Welcome to our website credit and debt managementr.

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

Saturday, June 30, 2012

How to Deal With Credit Card Collectors

Receiving a call from a credit card collector can prove to be intimidating. The collector may threaten a lawsuit if you don't pay your debt or continue to call you at your home, work and cell until he receives his money. Credit card collectors can be difficult to deal with, especially because they are often motivated by incentives from their respective companies. However, remain calm when dealing with credit card collectors in order to avoid ugly blowups.

Instructions

    1

    Try to make fair payment arrangements with the credit card collector. See if they will be willing to offer a payment plan or reduced interest rate. Request that any offers be verified by letter.

    2

    Request that a letter be sent to you with the debt information. The law requires that a credit card collector must provide you with written documentation that states amount owed, name of the credit card company and the expected action it plans to take against you if the debt is not settled.

    3

    Hire an attorney. If you have retained an attorney to handle a dispute with a credit card collection company, you can give this information to the collector. The collector will then need to go through the attorney instead of contacting you directly.

    4

    Send a certified letter to the credit card collector that requests he stop harassing you if you receive repeated calls and letters. Once received, the collector is required by law to stop contacting you unless it is to take a specific legal action.

    5

    Report any abuse to the Federal Trade Commission. The Fair Debt Collections Practices Act protects the consumer from credit card collectors that threaten, harass or mislead the debtor. You may be able to sue the credit card collector if you can prove that the company violated this act.

How to Get All 3 Credit Reports for One Price

Under the Fair Credit Reporting Act, the three nationwide consumer-reporting companies---Equifax, Experian and TransUnion---are required to provide you with a free copy of your credit report once every 12 months, according to the Federal Trade Commission (FTC). The three reports can be accessed from one website.

Instructions

    1

    Go to Annualcreditreport.com. This is the only authorized website permitted to provide free credit reports in one place from all three reporting companies. Reports can be ordered and printed together or obtained separately. You'll pay a charge only if a report has already been obtained within the past 12 months.

    2

    Enter your personal information to verify your identify. First, select the state in which you live. Then enter such data as your full name, address, Social Security number and date of birth. The credit reports can be viewed immediately upon authentication of your identity.

    3

    If you feel uncomfortable revealing your personal information over the Internet, you can find a toll-free phone number and address on Annualcreditreport.com to request your reports by phone or mail. If you do the latter, the reports will be mailed to you within 15 days.

Nonmonetary Reasons to Pay Off Debt

Nonmonetary Reasons to Pay Off Debt

Anyone who has ever faced having a mountain of debt may tell you that the negative effects are not only financial but they can also wreak havoc in other areas of life. In some cases, ancillary effects may be worse than the obvious financial consequences. The act of paying off the debt can provide needed relief in a variety of important ways.

Relieving Stress

    If you carry a lot of debt, you may also worry about whether you'll ever to be able to pay it off or what will happen if you can't meet the monthly payments. The stress may have negative consequences on your health, including the inability to sleep or eat properly, and you might suffer from ailments like high blood pressure or heart disease. The stress may even lead to depression.

Social Stigma

    A stigma is often attached to those who carry a large amount of debt, whether fairly or unfairly. Friends or relatives who are aware of your plight may view you as lazy or irresponsible, or as someone who has little self-control. If your debt leads to your filing bankruptcy, the stigma may be even stronger. Paying off the debt can remove the stigma as it shows others you can hold yourself accountable for your actions.

Sense of Self-Worth

    Paying off your debt may improve your sense of self-worth. Instead of feeling defeated or "beating yourself up" for getting into your predicament, the process of paying off your debt can give you a sense of accomplishment and boost your self-confidence as well as reduce feelings of shame or guilt. You may develop the belief that you have the ability to overcome any obstacle in your life, no matter how daunting it may seem. You might also develop better lifestyle habits that make you feel better about yourself.

Helping Others

    Paying off your debts can make you feel as if a psychological "ball and chain" has been removed, which provides a sense of freedom and happiness. You may be able to enjoy more meaningful relationships and not feel as though you are hiding anything. You can serve as an example for others facing large amounts of debt and even serve as a role model, much as recovering alcoholics or drug addicts often provide the most effective means of support to other addicts.

Wednesday, June 27, 2012

How to Tell My Husband About How Much Debt We Have

Hidden debt is a difficult topic for couples to discuss as it often initiates negative emotions along with feelings of hurt, betrayal and distrust. While it may be tempting to try to remedy hidden debt on your own, the stress and continuation of hiding facts regarding personal finances will eventually take their toll and often result in deeper debt. Additionally, when you accept the responsibility to discuss the details of your financial affairs upfront and honestly, the chances of a positive outcome are greater.

Instructions

How to Discuss Hidden Debt

    1

    Write down the details of all accounts, debts, and outstanding bills for reference.

    2

    Determine a time with your spouse to sit down and discuss your personal finances. Allow for several hours, and make sure this will be uninterrupted time.

    3

    Prepare to be asked difficult questions. "Why?" is the most common question. Usually, embarrassment and feelings of inadequacy are often the reason why. Just be honest.

    4

    Stay positive throughout the discussion. Be prepared for your spouse to become angry and experience a significant amount of hurt.

    5

    Ask for forgiveness and refrain from sharing how bad you feel. Your spouse is under quite a bit of shock and would not be very receptive of your feelings at the moment.

    6

    Maintain the fact that you would like to work together to resolve matters as a team, and ask to discuss what options you have. Selling personal property or real estate may be one option to consider.

    7

    Offer to go to credit counseling together. Your spouse may demand that the responsibility of your financial affairs be turned over to him or her. Respect this request.

How to Calculate Deferred Interest

Banks, credit card companies and other lenders routinely offer accounts or products with deferred interest. With a loan or other debt, deferred interest means that you either do not pay interest for a specific amount of time or you pay less than the minimum balance and pay the difference plus interest later. The terms, meaning and calculation of deferred interest changes with each lender; be sure that you understand the rules of the contract before signing up.

Instructions

No Interest for Several Months

    1

    Determine if your deferred interest offer suspends interest for a number of months, which is common with credit cards and installment plans for large consumer items such as furniture.

    2

    Read the contract and determine if there is no interest at all for the time period stated in the contract or if the interest accumulates and you have to pay it after the time period ends.

    3

    Find the interest rate in the contract and the amount of time that you have to pay the debt.

    4

    Multiply the amount you owe by the interest rate and the number of years you have to pay it back. For example, if you bought a $1,000 couch at 10 percent a year and have two years to pay, you will pay $200 in interest: (1,000)(0.1)(2). If the interest accrues, you have to pay $200 --- two years of interest --- back in one year, plus the $1,000.

    5

    Subtract the interest from the interest free period if the interest does not accrue. For example, if the $1,000 generates no interest for 12 months but you pay the debt back in 24 months at 10 percent a year, you owe $100 in interest: (1,000)(.1)(2) - (1,000)(.1).

Negative Amortization

    6

    Determine if your contract allows you to pay less than the monthly minimum but adds the difference to the debt. This type of deferred interest is common in mortgages and is also called negative amortization.

    7

    Add the amount that you do not pay every month to your principal --- the original debt. For example, if you have a 30-year mortgage of $100,000 but pay $500 less than the monthly minimum each month for a year, your principal goes up to $106,000.

    8

    Multiply the new principal by the interest rate; the product is the amount of interest that you owe. For example, a $106,000 mortgage at 5 percent a year generates $5,300 in interest for the lender

Can Defaulted Student Loans Be Consolidated?

As college enrollment continues to increase at a rapid pace, the student loan debt load carried by the average American student similarly continues to grow exponentially. According to Finaid.org, the average student graduating in the 2007-2008 school year carried a debt burden of $23,186. As such, many college graduates who struggle to find employment default on these loans.

Consequences of Defaulted Loans

    A defaulted student loan is more serious than defaulted credit card bills. While a defaulted loan will negatively affect your credit and your options when seeking employment, a defaulted student loan may also result in wage garnishment and a decrease in your tax refunds. Defaults may also cancel any other government programs to which you may be entitled---like VA and FHA benefits.

Cleaning Poor Student Loan Credit

    A default on a student loan is any account more than 270 days past due. After this point, your credit rating will drop significantly, your wages could be garnished and you could be sued. In order to bring your defaulted loan to a point at which consolidation is possible, you must make at least three consecutive on-time payments (including paying any delinquent charges and back interest).

FFEL

    FFELs, or Federal Family Education Loans, are one way to consolidate your delinquent debt. To check your eligibility, review the government's student aid webpage. Loan officers will review your defaulted debts on a case by case basis and determine if you are a worthy candidate for a FFEL loan. Choosing a federal consolidation loan is preferable, as the terms are more favorable than private loans.

Other Options

    Before consolidating all defaulted loans into one monster loan, you should exhaust all other methods. Most government-held student loans offer both deferment and forbearance options to struggling students. While these options should be exercised before a loan has defaulted, if you can bring your accounts close to current, you may have luck deferring or placing loans into forbearance.

