How to Add Someone as a Cosigner to Improve Credit

The Federal Trade Commission reports that companies that promise to repair credit are often a scam. In fact, they say that a legitimate credit repair organization would never advertise the ability to erase all your bad debt or to provide you with a new identity. However, if you wish, you can help a close friend or relative raise their credit score by allowing them to piggyback on your strong credit rating.

Instructions

1

Make them joint credit card holder. Choose your credit card with the lowest limit and contact your credit card carrier in order to add someone new to your account. Every payment made toward this account will be reported to the three major credit bureaus. As long as the card is paid in a timely manner, it will benefit both of your credit reports. However, if the other person does not hold up their end of the bargain, you will be stuck with paying the entire amount in order to keep your credit in good repair.

2

Cosign on a department store card. Your good credit will give the creditor a sense of assurance that the debt is going to be faithfully paid. As a cosigner, you have the right to check the account each month to ensure it has been paid. It's especially important to check regularly because as the cosigner, your credit is at risk if the other party is not paying on time.

3

Cosign on a small, personal loan. If the person you are helping has fair credit, they may be able to get a small personal loan from their bank with your cosignature. Like other loans, it will be reported to the three major credit bureaus, helping to improve an overall credit score. Make sure the loan is small enough that you can easily pay it off if the other party reneges. The best bet with a small personal loan is to have the other person pay it back in full within weeks of receiving it. It will show up on their credit report as an obligation paid in full.

4

Pull the plug on the exercise if the person you're helping is not doing their part. This is your credit reputation at stake. The first time they miss a scheduled payment, pay the balance off. If you hold a credit card jointly with this person, cancel the account. Canceling a credit card will mar your credit, but is much easier to recover from than late payments. Go to the person you have been helping and ask for repayment. If this person refuses to pay, you may have to take them to small claims court.

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Oregon Medical Debt Statute of Limitations

Every state, including Oregon, has laws that limit how long you have to file a lawsuit, known as a statute of limitations. In Oregon, any creditor to whom you owe money has a limited amount of time to sue you to recover a debt you have failed to pay. Talk to an Oregon attorney for legal advice about medical debts and statutes of limitations.

Kinds of Debts and Their Limitations

Debts are typically incurred in one of four ways: through a written contract, an oral agreement or oral contract, an open-ended account and a promissory note. Oregon Revised Statutes section 12.080 includes all of these debts in a single statute of limitations. Any actions to recover debts incurred in Oregon, medical or otherwise, must begin within six years from the date when the debtor defaulted on the terms of the debt.

Medical Debts

Most medical debts are usually considered written contracts. For example, when you go to a dentist and are asked to fill out the paperwork before the dentist sees you, these usually include terms of payment. When you sign these agreements, that constitutes entering into a written contract. However, you may sometimes enter into oral or acknowledged agreements for medical services, though these are more rare than written contracts. Either way, Oregon's statute of limitations is the same for any debts.

Time Frame

The statute of limitations imposes a duty on the creditor, meaning it is the creditor's job to file a lawsuit to try to recover the debt before the statute of limitations expires. For example, if you go to the doctor and never pay your bill, the doctor must sue you within six years. As long as she does, she meets the statute of limitations and the court will hear her case. Even if she files one day before the statute expires and the case drags on for years, the statute of limitations has still been met because she started the case before it expired.

Judgements

If a creditor sues you for an unpaid medical debt, and wins, the creditor then has a limited time to collect on the judgment. The judgment is subject to a different statute of limitations that begins ticking once the court grants it. Oregon Revised Statutes section 12.070 states that all judgments must be acted upon within 10 years.

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How to Negotiate My Credit Card Debt Prior to Paying Off My Balance

Some Americans struggle with overwhelming credit card debt. If you have a large amount of credit card debt, you must make repayment a priority before it consumes you--financially and psychologically. One of the ways you can relieve some pressure is by negotiating with your lenders. There are several strategies, but you must pick the one that best helps you get out of debt.

Instructions

1

Pull your credit report prior to approaching your credit card companies. You'll want to be well-armed and well-informed before arguing your case. You can get a free copy of your report at AnnualCreditReport.com. You should also pay for a copy of your FICO score--a three-digit number that represents your total credit profile. Scores over 720 are great; scores below 600 are very poor.

2

Calculate your own debt-to-income ratio (DIR). This is the percentage lenders use to determine your ability to repay any loan. To find your DIR, divide the sum of all monthly bill payments by your total gross income. Now multiply this figure by 100. Most lenders will be unwilling to negotiate any debts unless your DIR is well over 50 percent.

3

Review your credit report for delinquencies and other negative marks (charge-offs, judgments). These will need to be explained. Make sure you can both explain what led up to the negative credit marks and provide any documentation to support your argument (medical bills, unemployment stubs).

4

Contact your credit card companies with settlement offers in mind. You will have to open the negotiations--not the lenders. For example, if you owe $5,000 on a credit card, ask for a 35 percent reduction--leaving you with a balance of $3,250. Lenders will be more willing to negotiate if you give a promise to repay huge chunks of the loan in lump-sum payments.

5

Counter the credit card company's counter-offer. You are looking for the best deal for you; the companies are looking for the best deal for them. You'll need to compromise, but don't back down right away. Impress upon the representatives the problems you are facing, and that the best way for them to get a percentage of their money back is to reach a settlement.

6

Get the settlement offer agreement in writing before signing or agreeing to it. Review the agreement and make sure the terms are correct and fair.

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Recommended Debt Ratio

Intent and ability are equally important factors in the loan approval process. When reviewing your loan application, lenders look to your credit score to establish intent and to your debt ratio to establish ability. Although your lender uses a standard formula to calculate debt ratio, how it's applied when assessing your ability to repay depends on the type and recommended debt ratio for your loan.

Identification

Debt ratio, also called debt-to-income ratio, compares your gross monthly income, or income before deductions, to your total monthly debt load. Income includes not only wages, but also spousal and/or child support, Social Security or other government assistance, dividends and interest payments and an average for fluctuating income such as tips, bonuses or commissions. Your debt load consists of the minimum amount due each month on credit card and all loan payments, with the exception in some cases of your mortgage payment

Formula

The formula to calculate your debt ratio is debt load/income. First, determine your monthly debt load by adding monthly payments. Then calculate your gross monthly income. If your pay schedule is weekly, multiply your gross weekly wage by 52 and then divide this number by 12, and if your pay schedule is bi-weekly, multiply your gross bi-weekly wage by 26 and divide by 12. For example, if your monthly debt load is $1,200 and gross monthly income is $3500, your debt ratio is 1,200/3,500, or 34 percent.

General Recommendations

Debt ratio recommendations for your loan depend on whether your debt load includes your mortgage payment, in which case recommendations generally allow a higher percentage. According to Bankrate.com, when your debt ratio includes your mortgage, a general recommendation is to keep this percentage at or below 36 percent. When your mortgage payment is not part of the calculation, the general recommendation falls to 20 percent or less, according to MindYourFinances.com

Mortgage Loan Recommendations

Mortgage loans work somewhat differently in that they calculate your debt ratio two different ways. The first, called the front-end ratio, compares your potential mortgage payment, including the principal, interest, taxes and insurance, to your monthly income. The second, called the back-end ratio, compares debt load, including your mortgage payment, to income. An acceptable debt ratio depends on the loan. Fannie Mae and Freddie Mac loans, according to MortgageUnderwriters.com, allow up to 28 percent for the front-end and up to 36 percent for the back-end. FHA loans allow up to 31 percent for the front-end and up to 43 percent for the back-end, while VA loans use only the back-end ratio, allowing up to a 41 percent debt ratio.

Considerations

You can also use this formula to calculate and monitor your debt ratio at home. Keeping track of your debt ratio can help you make smart financial decisions and avoid what MindYourFinances.com refers to as "creeping indebtedness."

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Can My Lawsuit Monetary Reward Be Garnished?

When you owe large amounts of money to one or more creditors, you stand the chance of being sued for the collection of the money that you owe. In many cases, if the judge finds for the plaintiff creditors in the case, then you can have an order of garnishment levied against you. In some cases, you can have not just wages but a civil judgment seized or garnished by creditors.

Civil Judgment

Just as you may have a civil judgment levied against you in a debt collection case, you may be the recipient of a civil judgment levied against another person. While rules vary from state to state, a civil judgment is a debt obligation from one party to another. The party that owes you money may pay in a lump sum or in multiple payments. However, this money is not exempt from garnishment.

