February 2003 ~ Credit And Debt Management

Friday, February 28, 2003

Aid to Families With Dependent Children in Ohio

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The Aid to Families With Dependent Children program was established by the federal government in 1935 to provide financial assistance to families in need. In 1996, the AFDC program was replaced with Temporary Assistance for Needy Families, a state-administered grant assistance program. In the state of Ohio, TANF programs are administered by the Department of Job and Family Services. Residents must meet specific eligibility criteria to qualify for cash, food and medical assistance.

Ohio offers three primary categories of TANF assistance in the form of cash, food or medical benefits. Cash assistance is available to qualifying families through the Ohio Works First program. This program provides cash benefits to needy families with minor children for a maximum of 36 months. The Ohio Food Assistance Program provides eligible families with electronic benefits that can be used to purchase food items. The food assistance program also provides nutrition and education counseling for pregnant and new mothers. The Ohio Medicaid program offers free or low-cost health care services to qualifying individuals and families who cannot otherwise not afford medical care.

Eligibility for TANF benefits in Ohio is based on your gross monthly income, assets and family size. For example, as of 2010, a family of three could earn no more than $734 per month to qualify for cash assistance through the Ohio Works First program. Adult recipients of cash benefits must actively participate in work activities to continue their eligibility. You may qualify for food assistance benefits if your gross monthly income is at or below 130 of the federal poverty guidelines for your household size. Medicaid benefits are available to families with children under age 19, pregnant women, people with disabilities and individuals over age 65 whose income is within federal poverty guidelines.

You may apply for Ohio TANF benefits in one of two ways. First, you may submit a paper application at the Department of Job and Family Services in the county in which you live. You will need to provide a copy of your Social Security card, along with several other key documents, including: recent pay stubs, recent bank statements, proof of ownership for any vehicles, proof of any child support you pay or receive, proof of housing and utility costs, proof of health insurance if applicable and proof of any child care costs you pay. You can also apply for benefits online through the Ohio Department of Job and Family Services website.

If you are receiving cash assistance and fail to meet the employment requirement, the Department of Job and Family Services reserves the right to reduce or terminate your benefits. You cannot receive cash assistance if you already receive Supplemental Security Income benefits or assistance payments for a foster child in your care. Intentionally providing false or misleading information to obtain benefits constitutes fraud and is punishable by fines, incarceration or both.

Does Consolidating Your Debt Hurt Your Credit Anyway?

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When you have trouble keeping track of your debts or making payments, consolidation sometimes is an option for getting control over what you owe. Like other methods of handling debt, debt consolidation can impact your credit score negatively if you do not approach it the right way. The goal of consolidation, however, is always to bring up your score.

Companies that work with debt often use the term "debt consolidation" to refer to debt management or debt counseling, which leads to confusion about whether consolidating dings credit. Debt management involves getting a middleman to negotiate for you and pay creditors out of a lump sum you provide. Debt counseling is just advice, which doesn't hurt your credit as long as the advice is good.

True debt consolidation involves taking out a new loan. You use the money from this loan to pay off your old debts. Once you've done this, you have just one payment to make to your consolidation loan lender, which makes working with your debt much less of a hassle. When you consolidate, you typically get a lower interest rate overall than you were paying on your individual old debts, and you can negotiate your term length so you pay less every month than you would if your loans weren't consolidated.

When you consolidate, you open a new line of credit. New lines of credit account for about 10 percent of your credit score. The biggest impact to your score comes through your payments to the new lender and your credit history; payment history and credit history length together account for half of your credit score. When you consolidate and pay off the old lenders, your old accounts are marked as "paid in full," the highest status possible. There is no chance of making late payments on these accounts. Provided you keep your old accounts open after you pay the balances off, consolidation gets your accounts in excellent standing while maintaining your credit history.

Consolidation can hurt your credit in that you lower your credit utilization ratio. This ratio is the amount of credit you're using divided by the amount of credit your lenders will give you. You have to have some credit utilized in order to keep building a payment history, so even though you want to pay what you owe, you don't necessarily want to drop your credit utilization ratio to zero. Your credit score will take hits if you close the accounts you pay off because account closure typically trims your credit limit. Your score also may decrease if you miss payments on the consolidation loan. You also shouldn't apply for new credit more than once in six months. The Fair Isaac Corporation, the company that establishes credit scores, typically sees the opening of many new accounts within a short period as a signal of financial trouble, so your score typically drops if you try to consolidate soon after getting other new lines of credit.

Consolidation does have the potential to lower your score. However, as long as you pay attention to when and how often you consolidate, don't close the accounts you pay off, and are consistent about your payments, consolidation should make your credit score go up overall. Consolidation is much better for your credit than other forms of debt reduction, such as bankruptcy or debt management.

Legal Ways to Erase Bad Credit

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Having bad credit can bar you from buying a home or opening a credit card account. Poor credit can even cause some employers to decide not to hire you. There are some legal ways to erase bad credit. However, there are also limitations. Don't be taken in by scam artists who offer to "fix your credit" overnight regardless of the reasons for your poor credit standing.

Credit problems that result from inaccurate information on a credit report can be erased. This does not apply to any correct information. The first step to removing or correcting false information is to get a current copy of your credit report. Under the Fair Credit Reporting Act, you are entitled to a free report once a year from each major credit bureau (Equifax, Experian, and TransUnion). Call Annual Credit Reports, which is the FTC-authorized provider, at (877) 322-8228 or order your reports online by going through the FTC website (ftc.gov/freereports).

If you identify items on your credit report, file a dispute with the credit bureau. By law the credit bureau must remove the information while they investigate and make corrections. According to the FTC you should notify both the credit bureau and the creditor in writing that you are initiating a dispute of an item. Include copies of any documents you have that support your position (don't send the originals). Once the information has been corrected request that the updated credit report be sent to any creditor who has received the erroneous information.

Accurate information cannot legally be removed for a specific period . However, you may be able to make arrangements with a creditor to improve your position. For example, if you've had an obligation "charged off" as a bad debt, you may be able to get the creditor to amend the report to show the account paid in return for your clearing the debt.

Ultimately, the only way to completely erase bad credit not due to errors is to improve your use of credit. Once you can bring all your credit accounts up to date and make arrangements to start paying off any defaulted obligations, your credit report will start to improve. Continue to pay bills on time. This is the most important thing you can do to erase bad credit. Concentrate on reducing your debt to a level you can manage comfortably and refrain from constantly applying for new credit or closing accounts. If you demonstrate consistently good credit use habits for a couple of years, you'll find most of the negative items on your credit record will start to disappear.

Credit Counseling Effects on Credit

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One of the top questions that consumer credit counselors receive from prospective clients is how will my credit be affected. Don't be surprised if you get an answer that still leaves you feeling uneasy. There is no absolute answer to this question---the procedures followed by each creditor and each credit counselor will vary.

Credit counseling agencies, also referred to as debt management agencies, are organizations that help consumers who are in over their heads with debt. Consumers can pay down their bills, stop bill collector calls and start on the road to a debt-free lifestyle. Debt counselors work with creditors to reduce debt balances and interest rates to affordable levels.

When you start up with a credit counselor, the agency will call and work with all of your creditors directly. The goal is to get all of the creditors on the same page about when they will be repaid, which, in some cases, could take months or years, and at what rate. The counselor will ask your debtors to stop reporting late payments on your credit report, and in some cases, the creditor will simply report you as being on a credit counseling plan.

Credit counselors are usually very vague about what will happen to your credit report when you work with them, because they are not 100 percent sure. The responses from creditors will vary. Some will back off, report your account as on a debt management plan and leave you alone. Others will try to take collection actions against you. According to Fair Isaac, your FICO score does not include information about your participation in a credit counseling plan (see Resources).

Though creditors are supposed to stop calling and attempting to collect the debt after they are contacted by the credit counselor, some don't get the message. Also, some creditors pass the debt off to a debt collection agency that has not yet gotten the message (or that simply does not care). In this case, you may still have items placed on your credit report or receive calls. You have to take additional steps on your end to stop collection activities.

To stop persistent creditors, you must write a cease-and-desist letter to the creditor or collections agency to tell the company to stop calling and contacting you about the debt. Give the company full information about the credit counseling agency you are working with. Get the letter notarized and send it via registered or certified mail, so you will have proof that the collections unit received the information.

