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

Friday, January 31, 2003

How Quickly Can You Increase Your Credit Score?

How Quickly Can You Increase Your Credit Score?

Credit scores are an important part of personal finance. A good credit score allows you to qualify for home, auto or other types of loans, while a bad credit score likely will prohibit you from qualifying. However, even bad credit scores improve over time, as long as you put in the effort to fix them. The speed at which credit scores improve depends on how quickly you can resolve financial issues dragging your credit score down as well as how soon credit card companies and other agencies report the improvements to the credit bureaus.

Time Line

    Major credit score repair can take several months or even years, depending on how bad your current score is, according to the Repair Bad Credit Report website. MSN indicates that to get the best interest rates, you should shoot for a score of 760 or above. If your score is a few hundred points below that, expect the process to take at least a few months, depending on how fast you can resolve the issues by paying down debt and becoming current on other payments. However, you will start to see small improvements rather quickly, often within a few weeks or a month if you are able to pay off some debt and get rid of past-due payments quickly. Becoming current on just one account will improve your score a few weeks after it is resolved.

Analyze Credit Report

    To quickly improve your credit score, you must first examine your credit report to see what is dragging your score down. Obtain a free copy of your credit report at the Annual Credit Report website (see Resources). Examine the report for any errors, or for any items that you have already resolved, and address those issues first. For example, if you paid off a credit card but it still shows up on your credit report, contact the credit card company and ask it to report the paid-off debt to the credit bureaus. Then address any lingering issues. The more credit issues you have, the longer it takes to increase your credit score.

Pay Down Debt

    One of the fastest ways to improve your credit score is to get out of debt. This might take months or years, depending on how much debt you have and how much money you can make to pay it off. The more you work and the more money you make, the faster you can get rid of debt and the faster you will see credit score improvements. Try to get your balances on credit cards to 30 percent or less of your total available credit to improve your score, according to MSN. Also, pay any past-due payments and bring all accounts current. The longer an account is past due, the worse your credit score is, but bringing all accounts current will improve your credit score a few weeks after the past-due status is eliminated.

Reporting to Credit Bureaus

    Credit scores improve after your creditors report the resolved issues to credit bureaus. Most credit card companies report to credit bureaus once a month, so if you make a payment in March, it will likely be reported and show up on your credit report in April. Stay in close contact with your credit card companies and other creditors and ask them to report any improvements to the credit bureaus as soon as possible to improve your credit score quickly.

Use Credit Responsibly

    Once debt has been paid down and accounts are brought current, you need to use credit responsibly to continue to improve and maintain a good credit score. Your credit score actually will go down if you do not use credit at all. So, open a credit card or use an existing one, and use it to make purchases you know you can afford. Make payments each month to keep the balance at 30 percent of the available credit or lower. Ideally, you should pay it off completely each month, then make more purchases and pay those off again the next month.

How to Modify an 80/20 Mortgage

An 80/20 mortgage is actually two mortgage loans allowing 100 percent financing for home purchases. A first mortgage is issued for 80 percent of the purchase price and a second mortgage for 20 percent, eliminating the need for a down payment. The loans are considered controversial because with no money down the borrower usually has little or no equity in the home at closing. Falling property values, because of a housing bust or recession, can lead to the borrower owing much more on the house than it is worth.



    Hire a licensed home appraiser to determine the fair market value of your home, or ask a real estate agent to offer an estimate based on similar homes recently sold in your neighborhood. Refinancing your 80/20 mortgage will be difficult or impossible if the home is worth less than what you paid for it. For example, the original purchase was $200,000 with a first mortgage for $160,000 and a second for $40,000. Two years later you still owe $195,000 on the mortgages. Meanwhile property values have sharply declined and the home is worth only $150,000. This leaves you with negative equity of $45,000, also referred to as being "upside down" on the mortgage.


    Check your credit report and score by viewing and printing it from AnnualCreditReport.com. It's the only website specifically authorized by the Federal Trade Commission to offer free reports under the terms of the Fair Credit Reporting Act. Order your credit score separately for a fee. Refinancing will also be difficult or impossible if your credit score is below 620 -- generally the cut off for standard refinancing at a competitive interest rate. Scores of 720 or higher are preferable.


    Apply for a new loan to eliminate the 80/20. Apply through the mortgage company for your first or second mortgage or select a different lender. Add cash to the deal if you are upside down on the mortgage or lack sufficient equity for approval. For example, the balance due on your mortgage is $200,000, and the house is appraised for the same amount. Add $40,000 cash to the refinancing to create 20 percent equity. Lenders generally like for home owners to maintain at least 20 percent equity, with many home purchases requiring a 20 percent down payment.


    Delay your refinancing if your credit score is poor or you lack sufficient equity and can't afford to add cash to the refinancing. Contact a housing counselor certified by the U.S. Department of Housing and Urban Development to determine if you may be eligible for a special loan modification based on financial problems. Some lenders offer special foreclosure-avoidance loan modifications for people who clearly are in danger of losing their homes because of financial problems. You must be at least one payment behind to qualify. Find a housing counselor in your area by contacting a local charity such as the Salvation Army or United Way. Loan modifications by lenders allow all the terms of your loan to be changed, including consolidating the loans into one mortgage. The housing counselor can initiate discussions with your lender if you are eligible.

Is My Husband's Debt Mine?

Tying the knot with your partner does not necessarily mean you need to take on his debt or credit history. As long as you keep separate finances during the marriage, your spouse's previous debt will not affect your credit score.

Joining Finances

    As soon as you and your spouse open a joint account his credit score will affect yours, and vice versa. Your spouse's previous debt and credit history will affect your ability to qualify for loans, including a mortgage.

Account Users

    Authorizing your spouse on any of your accounts is not the same as holding a joint account. This kind of arrangement can make things easier if your spouse does not qualify for credit reasons, but you remain liable for debt incurred in the event the marriage ends.


    Most states recognize that an individual's debt acquired prior to marriage does not become joint debt should the marriage dissolve.

Debt While Separated

    Debt incurred after a date of separation can be considered joint debt. In these cases, it is up to a judge to decide which party is responsible.

Debt and Divorce Decree

    Even if a judge has decreed who is responsible to pay any debt incurred while married, your creditors are not bound to follow that decree. They will expect whomever is on the account to pay the debt.

Community Property

    Be aware that nine states--Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Wisconsin, Washington--are known as community property states. If you live in one of these states, "you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other," according to the Federal Trade Commission.

Information on Personal Credit Questions

Misinformation about credit reports, credit scores and other consumer credit issues can cause people to unwittingly mismanage their finances. People who want to raise their credit scores or apply for credit cards and loans need to understand how various actions impact their credit histories and the way creditors and lenders view their creditworthiness.

How Do Creditors Decide Whether to Approve a Credit Application?

    Creditors try to determine how risky it would be to extend credit to an applicant. They review credit reports to evaluate how you manage the debts you already have. Creditors pay particular attention to whether you have made credit card and loan payments on time. They also consider whether you've had a stable work history based on the employment information you list on your application. The total amount of debt you already have is important as well. Your application may be rejected if you're using all of your available credit because the creditor is concerned you're taking on more debt than you can afford to repay.

How Many Credit Scores Do I Have?

    A credit score is calculated based on the information in your credit file at credit-reporting companies. The score is impacted by many factors, such as whether you pay your accounts late or whether one of your debts has been turned over to a collection agency. Your files at credit bureaus usually don't contain the same information. That's partly because some creditors only report information about your accounts to one or two credit bureaus. Therefore, consumers can have several different credit scores. According to the Experian credit-reporting company, creditors and lenders may use as many as 1,000 different scores, although some are used more frequently than others.

Do Inquiries in My Credit Files Affect My Credit Scores?

    An inquiry is a notation in your credit files that indicates a creditor or lender asked to see information in your files. According to Experian, inquiries have a small impact on consumers' credit scores, since they usually aren't the main reason a person has a poor credit score. Inquiries take on more significance if other information is lowering a person's score, such as large amounts of debt or delinquent accounts. Inquiries that are added to your credit files when you or an employer request a copy of your credit reports aren't seen by creditors and don't affect your credit scores.

Can I Have Too Many Credit Cards?

    You probably have too many credit cards if you're having trouble paying your debts. A 2008 Bankrate article titled "4 Burning Questions About Credit Scores" says the average number of credit cards per cardholder in the United States is 9.5. It's debatable whether having so many cards is a problem. People who can't avoid maxing out their credit cards probably shouldn't have more than one or two because using up all of the available credit on a card can negatively impact credit scores. Cardholders who keep their credit card balances low and pay them off every month likely won't have a problem handling multiple cards.

