March 2005 ~ Credit And Debt Management

Thursday, March 31, 2005

How to Write an Amendment to the Circuit Court

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A circuit court is a place for appeals to be heard. Papers filed at this court must be as accurate as possible. Once you have submitted papers to the circuit court, you may not take them back. You will need to submit new papers to the court if any section of your original filing needs to be amended before the hearing. Filing an amendment is much like filing an original document. The main difference is that the court may not accept the amended document if a valid reason is not given for the change.

Instructions

Review your original filing. Make notes to remind you of all of the changes you want to make to the document.

Draft a new document mirroring the first. Include all of the changes you want to make to each section.

Draft a letter to the court highlighting the changes. Specify the sections, paragraphs and lines that have been changed. Explain why you felt the need to make each change.

Submit the letter and your new document to the court. Drop it off at the court clerk's office and ask for a receipt that specifies the name of the amended document.

How to Meet Debt Obligations

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Your debt has been piling up and now it's time to start meeting your debt obligations. Taking care of your debt will improve your credit score and it will improve your mood--you'll no longer have to worry about paying debts once you make that final payment. Unfortunately, there's simply no easy way out of paying your debt. You'll need to be frugal and financially responsible. Once you learn these techniques, you will hopefully never be in debt again.

Instructions

Get rid of your credit cards without closing the accounts. Credit cards make it easy to spend money that you don't have, but closing your credit card accounts can negatively affect your credit score. Cut up your cards or freeze them in water to make it difficult to use them while you try to meet your debt obligations.

Determine how much debt you have and when the bills are due. Take a look at all of your statements. Add up the total balance to see how much you owe. Put your debts in order of due date so that you always pay bills on time, avoiding extra late fees.

Pay more than the minimum due. As you pay your bills, be sure to send extra money to apply towards the principal balance. If you pay only the minimum, it will take several years to get out of debt.

Apply extra money towards your debt. When you get a bonus, a monetary gift or an unexpected raise, take that money and pay down your debt. Yes, it's boring, but you'll feel much better when you've paid everything off.

Budget your money. When you plan for your expenses, it's easier to keep track of spending habits and avoid overspending. For example, you can allot yourself just $200 per month to spend on food and work toward only spending that much money. This should free up some money that you were previously spending on unnecessary items, so use that extra to pay down more debt.

Remain diligent until you've met all debt obligations. After awhile, you may want to celebrate by buying more things. But don't do this. It will only put you back into debt. You must remain frugal until you've paid off all of your debts.

How to Consolidate Secured Debt

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Getting out of debt isnt easy. For this reason, many people consider a secured debt consolidation loan. Consolidations are beneficial because they combine all your outstanding debts into one loan. Thus, you dont have to worry about varying interest rates, payment amounts and due dates. There are many different types of debt consolidation loans. To ensure loan approval, its best to have collateral.

Instructions

Check your credit report before applying for a loan. Although secured debt consolidation loans involve collateral, credit checks are necessary. Whats more, your credit rating influences the debt consolidation loan rate. Acquire a free credit report online, and check the report for inaccuracies and errors.

Apply for a home equity loan. If you own a home, a home equity loan or second mortgage can function as a secured debt consolidation loan. Contact a mortgage lender and discuss your options.

Choose the best collateral or security for the loan. If you dont own a home, use a vehicle title, boat or other personal property as collateral for the debt consolidation loan. The propertys worth must be equivalent to the loan amount.

Determine which debts youll include in the consolidation. If your debt consolidation loan amount isnt enough to include all your debts, consolidate the debts with the highest interest rate.

Compare debt consolidation loans and rates. Loans vary according to lender. Thus, its important to shop around and compare different loans and interest rates. Contact a loan broker or go online and request a no-obligation loan quote. Quotes contain information such as rate, term and estimated monthly payments.

How to Sell Your Used Car Fast

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Needing to sell your car fast be stressful. Cars are a large expense for many people, and you have to find a person who needs and wants your type of car, and also has the cash to pay for the car. Rather than listing your car for sale in one place and then waiting for the phone to ring, there are several things you can do to increase the chances of selling your car quickly.

Instructions

Call your local bank's loan department, and ask for the Blue Book value on your vehicle. Be prepared to provide the agent with the make, model, mileage, condition and features that your vehicle has. As an alternative, go to kbb.com, and enter the values into the computer to get the Blue Book value for private sales. The Blue Book value is the price you can expect to get for the type of car you are selling and condition it is in.

Set your starting price for the vehicle. Depending on how fast you need to sell, you may need to lower the price under the Blue Book value.

Clean the car inside and out. Don't even attempt to sell the car if you haven't taken the time to make it look as nice as possible. Consider a detailing service if you do not have the time.

Put "For Sale" signs in the car windows. This will serve as a moving advertisement every time you drive the vehicle or anyone walks past it or drives past it when the vehicle is parked. Find a parking lot that allows vehicles for sale to be parked in it, and park the vehicle near the end of the lot for maximum viewing from cars driving past the lot. Do not park the car long-term unless you know that the lot allows you to. If you are unsure, contact the lot manager for permission.

Post a classified ad in newspapers both in your city and surrounding cities. There is a charge for posting a classified ad, but the cost may prove to be worth it if the car sells. Also post the ad on area websites that offer free classified ads.

Visit local grocery stores, libraries and banks to see if these establishments have bulletin boards for you to post ads. Leave an ad in any establishments that allow you to post it.

Let everyone know that you are trying to sell your car--family, friends, fellow churchgoers, co-workers, neighbors and more. You never know who may know someone else in need of a car.

Adjust the price of the car as needed. Accept the fact that you need to sell the car fast, and that you are unlikely to get top dollar for it. A sold car is better than an unsold car in many situations.

How to Reduce Garnishment Payments

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Getting your paycheck and noticing a reduction in pay can spark panic. Less pay might result from a wage garnishment order sent to your employer. Creditors can request a garnishment from the court system if you refuse to pay a judgment. With garnishments, employers must withhold up to 25 percent of your income. In certain situations, such as delinquent alimony or child support payments, a wage garnishment can consume 50 percent of your pay.

Instructions

Go to your local court's clerk office and schedule a hearing to discuss the wage garnishment order. File a Claim of Exemption form. A judge needs to decide whether to reduce or eliminate the wage garnishment.

Ask for a reduction due to economic hardship. Inform the judge that you can't make a living because you're losing 25 percent of your paycheck. Show evidence of monthly expenses to inform the judge's ruling, such as copies of your income stubs after withholdings and recent statements for utilities, mortgage, auto loans and other monthly expenses.

Work with your creditor on this issue and politely ask the company to reduce how much they take from your pay each week. If agreed upon, the company will have to file any changes with the local court.

How to Pay Off Student Loan Debt Fast

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If you've gone to college and accumulated student loan debt, you're probably concerned about paying them off as quickly as possible. Having a lot of loan payments to make on a monthly basis can really rob you of wealth in the long term. The good news is that there are a couple of different ways to pay off student loan debt as fast as possible. Here's how to pay off student loans fast.

Instructions

Search for an employer that will help you to pay off your student loan debt. Some companies or government entities will actually help you pay off the balance of your student loans if you agree to work with them for a set amount of time. It may not be a bad idea to ask your current employer if you're already working.

Increase your intensity. Contribute all available resources to your outstanding student loan debt and pay it off as quickly as possible. Take on an extra job or sell things on eBay. Do whatever it takes to raise cash to devote towards pay extra on the student loans.

If you're still in school, consider beginning to pay off your student loan debt now. Work a summer job or donate plasma to raise cash. Don't spend more than you make and save as much cash as possible.

Avoid taking on any more debt while you're vigorously paying off your student loan debt. Don't strap yourself with additional debt such as car payments or credit card debt. They will only hurt your efforts in the long run.

Does Canceling an Unactivated Credit Card Affect Your Credit?

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Credit card activation means calling the issuing bank and following the instructions that come with your new card to make the account usable. You cannot make charges, get cash advances or do any other transactions without completing activation. Canceling your card before you activate it may affect your credit score, depending on how quickly you close the account.

Credit card companies do not immediately report brand-new accounts to the three credit bureaus. Your credit score comes from your TransUnion, Experian and Equifax credit reports, so that number only is affected once the account gets added to the credit bureau records, according to Bankrate writer Leslie McFadden. Reporting usually happens within one billing cycle, whether or not you activated the credit card.

