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

Wednesday, March 31, 2004

What Percentage of Debt Is Required for a Debt-Relief Government Grant?

Looking for information on government-funded debt relief? Stop wasting your time. There is no government program that provides funding for a borrower who wishes to pay off her debts. However, there is help available for those willing to work to pay it off or suffer the consequences of bankruptcy. Remember, with debt relief, there are no easy answers if you're serious about eliminating debt.

Grant Scam

    The Federal Trade Commission takes the threat of fake grant criminals so seriously that it has issued a warning to consumers. These thieves may tell you that they're calling from the "Federal Grants Administration" -- there's no such organization -- to tell you that you're eligible. Do not, under any circumstances, give a caller or a website personal information like your checking account number, your Social Security number or your credit card numbers. The worst thieves use this information to steal your identity. Real grant information is available for free. In addition, grants are not used to pay personal debts; they're used to improve the public good. The government does not consider the elimination of your debt as good for the public.

Real Help

    Discouraged? Don't be. There is legitimate help. If you're overwhelmed with credit card and other types of debt, call a certified credit counselor. There are a variety of nonprofit financial organizations whose sole purpose is to educate and assist the public in managing their money. Each organization provides a free, personalized one-hour consultation. Some organizations also provide housing and bankruptcy counseling. They won't reach out to you; you must take the first step. The National Foundation for Credit Counseling is one such resource; it is the nation's oldest credit counseling organization, and it partners with local agencies so that you can have an in-person meeting if you prefer.

Debt Management Plan

    The credit counselor's primary weapon is the debt management plan. In the DMP, the counselor negotiates with the lenders on your behalf. It's not uncommon for lenders to reduce or eliminate interest rates, as well as lower payments. The debt is paid in full in about three to five years. If the borrower decides to enroll, he must include every account in the plan (an exception may be made for a corporate-sponsored card used only for work). The accounts are closed, and the borrower makes payments to the credit counselor, who distributes it on his behalf. The accounts are paid in full by the end of the program.

Settlement and Bankruptcy

    Settlement is another legal alternative, but it's risky. In debt settlement, a delinquent borrower makes a lump-sum payment to the creditor that's a fraction of the total outstanding debt, often between 30 and 50 percent. It's devastating to credit history; settlements stay on the credit report for seven years. If you're really desperate, there's bankruptcy, in which unsecured debts are usually eliminated. Depending on the type of bankruptcy you file, you may have to sell assets to repay creditors. It's the worst-case scenario for a borrower, and it stays on your credit report for 10 years.

Can a Company Garnish My Wages in Texas?

Texas is one of the few states that do not allow creditors or debt collectors to garnish a debtor's wages. This protection includes collection for debts covered under the Fair Debt Collection Practices Act, such as credit cards debts, medical bills, and personal, family and household debts. Exceptions apply, including child support payments and federal tax debts.


    Ordinarily, to garnish wages, a creditor has to first file a lawsuit against you. You can contest the suit in court. If the court agrees with the creditor, it grants him a judgment. To garnish wages, the creditor applies for a wage garnishment from the same court. The court issues a writ of garnishment, which orders your employer to withhold payments from your wages. Once judgment has been granted, a wage garnishment is not difficult to obtain if the creditor knows your place of employment. Although Texas does not allow creditors to garnish wages, they can still obtain a judgment against you. Some creditors resort to a bank account garnishment after receiving a judgment.


    If you are paid in a state that allows wage garnishments, a Texas creditor can obtain a judgment in Texas against you, domesticate it in the foreign state and then seek a wage garnishment there. Similarly, if you are in Texas and the creditor is in a foreign state, the latter can domesticate a judgment in Texas and obtain a writ to garnish via an allowable method, such as from your bank account. These processes can be complicated and costly and are not commonly exercised.


    In Texas, you are not exempt from child support withholding or an IRS wage levy. The court can order an employer to withhold up to 50 percent of your pay if you are supporting a child outside of the support order, and up to 60 percent if you are not. It can also order an additional withholding of 5 percent for late support payments exceeding 12 weeks. Your employer uses IRS Publication 1494 and your Statement of Exemptions and Filing Status to calculate the amount of your income that is excluded from levy.


    In most cases, a debt collector has four years to bring a lawsuit against you in Texas and 10 years to enforce a judgment. The court can appoint a "receiver" to sell your nonexempt property, such as your business or rental property, to satisfy a judgment. Social Security payments, some pensions, several public assistance or benefits and some insurance or annuities payments are exempt from garnishment in Texas.

The Statute of Limitations for a Written Contract in Louisiana

Louisiana has laws regarding the time frame during which a debtor may be sued for an outstanding debt. The laws stipulate what the state has judged as a reasonable period of time within which creditors may attempt to collect an unpaid debt through the courts.


    The laws establish four types of debt: oral contracts, written contracts, promissory notes and open accounts.


    Each debt type has a statute of limitations, beyond the expiration of which a creditor may not sue a debtor.

Written Contract

    A written contract is a contract in which the terms have been specified on paper and signed by the debtor.

Time Frame

    The statute of limitations on a written contract in Louisiana is 10 years. Until this time has passed, a debtor is at risk for being sued by a creditor.


    A creditor who files suit in connection with a written contract before the statute of limitations has passed may be able to garnish up to 25 percent of the debtor's wages, according to Louisiana garnishment laws.

Tuesday, March 30, 2004

Can I Be Sued for a Debt Before the Debt Is Verified?

Consumers should look at a debt collector who is trying to collect a debt from them with skepticism. As debts are bought and sold by third party debt buyers, errors can be introduced into the process, meaning that people can be targeted for collections who do not owe money. Sometimes, the collections process progresses to a lawsuit against a consumer, when the debt has not been verified to have been accurate.

Requesting Verification

    A consumer can request verification of a debt from a collector who contacts her attempting to collect a debt. She must write to the debt collector to request proof that the debt is valid and the reasons why she owes the debt. Many debt collectors will have difficulty providing this information but will still proceed with aggressive collection of the debt. If the creditor provides verification that the debt is valid, it will probably move forward with collections efforts if the consumer does not pay or make arrangements to settle the debt.

Debt Not Verified

    A collector is under no obligation to offer debt verification to a consumer if the consumer did not request it. A collector is likely to assume the debt is valid if it does not hear from the consumer within 30 days. The creditor will probably continue with collection efforts, and may eventually sue the consumer. A court will probably want verification of the debt, particularly if the consumer asks for it during a court appearance, which may make it difficult for a collector to win a lawsuit for collections.

Third-Party Debt Buyers

    Verification of debt is often difficult for third-party debt buyers. Many times, a debt will pass through multiple collectors, as the original creditor or a debt collector sells the debt to other parties. Consumer debt is often purchased in portfolios, or large groups of debt, for pennies on the dollar. Many times, the identifying information for the debt doesn't transfer with the sale, so the collector may have difficulty verifying the debt. The sales process can also introduce errors, from incorrect balances to people being named as debtors who do not owe the money.

Debt Information

    In a memo to the Federal Trade Commission regarding ways the FTC can protect consumers facing debt collection actions, Consumers Union staff attorney Lauren Z. Bowne states that all consumers and debt collectors should provide information proving a debt is valid. This information is divided into two parts: baseline and baseline plus. Baseline information includes the amount of the debt and name of the original creditor, as well as an itemization of the balance, including fees and interest charged. Baseline plus information goes further and includes a signed contract by the consumer and detailed information about the charges and payments made on the debt. Baseline plus information should also include the chain of title if the debt has been sold.

Can I Avoid Garnishment in Georgia if I am Head of Household?

Garnishment is a collection strategy used by creditors when your account has become severely delinquent -- usually at least six months past due -- and you have made no effort to establish a repayment arrangement. Although some states provide protection against garnishment for heads of household, you are subject to the same garnishment laws as any other debtor in Georgia as the head of your household.

Executing a Garnishment

    Before a private creditor or collector can garnish the wages of any debtor in Georgia, it must file a civil suit in the magistrate court of the county where the debtor resides. If a creditor files a lawsuit against you, and you cannot provide proof that you have already paid your debt, the magistrate court will grant a judgment in favor of the creditor. Your creditor can then obtain a writ of garnishment, which is a legal authorization for wage garnishment. However, a government entity does not typically need a court order before executing a garnishment.

Garnishment After Judgment

    After a creditor or collector obtains a legal judgment against you in Georgia, there is little you can do to stop the garnishment. A judgment removes you from the process, leaving the court, the creditor and your employer to determine how much the court will take from your earnings. You may petition the court for a hearing to demonstrate that garnishment would reflect a severe financial hardship. However, it is up to the court to decide whether the hardship outweighs your legal obligation to repay your debt.

