, and there is no published standard.

Payment Arrangements

    Ignoring a delinquent credit card debt and hoping you won't be sued is risky. It's better to put the debt behind you by making payment arrangements. The Smart Money website reports that delinquent credit card debts can often be settled for between 20 and 75 percent of the balance. That's obviously better than being sued in court and ordered to pay the entire amount. Debt settlement is a common form of debt management, allowing you to resolve a debt by paying less than the full balance. Call your credit card company at its customer service number to request a settlement.

Ignoring Debt Collectors

    Read all correspondence from your credit card company or debt collector. People unable to pay or settle their debts often ignore mail from debt collectors. That could be a mistake. The debt collector could be writing to offer a reasonable settlement with payments in installments. Or it could be a notice suggesting that the credit card company is considering a lawsuit. The letter could be a bluff to entice you to pay -- or it could be the start of a legal action.

Legal Notices

    Court notices should never be ignored. "The New York Times" reports that some people fail to realize that they have been sued until they discover their bank accounts have been frozen because of a judgment. To protect your rights, you must respond to any notices sent to you by a civil court. Credit card lawsuits begin with the notification of a lawsuit, called a summons. Attached to the lawsuit is a document called a complaint, which is the actual lawsuit. The summons and complaint are usually delivered to you by a courier, who can contact you at your home, office or anywhere else. Carefully read the summons if you receive one and seek advice from an attorney on how to proceed.

Negotiation Is Always Possible

    You may still have an opportunity to settle, even after being sued. Settling, even for the full amount with installments, is better than receiving a judgment. The judgment will remain on your credit report for seven years and, more important, allow the debt collector to possibly garnish your wages and bank account.

Step-by-Step Foreclosure in Maryland

The foreclosure process in Maryland can start as soon as you miss a payment, but actual eviction can take more than six months. The foreclosure doesn't necessarily end the previous owner's financial responsibility, however. The lender has up to three years to file for a deficiency judgment against the former owner if the house is sold at auction for less than the outstanding balance due on the loan. A deficiency judgment allows the lender to collect the difference in the auction price and the sales price at auction.

Instructions

    1

    Confirm the date of your last mortgage payment by checking your billing statement or bank records. Mortgage payments are expected by the due date; the mortgage can be considered in default if it's just one day late, according to the Maryland Department of Housing and Community Development.

    2

    Check your mail for a "Notice of Intent to Foreclose to Borrower." This notice is generally sent out within about 45 days of your missed payment. Before sending the notice, the lender will try reaching you by telephone and mail. The notice officially begins the foreclosure process. Along with the notice of intent, the lender is required by Maryland state law to send you information about requesting mediation counseling. The law entitles you to a mediation session, which will be directed by an independent third party with your lender participating. The goal is to discuss possible solutions for ending the foreclosure, such as a payment plan or loan modification. The Maryland Department of Housing and Community Development reports that you have 105 to 133 days from the date of your missed payment --- depending on the specifics of your foreclosure --- to request foreclosure mediation.

    3

    Request foreclosure mediation by following information received by your lender. The mediation session must be held within 170 days of your missed payment, according to the Maryland Department of Housing and Community Development.

    4

    Prepare for eviction at the 185-day mark if mediation fails and the lender proceeds with the foreclosure. After 185 days, the lender can officially foreclose on your home and schedule a sale of the property. Consult an attorney to consider filing for bankruptcy as a final effort to save your home.

Nonprofit Debt Consolidation Help

Nonprofit Debt Consolidation Help

Many consumers have plans of paying off their consumer debts and improving their personal finances. Unfortunately, debt elimination is easier said than done. With high interest rates and high monthly minimums, paying off debt can prove challenging. Using a nonprofit debt consolidation company can help eradicate your debt.

Nonprofit vs. Profit

    There are two types of debt consolidation companies -- nonprofit companies and for-profit companies. Working with a nonprofit debt consolidation company is advantageous because these companies do not attempt to profit off your situation; any fees charged for their services are nominal and used to cover their costs, says the Non Profit Debt Consolidation website. Other companies without nonprofit status from the IRS tend to charge expensive fees, which can include an initial fee and a monthly fee.

How Debt Consolidation Works?

    Nonprofit debt consolidation companies are not banks or lenders, so don't expect the company to issue a check to pay off your outstanding balances. These companies consolidate debt by combining your credit cards and loans into a single monthly bill. You provide them with information on the type of accounts and account numbers, and they'll contact your creditors to begin managing your expenses. After reviewing your accounts, they'll establish a monthly payment to pay your debts. You make this payment to the debt consolidation company and not your individual creditors.

Negotiating

    Debt consolidation companies contact your original creditors to negotiate lower interest rates on the debt, which will reduce your monthly minimums. And if you're behind on payments, resulting in collection accounts and excessive late fees, debt consolidation companies work on your behalf to get these fees reduced or eliminated.

Counseling

    Learning how to manage debt and credit can alleviate future problems. With this in mind, nonprofit debt consolidation companies not only help to eradicate your outstanding balances faster, they also offer credit counseling to teach you better habits to help improve your personal credit rating. Good credit habits include timely bill payments and careful debt management.

Benefit of Debt Consolidation

    High-interest credit cards can take years to pay off, and debtors can pay hundreds or thousands in interest charges. Debt consolidation companies establish a payoff plan at the beginning of the program, allowing debtors to pay off their balances in four to six years, providing they don't add new debt.

Christian Credit Help

Christian Credit Help

The Bible is filled with references of how Christians should handle debt and finances. Paul writes in Romans 13:8, "Let no debt remain outstanding." Sobering words for Christians who find themselves drowning in debt. Achieving financial freedom means gaining spiritual freedom as well. To that end, many companies now offer debt relief with Christian themes and philosophies.

Credit Counseling

    Credit counselors review income and debt to get an understanding of the client's financial health.
    Credit counselors review income and debt to get an understanding of the client's financial health.