The inquiry triggered by your credit card application affects your credit, even if you close the account before it is reported to the credit bureaus. TransUnion, Experian and Equifax all record a "hard inquiry" in their records when a card issuer pulls your credit report copies to evaluate you for a new account. This credit check costs you up to five points on your credit score, the MyFICO scoring website explains. Your score takes a bigger hit if you have other recent inquiries, especially if there are more than six, because that number marks you as a high bankruptcy risk.

Credit card cancellation lowers your credit score by changing your available credit as compared to what you owe, whether or not you completed activation. Your account balances ideally should not exceed 10 percent of your credit lines, although they can go as high as 30 percent before serious harm starts, MSN Money writer Liz Pulliam Weston explains. Your balance improves when you get a new credit line, but you lose the benefit by canceling the card rather than simply keeping it unused or activating it and using it sparingly.

Confirm the presence or absence of a canceled account on your credit reports by ordering free copies through AnnualCreditReport.com. Use this official website, the Federal Trade Commission advises, because it provides TransUnion, Experian and Equifax reports with no cost or required qualification purchase. Your credit score is safe if the account does not show up at all. The score likely dropped if you see it as a closed credit card. The activation status does not show up at all.

What Is the Difference on a 1099-A Between the Balance of Principal & the Fair Market Value?

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When a borrower defaults on a loan secured by property such as a car loan or mortgage or willingly abandons that property rather than continuing to make payments, the lender may take the property back through repossession, foreclosure or other legal action. On Internal Revenue Service Form 1099-A, a lender notifies a borrower that it has seized the property or considers it abandoned and will retake possession. Two pieces of information on the form the principal balance and the market value helps determine whether the borrower will face any tax consequences as a result.

Box 2 of Form 1099-A shows "Balance of Principal Outstanding." This is the amount owed on the loan at the time the lender reacquired the property or concluded that it had been abandoned. This total represents only the unpaid principal not any accrued interest, finance charges or other fees on the loan, such as late fees. Box 3 of the form shows "Fair Market Value of Property." This is what the property was worth on the date of abandonment or repossession, the date listed in Box 1. Fair market value isn't the same thing as the original sale price of the property. It's just what the lender could get for it now.

Form 1099-A simply notifies a borrower that the lender considers the property abandoned or that it has retaken possession. If the outstanding balance exceeds the fair market value of the property, the lender may try to recover the difference, or it could choose to cancel or forgive the remaining debt. If the lender cancels the debt, it sends a related form: the 1099-C, which tells exactly how much debt was forgiven. A lender that cancels debt may send both a 1099-A and a 1099-C, or just a 1099-C.

An important consideration is whether the loan secured by the property was a recourse loan, meaning the borrower is personally liable for the entire balance of the loan. For example, say you took out a $20,000 car loan, then defaulted with $15,000 left to pay, and at the time of default the car had a fair market value of $12,000. If the loan was a recourse loan, the lender may not only seize the car but can also come after you for the remaining $3,000. However, if it doesn't think it can get that money or if it doesn't think it's worth the trouble, it cancels the debt. On the other hand, if it was a nonrecourse loan, the lender may repossess the car but has no legal claim on the remaining $3,000. In that case, the lender has no choice but to cancel the remaining debt.

If the loan was a recourse loan, there will be a check mark in Box 5 of forms 1099-A and 1099-C. If so, the canceled debt may be considered taxable income for the borrower. On the other hand, if it was a nonrecourse loan, then the canceled debt doesn't constitute taxable income. As far as the IRS is concerned, a nonrecourse debt is fully satisfied when the lender repossesses the property. In cases of nonrecourse debt, Box 5 won't be checked on either form.

Alternatives to Credit Card Bankruptcy

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Credit card bankruptcy can help clear up your debts, but it will leave a lasting mark on your credit score making it difficult to borrow money in the future. There are alternatives to declaring bankruptcy, which will allow you to pay off your credit card debt and take control of your financial situation.

Debt settlement is when you negotiate with your creditors to lower your interest rates, monthly payments or to pay less than you owe on your debts. This option works best when you are already behind on your payments. You can use a debt management program or contact your creditors yourself. When you call your creditors have a lump sum available to offer as settlement for payment in full. Begin by offering a lower amount than you have to pay since the number is negotiated during the call. Do not send the payment in until you have received a letter stating that the payment will be considered payment in full. Any debt that is forgiven is taxable at the end of the year.

A debt consolidation loan will lower the amount you have to pay each month and often lowers the interest rate on your credit card debt. If you find your payments overwhelming then this option can help you change your current situation. This will not have a negative affect on your credit score, though you may have a difficult time qualifying for a debt consolidation loan if you are behind on your payments. If you use a second mortgage or home equity loan you are tying your unsecured credit card debt to your home, and if you cannot make payments on it in the future you may lose your home. Try to obtain an unsecured consolidation loan.

Another option is to set up an aggressive debt payment plan. First list your debts in order from the highest interest rate to the lowest. This is the order you will pay off your debts. Next you will need to set up a budget and find extra money to apply to your debts each month. You will need to cut your expenses or take on a second job to find the extra money. The more money you can find the sooner you will pay off your debt. Although this plan does require work and sacrifice it is the best option for your credit score.

Depending on the amount of credit card debt you have, you will need to make the decision that is right for your situation. If the debt takes up more than 50 percent of your income, you may be forced to file bankruptcy, otherwise you can likely turn the situation around. You may use the debt payment plan in conjunction with the other options to clear up the debt as quickly as possible.

Can You Get Bonded for a Job as a Cashier With Poor Credit?

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People with poor credit are perceived as being more likely to mismanage money or even steal, which keeps many of them from getting jobs where they handle money. However, avenues are open to this group that allows them to become bonded, thus increasing their chances of being hired.

You might assume you have poor credit because you've been late on payments here and there. However, it might not be as bad as they think. Find out what your credit score is. Any score less than 650 is considered to be poor, and then you may need to go ahead and seek bonding.

While you might have determined that your credit is not up to par, you do not have to count yourself out of the running for the sales job you've been eying. This is where bonding comes into play, and you might be surprised to learn that you are likely to be eligible to be bonded. The employer posts a bond, which amounts to an insurance policy, to protect himself if an employee steals from him or breaks the law in any other way. The bond pays the employer for any losses incurred.

Private insurance companies provide most bonds. One of the first things the company will do before deciding to bond a potential employee is check their credit report. People who are found to have poor credit are generally not bondable by most private insurance companies.

However, hope exists. Recognizing that the large and growing number of people who were unable to get jobs, especially where they were handling money, a program was developed to help. Thanks to the Federal Bonding Program, people with poor credit are able to be bonded and get jobs, such as cashiering.

The bonds issued through the program guarantee to the employer the honesty of people with poor credit, who are considered at-risk job seekers. The prospective employer does not have to pay for the bonds as they would with a private insurance company. Remember, regardless of whether are bonded, the company does not have to hire you if you have poor credit.

If you are having trouble getting a bond, look into surety bonds. These bonds work like others in that they provide the employer protection against loss or theft of money or property by employees. They are also costly. Application fees can start at $100. The riskier you are to insure, the higher your premium will be, so it is best to shop around before purchasing a surety bond. You could also be charged fees stemming from a host of charges the bond provider wants to recoup, including fees for sending faxes.

Good Credit Cards for People With Bad Credit

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When you have bad credit, you can get stuck in a vicious cycle. You need a credit card to help rebuild a good credit history, but your history prevents you from getting one. Fortunately, there are some good credit card options for people with bad credit. Some will help you build up your credit rating, while others are mainly for convenience or budgeting. Even if your credit rating is low, you should be able to find one that fits your situation.

Many banks will be reluctant to give you a credit card when you have bad credit. If you have had a savings or checking account with one bank or credit union for a long time, and if you've maintained a reasonably good financial history with that financial institution, it may be willing to give you a credit card. Many issuers who give credit cards to people with bad credit charge high interest rates, annual fees and even monthly service charges. Your own bank or credit union is more likely to give you a card with favorable terms, even if your credit is bad.

