Welcome to our website credit and debt managementr.

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, June 30, 2004

How to Pay Bills Online in Foreign Currency

How to Pay Bills Online in Foreign Currency

Paying bills online is an efficient way to conduct business. Many international websites will already use your current currency. However, what if the site you are using to pay a bill displays the money in a foreign currency? Things could get tricky. How do you know how much you are paying out for your bill? How will you even know in which currency to make your payments? You can clear up the confusion of paying bills online in foreign currency with a few steps.


    Use a website that will convert the currency for you.
    Use a website that will convert the currency for you.

    Calculate how much you will be paying out by using an online currency converter such as XE or Currency Source. Most online currency converters are free and are updated daily according to the current exchange rates. Using a currency converter will give you an accurate calculation of both the amount of money you will be spending in your own currency as well as the foreign currency requested by the recipient.

    Decide whether to use PayPal or a credit card.
    Decide whether to use PayPal or a credit card.

    Specify a method of payment. The two common payment methods for online international payments are by credit card or by using PayPal. PayPal allows you to make payment without disclosing your credit card details to a third party. With PayPal you will process the payment yourself.

    Use a credit card to pay a bill online in foreign currency.
    Use a credit card to pay a bill online in foreign currency.

    Make your payment by using your credit card. The recipients will deduct the amount from your credit account in their currency. On your billing statement the deduction will show in your currency.

    Use PayPal without disclosing your information.
    Use PayPal without disclosing your information.

    Pay your bill using PayPal instead. You will be able to specify in which currency you want to make your payment. To complete the transaction, sign into your PayPal account. Click on the "send money" tab located near the top left of the page. Type the amount you previously calculated using the currency converter into the box labeled "amount." Use the drop down menu directly to the right to select in which currency you want to make your payment. Click on the tab labeled "personal" and select the option "payment owed." Click "continue." A confirmation page will open. PayPal will do the currency conversion for you. Both the amount in the foreign currency as well as the amount in your own currency will be displayed. Make sure the information is correct. If it is, click the button labeled "send." PayPal will complete the transaction and the amount will be deducted from your account instantly. You will be able to see the payment made in your recent activity located in the "overview" tab.

If Overpaid for Unemployment in New York, Can They Garnish My Wages?

Being unemployed is a stressful experience, though being eligible for unemployment compensation certainly does help the situation. If you collect unemployment in New York, ensure that you keep track of your payments and report any earning to the unemployment office when you certify for benefits. If you don't report all earnings, even freelance earnings, the New York Department of Labor may view this as fraud and will begin collection efforts. Not only your wages can be garnished.


    Overpayment of unemployment benefits in New York is a huge problem. As of September of 2010, more than 80,000 people had been sent repeated notices regarding fraudulently collecting unemployment benefits to the tune of $140.7 million. Some of the debts have been owed for a decade and there is no statute of limitations. New York will aggressively pursue you if you owe them for unemployment overpayments because as of 2010, the NYS Unemployment Insurance Trust Fund has a deficit of $3.1 billion.

Willful or Non-Willful

    Under New York law, if you are overpaid by unemployment, the overpaid amount is collected from your unemployment checks until it is paid off. If the New York Department of Labor determines that the overpayment was willful -- you knew you were being overpaid -- it can garnish 100 percent of your unemployment check. If the overpayment was unintentional, then the department only garnishes 50 percent of your unemployment wages. You are not assessed interest and late charges. You can appeal the ruling if it will cause you severe hardship such as loss of your dwelling or inability to purchase food.

Collection Techniques

    New York State uses several different tactics to collect fraudulently obtained unemployment compensation. It uses "general collection techniques," according to a 2010 press release, including judgments filed by the Attorney General. In addition, it garnishes state tax refunds and you forfeit future unemployment benefits. You are given an opportunity to provide proof that you don't owe the debt, prior to the garnishment proceedings. Acceptable proofs include the debt was discharged in bankruptcy, it was already paid or the Social Security number is not yours so you are not the debtor.

Federal Offset

    In 2008, Congress passed legislation directing the Treasury Department to assist the Department of Labor with collecting fraudulently obtained unemployment benefits. Labor notifies the Treasury Department's Financial Management System (FMS) of unemployment debts owed to the states, and FMS garnishes your federal tax refunds for payment. New York began participating in the program in September of 2010, but could only collect in cases of fraud. The debtor also had to reside in New York. Since then, Congress passed the Claims Resolution Act of 2010, which allows New York to collect unemployment debt from your federal tax refund, without the restriction that the debt was the result of fraud, and regardless of which state you live in.

Tuesday, June 29, 2004

How do I Eliminate Credit Report Charge Offs?

How do I Eliminate Credit Report Charge Offs?

Your credit report is a snapshot of your financial reliability. Creditors use your credit report to determine if you are a safe borrower. As we mature, we realize the importance of good credit. It is never too late to clean-up your credit. If you ever had a seriously delinquent account, the creditor may write the balance on the account off as a bad debt, referred to as a charge-off. If your credit report contains charge-offs there are steps you can take to remove them and improve your credit score.



    Review your credit report. You are entitled to a free copy of your credit report every 12 months under the Fair Credit Reporting Act. Request your copy by visiting annualcreditreport.com. Since the information reported to each credit bureau may differ, you will need copies from the big three: Equifax, Experian and TransUnion.


    Locate the creditor reporting the charge-off. In order to have a charge-off removed, you must negotiate directly with the creditor instead of a collection agency. You will need to get the name of the creditor, phone number, address and account number to handle the debt.


    Negotiate with the creditor. Try to come to an agreement to settle the debt. In some cases, the creditor will settle for a lesser amount than the total balance due. Paying off the debt does not automatically remove the charge-off.


    Request a written agreement before paying the debt. The payment is your leverage. Have the creditor send a written statement agreeing to remove the debt from your credit report at all three bureaus once the debt is paid.


    Pay the debt as agreed. If you are mailing in your payment, send in a copy of your agreement as a reminder. Keep proof of the payment for your records, you may need it later.


    Follow-up by checking your credit report again. To make sure the creditor is fulfilling their end of the agreement, you will need a new copy of your credit report. If the debt is not removed within 30 days, contact the credit bureaus directly to file a dispute. Provide each bureau with evidence of the agreement and proof of payment. The credit bureaus have 30 days to investigate and remove the charge-off from your report, according to the Fair Credit Reporting Act.

Monday, June 28, 2004

Credit Consulting Companies

Credit consulting companies educate consumers on the best strategies for improving their credit scores. Clients learn how to avoid filing for bankruptcy or becoming victims of identity theft. Most credit consulting companies offer fee-based services and are readily available online. Customers receive one-on-one counseling and individualized solutions to help improve their credit score ratings and eliminate their debts. Most credit consulting companies offer a fee-based service.

Simple Solutions Credit Counseling

    Simple Solutions Credit Counseling provides consulting services to clients who wish to improve their credit scores. The company also helps its clients by negotiating debt reductions with creditors, and offers fee-based credit and financial consulting services. Credit consultant specialists review individual credit scores and give recommendations to help improve their client's credit rating or eligibility for low interest loans. Clients also receive training on various credit-related educational topics such as bankruptcy, budgeting, identity theft and ways of obtaining low interest credit cards. The company guarantees that customers who enroll in the program will improve their credit scores within 45 days. In addition to offering consulting services, Simple Solutions provides a training program to individuals who wish to become certified credit consultants.

ENG Credit Counseling

    ENG Credit Consulting offers legal and credit counseling services to individuals and businesses. The company helps entrepreneurs establish their small business credit. Individuals can submit their application and payment for an initial consultation online, and will be contacted by a credit consultant within 72 hours. ENG charges a flat fee for all of its individual and small business credit consulting services.

AMG Consulting Group

    AMG Consulting Group provides credit consulting services seven days a week, and is based in Sherman Oaks, California. The company offers full-service credit counseling and assists clients with debt negotiations and credit restoration services. Clients can also receive assistance with judgments and tax liens, identity theft, repossessions and late payments. Added services provided by AMG include a six-month credit counseling and restoration service. Clients receive a free credit consultation; AMG negotiates any outstanding debts and disputes inaccurate charges made to a client's account. By enrolling in the debt negotiation program, clients receive assistance with settling any outstanding debt payments and avoid receiving harassing phone calls from debt collectors. AMG also provides personal coaching and training through courses in financial planning, budgeting and credit enhancement strategies.

