May 2013 ~ Credit And Debt Management

Friday, May 31, 2013

Should You Try to Settle Your Debt?

11:58 AM No comments

Debt settlement is an effective strategy for discharging delinquent debts that requires no special education, little preparation and a relatively small investment. The payoff can be a dramatically improved credit rating and a clear mind. Compared to bankruptcy, debt settlement is time-efficient, doesn't require that you open up your financial behavior to scrutiny by a judge and avoids the stigma and credit rating damage caused by filing for bankruptcy.

No lender can force you to pay a debt. There are no prisons for debtors in the United States. They can seize property used to secure a debt. If they receive a judgement against you when suing you for collection, they may seize bank accounts or garnish your wages for repayment. Creditors can limit your ability to take on more debt by reporting your delinquency on payment to the credit bureaus. Other than that, they can do very little. Even if they try to garnish your wages, you can simply cash all your checks rather than deposit them. Whether or not you repay, settle or escape your debts is a choice, not an obligation.

When a creditor sells a debt to a collection agency, they typically receive only 5 to 20 percent of the amount owed in return depending on the size of the debt and the perceived ability of the borrower to repay it. This means that a collection agency can still turn a profit on a debt if they only receive a small portion of it in return. When you settle a debt rather than paying it in full, most of the time the creditor will report it as "settled" on your credit report. This damages your credit report more than if it were listed as "paid in full," but the negative effects decline over time. This is the chief advantage of repairing your credit rating for a relatively low price and discharging the debt at the same time.

The main alternatives to debt settlement are developing a payment plan with the lender to pay the debt in full, declaring bankruptcy and waiting until the statutes of limitations on the debts expire. A payment plan is expensive and unnecessary, but will discharge the debt over time. Declaring bankruptcy will wipe out all unsecured debt immediately, but it will also result in you losing most of your liquid assets and permanently damaging your ability to secure loans in the future. It also takes time and effort to successfully file for bankruptcy, as a judge must scrutinize your financial behavior for at least the 90 days before you filed for it. Waiting for the statute of limitations to expire on a debt can result in you being sued for collection, but the debt will eventually fall off your credit report.

Strategies for Debt Elimination

10:00 PM No comments

People who spend more than they earn often find themselves in debt, sometimes heavily. On average, a United States consumer has 13 credit accounts recorded at the credit bureau; nine of these are credit card accounts, the remaining being installment obligations. As of the end of 2008, the average outstanding obligation of every household from credit cards alone was $10,679. There are strategies you can employ to try to reduce your debts or otherwise eliminate them altogether.

With the recession, it is no wonder many people default in their payments, nor is it surprising that people are looking for ways to eliminate or reduce their existing obligations.

Debt elimination is the process of arranging for the possible settlement of your obligations quickly so you can stop paying the excessive interests charged on such loans.

Draw up a budget and adhere to it. It is important that, once and for all, you examine where your income is going and into what type of expenditures.

Stop using credit cards, especially while you're in financial crisis. Resist buying items on impulse.

If possible, pay more than the minimum required on your monthly credit card bill. This will speed up the debt elimination process. If you cannot pay more than the minimum, pay the minimum.

If you have two or more credit cards, use the snowball technique, giving priority to extra payments to the card with the smallest account. As soon as this card is paid off, apply the available amount to the next, then to the next, until all the card accounts are settled.

Try negotiating with your creditors for a lower interest. Some creditors understand what it means to be in a fix and may agree to your request.

Avail yourself of a balance transfer to a different credit card, but first know which card company is charging the lower interest.

If you have obligations other than in credit cards, and you have some properties, consider a debt consolidation program.

If you have missed payments on several accounts already, take a look at some formal debt settlement programs, debt management programs or, as a last resort, a bankruptcy proceeding.

In reality, you need not even look at any formal debt elimination arrangements to be debt-free. All that is needed is a firm resolve to eliminate debts, reduce your spending, increase your earnings and live within your means.

How to Snowball Credit Debt Payoff

7:54 PM No comments

A debt snowball refers to a method of paying down your debt by starting with the smallest debts first. This term is often used in conjunction with following personal finance guru Dave Ramsey's debt reduction plans. Debt snowballing works by providing quick progress to debt reduction. The disadvantage to debt snowballing is that you are not attacking your debt in order of the highest to lowest interest rate, so it may cost you more in finance charges than other debt reduction methods.

Instructions

Make a list of all of your credit card and debt accounts. Order the accounts from lowest to highest balance and include the interest rate for the account.

Calculate how much money you can put toward your debt every month. Subtract the essentials and minimum credit payments from your income and cut down on non-essentials.

Pay the lowest balance credit card with the leftover money from your budget. If card balances are close or tied, pay off the card with the highest interest rate first. Repeat this with all of your credit cards and debt accounts.

How to Garnish Wages in North Carolina

8:40 AM No comments

To garnish a debtor's wages in North Carolina, you have to file suit in the small claims court in the county where he lives. However, according to state law, wages can be garnished only for debts involving taxes, student loans, alimony or child support. You cannot garnish someone for credit-card debt unless a judgment has been ordered by a court in another state.

Instructions

Familiarize yourself with North Carolina wage garnishment laws. As of 2010, employers in North Carolina can legally withhold wages only on the basis of back taxes, student loans, alimony and child support. In certain instances, unpaid ambulance services could also be included. Other debts, including credit-card debts, are not permitted under the state's garnishment rules. The only exception is if a court from another state ordered a wage garnishment.

Go to Small Claims Court and file a lawsuit against the debtor. Make sure that you have all the necessary paperwork to prove your claim to the judge. If judgment is found in your favor, the court will issue a writ of execution.

Go to the office of the county where the debtor lives and obtain an application for an earnings withholding order. Have the order served to the debtor's employer. This order will provide clear instructions about how much money is to be withheld from the employer's wages and how the money will be collected.

Be prepared to negotiate with the debtor. Once the necessary paperwork has been served on the employer, you should start receiving the garnishment payments. The debtor has 30 days after judgment was found to start making payments, so during that time, he might attempt to negotiate different payment amounts. He can also file an appeal or he can file for bankruptcy.

What If I Don't Pay My Payday Loan?

9:29 PM No comments

Payday loans are loans issued by lenders for a short period of time --- typically a few days to a month --- at very high rates of interest. If a borrower of a payday loan defaults, he's typically charged additional fees and may face an even higher rate of interest on the loan. In addition, the lender is legally entitled to seek payment of the loan through a number of methods.

The contract that a borrower signs before taking out a payday loan spells out the consequences of defaulting on a payday loan. While each lender's contract is slightly different, the borrower is usually assessed additional fees, which are then added to the premium of the loan. In addition, the borrower is required to pay a higher rate of interest on this premium. A short time after defaulting, a borrower may find that he owes an amount several times the size of his initial loan.

A lender may take a number of different measures to compel the borrower to repay the loan. Initially, the lender is likely to contact the borrower, either by phone or by letter. If the borrower continues to remain delinquent on the loan, the creditor may then sue the borrower. If it receives a judgment in court, the creditor may then choose to petition the judge to freeze the borrower's bank account or to garnish his wages.

Although a creditor is legally allowed to take action against a debtor in court, whether it chooses to do so is another question. Often, the cost of suing a borrower exceeds the cost of the loan itself. In this case, the creditor may find that it makes more financial sense to negotiate a payment plan with the borrower, accept partial payment or, in some cases, write off the debt entirely.

Whether a creditor seeks payment of a debt or not, it almost certainly reports the delinquent debt to a credit reporting agency. This means that the delinquent debt is noted on the debtor's credit report, harming his credit score. According to U.S. federal law, negative information regarding bad debts can remain on a person's credit report for a maximum of seven years, during which time it continues to drag down the person's score and potentially affect the interest rate he can receive on loans.

What Are the Characteristics of Charge Off Accounts?

9:23 PM No comments

The term "charge off" became prominent in the news after the economy started falling in the late 2000s. Banks or lenders initiate charge off accounts when they realize a debt will likely not be paid.

A lender's accounts receivable department will determine if a loan or charge has become a bad debt. After this determination, they will take one of two steps. They will either write off the debt on their books as an expense on their income statement or sell the debt to an outside collector.

Normally a lender will not initiate a charge off account until there has been no payment on the debt for 180 days. If a borrower files bankruptcy, the charge off is usually immediate.

A charge off doesn't erase your debt--it just means the company has written off the amount of the debt on their income reports. Any contract that you signed saying you would be responsible for payment of the debt is still in effect. Even though the lender has filed a charge off, it may still take action to collect.

A lender or credit company can decide to sell charged off accounts to a collection agency. The agency then has every right to collect on the debt that the original lender had. Because a collection agency's profit comes solely from collecting debt, it may be more aggressive in trying to collect than the original lender was.

