May 2004 ~ Credit And Debt Management

Monday, May 31, 2004

Statute of Limitations for Unsecured Debt

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Any debt you incur without providing your creditor with collateral is "unsecured." Medical debts, mortgage deficiencies, collection accounts and most credit card debts fall into this category. While unsecured creditors can seek legal recourse when recovering unsecured debts, they can only do so unhindered until the statute of limitations in the debtor's state expires.

The statute of limitations is a time period after which a debtor can claim in court that the debt is question is too old to legally enforce. It does not prevent the creditor from filing a lawsuit, but, providing the debtor is aware of the expired statute, it does prevent the creditor from obtaining a court judgment.

States set varying statutes independently of one another. Thus, the statute of limitations in one state can be two years while the statute in another is six years. Another factor that influences the statue of limitations is the type of debt the creditor wishes to collect. Credit card debts, for example, fall under the category of "open" debts in most states. Open debts have the shortest statutes of limitation. Written contracts, such as a contract for a personal loan often carry longer statutes of limitation than other forms of unsecured debt. Like the statute itself, the way different debts are categorized varies by state.

An expired statute of limitations does not bar a creditor from collecting a debt, it merely grants the debtor a court defense to use against the creditor should it file suit. Because the creditor cannot sue and obtain a judgment, it cannot utilize collection options such as liens and garnishment to force the debtor to resolve her financial obligation.

Should the debtor agree to a voluntary payment plan, the creditor retains the right to collect the money. Unfortunately for the debtor, agreeing to a payment plan, making a payment, and then defaulting on the debt a second time places him in a dangerous position. Making payments restarts the clock on the statute of limitations--stripping the debtor of his valid defense should the creditor file a lawsuit.

Federal student loans are the exception to the rule. Regardless of your state of residence, the U.S. Department of Education notes that federal law allows the government to use whatever means necessary to collect defaulted student loan debts until you pay off the debt in full. This includes garnishment, tax refund offset and property seizure. The statute of limitations does not apply to federal student loans.

How to Open a New Credit File

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Getting credit without a credit file can be difficult. Lenders check your credit file each time you apply for credit. The better your record, the greater chance you have of getting credit. Use credit facilities wisely and you get financial freedom. If you are new to credit, or have just become a resident in the U.S., you need to open a new credit file. It is not difficult, but it takes a little time.

Instructions

Pay utility and cell phone bills on time. Utility companies do not report timely payments to credit reporting bureaus, but they do report late or missed payments. Paying your bills on time doesnt open a new credit file. Late or missed payments can open a credit file, but for the wrong reasons.

Get a pre-paid credit card (see Resources). Check online to make comparisons, as there are many cards. Its important to get a pre-paid card that offers credit building. Use your pre-paid card for purchases in the same way as a regular credit card. Top-up payments and certain purchases get reported to the credit reporting bureaus and a new credit file will be opened.

Choose a co-signature credit card. Ask a friend of family member with a good credit record to apply to get a second card. Register it for credit building. Lenders offer co-signature cards to help people build credit. The main cardholder is liable if you fail to pay, so make certain you use the card wisely. Using your card opens a credit file and improves your credit rating.

Obtain a secured credit card (see Resources). Many are available. Check online to get the best offers. You need to deposit money with the card issuer. This is held as a guarantee against non-payment. Your card issuer will tell you your credit limit. This can be between 50 percent and 100 percent above the amount deposited. Secured card usage is reported to credit reporting bureaus.

Apply for a store card. Store cards can be obtained more easily than regular credit cards. Interest charges are high, but if you clear the balance monthly, no interest is charged.

How to Add Points to Your Credit Report

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A credit report tracks a consumer's history of paying debt obligations. Based on your history, credit bureaus assign a credit score, which financial institutions use to determine your credit worthiness. A credit report dictates your ability to secure employement, purchase a vehicle and purchase a home. It's a big deal. Making simple positive changes to your credit behavior can add points to your score over time.

Instructions

Focus on improving payment history. Late payments could be hurting your credit score. According to MSN Money, late payments account for 35 percent of your credit rating. Consider setting up automatic payments with your financial institution to avoid late payments.

Pay down debt. Large amounts of debt also drag down credit scores. Debt accounts for 30 percent of your score, according to MSN Money. Revolving debt, such as home equity lines of credit and credit cards, appears to weigh more heavily on your score. Focus on paying down revolving credit first, then focus on installment loans (such as an auto loan or personal loan).

Use a variety of credit. The type of credit used accounts for 10 percent of your credit score. Consumers who use a mix of installment loans and revolving credit earn higher credit scores. For example, don't avoid using credit cards altogether. Open a credit card and pay it off every month. This shows creditors you have will power with revolving credit.

Build a credit history. Avoid closing the first credit card you ever opened. Credit bureaus like to see consumers with a long credit history. It makes up 15 percent of your credit score. Use older credit accounts responsibly to add points to your credit score.

How to Win at a Hearing for Judgment

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After missing several credit card payments, a creditor may threaten to sue you in court and acquire a credit judgment against you. Paying the money owed is the best method to avoid a judgment, especially since the judgment can stay on your credit report for up to seven years. But if you don't owe the money or already paid the debt, you can win at a judgment hearing and avoid a tarnished credit file.

Instructions

Show up in court. Missing your court date results in a default win for your creditor. The judge concludes that you owe the debt and he'll issue a credit judgment against you.

Hire a lawyer to represent you. If you don't owe the money, consult with a local attorney to help you win at your judgment hearing. Provide the lawyer with all needed information to support your case. Some debtors represent themselves in court, but knowledgeable attorneys know how the process works and they know what questions to ask in court.

Ask the creditor to provide proof that you owe the debt. If hiring a lawyer isn't an option, go before the judge yourself and ask to see proof that you owe the money. Original creditors can usually supply this information if dealing with a legitimate debt, but if a collection agency now handles the debt, the agency may arrive in court without documented proof.

Submit evidence to the court. Go through your bank records and pull copies of canceled checks to show the judge that you paid the debt in question, if applicable. If the lawsuit stems from a breach of contract claim, bring copies of original contracts to the hearing or confirmation of other written agreements between you and the other party to show that you don't owe funds.

How to Skip Trace a Person

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Skip tracing a person means tracking down the whereabouts of someone who sometimes doesn't know or care whether you're looking for him, but sometimes really doesn't want to be found --- usually because he owes a debt he doesn't intend to repay. However, it's becoming increasingly harder to hide in the modern world of Facebook and Twitter, as well as computerized databases that routinely track financial transactions, customer accounts, cell phone locations and social media footprints.

Instructions

Gather all the identifying and personal information you have about your subject. These bits of data include full name and any known aliases or maiden name, last known address and phone numbers (home and cell), previous addresses, last known employer's address and phone number, your subject's physical description (a recent photo is helpful), make and model of car, driver license number, car insurance company, Social Security number and the names, addresses and phone numbers of all known associates including friends and family.

Work the phone first. Call the subject's friends, family and employer. Ask if they know her whereabouts or a phone number at which you can reach her. If they won't give you a number, ask them to pass along a message to contact you. If you're collecting a debt, the federal Fair Debt Collection Practices Act (FDCPA) prohibits you from disclosing that fact to anyone other than your subject or her attorney.

Search for your subject and his family members by name and by phone number in Google and other search engines. Depending upon how extensive their online activities are, you may find a surprising amount of information.

Look for evidence that your subject or one of her family members has an online presence on social networking sites like Twitter or Facebook. Search these websites for the names and nicknames of your subject and her family members. Many people talk about relatively private things on these sites --- information such as where they are going and what they are doing --- that can make it easy to pinpoint their whereabouts.

Use a reverse phone number search service like 555-1212.com if you have a phone number. The advantage of this particular service is that its reports include a "neighborhood search," providing you with the phone numbers and addresses of other residences in the neighborhood of the target phone number. This allows you to interview the subject's neighbors if the database search results in an old phone number for a residence where the subject is no longer living. Often, a neighbor in the old neighborhood may keep in touch with your subject well enough that he has information on his current whereabouts. The neighborhood search report feature makes it easy to interview the neighbors even if they live on the other side of the country from you.