Sunday, June 27, 2004

How to Dispute a Credit Report

How to Dispute a Credit Report

It is always a good idea to review your credit report at least once a year so you can spot any errors or fraudulent accounts. In many cases, victims of identity theft first learn their identity has been compromised when reviewing their credit report. If you do spot errors or fraudulent accounts, it is within your rights to dispute the credit report. Under the Fair Credit Reporting Act (FCRA), the three main credit reporting bureaus--Experian, TransUnion and Equifax--must correct inaccurate information in your credit report. In addition, the creditor that provided the inaccurate information, such as a credit card company or a mortgage provider, must correct the information as well.



    Print two copies of the disputed credit report and circle each item that is inaccurate.


    Write a letter to the credit reporting bureau that issued your credit report--Equifax, Experian or TransUnion. Make sure your letter is dated and includes your name and address. Your letter should include in detailed language exactly what is erroneous on your report and why those items should be removed. Include any documents or information that may support your case and the credit report you printed in Step 1.


    Make a copy of the letter, credit report and supporting documents so you have all the information you are sending for your records.


    Mail the letter, credit report and any other related documents to the credit reporting bureau by certified mail. For the address for each of the credit reporting bureaus see Resources below. Request a return receipt at the post office so you will know that the letter was received.


    Write another letter to the creditor that supplied the inaccurate information to the credit reporting agency. For example, if your credit report lists that you have a credit card issued by First National Bank and that is untrue, send the letter to First National Bank. Explain why the information they supplied is inaccurate and request that they update their records. Repeat Steps 3 and 4 for this letter.


    Wait for a response from the credit reporting bureau. Under FCRA, the agencies are required to investigate your dispute. However, they are not required to conduct an investigation if they deem your dispute to be frivolous. If they do conduct an investigation, they must send you the results of their investigation in writing, along with a new copy of your credit report after the errors have been removed. You should also receive a written response from the creditor you contacted in Step 5.


    File a complaint with the Federal Trade Commission if you do not hear from the credit agency or the creditor within 45 days. The FTC complaint assistant will prompt you to answer a series of questions that should take no longer than five minutes. This information is used by the FTC to investigate unethical practices, although they cannot resolve an individual dispute. In addition, continue contacting the credit agency or creditor by phone and writing until you receive a written response.


    If the credit agency decides that your dispute does not have merit, ask that they include a copy of your dispute with any future credit reports. This will ensure that future creditors know that you have disputed the contents of the credit report.

Letter of Credit Requirements

Letter of Credit Requirements

Letters of credit are used in business when a purchaser does not have the cash on hand for products ordered, or does not wish to use the cash it has on hand. Instead of paying in cash, the purchaser asks its bank to issue a letter of credit. This letter of credit indicates the bank is willing to finance the transaction for the purchaser. The recipient of the letter of credit is then entitled to receive the money owed from the bank that issued the letter of credit.

Parties Involved

    A letter of credit must indicate all of the parties involved in the transaction. The letter of credit must indicate the individual or company that the bank is issuing the letter of credit for. It must also indicate who the letter of credit is to be received by, which is the company or individual that is owed the money. A letter of credit may be sold, but the original letter of credit must include the original recipient's name. Finally, the lending bank that is issuing the letter of credit must be identified in the letter of credit.

Written Draft Presented

    A written draft determines when a letter of credit is paid to the recipient. According to crfonline.com, there are two different types of drafts. One is a sight draft, and the other is a time draft. When a sight draft is presented to the recipient, the issuing bank must pay that recipient immediately, within reasonable bank processing times for the money transfer. If the draft issues is a time draft, that draft indicates at what time the recipient is entitled to receive the amount of money defined in the letter of credit from the issuing bank, within reasonable bank processing times.

Documentation Required

    For a letter of credit to be issued, the issuing bank will require several documents to be presented, according to crfonline.com. The bank requires that an invoice has been issued to the individual or company applying for the letter of credit. A bill of lading that indicates what is being shipped by the seller is also required for the letter of credit to be issued. The warranty of title verifies that the seller legally owns the items and can legally sell them to the buyer. An optional document is the letter of indemnity. This guarantees that the documentation involved in the transaction will be presented to the bank in legible and legal condition.

Consumer Debt Settlement Programs

Debt settlement programs reduce overall debt through creditor negotiation. While technique may vary depending on the debt relief company, the idea behind debt settlement is to convince creditors to accept a reduced lump-sum payment in lieu of the entire amount owed. Successful debt settlement not only lowers overall debt, it can provide an alternative to bankruptcy for cash-strapped consumers. As with any business deal, do your homework on debt settlement options and particular companies before signing a contract.

Debt Settlement Process

    Unless you already have considerable delinquencies, a debt settlement agency may instruct you to stop paying your bills in hopes that a creditor desperate for payment will be more willing to negotiate. In most cases, you make payments to the settlement company. Once these funds build up, the settlement company offers creditors a lump-sum payment to settle the debt. Negotiations may be lengthy, and success depends on how willing your creditors are to negotiate and the total amount owed.

What to Look For

    Contact your State Attorney General's office regarding licensing requirements and check with the Better Business Bureau for consumer complaints before signing a contract. Reputable companies clearly detail contract terms, time frames and costs. Opt for a debt relief company offering credit counseling as well as settlement help. Ask about guarantees, and get them in writing. Do the math when it comes to fees to make sure your monthly payments or percentage-based fees are manageable. Choose an agency that addresses your questions and concerns clearly.


    Be wary of companies claiming to erase or reduce debt to "pennies on the dollar" or promises to eradicate negative credit information. Creditors are not obligated to work with debt settlement companies or make deals and barring inaccurate information, agencies cannot remove negative marks on your credit report. Agencies may instruct you to stop communicating with or making payments to creditors. Late payments will end up on your credit report, potentially lowering your score.


    Under the Federal Trade Commission's Telemarketing Sales Rule, debt relief agencies cannot charge upfront fees, misrepresent services or make false claims to consumers. To collect payment, an agency must have renegotiated, reduced or changed the terms of at least one debt for the client. Agencies must disclose all costs, time frames and possible negative consequences resulting from debt relief programs. The TSR covers incoming calls from potential clients, as well as outgoing sales calls.

How Can Someone Garnish Your Bank Account?

If you have been sued for a debt you owe and a judgment has been issued against you, you must pay off that debt by court order. There are several avenues a creditor can take to ensure you pay, one of which is a garnishment of your bank account. A specific procedure must be followed by the creditor to effect this garnishment; you are not notified until your accounts have already been frozen.


    Though the names of the forms and courts vary from state to state, the process of freezing your bank account is essentially the same no matter where you live. A judgment is entered against you for a debt. The creditor then files a request with the court to freeze your bank account. This is known as a nonperiodic garnishment because it happens once. If the judge issues the writ, or order, the request for garnishment is sent to your bank, now the garnishee. It is required to freeze your funds until further notice. You are then served with a notice that your account has been frozen. This does not apply to debt owed to the federal government -- it doesn't need a court order.


    If your account is frozen due to a garnishment order you do not have access to your funds. Outstanding checks and pending transactions are not honored. The garnishee must furnish the court with a form that discloses the assets over which he has control. You are notified that your account has been frozen after it has happened. You can object.

Valid Objections

    You must have a qualifying reason to object. The fact that you can't afford it is not one of them. Valid reasons for an objection are: the garnishment wasn't properly issued; you are in bankruptcy proceedings; you have an existing installment agreement that barred asset freezes; the judgment was paid; or you have exempt funds in your account. To avoid losing more money, stop direct deposit payments until the issue is settled.

Exempt Income

    Under federal law, most federal benefits are exempt from garnishment, unless the federal government is the creditor. Exempt benefits include, but are not limited to, Railroad Retirement, Social Security, federal and military pensions, Social Security Income payments, federal disaster assistance and student aid. Some states exempt other income not covered by federal law such as state pensions and child support. If you have exempt income in your bank account, you can write to the bank holding the funds and notify it that the income is exempt. Copy the creditor's attorney on the letter. You can challenge the freeze in court but you should bring copies of bank statements showing the deposits made were from exempt sources. Check with your state to determine what other rights you have regarding this issue as some states prohibit garnishment of funds below a certain amount. The writ, once served, can only take the money in the account from the time served to the court date. Your account is then unfrozen, but the creditor can come back and get another order, if the debt is not yet paid, until the statute of limitations runs out on collection.