Limitations of Garnishment

    Georgia follows federal law regarding garnishment limitations. If you earn less than 30 times the federal minimum hourly wage per week, your earnings are garnishment-proof. If you earn more than this amount per week, the creditor can take your earnings in excess of 30 times federal minimum wage each week, or 25 percent of your income after taxes, whichever is less. These limitations apply regardless of how many dependents you have. However, if the garnishment is for past due taxes, child support or alimony, the creditor may take 50 percent of your earnings if you support a spouse or dependent, and 60 percent if you support a spouse or dependent.

Avoiding Judgment

    Avoiding a judgment is the most effective way to avoid wage garnishment in Georgia. Stay in contact with your creditor or collector and demonstrate willingness to pay off your debt. Because legal action and garnishment is expensive, most creditors would rather work out a payment arrangement with you than pursue legal action, even if the arrangement involves a temporary payment forbearance or interest rate reduction.

How to Withdraw Money from a Credit Card and Deposit It to a Bank

There are several ways to get cash from your credit card. Explore the options and see which way is the most convenient. Once you have the cash, you can deposit it right into your checking or savings account. Before you get cash from your credit card, make sure you are aware of the fees involved. These types of transactions are cash advances and they can be costly.



    Review the ways to get cash from your credit card. If you want cash from your credit card, you can call your credit card company and have the money transferred right into your bank account. You can also use one of the convenience checks that banks sometimes issue to credit card holders.


    Get in contact with the bank that issued you a credit card. After checking your credit limit on the card, let them know you want to do a balance transfer right into your bank account. The credit card company will need your routing number and bank account number. They will transfer the money right into your bank account. The money should be available for you to use in approximately three to five business days.

    There could be a balance transfer fee, which can vary from bank to bank. Balance transfer fees are usually about 3 percent, according to bankrate.com, but some banks are charging 4 or 5 percent. Sometimes you can negotiate a balance transfer fee. Find out if your credit card company has a zero percent rate for balance transfers. This is a promotional rate or introductory which may last from six to 12 months. The credit card will have a standard rate in place after the introductory rate expires.


    Wait three to five days and then check your bank account to see if the funds have been transferred. Once the money is in your account, you will have access to the funds. If the money was transferred from your credit card to your checking account, you can now use your own personal checks for payments and purchases.


    Review your credit card statement. Your credit card statement is another way for you to confirm the amount of the balance transfer. Your statement will have the amount of your transaction fee and your introductory rate as well. Many credit card companies offer introductory rates, according to FTC.gov.

Sunday, March 28, 2004

What Is the Difference Between a Bank Note & Currency?

What Is the Difference Between a Bank Note & Currency?

There was a time when a "bank note" and "currency" were one and the same. This ended in the 20th century, and the two concepts are today opposed. In 2011, as macroeconomic problems continue to plague most of the world, with no end in sight, the concept of a "bank note" has been revived.

Bank Notes and Currency

    A bank note is a promise. It is a promise from the issuing authority that the note is worth a certain amount of a commodity. The issuing authority was most often the government, and the commodity was most often gold. A bank note, most commonly, was the currency of a country that was issued by the state and backed by a definite amount of gold. As of 1933, gold was eliminated as the monetary standard and was replaced by private banks.

What is Currency?

    Broadly speaking, currency is the only permitted medium of exchange within a certain legal jurisdiction. Currency itself has value depending on how much of it exists versus how much economic production occurs within a jurisdiction. Too much currency with too little production means inflation, and the currency can become worthless. Therefore, currency must have intrinsic value. This value stabilizes the currency and imposes fiscal discipline on the government that issues it. That stabilization mechanism has traditionally been gold. The problem with gold, as University of Nebraska economist Tarik Abdel-Monem has written, was that if gold left a country due to balance of payments difficulties, the economy would become unbalanced and could possibly lead to serious recession or depression. The argument for fiat currency was that a central bank could adjust for these kinds of crises more quickly than could a real bank note currency.

What is a Bank Note?

    Currency backed by gold, or some other commodity, is called a bank note. It certifies that the paper you hold in your hand has intrinsic worth. The "note" says that a certain indicated amount of gold exists that gives that paper its value. The wars of the 19th and 20th century, especially World War I, forced governments to print more and more money, and many advanced economies had to leave the gold standard so as to finance their wars.

Fiat Currencies

    The entire world, as of 2011, creates currencies by "fiat." Whether a banking cartel prints the currency, as in the U.S., or the government, as in China, the value of the currency is what that authority says it is. Citizens accept it because there is no other option. There is no discipline in either government spending or consumer debt because the dollar has no value except what consumers and bankers give it by their faith in its strength. As soon as this faith disappears, so does the currency.

How to Report Past-Due Accounts

How to Report Past-Due Accounts

Past due accounts can happen to all people, from retailers who fail to make a payment to a vendor for purchased goods to college students who must make loan payments. The academic institution or company follows certain reporting procedures regarding these accounts. Collections departments, either internal or external to the organization, need the reports so that they can institute collection attempts with the debtor. Past due accounts are usually reported after the first 30 days.



    Create the report in a spreadsheet application or any word processing application that your organization uses. Pull out the accounting books. Note all accounts that are past due for over 30 months.


    Place the organization's name, address and phone number at the top of the page. Type in the date the report was made, your name and job title as creating the report.


    Make a table by placing columns and rows with appropriate headers. Place in header titles, such as the account number, name and description of what the past due amount relates to, in the columns. Include other headers such as interest if your organization charges a fee for past due accounts and total amount due.


    Place in the data regarding the person or company with the past due account into the appropriate rows under the headers. Attach additional pages regarding collection attempts made by the organization that includes dates and times of contact.


    Save the report in the past due accounts folder on your computer. Print out hard copies to keep in a separate file. If you are sending this report to a collections department, type in the contact person, job title, phone number and department name. Include the address if you are working with an outside collections agency.

Friday, March 26, 2004

State Garnishment Laws in Michigan

State Garnishment Laws in Michigan

By definition, a garnishment is a court order that allows for a portion of an individual's income or money in a bank account to be taken directly by a creditor to pay off a debt. In Michigan, an individual, organization or private creditor such as a landlord may not garnish a person's wages until the court has issued an order allowing it. As of 2010, federal laws mandate that $154.50 per week is exempt from garnishment. However, up to 25 percent of remaining wages may garnished to satisfy the debt.

Eligible Money

    When sued for debt collection by an individual, company or private debtor, the court will determine your financial ability to pay the debt by assessing bank accounts, employment earnings, tax returns, cash value of life insurance policies or any credit owed to you by the state of Michigan, such as the Michigan Home Heating Credit.

    Not all income sources are eligible for garnishment, such as Social Security Disability. However, the debtor must prove the income is exempt; if not proven, those monies are fair game to the creditor. In this situation, if contacted to garnish funds from a bank account, the bank will notify the account holder of this request. The account holder then has 14 days to dispute the action by filing Michigan Court form MC-49 with the court overseeing the garnishment. A hearing to discuss the form and the exemption will be scheduled after the form is received. If the form MC-49 is not filed within 14 days of the request, the money will be automatically garnished from the account, regardless of the funding source.

Request for Garnishment

    Once the judgement for a creditor has been issued, he must wait 21 days before a garnishment can begin. This provides time for the debt to be paid by the debtor. After the 21-day waiting period has expired, the creditor can request a periodic or nonperiodic garnishment.

    A periodic writ or garnishment allows for the collection of money that is paid to the debtor on a regular basis, such as wages, rent or land contract payments. The garnishment order stands for 91 days, or until the debt is paid off.

    A nonperiodic garnishment order is a one-time collection by the creditor from the debtor's bank account. After the one-time withdrawal has been made, the writ is no longer in effect and if any outstanding balance of the debt remains a separate writ must be filed for and granted by the court.

Fighting a Garnishment

    Michigan courts allow a debtor to object to a writ of garnishment, but specific criteria must be met. The debtor must file form MC 49 with the court to object. The objection must be made because the funds being garnished are not eligible, an installment payment plan has been arranged, another garnishment order is already in place and the maximum garnishment amount is already been reached, the debt has been paid in full or the garnishment was invalid. Objection to a garnishment order for any other reason is not allowed.

The Fastest Most Efficient Ways to Pay Off Credit Cards

The Fastest Most Efficient Ways to Pay Off Credit Cards

Paying off debt is one thing that people strive for, especially in tough economic times. By paying off debt, you can live on a lower income and not have all the worries that go along with trying to cover expenses each month. While it does take some time, depending on how many credit cards you have, you can pay off your credit cards quickly and efficiently if you work hard.