Private Loans

    Choosing the private sector to refinance your student loans is dangerous. Private lenders need only adhere to loose regulatory lending standards, unlike the federal student aid standards. As such, private lenders may charge exorbitant fees and interest rates on huge sums of money, leaving you in a worse situation. Before signing any private consolidation loan, be sure to review the paperwork with both an attorney and CPA to ensure you are going to benefit from the consolidation.

How to Build Credit as a Small Business

How to Build Credit as a Small Business

As a small business owner, you may need to purchase equipment, rent a building or expand your existing operations. If you dont have enough capital to cover the expense, you may need to borrow it from a bank, a savings and loan association or a from a venture capital entity. However, your credit standing within the business world may determine whether you get the loan. As a small business, it is imperative that you build good credit as soon as possible.

Instructions

    1

    Find a bank that works with new businesses and offers in-house loans. This is as easy as making a list of potential banks and credit bureaus and picking up the phone. Ask to speak with a loan officer in commercial lending. When you reach the correct person, ask whether the bank makes in-house loans to local businesses.

    2

    Question the commercial loan officer about his banks policy of making unsecured business loans. Many banks offer small, unsecured loans to bank business customers. Find out what the requirements are to qualify for one of these loans. Most banks require that you place your main business account with them and that you maintain a minimum dollar amount in your account.

    3

    Establish your banking with the lender you feel is the most likely to work with you on building your business credit. Unlike some loans, the bank may never report your payment activity to a credit agency if you take a small loan. However, they will track your payments and use the information to determine whether you are a good risk for a future loan.

    4

    Open wholesale business accounts with the merchants and suppliers in your line of work. These accounts help you build credit within the business community and you may list them as references when applying for larger loans.

    5

    Pay back all loans before they are due. This is the quickest way to build business credit. Banks and creditors maintain a detailed list of your monthly payments and whether you make any late payments. If all your payments arrive before the due date, your business credit will increase.

    6

    Take out an Accounts Receivable Line Of Credit (ARLOC) against billed, but not received, income from services or goods sold. When you open an ARLOC with your bank, you may be required to show copies of client statements in order to borrow money against the amount due. Often the ARLOC acts as a revolving credit account attached to your business checking account and you will borrow and pay the amount needed as you receive payment from the client.

    7

    Purchase equipment or big ticket items from a supplier on credit. After you establish a little credit with wholesale accounts or a small unsecured loan, you may apply for larger financing. Each time you successfully pay back the money you borrow, your business credit will increase.

Can You Get Turned Down for a Corporate Credit Card Due to Personal Credit?

A corporate credit card can be a vital tool in financing a business. Creditors assess a company's credit history to determine whether the business is creditworthy. If a business is new and does not have an established credit history, your personal credit history becomes the primary factor in the approval process, and you may be turned down for a corporate credit card due to an unsatisfactory personal credit history.

Business Credit

    Like personal credit, business credit information is updated monthly for companies registered with Dun & Bradstreet. Dun & Bradstreet assigns each business a DUNS number used to track its credit information. If you have not established business credit, you can start with a credit account with a retailer that does not require extensive business credit history. Before applying, ensure that the company reports information monthly to Dun & Bradstreet and the major business credit bureaus.

Company Assets

    Credit cards can provide access to capital for business owners who are unable to qualify for adequate loans. Credit cards offer flexibility and perks that can be essential in maximizing the resources of your business. However, never finance your business with personal credit cards. Mixing personal and business credit can result in tax penalties. You are required to use your Social Security information to apply for business credit cards while your business is in the start-up phase so that creditors have a reference as to how you manage debt, however.

Application Process

    Many business credit card applications offer instant approval when you apply online or by phone. If you are using your Social Security information to secure the card, you have a greater chance of approval if you have a good credit score. Bad credit scores do not always result in rejection, but can cause you to have a higher interest rate and lower your credit limit. If your application for a corporate credit card is rejected, you will receive a letter in the mail detailing the reason for the unapproved application.

Established Business Credit

    With established business credit and assets, you can avoid using your personal credit to obtain new financial resources. The length of time you have been in business, annual profits and the presence of existing business capital all add your credit worthiness. If you have more than one business, consider using the business with the most assets and credit history to apply for a credit card to increase your chances of approval. Inquire as to whether you can add another business entity as an authorized user prior to completing your application. This helps you maintain accurate accounting records for tax time.

Tuesday, June 26, 2012

What Happens When a Creditor Threatens to Sue?

When a person owes a debt to another party and then fails to pay back the money according to the terms reached with the creditor, the other creditor usually has the legal right to sue the person for failing to pay the money that he owes. A creditor can threaten to sue only if he has the legal right to do so. If he does not, then this threat is illegal.

Creditors

    A creditor often has the legal right to sue for an unpaid, delinquent debt. The creditor is allowed to sue on the grounds that the debtor breached the contract that was used to establish the debt. This contract is usually written, but it may simply be spoken. In either case, if both parties reached the agreement, the debtor has a legal right to follow through on it.

Lawsuits

    If a creditor threatens to sue a debtor, he may well make good on this threat. This is done by filing a lawsuit in the civil court that has jurisdiction over the case. If the creditor files a lawsuit, the debtor is notified of it and asked to appear in court to defend himself. If he does not appear in court when requested, the creditor will likely be awarded a default judgment.

Statute of Limitations

    There are certain situations in which a creditor is not allowed to threaten a lawsuit, as he does not have the legal right to sue. One of these is if the statute of limitations on the debt has already expired. Each state has its own statute of limitations for the filing of a lawsuit over a particular kind of debt. If a lawsuit is not filed within this period, the creditor can never file it.

Considerations

    If a creditor threatens a debtor with a lawsuit that he cannot legally file, it is violating the federal Fair Debt Collection Practices act. Under this act, a creditor cannot falsely threaten a debtor in an attempt to collect on a debt. If such an instance, the creditor may actually be fined by the government and, on some occasions, forced to pay damages to the debtor.

How to Write a Hardship Letter to a Mortgage Lender

How to Write a Hardship Letter to a Mortgage Lender

If you're trying to stave off foreclosure on your home and want your lender to consider an alternative to your current mortgage terms, one of the first things you need to do is write a letter of hardship to the lender. This document is a necessary first step in creating a loan "workout", modification, forbearance agreement or other change to your loan status. The letter should focus on a specific event that caused you to fall behind on your mortgage payments. It's a brief, to-the-point explanation, a snapshot of your current situation.

Instructions

    1

    Gather and review all your financial documents. Assess your true financial situation before proceeding with a loan modification. A loan workout can adversely affect your future credit rating.

    2

    Review the acceptable reasons for requesting a loan modification. Banks and other lenders require tangible reasons, not vague explanations, before considering your modification request. Acceptable reasons include illness and/or medical bills, loss of job, reduced income, a failed business, single-parent household after divorce (not simply a divorce or alimony/child support payments), loss of spouse or household income earner, military duty or a natural disaster such as an earthquake that devastated your home. More lenders are now also considering changes ("resets") in adjustable rate mortgages.

    3

    Include the date, the company name (and your representative, if you have one), company address and company phone number in the upper-left portion of the letter (the "inside address"). Skip a line and include a "regarding" line ("RE:"), which is a two- or three-word description of the subject matter, such as "RE: Loan workout request". Include your name and account number immediately below that line.

    4

    Compose the body of your letter. Get right to the point. Explain that your husband was injured at work, for example, and that you have yet to receive unemployment benefits. Provide dates of any incident you mention and offer a resolution for the bank to consider, such as, "We expect a full recovery for my husband but he won't be back to work for six months. At that point, we should be able to pay our bills on time. Until then, could you please consider a restructuring of our mortgage to reduce payments by $150 a month." There are scores of sample letters available online (see References).

    5

    Avoid using excuses such as: you maxed out your credit cards, your wife spends too much money, or your kids are now in college. These are circumstances that you are expected to manage as a homeowner and as an adult. Do not blame the bank for your misfortunes or otherwise complain about high prices or inflation. Although you should write with emotion in explaining your situation, don't belabor the issue. The bank knows you're in financial trouble.

    6

    Include a paragraph near the end explaining that you're enclosing documents and statements verifying your financial situation, and include copies of those documents.

    7

    Close by thanking the bank for their time and consideration of the matter. Include your name, any co-signer, your account number and your address and phone number. (You can also include an email address.)

Debt Management & Credit Counseling

Debt Management & Credit Counseling

When a credit card has reached default--and before the debt is sold to a collection company--you may benefit from credit counseling and debt management services. These nonprofit organizations negotiate with your creditors and help you manage your money to make the payments. The key is to find a reputable organization that won't worsen your situation.

Who Goes?

    People typically go to a credit card counseling service when their payments become impossible to maintain. Perhaps you are a college student or recently suffered a medical hardship. Even if you are just bad with money, these organizations can help you get your life back on track. Most importantly, however, is to reach out for help before the debt is sold to a collection company. At this point, counseling services most likely cannot help you.

