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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..

Saturday, May 31, 2008

Understanding Remission of Debt

Understanding Remission of Debt

The government, most businesses and institutions allow for remission of debt due to extenuating circumstances. Remission is defined as lessening the intensity, forgiveness or complete pardon. To forgive a liability either in whole or in part can be considered a remission of debt. Generally, this is done when unusual circumstances are involved. A lendee that is injured or killed may have her debts placed in remission rather than placed upon next of kin.

Findings of Debt and Remission

    In the military, a solider may be placed in charge of equipment and personally responsible for any damage. If an item is damaged, a court may find him liable and owe the United States the value of the equipment damaged.

Example of Remission

    The solider could appeal the verdict and bring proof that the equipment was damaged en route and that he had not taken responsibility of the items at the time they were damaged. In this case, the appeals court can rule a remission of the debt, meaning the solider no longer owes any monies.

Remission Within the Contract

    Remission of debt does not only occur in unusual circumstances, but can be part of the loan contract. This tactic is used by countries that are not well developed to encourage young people to acquire needed skills to aid the nation and return from their schooling debt free.

Remission Upon Completion of Duties

    Students from one country may take educational loans and get a degree in another country. There could be a stipulation that after their education, if they return to their native country and work within a certain career field, the government will place their student loans in remission.

Legal Guidelines

    Many states have clear guidelines in further details of remission of debt. The State of Louisiana has a law (Article 1888) that remission can be expressed, meaning the lender can sign a letter stating that the debt is in remission; or tacit, meaning that the lender did something that indirectly shows the debt is forgiven. Article 1890 states that remission is effective when communication of one type or another is received by the person or company that owes debt to the creditor. This means that a credit card company may find that they made errors in the amount owed by a client. If they send an email to the client stating their error and that a partial amount of debt is forgiven, the forgiveness of the loan is effective on the date the client receives the email.

Statute of Limitations on Garnishing Wages for a Collection

Each state sets its own statute of limitations for wage garnishment. A few states do not allow wage garnishment, while others allow creditors to collect debts for different periods of time depending on the type of debt the debtor owes. Wage garnishment can seriously interfere with your financial health, so you should attempt to settle the debt with your creditor rather than accepting garnishment.

Meaning

    The statute of limitations is the amount of time the creditor has to use the court system to obtain a judgment against you and take action such as garnishing your wages. The statute of limitations is counted from the date you go into default on a debt, not from the date you incurred the debt. The creditor can still contact you to attempt to collect the debt after the statute of limitations expires as long as he does not attempt to take court action against you.

Fair Debt Collection Practices Act

    Creditors and collections agencies cannot make empty threats in an attempt to collect a debt. Thus, a creditor cannot threaten to garnish your wages unless he has the legal recourse to do so. If the statute of limitations has run out, for example, by law the creditor cannot use the threat of wage garnishment against you. If a creditor threatens to garnish your wages when it is not legal for him to do so, file a complaint with the federal trade commission.

Maximum Wage Garnishment

    Although creditors can use wage garnishment to collect a debt as long as they do not violate the statute of limitations, they cannot garnish all of your wages. Federal law prohibits creditors from collecting more than 25 percent of your wages or 30 times the federal minimum wage, whichever is greater. As of 2011, states may make their own laws regarding garnishment limits but may not allow creditors to garnish more than the federal limit.

Statute of Limitations on Judgments

    Many states have a statute of limitations of between three to five years on debt collection. Thus, debt collectors only have a short window of time to sue debtors for unpaid debts. However, once the creditor obtains a judgment against you, your state may allow a far greater period of time for collecting the judgment. For example, California allows creditors to collect judgments for at least 10 years after the court date. Thus, creditors may be able to garnish your wages for a long period of time to satisfy a judgment even though the statute of limitations on the debt itself has long since expired.

Friday, May 30, 2008

Does Paying Bill Collectors Raise Your Credit?

Does Paying Bill Collectors Raise Your Credit?

Paying bill collectors is good for your credit -- but don't expect an immediate improvement in your credit score. Credit scores range from 350 to 850, with scores of 720 or higher considered excellent. People with lots of late payments on their credit report, along with charge-offs and collection accounts, usually have poorer scores -- 620 or lower. Paying a delinquent bill to a bill collector will not immediately reverse the damage from all the late payments and other negative credit information. However, paying a debt to a bill collector is an important part of a long-term credit repair strategy.

Definition

    A charge-off is a credit account that the creditor deemed noncollectable. The creditor usually takes this action after the account falls past due by three months or longer. Charge offs remain on credit reports for seven years and are very damaging to credit because they indicate that a debtor failed to pay on an account as agreed. Collection accounts are accounts the creditors assigned or sold to a debt collector. Notations about collection accounts also remain on credit reports for seven years and hurt credit scores.

Considerations

    Experian, one of the major credit reporting bureaus, reports that a collection account "is as negative as it gets," short of bankruptcy. The agency maintains that so much damage is caused by a collection account that a debtor's credit score is not likely to increase by much, even after the debtor pays off the collection account.

Settlement

    Some people resolve accounts with bill collectors through debt settlement. Settlement allows the debtor to pay off the account for less than the full balance. SmartMoney.com reports that bill collectors often will accept 20 to 70 percent of the balance to pay off collection accounts. Debtors who want to pay the account in full, perhaps for ethical or moral reasons, are free to do so. But Experian maintains that credit scores are not likely to immediately improve if the debtor settles for less than the balance or pays the entire amount.

Rehabilitation

    The best cure for damaged credit scores is to rehabilitate credit over two or three years. People rebuilding credit often open new accounts, such as secured credit cards, and make charges for necessities each month. They pay the balances in full each month or carry tiny balances, such as 10 percent of the credit limit. Later, they may add an installment account by placing money in a bank account and offering the savings as collateral. That makes credit approval easier. Gradually, the debtor adds other credit cards or installment loans and makes regular payments on them to improve credit scores. A secured credit card looks and works like a regular MasterCard or Visa but is secured by a deposit in a bank savings account.

Wednesday, May 28, 2008

How Debt Management Plans Can Help You

How Debt Management Plans Can Help You

If you're struggling with unmanageable levels of personal debt and have exhausted all other avenues, a debt management plan might be the option for you if you're eager to avoid bankruptcy. Although a debt management plan should not be entered in to lightly--accepting one can seriously damage your credit score--it may give you the breathing space you need to get your financial affairs in order. You should only enter into a debt management plan with an accredited or certified credit counselor and make sure that you have everything in writing, particularity a breakdown of their charges and terms, before proceeding.

Negotiate With Creditors

    The credit counseling company that administers your debt management plan will negotiate with your creditors on your behalf. They will seek to set up a payment plan that satisfies both parties and stop your creditors from bombarding you with phone calls and letters about your back charges. Once you've entered into a debt management program, you're unlikely to hear from your creditors unless you start to miss payments or pay late.

Lower Monthly Payments

    As part of your debt management plan, your credit counselor may be able to lower or eliminate the amount of interest being charged on your debt. They may also be able to reduce your monthly payments to a more manageable level. In most cases, it will be in the interests of your creditors to establish a payment structure you can afford. The lenders you owe money to know they are more likely to recoup their money from you through a debt management plan than they would if they pushed to make you bankrupt.

Debt Counseling

    Good nonprofit credit counselors should provide you with a comprehensive review of your financial position before entering in to a debt management plan. A reputable counselor will not recommend that you enter a debt management program if it's not the right thing for you. If you do go ahead, your counselor should be able to offer you ongoing advice about money management and how to avoid future problems with debt.

Retain Assets

    If your counselor is able to negotiate a debt management plan with your creditors, you will be able to retain assets like your house or other high-value items that you could face losing if you were declared bankrupt. As long as you maintain your payments in a timely fashion and avoid taking on further debt, your assets will be safe.

How to Get Student Loans Out of Default

How to Get Student Loans Out of Default

Student loans typically go into default after 270 days of non-payment. Once default occurs, the lender has the right to request full loan payoff and can begin collection procedures, including reporting the default on your credit report, wage garnishment, the seizure of federal tax returns and denial of federal student aid. However, borrowers can go through a process called rehabilitation to bring them out of default. You do not have to meet any eligibility criteria to take advantage of this valuable life line.

Instructions

    1

    Add together all your sources of income and subtract your expenses, such as housing payments, utilities, food and other debts, to determine how much you can afford to pay each month toward the overdue amount.

