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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..

Thursday, September 30, 2004

Help With Secured & Unsecured Debt

Loans and credit agreements can be differentiated into two key groups: secured and unsecured. A secured loan is one in which a creditor has a legal interest in your property, while an unsecured loan is not. Knowing the difference between these two types of loans is key for consumers who are considering any kind of loan.

Unsecurd Loans

    You've probably got an unsecured loan in your wallet right now. Most credit cards are unsecured loans. If you don't pay your credit card bill, your creditor cannot repossess your car to make up for the debt. An unsecured loan is one the lender gives you without requiring you to sign over an interest in any of your property or give collateral in case you are unable to pay the loan back.

Secured Loan

    While missing a payment on your credit card bills won't risk repossession, missing a car payment will. A car loan, unlike a credit card loan, is a secured loan. When you borrow money, you agree to give your lender an interest in the car, known as a security interest. Thus, if you fail to pay back the loan, the lender knows it can take back the car to secure its payment.

Unsecured Loan Pros and Cons

    A secured loan gives the lender more reassurance that even if you are unable to pay, the lender won't be out of luck and won't have to lose all the money it lent you. Because of this, a secured loan, such as a mortgage, typically comes with a much lower interest rate than an unsecured loan. However, defaulting on a secured loan means you may lose your property at a time when you need it the most.

Unsecured Loans Pros and Cons

    An unsecured loan's primary benefit is that you don't risk losing your property if you fall behind on your payments. To get its money back on an unsecured loan, a lender has to sue you in court and prove its case. However, this lack of security on the part of the lender usually comes with a price: namely higher interest rates and stricter conditions. While unsecured loans pose less risk to you, they are more risky to the lender, and thus the higher costs.

Can Debt on Credit Keep You From Getting a Job?

Can Debt on Credit Keep You From Getting a Job?

When you apply for a job, you may be required to undergo a credit check. Negative information found in the check may impact whether you get the job or not. Positions that require you to handle money are especially sensitive to scrutinizing your credit history. You may not agree to have a background or credit check, however, this will most probably eliminate you as a job candidate.

Debt Does Matter

    The amount of debt you owe, the number of unpaid accounts and the number of late pays may stop you from getting a job, according the ABC News website. Hiring organizations have different levels or criteria for determining what is acceptable in terms of a negative credit history. For example, if you are applying for a job as a bank teller, your credit history is more pertinent than if you are applying as a mechanic.

Employer Reasoning

    Financial jobs may be sensitive to your debt-to-credit ratio, while other industries may also be concerned about your credit history. For example, if the position offers the opportunity to steal, the company may be concerned about your financial history. If you work for a drug store, your debt may prompt you to make bad decisions. Employers may consider that you are a higher risk to steal drugs to pay off debt or even that by owing debt, your character is questionable.

Debt and Character

    The practice of performing credit checks for employment does cause concern. A person's personal credit does not have an impact on the person's ability to perform a job. For example, if a nurse is denied a job due to her debt on credit cards, loans or a mortgage, it does not detract from her ability to help patients. Perhaps the applicant recently went through a divorce that caused a financial hardship or the applicant had a business that closed due to the economy. Situations that occur in life present personal challenges, however, being denied a job due to the debt can devastate a person's life. Without the ability to obtain a good job, the debt for various credit situations will worsen.

Restrictions on Credit Checks

    Most employers can require you to allow them to perform a credit check to learn about your debt. However, the federal Fair Credit Reporting Act does restrict some information from the employer. If the employer hires a third-party to perform the check, bankruptcies over 10 years old cannot be disclosed and tax liens or civil suits that are older than 7 years cannot be disclosed. Positions that earn $75,000 a year or more do not have even these minimal restrictions. However, some states such as California have additional restrictions on the release of information.

How to Refinance with Credit Problems

Sometimes you need to refinance your credit card debt or mortgage to be able to make payments. If you have a low credit score, it might be hard to get the refinancing you need. It isn't impossible, though, as there are ways to perhaps improve your credit and talk to lenders to help you make payments.



    If you haven't yet, check your credit report for errors. Write to the credit bureaus and fix these to help improve your score.


    Talk to a credit counselor who can help with credit repair and improve the look of your credit report. Wait to review the refinancing option until all credit repair changes are made to have the best score possible.


    Talk to the lender of the debt to be refinanced, and ask about your options. If it is a credit debt or a mortgage, the lender might have special offers or savings if you refinance with them.


    Use online options to check with multiple lenders at one time, instead of going from bank to bank, to help save time. Proof of employment makes it easier for lenders to approve your request for refinancing.


    Check with multiple lenders and evaluate your options. Call if you have questions and talk to them if they feel your credit score might be a problem, or enlist a credit counselor, as some can act as a mediator if you need help to reduce the payment to stay out of debt.

Can a Repo Man Stalk You and Harass You at Work?

Work is stressful enough without dealing with harassment from a collection agency. Although creditors are allowed to use the services of collection agencies to resolve legitimate debts, the Federal Trade Commission (FTC) has limits on the tactics that collectors may use. Whether the debt is legitimate or not, it is illegal for a repo man to relentlessly stalk and harass you at work.

Fair Debt Collection Practices Act

    The Fair Debt Collection Practices Act (FDCPA) regulates the types of contact that collection agencies and repo men can make in attempting to collect a debt. Specifically, the law prohibits collection attempts before 8 a.m. or after 9 p.m. unless you give permission. If you do not believe that you owe the debt, contact the collector within 30 days of receiving a validation notice. Send the letter by certified mail with return receipt and keep a copy of the letter for your files. After you send the letter, the collector must provide proof of the debt, such as a copy of the original bill, or stop contacting you about that particular debt. The collector may not contact you again except to inform you of further actions the agency intends to take, such as filing a lawsuit.

Improper Contact by Collectors at Your Job

    The FDCPA states that collectors may not contact you at work after you provide notice, either orally or in writing, that you cannot take calls at work or that you do not wish to receive calls at work. You can provide this notice during the initial contact or afterward. If you inform the collector orally, keep a log of the date and time of your request. Take the name of the person who contacts you. Follow up any oral requests in writing.

Improper Contact of Third Parties by Collectors

    The FDCPA prohibits collectors from contacting third parties more than once and only then to ask how to reach you at home and work. According to the FTC, anyone besides you, your spouse or your legal representative is a third party. This means that collectors are prohibited from embarrassing you or putting your job at risk by discussing your debt with your supervisor, co-workers or anyone else at your place of business or work. Collectors may only send paperwork to your employer that is related to collecting the debt, such as a garnishment order.


    If collectors engage in illegal or improper collection practices, you can file a lawsuit in state or federal court for up to a year after the date of the improper contact or collection attempt, according to the FTC. If the judge rules in your favor, you may collect up to $1,000 from the collector, even without providing evidence that you suffered any actual damages.

Legal Repossession Action

    Once you have gone into default on a secured loan, the lender may repossess the property without notice -- even from a private home or office with a court order. A repo man may legally seize your car from the street or company parking lot. Some states also allow repossession from a closed garage. If you have added rims or other aftermarket modifications, you are usually out of luck. However, the lender may not retain personal property found in the car.

How do I Establish Credit in Middle Age?

How do I Establish Credit in Middle Age?

Establishing credit can be a very important step to self-sufficiency. Establishing a positive credit history opens the door to qualifying for many types of financial assistance by lending institutions. The type of lending you may qualify for with an established credit history ranges from home mortgages, personal lines of credits, and personal credit cards. Without establishing a credit history, a lender will be unlikely to give you access to the breadth of their financial services. There are several good habits and methods you can employ to establish credit, even when middle-aged.



    Open a checking and saving account in your name. This will help you establish a relationship with a banking instiution. With some lines of credit, the lending institution will want to establish that you have money and spending habits through your bank account.


    Open "Store" accounts. These are lines of credit given out by retail stores, that are typically only good to use at the specific store they were opened with. Make sure to pay any balance on these cards off at the end of every month, as the interest associated with these cards tends to be rather high. Also ensure that the store reports the opening of the credit line to one of the major credit bureaus. Once your credit is established and you can qualify for an unsecured line of credit, cancel any store accounts you may have.


    Open a "Secure" credit card with a banking instiution. A secure credit card is a line of credit that you have "secured" with a downpayment equal to the limit of the line of credit (i.e. You pay down $500 on the secured line of credit to open it, the limit of the account is $500). Pay off the balance on the card every month to help establish a positive payment history.


    Find a co-signer to open a line of credit with you. By using a co-signer, you are effectively using their credit history as your own. This will help you open credit accounts you would otherwise not qualify for. There are risks to both signers when this is done, as both are responsible for the repayment of the loan. If you default on the loan, your co-signer will be affected negatively.