Secured credit cards are good for people with bad credit because virtually anyone can get one. The main requirement is having a deposit with which to secure the card. Many banks will accept a deposit of as little as $100 to $300. Once you make it, you will receive a credit card with a limit that is equal to the deposit. This will help you stay on a budget by limited your spending power. It will also help rebuild your credit if you make the payments on time every month. Jessica Seubert of Bankrate.com says many secured card issuers will let you open an unsecured account if you maintain a good payment record for a year.

Pre-paid credit cards are good for people with bad credit because they force you to stick to a budget. Even though the pre-paid card will have a Visa or MasterCard logo, it doesn't actually give you a credit line. You load it up with money, and this allows you to use it at any website or merchant where credit cards are accepted. Once you spend all the money, you cannot use the card until you load it up again. This prevents overspending because you can only spend money you already have rather than digging yourself into debt with a traditional credit card company. The Credit Card Guide warns that some pre-paid cards have high fees, so you should shop around for the best deal.

How to Keep Track of Debts

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In 2011 the U.S. Census Bureau reported that as a whole American citizens held $14,001,000,000,000 worth of debt in 2009. That being said, creating a system to keep track of and manage debt has become increasingly important. The good news is that most creditors are more than happy to update you on your debt status and may even be willing to work with you toward the goal of paying it off. The main ideas behind keeping track of debt are knowing how much you owe and organizing that information.

Instructions

Label one file folder per type of debt or income you have. Store these folders in a single place, such as a filing cabinet. This will make it easy for your to find and access all of your financial information.

Obtain official information about the debt you owe so that you know the exact total and can file this important information into your financial folders. You may need to call companies to request copies of debt statements.

Calculate how much debt you owe from credit cards, mortgage, loans, rent and other expenses. Type these figures into a spreadsheet, with rows for companies to which you owe money and columns for months. Save the spreadsheet on your computer and print out a copy to file into a financial folder with pay stubs, payment receipts and other current information.

Calculate your debt-to-income ratio by looking at the debt spreadsheet you created and factoring in your monthly income. Then determine how much you need to spend on food, gasoline and other living expenses and add these figures to your spreadsheet.

Update your spreadsheet at the end of each month so that you know which debt payments you successfully made, how much income you earned and how much debt you still owe.

Create a budget based on how much you earn, how much you owe each month and how much living expenses you need to more effectively reduce debt. Speak to a financial adviser for help budgeting. It's easier for a professional to help you when you have all of your debt and income information calculated.

Contact your creditors if you are not earning enough income to pay off monthly debt payments. If you explain your situation, you may be able to get an extension with a lower monthly payment. Keep in mind that you will be paying more interest this way, but in the short term it can help you make ends meet.

Connecticut Laws Regarding a Bounced Check

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If a person writes a check without sufficient funds in an associated account to cover it, the check will bounce, or be returned for insufficient funds. Each state has laws regulating how merchants may respond to bounced checks. In Connecticut, the merchant may file a civil suit and press criminal charges if the check writer does not reimburse him for a bounced check after the merchant has sent several notices regarding the matter.

Merchants and other business owners who accept checks must post a notice where customers are likely to see it warning them of the potential consequences of writing bad checks. The notice must include the civil penalties that bad check writers may face, the appropriate Connecticut statute number and an advisory that the check writer may also face criminal penalties.

As of 2010, civil courts may require the check writer to reimburse the merchant for the value of the check plus pay up to $750 if he has no bank account or $400 if the check is returned for insufficient funds. If the merchant chooses to press criminal charges, the bad check writer may face a fine of up to $1,000 and up to one year in jail. Writing a bad check is a felony charge if the check was for more than $1,000 and a misdemeanor if written for a lesser amount.

If a check bounces, the merchant must send the check writer a letter by certified mail at the check writer's last known address or place of business. Usually this letter is sent to the address on the writer's check. The letter must inform the writer that the check was returned; ask him to reimburse the merchant for the amount of the check; and inform him of the potential criminal or civil penalties if he fails to do so. If the check writer does not respond to the letter within 15 days of receipt, the merchant must send a second letter. This letter must inform the check writer that he has 30 days to reimburse the merchant before the merchant takes legal action against him. Both letters must be written in both English and Spanish.

Check writers in Connecticut are exempt from civil penalties for bad checks if the check was written as payment to a utility company or landlord or in payment for a debt on property that has been repossessed. Check writers are not exempt, however, from criminal penalties in these cases.

Will Assets Be Frozen in a Foreclosure?

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A mortgage lender has no power to freeze your assets. However, the lender has the right to seize assets to cover your debts. This is what happens in a foreclosure. Depending on the laws in your area and your particular situation, your lender has several ways to get your assets.

If you miss your mortgage payments, your lender may foreclose on your property. In a foreclosure, your lender takes your property, which is an asset, and sells it to pay your debt. This is the only asset your lender can take at this stage. Your other assets are yours and remain liquid, which means that you can convert them into cash if you wish. These assets include other properties, bank accounts and employment income.

Your lender may be able to seize your other assets after a foreclosure. At the foreclosure sale, your property may not sell for much. In fact, the sale price may not be enough to pay off your entire debt. When this happens, the lender has a deficiency balance, which is the difference between the sale price and your outstanding balance. Depending on your state laws, your lender may obtain a deficiency judgment from the court to seize your other assets.

Your lender may start by taking assets that it can easily get. The lender can seize up to 25 percent of your wages, stocks, bonds and the assets in your bank accounts. If you own a business, a sheriff or marshal may seize your business assets, such as the money in your register and machinery, on behalf of the lender. The lender may place a lien on property you own that is not your primary residence.

The law prevents the lender from obtaining some assets. These include the food on your table, the clothes in your wardrobe and the TV in your living room. The lender also can't take vehicles in which you have less than $2,000 equity, or vehicles you use for business. Your lender can't touch 75 percent of your wages, or all your wages if you have a low income. Welfare, Social Security, unemployment, pension and disability checks are also exempt.

How to Improve Credit While in Chapter 13

4:06 AM 1 comment

A Chapter 13 bankruptcy allows individuals with steady income to develop a plan to repay all or part of their debts, according to the Administrative Office of the U.S. Courts. Under this chapter, a repayment plan is configured where installment payments are made to creditors over three to five years.

A Chapter 13 bankruptcy can remain on a credit report for up to 10 years after it is discharged. If you're filing bankruptcy, your credit may already be impaired, but there are ways to improve your credit while in Chapter 13.

Instructions

Make current payments on time. When loans and debts are reorganized, you'll be set up on a payment plan through the Chapter 13 bankruptcy court. It's imperative that you make payments on time to creditors and mortgage holders, especially if you're already behind. In doing so, you'll begin the process of improving your credit.

Apply for new unsecured credit cards. This is the fastest way to improve your credit rating when recovering from bankruptcy. Look for creditors such as Orchard Bank that offer credit cards to individuals with impaired credit. You can expect to be extended an offer for a card with a low credit limit. You can also anticipate upfront processing or administrative fees that will be charged to your card. It's extremely important that you keep your credit under control when you're trying to improve your credit score. Make payments early or on time and don't exceed your credit limit.

Apply for a secured credit card. If your credit rating does not permit you to obtain a traditional credit card, you may find yourself applying for a secured credit card. With a secured card, like the Centennial Classic offered by First Premier Bank, you will simply submit a security deposit that's equal to your credit line. Monthly payments are made, just like you would normally submit to a creditor, and reports are made to the credit bureaus. With secured cards, you're typically charged fees upfront for processing or account opening.

Apply for a secured line of credit. If you have a title to a paid-off vehicle, a title to a piece of property or home equity, you may be interested in applying for a secured credit line. This is where you use your asset as collateral, allowing the lender to feel confident that you'll repay the loan (or they'll become the owner of your collateral item).

Secure a cosigner as a last resort. If your credit is too poor for you to find an unsecured card, and you don't have any assets to offer, you may need to find someone to cosign a loan with you. How the information is reported to the credit bureau will depend upon the type of credit card or loan you secure with your cosigner.

You may find that both you and your cosigner have information being reported on your credit bureau report, or you may find that it is only being reported on the cosigner's account. In the latter situation, you'll want to inquire with the creditor as to the amount of time the cosigner needs to remain on your loan. When the time is up, simply have the cosigner removed, and the reporting will begin on your own bureau report.

