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

Wednesday, October 31, 2007

How to Settle a Bank Debt

How to Settle a Bank Debt

Debt settlement is popular with some people drowning in debt that hope to avoid bankruptcy. Settling with your bank for less than the full amount owed on your unsecured loan or credit card will stop the collection calls and end the possibility of being sued on that particular account. The savings can be significant, with banks commonly settling for about the half the balance and sometimes for as little as 20 percent, according to The New York Times.



    Review your credit card or loan statement to determine if your account is four months behind. According to the site Bank Rate, most debt settlement activity takes place when accounts are at least four months delinquent, but not more than six. After six months the banks generally close accounts and sell them to collection agencies.


    Call the bank's customer service department using the number on the back of your card or on your billing statement. Tell the representative that you wish to speak to someone about your past-due account and that you are seeking a settlement. You will be transferred to the collections department, which will consider your request. Before you begin, ask the collections agent for her name and bank mailing address for possible follow-up in writing. Offer to settle the account for a certain amount, such as 20 percent of the balance. That starts the negotiation and the bank will likely counter with a much higher offer -- up to 90 percent of the balance. Keep negotiating until you reach a deal that you believe is fair, or politely end the conversation and go on to the next step.


    Write a letter. Use the name and address you acquired in step 2. In your letter, emphasize that you remain interested in a settlement offer that is fair for you and the bank. Then make a new offer better than your most recent offer but less than the bank was offering. Wait for a response. Continue the negotiation by mail or telephone with the same bank representative until you have a deal.

Is it Smart to Use a Home Equity Line of Credit to Pay Off a Credit Card?

Sometimes it is smart to use a home equity line of credit, otherwise known as a HELOC, to pay off a credit card, and sometimes it is not. If you have equity built up in your home, taking out a HELOC is certainly an option to pay off credit card debt, but first consider the pros and cons.


    A HELOC works like a credit card, only you use your home as collateral. Homeowners typically qualify for 75 percent of the home's appraised value minus the balance you owe. So, for example, if your home is valued at $300,000, 75 percent of that is $225,000. Say you still owe $150,000 on the house. Your potential line of credit would be $75,000.


    If home equity debt is cheaper than credit card debt (the interest rate is lower), it may make sense to take out a HELOC and pay off your credit cards. Plus, you get a tax deduction for interest you pay on a HELOC. However, if you can get a lower rate on a credit card than you would on a HELOC, you should not take out an equity line and simply pay your credit card.


    It's always riskier to have a loan out on your house than it is to carry credit card debt. If you are delinquent on your HELOC, you can lose your home. If you are delinquent on your credit card, your credit issuer can sue you, but you will almost never lose your home from being delinquent on a credit card, according to SmartMoney.

Expert Insight

    Another danger concerning using your HELOC to pay off your credit card is that it may be tempting to run up your card again once it is paid off. You must be disciplined and curb your spending. Otherwise, you could wind up with the same credit card debt as well as a HELOC. The Motley Fool recommends that before you start using your credit cards again, you first pay off your HELOC.


    You also must consider the cost to take out a HELOC. You pay fees similar to when you bought the house, such as property appraisal fee, an application fee, one or more points -- which are 1 percent of your credit limit -- and closing costs. You could pay several hundred dollars just to take out the line, according to The Federal Reserve Board.

Bottom Line

    The bottom line regarding whether you should or shouldn't take out a HELOC to pay off your credit cards depends on your particular situation. If you can handle the credit card payments without tapping the equity in your home, do that first. However, if you have outstanding credit card debt that you can't seem to pay down, and you are paying a high rate of interest on the cards, a HELOC may be the answer to get you back on track, according to Bankrate.com.

Tuesday, October 30, 2007

How to Determine Debt Collection Statute of Limitations

How to Determine Debt Collection Statute of Limitations

If you've got an aged credit card debt or loan that you've failed to repay, it's helpful to know that debt collections agencies may be unable to sue you for the amount if the statute of limitations has expired on the amount you owe. Because the statute of limitations (SOL) varies widely depending on the state where you acquired the debt or the type of account, for example, it's vital to know where your debt falls. Consider these tips to determine debt collection statue of limitations.



    Determine the day that you last used the account in question or received a loan payment, for example. You can typically use the last date listed for the account on your credit report as legal proof of how long it's been since the account or loan has been active.


    Note that debt collection statute of limitations doesn't typically apply to certain types of money owed, such as income taxes, legal fines (like traffic tickets), child support payments or federal student loans.


    Consult listings on debt-related websites for a quick appraisal of the statute of limitations for your particular form of debt. Sites like Fair-debt-collection.com, BCSAlliance.com and CreditInfoCenter.com provide charts and information on individual states since each has a different statute of limitations for debt based on whether it's an open account (like a credit card account), a promissory note or an oral or written agreement.


    Contact your state Attorney General (www.naag.org) to confirm debt collection statute of limitations if you intend to dispute a debt in court against a collection agency. The AG can provide official documentation and up-to-the-minute legal information.

How to Get a Settlement for Default Student Loans

How to Get a Settlement for Default Student Loans

A student loan is any loan that is intended to help you finance your education. It may be financed by the government or awarded by private lenders. A federal student loan will fall into default after nine months of missed payments. Private student loans, however, may fall into default status immediately after you stop paying the debt. A defaulted student loan continues to accrue interest until it is paid off. Should the debt be transferred to a collection agency, extra fees apply. If you are financially able to settle a defaulted student loan, you should do so before the fees and interest charges grow too high to manage.


Federal Student Loans


    Save enough money to cover the original balance of the loan. The federal government may be willing to waive the added fees and interest, but you will not be able to settle for less than the original loan balance.


    Gather any documentation you have that demonstrates you are financially unable to make payments on the loan. This may include tax documents or proof that you are unemployed or on public assistance.


    Write a letter outlining your settlement offer. Explain that you are able to settle the debt in a lump sum for the original loan balance.


    Mail your letter and the documentation of your financial hardship to the servicing center at the U.S. Department of Education that processes the type of federal loan you originally received.


    Contact the servicing center by phone if you do not receive a response to your settlement request or if your request is denied. Ask to speak to a supervisor and explain your situation. Inform the supervisor that you are able to provide extensive documentation as to why you are unable to make payments on the loan and ask for a settlement.


    Hire an attorney if you are unable to settle your federal student loan debt on your own. An attorney may be able to help you obtain a settlement.

Private Student Loans


    Add 180 days to the date you made the last payment on your loan. Compare this date to the statute of limitations on debt collection in your state. If the statute of limitations on the debt is no longer valid, you cannot be sued for the balance and may not need to seek a settlement. You can check your state's statute of limitations by contacting your attorney general's office.


    Contact the creditor or collection agency that currently owns the debt. Explain that you are interested in a debt settlement agreement. You do not have to settle for the full balance of the loan, nor do you have to make a lump sum payment to procure a settlement for a private student loan.


    Wait for a while if the creditor rejects your offer. The older your private student loan debt gets, the more eager the lender or collection agency will be to negotiate a settlement with you. This is because the creditor knows that after the statute of limitations passes, you will no longer be legally liable for the debt.


    Call the creditor back and again attempt to negotiate a settlement. The longer you wait, the more likely your creditor is to work with you and lower the balance of the defaulted loan.

How to Save Money and Pay Off My Credit Cards

Living beyond your means and incurring debt is stressful. But with a little savvy saving and a debt payment plan, you can still live well while also being financially responsible. Here are tips for saving money and paying off credit card debt.


What is Your Financial State Now


    Take a good look at your current financial situation. You can't get where you want to go without knowing where you are now. So pull out your bank statements and determine how much money you have coming in and how much is going out. Group your expenses into categories (it helps to use a financial program) such as food, utilities, loans, etc.


    Tally up your debt. If you want to save money so you can pay off you're debt, you need to figure out how much debt you have. Also note the interest rate and monthly payments.


    Run the numbers. Add up all the money that is coming in (income, child support, etc) and subtract the amount is going out. If you get a negative number, your financial situation is dire. Even if you get a positive number, if it's low and you don't have emergency savings, you can still be in financial trouble.


    Create a budget and money system. It's one thing to know where you stand financially at this moment, but to keep moving toward your goal of saving money and paying off debt, you need to have a plan. Consider getting financial software that can help track your income and expenses, as well as calculate debt payment. Some banks offer this service as part of their online banking for free. Develop a spending system, such as not carrying cash that's too easily spent. Get a debit card so that you're paying with cash, not credit, on items you need.

Start Saving Money


    Cut expenses you don't need. If you've taken a close look at your budget, you should be able to see some expenses that you can cut or reduce right away. Do you really need 800 cable channels or every feature under the sun on your phone? Fun activities such as manicures or going to the movies can be reduced by doing your own nails and renting videos (it's free if you borrow from the library).


