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Wednesday, February 27, 2002

Advantages of Credit Cards for Teenagers

Getting a credit card is a sign of maturity, and must be handled in a mature way. Credit cards can help teenagers learn skills that will be useful later in life. They also run a risk of teaching poor financial management practices if the teenagers fail to make payments on time. Having a credit card when living at home allows teenagers the responsibility of owning the credit card, while still receiving guidance from their parents.

Sign of Maturity

    Allowing teenagers to own a credit card is a way to show that as parents you feel they are mature enough to handle the responsibility. This is a way to help build a bond between parents and teenagers. The teenagers will realize that their parents no longer view them as children, but instead as young adults who are able to display money management skills.

Teaching Financial Management

    Having a credit card when at home is a way for teenagers to learn financial management before going to college. Parents can work with them and emphasize the need to pay off bills in a timely manner. Parents can also encourage teenagers to determine the actual cost of an item after the monthly interest charges from a credit card company. This can help teenagers learn that purchases with credit cards sometimes cancel out the "sale price" the item is on sale for and end up paying more than the original price of the item before it was discounted. This skill can help teenagers avoid binge spending.


    Teenagers travel away from home and sometimes away form their parents. Having a credit card in their pocket can help them pay for any unexpected expenses, such as a car repair, or the need to get a hotel room for an extra night or two that was not planned for originally.

Ability to Shop Online

    Teenagers can have difficulty shopping online over the Internet without a credit card. Sometimes debit cards do not have the same level of theft protection of credit cards. This can allow teenagers to purchase items online while living at home. By making these purchases while living at home a parent can monitor if the teenagers are managing their credit cards effectively, based on if any collection calls are received.

Developing Credit

    As teenagers get older they need to purchase items on credit. These items include cars, loans, and renting apartments or homes. By getting a credit card and using it responsibility with parental assistance the teenagers can avoid having poor credit, or no credit when it is needed for these purchases or rental agreements later in life.

Tuesday, February 26, 2002

Nonprofit Debt Relief Organizations in California

Nonprofit Debt Relief Organizations in California

Credit counseling organizations advise consumers on managing their personal finances and debt. These organizations have trained counselors that explain financial matters and work with clients to develop personalized plans and budgets for debt relief. According to the United States Federal Trade Commission (FTC), consumers should use caution when selecting any type of debt relief organization. The FTC recommends selecting agencies that have received recognition by organizations or offices dedicated to preventing consumer fraud.

ClearPoint Credit Counseling Solutions

    ClearPoint Credit Counseling Solutions was established in 1979 as a non-profit organization dedicated to helping clients with their financial needs. ClearPoint is accredited by the Better Business Bureau, is certified by the U.S. Department of Housing and Urban Development (HUD) and is recognized by an independent organization called the Council on Accreditation that credits social service organizations. ClearPoint offers no or low-cost one-on-one counseling services by phone, via the Internet or in person. Counseling may include help with budgeting, credit reports, reverse mortgage counseling, rental counseling, mortgage default, bankruptcy, identity theft and home buying. Additionally, ClearPoint offers debt management programs to help clients pay off debt more quickly by negotiating with finance companies on their behalf. Unlike for-profit agencies, creditors receive 100 percent of the funds paid through the debt management plan. Spanish translation is available on the website and Spanish-speaking counselors are also offered.

    ClearPoint Credit Counseling Solutions

    Pacific Region Main Office

    6001 E. Washington Blvd.

    Suite 200

    Los Angeles, CA 90040



Consumer Credit Counseling Service of Orange County

    The Consumer Credit Counseling Service of Orange County (CCCS) has been in business since 1966. Debt counseling is offered to clients in branch offices, over the Internet, by mail and in person. CCCS of Orange County is accredited by the Better Business Bureau, the Council on Accreditation and certified by HUD. At the CCCS, certified counselors help clients develop debt management plans that stop legal action for collection, end debt collection phone calls and negotiate payments or interest rates with creditors. The CCCS also offers counseling on bankruptcies, identity theft, homeownership, credit reports, budgeting and cash management. Spanish language workshops, a Spanish language website and Spanish-speaking counselors are available.

    Consumer Credit Counseling Service of Orange County

    1920 Old Tustin Ave.

    Santa Ana, CA 92705



SurePath Financial Solutions

    SurePath Financial Solutions has been in business for over 44 years. SurePath is a member of the National Foundation of Credit Counseling and has been accredited by the Better Business Bureau since 1998. All clients meet with certified credit and housing counselors over the phone, via the Internet or in person. SurePath offers a Debt Solver Plan, which is a debt management plan designed to help consumers gain control of their finances. The plan has the ability to lower interest rates and payments, reduce or waive late fees and stop collection agencies from making phone calls. SurePath also gives clients the ability to check debt plan progress 24 hours a day via the Internet or telephone. In addition to the Debt Solver Plan, SurePath advises clients on other financial matters, including bankruptcies, foreclosures, home-buying and credit scores. Spanish-speaking counselors and a Spanish language feature on the website are also available.

