Consumer Debt to Income Ratio

The Federal Reserve Board refers to the consumer debt to income ratio as household debt service and financial obligations ratios. A consumer's debt to income ratio can play a role in a number of financial events including auto loans, mortgage approvals and credit card rates.

Factors

The consumer debt to income ratio is determined by two factors: monthly debt payment obligations and the amount of personal disposable income a family or household has. The income used is a person's income before tax, while both mortgage and consumer debt such as credit cards or automobile loans are considered consumer debt. Additional examples of consumer debt may include home equity loan payments, student loans, alimony and any other loan product the consumer is obligated to repay.

Importance

A number of financial institutions consider a consumer's debt to income ratio when determining whether or not to grant a credit product to an applicant. The debt to income ratio is also a factor for homeowners who are attempting to modify their mortgage payments. Financial institutions will examine an applicant's debt to income ratio to determine the likelihood that he would default on a credit product if finances got out of hand. A potential employer may also examine a debt to income ratio when doing a background check on an applicant.

Suggested Ratios

Although each financial institution has different lending standards, a debt to income ratio of 36 percent or less is a preferred industry standard. Institutions granting mortgages prefer that a mortgage payment take up no more than 28 to 31 percent of an applicant's income each month.

Lowering Debt to Income Ratio

For consumers with debt to income ratios above the suggested amount, lowering the percentage can increase the likelihood of obtaining a credit product in the future. To lower debt to income ratios, consumers may choose to pay a larger amount each month to their credit accounts, decreasing the total amount owed. A consumer may also choose to take on an extra job or additional hours in order to increase the income side of the ratio.

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What to Do When You Can't Pay Hospital Bills?

Overdue medical bills played a part in 62 percent of all bankruptcy cases in 2007, according to a 2009 study by "The American Journal of Medicine." When medical bills are overwhelming, you might be able to work out a way to pay them off, even if you do not have a job. Bankruptcy should be an option only when you exhaust all alternatives.

Considerations

You may have to prioritize your bills when you have an unexpected medical emergency, suggests Liz Weston of MSN Money Central. You always want to pay for the essentials first, like your mortgage and rent and utilities, because landlords can evict you and the utility company can shut off service within weeks. Hospitals and credit card companies usually explore more avenues and wait much longer before they take legal action or involve a debt collector, which allows you to give them a lower priority in a tough financial situation.

Negotiate

Doctors and hospitals are often willing to negotiate bills with patients in distressed financial situations if it means they can secure at least some payment. According to a 2009 article in the "New York Times," the typical physician usually gives a 10 to 30 percent discount off the bill when a patient cannot afford to pay, and specialists may give a larger discount. If talking personally to a doctor seems daunting or shameful, his billing office will probably negotiate for him.

Misconception

In modern times, hospitals tend to avoid hardball tactics, such as suing a patient who does not pay a bill, because most are nonprofit and can use unpaid bills to lobby for more government aid or are profit-based and receive a tax deduction when someone skips out on a bill, according to CBS News. Liens on property, collection agencies and sometimes jail are the exception rather than the norm. This does not mean you should simply ignore hospital bills, because if the bill does end up with a collection agency, it will destroy your credit. If you have insurance and it rejects any claim, file an appeal. In the meantime, request the account status move to "unpaid"--this will prevent it from going to collections.

Tip

Ask the hospital for an itemized bill and look for erroneous or suspicious charges. Obscene overcharges, such as $129 for a box of tissues, comprise 5 percent of all hospital bills, according to MSN Money Central. Search around for state and local government assistance. Most states have programs to help low-income or disabled people pay for medical bills. Also, ask the hospital's billing department if it offers any social services. Hospitals are often required to provide some amount of free care to maintain nonprofit tax status.

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How to Negotiate the Full or Partial Release of a Wage Garnishment

Wage garnishment allows a debt collector to receive a percentage of your paycheck for an unpaid debt. By law, your employer must comply with wage garnishment. The only way out of the situation is to pay off the debt, negotiate with the debt collector or file for bankruptcy. Bankruptcy immediately stops wage garnishment through a powerful legal injunction called the automatic stay. A debt collector receiving payments through garnishment usually has little reason to negotiate, but there are options for making a deal.

Instructions

1

Garnishment guarantees payments to the debt collector. You must offer something of value in exchange for ending or reducing the garnishment. Simply asking for help will not work. Save money for a lump sum payment on the debt equal to four monthly payments. Get the money for the lump sum by working overtime, working a second job or selling items in garage sales.

2

Contact the debt collector by telephone to open negotiations. Conducting the talks by phone usually leads to faster results than sending a letter. Tell the debt collector you are seeking full release of the garnishment in exchange for an immediate lump sum payment equaling four monthly payments. Tell the debt collector that you are also willing to pay a fee for the arrangement equaling 10 percent of the current balance. Instruct the debt collector to add the fee to your balance after receiving the lump payment and promise to continue making regular monthly payments by money order or cashier's check. Inform the debt collector that if you miss two consecutive payments, garnishment can resume.

3

Tell the debt collector that you must reach an agreement. Continue by saying you will file for bankruptcy if an agreement is impossible. Remind the debt collector that the garnishment will end the day that you file for bankruptcy, and there is a chance bankruptcy may eliminate the entire balance, with the debt collector receiving nothing.

4

Inform the debt collector that you will not answer questions about your finances if the debt collector steers the conversation in that direction. Simply acknowledge that you're having a tough time financially and that the wage garnishment limits your flexibility to manage your money.

5

Ask the debt collector for his mailing address and direct telephone number if he continues to refuse to negotiate. Tell the debt collector that you're turning the matter over to a bankruptcy attorney and that the attorney will make one last effort to negotiate an agreement.

6

Hire a consumer affairs attorney with bankruptcy experience to send a letter, if necessary. Continue negotiating with the debt collector on your own and through the attorney until you reach an agreement.

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How to Lease a Tanning Bed With Bad Credit

Leasing a tanning bed for business or personal use can be challenging if you have bad credit. Bad credit, however, is not the only factor that can affect your ability to obtain a lease. The leasing company needs to feel it is not taking a huge risk by renting to you. Therefore, it's vital to communicate openly about your credit and the alternative options available to you.

Instructions

1

Consider purchasing a tanning bed instead. Leasing is frequently more expensive in the end than purchasing. Contact your bank or credit union to see if they'd be willing to give you a loan. If you already do business with a company, they're more likely to give you a loan, even with bad credit.

2

Get a co-signer with good credit. Your co-signer is liable for any fees if you default on your lease, so you must pay your lease on time every month. Most rental companies, however, rent to someone with bad credit if they obtain a co-signer. Close friends, parents and spouses are good people to ask to cosign a loan.

3

Ask about making a large deposit. Rental companies don't want to lease to people with bad credit because of the potential financial loss involved. If you default on your lease in the first few months, the rental company must repossess the tanning bed, pay for debt collection costs and potentially pay an attorney to sue you, in addition to the loss of the money you pay on your lease. A deposit can help to minimize fears about this potential financial loss. Ask if you can pay 3, 6, or 12 months of lease payment as your deposit.

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How Can I Check the Balance on My Checking Card?

Almost everyone who has a checking account has a checking card, or debit card, to go with it. It's convenient and quick, and it saves time compared to writing a check. Because funds are withdrawn directly from your checking account when you use your card, you'll need to know what the account balance is so you won't overdraw your account. You can ask a teller what your balance is when you're at the bank or check the balance at your bank's ATM machine, but you can also call the number on the back of your call or use online banking when visiting the bank isn't convenient for you.

Instructions

Calling the Number on Your Bank Card

1

Look on the back of your bank card for a bank telephone number. Call that number and either a person or an automated phone system will respond.

2

Either type in or speak your checking account number when asked by the customer service representative or prompted by an automated system. After you give your number, the customer service rep or automated system will retrieve your information.

3

After you listen for your account balance, choose another option, such as transaction history, make a payment or withdrawal funds, from the automated system or customer service rep. If you do not need anymore additional information, end the call.

Checking Your Balance Online

4

If you haven't done so already, go to your bank's website and register to use their online banking features. Fill out the webpage with your basic information or any other information it asks for.

5

Create a user name and password when prompted. For added security of your identity, pick the suggested security questions and create answers combining both letters, numbers and symbols.

6

Click on the tab showing your checking account for access to your transaction history as well as your check card and checking account balance. Whatever balance is left in your account is the balance left on your card. Use the "contact us" or "live chat" help features your bank offers if additional help is needed.

