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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..

Tuesday, January 31, 2006

How to Stop Paycheck Garnishment

If you owe money, a creditor can sue you in court. After successfully suing you, she can ask that your wages be garnished. Every pay period, your employer must withhold a certain amount of your pay and give it to your creditor. The creditor cannot garnish your entire paycheck; you must retain a small amount to pay for food and other expenses. You can stop garnishment by paying the debt back or otherwise settling it, in or out of court.


Paying Back Debt in Full


    Visit the clerk of the court. Ask him how much you owe, including court costs.


    Pay the entire amount at the clerk's office. Get a receipt from the clerk.


    Bring your receipt to your employer. Tell him that the receipt proves you have settled the debt and ask him to stop the wage garnishment.

Make Payment Arrangements With Your Creditor


    Contact your attorney. Ask him to set up a meeting with your creditor's attorney to discuss payment arrangements.


    Write a budget that includes a weekly or monthly payment to your creditor. Determine the maximum and minimum amounts you are willing to pay to your creditor per week or month. Keep in mind that you get to keep at least $154.50 per week if your wages are garnished; do not attempt to live on less than this in your budget.


    Discuss the budget with your attorney. Let him know the maximum you are willing to pay. Instruct him to meet with the creditor, or her attorney.


    Attend that meeting with your attorney. Let him negotiate a settlement on your behalf.


    Sign a written statement saying that you will pay the agreed-upon amount to the creditor each week or month. Clarify terms before signing. After signing, submit the statement to the clerk's office. The court will order that your employer stop garnishing your wages. Bring a copy of the signed statement and the court's new order to your employer and ask him to stop garnishment.

File a Slow-Pay Motion


    Obtain a petition for a slow-pay motion from the clerk of the court. Fill out the petition completely. In addition to your name and contact information, you must provide information about your place of employment, how much you make and how often you get paid. You also must provide contact information for your creditor, your case number, the total amount you owe and how much you have paid already through garnishment. If you are not sure of any of these details, ask the clerk to look them up for you.


    Give the completed petition to the clerk of the court. Pay any required filing fees. The clerk of the court will schedule a hearing and give you the hearing date.


    Make a budget. Include all your expenses, such as rent and food, and all sources of income. Determine how much you can realistically pay each week or month. Your payment plan should include keeping at least $154.50 each week, as you will get this amount if you continue to pay through wage garnishment.


    Attend the hearing. Bring your budget and copies of your bills, your last pay stub and your most recent tax return with you. The judge will ask you to explain why you cannot pay the full amount all at once and how much you can pay. Give him your budget and related documents as evidence of your claims. Your creditor's attorney may dispute your claim and request that the judge require you to pay a higher amount per week or month. The judge will order you to pay whichever amount she deems reasonable.


    Bring a copy of the judge's new order to your employer and ask her to stop garnishing your wages.

Monday, January 30, 2006

If My Bank Froze My Account, What Is the Fastest Way to Unfreeze It?

If a creditor freezes your bank account, you may have the funds in the account released under certain conditions. For instance, federal laws prevent a creditor from freezing your bank account if the amount in the account is below an established threshold. In addition, the law protects bank accounts that contain funds from Social Security and other types of exempt income. In such cases, getting your account released is a matter of providing proof.

Exempt Income Protection Act

    The Exempt Income Protection Act (EIPA), a federal law, protects bank accounts that contain subsistence funds such as government benefits, pensions and other types of unearned income such as a worker's compensation. The law prevents creditors from freezing your bank account to pay off private debts such as credit cards. Under EIPA, if your bank account contains less than $2,500 from sources such as Social Security, unemployment benefits or public assistance, a creditor cannot freeze your bank account. For all other source of funds, the threshold is $1,740.

Unfreezing your Bank Account

    The quickest way to unfreeze your bank account is to vacate the judgment against. To freeze your account in the first place, the creditor must obtain a default judgment in court giving it permission. According to New York-based Neighborhood Economic Development Advocacy Project (NEDAP), a client has a better chance of vacating the judgment, which automatically releases the lien on your account, by going to court to negotiate a settlement. If you can prove you have exempt funds in your account, the court will vacate the judgment. You may want to consider hiring an attorney to represent you in court.

Joint Bank Accounts

    If you share a joint bank account, the other party may have the account released under Banking Law 678. She must prove she added you to the account for convenience, you do not have an ATM card or withdrawal privileges and the money in the account belongs to her. If she cannot prove the account is for convenience only, she can recover half the funds in the account. The law presumes half the funds belong to her. Therefore, a creditor cannot take more than half the funds in the account.


    If you are in default, do not wait until the creditor takes the matter to court. This makes it more expensive for you, as the creditor adds its legal expenses to the amount of money you owe. By law, the creditor must properly notify you of a court summons to appear in court to address the debt. Even then, you have an opportunity to negotiate with the creditor and, in some cases, for a reduced amount. Creditors often prefer to settle out-of-court.

How to Repair & Fix a Suspicious Address on Your Credit

How to Repair & Fix a Suspicious Address on Your Credit

The Fair Credit Reporting Act was passed in order to more efficiently and effectively protect consumers and their financial lives. The FCRA gives a free credit report to each consumer in the U.S. and provides timely handling of credit report inquiries. It also allows customers to change erroneous information on their reports. If you have a suspicious address on your credit report, you need to verify it and send inquiries to all three credit bureaus.



    Pull a copy of your credit report before sending off any emails or letters to the three credit bureaus, which are TransUnion, Equifax and Experian. You first need to confirm that there is indeed an inaccurate address on your report. To get a free copy of your credit report, visit AnnualCreditReport.com.


    Print out the credit report and scan through the demographic information. This is where your name, address, employer, Social Security number, date of birth and telephone number are listed. Find the inaccurate street address and circle it. Make photocopies of this report, including the circled area.


    Copy down the addresses of the three credit bureaus, available under Resources. You will need to contact each bureau to correct the address on the credit report.


    Write a short letter explaining the problem. Keep the letter business-like, specific and nonemotional. You may have suffered a financial hardship due to a credit report error, but this is not the place to take out your frustration. You simply need the record corrected. Make sure to include your name, Social Security number and date of birth. Include copies of at least two documents confirming your correct address.


    Send the letters to all three bureaus. The credit bureaus have 30 days to acknowledge your inquiry, and another 90 days to address and correct the problem.

How to Find the Best Company for Consolidation Loans

Debt consolidation companies can be reputable, helpful services that assist their customers in getting out of debt or nearly criminal enterprises that end up ensnaring vulnerable, undereducated consumers in a web of even larger debts than the ones they were trying to get out from under. Finding an excellent debt consolidation service requires some research and a willingness to compare offered consolidation loan rates.



    Apply for a personal loan from a bank or credit union if you still have a reasonably strong credit score (above 680 on the FICO scale). If you win approval for a personal loan, you can consolidate your higher interest debts yourself without paying the fees that will be attached by a debt consolidation service. In some cases, banks may offer special rates on loans used for debt consolidation.


    Contact a non-profit consumer debt counseling service before working with a debt consolidation company. You can get a referral from the National Foundation for Credit Counseling. These companies will take a look at your finances and your debt situation and advise you on how to best proceed. If you still think that debt consolidation is a good idea, the service will be able to refer you to reputable debt consolidation companies.


    Check any debt consolidation company that you're interested in with the Better Business Bureau. Read the reviews carefully. Many debt consolidation companies charge very high interest rates and fees that make their services less valuable than it would be otherwise.


    Compare the interest rates and fees that you are offered by various debt consolidation companies to find the best fit for your debt problems and budget. If a company refuses to quote you an interest rate or to explain their fees, don't work with them.


    Read any agreements carefully before deciding to work with any debt consolidation company. Ask questions if you're confused about anything in the contract. Find out what happens if you become late on your consolidated loan payments. Hidden fees can cut into the utility of a consolidation loan.

Help With Paying High Credit Card Bills

Help With Paying High Credit Card Bills

You must be proactive if you want help paying off your credit card bills. While it would be great to receive free money for paying your credit cards, chances are you'll have more success by utilizing options that are readily available. Make a commitment to pay off your debt, and once you choose an option, stick with it until you're debt free.

Lower Interest Rates

    One of the easiest ways to automatically reduce your monthly credit card payments is to ask your credit card companies for lower interest rates. Collect those credit card offers you receive in the mail to get a general estimate of the range of interest rates you should aim for, then call your creditor's customer service line to ask for a lower rate. If you've been a customer for a long time, you may mention this in your conversation with the customer service representative for more leverage. If you are denied, call again another day, or ask to speak with a manager.