    Find great offers and use them on items you need. Use coupons and shop at grocery stores that have the item on sale and double or triple the coupon's value (use coupons only if it is an item you normally buy and it really saves you money). Use the Web to find great deals and rebate offers on things you need.


    Save at home. Start by turning off lights and appliances when you're not using them. In fact, plug them in a power strip and turn off the strip when not in use. Items plugged in the wall still use energy even if they're off. Weatherize your home by making sure that doors and windows are weatherstripped and that you have good insulation.


    Live large for less or free. Saving shouldn't mean you don't enjoy things in life. It just means you need to do it for less. Check your community events calendar for fun activities that are free or low cost in your area. Use the library for books and videos. Many even have Wii and other system games. Have exchanges with friends and family for needed items such as toys and clothes.

Tips to Pay Off Debt


    Save for emergencies first. There is a debate among financial people on whether or not it's better to focus on paying off debt over saving money. Most do agree, though, that you should have a month's worth of savings for emergencies. If you can't save that much, try to save at least $1,000.


    Use the money you're saving on living expenses to increase your payments to credit card companies. Paying the minimum amount on credit cards not only means years of payments, but also paying way too much interest. So use your extra money toward debt.


    Pay the smallest debt first. This is another financial tactic that gets debated, but by paying the smallest debt first, you'll gain a sense of accomplishment that can help keep you motivated toward your goal. When it's paid, take the money you used for monthly payments and apply it to the next credit card.


    Pay the card with the highest interest rate next. The interest charges are really what add up in credit card debt. If you can, try to negotiate a lower interest rate. If not, focus on paying the cards in order by those with the highest interest rates.


    Apply the money from paid-off debt to other credit cards. Each time you pay off a card, use the money that went to that card to add to the payment of the next card.

Does Bankruptcy Clear Medical Debt?

Being overwhelmed with debts is no fun --- particularly when that debt is compounded by medical issues. A recent study by Harvard University found that as many as 46 percent of personal bankruptcies had medical debt as a contributing factor. Not all debts are dischargeable in bankruptcy. But as long as there was no evidence of fraud, and the creditor is not the federal government, bankruptcy can potentially discharge medical debts. Whether filing bankruptcy is worth it or not, however, is another matter altogether.

Liquidation Versus Reorganization

    Bankruptcies has two types for individual filers: liquidation and reorganization. Liquidation is governed by Chapter 7 of the U.S. bankruptcy code. In a Chapter 7 proceeding, the court takes charge of all of a person's assets --- minus a limited amount, called an exemption, that the filer is allowed to keep with which to start over. Normally, debts that cannot be satisfied by the sale of the assets are cleared, or discharged, by the courts. In a Chapter 13 proceeding, the filer pays off at least a substantial part of the debt over time. Collection efforts cease as long as the individual is complying with the terms of the bankruptcy.

Dischargeable Versus Non-dischargeable

    Not all debts are dischargeable via the bankrupcty process. For example, you cannot go bankrupt on amounts you owe in court-ordered child support payments, nor on federally guaranteed student loans, nor on most tax debt less than three years old. You also cannot discharge debts fraudulently incurred or debts you deliberately ran up knowing you would shortly be filing bankruptcy.

Medical Debts

    In most cases, medical debts are owed to a private creditor, such as a doctor, clinic or hospital. In these cases, medical debts are no different than any other debts --- they are typically unsecured debts and therefore receive a fairly low priority under the bankruptcy code. If you file a Chapter 7 bankruptcy, you will lose all but a limited amount of your personal assets, but you may be able to clear the medical debt. However, you cannot bankrupt out of debts you owe to the Medicaid system. If you have substantial assets, and the government has paid Medicaid benefits on your behalf, under clawback rules, the state will typically become the first position lienholder on personal assets sufficient to satisfy the debt.

Chapter 7 Versus Chapter 13

    The chances of a full debt discharge is highest under Chapter 7, though you will typically not be allowed to keep much. State laws vary, but you will typically be reduced to a few thousand dollars in personal wealth, a modest car, personal clothing and books and tools and books used in the pursuit of your trade, up to a certain amount. However, Chapter 7 can be difficult to qualify for. If you earn more than the median income in your state for a family of comparable size to yours, the court may disallow your Chapter 7 filing, forcing you to file under Chapter 13 instead. However, Chapter 13 may enable you to create a payment plan that enables you to pay the medical debt, along with everything else, without having your assets liquidated by the court.

How to Dispute Collection Accounts on Credit

A collection account on your credit report drags down your credit score and looks bad to lenders, employers, rental managers and insurance companies that may pull and review your credit. If you notice a collection account appearing on your credit report that doesn't belong to you or that contains incorrect information, you can dispute the account with both the collection agency reporting the debt and the credit bureaus. Federal law prohibits information providers and credit bureaus alike from knowingly maintaining incorrect information.



    Pull a copy of your credit report from TransUnion, Equifax and Experian. Your credit reports from each credit bureau may differ, and successfully removing or remedying the collection account with one credit bureau doesn't influence the way it appears on your other credit reports.


    Review each credit report for incorrect information contained within the collection account's trade line. Circle the collection account's trade line on each of your credit reports and make copies of each report.


    Write a letter to the collection agency reporting the debt. Notify the agency that it is reporting a debt to the credit bureaus in error. Request that the company investigate the debt and provide you with written validation of the debt's accuracy. The Fair Debt Collection Practices Act states that until the company provides you with validation of the debt, it cannot continue any form of collection activity -- including reporting the debt to the credit bureaus.


    Write a letter to the collection agency demanding that it remove the collection account from your credit report if you do not receive a response within 30 days or the debt validation you receive only contains your name and the amount you supposedly owe.


    Write a letter to each credit bureau whose report contains the erroneous collection account if the collection agency fails to properly update your credit history. Inform the credit bureaus of the exact error. Include a copy of your credit report with the error circled or underlined. After receiving your dispute, the credit bureaus will conduct an investigation. If they determine that the collection account contains errors or does not belong to you, they will either update the account or delete it from your credit history.

Sunday, October 28, 2007

The Differences Between Preapproved and Prequalified

The Differences Between Preapproved and Prequalified

Whether buying a house, car, furniture or another big-ticket item, an individual has two main options: pay the entire amount out of pocket or obtain a loan. Obtaining a loan involves working with lenders. To avoid the disappointment of having your loan application denied, you can find out ahead of time how much you can afford to borrow. Prequalification and preapproval are different from each other, but both are ways to determine the amount of borrowing power an individual has.


    Conducting a search for property before knowing the amount of money a lender may loan you to purchase the property can lead to disappointment. For instance, a buyer interested in purchasing a $100,000 house will be unable to complete the purchase if the lender concludes that he can only afford to buy a $30,000 house. Thus, the first step in securing a loan is to get prequalified, which gives the buyer a quick snapshot of his buying power. In the next step of the process, preapproval, the lender provides a specific loan amount a person can borrow.

Prequalification Process

    The prequalification process occurs in two ways. A buyer can use an online calculator to input basic financial information or she can consult a lender directly. The buyer provides the lender with basic financial information such as assets, debt and income. Generally, a lender doesn't require a prequalification fee. Regardless of the way a buyer prequalifies, she receives an approximate or ballpark figure of what she can afford to borrow.

Preapproval Process

    The preapproval process is a little more complicated. During the preapproval process, a person must complete an application, supply financial information and pay an application fee. A lender then reviews financial information provided such as federal tax returns, proof of income, bank statements, W-2 statements and a credit report. Based on the information, a lender provides an individual with a specific loan amount. For instance, when obtaining preapproval for a mortgage, a buyer receives a preapproval letter from a lender with the loan amount and terms and condition associated with the loan.


    If an individual intends to make a purchase, it's best to seek a lender's preapproval. Agents see preapproved buyers as more serious (and more valuable) because they've taken proactive steps to secure a loan, explains Smart Money. Preapproval doesn't commit a person or lender to a loan. Thus, a buyer can choose to borrow money from a different lender without out breaking any promise or commitment.

Saturday, October 27, 2007

Credit Card Consolidation Limits

Credit Card Consolidation Limits

Combining many loans into one for the purposes of lowering interest and total payments is known as debt consolidation. For those looking to simplify and improve their financial lives, consolidation can provide relief for the mind as well as the wallet. Don't count on being able to consolidate your debts onto one credit card, because loans always come with limits. However, there are many ways to consolidate debt, and there is a solution for you.

