How to Deal With Upside-Down Home Loans in California

An "upside down" home loan means you owe more on the house than what it's worth. Houses lose value for a variety of reasons, including because of recessions and declines in the home-buying industry. People who may have paid inflated prices for their homes --- often with little money down --- are among the most likely to become victims of upside-down loans. The "Los Angeles Times" reported in 2010 that millions of people around the country --- including many in California --- were struggling with upside-down mortgages. According to the "Times," some 400,000 homes were expected to be be sold in the state in 2010 for less than the amount outstanding on the mortgage.

Instructions

1

Ask a California real estate agent to provide you with an approximate value of your home based on recent comparable sales in your neighborhood. Compare that price with the balance due on your loan to determine how upside down your mortgage really is.

2

Make an appointment with a California housing counselor certified by the U.S. Department of Housing and Urban Development, or HUD. Find a counselor in California by checking the HUD website (see Resources). Examples include the Anaheim Housing Authority in Anaheim, as well as the Neighborhood Housing Services of Orange County, also in Anaheim. The counselors are experts in working with people who are upside down on their mortgages.

3

Authorize the counselor to contact your lender directly to seek a solution. The most common solution is a short sale. A short sale is done in cooperation with the lender, who agrees to allow the house to be sold for less than the remaining balance on the loan. The lender often agrees to forgive the remaining balance --- but that must be stipulated in the short-sale agreement. That's why it's important to have a certified housing counselor negotiate for you. Another option is loan modification, which allows the mortgage to be completely rewritten by the lender. Improved terms such as a lower fixed interest rate and lower payments may make it worth your while to remain in the home while its value increases over the years.

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Creditor Harassment & Rights in New Jersey

Falling behind on bills can be stressful enough without having creditors harassing you at your house, place of employment and mailbox. Creditors have a legitimate right to attempt to recover their money, however, the New Jersey Fair Debt Collection Act protects debtors from being unreasonably and illegally harassed. The New Jersey Act requires creditors to comply with statutes described in the act or face fines, incarceration or both.

Time and Place

Debtors have the right not to be contacted about a debt outside of the hours of 8 a.m. to 9 p.m. This time frame is to be observed within the debtor's time zone. For example, a collection agency on the West Coast, attempting to collect a debt from a New Jersey customer, cannot call before 6 a.m. PST and 7 p.m. PST to comply with the time zone of New Jersey.

Phone Calls

Creditors cannot call a debtor's place of employment more than once per month unless given express written permission by the debtor to do so. Before calling a New Jersey resident's workplace for the purpose of debt collection, the creditor or collection agency must make reasonable attempts to contact the debtor at his residence.

If the debtor informs a creditor that he does not wish to be contacted at work or the creditor becomes aware that the employer does not allow personal phone calls to employees, all calls to the debtor's place of business must immediately cease.

In calling the debtor's place of employment, the creditor is prohibited by the act from disclosing the purpose of the call to anyone but the debtor.

Mail

Letters requesting payment may be sent to the debtor's personal mailing address but when it comes to contact with the debtor through work, only one letter is allowed to be sent to the debtor. The envelope containing written communication to the debtor cannot display any markings or logos that denote it is from a debt collection agency. Nor can anything on the outside of the envelope denote that it is being sent as an attempt to collect a debt.

Cease and Desist

Debtors in New Jersey have the right to tell debt collectors to cease and desist all communications with the debtor. This applies to contact at work or home. Once told to stop communications, the debt collector must immediately stop, other than to send one letter detailing that communication will cease. The creditor still has the option of pursuing collections through a civil court action, which can include seeking a judgment and wage garnishment.

Attorneys

Once a debtor tells the creditor he is represented by an attorney, the creditor or debt collector must go through the debtor's attorney for all collection attempts.

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How Does a Collections Agency Find out if You Have an Estate When You Die?

When you die leaving behind debts that are not secured by collateral, such as collection debts, your creditors have the right to file a claim against your estate with the probate court handling your affairs. The probate court pays off your unsecured creditors and then distributes the remaining inheritance to your loved ones. Collection agencies find out about deceased individuals' estates in a variety of ways.

Estate Executor

If you designate an executor for your will and estate, that individual bears the responsibility of handling your financial affairs upon your passing. The executor typically obtains copies of your death certificate and notifies your creditors of your death. The executor also will sometimes publish notice of your death in the local newspaper to give creditors the family is unaware of the opportunity to file payment claims. Once the collection agency receives notice of your death from the executor, it files a claim with your county's probate court.

Family Members

If you do not have an executor or the executor was not aware of your collection account, the collection agency may find out about your death and your estate by calling your home and demanding payment. When your family members notify the debt collector of your death, the collection agency can then file its probate claim. Collection agencies often request copies of the deceased's death certificate from family members before searching probate records.

Computer Programs

According to the "New York Times," expanding technology allows collection agencies to search probate cases across the country via computer. If the collection agency uses a computer program that keeps track of new probate cases, the company finds out about your estate--and can subsequently file a claim--as soon as the probate court opens the case.

No Estate

Not everyone leaves an estate behind when they die. If your total debts exceed your assets, you are categorized as "insolvent." Creditors cannot file claims with the probate court to collect debt from insolvent individuals because no assets exist with which to pay the claim. Thus, even if a collection agency finds out about your death that does not mean that the company can pursue legal avenues for payment.

Time Limits

State laws vary regarding the length of time creditors have to file claims. If the collection agency discovers the existence of your estate but does not file its claim in a timely manner, the probate court closes the case and will not pay the company's claim. Unless a family member co-signed for the original debt or specific state laws, such as community property laws, dictate otherwise, your family members are not liable for collection accounts you leave behind upon your death.

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How to Dispute Rights for Charged-Off Credit Cards

The Fair Trade Reporting Act gives you the right to dispute anything on your credit report. That includes credit card accounts that are listed on your report as charged off. Writing a letter to dispute the charge-offs is easy. Getting the reports removed from your credit report is much more difficult. The Federal Trade Commission reports that negative information can be removed from your credit report only if it is outdated or inaccurate.

Instructions

1

Navigate to the Annual Credit Report website to view and print a copy of your credit report. The site was established by the nationwide credit bureaus to offer free credit reports as required by the Fair Credit Reporting Act.

2

Review the report to find the charged-off accounts. The accounts will be listed in a section of the report along with all your other credit accounts, and will be marked as charged-off. Note the date of last activity on the account -- such as the last payment that you made. By law, the charge-off can be reported for seven years after the last date of activity.

3

Write a letter to the credit bureau disputing the charge-off. In your letter, describe why you are disputing the charge-off. Tell the credit bureau that the account information is outdated and should be removed for that reason -- if that is the case. Or if the information is inaccurate state that as a reason for your dispute and describe the inaccuracy.

4

Mail your dispute to the credit bureau at its address listed on the credit report. Allow about 30 days for a response, according to the Federal Trade Commission. The information will be removed from your account if the credit bureau agrees that it is outdated. Any inaccurate information will also be removed following the credit bureau's investigation. The information will remain on your report in its present form if the credit bureau denies your dispute.

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What Is the Meaning of Terms Used on Credit Reports?

Credit reports contain information about your credit accounts, including mortgages, installation loans and credit cards. Each account has information about its limits, balances, payment history and account status. There also is a notation field with information such as whether your credit account is the subject of dispute or included in a bankruptcy.

Basic Account Information

The same general information appears for all accounts on your credit report. A truncated account number helps to identify your various credit accounts. It lists the type of account, such as installation loan or credit card. Your highest balance, overall limit and minimum monthly payments are given. Most credit reports show a two-year payment history, although the credit bureaus track this throughout the life of the account.

Dispute

Each account has a comments field with extra information. One such notation is a dispute status, which can display in the status field for each account. If a borrower feels that the information for an account is inaccurate, he can dispute that information and the company has to verify that it is correct. Consumers can use disputes to clear up problems with account balances, late payments and collection accounts.

IIB

A notation of IIB on a credit account stands for "included in bankruptcy." When an account has this notation, it was part of a bankruptcy filing and the individual is no longer responsible for the debt. Instead, the court has discharged the debt entirely in a Chapter 7 bankruptcy, or consolidated it into a payment plan under Chapter 13.

Charge Off

If you are repeatedly late on a credit account, the company may charge it off. A charge-off means the account is in collection or will transfer to an external collection agency. A charge-off has a very negative affect on your credit score, although the specific impact depends on whether you have other negative marks on your credit.

