Definition of Uncollectable Debt

If someone does not pay money that they owe, their creditor has few options to collect the money owed. If the debtor does not respond to letters and phone calls, the creditor can sue the debtor. However, if a debt has been listed in a bankruptcy or past the statute of limitations, the debt is legally uncollectible.

Statute of Limitations

Most states set a statute of limitations on how long a creditor has to file a lawsuit against a debtor. If a debt is older than the statute of limitations, the debt is no longer legally collectible via court judgment.

There is also a statute of limitations on the collectibility of judgments in most states. Even if a creditor wins a lawsuit, the creditor is responsible for collecting the debt within the statute of limitations on judgments in that state.

Bankruptcy

In a bankruptcy, a person or a business asks the court for protection from creditors. Depending on the type of bankruptcy, the debts may be eliminated or repaid under a court-ordered payment plan. If a creditor is owed money, the creditor must work with the court to receive some repayment, which, depending on the type of bankruptcy and the debtor's assets, may be very little. If a debt has been listed by a debtor in his bankruptcy proceedings and is not exempt from bankruptcy protection, a creditor can no longer attempt to collect the debt directly from the debtor.

Exceptions

Certain debts cannot be discharged by bankruptcy, nor can student loans, child support payments, fines for criminal conduct and costs that are the result of causing injury or death while driving drunk. There is also no statute of limitations on the collection of federal student loans or child support.

Misconceptions

The statute of limitations in debt is a defense against a court judgment: If a creditor tries to sue someone for a debt that is past the statute of limitations, you can ask that the case be dismissed. However, the creditor can still try to collect the debt via telephone calls or sending letters. The creditor just can't legally seize assets or otherwise force a debtor to pay the debt.

Many people confuse the statute of limitations for collecting debt with the time limit on how long a negative item can be reported on a credit report. It is important to keep in mind that these are two different things: Each state sets its own statute of limitations on debt collection. The statute of limitations may be longer, or shorter, than the federal law, which stipulates a seven-year time limit on reporting negative credit information.

Warning

While there is a statute of limitations on court judgments in most states, it can be renewed by a judge. Judges routinely order renewals, so don't think that a judgment will automatically go away after the statute of limitations runs out.

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Small Business Debt Help

A slow economy and mounting debts doesn't mean a company should rush to close its doors. There is help out there for small companies struggling with debt.

Credit Counseling

If your company's finances are unsteady, credit counseling is an option that can help get monies spent back on tract. Through this channel, a certified counselor will review your company's finances and give advice on balancing the books.

Consolidation

Debt consolidation is an attractive means to dissolve debt for small companies. Counselors work to decrease fees and get interest rates lowered while debts are combined into one lower, monthly bill. The U.S. Small Business Administration as well as many nonprofit companies offer this service.

Debt Settlement

If you have cash on hand you can try and negotiate down your debts by working with your creditors. Alternatively, you can employ a debt settlement company to carry out the negotiations for you.

Bankruptcy

Chapter 11 bankruptcy is a last resort that can be a way to keep your business running while making more affordable payments to your creditors. Speak with an attorney to determine if this is the best option for your company.

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How to Sell Assets to Pay Debts

No one thinks they will end up over their head in debt, yet it is a common occurrence among Americans. Most financial advisors will tell you to pay down your debt with a budget that makes you live below your means and pay it down over time. However, some financial advisors, like Dave Ramsey, recommend selling whatever assets you have that are not required to live to pay your debts as soon as possible.

Instructions

1

Identify the items considered "luxury goods," such as art, jewelry, designer clothing, classic cars and high-end electronic equipment. Get these items appraised or browse your local ads for similar items to get an idea of how much your luxury goods are going for on the market. Place an ad through your local newspaper, an auction website or online ad listing site to sell the items. Make sure you pay all applicable fees and taxes to your local and state governments on the money made from the sales.

2

Identify property you can live without. This includes but is not limited to land, vacation homes, recreation vehicles, second or third vehicles, entertainment media and furniture. Get the property appraised or check its value by comparison shopping online, in your local newspaper classifieds or other advertisement listings. List your property for sale through one of these venues. Pay the appropriate taxes and fees to your local, state and federal government as applicable.

3

List the investments you have, such as stocks, bonds, 401ks and mutual funds. Calculate how much money you currently have tied up in these investments as well as the fees and penalties for cashing out on them now. Contact your broker to conduct this withdrawal as he or she will best know how and when to perform this transaction, as well as how to pay the aforementioned penalties, fees and taxes.

4

Total the amount of money you have made from selling your assets, minus fees, taxes and penalties. Use the money to pay off your debts via two options: either pay off your debt from highest to lowest interest in order or from smallest to largest debt consecutively.

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How to Handle Collection Agencies Who Call About Someone (Un)related

When collection agencies have trouble tracking down someone who owes money, it is common for the agency to "clutch at straws," and find out whatever they can from whomever they can. They will search public records to find any possible links to the person, whether it is through ex-spouses, or distant relatives, or anything at all. They will then typically call these people and try to get information. In some cases they will even try to pressure family members into paying whatever is owed by the individual that they are seeking. They will sometimes resort to illegal or unethical means to try to convince family members that they are responsible for the money, when they may not legally be. This article offers some steps to dealing with this situation.

Instructions

1

The first step is to document every communication that comes your way. This is because sometimes agencies just keep calling. Write down the time of the call and the phone number on your caller ID. If the person leaves a message, call them back when you can. If you truly have no involvement in the matter, just politely explain so. Don't get on the defensive. In some cases they may have the wrong number, or they may be searching for someone with a similar name, or someone who owned your house 30 years ago, or something like that. They could be after a distant relative of yours that you didn't even know you had, or after an ex-husband of an ex-wife of an ex-husband. If you have no idea what they are talking about, just explain that, but try to obtain any information that you can about the caller, such as their name and company name. They will more likely share this with you if are polite, and imply a willingness to try to answer their questions honestly.

2

If you do have a fairly close connection to the person that they are after, try to find out whatever details you can, but in no way agree that you are responsible for the other person, and in no way speak on their behalf. Say as little as possible. Encourage the person to provide all relevant information in writing, and mail it to you. They can get your address anyway, so that is not a concern.

3

Obviously if you or your spouse owe money, seek legal or financial guidance. If they claim that money is owed by your parent or sibling, you are probably not responsible for paying their debt, but they might try to convince you otherwise. Just seek legal advice, and do not conduct any business at all over the phone.

4

Sometimes calls will continue. This can be because they are trying to harasses you to pay the money that a family member owes. It can also be because the company is disorganized, and has 10 different people working on the same case, and each one doesn't know that the other is calling. Politely ask them to stop calling, but don't make any threats unless calls keep coming in. If they do, simply give them one more chance, remind them that everything is being documented, and inform them that you your next step will be to file a written harassment complaint with your local police department and your state's Attorney General. Almost certainly they will just pull your number from their computer.

5

Note that I would usually suggest researching the collection agency on the Internet, but you will likely find nothing but complaints about any such agency. People get angry if they get a call that has nothing to do with them, and certainly people are angry if they receive a call about a debt from 10 years ago that they were certain had fallen through the cracks.

6

Understand that if the collection agency is truly legitimate, then all they are really trying to do is track down someone who probably left the country, or changed their name illegally, or is just hiding somewhere. Often they are only trying to show their own insurance company that a good-faith effort was made to collect the debt.

7

If calls continue to come in despite everything you did in the above steps, and you are certain that they are actually from the same agency (one agency cannot be held responsible for another), then you will have to make good on the threat from Step 3. A simple letter mailed to your local police precinct should really suffice. All the police can really do is just call the agency on your behalf, and inform them that a harassment claim was made, but that should be more than enough to stop them.

8

Again, if for some reason it truly is a sticky situation, seek immediate legal and financial help from professionals. You could also start out by posting your situation on legal forums where you can get some free basic help. Be polite with the caller at all times. Don't take anything they say personally. They are just following their script and doing their job. Of course you could very well be on the phone with a complete scam artist who is just trying to trick people into handing over money, but still try to keep your cool.

9

Document every word that they say, but inform them that you will not conduct any business over the phone. If they are convinced that you truly owe them money, then they will send you a certified letter explaining so, and you can take the appropriate legal action. If they don't do this, but just continue rambling on the phone, then it is highly suggestive of a scam, and you should just follow the guidance in the steps above. Try not to worry about it. It will resolve itself.

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How to Measure Debt

Having too much debt can mean not getting approved for a mortgage or paying higher interest rates on credit cards, car notes and other investments. Bottom line: debt can cost you in the long run. That's why it's important to know how much debt you have. There are a few ways to measure your debt. Note that the amount you owe must be measured against your income--the more you make, the more debt you can afford to take on.

