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New offers options to American consumers who need an effective debt reduction plan. We have settled over 150 million dollars worth of unsecured, credit card debt while saving clients thousands of dollars. AmeriGuard believes it is important to make an informed decision especially when it affects your financial health. Understanding your options can be overwhelming; that’s why we offer experienced, knowledgeable guidance along the way. provides the information you need to participate in creating a better future..

Monday, December 31, 2007

How to Pay Off My Credit in One Year

Paying off all your credit accounts in one year could provide you with added financial security. You could find yourself with more money to invest in retirement savings. Or you could increase the amount of money in your emergency savings fund. Paying off the credit accounts will require discipline and possibly sacrifice as you cut expenses and nonessential spending. It will be important to create a sound and reasonable plan for your debt reduction.

Instructions

    1

    Review your budget. Cut discretionary expenses such as premium cable television channels, lawn service and dining out. Spend a month making notes about every dollar that you spend. Then review the list to see what nonessential items or services you could have done without -- or obtained at a lower cost.

    2

    Create a new budget based on your review. Determine how much you will be able to spend each month on paying off your credit. Also consider money you have in discretionary savings accounts -- but don't raid your 401K or other retirement accounts and don't dip into your emergency fund.

    3

    Find ways to supplement your income for a year. Take a job waiting tables at a restaurant on weekends or take a job as a sales clerk at a department store. Also hold garage sales or sell a used car that you are no longer driving. Plan on using all of the extra money on paying down debt.

    4

    Make a list of all your credit accounts. Rank them by interest rate, with the accounts with the highest interest rates listed at the top. These accounts are costing you the most money in finance charges and should be paid off first.

    5

    Pay off your credit accounts, one at a time. Make lump sum payments, if possible, or make biweekly payments to save on finance charges.Your ability to pay all your credit accounts off in one year will be determined by how much you can pay each month and how much debt you have. Keep paying on the debts over the course of the year until they are paid off.

Statute of Limitations for Consumers in Mississippi

A consumer with delinquent debt payments is likely to be sued at some point by the creditor or a debt collector to enforce the debt. However, the time period to use the court system to collect consumer debts is limited. In Mississippi, as in all states, the statute of limitations requires the creditor to commence court action within a certain number of years or the creditor can be barred from enforcing the debt.

Written Contracts

    Consumer debt is frequently incurred through a written agreement to pay for goods or services. Mississippi law specifies a general statute of limitations of three years where no other specific statute applies. Consumer debts based on written agreements fall under this statute. If the written agreement is for a loan, such as a promissory note, a specific statute of limitations applies, and that one is six years. In either of these cases, the period of limitation starts on the date a payment is due but was not paid.

Oral Contracts

    If the consumer debt is not based on a written agreement, Mississippi law specifies a three year statute of limitations. Such debts are typically incurred by consumers using credit card or charge card accounts. The statute of limitations on these accounts begins on the date that a charge is incurred, but was not paid. An account with multiple unpaid items on different dates will have a different limitation end date for each item.

Deficiency Debts

    The issue of deficiency debts applies to consumers who incurred the debt as a result of security against their real estate, such as a mortgage or deed of trust. In situations where the consumer's property was foreclosed, but the sale price was insufficient to pay the debt in full, the creditor may take action to collect the balance or deficiency. Mississippi specifies a one year statute of limitations on deficiency debts. The statute begins to run on the date of the foreclosure sale.

Enforcement of Judgments

    A creditor who successfully sues a consumer will obtain a court judgment on the unpaid debt. At that point, a new limitation period applies. Mississippi law gives the creditor seven years from the date the judgment is made to enforce it using the court process, such as wage garnishment or bank levy. However, unlike the other limitations periods, the creditor can extend the seven year period by renewing the judgment with the court. Only after the judgment has been dormant for more than seven years will it become unenforceable.

Sunday, December 30, 2007

Can You Recover From Bankruptcy?

You may think that recovering from bankruptcy is impossible, as your credit score goes down and many lenders will not extend credit to you. Yet, bankruptcies don't last forever and, with time, you can boost your poor credit rating and fully recover.

Bankruptcies and Credit Reports

    Bankruptcies are unlike other types of negative information on credit reports, such as foreclosures and collection accounts. These types of information stay on reports for a period of seven years, whereas a bankruptcy can tarnish your credit report for 10 years. Recovery soon after a bankruptcy discharge is crucial to improving your credit score. If you don't take steps to fix a bad credit rating, this can result in credit rejections or higher interest rates until the bankruptcy falls off your credit report.

Reaffirming Debts

    Reaffirming a debt in a bankruptcy involves you excluding a particular creditor and debt from a bankruptcy filing, and continuing to pay the account as agreed. Common debts that you may reaffirm include mortgage loans, auto loans and student loans. Reaffirming debt helps put you on the path to recovery. While a bankruptcy court may wipe out your other debts, which results in a reduced credit rating, if you make payments every month on your reaffirmed debts, this will slowly improve your credit rating and help reverse the effects of a bankruptcy.

Opening New Accounts

    When a bankruptcy eliminates all your outstanding debts, opening new credit accounts and practicing better account management is imperative to recovery. Because some lenders will not consider your application for credit, look for creditors and lenders that work with sub-prime borrowers, which include those with recent bankruptcies. Apply at your bank for a high-interest rate credit card or a secured credit card that requires a security deposit. Get a high-interest rate auto loan, or apply for a small personal loan using personal property as collateral. Pay these creditors on time and pay off credit card balances each month to keep debts manageable.

Rate of Recovery

    The amount of time varies in which you improve your credit after bankruptcy, and depends on the number of accounts you hold and the way you manage your credit. Starting the improvement process immediately after a bankruptcy discharge, and adhering to good credit habits, can help you qualify for a mortgage loan within 18 to 24 months, according to the Moran Law Group.

Credit Collection Issues

Credit collection issues usually have to do with the conduct of debt collectors. Their conduct -- or misconduct -- affects consumers whose credit accounts are no longer managed by the original creditor. An original lender may hire a debt collection agency to attempt to recover a debt, or the lender may write off the debt and sell it to a debt buyer.The Fair Debt Collection Practices Act (FDCPA) provides credit collection guidelines for debt collectors and debt buyers, but it's important to note that these guidelines don't apply to the original creditor.

Contact

    One credit collection issue that affects consumers involves the methods a collector may employ to collect the debt. FDCPA guidelines allow the collector to contact consumers by telephone, postal mail, e-mail and fax. Collectors may also contact the consumer's family members, neighbors and employers to ask for contact information. FDCPA guidelines prohibit the collector from discussing the reason for the call or the particulars of the account with any third party, with the exception of the account holder's attorney. FDCPA guidelines also demand that collection calls be made between the hours of 8 a.m. and 9 p.m. If an employer or an account holder requests orally, or in writing, that the collector stop contacting the workplace, the collector must comply.

Harassment

    The FDCPA protects the consumer from collector harassment. For example, the collector may threaten to bring criminal charges against the account holder, threaten to file a lawsuit on an account that's beyond the statute of limitations, or add fees or charges to the account that aren't authorized in the contract. Other types of harassment include multiple daily phone calls, contacting third parties when the collector already has correct contact information, demands for immediate payment, and continuing to contact the account holder after receiving a written request to stop. Consumers faced with these collection issues may file a lawsuit against the collector.

Disputes

    Some collectors try to make an account holder pay a debt that isn't his, or a debt that's past the legal timeframe for collection. Account holders have the right to dispute credit account collection in writing with the collection agency. The account holder must send a written dispute to the collection agency within 30 days of receiving the initial written communication from the collector. It's not necessary for the account holder to specify a reason for disputing the account, but he must request validation, which may include a copy of the original contract. Collectors must cease all collection activities on the disputed account unless they can provide validation within 30 days.

Reporting

    Credit reporting issues involving collection accounts can seriously impact a consumer's credit score. One delinquent account may be reported several times on a credit report; first by the original creditor, then by a debt collector, and then again by a debt buyer. The amounts on each account can vary based on accumulated fees, and the account designation may also vary from charge-off to collection. Negative account listings must be extinguished from a consumer's credit file after seven years of the original delinquency, according to the FDCPA.

Saturday, December 29, 2007

Do You Have to Cancel Credit Cards With Consolidation?

Do You Have to Cancel Credit Cards With Consolidation?

When you take on a debt consolidation loan, you must be sure that you are fully committed to staying out of debt. This means that you must lock up your credit cards and stop spending on them; however, that doesn't mean you have to cancel your accounts. On the contrary, if you cancel your credit cards, you may be doing more harm than good.

Debt Consolidation

    A debt consolidation loan pays off your current balances so that you just have to make one monthly payment. The loan itself is completely separate from your credit cards; therefore it's not necessary to close any of your accounts. In fact, doing so may actually hurt your credit score.