A creditor cannot continue to contact you (with a few exceptions, such as an intent to sue) after the company receives this letter. A creditor also cannot report false information on your credit report. If the creditor continues to harass you or is not reporting correct information on your credit history, you may be able to sue the company under the Fair Debt Collection Practices Act (FDCPA; see Resources). You can win up to $1,000 in damages if the creditor is in violation.

How to Create Debt Goal Chart

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Once you have determined you want to get out of debt, one important tool is a debt goal chart. This chart allows you to break up your goals and matching dates into a visual chart, which can help motivate you as you get out of debt. The debt goal chart can be hung in a place where it serves as a constant reminder of what you are working for.

Instructions

List all of your debts on a piece of paper. You should include the minimum payment amount, the interest rate and the total amount you need to pay the debts off. This list will help you design your debt goal chart and give you guidance in the order that you pay your debt off.

Put the debts in order from smallest to largest or from highest interest rate to lowest interest rate. The smallest to largest will help you build momentum as you pay off the debts, because once you pay off one debt you should apply that monthly amount to your next debt. The highest to lowest interest rate will allow you to save money on interest over time. Total the amount of your debts.

Decide how to organize your chart. You can list your debts in separate columns and mark out amounts as you reach them or you can create one giant chart for all of your debt. One simple design is a thermometer. Decide how much you want each line to represent. Some common increments for each mark are $100 or $500.

Draw a large chart on a piece of poster board. You can either have the amount paid fill up to the top of the thermometer, or you can start with it full and work toward emptying your thermometer. Write down the amount that you will fill in at each increment.

Fill in the chart as you pay off your debts. This can be motivating, and it helps you see how much you have accomplished as you have worked toward getting out of debt.

How to Rebuild Credit Sensibly

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Having poor credit makes routine tasks, such as securing housing and landing employment, difficult. If you have poor credit, there are actions you can take to boost your credit score. There isn't a quick fix to rebuilding credit; however, over time, small changes will make a large difference. Evaluating your credit for areas that need improvement and focusing on those areas will assist in rebuilding credit sensibly.

Instructions

Check your credit report. Annual Credit Report (see Resources) offers a free credit report once a year. Look for areas that need improvement, such as a history of late payment or high credit balances. Collections activity will also adversely affect your credit rating.

Dispute errors on your credit report. If you find activity on your credit report that isn't accurate, file a dispute with the reporting credit bureau. The company will review your request and remove the inaccuracies from the report if the request is approved.

List accounts with high balances. Revolving credit with high balances will pull down your credit score, according to MSN Money. Focus on keeping balances at 30 percent or less of total available credit. For example, if the credit limit is $5,000, pay the balance down to $1,500 or less to improve your credit score.

Settle collection activity. Contact creditors to negotiate debt in collections status. Some creditors will settle debt for less than the original amount.

Keep revolving credit accounts open. Once credit is paid off, it's tempting to close out the account. However, to rebuild credit, it's important to leave these accounts open. Credit bureaus give higher credit scores to consumers with a long credit history. Having a zero balance will also boost your score.

Brainstorm ways to cut costs. Putting extra money towards debt each month will improve your credit score over time. Housing, transportation and food are large categories of spending. Focus on cuts in these areas. For example, securing lower cost housing can free up a large chunk of money each month. Downgrading your vehicle or joining a carpool will also free up extra cash. Use the funds to pay down debt sooner.

What to Know When Getting a Credit Card

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Using a credit card can be very convenient and can help you build your credit profile. When choosing a credit card, look at several variables. Choosing the best credit card for your situation is important so that you can save money and get the most rewards for the purchases you make.

One of the most important things for you to consider when selecting a credit card is the interest rate. Every credit card will have a specific interest rate that they charge on purchases you make. If you do not pay your credit card balance off in full every month, you will have to pay interest on the amount that is left on the card. Choosing a card with a low interest rate will help you save a significant amount of money.

If you plan on using your card frequently, you may want to pay special attention to the rewards program that your card offers. Credit card rewards are one of the perks of being a credit card holder, and you want to be able to take full advantage of them. Many credit cards provide you with points every time you make a purchase. You can use these points to get free travel, merchandise or cash back. Find the program that fits your needs the best.

The interest rate is not the only way that credit card companies make money. When choosing a card, you also have to look at the other fees that are involved. For example, many credit cards charge an annual fee for having a card. They could also charge a separate fee if you get a cash advance. Every card will have late fees if you do not make your payment. Read about the fee structure of each card that you are considering before making a choice.

Besides rewards, some credit cards also offer additional perks. For example, some cards give you a discount when you shop at particular stores. Some credit cards give you access to private lounges at airports while you are waiting. Some cards even offer free access to your credit report at any time. Read all of the details of card and find out what additional perks you can get by signing up.

How to Donate a Car in Detroit

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When it's time to upgrade your ride, donating the old car allows you to dispose of it in a painless manner and put funds into the pocket of your favorite charity. Detroit's many donation options let you fund medical research, animal rescue, public radio, youth services and other social services. When donating, the charity of your choice pays for a tow as part of the transaction.

Instructions

Give your old car to Mother Waddles to help disadvantaged young adults in Detroit and southern Michigan. Complete the online donation form (see Resources) or call Mother Waddles directly at 313-923-3537. Enter in detailed information about your auto's condition, and provide your personal information. Someone from Mother Waddles' preferred tow company will call you to arrange a tow. Hand over the car, the title and keys on the day of the tow to begin helping those in need.

Support Detroit's public radio station, WDET, with your vehicle donation. Complete the online donation form (see Resources). Enter in vehicle information and personal information then submit the form. Arrange for a tow when contacted by WDET's preferred tow company, and present them with the keys and title at that time.

Choose national charities such as the American Cancer Society or local charities such as the Michigan Humane Society or the southeast Michigan American Red Cross chapter through Charity Motors, a Detroit auto donation program that works with state and national organizations. Complete the online donation form (see Resources) and select the charity of your choice. Again, arrange a tow when contacted by Charity Motors and hand over the title and keys.

Statue of Limitations on Credit Card Debt in Louisiana

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The statute of limitations on credit card debt in Louisiana is defined in Article 3494, Section 2 of the Louisiana Code. Credit card debt is considered no different than claims for back wages from employment, rent, borrowed money and compensation for services rendered. Once the statute of limitations expires, a creditor may find it very difficult to legally compel a debtor to repay a credit card debt.

In Louisiana and other states across the country, a credit card is considered an open account. This type of credit has no end date, meaning the credit is continually available as long as your account is in good standing. An open account also has no fixed term of repayment, which means you could take as long as you like to pay the balance of the account, as long as you continue to make the creditor's minimum monthly payment to keep the account in good standing.

The statute of limitations for collecting credit card debt in Louisiana is three years. This is a relatively short amount of time when you consider other debts in the state, including written contracts and domestic judgments, have a statute of limitations as long as 10 years. A creditor has up to the statute of limitations to force you to repay the debt through a lawsuit. In Louisiana, a creditor may obtain a wage garnishment for up to 25 percent of your disposable weekly earnings, or up to 30 percent of the federal minimum wage rate of weekly earnings, whichever is less.

The expiration of the statute of limitations on a credit card debt does not expressly prevent a creditor from suing you. If a creditor does elect to sue you past the expiration of the statute, all you have to do is point out the debt is time-barred by the expired statute. The court may then dismiss the lawsuit with prejudice. This means the creditor loses the suit, and is legally barred from suing you again to force you to repay the debt.

Contacting your creditor, including answering phone calls or responding to written requests, restarts the statute of limitations on your credit card account. This buys your creditor more time to get you to collect the debt, and may allow the creditor enough time to successfully sue you in civil court. If your statute of limitations is about to expire it is advisable to not contact your creditor in any way. Once the statute expires, the creditor may continue normal collection practices, including phone calls and emails, but cannot legally force you to repay the debt.

The Effects of Bill Consolidation on Credit Score

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Debt consolidation is an attractive option for many people who find themselves faced with debt. However, there are various effects that bill consolidation has on your credit score that can be helpful or aversive to your overall credit health. Understanding what you are signing up for when you enlist in debt or bill consolidation can save you unnecessary confusion and complications in your financial future.

