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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..

Friday, March 31, 2006

Debt Restructure Information

Debt Restructure Information

If your debts are overwhelming, you may consider asking your creditors to restructure the amounts that you owe to make your debts easier to pay. Having your debts restructured can lower your stress levels and save you from foreclosure or a lawsuit.


    A restructured debt is a debt on which the original repayment terms are modified. Creditors restructure debts to lower the odds that a consumer will default on the amount she owes.


    The most common types of debt restructuring are mortgage loan modifications and debt settlements.


    A debt restructuring makes a debt easier for a consumer to pay by lowering the interest rate, extending the repayment plan or lowering the outstanding balance the individual still owes.


    If your creditors will not work with you to restructure your debts, you may consider filing for Chapter 13 bankruptcy. When you file, the bankruptcy court will often force your creditors to modify your debts so that you may pay them off over a three- to five-year period.


    Some forms of debt restructuring can be detrimental to your credit report and lower your credit score.

Can You Transfer Student Loans From Cosigner to Borrower?

Can You Transfer Student Loans From Cosigner to Borrower?

Many students use a co-signer on loans when they enter college. Students are often not earning a salary, have little to no credit history and otherwise will not qualify for loans on their own. Once the student graduates, however, he is likely to be in a much better position to qualify for a loan without a co-signer. In this case, it is possible to modify or refinance a student loan into the borrower's name only.


    You cannot simply "remove" a co-signer on most loans. The lender used the co-signer's credit and income as part of the consideration for loan terms. If the co-signer is removed, the borrower's credit and income will be used to consider new terms. Contact your lender to ask about modifying the loan to a single borrower. You may be able to do so directly by filling out a few forms. Or you may need to go through the loan approval process again to remove the co-signer.


    If you have a federal student loan, you can modify or refinance through the U.S. Department of Education. You will need to apply for modification without the co-signer. At this time, you will be able to consolidate all of your federal student loans into one loan, remove the cosigner and move forward with a more simply loan structure. You cannot consolidate private loans into federal loans.


    When you transfer a student loan away from a co-signer, you have an opportunity to refinance or change the terms of the loan at the same time. Consider the loan payment structure. Are you able to meet the payments on schedule? Is the interest rate acceptable in the current market? Is there another lender who may offer a better quote? Take this opportunity to shop around to determine if you are getting the best deal possible on your sole-borrower loan.


    When you remove the co-signer from your loan, you are standing on your own feet. On one hand, it is a great way to build your personal credit for the future. On the other, if your credit is low at this point, you may face unfavorable loan terms. It is advisable to wait until you understand your credit, income and financial responsibilities post-graduation before refinancing your loan without a co-signer. If you default on your student loans you will be starting off on the wrong foot financially in your adult life.

How to Negotiate Debt Resolution Letters

How to Negotiate Debt Resolution Letters

If you've gone through a major change in life, such as a divorce, serious illness or corporate upheaval, you may have found it difficult to pay bills. There are plenty of debt negotiation firms that promise to negotiate with your creditors on your behalf. However, negotiations are something you can do yourself. Not only will you save the money you would have paid the debt negotiation firm, but you will also have an intimate sense of precisely where you are financially.



    Write a letter to each creditor. Written negotiations serve as an accurate record of what both parties have agreed to. Lay out your situation in a clear and polite manner. Explain specifically what happened to prevent you from meeting your obligation. Tell them that while your next step will likely be filing for foreclosure, you would like to meet your obligation to the best of your current ability. Begin with an offer of approximately 10 percent of the amount you owe. For example, if you owe $3,000 on a credit card, tell them that you can put together $300. Send this letter by certified mail with a return receipt requested. This receipt will serve as your proof that the letter was received.


    Purchase a disposable phone. If you would like to make a follow-up call or feel you can better make your case by talking directly to someone, purchase a pre-paid disposable phone. This is the only number you should use to make your calls and the only number on which you should answer calls from creditors. Creditors are in the business of collecting as much as possible from you, regardless of your circumstances. While they would like to have your home number, do not give it to them. Tell them that you are working with this phone number now. No matter what they agree to verbally, tell them that you'll need to see it in writing before you remit any money. Give them the fax number at a local office FedEx or other business that will allow you to pick a fax up. You can also ask them to send it through the mail. If you have a fax at home, do not give them your home fax number.


    Maintain detailed files. Create a separate file for each creditor. Place a copy of your initial letter in the file, any responses they send to you and any more correspondence you send to them. On the inside of the file folder, write the name of anyone you speak with by phone, along with the date and what was discussed. Once an agreement has been reached, put a copy of the final agreement in the file. Mark each file as "paid" as soon as your cashier's check has been received by the creditor. As with your initial letter, send settlement payments by certified mail, return receipt requested.


    Remain calm no matter what you hear. Keep in mind that the creditor knows that you're in trouble and if you tell them that bankruptcy is your next option, they know that the most they can get from you is the amount you settle for. If you happen to be dealing with an especially pushy or rude collector, stay calm. Do not give the person any personal information, such as your place of employment, private phone number, email address or banking information. Calmly reiterate your inability to pay the debt in full and repeat the amount you would be able to come up with. They will ask you to borrow from friends and relatives and to sell items of value. Remind them that you're working with a fixed amount of money and have no other sources of income.


    Request a short-term payment plan for larger debts. For example, if you have a furniture loan for $8,500 and you end up settling for $1,500, offer to make three monthly payments of $500 or five monthly payments of $300. Once they've agreed to take less for a debt -- creditors are not generally happy to string out payments -- make it clear that it's the best you can do. Follow through on each payment, missing one gives the creditor the right to back out on the agreement and keep the money you've already sent.

Default on Debt Obligations

If you default on a debt obligation, the credit card issuer or lender can bring legal proceedings against you in a state court. Your state's statute of limitations laws on debt collection limit the length of time creditors have to sue you for an unpaid debt obligation. Debt is only collectible in a state court if it has not expired.


    Lenders have a number of options when it comes to the enforceability of an unpaid debt obligation. The lender can pass the debt along to an internal collection department for further collection efforts, sell the debt to a third-party debt collection firm at a discounted rate or charge-off the debt at a significant loss. Often, a lender will not charge-off or sell a delinquent debt obligation until it reaches the six-month mark.


    Defaulting on a debt obligation hurts your consumer credit score. In addition to a drop in your consumer credit score, creditors may also increase the annual percentage rate charged on balances that carry over from one billing cycle to another and decrease the line of credit available on open accounts. Credit accounts that are delinquent or past due are subject to periodic penalty fees.

Consumer Credit Reports

    Creditors can report unpaid credit accounts on a consumer credit report for three to 10 years, according to the BCS Alliance website. At three years, states like Alabama, Kansas and Oklahoma have the shortest statutes of limitations on delinquent credit card debt in the country. The statute of limitations for most states is three to six years. Creditors in Rhode Island have up to 10 years to pursue defaulted debt obligations in court. There is no statute of limitations on student loans.

Statutes of Limitations

    Debt is only collectible in a state court if the statute of limitations has not run out. The clock starts ticking from the date of last activity or when a delinquent account is written off as a bad debt by the original creditor, which depends on state law, according to BCS Alliance. A lender can try collecting a defaulted debt obligation after the statute of limitations runs out, but collection efforts must be handled outside of court.

Thursday, March 30, 2006

What Is Shown on a Credit Report?

What Is Shown on a Credit Report?

The information listed on your credit report determines whether your next loan application will be approved and what interest rate you will pay on that loan. Your credit worthiness is determined by the financial information stored about you with the three major credit bureaus. The three bureaus are TransUnion, Equifax and Experian. Although your actual FICO score is not on any of these reports, the information in the pages gives an in-depth view of what makes up that number.


    Who you are and where you've lived is the first block of information you will see on your credit report. Equifax reports that the identifying information it includes is your name, address, Social Security Number, date of birth and employment information. This information comes to them through the applications you submit for credit. Unknown addresses listed on your credit report may be the first indication that someone may be using your identity.

Account History

    The most important information on your report to potential creditors is how you have handled similar relationships in the past. TrueCredit, operated by TransUnion, says "Your credit report lists a summary of the details and terms for each account. This summary includes information about the account number, condition, balance, type and pay status for each account." Any accounts that you have settled, defaulted or have been delinquent on will be red flags that work against you. Open accounts can actually work against you as well. It may signify to the prospective lender that you will be over-extended if they offer you a loan.

