May 2006 ~ Credit And Debt Management

Wednesday, May 31, 2006

Validation & Verification of Debt

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In the event of your credit accounts enters collections, don't assume that paying the debt is the next step. Creditors and collection agencies can and do make mistakes and some of them don't operate entirely honestly. Therefore, if a collection agency contacts you, always validate the amount of the debt before you pay a penny.

Debt validation is the process of having a collection agency prove you really owe a debt. Under validation, the collection agency must send you a copy of the original agreement you had with the creditor. Verification is similar but the collection agency sends you a letter with the creditor name and address, along with the debt total. Validation is preferable because of the original documentation it provides.

Collection agencies normally send you a letter telling you your debt has gone to collections and that they want you to pay what you owe. Watch for another letter within five days of the first notice for collection. This second letter informs you of your right to validate and dispute the debt. Generally, you have a month -- 30 days -- to respond and dispute the total. If you don't respond, the collection agency will assume you agree that they have the right to collect.

Under debt validation, any collection agency should send you three items. The first is the proof that the creditor sold or assigned the debt to the collection agency. A collection agency cannot attempt to collect a debt it doesn't own or to which it hasn't been assigned, so this shows you the collection agency has a right to pursue your balance.

The collection agency also should give you a copy of your payment history with the creditor. The third piece of documentation is a copy of your original contract. Normally, the contract and payment history are enough to show you that the debt is correct or where a mistake has happened. If a collection agency can't produce the original contract, copies of account statements, along with the payment history, may give sufficient evidence.

Debt validation is a multi-step process. It starts with you checking the statute of limitations for your state -- if the statute has expired, the collection agency is pursuing phantom debt you aren't legally obligated to pay even if the total is accurate.

Once you've checked the statute of limitations, check that the collection agency is licensed, as only licensed collection agencies have the right to collect debts. Then request validation in writing via certified mail. If they don't respond, send them a copy of your original letter and a copy of your return receipt; tell them they have violated the Fair Debt Collection Practices Act. Send a second letter asking them to remove the negative listing from your credit history if they still don't respond. Sue if they don't comply.

Contact the credit bureaus in writing and let them know the collection agency didn't respond to your validation request and violated FDCPA. Ask that they verify how they got their information from the collection agency. If they can't do this, you can assume the bureau didn't perform a reasonable investigation. If they don't remove the negative listing, indicate your intent to sue and, if necessary, do so.

The Advantages of Debit Vs. Credit Purchases

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It's usually easier to get a debit card than a credit card because you're tapping the funds in your checking account when you make debit-card purchases. Poor credit histories can prevent people from getting credit cards, but credit profiles typically don't come into play when a person applies for a debit card. People who manage their checking accounts responsibly likely won't have trouble getting a debit card.

Credit cards offer the opportunity to pay for purchases at a later date. Yet that can be a problem for some people who don't control their spending. Their "buy-now-pay-later" mindset can result in them racking up more debt than they can afford to pay. Money for debit-card purchases is drawn out of a person's checking account almost immediately. This can be a safeguard against falling into deep debt because purchases are limited by the amount of cash in a checking account. Debit cards also force people to pay more attention to how they manage cash so that they don't exceed their checking account balances through debit-card purchases.

Debit-card and credit-card may pay account fees. The amount of those fees varies among card issuers. Still, debit cards don't come with the interest charges that credit cards have. Credit-card users who carry a balance on their cards can pay 18 percent or more in interest charges every month. They also can be subjected to higher interest rates if they're consistently late with their payments or exceed their credit limits. The combination of fees and interest charges can make it difficult to pay off credit-card debt.

Debit-card users receive a confidential personal identification number (PIN) that must be used to access the money in their accounts when making a purchase. Those PIN numbers offer extra security that credit cards lack, since credit-card transactions usually just require a signature. There is no way of knowing if the person signing for a credit-card purchase is the owner of the card unless a retailer checks that person's identification. Many stores now have terminals where customers simply swipe their credit cards and sign for a purchase on the terminal screen, which makes it less likely that a sales person will check the buyer's identification.

Credit Card Debt When Divorcing in New Jersey

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When a couple gets divorced in New Jersey, the court has to allow for property division of all assets and debts owned by either spouse. No two divorces are identical, and how the court divides these debts depends on each case. Talk to a New Jersey divorce attorney if you need legal advice about dividing credit card debts in a divorce.

When a New Jersey court is asked to divide property between spouses in a divorce, it takes numerous factors into consideration, while aiming to divide all property equitably. This means the court will divide all property in a manner it believes is fair, which is not necessarily 50-50. The court takes into consideration factors such as how old each spouse is, how long the couple was married, the ability of each spouse to earn an income and the contribution the spouses made to the marriage.

While a court can order all debts and assets split between the spouses, the court cannot order a credit card company to only seek repayment of debts from one spouse or the other. For example, if you have opened a joint credit card with your spouse, the credit card company can seek repayment from either of you regardless of what the court orders. Many divorcing couples cancel joint accounts as part of the divorce process, even before coming to a settlement agreement.

While the court can order property settlements under the terms outlined in the New Jersey statutes, the court can also allow the couple to come to an agreement between themselves. The courts not only allow this, but they encourage it. This encouragement results in 98 percent of New Jersey divorces resulting in a settlement between the spouses before the case goes to trial, according to the New Jersey Law Network website.

New Jersey couples can also enter into prenuptial agreements that address the issue of credit card debt. New Jersey requires that all prenuptial agreements be made voluntarily between the couple, that each partner had a chance to review the agreement with an attorney and that the both parties reveal all assets and debts they have at the time of entering the agreement, according to the website of the Salvaggio Law Group, a New Jersey law firm.

How to Settle Student Loan Debt

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Settling student debt is challenging relative to other forms of private debt because of the special protections afforded such loans by federal legislation. Unlike most other forms of debt, the law prevents student loans from being discharged in bankruptcy. Despite this, private lenders are often willing to settle student debts for less than the total amount owed. Federal and state student loan lenders are unlikely to provide settlements, but many offer loan forgiveness programs for those willing to work in certain jobs, volunteer for Americorps or work for the National Institute of Health in a research program.

Instructions

Find the contact information for your lender on your monthly student loan bill. In most cases, you may not be able to settle your debt unless the loan is already delinquent or in collection. You may only be able to secure an agreement to reduce the principal by a small portion or reduce the interest rate. Prepare a reasonable settlement offer to the lender. Expect to need to pay 30 percent or more of the outstanding loan to settle the debt. If the debt is already in collection, it will be easier to achieve a reasonable settlement.

Contact the lender and make the initial settlement offer. Before sending any payments, request that any agreement be mailed to you in writing for you to sign. You may also want to request that the lender cease all attempts to collect on the debt. Many companies will collect aggressively on student loans, seizing assets and garnishing wages. Ensure that any settlement agreement has a clear deadline by which you are required to send payment.

Review your new agreement with the lender. Send payment as requested before the contractual deadline elapses.

Review your credit reports from the three major credit bureaus (TransUnion, Equifax, and Experian) via the company websites to ensure that the debt has been properly marked as settled. Ensure that you receive confirmation from the lender after you provide the settlement payment.

Statue of Limitation for Suing Over Credit Card Debt

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Statute of limitation laws for credit card debt vary by state. These laws regulate the length of time debt collectors have to win court judgments against you. There are no limits on how long debt collectors have to actually file a lawsuit. They can sue at any time, theoretically even decades after you defaulted. However, the judge will automatically dismiss the lawsuit in court if she determines that the debt is beyond the state's statute of limitation for collection.

BCS Alliance, a nonprofit consumer information website, reports that, across the nation, statute of limitation laws range from two to 15 years, with the average about six years. That's the length of time debt collectors have to win court judgments against you after you default on the debt. A debt beyond a state's statute of limitation is considered "time-barred" for collection.

Although they cannot win in court, some debt collectors will file credit card lawsuits after the state's statute of limitation period has expired. The debt collectors are fully aware of the state statutes, but know some people will panic after being served with a lawsuit and will agree to settle out of court. Debt collectors often time telephone calls to the debtor to coincide with the delivery of the lawsuit.

Some people fail to realize that they can appear in court and easily have the case dismissed by informing the judge that the statute of limitation on the debt has expired and the debt is time-barred. BCS Alliance notes that the burden of notifying the court is on the debtor, however. In 2010, Andrew Martin, writing for "The New York Times," wrote about a man who was twice sued for credit card debt that was beyond his state's statute of limitation. On each occasion the man sent handwritten notes to the judge pointing out that the debt was time-barred for collection. The judge dismissed both cases.