How to Settle a Judgment With a Counteroffer

A judgment is a decision reached in civil court by a judge. The judge rules that you failed to pay as agreed on a credit account, and that you legally owe a creditor or debt collector. It is a very serious ruling that could subject you to garnishment of your bank account or wages. The New York Times reported in April 2010 that pay garnishments were rising fast, with creditors quick to take advantage of judgments. You can avoid garnishment by making a counteroffer to settle the judgment -- possibly for less than the amount awarded by the judge. The challenge is getting the creditor or debt collector to accept.



    Schedule a free consultation with an attorney -- especially if you have little experience in civil court judgments. You can still choose to handle the settlement yourself, but the attorney can advise you about legal maneuvers that may be helpful. For example, in California and other states, you can appeal the judge's ruling by entering a Notice of Appeal. The appeal allows you to challenge the judgment on legal grounds, such as a procedural error allegedly made by the judge. Or you can file a file a Notice of Motion to Vacate Judgment, which is typically filed after people fail to show up in court to defend themselves because of illness or another good reason. Either notice will put the case -- and possible garnishment -- on hold until another court hearing. That gives you more time to negotiate a settlement. Get a referral for an attorney by contacting your local Legal Aid office.


    Review court papers notifying you of the judgment, and note the contact information for the creditor or debt collector.


    Call the creditor or debt collector to negotiate a settlement. Generally, the threat of garnishment gives the creditor or debt collector considerable leverage, making it difficult to settle for less than the full amount owed. However, by adopting a firm but reasonable negotiating position you may convince the debt collector that you are no pushover -- especially if you or your attorney filed an appeal or a request to vacate the judgment.


    Offer to settle for, say, 75 percent of the amount due in a lump sum, or 100 percent of the balance in installments. Keep negotiating until you have a deal. The creditor or debt collector may accept a counteroffer to avoid the time and expense of another appearance in court to seek a garnishment or to fight your appeal or notice to vacate the judgment.


    Obtain the terms in writing before making a payment. Insist that the debt collector stipulate in the agreement that all collection efforts will cease as long as you pay as greed. Pay by cashier's check to protect your personal banking information.

Saturday, June 26, 2004

What Is Debt Burden?

What Is Debt Burden?

According to the December 7, 2010, Federal Reserve Statistical Release, Americans owned almost 2.4 billion dollars in revolving and non-revolving debt as of the end of October 2010. When learning to manage your money, understanding debt burden and its impact on your finances can be a positive step to learning to save for the future and avoiding unnecessary debt.


    According to the Economics-Dictionary.com, a debt burden is how much money it costs you to service your debt. In general, the cost of your debt includes interest that you pay, fees for attaining the debt and occasionally, extra fees such as late payment fees, loan servicing fees and annual membership fees. For example, a 30-year $100,000 mortgage loan with an interest rate of 6 percent will cost you an additional $115,000 in interest if you make payments for the entire 30 years, according to Bankrate.com.

Types of Debt Burdens

    Governments have debt burdens in the form of publicly held securities such as U.S. Treasury securities and internal debt such as Social Security or state retirement programs. Individuals have a more limited scope of debt. Each debt you have has the potential to become a debt burden if you do not pay off the loan before you incur fees. Credit cards can be debt burdens, as the cost of interest adds to your initial balance, thus increasing your debt burden. Mortgage loans cars, boats, consolidated, home equity and unsecured loans all have potential to add to your debt and cause you to incur more of a debt burden.

Reducing Your Debt Burden

    Paying off your debts before the end of the term can help reduce your debt burden by reducing the interest you owe. The Federal Reserve instituted new credit card rules in 2010 that can help you understand how much faster you can pay off your debt by making more than the minimum payment. Most car and home loans do not have a prepayment penalty. Payments over your minimum monthly payment reduce your principal balance, thus helping you save interest while paying off the loan faster. Avoid incurring new debt while paying down your balances.


    Consider refinancing your debt to reduce your interest rate, the cost of interest and reducing your debt burden in the process. Think carefully before committing to a new loan or purchasing an item using a credit card. If your spending habits are under control and you have demonstrated the ability to live within your monthly budget, a consolidation loan may help you reduce your overall interest cost of paying off your debts. Meet with a financial counselor or non-profit credit counselor to get better control over your spending habits and debts.

Are There Disadvantages of Debt Management Companies?

Debt management programs may be a solution for those who have problems paying off their credit card balances. While they can help customers, debt management programs often come with their own set of problems. In some cases, these issues make it difficult or impossible to use debt management programs.

Debt Management Basics

    You may have seen debt management programs advertised on television. These programs aim to help you pay off your debts by lowering your interest rates and providing you with a payment schedule that maximizes your contributions. Most debt management programs are set up so you can get out of debt within five years, provided you stick to the plan.

High Dropout Rate

    Sticking to a debt management plan might not seem difficult, but the numbers show that it's far from a given. The debt settlement group DebtShield states that three out of four people on debt management programs drop out before their plans are completed. Though debt management programs strive to work with your budget and give you an affordable monthly payment, many people find they are unable to meet the financial obligations of the program.

Inability to Use Credit

    One of the reasons so many people drop out of debt management programs is that you typically cannot use your credit cards or apply for new credit while on the program. Living without credit can be difficult. For example, if your car experiences mechanical problems and you can't use your credit card to pay for repairs, you could be in a difficult situation because of your debt management program's restrictions.

Lengthy Term

    Although debt management programs try to get customers out of debt as quickly as possible, the process usually takes years. Even if your term is four years, it's easy to lose patience over that period, especially if your balances are high. It may seem you're not getting anywhere and you may give up on the program. You may opt for a quicker alternative, such as debt settlement, which has a different set of consequences. Seeing the program through to its conclusion requires a commitment, which might not be possible for everybody. This is especially true if you undergo life changes, such as getting divorced or having a child, while on the program.

How to Calculate Loan Payments for Debt Consolidation

A debt consolidation loan allows you to pay off all your financial obligations with a single monthly loan payment. It can be a smart choice for consumers with many different debt payments or those seeking to obtain a lower interest rate.

Research Consolidation Loans

    Figure out the terms of your consolidation loan will have before calculating monthly payments, Critical information includes: the amount borrowed, the interest rate, and the loan term. To find the amount you need to borrow, add up all the principal balances on the debts you wish to consolidate. Determine the length of time needed to repay the loan: this is you loan term. The sooner you repay the loan, the lower your total interest charges will be. Contact several lenders to obtain and compare quotes on interest rates.

Basic Payment Calculator

    Most debt consolidation occurs through installment loans, meaning you take out a loan for a specific amount of money and repay the entire amount over a period of time. The monthly payment is the same every month for the duration of the loan. Plug the information about the loan amount, its interest rate and its term into a basic installment loan calculator, such as that offered by Bankrate.com. For example, a debt consolidation loan of $30,000 at 10 percent annual interest, to be repaid over 10 years, requires a monthly payment of $396.45.

Advanced Payment Calculator

    Some online calculators let you input data on all your current debts, in addition to basic information about your consolidation loan. The calculator's results allow you to compare the payments, total interest costs, and total additional costs for each situation. This information helps you decide whether to take out a debt-consolidation loan. To use an advanced calculator, type the principal balance, interest rate and monthly payment of each of your current debts in the calculator. Also, type in the interest rate and terms of your consolidation loan to calculate the monthly payment and your potential savings.

Home Equity Loan Considerations

    Using a home equity loan to consolidation debts usually provides a lower interest rate than a personal loan does. You also may qualify for a tax deduction, if you deduct interest on a home equity loan on your taxes. Some advanced calculators take this tax deduction into account to estimate the tax savings of using a home equity loan to consolidate debt.

Friday, June 25, 2004

How to Consolidate Your Student Loans From the Government

How to Consolidate Your Student Loans From the Government

The average four-year college student graduates with just over $23,000 in student loan debt, according to the U.S. Department of Education. Borrowers must repay these loans, plus interest, soon after graduation.

One way to simplify your student loan repayment and lock in a fixed interest rate is through federal loan consolidation. Consolidation rolls all your separate student loans into one monthly payment. These consolidation loans are not credit based--you complete an application with a student loan lender, provide your student loan information and decide on a repayment plan. After your loan is approved, all you have to do is make your payments each month.



    Figure out how much you owe. Your lenders will start sending you repayment notifications once you graduate or drop below half-time status. You have six months after one of these events before you have to start paying on your loans, so it's important to start the consolidation process as quickly as possible.

    You are able to consolidate most federal student loans, including Stafford, Parent PLUS, Supplemental Loans for Students, Perkins, Federally Insured Student Loans, Nursing Student Loans, Direct Loans, Health Professional Student Loans and Health Education Assistance Loans.

