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

Wednesday, November 30, 2005

How to Negotiate Paying Defaulted Credit Cards

Negotiating payment of defaulted credit cards requires patience. You and the debt collectors will have opposing goals: Debt collectors want to collect as much of the debt as possible, and you should pay as little as possible. Experienced debt collectors are unlikely to accept a rock-bottom offer during the first round of negotiations. That means reaching an agreement could take some time, even months. You must decide how much you can afford to pay on a specific account and not budge past that point.



    Call the credit card company to determine who is managing the account since the default. An internal collections team may have the account, or may have transferred or sold it to a debt collections agency. Get a contact number for the debt collector, if applicable.


    Tell the card company or debt collector that you want to resolve your defaulted debt. Ask for the current balance. Don't open negotiations at this point. Simply obtain the balance and ask if you qualify for a settlement offer. The card company or debt collector may immediately make an offer. If so, ask about the terms, such as whether you must pay in a lump sum or over several installments. Take notes.


    End the discussion by telling the representative you need some time to review your budget and determine if you can come up with the money. The representative may claim that the offer will expire shortly or may otherwise pressure you into making an immediate payment over the telephone. Ignore that and politely end the discussion.


    Make calls on all your other defaulted credit cards, if applicable, and get the same information.


    Make a list of all your defaulted credit cards, ranking them by initial settlement offers from the telephone discussions. If one debt collector is offering to settle for 20 percent of the balance, rank that account No. 1. If the next best offer is 30 percent, rank it No. 2, and so on. Make a second list ranking the defaulted cards by the amount of the respective settlement. For example, if your lowest settlement in terms of dollars is $500, rank that card No. 1, followed by all the others.


    Review your budget to determine how much money you can allocate to a debt settlement strategy. Ideally, you should first settle accounts offering the largest discounts. However, your budget may require you to focus on accounts within a certain dollar amount. Choose a strategy and make a final ranking.


    Start negotiating. "The New York Times" reports credit card companies or debt collectors usually settle for 20 to 70 percent of the balance. Call the first debt collector on your list. Tell the debt collector you are ready to settle the debt. Offer 20 percent --- regardless of any higher initial offer. Increase your offer if the representative balks, but don't exceed 50 percent.


    Keep calling through your list of defaulted accounts, if necessary, until you have a deal. Keep detailed records of your conversations. If you can't strike a deal with the first round of conversations try again 30 days later. Stay with the strategy until you are successful.

How to Report One Account to Credit Bureaus and Landlords

If you have a new or less-than-satisfactory credit profile, you can improve your credit by adding an account to your credit report. Additionally, landlords may accept proof of a satisfactory account to establish credit. To add an account to your credit report, submit proof of the account to the credit bureau or directly to the landlord.



    Collect billing statements and copies of both sides of the canceled checks used to pay the account for a 12-month period for the account you want to add to your credit bureau or use to establish credit with a landlord. Pay your bill before the due date every month. Banks usually don't return canceled checks to you with your billing statement. If you don't receive canceled checks, contact your bank to obtain copies of the canceled checks. Alternatively, banks may allow you to print canceled checks through their online banking systems.


    Send the copies of the canceled checks and monthly billing statement to the credit bureaus or to the landlord. For the credit bureaus, include a letter in the correspondence requesting the addition of the enclosed account to your credit profile. Include contact information for the account in the letter, in addition to your name, address, phone number and Social Security number. If you're establishing credit with a landlord, the letter should state that you'd like to use proof of payment of the enclosed account to establish credit.


    Follow up with the credit bureaus or the landlord in 30 days. Request copies of your credit report to see if the account is now included on your credit report. You can request credit reports directly from the credit bureaus. Contact the landlord and ask if proof of the account was accepted to establish credit.

Help With Writing a Financial Hardship Letter

Good communication with your creditors can mean reduced interest rates and fees. To remain in good standing, inform your creditors when you are experiencing financial hardship. A simple letter of explanation can help you avoid collection calls, and sometimes late fees, when you fall behind in paying on your accounts.

How Much You Can Pay

    Creditors are generally detail oriented. Stating that you are having financial trouble is not enough information. Always get specific. Give creditors a date when you hope to regain financial stability. Explain how much you are able to pay on your account each month. If you are not currently able to pay anything, state specifically when you expect to make your next payment.

Tell Your Story

    Use a conversational tone when writing your hardship letter. Reveal personal details that help the reader understand and empathize with your circumstances. While a hardship letter is intended to inform the lender of your circumstances, it also provides the opportunity for the creditor to connect with your personal story.


    Use an appropriate tone in your cover letter. Although you want to set a positive tone, the purpose of your letter also is to show your desire to take responsibility for the current circumstances. A statement of regret for not meeting your financial obligations shows that you are concerned about keeping a good relationship.


    Creditors are not obligated to bend the rules for you simple because you are experiencing hardship. Keep this fact in mind while writing your letter. Demonstrate gratitude whenever possible by thanking the creditor for reading and considering your request. If your prior relationship with the creditor was positive, thank the lender for the quality experience you have had thus far.

Action Steps

    Give the creditor an action item. For example, if you are making less than the minimum payment due on a credit card, you can request that the late fee be removed. Always explain to the credit how you want the situation handled. Your request will not always be granted, but it opens the door to negotiation.

How to Close a Line of Credit

A line of credit allows you to borrow money, up to a set limit, on an as-needed basis. Lines of credit differs from loans, which immediately provide you with the full amount of borrowed money up front. With a line of credit, you only pay interest on the outstanding balance. The most common lines of credit are home equity lines of credit, which are secured by your home; some banks also offer personal lines of credit.



    Review your line of credit agreement. Specific instructions for closing the line might be contained within the agreement. The agreement also contains information on fees or penalties related to closing the line, if applicable.


    Pay off any outstanding balance. Most banks do not allow you close a line of credit that has a balance. The bank may close the line on its own initiative, however, if your agreement allows it.


    Call the lender to obtain details on closing the line of credit and find out if it has forms you must use. The phone number should be printed on your account statement. Even if your credit agreement provides information on closing the line, it's a good idea to call to ensure nothing has changed.


    Write a letter to the lender specifically stating that you wish to close the line of credit. Include the loan or account number in your letter. Lenders often require account closing requests in writing. If the lender has forms for closing a line, fill out those instead of writing a letter.


    Mail the letter to the lender via certified mail, return receipt requested. This will allow you to track the letter until it is delivered to the lender, and to ensure the line is closed in a timely fashion. It also provides proof of delivery, should a question arise.

Tuesday, November 29, 2005

Can I Get a Personal Loan to Move?

Personal loans are available for virtually any purpose--including moving. You can borrow a few hundred dollars to move across town or a few thousand dollars to move across the country. Your credit score will largely determine exactly how much you can borrow, with some professional movers possibly arranging loans through third-party financial institutions

Beware of Interest Rates

    Unsecured personal loans such as signature loans and credit cards don't require collateral. That makes the loans easier to qualify for but much more expensive than other types of loans, such as home equity loans. Personal loans arranged through moving companies could feature interest rates exceeding 21 percent. Personal loans through banks and credit unions could exceed 10 percent, depending on your credit. Secured personal loans offer lower interest rates because they are backed by collateral. A car that is paid for with clear title can be used as collateral for a bank-issued personal loan, resulting in significant savings over unsecured loans. Vacant land and stocks and bonds are other examples of collateral.

Credit Card Debt

    Credit cards are perhaps the most popular form of personal loans. The application process is easy and same-day approval decisions sometimes are available when applying online. A credit card allows you to use the credit line as you please. Most moving expenses can be placed on credit cards, including truck rentals, hotels, gasoline or paying professional moving companies. Credit cards offer great convenience for moving, but if possible time your move so that you can afford to pay off the credit card when the bill arrives. That prevents accumulating credit card debt.

Credit Score

    Your credit score is a three-digit number ranging from 350-850. Privacy Rights Clearinghouse, a nonprofit consumer information company, reports that a credit score of at least 620 is needed for competitive interest rates on personal loans and other forms of credit. Scores of 720 or higher lead to the best rates.

Credit Reports

    Credit reports are available for free (see Resources). View and print your report by visiting the website. Then follow instructions included with the report to order your credit score separately, for a fee.


    The fact that you may be borrowing money to leave town shouldn't affect your ability to qualify for a personal loan. Financial institutions have customers spread across the country, and your relationship with the bank will be just fine as long as you make timely payments and notify the bank about your new address. However, borrowing money to move could be an issue if your credit score is poor and you have a history of frequently moving from one town to the next. That could suggest a lack of stability and lead to your loan application being denied.

