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

Monday, August 30, 2004

Is There an Automatic Stay Protection for a Co-Debtor Under Chapter 7 Bankruptcy?

Two people filing jointly for Chapter 7 bankruptcy are entitled to equal protection under federal bankruptcy laws -- including the automatic stay. Married couples and individuals are eligible for Chapter 7; unmarried individuals cannot file jointly. The automatic stay is a major reason why some couples file for bankruptcy. The stay is a legal injunction signed by a judge and is granted to everyone filing for bankruptcy. The stay immediately halts lawsuits and all debt collection, including bank and wage garnishment.

Short Wait

    People filing jointly for Chapter 7 bankruptcy won't need the automatic stay for long. That is because Chapter 7 is the fastest of all bankruptcy types. The courts resolve Chapter 7 cases in as little as three or four months. Unsecured debt, such as credit cards, is completely eliminated in Chapter 7 following a possible liquidation of assets. Many assets are exempt from the process, however, and some people lose nothing. Assets at risk in Chapter 7 include large amounts of cash, expensive artwork or vacation homes. Primary residences and cars under a certain value are usually protected.

Dismissal

    The automatic stay remains until the bankruptcy is discharged, or completed. At that point there isn't a need for protection because the bankruptcy has addressed all the couple's debts. However, a dismissal of the bankruptcy petition before discharge causes a lifting of the automatic stay. The bankruptcy judge can dismiss a bankruptcy case for procedural errors, such as failing to list all assets and debts on the application. Creditors can resume all debt collection efforts -- including bank and wage garnishment -- if the automatic stay is lifted.

Alternatives

    There are several alternatives to bankruptcy -- including debt settlement -- but none offers protection similar to the automatic stay. However, there are some loopholes in the automatic stay. For example, a couple living in an apartment is protected from eviction by the automatic stay, but only temporarily. The landlord will petition the court to allow eviction if the couple cannot or will not pay the rent. The same is true for foreclosure situations and repossession of secured debts such as automobiles.

Advice

    Couples uncertain about protection under Chapter 7 should visit a few bankruptcy attorneys. Initial consultations are usually free. Visiting two or three attorneys allows the couple to ask more questions and gain a clearer understanding of the Chapter 7 process. Nonprofit credit counselors can also answer questions during free consultations. Referrals for credit counselors are available from charities such as the United Way.

Sunday, August 29, 2004

How Much Money Can Be Garnished From My Wages?

How Much Money Can Be Garnished From My Wages?

If you fail to pay a debt, a creditor or debt collector has the right to sue you in court. If the creditor wins, a judgment will be entered against you. According to the U.S. Department of Labor (DOL), that judgment allows the creditor to obtain a wage garnishment against you, order your employer to turn over part of your wages every pay period until the debt is paid or get your bank to pay funds from your account. Because you still need to eat and get back and forth to work, federal law puts limitations on how much can be taken through garnishment, but it will pinch no matter what. Your best option is to work out an agreement before going to court.

Amount Allowed

    The DOL specifies that a wage garnishment can require an employer to take up 25 percent of your take-home pay out of each check until the debt is paid. For garnishees who are living on low incomes, the employer has to ensure you are still left with a certain amount of money under the law. That amount usually is equal to 30 times the minimum wage.

Special Debts

    If your wages are garnished due to failure to pay child support, alimony or certain taxes, up to 50 percent of your income can be withheld if you owe child support, says the DOL. If you owe child support and have no other dependents, 60 percent can be withheld. If these special debts are more than 12 weeks past due, the garnishment can order an additional 5 percent to each withholding, making the amount 55 percent and 65 percent, respectively.

More Than One Garnishment

    Federal law, and in some cases state law, limits how much can be taken out of each of your checks. However, according to Bills.com, some debtors often have more than one garnishment. A second creditor who has garnishment orders against you normally will have to wait until the first garnishment is paid. This means it will take longer to pay off both debts and you will be living off of a lower income for a much longer period of time.

Exempt Income

    If any of your income comes from certain federal benefits, it will be protected entirely, according to the Federal Trade Commission (FTC). These benefits include Social Security, Supplemental Security Income (SSI), veterans' benefits, student assistance, civil service and federal retirement, railroad retirement benefits, merchant seaman wages, foreign service retirement, longshoremen's and harbor workers' death and disability payments and Federal Emergency Management Agency (FEMA) assistance.

Challenge the Garnishment

    To challenge a garnishment, you must be proactive. Show up in court when the collector or creditor files suit against you, the FTC advises. Make your case and demand proof of the amount that the creditor claims you owe. It is possible to work out an agreement at this stage and avoid a judgment and garnishment altogether.

What Happens If I Don't Comply With a Garnishment?

When a debtor fails to pay a credit on time, the creditor may undertake a number of different actions with the intention of receiving payment on the outstanding debt. One collection action a creditor can take is wage garnishment. After receiving a legal judgment for the money owed, the creditor can petition the judge to allow him to confiscate a portion of the employee's wage directly from his employer. Employers are required to comply with a garnishment order or face severe legal penalties.

Legal Garnishments

    An employer is legally obligated to comply with a order of garnishment. Under U.S. law, a creditor must first inform the employer of the garnishment order. An employer is not obligated to comply with a garnishment order that he has not been formally served with. Also, an employer is not obligated to comply with an extra-judicial garnishment order. Only garnishment orders issued by a judge are legal; attempts to garnish wages without a judge's consent are illegal.

Penalties

    If an employer fails to comply with a legally mandated garnishment order, he can face stiff penalties. Because the employer is violating a judge's orders, the employer can be held in contempt of court. Penalties for contempt of court are left to the discretion of the judge, but can range from fines to imprisonment. In some cases, an employer who fails to comply with a garnishment order may become liable for the debtor employee's debt.

Size of Garnishment

    Although employers must comply with garnishment orders, they cannot garnish more than a certain amount of an employee's wages. According to the U.S. Department of Labor, the maximum amount of wages that can garnished in any pay period is 25 percent of disposable earnings or the amount by which the employee's disposable earnings are 30 times larger than the federal minimum hourly wage -- whichever number is smaller.

Considerations

    While some garnishments are straightforward, employers may face legal complications if served with more than one garnishment order simultaneously, as this may place the employer in position in which he is being legally ordered to garnish more from the employee's wages than federal law permits. In this case, the employer should contact an employment law attorney. In addition, all employers should consult state laws regarding garnishment before fulfilling an order, to make sure that they are in compliance.

Saturday, August 28, 2004

Nonprofit Debt Relief Organizations

Nonprofit debt relief organizations, or credit counseling services, work with consumers and their creditors to develop affordable debt repayment programs based on monthly income and expenses. Fees for services may be based on a sliding scale or consumers' ability to pay. Nonprofit debt relief organizations cannot typically reduce debt amounts, but they may negotiate waivers or reductions of fees and finance charges.

Scams to Avoid

    Do not accept unsolicited offers of debt help, and do not pay for services in advance. Avoid any organization that promises instant credit repair or guarantees immediate results.

Debt Relief Plan

    Nonprofit debt relief organizations require full disclosure of all income, expenses and credit accounts. Based on this information, they negotiate an affordable debt repayment plan with your creditors.

Reduced Finance Charges

    Debt relief plans may include waivers or reductions of late fees, overlimit fees, membership fees and finance charges on accounts. This helps you pay off your debts faster.

Closed Accounts

    Terms and conditions of debt relief plans typically require you to close all credit card accounts and agree not to open new accounts during the completion of your debt relief plan. Failure to comply can result in termination of your debt relief plan.

Credit Report Information

    Debt relief organizations cannot "fix" negative credit reporting that occurred before your arranged your debt relief plan. Payments made according to your repayment plan are typically reported to credit bureaus as "paid as agreed."

Debt Management

    A key aspect of getting out of debt is understanding how you got into debt and how to avoid repeating past mistakes. Your debt relief counselor will help you develop and learn to live on a cash-based budget that includes saving for emergencies.

How to Calculate Effective Interest

When you are presented with an annual interest rate for a loan that is going to be paid off in multiple years, that rate is not the true interest rate you will pay on the loan. It is only the annual rate. To find out how much interest you will pay during the life of the loan, you need to multiply your loan by the effective interest rate.

Instructions

    1

    Write down the critical information for your loan on a sheet of paper so you have them to refer to when doing the calculation. This includes the annual interest rate that you agreed to when signing for the loan and the number of years before the loan is paid off. For this example, assume the annual interest rate is 10 percent and you have 5 years to pay off the loan.