Public Records

    If you've been sued, it will be in your credit report. Generally, anything handled by a court of law becomes public record for anyone to see. In Kiplinger's Personal Finance Magazine, Elizabeth Kountze explains that "Public records will reveal court records of bankruptcy, tax liens or monetary judgements against you." These kinds of records are interpreted as marks against your character and can negatively influence a lender's decision. Tax liens are a deterrent because companies will be aware that the IRS is likely to get money from you before your other debts are paid.


    Anytime you fill out an application, there is an inquiry into your credit report. These inquiries are listed on your credit report. The number of inquiries in a given time period impact your credit score and could lower it a few points. Lenders typically look at inquiries for the last two years to determine how many loans you've applied for.

Credit Management

    Experian advises that to manage your credit you should set a budget and live within it. The company advises you not to use credit if it forces you to live beyond your means. Paying bills on time shows creditors that you are a responsible money manager. Length of employment and length of residence also play a factor in demonstrating your stability to creditors.

How to Finance Computers Without a Down Payment

How to Finance Computers Without a Down Payment

Computers, especially notebooks, can be quite expensive. However, most major computer companies offer financing to help spread the cost over time. In addition, many local banks, credit unions and finance companies offer small personal loans for any purpose. Financing a computer is relatively easy so long as your credit is not substandard.



    Access a copy of your credit report. Go to Annual Credit Report, the federally mandated site for citizens to pull free credit reports (see Resources). You should also pay for a FICO score, a three-digit number that represents your overall creditworthiness. Excellent scores are above 720; poor scores are below 600. If your score is below 600, you should work toward improving your credit prior to seeking computer financing.


    Find the computer you want to buy. Do not base your decision on the type of financing available at a particular company. You should find the exact model, purchase price and software add-ons before thinking about financing.


    Check to see if the computer company offers in-house financing. Companies like Dell and Apple offer financing. Other companies, too, have financing programs.


    Look at the financing options offered. Many companies will finance a computer if you sign up for a credit card associated with the company. These loans are standard credit cards--the loans are revolving and the payments are only the minimum required.


    Try to secure a closed-end loan through a computer company, if possible. Closed-end loans (also called installment loans) offer fixed rates, fixed terms and standard monthly payments. This means that the loan has a definite expiration date, unlike revolving loans.


    Research personal-loan programs at your local bank or credit union, if you have good credit. These companies often offer more competitive rates than computer credit-card financing programs. Finance companies (like Wells Fargo Financial and CitiFinancial) also offer consumer loans, but come with higher rates and fees.


    Make sure your computer loan is beneficial. For example, if you struggle with credit, you may not want to accept a $3,000 credit line to purchase a $1,000 computer. If that much credit is available to you, you may be tempted to continue to spend rather than pay off the accountt.

Wednesday, March 29, 2006

How to Make a Settlement With American Express

American Express Company is one of the world's largest bank holding companies. It offers charge cards and credit cards to people around the world. Its charge cards require payment in full each month, while the company's credit cards offer a line of credit and monthly payments for people who prefer to pay over time. Like all other charge and credit card companies, American Express has some customers who default on accounts because of nonpayment. One option for resolving bad debt with American Express is to request a settlement.

Debt Settlement

    Debt settlement is a strategy for resolving unsecured debt such as credit cards. American Express does not publicly discuss its policy for settlement agreements, but "The New York Times" reported in 2009 that American Express and other credit card companies were willing to settle delinquent credit card accounts for 20 to 70 percent of the balance. The exact amount depends on what American Express is willing to accept on a specific account.


    American Express will not settle accounts that are current. The company has nothing to gain by reducing the balance on an account the account holder is paying on time. A customer seeking a settlement from American Express must miss several payments in a row to qualify. Falling three to six months behind on an American Express account could cause your credit score to drop. Also, American Express may close or restrict spending on other American Express accounts you hold.


    Requesting a settlement from American Express is simple and straightforward, but may require some negotiation. After falling behind by three payments you should call American Express at the customer service number listed on the back of your card or on the billing statement. Explain to the representative that continuing to pay the account as agreed is no longer possible, and you would like to resolve the balance through a settlement. It is not important to offer specific reasons for wanting to settle other than you are unable to pay. Making such a request is also possible in writing, and may be preferable because it creates a paper trail. However, telephone conversations are faster.


    Nothing requires American Express to grant a settlement offer or agree to any specific terms. Receiving a suitable offer could require multiple phone calls or letters spanning several months. Begin negotiations by requesting a settlement of 20 percent of the balance, and ask for a counteroffer if American Express balks at that. From that point it's simply a matter of continuing to negotiate by telephone or mail until American Express makes an offer you can afford or are willing to pay.


    American Express could refuse to make an acceptable settlement and instead assign the account to a debt collection agency. However, settlement may also be possible through the debt collector. A debt collector could also file a lawsuit to collect on the account. You should get a settlement offer from American Express in writing before making payment. Terms of the agreement should include the settlement amount, due date and information on how American Express will list the settlement on creditor reports.

What Assets Are Protected From Seizure?

Assets protected from seizure resulting from court judgments or bankruptcy vary from state to state. Assets that may be protected from court judgments are not protected if they are the collateral used for the loan. For example, although motor vehicles up to a certain amount may be protected, the vehicle may still be seized by the company making the loan if the borrower is in default.

Protected Assets

    In most U.S. venues, assets protected from seizure due to judgment include the initial $2,300 worth of motor vehicles, 75 percent of wages, $6,075 of jewelry, and $6,075 of the debtor's tools of the trade, according to the University of California Student Legal Services. For those filing bankruptcy under Chapter 7 of the U.S. Bankruptcy Code, federal statute provides couples may exempt that up to $32,000 of their home equity, or $16,500 each.

Florida Protected Assets

    Under Florida law, assets held in a child's name for college tuition are exempt from seizure. Employer-sponsored medical savings accounts are also exempt from bankruptcy seizure. All pensions, disability payments, retirement savings and government assistance payments are protected. Those receiving alimony, child support payments, worker's compensation and unemployment benefits will not have those benefits seized in case of bankruptcy. Perhaps the most important state exemption is the Florida Homestead Exemption. Under this law, properties under half an acre in urban sites and up to 160 acres in rural areas cannot be seized by creditors in bankruptcy. However, foreclosure laws still apply if proceedings are brought forward by the entity holding the mortgage. Municipal and county authorities may proceed with tax sales if property taxes are unpaid.

Texas Protected Assets

    In the Lone Star state, homesteads are exempt from seizure unless the mortgage, home equity loan or property taxes have not been paid. Homeowners who fail to pay a contractor under a written contract for repairs or improvements to the homestead are ineligible for exemption. Urban homesteads include properties up to 10 acres, while rural homesteads are up to 100 acres for an individual or 200 acres for a couple. Personal property with a fair market value of up to $30,000 for an individual or $60,000 for a couple is also exempted, and such property includes clothes, motor vehicles, tools, equipment, furniture, pets and livestock.

I Am Appearing Before a Judge on a Judgment on a Credit Card: What Do I Do?

While being summoned to court over a debt can be a scary experience, it's important that you do appear before a judge. By doing this, you show the court and your creditor that you take your debt seriously and want to get the matter resolved. If possible, at least speak to a lawyer before going to court, and make sure that you gather together any evidence that may help your case.

Seek Legal Counsel

    If you receive a summons to court, it is a good idea to talk to a lawyer, even if you can't afford full representation. A lawyer can help you to understand your rights and prepare you for what you might encounter in court. Contact legal aid services in your area to see if you can talk to one of their lawyers about your situation.

Organize Your Documentation

    If you believe that you do not owe what your credit card company says you owe, and you have not been able to resolve the matter with your credit card company, be prepared to explain this to a judge. Bring with you the paperwork that can back up your claim. For example, if you have canceled checks and bank statements that show that you made your payments, bring those to court.

Protecting Your Assets

    If you are concerned that your credit card company will win its judgment against you and will then freeze and garnish your bank accounts, take steps to protect your assets now. If you currently receive your salary or other funds via direct deposit, stop the direct deposit and ask to receive your money by paper check. Some assets, such as unemployment checks and Social Security payments, are exempt from garnishment, but it is your responsibility to protect them. You can do this by opening a bank account into which you deposit exempt funds. If your creditor attempts to garnish this money, you can notify the creditor, the court, and your bank that these funds cannot be garnished.