Delinquent

Delinquent accounts include those with a history of late payments, or payments not meeting the minimum requirements, as well as accounts in collection or charged off. Delinquent accounts are a negative factor on your credit, and are usually in a specific section on your report.

Public Record

The public record section of your report involves court filings and other public records that affect your credit. Examples of public records on your report include bankruptcy, liens, judgments and foreclosure.

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How to Initiate a Garnishment

Wage garnishment is one of the best ways to secure payment on a debt from a debtor who is employed. When you garnish an employee's wages, his employer withholds his monthly payment on the debt before giving him his paycheck, guaranteeing that you will get your money each month and that the debt will eventually be paid back. Go through the civil court system to initiate a wage garnishment.

Instructions

1

Win a judgment against the debtor in civil court. Serve notice to the debtor that you are suing him so that he can contest the lawsuit if he wishes. Unless the debtor can prove that he did not incur the debt or that there are extenuating circumstances, the judge will rule in your favor.

2

Obtain a form from the court for wage garnishment. Complete the form. Provide the debtor's name and place of employment as well as the amount of the judgment against her. If your state allows you to collect court costs against a debtor, add the amount of court costs to the judgment and report the total she owes on the garnishment form. File the completed form with the court.

3

Check your mail. Two to three weeks after you file the order for garnishment, you will receive a signed copy of the garnishment order from the judge who handled your case. Serve this order to the debtor and his employer by giving copies to the sheriff to deliver or by sending them to the appropriate parties via registered mail.

4

Wait for the employer's response in the mail. Occasionally, the employer will report that the debtor no longer works for his company. If this happens, you must see the clerk of the court to schedule a hearing. You have 15 days to do this after receiving this notice from the employer. At the hearing, the judge will examine the debtor's sources of income, if any, and determine whether you can garnish those sources.

5

Collect payments each month from the debtor's employer until the debt is paid off. Apply the payments to the debtor's account and provide the debtor and his employer with a monthly statement showing the debtor's balance and how much has been paid so far. When the debtor has paid off his debt, file an order of satisfaction with the court. When you get the signed copy of this order, send it to the debtor's employer to cancel the wage garnishment.

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How to Find Credit Repair Software

If your credit score is below the national average of 680, you can use a credit repair program that helps you organize your outstanding debt. Credit repair software collects information from the three major consumer reporting agencies--TransUnion, Equifax and Experian--and provides a credit report that allows you to see your current score. Many of the credit repair programs offer a limited-time free trial, which allows you to test the software prior to purchasing a license for the full version. Credit repair software can be bought online or at your local computer software retail store.

Instructions

1

Get Credit Aid. Credit Aid is a credit repair program that allows you to order your credit report form, and also generates a letter that can be sent to creditors to negotiate a payment plan for delinquent credit accounts. The software includes a video tutorial that helps you set up your credit information on your computer, and includes a 90-day money back guarantee if your credit score doesn't improve after using it.

2

Get Report Guru Credit Repair Kit. As a credit repair program, Report Guru Credit Repair Kit is meant to assist you in creating letters for you to send to credit bureaus and debtors. The program has a basic template that allows you to input the name, address and amount into the software-generated letter. Once created, you can mail the letter to the credit bureaus who will contact you about payment arrangements.

3

Get Turbo Credit Consumer Edition. Similar to the previous programs, Turbo Credit Consumer Edition provides a point-and-click interface that enables you to create dispute letters. It also includes a database of reasons as to why you were late paying on your account. The software includes updated credit reports from all three consumer reporting agencies, which allows you to view your credit report for any errors that can be legally removed.

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How to Get Medical Bills Help

Are you struggling with unpaid medical bills? Help may come in a variety of forms, but you'll need to be proactive in seeking a solution. From government assistance, to payment and charity care plans, there are many options for getting medical bills help. Here are some steps that you can take to begin to find your way out of mounting medical bill debt:

Instructions

1

Apply for Medicaid. Medicaid is a program that is administered jointly by federal and state governments to provide medical bills help for certain categories of people. Pregnant women, children and teens, the elderly, blind and disabled may be eligible. Each eligibility category has different income limits, so you'll need to check with the agency in your state that administers the program. The program can generally cover medical bills that were incurred up to three months before the date that you apply. In general, able bodied adults do not qualify, even if they do not make much money.

2

Request a charity care application from the doctor or hospital. While small offices generally don't offer such a plan for medical bills help, many hospitals do offer charity care. Generally, you'll need to fill out an application and provide proof of your income. The hospital may waive all charges, or may reduce the amount you owe by a certain percentage.

3

Set up a payment plan. Many doctors and hospitals are willing to provide medical bills help through a monthly payment plan. Even if you owe a lot of money, you might be surprised to find that you can make low monthly payments, often interest free. The worst thing you can do is ignore the problem, as many people do when they face mounting bills. Don't ignore your bills - get in touch with the billing department to see what kind of arrangements can be made.

4

Negotiate a reduced amount with the creditor. Medical creditors are generally more amenable to making favorable payment arrangements with you than other kinds of creditors. Especially if you've been unable to make regular payments, you might be able to negotiate medical bills help in the form of a lump sum payment to satisfy your debt. This is a good idea if you'll be receiving an influx of cash, like an inheritance or income tax refund. Even if you don't qualify for charity care, you may be able to negotiate a settlement. There are debt settlement negotiators that can help you with this process, for a fee, of course.

5

Consider filing bankruptcy as a last resort. If you've exhausted all avenues for medical bills help, you can get out from under your debt by filing for bankruptcy. Discuss this option with an experienced bankruptcy attorney, since this step has far reaching consequences.

6

Get low cost insurance for the future. Check with your state health care authority to find out if there are any fully or partially subsidized insurance programs for which you may be eligible. If you can't afford full insurance coverage, you may be able to purchase insurance that is limited to catastrophic illness or injury.

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How to Be Debt-Free in 10 Years

It doesn't matter what the economy is like, people are always worried about paying off their debt. Depending on the amount of debt you have, you may be able to pay your debt off quickly. If your debt is larger, you may want to create a goal to pay everything off in 10 years. Creating a plan to meet that goal--and sticking to it--can help reduce financial stress. The following steps will ensure that you're debt free in 10 years.

Instructions

1

Make a spreadsheet of your debt. It's not uncommon to have several credit cards, loans and credit lines. Looking at a large stack of bills can make your debt seem overwhelming. Take time to create a spreadsheet that lists each debtor and the amount owed. As you pay your bills each month, you can update the totals. Seeing your debt go down each month can motivate you to work harder towards being debt free in 10 years.

2

Send more than the minimum payment. When you only pay the minimum amount due, you not only increase the time it takes to pay off the debt, but you also increase the interest to be paid. A quick look at your budget and other expenses can better help you determine how much you can afford to send to each debtor each month.

3

Pay off high interest debt first. You may be tempted to pay off small accounts first, but it makes more sense to pay off high interest debt first. The faster you're able to pay off this debt, the less you'll end up paying on the debt.

4

Create payoff date goals for each debt. Once you've determined how much you can pay each month, do a bit of calculating to determine when the debt will be paid off. Add these dates to your spreadsheet and calendars. To keep yourself motivated, you can also write down small goals as well. For example, you might have yearly goals that state what your amount of debt should be by that date.

5

Review your spreadsheet and plan often. It doesn't do any good to create goals and a plan if you don't stick to them. Each month, sit down and see where you're at. It's important to make sure you're doing what it takes to meet your goals. Also make sure to look over your budget to see whether or not you can make larger payments.

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Quick Ways to Boost Your Credit Score

Perhaps you have been out of work or have incurred medical bills exceeding your ability to pay. Whatever the reason, your credit score has plummeted, hampering your efforts to get new credit. Fortunately, there are several ways to quickly boost your rating so you can make the purchase you need at a fair interest rate.

Know Your Score

Your credit score is the main criteria lenders use to grant or withhold funds. The only way to know your score is to get your reports from the three credit bureaus---Equifax, TransUnion and Experian. Under federal law, you may get a copy each year from all three. If you have not obtained your report in the last 12 months, you can do so for less than $10.

Cleanse Your Reports

Review your credit reports carefully. First, look for errors like someone else's records appearing on your report. If you have paid off an account, make sure that is mentioned. Often, a report will show a certain account has gone to collection, when it has not. That error alone can cost about 100 points.

