May 2002 ~ Credit And Debt Management

Friday, May 31, 2002

How to Delete a Judgment From My Credit Report

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A judgment is a formal decision or order given by a court of law. With respect to your credit report, judgments pertain to decisions regarding the repayment of debt. Creditors and other lenders who see the judgment information when performing a background check may be less inclined to open a credit account for you. If the judgment information being reported is in error and does not belong on your report, you can contact the credit bureaus to have it removed. Judgment information outside the allowed reporting time period may also be removed.

Instructions

Draft a letter to each of the major credit bureaus -- Experian, Equifax and TransUnion. Notify the bureaus that the judgment information being reported is incorrect or in error.

Send your letters certified, return-receipt mail. This provides proof the credit bureaus received the letters and gives you the date of receipt.

Await the results. Upon receipt of your letter, the credit bureaus have 30 days to conduct an investigation. Any information they cannot verify must be removed from your credit report. The investigation results must be provided to you in writing and any changes made to your credit report entitle you to a free copy.

Review your credit report for the date of the judgment information. Under the Fair Credit Reporting Act, credit reporting agencies are prohibited from reporting judgments that are older than seven years from the credit report date.

Send a letter to Experian, Equifax and TransUnion, notifying them that you wish to have the judgment information removed from your credit report because the information is older than seven years and it violates the Fair Credit Reporting Act. You can include a copy of your credit report with the judgment information circled.

Use certified, return-receipt mail for proof that the credit bureaus received your letter.

Await the credit bureaus' investigation, which can take 30 days. If the judgment information is determined to be outside the reporting time frame, it must be removed from your credit report.

How to Apply For Government Grants The Easy Way

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The government offers grants and low interest/no interest loans for various reasons. Reasons include business costs, hospital costs, car repair, home building expenses, daycare costs, community out reach programs, charitable events, and misc. You can spend hours online trying to find various grant programs or you can apply for government grants the easy way by going to the source.

Instructions

To apply for student grants ans scholarships to pay for college visit your colleges financial aid office. They will have all the resources required to apply for federal student aid and other government funded money for college and training programs.

To apply for grants involving children daycare facilities, employment, nonprofit community action programs, and community heath contact your local Economic Security Office.

To apply for grants to help individuals with disabilities or barriers to employment contact your states Vocational Rehabilitation (VR)Center. VR are know to give grant for qualified individuals to go to school, start a business, attend training seminars, get surgery or money to pay for health care costs so they can return to work, equipment to solve mobility issues, and even pay for work uniforms.

For Grants involving family or child welfare contact your local Family service office. The Division family service office can offer grants and financial assistants for those who show need to but essential items such as shelter, food, and clothing.

To apply for grants involving community health contact your local Health Department. Health department are known to give grants to help organizations do community projects to better health or increase health care awareness.

To apply for government grants and low to no interest loans for business expenses and start up costs information contact the Small Business Administration or go to their website at sba.org. If looking for loan information you can also visit with your current banker.

To apply for grants involving veterans contact the Veterans Administration (VA). Grants to start a business, go back to school, or for living expenses may be available if eligible.

What Are Non-Exempt Assets in a Judgment in Texas?

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If you win a judgment against a non-paying debtor, you usually have the legal right to collect the money that owed to you. Unfortunately, if your debtor lives in Texas, you may not be able to collect any of that money. Texas has some of the most liberal protections for debtors in the country, and it is entirely possible that a Texas debtor could protect all of his assets from a judgment.

If you are a creditor and your debtor won't pay his debt to you, you can sue him in court to win a judgment. A judgment is simply the court's agreement that the debt you hold is valid, and that the debtor has the legal responsibility to pay you. After that court verdict, you are essentially on your own in terms of getting the debtor to pay. While the court will support your efforts, it will not act on your behalf to collect the debt. However, the court will allow you to take certain legal measures to collect your debt, such as wage garnishment or asset attachment. Each state has its own laws regarding what creditors can take from a debtor, and Texas tends to protect the debtor over the creditor.

In many states, if you don't have the right to seize any property, you have the right to garnish a debtor's wages. However, Texas does not allow wage garnishment. While federal standards suggest that states should allow garnishment of up to 25 percent of a debtor's wages, each state can determine its own level of garnishment, as long as it does not exceed the federal standard. In Texas, 100 percent of a debtor's wages are exempt from garnishment, so this is not an avenue for you as a Texas creditor. Although certain rare exceptions exist, such as garnishment for a student loan or child support, as an independent creditor you cannot garnish a Texas debtor's wages.

Since you can't generally garnish the wages of a Texas debtor, your only avenue for repayment with a judgment in Texas becomes asset attachment. Unfortunately, Texas laws are generous towards debtors in this regard as well. The main Texas exemption is the homestead exemption, which is essentially unlimited. No matter what the size of a debtor's unpaid debt, you cannot slap a lien on a Texas debtor's property. Other protected assets include most insurance and annuities, public benefits and pensions and retirement plans. Most personal property is also protected up to $30,000 for a single debtor, or $60,000 for a joint debtor, although exceptions exist. If a debtor has most of his net worth in his homestead, even if it is a million-dollar homestead, you may not end up with any money out of your judgment.

One debt collection strategy in Texas is to issue abstracts of judgment in any county where you feel your debtor may own additional property. If the debtor has any non-exempt property in any of these counties, or if the debtor ever acquires property in these counties, you may have priority in terms of establishing a lien against the debtor's property. Since the Texas homestead exemption only protects a debtor's primary residence, if your debtor has or acquires rental property you may be able to place a lien against that property to satisfy your judgment.

Laws on Disputing Inaccurate Information in Credit Reports

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The information contained in your credit report can determine whether you are approved for a credit card, mortgage loan, cell phone or any other type of credit. Many employers also run a credit check when hiring new employees. Erroneous or inaccurate information can cause your credit score to suffer, which can make it difficult to obtain new credit or favorable interest rates. Fortunately, federal law allows consumers the right to dispute credit reporting errors.

The Fair Credit Reporting Act was established to preserve the accuracy, fairness and privacy of information contained in consumer credit reports. The FCRA requires the credit reporting bureau to investigate consumer disputes and take steps to remove or correct erroneous or inaccurate information. Credit reporting agencies also must forward any relevant data you provide regarding an inaccuracy to the organization that originally provided the information. By law, the credit reporting agency must resolve the dispute within 30 days and provide you with a free copy of your credit report if any changes are made. If a change is made, the FCRA allows you to request that corrected copies of your report be sent to anyone who requested it in the previous six months.

The Fair and Accurate Credit Transactions Act offers additional protections to consumers, specifically those who have been or may become targets of identity theft. If you believe your identity has been stolen, FACTA allows you to request that the credit reporting bureau place a flag or fraud alert on your account. You also may block negative items from appearing on your credit report if they occurred as a result of identity theft. Under FACTA, you also may contact a creditor directly to initiate a dispute regarding inaccurate information. The creditor must investigate and resolve the dispute within 30 days

To dispute information contained in your credit report, you must first notify the credit reporting agency or agencies in writing of the error. You must include your name, address and account information, along with a description of the error and why you feel the information should be removed or corrected. You may choose to enclose a copy of your credit report with the information highlighted for reference. Once you've initiated a dispute with the credit reporting agency, you may initiate a dispute with the creditor who provided the information. Be sure to contact the creditor in writing and include your complete contact information, account information and any details relevant to the dispute.

If you feel your rights under the FCRA or FACTA have been violated, you may sue the creditor or credit bureau for damages, court costs and attorneys' fees. For example, if you initiate a dispute and the credit bureau fails to resolve it within the 30-day period allowed, this is considered a violation of your rights. Similarly, your rights are also violated if the creditor or credit reporting bureau determines that information is inaccurate but fails to remove or correct it.

What Are the Benefits of Balancing a Budget?

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There are many benefits to establishing and balancing a budget. The first step is to create your budget and you should have every dollar accounted for. General categories should include: household, food, entertainment, kids expenses, medical, savings and every other area where you spend money. Once your budget is made and you start to follow it, you will find many benefits.