A charge off has a serious negative effect on your credit rating. Even if you ultimately pay off the debt, it will be recorded on your report. A charge off may remain on your credit report for seven years or more, unless you are able to strike a deal with the lender when you pay off the debt. When full payment is made, be sure that it shows on your report as a "paid charge off" or "paid as agreed."

How to Use Credit Dispute Letters

1:24 PM No comments

When you find an error on your credit report, you probably want to have this mistake corrected. This is what a credit dispute letter is for. Once you contact the credit companies who caused the mistake, they send you a letter stating that they asked the credit agencies to remove the errors from your report. You will then need to write your own credit dispute letter to send along with their confirmation to the credit agencies. Never completely rely on the credit companies to take care of this for you.

Instructions

Send certified letters. Many financial advisers say that you should not send separate dispute letters. Instead, combine your dispute letters into one letter to save on the cost. For additional information, visit Credit Infocenter. (See Resources for link). Certified letters typically cost about $5.10 each, so if you have a lot of errors, you will be spending a lot of money sending them separately versus together. You might worry that they won't investigate each dispute if all are listed together. However, according to the Fair Credit Reporting Act, credit agencies must investigate each dispute as long as there is a separate reason for each dispute.

Include relevant information. You need a copy of your current credit report. You also need to include the account name and number that you are disputing. You also need to add personal information such as your name, address and social security number. Any supporting documents, such as paid receipts, speed along the process.

Keep the letter simple and straightforward. This is especially important if you are disputing multiple items. List each dispute in a separate paragraph. Include in your letter the provisions in the Fair Credit Reporting Act that specify it is your legal right to engage in this process. Be courteous; you won't get anywhere by making threats.

Format your letter correctly. A dispute letter is basically a normal letter with specific information about your credit report. However, you still want it to look professional. There are thousands of credit dispute letter samples available online.

Get copies of your credit report. Once you get the mistakes cleared up, obtain a copy of your credit report to make sure it is indeed free of all errors. There are several different companies you can use for this service, and some of them are free. A couple of examples are Annual Credit Report and Free Credit Report. Continue to check your credit report on a regular basis to monitor for mistakes that could potentially harm your score.

Statute of Limitations Law Regarding Debt in Kentucky

12:43 PM No comments

Kentucky law sets forth several statutes of limitations on a creditor's right to enforce a debt. These statutes constitute a deadline by which the creditor must file a lawsuit against the debtor. If the creditor misses the deadline, the court can dismiss the lawsuit at the debtor's request. The length of time set by the statute of limitations depends on the basis for the debt.

Kentucky Revised Statute 413.090(2) generally provides a 15-year statute of limitations to enforce a written contract. However, Kentucky Revised Statute 355.2-725 provides a special four-year statute of limitations on written contracts related to the sale of goods, such as an installment agreement involving consumer goods. In either situation, the limitation period begins on the date that the contract is breached -- that is, when the debtor failed to make a payment.

If the contract is "not in writing, express or implied," then the five-year limitation period set forth in Kentucky Revised Statute 413.120 applies to enforcing the debt. This statute applies to all oral contracts and open-end accounts, such as consumer credit card accounts. Trade accounts between merchants and charge accounts provided by merchants to consumers are also subject to the five-year limitation period.

Creditors who file a lawsuit to enforce a debt before the statute of limitation expires can pursue the lawsuit to a judgment. When the debt is made into a judgment, it has the effect of restarting and, in most cases, enlarging the statute of limitations to enforce the debt. Subsection (1) of Kentucky Revised Statute 413.090 gives a creditor 15 years to enforce a judgment by using such court processes as a bank account or wage garnishment. The time period is calculated from the date of the creditor's last court action to enforce the judgment. Therefore, as long as the creditor does not allow 15 years to pass before taking the next action, the statute of limitations on the judgment can be extended indefinitely.

The statute of limitations for debts is not uniform throughout the country and can vary significantly from state to state. For example, if a resident of Delaware defaults on a credit card account, the limitation period to enforce the debt under Delaware law is three years as opposed to Kentucky's five-year statute. However, if the Delaware resident moves to Kentucky, the creditor cannot rely on the longer Kentucky statute of limitations. Kentucky Revised Statute 413.320 states that, if the debt would be barred under the laws of the state where it was incurred, it is barred in Kentucky.

Are Medical Bills Excluded for Credit Evaluations?

5:04 AM No comments

Lenders reviewing your credit profile consider both your debt level and your positive and negative accounts. The more negative accounts that appear within your credit history, the higher risk the lender incurs by approving your application. Medical debts appear on your credit report as collection accounts and can derail your ability to qualify for the credit card or loan you want.

Just because you owe outstanding medical debt does not mean that the debt shows up on your credit report. Provided you arrange a payment plan with your health care provider and make your payments on time, the provider has little reason to send your account to a collection agency. Health care providers do not submit reports to the credit bureaus. Because of this, a prospective lender has no way of knowing you owe medical debt that does not appear on your credit report unless you volunteer the information. This results in the lender excluding your medical debts from a credit evaluation.

Collection accounts on your credit report demonstrate a poor debt payment history to lenders. Unpaid medical debts your health care provider sends to a collection agency could adversely impact credit and loan applications in the future. The way a lender views your medical debt depends on the lender. Some lenders view all collection accounts in the same negative light while others do not consider medical debt an indicator of future nonpayment since medical care---especially in emergency situations---is not optional. In this situation, provided the other accounts within your credit profile are current, medical debt hurts your chances of approval less than other forms of unpaid debt you carry.

The creditor to whom you owe your medical debt has the right to file a lawsuit against you if you do not pay it off. A lawsuit and judgment forcing you to pay off your medical bills may leave you unable to keep up with payments to other creditors. Lenders take lawsuit risks into consideration when evaluating how your medical debt impacts your application.

Yet another factor lenders consider is whether your medical debt is high enough to force you into bankruptcy. A bankruptcy petition incorporates all of your debt. Thus, if the lender approved your application, it would risk its debt being discharged through bankruptcy alongside your medical bills---even if you had applied for the new account in good faith.

You can avoid lenders taking your medical debts into consideration by working out a payment plan or settlement with your health care provider and making regular payments on time. Doctors and hospitals often send unpaid accounts to outside agencies more quickly that other creditors. Thus, it's crucial that you act quickly in order to avoid credit damage.

Should credit damage occur, the Fair Credit Reporting Act allows you to include a consumer statement up to 100 words within your credit record explaining the circumstances surrounding the negative entry. The credit bureaus will then remove the medical debt from your credit report after seven years.

How to Answer a Debt Complaint

1:01 AM No comments

Once a debt goes into collection, it is already several weeks, maybe months delinquent. Creditors usually waste no time in trying to collect the debt. It is in your best interest to negotiate the debt before it reaches collection or even during the collections process. Failing to do so may result in a lawsuit. When this stage begins, you will receive a summons, which will contain the debt complaint. This will be your only chance to answer to the debt before the courts take over.

Instructions

Look through the summons paperwork for the complaint or list of allegations that the debt collector is accusing you of.

Get a separate sheet of paper or word document and address each complaint. Provide reasons for not making the payment or proof in the form of dates, payment types and amounts used to pay off the alleged delinquent accounts.

Gather your evidence. Make copies of original documents and prepare to bring both to the court. Make sure that the account numbers on your evidence documents match those in the allegations or complaint list.

Prepare your formal document. List the allegations as they are on the on the summons. Clearly type the words Admit or Deny beside each allegation. Place one of these words before the explanation. Admitting to an allegation is the same as pleading guilty. Denying the allegation is the same as pleading not guilty to the debt collectors complaints.

Place your explanation next. Use the reasons that you wrote up in Step two. Proofread it and make sure that it is clear and concise. Verify the details with the evidence material gathered.

Take or send the answer to the court that is listed in the summons before the due date given. This date will not be in the form of an actual date, but a set number of days from the date of the summons. Use delivery confirmation for letter sent via the post office to ensure that your letter gets to its destination. This will also serve as evidence that you mailed the complaint before the due date.

Illinois Programs to Help With Mortgages

6:42 AM No comments

Illinois has programs in place to help people in the state purchase their home and keep their homes when going through a financial crisis. The Illinois Housing Development Authority (IHDA) oversees all of the programs that the state offers and determines the guidelines and qualifications of qualifying for assistance.

This law was signed into effect in 2009 to provide homeowners who are not currently in foreclosure more time to work out an arrangement with their lenders and remain in their home. Homeowners who have applied for bankruptcy do not qualify for this program and assistance is only available for principle residences. The law states that lenders must notify homeowners when they are 30-days past due on their payments and that they have 30 days to enter a counseling program. After entering a counseling program, homeowners have an additional 30 days before foreclosure proceedings can begin. This gives homeowners 90 days to work out solutions with the lenders before losing their homes.