Who Administers?

    Most debt management and credit counseling organizations are non-profit. They may stand alone or could be part of your workplace, credit union or university. Some handle credit card transactions alone, while others will help with medical bills and student loans. These services may work with you by phone, Internet or in person at offices.

Sign-Up

    Your first visit will be a consultation that lasts about an hour. Reputable credit counseling companies thoroughly review the debt, help create a budget and recommend a debt management plan (DMP), if necessary. Through a DMP, the counselors negotiate with the credit card companies, often getting a lower interest rate and waived fees. The customer then pays a monthly amount to the counselors, who then pay the credit card companies. These services often come with a small fee, if any.

How It Works

    Through counseling and a debt management plan, you can start chipping away at your debt. Depending on the amount of debt, this can take a few months, a couple of years, or more. Users of this service should keep a watchful eye on credit card statements to ensure that these companies comply with the counseling service's DMP.

Warning

    Some companies are out for profit only and can put a customer in worse shape. Signs of these type of companies include those that charge high upfront fees, don't fully review credit reports before assigning a DMP, or those that sign you up with a DMP before creditors' approval. Reliable services will be endorsed by the Better Business Bureau and will educate consumers on budgeting practices to prevent further debt troubles.

Monday, June 25, 2012

Will a Settlement With a Credit Card Company Hurt Others?

A settlement with a credit card company is an agreement to pay a credit card debt for less than the full balance owed. It is a tactic used for resolving delinquent accounts placed with a debt collector. SmartMoney reports that credit card companies typically settle delinquent debts for 20 to 70 percent of the balance. The exact settlement amount depends on the negotiating skills of the debtor and what the card company is willing to accept. Settlement with a credit card company usually only hurts the person whose name appears on the account. However, other persons, such as a spouse, may suffer indirect harm.

Credit

    Credit card settlement could cause a significant drop in credit score. FICO credit scores range from 350 to 850. A person with a high credit score has more to lose than someone with a low score. Settlements appear on credit reports for seven years, according to the Federal Trade Commission. It is possible for a settlement to indirectly affect a spouse. For example, a couple planning to purchase a house might not qualify for the mortgage if one spouse's credit is severely hurt by credit card settlement. The same is possible for any other joint credit application, such as an auto loan.

Income Taxes

    A couple could also suffer from an increased tax bill. In most cases, credit card companies must report debt settlement to the Internal Revenue Service. The IRS treats any money saved as income. For example, a person settling a $15,000 credit card debt for $5,000 must report $10,000 in additional gross income on the next federal tax return. However, the IRS allows exceptions for people who were financially insolvent at the time. Insolvency means the taxpayer had more debts than assets at the time of the settlement.

Closed Accounts

    Some credit card companies regularly monitor credit reports to track the financial status of customers. If a card company notices that a debtor is settling debts, the company may arbitrarily close another account the debtor owns to prevent further charges. This could indirectly affect a couple because one spouse would lose access to credit. If it was a joint account that was closed, both spouses would lose access to credit.

Planning

    People considering debt settlement should weigh the consequences and create a strategic plan before starting. For example, settling credit card debts in January is better than in December for tax purposes. A settlement in December could lead to a higher tax bill due just four months later in April. However, settling in January gives the debtor 15 months before the settlement becomes an issue on tax returns.

What Happens to Charge Off Accounts?

A charge-off account is any debt that the original creditor removes from its accounting ledger and categorizes as "uncollectible." Although most people use this term to refer to credit card accounts, hospital debts, small business debts and unsecured personal loans can also be charged off. Most companies periodically charge off bad debts for tax purposes.

Facts

    A creditor that charges off a debt has the right to retain ownership of the debt, but most do not. By selling the debt to a collection agency, a creditor can recover a portion of the outstanding account balance and write off the remainder as a loss on its annual profit and loss statement. Charging off a debt does not in any way invalidate it or absolve the consumer from his obligation to pay off the balance in full.

Features

    Some companies choose not to sell the debt to a collection agency and instead write off the full amount owed as a loss. Should this occur, the company will then file a Form 1099 with the IRS noting that it "forgave" the debt following a charge off. It must then send Form 1099-C, noting the full amount of the written off debt, to the debtor. Form 1099-C requires the individual to include the charged-off debt as income on her tax return.

Significance

    If a creditor files regular reports with the credit bureaus, a charge-off results in significant credit damage for the nonpaying consumer. The Fair Isaac Corporation's website, myFICO.com, notes that each consumer's payment history record determines approximately 30 percent of his credit score. Thus, the missed payments prior to the charge-off will severely damage the debtor's credit rating. The Fair Credit Reporting Act, which contains laws that regulate the credit reporting industry, notes that late payments and charge-offs remain within a debtor's credit report for seven years.

Effects

    Most lenders use an individual's past credit history as an indicator of whether or not she is likely to repay borrowed funds. A damaged credit history due to a charge-off causes future lenders to view the debtor as a much higher risk and charge her higher interest rates as a result. Some lenders will decline new applications for credit or loans based on a previous charge-off.

Warning

    Collection agencies that buy charged off debts use standard collection methods such as collection letters and frequent telephone calls. Depending on the amount the debtor owes, however, the collection agency that owns the account may file a lawsuit against him and obtain a civil judgment. In most states, this gives the collection agency garnishment rights. In addition to seizing the consumer's bank accounts and a portion of his wages through garnishment, if the debtor owns real estate, the collection agency may also place a real estate lien against his property -- forcing him to pay off the previously charged off debt before selling or refinancing his home.

How to Solve Your Debt Problems

Debt can be both a problem in and of itself and a symptom of a larger financial problem. Debt is burdensome because you must use money you earn today to pay off debts you incurred in the past, and the interest associated with debt always makes debt more expensive to pay off. If you manage to crawl out from under the weight of a heavy debt load, you must learn how to adopt frugal strategies to avoid getting into debt again.

Instructions

    1

    Budget. By crafting even a simple budget, you can see in hard figures how much money you are taking in versus how much you are spending. Without an accurate accounting of your financial situation, it is difficult to impossible to solve a debt problem.

    2

    Negotiate. Even if you haven't missed payments or aroused the ire of any of your creditors, it can never hurt to try to negotiate a lower interest rate or principal balance on your debt. Negotiating a lower interest rate will prevent your debt from escalating, while reducing your principal balance allows you to pay off your debt faster. Call your creditors and ask if there is any way they could offer you either of these benefits.

    3

    Pay as much as you can. The fastest way to solve a debt problem is to have the money to pay it off. While this is not always an option, you may consider using some of your investments or savings to pay down some or all of your debt, particularly if you are paying a high rate of interest on the debt.

    4

    Save. One of the reasons people get in debt in the first place is the lack of a savings plan. Having savings for emergencies allows you to avoid going into debt when the unexpected happens, such as a surprise car repair or a medical procedure. If you can weather the storm with your savings instead of a credit card, you can avoid a debt problem.

    5

    Live on less income than you earn. Credit makes it easy to spend more than you earn. To solve a debt problem, however, you must have the discipline to avoid spending money that isn't truly yours. View a credit card as a loan, not as money in the bank. Use it primarily for emergencies or convenience, not to buy things for which you are unable to pay.

Can a Collection Agency Suspend Your Licenses?

People who have defaulted on certain types of debt risk having their driver's or professional licenses revoked. However, a government-issued license can only be revoked by its issuing agency or a court of law, not a third-party debt collector.

Collection Agency Power

    Collection agencies can make reasonable efforts to collect a debt from you, including calling you, sending you letters, and even suing you in court. However, a collection agency cannot take away a professional or diver's license on its own authority.

Professional Licenses

    Professional regulatory boards, courts, as well as state driver's license agencies, can suspend a debtor's driver's or professional license if she has defaulted on certain types of debt, such as student loans, child support, or traffic fines. For example, if someone has a lot of unpaid traffic tickets, their driver's license may be suspended. Similarly, if a lawyer hasn't paid his child support, his license to practice may be suspended.

Deceptive Collections' Tactics

    The federal Fair Debt Collections Practices Act (FDCPA) makes it illegal for a collection agency to make empty threats. If a collection agency threatens to take your driver's or professional license away, it has violated the law.

Sunday, June 24, 2012

Can the Government Help You to Get Out of Debt?

One of the federal government's responsibilities is protecting its citizens. This comes in the form of national defense and national security, as well as programs and administrations offering subsidies to struggling communities. At times, the government is even responsible for relieving individuals of debt burdens that have become unmanageable.

Bankruptcy

    The first, and least attractive, government option is bankruptcy. Established by the U.S. Constitution, this protection enables consumers to start with a nearly clean slate. A bankruptcy judge halts all collection attempts by creditors, and either works out a repayment plan or dismisses some or all debts. This is not the best debt relief scenario as it remains a blemish on your credit report for up to ten years.

