2003 ~ Credit And Debt Management

Wednesday, December 31, 2003

What Are the Rights for a Breach of Contract on a Credit Card?

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When an individual signs a credit card agreement he enters into a legally binding and enforceable contract with the credit card company. The terms and conditions of the contract are elaborated within the card agreement including repayment terms and the incidents that will give rise to a default or breach of the contract.

If the cardholder fails to remit payments pursuant to the terms of the credit card agreement, once the account is in default, the card company has the right to sue the debtor for breach of contract. The card company is entitled to damages in the amount of the remaining balance due plus any accrued interest and late charges assessed.

Another common provision found in most credit card agreements is a clause which provides that the card company will be entitled to reimbursement from the debtor for reasonable attorney's fees it incurs in connection with the collection of the default balance. Most courts will uphold this provision. However, in order to insure that the fees assessed are indeed reasonable, prior to adding attorney's fees to any damages award, most jurisdictions require the attorney to file with the court an affidavit of attorney's fees which lists the amount of time spent and the hourly rate charged.

Most credit card agreements contain a clause which gives the credit card company the right to assign (sell) the contract. Many card companies at some stage in the collection process sell the delinquent balance to third party purchasers of bad debt. Legally, the purchaser of the bad debt (assignee) stands in the shoes of the original creditor (assignor) and acquires all of the rights and obligations under the terms of the original card agreement. Thus, if it so chooses, the assignee can file suit against the debtor for payment of the default balance. If contained in the original card agreement, the assignee is also entitled to recover attorney's fees and court costs it incurs in collecting the balance.

In the event of a default, a credit card company has every right to bring suit for breach of contract against the debtor. However, the card company cannot file suit in the state in which it is incorporated and thereby force the debtor to defend the action in an inconvenient forum. Under the provisions of the Fair Debt Collection Practices Act ("FDCPA"), any civil action filed by the credit card company against a consumer debtor must be brought within the judicial district in which the defendant/debtor resides.

Which Debt Should Be Paid Off First?

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Picking a debt repayment strategy depends on the nature of your debts, including debt sizes and interest rates. There are two main debt repayment strategies: the high- interest-first method and the debt-snowball method. Each debt repayment method has its advantages and the ideal method may differ from person to person.

Most debts have an interest rate on the principal outstanding balance. This principal balance grows as any interest accrued during the lifetime of the debt is added to the outstanding amount. Some people prefer to focus on paying back debts with the highest interest rates first. Minimum payments are paid on all debts and an additional payment is made on the debt with the higher interest rate. When considering two debts of identical sizes but with different interest rates, paying back the debt with the higher interest rate will result in a reduced total debt.

The debt-snowball method is when the smaller debts are paid back first, with the intention of paying back the larger ones later. In addition to paying the minimum payment amount on each debt, an extra sum is paid towards the smallest debt. Once the smallest debt is repaid, the second smallest debt is repaid. The second smallest debt is repaid by paying the minimum payment on that debt, plus the minimum payment normally reserved for the smallest debt, plus any extra sum available. This "snowball" effect continues until all debts are repaid in full.

The ideal debt repayment strategy depends on the nature of the debts owed. Some people may have many debts of similar size, but with varying interest rates. Others may have multiple debts of different sizes, but with similar interest rates. The debt-snowball method is often recommended for those with multiple credit card debts as well as debts with similar rates of interest. Many people prefer this method as it gives them the satisfaction of clearing a whole debt completely, which encourages them to repay other debts later on. Repaying debts with the highest interest first, however, results in debtors with more money in their pockets when all debts are cleared.

Some people may find the above debt repayment strategies unfeasible, especially with debts that are either late or have spiraled out of control. A Debt Management Program, or DMP, may reduce the burden of such situations. DMPs are managed by a third party who will in turn stipulate new repayment terms. Another option is debt consolidation, where many debts are rolled into one, larger debt. Care must be taken with debt consolidation, especially with debts that have different interest rates. Debtors may find that they are in fact paying more interest in the long run, even though monthly repayments have been reduced.

Statute of Limitations to Enforce a Debt

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A statute of limitations refers to a legal limit on the amount of time someone can be held legally liable for a specific circumstance. Civil and criminal offenses have statutes of limitations imposed on them by both federal and state law, as do debts of various types. Debts are largely regulated by state law and thus every state has different statutes of limitations applying to various types of debt.

The idea behind a statute of limitations for a crime or a debt is two-fold. First, it is in the general public interest not to have legal liability extend indefinitely since that prevents people from moving on and starting over, and it also does not further social interests to incarcerate someone for a single criminal offense in the distant past if they have led an upright and productive life since (self-rehabilitated). Second, memories fade and evidence degrades; it is often simply not fair to have a legal proceeding on the basis of old unreliable evidence.

There are many different types of debt, and thus the the various statutes of limitations are rather complex, particularly given that each state has its own set of these statutes. That said, many states do have very similar statutes, but there are some significant differences to keep in mind. Some of the typical types of debt that are referred to in statutes of limitations include open accounts, judgments, oral contracts, written contracts, debts from sale of goods, debts from unpaid wages, medical debts, and so forth.

Typical statutes of limitations for debts range from two to 10 years, with a few states having statutes of limitation of up to 20 years for legal judgments. The general trend is shorter statutes of limitations for consumer or personal debts and longer statutes of limitations for highly-documented (witnessed written contracts, notarized, and the like) debts and debts from legal judgments.

Rhode Island has an exceptionally short one-year statute of limitations on hospital liens. Wyoming has a very long 21-year statute of limitations of legal judgments. Also note that many states have exceptions to statutes of limitations for special circumstances like an injury not manifesting until much later for medical malpractice or minors having the right to sue for circumstances occurring during their minority, and similar issues.

Debt Coaching

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Debt coaching -- also referred to as money coaching -- teaches you how to budget and manage household finances. Along with improving your money management skills, debt coaching can help you reach your financial goals, whether they be accumulating savings, paying off debts or learning how to invest. A money coach offers advice and can help guide you in making the right financial choices for your personal situation so you can get your finances in order.

Budgeting is about knowing where your money goes and not spending more than you earn. Begin by comparing how much you make each month with how much you spend. The first step in creating a budget is determining which of your monthly expenses are genuine needs. Sticking to a budget means living only on what money you actually have coming in. From there you can prioritize and make choices on how to spend any remaining income. If there are times when you spend more money on certain expenses than you have, then you have to cut spending somewhere else to compensate. Examine your spending habits carefully because they are key to reducing debt and successfully saving more money for both your short-term and future long-term financial goals.

Tracking your spending can help you keep to your budget. Each time you pay a bill or spend money, write it down in a notebook. Another approach is to ask for a receipt every time you spend money. Either method of record-keeping works, but if you do both you can check one against the other for more accurate tracking. Spending includes fixed monthly expenses and necessities as well as the other things you might want. Make it a habit to buy only what you need and avoid the temptation to spend money on things you want but don't really need. If you don't have enough money coming in each month to cover the basics, you may have to find ways to add to your income.

According to Bankrate.com, it can be to your advantage to try to manage your debts yourself. One benefit is that you save money you can put somewhere else. Instead of paying a debt management company a fee, use that money to pay down one of your debts. If you are in serious financial trouble, prioritize which bills you should pay first. Start by paying basic expenses. These include household utilities, health insurance premiums and mortgage or rent. Next, move on to pay other secured debts like your car payment before paying unsecured debts such as credit cards. Contact the creditors for any unsecured debts and ask if they are willing to accept a smaller monthly payment. Negotiating a lower payment plan can keep a creditor from taking legal action against you and give you more time to repay what you owe.

Personal finance expert Lynette Khalfani-Cox recommends paying more than the minimum payments on credit card balances. Khalfani-Cox points outs that by paying the minimum, you are only paying 2 to 4 percent on the principal balance each month. Depending on how much you owe, this could keep you in debt for many years to come. Another strategy while you are paying off credit card debt is to delay making any new purchases until you can pay in cash.

What Is a Credit Card Buyout?

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A credit card buyout can be one of various that help credit card holders by alleviating their credit card debt. Such buyout options can be useful when recurring credit card bills have become too much for the card holder to handle. However, a card holder should proceed with caution.