IHDA administers this federal program in Illinois. The program assists homeowners who are at risk for foreclosure or currently facing foreclosure. Through this program, homeowners are placed in contact with counselors who work with the lenders to achieve relief and prevent foreclosure when possible.

IHDA offers this mortgage assistance program for low to moderate-income borrowers and those who need assistance on their down payment and closing costs. The program provides up to $6,000 for down payments and closing costs and offers mortgages at up to 100 percent of the home's value. Qualified applicants can receive mortgage insurance at around one-third the cost of traditional insurance. Qualifications include a minimum credit score of 620, first-time buyer and home ownership counseling. This program is exclusively for homes in Illinois.

The Home Program in Illinois provides assistance to low income applicants for mortgages. The funds for the program are allocated by the federal government and managed by IHDA. The program seeks to encourage home ownership for low and very low-income residents. To qualify, applicant's income cannot exceed 80 percent of the medium income for the home's area.

How to Transfer Credit That Is More Than 10 Years Old

5:58 AM No comments

Old credit, depending on how well it has been paid, can be either very helpful or highly detrimental. If you have old debt that you need to transfer to a different account, the process is relatively simple. However, before you jump into a debt refinance, there are several factors you should weigh. In addition, it's important to keep in mind that transferring debt (also known as refinancing) will probably incur fees--sometimes, overwhelming fees.

Instructions

Pull a copy of your credit report first. This will show when the account was opened, how much is still owed, how much credit is available, how well it was paid, and whether there are any negative marks on it. Visit AnnualCreditReport.com to request a free copy of your credit report.

Review the statute of limitations for consumer debt for your state if the debt is seriously delinquent. Most states (see Resources section) allow consumers to expunge very old debts that are a certain number of years old.

Research lenders for a debt refinance, if you cannot expunge the debt. Use your credit report as a guide when you begin searching lenders. For example, if you have great credit, you should look only at local banking institutions (including credit unions). However, if you have some credit problems, you must also look at finance companies, such as Wells Fargo Financial and HSBC Financial.

Apply at a few lenders to get multiple options. Give all loan officers your income documents and the existing loan documents. This will help the underwriters put together accurate preapproval offers. Review all loan offers side by side. Pay close attention to fees, interest and term.

Compare all loan offers to your current loan. You do not want to take on a new loan that will not put you in a worse financial situation. For example, if your current loan has an adjustable rate, you should look for an offer that comes with a fixed interest rate.

Contact your current lender and ask for a payoff statement. This statement will include the total amount needed to repay the loan--including all fees, interest and a per diem for any days past the expiration date on the payoff statement. Give this statement to your new loan officer.

How Can I Pay Off My Home Equity Line of Credit Faster?

10:39 PM No comments

It can take years to pay off your home equity line of credit if you choose to only make the minimum payments. You can pay off your home equity line of credit much faster if you set up a plan to pay more than the minimum and stick to it. A home equity loan is a line of credit attached to your home. If you are unable to make payments, the bank can take your home in order to pay your bills. It is important to make paying off your home equity loan a priority.

Instructions

Stop using the home equity loan. If you continue adding money to amount you currently owe, it will take you much longer to pay off the loan.

Create a budget. Include all of your bills and expenses. Creating a budget makes it easier to find areas to cut so you can find extra money to put towards the home equity loan. Make sure your expenses are less than your income.

Cut back on entertainment costs and unnecessary expenditures to find money to put towards your home equity loan. Try to find an extra $200 or $300 to put towards the monthly payments in addition to your minimum payments. The more you pay each month, the more quickly you will pay off the loan.

Apply bonuses and your tax refund towards your home equity loan when you receive them. These extra one-time payments reduce the amount of interest that accumulates and can speed up the time it takes to pay off the loan.

Sell items to raise extra money to put towards your home equity loan. A yard sale can raise quite a bit of money if you sort through the things you no longer need in your home. You can also sell items on eBay and Craigslist. If your loan if large, you may consider selling big ticket items such as your boat or other high end items to raise money.

How Much Do I Need to Put Down to Buy a House?

6:31 PM No comments

If you want to buy a house, you're going to have to put a significant amount of cash down in most cases. The total amount you have available to give as a down payment could affect your interest rate or even your general eligibility for the loan. Know the minimums in advance of shopping for a home loan.

The lender asks for a down payment because the mortgage company's investors want you to invest in the transaction as well. When you put money down, you've immediately established equity in the house (the difference between the mortgage balance and the market value of the home).

The common percentage you need to put down to buy a house is between 10 percent to 20 percent. If you go for an FHA (Federal Housing Administration) loan you might be able put down as little as 3.5 percent. Use these minimums as a guideline, because each lender's rules and the borrowing situations vary. The exact amount the lender requires also depends on your credit score and profile.

Another amount you need to put down to buy a house is earnest money. This is a deposit you issue to the seller to show that you're serious about purchasing the home. The common acceptable amount to put down as an earnest deposit is between 0.5 percent to 1 percent of the proposed purchase price. Your real estate agent informs you of exactly how much earnest money you must put down to buy a home.

Start saving for a down payment at least a couple of years before you start shopping for a home. Cut costs and put the money into an interest bearing savings account, like a CD (certificate of deposit). You also have to prove to a lender where you get the funds for your home down payment. Acceptable sources of down payment money for a mortgage loan may include your own personal savings, a retirement account, a family member or a down payment assistance program.

What Is the Lowest Amount You Can Ask for When Negotiating a Debt?

2:32 AM No comments

Overwhelming debt can sometimes be knocked down to size through negotiations with your creditors. Credit card companies and other lenders sometimes forgive part of the owed amount rather than take the risk of having you declare bankruptcy or just stop paying the bill. They usually want the agreed-upon total in a lump-sum payment, the University of Illinois Extension advises. No laws govern settlement amounts, so the exact discount is between you and your creditors.

Make a low settlement offer because your creditor may turn it down and respond with a counter offer. Start at 50 percent of the owed amount, the University of Illinois Extension advises, and be open to some back-and-forth negotiation. Offer below what you can actually afford to pay so you have room to negotiate without making your finances worse.

Debt collectors often accept lower offers for debt settlement than your original creditors because they pay pennies for charged-off accounts. The collection agencies make a profit even if you pay a small percentage of the original bill, and Bankrate writer Lucy Lazarony explains that collectors have an incentive to settle because they receive commissions. Offer 30 cents on the dollar, she advises, and get a written contract before paying anything if you reach an agreement.

You may incur tax liability if you make debt settlements with your creditors because the government considers forgiven debt over a certain amount as income and imposes taxes. Check with a tax preparer or attorney before going through the negotiation process for advice on how your proposed settlement amounts will affect your taxes if the lenders accept your offer. Typically, liability starts when a credit releases you from at least $600 of a debt, Bankrate writer Steve Bucci advises

Debt settlement companies handle negotiations for you, but they charge fees that offset some of your savings. They typically offer 50 percent to 60 percent of the owed balance, according to Bucci. Their tactics often damage your credit rating. For example, Bankrate credit card advisor Leslie McFadden warns that some companies instruct you to stop paying your credit cards. Instead, you send the funds to the settlement firm until it has enough to make a settlement offer on your behalf. Your credit score plunges in the meantime because of skipped payments, and your card issuers may add late fees to your accounts, sue you for the debt or charge off your balance and transfer the account to a collection agency.

How to Rebuild Credit With Unsecured Credit Cards

7:16 AM No comments

Bad credit is reversible, wherein you're able to get a good interest rate on home loan, auto loans and other types of financing. Different factors lead to poor credit. But you can rebuild your credit history and maintain a high score. In fact, it's possible to re-establish a credit history using an unsecured credit card.

Instructions

Limit the number of credit cards you possess by cutting them down to the most essential ones. Rebuilding credit involves obtaining new lines of credit and periodically using credit. Rather than acquire several types of credit cards (gas, store and major), apply for one major credit card and only use it for emergencies.

Pay off the balance every month. Carrying a balance on your credit card decreases your credit rating and you're more likely to max out the account. Pay off your debts in full and keep a low balance to rebuild your score.

Know your due dates. Open credit card statements upon arrival. And if possible, make an immediate payment. You'll pay fewer interest and alleviate late payments.

Add your name to someone's credit card. Piggybacking is an effective way to rebuild credit. Ask someone with an excellent credit history (parent, spouse or sibling) to name you as an authorized user on their credit card. The credit card company will issue a card in your name, and report the account to the credit bureaus.

Be patient. Consistency is key to rebuilding credit. Paying your credit cards on time for one or two months isn't enough to significantly raise your rating. Continue to pay your credit card on time and make wise credit decisions.