Having a budget means you have a plan. Your budget tells you where every dollar should be spent. A budget can be adjusted as needed to help meet your needs but should be followed as closely as possible. You should be able to look at your budget at the beginning of the month, week or day and know how much money you have to spend in each of your categories. When you know you have a specific amount to spend on a specific item, it is much easier to stay within the boundaries of your budget.

Having a budget makes you realize how much money is being spent in specific categories. You may not realize how much your morning coffee or lunch adds up to over the course of a week or month. Seeing these figures in black and white can often create a stark reality for people.

Adjustments can be made in your budget as you see where there are areas of waste. Can you spend less on luxury items to increase your savings? Constantly reviewing your budget for areas where things can be tightened up is important. Your goal should be to reduce needless spending, pay down other bills or increase the amount in your savings accounts. Without a budget, it is difficult to know where your money is being spent, and how much is being spent on what. A budget creates awareness that can lead to multiple life changes.

When you have a budget and stick to it, it is easier to save money. Without a budget, money is often spent, and you are left wondering where it went. The budget can help you set goals for the money you save.

Debt Recovery Steps

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The debt recovery process begins the moment a debtor first misses a payment on a credit account or loan. His original creditor has a set of procedures it follows to attempt to collect the debt before attempting to sell the debt off to a collection agency. Once the creditor sells the debt to a collection agency, a debtor may not have long until he is taken to court to force him to pay the debt.

When you miss payments on your loan or credit account, your creditor may contact you through the mail or call you to attempt to collect the payments. These actions may continue for 30 to 60 days after your first delinquency according to the Discover Debt Freedom website. Your creditor may also report your delinquency to all three major credit-reporting bureaus during this time. If your creditor is unsuccessful in obtaining payments needed to bring your account current, your creditor may sell your account to a debt collection agency. This action can further damage your credit score.

A debt collector must first confirm the contact information he has for the debtor is accurate and that the debt is valid. The collector usually attempts to confirm the debt by contacting the debtor either through the mail or over the phone. Any mailed documents usually contain instructions for the debtor to dispute the debt with the caveat that, if the debtor does not respond within a specified time, the debt is considered valid and collection practices will begin.

The debt collection agency usually begins collection calls once it confirms that the debt is valid. These collection calls are made in an attempt to contact the debtor and secure payment for the debt or arrange a payment plan that can pay off the debt over time. The Fair Debt Collection Act restricts the times of day a debt collection agency may contact a debtor over the phone and what language a debt collection agency may use with a debtor. If a debtor sends the collection agency a written letter stating he no longer wishes the agency to contact him about the debt in question, the collection agency is required to stop contacting the debtor.

If a debt collection company is unable to secure payment for a valid debt, the company may move to secure legal counsel and sue the debtor in civil court to attempt to force him to pay. A judgment in civil court may allow a debt collection agency to seize money in bank accounts, garnish wages or take possession of assets in an attempt to recoup money owed for a debt. Some states do not allow wage garnishment for unsecured debts like credit cards, which can limit a debt collection company's ability to recoup money owed.

Strategies to Pay Off Debt

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Paying off debt can save you plenty of money in interest charges and fees, but more importantly it can give you access to more money to save, invest or enjoy. Pay off your debt and stop watching your money go straight to your creditors every month.

It will be much easier to pay off your debt if you first take the time to fully examine how much debt you have. How much money do you owe, and whom do you owe it to?

Even if your debt seems daunting and you would like nothing more than to ignore the actual amount, you will have a harder time paying off the debt without a clear understanding of the task ahead of you. Open all your credit card and loan statements and tally up the numbers.

Once you have a firm grasp on the amount of money you actually owe to your creditors, the next important step is to stop using credit. You don't have to close your accounts, but you should not use a credit card you are actively trying to pay off because it defeats the purpose and slows your progress. Even if you can't pay a great deal of money toward your debt, by not adding to your debt you will pay it off faster.

It is a good idea to pick one debt and aggressively pay it off. Make minimum payments to all your other debts until you can eliminate the first account, then choose another debt to aggressively pay off.

You can choose the account with the highest interest rate if you would like to use the most mathematically sound method, or if you think you need more motivational tactics you can choose to first pay off the account with the smallest balance so you can experience your first victory faster.

Whatever method you choose, as long as you stay the course and aggressively pursue the task of paying off your accounts, you will certainly pay off your debt faster than if you had no plan in place at all.

Should I Pay Off My Credit Card or Save Money?

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Many people struggle with the question of whether to pay off their credit cards or save money. There isn't one answer that will apply to every person; however, you can make a more sound financial decision when you consider the pros and cons of doing one or the other. Despite the conventional wisdom that paying off high interest credit cards is better than saving, you need to decide what your best option will be based on your needs, priorities and financial goals. Also, consider setting up a small emergency fund while you pay down debt so you avoid replacing old debt with new debt.

While some people might be more secure with a high balance in their savings account, such numbers can be deceptive if they carry an equally high balance on their credit accounts. Savings accounts generally have lower interest rates when compared to the higher interest rates that credit cards tend to carry. In the long run, you lose money by saving when you could be paying down high credit balances.

If you already have some money set aside for an emergency then paying off your credit cards is a good idea. Without having money set aside, you may find yourself stuck and reliant on your credit when an emergency comes around, putting you in an even bigger financial hole than you started with initially. In today's economy, having an emergency fund is especially important since various forms of credit, such as home equity lines of credit, are not as available as they once were.

Consider saving some money to take care of anticipated expenses or changes to your life situation. If you are working in a volatile industry and are susceptible to layoffs, then building your savings might give you a little buffer. Similarly, if you are expecting a child, having some money handy will allow you to afford some of your expenses without resorting to using your credit and having to pay interest on whatever you charge.

Saving money might be a good idea if your company offers a matching contribution. In that case, it may be unwise not to take the money and use it to your advantage as you work toward a more secure financial future.

When Should You Refinance to Consolidate Credit Cards?

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Refinancing your mortgage can do more than lower your interest rate. By taking a cash-out refinance for more money than you owe on your old mortgage, you acquire a sum of money you can use as you choose. One use for the money is to pay off your credit cards, leaving you with only one monthly payment. This can save you money, but it may not be as good a deal as it sounds.

Paying your mortgage lender instead of a number of credit-card companies produces multiple benefits. Mortgage interest rates are usually lower than credit card rates, the LendingTree website states, so you pay less and probably have a smaller monthly payment. In addition, you can deduct interest on the mortgage on your taxes, something you can't do with credit card bills. If you're unable to keep up your payments, on the other hand, your mortgage lender can foreclose on your house; credit card companies don't have that option.

When you refinance a mortgage, you trade the interest rate on your old mortgage for whatever's available in the current mortgage market. If rates have risen since you took out your original mortgage, a cash-out refinance means trading a lower mortgage rate for a higher one; the lower rate on your credit card debt may not make up for that. The Mortgage Loan website points out that lenders typically charge several thousand dollars to refinance a mortgage: If you can't afford that kind of expense, it's definitely not time to refinance.

Mortgage lenders prefer that the mortgage only cover 80 percent of your home's value. If your home is currently appraised at $150,000, 80 percent would equal a $120,000 mortgage; if your original mortgage is at $115,000, you'd only be able to cash out for $5,000. With home values dropping in a number of areas, owners may have homes that are worth less than the original mortgage. If your home value won't allow you to cash out the money you need, this isn't the time to refinance.

The ideal time for a cash-out refinance is when mortgage rates are low and your home's value is high --- but cashing out still isn't a good idea for everyone. Homeowners may have a history of credit problems or compulsive spending --- if they don't change the underlying problems, consolidating their credit card debt frees up their cards so they can charge more debts. There's never a good time for someone with these patterns to do a cash-out refinance: The end result is more debt than ever.

How to Remove Negative Credit Reporting That Is Older Than 7 Years

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Without credit, major purchases such as homes, cars, recreational vehicles and even education are not possible to consumers who are not cash rich. However, at some point many consumers who have used credit have had a negative item reported. While there are many methods to having these items removed, there are some items like collections, judgments, bankruptcies and foreclosures that will remain for at least seven years. There is a process to removing those items that all consumers can follow.