    Call the credit card companies that you owe and explain your financial situation to them. Ask them if they would be willing to reduce your interest rate. Keep in mind, many credit card companies would much rather work with you than risk losing a lot of money because of a bankruptcy or a default on an account.


    Order your credit card bills from least amount owed to the greatest amount. Add up all the minimum payments on all the credit cards owed each month.


    Examine your finances searching for opportunities to save money. Eliminate all unnecessary expenditures for the time being and put that saved money toward paying off your credit card debt. For example, do not go out to eat for one month and put all that saved money towards paying off the debt.


    Start with the credit card with the least amount owed and pay them more than the minimum amount each month, while making the minimum payments on all other credit cards. Pay the first card off and take the money you had been applying to that credit card payment and apply it to the next smallest debt. Keep working your way through all of your debts. Do not make any new charges to the cards during this time.


    Finagle your finances a little bit if necessary. Transfer credit cards with high interest rates to a new credit card without interest. Set up a payment plan so that you can pay off that debt within the allotted time with no interest. For example, if you have a $1500 balance with a 28 percent interest on one card, transfer that $1500 to a credit card with no interest for 12 months. Divide the 1500 by 12 to see how much you have to pay each month to pay that credit card debt off in a year.

How to Consolidate Bills

There are many reasons why people get into debt, they may have a lot of medical bills, they may have just been introduced to credit cards and have not mastered the use of the credit cards, they may need a new car. Whatever the reasons your paycheck is being divided into many different payments and if you are just making the minimum payment on a credit card then it will literally take you years upon years to erase that debt. The interest that you are paying on those various credit cards are not tax deductible, it may be wise to consolidate your bills


Get out of Debt


    Sit down at the table or on the computer and list all of your outgoing payments. Look at your debts, credit card balances, and the amount of take home pay that you receive. You can save thousands of dollars by consolidating a lot of small bills into one larger bill


    If you are going to look into wiping out your credit card balances, and are going to get a mortgage on your home, remember that the interest that you pay on a mortgage loan is tax deductible.


    The repayment amount for a consolidated loan needs to be less than the gross amount that you are paying. One larger bill is easier to maintain than several smaller ones.


    Before entering into an agreement with either a mortgage company or a financial institution read the contract. Assure that you do not have a pre payment penalty that is added on the bill if you pay it off earlier then the terms of your contract


    If the loan company or mortgage company offers free online payment, then that would be your easiest way to pay the loan back


    Look at loan consolidation as a means to save you money. If you enter into an agreement which allows you to gather several bills into one larger bill, you will be saving money each month. Apply that extra money towards your consolidate bill. Ask the lending institution if they have any problems with paying additional money on your account. For instance if your repayment amount is $100.00 a month and you pay $110.00, inquire if that additional $10.00 is going on the principal. If so that would be a benefit for your to try to put as much extra on the bill thereby reducing the amount that you ultimately have to repay


    Remember that if you choose to consolidate your bills through a mortgage, you will be paying at a minimum of fifteen years on the mortgage and the interest rates are tax deductible. This helps you when it is time to do your taxes in January.

Questions About Debt Consultation

Questions About Debt Consultation

Your debt may have spiraled out of control if you are seeking help from a credit counselor or debt management consultant. You want answers for solving your debt problems, and the best way to accomplish that is to ask lots of questions. Debt consultation can lead to a fresh start--or make things worse. Sometimes people saddled with debt fall prey to unethical debt counselors who talk a good game but fail to deliver. That's a key reason why you should understand the pros and cons of any debt management plan before enrolling.

Credit Score

    Ask the counselor or consultant how your credit score will be impacted by your participation in debt settlement, debt management, bankruptcy, or whatever program you are considering. Ask if your credit score will go up or down once you enroll in the program. Typically, credit scores fall as you restructure debt but rise again once you start to show progress. Ask how the fluctuation will affect your ability to buy a house, car or take out a loan for other reasons.

Credit Report

    Also ask what negative entries, if any, will be included on your credit report as you start to restructure your finances. For example, debt settlement, which allows you to settle debts for less than the full balance, can lead to a slew of negative entries. Creditors and debt collectors may direct the credit bureaus to update your credit report to indicate that accounts you resolved were "settled for less than the full balance." That could make getting new credit difficult, at least for a while, as creditors fear you might default on other accounts as well. Ask how long negative entries will remain on your report. Federal law allows bankruptcies to remain on your report for 10 years, and other negative information--including settlements--can remain for seven. Ask your counselor how these entries will affect your ability to be approved for new credit.

Tax Liabilities

    Ask if your debt workout plan will lead to a higher tax bill. For example, debt settlement could result in the Internal Revenue Service treating any savings you realize as income. For example, a $20,000 credit card debt settled for $10,000 would prompt the IRS to add $10,000 to your gross income for tax purposes. That could lead to an additional tax liability of a few thousand dollars, depending on your tax situation.


    Ask how much debt consultation and a debt workout plan will cost you. Debt settlement, bankruptcies and other debt workout plans can be expensive because of fees charged by counselors, consultants or attorneys. Debt settlement firms, for example, collect their monthly fees before paying off any of your debts. The Federal Trade Commission says that can lead to thousands of dollars in fees--money that could be going to your creditors if you handled your debt collection on your own.

What Does "Establishment of a Lien" Mean?

When you owe a creditor money and you hear the term "establishment of a lien" it means that your creditor is putting a claim against some of your personal property. This is done so that it will eventually force you to repay the debt that you owe. Creditors must go through a legal process before a lien can be placed.

How Liens Work

    When a creditor places a lien on your property, it is like putting a claim in on that individual piece of property. You will not be able to sell the property until the debt that you owe the creditor is repaid. Once you repay the creditor, it will remove the lien from your property. In some cases, you may have to use the proceeds from the sale of the property to repay the debt that you owe.

Voluntary Establishment

    In some cases, you can voluntarily establish a lien against your property. This is commonly done when you buy a house or a car. With either one of these processes, you allow the lender to put a lien on the property when you buy it. This way, if you do not make your loan payments, the lender can foreclose on the property and take possession of it. Then the lender can sell the property to recoup the costs of the loan.

Creditor Liens

    In other cases, liens can be placed on your property involuntarily. For example, when you owe money to a contractor, it can place a mechanics lien on your property if you do not pay your bill. Creditors can also file a civil lawsuit against you and get a judgment from a court. Then once the creditor has the judgment, it can use it to establish a lien on your property. If you owe taxes to the local or federal government, you can also have a lien placed on your property until they are paid.


    If you have a lien on your property, you need to consider the impact that it can have on you. Liens can show up on your credit report and make it difficult for you to get additional financing in the future. They can also cut into the amount of equity you have in a piece of property when it is sold. If you have a lien, you can pay off the balance you owe or in some cases, set up a payment arrangement and request that the lien be removed.

How to Lose Bill Collectors

How to Lose Bill Collectors

If it's been a while since you last paid your bills, you've likely started receiving calls and letters from bill collectors. Creditors often hire collection agencies to corral payment from those that haven't yet paid their bills. As a renter or homeowner, pressure from bill collectors can seem intimidating or overwhelming. Creditors are often relentless, calling your home or place of business at all hours of the day until they've received payment. Such pressure can distract you from friends, family and day-to-day tasks. Luckily, there are several ways to lose your bill collectors and pick your life up where you left off.



    Review The Fair Debt Collection Practices Act, which stipulates the legal boundaries under which your bill collectors must operate. The law also outlines your rights as a debtor. Bill collectors cannot bully or intimidate you into paying unpaid bills.


    Check your Caller ID system and avoid phone calls from bill collectors. Do not admit you are unable to pay your debts, as this will provide collectors with additional grounds to harass you. Request that all correspondences be sent through the mail.


    Ask for debt validation to prove the unpaid bills are in fact yours. Collectors are given 30 days in which to provide such information or must drop their claim. Such information will ensure you're being charged the correct amount, as well as buy you additional time.


    Work with the collection agency. Explain the amount you're able to pay and try to reach a settlement. Bill collectors wants to receive payment and will likely be willing to reach an agreement.

Thursday, March 25, 2004

How to Deal Directly With Creditors and Not Credit Collection Agencies

Instead of waiting for a creditor to contact you, or worse, send your account to a collection agency, contact the creditor if you missed or will be missing a payment. Most creditors will work with you, but it's important to have an understanding of your current financial situation.



    Contact creditors as soon as you miss a payment or are about to miss a payment. By contacting creditors, you can work with them to lower your monthly payment, create a new payment amount, change the payment due date or make arrangements to repay past due balances.