    SurePath Financial Solutions

    80 N. Wood Road Suite 200

    Camarillo, CA 93010



How Long Will Debt Consolidation Damage Credit?

The damage to your credit comes not from consolidating your debt, but mainly from how you handle the consolidation. While both consolidation loans and debt management plans cause a small initial negative impact on your credit score, those may be outweighed by the positive impact of paying off your debt and keeping it paid off. However, often people fall further into debt as a result of consolidation because they don't learn the lesson of becoming financially responsible prior to taking on the consolidation.

Consolidation Loans

    When you apply for a consolidation loan, the lender makes an inquiry into your credit report to determine whether to lend you the money. However, after that, any damage that comes from a consolidation loan is the direct result of your actions. Once a consolidation loan pays off the balances on your existing debt, you may be lured into contributing further to your debt, propelling yourself quickly into a higher debt-to-credit ratio and making it difficult for yourself to make payments each month. Both your debt ratio and making on-time payments are top considerations in calculating your credit score, and the effects last as long as you allow them to. If, however, you pay off your debt with a consolidation loan and keep it paid off, your credit score will get a considerable boost.

Debt Management Plans

    A debt management plan (DMP) doesn't effect your credit score but rather your ability to obtain credit in the future. A DMP is the last stop on the way to bankruptcy, and you must have defaulted on payments and be having difficulty meeting minimum payments to qualify for one of these plans. On a DMP, a credit counselor negotiates with your creditors for lower interest rates and pays off balances. As a result, lenders see DMPs as a dark mark on your credit report because it indicates that you've had difficulty making payments and that you didn't pay back the full amount of your debt. A DMP may stay on your credit report for up to seven years.


    You are usually required to put up collateral, such as your house, when you take out a consolidation loan. If you default on your payments, the lender has the right to garnish your assets. With debt management plans, you must be careful to use a reputable company; if the credit counseling company fails to make the payments to your creditors on time, your score will plummet dramatically. The Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling are both organizations that can confirm whether your credit counseling service is reputable.


    Because of the potential damage to your credit score and the risk associated with consolidation, consider your options for paying off your debt on your own. Often, the interest rates offered with consolidation loans are only available to those with excellent credit. You may end up getting a better rate by simply calling your creditor and asking for a lower interest rate. If you end up with a rate comparable to the one offered to you by a consolidation loan, you get the same outcome without the risk of being unable to obtain new credit.

About Refinancing Credit Card Debt

If you are carrying balances on high interest rate credit cards, you may benefit from refinancing your credit card debt. Instead of making minimum payments on credit card balances that only seem to get larger each month, it is much better to move credit card balances to financing options with terms that allow more of the money you pay to go toward reducing the actual principal of the debt you owe.


    Since credit card interest rates tend to be quite high, often refinancing credit card debt is the best solution for paying off balances and making forward progress toward becoming debt-free. Changing from high interest revolving credit accounts to more affordable forms of financing can be an excellent way to get credit card debt under control.


    There are several ways to approach refinancing credit card debt. If you own your home, refinancing your mortgage loan can help you reduce your credit card debt. If you have equity in your home, any amount of money you get from refinancing can be applied to your high interest credit cards. Instead of paying high credit card interest rates, the outstanding balances on your credit cards will become part of your home loan, reducing the interest rate to that of your home loan. Credit card debt can also be refinanced using the proceeds from a home equity line of credit. Both of these options allow many homeowners to claim a tax deduction for the interest paid on the loan.

    If you don't own your home or have a sufficient amount of equity, but have a positive credit history, you may be able to get an unsecured personal loan with a lower interest rate than that of your credit card accounts. Another option for refinancing credit card debt is to take advantage of low interest rate credit card offers, transferring balances from one card to another to enjoy an interest rate reduction.


    Refinancing credit card debt can greatly reduce the amount of time it takes you to become debt-free. Because most revolving credit accounts carry high interest rates and compound interest charges daily, it can take an extremely long time to pay off balances. If you are making minimum payments on a high interest credit card virtually all of the money you are paying is going to interest, making it virtually impossible to ever become free from the debt. When credit card balances are transferred to lower interest rate accounts or to installment loan programs, you can make greater progress toward paying off the debt, even without increasing the amount of your monthly payments in many cases.


