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Wednesday, August 31, 2005

How to Resolve Credit Reporting Disputes

Your credit score and credit report are important because bad credit can cause keep a person from getting a personal loan, a mortgage, a job or even an apartment. Mistakes on your credit report can lower your credit score, so it's important that you eliminate the mistakes. The Fair Credit Reporting Act states that the credit reporting agency is responsible for making right any credit reporting disputes. Here are the basic steps to use to resolve credit reporting disputes on your own.

Instructions

    1

    Request your credit report from all credit reporting agencies. In order to dispute a problem, you will need to have your credit report to show the mistakes. Every person should get a copy of her credit report each year. If you don't have a current copy, you can go to AnnualCreditReport.com to receive a free copy of your credit report from each of the reporting agencies.

    2

    Write a dispute letter to the reporting bureau about any discrepancies. This should include your address, full name and a list of all the disputes that you are making. Include a copy of your credit report with problem areas circled. Once the credit reporting company receives your letter, it has 30 days to investigate the problem and then report back to you. If it finds that there has been an error, the bureau is obligated to correct its report and notify the other credit reporting bureaus as well.

    3

    As you resolve credit reporting disputes, create a file and keep a copy of every piece of correspondence with the credit reporting agency. Keep the credit report you have a problem with, a copy of your letter of dispute and a copy of anything the company sends back to you. Sending any correspondence by certified mail is an excellent idea as well, allowing you to have a tracking number of the mail that you sent.

    4

    Going straight to the creditor is another option toward resolving credit reporting disputes. This also requires a written list of disputes. The creditor can tell you where to send your dispute letter. If the creditor determines there is an error, it will contact the credit reporting bureaus to fix the problem and will also notify you. However, this is not always the best course of action, since creditors are not held to laws that require them to get back with you in a specific amount of time. Some people have tried this method of disputing a problem only to never hear back from the creditor.

Help With Unpaid Medical Bills

The high costs of health care place many people at risk of financial ruin, with only one major illness or injury standing between them and bankruptcy. According to CNN Health, 62 percent of the bankruptcies filed in 2007 resulted from costly medical bills that people were unable to pay. Fortunately, there are some programs and options available to help with unpaid medical expenses.

Billing Processes

    Unpaid medical bills can quickly build interest charges and place a person even further in debt than at the start. As a first resort, attempts to set up payment arrangements with medical providers and hospitals may help prevent further action, such as debt collection agencies or wage garnishments, from being taken. Double-checking billing statements for excessive charges or charges that should have been paid by insurance coverage may provide ways to reduce the total bill amount. Excessive charges may show up as double billings for services not received. Mistakes made during the provider's billing process can also result in unpaid insurance claims.

Charity Care Programs

    Charity care programs are offered by nonprofit hospitals and other nonprofit health care agencies to assist the uninsured and people with limited resources with medical costs. As community service providers, nonprofit organizations receive tax exemptions from federal, state and local governments in exchange for the services they provide within communities. Offering special payment programs for people with unpaid medical bills are one way these organizations work with their communities. In some cases, even for-profit providers may have financial assistance plans available to those who qualify.

Medicaid Considerations

    The Medicaid health insurance program pays medical providers directly while requiring a small co-payment amount from recipients in some states. Patients with Medicaid coverage should not be billed over and above their co-payment requirement. When this happens, persons can speak with their state's Medicaid administrator or agency to help resolve unpaid bills. Individuals and families with limited income who don't have Medicaid coverage may want to consider applying for coverage. In some cases, Medicaid will make back payments on unpaid bills for eligible applicants provided the bills are no more than three months old.

State Laws

    An unpaid medical bill can prompt a medical provider to turn the debt over to a collection agency. When this happens, collectors can sue, garnish wages or seize bank account holdings for continued nonpayment on a bill. States such as Ohio, Kansas, Texas and North Carolina have certain in place that protect people from unfair collection practices. These protections place a limit on garnishments in terms of what percentage of a person's check can be withheld. Limitations on garnishment amounts are also enforced through the Consumer Credit Protection Act, a national law that sets maximum limits on garnishment amounts.

Can I Get a Deferral on Student Loans if I Am Married?

Can I Get a Deferral on Student Loans if I Am Married?

When you have a difficult time covering your basic bills, you may not be able to continue making student loan payments. Fortunately, you have the option to put your student loans on deferment. This will protect your credit score and prevent you from paying late fees or other penalties. Being married should not affect your ability to put your student loan on deferment.

Getting a Loan Deferment

    You can qualify for deferment for a variety of reasons. You will need to fill out an application with a reason explaining why you are asking for a deferment. The lender will ask for proof of your current income and other extenuating circumstances. If you are married, you can still qualify for student loan deferment, but the lender will take into account your total household income when determining your eligibility.

Payment Options

    Another option is to lower your monthly student loan payments. Student loan consolidation allows you to combine all of your student loans into one monthly payment. You can extend the life of the loan and lower your monthly payment, although this will increase the amount of interest you pay over time. You can also apply for an income-based payment option. You will need to reapply for this option each year, but it can significantly lower the amount you pay each month.

Student Loan Forgiveness

    There are student loan forgiveness programs available to you. If you are a teacher, you can qualify to have your student loan forgiven after teaching in a public school for five years. During this time you must make regular payments on your loan. If you work in the public sector, you can have your loan forgiven after 10 years of service. The loan must stay current the entire time as well. You can also qualify to have the remainder of your student loan forgiven after income-based payments for 25 years.

Student Loan Help

    Student loans will not be discharged during bankruptcy, but lenders are willing to work with you when you have a difficult time making payments. Contact your lender if you cannot make your current payments due to extenuating circumstances. Rather than skipping a payment and being penalized with rate hikes and penalties, apply for an option that will temporarily ease the amount you need to pay each month. Although there is a limited number of months you can put your loan on deferment, you should take advantage of the option if it's a matter of meeting your family's basic needs first.

Can I Transfer My Assets to My Wife if I'm Getting Sued?

If you do not pay a personal or business debt, an accident, unpaid taxes or other financial liability, a creditor or injured party may sue you for the amount you owe. If the court issues a judgment against you, the creditor or injured party may take several steps to recover the judgment amount, plus court costs and attorney fees. You may be subject to garnishment of wages, as well as amounts held in bank accounts in your name. You may also lose personal property and real estate you own. In most cases, transferring assets to your wife will not prevent loss.

Proactive Asset Protection

    Transferring assets before a lawsuit is considered proactive financial planning, and does not violate federal or state law. The transfer must not occur in contemplation of a lawsuit or insolvency -- that is, you must not foresee a lawsuit when deciding to transfer your assets to your wife. The transfer of assets as a means of proactive asset protection, without contemplation of a lawsuit or insolvency, may protect your assets in states where spouses retain individual ownership of property.

Reactive Asset Protection

    Transferring assets to your wife after the commencement of a lawsuit against you will not place your assets out of the reach of the judgment creditor -- the court will likely allow the creditor to take money and liquidate the personal property you transfer to your wife, subject to the same limitations and exemptions placed on personal property in your name. The court will also typically allow the garnishment and liquidation of assets transferred in contemplation of a lawsuit -- that is, if you know or should have known that you will be sued.

Fraudulent Conveyance

    State and federal courts may consider transferring your assets to your wife after the commencement of a lawsuit or in contemplation of a lawsuit a fraudulent conveyance under the Uniform Fraudulent Conveyance Act. Insolvency, or the inability to meet your financial obligations, at the time of transfer increases the risk of a court considering a transfer fraudulent. If the court determines that you have taken overt steps to hide your assets or place them out of reach of your creditors, it may pursue felony charges against you.

Communal Property

    Some states, such as Texas, Arizona, California or Nevada, consider all assets you accumulate after marriage to be communal property -- that is, the property is owned by both you and your spouse. In these states, a creditor can garnish funds and liquidate property transferred to your wife simply because you retain ownership under communal property laws.

How Long Before Negatives Are Removed From a Credit Report?

When you have a judgment, late payment or some other negative item show up on your credit report, it can significantly hurt your credit score. The negative items can remain on your credit report for up to 10 years. In some cases, you can get the items removed sooner.

Seven-Year Items

    Some negative items remain for seven years, according to the law. After seven years, the credit bureaus will remove these items. Some items in this category are account charge-offs and late payments. A judgment against you in a civil suit can also stay on your credit report for seven years.

10-Year Items

    Although many items stay on your credit report for about seven years, other negative items remain for 10 years. For example, Chapter 7 bankruptcy stays on your credit report for 10 years from the date of discharge. Chapter 13 bankruptcies also stay on your record for 10 years, even though you use a payment plan to repay your creditors. Most criminal arrests also stay on your credit report for 10 years.