    2

    Contact your lender and request to be transferred to the collection department.

    3

    Provide the personal information the representative requests. This typically includes your name, Social Security number and loan account number.

    4

    Tell the representative that you want to rehabilitate your loan and tell her the payment amount you can afford. Depending on your offer and the lender, you may have to submit verification of your income and expenses, such as pay stubs, tax returns, social service benefit statements and copies of bills. Federal regulations require lenders to accept a payment plan if it is reasonable given the borrower's income and expenses.

    5

    Make nine on-time payments. Federal law requires lenders to remove default status from the loan after nine months of regular payments. The lender must also report the loan as "Paid As Agreed" or something similar on your credit report.

Debt Relief for Seniors & the Disabled

Seniors and the disabled have few special options for debt relief, although they are eligible for more hardship and disability exceptions if they file for personal bankruptcy. Student loans and other bankruptcy-exempt debts if a judge deems that an individual is permanently disabled and unable to service their debts. Seniors are also likely to be eligible for certain kinds of medical debt relief such, as charity care.

Negotiating Debts

    Many seniors are living off savings or fixed income, so they have limited opportunities for increasing their income in order to pay down debt. Paradoxically, this strengthens their negotiating position when managing debts, as creditors can't realistically demand that the senior improve their earning power. Also, they are less likely to need to preserve their credit rating, as they have a lower lifespan and likely don't need to take out large personal loans, mortgages or auto loans.

Selling or Borrowing Against Assets

    Selling annuities, liquidating retirement plans and stock trading accounts can all be sensible debt management strategies for seniors. These assets will be liquidated in a bankruptcy, so it is better to try to preserve at least some of them before taking on more extreme measures. For most IRA and 401(k) plans, there are special hardship provisions allowing additional withdrawals for severe debt problems. Taking on a reverse mortgage on a house can also be highly effective for seniors who own their own home and still have substantial debts.

Medical Debt

    Seniors and the disabled are in a better position to apply for charity care than most other categories of people. They should apply for any financial aid offered by the hospital where they may have debts. Federal, state and local Health and Human Services Departments should also be contacted to provide assistance with medical bills. Most hospitals require that applications for financial aid be made within six to 12 months of treatment. Families with income below 200 percent of the Federal poverty level should also be eligible for Charity Care subisides according to the U.S. Department of Health and Human Services.

Lawsuits And Bankruptcy

    Social Security income and disability payments can't be garnished by creditor lawsuits, but bank accounts can be frozen or seized. Bankruptcy is a difficult option for seniors or the disabled to make as they are unlikely to be able to rebuild their financial situation afterward. In most cases during personal bankruptcy, individuals are able to keep their mortgage. If it is possible to declare bankruptcy and live with the assistance of family members, it may be a sensible choice, but if it completely wipes out savings, any kind of settlement will likely be more advantageous.

How to Respond to a Garnishment

A garnishment order allows a creditor to take money from your primary sources of income and bank accounts to satisfy a debt. The creditor must go to court and receive a money judgment against you to garnish your wages unless the creditor has special status, such as a child support agency. Federal law limits most wage garnishments to 25 percent of your income after taxes, but for items like owed child support, up to 60 percent of your net income may be taken.

Instructions

    1

    Contact the creditor garnishing your income. Verify the debt amount is correct. Ask about repayment options if you cannot pay in full; some creditors will cease garnishment if you make payment arrangements. Request the terms of the repayment plan be sent to you in writing, including the down payment, if any. Do not agree to a plan you cannot afford, as additional collection activities may result.

    2

    Write down your monthly income sources and expenses. Include all sources of income, such as wages and retirement pensions. Include all necessary expenses, such as housing, food and basic utilities. Gather proof for each item listed, such as pay stubs and bills.

    3

    Visit the court where the judgment you are being garnished for was issued. Ask the court clerk for an exemption petition. An exemption claim is used when you believe the money lost to the garnishment will deprive you of basic necessities. Fill out the petition in full, following all directions on the form, and submit the document to the court.

    4

    Attend your exemption hearing. Bring the items verifying your income and bills with you. Bring proof of any extenuating financial circumstances you are under, such as paying medical costs for a serious illness of yourself, your child or spouse.

    5

    File for bankruptcy if necessary. File the bankruptcy petition in your local federal district court. A bankruptcy filing grants you an automatic stay from creditor's actions, and the garnishment will cease the garnishment activity.

Tuesday, May 27, 2008

How to Dispute Credit Debt

How to Dispute Credit Debt

When a collection agency contacts you in error, or you see a charge on a statement that is not yours, your first reaction may be to panic. But the agency may have posted a charge to the wrong account. Or, a debt buyer may have bought the account, and may now be trying to collect from anyone--even someone with a similar name. The debt buyer may have paid as little as 25 cents per $100 balance, and if he can convince you to pay even a small amount, he makes a profit. It is therefore best to dispute the charge methodically, and without emotion.

Instructions

    1

    Keep your cool. When you become emotional, you are giving the collector exactly what he wants. He knows that if he can get you acting on emotions, you are more likely to pay.

    2

    Dispute the debt in writing. If it is a credit card charge on your account that you did not make, follow the credit card company's procedure for filing a dispute. Write a letter stating why you do not believe that you are responsible for the charge. Include supporting evidence you have--even though it is up to them to prove that you owe them. The bank or credit card company must acknowledge your letter within 30 days and remove the charges, or explain why they are correct, within 90 days.

    3

    Fight a credit card charge with the card company itself if you have an issue with merchandise or services you charged. You should try to work this out with the merchant first, but the law allows you to dispute a charge with the credit card company if you cannot work things out with the merchant. The credit card company may investigate to see if your concern is valid. If so, they may give you a refund.

    4

    Mail a debt verification letter to anyone who is trying to collect a debt from you. This letter asks them to prove that they are legally entitled to collect this debt by providing evidence to you. This is typically a signed contract, account history, or anything that proves that the collector is legally entitled to collect this debt from you.

    5

    Stand your ground--do not let collectors harass you. If it is your debt and you cannot pay, simply tell them that you cannot pay. If they are abusive on the phone, hang up. If someone threatens you with a negative posting to your credit report if you do not pay a debt that is not yours, remind them of the Fair Debt Collections Practices Act. This law describes how collectors must deal with debtors and it prohibits abusive treatment of people by collection agencies. It also provides civil penalties when collectors violate the law.

    6

    Tell the bill collector not to contact you anymore. This is particularly effective with abusive collectors. Proceed with debt verification, and all the steps to stop a wrongful collections action, but do not put up with abuse.

Credit Card Consolidation Programs

Credit Card Consolidation Programs

Credit card consolidation may occur through a consolidation loan program or through a debt management plan by way of a credit counseling program. Both of these methods eliminate multiple payments, allowing you to make one monthly payment each month. You must understand the differences between the two, however, as well as the effect that these programs will have on your credit report to make a choice.

Consolidation Loans

    Usually, a consolidation loan requires collateral, such as your house. The loan is then applied to your credit card debts, effectively bringing your balances to zero. As a result, you make one monthly payment to the consolidation loan. Because the consolidation loan wipes out your balances, it frees your credit, which may be tempting for those who aren't fully committed to paying off debt.

Debt Management Plans

    Another way of consolidating your loans is through a debt management plan. Your debt situation must be dire, however, to get on one of these consolidation plans. To qualify for a DMP, a credit counselor must recommend one for you. Recommendations are made for those who have already defaulted on their payments. Once you agree to a DMP, your counselor works with your creditors to negotiate lower interest rates and/or payoff balances. The counselor also comes up with a time frame, at the end of which your debt will be paid off. You then make one monthly payment to the credit counseling company. If the counseling company is late making your payments it reflects poorly on your credit report, so it's vital to choose a reputable one. The Federal Trade Commission recommends finding a credit counseling company through the National Foundation for Credit Counseling (see Resources).

Warnings

    Both consolidation loans and debt management plans are looked upon negatively by lenders, and it may be difficult to obtain new credit in the future as a result. Consolidation generally reflects difficulty in repaying debt -- and in the case of DMPs, lenders must acknowledge that you weren't able to pay the full amount of your debt. Additionally, 70 percent of those who take on consolidation loans end up with the same or more debt within two years, according to an article on Bankrate. It's best to seek financial counseling to sort out a budget prior to taking on any type of consolidation.