Debt Management Opinions

Debt Management Opinions

There are many opinions about debt. Some people believe all debt is bad while others conclude it can be a form of investment. Some people think you should try to avoid consolidation while others believe it creates peace of mind. Many people feel that defaulting on debt is always irresponsible, while others conclude that sometimes it's the only responsible option. There are almost as many opinions about debt management as debtors.

Debt is Bad

    Many people believe that all debt is bad. It leaves you paying more for things than the original sticker price and if you get in over your head, it can drive you to lose things you've paid a lot of money for, like a house or a car. Other people argue that some debt is good. Debt for a college loan, for example, or a house that increases in value is considered a worthwhile investment to building greater wealth. The same MSN article, however, that concludes that some debt is good also argues that debt for disposable items is generally bad.

Snowball vs. Avalanche

    If you're planning to pay off your debt yourself, some people recommend the snowball, others the avalanche. Write all your debts down, with amounts and interest rates. With the snowball plan, you pay off the smallest debts first and roll the amount that had been dedicated to the paid-off debt into the next debt for a snowball effect. Some people believe this is the best way to stay motivated. Other people suggest it's wiser to pay off the debts with the biggest interest rate first -- the avalanche -- and dedicate the saved interest to paying off other debts. Both debt plans are recommended as good options by MSN Money.

Debt Consolidation

    Many experts, including those on MSN Money, say debt consolidation can be a slippery slope. If you unload your credit card into a new card or an installment loan, you may be tempted to rack up the first card again. Also some debt consolidation companies charge high fees and aren't consistent about making payments to your creditors. MSN Money recommends that if you must consolidate, consolidate to a bank installment loan or through a debt management plan offered by a low-fee credit counseling agency like those listed with the Association of Independent Consumer Credit Counseling Agencies or the National Federation for Credit Counselors.

Paying Your Bills is Not Always Best

    Debt settlement, bankruptcy, and foreclosure all promise to wreck your credit for at least seven years. But there are times when your debt seems overwhelming and there's no other way out. Liz Pulliam Weston of MSN Money says debt settlement --in which you hire a debt settlement agency to settle your debts -- is faster than bankruptcy. But bankruptcy is cheaper than debt settlement because of high fees charged by agencies. Also, with Chapter 7 bankruptcy, debts are erased. Not so with debt settlement. There's still a stigma attached to walking away from debt, like bankruptcy and foreclosure, but sometimes it's the smartest thing to do.

Thursday, January 30, 2003

Debt Restructure Recovery

Debt Restructure Recovery

Debt restructuring is a process generally used by corporations, but individuals may also use restructuring. Briefly, restructuring debt means repackaging it with a lower interest rate. Once the debt restructure is successful, the process of recovery begins.

Make Regular Payments

    When personal debt is restructured, it is imperative to make regular, on-time payments on that restructured loan. Timely payments are the only way to assure that the restructuring program will last long term. If the restructuring is on a home loan, foreclosure is only forestalled as long as homeowners make regular payments.

Avoid More Debt

    Although the only way to reestablish a credit rating is to find new credit and use it wisely, avoid seeking more credit during a restructure. Since it's clear credit management is a current problem, concentrate on paying off the restructured loan only. Timely payments on that debt also build credit, although not quickly. However, increased debt that is not paid off will further harm credit.

Follow a Budget

    Although no one likes to hear it, a budget and wise financial planning helps most in restructuring recovery. Make a realistic budget considering current income. If expenses outweigh income, decrease any expenses possible. Look at improving education for improved job prospects, but avoid debt for education.

How to Pay a Collection Agency With a Certified Check

While paying off a collection account does not improve your credit score, it looks much better to lenders that you absolved past debts rather than ignored them. Unfortunately, not all collection agencies accept personal checks. If you are not comfortable permitting a collection agency to draft your bank account directly, consider sending the company a certified check. Certified checks reflect the bank's authorization that it has "reserved" the funds until the company cashes the check -- providing security for the collection agency and helping you avoid a bank draft.



    Contact the collection agency and make arrangements to pay off the debt. Depending on how old the collection account is, the company may accept less than the amount you owe to settle the account.


    Ask for any concessions in writing. This provides you with documentation of any settlement program or payment plan the collection agency agreed to.


    Visit your bank and request a certified check in the amount of your payment. Pay the check fee. Banks often charge several dollars for certified checks.


    Write a letter to the collection agency that contains your name, account number and the details of your agreement. This ensures that the company correctly applies the payment to your account.


    Mail the certified check and your letter to the collection agency.

Debt Consolidiation Help

Debt Consolidiation Help

When you have high interest rates and are struggling to make monthly payments on your credit cards, consolidation might be your only option. Debt consolidation helps to lower your interest rate as well as your minimum payment, so you pay more toward your principal, which helps you get out of debt faster. There are different ways to consolidate your debt, depending on your current financial situation.

Home Equity Consolidation

    Using the equity in your home is one way to consolidate your high-interest credit card debt. Check with a reputable lender to see whether the value of your home is high enough to qualify for a home equity line of credit. If you do qualify for a home equity line of credit, the rates might be far less than your current credit card bills and make it worth using the equity in your home.

Refinance Mortgage

    If you have enough equity in your home, you might be able to refinance your entire mortgage to a lower rate as well as pay off your other high-interest credit cards. Check with your current lender to see whether you qualify to refinance your mortgage and consolidate your other high-interest debt.

    If you are struggling to make your monthly mortgage payments and do not qualify for a refinance, you might be able to modify your current mortgage through the government's Making Home Affordable plan. This can be done through your current lender and doesn't cost you anything. Some homeowners have saved hundreds of dollars a month. Speak to your current lender to see whether you qualify.

Debt Management Program

    Consult a nonprofit credit counselor to see whether you qualify for a debt management program. A reputable credit counselor can go over your current financial situation and assist you with finding ways for you to get out of debt. If you enroll into a DMP program, credit counselors work with your creditors to lower your monthly interest rates and payments. You will then be put on a payment plan, which can save you money in interest and pay off your credit cards within two to five years.

Balance Transfer to Lower-Interest Rate Card

    Consider transferring your balance from one high-interest rate credit card to one with a much lower rate. Then, close the credit card with the higher rate or don't use it. Be diligent with paying off your balance and be observant as to what you are spending every month. Put yourself on a budget, and be persistent. Some ideas for saving money include bringing a lunch to work, cutting back on going to restaurants and theaters, and being conscious of what you are spending.

Wednesday, January 29, 2003

Debt Recovery Techniques

Debt Recovery Techniques

Creditors that cannot recover debts from consumers lose money. Thus, unpaid consumer accounts cut into a company's profit margin. To keep the company profitable, corporations and small businesses alike use a variety of debt recovery techniques when collecting debt, although the exact methods used vary by company. A collector may use only one or all of the debt collection options available when attempting to recover unpaid consumer debts.

Creditor Contact

    Direct contact with the debtor is a creditor's primary debt recovery method. Direct contact includes telephone calls, emails and letters that inform the consumer of his responsibility to pay off his account. Creditors have the right to call or send as many letters and emails as necessary unless the company is a third-party collector, such as a debt buyer. Collection agencies and other debt buyers must take care not to threaten or harass the consumer when contacting him about a debt because such behavior is prohibited under the Fair Debt Collection Practices Act, FDCPA. The FDCPA, however, does not apply to the original creditor.

Wage Garnishment

    Should a debtor refuse to pay off his debts after repeated requests by the creditor to do so, the creditor may sue him and file a request with the court to garnish his wages. Should the creditor receive a wage garnishment, it can order the debtor's employer to withhold and redirect up to 25 percent of his pay to the creditor each pay period. This continues until the consumer pays off the debt. Not all states allow this practice. Texas, for example, does not permit creditors to collect consumer debt through wage garnishment.

Bank Levy

    Similar to wage garnishment, a bank levy occurs after a lawsuit. Rather than serving the garnishment order on the debtor's employer, however, the creditor serves the debtor's bank. The bank freezes the individual's accounts -- denying him access -- and turns over all non-exempt funds to the creditor. Exemptions that commercial creditors, such as hospitals or credit card companies, cannot seize include federal benefits, unemployment and child support.

Real Estate Lien

    Real estate liens restrict an individual's ability to profit from the sale of his own property without paying off a creditor's lien. Like wage garnishments and bank levies, real estate liens require creditors to win a lawsuit against the property owner. After a creditor attaches a real estate lien to a debtor's property through the Land Records Office in his county of residence, the debtor must pay off the debt before refinancing the home.

    While consumers can transfer ownership of a given property with a real estate lien still attached, most cannot sell the home without paying the lien. This is because few mortgage companies, if any, will finance a buyer to purchase a home until the property owner clears any existing liens.