Instructions

Acquire a copy of the credit report. If you have recently applied for credit, you may acquire a copy through the creditor or a paid service can be utilized. Federal law dictates that consumers are entitled to one free credit report every 12 months. This report is available through any of the three credit reporting agencies, Experian, Equifax and TransUnion. A Social Security number and any other verifying information will be necessary to gain access to the report.

Look for any items listed as negative. A negative credit item could include late payments, collections, bankruptcies, foreclosures, defaults and judgments. Because of their negative effect on FICO scores, these are what you want to remove from a report.

Locate contact information for creditors that need to be contacted. On the credit report will be the contact information for each of the creditors. If the credit report is being viewed online, a prompt to dispute any items will appear on the Web page of the respective reporting agency. At this point, a dispute can be submitted online or in writing to the respective creditor.

Contact the organization that issued the credit as well as all the credit reporting agencies. In the correspondence, note that the negative item is more than seven years old and by law should be removed form the credit file. If you protest online, the credit reporting agencies will provide an appropriate option for information over seven years old. Make copies of all records and letters mailed to the creditor and the reporting agency.

A response should be received from the creditor and credit reporting agency within 30 days of the dispute. If the creditor can verify that the negative information is seven years old or older, it will be removed. Check the credit report to confirm the removal of the negative information.

Does Financing a Car Build Credit History?

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If you are in the market for a new or used car, you may wonder if you should finance your car through a lender or save the funds necessary to buy the car outright. Although buying a car outright can save you the money you would pay in interest on a vehicle loan, it does not help you build your credit history. In most cases, financing a vehicle will help you establish or rebuild your credit, increasing your ability to qualify for future loans.

Buying a new car typically involves using lenders associated with the dealership where you purchase the vehicle. In some cases, the vehicle manufacturer may own a financing company -- if you obtain the loan through the manufacturer's finance company, you may be able to take advantage of special incentives such as low introductory interest rates or waived loan origination fees. Some dealerships also work with third-party lenders to provide loans for their customers. Manufacturer-owned financing companies and third-party lenders typically report to credit bureaus as you make your loan payments, which can help build your credit history.

The lending process for buying a used car is typically the same as for buying a new car. However, unless you buy a certified pre-owned vehicle, you will typically obtain your loan through a third-party lender rather than a manufacturer-owned finance company. Some dealerships work with more than one lender, so they may be able to provide lending solutions if you have less than perfect credit. Financing a used car through a third-party lender will usually help build or rebuild your credit history.

If you have poor credit or have not established a credit history, you may have difficulty obtaining traditional financing for a vehicle. You may need to purchase a vehicle at a "buy here, pay here" dealership, which typically handles financing in-house -- you pay installments directly to the dealership instead of to a third-party lender. Not all "buy here, pay here" dealerships report payments to credit bureaus, though. If this type of dealership advertises credit reporting, obtain a statement in writing that the dealership will report your timely payments to help you establish or rebuild your credit history.

When considering a new or used vehicle purchase, evaluate your current income and expenses carefully to make sure that you will be able to afford your loan payments. Financing may help you obtain a newer, higher-quality vehicle than you could afford by paying with cash; however, if you overestimate your ability to make installment payments, financing can lead to a negative credit history and can make bad credit worse if you miss payments. At worst, the lender can repossess your vehicle, which can cause severe damage to your credit.

Should You Close Some Accounts to Raise Your Credit Score?

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Your credit score is calculated using a formula created by the Fair Isaac Corporation. Here's how it breaks down: Your payment history makes up 35 percent of your score. Your debt to credit ratio makes up 30 percent. The average age of your credit (closing old accounts and opening new ones lowers this number) makes up 15 percent. The different types of credit you use makes up 10 percent (having a mix of credit cards, mortgage and car loans raises this number). The last 10 percent is based on inquiries made (applying for credit and having your credit report pulled lowers this number).

Closing old accounts does not raise your credit score. In fact, closing old accounts actually has the opposite impact, it can lower your score. It does this by affecting two components of your credit score: the average age of credit and the debt to credit ratio. The other factors--payment history, inquiries and types of credit--are usually not affected by closing old accounts, unless you close the only credit card accounts that you have, thus reducing the variety of credit you use. You can raise your credit score by paying down debt, making payments on time and refraining from opening new credit cards. You cannot raise your credit score by closing old accounts.

The length of your credit history makes up 15 percent of your credit score. This number averages the age of all of your credit accounts. When you close old credit cards, you lower the average age of your credit accounts. This can have an adverse impact on your credit score.

Your debt to credit ratio looks at how much of your available credit you use. The more of your available credit you use, the lower your credit score. So, if you have an old card with a high credit limit and no balance, when you close that account, the amount of credit available to you is reduced. Thus, since you still owe the same amount of money but the amount of credit available to you is reduced, it appears to creditors that you are using more of your available credit. This lowers your debt to credit ratio, lowering your credit score.

Do Collection Agencies Have Access to Credit Bureaus?

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Not all debts incurred by debtors are collected by the people to whom they owe money. Often, creditors hire collection agencies or sell their debts to collection agencies, as collection agencies are more skilled at collecting on debts than creditors. Because collection agencies have a legitimate business need to access a credit report, they can access this report, as well as report the status of debts to credit bureaus.

As long as a collection agency pays the money required to access a credit report to the credit bureau that holds it, the collection agency can access the report of any person from whom it is seeking to collect money. Although credit reports are not public information, they are legally available to someone who has a legitimate business interest in knowing a person's credit history. This includes debt collectors.

It is a common misconception that a collection agency checking a person's credit report will cause his credit score to decline. The only time a credit check can cause a person's score to go down is if the party doing the checking is a lender who is considering an individual's request for credit. Because the individual is not looking to take out more credit, a check by a debt collector will not hurt his score.

Another way in which a collection agency has access to a credit bureau is through the reporting of the status of a debt. If a debt is delinquent, a collection agency may report this delinquency to a credit reporting bureau as a means to motivate the debtor to make good on the debt. This is because the presence of a late debt payment on a credit report will cause a person's credit score to decline.

While a collection agency has access to the credit reports of debtors for whom it is collecting debt and whose debt it is considering purchasing, it cannot access the reports of a person for whom it does not have a legitimate business interest. In addition, agencies cannot report false information to credit bureaus that causes a person's credit score to decline, particularly if it is used as leverage to get the person to pay off a debt.

How to Deal With Long Term Debt

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Having debt can be extremely frustrating and feel like something you are enslaved to. Unfortunately being in some amount of debt has become commonplace. With the costs of everyday life, the uncertainties of the economy and the incessant advertisers pressuring us to constantly buy more, bigger and better items, it is no wonder that so many of us are behind the eight ball. If you are in debt, even long-term debt, there is hope for you. With a certain degree of planning, diligence and discipline you can be on your way to lowering and potentially eliminating your debt.

Instructions

Determine exactly how much debt you are in. Nobody likes to be in debt but neither stressing over it nor ignoring it because it is too overwhelming is going to help improve your circumstances. Knowing exactly how much you owe is the first step to reducing it. Look at all your bills including loans, credit cards, mortgage and any other amount you owe and determine the total.

Create a budget. Type a list of all your current bills and your recurring monthly payments. Also take into consideration the amount you spend on gas, groceries, toiletries and other essentials. Add up the total amount you spend each month and subtract it from your monthly income. The amount you have left is your surplus.

Reduce your surplus spending. If you currently use your surplus on shopping sprees, entertainment and going out to dinner, try to cut back on those items. Decide on a maximum amount you want to spend out of your surplus each month and stick to it.

Set up a debt repayment plan using the rest of your surplus income. You should continue to make the minimum payments on all of your debts, and you will use this plan to begin to reduce your debts one by one. Categorize your debts by the amount of interest you owe on each item. Do not include your mortgage here. You will want to use the rest of your surplus income to start paying extra money against the principal amount you owe on your debts beginning with your highest interest rate debt, which will likely be your credit card. Once you pay off one debt completely, move onto the next highest interest rate debt and so on. Resolve to not add any more debt.

Consider acquiring a secondary income through a second job if you do not have enough of a surplus to make a dent in your debts. If you have been living beyond your means, you may need to make more money to get out of debt. This will be a sacrifice, but it is necessary in order to become free of debt and will be well worth it in the long run.