Garnishment

When wages or other income streams are garnished, it means that the money is diverted from the person paying you, the debtor -- usually an employer -- to a party who you owe money to. Usually, garnishments are only levied against employers. However, in certain cases, a judge may allow the garnishment order to be placed on other income streams or even on anticipated lump sum payments.

Bank Account Seizure

Even if a civil judgment cannot be garnished directly from the person paying it to you, it may be siphoned out of your bank account. While there are certain types of income that cannot be legally garnished from your bank account, such as most payments by the government -- like Social Security or disability payments -- civil judgments enjoy no such protection. A debt collector only need gain the permission of a judge.

State Laws

Laws regarding the garnishment of wages and other income streams vary from state to state. Some states allow no form of garnishment by private debt collectors at all. Therefore, the only way to determine whether garnishments of civil judgments are legal in your area is to consult with an expert, such as a debt counselor or an attorney with experience in debt law.

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Definition of Trade Debts

Trade debts include all those payments that the purchaser is allowed to make at a later date. Thus, a trade debt is originated as a credit facility for increasing the sales revenue for a business. Trade debts for a company are of two kinds: trade receivables and trade payable.



The accounts receivables include the amount of money that is yet to be recovered from the purchasers or users of a companys services. The accounts payable include the amount that your company owes to others against a purchase that's been made or a service that's been utilized for business operations.

Facilitate Business Activity

Trade debts facilitate business activities through permitting purchasers pay at a later date. This facilitates a purchaser to make or sell the end product, generate revenue on the product, keep the value added or the profits, and return the trade debt according to the predetermined time.

Are Trade Debts Important?

Trade debts not only facilitate the business operations and sales of a business but can serve other purposes at the same time. A popular use of trade debts is to include them into financial statements of the companies. The trade receivables, also known as accounts receivables, are recorded as current assets on the balance sheet, while the trade payable, also known as accounts payable, are recorded as current liabilities.

Trade receivables are assets and can be pledged with a financial institution or a bank to obtain a credit line or a loan. Thus, trade debts can help generate business activity and at the same time provide a means to obtain cash for operating activities.

Short-Term Nature of Trade Debts

The primary purpose of allowing trade debts is to save the interest payments, if the money to purchase those products or services was borrowed from a bank. Also, trade debts are usually synchronized with the trade cycle of a firm and are of a short-term nature. Businesses producing daily use products such as soaps will allow a trade debt ranging from a few days to a few weeks incorporating the time it may take for a shop to sell the soap. A car manufacturer may offer a trade debt, for a length of three to six months depending on the time it takes to sell cars on average.

Associated Problems with Trade Debts

It is not always simple to determine the amount of trade debts a firm holds. This can be a loophole for firms to cheat their auditors through generating fake invoices and trade receivables. Also, it is often hard to determine if the trade debts are in good standing and will actually be received by the company, or if they will go into default. The company auditors must be cautious in verifying changes in the levels of trade debt if they are striking and appear to be manipulative.

Competitive Pressures

Trade debts also are created due to competitive pressures in certain industries. In such cases a company may offer more relaxed credit terms or longer periods for payment of trade debts to capture more of the market share.

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How to Dispute Inquiries With TransUnion

When a lender looks at a copy of your credit report, an inquiry is posted to your file. Every lender who looks at your report for the next two years will be able to see who has looked at your file. This can affect your ability to get new credit if there appears to be too many loan applications. When lenders pull your credit report without permission, this could indicate possible identity theft and you should consider disputing the inquiries with the credit bureau TransUnion. Fortunately this is fairly easy to do, through phone or postal mail.

Instructions

1

Write down a list of the unauthorized inquiries appearing on your TransUnion credit file. These should be lenders with which you never made a credit application or had an account. Remember that your current financial institutions, such as a credit card company, do have the right to view your credit reports at any time.

2

Call TransUnion at 1-800-916-8800. Tell the customer service representative that you have unauthorized inquiries on your credit report and that you wish to dispute them.

3

Write a letter disputing the unauthorized TransUnion inquiries as an alternative to calling. You should note that you did not apply for credit and/or do not have credit with the company in question, and that you wish the inquiries be immediately removed. Send your letter certified mail to TransUnion, 2 Baldwin Place, P.O. Box 2000, Chester, PA 19022.

4

Wait about 30 to 45 days to receive a response. If TransUnion will not remove the inquiries after their first investigation, you may wish to send another letter and/or contact the lender who pulled your credit reports.

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How to Reduce Debt When Losing Your Job

Losing your job can be both psychologically difficult and financially stressful. If you are about to lose your job and source of income, and you are contending with overwhelming debt, you have a challenge ahead of you. It is still possible, however, to reduce debts while you are unemployed. It does take discipline and perhaps some help from a debt counselor.

Instructions

1

Apply for unemployment benefits as soon as you lose your job. The earlier you begin the process, the earlier the application will be processed and, hopefully, approved. These benefits can help defray living expenses while you work on debt reduction.

2

Do not liquidate all assets, savings, retirement funds and investments. This may be tempting. You'll need an emergency fund now more than ever. Make sure you have a fund (of liquid capital) that can carry you for six months without any income.

3

Focus on the most burdensome debts only. It's unreasonable to expect that you can eliminate your debts while your income is drastically reduced or non-existent. Instead, find the largest, highest-interest accounts to begin repaying.

4

Take money from some of your other accounts. While you should not liquidate everything (see Step 2), you can benefit from removing some of your savings to help get you by. One option that is utilized by many Americans is the 401k loan. You can often access up to 50 percent of your 401k balance without paying early withdrawal penalties or taxes. Consider taking money from investments and savings too.

5

Create a new budget based on unemployment income, funds you pulled from other accounts and your severance (if available). Cut all non-essential expenses: eating out, entertainment and luxuries. Pay minimums on all accounts you are not actively paying down. This will free up enough disposable income to make larger payments against those higher-interest accounts.

6

Find a credit counselor if you are still struggling to get your debts under control. Start your search at the National Foundation for Credit Counseling. This is the association that approves reputable credit counselors. You may be able to reduce interest rates, eliminate fees and create a more manageable repayment plan.

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How to Stop Foreclosure Meetings

Foreclosure is a nightmare many people face daily. When a homeowner gets behind on his mortgage, a natural reaction is to ignore the phone calls and letters and hope the situation will go away. This is a bad approach because it almost always results in the homeowner losing his home. However, being behind on a mortgage does not have to mean the home is lost. There are things a homeowner can do to prevent foreclosure, even after several mortgage payments are missed.

Instructions

1

Do not avoid phone calls from the mortgage company. When homeowners fall behind on payments, the natural inclination is to avoid calls from the mortgage company, often to avoid embarrassment. However, the mortgage company has no idea why the account is past due and unless the homeowner informs them otherwise, will assume the worst--that the homeowner refuses to pay. Talk to the mortgage company and explain the circumstances; there could be programs or a payment arrangement a homeowner can utilize to keep his home out of foreclosure.

2

Contact a consumer housing counselor to advocate on your behalf. These agencies have working relationships with many lenders and can often negotiate an arrangement between the homeowner and the lender. A homeowner should contact a housing counselor as soon as he realizes the mortgage payments are becoming an issue.

3

Sell the house through a short sale. A short sale occurs when a house is sold for less than is owed, but the mortgage holder agrees to accept the lower amount as payment in full. Many real estate investors are interested in buying homes through a short sale because the homes sell for less than their actual value, and can be turned around for a profit quickly. First-time homebuyers are often interested because they can get more house for their dollar. Contact a real estate agent that specializes in short sales for assistance with listing and selling the home. The lender will also have to agree to accept the terms of the sale, but many lenders agree because they will often get more of their investment back through a short sale than if they foreclosed and sold the home at auction.

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What to Do If a Bill Goes to a Collection Agency?

Collection agencies purchase your debt, sometimes for pennies on the dollar, from your original creditor. Collection agencies can strike fear in certain consumers when they are attempting to collect a debt. Being armed with the Fair Debt Collection Practices Act and negotiation skills will allow you to resolve any issues if a bill goes to a collection agency.

Reviewing Credit Report

Obtain a copy of your credit report. A copy of your credit report will determine if the collection agency is reporting the debt. You can get your credit report by going to Equifax.com, TransUnion.com, or Experian.com. You can also contact the credit bureaus via mail or phone to request a copy of your credit report. You are entitled to one free credit report per year or if you are denied credit for any reason. If you do not see the bill on your credit report, you can wait for correspondence from the collection agency.

When a collection agency has received your debt, by law it has to contact you within 30 days of receiving the debt based on the Fair Debt Collection Practices Act. When the agency contacts you via mail you can dispute the charge, if necessary and it cannot further attempt to collect on the debt until the dispute has completely been investigated.