Credit Card Consolidation Basics

    Credit cards often have high interest rates and fees for late payments and going over the limit, and paying these loans quickly ensures you'll save the most money as possible. If your credit is good, you may be able to combine these credit card bills into one low-interest payment.

    In this arrangement, the credit card company pays your outstanding high-interest bills and combines them into one new credit card loan. Promotional or "teaser" rates, such as "0 percent financing," are offered, but usually for a very limited period of time, often six months to a year. If you are able to pay the balance completely in this time frame, credit card consolidation is a terrific way to pay debts.

Credit Card Consolidation Limits

    Read the fine print, because you may only be able to use a portion of your new credit limit for consolidation purposes. The creditor will want you to use the card for purchases, which may be subject to higher interest rates. Be advised that you may not be able to utilize the cash advance benefit, either. As long as you stay beneath the dollar limit for consolidation, you may consolidate as many loans as you wish into one new payment.

Debt Management Limits and Criteria

    If you decide that credit card consolidation is not for you, consider a debt management plan. In a "DMP," there is no limit to the dollar amount or number of debts you can consolidate. Contact the National Foundation for Credit Counseling. Their certified counselors will give you a free budget consultation, and enroll you in a DMP, which can lower your interest rates and payments, eliminate fees and collection calls, and help you reestablish good credit. In a DMP, the consolidation agency collects one monthly payment and distributes the negotiated payments to your creditors. It is not a loan, and your balances will be paid in full within five years.

Home Equity Loan Limits and Criteria

    If you have equity in your home or auto and decide that a new credit card or a DMP is unattractive, try an equity-based consolidation loan. The limit on these loans is determined by the amount of equity you have in the asset. Be advised that your lender may want you to retain a portion of your equity, so you won't be able to use the entire amount. You must have a good credit history to qualify, complete with on-time payments.


    All consolidation loans require discipline. Don't run up balances on the old cards after you've paid them using a new loan. This is especially true of home equity loans, since you risk losing the asset if your default on the loan.

    With DMPs, the lenders may opt to notify the credit bureaus that you're participating in a credit counseling plan, which may lower your credit score. However, participation in a DMP is preferable to missed or late payments.

    Do your homework, think carefully about your behavior and the risks, and soon you'll be enjoying the benefits of living debt-free.

Friday, October 26, 2007

Credit Card Debt Relief Options

Credit Card Debt Relief Options

Excessive credit card debt can easily lead to financial ruin. Carrying large balances while struggling to make even the minimum payments can lead to debt that could literally take decades to pay off. You can avoid that by taking advantage of various credit card debt relief programs. The programs can help you through a temporary hardship--or end your credit card debt all at once.

Hardship Plans

    Credit card hardship plans are designed to help you recover from a temporary setback. The credit card company will lower your minimum payment to as little as 1 percent of the balance for up to a year. In some instances, the card company will also waive finance charges while the plan is in effect. To apply for a hardship plan, call your credit card company and explain your financial situation. Be prepared to offer detailed information about your income and expenses, and how long you expect your hardship to continue.

Debt Management Plans

    Debt management plans are usually directed by nonprofit credit counseling agencies such as those affiliated with the Consumer Credit Counseling Service. The counseling agencies will require you to enter into a four-year program aimed at eliminating or greatly reducing your credit card debt. For a management fee of about $50 a month, the agencies will contact all your credit card companies and negotiate lower interest rates, lower monthly payments and even a reduction of your balances through the reversal of some fees and finance charges. You can direct your own debt management plan by doing the negotiating yourself as you contact each individual credit card company.

Debt Settlement

    You can pay off your credit card debt for less than the full balance through a process called debt settlement. Generally, debt settlement is available only after your account has fallen behind by at least three months and is on the verge of being closed and sold to a debt collection agency. In 2009, The New York Times reported that some credit card companies were settling delinquent credit card accounts for as little as 20 percent of the balance. However, that was at the height of a U.S. recession and housing crisis. The Federal Trade Commission says debt settlement offers are generally between 30 to 70 percent of the balance. You can ask for a debt settlement agreement by contacting your credit card company. The FTC says the card company may turn down your first request, but that you should keep trying if you're deeply in credit card debt and need a way out.


    Bankruptcy represents the most extreme form of credit card debt relief. Chapter 7 bankruptcy allows you to eliminate all of your credit card debt in just a few months. However, there are income limits on Chapter 7 which vary by the state. Generally, only those with lower incomes will qualify. Another form of personal bankruptcy, Chapter 13, requires a five-year payment plan based on your ability to pay. The bankruptcy court sets guidelines on your living expenses, and money left over is used to pay your creditors. At the end of the five years, your remaining credit card and other unsecured debt is eliminated.

Thursday, October 25, 2007

Are Debt Settlement Companies a Good Option?

Debt settlement companies offer consumers a way to eliminate their debt for less than what is owed. These companies have advantages and disadvantages, and these should be weighed carefully before contracting their services.


    Debt settlement companies contact your creditors on your behalf and attempt to negotiate settlement agreements for your oustanding debt.


    Debt settlement companies typically charge a flat rate fee, usually a percentage of the balance owed or of the forgiven debt. They may also charge an initial signup fee and/or a monthly fee.


    Debt settlement companies negotiate directly with your creditors, saving you the stress of having to deal with debt collectors.


    The fees can be exorbitant and a debt settlement company cannot protect you from a creditor lawsuit. Debt settlement scams are rampant in the industry and it can be difficult to find a reputable company.


    Debt settlement companies can negotiate with your creditors on your behalf, saving you time, money, and unnecessary stress. However, if you're comfortable dealing directly with your creditors, negotiate debts on your own and avoid unnecessary costs.

How to Set a Credit Bureau Fraud Alert

Fraud alerts on consumers' credit files prevent other people from opening a new credit or loan account in their name or charging items to a credit card without their authorization. Creditors, lenders and others who see fraud alerts on a consumer's credit file should verify that person's identity before allowing any financial transactions. There are three types of fraud alerts offered by the three major credit-reporting companies, which are Equifax, Experian and TransUnion. Fraud alerts processed at one company automatically go on the corresponding consumer files at the other two companies.



    Access the fraud-alert section on the website of one of the three major credit-reporting companies to set up a fraud alert with that company. Follow the instructions provided for choosing the appropriate alert for your situation. For example, set up an initial alert if you've lost a credit card but haven't detected any fraudulent charges. Fill out any online form provided by the company with your name, address, Social Security number and other personal information. Ensure that you select "initial alert" on the form. Expect an initial fraud alert to remain on your credit reports at all three credit-reporting companies for 90 days.


    Use the same fraud-alert section of the websites of the three major credit bureaus to set up an active-duty fraud alert if you're on active military duty. Simply select "active duty" on any fraud-alert form provided instead of "initial alert." Expect an active-duty alert to remain on your credit files at all three bureaus for one year. Bear in mind that the three bureaus also automatically remove consumers' names from their lists to receive credit card and insurance offers for two years after active-duty alerts are applied to their files.


    Report any identity theft incidents to your local police department if you have evidence that your identity has been stolen. Set an extended fraud alert on your credit files for seven years as a victim of identity theft. Fill out any required forms for an extended alert provided on one of the three national credit bureau websites. Send the forms with your police report and other information requested by the bureau to the address or fax number provided. Be aware that all three bureaus will remove your name from their lists to receive credit card and insurance offers for five years after they set an extended fraud alert on your files.

Tuesday, October 23, 2007

Do Credit Card Companies Ever Lower Your Amount of Debt?

Do Credit Card Companies Ever Lower Your Amount of Debt?

Only in debt settlement do credit card companies lower your level of debt. However, to qualify for debt settlement, you must already be in dire financial circumstances. By understanding all your debt relief options, you may be able to get out of debt while saving yourself from rejection for new credit in the future.

Debt Settlement

    When a credit card company agrees to lower the amount of the balance you need to pay off, it's called debt settlement. Generally, if a creditor agrees to settle a debt, the payoff amount is somewhere between 20 and 75 percent of your total balance, according to Smart Money writer Aleksandra Todorova. The settlement is a one-time payment; generally, creditors do not accept payment plans for settlements.


    The only reason creditors accept settlements is when the alternative is bankruptcy. Therefore, you must be headed toward bankruptcy, with missed payments, to qualify for settlement. Creditors are generally willing to accept a partial payment only if they believe the only other likely outcome is that they will receive no payment. If you are current on payments but having difficulty making minimum payments, you may benefit from working with a credit counselor to learn about your other options.


    Debt settlement may damage your credit score and make it difficult to obtain new credit in the future. If you have many delinquencies and negative marks on your report, the impact of debt settlement may not be as severe as it is on someone with an otherwise healthy credit report. Debt settlement can also appear on your credit score as partial payment accepted, debt settled for less than amount due or settlement. In the future, lenders may see that you weren't able to pay the full amount of your debt and see you as a high credit risk.