    You can find out the types of loans you hold, their balances and interest rates by visiting with your school's financial aid office. If you aren't able to find out this information from them, you can locate it in the National Student Loan Data System.


    Chose a consolidation lender. You can opt to consolidate through the federal government directly by completing the appropriate application on their website or through your school's financial aid office. You can also opt to consolidate your federal loans through a private lender. You can find lenders by searching on the web or asking your school's financial aid office for recommendations. The federal government mandates the interest rates for federal student loans, so consolidating your loans will be the same no matter what lender you chose.


    Decide on a payment plan. Federal student loans offers four repayment plans to choose from. Each payment plan offers different terms, including payment amount and length of repayment.

    Choosing the standard repayment plan means you'll pay a fixed amount per month (minimum $50) for up to 10 years. Extended repayment is similar to standard, but you'll have 12 to 30 years to repay. An extended repayment plan means your payments will be smaller, but you'll end up paying more in interest in the long run.

    Graduated repayment starts with smaller payments and increase gradually every two years until the loan is repaid (up to 30 years). The graduated monthly payment must be at least $25 and cover the amount of interest that has accrued on the loan since the last payment.

    The income-contingent repayment plan is available only for Direct Loan borrowers and is based on a percentage of the borrower's income (minimum payment of $5 per month). The payment amount increases yearly as income increases with a maximum repayment period of 25 years. After 25 years, the remaining amount owed on the loan is discharged.

    It's important to check out each repayment option and decide which works best for your needs. However, you're not locked in to that repayment plan--you can change repayment plans once a year.


    Complete the application process. The application process is similar for every lender. In the application, you'll provide the information on your student loans, the amounts owed and the current lenders. From there, your consolidation loan lender will take care of working with each of your lenders to pay off each loan and transfer the debt.

    After the consolidation process is complete, you'll sign a promissory note similar to the ones you signed when you originally took out your student loans. This will outline the repayment amount, interest rate, and your chosen payment plan.


    Make payments on time every month. Choosing a repayment plan that fits your current budget is vital to ensuring that you can keep up with your student loan payments. In addition, some lenders give a 1/2-percent interest rate reduction for borrowers who make consistent on-time payments.

Thursday, June 24, 2004

The Credit Card Debt Relief Act

The Credit Card Debt Relief Act

The Credit Card Debt Relief Act has been referred to in commercials by debt settlement companies and other debt counseling services, but is not an actual law that has been passed or proposed. It is sometimes used as a marketing strategy playing off the Mortgage Debt Relief Act of 2007. This law allowed people who had debt forgiven as the result of a short sale on their home to exclude the forgiven debt from their income, and save on taxes.


    Advertisements for some debt settlement and consolidation companies, at one time marketed their services as if a new federal law called "The Credit Card Debt Relief Act," would allow debtors to renegotiate reductions on their credit card debts. These ads often talked about the assistance that some banks received in federal funds, and would say that this money allowed the banks to write off credit card debt. People often draw the conclusion that if the banks received help, why wouldn't the government bail out the borrowers as well?

Broken Promises

    Often, these ads were just for organizations that solicit your information to pass on to potential debt settlement companies. These companies would sometimes use deceptive practices to get you to commit to using their services, such as promising that they can eliminate certain amounts of debt without any negative effects. Debt settlement companies often collected large fees before they even did anything for you at all. And using their services may result in a creditor suing you.

Government Relief

    The Federal Trade Commission established rules in late 2010 that affected how debt settlement companies operate, limiting the deceptive practices that they have used in the past. Debt settlement companies now must disclose to anyone how long it is likely to take to settle debt, and how much the company will charge in fees to negotiate this settlement. Debt settlement companies can no longer charge a fee in advance, and can not charge the debtor anything until they have negotiated or settled at least one debt, or the debtor has made at least one payment on the reduced amount.

On Your Own

    You can pursue debt settlement on your own without a settlement company. Contact a creditor and offer them a cash settlement for a lower amount than the balance of the debt. The creditor may accept or refuse this offer. If they refuse, you can then continue to negotiate with them, until you receive an offer that is acceptable to you both. There is no guarantee that you can settle with a creditor, but if you are not able to do so, a debt settlement company would probably not be able to settle either.

Wednesday, June 23, 2004

The Disadvantages of Short-Term Debt

The Disadvantages of Short-Term Debt

There are times when a business needs cash in a hurry. For example, if the business is having trouble paying its employees for the next couple of months but expects a substantial increase in clash flow a few months down the line, the business may look for a short-term loan in order to tide them over. Short-term debt is generally due within a year's time. Short-term loans can be beneficial to get you through a tough time, but there could be drawbacks.

Perception of Poor Financial Health

    Investors you may be wooing will look at your financial statements before they make a substantial contribution. They want to see that you have available cash flow and the credit rating to get yourself out of a jam if you needed more money in a hurry. The presence of a short-term loan can inflate your numbers and make it appear that your business is in financial trouble. Open loans reduce your ability to get approved for long-term loans and increase your current overhead. Investors see your business as a risky investment that could falter under the pressure of a short-term loan. Jennifer Lindsey, author of "The Entrepreneur's Guide to Capital," says that lenders ideally like to see a two-year operating history, a stable management group, a desirable niche in the industry, a growth in market share, a strong cash flow and an ability to obtain short-term financing from other sources as a supplement to the loan.

Negative Credit Risk Assessments

    Any late payment on the short-term debt can negatively impact your credit rating. Your new debt to income ratio, inflated by the new loan, will also have a negative impact on your credit rating. Dunn and Bradstreet is one of the companies that provides commercial credit risk information similar to the concept behind the FICO score for individuals. Once you've paid off the loan, your rating with D&B will improve, but during the period that your debt seems to outweigh your income, your risk assessment will be less than positive. DP Information Group (DP Info), Singapore's leading credit and business information bureau says, "Short-term debt financing has to be monitored closely to avoid bad relationships with suppliers and bankers or a bad reputation in the industry for not paying debts on time."

Insufficient for Long-Term Goals

    Short-term debts are best if your business has an immediate need for more cash. Immediate needs for a short-term business loan could be to meet payroll while awaiting a large cash lump sum or to buy materials to produce your hottest selling product after you have sold out. They are not good for financing entire new business ventures in which it could take years before the business starts to turn a profit or to build a new facility with a substantial mortgage because the money due on these loans is due within a year.

Strain on the Day-to-Day Operations

    Lenders to small business owners often have severe penalties for late payments. They can increase your interest rate on the loan, add late fee charges to the loan or request that you pay the loan off early. For most small businesses, making this additional monthly payment is already a burden. Any increases in the payment could cause you to default, labeling you as a credit risk. Trying to make the payments on these loans could hinder your performance on other loans or responsibilities that you have, thus putting you further into debt instead of helping you improve your business. Falling further into debt puts unwanted strain on the day-to-day operations of the business. Decisions from management team focus on meeting the immediate loan needs instead of looking into the future.

Will a Debt Management Plan Affect My Credit Score?

People borrow money. They incur credit card debt, student loans and automobile loans to pay for items today without having the money for them. Many people struggling with debt consider committing to a debt management plan. Companies offering debt management plans claim to help individuals pay their debt off faster with lower interest charges. In most cases, participation in a debt management plan will not directly affect your credit score.

Purpose of Debt Management Plan

    Debt management plans provide a solution for debt-ridden consumers. These consumers often feel like they are drowning in a sea of debt and are unable to catch their breath. Their income is insufficient to pay the bills coming in each month, putting them further and further behind on payments. Credit cards and other forms of debt add late charges to the balance, increasing the amount owed by the consumer. A consumer's credit scores may already be damaged before he begins a debt management program by missing payments.

How Plan Works

    Consumers work with credit counseling agencies to initiate a debt management plan. The credit counseling agency contacts the consumer's creditors in an attempt to negotiate a lower interest rate and eliminate additional service charges on the accounts. After negotiating with each creditor, the credit counseling agency consolidates the payments for each creditor into one amount for the consumer, and the consumer pays the agency one payment. The agency, in turn, pays the creditors their separate amounts.

    Credit counseling agencies sometimes charge a fee for this service, and some can be substantial. In addition, some agencies can be late with or miss payments, which ultimately can hurt the consumer's credit score. Other agencies sometimes even encourage consumers to make late payments, claiming that doing so will make creditors more willing to negotiate. Reputable agencies, often nonprofit organizations, will make sure any payments from a debt management plan are paid to creditors on time.