    Pay your bills on time, every time. One of the most important things to lending institutions is how responsibly you have behaved in the past with your financial obligations. By establishing a positive payment history, you are establishing a positive credit history.

Does Using Rent-to-Owns Help Build up Your Credit?

Does Using Rent-to-Owns Help Build up Your Credit?

Rent-to-own arrangements can provide an opportunity for you to use an item prior to full payment and in many cases end your month-to-month rental agreement. Not to be misunderstood with a lease, such as an auto lease or a home that offers a lease with the option to buy, many rent-to-own plans can end at any time. Typically, your agreement ends when you return an item or if you stop making your required payments. Rent-to-own agreements that you fulfill might be instrumental toward building your credit. Most rental-to-own providers do not report to the credit bureaus. However, you may have opportunities to receive credit reference for your rent-to-own payment plan.


    Qualifying for an item that offers an opportunity to gain ownership at the conclusion of your rental term may not be too difficult. Many companies and individuals who provide rent-to-own options are typically aware of certain risks, as there are other options such as payment in full or credit approved transactions. To qualify for some rent-to-own items, you will need to provide proof of employment, personal references, your home address and your phone number. After your information is verified, you may need to make a deposit or a payment for your first month's rental. When using a rent-to-own program, most offers are not based on your credit qualifications.


    An agreement will serve as the understood terms between you and the person or company from whom you rent. You should never enter a rent-to-own agreement on a handshake or a verbal understanding. Because a lapse in memory could cause a dispute for either party, and in many cases you may have minimal proof should a legal proceeding occur. Ensure that you obtain a written agreement prior to the commencement of your rent-to-own plan. Your agreement should reflect your ownership of the rental item after you have satisfied the proposed requirements. Safeguard the agreement in case you need to reference the document in the future.


    The terms of your rent-to-own agreement should reflect the rental item and the duration of your rental term, as well as the amount and frequency of your rental payment. The term for rent-to-own items typically depends on the item's cost, as an inexpensive clock radio will take a shorter time to pay for when compared to a large-screen television. Many rent-to-own agreements are short-term and typically last from a few months to a few years.


    If you are considering a rent-to-own arrangement to acquire an item that you are not able to pay for upfront, ensure that you understand the terms. You should also shop among other merchants or individuals who offer the item that you want to rent. Because pricing can vary, it's a good idea to comparison-shop for the lowest combination of rental payments and total ownership costs for the item. While shopping, you should inquire about internal procedures for providing credit references, for customers who pay as agreed.

Wednesday, September 29, 2004

How to Eliminate Unsecured Credit Cards

How to Eliminate Unsecured Credit Cards

Eliminating unsecured credit cards is a key to getting out from under debt. It also is a great way to rebuild credit and budget your finances. High-balance credit cards with high interest rates can dramatically lower a credit score. Cards with more than 50 percent of the balance used make a negative impact on your credit score. Therefore, ridding yourself of these types of credit cards should greatly improve your credit score.



    Remove the credit cards from your wallet, cut them up or put a freeze on their use. The first step in eliminating unsecured credit card debt is to stop using the card. Therefore, the only way to stop accumulating debt is to destroy or hide the cards.


    Gather all of your unsecured credit card statements and systematically jot down the balances and minimum payments of each card in a notebook. Start with the card that has the highest interest rate vs. the card with the highest balance. Eliminating the card with the high interest rate will save you more money than tackling a card a higher balance but lower interest rate.


    Determine the amount of additional money, other than the minimum payment, that you can afford to set aside to pay down your unsecured credit cards. Even an additional $30 a month can dramatically affect the length of time it will take you to pay off a high-interest credit card.


    Contact your creditors and ask the representative if she can lower your interest rate. If you are a long-time customer with a solid payment history, most creditors would rather keep you as a customer. Therefore, it does not hurt to ask credits to grant your request by lowering your annual percentage rate.


    Make multiple payments on your credit card account instead of paying your minimum payment every month. Making weekly payments adds an extra month of payments to your account. If you can make a payment every week, that would equal 13 months' worth of payments, compared to 12 months' worth of payments using a monthly schedule. Weekly payments will reduce the amount of time you spend paying on a credit card, thus saving you money on interest charges.

Tuesday, September 28, 2004

How to Determine the Statute of Limitations on Credit Card Debts

State statute of limitation laws regulate how long credit-card companies and debt collectors have to sue you for an unpaid credit-card debt. The length of time varies by state, but the average is about six years. The Federal Trade Commission reports that credit-card debt that is beyond the statute of limitations is considered "time-barred" -- meaning it cannot be collected with the help of the court system.



    Get a copy of your credit report from Annual Credit Report (see Resources). The site offers credit reports for free under the terms of the Fair Credit Reporting Act.


    Review the date of the last activity on your credit-card debts, such as your last posted payment.


    Contact a local office for your State Attorney General's Office to determine when a debt is time-barred by your state. Compare the time frame given you with the date of last activity on your credit-card debts. Example: The statute of limitations in your state is seven years. The last date of activity on your account occurred eight years ago. This credit-card debt would be time-barred for court action.


    Contact a nonprofit credit counselor if you need more help after speaking with the attorney general's office. Find a counselor in your area by seeking a referral from your bank or credit union.

How to Locate Accounts Owed to Collection Agencies

Ignoring a debt can have severe consequences. Missing payments to your creditors damages your credit rating and may result in your debt being remanded to a collection agency (See References 1). Not only will the collection agency add its account to your credit report, but if you owe more than $100, a collection account causes additional damage to your credit score (See References 2). The Federal Trade Commission warns consumers to make payment arrangements with collection agencies to avoid lawsuits that can result in a bank levy or wage garnishment (See References 3). Paying off old debts prevents lawsuits and gives you peace of mind. A collection account can be sold repeatedly; therefore you must track down the current owner of the debt in order to make a payment.



    Pull your credit report and locate the original creditor and account number for the debt. The original creditor is the company you owed the debt to before it was sent to a collection agency.


    Call the original creditor. Give the customer service representative your name and the account number. Ask the customer service representative which collection agency the original creditor sold the debt to.


    Compare the customer service representative's response to the collection accounts listed on your credit report to find the correct collection agency and account number. The collection agency's account number for the debt is likely to differ from the original creditor's account number.


    Call the collection agency and inquire about whether it still owns the debt. If not, ask which company purchased the debt.


    Check your credit report again. Compare the information the collection agency representative gave you with the collection accounts listed on your credit report to find the correct creditor and its contact information.


    Contact the correct collection agency and arrange to make payment. If the debt itself or the amount the collection agency states you owe is inaccurate, send a written request to the collection agency seeking full validation of the debt. Section 809 of the Fair Debt Collection Practices Act allows you to request a debt validation if you suspect that the collection agency made an error (See References 4).

Monday, September 27, 2004

Tips for a Debt Consolidation Plan

When you face the repayment of a large amount of debt, you may wish to pursue a debt consolidation plan to help with the process. By consolidating your debt, you can focus on a single payment and potentially lower your interest rate. When consolidating debt, you need to keep a few tips in mind.

Negotiate Interest Rates

    When you enter into a debt consolidation plan, you may be able to lower the amount of interest that you pay your creditors. This is especially true if you have a significant amount of credit card debt. Most credit cards charge very high interest rates above 10 or 15 percent. If you are willing to negotiate with the credit card companies, you may be able to get your interest rates down to 2 to 5 percent. You could negotiate on your own or hire a credit counseling service to do it for you.

Watch Fees

    Many people in this situation hire a debt consolidation company or a credit counseling service to help with the process. While this can help reduce the amount of responsibility you have in this process, it can also add to your costs. Although paying something is to be expected, make sure that you do not have to pay more than is reasonable. Take into consideration exactly what the company is doing for you and see if their fee is in line with what they offer. You may want to shop around with various providers to make sure that you are getting the best deal.

Watch for Scams

    In the debt consolidation industry, there are a number of scam companies that could try to take advantage of you. When signing up with a company, you need to check with the Better Business Bureau to see if they are legitimate (see Resources). Some companies like to charge large upfront fees and then never provide any services after they get access to your money. Be very hesitant to work with companies that charge a large amount of money upfront.

Consider Your Options

    When looking for the best way to consolidate your debt, you need to look at the various options you have. For example, you may want to take out a home-equity loan so that the interest you pay is tax deductible. You could also borrow from a life insurance policy at a very low interest rate. Some like to use credit card balance transfers to finance the consolidation, but you need to consider the risks of doing so. This strategy is very risky as it could result in large interest charges in the future.