Grants

    There are a small number of grants available to private citizens for consumer debt. These grants are few and far between, but if a borrower is persistent, he can acquire some government funding. Usually consumer advocacy groups, like Goodwill, must file the paperwork for such grants. These funds normally come in large amounts, and then are distributed among worthy candidates by a non-profit organization.

Farm Loans

    Small ranchers and farmers have the opportunity to receive assistance with government loans and grants. Farmers who've been struck by a natural disaster may apply for emergency loans--as long as the President or Secretary of Agriculture have deemed his county as a Federal Disaster Area. Also, low-interest loans from the government can help consolidate high-interest farming debt.

Student Loans

    The government offers student loan forgiveness to certain borrowers. To be eligible for this program, you must serve in one of the following ways: in the military, in a volunteer role (approved by the government), or teach in marginalized communities. These forgiveness programs have helped thousands of students relieve themselves of overwhelming student loan debt.

Warning

    Before seeking government assistance, be sure that you are unable to repay the debts on your own. Qualifying for such programs usually means that your income will no longer support your obligations. Make a budget and attempt to repay your own debts before looking to the government for help. In many cases, loans and grants are denied based on income.

Friday, June 22, 2012

Help for Serious Debt

Seemingly harmless at first, debt can quickly turn into a problem that resembles a bottomless pit without a rescue rope. Serious debt can seem uncontrollable and the task of eliminating it may appear impossible. However, developing a debt elimination plan and sticking to it can help a consumer in a debt crisis get back in control.

Assess Your Debt

    Figure out exactly much debt you have by making a list that includes the total amount owed to each creditor along with monthly minimum payments and interest. Knowing the total amount to pay off can result in a huge challenge. Break it up in to smaller, more achievable goals.

Create a Budget

    Make a budget with categories such as rent or mortgage, groceries, utilities, child care, credit card bills, medical expenses, auto loans, gas, entertainment and cell phone bills. List how much you have spent in each category over the past three months to see where your money is going and where you can cut back. For example, if you frequently eat fast food for lunch, decide to pack your meals from home and use the savings to help pay credit card bills. Once you've created a budget your income can handle, follow it.

Call Creditors

    Most creditors are willing to work with those in need rather than not receive any payments at all. The Federal Trade Commission (FTC) states consumers should explain their financial situation to a creditor to see if it offers a program to lower the interest rate on a debt or reduce the monthly minimum payment. If medical bills are part of the problem, call the medical establishment's billing office to set up an interest-free repayment plan and to inquire about financial assistance. Many medical facilities offer discounts on medical bills to low-income individuals and families or to those in a financial crisis.

Pay the Debt

    Look at your list of debts and work on paying off the smallest amounts owed first. According to Dave Ramsey, eliminating the smallest debts first will provide debtor with extra money to pay off the larger debts.

Thursday, June 21, 2012

Simple Strategies for Getting Out of Debt

Many people find that getting into debt is not hard; however, getting back out of debt is much more challenging. With hard work, dedication and a plan, getting out of debt can be accomplished by anyone. Create your plan and communicate its points to your family in order to accomplish your goals together and stay out of debt for good.

Total All Debts

    Make a list of all of your outstanding debts. Make sure to include all debts, no matter the size. Do not estimate. Get out all loan statements and credit card bills to ensure that you find a correct total amount. This will help you with planning and goal setting, as well to show you the reality of your situation.

Create a Budget

    Create a monthly family budget. Be sure to include all expenditures for a full month. Use the last several month's worth of bank statements as a guide. Include your monthly debt payments. If you use cash only, carry a notebook with you for a month and write down all expenses, even small ones, to help you create your overall budget. Divide each expense into a general category, such as housing, entertainment, food and automobile. Total up each category to get an idea of what you have been spending in each area.

Find Extra Funds

    Find extra funds to put toward debt repayment. First, analyze your budget and look for ways to cut spending. For example, taking your lunch to work or eating fewer dinners out could make a significant impact on your spending. Analyze your cable, Internet and cell phone bills for ways to reduce your overall bill. Call and compare rates for utilities, insurance and other monthly bills. Sell off unused items around the house in a garage sale or online auction. Take on a second job or find extra ways to earn money through overtime or babysitting. Consider using coupons as a way to decrease your grocery budget. Take all the money "found" in your budget or earned each month and apply it toward debt reduction.

Set Small, Accomplishable Goals

    Start by paying off your smallest debt first. While this may not make a big difference in monthly payments, the early success will keep you motivated. Then tackle your next smallest debt and continue paying off each debt in order until all of your extra debt repayment funds are going toward your biggest debt. Set a goal each month of how much money you want to apply to debt reduction and adjust considering your monthly expenses each month. For example, you may want to set smaller goals around Christmas to spend more of your income on gifts to avoid the use of credit cards.

North Carolina Credit Reporting Law

Federal and state laws protect North Carolina residents from identity theft and inaccurate credit reporting. Because credit reports play a role in whether consumers get loans, credit cards, apartments and even some types of jobs, it is very important to keep an eye on the accuracy of the information reflected on these types of documents.

Security Freeze

    North Carolina state law 75-63 enables citizens to demand a "security freeze" on their credit reports. As of 2011, it takes up to three days for the security measure to go into effect. Once the freeze is in place, a third party cannot view the person's credit report without direct permission from that person. A security freeze also bars creditors from granting new accounts without verifying the applicant's identity. A North Carolina resident can request removal of the security freeze at any time either for temporary reasons such as applying for a mortgage or permanently. Unless you are the victim of identity theft or over the age of 62, you may be required to pay $3 to place a security freeze on your report, notes the credit reporting agency Experian.

Free Annual Credit Reports

    North Carolina residents are entitled to one free copy of their credit reports each year, according to the Federal Trade Commission. Federal officials granted this right to North Carolinians in 2005. Residents can request their reports from one or more of the major credit bureaus Equifax, Experian and TransUnion. However, identity verification through a series of online multiple choice questions or mailing a copy of a government-issued photo identification card may be required. North Carolina residents can get more free credit reports in a year only if they are denied credit or a job. Otherwise, additional credit reports are available for a nominal fee.

Credit Reporting Time Frame

    The Fair Credit Reporting Act governs the length of credit reporting in North Carolina. Typically, negative information such as late credit card payments, unpaid medical collection accounts and Chapter 13 bankruptcies reflects on credit reports for seven years from the date of the incident. Some types of negative credit information such as Chapter 7 bankruptcy and tax liens can legally report for 10 years. A prompt payment history on closed accounts reports for 10 years from the date of closure; on-time payments on open credit accounts report indefinitely.

Disputing Errors

    If you live in North Carolina and find errors on your credit report, the Fair Credit Reporting Act assures you the right to demand a prompt investigation. If a credit reporting agency keeps provably inaccurate information on your files, you can sue them for monetary damages. In some cases, you may also be able to sue the creditor reporting the inaccurate information if they do not help resolve the situation in a timely manner.

How Soon Will My Credit Improve After Negative Accounts Are Removed?

Removing recent negative accounts from your credit report can improve your credit score within 30 to 60 days. However, all credit situations are different, and no one can predict exactly when your credit score will improve or by how much. People engaging in credit repair should set reasonable expectations. Other factors are also important in increasing credit scores, such as the payment status of current accounts. Failure to pay current accounts on time will hurt credit scores even as negative accounts are removed.

Expiring Accounts

    Most negative credit information is reported on credit reports for seven years. Federal law considers the information outdated after that, and credit bureaus are supposed to remove it automatically, although that is not always the case. Removing 7-year-old negative accounts may have little to no impact on improving credit. That's because the account is so old that its impact on credit scores is insignificant. Negative credit information affects credit scores the most when first added, with the impact gradually lessening until the information expires and is removed. However, MSN Money reports that the effect of removing particularly old negative accounts is difficult to predict and that some people have experienced decreases to their scores when removing negative accounts appearing on the credit report for more than seven years.

Recent Accounts

    Removing negative accounts that are recent can help credit scores. For example, removing a recent charge-off or collections account could provide a boost for scores. A charge-off is an account the creditor closed because of nonpayment. A collections account is an account assigned or sold to a debt collector. Charge-offs and collection accounts cause credit scores to drop when they first appear on credit reports, but quickly removing them can erase the damage.

Pay-for-Delete

    The Federal Trade Commission maintains that it is not possible to remove charge-offs, collection accounts and other negative credit information until the accounts expire after seven years. Bankruptcy information remains for up to 10 years. However, some people remove negative information sooner than seven years by entering into a special arrangement with creditors or debt collectors called "pay-for-delete." The debtor agrees to pay a debt in full in exchange for deletion of the negative account from all credit reports. The practice is common, although many creditors do not participate. Pay-for-delete plans can repair credit in just a few months.

Disputes

    People who cannot afford pay-for-delete sometimes dispute negative account information on their credit reports and hope that it is deleted during the investigation by the credit bureau. The Fair Credit Reporting Act gives people the right to dispute anything on their report, although the law is designed to allow people to dispute mistakes on their credit report. It is the credit bureau's responsibility to conduct a timely investigation and confirm that the information is correct. The negative account information is removed if the credit bureau cannot confirm its accuracy. Disputes deemed frivolous can be ignored by the credit bureaus. Credit reports usually are updated each month as the credit bureaus receive information from creditors.