Consolidation Loans

    Consolidation loans wipe out your multiple debts, allowing you to make one monthly payment under a single interest rate. This option is ideal for consumers who have trouble keeping track of their multiple payments. These loans are often advertised at extremely low interest rates to lure consumers into thinking that they will pay far less by using a consolidation loan than by continuing to pay their credit cards. But these ultra-low rates are usually reserved for those with very high credit scores. Before applying for a consolidation loan, find out about how much lower you can get your interest rates. The appearance of a consolidation loan on your credit report may make it difficult to obtain new credit down the road.

Debt Management Plans

    People who have defaulted on payments or who are having trouble making payments should make an appointment with a credit counselor, who may suggest using a debt management plan. Unlike debt negotiation or settlement companies, credit counselors help consumers to diagnose and deal with their financial problems from the root. Credit counselors help consumers to create budgets and educate them on how to spend and save wisely. However, if the credit card payments are overwhelming the client, a debt management plan may be a wise course of action. Under a debt management plan, the credit counselor works with the creditor to negotiate lower interest rates and payoff balances. Then, over a set period of time, the consumer makes payments to the credit counseling company, who pays the creditors. Since the credit counseling company acts as the middleman, the Federal Trade Commission recommends checking with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling to make sure your credit counseling company is reputable.


    Debt management plans and debt consolidation loans are both seen as dark marks on your credit report because it demonstrates difficulty in meeting your financial obligations. Consolidation loans have less of an impact because they generally require collateral, such as your house. Debt management plans hold more weight because they usually involve negotiating lower payoff balances, which means that you weren't able to pay the full amount of your agreement. However, both methods are better than defaulting on your loans and are particularly beneficial if you continue to stay out of debt in the future.

Credit Card Debt & Nursing Home Fees

Credit Card Debt & Nursing Home Fees

Senior citizens are carrying more credit card debt now than ever before. Debt often becomes a problem after the senior citizen or his or her spouse suffers a health care crisis and requires nursing home care.


    According to CBS News, the amount of credit card debt carried by senior citizens increased 89 percent between 1992 and 2001. Many seniors get into trouble with credit cards after they or their spouses suffer a medical crisis. Hospitals and nursing homes may urge seniors to pay for bills using their credit cards.


    If you discover your loved one has charged a large medical expense like nursing home care, help him or her explore other options to pay medical bills. For instance, if your loved one's assets are depleted, he or she is probably eligible for Medicaid to cover the cost of a nursing facility.


    Unless you have signed an agreement with a credit card company assuming responsibility for your loved one's debt, you are not responsible for paying his or her credit card bills. No matter what a creditor or bill collector says to you, do not obligate yourself to pay any of your loved one's unsecured debt without talking to an attorney or financial counselor.

Sunday, January 29, 2006

How to Answer a Suit From Discover Bank

How to Answer a Suit From Discover Bank

If you have an outstanding debt with Discover Bank, they are entitled to pursue collection efforts against you, including a civil lawsuit. While filing a lawsuit is often a last resort, creditors may be willing to put forth the time and expense to recoup a debt if all other efforts have failed. If you've been served with a suit from Discover Bank, take the following steps to prepare your answer and establish a credible defense.



    Choose your defense. When filing your answer, you are required to offer some sort of explanation or defense as to why you feel you are not liable for the debt. Inability to pay is not a suitable defense and you must be able to provide supporting evidence for your claim.


    File your answer with the court within the time frame as prescribed by the summons. This may be anywhere from ten to thirty days. You may respond via a Notice of Appearance, which prevents the court from entering a default judgment against you, and a subsequent Answer, which notifies the court of your defense. You must file the proper paperwork with the court prior to the court date.


    Request validation of the debt from Discover Bank within thirty days of receiving notice of the debt. This means that the creditor must provide written documentation that you are liable for the debt and that they have legal standing to collect on it. Once you request validation, collection efforts against you must stop until proof is provided. If the creditor cannot provide this information, then the lawsuit cannot proceed.


    Check the statute of limitations regarding debt in your state. Each state has different regulations regarding time-barred debts, or those debts whose age essentially makes them uncollectable. This simply means that you cannot be sued for the debt if its age has exceeded the statute of limitations. This may be anywhere from two to ten years depending on the type of debt.


    Pull your credit report from each of the three major credit reporting bureaus and verify the age of the debt. The statute of limitations generally begins at the initial date of default, or the first missed payment. Check your reports carefully to ensure that the account is being reported correctly, as debt collectors may re-age accounts to circumvent the time restriction. If the debt has aged out of the statute of limitations, you still owe it but you cannot be sued for it.


    If the creditor is able to provide validation and the statute of limitations has not passed, you may need to consider a settlement proposal, wherein you offer a lump-sum payment for less than what is owed. While doing so acknowledges your responsibility for the debt, it also helps you to avoid the prospect of a judgment for the full amount being entered against you in court.


    If a judgment is entered against you, you may appeal. Keep in mind that for a creditor to actually collect on a debt, further court action is required. If you do not have any assets with which to pay, you may be able to have the court deem you judgment-proof, meaning the creditor can't pursue further collection efforts until your financial situation improves.

Can You Get a Consolidation Loan With a Co-Signer If Your Credit Is Really Bad?

A consolidation loan can be an ideal solution for someone who has many monthly payments on debts at high interest rates. The consolidation loan pays off all the other debts and leaves the borrower with just one monthly payment, ideally at a lower interest rate. However, getting the loan can be difficult for someone with a bad credit score. One solution is to have a co-signer who applies jointly for the loan.


    If your credit is really bad, the most difficult part of getting a consolidation loan with a co-signer will likely be finding someone who is willing to co-sign. The co-signer takes on full financial responsibility for the loan, meaning that if you fail to make the payments, the co-signer must make the payments. Part of co-signing a loan includes agreeing to pay the full amount of the loan, if needed, including late fees and collection costs. Ask friends and relatives if they would be willing to co-sign, and convince them that you are committed to paying the loan in full.

Getting a Loan

    Not all lenders handle consolidation loans with co-signers. Before visiting a bank or credit union, call to confirm whether the lender accepts applicants with bad credit and a co-signer. Shop around for the best interest rate, because they differ from one lender to another. If the co-signer has a good credit score, you should be able to get a much lower interest rate than you would be charged if you were applying alone.

Tips for Success

    Because the co-signer has a solid credit score that allows you to get the consolidation loan, this person can also be a useful resource for planning your finances. One way to increase your chances of making your payments is to have your co-signer help you make a budget that includes the consolidation loan payments. Stick to the budget and avoid using credit cards for any expenses, because these will add additional debt payments to your monthly expenses.

Missing Payments

    If you think you might not be able to make one of your scheduled payments on the consolidation loan, tell your co-signer as soon as possible. Missing a payment will affect your co-signer's credit score as well, so he has a right to know about it. Try to work out a solution together, perhaps having you pay as much as you possibly can and having the co-signer pay the difference on the monthly payment.

How Soon Does a Judgment Show Up on a Credit Report?

Major credit bureaus TransUnion, Experian and Equifax usually acquire information about court judgments from third-party information providers. Companies providing the information regularly review court records and notify the credit bureaus about judgments, tax liens and bankruptcies. It is impossible for anyone to precisely predict how soon judgments will appear on credit reports. Court records are reviewed each day the courts are open, and it depends on how fast the information is relayed to credit bureaus.


    Experian reports on its website in 2011 that "court records are updated periodically" and that credit bureaus move quickly to add information to credit reports told about judgment. People receiving could judgments should expect the information to show up on credit reports within about 30 to 60 days or even sooner.


    Experian describes a judgment as a debt owed as the result of a lawsuit. Judgments, also called monetary judgments, are legal orders signed by a judge. The judge rules in favor of the party filing suit and demands that the person sued pay a specific amount of money. The information is listed as a judgment on the report but is updated once paid to show as a "paid" judgment. Judgments remain on credit reports for seven years, and are very damaging to credit when first listed. Judgments hurt credit scores at first but are less damaging after two or three years.


    The timing of a judgment is important for people applying for a mortgage or facing some other credit decision. For example, a mortgage company could require full payment of a judgment before granting credit approval on a home loan. However, many people with judgments are already suffering from bad credit. Typically, companies have reported negative information long before any court action over debt. Credit bureaus are told about late payments on the account and also are alerted when the account is charged off and listed as a collections account with a debt collector. A charge-off means the account was closed by the credit card company and sold or assigned to a debt collector.

Credit Repair

    There is no way to stop a judgment from appearing on a credit report. Credit repair agencies say they can remove judgments from reports, but the Federal Trade Commission reports there isn't a legal or ethical way to do so.

Saturday, January 28, 2006

Types of ACH Payments

Types of ACH Payments

Automated Clearing House (ACH) payments occur daily in the United States and are playing an increasing role in consumer and business financial transactions.