The Best Ways to Collect Debt

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Debt collectors are a tenacious lot. Most debt collectors are hired not according to a flat fee, but on commission: for every dollar that the debt collector collects for his client, the debt collector gets to keep a portion. This gives him a powerful incentive to collect, for which he mobilizes a number of different tactics.

One of the simplest and most effective means of collecting a debt is to call the person who owes the money. And then call her again. And again. And again. Debt collectors must follow a number of rules, outlined in federal law, when calling. They cannot call during inconvenient hours (9 p.m. to 8 a.m.), make false statements, or use abusive language. However, a collector can continue to call and politely remind the person that he owes money.

Wage garnishment is a process in which an employer withholds money from an employee's paycheck and turns it over to a creditor. To initiate a wage garnishment, a creditor must seek the sum in court. If the judge hearing the case sides with the creditor, he can order the debtor to pay the money. If he does not, the judge can order the money garnished from his paycheck.

When a person has borrowed money to purchase an object, that object often acts as a form of collateral on the debt. If the debtor falls behind on his payments, the creditor may attempt to make up for the loss by repossessing the object. Repossession, unlike wage garnishment, does generally not need to be ordered by a court. However, the creditor must usually notify the debtor that repossession is imminent before proceeding.

Foreclosure is a specialized form of repossession that is used when a person defaults on a mortgage. The process by which a home can be foreclosed upon is complicated and varies from state to state, lasting anywhere from several weeks to more than six months. In most cases, the debtor will be given the chance to make good on the money he owes before the home is seized.

When a debtor owes a significant amount of money and refuses to pay, a creditor may petition a judge to freeze the debtor's bank account. This freeze will prevent the account holder from accessing all or a portion of the funds in the account. In some cases, the creditor may take further action and have funds actively removed from the account. However, occasionally, freezing the account is enough to compel the debtor to pay.

How to Use a PayPal Business Debit Card

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PayPal, one of the most popular online payment processors, offers its account holders debit cards. Business account holders, as well as individual account holders have the option of apply for a debit card. To use your card, you must activate it and then use it as you would any other debit card. Your purchase or withdrawl amounts are limited by PayPal's daily limit restrictions, as well as the amount of money currently available in your PayPal business account.

Instructions

Go to PayPal.com and log in to your business account.

Click on "My Account."

Click "Profile" at the top of the page.

Locate the "Financial Information" column and click on "PayPal Debit Card."

Select your business card, and click "Activate Now."

Enter in the required information (required activation codes are included on that was sent with your debit card), and select your business card's PIN number. Then select "Activate Debit Card."

Swipe your card when making purchases in retail outlets that accept MasterCard. There is no charge from PayPal for this. There is a daily limit of up to $3,000 for these transactions.

Withdraw money from ATM machines. You will have to enter your PayPal business debit card PIN number. You will probably incur a charge from the ATM and a $1 charge from PayPal. There is a daily limit of up to $400 for ATM transactions.

Make purchases online with your business debit card. You can make purchases by entering in your debit card number just as you would any other debit/credit card. There is no fee for this, and you are limited to spending up to $3,000 per day.

How Do Interest Rates Affect the Customer Demand?

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Interest rates have a real and profound affect on consumer and retail demand. Interest rates relative to the consumer are about the cost of borrowing money, including credit card rates. At the same time, less directly, businesses see lower rates as a signal to expand, to borrow money and seek short-term profits by offering lower prices to the public. In the most general terms, low rates mean economic recovery and consumer spending.

The Federal Reserve controls general interest rates. This is important because the Fed also is in charge of monetary policy more generally, which seeks to control inflation. The "real" interest rate is the Fed rate plus the rate of inflation. If rates are lowered by the Fed, given the structure of the American economy based on consumption, people will buy more. Businesses will borrow more. Low rates are a signal that it is now OK to borrow, invest and spend.

Both low and high rates are closely connected to demand. Elastic markets such as luxury goods and entertainment are in high demand as rates lower. Stocks usually go up as money is transferred from the bond market. All of this gives corporate America and its retail sector the green light to expand, offer more products and engage in heavy advertising for short-term profits. Since most believe, as rates go down, they cannot stay down, the stress is on the short term. Eventually, once consumer demand has leveled off and debt rises, rates will go up.

Demand is the public's desire for goods. It is reflected in prices. Elastic demand refers to those goods that a household can live without. Inelastic demand refers to those staple items that must be bought regardless of the interest rates or any other macroeconomic measure. The demand for inelastic sectors does not change. If anything, it forces households to go into debt to afford basic food, hygiene and transportation items that are not discretionary. Therefore, rates are connected most clearly with elastic demand items. Inelastic items can change in that in expansionary times, consumers might buy name brands and place more purchases on credit cards. In recessions, consumers might go to generic brands or switch to cash to avoid high interest charges. It is also possible that consumers will save less in recessions and spend the same amount of discretionary cash, driving rates even higher as liquidity becomes more scarce.

High rates are very good for the bond market, especially short-term bonds that are more volatile. They attract investment during times of high interest rates because the return on these monies loaned will be high. As rates fall, money is sent to the stock markets. As firms financing with debt demand more cash, interest rates will have to increase to attract bond money. Therefore, an equilibrium is reached as rates change. Long-term bonds do not change as much as rates tend to even out the longer the term. Short-term bonds are for quick profits if rates are to go up.

Can Social Security Benefits Be Garnished for a Defaulted Car Loan?

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When a person in deep debt fails to make payments on his loans, a creditor may seeks to have a portion of the borrower's income garnished. Garnishment must be ordered by a judge before it can be accomplished by the creditor. While most forms of income are subject to garnishment, Social Security benefits are generally exempt.

Under the Social Security program, individuals who are elderly or incapacitated receive regular payments from the federal government. These payments are designed to help them meet basic living expenses, such as food, shelter and clothing. Although Social Security benefits are often received by a person who has other sources of income, sometime they constitute an individual's only source of funds. This is one reason that they are considered a special form of income.

According to Section 207 of the Social Security Act, the law that outlines most of the rules governing the administration of benefits, benefits are exempt from almost all forms of garnishment. The act states that no benefits shall be "subject to execution, levy, attachment, garnishment, or other legal process" by a private party. However, according to the Social Security Administration, the federal government can garnish wages under certain circumstances.

According to the Social Security Administration, a creditor seeking repayment for a car loan may not garnish Social Security benefits. The Administration suggests that if a creditor attempts to garnish your benefits, you inform him that he is acting in violation of Section 207 of the Social Security Act. The Administration notes, however, that its responsibility for protecting against illegal garnishment of benefits ends after it pays the beneficiary.

There are instances in which the federal government can garnish benefits. These include to enforce child support or alimony payments, and to pay for unpaid federal taxes. The Internal Revenue Service is allowed to garnish up to 15 percent of monthly wages until a debt is paid off. Other federal agencies are also allowed to garnish money if a debt is owed them.

According to the financial reference website Financial Web, benefits for creditors seeking repayment for private debts, such as a car loan, may wrongfully confiscate Social Security benefits by removing money from a debtor's bank account. If the creditor has been granted permission from a judge to seize money from a debtor's bank account, and the debtor has deposited her benefits in the bank or had them directly deposited, there is a strong likelihood that the benefits could be illegally seized.

The Best Debt Settlement Plans

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Finding the best debt settlement plan is difficult, as debt settlement is a complicated financial solution to an unfortunate situation. Engaging in debt settlement usually means having your credit score drop dramatically and paying large fees to a company that might not perform any useful service.

Some debt settlement companies might tell you they will keep your credit scores from being reduced. This isn't true. Any debt settlement plan will reduce your credit score and the best settlement companies will acknowledge this. On the other hand, you can instead work with what's called a debt management program to try to keep your credit scores intact or minimize the damage.

Some creditors will make a settlement offer when you fall behind on your payments. They usually require you to place money into an escrow account and they often accept less than you owe. While this might sound good, the problem is you must be behind in your payments before receiving such an offer. If you're current, there's no point in trying to get a debt settlement in place. Also, you can often work out a settlement by contacting your creditor directly, thereby saving an unnecessary expense.

If you engage in a debt management program instead of using a debt-settlement company, you'll still have to pay your entire debt, but your credit score will suffer less. In addition, many credit managers have experience with helping you to keep and stay on a budget, which might prevent future debt problems.