How to Get a Second Chance When I Have Defaulted Student Loans

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Defaulting on student loans results in severe consequences, including damage to your credit rating and an inability to obtain future loans. Receiving a second chance after default is possible, but you must take advantage of government programs that enable you to bring your loan out of default to qualify for new loans. Typically, a student loan enters default status 270 to 360 days after your first late payment, according to FinAid. Until you resolve the default with the lender, the lender can turn the debt over to a collection agency, sue you for payment, garnish her wages after receiving a court judgment and attach your tax refunds. You cannot qualify for new student loans until you resolve the default.

Instructions

Contact the United States Department of Education's Default Resolution Group at 800-433-3243 to obtain the name and contact information of the agency holding your loan if you do not know.

Call the lending agency and inform an agency representative you want to rehabilitate your loan. Rehabilitating your loan stops any garnishments and tax refund withholding. Successful rehabilitation entitles you to qualify for forbearance or deferment and enables you to qualify for future student loans.

Negotiate with the lender on your payment amount. By law, lenders do not have a minimum amount they are required to charge, as the rules of rehabilitation only specify that the amount must be fair to the lender and affordable for you.

Make at least nine payments. You must make the payments over a 10-month period and be no more than 20 days late on any.

Order your credit report after exiting rehabilitation to confirm that the lender removed the default status notation from the loan.

Can the State of Georgia Allow Credit Cards to Garnish Wages?

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Under Georgia law, creditors can pursue civil lawsuits against residents who fail to pay their debts. If the creditor is successful in proving its case or if you fail to appear at the court hearing, a judgment will be entered against you. Once the judgment is in place, state law permits creditors to pursue additional collection remedies, including seizure of your bank account or garnishment of your wages.

Once a creditor obtains a judgment against you, it must then file an order for continuing garnishment with the state court clerk's office in your county of residence. A copy of this order must then be served to your employer. Your employer has a 45-day period in which he may file an objection to the garnishment order. State law permits the creditor to seek an additional judgment against your employer for the full amount of the debt if the employer fails to respond to the garnishment order. Once the garnishment takes effect, your employer must begin withholding your wages. This money is then paid to the clerk of court, who is responsible for distributing it to your creditor's attorney.

Georgia law follows federal guidelines for determining garnishment amounts. As of 2011, a creditor can garnish a maximum of 25 percent of your disposable earnings each pay period, or the amount by which your disposable income exceeds 30 times the federal minimum wage. The creditor must use the calculation that produces the lower garnishment amount. If your wages are currently being garnished to fulfill a domestic support obligation and the garnishment exceeds 25 percent of your disposable wages, no additional garnishment is permitted. Additionally, no garnishment is allowed if your weekly disposable earnings do not exceed the federal minimum wage based on a 40-hour work week.

If you've been served with a notice of a pending garnishment, you have the right to appeal the order or claim some or all of your income as exempt. You must respond to the garnishment order within 45 days of receiving it. Federal law permits you to claim an exemption for Social Security or Supplemental Security Income benefits, veterans' benefits, military survivors' benefits, student assistance, federal retirement or disability benefits or railroad workers' benefits. Georgia law also allows you to exempt income received from a state pension or individual retirement account, worker's compensation benefits, unemployment compensation payments or any domestic support payments you receive.

Georgia law prohibits employers from terminating an employee on the basis of a single garnishment order. However, if your employer receives multiple garnishment orders from different creditors, this protection no longer applies. State law also allows your creditor to seek a levy of your bank accounts or a lien against your property in conjunction with a wage garnishment. Under the statute of limitations, creditors have up to four years from the last date of payment to seek a judgment for unpaid credit card debt. Once the judgment is granted, the creditor then has an additional seven years to enforce it.

Does Credit Counseling Help?

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Advertisements on television, in the newspaper and on the radio often tout credit counseling as the panacea that can cure all of your financial woes. While credit counseling programs are beneficial for those whose debt management difficulties stem from a lack of organization and an inability to properly budget their income, these programs don't help everyone.

Credit counseling agencies employ counselors that evaluate consumers' financial situation and recommend solutions to a variety of debt-related problems. A credit counselor can help you construct a more efficient budget to avoid spending more than you can afford each month and to pay off overdue debts. Credit counseling agencies also often offer workshops and seminars designed to better educate debtors about money-management techniques.

For those whose carry too much debt to repay on their current income, credit counseling agencies offer debt management plans. Specific qualifications for enrollment in a DMP, such as the amount of money you must owe or how delinquent your accounts must be, vary depending on the company, but typically if your disposable income does not provide you with enough money to repay your creditors, enrolling in a DMP is an option. Through a DMP, the credit counseling agency works with your creditors to either reduce your balance, lower your payments or both. After enrolling in a DMP, you submit payments to the credit counseling agency, which will then distribute the payments to your creditors.

The goal of any credit counseling program is to teach you how to get out of debt and stay out of debt. Many consumers are able to do just that. MSN Money notes that, according to the National Foundation for Credit Counseling, one-third of all consumers that sought credit counseling in 2009 were able to successfully manage their own finances and budget after only one counseling session.

While credit counselors can attempt to negotiate with creditors through a DMP, that negotiation is not always successful. Creditors are not under any obligation to modify an individual's repayment plan or outstanding balance. In addition, credit counseling isn't a free service. Most credit counseling agencies -- even those that are nonprofit -- charge fees for their services. Companies that charge high fees can make a consumer's financial situation worse rather than better.

Whenever you file for personal bankruptcy, regardless of whether you do so under Chapter 7 or Chapter 13, you must obtain credit counseling through an approved credit counseling agency before the court will discharge your bankruptcy case. The goal of pre-bankruptcy credit counseling isn't necessarily to prevent the bankruptcy from taking place, but rather to ensure that you do not repeat the financial behavior that made filing for bankruptcy necessary once the bankruptcy is over. A list of credit counseling agencies approved to provide pre-bankruptcy counseling services is available through the U.S. Department of Justice Trustee Program (see Resources).

Problems Surrounding Debit Card Fees

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Debit cards work like credit cards, in that you can use a debit card to make a purchase or pay a bill as opposed to using cash or writing a check. However, debit cards use money from your bank or other account to fund the transaction, so you must have the funds available to use a debit card. Like credit cards, debit cards also typically come with fees as penalty for breaking some form of the debit card usage agreement. Those fees can create problems for debit card holders.

Debit cards come with several different fees. For example, if you use your debit card for a purchase but do not have enough funds in your bank account to cover the cost of the transaction, your bank might still authorize the transaction and allow you to make the purchase. However, your account will fall below zero, and the bank will likely charge you a fee for making the purchase with insufficient funds. Fee amounts vary by bank, but this particular fee typically costs around $35 in 2011. Some banks also charge a fee for using your debit card as an ATM card to withdraw cash. If you withdraw cash from an ATM that is not affiliated with your bank, your bank might charge you a few dollars for the transaction. Plus, the ATM might have a fee on top of that, so you pay both your bank and the ATM fees for the withdrawal. Other possible fees include debit card replacement or activation fees.

Fees from debit cards can cause financial problems for card carriers. For example, if your account is overdrawn and your bank charges you a fee for insufficient funds, your account becomes even more overdrawn, making it harder to pay bills and bring your account positive. Also, debit card fees can add up in the short and long term. For example, if several debit card transactions hit your account at the same time, and the account is already overdrawn, you are charged a fee for each transaction, which can costs you hundreds of dollars. To avoid this, use your debit card wisely, and check your balance regularly to ensure you have sufficient funds to cover your purchases.

Debit card fees can cause other problems as well. For example, unexpected expenses and financial stress can be harmful to your health and lead to significant health issues like heart problems, according to Health.com. Also, if your account is overdrawn, your transactions might be denied until you bring the account positive, which leads to embarrassment and lower self-esteem. Financial issues due to debit card fees can also negatively affect your relationships with friends and family, causing arguments or disagreements over finances or money management.