Online Debt Information

Consumers who need advice on managing credit card debts, dealing with debt collectors or paying their taxes can find all of that information online and more. Consumer and government websites can help people unravel complicated credit and debt regulations, or find an attorney who specializes in consumer protection to handle various debt problems.

Consumer Sites

    Consumer websites can be a good source of information about regulations intended to protect consumers in their dealings with creditors and lenders. For example, the website of National Association of Consumer Advocates includes information on debt-collection abuse and predatory-lending practices. People who need legal advice can find attorneys on the site who specialize in bankruptcy filings, debt-collection issues, foreclosure problems and other debt-related matters. You can search for attorneys on the site by their location and area of practice.

Federal Reserve Board

    The U.S. Federal Reserve Board manages a website that provides information on consumers' credit card rights. The site is especially useful because it abandons the legalese of government legislation to clearly explain regulations that limit credit card interest-rate and fee increases. It also explains how creditors must handle billing and payments. Another section of the site explains laws that pertain to credit reporting, debt collection and lending practices. The site also includes a glossary that defines credit and lending terms consumers usually see in their credit card agreements and monthly statements.

Federal Trade Commission

    A consumer protection section is included on the U.S. Federal Trade Commission website. It has information on creating a budget, dealing with debt collectors, and managing home and auto loans. People who are looking for credit-counseling services can get information on finding reputable counseling organizations. The FTC also describes the services that credit counselors should offer their clients to help them improve their financial situation. The site has information on bankruptcy and debt-management plans as well.

Internal Revenue Service

    The Internal Revenue Service site describes people's options for handling a tax debt. The site suggests alternative payment options that can help reduce penalty and interest charges that accrue on late tax payments. People who can't afford to pay their tax bills in full can get details on IRS installment agreements that allow people to make several payments over time until their tax bills are settled. Penalty and interest charges still accrue on installment agreements.

Collections & the Impact on Credit Scores

Using a credit card is a simple way to pay for an item. Taking out a loan may be your only option when buying a car, house or any large purchase. The interest rate can be steep and affect you financially. However, your credit score also may be negatively impacted if you fail to make your payment on time and your debt is sent to collections.

Collections Definition

    When you default on a debt payment, your creditor transfers your account to a collection agency that either works in the same company or is hired to collect debt on its behalf. Third-party collection agencies receive a percentage of the amount that they are able to recover from a debtor. Sometimes creditors sell very old debt to a collection agency, which, in turn, keeps all that it collects. The representative assigned to your account may call you frequently and repeatedly to request that you pay your debt.

Credit Score Definition

    Your credit report is a history of your credit activity. The major credit reporting bureaus, Experian, TransUnion and Equifax, assign your history a credit, or FICO, score based on your level of proven responsibility in taking on and paying your debts. Lenders, insurance companies and some employers use your credit score to determine your risk factors.

Impact of Collections

    Credit scores may range between 300 and 850. With a higher score when applying for a loan, you may receive the lowest interest rate. Your payment history is 35 percent of your credit score, so, once you are delinquent with your payments, your rating decreases. When a bill is sent to collections, your score drops even more. According to CNNMoney, if you carry a credit score above 700, it can drop 100 points or more if you are 30 days late with a payment. Sometimes a collection agency will negotiate with you to settle the debt for less than you owe. If your credit rating is low, this will not affect your score as much as it would if your rating is high.

Removing Negative Entries

    You can improve your credit score after you have had a debt that was sent to collections. First you need to see the impact on your credit history. You can order one free credit report annually from each of the three major bureaus. You can pay a fee to receive your credit score at the same time, since it is not included on the free reports. Once you have reviewed your history, check it for accuracy. If there is a negative entry, such as collection activity, that is more than seven years old (some bankruptcies may stay on a report for 10 years), request that the credit bureaus remove it. They will determine the facts and respond within 30 days. If they refuse to remove the item, ask the original creditor to do so. Once all old entries and inaccuracies are removed from your history, you should see an increase in your credit score.

How to Get Help Paying Back a Student Loan If You Can't Afford It

Because of the high cost of college and post-graduate education, recent graduates might find themselves unable to afford their student loan payments. For example, payments on $40,000 of student debt to be repaid over 10 years at 6.8 percent interest are $460.32 per month. In many situations, recent graduates will be paying more each month for their student loans than for their portion of an apartment's monthly rent. Lenders that offer student loans provide graduates with resources and alternate repayment plans to help them make student loan payments.



    Call the company that services your loan as soon as you realize you are having trouble affording your student loan payments. Taking action quickly can help you avoid damaging your credit score with late payments.


    Tell the customer service representative that you cannot afford your current student loan payments and need to discuss other payment options.


    Ask to receive a deferment if you cannot afford your payments because you are enrolled in school, unemployed, or otherwise experiencing economic hardship. The representative will help you determine if you are eligible for deferment, which will allow you to stop making payments on your student loans. If the federal government subsidized your loans while you were in school, they will be subsidized during deferment as well, which means that the government will pay the interest accruing on them.


    Ask to receive forbearance if you do not qualify for a deferment. Forbearance is granted in times of financial difficulty for up to three years and allows you to stop making payments. However, interest will continue to accrue during this time so you will owe more on your student loans when you start repaying them again.


    Change your student loan repayment plan if you do not qualify for forbearance or deferment. The representative can help you select the best available plan for your situation.


    Contact your local community center to find resources to help you develop a budget so you can afford your monthly payment. Many nonprofit credit-counseling companies offer free or low-cost budgeting workshops or personal consultations.

Does Credit or Debit Automatically Take the Money Out?

Does Credit or Debit Automatically Take the Money Out?

Some debit cardholders can use their cards in ways that are similar to credit card users, but the payment process is significantly different. Credit card users usually have about 30 days to pay for purchases. Debit cardholders don't have that length of time to pay for their purchases. However, there is a delay in withdrawals from debit card accounts when debit card users sign for their purchases.

PIN vs. Signature

    Debit cardholders usually authorize purchases made with their cards by entering a personal identification number at a cash register terminal. Some cardholders also may sign for a debit card purchase instead of using a PIN, just as credit cardholders do. Debit card users simply select "credit" instead of "debit" at a cash register terminal to sign for their purchases. According to Consumer Reports, PIN-based transactions are immediately withdrawn from debit card users' checking accounts. However, signature-based transactions usually aren't deducted for up to two days.


    The security of a debit card transaction is just as important as how quickly the withdrawal takes place. According to Consumer Reports, many retailers report that incidents of fraud are usually higher with signature-based debt card purchases. That's because it's easy for someone who steals a debit card to forge a signature, since cashiers usually don't examine the signatures on the backs of debits cards. Furthermore, not all debit card users sign the backs of their cards. PINs are usually kept secret, which makes it harder for thieves to use PIN-based cards. However, Consumer Reports notes that there have been security breaches in which hackers have stolen PINs from computer databases.

Overdrawing Accounts

    It may be harder to keep track of your checking account balance because of the delay in withdrawals for signature-based purchases. People who forget about such transactions may think they have more money in their accounts than they do. As a result, they might make other purchases that exceed their account balances. Therefore, debit cardholders' future purchases may be rejected until they increase their balances to cover all transactions.

Card Terms

    You should check with your bank to determine what type of protection you have when you sign for debit card purchases instead of using a PIN. According to Consumer Reports, debit card users usually have better fraud protection if they sign for their purchases. Some card issuers provide zero liability for debit cardholders. That generally means you won't be out any money if someone fraudulently withdraws cash from your debit card account. In such cases, the bank that issued the card would restore the stolen funds. However, some PIN-based transactions may be excluded from card issuers' zero-liability policies.

Sunday, September 26, 2004

Can a Collection Agency Take Money Out of Your Check for a Home Foreclosure?

Can a Collection Agency Take Money Out of Your Check for a Home Foreclosure?

When you go through the foreclosure process, your personal assets are at risk. If the lender decides to pursue a case against you at the end of foreclosure proceedings, a garnishment order can be signed against you. However, because court cases are expensive, many lenders do not pursue this type of judgment.


    When your house goes through the foreclosure process, it is typically sold to the highest bidder to settle the debt owed on the property. However, at the end of the foreclosure process, the lender may still be owed a significant amount of money if the sale price of the home was less than the amount you owed on the mortgage. In this case, the lender sometimes can take you to court to obtain a deficiency judgment for the difference owed on the house. While foreclosure proceedings are ongoing, a deficiency judgment cannot be ordered and your wages cannot be garnished by a collection agency.