Working with the original creditor

Contact the original creditor to see if you can settle the debt. Depending on how early the debt was sent to the collection agency you may be able to negotiate a payment with the original creditor. If you settle with the original creditor you can send a certified letter to the collection agency informing them the matter has already been handled and to cease further contact.

Satisfy Debt

Determine how you will like to handle the bill. Look into your current finances, extra money and budget to determine if you can repay the debt. Once the collection agency receives your debt, you do not have to pay the full amount to settle. Determine what is best for you and contact the collection agency via mail or phone to negotiate a payment. If you both mutually agree on a settlement amount get the agreement in writing before you make any payments. If you choose to mail letters to the collection agency do so via certified mail to prove that someone signed for and received the letter.

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How to Calculate Expected Unemployment Benefits

If you have recently lost your job, you may qualify for unemployment benefits. Weekly unemployment compensation amounts are based on the amount of money you earned before you were unemployed. The amounts vary from state-to-state, which means one calculation does not exist for estimating your benefits amount. As long as you have your earnings information, you can plug the data into a benefits estimator or calculator to determine your expected amount of compensation.

Instructions

1

Gather your last paycheck stub for each job that you held in the past 18 months. If you cannot find a paycheck stub, you can use a W-2 instead.

2

Separate the paystubs and W-2s into groups. You need five groups for each of the most recent five calendar quarters, which are three-month periods.

3

Use a calculator to add up your total wages in each of the first four quarters. These quarters make up your base period and the fifth quarter does not count. The amount you earned in the base period is what your unemployment benefits are based on, which is why you need total wages for each quarter.

4

Go to your state unemployment website and use the expected benefits calculator, if your state offers one, to calculate your benefits. Alternatively, use the Unemployment Benefits website (see Resources) to calculate the amount. You must enter in the wages for the first four quarters to get your expected benefits amount. If you use the Unemployment Benefits site, you must first enter in your state, employment status, education level and zip code. After you do this, you will be presented with an advertisement. To continue to the benefits calculator, click on the "To Skip This Offer, Click Here" link above the ad.

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What Does G Mean on an Experian Credit Report?

While many consumers know their credit rating is based on a credit report, knowing exactly what is in a credit report can be difficult, especially if you're reviewing your report for the first time. Credit reports contain a variety of terms and information. A "G" on an Experian report can mean one of two things: an identifier of a kind of business or an account in collections.

Experien Credit Report

Experian, Equifax and TransUnion are the three main credit reporting agencies (CRAs). Experian maintains a credit report on any consumer who has used a credit instrument. These reports contain different types of information about each consumer's history as a credit user, though much of this information is presented in numbers or letters that represent specific credit history items.

Trades

The main part of an Experian credit report consists of the "trade" items. This section contains all your credit activity regarding installment loans, credit card accounts, mortgages and other open or closed accounts you've had within the past seven to 10 years. These trade items use a variety of code letters to represent specific types of transactions. For example, each trade item has a SUB (subcode) number, which is a unique number Experian gives to each lender.

Business Code

Experian also assigns each trade item a Kind of Business (KOB) code. The first letter of a person's KOB code represents the type of business the creditor or reporting agency is. A "G" in the KOB means the business is a grocery store. So, for example, if you have a credit card with your local grocery store, this account is identified with a G in the business code that appears immediately after the business SUB number, on the far left of each trade entry item.

Collections

The letter "G" also represents collections in your payment history. Experian lists your payment history on the far left of each trade item, listing each payment month in sequence. For example, you might have a "CCCCCCCCCG" listed on a trade item. This means you were current on the first nine payment periods, as indicated by the "C," but the 10th period is currently in collections, as indicated by the "G," meaning you have failed to pay, and the creditor referred the item to a credit collections agency. This is a serious negative item and has a significant negative impact on your credit score.

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Nonprofit Credit Card Counseling

Credit card counseling companies advertise helpful services for people who are having trouble managing their debt, and many counseling firms emphasize their nonprofit status. The Better Business Bureau warns that some lie about being not-for-profit, and even companies that really do have nonprofit status are not necessarily legitimate. The status is just one factor in judging a credit counseling firm's legitimacy.

Status

A credit card counseling company's nonprofit status claim is easily verifiable. The BBB explains that your state charity official can confirm the counseling firm's status for you. The National Association of State Charity Officials provides contact information for the proper officials. Two professional organizations, known as the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies, offer referrals to legitimate nonprofit credit card counseling services.

Funding

Nonprofit credit card counseling companies that are on the level should readily disclose their funding sources if you ask them. Nonprofit status does not guarantee that a firm charges reasonable fees. Good firms get the bulk of their funding from creditors, according to the BBB. You may be asked to pay for certain services, but many firms waive their fees if you are too destitute to afford their help. Only work with a counseling company that gives a clear statement of fees in writing.

Services

Good nonprofit credit card counseling companies offer a full spectrum of services to assist you in handling credit card debt. The Federal Trade Commission explains that they should have free educational materials, as well as classes and personal counseling. Counselors should be independently certified and able to help you with everything from creating a budget for your credit card bills to negotiating with your card issuers and setting up a manageable payment plan if you are deeply in debt. Banks sometimes agree to lower your minimum payments, erase late fees from your accounts, and even reset the clock on delinquencies if you commit to a structured payment plan through a nonprofit counseling firm.

Considerations

Credit counseling is not the right solution for every person buried in credit card debt. MSN Money columnist Liz Pulliam Weston explains that National Foundation for Credit Counseling statistics show that two-thirds of the people who sought counseling in 2008 were able to either manage their credit card debt on their own after some education or entered structured payment plans, but one-third were too deeply in debt to be helped by counseling services. Bankruptcy is sometimes necessary when you have too much credit card debt and too little income.

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About Debt Management Plans

Debt is a way of life for the typical American, with most people having mortgages, auto loans, school loans and/or credit card debt. When debts become overwhelming, searching for a solution to your financial difficulty is a logical next step. In some circumstances, a debt management plan (DMP) can get you back on track, but DMPs aren't for everybody.

What Is a Debt Management Plan?

A debt management plan is a systematic, organized method for repaying debt. The purpose is to get your debts under control and give you more solid financial ground.

How Debt Managment Plans Work

When you opt for a DMP, you give all the money you'd normally pay to your creditors to a debt management company. The debt management company takes responsibility for your bills, sending the right amount to each creditor. In return for handling your debt, the debt management company charges you a monthly fee.

Benefits

A primary benefit of DMPs is that you no longer have to struggle to work with every creditor every month. You can make one quick, easy payment to the debt management company, and they do the rest. This can be a huge stress reliever. In some cases, debt management helps you avoid larger financial disasters like bankruptcy, with the debt management company often negotiating lower interest rates with creditors. Debt management can reduce or put an end to harassment from creditors, since the creditors are receiving payments from and dealing with the debt management company instead of you.

Drawbacks

The fact debt management allows you to make just one payment can provide peace of mind, but it also puts all your eggs in one financial basket. You have to trust that the debt management company won't make a mistake, and sometimes, they do, leaving your money improperly distributed. The fees debt management companies charge often are hefty, which can worsen your financial situation. You also can't write off the debt involved in a debt management plan the way you can when you use debt settlement. Using a debt management company also shows up on your credit history and can lower your credit rating. Finally, creditors don't have to agree to debt management. If your creditors don't want to be part of your DMP, you can't force them into it.

Should You Use a DMP?

For some people, using a DMP is the right option because, with a good company, the immediate debt obligations are handled promptly, and money is saved on what you owe. Depending on how the company negotiates and the fees they charge overall, you might only break even financially -- that is, the real benefit of a DMP is the reduction of stress. Debt management companies, unless they provide credit counseling as part of their service, do not teach you the effective financial strategies that will prevent you from needing a DMP again in the future. It's a lot like letting your mom do your financial laundry. If you want to prevent hassle in the future, you may be better off with free counseling from a non-profit credit counseling agency.

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Can People Pay Off Their Primary Mortgage Before They Pay Off Their Secondary Mortgage?

When you have multiple debts secured by your home, these mortgages are arranged by the lienholders' priority for getting repaid. In most cases, your primary mortgage will be the large one that you got when you purchased the home. Your secondary mortgage will probably be a home equity loan or line of credit. You can pay off the mortgages in whatever order you prefer.