    2

    Divide the annual interest rate by the number of years you have to pay off the loan. In this example, that would be .10 (interest rate expressed in decimal form) divided by 5, resulting in an answer of .02. To convert your annual interest rate to a decimal in this step, divide the annual interest rate by 100.

    3

    Add 1 to the result that you received in Step 2. In this example, it would be 1 added to .02, with a result of 1.02.

    4

    Subtract 1 from the number of years you have to pay off the loan. In this example, the math required is subtracting 1 from 5, resulting in 4.

    5

    Raise your result from Step 3 to the power of the result in Step 4. In this example, you would multiple 3 by itself four times. Written out, the equation would be 1.02 x 1.02 x 1.02 x 1.02. The answer to this equation is 1.0824.

    6

    Subtract 1 from the answer you received in Step 5. In this example, your result would be 1.0824 minus 1, which equals .0824.

    7

    Convert your answer in Step 6, which is in decimal form, to percentage form by multiplying it by 100. In this example .0824 x 100 = 8.24. Your effective interest rate is 8.24 percent in this example.

Friday, August 27, 2004

Can a Creditor Go After My Spouse in Pennsylvania?

If you fall behind on a debt payment, you can expect your creditor to send you letters and make phone calls to try to recover your past-due amounts. If your debt becomes severely delinquent--usually six months or more--the creditor may also sue you, which gives the creditor the right to pursue garnishment of your bank balances and liquidation of personal property. You may wonder if a creditor can go after your spouse as well. In Pennsylvania, a creditor typically cannot pursue your spouse.

Individual Property

    Pennsylvania is not a community property state, in which all assets and debts accrued after marriage belong to both spouses, regardless of whose name appears on the loan, deed or title. If you incur a debt alone in Pennsylvania, without your spouse's name on the debt, the creditor typically cannot pursue collection of the debt from your spouse.

Jointly Held Debt

    Although Pennsylvania law typically protects your spouse from collection efforts for a debt that you solely own, the same does not hold true for debt held jointly by you and your spouse. If both your name and your spouse's name are listed on the loan, the creditor can pursue collection of past-due amounts from your spouse. If you refuse to pay a debt or make no attempt to resolve your past-due balance, your creditor may file a lawsuit to obtain a civil judgment against both you and your spouse.

Bank Account Garnishment

    Pennsylvania law does not permit wage garnishment in most circumstances, except when the debt involves unpaid taxes or child support. However, a creditor that has obtained a valid judgment against you for a debt may garnish your bank account balances. This means that it may take wages deposited into your bank account, regardless of whether you or your spouse earned the money.

Bankruptcy

    If you file Chapter 7 bankruptcy alone, and a debt included in your bankruptcy is jointly held by you and your spouse, the creditor may pursue collection against your spouse to recover the discharged debt. However, if you file for Chapter 13 bankruptcy in Pennsylvania, you or your attorney may file a co-creditor stay, which prevents the creditor from seeking recovery from your spouse as long as you make your bankruptcy payments as ordered by the court.

Ways to Settle Credit Card Debt

Ways to Settle Credit Card Debt

Consumers have a number of ways to settle credit card debt. During economic downturns, banks tend to be open to accepting settlements at a significant discount to balances owed. However, such settlements come with long-term consequences, so carefully consider all options before entering into any agreement. Credit scores will negatively reflect these arrangements for seven years and you may owe taxes on the amount of forgiven debt. Always consult a tax adviser.

Negotiate Directly With Banks

    Banks will generally consider settlement discussions after you are delinquent for at least two months. The longer an account is delinquent, the more banks are willing to entertain increasingly lower settlement offers. If, however, you are behind on only one or two accounts, banks are much less inclined to settle, as they look at a consumer's overall credit profile when making such decisions.

Work Through a Credit Counseling Service

    You have many credit-counseling service options. Look for nonprofit agencies, which provide resources, comprehensive Frequently Asked Questions, online enrollment, free telephone consultation and debt management plans. After you fill out a questionnaire, the counseling service will make specific suggestions and negotiate directly with banks to settle debt at amounts significantly less than the principal due. These plans typically allow you to pay on a monthly basis by sending one check to the agency, which then distributes predetermined amounts to creditors.

Borrow From Alternate Sources

    Homeowners with equity can borrow money at low interest to settle credit card debt at a significant savings from the total amount due. Other options include borrowing money from family or friends to settle debt and make a fresh start. Either of these options should be accompanied by specific and realistic repayment plans to avoid foreclosure or risk to relationships. Given that credit scores will be impaired for years when making settlements with banks, any such borrowing should ideally be done while scores remain positive.

Thursday, August 26, 2004

How to Get a Credit Card Company to Waive Finance Fees

How to Get a Credit Card Company to Waive Finance Fees

A financing charge is simply any fee that you pay to a credit card company or business for the privilege of borrowing money and paying it back later. Finance charges can be quite steep, since credit cards with rates as high as 20 percent begin applying finance charges to your account from the day that you begin carrying a balance. Fortunately, if you are a good customer or if you are with a debt management plan, you can get the company to waive some of these finance charges.

Instructions

Waiving fees by yourself

    1

    Call your company and ask them to remove the charge. Do not give them the chance to say no easily; instead of saying "Can you please waive this fee?" say something like "I have this finance charge on my account that you can help me with today." Especially if you usually pay your bill in full and are a good customer, the representative will probably waive your fee immediately.

    2

    Make it clear that you are willing to work with the company. "It's fair to say in light of the economy more people are experiencing financial difficulty, so we're offering the payment programs more frequently," Lisa Gonzales, an American Express spokeswoman, said in an interview with The Washington Post. If you show that you are willing to make a good-faith effort to pay, the company may waive some of your finance charges.

    3

    Be persistent when you call the company. If you call and ask to have a fee waived or an interest rate reduced and are refused, you can ask to speak with someone else. You might eventually find someone who is willing to waive your finance charges or lower your interest rate in order to drop your finance charges.

    4

    Offer to close your account if the company will waive further finance charges or drop your interest rate significantly. Although you will lose the line of credit, you will owe a smaller monthly payment and most of that payment will go toward your principal, rather than finance charges. These deals are made on a case-by-case basis, but if you are already drowning in debt, you can certainly try to make this offer.

With a Debt Management Agency

    5

    Talk to a credit counselor at a reputable debt or credit counseling agency. Many agencies charge high fees or try other ways to trick you out of your money. Make sure your agency has in-person counseling and treats you well.

    6

    Set up a debt management plan with your credit counselor. Under this plan, you pay the credit counseling agency a certain amount of money per month, and they will use that money to start paying off your debt.

    7

    Ask your credit counselor to call your credit card company and ask them to waive some finance charges or lower your interest rate. Your credit counselor has more "pull" with the company because she is part of a reputable agency, and she may get your rate lowered or some fees waived to help you get out of debt faster.

Wednesday, August 25, 2004

Do Credit Cards Offer Low Settlements to Avoid Bankruptcy?

If a borrower owes a large amount of money on a credit card, rather than pay the full amount, he may attempt to reach a settlement with the company to pay less than the amount he owes. While it may appear counterintuitive for a lender to agree to accept less than full payment on a debt, some credit card companies agree to settlements out of a fear that the debtor will go bankrupt.

Settlements

    According to the New York Times, credit card companies typically only offer settlements to people who have already defaulted or who are at imminent risk of defaulting on their credit card accounts. A person with a healthy credit record who, from the company's perspective, will not have difficulty paying back the loan, generally will not be given the option of paying only a partial amount.

Bankruptcy

    One of the main reasons credit card companies offer settlements to financially strapped clients is that the credit card debt probably would be discharged if the client declares bankruptcy. In that case, the client would no longer be obligated to pay the debt. Lowering the amount a client must pay helps prevent the client from entering bankruptcy, and receiving partial payment of the debt from the client is better than receiving no payment at all.

Collection

    Another reason credit card companies agree to a settlement rather than demand payment in full is that attempting to collect the full sum can be expensive. Whether a company is using in-house resources to collect the debt or employing the services of a professional collection agency, debt collection is expensive. Often, it can make more financial sense for the company to forgo expensive collection attempts and make a deal with the client.

Effects

    Although settlement may appear to be a favorable resolution for clients with steep debt, it comes with consequences. According to the New York Times, a person who settles his debt with a credit card company can expect to see his credit score drop by 70 to 130 points. As a result, clients have an incentive to pay the full amount that they owe. Therefore, by extending settlements to certain clients at risk of bankruptcy, credit card companies are not necessarily inducing other clients to try to settle.