According to Andrew Martin's article, debt collectors will also try other sneaky tactics, including convincing people to make a payment on an old debt, no matter how small. Payment on an old debt restarts the statute of limitation, giving debt collectors several more years to collect or seek a judgment. Attempting to reset the statute of limitation is an important strategy for debt collectors who purchase really old debt. They purchase defaulted credit accounts in bulk, usually for pennies on the dollar. They realize much of the debt is time-barred, but they proceed anyway with trying to lure people into making payments that reset the statute of limitation.

Check with your local state attorney general's office to determine the statute of limitation on credit card debt in your state. Avoid discussing old debts over the telephone with a debt collector. In some cases even admitting that the debt is yours can reset the clock. Never make a payment on an old debt unless you intend to pay the account off. If you do intend to pay it you should settle for less than the full balance. Debt collectors will often accept as little as 20 percent of the balance on really old debts.

Credit Repair Questions

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If you have ever been turned down for a loan, or perhaps even a job, chances are your credit history played a key role in that rejection. Credit reporting is like a financial report card that affects nearly every aspect of our lives. Those who want to do business with us use it as an indicator of our character, as well as how likely we are to repay our debts. Keeping our credit record clear of negative entries and repairing past damage is hard work but is necessary to live out our financial dreams. Get answers to those questions that will help you begin determining how to approach your own credit-repair process.

To solve a problem, you have to know the size and scope of it. If you have had a lengthy period of difficulty repaying your credit bills, it is highly likely one or two of those debts have slipped your mind. Get a comprehensive inventory of what you owe and to whom by starting with your credit reports and going to all of your creditors (or bill collectors) and asking them for a full accounting of your bill and payment history.

Credit scores are determined by a proprietary formula by the Fair Isaac Company. Your score includes measures of your payment history, the length of your credit accounts, and how much debt you have. Use your current score to determine where you are credit-wise and to set out the path where you want to go.

Do you want to buy a house, a car, take a vacation, or in some cases, even get a job? Each of these requires credit. By assessing your debt, knowing your credit score and seeing the time line of when you want to make a credit-involved purchase, you will have a healthy sense of what it will take to accomplish your goals.

Before beginning the credit repair and debt payment process, determine first whether there are errors on your credit report that are hurting your score. Request your free annual credit report, through annualcreditreport.com, from all three credit bureaus: Equifax, TransUnion, and Experian. Review them carefully and, if necessary, begin a dispute process to eliminate these issues.

Calculating how much money you have free and clear every month tells you how much money you can devote to credit repair and debt payments. Because you have also declared your goals and fixed errors on your credit report, this figure will tell you what you can realistically accomplish in the time frame you planned.

If you have a shorter time line or a large amount of debt, you need to find ways to put more money into credit repair and debt repayment. If you have open accounts that are at risk of going into collection, paying your debt down will have a great impact on your credit standing.

Creditors and collectors can behave like barracudas. They have been known to say and do anything to get debtors to pay more money. First, know your rights by reviewing the Fair Credit Reporting Act and the Fair Debt Collection Practices Act before attempting to strike deals with creditors. You can do this on your own for free, but there are a number of reputable credit repair companies that will do this work on your behalf. If you cannot handle this high-pressure dealing, find a credit repair agency to help. If you do this on your own, keep in mind, paying the debt off is only half the goal. You want to negotiate your credit as well. So in exchange for your payment, you want the creditor to report something positive on your credit report. Get everything in writing.

Wage Garnishment Rights in Georgia

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When you fall behind on credit card payments, your creditors can take you to court. This can lead to garnishment of your wages, a system where a portion of your debt is deducted from your pay every week. Wage garnishment rights in Georgia afford some protection to Georgians going through a wage garnishment process, however.

To obtain a judgment or garnishment against you, your creditors must sue within a certain window. You can still be sued after the window closes; however, the statute of limitation provides you with an affirmative defense against your creditors. Credit card debt is known as an "open account" under Georgia law. Your creditors have four years to sue you for an open account. The clock begins running when you default, not when you stop making payments.

Georgia has no state law on the amount of your earnings that can be garnished by a creditor. However, a relevant federal law prohibits creditors from taking more than 25 percent of your earnings through garnishment. State law does limit the amount of interest that can accrue on a judgment. The cap on interest stands at 12 percent for judgments, the relevant type of debt for garnishment.

When your wages are garnished your employer may file a challenge against the garnishment. Employers have 45 days to file a challenge with the courts. Employers who flat out refuse to garnish wages may be liable for the full amount of the unpaid debt in question. Wage garnishment rights in Georgia include protections for garnished debtors in the workplace. Specifically, Georgia law prohibits an employer from terminating an employee on the basis of a garnishment order.

Stopping a garnishment order once it has been enacted is often difficult. You are not without recourse, however. Paperwork that you receive with your garnishment order will tell you how to file an appeal. Hardship petitions may be filed with the court that issued your garnishment order. Bankruptcy will stop garnishments immediately, but is a last resort, due to the damage that bankruptcy does to your credit rating. Note that bankruptcy will not stop a garnishment order related to child support or taxes.

What Makes Your Credit Score Decrease?

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A high credit score can save you hundreds and even thousands of dollars of interest payments every year. Lenders view people with high credit scores as responsible borrowers. These people typically check their credit reports often for mistakes and make sure to avoid incidents that will negatively impact their credit score. Preventing your score from decreasing requires vigilance, but it is an attainable goal.

The highest percentage of your credit score, 35 percent, is determined by your payment history. It makes sense, because a lender determines your worthiness primarily by your likelihood to pay back a loan. Defaults on loan payments, bankruptcies or missed payments decrease your score and cause you to be viewed as a higher risk. To improve your credit scores or at least keep them consistent, pay at least the minimum amounts due on your bills on time each month and avoid defaulting on any loans.

Credit inquiries indicate you are seeking new credit, and, in some cases, they negatively affect your credit rating. Many lenders consider a credit inquiry an indication that you are overextended on your current credit options, especially if you also carry high balances on your cards. Sometimes people are not aware they are giving consent for credit inquiries. When signing documents, make sure you are not consenting to having your credit report pulled unless it's required.

You need to keep the balance of your credit cards under 30 percent of your available credit to avoid it having a noticeable impact on your credit score. Increasing this percentage--known as the debt-to-credit ratio--causes your credit score to decrease, because it means you are using a high percentage of your available credit (also known as your credit limit). Maxing out a credit card (using 100 percent of your available credit), causes your credit score to decrease, even if you have other credit cards that are unused.

Bankruptcies, foreclosures, accounts in collections, having too many revolving accounts open or any forms of defaulted loan payments typically cause your credit score to decrease, and the score reduction is significant in the case of bankruptcy or foreclosure. A lot of people don't realize that closing unused credit accounts may negatively affect their credit scores, because it could reduce their available credit, and, therefore, increase their debt-to-credit ratio.

How to Settle a Tax Debt

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Tax debts differ from most other items that appear within your credit history in that, if left unpaid, they can continue to appear on your credit report indefinitely. Once a tax debt has been paid, it will age off your credit report in seven years. The IRS is willing to settle many consumer tax debts for less than the amount owed. Choosing to settle a tax debt is wise as it ensures you will be able to avoid the negative consequences of nonpayment such as wage garnishment and property levies.

Instructions

Decide how much of the debt you are reasonably capable of paying. You are responsible for submitting a settlement offer to the IRS and the IRS is unlikely to accept a settlement that is only a small percentage of the original tax debt.

Choose between a settlement offer in which you pay periodic payments on the debt to the IRS and a lump sum settlement. The IRS makes provisions to accept both payment methods, but the type of settlement you offer will influence the initial fee payment that you submit with the settlement.

Complete Form 656. This is known as an Offer in Compromise (OIC) form. The OIC form contains questions to verify your identity and gives you the opportunity to offer a settlement.

Fill out Form 433-A. You must use this form to provide detailed information to the IRS concerning your place of employment and any assets you own. The IRS will use this information to calculate a reasonable amount you should be able to pay to settle your tax debt.

Prepare your filing fee. The standard filing fee to settle a tax debt is $150. You will also need to include the first payment of your payment plan or 20 percent of the lump settlement agreement.

Mail your debt settlement request to the corresponding IRS office. The office to which you should send the settlement offer varies depending on your employment status and the area of the country that you live in.

Wait for a response from the IRS. It can take several months for the IRS to fully review your forms and provide you with a decision concerning your debt settlement offer.

What Is a Consolidation Loan?

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Many financial institutions advertise consolidation loans as a way to improve the borrower's financial situation. They may promise a lower payment, lower rates and other favorable terms. However, not all borrowers qualify. Banks offer several types of consolidation loans to fit the customer's needs. For many consumers, consolidating debt is only one part of the problem. They also need to prevent accruing debt by learning to spend money wisely.

A consolidation loan involves combining several loans into one. Some companies buy debt at a discount from the lender and pass the savings on to the borrower. Banks offer personal loans, car loans and home equity loans to qualified consumers to consolidate debt. Consumers need to be careful about these offers as they often are scams.