Instructions

1

Educate yourself on ratios--a term defined as one value divided by another. The end result is a representation of one quantity in terms of another quantity. To measure your debt, you will have to define debt in terms of both your available credit and income.

2

Calculate your debt to income ratio. You can calculate your debt to income ratio by listing your monthly mortgage or rent, your minimum monthly credit card payments, monthly car loan payments and any other loan obligations. Add all those things together and divide it by your annual gross salary plus bonuses, overtime and any other income you receive. This number will equal your debt to income ratio.

According to US News and World Report, a debt to income ratio measurement of 36 percent or less is pretty healthy for many people. However a debt load over 43 percent shows that financial problems are probably on the way.

3

Calculate your debt to credit ratio. Go to AnnualCreditReport.com

to get a free copy of your credit report.--you are entitled to one every 12 months from each of the three major agencies. In the report you will be able to see how much available credit you have. Take your amount of debt and divide it by your available credit. If you have a high debt to credit ratio, lenders will assume you are a higher credit risk.

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Tips on Staying Out of Credit Trouble

Credit cards lure many consumers into financial difficulties, which is compounded by a struggling economy. Avoiding credit trouble allows individuals to live a comfortable lifestyle and alleviates the stress and worry that come with high credit card balances. Living within one's means is essential to avoid credit difficulties that can last for years.

Wants Versus Needs

Assess the difference between wants and needs. Avoid falling into the trap of needing the latest electronics, toys or other expenses. True needs include shelter, food, heat and clothing. Most other things fall under the "wants" category. Evaluate each purchase to determine whether you really need the item, or whether it is an item that you would simply like to own. Knowing the difference helps you avoid overspending. Set a monthly budget for the extras to ensure you don't buy too many of them, which may cause you to dip into the budget for necessities.

Pay Off Balance

Avoid keeping a balance on your credit cards. Pay off the balance each month if possible. This avoids lots of interest and prevents the balance from growing gradually to an amount you can't handle. Make it your priority to pay off any high balances on credit cards without taking on any new credit card debt. Ensure that you pay your credit card on time each month. Late payments result in fees and potentially higher interest rates. They may also be reported to credit agencies, which will lower your credit score.

Watch Small Purchases

Keep track of all of your spending, even the small purchases. Avoid the temptation to add extras to the shopping cart or buy little things that you don't need. Small dollar amounts add up quickly and eat away at the money set aside for necessities such as a mortgage or groceries. Excessive small purchases may lead to charging items on a credit card when money in the bank account runs low.

Read the Fine Print

Ensure that you understand all the details of a credit card before accepting and using it. Check on the interest rate, annual fee and other details of carrying a balance on the card. Avoid getting drawn in by promises of rewards for using the credit card. The rewards won't mean a lot if you get in over your head with credit card debt. Check your statement each month to ensure that all of the charges are legitimate. Keep an eye on the interest rate to ensure the company doesn't raise it. If the credit card doesn't have an annual fee associated with it, watch your statements to ensure the company doesn't charge you the fee.

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How to Reduce Debt in Canada

In a culture of consumption and limitless spending it is not surprising that personal debt has soared to an average of $41,740 per person in Canada. Even in the economic downturn, Canadians are continuing to add to their debt and spend money that they do not have. What many Canadians do not realize is that becoming financially stable and reducing personal debt is possible, and will free up funds for retirement, vacations and education.

Instructions

1

Take your credit cards out of your wallet so that you are not tempted to use them on a daily basis. Pay for your purchases with cash instead of credit. Using cash will help you separate your needs from your wants. Keep record of what you are spending your cash on so that you can revisit your needs vs. wants at a later time.

2

Make a list of all of your debts and prioritize them in terms of amount and the interest that is being accumulated. Terry McBride of the Financial Advisors Association of Canada and columnist for Canwest suggests paying off the smallest debt first while still paying the minimum on your other debts. When this debt is paid off, start paying off the next smallest debt. McBride refers to this method as the "Snowball Method."

3

Create a monthly budget that outlines how much you plan to spend on every little item. The Vancouver Credit Counselling Society suggests reviewing your credit card and bank statements to see where your money is going and what spending you can eliminate. One strategy to help you follow your budget on a daily basis is the envelope method, where you place cash in envelopes to cover the amount that you have allocated for groceries, entertainment, etc. This gives you the ability to see where your money is going and how wisely you are using your money for needs.

4

Talk to a professional debt counselor about consolidating your debts into one line of credit. Although interest rates might be a bit higher for a consolidation loan, you will only be paying one lump sum instead of the minimums on all of your debts.

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Fair Credit Billing Act Rights

If you've noticed a billing error on your credit card statement, you may be wondering what your rights are in correcting the situation. Fortunately for consumers, the Fair Credit Billing Act (FCBA) provides specific guidelines for disputing billing errors. The FCBA also protects consumer with regards to truth in lending. Understanding your rights under the FCBA can help to protect your credit rating and ensure that billing disputes are properly resolved.

Types of Disputes

The Fair Credit Billing Act allows consumers the right to dispute certain types of billing errors. These include unauthorized charges; charges that list the wrong date or amount; charges for goods and services you didn't accept; mathematical errors; any failure to post payments or credits to your account; failure to send a current bill to your billing address; or charges for which you request an explanation or written proof of purchase. The FCBA does not give consumers the right to dispute charges based on the quality of goods or services received.

Dispute Process

To initiate a dispute under the FCBA, you must send a written request to the creditor's billing address that includes your name, address, account number and a description of the error. The creditor must be notified within the 60 days following the initial date the error appeared on your bill. The creditor is required to notify you of receipt of your complaint within 30 days, and resolve the error within two billing cycles. During this period, you have the right to withhold payment for the disputed amount only. The creditor is barred from reporting your account negatively to any of the three credit reporting bureaus until the error is resolved. The creditor is required to notify you in writing of whether the bill is correct or incorrect.

Other Billing Rights

In addition to your right to dispute billing errors, the FCBA also offers consumers certain other protections. Any creditor that offers open-ended or revolving credit is required to provide you with written notice of your rights under the FCBA any time you open a new account. Creditors must provide you with a statement for each billing period in which you owe more than $1, and they must send your bill at least 14 days before payment is due. Your creditor must credit all payments on the date they are received, and promptly credit amounts or refunds owed to your account.

Violations

If you feel that a creditor has violated your rights under the FCBA, you may file a complaint with the Federal Trade Commission. Additionally, you are entitled to sue a creditor who violates the FCBA for damages and twice the amount of the finance charges for the disputed item, up to $1,000. The court may also order the creditor to pay your attorney's fees.

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Is a Surviving Spouse Responsible for Credit Card Debt in Nevada?

In Nevada, creditors can hold a husband and wife equally responsible for debt acquired during a marriage. This includes credit card debt charged to a card held by only one spouse. Spouses in Nevada, as well as other community property states, should be frank with each other about their debt in order to avoid surprises after death.

Handling Debt after Death

After someone dies, the executor or administrator of an estate is responsible for paying creditors out of the estate. The executor or administrator will use the funds in the estate, if any, to pay any bills that the deceased left behind. State law may also require the executor to notify creditors of the death through a newspaper ad.

Joint Vs. Authorized Users

Credit card companies can issue credit cards to married couples in one of two ways. The couple may qualify for the card together as joint account holders. Each spouse is responsible for paying the card's balance. Some couples, on the other hand, choose to have only one spouse listed as the account holder, while the other is an authorized user of the account. An authorized user can charge purchases to the card, but is technically not responsible for paying its balance.

Nevada Is a Community Property State

In most states, a credit card company cannot force an authorized user, even the account holder's spouse, to pay the card's balance out of her personal funds. However, in community property states, such as Nevada, laws are different. Both assets and debts acquired during marriage belong to both spouses. Even if a Nevada spouse is only an authorized user of the card, or not named on the account at all, the credit card company may come after her for the card balance.

Negotiation

If the estate does not have enough money to pay the deceased's credit card balances, she may be able to negotiate a settlement for less than the amount owed. The surviving spouse should also consider whether she herself is "judgment-proof:" if her only income is from Social Security, a pension or other government or retirement funds, it can't be seized or garnished by a creditor who gets a court judgment against her. On the other hand, she should also be aware that debt settlement or not paying a judgment can also severely damage her credit score. For this reason, the surviving spouse should seek help from a lawyer, estate planner or credit counselor for advice in dealing with the debt.