    Gather credit card and loan statements. Review your finances and create a budget that you can follow each month. This budget should include how much you can afford to pay creditors each month. Being able to ask for specific payment amounts each month shows creditors that you are working to repay your debt and are not trying to get out of paying it. Although it may not accept this amount at first, negotiate to get the best repayment amount possible.


    Cite your creditworthiness, customer loyalty and other positive financial attributes you have. If you've never missed a payment before, this is your best strategy. If you have missed payments before, contact the creditor anyway and explain your current financial situation and your plan for getting out of debt.


    Ask for new payment arrangements to be sent to you in writing. Keep this new agreement in your files.


    Make your new payments each month to show creditors that you are working to repay your debt. By making regular payments, you will begin to rebuild your credit. This will make an impact on your credit report and score.

Tuesday, March 23, 2004

Can I Get a Credit Card With a Dismissed Bankruptcy?

Can I Get a Credit Card With a Dismissed Bankruptcy?

In order to get a credit card, you have to meet the lending standards of the credit card company. Card companies typically require that you have a minimum credit score in order to qualify for a credit card. However, when you file for bankruptcy, your credit score typically suffers, making it harder for you to get a card. You may still be able to get a credit card after filing for bankruptcy or having your bankruptcy dismissed, but it may be very difficult to do so.

Dismissed Bankruptcy

    When you file for bankruptcy, the bankruptcy typically ends once the bankruptcy court discharges the case, meaning you successfully complete the bankruptcy. In this situation, you typically discharge or eliminate all your debts or enter into a payment plan with your creditors to repay the debts over time. However, a dismissed bankruptcy is one in which the bankruptcy case is ended before the court completes the discharge process. This means the debts you owe still exist and your creditors can resume their collections activities.

Credit Scores

    Numerous types of credit scores exist, but in general, your credit score is a number ranging from 300 to 850. A person with a score above 720 generally has good credit, according to the Federal Citizen Information Center, while someone with 580 or less has bad credit. Each credit card company makes its own determination for what credit score you need to get a card, but in general it will be much harder to get a card with a score of 580 or lower than it is to get one when your score is 720 or higher.

Bankruptcy and Credit Score

    Filing for bankruptcy, even if the case gets dismissed before discharge, is a negative that will lower your credit score. According to Yahoo Finance, a bankruptcy lowers a person's credit score by 130 to 240 points depending on different factors. The higher your credit score, in general, the greater impact a bankruptcy will have on it. The more recent the bankruptcy, the greater the impact on your score and vice versa. So, if you had a bankruptcy dismissed several years ago, this will not lower your score as much as one you filed last month.

Other Options

    Even if you're not able to get a traditional unsecured credit card because of a bankruptcy or dismissed bankruptcy, you may be able to get a secured credit card. A secured card, unlike a credit card, is one in which you provide the creditor collateral, typically in the form of a security deposit. If you fail to make a payment, the creditor can then use the security deposit to cover the debt. If you continue to make payments on time and do not have any more negative events on your credit report, you will eventually be able to get an unsecured credit card.

How to Get a Written Credit Report

How to Get a Written Credit Report

A written credit report is a financial history. Typically, it contains information about your previous and current residence, accounts, balances and payment behavior. According to the Federal Trade Commission, a written credit report also indicates whether you have been sued, or arrested, or have filed for bankruptcy. This information is collected by three major credit bureaus (Equifax, Experian and TransUnion), then is sold to creditors, insurers and employers. Since the information listed in your credit report is used to evaluate your credit worthiness, it is crucial that you order a copy and check it for errors. Learn how to get a written credit report in the following steps.



    Go to the Federal Trade Commission website to learn more about your rights as a consumer under the Fair Credit Reporting Act. Understand that you are entitled to a free credit report from each credit bureau annually.


    Prepare to give your contact information. Get ready to list your name, address, social security number and date of birth. Expect to answer one or two personal questions for verification purposes, such as the name of your student loan lender or the amount of your mortgage payment.


    Get a written credit report by phone. Call the Annual Credit Report Request Service to order a credit report.


    Get a written credit report over the Internet. Visit AnnualCreditReport.com (the website of the Annual Credit Report Request Service) and complete the steps to get a report.


    Get a written credit report by mail. Visit AnnualCreditReport.com, then print a copy of the Annual Credit Report Request Form. Fill out the fields, then send it to the address listed on the brochure.

If You Cut a Deal With a Credit Card Company, How Long Is It on Your Credit Report?

If You Cut a Deal With a Credit Card Company, How Long Is It on Your Credit Report?

Different debt reduction and elimination strategies are available to you at any given time, including debt settlement. In debt settlement, you cut a deal with your credit card company so that you pay less than what you originally owe. In some cases, this can reduce your debt on a credit card by up to 50 percent, with some rare instances producing reductions of up to 80 percent. Unfortunately, settlement goes onto your credit report and doesn't come off immediately.

Standard Length of Inclusion

    In general, any negative information on your credit report stays there for seven years. This includes both collections and charge-offs. A collection means the credit card company has transferred your debt to a third-party agency that will try more aggressively to get you to pay what you owe. It shows your account has reached the point of serious delinquency and that, in some cases, the creditor and the collection agency had to resort to legal action to get their money. A charge-off means that the credit card company has declared some or all of your debt unlikely to be collected -- you still are obligated to pay the debt, but the creditor acknowledges you probably won't pay. It is closely tied to settlement in that the charge-off amount usually ends up being the amount your creditor subtracts from your due balance in the settlement.

Judgments and Lawsuits

    The seven-year rule for negative information on a credit report applies to judgments and lawsuits related to credit cards. However, the law also allows negative information related to judgments and lawsuits to remain on your credit report through the statute of limitations, if the statute extends beyond seven years in your state. If your credit card company settles with you in court, the settlement may remain on your credit report longer than seven years, depending on the laws for your jurisdiction and whether the credit card company is still trying to collect from you at the end of the initial seven years.


    Bankruptcy can stay on your credit report for up to 10 years, depending on the type of bankruptcy you file. If your deal with a creditor is part of a bankruptcy judgment, the bankruptcy will stay on your credit report longer than the basic charge-off indication.

Closed Accounts

    When you settle a credit card account, your credit card company may opt to close your account. A closed account may remain on your credit report up to 10 years, similar to bankruptcy.


    Cutting a deal with a credit card company typically reduces your credit score by 20 to 50 percent. Your lowered score, along with the indication of the charge-off, alert both current and future lenders and creditors you are a greater financial risk. Current creditors may increase your interest rates or opt to close your accounts as a result. This makes it harder for you to pay your debts. It also decreases your debt utilization ratio, which is the amount of credit you're using divided by the amount of credit you have available. This further decreases your credit score. Future lenders and creditors may deny your credit applications. For these reasons, if you have a settlement on your credit report, you should do all you can to clean up the rest of the report and raise your credit score. Be ruthless about paying on time and contacting creditors and credit bureaus about mistakes on your report.


    The seven-year rule for negative information on credit reports is the maximum allowed time. If the credit reporting agency doesn't feel the settlement is relevant anymore based on the way they collect data, they may let it drop from your credit report prior to the seven-year mark. Additionally, you can ask your creditor to upgrade the status of your account. For example, instead of reporting the account as "settled," they may note the account as "paid." This will make the settlement dig into your credit score a little less. Lastly, many creditors and lenders consider you financially "rehabilitated" if you have at least two years of high re-established credit, as indicated by Next Advisor.

Money and Credit Advice

Money and Credit Advice

Managing money and maintaining credit accounts are major parts of creating financial stability. There are many different professional services that offer advice about managing finances and dealing with credit issues, for a fee, but you can some of that fee money by taking some practical and free money and credit advice.

Credit Cards

    One of the common misconceptions people have about credit cards is that using them can damage your credit. The truth is that credit card companies prefer if you use your cards, but you need to learn to use cards in moderation in order to maintain financial stability, according to financial expert Liz Pulliam Weston, writing on the MSN Money website. Keep a rotating balance of up to 30 percent of your credit card limits in use at all times. Do not pay off your cards as that will lower your credit rating. But learn to keep your spending at that 30 percent limit to keep your monthly payments reasonable.


    Each consumer is entitled to one free credit report from each of the three main credit reporting agencies every 12 months. Check your credit report at least once a year to make sure all of your personal and credit account information is correct. Also check to see if any suspicious accounts have been opened in your name that could be a sign of identity theft. If you suspect identity theft, contact the credit reporting agencies, all of your creditors and the local police immediately. Filing a police report about suspected identity theft proves that you took action as soon as you suspected a problem. Also be sure to analyze your monthly credit card statements to make sure there is no suspicious activity on it or charges you do not recognize.