Considerations

    Consolidation loans are often advertised with very low interest rates, however, those rates are generally reserved for those with the best credit scores. You may find that the rates you are offered are not highly competitive with your current credit card interest rates. Before taking on a consolidation loan, which may make future borrowing difficult, call your creditors to ask for a lower interest rate. It's wise to collect any credit card offers you've received to have an idea of your target rate. If at first you are not successful, call another day and ask again.

Monday, May 26, 2008

How to Pay Off Old Debt on a Credit Report

When applying for any type of loan, your credit report is pulled. Listed on your credit report is every loan that you have had in the past in addition to any collections, liens, or judgments that have been filed against you. If the lines of credit are still open, they will appear on your report. If the lines of credit have been closed, they usually removed from your credit report after seven years. If there is negative debt on your credit bureau, it needs to be removed.

Instructions

    1

    Check your credit on all three bureaus: Experian, EquiFax and TransUnion. Visit any a free credit reporting site, such as FreeCreditReport.com, and order a tri-merge report. Enter your full legal name, social security number, birth date and credit card information to receive a full report. Take note of any errors and use the online credit reporting tool to report any errors to the agency.

    2

    Take note of any unpaid debts, liens, judgments, or collections on your report. List them in order of smallest to largest.

    3

    Contact each debt holder listed on the credit bureau to either create a payment plan or to pay the debt in full. Start with the smallest debt and continue paying until each debt is paid in full. Collect a receipt or letter of full payment from each lender.

    4

    Pull your credit report 45 to 60 days after your last debt is paid in full. Make sure that all debts are marked as paid in full. If not, report them directly to the credit bureau by showing proof of payment.

Can a Civil Service Retirement Account Be Garnished for Debt?

Can a Civil Service Retirement Account Be Garnished for Debt?

Although debt collectors are infamous for their nonstop telephone calls and frequent letters, they are not restricted to procuring payments only from those who send them voluntarily. If a creditor takes legal action against you and the court sides with your creditor, the judge issues the creditor a money judgment. Your creditor can then use its money judgment to seize certain assets and forms of income.

Garnishment Exemption

    A creditor can use its judgment to apply for a writ of execution, which it then serves on the debtor's employer. The writ of execution forces the employer to withhold earnings from the debtor's paycheck and distribute those earnings to the creditor each pay period until the debtor either finds a new employer or pays off the debt.

    Civil service benefits are paid to certain retired federal employees. The Federal Trade Commission notes that, because civil service retirement pay is considered a federal benefit, commercial creditors can neither seize nor garnish your civil service checks.

Bank Levy

    While a commercial creditor cannot garnish your civil service retirement pay, it can seize your benefits from your bank account if you do not take steps to protect your income. Creditors with a judgment can satisfy the debt by freezing your bank accounts and garnishing them directly.

    Civil service benefits are exempt from seizure even after you deposit them into your bank account. After receiving a writ of execution from a creditor, banks are required to conduct an account review and determine which forms of income within the account are and are not exempt from seizure.

Protection From Seizure

    Prior to May 1, 2011, banks were not responsible for keeping track of which funds within an individual's bank account were exempt from garnishment and which were not. Consumers who received exempt benefits were encouraged to keep those benefits in a separate account and instruct the bank that the account contained only exempt benefits. Otherwise, the debtor had to fill out an exemption claim form and attempt to prove the amount of money within his account that held exempt status.

    Because banks must now closely review each consumer's banking history and identify exempt deposits, it is no longer necessary for consumers to deposit their federal benefits into a separate bank account to avoid having them frozen by creditors.

Exemption Limitations

    Your exemption isn't based on the amount of income within your bank account that came from the federal government but on the amount you typically receive over a two-month period. Two months' worth of civil service retirement benefits are automatically exempt from seizure regardless of whether you already spent them and the remaining funds within your account came from a different source.

    For example, if you receive a monthly retirement check for $2,000, your bank account is exempt up to $4,000, since that constitutes two months' worth of benefits. If your account contained $3,000 when the bank received a garnishment order, the whole $3,000 is exempt from seizure. If, however, your bank account contained $6,000, you could lose $2,000 -- even if the entire $6,000 balance was comprised of civil service retirement payments.

Is a Wife's Debt Yours Too?

Is a Wife's Debt Yours Too?

When a couple agrees to marry, it is assumed they will shoulder each other's burdens and support each other. However, in the eyes of the law, when it comes to finances, a husband usually isn't responsible for carrying his wife's debt. Likewise, a wife typically is not bound to the debt her husband carries. Regulations on this issue, however, are not consistent across the United States.

Separate Property States

    Whether a creditor can come after you for your wife's debt depends largely on the state in which you live. Most states are separate property states. In these states, you and your wife are financially separate in the eyes of the law, meaning your wife is responsible for her debt and you're responsible for yours. If you live in a separate property state, your share in marital assets usually is protected.

Community Property States

    Community property states function in the opposite manner of separate property states in regard to debt. In these states, you and your wife are one financial entity, according to the courts. The concept in these states is that, when you get married, you and your wife function as a unit, and that therefore, you both should be accountable for debt incurred. If you live in a community property state, creditors have the legal right to seize your property, even if you had no idea your wife was racking up debt. As of 2011, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states.

Creditor's Choice to Pursue

    Even if you live in a community property state, creditors won't necessarily come to you to seek compensation for what your wife owes. They have the choice to sue you to get a judgment or just write off the debt. If they foresee that the cost of legal action will be larger than the debt itself, they usually don't sue. Even if they sue, they have to go through due process before they can seize your assets.

Credit

    People often are concerned that liability for their spouse's debt will impact their credit score negatively. This usually is not the case. In most instances, your wife's debt won't impact your credit, because your name isn't on the credit applications your wife filed, and because individual credit reports are generated using your Social Security number.

Pre-Marriage Debt

    In general, if your wife incurred debt before marrying you, you are not responsible for that debt. There are some exceptions. The first is if you co-signed for the pre-marital debt. Some husbands do this as they obtain property or loans with their wife while they are still dating or engaged. The second is if you become a joint account holder, such as if you get your name put on a credit card on which your wife has a balance. The last exception is if your wife's debt becomes "fresh" debt through refinancing or consolidation. Even if you don't put your name on the refinance or consolidation contract, you might be responsible for this debt, depending on your state, because the new loans and agreements that cover her old loans and agreements are made after your marriage. As with post-marital debt, obligations vary by state, so if you are concerned, contact an attorney in your specific jurisdiction.

Credit Card Debt Elimination Scams

Credit Card Debt Elimination Scams

The news is full of stories of foreclosures, rising credit card rates and huge lay-offs. People are struggling to pay their bills. Creditors are calling, expecting people to forgo paying rent in order to pay their monthly payments. Meanwhile, late fees are mounting.

This precarious financial scene is the perfect opportunity for vultures and scammers to swoop in and offer to help eliminate or manage your debt. But are they actually offering help, or are taking matters from bad to worse?

Debt Elimination Scams

    Claims aren't legal
    Claims aren't legal

    You've all seen the advertisements that promise to eliminate outstanding debt. According to a Federal Reserve System Supervisory letter, the company will prepare legal documents based on your financial obligations. They are then presented to your bank, mortgage company, etc. in an attempt to satisfy the debt.

    These companies support their claims by stating that a specific government agency, like the Federal Reserve, supports their work. Not so, states the Federal Reserve Bank. "Debt elimination programs that claim Federal Reserve approval or acquiescence and the satisfaction of legitimate debts through the presentation of suspicious documents are totally bogus. The Federal Reserve does not approve and is in no way involved in any program aimed at eliminating anyone's debt obligations."

    Debt elimination companies generally charge between $1200 to $2500 up front. But UCAN's Consumer Watchdog Blog warns that the cost could be much higher. "The risk for identity theft is drastically increased because victims have provided all of their personal information to the scam artists."

Debt Consolidation Scams

    Escalating costs of credit card debt gives scammers room to grow.
    Escalating costs of credit card debt gives scammers room to grow.

    They're all over the Internet. They appear in your e-mail inbox. They advertise on television day and night: "Reduce your debts by 50 percent or more!" or "Repair your credit report!! Eliminate late fees!" Could this possibly be true? Katie at SmartCreditInfo.com writes, "One of your jobs will be to navigate through the scams to find one of the few reputable ones that exist."