    Utilizing credit card offers with low or zero percent interest rates for an introductory period can be a good way to enjoy reduced interest rates for many people. However, when using this technique for refinancing credit card debt, make sure that you fully understand the fine print of the new account and keep up with when the introductory period expires. Before the account changes to the standard account interest rate, which may be higher than that of your original credit card, you need to be poised and ready to transfer the balance to another new account with favorable terms.


    Once you refinance your credit card debt, it is essential to stop carrying a balance on the original credit card accounts. Many people find themselves in financial trouble because they move credit card debt to a home loan, personal loan or new credit account, yet charge the original credit cards up again. Such behavior is dangerous, and results in more debt in the long run rather than less.

Monday, February 25, 2002

Help for Renters Forced Out Due to Foreclosures

Contacting a lawyer is the first thing you should do if you've been forced out of your rental home by foreclosure. State laws may give you the legal right to remain in the rental home until your lease expires --- despite the foreclosure. The federal Protecting Tenants at Foreclosure Act offers similar protection. It may not be too late to get back into your home or sue for damages if you were illegally forced from your rental home during a foreclosure.

Tenant Rights

    Massachusetts Poverty Law Advocates, a nonprofit legal-aid organization, reports that all tenants have legal rights, even during foreclosure. For example, the organization reports that in Massachusetts you don't have to leave your rental home after foreclosure --- no matter what the bank or a new owner of the property tells you. In Massachusetts, the law is on your side as a tenant during foreclosure, and all you have to do is stand your ground. Laws in your state may be similar.

Getting a Lawyer

    Nonprofit legal organizations such as Legal Aid are available in most communities; you may be eligible for free help from an attorney affiliated with the organization. Generally, only those below a certain income level qualify for free legal help. But an exception may be possible if you're on the verge of homelessness because of the foreclose and there's a possibility that you were forced out illegally. Find contact information for Legal Aid or a similar organization by calling a local charity such as the Salvation Army or a chapter of the National Urban League.

Federal Law

    The Protecting Tenants at Foreclosure Act requires a minimum of 90 days' notice before tenants with month-to-month contracts can be evicted, and tenants with signed leases can remain until the lease expires. There are various exceptions, however, and state laws supersede federal law if the state law offers greater protection for the tenant. The federal law can be circumvented by landlords if there are people living in the home who aren't on the lease or the rent payments haven't been made on time.

Government Counselors

    Housing counselors certified by the U.S. Department of Housing and Urban Development can also help with options if you've been forced out. The counselors know about any forms of emergency public housing that are available, including Section 8 housing for those on low incomes. Although the housing counselors usually aren't attorneys, they may be able to advise about your legal rights as well. The counselors, including those aligned with Consumer Credit Counseling Services, are available in most communities.

Information Is Key

    The bottom line is that if you've been forced out because of foreclosure you must determine what your rights were and have an attorney ask for damages if you were forced out illegally. CNN reported in 2010 that banks, mortgage companies and real estate agents may knowingly take advantage of renters during foreclosure by leading them to believe that they must move. Knowing the laws and standing up for your rights may reverse the situation.

Sunday, February 24, 2002

How Do I Qualify for a DMP?

How Do I Qualify for a DMP?

If you're having a hard time paying your debts, you may want to consider enrolling in a debt management program (DMP), which can help you negotiate more affordable monthly payments. DMPs are usually set up through a third-party group. Debt-management companies work with your lenders to negotiate different payment terms, lower interest rates and the elimination of late charges, to ease your financial burden. The catch is that not everyone qualifies for this assistance; these programs are aimed at those who can and are willing to repay their debts.



    Consult a professional debt adviser before committing to any debt management program. You will likely have to divulge your entire financial history (student loans, credit card debt), which can be a humbling experience. It's important that you don't leave anything out so that the debt adviser can help you make the decision whether to enroll in the program or direct you elsewhere.


    Research each company and their program. Be sure to find out whether they are licensed in your state and what their fees are. With the help of the adviser, you should be able to determine which program is the best fit. Contact the company to find out if your qualify for its program. This is usually contingent on your ability to repay rather than the amount of debt you have.


    Prepare to demonstrate your inability to meet current payments. You may be asked to produce financial statements identifying other obligations you have (rent, child-support payments) that prevent you from making the monthly payments. Pointing out any recent financial hardships, such as layoffs or a reduction in work hours, may help strengthen your case for qualifying.

The Best Debt Management Programs

The Best Debt Management Programs

The Federal Trade Commission and most consumer advocate groups state that the majority of debt management and credit repair companies are scams that do more harm than good. There is no quick fix to get rid of debt or manage it effectively overnight. A good debt management program focuses on the long term, forcing people to make lifestyle changes in which they learn and practice efficient budgeting and maintain a disciplined plan of consistent debt elimination.