Pay extra against the principal of your mortgage once your other debts have been eliminated. This will enable you to pay off your mortgage in a shorter time period, thus reducing the overall amount you end up paying for your home.

Do not neglect your savings account. No matter how badly you want to get out of debt, you should still want add money into your savings account each month. Even if you only put 5 percent of your income away, you will certainly want a cushion in case the unexpected occurs. Include your monthly allocation to your savings account in your budget.

If My Wages Are Being Garnished, Can a Lien Also Be Put on My Home?

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If your creditor sues you in court, he may be able to obtain a court order to force your employer to withhold some of your pay for your creditor. On top of this, your creditor can use other methods to collect the debt, including placing a lien on your home.

To obtain the right to garnish your wages, your creditor has to go through the court system. If your wages already are being garnished, it means that your creditor has successfully brought a lawsuit against you. The judgment gives your creditor the right to use various legal methods to collect the money you owe. While the court does not collect the money on behalf of your creditor, she can obtain court orders to force you to pay.

Wage garnishment is only one of the several ways that your creditor can use to collect your debt. Your creditor can collect up to 25 percent of your pay, depending on your income level. To do so, your creditor has to know who your employer is and serve your creditor with a court-issued earnings withholding order. Your employer then has the legal obligation to give the creditor part of your pay.

With a judgment, your creditor can place a lien on your home, but only after obtaining appraisals and other documents. According to lawyer Robert A. Weinberg, placing a lien on your home can cost the creditor more than $5,000. After placing a lien, the creditor usually has to wait until you sell the property to collect your money. Even then, the money first goes to any superior lien holders, such as mortgage lenders.

Besides garnishing your wages and placing a lien on your home, your creditor also has other ways he can use to collect the debt. Your creditor can garnish your bank accounts. He can also take cash from your businesses and seize your personal property, such as vehicles and jewelry. Unless you pay off the entire debt or declare bankruptcy, your creditor may be able to continue collecting the debt for more than 20 years from the date of the judgment.

The Best Debit Card Sources

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Debit-card sources should go beyond just listing debit-card issuers. The best sources of information help consumers determine what type of debit-card services are available and what fees they should expect to pay. Consumers also should understand what their responsibilities are if their debit cards are used without their consent.

The websites of card issuers are good sources for information if you're shopping for a debit card. Card issuers' sites will have up-to-date information about terms and services they provide. For example, the Visa debit card site explains how customers can use their debit cards to pay their bills. Visa also promotes what it calls an e-commerce fraud detection system. Visa cardholders are alerted if the system detects a change in their typical spending patterns that may point to fraudulent activity.

You can compare several debit-card issuers' offers at Bankrate.com. The site also provides information on the types of debit cards that are available and what to look out for when using them. Some people get prepaid debit cards because they can't open traditional bank accounts due to past financial problems. Prepaid card issuers require cardholders to deposit money into an account. The account is linked to the debit card, which is used to make purchases up to the amount of the deposit. However, Bankrate.com warns consumers to avoid the high fees that some prepaid card issuers charge by comparing fees listed in issuers' terms.

The U.S. Federal Trade Commission explains the Electronic Fund Transfer Act on its website. It's important for debit-card users to be familiar with the EFTA because it outlines users' liability. For instance, the amount of money you would be obligated to pay if your debit card is stolen and used for fraudulent transactions depends on how quickly you report the theft. The EFTA says a cardholder can't be held responsible for any unauthorized transactions if the theft is reported before the card is used. However, people who don't report such thefts they discover within two business days may have to pay up to $500 because of unauthorized transactions.

"Consumer Reports" and other types of consumer-focused publications and websites are good sources for keeping up with abuses, scams and other issues associated with debit cards. For example, "Consumer Reports" notes on its website that it found a prepaid debit card for teens that included 15 potential fees in 2009. "Consumer Reports" says another prepaid debit-card issuer charged cardholders $1 just to speak with a customer service representative.

Can You Get a Garnishment Removed From Your Credit Report?

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A garnishment -- when your employer withholds a portion of your wages to pay off a debt -- indicates that you failed to honor previous financial agreements. Not paying your creditors negatively affects your credit scores. Federal law gives you the right to dispute incorrect information on your credit report, but a successful dispute is no guarantee that the garnishment will not continue until you pay off what you owe.

A garnishment does not appear on your credit report. Because of this, it cannot directly impact your credit rating. Before a creditor can begin garnishing your wages, however, it must hold a legal judgment against you. The legal judgment permitting the garnishment does appear on your credit report and has a significant negative impact on your credit. The Fair Credit Reporting Act notes that a legal judgment remains a part of your credit history for a minimum of seven years and possibly longer, depending on your states laws.

The defaulted debt that preceded the legal judgment and garnishment also appears as a negative entry on your credit report. Derogatory credit entries regarding the debt must be removed from your credit report seven years and 180 days from the date of your most recent payment -- regardless of whether the entry is from the debts original creditor or a collection agency.

The FCRA awards you the legal right to dispute any information on your credit report that is inaccurate. When you dispute information with the credit bureaus, the bureaus will attempt to verify the data. If verification isnt possible, the FCRA requires that the bureaus immediately remove the item from your record. If your credit records contain errors, it is possible to dispute both a legal judgment and the creditors original entry and have those entries removed before the reporting period expires. Doing so, however, does not stop the garnishment from occurring.

Even if you successfully eliminate all evidence of the debt from your credit report, either through a legitimate dispute or simply because the reporting period for the derogatory information expired, the garnishment can continue until you pay off the debt. In order to overturn a garnishment you must overturn the legal judgment that gave the creditor the right to seize your wages. This requires that you return to court and contest the judgment. Each state has different regulations regarding how much time consumers have to vacate a judgment and the grounds under which they may do so. If you vacate a judgment and subsequently stop the garnishment, the credit bureaus will remove the judgment from your credit report upon request.

Who Can Garnish Your Wages in Pennsylvania?

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Pennsylvania law limits who can garnish wages. Courts in a child custody case can garnish wages. Credit card companies or other commercial creditors cannot. Residential landlords, bankruptcy courts and student loan companies can also attach wages in Pennsylvania.

Pennsylvania law applies, except for federal debts.

The federal law governing wage garnishment sets a ceiling on the amount of money that can be garnished from a paycheck at 25 percent of a person's net income. More importantly, according to the U.S. Department of Labor, the law states that if there is a conflict between state and federal law, the law which results in the least amount being garnished applies. Since Pennsylvania prohibits garnishment for commercial debt, the federal law does not apply. In other situations, Pennsylvania law limits garnishment to 10 percent of a person's take-home pay.

Steep penalties are possible for people who don't pay for their children.

Federal law limits creditors from taking more than 25 percent of a person's income with some important exceptions, particularly child support. When it comes to child support, according to the Pennsylvania Department of Human Services, "These limits are 50 percent for a noncustodial parent who is the head of a second household and 60 percent for a noncustodial parent who is not supporting a second family. These percentages may be increased five percent for payment on arrears owed when the noncustodial parent is behind on support payments 12 weeks or more."

The landlord would have to go to court first, which could be an added expense.

If you have a residential lease and fail to pay, a landlord may garnish your wages after obtaining a court order. The law limits how much the court can deduct to 10 percent of a person's wages after taxes, health insurance, union dues and other garnishments.

Failing to pay taxes could lead to a garnishment order.

Garnishment for state and federal taxes is allowed in all states. Like residential leases, the Pennsylvania Department of Revenue can garnish up to 10 percent of a person's take-home pay. Additionally, an employer can deduct two percent of a person's take-home pay to pay the costs of the garnishment. IRS levies can be as high as 25 percent.

Debt collectors are prohibited from making abusive or false statements, and this applies to wage garnishments. Debt collectors may not threaten to garnish wages if they do not intend to do so or if garnishment isn't allowed. Debt collectors who threaten to garnish wages for commercial debts, such as credit cards, in Pennsylvania, could face sanctions from the Federal Trade Commission.

What Is Considered a Debt?