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How Creditors Can Recover on an Unpaid Credit Card Balance

Credit card debt can be a serious problem, with the ease of using credit cards making it easy to build up more debt than you can afford to pay. Unfortunately, credit card companies have a legal right to pursue repayment that can last for years. Depending on the amount of time that has passed since your last credit card payment, the credit card company may even take legal action against you in an attempt to recover their money.

Internal Collection Attempts

The first option available to credit card companies when credit card debts aren't paid is to attempt to collect the unpaid debt directly. The creditor may contact the debtor by mail or by phone, attempting to get him to submit a payment or agree to a repayment schedule for the entire amount owed. The unpaid debt is reported to credit bureaus based on the amount of time that has passed since the debtor's last credit card payment was received, and if the debt remains unpaid, the debtor's credit privileges may be suspended or canceled.

Selling the Debt

A common option for creditors who have not been able to collect overdue credit card debts is to sell the debt to a third-party debt collection agency. The creditor recovers some or all of their money by selling the debt, while the collection agency gains a legal right to pursue the debt for collection. A collection agency that has purchased a debt may negotiate installment payments with the debtor, offer to change the amount owed and take legal action as though it was the original creditor if the debt remains unpaid.

Legal Action

A creditor may file a civil lawsuit against a debtor if collection attempts to recover unpaid credit card debt prove unsuccessful. The lawsuit will seek damages equal to the amount of the debt owed and may add legal fees or other expenses to the amount as well. The creditor must provide proof that the debt is owed and that collection attempts have failed. If the judge hearing the suit finds in favor of the creditor he may order that the debt be paid in full or establish a payment plan for the debtor.

Wage Garnishment

When a creditor successfully sues a debtor for the amount of their credit card debt and the debtor is unable to pay, a judge may order a garnishment of the debtor's wages until the debt has been paid. This garnishment takes money directly from the debtor's paycheck and turns it over to the sheriff or district attorney, who then distributes it to the creditor in regular payments. Any wage garnishment is taken from the money owed to the debtor in his paycheck before he receives it, ensuring compliance with the court order.

Property Seizure

In rare cases, a judge may rule that real estate or other property can be seized and sold to recover the money owed to creditors. The property seized may be a secondary piece of real estate other than the debtor's primary home or other physical property that has a significant value to it. Seizure orders are typically only issued when the amount of credit card debt owed is exceptionally high and when the seizure of the property will not leave the debtor destitute.

Limitations

Though there are several methods available to creditors in regards to collecting credit card debts, there are limitations on these methods. Each state places a statute of limitations on the filing of legal suits for unpaid debts, limiting the amount of time that a creditor has to take legal action. Additionally, certain types of income such as disability benefits and welfare cannot be garnished to recover unpaid credit card debts. Creditors making threats of legal action or harassing debtors may also be subject to fines or other penalties under federal law.

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Oklahoma Laws on the Statute of Limitations for Judgments

If you are involved in a lawsuit in Oklahoma, take time to learn about the statute of limitations on judgment collection. Plaintiffs need to take regular action on collecting a judgment or they risk losing their right to collect if the statute of limitations run out. Defendants, on the other hand, shouldn't rely on the statute of limitations to negate their obligations, as it is easy for a judgment creditor to keep renewing it until a judgment debt is settled or paid.

Statute of Limitations

A statute of limitations is the legally prescribed period in which the government or an individual can bring or enforce a legal action against a person, business or organization. Statute of limitations laws apply to both criminal charges and civil lawsuits, though there are some crimes for which there is no statute of limitations. The length of the statute of limitations varies by state as well as the nature of the crime or civil matter.

Judgments

When a plaintiff in a lawsuit wins her case against the defendant, the plaintiff then becomes a "judgment creditor" and can take several steps to collect the full amount of what is owed by the defendant, who is now known as a "judgment debtor." In Oklahoma, a judgment creditor has the right to attempt to collect his debt by several methods, including seizing a debtor's property or bank account or garnishing his wages.

Collecting a Domestic Judgment in Oklahoma

Under Oklahoma law, a judgment creditor has five years from the date that the judgment creditor files the judgment with the appropriate court clerk to collect his judgment. During this time, he can pursue any legal means of getting the debtor to pay the judgment. If the statute of limitations expires, the judgment creditor cannot legally force the debtor to pay the balance remaining on the judgment debt.

Judgment Renewal

Under Oklahoma law, the statute of limitations on judgment collections is five years -- but only if the judgment creditor takes no action on the judgment during the statute of limitations period. By continually taking action to collect the debt, a creditor can prevent the statute of limitations from expiring. The creditor can also go to court and ask the judge to renew the statute of limitations on the debt.

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Some Simple Debt Solutions

Getting out of debt does not have to be a long, grim march fraught with sacrifice, pain and lowered living standards. It can be an opportunity to connect with what really matters in life--relationships, fulfilling work, responsibility, self-esteem and healthy pride. There is no need to resort to complex financial machinations, lawyers or counseling services. Debt solutions begin with a firm commitment to get out of debt through consistent actions.

Significance

Many families find themselves buried under mountains of debt, with ever-increasing portions of their income being devoted toward paying interest, minimum payments and fees. Often, many get trapped in a slippery slope of taking out more debt to finance other loans, sliding down a mountain of plastic cards and paper contracts. The first, hardest and most effective step toward getting out of debt is to stop taking on new loans and credit cards. Commit to reducing debt load or at least maintaining it at its current size every month.

Function

This action helps to stop a habit of viewing new debt as a solution to old debt. Earning more than you spend and paying off debt regularly is the only reliable way to reduce debt. Create an action plan for paying off the principal on your highest interest loans first. Create a budget and stick to it, cutting down on nonessential costs as much as possible. The most common sources of budget bloat are eating out at restaurants and purchasing expensive entertainment products. Eliminate as many recurring costs as possible.

Features

Carry around a small notebook and pen with you wherever you go. Every time you make a purchase, record it in your notebook along with how much it costs. This simple solution will help you get an idea of how much you actually spend on a regular basis. Writing up an abstract budget is not nearly as effective as actually recording your real expenditures. Tally up the real results and see if you notice any spending patterns that you could reduce or eliminate.

Considerations

Write in debt repayment to your regular budget. Many people assume that they will pay whatever they have left over for a certain pay period to debt repayment. A budget is more effective as a planning tool if it is as specific as possible. Even if the amount of debt repayment that you can afford every month is small, a symbolic payment can have a powerful effect on your financial thinking. Even $5 paid toward getting out of debt is a $5 increase to your net worth.

Benefits

Enacting these simple debt solutions will not launch you out of debt immediately, but committing to at least getting started on it will convince you that you are not helpless in the face of your debt. Even the lowest wage-earners can start to throw dirt into the pit of debt that they have dug for themselves. The real trick to it is getting addicted to the positive emotional reward that is near universal upon paying off a debt. It is interesting that so many people feel very anxious about debt, but when they start to pay it back, the emotions that come up are almost always those of relief from their tension. Getting hooked on this positive emotional feedback is a bit like becoming addicted to a drug that makes you healthier.

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Can a Creditor File a Lien on My House in Maryland?

Under Maryland law, a creditor may file a lien on a debtor's house, but only after he has obtained a valid judgment issued by a court. A judgment lien has the same force and effect --- though not necessarily the same priority --- as other encumbrances on the debtor's property, and it must be paid in full before the property can be transferred or sold.

Obtaining A Judgment

A creditor must first file suit against the debtor for the balance owed. For consumer debt, the provisions of the Fair Debt Collection Practices Act require that the suit be filed in the judicial district in which the debtor resides. If the creditor has sufficient documentation to evidence the debt and any remaining balance due, unless a debtor has a legitimate defense to repayment, the creditor will ultimately obtain a judgment from the court for the amount owed after he files suit. Once he obtains judgment, a creditor can initiate court-approved collection procedures which, under Maryland law, include garnishment and placing a lien against the debtor's real property.

Recording The Lien

The judgment creditor must record the lien in the county in which the property is situated. Once properly recorded, the lien attaches to the property and becomes an encumbrance on the debtor's real estate. The lien must be recorded in the same name as that which appears on the deed. A judgment entered against a husband only does not constitute a lien against the real property owned by the husband and wife jointly.

Cloud On Title

Even if other secured lien holders, like the bank that holds the mortgage on the property, have priority over a judgment lien at the time it is recorded, the judgment lien still acts as a cloud on the title. If the debtor ever sells the property at a later date, a creditor who holds a judgment lien will be paid the full amount of the judgment.