Mistakes

    In some cases, you may notice incorrect information on your credit report. You can contact the credit bureaus and dispute these items. If you can provide proof that the information is not correct, the credit bureaus remove it from your credit report and recalculate your credit score.

Credit Repair Scams

    When trying to get negative items from your credit report removed, you may be interested in hiring a credit repair company. Many companies claim to be able to take negative information off of your credit report. This is inaccurate, and the company will not be able to remove items unless they are mistakes. If the information is correct and up-to-date, it will have to stay on your credit report for the full amount of time required.

Debt Reduction Programs by the US Government

Debt Reduction Programs by the US Government

The federal government explicitly states on its grants website that it does not help delinquent borrowers with credit card debt. However, if you need help with your mortgage or a small business, you may be in luck. And if it's credit card help you need, a nonprofit is standing by.

Government Grants: Scam or Not?

    The federal government does indeed provide billions of dollars in grants funding, if you're a researcher and have a clear, written plan as to how you're going to use the money. Credit card repayment is not on the available grants list.

    Many people pay money every day to seemingly legitimate "grant assistance" organizations. However, the information these people pay for is free and readily available. The organizations may also be criminal; these companies often exist solely for the purpose of stealing personal information, such as Social Security numbers, credit card numbers, and bank account numbers.

Biggest Risk: Identity Theft

    If you suspect that you've been victimized by a grants assistance company, it's not too late to take action. Order your credit report immediately, and review it for suspicious activity. Notify the credit bureaus, Equifax, Experian, and TransUnion, that you've been the victim of identity theft. Report the company to your state attorney general's office and the Better Business Bureau. You may not be able to get a refund on the company's grant search fee, but you may be able to prevent further damage to your credit.

    Real government grants never charge a fee for applying. They won't ask you to supply personal information, either. Always apply for a grant directly through a government agency.

Refinance and Modification Opportunities

    The government provides mortgage assistance through the Making Home Affordable program. Developed as a result of the housing market crash that began rippling through the country in 2007, qualified homeowners may earn an interest rate reduction, principal reduction, or both.

    To qualify, you must have a conforming (non-jumbo) loan, but you don't have to be delinquent. Streamline refinances, where your interest rate is simply lowered with less-stringent paperwork requirements, must be Federal Housing Administration-backed. Modifications don't have to be FHA-backed, but the lender must be participating in the Making Home Affordable program (most do). Apply through your lender.

Business Loans

    The federal government also sponsors microloans and small-business loans to help you get up and running, or to bring your business to the next level. Remember that these are loans -- not grants -- and must be repaid. You must also be able to document that the loan is for a business purpose. Don't apply through the federal government, but through a participating bank. As of May 2011, microloans are available up to $35,000; after that, you'll need a small-business loan (these loans max out at $2 million).

Credit Counseling

    The nation's oldest nonprofit credit counseling agency is the National Foundation for Credit Counseling. If you're in trouble on your unsecured debts -- like credit cards -- the foundation can help. If you're eligible, you can enroll in a debt management plan that can save you money and aggravation, along with your credit rating. Fees are minimal, and you will fully repay your debts within five years.

Statute of Limitations on Collection Agencies for Credit Cards

All states have statute of limitations on collecting credit card debt. The statutes, which vary from state to state, regulate how long debt collectors have to win court judgments for delinquent credit card debt. Credit and debt website BCS Alliance reports that the statute of limitations on credit cards in Alabama is three years, six years in Maine, eight in Wyoming and 10 in Rhode Island. On average, debt collectors have about six years to use the court system to collect credit card debts.

Misconceptions

    Credit card debts never expire. The debts are valid until you pay them in full. BCS Alliance reports that states created statute of limitation laws to offer people a certain degree of protection from old debts. Without the laws a debt collector could win a court judgment for a debt 30 years old, for example. The laws do not stop debt collectors from filing lawsuits, however. Statute of limitations laws are available as a suitable defense in a lawsuit, but cannot prevent the filing of a suit. A 2010 article in "The New York Times" reports that a man sued for an old debt won a case after sending a note to the judge indicating that the debt was too old for review by the court.

Considerations

    The clock on the statute of limitation laws usually begins with the date of the last activity on the account, such as a payment, or the date the account closed and the creditor charged off the balance. Debt collectors sometimes attempt to reset the statute of limitations by soliciting a small payment against the account. The date of that payment becomes the most recent activity, and a fresh statute of limitations period begins.

Options

    Debt beyond statute of limitation guidelines is "time-barred" from enforcement by the courts, according to BCS Alliance. Lawsuits and the threat of court judgments or bank garnishment are the biggest weapons debt collectors have. Some people who know that their debts are time-barred simply refuse to pay because a successful lawsuit is impossible if they defend themselves. Monetary judgments are possible if a person sued does not appear in court or fails to respond to the lawsuit in writing. Judges issue default judgments against people who do not contest lawsuits.

Credit

    Statute of limitation laws do not directly affect credit. Negative information on credit reports, such as defaulted credit card accounts, appear for seven years, according to the Federal Trade Commission. Some people may choose not to pay a credit card debt that is no longer appearing on credit reports and is time-barred for court action. Debt collectors may still attempt to collect the debt by calling and sending statements, however.

Credit Education 101

Credit Education 101

Educating yourself on how credit works and on how to manage credit can help you achieve a high FICO, Fair Isaac Corporation, credit score. Credit scores are between 300 and 850; and the higher your score, the easier it is to get approved for mortgages, auto loans and various other types of installment loans.

Payment History

    Providing creditors with monies owed on or before the due date is a key component in maintaining a good credit history. Payment history is the biggest factor affecting your personal FICO and makes up 35 percent of your score. Missing a payment can end with late fees; and the more payments you miss, the lower your score. Careful budgeting and organizing your bills can help you meet creditor deadlines and avoid credit blemishes.

Credit Card Balances

    Paying your minimum payment each month on credit cards isn't an open invitation to buy items you can't afford or carry a high balance. Maxed-out credit card accounts and maintaining balances near your credit limit are extremely damaging to your credit score. Like payment records, the balances owed to creditors make up 30 percent of your score. And quickly boosting a low score might call for paying down your balances. MSN Money advises consumers to keep credit card balances below 30 percent of their credit limit.

Shop Around

    Shopping around and finding the credit card and loan with the lowest interest rate is key to saving money on interest charges. Rather than randomly applying for a credit card or loan, read the fine print and look for information pertaining to the interest rate. High-interest rate credit cards and loans equal spending more money on paying down the new interest charges each month, and less money reducing your outstanding principal.

Minimum Payments

    Minimum payments are okay if you cannot afford to make higher payments each month. But if your budget allows, always send more than the requested minimum when making credit card payments. Credit card balances can quickly accumulate out of control, and limiting debt requires paying off balances in full each month, and charging only items that you can afford to pay off.

Credit Inquiries

    Consumers need credit to build credit, and in an attempt to secure a new credit account, some consumers mistakenly apply for several credit accounts back-to-back. This desperate attempt to acquire credit can harm FICO credit scores because personal ratings decrease with every credit check or inquiry by a bank or company. Keep credit inquiries to the minimum, and only apply for credit when necessary.

Tuesday, August 30, 2005

The Collection Agencies Act

Collection agencies that work for a creditor or have purchased the debt from a creditor have the right to collect. The collection agencies act regulates how the collector can collect and when the collector may collect. Violating the rules of this act could lead to a civil lawsuit against the creditor and possibly eliminate the debt of the debtor.

Notice Of Debt

    A debt collector must notify a debtor within 30 days of the debt. Other important information that should be included with the letter is the name of the original creditor if applicable, the amount of the debt plus any reasonable interest and fees that have been assessed, the right to dispute the debt and contact information where payment may be sent or where the collector may be contacted at. This notice must legally be submitted to the debtor in order to begin collecting on a debt.

Time Limitations

    A collection agency has limitations of when and where the agency may call the debtor according to the collection agencies act. A collection agency may call a debtor between 8 a.m. and 9 p.m. in the debtor's time zone. Collectors may collect on the debt any day of the week, including holidays. If a collector contacts a debtor at his or her place of employment, the collector must cease communications if the debtor informs the creditor personal calls to the job are not permitted.

Threatening Debtors

    Collection agencies are not allowed to threaten physical harm to the debtor at any time. The collector is also prohibited from pretending to be an attorney or law enforcement agency. Collectors can not legally seize assets or property of the debtor or any wages without the approval of the courts. Therefore, a collector may not state to a debtor that he has this authority. Collection agencies may not publicly announce the debtor's debt to family, friend, co-workers or employees. Anything that will get the debtor fired from his or her job is illegal.

