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

Monday, December 31, 2012

Can You Get a Pell Grant for a Certification?

Pell Grants are among the several types of grants the federal government offers to college students. They are some of the most common grants issued, and they are typically given to students who have not yet earned a bachelors or professional degree. They provide access to higher education for many students who would not otherwise have the opportunity to attend college, and students who want to seek a certification instead of a bachelors degree and use a Pell Grant to pay for tuition may often do so.

Amounts

    The amount of a Pell Grant students are eligible to receive varies from year to year, and is based on a number of factors. A students household income, cost of attendance and whether he attends school part- or full-time are some of the considerations that impact the amount of a Pell Grant a student can receive. For the 2011 to 2012 award year, the maximum amount of a Pell Grant was $5,550.

Eligible Programs

    If you want to pursue a bachelors degree and you meet other eligibility requirements, you can pay for your education in part with Pell Grants. Certification programs are also eligible for Pell Grants. You may also pay for some distance education courses leading to a bachelors degree or certification program in some cases.

Teacher Education

    If you are pursuing a post-bachelors teaching program that leads to licensure or certification, you may also be eligible to use Pell Grants to pay for your tuition. Eligible post-baccalaureate programs offer courses your state requires to earn a licensing or certification credential as a teacher. They must also be offered by an accredited school or vocational education institution. Programs cant lead to a graduate degree, and the schools offering them must not offer a bachelors program in education. Students must also be enrolled at least half-time to receive a Pell Grant for a post-bachelors teacher certification program.

Eligible Institutions

    Your certification program must be offered by an accredited institution of higher learning. The U.S. Department of Education does not accredit institutions, but it does offer a database of schools eligible to receive federal financial aid on its website. You can also contact your chosen school to see if it is eligible to receive Pell Grant funds.

Using Debit Vs. Credit on a Debit Card

Often when a person uses a debit card to make a purchase, the retailer will ask whether the person wishes to pay by debit or credit. This can evoke some confusion, as the person is drawing money from the same source, his checking account. However, while the money is coming from the same place, the method by which the money is withdrawn from his account will differ depending on his selection.

Debit Cards

    Debit cards can be used to draw money out of a person's checking account. At automatic teller machines, debit cards can be used to withdraw cash, while at retail establishments they can be used to pay for purchases. However, unlike a credit card, which draws money against a line of credit, debit cards can only be used to draw money out of a bank account in which funds already exist.

Debit

    When a person chooses to pay for a purchase as a debit transaction, he is drawing money directly out of his checking account. The retailer will generally ask the person to enter a personal identification number to confirm that he is the rightful holder of the card. If there are insufficient funds in the person's bank account, then he will not be able to make the purchase as a debit transaction.

Credit

    A "credit" transaction on a debit card still draws money from the card holder's checking account. However, instead of having the money processed directly through the individual's bank, this transaction is routed through a credit card company. The company that will process the transaction will correspond with the logo placed on the front of the debit card. The transaction will generally not be reflected immediately on the individual's checking account, but will post in several days.

Considerations

    Although the term "credit" is used, a debit card can never be used to charge a purchase to a line of credit, such as is done with a credit card. For this reason, these "credit" transactions do not constitute a loan and will not affect the card holder's credit rating. However, as with some credit card purchases, they will generally take a few days to process.

Sunday, December 30, 2012

Is It Too Late to File for Unemployment If I Got Fired From My Job Over a Year Ago?

When you lose your job and have trouble finding a new one, you may be able to claim unemployment benefits in your state. Unemployment benefits are intended to provide temporary financial relief while you look for other employment. Each state offers unemployment benefits to workers who are no longer working. Even if it has been more than one year since you were employed, you may still be eligible for benefits.

When to File

    Although you can file for benefits at any time, you should typically file for unemployment benefits as soon as you become unemployed. This is because unemployment benefits usually start as of that date. The date you file your claim is the date your benefit year starts. In certain states, your first week is considered a waiting week, which means that you don't get a benefits payment that week. The following week is when you begin to receive benefits payments. Filing can typically be done online or over the phone.

Employment History

    To file for unemployment benefits, you must have information regarding your unemployment history. You need to list names, addresses, contact information and your supervisor for your previous jobs. You're also asked why you're no longer employed. Being fired doesn't automatically disqualify or qualify you for benefits. If you have more details, such as the fact that you were fired due to the company losing a contract, provide those details when you apply for benefits.

Benefit Base Period

    When determining how much your weekly benefit payment is, the state unemployment office looks at your base period earnings. The base period is defined as the first four of the previous five quarters; in months, this means the first 12 of the past 18 months. Waiting to file for more than a year can result in a lower weekly benefit payment, as only the past 18 months are looked at. If you lost your job more than 18 months ago, you likely won't get any unemployment benefits unless you've been employed since then. The exception to this is if you had no wages due to injury or illness, which qualifies you for an extended base period to include a recent time when you had wages.

Retroactive Benefits

    Usually unemployment benefits aren't retroactive, which means that filing late doesn't earn you all those previous weeks of benefits as a lump-sum payment. In rare instances, you can win retroactive benefit pay from your state unemployment office; the qualifications for this vary by state. For instance, in California, you may be entitled to back pay of benefits if your employer never told you that you were eligible for benefits. The only way you can ask for retroactive benefits is when you file your unemployment claim by phone.

Relief for Getting Out of Debt

There is relief for getting out of debt and improving your personal finances. Debt can include huge credit card balances, medical bills and other outstanding loans. Little disposable income and spending uncontrollably can trigger debt problems. However, regardless of the reason for balances, you can find relief and pay down debt.

Lateness

    Paying credit cards and other bills late will result in paying additional late fees. These late fees can quickly add up and significantly increase the balance on your account. Manage debt and get rid of balances quicker by avoiding additional fees on your account. Always pay on time -- early if possible -- and establish a new payment arrangement if you can't make a payment.

Start Budgeting

    Establish how much you're going to spend on each expense at the beginning of each month. There's nothing wrong with shopping in moderation and occasionally recreating. However, too much of both can result in spending money you don't have, and this can cause debt if you use a credit card. Give yourself a modest budget for extra expenses and stick to your budget.

Reduce Monthly Costs

    Look at your spending and consider areas to reduce costs. This can include giving up an expensive gym membership, canceling lawn care services or reducing your cable services to save money. You can apply the savings to your credit cards and other bills to help bring down your balances quicker.

Low-Rate Offers

    Discuss a better interest rate with your credit card company to help bring down balances faster by paying less interest. Another option includes applying for a new credit card with a lower interest rate and transferring your balance to save money on interest each month.

Start Selling

    Selling personal electronics or jewelry that you no longer need or use can provide quick cash for debt elimination. Go through your house and look for items to sell. Plan a weekend yard sale, take the items to a consignment shop or place classified ads. Take all proceeds and put them toward getting out of debt.

Home Equity

    Visit a home lender and discuss using your equity to get rid of credit card debt, bills and others loans. With a cash-out refinance or home equity loan, you can borrow from your equity and use the money to consolidate your debt at a reduced interest rate with fixed loan terms. Discuss eligibility and qualifying with a home mortgage provider.

Help With School Debt

Help With School Debt

In 2009, the average college student graduated with $24,000 in debt, according to the "New York Times." Although these are typically low-interest loans, it can be a struggle to pay them off when just starting out, when laid off, or if you can't find quality employment. Fortunately, there are a number of sources for help with school debt.

Loan Forgiveness Programs

    If you have federal student loans, you might have part or all of them forgiven by entering certain professions. Volunteering for organizations like the Peace Corps, joining the military, or teaching or practicing medicine in certain low-income communities can earn you a grant to cover your loans -- possibly the full amount. In addition, you receive a small stipend for your living expenses.

Consolidation

    When paying off multiple loans at different interest rates, you might be paying a lot more than necessary. By consolidating your loans, you might reduce the interest rates and overall cost as well as the monthly payment. This can give you payments more manageable for your financial situation.

Forbearance

    If you experience financial difficulties due to job loss or the inability to find steady employment, forbearance may be a solution. With this option, you work out a plan with the lender to postpone or reduce your payments for a specified time. When the period ends, you resume regular payments.

Talking to Lenders

    It is important to talk to your lenders before you fall behind in your loans. Whether your payments are too high to bear or you lost your job, pick up the phone and call the lender. Most student loan companies are flexible and willing to work with you. Before you call, look at your budget to figure out what you can do for the loan company. For example, you might be able to make payments if they were just $50 a month less. Or perhaps you need a break from paying while you settle into a new city with a new job. Be upfront and honest about what you can do, and ask the lender to help you come up with a plan that works for you both.