    The first step for many individuals trying to pay off debt is a visit with a credit counselor. Credit counselors help you analyze your outstanding debt and take a hard look at your spending habits. Many people have never developed a financial plan or budget, so sitting down with a counselor can be an eye-opening experience. There are many nonprofit and Christian credit counseling programs available on the Internet and in the yellow pages. Before signing up with any company, check to see what fees, if any, are involved. Ask questions to ensure that the company has the spiritual values that you are looking for. Many reputable companies do not charge an upfront fee and have small monthly fees. Visit the Christian Debt Solutions website for links to trustworthy companies.

Debt Consolidation Companies

    Christian debt counselors review a client's debt portfolio to see if consolidation is the best option. Christians with a debt consolidation plan pay one lump sum per month to a debt consolidation company. The company in turn disperses the money to the client's creditors. The company will also contact the creditors to negotiate lower interest rates or terms in order to pay down the balance quicker. The benefit to the consumer is he now only has one affordable monthly payment. A company that has Christian values will counsel clients as to the best options to overcome debt.

Christian Financial Education

    Crown Financial Ministries has a solid reputation for helping Christians achieve financial freedom. On their website, you can find financial calculators and tools to help analyze spending and create budgets to overcome debt. There are also printouts for churches that wish to hold small group classes in financial ministry. The site also boasts several articles on debt management and overcoming debt. Bible Money Matters is another helpful site that offers timely articles for Christians seeking to overcome their debt problems.

Conquering Debt

    Debt counselors and debt management plans can help with overcoming debt, however it is important to note that you are capable of doing what these companies do all on your own. The first step in overcoming debt, according to Crown Ministries, is to give everything over to God. This includes debt, income and worrying. This is a metaphorical statement of course, but Christians should turn first to prayer and then follow the teachings of the Bible to overcome a tough financial situation. Stopping the use of credit cards and starting to pay down high-interest debt are the subsequent steps. You do not need a company to negotiate lower credit card terms on your behalf. This is something that you can do yourself in an effort to pay down debt. How Christians handle their finances reveals much about their character, as Jesus tells us in the Parable of the Talents (Matthew 25:14-30).

Monday, January 26, 2004

Free Credit Reports Under the Fair Credit Reporting Act

Whether you are applying for a job, looking to purchase a new home or attempting to finance a college education, the information on your credit report says a lot about you. It provides lenders with information about how you handle money and how you handle your financial responsibilities as they pertain to debt and credit. Reviewing your credit report regularly helps alert you to possible identity theft and credit reporting inaccuracies that can influence lenders' decisions.

Background

    Enforced by the Federal Trade Commission (FTC), the Fair Credit Reporting Act (FCRA) sets forth objectives and policies to ensure the accuracy and privacy of the information commonly found in credit reports. The regulations laid out in the FCRA provide guidance for both consumers and consumer reporting agencies. These guidelines instruct consumer reporting agencies, including the three major credit bureaus and agencies involved in providing check writing or rental history records, how to handle advising consumers of any adverse actions that have resulted from the information contained in their reports. The FCRA also provides consumers with rights related to receiving, reviewing and correcting the information contained in these reports.

Reasons

    Various circumstances may lead to the need to request a free copy of your credit report. The FCRA provides for one free credit report annually from each of the three major credit bureaus upon request. Requesting a free report annually can allow consumers to keep an eye open for fraudulent or inaccurate information. If you have been turned down for credit or suffered another adverse action, such as being turned down for employment, because of information contained on your credit report, you are entitled to a free report as well. Other valid reasons for receiving a free credit report include being a victim of identity theft, receiving public assistance and applying for employment during a period of unemployment.

Requests

    Request a free copy of your credit report by visiting annualcreditreport.com. This website allows you to request a free report from each major credit bureau -- TransUnion, Experian and Equifax -- once a year. You can request a report from each of the three credit bureaus at the same time or space the requests out throughout the year. If the information in your credit report was used against you, the credit agency responsible for reporting the adverse information will provide you with a free copy of your credit report upon request. You should receive a letter detailing the adverse action, such as denial of credit, and the credit bureau responsible for reporting the information used to reach the decision. Follow the detailed instructions on this letter to request a free copy of your credit report.

Additional Considerations

    Annualcreditreport.com is the only website authorized to provide consumers with free annual credit reports from each of the three major credit bureaus. You will have to provide personal information -- including your Social Security number, date of birth and address -- to verify your identity when requesting your free annual credit report. In addition, information related to loan balances, payments and creditors may be requested to further prove your identity.

Sunday, January 25, 2004

Are Bankruptcy Filings Public Information?

Increased numbers of bankruptcy filings mean that the social stigma once attached to bankruptcy is fading. However, bankruptcy filings are still public information, meaning anyone has access to information about debtors who have filed.

Process

    Bankruptcy is filed through federal courts. Debtors who file must turn over all financial information--income and debts- to the court as part of the bankruptcy process. This information becomes part of the court record, which is available to the public.

Location

    A bankruptcy court is included in every federal judicial district in the United States, with each state having at least one--and usually more--districts. Those who file for bankruptcy file in the federal district court nearest them. Records of the bankruptcy are kept in the district court clerk's office.

Considerations

    The sensitivity of information contained in bankruptcy documents has been cause for concern for many who fear the information can be used for identity theft, among other crimes, especially as digitization of court records becomes more common.

    The Privacy Rights Clearinghouse states that "the type of highly personal information at issue here, although now publicly available but difficult to obtain, will certainly prove a gold mine to criminals if and when access becomes effortless."

How to Wipeout Credit Card Debt Without Going Bankrupt

Faced with rising debt and uncertain economic conditions, some people consider bankruptcy as a way to alleviate their financial pain. However, bankruptcy can affect other aspects of life, including finding future credit or loans, and possibly finding a job. Whatever your financial situation, there are alternatives to bankruptcy that you can consider to help you wipe out credit card debt.

Instructions

Instructions

    1

    Determine the amount of your monthly income and expenses, including your credit card debt. If you have excess income, or find areas where you can trim expenses, pay that money towards your credit card debt. Use an online financial debt calculator to see how long it will take you to pay off the money you owe.

    2

    Call a financial counselor or a debt-reduction agency. Explain your financial situation and see what alternatives they suggest. Often, debt specialists will construct a five-year plan to pay off your current debt, with a monthly payment approximating 2% of your total amount owed. Under this system, you will no longer deal directly with your credit card companies, but pay one monthly payment that will be distributed to all of your creditors.