One of the most common beliefs about debt consolidation is that signing up for a debt or bill consolidation program will adversely affect your credit score. This is an urban credit myth. Enrollment in consolidation programs are not reflected in your FICO score rating, according to a public affairs manager at Fair Issac. The enrollment in the debt program will appear on your score report but not be factored into the score itself.

You should be aware that enlisting in a debt consolidation program may make it more difficult for you to garner new credit during the duration of your enrollment in the consolidation program. The reasons for this are simple: New creditors want to ensure that you will be able to pay existing debts before extending you new credit. So while your credit score is not affected by enrollment in consolidation, your ability to acquire new credit may be due to the belief that you may already have too much debt.

What is more important than your credit score during debt consolidation is your ability to pay your consolidation loan amount. Not paying your consolidation payment can result in a decreased credit score. Ensure that you find an amount that is manageable and pay your consolidation payment on time every month. Paying off your consolidation amount early will improve your credit rating and help get you back on track toward a more desirable credit standing with potential creditors.

How to Build a Credit Score With Partial Credit Card Payments

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If you're unable to make a full payment on your credit card, partial payments are an alternative to keep your account in good standing while simultaneously building your credit score. Before you decide to pay a portion of your credit card bill, you must set up a payment plan with your creditor, who is usually willing to accept partial payment for a limited time if you explain your current financial situation.

Instructions

Write a formal payment plan request letter. Include your name and address, and the creditor's name and address at the top of the letter.

Explain your current financial difficulties. According to Brette McWhorter Sember of "The Complete Credit Repair Kit," it is important to state the payment plan request is temporary, and to explain in detail what you are able to pay per month.

Request that the creditor reports a positive listing, which shows you are responsible and still making payment on the account. Sign the letter and send it to the creditor. If accepted, the creditor will respond with a letter that outlines the payment plan agreement.

Pay on time. Once a payment plan has been agreed upon, it is absolutely necessary that you pay on the account on time to keep your account in good standing. Failure to make on-time payments can result in a cancellation of the payment plan.

How Do Credit Card Consolidation Services Work?

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Debt consolidation services, including those for credit cards, are usually handled through firms called credit counseling services. These services are meant to help you improve your overall financial situation by looking at how you can improve your money management. Your credit counselor will determine if consolidation through a debt management plan is the right course of action.

A debt consolidation service first offers credit counseling. You'll work one-on-one with a credit counselor who will analyze your current financial situation and help you to develop better money management skills. The only way to qualify for a debt management plan is by the recommendation of a credit counseling service.

According to the Federal Trade Commission, a reputable credit counseling service will thoroughly assess your financial situation and work with you to create a budget and a financial management plan before suggesting consolidation through a debt management plan. A credit counselor should offer you customized advice about your specific financial situation to help you to stop the cycle of debt.

If your credit counselor suggests consolidation through a debt management plan, the counselor will get in touch with your creditors to negotiate ways to lower your balances and your interest rates, if possible. You then set up with the counseling company an account into which you make a monthly deposit over a predetermined period of time, from which the company pays your creditors.

Simply having a debt management plan listed on your credit report doesn't bring your score down, but it is seen as a negative mark because the negotiations with your creditors mean you're paying back less than you owe. Also, some people on DMPs suffer from sinking credit scores because the credit counseling service does not pay the creditors on time. Check with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling to see if your credit counseling company is listed as a reputable service.

Before taking on a debt management plan, consider your options for paying off your debt independently. One way to lower your overall payments is to ask for an interest rate reduction on your cards. Gather any credit card offers you've recently received to get a target interest rate, then call your creditor and speak to a representative about lowering your rate. Another option is to take out a consolidation loan, which usually requires collateral such as your home -- however, taking out a loan against yourself looks better on your credit report than a DMP. As with a DMP, though, it's vital to make a commitment to paying off your debt and keeping it off for good. Many people misuse consolidation loans by continuing to spend on their newly freed credit.

Forcing a Homeowner Into Bankruptcy

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Some people facing imminent foreclosure often turn to bankruptcy for help. However, that's a personal decision, with banks and mortgage companies legally unable to force people to file. Despite that, some people do feel forced because foreclosure of their home seems certain. Bankruptcy halts foreclosure proceedings, but it is not a bailout. The relief is only temporary, as it provides the homeowner with time to reach an agreement with the bank on missed payments. Some people who file for bankruptcy lose their house to foreclosure several months later because they simply cannot afford the payments.

Decisions about bankruptcy require careful consideration, even when foreclosure is a possibility. Bankruptcy information remains on credit reports for 10 years, making it hard or impossible to qualify for loans at reasonable rates for a while. Bankruptcy makes sense for people who have a reasonable chance to save their homes from foreclosure. However, if the effort fails, the former homeowner is left with a bankruptcy and a foreclosure on credit reports. Those are the most negative credit events possible and will lead to poor credit for years.

Bankruptcy does not lower mortgage payments or forgive missed payments. The bank can rewrite terms of the mortgage to make it more affordable but is under no obligation to do so. Homeowners in bankruptcy must agree to a payment plan that addresses missed payments as well as the current monthly payment. Some people accomplish that through Chapter 13 bankruptcy, which reorganizes debt over three to five years.

Chapter 13 allows for reasonable living expenses, including mortgage payments for a primary residence. Money remaining is paid to unsecured lenders such as credit cards. Some people in Chapter 13 gain court approval to spend nearly all their money on food, shelter and other reasonable living expenses because of their level of income. Unsecured creditors are not paid in that situation ,with the debt wiped out at the end of the bankruptcy. Chapter 13 requires three to five years to complete.

People facing foreclosure should seek alternatives to bankruptcy. Various foreclosure-avoidance programs are available through direct negotiations with lenders or with the assistance of government-certified housing counselors. Options include forbearance, which tacks missed payments onto the end of the loan, or payment plans allowing a larger payment each month until the loan is current. Reaching out to lenders before foreclosure proceedings can prevent homeowners from feeling as if they are forced into bankruptcy.

Housing counselors approved by the U.S. Department of Housing and Urban Development are located nationwide. Initial consultations are free, and services are considerablly more reputable than those provided by some so-called "foreclosure rescue" firms. Referrals for housing counselors are available by contacting local charities such as the United Way.

How to Renegotiate Debt

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Renegotiating your debt can help ease your financial burden and bring some relief. There are three ways to renegotiate a debt, according to New Retirement. You can renegotiate for a lower interest rate, a different payment schedule or to take some money off of the total debt. There are no written requirements for debt renegotiation, according to CNN, and decisions are usually made on a case-by-case basis.

Instructions

Know your situation. Get your paperwork together and find out how much you currently owe, what your current interest rate is and how much you are paying each month. If you want to lower your interest rate, check your official FICO scores and credit reports, too, at the MyFICO website.

Make a budget to determine how much you can pay each month or as a lump sum, if renegotiating for a settlement. For monthly payments, know how much you would need to lower your interest rate in order to reach your monthly payment goal.

Use the information from your FICO score to find out what type of interest rate you have a shot at getting. Do this by searching for the current average interest rates for the type of debt you have and what interest rate you need to get it. Depending on the type of debt, you might be able to do this directly on the MyFICO website or on Bankrate.

Call your lender. Explain your situation to them and let them know that a renegotiation is the only way that you are likely to be able to keep up your payments. A renegotiation might be more attractive to them than a default or bankruptcy. According to CNN, if you are over 90 days late and you still don't have the money to get your payments current, you might have a good shot at a debt renegotiation.

Try again until you get the answer you want. You might not get it the first, second or even third time; but that doesn't mean you won't get it at all. This is especially true if you are renegotiating the balance. If you want to renegotiate for a debt settlement, the closer your debts are to being charged off by the original lender, the easier it might be to get a better deal in your favor, according to Bankrate.

Are There Settlement Offers for Arrears Child Support in Texas?

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If you are behind in your payments, the Texas Attorney General's Office, which oversees child support collections, would rather have you pay something than nothing at all. Your child's custodial parent might feel the same way. In 2006, Texas took part in a study conducted by the United States Inspector General to determine whether debt compromise helps collect past due child support, with favorable results. The state is open to negotiating with you.