    One of the key tools in money management is a monthly budget, according to the personal finance experts at the CNN Money website. Create a spreadsheet either on a computer or by hand that lists all of your bills and expenses, and compares them to your monthly income. This will help you plan to pay bills on time, help you budget for monthly expenses such as food and savings, and show you how much extra you have each month to pay down your bills.


    Learn to control how much money you spend each month. Do not deny yourself the chance to buy things you want, but rather figure an entertainment entry into your budget for activities like clothes shopping and going out for the evening, and do not be afraid to use it. The key is to not exceed that budget item each month and over-extend your entire budget. Look for areas you can cut back on spending to allow you more leeway in your entertainment budget. For example, take your lunch to work rather than spend money each day to buy lunch. Instead of stopping off to buy a coffee each morning, bring one from home and save that extra money for a night on the town.

Monday, March 22, 2004

How to Manage Your Bills and Get Out of Debt

Having too much credit card debt can induce stress and cause sleepless nights. But there are plenty of fast ways to get rid of debt and improve your credit rating. A good debt elimination strategy will likely call for major sacrifices on your part, and you may have to change your lifestyle and spending habits. But with a little self-discipline, it's possible to eliminate credit card debt.



    Increase payments significantly to pay off debt quickly. Forgo entertainment or non-essential shopping until you've eliminated your credit card debt. Rather than pay the minimum on a $1,000 credit card bill, make sacrifices and make higher payments each month. You can eliminate this debt in four months by paying $250 each month.


    Use personal savings to clear debt. You may feel uncomfortable dipping into your emergency fund to pay off debt. However, high interest rates make these debts hard to pay off in other ways. If possible, use your savings to eliminate debt fast and then rebuild your personal savings.


    Sell a possession. Look through your closet or other storage areas and find personal belongings to sell, perhaps an old fur coat/leather jacket, electronics, unused jewelry or furniture. Use the proceeds to pay off debt.


    Put your home up as collateral and apply for a home equity loan. The interest rates on these loans are often lower than credit cards, which equals lower payments.


    Start using cash for purchases. Continuing to use credit while attempting to pay off unsecured debt continues the cycle of debt. Cut up your credit cards to eliminate any temptation and only buy items when you have the cash.


    Make timely payments. Missing a payment or sending a late payment may prompt your creditor to charge additional fees. These fees can accumulate and increase your debt balances. Pay all your bills by their due dates.


    Avoid going over your credit limit. Credit card companies impose credit limits, and overcharging or exceeding this limit will result in a fee. Companies charge a fee for every month your balances remains over the limit. Only charge what you can afford to pay off and monitor your credit activity to stay within limits.

What Do You Do When Your Credit Card Debt Is Turned Over to an Attorney?

Just because a lawyer contacts you about your credit card debt doesn't mean that your case has to go to court. If you hear from an attorney about your credit card debt, don't ignore the communication. You may still be able to negotiate a payment plan or settlement. Learn your rights and, if possible, seek legal advice.

Your Rights

    Credit card companies or their collection agencies might turn your debt over to a lawyer. This usually happens if you haven't responded to other communications and they are considering taking the matter to court. If a lawyer regularly collects debts as part of her practice, the Fair Debt Collections Practices Act (FDCPA) regulates her and her employees. The FDCPA protects you from abusive collection tactics, which include calling you at inconvenient hours, calling you at work if you have informed them that your employer does not permit personal calls, and threatening you with actions they do not intend to take. For example, it is illegal for a debt collection lawyer to threaten to sue you unless she actually plans to do so.

Verify the Debt

    Under the FDCPA, you have a right to verification of the debt. Send a letter in writing within 30 days of hearing from the lawyer asking him to verify the debt for you, including the amount of money you actually owe and the name of your original creditor. You should also ask him for the date on which you allegedly defaulted on the credit card bill. If the debt is older than the statute of limitations in your state, you have a defense against a lawsuit. Send a certified letter to the lawyer telling him that the debt is no longer collectible.

Attempt to Settle Your Debt

    If the debt is valid, attempt to work out a payment arrangement or make an offer to settle the debt for less than what you actually owe. If you don't do this, your case could go to court. If the lawyer wins a lawsuit against you, you'll have to pay the debt as well as any court costs and legal fees. The judgment will also show up on your credit report, which can cause serious problems for you if you want to take out new credit, rent an apartment or find a new job.

Respond to a Court Summons

    Never ignore a summons to appear in court. If the lawyer sues you and you don't show up, the judge can issue a default judgment against you. This means that you've lost the case just because you didn't appear to give your side of the story. If you get a summons, try to get a lawyer or contact the Legal Aid Society in your area. The Legal Aid Society may not be able to provide you with a lawyer but they can help you prepare for going to court. If you cannot afford the court appearance fee, ask the courthouse how you can get a fee waiver. By showing up in court, you demonstrate good faith to both the judge and your creditor, and may be able to work out a repayment plan that does not involve wage garnishment or the levying of your bank accounts.

Sunday, March 21, 2004

Can I Still Use My Credit Cards in Debt Consolidation?

If you're feeling overwhelmed by your credit card debt, you may be tempted to turn towards debt consolidation as a possible solution. While consolidation is a viable option for some consumers, you should understand what consolidation is, and what it involves before committing to a consolidation program. In most consolidation situations, you'll still be able to use your credit cards after you consolidate, but that doesn't mean you should.

Debt Consolidation

    When you consolidate your debts, you basically take out a new loan to pay back some of your other loans. When you consolidate credit card debts, you use the money from the new loan to pay off old balances. When you do this, there's no requirement that you stop using the paid-off cards, nor are you forced to close those accounts.

Debt Management Programs

    Some consumers choose to get debt help by going to a credit counseling service and entering into a debt management program. In this situation, your debt management program effectively consolidates your debt for you. The program then requires that you pay the program a monthly bill, instead of all your other creditors, which the program then uses to pay your creditors for you. Some programs may require that you turn over or cancel your credit cards as a condition of participation.

Balance Transfers

    One debt consolidation situation in which you may not be able to use a credit card anymore comes when you use one credit card as a balance transfer vehicle. If, for example, you transfer the balances from several other credit cards and the transferred amounts get you close to or at the credit limit of the card to which you transferred the balances, you won't be able to use the card to make purchases until you pay off some of the balance.

Closing Account

    When you consolidate your credit card debts, you may choose to cancel one or more of the recently paid-off accounts. If you do this, you will obviously not be able to use that account any longer. While closing an account can be helpful if you are unable to maintain the discipline to stop yourself from using the card, it can also have a negative impact. Closing that account might actually lower your credit score, especially if you've had your card for a long time and have a good history of timely payments.

How to Rebuild Your Credit After Chapter 13

How to Rebuild Your Credit After Chapter 13

Chapter 13 bankruptcies have become more common since 2005 federal laws changed the bankruptcy rules, making it harder to declare Chapter 7. Rebuilding your credit after a Chapter 13 bankruptcy is thus slightly different than rebuilding your credit following a standard bankruptcy. By following these tips, you can get on the right track and bounce back from a Chapter 13 bankruptcy.



    Stay on your payment plan. When you declare Chapter 13 bankruptcy, the court will put you on a payment plan in which you pay back a portion of your debts. You will want to make sure you stay on this plan. Not only are you legally bound to do so but the payments are reported on your credit report. This can help rebuild your credit. If you fail to make payments, this will show up on your report, making things worse. Failure to make payments could also result in additional legal action or even involuntary Chapter 7 bankruptcy, which will lower your credit score.


    Open a credit card. You may have difficulty getting a credit card because of the bankruptcy, but this is an essential step to rebuilding credit. If necessary, get a secured card. This is a card that requires collateral in the form of cash, and your credit line is limited to the amount of money you put up. There may be a fee associated with opening the card and an annual fee; but, if this is the only card you can get, it's important to do so. Just make sure the card reports to the three major credit bureaus.


    Make small charges on your credit card and pay the balance in full. This will help you build a positive record of on-time payments, which will raise your credit score. Some secured cards even have programs where the card converts to a standard card after a set period of timely payments. Just remember, you don't need to carry a balance on the card to build credit and you usually should not because most secured cards have high interest rates.


    Wait. Nothing will help you rebuild your credit more than time. Eventually, your record of on-time payments and the credit card you opened will raise your credit score. Then, after ten years, your Chapter 13 bankruptcy will drop off of your credit report.

Friday, March 19, 2004

Are Children Resonsible for Deceased Parents' Credit Card Debt?

Are Children Resonsible for Deceased Parents' Credit Card Debt?

Many parents run up large amounts of credit debt in their later years as they struggle on a fixed income, and their children may worry about whether they will be held responsible for the their parents' debt once they die. Although children are not responsible for the credit card debt, the assets in the estate must stand for any debts incurred before the amount is paid out.