How to Deal With Collection Agencies and False Claims

9:17 PM No comments

When an individual defaults on a debt and the debt is purchased by a collection agency, the agency often has to go to great lengths to track the debtor down in order to request payment. Many unlucky individuals have found themselves harassed by debt collectors for a debt they do not owe simply because they happen to have the same name as the real debtor, or the collection agency has a mistake in its records. If this happens to you, you should be aware of the fact that legal safeguards are in place to protect you from a collection agency's false claims.

Instructions

Write a letter to the collection agency as soon as you are contacted about the debt. Make the agency aware of the fact that you are not the person they are looking for and request a validation of the debt. The Fair Debt Collection Practices Act (FDCPA) allows any individual who is contacted by a collection agency over a debt to request proof that he actually owes the debt in question and proof of the original creditor.

Contact the original creditor of the account and ask to speak to a supervisor as soon as you receive the debt validation from the collection agency. Explain the situation to the supervisor you speak with and request a statement in writing making it clear that the transferred account does not belong to you.

Send a copy of the letter from the original creditor stating that the account does not belong to you, along with a formal notice that the debt has been sent to the wrong person, to the collection agency. Provide a copy of your picture ID to the collection agency if the name on the account is incorrect, or to show evidence of a different middle name.

Meet with an attorney and have a letter drawn up threatening to sue the collection agency if your previous evidence does not result in the collection agency dropping its claim against you. Also demand that any evidence of the erroneous debt be removed from your credit report.

Contact your state attorney general and the Federal Trade Commission to complain about the false claims made against you by the collection agency. One phone call from the attorney general will usually be enough to force the collection agency to leave you be and pursue the correct individual.

File a lawsuit against the collection agency for a violation of the FDCPA if the false claims against you are not dropped. You do not need an attorney to do this, but if you do opt to hire an attorney, you can request that the collection agency be required to pay your attorney's fees.

How to Get Out of Debt When You Don't Have a Job

6:53 PM No comments

Getting out of debt while unemployed may be difficult. Some people who are unemployed find it hard to cover necessary living expenses such as food and shelter. Others who are able to pay for necessities find that there is simply not enough money left to pay down debt, or to even make monthly payments. Telling your creditors about your unemployment could give you more time to find a solution for getting rid of the debt. Some creditors have hardship plans allowing payments to be reduced or even suspended while you are out of work.

Instructions

Contact a nonprofit credit counselor approved by the U.S. Department of Housing and Urban Development (HUD). Find a counselor near you by checking the HUD website. Choose a counseling agency listing financial management as a specialty.

Tell the counselor about your employment and your desire to get out of debt. Discuss your debts as you ask the credit counselor for advice on approaching your creditors for hardship consideration. Or authorize the credit counselor to contact creditors on your behalf. The Federal Trade Commission reports that counseling agencies offer debt management plans allowing the agencies to manage many of your monthly bills, such as credit cards. The agency contacts your creditor to negotiate lower monthly payments, reduced interest rates and a waiver of some fees.

Pay off some debts through debt settlement -- if you have enough cash in reserve to make lump-sum payments and still cover your living expenses. The SmartMoney website reports that credit card companies may settle delinquent accounts for 20 to 75 percent of the balance, meaning you could pay off a $1,000 credit card bill for as little as $200. Ask for a settlement by calling the customer service number of your credit card company. However, SmartMoney reports that the card companies won't discuss a settlement until you are at least three months behind.

File for bankruptcy as a last resort. Chapter 7 bankruptcy allows you to eliminate all unsecured debt, such as credit cards, within months. There are income limits for Chapter 7 that vary by the state, but you may qualify because of your unemployment status. Chapter 13 bankruptcy is another option, but requires a payment plan of three to five years. Chapter 11 bankruptcy is much more complicated and expensive than other forms of bankruptcy, according to the website Bankrate. The website reports that Chapter 11 is used mostly by businesses and wealthy individuals.

How Long Does It Take for a Levy to Be Placed on an Account?

10:06 AM No comments

A bank levy is a real and serious threat if you owe money to a creditor or the IRS. It takes time to enforce a bank levy because the creditor must follow proper protocol such as receiving a court-issued default judgment in a lawsuit. You have an opportunity to defend yourself, but if you lose your appeal and the creditor wins the lawsuit, it can employ a bank levy right away.

The first step in the process for obtaining a levy is filing a lawsuit in the local civil court. The time that it takes to do this varies depending on the creditor. For example, if it is a credit card debt, the creditor usually makes several attempts at collections, which could last several months, before seeking a court remedy. The creditor must prove to the court that you owe and defaulted on the debt. The court grants the debt collector a default judgment if it successfully wins its case. You have an opportunity to appeal. To do this, you must respond to a summons to appear in court.

A levy is a court order that grants another party the right to remove funds from your bank account to satisfy a debt. There is no time limit for enforcement of a levy. The time that it takes depends on when the creditor files the necessary paperwork with the local authorities to levy funds from your account. In New York City, a creditor or debt collector can hire a city marshal to enforce the levy.

The Exempt Income Protection Act (EPIA), which went into effect on Jan. 1, 2009, protects bank accounts that contain subsistence funds. The EPIA protects you if you receive Social Security, disability, worker's comp, SSI, veteran's benefits, unemployment benefits, public assistance, Railroad Retirement benefits and Black Lung benefits. However, a bank levy is enforceable if you owe child support payments and federal taxes.

If you receive a summons to appear in court for debt you owe, do not ignore it, or the debt collector will automatically win its case against you. Having legal representation is important even if you receive assistance from a public attorney. You still have an opportunity to negotiate with your creditor before the matter goes to trial. This saves you money in the long run as creditors usually tack on their lawyer's fees and other expenses to the money owed. If you hire your own attorney, it becomes even more expensive if you lose your case.

Debt to Income Ratio for Personal Financial Health

12:13 AM No comments

With easy access to credit cards and perhaps having income from more than one source, it can be easy to use the credit card and checkbook without much thought. However, if you do, even if you make all of your minimum credit card payments on time, you could be hurting your financial health by raising your debt-to-income ratio. Your debt-to-income ratio is the amount of reoccurring debt you have divided by your income after taxes. Calculating it can open your eyes to the amount of money you have available to put toward your other expenses each month.

According to Care One, a debt relief service, a healthy debt-to-income ratio is anything below 36 percent. However, it is helpful to have a lower debt-to-income ratio, and increasing your ratio to near 36 percent might be a ineffective strategy if you have no plan or ability to pay off some of that debt quickly or to raise your income. Most lenders use the 36 percent debt-to-income theshold to determine whether they will approve a loan and the interest rate you will pay, according to the LendingTree website. However, your debt-to-income ratio affects more than just your ability to qualify for a loan. It also determines whether you have enough income to pay your debts and still have enough money left to satisfy your basic needs, invest in your family's future and maintain your desired lifestyle. If you calculate your debt-to-income ratio and determine you only have $50 left per month after bills and expenses, you don't have a healthy ratio.

While some lenders will not offer loans to people with debt-to-income ratios above 36 percent, others will, but the interest rate they offer is likely to be high. Many mortgage lenders require that your housing expenses alone not exceed 28 percent of your monthly gross income, according to LendingTree. However, some government loan programs, such as those loans insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), may set a higher threshold for the debt-to-income ratio of its borrowers. Regardless of whether you are approved for a loan based on your debt-to-income ratio, you should calculate your ratio before signing the papers. Use it to gauge your financial health, and dont sign the papers if you believe the loan will raise your debt-to-income ratio too much to meet your expenses.

Calculating your debt-to-income ratio is helpful in preparing for unforeseen circumstances. While paying more than half of your income toward your debt may be comfortable when you have a large income and your debt represents investments, things may be different if you lose your job or face unexpected medical expenses. Consider these issues before you raise your debt-to-income ratio.

One way to achieve a healthier debt-to-income ratio is to pay off some of your debt. If you suddenly come into a large amount of money, such as a tax refund, gift or inheritance, consider allocating some or all of it to debt repayment. This will reduce the amount you owe and give you a lower, healthier debt-to-income ratio. If you can do that, you also must try to avoid accumulating debt in the future.

How to Get Help Paying Credit Card Debt

6:16 AM No comments

If you're drowning in credit card debt, you're probably looking for a little relief. Learn all of the ways you can help yourself get out of credit card debt. If all else fails, then learn the last resort effort you can turn to for help in getting your credit card debt under control.

Instructions

Call each of your credit card companies, if you're having trouble making payments. Talk to them about setting up payment arrangements or see if they can lower your interest rate. Also inquire about a zero interest option, which at least allows you to stop earning interest on your balance while you continue to make payments to reduce the amount you owe.

Use the cash you have to pay off or at least reduce the amount of credit card debt you have. If you have money in a savings account, it is probably earning very little interest. Be sure to keep enough cash in savings to have a cushion for emergencies, but you'll end up saving more money in interest by reducing your credit card debt than what you're earning on the cash.

