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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..

Thursday, January 31, 2008

When Can You Repo on a Default With a Texas Promissory Note?

A promissory note is an agreement you sign when you purchase property using a loan, such as a car, furniture or electronics. The promissory note is an agreement to make payments on the the item purchased, and that the creditor has the right to recover the property if you default on the loan. Texas law permits repossession of collateral upon default of a signed promissory note.

No Waiting Period

    Texas law does not establish a waiting period for repossession of collateral after default on a promissory note. The borrower is in default the day after he misses a payment. However, most lenders choose not to repossess collateral immediately after a missed payment. Repossessing collateral is expensive, and reselling the property typically results in a financial loss -- although you may file suit against the borrower for your repossession and resale costs, you may never recover these costs if the borrower lacks the funds to pay you.

No Notice Requirement

    Once you determine that repossessing collateral securing a defaulted promissory note is the appropriate choice, you may repossess the property immediately. Texas law does not require you to give the borrower notice before repossessing the property. Giving the borrower notice gives the borrower an opportunity to hide the property -- although this act constitutes a crime under the Texas Penal Code, borrowers may use this strategy to delay or prevent repossession.

Method of Repossession

    Texas law does not dictate the manner for the repossession of collateral. It only specifies that repossession activity must not constitute a breach of peace. You cannot engage in physical contact with the borrower to obtain access to collateral. Also, entering the borrowers property, which includes a garage, shed or other storage area, without the borrower's permission constitutes a breach of peace.

Notice After Repossession

    In Texas, you may sell the property after repossession to recover your loss. However, if you plan to sell the property at a public auction, you must give the borrower written notice at least 10 days before the sale. The notice must contain the time, date and location of the sale. The notice gives the borrower the opportunity to regain possession of the collateral by paying the full balance due, along with repossession, storage and other related costs.

When Does a Debt Become Uncollectable?

When you rack up a debt with a creditor, that creditor has a legal right to try to collect it from you. At some point, if the debt is not collected, it can become uncollectable for the creditor. A few different types of circumstances could lead to a debt becoming uncollectable.

Statute of Limitations

    One scenario in which a debt could become uncollectable is when the statute of limitations runs out. Every debt has a statute of limitations associated with it. This is the amount of time in which the debt is legally collectible. If this amount of time passes without the creditor getting a judgment or collecting the debt, the creditor can no longer legally enforce you to pay the debt. Every state has its own statute of limitations laws. Some states have limits of two years while others have limits as long as 15 years.

Debt Settlement

    A strategy that is commonly used in the debt industry is that of debt settlement. A debt settlement is a method that involves paying a lump sum of money less than what you owe, and the creditor accepts it as payment in full. For example, you owe $10,000 on a debt and the creditor accepts $6,000 to close your account. At that point, the remainder of the debt is not collectible on the part of the creditor.

Bankruptcy Discharge

    Another scenario that could lead to a debt not being collectible is a bankruptcy discharge. When you file for Chapter 7 bankruptcy, the court issues an order of automatic stay. Once this order is issued, it means that your creditors can no longer try to collect debts. Then at the end of the bankruptcy process, the court will issue a debt discharge, which legally erases your debts included in the bankruptcy. Once this happens, your creditors can never try to collect on the debts again.

Credit Damage

    Even if a debt is not eligible for collection, it does not mean that the creditor cannot still hurt your credit. When an account is written off as a bad debt, it shows up on your credit report as a negative item. These negative items can stay on your credit report for seven or 10 years, depending on what type of item it is. This can make it hard for you to get other types of credit in the future.

How to Lower Credit Card Interest Rate

How to Lower Credit Card Interest Rate

If you have a high credit card interest rate, with a single phone call to the card issuer you might be able to secure a lower rate. A six-month history of timely payments and overall responsible management of your account may be all that you need to persuade a listening customer service representative that your request has merit.

Instructions

    1

    Gather all credit card statements for the past six months. Make note of your extended credit to used credit ratio; how many times out of the past six months you paid your bill on time;
    how many times over your history with the card you have paid on time; if you have ever maxed out or exceeded your credit limit; your current interest rate and what you would like it to be.

    2

    Call the credit card issuer. When connected to a customer service representative, explain that you are calling to request a lower interest rate.