Saturday, December 29, 2012

How to Pay Off Bills Without Bill Consolidation

How to Pay Off Bills Without Bill Consolidation

You might be considering bill consolidation because you have a large number of debt payments every month. If you are like many people, you don't have a systematic plan to get out of debt and this lack of focus means you are probably trying to pay off too many of your debts at once. The debt-snowball technique, according to nationally syndicated financial commentator Dave Ramsey, offers a definitive plan of action for getting out of debt. Seeking the advice of a credit and debt counselor is an alternative.

Instructions

Debt-snowball technique

    1

    List all of your balances in order from smallest to largest.

    2

    Increase the payment on your smallest balance to the largest amount you can afford while still taking care of basic necessities. Necessities include food, shelter, clothing, transportation and utilities.

    3

    Make minimum payments on all other balances.

    4

    Once the smallest balance is paid off add the amount that was being applied to that balance to the minimum payment of the new smallest balance.

    5

    Repeat this process until all debts have been paid off.

Financial Counseling

    6

    Explore the possibility of financial counseling. Financial counselors---or coaches---can assist with household budgeting, discovering ideas for producing extra income and establishing the fastest way to eliminate your debts. Many financial institutions offer such services to their customers, while some companies exist solely for the purpose of providing financial counseling. Counselors in any setting will help you focus on raising your household income; setting monthly spending priorities; and sequencing your debt payments for maximum benefit.

    7

    Contact your bank or credit union and ask to speak with a financial counselor.

    8

    Consult an independent financial counseling service. Some services provide counseling free of charge, while others require a fee.

Friday, December 28, 2012

How to Negotiate Credit Card Debt After a Judgement

Paying a credit card debt after creditors report a judgment to the bureaus will not remove the judgment from your record. However, a paid judgment status on your report helps if you want to apply for a mortgage or other loan. Creditors are prepared to negotiate credit card debt, and sometimes, they will settle for less than the account balance.

Instructions

    1

    Obtain your current balance. Creditors may charge additional interest and fees on delinquent accounts. Call your creditor to discuss your present balance.

    2

    Review your disposable income. You will need accessible cash to negotiate and get rid of your credit card debt after a judgment. Determine what you can spend to remedy your debt problem.

    3

    Present an offer to pay off the judgment. The creditor may or may not agree to your proposed settlement amount.

    4

    Discuss the terms of the debt settlement. If the creditor responds with a higher settlement amount, contemplate whether you can afford to spend the amount, then accept or reject the settlement. If you reject the offer, proceed with negotiations until you and the creditor reach an agreement.

    5

    Ask questions about your credit report. Creditors will not erase a judgment once you pay the balance, but they can update your credit report to reveal that you paid off the judgment. Get confirmation in writing that the creditor will update your personal credit file upon obtaining your payment.

Thursday, December 27, 2012

Letter of Credit Procedures

The Agreement

    A letter of credit is an agreement between four parties: a buyer, an issuing bank, a seller (beneficiary) and an advising bank. Letters of credit typically are used for large-scale purchases or service agreements between individuals or companies conducting business internationally. When a buyer agrees to purchase goods or services from a seller (beneficiary), the issuing bank creates a letter of credit that agrees to pay the seller upon the completion of the transaction. The advising banks acts in a consulting role to oversee the transaction.

Documentation

    Letters of credit provide documentation of an international transaction. After a letter of credit is delivered, the seller performs the necessary actions, such as delivering goods to a specified location, to complete the transaction. In this example, after the goods have been delivered according to the constraints of the LOC (letter of credit) and documentation has been provided to prove such actions, the buyer can withdraw funds from the issuing bank.

Importance of Language

    Letters of credit are ironclad. Because most of them represent large-scale purchase transactions, their language must reflect exactly how the transaction will take place. Dates, locations, times, dollar figures and proper identification of the parties involved are crucial to the legitimacy of the document. Similarly, buyers and sellers must confirm the legitimacy and reputation of both the issuing and advising banks before proceeding with a letter of credit.

What Does it Mean to Default on Credit Card Debt?

You can default on your credit card debt if you don't comply with the contractual arrangement outlined in the terms and agreements. Some credit card companies will consider you to be in default at one stage of delinquency while other creditors will consider you to be in default a different stage. If you are past due on a loan or credit card, you should contact your creditors to avoid further action.

Definition

    You are in default on a credit card when you fall past due. Whenever a debtor refuses to pay or cannot pay according to the terms and agreements of the contract they are in default.

Consequences of Default

    The terms and agreements can state the consequences of defaulting on your credit cards. A creditor can increase your interest rate, which will increase your payment and cause you to pay more in finance charges.

Resetting the Default

    If you get your account up to date and fall past due once again you have defaulted again. You can receive late charges if you are in default by one day.

Time Frame

    You can have different levels of delinquency. An account can be 30, 60, 90 or even 120 days past due. Once your account is in serious default (90 or 120 days late), a credit card company can send your account to a collection agency and report the account to a credit bureau.

Considerations

    Credit card companies will eventually have to make some decisions about how they will collect on your account when you are in default.

How to Raise Credit Score for Military Personnel

How to Raise Credit Score for Military Personnel

Military personnel face credit score challenges other members of society do not. Frequent home base relocations and temporary duty assignments potentially result in a large number of credit relationships and lackluster credit history as bills get lost in the mail or military personnel fail to close credit accounts properly. These challenges, combined with less-than-ideal financial diligence, can lead to artificially deflated credit scores for some people in the military. Military personnel have the ability to raise their credit score by taking certain concrete steps.

Instructions

    1

    Obtain a copy of your credit report from each of the three main credit bureaus, and scour for errors. According to the Naval Criminal Investigative Service, military personnel are at increased risk of identity theft. Additionally, frequent relocation complicates credit reporting; regular review and correction of credit reports mitigates these problems.

    2

    Use electronic bill pay to simplify payment of bills. Regular relocations and temporary assignments wreak havoc on a military member's ability to receive all bills. Sign up for electronic bill pay, which will allow you to receive and remit bills anywhere in the world with only an Internet connection.

    3

    Resist the urge to frequently apply for credit at new duty stations. Credit inquiries and a large number of open accounts adversely affect credit scores. Establish credit with nationwide or multinational corporations to reduce the need to open new accounts after moving.

    4

    Pay all bills on time, every time, to increase a lagging credit score; late payments negatively affect credit scores. If necessary, set up automatic deductions from your military pay to creditors to ensure you remit payments promptly.

    5

    Reduce credit card balances. The Federal Reserve of the United States explains that credit utilization, or the ratio of your credit balances to your overall credit limit, factors into credit scores. Pay down credit cards as able, starting with the card charging the highest interest rate.

    6

    Visit on-base financial counselors. Most military bases employ financial counselors available to military personnel. Visit these counselors to create a household budget as well as a strategy to reduce debt burden and improve credit scores.

    7

    Establish additional credit history through the use of military loans or Department of Veterans Affairs (VA) mortgages. Military members enjoy increased access to credit from the VA (in the form of VA mortgages) and from financial institutions (in the form of military loans). Establish a credit history by opening accounts appropriate to your situation, then regularly paying on time.

Wednesday, December 26, 2012

The Statute of Limitations on Debt Recovery in Missouri

The Statute of Limitations on Debt Recovery in Missouri

Imagine receiving a notice to appear in court because someone filed a lawsuit against you, only to discover it is for a debt you don't even remember incurring --- not because you don't keep your debts organized, but because it's so old. As you look back through your personal files, you discover the debt occurred over 15 years ago and it seems unfair to have to face lawsuit now. Missouri puts a statute of limitations on debt recovery in place to avoid this exact kind of situation.

Function

    The purpose of Missouri's statute of limitations on debt collection is twofold. The first purpose is to prevent clogging of the court system. If every debt imaginable from decades past was admissible for court proceedings, the Missouri courts system could face more than an overcrowding, but such a vast number of lawsuits that there would be no way to process them all. The second purpose is to preserve justice. allowing creditors to sue alleged debtors at any time is unjust by standards set forth by many municipalities.

Types

    There are three types of debts, as determined by Missouri Revised Statutes, to which the statutes of limitations apply: open accounts, oral agreements and written agreements. Open accounts cover debts owed to credit card companies, or to companies such as hospitals that produce an invoice for services rendered. Oral agreements, of course, have no documentation, but are an oral arrangement for the exchange of goods or services for money. Written agreements are contracts showing an agreed upon exchange of a product or service for payment.

Time Frame

    According to Missouri Revised Statutes Section 516.110, written contracts and agreements have a statute of limitations of 10 years. This period commences as of the date of the agreement or the date of the last payment, as set forth in the agreement. Section 516.120 of the Missouri Revised Statutes states that open accounts and oral agreements have a statute of limitations of 5 years. In the case of open accounts, this time line commences as of the date of the last invoice sent by the creditor or the date of the last payment. For oral agreements, the statute of limitations commences at provision of the product or service.