    Whether or not you decide to file for debt settlement, working with a reputable credit counseling organization will help you to formulate a realistic budget and identify problems in your spending so that you can prevent yourself from being burdened by financial problems in the future. A credit counselor will also show you options for debt relief, which may include debt consolidation or a debt management plan. The National Foundation for Credit Counseling provides location-specific information on reputable credit counseling organizations.

How to Avoid Getting Your Credit Card Cancelled

How to Avoid Getting Your Credit Card Cancelled

A credit card company may cancel a card for many reasons, including non-use, excess debt, a lowered credit score and even an increase in credit that exceeds the amount the company is comfortable with. A cancelled credit card can cause considerable problems, especially in an emergency such as needing gas or a hotel room on short notice. A few easy steps, applied on a regular basis, can help avoid an unnecessary cancellation.



    Use your credit card at least once every 60 days. You don't need to make a large purchase -- just a cup of coffee will do -- and you should pay it off immediately if you're concerned about debt. Regular use informs the company that your card is still being used.


    Maintain a low credit utilization ratio, which is the percent of the total limit on the card that you have used. For example, if you have a credit limit of $1,000 and you have $530 on the card, your credit utilization ratio would be 53 percent (530/1000). Ideally, you want your credit utilization ratio to be 25 percent or lower.


    Pay your bills on time. The Wall Street Journal cites a high delinquency rate -- with more people neglecting to pay their monthly statement -- as a cause of concern among credit card issuers. You can avoid that by keeping up with your monthly bills, and not giving the company reason to fret.


    Keep careful track of your overall credit rating. The higher your rating, the less likely a credit card company is to cancel your card. Three major agencies -- Equifax, Experian and Transunion -- keep track of credit scores. You are entitled to a free credit report every 12 months. AnnualCreditReport.com allows you to request a free credit report online.

Does Bad Credit Affect Student Debt Consolidation?

Student loans are one area of lending where bad credit does not necessarily preclude you from consolidation your accounts to take advantage of lower rates. Whether bad credit hinders your application depends largely on what type of student loans you own. Federal student loans usually offer guaranteed consolidation, while private loans are much harder to consolidate.


    If you have a federal student loan, you automatically qualify for federal student loan consolidation as long as you are not in school. In 2010, the Department of Education allowed students to consolidate federal student loans while attending school if the borrower put in an application on or after July 1, 2010, and before July 1, 2011. Federal student loans are not dependent on a credit check.

Private Student Loans

    Private lenders of student loans have more leeway to reject an application for consolidation for bad credit. The 2008 credit crisis forced many lenders to give up their student loan consolidation programs. Some lenders even suspended consolidating federal student loan. If you have bad credit, you might still find a private student consolidation loan in 2011, but you might not receive one with a lower interest rate.


    Compare the interest rate offered by the lender offering consolidation versus the original loan. Loan originators usually offer better rates than loan consolidation companies. However, if consolidating loans means you won't default, this will be better for your credit score in the long run. School loans are essentially protected from a bankruptcy discharge, so falling behind on payments can continue the cycle of bad credit for years.


    A consolidation loan from a new lender will probably drop your score a few points because the creditor will perform a hard inquiry into your credit history. If you consolidate with an existing lender, your score will likely stay the same, according to MyFICO.com. Usually when you consolidate with an existing lender, the company will make adjustments to your accounts rather than opening a new one.

Advice to Pay Off Credit Card Debt

If you're deep into credit card debt, it might seem like there's no way out. However, that isn't the case. No amount of debt is insurmountable, but you need the right plan in order to climb your way out of your debt hole.

Stop Using Credit

    If you're in a huge debt hole and you aren't already maxed out, odds are good that you soon will be. Cut up your cards immediately and stop making the problem worse. Living without credit is a scary thing, but it's necessary to start paying down your debts. If you're worried about making ends meet, it's a sign that you've been relying too heavily on credit for too long.


    Once you resolve to stop using your cards and start paying down your balances, call your credit card companies and see what they can do for you. Whether it is reduced interest or a payment program, the credit card company will likely work with you to help you get your balances down. Remember, they want their money, so it's in their best interest to help you out, but they can't help you unless you call them to explain your situation.

Create a Budget

    After you negotiate a better interest rate or payment plan, be sure to hold up your end of the bargain and make those payments on time each month. Create a calendar containing all your expenses for the month and see what you will have left over to make payments on your cards above and beyond your minimum requirements. You can pay the cards in any order you want; attacking the card with the highest interest rate will save you the most money long-term, while paying the smallest balance first can help you to see results more quickly. The most important part is sticking to your budget and doing whatever you can to get out of debt.

Eliminate Unnecessary Expenses

    If you've made a budget and you don't have as much to pay down your cards as you'd like, take a look at your expenditures and see what you can eliminate. For example, if you're paying for a premium movie package and you barely watch it, you can safely get rid of it and use that money to pay off your cards. Similarly, you can bring lunch from home, cancel any services you don't use or sell old jewelry you don't wear anymore. Even if you just clear up $50 extra a month, that's $600 a year that can go towards paying down your credit card balances.

Monday, October 22, 2007

How Long Can a Company Try to Collect a Bad Debt?

How Long Can a Company Try to Collect a Bad Debt?

A company may try to collect valid debt indefinitely. However, the lengths a company can go to collect the debt are governed by state laws and the federal Fair Debt Collection Practices Act.


    In most states, there is a statute of limitations on individual debt. Debt beyond that point is not erased and companies can attempt to collect until the account is in good standing. However, a company cannot sue you in court beyond that time, from three to 10 years, depending on the state.


    Regardless of the statute of limitations, a company cannot sue your or attempt to collect on debt discharged in bankruptcy.


    According to the Better Business Bureau, child support orders, federal student loans, fines and taxes do not have a statute of limitations. Additionally, delinquent accounts may stay on your credit report for up to seven years regardless of the statute of limitations.


    If a company sues you for debt past the statute of limitations, do not ignore the summons. Submit proof to the court that the debt is beyond the time frame for a lawsuit.

Can Credit Card Judgements Come After Home Equity?

Good credit is essential to your financial health. Maintaining consistent payments on your credit cards proves to lenders that you can manage your debts. Credit card judgments show that you are in financial trouble and hinder attempts to get further credit. While you will not be able to get a home equity loan with credit card judgments, you can find yourself with judgments after you get a home equity loan.

Credit Card Judgments

    When you are issued a credit card, you must repay your purchases in monthly installments with interest. If you miss a monthly payment, the interest rate goes up and you are charged late fees. After 30 days of nonpayment, the delinquency is reported to the credit bureaus. After 90 days, the account is moved into collections. At this point, the company can seek a judgment against you for repayment of the debt.

Home Equity Loan

    A home equity loan is a mortgage against an existing property. Equity is the difference between what you owe on a property and what the property is worth. Banks typically lend up to 80 percent of a home's value. So a home worth $100,000 will have $80,000 in equity minus any existing obligations. If you have a first mortgage with a balance of $50,000 against the property, you are left with $30,000 in equity.

Judgment Before a Home Equity

    When you apply for a home equity loan, one of the first actions a bank takes is running your credit. Any credit card judgments are red flags. While the amount, the time frame and the explanation of the judgment all have bearing on the decision, getting approved is difficult.

Judgment After Home Equity

    While a credit card judgment prior to a home equity makes it unlikely you will even get approved, a credit card judgment can easily come after a home equity. Since your home equity is another monthly debt, it can put a strain on your finances. If your credit card debt continues to grow after obtaining a home equity, you can find yourself unable to make the payments. If this goes on long enough, you can end up with judgments against you after closing on the home equity.

Identity Theft Help & Information

Identity theft occurs when someone uses your personal information and assumes your identity. Identity theft can take many forms such as someone making purchases on one of your credit cards to opening an account in your name. If you find that you are the victim of an identity theft, you can take steps to reclaim your identity.

Identifying Crime

    Many times, one of the problems that people have with identity theft is finding out that they have become a victim. To determine if you have been the victim of identity theft, you may need to look at a copy of your credit report. This way, you can identify of any accounts have been opened in your name or if there are any unusual purchases on your credit cards. If you are notified of purchases that you did not make, this should tip you off that you have become a victim.

Fraud Alert

    When you believe that you are the victim of an identity theft, you need to place a fraud alert on your accounts. You can do this by contacting the credit bureaus and asking them to initiate a fraud alert. When you have a fraud alert on your account, it will be very difficult for the identity thief to continue using your information. Every time you try to obtain credit during the alert, your personal information will be verified.