Credit Card Debt Is Not Transferable

    Credit card debt cannot be transferred to you once your parent dies. Contact the credit card company and inform it that your parent has died. You need to send a copy of the death certificate. Do not continue to pay on the debt since there may not be enough money in the estate to pay for the bills, and the debt will be forgiven because of the death.

Credit Card Ownership

    If you are an account holder along with your parents on the credit card, you will be held responsible for the credit card debt after they die. To protect yourself from this, do not co-sign on a loan or credit card with your parents. If there is not enough money left in the estate to cover the bills, you will need to pay off the credit card debt or else it will affect your credit score.

Estate Stands for the Amount Owed

    Your parents' estate must stand for all debts before you can receive any inheritance. This means assets such as a home, stocks or a car must be sold and the proceeds used to pay off all the debts before any money will given to the heirs. Although you will not be held responsible for the credit card debt, it may limit how much you receive for inheritance.

Settling with the Credit Card Company

    The executor of the estate will need to send a letter stating the person has died as well as a copy of the death certificate. Once the assets of the estate have been liquidated, the executor will need to pay any outstanding debts the person had. The mortgage and car loans will be paid off with the sale of those items, and any remaining money will go toward credit card debt. If there is not enough to cover all of the debts, the executor will need to send a letter explaining that the estate did not have enough assets to cover the debt.

How to Esablish an Excellent Credit Rating

Establishing an excellent credit rating is important for several reasons. When a potential employer checks your credit, your high rating will indicate your sense of responsibility and efficiency. A high credit score can mean a lower interest rate for financing a home or car and savings of thousands of dollars over the life of the loan. Establishing excellent credit requires discipline and focus. While not always easy, the results make it worth the effort.


Establishing an Excellent Credit Rating


    Gather your bills together and create a monthly budget that you can follow. Prioritize your bills based on due date, and account for every bill you have to pay each month.


    Follow your budget and pay your bills on or before the due date. Always pay at least the minimum payments, and pay a little more than minimum if you can afford it.


    Use cash for purchases and avoid using your credit accounts as much as possible. However, do not allow your credit accounts to fall to zero balance. Always carry some sort of balance on your credit cards, but try to carry a balance that is no more than 90 percent of the total available credit. Avoid maximizing your credit cards.


    Leave a credit account open if you do decide to pay off the balance. Having old credit in good standing on your credit report will help raise your credit score and push you closer to maintaining an excellent credit rating.


    Review your credit reports from each of the three main reporting agencies at least once every six months. Federal law entitles you to one free credit report each calendar year, so you will have to pay for the second one. Review all of your personal information and credit account information to ensure accuracy. If you find any inaccurate information, report it to the credit reporting agency immediately.

Acceptable Debt-to-Income Ratio

Acceptable Debt-to-Income Ratio

A debt-to-income ratio is the percentage of your debt compared to your income. Your debt-to-income ratio has an effect on your credit score and your ability to borrow money for things such as a house or car or to obtain other personal loans. Many banks and financial institutions have established what debt-to-income ratio is acceptable for a loan to be approved.

Acceptable Debt-to-Income Percentage

    Most banks and lenders require a debt-to-income percentage no higher than 36 percent, according to Lending Tree. The lower your debt-to-income ratio is, the better your chances of getting approved for a loan and the lower the interest rate for that loan is likely to be. If your debt-to-income ratio is slightly above 36 percent, you might be able to obtain loans, but you should try to eliminate some of your debt to bring the ratio down. If your debt-to-income ratio is above 50 percent, you should take aggressive action as soon as possible.

Calculate Your Debt-to-Income Ratio

    A variety of tools and calculators are available online to help you determine your debt-to-income ratio. You also can do the math yourself if you prefer. To calculate your debt-to-income ratio, add up all your monthly debt and expenses, including rent or mortgage payments, credit card payments, car payments, car and home insurance premiums and other loans. Divide that number by your monthly gross salary, including wages from all jobs, child support received or bonuses. Multiply the answer by 100 to get your percentage. For example, if your monthly expenses are $1,000, and your monthly gross income is $4,000, your debt-to-income ratio is 25 percent (1,000 divided by 4,000, times 100).

Reduce Your Debt

    There are two primary ways to improve or reduce your debt-to-income ratio. One is to reduce your monthly living expenses and use the savings toward paying down your debt. Examine your monthly budget to determine whether you are spending regularly on things you can eliminate. The Hamilton Debt Relief website suggests walking or taking public transportation instead of paying for gas, parking and car maintenance, or set up a car pool. A December report on the Bukisa website recommends talking to your creditors to try to negotiate lower interest rates or reduce the amount you owe. To avoid overspending, try using the envelope system recommended by analyst Dave Ramsey on his website. Designate one envelope for each living expense, such as groceries, clothing, dining out or entertainment. Put a set amount of cash in each envelope each time you are paid or each month. When the cash runs out in a particular envelope, do not spend in that category until you get paid again.

Increase Your Income

    The other way to improve your debt-to-income ratio is to increase your income . Besides the obvious means of improving income, such as finding a second job, asking for a raise or working overtime, the Hamilton Debt Relief website suggests a few other options, such as conducting a sale of items you no longer need, renting out a room in your house or taking on odd jobs around your neighborhood, such as mowing lawns, babysitting, gardening or walking dogs. Do not increase your spending habits while increasing your monthly income. Use that money to pay down debts, thus reducing your debt-to-income ratio further.

Thursday, March 18, 2004

Guide to Credit Repair

A good credit rating is more important than ever. Many people want to know how to repair a bad credit history, and there is a lot of information and misinformation out there on the subject. In truth, credit repair isn't as difficult to comprehend as it is to implement. A great credit score is a valuable asset, and building it takes self-sacrifice and lifestyle changes to accomplish. This guide to credit repair will help you begin your journey to better credit.

No New Credit

    Some companies may suggest that you can start fresh with a new credit report by applying for an employer identification number to use in place of your Social Security number. Acquiring an EIN under false pretenses is illegal. Be wary of any organization that claims to be able to do so. If it sounds too good to be true, it probably is. There is one way to possibly remove negative activity from your report. You can write a goodwill letter, in which you request removal of a negative item like a late payment, settlement or items that were paid off after a lengthy delinquency. The goodwill letter references recent good payments, responsible credit behavior or extenuating circumstances in order to bolster the request to remove the negative item on the credit report. This isn't new credit, it is just a way to extinguish the old.

Get a Free Report Each Year

    When trying to improve your credit rating, the first step is to get a copy of a credit report from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. You are entitled to one free copy of your credit report each year from each agency. You can request all three at once or spread them out throughout the year. You may also get a free copy of your credit report when you have been denied credit, but you must request it within 60 days of receiving a notice of denial.

Dispute any Mistakes

    When you receive your credit report, look it over carefully. Mistakes are common. You may dispute anything on your credit report that looks questionable by sending a letter to the credit reporting agency and requesting an investigation. The agency has 30 days to investigate the disputed item and respond. The agency must remove any item that cannot be verified. Be sure to submit your request in writing and document each step you take, including sending your request by registered mail.

Remove the Debt

    Items reported on your credit report that are closed issues have less negative impact than ongoing problems. If possible, it is best to resolve any negative issues on your credit. A negative item that has been resolved will still appear on your report, but will not look as bad as if it were an open issue. Simply catching up on payments that are behind is one simple way to do this. Settling with creditors or setting up a payment plan counts as resolution of an open issue.

Have Patience

    The final thing that improves credit is time. Stay out of trouble, and negative items on your credit report will eventually come off. Most items show up on your credit report for seven years, with the exception of bankruptcy, which remains for 10 years. Seven years is a long time, but as time passes, most creditors will take a more lenient view of past mistakes if there is evidence that your current credit habits are sound.

    With time and effort, it is possible to do a great deal to improve your credit. It is important to be patient and realistic. Bad credit does take time and effort to repair, but by doing the right things, it can improve dramatically.

Tuesday, March 16, 2004

What Happens When a HELOC Gets Charged Off?

What Happens When a HELOC Gets Charged Off?

A home equity line of credit, or "HELOC," provides homeowners with the ability to use their home's equity as security for credit purchases. Like purchases made on a credit card, a HELOC carries an interest rate and, if not paid in a timely manner, the lender has the option to charge-off the debt.


    When a lender charges off a HELOC, it removes the account from its business accounting ledger and often sells it to a debt collection agency. The fact that the company charged off the unpaid HELOC appears on the debtor's credit report and, according to the Fair Credit Reporting Act, can remain there for seven years. After the charge-off and sale of the debt, the original lender will claim any lost revenue as a business tax deduction.