Confidentiality

    A collection agency has the right to collect from a debtor via telephone or through written correspondence as a part of the collection agencies act. The collector from the collection agency is prohibited from discussing the debt with anyone other than the debtor, her spouse or authorized account holder. The collector may leave a voice message or message with someone in the home of the debtor, but the collector may not discuss the reason for the call, only a contact and reference number.

Credit Bureaus

    The collection agencies act permits the collection agency to share any debt information with the credit bureaus. The amount of the debt may be listed, regardless of whether the debt has been paid. The debt is not removed from the credit report, but if the debt is paid, the collection agency must mark the debt as paid. Collection agencies have the right to request a debtor's credit report in order to find current employment and financial information, as well as up to date contact information for the debtor.

Unable to Pay Debt Letters

If you are having trouble paying your bills, you should contact your creditors as soon as possible and let them know about your situation. Many companies are willing to work with you if you notify them immediately and are honest about your finances. Although you can conduct this kind of business over the phone, a letter provides evidence of your correspondence that protects you from unscrupulous creditors who may agree to one thing over the phone and then change the agreement later.

Heading

    Start the letter by putting the date, your name and your address at the right corner. Type the creditor's name, address and your account number in the right corner. If you know the name of the person in charge of your account, address the letter to him.

If You Cannot Pay Right Now

    If you can not make any payments now but your financial situation will improve in the near future, tell the creditor when you think you can resume making payments. If you can afford to make smaller payments until your situation improves, suggest a monthly payment amount you can afford.

If You Cannot Pay at All

    If you are unable to repay the debt and will not be able to pay in the foreseeable future, you can state that to the creditor. Explain how your circumstances have changed that prevent you from paying your debt. Stating you will not pay the debt may cause the creditor to sue you in court and enact income garnishments and property seizures. However, creditors cannot garnish income from sources such as social service programs, Social Security benefits, unemployment payments or workers' compensation. Creditors also are restricted from seizing property with value under the exemption amount for debt collection in your state. If your financial situation is permanent, your only income comes from sources the creditor cannot garnish, and if the value of your property is under the exemption amount, the creditor may simply give up on the debt and stop costly collection activities.

Apology

    Tell the creditor you are sorry in the last paragraph. Don't be overzealous but give an honest apology for being unable to pay as agreed. Thank the creditor for its willingness to work with you if you proposed a lower payments or temporary forbearance on payments. Sign your name at the bottom.

Mailing

    Create a paper trail to establish dates of correspondence. Send the letter by certified mail so you have proof of when you sent it. Request a return receipt so the creditor has to sign for the letter. This gives you the date the creditor received the letter.

How to Get Outdated Information Removed From My Credit Report

Old and outdated information can cause problems with your credit report, whether it results from prescreened offers going to a former address or incorrect credit information being associated with your file. You can submit a report detailing the inaccuracies on your credit report, whether it's for an account that needs to be removed or addresses you haven't used in years. The three nationwide consumer credit reporting companies are Equifax, Experian and TransUnion. These credit reporting agencies contact the party that provided the disputed data to determine the accuracy of the information. The information is updated if necessary, and it is removed if the party that supplied the information does not respond to the credit reporting agency's request within 30 to 45 days.

Instructions

TransUnion

    1

    Click TransUnion's dispute page on the TransUnion website.

    2

    Click "First Time" to sign up for an account if you are new to TransUnion's website. If you have requested a credit report through annualcreditreport.com, you have a TransUnion account already. Likewise, if you ever used TransUnion credit services for monitoring or reviewing your report, you have an account. Click "Returning Users" to log in to your current or newly created account.

    3

    Click "Credit Report" and "Report Inaccuracy" to navigate to the dispute page. A dispute request asks the credit reporting agency to update your records with accurate information.

    4

    Click "Submit Dispute." Check each section of your TransUnion credit report, clicking any accounts and credit information that is not accurate. Click "Request Investigation" for each section that is inaccurate. Click "Submit."

Experian

    5

    Open Experian's online dispute web page on the Experian website. Experian requires everyone filing a a dispute or requesting a change in his credit information to have a credit report less than 90 days old. If you need a report, Experian provides a number of ways for you to obtain one.

    6

    Click the option labeled "Yes, I have a credit report number" once you obtain an Experian credit report. Enter the number and your personal information on this page. Click "Submit."

    7

    Click "Dispute this item" for any item on your credit report that is inaccurate or outdated. Provide the reason this item should be removed. Click "Submit this dispute."

Equifax

    8

    Click Equifax's dispute page link on the Equifax website.

    9

    Provide the Equifax credit report number, if you have one, in the first field. If you do not, skip this field and fill out the rest of the requested information. Click "Submit."

    10

    Answer each identification question with the multiple-choice selections. These questions determine whether you are the proper person requesting your credit report. Click "Submit."

    11

    Click each section of the Equifax credit report to check for outdated information. Click "Dispute this item" and provide the outdated information. Click "Add this dispute."

Monday, August 29, 2005

How to Clean Up Credit in Six Months

How to Clean Up Credit in Six Months

Your credit report is very important to your life. It will determine whether you can afford your next mortgage. It may even determine if you can get the next job you apply for. Changing your credit could mean changing your life. If you start today, you will see results very quickly, in just six months. It may take determination and work, but the work is time limited.

Instructions

    1

    Get a a copy of your credit report. Go to AnnualCreditReport.com to get a copy of your free annual credit report. Doing so will allow you to see what bills you've been paying late and how much debt you have in your name.

    2

    Catch up on all of your late bills. Thirty-five percent of your FICO score comes from your payment history, according to MyFico. A FICO score is a number that lenders use to determine your credit risk. Take a look at your credit report and bring all of your past due bills up to date immediately.

    3

    Pay more than the minimum payment to reduce your debt to credit ratio. Thirty percent of your FICO score comes from the amount of debt you owe, according to Myfico. If you have more debt than available credit, your credit score could go down, according to Equifax. To reduce your debt, pay a lot more the minimum payment each month. If you can, take any extra money you get, and work to pay down your debts as quickly as possible during the next six months.

    4

    Don't open any new credit accounts. Credit inquiries will negatively affect your credit score. You don't want to undo all of the work you have done by opening new accounts. Instead, show creditors that you can clean up the credit you already have.

    5

    Pay down any credit cards that are at their credit limit. If your cards are almost maxed out, it will hurt your credit score. Look at how much credit you are using on each card and make large payments on those cards that are at their limit. Then, avoid maxing out cards in the future.

How to Get a Credit Card Settlement

If you are swimming in credit card debt and are considering bankruptcy, you may want to try for a credit card settlement first. A credit card settlement is an agreement you make with the creditor for a lesser amount than the total debt you owe. When paid in full, your debt is then cleared. While a credit card settlement will appear on your credit report, it is nowhere near as bad as a write-off or bankruptcy.

Instructions

    1

    Obtain and organize your financial documents. You will need a copy of your most recent credit card statement and the total amount of debt you currently owe to the creditor. If the creditor has previously sent you a letter offering a settlement on your credit card debt, you will also need a copy of this, as well.

    2

    Calculate how much money you will be able to pay toward a credit card settlement. Most settlements are paid in one lump sum, although some creditors will extend a short monthly payment plan to debtors, generally between two and six months. Be prepared to pay the entire settlement in one or two payments. Make sure that what you are able to pay toward your credit card settlement is at least 40 percent to 60 percent of the entire debt; creditors will generally not settle a debt for less than 70 percent, but they will try to settle for as much money as they can to keep their losses at a minimum.

    3

    Have a method to make the payments for your credit card settlement. Plan this prior to contacting the creditor. If you do not have a checking account, you will need to find another way to make the payment, such as with another credit card, using someone else's checking account, with a money order or cashier's check or using a money-transfer service like Western Union.

    4

    Contact the creditor to negotiate a credit card settlement. The easiest way to do this is by telephone; however, sending a letter via certified mail would give you a hard copy of the negotiations between you and the creditor, which can prevent any miscommunication or reneging of any settlement offers an agent made verbally.

    5

    Inquire about the possibility of getting a credit card settlement. If you have already received a settlement offer, bring this up immediately when you call. If you have not, there is a chance that your account may not qualify for such action or you may be past the date where a credit card settlement is possible. If your debt has already been written off, you will not be able to settle it.

    6

    Start your offer for a credit card settlement low if you are eligible. Starting at around 70 percent to 80 percent gives you room to increase your offer while still keeping your potential credit card settlement low. Remember, if you are not happy with the amount the agent offers you, you can always cease negotiations with that particular agent and try again with another agent.

How to Find Information on Past Due Student Loans

When you accept a student loan to finance your education, you are expected to begin repaying the student loan after a certain period of time. Missing a few payments will result in contact from your lender, and perhaps even a collection agency, demanding immediate payment. A lender can easily lose track of you over time, however, if you move or change your telephone number. Should you find yourself in a position in the future where it may be possible to pay off past-due student loans, you must get information about the loans, and to whom you owe the debt, before you can submit a payment.