Debit card fees charged by banks are not only problematic to consumers; retailers are paying the price as well. Each time a consumer uses a debit card to make a purchase, banks charge merchants a swipe fee. Many merchants prefer customers use cash instead to avoid this fee. In 2009, the average swipe fee was 44 cents per transaction, according to PBS. In December 2010, the federal government proposed a bill to give merchants some relief and cap the swipe fees at 12 cents per transaction. As of the May 2011, the debate is ongoing and no reform has been passed to eliminate or reduce swipe fees merchants pay.

Ways to Rebuild Your Credit Even With Repossession

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When you fall behind on a loan and your creditor repossesses your property, this shows up on your credit report and lowers your score. New creditors will see the repossession on your credit history and will be far less likely to give you a new loan because of it. However, you can start rebuilding your credit score at any time even if you've had a repossession.

It's difficult to know how much a repossession lowers your credit score, but in general any repossession will lower your score significantly and make it tougher to get a loan. However, Yahoo Finance reports that just a single late payment that precedes a repossession lowers your score anywhere from 60 to 100 points. Once the repossession gets added on to your credit report, this, too, lowers your score even more.

There's no secret to rebuilding your credit, it just takes a little discipline and the willingness to commit to a long-term program that establishes that you're a safe borrower. When you rebuild your credit, you take steps that impact your credit score in a positive way. Credit scores are based on several factors, including your payment history, number of new accounts, the average length of your accounts, how much of your available credit you use and the variety of forms of credit you have.

To repair your credit, you have to show potential creditors that you've learned to handle your credit more responsibly since the repossession. The single most positive thing you can do to rebuild your credit is to make sure you pay all your bills on time, every time. Even a single 30-day late payment can erase your past efforts at rebuilding your score.

People with bad credit scores are often confronted with offers to help rebuild or repair their credit scores. While these claims have merit, there's no reason you can rebuild your score on your own. Services offering to rebuild your credit usually just end up costing you more money, money that you could otherwise use to pay your debts. If you decide to use a credit repair or rebuilding service, the Federal Trade Commission recommends that you demand to see any terms in writing before entering into an agreement.

When Credit Card Debt Is Too Old, Is it Not Worth Paying?

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You hold full legal responsibility for paying credit card debt you incur. Failing to do so can result in legal and financial consequences. If a creditor intends to use legal force to recover your defaulted credit card debt, however, it must do so within a given time frame. As credit card debt ages, the benefits of paying off the debt decrease along with the consequences of nonpayment.

Credit card companies and collection agencies can sue you for unpaid credit card bills -- but only for a few years. Statutes of limitation in each state prevent creditors from filing lawsuits on accounts that have been delinquent beyond a certain period. States' statutes of limitations vary.

Even if the statute of limitations on your debt has passed, it's still in your best interests to pay it off. Not all creditors abide by the law and disreputable creditors have been known to illegally file out-of-statute lawsuits against consumers.

A defaulted and charged off credit card debt serves as a black mark on a credit report. Should a collection agency purchase the account, its notation on your credit record also tarnishes your credit report. The Fair Credit Reporting Act permits creditors to report your default for seven years from the date the original account was charged off. Regardless of whether you satisfy the debt, all accounts related to your old credit card debt disappear after seven years. Paying the debt does not help your credit if the accounts reflecting the debt no longer appear on your credit report.

Beyond a certain point, your creditors cannot force you to pay via a lawsuit or use your lack of payment to hurt your creditworthiness. This does not mean that you do not still owe the debt, and your creditors will continue to contact you about your outstanding balance indefinitely.

Should you pay off the old debt, the collection calls will stop. In addition, paying your credit card debt stops interest from accruing on the account and provides you with the peace of mind that comes from knowing you satisfied your financial obligations.

It's up to you whether or not to pay old credit card debts. Your creditors can demand that you pay, but they cannot force you. If you make a partial payment on the debt, however, the statute of limitations begins anew -- providing your creditor with the ability to file suit against you for the remainder of your bill. Thus, if you intend to pay your old credit card debt, it is imperative that you pay it in full or obtain a written debt settlement agreement from the credit card company or collection agency proving that the company agreed to accept partial payment for the debt as payment in full.

What Happens to a Mortgage When One Spouse Dies?

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When a spouse passes away, her debt remains behind. It's important to understand how estates and debt work to avoid unpleasant surprises during a difficult time. Spouses who owned property together may become liable for mortgage payments when the other partner dies. You should make sure to discuss the possibility with your lender before signing your mortgage agreement.

The will is used in creating the deceased person's estate and can also be used to assign responsibility for a property, including the mortgages on the property. Without a will, state and federal laws dictate the disposition of the deceased person's property. Jointly held property is likely to remain in the possession of the surviving party even if this is not specified in a will.

The deceased person's estate is made up of his personal possessions. Any debt the deceased has accumulated is satisfied out of the proceeds of the estate. This can include mortgages if the lender has used a due-on-sale clause and the spouse is not exempt. In some cases, the mortgaged house may need to be sold in order to satisfy the debts of the deceased and clear the estate. This is the probate process, and once it is completed the instructions of the deceased person's will are carried out and property is distributed.

Your lender also has provisions dictating what happens when a mortgage holder dies. Many mortgages contain a due-on-sale clause, which calls the balance of the mortgage due on the sale or transfer of the property to a spouse. This includes transfer of the property due to inheritance. The surviving spouse must then make the payments or take out a mortgage of her own on the property to satisfy the lender. If there is no due-on-sale clause or the surviving spouse is considered exempt under the Garner-St. Germain Depository Institutions Regulation Act, it may be possible for the surviving spouse to simply assume the current mortgage payments and continue the mortgage.

Even while an estate is being settled, mortgage payments need to be kept current or the lender can foreclose on the house. If your mortgage contains a due-on-sale clause, consider taking out a term life insurance policy that decreases in value over the life of the mortgage. This type of policy provides a death benefit that should enable your heirs to clear the balance of the mortgage and assume ownership of the property without worry.

Can I Pay Off a Judgement Without Wage Garnishment?

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If you owe debt to a creditor, he may obtain a judgment to make you pay. Creditors can use judgments to garnish your wages, seize your personal property or levy your bank account. However, you may be able to pay off a judgment without enduring the embarrassment of a wage garnishment or property seizure.

Creditors can't garnish your wages without first obtaining permission from the court. In some states, creditors may only need to obtain a judgment, while in other states, creditors may need to obtain a judgment and a court order for wage garnishment. Creditors can take only the lesser of 25 percent of your disposable income or the amount by which your weekly income exceeds 30 times the federal minimum wage, unless they are collecting certain debts, such as child support or back taxes.

Before a creditor can start garnishing your wages, he must typically mail you a final demand for payment. If you pay your debt in full, the creditor can't garnish your paycheck. However, you should obtain proof of your payment in writing. In some cases, you may also be able to negotiate a payment plan with the creditor to avoid the garnishment, but the law doesn't require him to accept your offer.

After the garnishment is in effect, making payments toward the debt won't typically stop the creditor from taking money out of your paycheck. However, you can stop a wage garnishment order by paying your debt in full. Once the debt is paid, you are no longer liable for it and the creditor can't continue to collect from your wages. You can also alter the garnishment if the creditor is collecting too much money from your paycheck by filing a formal request with the court.

If you can't afford to pay your debt in full immediately and your creditor won't agree to a payment plan, you may be able to prevent or stop a wage garnishment by filing for bankruptcy. If you file Chapter 7 bankruptcy, you may be able to discharge the debt without paying it in full. If you file Chapter 13 bankruptcy, you may be able to include the debt in your payment plan. In either case, the creditor can't garnish your wages after you file.

Missouri Wage Garnishment Laws for Local Taxes

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Missouri wage garnishment laws may protect a resident from losing money to back local or state taxes, depending on the source of the resident's money. A local municipality or state agency may have a tough time garnishing a consumer's income if the income does not come directly from wages earned.

A local municipality attempting to pursue collection of back taxes in Missouri must obtain a court judgment to legally garnish the debtor's wages. This is different from the Internal Revenue Service, which does not need to ask the court's permission to seize a taxpayer's wages to pay federal taxes owed. Missouri permits wage garnishment of up to 25 percent of a debtor's weekly disposable income if the debtor is single without any dependents. The garnishment amount decreases to 10 percent of disposable weekly income for a debtor who files taxes as a head of household. Disposable earnings means all income after required federal and state tax deductions.