Tuesday, August 24, 2004

Ohio Law on How to Do a Bank Garnishment

When the person losing a civil or small claims suit does not pay the judgment to the wining party, a garnishment can be filed against the losing party's earnings and bank accounts. In Ohio, the requirements for garnishing a bank account vary by municipal court where the request for garnishment will be filed. However, the general procedures are the same.

Instructions

    1

    Contact the clerk's office at the municipal court where you will be filing. Request the forms to file for a garnishment against a bank account. Get instructions about the number of copies that need to be submitted and whether any of the documentation needs to be notarized. For instance, the Kettering Municipal Court requires completion of its five-part Order and Notice of Garnishment Form. The Dayton Municipal Court requires filing of its Order in Aid (original and four copies), its Notice to Judgment Debtor Form (original and two copies) and its Request for Hearing Card.

    2

    Submit the proper fees when you submit the forms. Decide how you want the forms sent to the losing party. For instance, the 2010 fees for the Cleveland Municipal Court are $15.00 for the original filing if there is only one garnishee and one defendant, $5.00 for each additional garnishee and a $1.00 check made payable to each of the banks or other garnishees.

    3

    Specify how you want the forms delivered. For instance, the Dayton Municipal Court typically sends the notice to banks using certified mail. Options are: $100.00 for Certified Mail, $100.00 for Special Process Server, $110.00 for Personal Service, $ 130.00 for Sheriff Service.

    4

    Follow the instructions for submitting the forms. The Dayton Municipal Court describes how each set of copies should be stapled together. The Cleveland Municipal Court will dismiss the request, at your cost, if the filing is not done correctly.

TransUnion Information

TransUnion is one of the three major credit-reporting agencies. Along with Experian and Equifax, TransUnion provides information and credit management to consumers. Its work with business clients involves managing risk, reducing costs and increasing revenue through delivery of data and analysis.

The Company

    TransUnion's headquarters is in Chicago. Begun in 1968, the company today has a presence in five continents and 25 countries. The employee base is greater than 3,100.

Company Firsts

    TransUnion replaced manual data entry with the first automated system of tape-to-disc transfer. The company also created the first storage and retrieval system for online data processing call the credit reporting on-line network utility system, or CRONUS.

Consumer Identity Protection

    In 1992, TransUnion developed the fraud victim assistance department, which works to fight and prevent financial crimes.

History

    Begun as a rail car leasing organization, TransUnion was originally known as the Union Tank Car Co. It bought the Credit Bureau of Cook County, Illinois, in 1969, only one year after its founding. By 1988, the company had gained national coverage of the maintenance and data management of all U.S. consumers.

Statistics

    Each month, TransUnion manages about 2 billion pieces of data of hundreds of millions of consumers around the world. As of 2007, it was the first credit reporting bureau in the United States to own its database.

Credit Counseling & How it Affects Your Credit

Credit Counseling & How it Affects Your Credit

Credit counseling agencies can advise people on how to manage their debts, or they can go a step further and help them create debt management plans. Simply getting advice from one of these agencies will not hurt your credit and may help you pay down debt. Entering a debt management plan can damage your credit because the agencies negotiate for lower fees and interest rates.

Credit Counseling

    Reputable credit counselors begin by offering a free consultation about your finances. Credit counseling agencies report that about a third of clients can handle their finances on their own after such a session, according to MSN Money. Sessions can be done in person, over the phone or via email, depending on the preference of the client and the setup of the agency.

Choosing a Counselor

    The Federal Trade Commission cites many sources for credit counseling, including universities, credit unions and branches of the U.S. Cooperative Extension Service. MSN Money recommends finding a counselor from the Association of Independent Consumer Credit Counseling Agencies or the National Federation for Credit Counselors to ensure fair dealing and low fees. Both FTC and MSN recommend you check any counseling agency with the Better Business Bureau and don't use any agencies that charge high upfront fees.

Debt Management Plan

    If you and your credit counselor agree, you will create and follow a debt management plan. You will agree on an amount to send the counseling agency every month. From that, they will pay your unsecured debts. Depending on how much you owe, the amount the agency will expect you to set aside for this monthly payment plan is considerable and requires strict budgeting efforts. The counseling agency usually requires you cut up your credit cards, too. The agency charges a fee, often around $40. The AICCA and NFCC both have fee limits on their member agencies.

Counseling and Credit Ratings

    Having visited a credit counselor will not negatively affect your credit. However, entering a debt management plan can hurt it since counselors generally negotiate down fees and interest rates with creditors. If creditors choose to note this on your credit report, it shows that you did not pay the debt as originally agreed, and that can look bad to other creditors. How individual creditors respond to this information varies, according to MSN Money. Some may count it against you and refuse credit or charge higher rates. Others may not see it as a negative.

Monday, August 23, 2004

About Debt Forgiveness, Reduction, or Deferral

In tough economic times or during temporary financial hardship, it can be difficult to meet every financial obligation. However, not paying your debts can have severe negative effects on your credit rating and can hamper your ability to qualify for additional credit in the future. Debt forgiveness, reductions and deferrals are ways that your bank or lending institution may be willing to work with you when it comes to helping you meet your debt obligations without suffering undue financial hardship.

Debt Forgiveness

    When a debt is "forgiven" by a creditor, you no longer have to pay it. In essence, the debt is wiped clean. You may find a forgiven debt listed as "paid in full" on your credit report, but for an amount that is less than the original agreement. It may also be listed as "settled." Regardless of how it's listed, having a forgiven debt is less damaging to your credit report than having a history of missed payments.

    Debt forgiveness is most often an option when you've already paid off most of the debt and circumstances are preventing you from being able to make the final few payments. While it may be an attractive option if your creditor is willing, you should be cautious if the amount is too large. Forgiven debt is most often reported on your taxes as income. For larger amounts, this could push you into a higher tax bracket and result in increased tax liability.

Debt Reduction

    Depending upon the amount you owe, you may be able to negotiate a debt reduction agreement with your lender. Debt reduction will lower the total amount you owe, while still allowing you to pay back some or most of the remaining debt. Your creditor may also adjust your payments to reflect the new, lower balance, or your payments may remain the same, allowing you to repay the debt faster.

    Just as with debt forgiveness, the amount of the reduction may be taxable as income. However, if the debt reduction is due to a buy-off that eliminates interest payments, that amount is generally not taxable.

Debt Deferrals

    If you are in the midst of a temporary financial hardship, such as a layoff or temporary disability, you may be able to negotiate debt deferral. For most types of deferrals, you will be required to either provide proof of your current income or sign a form stating that you are currently not receiving any income in order to qualify. Additionally, debt deferrals are usually for a short period of time, anywhere from a few months up to a year, after which you would need to reapply in order to continue having the debt deferred.

    Unlike forgiveness and reductions, debt that is deferred will not be counted as taxable income. However, debt that has been deferred may continue to accrue interest, thus raising the amount you'll need to pay in the long term.

Benefits

    The major benefit to debt forgiveness, reduction or deferral is the ability to maintain your credit rating. Another key benefit is the ability to avoid collection activity on unpaid debt. If you come to an agreement with your creditors before missed payments become a problem, you can avoid most of the collection calls, notices and other attempts by the creditor to obtain payment.

Considerations

    Not all lenders will be willing to forgive or reduce a debt, but most will be willing to accept a deferral or adjustment in payment terms. You should do your research before you ask for any type of debt forgiveness or reduction, as the amount you save could be less due to tax considerations on the forgiven debt.

    If you request a debt deferral, be certain to keep accurate records. If your creditor reports your payments as late to the credit bureaus, you'll need the deferment agreement to straighten out the error. Overall, even if you aren't currently paying on a debt, you still need to keep track of it for both record-keeping and tax purposes.

    Debt forgiveness, reductions and deferrals are all potential options for remaining solvent and up-to-date on your debt payments. Speak with your creditors in order to take advantage of the type of debt relief that is best suited to your situation.

The Responsibility of Debt in Separation

When a marriage comes to an end, things can get quite complicated. If you own assets as a couple, hold debt together or have children, divorce is even more difficult. Sometimes circumstances dictate a formal separation before you're ready to get a divorce. Marriage laws vary from one state to another. Some states may not even have a legal separation status or process and whether you can become legally separated or not may not matter completely to debt collection agencies.

Remove Your Name

    If your name is on a rental agreement or lease, credit cards or other accounts that can have additional debt added, you need to remove your name from the account as quickly as possible. When your name is on the account, you can be held legally liable for the debt incurred even after you have separated.

Make Copies

    Make copies of all account agreements and balances, bank account statements and anything you own jointly, such as a home mortgage or a car that you are still making payments on. If you come to a personal agreement with your spouse about which one of you will take responsibility for specific debts, get the agreement in writing.