Ultimately, your child's other parent is the only one who can agree to "forgive" your child support arrears. The attorney general's office cannot force her. But the OAG will bring the two of you together in a negotiation conference with a case worker to help facilitate an agreement. You can offer to make a lump-sum payment on your arrears for less than the total accrued balance, called a "debt compromise." You can also offer to begin making monthly payments toward your arrears in exchange for reducing your overall balance.

The first step of the process is to notify the OAG that you would like a child support review. Call the office and ask for a "request for review" form. Fill it out and be specific about the terms of your offer. Mail in the request. Someone from the OAG will contact your child's other parent to arrange a conference, then get back to you with a time and location. When you meet with the case worker, if you can reach an agreement, you will both sign a court order formalizing the terms. The OAG will then forward it to a judge for his signature and filing with the court.

According to the U.S. Inspector General's report, the average child support arrears balance negotiated to a debt compromise in Texas in 2006 was $19,349. Negotiations reduced this by an average of about $14,000 per case. Your chances of reaching such a compromise depend on your ex's good will and the enthusiasm of your case worker to accept the deal you're offering. If you're making current child support payments at the time you make your offer, assuming your children are not grown and you are still paying support for them, it will increase your odds of acceptance. If your children are no longer living with your ex, she will most likely accept your offer rather than have to pursue you for payment through the court system. The case worker will probably encourage her to do so.

If you can reach an agreement directly with your children's other parent, you can also bypass the OAG by having an attorney draw up a consent order stating the terms of your agreement and filing it with the court. Don't make any payment directly to your ex without a court order confirming it. If there's no record of it with the court, it didn't happen. You could end up being out the money and still having an arrears balance on record with the OAG. Texas takes extensive efforts to collect past due child support from non-custodial parents, and interest on your arrears balance accumulates at the rate of 6 percent per year. It's in your best interest to erase the arrears if possible.

Does Debt Counseling Hurt Your Credit?

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Credit counseling has been stigmatized, with many people falsely believing that simply using a credit counseling service negatively affects their credit. Before deciding whether to participate in credit counseling, understand how it actually works and how to control the way your credit score is impacted.

Going to see a credit counselor does not hurt your credit score. Previously, the score could be slightly lowered if your credit report mentioned credit counseling; however, in 1998 the Fair Isaac Corporation decided not to allow credit counseling to affect the score after realizing that doing so was preventing people from talking to a credit counselor until the problem took hold. Now, the FICO scoring formula ignores any references to credit counseling.

A debt management plan (DMP) doesn't directly impact your credit score, either. However, a creditor may report that your debt is being paid through a reduced-interest or reduced-payment program, which may lower your score. Also, any credit lines closed because of a DMP can lower your debt utilization ratio, which is a key factor in calculating your credit score.

To keep your credit score as high as possible while undergoing debt counseling, pay attention to the other factors that are included in the calculation of your score. Timeliness of payments accounts for 35 percent of your score, while debt utilization makes up 30 percent. The length of your credit history is 15 percent, new credit is 10 percent and credit diversity is 10 percent. A reputable credit counselor can help you figure out how to best work with your finances to keep your credit score afloat.

Although a DMP may negatively affect your credit score, weigh the negatives against the positives. Most people who qualify for DMPs are already late on payments, and according to Bankrate, one payment that is 30 days late already drops your score by 90 to 110 points. The impact of a DMP may initially lower your score even more; however, credit counseling should assist with budget creation and help you get out of debt more quickly. Decide if the long-term benefits are worthwhile.

How to Calculate Child Support Payments in Pennsylvania

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Calculating your Pennsylvania child support payment helps you to plan for your financial needs. Child support in Pennsylvania is based on the combined income of both parents, as the child is entitled to the financial support she would have received if the parents were together. The support amount may deviate from the state guidelines if special circumstances apply, such as your child having a serious illness, per Rule 1910.16-5 of the Pennsylvania Code.

Instructions

Write down all of your sources of monthly income. Include sources that are considered in Pennsylvania for support: wages, rents, salaries, stock dividends, income from a trust or estate fund, Social Security benefits, unemployment benefits, retirement and disability pay, and worker's compensation. Add all of the figures together and note the result as your gross income.

List all of the sources of the gross income for the other party in the support proceeding. Estimate where needed. Include all sources. Add the figures together. Mark the total as other gross income.

Write down the expenses you are allowed to subtract from your income under Pennsylvania law. List the following monthly amounts: federal and state income taxes, Social Security, Medicare, self-employment and non-voluntary retirement contribution amounts that are taken out of your check, and union dues. Court-ordered alimony or support for another child are adjustments to your income as well. Add the expenses together. Subtract the total from your gross income. Note the resulting figure as your net income.

List all the deductible expenses for the other party. Add the figures together. Subtract the figure from the other gross income total. Mark the result as other net income.

Add your net income to the other net income. Note the result as the "combined adjusted net income."

Visit the local child support collection unit. Request a copy of the child support guidelines.

Find the income range your combined adjusted net income falls into on the upper left of the table. The basic monthly support payment is to the right of the income range, under the column with the correct number of children the support is for. Write down the basic payment.

Divide your net income by the combined adjusted net income. Multiply the answer by 100; the result is your percentage of the net income. Multiply your income percentage by the total basic support amount. The resulting figure is your monthly payment.

Acceptable Level of Debt

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Many people feel like they're drowning in debt, and it may be difficult to know if you are, indeed, in over your head. For those paying a high percentage of their income to debt each month, it may quickly become impossible to enjoy the things you really want to do. To keep yourself from getting buried by your debt, it's vital to look carefully at whether you're living within a healthy range of monthly debt obligations.

One of the key factors in calculating your credit score is your debt utilization ratio. This figure indicates how much of a balance you're carrying in relationship to your credit limit. According to the Better Business Bureau, keeping your debt utilization ratio between 25 and 30 percent of your credit limit is acceptable; anything beyond that may hurt your credit score.

Your debt-to-income ratio is the proportion of debt you're paying each month in relationship to the amount of money you're bringing in. The more income you make, the more debt you may assume. The typical American household has debt obligations including a mortgage, an auto loan, student loans and four to five credit cards. According to the budgeting website Say Planning, you should aim to spend no more than 25 to 28 percent of your income on housing debt (including taxes and insurance), and 10 to 15 percent on other credit obligations (including credit cards, auto loans and student loans). Your total debt obligations should be within the range of 36 to 40 percent of your income each month.

The more of your income that is dedicated to your debt each month, the more important it becomes to either make more money or take corrective action. Say Planning indicates that those paying between 37 to 42 percent of their income to debt each month should consider paying off or consolidating some of their debt to bring their total debt to income ratio below 36 percent. Those paying between 43 to 50 percent are within the danger zone and must immediately reign in their debt to avoid losing control. Those with debt payments over 50 percent of their monthly income must seriously consider their options for eliminating as much debt as possible and should contact a reputable credit counseling service.

If you feel like your debt is out of control, you may consider working with a credit counselor. Reputable credit counseling services will help you to figure out the root of your financial troubles and guide you through the process of creating a budget so that once you're out of debt, you'll stay out of debt. Credit counselors may recommend participating in a debt management program if you're having trouble making minimum monthly payments or if you have defaulted on your payments. The credit counselor and credit then negotiate lower interest rates or payoff balances so that you may pay off your balances over a set period of time. The Federal Trade Commission recommends using a credit counseling service recommended by the National Foundation for Credit Counseling.

What Does it Mean When a Company Buys Back Debt?

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Sometimes a company will choose to issue debt as a means of raising capital. Generally, this debt will take the form of an issue of bonds. These bonds will be sold to investors, who will be compensated for their investment by being paid interest on their purchase. Occasionally, instead of repaying this debt according to the original terms, a company will choose to buy the debt back, thereby lessening its total debt load.

Companies may choose to issue debt for a number of reasons. However, in most cases, the companies will want to raise money for expansion or, in some cases, to pay back older debts. Often, companies will issue new debt as a means of effectively refinancing their old debt. The rate of interest the company will have to pay will generally depend on the company's perceived creditworthiness, with less creditworthy companies required to pay higher rates.

Normally, companies will pay off this debt a little at a time by making payment on the bonds. However, sometimes companies will not want to wait to pay off this debt according to the original timeline. In such a case, the company will go ahead and purchase the debt on the open market, just like any other investor. Any debt that it purchases, it no longer has to pay interest on, as it would be paying interest to itself.