Mortgage Priority

The mortgage priority refers only to the order in which the lienholders get their money back if you fail to make payments, not the order in which you have to pay them off. For example, say you have a primary mortgage of $100,000 and a secondary mortgage of a home equity line of credit of $50,000. If your home goes into foreclosure and the lender sells it for $120,000, the primary lender will get the full $100,000 and the secondary lender will only get the remaining $20,000. This is why secondary mortgages usually have higher interest rates than primary ones.

Choosing Payoff Order

The order in which you choose to pay off your mortgages depends your goals. If you are looking to save money on interest, you probably want to pay the mortgage with a higher interest rate first. However, if the one with a lower interest rate has a variable rate that is trending upward, you might want to pay it off first so you can get rid of it before the interest rate gets really high. If one of the mortgages has a much smaller balance than the other, you might want to pay that off first to get the satisfaction of paying off a debt and having one less monthly payment.

Pay Mortgage With HELOC

Some homeowners choose to pay off a primary mortgage with a home equity line of credit (HELOC). This might be because the variable interest rate on the HELOC is currently less than the rate on the primary mortgage. Others use the HELOC basically like a checking account and deposit their paychecks into it and make withdrawals when needed. This ensures that all extra money each month goes toward paying off the house.

Considerations

Before rushing to pay off either mortgage, consider whether this is the wisest way to use your money. Most mortgages have lower interest rates than other types of consumer debt, such as credit cards, so you should probably pay those off first. In addition, between the low interest rates and tax deductions on mortgage interest, many people can earn more by investing the money than they save on mortgage interest.

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Credit Score Vs. Interest Rate

Your credit score has a direct relationship on the interest rate you are charged for a new or current loan. The higher your score, the lower your interest rate should be on a new or current debt.

Function

A credit score tells a lender what the odds are you will repay your debt on time and in full. An interest rate is the percentage of the loan, or monthly fee, charged to the borrower for having the debt.

Types

There are three credit bureaus that report credit score: Experian, TransUnion and Equifax. Interest rates can be simple or compounding rates, depending upon the terms of agreement for the loan.

Time Frame

A credit score is updated once a month, and can fluctuate from month to month. Unless an interest rate is fixed, it can fluctuate as well based upon predetermined factors, including the borrower's credit score.

Effects

The lower the credit score of the borrower, usually, the higher the interest rate charged and vice versa. If the borrower has a lower credit score (under 620), the loan servicer has a higher risk in the deal and, therefore, charges a higher interest rate to offset that risk.

Considerations

Before procuring new debt, a borrower should check his credit score to see if any changes can be made to raise the score and increase his chances of a lower interest rate on the new debt.

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Can a Business Charge My Debit Card Without My Authorization?

Businesses are not allowed to charge your debit card without your authorization, but it is a regularly occurring problem. Debit cards are stolen -- or their card numbers are stolen and replicated on another card -- and then used. Fraudulent telemarketers may use deceptive means to gain access to debit card information, then sign unwitting customers up for recurring charges. Federal banking regulations limit the amount of money you can lose to such schemes.

Federal Limits

Under federal banking regulations, you are liable for losses of up to $50 if you notify your bank within two days of discovering the fraudulent charge. You can lose up to $500 if you fail to notify your bank within the two-day period. Banks can take up to 10 days to return your money while they investigate. If they need more time to investigate, they must return your money -- but they may take it back again if the investigation determines you were at fault for the loss.

Automatic Debit Scams

Telemarketers may call your home and inform you that you have won a free trip or offer to sell a service to repair your credit. After a long telephone conversation, they may ask for your debit card number to process the prize. You may authorize a small, one-time charge. Even if you don't, the scammers may bill you every month for a service you do not want. If you notice that a company is billing you without authorization, notify the bank immediately.

Cancelation in Writing

There may cases in which you authorized a company to make a recurring withdrawal from your debit card account but you have ceased to need its services. Occasionally, the company will continue to charge your account. If this happens, you must notify the business in writing that you no longer want it to charge you. "You provided the merchant with written authorization to debit your account. Because the bank was not a party to that agreement, they cannot cancel it for you. You need to instruct the merchant to cease debiting your account," the U.S. Department of Treasury says on its website.

Lost Cards

If your card is lost or stolen, your liability is similar to situations in which a fraudster used the card's information -- without the card -- for gain. If you report a card lost or stolen before it is used, federal law states that you cannot be held liable for any charges. If your card is used, your loss is limited to $50 if you report the unauthorized charges within two days.

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What Happens When the Court Orders Payment of a Debt?

When a creditor wins a judgment against you with regard to an outstanding debt, he gains power to perform a number of debt-recovery actions. These powers allow him to lawfully go after your finances directly, effectively removing you from the debt payment equation. Some funds are protected from such actions by federal law though the greatest determiner of how much of your money is protected is the nature of the debt you owe.

You Have to Pay the Debt

Yes, when a court orders you to repay a debt you really have no choice. The court does not make this decision lightly and only arrives at it through careful examination of your finances to determine if you can reasonably be expected to repay a debt with your current salary and living situation. A court will generally not force the repayment of a debt if payments will send you below the poverty line, render you unable to make rental or mortgage payments or significantly impact your ability to provide care for your family.

Wage Garnishment

In many states across the country a court may order the garnishment of your wages to force you repay a debt. This means that payments to your creditors are taken out of your paycheck after taxes -- you never see the money. Even states where wage garnishment is illegal still allow wage garnishment if your debt is connected to back taxes, federally funded student loans, court fines and child support payments.

Bank Account Seizure

Once a creditor wins a judgment against you he may place a hold on your checking or other bank accounts to pull money out of them for the purpose of paying your debt. This helps creditors collect payments from debtors who may be self-employed and don't necessarily bring home a paycheck to garnish. A bank account hold can be used to seize any funds available in the account including income from work, tax refunds and gifts.

Exempt Funds

Payments from Social Security, federal pension funds or Social Security disability funds are exempt from bank account seizure and garnishment. This means a creditor cannot touch these funds as part of a garnishment or account seizure decision. Some debts, such as back taxes, child support payments, outstanding court fines and alimony may be paid through the garnishment of Social Security benefits and retirement funds.

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How to Get a Personal Loan 2 Years After a Discharged Bankruptcy

Bankruptcy is not the end of the world. Contrary to popular belief, you can improve your credit and secure financing after a bankruptcy. While you'll almost certainly face disadvantageous rates and programs, you can use sub-prime lenders and loans to begin repairing your credit report. While you may be disqualified for large loans (like mortgages), you can obtain a personal loan if two years have elapsed since your bankruptcy. The process, however, will likely be challenging.

Instructions

1

Pull a copy of your credit report. You can access a free copy at Annual Credit Report (see Resource 1). You need to find out how your credit fared after your bankruptcy. Pay for a copy of your Fair Isaac Corporation, or FICO, score, too. This is a three-digit number between 300 and 850 that represents your creditworthiness. Scores above 720 are excellent; scores below 600 are poor.

2

Do not over-apply. Excessive inquiries (more that six in a six-month period) will negatively affect your credit. Instead, eliminate lenders that do not cater to sub-prime borrowers--like credit unions and local banks.

3

Research finance companies. These companies, like CitiFinancial and Wells Fargo Financial, offer higher rates and fees on their programs and will often consider borrowers who suffered bankruptcies. Make sure to research the reputation of each of these companies at the Better Business Bureau (see Resource 2).

4

Print out a copy of your credit report and circle all positive aspects of your credit. This includes accounts not included in the bankruptcy and paid well, well-paid secured loans (like car loans) and positive payment history on new accounts obtained after a bankruptcy.

5

Apply to two or three lenders. Make sure to provide your credit report, a letter explaining the delinquency that led up to the bankruptcy and copies of your income documents (pay stubs and W2s).

6

Review all loan offers with a trusted advisor--like an accountant or attorney. It is crucial that you do not take a loan that will place you in a more precarious financial position. While you will likely pay more for the loan, you must be wary of predatory lenders.

7

Accept a loan offer only if it meets your financial needs and if you are confident in your ability to repay the account.

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What Does it Mean to Confiscate a Debt?

To "confiscate" a debt refers to forcibly seize an unpaid debt from a debtor. A creditor will generally attempt to confiscate this payment if other methods of collection have failed. Confiscation is generally limited to debts that are long overdue and for which the creditor has received a judgment in court. However, certain categories of individuals and kinds of income enjoy immunity from debt confiscation.

Garnishment

The most common type of forcible confiscation of debt is the garnishment of a person's income stream, usually wages from a job. When a debt is garnished, the creditor, with the permission of a judge, will approach the debtor's employee or other income provider and serve him with an order that mandates he set aside a portion of the debtor's wages for the creditor. This continues until the debt is fully paid off.