Benefits of Debt Management Plan

    For struggling consumers, a debt management plan can reduce the anxiety and worry associated with the inability to meet their current payments. The debt management plan includes a manageable payment for the consumer within his current budget constraints. Creditors stop calling the consumer's home and workplace. Each account that had been past due is brought current. Over the life of the debt management plan, the consumer sees her account balances decrease and eventually be satisfied.

Impact on Credit Score

    Many consumers worry about the impact that participating in a debt management plan will have on their credit score. Creditors may report that the account is included in a debt management plan when they report payment history to the credit bureaus. This statement is usually included on the consumer's credit report. However, there is no impact on a consumer's credit score.

How Does a Bank Levy Work?

If you have fallen behind on a debt payment and have been unable to satisfactorily reach an agreement with your creditor to bring your account current, your creditor may use several strategies to recover the debt you owe. Typically, the creditor will send collection letters and make phone calls to try to resolve the past-due status of your account. It may also use other strategies, including levying your bank accounts.

Levy Authorization

    Before a creditor can levy your bank account, it must file a civil suit against you for the money you owe, usually through the municipal or magistrate court in your county. If you cannot show that you have already paid the debt or that the lawsuit is otherwise invalid, or if you simply do not respond to the lawsuit, the court will grant a default judgment to the creditor. Your creditor can then apply to the court for the authorization to place a levy on your bank account.

Bank Notification

    After a creditor receives authorization from the court, it will typically send a letter to your bank demanding that the account be frozen and that all eligible funds be sent to the court for payment toward your judgment debt. The bank then freezes your account and forwards any non-exempt funds to the court. Depending on your state's laws, the levy may stay in place until the judgment debt is satisfied. This means that you can deposit money into the account but cannot make withdrawals or write checks against the balance until you have paid the judgment debt in full.

Debtor Notification

    Most states require the bank or your creditor to notify you when the creditor has placed a levy on your bank account. However, you will typically not receive notice until at least three days after the levy is in place. States do not require notification before the levy is in place, because advance notice would give you the opportunity to move funds out of the account to prevent them from being sent to the court to satisfy the judgment.


    Depending on state and federal laws, some funds in your account may be exempt from a bank levy. A creditor cannot take funds derived from Social Security benefits, disability payments, unemployment compensation or child support payments. Some states also impose a specific monetary exemption to prevent a judgment creditor from completely draining your bank account. For example, Ohio considers $400 of your bank account balance exempt from levy. Some states also allow a wild-card exemption, subject to a specific monetary limitation, which you can use to protect part of your assets from levy and garnishment.

Texas Debt Settlement Laws

Debt settlement companies help debtors settle their debts by negotiating with creditors on the debtor's behalf. In Texas, debt settlement companies must be careful not to mislead or misinform debtors. In addition, the companies must inform consumers of all their rights prior to entering debt settlement. Texas has strong consumer protection laws in place to protect debtors from unfair debt collection practices, as well as from shady debt settlement tactics.

Prohibition Against Misleading Services

    Debt settlement companies in Texas may not mislead customers as to the services they provide or about the customers' rights under current debt settlement laws. For example, debt settlement services must not claim to be able to resolve debt problems instantly or make false or misleading claims about what debtors must do if they file for bankruptcy. For example, debt settlement companies may not claim that debtors will lose all their property in a Chapter 7 bankruptcy, as this statement omits the property exemptions built into Chapter 7 bankruptcy.

Cease-And-Desist Law

    At the time of publication, Texas prohibits both debt collectors and the original creditor from contacting a debtor if the debtor sends a written demand that the debt collector cease contacting him. Debt collectors and original creditors may still contact the debtor to inform her of an impending lawsuit against her after the debtor makes this request. The debtor may request that persons involved with the debt stop contacting her at work or stop contacting her altogether.

Statute of Limitations

    Texas has a statute of limitations of four years on all consumer debts. The statutes of limitations begins when a debtor defaults on the debt, not when the debtor takes out the loan. For example, if a debtor defaults on a credit card debt one year after using the card, his creditor has four years from that point to sue him in civil court for the amount of the debt. Creditors may still contact debtors by phone after the statute of limitations expires as long as they don't threaten to take the debtor to court, as they cannot use the legal system to collect a debt after the statute of limitations expires.

Prohibition of Wage Garnishment

    Texas does not allow creditors to garnish debtors' wages to satisfy most unpaid obligations. Creditors can garnish bank accounts or non-earned income, such as royalties or rent after winning a lawsuit against a debtor, and creditors may garnish wages if the debtor owes child support. If a creditor illegally garnishes a debtor's wages, the creditor may face a misdemeanor charge or incur fines.

Can You Bargain Down Your Credit Debt?

When your debt is overwhelming, settling for less than you owe can seem like a great solution. TV and radio advertisements make it seem easy, but the truth is that debt settlement isn't for everyone. Though you can reduce the amount that you have to pay the company, you'll have to pay with a lower credit score, which can hurt you in the long term.

Creditors vs. Collections

    Initially, you owe debt to a creditor, typically a credit card company or a bank. When you don't pay that money back, it goes to a collection agency. It's easier to get a debt settlement through a collection agency. The original creditor, however, may be willing to work with you by decreasing your interest rate, which can significantly decrease the amount of money that you owe the company.

When It Can Work

    A company won't bargain down the amount that you owe until it starts to worry that you won't pay anything at all. Typically, this means that you need to skip making payments for several months before the company will bargain. At that point, you may be able to settle your debt for between 20 percent and 75 percent of the amount of your debt.

How to Bargain

    One way to bargain down your credit debt is to hire a debt settlement company to handle the negotiations for you. This comes with additional fees, however, even if you back out. You can also wait for the company to approach you with a settlement offer. This can happen after you've stopped making payments for several months. This is an easy approach. If you want to be more proactive, you can contact the company and make an offer to settle. You should have the full amount that you want to pay on hand to make the payment immediately.

Effects of Debt Settlement

    Settling your debt in this manner can have an adverse effect on your credit score. The credit bureaus partially base your credit score on your credit history and by stopping payment on a debt, you will decrease your score. Additionally, some companies will report that you settled the debt, rather than paying the full amount, on your credit report. This may not look good to lenders in the future.

Tuesday, June 22, 2004

How Long Does Debt Settlement Affect My Credit Rating?

When a creditor or collection agency offers to let you settle a debt for pennies on the dollar, the prospect can seem too good to be true. Often, that's just the case -- while debt settlement agreements can let you get rid of debt for much less than you owe, your credit rating will pay the price in the long run.

Last-Ditch Effort

    Debt settlement, whether offered by your creditor, a collection agency or a so-called credit repair company, is your creditor's parting shot at collecting even a portion of what you owe. Offers to settle your debt for less than what was originally owed are often extended only after other attempts to collect the debt in full have failed. When debt settlement is on the table, it's often because the account is in collections, or because you've stopped making payments.

Long-Ranging Consequences

    When you settle a debt for less than you owe, the remainder of the debt may be forgiven, but a record of the debt still exists -- it's there on your credit report for future creditors to see. Debt settlement becomes part of your credit history when your creditor or a collection agency notates your credit report to reflect that you settled the account for less than what was owed. This notation stays on your credit report for seven years.

Damage Already Done

    The damage that debt settlement does to your credit report is not just the notation that your debt was settled for less than the amount owed. Because debt settlement is often a worst-case scenario, the damage to your credit report in the form of late payments and failure to make payments is often already done by the time debt settlement becomes an option.

Worst Case Scenario

    There's no way that debt settlement is not going to cost you in the long run, even if it does save you a considerable amount of money upfront. The cost is a trashed credit score and years of rebuilding your credit in order to seem like a viable risk to lenders again. Before you agree to a debt settlement, contact a reputable credit counseling agency to see what your other, legitimate options may be.

Who Can Pay the Car Loan After Someone Dies?

When you have just lost your spouse, the last thing you want to think about is the bills mounting up with his name on them. However, you must handle those bills for which you are responsible and give the rest to your late spouse's executor to handle to avoid damage to your credit and lawsuits against the estate. Vehicle loans are especially important, because if you or your executor do not pay them, the creditor can repossess the vehicle from the estate.

Joint Ownership

    If the deceased person jointly owned the car along with a spouse, child or friend, then that person is solely responsible for continuing to make payments on the car. The surviving owner should contact the lender and inform it of the death as well as make new payment arrangements. If the surviving owner fails to make payments as agreed upon, the lender can repossess her vehicle.