Separation Specifics

    If you live in a state that recognizes legal separation agreements, be sure to list specific debts and repayment responsibilities in the separation agreement. Listing debts and individual responsibilities on the legal paperwork can help protect you in the future if debt collectors come calling.

Debt Collection Realities

    Unfortunately, regardless of what agreement you come to with your spouse privately, through legal separation paperwork and even through legal divorce settlement papers, some debt collectors may continue holding you responsible for payments. Separation and divorce agreements are legal contracts between a husband and wife and the state government. Creditors are not usually involved in making these agreements and they may continue viewing both the husband and wife as financially responsible for the outstanding debts.

How to Get a Charge-off Removed From Your Credit Report

How to Get a Charge-off Removed From Your Credit Report

If only the collection bureaus would realize how much more money they would make if they would simply agree to remove the items from the report, upon full payment!

Instructions

    1

    Look for phone numbers for the companies reporting the charge-offs. Write them down, along with the name and account number listed on each credit report. (may be different on each report)

    2

    Once you have them listed, call each company, and pleasantly let them know you are calling to settle a debt, in exchange for a letter stating that they are willing to remove each debt from your credit report. If the company agrees to delete the debt completely, then move on to the next step. If they do not remove the item, you can chose to pay the debt, but if the debt is not removed, and only updated as payed in full, it may still affect your credit score.

    3

    Write down the time, day and name of the person you spoke to at the collection company, whether they agree to remove the debt or not. You may need this incase a company tries to say you never contacted them to make arrangements on the debt. Keep details!

    4

    Once they have agreed, ask them to mail a statement, or fax the agreement letter to you in writing, along with a bill and a return envelope.

    5

    Once you receive the letter, pay the debt with a check or credit card. Do not pay with a money order if you can help it, and never send cash. You want to pay with a credit card or check, because you may need to show proof of a canceled check, or bank statement to the credit bureaus to have the charge-off removed. It may take the collection company up to 45 days to remove the item. If you have the letter, and a copy of a canceled check or bank statement, you may be able to call the bureau directly to have the item removed sooner.

    6

    If you chose to pay the company over the phone, with a credit card, make sure the company is willing to fax you an agreement letter before you pay it, stating that upon payment, they are willing to remove the item from each report that they report to. Some companied may only report information to two bureaus, as you will notice when you pull your report. It is very important that you have that information.

Saturday, August 21, 2004

How to Become Debt Free

How to Become Debt Free

The average American family has about $15,000 in credit card debt, in addition to car payments and possibly a mortgage. At the average rate of 14.9 percent for credit card debt, that $15,000 racks up over $2,200 in interest expenses every year, if it's not paid off. Making only minimum payments means it can time more than nine years to pay off those balances. You can work hard to eliminate your debt by either paying the debts off or through settling the debts.

Instructions

Pay The Debts Off

    1

    Write down all your debts, the balances owed and minimum payments in order of the highest interest rate first.

    2

    Make a list of all your other financial obligations and payments such as rent, food, gas, entertainment, clothing and utilities. Add up the expenses.

    3

    Total your net income from all sources. Subtract the expenses from your income. This is your discretionary income, or the amount you have available to pay down your debt. If it isn't a significant amount, say at least $100, you will need to cut expenses to find additional funds to pay down debt.

    4

    Sell any assets that aren't necessary for day-to-day living. Apply the proceeds to the unsecured debt with the highest interest rate.

    5

    Pay the amount of the discretionary income every month to the unsecured debt with the highest interest rate. Pay the minimum payment on all other debts. For example, you pay $400 to Debt A and $100 to Debts B through D. When the debt with the highest interest rate is paid in full, pay down the next highest interest rate debt. You would have the $400 you used to pay on Debt A and the minimum payment of $100 for Debt B, or a total of $500 to pay on Debt B. When Debt B is paid off, you have a total of $600 to pay down Debt C.

    6

    Continue until all unsecured debts are paid off. Use that debt payment about $700 in the example, to pay your secured debts such as a car payment.

Debt Settlement

    7

    Compile a list of all your unsecured debts in order of the largest balance owed first.

    8

    Sell off any unnecessary assets.

    9

    Make a list of your savings, bonds, stocks and other investments. Decide how much of your investments and cash you're willing to use to pay down the debt. Combine that with the proceeds of the asset sale.

    10

    Call each creditor starting with the largest balance first. Negotiate with a supervisor to come up with a total they will accept as payment in full. Demand that the creditor send you a letter verifying the amount. Your chances at settling for less money than you owe are better if you are 90 days or more behind in your payments.

    11

    Pay the creditors the amount you negotiated as payment in full.

    12

    Require confirmation from each creditor that the debt has been paid in full.

    13

    Use the funds you would have paid to the creditors you've settled with, to pay off any other secured debts.

Rapid Debt Reduction Strategies

Rapid Debt Reduction Strategies

Feeling overwhelmed with your monthly debt is not uncommon. You can, however, manage your debt and find relief. It may take some time, but it will be worth it when you see more of your paycheck in the bank and less going out to creditors.

Confront Your Debt

    Know What You're Facing

    The first step in reducing your debt is confronting all those bills. Gather all of your bills and list them on a spreadsheet with the balance, interest rate, and minimum payment due on each. Take the loan or credit card with the highest interest rate and try to double the monthly payment on that bill while paying the minimum payments on all other bills. Continue doubling that bill with the highest interest until it has been paid off. Once that bill no longer exists, move the amount you were paying on that former bill to the next bill with the highest interest rate along with its minimum payment and pay that amount each month until it is paid off. Continue doing this until all of your outstanding debt is paid.

Cut Unnecessary Expenses

    Do You Need to Go Out Every Weekend?

    Another way to reduce your debt rapidly is to cut out any unnecessary expenses. Take the money you save from the unnecessary expenses that you normally spend and put that amount toward your bill with the highest interest rate. For example, if you go to the movies and out to dinner every weekend, you can cut out at least one of those weekends. A typical night out at the movies and dinner for two would be at least $50. Move that $50 towards your highest interest bill.

Find Additional Funds

    Sell Your Old Stuff

    Have a yard sale or sell items online to make additional funds. Be sure to take any money that you make off your sales and put it towards your bills. If you can make enough to pay off that highest interest bill, you are one bill closer to freeing yourself from the stress of debt.

Online Debt Consolidation Programs

The chaos of life often pushes people to make decisions with their finances that have long-term repercussions. Over time, one late payment can turn into a collage of debt collectors calling and harassing you. There are debt solutions, however, that allow you to put a stop to the annoying phone calls and bring all your debt into one manageable location. The right online debt consolidation program allows you to make one payment instead of several payments; it also reduces your mounting debt.

Online Debt Consolidation Solution

    Online Debt Consolidation Solution is a versatile debt solution that handles financial problems of all sizes. It offers services such as debt consolidation, debt management and credit counseling. Once you enroll in the debt consolidation program you are given a team of nonprofit credit counselors. The credit counselors works on your behalf to build relationships with your creditors to consolidate your debt.

Debt Consolidation

    Debt Consolidation operates under Star Nine Ventures and has been providing reliable debt consolidation services for more than 10 years. Debt consolidation offers an array of money managing tools, such as a debt calculator, which helps you better understand the level of help you need. It allows you to set up your debt consolidation through home equity, loans or repayment plans. Debt Consolidation gives you access to financial experts to assist in whichever option you choose.

Debt Consolidation 123

    Debt Consolidation 123 is a fast and dependable debt consolidating option. It gives you access to a comprehensive network of consumer debt and nonprofit debt relief consultants. Debt Consolidation 123 provides free debt counseling and debt help to customers. Its bad credit debt consolidation program allows you to completely revamp your finances. It also provides services that assist in bankruptcy, loans and debt management.

Care One

    Care One debt relief services offers personalized plans designed to help you achieve financial freedom in the shortest amount of time possible. Care One gives you a free complete financial analysis, so you can better customize your plan. Care One has a community of like-minded individuals working together to help each other with debt problems. Care One has helped more than 4.5 milling people nationwide find debt relief.

Friday, August 20, 2004

How to Pay Off Loans Quickly

How to Pay Off Loans Quickly

Whether your loan is a mortgage, student loan, car loan or personal loan, freeing yourself from debt can be liberating. It's especially important to pay off high interest loans quickly, the only caveat is if there are steep penalties for early repayment, as is the case with some mortgages. If you put your mind to it and make some lifestyle changes, you can pay off loans quickly, leaving you with more money to spend on the things that really matter.