Drawbacks

    When you close a credit card account, you're affecting your utilization ratio and your credit history in a negative way. Your utilization ratio is the amount of debt you have to the amount of credit available to you. This is one of the biggest factors in calculating your credit score. If you close an account, the amount of credit available to you shrinks. Your credit history is also important in figuring out your credit score, and lenders use it to assess your creditworthiness. Closing an account means that you end your credit relationship with the company, which reflects negatively on your credit report.

How to Cancel

    You should only cancel a credit card after you've paid off the balance -- otherwise, you can never ask for a lower interest rate. Once you've paid off the card, call the creditor and let a representative know you want to cancel it. Send a follow-up letter with the representative's, stating that you want to close your account. Check your credit report to confirm that the account has been closed but not "closed by creditor," which makes it look as though you were delinquent on payments.

Considerations

    Of the consumers that take out debt consolidation loans, 70 percent accumulate the same amount or more debt two years after consolidation, according to Chris Viale, general manager of Cambridge Credit Corporation, in a 2003 Bankrate article. Debt consolidation frees up your credit, making it tempting to use your credit cards again, which may cause you to spiral further into debt. It is therefore important to stop spending on your credit cards when you take out a debt consolidation loan; however, canceling the cards will only hurt your score. If you do decide to cancel, listen carefully to any offers the credit card company representative may make. You may be able to get lower interest rates or other incentives.

Pros & Cons of Federal Debt Management Services

While America is home to many debt management companies, federally administered debt management services don't exist. There is a company based in Florida named Federal Debt Management Services that offers debt management programs to interested customers.

Debt Management Programs

    Companies such as Federal Debt Management Services allow customers the chance to get their debts under control in an organized way. Debt management programs give people the chance to pay their credit card debts at reduced interest rates. These programs require working with the credit card companies to negotiate revised terms, which is where the administering organization comes into play. It is through their efforts that customers are able to pay down their debts more quickly.

Federal Debt Management Services Pros

    Like all debt management services, Federal Debt Management Services gives its customers the chance to break free of credit card debt once and for all. If you can stick to the program provided by Federal Debt Management Services, you can get yourself out of debt and move on with your life. The group's website features testimonials from people who have done just that.

Federal Debt Management Services Cons

    Debt management programs do come with some negatives, and Federal Debt Management Services is no different. As a condition of being on a debt management program, you must relinquish the ability to use credit or apply for new credit. In addition, you must be disciplined with your payments, as just one slip up can cause creditors to discontinue your reduced interest rates. Your debt management program with Federal Debt Management Services requires you to learn a new way to get by, one that doesn't involve relying on credit, which can be very difficult to adjust to.

Federal Debt Management Services

    As of May 2011, Federal Debt Management Services has a very primitive website that is difficult to navigate and gives less information about debt management programs than its competitors. This may lead some people to question the legitimacy of the agency. Federal Debt Management Services has taken steps to fight this perception by including this topic in its page of frequently asked questions. The company was featured in a 2008 book called "Everything U Need to Know," lending credence to the validity of the organization.

How to Restore Personal Credit

Restoring your personal credit after a setback will require determination, time and patience. Foreclosures, bankruptcies, late payments and other negative credit events will cause your credit score to sink. The good news is that your credit can recover. Creditors are more concerned with your current credit score and finances than financial setbacks that took place several years ago. Using credit responsibly will show that you have put your credit problems behind you.

Instructions

    1

    Order your credit report for free from AnnualCreditReport.com (see Resources). You're entitled to three free credit reports every 12 months from the website, according to the Federal Trade Commission.

    2

    Review your credit report for negative entries. These include accounts that are currently reporting as past-due and delinquent accounts that have been sold or assigned to debt collection agencies. Make payments to bring any open accounts current, if necessary. Also contact original creditors or debt collectors to make payment arrangements on old, delinquent accounts.

    3

    Dispute wrong or outdated information on your report. This is the only option for removing information on your credit report, according to the FTC. The agency reports that bankruptcy information can remain on your report for 10 years, but all other negative information must be removed after seven years. Wrong information can be removed at any time. Dispute wrong or outdated information by writing letters to the credit bureaus at their address listed on the report. The AnnualCreditReport.com allows you to order separate credit reports from all three nationwide credit bureaus -- Equifax, TransUnion and Experian.

    4

    Check the balances on all your revolving credit accounts, such as credit cards. You should pay down the balances to at least 30 percent of your credit limit on each account. Paying down balances even lower is even better, MSN Money reports.

    5

    Establish a plan for paying all your debts on time ever month -- without fail. A single missed payment can cause your credit score to drop, according to Privacy Rights Clearinghouse, a national nonprofit consumer information company. Schedule on-time payments with the help of your bank's online bill-paying software, or begin making biweekly payments to get ahead. Biweekly payments will result in 26 payments in a year instead of 12 if paying monthly.

Friday, December 28, 2007

How to Refinance and Combine Debt

How to Refinance and Combine Debt

Your debt to income ratio is too high, you pay most of your income on bills, you are worried about losing your home and your car is about to be repossessed by the lender. It's a nightmare scenario that many Americans have faced, and there seems to be no way out. Combining debt is called "debt consolidation," and this may provide you with a solution. Debt consolidation works by combining all your existing debts into one amount. You take out a loan or mortgage to pay off all the debts, and you make a single monthly payment against the loan.

Instructions

    1

    Check your credit score. You must be able to show that you have tried to maintain your payments in order to get a consolidation loan. You can obtain a free credit report online from one of the three national consumer reporting companies, or by sending a request by post to the Annual Credit Report Request Service in Atlanta, Georgia.

    2

    Prepare a full list of your debts. Include details on which debts are secured against an asset, such as a home mortgage or vehicle lease agreement, and which are unsecured such as credit cards and personal loans. Include information about the remaining terms of agreements and the outstanding balances.

    3

    Draw up your monthly budget, showing all current income and expenses as well as your debt repayments. Potential lenders will want to see exactly how much you are able to pay each month once your debts are consolidated.

    4

    Look for lenders that offer credit specifically for debt consolidation. Institutions that specialize in this type of credit include banks, consumer finance companies and credit unions. Make appointments with several institutions and take your documentation along when you go to see them.

    5

    Speak to your mortgage company about refinancing your home. If you have been paying your mortgage for several years, your home may be worth more than you owe on it, and a second mortgage or a refinance may provide the funds you need to pay off your other debts. Mortgage interest is usually lower than interest on a personal loan because it is a secured loan, so this might be the solution.

    6

    Investigate lenders that offer loans in spite of bad credit scores. Pay attention to the terms and conditions of an agreement with such institutions and the rate of interest that is quoted, because a bad credit loan is a higher risk for the lender and generally attracts a higher rate of interest for this reason.

    7

    Take the draft agreement to your legal adviser to check before signing. He will make sure you are not at risk of losing your home or other assets as a result of the loan.

    8

    Sign the final agreement, obtain the loan and pay off all your debts. Make regular payments against the consolidation loan or refinanced mortgage. Your credit score will be improved by having reduced your level of household debt and having paid off your creditors.

What Steps Does a Person Take If His Identity Has Been Stolen?

What Steps Does a Person Take If His Identity Has Been Stolen?

Identity theft is when someone steals your personal information and uses it to commit fraud that is commonly tied to financial issues, according to the U.S. Department of Justice website. You can detect fraud by checking your credit card statements for charges you did not make, and monitoring your credit report for accounts you did not start. Once you detect identity theft, you need to act fast to help avoid financial disaster.

Fraud Alert

    One of the first things you need to do after detecting identity theft is to contact the three major credit agencies and put a fraud alert on your credit profile, according to the Federal Trade Commission website. A fraud alert will prevent anyone from opening a new credit account in your name without your personal approval. It will require that every new account opened in your name be confirmed by a phone call to you at your home phone number. You will receive a free copy of your credit report once you put a fraud alert on your account. Analyze the report to see if there are any new accounts or transactions on there that you do not recognize and contact the appropriate creditors immediately.

Report It

    The U.S. Department of Justice website encourages consumers to contact their local FBI or U.S. Secret Service office to report cases of identity theft. This way, there can be an official record of you reporting the theft and new credit accounts in your name can be treated as a crime. Your local law enforcement officials should be contacted as well to generate a local report that can be used for cases of local credit fraud. You should also contact the Federal Trade Commission through its website to get information on other legal steps to take, and to be routed to other law enforcement agencies that can help in getting back your identity.

Monitor

    Monitor your credit reports from the three major credit agencies on a regular basis to see if any accounts show up that were started before your fraud alert. If new accounts do show up, contact the credit reporting bureaus and the creditors immediately. Be prepared to fax a copy of any police report or federal report you have identifying the problem as fraud committed by others in your name.