Your Best Program Is You

    Popular financial experts like Suze Orman and Dave Ramsey feel that the best debt management program is you. They advise each person to learn budgeting, financial disciplining and the whys and hows of money to be able to become financially independent. Even the most effective financial coach or debt company cannot help you if you continue to spend more than you make.

Financial Disipline

    There are several techniques a person can do by themselves to begin properly managing their debt. One example is Dave Ramsey's, "Debt Snowball Plan." He advises to first gather $1,000 cash as an emergency fund, then list the debts you have with the smallest balance first. If two debts have the same balance, then list the one with the higher interest rate first. Pay off the smaller debts as soon as you can. Eliminating credit cards or loans one by one will give you a feeling of accomplishment and motivation for continued discipline in following the plan. Spreading payments to each card or loan dilutes your effort, not giving you any feedback on your progress.

The Business of Debt Management

    Debt management and debt counseling have become a big business in which many debt management companies are connected to the same banks and financial businesses that provided the loans and credit cards and aided people in getting into debt in the first place. Many of these companies make their money by combining a person's debts into one, lowering monthly interest and payments, but extending payment terms. As an example, let's say you have four debts each at $1000 and are paying the minimum of $40 per loan ($160 per month). It would take you 25 months to pay it off (in the real world, due to interest, it would take longer, but this is a simplified example). Many debt management companies will combine these four loans and have you pay an amount such as $114.27 for 37 months, which lowers your monthly payment, but in the long term, you will actually be paying $ 4,227.99. Since you have not changed your spending habits, it is likely you will return to debt within a short time.

Primerica Financial Services

    One company that focuses on a lifestyle change and gives you the tools to manage your debt by yourself is Primerica Financial Services. They provide a free financial needs analysis, in which an agent will analyze your financial situation and advise you about fixed-interest loans, first or second mortgages, mutual funds, and how to cut costs to become financially independent.

Objective Resources

    To be sure you are getting accurate debt management advice, and to further research debt management resources, visit www.nfcc.org, the National Foundation for Credit Counseling, a 50-year-old nonprofit credit counseling network that aims to help consumers with debt problems.

How to Lower the Interest Rate on HFC Loans

How to Lower the Interest Rate on HFC Loans

HFC, or Household Finance Company, is a now-defunct lender. The former HFC was a subsidiary of HSBC Bank, a British banking conglomerate. However, HFC is still servicing its open loans. In order to reduce the interest rate on an HFC loan, you'll have to do one of two things; file for a hardship or refinance elsewhere.



    Calculate your debt-to-income ratio to determine your eligibility for a hardship loan. In order to qualify, lenders generally want to see that you are currently unable to pay the minimum payments on all expenses. To figure this out, you must do a debt-to-income ratio (DIR) calculation. Divide your total monthly expenses by your gross monthly income. 50 percent is normally the threshold.


    Contact the customer service department at HFC. You must get transferred to the account servicing department. These representatives will be able to complete a hardship application with you. Be prepared to mail, email or fax in your income documents to prove your hardship.


    Draft a hardship letter explaining the reason you need a hardship exception. This can be: disability, unemployment or medical emergency. It's important to be thorough in this letter as the underwriter reviewing the application will look carefully at your reasons.


    Remember that a hardship exception is a temporary plan--you will eventually be put back on the original terms of the loan. You must have a plan B for when that occurs.


    Refinance the HFC debt with another lender for a lower interest rate. You cannot refinance with HFC. Pull a copy of your credit report (see Resources for a free copy) and purchase your FICO score (scores over 720 are excellent; scores below 600 are poor).


    Begin researching lenders for a refinance. No matter the type of debt--mortgage, personal loan, auto loan--banks and credit unions almost always offer the most competitive rates on loan program. You must, however, have good to excellent credit. Otherwise, you should look at finance companies such as CitiFinancial.

Nonprofit Help for Foreclosures

A variety of nonprofit credit help is available for avoiding foreclosure. The U.S. Department of Justice and the U.S. Department of Housing and Urban Development maintain lists of nonprofit credit counselors across the country. The agencies are experts in foreclosure avoidance and can contact your lender directly to stop foreclosure proceedings.

Making Home Affordable

    The Making Home Affordable Program is directed by the U.S. Department of Treasury and the U.S. Department of Housing and Urban Development. The program was created to provide free assistance for people seeking to avoid foreclosure. The program specializes in loan modification programs, which allow lenders to rewrite the terms of your loan to make make it more affordable and end the foreclosure process. Homeowners can determine their eligibility for the program and gain more information by visiting MakingHomeAffordable.gov.

Howeownership Preservation Foundation

    The Homeownership Preservation Foundation is a nonprofit agency offering a comprehensive telephone counseling for avoiding foreclosure. A toll-free hotline is staffed by trained counselors 24 hours a day. The counselors can answer immediate questions about foreclosure and direct you to local nonprofit resources in your community for followup. Call the hotline at 888-995-4673.