    ACH is a national clearing house in the United States for processing electronic fund transfers (EFT) and is governed by the Federal Reserve and NACHA (the Electronic Payment Association).

The Facts

    ACH payments can be in the form of a debit or credit card transaction for person-to-person, business-to-customer and business-to-business encounters.


    Credit card transactions occur instantly, but debit card transactions are like checks. While debit payments file faster than paper checks, they can still bounce or take days to process.


    Common types of ACH transactions are web-initiated, prearranged payment and deposits for recurring billing/payments and corporate cash disbursement for business-to-business transactions.


    In the first quarter of 2009, almost 92 percent of ACH transactions were commercial. The rest were from the government.
    Of the commercial ACH transactions, 65 percent were debit and 35 percent were credit.

How to Stop Collection Agencies

Many people mistakenly believe that if they are behind on paying their bills, there is no recourse from the dozens of daily phone calls they receive from collection agencies. However, according to the Federal Trade Commission (FTC), you do have a right to halt these incessant calls as well as threatening letters.



    Talk to the collector. While it may seem counter-intuitive to talk to the person you are trying to get rid of, it is important to talk to them at least once to determine exactly what it is they are trying to collect and why. It may be in your best interest to work with the collector to reach a settlement instead of cutting off all communication with them. However, talking to them may not resolve the issue, and you may decide that preventing further communication is for the best after all.


    Tell the collector in writing that you would like them to stop contacting you. Be polite, but firm in your request. Make sure you are clear that you would like all communication stopped. Make sure the letter is signed and dated.


    Make a copy of your letter. It is best to put the photocopied version of the letter in a safe place in your home, then mail the original.


    Send the original copy of the letter by certified mail. Also, make sure to request a return receipt to obtain proof that the collector actually received your letter.


    Relax. According to the FTC, after receiving your letter, the creditor only has a legal right to contact you to tell you that there will be no further contact or to inform you that they will be taking legal action against you for the debt. If the collector contacts you about something other than these two reasons, it will breach the Fair Debt Collection Practices Act (FDCPA), and you then may have a right to take legal action against them.

How to Report to a Credit Company

Reporting a delinquent or late payment on a debt may not be something you want to do, but it can be an important part of your business. Small business owners are often confronted with debtors who can't or won't pay a debt. Knowing how to report these delinquencies is important, and understanding the various ways it can be done affords you more options.



    Hire a collections agency. One of the easiest, and most common, ways to report a delinquent or late payment on a debt is to hire a collection agency. These companies will often be members of one of the credit reporting agencies (CRA's) and will be able to report the delinquency on your behalf. Collections agencies typically report the late payment to the CRA before they begin a collections action.


    Contact a credit reporting service. Some small businesses may not want to hire a collections agency but will still want to have the delinquency reported. Because the CRA's do not allow every business to be a member, small businesses can employ a credit reporting service. These are companies that report to the CRA's on the creditor's behalf. Unlike the CRA's, they don't generally provide consumer credit reports themselves. Instead, they maintain memberships with one of more the the CRA's and allow their customers to file through them.


    Sign up with the credit reporting agencies. The three companies that provide consumer credit reports (Equifax, Experian and TransUnion) each monitor a consumer's credit history. They do this by receiving information from reporting parties like credit card companies, loan companies, etc. While each of these companies has different requirements about who can provide them information on consumer credit, you might be able to sign up with them directly. An application process and a fee is usually involved.

Interesting Facts About Debt

Interesting Facts About Debt

Debt is a common but often risky source of funds for many Americans. Using debt to pay for homes, cars and education is fairly standard in the United States. However, a buy-now-and-pay-later spending mentality has led to many Americans incurring significant personal loan and credit card debt.

Student Loan Debt

    Business Insider writer Michael Snyder says Americans owe a total of $875 billion in student loan debt, which is actually more than Americans owe in credit card debt. Over the past three decades, the cost of attending college has risen by more than 400 percent. Costs include tuition, related fees and living expenses.

Credit Card Profits

    A look at how much credit card companies take in annually in credit card fees and financing charges shows why so many credit card providers exist, and why it is so hard for Americans to get out of debt. In its "12 Amazing Facts about Credit Card Debt," Delray Credit Counseling indicates that in 2006, for instance, the card industry made $55 billion in credit card fees and another $90 billion in finance charges. This demonstrates the hazards of late payments.

Fast Food Loan

    When you think about the common uses of loan funds and credit card financing, fast food payments likely do not immediately come to mind. However, Delray Credit Counseling notes that in 2006, Americans charged $51 billion in fast food purchases on their credit and debit cards. According to Delray, that is equal to 10.2 billion Big Mac meals, 3 billion pounds of fries and 1.7 billion gallons of Coke. This fact partly shows American reliance on plastic, but also shows the buy now, pay later mentality in action.

The Young

    Not only do college students often incur significant debt to pay tuition and to get an education, they must also deal with being a major target market for credit card companies. Consolidated Credit Counseling Services indicates that in 2008, about one-in-five 18- to 24-year-olds were considered in "financial hardship," largely because of excessive debt. Lenders compete heavily to acquire young consumers for lifetime interest income possibilities. While young people often lack responsibility to manage debt effectively, it is sometimes beneficial to establish a good credit history early through responsible borrowing and paying off your credit bills.

Friday, January 27, 2006

Can My Wages Be Garnished in Tennessee for a Credit Debt That I Haven't Paid?

Can My Wages Be Garnished in Tennessee for a Credit Debt That I Haven't Paid?

Having unpaid debt weighs heavily on you, and fearing your wages will be garnished can cause distress and worry. Tennessee has laws that govern wage garnishment. While your wages can be garnished for unpaid debt, there are steps a creditor must take to be able to garnish wages. There is also a limit to what a creditor can take from your paycheck.

Student Loans, Taxes and Child Support

    There are three types of debt that do not require legal intervention to garnish your wages, tax refunds or bank accounts: Student loans, taxes and child support. The government agencies responsible for these debts must provide you notice of the pending wage garnishment, and you will have approximately 30 days to challenge the garnishment; however, your employer must withhold a percentage of your wages once the garnishment paperwork is received. A court order is not required to uphold the wage garnishment.


    All other creditors must go to court and be granted a judgment to garnish your wages. This process involves the creditor providing you notice of the court date, so you can prepare and attend the legal hearing. A creditor who attends the court hearing and can show the judge that you do, in fact, owe the debt and have not repaid it may get the judge to sign the judgment. The judgment is then sent to your employer, who is required by Tennessee and federal law to garnish a portion of your wages.

Tennessee Law

    Tennessee has not established guidelines separate from federal law. Federal law allows a creditor to take a maximum of 25 percent of an employee's disposable wages. The employer is required to garnish your wages until the debt is repaid in full. An employer is barred from terminating your employment due to a wage garnishment.

Preventing a Judgment

    Once a judgment has been granted, the creditor has legal rights to take the money from your bank account, place liens against your property and garnish your wages. Negotiating a repayment plan with a creditor prior to a judgment is in your best interest. Coming to an agreement outside of court gives you more control of the situation, allowing you to negotiate what you can afford, rather than letting the creditor take 25 percent of your wages. Negotiating the debt repayment will also prevent a judgment from being recorded on your credit report, which would cause further damage to your credit score.

Thursday, January 26, 2006

What Happens After You Answer a Summons for a Credit Card?

A summons is notice of a lawsuit. In a credit card case, the card company or debt collector files the suit in civil court to collect on a delinquent account. The lawsuit is a last resort to collect the debt and usually follows months or even years of collection efforts. Answering the summons allows you to defend yourself in court, but some debtors fail to appear, according to "The New York Times." The Times reports that most consumers facing a summons never offer a defense, allowing credit card companies to claim easy victories. After answering a summons, debtors may want to seek the advice of a consumer affairs attorney.


    Credit card companies usually close credit card accounts after six months of nonpayment and list them as charged off. Some card companies may close accounts sooner. The charge off does not end the debtor's responsibility for the balance; a charge off is just an internal accounting term. Eventually the card company sells or assigns the account to a debt collector. Debt collectors may eventually file a lawsuit seeking full payment.


    A lawsuit over an unpaid credit cad debt begins for the debtor with the delivery of a summons and complaint -- a document usually presented to the debor by a courier. The summons is only a few pages long, much shorter than the complaint, which is the actual lawsuit. The courier typically hand-delivers the summons and complaint to the debtor at his place of employment or home, or anywhere else in public. In some states, the documents arrive by certified mail or ithey are simply left by courier at the debtor's last known address. The summons includes specific instructions for responding to the lawsuit. Depending on the state, the lawsuit may require the debtor to answer the charges by sending a written response -- or by appearing before a judge on a certain date.