Wednesday, June 20, 2012

Credit Card Payments & Death

When a person dies, the last thing those close to him want to think about is repaying his credit card debt. However, creditors must be informed so that they stop charging interest on the unpaid debt, and the debtor's executor must determine how to use estate funds to pay off credit card and other debt the deceased person left behind.

Spousal Responsibility

    If you and your spouse have joint credit cards, responsibility for the debts passes to your spouse after your death. In addition, if you live in a community property state, your late spouse's debts may be considered to be your property if he incurred the debts during the course of your marriage. As of 2011, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are considered community property states.

Heirs' Liability

    Spouses, children and other heirs are not liable for a late debtor's credit card payments except for the spousal obligations listed above. Creditors cannot demand payment from these people, and it does not affect an heir's credit record if she does not pay the debtor's credit card bills. It is illegal for creditors to tell heirs they have a legal obligation to pay the debt, as debt collectors may not lie to debtors to try to collect a debt.

Debtor's Estate

    As of 2011, the executor of an estate must use the estate's assets to settle debts. However, the estate holder must prioritize an estate's debts; if there is not enough money in the estate to pay all debts after liquidating property, the estate holder must pay the highest-priority debts first and let go of the other debts. The estate executor is responsible for contacting creditors to inform them of the situation.

Life Insurance

    According to bills.com, life insurance payments are exempt from probate. This means that if an estate has more debts than it has assets, life insurance benefits cannot be used to pay off the debts; the beneficiary of the policy must receive his payments. The policy must list a beneficiary; it cannot list "the estate" as the beneficiary, or the proceeds will go towards paying credit card and other debts incurred during the deceased person's lifetime.

Tuesday, June 19, 2012

What Percentage of Unemployment Can Be Garnished in California

In California, private creditors cannot garnish a debtor's unemployment benefits pursuant to the California Code of Civil Procedure. However, the California Employment Development Department is authorized to invoke collection efforts through garnishment to collect overpayments or unemployment benefits obtained by fraud.

California Code of Civil Procedure

    According to the California Code of Civil Procedure, unemployment benefits and contributions are exempt from judgment collections, and judgment debtors are protected from having their unemployment benefits garnished by creditors. However, this statute does not apply to collection efforts used by the state to collect overpaid unemployment benefits from claimants or benefits paid based on fraudulent claims.

Notice of OverPayments

    The California Employment Development Department sends claimants a "Notice of Overpayment" if it determines the state paid unemployment benefits erroneously or overpaid benefits. Under California law, the department can assess 30 percent in unemployment overpayment penalties on the amount overpaid. Moreover, the department can disqualify claimants from receiving future benefits for up to 23 weeks. The department is required to seek repayment of fraudulently paid overpayments and penalties assessed on the basis of fraudulent statements. The department has the discretion to waive collections and repayment for overpaid benefits due to mistakes or "non-fraud" cases.

Collection Methods

    The California Employment Development Department will seek repayment of fraudulently paid benefits. Claimants must repay them immediately or the department will seek an offset from future benefits or other types of state benefits. Pursuant to the federal Benefit Payment Control program, all states are required to follow the overpayment procedures for overpaid state-federal benefits. The department can offset its overpaid benefits by intercepting lottery winnings, disability benefits and state tax refunds. Furthermore, the department can collect overpayments by garnishing a claimant's bank account and can file liens against his property.

Considerations

    Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

Monday, June 18, 2012

How to Dispute Bad Credit

In order to dispute bad credit on your report, you can either pay a company to do this for you or do it yourself. It will cost you nothing to do it yourself, while paying a company to contact the creditors and fight your bad credit can run into at least $800 per item you want removed. The company will not guarantee anything either. In order to dispute bad credit on your own, it will require time, patience and perseverance.

Instructions

    1

    Request a credit report from each of the three major credit agencies. They are Experian at 800-685-1111, Equifax at 888-397-3747, and Trans Union at 800-916-8800. Then, prepare a letter stating your dispute along with any documentation that may support your claim. Be sure to send only copies of any documentation you may have and keep the originals for yourself. You can dispute anything from an incorrect address to an incorrect amount of money owed. Keep a copy of the dispute letter, as well.

    2

    Check your report online, or call the agencies to find out the status of your dispute after 30 days. It takes at least that amount of time in order for the dispute to be resolved. Sometimes, it can take up to 45 days. However, if there is no response from the creditor to the credit agency within 30 days, then they will automatically remove the account in bad standing from your report. Even if you are simply disputing your address, and there is no response, then the agency can remove it.

    3

    Receive another report on your credit. This will be sent to you for free, as well, to show you what the results are on paper. If there weren't any changes, then you can dispute the bad credit again, but not on the same subject. Therefore, if you disputed that your address needed to be changed, and they verified this as correct, then you will need to dispute something else or show more in-depth documentation. They will not dispute the same complaint twice unless you have more detailed documentation to show proof of your statement. If the dispute was regarding a non-payment, and you have proof of the cashed check then send a copy of the canceled check. However, there has to be solid proof for anything disputed twice in order for the agency to go forth with the investigation.

    4

    Write another letter explaining the problem, and mail it along with the documentation. Once the information is corrected on your report, there can be a letter upon your request sent out to those that requested your credit report in the past six months.

    5

    Call the creditor with your dispute. If they claim you owe them more money than originally stated, it might be an accumulation of interest fees put onto the original amount. In order to settle this, you can call the creditor and coordinate a payment plan or a settlement amount. Many creditors will settle for half of the amount owed since most of the time they do not see any of the owed debt. Whatever the agreement, be sure to get it in writing. Also, ask for them to remove all information from your report or put it in good standing once it is paid.

    6

    Request another credit report once you make a settlement with the creditor. This should also be sent to you for free from the credit agency, and it should show the updated information.

How Long Between Bankruptcy Filings?

How Long Between Bankruptcy Filings?

The decision to file personal bankruptcy is usually a difficult one. The consequences of a bankruptcy are long-term, since a bankruptcy on your credit report can have an affect on new loans and credit. Bankruptcies open the door to a fresh start, and if you experience hardship after an initial filing, you can file again in the future.

What is a Bankruptcy?

    A bankruptcy helps debtors who can't manage or pay their existing debts. Filing bankruptcy can eradicate high credit card bills, installment loans, medical bills and other outstanding financial obligations. Filing bankruptcy can also give consumers the opportunity to reorganize their debts and satisfy the debt through a new repayment plan. Consumers typically consider filing bankruptcy when debts exceed assets, and when they receive constantly harassment from creditors.

Consequences of a Bankruptcy

    The long-term consequences of filing bankruptcy are worth considering before meeting with an attorney to start the process. Yes, bankruptcy can stop collection letters and phone calls and provide a clean slate to begin rebuilding your credit history. Regrettably, the bankruptcy will appear on your credit report after a few weeks or months, and the bankruptcy will stay on your report for 10 years. A drop in FICO credit score is inevitable, and it can take several years to re-establish credit and qualify for loans such as mortgages.

Lenght Between Filings

    It's possible to file for bankruptcy multiple times. However, the law requires a certain amount of time to pass, and this length of time depends on the type of bankruptcy. For example, if you file a chapter 7 to eliminate your debts, you can file for another chapter 7 in eight years. On the other hand, if you file a chapter 13 to reorganize your debts, you can file for another chapter 13 in two years. Consumers who file a chapter 13 after a previous chapter 7 must wait a minimum of four years, says Bankrate.com.

Bankruptcy Process

    An attorney can file a bankruptcy with the courts on your behalf. Shortly after, your creditors receive notification of the bankruptcy. Creditors are not allowed to contact you by letter or phone once you file bankruptcy, nor can they file a lawsuit to collect on a debt. Bankruptcy gives you temporary protection and relief from creditors. Creditors or collection agencies that wish to challenge the bankruptcy can appear at your hearing.

Sunday, June 17, 2012

How Can I Get Something Taken Off My Credit Report?

Maintaining a good credit history is a critical part to increasing your integrity when it comes to purchasing an automobile or home, taking out personal loans or credit cards. Consumers with favorable credit ratings get lower interest rates and higher credit lines than consumers with damaged credit. Occasionally, an incorrect item may sprout up on your credit report. To fix this, you can easily dispute the incorrect items so that they may be corrected or updated.

Obtaining Your Credit Report

    Your credit report is an invaluable tool that creditors, employers and even potential landlords use to evaluate your ability to pay your bills and track your history of bill paying. You should examine your credit report at least annually to verify that all of the information that it contains is correct and up-to-date.

    You can obtain your credit report by using one of several methods. You can request a report over the phone, mail in a request to the credit reporting agency (bureau), or request a copy of your report online.