Under rules which went into effect in October 2010, debt settlers can no longer attempt to collect upfront fees. Instead, they are paid after a settlement is completed. In addition, caps were put in place to prevent the companies from charging high fees. And the companies can no longer engage in advertising that makes bold claims that cannot be proven.

Debt settlement cannot be used on certain bills, including electric bills, water bills, alimony, child support, car payments, house payments, student loans and tax bills. Debt settlement only works with credit card companies and other businesses.

Credit Bureau Laws

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A person's creditworthiness is an extremely important asset, and one given a high priority by lenders. Several major pieces of legislation regulate credit bureaus, the organizations responsible for collecting and standardizing credit information. Every aspect of the credit system is subject to stringent rules, although not all of them necessarily serve the interests of consumers.

Legislation pertaining to the U.S personal credit system began appearing in the 1960s and 1970s, when personal credit in the form of credit cards and loans became a huge industry with far-reaching implications. Personal credit performance is evaluated using a credit score, and can affect a person's ability to secure loans, lines of credit, even housing and employment--credit scores are increasingly seen as a measure of personal integrity.

The Fair Credit Reporting Act law regulates the conduct of credit bureaus, with its most important aspect being the right of consumers to challenge their credit history and have incorrect information removed. The act also prohibits the release of credit information without consumer consent or court order. And even with consumer consent, only legitimate businesses may be given information.

Errors found on a report must be shared with all other bureaus, and in case of denial, bureaus must provide consumers with a copy of their credit file, citing reasons for said denial. Disclosure is also important--bureaus must release information to file holders upon request.

Similar to other equal opportunity acts, the Equal Credit Opportunity Act also regulates the collection of personal information beyond what is immediately pertinent to financial performance. Age, sex, national origin, religion, race and welfare benefits are all off-limits. This law requires credit bureaus to specify the exact reason for denial.

The Fair Credit Billing Act offers protection for credit histories in dispute. The upshot for consumers is that when they choose to dispute an item on their file, credit bureaus are prohibited from adversely affecting their credit ratings and in most cases are ordered to put said file on hold until the dispute is resolved.

Similar to the Fair Credit Reporting Act, the Right to Financial Privacy Act regulates the accessing of personal credit information. The emphasis here is on prying government agencies, as the act requires that consumers be made aware of any investigation barring court order. Credit bureaus are therefore not allowed to furnish private information even to federal agencies.

There are three major credit reporting bureaus in the United States--TransUnion, Experian and Equifax. These organizations sell information to merchants, landlords, employers and financial institutions that wish to inquire about a potential customer, tenant or employee. Officially, these credit bureaus are known to government agencies as CRAs--consumer reporting agencies.

Credit bureaus are the responsibility of both state and federal agencies. On a local level, the state attorney general can take action in any case involving credit bureaus. However, the two most prominent authorities in this field are the U.S. Federal Trade Commission and the Federal Reserve, who are responsible for enforcing the various credit-related acts.

How to Negotiate & Settle Your Debt With Creditors

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When dealing with debt, it can be challenging to know how to best negotiate with your creditors to settle the debt and get it off your credit report for good. This process is best done in a straightforward manner, with you -- as the debtor -- proposing what you can pay in terms of a settlement, including a proposed time line that resolves the account in a timely fashion instead of dragging it out over an extensive period.

Instructions

Ask for an accounting for the final amount of the debt. In the time since you've paid on the account or worked with your creditor, late fees and other collection amounts may have been added, making the amount different than what you thought it was. Request the amount of the debt in writing from your creditor.

Request a settlement amount. Be prepared to go back and forth with your creditor until you settle on an amount. Sometimes, depending on how old the debt is, your creditor might be willing to settle for up to 50 percent of the original debt; adversely, some debtors might not be willing to negotiate at all. When you call, ask to speak with an account manager, since this is the person who has the authority to negotiate, and not a customer service rep from the call center's general pool.

Propose a time line in which to pay the settlement amount. The quicker you are willing to pay off the debt, the more likely it is the creditor will accept the terms of the settlement. Be sure that whatever time line you propose is one you stick with; if you miss payments or violate the terms of the settlement agreement, then you may find that your creditor dismisses the agreement and goes back to requesting the full amount due on the account.

Keep track of your payments and request an update to your credit report once the account is paid in full. Keep in mind, however, that the impact on your credit might not be as favorable as it might have been had you paid the amount of the debt in full because you settled for a lesser amount.

How to Take the Debt Free Pledge

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The U.S. Federal Reserve reported that the average American household carried nearly $6,500 in credit card debt in 2010. According to the National Foundation for Credit Counseling, when people are in debt, they are 95 times more likely to meet their goal of becoming debt-free when they write it down. The NFCC is helping people do this by offering them the Debt Free Pledge, encouraging people to get themselves out of debt by committing to certain lifestyle changes and goals.

Instructions

Visit the National Foundation for Credit Counseling website. Read the information provided about becoming debt-free. Once you have read and understand the Debt Free Pledge, click the box next to "Yes, I Want to Become Debt Free. Count Me In!"

Click on the "Take the Pledge -- Certificate," a PDF document that you can print and fill out indicating that you are making a pledge to yourself to eliminate your debt, and acknowledging that you are the only one who can take control of your finances.

On the certificate, fill out the steps for how you plan to take to make a your debt-free dreams a reality. These sections include your reasons for taking the pledge, specific steps you will take to make your commitment a reality, short-term goal that being debt free will help you attain, and long-term goals that you will accomplish living a debt-free life.

Begin taking the steps you indicated on your certificate to take control of your finances and eliminate your debt.

DIY Debt Secrets

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You may feel you need step-by-step support and guidance to extract yourself from the vise grip of credit card debt. However, taking control of your finances and alleviating the burden you are carrying due to excessive debt and interest charges can be done on your own without the need for fee-based services.

Although high fees and interest may be welcome by credit card issuers, the last thing they want to see is you falling so far behind that they have to write off part or all of your balance. Running from the issuer and not returning calls does nothing to help your cause. Pick up the phone and politely ask what programs are available to ease your debt pains. You may be able to obtain a lower interest rate or get fees waived just by asking and agreeing to do a better job servicing the account going forward.

Take stock of your credit cards and note the available credit and interest rate on each account. You may find that you have some accounts where there is significant available credit and that has a lower rate than the interest on one of your other cards with a balance. Make an effort to move balances to lower-rate cards or open new accounts with low or 0 percent promotional interest rates on balance transfers. If possible, try to get the balance transfer transaction fee waived as part of this effort. If you can move balances from higher-rate cards to lower ones, you will save a great deal in interest fees and be better able to pay off your debt.

If you find yourself in credit card trouble, you may find that irresponsible spending, at least in part, contributed to the high balances. Use a financial management software tool or spreadsheet to evaluate your spending habits and see where you can cut spending. If you find yourself hitting the movie theater three times a week, consider renting movies or watching one at home on cable television instead. Eliminate all extraneous expenses and develop a spending plan that works within your earnings capability. Establishing a budget can be empowering and help you better handle the stresses of dealing with credit card debt.

If your balances are accruing interest, you may not be aware that as soon as you make any purchase of any sort, it begins to accrue interest. That is, there is no grace period. Start reducing your average daily balance -- the most common technique used to calculate your interest charges -- by paying down your credit card as soon as you have cash available rather than waiting for the payment due date. For instance, a card with a $1,000 balance paid off on the payment due date will see interest charges apply to about $967 versus $34 if you pay off the $1,000 the first day of the statement period.

Can You Be Taken to Court on an Old Credit Card Debt?

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If you fail to pay back your credit card debts, you not only face the prospect of a damaged credit score and difficulty in getting a new loan, but your creditors also can sue you to recover the money. Facing a credit card lawsuit without assistance is difficult, so talk to a lawyer if you need legal advice.

Every time you use a credit card, you pay for something by using the creditor's money. The creditor agrees to pay the money and you agree to pay it back at a later time with interest. When you don't pay the money back, the creditor will try to collect it from you. It usually does this first by trying to convince you to pay, but if these efforts don't work, it can also sue you to recover the money.

A credit card debt is a form of unsecured debt, meaning the creditor did not take any collateral to hold in case you defaulted on the loan. To get its money back, the creditor has to sue you in court. It generally has to do this by filing a lawsuit in the county where you live and notify you that it filed the lawsuit. Once a creditor sues you, you have the right to go to court and try to win the case or try to reach a settlement with the creditor before the court makes a decision.