Tuesday, January 28, 2003

Information on Superior Debt Solutions

Information on Superior Debt Solutions

A search of the Better Business Bureau's consumer website brings up three businesses that use the name Superior Debt Solutions. Two of them had F ratings while one---Superior Debt Solutions, aka Stone Mountain Group, and the focus of this article---had a B+ rating.

Superior Debt Solutions' Services

    Superior Debt Solutions---also called Superior Debt Relief Services---negotiates with clients' creditors to reduce amounts owed on unsecured debts. Once a client agrees to a plan, a representative contacts creditors and a settlement account is established.


    Clients pay into the settlement account each month and stop paying their credit card bills. After approximately six months, a representative from Superior Debt Solutions contacts creditors and attempts to broker a settlement.

    When clients stop paying their credit card bills as part of this program, creditors can contact them directly, send their accounts into collections and sue them.


    Superior Debt Solutions claims that clients who join their program will become debt-free sooner, face fewer creditor phone calls and avoid the stigma of filing bankruptcy.

Better Business Bureau Rating

    Superior Debt Solutions is not accredited by the Better Business Bureau, but has a B+ rating. In March 2010, BBB reported that three complaints had been made about Superior Debt Solutions over the past 36 months.

Other Potential Options

    People with more credit card debt than they can afford to repay can negotiate directly with their creditors or visit an accredited nonprofit credit counseling agency for help.

What Is Considered a Cash Bond?

When a person is placed in jail while awaiting trial for a crime, he is often given the opportunity to be released before the trial starts. However, to give the defendant an incentive to show up at the trial, a court will often require that he put up a cash bond. A cash bond is a cash deposit made to secure the release of the defendant. The money will be returned when his trial is over.


    When a person awaits trial, a judge will have the right to set an amount that the defendant can put down as a deposit to secure his release. This money is known as bail. The amount of bail can range from a hundred dollars to more than a million, depending on the nature of the crime and the defendant. Bail is typically paid to the court that is hearing the case.

Cash Bond

    A cash bond is the amount of money that the defendant or someone who agrees to bail him out of jail must put up to allow him to go free. Generally, this amount is equivalent to the bail amount, but sometimes it can include additional court fees. Courts will generally require that the person putting up the bail money pay for a cash bond in cash or sometime tantamount to cash, like a cashier's check.

Returning The Bond

    When a defendant or someone else puts up money for his cash bond, the money will be returned when the defendant's case is resolved, so long as he shows up at all his required court appearances. So, for example, if a defendant is found guilty and sentenced, the cash bond will be returned. Similarly, if a defendant is found innocent, the cash bond will be returned as well.


    However, if a defendant fails to appear at the court on an appointed date, he may face forfeiture of the cash bond. Depending on the policies of the court, the defendant's bond might be forfeited entirely if he misses an appointment or it might merely be reduced. In some cases, if he returns later, the bond might be returned, but his right to bail will be revoked and he will be incarcerated.

Can Arizona State Retirement Disability Pension Be Garnished?

Can Arizona State Retirement Disability Pension Be Garnished?

Unless specifically exempted from the garnishment process by state law, almost any source of income can be claimed to pay back legal debts. The controlling authority for determining exemption status is federal law, and then state law in the Arizona Revised Statutes. Federal law says Social Security disability cannot be garnished except in a few instances. Whether the same holds true for your state-level retirement disability pension depends upon the specific source of the check.


    Wage garnishment is legal in Arizona. To collect, a creditor must go to court and receive a legal judgment in his favor and then apply for a Writ of Garnishment. Though federal law decrees that no one shall have more than 25 percent of his income garnished, some judges in Arizona lower that to 15 percent. Social Security retirement can only be garnished for certain types of debt like alimony, child support and federal taxes. This is law enacted at the federal level. Arizona has seen to apply the same kind of thinking to certain state retirement disability pensions.


    The Arizona Revised Statutes protect some state and local pensions from garnishment, such as police officers, firefighters and other public safety personnel. State employees and Board of Regents members enjoy the same protection for their retirement benefits. In the U.S., public servants have always enjoyed a respected position, and guarding their retirement money is seen as a "thank you" for doing a tough job. Private pensions and others not specifically protected by state law can expect to be attached for garnishment if approved by the court system.


    No Writ of Garnishment will be issued by an Arizona court without the defendant having opportunity to present his side of the argument in court. If you feel your retirement is on the verge of being wrongfully attached for debt, it is well within your rights to hire an attorney or even make the case to the judge yourself. Keep in mind that it is legal in Arizona to garnish most private retirement pensions, though there is a formula that should be used to ensure the debtor has enough income to live on.


    Creditors and debtors alike should keep in mind that there is a statute of limitations for garnishment in Arizona after a favorable decision has been rendered by the court. The creditor has five years after a decision has been rendered in Arizona, and four years on a decision rendered outside the state, to complete the garnishing process. If he waits too long, he must start the whole thing over.

Monday, January 27, 2003

What to Do About Credit Card Payments When You've Lost Your Job

Losing a job is a horrifying experience, especially if you have large amounts of credit card debt and are now on a very limited income. Above all, you must make sure you do not panic and take steps to address your situation as quickly as possible. In order to protect your assets and credit rating, apply for any assistance that is available, speak with your creditors and work with a credit counseling firm if you need some extra help.

Stabilize Your Situation

    Losing a job is traumatic, but you cannot let it mire you in depression and hopelessness. You should immediately contact your local or state Department of Labor and file to receive unemployment benefits. Look over your expenses and slash any non-essential bills -- buying food and paying for heat are essential; premium cable channels and magazine subscriptions are not. If your financial situation is especially dire, check into other assistance programs such as food stamps or WIC checks. Update your resume and immediately begin looking for a new job -- be prepared to take a temporary job if you cannot find one in your industry right away. By taking these measures, you will minimize the damage (financial and emotional) that losing your job can inflict.

Notify Your Creditors

    Many people never take this step, either due to fear or embarrassment. However, it is critical that you call any lenders you owe money to and explain your situation. Many credit card companies and other lenders will work with you to reduce your monthly payments and structure a temporary payment plan that fits within your budget. You may be required to provide proof that you are unemployed or have filed for unemployment benefits. Taking this step can show your creditors that you have every intention of paying them back and will help prevent black marks on your credit report, which can haunt you long after you are back on your feet. Make sure you do not get in the downward spiral of using one credit card to pay balances on another one -- speak to your creditors, be honest about your situation and come up with a plan with which you can live.

Hire a Credit Counselor

    There are many credit counseling firms that will help you negotiate with creditors and collection agencies. These companies can help you lower your interest rates, reschedule when your bills are due and consolidate all of your debt into a lower rate loan. However, be very careful when choosing a credit counseling firm -- there are many shady companies that try and take advantage of those in financial distress. Watch out for high setup fees, sometimes called "contributions." Check to see if the firm is listed with the National Foundation for Credit Counseling, a nonprofit organization that sets standards for and accredits legitimate counseling operations. A real counselor will help you negotiate and teach you money management strategies -- anyone claiming to be able to erase your debt or repair your credit rating overnight is most likely running a scam.

How to Remove a Late Pay History

It's easy to end up with a late payment on your credit report. Everything from major life events like job loss or divorce to minor incidents like popping a check in the mail a day later than planned could earn you a late payment ding. The hard part is what comes next. A single late payment could knock 30 points off your credit score. An account that is more than 90 days past due can be as damaging as bankruptcy. Even years later, a late payment could impact your chances of getting a loan, mortgage or credit card. If you have a late pay holding down your credit score, you do have options. There are ways you may be able to have that credit blemish erased.



    Verify that the information is correct. Did you really pay late? Can you prove that you paid on time? If the late payment on your credit report is an error, contact Experian, TransUnion and Equifax--the three credit bureaus--and file a dispute. They will investigate your claim, and if they find the report is an error, they will remove it. You can file a dispute on the agencies' respective websites (see Resources). Each bureau has its own method for handling disputes, so follow the procedure given to you when you file your complaint.


    Request a goodwill adjustment. Your creditor may be willing to remove the negative mark from your credit report by offering you a goodwill adjustment. This adjustment is simply a gesture on the creditor's part to keep you a satisfied customer. Generally, to qualify, you need to be a customer in good standing whose late payment was merely a blip in an otherwise solid payment history. Contact your creditor by phone to request the adjustment or write a letter. Be prepared to take responsibility for your late payment, give an explanation for why you missed the payment and point to your otherwise good payment history. Credit Info Center has a sample goodwill adjustment request letter you can use as a guide (see Resources).