Lower Your Debts

Try to pay off as many of your debts as possible, while increasing the amount of your credit lines. The purpose is to reduce the percentage of credit used from the total amount granted. A good rule of thumb is to keep this figure below 30 percent, which will raise your credit score. In this vein, do not apply for new cards, which will lower your score. Instead, ask your current card companies to increase your credit limits.

Pay On Time

Get into the habit of sending payments to your creditors when they are received. If possible, pay off the entire balance because that will greatly help raise your credit score because you are acting to lower the amount of credit you have been granted. If your due dates are inconvenient, simply ask for different dates.

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How to Collect Child Support Debt in California

Every state has a child support agency that can help you receive child support or enforce existing child support orders. In California, you can apply to Child Support Services through your county of residence. You must fill out a detailed application and provide as much information as possible to help expedite your case. You can apply for child support without fear of violent retribution by informing CSS about your fears on the application so that it does not release any information about you to your child's other parent.

Instructions

1

Download the application paperwork from Child Support Services or contact CSS by phone or email to request an application packet.

2

Complete the application for services with a black pen. Provide identifying information for each of your children, such as their names, date of birth and ethnic group. Do not list children who are not biologically related to the noncustodial parent who owes you child support. Provide financial and identifying information about both the custodial and noncustodial parent. Include the court order regarding child support. Provide information about the noncustodial parent's habits in the comments section, especially any dangers CSS should watch for when trying to enforce the order, such as a bad temper or gun ownership.

3

Sign and date the application and the request for child support services form. Bring the child care provider form to your babysitter or day care provider. The child care provider must fill out this form, reporting how much you pay him for child care, and sign and date the form.

4

Complete the visitation verification form. Report how often the child visits the noncustodial parent. Sign and date this form.

5

Provide information about your child's health insurance on the health insurance form. Include information about your insurance provider, the other parent's insurance provider and your children's insurance. Sign and date the form.

6

Complete the Declaration of Support Payment History. List any amounts of court-ordered support, how much you were paid and when you were paid. Sign and date the form.

7

Complete the Domestic Violence Questionnaire. Indicate if you or your child has ever been subject to domestic violence and explain the incident(s). If you feel you are in danger, tell CSS not to disclose your identifying or contact information to your child's other parent by checking the correct box on the bottom of the form. Sign and date the form.

8

Attach any child support or other court orders to the application package. Mail the entire package to Child Support Services. Pay a fee of $25 along with your application.

9

Check your mail for information from Child Support Services. CSS will let you know if it needs more information from you or if you need to testify in court. It will also send you a letter when child support services have been established for you. CSS does not have a specific time frame for completing requests. You can contact CSS at any time during the application process.to find out the status of your case.

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Can a Lien Be Put on a House if My Wife Owes a Debt?

Calculating and resolving debt can be an unsettling process. Worrying about a lien being placed on your home compounds the issue. This process can be even more confusing if only one spouse owes the debt. Educating yourself on your rights will help you know what to do if creditors come knocking.

Definition

A lien is a claim someone can make to obtain possession of your property if you owe that person or organization money. The claim becomes legally enforceable -- known as a "judgment lien -- if you are sued for the money and a court determines you are responsible for the debt. You are unable to regain ownership until the debt is settled. If you own real estate, it's first type of property a lien is placed against.

Ownership

Much depends on whose name is on the home's mortgage and the deed. If your wife's name does not appear on the deed or mortgage, a lien will not be placed on your home. This scenario assumes that your name is not attached to her debt, such as in a joint credit line. If your wife is a co-owner in any capacity, it is possible a court will place a judgment lien on a portion of the house. Technically, your spouse owns 50 percent of the home, so a creditor could ask for a lien against half the house.

Protection

Certain things are in place to protect you, especially if the debt is only in your wife's name. In most cases, the courts will not sell your house to fulfill the debt. However, if the lien is still in place when you sell the home, the creditor will be able to collect on your wife's portion of the sale. Most states have homestead laws, which allow you to protect a certain portion of your home's equity. If your spouse passes away, the debt is nontransferable, so the lien is lifted.

Lien Settlement

To avoid execution, you or your wife must pay the balance of the debt. However, even if a judgment lien is placed against your property, it can still be lifted. If your wife fulfills her debt, the creditor will go through the process of lifting the lien. Be aware that a lien, paid or unpaid, will show up on a credit report, and can harm a credit score.

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When Will Unemployment Extension Benefits Be Paid?

When you move from your regular unemployment benefits to extended unemployment benefits, you can expect payment to be similar. In fact, your unemployment benefits are paid to you in the same manner, such as check, direct deposit or benefits debit card. You will even receive the same weekly benefit amount as with your initial unemployment claim.

About Extended Benefits

A federal program, the emergency unemployment compensation benefits offer extended unemployment benefits to claimants that remain unemployed after exhausting an initial unemployment claim. The extended benefits were created as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. A total of four tiers of EUC benefits are available to claimants. These four tiers offer up to 53 weeks of additional benefits.

Do You Have to Apply for the Extension?

The unemployment extensions are a continuation of your regular unemployment benefits. As a result, some states do not require claimants to submit an application for benefits. In such instances, an award letter is sent to claimants as they qualify for each tier. In other states, claimant are required to apply for one or all of the extended tiers of benefits. If you are in one of these states, the application is almost identical to the initial unemployment application. The difference is the addition of questions regarding your work search efforts since becoming unemployed. If you think you qualify for an extension but are not sure, you can call your unemployment agency to inquire.

Moving Between Extensions

As you move from one tier of EUC benefits to another, you may experience a small delay. This is because you must wait for an award letter or an application to be approved before you start receiving your claim forms. Despite the possible paperwork delays, you will not miss out on any benefits. With the extensions, the benefits are retroactive so you can get multiple claim forms at once to catch up on your benefits.

How to Certify for Benefits

When you are moved to an unemployment extension, you are required to certify your benefits via weekly or biweekly claim forms. The forms and their submission is identical to those you received for your initial unemployment benefits. To certify your benefits, utilize the same methods as you did with your initial benefits claims. Methods vary by state but include online filing, over-the-phone filing and by-mail filing. Once your claim form is received, the unemployment agency usually has 10 business days to get your benefit payment to you. In the case of retroactive benefits, you will usually get all of your benefit payments on one check when the agency is catching up on your extended benefits.

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10 Strategies to Reduce Your Debt

Personal debt is very high in the United States, and many people are struggling to gain control of their finances. Experts like Dave Ramsey and Suze Orman are making a name for themselves by teaching people common sense strategies to reduce debt. Although it may seem impossible at times, there are things anyone can do to reduce personal debt.

Reduce Monthly Living Expenses

Living somewhere you can not afford will keep you in debt forever

Reducing monthly living expenses will free up money to use to pay off personal debt. It will also allow for money to be put into savings once personal debt is paid off. Ways to cut expenses can include reducing or eliminating cable or Internet service. It may also mean doing more to conserve electricity; eliminating paper or magazine subscriptions; and eating at home instead of at restaurants. In cases of large debt, it could also mean moving to a smaller and less expensive house or apartment.

Reduce Vehicle Costs

Eliminating one of your vehicles will also help the environment

If your family owns and drives multiple cars, consider reducing the number of cars by one. Cars are a huge expense, including payments, gas, oil changes, insurance and repairs. Cars are also a source of many unexpected expenses. If the extra car can be sold, that money can be put towards paying off debt. Although reducing the number of cars may significantly impact daily life, it is likely a change worth making. You may have to consider car pooling or alternatives modes of transportation.

Increase Income

A second job can help eliminate debt quickly

Getting a second job, and then applying all the money earned to paying off debt has the potential to make a big impact in a short time. If you already have a full-time job, you will need to find a job either in the evening or early morning. Look into getting a motor paper route. Most morning papers have to be delivered very early, so this could easily be done prior to going to a first-shift job.

Pay Off Smaller Debts

There are multiple strategies to actually paying off debt. One strategy is to start with the smallest bills--those that you can pay off quickly. This will reduce your number of monthly payments, and then you can take the money you were using to pay off the smaller debt, and add it the payment on a larger debt. For example, if you owe $2,000 on one credit card and $200 on a second credit, pay off the $200 bill first, and then apply more money to pay off the $2,000 bill.