    3

    Talk to your credit card companies directly. Tell them your situation and that you would like to work out a payment plan. Especially in the current economic environment, many companies are willing to drastically reduce your payments and/or interest rates in order to prevent you from falling into bankruptcy and paying them nothing. In certain situations, your card company may even forgive a portion of your debt in exchange for an upfront payment.

What to Say to Help Reduce Your Credit Card Debt

What to Say to Help Reduce Your Credit Card Debt

Credit cards let both unemployed and employed individuals manage cash flow and survive times of financial hardship. However, the price for this convenience is debt. Often, when coupled with proper debt management techniques such as budgeting and expense tracking, contacting your credit card company reduces the credit card debt you have. When you contact credit card companies to reduce debt, approach the credit card company with the right data and attitude. Otherwise, the credit card company may be less willing to work with you.

Level of Management

    When you call your credit card company, ask to speak with someone who has the authority to make major alterations to your account. If your write a letter, always address it to that authority. Often, the typical customer service representative doesn't have this ability, although he can review the account and make modest changes like correcting charges for purchases not made or adding a user to the card.

Presentation of Problem

    Explain to the authority why you cannot make your payments. For example, you might indicate that you were laid off temporarily or that you had unexpected medical bills, if applicable. The data you provide here establishes the grounds for whatever request you make for the account, such as lower monthly minimums or settlement on some of the debt. Give the representative concrete figures and dates, if possible.

Solution to the Problem

    Credit card companies often are willing to negotiate with you to reduce your debt if you can present them with a workable solution to the problem you present. Tell the representative an exact figure for what you can pay -- if you're looking to settle, offer to pay 15 to 25 percent of the total debt, as the Need Help Paying Bills website recommends. Because credit card companies will want you to pay more, an offer of 15 to 25 percent provides plenty of room for negotiation. Indicate how long it will take to repay the debt via the presented method, whether you plan to pay in a lump sum or in installments, where you will get the money to repay the debt and the payment methods you have available to use (e.g., electronic payment from a bank account, money order, check). The idea is to start negotiations with your ideal terms and then let the credit card company modify your plans based on their policies and procedures as needed.

Disadvantage Reminders

    If you are a loyal customer who has had decent credit and payment history, remind the company representative of this and present evidence such as previous statement data and your credit score -- in writing -- to support your assertion. Remind the representative of the disadvantages to alternatives to your proposed solutions, such as the expense the company will incur if they sue you. Spin this in a positive light and don't be accusing. For instance, you might say "I'm really looking to preserve my credit rating, and settling means you don't have to spend money on collections or a lawsuit, so I propose...", rather than "I've had my account for x years -- I deserve to have some of the debt forgiven because you don't give me any other perks."

Quotes from Other Companies

    Credit card companies don't want to lose business to other credit card companies. They understand that they'll look like the "bad guy" of the field if they deny a request that is within reasonable market standards (15 to 25 percent above the initial settlement offer). Most companies don't like to be in this position and therefore will extend negotiations if you politely present information that shows what other companies have done in situations similar to yours. You can get this information simply by requesting it from the delinquent accounts departments of credit card companies, or by contacting attorneys who specialize in debt collections. Presenting this information shows that you have done your homework and know your entitlements, even if those entitlements are not especially high. In the worst-case scenario, you can use your quotes as an ultimatum, telling the credit card company you're prepared to cancel the card if they can't meet your clearly reasonable terms. Companies often don't want you to cancel the card because it is less expensive to retain a card holder than to find a new one, and because they can make money from keeping you as a client with a higher interest rate.

Compliments

    Companies by themselves may not respond to flattery, but the workers in companies do. Tell the company if you were impressed with service you've received or how you don't want to lose privileges with the company considering the reputation and rankings the company has -- list positive card features they provided to you, and if possible, name specific representatives that have helped you in the past to make the conversation and requests seem more personal. Add that helping customers through hard times is one more way the company can distinguish itself.

Final Words

    Regardless of what you say to your representative, keep your language concise and professional, even if the service representatives provide nightmarish help. Always get the name of the representative with whom you speak if using the phone, and get negotiated points in writing via a formal letter or email before you take any other action.

Saturday, January 24, 2004

What Security Problems Come With Using Credit Cards?

What Security Problems Come With Using Credit Cards?

Credit cards offer convenience when shopping online or in person. They can help you with personal security by allowing you to purchase goods and services without having to carry cash. But credit card fraud can occur for months without the credit card owner even realizing it, according to the Federal Trade Commission (FTC). You should understand the security problems posed by credit card use.

Credit Card Fraud

    One of the most basic security problems with using a credit card is the possibility of credit card fraud, according to the FTC. If your account number or copy of a transaction receipt wound up in the wrong hands, you could find unauthorized charges on your card. Check your credit card statements every month to make sure you recognize all of the transactions. Report any suspicious transactions to your credit card company.

Credit Accounts

    Credit card fraud also can occur when someone opens an account in your name. One of the most common ways for this to happen is when you get a pre-approved credit card offer in the mail that someone else manages to steal from your mailbox or your trash. The criminal fills out your application, opens an account and begins using the card in your name.

Identity Theft

    If a criminal is able to gain access to your credit card accounts through the Internet, or he gets your credit card account statements you threw out in the trash, then your Social Security number and other important information may be compromised. With that information, a criminal could begin the process of stealing your identity and opening a variety of accounts in your name. Destroy all of your credit card statements and expired credit cards before disposing of them. The best way to do this is to invest in a paper shredder that is also designed to handle credit cards.

Friday, January 23, 2004

Can Unsecured Creditors Garnish SSI, SSDI or Social Security Benefits?

When a person owes a creditor, he faces the prospect of having his income garnished by the creditor. This means that the creditor siphons off a percentage of the debtor's income until the money that the debtor owes is paid off. Garnishment is more often applied to unsecured loans, as secured loans --- loans in which the debtor offers collateral --- can be paid off with the collateral. Private creditors cannot, however, garnish government benefits.