Time Frame

    A deficiency judgment permits a collection agency to attempt to access money by freezing bank accounts or garnishing wages. Court judgments are typically valid for up to 20 years, and your wages can be garnished until the debt is settled. The lender must go through the court to obtain a notice for wage garnishment, which is presented to your employer before your employer is required to take funds from your paycheck.


    In some cases, the lender is not eligible to pursue a deficiency judgment against you. For instance, in some states, if you attempted a short sale prior to foreclosure, the lender may not be able to collect any additional money owed after foreclosure proceedings have ended. Familiarize yourself with your state's laws regarding your rights for wage garnishment.


    Certain funds cannot be garnished to settle a mortgage debt. Exempted funds include Social Security benefits, unemployment benefits, veterans pay and disability payments. Also, a cap is placed on the amount the collection agency can garnish. According to the United States Department of Labor, no more than 25 percent of your disposable income can be garnished from a paycheck.

How to Manage Consumer Debt

How to Manage Consumer Debt

The ability to manage debt properly doesn't come easy for some consumers. As a result, many consumers accumulate a heavy debt load, which creates a major financial burden. Whether you have a little or a lot of debt, there are techniques to help you manage debt. Proper management can lead to a better credit score, and you're likely to pay off your debt sooner.



    Determine how much you can afford to spend on debt. Get rid of debt faster by using your disposable income to eliminate balances. Write down your monthly expenses and subtract this number from your income. Allocate any extra money to debt payments.


    Fina an extra source of income to augment your take-home pay. Lack of extra income impedes debt elimination efforts. Create a plan to bring in more money. Turn your hobby or talent into a side business or seek a more lucrative job.


    Be sure to pay at least the minimum payment due on your debts. Even if you don't have a lot of extra money, aim to pay your minimum each month to avoid a negative credit rating.


    Pay more than your minimum, if possible. Pay down debt faster by doubling or paying a lump sum on your debt each month. Paying $500 a month can reduce a $6,000 debt in approximately 12 months, depending on the interest rate.


    Destroy credit cards. Avoid accumulating additional debt by cutting your credit cards in half or removing them from your purse or wallet. Carry cash and limit credit card use.


    Seek professional help. Obtain a lower interest rate on credit cards and pay off your debt within a set time frame by contacting a debt management company. Research companies and select a non-profit organization. These particular companies often do not charge a monthly fee, or they may offer a sliding payment scale for the fees.


    Research consolidation options. Home equity loans, refinances and debt consolidation loans typically offer lower rates and fixed terms. You may be able to consolidate your debt and pay it off sooner. Contact a loan officer to discuss your debt consolidation options.

How to Clean a Credit Report With a Default Judgment

A judgment on a credit report is bad news. Potential lenders will look at this as a serious blemish. Any judgment means that you failed to pay an obligation--probably after repeated attempts to collect the debt--and thus the original lender charged-off that debt. A charge-off means a lender has given up hope on collecting and has taken the debt as a loss. Cleaning up judgments can be simple; but for old debt, it can be a struggle.


Cleaning a Credit Report With a Default Judgment


    Pull a copy of your credit report. The federal government mandates that all consumers get access to one free report each year. See resources for this link. Make sure to print out a copy of your report for your records.


    Verify the debt as outstanding. Go through your financial paperwork and determine if you've paid the debt in the past. If you have, file a complaint at the credit bureau reporting the error. The three major credit bureaus are: Trans Union, Equifax and Experian.


    Find out the holder of the judgment debt. Often an original lender will sell a bad debt to a collection firm at a reduced price. Most often these collection companies hold the judgments on credit reports. Sometimes the name of the company will be listed on the credit report, and sometimes not. You may need to do some research or contact the credit bureau for further information.


    Contact the holder of the debt and either pay it off or work out a payment schedule. Write up a budget that will allow you to pay off the debt quickly and responsibly.


    Write to the credit bureau as soon as the debt is satisfied. They should remove it within 60 days.

5 Things You Need to Know About Your Credit Score

A number of factors affect credit scores --- even consumers who consider themselves financially responsible may inadvertently be lowering their scores. However, one of the biggest credit myths is that consumers only have three scores generated by three major credit-reporting companies. Consumer credit scores actually vary among creditors and lenders.

Scoring Models

    You may have any number of credit scores, depending on how creditors and lenders handle their credit checks. Consumers often check their scores with three well-known credit-reporting companies: Experian, Equifax and TransUnion. Tracking your scores with those companies may give you a broad idea of your credit rating. However, the score a creditor or lender sees is likely different because credit-scoring models vary. For example, mortgage lenders often check FICO credit scores, and a consumer's payment history with creditors and lenders accounts for 35 percent of that score. Yet payment history affects 32 percent of the VantageScore that was developed by Experian, Equifax and TransUnion.

Payment History and Debt Load

    Paying all of your bills on time creates an excellent payment history with creditors and lenders that helps boost your credit score, but that doesn't guarantee you'll have a high score. Credit-scoring models take other factors into account that may drag down your score. For instance, the amount of debt you owe affects 30 percent of your FICO score. Financial advisers often recommend that consumers use no more than 30 percent of their credit lines at all times to prevent a drop in their credit scores.


    Not using credit cards or not taking out loans won't give you a stellar credit score. Credit scores are a measure of how people manage their finances --- therefore, consumers need to pay off credit cards or loans to establish a financial track record and credit score that represents their creditworthiness. People who don't have credit histories often can't get home loans, rent apartments or buy cars without having a co-signer with a satisfactory credit rating on their loan or lease applications.

Married Couples

    Spouses have separate credit ratings, so an individual who has a poor credit history doesn't automatically establish a desirable credit score by marrying someone who has a high score. However, spouses who establish joint accounts for credit cards, a mortgage or other loans share the financial information from those accounts. Therefore, the credit scores of both spouses may increase if they manage their joint accounts properly.

Free Credit Reports

    The U.S. Fair Credit Reporting Act allows consumers to receive one free credit report each year from Equifax, Experian and TransUnion. However, the law doesn't require the companies to give consumers free credit scores each year. Credit scores are separate from credit reports: You may need to pay a fee to get your credit score from a credit-reporting company.

Saturday, September 25, 2004

What Is a Secured Checking Account?

What Is a Secured Checking Account?

In addition to the financial difficulties of paying off overdue loans, bad credit can make it difficult for a borrower to develop any type of positive credit history. Once deemed a credit risk, many lenders and banks avoid transactions with customers with a history of bad credit. Secured financial services such as checking accounts -- sometimes called second-chance accounts -- allow customers with poor credit access to a checking account.

Secured Checking Basics

    Where traditional checking accounts give customers access to all the funds in their account, a secured checking account requires a portion of the money used to open it to be held in reserve. Similar to a security deposit when renting a property, the bank holds these funds in a separate savings account on the chance the account holder receives an overdraft fee or other penalty for a returned check. If the account holder doesn't repay the fee to the bank, it holds a portion of the security deposit when the account is closed.

Security Amount

    Although security deposits vary by bank and may also vary by the account holder's credit risk, many banks require secured checking account holders to contribute $200 as a security deposit. These funds cannot be directly accessed by the account holder until the account matures into a traditional checking account or the account is closed. For example, if a customer initially places $500 into a secured checking account with a $200 deposit, his checking balance will only reflect $300. After demonstrating proper checking history, the $200 will be refunded into the checking account.

Secured Checking vs. Overdraft Protection

    Secured checking accounts often don't come with overdraft protection that's common among traditional checking accounts. Because of this, if an account holder writes a check that draws on funds not present in his account, the bank returns the check to the payee, as secured deposits aren't used to cover overdrafts. If the account holder closes the checking account with a negative balance caused by overdraft fees, the bank uses the secured balance to pay outstanding fees and other penalties.

Rebuilding Credit

    Customers who must open a secured checking account rather than a traditional one should quickly begin repairing their credit in order to receive full checking privileges and have access to all the funds in their account. Customers should repay any outstanding balances and fees on previously held checking accounts to begin to clear their debt. Once all checking accounts have been adequately closed at a zero balance, the account holder should request the bank notify ChexSystems with information about the cleared debt. Account holders should request a free report from ChexSystems to verify that outstanding checking account debts have been removed from their record.

What Happens When Creditors Put a Lien on Your Home?

If a creditor, or collection agency, cannot compel you to bring your account current through letters and telephone calls, and it believes that you have available assets to pay your debt, it may decide to sue you for the debt you owe. If you cannot prove that you have already paid the debt, the court will typically grant a legal judgment to the creditor. After issuing a judgment, the court places a lien on your real estate property, including your primary home.