Eliminate High Interest Debt

A second strategy to paying off debt is to focus on paying off the debt with the largest interest rate first. Interest rates cause debt to grow larger every month. Focusing on the bills charging the highest interest rates will allow you to decrease the amount of debt you gain every month.

Consolidate Bills

When your debt is so spread out that you can't even make the minimum payments on each bill, you may want to consider a debt consolidation loan. Although this won't actually decrease any debt, it will allow you to send only one payment each month. Although consolidation loans will also involve paying interest, it will likely be a lower overall rate than you were paying on numerous individual debts.

Sell Personal Items

Selling online is ideal for people who don't have the time for a garage sale

Look around your home for things you can sell to make extra money. Use that money towards paying off debt. Items to sell may include books, movies, music, furniture, jewelry, or housewares. You don't need to have antiques or valuables to consider selling things. Try to sell items through outlets like Craigslist first because it is free. Look into local consignment or resale shops, and list smaller or easier to ship items on eBay. If you have a lot of things you can get rid of then have a garage sale.

Quit Smoking and Drinking

Smoking is a very expensive habit that can be eliminated

Columnist, MP Dunleavey, recommends quitting vices when trying to reduce debt. Smoking and drinking cost a lot of money, and that is money that could be going towards paying off your debt. Quit smoking or drinking, but each day take the money you would have spent on cigarettes or alcohol, and put it in a jar at home. At the end of each month, count up how much money you saved, and then use it to pay towards your debt.

Stop Using Credit

Debt won't be reduced unless you stop creating new debt

The Motley Fool and Dave Ramsey strongly recommend people in debt stop using credit. Credit will only increase the amount of debt, and it creates a habit that is hard to break. Only buy items you can pay cash for. Although that may be very hard to do, especially if you are already in debt, it ensures you will not add to your debt.

Create an Emergency Fund

Having money in case of an emergency will go along way towards reducing debt

Dave Ramsey, personal finance professional, recommends people create an emergency fund with $1,000 in it. This will aid in reducing debt because it will allow you to handle emergency situations without relying on credit cards. Without an emergency fund, a routine problem such as an unreliable car can knock you off your debt reduction plan.

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How Fast Does a Secured Loan Help Your Credit?

If you've trashed your credit, or just want to improve you credit before making a major purchase or searching for a new job, it may seem ironic, but using credit is your best bet. While using credit cards or other revolving credit lines will do the most to improve your credit, secured loans can also help you raise your credit score within a few years.

What is a Secured Loan?

A secured loan is backed by an item, such as a car, boat, motorcycle or even a home, that stands good for the loan. Some secured loans are guaranteed by money rather than an item; certificates of deposit or savings deposits are used to collateralize the loan in the event that you do not repay it.

How Quickly Will a Secured Loan Help My Credit?

Your credit history is referred to as "history" for a very good reason: it reflects years of credit use, or abuse. Improving your credit, therefore, is not something that can be done overnight. Using a secured loan or any other credit resource to rebuild your credit means paying as agreed and on time for a period of 12 to 36 months. Your credit score will begin to improve incrementally during that period, but the longer you pay as agreed on your loan, the better your credit score will be.

How Do I Get a Secured Loan?

You will have to get a lender to agree to give you a secured loan before you can begin to rebuild your credit by paying on the loan. If you're using a CD or savings account, you're in luck. "A loan of $500 should be sufficient, since it's for the purpose of improving your credit report, although for credit score rebuilding, the larger the CD loan or passbook loan, the better," writes Bankrate's Steve Bucci. If it's a car or other item you want, you may have to provide a down payment, or take out a loan that's less than the full amount of the purchase price, in order to qualify.

What if I Can't Get a Secured Loan?

If you can't qualify for a secured loan, you can almost certainly qualify for a secured credit card. Like a loan secured by a CD or savings account, a secured credit card is guaranteed by a deposit you make with the card issuer. After 12 to 24 months of paying as agreed, your credit will be improved, and the card issuer will likely offer you a regular credit card.

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How Do We Use Negative Numbers in Debt?

A negative number is a number less than zero. Negative numbers often have bad connotations as these numbers are associated with cold temperatures, poor performances and losses. Negative numbers also have applications in business and personal finance, particularly debt, where negative numbers and debt have applications in accounting, applying for credit, household debt management and budgeting.

Accounting

Richard Mattessich of the University of British Columbia discusses accounting and negative numbers in his book "The Beginnings of Accounting and Accounting Thought." Modern accounting uses the following formula: assets = liabilities + owner's equity on a balance sheet. If you use the alternative equation, you see that assets - liabilities = owner's equity. In the latter equation, notice the term "- liabilities"; this term indicates that debt is negative. Instead of using negative numbers to represent liabilities and positive numbers to represent gains, modern accounting uses debit and credits, as all balances in accounting must be positive.

Applying for Credit

When you apply for credit in the form of a mortgage home loan, an automobile loan or a bank loan the lender often considers your debt as a percentage of your income. Any amount of money that you owe someone is a debt, such as a credit card payment or an existing loan. Because these are subtracted from your income, these are, in essence, negative numbers. Although debt-to-income is not a negative ratio, you are using negative numbers to determine this ratio.

Household Debt Management

When your receive your credit card, car loan and other debt statements each month, these statements reflect the amounts you are in debt, or negative, to those lenders. The monthly payment is the minimum amount you must subtract from your income each month to stay current on your debts. The total amount is how much you owe all together. Because you took out a loan, you are negative to your lender the amount of the loan minus the value of the asset you purchased with the funds. For example, say you financed a vehicle that is currently worth $8,000 and you still owe $9,000 on the vehicle in total. You are "upside down" or negative $1,000 on that loan. On the other hand, if the vehicle was worth $10,000, you would have $1,000 of equity in the vehicle, or you would be positive $1,000. If you intend on keeping your asset, you must continue to make your payments until you pay the total amount.

Household Budgeting

You can also use negative numbers to subtract your debt and bills from your income to determine your disposable income. If you consider your pay and any other gains positive numbers and your bills, grocery, gas, debt and any other money you have to spend on necessities each month negative numbers, you can easily and accurately calculate your monthly disposable income. Hopefully, your final calculation is a positive number.

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SSI Status Credit Card Debt & Government Regulation Laws

Supplemental Security Income (SSI) provides cash benefits to low-income disabled and elderly people who have few or no assets. Because SSI income is protected by federal law from garnishment and seizure, credit card companies can have a difficult time collecting on an SSI recipient's debt.

Collection Activity

Credit card companies have the right to attempt to collect a debt owed by someone on SSI. Collection activity usually involves contacting a debtor repeatedly through the mail or by telephone. Creditors and collection agencies can also file a lawsuit, provided that the debt is still within the statute of limitations. Each state sets its own statute of limitations for credit card debt, which typically gives a creditor anywhere from 3-6 years in which they can go to court to collect a debt. People on SSI, like any other debtors, are protected by both state and federal fair collection practices laws. Collection agencies cannot threaten, abuse, or harass debtors, nor can they call at inconvenient times or places. Debtors can also request, in writing, that a collection agency end its collection efforts. After the request is made, the collection agency can only contact a debtor one more time to let her know if they plan to file a lawsuit or return her case to the original creditor.

Court Judgment

If a credit card company or collection agency cannot persuade a debtor to pay his debts voluntarily, it can take the debtor to court. Once the creditor wins a court judgment, it can use one of several tactics permitted by state law to collect the judgment. Some of these tactics include asset seizure, wage and bank account garnishment, and property liens. Because people on SSI typically do not have a lot of assets and don't earn very much, if anything, it can be difficult for a creditor to successfully collect on a judgment. State laws often exempt certain amounts of property and assets from seizure or garnishment anyway, so unless the SSI recipient owns a house on which a lien can be filed, it is unlikely that a creditor will be able to get much from the SSI recipient. However, there is no law that prevents a creditor from trying to collect a judgment from an SSI recipient.

Garnishment

SSI income cannot be garnished, nor can funds from SSI that are in a bank account be garnished or seized. State law usually requires that an SSI recipient take the initiative and inform the court, and the creditor, that money in an account is from SSI in order to prevent its garnishment.

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Is it Good to Close Credit Card Accounts?

When you have several credit card accounts open, you might consider canceling some to make your financial life easier. While canceling a credit card can be helpful in some situations, it can also hurt your credit score and make it more difficult to receive financing approval.