Creditors

    Contact your current creditors and alert them to the situation. Ask that all of your current account numbers be discontinued, and that new credit accounts be issued. Discuss the issue with your bank and any entity that you have an installment loan with to prevent any new loans from being opened in your name. Watch your credit card and checking account statements carefully to see if any irregular activity begins to show up. Report any suspicious activity to your bank or your creditors immediately. Fax copies of your police reports and federal reports to your creditors and banks so they are completely aware of the situation.

How to Fight Garnishments

How to Fight Garnishments

Wage garnishment occurs when a court order directs your employer to withhold a portion of your earned wages to pay your debts. You may appeal the ruling in court if you feel unable to pay for your basic living needs -- like food, housing, health care, transportation, education and other necessities. The court could issue a new judgment preventing creditors from garnishing your wages or it could issue a smaller wage-garnishment amount.

Instructions

    1

    File a "claim of exemption" with the court that issued the garnishment order. Pay the required filing fee to the clerk.

    2

    Attend the scheduled hearing and present your basic living expenses documentation to the court judge.

    3

    Explain in detail your reasons for wanting a reconsideration of the wage-garnishment judgment, based on your inability to meet basic living needs. Be clear about your circumstances that prevent you from fulfilling the current judgment. Await the judge's decision.

Thursday, December 27, 2007

Negative Credit Ratings

A negative credit rating hurts your chances of getting a loan. Plans to buy a house or car often call for improving a low negative rating. You can do several things to help fix a bad score. But before you can improve your rating, you need to understand possible causes of a negative credit rating.

Credit Scores

    Credit scores range between 300 and 850, and upon reviewing an applicant's request for credit, lenders and creditors place applicants in three categories: good credit, fair credit and bad credit. Scores 680 or higher are considered good by most lenders, and these people can qualify for the best rates. Anything lower than 620 is considered bad by most lenders, according to Bankrate.com. It becomes harder to acquire financing with a score in the low 600s, and if approved, you'll pay higher interest rates.

Causes of Negative Credit Rating

    A negative credit rating can develop from a history of poor credit decisions such as late payments, missing payments, carrying high credit card balances, allowing accounts to go to collection, judgments and bankruptcy. Everyone makes mistakes, and missing or sending in one late payment won't trigger a poor rating. On the other hand, if you don't understand credit scoring and how credit works, a pattern of unwise decisions can take points off your rating and place you in a sub-prime category.

Consequences

    Credit rejections and high interest rates are only two consequences of a negative credit rating. People with poor credit know of their limited finance options and realize that they may be unable to buy a home. However, a negative credit rating can also affect rental options. Some landlords will not allow you to rent, or they may charge a higher security deposit. And if you are looking for insurance policies, a negative credit rating can result in higher premiums.

Credit Restoration

    Putting together a plan to fix a negative credit rating can improve your situation and make it possible for you to get hassle-free financing. You can't fix a bad rating overnight. But you can slowly increase your credit score until you reach prime status. It doesn't take much to fix bad credit. Paying bills on time and paying down debt on credit cards can have a significant impact on credit scores.

Wednesday, December 26, 2007

Is the Debt-to-Income Ratio a Factor in Credit Scoring?

Your debt-to-income ratio is a percentage figure that compares how much debt you have vs. how much you earn before taxes, according to Bankrate's Erin Peterson. This number is important because the lower the percentage, the better your odds of getting a good interest rate on everything from a new car to a new home. A credit score also helps to determine interest rates, but it stands alone and the ratio is not a factor in this three-digit number.

Distinction

    Your debt-to-income ratio tells lenders how much debt you will be able to take on and, thus, determines how much they are willing to lend to you, according to Peterson. On the other hand, your credit score is a record of how good you've been about paying your bills on time. Unlike the debt-to-income ratio, the credit score does not take into account your income at all.

Calculation

    You can figure out your ratio by adding up all of your monthly payments (don't count basic expenses like food, gas or clothes) and dividing that by how much you make each month before taxes are taken out. The lower the number, the bigger the loan you'll qualify for. On the other hand, the higher the number for your credit score, the better your odds of qualifying for good rates on a home loan. The Consumer Federation of America reports that scores range from 300 to 850, with the best rates given to those whose scores are 700 or higher. Anything under 600 is considered high risk. Unlike the debt-to-income ratio, you can't determine the credit score on your own, but you can get a feel for where the number comes from; 65 percent of the number is derived from your ability to pay debts on time and from your total debt load, according to Fair Isaac Corp's MyFICO. Length of credit, new credit and mix of credit types are also factors.

Debt

    The debt that is taken into account with the ratio is considered recurring debt. These monthly, ongoing obligations include car loans, credit card payments and student loans. Peterson notes that in some cases lenders will take your existing mortgage into account when determining the debt-to-income ratio -- whereas other lenders won't -- but the concept of how the number is derived remains the same. Credit scores always take into account all recurring debts, and this includes an existing mortgage, to determine the final number, according to the Consumer Federation of America.

Qualification

    If you calculate that your debt-to-income ratio is 36 (or less), that means your overall debt is no more than 36 percent of your total income. That's a good thing, according to consumer resource organization Nolo, becasue higher than that, and you'll have a hard time qualifying for the best rates. That's not to say you won't get the size of the loan you need to finance your home, but you may pay big over the long run with a much higher interest rate, according to Peterson.

Significance

    Though your credit score is not figured into your debt-to-income ratio, it plays a factor in your overall likelihood of getting a loan you can afford. According to Peterson, lenders evaluate debt-to-income ratio, as well as how long you've been in an existing home (or job). You can also use a good ratio as a means of negotiating a better deal on your loan.

Tuesday, December 25, 2007

How to Find the Best Free Money Government Grants For Personal Debt Relief

How to Find the Best Free Money Government Grants For Personal Debt Relief

There is a lot of Free Money available in the the form of a Government Grant but you need to know were to look. If you are trying to get debt relief then a Government Grant can help you eliminate any personal debt that you may have. It seems like it is becoming harder to make ends meet because of the rising price of oil everything from gas to groceries keeps going up.

Instructions

    1

    To keep up with the rising price of all things that we use it seems that it get us further into debt every day because we are charging the things we need because we do not have the money to just pay for them. Although the price of everything we use on a daily basis keeps going up our salaries are not going up to keep up with these high prices and it is causing us to have an alarming amount of debt.

    2

    Seeking a Government Grant to eliminate this debt can be a great alternative to consolidating your debt into one loan payment. The advantage you will get by getting a Grant is that the money you receive to pay off your debt will not have to be repaid. This can be a big advantage because even a consolidation loan you will have to pay back and the interest alone can make it difficult.

    3

    Remember that when in debt you can get a Government Grant to help eliminate your personal debt and get you on the road to financial freedom.

Monday, December 24, 2007

Is an Unsecured Loan a Good Way to Consolidate Bills?

Is an Unsecured Loan a Good Way to Consolidate Bills?

Loans and credit agreements can be differentiated based on whether or not the lender requires the borrower to enter into a security agreement. A secured credit transaction requires the borrower to give the creditor an interest in property, such as by providing collateral. When you consolidate your loans, you can use either a secured or unsecured loan to do so. The kind of loan you use depends on your circumstances, abilities and desires.

Debt Consolidation

    Unsecured consolidation loans, such as credit transfers, offer borrowers the chance to combine a group of bills into a single loan. Like other debt consolidation loans, an unsecured consolidation loan is simply a loan used to pay off bills, instead of a loan to paying for a car or a home. You must then pay back the consolidation loan lender instead of the multiple lenders you paid before consolidating the loan.

Benefits of an Unsecured Loan

    An unsecured debt consolidation loan is good for debtors who do not want to provide collateral. Most credit cards are unsecured forms of credit, and when you, for example, transfer multiple balances from multiple credit cards, you have a single card with a balance. Credit card transfer offers typically come with low introductory interest rates that last a limited amount of time and come with transfer fees. Once the introductory offer expires, a higher interest rate applies.

Drawbacks of an Unsecured Loan

    When a lender gives you an unsecured loan, the lender necessarily incurs more risk because it has fewer options to recover the loan funds if you default. Because of this, secured loans typically have lower interest rates than unsecured loans. When you take out an unsecured consolidation loan, such as a credit card balance transfer, you typically have a significantly higher interest rate on the transfer than you would if you used a home equity loan.

Other Options

    Unsecured debt consolidation is not the only option available to debtors, nor is debt consolidation itself always the best way to manage debt. Debt consolidation loans, secured or unsecured, do nothing to eliminate the amount of money you owe. While these loans promise lower monthly payments, they also charge you more interest over the lifetime of the loan, therefore costing you more money in the long term. Responsible consumers should carefully consider all the aspects and potential impacts of a loan before committing to an unsecured consolidation.