    Everyone is able to receive one free credit report each year from each of the three credit reporting agencies: Equifax, Experian and Trans-Union. To retrieve your free annual credit report, you can visit the site with which the federal government partners, annualcreditreport.com .

    In addition to being able to obtain a free report annually, you can also retrieve a free report if you've recently been denied credit. Furthermore, you can always pay for your report at any time. Fees vary by package and usually average about $10. This fee doesn't usually include your FICO credit score, for which you may have to pay extra.

    Reports may be obtained by mail, telephone or Internet from each of the following credit reporting agencies:

    Equifax
    P.O. Box 740256
    Atlanta, GA 30374
    (800) 865-1111
    www.equifax.com

    TransUnion
    P.O. Box 2000
    Springfield, PA 19022
    (800) 888-4213
    www.transunion.com

    Experian
    P.O. Box 2014
    Allen, TX 75013
    (888) 397-3742
    www.experian.com

Checking Your Report

    Once you've received your report(s), check it over carefully for inaccuracies. Note any accounts that may reflect inaccurate balances, past-due payment history, delinquent status, or with which you are simply not familiar. Any information that doesn't look right to you can be disputed easily via a simple online application or letter that can be mailed to the credit reporting agency.

    Pay special attention to accounts with which you may not recognize. If there are credit card accounts that you know you don't have, whether or not there are balances on them, they must be reported as quickly as possible. These accounts might signify that your identity or Social Security number has been jeopardized. In addition, known credit accounts that reflect incorrect balances might also reflect identity theft.

Disputing Incorrect Items

    If you ordered your report online, there will be a built-in application that comes with the report which will let you dispute erroneous credit information. Items that are in question can be disputed by simply clicking a "dispute this item" link that will be located near each item on the report. If there are numerous errors, all of the disputes will be filed in one convenient step. Upon receiving the dispute, the credit reporting agency will launch an investigation for each item in question. You can expect to receive a response from the credit reporting agency within 45 days when a dispute is filed online.

    If you prefer, you can mail your disputes directly to the credit reporting agency(ies). The FTC recommends mailing your dispute as opposed to filing it online because you will be able to provide the credit reporting agency with more information and documents that will strengthen your dispute.

    When contacting the credit bureau, you will need to include your name, address, a copy of your credit report with the items in question circled prominently, a list of the items in question, including the creditor's name, balance and type of item, and the reasons in which the items in question are not accurate--incorrect balance, suspected fraud, or a previously paid off debt that isn't reporting as current. Also include copies of any documents you might have which prove that the information is incorrect, such as credit card statements or letters from creditors. Mail this packet to the credit bureau. The bureau will have up to 30 days from the date that they receive your dispute letter to process and investigate your dispute. You will be contacted by mail with the results of the investigation during that time frame.

    If you suspect fraudulent activity on your report, you may indicate that you would like a security fraud alert to appear on your report. This will prevent new accounts from being opened unless you are directly contacted and special procedures are taken.

How to Improve Debt Utilization

How to Improve Debt Utilization

Debt utilization---which is the percentage of your credit card debt in relation to your credit limit---affects your credit score. The more debt you owe, the greater the likelihood of a lower FICO rating. A low rating can lead to higher interest rates on future loans, and possibly result in loan and credit rejections. But you can improve your debt utilization and boost your personal score.

Instructions

    1

    Begin paying down your debt. Lowering your credit card debt is key to improving your debt utilization. MSN Money recommends a credit card debt utilization ratio of no more than 30 percent. Therefore, if your credit limit is $2,000, the balance on the card should stay below $600. Make larger payments each month to bring down balances.

    2

    Limit new charges as you reduce your balances. Use cash to pay for purchases as you work to improve your credit card debt utilization. Charging additional items is counterproductive and can slow down all efforts to lower your existing balances. Keep credit cards at home or cut them in half.

    3

    Request a credit limit increase to avoid a high utilization ratio. If you don't have the disposable income to write a check and pay down your balances, contact your credit card company and ask for a credit limit increase if your balances are close to the limit. An increase expands the gap between your balance and credit limit, and helps lower your debt utilization. Only ask for an increase if you have self-control. A higher limit isn't a reason to charge more and increase your debt amount.

The Statute of Limitations on Bad Debts

Ignoring a debt you owe does not make the debt disappear, but if your creditor does not successfully collect the debt within a state-mandated time frame, they face limited collection options from that point on. The statute of limitations provides each creditor with a pre-set amount of time during which it may pursue legal action against a debtor when recovering an unpaid debt.

Significance

    The statute of limitations protects you from retaining legal liability for an unpaid debt beyond a certain time frame. The statute of limitations for debt collection only applies to debts that are not secured by your property or other assets, such as unpaid hospital bills, credit card bills and personal loans. It usually does not apply to car loans, mortgages or home equity loans.

State Regulations

    The statute of limitations varies in each state. Further variations exist in each state regarding the type of unsecured debt you owe. Depending on your state of residence, the statute of limitations may range anywhere from two years to ten years. Once the statute of limitations for debt collection expires, however, a creditor loses its legal right to sue you in an effort to force you to pay the debt involuntarily through garnishment or liens -- but some unethical debt collectors violate the law by doing so anyway.

Categories of Debt

    States divide debts into three categories: oral agreements, written agreements and open agreements. An oral agreement refers to a verbal contract you enter into to repay a debt, while signed promissory notes -- such as those required with unsecured personal bank loans -- constitute written agreements. As revolving debts, credit cards typically fall into the "open" category.

Restarting the Clock

    Regardless of your state of residence, the clock for the statute of limitations begins ticking 180 days after you made the most recent payment on the account. Unfortunately, this means that making a payment on an old debt "restarts" the clock -- refreshing a debt collector's right to sue. Depending on your state's laws, even making a verbal promise to repay the debt could restart the clock on the statute of limitations -- even if you had no real intention of making a payment on the debt.

Expired Debt Lawsuits

    An expired statute of limitations does not provide you with absolute protection from lawsuits. Rather, it gives you a legal defense you can use should a creditor sue you. Although taking legal action against a consumer on an expired debt is illegal, that does not stop some unethical creditors and collection agencies from participating in the practice. If a creditor sues you for an out-of-statute debt, and you do not use the expired statute as your legal defense, the judge, ignorant of the actual age of the debt, may still award your creditor a judgment against you in court.

Saturday, June 16, 2012

Florida Payday Loan Statute of Limitations

Payday loans allow debtors to borrow against their next paycheck to get cash for emergencies. However, most payday lenders charge high interest rates, and the borrower may find himself unable to pay back the loan when he gets paid. If a borrower fails to pay back a payday loan, the lender may take collection action against him. Florida gives lenders a limited amount of time to do this in most cases.

Debts

    Florida law sets the statute of limitations for unpaid debts at five years. This means that if you do not pay back your payday lender, the lender has five years to use the court system to collect the debt. The payday lender may still use other methods to collect the debt, such as contacting you by telephone or engaging the services of a collection agency, even after the statute of limitations expires.

Judgments

    If a payday lender sues you and wins, the court enters a judgment against you. A judgment is a court order to pay a certain amount of money. In Florida, creditors may attempt to collect judgments for 20 years after the court enters the judgment against a debtor. Thus, if your payday lender sues you within the five year period following your default and gets a judgment against you, he can continue to attempt to collect the judgment amount for the next 20 years.

Prohibited Behavior

    Payday lenders in Florida may not press criminal charges against a debtor for non-payment of the debt, including prosecuting her under bad check laws. In addition, lenders or collection agencies may not threaten to have the debtor arrested under bad check laws if she does not pay back the debt. In general, creditors and collection agencies may not make empty threats to compel a debtor to pay a debt.

Tolling of the Debt

    If the debtor leaves Florida, the statute of limitations on the debt is tolled, or suspended, until such time as he returns. Thus, if a debtor defaults on a payday loan and leaves the state for five years, his creditor can still sue him when he comes back. In addition, if the debtor makes any payment on the debt, it resets the statute of limitations. For example, if the debtor owes $200 and pays $20, after four and a half years, the statute of limitations resets.

Pros & Cons of Debt Consalidation Companies

When debt begins to overwhelm your finances, it not only interferes with your ability to make ends meet, but it also might make it difficult for you to get a future loan or line of credit. Debt consolidation companies buy out your existing debt and pay off your creditors, allowing one a lower monthly payment, rather than several different payments you can't afford to make. It sounds like a dream come true, especially if you are drowning in debt, but there are important factors to consider before you sign on with a debt consolidation company.

Pro: Reduced Monthly Payment

    When you have an overwhelming amount of debt, falling behind on your payments can put your accounts in danger of default and collection. A debt consolidation company lowers your overall monthly payment amount and decreases the danger of defaulting on your accounts. Once your debts are consolidated, you only make one payment, rather than several. You receive fewer calls and letters from the original creditor because they are getting paid.

Con: Fees

    When you contract a debt consolidation company to manage your debt on your behalf, you are often required to pay the company a high fee. Many debt consolidation companies lend their clients the money they need to settle their debts, offering a high interest loan that takes far longer to repay than the sum of the client's original debt.