Personal Factors

For some people, canceling a credit card is one of the best decisions that they could make. If you are the type of person who cannot control your spending, canceling your credit cards might help you gain control of your financial life. Even if it has a negative impact on your credit score, it is better than continuing to rack up large balances on your accounts. Simply cutting up the card may not stop you from spending online.

Length of Credit History

When you cancel a credit card, you risk shortening your credit history. One of the important variables when calculating your credit score is the length of credit history on your profile. If you cancel the card you have had the longest, you will potentially hurt your credit score. If you do cancel a card, make it one you have not had the longest.

Change Ratios

When you cancel a credit card, you may inadvertently affect your credit utilization ratio. This is what creditors use to gauge how much of your available credit you currently use. If you cancel a credit card, you lower the amount of available credit that you have. For example, if you had a credit card balance of $2,000 and available credit of $20,000 on all your credit cards, this means that you have a credit utilization ratio of 10 percent. If you cancel several of your cards and get down to an available credit limit of $5,000, your credit utilization ratio is now 40 percent. This looks much more risky for lenders.

Permanent Impact

Once you have a credit card on your credit report you cannot remove it, even if you cancel your account. This means that if you have several late payments and negative statements from a credit card company, canceling that account will do no good. All of the records will remain on your credit report. Instead of canceling the account, leave it open and simply pay off the balance.

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How to Find Phone Numbers & Addresses for Collection Agencies

Collection agencies seem to have little trouble finding you, but finding collection agency addresses and phone numbers sometimes can be challenging. Many collection agencies will only provide a post office box address to consumers. If you want to send the agency a certified letter or even serve the company with a lawsuit, you will want the company's physical address. There are a few sources online that provide the addresses and phone numbers for collection agencies.

Instructions

1

Search for collection agencies using the Better Business Bureau's search index. The BBB lists business that they've accredited, as well as those they have not. To use this index, enter the name of the collection agency in the search field and then hit "Search." Click on the result that matches your query. In the "Business Contact & Profile" section the address and phone number of the business is listed. There is no fee to search this index.

2

Find a collection agency using Credit Wrench's list. This website lists many collection agencies in alphabetical order throughout the U.S. and Canada. Next to each collection company is the street address and phone number. There is no charge to access this list.

3

Locate the address and phone number using Collection Agency Services. This website is actually set up for businesses who are looking to hire the services of an agency to collect on their behalf, but consumers can use it too. The website doesn't list agencies in alphabetical order or provide a convenient search box. You will need to search for agencies by state. Start by searching for the agency listed under the state where your debt was incurred. You can also try to find the company by the state you currently live in. Click on a result to find the address and phone number. There is no fee to access this directory.

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How to Increase Automatic Payments to Sallie Mae

You are not required to pay your student loans issued through Sallie Mae until six months after your college graduation, or your disenrollment from school. While you are in school, interest accrues on your loans, which you can pay down while in school or add to the principal of your loan. Once your repayment period starts, you can make your payments online through the Sallie Mae automatic payment plan; choose to pay the minimum amount due each month or increase your payments to an amount you are comfortable with.

Instructions

1

Go to the Sallie Mae website to log into and manage your student loan account. Enter your username and password to log in.

2

Locate the "Manage my Account" link on your account overview page. Choose the "Payment Options" to change your automatic payment amount.

3

Enter the increased amount you want to pay each month with your automatic payment by entering it into the "Payment Amount" box. Continue your request. Confirm the changes to your account and submit them to Sallie Mae.

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Disposable Income to Household Debt

The ratio between your income and household debt is a debt-to-income ratio. The two types of debt-to-income ratios are front end and back end. When lenders use these ratios to qualify you for a loan, they use your gross monthly income. Lenders often consider 28 percent a healthy front-end ratio and 36 percent for the back-end ratio. If you want to calculate your debt-to-income ratios for personal use -- in making a plan to get out of debt, for example -- consider using your disposable income instead of your gross income.

Ratios for Personal Use

Your disposable income is income after taxes. If you are calculating your ratios for personal use, using your disposable income gives you a more accurate picture of your financial health because it is the money you actually have available to pay your monthly expenses. This is helpful when making a monthly household budget. Figuring out how much money you have left over after paying your household expenses is particularly useful when making a plan to become debt free.

Calculating Front-End Ratios

Since lenders use 28 for front-end ratios then it's a good idea that you keep your ratios around the same percentages. For the front-end ratio, divide your house or rent payment by your disposable income. If this percentage is near 28 percent, then your housing is affordable. If it exceeds 28 percent, you risk not being able to pay your rent or mortgage if you income decreases, your expenses increase or both.

Calculating Back-End Ratios

For your back-end ratio, you add up all of your fixed monthly expenses, including your housing payment. If you rent, just use the amount of your rent payment. If you have a mortgage, remember to include your principal, interest, taxes and insurance. Fixed monthly expenses are payments for loans, credit cards and court ordered support payments. Add up your fixed expenses and divide that number by your disposable income. If the number is more than 36 percent, your monthly expenses are not affordable and you may want to consider finding ways to cut these expenses.

Ratios for Lender Use

Lenders use these ratios to evaluate your credit risk. To lenders, higher ratios equal a higher default risk and low ratios equal a lower default risk. The higher credit risk you pose to lenders, the less likely they are to approve you for a loan. Knowing your debt-to-income ratios in advance of applying for a major loan, such as a mortgage, allows you time to adjust your spending habits and pay down your debts. Doing so may increase the likelihood of a lender approving you for a mortgage or another type of loan.

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How to Beat a Credit Card Lawsuit

You may have such a huge amount of debt that you find you are unable to pay it all off. Should you stop paying a creditor completely, you may find yourself at risk of being sued, even if the debt is listed as a charge-off on your credit report. Creditors generally bring lawsuits in the hopes of getting a court-ordered judgment against you, to force payment of what is owed through wage garnishment, property seizure and other aggressive means. Although it might seem that the odds are against you, there are some valid solutions you can employ to turn the situation around and beat the lawsuit.

Instructions

1

Request a validation of the debt from the creditor bringing suit. This means that the creditor must provide a written, signed statement of verification of the debt by mail. It also means that, until the validation is received by you, collection efforts must stop. It will fend off a lawsuit temporarily.

2

Get in direct contact with the creditor who is bringing the lawsuit against you and see if you can negotiate a way to pay off the debt. Work on persuading the creditor to drop its lawsuit and to let you pay off only a portion of the debt, explaining that your present financial situation makes it difficult or impossible to satisfy the entire debt. You may find that your creditor is receptive, since it would probably prefer to get paid something rather than nothing. Always communicate by certified mail, so you have legal documentation to prove your efforts to negotiate.

3

Find out if the statute of limitations has passed for a particular creditor to file suit against you. This refers to the window of time that a creditor is allowed to sue you for failure to pay off the balance of a debt after your last documented payment. The length of time depends upon what state you reside in. If that amount of time has passed, you can request that the lawsuit be dismissed by the court.

4

Pay off the creditor in full, if you are capable of doing so. That will put the skids on any lawsuit and stop a judgment being made against you. This applies only if you are financially able to pay what you owe.

5

File for bankruptcy. This may be the best option if you owe several creditors and are unable to defend yourself against a credit card company's lawsuit due to dire financial circumstances. If it is a nonsecure credit card debt it can be dissolved under Chapter 7; a secured credit card debt can be paid by liquidating your assets. If you file a Chapter 13 bankruptcy, which utilizes a court-approved repayment plan, that will provide you more time to pay off your debts.

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How to Persuade Credit-Card Companies to Lower Debt

Credit card companies may allow you to settle your debt by paying off less than the full balance. This process of lowering your credit-card debt is called debt settlement. Generally, the card companies will make settlement offers when you are four to six months behind. After six months the companies generally give up trying to collect, list your account as charged off and sell it to a collection agency.

Instructions

1

Check your billing statement to determine how many months you are behind on your payments. You can ask your card company for a settlement at any time, but generally the best offers are available just before your account is scheduled to be charged off.

2

Call your card company once you have confirmed that you are at least four months behind. Tell the representative that you are unable to continue making regular payments on your account and that you would like to settle for less than the full balance. According to "The New York Times," card companies will sometimes settle for as little as 20 percent of the balance, although most settlements are for roughly half the amount owed. Offer to settle the debt for 20 percent of the balance.