    One form this scam takes is the "bump up" letters. Katie explains, "These bump up letters will state that the creditors have changed their policy and that they [the credit management company] will now require a larger monthly payment in order to give you the benefits of Debt Consolidation. So your monthly payment to the Debt Consolidation company gets larger and larger until suddenly it no longer resembles the payment that you agreed upon when you signed up."

    Katie also recommends that before signing up with a debt management program, you check out the company with your state attorney general's office and the Federal Trade Commission.

NEW CREDIT CARD LAWS

    Change the way you use credit cards.
    Change the way you use credit cards.

    New credit laws designed to protect consumers went into effect in 2009. However, ConsumerAffairs.com warns that unless consumers adjust the way they use credit cards, the new law won't necessarily improve your situation. Educate yourself on these new laws at MSN Money and other credible sources.

Your Credit Report

    Take Control of your Credit Report
    Take Control of your Credit Report

    The Federal Trade Commission has published "Facts for Consumers" (available at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm). This document explains how manage your own credit report.
    Bottom line, if it looks too good to be true, it most likely is. Knowledge is power.

Sunday, May 25, 2008

Can a Lawyer Take My Car Over Outstanding Debt?

If you owe money to a creditor, his options for collecting the debt are limited by the type of debt you owe. Most debts are not secured by property, so the creditor cannot take any of your property, even if he sues you for the amount of the debt. If your creditor's lawyer or a debt collector threatens to take your car, contact an attorney -- it is against the law for creditors to make empty threats when attempting to collect a debt.

Secured Debts

    Some debts are secured by property. For example, if you take out a loan to purchase a vehicle, the loan is secured by your vehicle -- if you default on the loan, the lender can repossess the vehicle. In many states, if you refuse to allow the repossessor to take your vehicle, the lender must go to court to get an order of repossession. One the court grants this order, the lender can take your vehicle.

Credit Card Debts

    You may use your credit card to pay your vehicle loan each month, but if you default on your credit card payments, it does not give the lender the right to take your vehicle. Credit card payments are unsecured debts; lenders cannot take property if you fail to pay these debts. Your vehicle and other property you pay for via credit card is therefore safe from repossession.

Threats

    If a creditor threatens to take your vehicle if you don't pay a bill, that creditor may be in violation of the Fair Debt Collection Practices Act. The act says that creditors and debt collectors cannot make threats that they are not empowered to carry out, such as an unsecured creditor threatening to take your vehicle. In addition, debt collectors may not make threats they don't intend to carry out. For example, a vehicle lender cannot threaten to repossess the vehicle if he has no intention of doing so.

Legitimate Collection Activities

    While unsecured creditors cannot take your property if you default on the debt, they can take legal action against you. These creditors can report you to the credit reporting bureaus for delinquency or can sue you for the amount of the debt. If a creditor wins a lawsuit against you, she can ask the court to garnish your wages or levy your bank account for the amount of the debt.

How to Vacate a Judgment to Get It Off Your Credit

Court judgments cause significant damage to your credit report. If a creditor got a default judgment against you because you weren't present at a court hearing, you may be able to vacate the judgment and have it removed from your credit report. However, just because a judgment is vacated does not mean that your creditor's case against you is dismissed: You'll still have to show up in court and defend the case. If you lose, the judgment can end up back on your report. Consult with a lawyer about any legal matter, even if you plan to represent yourself in court.

Instructions

    1

    Check your state law for the statute of limitations on vacating default judgments. If you miss the statute of limitations, you may not be able to vacate the judgment.

    2

    Determine whether you have a legitimate reason for vacating the judgment. For example, if you weren't in court because of a medical problem, work or a family emergency, a judge may be willing to vacate the judgment. Another defense might be that you were never properly served with the original summons and didn't know that the creditor filed suit against you.

    3

    Request the appropriate form for vacating a judgment from the courthouse where your case was tried. These forms may be available online through the courthouse's website, or you may need to visit the clerk of court's office to pick them up.

    4

    Fill out the form and submit it to the court along with the appropriate fees. Each court has its own process for notifying your alleged creditor and letting you present your case to the judge. If you don't understand the process at your courthouse, ask the clerk for information on what you need to do next.

    5

    Check your credit reports after the judge vacates your judgment. The judgment should be removed by the credit bureaus, but if it isn't, send the credit bureaus a copy of the judge's order and request that they remove the judgment from your report. It can take 30 days or so for the change to be made, after which the credit bureaus will mail you a copy of your updated credit report.

Saturday, May 24, 2008

Rules About Paying Your Credit Card Bill That Your Creditors Don't Want You to Know

Rules About Paying Your Credit Card Bill That Your Creditors Don't Want You to Know

Consumers owe over $800 billion dollars in credit card debt, according to a March 2010 Federal Reserve report. That's a lot of 100 dollar bills. And navigating the ever expanding clauses, stipulations and legalese of credit card contracts can tax even most dedicated debt-reduction warrior. But there's a simpler way: work within the rules. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 enforces protections against sneaky penalty fees, silent and drastic changes in interest rates and manipulation of payment dates. Credit card companies might wince a collective ouch, but for consumers who want to stay in the black and ahead of the billing cycle, using these rules can put their payments in the win column.

Interest Rate Increases

    Interest rate increases can only apply to transactions that occur under the new rate.
    Interest rate increases can only apply to transactions that occur under the new rate.

    Credit card companies used to have the power to increase your annual percentage rate at will. One month your rate floated at 10 percent, then may have mysteriously hiked to 18 percent. Today, credit card companies must give you written notice 45 days before they increase your rate. And, they have to re-evaluate the rate increase every six months. If you qualify for a rate reduction, they have 45 days from the time of the evaluation to comply. Notably, if you open a new account, they can't raise the rate during the first year.

Charging Late Fees

    The credit card companies made a mint penalizing consumers for late payments. The new rule throws down a penalty flag on charging late fees and sets a cap of $25. And to sweeten the pot, the fee you pay cannot exceed your minimum monthly payment. So, if your minimum payment is $15, it can't charge more than that. Nor can it keep increasing the fee on the same transaction. One caveat: if you've had a late payment within six months this last rule doesn't apply.

Over-the-limit Charges

    Sometimes you make a purchase or an emergency charge and your balance creeps over your credit limit. In days past, it didn't matter if the charge equaled the price of a tube of toothpaste. For a few dollars, you'd get hit with a hefty fine. Today, if you go over your spending limit, you're fined the exact overage amount of $10 or $15 or $200 dollars.

Permissions and Restrictions

    If you didn't give the credit card company permission to allow transactions that max out your card and one or more slip through, they cannot hit you with a fee. The CARD Act rules stipulate that if you didn't agree to it, then you don't pay.

Paying Your Bill

    On any given month you could have a different billing cycle, different due date and a slew of unrecognizable charges. You received a bill on the fifteenth one month and on the tenth a few months later. That's how late fees could sneak into a bill. Today, you must receive your statement at least 21 days before the due date. In addition, you have the same payment date each month. This longer billing cycle helps you pay down your debt.

Friday, May 23, 2008

How to Pay Your Bill for Dish Network Online

How to Pay Your Bill for Dish Network Online

You have enjoyed your month's worth of Dish Network satellite service and now it is time to make a payment. One of the easiest ways to make a payment is by making an online payment on the Dish Network website. Not only will you save time, gas and energy by making your payment at Dish Network's website, but you be certain that your payment has arrived safely and on time.

Instructions

    1

    Gather important information. To pay your Dish Network bill online, you will need to know your 16-digit account number, located in the upper right portion of your bill. In addition, have your debit/credit card number or your checking/savings account and routing numbers available.

    2

    Sign up for a Dish Network account online at the company's website. With a Dish Network online account, you will be able to access your account information, statements and payment history. Once registered, choose the "My Account" link. Then select the "Payment" link.

    3

    Choose a payment method. Dish Network accepts credit cards, including Visa, MasterCard, Discover and American Express. It also accepts debit cards that have the NYCE, Pulse or Star logo on the back of the card. If you do not have debit or credit cards, you can use an electronic funds transfer or Green Dot MoneyPak.

    4

    Enter a payment amount, either your account balance or a different amount. Then, enter your method of payment. Once you have entered all of your payment information, you will be able to review it before submitting your payment.

    5

    Confirm your payment. Check to see that your payment has been credited to your Dish Network account by clicking on the "Account Information" link under "My Account."