Monday, November 28, 2005

Can Poor Credit Keep You From Getting a Police Job?

Can Poor Credit Keep You From Getting a Police Job?

Police officers are responsible for a wide range of public safety and investigative duties and are given broad powers to ensure these duties are carried out. While each police department has different standards it uses to determine who can become an officer, most, if not all, departments look at a person's credit history to evaluate the candidate.

Bad Credit

    When you apply for a position as a police officer, agencies typically require that you agree to a credit inspection. The police department will then look at your credit report. Every consumer who uses credit of any kind has a credit report. The report contains your history as a credit user and includes information such as what kinds of loans you've applied for, whether you've ever declared bankruptcy and if you have trouble paying your bills on time.


    While having bad credit in and of itself does not necessarily mean that you are unfit to be a police officer, police departments view trouble with credit as a negative for a number of reasons. A person with bad credit is generally unable to meet all their financial promises, which may indicate a lack of discipline. Also, people with money problems can face additional pressure to accept bribes or engage in corrupt activity, according to an article in the Lubbock (Texas) Avalanche-Journal.

Bad Credit

    Police departments look for any information in your credit report that might indicate you are not a good candidate as a police officer. In general, a good credit report means the candidate is a reliable and trustworthy user of credit, while a bad credit report means she is not. Police departments use this as a measure of a candidate's overall trustworthiness, a character trait vital to police work.

Repairing Credit

    Having bad credit doesn't necessarily disqualify you from becoming a police officer, however, if your bad credit is a barrier to being hired, you can take steps to improve your credit starting immediately. You can engage in positive credit behavior -- paying your bills on time, not opening too many credit card accounts and not using too much of your available credit -- to improve your credit history and give you a better chance at becoming a police officer.

How to Get Out of Consumer Debt Without Taking Bankruptcy

How to Get Out of Consumer Debt Without Taking Bankruptcy

Bankruptcy is an option if you cannot handle your bills any other way, but you may be able to handle your consumer debts without that drastic step. Even though bankruptcy either cancels your debts or provides an affordable repayment arrangement, it also brings down your credit score and appears on your credit reports for a decade. Other debt relieving arrangements often have less negative impact on your ability to get future loans and accounts, and you do not have to go through a court case and pay an attorney.



    Call a nonprofit consumer credit counseling agency and make a consultation appointment. Credit counselors are trained to help you look at all your options for getting out of consumer debt, from simple steps like budgeting to more involved measures like structured payment arrangements, according to the Federal Trade Commission. Counselors sometimes recommend bankruptcy if your debt cannot be handled through less extreme methods, but they try to work out other options first.


    Bring a complete list of your income and expenses to your credit counseling session. The counselor needs an accurate picture of how much you owe your creditors and how much you can realistically afford to repay. Sometimes getting your consumer debt under control simply takes some objective help with cutting your expenses and creating a budget. The counselor can help you make a budget plan or suggest other measures.


    Decide whether you wish to follow the credit counselor's recommendations for getting out of consumer debt. The recommendations might include a budget, financial education classes or a formal debt management plan created by the counseling firm. Such plans often include concessions from your creditors like reduced interest rates and waived penalty fees. You are free to accept the counselor's advice or to file for bankruptcy if you believe that is a more feasible option.

What Are the Effects of Bad Credit History?

A bad credit history can affect your financial future in several ways. You may pay high interest rates for many years because of low credit scores, especially if you never improve your credit rating. A poor credit history also can affect the type of job you can get, which could hamper the possibility of receiving higher salaries.


    One of biggest problems for people who have bad credit histories is that the negative information in their credit files remains there for several years, even if they have paid off bad debts. Delinquent payments to credit card companies that are at least 30 days late will be documented in credit files, and those delinquencies can stay in a consumer's file for seven years. Bankruptcies generally remain in credit files for 10 years.

Credit and Loans

    An MSN Money article titled "Lifetime Cost of Bad Credit: $201,712" focuses on a scenario that shows how much more a person with a low credit score can pay for student loans, credit cards, auto loans and mortgages. As for credit cards, a person with a low score of 650 might only be able to get a card with an interest rate of nearly 20 percent. Someone with a good score of 750 may get a card with an interest rate of nearly 11 percent. According to the article, the higher rate could result in annual interest payments of $1,600, which would be almost twice what the person with the higher score would pay.


    Some employers check job applicants' credit history when they make hiring decisions. Those employers may view credit history as a measure of responsible behavior and trustworthiness. People with a poor credit history can lose job offers, especially if a prospective job requires them to handle cash, employee payrolls, financial portfolios or expensive products such as jewelry.

Auto Insurance

    Many auto insurers also examine credit histories to determine insurance rates, and drivers with bad credit histories often pay higher premiums. Auto insurers assert that research indicates people with low credit scores present higher risks because they're more likely to file insurance claims. In a USA Today article titled "Bad Credit Can Inflate Car Insurance Premiums," a spokeswoman for the National Consumer Law Center disputes such notions. She said people may have poor credit histories due to difficult times brought about by unemployment or serious illness, not high-risk driving.

Sunday, November 27, 2005

Do Creditors Report a Bankruptcy to Equifax?

Bankruptcy is a court action that affects your creditors. Banks, credit card issuers and other companies that loaned you money may get some of it back, or the debt might get wiped out entirely, depending on which type of bankruptcy you file, according to the Federal Trade Commission website. This negative court action makes its way to your files with Equifax and the other credit bureaus.


    Equifax is one of the three national credit bureaus, according to the Federal Reserve Bank of San Francisco website; the other two are TransUnion and Experian. All three bureaus compile personal, demographic and financial information about you and provide it in report form to banks, lenders, landlords, insurers, employers and others who have a legitimate need to review it. The bureaus are all independent companies, so your Equifax report may have minor differences when compared to TransUnion and Experian. A major item such as a bankruptcy generally appears on all three.


    Creditors continually report information about your accounts to Equifax and the other bureaus. They share data about your balance, credit limit and payment dates, the FRBSF site advises. Lenders also alert the bureau to certain negative actions, such as account write-offs or car repossessions. Bankruptcy is a court action that involves multiple creditors, so Equifax usually gets information about it from public records.

Time Frame

    All three credit bureaus report bankruptcies for 10 years, according to the FTC site. The reporting period is the same for Chapter 7 bankruptcies, which liquidate most of your assets and gets rid of most bills, as for Chapter 13 filings, which let you keep much of your property and make a repayment plan. This contrasts with most other negative credit report entries, which the bureaus erase within seven years.


    Equifax is required by federal law to give you a free credit report each year, which allows you to confirm if your bankruptcy appears in your file. The FTC advises that you must get the free report from annualcreditreport.com, the official website run by all three bureaus to comply with the Fair Credit Reporting Act. Experian and TransUnion are also obligated to give you free reports, but all three bureaus make you pay if you place orders on their own websites. You are allowed to dispute the bankruptcy entry with Equifax if there are any incorrect details, according to the FTC. The company removes negative items if the bureaus do not verify them within 30 days.

What To Do When You Can't Make Payments on a Credit Card

Occasional late payments may temporarily harm your credit score, but are not serious if they only happen once in awhile. However, if you reach the point where you are completely unable to make payments, reaching out to your creditor may actually help. If you're past the point where your creditor is willing and able to help you, you may need to consider other options.

Notify Your Creditor

    As soon as you realize that making payments on your credit card is presenting more financial strain than you can handle, call your creditor and notify the company of the problem. Although the company would prefer if you made at least your minimum payment on time, every time, it will be more willing to negotiate with you if you take this step. If you do not notify your creditor, the company has no way of knowing what is preventing you from making payments as scheduled.

Negotiate A Plan

    Your phone call to your creditor shows that you are willing to pay what you owe, but are encountering financial hardship that prevents you from meeting that obligation at the moment. Because of this, provided you have not allowed your account to become seriously delinquent, such as 90 days or more, your creditor may be willing to negotiate with you. Some credit card companies offer hardship plans, which are unadvertised, but which can be discussed if you ask about them. These plans typically reduce your interest and set your minimum payment very low for a fixed period of time, in order to give you time to get back on your feet financially. Other plans may also be available, depending on the creditor, but you will not know until you explain the situation and ask what can be done.

Be Prepared

    If a creditor agrees to a hardship or other reduced payment plan, the company will likely want to take a financial statement from you. This statement documents your current income, as well as all payments for necessary bills that you make on a regular basis. You will need to make a full report of monthly expenditures for your mortgage or rent, utilities, grocery bills, car payment, insurance and any outstanding loans you are paying. Have this information handy when you call your creditor, so you can provide it when asked.