Instructions

    1

    Search for any old bills or statements that you have from your lender regarding your student loan. Old bills and statements will often contain the information about the past-due student loan that you need either to contact your lender or merely to review the debt.

    2

    Visit the National Student Loan Database at nslds.ed.gov if your student loan is federal. This database keeps a comprehensive record of student loans and borrowers that can help you locate your loan and find out how much you owe.

    3

    Pull your credit reports. Your student loan debt, the name of your lender and your lender's contact information will appear on your credit report. Because each of your credit reports may contain different information, it is important that you review all three of your reports. You may pull your credit reports for free once a year at annualcreditreport.com.

    4

    Call your lender and provide the representative you are referred to with information that identifies you as the owner of the account, such as your full name, Social Security number, past addresses or the name of the school you attended.

    5

    Ask for a printout to be mailed to you detailing the amount of the debt and any interest that has accrued in the period of time in which the loan has been past due. Keep the printout for your records.

How to Pull Your Credit Scores for Free

An excellent credit score opens many doors. "When you apply for credit -- whether for a credit card, a car loan, or a mortgage -- lenders want to know what risk they'd take by loaning money to you," explains MyFICO.com. Lenders determine your credit risk through your credit score. While credit reports are offered to consumers in most states annually at no cost, the credit bureaus typically charge a fee to see your three-digit credit score. You can avoid these fees using a free online service. Alternatively, when applying for a loan, you can also obtain a copy of your credit score at no charge.

Instructions

Free Online Service

    1

    Sign up for an account with a free credit score reporting service such as Credit Karma or SpendOnLife.com (see Resources).

    2

    Create a username and password for your account. Choose the option to continue to the next step.

    3

    Enter your full name, physical address and previous addresses, telephone number, e-mail and Social Security number. A Social Security number is required to gain access to your credit records and verify your identity.

    4

    Submit your application. Click "View Credit Score" from the main page.

Loan Application

    5

    Apply for a car, home or personal loan by visiting a local bank or mortgage broker.

    6

    Enter your personal details on the loan application. These details vary, but generally include your full name, employment information, physical address and previous address, Social Security number and contact details.

    7

    Request to view your credit ratings after your loan has been processed. Loan officers will typically provide you with a printout of your credit score upon request. Be advised that the bureau or agency the lender uses to retrieve your credit score varies from lender to lender.

Sunday, August 28, 2005

Tips on How to Pay Off Bills Early

By paying your bills off early you can save yourself a lot of money. Paying your bills off early involves sending in extra money each month. Find different ways to discipline yourself to not spend money and add that extra amount to the payments. Once you pay off your debts, you may have extra cash to spend on thing you couldn't afford before or be able to build up savings.

Pay Extra

    One of the best things you can do to expedite the paying off of your bills early is to pay a little bit extra each month. Even if you can only send 10 or 20 dollars, make sure you make it clear that you want that amount applied to the principle balance. Then next month you will be paying interest on a smaller balance. This works well for all bills that you pay interest on, from your credit cards to your mortgage. If you can may one extra payment on your mortgage per year, you can save yourself thousands of dollars over the course of your loan, resulting it early pay-off. Find the extra money to send to your bills in little ways, such as not buying that cup of coffee every day or giving up cigarettes. If you can only tackle one bill at a time, start with the bill that has the highest interest rate to save the most amount of money.

Set a Goal

    If you want to have your bills paid off by a certain date, set a goal. This may be a little harder to do for your mortgage, but you can do it for credit cards and other smaller loans. Decide when you want to have your bills paid off by and count out the months. Divide your payments up into that number of months. For example, if you want to pay off one of your debts in one year, take the total amount of the bill and divide it by 12. You may want to add a little bit extra to the payments each month to account for accruing interest. You could also divide the total debt by 11 and then leave the 12th month to pay whatever amount is left on the bill.

Consolidate

    Consolidate your debt into one loan and one payment each month. This works especially well for those who have lost jobs or extra income and cannot afford to have nine different debt payments each month. If this is something you want to do, make sure you consolidate your existing debts into a loan with a lower interest rate. If you get a loan with a higher interest rate you are doing nothing but increasing the life of your debt. For many people, consolidating debt helps to decrease their monthly payout, sometimes by hundreds of dollars. The key here is to pay more than the loan payment each month. Yes, you may not be able to pay as much each month as you did when you had several separate bills, but with one lower payment, you can always add a little bit more to expedite the process of paying off your bills early.

How Can a Credit Counselor Help?

After struggling with debt for a time, you might need assistance from an outside source. Credit counselors can help you evaluate your situation and your options when you find yourself in a substantial amount of debt. In some cases, people seek out credit counselors voluntarily. Those who file for bankruptcy must see them as part of the process.

Credit Counseling Basics

    Credit counseling takes many forms, but the basic services are the same. When an individual is in trouble with debt, talking to a credit counselor can help to get their financial situation back under control. Credit counselors often help consumers figure out how to avoid debt in the future, as well as get out of the debt they're currently in. Many credit counselors offer debt management plans as a solution for their clients.

Debt Management Plan

    The primary tool used by credit counselors is a debt management plan. Under debt management, the credit counseling service negotiates with the client's creditors. The creditors typically agree to lower interest rates for the accounts. The client can no longer use the accounts or take on any additional credit. The client makes a monthly payment to the counseling service, which uses the money to pay all of the accounts.

Pre-bankruptcy Counseling

    If you are considering filing for bankruptcy, you must employ a credit counselor. This is a requirement of the bankruptcy court. You have to provide a certificate showing you are undergoing credit counseling before you can file. The counselor will focus on your options and assure that you understand the impact of filing for bankruptcy. You can also explore alternatives with the credit counselor, such as a debt management plan or debt settlement.

Employing a Counselor

    When you decide to go through credit counseling, you can often do so easily and conveniently according to your schedule. Most credit counselors do not require you to appear in person, although this is an option with most. You can also conduct your counseling online or over the phone. The service typically carries costs for the debtor. And if you agree to a debt management plan, you will pay a monthly service fee.

How to Get Student Loans Decreased

Your student loan payments begin six months after you leave school, but you may be unable to make your payments if you are unemployed or underemployed. You can reduce or defer your student loan payments in several ways, although your loan company does need to approve any changes to your current loans.

Instructions

    1

    Apply for an unemployment or hardship deferment on your student loans. Prepare any documentation that the lender requests to prove your hardship or unemployment claim.

    2

    Consolidate your student loans into one loan. You can lower your student loan payments with this method if your interest rate is lower, or you can extend the payment terms.

    3

    Call your lender and request a forbearance. Forbearance reduces or eliminates your monthly payments for a set period of time. Forbearances generally run for one year or less. Your loan still accrues interest during this time period. If you do not pay the interest during your forbearance, it is added to the principle balance of the student loan.

Can a Third-Party Collection Agency Collect Interest?

Even if you know exactly how much you owed your credit card company when it charged off your debt, don't be too surprised if the bill you receive from the third-party collection agency that purchased your account is much higher. Third-party collection agencies are independent companies that collect debt on another company's behalf. Unlike in-house collection agencies, which are owned by the creditors themselves, third-party agencies are bound by the Fair Debt Collection Practices Act -- which sometimes allows debt collectors to charge interest on collection accounts.

The Law

    The FDCPA denies most third-party collection agencies the right to charge interest on a debt. Two exceptions to this rule exist. If the original agreement between you and the credit card company stipulated that the debt would continue to incur interest charges after being sent to collections or your state's laws permit collection agencies to levy interest charges on delinquent balances, interest will continue adding up until you pay off the debt.

Fees

    When receiving a collection bill considerably higher than the debt itself, debtors often assume that the additional charges are interest charges when this is not always the case. Collection agencies add fees to consumer accounts. Doing so increases the balance owed which, in turn, increases the amount the company can collect in a settlement. Because settlements are so common with collection agencies, increasing the balance you owe with collection fees boosts the company's profit margin. State laws determine the fees, if any, that a collection agency can charge the residents of each state.

Considerations

    If you believe the collection agency is charging you interest that you don't owe, you can file a dispute with the company. The FDCPA gives you the right to dispute any aspect of a debt that a third-party collection agency claims you owe. Within five days of its initial communication with you, the collection agency will send you information about your account -- including the amount of the debt. If you don't agree with the amount, you can demand that the collection agency "validate" its claims by sending you written proof that you actually owe what the collector claims you owe. You have 30 days from the day you receive the collection agency's initial notice to request validation.