Judgment

    When a creditor files a lawsuit, the creditor is seeking to obtain a judgment against a debtor for the alleged unpaid debt. If the creditor, or its representative, files the lawsuit within the Missouri statute of limitation for debt recovery, and can adequately prove that the payment is still outstanding, then the court will likely rule in favor of the creditor and put a judgment on the debtor. This will not only affect the debtor's credit history, but can result in garnishment of wages or bank accounts if the debtor still fails to pay.

Does a Home Loan Help Me to Consolidate My Debts?

Common debt consolidation options include taking out a personal loan, transferring credit card balances to a new account, or getting involved in a debt consolidation plan with a financial professional. Other options include home equity loans and mortgage refinancing. Before you decide on a method of consolidating your debt, you need to understand how a home loan can help you get your finances under control.

Definition

    A home equity loan is an amount borrowed against the equity you have built up in your home. Equity is the difference between what you owe on your mortgage and the value of your home. A home equity loan is commonly structured to be paid back in 36 to 60 months. A mortgage refinance involves taking out a new mortgage to pay off the old mortgage. In some instances, people borrow more than they need for the old mortgage, and use the difference to pay off other debts.

Benefits

    The interest payments on home equity loans and mortgage refinancing loans are tax deductible, and you can negotiate a lower interest rate on your home loan than you carry on your credit cards, according to financial expert Liz Pulliam Weston. This means that using a home loan to consolidate your debt will not only reduce your interest obligation, but can also become a regular tax deduction.

Considerations

    Home equity loans and mortgage refinances are both secured loans that use your home as collateral. If you default on your home loan while trying to pay off your debt consolidation, you run the risk of losing your home.

Warning

    When you consolidate debt using a home loan, you are moving unsecured credit card debt into a secured loan. You are not eliminating the debt; you are simply shuffling it to a new account. In order to make your debt consolidation plan truly effective, you may need to seek credit counseling to help you control your credit spending.

Can a Credit Card Company Put a Lien on My House If I Live in Texas?

Debt collection laws for accounts that go into default vary from state to state with different laws applied to both secured and unsecured debt. Within the state of Texas you, the consumer or debtor, are largely protected from more extreme debt collection measures when dealing with credit card account issuers.

Credit Card Debt Collection Basics

    When you quit paying your credit card bills, the account goes into default after a period of time specified on your credit card company's cardholder agreement. After the account goes into default, the card issuing bank steps up collection efforts in the form of repeated mailings and phone calls. When the collection efforts go unanswered, most creditors refer accounts to third-party collection agencies who again attempt to collect on the debt. The third-party collection agencies are typically the creditors who try to collect through suits and judgments.

Unsecured Debts

    Debts can be broken into two different categories, secured and unsecured debt. Within the state of Texas, the category the debt falls into determines the collection powers allotted to a creditor. Debts attached to your home through an agreement between you and the creditor are secured as are debts involuntarily attached to your home by a court's judgment or through tax issues. Debts not tied to your property through agreements or judgments are categorized as unsecured.

Texas Debt Collection

    The state of Texas has debt collection laws that are highly favorable to the consumer. Texas law keeps the wages of a debtor from being garnished and protects the debtor's home with full homestead protection. Homestead protection prevents the creditor from forcing the sale of your primary home.

Liens in Texas

    Credit card debt is considered unsecured debt as it is not directly connected to you home. The bank that issued your credit card cannot put a lien on your property as a method of debt collection. If your creditor sues you, however, the court may issue a judgment against you that allows the card issuer to put a lien on your property. When this happens, you are not forced to sell your home to pay the debt. Instead, you must pay the creditor off with any profits you earn from a future sale or future refinancing of your home.

How Do Liens Work?

When you owe a creditor money, it can use several different methods to try to collect that money from you. One option that a creditor can use is a lien. A lien is a legal claim to a piece of your property that the creditor can can use to repossess your property if conditions are not fulfilled.

Lien Basics

    The basic idea behind a lien is that a creditor has a legal claim against your property. If you do not repay a debt that you owe to the creditor, your property can be seized by the creditor. In some cases, the creditor may not seize the property but instead simply wait for you to sell the property before it collects. Liens can be placed on property such as a house, car or other personal property.

Voluntary Placement

    In some cases, people place liens on their property voluntarily. One example of this is when individual uses a mortgage to purchase a piece of property. When a homebuyer uses a mortgage, the mortgage lender places a lien on the home. If the borrower does not pay the loan back, the lender can step in and take the property away. The lender then has the right to sell the property to recover any money that it lost on the mortgage.

Other Liens

    While some liens are placed on property voluntarily, others are placed on property in less favorable circumstances. For example, if you do not pay your income taxes, the IRS can place a lien on your property. Municipalities can also place a lien on your property for failure to pay property taxes. If you have a contractor work on your house and then do not pay him for his work, the contractor can place a mechanic's lien on your home.

Removing the Lien

    When a lien is placed on your property, it is possible to have it removed at some point in the future. After the lien is placed on your property, it is up to the lien holder to remove it. This means that you have to pay the full debt that you owe and meeting the other conditions that are set forth by the lien holder. At that point, you can ask the lien holder to remove it and it should be eliminated.

Sunday, December 23, 2012

How to Calculate a Loan With Different Payment Dates

Many types of loans, including student loans and credit cards, calculate interest charges by the day rather than the month. The interest you pay is based on the day when the lender receives payment. If the day on which you send the payment fluctuates each month, or if you send multiple payments each month, it is difficult to predict in advance exactly how your loan payment schedule will look. However, you can calculate the remaining balance on your loan by determining how much of each payment goes toward interest and how much is left to pay off principal.

Instructions

    1

    Look up your most recent loan balance on your statement. Also note the day on which your last payment was applied to the loan.

    2

    Find the interest rate on the loan statement. Divide the interest rate by 100 to convert it to a decimal. Divide the result by 365.25 to convert it to a daily interest multiplier. For example, if your interest rate is 7.9 percent, divide by 100 to get 0.079 and divide that by 365.25 to get 0.0002163 as your daily interest multiplier.

    3

    Count the number of days between your last payment and when you expect your next payment to be applied to your loan balance. If your last payment was April 20 and your next payment will be applied on May 13, there will be 23 days between payments.

    4

    Multiply the daily interest multiplier by the number of days between payments and your loan balance. The result is the interest charge that will come out of the payment you send. In this case, if your loan balance was $7,914.50, you would multiply 0.0002163 by 23 and then by $7,914.50 to get an interest charge of $39.37.

    5

    Subtract the interest charge from the amount of the payment you will send to find out how much of your payment will go toward principal. For example, if you are sending a payment of $200, subtract the $39.37 of interest to arrive at a principal payment of $160.63.

    6

    Subtract the amount of the principal payment from the amount you owed on your loan after the last payment. This is how much you will owe after your payment is applied. In this case, your loan balance of $7,914.50 will decrease by $160.63 and you will now owe $7,753.87

    7

    Repeat the process for each payment, being careful to accurately count the number of days between the previous payment and when the next one will be applied.

Can a Judgment Creditor Take My Car If My Son's Name Is Also on the Title?

When a creditor moves to take judgment against you, it could potentially levy personal property to repay the debt that you owe. If you have a car that is jointly owned by you and your son, the creditor could take the car even though your son's name is on the property.

Levying Property

    When the court issues a debt judgment against you, the creditor can use a levy to take your property. At this point, the creditor can potentially levy any property that you own, unless it is prevented by state laws. Cars that you own can be seized by the creditor if they have enough equity in them to help pay off the debt once they are sold. The creditor can levy property even if someone owns it jointly with you.

Debtor's Share

    With most states, when a levy occurs, the sheriff takes only the portion of the property that belongs to the creditor. With a car, you can't really split it up and take only half of it. Because of this, the car will be levied and sold to repay the debt. If the car is sold and the entire debt is repaid, any remaining money could be given back to the son.

Stopping the Sale

    In some states, those who are not liable for the debt can stop the levy and sale of the property if they are willing to put up a bond sufficient to pay for the debt. By doing this, the son could potentially stop the sale of the property and continue using it as long as he is willing to personally guarantee that the debt will be repaid by the father within a certain period of time.

Fraudulent Transfer

    If you are worried about losing the car to creditors, you may be tempted to try to remove your name from the property and transfer it wholly to your son. While you could try to do this, the court will usually find out about it. If this is discovered, the court could hold you responsible for a fraudulent transfer. This is against the law and you could have charges brought against you for trying to beat the judgment fraudulently.