Community Property States

    If you live in a community property state, you are liable for all debts incurred during the course of the marriage regardless of whether your name is on the account. Thus, if your spouse bought the car after you were married, you must treat your late spouse's vehicle as if it were a jointly owned vehicle: contact the creditor, make payment arrangements and pay the loan each month. As of 2011, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states.


    The executor of the estate is responsible for paying most of the deceased person's debts, including secured debts such as automobile loans, if they belong solely to the decedent. The executor should send the lender a notice of estate administration through registered or certified mail. National Paralegal College reports that the creditor may demand full payment immediately. The executor can then pay the debt out of the estate's assets or sell the deceased person's home and use the proceeds to cover the debt.


    In most states, if a debtor defaults on a car loan, the creditor can repossess the vehicle. This applies equally to the deceased's vehicle if proper arrangements are not made or honored. For example, if a spouse is liable for the payments and does not make them, the vehicle can be repossessed. Thus, it is important to contact the loan holder as soon as possible following the death of a vehicle owner.

How to Retrieve an Old Credit Report

How to Retrieve an Old Credit Report

Information on your credit report determines your credit score -- which, in turn, influences the interest rate on your loans and home mortgages, as well as other important life decisions, including employment. Many factors, from late credit card payments to bankruptcy, can affect this report. While it is simple to get a current credit report, you may also wish to examine old credit reports to help determine the factors still influencing your credit.



    Call a credit bureau. The three largest bureaus are Experian, Equifax and TransUnion. According to Spend on Life expert Evan Hendricks, author of "Credit Scores and Credit Reports: How The System Really Works, What You Can Do," several major credit bureaus take monthly "snapshots" of their databases' credit reports; others, however, do not keep such information in their files and only have notes about old items on former credit reports.


    Make a list of your reasons for needing an old credit report. By determining the information you need, and from which year it would have appeared, you can help the credit agency find the report easily. For example, if you suspect that someone opened credit card accounts in your name in 1999, that can help your representative find the report that you need.


    Request a copy of your current credit report. Here, you can see factors from the past seven years that affect your credit negatively, from collections to delinquent accounts. If you have filed for bankruptcy in the past 10 years, this will also appear on your report. When you receive the report, make note of any suspicious activity to request further information from your credit bureau.


    Request information from the credit bureau. For example, ask to see a copy of your credit report from May to December of 1999 if you suspect a fraudulent credit card account had been opened in your name. If you do not know which month the credit report you need to see belongs to, provide as many specific details as you can to your representative to help her narrow down the search criteria. In this example, you might ask for information regarding all credit cards opened in your name from 1995 to 2000. You may have to pay a small amount for administrative processing, depending on the age of the information you are seeking.

Monday, June 21, 2004

Can You Place a Lien on a Joint Account?

A joint bank account is convenient for many purposes, but it also can cause problems if one account holder has a collections judgment against him. Whether a person has a joint bank account or is a creditor seeking to collect on a judgment, it is important to understand the process of placing a lien on a joint bank account to be able to protect his rights.

Joint Bank Account Ownership

    A joint bank account is an account wholly owned by each of the persons on the account. This means either person can use the full amount of money in the account for any purpose without consent of the other. However, if a creditor has a judgment against one of the account owners, the creditor with the judgment can place a lien against the joint bank account in an effort to collect on that judgment.

Bank Account Lien

    A lien on a bank account freezes the money in the account, up to the total amount of the lien. For example, if a creditor places a $1,500 lien against a bank account with $2,000 in it, the bank will freeze $1,500 and only allow the account holder(s) to use $500 of the money in the account. The bank holds the money for a period of time that varies by state, but is generally a few weeks to a month. Once the bank freezes the money in the account, the creditor may levy the money in the account. A levy requires the bank to send the money to the creditor, generally through the court or county sheriff, to satisfy the debt. Laws vary by state, but generally a lien will not freeze deposits placed into the account after the creditor places the lien.

Appealing the Lien

    The purpose of the waiting period between the placement of the lien and the release of funds to the creditor is to allow the account holder time to appeal the lien. In the case of a joint account, the account holder not subject to the lien may go to court to prove that the seized money belongs to her and not the person with the judgment. Proving this is difficult, but if all or the majority of the deposits came from the account holder without a judgment, an appeal may be successful.

Exempt Income

    Though laws vary by state, most states exempt some forms of income from a bank lien. Commonly exempted funds include deposits from child support, Social Security, unemployment and veterans' benefits and other government programs. Some states also exempt all account balances below a specific level. For example, in New York, creditors cannot levy any money if the account balance is below $1,740. For more information on what sources of income are exempt, a person should contact the court that issued the bank lien.

Saturday, June 19, 2004

What Are the Benefits of Reducing Debt?

What Are the Benefits of Reducing Debt?

MSN Money states that the average American household has approximately $8,000 in credit card debt, and nearly 43 percent of American households spend more money than they earn every year. Debt brings with it many consequences, including interest payments and fees and, for many people, stress. There are many benefits of reducing debt, including financial flexibility, a lower debt-to-income ratio, and less stress.

Freedom to Spend

    One benefit of reducing debt is having the freedom to spend money. When you don't have debt, you are free to do what you want with your money. This could mean spending money on a dream vacation, new furniture, or being able to go out to the fanciest restaurant in town. When you have little or no debt you do not have to worry about every bit of your money going toward debt and interest payments. Reducing your debt allows you spend money as you please.

Freedom to Save

    Reducing debt also gives you the freedom to save money for larger purchases, such as a home or a car, or to prepare for your future. The money that you would have to pay for interest and fees can be put toward your retirement or saved for future spending. When you are able to save money for your future, the prospect of retiring becomes more accessible, and living comfortably during retirement will be easier than if you were unable to save money.

Lower Debt-To-Income Ratio

    A big benefit of reducing debt is having a lower debt-to-income ratio, meaning your income is substantially more than the amount of debt you owe to others. MSNBC describes that "your debt-to-income ratio is one important tool in evaluating your financial health." If you have a high debt-to-income ratio, over 36 percent in most cases, it will be difficult for you to secure a loan when you need one because lenders see you as unable to pay them based on your current income and debt payments. By reducing debt, you can reduce your debt-to-income ratio and apply for car loans or home loans when necessary.

Less Stress

    A final benefit of reducing debt is having less stress. According to the Associated Press "when people are dealing with mountains of debt, they're much more likely to report health problems" including depression, ulcers and cardiovascular issues. As such, reducing or eliminating debt can lower stress and improve your mental health. Focus on the Family describes that when you have less debt you spend less time worrying about it and therefore can focus on more important aspects of your life such as friends and family.

When You Die Is Your Debt Canceled?

With the exception of federal student loans, most debts aren't canceled at death, and creditors still have the right to attempt collection. However, collecting debts isn't always easy: Relatives and heirs generally aren't responsible for paying the deceased's debts, requiring creditors to file a claim against the deceased's estate in hopes of compensation.

Debts of the Deceased

    When someone dies, her debts will be paid from her estate, if she left one. Her relatives and heirs are not responsible for paying her debt, even if her estate is not large enough to pay her creditors back. Creditors may be informed of the deceased's death by family members, by the estate executor, or through a notice printed in a newspaper. According to the article "8 Ways to Avoid Probate" at Nolo.com, the creditors have a limited amount of time, which varies by state, to present their claim to the executor. If they prove their claim, the executor will compensate them if there are funds available.

    One exception to the principle that relatives do not inherit debt is in cases of joint debt. If a relative or friend took out a joint credit card or co-signed for a loan, that co-debtor is still legally obligated to pay back that debt.

Executor's Duties

    An estate executor or administrator oversees the deceased's financial affairs. The executor is responsible for gathering information about the deceased's debts and assets. Once his assets are collected and, if necessary, liquidated, the executor can pay the deceased's creditors. After the executor satisfies the creditors, he can pay the remainder of the estate to its heirs.

Student Loan Debt

    Federal student loans are canceled when a student dies. This is true of both student-borrowed loans, such as Stafford and Perkins loans, as well as PLUS loans that a parent takes out to pay for her child's education. In the later case, the loan is canceled if the student dies. If both a student's parents took out the PLUS loan, the loan is likewise canceled, though if only one parent who signed for the loan dies, the loan's status does not change.

Debt Collection

    Relatives of recently the recently deceased may receive calls from creditors and bill collectors. In some cases, these callers simply want to get information about how to contact the estate executor, while others may try to persuade the relative to pay a debt. Since debt is not inherited, relatives are not under any obligation to pay these debts, and should refer the caller to the estate's executor for the purpose of filing a claim.