Execute Plan Faithfully

    Once your creditor has agreed to a plan, the terms may be even more strict than your normal terms of credit with that creditor. For example, if your credit card payment was a day late before, you would be assessed a late fee, but things would otherwise remain normal unless you made a habit of late payments. With hardship plans, the penalty for late payment or failure to pay is often getting kicked out of the plan entirely. Depending on your creditor's terms, your entire balance may then be due in full and your account closed. Your creditor should explain all the terms in full when you set up the plan, but ask specific questions about penalties if details are not made clear.

Seek Additional Help

    If your financial situation is in full-blown crisis mode, hardship plans may not be able to help. In that case, seek consultation with a certified credit counselor, preferably affiliated with the National Foundation for Credit Counseling or the Association of Independent Credit Counseling Agencies. After taking stock of your situation, a certified credit counselor will be able to offer you detailed advice regarding your available options. In some cases, a debt management plan or even bankruptcy may be better options for your particular situation.

Legitimate Reasons for Canceling a Credit Transaction

One of the reasons consumers use credit cards and other similar credit arrangements is that they have consumer protection built in. In certain situations, you can cancel a credit transaction without any negative consequences. While you cannot always cancel for any reason, you may be able to discontinue the transaction for legitimate reasons.

Item Not As Described

    One of the most common legitimate reasons for canceling a credit transaction is that the item you purchased is not as it was described by the seller -- for example, you buy a toaster online and when you get it in the mail, it is actually a toaster oven. If the item is unlike what you paid for, your credit card company should allow you to charge the item back and send it back to the seller.


    One of the best reasons to cancel a credit transaction is if it is fraudulent. If someone gets your credit card information and makes a purchase, you have the right to cancel that transaction. Most credit card companies will allow you to cancel the transaction and refund any money you were charged. At that point, the credit card company should send you a new card and cancel the old one so that the thief cannot use it again.


    If the item you received is defective, you can return it and cancel the transaction. For example, if you purchased something online and when it is shipped to you, it arrives broken, you do not have to pay for it. As soon as you receive the item in the mail, check that its condition is usable. If it has a manufacturing defect or is not functioning in some other way, send it back and cancel the charge.

Duplicate Charge

    In some situations, sellers will charge your card more than once for the same transaction. For example, you buy a blender online for $30 and then you check your credit card statement only to find two $30 transactions from the seller. When this happens, you can contact the credit card company and get one of the charges removed without any problems. You may need to show a receipt for the one purchase and contact the seller as well.

Saturday, November 26, 2005

Percentage of Debt That Collection Agencies Accept

It is impossible for anyone to exactly predict how much a debt collection agency will accept during a negotiation over delinquent debt. All negotiations are different, and debt collection agencies are independent companies. That means one debt collector could accept a certain percentage, with another insisting on a different percentage. SmartMoney reports that generally, debt collectors will negotiate settlement of unsecured debt such as credit cards for 20 to 70 percent of the balance.


    Debt collection agencies sometimes own the debt they are collecting after purchasing it from the original creditor. In other instances, the original creditor still owns the debt and hires the agency on commission. The original creditor reserves the right to approve settlement offers on assigned debts, with the debt collector making its own determination on debts that it owns.


    Many factors can affect debt settlement agreements. Debt settlement is an accepted strategy for resolving delinquent debt, but it often requires strong negotiating skills on the part of the debtor. Debt collectors are at an advantage because of their experience, while debtors are often novices. The negotiations are strictly voluntary on both sides, with the debt collector having considerable leverage because of the threat of a lawsuit or garnishment if the debtor does not pay the debt.


    Debt collectors usually try to collect as much as possible and theoretically, could demand that the debtor pay 80 or 90 percent of the balance -- or even all of it. Debtors can respond by offering to pay, say 20 percent, and continue negotiations from that point. Debt collectors may make different offers at different times depending on direction from the original creditor, or other factors. For example, debt collectors may offer a better deal during the spring when debtors are receiving income tax returns and may have some extra cash. Or the debt collector may offer a more reasonable settlement offer during the Christmas holidays when collection efforts are slower because debtors are spending on holiday expenses.


    Debtors negotiating with debt collectors should start at around 20 percent and force the debt collector to counter. The process could take months because the debt collector may not make his best offer right away. Ultimately, it's up to the debtor to decide whether a debt collector's offer is reasonable --- and affordable. Contacting the original creditor is also an option. The original creditor may refer the debtor to the debt collector, but making the call won't harm the negotiations and could lead to a direct settlement.

Jobs to Get Out of Debt

Jobs to Get Out of Debt

When you have accumulated a lot of debt you may need to increase your income to pay off the debt more quickly. Depending on the amount of debt you have you may need to take a two-step approach, finding a temporary second part-time job and finding a new job that will earn you more money. Before looking for jobs, have a budget in place and stop using your credit cards to make your hard work pay off.

Part-time Jobs

    A part-time job that you work around your current job can provide the extra income boost you need to get out of debt. Look for a job that will make working worth your time. For example pizza delivery drivers and waiters can earn tips in addition to their hourly wage, and will pay more than working at a fast food restaurant. Working as a tutor if you are qualified will allow you to make more per hour than you would in other areas.

Freelance Jobs

    Freelance jobs may offer more flexibility in working around your schedule, but they may not be as steady. Generally you are working for yourself and you will be responsible for finding your own work. However the rate of return may be much higher. For example working as a freelance tutor where you find your own clients will allow you to charge less than the tutoring companies do per hour, but you may more than double the amount you make per hour. If you have a specialized skill set in things such as accounting, public relations, writing or other work you can find clients who need someone to work for them part-time and who do not want to hire a company or a permanent employee.

Opening a Business

    Another option is to open a part-time at home business to supplement your income to get out of debt. Some of these jobs would include working as a consultant for companies like Pampered Chef, Avon or Mary Kay. The work generally takes place in the evenings and you can build a returning customer base after time. You may also open a weekend babysitting service you run from your home or do jobs like yard work or home cleaning on the weekends for other people.

Changing Jobs

    If you got into debt because you do not make enough money to cover your basic expenses then you will need to find a job that will. This may mean getting additional training or a degree so you can qualify for higher pay. Before making the decision you should research the fields that interest you to discover the amount you will earn in each field.

About Foreclosure Resources

Foreclosure resources can help you avoid losing your home because of missed payments. Help is available in virtually every community and can include credible advice from housing counselors approved by the U.S. Department of Housing and Urban Development (HUD). The counselors are an ideal starting point for people looking for foreclosure avoidance solutions.

Getting Counseling

    The Federal Trade Commission strongly recommends that you meet with a government-certified housing counselor if you are about to start missing payments or have already missed a payment. A trained counselor can contact your lender on your behalf and immediately negotiate a suspension of preforeclosure activity while a permanent solution to your problem is found. Search for a local approved counselor by checking the HUD website (see Resources).

Foreclosure Rescue Firms

    You should not enlist the services of so-called "foreclosure rescue firms." The Federal Trade Commission acknowledges that some of the for-profit firms are credible, but many others are managed by con artists out to take your money without providing any meaningful service. Nonprofit counselors can offer any foreclosure rescue service offered by a for-profit company, and all government-approved counselors are bound by an official code of ethics.

Loan Modification

    Loan modification is a powerful option for avoiding foreclosure. The process allows lenders to completely rewrite the terms of a mortgage loan to make the payments more affordable. Housing counselors can negotiate loan modification agreements. Payments can be lowered by adding more months to the length of the loan, dropping the interest rate and changing the loan from an adjustable loan to a fixed loan.


    Forbearance offers temporary help for avoiding foreclosure. Counselors can negotiate with lenders for forbearance consideration as well. Forbearance is a flexible program allowing you to skip several payments during a hardship, pay a reduced monthly payment over a period of time, or bring your account current by tacking on missed payments to the back of the loan.

Communication Is Key

    The Federal Trade Commission reports that communicating with your lender early and often is one of the biggest keys to avoiding foreclosure and gaining access to the most foreclosure resources possible. For example, as of 2011, holders of mortgages backed by Fannie Mae may be eligible for an additional loan structured as a second mortgage, according to Hope Now, a nonprofit organization offering support and advice for homeowners. The second mortgage is used to pay for missed payments on the first mortgage and bring the account current. A similar program is available for people with loans insured by the Federal Housing Administration (FHA). Up to 12 missed payments can be covered through the FHA second mortgage loan program. These special programs may not be widely advertised but can be discovered through conversations with lenders.