Considerations

As a practical matter, in most circumstances, a creditor who obtains a valid judgment lien against the debtor's real estate will not be able to force a judicial sale of the property once his lien is recorded. In most cases, the mortgage holder will have a priority lien on the sales proceeds; and depending on the prevailing real estate market conditions, the debtor may have insufficient equity to pay off the judgment lien holder.

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Can You Negotiate Credit Card Debt Without Affecting Your Credit Score?

Negotiating credit card debt can most definitely help you to dig yourself out of a financial hole, but the cost to your credit score may be something you decide is too high. Whether or not this is the case depends largely on your individual circumstances prior to negotiation. It also depends on being very persuasive with creditors about what terminology is used on your credit report.

Types

Credit card debt negotiation may simply involve asking creditors to lower your interest rates so that you can apply more of your payments toward the principal rather than toward interest payments. Negotiation can also take the form of changing your payment schedule, or partial debt settlement. Be aware that debt settlement is usually only an option after 90 days of delinquency with your creditors, and should be seen only as a last resort. Debt settlement usually requires creditors to close your accounts, which should also be taken into consideration.

Effects

How dark a mark negotiated credit card debt will leave on your credit report and score depends largely on how much debt you already have, as well as your debt-to-credit ratio. Credit scores consider your debt-to-credit ratio very important, so the more open credit accounts you have, the more existing credit lines are reflected. The lower the debt you have charged on those accounts, the lower your debt-to-credit ratio is. When a creditor closes your accounts, particularly if you have a lot of other existing debt, your debt-to-credit ratio can increase, lowering your credit score significantly. If you do not have a lot of existing debt, however, such an account closure may not make as big an impact on your credit score.

Considerations

A closed account on your credit history is not, in and of itself, a bad thing. After all, account closure may have been initiated by you, the cardholder. However, if your credit card issuer notes that they forced closure on your account, that can reflect negatively on both your credit history and score. Similarly, if a creditor marks that your account was "settled," a term that indicates that they accepted less money than was due them, your credit score will be negatively impacted.

Prevention/Solution

When negotiating your debt, ask about the specific terminology your creditor will use when reporting the account closure. If you feel comfortable with pushing the issue, try to make sure it only says the account was closed, not by whom, and that it was paid in full. How comfortable you feel will depend in part on your past history with each individual credit card company, and your success rate will also likely depend on that, as well.

Additional Concerns

Debt that is forgiven by creditors, even if it is only partially forgiven, may still be taxable. Consult a tax professional when you are calculating your tax returns for the year in which the debt was forgiven in order to make sure you comply with all applicable tax laws. It will also remain on your credit report for a maximum of seven years. The older that item on your credit report gets, the less it will impact your credit score, but any damage inflicted will come while that item is still fresh on the report.

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Life Without Debt Sponsoring Tips

Living without debt and getting out of debt are different processes. There are ways to get out of debt, including budgeting, debt management, frugal living and saving. Once the debts are cleared, staying debt-free is the next challenge. Living without debt brings distinct advantages, but it also brings its own set of challenges. Such a lifestyle requires sacrifice and discipline, such as living within your means and coming up with alternatives to debt to finance the things you need. Living without debt does not mean living without bills, however.

Close Your Credit Accounts

Close your credit accounts. Cutting up cards isn't the best course of action according to the cost reduction site uSwitch.com. If the accounts remain open, you can still use them; plus, there is the possibility that fraudsters can use your account. As an alternative, switch to a debit card with a major credit card logo on the front. This way, you only spend money that you have available.

Save an Emergency Fund

Many people have credit cards to use in case of an emergency. Instead of this, start saving money to build an emergency fund. Kathy Kirstoff of CBS's MoneyWatch.com recommends having three to six months of living expenses saved. Once you have achieved this amount, you can start placing money in another savings account or fund.

Invest for Interest Payments

Invest your savings to earn interest. There are several options available to you. If you don't have a lot of extra money currently or need access to you money, a basic savings account is a good option. Some banks and credit unions require no minimum balance, and you can take money out as you need it. The money is also insured by the Federal Deposit Insurance Corporation, so it is a safe investment option. Basic savings accounts pay lower amounts of interest than other savings options, however.

Money market accounts are another saving options for people that have a little more cash available. Money market accounts are offered through banks, credit unions and investments firms. When you place money in one of these accounts, you actually purchase shares in a money market fund. Money market accounts require higher account minimums. Amounts can range from several hundred dollars to $25,000. The minimum payment must remain in the account, but you have access to any money above the amount. Money market accounts offer higher interest rates than basic savings accounts.

Certificates of deposit are one of the highest-paying forms of savings accounts. They are available through banks and credit unions. A certificate of deposit offers a guaranteed rate of interest in exchange for leaving your money in the account until it matures. The longer the period of maturity, the more the certificate of deposit pays. Certificates of deposit can be purchased for relatively small amounts of money. They range from $100 to hundreds of thousands of dollars.

Use Cash for Your Next Car Purchase

Most people purchase large items such as cars through financing plans. However, you can pay substantially less per item if you save the money and purchase the car outright. If you currently have a car loan, MoneyCentral.com recommends the following formula: Take your current car loan and double the amount of time left on your payment plan. If you have been paying the loan for some time, however, use the remaining time left. For instance, if you have three years left on your car loan, double it to get six. Six years is how long you should make your car last before purchasing a new one. According to Karen Datko at MoneyCentral.com, this is usually feasible with good maintenance and care.

Once your car is paid off, take what you would have normally paid each month and save it. Do this for three years. Thus, taking a car payment of $300 dollars per month, you will have $10,800 to put toward your next purchase in just three years. You might also get additional cash on your current car at resale. This formula should give you enough to buy a good used car without taking on new debt.

Travel Without Credit Cards

Most of people are under the impression that taking a vacation requires credit cards. This is false, despite what the hotel and car rental industry state. If you have a debit card with a Visa or Mastercard logo on the front, most hotels and some car rental places will accept it for incidentals and deposits. If not, call the rental company ahead of time to inquire about check cards. Some companies still accept cash but will usually require several hundred dollars for a safety deposit. The money will be returned, assuming no late fees, damage or missing items.

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Definition of Installment Debt

Consumer debt falls into two categories, installment debt and revolving debt. Installment debt always has a fixed term; revolving debt does not. Installment debt has several variations, all of which still have a set period of payment.

Time Frame

Installment debt always has a fixed period; you know in advance when the last payment is due. Auto loans and mortgages are generally installment loans.

Types

Most installment debt has fixed interest rates, resulting in equal payments. Some have variable rates, causing payment amounts to fluctuate during the repayment period.

Total Interest

Calculate the total interest you will pay on an installment debt by multiplying the payment amount times the number of payments, then subtracting the amount borrowed. This difference is the total interest you will pay.

Benefits

Set payments for a fixed time period make budgeting and other financial planning easier. Fixed interest rates, common on installment debt, reduce risk of payments increasing due to changes in interest rates.

Expert Insight

Replacing revolving debt with installment debt can help to eliminate debt faster and prevent interest rate changes from increasing your payments.

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How to Dispute Credit Legally

While it is impossible to dispute negative items that rightfully appear on your credit report, you may be able to dispute the items if they were falsely reported. For example, if you were up-to-date on your payments and a creditor reported that you defaulted or missed payments, you have a right to dispute that claim. You may also dispute falsely acquired debts on your credit report that appear due to identity or credit card theft.

Instructions

1

Analyze your credit report carefully. Review and compare the information provided on your credit report and take notes on any debt that was reported inaccurately. You may obtain one free copy of your credit report each year from each of the three credit bureaus approved credit reporting companies, Equifax, Experian and TransUnion.

2

Review your documents related to each account, and create a list of any items that are not reported properly. For example, if you have documented proof, such as receipts, for an item that is reported as being in default or has lapsed in payment.

3

Photocopy your receipts and any communication you received from the creditor that proves the information on the report is not correct. For example, if you set up payment arrangements and maintained your agreement and the account is listed as unpaid or in default, you may be able to dispute the report.

4

Contact the credit reporting company with a professional dispute letter. This letter should include your name, address, the item listed on your report that you want to dispute and your reason for disputing that item. Make an extra copy of your dispute letter to keep in your personal files for later reference.

5

Enclose your documented proof with the dispute letter. The credit reporting company must investigate your claim within 30 days of receiving your dispute.