High-balance, high-interest credit cards charge high monthly payments. Banks may offer consolidating them into an unsecured personal loan with a lower interest rate, shorter repayment period and lower monthly payment to qualified consumers. Some companies buy credit card debt at a discount from the lender and pass on some savings to the borrower. The Federal Trade Commission warns that some offers may be scams and advises consumers to research companies before signing an agreement.

Consumers who own their home and have equity may be able to borrow against it and repay the debt. Home equity loans are likely to have the lowest interest rate but may not be the best choice for borrowers with high debt. If a borrower is not able to make payments, he will lose his home. Some financial institutions may not be willing to loan more than 80 percent of the market value of the home. A borrower must have a significant amount of equity available to finance a home equity loan.

Consumers may not be aware that their vehicles can help them to pay off their high-interest debt. If a borrower owns a car free and clear, a financial institution can set up a car loan against it. Car loans usually have lower interest rates than credit cards. This option is for consumers who don't have a high amount of debt and who are looking for a lower interest rate.

Can I Establish Credit Under My TIN Number?

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A frequent promise made by credit repair companies is the ability to create a "new" credit file for consumers. For an individual who cannot get approved for a loan or who is plagued by high interest rates, a fresh start with credit sounds like the perfect solution. Establishing a credit file under any tax identification number (TIN) other than your Social Security Number has its own set of issues, however, and could potentially do more harm that good.

A TIN is any number used to identify you for tax purposes. Your Social Security Number (SSN) is the number commonly used to apply for credit and maintain your profile. This is one form of TIN. The five other forms of TINs are: Employer Identification Numbers (EIN), Individual Taxpayer Identification Numbers (ITIN), Adoption Taxpayer Identification Numbers (ATIN) and Preparer Tax Identification Numbers (PTIN). Although all six forms of TIN are nine-digit numbers, credit is typically established under the SSN only.

When most people refer to a TIN, what they are actually referring to is the EIN. Employer Identification Numbers are available to anyone with a small business or sole proprietorship and a valid SSN. The EIN serves to keep business credit purchases separate from personal credit purchases. Because of this, all small business owners must use the EIN to establish credit. Credit cannot be established using a PTIN or ATIN. These numbers are issued only to licensed tax preparers or those in the process of adopting a child from a foreign country.

Establishing credit using an EIN is a perfectly legal practice for business owners. It is not, however, legal for individuals to create personal credit profiles using an EIN. Doing so is known as "file segregation." File segregation occurs any time a consumer creates an alternate credit file for himself under a number other than his SSN. The Federal Trade Commission (FTC) strongly discourages consumers from participating in this practice. It also requests that consumers report any credit repair organization that encourages consumers to segregate their credit files.

If your credit report is damaged, it can take years of on-time payments and careful credit monitoring to fix your score. During this period of time you may not qualify for loans or credit. The idea of a fresh new credit report is alluring enough for many people to begin applying for credit with either an alternate TIN or a random nine-digit number. When you do this, you are deliberately hiding your credit report from lenders. Forcing a lender to pull a false credit report on you by providing a number other than your SSN on an application constitutes fraud and is illegal.

A Social Security Number and an Employer Identification Number may both be TINs, but the effects of using them to establish a credit profile are very different. Using your SSN to apply for credit is legal and encouraged. Using any other TIN to establish credit can result in charges of perjury being levied against you by the IRS for a fraudulent TIN application, charges from any creditors who have been victims of the fraud, and the merging of your credit files by the credit bureaus. Perjury and fraud both carry fees and potential prison time.

What Is the Meaning of Book Debts?

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Over 3 billion solicitations will be sent out this year for people to sign up for new lines of credit, according to finance expert Clark Howard. Understanding book debts and paying them off is a major challenge but well advised for those seeking to maintain good credit.

In the United Kingdom government's manual, book debts are monies owed to the "bankrupt, partnership or company at the date of the insolvency order." According to Shipley vs. Marshall, they are defined as debts owed in the course of conducting business that would be reported in trade books.

Bills of exchange, which are payments from one person to a third party, and sums that are due under loans, are also considered book debts.

Book debts have "realizable value," but official debt receivers should not seek insolvency practitioners unless directed by creditors.

The more one pays off his book debts, the more money there is to put into personal savings and improve personal credit.

According to the U.K. government, the chances of collecting book debts reduces greatly over time.

How to Obtain a Free Credit Report Without a Credit Card

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Just because you don't own any personal credit cards like Visa, MasterCard, or American Express, doesn't mean you don't have a credit report. It's always safe to check on your personal information to make sure no one else out there is using it without your knowledge. Everyone is entitled to a free credit report check once a year from the three major credit bureaus.

Instructions

Go to the annual credit report website.

Choose your state from the drop down menu in the center of the page and select "Request Report."

Fill out all the personal information requested such as name, birth date, SSN, and current and past address. Your report will be available immediately online once you have supplied proof of identity.

If you wish to receive the report by mail, fill out a request form and send it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

How to Eliminate Credit Card Debt Fast

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The average American family is bogged down with credit card debt. They often struggle to pay off creditors in addition to regular bills. The only way out of this debt dilemma is to stop the behavior, change your spending habits and eliminate debt as quickly as humanly possible.

Instructions

Analyze your budget. Decide how much additional money you can put towards paying down debt more aggressively each month. Cut out your luxuries. For example, if you like to drink Starbucks coffee each morning, brew your own at home. Instead of eating out, put that money towards paying off your debt.

Gather all of your credit cards into a pile. Shred or cut them up. If you've committed a card number to memory, order a new one with a different number from your creditor and then shred it up immediately.

Determine which card has the highest interest rate and put all of the extra money you can towards paying off that one card. The more additional money you can contribute each month to this account, the faster you will eliminate credit card debt. Continue to make the minimum payment on your lower interest rate cards.

Once the highest interest rate card is paid off (which could take months), move down to the next highest interest rate account. Put all of your additional earnings towards this account until it is paid off and continue this cycle until all of your cards are paid off.

Rules to Transfer Debt to a Collection Agency

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The Bureau of Consumer Protection within the Federal Trade Commission is responsible for protecting consumers against illegal or deceptive business practices. The bureau administers the federal Fair Debt Collection Practices Act and requires credit collection agencies to comply with the federal disclosure and anti-harassment regulations. Credit collection agencies that fail to comply with the act face criminal and civil sanctions.

The Fair Debt Collection Practices Act covers household debts, personal credit card debts, auto loans, mortgages and medical bills. It does not cover commercial or business debts. Often, creditors sell, transfer or assign their debts to third-party collection agencies to collect their debts for less than the remaining balance of their debts.

According to the Fair Debt Collection Practices Act, collection agencies must send written notices to consumers within five days of first contact. A collection agency's "validation notice" must contain the original creditor's name, the amount of the debt and must inform a consumer of how to appeal or challenge the debt. Moreover, credit agencies must comply with the act's disclosure regulations when contacting consumers by telephone. Credit collectors must disclose their names and the names of the agencies they work for each time they contact customers by telephone, and they may not contact debtors outside of the hours between 8 a.m. and 9 p.m.

The Federal Trade Commission passed the "Holder in Due Course Rule" to address situations that arise when merchants sell their debts to third parties. The rule is actually a preservation of legal defense doctrine that allows consumers the legal right to pursue third parties for promises made by original merchants. For instance, when a car buyer purchases a vehicle from an automobile dealer, the dealer may sell the consumer a car warranty, and unbeknown to the buyer, the car dealer has sold his loan to a third-party credit agency.

Unfortunately, before the FTC passed this rule, third-party collection agencies or creditors could assert an affirmative defense of lack of privity between themselves and consumers; in turn, they did not have to honor the terms of original warranties, since they did not assent to them, and they were not involved in contract negotiations. The Holder in Due Course Rule requires third-party collection agencies and creditors to comply with any existing promises provided by the original lenders.

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

Amount of Payment Required for Delinquent Debt

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When a debt goes unpaid, the repayment amount of the debt can increase due to late fees or decrease if you are eligible for a settlement. Paying a debt before it defaults can prevent legal action and an even higher repayment amount.

When you are late on a debt payment, the payment amount required may change.

Once a debt is delinquent, the creditor often adds penalty fees, which increase the amount you must pay to bring the debt current again.

A creditor will sometimes be willing to accept less than you owe on a debt. This is known as a settlement, and to a creditor, collecting a lesser amount is better than not collecting any payment at all.

Allowing your debt to become delinquent will result in a higher interest rate. This can quickly increase the amount that you owe and the amount of your required payments.

If a delinquent debt goes unpaid long enough, it will default and the creditor may sue you for the balance. If this occurs, you will be responsible for the debt along with the court costs.