When a credit card holder has an excessive amount of debt on his card, he may be able to work out a deal with the credit card company to pay off the balance at a discount. Although most credit card companies do cut such deals with card holders, they only tend to do so only when they are convinced that the card holder is truly having trouble repaying the debt. If you are in this situation, though, you may be able to get the credit card company to forgive a substantial portion of your debt under an agreement that you make a single large payment. Credit card companies tend to be more willing to settle debts with card holders in this way if the card holder is contemplating a bankruptcy filing, in which case the credit card company might not be able to collect on the debt at all.

Realizing that many credit card holders sometimes have trouble making payments on their cards only because the interest rate and minimum recurring payments are so high, a number of lenders offer loans to credit card holders as a way of refinancing their debt. Often coming as part of a general consolidation loan that factors in most or all of their debts, a credit card loan may give the card holder the ability to make lower payments on the debt and/or repay the debt at a lower interest rate. When a lender issues a credit card loan, it pays off the remaining credit card debt, thus resulting in a "buyout."

In order to get to the point at which a credit card company would be willing to settle your debt by agreeing to a single discounted payment of the remaining balance, you must be in a dire financial situation in which such debt settlement is necessary. For instance, if you have a history of missing payments, your credit card company may be more willing to settle with you. However, getting to this point will effectively ruin your credit score. On the other hand, getting a credit card buyout loan from a third party will have no recognizable negative effect on your credit score as long as you make timely payments on that loan.

While debt settlement may be advantageous in that it allows you to eliminate your debt by repaying only a fraction of the original amount, it can have additional drawbacks in addition to any credit score effects. The main drawback deals with taxation. When the credit card company agrees to eliminate your debt at a discount, the IRS may count the difference between what you owed and what you paid as taxable income. You can avert this by proving to the IRS that you were financially insolvent on the date of the debt settlement. The IRS does not view money received from credit card loans as taxable income.

Should I Pay Off Debt or Increase My Savings?

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Many financial experts believe it is best to pay off debt rather than increase savings because most debts are at a higher interest rate than interest earned in savings. Paying off debts will save money that is currently wasted paying interest and make it available for greater savings in the future.

Some money experts contend it is necessary to have some savings before paying down debt. These experts believe an emergency fund of $500 to $1,000 is necessary in times of tight credit. After saving the emergency fund, finances can be allocated to debt payment.

Paying debt or saving is not a totally straightforward decision. Some experts believe debt should be attacked first, while others believe saving an emergency fund is best. If credit is available for emergencies, paying down debt first is most likely the best option. If no credit is available, start with the emergency fund and then pay down debt.

How to Stop a Garnishment of Wages While Living in Iowa and Working in Nebraska

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When you're strapped for cash and finding it hard to pay basic living expenses, an order for garnishment of wages can be the kiss of death for your already overloaded budget. If you're living in Iowa and working in Nebraska and are served with a garnishment of wages order for an unpaid debt, there are a few ways you can legally stop the garnishment. But it won't be easy.

Instructions

Prove that the garnishment is more than 25 percent of your disposable earnings if you are in a dual-income family or 15 percent if you are the head of household. These are the highest garnishment amounts allowed by Nebraska law. If you can prove that the court order exceeded those limits, you can take the issue back to court to request a reduction in the garnishment amount.

Change jobs. Once wage garnishment is effective, your employer at the time is required by law to deduct the designated amount from your paychecks. If you change employers, however, the wage garnishment does not automatically follow you to the new place of work, and the creditor must start the garnishment process over. At that point, you can try to work with the creditor on a payment plan.

Declare bankruptcy. If the wage garnishment is affecting your ability to support yourself and/or your family, you might consider bankruptcy as a last resort. Bankruptcy is a legal proceeding that can either eliminate your debts or help you restructure them into a payment plan that fits your budget. Either way, bankruptcy can give you a little breathing room while you get back on your feet financially.

How Does a Write off Affect Your Credit?

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There are more than a few reasons to maintain a strong credit score. High scores help you qualify for a loan at a good interest rate, lower insurance premiums and even help you get a job. But if you have negative items, such as charge-offs or a write-off, on your credit report, this can hinder your rating.

Creditors send letters and make calls to collect an unpaid debt for approximately six months. Borrowers who can't or don't want to pay typically ignore these collection attempts. After months of non-payment, creditors stop collection efforts and write off the debt. Debts written off appear as charge-offs on a borrower's credit report, which indicates to other creditors and potential lenders that the borrower didn't fulfill his financial obligations.

Just because your creditor decided to write off or charge off an unpaid debt doesn't mean you've escaped your obligation to repay the debt. After charging off or writing off debts, creditors usually sell these debts to collection agencies. Once the collection agency owns the debt, it continues collection attempts, and some agencies even file lawsuits to collect the unpaid balance.

A charge-off affects your credit history. For starters, the original creditor will report the charge-off on your credit report. And once it sells the debt to a collection agency, a collection notation appears on your report. Both are negative and will cause your score to drop. Charge-offs or write-offs, like other negative items, stay on credit reports for at least seven years.

Paying a charge-off or collection account may not completely undo credit damage. Creditors and collection agencies are not required to delete negative account information once you decide to pay off the balance. However, they can update your credit report to show that you satisfied unpaid accounts. Your credit report will then read "paid charge-off" or "paid collection account." It's beneficial to satisfy old debts if you want to apply for a mortgage or auto loan. A charge-off can trigger a rejection or your lender may require that you satisfy the debt prior to accepting your application.

Can an Unsecured Creditor Garnish Wages in the State of Georgia?

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An unpaid creditor has a right to collect on the debt through legal action. An unsecured creditor, such as a credit card company, can sue the debtor and secure a judgment for the unpaid debt. One way the creditor can collect on the judgment is to garnish the wages of the debtor. Such wage garnishments in Georgia are subject to federal and state laws.

A wage garnishment describes a legal action used by a creditor who's owed money by a debtor. The wage garnishment forces the employer of the debtor to pay a portion of the debtor's wages directly to the creditor. In Georgia, state law compels employers to execute the garnishment unless they can show the court that the debtor isn't owed any wages and isn't working for that employer. Employers who don't comply with the law can be held liable to pay the total garnishment themselves. A garnishment order must meet state legal requirements and federal law restrictions.

State law mandates that wage garnishment action can be taken only after the creditor first secures a judgment against the debtor-employee. The creditor then can try to collect on such a judgment via a wage garnishment. The creditor must serve legal papers to the employer and the debtor-employee to start collecting money. The debtor-employee must be served within three business days after the employer is served. The debtor-employee has a right to challenge the garnishment order and ask for the garnishment to be suspended pending the outcome of the challenge.

Federal law regulates the amount of money that can be taken from the debtor-employee. The maximum amount that can be garnished at a time is 25 percent of the disposable weekly earnings for non-governmental debts. Also, the debtor must earn at least 30 times the minimum hourly wage for the week in order for any earnings to be garnished. Garnishments for child or spousal support debts can be up to 60 percent of disposable earnings. Student loan debt garnishments can be up to 10 percent.

Disposable earnings, per federal law restrictions, refers to all gross wages minus all legally required payroll deductions, such as taxes and Social Security. Deductions for things like medical insurance aren't counted. Proper service of the garnishment papers can be done by sending them to the debtor-employee by registered mail. Any proof of receipt or refusal of delivery will meet the service requirement. The federal maximum garnishment amounts don't apply to debts for taxes or from a bankruptcy action. The allowable amounts in those cases are regulated by the tax authority rules and bankruptcy court rules.

How to Fix My Credit in Texas

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Texas law provides provisions and limitations for revolving credit accounts, judgments and other potentially negative items that can adversely affect your credit file. Such provisions protect you against abuses such as improper collection of debts and uncapped interest fees. If a past due or delinquent line of credit has triggered a drop in your credit rating, act with swift determination and take advantage of the public, private and state resources available to help you restore your credit file.

Instructions

Request and print your credit reports through Annual Credit Report's website. Texas residents receive one free annual credit report. Purchase additional credit reports through the three major nationwide credit reporting bureaus: Experian, TransUnion and Equifax.

Check your credit report for potentially negative items such as delinquent lines of credit, judgments and collection accounts. Look for the information provider next to each item.

Contact each information provider directly. Set up debt repayment plans for every past due or delinquent item on your credit reports. Credit services organizations are available to assist you. Such organizations are regulated and subject to state law as well as the provisions set forth by the Fair Credit Reporting Act.

Negotiate a reduction or cancellation of penalty fees, if possible. Texas law limits judgment interest to the rate specified in your original loan contract, which may be a variable rate or 18 percent a year. All other lines of credit are subject to a maximum interest fee of $2,000 or 20 percent of the amount of the principal, whichever is less, according to Texas law.