What Happens If I Walk Away From My Credit Card Debt?

What Happens If I Walk Away From My Credit Card Debt?

If you have used credit to purchase a home, buy a car or purchase personal items, chances are you have debt. Financial burdens such as job loss, child support payments or medical expenses could made it difficult for you to meet the minimum payments on all your combined debts. Some consumers have considered simply walking away from their credit card debt. Before you take this route, you should know the ramifications of this decision.

Damaged Credit

    When you miss a credit card payment or submit a late payment, this information appears on your credit report and can reduce your credit score. If you decide to walk away from a credit card debt, your credit card lender may report your card as a charge-off or collection. Charge-offs and collections can decrease your score even more than missed payments. A damaged credit score can take years to repair and may affect your ability to purchase a home, get a new job or obtain new credit.

Lawsuits

    Many credit card lenders forward your account to a lawyer for collection. The collection lawyer typically files a lawsuit against you for the amount of debt that is owed on your account. The total amount you owe may be increased by attorney fees and court costs.

Judgments

    If you cannot effectively dispute a lawsuit, the court will issue a judgment against you in favor of the creditor. Judgments stay on your credit report and your permanent record until they are resolved. In most states, the judgment issued by a court has no statute of limitations and can be collected at any point in the future. A judgment in the creditor's favor allows the creditor or the creditor's attorney to continue to pursue you for payment of an unpaid credit card balance.

Garnishments

    If the creditor wins a judgment against you in court, it may be entitled to garnish your wages. A wage garnishment means the creditor is entitled to take a portion of your income directly from your employer's payroll. Wage garnishment takes away your choice of whether to pay the creditor.

Liens

    If a judgment is issued against you, and you do not have income or wages that can be garnished for repayment, a creditor may place a lien on your personal property. Liens can be placed against real estate, businesses and personal property such as a vehicle or business equipment. Before you can sell or transfer any personal or business assets, you may be required to pay off the lien first.

How to Build a Credit History When You Have None

How to Build a Credit History When You Have None

You need to build a credit history not only to eventually be able to finance a car or a home in the future, but also because your credit history will determine whether you can get a lease on an apartment, get a cell phone contract in your name and it could potentially determine whether you get the job you are applying for. However, it's really a Catch-22 when you are young. You need to build a credit history, but because you don't have any credit, it's almost impossible to get someone to issue your first credit card or approve your loan application. The following tips should help you to establish your credit.

Instructions

    1

    Check your credit report for errors. One of the reasons you may be having trouble getting credit is because you might have errors on your credit report. You may have someone else's information with the same name as you on your report or you may have been a victim of some form of identity theft. You are entitled to a free credit report from each of the three credit reporting agencies each year: Experian, Equifax and TransUnion. Get your free reports and check for any errors.

    2

    Open a checking account. Definitely open a checking account, but also open a savings account, if possible. Establishing an account history, managing your money properly and keeping the account in good standing will not be reported to the credit bureaus, but it will show that you are able to manage your money. Your checking and savings habits will be considered when applying for your first loan.

    3

    Apply for a store credit card or a student card if you are in college. Department store credit cards and gas cards are usually not a good idea. They usually come with low credit limits and high interest rates, but if you are unable to get credit through the major banks this may be a good option. They are typically easier to get approved for than other credit cards or loans. Be sure to look for a card with no annual fee, or at least a low fee, and one that is reported to all three credit bureaus if they are not reported they will not help you build a credit history. Also, be sure to manage your credit properly. Use the card periodically to establish a payment history, but be careful not to charge too much and make sure to pay off your balance in full each month. By paying off your balance each month you will not have to pay interest. Always make your payments before the due date and never go over your credit limit.

    4

    Join your local credit union. If you meet the requirements to join a credit union, do so. It may be one of your best chances to get a good rate on your savings account balance, vehicle loan or home loan in the future. It may also be easier for you to qualify for a credit card or loan than at a traditional bank. Credit unions are more community or member oriented and less focused on profits than traditional banks.

    5

    Get someone to co-sign for a loan. If you are having trouble getting approved for credit or a loan on your own you may be able to get approved if you have someone co-sign for you. This can be your parents or grandparents, for example. Apply for a very small installment loan for a short time period just to establish payment history. Once you have established some credit it will be easier to get approved in the future.

    6

    If all else fails, apply for a secured credit card. Basically, a secured card means that there is some type of asset to back-up the credit. If you don't make your payments the bank can seize the asset that is securing the loan. Car and home loans are based on this principle. If you do not make your car payments your car can be repossessed. Secured credit cards are pretty easy to get as long as you have assets to back them up. If you have a checking account, go to your bank and apply for a secured credit line. If you apply for a $500 credit limit you will have to pledge $500 of your account balance to secure the credit card. Make sure that the card has a low application and annual fee, that it will be reported to all of the credit bureaus and that you will be able to convert the secured card to an unsecured card after a year to 18 months of established on-time payment history.

Saturday, December 22, 2012

How Collection Agencies Collect Their Money

How Collection Agencies Collect Their Money

Collection agencies are third-party companies that collect past due balances on behalf of the original creditor or buy bad debt from businesses below market value in the hope of collecting the debt and turning a profit. However, many collection agencies collect their money in the same manner.

Letters

    Most collection agencies will begin with a series of collection letters. They must begin by giving the debtor the opportunity to dispute the validity of the debt. From that point, if the debt is deemed legitimate, future letters attempt to compel the debtor to pay the debt.

Phone Calls

    Many collection agencies utilize telephone calls to collect a debt. These may range from a polite attempt to reach a compromised payment to an indelicate attempt to pressure the debtor into making a payment.

Report to Credit Bureaus

    Collection agencies may also report the past due debt on the debtor's credit report. This is not a direct attempt to collect the debt, but it may prompt the debtor to pay the debt to clear their credit report.

How to Look Up an Address with the National Credit Bureau

How to Look Up an Address with the National Credit Bureau

There are three national credit bureaus in the United States: TransUnion, Experian and Equifax. These three bureaus record, store and display information about the credit histories of all active consumers in the U.S. While their methods of collecting and recording information are often quite similar, there are a few differences between the bureaus. If you have a question about your report, or need to send a document to these bureaus, you must know how to find their addresses.

Instructions

    1

    Pull a copy of your credit report first. Log on to Annual Credit Report for a free copy. This is a federally mandated website for American consumers. You can get a free copy of your report from all three agencies. You will need to know some account-specific information, though, such as last payments, account balances and open dates. These questions are to verify and secure your identity.

    2

    Print out all three credit reports. Each report has four distinct sections: demographic information (such as name, address, employer); public records (such as bankruptcies and tax liens); credit inquiries; and trade lines (all accounts on your report). On the bottom of each report is the mailing address for each credit bureau.

    3

    Call your local bank. If your bank has any credit-related programs (mortgages, equity loans, personal loans or bank overdraft protection), it reports to the credit bureaus each month. Ask for the credit bureau mailing addresses.

    4

    Log on to Bankrate to search for the credit bureau addresses online. These addresses are easily found by typing "contacting the credit bureaus" into the search bar. Choose the first option in the results section. The three addresses are clearly displayed.

Friday, December 21, 2012

How to Write a Hardship Letter to Credit Card Companies

How to Write a Hardship Letter to Credit Card Companies

For those who have fallen on hard times and have difficulty paying off their credit card bills, writing a letter of hardship is one way to alleviate the burden of debt. Because a credit card settlement may reflect negatively on your credit score, writing a letter of hardship should only be considered as a last resort.

Instructions

    1

    Write down what you are asking for in the first line of your letter. Be exact. If you are asking for a settlement of your credit card debt, for example, write down what percentage of your total debt you would like forgiven. Keep your requests reasonable; avoid asking for total debt forgiveness, as this is less likely to be accepted by the credit card company.

    2

    Explain the cause of your hardship. Describe the change in circumstances which have left you unable to pay your credit card bills, such as job loss, home foreclosure or death in the family. Personalize the letter with important details, but try to be succinct.

    3

    Make copies of important documents that can verify your hardship status and attach those copies to the letter. Examples of documents are bank statements, pink slips, utility bills, and death certificates.

    4

    Include a time line. When asking for a settlement of credit card debt, explain how long it will take you to make the payments on that settlement. Make sure that you will be able to keep to this deadline.

    5

    Include your contact information, including your home address, email and phone number, so that the credit card company can contact you through their preferred means. Mention which times you will be available via phone.

    6

    Thank the addressee in advance. You are asking the company for a favor, so make sure they understand that you are grateful for any help they might give.

What Happens to Co-signers on a Foreclosure?