Warning

Unfortunately, there are unscrupulous individuals who take advantage of the distress caused by a death by pretending to be creditors demanding payment. They may call the spouse or another family member of the deceased in attempt to get their banking or credit card information. When taking calls about the debts of the deceased, the person who answers the phone should give the caller the name and contact information for the executor or administrator of the estate or the deceased's lawyer and never divulge any personal information.

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Enforcement Remedies for Debt

Methods for collecting debts have increased over time. Because of credit friendly laws, such as the Fair Credit Act, creditors have more legal options when a debtor refuses to pay. Ranging from self-made payment arrangements to third-party involvement, debt collection efforts have become less stressful and more successful. Creditors are able to collect outstanding debt through personal contracts, court-awarded judgments, court-awarded liens, and court-awarded garnishments, and other third party collection efforts.

Personal Arrangements

Creditors desiring to have a personal involvement in debt collection are using personal contacts during collection efforts. This method is costly and time-consuming. The initial point of contact is either a telephone call or a letter requesting a set number of payments for a set amount. For example, a debtor owning $1,000 may be asked to pay $100/month for 10 months to ensure the debt is paid in full. This technique is most effective when the debtor is willing to pay but is experiencing difficulty paying. Not only is the debt resolved in a timely manner, but also the debtor and creditor are able to make arrangements suitable to the debtor's budget.

Court Orders

Legal action may be required for debt collection. Court-awarded judgments allows the creditor to collect the debt with an aggressive approach. After a judgment is granted, the creditor is able to pursue a lien or garnishment against the debtor.

A lien is placed against the debtor's property or assets. Because the creditors has an interest in the debtor's assets, the debtor cannot sell or trade the property without the creditor receiving payment.

Courts can also order garnishments, such as wage garnishments. A monetary garnishment can be attached to any income expect for governmental assistance such as SSI, unemployment and Temporary Aid to Needy Families. A garnishment cannot be attached to court-ordered child support.

Collection Angencies

Collection agencies are used when the original creditor does not have time to pursue a debt. The creditor either assigns the debt to the company's collection department or sells the debt to an outside collection agency. Collection agencies retain rights to collect the entire debt within the limitations of the Fair Credit Act. In addition to resolving unpaid debt, a collection agency saves the creditor time and money.

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Household Debt Income Ratios

Debt management is an important aspect of a person's financial well-being. There are a number of ratios that individual's can use to ascertain whether or not they have a good handle on the amount of debt that they have acquired. No person has a set amount of debt that is good or bad, but they must be able to manage it without incurring excessive costs and afford it.

Consumer Debt Ratio

As probably the most widely used debt management ratio, this examines the amount of monthly consumer debt payments to monthly net income. Net income is after-tax income. Adding together all non-housing monthly payments for items such as credit cards, automobiles, furniture, etc., and then dividing by monthly gross income will produce a percentage value. The benchmark, or point of measure, for this ratio is 20 percent.

Monthly Housing Costs to Monthly Gross Income

Many people try to take on a larger mortgage than they can handle. The 28/36 benchmark is a good determinant of affordability.

This ratio examines monthly housing costs, including principal, interest, taxes and insurance (PITI), as a percentage of monthly gross income. Most mortgage payments are PITI payments. Gross income is everything that is earned before taxes are taken out. When PITI monthly housing costs are divided by monthly gross income, the prevailing percentage should be 28 percent or less. This is what is required by most mortgage lenders.

Monthly Housing Costs and Other Debt Repayments to Monthly Gross Income

This is similar to the ratio above, except that the numerator will now include credit card and other monthly debt payments, such as amounts for a car loan. Adding all of these to the monthly housing costs (PITI) and dividing by monthly gross income should equal less than 36 percent. Mortgage lenders will look at this. This also means that only eight percent of gross income is being spent on debt other than housing. The reason this is different from the first ratio is because that was calculated with after-tax income and this with pre-tax income.

Total Debt to Net Worth

While this is not an income ratio, it is an important measurement of how one is measuring their debt. It is an indication of how much of a person's assets was purchased using debt. Over time, this value should decline as debt is paid off. The ratio is calculated by simply dividing total debt by net worth. The lower this value, the less financial risk the person carries, or the less risk of default if something happens to that person's income.

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How to Pay Off Medical Debt

Medical debt can accumulate regardless of whether you have insurance or not. Unexpected illness or injury is a major cause of medical debt along with high deductibles and co-pays. Although most medical doctors and hospitals do not report to the credit bureau, if left unpaid medical debt can have a negative impact on your credit score when turned over to a collection agency. Not ignoring medical debt is the key to avoiding long-term financial problems.

Instructions

1

Contact the medical office, hospital or lab involved with the medical debt as soon as you receive the first bill or statement. Do not wait until it is sent to collections. These facilities have trained professionals who can help you work out a payment plan and offer the names of state and federal programs that can help you pay your debt.

2

Ask for a settlement for a payoff. Many medical facilities offer a discount or settlement amount if you are able to pay the amount in full. Even if you cannot pay the full amount, ask for a reduced total to make your monthly payments lower.

3

Use the equity in your home. If the medical debt is on several accounts, using the equity in your home to combine the payments into one might help you save money if the medical bills charge interest. Plus, this can save money considering a home equity loan's interest is tax deductible.

4

Use a flexible spending account (FSA) set up through your employer. A certain amount of your paycheck is put into the account automatically. The money is pre-tax, so it saves you money in the long run.

5

Apply for a credit card or use one you have that has a low interest rate. Some cards offer an introductory period with a zero interest rate, which is a good idea for paying medical debt.

6

Get a consolidation loan. If you have other outstanding loans that you can combine into one, a consolidation loan might save you money on monthly payments and interest.

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What to Do If You Think You're a Victim of Identity Theft

Identity theft can be one of the most difficult types of theft to overcome. With just a few simple pieces of information, a violator can use your information over and over before you become the least bit suspicious. Not only can immediate fraudulent issues arise, you may find other fraudulent issues years after the actual theft occurred. It is important to be diligent about protecting your information. Still, if you do find that your information is at risk, a few steps will assist you in correcting the issues.

Be Proactive

The best way to ensure you are protected from identity theft is to be proactive. Secure your personal information. Shred personal files for which you no longer have use. Don't give out your personal information unless it is to someone you have confirmed to be an authorized entity. Most important, check your credit reports regularly for unfamiliar activity.

Involve the FTC

If you find your information has been compromised, take note of as much information as possible. File an Identity Theft Complaint with the Federal Trade Commission (FTC). Take the completed complaint card with you to the police department. There, file an identity theft report with the station. These reports will activate your rights to block certain collection activity on these fraudulent accounts and those that may come in the future.

Inform the Credit Agencies

Contact the three credit reporting agencies (TransUnion, Experian and Equifax) and report the fraudulent activity to these agencies. Provide the agency representatives with the report numbers you received from the Federal Trade Commission and the police station. The agencies will update your reports to show there is suspected fraudulent activity. The reporting agencies will also make a special note on your reports to make creditors aware, should they look at your reports.

Contact Your Creditors

Contact your creditors and banking institutions to make them aware of the activity. As with the credit reporting agencies, provide the creditors and banking institutions with as much information as possible. Provide them with the file numbers you obtained from the FTC and the police station. You may be able to obtain a copy of the theft's applications for credit from the creditors. To do this, you must provide the creditor with a copy of the police report and a written request. Generally, these requests are handled by the creditor's fraudulent investigations department and can take up to 45 days for receipt.

Be Vigilant

Continue to be vigilant. You may receive calls or letters from the creditors or reporting agencies. If you do, provide as much information and answer any follow-up questions they have in a timely fashion. Check your reports every three months for at least the first 12 months. After you see the activity begin to cease, you can return to reviewing your reports every six to 12 months. It is also a good idea to check your driving history and criminal background reports, even if you have never had any past criminal activity. Don't underestimate the thief. Some thieves steal identities simply to sell to other parties.

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How to Convert GB Pounds to Dollars

If you are returning to the United States from a trip to the United Kingdom, or are preparing to take a trip to the United States from the United Kingdom, you need to exchange your currency. In order to convert GB pounds to U.S. dollars, you must exchange your currency at a financial institution or currency exchange specialist. Regardless of where you are in the world, you can find a place to exchange your foreign currency.

Instructions

1

Use an online currency converter, such as Coin Mill or XE, which can be found in the Resources section, to check out the exchange rate for GB pounds to U.S. dollars. When you get the exchange rate, use it as an estimate because when you do the actual conversion, a fee will be included, which results in a slightly different exchange rate for you.

