November 2006 ~ Credit And Debt Management

Thursday, November 30, 2006

Negative Effects of Settling Debt

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If circumstances have made it impossible for you to keep up with your debt obligations, there are a number of options you can weigh. You might simply walk away from the situation and accept whatever fallout may come. You can file for bankruptcy. You can take a second or third job, applying every bit of your pay to your debts. Another option is to negotiate with your creditors to settle your debts for less than you owe. While debt settlement can provide you some financial relief, there are several negative effects you may experience.

Debt settlement will likely do considerable damage to your credit report. Just how much damage you experience will be based, in part, upon how strong your credit was prior to the crisis. If your credit was battered prior to settlement, you may simply see a dip in score. If prior to your time of financial hardship you were able to pay all of your obligations on time and enjoyed a reasonably high credit score, you'll see a more dramatic plunge. It can take years of effort to pull your credit back up to a healthy level.

You may be responsible for paying taxes on the debt that has been forgiven by your creditor. For example, if you owed $6,000 on a credit card but settled it by paying $2,500, your creditor would report the $3,500 you didn't pay as a write-off to the IRS. The creditor would then send you a Form 1099-C which the IRS expects you to include as income for the year. There are exceptions to this rule, so check with a tax professional before making any decisions.

Negotiating with debt collectors can be a challenge, but dealing with debt settlement companies can be even worse. In 2011, The New York City Consumer Affairs office cracked down on 15 debt settlement companies that the department considered to be predatory. The companies in question allegedly manipulated people into making payments to them each month rather than to the people's creditors. The companies allegedly promised to negotiate on the clients' behalf but failed to do so, or allegedly collected such exorbitant fees from the clients' monthly payments that there was little left for negotiating or paying down debts.

You must be prepared to experience a level of emotional stress as you deal with creditors. Your phone may ring incessantly, and you will sometimes speak with rude collection agents. The terms of your debt settlement agreement may not seem clear, or you may worry that you're doing something incorrectly. You're responsible for keeping records of the contact between you and the creditor and determining how much you will be able to pay. Only you can decide whether the weight of your debt makes going through the settlement process worth the trouble.

Can a Creditor Send to Collection Agency If Disputed?

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An original creditor, such as a bank or credit card company, can sell or assign a delinquent account to a collection agency -- even if the consumer disputes the accuracy of the account. However, there are provisions under federal law to challenge the account once a debt collector begins the collection process.

Original creditors usually close accounts after they fall six months behind, although some lenders may take the action sooner. Creditors list a closed account as a "charge-off," which is a very negative credit event usually leading to placement of the account with a debt collector.

Creditors are usually very responsive to customer complaints, or disputes, while the account is active. Legitimate disputes such as complaints about accounting errors are usually addressed in a timely way. However, it is not possible to use a dispute to stop making payments on a legitimate account and block the creditor from placing the account with a debt collector. It is best to resolve disputes with the original creditor while the account is still active. Debtors should continue to make payments as agreed while the creditor responds.

Accounts placed with a debt collector result in increased collection efforts, including telephone calls and notices by mail. The action also hurts credit scores, with the notations "charge off" and "collection account" listed on the debtor's credit reports. It is impossible for anyone to predict just how much a debtor's credit score will fall after a charge off or collection. That's because everyone's credit is different, and people with bad credit usually experience lower drops in credit score than people with good credit. Credit scores are three-digit numbers ranging from 350 to 850, with scores of 720 or higher considered ideal.

The Fair Debt Collection Practices Act, a federal law, allows debtors to dispute debts after placement of a debt with a debt collector. Privacy Rights Clearinghouse, a national nonprofit consumer information company, reports that debt collectors must provide debtors a written notice about the debt, including the name of the original creditor and the amount due. After receiving the letter the debtor can dispute the debt in writing. Under the terms of the Fair Debt Collection Practices Act the debtor must write the letter to the debt collector. The debtor can demand proof of the debt, such as billing statements. By law, the debt collector must end all debt collection efforts until it sends the proof to the debtor.

Debt Management Definition

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Debt management is a term that applies to any act of trying to get your debt under control and become responsible for repaying your obligations. You can develop your own debt management plan, or you can hire a financial professional.

One of the ways to manage your debt is to create a monthly budget that allows you to compare your income to your bills. Prioritize your bills by due date, and tailor your spending to meet your monthly obligations.

If you are unable to organize and manage your own debt, then you can contract with a debt management firm to help you stay current on your bills.

A debt management firm will set up a monthly installment plan where you deposit money in a pre-determined account, and then the organization pays all of your creditors for you. A fee is added to your bills each month to compensate the debt manager. This fee varies depending on the company, and you should ask about the fee before signing any agreement.

The Federal Trade Commission suggests checking your billing statements each month to make certain that your debt management company is paying your bills as scheduled. If your bills are not getting paid, then contact the debt company. If you get no help, then contact your state attorney general's office.

The Wall Street Journal suggests finding a nonprofit debt management company to help lower your fees.

How to Negotiate With a Credit Bureau

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Credit bureaus are agencies that track and report consumer behavior. There are three major agencies: TransUnion, Experian and Equifax. It is the responsibility of these companies to accurately and fairly report all consumer transactions. These companies do make mistakes and can be influenced, however. But negotiating with a credit bureau takes some savvy.

Instructions

Pull an undated copy of your credit report. Visit Annual Credit Report to get a free copy. You should also pay for a three-digit FICO score. This will tell you where you stand on the credit spectrum. Scores below 600 are poor; scores above 720 are excellent.

Research your financial records and find out the purpose of your negotiation. It could have to do with an old debt that is still reporting. It could be an error on an existing account. Or it could be an error in your demographic section (address, employer, phone number).

Collect all documents relating to the issue at hand, particularly if you are disputing an inaccurate report. Draft a letter explaining the error. Include your name, address, Social Security number, account number and any other documents to support your argument. Send this letter to all credit bureaus reporting the inaccuracy (see Resources for contact information). Credit bureaus must respond to your inquiry within 30 days and fix the error within 90 days.

Draft a goodwill letter if you are requesting a change to your account. Goodwill letters are pleas to adjust negative reports. The credit bureaus are under no obligation to change, remove or adjust any legal information (like settled debts, bankruptcies and charge-offs).

Try to craft a persuasive, emotive argument when writing your goodwill letter. You cannot negotiate directly with an agent at the bureaus (nor should you as a paper trail is essential). Address any personal issues that led up to negative reporting. These can include: unemployment, medical issues, disabilities or military service.

Include copies of any and all documention supporting the argument you develop in your letter. This can include: disability award letters, Social Security statements, medical bills, letters from your physician and military conscription orders. Review your letter for accuracy and grammar and send it off to the credit bureaus. The bureaus must respond within 30 days.

Can I Be Arrested for a Default on a Payday Loan?

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Payday loans are short-term loans issued by private companies to individuals. The duration of the loan is usually short --- generally under two weeks --- with interest rates that are exceedingly high, sometimes approaching 400 percent annually. While a person who defaults on a payday loan may face higher interest rates and a slew of fines, he can't be arrested and put in jail.

Typically, people who take out payday loans have the loan deposited in a checking or savings account. The person then agrees to pay back the loan by the date it's due or to have the amount due withdrawn from his bank account on an appointed date. If the person defaults on the loan, the lender is allowed to take the same actions to reclaim this money as any other creditor.

Payday lenders usually charge the borrower penalties in the event of a default, such as service fees and higher rates of interest. According to the website Payday Loan Center, lenders may require customers to sign an "Assignment of Salary and Wages" document, which allows the lender to approach the borrower's employer and ask that the money be withdrawn from the borrower's paycheck.

The United States doesn't have debtors' prisons. This means that if a person fails to pay a debt, it's illegal for her to be locked up as punishment or as a means of compelling her to pay. The only exception is child support payments. A person who fails to make child support payments can, in some cases, be incarcerated. A person can't be arrested for failing to pay back a payday loan.

Although people can't go to jail for failing to pay debts other than child support, people can be arrested for failing to abide with court procedures related to their debt. According to MSN, debtors in Minnesota have been arrested for failing to appear in court when ordered or to fill out the form needed to initiate the garnishment of their wages.