Settle lines of credit. If you cannot budget yourself out of debt, negotiate a settlement. Start your negotiations low. The age of a line of credit matters, so offer your creditors pennies on the dollar for lines of credit 90 days or more past due. Base your settlement offer on the percentage or amount you can reasonably afford to pay.

Request a lower interest rate on all credit accounts. The maximum interest rate is 10 percent a year, according to Texas statute, which is only applicable to banks chartered in Texas. Contact your creditor directly. Request a more favorable interest rate. Outline your plan to repay all outstanding debts and restore your credit rating. Even a small reduction in interest fees saves you money, which you can apply toward paying off outstanding debts.

Maintain a low card utilization rate. Kiplinger Magazine, a resource for money management, suggests retaining low card balances of 30 percent or less of your credit line.

Reasons for Income Inequality

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Few will deny that income inequality is rising in America. As of 2010, corporate CEOs make almost 300 times what the average worker makes, up from 30 times back in the 1970s. The top 10 percent of wage earners make almost 45 percent of total income today, up from only 27 percent in the late 1960s. The causes of this and other examples of inequality are many and remain complex and controversial.

A consistently useful measure of income potential is education. Since the 1970s, education has grown as a reason for income disparities. According to statistical work done at Georgia State University, having a college education is always positively correlated with higher income. In the 1970s, the correlation began to weaken, but it picked up again soon after. Between the late 1960s and the late 1990s, those with college degrees made up to 60 percent more than those who did not attend college. This is up from 40 percent in the 1960s. It continues to widen as technology continues to demand more skilled labor.

Higher-income homes normally have two wage earners. Upper-class men and women tend to marry each other, so they have two higher-earning workers. However, only 15 percent of the lowest-earning 20 percent of families have two incomes. This suggests that single parenthood is an important cause of poverty and income inequality, according to the Center for Public Policy Analysis.

Despite the recent difficulties in the stock market, the long bull market of the late 1990s contributed significantly to the wealth of upper-income earners, who are more likely to invest in stocks; this contributed to income inequality, according to a recent article by National Public Radio, or NPR.

Rapid increases in modern technology have made certain jobs obsolete, according to NPR. As those jobs have been removed or transferred overseas, newer careers for those well educated in the high-tech sector have opened up just as rapidly, suggesting that education means more than ever in terms of income potential.

Poorer people are generally more unhealthy than upper-income people. Studies by the National Bureau for Economic Research strongly suggest that health is and has been a major --- and often neglected --- cause of income inequality by placing more of a health burden on the poor. Poor people often have poor diets that can lead to serious health problems later on. These health problems are expensive, and as health insurance premiums go up -- even more so for the poor who already suffer from poor health -- income inequality widens that much more.

Can Hospital Debt Put a Lien on Inherited Property?

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If you haven't paid your medical or hospital bills you may face the unpleasant prospect of having a lien placed on your property regardless of whether you inherited it. In general, any unsecured creditor can acquire a lien after it sues you in court and wins a judgment. Lien laws differ among states, so consult with a qualified attorney in your area for legal advice.

If you've received services from a hospital but have not paid the bills, the hospital can take a variety of actions against you as your creditor. Hospital debt is typically unsecured debt, meaning the hospital doesn't require you to give it a security interest before performing its services. However, when you receive those services you implicitly agree to repay them. When you don't repay them, a hospital can try to recover the debt from you in a variety of ways including by filing a lien.

A lien is a security interest a creditor takes in your property either voluntarily or involuntarily. A voluntary lien, such as a lien against your car when you use a car loan to buy it, is typically made a condition of entering into a loan agreement. An involuntary loan is one in which a creditor takes against you when you don't pay an unsecured debt. Once the hospital places the lien against your property, such as your home, the hospital can collect the debt from the proceeds of the home if you ever sell it.

Unlike a voluntary lien agreement, you don't automatically give a hospital a lien when you go there for services. If the hospital wants to place a lien against your property, it has to first sue you in court and prove its case. Only after the hospital wins can it file a lien against your property. You can pay the debt, defend against the lien in court or negotiate a settlement with the hospital, but once a hospital has a judgment it can file a lien against your property.

If you inherited property, your creditors can seek to take that property if you fail to repay the debt. That the property once belonged to someone else and has subsequently become yours is irrelevant to whether a creditor can take it. If you stand to inherit property but haven't yet, your creditors cannot take such property because it is not yours and your creditors cannot take another person's property. However, as long as you own it, your creditors can try to recover it or place a lien on it to satisfy the debt.

Statute of Limitations for Overdue Debt

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A statute of limitations, sometimes called a "statute of repose," bars lawsuits filed after the expiration of a time limit set forth in the statute. In debt collection cases, a defendant can sometimes raise the statute of limitations to beat the lawsuit even if the underlying debt is otherwise valid. As most debt collections cases are based upon state law, however, the specific limitations period will vary from state to state.

The length of time a plaintiff has to file a given lawsuit can usually be found in a state's legal code under a section heading such as "limitation of actions." Exactly how long the limitations period is depends not only on the state, but also the type of claim. In North Carolina, for example, general breach of contract cases and suits for money owed are governed by a three-year statute, but wrongful death has a two-year statute and suits based upon documents under seal have a 10-year statute.

The statute on a given claim begins to run when the cause of action "accrues," which means when the underlying facts constituting the claim have all occurred. In an automobile negligence case, the statute begins running on the date of the accident. With debt cases and suits for money owed, the statute usually begins running on the date of the first missed payment. A forbearance agreement between the debtor and creditor can toll the statute, or stop it from running, for a period of time. Making a payment on the debt within the limitations period can reset the statute and start it running all over again.

All states have a list of factors that toll the statute of limitations under certain circumstances. The statute does not begin to run against a plaintiff who is legally incompetent due to some disability or youth at the time the cause of action accrues. It starts running on the day the disability is removed or the minor turns 18. Some states also toll the statute where the plaintiff is away from the state on deployment with the U.S. military or is a national of a country at war with the United States. Very seldom will a plaintiff in the typical debtor-creditor case be entitled to a tolling of the statute based upon one of these factors.

States also have lists of debtor-related factors that can toll the statute of limitations. Many states toll the statute when the debtor is away on military deployment; if the state statute does not afford protection to military servicemembers, the federal Soldiers and Sailors Civil Relief Act does in certain cases. Some states pause the statute where the debtor moves out of state or hides from service of process inside the state. This is to prevent a debtor from gaining an advantage in the case by dodging a creditor's efforts to exercise its collection rights.

Can Your Paycheck Be Garnished for a Foreclosure?

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It is possible that your paycheck could be garnished as a result of a foreclosure, but if it happens at all it could take years to begin. CNN reports that losing a home to foreclosure doesn't necessarily end your financial responsibility for the mortgage. In most states, banks and mortgage companies can file lawsuits to recover money lost when selling foreclosed homes at auction. Such a lawsuit could lead to a court judgment and garnishment of your paycheck.

Foreclosed homes sold at auction are often sold for less than the remaining balance on the mortgage. Example: Your house is foreclosed with a mortgage balance of $125,000, but is sold at auction for $100,000. That creates a $25,000 loss for the mortgage company. If the laws in your state allow it, the mortgage company can demand that you pay the $25,000 difference.

The remaining balance on the mortgage becomes an unsecured debt, allowing the mortgage company to file a lawsuit in seeking what is known as a "deficiency judgment." The deficiency judgment is the difference between the mortgage balance and the sales price at auction. A court hearing will be set but the process is usually an easy victory for the mortgage company. Illinois Legal Aid reports that creditors and debt collectors always win debt lawsuits if they can prove that the debt is valid and you owe it.

A judge will hear the case and either dismiss the lawsuit or grant the deficiency judgment. If you receive a judgment and refuse to pay, the mortgage company can request garnishment of your paycheck through a court order signed by the judge. A certain percentage of your check would be sent to the mortgage company each payday until the judgment is paid. CNN reports that banks and mortgage companies sometimes wait several years before suing over a mortgage foreclosure. The reasoning is that after a few years your finances may have recovered and you may be in a better position to pay the judgment without the threat of garnishment.

The threat of a lawsuit -- even several years later -- is a key reason why you hire a reputable real estate attorney during your foreclosure. You may be focused on simply giving the house up and getting on with your life, but the attorney can advise you if laws in your state allow the mortgage company to come after you later. In some instances the attorney may secure a written guarantee that the bank or mortgage company will not sue you.