2

Go to your local bank with your GBP currency and ask to exchange it for U.S. dollars. Request the exchange rate before you do the transaction because you may be able to get a better rate elsewhere.

3

Change over your GB pounds to U.S. dollars while you are traveling at an airport currency exchange kiosk or a hotel desk. According to Go Currency, the transaction charge can be higher when using an airport or hotel. You can also use a travel agency or currency exchange specialist, where you may get a better exchange rate with lower fees.

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Definition of Credit Card Relief

When a person takes on unmanageable amounts of debt -- debt that is so large that, were he to attempt to pay it down, he would suffer severe financial consequences -- he may attempt to seek some relief. With debt related to credit cards, this relief can take several forms. A person may seek to settle for paying less than the full amount owed, receive more generous terms on the line of credit, or restructure his payments.

Credit Cards

Credit cards are essentially a tool that grants individuals access to a line of credit with a financial institution. When the person uses the card to make a purchase, he is essentially withdrawing money against this line of credit. He will generally be charged a rate of interest when he does this. If he fails to pay the money back on time, he will be assessed punitive fees, which may lead to the need for debt relief.

Debt Settlement

The simplest form of credit card relief is negotiating with credit card companies to pay less than the full amount on a loan. In some cases, credit card companies will be willing to accept less than full payment on a debt, as they believe it will be more financially worthwhile than to attempt to collect full payment. Partial payment provides significant financial relief to the borrower, but will likely damage the person's credit rating.

Terms

Another form of relief is the renegotiation of terms for the card. Generally, when a person defaults on a card, he is required to pay a higher rate of interest than he previously owed. This interest will apply not just the principal of the loan, but all fees assessed for paying late. A renegotiation of terms may lower the rate of interest applied to the loan or eliminate certain fees for late payment.

Debt Restructuring

When a debt is restructured, it means that the person is still required to pay the same amount of money, but over a different period of time. Some credit card companies are willing to allow borrowers to pay according to alternate payment plans. For example, a person may be allowed to make small installment payments on a loan over a long period of time without accruing additional late or being charged a punitive rate of interest.

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Approved Debt Consolidation Companies

The U.S. Trustee Program (USTP) oversees the administration of bankruptcy cases and is a part of the Department of Justice. While its main function is to prevent abuse of the bankruptcy system, the Trustee Program has provided a list of approved credit counseling agencies to help consumers regain control of their finances. Some of the approved agencies deal with bankruptcies and counseling only, however, several provide educational resources for anyone interested.

American Consumer Credit Counseling

American Consumer Credit Counseling (ACCC) is a USTP-approved agency that provides personalized debt consolidation, credit counseling, financial education and debt management services to help consumers achieve financial stability. Their debt management programs focus mainly on unsecured debt obligations, such as credit cards, credit lines, department store cards and unsecured personal loans. ACCC consolidates payments and disburses funds to creditors on behalf of the client once a client enrolls in the program. The agency also provides a library of financial education resources and web seminars.

American Consumer Credit Counseling
130 Rumford Ave., Suite 202
Auburndale, MA 02466
866-826-6924
ConsumerCredit.org

GreenPath

GreenPath, a nationwide nonprofit consumer credit counseling service, is government-approved and since 1961 has been helping people get relief from debt through financial education, debt management and debt counseling. GreenPath is headquartered in Farmington Hills, Michigan, but operates 42 branch offices in Arizona, Florida, Illinois, Indiana, Michigan, New York and Wisconsin. It also provides licensed services across the U.S. via the Internet and telephone.

GreenPath
38505 Country Club Drive, Suite 210
Farmington Hills, MI 48331
888-860-4220
greenpathbk.com

InCharge Debt Solutions

InCharge Debt Solutions is an approved credit counseling agency and nonprofit organization that helps consumers manage debt reduction and regain financial well-being. The agency provides personalized debt counseling, debt management programs and alternatives to debt consolidation---without a loan or bankruptcy. In addition to counseling, they provide a library of financial resources, including an online interactive learning program through their partner InCharge Education Foundation.

InCharge Debt Solutions
2101 Park Center Drive, Suite 310
Orlando, FL 32835
866-729-0049
personalfinanceeducation.com

Money Management International

Money Management International is part of a family of consumer credit counseling service agencies that make up the largest nonprofit, government-approved, full-service credit counseling agency in the U.S. Founded in 1958, they provide bankruptcy counseling and education services, debt management assistance, credit counseling, financial guidance, community-wide educational programs and housing counseling assistance to consumers over the phone, Internet and through in-person sessions. They offer financial educational tools on their website such as videos, articles, calculators and webinars.

Money Management International
9009 W. Loop S, Suite 700
Houston, TX 77096-1719
866-889-9347
moneymanagement.org

Take Charge America

Take Charge America (TCA), a government-approved nonprofit credit counseling and financial education organization, helps Americans improve their financial situation through credit counseling, debt management solutions and educational outreach. The agency prioritizes financial literacy and education. TCA founded the Take Charge America Institute for Consumer Financial Education and Research in 2003 that is based at the University of Arizona. Consumers may access several free educational resources on the Take Charge website.

Take Charge America, Inc.
20620 N. 19th Ave.
Phoenix, AZ 85027
866-528-0588
takechargeamerica.org

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Simple Steps to Clean Up Your Credit Rating

You may not think much about your credit rating until the time comes when you need a good score in order to get a new car, house, job, insurance or other important asset. It may take some months, and possibly even years, but you can clean up your credit rating by being more committed to taking care of your financial affairs.

Get Your Credit Report

Get a copy of your credit report. You are allowed one free copy of your credit report every year (go to annualcreditreport.com). You can also order a credit report for free when you are denied for credit. Otherwise, you can order your credit report from the three major reporting agencies (experian.com, equifax.com, and transunion.com).

Scan Your Report

Once you have all three credit reports in front of you, look for the section that lists negative information. This is the area that you need to focus on if you want to clear up your credit rating. Sort through each listing to see if these negative reports are true.

Dispute Incorrect Items

If you find that any of the information is incorrect, dispute it immediately with the credit agencies. You can file a dispute online at the credit reporting agency's website or send a letter containing details about the information and why it is wrong. The creditor that reported the information must provide proof of why you owe the debt. If the company cannot prove its case, the information will be removed. This will cause your score to rise.

Pay Open Accounts

Once you have cleared up incorrect items, go through your credit items and pay off open accounts that are showing as past due, in collections, unpaid or charged off. Call each creditor and negotiate a payoff amount so that the information on your report can be reported as "paid." Eventually, your credit rating will go up.

Don't feel pressured to send money to your creditors immediately after making a verbal agreement. Get an agreement in writing stating that if you pay the amount agreed upon, the debt will be updated as "paid" on your credit report immediately (ask for a "payment settlement agreement in writing"). Keep receipts of your payment and present all of this information to the credit reporting agency if the item is not removed within a few weeks.

Also, if you have numerous missed or late payments on your credit report, get up to date on your payments to get your rating to rise.

Reduce Your Credit Card Balances

Your credit rating is also dependent on the ratio of your credit card account balances to your credit limits. So lower this ratio by paying off chunks of your credit card balances due. Stop using the cards---just allow the balance to fall. If you do this consistently, it will help to raise your credit score over time.

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Debt Solutions & Consolidating Credit

When a person is mired in debt, he will generally seek one or more strategies to give himself some financial breathing room. A number of debt solutions are available to individuals, all of which have their advantages and disadvantages. One of the most popular of these is the consolidation of credit, in which the individual trades a number of different debts for a single, larger debt issued by a new creditor.

Debt Consolidation Advantages

Perhaps the main advantage to consolidating a debt is that it greatly simplifies a person's monthly payment schedule. Instead of having to pay multiple creditors each month, the debtor will merely write out one check to the company that has issued it the new loan. In addition, some lenders will be willing to structure this new loan in such a way that the monthly payment size is less than the debtor is currently paying for all his loans combined.

Debt Conslidation Disadvantages

Few companies that issue consolidation loans are nonprofit. In order to earn a profit on consolidation loans, a lender will have to charge the debtor a larger amount of money than it cost the lender to buy up the person's current debts. This means that the debtor may actually be increasing his overall debt load. In addition, some consolidation loans come with large interest rates that may be difficult for the debtor to meet.

Restructuring

In lieu of taking out a consolidation loan, a debtor may be able to manage his debts by simply restructuring his agreements with his current lenders. When a loan agreement is restructured, it means that the lender is changing the repayment terms. For example, a loan may be changed so that a debtor pays a lower rate of interest or is allowed to make smaller-sized payments over a longer period of time, which can make the debt more manageable.