Filing Reports

    Once you have confirmed that you have been the victim of an identity theft, you need to file reports with the appropriate agencies. You should file a complaint with the Federal Trade Commission as the agency investigates identity thefts and help consumers. You should also file a report with your local police station. While the local police may not be able to solve the crime, the FTC can file a report that allows you to show that you are actively trying to fix the problem.

Preventing Access

    When you become the victim of an identity theft, it can be very difficult to put your financial life back together again. The best approach is to try to avoid being taken advantage of in the first place. To help avoid identity theft, you need to safeguard your personal information. Do not give out your Social Security number randomly to anyone who asks for it. Shred your personal documents so that identity thieves cannot access your information from the trash.

Sunday, October 21, 2007

Define Composition Settlement

A composition settlement is an agreement between a debtor and a creditor stating that the creditor will accept as settlement a payment from the debtor that amounts to less than what is owed in full.


    A composition settlement with creditors can be an alternative to bankruptcy. However, debtors are not released from making payments until they have fulfilled the payment provisions that both parties agreed to.


    Creditors are sometimes reluctant to agree to a composition settlement. However, if the request is from a small business, creditors may reason that there will be more in profits on future sales than on liquidation of the business.

Failure to Pay

    If debtors fail to fulfill the terms of a composition settlement, they can be subject to a lawsuit. It is important to meet all obligations in a timely manner.

Collective Agreement

    A composition settlement with creditors is both an agreement between the debtor and creditors and between the participating creditors themselves collectively. To be affective, all of the creditors must agree to accept less than what each party is owed.


    If you or your business is having trouble with finances, it may be viable to seek advice from a financial adviser regarding a composition settlement.

Can You Change Your Mortgage Terms After a Divorce?

One of the most difficult aspects of divorce is deciding what to do with the house. When one spouse decides to keep the house, the family court may end up deciding who is going to pay for the house and how, but when it comes to the mortgage, the family court's decision means little. The terms are rarely negotiable.

Transferring Interest

    In the instance of a divorce in which one spouse decides to keep the house, the spouse who no longer wants any interest in the home will often sign a quitclaim deed or interspousal transfer grant, giving up his interest in the home. There's no such thing, however, as a quitclaim for a mortgage payment; if both spouses are on the loan, both spouses are ultimately responsible for the repayment, regardless of which spouse is living in the home.

Judgments Useless

    Many divorced couples assume that because a family court has issued a judgment assigning debt to one person in the marriage that the other's responsibility for that debt is eradicated. Nothing, however, could be farther from the truth, warns Bankrate's Justin Harelik. A family court judgment means nothing to your creditors; if your ex-spouse chooses to keep the house but fails to pay and your name is on the mortgage, you are still responsible for repayment.

Both Parties Responsible

    When it comes to a mortgage held in the names of two people, lenders could not care less about which person lives in the house and who is making the payments, as long as the payments are being made. Both people are equally responsible for the loan, despite their marital status or any attempts to take their name off the property. Lenders are unlikely to voluntarily take one spouse's name off a mortgage during a divorce, writes Harelik; doing so leaves the lender without a valuable avenue of recourse should the spouse who keeps the property fail to pay.

Refinancing the Only Option

    The only way to change the terms of a mortgage after a divorce is to sell the home or get a new mortgage. "Short of refinancing a property," Harelik writes, "there is no way to get your name off the [mortgage]."

    In order to refinance the home, the spouse who wishes to keep the home would require sufficient means and good enough credit to get a loan for the home without piggybacking on a spouse's income and credit.

Saturday, October 20, 2007

What Are the Statutes of Limitations on Credit Card Fraud?

What Are the Statutes of Limitations on Credit Card Fraud?

As many as 78 percent of consumers have a credit card, according to the CreditCards.com website. Although credit cards can be valuable when properly used, some card holders will face credit card debt they cannot pay. Occasionally, this debt is the result of fraud. Your credit card company and legal authorities may try to take you to court to collect the debt, but statutes of limitations apply to credit card fraud cases.

Factors Affecting Statutes of Limitations

    Multiple factors determine how long a credit card company or law enforcement agency has to charge someone with credit card fraud. They include the state in which you live, the exact charges the law enforcement agency wishes to pursue and the method by which the credit card fraud occurred. The type of credit card contract you have --- for example, oral or written --- also affects the statutes of limitations on credit card fraud and debt.

Range of Statutes of Limitations

    Fraud that occurs with an oral credit card agreement has a limitation of between two and 10 years, depending on your state. Written and promissory agreements have a range of between three and 15 years. The range for open-ended accounts is three to eight years.

Beginning of Statute

    Because every state has different credit card fraud statutes of limitations, the time when the statute begins to run is a major factor in credit card fraud cases. The statute of limitations typically begins to apply once you deviate from the terms of your contract. With credit cards, this usually is when you fail to pay your bill, according to the Credit InfoCenter website, but it will depend on the terms of your credit card agreement and the type of credit card fraud that occurred. Some companies have acceleration clauses in the credit card contract that the creditor has to apply before the statute begins to run.

Partial Payments

    In some states like Michigan and Minnesota, laws are on the books that prevent a partial payment from restarting the statute clock. In these states, you have to have a written statement indicating a new promise to pay. You cannot simply send in money to the credit card company and assume you are in the clear.

Rights After Expiration

    If the statute of limitations in your state expires and no charges have been filed, the credit card company essentially forfeits its right to pursue action against the person who committed the fraud or who holds the account. You have the right to not pay the debt if this happens. Unfortunately, people not aware of this fact continue to pay fraud debts for which they are no longer responsible.

What Is a Person's Credit Score When They Have No Credit?

A credit score is a numerical value based on the information on a person's credit report, which includes data from mortgage loans, credit cards, lines of revolving credit, student loans and other forms of credit and borrowed money. Credit scores range from 300 to 850, with low numbers indicating bad credit and high numbers indicating good credit.

Credit Score Number

    A person with no credit history -- that is, no information on his credit report for the past six months -- has a credit score of "zero," which some lenders and credit specialists refer to as "no credit score." Although it falls outside of the standard 300 to 850 range, a zero score does not indicate "bad credit," only that a person has no recent credit activity.


    Although a zero score is not technically "bad credit," it has a negative impact on a person's chances of getting a home loan, credit card, line of credit, car loan, private student loan or any other form of credit. This is because an individual without a credit history is an unknown to banks and lending institutions -- they do not know if such an individual will repay her debts in a timely manner or allow them to go into default.

Comparison to Bad Credit

    Although both a zero credit score and a poor -- below 620 -- credit rating will prevent a person from getting access to loans or credit lines, having no credit history is better than having bad credit. This is because a bad credit score impacts a person in other ways, including preventing her from getting a job, leasing an apartment or setting up utilities in her name. Businesses and agencies believe a poor credit score shows irresponsibility, while they do not have such an impression from someone with no credit.


    A person with a zero score must build a credit history before applying for a mortgage, private student loan or standard credit card. She can do this by signing up for a secured credit card, which people without credit histories can obtain. A secured credit card is a line of credit backed by a deposit equal to the card's limit. A person who uses such a card sparingly and pays off the balance monthly will see her credit score increase into the "good" -- above 620 -- range.

Wednesday, October 17, 2007

How to Broker Delinquent Debt

How to Broker Delinquent Debt

When a credit card account or a medical bill goes 60 days past due, it is generally considered to be a delinquent account. Some credit card companies and medical billing services will keep the collection effort in-house for up to 3 to 6 months, at which time the account is sent to a third-party collector. If you receive a notice of a delinquent account, you can broker it yourself.



    Verify the debt. If the delinquent account is being serviced by a third-party debt collector, request that a verification of the debt be sent to you. This information includes the name of the original creditor, the amount owed and a verification that the debt is legally yours.

    In addition, verify the debt by requesting a copy of your credit report from each of the three credit reporting agencies: TransUnion, Experian and Equifax. By law, you are entitled to one free copy from each bureau per year. Under federal law, each agency must verify the debt or remove it from your report.


    Contact the credit card company, medical billing service or third-party collector. Request to speak with a manager or supervisor. If the representative refuses, politely end the call and phone back later. Once speaking with a supervisor or manager, offer to settle the debt in a lump-sum payment for 40 or 50 cents on the dollar. Repeat this process until your offer is accepted.


    Demand the company delete or reword the debt trade line. Your credit report will reflect the delinquent debt for a period of 7 years. Tell the company your settlement offer is subject to having the trade line or debt deleted from your credit report or to read "paid as agreed" or "paid, account closed."