Public Record

    When a creditor places a judgment lien on your home, the lien is documented in the county or parish recorder's office. Once recorded, the documentation becomes public record. This means that anyone, including an employer, family member or complete stranger, can discover the lien by reviewing records at the recorder's office.

Credit Damage

    In addition to reporting the lien to the county or parish's recorder's office, the court permits the judgment creditor to report the lien to credit bureaus. Like other public records, such as bankruptcies, liens can severely impact your credit score. This can make it difficult to obtain future loans, credit cards or lines of credit.

Prevention of Transfer

    A lien on your home creates a financial interest in the property for the judgment creditor. This financial interest must be eliminated by satisfying the judgment debt before a transfer of ownership in the property can occur. This means that you must pay the judgment before you can sell or transfer the property. If you cannot satisfy the judgment, either from your income or from the capital gains you earn from the sale of the home, a sale or transfer cannot take place.


    A judgment lien on your home gives the lienholder the option of forcing the foreclosure of your property to satisfy the judgment debt. In a judgment foreclosure, the court orders the sale of the home through an auction, and uses the proceeds to pay your creditor. The judgment creditor may opt for foreclosure if it discovers you have enough equity in your home to pay the debt. However, the mortgage lender's interest in the property takes precedence over the judgment creditor's interest, which means that if you have little or no equity in your home, the creditor stands to gain little by forcing a foreclosure.

The Right Credit Card to Debt Ratio

Your credit score is an important tool for your financial endeavors. A high credit score helps you obtain a mortgage or other loan at favorable interest rates. Credit card companies consider your credit score when deciding your interest rate and credit limit. One of the factors used to determine a credit score is your debt-to-credit ratio, which is the amount of debt you carry relative to your credit limit.

The Magic Number

    According to MSN Money, you should aim to keep your debt levels to no more than 30 percent of your available credit to improve your credit score and be attractive to lenders. Anything lower than that number would help even more. About 30 percent of your credit score is determined by how much you owe, and the lower your debt-to-credit ratio is, the more it boosts your score.


    Calculating your debt-to-credit ratio is simple. Tally all of the credit available to you on your credit cards, and add up all your credit card debt balances. Divide your debts by your available credit to get your debt-to-credit ratio. For example, if your available credit (or credit limit) is $20,000 and you owe $10,000, your debt-to-credit ratio is 50 percent. Because it is recommended that your debt-to-credit ratio be 30 percent or lower, aim to get your debts down to no more than $6,000 if your credit limit is $20,000.


    Because your debt level accounts for almost one-third of your score, a high debt-to-credit ratio will bring your score down. If you are carrying too much debt, lenders may be less willing to loan you money, because you have other debt obligations with little room to borrow additional money to pay them off. Lenders will question whether you will be able to repay any new loans. To compensate for that risk, lenders may charge you a high interest rate.

Bring it Down

    If you need help to bring down your debt levels, create a budget. Note your sources of income and how much money you make. Compare that to your expenses. Cut back on expenses so income exceeds expenses. Use that "profit" to pay down your debt so your debt-to-credit ratio is less than 30 percent. The Consumerism Commentary website recommends reducing your debt by using either the snowball or avalanche method. The snowball methods starts by paying off your smallest debt balance, then moving on to the next smallest balance. The avalanche method starts by paying off the debt with the highest interest rate, then moving on to the debt with the next highest interest rate.

Can You Add Secured Personal Loans to Debt Relief Programs?

When you enter a debt relief program, your credit counselor will likely attempt to move all of your debts through the program. Even personal debts can be added to the debt relief program, but it is not always in your best interest to take this step. While debt relief can save your credit and reduce your total debt, it can also be very costly in the long run.


    The goal of a debt relief program is to move you out of debt quickly. This is accomplished by paying off your existing loans with new loans, typically issued by the debt relief company itself. The company negotiates for lower payoff quotes with your existing lenders. As a result, the total debt remaining is only a fraction of the prior existing debt. In order for debt relief to be effective, as many debts as possible should be paid off. This includes personal debts, even if they are not secured with an asset.


    The main benefit of debt relief is to reduce the total amount you owe lenders. Contrary to what some advertisers say, debt relief will not save your credit immediately. You will still be in debt, just to a new lender, and the process of closing your existing loans can actually harm your credit. You will still have interest on your new debt, and this can make the new loan costly. However, the total sum is reduced, and you may avoid default on multiple loans through a debt relief program. By moving all of your debts into the new loan, including personal loans, you have the best chance of reducing your debt load.


    Debt relief often reduces debt at the expense of many other financial goals. By settling your loans in large numbers and closing them down, you will see a drop in your credit score. Further, you may actually be able to save money by closing loans yourself than you will with a debt relief program. By negotiating loans yourself, you can only settle those loans that are beyond your ability to pay currently. Those loans you can pay, such as small personal loans, would not be added to your new, large settlement loan. You can also prioritize loans based on interest rate. When working independently, you can pay down the most costly loans first and save the cheap loans for the end. Often, you will actually spend more money going through a program -- which will always cost a fee -- than going it alone.


    The Federal Trade Commission now prohibits debt relief programs from collecting upfront fees. It does this to protect consumers from falling for debt relief scams; there are plenty of scams on the market. Beware of any debt relief counselor who promises results that appear to be "too good to be true." Always factor out the total costs of the program versus savings you will obtain to determine if the program is actually helpful or just another form of predatory lending.


    If you are suffering from the cost of too much debt but do not want to use a debt relief program, contact the Consumer Protection Agency to ask for advice. The organization can teach you about limitations on the debts you owe, and you may find the lender no longer has a right to collect. You may also learn you qualify for bankruptcy protection. Though this step is scary, it is designed to help people who can no longer afford the burden of their debts due to life's hardships. Bankruptcy rotection can be a much-needed assistance to those who qualify.

Friday, September 24, 2004

Financial Help to Clear Up Personal Credit Issues

Personal credit issues can negatively impact your finances. Poor payment habits and high debts lead to low credit scores. The consequences include loan rejections and higher interest rates. Fortunately, you can clear up common credit issues by learning better ways to manage your finances and credit.

Managing Accounts Online

    Signing up for online account management programs to pay your creditors doesn't require exceptional computer skills. You can set up your monthly bills so that creditors automatically deduct the money from your personal bank account. This method requires good budgeting and having funds in your account when the bank drafts occur.

Cash vs. Credit Cards

    Carrying cash and limiting the use of credit cards is another method to help clear personal credit issues and improve your finances. Using credit cards and then quickly paying off the debt helps your personal rating. If you don't pay off the debt and choose to carry a balance from month to month, this further damages your credit rating. Aim to pay off credit card charges every month to keep debt to a minimum.

Talk with Your Creditors

    Asking creditors and lenders for help can protect your credit rating and help your personal finances. The first response to cash-flow problems may include skipping a payment and then dodging phone calls from your creditors. "Disappearing acts" do not help the situation, and with zero communication, creditors will charge late fees and possibly send your delinquent account to collections. On the other hand, communication at the first sign of trouble can open the door to different options. For example, you creditor may permit you to miss a payment or two without penalty, reduce your minimum or offer an extension on due dates.

Increasing Disposable Income

    A lack of disposable income is often linked to credit problems. Plus, there's a greater chance of using credit cards for essentials when cash is low, which can bring on excessive debt and a lower credit score. Insufficient funds to pay creditors and lenders has a snowball effect that begins with a missed payment.Think of possible solutions to cash-flow problems. Approach your employer about a raise or overtime work, or look for part-time employment to increase weekly income. Earn an extra $100 a week and you've increased your monthly income by $400 a month.

How to Apply Government Grants to Help You Consolidate Debt

How to Apply Government Grants to Help You Consolidate Debt

If you have found yourself in a situation were you are having trouble paying your monthly credit card bills then you should look into the many options that are available to you so that you can consolidate your debt. A Government Grant can be a great way to get help with eliminating your debt so that you do not have to have the added stress of credit card bills.It is hard now for many people to keep up with the increasing price of food and gas so many of us have used our credit cards to purchase those things that we need. The major issue with using your credit card to purchase items we can not really afford is that when it comes time to pay those credit cards we find that our incomes have not increased at the same rate as the things we are purchasing have and it makes it hard to pay those credit card bills.



    It is hard now for many people to keep up with the increasing price of food and gas so many of us have used our credit cards to purchase those things that we need. The major issue with using your credit card to purchase items we can not really afford is that when it comes time to pay those credit cards we find that our incomes have not increased at the same rate as the things we are purchasing have and it makes it hard to pay those credit card bills.