Federal law only allows garnishment of Social Security benefits for child support payments, federal taxes and spousal support. According to the Debt Settlement Lawyers website, Missouri law totally exempts Social Security benefits from wage garnishment of any kind. This means a local government attempting to secure payment for back taxes is unable to garnish the Social Security benefits of a Missouri resident. This may mean the taxes go unpaid if the taxpayer only receives income through Social Security.

Missouri law protects the pension and retirement benefits of most state workers, including firefighters, teachers and police officers, from garnishment due to owing back local or state taxes. State law also protects retirement benefits and pension plans of non-state workers up to the finances necessary for debtors to meet obligations for living expenses and maintaining a quality of life. A state or local government agency may pursue debtors for amounts exceeding this variable limit. A court order is still necessary to secure wage garnishment in cases of retirement benefits and pension plans.

Missouri completely exempts several forms of public assistance from wage garnishment, including unemployment benefits, workers' compensation payments and assistance to families with dependent children. Missouri is less restrictive when it comes to income from life insurance policies or annuities. The state's wage garnishment rules applying to wages usually applies to money obtained through life insurance policies, though some fraternal annuities and policies generated by a nonprofit organization may enjoy limited protection from garnishment under the law.

Consumer Debt Myths

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Borrowing is an essential component of the modern economy, but debts can lead to financial hardship. Managing debt and spending money responsibly are necessary to build wealth and enjoy a high standard of living in retirement. Many common misconceptions and myths are associated with consumer debt.

A common debt myth is that filing for bankruptcy causes you to lose everything you own. The bankruptcy code offers different options to filers, one of which is known as "liquidation," or Chapter 7. When you file for bankruptcy under Chapter 7, the process involves selling various assets to pay off creditors, but you are not required to sell a single piece of property you own. According to the U.S. courts, filers are allowed certain exemptions that allow them to keep basic things like clothes, furniture and possibly a car and a home.

Debt consolidation is a common method of debt management whereby a lender buys your debts and offers you a single, large loan in exchange. Debt consolidation can make paying debts less confusing by making it easier to keep track of a single, large debt payment rather than many small payments due at different times of the month. It is not a given, however, that consolidation saves money, since interest rates may be high and you may be subject to fees and other setup costs.

Credit cards are one of the most dangerous debt instruments available to consumers. They allow consumers to borrow money, usually at very high interest rates, for spur-of-the-moment purchases, which enables impulsive spending. Credit card companies require borrowers to make minimum monthly payments. But minimum payment amounts are often extremely low, to the point where it can take years for a borrower to get out of debt. If you continue using the card, chances are your balance will increase over time, even if you faithfully make minimum payments. Paying more than the minimum payment is the best way to get out of credit card debt.

When you refinance a mortgage, a lender buys your current mortgage and offers you a new one with different terms. If interest rates have fallen recently, you may be able to get a lower rate by refinancing. Even if you get a lower interest rate, however, you may not save money because refinancing can be expensive because of legal, application and home appraisal fees and other costs. It is important that the savings realized from a lower interest rate exceeds the costs of refinancing.

How to Pay a Landline AT&T Bill Online

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If you currently have AT&T home phone service, you can pay your bill online at any time of the day. AT&T's online payment service is safe and convenient to use; by completing a few steps, you can pay your landline AT&T bill in a timely manner.

Instructions

Go to the official AT&T website (Att.com) and locate the section entitled "Manage My Account" (on the right side of the page). Click on the link that says "Register for Account Management."

Find the "Register" link (located inside the box labeled Internet and Home Phone) and click on it.

Select your account type "Residential" or "Business" and enter your zip code in the appropriate box, or enter the area code and first three digits of the main telephone number for your account.

Click the link that says, "Request online registration code." You will need this code in order to complete the registration process.

Request your online registration code. Enter your main telephone number in the designated box. Verify that you are the account holder by typing your "3-digit customer code" (located in the top corner of your phone bill) in the appropriate space, or enter the last 4 digits of your Social Security number in the correct box. Then type your zip code where it says, "Enter Billing Address ZIP Code."

Choose how you want to receive your code. You can receive your code through regular postal mail, or via an automated telephone system. Once you receive your code, you may complete the registration process online by choosing a valid Username and Password, which you will use to access your account information.

Go to Att.com and find the section entitled "Manage My Account."

Sign in to your account with the correct details. Select "Home Phone & Internet" from the drop-down menu. Then enter your Username and Password in the appropriate boxes and click the "Go" button.

Go to "Make a Payment" and enter the amount you want to pay. Then click the "Pay Now" button.

Choose your payment method and scheduled payment date, and enter your payment details in the designated boxes.

Agree to the terms and conditions and click the "Add Payment" button to process your payment.

How Do I Know a Collection Agency Has the Authority to Settle on Behalf of the Original Creditor?

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Being contacted by a collection agency about an old debt may catch you off guard, even if you know you owe the debt. Before you take the offer to settle the debt with the collection agency, make sure the collection agency has the authority to settle the debt on behalf of the original creditor; otherwise your money could be wasted.

A collection agency is not the original creditor to whom you owe money, but rather a third party that attempts to collect the debt. Sometimes the debt is still owned by the original creditor, at least for a period, before the creditor writes off the debt. During the time the original creditor still owns the debt, it may use a collection agency's services to recover the money. Sometimes collection agencies have actually purchased the debt from the original creditor, meaning the collection agency owns the debt at that point.

When a collection agency first contacts you about a debt, it has five days to send to you a validation notice in the mail, according to the Federal Trade Commission. A legal validation notice must contain certain information, including the amount owed, the name of the original creditor and information on how to proceed with contesting the debt if you believe that you do not owe any money. Without a validation notice, you do not have any proof that the collection agency has the authority to settle the debt, making sending money to the collection agency a risky move.

If you do not think you owe the debt the collection agency is trying to collect, you do not need to settle or pay any amount to the collection agency. If you do believe you owe the debt and have received a validation notice from the collection agency, you can negotiate with the collection agency on the amount you can pay to settle the old debt. If the collection agency does not send a validation notice, or if it threatens you with jail time for not settling or otherwise act abusively, contact the FTC through the "Complaints" link on the FTC home page.

You may retain an attorney to deal with debt settlements, especially if you are nervous about negotiating settlements on your own. If you have retained an attorney, collection agencies must contact your attorney and not you about settling any debts.

Can a Wife Be Responsible for a Husband's Debt After Marriage?

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For a wife going through divorce, it can be stressful and scary to think about paying for a husband's debts after the marriage ends. Post-divorce responsibility for debts may depend on whether the liability is a joint debt or separate debt, as well as on the terms of the couple's divorce decree, judgment or settlement agreement. In addition, a family law court must follow the relevant state's laws when deciding issues of debt division.

Debt division is a significant legal issue when a wife and husband decide to end their marriage. Assignment of debts, along with division of the couple's property, may affect each ex-spouse's financial future for years. Each state sets its own divorce laws to determine legal standards for property and debt division during the dissolution of a marriage. Liability for certain debts may vary depending on whether the state follows a community property system. Accordingly, a wife should research the laws of her own state and consider retaining an attorney who practices family law in the area.

When a husband and wife co-sign for a debt obligation such as a credit card or mortgage, both spouses may be responsible for part or all of the debt as determined by their divorce judgment or settlement agreement. In community property law states, spouses may be jointly liable for debts signed by only one spouse if acquired during the couple's marriage. Spouses often need to negotiate division of their joint debts, also known as marital debts, before they can finalize the terms of their divorce.

When a husband incurred a debt before the date of marriage, the debt may remain his separate debt. While assignment of the debt depends on the divorce laws of their state, the wife likely will not have an obligation to pay the husband's separate debt after their divorce. However, creditors may still be able to reach the spouses' marital property, including income earned during the marriage, as payment for separate debts acquired before marriage. In states that do not follow the community property law system, the husband and wife may each incur separate debts during marriage if those debts do not result from family expenses; in these states, the spouse who incurred the separate debt will likely have responsibility for payment after the couple's divorce.