How to File a 1099-A Abandonment

If you lend money to a borrower for a secured debt such as for a car or other personal property, and you have to repossess the property, you must file form 1099-A with the Internal Revenue Service. You must also file this form if you have reason to believe that the borrower has abandoned the property securing the loan. This form is necessary for properly assessing borrower tax liabilities because the borrow may be liable for taxes on the canceled debt.

Instructions

    1

    Order IRS Form 1099-A through the IRS website or by calling the telephone number listed in the 1099-A instructions.

    2

    Enter your name, address and telephone number in the first box on the form. Enter your Federal Employer Identification Number in the box marked "Lender's Federal Identification Number," and note the debtor's Social Security Number or FEIN in the box marked "Borrower's Identification Number."

    3

    List the date you repossessed the collateral or the date you learned that the debtor abandoned the property in box 1. Enter the outstanding loan amount in box 2. This amount only includes principal; it does not include any interest or fees owed by the debtor.

    4

    List the debtor's name and address in the boxes below your FEIN and the debtor's identification number. If an account number is associated with the loan, enter that number in the "Account Number" box below the borrower's address.

    5

    Enter the fair market value of the repossessed or abandoned property in box 4. If the amount is less than the outstanding balance and you have canceled the debt, the debtor may be responsible for paying taxes on the difference.

    6

    Place an "X" in box 5 if the debtor was personally liable for repaying the debt when you initiated or modified the loan. Enter a physical description of the repossessed or abandoned property in box 6.

    7

    Enter all of the same information on copies B and C of Form 1099-A. Mail copy B to the debtor Jan. 31 of the year after the property was abandoned or repossessed. Mail copy A to the IRS by Feb. 28 and keep copy C for your records.

How Fast Do Points Increase in a Credit Score?

How Fast Do Points Increase in a Credit Score?

If you've had some financial trouble in the past that damaged your credit score, you may be wondering how long it will take to repair it. Creditors report information to credit bureaus every 30 days or so, so your credit score is constantly changing. However, it will take more than a month to undo the damaged. Depending on the state of your credit history and how well you manage your money, you may be able to raise your score significantly in as little as a year.


What's a Credit Score?

    A credit score is a three-digit number that tells potential lenders whether or not you're creditworthy. Every time you borrow money, the lender will report it to one or more of the major credit bureaus (Equifax, Experian and TransUnion). The bureaus compile this information into a credit report. Every time you apply for credit, the lender will request your credit report from the bureau. Since the reports are long and cumbersome to read, the bureaus summarize all of that information in a credit score.

How the Score is Calculated

    The exact formulas used to calculate credit scores vary from bureau to bureau and are secret. What is known is the sort of things that are taken into account and their approximate weight in determining the score. Thirty-five percent of your credit score is made up of your repayment history. Another 30 percent relates to the total amount you owe. Around 15 percent has to do with the length of your credit history. The types of credit you have and how often you apply for credit each make up around 10 percent.

Increasing Your Credit Score

    The easiest way to increase your credit score is by making all of your payments on time. If you do this for at least a year, your credit score should increase dramatically. Another option is to pay off some of your debt if you can. If the lenders think you've borrowed more than you can handle, your score will drop. On the other hand, if you're only using 30 percent of your possible credit line, the score will go up.

Time Frame

    Nothing stays on your credit report indefinitely. Most negative information is erased after seven years. This includes missed credit card payments and defaults on loans. Bankruptcy can stay on your report longer. If you've filed for Chapter 7, it'll be on your report for 10 years. There's nothing you can do to erase that information before it's set to expire, but if the rest of your credit history is good, it may not matter very much.

Errors

    In some cases, a low credit score may not be your fault. For example, if there's a mistake on your credit report, it can ruin the score without you knowing about it. It's important to check your credit reports on a regular basis. If you do see a mistake, you must file a dispute directly with the bureau. It'll take 30 days for the bureau to evaluate your case. Once the error is corrected, your score should go up almost immediately.

Sunday, December 23, 2007

How to Find the Right Debt Consolidation Company

When searching for the right debt consolidation company, it is always best to rely, first, on your gut instant and, second, on the company's reputation and previous operating practices. Finding a reputable debt consolidation company requires legwork. However, if you are thorough in your search, you'll find a legitimate and experienced debt consolidation company that is right for you. Doing research also allows you to ask the hard questions and receive the answer you want before making your first payment.

Instructions

    1

    Select a debt consolidation company with a business address. It is almost impossible to regulate an Internet based company. Check for a business address along with an employer identification number and articles of organization. If the company is a "non-profit," confirm its 501(c)(3) status.

    2

    Research the company. Check the company's reliability report at the Better Business Bureau's website. The rating can vary from "A" to "F," with "A" being the most favorable. Contact your state's attorney general's office and inquire about consumer complaints and company responses to those complaints. Avoid debt consolidation companies with a high volume of complaints.

    3

    Interview the company. Schedule a consultation with a debt consolidation counselor who can answer your questions, review your credit information and provide a quote free of charge. A reputable debt consolidation company will not charge a consultation fee.

    4

    Compare rates against multiple companies. Look for averages across the industry. Contact several debt consolidation companies and avoid those that quote unusually high or unusually low rates.

    5

    Ask about the delivery options for customer support. For example, ask if phone support is available and if other delivery options, such as Internet support, are available.

Laws on Death & Credit Card Debt

Laws on Death & Credit Card Debt

A loved one's death can leave a family grieving and in shock--it can also result in frequent telephone calls from credit card companies requesting payment on the deceased's credit card debt. Depending on the type of account the deceased held, however, the credit card company may not have the right to demand payment from family members. Consumer protection laws exist to regulate creditors' rights to collect after an account holder dies.

Joint Account Holders

    If the deceased shared an account with another person, that individual automatically inherits the responsibility of paying off the full balance of the credit card--regardless of whether he made the purchases. The credit card company may turn the credit card account over to a collection agency, file a lawsuit against the joint account holder or make negative reports to the credit bureaus should he fail to pay the deceased's credit card debt. Authorized users, however, are not joint account holders and are not legally liable for paying the credit card debt.

Collection Through Probate

    If no joint account holder exists, credit card companies must file a claim against the deceased's estate. The executor of the will then pays off debts in a priority order. Typically, secured debts, such as vehicle loans and mortgages, are at the top of the priority list. If any assets are left over after the executor pays off secured creditors, those assets will be allocated to unsecured creditors such as credit card companies. In some cases, the deceased's estate runs out of assets before the credit card company receives payment. In this case, the credit card company has no choice but to charge off the debt and claim it as a tax loss.

Timely Settlement

    In the past, when someone died, credit card companies could continue to add interest charges and fees to the account--inflating the amount that the deceased's estate must ultimately pay. The Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) of 2009 put a stop to this practice by forcing credit card companies to stop adding additional charges to a deceased person's debt as soon as they receive formal notification of the event, typically through a death certificate and an official balance request from the will's executor. The credit card provider then has 30 days in which to provide the executor with the card balance.

Consumer Protection

    Although the deceased's family members aren't liable for the debt, that doesn't stop credit card companies from trying to collect. A 2009 "New York Times" report states that some credit card companies train debt collectors in grief counseling to increase their odds of coercing family members into making a payment. The Fair Debt Collection Practices Act (FDCPA) contains a provision to protect consumers from debt-collector harassment--whether or not they owe the debts in question. Under the FDCPA, a person may notify the credit card company in writing that her relative is deceased and she no longer wishes to receive any contact from the creditor concerning the debt. The credit card company must comply with the person's demands or risk violating federal consumer protection laws.

Mortgage Forgiveness Debt Relief Act of 2007 & Debt Cancellation

Individuals who receive forgiveness or cancellation from their home mortgage loans must report the discharged amount as income on their tax returns and pay federal taxes on the amount to the IRS. The Mortgage Forgiveness Debt Relief Act of 2007 is a federal law proscribing certain tax rules for individuals receiving discharges from their mortgage debts.

Background

    The Mortgage Forgiveness Debt Relief Act of 2007 makes mortgage debt cancellation from a person's primary home exempt from taxation. As of March 2011, the act's provisions apply only to debts forgiven during the years of 2007 through 2012, according to the IRS. The act's tax exemption does not apply to discharged mortgage debts resulting from lender services not related to a decline in the value of an individual's home or services performed for a mortgage lender.

Amounts

    The act allows homeowners up to $2 million of tax exemption (as of 2007) for loan cancellation from their primary residences' mortgages. However, married people filing separate tax returns receive a maximum exemption amount of $1 million, as of 2007. Although canceled mortgage debt falling below these amounts are exempt from taxation, individuals must still report them to the IRS when they file their regular yearly tax returns.

    (Note to CE: the IRS website is unclear as to whether it is individuals or married filing jointly -- it doesn't say. I just changed it to say "homeowners." However, this website "http://www.IRS.gov/pub/IRS-pdf/p4681.pdf," page 8, seems to suggest the $2 million limit applies to both individuals and married people filing jointly.)