Garnishment

    When a creditor seeks to garnish a person's income, he must first take the debtor to court and win a civil judgment against him. The creditor can then apply for and receive an order of garnishment, which he presents to the debtor's employer, who is legally required to honor it. A creditor cannot, however, garnish wages without the permission of a judge, even if the borrower agrees to the garnishment.

Exemptions

    While creditors can legally garnish most types of income, federal law prevents private creditors from garnishing most types of federal benefits. This includes most types of Social Security payments, including SSI and SSDI. A judge will not issue an order of garnishment for seizing government benefits. Were one to be issued, the Social Security Administration, the federal agency that issues these benefits, would not comply with it. Even after the money is deposited in the debtor's account, it can't be seized.

Securing Loans

    In some cases, a lender may attempt to have the borrower sign a document giving the lender the right to garnish the borrower's income, in the event that he fails to pay back the loan. While technically not a secured loan, this provides the lender a means of getting repaid if the loan falls into arrears. However, this document has no legal standing, as all forms of extrajudicial garnishment are illegal.

Government Debts

    Although private creditors are not allowed to garnish government benefits, the government itself can. If a person takes out an unsecured loan from the government, such as a student loan, and fails to pay it back, the government can withhold a percentage of the person's federal benefits. However, the government will, as with a private creditor, have to seek a legal judgment against the individual before he is able to garnish federal benefits.

How to Compare Fixed Personal Loan Rates

There are not a lot of choices to choose from when comparing fixed-rate personal loans. A fixed personal loan is an installment loan. The monthly payments are fixed over the life of the loan, and the proceeds from the loan are given to you in a lump sum when the loan is approved. You are not allowed to draw additional money from the loan. In that way the installment loan is somewhat similar to other loans. A mortgage loan can offer a fixed interest rate, but it is not considered a personal loan. The same is true for an auto loan, which also can have a fixed interest rate.

Instructions

    1

    Obtain a copy of your credit report and score. AnnualCreditReport.com offers free credit reports and is the only website endorsed by the federal government to offer free reports under the terms of the Fair Credit Reporting Act. Print a copy of your credit report by visiting the website (see Resources). Then order your credit score separately, for a fee, by following instructions on the report.

    2

    Compare your credit score with standards for good credit. Privacy Rights Clearinghouse, a national nonprofit consumer information company, reports that scores of 720 or higher represent the best credit, with 620 the minimum score for "good" credit.

    3

    Contact banks and credit unions offering fixed-rate personal installment loans. Reach them over the telephone or in person. Speak with a loan officer to ask about interest rates. The interest rate you receive will be determined in part by your credit score, so share your credit score with the loan officer. Get other personal installment loan information by visiting websites for banks and credit unions.

    4

    Compare all the loan rates by analyzing the interest rates and any possible fees. The loans with the lowest interest rates and fee structure offer the best value.

How to Bring Your Credit Score Up

Your credit score could spell the difference between owning and renting, and determine the interest rate you're given when you make a large purchase. Because of this, it's important that you maintain a good credit score and consistently find ways to improve it. There are some general rules that should be followed in order to improve a low credit score.

Instructions

    1

    Start by building credit. For too many people, the fact that they have no credit score is often more damaging than having a poor one. You should start building your credit as early as you can through credit cards.

    2

    Make your payments. The more often you make your payments on time without getting late notices and possible defaults on accounts, the better your credit score will be when you really need to have good credit.

    3

    Solve debt issues with the creditor when possible. If you have a problem paying off a certain debt, try working with the company directly. Explain your situation and find out what the company can do in order to make your payment more manageable. It also creates a good opportunity to ask it about removing any late payment notations from your credit record with it.

    4

    Cancel old cards. If you've had a lot of credit cards in your past, they'll show up on your credit report. This can hurt your overall credit rating. By having them removed through the credit reporting agencies, you can boost your credit.

    5

    Keep track of negative credit information. The best way to do this is by regularly (at least yearly) getting your credit reports from all three credit reporting agencies (Experian, Transunion, Equifax). Some states allow for free credit reports from the agencies once a year but, no matter where you live, you can get them for a minimal $10 to $15 fee.

Thursday, January 22, 2004

What Happens to Credit Card Debt When You Die in Texas?

What Happens to Credit Card Debt When You Die in Texas?

Credit card debt is one of the most common types of debt Americans carry aside from their mortgage. When you pass away, your spouse, heirs or estate administrator must take on the task of informing all outstanding creditors and arranging to pay off any remaining balances. The asset value of your estate may be enough to pay off unsecured debts, but in Texas, your spouse could potentially be held liable if your estate cannot pay off the credit card balances.

Community Property State

    Texas is a community property state, which means that everything owned by one person in a legal marriage is also owned by the spouse. The couple -- as a unit -- owns assets and liabilities, instead of individual ownership by husband or wife. When the husband dies, his wife is legally responsible to repay any and all debts left outstanding -- including those that were in his name only.

Joint Account Holder

    In all states, including Texas, if two individuals jointly hold a credit card account, the surviving account holder is responsible for paying off the balance of the debt. If credit card debts are paid off in probate court, the joint account holder may not be required to pay the balance.

Probate Process

    The probate court process assesses secured and unsecured assets owned by the deceased person and compiles a list of all outstanding debts, including mortgages, car loans and credit card accounts. If needed, the court orders liquidation of assets so that debts to pay off debts in full. If the deceased person did not have enough assets to cover all of their debts, some or all of the debts may be written off due to insolvency.

Get Professional Help

    Since Texas is a community property state, the credit card balances may not be eligible for write off in probate court. Consult with a professional estate attorney or counseling center to determine what steps to take to protect your spouse from bill collectors in the event of your death.

Wednesday, January 21, 2004

Strategies for Decreasing Debt

Decreasing debt helps increase disposable income, and once you've paid down your debt, your credit rating will slowly increase. Several strategies help reduce debt. By employing these techniques in your life, you can eliminate your debt and improve finances.