Debt Settlement

A more drastic solution to a person's debt problems may be to attempt to settle with her creditors so that she owes less money on the debt than she originally agreed to pay. While this may save the debtor some money in the short term, this will harm her credit rating and make it difficult for her to receive loans at a low rate of interest. This can complicate her financial future in the long term.

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What Can Be Garnished for Debt?

When a creditor gets a judgment from a court, the creditor can put through a garnishment order against certain assets, to collect the past due debt. A creditor can keep a garnishment in place until a debt is paid in full.

Size

Your wages from your job can be garnished by a creditor. The amount of the garnishment is usually 25 percent of your disposable income on a weekly basis.

Considerations

A creditor also can garnish your bank account. When a bank account is garnished, you can deposit money but you cannot withdraw money.

Benefits

If the money in your bank account is from Social Security, unemployment compensation, welfare, child support or Veterans Administration benefits, your account is exempt from bank garnishment.

Prevention/Solution

If a creditor freezes your bank account and you think it is exempt from garnishment, you need to visit the court where the judgment was rendered and fill out an exemption form. You might have to attend a hearing.

Warning

Your vehicle also can be garnished. In order for a creditor to garnish or repossess your automobile, it has to have at least a set amount of equity; the amount varies from state to state. According to Lawyers.com, the value of the car minus the loan amount determines the equity.

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How to Keep the Interest Low on Your Debt

Lenders charge borrowers an interest rate when they borrow money. This represents the borrowers cost of borrowing money for an automobile or home or using credit cards to make purchases. The interest rate a creditor charges you to borrow money will be based on several factors, including your credit history and the current rate of inflation. Taking steps to keep the interest rate related to your borrowing low can represent a savings over the course of the loan or, in the case of credit cards, a reduction in the amount you have to repay.

Instructions

1

Secure the best possible interest rate by verifying the accuracy of your credit report. Request and review your credit report on an annual basis to stay on top of any possible mistakes or errors that may show up. Take advantage of the ability to order a free credit report each year by visiting AnnualCreditReport.com. AnnualCreditReport.com processes requests for each of the three major credit bureaus. Making sure your credit report is accurate and free of errors will help you achieve the best possible credit score, and thus interest rate, based on your financial history.

2

Shop around for the best rate when applying for loans and credit cards. When applying for home or automobile loans, investigate all of your options. Ask local credit unions and your neighborhood bank if they offer loan products with lower interest rates for credit union members or current customers. Check the interest rate associated with credit card offers against interest rates offered by other credit card companies. Keep your local bank and credit union in mind as well when investigating credit card offers.

3

Stay on top of your credit to keep interest rate hikes at bay. Creditors can increase your interest rate after a late or missed payment. In addition to the interest rate hike that may occur with your current creditors, late and missed payments reported on your credit report can hurt your chances for future opportunities for low interest rate loans and credit cards.

4

Talk to your creditors and ask them for a lower interest rate. Some creditors may offer customers with a stellar payment history a lower interest rate. Consider switching to a card with a lower rate if a creditor refuses to offer you a lower interest rate. Avoid scams offered by companies promising to contact your creditors on your behalf and get you a lower interest rate. These companies often charge a fee and don't deliver on their promises.

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Help With Consolidating Bills

Consumers who need help with consolidating bills are aware of many companies that promise debt solutions that seem to be good to be true. They may indeed not be true, according to the Federal Trade Commission (FTC.) The FTC has prosecuted over a dozen credit counseling agencies and the IRS has issued a warning to consumers about selecting a debt consolidation company. According to Clear Point, an agency recommended by the Better Business Bureau, it is tempting to pay off all debts with a debt consolidation loan, using equity in your home. However, if your spending habits don't change, a debt consolidation loan can be risky.

Debt Consolidation Option

Rather than taking out a home equity loan for debt consolidation, Clear Point recommends consolidating bills by restructuring existing unsecured debts so they can be paid off more quickly. The types of bills that be consolidated include credit cards, retail cards, finance company loans, medical bills, past-due utility bills and attorney's bills. Legitimate debt consolidation requires counseling as well as the consolidation process, and results in changed habits, a renegotiated rate and one monthly payment toward all bills.

When Debt Consolidation is the Right Move

Debt consolidation may be the best step if a consumer finds himself dodging collection calls, feels overwhelmed by several outstanding debts with high interest rates, is only able to make minimum monthly payments, is "maxed out" on credit cards and is unable to put any money in savings.

Debt Consolidation Process

A legitimate credit counselor reviews your finances in a budget-counseling session, followed by a presentation of options. If a debt consolidation program is best for an individual situation, the counselor will recommend a program. In debt consolidation, the consumer pays an agreed monthly amount to the counseling agency, which disperses the funds to your creditors. The counseling agency keeps a specified amount for negotiating with creditors and disbursing the payments. The agency sends you monthly statements as the process continues.

Finding Legitimate Help

Considering the warnings from the FTC and the IRS, care should be used in selecting a credit counselor. The FTC offers guidelines for selecting a legitimate credit counseling agency, as does the Better Business Bureau. The counselor will need to know all of the accounts on which you owe and information on your income. If a debt management program is right for your situation, the sooner you are on the road to a debt-free future, the better.

Other Debt Management Options

According to the FTC's "Knee Deep in Debt," self-help debt management involves careful budgeting and negotiating with debtors on your own. Another option is bankruptcy, which is designed to provide debt relief by a discharge of all unsecured debts. Bankruptcies remain on your credit report and usually require the services of an attorney, but bankruptcy can provide consumers with a fresh start.

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How to Activate a Green Dot Prepaid MasterCard Card

Green Dot has been providing consumers with prepaid MasterCards since 1999, according to the company's website. Consumers often purchase Green Dot cards with a specific dollar amount preloaded from a retailer. Once the card is purchased, the consumer registers and activates the card. Green Dot offers two convenient ways to register and activate the card: online and by telephone. After activation, Green Dot mails you a re-loadable Green Dot card. This card also requires activation before you can use it.

Instructions

1

Remove the back panel from your Green Dot package. Behind the panel you'll find the activation number. Gather your purchase receipt. The receipt has an additional number you need to activate the Green Dot prepaid MasterCard. This is your personal identification number for activation. You'll find it on your receipt next to "PIN."

2

Visit the Green Dot activation page to activate your temporary card online (see Resources). Type the 20-digit activation code into the first box, and then type the "Captcha code" into the second box. Click "Continue" to go through the activation steps. You'll need to enter your PIN, Social Security number, full name and mailing address. Once you are finished, your card is registered and activated.

3

Call Green Dot by telephone to register and activate your temporary MasterCard by phone. The hours of operation are 8 a.m. to 1 p.m. Monday through Friday, and 8 a.m. to 10 p.m. Saturday and Sunday (Eastern Time). The number is 866-785-6963. Say "register a card" when prompted or press "1." You will be transferred to a Green Dot representative. Provide the representative with your activation number, PIN and personal information to register and activate your card.

4

Activate your permanent, re-loadable Green Dot Mastercard when it arrives in the mail. This normally takes seven to 10 business days. Visit the Green Dot permanent card activation website (see Resources) or call 866-795-7605. For activation, you'll need the 16-digit MasterCard number, the expiration date and the three-digit code found on the back.

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What Determines Creditworthiness?

Creditworthiness is a key determining factor in whether you'll get approved for a credit card or financing, and several factors determine if you're creditworthy. Creditors and lenders carefully review applications for loans and credit, and your past habits can positively or negatively affect your approval chances.

Credit Scores

An applicant's FICO credit score can contribute to a credit rejection or approval. Lenders check credit reports, but they also check credit scores. Credit scores can immediately tell lenders or creditors if you're worthy of financing. Credit scores range from 300 to 850. The minimum score for loans vary depending on the lender, but if your score is within the 700 range, the majority of lenders will consider you creditworthy and consider your application for approval.

Pay Bills on Time

Increase creditworthiness and improve your chances of getting a loan by paying your bills on time. Numerous factors affect your score, and your payment history makes up 35 percent of your score. Missing your payments and even submitting payments late ruins your credibility with lenders. If you are 30 or more days behind on payments, lenders and creditors begin reporting lateness to the bureaus. A history of lateness doesn't only result in additional fees -- it can prevent future credit and loan approvals.

How Much Do You Owe?

Keeping a low debt-to-income ratio also affects your creditworthiness. Prior to approving a loan or credit request, lenders take a look at your credit report to evaluate your existing debt obligations. Owing an excessive amount on credit cards --- more than 30 percent of the balance; maxing out your credit cards; or having several loans in your name can significantly raise your debt-to-income ratio, and creditors are less likely to extend additional credit if you're overextended. Get rid of present debts and keep balances on cards low to improve creditworthiness.