Instructions

    1

    Stop spending. Obviously, you need to pay your bills and buy food, but in order to have extra money to pay off your loans, you will need to tighten the purse strings. Give yourself a weekly or monthly budget for non-essentials like a latte at the coffee shop or a lunch out and stick to your budget. Once that money is gone, stop buying anything that isn't necessary for that month or week.

    2

    Pay the smallest balances first. This is called the "debt snowball" technique. Start by paying the minimums on all of your debt and loans, then pay as much as you can extra on the loan with the lowest balance. This loan will be paid off first, giving you a sense of accomplishment and freeing up more money that you can pay toward the next loan with the lowest balance.

    3

    Pay more than the minimums. In order to pay off loans and debt faster, you will need to pay off more than just the minimum. If you are scraping by as it is, you will need to find a way to make more money to put toward your debt.

    4

    Increase your income. Take a second job, work overtime or hold a garage sale; do anything that you can to increase your monthly income. Use this extra income solely to pay on your loans. If you only make $100 more a week, that's $100 a week off the principal of your loan balance. It adds up over time and saves you interest charges.

    5

    Borrow money. Perhaps you can borrow money from a friend or family member, allowing you to pay off your loan and then make payments without (or with less) interest. You may also be able to borrow against your 401k at work, your life insurance policy or your home equity. Make sure the benefits of paying off your loan early outweigh the detriment of taking on more debt.

When You Consolidate Your Bills Does It Go on a Credit Report?

Consolidating bills through a loan involves transferring debt from one source to another. Consolidation plans also may include using a debt consolidation company to negotiate with creditors. Either method is designed to result in fewer payments, lower interest rates and a reduction in overall debt. How bill consolidation affects your credit report depends on the consolidation method used and the type of credit involved.

Credit Scoring Facts

    The Fair Isaac Corporation (FICO) uses a range of financial information to calculate your credit score, also called a FICO score. While account types, length of credit history and new credit affect your credit report, your payment history accounts for 35 percent of the credit score formula and overall debt makes up 30 percent of your score. Debt consolidation can affect all these variables, and creditors may report any activity to a credit bureau, including payment plans and balance transfers.

Benefits

    Lenders may consider you a higher credit risk if you have high balances on revolving accounts such as credit cards. Paying off high-risk credit cards with a bank or equity consolidation loan may improve your credit score. Consolidating your bills with a lower interest rate loan can help you pay off the same amount of debt faster, resulting in an increase in your score as your debt-to-credit ratio improves. Additionally, having previously delinquent or high-balance accounts reported as "paid in full" will improve your creditworthiness with potential lenders.

Disadvantages

    If you use a debt management company to consolidate debt or negotiate with lenders, the management company may instruct you to stop paying bills until your creditors are more willing to accept a payment deal. However, delinquencies and late charges end up on your credit report even if creditors eventually are willing to negotiate. Additionally, if an outside consolidation agency is used, lenders may place a note on your credit report stating the account was "settled" instead of paid in full or that a debt management plan was used.

Considerations

    Debt-to-credit ratios, the average age of open accounts and having a mix of credit types impact credit scoring. Unless there is a risk of running up balances on recently consolidated credit accounts, consider leaving a few credit cards or other revolving lines of credit open. While having too many lines of credit open may hurt your credit score, closing all or most of them may damage it as well. Closing an account reduces the average age of your open accounts and may hurt your debt-to-credit ratio because your available credit is reduced.

Thursday, August 19, 2004

What to Know to Protect Yourself and Your Credit Report

If you carry accounts with creditors that report your debts to the credit bureaus, you have a credit report. Your credit report serves as record of your financial history for lenders and other financial institutions. The information within your report determines your credit score -- the higher your score, the less risk you present to lenders and the more money you will save in interest on loans and credit cards. It is crucial that all consumers take steps to protect themselves from misinformation on their credit reports that could ultimately damage their credit scores.

Reporting Period Limitations

    The Fair Credit Reporting Act (FCRA) establishes a reporting period for your debts and accounts. The reporting period differs for each item within your report. Positive closed accounts, for example, can remain for seven to 10 years, depending on the creditor. Negative notations, however, such as collection accounts, foreclosures, repossessions and missed payments only appear for seven years.

    Negative information is always derogatory for your credit score. If you come across derogatory accounts on your credit file after the reporting period for those accounts expires, you can protect your credit rating by notifying the credit bureaus of the error and requesting that they remove obsolete entries.

Identity Theft Prevention

    Incidents of identity theft often result in numerous derogatory entries on a victim's credit report without his knowledge. The Fair and Accurate Credit Transactions Act, an amendment to the FCRA, provides you with the right to place a fraud alert on your credit report that helps protect you from identity theft and preserve your good credit rating.

    When you place a fraud alert on your credit reports, any lender accessing your files receives notice not to extend credit in your name without first calling you and verifying that you did, in fact, apply for new credit. Fraud alerts only last for 90 days, but you can renew them repeatedly with each credit bureau.

Disputing Information

    Inaccurate information on your credit report can damage your credit score and cause you problems when you apply for new credit and loans. The FCRA gives you the right to pull one free credit report each year to check for creditor errors. Should you find an error, you have the right to formally dispute the error with the credit bureaus. Each credit bureau will then initiate an investigation into your claim. If the credit bureaus determine that the information you disputed is inaccurate, they will remove it from your credit report.

Smart Financial Behavior

    Knowing how to boost and maintain a positive credit score helps you protect your credit from blemishes that occur due to your own behavior. Paying creditors on time, for example, helps you avoid a damaging missed payment notation within your report that lowers your credit rating. Keeping a low balance on your credit cards and paying debts in full, rather than settling them for less, also prevents credit damage.

Wednesday, August 18, 2004

How to Make a Bank of America Credit Card Payment Online

How to Make a Bank of America Credit Card Payment Online

Making online payments to your Bank of America credit card is easy. You can make payments using your checking or money market account. You can open a Bank of America online banking account in just minutes and start making payments instantly.

Instructions

    1

    Open a Bank of America online account if you do not already have one. Skip this step if you already have an online account. To open a new account, you will need your credit card number, the three- or four-digit code on the back of the card, your billing zip code, Social Security number, mother's maiden name and your email address.

    2

    Use your Internet browser to navigate to the Bank of America website. Find the menu for online banking and click on "Enroll" to create a new online banking account, or move to the next step if you already have online access with Bank of America. Follow the prompts as the system asks what type of credit or savings account you presently have with the bank. Click on "credit card." Enter your card number and other identifying information such as your Social Security number and mother's maiden name. Finish the process by following the prompts to create an online ID and passcode that you will need each time you enter online banking. Exit the system by clicking on the "sign out" button. Or just close your browser.

    3

    Return to the Bank of America website. Use your online ID and passcode to enter the site. Click on the "Bill Pay" tab at the top of the page. Then click "Add Payment Account." This will be the funding source for your credit card payment or any other bills you pay through online banking. You can select a checking or money market account with Bank of America or another bank. Enter the routing transit number and account number from the account you wish to use. You can find the routing number and account number at the bottom of one of your checks. The routing number is the nine-digit number on the left side of the check. Your account number will be block of numbers to the immediate right of the routing number. Continue following the prompts to store the data in the online banking system. Now click on the "Bill Pay" tab again, and click on "Add A Pay To Account." Enter your Bank of America credit card account number. Because it is a Bank of America account, the system will automatically populate the mailing address, if needed. Click continue to confirm. You can immediately begin making payments to the account by clicking on the "Bill Pay" tab after signing in.

    4

    Return to the Bank of America home page. Use your Online ID and passcode. Sign in to the system. Click on "Bill Pay." Find your Bank of America credit card from the list and click on it. Enter the date you want the payment delivered and the amount. Click the "Make Payment" button to confirm. Repeat each time you wish to pay your account online.

Government Grants to Help Get Money for Bills

Americans are struggling under the weight of a sagging economy. According to United Way, nearly one-third of working citizens do not earn enough money to take care of basic needs for their families, and 12 percent of the U.S. population lives below the poverty level---even while toiling at two and sometimes three jobs. Help is available in the form of grants that could make incomes go further by helping cover utility bills, mortgages and car payments.

Finding Grants Online

    Govbenefits.gov will help you find personal grants to help with bills by linking to agencies in all 50 states. Each state varies in what grants it offers and through what department. Another place to find government grants to get money for bills is through the nonprofit American Public Human Services Association (www.aphsa.org). This site also provides links to state agencies to aid in your search for money to pay bills.

    One of the best ways to find government grants is through grants.gov---think of it as the clearinghouse of federal grants for groups in need of money to cover expenses. One of the managing partners of the Web site is the U.S. Department of Health and Human Services. Though it doesn't handle personal grants, grants.gov can help direct your search for personal financial assistance to pay bills, including student loans.