Consider taking out a home equity loan to pay off and consolidate your credit card debt, if you own a home that has equity built up in it. Home equity loan rates are much lower than credit card interest rates and are usually tax deductible, while credit card debt is not.

As a last resort, turn to a debt consolidation company. Consumer credit counseling agencies can help. They negotiate with your credit card companies to come up with terms and conditions that you can afford. You pay one monthly payment and the counseling agency pays the credit companies. While it may be a relief to you, it doesn't look good to future creditors that you had to go to a counselor to help you manage your finances. Lenders and creditors want to see you can manage your own finances, so only take this route if you have to.

Stick to the new terms and conditions. Whether you convince your credit card company to change your terms or you turn to a credit counseling agency, make sure you stick to the new payment arrangements. Be sure to make your payments and make them on time. Also, stop using your credit cards to avoid running the debt up even further.

How to Beat a Credit Card Law Suit

3:03 AM No comments

Beating a credit card lawsuit is all but impossible unless fraud or identity theft can be established. There are some tactics that can slow the process, but the law is on the creditor's side or his agent, a law firm. Some law firms that collect on these sorts of lawsuits seek "lay down" business--that is, debtors who do not fight the suit. By fighting the suit, there is a chance that you can beat it.

Instructions

Request a validation of the debt. This is a temporary way to suspend collection action. You have to send a written request to the creditor, and it must, by law, send you confirmation that it is you that owes the debt. In the meantime, it must suspend all collection action.

Answer the lawsuit when you receive the copy. The lawyer sending the paperwork to you is hoping you will ignore it. If you do, in many states, the lawyer is then able to motion the court for a default judgment and begin to collect against you and your assets. That means garnishing your wages (and your spouse's in some states), seizing your bank accounts and/or putting liens on your property. You can also try to negotiate a lesser amount if you know you owe the money and see if that will satisfy the creditor.

Research your state's laws to see if the lawsuit is still legal in your state. Some states allow lawsuits for seven years after the last sale, while others limit a right to sue to four years. The lawyer may be trying to get a quick judgment before you realize he cannot sue you.

Contact the lawyer and explain your financial situation. Since he is acting on the orders of another party, he may not care about threats of bankruptcy. His job is to get a judgment and cash if at all possible. But he may want to have good statistics to report to the creditor, so he might stop the suit if your situation is dire. He may not stop the suit, however, and you will have a judgment against you.

If all else fails, file for bankruptcy. Though this a much more involved process than it once was, it will retire the debt in some cases.

How to Clear Old Debt

12:09 AM No comments

Clearing old debt could end harassing phone calls from debt collectors and improve your credit. A debt several years old may be preventing you from being approved for a mortgage loan. Or banks and credit unions may be offering you only high interest rates on a loan for a new car. Old debts never legally expire and can be listed on your credit report for seven years, according to the Federal Trade Commission.

Instructions

Get a copy of your credit report. Visit the website Annual Credit Report to view and print a copy for free (see Resources). The Federal Trade Commission reports that you're entitled to three free reports every 12 months under the terms of the Fair Credit Reporting Act.

Review your report to find old debts. Your debts may still be held by the original creditors or may have been sold or assigned to debt collectors. The current contact information will be listed on your credit report.

Call the individual creditors or debt collectors and make arrangements to pay the debts in full -- either in a lump sum or through installments.

Offer to settle the debts for less than the full amount if you can't afford to pay the entire bill. The SmartMoney website reports that debt collectors will often agree to settle old debts for 20 to 75 percent of the balance. Make 20 percent your initial offer as you negotiate a payoff. Get an agreement in writing before making payment.

Apply for bankruptcy if your debts are severe and you cannot pay them off in full or negotiate settlements. Chapter 7 bankruptcy allows you to eliminate unsecured debt, such as credit cards, in as little as a few months. Chapter 7 bankruptcy can be difficult to qualify for because of income limits that vary by the state. Another option is Chapter 13, which requires a payment plan of three to five years, during which time you will be held to a strict budget by the bankruptcy court.

The Pros & Cons of Debt Management Programs

1:22 PM No comments

Consumers who feel as though their personal debt is getting out of control might decide to look into a debt-management program as a solution. According to Consumer Reports, while the lure of debt-management programs might be tempting, the reality could wind up being something different. Research debt-management programs to understand the pros and cons of becoming involved in one.

According to the Federal Trade Commission, one of the benefits of a debt-management program is it can help you get control of your debt if you are unable to on your own. Many consumers feel intimidated by the thought of having to talk to their creditors and work out their own debt-management program. When you contract the services of a debt-management counselor, they do the work and negotiation for you and get you on a plan that fits your budget.

One advantage to using a debt-counseling service and a debt-management program is the benefit of the counseling service's experience, according to Investopedia. In researching debt-counseling services, you should look for a professional who has the proper certifications, experience and is certified by the National Association of Financial Planners or other reputable, national organization. This allows you to check on the experience of the financial professional and find one who gives you confidence.

According to online financial resource Bankrate, when you become involved in a debt-management program, your credit accounts are frozen while you pay them off. Creditors will refrain from giving you new credit until after you have paid off your debt-management program and have shown a record of on-time payments for 12 to 24 months after your program ends. This means if you need a car loan, credit card or mortgage, you might run into problems for up to seven years.

According to Consumer Reports, your debt-management plan might include debt consolidation. While debt consolidation can help lower your obligations and interest debt, it also pulls all of your debt together under one loan. If you default on your consolidation program, you are defaulting on any account in the consolidation. For example, if you take out a second mortgage as part of your debt-management program and you roll your car loan into that as well, if you default on your consolidation program, you are also defaulting on your car and house payments instead of dealing with them individually.

Can Debt Settlements Help Credit Card Judgments?

2:22 AM No comments

Debt settlement resolves credit card debt, usually for less than the full balance. Settlement is possible once a credit card becomes seriously delinquent -- usually after it is 90 days or more past due. Settlement is also possible on credit card accounts whose delinquency led to a debt lawsuit and court judgment. People settling credit card debt at that point are most likely trying to avoid bank or wage garnishment. The settlement helps with that, but not significantly in any other way. A judgment is a legal order by a judge ordering a defendant to pay a certain amount of money.

Avoiding bank and wage garnishment is critically important for most people. Bank garnishment allows a debt collector to freeze the debtor's account so that the debtor does not have access except to deposit more money. Meanwhile, the debt collector has the legal right to withdraw money for the full amount of the judgment through a lump sum withdrawal or installments. Wage garnishment forces the debtor's employer to make regular deductions from the debtor's paycheck and send it to the debt collector on a regular basis.

Some debt collectors may agree to a settlement that ends the threat of garnishment. However, a judgment gives the debt collector full leverage. The debt collector may insist on a settlement for the full amount of the judgment -- and an additional fee for agreeing to accept payments in monthly installments. A settlement is a voluntary agreement between the two parties, giving the debt collector the right to ask for whatever he wants. The debtor can refuse, but then could face garnishment.

Settling a judgment on a credit card debt does little to immediately help credit scores and ratings. Usually, settlements will not erase negative information on credit reports leading to the judgment. A person receiving a judgment for credit card debt suffers severe harm to credit because of negative entries on credit reports. They include multiple missed payments on the account, a charge-off by the creditor and another notation called a collection account that indicates assignment to a debt collector. The charge-off indicates the creditor closed the account for nonpayment. Those events combined can cause credit scores to plummet, with two or three years necessary in some instances for full recovery.

Some debt collectors may agree to remove some negative information from credit reports as part of the settlement agreement. That's known as "pay-for-delete." However, not all debt collectors participate in such arrangements. One credit report entry that the debt collector cannot erase is the judgment itself. Credit bureaus get that information directly from court records, and it will remain on reports for seven years. Paying a judgment results in an update to credit reports to show the judgment as a "paid judgment." Settlements cause updates to credit reports to show the account as "settled for less than the full balance," or something similar. Neither update significantly improves credit scores.

Tips That Protect From Online Hackers & Credit Card Identity Theft

12:43 AM No comments

Shopping online is convenient and saves money on gas and maintenance on the car, and you can go to hundreds of different stores all from the comfort of your home. According to the Privacy Rights Clearinghouse, consumers should be as vigilant in protecting their personal information online as they are when shopping in a retail store. There are tips that protect from online hackers and credit card identity theft that all consumers should follow.

According to the Privacy Rights Clearinghouse, you can protect yourself from identity theft by using only secure websites. There are two ways that you can tell whether a retail website is secure. The first way is to see whether the address in the address bar starts with "https://" or "shttp://" instead of just "http://". The "s" indicates that the website has a security encryption certificate on it that protects you from hackers. The second way to tell is that, if you are using Internet Explorer, a secure website will show a closed padlock icon in the bottom right-hand corner of the screen.