When a creditor sues you to collect on a credit card, it cannot force you to appear in court. If you don't, however, the creditor will likely win a default judgment. This means the court will declare the creditor the winner and grant it the right to collect money from you through methods only available to a judgment winner, including wage garnishments, levies and liens.

When a creditor wants to take you to court, it has a limited time in which it can do so. The amount of time, known as the statute of limitations, differs depending on the state in which you live, the kind of debt and the terms of the debt, but in general requires the creditor to sue you within several years from the date you last paid on the debt. If the creditor sues you after this, you can ask the court to dismiss the case because the statute of limitations has passed.

Do I Owe the Balance After a Repossession?

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Repossessions occur when consumers pledge their vehicles as collateral and subsequently default on their loans. Consumers can pledge their vehicles in exchange for short-term title loans, to finance their vehicles or under lease arrangements. State laws govern the rights that creditors and third-party repossession agencies have to repossess their collateral. In most states, creditors can sell their repossessed vehicles and sue borrowers for any remaining deficiency balance.

In most states, lenders can repossess their vehicles or contract with third-party repossession agencies to repossess their vehicles as soon as borrowers default on their loans. In these states, as soon as a borrower misses on payment, he may be liable for the remaining loan balance. Known as an acceleration clause, many installment agreements contain this provision. An acceleration clause in a contract allows a lender to accelerate the remaining payments and demand repayment of the entire loan, plus penalties, late fees and interest.

Creditors in most states are required to conduct commercially reasonable sales. A commercially reasonable sale occurs if a lender conducts a public auction, sells a repossessed vehicle for a commercially reasonable amount and provides the borrower with notice of the sale. The legal requirement for lenders to conduct commercially reasonable sales are related to their rights to pursue deficiency judgments.

Most states allow lenders to sue borrowers for any difference between the sales price and original loan amount. Known as a deficiency judgment, a lender can sue the vehicle purchaser for any remaining loan balance. The sales price is the amount the lender receives after conducting a public auction. Since lenders can theoretically sell their vehicles for less than fair market value and sue borrowers for the deficiency, states require them to conduct commercially reasonable sales to prevent opportunities for abusive sales and lending practices. The Federal Trade Commission does not regulate repossessions.

Although legal terminology can vary in different states, to collect a deficiency judgment, a lender must file a summons and complaint in court. The local court sets a hearing date for the deficiency judgment hearing. The lender must serve the borrower with the complaint and summons.

State laws may allow a borrower to assert a defense based on a lender's violation of state law. For instance, in most states, lenders are required to conduct their repossessions without breaching the peace, using violence or threatening violence. Additionally, in most states, lenders must provide consumers with an opportunity to remove and retrieve their personal items remaining in their vehicles. Some states further allow buyers the legal right to redeem their property within a certain amount of time after paying any deficiencies. A lender's failure to comply with her state's consumer protection laws can lead to a dismissal of her deficiency judgment.

Since state consumer protection laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

How to Get Free Help to Stop Garnishing From Student Loans

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The process of paying off student loans is a daunting task for many people. Adding to the challenge is dealing with collection efforts if your student loan payments become past due. One course that is taken in the collection of past due student loans is the garnishment of wages or bank accounts. Either type of garnishment seriously hampers your overall financial status. Facing either type (or even both types) of garnishment may motivate you to find free resources to assist in stopping this type of collection activity.

Instructions

Make an appointment to meet with an attorney at a legal aid organization in your area. Many communities maintain not-for-profit legal aid organizations that provide free or low cost legal assistance and representation in a variety of areas. Included in the list of legal services provided by these organizations is advice and representation relating to collection defense, including garnishments associated with students loans.

Contact the law clinic operated by a law school in you area. Virtually every law school in the United States maintains a clinical program through which students in their final year of study provide free legal services. These clinics typically provide representation to individuals like you dealing with debt and collection issues. Included on the list of services is assisting in stopping a garnishment arising out of student loan debt collection.

Schedule an appointment with a lawyer who previously provided you with legal services or an attorney who graduated from the same college or university you attended. Pay particular attention to a lawyer who is active in your school's alumni organization. Although this is not a guaranteed path to free assistance in stopping a garnishment related to a student loan, there are instances when an attorney will provide free legal advice or representation in this type of situation.

Telephone the state and local bar associations and see if they maintain a committee of attorneys available to provide pro bono (free) services to people like you dealing with student loan debt. Many of these organizations do sponsor pro bono efforts to aid consumers. Contact information for these groups is available from the American Bar Association.

What Is the Statute of Limitations for Debt by State?

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State statutes of limitations for debt vary by state and by the type of debt involved. The statutes don't erase debts that people owe, but they do place limitations on how delinquent debts are collected. Debt collectors who file lawsuits to collect debts after the statute of limitations has expired are violating the U.S. Fair Debt Collection Practices Act.

A state statute of limitations on debt is the amount of time that a creditor or lender has to sue a consumer to recoup delinquent debts. The statutes don't release consumers from paying legitimate debts, but they do prevent wage garnishments and other legal actions creditors and lenders might take to collect debts. Collection companies can still contact consumers to try to recoup delinquent debts even if they can't legally sue to collect them. Consumers generally aren't released from paying their debts unless they're paid in full, discharged in a bankruptcy or forgiven by a creditor or lender.

Open-ended accounts include credit cards because the credit line and the balance may vary. State statutes of limitations on open-ended accounts can last as long as 10 years as they do in Rhode Island or as little as three years as they do in Alabama, Delaware, Kansas, North Carolina and other states. Bankrate.com lists the timeline for each state's statute on its website. However, you may need to consult with an attorney to determine the statute of limitations on credit cards. Credit card debts usually come with written cardholder agreements, making them written contracts. The statute of limitations on written contracts is longer than it is for open-ended accounts in some states, which may give creditors more time to sue to collect credit card debts.

State statutes of limitations on accounts with written contracts range from three years in Maryland and Mississippi to 15 years in Kentucky and Ohio. Oral contracts essentially are loan agreements made with a handshake because no written agreement outlines the terms of the loan. The terms of an oral contract are difficult to prove in court due to the lack of a written agreement. However, the lender has ten years in Louisiana and South Carolina to sue to try to collect money owed on an oral contract. That time limit drops to three years in Arkansas, New Hampshire and Oklahoma.

A mortgage is a promissory note. It's different from a written contract because it includes payment dates and interest charges on a loan. State statutes of limitations on promissory notes range from three to 15 years. Bankrate's data on the statutes indicates that Vermont's statute on promissory notes is generally six years. However, it increases to 14 years when borrowers sign promissory notes before a witness.

How to Create a New Account in Quicken 2008

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Intuits best-selling personal finance software, Quicken 2008, allows consumers to keep track of all of their financial information in one place. With automatic updates via the web, consumers can instantly see where they stand financially at any given point in time. When a user first installs Quicken, they will be prompted to walk through the setup and customization portion. Afterwards, consumers may find that they would like to add a new account. Read on to learn how to create a new account in Quicken 2008 after the initial setup.

Instructions

Launch Quicken 2008 and then select Tools and then Account List. Alternately, you can press the CTRL and A keys on your keyboard to bring the Account List screen up.

Click on Add Account in the upper right-hand side of the Account List screen.

Enter the name of the financial institution where the account is held. If the account is a personal loan, select the option stating that the account is not held at a financial institution. Click Next after making your selection.

Select the specific financial institution from the pop-up menu if it appears. Not all financial institutions will require a more specific choice so the pop-up menu will not appear. If it does appear, select the appropriate institution and then click on OK to continue.

Choose whether you would like to electronically connect to your financial institution to update your account. Not all financial institutions support this feature. Quicken will prompt you for your login and password information if your bank has electronic banking. If it does not, you will need to manually enter the information.

Follow the prompts to update your account if you select Yes in step five. Quicken will prompt you for all of the necessary information. Click Next after entering your login information. Quicken will then attempt to contact the bank. After successful connection, your account information will be downloaded.

If your bank is not listed in the menu options from step three, you will be prompted to enter the type of account. After selecting the type of account, click on Next to continue.

Enter a name for the account and then click Next. Enter your statement date and ending balance if you have this information. If you do not, contact your financial information to obtain your current balance as this will become the starting balance for your Quicken account.