Finding Grants in Your Community

    Finding sources of grant money to pay bills in your community is possible. One of the best places to start is with local government offices. Even though local governments may not hand out personal grants, people who work in these offices are in tune to what is happening in the community. Officials may keep lists of local resources to help residents.

    Check with local food pantries. These charitable groups often have limited monetary help available for their clients. The groups probably do not publicize this action. You need to ask.

    Contact local churches, which have a variety of outreach services to help the community, including providing monetary help for bills and other living expenses. Also try your local United Way or Salvation Army to find out what sources of grants for bills these agencies have available.

Grants for Students

    Students seeking help paying their college tuition bills and living expenses can also apply for student aid online. By visiting Student Aid on the Web (studentaid.ed.gov), you will find information on everything from "Grant and Loan Program Fact Sheets" and "TEACH Grant Information" to applying for loans and tips on repayment of loans. The site, operated by the U.S. Department of Education, even has tips on applying for college admission.

Applying for Grants

    Applying for grants can take time to fill out applications and wait for approval. If your situation is an emergency, contact a local charitable group for help.

    Though most sites will not charge fees, be aware that some will. One that will charge an application fee is usafundingapplications.org. However, the site does promise a money-back guarantee if you do not find a free grant to pay utility bills. Another source that will charge a fee is gtionline.foundationcenter.org. This site will help you find more than 8,300 programs, including for people seeking general welfare help.

DIY Debt Settlement & Credit Repair Letters

DIY Debt Settlement & Credit Repair Letters

As a consumer, you know your credit situation better than anyone else. Repairing your credit by writing debt settlement letters and credit repair letters is best handled by you. You have the ability to advocate for yourself, come to a settlement that you know you can commit to, and only you know what information on your credit report is incorrect. With a few steps, you can be well on your way to improving your credit, but remember, you may have to write a letter more than once to achieve your desired results.

Instructions

Debt Settlement Letters

    1

    Take some time to review your financial situation. Figure out the amount of money you can devote to settling the debt. Decide on an amount that you are certain you can pay.

    2

    Write a letter to the creditor. Write that you are attempting to settle your debt but are unable to pay the full amount. List your settlement offer to include the amount you will pay and the date you will pay it. Give the creditor the reason you are unable to pay in full.

    3

    End the letter by asking the creditor to respond, on letterhead, agreeing to the terms of the settlement and agreeing to consider the account settled. Specify the date you'd like to hear back. Mail the letter.

    4

    If the agreement is approved, send the payment upon receipt of the settlement agreement. Pay with a money order or cashier's check. If you do not get a settlement agreement back, send another letter. Debt settlement often takes several attempts to come to an agreement.

Credit Repair Letters

    5

    Pull copies of your credit report from annualcreditreport.com (see Resources). This site allows you to order a copy from each credit bureau one time per year. The credit reports from this site are free.

    6

    Review each report carefully and look for any inaccurate information. Federal law gives you the right to dispute any item on your credit report that you believe is inaccurate (see Resources). This could be incorrect dates, balances, payment amounts, late payments, account status or any other information showing on your report.

    7

    Write a letter to each credit bureau that shows what you believe to be inaccurate information on the credit report. Include your name, date of birth, address and Social Security number. Create a list of each item you have a question about. End the letter by asking the credit bureau to investigate the items and to update, correct or delete each item.

    8

    Wait for a reply from the credit bureau. Read the letter sent back to you and make note of all the corrections, updates or deletions of your disputed items.

Tuesday, August 17, 2004

After How Many Years Is Negative Credit Information Removed From a Credit Report?

A person's credit score is computed by credit reporting agencies using information that the agencies have collected and place in the individual's credit report. This credit report contains as much information as the agencies can gather about a person's lending history, including the amount and disposition of loans. However, there are time limits for how long information can remain in this report. Most positive information can stay for up to 10 years, while most negative information must be removed after seven.

Negative Information

    Negative information on a credit report can be defined as all information on a credit report that a drags down a person's score. Positive information, by contrast, is information that pulls a person's score up. When loans are paid back on time, a person's score goes up. However, when a person is late in making a payment or an overdue debt is sent to a collection agency, this negative information brings a person's score down.

Federal Law

    Under the Fair Credit Reporting Act, all credit reporting agencies must remove a negative item within seven years after the item was first listed. However, if the status of this item changes within this time period -- for example, a single additional payment is made on a delinquent debt -- then the credit reporting agency can keep the item seven years from the date of the change. The only exception to this rule is Chapter 7 personal bankruptcies, which can remain on a credit report for up to 10 years.

Agency Policies

    Although a credit reporting agency is required to remove a negative item within seven years of the date on which it was listed, some may choose to remove it sooner. Each credit reporting agency uses a different formula to measure an individual's creditworthiness. This information is proprietary and unavailable to the public. Theoretically, a credit reporting agency could decide that a negative item is irrelevant before the seven-year deadline has expired and decide to remove it early.

Disputes

    Occasionally, a credit reporting agency will include negative information on a credit report that, according to federal law, should already have been removed. In such a case, the individual must petition the credit reporting agency to have the information removed. If the credit reporting agency fails to remove information that it is legally require to remove, it can face fines, as well as damages from a lawsuit brought by the affected individual.

Monday, August 16, 2004

How to Dispute ChexSystems on a Credit Report

How to Dispute ChexSystems on a Credit Report

ChexSystems is composed of a group of banks that supply each other with information relating to its accounts holders, such as how often a customer's account has nonsufficient funds, as well as whether a bank account was closed involuntarily. There are instances where errors are made regarding accounts and this is when a dispute is required to erase an item from ChexSystems, as well as your credit report.

Instructions

    1

    Request a copy of your ChexSystems report if you don't already have one (see Reference 2). The fastest way to get your own ChexSystems report is to visit the consumerdebit.com website and make a request by clicking on the Facta Free Report tab and following the instructions. The report usually will arrive by mail within five business days.

    2

    Request a free copy of your personal credit report at annualcreditreport.com. Each person is allowed one free credit report per year from all three of the major credit bureaus (Equifax, Experian, Trans-Union).

    3

    Review your reports. Look for obvious errors such as incorrect addresses, closed bank accounts that were paid, yet still show as overdrawn, and other errors that can be rectified with a bit of patience. On your credit report, the accounts may show as charged off. ChexSystems is not a credit reporting agency, although it does act as a collection agency. Due to this, your ChexSystems accounts will most likely show up as collection accounts on your personal credit report.

    4

    Locate the accounts to dispute on both your personal credit report and your ChexSystems report. Though the accounts may not have the same account numbers, the accounts will have the same bank name or collection account name. Be sure to verify the amount in question. An account with Bank of America on your credit report may show as an owed balance of $100 while your ChexSystems report could show as $120. This is usually caused by collection fees that were added after ChexSystems began collection on your account.

    5

    Go to ChexSystems to print a copy of your ChexSystems dispute form (see Reference 3). Fill out the form completely and mail it to the address as shown on the form. Be sure to dispute the same items on your personal credit report by filing an online dispute at each of the credit reporting agencies that show the erroneous accounts. Filing a dispute with the credit agency can be completed by simply locating the report number on the top of your credit report page. This number can be used to file an online dispute at whichever reporting agency issued your report.

    6

    Allow both entities (credit reporting agencies and ChexSystems) to review your disputes. A response is issued either online or by mail within 30 days.

Sunday, August 15, 2004

How to Freeze Cards with Credit Cryogenics

How to Freeze Cards with Credit Cryogenics

Stormy financial forecasts call for creative contingency plans. Taking precaution requires much-more extreme measures than stashing your hard-earned cash under the mattress. Consider this time around credit cryogenics, the act of freezing one's debt-liest credit card(s) in your friendly Frigidaire.

Instructions

    1
    Survey credit-card damage

    Face Your Credit-Card Debt Demons. Spread out on a clear workspace your most recent credit-card statements. Note and highlight the balances and annual percentage rate (APR) of each.

    2
    Consolidate repayment

    Consolidate Credit Cards. Single out the card statement(s) with the highest APR and/or heaviest debt load. Debtors who aim to pay off the highest balances first - unless they can double their minimum monthly credit-card payments - often find themselves even deeper in the hole. Set aside one or two low- or zero-APR credit cards and shred the highest APR cards.

    3
    Place cards in a freezer-proof container

    Throw a Private Tupperware Party. Transfer the total balance from all credit card debt to the remaining cards. Then, transfer those credit cards from your wallet into a freezer-friendly storage container.