How to Calculate Consolidation Loan Payment Savings

How to Calculate Consolidation Loan Payment Savings

Consolidating your debt is when you combine all of your loan balances into one account. Instead of paying several creditors you only have to pay one. This process usually saves you money by lowering your interest rates, which leads to a lower overall monthly payment. If you know how much you are paying monthly before you consolidate your debt, you can calculate how much you will save on a monthly basis after you have consolidated your debt. You can increase the amount of your monthly savings by getting the longest loan term you can.



    Add up all of your monthly payments for each individual loan, or creditor that will be included in the consolidation loan. A consolidation loan can include credit cards, car loans, personal loans, student loans and even home equity lines of credit.


    Calculate the balances owed on each debt you wish to consolidate. You can call each creditor to get this information directly or you can rely on the last statement you received. The balances will be needed when it is time to find out the terms and conditions of your consolidation loan.


    Contact a lender and let the representative know you wish to consolidate your debt. Find out what the interest rate will be as well as the new payment. The lender will be able to provide you with this information after you submit a credit application.


    Compare your new payment with the old payment. For example if you have 10 creditors to pay, before your consolidation loan, with monthly payments of $1,200 total, and your new payment is $500 after the consolidation loan, your savings are $700 per month.

Can Child Support Payments Be Frozen in Bank Accounts?

Bank accounts are frozen as a result of some debt collection practices, which can be either private or governmental. There are different laws for each, and laws also change depending on the state in which you live. However, generally speaking, child support payments -- especially those paid using direct deposit -- are typically exempt from such seizure.

Frozen Bank Accounts

    A bank account is "frozen" when the money in it cannot be withdrawn. Usually, money can still be deposited, but isn't available for use. In order to freeze a bank account, a creditor must have a judgment against the account's holder, or one of the account's holders in the case of joint accounts. A frozen account may show a negative balance because the creditor puts a hold on the account for an amount greater than the judgment. This is reflected on the account as a negative balance, even though money is not owed to the account itself.

Exempt Benefits

    Even if you cannot vacate the judgment -- which unfreezes all funds within the account -- child support payments are usually exempt from such seizure, as are Social Security, Supplemental Security Income, veterans benefits and unemployment benefits. However, you may have to notify the creditor's attorney that the funds are exempt in order to gain access to them.

Establishing Exempt Funds

    To unfreeze your funds, or a portion of them, you need to prove that they came from child support payments. The bank can give you the proper contact information and from there you may have to send proof of exempt funds. You can do this by sending the attorney copies of your bank statements for the last three months. You are perfectly allowed to redact your statements, blacking out purchases to protect your privacy, but the attorney needs to see the deposits in order to confirm that the funds are exempt.

Leverage of Funds

    It's important to establish exempt funds such as child support payments as quickly as possible because, with a judgment against you, a creditor may have the right to levy the funds in your account. They may be able to take the funds out, and things only become more complicated once that happens. While some states -- New York, for instance -- have a limit on how much must remain in your account and free for your use, other states do not.

Christian Alternatives to Debt Consolidation

Christian Alternatives to Debt Consolidation

Proverbs 22:7 states, "The rich rule over the poor, and the borrower becomes the lender's slave." Debt is a form of bondage, and today's Christians can turn to the Bible for alternatives to quick fixes. While credit repair companies and debt consolidation companies offer claims that they can quickly repair credit or overcome debt in a matter of months, they are usually scams which should be avoided. Overcoming debt can be accomplished with desire and discipline.

What does the Bible say about Debt?

    The Bible does not state that debt is sinful but instead it warns Christians to avoid being in a state of surety. Surety exists when a person is deeply in debt without a means of repayment. The Books of Proverbs and Psalms instruct about the consequences of excessive borrowing and the lack of financial planning (Psalms 37:21 and Proverbs 21:5.) Overcoming debt can be spiritually freeing, and families that follow the Bible's guiding principles will foster good financial habits in their children.

Debt Consolidation Pitfalls

    While some debt consolidation companies may be reputable, many may inadvertently cause damage to already weakened credit scores. Stories of companies taking payments and not sending them to creditors have been reported. Late payments to creditors on clients' behalf have also been reported. Some companies offer debt consolidation loans with high interest rates, meaning the consumer makes lower monthly payments but pays more over time. Also when an account is in debt consolidation, the credit report reflects this through a notation on the account. Future creditors may view this as a negative situation. If an agency closes the credit card accounts at the start of the debt consolidation program then the overall available credit decreases, but the balance stays the same. This will cause a credit score to drop.

Getting out of Debt

    Crown Financial Ministries offers five basic strategies for overcoming debt. The first step is to transfer ownership to God through prayer. This includes money, time, possessions and family. Next is to give the Lord what he is due through the act of tithing. The third step is to incur no more future debt. Pay everything in cash and stop the use of credit cards. Developing a budget that is realistic to your situation is the next step. Lastly, retire the debts by paying down higher interest debt first and then moving on to the next debt until all debt has been paid.

Credit Repair

    Time is the greatest healer for a bad credit history. Therefore paying bills on time is essential to rebuilding credit. Be suspicious of anyone who claims that they can quickly remove erroneous information from your credit report. You are entitled to one free copy of your credit report each year. Review the report for inaccuracies. Highlight any errors and report them to the credit agency. If no response is received within 30 days, the error should be removed from the report. You also can add a statement of up to 100 words to your credit report explaining any financial situations that may have affected the report adversely.

Thursday, June 17, 2004

The Benefits of Business Credit

When you establish a business, start taking steps to separate your company business from your personal accounts. One way is to open a business bank account. Another common action new business owners take is to apply for a business credit account, such as a credit card. Explore the various benefits of opening a commercial credit account.

Applying for Business Credit

    Getting a business credit line is very similar to getting a personal line of credit. You must meet the creditor's requirements for credit history and income. When you apply for a business credit account you must provide your company's employer identification number (EIN), as well as information about the company's operations. You may also have to list owner information, including Social Security information and income, to get approved for business credit --- especially in the case of a brand new company.

Cash-flow Needs

    One of the benefits of establishing a commercial credit account is that you have funds available to take care of your immediate needs in running the business. It helps you manage cash-flow problems. For instance, when you're waiting for payment from customers, you may experience a stretch of time when cash is tight. Having a business credit line allows you to pay your company's bills and obligations, such as purchasing new products, until you have available cash. You can then pay back the used credit and continue operations.

Business-credit Reporting

    Business credit bureaus like Experian Business and Dun & Bradstreet gather and report information about companies the same way that the top three credit bureaus, Transunion, Experian and Equifax, keep information about individuals. When you start a new business credit account, the information is reported on your business credit report. If you maintain a positive payment history, this helps to establish your credit as a business owner.

Business Rewards

    When you establish a company credit card account, you can take advantage of rewards programs designed especially for company owners. For instance, some business credit card companies offer discounts on office supplies, rental cars and business travel. Some may offer special business services to companies, like travel booking and invoice processing, as an added benefit.

Five Steps for Improving My Credit Rating

Credit reports and scores used to be mysterious to consumers who tried to improve them and wound up doing all the wrong things. According to the Experian website and MSN Money, the key is having a few credit accounts, using them with some regularity, keeping balances low--ideally below 10 percent of credit extended--and paying on time. There are specific steps you can take.

Order Your Credit Report

    Many people avoid looking at their credit reports for fear of negative information. However, often credit reports contain erroneous information such as accounts mistakenly connected to you or paid debts marked not paid. Order the report and make sure it is accurate. Everyone is eligible for one free credit report per year from all three credit-reporting agencies. A free credit report is available from the Annual Credit Report website -- the only official website cited by the Federal Trade Commission (see Resources).

Correct Errors

    If you have errors on your credit report, notify the reporting agency in writing why you think the item is inaccurate. Include copies of documents that support your position, such as notices of items paid in full. The reporting agencies should investigate the items in question within 30 days unless they deem them frivolous. Getting mistakes off your credit report should help.

Pay Bills on Time

    Paying bills on time seems like a no-brainer, but having delinquent accounts and collections can do serious damage to your credit card. Begin today rebuilding credit by making payments on time. If you have bills in collections and they are already on your credit report, paying them now will not make as much difference as keeping other accounts current. If you can, set up automatic payments so you do not miss any more.

Manage Credit Cards

    The objective with credit cards is to demonstrate responsible use of credit, which includes using cards, but keeping balances below 30 percent of credit available and paying on time. Common mistakes include having too many cards, closing unused cards, which has a negative, rather than positive impact on credit scores, and constantly shifting balances. However, if transferring balances to existing cards will give you a few cards with lower balances, it could be worth it.