Forms

    Individuals receiving mortgage debt discharges will receive IRS Form 1099-C from their mortgage lenders. This form will state the amount of canceled debt in box 2. A person should enter the amount shown on their 1099-C form on boxes 2 and 10 on IRS Form 982, the canceled debt return form. When filing their taxes, individuals receiving discharges from mortgage debts must attach Form 982 to their annual federal income tax returns.

Considerations

    If individuals receive mortgage debt forgiveness in excess of the aforementioned dollar limits, they may still receive tax exemption for the extra amount under the IRS' insolvency clause.The IRS considers a person legally "insolvent" when the amount of her total liabilities, such as credit card debt or student loans, exceeds the value of her total assets, such as cash income or home equity. Additionally, individuals may receive tax exemption for their excess canceled debt by filing for Chapter 11 bankruptcy protection.

Saturday, December 22, 2007

How to Reduce Your Credit Card's Interest Rates From Debt Counseling

Counseling is an excellent way to address problems with credit card debt, the Federal Trade Commission points out. Many credit counseling agencies, such as those associated with Consumer Credit Counseling Services, specialize in restructuring credit card debt, including the lowering of interest rates. The initial consultation for a debt counseling session is usually free. However, a monthly fee will be required if the counseling service manages your credit card accounts on an ongoing basis.

Instructions

    1

    Gather copies of the account statements for all of your credit cards.

    2

    Make an appointment with a credit counselor approved by the U.S. Department of Housing and Urban Development. Visit the HUD website to find a counselor near you (see Resources).

    3

    Show the HUD counselor your credit card statements with the balances and the interest rates. Ask the counselor about formal debt management plans, which allow the counseling agency to take full control of your credit card debt and pay your monthly credit card bills. There is a monthly management fee for this service. If you simply want the counselor to negotiate lower interest rates on a one-time basis, ask about the cost for that.

    4

    Enter into an agreement with the counseling agency for either a complete debt management plan or for a one-time assignment contacting your card companies to request lower interest rates. Get all the terms and conditions in writing. Sign the agreement authorizing the counseling agency to represent you in discussions with your card companies.

Friday, December 21, 2007

How to Get Rid of Zombie Debt: Get Rid of That Old Debt Once and For All

How to Get Rid of Zombie Debt: Get Rid of That Old Debt Once and For All

Are old debts that have been settled, now coming back to haunt you? Are collection agencies contacting you regarding debts from 1982? You may be a victim of zombie debt and its time to stand firm and get rid of those pesky debts once and for all.

Instructions

    1

    Zombie debt is simply debt that are the result of mistaken or stolen identity, debts that have been settled through bankruptcies, or debts that have run surpassed there statue of limitations.

    So if these debts are settled through one method or another, why are they coming back to haunt consumers? Simply, collection agencies don't care. They sell debts from one collection agency to another. And each new collection agency will try to collect on those newly purchased debts.

    2

    When first confronted with a zombie debt, don't acknowledge that it belongs to you even if you know it does.

    3

    If it does belong to you, check out the statue of limitations in your state. If the debt is more than 7 years old, you want to ignore the collector. Don't acknowledge the debt is yours, don't acknowledge that you have been notified of the debt, just go on about your business.

    If you acknowledge the debt and agree to pay it, then the statute of limitations starts all over again. And now instead of removing this old debt from your credit report, it is placed on there again for another 7 years (depending on the state you live in), which can actually hurt your credit.

    4

    If this is debt is one that was settled as a result of bankruptcy or was a result of identity theft, you can a) provide the collection agency with documentation to prove this, or b) ignore them.

    If you have filed bankruptcy you want to get a discharge order from the courts which will protect you from any zombie debts. You can provide the collection agency with a copy of it.

    If this debt is past the statute, you may want to ignore them and watch your credit reports for any entries they may add. If they try to add a negative entry send the credit bureau a letter stating the statute of limitations is up and the matter was settled, and give them 30 days to take it off your report.

    5

    If you don't owe the debt you can also send the collection agency a letter, certified mail, demanding that they stop contacting you.

Statute of Limitations on Debt Collection in Kansas

Statute of Limitations on Debt Collection in Kansas

Every state has its own laws that govern how long creditors can go after debtors who have not paid their debt, collectively known as statutes of limitations. The Kansas statute places specific limits on debt collections based on the kind of debt pursued. Always speak to a qualified Kansas attorney if you need legal advice or have questions about Kansas debt collection statutes.

Time Limits

    The Kansas statute of limitations on debt differentiates between different kinds of debt categories, according to Kansas Statutes Annotated section 60-511 et. seq.: oral contracts, open-ended accounts, written contracts and promissory notes. Oral contracts are any contract that the parties enter into without writing the agreement down, while written contracts have a written document that formalizes the transaction. Open-ended accounts are debts such as lines of credit, while promissory notes are written contracts with a specific promise to pay. The time limit for oral contracts and open-ended accounts is three years while the limit for promissory notes is five years and the limit for written contracts is six years.

Time Limits

    The Kansas statute of limitations states that the creditor must bring an action to collect on the debt with a specific number of years, which means that the creditor must file a lawsuit in court asking the court to grant a judgment in the creditor's favor so he can collect on the debt. Even if a creditor tries to collect on the debt by, for example, hiring a credit collection agency to try to persuade the debtor to pay, this does not stop the statute of limitations or extend the time the creditor has to file a lawsuit.

Judgment Limitations

    The state of Kansas also limits how long a debtor can take to collect on a debt for which she has already sued and won a judgment. This statute of limitations only applies to judgments, meaning the creditor must have taken the debtor to court and received a judgment ruling in the creditor's favor from the court. In Kansas, anyone who wins the judgment has five years to initiate a collection of action. After this time, the judgment holder is barred from collecting.

Choice of Law

    Creditors often include choice of law provisions whenever entering into a credit agreement with a consumer. These provisions allow the creditor to select the laws of the state that will govern any debt collections or conflicts arising out of the agreement. For example, credit card companies commonly include a choice of law clause that selects estate where there is no effective statute of limitations for collections. So, even though the creditor lives in Kansas, the Kansas statute of limitations do not necessarily apply if there is such a choice of law provision as part of the contract.

How to Write a Contract for a Debt Pay Off

How to Write a Contract for a Debt Pay Off

In the United States, the total amount of personal debt people have stood at over $2 trillion in 2009, as reported by the Money-Zine website. Revolving debt (e.g., student loans) make up the majority of this debt. According to Mindy Fetterman and Barbara Hansen of USA Today, young people thus are the hardest hit and have increased their debt since 2006. These statistics show that debt contracts--contracts that detail how and when a person will repay a loan--are an increasing necessity.

Instructions

    1

    Write out your name and contact information, flush left, at the top of the page.

    2

    Write out the name of the person to whom you are lending, along with her contact information, flush left.

    3

    Write "Contract for Debt Repayment" without quotes, centered.

    4

    Write a sentence or paragraph in which you define yourself as the Lender and the person to whom you are lending as the Borrower. Use these terms throughout the rest of the contract. In this same paragraph, write out the amount you have lent and that both parties acknowledge this is the true amount of the debt owed. Include the date on which you are lending the money.

    5

    Indicate the terms of interest, such as, "Borrower agrees to pay interest at a rate of six percent on the unpaid balance of the loan." Keep in mind that you may opt to forgo interest charges for a specified period and that you may include a clause in which interest will increase in the instance of repeated missed payments.

    6

    Write out a paragraph or sentence that explains when a full or partial payment will be due. For example, write, "The Borrower agrees to pay [sum] on the first of the month until the debt is paid in its entirety." If you plan to have a grace period, explain how many days the borrower will have before penalties are applied. Specify the exact amount you will charge in penalties, and explain the methods of payment. If you are accepting checks, include a penalty for insufficient funds.

    7

    Indicate the date when the entire loan is to be paid off in full; if the contract allows for partial payments, simply divide the total amount of the loan by the number of payment periods (e.g., months) to calculate how long it will take the borrower to repay you. Specify that you are entitled to demand any unpaid balance on the loan on that date, including any outstanding penalties.

    8

    Specify that, as the loan contract is a legal agreement, you can and will pursue legal action to collect the debt if the borrower fails to meet his obligations. Clarify that the borrower, not you, will be responsible for any expenses incurred as a result of trying to collect the debt.

    9

    Create lines for both you and the borrower to sign the contract, as well as a line to indicate the date on which the contract was signed.

Tuesday, December 18, 2007

Should I Pay Off My Second Mortgage or My Credit Cards First?

Should I Pay Off My Second Mortgage or My Credit Cards First?

    When choosing between bad options, choose the one that harms you least.
    When choosing between bad options, choose the one that harms you least.