According to the Fair Debt Collection Practices Act, it's illegal for creditors to threaten a debtor with arrest or jail. According to the Federal Trade Commission, a person who is illegally threatened by a collector can file suit within one year of the violation. The creditor may be required to pay up to $1,000 to the debtor, as well as reimburse him for court costs and attorney's fees. However, this doesn't make the debt go away.

How to Apply for Charitable Help

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Just about everyone needs help at some point in life. All it takes is one major illness or losing a job to throw finances into chaos and leave a household in a state of distress. Fortunately, there are often one or more charitable organizations in the area that can offer temporary assistance while you get back on your feet. Here are some ways to go about finding the help you need.

Instructions

Assess your current condition. This means taking a long hard look at what bills are currently due and how much money you have on hand. Make a list of things you need for the home, such as food and clothing. Putting it all down on paper will help you get a handle on exactly what you do and do not need to get by in the short term.

Identify viable local organizations. There are some charities that help with food, while others help with paying pending or past due utilities. Still others will intervene with creditors to buy you time without charging you a cent. Using the list you compiled in Step 1, make a list of local charities that provide the various types of assistance you need.

Make appointments with local charities. Usually, this can be arranged with a telephone call. Ask what type of documents or records you should bring along to the meeting and make sure to take them along. Keep in mind the documentation required may vary, depending on the operating structure of the charity.

Be prepared to provide full disclosure about your current situation. Many people either try to minimize the extent of their problems, while others will blow them out of proportion. Provide all the factual information you possibly can and have documentation to back it up. Include details regarding the circumstances surrounding the nature of the medical emergency, or the loss of work due to layoffs, cutbacks or firings. Provide your current bank balances without having to be asked. Present copies of all current bills. Also make note of any changes in spending habits or cost cutting measures you have already implemented. Also be prepared to provide proof you are looking for work, if not incapaticated by illness. This will help demonstrate that you are making efforts to correct the situation.

Dont become discouraged. Most charitable organizations have limited resources. You may have to visit several before finding one who is in a position to help you. Often, local charities network with one another, making it possible for one charity to refer you to another organization if they are unable to help you. It may take time, but there are usually resources somewhere to help people who are in dire need due to circumstances out of their control.

Advice and Help for Credit and Debt

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The American society has been inundated with credit and debt instruments for so long that as of January 2010, Americans have approximately 1.2 billion bank and retailer issued credit cards. Many Americans are able to manage their debt in a responsible fashion; others, however, seem to be unable to handle credit and debt instruments responsibly.

Emergencies are a major reason that credit cards are used. From unexpected car repairs to unplanned health care expenses, emergencies seem to present people with a financial dilemma. Personal finance guru Dave Ramsey recommends that people create an emergency fund of at least $1,000. This recommendation helps people pay for emergencies with cash instead of using a credit card. Preventing credit use is the most effective way of managing credit and debt. The ideal emergency fund will be comprised of at least three to six months of expenses.

Many people use their credit cards extensively but only pay the minimum payment. Cardholders are not able to gain traction in paying off their account by paying only the minimum payment, as the credit card company has designed the minimum payment to scarcely cover the interest charged on the account. People should make the goal of paying off their credit card a priority to better manage their credit and debt levels.

People often visit pay day lending businesses when they have a short term cash flow issue. A pay day lender is a company who lends small amounts of money at high interest rates up to 460 percent annually and with outlandish service fees. People who are serious about managing their credit should stay away from these companies, as the cost of credit will most likely outweigh any short term benefit the pay day loan may provide.

People should check their credit report on a regular basis to ensure that all of their credit accounts are reported accurately. Most credit reports will rate the account holder as to their history and ability to pay their debt. This rating, known as a credit rating, or FICO score, is often used by lenders and credit issuers when making a decision to extend credit. Items that are reported incorrectly can have devastating effects on an individual's credit rating, hampering that person's ability to manage their credit accounts. Most people in the United States can obtain at least three free credit reports per year.

Do Credit Card Companies Have a Right to Take Your Checks?

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Credit card companies cannot arbitrarily take your paper paycheck but they can garnish your wages or bank account with a court order. Wage garnishment allows credit card companies to receive a percentage of your pay before the employer issues your paycheck. Bank garnishment freezes your checking account, allowing the credit card company to withdraw money for an unpaid credit card debt. Numerous steps are necessary by the card company before garnishment begins.

The filing of a lawsuit is the first step leading to possible bank or wage garnishment. Credit card companies or debt collection agencies file lawsuits after failing to collect unpaid credit card debts. Lawsuits take place some time after the credit card account is about six months behind and charged off by the card company. A charge off is an internal accounting term and does not relieve the credit card account holder of responsibility for the debt.

The account holder learns about the lawsuit through a paper document called a summons and complaint. The summons is a few pages long and is the notification of a lawsuit. Attached to the summons is the actual lawsuit, called a complaint. The summons lists a date for appearing in court or a deadline for filing a written response to the lawsuit. Failing to respond results in an automatic victory for the card company called a default judgment. The default judgment is signed by the judge and orders the person sued to pay a specific amount of money to the card company.

Garnishment is possible if the person sued does not pay the default judgment or fails to work out a payment plan. The credit card company returns to court to explain the situation to the judge and formally request garnishment of wages or money in bank accounts. Judgments are also possible when the person responds to the lawsuit by showing up in court or responding in writing. Credit card companies are easily able to prove that the lawsuit is valid, leaving most people without a suitable defense. Financial problems stemming from unemployment, divorce or illness are not suitable defenses for a credit card lawsuit. The judge may acknowledge the problems but will rule for the credit card company if it proves the debt is valid and not paid as agreed.

Employers and banks are forced by law to cooperate with garnishment orders. Employers will start regular deductions from paychecks and continue until the debt is paid. Banks will give the credit card company complete access to deposit accounts bearing the name of the person sued. Garnishment of an account is possible even if the account has a co-owner and that person was not a part of the lawsuit. The owners of the bank account are not allowed to access garnished bank accounts except to make deposits. Access resumes after payment of the credit card debt.

Refinance Vs. Restructure Mortgage

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Refinancing and restructuring are each popular options for dealing with a problematic mortgage that is creating debt payments borrowers can no longer make. Sometimes refinancing is used to get better mortgage terms, even though there is no danger of defaulting. If borrowers are struggling and must choose between the two, refinancing is typically a better option. But the choice depends on specific financial information, and can vary based on the borrower.

Refinancing replaces the first mortgage with a new mortgage. The old home loan is paid off entirely and the borrower does not need to worry about it anymore, but the new loan has its own monthly payments that must be taken care of. Refinancing can be used as a type of debt consolidation --- homeowners borrow more than they need to pay off their mortgage and take care of other debts too, like credit card balances.

Debt restructuring does not replace the original mortgage with a new loan, like refinancing does. Instead, it changes the loan in some fundamental way that makes it easier for borrowers to pay off. Lenders must agree to restructure a loan, and they often decide what type of restructuring to do. Some pause payments to give borrowers a chance to recover. Others lower interest rates to reduce monthly payments, or combine late payments back into the loan to make it easier to pay off.

The choice between refinancing and restructuring often comes down to credit. If at all possible, the borrower should try to change debt before it begins to drop credit ratings, which occurs in the case of late payments and defaults. Unfortunately, most lenders will only agree to drastic restructuring after late payments have already become a problem. Borrowers should try to use a refinance to avoid credit issues, or prove to the lender that they are not making enough income to deal with the debt.

Borrowers also have the ability to change their rate with both refinances and restructuring. There is is one key difference: refinancing only allows borrowers to qualify for rates that the current market allows. Restructuring is a lender's unique choice to lower the rate on one loan, usually a variable rate mortgage. If rates are rising in the market, then borrowers will be able to get a lower rate through restructuring more easily.

How to Access Business Credit

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When you start a new business, you may want to explore options for getting business credit. You can either use your own funds to start up and maintain your company or use "other people's money" to get things up and running. If you go the latter route, you will have to handle some preliminary details in order to access business credit.

Instructions

Improve your own personal credit history and scores. When you start making plans to start a new business, it's important to take steps to boost your own individual credit scores. You can do this by resolving issues with unpaid accounts, making payments on time and disputing any incorrect information listed on your personal credit history. Business creditors usually ask that the owner or company representative act as a "responsible party" for the application. The responsible party is contacted in case of an issue with the account and sometimes held liable if the account goes into default. The business creditor may also evaluate the responsible party's personal credit history before approving the business credit application.