3

Wait on the phone for a counteroffer, which could be much higher than your offer. For example, the card company might offer you a settlement for 90 percent of the balance. You can accept the counteroffer or continue haggling. Politely end the discussion if you cannot reach an agreement and hang up.

4

Call back several days later to continue the negotiations. The card company will have placed notes on your file regarding the previous discussion. Ask the representative if it can make a better offer. Continue this approach, even if you have to keep calling back, until you have a deal.

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Bad Debt Problems

Banks, loan companies and other lenders consider accounts to be bad debt after you stop paying for about 180 days, according to MSN Money writer Liz Pulliam Weston. Creditors consider your likelihood of repaying the bill to be low after six months, so they usually take steps to get it off their books and get some money by selling off the account. You may even face a lawsuit for the bad debt.

Process

Creditors follow a process for handling bad debts that usually includes charging the accounts off their books as not collectible, which gives them a tax benefit. This action does nothing to legally absolve you from paying the debt, and the lender may make some money off the account by selling it to an independent collection agency at a steep discount. Charge-offs show up on your Experian, TransUnion and Equifax credit reports, along with the original delinquent account information, and the debt collector usually adds an entry, too.

Effects

Bad debt problems affect your credit rating, making other lenders leery of working with you once they review your credit reports. The unpaid bills mark you as someone who is at high risk of defaulting on other obligations. Charge-offs and collection accounts also devastate your credit score because they are part of your payment history. Thirty-five percent of your total score is based on that category, according to credit scoring giant FICO. Debt collector sometimes file suit to collect on bad debts. You are especially at risk if you have a steady job, because the collector can garnish your wages if it gets a judgment against you.

Time Frame

Bad debt never completely disappears, but your problems lessen over time because it drops off your credit reports and collectors lose their right to sue after a certain number of years. The allowable bad debt reporting period for Experian, TransUnion and Equifax is seven years, according to the Federal Trade Commission, after which the entry is completely erased. The period during which you can be sued varies by state, running from two to 15 years, the BCS Alliance explains. Collectors can still pursue you in other ways after your state's statute of limitations expires, but they cannot take you to court.

Prevention

You can often prevent bad debt problems by settling with your creditor before, or even after, it charges off the bill. Lenders often accept a discounted amount to settle a bill rather than writing it off and getting pennies on the dollar from a collection agency. Negotiate your settlement in writing, and ask the lender to remove the bad credit report entry entirely or make its status "paid as agreed." Settled delinquent accounts still cause credit problems, even though you paid the negotiated amount, unless you get the status changed to something favorable.

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Do Credit Card Companies Negotiate a Payoff Balance?

More than 1.5 million personal bankruptcies were filed in the United States in 2010, which is an increase of 6.5 percent from 2009, according to the United States Courts. Bankruptcy is a last resort, and several other options exist for those who have more debt than they can handle. One way to attempt to eliminate credit card debt is negotiating a payoff balance with your credit card companies.

Direct Negotiation

You can negotiate directly with your credit card company, with no intermediary. Begin the process by calling the customer service number found on the back of your credit card. It may help if you have had the card for some time and have made regular, on-time payments. Inform the customer service representative you want to pay off your card in a timely manner. The Motley Fool website suggests you might claim a competitor's card is offering a lower interest rate and that you will switch to that credit card if the company will not negotiate a new payoff balance. Offering a lump sum payment may help too, because paying off the outstanding balance immediately is attractive to the credit card company.

Debt Negotiation Services

If negotiating directly fails, you can consult professionals. There are companies, including nonprofit companies, that can help advise you on how to pay off your debts. These companies attempt to negotiate a settlement with the credit card company on your behalf. You still will have monthly payments to make, but the payments may be lower.

Debt Negotiation Service Problems

Debt negotiation services are not without their pitfalls, and the Federal Trade Commission advises caution in dealing with such services. Even reputable agencies typically charge a monthly fee as well as an upfront fee based on a percentage of the forgiven debt. Unscrupulous agencies may not deliver on services promised, and this may force you to pay off the original debt amount as well as late fees and other charges even though you thought the debt had been satisfied.

Other Considerations

If you have a number of credit cards with high balances, you may want to consider debt consolidation. You can try to arrange debt consolidation on your own, but there also are consolidation services that can help lower your payments and interest rates. Do research before signing with a consolidation service. Also, consolidation and negotiated payoffs may have a negative impact on your credit rating. Even dealing with the reputable services has potential drawbacks.

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Requirements for Auto Repossession in Nebraska

If you default on your auto payments, the amount of time you have before repossession depends on the contract you signed with the lender. How the lender repossesses it and what it does with the automobile afterward depends on Nebraska state law, which is silent regarding in regards to if the lender can sue you if it resells the car for less than you owe on it. The state is debtor-friendly about giving you time to pay what you owe and reclaim the car before it is sold, however.

Title

For a lender to repossess your vehicle in Nebraska, its name must appear on the title as lien-holder, and it must record the title either in the county where you live or the county where you keep the vehicle, if you're not actually a resident of Nebraska. Therefore, if you purchase the vehicle while living in one state, then relocate with the vehicle to Nebraska, you might have some minimal protection, at least until the lender re-records the deed in the county where you live.

Repossession Process

State law requires that the lender can't "breach the peace" when repossessing your car, but the legislation doesn't detail exactly what constitutes a breach of peace. Generally, it includes taking the car over your objections, using threats or force, or removing or trying to remove your car from a closed or locked garage. Your license plates are yours, and the repo agent must leave them with you. Nebraska is one of only 10 states that will not permit repossession until after you have received a notice from the lender giving you a certain amount of time to "cure" your default and pay off your delinquent balance.

Resale

Once the lender has possession of your car, it will most likely sell it to recoup at least some of your outstanding loan balance. But Nebraska does not allow the lien-holder to do this until 20 days have passed, which is more time than other states give a debtor. If you can come up with the entire balance due, plus any costs incurred in the repossession process, you can redeem your car. If you can't come up with the money and the lender sells it to repay the loan you contracted for, the company can usually sue you for any deficiency or difference between your loan balance and what the car sold for. The requirements the lender must meet to do this should be included in your contract. Nebraska legislation contains no rules for deficiency judgments.

Tips

It is always much easier to prevent a repossession than to get your car back after the lender has taken it back. If you think you might have a problem making your car payments, contact the lender immediately to see if the company will work with you to get back on track. Don't hide the car to avoid repossession; this is a crime. If the lender has already taken your car, consult with an attorney and show him your loan agreement to find out if the lien-holder can hold you liable for any deficiency resulting from the resale. Make sure the company has met all legal requirements in taking it the vehicle. While you probably won't be able to get your car back, you may be able to escape any liability for a deficiency if the company broke any rules.

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Can I Receive My Credit Report at No Charge?

Credit reports contain all your unflattering financial secrets, including the time you missed your car payment but maxed out your credit card on a vacation or had a lien placed on your home. No matter the stains or praise in your credit report you have a right to know what's included. Consumers are entitled to a credit report under the Fair Credit Reporting Act.

Fair Credit Reporting Act

The information reported by your creditors each month to the three major credit bureaus determines your credit score. The three major credit bureaus, Equifax, TransUnion, and Experian, are required by law to offer you a free credit report under the Fair Credit Reporting Act. The Fair Credit Reporting Act protects consumers against fraud and helps to ensure accurate information is reported to the credit bureaus each month from your creditors. Consumers who monitor their credit reports regularly may find errors that significantly impact their credit rating. Under the Fair Credit Reporting Act, you have the right to not only know what's in your credit report, but to dispute any incorrect information.

When to Get a Free Report

Consumers are entitled to one free credit report each year from all three credit bureaus. In addition, free credit reports are granted under certain circumstances, such as if you are denied credit or legal action is taken against you based on information in your credit report. You can also request a free credit report if you are unemployed or receiving public assistance such as Temporary Assistance for Needy Families.

How to Order Free Report

Order a free credit report by contacting each credit bureau in writing with verification of your identity such as a copy of a Social Security card or government-issued picture ID. You can also order free copies of your credit reports online by visit annualcreditreport.com, a website managed by the three major bureaus. Avoid websites that require you to provide credit card information in exchange for your credit report. These reports are generally available in exchange for a subscription or membership. If you fail to cancel the program before a certain time frame, you incur charges to your credit card.