The Federal Trade Commission (FTC) warns spouses that creditors can pursue payment from either party when both names appear on an account or debt, even if the divorce decree assigns the debt to one spouse. The divorce decree is an agreement between the wife and husband as a third party, a creditor is not legally bound to follow the divorce decree. The FTC suggests that individuals protect themselves during divorce by converting joint accounts into individual accounts if financially and legally feasible. However, a creditor does not have a legal obligation to convert a joint account into an individual account; the process may require a new application and result in changed terms. If both names remain on a joint account after the marriage ends, failure to pay the account obligations may hurt both individuals' credit scores.

Disadvantages of Long-Term Financing

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Borrowing money to finance a purchase includes factors for repayment that can shape your financial future. Choosing long-term financing means setting up installment payments that are lower than those for a shorter repayment plan. The benefits of lower payments come with some disadvantages as well. Weigh the relative merits of the terms available to you and decide if long-term financing makes the most sense.

The interest rates available for a long-term financing agreement are usually higher than the rates available for shorter-termed loans. Generally, the level of the interest rate is established based upon the risk involved with making the loan. Long-term financing includes a greater span of time for default. A shorter term is less risky to the lender, as it is easier to forecast a borrowers financial status in the short term than it is to be sure the borrower will have the means to satisfy the loan payments decades down the road.

The higher rates alone for a long-term loan mean that you will pay more over the life of the loan than you would for a short-term loan, and that is exacerbated by the length of time you'll be paying the higher interest rates. A shorter loan has less time for the interest to accrue. For example, a loan for $50,000 at a rate of 4 percent annually over 10 years will include paying $10,747.60 in interest. The same loan amount, even at the same interest rate, when paid over 20 years will include $22,717.60 in interest payments.

Accessing credit involves a review of your total financial picture. Included in that picture is your debt-to-income ratio, or the amount of outstanding debt you owe in relation to the amount you earn. The longer the terms for your loan, the longer you will have a hefty number in the "debt" column of your credit worthiness evaluation. Choose a shorter term loan to pay it faster and lower your debt.

Long-term financing, such as a home mortgage, accrues equity as you repay the loan. Equity is important in determining how much you have versus how much you owe. Your net worth is defined as your assets minus your debt. Long-term financing, with generally smaller installment payments, adds equity at a slower rate than would shorter repayment terms. The sooner you pay down the loan, adding equity to a business or home, the more your net worth is increased. Equity is also valuable, if not necessary, when seeking a loan or line of credit using your home as collateral. Often, the amount of equity you have in your home will determine whether your loan or line of credit application is approved or denied.

The Difference Between a Car Loan & a Credit Card Loan

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If you've ever bought a car, you know it's a major purchase and that you must pay back your loan every month to keep your vehicle. With a credit card, you are taking out a loan every time you use your credit card; the creditor pays for the purchase and expects you to pay it back. Defaulting on credit cards can seriously harm your credit even though the creditor cannot take your property if you do not pay.

Car loans are secured debts. With a secured debt, the debt is backed by property; the lender can reclaim his property if the debtor fails to pay the debt back as agreed. In the case of a car loan, the creditor can repossess the vehicle if the debtor defaults. Credit cards are unsecured debts, so the creditor cannot take property if the debtor defaults. Creditors often use the court system to collect unpaid unsecured debts.

When you purchase a car, you pay a set amount each month until the debt is completely paid off. Your beginning balance is the cost of the vehicle minus any down payment you make at the time of purchase. In contrast, with an unsecured debt your balance begins at zero. As you make purchases using your credit card, your balance rises. You can then pay the entire balance at once or pay it off over time.

In most cases, unsecured debts like credit card debt are treated differently than secured debts when you file for bankruptcy. According to the Federal Bankruptcy Court, If you are filing for Chapter 7 bankruptcy, you can choose to give back your car or to reaffirm the debt, meaning that you make new arrangements to pay it back after the bankruptcy is approved. Credit card debts are usually discharged altogether via bankruptcy. When filing for Chapter 13 bankruptcy, you may have a maximum of $360,475 of unsecured debt and $1,081,400 of secured debt, as of 2011.

As you pay off a secured debt such as a car loan, you build equity in the property, according to GMAC Smart Edge. Equity is the difference between the car's total value and the amount you still owe on it. Building equity helps strengthen your credit and gives you the power the make larger purchases, such as a bigger car or a house. You do not build equity when you pay off unsecured debts such as credit cards.

How to Make Debt Collectors Go Away

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There are ways to make debt collectors go away -- but stopping debt collectors from contacting you and resolving the debt permanently are two different challenges. Debtors who simply ignore debt collectors could eventually receive a lawsuit. A debtor is forced to deal with a debt collector when that happens with often disastrous results. The best way to make a debt collector go away is by creating an overall strategy for eliminating the debt.

Instructions

Consult with a consumer affairs attorney, if possible, to fully understand the consequences of making debt collectors go away by ignoring them. The attorney can tell you about the process debt collectors use to file lawsuits in your county, as well as the penalties for losing debt lawsuits, such as monetary judgments and bank or wage garnishment.

Allow the attorney to pull your credit report for an analysis of your debts. The attorney can compare your debts against state statute of limitation laws to determine which debts you can safely ignore. All states have limits on how long debt collectors have to pursue debts in court.

Consult with a nonprofit credit counselor in your area if you choose not to meet with a lawyer. A credit counselor can offer general information about debt lawsuits and tell you about state statute of limitation guidelines. Get a referral for a credit counselor from a local charity, such as the United Way.

Send letters to debt collectors indicating that you are exercising your rights under the Fair Debt Collection Practices Act regarding contact with debt collectors. Instruct the debt collectors not to contact you by telephone or mail about the debt. The Federal Trade Commission reports that after receiving the letter the debt collector may contact you only to confirm that it is complying with your request, or to announce a specific action, such as the assignment of your debt to a debt collection attorney for a possible lawsuit.

Resolve debts, eventually, by contacting debt collectors to settle for less than the full balance -- a process known as debt settlement. Or consider bankruptcy if your debt is excessive. Chapter 7 bankruptcy eliminates credit card and other unsecured debt in only a few months. Chapter 13 bankruptcy requires a payment plan lasting three or five years. Both forms of bankruptcy make debt collectors go away immediately as your finances are managed by a federal bankruptcy court.

Can an Assignee of a Creditor Sue in Texas?

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At common law, rights under a contract can be freely assigned to a third party with some narrow exceptions that are inapplicable in most creditor/debtor relationships. An assignee is an individual to whom a creditor, or assignor, has transferred his rights and duties under the terms of an existing contract with the debtor. Credit card companies frequently sell or assign their delinquent or poorly performing accounts to third-party purchasers of bad debt, often for pennies on the dollar. Under Texas law, it is perfectly legal for an assignee of a creditor to sue a delinquent debtor for breach of the contract.

Legally, the purchaser of the bad debt stands in the shoes of the original creditor and acquires all of the rights and obligations under the terms of the original loan contract. Thus, in the event the debtor has defaulted pursuant to the terms of repayment of the loan or revolving credit agreement, the assignee, if it chooses, can file suit against the debtor for payment of the remaining balance due. If contained in the original card agreement, the assignee is also entitled to recover reasonable attorney's fees and court costs it incurs in collecting the default balance.

The assignee acquires no greater rights nor can he impose any additional duties on the debtor other than those stipulated in the original credit agreement. In the context of credit card accounts, an assignee would be prohibited from assessing any additional late fees or penalties that go beyond the scope of the terms and conditions of the original credit card agreement signed by the debtor. Any such changes or additional duties imposed by the assignee are legally unenforceable.

Since the assignee stands in the shoes of the assignor, any suit filed by the assignee must comply with the applicable statute of limitations period established by Texas law. Assignment of the account by the creditor does not toll the running of the statute of limitations. The clock commences from the date the credit account first went into default.

The assignee must comply with the provisions of the Fair Debt Collection Practices Act in all of its communications with the debtor. The assignee cannot threaten to sue the debtor if it has no intention of carrying through on the threat. In addition, it is a violation of the FDCPA for the assignee to threaten suit if he knows that any civil action would be barred by the Texas statute of limitations.