The mortgage company may agree to a settlement on the remaining balance rather than sue. Debt settlement allows unsecured debt to be resolved for less than the full balance. Settlement agreements can vary widely but usually are for 25 to 75 percent of the balance. A real estate attorney can handle negotiations for you and help avoid garnishment of your paycheck.

Staute of Limitations on Debt in Nevada

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Nevada's statute of limitations on debt reduces the options that creditors and lenders have for collecting delinquent debts after a certain amount of time. Yet the statute doesn't relieve consumers of paying legitimate debts. Still, Nevadans need to know debt-collection restrictions to protect themselves from overzealous collectors who may violate laws to settle delinquent accounts.

The statute of limitations on debt in Nevada varies based on the debt involved. The statute restricts the amount of time a creditor or lender has to sue a consumer to collect a delinquent debt. The statute of limitations on credit-card debt and debt linked to verbal agreements is four years. That increases to six years for debts cited in written contracts, but it drops to three years for debts outlined in promissory notes. A debt-collection company can't legally sue a consumer to recoup a debt if the statute of limitations has expired, but it can use other means to recover the money owed. Consumers aren't relieved of any debts they owe unless a debt has been forgiven by the lender or discharged in a bankruptcy.

Collectors have the right to contact Nevada debtors to demand payment when accounts become delinquent. According to the Legal Aid Center of Southern Nevada, collection companies can accept partial payment from debtors, renegotiate payment terms or take legal action to recoup the money owed. However, it's a violation of the U.S. Fair Debt Collection Practices Act to sue or threaten to sue a consumer after the statute of limitations on a debt has expired.

Nevadans have the right to request verification of a debt they don't believe they owe. Such requests should be made in writing and within 30 days of receiving the first collection notice. The collection agency must then send documentation that proves the debt in dispute is accurate. Collectors must stop contacting debtors if they lack the proof to verify a debt. However, Nevadans can require a collection company to stop contacting them under any circumstances, but the company may then pursue legal action to collect a verified debt if the statute of limitations hasn't expired.

Creditors also can execute repossession rights in Nevada to settle delinquent debts. According to the Legal Aid Center, creditors don't need a court order to repossess vehicles, furniture or other items that customers are paying off in installments if their accounts are delinquent. Consumers who refuse to consent to a repossession essentially force their creditors to sue them. Nevadans who want to avoid a lawsuit may be able to negotiate a voluntary repossession in which creditors agree to forgo a financial settlement if their merchandise is returned.

Laws in Texas for Credit Card Debt for the Deceased

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When a person dies in the United States, the state they were a resident of initiates a probate court process. Each state has variances in specific probate laws, and in states that have community property laws, things can get quite complicated. Texas is a community property state and has a very stringent process that must be followed for probate. When in doubt about how to proceed with your estate planning or with handling a death in the family, consult with a professional Texas probate attorney.

The Texas probate system has a very specific set of procedures that must be followed by the decedent's personal representative and family members. If the laws are not followed, the estate administrator and family heirs can be subjected to legal action. The Texas probate system is designed to collect all assets, pay all debts and disburse any remaining assets to the heirs and beneficiaries.

A personal representative, or estate executor, must fulfill all probate requirements set down by law. The representative is responsible for distributing notices to individuals and companies about the decedent's death, posting public newspaper notices, and ensuring that all assets and valid creditors for the estate are recorded properly. The representative must allow specific amounts of time to pass to ensure that all valid creditors have had an opportunity to stake their claim on the estate.

The personal administrator of an estate in Texas has numerous responsibilities that must be carried out in order, within the time frames specified by law. Many creditor notices must be conducted a specific way and the administrator must also keep track of all responses from involved parties to ensure no one was overlooked. If the estate administrator fails to send specific types of notices or wait the required time for responses, they can be held personally liable to the creditors.

After the appropriate notices have been distributed and time has passed, the estate administrator must begin paying outstanding debts from the estate assets. Debts must be paid in order, beginning with debts classified as "Class 1," such as funeral expenses and medical bills, and ending with debts classified as "Class 8," which are any that do not fall into one of the previous classification numbers. Federal tax debts take precedence before Class 1 debts, and credit card debt would fall into Class 8.

How to File for Bankruptcy on Gambling Debts

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Gambling debts can be eliminated, or discharged, through bankruptcy. The debts are treated as unsecured debts, making them eligible for Chapter 7 bankruptcy and Chapter 13 bankruptcy--the two most popular forms of personal bankruptcy according to the Federal Trade Commission. In 2010, the Wall Street Journal reported on a famous--but retired and unemployed--professional basketball player who filed for personal bankruptcy after racking up $1.27 million in gambling debts. All debts must be included in a bankruptcy, meaning that you cannot file on gambling debts alone--unless they are your only debts.

Instructions

Get help for your gambling problems to avoid more losses as you prepare to file for bankruptcy. Contact the National Council on Problem Gambling by calling its 24-hour hotline at 800-522-4700.

Make an appointment with a nonprofit credit counselor approved for bankruptcy counseling by the U.S. government. Find a certified counselor by checking the website for the U.S. Trustee program found in the Resources section of this article. Tell the counselor you would like formal pre-bankruptcy counseling. Such counseling sessions typically last about 90 minutes, according to the the Federal Trade Commission, and are required for people filing for bankruptcy.

Take a complete list of your debts to the meeting with the counselor, including all of your gambling debts. Ask the counselor about the bankruptcy process as she details the pros and cons of filing. As part of the program the counselor is required to suggest alternatives to bankruptcy, such as payment plans. Bankruptcy may, however, be your only solution if your gambling debts are severe.

Schedule free consultations with bankruptcy attorneys. Initial consultations are usually free, and you should take advantage by seeing two or three lawyers. Use the consultations to learn which form of bankruptcy is best for your situation.

Hire one of the lawyers based on overall experience and on evidence of specific experience handling bankruptcy filings caused by gambling debts.

File for bankruptcy by authorizing your attorney to file the necessary paperwork. In 2010, the United States Courts website listed bankruptcy filing fees of $299 for Chapter 7 bankruptcy and $274 for Chapter 13. Attorney fees are additional.

Expense of Bad Debt Recovery

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It can be very costly when a lender makes bad loans. These loans eventually turn into bad debt accounts, and to collect cash from them a company has to utilize a variety of resources.

A bad debt account is an account in which a payment has not been made in 180 days. These accounts are turned over to collection agencies for further collection activity.

Some collection agencies will charge anywhere from 25 to 50 percent of the balance collected. If the account is forwarded to an attorney or legal action is needed there could be a cost to file a judgment in a court of law.

The ideal situation is to forward the cost of collection on to the past due customer, but if the account cannot be collected the lender will have to bear the expense.

An account written off as a bad debt initially represents a loss, but any income collected represents cash or income, according to online financial resource Investopedia.

Sometimes bad debt is recovered by selling collateral. Depending on what the collateral physically is, there could be an expense involved in retrieving and reselling it.

Lenders will report the total amount of bad debts to the IRS, which reduces their taxable income for that period.

Can You File Bankruptcy If You Already Have Judgments Against You?

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Filing for bankruptcy provides you with the most powerful protection available from judgments. A judgment is a legal decision ordering you to pay a specific amount of money after losing a lawsuit. However, if you file for bankruptcy, you do not have to pay the judgment while a federal bankruptcy court reviews your case. The bankruptcy may eliminate the judgment entirely or establish a court-ordered payment plan. It is possible to file for bankruptcy before or after a judgment.

A provision in bankruptcy called the automatic stay takes effect the day you file for bankruptcy. The automatic stay stops collection on all debts, including judgments. With the automatic stay in place, a debt collector or the party filing suit against you cannot enforce the judgment in any way, including through bank or wage garnishment. The automatic stay is a primary reason many people file for bankruptcy.

Bankruptcy courts offer abbreviated application forms for people needing to immediately file for protection. The application is just a few pages long and allows you to begin receiving protection under the automatic stay, with a deadline set for submitting a complete application. Generally, a judgment does not merit an emergency filing unless the party holding the judgment is garnishing the debtors bank account or wages. The automatic stay ends all garnishment activity.

You must include all debts in a bankruptcy filing, not just judgments. Bankruptcy severely harms your credit, with years needed for a full recovery. Seek alternatives for resolving judgments before selecting bankruptcy. Judgments are resolvable through debt settlement before and after the judgment. Debt collectors who have initiated legal action may insist on settlements for the full amount of the debt, however. Settlements are possible in a lump sum or installments.