I Could Lose My Home

    Your second mortgage, if you get into financial trouble, could cost you your house. Your credit cards, no matter how bad your finances get, can't put you out on the street, though they can wreck your credit rating if you go too long without paying them.

My Credit Card Bills Are Higher Than My Mortgage

    If you're paying more on credit cards than you are on the second mortgage each month, it's worth it to trim the fat off of your expenses and run that credit card bill down to nothing--then retire the card. Debt consolidations may be worth exploring in this instance.

Bottom Line

    Unless your mortgage is "upside down," where the total debt owed exceeds the value of your home, you are almost always better off paying off the second mortgage ahead of paying off the credit cards if you have to make a choice between the two. If you are capable of paying both debts off, put extra money toward paying off the one with the highest interest rate.

Monday, December 17, 2007

How to Consolidate Debt in Canada

Consolidating debt in Canada is similar to doing it in the United States or elsewhere, although Canadians have some resources to turn to that are unique to Canada. Utilizing a consumer credit counseling organization is a popular way to help organize and repay your debt, but certain steps should be followed to find an organization that is trustworthy.

Instructions

    1

    Repaying your debt is about preparation and full disclosure. Pull your credit reports from the three major credit reporting agencies--Experian, Transunion and Equifax--to confirm what financial responsibilities you have. All three credit reporting agencies are available in Canada. You can obtain these credit reports for a small fee. Or, if you apply for credit, you're eligible to get a free copy of your report. This also ensures that you're made aware of all your credit accounts, paid or open.

    2

    Go online and visit Consolidated Credit Counseling Services of Canada (find a link in the References section below). This is a non-profit debt management agency and a registered charity, as opposed to a commercial debt management company that may charge fees or benefit in some other way from your debt repayment.

    3

    Set up a phone or personal appointment with the debt agency. Whether you go with Consolidated Credit Counseling or with some other service, you will need to bring your income records, such as recent tax returns and pay stubs, and debt listings, either from statements or from your credit report. A debt counselor will attempt to create a consolidated repayment plan, which essentially puts most or all of your debts together into one package to be serviced by a single monthly payment. If all goes well, the single payment will be one that you can afford.

    4

    Wait for the debt consolidation agency to submit a proposal for repayment to your creditors. The agency will make offers to each creditor. If the creditors accept these payment offers, then you'll benefit from paying a lower interest rate and possibly a lower payment in the long run. The agency will provide you a schedule of due dates and a statement. This statement will include your debts and relative balances. You'll send your payments directly to the consolidation agency, who then allocates payments to your creditors. Make timely payments--if you regularly miss payments, you may be removed from the program.

    5

    If you are credit-worthy and debt consolidation programs aren't for you, consider asking a lending agency for a consolidation loan. As with debt manager programs, get prepared by researching your credit reports and understand the scope of your financial responsibilities. Be ready to prove your income capacity as it's a key component of the loan process.

    6

    Shop around for good interest rates. Many Canadian banks and lending institutions can be found through online listings, such as http://www.bankingcanada.net/, or in the phone book. Compare rates and payment terms before applying. Your loan could vary from paying weekly, bi-weekly or monthly. Loan rates may be variable or fixed over the time of the loan. Some banks offer an opportunity to skip the equivalent of a payment once per year.

    7

    Apply for your consolidation loan. Once approved, you'll use the new loan to pay off your old credit card balances and other debts, consolidating them into one loan with one payment. If possible, pay a little extra every month to pay your debt off at a quicker rate.

Can a Credit Card Company Levy a Lien Against Your Home?

Refusing to pay credit card debt can open you up to consequences like wage garnishment and credit score damage. In some cases, it could even result in a lien on your property. When this happens, you must repay the debt to have the lien removed. Otherwise, you will have to pay the creditor before you sell the property.

Credit Card Debt Collections

    Although it is possible for credit card companies to file a lien on your property, it will definitely not be the first step in the process. When you miss your payment, the credit card company will contact you. After several missed payments and no response from you, the credit card company will charge the debt off and turn the account over to its internal collections department. The collections department will call you and send letters to collect.

Getting a Judgment

    If the collections department is unsuccessful in collecting the credit card debt from you, the process then may move to civil court. The credit card company files a lawsuit against you. You will then be asked to appear in court. At the hearing, the credit card company will provide proof of the debt and the court will usually issue a judgment against you. If you do not show up to court, the judge will issue a default judgment against you.

Using the Judgment

    Once the credit card company has a judgment against you, it can use that judgment in several ways to try to collect the debt from you. One of the ways is to file a lien against you. However, credit card companies do not always use this option. In many cases, the company will set up a payment plan with you. In other situations, it may pursue a wage garnishment against you.

Property Lien

    If the credit card company chooses to put a lien on your house, it means that you will have to pay the debt if you want to sell the house. To get the lien removed, you also have to pay the debt. While some state laws do make it possible to force a foreclosure after a certain amount of time, this credit card companies rarely pursue this.

Questions to Ask Collection Agencies

When a collection agency comes calling, it's important to be armed with an education about how collection agencies work and what rights you have. A collection agency may even have the wrong person. Just because you have a debt doesn't mean that a collection agency is correctly calling you about the debt it is investigating. It's important to get all the facts. Often, collection agencies are in a hurry. but don't let them fool you. Take your time to deal with the situation correctly.

Collection Agency Limits

    Before you get too concerned, it's important to understand what a collection agency can and cannot do legally. If you owe a debt, it is your legally responsibility to pay the bill. However, credit agencies cannot threaten you. They cannot let your friends, boss or neighbors know that they are collecting a debt from you. That cannot take your money or confiscate assets or your paycheck to collect the debt. The government can take your check, though, and the bank can repossess your car on a car loan. A collection agency can and most likely will report your debt to the major credit bureaus, hurting your credit report. A company you owe a debt to can also take you to court.

Questions

    Find out everything you can from a collection agency without giving any additional information on your part. Verify who the agency is are calling for and have the agency verify your Social Security information. Find out who the debt originates from and who owns the debt. Find out the full amount of the debt and any qualified legal fees. Ask the company to send proof of the debt. You have the right to dispute the debt and that will slow the process and make the collection agency verify the debt in writing.

Pennsylvania Credit Card Default Consequences

Pennsylvania Credit Card Default Consequences

Defaulting on a credit card balance is serious business no matter where you live. By defaulting on your account, you will harm your credit, have to deal with debt collectors and may even have to face a lawsuit. If you live in Pennsylvania and cannot pay your bills, you should be aware that Pennsylvania law protects you against both abusive collection tactics and wage garnishment if you are sued.

Credit Reporting

    There are no special protections for Pennsylvania residents when it comes to credit reporting. If you are late or default on your credit card payments, your credit report will take a significant hit. At the same time, you are protected under the federal Fair Credit Reporting Act, which requires credit bureaus to investigate untrue information on your report and remove what it, or a creditor, cannot verify. The federal law also limits the length of time that most negative information can remain on your report to seven years, or ten years for bankruptcy.

Collection Efforts

    While collection agencies have the right to try and persuade you to pay your debt, they do not have the right to use illegal or abusive tactics. Both the federal Fair Debt Collection Practices Act and Pennsylvania's Fair Credit Extension Uniformity Act forbid bill collectors from calling you in the middle of the night, at work (if they have been told that your employer does not permit them to call you there), or if the bill collector is informed that you are represented by a lawyer. In addition, it is against the law for the collector to make threats that it cannot, or will not, follow up on. For example, there are no debtor's prisons in America, and people don't go to jail for not paying a credit card bill. If a bill collector threatens you with jail time, he has violated both state and federal law.

Lawsuits

    While a credit card company or collection agency can file a lawsuit against you in Pennsylvania, it must do so within the time period allowed by the statute of limitations. In Pennsylvania, the current statue of limitations in 2010 on filing a lawsuit to collect a debt is four years. If a creditor does file a lawsuit against you after that period of time, you can ask the judge to have the lawsuit dismissed on the grounds that it is out of statute.

    Pennsylvania state law does not permit creditors to garnish your wages. If your creditor does win a lawsuit against you, it will need to find other ways to collect what you owe.

Sunday, December 16, 2007

What Is Non-Tax Debt?

There is no shortage of ways to get into debt, but the cost and process of paying off what you owe varies based on what type of debt you have. Taxes, which you incur simply by earning money, represent just one specific type of debt. Non-tax debt comprises all other types of debt, though it sometimes refers specifically to government debt.

General Definition

    The general definition of non-tax debt is any money you legally owe that is not to a government taxation agency. This means that everything from credit cards and medical bills to student loans, auto loans, mortgages and fines are all types of non-tax debt. Non-tax debt comprises a much larger portion of what most people owe than tax debt, especially since tax debt is lessened by paycheck deductions and due every year, allowing taxpayers to start incurring new tax debt again without carrying over past tax debt in most cases.