    4
    Cover credit cards in coffee

    Just Add Coffee. No frozen block of plain H20 is going to shield the seductive flash of your MasterCard hologram. You'll have that Tupperware in your paws in no time - along with your credit-card number. Fill the container with black coffee and save yourself extra shame and debt.

    5
    Freeze away credit-card spending temptation

    Take That Card and Shove it... in the Freezer! But first, place it in a plastic grocery bag as an extra security measure. Push the parcel to the back of the freezer behind the two-year-old bag of frozen spinach or other long-forgotten food stuff.

    6
    Pay down credit card debt

    Pay Debt Forward. Out-of-sight is not out-of-mind. Just because you can't see a coffee-popsicle of a credit card doesn't mean balance and interest rate have disappeared. Double the minimum monthly payment and set up automated bill-pay.

    7
    Consider financial software

    Balance with a Budget. Without our plastic friends, we are left with old-fashioned checking and hopefully savings accounts. A budget therefore is mission critical to debt resolution. Invest in financial software such as Quicken or create your own spreadsheets using Microsoft Office applications (Excel is a natural but Word also offers a variety of user-friendly budget-worksheet templates).

    8
    Find emotional and financial support

    Get Help. If within a few weeks you find yourself gravitating like a moth toward your freezer, tempted to chisel through the iced coffee, it's time for an intervention. Ward off a financial crisis on the homefront by joining a support group, such as Debtors Anonymous, or researching other credit-card counseling solutions such as those listed in Resources.

How do I Work on Getting Out of Credit Card Debt?

How do I Work on Getting Out of Credit Card Debt?

Credit cards can be a useful financial tool that allow you to defer payment for purchases. However, some people allow their credit card purchases to get out of control and end up owing far more than they can actually pay back. These people must carefully evaluate their current position and determine a way to get out of credit card debt. The steps for getting out of credit card debt are basic if you consistently follow them.

Instructions

    1

    Get all of the credit cards you own and lay them on a table. Call the customer service number on the back of each card and write down the total balance on each card as well as the interest rate for each card.

    2

    Cut up all of the credit cards with a pair of scissors, except for the one with the lowest balance. Place the one remaining credit card in a location at home that makes it difficult to take it with you while shopping.

    3

    Rank the cards from the lowest balance to the highest balance. If desired, you can choose to rank the cards from highest interest rate to lowest interest rate.

    4

    Call customer service for the credit cards with the lowest interest rates and ask them if you qualify for a balance transfer deal. If so, transfer the balance from the highest interest rate cards to the lowest interest rate cards. This helps you pay off the debt faster since your interest amounts are reduced.

    5

    Ask the credit card companies to reduce the interest rate on your card and they might just do it. Remind them of how long you have been a customer, if it has been longer than a year. In addition, if you have never had a late payment, remind them of this as well since this increases your chances of getting the rate lowered. If you have had late payments, it is unlikely they will lower your rate.

    6

    Pay the minimum balance on all of the cards each month except for the one with the lowest balance. On the card with the lowest balance, pay the minimum balance and any extra that you can come up with. If you are paying off debt by the highest interest rate, apply the larger payments to the card with the highest rate first.

    7

    Continue using this payment method each month until you pay off the card with the lowest balance or the highest rate depending on which method you choose. Then, apply the larger payments to the credit card with the next lowest balance or the next highest rate.

Saturday, August 14, 2004

Credit Rating Agency Rules

Credit rating companies are required to follow government regulations to safeguard consumers' credit histories. Among other things, they must provide credit reports to consumers upon request and maintain accurate credit files. However, it's up to consumers to monitor their credit reports to ensure their credit histories are accurately represented by rating agencies.

Credit Reports

    Consumers have the right to know what's in their credit reports. The U.S. Fair Credit Reporting Act allows consumers to request one free credit report each year from the following national credit reporting companies: Equifax, Experian and TransUnion. However, the Experian website points out that consumers aren't entitled to receive free credit scores with their reports. Therefore, the three companies may charge a fee for including a credit score with a consumer's report. A credit report only shows your credit history, which includes the number of accounts you have and whether you've made late payments. A credit score is based on a statistical analysis of your credit history, which represents the likelihood that a person will repay a debt.

Credit Privacy

    All credit rating companies are required to safeguard consumers' privacy by limiting access to their credit files. The companies may only provide people's credit data to entities that have a valid need for the information, which usually includes creditors, insurers, landlords and lenders. However, employers also are permitted to see your credit files if you're applying for a job and have granted your permission for a potential employer to do a credit check on you. Some employers who are seeking to reassign or promote their current employees also may do credit checks on workers with their permission.

Accurate Files

    Credit reporting companies are prohibited from including outdated, negative information in consumers' reports, which could hamper their credit ratings and prevent them from getting approved for loans and credit cards. For example, information about late payments in a consumer's credit file generally must be removed after seven years. Bankruptcy information can remain in a person's file for 10 years.

Unsolicited Marketing

    Credit reporting agencies can sell information about you to other companies that want to market their credit and insurance services to you. However, credit rating agencies must allow consumers to opt out of such unsolicited offers. Each of the national credit reporting agencies provides instructions on opting out of the offers on their websites. Yet you will only suspend the offers for five years if you opt out of them online. You have to mail in an opt-out form supplied online by the credit reporting companies if you want to be removed from their marketing lists permanently.

How Does a Debt Consolidation Affect Credit Rating?

What Debt Consolidation Is

    Debt consolidation normally come in two flavors: a debt consolidation loan and a debt management firm. Both of these solutions will lump a consumer's debt into one neatly wrapped, and often lower, monthly payment. However, deciding between the two can have an impact on your credit report and credit rating---both in the short and long terms. So before choosing a debt consolidation method it's best to know what you are getting into.

Debt Consolidation Loan

    Debt consolidation loans can either be in the form of a home equity loan (in which you borrow against your home's value) or a personal debt consolidation loan, with no collateral. Initially, borrowing this money will bring your credit score down by a few points, as it will heighten your debt-to-income ratio. However, as balances begin to be transferred from creditors into your debt consolidation loan, your credit score will improve. And as you make timely payments toward your debt consolidation loan your credit score will not be negatively affected.
    There are a couple of points to remember in all of this, though. Closing credit card accounts or personal loans after placing them under the debt consolidation umbrella can have a negative impact on your credit score, as this can appear to creditors as if you do not know how to manage your money properly.
    Another damaging factor can be applying for additional credit shortly after obtaining a debt consolidation loan. It can be considered a negative if a consumer is applying for credit more often than once every six months.

Debt Consolidation Company

    Debt consolidation companies do not loan money. Their function is to negotiate with creditors on your behalf in order to lower or freeze interest rates, and then to create a single, affordable payment. In this scenario, you pay the debt consolidation company each month, and they disburse the payments accordingly to each of your creditors.
    What does this do to your credit score? Nothing good. Since these debt consolidation specialists are settling with your credit card companies to pay less than what you owe, this doesn't look favorable to banks or lenders and will decrease your score. The debt management company will also have a flag placed on your credit history, alerting potential lenders that you have consolidated your debts, which reduces your chances for getting a loan approval.
    In many instances, the creditor will close your account after payoff, further damaging your credit score. While the convenience of a debt consolidation company may seem attractive, it's important to note that unless you are behind on payments the firm might not offer the best opportunity to keep your credit history in the black.

How to Get Your Student Loan Reduced

The economic recession that began in 2007 resulted in large numbers of unemployed workers. As reported by the Bureau of Labor Statistics within the U.S. Department of Labor in June of 2011, there were over 14.1 million unemployed Americans -- equivalent to a 9.2 percent unemployment rate of the nation's total workforce. To help students, graduates and their parents during times of financial difficulty, the U.S. Department of Education allows qualified individuals a way to apply for loan reductions, loan forgiveness and loan forbearance.

Instructions

    1

    Apply for a loan deferment with the U. S. Department of Education if you are in school on at least a part-time basis, if you are experiencing an economic hardship or if you are in the U.S. military on an active service basis or reserves.

    2

    Contact the school where you applied for your federal Perkins loan to obtain a deferment. For Stafford and Direct loans, contact your loan servicer. Use the Department of Education's National Student Loan Data System to search for your loan servicer.

    3

    Contact the U.S. Department of Education by calling its toll-free Federal Student Aid Information Center if you are not a part-time student or not in the military. Ask about the federal loan deferment program based on economic hardship. The department provides a free informational service to students and their parents on how to apply for a reduced loan repayment program or deferment based on economic hardship.

    4

    Switch repayment plans by contacting the toll-free information center hotline. The Department of Education allows those experiencing economic hardship to pay their loans under different plans. These reduction repayment plans often allow students and graduates to repay their loans at lower monthly payments.