Account Seizure

In lieu of garnishment, a creditor can also seize funds from a person's bank account. This is done by approaching the debtor's bank or other financial institution -- again, with the permission of a judge -- and ordering the account frozen. Once an account is frozen, a creditor may be able to seize funds from the account and use them to pay off the outstanding debt. Banks are legally obligated to comply with freeze orders.

Liens

In some cases, a creditor may also be able to place a lien on a person's property. Generally, such liens are unavailable to creditors who have won judgments for unsecured loans. However, if a loan is secured by a piece of property, such as real estate, a creditor may be allowed to place a lien on it if the debt is late. Before the property can be sold, the creditor receives payment first.

Exemptions

Confiscation is outlawed in a number of instances. While some federal laws apply to these practices, most laws are formed at the state level, meaning that the rules that apply will vary by region. However, federal law protects the seizure of federal benefits, as well as certain other income streams. In addition, many debtors are protected from the confiscation of their debt if they are receiving little income.

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Can Creditors Collect Disability Assets?

If you are behind on your bills, you may have creditors and collectors contacting you regularly about your outstanding debts. These collectors often make threats such as lawsuits and attachment to your income and bank accounts. If your income is primarily federal disability income or other federal benefits, you may be exempt from their collections attempts.

Paying Creditors

Generally, courts consider federal disability income to be exempt from garnishment by a debt collector. Disability income includes Social Security disability, or SSI, payments. Most federal pension benefits are also exempt from judgments. Benefits that you receive for service in the military and federal student benefits fall under the same category, and cannot be taken by a court in order to satisfy a judgment for collection of a debt. Generally, the federal government will not honor a request to garnish disability payments for debt collections.

Child Support

Child support debt is treated differently by law. Just as you cannot exempt child support debt in bankruptcy, you generally can't exempt disability income from garnishment to pay child support. The law holds a person's obligation to their children to a higher standard, and will usually allow disability or federal benefits money to be garnished in order to pay this obligation.

Court Hearings

To obtain a garnishment, a creditor must sue you in court and win a lawsuit. After the creditor has won the lawsuit, you are given a certain amount of time to pay the judgment. If you do not pay the judgment in that amount of time, the creditor may ask you to come back to court to determine what you are able to pay. You will be asked about your income, and where it comes from. At this time, the judge will determine if your income is exempt from garnishment. If you have income that can be garnished, the judge will issue orders allowing this.

What If My Account is Frozen?

Since the creditor will not be successful in having the federal government withhold income in order to pay the debt, it may turn their attention to your bank account, trying to get it frozen. If the creditor does this, you will not be able to use the money in your account. If the money in your account is primarily from your disability benefits, that money usually can not be taken to pay a judgment. Contact your bank and ask it to free your account, telling it that the money in the account is exempt from seizure under federal law. If the bank does not release the funds, you will probably need to go to court to have a judge rule that the money is exempt, and issue an order releasing the funds.

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New York State Laws for Credit Collection on a Frozen Bank Account

If a creditor sues an individual for a specific amount of money owed and a judge rules in the creditor's favor, the creditor will be awarded a money judgment. The creditor then has the right to collect that debt, and in some cases the creditor will be allowed to freeze the individual's bank account to remove funds directly.

Exemption Notice and Claim

If a bank account is frozen in the state of New York, the bank must send out proper documentation within two days of freezing the account. The account owner should receive an exemption notice and an exemption claim form. The notice will have information regarding whether or not the account owner is exempt from creditors, as well as information for unfreezing the account. The claim form must be completed and mailed to the bank and creditor attorney within 15 days of receipt to prevent the creditor from taking funds from the frozen account.

Wrongly Frozen Accounts

If an individual's account is wrongly frozen, the bank has no right to charge or collect restraint fees. In cases where such fees show up on the individual's bank statement, the individual should dispute the fees directly with the bank. If you don't receive the proper documentation from your bank within two days of the bank freezing your account, call your bank immediately or report them to the New York State Banking Department at (877) BANK-NYS.

Exempt Income Protection Act 2008

Effective January 1, 2009, the Exempt Income Protection Act provides that certain money held in an individual's bank account is protected from debt collectors. This act ensures that individuals have sufficient funds available to meet their basic daily needs such as rent, food and medicine. The bank cannot freeze the first $1,740 in an individual's bank account regardless of whether the account has exempt funds.

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What Happens With Accounts That Are Not Paid After Several Years?

When you fail to pay a credit card or charge account debt, the debt triggers a series of events. First, you will receive mailed or e-mailed reminders. After 30 days, the company owning the debt will likely report the delinquency to one of the three credit reporting agencies. You will then likely receive delinquency notices and a series of phone calls and letters from a collection agency. The creditor eventually may write off the debt as a total loss, then sell it for a fraction of the debt to a company specializing in long-term bad debt collection.

Credit Rating Consequences

Your general payment history accounts for about 35 percent of you total credit score. If you have many other good credit relationships and one unpaid debt, the bad debt will lower the payment history part of your score but perhaps not significantly. You cannot know exactly, because the credit reporting agencies do not discuss details of their scoring practices. As the bad debt ages, its negative impact on your score decreases.

Debt Collection

At some point, the credit-issuing company will turn an aging bed debt over to a collection agency. How much energy the agency puts into the collection will likely depend upon the amount. For amounts greater than $1,500 but increasingly for lesser amounts since the 2008 credit meltdown, the agency will take you to court. Note that if you do not show up to defend yourself, the judge will likely issue a default judgment that you cannot appeal. Note that in some instances and in some states, you can be arrested for ignoring court orders related to debt repayment.

Long Term Debt Collectors

Most traditional collection agencies concern themselves with fast, if partial, payoffs of bad debt. An emerging kind of company, such as Encore Capital Group, buys aged credit and consumer loan debts for a few pennies on the dollar and then "pushes them through assembly-line litigation," to make a small profit, often with wage garnishment -- a legal way of attaching a portion of the debtor's pay check every pay period until full repayment of the debt is made. While these companies may return a small profit on each debt over an extended time period, they enjoy economies of scale and specialization.

Dealing with Debt Collectors

In cases where you cannot pay the debt or disclaim it, you may find yourself dealing with a debt collector. The federal Fair Debt Collection Practices Act gives you certain rights related to debt collection and obligates the debt collector to pursue the debt within the limits of the Act. You can read the Act online. Privacy Rights Clearinghouse maintains a helpful website informing you of details of the Act and giving various tips on working with debt collectors, filing disputes against them and suing them when you believe they have violated your rights.

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Debt Collection Services of the Department of Education

Failure to pay your student loans can have serious repercussions for your credit and finances. If your student loan gets sent to collections, you can expect increased collection efforts, damage to your credit and the possibility of the Department of Education turning your account over to an outside collection agency.

Student Loan Collections

Paying off student loans can be significantly different than paying off other debts. If you have difficulty paying off loans backed by the Department of Education, you have several options for repayment, including plans based on your income, as well as the ability to defer repayment if you're in school or facing severe financial hardship. However, if you don't take advantage of these options, your loans eventually end up being collected by the Department of Education or one of its collection agencies.

Dischargeablity of Debt

There's no statute of limitations on student loans, and they're extremely hard to discharge in bankruptcy. Although there are loan discharge programs that entitle you to loan cancellation, such as working for 10 years or more in public service while making regular monthly loan payments, you won't be able to eliminate your student loans through bankruptcy or just not paying them. The collectors working for the Department of Education and their outside collection agencies are aware of this fact and aren't likely to cease their collection efforts.

Rehabilitation Rights

If your student loan goes into default, you may have the right to rehabilitate it by making regular, on-time payments for 10 months. Once you do this, your loan is no longer in default status and is serviced like any other student loan. You're eligible for forbearances and deferments, and if you need to borrow more money to further your education, you can do so.

Outside Collection Agencies

If you have defaulted on your student loan debt and haven't participated in the Department of Education's attempts to work out a mutually agreeable payment arrangement, an outside collection agency may take over your account. When this happens, be prepared for aggressive collection attempts, including phone calls at home and at work. It's also possible for the collection agency to garnish your wages or bank accounts, and, because it's working on behalf of the federal government, it won't need a court order to do so.

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Secrets to Rebuilding Your Credit

Rebuilding your credit after bankruptcy, credit charge offs, judgments or other financial problems can be daunting. You don't want to deal with rejection after rejection while attempting to rebuild your credit. Some companies specialize in bad credit loans and accounts, while other types of credit have a lower barrier to entry.