Churches and Charities

    Local charities and churches may also offer foreclosure avoidance help, although they are likely to refer your to nonprofit housing counselors in your community. However, some charities such as the United Way, Urban League or Salvation Army may have government-approved housing counselors on site. Churches and organizations may also have special funds for one-time help with mortgage payments to avoid foreclosure. Larger nonprofits such as the United Way can refer you to other community-based resources for avoiding foreclosure in your city.

Credit Union Foundations

    Many credit unions offer nonprofit foundations offering services and advice on a variety of issues, including foreclosure avoidance. Many of the foundations specialize in educational programs designed to keep people from becoming victims of foreclosure. The programs cover home buying, budgeting, avoiding excessive spending and information on what to do if you start missing mortgage payments.

Nonprofit Credit Counseling

    Initial consultations with nonprofit credit counselors are usually free. The counselors know about every possible solution for foreclosure avoidance, and have working relationships with most local lenders and many national firms. The counselors are trained to take a broad look at your financial situation, which includes evaluating your overall credit and finances, in addition to any specific foreclosure problem. The counselors often recommend debt management plans as a long-term solution to your financial problems, but will also contact your lender immediately to begin talks for ending the foreclosure process.

Saturday, February 23, 2002

How Does a Credit Repair Agency Work?

How Does a Credit Repair Agency Work?

What's a Scam and What Isn't

    Radio and television commercials for credit repair agencies abound. However, these businesses are often fronts for fraudulent activity, misleading desperate consumers who don't know better. Commons claims are that they can repair debt with no money down, remove legal judgments and create a new identity with a clean credit record.

    The Federal Trade Commission warns that "the fact is there's no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort and sticking to a personal debt repayment plan." These operations are a scam, with only the non-profit Consumer Credit Counseling Corporation a legitimate solution to debt problems.

What Credit Repair Agencies Promise

    These agencies make big promises to customers that they can't deliver on. In fact, some of the actions they advise could be illegal. They may ask you to create disputes for every recorded account on a credit report, register for an employer identification number or lie on a loan or credit application. All of these are federal crimes punishable by fines and jail time.

How to Spot the a Credit Repair Agency Scam

    The first thing that these operations will do is ask for an upfront payment. According to federal law, credit agencies can't ask for any fees before services are rendered; cash before action is a sure sign of a shady business. Next, the companies will often suggest that you bring in your credit reports so that they can pick out items to dispute in your stead. However, these disputes may be done for free by the consumer themselves with a minimum of paperwork.

    These companies will also neglect to apprise you of your credit rights and recommend no direct contact with creditors. They also might try to persuade you to try "file segregation"--the illegal establishment of a new credit identity by using the EIN instead of a valid Social Security number.

    Because they don't share what the consumer can do for free, people stand to lose their hard-earned money for little gain. With the added danger of illegal activity, credit repair agencies are usually a very bad bet.

Friday, February 22, 2002

Quick Debt Reduction

It's an unfortunate fact of life that it's always easier to get into debt than to get back out of it. While there are ways to quickly reduce the amount of debt you owe, it's often at the risk of your credit score or your financial well-being. Dumping debt into another loan, debt settlement or bankruptcy may get you out of debt, but it often comes at a price.

Switching Credit Cards

    One reliable method for reducing your debt quickly is to transfer high-interest credit card balances to a low- or no-interest card. The good news is you reduce your debt overnight by getting rid of steep credit card interest fees. The bad news is the days of low- and no-interest cards are largely behind us.

    Even if you can switch to a card with a lower interest rate, take care when doing so. Opening new accounts can ding your credit score, as can using up most or all of your credit line by transferring balances. And, if you don't make payments on time or are late on another payment, you could see that low interest rate disappear.

Home Equity Loans

    If you've got enough equity in your home, a home equity loan can allow you to pay off high-interest debt like credit cards or high-payment debt like medical bills in a lump sum, then pay it off at a low interest rate over a period of years.

    The recent financial meltdown has made qualifying for a home equity loan harder than ever. That's besides the fact hat if you are unable to pay, your home is on the line.

Debt Settlement/Negotiation

    It sounds like a dream come true -- a debt settlement or negotiation firm tells you your debt can be settled for pennies on the dollar. Debt settlement is actually a nightmare, destroying your credit for years to come. Debt settlement often means letting your bills go unpaid until creditors are willing to settle for less than the amount owed. Late payments and paying less than the full amount of a debt are black marks on your credit that can last up to seven years.