    Getting a Government Grant to pay off those bills can be a great option for you because every year there is grant money that is available that goes unused. You need to know were and how to apply for this money because it is important to get out of debt and get your finances in order.


    When searching for a Government Grant keep in mind that they are looking for someone who is in need of the money. If you have got in a situation were this is your only option to get out of the debt then you stand a great chance of qualifying for the grant money.


    Remember that you want to get rid of your credit card debt and finding a Government Grant to help you do so can be a great option for you.

Thursday, September 23, 2004

How to Pay Off a Huge Amount of Credit Card Debt in Six Months?

A large amount of credit card debt can be overwhelming, especially if you are dealing with defaulted interest rates, late and over limit fees and finance charges larger than your minimum payment. Paying off credit card debt requires a solid budget plan and a bit of math to figure out the order in which to pay your credit cards off.



    Write a list of your credit card accounts, credit card balances and interest rates for all of your cards.


    Call the credit card company that issued you the lowest interest rate card. Ask if you can transfer the balance of the highest interest card onto the lowest interest card, if you have room on it. Balance transferring allows you to pay off your debt at a lowest interest rate, costing you less money over the six months.


    Divide your total credit card debt amount into six equal parts. The actual amount you need to repay in six months will be slightly higher due to finance charges. This figure gives you a ballpark figure that you need to put towards your credit card debt monthy.


    Examine your budget. Try to cut out as many unnecessary expenses as possible so you have extra money to put towards paying off your credit cards as quickly as possible.


    Pay your highest interest credit card first until it is completely paid off. Continue paying off the cards in order of interest rate. The only reason you may want to consider paying off a lower interest credit card first is if the balance is significantly higher than your high interest cards.


    Talk to your bank or credit union about a debt consolidation loan if you are unable to cut enough expenses or get enough money together to pay off your credit card debt in six months. Debt consolidation loans often have lower rates than your credit cards. You also only need to make one payment per month instead of one for every credit card.

Wednesday, September 22, 2004

Can Wages Be Garnished for Medical Bills?

Medical bills are considered unsecured debt, meaning that there is no collateral to cover them. As with debt incurred with credit cards or personal loans, an unsecured creditor must first sue and win a win a judgment before it can take action to collect the debt. However, once they obtain a judgment, medical bill creditors can garnish wages, but they must adhere to the regulations and procedures governing all other unsecured creditors.

How Garnishment Works

    After a medical creditor sues and wins a judgment, your employer receives a notification to hold back a portion of your wages to be paid to your creditor. Though it varies in some states, most often a creditor can only claim 25 percent of your net income. There is also a portion of your income up to 30 times the federal minimum wage that is exempt from garnishment. For example, the current federal minimum hourly wage is $7.25, which means that $217.50 (30 x $7.25) of your weekly pay is exempt from garnishment to pay medical bill creditors.

Exempt Income Sources

    There are other sources of income that are exempt from garnishment. Government assistance such as welfare benefits are not eligible for garnishment, nor are Supplement Security Income (SSI), Social Security, unemployment benefits, and student loans, grants or work-study payments. In addition, most pension and retirement plans are immune to garnishment. Not only are these exempt as income, but any savings you build using them is also protected from seizure by an unsecured creditor.

Modifying the Judgment

    Before the garnishment begins you'll be given a notice of garnishment. Once you receive this you can file to have a hearing. This hearing is your chance to explain why the garnishment amount should be modified or lowered. You'll need proof of your income, as well as your monthly expenses, such as rent, food, utilities or medical care.

Employment Protection

    An employer cannot fire you for a single wage garnishment. However, there is no legal protection if you are being garnished by more than one creditor or if your wages are garnished more than once.

Tuesday, September 21, 2004

How to Identify Debt Settlement Fraud

Settling your debts for a fraction of what you owe sounds tempting, but companies that promise to help you do this are often fraudulent, consumer advocacy website Debt Settlement Fraud warns. Settlement company salespeople make impossible promises to lure you in and earn a commission, and some firms collect up-front fees from you, even though the law prohibits advance payment, then fail to negotiate settlements. You might be mislead about the consequences of debt settlement on your credit bureau reports. Avoid these issues by being alert for debt settlement fraud.



    Ask the debt settlement company for contact information if it solicits you on the phone. Fraudulent companies refuse to give out a name and address and insist on immediately enrollment and payment for their programs. Hang up on evasive companies that initiate contact with you and seek out a debt settlement firm on your own.


    Contact the Better Business Bureau to check the debt settlement company's rating. The BBB will list any complaints against the company and whether they were satisfactorily resolved. Call your state attorney general's office to do some additional checking if you suspect the company might be fraudulent.


    Ask the settlement company if it is a member of the Association of Settlement Companies, a trade group that promotes good industry practices. Confirm membership on the association's website if the company claims to belong to the group. A fraudulent company will not be a trade group member and may lie about that fact.


    Ask the settlement company about the effects of debt settlement on your credit rating. Fraudulent companies assure you that no negative effect will occur, but a July 30, 2010, article in The Washington Post warns that your credit score always goes down when you stop paying your bills to save up money for a settlement. The late and missed payments leading up to your settlement appear on your credit reports for seven years, and creditors can still call you to demand payment until a settlement agreement is reached. You continue to rack up late payment fees, and your creditor can refuse to agree to a settlement or even sue you. A legitimate settlement company is honest about these possibilities.


    Inquire about getting a written contract before you work with a debt settlement company. Fraudulent firms will not put their terms and promises in writing in a legally binding document, and they often demand payment before they perform any services, even though they cannot legally take your money until they settle your debts, according to The Washington Post article.

How to Prove Unreported Income Through Bank Deposits

There is a variety of reasons for wanting to prove unreported income through bank deposits. A parent seeking an increase in child support payments may suspect that the other parent is not making truthful statements about income. Or, a divorce court could ask for complete information about a person's finances. Also, mortgage companies often require proof of money in bank accounts as part of the credit approval process.



    Obtain records from your bank if you are voluntarily providing proof of income that is unreported yet documented by bank deposits. Visit your bank's online banking site to view and print statements from checking and savings accounts. Or contact the bank's customer service department to request the statements by mail. Obtain statements covering an entire tax year.


    Prove the unreported income by comparing the total amount deposited for the year against amounts listed on federal income tax returns. People with unreported income sometimes have more income on deposit in banks than they report on tax returns. Or they have more income than they report in a child support or divorce case. Matching up bank deposits and tax returns over the course of a year provides an accurate picture of unreported income.


    Consult with an attorney on methods for forcing a person to produce banking records in child support or divorce papers, if necessary. A judge can order a person to produce full banking statements showing the unreported income.

How to Get Out of Minor Debt

There are numerous money experts on TV and the Internet, each with their own prescriptions for debt reduction. There's the Snowball Plan, the Bucket Method, the Debt Diet and at least half a dozen other plans designed to separate you from even more of your money. Getting out of debt, especially minor debt, takes common sense, which is sometimes hard to find when you are constantly worrying about your bills. If you have minor debt, with just a little effort on your part, you can whittle that debt down to nothing. There are some free, easy, relatively painless ways to get started on debt reduction.



    Prioritize your debts. Your secured debts, those for which someone can take something away from you if you don't pay (your car, your home) are the priority. Next in importance are those for which your wages can be garnished. These will include child support payments, taxes and student loans. Credit card and other unsecured debt will come next. Make a prioritized list of all your debts, in the order in which they will be paid.


    Cut out spending on items that you don't need. Look at your credit card statements to get an idea of what you spend money on. If those items aren't absolutely necessary, stop buying them. Many families are doing without cable TV and putting that money toward their debt. If you have a landline and a cellular phone, get rid of one and use that money to pay off debt. Or, downgrade your cell service to a less expensive plan. Then, take the money you would have spent and put it toward the first item on your prioritized debt list. Even if you are sending the debt holder $20 per month, it is a start, and before you know it, the debt will be gone.


    Sell items you no longer need or use. Have a garage sale or sell the items online at Craigslist or Ebay. Garages and attics generally become the repositories for items that we no longer use, so those rooms are a good place to begin your search. Selling these items will bring in some immediate money that you can put toward getting out of debt.

Monday, September 20, 2004

How to Get Debt Free Without Filing Bankruptcy

Filing for bankruptcy is a stressful process that may not leave you debt free. Your creditors have the right to contest being included in a bankruptcy filing. In addition, a bankruptcy can remain on your credit report for up to 10 years. As a derogatory entry, a bankruptcy will severely damage your credit score and impede your ability to do everything from finance a new home to procure a cell phone contract. There are ways to become debt free on your own without filing for bankruptcy, but you must be willing to make sacrifices to pay off the majority of your debt.