Notice to Appear

    Filing a written response to the lawsuit before a specified deadline notifies the court that the debtor is contesting the allegations in the complaint. Upon receipt, the court schedules a court appearance. Laws vary by the state, but the court could schedule a trial, or a hearing to discuss a possible settlement. The court sends the debtor a "notice to appear" that outlines the next steps.


    A pre-trial settlement conference is generally a good outcome for the debtor. There simply are no viable defenses for a debtor in a credit card case -- if the debtor really owes the debt. The attorney for the credit card company should be able to easily prove the case and win a judgment for the entire balance due. From there the attorney can request garnishment of the debtor's bank account or wages. Settling out of court prevents a judgment. Settlement discussions are possible even if the court orders the debtor to appear for a trial. In that case, the debtor can directly contact the attorney for the credit card company to discuss a settlement. The attorney's contact information appears on the summons and complaint.

How to Take a Debt Collector to Court

If you have outstanding debt and are unable to pay your bills, you may find that your creditor has sold your debt to a debt collection agency. A debt collection agency may use a variety of tactics to collect the debt; however, they are bound by a certain set of laws and rules. If these rules are violated, you have the right to sue the collector. Hiring a lawyer specialized in consumer law is advised. Most debt collectors, however, settle out of court to avoid the steep legal fees associated with such cases.



    Know which practices are illegal for debt collection agencies. These include harassment, which includes the use of obscene language, repeatedly calling you to the point of annoyance, publishing your name to the public -- with the exception of credit reporting agencies -- or the use of violence. They are also forbidden from using false statements, such as misrepresenting themselves or the amount you owe. Debt collectors are also forbidden from using unfair practices, such as charging interest rates outside of the terms of the original debt. If a debt collector violates any of these rules, you have the right to take a collector to court.


    Hire a lawyer experienced in consumer law. The National Association of Consumer Advocates, NACA, publishes a list of experienced consumer lawyers in your local area. An experienced consumer advocate will be familiar with the laws relevant to consumer rights with respect to debt collection and the violations of debt collection agencies. Most of these type of lawyers work on a contingency basis, which means that you will only need to pay their fees if you win the case or reach a settlement with the debt collection agency.


    Sue the debt collector. This must be done within one year of the debt collector's violation. You will need to prove that the debt collector has violated the law. If the collector harassed you with phone calls, you must have the recordings of these phone calls to present in court. If the debt collector changed the conditions of the debt, you must prove this by comparing their terms with the original creditor. A debt collector may be sued in either a state or federal court.

Wednesday, January 25, 2006

Can a Collection Agency Put Lien on a Home Before Bankruptcy in Kentucky?

Creditors often turn over accounts that are past due to collection agencies for collection on the debt. Although a collection agency is a separate entity, it works on behalf of the creditor. If it appears as though the debtor is not going to voluntarily pay the debt, the creditor may file a lawsuit. In Kentucky, a creditor may be able to attach a lien on personal property prior to obtaining a judgment. A judgment is automatically attached after the creditor obtains it. Bankruptcy may temporarily protect the property from enforcement of the judgment.

Pre-Judgment Lien

    Kentucky allows a creditor to attach a lien to real property prior to obtaining a judgment against the debtor under some circumstances. There must be an active lawsuit pending against the debtor, and the creditor must file a motion requesting the pre-judgment lien. The plaintiff, or creditor, must give the court a valid legal reason to attach the lien prior to judgment. Common reasons include an attempt to conceal or sell the property by the debtor, disappearance of the debtor or attempted removal or destruction of the property. The creditor is required to post a bond for a pre-judgment lien.

Post-Judgment Lien

    Once a creditor has won a lawsuit against you, the court enters a monetary judgment against you. According to the laws of Kentucky, all judgments act as an automatic lien against any real property located in the commonwealth of Kentucky. The creditor must file the judgment with the county clerk and notify the debtor of the lien.


    Bankruptcy actions fall within the jurisdiction of the United States federal courts; however, state exemption laws govern the exemptions to which a debtor is entitled. Once you file for bankruptcy protection, the court enters an automatic stay that prevents all creditors from starting or continuing collection efforts for debts you owe. Filing for bankruptcy does not remove a lien from personal property, but it will stop any efforts to collect on the judgment. Depending on which type of bankruptcy you file and the reason for the judgment, the judgment may ultimately be discharged and the lien on your real property removed.


    Most states, including Kentucky, allow a debtor to declare a certain amount of property, assets or income exempt from creditors. Kentucky allows a $5,000 homestead exemption for all proceedings as well as a $1,000 general exemption in bankruptcy proceedings. Claiming an exemption protects your property from a creditor up to the amount of the exemption. The general bankruptcy exemption may be used along with the homestead exemption if you have not used it for anything else which provides another $1,000 exemption for your property.

How to Terminate All Credit Card Debt

Dependency on credit cards is a big problem in America. The average family owes $8,000 in credit card debt, according to the American Bankers Association. Making the minimal monthly payments on your credit cards won't help you get out of debt---and you'll end up spending a lot more money in the long run. By developing a well-thought-out plan and following a few basics of money management, you can terminate your credit card debt and move down the path to financial freedom.



    Compile your credit card statements and map out your debt. Create a spreadsheet with four columns: credit card company, outstanding debt, interest rate and minimum payment. The credit card with the least amount of debt should be at the top of the list, while the credit card/creditor with the highest amount of outstanding debt should be placed at the bottom of the list. If two credit cards share the same amount of debt, list the card with the higher interest rate first.


    Begin paying off the credit card with the least amount of debt first, while continuing to make the minimum payments on the others. This approach was developed by financial planner Dave Ramsey and is known as the Snowball Effect. By paying off the smaller debts first, you'll get closer to a debt-free lifestyle. Each successful payoff will give you the momentum you need to tackle a larger debt.


    As each account gets paid off, make sure it gets closed, too. You can't truly terminate credit card debt if you continue to borrow against the same accounts. Cancel all accounts once you have paid them off.

Settlement Procedures

The state of the economy has a lot of consumers overwhelmed with debt. Anyone struggling to make ends meet may want to consider settling their debts. To settle your debt there are a number of procedures you will need to follow. It's important to note that there are some consequences as a result of following through with this process. If you can make your monthly payments comfortably, then debt settlement may not be for you.

Settlement Procedures

    Once you decide to settle your accounts, make a list of all of your debts including the name of the creditor, balance, monthly payment and interest rate. Determine the amount of the settlement you are seeking and do the same for the payments and interest rate. Make sure you can afford to make the new payments and never let a creditor force you to make a payment that does not fit in with your budget.

Contact Creditors

    If you are thinking about settling your debt, contact your creditors and negotiate a settlement on your own. A lot of creditors are willing to work with you in this regard because of the alternative. If no settlement is reached, bankruptcy could become a reality, which stops unsecured creditors from receiving anything. Explain your situation to the creditor. You may be able to settle your debt for as little as 40 to 50 percent of your outstanding balance. Make sure you receive your settlement offer in the mail before you send the creditor any money.

Debt Relief Programs

    There are a lot of debt relief programs available that will help you settle your debt. A program such as this has the ability to negotiate debt settlement with your creditors in the amount of 50 percent of your monthly payments. They will contact all of your creditors and negotiate settlements. You will most likely receive lower rates of interest with your creditors.

Credit Report

    Once you settle your deb,t it will have a negative impact on your credit report by lowering your credit score. When your score is lowered, you may have to pay a higher interest rate for other credit products, such as mortgages, auto loans and credit cards. Some creditors may charge a substantial amount of fees and it may become difficult to get approved. Derogatory information such as debt settlement can remain on your credit file for seven years.


    Depending on your situation you may have to pay taxes on the settled debt. If you owe $8,000 to a creditor, and you settle for $5,000, you may have to report $3,000 as taxable income when you file your taxes. Once your debt is settled the creditor may send you a 1099-C, which is a cancellation of debt form. There are two situations which will keep you from reporting your settled debt as taxable income: if you file a petition for bankruptcy and if it is determined that you are insolvent. Insolvency is when your liabilities exceed your assets. If you receive a 1099-C form contact your tax advisor or a tax attorney immediately to see how you should proceed. If you meet either one of the aforementioned situations your tax professional may suggest you file an IRS form 982 in conjunction with the 1099-C


    There are fees you will incur when you enroll with a debt relief program. Fees can be calculated a number of ways.They can calculate it based on the number of creditors and balances, case by case, the amount of debt settled, or as a percentage of your total debt such as 15 percent.

Tuesday, January 24, 2006

How Often Does Reporting Occur for Home Equity Lines of Credit?