Can a Debt Collection Agency Access a Relative's Credit Reports?

When a creditor fails to receive repayment of a debt, it will often choose to hire a collection agency to attempt to receive payment, usually by paying the agency a portion of the money it successfully collects. This collection agency may attempt to secure repayment in different ways, such as contacting the debtor or suing him in civil court. In addition, the agency may choose to examine the debtor's credit report. However, it cannot legally access the debtor's relatives' reports.

Credit Report

    Credit reports are documents held by credit reporting agencies that contain information about an individual's credit history. They list all the loans that the person has taken out and whether he has paid them back on time. This information is not public record, but is privately held by credit reporting agencies. Because of the information's sensitivity, laws restrict who can access this information, and credit reporting companies will only show the reports to certain parties.

Legitimate Business Obligation

    Under U.S. law, only parties with a legitimate business interest can access a person's credit report. For example, a creditor considering whether a person should receive a loan will have a legitimate business interest in knowing the prospective borrower's lending history, as will a landlord who is considering renting the person an apartment. While a debt collection agency would have a legitimate business interest in knowing a debtor's credit history, it would not have a legitimate reason for accessing her relatives' reports and would therefore be forbidden from doing so.

Exception

    Under U.S. law, only a person who signs for a loan can be held responsible for its payment. If a debtor's relative cosigned a loan for which a debt collection agency is seeking payment -- meaning that the relative is partially responsible for the debt -- then the collection agency would have a valid interest in viewing his credit report. However, the Fair Debt Collection Practices Act, a federal law, prohibits creditors or debt collection agencies from harassing relatives for any other reason; all creditors or debt collectors may do is call a relative in an effort to ascertain the debtor's whereabouts, and they must cease calling when the relative tells them to stop.

Penalties

    A party who accesses a person's credit report under false pretenses can face civil penalties, as this is a violation of federal law. In addition, the party is likely to lose her right to view other credit reports, even for legitimate reasons. If the party were to violate the Fair Debt Collection Practices Act by harassing a debtor's relative, she would also face civil fines that would be paid in compensation to the debtor.

Define Household Debt

Define Household Debt

Household debt is the total consumer debt that the people in a single household have accrued. It includes mortgage debt in addition to credit card debt, car loans, student loans and other outstanding non-business loans. Over the past two decades, household debt has risen substantially in many developed countries, even as household income has remained steady or even declined.

Mortgage Debt

    Guy Debelle, author of "Household Debt and the Macroeconomy," writes that in recent years in the United States, United Kingdom, Australia, Japan, the Netherlands, Denmark, France, Germany and Italy, "the bulk of the increase in household debt has been in the form of borrowing for housing." Mortgage debt typically represents about 75 percent of total household debt in the United States and as much as 85 percent of the household debt in Australia, according to Debelle. Mortgage debt is directly tied to its holder's available income. In a sound economy, home equity increases as the mortgage debt is paid down. When property values decline across the housing market, the value of home equity also falls.

Consumer Debt

    Low interest rates on borrowed money have played a large part in increased household consumption--or consumer debt--since the 1990s. Because people had easy access to consumer credit, there were far fewer monetary restrictions for households. Consumer credit provides households with the direct means to make desired purchases without waiting to earn the money first. In 2009, average household credit card debt in the U.S. was $5,100, according to Money-Zine.com. By the end of 2010, that number was projected to be about $6,500 per household.

Debt Service Ratio

    The Federal Reserve analyzes a household's debt service ratio to find out the ratio of the average household's debts to its disposable income. The measurement takes into account a household's total debts in addition to the costs related to maintaining those debts. For example, a household with a mortgage also must pay for property insurance and a household with a car loan must also pay for automobile insurance. The study also considers loan and credit card interest as a necessary cost to fund consumer debt. In June 2008, 14 percent of the average household's disposable income went toward mortgage, credit card and personal loans. About 18 percent of homeowners' disposable income paid the costs of home and car ownership while renters spent about 25 percent of disposable income on housing and car expenses.

GDP

    The gross domestic product (GDP) of the United States is a measurement of the country's economic output. Simply put, the national economy is strongest when debt is low and economic output is high. In an interview with NPR in February 2009, Professor David Beim of the Columbia Business School stated that beginning in 2007, consumer debt equaled the GDP for the first time since 1929, when the Great Depression hit. Beim said that "currently, consumers owe $13 trillion when GDP is $13 trillion." The average household's standard of living has risen very quickly, funded by borrowed money.

Expert Insight

    The McKinsey Global Institute issued an extensive report on the effects of household debt on the wider economy, as highlighted by HeraldNet.com. The report states that it's erroneous to only consider a household's debt-to-equity ratio rather than it's debt-to-equity-to-income ratio, as was often the case in the past. It goes on to state that increasing "housing prices meant that the ratio of household debt to assets appeared stable. ... But household debt compared with disposable income increased significantly, which should have raised a red flag."

Thursday, May 22, 2008

Options to Decrease Debt

Whether it be due to loss of a job or just plain overspending, debt levels can easily start increasing, especially when interest charges and fees get tacked on. Fortunately, there are ways to get out from underneath the crushing burden of debt and most approaches, while simple in practice, require discipline and commitment toward the goal of becoming debt-free.

Reduce Spending

    The most logical way to reduce your amount of credit card debt is to significantly lower your spending and stop putting new charges on your credit cards. Establish a budget and evaluate your spending patterns to see in which categories you can reduce spending. Switch to a debit card or cash only means of purchasing to keep new debt and interest charges off your credit cards and allocate all savings to paying down your existing balances.

Increase Income

    It is easier to devote more funds to paying down debt if you have more money available to do so. Consider getting a second job, freelancing, selling excess items or even asking for a raise at work to generate additional income. Make a commitment to take all additional earnings after taxes to pay down credit card balances.

Lower Interest Rates

    High interest rates can lead to charges to significantly inflate your debt far beyond what you originally spent. The problem has been so problematic that legislation was passed requiring creditors to disclose how long it would take to pay off the balance if only the minimum payment was made. In many cases, it could take decades to pay down a balance by only paying the minimum. The culprit? Interest charges. Call your creditors and request lower interest rates or look for creditors offering introductory low rates on balance transfers. Lower rates will allow for more of your payments to pay down principal versus paying interest fees.

Explore Debt Management

    Debt management services have become a thriving business and provide many options to debt-laden consumers. Evaluate the various debt management options and determine the best approach for your needs. Debt consolidation loans aggregate all of your debt into a single new loan at a lower interest rate. Credit counseling offers education and works to lower interest rates on your credit cards on your behalf. Debt settlement firms help you settle outstanding balances through a single lump sum payment that is usually much less than the full amount owed. Each approach has its own set of benefits and drawbacks you should consider before arbitrarily enrolling.

How to Find Non Chexsystems Banks Free

How to Find Non Chexsystems Banks Free

Finding non chexsystems banks can be difficult, especially when around 80 percent of banks use the consumer reporting system. Hundreds of sites claim to offer "lists" of non chexsystems banks, some for hundreds of dollars. Luckily, there are several ways you can go about finding this information for yourself, for free. Learn how to find out which non chexsystems banks are available in your specific area, without paying a dime.

Instructions

    1

    Contact local bank branches in your area and ask if they have second chance checking accounts available. Many times, local banks will offer these programs for people in the chexsystem, or they may be non chexsystems banks themselves. If you are uncomfortable contacting the bank directly, perform a Google search for the name of the particular bank and the word "chexsystem". This will often give you some insight into their status as non chexsystems banks.

    2

    Search the web for online checking accounts. Online banks are almost always non chexsystems banks and function just like a real bank without the local branches. You can mail in checks for deposit, get a debit card to withdraw your funds, and use real checks. These are not second chance checking accounts, but real bank accounts that anyone can open.

    3

    Check local credit unions in your area. Credit unions don't always use chexsystems, and this can be a viable alternative to a bank. The accounts function exactly like other checking accounts, with debit cards, checks, ATM withdrawals, and deposits at local branches. Contact the credit union directly to inquire, or perform research online as described above. Some credit unions may also offer second chance checking accounts.

    4

    Apply at local branches online. Many banks, such as Bank of America and Chase Bank, allow online application for checking accounts. By applying this way, you'll be able to quickly find out if they are non chexsystems banks, and avoid the embarrassment of being denied in person. Visit websites of all the local banks in your area and find out if they allow online applications.