Cash Only

    Many people use credit cards to buy items that they otherwise couldn't afford. And when they can't pay off the charge, charges pile up and debt gets out of control. Reversing debt problems caused by the overuse of credit cards starts with putting plastic away and relying on cash only to make purchases. Because you're not using credit to buy now, you'll have to plan purchases and save money. Not only does this strategy help with reducing debt, but you'll get practice in how to budget and control impulse spending.

Monthly Payments

    Using cash to buy items eliminates new charges on your credit cards. To begin decreasing the debt, you have to put more money toward your debt each month. Paying the minimum is convenient and doesn't require a lot of money. However, small payments won't put a dent in your principal, and to get rid of the debt faster you have to double, triple, even quadruple your minimum payments every month until the debt is gone.

Tapping into Your Home's Equity

    Some debtors hesitate to use a home equity loan to pay off high-interest debts because defaulting on the second mortgage can result in losing their home to foreclosure. However, if you're confident that you're able to afford a second mortgage, a home equity loan can quickly pay off credit card debt and save you money each month. You have to pay back a home equity loan. But with lower interest rates than credit cards, you'll have lower payments. A fixed term means you'll pay off the home equity debt within a specific time frame.

Debt Consolidation

    Some people spend years trying to pay off their debt and never succeed. If you are unable to decrease debt on your own, consider getting help from a debt management company. Search for a company that doesn't charge a fee (non-profit) to help you consolidate and lower your debt. Once accepted into the program (you have to qualify), a trained debt consultant will work with you and your creditors to get you better rates and lower payments on your debt.

The Best Ways to Organize Bills

The Best Ways to Organize Bills

Your bills come each month whether you want them to or not. Setting them aside and dealing with them later can lead you to forget about their due dates. When this happens you end up having to pay a late fee. If you are willing to get organized, you can get your bills paid on time and never have to worry about incurring a late fee. This may take some time to set up, but only a few extra minutes per week to maintain.

Opening the Bills

    Open your bills. Many bills come with unnecessary inserts that just take up room in your office. Remove any inserts and recycle them with the outer envelope immediately. This prevents clutter from piling up and taking your focus off of the bill itself. Now take the bill and place it under the fold of the return envelope.

Four Plastic Bins

    Label four plastic bins so that each one represents a week of the month. You can simply label them "Week one," "Week two," "Week three," and "Week four." Now take your prepared bills and locate the due date. If the due date is the eighth of the month, the bill goes in week two's bin. If the due date is the 20th, the bill goes in the bin for week three. Do this with all of your bills and then stack the bins on top of each other in order. When week one comes, take your bills out and pay them. Then place the bin on the bottom of the pile so that week two's bills are ready for you the following week.

13 Pocket File Folder

    Once your bills are paid, you still have your statements to deal with. You want to keep them organized as well so that you can quickly locate them if you need to. Purchase a 13 pocket file folder. Label the first 12 pockets with the months of the year. The final pocket can be labeled "taxes." Place your monthly statements into the pocket for that particular month. When the year is over, you can label the file folder with the year on the front and store it in case you ever get audited.

Tuesday, January 20, 2004

How to Do a Simple 623 Dispute

How to Do a Simple 623 Dispute

Section 623 of the Federal Credit Reporting Act gives you the right to protest items that show up on your credit report. The basic idea is that you have the right dispute your credit tradelines directly with the furnisher. You can request to see the documentation that supports the way your credit is reported. A Section 623 dispute is a dispute submitted to the original creditor.

Instructions

    1

    Once you see an erroneous entry on your credit report, send a letter of dispute to the creditor. Use the address published in the tradeline, or the line that reports the creditor's entry on your credit report. Send this letter by certified mail with return receipt requested. You can quote section 623. Keep your letter specific and personalized. Ask for records of the specific things you are disputing, like late payments.

    2

    Wait 30 days for a reply.

    3

    If you get no response by then, you need to send a letter to the credit reporting agencies that report this tradeline. This is called method of validation. You are asking the credit reporting agency to explain how they validated this tradeline when the tradeline furnisher has not responded to your legal request for investigation. Send a copy of your original letter to the creditor, along with copies of any documentation you have to verify your case.

    4

    File a complaint. It depends on who the creditor is. Your failsafe will be complaining to your state's attorney general, but you will have more results with a specific attack. Contact a bank regulator like OCC, OTS, FDIC or the Federal Reserve if the creditor is a bank. Write to the relevant state licensing board if the creditor is something like a dentist.

    5

    Failing to respond to a 623 dispute is a violation of federal law; you can sue the tradeline furnisher if they fail to respond in a timely manner, or if they fail to respond at all.

    6

    The desired result can be removal of a late payment report or deletion of the whole tradeline. The result is typically accompanied by a snooty letter that says "we did nothing wrong, but will delete this as a one-time courtesy."

Monday, January 19, 2004

What Happens If You Cannot Pay Your Medical Bills?

Medical bills resulting from a catastrophic injury or an unexpected illness can be financially crippling. This problem can be exacerbated if you have no health insurance. You can employ several strategies to make your medical bill payments more manageable and allow you pay them down over time. If your medical bills are too large, you may be forced to explore bankruptcy options to alleviate the debt.

Negotiate Debt

    Negotiating medical bills is actually quite common, according to "The New York Times." Hospitals and doctors prefer to get paid something rather than ship your account off to a collection agency and be forced to write off the debt. Communicating your financial difficulty to your physician can be the first step in securing a discount on your medical bill. The total discount can range from 10 percent to 30 percent of your total bill depending on the practice and the physician's specialty. This discount may be enough for you to pay off your medical debt and avoid damage to your credit.

Medical Charities Fund

    Nonprofit organizations geared towards helping consumers pay for large medical expenses, including the Medi-Corp Health System and The Patient Advocate Foundation are available in almost every state. Some organizations even have state funding. Finances are intended for those who make too much money to qualify for Medicaid but don't make enough money to afford the large medical expenses they have incurred. Hospitals often have listings of state charities funds so patients can contact them and apply for assistance. Remember to ask specifically for nonprofit medical assistance programs after receiving treatment but before exiting the hospital. Hospital administrators are not required to inform patients about the existence of such programs.