Secured Cards

A secured credit card requires an upfront deposit of your own money, placed into a savings account which the bank controls. In return, the bank issues you a credit card with a limit equal to the amount in the savings account.

Rent-to-Own

Rent-to-own stores spread payments for different items over a long-term period, so you pay a low cost per month. You will pay more overall for the items you're buying, but many of these stores add a tradeline to your credit report.

Buy Here, Pay Here

Buy here, pay here auto and furniture stores report to credit reporting agencies. You will pay more overall, but low credit scores are often accepted, and the business may not even do a credit check. Pay these accounts on time to build up the positive tradeline.

Credit Unions

A small, local credit union may be more likely to issue you a credit building card than a larger bank. You can talk face to face with the loan department at a credit union in many cases, and explain how you are keeping yourself out of credit trouble and how you are going to use the card.

Bad Credit Accounts

Some credit card companies have credit offerings that focus specifically on low credit borrowers or bankruptcy debtors. These cards and loans usually offset the company's risk by charging higher interest rates, annual fees or other methods of mitigating damage in the event of a default.

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Tips on Paying Down Student Debt

The National Center for Education indicated in 2008 that two out of three college students have some type of student debt after graduation. Debt can impact your ability to save money and pay your bills. The longer it takes to pay down the student loans, the more money you'll be spending on interest. Though repayment plans are available that let you pay small amounts of money over many years, in the end it's better to pay off your loans as quickly as possible, even if it means sacrificing some luxuries.

Grace Period

After you graduate, you will have a grace period on your loans. During this period, which is usually about six months from the day you graduate, interest will not be charged on your loans and you will not be required to make payments. Attempt to put as much money as you can into your student loan payments before interest begins being added. Consider using any graduation gifts or employment sign-on bonuses to pay off your loans.

Repayment Plans

Life is unpredictable and you never know what might happen next. Select a low repayment plan and then put more money than the minimum on your loan each month. Using income-based or graduated repayment plans ensure that your necessary payment is low, in case you get into some kind of financial difficulty. Adding more money than required to your loans, though, will save you from high interest rates over the years.

Consolidate

It can be difficult to make multiple payments each month, especially if you have many different loans to many different companies. By consolidating, you can lock in one interest rate and create one payment, saving yourself money every month. Consolidation is the process of lumping all your loans into one large loan. You can consolidate government loans through the Department of Education. (See the Resources section.) Check to be sure that you're getting a better interest rate on the new, bulk loan before signing anything. Going down even a few percent on your loans can save thousands of dollars over the years.

Forgiveness

You can qualify for loan forgiveness if you work in certain fields. These include: teaching in low-income areas, federal service, nursing or volunteering with AmeriCorps. Some programs forgive a percentage of your loans for every year of service. The Public Student Loan Forgiveness program forgives your loan after 10 years of service and steady payments. It is only eligible on direct student loans. (See Resources section.)

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What Is a Hardship Letter?

A hardship letter is a one-page document provided to a lender to explain delinquency and request a modification to your loan to bring you current. The most common form of loan modification is mortgage loan modification. A hardship letter with the right information can make the difference between keeping your home or losing it to foreclosure.

Provide the Loan Information

The first items contained in a hardship letter should be the loan number, name or names of the people securing the loan, the address of the property and a way in which you can be contacted. Do not force the loan workout specialist to look up your information, or your letter may find itself at the bottom of the stack. It is also wise to include both a phone number and email address in contact information because many loan workout specialists are often handling a large case load. Make communication as easy as possible.

Explain Why You're Requesting a Modification

Provide a detailed but succinct explanation of what has changed in your financial situation that is causing you to fall behind on your payments. Reasons for late payments may include items such as job loss or reduction in hours or pay, death of a spouse, serious illness, relocation, military duty or divorce. Give the exact date of when the change occurred so that the specialist can verify that you were current on your mortgage prior to the change.

Suggest a Modification

Suggesting an equitable modification may save an enormous amount of time in calls and emails between you and the specialist. In order to suggest a modification, you need the knowledge to calculate the effect of loan modifications on your payment. For example, if you want to request a reduction of your interest rate to decrease your monthly payment by $200, you should make the necessary calculations to determine what interest rate results in the $200 savings, then suggest that exact rate and explain how you arrived at that figure.

Explain Your Plan for Paying Under the Modified Terms

If you're requesting a modification, you need to make it clear to the specialist that you have the ability to pay under the modified loan terms, otherwise, you are wasting everyone's time. If you have just gained part-time employment, or started a new job or sold stock, explain that to the specialist. He will want to know how you expect to pay the modified amount next month, as well as in the future.

Tell the Lender How Important Your Home Is to You

Provide a couple of sentences that explain why your home is important. A borrower who has lived in a home paying on time for many years is likely to want to remain. A borrower raising children in the home is not likely to want to move. Explain your incentive for making sure you meet your modified loan obligation.

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Can a Bank Garnish Wages for Vehicle Repossesion?

Except in states where garnishment for private debts is prohibited, most creditors are allowed to pursue the collection of an unpaid debt by garnishing the wages of the person who owes them the money. This includes debts that stem from the repossession of a vehicle. In some cases, even after a vehicle is repossessed, a debtor may still owe the creditor money. In such a case, the debtor may have his wages garnished.

Car Loans

When someone takes out a car loan, he is obligated to have the loan secured by the vehicle he is purchasing. This means that if the loan goes into default, the creditor can use the vehicle as collateral. The finance company will be allowed to seize the vehicle as compensation for the borrower's failure to pay back the loan. In some cases, however, this may not cover the full debt.

Repossession

Car repossessions cost money. In addition, after a car is repossessed, the car must be sold. If the money the finance company receives from the sale of the car does not equal to the amount of money owed on the loan plus the cost of the repossession, then the creditor can sue the debtor in court for the difference. If the creditor wins, he may try to garnish the debtor's wages.

Garnishment

Garnishment can only occur once a civil judgment has been attained by a creditor, not before. A garnishment in the case of a vehicle repossession can therefore only occur after the creditor has repossessed the vehicle, sold it, sued the debtor and won damages in the case. The garnishment order must then be presented to a party providing the debtor with regular payments, such as an employer.

Bank's Role

Unless the debtor owes the money to a bank, the bank will play no role in a garnishment. The three parties involved with be the debtor, the creditor and the person who must divert money to the creditor, known as the garnishee. However, if the creditor convinces a judge to allow him to take money out of the debtor's bank account, then the debtor's bank will have to abide by any court order presented to it.

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How to Stop Foreclosure & Eviction

All across the country, homes are being foreclosed upon and people are evicted due to non-payment of their mortgage or rental payments. Although your first instinct may be to run and hide from your bills in order to avoid the consequences, this is not the way to stop foreclosure and eviction from your home or property.

Instructions

How to Stop Foreclosure and Eviction

1

Contact your lender or landlord. Do not put this off. Immediately contact your lender as soon as you realize you cannot make a payment on time. Do not wait until the second or third missed payment to get in touch with your lender or landlord. If you are already 2 or 3 months behind, it is even more important that you contact your lender immediately.

2

Apply for an FDIC loan. You can apply for a loan from the federal loan modification program. It will figure out your debt-to-income ratio and will base your future payments on that amount.

3

Apply for the Making Home Affordable program. This program will determine whether you are eligible for a government loan that will help you save your home.

4

Request a partial claim. Ask your mortgage lender if you can get an insurance payment from the Federal Housing Administration to make your mortgage payments current. According to the U.S. Department of Housing and Urban Development, this option is available if you issue a Promissory note to the lender stating that you will pay the amount in full on a specified date.

5

Ask for a forebearance. If you suffered from a loss of job or income you may qualify for a deferment of normal payment amounts owed to your lender. Ask your lender if you can have the amount of the loan reduced or deferred until your situation changes.

6

Consider foreclosure and eviction options. Think outside the box. Some things you can do to manage finances that will help you pay mortgage or rental payments are to take a personal loan to pay the mortgage or rent on the home. Another option is to rent out a room to a tenant, if possible, to help defer mortgage or rental costs. You might also decrease other expenses in order to add more money to mortgage payments. Finally, you can get a second job to help pay the mortgage whenever possible. In the meantime, however, do not wait. Contact your mortgage lender or landlord to work out arrangements that will allow you to stay in your home and stop foreclosure and eviction.

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Debt Consolidation Benefits

Combining multiple debt obligations into just one loan or bill is known as debt consolidation. To consolidate multiple loans into just one, you take out a new loan that is large enough to pay off all of your other creditors combined. Using the new consolidation loan funds, you pay all of your other debts in full so that you're left paying just one debt -- the new consolidation loan -- each month.