6

Contact the creditor who reported the item falsely and dispute the item. You may send them a copy of the dispute letter you sent to the credit reporting agency, along with your copied receipts and prior communication.

7

Follow up by checking the status of the item on your credit report. In the event that your dispute is found in your favor, the credit reporting companies must change the status of your account with that creditor.

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How Not to Graduate With Thousands in Debt

Student loan debt can limit what you do once you have graduated from college. Many students do not realize how much they will need to pay each month after finishing school. There are ways to limit or avoid student loan debt altogether. It is also important to avoid credit card debt.

Limit the Amount You Borrow

The best way to avoid graduating with a lot of debt is to limit the amount you borrow. You should use several strategies to help you reduce the amount you need to borrow to attend school. In addition to student loans, you should apply for as many scholarships as possible. You can work while you are in school and follow a set budget to reduce the amount that you need to borrow to cover expenses.

Budget

Create a budget for the entire school year before you go to school. You should include the cost of housing, food, tuition, books, clothing and entertainment in your budget. Break down your expense totals into monthly amounts and stick to them. A budget will prevent you from spending too much on entertainment costs or blowing all of your money on a great sale at your favorite store. This will also let you know exactly how much you need to survive.

Work While in School

Reduce the amount you need to borrow by working while in school. Over the summers, you can work one or two jobs to help cover expenses during the school year. Waiting tables or delivering pizzas can help you make more per hour than a typical summer job, but you must be disciplined and put your tips in the bank. Another option is to take a job while you are in school. Some employers will reimburse the cost of tuition for a set number of classes each year. You may also gain experience, which will help you when you start job hunting.

Don't Use Credit Cards

In addition to student loans, credit card debt can be crippling. The best way to avoid credit card debt while in college is to not have a credit card. If you do have one, choose one with a low interest rate and pay off the balance in full each month or do not use it at all. Many people will use a credit card only for emergencies, but with careful planning you can set aside money in savings to cover emergencies like car repairs, medical bills and other unexpected expenses.

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Statute of Limitations on Debt Recovery

Consumer protection laws in each state limit the amount of time creditors have to sue an individual for a debt owed. Creditors and collection agencies may not file a lawsuit against a consumer for unpaid debt after the statute of limitations has expired.

Types

The statute of limitations depends on whether the debt was incurred through a verbal, open or written contract, and varies by type and state. According to MSN Money, most states consider credit card accounts open contracts rather than written.

Time Frame

The statute of limitations for debt recovery is a matter of state, rather than federal, law. Thus, the amount of time that an unpaid creditor has to file a lawsuit varies by state.

Considerations

In some states, making a payment to the creditor at any time can restart the clock on the statute of limitations, even if the time limit for debt recovery has already expired in the individuals state.

Features

The statute of limitations may limit a creditor to the amount of time it can sue, but doesnt limit its other forms of collection activity. Unpaid creditors may continue to contact consumers indefinitely in an effort to collect overdue bills.

Warning

Some creditors and collection agencies violate the law by suing consumers for debts that are time-barred by the statute of limitations. A creditor may win an illegal lawsuit if the debtor does not point out the expired statute of limitations to the court.

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What Kinds of Credit Can Be Settled?

If a settlement is becoming a necessity for you to overcome your debt obligations, you need to be aware that not all debts can be settled. However, if you are struggling with unsecured debts, then you will be able to begin the process of debt settlement. Secured debts, however, cannot be settled no matter what your circumstances.

What are Unsecured Debts?

Unsecured debts are those against which there is no collateral. For example, unsecured debts commonly arise from items, such as home improvement loans or vacations. Unsecured debts can be commonly accumulated on credit cards. Other items that are commonly considered unsecured loans are personal lines of credit, medical bills or personal loans that are unsecured. These are the only types of debts that can be settled.

What are Secured Debts?

If you have a secured debt, you cannot settle it. A secured debt is attained by offering collateral in the event you cannot pay back the loan. For example, your mortgage is a secured loan -- in the event you cannot meet your obligation -- the lender can claim your property. Other items that are considered secured are car loans, IRS tax debts and utility bills.

Beginning the Settlement Process

Debt settlement is usually a last resort before filing for bankruptcy. Creditors will often be willing to settle with you because there is little possibility that you will be able to pay back your balance and the prospect of filing for bankruptcy means that there is a remote chance they will be able to get any return for their money. You can either try contacting your creditors on your own or working with a debt settlement agency to settle your debt.

Warning

If you will enter into a business relationship with a debt settlement agency, ensure that you have checked with the Better Business Bureau as to the satisfaction other customers have had with the company. This is because many have complained about various companies for a number of items, such as fees. An agency will likely charge you a percentage of your debt savings, plus monthly fees.

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Refinance Vs. Home Equity Line of Credit

When a person is seeking to better his financial situation, he may consider using his home as a means of freeing up some cash. There are several ways in which the person can do this. One of the most popular methods is to take out a home equity line of credit. Another is to refinance his home loan into a cash-out loan, in which he is loaned a sum of money. Both these tactics have advantages and disadvantages.

Refinance Advantages

Perhaps the main advantage of refinancing into another mortgage is that the new loan can take many different forms. A homeowner will often approach a number of different lenders and pick the loan offer that most suits her immediate financial needs. A cash-out refinancing may also allow the lump sum loan to be repaid at a fixed rate of interest, so the borrower will know exactly what she owes on the loan.

Refinance Disadvantages

The downside to refinancing, including cash-out refinancing, is that the process is expensive. A person who is refinancing will end up paying many of the same expensive fees that he paid when he took out his first home loan, fees that many not be applied for a home equity line of credit. In addition, cash-out loans offer only a single lump sum payment, as opposed to the flexibility of a line of credit.

Home Equity Line of Credit Advantages

A home equity line of credit, commonly referred to as a HELOC, allows a person to use the equity of her home as collateral on loans. It functions, in effect, like a credit card secured by a house. Like a credit card, a person can take out only as large a loan as she want. Also, because the loan is secured by collateral, interest rates are generally lower than those attached to credit cards.

HELOC Disadvantages

HELOCs are generally only available with variable interest rates attached to the loans. This means that the interest of the loan will go up and down depending on the direction of market interest rates. This can be somewhat riskier than a fixed-rate loan. If interest rates spike unexpectedly, a person can be left owing a large amount of interest. This can potentially lead to default and, in the worst cases, repossession of the house.

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How to Freeze Credit Reports in Georgia

A credit report freeze prevents access to your credit file and your credit score. The freeze only pertains to new inquiries; existing lenders, insurance companies and law enforcement agencies still have access to both the file information and your credit score. The laws and fees for freezing credit reports vary from state to state. In Georgia, consumers must pay $3 to each of the three credit reporting agencies to initiate a freeze of their credit file. People age 65 and older or victims of identity theft can initiate a freeze for free.

Instructions

1

Make three copies of your Georgia driver's license, state identification card or other identification card issued by the government.

2

Make three copies of a current phone or utility bill referencing your name and address. This is proof of your residence.

3

Make three copies of the police report if you are a victim of identity theft. An investigative report or a complaint filed with a law enforcement agency is also acceptable.

4

Write a letter to each of the three credit reporting agencies--Equifax, Experian and TransUnion--requesting a credit report freeze. Include your full name, current address, Social Security number and date of birth. You must also reference your former address if you've moved within the past five years.

5

Compile three envelope packets containing the letter along with the copies of your identifying, residence and identity-theft information, if applicable. Include a check, money order or credit card information to cover the $3 fee in each packet if you are younger than 65 and not a victim of identity theft.

6

Mail the packets to each of the three credit reporting agencies. The addresses are as follows:

Equifax Security Freeze

P.O. Box 105788

Atlanta, GA 30348

Experian Security Freeze

P.O. Box 9554

Allen, TX 75013

TransUnion Security Freeze

P.O. Box 6790

Fullerton, CA 92834-6790

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Who Does the Debt Get Passed on to After Death?

Children and other relatives may worry they will be held responsible for the debt of loved one after she dies. However, debt cannot be inherited or transferred to someone else after the borrower dies. This means you do not need to worry about paying off debt you did not personally borrow or sign for.

Dealing with Creditors After Death

The executor of the estate will be responsible for settling the person's debt after she dies. The executor will use the assets of the estate to pay for the debts. The executor will need to contact the creditors immediately to inform them of the death. Creditors will want a copy of the death certificate mailed to them as soon as it is available. This should stop all phone calls while the estate is settled.