Other Factors

While the amount you owe and payment history are two of the biggest factors that determine creditworthiness, other factors also play a role in the equation. The length of your credit history, or the amount of time that you've had a credit account in your name affects creditworthiness, making up 15 percent of your score. Some creditors and lenders are hesitant to extend credit to people with no credit history or a short credit history. The types of credit you use make up 10 percent of creditworthiness, thus it's wise to have a mixture of accounts, such as a car loan along with a credit card. New credit accounts influence credit by 10 percent, and this includes factors such as recent inquiries and the number of new accounts opened.

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About Debt Settlement Companies

Debt settlement companies will work with you to reduce the amount of debt you owe. They offer a solution to people who are overwhelmed by debt. Although debt settlement is better than bankruptcy, it will have a negative affect on your credit and may make it difficult to qualify for a new loan for a few years.

What They Do

A debt settlement company will collect your monthly payments and put them into a savings account. Once you have saved enough to begin settling the debts, they will begin contacting your creditors and offering a lower amount as payment in full. While working with a debt settlement company, you will not be making on-time payments to your creditors. This option is best for someone who is already behind on payments, not for someone who is current with all of his payments.

Dangers of Debt Settlement Companies

Many debt settlement companies have closed down suddenly and taken the money that their clients have paid for debt settlement with them. If you are considering debt settlement, carefully research the company before you commit to anything. Debt settlement negatively affects your credit and should be considered a last resort before bankruptcy.

Settle Yourself

You can settle the debt yourself by saving up money and contacting each individual creditor when you have about 50 percent of the debt saved up. Offer to pay the amount you have saved as settlement in full. If they accept the deal, then request them you to send it in writing. Do not send your payment until you have received the letter. Keep a copy of the letter and a copy of your check on file indefinitely. Check your credit report in a few months to be sure the debt says "Settled."

Credit Counseling as an Alternative

An alternative to debt settlement is to go with a credit counseling company. They will work with you and your creditors to set up a budget and reduce your interest rate and payment amounts. You will pay the company who will then pay your creditors. This is a better option than simply settling your debts. Some companies are more reputable than others, so do your research for signing up with one. The biggest advantage to a credit counseling service is the financial counseling they give in regards to your budget. This will help prevent you from going into debt again, because you will learn how to control your spending.

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How to Restore Credit That Your Wife Ruined

When your credit history is ruined, it may not always be your fault. If you share a joint credit card account with your spouse--one in which multiple cards are issued--the effects of the account are felt by both partners. If your partner runs up a large debt and misses a payment, the credit card companies will knock down both of your scores. However, in the wake of this disaster, there are a number of ways that individuals can recover.

Instructions

1

Review your credit report for errors. The first step in repairing credit is to make sure that the information contained in your credit report--the basis for your credit score--is accurate. Obtain your credit report once annually for free, which covers the three main crediting agencies Equifax, Experian and TransUnion, at the Annual Credit Report website (see Resources). Identify all accounts listed in the report and report any errors to both the creditor and crediting reporting agency that may pull down your score.

2

Report any fraudulent transactions to authorities. Legally, only authorized users of a credit card are allowed to use the card to make transactions on the account. Although spouses may frequently use each other's cards, if one spouse ran up a debt on another's card without his permission, this can constitute fraud. If your wife used your card without your permission, contact the card company and your state attorney general's office.

3

Pay down existing debt. One of the main factors weighing down a credit score is the amount of outstanding debt that the person currently has out on the account. This is particularly true of debt for which the payments are late. To raise your score, pay down as much outstanding debt as remains on your account. If possible, pay in full: when a creditor writes off debt, it lowers your score.

4

Even out your balances. According to the Fair Isaac Corporation, the investors of the formula for scoring credit, the closer a line of credit is to being maxed out, the lower this will push the person's score. As you pay down your debt, if you have several credit cards and one of them is close to the limit, shift the balance to another card. This will result in a gain of several points.

5

Take out new credit--in your own name. The only true cure for a damaged credit history is time, and timely payments. To held balance out the blotches on your record, take out new lines of credit and pay down the debt on time and in full. To prevent your wife from committing the same error, ensure the card is issued only in your name and guard it closely.

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The Steps to Pay Credit Card Debt

There's nothing inherently wrong with using credit cards, but the convenient spending they allow can lead to unmanageable debt if you're not careful. If you're facing credit card debt that cuts into your family's budget and results in bills that are higher than you can afford, you need to pay off your debt in the right order by using some common sense tactics.

Stop Using Credit

You'll have a much better chance of paying off your credit card debt in a reasonable amount of time if the balance isn't constantly creeping upward. When you decide it's time to get serious about paying down your debt, stop using your credit cards altogether. You can cancel the cards, or, if you plan to use them in the future once the balances are wiped out, store them someplace safe where you won't have easy access to them.

Reduce Spending

The best way to pay off credit card debt is by making the largest payment you can afford each month. This means cutting back elsewhere so you can write the biggest check possible to your credit card company. Eliminate luxuries such as cable television, cell phones and vacations. Find free alternatives such as a local park where you can exercise instead of paying for a gym membership, or a nearby nature preserve where your family can enjoy the outdoors without taking a plane trip to an exotic location.

Contact Your Creditors

If you run into financial difficulty while paying off your credit card debt, don't hesitate to contact the credit card companies. Creditors may offer to forgive a late payment fee if they think it means the difference between your continuing to make payments or giving up and defaulting on your debt. If you need additional help, a nonprofit credit counseling agency may be able to work with you and your creditors to reduce your interest rate. However, credit counseling services cost money, and there's no guarantee that they'll be able to save you money.

Pay High-Interest Cards First

If you have multiple credit cards, pay off the card with the highest interest rate first. Interest rates contribute significantly to what you owe, so eliminating high-interest debt will save you money in the end. Even if its balance is higher, pay off the highest interest card fully while making minimum payments on all your other cards. When the first card is paid off, move to the card with the next highest interest rate and so on.

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Where Can I Get an Anti-Garnishment Letter for My Bank Account?

When a creditor is owed money, they may resort to obtaining a judgment against you and then attempting to collect on the judgment. One way to collect on a judgment is to garnish your bank account. While garnishing a bank account is legal, there are some income sources that are exempt from garnishment as well as state laws that exempt additional funds in many cases. If your bank account has been garnished, you may be able to stop, or lift, the garnishment order.

Garnishment Procedure

As a general rule, a creditor must file a lawsuit against you before they can garnish your bank account. The federal government, however, can garnish you without filing suit first. You must be notified that the lawsuit has been filed and given the chance to defend the lawsuit in court. If you do not defend the lawsuit, or do not win, the court will enter a judgment against you. At that point, the plaintiff, or creditor, may request the court order a garnishment of your bank account. If ordered, the court will forward a copy of the order to your bank. Your account will then be frozen until a hearing can be held to decide whether or not the money in your account can be used to satisfy the judgment.

Exemptions

In order to stop a bank garnishment, you have to have a legal reason to do so. Both federal and state laws may help. Federal law provides a minimum amount of protection for wages you earn; however, many states allow you to exempt considerably more than the federal rule. Some states also allow exemptions for dependents, disabled family members or heads of household. Federal law also protects most federal benefits from garnishment unless the garnishment is for a support order or for taxes. If the funds held in your account are covered under a state or federal exemption, then you should be able to lift the garnishment order.

Organizations That May Help

While there is not an official letter that you must use to prevent or lift a bank garnishment order, many state legal aid organizations provide helpful forms, letters or guides that you may use as a reference when you are faced with a bank garnishment. You may also choose to hire an attorney who will provide all the forms you will need. Contact your local legal aid organization or an attorney as soon as you are notified of the garnishment. You must appear at the hearing held on the garnishment if you wish to object or claim an exemption.

Prevention/Federal Benefit Exemption

If you know that you have an outstanding judgment against you, try and prevent a garnishment from happening instead of having to object after the fact. As a general rule, bank accounts into which federal benefits are direct deposited are protected up to the amount of the benefits. While your bank may recognize that on its own, it's a good idea to write to your bank explaining that your account receives monthly federal benefits via direct deposit and that you believe those funds are exempt from garnishment. The same may apply to state law exemptions. Simply explain in the letter what state exemptions you believe you are entitled to in the event the bank receives a garnishment order.

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Things Collection Agencies Cannot Tell You

Collection agencies employ many different methods to collect debts. Under the Fair Debt Collection Practices Act (FDCPA), some of these methods may be illegal. By law, collection agencies are prohibited from making false threats and from falsely representing themselves. They are also prohibited from making false claims about the debt or their intentions to prosecute you for it. If you find that a collection agency is breaking the law, there are steps you can take to defend yourself.