    Collection agencies often start out using standard debt-collection methods, such as collection calls, and steadily progress to more aggressive tactics, such as lawsuits, if the debt remains unpaid. If a collection agency wins a lawsuit against the debtor, it becomes a judgment creditor and, in many states, has the right to recover the debt through an involuntary bank account or wage garnishment.


    When a lender charges off a HELOC, it relinquishes its right to seize the debtor's property as collateral for the debt. This makes the account an unsecured, rather than secured, debt and leaves it subject to the debtor's state's statute of limitations for debt collection. The statute of limitations varies in every state, but once it passes, neither the original creditor nor a debt collector can legally sue the debtor for the defaulted HELOC.

How Long Does it Take to Transfer Money?

How Long Does it Take to Transfer Money?

The time needed to transfer money can vary from institution to institution. There are a number of ways you can send money. If you follow the correct procedures, the process will flow smoothly and your recipient will receive the money in a timely manner. The facilities involved have their own rules and regulations that you must abide by. Choose the method that helps you to accomplish your goals and objectives. Your own situation will determine which method you choose.

Western Union

    If you want to transfer money by Western Union, the time frame can vary depending on the method you use. If you go to one of the approved Western Union locations, it can take minutes. The other options are next day, in which case the money will be available first thing the next morning. The last option available at a location is direct-to-bank, which takes approximately three to five business days. The fees can vary depending on how much money you transfer. When you go to an approved location, you will need cash, but some locations will allow you to use a MasterCard, Visa or debit card. You can transfer money in minutes over the phone and by going online. Going online also gives you the option of direct-to-bank for transfers.


    You can send money by using MoneyGram. This transfer can take minutes to complete if the process is done online. To use this feature, you must set up a profile and click on same-day service. Enter the information of the recipient and use the locator feature to find a location for the receiver to pick up the money. There are several sources from which to access funds, including your bank account or MasterCard and Visa. You can also use the e-Money Transfer, which takes three to five business days.

Bank Transfer

    You can go to a bank where you have an account and do wire transfers. A bank wire transfer can be received by the recipient the same day if you arrive at the bank by a certain time. After the cut-off time, the wire transfer will be received the next business day. Wire transfers can be sent internationally as well, but they take three to five business days for completion. The cost for doing a wire transfer will vary from bank to bank, but the range will probably be $20 to $25 for domestic wire transfers and approximately $40 for international wire transfers.


    You can also transfer money using your PayPal account. PayPal is an e-commerce or website service account that allows you to transfer money on the Internet. Money can be transferred to anyone with an email account. The recipient will receive the money in approximately three to four business days. Money can be sent internationally as well. The basic PayPal account allows you to send money without incurring a fee. The money can be transferred from your online PayPal account, debit card, MasterCard or Visa card.


    Money can also be transferred using an online service called Xoom. It makes only international money transfers, and the time frame is approximately one to three business days, which can vary depending on the country. If you send $100 to South Africa, it will cost $4.99 if the money is transferred from a bank account; it costs $9.99 if the money is transferred from a MasterCard, Visa or PayPal account.

Monday, March 15, 2004

Will My Bad Credit Affect My Spouse's Bank Account?

Credit problems can cause tension between spouses, especially if one spouse has bad credit. Bad credit can lead to numerous problems, including garnishment of the couple's joint bank account. Garnishment allows a debt collector to freeze the joint bank account while withdrawing money for an unpaid debt. The spouse with good credit becomes an innocent victim because garnishment laws allow debt collectors to freeze joint accounts even if only one spouse is responsible for the debt.


    Couples concerned about one spouse's bad credit should maintain separate checking accounts. They may also consider a third checking account owned jointly for shared expenses. This protects both spouses, even though it may be inconvenient. The spouses would have access only to the joint account and their respective individual accounts, making it difficult or impossible for either to access all three accounts in an emergency.


    Separate accounts provide important protection from lawsuits. Debt collectors for credit card companies sometimes sue after other collection efforts fail. Lawsuits often lead to judgments, a legal decision ordering a debtor to pay money. Debt collectors who prove their case in court are virtually guaranteed to win judgments, according to Illinois Legal Aid. People who are sued for unpaid debts have virtually no reasonable defenses, unless they can prove identity theft and argue that someone else incurred the debt.


    After winning a judgment, debt collectors can ask the judge to allow garnishment. A legal order is issued if the judge agrees, with banks required by law to freeze accounts bearing the name of the person in the garnishment order. Banks are not required to notify account holders that the account is being frozen.

Bounced Checks

    Some people do not learn about the garnishment until checks bounce or they are unable to use their debit cards. Once the account is frozen, account holders may only make deposits. They may not write checks or access the account in any other way. A spouse who was not the subject of the garnishment order could ask the bank to start a new account for her use only. She would not be allowed to access any money currently on deposit in the frozen account, but could redirect her direct deposit paycheck to the new account.


    Some people with frozen bank accounts file for bankruptcy to end the garnishment. All forms of personal bankruptcy prohibit garnishment while bankruptcy proceedings are ongoing. Debt settlement negotiations with the debt collector can also end garnishment.

How to Repay Old Debts Without Restarting the Statute of Limitations

How to Repay Old Debts Without Restarting the Statute of Limitations

A statute of limitations is a legal timeframe for which legal action can be filed over an event, such as an auto accident, violation of statutes or administrative laws, medical malpractice or a debt such as credit card debts or loans.

In regard to debts, the statute of limitations and time of reporting said debt are two separate occurrences. The former is the time allowed for a creditor to begin legal proceedings to recover the debt, while the latter is the amount of time a credit bureau is allowed to report a debt.



    Determine if the statute of limitations has passed. Statutes of limitations vary by state, so it is necessary to look up and become familiar with your state's statutes regarding debt collection. The minimum is typically two years and the maximum is fifteen years. Allow for a window beyond the state's statute of limitations of at least two to three months.


    Establish the veracity of the debt. The debt should be confirmed by way of the credit bureaus. Request copies of all three credit reports. The federal government allows for one free copy of each of the credit bureau's reports per year. The date that appears on the credit report will be the last date reported to the credit bureau. The reports will also include the date first reported and date of last activity.


    Contact the creditor by phone. Do not send mail or email as written documentation inquiring about a debt or offer to pay may restart the statute of limitations. Do not make a promise to pay with the creditor's representative until you know that the statute of limitations do not restart from an oral agreement. In some states, any agreement or acknowledgment of the debt constitutes activity and restarts the statute of limitations.


    Make payment arrangements for a one-time, lump-sum payment. Entering into a payment arrangement that amortizes the debt incrementally, whether written or, may restart the statute of limitations. Inquire as to having the debt removed from your credit report after the debt has been satisfied with the credit bureau(s), not the creditor to which the debt was owed.

Sunday, March 14, 2004

Can Liens Be Attached to Your Home for a Charge-off?

In the process of trying to collect a debt, a debt collector could use many intimidating terms to get you to pay your bill. The term "charge-off" is thrown around by debt collectors and often frightens consumers who owe money. Even if one of your debts is charged off, it does not eliminate the debt and the creditor could still try to collect it from you with a lien.


    A charge-off is simply an accounting term that means the creditor is writing off the amount of the debt on its taxes. The creditor writes the account off to bad debt and then gets to take a tax deduction for the year. The amount of the debt written off is equal to the amount of the tax deduction that the company gets. This lowers the company's taxable income, which in turn, also lowers the tax liability for the company for the year.

Collecting After Charge-Off

    Although a company is technically writing off the account to bad debt, this does not mean that the debt is no longer owed. Instead, it simply means that the creditor is taking a tax deduction in the expectation that you will not pay. However, this does not remove the debt and the creditor still has the legal right to try to collect it from you. In some cases, the creditor will sell your debt off to a collection agency to try to collect.

Placing a Lien

    When a creditor has a debt against you that you are not paying, it has the right to file a civil lawsuit against you. After the lawsuit is filed, the creditor can get a judgment for the debt. Once the judgment is in place, the creditor has the option of using that judgment to place a lien on your property. A lien can be placed on your property, which makes it impossible for you to sell the property without first paying the creditor.

Statute of Limitations

    In this situation, it is important to know the statute of limitations for debt in your state. The statute of limitations is the amount of time that creditors have to collect a debt from you. If the statute of limitations is expired, the creditor can no longer try to collect from you or place a lien on your property. The statute of limitations varies significantly from one state to the next. Some states have statutes of limitations of five years or less while others have statutes of longer than 10 years.

Saturday, March 13, 2004

How to Deal With Credit Reporting Agencies

Credit Reporting Agencies control most of credit information on most of the people and businesses in North America and in most parts of the developed world. Access to good (low) interest rates to borrow money, access to credit for purchasing even access to insurance all depend on having and maintaining a good credit report. Maintaining good communication and rapport with credit reporting agencies is therefore in your best interest.