Some people with judgments file for Chapter 7 bankruptcy. Its the simplest and fastest way to resolve judgment debt. Judgments are an unsecured debt similar to credit card debt. Chapter 7 completely eliminates credit card debt in a few months. Chapter 13 is another form of bankruptcy but requires a payment plan lasting three to five years. Both chapters feature the automatic stay.

Is it Okay to Max Out a Credit Card?

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Maxing out a credit card refers to charging a credit card up to the maximum credit limit. So, if you have a credit limit of $500, and you charged $500 on that credit card, you have maxed it out. This behavior can cost you a lot of money. First, you may incur late fees or over-the-limit fees. Second, if you do not pay off the maxed-out credit card, you pay back a great deal more than you originally borrowed. Third, you may hurt your credit score, so any future money you borrow could be at a higher interest rate.

When you apply for a line of credit, you are granted an upper limit on the amount of money you are allowed to borrow. This upper limit or maximum credit line is based on a number of factors, including your credit score and the amount of income you make. While you can request that a creditor raise your line of credit or make your credit limit higher, this may not always be an option, and making this request may have an adverse impact on your credit score. When you are given a maximum limit or an upper limit, you can't charge above that amount without incurring fees or penalties. However, you can charge up to the total amount that you have available to you. If you choose to charge up to the total amount of your credit line, this is referred to as "maxing out" the card because you have used every dollar of your credit line that you can.

Maxing out your card does not generally carry any fees with it, unless you accidentally go over your credit limit. However, since you are at the maximum limit of your credit line, any additional charges that you incur may put you over your limit. Many credit card companies add late fees, annual limit fees, or other fees to the amount you owe. So, if you have a $500 line of credit and you charge $500, you are at your maximum limit. If you are then charged a late fee and the credit card company adds that late fee to your balance, that can put you over your limit. For example, if the late fee was $25, you would now owe $525 on a card with a $500 limit. Being over the limit, even if it occurs as a result of a late fee, can cause you to be charged an additional over the limit fee.

The minimum balance on your credit card is calculated as a percentage of the amount you owe. Although a higher balance or a maxed-out card will result in higher monthly payments than a lower balance, the minimum monthly payment still might not be very high. A low minimum monthly payment on a high balance may mean that if you are only paying the minimums your payments are not even covering the interest you are accruing on your debt. If this is the case, the interest you accrue becomes a part of your balance that you owe and you are ultimately charged interest on the interest. Paying only the minimum payment on a maxed-out credit card thus may end up costing you many times more money than the amount you originally borrowed, as you pay interest over the years.

Thirty percent of your FICO score (the credit score used to determine your credit worthiness and interest rates) is determined by the amount of money you owe. When you max out credit cards it has an adverse impact on your debt-to-credit ratio. Your debt-to-credit ratio refers to the amount of your available credit you have used. A lower debt-to-credit ratio is better. So, in other words if you have two credit cards with a $100 limit on each and you borrow $50 on each card, you will have a better debt-to-credit ratio than a person who maxes out one $100 credit card by charging up to the $100 limit.

If possible, it is best to avoid maxing our your credit card. Although opening new credit can hurt your credit score as well, by lowering the average age of your credit history (15 percent of your score) and by adding to the number of your inquires (10 percent of your score), this option may reduce your credit score less than maxing out one credit card. If you have multiple credit cards open already, it is always best to distribute the amount of money you borrow evenly over these multiple credit cards, instead of maxing out one single card.

How to Get Rid of Your Credit Card Debt Without a Settlement Company

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While some debt settlement companies may actually help you get out of debt, many charge high fees and cannot deliver on their promises. If you want to reduce your debt without the help of a settlement company, you do have a few options. The best path for you may vary depending on the depth of your financial situation. For example, if you are in good financial health and simply want to reduce your balances, the way you structure your payments may be your best option. If you cannot afford to make even your minimums, you may prefer to consider bankruptcy.

Instructions

Make larger payments. If you can afford to make more payments to your credit card debt, this is the simplest and most cost-effective way to get rid of your debt. By paying as much as you can, you will retire the debt more rapidly, and your total interest cost will also decline. By paying only the minimum amount due on your credit card, it can take years of time and interest to pay off a debt that you may be able to get rid of in a short time with slightly larger payments.

Consolidate at a lower interest rate. The higher the interest rate you pay on your credit card debt, the longer it will take to get rid of it. If you can find another credit card or other lender that will offer you a loan at a lower interest rate, it will allow you to get rid of your debt faster, even with the same monthly payment.

Negotiate with your credit card companies directly. Although many companies will be reluctant to lower your interest rates or balance due if you have been paying on time, if you are already behind in your payments they may be more open to suggestion. If your creditors fear that you will ultimately be unable to afford any payment at all, they may be willing to strike a compromise and allow you to get rid of your debt with smaller payments, particularly if they are in the form of an upfront lump sum. In order for this strategy to work, you must verify that you have enough money in your budget to provide the requested payment.

File bankruptcy. If you cannot afford to make your payments, you can file bankruptcy and likely get a discharge of all of your credit card debt. A Chapter 13 bankruptcy will often allow you to reduce the amount of your monthly payment to creditors, with the release of any unpaid debts at the end of your case. Chapter 7 allows you to get rid of your debt without monthly payments, although it could result in the court taking and selling some of your property. In either case, your credit card debt typically qualifies for discharge, freeing you from any obligation to pay it.

How to Find Out Who Owns Debt

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Debt is sold on a regular basis. Finding out who owns debt is necessary to pay it off and clear your credit record. Because of the frequency of debt sales, finding the owner of a particular debt can be difficult and require a large investment in time. It is best to know the original amount of your debt so when the new debt owner tells you how much you owe you will be able to determine the amount of fees added by the buying and selling of your debt.

Instructions

Request a copy of your credit report from all three major credit bureaus. You are entitled to one free copy per year and may receive additional copies if you are turned down for credit.

Examine your credit report. Each entry has a company name along with either a mailing address or phone number. This may not be the current owner of the debt but it does mean that the company owned the debt at some point.

Contact the company listed on the credit report and inquire about the status of your debt. If it no longer own the debt, request the name and contact information of the company to whom the debt was sold.

Continue contacting the companies that have purchased the debt until you find the current owner.

Is It Best to Pay Multiple Loans All at Once or One at a Time?

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If you're responsibly managing your credit, it's a given you'll make all scheduled payment amounts on time. If you can budget payments beyond the minimum scheduled amount, you may save interest charges by contributing excess amounts to loans. Determining which repayment strategy, such as devoting all your funds to paying down one balance or tackling all loans at once, is essential for maximizing the benefits in your repayment plan.

Although it may be tempting to seek a moral victory and pay off your loan with the smallest balance, sound financial planning isn't about moral victories, but about saving money. Because of this, debtors may want to devote all excess funds to paying off the loan with the highest interest rate, not the highest or smallest balance to reduce interest charges. For example, you have three loan balances, one for $1,200 at 6 percent, $4,000 at 9 percent and $12,000 at 10 percent. You plan to contribute $1,000 extra toward loan balances this year. Contributing an additional $1,000 to the 6 percent loan will save you $60 in interest in a year, as opposed to saving you $100 in interest with the 10-percent loan during the same time frame.

Instead of managing multiple loans, some borrowers turn to debt consolidation to help effectively manage their debt. Particularly suited for loans with variable interest rates, such as cash advances from credit card companies or student loans, consolidation combines all loan balances into a single monthly payment. Suitable only when the consolidation loan locks permanent interest rates that are lower than rates for all loans. This allows a borrower's contributions to essentially contribute to all the original loan balances equally.

In some circumstances, borrowers may wish to close a line of credit quickly. Whether it's to demonstrate the ability to repay a loan to future creditors or as a means to free up credit for a larger loan -- or simply to make credit available in the future -- concentrating on paying down a single loan with a small balance may be a strategy a handful of lenders may consider. This strategy isn't without its costs, and borrowers who employ it will end up paying more in interest charges by not focusing on loans with the highest rate.

It's highly unlikely, but in some instances, such as when carrying subsidized loans with minimal interest rates, using excess funds as an investment may be more profitable than contributing to a loan's balance. Investing $1,000 in a plan that yields an 8-percent return provides $80 in profit over the course of a year, while the same amount applied to a loan with 6 percent interest saves $60 in interest charges; the 8-percent investment yields $20 in profits after the loan's interest charges are deducted from its return.