Hospital Payment Plans

    The majority of hospitals across the country are willing to work with patients who are experiencing financial difficulty. If you can't pay your medical bill upfront consider inquiring about a payment plan. If the hospital or other medical facility agrees to the plan you can be allowed to make smaller monthly payments on your bill. The hospital wins because it gets paid the entire sum owed for your medical care and you win because you can actually afford to make the smaller payments and avoid collection practices. The key to this plan being successful is to make timely payments on the account. A hospital may be forced to send your bill to collections if you can't make the payments on time.

File for Bankruptcy

    If your payments options are exhausted and your medical bills are insurmountable, bankruptcy may be your only solution. Since medical bills are unsecured debt, meaning the hospital has no collateral to seize in the event of default, Chapter 7 bankruptcy is the more ideal solution. This chapter of bankruptcy expunges your unsecured debts by liquidating your non-exempt assets to pay your creditors. This may mean you lose some of your valuable assets, including a car or your home.

Federal Consumer Credit Laws

Consumer credit accounts include personal loans and credit cards. A number of federal laws govern consumer credit, including but not limited to credit reporting guidelines and billing disputes. Also, federal bankruptcy codes allow financially struggling consumers to liquidate or reduce their debts in extreme circumstances. Some states have additional laws regarding credit, but federal laws apply everywhere in the United States and its territories.

The Fair Credit Billing Act

    The Fair Credit Billing Act provides customers and companies a number of rights related to credit card accounts. Customers must keep their lenders apprised of their current addresses and should make payments on time to avoid hefty financial penalties. If someone's card is lost or stolen, he is only liable for the first $50 of unauthorized purchases. Credit card companies must promptly post payments and credits to accounts. They also must investigate any billing disputes the customer initiates due to shoddy or undelivered goods.

The Fair Credit Reporting Act

    Credit reports consist of information about a person's address history and bill-paying habits. On-time payments boost credit ratings, while late or missed payments adversely impact credit ratings. The Fair Credit Reporting Act demands that lenders issue only accurate reports concerning consumers to the credit bureaus. It also enables consumers who are victims of identity theft or unfair billing practices to demand investigations. Late or missed payments usually harm credit ratings for seven years from the date of the original delinquency.

The Fair Debt Collection Practices Act

    Under the Fair Debt Collection Practices Act, consumer creditors can turn over delinquent accounts to an outside agency. But all debt collectors must behave appropriately or risk being sued. Bill collectors must stop calling if a customer writes a letter requesting that the calls stop. They also cannot call consumers outside of the hours of 8 a.m. to 9 p.m. and may not communicate with consumers by postcard. Customers have the right to demand proof of the debt; if the debt is invalid the agency must cease collection activities.

Bankruptcy Laws

    People with financial problems can file for personal bankruptcy. The most common types are debt forgiveness under Chapter 7 and partial debt repayment in Chapter 13, according to the book "How to File for Chapter 7 Bankruptcy." Bankruptcy will only reduce consumer-oriented debts that were honestly incurred; people who lied to get credit or used accounts right before filing bankruptcy can be arrested for bankruptcy fraud. Bankruptcy also will not erase bad credit, nor will it help situations such as child support, alimony and court fines.

Sunday, January 18, 2004

Rules Debt Collectors Must Follow

When you owe creditors money, you have rights under the Fair Debt Collection Practices Act, which the Federal Trade Commission enforces. This act protects you if you owe money to family members or other individuals, credit card companies, health care providers and loan companies. The debt collection act, however, does not apply to debt collectors attempting to recover debts related to a business you may own.

Information Gathering and Appropriate Contacts

    If a debt collection agency does not know how to get a hold of you, it may contact individuals you know only to learn about your home address, place of work and home phone number. Generally, a debt collector cannot contact a third party more than once, and the collection agency cannot share information with a third party regarding your debts. If you have lawyer assisting you with your debts, the collection agency must contact your legal representative instead of you.

Notices

    After contacting you for the first time, the Federal Trade Commission states that a debt collector must mail you a "validation notice" within five days. The notice must state the amount you owe, the creditor's name and what to do if you cannot repay your debt.

Contact Times and Locations

    Unless you agree to accept phone calls at irregular hours, the debt collection act prohibits debt collectors from calling you before 8 a.m. or 9 p.m. If you tell a debt collector verbally or in writing to not call you at work because of company policy, the collector must comply.

Prohibited Practices

    The act prohibits debt collectors from harassing you, threatening violence or harm, calling you just to be an annoyance, using profanity while speaking with you or publicly publishing your name as a debtor. They also cannot lie in an attempt to collect payment from you, tell you that you are going to be arrested, tell you false information about your credit information or try to charge you additional fees or interest charges other than what you specifically owe.

Suspension of Debt Collector Contacts

    You can request in writing that a debt collector stop contacting you. The Federal Trade Commission states that you can do this by writing a letter the collections agency that asks them to stop contacting you. Send the letter via certified mail and request a return receipt so you can verify that the agency received your correspondence. Upon receipt of the letter, the collection agency may only contact you to tell you that they will not contact you anymore or to let you know if they are going to take a specific action against you, like take you to court over the debt you owe.

Saturday, January 17, 2004

Can Credit Card Collectors Garnish Tax Checks?

The purpose of a garnishment is for a creditor to intercept wages or money paid to you to satisfy a court judgment. The garnishment order is delivered to the party issuing you the money, like your employer. Some creditors can garnish your tax refund from the IRS or your state, but civil creditors, like a credit card company, are not permitted to do so.

Features

    A credit card company must file a lawsuit against you in court to obtain a money judgment for a debt you owe. Once the creditor receives the judgment, he can use the collection enforcement methods available to him under local laws; the methods commonly include bank account seizure and wage garnishment. However, a federal or state creditor does not need a money judgment to collect debts.

Debt Types

    State income tax refunds can be taken to satisfy past due child or spousal support that was established by court order. A student loan you had through or backed by the federal government that is in default for nonpayment can result in the loss of your federal refund in its entirety; the money is intercepted by the government and applied to the outstanding loan balance.

Effects

    Your federal tax refund can be taken in full by federal creditors, and your state refund can be kept by the state. A state tax agency, acting on behalf of the U.S. government, may intercept your state refund for a federal debt if directed to do so. In cases where your refund exceeds the money you owe, you receive the difference. The IRS and state tax revenue departments typically send a notice to you if your refund money was intercepted for a debt.