Home equity lines of credit are serious obligations and appear on all credit reports. A home equity line, which is also called a HELOC, is a real estate loan tied to the equity in a home. Lenders reviewing an application for credit always take note of how well the prospective borrower is paying real estate loans. People with excellent credit scores and control of their finances usually never are late with a mortgage or home equity loan payment.

Credit Bureaus

    Major credit bureaus such as Equifax, Experian and TransUnion rely on banks, mortgage companies and other lenders to provide updates on home equity credit lines and other obligations. The creditors usually provide the credit bureaus with electronic updates once a month. The updates include balances, the minimum monthly payment and current status.

Credit Scores

    Credit scores are computed from information on credit reports. A missed payment on a HELOC can cause a significant drop in credit score, although no one can say precisely how much an individual's score will be affected. All credit situations are different, and people with high credit scores are hurt most by late payments. The credit score is a three-digit number ranging from 350 to 850. Few people achieve a perfect score, but scores of 720 to 750 are considered outstanding. Scores in that range lead to the lowest interest rates on credit cards and loans.

Credit Repair

    People seeking to improve credit must pay all bills on time while keeping balances low. That includes balances on home equity lines. Creditors like seeing large credit limits and low balances because that shows the debtor is managing credit responsibly. Ideally, balances on home equity lines should not exceed 10 percent of the credit limit. That means someone with a $50,000 HELOC should not carry a balance of more than $5,000. If that level is topped, the debtor should pay down the balance as quickly as possible.

Credit Review

    Free credit reports are available from AnnualCreditReport.com. It is the only site authorized to distribute free reports under the terms of the Fair Credit Reporting Act. People are allowed up to three free credit reports each year, and can use the reports to monitor updates on HELOCs and other loans.

Monday, January 23, 2006

How to Reduce Credit Card Interest With Debt Services

How to Reduce Credit Card Interest With Debt Services

If you're struggling to keep up with your credit card payments because of your interest rate, negotiating a lower rate is the first step to making your debt manageable. While you can talk to your credit card company yourself about lowering your interest, you might decide to work with a debt services company if you feel overwhelmed. Different types of debt services companies offer various forms of help. Credit counselors often offer debt relief services to help you negotiate interest rates and plan a budget. Debt management services consolidate your debts and require you to make a payment to the company each month. The company uses that payment to pay your unsecured debts and possibly negotiate lower interest rates on credit cards and loans. Debt settlement companies attempt to lower the total amount you owe. This can have a significant impact on your credit, so save debt settlement attempts as a last resort.



    Speak to a credit counselor about your debt for free. Many credit unions, universities and Cooperative Extension System offices offer free credit counseling to help you work out a budget. A credit counselor can give you advice on negotiating your interest rate with your credit card company. For a referral to a counselor, talk to a representative at your financial institution.


    Ask your credit counselor to suggest a reputable debt services company if you determine that you need to consolidate your debts or lower your interest rate using professional help.


    Ask several questions of the debt services company before you agree to a plan to reduce your interest. The fees the company charges might be more than you can afford. Make sure you understand exactly what services the company is providing, as well as how long it will take to lower your interest and what penalties there are for making late payments or not following the plan completely.


    Request the debt services company send you free information on the program you're considering. If the company won't provide the information, look for another company. Legitimate debt relief, debt management and debt settlement services are honest and open about terms and fees as well as what the company can and cannot do.


    Call your credit card company once your debt services company outlines its plan to lower your interest rate. Ask your credit card company if the terms your debt services agent provided are accurate before you agree to the debt services company's plan.

Sunday, January 22, 2006

Can I Be Imprisoned for Debt?

The number of arrests in the United States associated with attempts to collect debts are difficult to pinpoint because states don't follow the same procedures for such actions. Still, news reports have documented the arrest of people who have fallen behind on paying creditors and court fines. Such stringent debt-collection actions may be linked to economic conditions.

Arrested Debtors

    Debtors' prisons were outlawed in the United States in the 1830s, but a 2010 Minneapolis-St. Paul "Star Tribune" article, In Jail for Being in Debt, says people are still being arrested for not paying debts. According to the "Star Tribune," Minnesota's use of arrest warrants against debtors increased 60 percent over four years, with 845 such warrants in 2009. However, the article notes that every warrant didn't lead to an arrest. More companies are buying delinquent consumer debts to profit from collecting on them, which may be driving the forceful tactics to recoup payments. The "Star Tribune" says whether people are prosecuted for unpaid debts varies from state to state.

Court Judgments

    A 2010 "Reason" magazine article, The Return of Debtor's Prison, notes that debtors are supposed to disclose their financial situation to a collector if a court judgment is issued against them. The collector can get an order to require debtors to make a court appearance if they don't disclose their finances. A judge can then issue an arrest warrant for debtors who don't appear in court. According to "Reason" magazine, the court process is the same one used to arrest parents who fall behind on child-support payments.

State Budget Shortfalls

    Tougher debt-collection practices also may be linked to budget shortfalls throughout the nation. A 2010 "Newsweek" magazine article says state funding for courts has dropped around the country. Therefore, collecting court fines has become an essential part of maintaining budgets. "Newsweek" says that means a person's failure to pay a traffic ticket could lead to an arrest warrant. A second failure to settle such debts can lead to jail time, even for impoverished defendants.

Debt Buyers

    It's difficult to estimate how often debtors are arrested in the United States. The "Star Tribune" says national statistics on such arrests aren't tabulated. Furthermore, the delinquent debts pursued by collectors in such cases are often several years old. Debt buyers try to collect on delinquent credit cards, cell phone bills and other debts that cost them a few cents to purchase from the original creditors. Often, the goal is to not only collect the balance on a delinquent debt, but to also get associated interest charges and fees on an account.

How to Write a Letter to Remove Items From a Credit Report

How to Write a Letter to Remove Items From a Credit Report

You may request that items be removed from your credit report if they were reported in error. You also may be able to have information removed if the reporting creditor or collection agency cannot prove that the information is factual and belongs to you. Negative information on your credit reports decrease your credit score, which can have a negative impact on your ability to get a credit card, home financing or even a job.



    Request copies of your credit reports from each of the three major credit bureaus, Equifax, Experian and TransUnion. You may request one copy of each report once per year free of charge through the Annual Credit Report website.


    Locate any information that is incorrect on each credit report. You may even find accounts that do not belong to you. Circle each account that is incorrect.


    Check your credit reports for negative information. This may include late payments, accounts that have been charged off and collection accounts. Although the information may be correct in parts, there are often smaller bits of information within the listing with inaccurate information. For example, your date of last payment, type of account, account balance and every other bit of information within the listing must be correct. If the information is not accurate, it must be corrected or the listing has to be removed entirely under the Fair Credit Reporting Act.


    Begin a letter to each credit bureau regarding the inaccurate information. In your letter, inform the credit bureau that you are disputing the information and inform them why the information is incorrect.


    Highlight the entry on a copy of your credit report and include it along with account statements, letters or other documentation proving that the information is incorrect.


    Ask the credit bureau to provide proof that the information is correct, or request that the information be deleted in its entirety as allowed under the Fair Credit Reporting Act.


    Mail the letters to each credit bureau. Wait 30 days for a response. You will receive notification in writing of the results of their investigation and a new copy of your credit report if changes are made.

Saturday, January 21, 2006

Help With Debt Consolidation & Stopping Foreclosure

Help With Debt Consolidation & Stopping Foreclosure

When your income isn't keeping up with your debt and expenses, bankruptcy and foreclosure may not be far away. By creating a budget and working with your mortgage lender, you may be able to pay back your debts and stay in your home in a way that you can afford.


    If you are a homeowner with unmanageable debt, consolidation may be your greatest tool in avoiding bankruptcy and foreclosure. Home equity loans and home equity lines of credit allow you to use the equity in your home to pay down high-interest debts at low second mortgage interest rates. The savings on interest often provides more breathing room in your monthly budget, permitting you to pay down your debts and stay current on your mortgage. Keep in mind, however, that a default on a second mortgage loan can result in foreclosure, as your home serves as collateral for the second mortgage.

Foreclosure Solutions

    If you miss mortgage payments, talk with your lender as soon as possible to avoid foreclosure. Mortgage lenders have many tools at their disposal to help you pay back missed payments, as well as modify your current mortgage terms to make your monthly payments more affordable. The U.S. Department of Housing and Urban Development, or HUD, provides free or low-cost mortgage counseling in every U.S. state. HUD-approved counselors help you explore your options, as well as help you learn to cut back unnecessary expenses so you can afford your mortgage. To find a HUD-approved housing counselor, call 800-569-4287.