Your Day In Court

    Be sure to dress appropriately for court. You should wear the kind of clothing appropriate to a business meeting or job interview. Make sure you get to the courthouse early. Many courthouses now require everyone who enters to undergo a security screening, and you don't want to be late to your hearing because you got caught in a long line. If you are representing yourself in court, it's a good idea to get to court extra early, or even visit the court before your hearing, so that you can see other cases and know what to expect.

Tuesday, March 28, 2006

What Is a Debt Hardship?

What Is a Debt Hardship?

Unfortunately, there may come a time in your life when you are unable to cover all of your debts. While the causes vary widely, they often stem from unexpected expenses that can deal a mighty blow to your budget. When this happens, the financial world refers to it as debt hardship. Simply put, debt hardships mean you have incurred expenses that you cannot afford.

Medical Expenses

    Medical expenses are one of the most common debt hardships that people suffer. This is because they are often unexpected. If they arise, they can throw a monkey wrench into the finances of some of the most fiscally well-run households. The most worrisome medical expenses that become debt hardships are those that are long-term. Short-term expenses, such as a leg break that will heal and not be a pressing financial or physical issue, do not constitute debt hardships. However, illnesses such as a cancer diagnosis may mean that long-term care will be in order. If this is your situation, health insurance can buffer the impact on your finances. So can supplemental insurance if you or a family member loses wages because they are ill. When it gets to this point, it can be considered a debt hardship.

Job Loss

    Another common cause of debt hardship stems from one of the family's breadwinners losing their job. This source of income had been depended upon, so if the person is laid off or terminated, a substantial amount of income will no longer be available to the family. As a result, the family will have to cut back on their expenses. Also, some of the bills that were paid with no problem may become hardships to the family.


    When a couple divorces, it can be a very expensive process. Lawyer' fees can quickly chip away at a person's finances. If there is no prenuptial agreement, the costs can easily become hardships. Also, if there is child support or alimony to be paid, a person who had no financial problems can find their income easily drained from these costs, making them a hardship, too.

Too Much Debt

    It is important that consumers not accumulate more debt than they can afford. Key to this is to simply not borrow beyond your means. If you are sued in court by a creditor, you may not be able to claim it as a debt hardship if it is a debt that showed you run up a credit card on items you did not need. New federal legislation passed in 2009 make it more difficult to accumulate debt that you cannot afford. This not only includes credit cards, but also mortgages. Even though this legislation was meant to protect consumers, there are some buyers who still push the limits, and they end up with debt that they may not be able to cover. They can call some of this debt hardship. However, if they are sued in court for being unable to pay their bills because they loss their jobs or had unexpected medical expenses, the debt hardship reason may not work. Debt hardships do not include the purchase of expensive cars, boats and second or third homes that are not affordable by the purchaser. A consumer who responds to a creditor who says that their purchase of a third home will have a difficult saying that purchase was a hardship considering they already own two homes.


    Creditors recognize the host of factors that can contribute to a person having a debt hardship. This makes it crucially important for consumers to keep detailed records of their spending and income. Creditors will work many times work with debtors who are in contact with them and willing to explain the reason for the hardship. Even more important, creditors are more willing to work with people who pay towards their debt. As difficult as it is to cover your debts when they seem to be piling up against you, you must keep the lines of communication open so that they know you are not shucking your duties as a debtor.

Brief History of Consumer Credit

Brief History of Consumer Credit

Consumer credit is ever-present in the twenty-first century. It is obtainable in a variety of forms, including credit cards, financial advances and loans for designated purchases, such as automobiles and pricey retail items. As early as Columbus' voyage can credit-based transactions be traced, but modern society's consumer credit did not appear until the nineteenth century.


    By definition, credit is the stipulation of payment that occurs when a borrower receives finances from a lender by means of promising to pay them back at a later point in time. One of the earliest examples of credit usage is the financing made available to Christopher Columbus for his fifteenth century voyages. After receiving funds from the Queen of Spain, Columbus would pay her majesty back by sharing with her a percentage of his newfound riches.


    Historically, credit was used primarily for goods that would put a consumer into what was called a "productive debt." Lendol Calder, author of "Financing the American Dream: A Cultural History of Consumer Credit," quoted the 1890 census superintendent as saying, "the prime motive in the private debt has been better fences, better barns, better homes and more land for the farmer."

    In modern times, the purpose of credit is to allow consumers to make larger purposes for which they might not have the money. Such purchases are often deemed luxury items. Although not all goods consumers purchase on credit are deemed luxurious, some items are not deemed essential.


    During the nineteenth century, the industrial revolution allowed for mass production of goods. Some goods were overpriced for the average consumer, though. At that time, the Singer Sewing Machine Company, began offering installment plan deals in order to boost sales because, at the time, the sewing machine was considered a "big ticket" item, according to the Federal Reserve Bank of Boston (FRBB). The Singer Sewing Machine Company had, for all intents and purposes, begun offering consumer credit.


    In the twenty-first century, the most closely associated consumer credit channel is the credit card. The first card was introduced by Diners Club in 1949. The card was simple in operation. It was primarily used in the hotel and restaurant industry. Diners Club would offer the card to persons deemed "credit worthy," as noted by the FRBB. Those consumers would then be able to use the card at various participating establishments. The hotels or restaurants would then bill Diners Club, who would bill the associated card user. At the time, Diners Club cards were considered prestigious.


    The explosion of technology and innovation has fueled the growth of credit cards and consumer lending. During the 1970s, only 16 percent of Americans had a credit card, according to the FRBB. As of the twenty-first century, however, 70 percent of households have a major credit card. In modern times, most cards are accepted as a viable substitute for cash at most places where purchases are made.

How to Eliminate Duplicate Accounts on Your Credit Report

How to Eliminate Duplicate Accounts on Your Credit Report

Your credit report is an important tool when it comes to obtaining auto loans, mortgages, credit cards and even employment opportunities. A favorable credit report increases the odds that you will be able to obtain good interest rates and higher credit limits on credit accounts. If you notice duplicate accounts on your credit report, you can dispute them either through the mail or by using an online application at the credit reporting agency's website. The dispute procedure can usually be completed in just a few minutes.



    Obtain credit reports from all three major credit reporting agencies and note whether they list any duplicate accounts. Consumers are allowed one free credit report every 12 months from TransUnion, Equifax and Experian. Your free reports can be obtained by visiting annualcreditreport.com (see Resources for link), the only website that is contracted through the federal government to deliver free credit reports to eligible consumers.

    If you aren't eligible to receive your reports because you've already requested them in the last 12 months, you can purchase them. The price for each report is usually less than $10.

    If you have been denied credit in the past 60 days, you can also request a free credit report from the agency that provided the credit report to the creditor that declined you. Refer to the credit denial letter to determine which credit reporting agency the creditor used to make the credit decision and for information on how to request the free report.

    You may also request a report by calling the credit reporting agency directly. (See Step 2 for applicable phone numbers.)


    Mail a dispute letter to each credit reporting agency. The letter should include your name, address, phone number and information for all duplicate accounts that you would like to have removed from your credit report. Include the creditor's name, account number and account balance that is reflected on the credit report. State under each account that these accounts are in error because they are reflected more than once on your report.

    In addition to the letter, you may include documentation that supports your dispute, such as letters from the creditor, copies of cleared checks, bank statements and credit card statements. These items can help the investigator who receives your dispute to resolve the duplicated items quickly and efficiently.

    Credit reporting agency contact information is as follows:

    P.O. Box 740256
    Atlanta, GA 30374
    (800) 865-1111

    P.O. Box 2000
    Springfield, PA 19022
    (800) 888-4213

    P.O. Box 2014
    Allen, TX 75013
    (888) 397-3742


    File a dispute with each credit reporting agency online. If you prefer, you can visit the credit reporting agency's website to file the dispute. This process is fast and simple and takes just a few minutes. Include the same account-identifying information as you would have with a letter of dispute (see Step 2), as well as the reasoning that the account(s) in question are invalid because they appear on your credit report multiple times.

    Notate the confirmation number that you will receive after filing the online dispute. You can use it to check the status of your dispute as it is processed.


    Wait 30 to 45 days for your dispute to be processed and your duplicate accounts to be corrected and removed from your credit report.

    For written dispute letters, the credit reporting agency will work to resolve your dispute within 30 days of receipt of your dispute letter and documentation, if applicable.

    Disputes filed online can take up to 45 days to be processed by the credit reporting agency. You will be notified via email when your dispute has been processed.

    If any changes were made to your credit report, the agency will include an updated copy of your credit report to reflect the changes that were made due to the dispute. This updated copy of your credit report will be delivered through the mail or via email, if you originally received your credit report(s) online.