Debt Reduction in Illinois

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If you are in serious financial trouble, you likely need professional assistance to get out of debt. Some Illinois residents choose to renegotiate their debts privately or with the assistance of a qualified credit counselor. Others may opt to file for full or partial bankruptcy under federal bankruptcy laws. No matter which option you choose, you can have some type of credit counseling; this will help you plan your budget better in the future to avoid repeating such problems.

You can try to settle your debts directly with the involved creditors or hire a credit counselor to do so. If you enter a credit counseling plan, you will make one monthly payment to your selected agency; the funds will be distributed as agreed to your creditors. But debt negotiation agencies cannot help resolve recent tax bills, court fines or familial support debts like alimony. You, or an attorney, must directly deal with the court or taxation agency on such issues.

If you economically qualify and have lived in Illinois for at least six months, you can request Chapter 7 bankruptcy to eliminate most of your pre-existing debts. But this will negatively impact your credit rating for 10 years from the date of filing and you risk losing some of your assets. As of 2011, a single Illinois resident who earns less than $45,941 economically qualified to file Chapter 7, according to the U.S. Trustee Program. A family of four could bring in up to $81,175 and the head of household could file Chapter 7. People earning more money must either prove they cannot pay their bills and their familial support obligations or request a Chapter 13 bankruptcy.

Chapter 13 allows a partial debt repayment plan over a three- to five-year period. Illinois residents cannot legally get new credit while in a Chapter 13 bankruptcy; the fact that they filed for Chapter 13 will harm their credit ratings for seven years from the date of case filing. Chapter 13 filers are also more likely to resolve past due mortgage problems without foreclosure, according to the United States Bankruptcy Court.

Chapter 11 bankruptcy allows self-employed Illinois residents or business owners to restructure personal and business debts while keeping most of their assets. Chapter 12 offers similar protections to family farmers. However, unlike other types of bankruptcy, an Illinois debtor must hire an attorney to file Chapter 11.

How Long Does a Foreclosure Stay on Your Record in California?

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The impact of a home foreclosure on one's credit report or record is an interesting issue. Most would assume that it would result in a negative mark, trashing the credit record and resulting in bad credit for seven years, or so the rumor goes. However, no one really knows for sure since the company that actually produces the credit scores, Fair, Isaac and Company, is not willing to disclose the statistics. So how does one figure out the right answer for their situation, particularly in California? A little homework in understanding the credit score system helps.

Your credit score, also known as your FICO score (an abbreviation for Fair, Isaac and Company), represents your credit-worthiness via an industry standard scoring system. In an nutshell, the credit score takes into account your income, your outstanding debts (both revolving and long-term), your payment history, and your lines of credit. A few other factors are included, but these are the major ones. The resulting calculation is your score. In today's market, scores above 680 are generally considered good.

However, a good score does not guarantee credit approval. This is because banks and lenders only use credit scores as a gauge and each has their own individual criteria of what they consider a good borrower. California is not unique in this respect.

The score is updated whenever there is a change in the tracked factors or when there is an inquiry into your record (not counting your own). Too many inquiries give the impression that you are shopping around for credit and thus your score lowers, for example.

There is a common rumor that if you default on a home loan once, your credit will be damaged so bad that you can never buy a home again. Another rumor runs along the lines that your credit score will be automatically crippled for a seven-year penance period before you can consider getting credit again. Both are inaccurate.

Purchasing a home again in California will depend on a number of factors aside from your score. Your down payment, your income, your type of loan request, and your willingness to pay more in interest all come into play. As a result, it is possible for people who have lost a home in foreclosure to buy again a year or two later. Each case is specific to its own circumstances. However, you can assume the second time around will likely cost more in borrowing interest and be a more difficult approval process than the first home was.

Rough estimates place the immediate credit score damage from a foreclosure in California to be somewhere between 100 to 200 points to the negative. So if you had a score of 680 before losing the home, you could go down as much as 480 or more, depending on your specific factors. (Remember that people in default usually lose more than one credit or loan account due to an inability to pay bills in general.)

The credit score system is used currently nationwide by lenders, so there would be no specific California angle on how a credit score ding due to foreclosure is prepared. More often than not, the methodology specific lenders in hard-hit California areas used when considering future borrowing would depend more on local market issues instead.

The foreclosure record itself will stay on your credit report for as long as the information is allowed to be present. Again, the general belief is the imposition of an automatic window of seven years, but in many cases it can last much longer if the consumer does not proactively work to get the information removed. As a result, while your score may increase over time with good financial behavior, the impression of a foreclosure record even being present could dash future applications when a lender reads your report fine print.

If You Leave a Job Do They Have to Refile With Your New Employer for a Wage Garnishment?

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If you are experiencing a wage garnishment through your current employer and you are leaving your job, you may be wondering what happens with your wage garnishment order. Depending on the type of job you transition to and the laws in your state, a new wage garnishment order may be required.

A garnishment occurs when a creditor to whom you owe money gets a court order to collect money to satisfy your debt. Typically, the creditor attempts to collect a debt by contacting you through mail or telephone. If you fail to respond, the creditor may file suit against you in court and win a judgment for the debt. A court judgment allows a creditor to assess a wage garnishment that requires your employer to deduct a portion of your paycheck to be sent to the creditor for payment of your debt.

There are certain instances where you may be exempt from having a wage garnishment enacted against you. If you currently receive public assistance, have filed bankruptcy or your current salary is below poverty level, you may be able to stop a wage garnishment by petitioning the court. According to the Neighborhood Economic Development Advocacy Program, you may be exempt from wage garnishment if your pay after taxes is less than $217.50 per week.

When a creditor files for a wage garnishment, the wage garnishment order is written and served to the current employer on record for you, the debtor. Once you change jobs, a new wage garnishment order must be served to your new employer. While some creditors have limited resources to locate your employer if you frequently change jobs, other creditors such as the Internal Revenue Service continue to pursue you and your employer for payment.

Typically, a creditor is not permitted to garnish unemployment checks if you are laid off from your job. Severance pay or retirement pay is subject to garnishment, however. If you received a wage garnishment because you owe child support or spousal support, even unemployment checks are subject to garnishment.

Apply by Phone Installment Loans

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Installment loans are available for application by telephone for a variety of purchases. Traditional lenders such as banks and credit unions offer installment loans for automobiles, home electronics, and appliances -- and even for summer vacations. Terms of installment loans vary, but usually borrowers agree to payments for 12 to 60 months or even longer, depending on the purchase. Some high-risk lenders offer installment loans for shorter periods.

Qualifications for installment loans by telephone are the same as for loans applied for in person or over the Internet. Many banks and credit unions accept installment loans over the phone through their customer service departments. The customer service representative asks the same basic questions that appear on paper applications customers present in person. Questions include the prospective borrower's driver's license number, Social Security number, home address, telephone and employer.

Applying for a loan over the telephone usually leads to a credit check by the lender, although some high-risk lenders may offer installment loans by telephone without a credit check. Banks and credit unions may conduct the credit check during the application process with the borrower on the phone. In certain situations the borrower may receive approval for the loan during the telephone conversation.

Interest rates for installment loans over the telephone are usually the same as loans offered by the lender on applications made in person or over the Internet. However, borrowers who have long banking relationships with the lender may negotiate over the telephone for lower interest rates. Non-customers of the bank can negotiate over the telephone as well. Approval for a lower rate usually depends on the borrower's credit score and history with the bank, if any.

Some high-risk lenders offer installment loans by phone that do not require credit checks but feature exorbitant interest rates. For example, in Illinois, some lenders most known for payday loans offer installment loans for six months at up to 99 percent interest. The lenders claim the high interest rates are necessary because the lack of a credit check makes them riskier than loans made by banks and credit unions.

Lenders usually require followup on all installment loans applied for over the telephone, upon approval. Depending on the lender, the borrower may have to visit a branch office to sign official loan documents or show proof of identification, such as a passport or driver's license. The applicant may also have to provide pay stubs or other proof of employment or income. Some lenders may allow the applicant to send documentation by fax or mail.