Can I File Small Claims in Bankruptcy?

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Collecting on all of your outstanding debts is a good business practice, but certain legal issues can make the matter more complex. When a debtor files for bankruptcy, a creditor must stop pursuing a lawsuit in small claims and file that debt with the bankruptcy court handling the case. If a creditor attempts to collect the debt in other ways, he may be subject to penalties or even a lawsuit.

Automatic stays are one of the protections that bankruptcy proceedings afford a debtor who has filed for bankruptcy. Once an automatic stay is awarded to a debtor, all creditors attempting to collect on a debt must stop all collection activities, including wage garnishment, repossessions or small claims lawsuits. This allows the bankruptcy court to take the time to collect all debt information, including small claims lawsuits. While the automatic stay is in effect, only the court can order the debtor in bankruptcy to settle a debt dispute with his available cash or assets.

All collection practices attempted for small claims debts on the part of the creditor can be voided by the bankruptcy court. If a creditor is found to be in violation of the automatic stay, the debtor in bankruptcy can file a lawsuit for damages, including emotional distress, actual damages, punitive damages and attorney's fees. The only legal way to recoup a small claims debt while the debtor is in bankruptcy is by filing the claim with the federal bankruptcy court processing the case.

If a small claims debt has yet to be collected by the time the debtor enters bankruptcy, the creditor must petition the bankruptcy court to be recognized as a legal creditor. Contact the small claims court clerk or bankruptcy court clerk to find the case number for the bankruptcy proceedings. Most of the debtor's obligations to creditors, including small claims, are discharged during bankruptcy proceedings, but filing a debt claim with the bankruptcy court establishes a creditor's right to at least some of a debtor's property or assets.

If a debtor has not entered bankruptcy, pursuing debt collection aggressively might not be the best option. A creditor may recoup the entire claim through bankruptcy, but if a debtor doesn't have the assets to cover all outstanding debts, some debts will have to be satisfied at less than the actual amount owed. Many small claims debts are less than $7,500 and can be paid off over a few years if a repayment schedule can be worked out. Creditors attempting to collect a debt in bankruptcy should seek legal help through an attorney familiar with rights and remedies during bankruptcy.

Strategies of Collection Letters

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Creditors depend upon consumers paying their debts in order to maintain a profitable business model. When customers fail to make their payments as agreed or default on their debts entirely, creditors often turn to collection letters to convince debtors to pay what they owe. Collection letters range from respectful to threatening depending on the company sending them. Companies employ different collection letter strategies for different types of accounts.

One form of collection strategy that numerous businesses utilize is to send the debtor a written reminder of his missed payment. This collection strategy involves noting that the debtor's payment is past due and respectfully requesting that he submit the payment as soon as possible. Friendly reminders sometimes, but not always, contain a warning regarding impending late fees the individual will incur if he does not bring the account current. Companies use friendly reminders when they have a vested interest in maintaining a financial relationship with the customer.

A demanding collection letter does not carry the same respectful tone as a friendly reminder. Companies often send demanding letters when a customer has missed more than one payment or is in danger of defaulting on the debt entirely. Demanding letters warn the individual of the consequences of nonpayment and frequently include vague threats such as noting the company's intent to take "further action" if payment is not received by a certain date. Creditors use demanding letters when obtaining payment is more important than maintaining rapport with the customer. Collection agencies also often use a demanding tone in their letters to debtors.

Collection letters noting a company's intent to sue are frequently used by collection agencies although original creditors also occasionally send these letters as well. A collection letter threatening consumers with a lawsuit serves as both a final warning of the consequences of nonpayment and a scare tactic. Debtors who would not submit payment otherwise will occasionally contact the creditor and work out a payment plan in order to avoid a lawsuit.

The Fair Debt Collection Practices Act notes that third-party collectors, such as collection agencies, can only legally send a collection letter threatening an individual with a lawsuit if the company actually has the right to sue the debtor and intends to exercise that right. This does not, however, stop some unethical debt collectors from using letters threatening to sue consumers merely to scare them into making payment arrangements.

A settlement offer often serves as a company's last resort when it either cannot sue or does not intend to sue. This particular strategy involves offering to accept a portion of the individual's outstanding debt as payment in full. While settlement offers are a common tactic collection agencies employ, original creditors sometimes send settlement offers as well. In general, the older the debt, the less a creditor will accept as a settlement.

Tips for Online Debt Consolidation

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Consolidating your debt into a lower payment with less interest is a smart way to save both time and money. Because consolidation usually involves securing debt with an asset, typically real estate, it is important to understand the logistics of the new loan, especially if you are doing it online. Many companies offer online debt consolidation.

Talk with nonprofit consumer credit advisers. They can go over your credit report with you, offer suggestions for lowering your bills, help you create a budget and answer any questions you may have about debt consolidation. If you do not have enough equity in your home to consolidate your debt, they may recommend debt management instead. This is another method in which they work with creditors to lower your rates and payments without securing anything.

Look up your mortgage company online to see if it offers any discounted debt consolidation loans to help you pay off your other bills. Check its website for promotions or rates being offered for home equity or refinancing. You can usually apply online for these types of loans and because you are already a customer, chances are you can get a debt consolidation loan fairly quickly.

Research debt consolidation by checking with the Better Business Bureau. Some companies offer loans with high rates and hidden fees. Make sure that the website is legitimate, has helpful resources, no application fees, no obligations or hidden charges.

Read the loan information carefully. Make sure the rate makes sense and that it is fixed. Some rates may start low but rise after two or three years. Also if the payment is low but the rate seems high, find out if the payment is covering interest and principal. You do not want to consolidate your other loans into an interest-only loan. This type of loan requires only the interest amount to be paid each month, so the loan amount stays the same and doesn't get paid down.

Does Debt Management Hurt My Credit?

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Signing up for a debt management plan can help you lower your interest rates and get a more affordable monthly payment. If you sign up for this kind of help, you may be worried about what it can do to your credit profile. The effect that it has on your credit will depend on your situation.

Simply signing up for a debt management plan will have no direct effect on your credit score. FICO is the company that creates the formula for calculating credit scores and they do not subtract any points from your credit score if you sign-up for this type of program. Enrolling in a debt management plan is seen as taking a necessary step to repay your debts, and you are not punished for it.

Depending on when you sign-up for the program, it could contribute to hurting your credit as a result of a missed payment. When you sign up for this kind of program, you will make one monthly payment to the program and they will pay your creditors for you. If you sign up for the program at the wrong time of the month, you might miss one of the due dates on an account and it could end up hurting your credit a bit.

If you have a large amount of debt that you cannot afford, this kind of program can actually help your credit. If you did not sign up for this program, you might have to settle your debts or go into bankruptcy. You may even be forced to skip payments that are due to your creditors. By signing up for the debt management plan, you may be able to get your finances under control and avoid further problems.

While you are engaged in a debt management plan, it may be difficult for you to obtain additional credit even if you have the same credit score. When you enter into this program, you will be unable to obtain additional credit from credit card companies. On your credit report, creditors will enter a statement that says you are in a debt management plan. This could negatively affect your chances of getting a loan while you are in the program.

Is a Judgment the Same As a Lien & Which One Is Worse?

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When you find yourself in debt, creditors can use a number of tactics to try to collect the balance that you owe. In this situation, you may hear the terms "judgment" and "lien" used frequently. While these terms are related to one another, they do not mean the same thing.

A judgment is an order from a court to pay money to another individual or company. To obtain a judgment, a creditor must first file a lawsuit against you. He then will present a case against you in court. If you cannot prove that the debt was issued fraudulently, then the court will issue a judgment against you. At that point, the court essentially demands that you repay the debt.

A lien is a claim on property that is held by a creditor. Liens can be placed on property voluntarily or involuntarily. For example, one of the most common types of liens is the mortgage loan. A mortgage lender places a lien on your property when you borrow money to purchase it. If you do not repay the loan, the lender can use this legal claim to foreclose on your house. Liens also can be placed on your property if you refuse to pay a debt.

Liens relate to judgments in that they can be obtained as a result of getting a judgment against a debtor. Once the judgment is obtained, a creditor can then use that judgment to obtain a lien on some of your property. For example, the creditor could use the judgment to file a lien on your home. Then when you try to sell the house, you will have to repay the debt before you can keep any of the equity.