Do it Yourself Debt Relief

Do it Yourself Debt Relief

Do it yourself debt relief requires educating yourself regarding money management methods. In order to relieve debt, you must deal with more than just the debt itself. You will also have to change the way you manage your daily budget. Behaviors and lifestyle choices created the need to work on a debt relief plan. This means that for debt relief to occur, you must change your pattern of living. Doing so will help to build your credit and eventually you will be debt free.

Put It In Writing

    Take the time to write out a budget that clearly shows all incoming and outgoing money flow. This will increase your spending awareness and is one of the key principles to prevent further increase of debt. It will also help you to set aside the necessary funds for relieving existing debt.

    Create a structured plan that includes both a bill payment schedule and a modified daily spending plan to free up more funds for the debt relief process. Do this by writing down your recurring monthly bills. Write down exactly how much you need to spend every day on groceries, clothing and miscellaneous items.

Lifestyle Changes

    During the writing process, determine what lifestyle changes are necessary for your debt relief plan to work. Evaluate whether or not every one of your recurring monthly bills are all more important than paying off your debt. If you discover an unnecessary monthly bill, now is the time to cancel it.

    Once you've weeded out some needless expenses, start saving a percentage of your income for an unknown emergency expense. When you have to buy, for example, a new tire unexpectedly or when any other unforeseen occurrence strikes, your entire debt relief plan will not be derailed.

Do It Yourself Debt Relief Method

    After listing everything on paper, you should now analyze your debt and the money that you have available for relieving that debt. One recommended method for dealing with debt is to divide the amount of available money that you have by the number of debts you are paying off. Rather than attempting to pay one debt first and accruing additional fees with other locations, choose to pay exactly the same amount to each debt. Do this whether you are paying 5.00 or 500.00 each. This method will, with patience, begin to eliminate certain debts while simultaneously decreasing others. When one debt is eliminated, then divide the payment that you were making so that all of the money remains evenly distributed among existing debts. The remaining debtors will now be receiving an increased payment amount.

    This method of do it yourself debt relief will help to rebuild your credit and eventually you will be debt free.

Debt Relief Resources

    Individuals and families attempting to eliminate their accumulated debt have many resources to turn to for information and guidance. Print books, books on CD, videos, as well as online information are all available to those interested in educating themselves on the most effective ways to get out of debt on their own. While specific pieces of advice vary, many similarities exist throughout each debt relief program. Studying and taking the appropriate advice can mean the difference between success and failure in DIY debt relief.

Monday, March 27, 2006

How to Create a Debt Consolidation Plan

How to Create a Debt Consolidation Plan

A debt consolidation plan allows individuals to determine the best way to pay down debt. There are many methods to consolidation but all of them involve a plan. The plan needs to outline what your debt is and how it will be paid down. For those considering a debt consolidation loan, it is important to create a plan to avoid getting further into debt. A debt consolidation plan can help you to start a financially successful life.



    Determine the amount of debt you have by making a list of all debts, excluding any mortgage payments, in order from the debt with the highest interest rate to the lowest interest rate. Do not forget debts such as vehicles, student loans, store accounts, tax liens and credit card debt. Second mortgages or home equity loans should not be listed.


    Calculate the monthly payments made on each of your debts, based on the required minimum payment on each. The debt consolidation plan may help you to reduce the amount of monthly payment you are making, depending on the type of consolidation loan obtained.


    Shop for the best consolidation loan available to you, which could be a secured loan (such as a home equity loan) or an unsecured loan (such as a personal loan.) Look for the lowest rate line of credit available that offers enough of a credit limit to cover the total debt owed.


    Apply for the loan after telling lenders your desire to consolidate pre-existing debt with this new loan. Because you will pay off pre-existing debt with the loan, the lender may look more favorably on your application because of the reduction in debt.


    Put in place a budget that outlines all monthly expenses in total. Using this budget, keep all credit spending to the lowest possible amount, which will ensure that no further debt is accumulated. Use a cash only lifestyle until the debt is paid off in full.


    Continue to pay off the debt consolidation loan. For the debt consolidation plan to be successful, individuals need a firm commitment to enable them to improve their credit and build financial wealth.

How Is Information Stored on Credit Cards?

How Is Information Stored on Credit Cards?

Magnetic Strip Technology

    Credit cards encode information by using magnetic stripes, and data is stored by changing the magnetism of iron-based particles on the band of magnetic material. These black magnetic stripes, sometimes called "magstripes," also may include other technology, such as an RFID tag, a transponder device or a microchip. Invented by IBM engineer Forrest Parry, these magnetic strips are in similar in part to cassette tape technology.

Magnetic Encoding

    There are three tracks on the magstripe, each about one-tenth of an inch wide. There are many different systems for storing information, but for banks, the ISO/IEC standard 7811 is used. Credit cards typically use only tracks one and two, whereas track three is a read/write track whose usage has not been standardized among banks. This information includes credit card numbers, account numbers, country codes, discretionary data to fill out records, expiration dates and other information.

Point of Sale

    When a card is swiped at a Point-of-Sale (POS) terminal, the terminal dials a telephone number using a modem to call an acquirer. Acquirers are hired by credit card companies to collect credit-authentication requests from merchants to provide the merchant with a safeguard for payment. The acquirer, upon receipt of the authentication request, checks the merchant ID, credit card number, expiration date, credit-card limit and card usage against a database of credit-card information. With PIN codes, as some magnetic strip technologies use, the PIN is encoded and sent along with the other information to be checked against either the cipher form in a bank's database or against a chip on the card itself. The acquirer then releases funds, and communicates updated account information to the credit card companies. Banks attempt to secure credit card information by making the cipher a one-way cipher: Even with access to encrypted PIN numbers in a database, the PIN numbers will remain secure. Further, encryption is used in all telephone communications to prevent wiretapping. Today's advanced technologies further spawn a new generation of smart cards whose complexity increases monthly.

Consolidation Loans for Non-Homeowners

Getting a loan to consolidate debts is easier for homeowners. Because of their home's equity, they can apply for a mortgage refinance or home equity loan and use the money to pay off their debts. Yet, it's also possible for non-homeowners to get a debt consolidation. A debt consolidation is beneficial because it typically involves lower interest rates and fixed terms, which allows a borrower to become debt-free in a relatively short period.



    Find a co-signer with good credit. If you don't own a home, but you want to get a debt consolidation loan, you can apply for an unsecured debt consolidation loan. These loans are difficult to obtain, and many lenders require an excellent credit history. Persons who don't have a strong credit background may be able to qualify with a co-signer. A co-signer becomes equally responsible for the loan, and in the event you're unable to repay, they are required to submit the loan payments.


    Use collateral and apply for a secured loan. Secured debt consolidation loans are available to non-homeowners. However, you'll need to provide the lender with collateral tha's equivalent to the loan amount. Adequate collateral can include the title to a vehicle or other valuable piece of personal property.


    Cash-in a life insurance policy. Universal or whole life insurance policies have a feature that lets policyholders cash-in their policy or use the money in their policy as collateral for a loan. If you need to get rid of your debts and you have a sizable life insurance policy, use a portion of the money to pay off your bills.


    Contact a debt consolidation agency. Debt consolidation and credit counseling agencies have helped countless non-homeowners become debt-free. These agencies communicate with your creditors, negotiate lower interest rates and establish new payment plans. They'll consolidate all your debts into one account. In turn, you submit one payment each month.


    Apply for a balance transfer. If you have good credit, apply for a low-interest credit card. Once you have the card, transfer the balances from the old cards to the new one. You'll enjoy a reduced interest rate, and you'll be able to consolidate and pay off your debts quicker.

Saturday, March 25, 2006

How to Use a Debit Card to Make Purchases at a Store

A debit card is a bank card that resembles a credit card. When it is used to make a purchase, however, the money is taken directly from a person's checking or savings account. The deduction may occur in as little as 24 hours. Individuals who prefer not to write checks, but also don't want to carry cash commonly use debit cards.



    Gather the items you want to purchase and proceed to checkout.


    Present your debit card to the cashier. If there is a card scanner near the register, she may request that you swipe your card.


    Swipe the magnetic strip side of the card through the scanning part of the machine. You will generally see a small image on the machine that will show you how to insert your card and what direction your card should face as you swipe it.


    Decide whether you want to run the card as a debit or credit card when the scanner prompts you on its screen. If you choose to run it as a debit card, you will typically have to provide your personal identification number, or PIN, before you complete your transaction.