    Stop making purchases with your credit cards. Although it may be tempting to purchase an item on credit, remember that when the interest rate is factored in, a small purchase may end up costing much more over time. An important step in eliminating your debt is to accrue as little of it as possible.


    Check your state's statute of limitations for unsecured debts. The statute of limitations is the length of time that a debt is considered legally enforceable. Put any debts you have that are beyond the statute of limitations in the back of your mind to deal with last.


    Call your creditors and attempt to negotiate a lower interest rate on your accounts. A lower interest rate can save you thousands over time and makes debts much easier to pay off.


    Consider requesting a debt settlement for debts that you know you will not be able to pay. If your creditor agrees to accept a settlement, the creditor will settle for less than the amount you actually owe on the account.


    Write down everything you spend money on for a period of two weeks. At the end of the two-week period, evaluate the items on your list. Choose to temporarily stop spending money on luxuries, such as having your car washed or your nails done. Instead, apply the money you would have spent on your luxuries to paying down your debts.


    Liquidate your assets to pay off your debts. If your home or car is worth more than you currently owe, consider selling it and buying a cheaper version. Use the extra money to put toward your debts. You will still have a roof over your head and a way to get to work, and once you are debt-free, you will have much more disposable income to put toward a new home or car.


    Polish up your resume and begin searching for a better-paying job. You can continue to live on your current salary while using the excess disposable income from the new job to work toward you goal of being debt-free.

Debt Sustainability Indicators

Lenders look at two key ratios when determining whether you can handle new debt with mortgage, auto or personal loans: your debt-to-income ratio and front-end ratio. Lenders also consider your three-digit credit score when determining whether you're likely to default on your new loan payments.

Debt-to-Income Ratio

    Before lending you money, financial institutions want to make sure that you'll be able to make your loan payments on time. To determine this, they look at the amount of monthly debts with which you're burdened and the size of your gross monthly income. Using this information, lenders calculate your debt-to-income ratio. In general, lenders want your monthly debt obligations, including your monthly mortgage payments, to equal no more than 36 percent of your gross monthly income. If new debt will push your ratio higher than this, financial institutions may hesitate to lend to you --- they won't think that you can sustain so much debt.

Front-End Ratio

    Lenders also consider your front-end ratio when determining whether you can afford to take on new debt. This ratio is similar to the debt-to-income ratio, but it only considers the relationship between your housing costs and your gross monthly income. Lenders prefer that your monthly housing costs --- a number that includes your mortgage payment, interest and any housing fees that you pay --- don't exceed 28 percent of your gross monthly income.

Credit Score

    If you have a high three-digit credit score, lenders might be willing to lend to you even if you already have a high level of debt. That's because a high score indicates that you have a long history of paying your bills on time. In general, if your credit score is 740 or higher on the popular FICO credit-scoring scale, lenders are usually more willing to work with you, even if your debt ratios are too high.

Making Improvements

    By reducing your monthly debt and boosting your gross monthly income, you can improve your debt ratios. This allows you to take on more debt. Be careful, though; You don't want to take on more debt than you can handle, even if financial institutions are willing to approve you for more of it.

How to Make Your Ex-Spouse Liable for His Debts

How to Make Your Ex-Spouse Liable for His Debts

The separation of financial debts and assets is one of many difficult aspects involved in getting a divorce, particularly when a couple holds joint assets. Courts and creditors alike consider several factors before making a former spouse solely liable for financial debts, including the circumstances surrounding a divorce, individual state laws and who signed the credit contract. Although a divorce agreement can not legally change who is liable for a debt, it can list your ex-spouse as the individual responsible for paying a debt.



    Obtain copies of your credit reports from the three major credit bureaus, Equifax, Experian and TransUnion. Review your credit-related activity, including any joint accounts obtained during your marriage. Make a list of the accounts, including the original loan amount, current balance, and monthly payment amount you believe your ex-spouse is liable for.


    Discuss the accounts with your former spouse and your divorce lawyers. Resolve the question of how much debt your ex-spouse is liable for during the equitable distribution phase of the divorce process. Include the debt your ex-spouse is liable for in your divorce agreement.


    Contact the lenders with whom you and your ex-spouse hold joint accounts. Ask the lender to close the account, or to revise your account contract so that only the person responsible for paying the debt is on the account. If the lender is unwilling to change the debtor to a single individual, ask the lender to put both you and your ex-spouse's mailing addresses on the account.


    Submit account modification requests to lenders in writing. Draft a letter indicating you want statements sent to both mailing addresses, and for them to notify you before an account becomes delinquent. While this does not make your ex-spouse solely liable for debt on a joint account, it may prevent the account from going to collections, and negative remarks on your credit report.

Sunday, September 19, 2004

How to Charge-Off Less Than the Full Balance of a Credit Card

How to Charge-Off Less Than the Full Balance of a Credit Card

A partial charge-off is an action taken by a consumer loan lender. Full charge-offs occur when a lender deems an account "uncollectible" and either writes the account off as a loss or sells the account at a lesser value to a collection agency. Both situations do not relieve you of the debt. However, in some extraordinary cases, partial charge-offs are awarded on consumer loans.



    Review all of your bills and your income. Do a debt-to-income ratio calculation (DIR). To do this, divide the sum of all monthly bill payments by your gross monthly income. If your DIR is well above 50 percent, you may have a chance for a partial charge-off. A high DIR may persuade a lender to at least review the option.


    Request a specific amount to be charged off. This can be either a dollar figure or a percentage. A specific number will tell the lender than you've done your homework, and have worked out what payment you'll be able to afford if a partial charge-off is granted.


    Draft a letter of explanation. This should be somewhat personal. If you've experienced a loss of employment, a medical procedure or a disability, this is the place to go into detail. Creditors want to see good faith and a full explanation of your hardship.


    Draft a goodwill letter. This is a professional business letter. It should include the account number, the date, your name and address, social security number, the specific amount you are requesting be charged off, and what the resulting balance will be.


    Make copies of both letters, account statements and any other documents (like income documents) supporting your request. Send all of these documents to the creditor with the goodwill etter on top (see Resources for a sample goodwill letter).


    Wait. It is up to the lender's discretion whether or not to approve the partial charge-off. It is by no means guaranteed.

Laws on Multiple Garnishments in California

If you owe money to a creditor and are a resident of California, your income may be subject to garnishment. This means your paycheck or bank account, or both, could be garnished. If you owe more than one debtor, your income can be garnished by more than one garnishment order as long as the total amount garnished does not exceed the maximum allowable under federal and state laws.

Garnishment Procedure

    Before anyone can garnish your bank account or your wages, they must first obtain a court order to do so in most cases. The only exception to the general rule requiring a court order is for some federal debts, such as taxes or student loans. The federal government can garnish a bank account or wages without going to court first. For all other creditors, they must first file a lawsuit against you in the appropriate court and obtain a monetary judgment against you. A judgment is a legal determination that you owe money to the creditor. The creditor may then execute on the judgment by using any legal means allowable under California state law, including garnishment.

Multiple Garnishments

    Under California law, multiple garnishments are allowed as long as the restrictions on garnishment are followed. California basically follows federal law. The federal government sets the minimum protection for garnishment with some states providing additional protection for residents. Under federal law, up to 25 percent of your disposable wages each week or the amount above 30 times the current federal minimum wage, whichever is less, may be garnished for most debts. California follows this rule.

Exceptions to Restrictions

    There are situations in which an amount above 25 percent of your disposable wages or 30 times the minimum wage can be garnished in California. If the garnishment is for a support order, your wages are subject to additional garnishment amounts. Up to one-half of your earnings each week can be garnished when the garnishment includes a support order. Bankruptcy orders and state or federal taxes can also increase the maximum amount subject to garnishment to 50 percent.


    California does allow a general exemption to garnishment. If you can show that your earnings are necessary to support you or your family, then you may qualify for an exemption. The exemption, however, does not apply if the debt was incurred for the common necessities of life, was incurred by an employee or is a family support or tax debt. In addition, under federal law, some federal benefits such as Social Security and Veteran's benefits are not subject to garnishment except for support, federal debts and some victim restitution orders.

Government Debt Relief Services

Government debt relief services include the federal bankruptcy process for individuals and businesses, as well as payment plans for delinquent federal and state tax liabilities. Not everyone qualifies for bankruptcy assistance or a tax payment plan and in some cases a debtor should hire an attorney for help.