There are several advantages to a company buying back debt. First, the company will have less outstanding debt on its books. A company with less debt is generally considered more valuable than a company with more, as the company with less debt has fewer liabilities. In addition, if a company buys back its debt, it will no longer have to pay interest on the bonds, meaning that it can save money on interest payments.

A company takes some risks in buying up debt early. For example, if the company buys up too much debt, it may not have enough cash on hand to finance operations necessary to keep the business in good health. Many companies continuously keep a small amount of debt on their books, which they regularly make payments to. A healthy company will not allow this debt to go delinquent and cause its credit rating to fall.

How to Get Rid of Defaulted School Loan Debt

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Eliminating defaulted student loans is extraordinarily difficult. A public student loan enters default if no payments have been made for nine months. Some private loans can enter default on the first missed payment. Student loans are not discharged by bankruptcy except in cases of extreme, lifelong disability. The best way to get rid of a student loan that is in default is to pay off the balance of the loan by coming to a settlement and creating a payment plan with the creditor. Lenders have extraordinary powers to sue for collection and wage garnishment of loans.

Instructions

Contact the creditor and create a repayment plan. Even if you will not be able to meet the terms of the agreement, it will at least stall the collections process and prevent them for suing you, freezing your checking account or garnishing your wages.

Apply for loan forbearance from the creditor. They may decide to reduce or cancel the balance of the loan if you have experienced economic hardship, particularly if it is due to a medical problem or some other circumstance beyond your control.

Contact a bankruptcy lawyer if you have a serious, chronic disability that prevents you from supporting yourself. If this is the case, you may be able to discharge a defaulted student loan by entering personal bankruptcy.

Research to determine if you are eligible for a student loan cancellation or deferment. Public school teachers, medical workers, law enforcement officers and members of the military are all eligible for many types of student loan cancellations and deferments.

Consider repaying the loan, but only after attempting to get some sort of forbearance. Unlike most other forms of debt, there is no statute of limitations for suing to collect on student loans in any state in the United States.

Will Over-the-Limit Affect My Credit History?

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A credit limit is not arbitrary. You qualify for a certain amount of credit based on factors like your income and credit score; as such, you need to respect the amount of your credit limit. According to Experian, if you're habitually going over the limit (OTL), not only will you be slapped with hefty fees each time you spend more than you have, but your credit limit will be decreased and your credit score will be damaged, which has far-reaching impacts beyond OTL fees.

Your credit score is a reflection of your credit history and helps lenders determine how credit-worthy you are (and how favorable your rates will be). You might get a free pass once or twice, but if you exceed your limit regularly, Experian reports, it's a red flag to would-be creditors about how you manage your credit. You may be considered a lending risk, and your lower credit score (the lower the score, the higher the credit risk) will reflect that.

Payment history is the biggest factor behind your credit score, with data related to payments making up 35 percent of your total score, according to Fair Isaac Corp. Even if you pay your credit card bill on time every month, a history of going over your credit limit can still have a negative impact. This is because of the second biggest factor behind your score: amounts owed, which contributes to 30 percent of the total score. Your total debt load is just one aspect of amounts owed.

Aside from total debt, creditors also look at the amount of money you owe versus the amount of credit you've been approved for, according to Evolution Finance's CardHub Education Center. Like credit scores, the lower your proportion of debt to credit, the better. If you have gone over the limit, you essentially have exhausted your credit by over-spending. Generally speaking, you should keep the ratio of debt-to-credit under 60 percent.

You can avoid over-the-limit fees (and their impact on your credit) by paying at least a portion of the balance so you're not over the limit by the time the billing cycle ends, according to CardHub. If you don't pay it down by the time the billing cycle ends, it will reflect poorly on your debt-to-credit ratio; this is even more true if you have fewer cards and less credit in general. Even if you pay down the balance by the close of the cycle, you need to explore your spending habits, according to Experian. Stop charging and start making more than the minimum monthly payments.

How Long Does Debt Management Stay on My Credit Report?

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In certain situations, large debts cannot be paid off in any other way except through a debt management plan or a bankruptcy declaration. When placed in this situation, the lesser of the two evils is the debt management plan. But, even this type of solution is one that should be carefully considered, as the process will have negative implications on your credit report.

When you choose a debt management plan, the company you choose to work with negotiates all debt owed, reduces interest rates and in some cases eliminates late fees or other fees caused by late payment. The consolidating company closes any credit cards you have been paid them a flat amount each month. This solution is only offered to people who have so much debt that they need help in recovery. In these cases creditors are willing to accept the reduced terms so customers can pay the debt back.

Those people at the point of entering a debt management plan already have very poor credit scores because they are unable to pay back their debt. You should enter a debt management plan only when debt is out of hand and cannot be paid back by any normal means. The objective of the plan is to eliminate existing debt, which takes precedence over future effects to your credit score. However, there are cases when the negative effects on a credit score can be minimal, but this depends on how the payments are set up and managed and whether you have other positive credit accounts.

Debt management plan information can stay on your credit records for up to seven years. This period of time is regulated by the Fair Credit Reporting Act, which stipulates that credit reporting agencies can keep negative credit information on a report for the maximum of seven years. However, there are worse types of negative information that could be placed on a credit report. For instance, other credit resolution methods like bankruptcy can stay on your credit report for as long as 10 years.

Even if a debt management plan hurts your credit score, this does not mean you have to wait seven years to build credit again. However the more time that's passed since the debt management plan, the lower credit risk you will be and the easier it will be to get credit. Start by getting a low credit limit card or a secured credit card. This way you can become creditworthy faster.

Why Credit Debt Is Bad

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There is a huge industry with billions and billions of dollars behind it trying to sell you debt. Between credit card issuers, car salesmen, appliance loans and payday loan companies, consumers are bombarded with offers of credit. But that credit comes at a cost -- and left unmanaged, that cost has devastated many American families' finances and bankrupted many businesses.

Household debt comes from a variety of sources. Debt on a home loan is often a family's largest single financial obligation. However, homes often appreciate in value over time, compensating for the debt. Cars, however, tend to fall in value -- yet car loans are another frequent source of consumer debt. Credit card spending and consumer loans to buy furniture and appliances round out the most common sources of debt for the middle class, while payday loan and rent-to-own stores frequently attract lower-income customers.

Most debt in the United States has two price tags: interest and fees. Interest is the amount lenders charge for the use of their money. In essence, they are renting their money to the borrower for a period of time in exchange for a rate of interest. Common fees lenders charge are origination fees, processing fees, late charges and annual and monthly statement fees.

When debt is used to finance the purchase of items that appreciate in value at or above the rate of interest, debt is not a bad thing at all. However, too many consumers frequently use debt to finance everything from groceries to meals out to vacations -- items that have no lasting monetary value. When this is the case and debt is allowed to accumulate, a larger and larger fraction of income must go to paying the interest and minimum payments on the debt, choking out more productive spending. The process is accelerated when the family experiences a loss of income because of illness or unemployment. Extreme cases of debt can result in default, bankruptcy, loss of a home and even divorce and suicide.

Avoid using credit cards completely. Strive to pay cash, rather than borrow, in order to pay for cars and appliances. Look for secondhand goods. Avoid borrowing to buy items that decline in value -- you may be making payments for years with nothing to show for it. Instead, limit borrowing to finance items that have lasting value and which you reasonably believe will appreciate in value or generate an income. Examples include business loans to buy inventory, to start a business or to purchase property or financial instruments.

Meaning of Balance Transfer

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The average American household had an average of $15,788 in credit card debt as of March 2010, at an average interest rate of 14 percent, according to CreditCards.com. Like most people, you probably look for ways to lower monthly debt. One option that many credit card companies offer is a balance transfer.

Credit card companies want cardholders to maintain a high balance, so they encourage the transfer of debt from another credit card to the one they issued. When you open the new credit card, you tell the company how much you want to transfer, and from which account numbers. In some cases you can do a fast, easy transfer via the Internet, by submitting a list of the accounts you want to pay off when applying for the card.

At times, credit card companies offer free balance transfer offers with no associated fees. You might find yourself in line for this type of offer if you have a good credit score and a good relationship with the credit card company.