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The simple definition of debt is money owed to a person or organization you've borrowed money from, with the intent or requirement to pay the money back. There are different types of debt. Some debt is considered good and some debt is considered bad. The type of debt you have, and the amount of debt, partially determines your credit standing.

Common types of debt include house mortgages, student loans, car loans and personal loans. Medical bills, credit cards and other bills you've made arrangements to pay regularly in an effort to clear them off are also common types of debt. Any loan or monies owed to someone with the intent to pay it back at an agreed upon schedule is debt.

Good debt is any debt you have that creates anything of value. Examples of good debt include school loans, which lead to an education that can provide job opportunities; a home loan, which builds equity and increases in value or a refinancing debt that is designed to get a lower interest rate.

Investing in anything that depreciates is considered bad debt. Cars depreciate in value, so a car loan is bad debt. Credit cards are bad debt. Paying partial credit card payments creates bad debt because the items you purchase with your credit card lose value while the interest rate causes the pay-off of the items to increase.

The difference between unsecured and secured debt is whether or not you have collateral. Collateral is something put up against borrowed money that can be taken if you fail to pay a loan. Credit cards are unsecured debt. Bank loans can be either unsecured or secured. Many banks aren't willing to loan money to new borrowers without collateral.

Can a Bank Account Be Levied Before a Judgment?

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A levy is a garnishment order, usually from a civil court, although the Internal Revenue Service and other tax agencies can also issue bank levies. Garnishment freezes a debtor's bank account, allowing a debt collector or tax agency to take money from the account. . Levies and garnishment are not possible in consumer debt cases until after the debt collector obtains a judgment in court.

The Fair Debt Collection Practices Act, places restrictions on the behavior of debt collectors as they attempt to collect debt. The act makes it unlawful for debt collectors to threaten a lawsuit unless they really intend to sue, and they cannot threaten to take money from a debtor's bank account without having obtained a judgment and garnishment.

Lawsuits, judgments and garnishments occur at the end of a long debt collection process. A debtor defaulting on a credit card account because of nonpayment may not face a possible lawsuit for several months or even a year. However, in some instances legal action can occur much sooner. Usually a credit card company sells or assigns the debt to a debt collector after the account is about six months behind. The debt collector steps up collection efforts and may eventually file a lawsuit.

Defendants in debt lawsuits usually try to settle the case if they have the means to do so. There are few suitable defenses for a debtor in a debt lawsuit, making it difficult to beat a debt collector in court. The amount of a possible settlement depends on what the debt collector is willing to accept. A debt collector willing to file a lawsuit may insist on receiving say, 80 percent of the balance in a settlement, but may accept less. SmartMoney.com reports debt collectors usually will settle for 20 to 75 percent.

Settlements are possible even after the start of garnishment. People facing garnishment usually stop putting money into the account. They redirect direct deposits such as payroll checks to another bank account or onto a prepaid debit card. This creates some leverage for the debtor because at this point the debt collector cannot collect money from the original bank account.

An experienced consumer affairs attorney can offer advice on debt lawsuits and garnishment. The attorney can negotiate settlements and represent the debtor in court on other debt lawsuits, if necessary. People facing levies because of tax issues should consult a tax attorney.

How to Delete a Collection Account & Its Effect on Credit

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Delinquent credit card accounts eventually get charged off and sold to debt collectors, which add a collection entry to your credit reports. Collection agency entries hurt your credit badly because they are part of your payment history, which is 35 percent of your credit score, according to the Fair Isaac scoring company. You cannot delete accurate collection information yourself, but the debt collector may agree to erase the item in exchange for a discounted payment from you.

Instructions

Review your finances and determine how much you can afford to pay to settle your collection account. Collection agencies buy charged-off credit card accounts and other unpaid bills for pennies on the dollar, so they make money even if they settle for a steeply discounted settlement from you. You may be able to pay as little as 40 to 60 percent of the original amount according to Bankrate.

Call the collection agency, and make your settlement offer. Tell the debt collector that you want the collection account erased from your Equifax, TransUnion and Experian credit reports as a condition of the settlement. You need complete erasure of the account to stop its effect on your credit, as a paid collection entry is almost as bad as an outstanding one. The collector may try to negotiate a higher amount, so initially offer less money than you are actually able to pay.

Ask the debt collector to mail you a signed letter detailing the terms of your settlement, including removal of the account from your credit reports once you send your money. Never remit your payment until you get written confirmation that the collection agency will remove its entry from all your credit bureau records.

Send the agreed-on payment to the collection agency along with a copy of the agreement letter. Include a note that says you expect the account to be removed from your credit reports immediately because you fulfilled your end of the bargain.

Order your three credit reports through the Annual Credit Report website a month or two after remitting payment to the collection agency (see Resource). That website provides consumers with free reports once per year. Check all three copies to ensure the collection account does not show up on any of them. The negative effect on your credit disappears completely as soon as the collection entry is erased.

What Happens to Personal Debt With the Fall of the Dollar?

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The phenomenon of a dollar declining in value can have various effects on your ability to pay off personal debt. The specific effect on your situation depends on a number of factors.

The dollar can decline against other currencies for a variety of reasons. A long period of low interest rates from the central bank, such as that experienced in the years immediately prior to 2010, can result in the cheapening of the currency. Another cause could be the failure of Congress to control the budget deficit, which ballooned in 2009 and 2010 thanks to a weak economy, a $900 stimulus package and the passage of the Affordable Care Act of 2010. The world markets could be discounting the effects of expected inflation within the United States, which lessens the dollar's value against other currencies. Furthermore, the mortgage crisis of 2008 to 2010 undermined confidence in the assets underpinning the U.S. financial system, which largely relies on pools of mortgage-related debt.

A falling dollar actually helps some Americans and hurts others. When the dollar declines against other world currencies, our imports become more expensive for Americans to purchase. This hurts people who buy imported goods, such as fuel. Historically, the effects on fuel prices have been muted because in the past, the oil markets have been denominated in dollars. Nevertheless, a weak dollar means it can't buy as much abroad as it used to, leading to inflation. When combined with a period of low interest rates, this can be devastating to those who live on a fixed income.

A weak dollar, on the other hand, can help stimulate employment. When the dollar declines against other currencies, U.S. exports become more affordable to those abroad, even compared to their own domestically produced goods. A weak dollar tends to help manufacturers and farmers, who export much of their production abroad.

If you have debts to U.S. creditors or any debts denominated in U.S. dollars, the declining dollar likely has no direct effect on your debt. However, if you have a long-term variable-interest-rate loan, such as an adjustable-rate mortgage, or ARM, the anticipation of a decline in the dollar could cause interest rates to rise, resulting in your mortgage payment increasing when it comes time for the rate to reset. If you have debts to foreign creditors denominated in foreign currency, and you earn your income in dollars, it becomes more expensive for you to convert your dollars into the foreign currency. However, if you're in an industry that benefits from a weak dollar, it may become easier to earn money.

If the dollar's troubles aren't confined to weakness against other currencies but instead lead to a period of high inflation, that could favor the debtor, as you would have borrowed relatively expensive dollars but have an opportunity to pay them back with relatively "cheap" dollars due to the effects of inflation. This is only true, however, if you don't live on a fixed income. Furthermore, wages tend to be "sticky": They don't tend to rise immediately when inflation sets in. However, if you can sell other assets for higher prices or increase your income in line with inflation, it may become easier for you to pay back debt.

Seizing Your Bank Account

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When a person falls into debt with creditors, he may be the subject of various kinds of aggressive collection methods. While some of these methods are relatively benign -- for example, repeated calls and emails -- others may involve the forcible seizure of the due funds. Some debtors may be subject to seizure of their bank accounts, which can occur if a judge hearing the creditor's case orders it.

Funds cannot be seized from a bank account without the explicit permission of a civil court judge. A bank is not allowed to provide funds to an account holder's creditors unless a judge orders it to do so. To get the approval of a judge, the creditor must file suit in civil court and win damages from the debtor. If the debtor doesn't pay the damages, the judge can order the seizure.

If a judge receives a motion to seize the funds within a bank account and honors it, then the creditor will be allowed to present the debtor's bank with a court order demanding that the debtor's account be frozen. When an account is frozen, a debtor can no longer withdraw from or transfer money out of it. Generally, after the account is frozen, the creditor will be allowed to draw funds from it.