    Filing for bankruptcy can reduce or eliminate your debt quickly, but only if you qualify for Chapter 7 bankruptcy, which erases most debt. Those who do not meet the guidelines for Chapter 7 bankruptcy, however, must file Chapter 13, which means repaying some or all of your debts over a period of several years.

    Although Chapter 7 bankruptcy can make most or all of your unsecured debt go away, it's at the price of your credit, often knocking hundreds of points off your credit score and staying on your credit report for up to 10 years, while Chapter 13 will haunt you for seven years.

How to Contest a Credit Report Error

Even one negative entry on your credit report can significantly damage your credit. That being said, if there is anything on your credit report that can leave a serious dent in your good credit, it is in your best interest to get rid of it. If the problem in question is an error, this will make it even simpler to remove the dent in your credit score, but you still will need to work to get it done.



    Gather any evidence you have that the problem on your report truly is an error. This could be in the form of anything such as a credit card statement, receipts that you may have, letters or other documents from the merchant.


    Try to speak to the merchant or organization that caused the error and resolve the situation with them. If they are unwilling to resolve it, you will need to escalate it.


    Write a letter to each of the three major credit bureaus: Equifax, Trans Union and Experian. State in the letter that you are contesting an item in the credit report. Include in the letter the error that is on the credit report, the price (if applicable,) the merchant causing the issue, and what exactly is wrong.


    Submit the letter to the credit bureaus. The bureaus will investigate the claim and ask for information from the merchant or other organization. If they don't respond, or don't have sufficient proof that it wasn't an error, then they will remove it from their records.

How to Increase Your Credit Score With One Short Phone Call

How to Increase Your Credit Score With One Short Phone Call

Credit bureaus compute your credit score using a combination of factors: your debt to income ratio, the number of late or missed bill or credit payments on your report, the composition of your debts, and the length of your credit history. Not all of these factors can be improved with one phone call, but creditors can be surprisingly forgiving if you just contact the relevant companies. Nothing will damage your credit score more than avoiding communication with creditors. Many are willing to negotiate away negative entries in return for payments or other positive credit behavior.



    Request copies of your credit report from all of the major credit reporting bureaus (Equifax, Experian and Transunion) either using the web forms on each company's website or by contacting the customer service departments for reports by mail. All American citizens are entitled by Federal Trade Commission (FTC) regulations to one free credit report for each bureau per year via the Annual Credit Report website.


    Review your credit report for any negative entries. This includes reports of late payments from bill companies, late credit cards, loan payments, and mortgages. Major negative entries will take more than just one phone call to correct, but late payments and other minor mistakes can often be erased with a single phone call.


    Select one minor credit transgression to negotiate off of your credit report. Contact information for the creditor or bill payee should be located on the entry in your report. The more recent the negative entry on your credit report, the greater the chance that you'll be able to correct it promptly.


    Contact the company that you want to negotiate with, prepared to explain why you made a mistake in your payments. If you've had a good record with that company - or have a relatively good credit rating overall - that will increase your chances of a successful negotiation. First, ask if the company will be willing to remove the negative entry in good faith. They may comply, especially if it's one of your first transgressions. If that fails, offer to make a small additional payment in return for the company deleting the late entry from your report. Once the representative accepts the deal, request that they mail you a copy of your mutual agreement to confirm it.


    Verify that the company upheld its agreement by ordering additional copies of your credit reports subsequently. It may take some months for the positive alteration to your credit report to improve your score. You can sign up for credit score monitoring services from most of the credit bureaus or from FICO directly.

Thursday, February 21, 2002

Responsibility for Credit Card Debt After the Death of a Spouse in Ohio

The sluggish economy in 2011 has led to difficult financial times for many families, and, in some cases, debts have piled up quickly. If your spouse passes away in the state of Ohio while still having outstanding credit card debts, the possible responsibility for that debt could create additional stress. In most cases, a surviving spouse is not liable for her husband's credit card debt when he passes. Instead, the assets of his estate should pay those debts in full. Credit card debt and death laws vary from one state to another, and community property laws can complicate the matter further. Ohio is not a community property state, however. Therefore, the spouse cannot be held liable unless she is a joint account holder or cosigner on the credit card debt.

Estate Responsibilities

    When a person passes away in Ohio, a probate court process is used to help pay off all outstanding debts and ensure that property is distributed according to the terms of his will. The estate assets consist of real and personal property that is not exempt from the probate process. Real estate held solely in the husband's name, for example, or bank accounts not set up to pay to a specific beneficiary in the event of death are assets of the estate that can be used to pay off outstanding debts.

Spouse Liabilities

    If a husband holds a joint debt account with the deceased spouse, which is often the case for credit card debts, the husband can be held responsible for paying off those credit card accounts after his wife passes away. If a wife cosigns a vehicle loan for her husband in Ohio, she could be held financially liable for the balance of that loan if he passes away.