When a creditor gets a judgment against you, it does not necessarily have to result in a lien being placed on your property. Creditors can use judgments for other purposes to collect the money from you. For example, the creditor could use the judgment to garnish your wages. With this procedure, part of your paycheck is taken out and given to the creditor before you receive it. The creditor could even use the judgment to levy money out of your bank account. In some cases, you can work out a payment arrangement with the creditor to make sure that the debt is paid.

Myths of Student Debt

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Many students go off to college every year without a real understanding of student loans and, as a result, find themselves deep in debt once their education career is over. In some cases, loans are necessary for students to get an education, but if other funding is available, avoid taking out loans as much as possible. Students and their parents should inform themselves about the details of student loans and the myths that can potentially set individuals back financially for years or even decades.

While student debt is relatively good debt compared to other debts like credit cards, a loan is still a loan, and will be called upon until satisfied. Students should also be aware that federal student loan debt is not forgiven through bankruptcy. Attending school is an important decision that should be carefully thought out; if you have an option to save tens of thousands of dollars at one school over another due to scholarships or other situations, consider choosing the cheaper school. The less debt you have in student loans, the faster you can become financially secure as a student and working professional.

Another common myth regarding student debt is that all students who attend a university or college take out loans. While not all students come from a wealthy family, students can still attend college without going into student loan debt. This can be possible through tuition assistance from the school, work-study programs or working a part-time job to pay tuition. Also, you can work and save during high school to help pay for college. A number of grants and scholarships are available, and those with military backgrounds can take advantage of the GI Bill to help cover education costs.

A common and potentially dangerous myth regarding student debt is that it is better to wait until after college to begin making payments. It is true that students are not required to make payments toward their loans while in school. However, this does not mean students should wait until graduation to start making payments. Unsubsidized loans accrue interest while in school, so the loan amount is higher upon graduation if you do not make any payments while in school. Student loans can easily exceed $100,000 by the time graduation comes around, which is not a good way to start life in the real world. Students should start making payments toward their loans while still in school if possible; even small or partial payments help over time.

Students do not need to acquire student loans to build credit for their financial future. Credit can be established with a credit card or car loan, as long as you make payments on time each month and use the credit card responsibly. To build a good financial future, students should focus on saving and building capital. It is always better to have a cash surplus than available credit you cannot afford to pay off.

How to Open a Debt Consolidation Business

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A debt consolidation or credit counseling business has helped millions of people get out of debt. Acquiring too much debt is easy. Unfortunately, eliminating debt is hard and some people need help. If youre looking for a business venture thatll help people, consider opening your own debt consolidation business.

Instructions

Decide whether youll offer credit counseling along with debt consolidation services. As a debt consolidation business owner, your primary responsibility is to manage your customers debts, speak with their creditors and negotiate better rates. If you like, provide credit counseling along with debt consolidation. This way, customers learn practical ways to manage their money and credit.

Educate yourself on credit and money management. In order to give your customers good advice, you need to learn the ins and outs of financial management. Take personal finance classes, buy books and attend workshops. Gain experience by properly managing your own money and credit.

Study the local competition. Its best to open a new debt consolidation business in an area with few competitors. If these agencies saturate a neighborhood, itll be hard to find business.

Interview experienced debt consolidation business owners. Unfortunately, new businesses have a low success rate. Before opening your location, talk with other debt consolidation and credit counseling business owners. They may be willing to share start-up advice.

Consider the advantages of buying a franchise. Purchasing a debt consolidation franchise is attractive because the main company handles advertising and they provide supplies and training material. Yet, this route is costly. If you cant afford the franchise fee, open your own location.

Create a business plan and apply for a loan. Non-franchised debt consolidation businesses have low start-up costs. However, youll likely need a business loan to help pay for a location, advertisements and equipment. Before applying for a loan, hire a professional to write a business plan geared towards a debt consolidation business.

Notification Of Debt

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Debt notifications come in many forms. Sometimes it's a statement; other times it's a debt collector's "validation notice." Either way, the notification must include the name of the creditor, how much you owe, and instructions on what to do if you don't owe the debt. And while lenders and collectors may also contact you via telephone and email, they must abide by the rules set forth by the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act (the FDCPA) is federal law that's enforced by the Federal Trade Commission. It's designed to protect consumers from unlawful, unfair or "deceptive" debt collection tactics, according to the FTC. The act covers personal -- not business -- debts, and it applies to any company that regularly collects debts, including lawyers and collection agencies. The act states that the collector must provide the borrower with written notification that confirms the debt within five days of first contact. This notification is called the "validation notice."

Although collectors almost always send a written notification, the first contact usually comes via telephone. Be advised a collector may not call you before 8:00 a.m. or after 9:00 p.m. (in your time zone). It may initially contact you at work, but if you ask them not to, they must abide by that rule immediately. You may write the collector to request that it stop contacting you; however, it won't make the debt go away. If the collector is able to validate the debt, it will begin contacting you again.

Unless you give a collector permission to speak or write to a third party about your debt -- such as a bankruptcy attorney -- the collector may not notify anyone else about the debt. This includes family members and employers. However, the collector may ask these people for your contact information. According to the FTC, collectors are almost always "prohibited from contacting third parties more than once." If you are using an attorney to resolve the debt, the collector must provide notification of the debt to the attorney instead of you.

If a collector or lender is contacting you about a debt that isn't yours, you must send a letter that clearly states that you don't believe that you owe the debt (instructions for disputing the debt will be on the validation notice). Be sure to send the letter via certified mail. Once the collector receives the letter, it must stop contacting you until it can resolve the dispute. Never ignore collection letters or calls, especially if there is a forthcoming legal proceeding; this may result in your bank account or wages being garnished. Your best bet is to speak with the collector honestly. If the debt is yours, you may be able to arrange a repayment plan that suits your budget and the collector.

How to Use PayPal for a Prepaid Visa

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To encourage members to keep money in their PayPal account, the company issues PayPal MasterCards that can be used at most ATMs and retailers. The card functions as a prepaid card; a user can only spend what is in her account. Once the funds in the account are depleted, a user will need to add funds. PayPal members can add funds manually or schedule automatic transfers into their PayPal account.

Instructions

Select the "My Account" tab.

Click on "Add Funds."

Select "Add Funds from Bank Account."

Click the "From" menu and select the registered bank account that you want to withdraw funds from if you have more than one registered bank account.

Enter the dollar amount to be transferred in the "Amount" field and click "Continue." Hit "Submit." Funds will be added to the account in three to five days.

Select "Balance Manager."

Click the "From" menu and select the bank account the funds will be transferred from.

Select either "Schedule regular transfers" or "Set minimum amount." Scheduling a regular transfer will transfer a certain amount weekly, biweekly or monthly. Setting a minimum amount will transfer a designated amount once the PayPal account reaches a certain balance. Enter the necessary information according to the choice you selected.

Click "Set Up" and "Confirm."

The Advantages of Financing a Vehicle

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If you are in the market for a vehicle, and you have the funds available to purchase the vehicle outright, you may wonder if you should purchase the vehicle with cash or opt for financing. Financing a vehicle requires careful research -- you'll need to find out how much you'll pay in interest, loan fees and other financing costs. However, opting for financing can offer several advantages.

Choosing to finance a vehicle instead of purchasing it outright can help preserve your savings. This allows you to retain funds for other expenses, such as vacations, home improvement or eduction. It also lets you keep a financial cushion for unexpected expenses -- if the car breaks down or you are involved in an accident, maintaining your savings provides you with the money you need to pay for repairs or meet your insurance deductible.

When you finance a vehicle, your lender reports your payments to TransUnion, Equifax and Experian, which are the major reporting bureaus in the United States. If you make your payments on time, financing can help you build a solid credit history, which will raise your FICO score. This can help you obtain other types of credit, such as installment loans, credit cards and mortgage loans.

Paying for a car with cash can limit your selection to vehicles with purchase prices below your savings balance. This may mean that you have to settle for a used vehicle or a lower-quality model. Conversely, financing increases your purchase power, allowing you to purchase a newer or higher-quality car. Although any car requires maintenance and repairs, a high-quality new vehicle may require fewer repairs. If you buy a new car, the dealership might pay for scheduled maintenance for the first one or two years after your purchase.

Although financing a car can offer advantages, it may also pose disadvantages. Financing can tempt you to buy a more expensive car than you can afford -- if you have trouble making your payments, you may incur late fees and risk repossession or damage to your credit rating. Also, financing involves paying interest on the money you borrow to pay for the vehicle purchase, so you will end up paying substantially more than the purchase price of the car over the life of the loan.