In many cases, a judge will not allow a creditor to seize a bank account. Many states have laws that forbid the seizure of certain bank accounts. For example, many states require that the debtor first pass a means test before his account can be seized. This means that the debtor must earn a certain amount of money, or his bank account will be ineligible for seizure.

Before an account is seized, the debtor may have a chance to protest the seizure. If he does not, he will be given a chance to appeal it. Depending on state and federal law, the debtor can appeal the seizure on various grounds. For example, a bank account that contains federal benefits, such as Social Security payments, cannot be seized. If an appeal is granted, then the seizure will be lifted.

How to Add Rent to a Credit Report

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Since your credit report is a reflection of your payment history, make sure it represents an accurate picture. While most major creditors supply information to credit-reporting agencies, smaller creditors usually do not. Consider a few easy steps to take to add an unreported account to the three major credit-reporting agencies.

Instructions

First, get your most current credit report by going online to AnnualCreditReport.com. AnnualCreditReport.com is the official site to obtain your free online credit reports from the three nationwide credit reporting agencies: Equifax, Experian and TransUnion.

Next, contact your creditor to request that your account and payment history be added to all of the credit-reporting agencies. Provide the creditor with the bureaus' contact information, as well as a record of your payment history and any required personal information. Make it as easy as possible for your creditor to add your account.

Finally, contact each of the three credit-reporting agencies to request that your unreported debt be added to your credit file. Provide copies of substantiating documentation---never send originals. Keep copies of all correspondence and receipts.

How to Take Responsibility for Paying Someone Else's Debt

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When a friend or family member gets into debt, he may approach you at some point about taking responsibility for it. In some cases, your family member or friend may not be able to get approved for financing without your guarantee of payment. In other cases, he may simply need help paying the bill and you want to help. If you want to take responsibility for another person's debt, you can typically do so, but the process can vary depending on the policies of the creditor.

Instructions

Get the information about the debt from the other individual. You will need to know the account balance as well as the account number. You need contact information for the creditor as well.

Contact the creditor to ask about becoming a guarantor. If your friend or family member is applying for new credit, you will simply provide your information as a co-applicant for the loan or credit account. If the debt is already existing, talk to the lender about the possibility of taking responsibility for it.

Provide your personal information to the creditor, including your name, Social Security number, address, phone number and income.

Sign the appropriate documentation that is provided by the lender. The lender may want you to sign a document that states you guarantee to pay the debt back. If your friend or family member is getting a new loan, you will simply sign the same document she signs as a cosigner.

Federal Regulations for Debt Counseling

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The credit counseling industry has received a great deal of attention in recent years. Common complaints include excessive or hidden fees, failure to disclose material facts, and false promises about eliminating inaccurate information from consumer credit reports. The industry is partly funded by the banking industry, and the presence of creditors on debt counseling agencies' boards of directors has also drawn fire from consumer advocates.

Credit counseling and credit repair services must comply with multiple layers of regulation and control. At the federal level, these organizations are chiefly regulated by the Federal Trade Commission and subject to a number of federal laws, including the Consumer Credit Protection Act. Additionally, credit repair and debt counseling organizations have come under close scrutiny by the Internal Revenue Service, particularly when they are claiming tax-exempt status as charity organizations. Finally, state legislatures and state commerce departments provide another layer of regulation and licensing.

As part of the Consumer Credit Protection Act, Congress cracked down on misleading claims made by credit repair organizations. Under Section 1679b, credit repair organizations are prohibited from advising consumers to make false representations to creditors or courts, nor may they seek to remove accurate negative history from consumer credit reports. Finally, no credit repair organization can receive money from a consumer before it has performed the services required of it.

As part of the same law, Congress requires every credit repair organization to furnish customers with a written contract, and provides a three-day cooling period before the contract becomes binding on the consumer. The contract must contain a full description of services to be performed and the time period estimated to be necessary to complete them. Finally, the contract must disclose all fees, terms and conditions of payment, including all amounts to be paid to the organization providing the services and to any other entity.

Many credit repair organizations have applied for tax-exempt treatment as charity organizations. The IRS scrutinizes these organizations carefully. If the scope of an organization's services is limited to working out a payment plan for a customer at a profit, the IRS will decline the application. To qualify for tax-exempt status, the organization must also provide significant counseling and education services to the public.

Should I Pay Charge-Off or Collection Accounts First?

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When prioritizing debt, charge-off accounts are often the last debts to be paid.

A debt is not forgiven when it is charged-off, so you may face legal action on an unpaid charge-off account. Although paid charge-off and collection accounts are clearly labeled as such on credit reports, it is preferable for these accounts to appear as paid rather than unpaid.

State laws dictate a statute of limitations after which creditors may no longer sue a debtor for bad debt. Sometimes paying a charged-off account resets this statute of limitations, making payment a potential disadvantage to the debtor if the debt cannot be paid in full. Whether in collection or not, an account that has been charged-off can only legally appear on your credit report and count against you for seven years.

Businesses often sell their charge-off accounts to collection agencies, so an account can be both a collection and charge-off account. When forced to prioritize the payment of overdue debt, it is wise to pay debt that has not been charged-off first. It may not be to your advantage to pay charged-off debt at all if it is close to 7 years old and beyond your state's debt-collecting statute of limitations.

How to Negotiate a Write-Off Debt

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Negotiating a debt that a creditor considers a write-off is possible in writing or over the telephone. The creditor officially lists the debt as a charge-off after considering it noncollectable because you stopped making payments as agreed. Charge-offs usually occur after debts are past due by more than three months. The creditor sends the charge-off information to the major credit bureaus, making it difficult for the debtor to qualify for new credit at competitive interest rates. People seeking to improve their credit can consider negotiating old debts through debt settlement.

Instructions

Read your credit reports from the three major credit-reporting agencies for information about the charge-off. Get these reports from Annual Credit Report, the only website the Federal Trade Commission (FTC) endorses for this purpose. Note the amount of the charge-off and contact information for the creditor or debt collector.

Contact the creditor or debt collector when you are ready to pay 20 to 70 percent of the balance to settle the account. Smart Money reports that's how much creditors and debt collectors are willing to accept to resolve old unsecured debts, such as credit cards. Make an initial offer of 20 percent.

Raise your offer gradually over several months if the creditor or debt collector will not accept 20 percent. Exercising patience may allow you to negotiate a deal you can afford. At some point you must strike a balance between what you can afford to pay and what the creditor or debt collector will accept. Deals for around half the balance or a little less may represent good value for both sides.

Obtain details of the agreement in writing before paying with a cashier's check.

How Often Can You Dispute a Credit Report?

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One of the reasons the Fair Credit Report Act allows you to view a free copy of your credit report annually is so you can review it to ensure that all of the information contain in it is correct. If you do find errors, you can dispute them so that your credit report is corrected and it does not negatively affect your credit score.

You can dispute any incorrect information on your credit report whenever you find it. If you are getting your free annual copy of your report, then you may find yourself disputing information once a year. However, should you ever be denied credit or a loan because of information in your credit report, you may want to purchase a copy of your report and review it to see if there is information that needs to be corrected. If something is wrong in the report, whoever provided the incorrect information is responsible for changing it.

The type of information you'll find in your credit report is a listing of all your credit accounts and loans with balances and payment history. You'll also see entries for instances where you may have been sued or filed for bankruptcy. Review all of the information to ensure that it is correct. You can't do anything about negative information that is accurate except wait for enough time to pass so that it is removed from your report. For example, if you really did pay your credit card late for six months in a row, you won't be able to get that information removed. You need to be able to prove that the information is inaccurate.

The information contained in the report is used to calculate your credit score, which lenders review to decide whether you are likely to pay back a loan or not. If your report contains inaccurate information that is pulling down your score, you may find yourself being turned down for loans or credit cards or at the very least having to pay a higher interest rate on them if you are approved.

The Federal Trade Commission recommends submitting your disputes with your credit information in writing. This is because you need to include copies of any documents that support your position in the dispute. You also need to include a letter explaining the problem you have with the information and pointing out what the correct information should be. The credit reporting agencies will then review your dispute within 30 days. The information is sent to the organization that reported it for investigation. If it is found that the information was inaccurately recorded, it will be corrected with all three credit reporting agencies. You will then get a free copy of your corrected credit report.