Cybercriminals are most active during the traditional peak buying times of the year, according to CreditCards.com. The week prior to and the week after Thanksgiving and Christmas Eve are popular holiday shopping days that will find hackers looking to steal your online information. To avoid the spike in criminal activity, avoid doing your purchasing during traditionally busy shopping times.

Phishing is the criminal activity involving spam emails used to steal your personal credit card information, according to MSN Money. If you receive an email that appears to be from your credit card company asking you to click on a link to validate your login information, you should not click on that link. Log in to your credit card company's website directly through its login page, and check for any messages or alerts from the company that would indicate you need to validate information. If you do not see any messages, then follow the instructions on the website to report the email as an attempt at identity theft.

Because of the ability to dispute charges that are suspicious, the safest way to shop online is by using a credit card, according to the Privacy Rights Clearinghouse. However, in order to protect yourself, you should get one credit card to use for online purchases and not use any of your other cards online. This will protect your other accounts and allow you to better manage your one card in case any suspicious charges should appear.

How to Remove Fraudulent Charge Card Liens in Georgia

4:36 AM No comments

A lien is an ownership interest filed against a property for nonpayment of debt. If a lien filed against a piece of property, you cannot sell or transfer the property, unless you satisfy the lien. Liens come in many forms and sources, but are not valid unless approved by a local judge. If a credit card company obtains a judgment against you, it is nearly impossible to sell or refinance your property, unless you pay the lien. However, if the debt is fraudulent, you have right to have the lien removed.

Instructions

Send the lien holder a letter via certified mail, stating that the debt is fraudulent. Be sure to include in this letter the reason why the debt is fraudulent, that you were unaware of the lien on the property, and request documentation for validation of both the debt in the existing lien.

Wait approximately 30 days for the lien holder to respond. If the lien holder responds by sending only a bill for the debt in the mail, claiming that is validation of the debt, send the lien holder a new letter restating that the debt is fraudulent. In this letter, mention that the lien holder is not abiding by the Fair Debt Collection Practices Act (FDCPA), and you intend to file a complaint with the Federal Trade Commission (FTC) if they investigate the validity of this debt. Once the agency completes investigation of the debt, he will send a letter with the results of the investigation, usually requiring a signed and notarized affidavit from you stating that the debt is indeed fraudulent and requiring you to submit subsequent proof. On the other hand, if the lien holder responds with letters stating they have investigated the debt and found it fraudulent, there is little more you need to do.

Sign off on paperwork or affidavits confirming the debt is fraudulent. Upon receipt of documentation, the lien holder begins the process of dismissing the debt with the courts. In the meantime, visit the Federal Trade Commission website, and file a complaint for identity theft, citing the fraudulent credit card debt and subsequent lien. This will substantiate your claims that the debts fraudulent both with a lien holder and with any other collection agency attempting to collect the debt in the future.

Request a copy of the release of lien from the lien holder. Once filed with the county court clerk's office, your lien is removed. If the lien holder fails to file the paperwork within the next 30 days, it is your responsibility to work with the lien holder to ensure the paper reaches the right set of hands. This is the only way to ensure dismissal of a fraudulent lien, without filing a complaint with the FTC.

Credit Card Debt FAQ

2:40 AM No comments

Credit card debt can cause financial problems for years -- even a lifetime -- making it difficult to save for retirement or pay cash for simple emergencies. In extreme cases, credit card debt can lead to bankruptcy in the event of a job loss or illness.

Credit cards allow you to pay for goods and services without using cash. Most cards allow you to pay the balance in full each month, or make a minimum payment that could be as low as 1 percent of the balance, according to "The New York Times." Paying less than the full balance each month leads to the accumulation of debt.

It can take decades to pay off credit card debt if you're only able to make the minimum payment. "The New York Times" reported in 2009 that it would take 32 years to pay off a $10,000 credit card balance at 18 percent interest if you only made the minimum payment.

Avoid excessive credit card debt by paying more than the minimum payment each month. The website MyFICO reported in 2010 that more than half the people with credit cards, on average, use less than 30 percent of their available credit. Avoid excessive debt by keeping your balances low as well.

How to Record the Present Value of a Debt

10:56 AM No comments

Under the Fair Credit Reporting Act (FCRA), creditors must accurately report the present value of any debt according to the original debt agreement. The creditor is obligated to correctly report the value of the debt in all communications with the debtor related to the current value. In addition, any reports to the major credit bureaus must be accurate. If you can demonstrate that a creditor has violated the FCRA by misreporting the value of a debt, you may be entitled to damages.

Instructions

Review the original agreement that created the debt. Look over any bills that were paid and any additional amounts that were borrowed in the case of a line of credit. Calculate the interest payments yourself to ensure that the company has not made any errors. Calculation errors are surprisingly common, so if you see a debt value that is out of line with what you believe you owe, double-check it.

Ask your creditor for the current value of the debt. Request that the information be sent to you in writing. If you detect any errors in the debt calculation, inform the creditor and request an itemized report of your account. When you receive this, further review it for any errors. If you think you're a victim of identity theft, inform your creditor as quickly as possible.

Order copies of your credit reports from the three major consumer credit bureaus (TransUnion, Equifax and Experian). Dispute any erroneous debts with the relevant credit bureaus. If you have documents from the creditor that show a value contrary to the one reported to the bureau, include copies if the bureau requests more information.

Contract with a debt lawyer if the recorded value of your debt remains inaccurate and you have adequate documentation. An attorney will be able to help you file a lawsuit or come to an agreement with your creditor to update the value accurately.

An Early Withdrawal From an IRA to Pay Off Credit Card Debt

9:32 AM No comments

Taking an early distribution from an IRA to pay off a credit card is more costly than most people initially realize. If credit card payments are made regularly and the balance is continually declining, then an early withdrawal really should not be taken. However, the concentrated effort should be toward paying off that balance through reduced spending. This can include not contributing toward the IRA for a period of time.

An early withdrawal from an IRA, traditional or Roth, is subject to penalties imposed by the Internal Revenue Service. A traditional IRA is subject to taxation at the current rate based on a person's level of income, plus a 10 percent penalty. If the person is taking an early distribution from a Roth IRA, then it is not taxable as income but may still incur the 10 percent penalty.

When you take an early distribution from an IRA, you also lose any capital gains or divident payments that would have been made on the investment. The length of time that it takes to repay the amount determines how much is actually lost. For example, if a stock pays an annual dividend of $3 per share and paying off the debt requires selling 1,000 shares, that person is losing $3,000 per year in income. If it takes four years to repay it, that's an extra $12,000.

Credit card debt, when not managed properly, may be subject to very high interest rates. If substantial payments cannot be made toward paying it off, then the amount may be steadily growing rather than declining. It is necessary to make substantial contributions to pay off any amounts for which this has become the problem.

If the credit card balance is growing from month to month, because only minimum payments can be made, then something will need to be done to manage it.

A person must weigh the cost of an early distribution against the cost of making continuous and steady payments on a credit card. The best course of action is probably to forgo any payments into an IRA and instead contribute that money toward paying off the credit card. Early withdrawal should really be a last resort.

How to Negotiate a Payment Plan With a Debt Collector

6:53 PM No comments

Debt collectors use many unlawful tactics to secure a payment from debtors. Some include threats of lawsuits as well as verbal insults. No matter how many threats and insults the debt collector hurls at you, understand that you have the power to negotiate. Don't be persuaded by what the debt collector tells you will work for his company. Instead, persuade the debt collector by telling him what works for you.

Instructions

Avoid making a payment arrangement until you are certain that the debt belongs to you. If you agree to make a payment arrangement, it is equivalent to assuming responsibility for the debt.

Check the "date of last activity" on the account before negotiating a payment plan. First request a copy of your credit report. You can get a free credit report each year through the Annual Credit Report website. You can also order a paid copy of your report from each credit bureau, Experian, Equifax and TransUnion.

Avoid making a payment plan if the debt is approaching your state's statute of limitations. In many states, an inactive delinquent account can remain on your credit report for seven years. After seven years, the debt has to be removed. If you agree to a payment plan, the date of last activity is reset. This voids the current statute of limitations on the debt.

Advise the debt collector of the amount you can comfortably afford to pay each month. The debt collector will likely pressure you to pay more. However, it's better to make a payment plan that you can honor than one you can't keep.

Ask the debt collector for a lower payoff amount if you pay the balance owed in full. Many debt collectors will significantly reduce the amount you owe if you agree to make one lump-sum payment.

Request that the debt collector report your payment to the credit bureaus. This shows potential creditors that the debt is paid in full.

Request everything in writing. This includes the payment plan, lump-sum settlement amount and the agreement to report your payment to the credit bureau.