Pro: One Payment

    Keeping track of monthly payments can be an overwhelming process, especially if you have a lot of debt. When you consolidate your debt with a debt consolidation company, you not only decrease the amount you pay out each month, but you are also responsible for making one simple payment, rather than several. In the long run, this saves you money on stamps and checks, which can add up over the year if you have a significant number of payments, and makes it easier for you to guarantee your payment is made on time each month.

Con: Foregoing Settlement on Smaller Debts

    For many debtors, it is more beneficial to save their money and pay off smaller debts with higher interest rates one by one. When those smaller debts are consolidated into one lump-sum payment with the rest of your debt, you will be unable to take advantage of settlement offers from the creditor to eliminate the debt for less than the original amount due. Many creditors make settlement offers on past-due debts because they would rather get some of the money than none of the money. Defaulted and unpaid debts damage your credit and appear on your credit report for seven to 10 years, making it difficult for you to get credit and loans in the future. Your credit score will suffer as well, because your original loan or line of credit is not paid back as per the terms of your original agreement with the creditor.

Con: Dishonest Credit Consolidation Companies

    Many credit companies earn money by taking a cut of the monthly savings earned through lower payments and debt settlement offers. The dishonest credit consolidation companies often charge you a large fee up front, and then continue taking a cut from your monthly savings. Another sign of a dishonest consolidation company is the lack of a plan designed to help get you out of a debt. If the company you are working with doesn't have a plan in place, it probably will fail to talk to you about the dangers of using credit during the consolidation as well. Many honest consolidation companies will provide you with a plan and an offer of debt counseling services to help you not only get on the right track, but learn how to manage your money so you don't end up back in debt again.

Reason for Paying Debt on Time

Reason for Paying Debt on Time

Difficult financial times cause some people to consider paying bills late, especially when the budget is stretched thin. When it comes to your debt accounts like credit cards and loans, paying on time saves you money and financial problems down the road. Understand how timely debt payments benefit your financial health before deciding to miss a due date.

Avoid Fees

    A late payment on a debt account results in a late fee. Most creditors and lenders add the fee even if your payment is one day late. The fees vary by account, so you should read the agreement on the account to determine what you will be charged. If a late fee is assessed, you face a larger payment the following month if the creditor requires you to pay the fee on the next payment. The late fee also increases the balance of the account, meaning you'll pay more interest.

Improve Credit Score

    Late payments show up on your credit report in some cases. The reporting guidelines vary depending on the creditor or lender. Some companies report a late payment right away. Others wait until the account is 30 or more days late. A late payment on your credit report lowers your overall credit score. A lowered credit score makes it more difficult to secure loans or credit cards. When the potential lender reviews your credit report, he sees the late payments, which send up a red flag. The combination of a low credit score and late payments may make you ineligible for the loan or line of credit. The interest rates on future debt accounts are likely to be higher. Paying your debts on time keeps your credit score higher and keeps late payment reports off of your credit report.

Pay Off Balance Sooner

    Paying your debts consistently on time keeps those balances moving down unless you continue charging on the accounts. If you pay late, your account balance grows. This makes it more difficult to make your next payment. If you continue paying late or start missing payments completely, it is difficult to get back on track. This means it will likely take you longer to pay off the debt.

Less Stress

    Late payments might cause stress, especially if you struggle to get back on track with your payments. If your late payments turn into missed payments, your account may go into collections. This means you'll receive letters and phone calls from collection specialists in an attempt to collect the money you owe. By staying current and paying on time, you reduce your stress load.

Thursday, June 14, 2012

If I Have a Judgment But the Defendant Works in Another State Can I Garnish His Wages?

The decision as to whether a creditor or debt collector can garnish a debtor's wages is governed by state law. Most states allow creditors to garnish wages to recover delinquent debts. Before you can seek garnishment, you must obtain a court-ordered judgment. If the debtor works in a different state from you, garnishment might still be possible.

Determination

    A wage garnishment is effective in the state in which the debtor works. As of June 2011, only Texas, North Carolina and South Carolina did not allow creditors to garnish wages. For example, if you are in Texas and the debtor is paid in Texas, you can obtain a judgment in Texas, but you cannot garnish the debtor's wages. However, if the debtor's work state allows wage garnishments and you are in a different state, you can seek garnishment through a process known as domestication.

Domestication

    To garnish wages, you must first file a lawsuit against the debtor. If the judge finds in your favor, he grants you a judgment. Thereafter, you can apply for a wage garnishment with the same court, which is the normal procedure for wage garnishments if you and the debtor are located in the same state. If the debtor works in a state that permits wage garnishments but you are in another state, you can obtain a judgment in your state, complete the necessary applications for domestication in the debtor's state court and then apply for a wage garnishment there. This process can take a minimum of 30 days or longer and might not be the court's highest priority.

Employer Responsibility

    As long as the garnishment is valid, the debtor's employer must honor it. Therefore, whether the garnishment is from an in-state or out-of-state creditor, as long as the court issued it, the employer must abide by it. If you obtained garnishment by domestication, the garnishment laws of the state that issued the garnishment apply. Under federal law, an employer can withhold no more than the smaller of 25 percent of the debtor's disposable pay or the amount by which her disposable earnings are more than 30 times the federal minimum hourly wage. The state might set a lower limit.

Considerations

    Rather than go through the process of domesticating a judgment, many creditors execute judgment via a bank account garnishment. States that do not allow wage garnishment generally allow bank account garnishment, which orders the debtor's bank to turn over monies deposited into the debtor's account to the creditor.

Wednesday, June 13, 2012

Delinquencies & Foreclosures

Delinquencies & Foreclosures

Homeowners in record numbers are delinquent on mortgage payments and may be losing homes to foreclosure. And as Bank of America suspends foreclosure proceedings in many states, due to possible fraudulent documentation, it is more essential then ever to have a firm understanding of delinquency and foreclosure as well as methods of avoiding or remedying such situations.

Delinquency

    Delinquency can dramatically effect a person's credit.
    Delinquency can dramatically effect a person's credit.

    A delinquency, simply defined, is a payment that is one or more days past its due date. Although simplistic in definition, there are varying ways delinquency may affect a homeowner.

    Delinquencies can lower a person's credit score, and will usually appear on a person's credit report after the payment is 30 days past its due date. Privacyrights.org, a website providing free financial information, lists payment history as 35 percent of a credit score. A lower credit score can affect a person's ability to obtain credit. Also, delinquent payments may result in the borrower's paying additional interest charges.

Foreclosure

    A lender can sell a house once it has foreclosed.
    A lender can sell a house once it has foreclosed.

    Foreclosure occurs when a loan is significantly delinquent, and the mortgage company seeks to remove the homeowner's property rights, repossess the home and sell the house to recoup the cost of the defaulted loan. The lender may begin foreclosure proceedings after the a borrower has three consecutive delinquent payments. A lender typically informs a homeowner of foreclosure initiation through a demand letter, which details the past-due amount and explains that foreclosure proceedings can be begin.

    Although foreclosures may begin after only three delinquent payments, the process typically takes several months; the duration of a foreclosure may also vary from state to state.

    There are two types of foreclosure: judicial and nonjudicial. Some states require a judicial foreclosure, which means a lender must sue a homeowner and obtain a court order to foreclose on a home.

    A nonjudicial foreclosure is more commonly used and involves a mortgage company's filing of an "election and demand" clause in the county where the property is located. This process avoids court hearings, but it does give the homeowner a few different opportunities to cure (or bring current) the account and retain the home.

Facing Foreclosure

    There are many programs available to distressed homeowners.
    There are many programs available to distressed homeowners.

    Many homeowners are facing the difficulty and stress of foreclosure. Realtytrac.com, a website that tracks foreclosure trends throughout the United States, currently lists over 2 million homes in foreclosure. However, help exists. Mortgage companies themselves often offer assistance, as they prefer to avoid costly foreclosure. Many lenders now have a variety of programs to help distressed homeowners and -- depending on the situation -- can defer payments, lower payments and interest rates, or even forgive some of the debt. Another important resource for troubled homeowners is the U.S. Department of Housing and Urban Development's initiative called Making Home Affordable (see Resources). This program provides foreclosure prevention, assistance and counseling free of charge.

Financial and Credit Card Help

Personal finances and credit card debts can get out of control for various reasons, whether from job loss, catastrophic illness or simple overspending. You may require assistance if you keep sinking financially despite your best efforts to stay afloat. The Federal Trade Commission (FTC) advises that there are legitimate help sources for credit card bills and overall debt management, but warns there are also some scams to be aware of.

Counseling and Education

    Speaking to a professional, studying educational materials or taking financial classes are all simple sources of financial and credit card help. Legitimate non-profit credit counseling companies provide a variety of free self-help materials and no-cost or inexpensive classes on budgeting, getting out of debt and similar topics. You can speak to a counselor at the company's office, online or on the phone for free or a reasonable fee if you need a formal one-on-one session. Reputable counseling firms have trained employees who assess your particular case and can make specific recommendations.