Specific Uses

    In some more specific cases, the term non-tax debt refers to any money an individual or business owes the federal government that it does not owe to the Internal Revenue Service as taxes or tax-related fees. This usage of non-tax debt includes only certain types of loans and fines, including direct student loans and federal fines imposed on individuals and corporations for violating laws or industry regulations.

Financial Management Service

    The Financial Management Service is a branch of the United States Treasury that deals with non-tax government debt. Rather than requiring the Internal Revenue Service to collect other money that people owe the government, the federal government began this service back in 1940. The Financial Management Service also makes payments on behalf of the federal government, including Social Security benefits. If you owe the government non-tax money, you generally pay the Financial Management Service.

Significance

    Besides knowing who to send your loan payments to, there are several cases where it's important to distinguish between non-tax debt and other forms of debt. For example, in a personal bankruptcy case, the court can only dismiss certain types of debt. Some non-tax debt, such as student loans, are exempt from being discharged. Non-tax debts that fall under the general definition, such as credit card debt and a mortgage loan, are eligible for reorganization or discharge. Different types of debt may also weigh differently on a business's credit rating or its financial evaluation by investors.

Help for Drowning in Debt

Drowning in debt can hinder your sleep and create anxiety, which can trigger physical symptoms such as stomach pains, depression and tension headaches. Rather than let debt control you, learn to handle your debts and pay off balances faster.

Budgets

    Spending money on extras each month takes a chunk of your money and leaves little left over for debt payments. Create a budget at the beginning of each month. Write out your monthly required expenses, including minimum debt payments, and exclude unnecessary expenses such as entertainment, dining out and shopping. Allot a certain amount of money each month to grocery shopping, transportation, housing and utilities. Stay within the budget. Use whatever you have in disposable income to pay down high debts before you spend any of that money on other items. Let's say you owe $10,000 in credit card debt. You could pay it off in two years with $400 monthly payments.

Interest Rates

    The interest rate on your credit card plays a role in debt elimination. It doesn't hurt to contact your creditors and negotiate a lower rate on your credit cards. This works to your advantage in two ways. First, lower interest rates reduce interest charges and minimum payments. Second, paying less interest means that your creditor will apply more of your payments to the principal balance. Often simply asking for a better rate results in one.

Debt Settlement

    Creditors vary, however; some are eager to work with debtors to reach a debt settlement. If high debts prevent you from making monthly payments, rather than lose money completely, your creditor may forgive a percentage of your debt and accept a smaller payoff. Call your creditor to negotiate a settlement. Get everything in writing once you've reached an agreement with your creditor.

Debt Counselors

    Overwhelming debt can be too much for you to handle alone. A debt counseling agencies will assist you in getting out of debt faster. Counselors provide numerous services, such as speaking with your creditors for you and working out a new repayment plan, which often involves lower interest rates and minimum payments. Nonprofit debt counseling agencies do not charge a monthly fee.

Saturday, December 15, 2007

Statute of Limitations for Medical Debt

A medical debt, like other debts, is limited by state statutes of limitations. What statute of limitations applies to your medical debt can differ based on various factors, some of which require the expertise of an experienced attorney to determine. Talk to a lawyer in your area if you need legal advice about medical debts.

Limitations

    A statute of limitations is a legal time limit. It states that a party has a limited amount of time in which to take a specific action. When it comes to medical debts, statutes of limitations limit the time in which a medical creditor, such as a physician or health care provider, has to sue a debtor for an unpaid medical debt. There are four kinds of debts that state statutes of limitations address: open accounts, promissory notes, written contracts and oral contracts.

Medical Debts

    Medical debts are usually incurred after a patient has received treatment from a health care provider and signed a written agreement with the provider. If, however, the patient did not enter into a written agreement with the provider, the medical debt might be considered an oral agreement. This distinction is important as the statute of limitations that applies may differ based on whether the agreement is an oral agreement or written contract.

State Differences

    Each state has its own statutes limiting when a creditor can sue a debtor to recover an unpaid debt. For example, as of April 2011, the state of Alaska has a statute of limitations that imposes a six-year limit on all types of debt. The state of Louisiana, on the other hand, imposes a 10-year limit on all kinds of debts except open accounts, which is subject to a three-year limit.

Affirmative Defense

    Even if the statute of limitations on debt has expired, that doesn't mean a health care provider to whom you owe a debt cannot sue you. You can still be sued for failure to repay a medical debt and will have to go to court or file a response before you can avoid the debt because of the statute of limitations. The statutes of limitations afford a debtor an affirmative defense, meaning the debtor has to respond to any lawsuit and prove that the time limit has expired.

What to Do When You Receive Judgment Papers From a Creditor?

When you stop making payments to a creditor, it has the right to sue you in an effort to collect your outstanding balance. If the creditor is an agency of the federal or state government, such as the U.S. Department of Education, IRS or a state treasury department, these agencies do not have to file a suit against you before they can begin garnishing your wages, state income tax refund and federal income tax refund.

Lawsuit

    When you receive the lawsuit paperwork notifying you of a creditor's lawsuit, you may still have some options to avoid court and possible wage garnishment. You can contact the creditor or law firm listed on the lawsuit paper work and try to negotiate a settlement agreement. Often times, creditors will allow you to settle your account for less than the full balance, but they may demand that you pay the settlement amount in full. You can also try to negotiate a monthly payment arrangement. Negotiating and accepting settlements and payment arrangements is at the creditor's discretion. They have no legal obligation to work out any sort of arrangement with you.

The Judgment

    When you receive a judgment for a debt, it is from the court and not the creditors. The papers will list the name of the creditor, the amount of debt you owe and the judge's final decision. A final judgment in favor of the creditor means the judge is allowing them to begin garnishing your wages as a means of collecting on the balance you owe. Generally, the only thing you can do to stop the garnishment at this point is to pay off your outstanding balance in full.

Filing a Motion to Quash

    After you receive a judgment, you have the right to file a Motion to Quash a Writ of Garnishment. By doing so, you are asking the judge to dismiss the case and void the creditor's writ of garnishment. You should consider filing a motion to quash if the creditor did not properly serve you with the lawsuit papers. Courts refer to this as lack of jurisdiction. You may also file a motion to quash if you can prove that the debt does not belong to you, such as in the case of identity theft. However, if you are a victim of identity theft, you need to file a police report if you haven't already. A judge may ask you to present a copy of the police report in court.

Filing a Claim of Exemption

    Income that is exempt from private creditor garnishment includes regular Social Security payments, worker's compensation benefits, disability payments and unemployment benefits. The above-listed type of income is not exempt from state and federal agency debt. If you make income that is less than 30 times the federal minimum wage, it is exempt from garnishment for state debts, federal debts and private creditors. To calculate 30 times the federal minimum wage, multiply the current minimum wage by 30.

How to Correct Negative Remarks on a Credit Report

Your credit report plays a large role in your financial life and if you have negative statements on it, it can end up costing you a lot of money. Instead of simply leaving these negative remarks on your credit report, you may be able to take action and remove them. By communicating with your creditors and with the credit bureaus, you could potentially get the remarks removed and start to improve your credit score.

Instructions

    1

    Get a copy of your credit report so that you can see the negative remarks. If you plan on removing these remarks, you need to see exactly is included in the report. You can find out exactly which creditors left negative remarks and what they said. You can get a free copy of your credit report from the credit bureaus or buy one from FICO.

    2

    Contact your creditor to ask them to remove the negative statement from your credit report. You can start by calling your creditor on the phone and talking to them about the issue. If they are unwilling to remove the negative statement after talking, you can send a letter. Write a letter to the creditor and politely ask them to remove the statement. You should also include any proof of payment if you believe that the statement was left in error.

    3

    Contact the credit bureaus immediately after contacting your creditors. You can write letters to the credit bureaus that have the same information as the one that you sent to your creditors. Include the same proof of payment that shows when you paid off your accounts. If the company is incorrectly reporting that you had late payments on your account, you should be able to prove when you paid your bills with documentation.

    4

    Use a rapid rescoring service to help you with the process. If you are in the process of applying for a mortgage or some other type of loan, you can hire a rapid rescoring service to help improve your credit file. They have relationships with credit bureaus and they can often get negative remarks removed from your credit file within two or three days.

    5

    Investigate any credit repair services before hiring them to do work for you. When you work with this type of company, do not pay them for the services until they have done what they claimed they would do. Many of these companies are scams and they do not do what they claim, so you have to be careful in this industry.

How to Reverse the Charges on My Visa

How to Reverse the Charges on My Visa

One of the benefits of making purchases with a Visa card, is that you can reverse a charge if the product you ordered never arrived -- if it arrives damaged -- or if a false charge is made. If a merchant will not reverse your charge, Visa will handle it for you, and thoroughly investigate your official dispute.

Instructions

    1

    Return to the merchant and ask to reverse the charge to your Visa. If the merchant won't work with you to reverse the charge, move on to Step 2.