Most card companies charge a balance transfer fee. The fee might be fixed or it might be a percentage of the amount that is being transferred. Typically, transfer fees are 3 percent of the amount transferred in each specific transaction, or $5, whichever is more.

A balance transfer can allow you to receive a lower interest rate and reduce monthly expenses. A person with a 14 percent interest rate on a credit card can expect to save $100 each year for every $1,000 transferred to a card with a zero percent interest rate, according to SmartBalanceTransfers.com.

You also might prefer seeing your debt in one account and slowly chipping away at one large bill, rather than having to remember to pay multiple credit card bills each month. If you're late on the payment, you have to pay only one late fee instead of multiples fees on different accounts.

Be diligent about paying off the balance quickly. The low-interest or no-interest rates last for only a few months. Do not acquire more debt by placing charges on the card the debt was transferred from. This defeats the purpose of transferring the balance in the first place.

You might see a sharp rise in the interest rate once the promotional period ends on the card to which the balance was transferred. Pay the minimum balance on the accounts you are transferring until the process is complete. Failure to do so could result in a late fee.

When deciding to make a balance transfer, read the fine print carefully. Some companies offer a rate of zero percent but they dont guarantee it. The rate that you receive can vary, so confirm your rate when your card arrives.

Also, verify that the rate is zero percent both on transfers and on subsequent purchases. Otherwise you might find yourself paying high interest on smaller purchases made after the balance transfer.

Can a Veteran's Pension Be Garnished From His Checking Account?

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Creditors have several avenues to try to collect a debt that is past due. If you are working, they can garnish your wages. They can also conduct an asset search to discover property, bank accounts, investments or financial instruments you may own. In addition, they can freeze your bank account and recoup their losses from the money you have in the account. If you are retired, some pensions are exempt, others are not. None is exempt from the federal government.

Exempt income is income that cannot be garnished by creditors or court judgments issued against you. Most income from the federal government, such as veteran's pensions and benefits, Social Security, Supplemental Security Income and Railroad Retirement benefits, are exempt from garnishment by ordinary creditors or court judgments in accordance with federal law. In addition to exemption from garnishment, if this is the only source of income deposited in your bank account, that money in the account is exempt from garnishment, as is anything you purchase with it.

As with many laws, there are exceptions. If you owe federal debts, such as student loans, or you owe child support, your veteran's pension can be garnished. Under the Debt Collection Improvement Act of 1996, veterans' pensions are subject to administrative wage garnishment for debts owed to the federal government or for child support, if the state in which it is owed notifies the federal government. Up to 15 percent of your pension can be garnished if your income is sufficient.

If your veteran's pension benefits are to be garnished from a bank account, the bank receives a notice that authorizes the bank to garnish the amount designated from the bank account in which the pension benefits are held. The federal government does not have to go to court to get this garnishment order. The authorization is provided by statute, but proper procedures must be followed. For example, if the garnishment is for child support, there must be a court-certified child support order.

If you are legally subject to garnishment for non-federal debt and the creditor pursues your bank account, you will receive a notice of the garnishment. If you receive this notice, you must notify your bank that funds in your account represent exempt income. The bank cannot seize your money with the state court order unless it is accompanied by a Notice of Right to Garnish Federal Benefits.

Tips on Credit Laws

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Every time you buy something with a credit card, you are taking out a small loan that you must pay back at the end of the month. If you use credit irresponsibly, running up huge amounts of debt that you cannot afford to pay back or ignoring the bill when it comes, you can seriously hurt your credit. However, the Federal Trade Commission has safeguards in place to stop credit card companies and debt collectors from taking advantage of you if you cannot pay your bill in full on time.

The Fair Credit Reporting Act prevents debt collectors from engaging in collection activities that are unfair or harmful to you. Debt collectors must discuss the debt only with you; if they contact your friends or relatives, they may only ask for the address or phone number where you currently may be reached. Debt collectors may not use abusive language, may not contact you before 8 a.m. or after 9 p.m., and may not threaten you with physical harm or with legal action that they are not authorized to carry out.

As of April 2011, the federal government limits penalty fees on most credit cards to protect consumers from falling more deeply into debt because of an inability to pay their balance on time.. If you are late making the minimum payment on your credit account, the creditor may not charge you more than $25 unless you have been late in the past six months, and your creditor cannot charge you a fee that is higher than your balance. For example, if you only owe $15 on a credit card, your creditor cannot charge you more than $15 as a late fee.

Credit card companies have the right to raise your rates if you are consistently late with your payments, carry too much debt or otherwise present an extra risk to the creditor of defaulting on your debt. However, the creditor must give you 45 day notice prior to raising your rates for any reason. In addition, the credit card company must re-evaluate your rate increase after six months, and if you no longer provide a high risk, it must lower the rate within 45 days of completing the re-evaluation.

You have the right to request a free credit report from each of the three major credit bureaus (Experian, Equifax and Transunion) every 12 months. Requesting your free credit report will not harm your credit score. You may request your credit report from each of the three bureaus at once or stagger your reports (for example, order one credit report every four months). Obtaining your credit report allows you to check for errors or potential fraud. If you disagree with any information in your report, you may contact the credit bureau to dispute it.

What Number Is a Good Consumer Credit Score for CBC Companies?

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It's important to manage your credit wisely.

Credit Bureau Central is an organization that attempts to collect active past due accounts, which can lower your credit rating.To qualify for a mortgage loan, your rating must be 620 or above.It's important to use the dispute form if you feel the score is in error.

The three credit bureaus that store your credit history, as well as your public record information, are TransUnion, Equifax, and Experian. Your bill and credit-card payment history determines your credit score. The 600 to 660 range is a poor credit score. A good credit score is 700 and above.

To have a good credit score, it's necessary to pay your bills on time. Only have three credit cards, or less, and pay more than the minimum payment due. Get a free report annually from each credit bureau and dispute anything that is wrong.

Debt Responsibilities After a Family Death

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The responsibility of paying a family members debt after death primarily falls to the estate of the deceased. In some cases, a surviving spouse and the children of the deceased may be responsible, depending on the terms of the family members will, the laws in their state of residence and the terms of a debt agreement.

The executor of a deceased family members estate has the responsibility of paying legitimate estate debts with the assets of the estate. Certain debts take priority, such as taxes, mortgages and installment loans. Payment of unsecured debts, such as utility bills and revolving loan accounts, are ranked in accordance with the laws of the deceaseds state and approved through probate court. The executor makes the decision to liquidate assets to cover debt; if the assets are insufficient, the debts may not be paid.

Community property states, and states that uphold the Doctrine of Necessaries, may hold the surviving spouse responsible for certain debts that are not paid by the deceaseds estate. For example, if the estate had insufficient assets to cover outstanding credit card debt, the surviving spouse may have to pay the balance. Community property states include Wisconsin, New Mexico, Alaska, California, Louisiana, Arizona, Washington, Nevada, Idaho and Arizona. The Doctrine of Necessaries is a common law that other states, such as Ohio and Connecticut, recognize, which can make the surviving spouse responsible for debt relating to necessary expenses. Medical debt and credit card charges directly relating to living expenses may be considered necessary.

Children and other beneficiaries of deceased family members other than the spouse may be responsible for the deceaseds debt under a few specific instances. If the beneficiaries jointly own installment loans, open credit accounts and other debt with the deceased family member, the beneficiaries will be responsible for their share of the debt. The family members estate is responsible for the deceaseds portion of the debt. In the case of a mortgage, if the family member bequeathed the secured property to a beneficiary, the beneficiary may be responsible for the mortgage. If the bequeath is subject to the mortgage, the beneficiary is responsible. If the bequeath is not subject to the loan, the family members estate pays the debt and transfers the title. Either way, the beneficiary or the estate may sell the property to satisfy the debt.

Any person who is listed as a joint account holder on any type of loan is responsible for the debt related to the account. After a family member dies, the estate is responsible for a portion of the debt, but the joint account owner is also responsible. If the estate cannot pay the portion of the debt, the joint account owner may be liable for the entire balance due.

What If I Cosigned for My Son's Student Loan and He's in Default?