How to Write Off on Regions Bank Loans

1:07 PM No comments

A loan written off by Regions Bank could cause your credit score to drop significantly. You also may face collection efforts, as the bank assigns your loan account to an internal or external collections team. Although the credit consequences can be severe, some people intentionally allow accounts to be written off in hopes of paying them off for less than the full amount owed -- a process called debt settlement. It's important to note that it's up to Regions Bank to write off the account -- not you. You will remain fully liable for the account even after Regions takes the write-off for tax purposes. Also, only unsecured loans, such as credit cards and signature loans, are eligible for settlement.

Instructions

Contact Regions Bank to make sure you fully understand your options. Call the customer service number on your statement. If a settlement offer is what you really want, ask for that. Most banks will offer to settle your account once you fall three months behind on payments, the SmartMoney website reports, although Regions could elect to settle sooner if it suspects you will default.

Offer to settle your loan account with Regions for 20 percent of the balance. Banks will generally settle for 20 percent to 75 percent of the balance, according to SmartMoney. Politely end the conversation and hang up if Regions won't settle or settle for an amount that you cannot afford.

Call back every few weeks to ask again. Most banks will close your account and write it off after you fall six months behind on payments, according to MSN Money. Writing off the account will allow Regions to collect a tax break equal to 35 percent of your balance -- while still coming after you for the full amount.

How to Finance Medical and Dental Procedures Interest Free

4:56 AM No comments

If you are one of the millions of Americans without medical and/or dental insurance, or if the insurance you do have will not completely cover a particular procedure, you may want to consider trying to obtain interest-free financing to pay for your procedure.

Instructions

Speak to your doctor/dentist about whether his practice offers this option. Orthodontists, in particular, should allow you to break down the total charges into lower monthly interest-free payments as you or a family member receive ongoing treatment.

Inquire about third-party finance options, if your healthcare provider does not offer his own interest-free payment plan. Ask if his office has an agreement with any finance companies offering interest-free loans for medical or dental procedures. Some doctors will have forms on hand to apply for the loan or a website link for you to access.

Inquire of the credit card companies with whom you already do business. Explain that you need a loan for a medical or dental procedure and ask if any special finance options exist for this purpose. Some credit cards offer 12-, 18- or 24-month loans at zero or very low interest, so be on the lookout for these promotional offers.

Google "interest-free medical loans." You will find several sites to explore (see Resources).

Evaluate the credit offers you find and determine which would suit your needs. Be sure you can comfortably make the required payments on time. This is the key to truly getting the benefits of an interest-free medical or dental procedure loan.

Statute of Limitations on Personal Debt in Oregon

6:37 PM No comments

When an individual incurs a debt to a creditor, the creditor has the right to seek repayment of this debt through various means. However, according to U.S. law, the creditor can only legally seek repayment of this debt for a certain period of time. This statute of limitations on debt collection is set at the state level. In Oregon, most consumer debts can only be pursued by creditors for up to six years.

In Oregon, the time period marked by the statute of limitations begins when a debt first goes delinquent. After the debt has become delinquent, a creditor in Oregon will have six years to collect it. After this time has elapsed, the debtor no longer has any legal obligation to pay the debt and the creditor is no longer allowed to take collection actions. However, if additional payments are made on the debt after the debt has been declared delinquent, the statute of limitations will reset.

Many states have different statutes of limitations for different types of consumer debt. However, in Oregon, all consumer debt accrued through a contract, either written or verbal, has a statute of limitations of six years. In addition, debts accrued through other means, such as unpaid bills, can also only be collected for six years. However, counterclaims made by buyers against sellers do not have a statute of limitation in Oregon.

A creditor owed money by a debtor has the right to sue the debtor in court. If the creditor does so, a judge will award him a legal judgment if he finds the case to have merit. Once a debtor receives a legal judgment ordering him to repay the money he owes, then a new statute of limitations goes into effect. The statute of limitations on legal judgments in Oregon is not six, but 10 years.

Theoretically, the personal debt accrued in Oregon may be owed to the federal government. For example, a debtor may have failed to pay his taxes in full, defaulted on student loan payments or neglected to pay child support. In the case of debts owed to the federal government, there is no statute of limitations. A debtor will owe this money until he dies -- and sometimes even longer. In some cases, the government will attempt to take this money out of his estate.

How to Collect and Enforce Child Support in California With a Father Not Paying the Full Amount

5:39 PM No comments

Collecting and enforcing your child support order may be difficult when the father of your child is not paying the full amount owed to you. California law allows for methods of support enforcement against your child's father to get the money owed, like wage garnishment, bank account seizure, license suspension and interception of tax return refunds. The father of your child is still considered in arrears if back support is owed, even if he is making partial payments.

Instructions

Calculate the amount the father is in arrears by. Visit the official website of the California Department of Child Support Services to view your account information online. You need to register and receive a personal identification number to use the online services to check the support payment history if you have not already done so. Write down the amount of support you are currently owed.

Write down all of the information you have about the father of your child. List his current place of employment and address, any assets he has, like a house, and the name of any financial institutional where he has bank accounts. Note if the father has a valid California driver or work-related license, like a broker's license, and whether or not you expect him to file an income tax return. Collect any supporting documentation you have, like a recent pay stub from the father.

Contact your local child support agency worker. Check the notices you received from the child support unit if you are unsure about your worker's contact information. Give the worker all of the information about the father you have and verify the arrears amount. Request that further enforcement action be taken against the father, like bank account seizure and license suspension, if possible.

Respond to all requests from the child support agency and your worker. You may be required to attend court hearings regarding further collection activity against the father.

File a complaint with the Complaint Resolution program if you are unable to get collection enforced through your local child support agency. Visit or contact your local child support agency and request the "Complaint Resolution" form. Fill out the form in full. File the complaint in person at your child support agency or by mail within 90 days of the event that is the basis of your complaint, like an unresponsive support worker.

What Happens After You Settle a Debt?

11:18 AM No comments

Although it takes a lot of work to reach a debt settlement agreement with your creditors, the work isn't over even after you've made the payment. You must keep an eye on your credit report and work on rebuilding your credit to ensure a solid foundation for your financial future.

Once you have made an agreement with your creditors to settle for a one-time lump sum payment, you will make the payment and the creditor will report your account as "settled." Typically, settlement payments range between 20 and 75 percent of the original balance, according to Smart Money writer Aleksandra Todorova. It's vital to make sure you have the lump sum payment on hand to make the settlement transaction a smooth one.

Check your credit report after the creditor has settled your account to make sure that it's been listed as settled. It's important the account is no longer listed as delinquent on your credit report, which will further drag down your credit score. If you find a discrepancy on your credit report, send a letter and any supporting documentation to both the creditor and reporting credit bureau. Credit bureaus must investigate all potential errors unless deemed frivolous, and they usually do so within 30 days.

Debt settlement is extremely damaging to your credit because it requires you to default on payments. To give you perspective on the damage you may accrue, one payment more than 30 days late can negatively impact your score by as much as 110 points, according to MSN Money writer Liz Pulliam Weston. Generally, creditors aren't willing to allow clients to settle unless they seem headed for bankruptcy, which means defaulting on payments for up to six months or longer. Therefore, it's important to begin the rebuilding immediately by setting up your remaining accounts with automatic payments, lowering your credit card balances to 25 percent of their limits or less and putting yourself on a budget so that you don't fall back into a cycle of dependence on your cards. Timeliness of payments and debt utilization combined make up 65 percent of your credit score, so tackling those two elements will do the most to help your credit score over time.

Debt settlement doesn't just damage your credit score; it may also make it difficult to obtain loans and new credit in the future. The appearance of debt settlement on your credit report may act as a warning sign to lenders that you have been delinquent and irresponsible with your finances in the past. Before pursuing debt settlement, consider meeting with a reputable credit counselor, who can provide you with information on a range of different options that are likely to be less damaging, including debt consolidation, debt management plans and even bankruptcy.

Credit Card Debt Vs. Consolidation Debt

9:12 AM No comments

When a person takes on too much credit card debt, particularly from multiple credit cards, he may attempt consolidate the debt. When a debt is consolidated, a lender purchases a borrower's outstanding debts and issues his new loan. This loan will be equivalent in size or larger than the debt that the lender purchased. While there are advantages to consolidating debts, a debtor may also find some drawbacks over owing credit card debt.

When a person charges purchases to a credit card, he is essentially drawing money against a line of credit. The person will be obligated to pay back this money within a certain period of time, in addition to paying interest on the principal of the loan. If the person doesn't pay back the loan on time, he will likely be hit with penalty fees and may be liable to pay a higher rate of interest on the principal.