False Threats

Certain threats are unlawful under the FDCPA. A debt collector may not threaten to refer your account to an attorney, harm your credit rating, repossession or garnishment without actual intention of action on the threat. Keep in mind, though, that they are allowed to inform you of their actual intent to refer the case to an attorney and/or their intent to refer the debt to a credit agency. What they can't do is use a false threat to intimidate you into paying the debt. In the same way, it is also unlawful for a debt collector to threaten to have you arrested if you don't pay the debt.

False Representation

It is unlawful for collection agencies to represent themselves falsely in order to collect a debt. This means that a debt collector cannot falsely claim that he or she is an attorney, and they may not falsely claim that they have filed a lawsuit against you. Debt collectors may not use false names, and they are prohibited from contacting you using stationery that is designed to look like an official court or government document.

False Claims

It is unlawful for collection agencies to make false claims in order to collect information about you. In the past, sometimes debt collectors would call alleged debtors and pretend to be taking a survey, in order to get more information to use against them. Under the FDCPA, this practice is prohibited.

What To Do

If you are find that a collection agency is engaging in unlawful debt collection practices, you have the right to sue them in state or federal court within one year from the date of the violation. If you win, you may recover damages in the amount of any losses you suffered as a result of the violation, plus an additional amount of up to $1,000. You may also be able to recover court costs and attorney fees. Start by reporting the agency's violations to your state attorney general's office. If you have a problem with a collection agency located outside of your state, contact the Federal Trade Commission.

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Statute of Limitations for Collection of a Third-party Debt

Those having trouble with old debt should look into the statute of limitations for debt collection of a third party. While a statute of limitation doesn't prevent a third party from attempting to collect a debt, it does provide you with an affirmative defense in civil court. If your debt is older than the local statute of limitations, you may well welcome a lawsuit, because this will help put the matter to legal rest.

State Law

There is no federal law on the statute of limitations for the collection of third-party debt. This means that the law varies from one state to another throughout the country. Depending on what kind of debt you are talking about, the statute of limitations may be as long as 20 years -- and the creditor may be able to renew its claim on the debt at the end of this time period. Look at your local state law for specifics.

Types of Debt

Even within a state there are different laws on different kinds of debt. Open accounts, more commonly referred to as credit card debt, are a common type of debt with which people have trouble getting dismissed. Written and oral contracts are subject to different statutes of limitations. Another type of debt that may have a different statute of limitations depending on the state where you live is a bad check. Court judgments have their own statute of limitations and may be renewable.

Tolling

"Tolling" refers to the age of your debt. Again, laws vary from one state to another and for different types of debt. Generally speaking, however, debt begins tolling the last time that you pay down on it. Whenever you make a payment, the "clock" starts over again. This means that if the statute of limitations is five years and you make a payment after a four-year lapse, you must wait another five years before using the statute of limitations as a defense.

Scavenger Debt Collectors

If years have gone by without you being contacted about a debt and you hear from a collector, you most likely are hearing from a so-called "scavenger" agency. These agencies purchase very old debt for a fraction of its original cost and use highly aggressive -- and some argue, unethical -- methods to collect that debt. They may even try to collect debt that is past the statute of limitations. Do not admit that you owe the money or agree to make any payments on the old debt.

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How to Avoid Judgment From Collectors

Judgments are a last effort on the part of credit institutions to collect payment. Judgments can come in the form of court orders or wage garnishments. In many cases debt collection companies will use judgments as a way to frighten debtors into paying. Most of the time judgments can be avoided. Debtors need to keep open communication with their creditors and try to propose a payment plan to help clear the debt.

Instructions

1

Make a list of outgoings from your account each month. Subtract it from the money that you have coming in to determine any disposable income available. Once you have this determined come up with an amount you can pay the creditor each month.

2

Send the payment offer and your monthly budget to the creditors. The budget will act as proof of what you can afford to pay. Await the answer. If they agree to the payment plan it is essential you stick to it until the debt is repaid.

3

Send the same offer to the collection agency's attorney if the company turns down your offer. The attorney might accept the offer to avoid going to court. If the attorneys refuse the agreement and a court date is set, take the same documentation to the hearing. The chances are good the judge will accept it if it is reasonable. This will avoid a judgment order to pay the money up front or a wage garnishment.

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How to Hedge Your Mortgage

In today's market, the interest rate for 30-year fixed mortgages is about 5 percent. Since this rate is near historic lows, many mortgage brokers and financial analysts expect this number to rise over time. If you are worried about increasing interest rates, there are hedging strategies you can take to decrease the financial hit if the interest rate on your mortgage increases.

Instructions

How to Hedge Your Mortgage

1

The simplest way to hedge against future rate increases is to get a fixed-rate, 30-year mortgage. Fixed rate mortgages lock in the current interest rate and last for 30 years, although they can be paid off faster.

2

Buying a targeted ETF, or exchange-traded fund, will help you hedge your mortgage. By buying an ETF that increases in value as rates rise, such as the ProShares UltraShort 7-10 Year Treasury Fund, you wlll minimize the hit you will take if interests rates rise. If you don't need a mortgage now, but want to hedge against the future interest rates, buying a PST in the short run and then selling it to pay for your downpayment is a popular strategy.

3

There are a wide variety of secondary market instruments that trade based on the changing values of interest rates. As you want to hedge on the changing future value of interest rates, the proper derivative to buy is a future. Currently, the most popular mortgage hedging future is the Eurodollar future, which is based on the LIBOR interest rate. If the LIBOR goes up by 1 percent, and your mortgage goes up by 1 percent, the Eurodollar future increases in value by $2,500. This means you need one Eurodollar future for every $250,000 of value your mortgage has to fully hedge per year. A $750,000 mortgage for 2 years would require 6 Eurodollar futures, 3 for each year.

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How Long Do Deficiency Judgments Remain on Your Credit Report?

A deficiency judgment is a public record that appears within your credit history. Deficiency judgments often occur after a home foreclosure or a vehicle repossession and have a negative effect on your credit score.

The Facts

When a creditor repossesses property to satisfy a debt, the value of the property may be less than the amount owed to the creditor. When this occurs, a creditor may sue you for the balance. If the creditor wins, a deficiency judgment will be issued against you.

Time Frame

A deficiency judgment will remain on your credit report for seven years. If the judgment remains unpaid, however, your creditor may apply with the court to have the judgment renewed for another seven-year period.

Function

The purpose of a deficiency judgment is to help a lender recover losses beyond that of the repossessed property. These types of judgments are often necessary if the item was willfully damaged by a borrower prior to repossession.

Considerations

If your loan paperwork states that the loan is a "no-recourse" loan, this means that, in the event of a repossession or foreclosure, your lender cannot sue you for any balance beyond the item itself.

Effects

In some states, a creditor may request a writ of garnishment from the court after being awarded a deficiency judgment. This will give the creditor the legal right to garnish a certain percentage of your wages every pay period.

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How to Determine Child Support in Texas

In Texas, the family court determines child support by examining the noncustodial parent's income and expenses. The court requires the parent to pay child support based on how much he makes and how many children he must support. If the court believes the parent is deliberately unemployed, it may require him to pay a greater amount of child support than is standard for his income level.

Instructions

1

Calculate your net income. Take 100 percent of your wages and any other income you earn (dividends, self-employment income and rental income) and subtract Social Security taxes, federal and state income taxes and expenses for your children's health care.

2

Multiply your net income by a percentage based on the number of children you must support. As of 2010, Texas requires you to pay 20 percent of your net income if you have one child, 25 percent for two children, 30 percent for three children, 35 percent for four children and 40 percent for five or more children.

3

Subtract 2.5 percent from the percentage you owe each month if you are supporting a child from a previous marriage. For example, if you have two children from this marriage and one child from a previous marriage, use 22.5 percent as your percentage for determining child support for the children from this marriage.

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What Happens When You Cash a Bad Check at a Check Cashing Place?

For customers to utilize services at a check-cashing business, they submit an application. Personal information submitted during this application process creates a way for the business to find customers if they pass a bad check, which is a felony. Business owners are finding ways to minimize the hassle of dealing with bad checks.

Check Cashing

People who frequent check-cashing facilities typically have reasons they cannot deal with banks. They may have credit issues and are in the Paychex database because of problems with a previous account. People who cannot provide proper documentation to open a bank account also utilize check-cashing facilities. Check-cashing facilities cash your check and take a percentage of your money for providing the service.