    Negotiate with your creditor. If your payment history with the creditor is not up to snuff enough to request a goodwill adjustment, attempt to come to an agreement whereby your creditor removes your late payment history in exchange for you getting your payments on track by setting up automated payments. You may also be able to offer a lump sum payment that brings your account balance down in exchange for removing the negative credit mark.

How to Stop a Wage Garnishment in Ohio

How to Stop a Wage Garnishment in Ohio

Wage garnishment is the court-ordered interception of part of your wages to satisfy a debt over time. Having your wages garnished in Ohio depletes your income and may cause you to struggle financially. Your employer takes out the amount directed by the order each time you get paid and forwards the money to the creditor. Ohio laws do not provide for an undue hardship exemption due to a garnishment order, but you may be able to stop the wage garnishment entirely.



    Contact the creditor garnishing your wages by phone or mail. Offer to make a repayment agreement to cease the garnishment; Ohio law provides that an order for garnishment may be halted or modified at the creditor's request. Get any repayment agreement you make in writing and make sure the agreement includes a provision for stopping the garnishment.


    Check your records if the creditor was included in a debt management or budget plan through a counseling agency. Review your payment dates to the debt counseling service. Ohio law does not allow a creditor who is part of a debt management plan to garnish your wages unless your debt plan payment was more than 45 days late; however, if the credit counseling company was the party who paid late, you are subject to garnishment. File a motion to halt the garnishment in the court where the order was issued if you have proof of timely debt counseling payments that include the garnishing creditor.


    File for bankruptcy in the Ohio district court responsible for your area. The garnishment will cease as soon as the creditor receives notice of the automatic stay you receive upon filing.

Sunday, January 26, 2003

Loan Consolidation Basics

If you have multiple creditors, you may want to consolidate your debt into one loan. There are a number of benefits derived from a loan of this sort. First of all there is a matter of convenience. It is much easier to pay one creditor than five or six. Consolidating your debt also saves time. Prior to consolidating, make sure you choose the lender with the most cost-effective terms.

Home Equity

    If you are a homeowner, you may be able to use the equity in your home to consolidate all of your credit card debt. Home equity loans usually have lower rates of interest than credit cards, which will save you money in finance charges.

Balance Transfers

    If you have a credit card, with a credit limit large enough, you may be able to consolidate all of your other credit cards into one. Credit cards usually offer promotional or introductory rates, sometimes as low as zero percent. You can save a substantial amount of money by consolidating. There will be a balance transfer fee assessed by the card company. Contact the card company with the lowest promotion rate. Consolidating can help you achieve lower monthly payments as well.

Installment Loans

    If you have multiple credit cards, all with different balances and interest rates, you really don't know when they will be paid off. When you consolidate, usually you have an installment loan, with a specific term that allows you to know exactly when your loan will be paid off. The promissory note will explain in detail the amount of your payments and the amount of finance charges you will pay.

Direct Pay

    Some lenders will pay off your other creditors themselves instead of letting consumers pay their own creditors. Each creditor to be paid will be listed on the disclosure statement, along with the other terms and conditions of the loan. The lenders may send a check directly to your creditors, or they may do some type of electronic transfer to get the creditors paid.

Closed Accounts

    A lender may request that you close out all credit cards as a condition of the loan to make sure you don't use the cards after they have been paid. Closing out your credit cards after they have been paid can temporarily lower your credit score. Creditors want to make sure you don't become a credit risk while you are a customer. Incurring new credit card balances could make it difficult to pay both your loan and the new debt.


    If you consolidate debt using the equity in your home, there is the possibility of foreclosure. When certain events transpire that prevent you from paying, a lender will start foreclosure activity, which could lower your credit score by as much as 250 points. This information will remain on your credit report for seven years. Your home will be sold at a sheriff's auction and you could be responsible for the deficiency balance after the sale.

How to Raise Your Credit Score Fast After Bankruptcy

How to Raise Your Credit Score Fast After Bankruptcy

Filing bankruptcy affects your credit score and makes it difficult to obtain any type of credit. In some cases, bankruptcy makes it tough to find adequate housing or decent employment. There isn't an overnight solution to repairing your credit score. By making small changes in the way you spend money, pay your bills and what types of credit you apply for, you can bring your credit score back to respectability quickly.



    Order a copy of your credit report from each of three major credit bureaus: Equifax, Experian and Trans Union. Review each item on the report individually, making sure that each individual entry is correct. If you find errors, dispute them with the credit bureau.


    Pay your bills on time to develop a good payment history. On-time payments show that you are balancing your finances responsibly, decreasing your risk with lenders.


    Open a secured credit card account. This type of account requires you to pay a deposit that goes into a savings account before the financial institution issues the credit card. The deposit secures the card and gives the bank the option to revoke it if you default on your payments. Your credit limit is equal to the amount you deposit. Every payment you make on time reports positively to the credit bureaus and helps raise your credit score.

Saturday, January 25, 2003

How to Get a Reaged Debt Removed From Your Credit Report

Reaged debts are a violation of the Fair Credit Reporting Act (FCRA) and must be removed from your credit report as soon as possible. A reaged debt is simply a debt in which the DOLA has been set to a more recent date in order to prevent the negative tradeline from falling off your credit report in a timely manner.



    Know what a DOLA is and how it affects you. DOLA stands for Date of Last Activity


    Learn how creditors calculate your DOLA. A DOLA is only assigned by an original creditor and is the date the debt first went delinquent with no following payments.


    Understand how debts "time out". A negative tradeline will fall off of your credit report seven years from the DOLA.


    Get a copy of your credit report. It is best, when attempting to clean up your credit, that you get a copy of all three credit reports.


    Check the tradeline of the original creditor for the debt. Note when the debt first went delinquent.


    Check the collection agency tradeline. Depending on which version of credit report you are looking at, you will either see a DOLA or a removal date. If their DOLA does not match the original creditors, or if their removal date is more than 7 years from the correct DOLA, your debt has been reaged.


    Contact the collection agency in writing. Do NOT send a copy of your credit report or include your SSN. State that reaging a debt is against FCRA guidelines and that they have 15 days to remove their illegal tradeline from your credit report.


    Send your letter CRRR (Certified Return Receipt Requested). This will insure that someone has to sign for your letter and that you receive written proof that your letter was delivered.


    Check your credit report to ensure that the collection agency tradeline has been removed.


    Contact the Credit Bureaus. If the collection agency does not remove their tradeline, send letters to each of the CRAs that are reporting the reaged DOLA.


    Explain that the DOLA has been illegally reaged. Remind them that this is against the FCRA. Highlight the date the debt went delinquent with the original creditor and highlight the collection agency tradeline. Demonstrate that the two do not match up.


    Notify the CRAs that you did attempt to rectify this with the collection agency but they would not fix the tradeline. Include the signed form from the collection agency verifying that they received your CRRR letter.


    Wait for the investigation to be completed. The CRAs will conduct an investigation into the true DOLA of the debt and any illegal actions on the part of the collection agency. You will receive a letter in the mail notifying you of the results of the investigation.


    Threaten the CRAs. If the CRAs do not remove the reaged tradeline, write another letter letting them know that you will be contacting the Federal Trade Commission and your Attorney General and filing a formal complaint if they do not uphold the law as outlined in the FCRA.

Understanding Concepts of Deficits & Debt

Understanding Concepts of Deficits & Debt

To the financial layperson, the distinction between deficit and debt might be unclear, but they are in fact two separate and distinct economic concepts. Debts and deficits exist in all levels of the global economy, be it in households, businesses or even on the national stage. Debts are par for the course when it comes to large investments, but deficits are indicative of more far-reaching problems than manageable debt.

Understanding Debt

    Debt is any long-term financial burden placed upon a consumer, business or even a nation to fund a long-term investment. At the home level, debts are incurred in a number of ways, most commonly as mortgages, car loans and consumer credit card debt. On the business level, debts are sometimes incurred when purchasing new capital equipment; for example, a delivery company may incur a vehicle debt when purchasing a new delivery van. On the national level, major projects such as investing in public infrastructure or the military may incur a long-term debt, which the government then needs to gradually pay back to its investors. National debt is usually owed to domestic companies, international firms and occasionally to other national entities. In simple terms, debt just refers to money owed, and as long as it is being paid back in a sensible and sustainable manner, it is not a problem in and of itself.

Deficit Defined

    Deficit, unlike debt, relates to shortfalls with negative connotations. For example, if a government started a program buying new space shuttles but the project cost more than the projected amount, it would incur a budget deficit --- or, in simple terms, a monetary shortfall. Avoiding deficits at any level requires accurate budgeting as well as sufficient income to pay off debts and expenses in a sustainable manner.