    While bankruptcy should be a last resort to resolving your debt and foreclosure problems, it may provide a viable solution to repaying your debt, while allowing you to remain in your home. According to the U.S. Courts website, Chapter 13 bankruptcy allows you to reorganize your debts to repay them over the course of three to five years. Once you file a petition for Chapter 13 bankruptcy, the bankruptcy court halts foreclosure proceedings, allowing you to begin repaying past-due mortgage payments. However, if you continue to miss mortgage payments, you may lose your home.


    If you seek help from a third party in negotiating your debts or mortgage, beware of shady companies that make false promises. According to the Federal Trade Commission, many companies claim to be nonprofit, yet still charge steep up-front fees, and may even require you to stop making monthly payments on your loans and credit card accounts. Check with the Better Business Bureau, your state's Attorney General and your local consumer protection agency to find out about the reputation and reliability of third-party debt negotiation companies.

Thursday, January 19, 2006

How Much Can I Garnish Wages in California?

Garnishment is a process where a creditor, through a court order, can garnish a portion of a debtor's wages to satisfy the outstanding debt owed by the debtor. While garnishment is legal in California, state laws protect debtors from excessive garnishment. Chapter five of the California Code of Civil Procedure governs garnishment in the state.

Federal Law

    The California Code of Civil Procedure mimics the federal law with respect to the total percent of wages that can be garnished. Through federal law, creditors are prohibited from collecting excessive wages through garnishment. Under U.S.C. Title 16 Section 1673(a) creditors cannot collect more than 25 percent of the debtor's disposable earnings. California's law mimics the Federal law.

California's Additional Exemption

    Section 706.051 of the California Code of Civil Procedure creates an additional exemption by permitting employees to declare a greater portion of disposable earnings if they need additional funds to cover their basic living expenses. The additional exemption will be permitted as long as the debt was not incurred from previous living expenses or is the result of delinquent child support or alimony payments.


    The debtor's disposable income after garnishment must be equal to or more than 30 times the federal minimum wage. If the resulting income is less than that, a lower percentage of the debtor's wages must be taken. In other words, the debtor must have at least 30 times the federal minimum wage for his disposable earnings after garnishment. If the debtor's income is low, the full 25 percent permitted by law may not be taken.

Employer Compliance

    Section 706.152 of the California Code of Civil Procedure requires California employers to explicitly comply with garnishment orders and withhold funds. Failure to do so subjects the employer to civil and criminal penalties. Under California law, it is a misdemeanor for failing to withhold garnished wages.

How to Pay Off Debts in Collection

How to Pay Off Debts in Collection

Once a bill has been placed in collection, it can be hard to pay off. Additional fees will have been added to the original balance, and the total debt owed can become quite large. Through responsible budgeting and some basic legwork, a borrower can work to reduce his collection debt and eventually pay it off in full. It may take some time and energy, but the reward will be when the collection is removed from your account.



    Collect all statements from each collection debt owed. Analyze the statements for contact information, the amount owed and the original debtor.


    Create a master list of all debts owed to get a clear picture of the whole situation. If the money is not readily available to repay the debts, create or analyze your family's budget. Look for areas of spending that can be temporarily reduced in order to find extra funds for debt repayment. Use this plus any extra earned income to pay down your collection debts.


    Contact the original debtor on each debt. Explain your situation. See if the creditor will take the debt out of collections and reduce the fees owed. If so, pay the creditor immediately or attempt to work out a payment plan.


    Contact the collection agency for any debts not settled with the original creditor. Ask for a payment plan or pay the debt directly to the collection agent in full. Continue payment on the debts until each one is paid in full. Do not miss a payment or make a late payment to avoid late fees.

The Best Credit Card Debt Reduction

The Best Credit Card Debt Reduction

Reducing credit card debt can be very challenging. However, the end results are well worth the effort. Lowering credit card debt can increase your credit score; and with fewer debt obligations, you can begin building a financial cushion and focus on long-term savings.

Speak with Creditors

    You don't have to accept the interest rate assigned by your credit card companies. A good credit and payment history with your creditors can justify better interest rates. Call your company's customer service line and simply ask for a lower interest rate. After a quick review of your standing with the company, some credit card companies will reduce your interest rate on the spot with no hassle. Paying a reduced interest rate helps reduce the principal on credit cards faster, which speeds debt reduction.

Decrease Spending

    Rein in spending to increase your monthly savings. Depending on how much you spend on extras each month, this may call for a major lifestyle change. Dining out, shopping and excessive recreation can take a chunk of your income. Evaluate your spending and drastically cut back to increase your disposable income.

Put Savings Toward Debt

    After reducing spending and saving more, use the savings to increase monthly debt payments. If you once paid $20 a month towards a credit card bill, increase payments to $40, $60 or $100 to get rid of the balance sooner. Higher payments pay off the new interest charges, plus a larger percentage of the principal debt.

Credit Card Use

    If you don't plan on paying off your balances in full each month, or if you can't afford to pay off entire balances, don't use credit cards. Carrying credit card balances from month-to-month keeps the debt cycle going, and you're less likely to reduce your balances. It's counterproductive to make a $100 monthly payment, and then re-charge $100 or more each month.

Debt Consolidation

    Combine your outstanding credit card balances into one bill to save on interest and ultimately pay off the balance sooner. Methods of debt consolidation include applying for a home equity loan, using collateral to secure a personal loan or transferring your high-rate balances to a credit card with a lower interest rate.

Wednesday, January 18, 2006

The Best of Way of Settling With a Collection Agency

You are likely to hear from a collection agency if you let your debts go unpaid for many months, even if the original creditor charged off the bill. Debt collectors can pursue you as long as they follow the Fair Debt Collection Practices Act, according to the Federal Trade Commission. You can stop the calls, and possibly save some money, by reaching a settlement.

Negotiate the Amount

    Credit card issuers and similar lenders try to collect money from you for about six months after you stop making your scheduled payments. They often sell off the debt after writing it off to get a tax break, according to MSN Money writer Liz Pulliam Weston. Collection agencies buy bad debts for pennies, then make a profit by collecting as much as possible. They still make money even if you negotiate a discount, so offer a lump sum payment that you can afford even if it does not cover the whole debt. Edward Jamison, a Los Angeles attorney, reports in a Bankrate.com article that you may be able to settle for half the original amount.

Negotiate Reporting

    Collection agencies often report their activity on your TransUnion, Experian and Equifax credit reports, which brings down your credit score and looks bad to lenders, cell phone companies, insurers or anyone else who pulls your records in response to an application. Tell the collector that you will send your payment in return for removal of the credit report entries. This doesn't cost the agency anything, so it shouldn't affect your settlement amount.

Get a Written Agreement

    A debt collector can promise anything, but the agreement is not easily enforceable until you have it in writing. Request a letter stating the agreed-upon settlement amount and the fact that the collection agency will no longer report the debt to the credit bureaus, Bankrate.com columnist Steve Bucci advises. Ask the agency to commit in writing not to resell the debt to other collectors or your phone might start ringing again with someone else wanting more money. Enclose a copy of the agreement with your payment and mail it certified, with delivery proof requested.

Check Your Credit Report

    Make sure the collection agency removed its entry from your credit reports. You may have a written commitment, but that does not guarantee a follow-through. The FTC website explains that annualcreditreport.com is the only no-obligation free credit report website, and it provides Experian, Equifax and TransUnion reports once per year. Order copies and complain to the collection agency or dispute the information directly with the credit bureaus if it still appears.

Monday, January 16, 2006

Help for Rebuilding My Credit

Your credit is not ruined forever after bankruptcy or a rough spell in which your bills go delinquent and get charged off or sent to debt collectors. Rebuilding good credit takes time, but the Fair Credit Reporting Act (FCRA) helps you clean up your credit bureau files, and financial institutions and credit counselors offer assistance in opening and properly maintaining new accounts.

Credit Clean-Up

    Your Equifax, TransUnion and Experian credit reports might have incorrect harmful data along with legitimate negative items. Bob Sullivan of the MSNBC Red Tape Chronicles website warns that errors show up in up to 25 percent of consumer credit files. The FCRA helps you fix this by giving you the right to order free credit reports every 12 months through annualcreditreport.com. The law lets you dispute mistakes and obligates the credit bureaus to investigate and correct your files in 30 days, according to the Federal Trade Commission (FTC). This gets your credit in the best possible shape and raises your credit score if several bad items get removed.

Credit Use

    Credit use is essential for rebuilding good financial records, according to MSN Money columnist Liz Pulliam Weston. Secured credit cards are available to almost anyone because you put up your own funds to guarantee them. Your credit union or bank may offer such a card, or you can find one through online credit card databases. Build up an excellent payment history by using the secured card modestly and making payments before the deadline. Eventually the issuer will convert the card to a traditional account, and other lenders will consider your recent payment history when you apply for other cards and loans.