Click Done. You will now have your new account listed in the Quicken Account list.

How to Measure Your Risk of Being Sued by a Collection Agency

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When a collection agency is in possession of your debt, the possibility of a lawsuit against you always exists. However, you do not have to operate in fear and anxiety, cringing during your trips to the mailbox. If you educate yourself on a few realities and take some simple actions, you will have a much better idea where you stand and perhaps avoid a lawsuit.

Instructions

Check the statute of limitations on debt for your state. If your debt is still within the statute, you have a higher chance of being sued because the agency wants to collect before the statute expires. Collection agencies do occasionally attempt to sue for debts beyond the statute because debtors typically do not contest. If they did, the suits would be dismissed.

Verify the amount of the debt. The higher the amount the collection agency claims you owe, the higher your chances it will sue.

Send a dispute and validation letter. Under the Fair Debt Collection Practices Act, you have the right to send a letter, asking the collection agency to validate that the debt is indeed yours.This will automatically red flag you as an aware consumer; thus, the collection agency will be less likely to file suit for an out-of-statute debt, especially if it fails to respond to your letter. Most do not.

Allow the collection agency some method of contacting you. If you have sent a full cease-and-desist letter forbidding all forms of contact with you, then you are much more likely to be sued because the collection agency now has no method of contacting you to attempt to collect the debt.

Watch your correspondence. If the collection agency has begun to send correspondence via an attorney, you are at greater risk of being sued.

Does It Hurt Your Credit to Get a Credit Report?

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Credit affects just about everything we do. Whether you're applying for a job, a mortgage, a car loan or a credit card, there's a good chance your credit is going to be scrutinized. Given how important credit is, it makes sense to keep an eye on your credit report and credit score. Fortunately, checking your credit to get a credit report doesn't hurt your credit.

There are three credit reporting agencies: TransUnion, Experion and Equifax. Each may contain slightly different information. In general, each report will have your identifying information, including any other names you've used, your lines of credit (both open and closed accounts), any credit inquiries and delinquencies. Your credit score is a number compiled from your credit report by the Fair Isaac Corporation, and reflects your overall use of credit. Your credit score isn't automatically included with your credit report.

You're entitled to one free credit report each year from each of the three credit reporting agencies, per the Fair and Accurate Credit Transactions, or FACT, Act. You can order your free report at AnnualCreditReport.com; this is the only site that provides the free reports you're entitled to by law. There are other sites that provide "free" credit reports, but obtaining the report involves signing up for a credit monitoring services for a trial period, and there is a cost to the monitoring service once your trial period ends. Your FICO score isn't included with your annual credit report, so if you want to know your score, you'll need to purchase it separately.

Inquiries can potentially hurt your credit. If you get your credit report through a legitimate source (the Annual Credit Report site, the official site of one of the credit reporting agencies or FICO), it will not count as an inquiry and affect your credit. The type of inquiries that can hurt your credit are multiple hard inquiries. A hard inquiry occurs when you apply for credit. Applications for credit cards, mortgages or car loans will all generate hard inquiries. FICO has measures in place to account for rate shopping for mortgages, car loans and student loans, so multiple inquiries won't hurt your score. For example, if you're shopping for a car loan and you apply at two banks and your dealership, the multiple inquiries count as one inquiry, as it's clear you're comparing rates. This only applies if you do the rate shopping within a 30 day period.

For the most part, credit reports won't hurt your credit. Attempting to open several new lines of credit can hurt your credit. Late payments also hurt your credit. Your credit report also reflects how much of your available credit you're using. Keeping your credit balances at or near your credit limit also hurts your credit. Bankruptcies are listed on your report, as well as court judgments, tax liens and settled accounts. When you review your credit report, carefully review the information, and write the reporting agency immediately if you see any mistakes. Use the information to see how you can improve your credit moving forward.

What Is the Next Step After Verification of Debt?

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A debt collection agency or creditor must verify you owe a debt before beginning collection practices against you. This verification process often involves just a letter sent through the mail. If you don't respond, the creditor or debt collector considers the debt valid and proceeds with collection practices. The debt collection process involves an escalating series of contacts from simple written requests to phone calls and possibly civil litigation.

Once a creditor or collection agency verifies the debt in question is yours, collection practices begin. These practices vary depending on the collection agency or creditor pursuing you but usually involve phone calls, emails and standard mail letters. Phone calls may involve an actual representative contacting you to secure payment or an automated service designed to provide you with the contact information of a collections representative. Collection agencies and creditors must comply with the Fair Debt Collection Practices Act when contacting you about a debt. Phone calls may only take place between 8 a.m. and 9 p.m., according to the Privacy Rights Clearinghouse website.

If the debt in question relates to a secured asset like an automobile, the next step for a creditor after verification of the debt involves repossessing the property. A secured creditor may make phone calls in attempt to collect the debt prior to repossessing the property for a short period of time. You may be able to stall the repossession process by remaining in contact with your creditor and explaining your financial situation. The only thing that will stop the collection process for good is bringing the account current.

It is illegal under the Fair Debt Collection Practices Act for a creditor or collection agency to harass you while attempting to collect on a debt. A creditor must inform you in writing or over the phone when communication is in regards to the collection of a debt, and the creditor may not use foul language when communicating with you. It is also illegal for a creditor or collection agency to impersonate law enforcement, threaten legal action when no such action is forthcoming or create documents that appear like official legal documents when these documents are, in fact, not.

You have the right to refuse contact from a creditor or collection agency regarding a debt. You must make a request in writing for the creditor or collection agency to cease all phone or mail communication with you regarding the debt in question. If the creditor or collection agency refuses to comply with your request, you may file a complaint with the attorney general's office in your state. A debt collection agency that fails to comply with state and federal regulations for the fair treatment of consumers risks losing its license to operate.

Facts About the Automated Credit-Reporting Industry

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Automated credit-reporting systems allow the three major credit-information providers---Equifax, Experian and TransUnion---to easily issue reports regarding a person's bill-paying history, according to the Federal Trade Commission (FTC).

Automated credit reporting saves lenders time when issuing information about their customers' bill-paying history and also when they are considering credit applications. This practice saves customers time when they apply for new loans or credit cards.

Your credit reports cannot legally include information about your race, religion, personal lifestyle choices, medical history or your political preferences.

Most automated credit reports are accurate, according to the FTC. But if incorrect information such as activity resulting from identity theft is listed on your credit report, federal law gives you the right to dispute that information and demand a thorough investigation. Furthermore, inaccuracies cannot legally remain on your credit file, under the Fair Credit Reporting Act.

How Credit Card Debt Consolidation Helps the Holders

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Having too much credit card debt is a scary and powerless feeling. If you're in significant credit card debt, however, you have options that can help you to pay down your debts. One such option is debt consolidation. It's important to learn the best way to make sure a consolidation helps the account holder.

One of the biggest reasons that racking up the balances on multiple credit cards is so problematic is that you have to remember the due dates and minimum payments for each card. Juggling all of these different cards can lead to confusion and, worse yet, missed payments. Debt consolidation takes care of this dilemma by replacing your many payments with one monthly payment. In most cases, you can have this payment come directly from your bank account, ensuring that you don't forget about making a payment.

The most common type of debt consolidation is a loan from either a bank or credit union. You can take a personal loan or a loan against the equity you've built up in your home; some banks, such as Wells Fargo, allow you to take an equity loan against your automobile. You can also consolidate your credit card payments through a debt settlement or debt management program, but these programs restrict your use of credit and make it difficult to apply for new forms of credit.

One way you can benefit from consolidating your debt is by getting a lower interest rate than your credit card companies currently offer. If you're fortunate enough to qualify for a premium interest rate, you can save serious cash by consolidating. Even if you don't get a top-notch interest rate through debt consolidation, you can still benefit, particularly if your credit card interest rates were increased due to late payments in the past. Furthermore, if you hold store credit cards, any consolidation loan you'd take is virtually guaranteed to be lower, as these cards are notorious for their high interest rates.

Debt consolidation can do wonders for you, provided you approach the situation the right way. This means avoiding the use of your cards unless absolutely necessary. One potential issue with a consolidation loan is that it leaves your cards with no balance so they are available to use again. It's important to exercise caution before entering into a consolidation loan; if you end up relying on your cards again, you'll be stuck paying both the loan and your cards, a scenario which can put you in financial distress.