Reduced Bills

If you take out a debt consolidation loan and use it to pay off all your outstanding bills and creditors, you typically make a reduced total monthly payment on the debt consolidation loan. If you normally pay a $300 monthly car payment, for example, along with $250 on credit cards and $75 on revolving credit accounts, you're paying $625 for debt each month. When you pay off these obligations with a consolidation loan, your monthly payment on the debt consolidation loan is likely less than the total of the individual debts, depending upon how you structure the loan.

Lower Interest Rates

When you take out a debt consolidation loan at your local bank or credit union, it's usual for that loan to have a lower interest rate than your existing debt payments do. This is particularly true if much of your outstanding debt is for credit cards, because credit card debt generally has a 15 to 20 percent rate, whereas a debt consolidation loan may carry only an 8 or 10 percent interest rate.

No More Collection Calls

Debt consolidation loans are used to pay off all your other existing creditors. When you use the loan to pay off each creditor, there are no longer any bills for them to harass you about. You stop receiving phone calls from the bill collections department, and you stop receiving intimidating letters and past due notices.

Peace of Mind

Most people find that having just one single bill payment to make each month is much easier to keep track of -- and stay current on -- than having five or 10 different bills to pay. By reducing your total monthly payment, you'll have the added benefit of being able to pay the regular household expenses without as much penny pinching. If you reduced your interest rate, you'll sleep easier knowing you're paying less money on that debt over the long term.

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How to Fix My Credit Score After a Property Lien

Ignoring your tax debt or another bill can result in a property lien, and having a lien on your credit report can cause significant damage to your credit score. As your score drops after a lien, qualifying for a loan or credit card can prove difficult. But if a lien blemishes your credit history, you can fix your credit score.

Instructions

1

Resolve the lien. Paying off a tax bill can help repair your credit score. Talk to the attorney handling your case, and make arrangements to pay the full balance or establish an installment plan to satisfy the outstanding tax bill.

2

Get the lien off your credit report. After making your final tax payment, consult the lawyer again, or speak with the reporting creditor, and ask to have the lien lifted from your credit report. Liens can stay on your report for seven years, even if you pay the debt. Creditors determine whether to delete a paid lien early.

3

Check your report. If the creditor agrees to remove the lien, give the company a few months to act, and then pull your own report to make sure the creditor updated your report. Removing a paid lien can help add points to your score. You can obtain one free copy of each of your three credit reports each year from Annual Credit Report.

4

Establish better payment habits. If the creditor isn't cooperative or refuses to delete the lien, take steps to improve your score with on-time payments to your creditors. Pay bills early -- before the due date or by the due date -- to maintain a good payment history.

5

Help fix a low credit score by paying off your consumer debts. The less debt you carry, the better your personal credit rating. Give your score a fast boost by paying off credit card debt.

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Should I Pay Off Credit Cards or Go to Debt Relief?

A large amount of credit card debt is scary and can make you feel helpless. You know something has to change, but you don't see a way out of your hole. Ideally, you'd just pay off your cards and move on with your life, but it isn't always that easy. In times like these, debt relief may sound like a potential alternative.

Minimum Payments

Even if you have a lot of debt, you might think you can find your way out of trouble. You could make minimum payments for decades to get out of debt, but you'll also pay tons of interest in the process. Under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, you can now see how long it will take to pay down your cards with just minimum payments. After seeing the true costs of this method, you may decide another method might be more beneficial.

Debt Relief Basics

Companies abound that claim they're able to settle your debts for less than you owe. While this is true, debt settlements also come with significant risk. There's no guarantee that a credit card company will agree to settle with you. To help your cause, the debt relief company will encourage you to stop making your minimum payments. After a while, you'll have leverage to settle, but your credit score will be destroyed because of all the missed payments. Worse, if your creditors don't want to settle, they can sue you for your unpaid balance.

Debt Management Program

A more conventional form of debt relief is to seek help from a credit counselor. In many cases, this will lead to a debt management program administered by the counseling agency. This arrangement doesn't reduce your balances, but you'll receive reduced interest rates, thereby allowing you to pay off your debts in five years or less. You'll likely have to close out your credit accounts, which can hurt your credit score, but your high debts have likely hurt your credit score already. This method is preferable if you don't mind taking the short-term hit, but don't want your credit score in tatters down the road.

Doing it Yourself

Although an outside agency has plenty of experience and know-how, you can perform many of the same tasks. You can call your credit card companies and see if they'll voluntarily reduce your interest rate; you can also see what it would take for them to settle your debt. If you're not a shrewd negotiator, you can try using a computer program to create a budget for efficiently paying down your cards.

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Tips on Negotiating Debt Reduction

When a person runs up a considerable debt with one or more creditors, it can often behoove him to attempt to negotiate with the lenders so that they agree to accept a payment less than the total amount owed. Borrowers can achieve greater success in these negotiations by following a few basic tips.

Know How Much You Can Pay

When negotiating for a lower payment, it's good to know how much you can afford to pay and insist on paying less than that. If you agree to pay more than you can afford, even if it's significantly less than you owe, odds are good that you'll have to take out another loan, thereby sending you back in a debt spiral. Know your price and let your creditors know it, too.

Keep It Impersonal

Most creditors whom you deal with have heard every story in the book about the circumstances that led you into debt. When negotiating, stick to hard facts: how much you owe and how much you're able to pay, including your current sources of income. The creditor may attempt to pressure you into agreeing to a bargain you don't want. Stay unemotional and don't let the creditor rush you into anything.

Consider an Attorney

Hiring attorneys can be expensive, with many charging several hundred dollars per hour. However, if you have the means to hire one and your debt is large enough that a few thousand dollars in legal costs is a relatively small expense, consider hiring a seasoned negotiator. Being represented by a person with expert skills in contract negotiation, and who knows the laws in your state, can more than pay for itself with the amount knocked off your debt.

Provide Evidence

When attempting to make an argument to a creditor, especially one regarding your ability to pay back a certain amount of the money, offer as much evidence as possible, particularly in the form of legally binding documents. For example, when attempting to convince a creditor to convert your debt into a long-term payment plan, present him with bank statements showing your savings, check stubs for a recent paycheck and any other record of your financial assets.

Watch Your Credit Score

If you negotiate a settlement with a creditor, the creditor may attempt to write off the difference between the amount paid and the amount originally owed. This can damage your credit score and will likely remain on your credit report for up to seven years. Insist that the company remove all damaging information from your credit report and mark the debt as "paid in full" rather than "paid in settlement."

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Why Debt Relief Is Bad

Debt relief programs offer promises of lower bills and financial freedom. Unfortunately, participating in a debt management program is not only good news. If you choose to explore the various debt relief options available to you, take note of some of the negative consequences you will face.

Fees & Costs

Paying a professional service firm fees for its time and expertise is not unreasonable. Debt relief firms of all types need to generate revenue from the services provided to pay their overhead and service their own obligations. Nearly all debt management and relief programs come with a fee structure. Paying fees is not necessarily a bad thing, but often those fees are more funds coming out of your pocket that could be better used toward paying down your debt. Be prepared to pay administrative and program fees or be asked to make voluntary contributions -- which sometimes you have to opt out of -- to your debt relief provider.

Restrictions on Credit Usage

Debt relief programs aim to help you lighten your debt burden as well as put you in a position to make timely payments on your outstanding credit balances. Ultimately, these actions will have a positive effect on your credit score. However, while enrolled in the program, you may experience difficulty, or be prohibited from, opening new credit accounts or taking on a new loan. If creditors are making a concession by offering you lower rates or negotiated balances, they will often stipulate that you do not open new accounts.

Questionable Tactics

Various forms of debt management and relief programs are available. It is important to understand how each category of program works to make the best decision for yourself. For instance, when it comes to debt settlement or debt negotiation firms, many consumers are surprised that the provider forces reduced settlements with the creditors by asking you to stop making payments to the creditor. Sometimes you have to force the hand of the other side, but you may have ethical or moral concerns about not paying your bills or participating in the program as outlined by the debt relief group.

Damaged Credit Score

Particularly if you choose debt negotiation as your debt relief path, at the conclusion of the program, you may find you credit score and report to be in worse shape than when you began the program. Once you cease making payments or end up paying less than you actually owed as part of a settlement offer, these negative remarks remain on your credit report for up to seven years. You may have saved some money by seeing reduced balances, but your damaged score may cause problems for you in the future when trying to buy a home or car and obtaining the most favorable financing available.