How to Protect My Money From Garnishment

How to Protect My Money From Garnishment

Garnishment happens when you owe a creditor money, have ceased to make payments and are not communicating with collectors. Creditors can obtain a judgment against you and by court order can seize money to pay off debts owed. They are not required to give you notice prior to the seizure and as a result you could see money disappearing from your bank account. While there is no real escape from debt save for making routine payments, some strategies can protect your paycheck and current assets from garnishment.

Instructions

    1

    Pay the debt in full. If you have the money there is no reason to let the debt sit there and wait for a court order to come take your assets and destroy your credit. Most likely the garnishment has occurred because you do not have the money. If that's the case, consider borrowing from friends and family to pay it off and avoid recurrent seizures and penalties.

    2

    Request an offer in compromise if the IRS is the one garnishing your wages. This offer allows you to settle your debt for a fraction of what is owed but is only available to certain individuals and can be very complicated to complete. If you feel this may work for you, consider hiring a tax professional to help you collect the necessary information needed to make your case.

    3

    Establish a payment plan or work with a credit consolidation firm to manage your debt and create a monthly payment you can afford. Having a plan and consolidating also helps stop the calls from creditors and instantly ceases the garnishment as long as payments continue to be made.

    4

    Collect records showing your expenses and income and file with the IRS to prove that garnishment is causing you financial hardship. If the IRS grants you hardship status because you cannot pay your other bills, creditors will stop making collections via garnishment.

    5

    Set up an exempt bank account with a bank you do not owe money and transfer all exempt funds into this account. Exempt funds include Social Security benefits, railroad, civil service and military retirement benefits, and Veterans Affairs benefits.

    6

    Transfer your money to an account in a family member's name. Accounts not in your name cannot be garnished on your behalf. If you feel none of the other methods listed will work for you, consider having a family member set up a new account for you or adding your money to theirs. Make sure to work out a management plan to keep track of how much money you have and determine how you are able to access it when you need it.

Wednesday, May 21, 2008

How to Refinance Unsecured Debts

Unsecured debts are those not backed by any collateral. The most common type of unsecured debt is credit card debt. However, personal loans and small lines of credit can be unsecured as well. Refinancing unsecured debt can be a risky proposition due to fees. However, refinancing into a lower-interest account can be financially beneficial.

Instructions

    1

    Attempt to secure a lower rate and payment with your current lender before refinancing. Simply ask your creditor for a lower rate--you may just get it. Creditors are in fierce competition to acquire and retain consumers and by mentioning that you are considering refinancing, you may get the rate you're looking for.

    2

    Determine the interest rate on your current account. Also, find out if the rate can adjust. When you refinance, you'll want to secure a fixed-interest account. You can accomplish these usually by looking at a current statement, but you can also refer these questions to the customer service department.

    3

    Pull a copy of your credit report. See Resources for a free copy of your report. You will also want to pay for a copy of your FICO score. This three-digit number represents your creditworthiness. Any score above 720 is excellent; any score below 600 is poor. Consider refinancing only if you have good to excellent credit.

    4

    Begin researching rates and programs. It's best to keep unsecured debt as unsecured debt. While rates on unsecured refinances are higher than secured programs, putting your credit card debt against your house is risky. Look at local banks and credit unions for their rates on personal loans and lines of credit.

    5

    Apply to two to three lenders. Excessive inquiries--more than six in a six-month period--will cause your score to go down. Make sure to review all offers side-by-side prior to making a decision. The best programs will have low interest rates (lower than your existing rate), a fixed rate, low fees, a closed-end structure. Closed-end loans, like auto loans, have a set monthly payment and expiration date.

    6

    Review the final paperwork for accuracy on the loan you choose. Make sure no terms have changed.

Credit Counseling or Debit Relief: Which Is Best?

If you're faced with an overwhelming amount of credit card debt that you can't handle yourself, you have two main options that can help you to avoid bankruptcy. Credit counseling and debt relief share the goal of getting you out of debt, but go about achieving this goal in completely different ways. The difference between those two ways has a great deal of impact on your credit, both short-term and long-term.

Credit Counseling

    When you go for credit counseling, it's a sign that you're unable to keep up with your current debt load. However, it's something that credit card companies look favorably upon. Since many credit counseling companies are owned by credit card companies, they are happy to help by reducing your interest rates and eliminating late fees. The idea is that you'll be able to pay your way out of debt in 3 to 5 years through a debt management program; however, as a condition of the program, you likely won't be able to use your existing credit or apply for any new credit until your balances are paid off.

Debt Relief

    Similar to credit counseling, debt relief involves negotiating favorable terms with creditors. However, the process isn't as straightforward. In debt relief, your goal is to settle your debts for less than what you currently owe. The debt relief agency acts on your behalf to negotiate and therefore requires a fee for its services. Settling your credit card debt usually means intentionally not making payments to save for a settlement; this also gives you the leverage necessary to negotiate a settlement for less than you owe.

Short-Term Implications

    In the short term, debt relief may seem like a better option than credit counseling. You may be able to reduce your overall debt and get it paid off more quickly. However, this option also includes the constant harassment from creditors as you miss your payments, which can go far beyond calls to include lawsuits and wage garnishment. On the other hand, credit counseling takes longer, but will relieve you of the stress of dodging creditors.

Long-Term Implications

    Though debt relief will have you settled sooner than credit counseling, the long-term effects of debt relief can be devastating. The process of missing payments and settling for less than your full balance can destroy your credit for years to come. Credit counseling also impacts your credit, mainly because all of the accounts you place on the debt management program will be closed, but you'll also build up a history of timely payments and gradually lower your credit card balances, which will drive your score up over time.

Can a Bank Garnish My Wages?

One of the most serious methods of debt collection used by debt collectors is wage garnishment. A creditor may choose to collect on a debt by filing a lawsuit against the debtor and then asking the judge to grant him a motion that will allow him to divert money from the debtor's paycheck. A bank can also do this if a person owes money from a checking account.

Bank Accounts

    A person may get into debt with his bank in a number of ways. One of the most common is to overdraw money from his checking account. According to the contract that the account holder signed when he took out the account, he must pay this money back within a set period of time. If the person does not, he may be sued in court for the debt.

Negative Balance

    When a person holds a negative balance on a checking account, this is just like taking out a bill from a creditor. if the person does not pay this money back, then the creditor may take measures to secure payment of it. This can include reporting the debt to a credit reporting agency, causing the person's credit rating to drop, and pursuing the garnishment of the person's wages.

Garnishment

    Garnishment of wages by a bank works just like garnishment by any other party. When the bank attempts to garnish the wages, it will first seek to win a judgment in court that certifies that the debt is indeed owed to the bank. It will then, once again, request payment from the debtor. If the debtor still fails to pay, the bank may take further measures and ask the judge to allow it to garnish the person's wages.

Garnishment and Freezing

    If a person has money in his account with the bank, then the bank will generally be allowed to take money directly out of the account to pay off this debt. While usually a creditor must receive an order to take money out of a person's account, this action is written into the bank's contract. However, the bank must still receive an order before it can garnish wages.

What to Offer a Collection Agency for a Student Loan

If you stop making payments on your student loans without first getting a forbearance or deferral from your student loan lender, the lender could assign the loans to a collection agency. When that happens, you may be required to pay back the full amount of the loan, plus extra collection costs and late fees. However, there is sometimes room for negotiation.

Total Amount Due

    The first thing to do is to find out the total you owe the collection agency. This is likely to be a different and higher amount than you originally owed the student loan company, because on top of your original balance, you probably also have late fees for late or missed payments, and collection costs from the collection agency. To find out the total amount due, contact the collection agency and ask, or look at any bill sent to you by the collection agency.

Offers from Collection Agency

    Sometimes collection agencies will make debtors an offer to make paying back a debt easier or more attractive. If the collection agency assigned to collect on your student loan has made you an offer, read it carefully to see what the terms are. For instance, the agency might offer to allow you to settle the debt for less than what is owed if you pay by a certain date in full or agree to pay in a few large installments. Consider your ability to meet the terms being offered if the collection agency has made you such an offer.

Making Counteroffers

    If the collection agency extended an offer that is just not doable, it's better to present a counteroffer than to agree to terms you might be unable to stick to. If no offer has been presented to you, make the collection agency an offer that is reasonable to you. Call the agency and ask to speak to someone about your account. Explain that you want to make good on your financial obligation but are experiencing financial difficulties. Tell the representative what you can afford to pay. If the offer is accepted, ask for confirmation in writing.