Estate Stands for Debt

Any assets the person owns must stand good for the debts left by a person. If the person owned a house with someone, then the house must be sold and half of the money be used to pay for the debts. Any assets will need to be applied to the remaining debt the person owes. If there is not enough money to cover all of the debts, than the executor will need to send a letter stating that the estate does not have enough money left cover any outstanding debt.

Life Insurance Money Exempt

Life insurance money will go to the beneficiary named on the policy and does not need to stand for any of the debts. This money can be used to pay for college for the deceased children or for any other reason. If the house or any other assets are co-owned, the beneficiary may choose to pay off the debts in order to keep the home or other assets. However this is not required, and should only be done if you can afford to keep the home once the debts are paid off.

Co-signers on Loans

Any co-signers for the deceased will assume responsibility for the debts they co-signed on. This means if you co-signed to help the ceased to qualify for a car loan or a mortgage you are responsible for paying off the loan in full. If you turn the car in instead of paying off the loan a voluntary repossession will show up on your credit report and you will be responsible for any loan amount. Selling the car, and then coming up with the difference will protect your credit more effectively.

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How to View My Visa Credit Card Account Online

The evolution of the Internet has provided consumers with many different convenience features. One convenient function is the ability to check the Visa account online. The ability to check your Visa account online varies depending on your credit card provider, but in most cases you can check your balance, see your account activity and check your available credit without picking up the phone.

Instructions

1

Check with a credit card provider before signing up for your Visa card to see if offers online access for your Visa account. According to Visa, the card issuer determines access to your account information. So before you sign up for a card, be sure Visa offers online access.

2

Apply for online account access once your card has been issued. In some cases this may require you filling out a form over the Internet, and in other cases all you would need is to log into the provider's website with your account number. If you have any questions, just call the customer service phone number on the back of your Visa card.

3

Log in to your card account and view your balance and any other information you may need pertaining to your Visa card. Keep in mind that it may take one or two business days for purchases to show up on your account, and it also may take one or two business days for your payment to be applied.

4

Become familiar with your online Visa account and understand how to find the different features and functions you may need to find to keep track of your account.

5

Print out any online statements that have incorrect information, such as a purchase you did not make or a credit limit increase you did not ask for. Always call customer service, with the copy of your online statement in front of you, to discuss problems with your account.

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How to Stop Check Garnishment

Wage garnishment is when a creditor obtains a judgment against you in court and obtains a writ of garnishment, which allows a creditor to take a certain percentage of your wages (usually no more than 25 percent) until the judgment is paid in full. You are sometimes served a writ of garnishment before your wages are taken, but more often than not your first notice is when your employer gives you a drastically reduced paycheck. Your employer has a legal obligation to send the money to the court, so it's no use bargaining or begging with your employer about it. To stop a wage garnishment you can either deal with your creditor or go to court.

Instructions

1

Pay the debt in full. Sometimes the only way to stop a wage garnishment is to find a way to pay the debt off outside of the garnishment process. Call your creditor and see if he will accept a reduced amount to pay in full.

2

File with the court that issued the writ of garnishment a claim of exemption if you cannot afford food, housing or other basic necessities. A judge will review your case and may ask you to provide such supporting documents as rent receipts, utility bills or receipts for medical necessities.

3

Contact a non-profit consumer credit counseling service to determine if you can reduce your payments and find a payment plan that suits your needs as well as those of your creditor.

4

File for bankruptcy protection if other options have not been effective. Going into bankruptcy will put an immediate end to all wage garnishments until your debts are discharged.

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Types of Settlements for a Credit Summons

One of the most stressful times in your life can occur when you receive a credit summons to appear in court. At some point you spent more than you had, transferring a balance from one credit card to another, unable to pay. Therefore, you stopped paying and are now being sued. You must file an answer to the suit and be prepared to defend yourself. Most plead guilty, as most are. Here are some types of settlements and options for a credit summons and debt.

Bankruptcy

One of the first things people think of when facing debt problems is bankruptcy. While this is a viable option if you can't pay, this doesn't mean your debt is gone. If you qualify for Chapter 7, then your debt is erased. However, Chapter 13 means a court will decide your payment terms. It is usually worked out based on your monthly disposable income, with payments being made for five years before being dismissed.

Settlement Company

One of your options is to use a debt settlement company, which helps you eliminate your debt at a fraction of what you owe, usually within three years. You pay them a fee to negotiate lower debt with your creditors. The downside is that nothing is paid toward your debt until a settlement occurs. So interest and fees continue to climb, even while they are working for you. Your credit is also damaged using a settlement company, which reflects all the late charges, collection accounts and settlements you and the company make.

Settle on your own

If you want to save your credit, try settling your credit summons on your own. You'll need to make an upfront payment of 35 percent to 65 percent of what you owe. Talk to your creditors about this option. However, make sure that everything is in writing. Your contract should state everything about the settlement you reached, from the collector's name and address to the amount agreed upon to be paid. You might even be able to get the creditor to remove any negative information about the debt and settlement from credit bureaus.

Avoid Judgments

Avoid going to court altogether if you can. By doing this, you can avoid damaging your credit rating and if you can settle everything financially before your court date, this will go toward eliminating your legal liability.

Warning

The last thing you want to do is to ignore your court summons. This will only result in what is known as a summary judgment or an automatic loss. This also gives you less advantage when negotiating your debt payments. If you must go to court, be prepared to plead guilty but state to the judge that you need help with payments.

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How to Settle Charged Off Credit Card Debt

Settling a charged-off credit card debt allows you to resolve the delinquent account by paying less than the full amount owed. The process, which is known as debt settlement, often results in significant savings. Credit card companies and debt collectors often settle charged-off accounts for around 50 percent of the balance, according to the MSN Money website. Credit card companies generally close credit card accounts after you fall six months behind. The card company lists the account internally as a write-off for tax purposes, but still holds you responsible for the debt. Your credit report is then updated to show the account as charged-off.

Instructions

1

Get a copy of your credit report from Annual Credit Report -- a website operated by major credit bureaus TransUnion, Experian and Equifax. The site offers free reports as required by the Fair Credit Reporting Act. You're entitled to three free reports every 12 months. Visit the site to view and print your report.

2

Review your credit report to find the charged-off account. The credit card company may still be managing the account or may have assigned or sold it to a debt collector. The credit report will list the current contact information, including the name of the company and a telephone number.

3

Call the credit card company or debt collector. Give the representative your name and account number, and also your Social Security number if asked. Tell the representative that you would like to resolve the account through settlement. Start with a low offer of 20 percent of the balance. Continue negotiating until you have a deal.

4

Get the terms of the agreement in writing before making a payment. The terms should include the due date and the amount that you have agreed to pay. The terms should also show that the account will be considered "settled" after you make the payment, and that your credit report will be updated to show that the account was "settled for less than the full balance."

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How to get out of a credit card machine lease

Do you have either a credit card or check reader lease with Global finance, Lease Finance Group, LFG? Did you sign up with a vendor that uses them to get credit for the scanners? Remember, just because you signed for the lease as a business, you probably signed a personal guarantee, which means even if the business is no longer you still owe the debt

Instructions

1

If you want to be honest about it, you can settle with them very easily usually down to 1/2 of the balance and payments. call the Collection agency or write a letter with why you want to settle.

2

The reason cannot be because you feel the salesman lied (even though they probably did) Good reasons, you are trying not to file bankruptcy etc.

3

If you dont care about your credit, if it is a lease with one of the above finance companys. In my years of expierience they will hound you with several collections agencys but they dont sue. Not saying they wont, just never seen it.

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Can I Go to Jail for Not Paying My Debts?

If you cannot afford to pay your debts, you may face a number of severe consequences, such as being sued or having your wages garnished. As of 2010, people do not normally go to jail for failing to pay debts, and the Federal Fair Debt Collection Practices Act (FDCPA) forbids debt collectors to threaten debtors with jail time. In some states, however, a prison sentence may indirectly result from failing to pay debts. For instance, you could be put in jail for missing a court date, or failing to fill out legally required paperwork.

Lawsuit

If you fail to pay a creditor for an extended period of time, she could potentially file a lawsuit against you. When this happens, she can take you to court and get a judgment against you. A judgment is simply a statement that confirms that you do have a debt. At that point, the creditor can go back to court to get a writ of execution. This document allows the creditor to collect the debt through wage garnishment and other techniques.