Considerations

    A civil creditor can freeze your bank account, locking you out of access to your funds. Your tax refund may be in your bank account when a credit card company seizes the account. Although some types of income are exempt from bank account freezes, like Social Security benefits, your tax refund is not. The creditor is permitted to remove the funds from your account to satisfy the outstanding debt, and your tax money may be part of the seizure.

Friday, January 16, 2004

Does Spending More With a Credit Card Increase the Credit Score or Limit?

Does Spending More With a Credit Card Increase the Credit Score or Limit?

You might think that spending more means you have more experience handling debt and could entice your credit card company to increase your limit, but this is not always the case. Actually, credit card debt is usually a bad thing for credit scores and overall financial health.

Effect on Credit Score

    Spending more on your credit card will always lower your credit score. Credit bureaus factor in your "credit utilization," or how much of the total limit on your revolving debt you have available. If, for example, you have a total limit of $1,000 and use $500 of that, you have a credit utilization ratio of 50 percent. Kiplinger Personal Finance recommends a credit utilization ratio of no more than 25 percent, and less is always better.

Effect on Credit Limit

    Most credit card companies set your credit limit based on your yearly income and credit score. Spending more on your card may prove counterproductive to getting a limit, because it lowers your credit score and the lender may see an increased debt load as a credit risk. Alternatively, lenders shy away from increasing limits for people who rarely use their card, because they are unlikely to need or increase this credit. In this case, spending more could lead to a limit increase, but only if you have history of responsible borrowing.

Considerations

    Take a look at your financial situation and determine if you can afford more credit card debt. Spending more could lead to default. Credit cards often have the highest interest rate for any consumer loan, so unless you plan and are able to pay the balance off every month, the benefits of a potential limit increase are minimal.

Tip

    Instead of spending to try to get a limit hike, just ask the credit card company to raise your limit. Some credit card issuers offer automatic limit increases on their website. When that fails, you could always call the customer support line and request an increase. The company will likely ask if you had any change in your salary, so a promotion or wage raise since your initial application boosts your chances. Before asking for any limit increase, inquire about whether or not the company performs a hard inquiry on your credit. Hard inquiries will ding your score by three points to five points.

Can Social Security Disability Be Used to Obtain Credit?

Credit is the lifeblood of the U.S. economy. The ability of businesspeople to borrow capital or consumers get credit enables the economy to grow. Obtaining credit is based significantly on your income, so make sure to list all sources, including pensions, medical benefits, and Social Security retirement or disability benefits when making an application.

Social Security Disability

    Social Security disability is an insurance program for workers. All workers in the U.S. have their Social Security insurance premium deducted from each paycheck, and that premium is for both your retirement account and your disability insurance. However, you must have paid your Social Security premiums for several years before you are eligible for disability payments. Forty "credits" are generally required --- earning up to four a year -- with some exceptions for younger workers. You receive these disability payments because you can no longer work and will continue to receive them as long as you cannot work regardless of any non-employment related income you may have. (Social Security disability benefits are not means-tested.)

Supplemental Security Income

    On the other hand, Supplemental Security Income, or SSI payments, are means-tested, as SSI is a related but separate program run by the Social Security Administration to offer support to low-income disabled Americans. SSI is a government assistance program using general tax revenues, not an insurance program, and SSI recipients receive these benefits because they are in need not because they paid premiums.

Social Security Disability Payments Are Considered Income

    All Social Security disability payments (including SSI benefits) are considered income, and therefore should be considered in any application for credit. Your income along with your credit report are probably the two most important factors in decisions to offer credit. Furthermore, government insurance benefits are guaranteed to be paid, which is a positive in getting a loan, as the lender does not have to worry about the borrower losing his job and being unable to make the payments.

Credit Reports

    Your credit report is the other critical factor in determining your eligibility for credit. Having good credit helps a lot in overcoming a low income in the loan application process. Income, however, is the essential limiting factor as no bank is likely to loan you more than you can realistically pay back based on your income no matter how stellar your credit.

Virginia Debt Relief Laws

If you are a Virginia resident overwhelmed by unpaid credit card accounts, medical bills and other debts, you potentially qualify for informal or formal debt relief. Paying your debts on time or making alternative arrangements is important, because Virginia law 8.01-246 allows most creditors to sue you for unpaid debt. Generally, creditors have from three to 10 years to sue you, depending on the type of debt incurred and any contracts you signed.

Credit Counseling

    A number of non-profit credit counseling services offer debt relief for Virginians. You can attend a workshop and learn more about managing your money or sign up for a credit counseling session. During these sessions, you and a certified credit counselor can discuss your finances and decide which repayment options work within your budget.

Debt Management Plans

    If you have some disposable income, you can usually sign up for a debt management plan. Your credit counselor will renegotiate your debts and attempt to reduce the payments owed. Once you agree to a debt management plan, you must stop using credit and make one monthly debt payment to your selected Virginia credit counseling agency. Most debt management plans charge a monthly service fee.

Chapter 13 Bankruptcy

    Local branches of the United States Bankruptcy Court offer a partial debt repayment plan to Virginia residents with regular income under Chapter 13. It usually takes three to five years to finish repaying a Chapter 13 case; during this time you cannot legally get any new credit without a Virginia bankruptcy judge's consent. Also, the fact that you filed Chapter 13 will harm your credit rating for seven years from the date you requested this debt relief. You cannot include most tax debts, most federally-backed student loans, child support, alimony or court fines in any type of case, warns the book "How to File for Chapter 7 Bankruptcy."

Chapter 7 Bankruptcy

    As of 2011, if you are a single Virginia resident earning less than $50,296 a year you can file Chapter 7 bankruptcy. The income level for a two-member household is $63,613, while the eligibility figure for a family of four is $86,990, according to the U.S. Trustee Program. Chapter 7 permanently liquidates many of your preexisting debts, but harms your credit rating for 10 years. You also risk losing some of your assets; but if you have lived in Virginia for at least two years you can retain some of your property, such as $5,000 of jewelry and $5,000 of real estate equity, under state asset exemption laws.