    On-time payments are the most important way to rebuild your credit because the MyFICO credit reporting site advises that they make up the largest part of your credit score. Banks help their customers make timely payments through electronic withdrawals and automatic bill payment services. This keeps you from forgetting to mail a check and prevents unexpected postal delays.

Credit Counseling

    Credit counseling is usually associated with bill payment problems, but a good counseling firm offers other services to help you rebuild your credit. The FTC explains that the best counseling companies offer free education materials and classes. Look for online budgeting and money management information or local seminars sponsored by counseling firms. Non-profit firms let you talk to a counselor for free or a very reasonable fee to make sure you are on track for rebuilding your credit and help you make a good plan to maintain your progress.

Sunday, January 15, 2006

What Are the Best and Fastest Ways to Rebuild Your Credit?

What Are the Best and Fastest Ways to Rebuild Your Credit?

Filing bankruptcy or being turned down for financing because of a low credit score can seem like the end of your financial world, but there is hope. Credit repair is possible; and while improvements don't usually happen in one day, starting anew and learning how to manage credit can fix a bad credit score in a relatively short period. This opens the door to numerous financing opportunities -- mortgage loans, auto loans and low-rate credit cards.

Payments and Credit

    Payments directly influence credit scores. As a matter of fact, payments are the biggest factor impacting personal credit scores. Thirty-five percent of your personal score is based on how well you manage payments to your creditors. Missing a payment or making a payment late can decrease your score, especially if this becomes a habit. Lenders report delinquencies, and with this information on credit reports, it becomes increasingly difficult to acquire installment loans or mortgage loans. Timely payments may call for organizing your bills on a calendar, avoiding procrastination and mailing payments early, or paying online to avoid delays with postal mail. Many creditors also allow customers to set up automated monthly minimum payments to avoid inadvertently missing due dates.

Importance of Lowering Debt

    Lowering debt is another key way to quickly repair a bad credit score. MSN Money underscores the importance of a low debt-to-income ratio, and the importance of keeping credit card balances below 30 percent of your credit limit. Higher account balances can drastically reduce your personal score; but paying off these accounts can quickly add points to your score. Use personal savings to completely wipe out credit card debt, or eliminate debt slowly by making higher minimum payments and stopping credit card use.

Adding New Accounts

    Credit scores can plateau, and increasing your score or rebuilding your credit may require opening a new credit account to start fresh. Starting fresh is key after filing bankruptcy, especially if all your debts were wiped out in the proceeding. Secured credit cards offered by banks, which require a security deposit paid to the financial institution, are simple to get after a bankruptcy. And as long as the bank reports to the bureaus regularly, a good payment record will help rebuild your credit.

Credit Report

    Another fast technique for rebuilding your credit score involves notifying creditors and lenders of any credit report mistakes. Mistakes on credit reports can harshly affect credit scoring, especially if mistakes include serious derogatory remarks like judgments, liens and collection accounts. Updating your report and deleting these errors can help you regain credit score points.

How to Establish a Payment Plan With a Credit Card Company

How to Establish a Payment Plan With a Credit Card Company

No more than 15 to 20 percent of your monthly income should go toward credit card bills, according to the the University of New Hampshire Cooperative Extension website. When you find yourself overextended and unable to pay your creditors, you may try to make arrangements for a payment plan. Creditors have different policies in place for payment plans, and they are not obligated to agree to any payment plan. Credit history with the company and the current state of the consumer's account influence the type of payment plans creditors accept.



    Total your monthly expenses. Add together all of the expenses that occur on a monthly basis for the same amount -- such as rent or mortgage, car payment and insurance. Add your other expenses, such as groceries, gas and utilities. If you put money in savings each month, add the amount to the total. If you add an expense amount for entertainment, dining out and clothing, consider reducing the amount or eliminating it for a few months while you get back on track with your credit cards. Don't add any credit card expenses.


    Subtract your total monthly expenses from your take-home pay or net income. Based on this planning strategy suggested by the University of New Hampshire Cooperative Extension website, the remaining amount represents money to pay toward credit card bills.


    Write down your credit card information, including the name of the companies, account numbers, current balances, interest rates, late fees (if applicable) and current payments due. Divide the remaining amount of money among your credit cards. For instance, if you have $250 left after making the minimum required payments and you have five credit card accounts, plan to pay each creditor $50. Alternatively, allot more money to the card with the highest interest rate, or pay the most money to cards with the lowest balance. As noted by the Consumer Reports website, a number of systematic strategies to pay down credit card debt exist. Choose the one that best fits your situation and personality, and stick to it.


    Call your creditor and ask to speak with a person who can assist you with a payment plan. Identify yourself and ask for the representative's name who helps you establish a payment plan. Write down her name for future reference. Tell the representative you can no longer continue to make payments on your account under the current agreement, and request a more manageable payment plan.


    Respond to the representative's questions regarding your financial situation and how much you can afford to pay currently toward the account, especially if the account has a past-due status. Be honest. Don't commit to an unaffordable amount. Ask the representative to reduce your interest rate and waive any late fees while negotiating a payment plan. Alternatively, write a letter to your creditor requesting a partial payment plan. The letter should detail your debts, assets, income and a specific payment plan proposal.


    Write down the amount that you agree to pay for each account, any reduction in the interest rate and the due date for the payments. Put the information in a safe place. Make payments as agreed.

Does a Foreclosure Forgive the Debt?

If you fall behind on your mortgage payments, your lender will likely send you letters and make phone calls to urge you to bring your mortgage account current. Continuing to miss mortgage payments can place you at risk of default. If your mortgage company considers your account in default, it may take aggressive action against you, including foreclosure, which is the process of selling your home at an auction to recover the lenders' losses. Sometimes, foreclosure may not forgive the entire balance of your mortgage loan.


    A lender that forecloses on a real estate property is not required to sell the home at an auction price equal to or greater than your loan balance. Depending on investor demand for your home, it may sell for substantially less than what you owe on your mortgage loan. If this happens, the difference between your balance and the sale price is called a deficiency. Your mortgage company will hold you responsible for the deficiency after the foreclosure sale.

Foreclosure Costs

    Foreclosure is an expensive process for mortgage lenders -- they must pay attorney fees, court costs, appraisal fees and auction costs in order to legally sell your home at a foreclosure auction. After the winning bidder has purchased the foreclosed home, your mortgage lender will seek recovery of these costs from you.


    The mortgage lender may send you letters and make telephone calls to compel you to pay the mortgage deficiency and foreclosure costs. If you do not attempt to pay these costs voluntarily, the lender may file a lawsuit against you in your county or district court. The court will typically issue a judgment in the lender's favor, which provides a legal confirmation that you are responsible for the debt.

Post-Judgment Action

    In most states --- except for North Carolina, South Carolina, Texas and Pennsylvania --- a judgment permits a creditor to take part of your wages through garnishment to pay a judgment debt. Typically, the mortgage lender may garnish up to 25 percent of your earnings after taxes to pay deficiency and foreclosure expenses. Depending on your state's laws, a lender with a valid judgment may also garnish your bank account balances, place a lien on your home and sell your non-exempt personal assets to recover what you owe.

Saturday, January 14, 2006

Does a Student Loan Forbearance Hurt Your Credit?

Graduating from school with a degree and a hefty student loan payment is a common occurrence nowadays. Loans are a viable option for financing your education, but repaying them can present a hardship, especially if you have rent, car expenses, utilities and other bills to pay. If making your student loan payments presents a hardship, requesting forbearance is one way to keep your account out of default and your credit intact.

Definition of Forbearance

    Forbearance, according to the U.S. Department of Education, temporarily postpones or reduces the amount of your monthly student loan payment. When you apply for forbearance, you must prove hardship, such as a loss of income or other financial difficulty, and suggest an amount that you can pay. You can apply for a forbearance that will last up to 12 months at a time, for a total of three years over the life of the loan.

Forbearance and Credit

    Requesting forbearance on your student loan will not affect your credit as long as you continue to make the payments on time as you agreed. The fact that your loan is in forbearance is not reported to the credit bureaus. However, when your loan is in forbearance and you make lower payments, the interest continues to accrue on the loan, increasing the overall balance that you will pay. Your credit report will reflect the higher balance and the fact that it takes you longer to pay off your loan.

Making Forbearance Payments

    If you apply for forbearance on your student loan, wait until you receive confirmation that your request has been accepted before reducing your payments. Paying a reduced amount before being authorized to could cause your account to go past due, and that will show up on your credit report. If your student loan payments are made via automatic withdrawal from your bank, make sure you have enough cash in your account to cover the full payment until the forbearance is granted.