Recourse Options

    Illegal recovery practices in the collection industry aren't uncommon. If the third-party collection agency that purchased your old credit card account is charging you interest illegally, you can report the company to the Federal Trade Commission. The FTC won't take action to solve your individual problem, but it can opt to investigate the collection agency's business practices and levy fines against the company for violating the FDCPA. You also have the right to sue any collection agency whose practices do not adhere to the federal government's debt collection laws.

Does Cancelling a Gym Membership Go on Your Credit Report?

When a person does not pay a debt that he owes, he risks suffering not just financial penalties from avoiding the debt, but facing damage to his credit rating, too. If a creditor reports the debt to a credit reporting agency, the agency may drop the person's score, as he will be viewed as less creditworthy. However, a canceled gym membership will usually not go on a person's credit report.

Credit Report

    A person's credit report contains a record of all of their recent debts, both paid and unpaid. When a person fails to pay back a loan on time or does not pay a bill, and this account is reported to the credit reporting agency, then the person may see the debt appear on his credit report, causing his score to drop. This can happen in the case of a gym membership if the person agreed to pay for it and did not follow through.

Gym Memberships

    The terms under which a gym membership is taken out will vary depending on the gym. Some gyms will require that people take out memberships for a set period of time, but allow them to pay in a monthly installment plan. Others, however, allow people to pay month-to-month for membership or pay for a long period of time in advance. If a person agrees to pay a certain amount for membership and does not, it may count against his credit score.

Cancellations

    Whether a gym membership cancellation will count against a person's credit score depends on the terms of the cancellation. If a person cancels when cancellation is not a legal -- if he, in effect, refuses to pay an amount he previously agreed to pay -- then his debt may be reported to a credit reporting agency. However, canceling a normal membership, but paying what he agreed to pay to begin with, either by paying in advance or one month at a time, will have no effect on his score.

Considerations

    Even if a person cancels a gym membership and leaves a sum of money unpaid, it will not always show up on his credit report. An unpaid debt will only show up on a person's credit report if the creditor reports it to a credit reporting agency. If the bill for the gym is small enough, the gym may not consider it worth their time to report it and instead just write it off.

Saturday, August 27, 2005

Extreme Ways for Wiping out Credit Card Debt for Free

Extreme Ways for Wiping out Credit Card Debt for Free

Although television advertisements may claim differently, you do not need to hire an outside source to manage or consolidate your credit card debt. Spending your money wisely and strategic planning of credit card payments can save you a lot of money and stress. Implementing several simple practices can help you to pay off debt and reduce future spending.

Budget Yourself

    Figure out exactly how much money you have to spend per week or month. Itemize a list of things you know you need and estimate how much you spend on them. Once you have compiled an appropriate list free of unnecessary items, stick with it. Keep a list of everything you buy within a month. At the end of the month, if you have not stuck to your budget, look back at the list of everything you purchased and decide if these things were necessary. Often, you find you can go without much of what you purchase.

No Charging

    If you can't pay cash for it, try not to buy it. Unless there is an emergency, such as a necessary household appliance breaking or a part for your car, do not charge items or services. If you must replace a household item, buy refurbished items. Many of these items are backed by a warranty and could last nearly as long as a new product. Visit your local thrift store to see if you can find what you need in working used condition. Paying with cash prevents you from overspending. Charging new items is so easy that deals in town are often not sought after.

Stick to the Basics

    Although there may be a cute new outfit at your favorite shop or a new DVD you feel you must own, save your money instead. You will be surprised to see how quickly your saved money adds up when you only purchase the basic necessities that you need, such as food, toiletries, household items and gas. Apply all the money you saved toward your credit card debt.

Concentrate on One at a Time

    Rather than giving a few extra dollars to every credit card bill that you have, find out which card has the highest interest rate and put all your excess cash toward that bill. If you concentrate on just one credit card at a time, it does not seem as overwhelming. Once this credit card is paid off, apply the extra money toward another credit card. You will feel relieved with how much progress you make toward becoming debt free.

Credit Bureau FAQ

Credit bureaus play a large role in your financial life and you may never have any direct dealings with them. These are companies that keep track of a great deal of credit information on you and every other consumer. They create a credit report on you and the information that they have could affect whether or not you can get financing.

What Do Credit Bureaus Do?

    Credit bureaus are organizations that keep track of your payments and interactions with your creditors. Every creditor that you have has the ability to report your account information to the credit bureaus. The credit bureaus keep track of whether you are making your payments on time and what your account balances with each creditor are. They compile all of this information in an easy-to-read format known as your credit report. Lenders then turn to the credit bureaus when they need information about you.

Who Are the Credit Bureaus?

    Even though many people are familiar with the idea of credit bureaus, they may not actually know much about them. The credit bureaus are not government agencies and do not have any specific powers granted to them by law. They are private companies that simply collect information from creditors. The three major credit bureaus are TransUnion, Experian and Equifax. While other credit bureaus do exist, these three collect the majority of information about consumers in the United States.

Who is the Fair Isaacs Corporation?

    Fair Isaacs Corporation is a company that is closely tied to the credit bureaus. Fair Isaacs Corporation developed a formula for computing credit scores. This is known as the FICO score and it is used by all three of the major credit bureaus. It is a numerical representation of your credit history. Lenders can easily look at your FICO score to determine what type of borrower you are.

Can You Contact the Credit Bureaus?

    Even though you may not ever have any need to contact a credit bureau, you can contact them if you choose to. Most of the time, your creditors are the only ones who provide them with information. You can get copies of your credit report to review them for errors. You can get a free copy of your credit report every year from each credit bureau. If you find something wrong in your credit report, you can call the credit bureaus or write to them to dispute the matter.

Debt Consolidation Vs. Bankruptcy

Debt Consolidation Vs. Bankruptcy

Debt consolidation and bankruptcy are two very different considerations for those facing an overwhelming amount of debt. Although each option offers some advantages, each option could also affect your credit rating. However, if you are behind in your bills, your credit rating is already being affected, so taking action is critical. Before taking any action, though, it is necessary to understand all your options.

Debt Consolidation

    Credit counseling services are a good source of information about consolidating debt. These agencies have experienced counselors who not only negotiate with your creditors for you but also provide you with sound strategies for managing your money. Those enrolled in such programs are usually required to get on a budget and abide by certain rules.

Debt Consolidation Loans

    A debt consolidation loan may be an option for a select few. However, if you are already considering bankruptcy, chances are you may not qualify for a loan or a loan at a reasonable interest rate because you may already be behind with some bills. Still, if you have a large amount of unsecured debt and are keeping up for the time being, this could significantly lower your monthly payments.

Debt Consolidation Considerations

    If you are working with a counseling service, remember that creditors still could put notes on your credit report saying that the bills were settled for less than the original amount. This could reflect negatively on your score, but defaulting or bankruptcy would be much worse.

Bankruptcy Types

    If you decide bankruptcy may be the proper route for you to take, you generally have two options to consider, Chapter 13 and Chapter 7. Chapter 11 could also be filed, but this is generally reserved only for corporations. Each has its own advantages and disadvantages.

Chapter 7

    Chapter 7 is known as the traditional bankruptcy and most severely affects your credit report, because it will be noted for 10 years. It will also affect your ability to get a mortgage and other credit accounts for at least two years. However, it will wipe clean nearly all your debts, allowing you to keep your home and at least one vehicle, if you so choose.

Chapter 13

    Although Chapter 13 will also leave a mark on your credit, it will not do so for as long. This type of bankruptcy allows you to reorganize or to restructure your debt so that it is more manageable. In other words, it does almost exactly what a credit counseling service does, but does it under a court order so that both you and your creditors know what is going to happen.

Bankruptcy Considerations

    Although it may seem like the easy way out, bankruptcies can affect you in the long run very negatively. Additionally, they are not cheap, and lawyers, knowing that your debts could be canceled or restructured, will likely demand upfront payments. Deciding to pursue a bankruptcy should only be done after carefully considering all other options and discussing your situation with professional financial planners.

The Debt-to-Income Ratio for a Credit Card Hardship Program

If you're having trouble making your minimum payments to your credit card company, a hardship program might be just what you need to get yourself caught up. However, the requirements for such programs are difficult to understand. A critical factor in a creditor's decision to offer you a hardship program is your debt-to-income ratio.

Credit Card Hardship Programs

    A credit card hardship program is a program administered by credit card companies that helps you to make your monthly payments and begin paying down your outstanding balance. Each creditor has its own way of providing assistance and its own criteria for admission. The benefits of these programs usually include interest rate breaks that range from six months to five years.

Debt-to-Income Ratio

    While credit card companies don't list the criteria to join a hardship program, they do look at many factors relating to your financial situation. One of the qualifications for a credit card hardship program is your debt-to-income ratio, which shows how much you owe in relation to how much you make. In other words, if you owe a very large percentage of what you make, the creditor might not want to give you any breaks because such a high ratio shows you're not a responsible credit manager. Since credit card hardship requirements aren't documented, a specific debt-to-income ratio for inclusion in such a program is unknown; however, Bankrate states that a debt-to-income ratio lower than 36% is ideal.