Credit Score

While your credit report is available at no cost, credit scores are generally available for a fee. You can order your credit score through the three major credit bureaus or a third-party organization. As new items are added to your credit report each month, your credit score increases or decreases. Many organizations offer monitoring services that allow you to track changes to your credit score each month. Though rare, free access to your credit score is available through online services like Quizzle and CreditKarma. These companies allow you to not only check your credit score, but get monthly updates to your score by email.

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How Are Garnishments Served?

Owing money to a creditor and failing to pay a balance can trigger a domino effect. Creditors and lenders are relentless in their debt collection techniques, and they employ various methods to collect on an unpaid debt, such as asking the court for a wage garnishment.

What is Wage Garnishment?

Understandably, debtors want to keep their debts and financial life private. But if a creditor obtains permission to garnish your wages, they involve your employer in the matter. Wage garnishments refer to an employer withholding a percentage of your paycheck in order to satisfy a debt. Creditors can garnish up to 25 percent of your earnings (50 percent if you owe back child support). Garnishments remain in effect until a debt is paid in full.

Obtaining Garnishment

Getting a wage garnishment involves a specific process. Creditors cannot garnish wages without permission from a court; and courts grant permission only after a creditor receives a judgment against the debtor. Judgments are an order to pay a debt issued by a court. After hearing a lawsuit for a delinquent account, a judge may order a debtor to pay his creditor. If the debtor ignores the judgment order, creditors may then enforce a judgment and obtain an order to garnish a debtor's wages.

Serving a Garnishment

Garnishment orders are delivered directly to employers and served by a sheriff. Upon receipt of a garnishment orders, employers are obligated by law to comply with the garnishment. They must withhold the appropriate funds and deliver these funds to the creditor. Failure to comply with the garnishment order transfers liability to the employer.

Stopping a Garnishment

Garnishments can continue until satisfaction of a debt. However, debtors can contact the creditor on their own to pay off the debt in full or establish a different payment plan. Garnishments stop after paying the full balance, and a creditor may accept an installment payment plan and stop the garnishment. Debtors can also petition the court to stop a wage garnishment if unable to afford basic living expenses due to the loss income. This involves filing a claim of exemption with the court and providing copies of bills and a list of expenses.

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Why Have Debit Cards Replaced Credit Cards?

According to the 2010 Federal Reserve Payments Study, debit card use in the United States had exceeded credit card use as of 2006. Debit cards are typically tied to a checking or savings account, while credit cards normally offer a revolving line of credit. As a result, debit cards can offer several advantages, particularly for credit-challenged consumers.

Consumer Distrust

Credit card companies often implement tactics such as hidden fees, raising interest rates and enticing marketing campaigns as a means of increasing their revenues. As a result, consumers who have incurred amounts large credit card debt may blame the credit card companies for their predicament, at least in part. Consumers who have fallen behind on their credit card payments also are usually hit with significant late fees, which can create an image of credit card companies as being unsympathetic during difficult financial times.

Forced Discipline

Consumers committed to debt reduction may prefer debit cards because it forces them to spend within their means. Unlike credit cards, which allow consumers to spend freely up to their available credit limit as long as they pay a relatively small monthly minimum amount, debit card use is limited to the amount the consumer currently holds in a bank account. Consumers who are tempted to make impulse purchases of items they may not really need may have to develop more thrifty spending habits.

Necessity

For some people, using credit cards may no longer be an option. Due to circumstances like foreclosures resulting from the housing crisis of 2008 and 2009 and bankruptcies stemming in part from credit card abuse, some individuals may no longer have access to credit cards. Debit cards can provide the same convenience of use as credit cards, although their purchasing power is typically less due to the need to have the available cash to cover the full amount.

Budgeting

Unlike credit cards, debit cards can help consumers keep a close eye on their finances, which can help them maintain a budget. When consumers use a debit card for regular expenses like groceries or to pay utility bills online, the amount is reflected in the monthly statement they receive from their banks. While credit card companies also list a monthly purchase history in their statements, the impact may not be the same as nothing is actually deducted from a bank account. As a result, it can be more difficult to comprehend how much is truly being spent.

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Solutions for Debt Crisis

Debt crises for individuals are very much like debt crises for nations. The debtor owes too much money to too many people. Hit with penalties and interest payments, the debtor will often spend all her financial resources merely servicing the interest on the debt and never attacking the principal. For both individuals and debt-plagued nations, the solutions to solve this crisis are similar.

Cut Back Spending

One of the simplest -- if often painful -- solutions to solving a debt crisis is to cut back spending. By spending less, the debtor has more money to pay back his creditors. By freeing up this cash, the debtor is not just treading water by paying interest, but gradually reducing the total size of the debt. However, sometimes cuts are so painful that the treatment can be worse than the medicine.

Restructure Debts

Another solution is to restructure debts. Sometimes, a debtor will be able to pay what he owes if only given more time to do so. If the debtor is allowed to change the repayment structure -- if, for example, he is allowed to reduce the payment size and interest rate and pay back the money over a longer period of time -- then both the creditor and the debtor may be placated.

Debt Settlement

Sometimes, a debtor will attempt to settle his debts for less than he owes. For both individuals and nations, this has the obvious benefit of cutting down the debt load. Many times, creditors are willing to settle for what the debtor can pay, on the principle that partial payment beats no payment at all. However, for both kinds of debtors, paying only part of a debtor will lower the credit rating and lead to higher interest payments on new loans.

Bankruptcy

A debtor can also, as a last resort, declare bankruptcy. For an individual, this involves declaring personal bankruptcy and allowing a judge control over many of his personal finances. For a country, this can take many forms, including simple declaring that it will not make good on the money that it owes, come what may. In both cases, the debtor's credit rating will be badly damaged, at least temporarily.

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How to Satisfy Your Debts

The bills have piled up and you're overwhelmed by all the money you owe. If you can't keep up, you're not alone. Many Americans fall behind on credit card payments and other bills. Once you fall behind on your bills, debt settlement might work for you. Although professional debt consolidation companies lure consumers with tempting ads of freedom from debt, MSN Money warns that these companies can charge up to 18 percent of the total debt. Consumers can try the same methods used by these companies. If all else fails, you may have to file for bankruptcy.

Instructions

1

Stop paying bills for the accounts you want to satisfy. This might sound counter-intuitive, but most creditors won't negotiate with a debtor until he falls three to six months behind on payments, according to MSN Money.

2

Analyze your budget. You'll need to save money for a settlement, but you should first identify areas where you can cut spending. If necessary, seek professional help to target areas where you can trim your spending. These newfound financial planning skills can help keep you out of future debt.

3

Save for a settlement. A creditor will typically accept a payment of 20 percent to 75 percent of the total amount owed as settlement after negotiations. Since you can't negotiate until you fall three to six months behind, use that time to save money for your settlement.

4

Avoid collections calls. The phone might ring incessantly while you save for your settlement, but your life will be less stressful if you ignore the calls.

5

Get a copy of your credit report to see who has your debt. Your original creditor may have passed it on to a collections agency.

6

Call your creditors or the collection agencies after saving the money for a settlement. Tell them you're on the verge of filing for bankruptcy and that they can either accept a percentage of what you owe or risk getting nothing. Most creditors would rather have you pay a percentage rather than lose the money altogether, according to MSN Money.

7

Persevere. The creditors may speak harshly, but stay calm and remember that many creditors will accept a portion of what you owe. In negotiations, start with a low percentage payment offer, which you can increase through counteroffers. If you don't reach a resolution the first time, you can always call back and try again.

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Debt Reduction & Negotiating Down Credit Card Balance

If you cannot afford to pay your way out of your debt, you may be able to negotiate down your balance to the point where you can. You can use various strategies to negotiate down your balance, and you can even hire companies to help you. However, all debt reduction strategies have additional consequences, including possible taxation and damage to your credit report.

Negotiating Yourself

The most inexpensive way to negotiate credit card debt may be to call your creditors yourself. If you can't afford to pay your entire balance, first determine what you can afford to pay. While some creditors may accept your suggestion of a lowered balance, they will want something in return, usually a lump-sum payment. Whether the credit card company accepts your offer of an upfront payment or a short series of installments, only promise what you can legitimately afford to pay. If you negotiate down your balance and then break your agreement, you will most likely be sued. You may find that you have more leverage in negotiating down your balance after you have already missed a few payments and your creditor is concerned about your ability to pay.