Write a list of the collateral you can use to back your business credit application. The bank may request collateral sources, such as a piece of property or vehicle, in order to approve a loan. You should also develop a profile of your business that summarizes your company, including the number of employees, annual (or projected) revenues and management information.

Create a comprehensive business plan, including financial records, if you want to access business credit. When applying for loans and lines of credit as a start-up, most firms will be asked to provide creditors with a written proposal describing the concept in detail so that they can evaluate whether it's a viable business idea. You can start with the business plan template offered by the Small Business Association.

Secure an employer identification number to access business credit. The EIN is your company's tax identification number. While it's not always necessary in order to operate as a company (sole proprietors can use a Social Security number), some banks require an EIN in order to open a new account in the business' name.

Register your business with your state's department of commerce or secretary of state's office. When you form an officially registered company, sometimes business creditors will send offers for credit cards or loans for you to review. Some banks also want to see your state-registered paperwork in order to approve you for business credit.

Government Approved Debt Management Plans

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If you're in debt, you're not alone. The average credit-card carrying household carries $16,700 in debt. This kind of debt can be crippling. You feel trapped, unable to make headway or plan for the future. There are debt management programs that can help, but you have to be careful because there are a lot of scams out there, too. If you are considering bankruptcy, laws require you to work with a government-approved credit counselor first.

A complete state-by-state listing of approved credit counseling programs is available through the Department of Justice. Many of these government-approved credit counselors also offer debt management programs.

Consumer Credit Counseling Services is an organization located in San Francisco, but it helps people nationwide to get control of their financial health. It is a government-approved organization and is also a member of the National Foundation for Credit Counseling.

CCCS has experts on housing, financial planning, credit reports and other financial topics, so they are able to help almost anyone in any situation. When you need the assistance of a debt management program, a CCCS counselor will spend an hour with you assessing your financial situation. He will then contact each of your creditors and propose a lower interest rate and monthly payment. Based on the adjustments your creditors make, you'll then submit a single monthly payment to CCCS to be distributed to your creditors based on the arrangements your counselor made. The end goal is to pay off your debt faster and at a lower expense to you.

Consumer Credit Counseling Service - San Francisco
595 Market St., Ste. 1500
San Francisco, CA 94105
800-777-7526
cccssf.org

Novadebt is a credit counseling organization located in New Jersey. It offers government-approved credit counseling and debt management programs on a nationwide basis. Novadebt provides free housing and credit counseling as well as free financial education to families.

During your counseling session, if your counselor determines your debt is too high for you to manage on your own, she may recommend Novadebt's debt management program. She will contact your creditors and work to adjust or waive your fees, lower your interest rates and set up a repayment plan that you can afford.

Novadebt
225 Willowbrook Road
Freehold, NJ 07728
732-409-6281
novadebt.org

Debt Reduction Services received its government approval to offer credit counseling services and financial education programs in 1996. Debt consolidation and debt management programs are among the services it offers. Debt Reduction Services offers help to individuals and families throughout several states, including California, Idaho and Montana.

If your credit counselor believes it's appropriate after reviewing your situation, he will recommend a debt management program. The goals of the program will be to consolidate your monthly credit card payments into a single payment you can afford, to lower your interest rates and to waive late and over-limit fees.

Debt Reduction Services
6213 N. Cloverdale Road, Ste. 100
Boise, ID 83713
208-378-0200
debtreductionservices.org

Can Bill Collectors Go Into a Bank Account?

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Bill collectors can draw from a bank account if granted permission by a judge. The process is called bank garnishment, and it can occur after the debt collector wins a debt lawsuit. Credit card companies file lawsuits in small claims court to collect unpaid debts, and other types of creditors may file lawsuits as well.

Debt collectors that win debt lawsuits receive monetary judgments signed by a judge. The legal order requires the person sued to pay a specific amount for the account balance, court fees and legal fees. Judgments are very bad for an individual's credit and can lead to bankruptcy. Additionally, judgments are included in public records and also are placed on credit reports for seven years. No provisions are available for removing them earlier, although paying a judgment results in credit reports updated to show the account as a "paid judgment."

Garnishment is possible if the debtor fails to pay the judgment or make payment arrangements. In the case of a garnishment the bill collector makes the request to a judge, and judges usually agree. The debt collector then sends a copy of the garnishment order to the debtor's bank, requesting access to the account. By law the bank must comply with the garnishment order, and banks are not required to notify the customer that garnishment is starting.

The debtor usually finds out about bank garnishment after checks bounce, debit card transactions fail or an online review of the account shows a huge negative balance. That is an indication that the account is garnished or frozen. Frozen accounts allow free access to the account for the bill collector, during which it can make lump sum or multiple withdrawals to satisfy the unpaid judgment. Meanwhile, the owner of the account is allowed only to deposit money into the account and cannot use it in any other way.

Some people end garnishment by filing for bankruptcy, although that is an extreme option. Bankruptcy features a legal order called "the automatic stay." It immediately halts garnishment and all other debt collection efforts. However, bankruptcy ruins credit for years and the Federal Trade Commission recommends avoiding it. People whose accounts are frozen should negotiate with the bill collector to set up a payment plan in exchange for an end to the garnishment.

Avoiding lawsuits altogether is the best option. Some people ignore debt collection notices, including legal notices about court hearings. Failing to appear in court results in the bill collector easily winning a default judgment and proceeding to garnishment. A default judgment means the person sued did not appear in court to defend against the lawsuit. That forces the judge to award a judgment to the bill collector. In all cases settling out of court is better than a default judgment.

Can a Durable Power of Attorney Pay Debts After the Death of a Person?

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If you want your spouse, a relative or a close friend to handle your financial affairs if you become incapacitated, you must file a durable power of attorney giving him permission to do so. You can give rights to your durable power of attorney immediately or specify that he only has these rights if you become unable to handle your own affairs because of injury or illness.

Nolo.com says that durable power of attorney ends when you die. Your durable power of attorney has the right to make financial decisions and take care of your financial affairs while you are alive, but cannot do so after you die. When you die, responsibility for your finances transfers to the executor of your estate.

If you want your durable power of attorney to handle your debts after your death, name her in your will as the executor of your estate. By doing this, you give her financial responsibility for your entire estate once you die. In addition to handling debts, she will be responsible for your funeral costs, estate taxes and distributing inheritances to your heirs.

If your spouse is your durable power of attorney and you divorce, in some states his power of attorney automatically ends. In other states, you must file paperwork if you choose not to continue to trust your ex-spouse to be your durable power of attorney. If your power of attorney dies before you do, or is unavailable at the time the agreement goes into effect, his power of attorney ends.

Get a form for durable power of attorney from your lawyer or your state department. Fill out the form and sign it in front of a notary public. File it with your Secretary of State. In North and South Carolina, you must also file the form with your local land records office. Consider writing a will and filing it with the court clerk in your county of residence at the same time to ensure your durable power of attorney has financial power after your death.

Surviving Spouse & Credit Card Debts in New York State

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The state of New York is not a community property state. That means assets and liabilities, such as credit card debts, are not shared jointly by the man and the wife in marriage. When either party in the marriage passes away, the surviving spouse is generally not held responsible for the decedent's remaining credit card debts.

If a husband and wife hold joint credit card accounts in New York, then the surviving spouse could be responsible for repaying all of that debt even after her husband dies. In some cases, even if the husband has a credit card account in his name only but the wife is an authorized user of the account, the credit card company may try to convince her that she has to continue paying off the debt after her husband's death.

When a person passes away in New York, a probate legal process is opened by his spouse, lawyer or designated estate administrator. The probate process is designed to allow the decedent's assets to pay off his remaining debts and to ensure all property is legally transferred to heirs and beneficiaries according to his wishes.

As part of the probate process, a list of probate assets is created and valued. A list of outstanding debts and claims against the estate is also created by the estate administrator. The estate assets are then used to pay off all valid debts and claims against the estate so that surviving spouses and other family members are not responsible for them.