What Is Reasonable

    Lowball offers are likely to be denied on the spot. However, offering to satisfy only the principal and interest; just the principal and half the interest; or 90 percent of the entire debt might just get you an approval. You may also ask that collection fees be waived or reduced.

Negotiation Tips

    Often, collection agencies will take significantly less than what is owed on a debt if you agree to pay in one lump sum rather than making payments for a prolonged period. That's because making payments requires the company to process your payments each month. And there's always the possibility that you will at some point stop making payments. So, if you can, offer a lump sum to settle the debt. Borrow from a parent if possible. While that may seem like a drastic and unattractive measure, student loan companies can take you to court to compel you to pay and even garnish your wages.

How to Tackle Bills That Are Turned Over to a Collection Agency & Are on My Credit Report

Once a creditor turns your bill over to a collection agency, your credit score takes a big hit. Your debt will appear twice on your credit report, once as the charged-off account with your original creditor and then as an account with the collection agency. If you owe the debt, and want to save your credit, try working with the collection agency to settle or pay the debt as quickly as possible.

Collection Agencies

    Collection agencies specialize in collecting debts from consumers and businesses. Some collection agencies work on behalf of the creditor who still owns your debt: The collection agency takes a percentage of any money collected from you. Alternatively, your original creditor may sell your debt to a debt buyer. Debt buyers pay the creditor a small percentage of the debt's value and get to keep anything that you pay on the debt. In both types of collection agencies, the employees who call you about your debt (also known as debt collectors) work on commission. This puts you at an advantage for negotiating your debt, as the collectors make money when you pay them something, even if it is less than what you actually owe.

Credit Reports

    Your credit report is a history of your financial behavior. Creditors and collection agencies can report the age of your debt, how much you owe, and your history of paying your debts on time. Credit scoring companies use your credit reports to calculate your credit score, a three-digit number that many creditors use to make credit decisions. Employers, landlords and insurance companies also use credit reports and scores when making decisions about offering you a job, housing or insurance coverage.

Paying Your Debt

    If you know that you owe a debt, it's a good idea to get it paid off. Not only is it the right thing to do, but it can this improve your credit score, and help prevent future problems with collectors of time-barred debt. Time-barred debt, also known as "zombie debt," is old debt that is no longer collectible under the statute of limitations. Sometimes it gets sold to unscrupulous debt buyers who try to collect it anyway. Some of these debt buyers will go so far as to sue you or place negative information on your credit report, despite the fact that it is no longer legal to do so. While you can defend yourself against such a lawsuit and get that information off your credit report, it's a hassle you simply don't need. On the other hand, if you are unsure that you owe the debt, the federal Fair Debt Collection Practices Act gives you the right to request validation from the collection agency within 30 days after it first contacts you. Send them a letter via certified mail asking for proof that you actually owe the debt.

Negotiation

    The preferred method for communicating with collection agencies is in writing: You want documentation of any agreements you make with a bill collector. If you choose to negotiate over the phone, insist that the bill collector fax or mail you a copy of your agreement in writing before you send any money. If you have cash on hand, ask the collector if it will consider settling your bill for less than you actually owe. It's a good strategy to offer a little less than what you can afford so you have some room to bargain. If you have the ability to pay the debt in full, or a high percentage of the debt, work into your negotiations a promise in the collection agency to remove your account from your credit report. If you can't settle the debt, ask about a payment plan.

Follow Up

    After you settle your account or begin making payments on your payment plan, check your credit reports. You want to make sure that the collection agency is properly reporting your account. For example, federal credit reporting law requires the collection agency to update your balance as you make payments on an account. If the information on your credit report is wrong, file a dispute with the credit bureau.

Tuesday, May 20, 2008

Indiana's Law on Time-Barred Debts

Indiana's Law on Time-Barred Debts

A time-barred debt is a debt that has a time limit for how long a creditor can sue you for nonpayment. This time limit is known as a statute of limitations. Indianas law on time-barred debts is laid out on the Indiana government's website.

Types

    Time-barred debts are divided in four categories, and each of these categories often has its own statute of limitations determined by the state. The four categories are oral and written contracts, promissory notes and open-ended accounts.

Oral Contract

    The statute of limitations on an oral contract in the state of Indiana is six years. An oral contract is when you verbally agree to pay a debt without signing a paper contract. This type of contract is harder to prove in court than a contract that is written and signed on paper.

Written Contract

    The statute of limitations on a written contract in the state of Indiana is 10 years. A written contract is a contract signed by you and the creditor in which you agree to pay the money back. This can be any papers that you sign in agreement to pay back a debt, whether the creditor is a company or an individual.

Promissory Note

    The statute of limitations on a promissory note in the state of Indiana is 10 years. A promissory note is a written promise that you will pay the debt within a specific schedule and at a set interest rate. For example, students getting a Federal loan for college may sign a promissory note with their school before receiving any funds.

Open-Ended Accounts

    The statute of limitations on open-ended accounts in the state of Indiana is six years. Open-ended accounts are different from the three other forms of time-barred debt because they have a varying, revolving balance. A good example of an open-ended account is a credit card.

Monday, May 19, 2008

Can You Borrow Money Against a Trust?

Can You Borrow Money Against a Trust?

A trust account is a legal instrument that one person puts in place to hold funds until, upon his death, they go to the named beneficiary. Trusts can also be used as a savings account, as some trusts allow the owner or beneficiary to borrower from them before their maturity.

Types

    Not all trust funds allow a user to borrow from them. Some types of trust funds that do allow a user or beneficiary to borrow money from the account are: discretionary trusts, family trusts, unit trusts, hybrid trusts, property investment trusts, self-managed super fund trusts and service trusts.

Fees for Trust Loans

    When taking money out of a trust on a loan basis, the borrower agrees to pay the money back into the trust within an allotted time. All lenders will charge a fee for the loan, as well as added legal fees ranging from $200 to $500, according to the Home Loan Experts website.

Considerations

    Trust loans are normally set up to purchase investment properties or second homes. When applying for a trust loan, a buyer should consult with the attorney who originated the paperwork for the trust in order to discover any ramifications associated with it.

Sunday, May 18, 2008

Facts About Debt Settlement

Debt settlement can be tempting if you find yourself tens of thousands of dollars in debt, with no foreseeable way to pay it. But debt settlement may not be the right way for you to reduce your debt.

Function

    Debt settlement is the practice of allowing a consumer to pay a portion of a debt, usually less than 50 percent of the total. The creditor reports the debt as settled, with a zero balance.

Types

    You can negotiate your own settlement, but creditors likely won't talk to you until you are several months behind in your payments. Of course, by that time late fees and other charges have accrued, putting you deeper in debt. Debt management companies or attorneys can also negotiate for you.

Warning

    Debt management companies can charge thousands of dollars, and there are many unscrupulous companies that will take your money without doing what they promise to do on your behalf. Also, if a creditor learns that you are working with a debt management company, the creditor may decide to sue you for the entire amount. If that happens, the debt manager will drop you.

Effects

    While it gets you out of debt, settlement can also result in a negative mark on your credit scores.

Considerations

    The money you save through a settlement could be taxable as income. It's best to check with your accountant.

Am I Responsible for a Credit Card Debt Under My Husband's Name?

Am I Responsible for a Credit Card Debt Under My Husband's Name?

Money is a major concern for most couples; however, if one spouse is routinely irresponsible financially, the worry may extend further than marital strife---the responsible spouse may be in danger of losing her wages and property, too. Whether or not you're responsible for your spouse's debt depends on the type of debt, the type of account and your home state. In some states, even if your finances and taxes are completely separate, you are responsible for your spouse's debt.

Separate Accounts

    If you have separate financial accounts, including credit cards, you are not responsible for your spouse's debts. Your credit score is based solely on your own financial history. Therefore, any debts your spouse has accrued affect only his credit report and only he is responsible for paying back those debts.

Joint Accounts

    If you have a joint credit card account, you are both equal owners of the account and you are therefore equally responsible for the debt accrued on that account. For instance, if you have a joint credit card with a high balance, that balance would create a negative impact on both your and your spouse's credit score. If your spouse refuses to make payments on the debt, as the co-owner of the account you will be responsible for paying it off.