Getting Into a Hardship Program

    Not only do credit card companies not list the requirements for getting into a hardship program, most banks don't even acknowledge the existence of these programs. The only way to get in is to call your credit card company and see what they can do for you. This sometimes requires calling multiple times or asking for a supervisor. Even if you're not comfortable with being tough on the phone, the potential benefit is well worth a few tense minutes with a customer service representative.

Credit Counseling

    Hardship programs are good if you're in trouble with only one or two cards. On the other hand, if you have many cards and they're all maxed out, entering hardship programs with all of these creditors can be very time-consuming. You can always try to seek out the help of credit counseling, which provides many of the same benefits as a hardship program, but all of your cards are covered. The downside is that you'll have to close all of your cards out to qualify. Credit counseling is far better than debt settlement or bankruptcy in terms of how it's viewed on your credit report and your chances of recovering from your setbacks.

Friday, August 26, 2005

Credit Repair Myths

When you start to research ways to repair your credit rating, you may find that there is a lot of contradictory information. The first step to mending your credit, or finding the right credit repair company, is to understand the difference between myth and reality.

Advertising

    Just because a credit repair company is allowed to make claims in their advertising does not mean those assertions are true. If something in an advertisement strikes you as too good to be true, have it looked over by a financial or legal expert before contacting the credit repair company. One example of false advertising is a credit repair company guaranteeing they can raise your credit score by a certain number of points before they even see your credit report. Each situation is different, and until they see the report they have no way of knowing how much they can raise your credit score, if at all.

Varying Numbers

    People sometimes believe that all three credit agencies have the same score for you. The truth is that your credit score varies depending on the reporting agency, and when you are checking your score you should check all three.

Misconceptions

    A common misconception is that all you have to do is dispute an old credit account and the reporting agencies will remove it and improve your credit score. Credit agencies have 30 days to investigate a dispute, and if the account can be verified then it will remain on your report.

Paying Off Accounts

    One common misconception is that if you pay off your accounts you should close them to raise your score. The truth is that paying off older credit accounts and keeping them open will help your credit more than closing accounts after they have been satisfied.

Time Frame

    It is a myth that shopping for a better loan rate can lower your credit score, according to CNN. Excessive inquires to your credit account can lower your score, but a set of inquiries done over a 14-day period is considered to be only one inquiry event.

Are Credit Monitoring Services Worth it?

Being a victim of credit fraud or identity theft may motivate you to take action to ensure it doesn't happen again. If you haven't experienced it already, you may be someone who worries about having your personal information stolen. To alleviate the public's concern, there are credit-monitoring services to help you track the activity on your credit report for a fee. Whether it is worth it will depend on your individual situation.

Purpose

    Thieves may steal your identity by finding details about you in your trash, by stealing your wallet, using Internet scams or by taking information from your credit card. Once they have your name, Social Security number (SSN), birth date or bank account number, they can establish credit in your name, spend the money and stick you with the bill, or they can wipe out your bank account. For a fee, credit-monitoring services check your credit history with the major credit reporting bureaus for any suspicious activity and alert you to possible fraud.

Advantages

    For an average of $14.95 per month as of 2010, credit-monitoring companies will frequently track your credit reports to determine if someone has opened new accounts using your name and personal information. They tell you when someone has applied for new credit or if your current balances have increased rapidly. You also may be able to purchase insurance against expenses caused by identity theft. In addition, WalletPop.com claims that hiring a credit monitoring service will allow you to review your credit history frequently and may even cause you to change poor spending habits.

Disadvantages

    Credit monitoring services cannot prevent identity theft. They will alert you when there is activity on your account, even if you are the one creating it. Also, if someone uses your SSN to open a new credit account or take out a loan, the creditor may not report it to the credit bureaus right away. This would delay a notification to you of suspected fraud. In addition, if someone steals your identity, some credit monitoring insurance plans have loopholes that will not cover you in a loss.

Alternatives

    You may order a free credit report every year from each of the major reporting agencies: Experian, TransUnion and Equifax (see Resources). If you order a report from one agency every four months, you can check for any unusual activity throughout the year. If you fear someone has compromised your personal information, you can place a security freeze on your account with each bureau. According to the Experian website, this will not allow any organization to check your credit, something required for credit card or loan approval. If you would like to open new credit, you may temporarily remove the security freeze from your file, making your credit history available to those you authorize to check it.

Thursday, August 25, 2005

How to Remove Yourself From Federal Debt

How to Remove Yourself From Federal Debt

Federal debt is the most serious type of debt. The most common federal debts are outstanding IRS taxes and student loans. Only in the most desperate of financial conditions is federal debt cancelled or forgiven--and in some cases, these situations still do not erase these debts. The only way to remove yourself from federal debt is to repay the obligations.

Instructions

    1

    Pull a current copy of your credit report from a free online provider such as AnnualCreditReport.com. Review all trade lines on the credit report, paying specific attention to student loans. Then look at the judgments and collections section. This will show any outstanding tax liens. Add up all of these debts to get a total amount outstanding.

    2

    Determine whether you are up to date on all federal loans. An IRS tax lien on your credit report means that you are seriously delinquent. Any liens must be given priority attention. The IRS, unlike credit card companies, can easily garnish your wages and freeze your bank accounts. Bring accounts up to date if possible.

    3

    Contact your federal lenders if you are struggling to make your minimum payments and are in danger of default. Speak with an account servicing representative. Ask about hardship or consolidation plans. The IRS will look more favorably on your situation if you are taking preemptive steps to eliminate and reduce debts.

    4

    Refinance your federal debts with a private lender if you cannot acquire a hardship plan or consolidation through your federal lender. Refinancing means losing the usually low rates of government loans. However, in dire circumstances, this will eliminate the federal debt and stop the IRS from seizing assets.

    5

    Review your budget once you've stabilized your federal loan payments. Track all of your expenses for one month and look for areas to cut back. Take a hard look at non-essential expenses such as entertainment and dining out. Make a new budget that applies all disposable income toward federal debts. This will speed up the payoffs.

    6

    Think creatively about paying off federal debts. Consider using a retirement fund loan, any savings you have accumulated or other investments. Be sure to speak with a trusted advisor--like an attorney or accountant--before making large financial decisions about retirement funds.

Wednesday, August 24, 2005

How Does a Charge Off Affect My Credit Score?

Charge-Off

    When you charge a purchase on your credit card, the credit card company considers that loan an asset because the company expects to get it back from you. However, if a payment isn't made on the balance after a period of time, typically 120 to 180 days, the credit card company may write that loan off as a loss if it no longer expects it to be paid, and that's known as a charge-off.

Negative Impact

    A charge-off says to future lenders who read your credit report that you are a person who does not pay their debts, so you are a particularly bad business risk. This lowers your credit score and makes it unlikely that you'll get more credit from your current credit provider or from a new one. The negative impact of a charge-off can stay on your credit for up to seven years.

'Paid as Agreed'

    The company may not expect payment after a charge-off, but you're still legally obligated to repay what you borrowed. To help save your credit rating, call your credit card company and try to negotiate with them. If an agreement can be reached, they may change the status of the charge-off to "paid as agreed," which means you paid your debt, but you paid it late. When it comes to your credit score, late is much better than unpaid. Get this type of agreement in writing to make sure the company holds up its end of the bargain and your credit score is not as drastically affected.

What Is the Penalty for a Person Who Does Not Pay His Debt?

The use of credit, such as credit cards or consumer loans, can lead to an accumulation of debt. When you accrue debt, you have a legal obligation to make good on it and the owner of that debt expects payment. If you do not pay your debts, you should understand the penalties that could occur as a result of not doing so.

Significance

    When you owe debt, the owner of that debt can take legal action in court against you if you don't pay. This is done by filing a lawsuit in civil court. If the judge determines that you owe the amount sought, he will issue a judgment against you, which is a judicial order that states how much money you owe that creditor. With a judgment, this creditor can seize money in your account or garnishee a portion of your paycheck from your employer.

Consequences

    Once a judgment is entered against you, the creditor will have a certain number of years from that date to collect the money. Even if you don't own any property or assets today, which is called being judgment proof, the creditor can seek to recoup the judgment from you at a later date when you do have the assets. The statute of limitations on judgments varies from state to state. One of the longest is Florida, which has a statute of limitations on judgments of 20 years.

Considerations

    Another area that a judgment affects is your credit report. A judgment appears on your credit report for seven years from the date it's issued by the court. According to MyFico, public records such as a judgment will have an adverse affect on your credit and thus will lower your credit score. Your FICO score ranges from 300 to 850 and the extent of the negative impact on your credit score will depend upon the other factors present in your credit report.