    Insist the third-party debt collector, medical billing service or credit card company place the accepted settlement offer in writing on its official company letterhead. Have a copy mailed to you and return a copy of the settlement offer with a money order or certified check for the exact settlement amount. Once the settlement is paid, forward a copy of the settlement offer to each credit bureau and request the trade line be deleted or worded according to the agreement.


    Reorder your credit reports. Allow about 90 days before reordering your credit reports to confirm the debt has been reported as paid.

Cars & Credit Assistance

Cars & Credit Assistance

Purchasing a car on credit at a competitive interest rate requires a good credit score. Credit scores are three-digit numbers ranging from 350 to 850. People with scores of 720 or higher usually receive the best deals on financing, including special offers for waiving finance charges over a a certain period. Auto credit is also available to people with lower credit scores, but at higher interest rates.


    Banks and credit unions usually offer the best deals on auto financing, and credit unions are often more competitive than banks, according to Bankrate. People shopping for a car should shop for the loan first and then the car. This allows the buyer to separate the transactions and get the best deal on each. Car dealers often mix in financing with discussions about the price of the car, sometimes making it difficult for the buyer to achieve a bargain on either.

Bad Credit

    Credit qualifications vary widely depending on the lender. Most auto financing requires a credit check, but that's only one thing lenders consider. Credit scores below 620 are usually considered poor, but it is possible to secure auto financing with scores much lower. Some dealers advertise that they can provide financing for almost anyone, including people who are in bankruptcy or have suffered from court judgments, foreclosures, late payments and charge-offs. Interest rates on bad credit auto loans are usually exorbitant, however, easily ranging from 18 to 25 percent.

General Qualifications

    People shopping for auto credit should have a job or show proof of regular income, such as a pension. Stability is also important, as creditors prefer applicants having worked on the same job for at least the past two years, ideally. The borrower must have enough income after living expenses and other credit obligations to afford the anticipated monthly payment. Down payments are usually required, but the amount depends on the credit rating and the borrower's income. Some people are required to pay large down payments because of poor credit or to lower the monthly payment so that it fits the borrower's income level.


    Repossession is possible when people fail to pay their auto loans as agreed. Collection calls begin after the first missed payment, with repossession likely after two or three missed payments. Repossessions are listed on credit reports for seven years, and make it very difficult to finance another vehicle at a reasonable interest rate or down payment. Auto repossessions are sold at auction or private sale, with the former owner responsible for paying any difference in the sales price and the balance remaining on the loan.

What Does it Say on Your Credit Report When You Make a Settlement?

Debt settlement allows you to resolve a delinquent account by paying less than the full amount owed. After the payment, your account is updated to show that it has been "settled" or "settled for less than the full balance." Both terms mean the same, but "paid in full" is used to indicate an account whose entire balance was paid.

Impact on Credit

    Settling a credit account will get debt collectors off your back but don't look for a spike in your credit score. Experian, one of the major credit reporting bureaus, reports that any update to your credit report that is less than "paid in full" or "paid as agreed" is considered a negative and could cause your score to drop or remain the same if your credit is already bad. However, the agency acknowledges that some people struggling with excessive debt may have no choice but to seek settlements as they prepare to recover from credit mistakes.

Credit Repair

    Information regarding a settlement will remain on your credit report for seven years, but the impact will lessen over time. A bunch of fresh new settlements---or even one---could make it impossible for you to qualify for credit at competitive interest rates over the short-term. However, Experian reports that you really shouldn't be taking on new debt while you are settling accounts and getting your budget under control. Instead you should focus less on your credit score and more on sound financial fundamentals. Paying all your bills on time while reducing debt is the fastest path to increasing your credit score and offsetting the presence of a settlement on your credit report.

Building Confidence

    Having accounts on your credit report marked as "settled" or "settled for less than the full balance" can be helpful in some ways as potential creditors review your report. For example, a potential landlord could see the settlements as a clear indication that you are starting to clean things up after a job loss and a foreclosure. The settlements may indicate that you're on the rebound after getting through your financial crisis, and convince the landlord to approve you for a lease agreement.

Negotiating Settlements

    The credit reporting agencies list your account information as it is provided by creditors, debt collection agencies and public records such as bankruptcy and foreclosure information. During a debt settlement negotiation, you can ask the creditor or debt collector to delete your old, delinquent account from the credit report instead of marking it as settled. The process is known as "pay-for-delete," but creditors are under no obligation to participate.

How to Make a Payment on My Federal Student Loan in Texas

Federal student loans are government programs, such as Stafford or Perkins loans, that help students pay for the costs associated with college. Though these are federal programs, loans are distributed by private lenders. When you leave school, you have a six- to nine-month grace period before payments are due depending on the type of loan you obtained. Payments are made directly to the lender unless you are considered in default. In Texas, defaulted student loans are turned over to the Texas Guaranteed Student Loan Corporation.



    Call the Federal Student Aid Information Center at 800-433-3243 or visit the National Student Loan Data System website (see Resources) to obtain information about your student loans if you don't have statements or paperwork. This database maintains a record of all federal student loans. Provide your Social Security number to get the desired information.


    Call the lender to update your loan records. Confirm name, address and Social Security Number information. Make sure current statement will be sent to you and confirm when your payments are due.


    Send payments directly to the lender or ask whether an automatic payment option is available.


    Call the Texas Guaranteed Student Loan Corporation at 800-222-6297 if your loan is in default. If your loan is turned over to TGSLC, payments are made directly to it. You can reinstate your loan from default with six months of on-time and full payments, but the loan remains at TGSLC. Credit card payments are accepted for a $6 transaction fee, or you can mail payments or hand-deliver them. Ask the representative how to perform each option.

Tuesday, October 16, 2007

Laws on Collecting a Debt After a Judgment

When a court awards a creditor a civil judgment after a collection lawsuit, the court does not work to recover the debt for the creditor. New collection options, such as wage garnishment, become available to creditors following the lawsuit, but it remains the creditor's responsibility -- not the court's -- to pursue the debtor and collect the debt after receiving a civil judgment.

Enforcing a Judgment

    Creditors can enforce their judgment collection rights only for the period of time the debtor's state sets for judgment enforcement. Different states have different statutes regarding how long judgments are enforceable. New York, for example, gives creditors 20 years to enforce their judgments through involuntary force, such as garnishing the debtor's wages or freezing his bank accounts.

    A creditor that is not successful enforcing its judgment before the statute of limitations for enforcement expires can renew the judgment with the court. This provides the creditor with a new judgment and the enforcement period begins anew. A creditor whose judgment has expired can still collect the debt but only if the debtor pays voluntarily.

Post-Judgment Interrogation

    Creditors sometimes sue debtors and win a judgment without knowing whether the individual possesses any assets with which to pay the debt. Should this occur, the creditor can file a post-judgment interrogation request with the court. The court then notifies the debtor that she must appear in court and disclose information about her assets to the creditor. The creditor uses the information it discovers through the post-judgment interrogation when conducting collection activity.

Credit and Incentives

    After the lawsuit, the court provides the creditor with a certificate of judgment it must file with the clerk of the court -- officially entering the judgment into the pubic record. Because the credit reporting agencies scan court records periodically, the judgment eventually ends up on the debtor's credit report -- reducing his credit score. According to the Fair Credit Reporting Act, a judgment can remain on a consumer's credit record for the full enforcement period in the debtor's state. In the event the enforcement period is less than seven years, the judgment must remain for a minimum of seven years.

    State laws vary, but generally a consumer may be able to prevent the judgment from appearing on his credit report by paying it off immediately. The court will not enter the judgment into the public record until the creditor files the certificate of judgment. By agreeing not to file the judgment with the court in exchange for payment, a creditor provides a debtor with greater incentive to pay -- making collecting the debt easier for the creditor.

Judgment Interest

    Each year that the judgment is legally enforceable the creditor assesses interest charges on the unpaid portion. Judgment interest rates vary by state and by year. The 2011 judgment rate for Utah, for example, is 2.3 percent. Thus, a debt collection judgment continues to grow each year from interest charges until the debtor pays off the judgment or the judgment officially expires and is no longer renewable.

What Do I Need to Do to My Bank Account to Defer a School Loan?

What Do I Need to Do to My Bank Account to Defer a School Loan?

Deferring a student loan allows you to free up the money you would normally make on your student loan so you can use it for something else. Many people defer student loans when they lose a job or face a hardship such as a serious illness. Federal student loans allow you to go into deferment, while private student loans may be more reluctant to do so. There are a limited number of months for which you can put your loan on deferment.

Putting Your Loan on Deferment

    Contact your lender to apply for deferment. You do need to have qualifying circumstances to put your loan on deferment. This usually involves some form of economic hardship, such as a job loss or a low income. The lender may require that you send in proof of your situation for you to qualify. Do not stop making payments until you have received notice that your deferment is approved. Generally the deferment is for a set amount of time and it should include the date you need to start making payments again.