Thursday, January 15, 2004

Can You Be Garnished for Charged Off Credit Cards?

If you do not make your credit card payments when due, your creditor will typically attempt to contact you by mail or telephone to try to compel you to pay your past-due amount. After your account becomes 180 days or more delinquent, the credit card company may charge off your balance, which means that it declares the balance a business loss. A charge-off does not mean that the creditor forgives the debt. It may continue to pursue collection activities, which may include garnishment.

Obtaining a Judgment

    A credit card company must obtain a legal judgment against you for a charge-off before it can garnish your earnings or bank account balances. A judgment is a verification that you are legally obligated to repay a debt. A creditor obtains a judgment by filing a lawsuit, usually in a county court, and providing evidence of your debt. After giving you an opportunity to respond, the court awards the judgment to the creditor and records the judgment as a public record entry.

Execution of Garnishment

    After obtaining a judgment for your charged-off credit card debt, the creditor may apply to the court that issued the judgment for a writ of garnishment. This allows the creditor to contact your employer to demand a portion of your future earnings. The creditor can also obtain a writ of garnishment to force your bank to turn over nonexempt funds to the court for payment of your credit card debt.

Wage Garnishment Limitations

    A creditor seeking wage garnishment for payment of a charged-off credit card balance must follow limitations imposed by federal and state law. Federal law limits garnishment to 25 percent of your post-tax income, or earnings above 30 times the federal minimum wage, whichever is less. Some states place additional restrictions on wage garnishment. For example, Texas and Pennsylvania prohibit private creditors from garnishing wages.

Bank Garnishment Limitations

    Bank garnishments for charged off credit card debt are also subject to state-imposed restrictions. A credit card company cannot garnish deposits derived from disability, Social Security or unemployment income. Some states also exempt certain amounts in your bank account. For example, Ohio law prohibits a judgment creditor from taking the first $400 in your bank account.

What Is the Best Debt Management Program?

What Is the Best Debt Management Program?

Tempting promises from debt management relief companies frequently cause otherwise savvy consumers to quickly part ways with much-needed funds. Doing advance homework is critical, since not all organizations are legitimate. An organization also may not provide all the services you need, such as bankruptcy or housing counseling, for example. Springboard Nonprofit Consumer Credit, accredited by the National Foundation for Credit Counseling, offered the best combination of fees and services.

Criteria

    In order for a debt management program to have a "best" superlative, the organization must have met specific criteria. First, the company should have an "A+" rating with the Better Business Bureau. Second, it should have an easily navigable website. Third, any setup or initiation fees should be made clear up front and should not be excessive. Fourth, the organization should provide plenty of tips and tools, such as loan calculators and educational opportunities. Finally, the organization should be a member of a consumer debt organization, such as the National Foundation for Credit Counseling.

Reputation

    Springboard, in business since 1974, earned an A+ rating from the Better Business Bureau and enjoys an excellent reputation as an above-board debt relief agency. From 2008 to March 2011, Springboard had eight complaints filed with the BBB (site information is updated daily). Ratings on TrustLink, a BBB program that allows consumers to write candid opinions online, and Yelp, an online ratings forum, are favorable. The website Top Ten Reviews also ranked Springboard among the best debt programs nationwide.

Fees

    Springboard does not work for lenders, although it accepts donations from credit card companies to fund its operations, according to the firm's website. The initial consultation, during which your personal financial picture will be evaluated, is free. As your debts increase -- and the level of assistance you require increases -- so do your fees, which vary from state to state. Debt management plan fees usually begin with a $50 setup fee, and monthly administration fees are a percentage of the monthly disbursal -- for example, 6.5 percent of your monthly payment.

Educational Tools

    Springboard offers a wide range of books, programs, articles and other items to help consumers understand the good and bad consequences of using credit, including programs designed to help children. All counseling, tips and tools are offered in English and Spanish, and are guaranteed confidential. Consumers who need bankruptcy or housing counseling can also find resources through Springboard; its program is certified by the Department of Housing and Urban Development. Lastly, Springboard offers consumers the chance to learn about their credit score, how it's calculated and how it affects their financial pictures.

Can You Have Your Wages Garnished If You Live in Michigan?

Can You Have Your Wages Garnished If You Live in Michigan?

Michigan law permits creditors to seek wage garnishments to satisfy an outstanding debt judgment. The state sets clear rules about how a creditor may obtain a garnishment and what types of income are exempt from collection. Garnishments authorized by a Michigan court are unrelated to wage garnishments issued by the U.S. Department of Education to recover defaulted student-loan debt.

Garnishment Levels

    Federal law protects the first $154.50 in weekly wages from garnishment. After that, up to a total of 25 percent of the remaining income may be withheld from your paycheck. A person may have multiple garnishments effective at the same time, but the courts will not allow seizure of more than the maximum amount allowed by statute.

Exemptions

    According to Michigan Legal Aid:

    "Some income is exempt from garnishment both before and after it is paid to you. This includes Social Security, Supplemental Security, state welfare and Veteran's benefits. Certain types of income are exempt from garnishment before they are paid to you, including: unemployment compensation, workers' compensation, state and federal civil service retirement benefits, and military retirement benefits. State law also exempts Individual Retirement Accounts (IRA's) and life insurance payable to a spouse or child of the insured."

Procedures

    A creditor must have a court judgment affirming the debt, then the creditor must get the court's authorization to effect the wage garnishment. Creditors must wait 21 days after receiving the judgment to file for garnishment and pay a $15 filing fee, as of 2011. The court will issue a garnishment order that is valid for 90 days or until the debt is fully recovered. Large judgments may require multiple garnishment orders. Wage garnishments, signed by a court officer, bind an employer to withhold the specified amount and send it directly to the court for disbursement to the creditor after a holding period to allow the debtor to challenge the garnishment.

Fighting a Garnishment

    If you are being garnished, you can object to the withholding of your wages by filing Form MC 49, "Objections to Garnishment and Notice of Hearing." Michigan permits only six technical reasons for objecting to a garnishment---you cannot re-litigate the original judgment through the garnishment objection process.