Failure to Appear

If a creditor gets a writ of execution against you, it requires you to appear in court. If you do not attend the hearing, the judge in the case may issue an arrest warrant for you. This means that you could potentially be arrested for your failure to appear in court, rather than for the debt itself. If you do not fill out the proper paperwork to have your wages garnished, you could also be arrested.

Fraud

If you accumulated the debt through fraudulent actions, you could wind up in jail. For example, if you opened a credit card account in someone else's name and then did not pay the debt, you could be arrested and prosecuted for this crime. You may have to repay the debt and spend an extended amount of time in prison for these actions.

Alternatives

Instead of going to jail, you will typically have to look at some other alternatives when it comes to handling your debt. For instance, you might be able to work out a debt settlement with your creditor. This involves paying a lump sum of money to the creditor, totaling less than you owe. You could also create a debt management plan, which involves setting up a payment plan with your creditors. If the situation is very bleak, you might even consider bankruptcy, which can eliminate most or all of your debt.

Considerations

U.S. laws against debtors' prisons have been in effect since the 1800s. If you go to jail for anything related to debt, it will be for failing to appear in court. It is illegal for a debt collector to threaten you by telling you that you can go to jail for failing to pay a debt.

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Debt Roll Down Strategy

A debt roll down strategy is a method for paying off all of your outstanding debts much more quickly than you would by paying just the minimum amounts. Using this strategy, you can quickly pay off one bill and add the monthly payment from it to the next bill as extra. By rolling payments down the list as each debt is paid off, you're creating what the financial author Dave Ramsey refers to as a "debt snowball" that picks up speed as it goes.

List All Debts

Make a list of all debts you currently have outstanding. Regular bills such as the rent and electricity are not debt, but credit card payments, outstanding student loans, a house mortgage, revolving store credit accounts and similar charge accounts are all forms of debt that need to be added to your list. Write down the name of your creditor or debt account, the total amount of the outstanding balance, the minimum monthly payment and the interest rate for each item on the list.

Organize Your List

Rearrange your list of outstanding debt either from the lowest to highest balance, or the highest to lowest interest rate. The debt roll down strategy works in two similar but distinct ways: Paying the smallest bills first or paying off the highest interest rate bills first.

Balance Payoff Approach

By listing your debts in order from the smallest remaining balance to the largest, you can start paying off one or more debts quickly. If your smallest outstanding debt is a doctor's bill of $100 for example, and your largest bill is the mortgage with a $100,000 balance, the doctor's bill can be paid off much more quickly than the mortgage. Paying off multiple small debts quickly is a good way to keep yourself motivated to stick with the plan.

Interest Rate Approach

Listing each debt from the highest interest rate to the smallest is a strategy that can help you save money over time, because your debt roll down strategy focuses on paying off the item with the highest interest rate first. Once the highest interest rate debt is paid, you then move to the next highest, thereby saving yourself from having those debts increase dramatically over time.

Rolling the Payments

Rolling down, or stacking, the debt payments is the heart of this system, regardless of whether you choose to pay off the smallest debts first or the highest interest rates first. Pay the minimum amount on each outstanding debt as you normally do, and add anything extra that you can possibly squeeze towards the first debt on your list. Even a few dollars extra added to the minimum payment will help you pay that first debt off more quickly. Once the first debt is paid, you then roll the monthly payment from that paid off debt to the second debt on your list. Add the payment from the paid off debt to the second payment as extra on top of the minimum, and that second debt is also paid off more quickly than it would have been with just the minimum. Once the second debt is paid, add the first debt's payment and the second debt's payment to the third debt's minimum payment. Continue rolling the payments to the next debt on your list as a new one is paid in full.

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About National Credit Reporting Agencies

A credit reporting agency gathers consumer- and business-credit information from various sources and provides that information to businesses and consumers. This information is used to determine a credit score, which can affect a consumer in many ways: from interest rates on loans to getting a job.

Credit Reporting Agencies in the United States

There are four credit-reporting agencies in the United States: Experian, TransUnion, Equifax and Innovis. These agencies compile data on consumers based on public records and the consumers' payment histories to lenders and utilities.

Experian

Experian is a global credit-reporting agency that operates in the United States. Founded in the United Kingdom in 1980 as CCS Systems, Experian expanded into the United States in 1986 by acquiring Management Decision Systems. The agency has credit information regarding 215 million Americans.

Equifax

Founded in 1899 as Retail Credit Company, Equifax is the oldest of the credit reporting agencies. In addition to traditional credit-reporting products, Equifax also offers monitoring services meant to help prevent identity theft.

TransUnion

TransUnion was created in 1968 and entered into credit reporting in 1969 with the acquisition of Credit Bureau of Cook County. TransUnion is the third-largest credit-reporting agency in the United States.

Innovis

A much smaller credit reporting agency, Innovis started business under the name ACB Services in 1970. Many information sources do not report data to Innovis.

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How Do I Get a Copy of a Lien Release?

When an installment loan has been paid in full, the proof that it's been paid lies in the lien release. The lender or lien holder usually provides this automatically to the borrower at the end of the deal term. However, you may have to request it if you're completing a short sale, foreclosure or other distressed sale or negotiation.

Instructions

1

Contact your lien holder's customer service department and request information on securing a lien release.

2

Write down the address, telephone and fax number of the appropriate department or person.

3

Write the department to request the release. Include the account name and number clearly at the top.

4

Request the release in the first paragraph. Example: "I am writing to request a lien release for account 12345 in the name of John Smith. The principal balance was $25,000 and the final payment was made in the amount of $500 on March 1, 2011. The terms of the loan have been satisfied."

5

Sign and mail the letter via return receipt.

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Does It Hurt My Credit Score if Debtors Keep Selling My Accounts?

When a debtor falls behind in paying a creditor, the creditor will often choose to sell the debtor's debt to another party. This party will then attempt to collect on the debt, either providing a portion of the earnings to the original creditor or keeping all of the money for itself, depending on the financial agreement. A person's debt can be sold many times. While debt will hurt a person's credit score, the sale of debt all by itself won't harm it.

Selling Debt

A debt is similar to a bond or other financial security related to money owed by one party to another.The person who is owed the debt can sell this payment obligation to another party. The debt can either be sold for cash payment, in which case the new owner has told control of the debt, or on consignment, meaning that the new owner will pay the old owner a portion of the money collected on the debt.

Credit Score

A credit score is compiled using data presented in a credit report -- a document listing information related to a person's lending history. Only information listed on this credit report can used to compute a person's credit score. When a debt is transferred from one party to another, this transfer is not noted on a person's credit report. Therefore, the sale of debt from one party to another will not hurt a person's credit score.

Credit Consequences

However, while the transfer of a debt will not hurt a person's credit score, the fact that the debt remains outstanding will hurt a person's credit score. In the majority of cases, a debt is sold only if the debtor is late in making payments. Anytime a person fails to make payments on an account in the time agreed, this will hurt his credit score. So, the sale of a debt suggests a person's score is currently depressed.

New Creditor

While a person's score will not change with a new creditor, the new creditor may take a new approach to collecting on the debt. While previous creditors may merely have written letters and made phone calls attempting to collect on the debt, a new creditor make take more severe measurements. In most instances, creditors are allowed to seek the freezing of a debtor's bank account or a garnishment of his wages to attain payment on the debt.

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What Causes Debts?

Knowing the cause of debt may help you understand ways you can avoid personal insolvency. There are many reasons that people get into debt, and this can be a problem if you lose control of your debts and face bankruptcy. However, owing money is commonplace, with 77 percent of U.S. families in some kind of debt in 2007, according to census.gov. Many debts are controllable with regular payments and won't necessarily lead you to insolvency.

Medical Bills

One way in which people may find themselves in debt is if they cannot afford to pay medical bills. In 2007, 62.1 percent of U.S. bankruptcies were due to medical debts. This is according to a study conducted by researchers from Harvard's Law and Medical Schools and published in the "American Journal of Medicine." Lead author David U. Himmelstein and his colleagues found that the proportion of insolvencies to which medical debts had contributed increased by nearly 50 percent between 2001 and 2007. This type of debt appears to hit the middle classes hardest, as the study revealed that most of those who had declared bankruptcies due to medical debts were educated homeowners with middle-class jobs.