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The cost to attend one of America's colleges or universities can run well over a staggering $40,000 per year. Even for students who opt for cheaper schools, the cost of earning a postsecondary education is often unaffordable without securing a student loan. As a result, many students ask parents to cosign student loans; while most students repay loans without difficulty, cosigners must learn the consequences of default before signing on the dotted line.

When a parent cosigns his child's student loan, he is agreeing to make payments on behalf of his child if the child defaults. The lender may also request payment from the cosigner instead of the student in the event that the loan is not a guaranteed loan. Guaranteed loans only go after the cosigner for repayment if the original debtor has defaulted. Cosigners are also responsible for late charges and other penalties, including legal fees.

If a child defaults on his student loan, the parent's credit rating will suffer. The lender will come directly to the parent if a student misses a payment, and may expect the parent to pay the late fee or penalty. If the parent has secured the loan with collateral, the lender may elect to sell the collateral to secure the loan's repayment. Because the consequences are so severe, be sure that you can afford to repay the loan yourself before agreeing to cosign.

Think you can declare bankruptcy to avoid repaying a student loan? Think again. Student loans are one of the few types of loans that must be repaid in full and cannot be discharged in bankruptcy. While there may be the rare exception -- if a debtor becomes severely disabled and is unable to work again, for example -- it is not the rule. As a result, do your homework before agreeing to cosign. It's not unreasonable to ask your child how he intends to repay the loan after graduation.

According to Mary Rowland of MSN Moneycentral, lenders and collectors often go after whomever they think they have the best chance of recovering the money from. As Rowland points out, if the lender thought that it had a shot of recovering the money from the borrower, the lender wouldn't have required the cosigner to begin with. Rowland also recommends taking the time during the college years to teach children about the proper use of credit through credit cards. Learning the essentials of debt management will secure the child's credit rating -- while saving the parent's.

How to Pay Off and Get Rid of Student Loan Debt

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Student loan debt can eat up a large portion of your income. Many students do not consider the financial repercussions of taking out student loans while they are in college and are often surprised by the amount they need to pay after graduation. Student loan debt will not be forgiven or reduced during bankruptcy so it is important to make a plan to pay off your debt quickly. Facing student loan debt head on is the quickest way to get rid of it.

Instructions

Plan out a monthly budget, which lists all of your expenses and your current income. Reduce your current expenses to free up extra money to apply to your student loans. Cut spending by limiting eating out, entertainment costs and gym memberships. The more you cut back the sooner you will be able to pay off the loans.

Take a second job as a temporary measure to earn extra money to pay off your student loans. Look for a better paying job if you are having a difficult time making your student loan payments. Working as a freelancer after hours is another way to increase your income and it often pays better than traditional second jobs.

Sell items you no longer need or use to raise money to get rid of your student loans. Large one-time payments will reduce the amount of interest you pay over the life of the loan and speed up the process of paying down your balance.

Apply for a loan forgiveness program, if you work in the public sector. The College Cost Reduction and Service Act allows other people working in public sector jobs, such as and social work and law enforcement, to qualify for loan forgiveness after 10 years of continuous employment. Loan forgiveness programs are only available for federal student loans, and will not work for private student loans.

Do Minors Have Credit Reports?

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Credit reports are collections of information related to a person's lending and debt history. This information is provided by lenders to companies called credit reporting agencies. Any person who has been issued a credit card or a loan has a credit report. Although credit can be legally extended only to adults, some minors also have credit reports. A minor can develop a credit history in a number of ways.

To receive credit, a person must sign a legally binding contract in which he agrees to the terms of the loan. The exact age at which a person is legally allowed to sign a contract varies by state, although it always is between the ages of 18 and 21. A minor is not legally allowed to take out credit by himself before age 18 and cannot legally have his own loan or credit line.

Although a minor cannot have his own credit account, he can have a joint account with a family member. In this case, the family member takes out his own line of credit and adds the minor to the account. In that situation, the lender reports the account to the credit reporting agency, which generates a file for the minor and begins to add information related to the credit account to which he is attached.

Although a minor is not legally allowed to receive a credit card, a credit card company may inadvertently issue him one. Credit card applications include a section in which the applicant is asked for his date of birth. Theoretically, a minor could place his real Social Security number on the application and falsify his date of birth. In this case, he may receive a credit card, which would lead to the creation of a credit report.

Alternately, a person may choose to use a minor's Social Security number to illegally take out a line of credit. According to the website ID Theft Assist, incidents in which adults stole the identity of minors rose throughout the decade of the 2000s. While 6,512 cases of this form of identity theft were reported in 2003, 10,835 were reported in 2006. Often, the person who steals the child's identity is a parent or other relative.

Can a Judgment Be Renewed After Bankruptcy?

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A successful bankruptcy resolves all debt matters, including judgments. A judgment is a court order requiring a person to pay a specific amount of money for a debt. However, filing for bankruptcy places control of the debt under the federal bankruptcy court. Debtors in bankruptcy will not owe the judgment after the official discharge, or completion of the bankruptcy. That means it is not possible for the creditor or debt collector to renew the debt after bankruptcy.

Decisions by a bankruptcy court are final. Chapter 7 bankruptcy, the fastest of all bankruptcy types, eliminates judgments in just several months. Judgments are common in debt lawsuits for unsecured debts such as credit cards. A person qualifying for Chapter 7 could list $50,000 in court judgments and eliminate all of them though the bankruptcy. In that situation there is no recourse for creditors holding judgments against the degtor. Federal law prohibits the creditor or debt collector from attempting to collect the judgment amount after the bankruptcy. Chapter 13, another form of bankruptcy, offers similar protection but requires a payment plan of three to five years. During Chapter 13 debt collectors usually receive at least some money from debtors.

Debt collectors can continue debt collection efforts against debtors who fail to complete bankruptcy. A dismissal of a bankruptcy completely removes protection by the federal bankruptcy courts. This allows the debt collector to act as if the bankruptcy never happened. A renewal of the judgment is not necessary in this case. After dismissal of the bankruptcy the debt collector can ask a civil court for permission to garnish the debtors bank account or wages. Dismissals in bankruptcy are possible because of procedural errors in the case or a debtors failure to follow court orders. Some people in Chapter 13 bankruptcy cause a dismissal of their bankruptcy by failing to make timely payments to the bankruptcy court to satisfy creditors.

Debtors completing bankruptcy should confirm that their credit reports list accurate information about the bankruptcy. Debts eliminated by the bankruptcy, including judgments, should appear on credit reports as included in bankruptcy, according to MSN Money. Debtors whose credit reports are showing wrong information should send a letter to the credit bureau asking for corrections. With the successful completion of a bankruptcy and accurate credit reports, debtors can completely ignore old debts.

Debtors with judgments have options other than bankruptcy. Bankruptcy requires debtors to list all debts, and not only judgments. A debtor with just a few judgments could resolve the issues without bankruptcy by negotiating payment plans with debt collectors, for example. The Federal Trade Commission advises that debtors should consider bankruptcy as only a last resort.

Can I Refinance a Debt?

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When you refinance a debt, you get a new loan and use the money to pay off the old loan. Then you get to make payments on the new loan following that lender's terms and procedures. Whether or not you can refinance depends on the specifics of your financial situation.

Lenders' guidelines for refinancing a debt are very similar to the guidelines for financing the debt in the first place. The borrower must have sufficient credit history to meet the lender's credit score requirements. Lenders also often look at the borrower's income to determine whether it can support the monthly payments, especially when refinancing a mortgage. A borrower who is not creditworthy might be asked to get a creditworthy co-signer who is willing to hold joint legal responsibility for repaying the refinanced debt.

In general, lenders are reluctant to refinance a secured debt unless the asset's market value is higher than the amount of the debt that will be refinanced. Therefore, if you owe more on your house or car than it is worth, you might have a hard time finding a lender to refinance. In addition, refinancing an unsecured debt can be tricky if you have a spotty credit history because the lender might not get all of the money back. The easiest type of debt to refinance is a secured debt in which the asset is worth at least 20 percent more than the amount you are refinancing.

You typically must pay some upfront costs to refinance a debt. Most lenders charge an application fee that might be refundable if you do not qualify. Lenders also generally charge a loan origination fee that is a specific percent of the refinanced debt. In some cases, the lender for your current loan might charge a prepayment penalty if you refinance it and pay off the original loan, especially if it has not been long since you got the loan in the first place.