Tax Assistance

    Failure to pay your taxes can lead to liens against your assets and in extreme cases jail time, warns the Internal Revenue Service. Tax bills incurred less than three years ago must go through the taxation agency and not the federal bankruptcy process. The Internal Revenue Service and most states offer installment payment arrangements. At the time of publication, people owing less than $25,000 in federal tax bills can apply online for a payment plan.

Chapter 7 Bankruptcy

    Chapter 7 bankruptcy discharges many pre-existing debts, with the exception of child support, alimony and court fines. Generally, a debtor must earn less than his state's yearly median income figure to file Chapter 7. At the time of publication, the annual median income level for a single Nebraska resident is $38,915, while the yearly figure for a family of four in Hawaii is $86,587, according to the U.S. Trustee Program. Chapter 7 will damage a consumer's credit rating for 10 years from the date of case filing.

Chapter 13 Bankruptcy

    People who want to keep more personal assets than permitted in Chapter 7 tend to request a partial debt repayment plan in Chapter 13. It takes three to five years to finish a Chapter 13 plan; during this time a debtor cannot get new credit accounts without a judge's permission. A Chapter 13 case damages credit ratings for seven years from the date of filing.

Corporate Bankruptcy

    Self-employed individuals and businesses in financial trouble can also take advantage of government debt relief services. Corporate Chapter 7 bankruptcy absolves the company owners of all business debts, but also dissolves the company's operations, notes the U.S. Securities and Exchange Commission. Court officials sell all business assets and distribute any proceeds to creditors and stockholders. People wanting to keep their businesses functioning can partially repay debts under Chapter 11 bankruptcy. Unlike other types of bankruptcies, you can manage personal debts through Chapter 11. An attorney's help is required to file any type of business bankruptcy.

The Consolidation of Marital Debt in a Divorce

The Consolidation of Marital Debt in a Divorce

Debt consolidation refers to rolling multiple debts into one single account, ideally with a lower interest rate or monthly payment than the original debts taken collectively. If parties to a divorce had significant debt before, the problem can only grow in divorce, thanks to attorney fees, child support and the addition of a new set of living expenses. But debt consolidation is not always possible for every party.

Marital Debt Division

    All states divide marital debt under either community property or equitable distribution (ED) laws. In community property states, courts seek to divide the total estate equally. In ED states, the focus is on dividing the estate equitably, or fairly; as fair and equitable aren't always synonymous, ED laws contain a list of factors justifying an unequal distribution in certain cases. Both types of states hold that debt acquired by either party during a marriage is marital and therefore divisible in divorce no matter whose name is on it.

Distribution of Debt

    Courts typically prefer to make an in-kind distribution of marital property and debt. This means that wherever possible, a judge will try to satisfy a desired division by giving each party debt and property items intact. With respect to debt, a court will seek to distribute debt in each party's name to that party wherever possible. The division is based upon the net value of an estate, which requires subtracting the total debt from the total value of all assets taken together. As such, a party can appear to "get everything" in a divorce in terms of property but actually walk away with less value than the other side if he is also saddled with everything in terms of debt.

Debt Management Options

    Debt payments can become unmanageable in light of child support payments, attorney fees and spousal support. To reduce or eliminate a debt load, some parties choose to extinguish as much marital debt as possible out of a sale of the former marital residence or through the sale or liquidation of other marital assets. Although courts are empowered to order parties to share in each other's debt, some parties may prefer to extinguish as many bills as possible to reduce the risk that the other side will file bankruptcy and leave them with all the responsibility for joint debt. In other cases, parties may pay off debt in a refinance of real property or through debt consolidation loans taken through banks, finance companies or credit cards.


    Debt consolidation is sometimes impossible in a divorce, as parties' credit ratings can plunge so low that even the low-end credit market won't touch them. In some cases, the only realistic debt management option is to file for bankruptcy protection under Chapter 7 or 13 of the United States Bankruptcy Code. Both forms of bankruptcy allow debtors to keep assets like homes and cars if they can continue to make the payments. After discharge, the bankrupt party receives a fresh start--albeit with a substantially lower credit score.

Saturday, September 18, 2004

How to Raise Money to Get Out of Debt

How to Raise Money to Get Out of Debt

Millions of Americans are in debt and are working over time just to pay the debt down. If you have a burning desire to get out of debt, then you can do it. Here's some tips on how to get out of debt.



    Have a garage sell and sell stuff around the house. You can probably raise a few thousand just by holding a garage sell. This is the fastest way to pay off your debt and you can even get rid of the junk around your house.


    You can also pay down your debt by getting a second job. If you have a second job, then instead of paying your debt with one stream of income. You can have an extra stream of income to pay down your debt.


    Another way to raise money is by writing articles. If you write for more then one site, then you can raise more money. The best article sites to write for is bukisa, ehow and associated content.


    If your garage sell don't go successful, then sell the rest of your products on e-bay. There are hundreds of millions of people on e-bay and products sell really fast. If you want to sell some thing in less then a few weeks, then I think e-bay is the best place to get products sold quick.


    If you have assets like stocks and bonds, then sell them for cash. You can even take some equity out your home to pay off your credit cards.

How to Remove Evictions From Your Credit Report

Lease agreements are legally binding contracts between an individual and a property owner. When one party breaks the agreement, typically the renter, an eviction will occur. The property owner will often report this breach of contract to credit-reporting agencies, which will negatively impact your credit report and credit score. While the negative information cannot immediately be removed from your credit report, after seven years, the information can be removed. Often, the renter will have to request the information be withdrawn following this process.



    Verify the eviction has been reported to the credit-reporting bureaus. If an outstanding court judgment is owed, pay the debt in full.


    Contact the county clerk where the court judgment was issued and request a copy of the record indicating the debt has been satisfied and the case is closed.


    Contact the three major credit-reporting bureaus, Equifax (800-685-1111), Experian (888-397-3742) and TransUnion (800-493-2392), to report the debt has been paid and request the information be removed from your credit report. Each bureau will require documentation be submitted to support your claim. Follow the instructions on how best to provide the requested information.


    Contact all three credit-reporting bureaus again in approximately six months to ensure the eviction has been removed. If it has not, continue working with each bureau to ensure it is properly removed.

Friday, September 17, 2004

Can a Payday Loan in Virginia Be Prosecuted As a Bad Check?

When a person takes out a payday loan, he is often required to cut the payday loan lender a postdated check. When the loan and any interest fees attached to it come due, the lender cashes the check. If the check bounces, the person who issued the check may be required to pay additional fees. However, in Virginia, he won't be criminally prosecuted for passing a bad check.

Payday Loans

    Payday loan lenders charge high rates of interest for loans that must be paid back shortly after they are taken out. If a borrower fails to pay back the money, the lender will exert pressure on him to pay. While this can be done through civil means, some lenders may also threaten the borrower with a criminal case. Yet, according the Consumer's Union, few prosecutors are willing to charge payday borrowers for passing bad checks.

"Hot" Checks

    There are a number of so-called "hot check" laws on the books in various states, including Virginia. These laws are designed to impose criminal penalties on people who pay for purchases with checks that they know to be phony or to be linked to an account with no money in them. In Virginia, if the check is for $200 or more, the crime is a felony.

Virginia Laws

    However, a person cannot be charged for a hot check in Virginia if his check to a payday loan lender bounces. According to the Consumer's Union, this is because the prosecutor cannot prove that the person maliciously fooled the lender. The borrower may genuinely have believed that there would be sufficient funds in his account on the day the check was cashed by the lender.


    The only circumstance in which a check passed to a payday loan company in Virginia could be prosecuted as a hot check is if the person committed a fraud in passing it. For example, if the person who passed the check used someone else's check or if the check was forged, then the person would be liable for fraud charges -- but not for having the check bounce.

What Is a Split Credit Report?

What Is a Split Credit Report?

If you pull your credit report and notice that prominent accounts are missing from your file, you may have a split credit report. Should your credit file be split by a credit bureau, take steps to correct the information as soon as possible.


    A split credit report occurs when a credit bureau has so much information on you that your credit file is split by the bureau's computer system. Another cause of a split credit file is if a creditor reports incorrect information on you that results in the credit bureaus assigning you a new credit file.


    A split credit report will result in you being assigned two credit scores rather than only one. Your credit scores will be based on the information present on each split report.


    A split credit file can cause you to be turned down for credit that you deserve to be approved for.


    If one of the credit bureaus is reporting a split credit file on you, that does not mean that all your credit reports will be split. The credit bureaus operate independently, and it is unlikely that you will have more than one split credit file.


    Contact the credit bureaus immediately if you notice one of your credit reports has been split. Once the error is brought to the bureaus' attention, your credit report can be merged to ensure that your report and score are both accurate.