Friday, November 25, 2005

How to Learn Loan Modification

Learning about loan modification could help you become more knowledgeable about ways to avoid foreclosure. Loan modification changes the terms of your mortgage to make the payments more affordable. According to Zillow.com, loan modification is also known as mortgage modification, a workout plan, or a mortgage restructuring. The goal of loan modification, according to Zillow, is to help people who are working through a financial hardship and are struggling to pay their mortgages. Lenders agree to help by making permanent changes to the loan, including altering the interest rate and the amount of the monthly payments.



    Learn the basics of loan modification by attending free local workshops. For example, a special workshop for loan modification was being planned for Phoenix, Arizona, for 2011 by the Neighborhood Assistance Corporation, a nonprofit counseling agency certified by the U.S. Department of Housing and Urban Development. Attendees were being promised free, same-day service on reducing the interest rates on their loans to as little as two percent--and possibly even a reduction of the principal through loan modification negotiations with lenders. Find similar workshops in your area by checking the Foreclosure Prevention Workshops page on the FreddieMac website.


    Visit one-on-one with a nonprofit credit counselor to learn about loan modification if there isn't a workshop scheduled for your area. Find a counselor in your area by searching the website for the U.S. Department of Housing and Urban Development. Take a copy of your mortgage statement to the meeting and ask the counselor to determine if you would be a good candidate for a modification program. Ask specific questions about loan modification, including the length of the process, qualifying procedures and success rates.


    Ask follow up questions, if necessary, by contacting your mortgage company. Don't worry about your mortgage company becoming alarmed by your questions. Mortgage companies would rather hear from you earlier rather than later if you're having financial problems. If you're just seeking general information about loan modification, then tell that to the loan officer as you continue to learn.

Process to Notify Potential Credit Card Creditors of Divorce

When a couple divorces, they need to separate their finances, including jointly-held credit cards. The process of informing credit card companies of a divorce may require spouses to contact the creditors more than once, particularly if the couple has difficulty settling their finances, one or both parties changes an address multiple times or a spouse changes a last name after the divorce becomes final.

Discovery and Disclosure

    The first step in dividing credit card debt and notifying creditors of a debtor's change in marital status is for each spouse to disclose all credit card debt. In most cases, this is done through the process of financial discovery, in which each spouse must turn over financial records to the other spouse's attorney. These financial records may include credit card statements as well as credit reports for each spouse. As the attorneys examine these records, they can compile a list of creditors to be contacted by the divorcing couple.

Contact Creditors

    While a divorce is in process, spouses should contact credit card companies and ask them to freeze joint credit card accounts. This will prevent either spouse from adding new charges to the account. As the divorce progresses, the couple should work with their lawyers to determine whether a credit card is to be paid off and closed, or whether one spouse wishes to assume responsibility for the card and ask the credit card company to transfer the account into his name only. While credit card companies are not required by law to convert a joint account into one owned by one spouse, some will do so upon request.

    A notification of a divorce and a request to freeze or close accounts should be made in writing and the spouse who makes the request should keep a copy of the request letter and send it via certified mail. (Spouses may want to call the credit card companies first to confirm the appropriate mailing address for making such a request.) After the request is made, both spouses should check their credit reports to make sure that the account status is reported correctly.

Name Change

    If a woman reverts to her maiden name after a divorce, she should inform her creditors as soon as possible. In some cases, she may be able to do this over the phone or online. Her creditors may, however, want her to mail them a copy of the court order authorizing the name change. The same rules apply to a man undergoing a name change.

    Spouses may move around a bit during and after a divorce. Both should take care to notify creditors of current address and phone number. Again, this is a process that can often be accomplished either online or via the telephone.


    Creditors are not legally obligated to recognize the division of credit card debt in a divorce settlement. If one party defaults on her payments or files for bankruptcy, the creditor may pursue the other spouse for payment, even if the divorce decree specifies that the defaulting spouse is responsible for the debt. If this happens, the spouse pursued for the debt has the option of taking his spouse back to court to recoup any money he had to pay to creditors.

Indiana's Statute of Limitations for Debt

When a statute of limitations expires, creditors can no longer win a case involving legal action in a court of law. Indiana's statute of limitations for debts varies depending on the type of account involved.


    There are four types of debt accounts that a statute of limitations can apply to in Indiana: oral, written, promissory note and open-ended account. Oral contracts are based on a handshake. Written contracts include the repayment terms between a borrower and lender on a document. Promissory notes include the number of payments as well as the interest, and open-ended accounts are revolving accounts such as credit cards.

Time Frame

    The statute of limitations for debt in Indiana is six years for oral and open-ended accounts and 10 years for written contracts and promissory notes.


    When a statute of limitations has expired, debt collectors can still pursue an account in court, but if the defendant brings up the fact that the statute of limitations has expired, the court will rule in favor of the defendant.

Thursday, November 24, 2005

How to Request a Proof of Debt Letter

Requesting a proof of debt letter from a collection agency helps validate the fact that you owe money. Collection agencies may purchase an old debt from lenders and creditors and attempt to collect these past due funds. But oftentimes, collection agencies can't provide proof that a consumer owes the money. Requesting a validation letter requires action from agencies, and if they can't supply this letter, they must stop contacting you.



    State your reason for challenging the alleged amount. Refer to the account number listed on your debt collection letter. List this account number and your name and include the date in your letter. Spell out in detail why you don't owe the money -- for example, already paid the balance, past the statue of limitations or don't recall the account.


    Inform the collection agency you need a proof of debt letter before you will acknowledge or send money to satisfy the balance.


    Give a written warning. According to the Federal Trade Commission, collectors can't pursue legal action or send collection letters if they don't provide validation for a debt upon request. End your letter with a sentence forewarning the agency that you will file a complaint with the FTC if it continues to write or call for a payment without first sending a proof of debt letter.


    Mail your request to the collection agency, and keep a photocopy of the letter for your records. The Federal Trade Commission recommends sending a certified letter to the collector to ensure delivery.

When Can You Arrange a Settlement With Credit Cards?

Setting up a debt settlement with one of your credit cards could help you avoid paying a large percentage of what you owe. But even if you are interested in pursuing a debt settlement, your credit card company may not want to negotiate with you yet. Finding the right time to go after a debt settlement is important.

When Is Debt Settlement an Option?

    When you accumulate a large amount of debt on a credit card, you may want to pursue a debt settlement, but most of the time, you have to be late on your credit card payments before the credit card company is willing to settle. According to MSN, you may need to be three to six months late on your payments before a settlement is an option.

Making Contact

    After you miss a single payment, the credit card company starts trying to contact you. Most of the time, it uses an internal collections department to start the process. If that does not work, the credit card company may hire an outside collections agency. You will receive regular phone calls and mailings from the collector. After a certain amount of time, you could facilitate the negotiation with the collector. You could also contact the credit card company directly to start the negotiation.

Negotiating a Settlement

    When you are ready to negotiate a settlement, you could do so on your own or with the help of a debt settlement company. If you start the process on your own, contact the company to ask about a settlement. Ask the company how much it would take to settle the account. If the company does not give you a figure, you might make an offer. If the company is not willing to settle yet, wait longer and then start the process over.

Why It Can Work

    You may think that debt settlement would not be an option for most creditors because it involves their losing money. While technically this is true, it also saves them some money in some situations. For example, if you are close to filing for bankruptcy, settling your debt is a way for the creditor to at least get something out of your account. If you file for bankruptcy, the company will not get anything out of the process.

Is a Husband Responsible for His Wife's Medical Bills in Texas?

Whether a spouse is jointly liable for marital debts depends on whether he lives in a community property or equitable distribution state. In community property states, such as Texas, spouses are jointly liable for marital debt if the debts were incurred during the marriage. However, Texas law also provides residents with prescriptive homestead rights allowing them to shield their personal and real homestead property from creditors.

Community Property

    Texas is only one of a few minority states following the doctrine of community property; the majority of other jurisdictions are common law equitable distribution states. In these community property jurisdictions, debts from the marriage are marital or community debts and spouses are jointly responsible for repayment, even if only one spouse incurred the debt.


    Husbands are not responsible for their wives debts in Texas if they were incurred before they married. If his wife incurred the medical debt or received medical services before the marriage, a husband is not jointly responsible for repaying her separate debt. In community property states, creditors can generally attempt collection proceedings for debt repayment against both spouses. Medical debts are generally the types of debts creditors can collect from husbands to repay their wives' medical debts. In other words, the debts incurred before marriage are not his responsibility, and his wife remains solely responsible for repaying them; however, any debts incurred during their marriage are marital debts, and both spouses are jointly responsible for repayment.

Medical Billing

    Texas law requires medical providers or health insurance agents to provide consumers with their medical billing information if requested. Consumers can also file complaints with the Texas Department of Insurance if they do not believe they owe their fees.