    Prepare to show your driver's license if you have chosen to run the debit card as a credit card. For protection, stores will commonly ask for identification if the purchase is over $50. Some stores may ask for identification, regardless of the purchase size.


    Sign the merchant's copy of your purchase. Stores typically have you sign one copy for them and give you a second copy for your records.

Are Authorized Users Responsible for Debt?

Are Authorized Users Responsible for Debt?

An "authorized user" is a person who is given permission to utilize the credit extended to another account holder. Credit card companies and other credit grantors allow approved account holders to allow designated individuals to use their account. Although authorized users may incur charges to the account, they are not legally responsible for repaying the debt.


    A major benefit of being an authorized user is that you can have access to a credit account but do not have to qualify for credit. For example, students and young adults with limited credit can become authorized users on their parents' credit card account. This is a beneficial arrangement for individuals unable to qualify for credit on their own.


    Drawbacks exist for both the original credit holder as well as the authorized user. The account holder runs the risk of the user over-extending available credit. Alternatively, if the account holder defaults on the credit obligation, the negative payment history can show up on the authorized user's credit report.


    The best way to prevent financial risks for both the account holder as well as the authorized user is to carefully consider the payment history and spending habits of each individual before making the decision to share a credit account. Establish rules that outline allowable purchases as well as who will be responsible for repaying them.

Can an Account Be Submitted to a Collection Agency?

If a creditor lacks the time or resources to collect debt from consumers on its own, it has the option of hiring a collection agency. Creditors who elicit the services of these companies either retain ownership of the account -- paying the debt collection company a percentage of what it recovers -- or selling the account in its entirety, relinquishing the debt. Not only can a creditor submit an account to a collection agency, but doing so is a fairly common business practice.

Delinquency and Collection

    Creditors only submit accounts to collection agencies when the company has little hope of collecting the debt on its own. Thus, it's unlikely that any debts you owe will end up sold or transferred after one missed payment. The amount of time your creditor will wait for payment before turning your debt over to a professional debt collector, however, depends on the type of debt you owe. Credit card companies, for example, retain delinquent accounts for up to 180 days, while hospitals, which often lack in-house collection departments, turn unpaid account balances over to outside agencies much more quickly.

Secured vs. Unsecured

    Creditors have little reason to turn secured debts over to outside collection agencies. Collection agencies are necessary when the creditor cannot collect the debt on its own. Because a secured debt grants your creditor a security interest in an asset you own, your creditor has the option to seize the asset rather than sell or transfer the account.

    If you owe an unsecured debt, however, your creditor cannot seize your assets without first filing a lawsuit against you. Hiring a collection agency is more cost-efficient and less time-consuming for creditors than seeking legal recourse. The collection agency then decides whether or not to sue you.

Collection Activity

    Debt collectors are typically aggressive in their debt-recovery efforts because, unlike original creditors, they have little interest in maintaining a professional relationship with the debtor. While consumers experience frequent collection calls and letters after having an account sent to a collection agency, the Fair Debt Collection Practices Act prohibits debt collectors from harassing or abusing debtors. Harassment includes, but is not limited to, using profanity, making threats the company cannot legally carry out and calling the debtor's friends and family members about the debt.

Paying Bad Debts

    Once a creditor sells a debt you owe to a collection agency, you must pay the debt to the collection agency rather than to your creditor. Unfortunately, if the collection agency inserts a collection account on your credit report, the negative entry will remain for seven years from the day your creditor reported your original account as 180 days delinquent. Paying off the debt will neither improve your credit score nor cause the company to remove the collection account from your report.

    Although creditors rarely "recall" debts from collection agencies, your creditor can reclaim ownership of your account if the debt was remanded to the collection agency in error.

About Credit Consolidation

When times get tough with money, people look for a way to lower their bills. If you have good credit and want to maintain it during an economic crisis, you may consider credit consolidation. This can help you in some situations, but in some ways consolidating credit can actually hurt you in the long run. Read on for an explanation of how credit consolidation works.


    Credit consolidation is when you decide to place a number of credit balances onto a single account. Let's say you have three cards with balances of $1,000 a piece, but are close to the max. You have a fourth card that has zero balance but a maximum credit of $5,000. You may decide to transfer all three balances to the high-limit card.
    Credit cards aren't the only forms of debt you can consolidate. Consolidation can happen with car payments, student loans and personal loans, too. For either service you can hire a company and pay them a fee to negotiate lower rates with your creditors so that when you consolidate you are making one single payment to cover several types of debt.


    Consolidating credit cards can make paying bills a little more streamlined. Instead of having several due dates with different minimum balances required on varying interest rates, consolidating credit onto one card brings all the debt into one rate. In many cases you can end up paying less per month on your credit cards than when they were separate bills.


    The biggest warning about credit consolidation is that the balance transfer can cost you more if the interest rate is higher on the absorbing card. Let's say those three cards were costing you $100 a month and it would take you 40 months to pay them off if you only paid the minimum balance at 19 percent. If your higher-limit card has an interest rate of 24 percent and you pay the minimum balance of $80, it could take you even longer to pay off because of the higher interest rate.
    Paying a company to consolidate your credit can also run you out of money. You could end up paying a lower amount per month to cover all the bills, but that could include a fee for each account, usually at 10 percent per balance. If you have many accounts to consolidate, these fees can add up.

Expert Insight

    Experts say that you can pay off your debt faster if you try to refinance other loans you may have in order to pay off debt. For instance, you may be able to refinance your car loan by 3 percent. If you negotiate your interest rates with the creditors and apply that 3 percent savings, your debt can go down a little faster.


    If you transfer balances and close those accounts, make sure that you tell the creditors to list them as closed by the customer. Otherwise, a future lender may think your account was a settlement or charge-off by the creditor.

Friday, March 24, 2006

How Much Should My Score Raise If I Pay Off Three Collection Debts?

How Much Should My Score Raise If I Pay Off Three Collection Debts?

    Paying off debt can increase your credit score.
    Paying off debt can increase your credit score.

Paying Bills Improves Credit Scores.

    According to myFICO, paying bills on time improves credit scores. The same can hold true when paying off three separate collection accounts. Paying off debt demonstrates that you are a responsible consumer.

Starts the Clock.

    Paying off any old debt re-ages the account. According to the Fair Debt Collection and Practices Act, collection accounts can be reported for up to 7 years, paid or not. Making a payment on aging debt starts a 7-year cycle of that negative mark over again. This can negatively impact your score.

Bottom Line

    According to MSN Money, collection accounts are often reported with a zero balance. Thus, paying off three collection accounts with a zero balance will not have any positive or negative impact on your credit score.

Can I Lose My Bank Account if I Have a Judgment?

Creditors and lenders are often serious about collecting unpaid debts. With this said, creditors and lenders may contact people with past due balances to get the account back on track. But when attempts prove unsuccessful, creditors and lenders can take legal action to acquire a judgment and possibly seize bank accounts.

What is a Judgment?

    Once a judge reaches a decision with regard to a credit lawsuit, he can issue a judgment, which basically awards the creditor the owed funds. Debtors receive a judgment notification on their credit report, and this information can damage their personal rating for a period of seven years. With a judgment on a credit file, getting loans, credit cards and low interest rates can prove challenging; and failing to satisfy a judgment creates further issues.


    The sooner you pay a judgment order, the better. Upon receipt of your payment, creditors submit a form to the court as evidence that you satisfied the debt, and the court updates your credit file to read "paid judgment." According to Bankrate.com, debtors have approximately 30 days or one month to pay a judgment. Ignoring the judgment order has a snowball effect, where a creditor can return to court and take additional legal action to collect on a debt.

Bank Account Liens

    Bank liens or seizures can follow non-payment of a judgment order. The creditor returns to court, and if they have your bank account information on file, they can request a court-ordered lien against your account. Once your bank receives notification of the lien, the institution freezes all funds in the account. This prevents the withdrawal of funds or the writing of checks. Some funds exempted from a bank lien include government benefits, alimony/child support payments, worker's compensation, retired benefits and disability benefits.

Reversing a Bank Lien

    Stopping a bank lien or seizure is often a matter of paying the judgment order to the creditor or court or appealing the judgment and scheduling another hearing to dispute the order. Appealing a valid judgment only delays the process. Contact the creditor to make a full payment, or ask for an installment plan to pay off the judgment and regain access to your personal funds.