How to Improve Credit After Foreclosure

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Losing a home to foreclosure can be devastating both personally and financially. A foreclosure is listed on a credit report for 7 years, but that doesn't mean you can't rebuild your credit and even own a home again before those 7 years have passed. The keys to improving your credit after foreclosure are diligence and hard work.

Instructions

Pinpoint the problems that led you to the foreclosure, so you can avoid those mistakes in the future. If you don't make positive changes, you may find yourself dealing with more financial problems, which will damage your credit even further.

Order a copy of your credit report from Equifax, Experian and TransUnion and carefully review the information, making note of any errors. Document each error in a letter and send that letter to the three credit agencies.

Write a statement to be published on your credit report that explains what forced you to go into foreclosure and submit that statement to the three credit agencies. Adding an honest statement to your credit report will show creditors that you understand what went wrong and are working to rectify your financial problems.

Pay all of your bills on time, or else your credit will plunge even further. Most banks have automatic bill pay, allowing your creditors to automatically withdraw payments from your bank account each month, an option you should consider to ensure all payments are made on time.

Rebuild your credit by ensuring that you have at least two credit cards open. Use the credit cards to make small purchases, such as groceries, then pay off the full balance.

Start paying back your existing debt. When your debt is high, your credit score will suffer even if you are doing everything else right, including paying all of your bills on time.

Create a budget and stick to it. With a budget, you will know how much money you have to spend each month on essentials and bills and how much you can reasonably afford to pay toward your existing debt.

Consult a credit counselor if you have difficulty controlling your finances. A credit counselor can teach you the money management skills you need to improve your credit.

What Do You Do If You Think You Do Not Owe the Money to a Creditor?

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Receiving a telephone call or collection letter from a creditor may catch you off guard, especially if you don't think that you owe a debt. Unpaid debts can have an effect on your credit rating. For this reason, it's imperative to resolve any unpaid balances or dispute unfamiliar debts.

A creditor may mistakenly forget to record a payment or lose record of a payment. If you paid the debt in question and don't owe additional funds, explain this to your creditor and provide evidence to support your claim. You can go through your bank records and get copies of canceled checks as proof of payment.

If a creditor contacts you by phone or letter, and you don't recognize a debt, rather than accept that you owe the debt and pay the balance, ask the creditor to validate the debt in question. Submit your request in writing and use certified mail to ensure that your creditor receives the correspondence. The creditor must respond to your request and provide proof that you owe the debt in writing.

When a creditor continually pursues collection of a debt that you don't owe, get an attorney involved to help you resolve the situation. Attorneys can contact the creditor on your behalf and demand validation of the debt, and also research the statue of limitations in your specific state. The statue of limitations refers to the time frame that a creditor has to sue for an unpaid debt. Some creditors may attempt to file a lawsuit past this time frame, but they're legally unable to collect this debt in court.

Regardless of whether a debt is legitimate, ignoring collection letters and telephone calls doesn't solve the situation. Creditors can report information such as collections and charge-offs to the credit bureaus, and this information can significantly lower your score and hurt your odds of getting approved for other types of financing. Addressing unfamiliar debt is key to keeping your credit report clean and avoiding delinquencies.

How to Get Out of Debt on a Fixed Income

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Debt elimination is challenging. it is even more challenging if you have little to no disposable income left over at the end of the month. If you are struggling to pay down overwhelming credit card debt, you must change your borrowing and purchasing habits. In addition, you must take a strong look at your monthly expenses.

Instructions

Calculate your disposable income. This is the amount you have left over at the end of the month after you make all monthly payments. To find this figure, subtract the sum of all monthly bills (credit-reportable) from your net monthly income. This is the amount you have left over for food, clothing and miscellaneous expenses. If this figure is close to zero (or below zero), you will need to consider bankruptcy.

Review three months of bank statements. Look for areas to cut back. The easiest areas to cut back are entertainment and eating out expenses. If you are really struggling, you should eliminate these expenses entirely. Consider shopping at a discount grocery store.

Speak with a credit counselor. Do not sign an agreement, just go in for an initial consultation. Use the National Foundation for Credit Counseling website to find an authorized agent near you (see Resources). This is a reputable association that approves ethical credit counseling firms.

Consider debt settlement if your disposable income is still not enough to pay extra against your bills. Debt settlement will negatively affect your credit score, but it will reduce the principal balances of your accounts, thereby reducing your payments.

Pay additional payments against the highest-interest credit card first if you increase your disposable income enough. Make minimum payments on all other bills. Depending on your disposable income, this may be a long process. However, this process will not hurt your credit, like debt settlement, credit counseling or bankruptcy will.

How to Check a Balance on a Debit Card Online

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Many financial institutions now allow customers to do their banking online from the comfort of their home. This means you can transfer money between accounts, send money to creditors and check a balance on a debit card without ever getting up off the couch. Online banking makes it easy to see how much money you have in your account and where the money you spent went.

Instructions

Set up your online banking account for your debit card and checking account. Most financial insitutions have a Web site that can walk you through the process. You will need a user name and password. For a bank debit card, you need a savings or checking account associated with the card and access to your information online.

Log in to your debit card account. Once your user name and password are verified, you will be taken to a page that allows you to click on your account. After clicking on the debit, checking or savings account associated with the debit card, you will see your balance.

Click on the account statement to see a list of all past transactions for the month. If you need to see past months, there may be a selection in a drop-down menu where you can select a past month or enter the date range you want to see.

Access prepaid debit cards through other sources such as Wal-Mart online at the Wal-Mart website or the corresponding website of the debit card company. You can select "Check Account" after you have registered for an online account.

Will You Save Money If You Make a Car Payment Early Each Month?

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How great would it be to save money? Paying your car payment earlier than the due date each month can help you save money by reducing the interest you have to pay to your lender.

When you make your car payment, some of your payment will be applied to the interest on the loan, while the remainder will be applied to the principle. Interest is the amount the lender charges for letting you borrow the money, while the principle is the actual amount that was paid on your behalf when you purchased the car.

Interest begins accuring on your auto loan as soon as money is disbursed for the car your purchased. Depending on the interest rate the lender gives you, it will determine how much you pay back in interest. Since interest will accrue daily on your loan, If you pay your payment five days early, then you will pay 5 days less of interest. The earlier you pay the payment, the more of the payment will go to principle.

When you make your automobile payment, interest due comes out of your payment and the remainder is applied to your actual balance. When you pay before your due date, you have fewer days of interest due and more of your payment is applied to your balance, which allows you to payoff your automobile loan early.

What Can the Oregon Circuit Court (OJD) Garnish Wages For?

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In general, Oregon allows the garnishment of wages for a variety of legal debts. Some examples are consumer, tax and federal student loans, though you should note that the state has more stringent guidelines in place than most exempting certain types of income from being garnished. For example, Oregon typically protects public benefits, retirement and insurance payouts. Keep in mind that in cases of federal debt, state laws do not apply and creditors may be able to reach income and assets normally off limits.

Child support and alimony payments are characterized as serious debt by both federal and state statutes. This is one area of law where the federal government allows the garnishment of Social Security payments and other types of income, which might otherwise be exempt. The obligation to support children and ex-spouses is seen as a serious obligation in the eyes of the legal system. If a writ of garnishment is issued on either of these types of debt, expect little protection from state exemption laws.

While most consumer creditors are perfectly within their legal rights to ask the Oregon Circuit Court for a writ of garnishment, and they might receive it, this kind of debt invokes the lengthy list of exemptions created by the state. Included would be credit cards and other types of debt acquired by purchasing "stuff" which was then not paid off. The only likely source of garnishment allowed by the state would be ordinary wages earned from working a job, and then the amount is limited to 25 percent of each paycheck.

As mentioned, neither Oregon nor any other state can make rules regarding wage garnishment related to federal debt. The most common types of federal debt are unpaid federal taxes and student loans. If you have outstanding federal debt, expect that very few sources of income or assets will be exempt. In addition to garnishing wages, you might also find a lien attached to your personal checking account, business checking account and personal property.

Any valid writ of garnishment issued in the state of Oregon is only good for 90 days, though it can be renewed. Any creditor, except a tax authority like the IRS, that wants to garnish your wages or assets must do so in the Oregon court system. The courts establish the validity of the debt via the writ. You will be notified if a creditor is seeking to garnish your wages, and can opt to appear in court and attempt to invalidate the claim.

Can I Demand Proof of My Signature on a Credit Card Debt Collection?

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The Fair Debt Collection Practices Act (FDCPA) provides consumers with protection against potentially abusive collection tactics. One right you receive under the FDCPA is the right to dispute a collection account by requiring a debt collector to provide you with validation or "proof" that you owe the debt. Obtaining a copy of your signature on the original's creditor's contract is one method of validating a credit card debt in collections.