    2

    Contact Visa. You will need to provide the customer service representative with the date, amount of the charge, the name of the merchant, and a reason why you want to dispute the charge. Visa will then contact the bank of the merchant, and ask for a chargeback.

    3

    Write a letter to Visa explaining the situation with the above information, if Visa requires you to do so. This happens in some cases. Visa may also require your signature to pursue the chargeback, especially if the merchant has breached the law in any way.

    4

    Contact the authorities and report the charge if the merchant charged your Visa card illegally. Visa will require you to do this, if you have not already.

Is Debt Consolidation Good?

Debt consolidation businesses are booming as many people struggle under the weight of big debt. Choosing to consolidate your debt can seem like an easy solution if you can save monthly expenses. But is debt consolidation a good thing? For some, yes. For many, it may not be the answer you need to save money on your bills. Learn how debt consolidation works so you can decide if it's good for you.

Function

    The function of debt consolidation for credit card debt, according to many who offer the service, is to bring your monthly debt payments down by combining all of your bills into one. The payments are made to the consolidation service and not any of the original creditors. The service would charge you a fee that can either be a flat rate or a percentage of the original balance per creditor. In exchange, the consolidation service negotiates a lower percentage rate for each creditor. If the consolidation is a loan, the consolidation service can offer to settle the accounts for a lower amount. To consolidate mortgage debt, debt consolidation companies would assume the mortgage at a lower interest rate with the home serving as collateral.

Time Frame

    It can take less than three days for debt consolidators to negotiate new terms with each creditor, should the creditors accept the program. Consumers would most likely have to authorize the consolidation service to draft the payments straight from their checking accounts. Once the terms are agreed upon, consolidation loans can take anywhere from a few months to several years for a payoff.

Benefits

    One major benefit if debt consolidation is that you can pay off several high-interest credit cards at a significantly lower interest rate. Lower interest rates means less time it should take to pay off the accounts. Also, debt consolidation allows you to pay just one bill instead of several creditors that require payments at various times of the month. With debt consolidation, you pay once a month to one service. For home equity consolidation loans, there is a possibility of a tax deduction because of what you pay in mortgage interest rates.

Considerations

    Debt consolidators often do not work for free. Many ask for long-term payoffs that, at first, seem reasonably lower but cost you more in the end. For example, let's say your debt is $10,000 at an average of 20 percent APR that would take 5 years to pay off at $200 per month. If the consolidation loan gets your payments down to $100 a month, you would still be paying for the same debt for 10 years, plus whatever fees the consolidation company charges. If you never reach a point where you can put some of that saved money towards the debt, you stay in debt longer. Your creditors do not always list your accounts as paid in full by the consumer. They can be listed as debt management, charge-offs, closed by creditor...you name it. Even if you've never missed a payment, having these labels attached to your credit report may turn off future lenders.

Prevention/Solution

    One solution is to transfer balances of credit cards into a lower-interest card. You may still end up paying the same amount each month on your credit card bills, but you still have the benefit of making one payment. You will also pay off the total debt faster since the interest rate is lower. Another way to avoid debt consolidation for credit cards is to refinance other loans you have, such as automobile loans. If you can shave off 3 percent of your loan's percentage rate, take the savings and pay on your credit card. You may end up extending the loan of your vehicle, but at least you have something to show for it on a 7 percent APR vehicle versus a 19 percent credit card.

Friday, December 14, 2007

Garnishment Laws in Missouri

Garnishment Laws in Missouri

In Missouri, so long as creditors follow Missouri law and obtain a court order for garnishment, they can legally intercept portions of a debtor's wages. This debt collection method is called wage garnishment. The three most common reasons for wage garnishment are creditors collecting on an unpaid debt, federal and state government collecting back taxes and custodial parents going after unpaid child support. Different rules apply to each scenario in Missouri.

Creditors

    Creditors (like credit card companies) may garnish debtors' wages if they follow the proper procedure under Missouri law. First, a creditor must obtain a judgment against a debtor. That means the creditor has to sue the debtor and win a money judgment. Oftentimes a debtor may concede the suit knowing that the debt is unpaid, or simply not defend the case. If the debtor does not defend the case, the court may enter a default judgment against her. Once the creditor obtains a judgment, it may seek to garnish the debtor's wages. Missouri law places limitations, however, on the amount of wages a typical creditor can garnish. In Missouri, a creditor may only garnish 10 percent of wages for a head of household and 25 percent for a single person.

Taxes

    In Missouri, taxing entities can garnish wages. The Internal Revenue Service may garnish wages to collect federal taxes. The Missouri Department of Revenue may garnish wages to collect delinquent state taxes. For delinquent taxes, the limitations normal creditors must observe do not exist. There is no limit to the percentage of wages a taxing authority may garnish. In addition, a state or federal taxing authority does not have to obtain a court order to effect a garnishment. These agencies can garnish through an administrative process.

Child Support

    Custodial parents may seek to garnish the wages of a noncustodial parent who has failed to meet child support obligations. Limitations exist to the amount of wages a custodial parent may garnish a noncustodial parent's wages. However, these limitations are greater than the limitations for ordinary creditors. A noncustodial parent may have either 50 or 60 percent of his wages garnished. The amount garnishable is 50 percent for noncustodial parents who take care of a separate child or spouse and 60 percent for those who do not. In addition, a custodial parent may garnish another 5 percent for payments that are more than 12 weeks delinquent.

Tips on Financial Depression

Tips on Financial Depression

Adults often get depressed over financial troubles --- whether it's job loss, stock market fluctuation, identity theft or other hardships. News reports feature stories about adults so severely in financial despair that they harm themselves or their family. It may seem like there is no way out, but all situations can be overcome. If depression begins to affect your daily life, it's time to take action to see brighter days ahead.

Get Help

    Depression can linger on for several weeks or months. Dr. Bill Knaus of REBT Network says deep depression is often accompanied by anxiety and anger over seeing no way out. If your persona has changed and your thoughts are filled with negativity, it is time to seek professional help, especially if contemplating suicide. Call a crisis hotline or see a psychiatrist or other counselor.

Stay Positive

    Negativity only brings you deeper into depression. Surround yourself with positive friends and family as a strong support system. Be thankful for what you do have and commit to changing your life. What's done is done, so sulking and dwelling upon poor decisions from the past is not productive.

Face the Issue

    Do not ignore your financial crisis. Be realistic. Assess your situation and find ways to improve. Your problems won't be solved overnight. It takes dedication and patience, but give yourself credit as you take the steps necessary to alleviate financial strife.

Realize You're Not Alone

    When times get tough, it helps knowing you're not the only one suffering. There are probably people around the world in worse situations. Each year, nearly 57 million struggle at some point with depression, reports Dr. Knaus.

Join a Support Group

    Meet with others who are also going through or have dealt with financial difficulties. It is comforting to discuss similarities and share emotions with those who know exactly what you are feeling.

Slowly Relieve Debt

    Look for ways to save money. Go out to eat less, eliminate impulse buying and cut unnecessary expenses. Use cash instead of credit cards. Those who pay in cash spend an average of 12 to 18 percent less than credit card payers, according to the Maryland State Bar Association. Ask creditors to lower your interest rates, and don't be afraid to seek counsel from a financial planner, debt consolidation company or bankruptcy attorney. The sooner you get back to work, the better. Seek a new job or take on a second one to earn more money. It may take some time, but stay hopeful and don't give up. Take things one day at a time.

Maintain Your Health

    Exercise, remain active and get adequate sleep. Dr. Knaus cites Duke University studies that reveal exercise is just as effective in lowering depression as antidepressants. The doctor also recommends eating more fish and other foods high in omega-3 fats to lower some types of depression.

Remain Social

    Relax and do things you enjoy to briefly take your mind off of finances. There are plenty of activities that don't require money. Whatever you do, avoid turning to alcohol. It will only make your financial and emotional situation worse.

What Happens When You Settle Credit Card Debit?

What Happens When You Settle Credit Card Debit?

When your credit card debt is out of hand, you don't have to change your telephone number or hide from the credit card company. You can try to settle the overdue balance and free yourself from credit card debt.

Facts

    You can settle credit card debt with either the original credit card company, or if the debt is more than six months old, the collection agency that bought the debt.

Features

    The credit card company will update your credit report to reflect the settlement. This notation can remain for seven years and reflects poorly on your debt management.

Effects

    The credit card company will write off the unpaid balance you owe as a tax loss. You must then include the written-off debt as income and pay taxes on it.

Considerations

    If you settle debt with a collection agency, rather than credit card company, you can request that the company delete its negative collection account from your credit report before you make a payment.

Significance

    Although settling credit card debt can bring debt relief, evidence of the settlement on your credit report will make it tougher to get approved for new credit cards with reasonable interest rates.