How to Decrease Credit Card Attrition

Faced with an increasing number of charge-offs and a liquidity crunch, credit card issuers have been slashing their customers' available credit limits to reduce liability. Some analysts have suggested that over $2 trillion of lines would be cut by the end of 2010. Lower available credit may hurt your purchasing ability, your personal cash flow management and even your credit score. Per most card agreements, creditors do have the right to raise or lower your credit limit at their discretion. However, there are some things you can do to make it less likely you will be part of the estimated $2 trillion in credit line cuts that have been taking place since 2008 and be able to maintain your credit lines in what appears to be a credit-restricted future.



    Use your credit cards. You may be more at risk for having your credit limits slashed if you are not periodically using your credit cards, or only using a small percentage of your outstanding available credit line. For example, if you have a $5,000 limit but your average daily balance over the last year is $500, the card issuer may assume that a reduction of your limit to $2,000 will not be that big of a deal for you. When you use larger portions of your available credit limit, you are sending a message of loyalty to your card issuer. This may not exclude you entirely from having your line reduced, but creditors would prefer to avoid reducing limits of committed customers, where viable.


    Pay on time. Paying on time is not only good for your credit score, it is also part of your agreement with the card issuer. A missed payment leads to fees, higher interest rates and a reduction of your available credit lines. Creditors see late payments as a sign of delinquency, and a red flag that you may be an at-risk customer. Remain a customer in good standing, and card issuers will be less likely to reduce your available credit.


    Stay under your limit. If you frequently approach the high level of your balances or habitually go over the limit, credit card issuers may label you as a high-risk consumer and reduce your available credit. A history of being unable to reduce your outstanding balance may indicate to the card issuer that you are having trouble, and are at higher risk of default. The card issuer may respond by cutting your available credit. This may keep your balance in an over-the-limit status for awhile, but you will be unable to make new purchases on this particular line as you pay down small portions of the balance.


    Call customer service. When you find yourself on the wrong end of a credit line reduction, a resolution may only be a phone call away. Consumers often find out about a credit line reduction via a notice in the mail, or by logging into the account online. A quick and courteous call to customer service, asking for more details on the credit line reduction, may provide some valuable insight and provide you an opportunity to ask for the decision to be reversed. This approach seems to work well when your account is in good standing, have a long history of usage and even have accrued a manageable level of interest charges while you have been a consumer.


    Keep other accounts in good standing. Card issuers look at more than your payment history with the account in question -- they will also look at your creditworthiness across your various credit accounts. Derogatory remarks on your credit report such as late payments, charge-offs or collections can be used by other creditors to assess your overall ability to repay debt. To reduce the risk of credit card issuers cutting your limit, review your existing credit report for any negative reporting items, and make sure you stay current with your other outstanding credit accounts.

Thursday, March 23, 2006

Tips to Reduce Credit Card Debt

There is only one sure-fire way to reduce your credit card debt: Spend less money than you make, and use the savings to pay down your debt. The painless way to do this is to make more money, but as that option is rarely available, you need to find other ways to reduce expenses.

Track What You're Spending

    It's impossible to spend less before you know exactly where your money is going. Few people have an accurate handle on their expenditures; that daily espresso may seem like a small splurge, but at $4 a day, that's $1,000 a year coming out of your pocket. Use a personal finance program, such as Quicken or Mint.com, to rigorously track every expenditure you make--then decide if those regular treats are worth the stress of not reducing your credit card balance.

Tackle Your Monthly Budget

    The juiciest targets for reducing your overall expenses are your monthly payments; a small change to any bill you receive regularly will add up to larger numbers over the course of a year. Unfortunately, most people think of these monthly charges as baseline necessities. Here are some ways you can cut your monthly costs without feeling deprived:

    Housing: Most Americans pay between one-fourth and one-third of their income on their rent or their mortgage; a reduction in your housing expenses can make a massive difference in your overall financial picture. If you rent, keep an eye on apartment listings in your area, and plan to move if you find a bargain that isn't too much of a compromise over your current place. If you own, even in a tough lending environment, the interest rate you'll pay on an equity loan is almost certainly lower than what you pay on your credit cards, so watch for lending opportunities that allow you to pay them off--and don't succumb to the temptation to rack them up again.

    Cable and telephone: Are you paying premium amounts for your cable television or cellular phone service? Many people paying $100 per month for cable television have access to a local library that lends DVDs for free; alternately, Netflix or online television viewing can be a much cheaper way to satisfy your viewing fix. Pay-as-you-go cell phone service can be as cheap as $10-20 a month, if you don't use too many minutes, or you can use online phone services such as Skype or Gizmo Voice, which let you gab away for pennies per minute.

Redefine Your Relationship With Money

    Finally, the best way to budget is to think about money in a new way. Check out the book "Your Money or Your Life" to find out if your debt issues are based on a dysfunctional relationship with your income; if so, follow its suggestions to improve your finances in the long term.

How Will a New Credit Card Bill Affect Me?

A new credit card bill means you started using a credit card account for purchases or balance transfers. The transaction itself, and the way you handle the bill, affects your credit reports and score. Credit card use benefits you if manage your accounts responsibly by keeping balances reasonable and paying on time, but it hurts you if you spend too much, or fall behind on your payments.

Debt Load

    The owed balance and amount you pay on your new credit card bill affects your credit score. MyFICO, the Fair Isaac Corporation scoring website, explains that large outstanding balances hurt you. You eliminate that result if you pay the entire amount owed. Otherwise, the balance figures in your credit score although negative effects decrease as the total goes down with each month's payment.

Payment Date

    Your new credit card bill shows a payment date. Your payment must arrive by that date to avoid a late payment fee and delinquent entry on your credit report. MyFICO warns that past-due payments are one of the worst detriments to a good credit score. Call the bank and ask to change the due date on your new bill if the current deadline is hard to meet because it does not align with your paydays. Holden Lewis of Bankrate.com explains that many credit card issuers are willing to make this change upon request.

Credit Report

    Your new credit card bill generates new information on your Equifax, TransUnion and Experian credit reports. The credit card account will show the owed balanced, if you pay the new bill on time and how much the balance decreased and the credit line increased after payment. A 2007 report by survey company Zogby International advises that 37 percent of credit reports had errors, so reports of your account activity might be incorrect. Check your credit reports through annualcreditreport.com, the government-mandated free report source, and notify the credit bureaus of any inaccuracies through their website forms.


    Your new credit card bill shows a minimum amount, as well as your total balance. You must pay at least the minimum to keep the account in good standing, although you are free to send more. High balances take years to pay in full if you stick to the minimum. The Board of Governors of the Federal Reserve System explains that federal law requires banks to print the repayment period and the actual amount you will pay, including interest charges, on your statement. This shows the long-term effect and cost of only sending the minimum.

Wednesday, March 22, 2006

Does a Student Loan Affect Buying a Car?

Having a student loan will impact a person's future ability to get a loan to buy a car or make any other purchase, so how a person manages a student loan will impact her credit score. Because a person's credit score is one of the most important factors that lenders use to determine whether to approve a loan, it is important for anyone with such debt to understand specifically how his life and credit record can be affected by all factors involved in having student loans on record.

Payment History

    For many people, a student loan is the first debt acquired. Because this debt may be the only debt a person has on her credit report, it is vitally important for a person to make payments on a student loan on time. Many student loan programs, including loans from the federal government, allow graduates flexible choices for repayment. A graduate can take advantage of these choices to obtain a student loan payment amount she can afford.

Debt Size

    One way that a student loan impacts a credit score to a larger degree than other debts is due to the size of the student loan. Credit scores take into account the total amount of debt that a person has. As many student loans are tens of thousands of dollars, or more, this large debt will impact a person's ratio of debt to income and other factors that both credit scoring companies and lenders will use.

Debt History

    Another factor used by the credit scoring companies to determine a person's credit score is the length of credit history. The credit scoring companies look favorably on borrowers who have a long history with one lender. As most graduates pay on student loans for decades, consistently making student loan payments on time will help a person build a solid credit history with the lender, which will result in a higher credit score over time.

Other Factors

    Credit scoring companies treat student loans as installment loans. Installment loans do not negatively impact a credit score as much as a revolving loan, such as a credit card. Though the credit score is important, a lender will also look at other factors when determining whether to approve a car loan. One factor that a lender will consider is the ratio of the amount of the student loan payment to a person's take-home pay. The lender will want to make certain that the borrower can afford the student loan and other existing payments as well as the new payment on the car loan.