While the FDCPA gives you the right to demand a debt validation, it doesn't specifically state what constitutes a legitimate debt validation. Thus, you can demand that a collection agency provide you with your signature on the original credit card contract, but the collection agency can legally validate your debt without doing so. Once you request a debt validation, the FDCPA prohibits collection activity from the company until it responds to your request.

Collection agencies purchase debts in batches. Original creditors rarely include documentation of each account they sell. Because your credit card debt can be sold repeatedly and most credit card companies purge their records after 18 months to two years, a collection agency may not be able to access your original records.

When a collection agency receives your debt validation request, standard protocol dictates that the company mail you a printout of your account information. Thus, you likely receive a document reflecting all of the information the company currently has on file for you, such as your full name and Social Security number, as well as the amount you owe. Certain collection agencies, however, do have records of your original contract and signature and will send you copies of the documents as proof of your debt.

Credit card companies often transfer debts to an in-house collection department before selling them to collection agencies. Because the FDCPA only applies to third-party debt collectors, a credit card company's collection department isn't legally required to respond to consumer requests for debt validation before conducting collection activity.

While a printout from a collection agency proves that the company has an account open in your name, it doesn't prove that you signed a credit card contract agreeing to pay the original debt. The Fair Credit Reporting Act gives you the right to dispute the account on your credit report. If the collection agency can't successfully validate the debt to the credit bureaus, they remove the collection agency's derogatory entry from your credit records.

If a collection agency continues to pursue you for a debt without providing you with debt validation, the FDCPA allows you to either force the collection agency to stop contacting you by putting your request in writing or sue the company for violating federal consumer protection laws.

How to Calculate Total Debt

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Most lending agencies view the amount of total debt carried as a measure of financial strength. Some debt is essential and, if used correctly, can even improve finances. If debt is structured to build assets or provide more quality of life, it may worth taking on. On the other hand, buying consumables on credit without paying the charges back will usually only hurt finances. While most people are aware they need to carry some debt, calculating the total ratio of good to bad debt may enable them to make better financial choices in the future.

Instructions

Add up all forms of debt, including interest owed, to arrive at a total figure. This means gathering all loan commitments and other types of consumable debt. Other types of debt include credit card obligations, car loans and lease payments, as well as store charge cards or gas cards. It may not be necessary to include mortgage or rent when totaling debt obligations, as these amounts are not usually counted as bad debt by lenders.

Calculate total income by adding take-home pay, bonuses and commissions. Include any income from real estate, investments or net business profits. Deduct any expenses, fees or taxes owed to find the total net income amount.

Divide the net income amount by the total amount of consumable debt to find the debt-to-income ratio. This ratio represents the percentage of net income that is paid towards consumable debt. The higher the percentage, the more a situation is viewed as susceptible to an inability to meet financial responsibilities. For instance, if a emergency comes up, such as an unexpected medical bill or loss of employment, the more difficult it could be to pay all obligations.

Compare the debt-to-income ratio to a standard to determine what actions might need to be taken. This number should be as low as possible, but no more than 10 to 15 percent, to indicate good financial strength. If the ratio is between 15 and 20 percent, this might represent the start of a financial problem. If a person's debt-to-income ratio reaches 25 percent or higher, they may become an unlikely candidate to receive any more loans.

Help for Paying Mounting Medical Bills

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When you receive medical bills in the mail, it might seem as though they just keep coming. Even a day or two in the hospital can put you back several thousand dollars. It is important that you stay on top of each bill that arrives, however. If you cannot deal with the bills yourself due to illness, ask a family member or friend to advocate on your behalf with doctors' offices and your your health insurance company.

Go over each bill carefully. It is possible that you were overcharged for certain procedures or tests, that those tests and procedures were never done or that your insurance company is supposed to pay for some of them. Pull out your insurance handbook if you have health insurance, and review your plan's coverage details. You may also not have to pay for some bills that were submitted to the insurance company late.

Before your bills get too out of hand, communicate with your insurance company and the doctors sending bills. Hospitals and doctors' offices often have payment arrangement plans to help you pay your bills over time. They may have programs for people under a certain income limit or with extenuating circumstances. They may be willing to reduce the amount of your bills if you can pay a certain amount in cash or explain your inability to pay. If you do not have health insurance, ask to be charged what the insurance companies pay for the same procedures, tests and care. Individuals are often charged more than the insurance companies.

Staying in contact with medical billing offices is vital. You may have to submit appeals in a letter to them or stay on the phone constantly as you work through issues with your medical bills. If bankruptcy is a result of your financial circumstances, approach the billing offices before you find you file. They are often willing to work with you, but it is your responsibility to contact them if you need help paying your medical bills.

Dozens of charities and medical funds are available to people across the country. Some have income limits, and some do not. Some are restricted to providing help to individuals with certain conditions and diseases. The state of New Jersey, for example, has a Catastrophic Illness in Children Relief Fund for families who are having a difficult time paying for medical bills for their children.

You can also consider debt consolidation or debt settlement to pay medical bills. Debt settlement will damage your credit significantly while you are in the program and for a year or so after you pay off your debt, but it may help you get rid of your medical debt and reduce your overall bill by 50 to 60 percent. A medical consolidation loan is another way to pay your medical bills. However, it also has some negative aspects. If you get a secured medical consolidation loan, you will have to provide collateral, which may be your house. An unsecured loan will come with a much higher interest rate. Before you get a consolidation loan, negotiate to reduce your medical bills as much as possible. It is only worth getting a consolidation loan if you can get a lower interest rate on your loan than you would pay by paying the medical creditors directly or to avoid going into bankruptcy. A consolidation loan may help you preserve your credit score to some degree as well.

Help With Credit Card Bills

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According to CreditCards.com, at the end of 2008, the credit card debt for Americans reached more than $972 billion ... and counting. Credit card debt has become a burden for the average American as many cardholders find it difficult to make their minimum payments. High interest rates and late fees combined with job losses and wage cuts have left many families scrambling to pay their bills. The answer to reducing your debt may lie with what's in your wallet.

The first step in eliminating your credit card debt is learning how much you owe.
This sounds simple but many people don't know their card balances. Add up all your credit card, and retailer balance amounts, including your interest rates, minimum payments and actual payments. Don't lie to yourself. Write down exactly what you pay, even if it is the minimum.

It is common knowledge that credit card debt is toxic. There are many debt strategies out there, they are all pretty good, and you should test them. You need, however, to try a plan. You should stop using the cards with the highest interest rates first. Search for a card with rates under 10 percent and use only that card. Place your other cards away, but do not close out the accounts since that will hurt your credit score. Instead, gradually eliminate your accounts, starting with your newest cards, keeping only those which you've had a long history. Cut unnecessary expenses right away; bring your lunch, take the bus, whatever. Start paying with cash or a bank card and, if you can't afford that something now, wait and save.

Attacking the card with the highest interest rate is the favored way by some debt analysts to pay down your debt. Mathematically, that advice seems sound, but, psychologically, that might not always work. High interest rate cards seem to have the higher balances, and seeing results can be frustrating if you are looking for a quick fix. Instead, choose the card with the lowest balance. Pay as much as your budget allows, and pay just above the minimum on the others. Once the first card is paid off, use that money and apply it all to the next debt, plus the minimum balance, and so on. You can also add payments at any time. This has been named the "snowflake approach." Take the extra $10 you saved on bagging your lunch and apply it to your debt. The small payments will begin to accumulate as your balance shrinks.

Once you decided on a plan of action, make sure to avoid the temptation of rolling your credit card debt into a home equity, home refinance or other quick fix. Yes, your monthly payments will be reduced, but there are fees tied to such transactions that could add five to 10 years on your debt. You may have no other choice but to consolidate, just do the math first, and keep in mind what you can afford and what is best for your family's future.

How Does a Collection Agency Find Out Your Bank Account?

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If a collection agency wins a judgment against you, it may attempt to garnish your bank accounts. Collection agencies have several ways of getting information about your accounts, including information provided by the original creditor and asking you to complete a financial disclosure form in court.

Bank account garnishments, sometimes known as levies, are a typical strategy for collecting debt. After a creditor wins a lawsuit against you, it can seize the money in your bank account to satisfy the debt. Depending on where you live, and the source of the money in your account, some of your account balance may be exempt from garnishment, though you will have to take action, such as providing written documentation to the court, your creditor and your bank, to protect those funds.

After winning a judgment, your creditor may ask you to complete a financial disclosure form. This form asks for information about your bank and investment accounts. In some places, you may be asked to fill out this form in court, in other places, you might receive the form in the mail. Your creditor will use this information to file a garnishment or levy on your accounts.