    3

    Listing reasons that you should be given a better rate.

    4

    Wait for the customer service representative to review your account and consult a manager. If asked how much you would like your rate lowered, request a decrease of no more than 10 percentage points.

    5

    You will probably be put on hold again while they factor this number into their calculations before they return with the verdict. There are three possible outcomes:
    1) They will say they are unable to lower your rate at this time
    2) They will say they can lower your rate a few points, but not to the amount your requested
    3) They will lower your rate to your requested amount

    6

    Ask the customer service representative to send you a letter detailing the new change to your account and your new interest rate.

    7

    Build your case by making payments on time and lowering your debt amount and try again in three months if the credit card issuer declines to lower your rate.

Wednesday, January 30, 2008

Can Collection Agencies Garnish Your Income Taxes?

A collection agency is a company that seeks to collect repayment on overdue debts. A collection agency will either be hired by a creditor and seek repayment of a debt on commission, or it will purchase old debts itself for a low price, then attempt to collect them. Collection agencies have many ways of encouraging debtors to pay what they owe, including garnishment of wages. However, in nearly all cases, a collection agency cannot garnish a person's income tax refund.

Garnishment

    Garnishment is the process by which a debtor's income is diverted to a creditor to pay off a debt. Many collection agencies will file a motion in civil court to garnish a debtor's wages. To do this, the agency must first sue the debtor. After a judge issues a civil judgment against the debtor, the creditor can file a motion seeking an order of garnishment. However, this order cannot usually be applied to income tax refunds.

State and Federal Laws

    Both the Internal Revenue Service, the government agency responsible for collecting taxes in the United States, and the lion's share of state tax agencies do not allow private creditors to garnish income tax refunds. While certain state and federal agencies may be allowed to take possession of a person's tax refund, particularly if the person owes back taxes, this same option is not available to a private creditor, such as a collection agency.

Michigan Law

    As of December 2010, the only state that allows private creditors to apply for the garnishment of an individual's income tax refund is Michigan. To do so, the collection agency must apply to the Michigan Department of the Treasury. Only state income tax refunds can be garnished, as the state of Michigan has no jurisdiction over federal income taxes. This garnishment will only be granted after the debtor has been given a chance to respond to the order.

Considerations

    While an income tax refund cannot, in most cases, be directly garnished, this does not mean that the money is exempt from seizure. Income derived from certain kinds of government benefits, such as Social Security benefits, cannot be garnished by private collection agencies. However, this does not apply to tax refunds. Therefore, if a tax refund is placed in a bank account, the collection agency could conceivably convince a judge to freeze the bank account and then seize the funds therein.

Can Credit Cards Be Used If You Consolidate?

Can Credit Cards Be Used If You Consolidate?

Debt consolidation may seem like an easy way of getting your debt under control; however, consolidation loans must be used with caution to prevent further financial anguish. While you may continue to use your credit cards while on a consolidation loan, doing so only creates more debt. Canceling your credit cards would be a mistake because it might damage your credit score -- but using them can be a mistake as well.

Debt Consolidation

    When you take on a debt consolidation loan for your credit card debt, it pays off your credit card balances, and as a result you only need to make one payment per month. Aside from the convenience of making only a single monthly payment, debt consolidation loans may have lower interest rates than credit cards. However, although consolidation loans may be offered at very low interest rates through advertisements, those rates are usually only given to people with excellent credit.

Credit Card Use

    When the debt consolidation loan clears your balances, your credit is actually freed up and you may use it. However, using your newly freed credit is actually one of the biggest reasons that debt consolidation fails as a method of paying off your debt. In a Bankrate article by Jenny McCune, a credit union manager named Chris Viale points out that over 70 percent of people who take on consolidation loans end up with the same or more debt within two years of accepting the loan. It is, therefore, unwise to continue using your credit cards when you've taken on a consolidation loan.

Discipline

    When you take on a debt consolidation loan, you must consider whether you are truly committed to paying off your debt, or if you're just looking for a way to get more credit. Taking on a consolidation loan simply to give yourself more breathing room is like treating the symptoms of a disease rather than the root problem. If you are spending on your credit cards while utilizing a consolidation loan, you are only making the problem worse. Those who are truly committed to paying off their debt will lock up their credit cards to prevent themselves from spiraling further out of control.