Creditor Claims

    When creditors have a claim against a decedent's estate in Ohio, the claim must be submitted to the estate executor in writing within six months of the death. If a credit card company or other creditor fails to submit its claim within the allotted time frame, the creditor is forever barred from being able to collect on that debt.

Insolvent Estates

    When an estate does not have enough probate assets to cover their debts, the probate court in Ohio will declare the estate insolvent. If the surviving spouse gets harassed by credit card collectors because the estate was insolvent, the spouse can ask the probate lawyer to issue an official statement to the creditor asking it to remove the decedent's spouse from its files.

How to Understand the Truth-In-Lending Disclosure Statement

How to Understand the Truth-In-Lending Disclosure Statement

The truth-in-lending disclosure is a federal law that requires lenders and financial institutions to make a full disclosure to consumers regarding the various fees, charges, terms and conditions of a contract. Some information must be set apart in bold print so that a consumers attention is alerted to the information. This act stops credit card companies from mailing out credit cards to customers who did not apply for them, according to Bankruptcy-Law Free Advice.com. To understand the truth-in-lending disclosure, you must read each section and analyze the information.



    Analyze the document from beginning to end. The truth-in-lending disclosure is quite lengthy. To truly understand it may require that you read the entire document over a period of several days. Write down any questions you may have for a lender or other financial institution. Make sure you get a thorough explanation.


    Determine some of the more common information included in the truth-in-lending disclosure. The truth-in-lending disclosure requires creditors to provide consumers with information regarding the total amount of a loan that is financed, the interest rate, annual percentage rate, (APR), fees, finance charges, total amount of the loan, payment schedule and prepayment penalties.


    Compare the APR to the interest rate. Take a look at the interest rate and the APR. The APR is the cost of borrowing money expressed as a percent. The APR will be higher than the interest rate because it takes into effect any some fees that have to be paid by consumers. The interest rate is the cost borrowers are charged by lenders to borrow money. An APR of 7.2 compared to 8.2 usually means there are more fees associated with the higher APR, according to MS Money.


    Find out how much the total amount of the loan is. The total amount of a loan is the principal amount borrowed plus the finance charges, fees and interest that have to be paid. If you know the monthly payment and the number of payments, you can calculate the total amount of a loan by multiplying. For example, if your monthly payments are $350 and your loan is 10 years, the total amount will be $42,000, ($350 x 120 months).


    Locate the amount financed for a loan. This is the principal amount you are borrowing before finance charges and fees have been applied.

Wednesday, February 20, 2002

What Happens to Your Unsecured Debt After You Die?

What Happens to Your Unsecured Debt After You Die?

If you are not financially capable of paying off your unsecured debts prior to your death, the courts take over responsibility for sorting out your affairs. A variety of factors, such as your assets, your state's probate laws and if you share payment responsibility with another individual, contribute to when and how your creditors get paid. In certain situations, however, unsecured creditors do not receive payment at all.


    Unsecured debts are those that are not tied to your assets -- leaving nothing for a creditor to seize if regular payments should stop. Common examples of unsecured debt include credit card debt, student loans and personal loans. If you stop paying unsecured debt while alive, a creditor can sue you and attempt to secure its debt with a lien against your assets. Once you die, however, your unsecured creditors' collection rights are limited.

Legal Process

    Whether or not you leave behind a will, your assets go into probate when you die. Each creditor will then file a claim against your estate for the outstanding amount you owe. Your estate's representative -- either appointed by you in your will or appointed by the court -- will distribute your assets to your creditors until all of your debts are paid. Only once your debts are paid will your beneficiaries receive their inheritance. If your debts exceed your assets, only some of your creditors will get paid.

Time Frame

    Each state's probate process differs, but all states only give creditors a limited amount of time to file claims against your estate. "The New York Times" notes that many creditors use computer programs that regularly scan probate listings for customers' names to file timely probate claims. If an unsecured creditor fails to file a claim against your estate, it will not receive payment.


    If you hold any joint accounts, such as joint credit cards, with a loved one, that loved one retains full responsibility for paying off the account balances after your death. This is because, as joint account holders, both of you share the same degree of responsibility for the account -- even if only one of you incurred the debt. Unsecured creditors can pursue the living account holder for payment and thus cannot file a claim with the probate court. In general, however, your family members are not responsible for paying your unsecured debts after you die.


    Unsecured creditors who do not receive payment after your death -- either due to not filing a prompt claim or your estate not containing enough money to pay off each of your debts -- usually write off the unpaid debts as a loss. The Internal Revenue Service allows businesses to claim uncollectible debts as tax deductions. This lessens the financial loss your creditors suffer from not receiving payment after your death.