Credit Cards

Not paying off credit cards can allow debt to build up. The inability to keep on top of credit card bills is often caused by people living beyond their means. If you buy items you cannot afford on plastic, it can become difficult to pay off your credit card balance -- this is one way in which debts can be accrued. This can also lead to insolvency, although many people can owe money on their card but pay it off frequently enough to never find themselves in financial difficulty. According to government statistics, 46.1 percent of U.S. families were holding credit card debts in 2007, with the median average owed at $3,000.

Loans

Taking out a loan can be a useful way of paying for an expensive item you would find it difficult to save for, such as a car. This kind of debt can be easily manageable by paying the amount back to the lender in installments, sometimes for a number of years. However, as with any kind of debt, people who fall behind on their repayments could find themselves in financial difficulty. Government statistics show that 46.9 percent of U.S. families had installment loan debts in 2007, with the median average amount owed standing at $13,000.

Mortgages

A mortgage is the most common debt. In 2007, government statistics show that 48.7 percent of U.S. families owed money on their primary residence and 5.5 percent held debt on other real estate. The median amount of debt owed on the family home was $107,000. Although this may sound like a lot of money, most people with home loans do not fall into insolvency as mortgages are usually subject to a structured and affordable repayment scheme.

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Is Debt Settlement a Good Option?

Sometimes, even if you prepare a budget well, debt still piles up due to job loss, unexpected bills and increases in the cost of living that don't correspond with pay increases. Often, people look to debt settlement if debts become overwhelming. This strategy for coping with what you owe isn't for everyone.

How Settlement Works

When you opt to settle your debt, you hire a company to negotiate with your creditors so the creditors forgive some or all of what you owe. In return for providing these services, the settlement company receives a fee. For some people, this fee is well worth it, since using a settlement company saves them the headache of dealing with the creditors alone. Additionally, many save more in the settlement than they pay in fees. However, the reality is that if a company can negotiate with creditors, so can you. Furthermore, not all companies charge the same fees, and you can't guarantee your savings will make the fee economical, particularly because you still have to pay taxes on the amount deducted from what you owe.

Clarity

The only way you can accurately measure whether debt settlement will work for you is if your debt settlement company is clear and upfront about fees and procedures. Some companies are good about this, but others are very confusing and catch customers off-guard.

Credit Impact

Most people enter debt settlement because they want to avoid the negative impacts of bankruptcy on their credit. However, settlement often sends your credit score into a nosedive. This is because creditors report to the credit bureaus that your payment was settled or partially paid instead of paid in full--other creditors don't like to see that you've only paid part of a debt. On the other hand, some creditors may see your debt settlement as a proactive means of avoiding more restrictive bankruptcy, so settlement doesn't necessarily mean you can't get credit in the future.

Creditor Harassment

Using a debt settlement company entitles you to request that all your creditors contact the debt settlement company instead of you about the debt. This means you don't have to deal with harassing letters, emails, phone calls or personal visits. However, this doesn't mean you can ignore the debt. The debt settlement company still will want to interact with you, and you'll have to provide creditors with information for the debt settlement company.

Debt Amount

Debt settlement works well when your debt is significant because the savings potential is greater, according to the SolveYourProblem website. Some settlement companies won't work with you unless you have at least $10,000 in debt. If you're just a few months behind, fees may negate your savings quickly.

The Bottom Line

Debt consolidation isn't a good choice if your debt is small, or if you already have a shaky credit score. It also isn't a good idea if you already have tried to settle with creditors and they declined your offer. Settlement companies will typically offer creditors less than you might offer on your own, so creditors likely will turn down your company if you haven't been able to settle independently.

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How to Make Payment on My HSI

HSI Financial Services, LLC is a debt collection agency specializing in debt recovery from patients in the health care industry. HSI offers payment options to patients with outstanding debts, as an attempt to collect or recover delinquent costs accrued during a hospital stay or any other service provided by a health care facility. Established in 1983, the HSI headquarters is in Atlanta, Georgia. HSI offers two ways for patients to make account payments, online and by mailing in the payment.

Instructions

Online

1

Visit the HSI Financial Services payment website at HsiPay.com. Locate and click the "Click Here to Get Started" link at the bottom of the page.

2

Enter your reference number and last name in the designated fields and click "Submit."

3

Enter your payment type and the amount of your payment.

4

Enter the type of credit card, if paying by credit and enter the bank routing number and account number, if paying by check.

5

Submit your payment and print out your payment confirmation sheet. Retain the confirmation sheet as a record to verify your online payment.

By Mail

6

Purchase a money order for the payment amount. If using a check, write the check for the payment. Be sure to include your reference number on the memo line of the check or money order, to ensure proper distribution of your payment.

7

Make your check or money order out to HSI Financial Services, LLC and be sure to sign it in the designated area.

8

Mail your payment to:

HSI Financial Services, LLC

Post Office Box 723537

Atlanta, GA 31139

9

Wait 7 to 10 days for HSI to apply your payment to your account. Verify receipt of your payment by calling to speak with a collections agent toll-free at 800-282-3108 or call 770-850-7450, if you are in the Atlanta area.

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What If You Cannot Pay Your Bills?

Individuals facing financial struggles such as unemployment, disability or medical problems may find it difficult or impossible to come up with the cash to pay their bills. Creditors have set consequences for individuals unable to pay their bills. Specifically, if you are unable to pay your bills, it can have lasting ramifications on your finances, regardless of the reason you cannot make payments.

Function

After you do not pay a bill, many companies will quickly start the "collections process," in which they attempt to recover the money you owe them. Some creditors take immediate action against non-paying consumers: auto loan companies will often repossess vehicles for one-day-overdue payments, while landlords will often evict tenants a few days or weeks after the rent is past due In contrast, credit card companies typically wait four months before automatically closing cards, charging them off and sending them to collections. Mortgage lenders have the longest collection processes, typically waiting months before foreclosing on borrowers' homes.

Credit Consequences

In addition to losing your home, car and/or credit cards, missing bill payments can damage your credit score, the three-digit number a lender uses to decide if you are eligible for a loan. Car repossession and late credit card or mortgage payments all go on your credit report and damage your payment history, which is the most important aspect of the credit scoring formula. Additionally, late payments, foreclosures and repossessions do long-term financial damage, remaining on your credit report for seven years.

Strategies

If you do not have the money to pay all your bills, the worst thing you can do is to ignore the problem. A June 2009 article from "Main Street," a consumer finance website, recommends prioritizing your bill payments according to basic needs and credit impact, and using your money to pay the most important bills. Keeping a roof over your head is of the utmost importance, so pay your rent or mortgage first, as well as utilities such as gas and electricity. Transportation, especially for work purposes, is also key, so car payments should also be a high priority.

Considerations

If your income situation is unlikely to improve any time in the near future, one option you can consider is filing for bankruptcy. Filing for Chapter 7 bankruptcy will give you a "discharge," or release, from most of your debts, selling your nonessential property to pay your creditors, while Chapter 13 bankruptcy allows you to reorganize your debt and pay what you owe over three to five years. Although filing for bankruptcy seems like a good way to escape debt, it will trash your credit score and remain on your credit report for seven to 10 years, greatly reducing your chances of getting credit, employment or rental property in the future.

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How to Resolve a Judgment

A court judgment is a very serious legal issue and can negatively impact your finances and credit score. Judgments stem from lawsuits, with a judge ordering the defendant to make full payment for a delinquent debt, or for damages in a civil case. Judgments appear on credit reports for seven years and in public court records. Even more damaging is the potential for bank or wage garnishment. Garnishment freezes bank accounts, allowing debt collectors to take money to satisfy the judgment. Wage garnishment forces an employer to deduct money from the debtor's paycheck to send to the bill collector. Garnishment is possible after a judge signs a garnishment order. Resolving the judgment ends the threat of garnishment.

Instructions

1

Contact the debt collector. Get the name and phone number by reviewing correspondence for the judgment sent to you by the court. Or get a copy of the judgment by visiting the county courthouse. Another option is pulling a copy of your credit report from the Annual Credit Report website. Credit reports are available for free from the site because of provisions in the Fair Credit Reporting Act. Read the credit report to review the judgment listing and contact information for the debt collector.

2

Negotiate a settlement of the judgment, preferably by making one lump sum payment. This completely resolves the judgment. Get details of the agreement in writing before paying.

3

Arrange for a payment plan or a settlement in several installments if you cannot pay in a lump sum. Request details in writing, including acknowledgment by the debt collector that your bank account and wages will not be garnished if you make payments as agreed.

4

Pay by cashier's check and keep copies of all correspondence, including a copy of the check.

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What Does Credit Limit/High Balance Mean?