Warning

    The owner of a judgment can hire a collection agency to collect that debt from you. Collection agencies are permitted to access your credit report. They are allowed by law to call you at home from 8 a.m. to 9 p.m. and may call your place of employment unless you direct them not to. Also, the agency will add a collection account to your credit report and this will negatively impact your credit score as well.

How to Discuss Debt Before Marriage

If you thought the "sex talk" with your parents was awkward, you must be really be squirming at the thought of discussing debt with the person you are about to marry. As difficult as this may sound, it must be done. The two of you have to sit down and discuss how much each owes. This is imperative to the financial health of your future and your relationship.

Instructions

    1

    Honestly talk about your individual credit scores. Remember that there are three credit reporting agencies. These different agencies have different information and give you your credit scores based on that information. It is possible to have three different credit scores, one for each agency. Have copies from each of the credit reporting agencies for both of you. Be sure that you understand what those credit scores mean to you as individuals and as a couple.

    2

    Candidly discuss your credit card debt. Have copies of all your credit card statements and the contracts from each of the issuing credit card companies. Add up all of your credit card debt to see how you each of you owe individually. Add up your individual debt to see how much you owe as a couple. Know and understand all of the interests rates, fees and penalties associated with each credit card. Both of you need to explain how you use your credit cards and how you pay off your credit card debt.

    3

    Frankly talk about all of your other debt. Remember all of your car payments, mortgages and students loans--any debt that you have. Even if you are not required to make payments on those student loans, still talk about the payments that you will eventually have to make. Add it all up so you will know how much you both owe, individually and as a couple.

    4

    Openly address how you plan to pay off all your debt. Formulate a workable plan, to pay off that debt. Consider your incomes, taxes and monthly expenses as you make your plan to get out of debt. Remember to include the amount of money you plan to put into savings as well as all charitable donations you want to make. This is not a time for big plans and even bigger dreams. Your plan to pay off your debt has to be as realistic as possible.

What Can I Do if I Am Behind on My Mortgage?

When you fall behind on your mortgage payments, the prospect of losing your home to foreclosure becomes very real. Whether it's a short-term setback or you simply can no longer afford your home, the time to act is now -- the sooner you make arrangements with your lender, the better your chances of keeping your home and saving your credit.

Contact Your Lender

    If you have not already contacted your lender, do so as soon as possible. Before calling, know two things: how much you can afford to pay from this point on, and whether you foresee being able to make full payments, plus the payments you've missed, in the future. Be prepared to offer a reasonable explanation as to why you have been unable to make your payments, such as unemployment, an illness or other catastrophic event in your life. Jot down notes about your situation before calling to make sure you hit all the important points.

Ask About Your Options

    If your lender does not offer you forbearance or loan modification, ask about these options. Forbearance will give you reduced or suspended payments for a specific period, at the end of which you resume making regular payments, in addition to a lump sum payment or additional payments to make up the payments you missed. Loan modification changes the terms of your loan, either by reducing your interest or payment and extending the life of loan, or by reducing or forgiving part of your loan balance.

Selling Your Home

    If your home is simply not affordable, even with loan modification or forbearance, selling the house may be the best way to get rid of the payment and possibly save enough to repay the lender for the payments you missed. As long as your home is worth more than what's owed against it, selling will not be a problem; if your home is worth less than what is owed, your lender will have to agree to a short sale, or a sale that nets less than the loan amount.

Contact Hope Now Alliance

    If you are behind on your payments, are not sure whether to accept modified loan terms, sell your house, or find another option, call the government-organized Hope Now Alliance of credit counselors, mortgage companies, investors and other mortgage market participants. The alliance offers free advice about your situation and helps you to work with your lender, if needed.

Does Having More Than 1 or 2 Bank Accounts Affect Your Credit Score?

A person's credit score is an estimate, made by financial services firms called credit reporting bureaus, of a person's creditworthiness -- the likelihood that he will pay back any money that is loaned to him. The higher a person's credit score, the better a lending risk he is. Credit scores are calculated using a wide variety of data related to a person's credit history, but any information related to bank accounts is not included.

Credit Reports

    The information in a person's credit report relates directly to a person's previous history of taking out money. It includes a list of all loans and lines of credit that have been reported to the credit reporting bureau, as well as whether the person paid these loans back and, if so, whether he did it on time. These reports do not list bank accounts, such as checking and savings accounts.

Checking Accounts

    While the size of a checking account may suggest whether a person is able to pay back a loan, it does not appear on a person's credit report as it does not involve the borrowing of money. Therefore, because it is not listed on a person's credit report, a credit reporting bureau will not use any information about how many bank accounts a person has to determine his credit score.

Loans

    While having multiple bank accounts will not directly affect a person's credit score, it does not mean that lenders won't take this information into consideration when making a loan to the person. Lenders commonly use credit scores to determine a person's creditworthiness, but they also use other information, too, such as his income and savings. While multiple bank accounts will not directly affect a person's creditworthiness in the eyes of a lender, the amount of money in the accounts might.

Considerations

    The only way that a checking or savings account could affect a person's credit score would be if the account holder ran up a negative balance on the account and did not pay it off. Theoretically, the bank could report this debt to a credit reporting bureau. Unpaid debts bring a person's score down. However, unless these accounts became negative, multiple banks accounts would remain unknown to credit reporting bureaus.

Tuesday, August 23, 2005

What Happens to a Credit Score After a Dispute?

Boosting your credit score may require consistent monitoring of your credit report. Under federal law, both the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your report, according to the Federal Trade Commission. Removal of inaccurate derogatory information can significantly boost your credit score once a decision has been made regarding your dispute.

Response Times

    A major benefit to disputing through credit bureaus is that each creditor is given 30 days to respond. The creditor must supply written proof within this time frame that the information reported is correct.

Removal

    A creditor may choose to remove an error from your report upon your first request. Follow-up within 30 days of your request to ensure the changes were reported to the credit bureaus. In some cases, creditors may send you written notification that the information will be removed. The credit bureaus will update the information on your credit report once official notice is received from the creditor. On the other hand, if the information is correct, your credit score will not change.

Notification

    When disputing with the credit bureaus, you will receive a notice of the outcome of the dispute once the creditor responds. The credit bureaus will either inform you that the listing will be dropped or that the claim was proven and your report will stay the same. Your score will be updated by the credit bureaus usually within the next reporting cycle.

Measurement

    The two factors that affect your credit score the most are your payment history and the amount of debt owed. If you are disputing information regarding either of these categories, your score can be impacted substantially. Be advised that exact points earned vary based on the other information reported to credit bureaus each month.

Can a Credit Card Company Take Money Out of My Checking?

Can a Credit Card Company Take Money Out of My Checking?

Imagine the shock and panic of discovering that money is missing from your checking account. Upon further investigation, you discover that your credit card company withdrew funds from your account without your knowledge. While this may cause a whirlwind of events, such as messing up payments for other bills, it's important to understand that, in some circumstances, the credit card company can legally withdraw funds from your bank account.

Automated Payment

    The most likely scenario is that you intended to discontinue the automated payment service and it slipped your mind. Automated payments are when you authorize the credit card company to withdraw a set amount from your checking account on a set day each month. This may be the minimum payment required or an amount that you feel you can afford over the minimum. In most cases, you sign up for this service through the credit card company's website. By checking the box and agreeing to the terms, you give the credit card company the right to withdraw funds from your account until you discontinue the service.

Garnishment

    Another possibility is that the credit card company is garnishing your checking account for failure to make payments. However, this is only legally possible if the credit card company has a judgment against you. According to the Fair Debt Collection Practices Act, to obtain a judgment, the credit card company must first give you 30 days to resolve the unpaid balance. Once those 30 days pass with nothing resolved, the credit card company can file a lawsuit against you. The legal process in this regard varies from state to state and county to county. However, once the credit card company obtains a judgment, your may find a garnishment on your bank account.

Exemptions

    A credit card company cannot garnish your bank account if the funds in that account are government benefits (such as Social Security), child support payments, alimony, disability or unemployment benefits, retirement benefits, workers' compensation, guaranteed student loan payments, life insurance benefits and/or proceeds from a personal injury claim. All of these are off limits. In addition, when a credit card company garnishes your bank account, it can only receive a percentage of your earned wages. This percentage limitation varies from state to state.

Considerations

    A garnishment on your bank account can be a stressful process, so it's a good idea to avoid the possibility of it occurring. One way to do this is to attempt to make payment arrangements with the credit card company, even if the unpaid balance is already in the legal system. Above all else, utilize tools like online banking to be continuously aware of what is going on with your bank account, so that, if there is a garnishment, you know quickly and can avoid other problems like bounced checks.