Co-signing on a home mortgage is always risky, because the bank or mortgage company can hold the co-signers 100 percent responsible for the loan after foreclosure. Co-signing for a home mortgage works the same as co-signing an automobile loan. The difference is that co-signing for a used car may create a liability of only several thousand dollars, while co-signing on a house could mean accepting responsibility for a loan of $150,000 or more.

Foreclosure Process

    Foreclosed properties are eventually sold by the bank or mortgage company. The bank takes possession of the home from the owner and schedules it for an auction or private sale. The sales price is applied to the balance remaining on the loan, with the former owner -- and the co-signers -- held responsible if the proceeds from the sale do not pay off the remaining mortgage balance.

Negative Equity

    Some foreclosed properties are worth less than the balance of the loan, creating a situation known as negative equity or being "upside-down" on the mortgage. Houses sometimes rapidly lose value during a recession or real estate slump. A house purchased at the height of a housing boom could lose half its value during a severe recession and downturn in the real estate market. Homeowners facing foreclosure with an upside-down mortgage could easily owe the bank $50,000 or more after foreclosure, with co-signers held equally responsible.

Deficiency Judgment

    Some states allow banks to file lawsuits to collect any balance remaining after a house is foreclosed and sold. Co-signers are treated like owners, allowing the bank to file separate lawsuits against them for the full amount due. There is no way out of the mess for co-signers, unless they can prove that they never agreed to co-sign and that their signatures on the loan application are fraudulent. Bank lawsuits after foreclosure often lead to default judgments ordering the owner or co-signers to pay the full amount due.

Garnishment

    Bank or wage garnishment is possible if the owner or co-signers fail to pay the judgment in full or make payment arrangements. Bank garnishment allows the mortgage company to freely withdraw money from checking accounts held by the owners and co-signers until the debt is paid. Wage garnishment allows forced payments from paychecks.

Alternatives

    Co-signers on a mortgage loan should treat the loan as their own, including paying the past-due mortgage payments to stop the foreclosure, if necessary. Bringing the account current and continuing to make monthly payments is preferable to foreclosure. The co-signers can also work with the owners on other foreclosure avoidance solutions, including loan modification, which changes terms of the loan to make it more affordable. If the house is foreclosed, the co-signers should negotiate a settlement with the bank on any remaining balance. Settlement allows for payment of a debt for less than the full amount owed.

How to Pay Off Old Debts

How to Pay Off Old Debts

Many consumers reach a point in their lives where they are unable to repay a debt obligation. Many times the original creditor sells the debt to a collection agency. At some point the collection agency may realize that their attempts to collect the debt will be unsuccessful and will just quit servicing the debt. However, this outstanding debt still remains on the consumers credit report, usually for seven years. As the consumers financial situation changes, they will want to pay off the old debt. This can be a bit more difficult than it sounds; follow the steps included here to pay off your old debts.

Instructions

    1

    Launch your internet browser and go to the Annual Credit Report website. Federal law has mandated that every U.S. consumer have access to a free copy of their credit report once every twelve months. This includes a copy of the report from each of the three major credit reporting agencies Equifax, Experian and TransUnion.

    2

    Select your state and then click on Request Report. Enter all of the required information to request online access to your credit report. You will need to request your report from each of the three credit reporting agencies as they do not all report the same information.

    3

    Print out a copy of your credit report. If you do not have access to a printer, write down all of your old debts. Include the creditor name (this will likely be a collection agency), the creditors phone number, the total amount due and the account number associated with the account. Credit reports may only include a partial account number but the creditor should be able to look up your account based on your name, address and/or social security number.

    4

    Organize your debts from smallest to largest. Depending on how many debts you have, and how much cash you have available, you may not be able to settle on all of your old debt accounts at one time.

    5

    Contact the first creditor listed on your debt list, the one with the smallest balance. Explain to them that you are in a position to settle on your old debt and offer them $0.50 on the dollar. It is not unusual for collection agencies to accept a portion of the debt as payment in full, especially on old debts. Many times the total amount due is inflated due to penalties and other associated fees. If the creditor is not willing to accept a reduced amount as settlement in full, you may choose to contact the next creditor and leave the first one until last.

    6

    Request a settlement letter from the first creditor that agrees to a reduced settlement amount. In this letter, you will want the creditor to list the reduced amount that they are accepting as well as verbiage to indicate that the account will be considered paid in full once the settlement amount has been received.

    7

    Obtain a cashiers check for the settlement amount and make a copy of the settlement letter and the cashiers check. Keep the copies for yourself in a safe place; do not ever dispose of these copies.

    8

    Mail the settlement letter along with the cashiers check to the creditor. Follow-up with a phone call to let the company know that the payment has been sent. Ask that the creditor call you upon receipt of the payment.

    9

    Follow steps one through eight for the next debt in your list. Do this until you have paid off all of your old debts.

Thursday, December 20, 2012

What You Should Know About Overpayment of Social Security Benefits?

What You Should Know About Overpayment of Social Security Benefits?

From 2004 through 2008 the Social Security Administration (SSA) paid $2.3 trillion in retirement and survivor benefits. Later, SSA decided that $3.7 billion were overpaid. During the same period, $6.3 billion of $454.8 billion in disability insurance benefits were incorrect. Under section 204 of the Social Security Act, SSA has the obligation to attempt recovery of these overpayments.

The Overpayment Notice

    Upon detecting an overpayment, SSA sends you a Notice of Overpayment detailing the amount, dates and cause of the overpayment. The letter states the month SSA will start recovery by withholding benefits, or requests refund if you no longer receive benefits. The notice also explains the right to file a Request for Reconsideration or a Request for Waiver of Overpayment.

Appeal Timeframes

    You have 60 days from the notice's date to file either a Request for Reconsideration or a Request for Waiver. However, you must file within 30 days to stop recovery action. All requests have to be made in writing.

Request for Reconsideration

    You file a Request for Reconsideration--form SSA-561--if the facts are incorrect. For example, you did not receive the earnings used to figure the overpayment. Social Security will correct their records and approve the appeal. Form SSA-561 is available at SSA's website www.ssa.gov or by calling SSA at 1-800-772-1213.

Request for Waiver of Overpayment

    If you are overpaid but believe you are not at fault and cannot afford to repay, you file a Request for Waiver of Overpayment Recovery--Form SSA-632--also available at SSA's 800 number and website. You must meet both criteria. Even if the overpayment was not your fault, SSA expects repayment if you have the funds in your possession or can afford to repay.

The Request for Waiver Form

    The first two pages of the SSA-632 obtain information needed to decide if you were at fault. Pages three through eight obtain information about income, assets and expenses so SSA can determine your ability to repay the overpayment. Persons who receive cash benefits based on need such as Supplemental Security Income or certain pensions from the Veteran's Administration are assumed to meet the inability to repay requirement and complete only the first two pages.

The Waiver Conference

    Before making a decision, Social Security schedules a personal conference, which can be held in person or by telephone with your local SSA office. The conference allows you to discuss your understanding of reporting requirements or misinformation received. If required, you must submit proof of income, assets and expenses.

Appealing Denials and the Repayment Rate

    No overpayment recovery continues while your reconsideration or waiver request is pending. If denied, you have 60 days to appeal. To appeal a reconsideration denial, you file a Request for Hearing before an administrative law judge (Form SSA-501). However, overpayment recovery begins while awaiting the hearing. You appeal a waiver denial by filing a Request for Reconsideration, which prevents initiation of overpayment collection. If SSA denies appeals, you can make arrangements through your local office to repay by monthly payments and avoid withholding of all benefits.

Debt Management Checklist

It is never too late to get debt under control. While a small amount of debt can seem harmless, it does not take long to for it to grow into a situation that may feel inescapable. When you make the decision to turn the tides on your cash flow situation, sticking to a debt management checklist can help you regain control over your finances.

The Big Picture

    To gain control over your debt, you must know your debt-to-income, or DTI, ratio, which compares your monthly income to the amount of money you pay creditors on a monthly basis. To figure out your DTI ratio, divide the amount of money you pay each month towards your debts by your monthly income. Then, multiply your answer by 100. Your goal is to have a DTI ratio that equals zero.

    Part of knowing the big picture when it comes to your debt is knowing exactly how much you owe each creditor, your minimum monthly payments to each and the interest rate each creditor charges. Knowing this information can help your create goals.

Spending Trends

    Gather all your receipts and bank statements from the last three months so you can see if there are spending habits that you can change. For example, you may notice that you spend more money at fast food restaurants or coffee shops than you thought.