Determining your credit score is not a simple process, as credit reporting agencies use several fairly complex ratios and formulas to assess your overall creditworthiness. One important ratio is your credit utilization rate, which compares your outstanding balances to your available limits. Improving your credit utilization rates will also improve your credit score.

Identification

Your account balance is the total amount you owe on a debt instrument such as a credit card. Your credit limit is the total amount that you can charge to the account. Generally, the lower your outstanding balance is in relation to your available credit, the better the impact on your credit score. Creditors and credit reporting agencies view lower balances as a reflection of your ability to handle credit responsibly.

Acceptable Ratio

There is no real consensus among credit industry experts as to the "ideal" ratio of outstanding balance to available limit. However, as a general rule of thumb, strive for a utilization rate of 20 percent to 30 percent. Thus, if you own a credit card with an available limit of $10,000, try to keep your outstanding balance between $2,000 and $3,000.

Considerations

For the best credit score, get an acceptable utilization for all your credit accounts, not just one or two. Even if your overall utilization rate is between 20 percent and 30 percent, one account with a 60 percent or 70 percent rate can still have a detrimental effect on your score. Therefore, when considering a repayment plan for your outstanding balances, a good strategy can be to apply any extra funds to those accounts with higher utilization rates while keeping the remaining accounts within the acceptable range.

Avoid Tranaferring Balance

You may be tempted to transfer all or portions of outstanding balances on high-utilization-rate cards to those with lower utilization rates in an attempt to "even things out." However, try to avoid this strategy, as transferring balances can also have a negative impact on your credit score. Your best option for improving your credit score as quickly as possible is to pay down those high-utilization balances in a timely manner.

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Senior Citizen Debt Help

The most common source of debt for senior citizens is health care costs. With often only a fixed retirement income to sustain them, many elderly people turn to lenders for assistance to cover health care and long-term housing expenses. Finding legitimate debt help can keep senior citizens out of financial difficulty, while managing the everyday costs associated with aging.

Increasing Debt

As of 2011, senior citizens make up a segment of the American population with the fastest-rising credit card debt. Among those 65 and older, the average credit card balance increased 149 percent from 1995 to 2004, according to Sharon Shaw Elrod, MSW, EdD in her article published on SeniorCitizenJournal.com. With the rising cost of health care, gas and energy bills, senior citizens on fixed incomes are often resorting to using their credit cards and other loans to pay for everyday expenses like prescription drugs, doctor visits and unexpected expenses.

Government Assistance

The American Association of Retired Persons (AARP) provides a "Benefits QuickLINK" on their website as a free online financial tool for senior citizens, which can help them find and apply for government benefits. Just a few of the programs for which seniors can find eligibility and application information include Medicare savings programs, state pharmaceutical assistance programs, state property tax relief, low-income home-energy assistance and supplemental security income.

Government Grants

Government grants, which do not have to be repaid, are available to senior citizens, most often through organizations that provide care and assistance to the elderly. Seniors may be able to qualify for these individual grants if they meet the specified requirements. The types of grants available for senior citizen debt help consist of debt assistance, housing assistance, educational grants and funds to start a business. Grants.gov provides more information about available government grants, eligibility requirements and the application process, or senior citizens can peruse a list of thousands of opportunities found in the Catalog of Federal Domestic Assistance (CFDA) available by mail or in downloadable PDF form at cfda.gov.

Private Assistance

Numerous charities, funded by private citizens, provide financial assistance to senior citizens who are having trouble paying all their bills. Seniors can free up more funds to pay down debt by getting help to pay heating and utility bills through charities such the American Red Cross, Operation Round Up (offered by many gas and utility companies) and United Way. NeedHelpPayingBIlls.com provides a detailed listing of nationwide charities and organizations that can help pay bills and reduce debt.

Reverse Mortgage

An increasingly popular alternative for senior citizen debt help is the reverse mortgage. A reverse mortgage allows seniors to use the equity in their homes without having monthly mortgage payments, and the loan on the home is not due until they die or move out of the home for a period of more than 12 months. The lender gives the senior a mortgage based on his age or life expectancy and the appraisal value of the home. The applicant can choose to receive the funds as one lump-sum, in monthly amounts or as an interest-earning equity line of credit.

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Texas Home Equity Loan Laws

When a homeowner in Texas needs to borrow for any purpose, he can make a home equity loan and secure the loan with a lien on his property. Equity is simply the difference between the current fair market value of your property, less them amount that he owes on it. So, if you still owe $100,000 on a house worth $300,000, you are said to have $200,000 worth of equity. Home equity loans were not available in Texas until 1997, and its laws go farther in protecting homeowners than most other states.

One at a Time

In Texas, unlike most other states, you must pay off a home equity loan entirely before you can make another loan against your house. That's opposed to a state like California that experienced a huge run-up in housing values. To tap into the accumulated appreciation, people remortgaged their homes, having pledged them a multiple of times. In addition, regardless of how quickly you pay off your home equity loan, you cannot apply for another home equity loan for one year in Texas.

80 Percent Rule

A combination of your first mortgage and your home equity loan may not exceed 80 percent of the fair market value of your home. Let's say you have a home that's worth $200,000, and you owe $100,000. You would be able to make a $60,000 home equity loan secured by your home. ([.8 x $200,000] - $100,000). However, if you owed $165,000 on your home, you would not be able to apply for a home equity loan in Texas.

Buyer's Remorse

Even after a home equity loan is executed, the borrower has three days to cancel the loan; and if she does, she will not have to pay any penalties. For that reason, the proceeds of that loan will not be delivered to the borrower until that time has expired.

Other Laws in Texas Governing Home Equity Loans

A lender cannot charge any more than 3 percent of the loan's value in fees. The state of Texas will impose a serious penalty on a lender when excess charges are revealed. In addition, a home equity loan cannot be closed within 12 days after a person applies for the loan and it must be closed at an office of the lender, at an attorney's office or at a title company's office.

Furthermore, the borrower will be given a statement of the fees he will pay at least a day before the closing unless the borrower waives his rights to one. Finally, the lender may not take as security any other of the borrower's assets as collateral except his home. And agricultural land and so-called open space cannot be taken as security for a home equity loan.

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What Is Debt Ridden?

Whether it is a country, company, state, or person, there are a number of present-day examples of entities being debt-ridden. In short, debt-ridden is classified as anything or anyone that has borrowed a significant amount of money that is unable to be paid back. Combinations of spending more than can be made and bad investments can quickly lead to an enormous amount of debt.

Personal Debt

Macmillan Dictionary defines debt-ridden as, in serious financial trouble as a result of owing very large amounts of money. For many people, one of the main reasons for becoming debt-ridden is credit cards. Before the U.S. National Debt crisis came to light, many households were thousands of dollars in credit card debt, and often relied upon credit to pay bills or other credit cards. With card interest rates often high, it is easy to spend more than is made, which makes it hard to pay the debt back in the end.

Debt-Ridden Countries

The United States is a perfect example of a debt-ridden country. With a current debt amount of $13 trillion and growing, the United States' debt is due to a number of reasons. Spending more than is made is one of them. For instance, in 2009, government receipts were $1.51 trillion while government expenditures had reached $3.5 trillion. A combination of wars in the Middle East, inflation and a real estate market where a large amount of credit was made available to people has led to a situation where the United States has quickly become debt-ridden.

Greece

Greece is another example of a debt-ridden country, with it being $413.6 billion in debt. A number of factors led to this debt, such as unrestrained spending and cheap lending practices. In recent years, Greece failed to reform its financial structure, leading to tax evasion by many of the country's well-off citizens. This left it in a situation where it was not gaining adequate tax revenue to support the economy. As a result, Greece is now considered a black hole by financial investors.

Zimbabwe

Last on the list of the many countries in financial strain is Zimbabwe, which is currently $5.7 billion in debt. One of the major problems within Zimbabwe was that it had a low per-capita income, meaning the income per person in a population was low. This is due in large part because the country is stricken with poverty in many areas. Therefore, this left the country with little to no way to clear the debts that it acquired. When coupled with a corrupt government, the result is yet another debt-ridden country.

Paying it Back

People who have acquired mass amounts of debt often must consult debt-consolidation firms, which in some cases may help lower the personal amount of debt. Bankruptcy is also an option for many. For countries, increased financial reform in the areas in taxation, and slashed spending are designed to help dig the country out of debt. For example, the United States has utilized stimulus packages that are designed to create jobs for its citizens and stimulate economic growth.

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