Hiring a Company

If you don't want to try reducing your debt on your own, you may consider hiring a debt management or settlement company. While many companies advertise the ability to reduce your debt, many charge high fees and can produce questionable results. Nonprofit agencies affiliated with reliable industry groups such as the Association of Independent Consumer Credit Counseling Agencies may be your best bet. If you do work with a settlement company, you will typically have to make a monthly payment to the agency for distribution to your creditors. Whether or not your creditors will agree to reduce your balance depends on the size of the payment you can make and the expertise of your chosen agency.

Taxes

Regardless of how you manage to reduce your debt balance, you may face a penalty in the form of income taxes. The Internal Revenue Service treats debt reduction as a taxable event, meaning you will have to pay ordinary income tax on the full amount by which your debt was reduced. For example, if you negotiate down a $20,000 debt to $5,000, you will have to report that $15,000 reduction to the IRS as taxable income.

Credit Report

Debt reduction is also damaging to your credit report. If you negotiate down a credit card debt, your report will show that you did not pay your account in full. While this may be less damaging than filing bankruptcy, having a notation that you paid less than you owed will be a negative on your report. A lower credit score may limit your future opportunities for getting additional credit.

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Can a Debt Collector Garnish Student Grants?

Even with the best of intentions, people find themselves in debt. When a debt collector starts the garnishment process, they'll find certain income sources exempt from garnishing. Social security, federal student grants and student loans payments are exempt from debt collection garnishments. Debt collectors may garnish federal grant funds under certain circumstances.

Protected Income Sources

The Federal Trade Commission, or FTC, lists federal benefits protected from debt collection garnishments. These include veteran's benefits, student assistance, retirement benefits, and death and dismemberment benefits. While exceptions exist, debt collectors cannot garnish money from these benefits for most types of debt. A credit card, mortgage or auto lending company cannot garnish student grants or other federal benefits.

Negating the Exemption

Federal benefits, including student grants, may be garnished only for child support, alimony, back taxes or delinquent student loans. These exceptions to the protection of federal benefits are the only ones approved without a waiver. Companies may apply for a waiver with the FTC to garnish federal benefits. The debtor is notified by the FTC and the collector of the waiver before any garnishment activities taking place. The debtor may appeal the waiver with the FTC.

Garnishments

To begin a garnishment against student grants, the court must order the garnishment. The garnishment order is sent to the financial institution, which will freeze all incoming payments and provide the required amount to the address or account on the garnishment. A copy of the garnishment order will be provided by mail to the debtor when the garnishment is issued. The debtor does not need to acknowledge the debt for their student grants to be garnished when received by the bank.

Protection From Garnishments

In the event that a student grant has been garnished improperly by a debt collector, the debtor has the opportunity to sue the debt collector. The debt may sue up to one year after the garnishment in state or federal court. The court will allow the debtor to sue for $1,000 above any damages that are proved in court as well as legal and court fees. You may also report violations to the State Attorney General's Office or the FTC.

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Programs to Clear Credit

The lure of fixing a bad credit score can be especially attractive when you start shopping for financing. If you have a low credit score, you will immediately find out that improving your score can save you a great deal of money. If you try to hire a credit repair company to help, you need to consider a few things first.

Credit Repair Services

Instead of working on fixing your credit on your own, you may be tempted to work with a credit repair service. These companies promise to be able to help you increase your credit score. You will have to pay the company a fixed fee for the credit repair and then they will go to work to make the necessary changes. Some credit repair services promise to be able to remove negative statements from your credit report, while others promise a certain amount of improvement in your credit score.

Scams

One of the problems with this industry is that many companies are not legitimate. If you mistakenly choose one of these companies, you could be out of a lot of money. These companies may take your money on the front end of the transaction and then not perform the services that they claimed. When this happens, you lose your money and your credit score is still low. While the Federal Trade Commission works to identify these companies and help eliminate them, new companies spring up constantly.

Spotting a Scam

When you are in the market for a credit repair service, you need to use some discretion before choosing a company. One of the signs that you should look for is a large upfront fee. If the company charges a large fee upfront, you should be very skeptical because they could easily keep it without providing any service. You should also look for information about the company on the Better Business Bureau website. This will tell you if the company has many complaints against it.

Rapid Rescore

If you are in the market for a mortgage or an auto loan, you might be able to access a rapid rescoring company. These are companies that can be accessed through the help of a lender. These companies have relationships with the credit bureaus and can quickly fix anything that is wrong with your credit report. These companies can make the necessary changes to your report and get your score changed within 72 hours as long as you are willing to cooperate with them.

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How to Negotiate Credit Card Debt With a Bank

According to the Internet personal financial resource Financial Web, if you're finding it difficult to pay your credit card debt, it may be a good idea to negotiate a settlement with the credit card company. CreditCards.com points out that a common misconception that the company will drastically reduce your debt if you just ask is not true. You need to have a reason for the credit card company to lower your debt, and you need to show that you're willing to work with the company to pay off as much of your debt as possible.

Instructions

1

Gather your credit card information and review it before you make the phone call to the credit card company. Know how much your balance is, become familiar with your current interest rate, and have the reason you'd like to negotiate your debt ready to present to the representative. The company may ask you to prove the hardship you're claiming, so have hard-copy evidence ready to submit should it be requested. Also have an amount in mind for the final settlement that you feel is fair. Remember that the company will use your amount as a starting point and will want to negotiate up from there.

2

Begin negotiating by asking for all late fees and other penalties to be removed from your account. Since the credit card company is interested primarily in recovering the principal balance and as much of the interest as possible, this may not be a problem.

3

Ask for a reduction in the interest amount that you owe. According to The Washington Post, it's possible that the company will offer you the opportunity to pay back your principal with no interest if you pay back the money in a predetermined period of time. If you can secure a deal that allows you to pay back the principal with no interest, and you can afford the monthly payments, take that deal.

4

Ask the representative if the company would be willing to take a reduction on the principal balance owed. Depending on the nature of the hardship you're claiming, the company may be willing to do this. If you let the company know that your next step could be bankruptcy, it may be more willing to work with you. The company knows that bankruptcy means it may get nothing, and it would like to avoid that.

5

Work with the representative to develop a monthly payment plan that's within your current budget.

6

Ask for the agreement in writing and let the representative know that you'll start making payments as soon as you receive the written agreement.

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Should I Pay Off Debt First or Save?

Your financial situation can help you decide whether you should pay off debts before you start building up your savings. You should consider the interest rates you're paying on various credit and loan accounts and also consider saving cash to cover emergency expenses to avoid creating more debts.

High-Interest Debts

You might want to focus on paying off debt before saving if you have credit card debt and personal loans other than home or student loans. Credit cards and personal loans usually come with high interest rates, unlike home and student loans. Retirement and savings accounts generally don't deliver double-digit interest earnings that outpace credit card and loan charges. For example, you may only be earning 1 percent interest on money in a savings account while paying 20 percent or more annually on credit card interest charges. In such cases, you would save more money over time by paying off high-interest debts.

Savings Plan

Bankrate notes in its article "Should You Pay Debt Before Saving?" that some financial advisers, such as Sarah Place of Place Trade Financial, don't recommend paying off debt before saving money for emergencies and retirement. Emergency funds can be particularly important to you during an economic downturn in which you lose your job or have your working hours reduced. Furthermore, people who work for companies that match their contributions to retirement accounts are essentially turning down free money if they don't take the matching funds to bolster retirement savings.

Debt Traps

Other financial advisers cited in the Bankrate article, such as financial author Paula Langgoth Ryan, recommend saving money and paying down debt at the same time. In such cases, you could set aside small amounts of money in a savings account for emergencies while paying down debts as much as possible. People who don't create even a small emergency fund are likely to continue racking up debts. That's because people who don't have cash on hand usually resort to using credit cards to pay for emergency expenses.

Setting Goals

You could concentrate on saving before paying off debt for short periods of time. In such cases, you should set a goal to save a certain amount of money for an emergency fund, such as $1,000. After you reach your goal, you could focus entirely on paying off debts. In the meantime, your $1,000 emergency fund would provide a cushion for unexpected expenses that could help you avoid using credit cards to cover such costs. However, it's important to replace your emergency funds as needed to maintain a $1,000 balance in your savings account.

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