    Review your credit reports with all the companies who have them on you.

    If you are an individual you will just need to check with the three main personal or retail credit bureaus: Equifax, Experian and TransUnion.

    If you are a business you will want to get your Dun & Bradstreet report as well

    You are reviewing the information to make sure that it is accurate. If you find inaccuracies you want to communicate with the reporting agency right away.


    Gather your information to prove your contention that their report is inaccurate before you contact the agency.

    Your record of payment or bill of sale or returned credit will be needed at some point to prove their report is not correct.


    Contact the credit reporting company involved to let the company know that some information is inaccurate.

    The company reporting is merely reporting the information received and is not doing anything out of spite.

    Be polite in your contact and throughout the process (either in emails, telephone or letters) because you want the company to take quick action to fix this to help YOU.

    You also want to see from the report which of your current (or past) creditors has reported you to the credit reporting agency as a problem and contact them as well.

    The company reporting you can fix the problem as fast or faster than the credit reporting company can.


    Re-order your credit report in one month to make certain the information you wanted corrected has been updated and/or removed.

    The credit reporting agency can send you the updated report as well as part of the updating process but you may want to take this step to ensure that the report has been fixed to your satisfaction.


    Save all your correspondence regarding this problem in a special credit file.

    The reason is because you might have to do the same thing again with another credit reporting agency.

    The agencies do not have all the same people reporting to them about you all the time. They sign up new companies and lose others sometimes so this dispute or problem may resurface at some point.

How to Avoid the IRS Taking Refunds Because of Student Debt

When you take out student loans, you sign a contract committing to repay the debt. One of the consequences of not paying the debt is that the lender can offset your federal tax refund. When this happens, rather than sending you a refund when you file taxes, the IRS sends the money to your lender to repay your student loan. There are a few things you can do to help avoid getting to the point of having your tax refund offset.



    Pay your monthly student loan payments on time every month. Make a budget and plan where your money goes so you know you have enough to pay your student loan.


    Apply for a deferment or forbearance if you are experiencing financial difficulty and do not think you will be able to make your payments as scheduled. Contact your lender to fill out an application.


    Change your repayment plan by calling your lender or logging onto the loan management area of the website. Many lenders offer extended repayment plans to make your monthly payments more affordable. The federal government also allows students to sign up for income-based repayment, which limits monthly payments to a percentage of the student's disposable income.


    Call your lender to arrange loan rehabilitation if your loan is currently in default. The loan usually goes into default when you fail to make payments for 270 days. At this point, you are in danger of having your refund taken to pay your loan. If you enter loan rehabilitation and start making payments again, the lender will not take your refund.


    Read the notice sent to you at least 65 days before the lender sets up a tax refund offset order and respond to stop the order. The two ways to stop your tax refund from being taken at this point are to prove that the debt is not actually yours or to begin repaying the loan voluntarily again.


    File a financial hardship claim with the Department of Education or the lender who is trying to collect on the student loan if having your tax refund offset would cause you severe financial hardship. For example, if you were counting on this money to pay your rent or cover medical bills, you might be able to get the refund because of financial hardship. In most cases, you will need to send your tax return or other proof of income, copies of your bills and an explanation of why you need the refund.

Friday, March 12, 2004

What Is an Exemption When Dealing With Debt?

What Is an Exemption When Dealing With Debt?

An exemption when dealing with debt refers to certain assets or monies that cannot be legally garnished or accounted for when calculating a person's or company's debt. Some debts are exempt from bankruptcy, such as child support. This means that if a person files for bankruptcy, their credit card and personal loans may be forgiven, but their child support must still be paid out. The bankruptcy cannot forgive the debt of child support.


    In bankruptcy (whether Chapter 7 or Chapter 13), a debt exemption, aside from child support, is an IRS lien. If the IRS audits you and finds you owe $4,000 in taxes, then this is an exempt debt. Other loans and debts may be forgiven in a bankruptcy, but you would still need to pay the IRS the money owed. Other debt exemptions include judgments from court orders and government loans such as student loans for college.

Debt Exemption vs. Nonexemption

    To further understand debt exemption, it may be helpful to understand debts that are not exempt. If you have a mortgage with a bank and a savings account at the same bank, generally speaking, if you are not paying your mortgage, the bank has a right to garnish or freeze your savings account either to take the money owed or until you begin making payments again. Your savings account is not exempt, meaning the bank has every right to garnish, freeze or demand payments from the account.

Federal Benefits

    Many federal benefits are exempt from garnishment if debt collectors make a claim against you. Your social security benefits, SSI income, military annuities and veterans' benefits are exempt for debt collectors.

Exemptions for Benefits

    There are exceptions under some circumstances where benefits would be nonexempt from debt. If you have delinquent federal taxes or student loans, the government has a right to garnish or freeze your benefits. According to the Federal Trade Commission, social security benefits could be deducted before you receive them in order to pay child support or alimony, meaning that in these cases, your federal benefits are nonexempt.

Exempt or Nonexempt Disputes

    There are times when there are legal arguments whether funds are debt exempt or not. If a bank receives a garnishment order, they will generally freeze funds until a court orders payment to the aggrieved party or informs the bank that funds should be unfrozen. If funds in the account include exempt monies such as SSI, you would write to the bank, informing them that funds in the account are debt exempt under federal law. If the bank doesn't unfreeze the account, you would go to court and request that the judge deem the funds as debt exempt and order the bank to release them.

Wednesday, March 10, 2004

How to Place a Credit Alert

A credit alert, also called a fraud alert, prevents criminals from opening more credit in your name. Placing a fraud alert on your account is relatively easy. According to the Federal Trade Commission (FTC), you can contact any one of the major credit bureaus (TransUnion, Equifax or Experian) to place the fraud alert. The company you contact is required to report the alert to the other two credit bureaus, which will also place an alert on your account.



    Call TransUnion at 800-680-7289, Experian at 888-Experian or Equifax at 800-525-6285. Ask the company to place a fraud alert on your account. A fraud alert lasts for 90 days, according to the Federal Trade Commission.


    Wait for written confirmation. After you've requested a fraud alert, the bureau will report the request to the other two credit bureaus. All three credit bureaus will send you written confirmation of your request.


    Follow up with the credit bureaus. If you haven't received written confirmation within 30 days, contact each credit bureau individually to check on the fraud alert status. The company will confirm if the alert was processed correctly and should re-send confirmation of your request.


    Decide if you want to extend your fraud alert. If you've been the victim of identity theft, you are entitled to file an extended fraud alert. This fraud alert will stay on your credit file for seven years. If you decide to remove a fraud alert, you'll need to contact all three credit bureaus and request that the alert be removed. Proof of identity, such as social security number, address and other personal information, will be required.

How to Establish Credit Fast

How to Establish Credit Fast

Establishing a good credit score is important. Whether you have no credit and are seeking to build it up or have bad credit and need to improve upon it, there are some very active steps that you can take in establishing credit fast.



    Obtain a secured credit card. You will be required to send in a deposit to secure the credit card. The amount usually varies from $250 - $500. Keep a small balance at all times on the card. You must make your payments like clockwork to make this work in your favor. These payments are reported and will increase your FICA score.


    Get a cell phone with a service agreement. By making your payments regularly, you can build your credit this way. Other utilities in your name can work in your favor as well.


    Open a checking account. This is the first thing most lenders want to see proof of. Never, ever bounce checks.


    Keep a savings account. Be certain that you keep in active with deposits and don't just let it sit stagnant. If your savings is large enough, you may even be able to secure loans without them even looking at your credit report as this could be considered collateral.


    Take out bank loans against cash you already have in your savings account. Get one which does not penalize for prepayments. This way you can pay off *nearly* the entire loan, leaving you with a smaller monthly payment. Again, make this payment without fail and it will look great on your credit report. Repeat this with a variety of banks to increase the effect even more.


    Open up an in-store credit card. These are generally easy to obtain. This gives you another source of good credit on your credit report. Just be certain that they report to the credit bureaus or it won't do your credit any good.


    Keep any loans you have paid down to a minimum principle balance while still keeping them open. When you apply for a loan or credit card, they look at your debt to income ratio. Having small balances helps the debt side of things. But keeping them open, you continue to build good credit.


    Take out a small personal loan if you have several items on your credit report. Use the loan to pay these off. Negotiate with the creditors first. Most will lower the balance you need to pay in order to be paid off in full in one lump sum. Don't be afraid to bargain down to half the principle balance, or even less.
    Be sure to visit the link in the resources section below this article to learn more.