What Is the Minimum You Have to Pay on Bills?

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Bills can take many forms, from bills for utility payments to bills for various forms of credit, such as credit cards and loans. However, what all bills have in common is that they constitute a debt obligation. A person presented with a bill is usually legally obligated to pay the person issuing it. While the ways in which the bills must be paid back differ greatly, generally all bills must be paid in full.

Most bills are issued as the result of an agreement, either written or oral, in which one party agrees to pay another party for a service rendered or an asset provided. In either case, the party receiving the bill is legally obligated to pay the bill, so long as the bill was legally issued. If the bill was not legally issued, then the person receiving it is not obligated to pay any amount on it.

If a person fails to pay a bill on time, he faces a number of penalties. For example, if the bill is linked to a loan and the creditor reports the lack of payment to a credit reporting agency, the person's credit score could decline. In addition, the person could face serious legal problems. In many cases, a creditor will sue a person for an unpaid bill in civil court over breach of contract.

If a creditor sues a person in civil court over a debt, a judge will hear the case and decide if the creditor's claim has merit. If the judge rules that the debtor has a legal obligation to pay the creditor, then the debtor might be required not just to pay the full amount of the bill but also to pay the legal fees the creditor was required to pay to take the case to court.

A special case can be made for bills issued by a credit card company. Usually, credit card companies present account holders with monthly statements stating both what the account holder's outstanding balance of debt is and a separate number indicating the minimum amount that the individual must pay by the end of the month to avoid paying a penalty fee. This minimum amount varies depending on the company's policies, but it is usually a small fraction of the balance. However, the outstanding balance eventually will have to be paid off.

Payday Loan Laws in California

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At first, a person needs money until the next payday for unforeseen expenses. Then he has difficulty paying off the loan and gets an extension. Because of the high interest rate on payday loans, the loan grows too large, and the borrower files for bankruptcy. This is the plight of many people, so the state of California has passed laws that restrict the use of payday loans.

All payday lenders must be registered with the state of California. This will enable potential borrowers to identify companies from whom they can take out a payday loan and to file a complaint, if necessary.

California laws set a limit on such loans at $300. A lender also is prohibited from charging in excess of 15 percent per week on such loans. Therefore, if someone borrows $300 for a week, the interest he will pay is $45. He will receive $255 after the interest is deducted from the amount borrowed. This equates to an annual percentage rate on a two-week loan of 460 percent.

Under California law, a loan of this type must come due on the borrower's next payday. This time limit may not exceed 31 days.

California prohibits a payday lender from making an additional loan to a customer until she pays off an existing loan. Furthermore, although difficult to monitor, a customer of one payday lender should not go to another for a loan to pay off an existing payday loan. Also, if a check to pay off a payday loan is returned because of insufficient funds, the amount that can be charged may not exceed $15. This is in addition to bank charges.

A payday lender may not charge additional interest if it grants a request for more time to pay off a loan. Also, if a check is returned due to insufficient funds, the payday lender may not threaten the borrower with criminal prosecution. Finally, the note the borrower receives from the payday lender should be easy to understand and in the same language the borrower used when he applied for the loan.

Pros & Cons of Interest-Only Vs. Reverse Mortgages

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An interest-only mortgage allows a borrower to simply pay the interest on the debt without making a principal reduction each month. A reverse mortgage uses the equity in a home to pay the borrower each month, as opposed to the borrower paying the lender.

An interest-only mortgage requires the borrower to make payments to the lender, while a reverse mortgage is the exact opposite. However, a borrower of any age can get an interest-only mortgage, while only those age 62 and older can get a reverse mortgage.

An interest-only mortgage allows a borrower to make smaller monthly payments, however, the borrower is not building up any equity. In a reverse mortgage, a borrower is cashing in their equity to get rid of their mortgage payment.

A reverse mortgage is almost double the closing costs of an interest-only mortgage, however, it is a good option for an older borrower on very limited income. An interest-only mortgage is usually interest only for a short term, and then the payments balloon.

Many people assume that an interest-only mortgage is a good idea for those looking to only live in the home for a few years, or those who are about ready to get a large raise. However, any number of variables could get in the way of these plans and the borrower should consider the risk involved with increased payments later as well.

Interest-only mortgages tend to have interest-only payments in the short term, with a set time for the payments to balloon to principal plus interest payments. Additionally, the interest rate on most interest-only mortgages is variable and based upon current market conditions and could, therefore, rise significantly over the life of the loan.

How to Find a Grant That Helps Prevent Foreclosure

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Grants are monetary awards that are not paid back and that are put to use in specific ways. Grants for higher education and business are well known, but grants are also available for homeowners to prevent foreclosure. Finding the appropriate grant can be complicated because of competition, deadlines and eligibility, but with some persistence, homeowners in danger of foreclosure may be able to find a grant that can pay their back mortgage and keep them in their home.

Instructions

Add up the amount of money owed to the bank, including fees and back payments. Grants must request a specific amount of money and usually have a limit on the amount available. Knowing precisely how much money is owed ensures that insufficient grants can be avoided or used to pay some of the outstanding balance while other funding is secured.

Look into government options. Government grants typically include mortgage grants and new homeowner grants that are designed to help pay for mortgages and down payments. The mortgage grants available through federal or state government often have strict rules regarding how the money is spent, so make sure the eligibility requirements are met. Government grants can be found through state websites or government grant websites.

Look into private grants. Private companies sometimes offer help in preventing foreclosure by giving grant money. Programs through NeighborWorks or similar non-profit organizations often have grant options available for homeowners who are in danger of foreclosure.

How to Undo a Reverse Mortgage

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A reverse mortgage is a special loan type that is available to homeowners who are 62 years of age or older. Money is borrowed against the equity in your home and is distributed through payments sent to the homeowner at regular intervals. Reverse mortgages are also associated with high fees and potential impact on assets after a homeowner's death, so some homeowners have second thoughts and want to undo their reverse mortgage before they start receiving payments.

Instructions

Inform the lender who issued the reverse mortgage in writing that you want to cancel the loan. This generally must be done within three business days of the loan closing. If mailing the request, send it using certified mail with a return receipt requested so that you can confirm when the request is accepted and who accepts it. Some lenders have cancellation forms that you can use to make your request, while others require you to write your request yourself.

Consult your reverse mortgage contract if it has been more than three business days and you are unable to cancel the loan without penalty. The contract should include a cancellation clause detailing what penalties may be applied for early loan termination and the process by which you or the lender may cancel the loan.

Contact the lender who issued the reverse mortgage and inform them that you wish to pay off the loan and terminate the loan contract. You will have to repay any money that has been paid out from the loan as well as any fines or other fees associated with early termination, as stated by the loan contract. You will also have to pay any interest that has accrued on the amount already paid.

How to Compare Consumer Credit Counseling Services

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As an alternative to defaulting on outstanding debt or declaring bankruptcy, many people opt for entering a debt restructuring program under the auspices of a consumer credit counseling service. While these services have helped a lot of people get back on their financial feet, not every credit counseling program is created equal. Your task will be to find a program that will not only help you eliminate debt but also develop constructive financial habits that prevent you from getting into more debt down the road.

Instructions

Identify at least four viable credit counseling services that you believe would be helpful to you. A good place to begin is with programs offered in your area. Most larger towns and cities will have two to four counseling services with a local office. Check the telephone book or ask your local bank for recommendations.

Contact each of the services and ask for general information about the program they offer. Along with the basics of their debt repayment program, ask about any educational and motivational resources they provide to clients. Once you have documented information in hand, it will be much easier to determine what support services are common to all the programs, and which ones have ancillary services that may be helpful in your case.

Find out how much counseling is actually involved in the establishment and administration of the debt repayment program. The best services provide classes in planning budgets and living within your means. They will assign a specific counselor to your case. In fact, seek a permanent counselor who will help you evaluate your current income and expenses and help you prepare a realistic budget. Any service that provides you with a worksheet and shifts you from one associate to another is not what you want. Personalized help is what you need to turn your situation around.