Relationship Between Debt and Deficit

    The real difficulty when deficits occur is that the money always has to come from somewhere. Either the overall debt will balloon, whether on the national, business or personal level, or a spending cut from some other source will be required to cover the difference. At the national level, ballooning debts due to deficits lead to weaker currencies and broader economic difficulties. On the business level, a company that is losing money may ultimately have to start laying off people or go bankrupt. Deficit in individual households may mean that the family could have its home, vehicles or property repossessed.

Combating a Budget Deficit

    There are three ways to fight a budget deficit. The first is to nip it in the bud before it begins by sensible budgeting based upon realistic budget projections. At the home level, this would mean looking at past expenses and making realistic estimates based upon those pre-existing numbers. It is all well and good for someone to intend to spend only $25 on entertainment in the month, for example, but if the person lacks willpower and ends up breaking the budget commitment, that budget is pointless. Strong budgets need to be based on economic realities, not idealism.

    The second way to fight a budget deficit is to increase income. Increasing the budget at the national level means raising taxes on someone, whether that means businesses, all private individuals or certain income groups. On the home or the business level, it means directly increasing earnings.

    The third and sometimes most difficult way to combat the budget deficit is by slashing expenditures. At the personal level, this means limiting spending on the fun stuff; on a business level, this might mean putting an expansion program on hold, selling less-competitive business units or slashing the payroll, either by layoffs or personal pay decreases. On the national level, slashing expenditures means shutting down government programs, which can have negative social consequences and should be considered only as a matter of last resort. Public institutions like the military, police, and fire departments were set up in the public interest for a reason, and slashing their support on any level of government is a risky proposition.

What You Can Lose Due to Defaulted Loans

Defaulting on a loan is never a good choice, although sometimes it's beyond a person's financial control. Defaulting on a loan can sometimes lead to losing your house or car. Lenders can also go after your paycheck. Do everything you can to avoid defaulting on a loan, including dipping into your savings account.

Unsecured Loans

    Unsecured loans are not secured by collateral, such as a house or car. Personal loans are a common type of unsecured loans. You typically will not lose anything with an unsecured loan, since you didn't put up any collateral in the first place. However, if you owe a substantial amount, the lender may elect to sue you. If it wins the trial, the lender then has options to get the money from you, such as wage garnishment. If you're unsure of whether or not your loan is unsecured, see whether your loan is tied to anything. If the loan is not tied to any asset, it's unsecured.

Secured Loans

    Secured loans are tied to something, such as a house or a car. A mortgage, car loan and home equity loan are prime examples of secured loans. If you default on a secured loan, you stand to lose whatever is tied to it. That doesn't mean you will, however. According to Go Banking Rates, lenders typically go after the collateral 90 days after you stopped making your last payment. If you know that it's been 90 days since your last payment, contact the lender and attempt to find some middle ground. If you can pay the past due money, you may not lose your assets.

Wage Garnishment

    Wage garnishment is not limited to unsecured loans. If the lender does not receive and cannot recoup the money from your defaulted loan, it reserves the right to garnish your wages. If the court rules in favor of the lender and approves the wage garnishment, a percentage of your paycheck is withheld and given to the lender until the loan is paid off. According to Balance Pro, most states allow for up to 25 percent of a person's wages to be garnished. The law is slightly different for student loans. According to the United States Department of Education, lenders can only garnish 15 percent of a person's wages to collect money on a defaulted student loan.

Credit Score

    Your credit score will nosedive if you default on a loan. Because payment history is taken into account to calculate your credit score, defaulting on a loan can wreak havoc on your credit. However, since there are a lot of other determining factors that make up your credit score, it's not possible to calculate how much your credit score will suffer from a defaulted loan. The defaulted loan will remain on your score for seven years.

Friday, January 24, 2003

How to Negotiate Credit Card Debt Down by Half

How to Negotiate Credit Card Debt Down by Half

Credit card debt is a serious problem for many Americans. Sometimes credit card companies charge high rates and fees that add up. If you can't afford your payments, there are ways you can negotiate with creditors to cut your debt in half.



    Consider your reason for not being able to pay back your debt, because credit card companies will ask you why you need debt relief. Examples of possible reasons that credit card companies will consider legitimate include a recent divorce, health problems or unemployment.


    Get assistance from a debt settlement agency, which can help you negotiate with creditors to get your debt cut in half, not just reduced by a small amount. To find a reputable debt settlement agency, contact the Association of Settlement Companies, or TASC. If a company is a member of TASC, they have to follow the TASC bylaws.


    Tell the creditor that you plan to file for bankruptcy if your credit card debt isn't cut in half. If you do file for bankruptcy, the creditor won't receive any money, so once this is on the table, they may be more open to negotiating.


    Keep proof of all your correspondence with the creditor. This includes letters you receive in the mail and letters you send out. It's best not to communicate with creditors over the phone. Negotiating through the mail gives you documented proof of all agreements.

Thursday, January 23, 2003

Dental Financing Problems

Needing dental work can put a dent in your pocketbook. If you can't afford to fix your teeth, your dentist may offer you an alternative to paying the bill upfront. Dental financing in the form of credit cards may be the answer to necessary treatment that you otherwise would not be able to have done. However, before you agree to charge your dentist's fees, read the small print carefully and decide if you think that it's worth it.


    Many dentist offices offer simple payment plans for patients who cannot afford a large out-of-pocket expenses. However, there is another alternative. Even with dental insurance and a payment plan, you may not be able to cover expenses associated with fixing your teeth or those of a family member. To resolve this issue, your dental office may offer you financing for the necessary work with a health credit card. Dental associations may be paid by the credit card company to endorse use of this type of financing among its dentist members.

False Sign Ups

    Complaints in states, such as New York and California, state that patients have been signed up for dental credit card financing without their knowledge. Instead, they thought that they were applying for a payment plan through the dental office, not with a third-party credit card company. The Western Center on Law and Poverty in California sponsored a bill that passed in 2010. The law does not allow dentists to ask patients to sign credit card applications under anesthesia or when not lucid.

Overcharge for Services

    State attorney general offices, such as those in New York and Minnesota, have alleged that patients were charged for services that they had not received. Also, complaints stated that cardholder were not told of the cost breakdowns prior to the charges being made. This resulted in overcharges for services that were not discovered until patients received their credit card bills. Dentists did not always agree to reverse some of the charges, and patient were stuck with bills for services that were not approved.

Finance Charges

    Complaints received in New York and California allege that promised low or no interest is for a short time only. Once the low-rate period expires, interest of over 25 percent may be charged retroactively, if the bill is not paid in full by that time. Also, late payments may incur interest rates of 30 percent for the entire amount of the charge. Since the terms of the card are not always given to the applicant, patients are unaware of the possible finance charges and late fees.

A Debt Collector Refuses to Send a Settlement Notice

A debt settlement notice is a letter that is usually written by a debt collector and addressed to the debtor. It is created after a collections agency makes a verbal agreement with the debtor concerning an owed debt. A settlement notice is used to ensure that a debtor understands the terms for settling the debt. It also ensures that the debtor knows what the collections agency will do in return for her paying off the debt.

Why A Settlement Notice Is Needed

    Verbal debt settlement agreements are often difficult to prove in a court of law. When you have a written debt settlement notice, there is a greater chance of proving your case, should the need arise. The agreement between you and the debt collector is undeniable when you have a paper trail documenting the payment terms. If you pay a debt and the debt collector refuses to uphold his end of the deal, you can consult with an attorney to hold the debt collector accountable.

What To Do

    Contact the debt collector. Advise him that you desire to settle the debt, as agreed. However, you want a settlement notice to ensure accountability from the collection agency. The settlement notice should include the name of the collection agency, your account number, original debt amount, settlement agreement and the due date for settlement. The settlement notice should also include promises made by the debt collector. For instance, the creditor may agree to report the debt to credit reporting bureaus as paid in full, once your balance is paid off.

Another Option

    If the debt collector still refuses to send a settlement notice, write your own. Include the debt collector's name and address, your name and address, account number, original debt amount and the agreed upon settlement. Include any promises made by the debt collector in return for your payment. Sign and date the letter. Include a signature and date field for the debt collector, so he can sign to accept the agreement. Request that the letter be mailed back to you. Send the letter to the debt collector via Certified Mail so you have proof that the collections agency received your letter.

What Not To Do

    Debt collectors often agree to settle for less than the amount owed if a debtor agrees to make a lump-sum payment. If you don't receive this settlement notice in writing, think twice before paying off the debt. Until you receive the settlement notice, you have no proof of an agreement between you and the debt collector. If you make the lump-sum payment before receiving the settlement notice, the debt collector may renege on his promise to discount the debt or to report the debt as paid to credit bureaus.