The Best Ways to Consolidate Loans

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Having several credit accounts with varying interest rates and due dates can complicate your finances. However, there is a way to simplify your financial situation. A loan consolidation involves applying for a new loan and using the funds from the new loan to pay off old loans. In the end, you'll have one loan and one monthly due date. And if you're able to obtain a lower, fixed rate, you'll save money on monthly payments.

Individuals with a good credit history and collateral may qualify for a debt consolidation loan from a bank or credit union. By means of a debt consolidation loan, you can combine all your outstanding loan balances into one new loan. There are two types of debt consolidation loans. An unsecured consolidation loan doesn't involve collateral. However, these loans are only available to people with an exceptional credit history--which is determined by individual lenders. Additionally, unsecured consolidation loans often feature higher interest rates. On the other hand, secured consolidation loans--which require collateral such as a vehicle title--feature reduced interest rates and are easier to obtain.

Homeowners can take advantage of multiple consolidation options. With a mortgage refinancing or a home equity loan, you can tap into your home's equity and borrow cash to pay off your debts. In the case of a mortgage refinance, lenders tack the borrowed money onto your new mortgage, which increases the balance and your payments. Home equity loans and home equity lines of credit do not involve a refinance. Instead, you'll apply for a consolidation loan and use your equity as collateral. Once you receive the funds, you'll use the cash to pay off your debts, then repay the home equity lender.

If you don't qualify for a debt consolidation loan, refinance or home equity loan, consider using a debt consolidation agency to merge your outstanding balances and simplify your finances. Debt consolidation agencies manage debts and loans on your behalf. They don't lend money to pay off debts. Rather, they contact your creditors and negotiate better terms, such as a lower interest rate and monthly payment. Once a debt consolidation agency begins working with your creditors, you'll no longer send payments directly to your creditors. Instead, you'll send payments to the agency, and they'll distribute funds to your creditors.

Consumer Lending Training

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Consumer lending training is a function that should be experienced by loan officers, bank managers and other lending professionals. This training deals with evaluating a consumer's potential for receiving consumer loans such as automobile loans, home equity loans and other loan products.

Many banks, mortgage companies and credit unions provide consumer lending to their platform staff such as assistant branch managers, branch managers and loan officers. The time frame for consumer lending training can vary depending on the organization. Many organizations provide consumer lending training to lending professionals.

When a credit application is taken, lending professionals need to make sure they secure all information such as name, address, social security number, date of birth and place of employment of all applicants.

To be efficient with consumer lending, individuals working with financial institutions need to understand the principles of ability, stability and willingness to pay. Ability deals with the individual's income. All reliable, consistent sources of income have to be evaluated. Stability centers on an individuals time on the job and at the residence. Homeowners are considered more stable than renters. Willingness to pay concerns an individual's pay history in the past.

Lending professionals have to be trained to read credit reports. A credit report provides information about a borrower's credit history. Every account that is reported to a credit bureau is done so in the form of a trade line, which includes all information for a particular account.

A lending professional has to make sure an applicant does not have too much debt. If a debtor has an excessive amount of debt, he may not be able to make the loan payments for the new loan.

Will Debit Consolidation Affect a Spouse's Credit?

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Married couples facing debt problems sometimes look to debt consolidation loans as a possible solution. While a debt consolidation loan has an impact on your credit report and credit score, the impact it has on your spouse's credit depends on several factors. Debt consolidation loans should always be entered into with caution, and only after carefully considering the terms and possibilities.

Your credit report is a collection of information about your behavior as a credit use. These reports exist for everyone who has ever used credit, though the information is collected for each individual, not for couples. Both you and your spouse have your own credit reports and your own credit scores based on those reports. Your spouse's individual credit behavior is not listed on your credit report, nor is yours listed on his.

Getting married usually involves some kind of shared financial and credit interests. For example, if you and your spouse take out a joint mortgage, both of your credit reports will have information about the mortgage and your history of the loan payments. In these circumstances, both spouse's credit reports indicate the same information, and the actions of one can affect the other. Similarly, if you and your spouse take a joint debt consolidation, this too will be reflected on your credit report.

When you consolidate your debts, you use a single loan to pay off several other loans. After you pay off the old loans, you then have a single loan, which you must repay. Debt consolidation is notorious for offering a quick fix, but often ends up hurting debtors in the long run. If you have a joint consolidation, both of your credit scores will be affected by the loan.

Even if your debt consolidation has no immediate impact on your spouse's credit score, your spouse's credit can still be affected by later events. For example, if you and your husband take out a consolidation loan together, a failure to repay the loan will hurt both your scores. If your husband takes out the loan alone, your score is generally not affected by his inability to pay it back. However, if you are forced to go into debt to help him pay, his consolidation can end up hurting your score.

Can a Creditor Garnish Your Bank Account While in Bankruptcy?

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Creditors and debt collectors use civil courts to obtain the right to garnish bank accounts for unpaid debts. Garnishment orders are among the most powerful weapons available to a creditor seeking to collect a debt. Banks quickly comply with garnishment orders, by allowing creditors full access to the debtors accounts. However, creditors cannot garnish a debtors account once the debtor is receiving protection under federal bankruptcy laws.

Creditors seeking money from a debtor in bankruptcy must seek payment through federal bankruptcy courts. While the debtor is in bankruptcy, creditors and debt collectors may not contact the debtor directly for payment. That includes attempting to garnish the debtors bank account or wages.

Federal laws force creditors to immediately end all debt collection efforts once a debtor files for bankruptcy. That means creditors must end all garnishment already in process against the debtor and may not attempt new garnishment. The specific law offering the protection is the automatic stay, one of the most important components of bankruptcy law. Every type of bankruptcy offers the automatic stay, including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is the fastest form of bankruptcy. It ends unsecured debts such as credit cards in three or four months. Chapter 13 requires a payment plan lasting three to five years.

Most creditors with garnishment orders immediately attempt withdrawing money from the debtors bank account. Their goal is to withdraw the full amount due for the unpaid debt before the debtor chooses to file for bankruptcy. Creditors with garnishment orders can keep any money they garnish before the debtor enters bankruptcy. Once a debtor files for bankruptcy, a creditor can petition the court for payment. However, success with that depends on the type of debt and the bankruptcy chapter. Garnishment usually affects unsecured debts, such as credit cards or loan balances after foreclosure or auto repossession.

Debtors wondering if bankruptcy is the right option should seek advice from a reputable credit expert. Bankruptcy attorneys offer free initial consultations. However, their goal is usually to convince the debtor to file for bankruptcy so the attorney can earn legal fees. Nonprofit credit counselors recommended by the U.S. Department of Housing and Urban Development can discuss other options, including payment plans. Charitable organizations such as local chapters of the National Urban League and the Salvation Army can offer referrals for local nonprofit credit counselors.

The Best Personal Loans for People With No Credit History

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You can qualify for a personal loan even without a credit history. The lack of a credit history helps in one way: Being new to credit means you don't have any negative credit information to worry about, such as late payments or foreclosures. With none of that as a factor, all you have to do is convince a bank, credit union or other lending institution that you are worthy of credit as a first-time borrower.

Secured installment loans are usually easy to qualify for because there is no risk for the bank. You guarantee the loan by depositing money into a savings account held for collateral. Then you build your credit by making on-time monthly payments.

You can qualify for a loan if you have a co-signer with excellent credit. Privacy Rights Clearinghouse, a nonprofit consumer information company, reports that credit scores range from 300 to 850, with scores above 760 representing the best credit. Finding a co-signer, such as a parent or other relative, with a high credit score could make approval easy on your loan. However, the co-signer will be responsible for the loan if you default.

The state of New Jersey reports that so-called "subprime loans" are often available for people with "incomplete credit histories" -- such as someone seeking credit for the first time. Subprime lenders are typically finance companies comfortable with lending to bad-credit borrowers or to people seeking a loan for the first time. Some banks and credit unions also offer subprime loans, according to the Bankrate.com website. One drawback: The loans generally feature higher interest rates than traditional loans.

How Do Landlords Report Late Rent to Credit Reports?