Set up a comparison chart. This can be on paper, on a whiteboard, or on an electronic spreadsheet. In one column, make a list of every tool or support offered by all of the consumer credit counseling services you are comparing. Create a header and column for each service you have received information on. Place a check in the appropriate field to indicate a service or support option provided by that particular counseling service. The creation of this simple visual aid will quickly make it obvious which are the two top choices.

Investigate the two most likely candidates. Ask pointed questions about each program to make sure you understand how it works. Verify the program has the ability to work with your creditors and create a plan that will satisfy you and everyone you owe. Make sure you understand any fees or charges that are bundled into the payment you will make to the service each month. Your goal is to choose the program that will get you out of debt, teach you how to stay out of debt, and will offer you consistent support all the way through the process.

How to Stop the Harassment of Credit Card Companies

10:24 PM No comments

Many credit card companies make courtesy calls for the purpose of collecting their debt if it is past due. In some cases, creditors employ abusive tactics that are considered harassment. If a creditor is addressing you in an abusive manner or calling your job, you can request that they stop. If the creditor doesnt stop harassing you after your request, you may file a complaint. Dont allow yourself to be stressed by harassing calls.

Instructions

Tell the caller to stop calling. You have a right to demand that any credit card collection company stop harassing you. Get the name of the caller and record the date and time of the call. Advise the caller of the Fair Debt Collection Practice Act (FDCPA) that protects you from harassing calls. Get the address of the caller to submit a written request. In your request, be sure to state that you want all harassing calls to cease. Keep a copy of the request for your records.

File a written complaint. If the creditor continues to harass you after you request that they stop, submit a written complaint to the Federal Trade Commission (FTC). Provide details in your letter, such as numerous calls to your job that constitute harassment.

Send a copy of the letter to the creditor that is harassing you. The FTC will review your case and determine whether or not you have a case. The creditor will be forced to stop the harassing calls if your claim is valid. You may sue the creditor in small claims court if the creditor doesnt comply with the FTC.

Consult an attorney. If your credit card debt is very high, it may be worth your time to seek legal advice. If you are not able to pay the debt, an attorney can advise the best way to deal with the harassing calls and resolve your credit card debt.

Credit Card Judgment Statute of Limitations

11:36 AM No comments

The National Foundation for Credit Counselings 2009 Financial Literacy Survey determined that 26 percent of Americans fail to pay their bills on time. Should a credit card company or debt collector file a civil lawsuit against an individual for failing to pay his credit card bills, a judgment is often the result.

Credit card judgments occur when a debtor either ignores the court summons regarding her unpaid credit card debt or defends herself unsuccessfully against the creditors allegations. A judgment is a formal court ruling that grants the creditor additional collection options. Although consumer protection laws vary by state, judgment creditors often have the right to garnish a debtors pay, place liens against her property or seize her bank accounts.

Judgments are not valid indefinitely. Each states law dictates how long a judgment creditor can use its judgment as a collection tool. Once the judgment expires, the creditor can still attempt to collect the debt, but may not collect the debt involuntary through garnishment or liens. During the judgment enforcement period, interest can continue to collect on the original debt.

Some consumers confuse the statute of limitations for judgment enforcement with the statute of limitations for debt collection. The statute of limitations for debt collection refers to the period of time during which a creditor may file a lawsuit against a debtor. The statute of limitations for judgment enforcement is the period of time during which a creditor may attempt to enforce a successful lawsuit. Because the statute of limitations for debt collection is often shorter than the statute of limitations for judgment enforcement, few creditors can sue consumers again for an unpaid credit card account after the original judgment expires.

The length of time a given state permits a creditor to enforce its judgment can also affect the amount of time that the judgment itself appears on the debtors credit report. While the Fair Credit Reporting Act restricts most negative credit report entries to a seven year reporting period, it stipulates that, if the individuals state statute of limitations for judgment enforcement exceeds seven years, the credit bureaus can allow the judgment to remain in the individuals credit reports for the length of time that the debtors state allows it to be enforced.

Many states allow credit card companies or collection agencies to renew a credit card judgment that is approaching expiration should the creditor do so within a pre-set time period prior to expiration. For example, in California, judgments expire after 10 years. A creditor can renew a judgment a total of three times giving it a total of 30 years to legally force the debtor to pay. Should a credit card company or collection agency need to renew its judgment, any interest the original judgment accrued will be added to the principal amount owed when the court processes the judgment renewal.

How Does Credit Work?

8:50 AM No comments

Your ability to purchase or lease the things you don't have cash for is based on your current credit status. Most of the time, homes, cars and boats are purchased using credit. Booking reservations for hotels, car rentals and cruises requires a credit card. Credit scores are used to rate your insurance and rent you a house these days. Having good credit can be a very powerful thing, as you find you can do almost anything, go anywhere and buy everything you want. It can also get you into quite a jam if you don't use it wisely.

If you are searching for a new home or car, or just applying for a credit card, the bank will run a credit report on you. The credit reporting agencies will send a copy of the report stating all credit accounts you have or have had, and they will each give you a score. That score will be a factor in determining if you are approved, denied or charged a higher interest rate for the credit. Other factors include your employment history, current income and debt-to-income ratio. Most banks issuing credit will ask for proof of these things, while credit card companies usually just take your word for it. These factors are used to determine you credit worthiness and ability to pay back the loan.

The first step in repairing your bad credit is to get a copy of your credit report. If you have recently been denied a loan due to your credit, you can request copies of the credit reports from the credit-reporting agencies. The addresses will be on the denial letter. Repairing credit takes some time; there is no quick fix. Check your report for any false information. If you find false information, call and write to the credit reporting agency and have them remove it. If you have high balances on your credit cards, pay off the smallest balance and then use that payment along with your regular payment to start paying off the next. Keep this up until you have paid off most of your cards and have lower balances on the rest.
Check with your state to see what the limits are for reporting negative information. In some states it's 4 years, and in others it can be as high as 7. Bankruptcies are usually allowed to stay on the credit report for 10 years. If there is any negative information that is older than your state allows, write the reporting agency and have it removed. Older credit problems do not necessarily mean denial of new credit. Stay on top of it, and order new reports about every 6 months to check that your score is getting better. If you keep working at it, you can greatly improve your credit score and be able to finance what you want.

Welcome to our website credit and debt managementr.

Friday, May 31, 2002

Instructions

Incorrect Information

Outdated Information

Instructions

Thursday, May 30, 2002

Judgment

Wage Garnishment in Texas

Texas Exemptions

Abstracts of Judgment

Wednesday, May 29, 2002

Fair Credit Reporting Act

Fair and Accurate Credit Transactions Act

Initiating a Dispute

Violations

Tuesday, May 28, 2002

Have a Plan

See Where Money Goes

Adjustments

Save

Contact by Original Creditor

Confirmation of Debt

Collection Calls

Lawsuit Against Debtor

Know Your Debt

Stop Using Debt

Pay Debt Off

Monday, May 27, 2002

Pay Off High Interest Rate Credit Cards

Pay off Credit Cards if You Already Have an Emergency Fund

Save Money if Your Family or Job Situation Might be Changing Soon

Save Money if Your Company Offers a Matching Contribution

Comparisons

Costs

Ratios

Warning

Sunday, May 26, 2002

Instructions

Buying a New Car

Buying a Used Car

Buy Here, Pay Here

Considerations

Saturday, May 25, 2002

Why Closing Accounts Hurts Your Score

Average Age of Credit

Debt to Credit Ratio

Friday, May 24, 2002

Acessing Credit Reports

Effect on Credit Score

Reporting Debts

Considerations

Thursday, May 23, 2002

Instructions

How to Deal With Long-Term Debt

Judgment

Wage Garnishment

Property Lien

Other Methods

Debit-Card Issuers

Types of Cards

Cardholder Liability

Consumer Alerts

Wednesday, May 22, 2002

Garnishment's Impact

Defaulted Debt

Amending Your Reports

Overturning a Garnishment

Federal Law

Considerations

Landlords

Taxes

Fair Debt Collection

Tuesday, May 21, 2002

Common Debts

Good Debt

Bad Debt

Unsecured and Secured Debt

Protection

Lawsuits