Community Property States

    The states of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington are community property states, which means that even if your debts are separate, collectors may come after you to repay the debts even if they are solely in your spouse's name. As the spouse of a financially irresponsible person, you would be responsible for any debts your spouse took on while you were married. Wisconsin has a Uniform Marital Property Act, under which spouses are subject to the same rules as community property states.

Considerations

    If collectors begin contacting you to pay off your spouse's debts, Bankrate suggests contacting the Federal Trade Commission or your state's attorney general to file a complaint. You may also consider contacting a credit counselor with your spouse to consider your options for how to get your their debts paid off.

Thursday, May 15, 2008

Risks of Filing Foreclosure

Foreclosure presents many risks. It is not possible to "file" for foreclosure, although some people voluntarily walk away from their homes through what is known as a strategic default. Strategic defaults occur when people weigh the pros and cons of foreclosure and decide to walk away even if they are capable of making the payments. They may be unhappy with the neighborhood or disappointed that their home has dramatically declined in value. Some homes purchased at inflated prices during a strong economy can lose a third or even half their value during a recession.

Credit Score

    Foreclosure can have a devastating effect on credit scores. It is one of the most negative credit events possible because it shows future creditors that you defaulted on one of your most important loan obligations. That can paint you as a poor credit risk and make it impossible to qualify for another mortgage for several years, especially if you voluntarily allowed the house to be foreclosed.

Court Action

    Houses are sold at auction or at private sales after foreclosure, and the lender applies the proceeds to the balance on the loan. Most states allow lenders to file lawsuits to collect the difference if the house sells at auction for less than is due on the mortgage. A house selling for $50,000 at auction with a $75,000 loan balance could lead to a deficiency judgment in court. The deficiency judgment orders you to pay the shortfall or risk garnishment of your bank account or wages.

Collections

    Mortgage companies don't always immediately seek deficiency judgments. Some state laws allow banks to wait several years before filing a lawsuit. The banks use that as part of their collections strategy, figuring your financial situation may improve in a few years and you will be in a better position to pay the shortfall.

Bankruptcy

    Deficiency judgments force some people to file for bankruptcy, another risk of foreclosure. The judgment is an unsecured debt and can be eliminated in just a few months through Chapter 7 bankruptcy. Another option is Chapter 13, but it requires a payment plan of three years to five years. For a while you'll really have a hard time finding affordable credit with a foreclosure, judgment and bankruptcy all on your credit report at the same time.

Medical Debt Responsibilities

Medical Debt Responsibilities

Medical costs and medical debt are one of the largest causes of bankruptcy in America, says bills.com. The high cost of health care is a significant portion of the problem. However, loss of income during recovery also adds stress to a family's financial state. The problems worsen for those that are not insured, under-insured or have claims denied. Understanding a few facts about medical debt responsibility can help avoid some of these situations.

You are Responsible for Your Medical Bills

    A major misconception surrounding medical bills and debt is who is responsible for paying. When you receive medical care it is ultimately you that is responsible for bill payment even if you have insurance. When you are treated, the contact is between you and the medical service provider. If your insurance company is paying the bill it is your responsibility to make sure this happens. Even though many doctors will bill insurance companies on your behalf, it is your responsibility to file the claim with your insurance company for payment.

Receiving a Bill

    You are still responsible for paying a medical debt even if the doctor or hospital fails to send you a bill. When you received the medical care this is the point that an enforceable contract was made. Patients are allowed to leave the doctor's office or hospital and pay at another time as a courtesy. The fact that your doctor fails to send you a bill does not absolve you of your responsibility to pay. If you do not receive a bill then phone your medical care provider and request one.

Timely Billing

    If you have insurance, the terms for billing times will be outlined in your agreement. It is essential that you are aware of these terms because you can be held liable for payment if the insurance company doesn't receive the bill in time. The times vary from policy to policy, but the standard period of time is 90 days. If your doctor or care provider does not bill the insurance company within this time, you can be held responsible for the payment. To prevent this from happening, call your doctor's office and make sure the bill is filed. You may have some recourse if you can show it was the doctor or hospital that was negligent.

Family Medical Bills

    Generally speaking, in most states spouses' medical bills are shared responsibility. This also holds true for children. If your spouse or child has medical treatment then you can be held liable for the costs. In most cases, this issue only becomes complicated when a divorce occurs. Most states will hold the ex-spouse liable for any medical costs created during the marriage. With children, legal experts recommend getting a provision with the marital dissolution agreement requiring the spouses be notified when medical care is given to children or other dependants. This prevents one spouse from running up medical cost to the deteriment of the other.

Wednesday, May 14, 2008

Can You Get a Money Loan on a Prepaid Visa Without a Direct Deposit?

In addition to credit cards, the financial services company Visa also offers prepaid cards. These prepaid cards function somewhat like a debit card linked to a checking account. A person is allowed to place money on the card and then make purchases with it at any place that Visa cards are accepted. However, unlike a credit card, a person cannot loan money with a prepaid card.

Prepaid Cards

    A person is allowed to place money on his prepaid Visa card in a number of ways, including by depositing cash at select locations or transferring money from another account. However, unlike a checking account, a person cannot write checks against this account, nor can he deposit checks to it. He also cannot borrow money using the card, as as he could do with a credit card.

Loans

    The only way that a person could theoretically use his prepaid Visa card to get a money loan is if he offered the card as collateral to a lender who was willing to lend him money based on the promise that it would be paid back in the future. However, few companies are willing to do this. Most payday loan companies, for example, require a person to have a checking account to borrow money.

Direct Deposit

    A person is allowed to deposit money directly onto his prepaid Visa card, such as the wages from a job or from benefits provided by the government. Although providing proof that you are receiving a direct deposit may help convince a lender to loan you money -- this shows that you have a consistent source of it income -- it will not enable you to make loans against the card itself.

Other Types of Cards

    While a person cannot loan money using a prepaid Visa, he may be able to apply and receive a Visa credit card through a bank or other financial institution. A Visa credit card allows a person access to a line of credit from which he draws money in the form of loans. The amount of money and the rate of interest he will pay on it typically do not depend on whether the person receives direct deposit.

How to Pay & Fix My Credit

How to Pay & Fix My Credit

You can pay off delinquent debts and improve your credit scores--but don't expect a quick fix. Cleaning up credit problems takes time. Negative information can remain on your credit reports for up to seven years, even if you've paid the debts. So-called credit repair firms may boast that they can quickly fix your credit, but the Federal Trade Commission says the companies often make promises they cannot deliver, and that you should repair your own credit.

Instructions

    1

    Get free copies of your credit report at the website Annual Credit Report. Federal law entitles you to three different copies of your credit reports during a 12-month period. You can get one copy from the three major credit reporting bureaus: TransUnion, Experian and Equifax. Consider staggerinng your requests by ordering one every three or four months as you repair your credit. Visit the website and click on "Request Report" to order, or call 877-322-8228. The Annual Credit Report website is the only website sanctioned by the Federal Trade Commission t to offer completely free reports; copycat sites may offer free reports and also attempt to sell you other services.

    2

    Review every entry on your credit report for accuracy. Federal law gives you the right to challenge any inaccurate information and have it removed by the credit bureaus within about 30 days. Even accurate information can be challenged. Under the terms of the Fair Credit Reporting Act, the credit bureaus must confirm the accuracy of any information you challenge--even if you know the information is true. The information must be removed if the credit bureau cannot confirm its accuracy during an investigation. This loophole is often exploited by credit repair agencies. For a fee, the agencies will challenge all negative information on your credit reports in hopes much of it will be deleted.

    3

    Write letters to the credit bureaus challenging any information your wish to dispute. Include your name, address and Social Security number. Include the name and account numbers for all the accounts you are disputing. Tell why you believe the information is inaccurate. You can argue that the account does not belong to you, that you never paid it late, or that the balance is incorrect. Or state another reason. You should receive a response in about five weeks.

    Equifax
    P.O. Box 740241
    Atlanta, GA 30374-0241
    800-685-1111.

    Experian
    P.O. Box 2104
    Allen, TX 75013
    888-397-3742

    TransUnion
    P.O. Box 1000
    Chester, PA 19022
    800-916-8800.

    4

    Make payments to bring any delinquent accounts current. This is one of the most effective ways to improve your credit. A consistent history of on-time payments will improve your scores over time. Also contact creditors or debt collectors to pay off delinquent closed accounts.