How to Repay a Federal Stafford Loan

Paying a student loan can be done in a variety of ways. In addition to sending a check through the mail, you can also submit your payment online and over the phone. Online payments are secure and provide a quicker processing time.

Instructions

    1

    Know your account information and loan balance(s). To find out financial information on your student loan(s), visit the U.S. Department of Education's National Student Loan Data System (NSLDS) at www.nslds.ed.gov. This site will provide loan information including: lender, outstanding balances, loan status and grant information. When you visit the web site for loan information, have your Social Security number (SSN), the first two digits of your last name, your date of birth and your Federal Student Aid PIN ready. Access your PIN by calling the Department of Educaton's customer service line toll-free at 1-800-4-FED-AID (1-800-433-3243). If you're applying for a new PIN, go to www.pin.ed.gov to register your pin. Once you provide this information, you'll be able to access your loan information.

    2

    Choose a repayment program. These programs provide the borrower flexibility depending on the financial situation. The standard repayment plan is the most popular plan. Payment terms are at least 10 years. The graduated repayment plan requires borrowers to start paying their loan(s) at a lower amount per month then gradually repay more every two years. An extended plan allows you to pay your loan over 25 years. Check with your loan organization to determine the terms and rates.

    3

    Consider a consolidation plan. Consolidation allows you to combine all of your student loans and make one single payment each month. You also may benefit from a lower interest rate. Check with student- loan companies about consolidation programs. Type "student loan consolidation programs" in your search engine's search bar.

    4

    Determine your form of payment. You can pay using the phone or online. Once you create an online account, you can pay from your bank account or through an active debit or credit card.

    5

    Pay your loan(s). Keep records of your student loans either through your online account or keep a physical record of your paper statements. If you can afford to, pay an extra amount on your student loan. The extra amount you pay on your loan(s) will go directly towards your loan principal.

Monday, August 22, 2005

How to Prove Debt

Someone asked to prove a debt is usually a debt collector. The Fair Credit Reporting Act gives you the right to demand that debt collectors prove they have the right to collect from you. Although it may not happen often, it is possible that an unethical debt collector could attempt to collect from you although it is not legally authorized to do so. The debt collector may have at one time been assigned to collect a debt that is yours but actually traded or sold the debt to another collection agency.

Instructions

    1

    Communicate in writing with the debt collector after the company initially makes contact with you about a debt. Simply write a letter stating that you are demanding that the debt collector provide verification of the debt under the terms of the Fair Credit Reporting Act. The Federal Trade Commission reports that the verification could be a copy of your last billing statement or something similar, such as a copy of a promissory note you signed. Demand that all collection efforts by the collection agency cease until you are provided with the proof or verification of the debt.

    2

    Mail the letter to the debt collector via certified mail with a return receipt requested. Keep a copy of the letter and the return receipt for your files. There isn't a time limit for the debt collector to respond to your letter. Some debt collectors that are unable to provide proof that you owe the debt may simply not contact you again and allow the debt to be sold or traded to another agency. Or the debt collector may need weeks or months to acquire proof of the debt from the original creditor.

    3

    Check your credit report for other debt collection entries that may have been posted without your knowledge. Write letters to these companies indicating that you noticed a collections entry on your report from the company. Further state that your are demanding verification of the debt. Ask that the company prove the debt or remove the entry from your credit report. Review your credit report several times a year by viewing and printing the report from AnnualCreditReport.com. It's the only site authorized by Fair Credit Reporting Act to offer free reports as required by the Fair Credit Reporting Act. You are entitled to three free reports each year -- one from each of the major credit reporting bureaus.

Sunday, August 21, 2005

How to Find Old Debts

Its not always easy locating old debts, especially those from several years ago. It is common for people to forget about old credit card accounts, loans and other types of bills. Quite often, people become overwhelmed with debt and simply push bills aside. In fact, many people eventually forget which creditors they owe. However, there is a way to locate your old credit accounts and bills. Learn how to find old debts in a short amount of time.

Instructions

    1

    Obtain a copy of your credit report from the three major credit bureaus: Equifax, TransUnion and Experian. You can order your credit report for free by visiting AnnualCreditReport.com. Simply submit your request online or download the appropriate form and mail it to the credit bureaus.

    2

    Review your credit reports to find your old debts. Take time to carefully read through each credit report line by line to find your old accounts. Make a list of your old debts, including the creditor's name, your account number, outstanding balance and the last date of activity on your account. Please note that the creditors may have sent your debts to a collection agency; so pay careful attention to all collection items listed on your credit reports. They may not be listed under a company name you recognize.

    3

    Contact the creditors or collection agencies to confirm your old debts. Ask the customer service representative to send you a confirmation letter validating the debt. The letter should state your account balance, including late fees, collection costs and other charges, along with details about your payments. Make sure the representative also sends you a copy of the signed contract or agreement for your records.

What Happens If You Default on Student Loans in Ohio?

College graduation means facing mountainous debt for many students in Ohio and around the country. The federal government backs loans for college students, enabling them to afford to go to college. Students do not have to make payments on loans until after graduation, but if a student does not make paying educational loans a priority, he risks going into default. Bankruptcy typically does not discharge student loans, so the consequences of default can be severe.

Default

    As soon as a student loan is late, lenders consider it delinquent. The government declares a student loan default when the loan is more than 270 days delinquent if it is a loan with a monthly payment. If the debtor pays less frequently, the government assesses default status after 330 days. Statute of limitations typically do not apply to student loans, according to Section 484A(a) of the Higher Education Act. The lender must make an effort to locate the borrower before turning the loan over to the Great Lakes Higher Education Corporation, which is the guaranty agency for Ohio.

Tax Refund

    If a federal student loan is in default, the borrower can lose her federal tax refund. If the loan is a private loan backed by the government, the United States Department of Education (DOE) can attach both your federal and Ohio refund. If offset occurs, the borrower can challenge the offset with the DOE. Some of the defenses for a challenge include an open bankruptcy case, a current repayment agreement with the lender or permanent disability of the borrower.

Collection Agencies

    The lender can turn a borrower's account over to a collection agency. Ohio relies on the federal laws found in the Fair Debt Collection Practices Act (FDCPA) that govern the activities of collection agencies instead of having its own state law. The FDCPA allows communication from agencies with borrowers, but it prevents communication with third parties such as a borrower's parents or boss. Agencies cannot threaten borrowers or lie when attempting to collect a debt. The DOE has a special unit to assist student loan debtors if a collection agency is breaking the law. Harassed debtors should contact the Default Resolution Group at the DOE at 800-621-3115 and ask to speak with the Special Assistance Unit to file a complaint.

Other Actions

    The DOE or lender can sue the debtor for the defaulted loan. If a judge enters a judgment against a debtor, the plaintiff in the case can ask for a garnishment of the borrower's wages. Borrowers in default cannot receive additional student aid until the loan is out of default status and at least six months current. The borrower's credit report will show any defaults or judgments, and the negative items will lower his credit score. This may make it difficult to obtain credit at favorable interest rates in Ohio.

Saturday, August 20, 2005

Can a Credit Card Company Access My Bank Account?

Credit card companies can access your bank account to withdraw money for a bad debt, but only after filing a lawsuit and gaining permission from a judge. You will be notified of that process every step of the way, giving you ample time to make payment arrangements or resolve the issue in some other way.

Bank Garnishment

    Bank garnishment is the procedure credit card companies use to withdraw money from your bank account without your permission. Garnishment can be financially devastating, and you should do everything possible to avoid one. Some people file for bankruptcy to stop garnishment, although it can also be ended through negotiations with the credit card company.

Summons and Complaint

    The garnishment process begins with the delivery of a summons and complaint. A summons is a paper document notifying you of a lawsuit. The lawsuit, called the complaint, is attached to the summons. The summons instructs you to appear before a judge or file a written response to the lawsuit. The lawsuit alleges that you opened a credit card account but stopped paying, resulting in a balance that is still owed. The summons and complaint are generally hand-delivered by a courier to your home or place of employment, but are sent by certified mail in some states or simply left at your residence.

Default Judgment

    Responding to the lawsuit is critical. A judge will rule in favor of the credit card company if you do not respond to the lawsuit. His decision is called a default judgment, and allows the credit card company to request access to your bank account through garnishment. The court will allow some time for you to be notified about the judgment and work out a payment arrangement. However, garnishment is allowed if you fail to contact the court or reach a settlement with the card company.

Garnishment Process

    It's up to the credit card company to find your banking information once the judge signs the garnishment order. This is generally easy, as the credit card company reviews your payment history to find your banking information from previous payments by check. The card company then provides the bank with the court order requesting garnishment. By law, the bank must comply and grant access to your account. The card company is then free to remove money from your account, multiple times if necessary, until the balance owed is paid.