Budget

    Creating a budget can help you stay on track with your goals and control your spending because you set aside a certain amount of money each month to spend on certain items. Your monthly budget should include housing payments, utility bills, childcare costs, gasoline, regular medical expenses, payments to creditors, groceries and nonessential items, such as eating out, gym memberships or movie rentals. Examine the amount of money you set aside towards nonessential items and see if you can reduce your spending on a particular item. For example, if you have a gym membership you never use, you can cancel it and use the money you save towards paying off a credit card faster or building a savings account.

Use Cash

    Spending money you do not have is often the reason for debt accumulation. A debt management checklist should include paying with cash for all purchases. This will prevent you from adding more debt to a credit card.

Pay Your Debt

    Refer to your list of debts and make a goal to pay off the smallest amount of debt first. Dave Ramsey, a financial advisor, states that if you pay your smallest debt first, you will have more money to pay off towards your larger debts faster.

What Is Consolidation?

When people start to realize that their personal debt is spiraling out of control they begin to look for help in getting their debt back into line. One of the popular solutions being offered to consumers is called debt consolidation. Before a consumer gets involved in debt consolidation it is important to take some time to understand what it really is and how it may be able to help the situation, or hurt.

Identification

    Debt consolidation is the process of taking multiple forms of high interest debt, usually in the form of credit accounts, and then getting them under one managed consolidation account. Some people opt to have a professional debt consolidation firm help them get their bills under control, while others prefer to deal with the situation on their own. Debt consolidation is normally accomplished by securing a loan that will be enough to pay off all of the debt at a lower interest rate than the rates on the existing credit accounts. There are other options to debt consolidation that are available to anyone looking for help with their obligations.

Types

    The most common type of debt consolidation program is a loan that is put together and administered by a debt consolidation organization. If there is sufficient equity available in the consumer's home then they may want to look into a home equity loan or home equity line of credit to use as a consolidation vehicle. Some people use either secured or unsecured personal loans to help bring their bills together. A secured personal loan is a personal loan that requires personal property to be used as collateral to back the value of the loan, and an unsecured loan is a loan that is granted without the need of collateral. Some consumers use special credit card offers to consolidate credit. These special credit offers allow consumers to get a credit card with a limit that is enough to consolidate their current debt under the one card, and in some cases the consolidated balance carries a zero percent interest rate which allows a significant savings to the consumer.

Benefits

    Credit consolidation will allow a consumer to bring a series of high interest credit accounts under one low interest loan which immediately reduces the interest obligation for the consumer. The several service charges will also be eliminated and replaced by one service charge which helps to reduce the monthly payment. The consumer is better able to pay their debt each month, and they may also find that they have extra cash each month that did not previously have.

Misconceptions

    Debt consolidation programs administered by a debt consolidation company appear on the consumer's credit report as a consolidation account. Until the account is paid off, this can have a negative effect on the consumer's credit score. If the consumer is able to secure their own financing through an equity loan or a personal loan then they may be better served as a those types of financing have a positive effect on a credit score. Many people turn to debt consolidation companies because they are unable to secure financing on their own that is large enough to cover their debt. It is recommended that a consumer do research on a debt consolidation company before signing an agreement to make sure that the company is reputable and has an established history.

Considerations

    Some people consider debt consolidation when they are still able to pay their monthly bills. In some cases the consumer may want to talk with a debt counselor as opposed to a debt consolidation company. It may very well be that with some creative financial moves the consumer will be able to create their own bill payment plan that will not require any outside financing. This option is sometimes preferred to taking on a consolidation program or a personal loan.

What is the Ohio Automobile Private Seller Lemon Law?

What is the Ohio Automobile Private Seller Lemon Law?

Ohio's lemon law does not apply to used vehicles unless car buyers purchased their vehicles covered by existing warranties. The Ohio Lemon Law is codified in the Ohio Revised Code Sections 1345.71 through 1345.78. Consumers who purchase defective vehicles are eligible for a replacement of their vehicles or a return of their money if they are covered by the state's lemon law.

Coverage

    The Ohio Lemon Law covers passenger cars, specific parts of motor homes not used for storage, cooking, sleeping or eating and noncommercial motor vehicles. "Passenger car" is defined as a vehicle not designed to carry over nine passengers. Pickup trucks used solely for business are not covered. However, trucks or farm vehicles used for non-business purposes and designed to carry less than 1 ton are covered. The Ohio Lemon Law covers new car purchasers, lessees who lease cars for at least 30 days and used car owners covered by a dealer's warranty.

Defects and Repairs

    Under Ohio's Lemon Law, a car is a defective "lemon" if it does not conform to the dealer's express warranty or it substantially diminishes the safety, use or value. Once a consumer gives a dealer, private seller or manufacturer notice of the defect, the other party must have a reasonable period of time to attempt repairs. If it cannot repair the defect within three attempts in the one-year period or if the car has been out of commission for at least 30 days, Ohio law presumes the buyer gave the seller a reasonable number of attempts to repair. However, only one repair attempt is necessary if the defect is one that would likely cause serious injury or death. For less serious defects, dealers must have at least three opportunities to remedy defects but no more than eight opportunities.

Time Limitations

    Consumers who are covered by the state's Lemon Law have five years from the original date of purchase to file complaints against defective car sellers, car manufacturers or car dealers. The five-year period does not count the time buyers were involved in alternative dispute proceedings. Although consumers have five years to file claims, they have only one year or 18,000 miles to discover defects, whichever occurs first.

Remedies

    Buyers are entitled to receive a refund of the contract sales price, including dealer fees, insurance and warranty fees, sales tax, license and registration fees, and any incidental fees. Car buyers also have the legal right to accept a suitable replacement car. Furthermore, under Ohio law, a vehicle sold pursuant to the state's "buyback" program cannot be resold unless the buyback's original defect was not one that was likely to cause death or bodily injury. The seller must provide buyers with buyback disclosures stating in all capital letters and at least 10-point font of returns pursuant to the state's lemon laws.

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.

Wednesday, December 19, 2012

Impact on Credit Report of Defaulting

Not knowing what will happen to your credit history if you're about to default on a loan feels like having an anvil hanging over your head. There are consequences, sometimes severe, when loan payments are in default. However, it is possible to recover and more quickly than you may imagine. Remember: It's always darkest before dawn.

Late Payments

    How long and how frequently you've been late has a significant effect on your credit history. FICO, the Fair Isaac Corporation, considers three factors: the frequency, severity and recency of your late payments. For example, one 30-day-late payment from two years ago will affect your history much less than several recent 60-, 90- or 120-days-late payments. Also, being late on a mortgage or other secured installment loan has a stronger negative effect than a missed credit card payment.

    Account charge-offs should be avoided at all costs, because even accounts that are as late as 150 days can be made current. Once an account goes to collection or is marked as a judgment, the delinquency will remain permanent.

Late Payments and Your FICO Score

    Your FICO score is calculated using five factors: timeliness of payments, amounts owed, length of credit history, new credit and types of credit. More than 1/3 of your FICO score -- 35 percent -- is comprised of timeliness of payments. Therefore, being in default for as little as 30 days is significant.

    There is no one-size-fits-all approach to credit scoring, however, because of other factors. A consumer with an excellent credit history who suddenly defaults may experience a significant, immediate decline in creditworthiness; a consumer who has a history of late or missed payments will find his score may not change much with a default. Keep in mind, however, that the consumer with frequent late payments already has a much lower score than the consumer with excellent credit.

How Long Credit Damage Lasts

    Time heals all wounds: The more distance you put between yourself and your last late payment the more your credit recovers. However, be advised that late payments, foreclosures and delinquencies last on your report for seven years. Bankruptcies can last as long as 10 years. Unpaid tax liens can last forever (along with other matters of public record, like criminal convictions).

    This is one good reason to make good on your loan agreement. Creditors are anxious to work with you, even if you're 150 days late. As long as the account remains open and you are making regular payments, you increase the chance that the account will be made current.

Alternatives to Missing a Payment

    Don't hesitate. Call your creditor the moment you think there may be a problem. Credit card telephone agents may offer to lower your interest rate, payment, or both; this action won't affect your credit. A creditor may also offer to put you in a more affordable repayment plan. Don't be afraid to call all your creditors to ask for friendlier terms; then put the available cash toward paying off the highest-interest debt first.

    Alternatively, contact the National Foundation for Credit Counseling. This nonprofit specializes in working with consumers who are struggling to manage their debt loads. Ask about debt management plans to satisfy your loan obligations.

Know Your Rights about Debt Collection

    If your accounts go to collection, learn your rights. Debt collection agencies may only contact you during certain hours and some tactics are illegal. They may not contact you at work -- but you have to indicate that you're not permitted to get collection calls there.