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Landlords have several options when it comes to tenants who have not paid their rent. The first step is to have clear rules laid out as to when rent is due and what procedures will be followed if rent is not paid. All tenants should be made aware of these rules and what steps the landlord will take if they fail to make their rent payments on time. There is a legal process that should be followed in these situations, which is usually determined by the type of lease the tenant is under.

Rent can either be completely unpaid, or partially unpaid. These charges often culminate under the term "added rent," which carries the same weight as unpaid rent but infers that the tenant still has that much rent left to pay, in addition to the current time frame. Any amount unpaid is usually seen as added rent for a few days before the landlord takes action--a grace period to receive the payment, which is often three to five days. After this, the landlord usually begins by sending a late-rent notice, a late notice form that indicates what fees the tenant has left unpaid, as per the lease agreement.

It is also advisable to make some kind of contact with the tenant, either by the phone or in person, to find out in more detail the circumstances of the unpaid rent. This is also an opportunity to mention that, on a specific date, the tenant's account will be transferred to an attorney's office and eviction proceedings will begin. The lease may even specify that tenants have to pay for the legal fees incurred in such an event.

After this, an official eviction notice is sent to the tenant, often combined with a legal letter from the attorney advising the tenant to pay the fees before the court date on which the eviction will become official. This is also the time that many landlords choose to notify their tenants that beyond the eviction proceedings, the debt they are incurring will badly influence their credit. The last step is usually to report the bad debt on the tenant's credit record by contacting a credit bureau.

There are several schools of thought on how a landlord should report credit. Some believe that landlords should report credit every month or every six months, both as a instrument to remind tenants to pay on time and as a reward for good payment, since regular reports will have some positive influence on their credit score. Others believe landlords should only report bad debts when there is no possibility of receiving payment. Either way, the action is the same: credit bureaus must be contacted with information on the tenant's account and the debt. There are three primary credit bureaus (Trans Union, Equifax and Experian), but many smaller versions as well. While a landlord can contact these agencies directly, there are many services designed to help landlords report debts to all three at once for a small payment--usually around $5 a month for a continual report, or $10 to $15 dollars for a one-time report. Organizations such as the Landlord's Protection Agency have more information available on these services. Once the credit bureaus have been informed, the debt will show on the tenant's credit report for seven years.

How Are Payment Arrangements Reported to Credit Bureaus?

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When facing economic hardship, receiving constant calls from bill collectors can be stressful. Calls can be prevented if you communicate with the creditor or collections agency regarding how you plan to repay your debt. Making payment arrangements can help ease your frustration and simplify your payment schedule. However, not all companies report payment arrangements to the credit bureau identically.

Not all payment arrangements meet the minimum requirements of your creditor. A creditor may persuade you to set up an arrangement just so that the company can ensure the debt is repaid. Request details from the creditor on how the payment arrangement affects your account standing. You want the arrangements to bring your account back into good standing or at least halt any negative reporting to the credit bureau. Always get confirmation from the creditor during your payment negotiations.

Creditors commonly report your account to the credit bureau under the classification "Pays As Agreed" when a payment arrangement is made. However, that payment arrangement must satisfy their requirements. In cases where a creditor still reports the amount as delinquent, contact the creditor immediately to report the error on your report. In addition to the "Pays As Agreed" designation, your account may include notes regarding your specific arrangements to repay your debt.

When you apply for new credit, your credit report shows your "Pays As Agreed" balances and sometimes notes on your account. The fact that your accounts show your commitment to repay your debt can be positive to some creditors but a red flag for others who may view your delinquency as an unnecessary risk. If you must apply for new credit at this time, speak to a representative at the company to communicate the circumstances surrounding the previous debt mismanagement to increase your chances of being approved.

Some payment arrangements will still harm your credit score, which means you have fewer opportunities to qualify for new credit accounts. For example, if you are behind on your mortgage payments, your lender may agree to receive payments and postpone foreclosing on your home. However, until you repay your past due balance, your credit score is still negatively impacted each month. The "Pays As Agreed" only implies that you made a payment arrangements. Some lenders and creditors will not report a "Pays As Agreed" on a past due account until your account is current. In this case, the account is listed as "Not Paid As Agreed."

What Is Proper Validation of Debt?

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As of March 2010, American consumers collectively held an outstanding balance of $852 billion worth of credit card debt. As a consequence of the recession of the past couple of years, Fitch Ratings places the current rate of credit card defaults at 13 percent.

In these tough times, it is in your best interest as a consumer to become knowledgeable about your rights regarding defaulted debt. The two laws that protect consumers from abusive debt collectors are the Fair Debt Collection Practices Act of 1977 and the Fair Credit Reporting Act.

Knowledge about the debt validation process provides you with leverage should you ever end up on the business end of a collection call.

The debt collections industry is now a $90+ billion industry. According to the Bureau of Labor Statistics, the debt collections industry is expected to grow by 23 percent between now and 2016. Debt collection companies operate by purchasing debts that are delinquent from the original creditors. After a debt has been delinquent for 180 days, banks are required to write these bad loans off of their books and sell these debts for cents on the dollar.

Many consumers are not aware that they even have rights when a collections agent calls them. Understanding your protections as a consumer will go a long way in helping you deal with collections agencies.

The Fair Debt Collection Practices Act (DCPA) outlines debt collector rules and consumer protections. The FDCPA also provides you, the consumer, with the right to request validation of any debt that a collections agency is calling about.

To properly validate a debt a collections company must provide proof that it is legally entitled to collect on this debt and also provide proof that the debt is yours.

Imagine that you borrowed money from Mike and one day Dave called you to say that you should now pay him the money you owed Mike. You would want proof that Dave has the right to collect this money. Proper debt validation is a lot like this.

FDCPA states that a debt collector "shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector."

When an original creditor sells a delinquent debt to a third-party collector, you have the right to request information that establishes that the debt is yours. You also have the right to request proof that you legally owe this debt to the collections agency.

The debt validation process protects a consumer against being misidentified by a debt collector. Proof of the validity of a debt is the responsibility of the debt collector. A collections agency has to provide, at your request, written proof that they have the legal right to collect a debt from you. That means that a debt collector is required to produce a contract between themselves and the original creditor showing that they are now entitled to collect on this debt.

You can request account statements from the original creditor or a copy of the original signed contract between you and the original creditor. You can go as far as to request the complete history of the account in question in order to validate that the amount of the debt is also correct.

A creditor is not allowed to attempt to contact you or collect on this debt until they validate the debt. If they can't or won't validate the debt, you can request that the credit bureau removes the collections account from your credit report until validation is provided.

How do I Cancel an MBNA Credit Card?

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MBNA credit cards used to be offered through MBNA bank. That company was purchased by the banking conglomerate, Bank of America. All payments and customer service for MBNA are handled by Bank of America representatives. If you still have an outstanding MBNA card, you can cancel that account through Bank of America; however, simply canceling the card will not relieve you of any remaining balance. You can cancel a credit line if you still have a balance, or you can cancel the card outright if you have a zero balance.

Instructions

Enroll in online banking with Bank of America, if you haven't yet (see References). It is easiest to handle account transactions electronically. You need to enter your name, address, email address, account number, Social Security number and date of birth to enroll. Click on the confirmation email to officially engage your online profile.

Find out what the balance on the MBNA card is, if applicable. You must decide whether or not to pay off the balance and then cancel, or keep the balance and simply shut down the credit line. If you choose to pay off the account, contact a Bank of America account servicing representative and ask for a payoff statement. Make sure to get a paid-in-full letter once the account is paid.

Log on to your MBNA account through Bank of America if you still have a balance. Choose the account with which you want to work (if you have multiple accounts with Bank of America). Choose "Account Activity." Then choose "Cancel Credit Line." This will indefinitely cut your access to any credit available on the MBNA card.

Contact an account servicing representative to close the account. You can also handle this through your online profile on Bank of America's website. You might get solicited for a new account or a retention program--banks do not like to lose business.

Obtain a copy of the closed account disclosure. This letter will state when the account was open, the payment history on the account, the last payment on the MBNA card and the current balance (zero). You must keep this with your records.

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