When a person consolidates his debts, he is switching a number of small debts for a single large debt. Generally, to make payments more manageable, the size of the payments that the borrower must pay on this consolidation loan are smaller. However, the borrower is generally required to pay a higher rate of interest on the loan or else pay a larger amount of money, albeit spread out over a longer period of time.

The total amount of money that a debtor will pay on a credit card debt, if he pays the loans on time, is less than he will pay if he consolidates the loans into a single payment. In addition, the debtor can often continue to draw money against these lines of credit while he pays his debts back. The advantage of consolidation loans is a smaller payment size and the simplicity of paying only one lender.

Debtors who take on consolidation debts are, in nearly all cases, required to pay a larger amount of money to the party issuing the new loan than they would to the credit card companies to whom they owed the original debt. In addition, just as with credit cards, consolidation debts may carry steep penalties for late payments. While consolidation debts may be simple, the terms of the loan are not necessarily more generous that those offered by credit card companies.

How to Get The Best Credit Card Debt Settlement

3:07 AM No comments

Getting a good settlement on your credit card debt can mean the difference of thousands of dollars. If you can receive even 5% less on your settlement you'll save a ton of money. This how-to will provide some steps to take to get the best credit card debt settlement.
A credit card debt settlement involves you contacting your creditors or collection agency after your credit card has defaulted or is about to. You will do some negotiation with them to see what price they are willing to offer. After a settlement price has been agreed on, you will usually have to make a lump sum payment right away or make a few large payments to get it taken care of.

Instructions

Get some cash. To get the best credit card debt settlement you should have a chunk of cash on hand. Ideally, you should have about 60% of your total debt amount. When you contact the creditors, they don't need to know that you have that much money, but you should still have some to smooth this process out and get you the best credit card debt settlement.

Wait as long as possible. I know this sounds counter-intuitive, but they are more likely to give you a better credit card debt settlement if it has been a really long time. Don't wait too long, they can take legal action to get their money.

Put on the "dog and pony show." Don't lie to get the best credit card debt settlement, but you certainly can be emotional when you are dealing with them. The people who work at the collection company are people too, and may react to your emotion and be a bit more generous. Be dramatic about financial hardships and other things that you've gone through since your credit card defaulted.

Requirements for Debt Consolidation Loans

2:43 AM No comments

If you want to get a debt consolidation loan there are certain requirements you must meet. Once you apply for a loan, the creditor will take a look at all of the information on your application and review your entire credit history. Some lending institutions will use an automated scoring system, which means you have to have a certain credit score to qualify. Others will have a credit analyst review your information.

If you want to qualify for a debt consolidation loan, the creditor wants to make sure that you are able to pay. She will look at your income, verifying that it is consistent and there is enough income to make the payments. Some creditors want you to have a certain debt to income ratio. Your monthly disposable income may have to be 10 percent to 15 percent of your gross income.

A creditor wants to see how you have handled your creditors in the past. He wants to make sure you are paying all of your debts on time. Sometimes one or two late payments could disqualify you from qualifying or it could cause you to receive a higher rate of interest.

Before giving you a consolidation loan, a creditor will look at your stability. She wants to see that you have been living in the same place for at least two years. She recognizes this as stability. If you are a homeowner this makes you even more stable in the eyes of a lender.

You need an adequate amount of equity in your home to get a debt consolidation loan. Without a home you can consolidate your debts but the amount you consolidate will be minimal. Lenders do not like to loan large sums of money without security or collateral. If you have $35,000 of equity in your home and you want to consolidate $30,000 of debt you should have no problem.

Some creditors will relax their standards a little if you are a homeowner. If you decide not to pay they can always foreclose on your home and sell it at a sheriff's auction and use the loan proceeds to pay off the loan. All banks and lending institutions have different credit lending criteria so the requirements can vary.

How Much in a Bank Account Is Safe Against Garnishment Freezes?

9:17 PM No comments

Garnishment is a court order signed by a judge. It allows free access to a bank account to satisfy an unpaid debt. The debt collector can withdraw money in installments or in a lump sum. However, the debt collector can make withdrawals only up to the amount due on the debt, as listed in court records. Determining how much money in the bank account is safe, or protected, depends on the amount of the debt.

The garnishment process starts with the filing of a lawsuit. A judge hears the case and issues a legal order called a monetary judgment. The judge reaches the decision after deciding that the person sued failed to pay a debt or is financially liable for damages for some other action. Some judgments are called default judgments, and occur when the person sued fails to show for a court hearing. The absence forces the judge to award a default judgment.

The debt collector sends a copy of the garnishment order to the bank. Usually the debt collector identifies the debtor's bank by reviewing previous payments made on the account by check The routing number and account number provide all the information that the debt collector needs to find location information for the bank and start the garnishment process.

Banks and other financial institutions must comply with garnishment orders and usually will not contact the customer as a courtesy. The bank immediately freezes the account, which usually shuts off access to the account holder except for deposits. The debt collector then makes withdrawals for the full amount of the judgment. For example, say the account holder has a $2,500 balance in checking and the judgment is for $1,800. The debt collector can withdrawal the full $1,800 in a lump sum. In this case, this releases the account with the remaining $700 protected.

Entering into a settlement agreement is one way to end bank garnishment. The debt collector may agree to release the garnishment order in return for full payment in installments. However, the judgment order remains in effect, and the debt collector will likely return to court for a new garnishment order if the debtor fails to comply with the settlement agreement.

Debts in Marriage

6:52 PM No comments

More than 40 percent of married couples say they fight over money. Since American households averaged more than $5,000 in credit-card debt as of 2009, it's a common problem. How it affects your marriage depends on where you live and why you incurred the debt. Consult with an attorney in your state to find out what the law is there and where you stand if you think you might have a problem.

Wisconsin, Washington, New Mexico, Texas, Louisiana, Nevada, California, Idaho and Arizona are all community-property states. In these states, your spouse's creditors can go after assets owned solely by you if he defaults on the loan. You're both responsible for all debt either of you contracts for during the marriage. In a divorce, marital debts are usually distributed evenly between you, although Texas courts will consider which of you incurred the debt and why.

In all other states, as of February 2011, if one spouse runs up a credit card in her name alone, she is usually solely responsible for paying it back. Creditors cannot go after one spouse for debts that are held in the sole name of the other. In some states, they can't levy on assets held jointly between spouses, either, to satisfy debts that are not in both names.

Common-law states will sometimes make an exception for any debt incurred for the betterment of the family, such as for shelter, furniture or a child's needs. Liability for these debts might be distributed between spouses at the court's discretion in a divorce situation, no matter whose name it is in.

In almost all states, premarital debt is the separate property of the spouse who incurred it before marriage. Since repayment of such loans generally comes from marital funds, however, both partners are affected by it. As far as creditors and divorce courts are concerned, though, only the spouse who took on the debt is responsible for repaying it.

The Internal Revenue Service has some of the most clear-cut rules regarding marital tax liabilities. When you file a joint tax return and you both sign it, you are both equally responsible for paying anything that is due. If one of you defaults on payment, the IRS will go after the other for the full amount. If you file a separate return and only you sign it, you are solely responsible for paying any taxes you owe.

Welcome to our website credit and debt managementr.

Friday, May 31, 2013

Debts and the Law

Advantages of Debt Settlement

Alternatives to Debt Settlement

Thursday, May 30, 2013

Debt Elimination

Strategies to Eliminate Debts

Considerations

Instructions

Instructions

Wednesday, May 29, 2013

Penalties

Collection Actions

Financial Considerations

Effects

Accounting

When Charge Offs Happen

You're Still Liable

Selling the Debt

Your Credit Report

Instructions

Written Contracts

Oral Contracts and Open-End Accounts

Judgments

Debt Incurred in Another State

Credit Reviews

Collection Accounts

Additional Lending Risks

Reducing the Damage

Instructions

Tuesday, May 28, 2013

2009 Homeowner Protection Act

National Foreclosure Mitigation Counseling Program

SmartMove Mortgage Products

Home Funds

Instructions

Monday, May 27, 2013

Instructions

Why Do You Need a Down Payment?

How Much?

Earnest Money

Saving

Settlement Offers

Collection Agencies

Warning

Alternative

Sunday, May 26, 2013

Instructions

Saturday, May 25, 2013

Instructions

Instructions

Process

Levy

Exemptions

Considerations

Healthy Ratio

Debt-to-Income Ratio and Loans

Preparing for Unforeseen Circumstances

Getting a Healthier Ratio

Wednesday, May 22, 2013

Instructions

How to Get Help Paying Credit Card Debt

Instructions

Monday, May 20, 2013

Instructions

Sunday, May 19, 2013

Negotiation Help

Experience

Credit Freeze

Default

Considerations

Solutions

Credit

Exceptions

Use Secure Websites

Avoid Peak Times

Phishing

Use One Card

Saturday, May 18, 2013