If you ever wrote a check to a collection agency or the original creditor, or disclosed information about your bank accounts in other paperwork, the collection agency can use this information to garnish your bank account. For example, if you ever signed up for your creditor's online payment option, you probably provided your bank account information so that your payments could be drafted directly from your checking account. That creditor, or its collection agency, can use that information to seize your funds after winning a court judgment.

If a creditor sues you, do not miss court hearings connected with your case. If the court contacts you with a request to provide a financial disclosure, don't ignore the request or a summons to appear in court. In some areas, judges issue bench warrants for those who don't respond to the summons. People have been arrested and spent time in jail because they didn't attend a financial disclosure hearing or fill out the forms promptly.

The Most Common Credit Reporting Agencies

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Three of the most common credit reporting agencies are required, under the U.S. Fair Credit Reporting Act, to provide consumers with one free credit report annually. Those agencies are Equifax, Experian and TransUnion. Yet they also can make use of a credit-scoring model provided by the Fair Isaac Corp. (FICO), which affects credit and loan decisions at thousands of banks and other businesses.

Some credit scoring models are produced with software developed by FICO. Banks, credit card issuers, insurers and others rely on FICO scoring to determine consumers' creditworthiness when making decisions about extending credit and issuing loans and insurance policies. According to the FICO website, the company delivers the most used credit agency scores worldwide, with more than 100 billion scores currently sold. FICO scores range from 300 to 850, and people with higher scores are believed to present less credit risk to creditors and lenders.

Equifax headquarters is in Atlanta, Georgia, but the company employs about 7,000 people in 15 countries. On its website, Equifax differentiates its credit score from the FICO score, although both scoring models are used to predict credit risk. Equifax scores range from 280 to 850, and higher scores suggest less credit risk is involved. Equifax also notes that its scoring model can be used to calculate scores for people's Equifax, Experian and TransUnion credit files, which allows consumers to compare their scores at all three credit reporting agencies.

The Experian website indicates the company employs 15,000 people through offices in 40 countries. Its headquarters is in Dublin, Ireland. The site also touts several uses for Experian's software tools, which include helping businesses determine credit limits for new customers and helping consumers protect themselves from identity theft.

According to the TransUnion website, the company handles the credit histories of about 500 million consumers. Its headquarters is in Chicago, Illinois. The company promotes a product called the TransUnion Credit Profile Plus FICO Score. It contains a person's FICO score calculated from a TransUnion credit report along with an analysis of the FICO score. TransUnion notes on its site that scoring models are affected by several factors, including the number of delinquent payments a consumer has. TransUnion stores several scoring models in its system to score reports for creditors who request them.

Pros & Cons of Credit Consolidators

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Credit consolidators have become an attractive option for many people who have fallen behind with their credit card payments and other financial obligations. Those looking for a quick way out of debt will find several credit consolidation options, with pros and cons for each. The experts at Bankrate.com and ExpertLaw. com have comprehensive advice on what to look for if you are considering using a credit consolidator.

Some credit consolidators will offer you a loan in one lump sum intended to pay off all your debts---from credit cards, mortgage arrears, student loans and medical bills.

Other consolidators will offer a payment management program. With this option, the consolidators negotiate with your credit card companies to help settle your debts and pay off all of them through one monthly payment that is lower than your total monthly payments.

Both these options give you one payment and one creditor, which is often much easier to deal with. Once you go through a debt consolidator, you can direct any harassing calls from debt collection agencies to the consolidators.

Credit consolidators can also save you money, thanks to any negotiated settlements they arrange with your creditors.

Credit consolidators tend to offer lower interest rates than the rates of your current debt. If your credit consolidator offers a monthly agreement, once you pay off one debt, you can roll over the payment toward remaining debts, paying them off even more quickly.

The biggest advantage of using a credit consolidator is that there is no need to file for bankruptcy and ruin your credit for years. The structured plan will get you out of debt within a specific period of time.

One of the biggest disadvantages of using a credit consolidator is that the company might offer you a loan only if you own a house, which they will expect you to use as security for the loan. If you don't own a home, your interest rate will actually be higher than the consolidator's ads indicate.

The more of a credit risk you are, the higher the interest rate, according to MSN Money. Once you apply for debt consolidation, the credit counseling company knows your full financial predicament---and just how desperate you are. Worse still, you may damage your credit rating even further. Unless you are paying off all your debts in full through a consolidator-issued loan, any debt settlement you make will appear on your credit report.

Another thing to beware of with debt consolidation is the long-term costs. The monthly payments and interest rate might appear lower in the short-term, but you might end up with a longer-term loan, warns ExpertLaw.com.

In addition, the monthly fee quoted might seem reasonable but may be subject to hidden costs, such as application fees, balance transfer fees, high administrative fees or early repayment penalties, which can add a lot to the final amount.

Unfortunately, not all debt consolidation services have proven trustworthy and reliable. They may not be able to do all they claim in their marketing materials. Research to compare companies, offers and customer reviews. Consider using nonprofit companies if possible.

Also, be extra vigilant when it comes to any financial paperwork if you sign with a credit consolidator. You need verification in writing that the payments will be applied to your credit card accounts on time each month. Otherwise, you might be liable for more fees or even considered in breach of the agreement.

Programs to Eliminate Debt

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The only way to eliminate your debts is to pay them off--perhaps for less than the full amount due--or to eliminate them through bankruptcy. Debts are usually never completely forgiven by creditors, and there are not any government grants for eliminating personal debt. Nonprofit credit counselors, including Consumer Credit Counseling Service agencies, recommend that you create a long-term strategy for eliminating debt and stick to your plan.

The Federal Trade Commission says simply creating a budget is a good first step toward eliminating debt. The FTC says you should tally all your monthly income and expenses, then determine how much expense you can eliminate by cutting back on cable television, cell phones, eating out, and other discretionary items. The savings could then be used to make extra payments on your debts as part of a debt elimination program. You could also pay debt down further by taking an extra job or seeking a raise or more overtime from your current employer.

Nonprofit credit counselors will also help you build a budget--and perhaps a stricter budget than you would create for yourself. With debt management plans the counselors take over the payment of your debt. You pay one monthly fee covering all of your debts, and the counseling agency mails out monthly checks. The agencies will also ask your lenders to lower your interest rates and reduce your balance by reversing some of your finance charges and fees, such as late payment fees. You're asked to remain in the debt management program for about four years while your debt is eliminated or significantly reduced. During that time the counseling agency will keep you on a strict budget so that as much money as possible goes to your creditors.

You can eliminate your debt by paying less than the full balance--if your creditor agrees. Debt settlement is available only on unsecured debts such as credit cards. Many times creditors would rather settle with you than sell your account to a debt collection company, often for pennies on the dollar. According to The New York Times, some card companies will settle accounts for as little as 20 percent of the balance. However, settlement agreements for around half the balance are more likely. The FTC says you should avoid for-profit debt settlement firms which charge high fees and may provide unsatisfactory results. Instead, you should contact your creditors directly to discuss settlement opportunities.

Bankruptcy is the most extreme program for eliminating debt. Unsecured debt can be eliminated in just months under Chapter 7 bankruptcy--the simplest of the two primary forms of personal bankruptcy protection. People with modest income and no real estate are the most likely candidates for Chapter 7. The other option, Chapter 13, is more complex and generally takes five years of monthly payments to complete. During that time your finances will remain under the control of a bankruptcy trustee, who will make monthly payments to your creditors.

What Is a Creditor Charge Off?

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When you cannot afford to pay a debt, creditors have several options that they can pursue to try to get the money you owe. In some cases, however, the creditor will simply write it off as a bad debt. This is known as a charge off and it can negatively affect your credit.

When a company charges off a debt, it is essentially using an accounting procedure so that the company can report a loss on the debt. This does not mean that the debt is necessarily forgiven or forgotten about. In many cases, the company will still try to collect the debt after it has been charged off. You still owe the money and paying off the debt after a charge off can still help your chances of getting credit in the future.

When you do not pay a bill and the creditor charges it off to bad debt, this will show up on your credit report. In fact, the negative item can stay on your credit report for quite some time. By law, the account can stay on your credit report for as long as seven years. Even if you decide to pay off the account after it has been charged off, it will remain on your credit report for the full seven years.

After your account is charged off by the creditor, you may face some collection actions. The creditor can try to collect the debt directly or it can work with a collections agency to try to collect the money you owe. You may start to receive phone calls and letters telling you to repay the debt. In some cases, the creditor will try to file a lawsuit against you to get a judgment. This could lead to wage garnishment, levied bank accounts or liens placed on your property.

When you have a charge off, it is in your best interest to pay it off. Even though it will still be on your credit report, it looks much better to have paid off a charged off account than it does to have one that is still outstanding. You can try to contact the creditor directly or contact the collections agency that is handling your account. If the debt is very old and the statute of limitations has run out on the debt, you may not have to pay it.