Payment Plan

    Many credit counseling companies set up and administer payment plans for clients who need structure to handle their credit card bills and other debts, according to the FTC. Your counselor speaks with your creditors to set up a payment plan and can sometimes get concessions, such as lowered interest rates or waiver of late fees. You send a lump sum to the counseling firm monthly, and it disburses individual payments to the creditors. You are typically out of debt within five years or less if you follow the payment plan.

Bankruptcy

    Bankruptcy may be your only option if your finances are so bleak that you have no possibility of repaying your credit cards and other bills. You have two choices, Chapter 7 or Chapter 13. Chapter 13 requires some repayment of your debt but on manageable terms spelled out by the court, and you get to keep most of your personal property. Chapter 7 relieves you of virtually all debt, but most of your assets will be sold.

Warning

    Scam artists prey on people with credit card debt and financial problems. Some call and claim they can lower your interest rates. They charge several hundred dollars and are often unsuccessful at adjusting your rates, the FTC warns. Others run credit counseling firms that charge unreasonable fees or set up payment plans, then keep the money instead of paying your bills. Hang up on telemarketers who make unrealistic promises, and never give out credit card account numbers or financial information to unknown callers. The Better Business Bureau advises choosing a counseling company that belongs to a professional organization and has certified counselors.

Tuesday, June 12, 2012

Can I Call Credit Card Companies to Settle My Debt?

Can I Call Credit Card Companies to Settle My Debt?

If your credit card debt is overwhelming, working out a settlement with your creditors may be your best option for avoiding bankruptcy or a lawsuit. In some cases, you can negotiate with credit card companies on your own, though you may want to consider getting outside assistance.

Settling Debt

    Credit card companies are sometimes willing to settle your debt for less than you owe, though they may require that you cancel your account as well. If you call your credit card company and they refuse to work with you, consider working with a credit counselor who may have better luck negotiating a settlement or payment plan.

Consequences

    When a credit card company settles your debt for less than the amount you owe, this arrangement may be reported to credit bureaus and could hurt your credit. You may also be responsible for paying taxes on the forgiven debt.

Alternatives

    If your financial situation isn't desperate, consider negotiating for a lowered interest rate rather than a reduction of your total debt. You could also ask that the card company remove any over-the-limit or late fees that are making it difficult for you to pay the minimum amount due on your account. If your current problems are temporary, ask if the credit card company can lower or suspend your payments for a few months while you try to get your finances sorted out.

Monday, June 11, 2012

Is an Authorized Cardholder Liable for Credit Debt?

Is an Authorized Cardholder Liable for Credit Debt?

Listing someone as an authorized user rather than adding them as a joint holder to the account gives them complete access to a credit card, but without the liabilities. In certain states and if you have a spousal relationship, you may be liable for someone's credit card debit no matter the status of the account.

Identification

    Authorized users are not liable for credit card debt, according to BankRate.com. Unlike a joint account, authorized users can legally use the card, but not make changes to the agreement. Collections agents, however, may still try to convince an authorized cardholder to pay credit card debt, especially when the primary holder dies.

Effects

    The primary and authorized cardholder's credit histories become linked when on the same card. If the primary holder does not keep up with payments on the card, the authorized user's credit score will go down, too. This also means that a positive history benefits the authorized user as well.

Community Property Law

    Eight states have community property laws that give assets and debt to both spouses in a marriage. (Wisconsin has laws similar to community property states.) Debt only transfers to a spouse---listed as either a joint owner or authorized user---if it was accrued during the marriage for the benefit of both parties. If, for instance, a husband buys a boat the wife never uses, then the wife would not bear responsibility for debt on the boat.

Warning

    Before adding someone as an authorized user, you should decide whether you trust this person with your line of credit. An authorized user can max out your credit cards and might not protect your card's information as carefully as you, which could lead to identity theft or fraudulent charges.

Sunday, June 10, 2012

About Debt-Free Solutions

Implementing a few debt-free solutions into your daily life can help you reign in spending and pay down your outstanding balances. Debt can occur from overspending, high medical bills, unforeseen incidents and poor budgeting. Recognizing the causes and outlining a clear plan to eliminate debt can help you regain control of your finances.

Considerations

    Frequently taking out loans and using credit cards on a whim may play a role in your debt problems. Solving debt is often a matter of developing a measure of control. The need for instant gratification can cause debt to spiral out of control. Rather than use credit cards to immediately satisfy your wants, learn how to save up for purchases and then pay for items with cash. You'll own these items outright without increasing your debt.

Credit Card Tips

    The more you pay in interest each month, the harder it becomes to knock down credit card balances. Take control of your finances and contact your creditors to ask for a cheaper interest rate on your accounts. Most creditors are eager to drop the rate if you have a good payment record with them. This reduction decreases how much you will owe in interest each month, which results in a faster reduction of your actual balance.

Disposable Income and Payments

    Disposable income helps eliminate debt more quickly, and if you have a few extra hundred dollars a month, start increasing your monthly payments. Paying only the minimum causes debt to linger, and you will pay more in interest over time. Drop lump sums on your debt every month. Let's say you owe $2,000 on a credit card. Skip the $40 minimum payments and send creditors $200 a month, if possible. Rather than pay on the account for several years, you can possibly get rid of the balance in less than one year.

Consolidation

    Consolidation methods can help erase debt sooner. This method does not eliminate debt. However, you can possibly pay a much lower interest rate with a consolidation, which saves you money. And if using a bank loan or home equity loan to consolidate, you'll pay on the new loan for a fixed term, which means you can eliminate your debt in three, four or five years. Debt consolidation firms are also advantageous. They don't issue checks in order for you to pay off your balances. These firms work by consolidating credit cards and loans into one low-rate bill.

Friday, June 8, 2012

How to Erase Debt Legally

How to Erase Debt Legally

If you currently have an excessive amount of debt, you are certainly not alone. Many people accumulate debt for various reasons, such as unexpected medical bills and car repairs, buying luxury items they cannot afford, or losing their main source of income. However, having too much unpaid debt on your credit report may damage your credit history and prevent you from qualifying for financing in the future. Fortunately, there is a way to eliminate some of that debt from your life. Learn the proper way to erase debt from your credit report legally.

Instructions

Dispute Inaccurate Items With the Credit Bureaus

    1

    Obtain a copy of your credit report from the major credit reporting bureaus: Equifax, Experian and TransUnion. Simply go to AnnualCreditReport.com and complete the request form online. You will need to provide your personal details on the form, such as your full legal name, social security number, drivers license number, date of birth, physical address and other relevant information.

    2

    Review your credit reports for errors. Carefully read over each credit report line by line and make a list of any inaccurate or outdated items you find. Pay close attention to certain details, like the creditors name, your account number, outstanding balance and the last payment received.

    3

    Complete a dispute form with each credit bureau. You can find the appropriate dispute form online by visiting Equifax.com, Experian.com and TransUnion.com. You will need to submit a separate form for each item you are disputing. For your convenience, you may submit your dispute form online or via postal mail.

    4

    Give the credit bureaus an ample amount of time to investigate your disputes. Depending on the nature of your disputes, it may take up to 45 days before you receive a response from the credit bureaus. The credit bureaus must contact each creditor listed on the dispute forms to verify the information in question. By law, the credit bureaus are required to either delete or update any incorrect or unverifiable item that appears on a consumers credit report. Each credit bureau will contact you individually with the results of its investigation.

    5

    Confirm that the proper changes were made to your credit reports. Allow the credit bureaus at least 30 days to update your credit file. After 30 days, order your credit report from the three credit bureaus. Make sure that the inaccurate items have been removed or updated.

Settle Your Unpaid Debts

    6

    Contact the creditors or collection agencies to discuss your payment options. It is possible that the creditors or agencies will provide you with a settlement offer, or allow you to set up a payment plan to pay off your outstanding debt. In exchange for your payments, ask the creditors or agencies to delete your account information from the credit bureaus once you pay your balance in full. According to Debt Free Destiny, debt settlement will probably not have a major adverse effect on your credit score. In fact, a settlement will only lower your score temporarily. However, failing to pay off your debt will have a greater impact on your creditworthiness for a much longer period of time. So, it is best to take care of the unpaid debt as soon as possible.

    7

    Get the agreement in writing before your send in your payments. Ask the customer service representative to mail you a confirmation letter describing the terms of the payment agreement. The letter should state your current balance due, along with the scheduled due dates for your payments.

    8

    Submit your payments according to the agreement. Be sure to make all of your payments on or before the scheduled due date. Once you submit your final payment, ask the creditor or agency to send you a paid in full letter confirming that you paid your past-due balance according to the agreement.

    9

    Confirm that your credit reports have been properly updated. Give the creditors or collection agencies at least 30 days to update your credit file. Order a current copy of your credit report from the three credit bureaus and make sure that the errors have been updated or removed.