Some types of assets are not included in the probate process because by law they automatically pass to another person. If a husband and wife hold a joint checking account, for example, then the husband automatically assumes full ownership of that account when his wife passes away. Life insurance with named beneficiaries and real estate that is owned in a right of survivorship status are examples of other types of assets that may not be included in the probate process.

Should You Redo a Mortgage to Pay Off Credit Card Bills?

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When credit card bills begin to stack up, some people consider borrowing money to consolidate the debt into a single monthly payment. One method of doing this is to refinance a mortgage and borrow extra money with which to pay off the credit card bills. While this strategy allows you to lower your overall monthly payments and consolidate your debt, you must make sure that you don't end up creating more financial problems in the end.

Refinancing a mortgage is the process of taking out a new loan that pays off the existing mortgage. The new loan has its own interest rate, terms and repayment period, often resulting in savings compared to the original mortgage. A refinance loan can be taken out for more than the remaining balance of the mortgage, however, letting you pay additional bills such as overdue credit cards with the money as well. Once the original mortgage and other bills are paid with the borrowed money, all that remains is the single monthly payment of your new loan.

Before you refinance your mortgage to pay off credit card bills, make sure that you can afford to do so. A mortgage refinance loan generally has out-of-pocket expenses associated with it, such as closing costs, that aren't included in the money being borrowed. You should also make sure that you have enough equity in your home to allow you to borrow enough to cover the cost of your credit card bills. Make sure that you can afford the new monthly payment as well, since there is a chance that it will be more than your current mortgage payment if you get a higher interest rate. Don't refinance if your property value has dropped, since you may not be able to borrow the additional money you need. You should also avoid refinancing if your current mortgage is less than a few years old or if you already have a second mortgage or home equity loan.

Unless your credit cards were seriously delinquent or had been canceled before the consolidation, paying off your credit card bills with a refinanced mortgage frees up the credit lines on your cards. Avoid the temptation to begin using your credit freely to make purchases, since this behavior can quickly max out your credit cards again. You should pay off your credit cards with a refinanced mortgage to eliminate debt, not to give yourself an opportunity to accrue more debt and possibly end up behind on your credit card payments again.

One problem often encountered when trying to determine whether you should pay off credit card bills by refinancing a mortgage is predatory lending. Predatory lenders approach you and offer suggestions such as refinancing for consolidation purposes, often marketing their loan services aggressively and including the cost of additional items such as credit insurance in the loan amount. Many refinance loans offered by predatory lenders feature penalties for early repayment, resulting in you being fined if you try and pay the loan off early to avoid interest charges. If a lender seems to be pushing you too hard to consolidate, includes early repayment penalties in the loan agreements, or tries to get you to borrow more than you need, consult another lender to avoid what could be a costly refinance.

What Happens If You Cash a Check That Is a Fraud?

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A check is considered fraudulent when the person who wrote it either intentionally falsified information on the document or else issued the check knowing it would not clear (for example, because the account has no money in it). Sometimes, the person who tries to cash a fraudulent check is not the person who wrote the check. In many cases, the holder of the check may have received it as payment for a good or service. If the person tries to cash the check, several outcomes may occur.

In some instances, the vendor who is cashing the check may not immediately detect that the check is fraudulent. In this case, the vendor may cash the check, only later to discover that the check did not go through. When that happens, the person who successfully cashed the check is required to return the money, even if he did not write the check. He, in turn, may seek compensation from the person who passed the fraudulent check to him.

In some cases, the vendor may immediately identify the check as fraudulent. The vendor may do this either by identifying some distinguishing physical feature to the check that indicates its phoniness or because she is able to quickly determine from the financial institution that issued the check that the account linked to the check will not be able to cover it. In this case, the vendor will refuse to cash the check and may summon authorities.

Knowingly cashing a fraudulent check is against the law and is a form of fraud. Punishment for committing check fraud varies by state. In some states, the crime is punishable by a fine; in other states the penalty may include jail time.

Many states have special "hot" check laws. Under a hot check law, people are guilty of a crime if they attempt to pay for a service or receive other compensation, such as cash, for a check that the know will bounce. Although this, too, is a form of fraud, the penalty for knowingly passing a hot check is generally less severe then the penalty for other forms of fraud, such as check forgery.

Can You Get a New Job While Being Garnished?

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A wage garnishment is a collection strategy that a creditor may use in most states after obtaining a judgment against you for an unpaid debt. This strategy involves directing your employer to withhold part of your earnings for payment against your judgment debt. Not only does a wage garnishment reduce your take-home pay, it may also affect your ability to find a new job.

In most cases, a wage garnishment can only follow a civil judgment. Except for cases involving unpaid alimony, taxes or child support, creditors must file and win a lawsuit against you for a debt, then apply to the court that issued the judgment for a writ of garnishment. Although a prospective employer typically will not inquire about garnishments, its hiring manager may look for evidence of a judgment, which can indicate that you are subject to or in danger of a wage garnishment.

Employment applications typically require disclosure of unpaid judgments -- if you are subject to a garnishment for an unpaid judgment, you must disclose the judgment on your job application. Failure to disclose an unpaid judgment can suffice as grounds for termination if the company hires you; however, disclosing the judgment can cause the employer's hiring staff to pass you over for an interview.

Employers commonly run background checks on prospective employees before making a firm employment offer. A background check may involve obtaining your consumer credit report and public records, both of which typically contain information about civil judgments. Even if you do not disclose a judgment on an employment application, your prospective employer may learn about the judgment from your background report. The employer may then choose to rescind any tentative job offer it has extended to you.

Employers may refuse to hire you after learning about an unpaid judgment or garnishment for several reasons. In the eyes of an employer, a judgment reflects a lack of financial responsibility, which may increase the employer's risk of dealing with embezzlement. An unpaid judgment also suggests financial distress, which means that your money worries may distract you from effectively fulfilling your job duties. Wage garnishments also cost an employer time and money; the employer's payroll staff must take extra time to answer a writ of garnishment, calculate withholding of your earnings and send withheld funds to the court for payment against your judgment debt.

How Can I Get Consolidation Loans Without Using My House?

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A consolidation loan involves taking out one loan to pay off multiple loans. Homeowners often take out a home-equity loan to pay off debt. However, using your home as collateral is risky, as you could lose your home if you become unable to make payments on the loan. If you have bills that would like to consolidate but don't want to risk your home ownership, you have multiple options.

Instructions

Take out an unsecured loan. You don't need collateral, and you can apply at your bank or at a local credit union. You will need to have good credit and a steady income source to qualify for an unsecured loan.

Borrow money from a friend or family member. Always put the terms down in writing if you choose to borrow from a friend or family member, as money-related misunderstandings can often damage relationships.

Consider peer-to-peer lending sites. Such sites are online communities for borrowers and lenders (see Resources). Applying is free. Enter the type of loan you need and the highest interest rate that you're willing to pay. Expect to receive bids on your application. Choose the lender offering the best terms. Although you typically need a FICO score of at least 640 to qualify, not all site have a minimum score requirement.

Transfer your balances to a low interest-rate credit card. This option requires that you pay your monthly minimum amount on time. One late payment will often cause the interest rate to increase.

Take out an auto cash out refinance loan. This type of loan works similarly to a home equity cash-out loan. Based on the vehicle's value, take out a loan for more than the balance on the current loan. Pay off the current auto loan, and use the remaining cash to pay off debt.

Borrow against your whole life insurance. There is no time limit to repay the borrowed amount. The amount is deducted from the beneficiaries' benefits when the loan is not paid back.

About College Students Misusing Credit Cards

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College offers great opportunity, including learning about new subjects, meeting friends, cooperating with gifted professors, completing internships and studying abroad. But the college experience isn't free; in fact, it can become quite expensive when tuition, books, housing, food, transportation and recreation are factored in. Some students may come to rely on credit cards to bridge the gap between expenses and financial resources. While learning how to manage credit is a key financial skill, misusing credit cards can lead to lasting debt.

Credit card use doesn't have to lead to debt, although it frequently does just that. Credit card companies permit consumers to swipe away throughout a specified billing period; when that period concludes, account holders receive a bill specifying how much they've spent. When college students pay their balance in full and on time each month, no interest accrues. But when students aren't able to pay the balance in full, they must pay interest on the unpaid amount until it's completely paid off. Interest compounds over time, so that the overall debt balance grows. Interest rates can be quite high for cardholders with little or no credit history; many college students fall into that category. Regular misuse of ringing up large account balances without paying the balance in full results in large debt loads.