Credit Card Debt Settlement Strategy

Credit card accounts can be paid off for less than the full balance through credit card debt settlement. Savings are often significant, ranging from 20 to 70 percent according to SmartMoney. The process is sometimes intimidating for people with little negotiating experience, but becomes easier over time. Mapping out a sound strategy is important because of tax implications and other reasons.


    Credit card debt is available only on delinquent accounts. Card companies will not settle accounts that are being paid as agreed. Individual lenders set standards for settlement offers, with negotiations generally available once the account is three months past due.

For-Profit Companies

    The Federal Trade Commission recommends self-directed debt settlement although for-profit debt settlement firms will handle negotiations for a fee. Some for-profit firms have been accused of shady business practices by federal and state authorities. Debt settlement starts by calling the card company to request a settlement. Begin calling once the the account is three months behind. Tell the customer service representative that you can no longer pay as agreed and want to settle.

Collections Department

    The representative may transfer you to an in-house collections team specializing in settlements. Avoid discussing your income, employment and assets -- information that could be helpful to the debt collector if you default on the account and the card company considers suing you to collect. Keep the conversation focused on settlement while emphasizing that you cannot continue making payments as agreed.


    The representative will review your account, and may inform you that a settlement is not currently available. Politely end the conversation and call back every two or three weeks. MSN Money reports that card companies usually close accounts and list them as charged off once they are six months past due. Settlement offers are usually available just before charge-off and sometimes sooner. Make a lowball offer once negotiations begin. Start at 20 percent and increase your offer by increments of five percent until you have a deal that you can afford. Get terms of any agreement in writing.

Tax Problems

    Consult your tax adviser on possible tax implications. The Internal Revenue Service may treat savings gained through settlement as income. For example, settling for $2,000 on a $10,000 credit card debt could result in the IRS increasing your gross income by $8,000. The card company will send you a tax form to include with your return. Some people with financial problems can petition the IRS for an exemption.

The Best Ways to Get Credit

Applying for a mortgage loan with no credit history can bring on a rejection. There are good reasons to build a credit history, and with countless ways to get credit, you can quickly create a high personal credit score and become a prime candidate for loans offering low interest rates.

Start with Your Bank

    Holding a savings or checking account with a bank or credit union opens the door to credit cards with the institution. Getting a major credit card can prove challenging with no prior credit history. But, if you have a good relationship with a bank, they may approve you for a secured credit card if you provide a security deposit that acts as collateral.


    Having another person cosign you credit card or loan application is a technique for acquiring credit if you can't based on your own information. Cosigning benefits you, but it's risky for the person who decides to help you. By cosigning your credit or loan application, this person is essentially agreeing to make your payment if you default. For this method to work, cosigners need steady income and a high credit score to compensate for your low score or no credit history.

Collateral-Based Personal Loan

    Being employed and having collateral -- car title, jewelry or other valuable property -- can help you get credit if you have a low credit score or no prior credit history. Lenders reviewing your application will factor your collateral into the equation. And, if the value of the collateral matches the requested loan amount, they may approve your application. Because collateral secures the loan, lenders can repossess your collateral if you default.

Auto Loan

    Larger car dealerships may not approve your loan application with no credit history because they can't judge your willingness to repay the loan. In this case, dealers might require a cosigner for an auto loan. If using a cosigner isn't an option, check out privately owned dealerships that offer in-house financing to see if you qualify for a bad credit auto loan. These auto companies may approve your loan with no credit check and no cosigner, but charge a much higher interest rate on the vehicle loan.

Credit Card Option

    Teenagers looking for ways to start their credit history can benefit from their parent's good credit habits. Using a parent, spouse or sibling's credit card and becoming an authorized user on the account is one way to get and build a credit history. The entire process takes minutes, and the primary accountholder simply calls the credit card companies and adds the name to the account. Authorized users receive a credit card in their name and the credit card will show on their credit report.

Tuesday, March 21, 2006

How to Clean Everything Off a Credit Report

How to Clean Everything Off a Credit Report

Your credit score is important, and having a low or negative score can prevent you from obtaining a mortgage loan, auto loan or credit card. Fortunately, there are several ways to clean every negative item off your credit report, and raise your score by 100 or more points. With a higher score, you're able to acquire financing and obtain the best interest rate.



    Obtain a copy of your credit report. Before you can clean negative remarks from your credit report, you'll need to know your credit standing. Order a free copy of your personal credit report from Annual Credit Report.


    Dispute credit reporting errors. After reviewing your report, circle unfamiliar accounts or reporting mistakes. Call your creditors to dispute an unfamiliar account. By law, they have to investigate all claims and correct inaccurate information.


    Settle collection accounts. If you have a collection account, contact the original creditor or the collection agency, and set up a payment arrangement. Once you've paid the debt in full, ask the agency to remove the remark from your credit report.


    Pay credit judgments. Judgments reduce your credit score. To clean negative items off your credit report, pay off credit judgments, or submit monthly payments.


    Pay your bills on time. Creditors report late payments to the bureaus, and these remarks decrease your credit rating. Make every effort to pay your bills on time each month. If necessary, sign up for automatic bill-pay to avoid late payments.


    Hire a credit repair agency. If you've filed bankruptc, or experienced a foreclosure or repossession, use a credit repair agency to clean up your credit report. Agencies contact past creditors on your behalf, and they work diligently to get negative remarks deleted from your report.

How to Send an Update to a Credit Reporting Agency

How to Send an Update to a Credit Reporting Agency

Every consumer is entitled to one free credit report from each of the three credit agencies once every 12 months. Consumers should take advantage of that law and check their credit reports each year to make sure that the information is accurate. If you do see inaccurate information and need to update your credit report, you can use the resource websites below to find out what kind of information the agencies need to make an update. There is also a procedure you should follow to make sure your update is handled properly.



    Draft a letter to each of the three credit reporting agencies, based on the requirements for a dispute outlined in their websites. Avoid using email, as you will want to create a paper trail using certified mail delivery.


    Mail the letter to each of the credit agencies with a signature certification that requires them to sign for the letter upon receipt. According to Military Money, the credit agencies have 45 calendar days from their date of receipt to respond to the letter and either let you know that the account you are disputing is valid, or that it has been removed or changed based on your request.


    Send a second request letter to the credit reporting agencies if they have not responded within 45 days. Include a copy of your original letter with your new letter. Send this second set of letters with a signature confirmation as well.


    Wait 15 calendar days from the date of the agencies' receipt for a response.


    Mail a letter to the creditor if the credit agencies have not responded within the 60-day period. In your letter to the creditor, include copies of all letters sent to the credit agencies and the signed return receipts. Wait 30 calendar days from the receipt by the creditor.

Saturday, March 18, 2006

How to Answer a Lawsuit by a Creditor if You Are Insolvent

Insolvency means a person has more debts than assets, according to the Internal Revenue Service. However, insolvency is not a suitable defense in a credit card lawsuit. Declaring insolvency is the same as saying you simply don't have the money to pay the debt. Such a response to a lawsuit is sure to lead to a monetary judgment and possible garnishment of your bank account or wages. If insolvency is your only defense, it's best to settle the lawsuit out of court. However, to protect your rights, you should still provide a legal answer to the lawsuit. Failing to legally respond to the lawsuit could lead to a so-called default judgment that forfeits your right to a court hearing.



    Consult with an attorney, if possible. Credit card lawsuits are serious legal matters and sometimes force people into bankruptcy,. A consumer affairs attorney cannot provide a suitable defense if you really owe the money, but can file various legal motions to delay the lawsuit while you seek a settlement. The attorney also can file a legal answer to the lawsuit.


    Prepare an answer if you don't have an attorney. States requiring a written answer to a lawsuit provide the defendant with a document called a summons and complaint. The summons is the notice of the lawsuit and is attached to the complaint, which is the actual lawsuit. The complaint lists a number of allegations, including that you opened a credit card account on a certain date and defaulted on the account, leaving a specific balance. You must respond to each allegation in writing, but exactly how you should respond may depend on the laws in your state -- a key reason for seeking legal advice. You can simply write a letter listing the number of each allegation and the word "deny" -- which is the same as pleading not guilty in a criminal case.


    File the answer with the court by following instructions included in the summons. Then contact the creditor or debt collector to settle the lawsuit. Illinois Legal Aid reports that you are sure to lose in court if you owe the money, no matter what you included in your written answer. Working out a settlement for less than the full amount -- or even a payment plan for the full amount -- is preferable to a judgment and possible garnishment.