Lesson Not Learned

If getting out of debt via a debt relief group is too easy, you may walk away from the situation without feeling any real pain or learning anything new about managing your finances. Ideally, it would be best to pay off the monies you borrowed without the assistance of third parties or aggressive negotiation techniques. That may not be realistic. But if you do not take immediate steps to take control of your finances, you may find yourself repeating your mistakes, racking up your debt and not having as many debt relief options available for your second effort.

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How to Repair Your Credit After a Chapter 7 Bankruptcy

Although a Chapter 7 bankruptcy discharge can be a great relief, you may finish your bankruptcy wondering what to do next. Maybe you gave up your car or your house in your Chapter 7 and need to get an apartment or buy a new vehicle, or maybe you know you'll need a new vehicle in the near future. Bankruptcy stays on your credit report for 10 years, and it's difficult to get credit when your credit score is low; however, you can improve your credit score before that 10 years is up by getting new credit and using it responsibly.

Instructions

1

Obtain a copy of your bankruptcy discharge. After you file your Chapter 7 case, make sure to follow your attorney's instructions, as well as the court's and the trustee's. If you have a typical Chapter 7 case, you should receive your discharge about two to three months after your creditors meeting. Your discharge order will help you as you try to obtain new credit after your bankruptcy.

2

Obtain a manageable level of new credit. You were in bankruptcy because you were in over your head when it came to your debt, so getting new debt after a bankruptcy may seem counter-intuitive. However, you need to obtain credit to improve your credit rating. Some banks will issue high-interest credit cards or car loans to individuals just out of bankruptcy, as long as they have a discharge order. By obtaining new credit, you can start to rebuild your credit score. Don't obtain too much credit; if you borrow too much and get in over your head again, you're no better off than you were when you filed bankruptcy. And too much debt will sink your score even lower. Just one credit card with a low, manageable credit limit is enough to start rebuilding your credit.

3

Use your new credit responsibly. If you get a new credit card, only charge what you can afford to repay at the end of each month. The reason you would get the card is solely to rebuild your credit, not to buy things you can't afford. If you get a car loan, buy a used car with affordable payments. You need the car for transportation, and it can also help you rebuild your credit, but you don't need a status symbol or a gas guzzler.

4

Make your debt payments on time, every time. Whether you're making payments on a car note or a mortgage that you reaffirmed in your Chapter 7 or on the new debt you incurred to rebuild your credit, making your payments on time is key to improving your credit rating. As time passes and you continue to make your payments on time, your credit score will go up, as long as you keep your balances manageable.

5

Avoid the new credit card offers you receive after your bankruptcy. As strange as it may seem, after a Chapter 7 case, many people are inundated with pre-approved credit card offers. Obtain one card to rebuild your credit. Throw the others away to avoid overextending yourself. Make sure the credit card you choose is issued through a reputable bank and has the best interest rate, and watch out for annual fees.

6

Avoid credit repair scams. You may receive offers from private companies promising to help you repair your credit by removing your bankruptcy from your credit report or changing negative information. They may ask for fees up front or tell you that you can't repair your credit alone. These companies are not legitimate. No one can legally remove negative information from your credit report if the information is correct, and you can repair your credit yourself.

7

Monitor your credit report. As time passes, you will need to make sure your credit report stays accurate. You're entitled to a free report every year from each credit reporting agency--Equifax, Experian and TransUnion. Check your report every year and make sure the balances due, account statuses and payment amounts are accurate. Report any inaccurate information to the credit reporting agency, and the agency will investigate it and correct it.

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What Is a Credit Record?

A credit record or report is a list of your financial activities involving loans and your repayment of them. The report also lists any actions of creditors against you because of nonpayment.

CRAs

Consumer reporting agencies--Expedia, Experian and TransUnion--collect and sell credit reports to a list of allowed viewers.

Sources of Information

CRAs obtain your credit information from your past and present creditors, including banks and credit card issuers, such as Visa and department stores.

Allowed Viewers

Prospective employers, insurers, creditors, institutional lenders and selected government agencies are among those who can request and view your credit report.

Information on Your Report

Typically your report lists identifying information (full name, known aliases, past and present addresses and employers, social security number), credit information (accounts with creditors, loan amounts, any cosigners, payment record for the past two years), public record information (tax liens, bankruptcy, and monetary judgments from state and county court records), recent inquiries (who obtained copies of your report over the past year).

Credit Rating

Your report determines your credit rating, which affects your ability to get future loans and make important purchases.

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Debt-Free Management Plan

Many consumers dream of living debt free. During tough economic times, it is easy to become dependent on credit to pay for basic essentials such as gas, food, daycare and housing. Utilizing credit is no longer a luxury but a necessity. Unfortunately for some, over-extending the use of credit can lead to financial ruin if they do not know how to manage debts properly.

Description

Debt management plans are an alternative to bankruptcy. They are designed to help consumers plan for a future free from debt. Debt management plans are offered through public or private consumer credit agencies. With a debt management plan, all debts not tied to an asset such as personal loans, credit cards, department store cards, lines of credit and collection accounts are grouped together. A credit counselor contacts all creditors on your behalf to negotiate payment arrangements. You pay a monthly lump sum payment and the credit agency disperses a portion of the payment to the creditors on your behalf.

Advantages

Debt-free management plans offer consumers a way to gain control of their finances. Once enrolled in a plan, creditors and collection agency calls usually cease and consumers are finally able to manage a workable budget. Debt-free management plans also eliminate or drastically reduce late payment fees and interest rates. Some plans allow consumers to completely restructure the terms of the credit account all together. Debt-free management plans also help consumers get out of debt faster than trying to pay off creditors one at a time. At the end of the program, consumers have a better understanding of credit and debt, as well as the resources to make better financial decisions in the future.

Drawbacks

A major drawback to a debt management plan is that there is a possibility it can damage your credit initially. Consumers enrolled in a debt management plan are advised to cancel all open, unsecured credit lines to avoid getting deeper in debt. Closing these accounts may cause a decrease in credit scores. Creditors may report to the credit bureaus that the account is managed through credit counseling. Some creditors view this as negative, while others do not. Another drawback is that once the management plan is complete, it is your responsibility to alert the credit bureaus to update your credit report. Otherwise, potentially negative items will continue to report on your file.

Free Help

Debt-free management help is offered through a variety of local and national resources. Locally, consumers can turn to their attorney general's office for information on organizations that help with preparing a budget, consolidating credit, stopping creditor phone calls and formulating a debt management plan. National organizations such as the Federal Trade Commission and the American Consumer Credit Counseling Agency offer programs and advice for consumers to understand fair credit laws, legal collection practices and how to become and remain debt free. Most debt management services are free or provided at very little cost to the consumer.

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Florida Laws on Judgements for Credit Card Debt

A Florida resident who is overwhelmed with credit card debt needs to be aware that he can be sued by the credit card companies. If his creditors win their lawsuit, they have several ways of collecting the debt. However, the debtor also has rights that are protected under Florida law. These include the right to have a creditor lawsuit dismissed if the debt is no longer covered under the statute of limitations and restrictions on how the creditor can contact him about paying the judgment. Both his wages and his property also can be exempt from seizure under certain circumstances.

Collecting a Judgement

Credit card companies who win a judgment against a debtor in Florida are entitled to seize that debtor's bank accounts and personal property and garnish the debtor's wages. However, Florida allows several exemptions that allow debtors to keep many of their assets. For example, a person's home is exempt from seizure by a creditor, as is up to $1,000 in personal property.

Statute of Limitations

The Florida statute of limitations on collecting a judgment is 20 years. The Florida statute of limitations on obtaining a judgment to collect credit card debt can be either four years, if there is no written agreement between card issuer and card holder, or five years, if a written contract existed. If a creditor tries to obtain a judgment against a debtor after the statute of limitations has expired, the debtor can ask the judge to dismiss the suit.

Collection Practices

Debtors in Florida are protected by both Federal fair debt collection laws as well as Florida statutes that govern consumer collection practices. Under Florida law, creditors cannot threaten or harass debtors and may only call a debtor on the telephone between the hours of 8 a.m. and 9 p.m.

Wage Garnishment

Florida law offers special protections to a "head of household" who is facing wage garnishment because of a judgment. If an adult family member is responsible for at least one-half of the support for a dependent (a spouse, child or elderly parent) who is living in the same house. The wages of a head of household cannot be garnished unless she gives written permission for wage garnishment, and then only if the head of household's wages are at least $500 per week. A head of household needs to file an affidavit in court claiming that she is the head of household in order to be protected by this law.

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