On average, college students have 2.5 credit cards and carry an $885 balance, according to College Student Credit Card. At 17 percent, students who don't own a credit card represent a minority. Some students practice responsible credit card use; 55 percent pay off their balance in full each month. Financial pressures, including debt, cause 8.5 percent of college students to drop out. There's near-constant pressure to sign up for a credit card; college students receive between 25 and 50 solicitations each semester.

Misusing credit cards can stem from poor financial planning. Rather than budget monthly expenses for rent, food, transportation and recreation, college students may spend haphazardly, augmenting student loans or personal savings with credit card swipes. Restrict credit card purchases for emergencies only or solely for monthly payments such as gym memberships in order to accrue good credit without overspending.

College student credit card misuse can include fraud. It's not unheard of for college roommates to steal another's credit card for surreptitious use if cards are left lying around. Fraudulent charges can be hard to track when used in familiar locations, such as the college bookstore, campus pub or nearby gas station, since these charges won't look suspicious on your statement. Save receipts and track purchases at the conclusion of each billing cycle.

College students can avoid credit card misuse by remembering that every purchase is a loan that they must repay with interest. Shop around for low-interest credit cards to avoid accruing steep interest payments, and request a low-balance limit to avoid overspending. Pay balances in full each month, and schedule automatic withdrawals from your bank account to avoid missing payments.

How to Reduce Consumer Debt

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Consumer debt from credit cards, installment loans and other types of financing can take a large percentage of your income each month. And if you owe a considerable sum on credit cards, the consequences can result in a lower credit rating. It isn't always easy to pay down or reduce consumer debt. High interest rates and insufficient income can lead to lingering debt. But there are ways to deal with consumer debt.

Instructions

Pay for items with cash. Ban credit cards from your wallet and get into a routine of only carrying cash. Freeze credit cards or physically destroy the cards to alleviate any temptation.

Reduce credit card debt by paying more than your minimum. Start small and begin doubling or tripling your minimum payments to bring down the balance. Make higher payments as your income increases, or use funds from employment bonuses or tax returns to get rid of consumer debt.

Tap into your personal savings. Good money management involves never touching your personal savings account. But if dealing with high consumer debt and interest rates, consider using cash from savings to reduce debt.

Request an interest rate reduction. Getting a better rate on debt reduces your payments. Call your creditors and ask them to lower your rate. They'll evaluate your credit first to see if you're eligible for a better rate. If approved, continue to make higher payments. This way, a larger percentage of your monthly payment goes toward reducing your principal.

Make personal sacrifices. Evaluate your monthly spending habits and cut back in certain areas. Review receipts and credit card statements and assess how much money you spend on dining out, entertainment and needless shopping. Resolve to stop unnecessary spending and use the extra money to pay down your debts.

Look for ways to increase your monthly income. If you simply cannot pay down your consumer debt with your present income, look into other employment opportunities or apply for a part-time job to generate additional income. Earning an extra $500 monthly can pay off a $3,000 credit card in six months.

How to Get a Free Copy of an Instant Credit Report

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The Fair Credit Reporting Act entitles you to free copies of your credit report. The reports are available instantly through the Annual Credit Report website. The three major credit bureaus -- Experian, Equifax and TransUnion -- operate the website, according to the Federal Trade Commission. Other sites on the Internet also market free credit reports, but only Annual Credit Report is authorized by the U.S. government to offer credit reports that are completely free.

Instructions

Navigate to Annual Credit Report. Enter your state on the homepage and click "Request Report."

Enter information to establish your identity, such as your Social Security number and address. Continue following the prompts to choose a credit report from Experian, Equifax or TransUnion.

Answer a final set of questions about your identity, including questions about your credit. View and print your report when prompted.

How Does a Debt Collector Go About Collecting Money?

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A debt collector is employed by a collection agency. This type of business specializes in working with defaulting debtors to achieve a repayment of an entire outstanding debt or at least a partial amount. The collection agency receives a percentage of the collected funds in payment for their services. The initial contact a debt collector will make with a debtor is a dunning letter. The is essentially a bill that details the amount owed, to whom the money should be remitted, when the payment of the balance due is expected, the phone number of the collection agency, and also a notation that failure to pay the bill will result in an adverse notation on the debtor's credit record. Even as collection agencies do not usually receive payment in response to the initial contact, the letters do serve as a request for contact; debtors quite frequently call the collection agency and speak with a debt collector in response to receiving such letters.

If the debtor fails to pay the outstanding debt and also does not contact the collection agency, the debt collector will attempt to contact him by phone. The collector uses the phone numbers that he has on file for the debtor. The goal is to ensure that the debtor is aware of the outstanding balance and to persuade him to make good on the debt. When the debt collector makes calls and receives an answer--instead of simply a recorded message--the collection agency requires that a timestamp is placed on the call. Subsequent phone calls are usually made during that same timeframe to ensure that the debtor is actually at home.

If phone calls to the debtor's home remain unanswered, the debt collector will attempt to locate the debtor by contacting the employer, a friend, neighbor, or any other contact noted in the file. Usually these facts are supplied by the debtor during the initial credit application. The goal is to track down the delinquent debtor and strongly urge him to make payments on the outstanding debt.

After the debt collector is successful in making contact with the debtor, every effort to achieve a repayment in full is made. If this proves unsuccessful, the collector is usually willing to work out a payment plan with very specific terms. Failure to adhere to even one of these terms will result in further phone calls from the collection agency.

Should--in spite of the debt collector's best efforts--the debtor fails to make the repayments as scheduled, the collection agency will refer the debt to a collection attorney. The attorney will file a suit in court and seek a judgment. If a judgment is granted, the attorney may place a lien on the debtor's property or garnish his wages until the debt and attorney's fees are paid in full.

Is Debt Settlement Legal?

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No one wants to count pennies and wonder where his next dollar is coming from. If you are severely in debt and in need of debt settlement, you can legally settle outstanding debt---as long as your creditor is willing to accept a debt settlement offer. There is no law that requires a creditor to accept a debt settlement offer.

Debt settlement affords a consumer a legal option for repaying outstanding debt at a lesser value. For debt settlement to occur, a debtor and a creditor must accept the terms and conditions set forth in a debt settlement agreement. Frequently, a debt settlement agreement defines when a debt settlement amount will be delivered by the debtor, the method by which it will be delivered to the creditor (i.e., personal check, debit card, cashier's check) and the actions the creditor will take after payment has been received.

Typically, a creditor will not accept or enter into negotiations for debt settlement until an account is 60 to 90 days past due or delinquent. At this time, a debtor can contact a creditor with a written or verbal request to enter into negotiations for debt settlement. Depending on a debtor's financial strength and ability to repay the balance owed---plus penalty fees---a creditor may refuse debt settlement. Most creditors have a minimum set of requirements that must take place before debt settlement negotiations can begin.

A creditor may be more like to accept a settlement offer as a past due account ages. For example, as an account reaches the six-month mark, it is essentially valued at zero on a creditor's books. To avoid losing an account to age or bankruptcy, a creditor may accept a debt settlement offer of pennies on the dollar. However, debt settlement ultimately rests on which parties is the more skilled negotiator.

The fastest way to achieve debt settlement is for a debtor to inform a creditor of an intention to file for bankruptcy. Creditors know all too well that a bankruptcy filing discharges credit card debt and renders outstanding debts uncollectible under the law. While it is never advisable to arbitrarily file for bankruptcy, if a creditor suspects that a debtor may be headed in that direction, the debtor may up his negotiating leverage.

Responsibility for Unsecured Debt Upon Death

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Over the next 50 years, trillions of dollars will be inherited by baby boomers and their children. However, according to Liz Pullman Weston of MSN, Money Central, a good portion of these inheritances might be eaten up by medical bills, inadequate insurance, taxes and debts. Unsecured debt after death is a complicated issue. State laws and the type of debt play a large role in how unsecured debts are handled after death of the account holder.