Homestead Protections

    Texas law limits creditors' collection efforts to non-homestead property. Texas homestead laws prohibit creditors from using homestead property to satisfy their debts, unless those debts were used to purchase homes, for home improvements or for home equity refinancing transactions. Texas homestead laws do not shield state governments or the federal government from placing liens on homes to pay state or federal tax debts. According to the Texas Comptroller of Public Accounts and the Texas State Bar Association, Texas homestead protections prohibit medical creditors from taking homestead real property consisting of one house and land and up to $60,000 in marital personal property. Additionally, the homestead protections shield most jewelry, vehicles, heirlooms, business and personal assets from collections. As a practical matter, although a husband may be responsible for repaying his wife's marital debt, a creditor will most likely be unable to collect the debt from him, since the homestead protection statutes shield his personal and real property from collections.


    Since state 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.

Guidelines for Revolving Credit Cards

Guidelines for Revolving Credit Cards

Credit cards are both friend and foe, and to play the game of credit you need to control your credit card spending carefully. The key to getting your credit cards under control is understanding how they impact your overall credit. Since your credit is the basis for lenders, landlords and even employers to make big decisions regarding your life, it's vital to keep your credit cards in order.

Credit Cards

    All credit cards are considered revolving credit. The money issued on a credit card is considered a loan from the financial institution. The word "revolving" refers to the fact that the borrower has access to the funds again after the loan has been paid off. For example, if you have a credit card with a $1,000 limit and you charge it to maximum capacity, you still have $1,000 available once you have paid off the balance.

Debt Utilization Ratio

    Roughly one third of your credit score is determined by your debt utilization ratio. This is the amount of debt you have in relation to the amount of credit available to you. For instance, if you're carrying a $500 balance on a $1,000 credit card, you're utilizing 50 percent of the credit available to you. The Better Business Bureau recommends keeping balances to 25 percent of your credit limit to keep your credit score as high as possible.


    While it's poor financial management to keep high balances on your credit cards, indicating overuse, not using your credit cards at all is also bad for your credit. Use your credit cards wisely and then pay off your balance each time to keep your credit healthy. Use credit cards to protect your big purchases and for online shopping. Under the Fair Credit Billing Act, if the items you purchase are damaged or defective, your creditors will investigate the transaction once you've made a fair attempt to resolve the dispute with the vendor. If the creditor sides with you, no charges are applied to your account.


    The timeliness of your payments is the biggest factor in determining your credit score, making up 35 percent of the calculation. Therefore, it's vital to pay your credit cards on time each month, even if you're only making minimum payments. One payment more than 30 days late may result in a credit score drop of up to 110 points.


    If you already have a mountain of credit card debt, you must work on paying it down so that your credit score can be as high as possible. Financial experts usually fall into one of two schools of thought when it comes to debt elimination. The first group believes in paying down the cards with the highest interest rates first. Interest is costly, and allowing a balance with high interest to sit means that you're paying money just to keep that balance there. Therefore, paying off the cards with the highest interest first shortens that period and saves money. The second group believes in paying off the card with the lowest balance first, to psych you up about continuing to pay down your debt. By seeing your efforts make a larger impact with the first account, you may become more motivated to pay off the rest of your cards. The method you choose depends on which one fits best with your lifestyle.

Definition of Gross Public Debt

Definition of Gross Public Debt

According to Robert C. Pozen, senior lecturer at Harvard Business School, a likely $14.3 trillion gross public debt in the U.S. (by the end of 2010) will have serious future effects on the country. Such a high number is likely to cause a higher interest rate, slower economic growth and serious problems to federal entitlement programs such as SSI.

Gross Public Debt

    Gross public debt is the total dollar amount of public and private financial liability in a country. It excludes internal debt between public sector units. For example, if a city-owned bus company owes the municipality monies for renting public facilities, this amount is not taken into account within gross public debt.

Does Not Include

    Gross public debt does include public debts such as city, state and government money owed to private companies and private debt such as mortgages, personal loans and credit card debt.

Percent of GDP

    Some financial experts say that gross public debt should not exceed 60 percent of a country's gross domestic product (market value of all goods and services made within a country per year). In the U.S., gross public debt has ranged from 30 percent to 90 percent of GDP with relatively little effect on inflation or general economic growth.

Debt Consequences

    In a February 2010 article in the Boston Globe, Pozen writes that if the gross public debt begins to stay around 90 percent, foreign investors may become concerned about the country's ability to keep spending under control, and will begin to demand higher interest rates to buy the increasing volume of U.S. Treasury bonds. To cite a micro-example, if a person begins to incur a great deal of debt, a bank will ask for a higher down payment on a loan, or give the client higher interest rates. It is the same on the macro-level with countries.

Gross Public Debt Effects

    Higher interest rates will affect those with credit card debt, homeowners with adjustable rate mortgages and in general private and public entities with borrowing needs. Since more monies are needed to finance debt, the country's general economic growth begins to slow as the gross public debt climbs. As the government tries to react to both the increased debt and slower economic growth, programs such as social security and Medicaid are likely to be cut as well as any type of spending that is not essential to the country's functioning.

The Economic Cycle

    The economy generally moves in cycles. As the gross public debt increases, the government and free market react to limit it and keep the country running. As the strategies take effect, the gross public debt decreases. Times of plenty then lead to increased spending and the debt begins to rise again.

Can Military Wages Be Garnished by a Creditor?

Members of the military may have wages garnished by creditors seeking payment for a variety of debts including commercial debts, orders for spousal support, back taxes and child support payments. Even retired members of the military are subject to these regulations. Exceptions to these rules apply only to active-duty members of the military deployed in combat areas of the world.

Deployed Military Members

    Federal law restricts most creditors from suing a member of the military who is in the field on active deployment. Creditors must wait until the service member returns home from the field to file a civil suit to obtain a wage garnishment judgment. This waiting period does not apply if the wage garnishment is for spousal or child support payments. Up to 25 percent of the service member's weekly disposable income or any weekly income exceeding 30 times the federal minimum wage is subject to garnishment -- whichever is less.

Active Duty Military

    A creditor may sue a member of the military on active, non-combat duty. Any commercial debtor may attempt to obtain a judgment for wage garnishment against the military service member in the same fashion as any other consumer. The exception being that the request for garnishment must involve submission of an income withholding order to the Defense Finance and Accounting Service. This division is a branch of the United States Department of Defense and acts as the liaison between the creditor and the military service member.

Exceptions to Garnishment Regulations

    The federal minimum for wage garnishment does not apply in the case of child support payments, A service member may have up to 50 percent of disposable weekly earnings garnished in support of a dependent child. Up to 60 percent of a service member's weekly earnings are subject to wage garnishment if the service member does not share in custody of the dependent child. These amounts may rise higher upon approval by a United States court.

Retired Military Members

    A retired member of the military may have retirement benefits garnished to pay off debts relating to back taxes, orders for child support and alimony payments. The Defense Finance and Accounting Service must receive a valid court order to begin the wage garnishment process of a retired service member's weekly benefits. Garnishment may not exceed 50 percent of disposable earnings if the retiree is supporting a family or up to 60 percent if the retiree is not supporting a family.

Wednesday, November 23, 2005

What Happens If You Don't Pay Hospital Bills?

What Happens If You Don't Pay Hospital Bills?

Hospital billing departments send medical bills to insurance companies for payment, but if your insurance company refuses to pay or you lack health insurance altogether, paying the debt becomes your responsibility. Like any debt, if you ignore hospital bills, this can pose a threat both to your credit score and your future financial stability.


    Most hospitals will notify you as soon as your insurance company turns down payment of your medical debt. Some health insurance plans cover only a portion of your debt -- leaving the remainder of the bill your responsibility. Although all hospital policies differ, if you don't submit a payment within the required time frame, the hospital will send the bill to a collection agency. According to New York's Neighborhood Economic Development Project, medical service providers don't grant consumers as much time to pay off debts before sending them to collections as other private creditors.


    Once the hospital sends the debt to a collection agency, it will appear on your credit report. Small medical debts of less than $100 do not adversely affect your FICO score. If you owe a considerable debt, however, the collection account damages your credit rating. Lenders, insurance companies and other businesses that pull your credit report will see the record of the unpaid debt and take it into consideration when considering your application for employment, loans, insurance, credit cards and other services.


    Not all lenders view medical debt in the same manner. To most lenders, a collection account is evidence of poor debt management skills. If the collection account is a result of a hospital stay, however, a lender's perspective may differ. You have little control over your health care needs, and your inability to pay the high costs of most medical services does not mean that you wouldn't make timely payments on forms of debt you incurred voluntarily.