    5

    Apply for a federal loan forgiveness program if you perform public volunteer services or work in the public education sector. Additionally, military service members can apply for loan forgiveness. There are at least one dozen federal loan forgiveness programs, and you will have to apply for the specific program designated for the type of public service you perform.

Professional Credit Repair & Restoration

Professional Credit Repair & Restoration

There is no quick fix when it comes to repairing your credit. However, with the right professional help, you can gain a better understanding of your situation, what appears on your credit report and specific things you can do to reduce debt and improve your credit score. The best credit repair companies emphasize credit education to teach you how to avoid problems in the future.

Finding a Reputable Professional Credit Repair Company

    The credit repair industry developed a bad reputation in the past with consumers, but government legislation such as The Consumer Credit Organizations Act of 1996 went a long way toward reforming these companies. The industry also attempts to govern itself through trade organization such as The National Association of Credit Services Organizations, The Ethical Credit Repair Alliance and The Certified Credit Consultants Association. These organizations adhere to codes of ethics and have member directories and online processes for filing complaints against members.

The Contract

    A credit repair organization may provide no services for a consumer until three days after the consumer has signed and dated a written contract. The contract must state specific terms and conditions, including the total amount of all payments they will make to the credit repair organization or anyone associated with them. The contract must also include a complete detailed description of the services to be performed by the credit repair organization, including any performance guarantee and an estimation of the date by that the services will be completed.

Payment in Advance

    According to The Consumer Credit Organizations Act, a credit repair organization may not accept any payment in advance of performing any of their services. They cannot charge you or accept any payments or any other sort of valuable consideration for any services they may have performed for you until those services are fully performed.

What to Expect From a Credit Repair Company

    Credit repair companies can do nothing for you that you cannot do on your own. What they can do is to help you to thoroughly review your credit issues and suggestion a course of action so that you will begin improving your credit situation much quicker than you might do by yourself. Expect the firm to explain your legal rights to you before performing any service or asking you to sign anything. Do not deal with any company that suggests that you can create a new identity with a new Social Security number or an Employer Identification Number.

Friday, August 13, 2004

USCG Credit Card Regulations

The Pentagon Federal Credit Union offers specialty cards to members of the armed forces including the United States Coast Guard. The USCG is the only branch of the military that is part of the Department of Homeland Security. During peacetime, the Coast Guard protects the country's shores and enforces maritime law. If the U.S. is at war, the Navy directs the Coast Guard. PenFed operates out of Virginia and is subject to credit card laws issued by the state of Virginia and the federal government.

Eligibility

    You are eligible to apply for a USCG credit card if you are a current or retired member of the Coast Guard or an eligible relative. Relatives include spouses and children. Acceptance for applicants under the age of 21 is dependent on a parent's signature or the child sending documents showing that he has the income to pay the bill independently, per the Credit Card Act of 2009. You must be a member of the Pentagon Federal Credit Union. PenFed does perform a credit check on applicants for credit cards and a low credit score can prevent the company from offering you a card.

Purchase and Cash Advance Interest Rates

    As of 2011, the annual interest rate for the USCG credit card is 12.49 percent. If you are late paying your bill by 60 days or more, your rate will increase to 17.99 percent. The Credit Card Act of 2009 prevents PenFed from raising your interest rate without providing you 45 days notice unless the increase is because of an increase in the Prime Rate.

Introductory Rate for Transfers

    The PenFed USCG card has an introductory rate of 2.99 percent for the first 12 months on online balance transfers. At the end of your first year with the company, your rate will increase to 12.49 percent based on the Prime Rate. By law, this increase can occur without 45 days notice because it is an introductory rate.

Fees

    There is no annual fee for a PenFed USCG credit card. There is a 3 percent fee for balance transfers and a 2 percent fee for foreign transactions. Penalty fees include up to $25 for late payment and payments returned for inadequate funds. There is no fee for being over your credit limit. Because of the Credit Card Act, PenFed cannot raise fees without providing 45 days notice and giving you the opportunity to close your account.

How to Write an Insolvent Letter to Debt Collectors

How to Write an Insolvent Letter to Debt Collectors

People often die while in debt. Death does not automatically eliminate the balances a deceased person has accrued. Creditors and debt collectors frequently approach those associated with the deceased's estate for payment. Those associated with the estate do not necessarily have to pay these balances, depending on their relationship with the deceased and whether the debts are joint debts. If a collector tries to collect from an estate that doesn't have enough money to cover the debt, you may have to write a letter telling the collector the estate is insolvent.

Instructions

    1

    Type your full name, left justified. Type your contact information, including your address, phone number, fax and email underneath your name, using one line per data set except for the address.

    2

    Skip two lines. Write "DATE:" followed by the current date. Skip another two lines and write "RE: Notice of Insolvency." Use double-line spacing once more and type your formal salutation followed by a colon.

    3

    Skip two lines and begin your first paragraph. Introduce yourself as a representative for the person who has died, citing the deceased's full name, address, date of death and the number and outstanding balance associated with the collection account. State you have included a copy of the deceased's death certificate in the letter.

    4

    Skip two lines and begin your second paragraph. Tell the debt collector that the estate appears to be insolvent. Cite any information you can to verify the insolvency, such as a specific court case number or a date when the deceased filed bankruptcy. Indicate that, due to the insolvency, you cannot meet the collector's demand for payment. Ask them outright but politely to consider writing off the outstanding balance.

    5

    Skip two lines to begin your third and final paragraph. Tell the collector how to contact you with questions or concerns. Thank the recipient for his time and consideration for your write-off request.

    6

    Skip two lines and close the letter with a closing phrase of your choice, such as "Sincerely" followed by a comma. Skip four lines and type your full name. Skip another two lines and write "Enclosure: (1) copy of Certificate of Death for [name of deceased]."

The Effects of Paying a Bill a Day Late on Your Credit Report

Your credit report provides creditors with a glimpse into how you handle debt and manage your finances. While a spotless report is not possible for everyone, doing what you can to keep negative marks off of your report represents a key aspect of building a positive credit report.

Credit Reporting Basics

    The Fair Credit Reporting Act sets the standard for the information credit reporting agencies can report when it comes to consumer histories. Allowable information includes details about your credit history, employment history and identifiable information, such as your name and address. Included on your credit report are a record of all current and past accounts, both open and closed, and the payment history associated with those accounts. Your credit report lists positive and negative accounts. Negative entries on a credit report can result from events including late payments, collections activity, bankruptcies and foreclosures.

Late Payments

    While paying a bill one day late won't always be reflected on your credit report, you should get in the habit of paying all bills by the due date to ensure your creditor doesn't place a black mark on your credit report. Late payments typically result in a negative entry on your personal credit report. Each creditor maintains its own policy for reporting late payments. Some creditors report a late payment as soon as it occurs, while others wait the traditional 30-day period to report a late payment.

Cascading Effects

    Late payment entries will lower your credit score, and if they occur on a regular basis they will hurt your ability to obtain additional credit. In addition, a late payment of even one day can allow your creditor to increase your interest rate and charge late fees. These consequences alone can have a negative impact on your overall debt-to-income ratio -- a calculation used to determine your ability to take on more credit.

Considerations

    Speaking with your creditors and notifying them of a late payment, even a payment that will be one day late, improves the chances of your credit report escaping unscathed. In addition, reviewing your loan documents and credit card policies for late payment procedures provides specifics regarding a creditor's reporting habits. For instance, some creditors specifically note what day past due they will report an account as late to the credit bureaus.

Wednesday, August 11, 2004

How to Calculate Annual Debt Obligations

How to Calculate Annual Debt Obligations

American households that have at least one credit card have an average credit card debt of $10,700. Many people have additional debts on top of this, such as student loans, house payments and car payments. Debt can be overwhelming, especially if it feels out of control. However, with proper planning and close attention to your overall financial situation, you can manage your debt wisely, pay it down and gain control of your financial life.

Instructions

    1

    Gather the most recent statement from each of your creditor accounts. These include all credit-card statements, mortgage statements, student loan bills, auto loan statements, personal loan statements, finance purchase statements and any other statement for an account that you consider a debt. Many creditors allow you to access your statements online if you do not have paper copies.

    2

    Review the monthly minimum payment for each statement and debt account you have. The monthly minimum payment is the minimum amount you are required to pay each month.

    3

    Multiply the monthly minimum payment by 12 for each account. This gives you the total annual minimum amount you need to pay on each specific debt account.

    4

    Add all of the annual minimum payments together to get the total annual debt obligation.