Wednesday, January 22, 2003

How to Get Out of Debt When You Owe More Than You Make

Getting out of debt when you owe more than you make requires careful budgeting and sacrifice. Eliminating discretionary spending on cable television, hobbies, eating out and traveling is essential. Even that may not be enough and could force you to make other hard decisions about your finances. Government-certified credit counselors, such as those affiliated with Consumer Credit Counseling Service, can offer suggestions based on your income and expenses. The public library or local charities such as the United Way can offer referrals for credit counseling in your area.



    Sell some of your assets to pay down debt. Eliminate a second car that is paid for, if possible. Sell household goods through a garage sale. Raise enough money to completely pay off some debts.


    Take money from savings accounts to pay off other bills. Dipping into savings is difficult, but using the money to pay off high-interest credit cards is a smart move. Tap into retirement accounts only as a last resort, especially if you will incur penalties for early withdrawal.


    Earn more money by taking a second job -- or even two additional jobs. Use the additional money to pay down debt. Or settle some debts for less than the full amount. For example, a credit card company may agree to settle a $1,000 credit card balance for $500 -- a savings of 50 percent. However, debt settlement hurts your credit score because you failed to pay an account as agreed. Also, creditors will not settle accounts that are in good standing, meaning you'll have to miss several monthly payments to qualify. Only unsecured debts, such as credit cards, are eligible for debt settlement.


    Eliminate a car payment you cannot afford. Sell the car if possible. This may be difficult if you owe more on the car than it is worth but it is worth exploring. Contact your lender to determine how much you owe on the vehicle. Look up the fair market value of the car on free online sites such as Kelly Blue Book. Some debtors who cannot afford their car payments contact the lender to arrange for a voluntary repossession. However, this severely harms credit and is best avoided if possible.


    File for bankruptcy if all other options fail. Chapter 7 bankruptcy eliminates unsecured debt in just a few months. Chapter 13 bankruptcy requires a payment plan lasting three to five years. Most bankruptcy attorneys offer free consultations to offer advice on which plan is best for your situation.

What Is a Budget Deficit?

A budget deficit is the residual debt that comes from spending an amount that is greater than your budget or the amount of positive revenue that you are able to bring in. The term "budget deficit" is often used to refer to a local, state or national governing body. In such cases, a budget deficit is created when the government's expenditures are greater than its tax revenues.

Types of Deficits

    There are two main types of governmental deficits that are commonly identified by economists. They are cyclical deficits and structural deficits. A cyclical deficit refers to a scenario in which the government must borrow funds during points of high unemployment to replace tax revenue that would have existed with a lower jobless rate. A structural deficit occurs when a governmental entity spends more than the amount of tax revenue that it brings in during times of low employment. This type of deficit is generally not self-correcting.


    The two main causes of a budget deficit are overspending and not receiving enough tax revenue to cover the predetermined budget in a given year. These causes may occur due to the necessity of paying for unexpected expenses such as emergency military defense or humanitarian aid, or because there is a sudden downturn in the economy or job market.


    Budget deficits require governments to borrow money or cut back on previously budgeted services. The act of borrowing large sums of money to pay for a budget deficit implies that it will be paid back with interest. This causes the overall budget deficit to increase since interest payments must be incorporated into the existing budget. If a governmental entity attempts to remedy the budget deficit by printing additional money, they may run the risk of causing an inflationary situation whereby the cost of goods and services increase to accommodate a devalued currency.


    The main solutions that governmental entities can use to eliminate a budget deficit are to reduce spending, to raise taxes or a combination thereof. All of these budget balancing measures tend to be unpopular with large portions of the population. On the one hand, many people depend upon the services, programs and benefits that are paid for by the government. On the other hand, many working individuals believe that they are paying a disproportionate amount for services that do not benefit them. Therefore, the act of balancing a budget will generally be viewed as an unpopular decision by a large segment of the population regardless of the method that is used by the governmental entity.

Tuesday, January 21, 2003

Can You Get a Credit Card When You Are on Unemployment Insurance?

Oftentimes, when a person is receiving unemployment benefits, he may wish to take out a credit card. Used judiciously, credit cards can be a good source of short-term loans that a person can use to pay bills. However, credit cards are not a right. Finance companies will generally only offer cards to clients who they believe are capable of paying the loans back. A person living on unemployment benefits may, therefore, have trouble getting a card.

Unemployment Insurance

    When a person is receiving unemployment insurance, he is making only a portion of the amount of money he was earning when he was working. In addition, he can only receive benefits for a limited period of time. As of March 2011, a person could receive unemployment benefits for a maximum of 99 weeks. This reduced, temporary income may make the person appear a credit risk to credit card companies.

Credit Card Eligibility

    When deciding whether to issue a person a card and, if so, a card at what rate of interest, a credit card company will look at various measures of an individual's creditworthiness. Foremost among these factors is an individual's credit rating, but companies will also look at his current income. If a person is making too little money, a company may refrain from issuing him a card, as he poses too high a risk of default.

Lender Policies

    Whether a person can receive a card will come down to lender policies. While some companies will refuse to issue a card to someone receiving unemployment benefits, others may be willing to take a chance, particularly if the person has a good credit rating. In addition, if the person wishes to build up his credit rating, he may wish to take out a secured credit card, one with a credit limit equivalent to the money the person sets aside in an account.


    A credit card company will not know a person's only form of income is unemployment insurance unless the person tells it. This is because the fact that a person is receiving unemployment benefits is not a matter of public record, and is not listed on a person's credit report. A person may be tempted to lie on his credit card application about his income. However, doing so is illegal and could put you at risk of various penalties.

Credit Card Settlement Agreement Vs. Pay-Off in Full

An offer to settle a debt for less than you owe can be tempting, and may be your best option if you are seriously in debt with no means to repay it. But debt settlement has pitfalls as well, including additional taxes and significant damage to your credit score. In the long run, paying your debts in full, even if it takes longer, may save you a lot of money and trouble.

Credit Consequences

    The fact that you settled a debt for less than you originally owed may end up on your credit report, and can remain there for some time -- up to seven years after you originally defaulted on the debt. Settling a debt for less than you owe can lower your credit score and make other lenders nervous about working with you. On the other hand, some people have managed to successfully negotiate the removal of a settled account from their credit report as part of the debt negotiation process. If you are offered the opportunity to settle a debt, get an agreement in writing from the creditor or collection agency that they will remove the account or report it as "paid in full."

Tax Consequences

    Federal law treats canceled debt over $600 as taxable income for you and requires creditors to report the cancellation using tax form 1099-C. While you may be able to avoid paying taxes by claiming insolvency, you need to factor tax consequences when considering a debt settlement.

Long-Term Financial Consequences

    While settling a debt offers short-term relief, it may cost you more money in the long run. Not only may you have to pay taxes on the forgiven debt, the damage to your credit score can cost you big time in higher interest rates over the next few years.

Debt Settlement Firms

    Debt settlement firms specialize in settling your debts for you. Unfortunately, some of these companies do more harm than good. They may encourage you to not pay your bills while you save up enough money for a settlement, which can significantly damage your credit and possibly trigger lawsuits. They also often charge high fees. If settlement is your best option, you can probably do better negotiating on your own.


    Credit counseling can help you with budgeting to get your bills paid off. Your credit counselor can set up a debt management plan to lower your interest rates and monthly payments while you pay your debts in full. Another alternative is bankruptcy. While bankruptcy is bad for credit, you don't have the tax consequences of debt settlement and may be your best option if you don't have the cash to settle your debts.

Usury Laws on Credit Card Debt

High interest rates or credit cards with hidden fees and costs can mean financial trouble for consumers who spend above their means or accumulate too much debt. Some consumers may claim that high interest rates violate usury laws. That answer depends largely on what state the credit card company is incorporated in.

Usury Laws in General

    The purpose of usury laws is to prevent a lender from charging illegal interest rates and to protect borrowers from predatory lending practices. States may set the usury limit on various transactions such as general legal rates of interest, consumer lending rates of interest and judgment rates of interest. It is illegal to exceed those interest rates, however, certain rules apply to banks and financial companies like credit card companies.

Special Rules

    According to the 'Lectric Law Library, in 1980 Congress enacted legislation that allowed national banks to ignore state usury laws. If the bank or financial institution is national, typically denoted by having the work "national" or "N.A." in its title, the credit cards it issues are not subject to state usury laws. Further, another exception exists allowing financial institutions to override state usury laws.