There are two major reasons to refinance a debt. The first is to get a lower interest rate. If market interest rates have dropped since your first loan, you will likely get a lower rate. Plus, if your credit score has improved by making consistent on-time payments to reduce your balances, this can also help you secure a lower interest rate. The other perk of refinancing a debt is that you can extend the term of the loan to make lower payments over a longer time period. This helps relieve your budget of some stress.

Can a Collection Agency Collect More Than the Charge Off for a Credit Bill?

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Several federal laws control the activities of collection agencies in seeking payment for debts. Laws prevent collection companies from harassing debtors and also set restrictions on the hours during which collection calls can be placed. However, collection agencies do have the right to collect more than the charge-off amount. Laws may vary by state and collection agency, but there are limitations.

The fees for bad checks vary by state, but there are some common laws. For example, many states have laws that allow collection agencies to collect double or triple the amount of the check. Many times this is after the check has bounced one to three times. There are often minimums and maximums to these amounts; many states have a $100 minimum, so if triple of the amount of the check is less than $100, the amount collected will go up to $100. There are also maximums imposed in many states; for example, California has a $1,500 maximum of per check.

Collection agencies can also collect on credit cards and other loans like car, student and home loans. In these cases, the collection laws are spelled out in the credit card agreement or loan documents for a car or mortgage. Again, these differ by company and state, but it is possible to have signed an agreement that if you fall behind on your payments, the entire amount is due immediately. It is important to read the fine print to see what the penalties for being sent to collections may be.

Many contracts have an attorney clause that allow the collection agency to collect attorney fees. Again, this is often in the fine print, but it will usually state that if all collection efforts are exhausted and it is necessary to go to court, then the debtor must pay reasonable attorney fees. These attorney fees are regulated by state and county. There are guidelines and limitations on the fees charged by attorneys.

Lastly, interest may accrue on bad debt. Even if there wasn't interest in the original loan or credit card, there is often a clause that allows a company to charge interest if payments aren't made on time. Interest rates on collection accounts are also regulated by the government. They are determined by the type of account and the state in which the account originated. These interest rates are listed in the original documents, although, again, it may be in the fine print. It is always important to carefully read documentation to understand what fees may occur if an account is sent to collections.

Can Your Credit Be Checked When You Fill Out an Application Online?

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Online applications help expedite the process of qualifying for many types of credit accounts. Many businesses require a credit check along with your application. Be sure to review the website terms and conditions to ensure you understand your privacy rights. Allowing a creditor to pull your application online has pros and cons.

Many online businesses offer a Terms of Use or Terms and Conditions link on their websites to disclose how personal information is managed on the site. The Terms and Conditions also state whether you are agreeing to a credit check by submitting your personal information on the website. In general, a privacy statement should also be included with this information. The privacy statement tells you what your rights are as a consumer to restrict information and explains whether a website will or won't share your contact details with third parties.

Online applications request a variety of personal details. Some fields can remain blank while others are required in order to process your information effectively. For example, when completing an application for credit, your Social Security number is often requested if your credit score will be pulled. If your Social Security number is not requested, the creditor may have a second step in the approval process where your credit score is checked.

Online applications that pull your credit also cause your credit score to be reduced. Inquiries are not all viewed the same. Typically, if you are shopping for a mortgage, car loan, or education loan, your score drops only once during the time you are shopping for a loan. However, other types of credit, such as personal loans or credit cards, create a decline in credit with each inquiry.

If you are wary of having your credit pulled through an online application or want to avoid deductions in your credit score, there are several alternatives. You can usually call the creditor to complete an application by phone or send in a printed application. Consider requesting that the creditor allow you to pull your own credit score instead of letting the creditor pull your report. You can ensure your privacy is maintained and points are not deducted if you pull your score on your own.

How to Find a Social Security Number for Debt Collection

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An important part of the debt collection process is credit reporting. When you place a negative entry on a debtors credit report, he will often be willing to work with you an pay the debt in exchange for the removal of the derogatory trade line. To report a debt to the credit bureaus, you must have enough personal information on the debtor for the credit bureaus to successfully match him up with the information that is already in the system. While coming across a debtors full name, birth date and address may not be challenging, Social Security numbers are more closely guarded. The debtors Social Security number, however, is necessary if you intend to use credit reporting as a method of debt collection.

Instructions

Call the debtor and ask for her Social Security number. Do not mention that you plan to use it to make a negative report to the credit bureaus. Sometimes unsuspecting individuals will volunteer the information if you ask.

Send a form to the debtors home for her to fill out if the initial telephone call was unsuccessful. Include blank spaces for her name, birth date and Social Security number. Not only does your request appear less suspicious when coupled with a request for additional information, by mailing the form you have the chance of a family member filling it out not realizing who it is from and what it is for.

Pull a copy of the debtors credit report. As a creditor, you have the legal right to do this at any time. Review the report for current and past addresses.

Look up the county for each of the addresses reflected in the debtors credit report.

Register for an account with PACER, the U.S. governments general access website for public records. It is available for personal and corporate use and can be found at pacer.psc.uscourts.gov.

Choose the option for Links to PACER websites. Select the appropriate state and county for the debtor.

Choose Query and type the individuals name into the box. Any public records containing the debtors name and personal information filed in that particular county will appear.Check each county on your list for public records. If the debtor has ever been married, filed bankruptcy, been arrested, purchased property or gotten a traffic ticket he will be in the database.

Review the public records that are available on the debtor until you come across his Social Security number. Most forms of public records will contain Social Security numbers.

Can I Get a Cell Contract With Poor Credit?

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Cell phones have become a major part of many people's lives. Some individuals use their cell phones as their primary phones, opting to forego a residential land line. Consumers with bad credit have to do a little more research to find a good carrier that is within their budget and offering the features they require. They may find it difficult to find good deals on cell phone plans, but there are still options available.

Some cell phone companies require higher deposits from customers with bad credit looking for contract plans. Credit companies see the customer as a risk for non-payment or late payments, so they require more money to start a plan. Often time, cell phone providers offer contract plans for a lower price than prepaid plans for the same amount of minutes. So, some customers are willing to pay the high deposit. Customers also do not have to worry about running out of minutes as with prepaid plans and are usually offered free nights and weekends. Some customers choose to pay a high deposit to take advantage of the special offers cell phone providers make to their contract customers, such as discounted plans and specially-priced cell phones and accessories.

Customers not wanting to get a prepaid plan or pay a deposit may have the option of getting a co-signer. A co-signer uses his credit rating as a way to vouch for you. The advantage of having a co-signer is you may not have to pay a deposit to enter into a cell phone contract. The disadvantage is your co-signer's credit is affected if you do not pay your bill. Your co-signer becomes equally obligated with you to pay off the debt.

Some regional providers offer cell phone services to customers without performing a credit check. The service area is often limited to your city or surrounding areas. This prevents you from being able to communicate while traveling to another city or state. If your service extends past your region, your cell provider may charge you roaming fees. Regional providers usually don't offer the same features as national providers. Many regional carriers do not offer Internet features or the latest cell phones to hit the market.

Prepaid, or pay-as-you-go cell phone plans, allow customers to buy a certain number of cell phone minutes before actually using them. Prepaid cell phone plans require customers to only buy a cell phone and a block of minutes on a calling card. Cell phone providers do not run credit checks on customers because the minutes are bought in advance. Usually certain phones are available on prepaid plans. Once a customer acquires the phone, she simply calls the number on the card and enters the authorization code to activate the minutes. The minutes are subtracted from the plan as they are used. Once the minutes are used entirely, you must buy more minutes and activate them. Nearly every major cell phone provider offers prepaid cell plans to customers.

Welcome to our website credit and debt managementr.

Friday, February 28, 2003

Benefits Offered

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What Is Debt Consolidation?

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Thursday, February 27, 2003

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How to Stop Persistent Creditors

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Tuesday, February 25, 2003

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Monday, February 24, 2003

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Sunday, February 23, 2003

Open Account Definition

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Saturday, February 22, 2003

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Friday, February 21, 2003

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Thursday, February 20, 2003

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Tuesday, February 18, 2003

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Monday, February 17, 2003

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Sunday, February 16, 2003

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Getting Rid of a Defaulted Student Loan

Saturday, February 15, 2003

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