Bank Accounts and Deferment

    If you have an automatic student loan payment coming out of your banking account, you will need to monitor your bank account to make sure that the payment does not go through each month. The lender should stop taking payments. If the lender continues to withdraw payments, you can put a stop on any automatic withdrawals from them at your bank. However, once you begin making payments again you may run into a problem with the payments going through. Another option is to close your account. Be sure you do not do these things until you have received notice that your deferral has been approved.

Stopping Automatic Payments

    You can contact your lender and cancel your automatic payment option at the same time you apply for a deferment. Some lenders allow you to do this online or over the phone. This should prevent automatic payments from starting at the wrong time while your loan is on deferment, but it may take a month for the lender to process the cancellation. You will need to monitor your account to make sure the cancellation has gone through.

Manual Payments

    If you make payments manually by check or transferring them yourself, you do not need to worry about the lender debiting the money from the account. Once you have received notice of deferment approval, you simply stop making payments until the deferment expires. If you have chosen to continue paying interest on the loans, you will need to send in the smaller interest payment during that time.

How to Consolidate Bills With a Very Low Credit Score

How to Consolidate Bills With a Very Low Credit Score

Health issues, job loss and other financial struggles can leave consumers with very low credit scores. A low credit score makes the cost of financing expensive. Consumers who have large amounts of debt may reduce monthly payments through debt consolidation loans. However, with a low credit score, these consumers need to know where to find these loans.



    Assemble all current bills. Make a list of each debt obligation balance and interest rate. As scary as it may seem, tally up the total debt obligations. Lenders will need this number when applying for loans.


    Apply for a secured loan. Lenders are more likely to approve a secured loan because its less risky. For example, lets say a borrower owes $2,000 on a vehicle and the market value of the vehicle is $10,000. Apply for a loan for the equity in the vehicle (which is $8,000).


    Apply for a personal loan. Personal loans are available at banks, savings and loans and credit unions. People with poor credit should check out credit unions. Credit unions usually make local lending decisions. This means the branch manager reviews the applicants entire situation (instead of just the numbers). For example, lets say a borrower suffered from serious medical illness, preventing her from working. However, she recovered and has been paying bills consistently for the past 12 months. A credit union is more likely to consider these details.


    Consider refinancing once the credit score has improved. Most lenders offer risk based lending. With a low credit score, consumers get stuck with high interest rates. However, after making timely payments and paying down debt, the credit score will rise. Talk with the existing lender about lowering the interest rate or refinancing to secure a better interest rate.

Sunday, October 14, 2007

Statute of Limitations on Judgments in Idaho

Statute of Limitations on Judgments in Idaho

Once a judgment is granted by the court, a creditor has the right to collect the money via wage garnishment, tax return garnishments or garnishing your bank account. Each state has specific laws governing how long a judgment is good for and how much interest can be charged. Once the statute of limitations on judgments time frame has passed, the judgment is no longer legally collectible.

What is a Judgment

    When a consumer defaults on a loan, the creditor is entitled to seek legal action to recover the money lost. The creditor must inform the consumer of the legal action including the pending court date. The creditor must attend the court hearing and the consumer may attend. The creditor must prove that the account holder defaulted on the account and is in breach of contract. If the creditor does not attend the court hearing, the judgment is almost always granted by default. Once the grant the judgment, the creditor can pursue legal remedies to collect on the debt. A judgment in Idaho, as well as all 50 states, cannot be granted without court approval.

What is a Statute of Limitation

    A statute of limitation is a legal limit placed on how long a creditor can pursue legal action to collect on a debt. In Idaho, the statute of limitations varies by the type of debt. A creditor can take legal action and attempt to get a judgment even if the statute of limitation on debt has passed unless the creditor is aware of his rights and appears in court to tell the judge that the statute of limitation has passed. The judge will dismiss the case in this event, but if the creditor fails to point out the statute of limitations, the judge is likely to grant the judgment.

Idaho Statute of Limitations

    Each state establishes the statute of limitations on debt based on the type of debt. In Idaho, the limts are:

    Open account: This is an account with a changing balance such as a credit card. Four years from date of default.

    Written contract: A loan that requires you and the creditor to sign a document such as a car loan. Five years from date of default.

    Oral contract: An oral agreement between you and another person. Four years from date of default.

    Domestic judgment: A judgment granted by the court. Five years but is renewable up to 20 years total.

    A judgment is only good for five years once it is granted but it can be renewed every five years for a maximum of 20 years. To renew the judgment, a creditor must petition the court before the five years expires.

Judgments and Credit Reports

    A judgment can remain on a credit report for seven years. Even if the judgment is renewed, it will not appear on your credit report after the initial seven-year period. The judgment will, therefore, not affect your credit score after the initial seven years has passed.

Ways to Lower My Credit Card Payoff

Millions of Americans are saddled with credit card debt. Seventy-eight percent of American households--about 91.1 million people--had one or more credit cards by the end of 2008, according to the April 2009 Nilson Report. At that time, Americans' credit card debt reached $8,329 per household, including those without credit cards. The United States Congress' Joint Economic Committee reported in May 2009 that U.S. revolving consumer debt was about $950 billion and was made up mostly of credit card debt.

Payoff in a Lump Sum

    If you want to lower your credit card payoff amount, try paying it off in one lump sum. Contact your creditor and offer a lump sum settlement that is no more than 15 percent of what you owe. Your creditors may not agree to the 15 percent but will usually settle for a payoff of about 25 percent to 40 percent of your original balance. Ensure that your payment will not post as a charge off on your credit report, as this will affect it negatively and will stay on your account for up to seven years.

Transfer Debt to a Lower Interest Card

    Some credit cards companies offer 0 percent interest for a certain amount of time as an introductory rate if you transfer your balance from a different credit card to theirs. Some may charge a balance transfer fee and the opening of a new credit card may negatively impact your credit score on the short term but if you pay off the card within the time of 0 interest, you'll have paid less to pay off your debt than if you didn't transfer the balance.

Renegotiate Credit Terms

    Another way to lower your credit card payoff is to renegotiate your contract terms. Speak with your creditor about getting a lower interest rate. Tell them that you can only pay off your debt at a lower interest rate. You can ask them to waive fees for late payments and being over the credit limit. You also can request for an easier payment plan where you'll only have to pay every two months instead of monthly. Stress financial difficulties you are having and any potential future hardship to renegotiate an affordable plan.

Friday, October 12, 2007

What Type of System Do Credit Bureaus Use to Gather Information?

The information each credit bureau collects makes up your credit report for that particular bureau. In turn, the information on each bureau's credit report determines your credit score with that bureau. Your credit report information and the scores each bureau holds for you may vary. The credit bureaus utilize several different information gathering methods to ensure that each has as much pertinent financial data on you as possible.

Reporting Contracts

    Much of the information that appears on your credit report has been inserted there directly by your creditors. Creditors must have an approved reporting contract with each credit bureau to which they wish to submit information about consumers. Because each bureau's criteria for awarding reporting contracts differs, the creditors whose data appears on each of your reports may also differ.

    If approved, the information provider uses software and a membership ID number provided by each credit bureau to submit regular reports containing your name, Social Security number, account number and payment history. The reported information subsequently appears on your credit reports.


    Some of the information on your credit report does not come directly from your creditors. In addition to credit cards, loans and collection accounts, your credit report also reflects certain public records, such as judgments and bankruptcies. The courts, however, do not hold reporting contracts with the credit bureaus.

    Many court systems, when updating public records, make their public records databases available for online review by uploading information to the Public Access to Court Electronic Records database, or "PACER." The credit bureaus then pull the court records directly from PACER. If the name, Social Security number and date of birth for a new record match your own, the credit bureaus then insert the court record into your credit file.

Manual Review

    While many court systems utilize PACER, not all do. The credit bureaus assign representatives to manually review public records databases in districts that do not report new court records to PACER. For this reason, court records from districts that do not submit online updates to PACER often take longer to appear on consumer credit reports.

Independent Records

    While the credit bureaus each use the same information gathering methods, each bureau's policies regarding information gathering and the efficiency with which it maintains its records may differ. The credit bureaus do not share information about consumers with one another. Thus, a negative entry reflected by one bureau may not appear on your other credit reports. Because credit information varies by credit bureau, it's crucial that you pull all three of your reports when monitoring your credit for errors.

How do I Write a Report Detailing the Reasons for Granting or Denying a Loan?

The Equal Credit Opportunity Act was passed to ensure that no lender turns down a credit or loan application due to an applicant's race, color, religion, national origin, sex, marital status or age. To help enforce the law, the U.S. government often looks at a lender's reports detailing reasons for credit approval and denial. If too many applicants are being rejected, the lender might need to revise its lending standards.