Supreme Court Ruling

    The Supreme Court case "Marquette vs First Omaha Service Corporation" ruled credit card companies may charge the maximum interest rate allowed in the state where the business is incorporated. This ruling applies regardless of where the card was used or where the consumer lives. Certain states, such as South Dakota, have no limit on consumer usury interest rates. Credit card companies incorporated in South Dakota can charge any rate as outlined in its terms and conditions.

Usury Rule Example

    Assume a consumer lives in Hawaii, a state with a legal maximum interest charge of ten percent. If that consumer borrows money from his neighbor, the neighbor cannot charge an interest rate greater than ten percent, or else he is in violation of the usury law. Violators are subject to penalties and the borrower won't have to pay the higher rate. If this Hawaiian consumer obtains a credit card from a company incorporated in South Dakota, the South Dakota usury limits apply. Since South Dakota has no usury limit for consumers, the credit card company can charge twenty percent or more on credit card balances.

Monday, January 20, 2003

If a Loan Is Paid Early Is it Impaired?

If a Loan Is Paid Early Is it Impaired?

Loan impairment occurs when the lender expects to be able to collect less than the full value of the loan. Either the value of the collateral has been reduced, such as when a car is worth less than its loan, or the borrower can no longer afford to pay the full value, such as when student loans are consolidated and the principal reduced.


    The concept of impairment is a way for a lender to estimate its future earnings based on a current, realistic view of the revenue it expects to make in the future, rather than simply estimating by the amount that it's technically owed. Critically, this is an estimate of what's going to happen in the future, not a reflection of what's already happened. A loan that's been paid off is not impaired.


    Generally speaking, the impairment is the full amount of the loan minus the expected repayment. For example, if an auto loan has $10,000 left on it but the borrower is in bankruptcy and expects to settle for $4,000, the impairment is $6,000. However, there are several ways to calculate impairment. You can calculate the future value of all payments, which takes inflation into account. If a loan is not backed with collateral you can use the fair market value of what the loan could be sold to another lender or collection agency. If it is backed with collateral you can use the market value of that asset. For instance if the car above is worth $3,000, the impairment can be calculated as $7,000.

Early Repayment

    Lenders may be willing to offer an early repayment discount, or to settle for receiving only a portion of the loan amount back, if they think that's less risky than allowing the original payment schedule to go on. In those cases the loan obligation is discharged, and the difference between the lender's expected profit and its actual profit is written off as a loss.

Accounting Treatment

    When a lender believes it will not receive the full repayment of the loan, it can re-measure the loan and re-estimate future cash flows, with a discount rate of the loan's effective interest rate. This allows the lender to value its assets correctly on balance sheet. If the lender restructures a loan with troubled borrowers, the difference between the original payments and the new payments can be recognized as impairment on an income statement as well.

How to Pay Off Bills Without Bankruptcy or Bill Consolidation

How to Pay Off Bills Without Bankruptcy or Bill Consolidation

Debt weighs you down, keeps you poor and prevents you from saving money for your future. Bankruptcy and bill consolidation are tools some people use to address debt, but both options come with drawbacks. Avoid the drawbacks and learn to manage your money and pay off debt on your own. Learn skills that keep you out of debt in the future and help you increase wealth and long-term financial stability. Avoid quick-fixes that will have a negative impact on your life and decide to take control of your finances yourself.



    Write down all of your debts and monthly bills. Leave nothing out, including the change you spend for your daily candy-bar fix or mocha latte.


    List all income that comes into the household each month. This includes money from your job, as well as any disability, retirement or child-support checks.


    Subtract your bills from your income in order to determine how much money you have to put towards your debt each month.


    Put aside $1,000 in an emergency fund before you start paying bills off, if possible. This money will keep you from using credit cards in an emergency, according to personal finance guru Dave Ramsey.


    Eliminate all extra expenses from your budget. Cut out satellite television, cell phone bills, vending-machine money and anything else you do not need to survive.


    Bring in extra money by selling personal items that you no longer use. Sell your car and get a cheaper one. Sell your house, if you have equity, and purchase a cheaper home. Get an extra job or work from home as a freelance writer, web designer or babysitter. Make cakes, arrange flowers or fix cars on the side. Cash in any life insurance policies you do not need.


    Pay off the debt with the highest interest rate or lowest balance first. Once it is paid off, combine the money used to pay off that card with the minimum payment on the next debt, until all debts are paid off.


    Celebrate each debt or credit card that is paid off. Make a list of free things to do in your town and enjoy one event, museum or park each time a card is paid off. Have fun along the way to keep your momentum up.

Sunday, January 19, 2003

The Average Student Debt After Graduation

A college education is expensive, and taking out loans to cover expenses is necessary for many college students. However, debt levels are high for some graduating students, a scary fact for college seniors who are already anxious about finding entry-level work in a lackluster economy. College students worried about their debt load may want to take part-time jobs, apply for scholarships and avoid carrying credit card balances to avoid large post-graduate burdens.

How Much Is Tuition These Days?

    How much college costs depends on the institution you attend. Generally, attending a college in your home state costs less, especially if your state provides significant financial aid. For example, personal finance magazine "Kiplinger" reported that the University of North Carolina at Chapel Hill provided the lowest cost education for in-state residents, based on 2009 data. Total costs, including tuition, room and board, were $13,731 per academic year before state assistance, but that figure was slashed to only $4,960 for in-state students receiving state funding. Although private colleges are usually more expensive, your education can be less expensive if you stay close to home. If you live in Connecticut, you can go to Yale for only $15,676 per year, while out-of-state students pay $46,950. St. Lawrence College, George Washington University and New York University were the most expensive colleges, with students paying more than $50,000 annually to attend one of these institutions.

Average Debt Loads

    The New York Times reported in 2007 that the average debt load for a student graduating from a public college was $18,000 per year, while for private college graduates the number was $25,000. "Kiplinger" reported that graduating student debt levels were between $15,000 and $20,000 in 23 out of 50 states, while 26 out of 50 states reported that college graduates carried between $20,000 and $25,000 worth of debt on average. In most states, recent graduates earn between $30,000 and $40,000 per year, making the debt pill a hard one to swallow. These statistics don't account for the debt taken on by students pursuing graduate and professional degrees. More than 88 percent of law students borrow to fund their education and end up with $92,937 worth of debt after graduation. Of social work graduate students, 73 percent fund their education with loans and end up with $49,017 of debt at the end of their studies.

Lower Class Only Borrowing a Bit More

    Surprisingly, students from lower income families only have slightly higher debt levels than their middle-income peers, according to 2007-2008 statistics from College Board. Of those with family incomes of less than $30,000, 68 percent borrow and take on about $16,800 in debt. Students with families earning between $60,000 and $89,999 have about the same amount of debt at graduation, with about 61 percent of them borrowing. Students that declare themselves as independent from their families borrow the most, graduating with about $20,000 worth of debt on average.

Credit Card Facts

    Although carrying a balance on a high-interest credit card may not be a smart financial decision, statistics show that students do it anyway. Loan provider Sallie Mae reported that 30 percent of students used credit cards to cover tuition costs in 2009. Students were also charging other education expenses, such as textbooks and school supplies, to their credit cards more often. In 2004, the average amount of credit card spending on these items was $942. In 2009, it was $2,200. Only 17 percent of students reported paying off all their credit cards every month. The numbers suggest many students are letting high-interest debt contribute to their loan burden after graduation.

Saturday, January 18, 2003

What Happens in Court Judgments for Credit Cards?

What Happens in Court Judgments for Credit Cards?

When you leave credit card debt unpaid, your credit card company or the collection agency that purchased your debt has the right to sue you in court. A court judgment is the result of a successful lawsuit. The civil judgment serves as legal acknowledgment of the creditor's right to recover the unpaid debt and provides it additional legal tools with which to do so.

Lawsuit Notification

    A court judgment begins with a lawsuit. Once your creditor files suit, it must serve you with formal notification of the lawsuit via a summons and complaint. The complaint details the reason why your creditor sued, and the summons provides you with the date and time of the impending court hearing. If you respond to the summons and complaint, the hearing proceeds as scheduled. If you do not respond, the court grants a default judgment in the creditor's favor.

The Hearing

    At the court hearing, the judge will give both you and the creditor's representative an opportunity to present your case. The credit card company or collection agency will present as much evidence as possible documenting your credit card debt. Thus, you must also bring evidence to support your defense. Because the grounds on which you can defend yourself vary, so too does the documentation you will need to bring to court. If the debt was incurred as a result of identity theft, for example, you must provide the court with evidence of the theft, such as a police report documenting the event. After listening to both sides of the case, the judge makes a decision regarding whether your unpaid credit card debt merits a judgment in favor of the creditor.