Move Credit Card Debt

    Credit reporting agencies treat personal installment loans from banks less harshly than they do credit card debt. You may be able to improve your credit rating by moving debt to a personal installment loan. Be careful of other means of eliminating debt. Avoid debt consolidation schemes and be wary of home equity loans that can put your house at risk.

Wednesday, June 16, 2004

Consumer Rights When Sued by a Credit Card Company

A credit card company you have an account with can sue you in civil court for money owed. You, as a consumer, have the right to challenge the creditor in court to prevent the company from getting a judgment, or court award, against you. A creditor with a judgment can use additional collection enforcement methods permitted by law, such as garnishing your income.


    You have the right to file a response to the lawsuit in the court handling the case. The court papers you received on the case dictate what form your response must take and how long you have to file your answer in court. Your statement should detail what aspects of the debt you are disputing, such as the amount, and what sort of evidence you have that backs up your claim, such as proof of payment.


    A motion to dismiss the case against you must be filed by the deadline imposed by the court. The dismissal papers must state why the case should be dismissed (if, for example, the credit debt has been paid in full) and supporting evidence should be submitted to court with the dismissal papers.


    You have the right to make the credit card company prove the debt is valid and that the amount being sued for is correct. The creditor must provide you with papers showing the charges, late fees, penalties and interest in an itemized format; the original credit agreement you signed; and other relevant information you request, such as your documented payment history. The information you receive during the validation process can be disputed in whole or in part.


    You can file a countersuit against the creditor if you have been injured in any way by the company or by the lawsuit itself. The nature of your countersuit depends on your individual circumstances, but commonly includes your attorney fees for the case, harassment or violation of credit collection laws and the wages you lost due to court appearances.

Help in Reducing Credit Card Debt

Help in Reducing Credit Card Debt

The recent economic bust has caused consumers to reevaluate their personal financial pictures. The 10-year period ending in 2007 saw an increase in credit card debt load of 75 percent. Eliminating this costly and potentially damaging debt is a critical first step as you begin to establish long-term financial security.

Your Credit Problem

    Considering a few aspects of your debt situation yields immediate answers. For example, you have a problem with credit if you only pay the minimum payments every month. If you rely on credit cards to pay for basic necessities, such as groceries and gas, or if you have several lines of credit open, such as multiple Visas, store cards and an American Express, you have a credit card problem. Consolidating or transferring balances to a new line of credit, only to run up a new balance on the old card, also creates issues for you and your credit card use.

Reducing Your Debts

    Many steps you can take today will lower your debts. Call your credit issuer and ask to lower your interest rate. The company will often do this over the phone. Also, pay more than the minimum every month, focusing on the highest-interest-rate card first. "Push" your payments: apply every extra dollar you can toward one payment instead of spreading it out. When that card is paid, apply that payment to the next-highest-interest-rate card, continuing until you're debt-free. Do not run up new balances while you are paying off the old ones. If you can, keep only one credit card and use it for emergencies only.

Debt Consolidation and Management Options

    If you are falling behind on your bills, debt consolidation or management is a possibility. Be advised that these options may affect your credit. Debt consolidation, the practice of combining your bills into one new loan, is effective but tricky. While tapping home equity is tempting, you are securing your credit card debt with your home. If you default, you risk foreclosure. Additionally, there is nothing to stop you from running up another credit card balance. Debt management is the practice of using a counselor to combine your bills into one payment. However, it's not a loan, your credit may be affected and the credit lines are closed. In return, you make one payment instead of several, interest rates are reduced or interest is eliminated, and you pay your debts in full, usually in fewer than five years. The nonprofit agency National Foundation for Credit Counseling offers a free one-hour consultation and walks you through the process of reducing debt.

Debt Settlement and Bankruptcy

    Debt settlement and bankruptcy are last resorts. To qualify for a settlement, you must be at least several months, at least six in most cases, behind on your bills. You must also be prepared to pay the negotiated settlement -- usually about 40 percent of the balance -- in full. Your credit is severely damaged, and you'll receive many debt collection calls. However, after the settlement is paid, you'll be debt free. Consumers who are considering bankruptcy should consult an attorney before proceeding to explore the different options. Also, consider that bankruptcy follows consumers for years and can even affect your employment status. Bankruptcy is only a solution of last resort.

Watch for Scams

    Consumers who contact a reputable nonprofit, such as the National Foundation for Credit Counseling, can feel secure. Unfortunately, those seeking management and settlement services may have a difficult time finding a reputable firm. Check the Better Business Bureau website or your state Attorney General's office before sending money, and be wary of firms that want you to pay into an account for six months before settling debts on your behalf. If it's a scam, you'll lose six months of payments and have severely damaged credit. Offers from your mortgage company or bank for consolidation loans are most likely legitimate, but investigate offers carefully that you receive over email or from a bank you don't recognize.

How to Make a Deal With a Credit Card Company for Reducing Early Payoff Amount Owed

How to Make a Deal With a Credit Card Company for Reducing Early Payoff Amount Owed

No matter how low interest rates on savings accounts and certificates of deposit sink, credit card rates never seem to follow suit. Credit card interest rates have remained stubbornly high through both good economies and bad, and that is not likely to change anytime soon. That means it is up to each individual consumer to negotiate a better deal with the credit card issuer.



    Gather up all of your bills and add up what you owe. Until you know exactly where you stand it will be hard to negotiate effectively with your creditors.


    Create a spreadsheet listing all of the credit card bills you owe, placing each account on a separate line. The spreadsheet should include the total outstanding balance, the monthly minimum and the interest rate.


    Sort the spreadsheet so that the cards with the highest interest rates are listed first. You will get more bang for your buck by paying off or renegotiating these high interest debts. Write down the contact information for each of these credit cards.

    Working with your credit card issuer can save you money
    Working with your credit card issuer can save you money

    Sort the spreadsheet again, this time listing the cards with the highest outstanding balances at the top. Write down the contact information for these accounts.


    Contact each of the credit card issuers on your list, starting with the cards with the highest interest rates and then the ones with the highest balances. Ask to speak to a supervisor or manager immediately when you call. The front line customer service representatives do not have the authority to change the amount you owe or lower your interest rate, but the management team does.


    Speak politely to the individuals on the phone. Getting angry or combative is the fastest way to get your case dismissed. Explain your situation calmly and rationally, detailing the reasons why you cannot pay the entire amount due.


    Make it clear that bankruptcy is a very real option if you are unable to renegotiate what you owe. Credit card issuers are often willing to work with customers who are considering bankruptcy, since they know they are likely to get nothing in the event of a bankruptcy filing.


    Document each call carefully, listing the names of the people you spoke to and any payment agreements. Follow up in writing to establish a paper trail. Ask the credit card issuer to send you a formal statement indicating their willingness to work with you, including details of offers to lower the amount you owe.

Can I Request to Remove a Bankruptcy in Seven Years?

Can I Request to Remove a Bankruptcy in Seven Years?

Many people think that filing bankruptcy will erase their bad credit and allow them to start over with a clean slate; however, this is not the case. What bankruptcy does is free you from having to pay back the debt you have accumulated. In some cases, a portion may still need to be paid, but this depends on the type of bankruptcy you file.

Types of Bankruptcy

    There are two basic types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy allows you to discharge your debts; however, your household income must be below the median for your area. Chapter 13 bankruptcy allows you to set up a payment plan through the court so that you can pay off your debts within three to five years. Both methods require complex paperwork that usually requires an attorney.

Effects of Bankruptcy

    Bankruptcy is one of the most negative things that can appear on your credit report. It basically states that you are unable to repay the remainder of your debts. For this reason creditors will see you as a poor candidate for future loans, making it unlikely that you will be extended a line of credit as long as it appears on your report. It does give you the opportunity for a fresh start, but the many problems caused make it a difficult road.

How Bankruptcy Accounts Appear on your Report

    All accounts included in a bankruptcy filing will continue to appear on your credit report. It will also show the account history. The main difference is that they will be shown as part of the bankruptcy declaration. They are listed in this manner because people often have active accounts that are not included when bankruptcy is declared.

Bankruptcy Removal

    Bankruptcies cannot be deleted early. They are automatically removed by credit reporting agencies when the time comes. The agencies keep track of Chapter 7 bankruptcies for 10 years. Chapter 13 bankruptcies are only kept on file for seven years. Calling creditors will not facilitate early removal as accurate information is not removed from your report.