Can You Garnish Social Security Disability Payments?

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Creditors facing the challenge of debtors who refuse to pay what they owe can take a number of different tactics to attempt collection. One of the most effective is garnishment. When a debtor's wages or other income is garnished, it means that the person paying the debtor must set aside a portion of the income and hand it over the creditor. Social Security Disability payments, however, are immune from garnishment by private creditors.

All garnishments must first be approved by a judge in a civil court before they can be executed. Although a creditor may attempt to get a debtor to agree to a garnishment in a settlement, all garnishments, even those to which a debtor agrees, must first be approved by a judge. If a garnishment is not legal, then a judge will not approved the garnishment order and it cannot be put into effect.

A number of different forms on income, particularly a number of different types of government benefits, are immune from garnishment under federal law. Social Security Disability benefits are payments made to individuals who previously participated in the work force but sustained an injury that prevented them from continuing to work. These benefits cannot be seized by private creditors through garnishment under any circumstances: The Social Security Administration will not honor any garnishment order presented to it.

In addition, Social Security payments cannot be seized once they have been deposited in a debtor's bank account. Even if the bank account is frozen and the creditor is attempting to seize funds, all deposits that originated from these benefits cannot be touched. According to federal law, a debtor is allowed to go to court to compel his bank to prohibit the seizure of these funds.

Although Social Security Disability payments cannot be seized by private creditors, certain government agencies can garnish them if the person owes money to the agency. For example, if a person has defaulted on his student loan payments; is in arrears on his child support payments; or owes money to the Internal Revenue Service for back taxes, then government benefits issued to the debtor may be subject to garnishment or seizure from his bank account.

Can a Private Person Garnish Another Person's Wages?

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A person need not necessary owe a debt to a company -- he can also owe a debt to another party. This debt may be secured in writing, or it may be an oral agreement between the two parties. In either case, the contract is legally valid and the creditor party has a right to collect payment, by force of law if necessary. This may include the use of wage garnishment.

If two private parties have an agreement in which one party ends up owing the other party money, then the creditor party may try to extract payment outside of the courts. If this fails, the creditor may attempt to secure payment by legitimizing the debt in court. This is done by filing a lawsuit. If a judge rules that the debt is valid, the debt is legitimized.

If a judge legitimizes a debt between two parties, then the debtor party will be forced to pay a civil judgment to the creditor party. This will usually be equal to the amount that the debtor owed the creditor before they entered court. Like all civil judgments, the debt judgment is legally enforceable through a number of means, including by getting an order to garnish the debtor's wages.

A creditor can receive an order of garnishment as easily as a company. He must merely apply to the judge with a motion. If the motion is granted, then the creditor can deliver this order to the debtor's employer -- or another party who provides the debtor regular payments -- and demand that the paying party siphon off a portion of the payments until the creditor has been paid off.

While a private party can get a garnishment order in court by himself, it may be much easier for him to do this with the aid of legal counsel who is experienced in contract law. He will be much better able to navigate the court system. In addition, a creditor should know that a debtor may be exempted from garnishment for all sorts of reasons, including having little income.

What Are Debt Relief Programs?

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There are a number of companies that provide debt relief service programs. The idea behind such a program is to help you manage your debt more effectively and efficiently. This allows you to get out of debt much faster than you normally would. When you enter such a program there are many avenues that the company can pursue to make your debt load more affordable.

Some of the debt relief programs will contact your creditors and offer them settlements of 50 percent or better on your outstanding debt.

A lot of these companies operate on a commission basis. They are paid based on how much money they save you during the negotiation period. It is in their best interest to get you the best deal possible.

Debt relief programs can help you settle your debts by providing a lump sum settlement or a monthly pay back plan.

You can receive a comprehensive package from some of the debt relief programs. The organization may have relationships with lawyers, lenders and financial advisors. This allows them to tap into data base of knowledge in order to cure your problem.

Your debt can be set up for a repayment plan. Most of these plans will eliminate late fees, finance charges, and over the limit fees. Some plans call for a reduction in your interest rates. Another option to pursue is debt consolidation. This is one of the many programs offered.

Some of the debt relief programs are offered by companies such as Curadebt, Credit Solutions and Net Debt. It's just a matter of finding out which program best meets your needs.

Can a Creditor Sue You for Credit Card Debt in Pennsylvania?

9:07 PM No comments

Every time you use a credit card, you take out a short-term loan for the amount you are charging. If you do not pay your credit card bill, you are considered to have defaulted on that loan, and your creditor is entitled to take action to collect it from you. In many states, including Pennsylvania, suing you for the amount of the loan is one option for collection. Pennsylvania law prohibits creditors from garnishing a debtor's wages after winning a judgment against him in a lawsuit.

In most cases, creditors in Pennsylvania may not seek wage garnishment from debtors via a lawsuit. Creditors may garnish a debtor's wages only if the debtor owes back child support, taxes, student loans or financial restitution for criminal activities. In all other cases, the creditor must find some other way to collect debts from a debtor than the lawsuit and garnishment method. However, this prohibition does not apply to garnishing your bank account; creditors may sue you and garnish your accounts of existing funds.

It is illegal for debt collectors to manipulate debtors into paying debts by making threats that they do not intend or cannot legally carry out. Thus, debt collectors in Pennsylvania cannot threaten to sue debtors unless they intend to follow through and cannot threaten to garnish the debtor's wages, as this activity is illegal in Pennsylvania. If a debt collector makes these kinds of threats, contact an attorney.

Pennsylvania law offers little protection against garnishment of your bank account. Your creditor must get a court order allowing him to garnish your account; he can do this by filing a lawsuit against you. Once the creditor obtains a garnishment order, he may take any money that is deposited in the account except for Social Security payments. If you deposit your wages in your bank account, your creditor may take them as well even though he cannot directly garnish your wages under Pennsylvania law.

The statute of limitations for lawsuits against debtors in Pennsylvania is four years as of 2011. This time period is counted against the date you first went into default, not the date you made the charges or the date your creditor first contacted you about them. Thus, if you went into default in March 2011, your creditor has until March 2015 to file a lawsuit against you. After the statute of limitations expires, your creditor may not sue you to recover the debt, but may continue to contact you regarding the debt as long as she does not violate anti-harassment or other fair debt collection practice laws.

Does Having a Co-Signer Help Rebuild Your Credit?

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People who have poor credit ratings can use a co-signer to rebuild their credit histories. However, some borrowers can't rebuild their credit even when someone co-signs on a loan or credit card because they fall into the same bad habits that originally led to their poor credit rating.

People who want to use co-signed accounts to rebuild their credit need to consider a potential co-signer's creditworthiness. Co-signers must have good credit ratings themselves, because they're guaranteeing the repayment of a debt for the primary borrower. The co-signer also needs to earn an income that meets a lender's or creditor's requirements, because the co-signer can be required to repay the loan or credit card debt if the primary borrower fails to do so.

The primary borrower and the co-signer assume responsibility for repaying a co-signed debt. However, just having a co-signer on a debt doesn't rebuild the borrower's creditworthiness. As with other debts, borrowers need to ensure they pay the bills for co-signed debts on time to rebuild a good credit history. Borrowers also should keep in mind that the payment history for co-signed debts appears on their credit reports and their co-signer's credit reports, even though the borrower is primarily responsible for making the payments.

Using up most or all of the credit line on a co-signed credit card could hamper your efforts to rebuild your credit history, even if you pay the monthly bill on time. Bear in mind that the amount of debt you have affects your credit score. For example, the amount of debt you owe affects 30 percent of your FICO credit score, so using up most or all of your available credit on a co-signed credit account may lower your FICO score. An article by Gregory Taggart on the Bankrate website notes that consumers generally maintain higher credit scores by using 35 percent or less of their available credit.

People are often uneasy about co-signing a debt because they can't be sure the primary borrower will fulfill the terms of the payment agreement. The U.S. Federal Trade Commission notes that one big problem for co-signers is that creditors and lenders don't notify them about payment problems unless an account is already delinquent. Borrowers who need a co-signer to rebuild their credit might use a tip from the FTC and recommend that the co-signer ask a lender to agree in writing to notify the co-signer about any missed payments. That would give the borrower and co-signer time to work out a payment problem before it gets out of hand and seriously damages their credit.

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