Time Frame

    Most hospitals will accept a reasonable payment plan for significant medical debts. Unfortunately, if the hospital has already turned the account over to a collection agency, paying it off does not resolve the credit damage you suffer by having the debt appear on your credit report -- damage that, according to the Fair Credit Reporting Act, continues for seven years.

    In January 2010, Congress proposed the Medical Debt Relief Act. The Act would serve as an amendment to the Fair Credit Reporting Act and require information providers to remove evidence of the medical debt from a consumer's credit records once the debtor successfully paid off the costs of his prior medical care.


    Rather than sending unpaid medical debts to collections, some hospitals will forgive the debts under charity care programs. Because hospitals are businesses, however, forgiving the debt doesn't mean that it disappears. At the end of the year, the hospital can claim the unpaid bills as a tax loss and send you a Form 1099-C for the amount it wrote off. You must then claim the forgiven medical debt as income on your taxes.

Can Taxes Be Held for Judgements?

Owing delinquent taxes to the Internal Revenue Service can cause a problem for your other creditors. The federal tax agency typically jumps to the front of the line when recouping debts, meaning your other creditors must wait longer to receive payment. Any judgments the IRS wins against a debtor can also run simultaneously with a bank levy or tax lien, allowing the agency to claim an even larger portion of a debtor's finances and assets.

Creditor Debt Priority

    The court assigns priority to each creditor in terms of recouping debts owed when multiple judgment actions occur at the same time or during a bankruptcy. The federal government, including the IRS, is typically at the top of the priority list. This means if a debtor owes the federal government back taxes, the IRS receives money before any other creditor may attempt to recoup debts owed. A creditor obtaining a judgment against a debtor who also owes the IRS cannot legally move to seize finances and assets marked by the IRS for the satisfaction of back taxes.

Seizing Tax Refunds

    An unsecured creditor, including a credit card company or collection agency attempting to collect medical debt, usually cannot obtain a judgment enabling the creditor to seize a debtor's federal or state tax refund. This is not the case for certain federal and state agencies, including the IRS and child services departments, who may seize tax refunds to pay back tax debts and delinquent child support payments. These government agencies usually don't need a court order to seize this money. The debtor gets a letter in the mail notifying him of the seizure and the agency responsible for taking the refund.

Judgments For Assessed Liability

    The IRS may sue a taxpayer in court to recover money owed from tax actions not directly related to tax liability, including an erroneous refund or failure to honor a lien. A lawsuit of this nature can result in a taxpayer owing the IRS additional money not directly related to any existing tax liability. This means the IRS can continue to garnish a debtor's wages to pay back tax debts while simultaneously securing a court judgment to force the debtor to pay back money received through an error or refusal to cooperate.

Judgments and Tax Liens

    When the IRS wins a judgment against a debtor, the court does not merge any existing tax lien or bank levy into the judgment. This means the IRS can exercise the judgment to seize a portion of the debtor's finances while continuing to hold a lien on the debtor's property or a bank levy on the taxpayer's bank accounts. This provides a modicum of insurance for the IRS in the event the taxpayer tries to evade payment. The tax agency can simply exercise the levy or lien to recoup the debt owed.

Tuesday, November 22, 2005

Is There a Statute of Limitations for Collecting on a Judgment?

Statute of limitations laws restrict the collection of all types of debts, including court judgments. If the judgment is not collected within the time frame prescribed by law, the creditor may never realize the amount of money awarded by the court.

Judgment Collections

    Courts issue judgments, but don't act as collection agencies. The creditor must pursue its judgment just as it would any other debt. Judgments do, however, make it easier for creditors to actually collect what they are owed through asset seizure and garnishment.

Statute of Limitations

    State statute of limitations laws restrict the length of time that a creditor has to use certain methods, such as filing a lawsuit, to collect a debt. In many states, statute of limitations on judgment collection is considerably longer than that for collecting other types of debt. For example, in New York, the statute of limitations on collecting a credit card debt is six years. If that debt ends up as a court judgment, the statute of limitations grows to 20 years, which can be renewed by court order.

Credit Reporting

    Judgments end up in court records, available for anyone to see, including credit bureau employees. A paid judgment can stay on a debtor's credit report for seven years. If the judgment is not paid, it can stay on the debtor's report until the statute of limitations on judgment debt runs out, or seven years has passed, whichever is longer.

Stopping Judgment Collections

    Because the length of time to collect a judgment is often very long, debtors who want to put an end to collection efforts and continued damage to their credit report have three options. The first is to pay the judgment in full. The second is to settle the judgment with the creditor for less than the debtor actually owes. The third is to file for bankruptcy. Some debts are dischargeable in bankruptcy, which means that the judge can eliminate them, though others, such as judgments from injury lawsuits caused by the debtor's decision to drive while intoxicated, are nondischargeable. A Chapter 13 repayment plan can, however, make repaying a nondischargeable debt manageable: The bankruptcy court includes the judgment in a repayment plan and the debtor continues to make payments on it every month. In return, the court issues an automatic stay against the judgment creditor which prevents wage garnishment, bank levies or other collection efforts.

Monday, November 21, 2005

How to Report Harassment Credit Card Calls

How to Report Harassment Credit Card Calls

The Federal Fair Debt Collection Practice Act of 1978 prohibits companies from using abusive or dishonest tactics to collect a debt. For instance, credit card companies can call their customers only between the hours of 8 a.m. and 9 p.m. They cannot harass your employer or threaten family members to obtain personal information about you. If you feel harassed by a credit card company or its collectors, you can report their behavior in a variety of ways. Simply choose the option that best suits your needs or situation.



    Contact a credit bureau if you believe the companys charges against you are baseless. Ask the credit bureau to investigate the charges. Ensure that the claims are removed from your credit report if you are proven right.


    Report your case to the Federal Trade Commission, specifically the Department of Financial Practices, if the charges against you are valid yet the company practices abusive tactics. Visit the FTC online at ftc.gov or call 877-FTC-HELP. Take advantage of the FTCs credit counseling services if necessary.


    Register a grievance with your states attorney generals office. Complete an online complaint form, call the office to discuss your case or visit in person if possible.


    Voice your harassment concerns to the National Association of Consumer Advocates if youre considering legal action. Take full advantage of its database of lawyers.


    Hire an attorney. File a suit against the credit card company or collection agency for unlawful activity, such as harassment and abuse.


    Issue a cease and desist letter to the credit card company or debt collector. Cite the instances of harassment in the letter. Keep in mind that sending such a letter usually results in the creditor's sending your account to a debt collector, so this effort may serve as a last resort.

What Is the Statute of Limitations on a Personal Loan in Virginia?

The statute of limitations precludes a plaintiff from filing a lawsuit after a period of time has elapsed from the date of his cause of action. Virginia, like other states, has limitations periods for various causes of action, such as negligence, fraud and actions to recover debt based on a personal loan.

Virgina Statute of Limitations

    As of the date of this article's publication, Virginia has two relevant statute of limitations periods for personal loans. If the loan contract was in writing, the Code of Virginia Procedure 8.01-246(2), which provides for a five-year limitations period, applies. If the obligation to repay the loan was based on an unwritten agreement, 8.01-246(4), which provides a three-year limitations period, applies.

Starting the Statute of Limitations Clock

    The statute of limitations clock begins on the date of the cause of action. This date is the date on which the borrower defaulted on his loan obligation as determined by the terms and conditions of the loan agreement. The limitations period ends on the date the creditor files a breach of contract action in court.


    A borrower who wishes to raise the statute of limitations as a defense must do so by citing the statute of limitations in his answer to creditor complaints after they are filed in court. The borrower can request that the court dismiss the action because it is being filed outside the applicable limitations period.


    The statute of limitations acts as an absolute bar to bringing another lawsuit against the debtor for repayment of the loan that was the basis for the original lawsuit. A creditor whose complaint is dismissed for failing to comply with the statute of limitations has no further legal recourse against the borrower.


    A personal loan based on an informal unwritten agreement poses enforcement problems to the creditor as well as to a borrower who might wish to raise the statute of limitations as a defense to repayment. The difficulty lies in determining the conditions and terms of the loan and the date from which the statue of limitations begins.

The Difference Between Credit Cards & Debit Cards

Debit cards and credit cards have some things in common. Both are used to access money for purchases; and both are used instead of cash as a method of convenience. The biggest difference between a debit card and a credit card is who owns the money which is being used. The next biggest difference is the limits placed on these types of cards. Here are a few more differences.


    Debit and credit cards are linked to financial accounts which are handled differently. Debit cards are tied directly to an account at a bank; while credit cards are tied to a line of credit which has been made available to you. Debit cards are funded directly from an account you own. Credit cards are funded by an account owned by the financial institution. Debit cards use money you already have. Credit cards use money on loan to you which must be repaid later.