    You may also be able to negotiate with a collection agency, but you'll be much better off working with your creditors. In addition to salvaging what remains of your credit history, you'll be able to sleep better at night knowing you did the right thing, so don't be afraid to take the first step.

What Happens if You Do Not Attend a Credit Civil Demand?

A credit civil demand is another way to describe a summons and complaint for appearing in court for a debt lawsuit. A summons is the notification of a lawsuit and in some states requires a debtor to appear in court. The complaint is the actual lawsuit and details the allegations set for discussion during the court appearance. Failing to appear in court for a summons results in an automatic victory for the party filing suit, usually a debt collection agency.

Process

    A summons and complaint are documents usually hand-delivered by a courier. Some states allow delivery by certified mail or allow couriers to simply leave the documents at the debtor's last known address. Delivery of the summons and complaint signals an official start of the lawsuit. Debt lawsuits are very serious. They are the most powerful weapon for a debt collector and can lead to bank and wage garnishment. Some people who lose debt lawsuits opt for bankruptcy to end garnishment.

Default Judgments

    Judges in civil court cases have no choice but to grant default judgments when defendants fail to appear in court for a scheduled court hearing. It is not unusual for debtors stressed out about excessive debt to simply ignore court notices. The debtors may understand that the notices are important but feel they simply cannot handle more bad news about their debt situation. However, by failing to appear in court for a hearing the debtor forfeits all rights to contest the lawsuit. The New York Times reports that some people failing to respond to court notices don't realize the seriousness of their error until they they learn that that their bank accounts or wages are under garnishment.

Prevention

    People facing court hearings should take action even before the court date. Showing up in court can also lead to a judgment if the debt is valid and the debt collector has documentation to prove it. Debtors should try to avoid appearing in court at all by resolving the case before the hearing. That usually means contacting the attorney for the debt collector and agreeing to a payment plan or settlement.

Advice

    Debtors with a court appearance should also hire a reputable consumer affairs attorney. The attorney can advise the debtor about the process and also file legal motions to delay the proceedings for months. The time could give the debtor time to gather money for a settlement.

Tuesday, December 18, 2012

How to Respond to a Foreclosure Summons

A foreclosure summons is the notification of a lawsuit and requires your immediate response. Ignoring the summons or failing to respond by the deadline can lead to a default foreclosure, according to the Pennsylvania Housing Finance Agency. A judge can grant a default judgment after you fail to appear in court to address the lawsuit. The judgment causes you to lose your home as it is awarded to the mortgage company or lender because you failed to make payments as agreed.

Instructions

    1

    Schedule a free consultation with a real estate attorney experienced in handling foreclosure summonses and lawsuits. Use the meeting to discuss your legal rights, the foreclosure process and how the attorney can help you. Also ask about attorney fees. Get a referral for an attorney by contacting your local Legal Aid office, and also ask if you qualify for free legal help based on your income and foreclosure situation.

    2

    Seek free help from a government-certified housing counselor before agreeing to pay an attorney. Contact a counselor approved by the U.S. Department of Housing and Urban Development. Visit the HUD website to find a counselor near you.

    3

    Take all of your foreclosure correspondence to your meeting with the housing counselor, including the summons and other foreclosure notices from the mortgage company. A government-certified housing counselor is an expert in foreclosure avoidance and can recommendations based on the current status of your foreclosure proceedings. The counselor may advise you to immediately hire the attorney to challenge the foreclosure in court. More likely, the counselor will offer to contact your lender directly to request a delay in the foreclosure proceedings while payment arrangements are discussed.

    4

    Authorize the housing counselor to contact your lender while you participate in a three-way call. Tell the lender why you have fallen behind on your mortgage payments and that you are getting back on track with the help of a government-certified counselor. The counselor can then discuss solutions for stopping the foreclosure and ending the lawsuit. For example, the counselor could ask the lender to give you time to make up the missed payments through a process called forbearance. Or the counselor could request that the lender consider changing the terms of the loan to make it affordable based on your income. During this process, known as loan modification, the missed payments could be waived or tacked onto the end of the mortgage.

    5

    Request written confirmation from the lender that the foreclosure process is being halted while discussions continue. Remain in close contact with the lender and the housing counselor to reach a final decision.

    6

    Hire the attorney to represent you if talks with the lender fail.

How Do Debt Consolidation Services Work?

How Do Debt Consolidation Services Work?

Avoiding Financial Disaster

    Living above your means, an unforeseen emergency and a bad economy are just some of the ingredients in a recipe for a financial disaster. Some consumers fold under this kind of pressure and choose bankruptcy as a way of avoiding the calamity. However, bankruptcy is not always the best, or the only, solution. Finding a reputable debt consolidation service may be the more viable solution.

What Is Debt Consolidation?

    A debt consolidation service, pretty much, is self-explanatory. The service combines all of the debt a consumer has acquired into a single affordable monthly payment. The logic behind a debt consolidation service is to provide a consumer with the financial breathing room for paying bills. Usually, the new monthly payment arranged by the debt consolidation service will have an interest rate that is lower than what the consumer previously paid. In some cases, a debt consolidation service will have the debt a consumer owes decreased.

How It Works

    A reputable debt consolidation service will have seasoned relationships with lenders. The service will use its relationships with lenders -- on the client's behalf -- to negotiate a lower interest rate and a lower payment.

Warning

    When a consumer is drowning in debt, he will be more apt to reach for the first financial rope back to safety. However, if the debt consolidation service sounds to good to be true, most likely it is. An unscrupulous debt consolidation service knows a consumer is vulnerable when he cannot pay his bills; this provides the window of opportunity needed for the scammer to make empty promises or charge for services it cannot deliver.

    There are a few things to look for when choosing, or inquiring, about a debt consolidation service.If a debt consolidation service approves you for service without having you provide proof of your debt, consider that to be your first red flag. A legitimate debt consolidation service needs proof that you are actually in debt. In addition, a real service requires a client to have a certain amount of debt before taking his case. Another red flag is if you are required to pay all of the cost associated with the debt consolidation service upfront. It is true that some debt consolidation services charge a fee; however, you should not be expected to pay that immediately.

Debt Settlement Dangers

Debt settlement companies are different than credit counselors. Debt settlement companies negotiate directly with your creditors for a lump sum payoff, not just for reduced interest rates or affordable payment plans. Debt settlement programs can have significant risk, so approach them with caution.

Fraud

    Fraud is a concern when using debt settlement companies. Some firms might not have your best interests at heart. Sometimes, you pay high fees before the company negotiates the first settlement with your creditors. Some servicers present themselves as experts and well qualified, but in reality, aren't experienced or capable enough to confront creditors and work settlements. Some services are scams, just take their fees, and disappear.

Lawsuits

    There is no guarantee that your creditors will work with a debt settlement company and accept a lower amount for a payoff. Most debt settlement companies work by having you make payments to them, and they hold the money until they have accumulated enough for a settlement with a creditor. Then, they call that creditor and begin to negotiate. In the meantime, the creditor could file a lawsuit against you. Some creditors do this even more quickly when they find out that you are working with a debt settlement company. The creditor could proceed to a judgment and a wage garnishment, leaving you even shorter on cash.

No Regulation

    As of 2011, the federal government does not regulate debt settlement companies, although that could change. Some states provide oversight, but in states with oversight, debt settlement companies are less likely to offer their services. If you use a debt settlement company, it is completely at your own risk.

Taxes

    The IRS considers debt settlement to be debt forgiveness. The creditors you settle with will send you Form 1099-C, stating that the forgiven amounts are taxable income. For example, if a creditor forgives $10,000 in debt, that $10,000 would be added to your taxable income for the year. If you are in the 25 percent federal tax bracket, you would owe $2,500 in additional federal income taxes on that $10,000 in forgiven debt above and beyond your normal tax bill. While you would still be saving money over paying the original debt, you need to be prepared to pay the taxes, or you could owe the IRS instead of the creditor.

Other Dangers and Concerns

    You take a significant hit to your credit when settling debt, although most of the damage may have been with seriously late payments. Debt settlement often takes two years to three years, whereas a Chapter 7 bankruptcy takes about four months if you qualify. Debt settlement firms frequently charge from 14 percent to 18 percent of your total debt amount for services that you may be able to do yourself.

Monday, December 17, 2012

How to Donate a Car in Westchester, New York

If you live in the Westchester area of New York, and you have a car that you no longer want to keep around, donate it to a local charity. Donating your car to a charitable organization allows you to help out an organization while earning a tax deduction at the same time. Typically charities accept both working and non-working cars for donation. When you are ready to donate your car in Westchester, you don't even have to drive the car to the charity as it will be picked up in most instances.