Judgment Amount

    If the judge grants the creditor's motion for a judgment, you must repay your unpaid credit card in addition to any fees the debt has incurred since you originally defaulted. Although not all debts collect interest after the debtor defaults, credit card debt is an exception to this rule. The Fair Debt Collection Practices Act notes that any debt subject to interest charges from the original creditor will continue to incur interest until paid in full. In addition to basic credit card interest charges, judgments incur interest annually. State laws vary regarding how much interest a creditor can charge each year on an unpaid judgment. In general, however, state interest rates range from 8 to 12 percent.

Judgment Recovery

    You can pay off your judgment at any time. If you do not make arrangements to pay voluntarily, however, the creditor can force you to pay your credit card debt by seizing your bank accounts, garnishing your wages and, in some states, placing liens on your real estate and personal property. Your state laws determine how long your creditor has to collect your credit card debt before its judgment is no longer valid (see Resources). Once the judgment expires, the creditor can still collect the debt but only if you pay it voluntarily.

How to Transfer My Credit History From the US to Europe

Credit history and creditworthiness are extremely important in both the United States and Europe. They determine the interest rates you'll receive on car loans, mortgages, credit cards and even whether you qualify for certain jobs. If you're considering moving to Europe from the U.S., it's important to keep a record of your credit history since there is no process by which you can electronically transfer your credit file to European systems.



    Pull a copy of your credit report (see Resources). Make sure you print out several copies of each credit report from all three credit reporting agencies--Equifax, Experian and Trans Union. Since it is impossible to electronically transfer your data across the ocean, you'll need ironclad proof of your credit standing. To ensure you have the most recent credit files before you move abroad, pull the reports the month you leave.


    Establish a good credit standing before moving. By moving abroad with a heavy debt load and poor credit history, you may be unable to qualify for the simplest of credit accounts. European nations tend to have stricter credit regulations, especially for those without established European credit history. If at all possible, clear up any delinquencies, pay off large balances, pay all judgements and charge-offs, keep low balances on revolving accounts and generally reduce the amount of debt you are carrying.


    Transfer all your credit cards to your new address abroad. Most credit cards can be used internationally, however, if you have a European address tied to the account, you'll be signaling to European lenders that you are in fact a resident of the country.


    Ask your American bank for 12 to 24 months of bank statements for all open accounts. While you will not have a European credit profile when you apply for your first credit account, establishing proof of your assets and liquid capital may encourage European lenders to act more favorably on your application.


    Open banking (checking, and savings) accounts in the European country. This is more difficult than opening an American account, but with a good amount of money to deposit, they'll accept your business. This is the first step in developing a European credit profile. After six to 12 months of positive banking business with a European bank, they'll be more likely to lend money to you. Make sure to present the appropriate documents--credit reports, bank statements, proof of European address on credit account --to your loan officer.

What Is the Maximum I Should Pay for Debt From My Net Income?

The relationship between the amount of debt you have and the amount of money you bring in each month is called your debt-to-income ratio. Keeping the maximum amount you spend on debt each month below recommended levels not only helps to keep you from running out of money by the end of the pay period, but it also boosts your ability to obtain new credit when you need it.

Maximum Debt Payments

    Your total debt should not exceed 36 percent of your net monthly income, according to Bankrate. Therefore, if you bring in a gross monthly income of $4,000, you should spend no more than $1,440 on your debt obligations. To calculate your total debt-to-income ratio, take your yearly salary and multiply it by 36 percent. Then divide that number by the number of months in the year, 12. The result is your maximum debt-to-income ratio, which you shouldn't exceed if you want to maximize your credit score.

Types of Debt

    Your total allowable debt means all of your debt, including your mortgage, credit card balances, student loans, car loans, child support, alimony and any other debt you've accumulated. When you're calculating your maximum allowable debt, you must carefully consider debts that are specific to your own life. Ten percent of your credit score is determined by the diversity of your debt, which means having both revolving debt (credit cards and lines of credit) and installment loans (mortgages, student loans, car loans).

Managing Debt

    For those whose debt payments exceed 36 percent of their monthly income, it's vital to pay down balances as quickly as possible to get to the figure resulting from the maximum debt-to-income ratio calculation. People with unmanageable or very high debt-to-income ratios should visit a reputable credit counseling organization recommended by the National Foundation for Credit Counseling. Debt consolidation, debt management plans, and self-help plans (such as paying off the debt with the lowest balance or highest interest rate first) are all methods to help debt ridden individuals become debt free.


    Your debt-to-income ratio plays a large role in whether or not you qualify for loans and how much you qualify for. This figure is a tool that lenders use to determine how much of a risk you are as a borrower, and whether or not you'll realistically be able to pay back the loan. While not quite as vital as your credit score, your debt-to-income ratio is a big part of the application process for new loans.

Friday, January 17, 2003

How to Find Out If You Are on an Ex-Spouse's Federal Student Loan

Many students rely on federal financial aid to supplement the cost of attending college or graduate school. Although there are a number of grant programs for undergraduate school, graduate and professional students often depend on student loans to pay for school. The Direct PLUS loans for graduate and professional students provide loans to students who qualify. A credit check is required for Direct PLUS loans. If your ex-spouse applied for one of these loans and was unable to qualify alone, you may have agreed to co-sign for the loan. If you are uncertain whether you are liable for an ex-spouse's loan, you may check through the National Student Loan Data System, or DSLDS.



    Navigate to the DSLDS website (see Resources).


    Choose "Financial Aid Review."


    Input your personal information when prompted. You will need a PIN number. If you do not have one, you may apply for one on the PIN website (see Resources).


    Contact the NSLDS if no information is found based on the information you input. Since you would be a co-signer on the loan, the system may not retrieve the loan based on your personal information. To be certain, you should contact the NSLDS by telephone or email (see Resources)

Strategies for Getting Out of Debt

Strategies for Getting Out of Debt

There are over 1 billion credit cards in circulation in the United States, so if you're in debt you're not alone. Getting out of debt isn't an easy task for everyone, especially if you're unemployed. Developing a strategy for getting out of debt is the first step towards a more sound financial future.

Create a Budget

    Creating a list of your expenses is an important part of developing a strategy for getting out of debt. Write down what your expenses are and how much you spend on each item on a monthly basis. Analyze your budget and look for ways that you can reduce your monthly expenses. For example, you might choose to make instant coffee instead of going to Starbucks for a cup of coffee each morning. Eliminating expenses like dining out and using your cell phone are other ways to cut back.

Debt Consolidation

    Debt consolidation isn't right for everyone, but is one strategy for getting out of debt. Debt consolidation involves taking out one loan to pay off all of your debts at once. Instead of paying multiple bills each month, you only have to pay one loan payment each month. This can help reduce stress in your life because you'll only have to deal with one creditor instead of having multiple creditors call your house every week.

Prioritize Bills

    Deciding which bills you're going to pay off first will help you get out of debt faster and save money on interest rates. One strategy is to pay off bills with the highest interest rates first, which will help reduce the amount of money you pay in interest.

Cancel Credit Cards

    After you pay off the balance on a credit card, you might want to consider canceling the card. This will help you avoid the temptation of using your credit card to make additional purchases that will put you back into debt.

Communicate with Creditors

    Communicating with creditors is an important part of getting out of debt. Ignoring your creditors will only make your debt problem worse, according to Bank Rate. Creditors are willing to talk to you and can sometimes help develop a more affordable repayment plan. Sometimes creditors will even settle for taking a fraction of what you owe. If you ignore your creditors, your bills will get sent to a collection agency and then to a judge if you continue to ignore the collection agencies.

Try to Make Extra Money

    Try looking for ways to make extra money by taking a part-time job at night or having a garage sale. The extra money you make each month can be used to pay off some of your debts.

Do I Need a Lawyer If I Get a Summons?

Do I Need a Lawyer If I Get a Summons?

A summons is a document issued by a judge or government agency requiring you to appear in court. Although you are not required to hire a lawyer if you get a summons, it is often advisable to do so.

Judicial Summons

    If you receive a summons stating that a party has named you as the defendant in a lawsuit, you may benefit from a consultation with an attorney. Since the rules of your court system require you to respond to the summons, contact an attorney as soon as you receive the document.

Traffic Citations

    Traffic citations are a type of summons for which most people do not need a lawyer. If you receive a summons to appear in court for a non-criminal traffic offense such as speeding or running a traffic light, you may benefit from the assistance of a lawyer if you believe your rights have been violated or if you have previous traffic offenses on your record.

Administrative Summons

    Government agencies such as the Internal Revenue Service may issue summonses to citizens requesting them to appear at administrative hearings. Since these proceedings can be complex and involve both criminal and civil penalties, it is advisable to get a lawyer if you receive an administrative summons.