Other Payment Plans

    Forbearance is only one way to keep your student loan account current and in good standing when you face financial struggles. If you meet certain economic hardship qualifications, are unemployed, are serving in the military or have re-enrolled in school, you can apply for a temporary deferment of your payments. If your loans are deferred, you do not have to make any payments for a specified amount of time. If your loan is unsubsidized, it will continue to accrue interest during the deferment period, and you'll end up paying back more when you do begin repaying the loan. If you do not qualify for a deferment, you may be able to switch payment plans, and pay less per month.

Friday, January 13, 2006

How to Raise My Credit Score After Late Payments

Your credit score is calculated using a variety of different criteria, such as how long you have had credit, the types of accounts you have and the amounts you owe on those accounts. The most crucial factor in calculating your credit score, however, is your payment history. Your payment history accounts for 35 percent of your credit score (See References 1). Missing a payment on a credit card or loan can do extensive damage to your credit score. If you have made late payments on any of your debts, there are steps to can take to raise your credit score and minimize the damage.



    Investigate the extent of the damage to your credit score. Pull a copy of your credit report from each of the major credit reporting agencies and review your score. This will inform you of how much progress you need to make to restore your good credit rating.


    Write a goodwill letter to the lender or creditor to whom you made the late payments. A goodwill letter is merely a written request that the company remove the derogatory payment information from your credit report. A goodwill letter is most likely to be successful if this is the first time you have ever missed payments.


    Pay the balances of your credit cards down as much as possible. Your debt-to-limit ratio accounts for 30 percent of your credit score. The lower your outstanding balance is in comparison to your credit limit, the higher you can expect your credit score to slowly climb.


    Review your credit reports for any negative information that is inaccurate. The Fair Credit Reporting Act allows you to request that the credit bureaus investigate suspicious information contained within your credit report. If the information cannot be validated, it will be removed and your credit score will increase.


    Check the dates of any derogatory entries in your credit file. You can request that the credit bureaus remove any entries that are over seven years old. The removal of obsolete negatives will boost your credit score.


    Pay all of your credit card and loan payments on time every month. An additional late payment will undo any progress you have managed to make with your credit score. After two years, the original late payment information will drop off your report, leaving only your good payment history.

How to Pay Bills When You Don't Have Enough Money

How to Pay Bills When You Don't Have Enough Money

Thursday, January 12, 2006

How to Answer Interrogatories Regarding Debt

How to Answer Interrogatories Regarding Debt

Consumers agree to repay any debt incurred. Failure to repay debt can result in legal action taken by the creditor. At some point during the legal proceedings, the creditor has the legal right to send you a list of questions that you are required to answer truthfully and completely. These questions are referred to as interrogatories. Failure to answer the interrogatories can result in a contempt charge from the court.



    Review all of the questions carefully prior to answering the first one. Each creditor can list up to 25 questions but you should expect to see questions regarding your employment, living arrangement, monthly expenses and bank account information.


    Answer each question truthfully. You are not required to give long details but you must provide the basic answer. If a question does not apply to your situation, write N/A in the space provided. This lets the creditor know you did not skip the answer or refuse to answer.


    Return the completed interrogatories to the court address listed on the form. The interrogatory form will state how many days you have to submit the answered questions. This time frame varies from 10 to 30 days. Ask the court to provide you with two certified copies.


    Mail one certified copy to the creditor and keep one certified copy in your records.

Tuesday, January 10, 2006

Debt Acquisition Strategies

Debt Acquisition Strategies

Debt acquisition is when you purchase debt from a lender so that the indebted party owes you. For example, a client may borrow money from a bank to purchase a home. You can acquire this debt by paying the bank so that now this client owes money to you. While buying and selling mortgages and other debts is a common practice, if you have no experience with debt acquisition you should familiarize yourself with risks.

Asset Debt

    Asset debt is debt that is backed by collateral. The most common type of asset debt is a mortgage. A borrower will take money from a bank to purchase real estate. This borrower then must repay the bank or risk losing the real estate. If you buy asset debt, you'll probably be buying mortgages. If the borrower is paying back the loan, you can earn money by keeping the interest the borrower has already agreed to pay. The original lender may have sold you this debt because she wants the money she lent the borrower back for other investments. You can also buy a mortgage that the borrower is not paying in the hopes of foreclosing on the borrower and keeping the property.

Non-Asset Debt

    Non-asset debt is debt that is not guaranteed by any sort of collateral. This could be credit card debt or even a personal loan. You can buy non-asset debt that the borrower is slowly paying back so that you can make money with interest. You can also buy non-asset debt that the borrower is unable to pay back in full. Often, lenders will sell this non- or sub-performing debt for pennies on the dollar. For example, a borrower could owe $1,000 to a credit card company. If the credit card company doesn't think the borrower will make good on the loan, the bank might be willing to sell you this debt for only $200 to recover some money. Then you can try to negotiate with the borrower and make a profit by collecting $400. The borrower may be eager to negotiate with you since he'll be relieved of having to pay back the entire $1,000.


    Buying debt can be very risky if you choose to buy sub-performing or non-performing debt. Sub- or non-performing debt is debt that the borrower is not paying back in full or at all. If you buy non-performing, asset-backed debt, you are hoping to foreclose on a borrower and own property. Before you become involved in this type of debt acquisition, you'll need to confirm that the property is worth more than you're paying for the debt. You'll also need to be aware of the costs and time associated with a foreclosure. If you are buying non-performing, non-asset debt, you risk losing your investment entirely if the borrower declares bankruptcy or just doesn't pay. It could be more expensive for you to recover the debt than the balance is worth.

Can Creditors Seize a Safe Deposit Box?

Although creditors typically limit collection activities for unpaid debts to phone calls and letters, a severely delinquent debt may invite more aggressive collection activity, particularly if you make no effort to resolve your debt. In some cases, collection may involve seizure of your personal assets, including valuables and cash kept in a safe deposit box.

Obtaining a Judgment

    In most cases a creditor must obtain a valid judgment against you before seizing your personal assets. A creditor obtains a judgment by suing you in civil court, usually in your home county. After the creditor files a lawsuit, you will have an opportunity to respond in writing or at a hearing. If you fail to respond, the court will enter a default judgment against you, which gives the plaintiff secured creditor status.

Property Liens

    After receiving a judgment, a creditor may place a lien on any personal property you own, subject to your state's exemptions and limitations. Most states provide a certain monetary threshold below which a creditor cannot establish an ownership interest through a lien. For example, Ohio allows judgment debtors to exempt $1,075 in personal property, including property stored in a safe deposit box.

Seizure and Liquidation

    If you have sufficient equity in nonexempt personal property contained in a safe deposit box, the creditor may petition the court for the right to seize and liquidate the property. The creditor will then sell the property and use the proceeds to pay your judgment debt.

Locating Personal Property

    For a judgment creditor, locating property contained in a safe deposit box represents one of the most significant difficulties in liquidating these assets. Most states allow creditors to question judgment debtors about their assets, either in writing or by ordering a court hearing. You must fully disclose all of your assets if you receive notice of a hearing or a debtor's examination letter. Failure to respond can result in contempt of court charges and possible imprisonment.

Credit Report Conflicts

Credit Report Conflicts

People make mistakes sometimes; that's why you should occasionally check your credit report for errors. The three credit bureaus -- Equifax, Experian and TransUnion -- all calculate your score a little differently. But they all use the same credit history reports, and if there's an error in your file, then your credit can suffer.

Monitor Your Credit Report

    Order a copy of your credit report. Since the three credit bureaus will have slightly different scores for you, get a report from each of them. You have a right to view your report from all three bureaus once a year for free at the Annual Credit Report website

Check for Errors and Contact Your Lenders

    Print each report and carefully read all three. Use a highlighter to mark any potential mistakes. If you find an inaccuracy, check your bank statements, utility bills or credit card statements from that time period. You can also call your bank, utility company or credit card company to inquire about the report. It's possible that the company made a mistake, will admit it and then file a new report with the credit bureaus and erase the mistake from your record. But if the company disagrees with you about it being a mistake, you now have a dispute to handle.

Dispute a Report with the Credit Reporting Agency

    Write to the company's dispute department, if it has one, explaining why you think there's a mistake on your credit report. Submit copies of supporting documents, like statements, along with a copy of the credit report with the mistake highlighted. Mail the letter and documents by "return receipt requested." The credit reporting agency now has 30 days to investigate your claim. It also will provide copies of your claim to the company that reported the alleged mistake.

Request Copies of the Dispute

    Once the investigation is complete, the credit reporting agency mails you the results, along with a free copy of your credit report. If a mistake was found on your report, it will be corrected . Also, you may request that the credit reporting company send a notice to anyone who asked for your report in the last six months. If the investigation did not find a mistake, you can still request that a record of your dispute be kept on file and distributed with your report in the future.