Instructions

    1

    Use the NADA Guides website (see Resources) to check the fair market value of your car. Enter your Westcheste zip code for the most accurate appraisal. You need the fair market value of the car to claim the donation on your taxes. If the value is over $5,000, you must get a written appraisal of the vehicle for your taxes.

    2

    Pick a Westchester charity to be the beneficiary of your car donation. Some of the local area charities that accept car donations include Habitat for Humanity of Westchester, Westchester Alzheimer's Association and SPCA of Westchester County. You can find other charities on the Charity Vault website (see Resources).

    3

    Set up a date and time for your car to be picked up by the charity you have selected. Some charities have online forms that you can fill out to schedule your pickup appointment. For example, SPCA of Westchester County uses the Donate Car USA site and Westchester Alzheimer's Association uses the Donate A Car website. A driver will come to tow away the vehicle, unless you plan on driving it to the donation center.

    4

    Take your New York plates and clean your personal items out of the vehicle before the driver arrives to take the car.

    5

    Sign your New York car title and give it to the driver when you car is picked up. Get your pickup donation receipt from the driver, which you need for your taxes.

Sunday, December 16, 2012

Debt Management Criteria

It's easy to lose track of how much debt you're accumulating, especially if you usually don't pay for things with cash and you don't tally small expenses. Successful debt management requires a change in spending habits, which includes considering how much you're paying in interest charges and fees to determine what your overall debt is costing you.

Organizing Debts

    List how much money you earn and what you spend to get a realistic picture of your debt situation. The U.S. Federal Trade Commission recommends listing your monthly income from all sources, not just your main source of employment. Tally all of your fixed costs next, which includes car payments and other expenses that are the same amount each month. List expenses that vary monthly too, including small costs such as subway fares.

Debt Reduction

    Documenting all of your expenses also can help you create a debt-reduction plan. One method is to list your debts in order from the ones with the highest interest rates to the ones with the lowest rates. Concentrate on paying as much as possible toward the high-interest debts while making the required minimum monthly payments on the others. The quicker you pay off high-interest debt, the faster you'll reduce your overall debt load.

Debt Ratio

    Consider your debt-to-income ratio before making a major purchase, such as buying a house. The ratio is the percentage of your pre-tax monthly income, or gross income, that goes toward paying debts. Mortgage lenders usually allow a total debt-to-income ratio of no more than 36 percent when considering whether to approve a home loan. Yet you also should consider how much you want to set aside in savings for emergency expenses, retirement accounts and other costs. CNN Money and other financial websites provide online calculators to help people determine how much they can comfortably afford to pay for a home. You also should avoid maxing out your credit cards because about 30 percent of consumer credit scores are based on how much debt people have accumulated. Lenders typically view large amounts of credit card debt unfavorably.

Considerations

    You could lower your monthly costs through debt consolidation by taking out a second mortgage on your home. Such loans allow homeowners to borrow money against the equity in their properties to pay off debts, which make them risky because the home is used as collateral. You could lose your home if you can't repay the loan. The cost of debt-consolidation loans can be expensive if you don't get a low interest rate and if you get hit with several processing fees. However, you may be able to recoup some of your costs because the interest paid on second mortgages is often tax deductible.

Friday, December 14, 2012

Does a Closed Revolving Account Reflect Negatively on Your Credit Report?

Credit card accounts are revolving accounts -- an account that requires a minimum payment each month on any balance due and limits the amount of credit you can have at a time. If you are abusing your credit cards, you may be considering closing those revolving accounts. However, this isn't always the best idea, as closing accounts can damage your credit.

Age of Accounts

    If you close your revolving credit accounts, the average age of your open accounts will take a dip. If the average age of your open accounts is low, you are less creditworthy than someone who has a higher average age of accounts. If you have had accounts for a longer period of time, it proves that you have built a credit reputation over the course of the years, while it may be hard to tell how trustworthy you are if you have opened your accounts recently. Thus, closing your accounts can hurt your credit score.

Debt-to-Credit Ratio

    The credit bureaus examine how much debt you have relative to your total available credit. If you have far more credit than debt, your credit score will be higher than it would be than if you would have used most of your available credit. When you close revolving accounts, you cut the total credit available to you. Thus, your debt will comprise a higher amount of your total credit, therefore lowering your credit score.

Credit Report Error

    Check your credit reports after you close an account. If the credit bureau mistakenly states that the creditor closed the account instead of you, it'll hurt your credit score. Creditors close accounts when debtors don't pay their bills, as agreed. Write a letter to the credit bureau if you find this mistake in your report so that it won't unintentionally harm your credit.

Considerations

    Closing revolving credit lines hurts your credit score more if you have balances on your other credit accounts, as opposed to not having any. Thus, before closing a credit line, you should make every effort to reduce your credit balances. Although closing a credit account can hurt your credit, if you can't resist overusing an account, closing it might be your best defense against future credit problems.

Thursday, December 13, 2012

Consumer Credit Programs

Consumer credit programs help clients create plans to get out of debt, manage spending and learn to stay out of debt. Consumer credit programs particularly benefit individuals who would like to learn more about the root of their spending behavior or learn how to manage their finances effectively.

Debt Settlement Program

    Debt settlement programs are best for those who can no longer make the minimum monthly credit card payments. A consumer credit program that assists with debt settlement assigns a counselor to communicate with a customer's credit card companies on his behalf over the phone or with a formal letter. The goal of the counselor is to reduce the amount of debt the customer owes on each card or reduce the interest rates. Credit counselors who offer debt settlement programs hold the belief that a credit card company would prefer to receive a reduced payment from a customer instead of no payment at all.

Debt Consolidation Program

    A debt consolidation program pays off a customer's credit card debt on her behalf so she only has to repay the consumer credit program instead of various credit card companies. Debt consolidation programs advertise that they offer lower interest rates because a customer only needs to make payments to one creditor. Debt consolidation programs are good as a quick-fix solution, and are most effective for those who have committed to not incurring debt while participating in the program. The best debt consolidation programs are upfront about all their fees and teach customers how to manage their money.

Credit Counseling Programs

    A consumer credit counseling program helps individuals pay off credit cards by setting up a debt management program, teaching them how to create a budget and evaluate spending. The Federal Trade Commission (FTC) states that good credit counseling programs are those who hire employees who are certified to provide credit counseling services and provide guidance to help customers repay debts with the use of effective money management. Some credit counseling programs offer public workshops free of charge about financial topics, such as saving money for large purchases.

Credit Card Assistance Program

    Instead of using a consumer credit program that may charge fees to help a customer get out of debt, an individual can call his own credit card companies. Credit card companies often provide consumer programs to those experiencing a financial hardship and assist by reducing the interest rate a customer pays or by adjusting the monthly payment amount to one that the customer can afford. A consumer can learn more and gain access to a credit assistance program by explaining his financial circumstances to a customer service agent.

Who Pays a Spouse's Debt When He Dies?

The death of a spouse is traumatic enough without the added stress of finances and debt collection attempts. Debt repayment during probate and the surviving spouse's liability depend on state laws and account details. Excluding joint accounts and community property states, proceeds from the estate pay off the debts, or creditors write them off as losses. If you are unsure about your financial liability, consult a legal professional about your rights and responsibilities.

Probate and Estate Process

    The executor of the estate has the responsibility for tallying assets and debts, notifying creditors of the death, paying debts with estate funds and distributing proceeds to heirs. If there is no will or no executor named, the court will appoint one. Estate assets and funds may be "frozen" until appointment of an executor. However, joint funds and resources may be available to the surviving spouse earlier. Insurance policies pay directly to the beneficiary and thereby avoid probate unless the will names the estate as beneficiary.

Paying the Debt

    Government debt takes priority in the payment process. Depending on state laws, you must next pay secured debt such as mortgages and properties with liens. Unsecured loans and revolving accounts like credit cards receive payment last. If estate funds are insufficient, some creditors receive no payment. The executor can only sell assets in the deceased's name to pay off debt. Jointly held properties, such as homes or vehicles, pass directly to the surviving account owner.

Joint Responsibility

    You may be liable for your spouse's debt if you were a cosigner on an account or you live in a community property state. Married couples in community property states share responsibility for assets and liabilities. Authorized users are different from cosigners, and excluding community property states, authorized account users are not responsible for the debt after the account holder dies.

Considerations

    Unless debt payoff was part of probate, debt collectors will call. Refer all collection attempts to the estate executor. If you are the executor or the estate has settled, ask for verification of the debt and check the statute of limitations in your state for the debt in question. Creditors cannot sue you beyond your state's statute of limitations. Additionally, most debt collectors will not tell you up front if you are personally liable. When asked if you are responsible, they must tell you the truth. The Fair Debt Collection Practices Act protects you from deceptive debt collection attempts.