    List all of the categories that will appear on the report. These can include but are not limited to the applicant's name, age, race, ethnicity, gender, amount of money applied for, date of credit application and purpose of loan.


    Write down the reasons for denial when an applicant does not qualify for a loan. When loan applicants are denied credit they are entitled to a letter explaining why. Reasons include but are not limited to insufficient credit history, insufficient income, history of late payments, too much revolving debt, lack of collateral or insufficient time at a job.


    Prepare monthly statistics. All of the applicants that apply for credit in a given month should be listed on separate reports. At the end of the month, compile a statistical report on the number of applications that have been denied and approved, and for what reasons. This will help you spot trends on whether the percentage of denials goes up or down, or remains pretty constant. It will also let you know whether any particular demographic group is getting a higher-than-normal number of denials, and why.

Can Anyone Turn in an Account to a Collection Agency If You Are Paying on That Account?

When you cannot afford to pay off a debt, your account could eventually be turned over to a collections agency in an attempt to collect the money you owe. While this is common if you are not making payments, in some cases, your account can be turned over even if you are making regular payments.

Lower Than Minimum Payment

    Just because you are making a payment, that does not necessarily mean the creditor won't turn you over to collections. For example, if you have a minimum payment of $100 on your credit card statement and you only send in $50 each month, the credit card company will not stand for this. After a few months of doing this, the credit card company will then turn your account over to its collections department.

Agreed-Upon Terms

    With other types of debt, in which a minimum payment amount is not established, you will need to agree to payment terms to avoid having your account sent to collections. For example, if you accumulate $10,000 in medical debt and then you randomly start sending $10 per month to the medical provider without setting up a payment plan, the medical provider could send your account to collections. You must set up a payment plan with the creditor detailing how the money will be paid.

Time Frame

    Typically, a creditor will take some time before your account is sent to collections. Your account will not be sent after a single payment. In most cases, the creditor will wait three to six months before it charges off your account. When your account is charged off, it does not mean that you do not still owe the money. Instead, your account will simply be sold to a collections agency and then you will have to pay the money you owe.


    Once your account is turned over to a collections agency, you should do your best to handle the debt. Talk to the collections agency about setting up a payment plan that you can work with. If you do not pay off the debt, the collection agency could file a lawsuit against you in civil court. When this happens, you could have a judgment issued against you by the court. This could then result in a bank account levy or wage garnishment to repay the debt.

How Will Debt Consolidation Affect Your Credit Score?

Debt consolidation is just one of many potential solutions for your credit card debt. However, as with all other options, it's important to understand the impact that debt consolidation can have on your credit score. Depending on your level of discipline, debt consolidation can either help improve your score, or it can help to destroy your score.

Debt Consolidation

    Debt consolidation is a way to get all of your different credit card bills combined into one monthly payment. In debt consolidation, you take out a loan -- usually a home equity loan or a personal loan -- and use the funds from the loan to pay off your credit cards. Your credit accounts remain open and are fully paid off, and you are only responsible for paying off the loan.


    If you have a lot of different credit cards with balances, debt consolidation may be an appealing option for you. Going this route can save you the headache of remembering which bills are due on which dates, then having to make those payments on time. In addition, a debt consolidation may result in a lower interest rate than you're currently paying for your credit cards, which can help your credit score because you can use your extra cash, not your credit cards, to pay your bills.


    The biggest problem with a debt consolidation is that it doesn't do anything to help you get out of debt. Instead, it just replaces one type of debt with another. Worse yet, it leaves you with the opportunity to rack up your credit cards once they're paid off, which happens to many people who go through the debt consolidation process. Should you end up in this situation, you'll not only be in the same hole you were once in, but it'll be worse because you'll have to worry about paying the consolidation loan as well. This can tarnish your credit score because you'll have too much debt outstanding and too many creditors to pay. Unless you can stick to a budget that minimizes the use of credit cards, consolidation might be a dangerous trap.


    If you're wary of doing a debt consolidation, but still want to pay down your credit card debts, you can choose an alternative means of managing your debt. If preserving your credit score is a priority, a debt management program is your best option. In this type of arrangement, you make your payments to a company that pays the credit card companies on your behalf. Though you'll likely have to close out your credit accounts, which does hurt your score, you'll receive better interest rates in the process, and the string of on-time payments you'll build will improve your score over time.

    If your credit score is not a priority, options like bankruptcy and debt settlement can help you to get out of debt. However, these methods will leave your credit in ruins for years to come and should be avoided unless there is no other alternative.

Thursday, October 11, 2007

Whom Do I Ask Questions About My Credit Score?

Whom Do I Ask Questions About My Credit Score?

The chorus of financial advice in the media can quickly turn into a cacophony. It comes at you from all directions, and without proper knowledge, separating the wheat from the chaff can be very difficult. Properly evaluating credit advice requires a sound understanding of the limitations of what credit consulting agencies can do for you and resources provided by state and federal government.


    The credit advice market has become large. It's easy to find companies and consulting agencies that claim to be able to repair your credit in a short period of time. If you have bad credit, these claims can seem enticing. If you're considering paying large amounts of money for these services, consider what the credit reporting agency Experian says: "There is nothing any credit repair clinic can legally do for you --- including removing inaccurate credit information --- which you can't do for yourself for free." It's prudent to treat audacious claims with skepticism.


    When evaluating credit advice, it helps to know where your credit score comes from in the first place. That would be the Fair Isaac Corp., or FICO. Your FICO score is then calculated by three separate credit reporting agencies, TransUnion, Experian and Equifax. A credit education center on FICO's website covers what's included in your score, facts and fallacies about your credit score and how to repair your credit score.

Federal Government

    Government agencies like the Federal Reserve and Federal Deposit Insurance Corp. have consumer guides on how to manage your credit. The Federal Reserve has a section on its website that gives advice on common credit questions and how your credit information can be used. It also provides a guide on other consumer protection laws. The FDIC has a consumer protection section on its website. It leads you to a site called MyMoney, which has a section devoted to managing credit and debt.

Outreach Programs

    Many state governments provide outreach programs for its residents. For example, Ohio has regular free seminars on financial literacy that cover topics such as debt management and investing and target audiences such as women, minorities or seniors. In addition to outreach programs, most state treasury websites have sections devoted to financial education. State and local governments are also good places to verify credit repair agencies since most business licensing is done on the state level.

Wednesday, October 10, 2007

Consumer Credit Report Assistance

Some companies offer credit report services to consumers that range from providing identity theft protection to fixing credit report errors. However, there is credit report advice available free online that shows consumers how to get copies of their reports, how to read them and how to correct errors with credit-reporting companies.

Free Reports

    An Associated Press report says identity theft was the top consumer complaint filed with the U.S. Federal Trade Commission for the eleventh year in a row in 2010. The AP article, titled "Fighting ID Theft? It Doesn't Have to Cost You," says such data usually causes companies to step up their marketing efforts for credit-monitoring services, which can cost as much as $180 per year. However, consumers can monitor their own credit reports without charge by requesting reports from the national credit-reporting companies through Annualcreditreport.com (see Resources). According to the FTC, one of the best ways to detect identity theft and prevent its damage is to check your credit reports regularly to spot loan or credit account activity that you didn't authorize.


    Fair Isaac Corporation developed the FICO credit score used by lenders and others to determine consumers' creditworthiness. The company's website provides information on how your financial decisions affect your credit report and your credit rating. The credit bureaus calculate your credit score based on the information in your credit report. For example, your payment history affects 35 percent of your FICO score, so you can build a good credit rating by consistently paying all of your bills on time. The negative impact of past late payments on your FICO score lessens over time as more recent, on-time payments appear in your credit report.

Reading Credit Reports

    It's important to understand how to read your credit reports as you review them to find possible errors. A Bankrate article, titled "How to Read and Understand Your Credit Report," explains what type of information is in a typical report and how the credit bureau documents it. For example, some reports are in what Bankrate calls plain English. This is because they include easy-to-understand notations, such as "never pays late." Other reports may use codes such as "R1," which indicates a good payment history on a revolving account. Credit cards are revolving accounts because cardholders don't have to pay off their balances each month.

Fixing Credit Reports

    The FTC website details how consumers can dispute errors in their credit reports. The FTC notes that credit-reporting companies must investigate items that consumers dispute within 30 days. However, the FTC says companies aren't obligated to investigate frivolous complaints. It's important to back up a dispute by sending the companies copies of supporting documents to bolster your case. For instance, send copies of canceled checks demonstrating that you made payments before their due dates if a credit report incorrectly states that you were late.