Each state's probate court system has a list of debts and how they rank in order of importance in terms of payment. There is some variation among the 50 states, but the following example is typical. First, the expenses for administering the estate must be paid. This includes court costs, attorney's fees and executor's fees. Second are a mortgage, tax liens and any other secured debt. Third, all funeral expenses must be paid. Fourth on the list are the most recent medical expenses. This includes doctor, hospital and caregiver bills. Fifth on the list is a family allowance for remaining spouses and any minor children to live on. Sixth on the list are any wage claims from employees, and finally all other debts must be paid.

Unsecured debts rank quite low on most states' probate lists. The significance of this is that sometimes credit card companies and unsecured lenders lose out. If there are sufficient assets in the estate, then the unsecured debts will be paid. If the estate is insolvent, then the unsecured debts might go unpaid. If there is money to pay some of the unsecured debts, then the probate courts will rank these in order of importance and decide who gets paid first.

Surviving children and spouses of the deceased cannot be held liable for the deceased person's unsecured debts except under specific circumstances. One possibility is if the remaining family members agree to take on the responsibility. They can be held responsible for the deceased's unsecured debts if they were joint account holders or cosigners on the account. If they hold power of attorney over the deceased's estate and spend the assets, they will be expected to pay the money back. Finally, spouses that live in community property states might be held accountable for unsecured debts after the death of their spouse. An attorney's advice is best in this situation as each community property state has its own rules regarding debt.

Dealing with the deceased's unsecured debts is fairly straightforward. Once a person passes away, the executor of the estate notifies all creditors. He can do this by phone, but a creditor will want a copy of the death certificate. Once a creditor is notified, they must cease charging interest and penalties until the estate is settled. The executor of the estate shouldn't pay any bill right away, even if he is being hounded by collection agencies. First, he should establish if the debt is valid. Second, he should see if it has passed the state's statute of limitations, and finally, he should make sure of payment responsibility for it before paying anything.

Even if the survivors are not legally liable for a family member's unsecured debt after death, that doesn't mean that collection agencies will not try to retrieve the money. If a collection call comes, creditcards.com recommends the following steps. First, do not give then any identifying information, especially a Social Security number or banking details. Ask who the original collector was and the total amount of the debt, and demand proof of the debt. Finally, anyone contacted should ask why she is being contacted and note the answers.

Debt Settlement Pitfalls

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When faced with credit card balances and interest fees that are spiraling out of control, you may be inclined to pay attention to the television commercials that offer to help you reduce your debt by enrolling in their debt settlement program. These firms negotiate lower payoffs on your credit card accounts. In many cases, the programs do succeed in obtaining a favorable settlement on your behalf, but often with consequences that are not as desirable.

Debt negotiation groups help you obtain settlements on your credit card balances. However, they do not offer their services for free. In some cases, you may not pay upfront fees to enroll, but you will incur administrative and contingency costs. For instance, there may be a monthly fee for program enrollment or a fee each time a payment is made to a creditor. The debt negotiation groups often charge contingency fees based on the amount of debt their negotiation efforts saved you. These costs may be worth it, but you are required to pay these in addition to any credit card balances.

To force a settlement offer, the debt negotiation group often asks you to stop making payments to your creditors. When payments are not being made, it is more likely the creditor will entertain a settlement offer. This technique may help achieve the desired consequence, but, in the meantime, the delinquent payments are reported to the major credit bureaus. This alone will have a detrimental impact on your overall credit profile. Additionally, once the settlement offer is complete, your credit report probably will show the account as being charged off or settled. This further reduces your credit score and remains on your credit report for up to seven years.

When you complete the settlement and pay the reduced balance, the amount you do not pay is what the card issuer charges off. You may end up having to pay taxes on that cancelled debt amount as income if the card issuer generates a 1099 form for the cancelled debt amount. If this happens, you have to report this amount as income on your tax return, and you may end up owing money to the IRS as a result.

Your weakened profile as a result of a debt settlement program may be enough to prevent you from obtaining new credit. Further complicating the matter may be your relationships with the actual card issuers. If after completing the debt settlement program, you establish a habit of responsibly managing your credit, the negative marks eventually will vanish, and your score will improve to levels that would suggest you are a creditworthy borrower. However, the specific issuers may never delete your account history, and they may automatically reject your applications for new credit based on your past charge-offs with them.

Can Home Foreclosure Affect Social Security Income?

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People normally cannot afford to buy a home outright, so they go to mortgage lenders, take out loans and use the loan funds to purchase the home. They then pay the mortgage lender back the amount of the loan, plus interest. Sometimes homeowners are not able to meet the terms of their loan agreements, however. Homeowners in this predicament often are Social Security recipients, which raises the issue of the impact of foreclosure on these benefits.

When a mortgage lender wants to foreclose on your home, it cannot do so without proving you actually violated your contract. Most foreclosures happen because of the violation of nonpayment. To prove the lender has a right to take back the home, it must sue you in court. If you don't pay what you owe once a judge finds in favor of the lender, the lender can proceed with the foreclosure, which involves the sale of your home to collect funds to cover your debt. The problem is that lenders are not always able to sell a foreclosed home for the mortgage amount. Subsequently, the lender still has money it needs to collect from the former homeowner. To get this money, the lender can ask the court for permission to use other means of debt collection, such as garnishment.

The government outlines a person's right to his Social Security benefits in Section 207 of the Social Security Act, 42 U.S.C. 407. These regulations explain that Social Security benefits are not subject to either levy or garnishment. The law also says the funds are not to be included in bankruptcy. In laymen's terms, this means your lender cannot take your Social Security to cover mortgage debt not covered by foreclosure sale, as the funds are exempted.

Even though Social Security money is protected by law from lenders, in the past, banks routinely froze bank accounts that held Social Security money. They had to comply with court orders stipulating the freeze should occur, but were not obligated to check that the account was free from exempted funds first. Account holders could file an exemption statement to make a case that some of the money was off limits, but not everyone could prove the source of the money in the account and therefore lost some of their Social Security funds. New regulations that became effective May 1, 2011 now require banks to take more precautions before freezing the account, but the regulations don't cover deposits made by paper check or older than two months. The law affords the most protection to those who have electronic deposit.

By law, mortgage lenders are not supposed to take your Social Security funds, and new regulations offer more protection to recipients than in the past. However, the possibility still exists that some Social Security funds can get wrapped up in a frozen account and therefore be lost. It is better to open a separate account for your Social Security funds and use direct deposit. This way, there is no question that the funds in the account are exempt from your mortgage lender's attempts to collect.

Can You Garnish a Joint Account in Florida?

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When a creditor sues a borrower and secures a court-ordered judgment, the creditor may collect its funds by garnishing the borrower's bank account. However, several factors affect whether a creditor is allowed to garnish a joint bank account. In Florida, while asset-protection laws recognize the theory of tenancy by the entirety, the delinquent borrower should contact an attorney to determine the legality of the lender's threatened garnishment.

Florida law recognizes tenancy by the entirety, which states that co-owners of an asset like a bank account each have a 100-percent claim on the value of the asset. Assets include bank and investment accounts, as well as real estate and other property. To qualify, the account's co-owners must be married; co-owners who are not married are not protected under the rights of survivorship. The rights of survivorship guarantee that assets in the account are automatically transferred to the sole ownership of the spouse in the event that the other dies.

In Florida, a joint bank account that was established in Florida -- from a bank that only has branches in Florida -- is exempt from creditor garnishment because Florida recognizes tenancy in the entirety. If a creditor attempts to garnish assets in such an account, the non-debtor spouse should claim that she has 100-percent interest in the account by raising a due-process argument. Although the non-debtor spouse has a strong argument, this approach may only work if the bank doesn't have branches outside the state.

While a Florida married couple's bank accounts are protected from garnishment when held in banks that only have locations in Florida, the situation is less clear if the couple has funds in a bank with branches outside the state. Sunshine State attorney Jonathan Alper described a case in which a joint account was garnished at a South Carolina branch of the national bank where he and his wife jointly held their funds. As a result, Alper recommends that Florida residents bank only in small community banks, where creditors have less reach.

Florida law does not recognize tenancy by the entirety for bank account co-owners who aren't married, and as a result, these accounts are more likely to be garnished if one of the owners receives a judgment. Nevertheless, the account owners should consider hiring an attorney to attack the garnishment. If the attorney can show that the account's funds were deposited solely by the non-debtor, then the account may be free from garnishment; however, the court may argue that depositing the funds into the account implied a "gift" of them. As a result, consulting an attorney is advised.