How to File for Unemployment Benefits in Kentucky

How to File for Unemployment Benefits in Kentucky

When you lose your job in Kentucky, you should immediately file for unemployment benefits. The Kentucky Office of Unemployment and Training processes all unemployment benefits applications. The office allows both telephone and online filing for unemployment benefits. It should take around 15 minutes to submit your application.



    Get together you employment history for the past 18 months. For each job you held, you need the business name, address, contact number and the dates you were employed. You will also need to have your driver's license number and Social Security number to complete the unemployment application.


    Use the Kentucky Office of Unemployment and Training website to file your benefits claim online. Scroll to the bottom of the page and click on "I Agree" to get started. You can only access the online system between 7 a.m. and 7 p.m. during the week and from 10 a.m. until 9 p.m. on weekends.


    Call the claims center at 502-875-0442 to file your unemployment claim over the phone. Access hours are between 7:30 a.m. and 5:30 p.m. on weekdays only.

Is it a Felony in Texas to Bounce a Payday Check?

Payday loans -- loans paid back in a short period of time, usually several days to a month -- command a very high rate of interest. If a person fails to pay back a loan by the date set by the lender, he will usually be assessed additional fees, too. In Texas, a person who maliciously passes a bad check is guilty of a felony. However, if a payday borrower bounces a check, it is not considered a crime.

Payday Loans

    Many payday loans are set up so that the borrower will in fact give the lender a postdated check at same time as he borrows the money. This check will be for the amount of the loan, plus any interest or additional fees. The lender will then agree to not cash the check until a set date. The borrower will agree to place enough money in his account that the check will clear when cashed.

Bouncing Checks

    Sometimes, for various reasons, the check that a borrower has provided the lender will bounce. When a check "bounces," this means that the account the check is linked to does not have sufficient funds to pay the person cashing the check. Instead of providing the individual cashing the check with partial payment, the bank will simply return the check. When a payday loan check bounces, the lender will usually assess the borrower additional fees.

Hot Check Laws

    Like several other states, Texas has a law restricting the passing of "hot checks." A hot check is one that the person issuing it knows is not valid, either because the account to which the check is linked has no money or because he is not authorized to write the check. Issuing a hot check is considered a form of financial fraud, as it allows a person to pay for products or services without compensation. In Texas, hot check fraud is felony.


    Texas does not consider the hot check law to be applicable to checks issued for the payment of payday loans, even if the checks bounce. As of January 2010, Texas has never prosecuted a person for bouncing a payday loan check. This is for two reasons. First, payday loan checks are postdated, meaning the issuer cannot know for certain if the check will bounce; second, it is nearly impossible to prove that a failure to pay back a payday loan was done maliciously.

Friday, March 17, 2006

Is My Credit Clean After Seven Years?

Credit reports and credit scores only help businesses make accurate lending decisions if those reports are up to date. The Fair Credit Reporting Act (FCRA), a collection of federal laws that governs the credit reporting industry, sets reporting periods for different types of information. A reporting period ensures that data remains on file only for the length of time that it is valid to lenders. Because of this, negative information cannot linger forever within your credit records.

Reporting Period

    According to the FCRA, most derogatory information on your credit report remains for only seven years and 180 days. After this reporting period passes, the reporting agencies remove the derogatory information from your file, and it is no longer visible by you or current and future creditors. It also no longer impacts your credit score. Negative information that disappears after 7 1/2 years includes collection accounts, credit card charge-offs and late payments.

Clean Credit

    If your credit record contains only negative entries and you do not incur new credit before the derogatory information is removed from your credit report, you could potentially be left with no credit history. Although you would still technically possess a credit report that contained your personal information, such as current and past addresses, your Social Security number, date of birth and any aliases, the report itself would not reflect any financial information. Having no credit makes you a high risk to lenders just as if you had poor credit, because lenders would have no positive payment histories and past proof of debt management skills to determine whether to lend you money.


    While most negative information disappears after 7 1/2 years, some derogatory entries linger for much longer. Bankruptcies are a prime example. A Chapter 7 bankruptcy remains within your credit file for 10 years. Unpaid tax liens can linger within your report for 15 years, and judgments remain for however long your state permits creditors to legally enforce them.

Positive Information

    Positive information on your credit report does not always disappear after seven years. Closed, positive accounts often remain a part of your credit report for up to 10 years before the reporting agencies remove them. Open and revolving accounts, such as credit cards, are reflected on your credit report for as long as you keep the account open and continue making purchases and payments. Thus, an open credit card account can potentially impact your credit score indefinitely.

Reporting Errors

    Not all derogatory information required to be erased by the FCRA vanishes within the appropriate time frame. Reporting errors sometimes result in negative data remaining on your credit report -- and damaging your scores -- for longer than the federal government allows. Should you notice obsolete information within your credit file, you can contact the credit reporting agency whose file contains the error and dispute the data as obsolete. Consumers can dispute errors online, by phone or via mail.

Thursday, March 16, 2006

When Are Garnishments Stopped?

By garnishing wages, your creditors can collect on your unpaid debts. If you default or stop paying a creditor, he may be able to sue you, win a court judgment and then use the judgment to have what you owe taken directly out of your wages or your bank account. Usually this continues until you've paid off the debt, but there are alternative solutions.


    Most creditors have to wait on a court order before they can take your wages. Once a judge authorizes the garnishment, creditors can garnish up to 25 percent of your disposable earnings, which is what's left of your paycheck after mandatory deductions. The 25 percent is the maximum of all garnishments, no matter how many creditors win a judgment. The exception is child support, which can garnish as much as 60 percent of your salary.


    You may be able to stop the garnishment by filing an exemption claim with the court. In Florida, for example, you can claim an exemption if you support a child or other dependent on less than $500 a week. You can also receive an exemption if your live on veteran's benefits or Social Security, which cannot be garnished. Depending on state law, you may be able to stop garnishment by showing that it leaves you without the money to cover basic living expenses.


    If you file bankruptcy, it triggers an automatic stay that stops your creditors' efforts to collect from you. If a creditor has already garnished your wages, the garnishment stops, and attempts to get a judgment against you must stop, too, unless it's for child support or alimony. If you discharge the debt in bankruptcy, the garnishment disappears, too. Bankruptcy can't discharge child support payments, alimony debts or most back taxes, so once you emerge from bankruptcy, garnishment for such debts could resume.


    Some states offer other alternatives to garnishment. In Ohio, for example, you can pay your creditor by going through a municipal clerk of court, a proceeding called municipal trusteeship. This won't save you any money, but if you apply for the trusteeship before the garnishment starts, your employer will never have to know anything about your debts. The simplest way to stop garnishment, if you can afford it, is to find a way to pay off the debt in one lump payment, eliminating the need to take money out of your wages.

Debt Alternatives

Debt Alternatives

As more and more people struggle to deal with high credit card and loan balances, they often look for alternatives to pay off debt sooner and fix their personal finances. There are consequences to debt, such as credit rejections, higher interest rates and little disposable income. Explore options to help remedy debt and increase monthly savings.

Debt Consolidation

    Debt consolidation, by either taking out a home equity loan or applying for a personal loan with your bank, can help remedy debt faster. Debt consolidation helps because the interest rate assigned to these loans are traditionally lower than the rate on a credit card balance. Plus, when issuing a home equity loan or personal loan to consolidate debt, lenders give the loan a specific term -- perhaps five years or less depending on the amount borrowed. Having a fixed term means paying off the debt by a specific date, as opposed to paying the minimum on a credit card and carrying the balance for decades.

Lower Interest Rates

    Debt consolidation isn't an option for some, but there are ways to tackle debt and get rid of balances sooner without a consolidation. Achieve similar results by contacting your credit card company and requesting a lower interest rate on your cards. A good, long-term relationship with your card company helps with negotiations. Good relationships consist of paying your bill on time each month. A history of lateness doesn't justify a rate reduction.

Credit Card Usage

    Good intentions to remedy debt can come to a halt if you can't control spending with credit cards. Paying down debt and then charging items again is counterproductive. Learn how to live without credit, and use cash only to buy items that you need. Controlling credit card usage might consist of destroying your cards or keeping them out of close reach, perhaps in a safe.


    Establish a monthly budget and decide how much you need to meet your recurring expenses. Give yourself a modest budget to spend on entertainment and miscellaneous purchases. This may involve reducing how much you spend on non-essentials. Reducing spending creates additional disposable income. Use this savings to increase debt payments. Review finances to see if you can afford to double or triple your minimum monthly payments to speed debt elimination.