How Can a Debt Counselor Help?

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If you find yourself living from paycheck to paycheck, you are not alone. Millions of Americans are struggling with financial debt. If you cannot seem to find a solution to mounting financial debt, consider the services of a debt counselor. Some credit counseling services even offer their services for free. A debt counselor may be able to help you find a workable solution to your financial problems.

After taking the first step of making an appointment with a debt counselor, you will have a one-on-one meeting. He will ask several questions about your current debt situation, including your currently monthly income and expenses. The counselor will look at your debt account statements, discuss your individual circumstances that led to your financial problems and recommend a plan of action.

A debt counselor will work with you to develop a budget, accessing your income and expenses on a monthly basis. He may offer your educational materials or enroll you in a debt management workshop. If you are in severe debt, the debt counselor may recommend you enroll in a debt management plan. If you enroll in a debt management plan, the counselor will set up a repayment plan with your creditors. While you are enrolled in a debt management plan, your creditors may stop assessing finance charges, or at least lower your interest rate. Enrolling in a debt management plan will usually stop harassing phone calls from creditors.

Debt counselors offer their services through various organizations. Check with such places as universities, military bases, the U.S. Cooperative Extension Service, local banks, credit unions or housing authorities. You should check the credibility of a debt counselor with such organizations as the Better Business Bureau, the National Foundation for Credit Counseling or the Consumer Credit Counseling Service. The Better Business Bureau will be able to tell you if any complaints have been filed against the company.

Beware of doubt counselors who charge very high fees for their services. Reputable services will send you free information upon request about what services they provide and the fees charged for these services. Do not believe unrealistic promises in advertisements such as being able to settle debt for pennies on the dollar. If the debt counselor wants to enroll you in a debt management plan, make sure they provide a written agreement detailing all services and fees before they charge you any money upfront. You should also not make any payments until you are sure your creditors have accepted you into the debt management program.

What Makes Bad Credit?

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Bad credit can keep you from owning a home, buying a new car and even getting a job. However, bad credit can easily be avoided if you know what actions negatively affect your credit score.

If you notoriously make your credit card, loan and mortgage payments long after their due dates, your credit score will be much lower than if you made your payments on time.

If you owe more than 80 percent of your available credit, you will have a lower credit score than if you keep your debts below 25 percent of your available credit.

A credit inquiry is listed on your credit report every time you apply for a credit card or loan. Applying for multiple credit cards in a short period of time will negatively affect your credit score.

Collections for bills you didn't pay as well as tax liens, judgments and bankruptcies will all appear on your credit report and bring down your credit score.

If your credit accounts haven't been open long, you will have a credit score that is lower than someone with long-standing credit accounts. For this reason, it may be beneficial to keep old credit accounts open even if you're not actively using them.

About Credit Card Debt Elimination

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Credit card debt potentially creates financial problems lasting years. Finance charges and other fees make it impossible to pay credit card debt quickly through minimum monthly payments. That prompts some people to search for faster alternatives. Several options are available, with some more extreme than others. Credit card debt elimination can harm credit scores, but most people with excessive credit card debt already have poor credit or are willing to accept lower scores as a trade-off.

Debt management plans are directed by credit counselors approved by the U.S. Department of Housing and Urban Development. A commitment lasting four or five years is required, during which time the credit counselor takes full control of your finances by creating a new budget based on income and expenses. You must send a lump sum check to the counseling agency each month to pay all credit card debt. A monthly management fee is also required. Throughout the program the counselor will contact your card companies to negotiate lower interest rates and reversal of some finance charges and fees. The goal is to eliminate or greatly reduce credit card debt during the plan.

Debt settlement resolves credit card debt for less than the full balance. SmartMoney reports that card companies will settle delinquent accounts for 20 to 70 percent of the balance, with settlements around half the balance common. Usually, card companies will offer to settle once the account becomes three months past due, with charge-off likely after six months. A charge-off is an internal accounting term indicating that the account has been closed. However it does not eliminate the debt. After charge-off, bad debts are usually sold or assigned to a debt collection agency. Savings achieved through debt settlement is often treated as income by the Internal Revenue Service, potentially leading to a higher tax bill.

Bankruptcy is a last resort for most people burdened by credit card debt. It is the most effective means of eliminating credit card debt but also the most damaging to credit. Bankruptcy information is reported on credit reports for 10 years, while other negative credit information, such as charge-offs, are reported for seven years. Chapter 7 bankruptcy, considered the simplest form of bankruptcy, wipes out credit card debt in just a few months. Income limits, which vary by the state, prevent many people from qualifying for Chapter 7, however. Everyone is eligible for Chapter 13. Chapter 13 requires a payment plan of three to five years, with any remaining credit card debt eliminated at the end of the bankruptcy.

Most debt management strategies are easily self-directed except for bankruptcy. Debt settlements are negotiated by contacting card companies directly. The Federal Trade Commission recommends that people manage their own credit card debt elimination when possible. The experience often is empowering -- and less expensive than credit counseling or for-profit debt settlement firms.

How to Keep Collection Activity From a Credit Report

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If you do not pay an unsecured debt, your creditor has nothing to repossess to recover the balance. To procure a payment, the creditor will often charge off the debt and sell the account to a collection agency. Collection agencies frequently report their ownership of consumer accounts to the credit bureaus. An entry on your credit report from a collection agency is always derogatory. It will not only lower your credit score, but it will appear within your credit file for seven years. There are actions you can take, however, to prevent a debt that has been purchased by a collection agency from appearing on your credit report.

Instructions

Verify that you do, in fact, owe the debt. The Fair Debt Collection Practices Act requires collection agencies to grant a consumer a 30-day grace period in which to request proof that the debit is legitimate and legally owned by the debt collector. Upon first being contacted by a collection agency, send a written request for validation. Collection activity, including credit reporting, cannot legally commence until the company provides you with the requested information.

Contact the collection agency and offer a payment plan or a debt settlement agreement. Only agree to pay on the grounds that the company agrees not to report the debt to your credit report during repayment or after you have paid off the settlement.

Request a signed copy of any agreement that you reach with the collection agency before making any payments on the account. This ensures that in the event a mistake is made, you will be able to have the derogatory information removed from your credit file.

Make payments on the debt as agreed. Missing even one payment will render your original arrangement with the collection agency null and void. When this occurs, the company is likely to immediately report the delinquent account to the credit bureaus.

Monitor your credit report regularly. Even if you have a signed statement claiming that the negative information will not appear within your credit file, mistakes occur. By monitoring your credit report you can catch mistakes early and petition the collection agency to rectify the error.

Welcome to our website credit and debt managementr.

Wednesday, December 31, 2003

Breach of Contract

Attorney's Fees

Assignment Rights

Venue for Suit

Highest Interest First

The Debt-Snowball Method

Chosing a Method

Alternative Strategies

Reasons for Statutes of Limitations

Types of Debt

Typical Statutes of Limitations

Exceptional Statutes of Limitations

Tuesday, December 30, 2003

Creating a Budget

Tracking Your Spending

Self-Managing Your Debts

Paying Down On Credit Card Debt

Monday, December 29, 2003

Debt Settlement

Credit Card Loans

Credit Score

Taxation

Pay Off Debt

Increase Savings

Bottom Line

Sunday, December 28, 2003

Instructions

Saturday, December 27, 2003

What is a Write-Off?

What Follows a Charge-Off?

Consequences

Reducing Credit Damage

Wage Garnishment

State Law Provisions

Federal Law Provisions

Other Provisions

Instructions

Education

Marriage

Stock Market

Technology

Health

Hospital Debt

Lien

Lien Procedures

Inherited Property

Length of Limitations Period

When the Statute Begins to Run

Creditor's Factors Affecting the Statute

Debtor's Factors Affecting the Statute

Friday, December 26, 2003

Foreclosure Auction

Deficiency Judgment

Garnishment Proceedings

Legal Advice

Settling Out Of Court

Thursday, December 25, 2003

Statute of Limitations

Collection Practices

Debt Verification

Considerations

Texas Probate Court

Personal Representative

Responsibilities and Liabilities

Debt Orders of Priority

Wednesday, December 24, 2003

Instructions

Identification

Fees/Expenses

Considerations

Loss/Income

Collateral

Taxable Income

Monday, December 22, 2003

The Automatic Stay

Emergencies

Considerations

Bankruptcy Types