How to Donate a Repairable Car in Minnesota

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If you have a car that is in need of a little work in Minnesota, you may not be able to get much for it if you try to trade it on a new car or sell it on your own. Instead of taking a fraction of its worth, you can instead donate your car to a charitable organization in Minnesota. While not all charities accept cars that are not in top condition, you will find some organizations that do take cars that are in need of repair.

Instructions

Download and complete the duplicate title form from the Minnesota Department of Public Safety website (see Resources), if you need a replacement car title. Complete the form and submit it to the address on the top of the form with your fee payment. As of December 2010, the fee for a duplicate title is $9.

Make arrangements for your car donation with a Minnesota charity that accepts repairable vehicles. Some charities that do so include the New Gate School, Goodwill/Easter Seals Minnesota and Community Action Duluth. You can look for other charities on the Charity Vault website, but not all charities accept repairable vehicles. If the car does not run, you will have to set up a time for it to be picked up and towed to the charity location.

Give the vehicle keys and the car title to the charity when you make your donation. You must sign the title to transfer the ownership. When you donate the vehicle, you should ask for your donation receipt. Usually it will just be a temporary receipt because the charity may sell the vehicle after you donate it. When that happens you need an updated receipt with the sales amount so that you know what amount to claim on your taxes.

Wait for your updated receipt to arrive by mail. Typically this happens within 30 days, if the organization is going to sell the vehicle.

How to Get a Credit Card Company to Forgive Debt

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Credit card companies realize that members often face drastic changes in their circumstances, which cause them to fall behind on their payments. Others may be unable to continue make any payments at all. If you find yourself in such a position, don't give up. There's hope. Fortunately, credit card companies are often willing to settle, or forgive, a portion of your debt. The good news is that you don't have to pay hefty fees for a service to handle your debt. You can settle with the credit card company yourself.

Instructions

Contact the credit card company directly if possible. If you're less than six months behind, your card company is likely still handling your account. After a certain period, companies normally turn delinquent accounts to a collection agency.

Get in touch with the collection agency if the credit card company is no longer handling your account.

Explain that due to your circumstances, you're unable to pay the full amount. You would, however, like to take care of your debt. Mention how much you can pay. Expect the agent to make a counter offer. Negotiate until you agree on a settlement.

Expect pressure from the collector or associate to pay by direct debit. Don't do it.

Request a written agreement. State to the associate handling your call that you will mail a check for the agreed amount as soon as you receive the written agreement. The agreement must include the fact that the agreed amount is accepted as payment in full.

Mail your check along with a letter summarizing the agreement but only after receiving the agreement. Preferably, pay by money order or cashier's check. Save the stub for your records. Save a copy of the letter as well.

Credit Report Safety

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In the 21st century, your credit report has a major affect on your financial life. It naturally affects your ability to get credit---the original purpose. In addition, prospective employers, landlords and insurance companies may also check your credit report to get an idea of your level of responsibility and how you handle obligations. Guarding your credit report can be as important to your well-being as guarding your home valuables.

Keep your credit card numbers and information a secret. Guard your statements, notes and Internet banking passwords in your head only or in a locked file or safe. Only give your credit card number or physical card to people with a legitimate reason to use it---such as vendors you trust and employees where you do business. Read every line of your credit card statements and report suspicious transactions immediately.

Malware and viruses aren't only annoying. Some programs, such as keyloggers, actually record what you input through your keyboard and email the logs to a specified mailbox. This includes everything you put in when you make transactions---including credit card numbers, your address and your Social Security number. Regularly scan your computer with up-to-date, professional anti-virus software in order to confirm the absence of these programs.

Many identity theft and credit fraud cases occur after the victim willingly gives out information over the Internet. Never give your information over the Internet under circumstances you wouldn't in real life. Be especially suspicious of unsolicited emails that request your information.

You are entitled to a free copy of your credit report once per year from each of the three major credit bureaus. It's good practice to order a copy from all three---Experian, TransUnion and Equifax---annually. Read each line of the report to look for questionable entries. Even if there is no intentional fraud, vendors and the bureaus themselves make mistakes.

How to Fix Your Own Credit With Do it Yourself Credit Repair Counseling

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Many companies advertise they can repair an individual's credit for a fee, but the reality is, anyone can take steps to repair his or her own credit for much less and without the risk of scam. According to the Federal Trade Commission, no one can legally remove accurate and timely negative information from a credit report, but it is possible to remove inaccurate information and to take steps to improve creditworthiness. However, it takes time, effort, and a commitment to paying bills on time to achieve a good or excellent credit score.

Instructions

Order a copy of your credit report. Every individual is entitled to a free credit report once every 12 months from each of the three major credit reporting agencies. Visit annualcreditreport.com, call 1-877-322-8228 or complete an Annual Credit Report Request form found on www.ftc.gov and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Review your credit report for inaccuracies and mistakes. This includes accounts of which you have no knowledge and outdated employment information or home address.

Write the credit reporting agency (TransUnion, Equifax, Experian) and dispute any inaccurate information found on your credit report. Provide copies of documents supporting your dispute. Request that the false information either be removed or corrected. The address to file a dispute should be listed on the credit report that contains the item being disputed.

Make a list of bills, including minimum amounts due and due dates. Create a separate list of all income coming in. Compare the two to develop a realistic monthly budget.

Contact any creditors for which you determine you cannot meet the minimum payments required. Politely explain your situation and ask for a payment plan based on what you can realistically pay each month. Do not allow the company's representative to pressure you into agreeing to pay more than you can afford. It might be necessary to call back and speak with a different representative later, or multiple times until you reach someone willing to help. Be persistent if necessary.

Pay your bills on time. This simple step is the most important and will improve your credit rating faster than any other action.

When a balance on an account in collections is paid in full, request documentation that the debt is discharged. Apply the minimum payment you were making on that debt toward another debt.

Pay off small balances first. This will slowly improve your debt-to-income ratio, which in turn improves your credit score.

Does a Bankruptcy Keep Me From Working for a Bank?

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For many whose debts are too much and too deep to pay, bankruptcy is a viable option to getting started back on the path to a clean credit history. However, filing for bankruptcy has its drawbacks, one of which can affect your employability. Seeking employment at financial institutions, such as banks, can be challenging and, in some cases, tougher because bankrupt individuals must work with money, creating the perception of high risk by these institutions.

If you file bankruptcy, you are not automatically precluded from working for a bank. On its website Bankruptcy-home.com, Dallas-based attorneys Fears and Nachawati state that under federal law, debtors are given the same employment protection as those of a certain race, gender or religion.

Section 525b of the U.S. bankruptcy code states that "private employers may not discriminate with respect to employment against an individual who is or has been a debtor under the Code," according to Bankruptcy-home.com. Thus, any individual who has filed bankruptcy in the past or who is currently under bankruptcy status is eligible for employment in any industry, even banks.

Though federal law prohibits discrimination against those who file bankruptcy in employment matters, the reality is that many financial institutions, such as banks, may shy away from hiring those with a poor credit history, particularly when considering an equal candidate without financial or credit troubles. In recent years, the increase in the number of employers adding credit checks to the list of "screening tests" has added to the ability of financial institutions, such as banks, to bypass those with steep financial issues, such as bankruptcy.

The U.S. Equal Opportunity Employment Commission includes matters of hiring, termination, remuneration and promotion in its list of items that are prohibited from discrimination. The commission protects against any discrimination related to age, sex, gender, religion and debt status. Employers, such as banks, that are found guilty of discrimination may be forced to pay back pay, hire and provide promotions to victims of discrimination. Additionally, they may have to pay attorney's fees or court costs. In cases of intentional discrimination, compensatory and punitive damages may be awarded.

A Creditor Is Not Responding to a Debt Settlement Letter

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Escaping the crushing weight of debt can be a challenge that requires planning and organization. One option is attempting to settle your debts with your creditors by negotiating new terms. While there is no guarantee that a creditor will be receptive to a settlement proposal, nothing prevents you from trying.

There is no legal requirement that your creditors renegotiate the terms of your debt or enter into a debt settlement agreement. Your ability to settle your debt is based entirely on you and your creditor's willingness to enter into a new agreement. If either party is unwilling to do this, a debt settlement is not possible. The only option in this situation is for you to either pay your debts or go through the collection process, which could include a lawsuit.