How to Form Established Business Credit to Help Me Start a Trucking Business

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Having access to credit is often critical for new businesses that need equipment, labor and facilities to help them grow. Likewise, creditors and suppliers often rely on a business's credit rating to assess its financial health and eligibility for lending. Whether you are starting a trucking business or a flower shop, obtaining trade lines, or credit relationships, can be a great way to build your business and establish the foundation for its future growth and success.

Instructions

Create and register your business structure with the appropriate state or local government to ensure that your company is recognized as a legally business entity. You business can be a sole proprietorship, partnership, or any other recognized business entity. A limited liability company or corporation are required if you want the debts of your business to be legally separate from your own.

Get a federal Employer Identification Number (EIN). You can get this number, which is used for business tax reporting and required to open a business bank account, through the Internal Revenue Service via phone or Internet, usually within the same day that you apply. You must have a valid Social Security number for the application.

Open a business bank account using your legally registered business name. This step ensures that your personal finances and that of the business do not co-mingle and allows a bank to extend you business credit. Most banks offer business checking account packages that may waive monthly fees, offer reduced fees for a high amount of transactions or offer bill pay services, in addition to many other services.

Set up a business phone line for lenders and suppliers. Make sure that you list the number in a reputable business directory. Suppliers, with whom you may establish lines of credit or lenders like banks and credit card companies may want to contact your business about invoices, loan offers or special business credit cards. Having a viable contact number ensures that they can reach you.

Request credit in your company's name. Credit can be extended from one supplier to another via goods awaiting payment, or by bank loan or credit card. Business owners often enjoy reduced interest rates and rewards like travel miles or cash back when using business credit cards. Credit transactions reported to one or more of the three major credit bureaus may increase your credit eligibility more quickly and give you access to other loans, increased credit lines and more favorable credit terms.

Consumer Information on Debt Consolidation

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Debt consolidation usually involves taking out one loan to pay off other debts or transferring credit-card balances to one card. People who consolidate debts are often trying to lower the overall interest rate they pay on credit cards and loans to make their monthly expenses more affordable. However, there are consolidation pitfalls to consider that could sink a person deeper into debt.

Homeowners who have a significant amount of equity in their homes may be able to consolidate their debts through a second mortgage or home equity line of credit. Home equity is determined by subtracting the balance owed on a mortgage from the appraised value of the home. Yet there are other important things to consider even if you have enough equity to pay off your debts. A consolidation loan that uses your home as collateral puts you at risk of losing your home if you can't repay the loan. An MSN Money article titled "Insider's Guide to Debt Consolidation" says people who think they may eventually file for bankruptcy should avoid home-equity loans because they usually can't be discharged through a bankruptcy.

Employees who participate in their employer's 401k plan may be able to borrow as much as half of the funds accumulated in their retirement accounts. Such loans are usually paid back over five years at a low interest rate, and the payments go back into an employee's account. One disadvantage of borrowing from a 401k comes into play if you leave or lose your job. In such cases, the balance of your loan can be treated as an account withdrawal, which includes tax payments and penalties associated with making an early withdrawal from a retirement account.

Credit-card debt can be consolidated by transferring balances from other credit cards to one with a low interest rate and a high credit limit. Some companies may offer you a low interest rate for a limited time if you transfer other credit-card debt to one of their cards. One problem with using credit-card consolidation deals is that card issuers may periodically raise your interest rate, especially if you miss making a payment. High interest rates make it more difficult to pay off debt, and it ultimately could take years to pay off a consolidation credit card if you only make the minimum monthly payment.

Consider whether your debt-consolidation options allow you to pay less than you're already paying on loans and credit cards before you agree to a consolidation offer. Current credit problems may prevent you from getting low-interest offers for consolidation loans and credit cards. Compare your current interest rates with the rates and fees you would need to pay on consolidation offers to determine if debt consolidation will help you lower your monthly expenses.

What a Judgment on Debt Means

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If you have unsecured debt and don't meet your payment obligations, your creditor can't take any of your assets without a lawsuit. If your creditor successfully sues you, it has a judgment against you and has the power to take some of your assets. This usually only happens if you have a large debt and your creditor believes that you can afford to pay off the debt.

If you don't pay your unsecured debt, your creditor may take legal action and you may get a notice or summons from the court. The summons contains details of the court hearing and gives you the option of attending the hearing and presenting your defense. If the judge decides that your creditor has a valid case, you would get a Notice of Judgment, which gives you 30 days to pay off your debt. If you don't pay, your creditor may get a judgment execution order.

A judgment gives your creditor the right to take your assets to pay off your loan. Depending on your state, your creditor may get a Writ of Garnishment, which allows a sheriff to take up to 25 percent of your wages until the debt is paid off. Most creditors attach a judgment lien to your real estate or other asset, allowing your creditor to collect its money when you sell or refinance your asset. In some cases, your creditor may take money from your bank accounts or take your personal property to sell at an auction.

The law protects some personal property from a judgment creditor. Most states allow you to keep some of your food, furniture and clothing. Most states also allow you to keep the equity you own in one vehicle, up to an amount determined by your state laws. You can also keep $10,000 to $50,000 of your home equity, depending on your state laws. You may also be able to keep your business assets and retirement savings.

If your creditor threatens to get a judgment, you should try to contact your creditor to negotiate another way out. You may be able to negotiate lower late fees, lower interest rates or even reduced loan balance. You can also seek help from credit counseling agencies. If your creditor already has a judgment against you, there are several options. You can pay off the debt in full, negotiate to pay it in installments or let your creditor garnish your wages. You can also file for bankruptcy to reduce or eliminate your debt.

Educational Requirements for Practical Nurses

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In the hierarchy of nursing, the practical nurse ranks higher than a certified nurse's aid but lower than the register nurse. The practical nurse has the opportunity to begin working in the field of nursing in a hospital, a doctor's office or nursing home and can also use the education and experience gained to easily move up that hierarchy to become a registered nurse.

The practical nurse program is not a degree but a certificate program. Therefore, the general education requirements are not as extensive as they would be for an associate's degree in nursing. Instead, they are only the courses a practical nursing student needs to ensure having the basic knowledge needed for the nursing classes. These classes include anatomy and physiology, psychology and a communication course such as English composition. Most community colleges require that the general education courses be taken before applying to the nursing program.

The core of the Certificate of Practical Nursing is the nursing courses. Most programs require 30 credit hours in nursing before becoming qualified to sit for the NCLEX-PN exam. Topics covered in these classes cover many aspects of nursing, including medical-surgical nursing, pharmacology, maternity nursing and public health. All courses include classroom instruction and real-life experience in a clinical setting.

To ensure that all practical nurses have the same knowledge and ability to take care of patients, all graduates of a Certificate of Practical Nursing program must sit for the NCLEX-PN exam. This exam is given in all 50 states.

The test is computerized and is pass/fail. When the nursing candidate has answered enough questions correctly to pass or has answered too many wrong and has failed, the computer turns off automatically. The candidate's test status will be posted online within 48 hours of the test.

Once the test is passed, the student can apply for licensure in the state where he will be employed.

A practical nurse can easily transition to an associate's degree in nursing. Many community colleges offer transitional programs that build upon the foundations of the practical nurse's education. In most cases, just another 20 credits will allow the practical nurse to take the NCLEX-RN.

These classes include any general education requirements required by the college for an associate's degree, as well as more advanced nursing courses. In most cases, the transition takes only a year and the investment is well worth it. An RN with an associate's degree and five years of experience can make as much as $17,000 more per year than an LPN with the same amount of experience.

Rent & Mortgage Assistance

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When you are unemployed, a major stressor is the constant worry of how to pay the bills. Arrangements can sometimes be made for late or missed payments with understanding creditors. Most creditors want their money, however, and aren't always sympathetic. For those who need help, there are rent and mortgage assistance programs to help ease the burden. To participate, you must meet certain eligibility requirements. These vary depending on the program.

The federal government is providing billions of dollars in housing and rent assistance resulting from the Federal Stimulus Program, according to Need Help Paying Bills. These funds are geared toward helping individuals from ending up on the street while searching for employment. Programs include the Housing Urban Development Rental Voucher Program, USDA Rural Development Program and the Veteran's Affairs Supportive Housing Program. The federal government currently has the Hope for Homeowners program through the Federal Housing Authority to help needy families pay or refinance their mortgages.

Charitable organizations such as Social Services, American Red Cross, the Salvation Army and the Legal Aid society can help with rent payments as well as paying security deposits. They require verification of unemployment and assets to determine if you meet the eligibility requirements. Eligibility varies depending on the program. There are many to choose from. Some provide a one-time service and others will assist for longer periods.

Catholic Charities and many local churches typically offer one-time assistance paying rent, mortgage, heating and other utility bills. They will pay most or all of your bill for one payment only. Contact local churches in your area to find out what eligibility requirements you must meet for assistance.