Tuesday, February 19, 2002

Can My HOA Place a Lien on My House Without Notification?

A homeowners' association (HOA) can take steps against a delinquent member to collect past-due assessments he might owe. In doing so, the HOA has a right to place a lien on the member's property that will secure payment of the debt. Before it can place a lien, the association must inform the homeowner of its intent in writing. according to the HOA Institute.

What is a Property Lien?

    A lien is a legal claim on a property that secures a payment of debt. A lien holder may sell the property to satisfy the outstanding debt. A homeowners' association (HOA) has a right to place an assessment lien when a homeowner becomes delinquent on his payments. Once an assessment lien is placed, a homeowner may not be allowed to sell or refinance the property until the lien is satisfied. An assessment lien allows the HOA to sell the homeowner's property to repay the outstanding dues.

Placing a Lien

    According to the HOA Institute, almost any homeowners' association places an automatic lien on an association member's property for the periodic assessments that every member must pay according to the agreement. As long as the association member pays the dues on time, the HOA does not record a separate lien. If a member violates the association's Declaration of Covenants, Conditions and Restrictions, the HOA can obtain a judgment against him. Before filing a lawsuit, an association notifies him by mail of the intent and the possible consequences of such a judgment, including an assessment lien. When notified of a hearing, the homeowner can contest the lawsuit in court. If the court awards a judgment against a homeowner, an HOA can then record a lien.

Collecting an Assessment Lien

    An assessment lien allows an HOA to judicially foreclose and sell the property to collect the outstanding debt. However, HOAs usually don't want to incur the expense of going through a lengthy and expensive foreclosure and sale process. An association usually records an assessment lien and waits for the payment when the homeowner decides to sell the property. A lien must be repaid from the sale proceeds during the closing.


    An HOA may only place an assessment lien for past-due association payments, late and collections charges, and attorney's fees. An association can seek an assessment lien only if a homeowner is delinquent for 12 months. A homeowner can repay the delinquent amount or negotiate a repayment plan at any time. When receiving payments, an HOA must apply them first to the past-due assessment balance before paying off other charges. A homeowner has a right to contest a lien in court by filing a request to have a hearing.

Monday, February 18, 2002

Difference Between Restructuring & Bankruptcy

If you are faced with mountains of bills that you cannot pay, you're probably wondering what your options are. Two terms you've probably heard are restructuring and bankruptcy, both of which will help you to reduce or even eliminate your debt. Knowing the difference between the two can help you to decide which option works best for you.


    Filing for bankruptcy means going to court to have your debts discharged. Personal bankruptcy is filed as either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

    In Chapter 7 bankruptcy (also known as liquidation bankruptcy), any assets are sold to satisfy some or all of your outstanding debt. The remaining debt is discharged. Chapter 7 bankruptcy typically serves as an option for those who have large unsecured debts, such as credit card debt or payday loans. A Chapter 7 bankruptcy remains part of your credit history for ten years.

    In Chapter 13 bankruptcy, also known as reorganization bankruptcy, the court restructures your debts so that some of your debt is repaid over a three to five year period while the remainder is discharged. Large debts such as house or car payments are reorganized to allow you a longer period of time to repay. Chapter 13 bankruptcy stays on your credit report for seven years.

Loan Restructuring

    Refinancing your debt through a home equity loan, second mortgage, or other consolidation loan is sometimes referred to as restructuring. Through this type of debt restructuring, you consolidate high-interest accounts into one low-interest loan. These options usually depend upon your assets and credit score--if you do not have a home or other asset to borrow against, you may not qualify for a personal loan unless you possess a high credit score.

Debt Management Plans

    Another way to restructure your debt is through a debt management plan: created by credit counselors who work with you to come up with a budget that determines how much you have left (after living expenses) to pay toward your debt. The credit counselor then contacts your debtors and sets up payment arrangements that allow for smaller payments (and, on many occasions, reduced interest and finance charges).

    You pay the credit counseling agency a lump sum each month, which the credit counseling agency then pays to your debtors. Debt management plans are usually structured in such a way to allow you to pay down or pay off most of your debt in 36 to 60 months.

Bankruptcy Vs. Restructuring

    The biggest difference between bankruptcy and restructuring through a loan or debt management plan is the damage done to your credit score. A bankruptcy will result in plummeting credit scores and a notation on your credit report that remains there from seven to ten years. A loan, on the other hand, will actually improve your credit score as long as you keep up with your payment, and a debt management plan by a reputable credit counseling agency should have no effect on your credit score whatsoever. While some creditors may indicate on your credit report that your account is being serviced by a debt management plan, this notation does not factor in to your credit score.

What Is a Charge Off to Bad Debt?

What Is a Charge Off to Bad Debt?