When you try to settle or renegotiate a debt, you can initiate contact with your creditors at any time and in any method you choose. If writing a debt settlement proposal letter does not receive a favorable response initially, you can try other methods. For example, you can call the creditor and ask for an account manager or other person who has the ability to negotiate a settlement. You can also write a new letter with new terms and address it to a different representative of the company.

If your creditor doesn't respond to your initial proposal for a debt settlement, you may need to reevaluate your terms. Start by evaluating your current financial situation to determine your total amount of debt as well as your ability to pay. Once you know how much you are able to pay and can give your creditor concrete information about your financial position, your creditor may be more willing to negotiate a settlement, especially if it appears that suing you will not result in repayment.

When a creditor contacts you in an attempt to collect on an unpaid debt, the creditor is obligated to act under the terms of the Fair Debt Collection Practices Act. This law requires that the creditor provide you with a debt validation document that details the debt the creditor believes you owe. You have the right to challenge this debt in writing by sending a dispute letter to the creditor. Once you do this, the creditor must send you verification of the original debt within 30 days. However, this does not require the creditor to renegotiate or settle the debt with you.

Debt Cures They Don't Want You to Know About

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An educated consumer in financial trouble might be one of a lender's worst nightmares, especially when it comes to dealing with collection agencies. With a little research and willingness, even the most cash-challenged debtor can find alternative ways to handle debt and avoid nasty consequences such as lawsuits and wage garnishments.

Credit counseling is one of the debt cures they don't want you to know about. It basically allows a representative of a firm to negotiate on behalf of a consumer and get lowered interest rates, waived late and over-the-limit fees, and make the payments to the creditor on behalf of the customer.

Debt reduction calculators (see Resources section) are a great way for consumers to save thousands of dollars and years of debt repayment. Using the program as a tool, the debtor can see how much money adding even $10 a month to a credit card payment could save them, which of course cuts the credit card company's profits.

Once an account goes to a collection agency, it often becomes much easier for a consumer to pay less of a debt than actually is owed. Bill collectors will usually take pennies on the dollar to earn something from the case, saving the debtor money, earning the collection agency profit and resulting in a loss to the original lender.

Another one of the debt cures they don't want you to know about is in-house hardship programs, which virtually every lender has for emergency situations. These can be accessed by simply calling the creditor, explaining the situation and asking to sign up for the hardship program to reduce interest rates, monthly payments and other fees.

Bankruptcy, especially Chapter 7 debt forgiveness, is the worst nightmare of every creditor. Consumers who cannot pay their bills anymore can have virtually every kind of consumer debt legally forgiven, and the creditor usually winds up with nothing.

Tips & Advice on Debt Consolidation

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Debt is a fearsome presence in many people's lives, especially in a tough economy. As creditors tighten the noose by charging higher interest rates and ramping up minimum payments, it becomes more difficult to get out of debt. For many, debt consolidation is a real solution that can help them pay off debt faster by lowering their payments. There are a few things to keep in mind when considering debt consolidation.

Debt consolidation is the bundling of several payments into a single, typically lower, payment. There are two ways to do this. One is to incorporate all your payments into a single loan that pays off the outstanding balances. The other is to go through a debt consolidation or credit counseling service. You then pay the service one monthly payment, which they distribute for you.

The first option---taking out a loan---is a solid option for those who either own a home they have equity in or who have good credit. If you own a home with available equity, you can take out a home equity loan or incorporate the payoff of debt into a refinanced mortgage. If you have good credit, you may be able to ask your bank for a personal loan that will cover their debt. The benefit of these loans is that they are typically available at much lower interest payments than the credit card and other debt they would be paying off, saving you money each month. An additional bonus is that the interest on home equity and refinanced mortgages is tax-deductible, which provides an additional savings.

Debt consolidation or credit counseling services are solid options for those who do not own a home or have credit issues that would prevent them from qualifying for a loan. These services negotiate better terms with your creditors, such as lower interest rates, lower payments or an extended payment period, which they get in return for assuring the creditors that they will get their payments on time. To ensure your cooperation with the negotiated payment schedule, you send a payment that covers all the negotiated payment plus a small monthly fee to the service. They then make the on-time payments for you on your behalf. These payments are typically lower than the combined original payments due to the service's negotiations.

Debt consolidation is not a good option for everyone. The main danger of debt consolidation is that many who follow this path end up in even more debt because they did not change the habits that got them into debt in the first place. Once the credit cards are paid off by a loan, it is all too easy to run them up again. For debt consolidation to be effective, it must be part of a long-term change in financial habits and responsible debt behavior. A credit counseling service or professional financial advisor can help with establishing new, healthier financial habits that keep you out of debt for good.

What Is a Certificate of Debt?

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A certificate of debt, also known as a bond, is a written promise issued by a government or company in order to raise money. It states the duration of the loan, the amount of principal and the fixed interest rate.

Whether they are issued by companies, or by local or national governments, all bonds are classified by the length of time before maturity. Those maturing in less than a year are known as bills, those maturing in one to 10 years are notes, and those with longer maturity are bonds.

Companies issue debt when they need to raise money for new products or facilities. Often it is cheaper than going to a bank and asking for a loan. For governments in need of funds, the alternatives are to raise taxes or go to international institutions such as the International Monetary Fund. Both are politically riskier options.

Debt is considered a safe investment. Bond buyers, known as creditors, receive fixed income and that is why bonds particularly appeal to people approaching retirement. Unlike stockholders, creditors are not owners of a company and cannot claim a share of the profits. Because they involve less risk than stocks, bonds bring lower returns.

Credit Card vs. Fixed Interest Loan Payments

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Both credit cards and fixed interest loan payments can be used to pay down debt, but there is a substantive difference between the two. With credit cards, the terms and agreements can change from time to time; fixed interest loan payments don't change during the life of the loan. In pursuing your financial goals, you can benefit by comparing the two to see which is the most cost-effective.

If you have a credit card, your interest rate can change at any ,even if you have a fixed rate. The credit card company must notify you in writing 15 days prior to the rate increase. If your rate increases, your payments will increase and the amount of finance charges you pay will increase as well. Some changes to credit-card arrangements are scheduled to go into effect in February 2010: A credit card company will not be able to increase your fixed rate for a year unless you are delinquent.

Credit cards can have variable rates. A credit card rate can increase if the index, such as the prime rate or the LIBOR, that it's tied to, also increases. Once the rate increases, your payments can increase along with the finance charges you pay. Normally, a rate increase for a credit card takes place 30 days after the index increases. If the index is lowered, the credit card rate will be lowered as well. A change in your credit card payment can keep you from budgeting effectively.

Credit cards also offer promotional or low-balance transfer rates. Sometimes, you can receive a zero rate for six months or a year. This allows you to pay off other high-interest-rate debt and save money by paying less finance charges. If you are late with a payment, your promotional rate will be canceled and you could receive a default rate that could be higher than 25 percent.

A fixed interest loan payment will have the same terms and agreements throughout the contract. When you make your payments, a portion will go toward the principal balance and a portion toward interest. The interest rate will not increase throughout the life of the loan. You can use a loan calculator to see how much of each payment is allocated toward principal and interest. When the last payment is made, the loan will be paid off.

If you have a fixed interest loan payment, you will be able to plan and budget, because you will always have the same payment. If you know how many months your loan is for, and the monthly payment, you can calculate the total amount of your loan. Multiply your payment times the number of months and you will get the total amount to be paid. If you pay more per month than your standard payment you will be able to pay off the loan faster. The extra payments will reduce your principal balance.

Welcome to our website credit and debt managementr.

Thursday, November 30, 2006

Credit

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Wednesday, November 29, 2006

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Monday, November 27, 2006

Create An Emergency Fund

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Sunday, November 26, 2006

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Saturday, November 25, 2006

Durable Power of Attorney Ends at Death

Use Your Will to Handle Posthumous Debts

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How to File a Durable Power of Attorney

Friday, November 24, 2006

Joint Accounts

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Thursday, November 23, 2006

Consolidation Refinancing

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Wednesday, November 22, 2006

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Tuesday, November 21, 2006

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