    Debit cards cannot help build a credit history; there is no record made outside of your financial institution that you used funds drawn on from the card. Debit cards also cannot be used at most Internet shopping sites because you need a PIN number to access the funds. Debit cards also require a PIN (Personal Identification Number) to access any funds while a credit card requires only a signature. Credit cards charge interest for the privilege of using them while debit cards do not. Credit cards are limited by the amount a financial company is willing to lend you, while debit cards are more limited by the available funds you have at a given moment in an account you own.


    Debit cards don't have direct fees, but can cause overdraft charges on your account since they act like a check. Credit cards charge interest like a loan. Users of debit cards are charged fees at ATM machines which are drawn directly from the account; credit cards do not have this charge. Issuers of credit cards can charge a fee for the privilege of using the card; debit cards do not have this charge.


    Credit cards have many consumer protection guidelines and regulations in place which debit cards cannot be held to. If a credit card is lost or stolen, the chance of identity theft is much higher than if a debit card is lost or stolen. Return policies and protections are almost non-existent for debit cards where they are common for credit card purchases.


    The one thing debit cards don't do is promote themselves. Unlike debit cards, credit cards try to get you to use them with gimmicks like cash back and rewards. Credit cards, like loans, need to be shopped for the best rates and offers; unlike debit cards which are basically all just the same type of access to your money. You don't get numerous offers asking you to sign up for a debit card like you do with credit cards.

Does Debt Affect Your Spouse?

Does Debt Affect Your Spouse?

The fact that you're conscious of how you spend your money and don't accumulate a lot of debt doesn't necessarily ward off money and debt problems. Being married to someone who carries high balances on credit cards or takes out several loans can have an impact on your finances and credit.

Co-Borrowing or Co-signing

    It's not unusual for a person to help his spouse get financing for a loan. The spouse applying for financing may not have the best credit score or enough income, and the other spouse agrees to co-sign or become a joint applicant. There's nothing wrong with helping a spouse get a loan. But completing a joint loan application makes both spouses responsible for the balance, and if one spouse doesn't pay, the other must make the payments to keep his credit in good standing.

Marriage and Debt

    Spouses are protected from each other's credit woes if they never co-sign or complete a joint application. Some couples keep their finances and credit separate. In other words, they may not share credit cards, banks accounts and loans. This option can protect spouses. For example, if a husband has a credit card in his name only, and he accumulates thousands of dollars of debt, the wife isn't responsible for this debt because her name isn't on the account. If the husband defaults, the credit card company cannot sue the wife or make her pay his debt.

Community-Property States

    In certain states, the above scenario doesn't apply to spouses. If you live in a community-property state (California, Louisiana, Idaho, Wisconsin, Arizona, New Mexico, Washington, Nevada and Texas) the majority of debts incurred during the marriage become the responsibility of both parties. For example, if a husband applies for a car loan in his name only after marriage, and then defaults on the loan, the auto lender can sue both him and his wife for repayment.


    While the majority of states do not hold individuals liable for debts incurred by a spouse, these individuals must satisfy any debts upon the death of their spouse. Some loans have riders that pay off the debt if the primary account holder dies. But if the borrower did not request this benefit, the surviving spouse is responsible for paying off any loans or credit cards in the deceased person's name.

Sunday, November 20, 2005

Does Your Credit Debt Disappear When You Die?

Credit debt does not disappear once you die. If you die and leave behind a sizable amount of debt, your estate will need to cover those costs. No one likes to think about what may happen to unpaid debt at the time of their death. Planning for it in advance may make the process easier for your estate administrators. Talk to your estate planner to put in place a plan of action so your family does not need to worry about repaying credit card debt after your death. Debts do not, however, transfer to your family or heirs to repay.

Account Owners

    If you are the sole owner of the credit card, no one else is responsible for your debt. It will be paid out of your estate. If you are a joint owner of an account, or there is a co-signer on the account, that person may be held liable for the balance. In cases in which you leave behind debt, but no value in the estate, the lender is forced to write off the debt.

Community Property States

    Married couples who live in community property states may also be held liable for any debt left by their spouse at the time of death. The following states are the only community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In these states, all debt acquired during the marriage is jointly owned by both spouses -- unless evidence is found showing the debt was created solely by one person. In most situations, the debt must be repaid by your spouse, even if only one spouse's name appears on the debt.

Common Law Property States

    In all other states, and the District of Columbia, common law property defines debt repayment. Under these laws, each married couple has the right to his or her own asset ownership, including debt ownership. In these states, when you die, it may not be necessary for your spouse to repay your debts as long as she can prove that the debt was not incurred for the benefit of the marriage. For example, an investment in a business that creates debt may not have to be repaid. A debt created to purchase goods for the home, however, may need to be repaid.

Probate Court

    When a person dies, their estate goes to probate court. The estate comprises everything they own, both tangible and intangible, and all debts. Lenders have a full year to file a claim against the estate. If they do, liquid accounts (such as checking, savings and certificates of deposit) will be liquidated to repay the debts. If more debts are found, assets may be sold to repay the debts. After this point, all remaining assets are distributed to heirs.

Avoiding Probate Decisions

    Individuals who craft an estate plan are able to avoid probate in some cases by placing specific instructions in their will and estate plan directing others how credit debt is to be repaid.

Credit Repair Training

Credit Repair Training

Training in credit repair can help a person through their personal debt, as well as aid in working as a financial consultant or counselor. Many debt consolidation/elimination companies will train employees in the basics of repairing clients' credit scores. As personal debt becomes larger, consumers are in need of repairing their credit score and standing.

The Credit Score

    One of the first skills a person in credit repair must have is the ability to understand the FICO score. To see your own score, call or email Equifax, Experian and Transunion. You will get a report of any companies that reported loan delinquency or nonpayment. The reports of all three companies will give you a rating of creditworthiness by what is called a "FICO," or Fair Isaac Corporation score.

FICO Details

    The FICO score is a number between 350 and 850 based on a person's reported default, current amount of debt and the length of time the person has made purchases on credit. A score of 650 is considered fair, while 750 or higher is considered excellent. Lenders use the number from one or all of these companies to offer terms on home loans, credit cards, car loans and mortgages.

Improve FICO

    Dave Ramsey states that helping a person in debt means attacking the root of the problem, which is over-spending and under-saving. One of the first steps in credit repair is to pay off credit cards. Ramsey advises the "Debt Snowball Plan" where a person should first save to have at least $1,000 in cash on hand (as of 2010.) This emergency fund should only be used for necessities such as a plumbing or car emergency, not entertainment or anything that could be put off and paid for later, when you actually have the money.

Pay Off Debts

    After building a savings account, a person should list debts in order with the smallest balance first. Paying off the smaller amounts reduces the amount owed each month and gives a person a sense of accomplishment. This, in turn, motivates the person further to continue paying off his debts one by one. Once the first debt is gone, increase payments to the next debt targeted for elimination. This will lower your debt, improve your credit and eventually get you out of debt, as long as you continue with the program.

Budgeting and Saving

    While there is no "fast track" to credit repair, the faster you pay off your loans, the quicker your FICO score will go up. Part of credit repair is looking at your expenses and budgeting your lifestyle to free up more money. This money should be placed into a savings account or put to pay off loans. You may have to forfeit a vacation, new clothing or large purchases until you can really afford it. Many times, things don't have to be eliminated, but rather, replaced with less expensive versions. As movie ticket prices climb higher, try renting or watching movies online. Spend social time with friends rather than spending money for cable. If there are expenses you feel you cannot live without, try increasing your income by finding part time work, working extra hours or looking for a higher paying job.

How to Pay Off Your Home Loan Faster

There are arguments both for and against paying off your home loan faster than its 15-year to 30-year term. While doing so may not always make financial sense, the emotional impact of ridding yourself of 15 to 30 years worth of mortgage payments can be a factor as well. Whatever your reasons, the process starts by understanding how the process works and applying it to your situation.



    Review your mortgage amortization schedule to determine the remaining principal balance of your loan, the number of monthly payments needed to pay it off and the interest rate of your loan. Decide how fast you want to pay off your home. For example, if you have 300 payments or 25 years remaining on your loan, you may decide you want to pay it off in 156 payments or 13 years.


    Calculate a new monthly payment using the formula "interest rate/12 x payoff in months x remaining principal balance" as outlined in the UK-US Connections website. For example, assume your current monthly payment is $734, your remaining principal balance is $80,000, the interest rate is 8 percent and you want to pay off your loan in 156 payments. You will need to increase your monthly payment by about $94, or make a monthly mortgage payment of about $828 each month for the next 13 years.