Application

You must apply to have check-cashing privileges. The application requires a mailing address. You state your work address. Check-cashing businesses want to know everything about you, considering the transient nature of their clientele. If your application is approved, you are issued an identification card for use every time you cash a check. Some check-cashing facilities charge you an annual fee, reinforcing a membership environment.

Fees

Check-cashing facilities charge customers substantial service fees. Unlike a bank account, where you a charged a monthly maintenance fee, check-cashing businesses collect a percentage of each check you cash. Sample fees may be 1 to 5 percent of the total value of your check. The check-cashing business knows its customers have no choice but to pay a steep price for its services.

Consequences

Bad checks are bad for business. The check-cashing facility is hit with a returned check charge. This charge is in addition to the amount paid to the customer to cash the check. The business first contacts the customer via phone to let him know his check was returned. Certified mail is then sent encouraging restitution. Finally, the business can pursue legal action and have a warrant issued. The individual who cashed the check can be arrested.

Penalties

The time given to you to make good on your check varies by state. The check-cashing facility resorts to legal action a week or two after sending you notification of your bad check and not receiving a response. You are arrested and taken before a judge. If it is determined you unintentionally cashed a bad check, you will pay the check amount plus additional penalties. If you are a repeat offender, you will be sentenced to jail time and fined.

Solutions

To reduce the time wasted by businesses chasing people who cash bad checks, proprietors have created a database. A grocery store owner created the computerized database after growing tired of losing money. Information in the database comes from the application and photograph taken when an applicant applies for check-cashing privileges. With business owners taking preventive measures, they can provide better services without raising fees.

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Does a Satisfied Judgment Hurt My Credit?

Lawsuit judgments are a matter of public record. Credit bureaus regularly search court records and list judgments on credit reports. While a judgment can do serious damage to your credit report, a satisfied judgment is a significant improvement over an unpaid one.

Court Judgments

When a plaintiff wins a lawsuit, she receives a judgment against the defendant. The judgment is a debt that the defendant is obligated to pay, and the plaintiff to the lawsuit can collect the judgment from the defendant in several different ways. If the defendant does not pay the debt immediately, or does not agree to a payment plan or settlement, the judgment creditor can seize the defendant's assets, take out a lien on his property, and in most states, garnish his wages.

Statute of Limitations on Judgments

A statute of limitations on judgments is the legally prescribed amount of time that a judgment creditor has to collect her judgment from the defendant. Once the statute of limitations on the judgment passes, the creditor can no longer use the courts to force the defendant to give up assets to pay the debt. The statute of limitations on judgment collection varies by state, though it is typically longer than the statute of limitations on other types of debt. In some places, a judgment creditor can ask the court to renew the statute of limitations.

Credit Reporting

Because judgments are a matter of court record, they can be included in your credit report. Federal law requires credit bureaus to take a paid judgment off your report when seven years has passed since the date it was entered into the court record. Credit bureaus can report an unpaid judgment until the statute of limitations runs out.

Potential Creditors

Even if you maintain a good credit record after a court orders a judgment against you, potential creditors -- such as mortgage companies -- may want you to pay off judgments before lending you money. If you cannot pay off a judgment all at once, your judgment creditor may be willing to settle your judgment for less than what you owe. After paying or settling a judgment, you should check your credit report to see that the judgment creditor has updated the status of your judgment to "paid."

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Debt Refinancing Information for You

Debt refinancing happens when an individual or a business combines several debts into one single payment to lower overall costs, among other reasons. For example, if you have two loans with an interest repayment rate of 10 percent and two loans with an interest repayment rate of 8 percent, a debt refinancing plan at 7 percent saves money on all the loans. In addition, you'll only need to make one monthly payment, rather than multiple payments.

Personal

Personal debt refinance -- known as debt consolidation -- helps individuals get out from under the burden of overwhelming debt. The consumer pays the various debts off by taking out one large loan, which is paid back monthly -- usually at a lower interest rate than the previous loans. In some instances, a borrower refinances his home and uses the money in order to pay off the various debts.

Business

Business debt refinancing works the same way as personal debt refinancing, although the numbers involved are larger. For example, many business debt consolidation programs require a minimum debt of $100,000 in order to accept a business debt refinancing plan. If the amount of the debt is less than that, examine other alternate methods, such as taking out bank loans.

Chrysler

One of the most largest debt refinancing plans came from Chrysler Group LLC. When the economic downturn of 2008 struck, many of the major automakers turned to the United States Government for money to keep going. Chrysler was one of the automakers and in 2009, the United States provided financing to keep Chrysler going. When foreign automaker Fiat made its intentions clear about wanting to purchase Chrysler, the auto manufacturer first had to pay off the United States government before the deal could progress. In order to accomplish that, it set in motion plans to have four major banks set up a debt refinance program.

Risks

Debt refinancing contains risks. In many cases, lenders require additional collateral before initiating a debt refinancing program. The collateral is forfeited if the debt financing does not work. In addition, if a business undertakes a debt refinancing program, potential investors might not want to put money into the business. There are times when debt refinancing must be used, despite the risks. When Fannie Mae found itself in financial trouble during the mortgage crisis in 2008, the only way it stayed functioning was by refinancing its debt.

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How to Get Better Mortgage Rates

With all that is going on in the finance world, this may be the right time for you to get better mortgage rates than you have now. What is out there that you are not aware of? Get on your laptop and surf the internet for details.

Instructions

1

Can you really get better a mortgage rate than you have now? According to the news, yes, you can. If rates are 2% lower than you have now, why wouldn't you try to pay less. Search online, checking names you know first. With all that is going on in the world, you may not want to get involved with a name you don't know.

2

Do you have a printer? If so, use printer friendly sites to print information on several lenders. Be sure to look at several bank sites. Compare your final information. Instead of applying online, think about calling all of the lenders you are interested in. Make friends with your contacts. Bring your application to your contacts in person-avoid doing this by mail if you can.

3

Once you know what several banks are offering, do a cost analysis. Who will charge you an application fee? Who offers to waive the credit application fee, the appraisal fee, or other charges that will leave more money in your pocket? What will this mortgage actually cost you?

4

When looking for a better mortgage rate, check Bankrate.com for current rates. Do the banks you are thinking about compare? Be sure to let lenders know you are aware of what rates should be if you think what you are being offered is wrong. An informed consumer is less likely to be paying too much. Look for more information in resources below.

5

Don't count yourself out of the mortgage game because you think your credit isn't good enough to obtain better financing. With government encouragement, things have changed considerably, and you can get better mortgage rates. And it is still free to ask.

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How to Apply for a Low Income Loan

If you are a low-income consumer struggling with bills and household expenses, you may be able to qualify for a low-income loan. While these loans are not typically considered "conventional" loans, you still can find financing that is financially beneficial. Before filling out applications, though, you must do ample research and carefully consider how much you can afford to spend on a loan payment. Finding lenders, however, is a rather simple process.

Instructions

1

Pull a copy of your credit report from Annual Credit Report. This is a federally mandated website that offers free credit reports to all consumers who request one. You should also pay for a copy of your FICO score--a three-digit number between 300 and 850 that represents your overall creditworthiness.

2

Calculate your income ratios. The two ratios used by lenders are the debt-to-income ratio (DIR) and the disposable income (DI) ratio. To calculate your DIR, divide the sum of all monthly expenses (excluding non-credit-reportable expenses) by your gross monthly income. Most low-income lenders want to see a DIR below 52 percent.

3

Subtract all monthly expenses (excluding non-credit-reportable expenses) from your net monthly income to find your disposable income (DI). Low-income lenders want to make sure you can afford food, clothing and miscellaneous expenses after paying all bills. Most low-income lenders want to see a DI above $300.

4

Research lenders based on your FICO score. If you have excellent credit (a FICO above 720) but low income, you still could qualify for a loan through a local bank or credit union. However, if your FICO is below 720, you should look instead at finance companies. These institutions cater to non-traditional borrowers. Wells Fargo Financial and CitiFinancial are examples of finance companies.

5

Apply to three or four lenders. Excessive applications will generate excessive inquiries on your credit report, which could in turn reduce your FICO score. Provide all lenders with full income documentation.

6

Ask prospective lenders about their stated income programs. These programs allow you to include income without verifying the source with documentation. This can be tip income, under-the-table income or childcare income. Include only income you are receiving regularly. This income will help both your DIR and DI ratios.

7

Review all loan offers side-by-side. Recalculate your DIR and DI with a new loan payment. Consider consolidating outstanding bills into a new loan to reduce monthly payments. Do not accept any loan that will put you into a more precarious financial situation.

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