If you qualify for low or moderate income help, you can get assistance to prevent eviction from several sources. The federal government funds Legal Services Corporation to provide eviction protection for low-income individuals and families. Local charities and churches sometimes have eviction and foreclosure programs to keep you from becoming homeless.

Bank of America offers the Home Affordable Foreclosure Alternative Program. If you're struggling to make monthly mortgage payments, this program helps settle your mortgage debt without going through foreclosure, according to Home Loan Help. The goal, if you qualify, is to reduce monthly payments to a more affordable amount. If you don't meet the qualifications for payment reduction, the program can help sell your property by doing a short sale, a sale in which the proceeds fall short of the home's balance owed.

How to Calculate Rent by Day

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In some cases you may have to allow a tenant to move in or out on an odd day of the month instead of the first or last day of the month. In this case, you must calculate rent by day, which is also called prorated rent. Figuring out rent by day is a simple matter of division and multiplication to determine the total amount of prorated rent due.

Instructions

Determine the total rent you plan to charge the tenant. For instance, $700 per month. Assume, for example, that your tenant wishes to move in on February 13 and you need to figure out what to charge him up until March 1.

Divide the monthly rent by the number of days in the month in question. So in this example, since the tenant wants to start the lease in February, divide the rent by 28 to get $25 (except on leap year when you have 29 days). This is the prorated daily rent required for that month.

Multiply this figure by the number of applicable days in the month if necessary. For instance for 16 days in the month of February the total to charge the tenant for prorated days is $400. Add that fee to the tenant's first rent payment --- include the prorated fee plus rent for March in this example ($1,100).

Examples of Credit Repair Letters

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Credit is what is used to give approval for loans on cars, houses and furniture. Added to this, now more and more employers are running credit checks on applicants prior to hiring them. It is crucial then to know how to effectively write credit repair letters to credit reporting companies--Experian, TransUnion and Equifax--to dispute any erroneous information on your report. Negative data can paint an incorrect picture of how you manage money and may pose a hurdle in enticing prospective employers.

Credit repair letters can be used to clean up any credit issues with the credit bureaus. It takes discipline and dedication to review the credit report on an annual basis, and then write a letter to dispel any false information and ask that it be removed.

Cleaning up your credit can raise your credit score over a period of time. It will not happen overnight; however, with dedication in writing the letters and reviewing your credit reports, you will begin to see your credit score improve. This can make a huge difference between being offered higher interest rates based on your less than perfect credit and being offered a lower interest rate with manageable payments based on your new score.

There are various types of credit repair letters that you could write based on your specific situation. Several reputable resources on the Internet offer sample credit repair letters for your use (see References). When reviewing examples, do not use them verbatim but change the wording to fit your circumstances.

The following are a few sample letters excerpted from CreditInfoCenter.com (see References):

Sample Letter of Unauthorized Credit Inquiry

Your Name
222 Street
Your City, ST ZIP

Credit Company
4444 Address
City, State 11111

Re: Unauthorized Credit Inquiry

Dear Creditor Name,

I recently received a copy of my TRW credit report. The credit
report showed a credit inquiry by your company that I do not recall
authorizing. I understand that you shouldn't be allowed to put an
inquiry on my file unless I have authorized it. Please have this
inquiry removed from my credit file because it is making it very
difficult for me to acquire credit.

I have sent this letter certified mail because I need your prompt
response to this issue. Please be so kind as to forward me
documentation that you have had the unauthorized inquiry removed.

If you find that I am remiss, and you did have my authorization to
inquire into my credit report, then please send me proof of this.

Thanking you in advance,

Your Printed Name

Sample Letter of Formal Complaint Reporting Inaccurate Credit Information

Your Name
123 Your Street Address
Your City, ST 01234

The Credit Bureau
Bureau Address
Anytown, State 56789

Date

Dear Credit Bureau,

This letter is a formal complaint that you are reporting inaccurate credit information.

I am very distressed that you have included the below information in my credit profile due to its damaging effects on my good credit standing. As you are no doubt aware, credit reporting laws ensure that bureaus report only accurate credit information. No doubt the inclusion of this inaccurate information is a mistake on either your or the reporting creditor's part. Because of the mistakes on my credit report, I have been wrongfully denied credit recently for a , which was highly embarassing and has negatively impacted my lifestyle.

Optional with the proof I'm attaching to this letter, I'm sure you'll agree it needs to be removed ASAP.

The following information therefore needs to be verified and deleted from the report as soon as possible:

CREDITOR AGENCY, acct. 123-34567-ABC
Please delete the above information as quickly as possible.

Sincerely,

Your Signature

Your Name
SSN 123-45-6789
Attachment included.

Don't forget to provide proof if you have it!

Keep a copy for your files and send the letter registered mail.

Sample Letter Requesting a Creditor Remove a Late Payment Based on Good Customer Standing

Date

Company name
Address

Re: Acct XXXX-XXXX-XXXX-XXXX

Dear CEO name,

I am writing to you today regarding my credit card account 4236-XXXX-XXXX-XXXX which I had while I was a medical student at ------------------------------------. The purpose of my correspondence is to see if you would be willing to make a "goodwill" adjustment on the reporting of this account to the three credit agencies.

During the time period this account was established I had was very happy with the service, I was however not the ideal customer and made mistakes with my handling of the account. I should have kept better records regarding the account and I take full responsibility. I became aware of the unpaid balance when I got a copy of my credit report in June of 2009.

I know that payment was my responsibility and I am not attempting to justify this breach of my user agreement, I was however hoping you might review the circumstances under which this non-payment occurred and consider removing the negative trade line associated with this account from my three credit reports.

As soon as I became aware of the balance I contacted ----------------- and paid the balance in full. I provide this not to justify why the account was unpaid, but rather to show that the issue with ----------- is not a good indicator of my actual credit worthiness. I hope that ---------------- is willing to work with me on erasing this mark from my credit reports.

I would like to STRESS that the information currently being reported IS accurate, (I am not disputing anything with ---------------). I am simply asking -------------for a courtesy gesture of goodwill in having the credit bureaus remove this account from my report. I do recognize that this request is unique and that it may not be ------------- normal policy. Please consider that the Fair Credit Reporting Act does not demand that all accounts be reported, only that any account that is reported be reported accurately. Therefore, a company does have legal discretion and permission to remove any account it chooses from the credit report. I'm hoping that ------------- will do that in my case for this account.

Your kind consideration in this matter is greatly appreciated.

Best Regards,

Name
123 Your Street Address
Your City, ST 01234

When you are cleaning up credit, you must include with your credit repair letters copies of the documentation that prove or clarify your position as to why any disputed information is incorrect. It is very crucial that all the information you send to the credit bureaus be sent by certified mail, return receipt requested, and that you keep a copy of everything you send. This provides you with a tracking system of when they received it.

When you are cleaning up your credit, you can request that the consumer reporting company send notices of any corrections to anyone who received your report in the past six months. Once you clean up your credit, it is good to remain in the habit of reviewing your credit report as a means of knowing what is on your report and making sure no one has stolen your identity.

Welcome to our website credit and debt managementr.

Wednesday, May 31, 2006

Definition

When to Validate

What to Get

Steps

Debt

Interest Charges

Security

Tuesday, May 30, 2006

Court Distribution

Credit Card Accounts

Party Settlements

Prenuptial Agreements

Monday, May 29, 2006

Instructions

Timeline

Warning

Court Defense

Other Tactics

Considerations

How Much Debt do I Have?

What is my Credit Score?

What are my Near-Term Goals That Require Credit?

Are There Mistakes on my Credit Reports?

How Much Money is Left Over After Necessary Expenses are Paid?

How Can I Decrease my Expenses and Increase my Income?

Can I Negotiate with Creditors?

Sunday, May 28, 2006

Statute of Limitations

Limits

Employers and Garnishment

Stopping a Garnishment

Payment History

Unnecessary Credit Inquiries

High Balance on Credit Cards

Others

Instructions

Types

Unsecured Loans

Home Equity Loans

Car Loans

Saturday, May 27, 2006

Types

The Facts

File Segregation

Considerations

Effects

Friday, May 26, 2006

Definitions

Types

Considerations

Significance

Time Frame

Thursday, May 25, 2006

Instructions

Instructions

Fair Debt Collection Practices Act

Mandatory Disclosures

Holder in Due Course Rule

Considerations

Significance

Considerations

Settlement

Interest Rate

Warning

Wednesday, May 24, 2006

Instructions

Submit Evidence

Debt Validation

Consult an Attorney

Consequences of Ignoring Debt

Tuesday, May 23, 2006

Instructions

Monday, May 22, 2006

Instructions

Function

Effects

Benefits

Sunday, May 21, 2006