    Use a different method if you do not have an exact payoff date in mind but want to determine the effect of adding one extra mortgage payment per year. Divide your current monthly payment by 12, and add that result to your current mortgage payment. For example, if your current mortgage payment is $734, you will add $61 to your mortgage payment each month, which would pay off your mortgage in 167 months, or about 14 years.

Saturday, November 19, 2005

Can I Sell Something if It Is Part of a Secured Loan?

Can I Sell Something if It Is Part of a Secured Loan?

When you use property to secure a loan, you are placing that property down as collateral. The lender puts a lien on the property, meaning the lender has a claim on the property until the loan is paid off. You cannot sell something if it is part of a secured loan unless you have satisfied the terms of the loan and had the lien removed. Typically, this happens at the time of sale.


    A common example of selling property that is part of a secured loan would be selling your car. You took a car loan three years ago, and you are expected to pay that loan off in two more years. Right now, you owe $5,000 on the loan. You want to sell the car. When you do so, you can use the proceeds of the sale to pay off the $5,000 loan, satisfying the lien. Often, if you are selling a car to a dealer, the dealer will arrange this for you.


    Complications arise if you are selling property with a lien, but you do not plan on settling the lien with the proceeds of the sale. For example, imagine in the scenario above that you plan to keep 100 percent of the proceeds from the sale of your car. In this case, the original lender will need to approve the sale of the property. You and the lender will have to work out a different arrangement to settle the terms of the loan. These complications are exacerbated if the lien on your property is a tax lien or otherwise involves the government.

Replacement Collateral

    One option is to replace the collateral you are selling with another form of collateral of equal or greater value. For example, you can sell your car, keep the proceeds and replace the collateral for the car loan with home equity. In this case, you have modified or refinanced the loan from a car loan to a home equity loan. This can be complicated to arrange directly with a lender.

New Loan

    An alternative to replacing collateral with a lender is refinancing the loan with another lender. For example, you can take a new loan for $5,000 using your home equity as collateral. You can use this loan to pay off your existing car loan, satisfying the lien, and then sell your car. This is typically the simplest option to pursue if you are not satisfying the lien with proceeds from the sale.

Can a Renter Garnish Wages for Rent in Georgia?

When a person rents a property, he will generally sign a contract in which he agrees to pay a set amount of money over a set period of time. If the person fails to do this, then the creditor can go to court and seek the issuance of a judgment against him. In Georgia, landlords can theoretically receive a garnishment order against a debtor, although this rarely happens.


    When a person agrees to rent a space, she also agrees to pay the landlord a set amount of money over a set period of time. If the tenant fails to uphold her end of the bargain, then the landlord may be able to take the person to court. If the judge finds that the tenant does indeed owe the money she agreed to pay the landlord, he will issue a civil judgment certifying this.


    Once a civil judgment has been issued, the landlord will have a number of ways in which she can collect the rental. In Georgia, as in most other states, the landlord may attempt to garnish the money from the tenant. Garnishment can occur only with the permission of a civil judge. A judge must first issue a garnishment order that the landlord can serve on the tenant's employer.

Georgia Law

    Georgia rules related to garnishment hew relatively closely to federal laws regarding garnishment. There are few restrictions on what kind of debt garnishment can be applied to, meaning that a tenant can use garnishment to collect back rent. However, federal law caps the maximum amount of garnishment that a debtor can have taken out of his income stream at any one time at 25 percent. Also, some types of income, such as Social Security payments, can't be garnished.


    Few landlords will go to the trouble of garnishing a tenant's wages, unless the amount of money owed to the landlord makes it financially worthwhile. The process of garnishing a tenant's wages can be long and expensive. In many cases, a landlord will simply evict the tenant and write off the losses or attempt to collect them in another way besides garnishment.

Friday, November 18, 2005

Can a Judgment in California Enforce a Wage Garnishment for a Person in Another State?

In California, the first step to garnishing someone's wages is to have a court confirm that the debtor owes you money so the court can award a judgment . The next step is to have the court issue a writ of execution. If you present the writ to the county sheriff where the debtor lives, the sheriff will direct the debtor's employer to begin the garnishment. If the debtor lives out of state, garnishment may still be possible, but it's more complicated.

State Law

    Your ability to garnish your debtor's wages may be limited by the other state's laws on debt collection. For example, Texas only allows garnishment for child support, back taxes and student loan debt. North Carolina has similar restrictions on in-state creditors, but it makes an exception for court judgments from states with different rules. Some states let you collect just by presenting proof of your California judgment, while others will require you to file an in-state court case first.

Locating Debtors

    Before you can garnish the debtor's wages, you have to find her and the place where she works. California's court system isn't going to do this for you. If you have any mail from her, a canceled check or her attorney's address, this will give you a starting point. If you can find the county she lives in, you know which sheriff to present with the writ. In some cases, you may need to use search engines and other online resources to track your debtor down.

Federal Law

    If you do find your debtor, and you can garnish his wages in the state where he works, you'll have to comply with federal garnishment rules. Unless you're seeking back child support, the most you can garnish is 25 percent of post-tax income per pay period. If someone else is already garnishing the person's wages, you'll have to settle for less than 25 percent until the other debt is settled. Your debtor can, however, agree to let you take more than 25 percent to settle the debt faster.


    If you can't garnish the debtor's wages, you may be able to levy her bank account after she deposits her paycheck in it. If the debtor owns a business, you also can ask the sheriff to perform a till tap, which enables you to take money out of the business accounts to settle a debt. In some cases, you may be able to negotiate a settlement without going through the garnishment, so attempt to communicate with the debtor before you file the writ.

Personal Credit Card Debt Negotiating Tips

Personal Credit Card Debt Negotiating Tips

When you have personal credit card debt problems, they can be overwhelming. However, the sooner you begin negotiating with your creditors and telling them you want to make good on your debts, the sooner they won't be a problem any longer. At first, you may feel nervous, particularly if you are not used to negotiating. But negotiating will become easier with practice.

Call Your Creditors

    If your debts are particularly overwhelming, this seemingly obvious step may be difficult. However, you need to work up the courage to make phone calls to every one of your credit card companies to begin the negotiation process. It is something you cannot do via e-mail, online or postal mail. Make sure you are well informed as to your late fees, current principal amount owed, current interest rate and any other accumulated fees each credit card may have assessed on your accounts. You don't need to have this information memorized, but keep it close at hand and know where each number is located on each document, for quick reference. That way, you can sound informed while speaking with your creditors.

Be Polite, But Firm

    No matter what happens, do not lose your temper. It is the credit card company service representative's job to help his company make money. Even if a customer service representative begins to make you uncomfortable, avoid the temptation to start yelling. While it may make you momentarily feel better, ultimately it will do nothing to help your case and could even harm it.

    Ask directly for an interest rate reduction, and be willing to explain the situation that caused you to fall behind in your payments (such as a job loss or sudden medical bills). If the customer service representative cannot or will not help you, ask politely to speak to the supervisor. Continue escalating your call through customer service by being politely insistent that your situation be dealt with. Remember that even a small reduction in interest, such as an annual percentage rate of 11 percent instead of 14 percent, will make a huge difference. Don't forget to say thank you whenever someone helps you.

Invoke Your Loyalty

    If you have been a card holder for a particularly long time, make sure to mention it. Tell the customer service representative why you have stayed loyal to that credit card company for so long. Do not lie, but embellish on your positive personal experiences with that creditor as much as you can. Make sure you sound as sincere as possible, but never like you are acting. Tell the customer service representative that you would hate to discontinue your partnership with her company after such a long and mutually beneficial history. This is a particularly useful bargaining chip if you had a previously spotless record of on-time payments with a creditor but only recently fell behind due to an unforeseen financial hardship for which you can provide evidence.

Mention Other Credit Card Offers

    Credit card offers advertising low interest rates and free or low-cost balance transfers abound. If the mere mention of your loyal history with a creditor does not do the trick, mention that you would hate to close your account with the creditor you're speaking with and move your existing balance to another credit card company. Mentioning the idea of switching your loyalties (and money) elsewhere may lead to a lower interest rate.

Principal Reduction

    In a worst-case scenario, you may have credit card debt that is delinquent by 90 days or more. If that is the case but your debt has not yet been charged off by your creditor to a collection agency, ask for a reduction of your principal amount owed. The New York Times advises that this practice can benefit both you and your creditor if you were previously a good customer who paid on time but recently fell on hard times. Your creditor wants to get paid, and you want to pay your debts in good faith and not have your credit rating suffer. The worst a creditor can do is say no, but according to the Times, creditors generally are willing to work with their customers on these matters.