Considerations

    When lenders see a consolidation loan on your credit report, it demonstrates that you had difficulty making payments in the past. On top of that, if you continue to spend on your credit cards, you are further demonstrating your inability to control your finances. As a result, you may have difficulty obtaining new credit in the future. For those who cannot trust themselves to pay off their debt with a consolidation loan, asking creditors for lower interest rates may be a more effective way of getting control of debt.

Tuesday, January 29, 2008

Information on Consumer Debt Counseling

Information on Consumer Debt Counseling

Consumer debt counseling is a process that may help struggling consumers to manage and pay off their debt. Consumer debt counseling helps to make the debt more manageable while protecting a consumer's credit score from significant damage. Before beginning a debt counseling program, consumers should understand how these programs operate, what alternatives are available and what to look for from a provider.

How it Works

    Consumer debt counseling includes a number of components designed to assist and educate consumers. When applying for help, consumers will provide information to the counselor on their income, debts and living expenses. The debt counselor will use this information to help the consumer develop a monthly budget, as well as negotiate with the creditors on the amount of the monthly payment and interest rate charged on the accounts. Consumers typically pay their debt payments in one monthly sum to the debt counselor who then pays the creditors. Debt counseling typically includes educational classes on financial topics designed to help consumers plan their financial future and avoid future debt.

Fees

    The fees charged by a debt counseling service will vary depending on a number of factors. Many nonprofit debt counselors will even waive all fees in some situations. Consumers should avoid startup or monthly fees in excess of $50 or providers that keep the entire first month's payment as a fee. A reasonable monthly fee for the counseling services will be around $25, as of 2011. Debt counselors should provide written documentation of all fees to the consumer before services begin.

Choosing a Provider

    The largest provider of consumer debt counseling services are nonprofit agencies affiliated with the National Foundation for Consumer Counseling, NFCC. While many companies in the debt counseling field have been targets of government investigations and sanctions, many NFCC affiliated providers receive referrals from government entities including bankruptcy courts and the Department of Housing and Urban Development. This does not mean that NFCC providers are the only legitimate choice, but affiliation is a positive indication. Before choosing any debt counseling provider, consumers should investigate the company with the Better Business Bureau and their state's attorney general.

Alternatives

    The two primary alternatives to debt counseling are debt settlement and bankruptcy. In debt settlement, debt settlement providers negotiate a lower payoff amount with the creditor. In bankruptcy, consumers petition the courts for relief from their debt. In both cases, the consumer's credit score suffers, which may result in an inability to borrow for many years. A damaged credit score may also impact insurance rates, job opportunities and the ability to rent an apartment. Consumers may also successfully negotiate with creditors themselves.

How to File a Lien on a Car

If someone owes you money, attaching a lien to a car owned by the debtor may be an available legal remedy to secure payment. A car lien may be filed if the owner owes you for repairs completed on the vehicle or its storage. You may also be entitled to attach a lien to a vehicle if you have obtained a judgment against the debtor for a civil debt. State laws and procedures will vary; however, there are some common steps generally required for both situations.

Instructions

Judgment Lien

    1

    Obtain a judgment against the owner of the car. A judgment will result from the successful litigation of a lawsuit filed against the vehicle's owner. The court will enter a monetary judgment against the owner if you win the lawsuit.

    2

    Request a writ of execution, or similarly named document, from the court where you obtained the judgment. A writ of execution allows you to locate and use any of the debtor's property allowable under your state's laws to satisfy the judgment.

    3

    Locate the vehicle. You may already know where the vehicle is usually parked or stored. If not, you may be able to request a list of vehicles registered to the debtor from the state department of motor vehicles.

    4

    Direct the local sheriff's office to serve the writ of execution on the debtor at the address where the vehicle is located. As a rule, once the sheriff serves the writ of execution, a lien attaches to the car. You may then have the option to seize and sell the car or simply allow the lien to attach. If you do not seize the car, the debtor will have to pay the amount of the lien before she can sell the car.

Mechanic/Repairman's Lien

    5

    Prepare a detailed invoice for the charges due on the vehicle.

    6

    Notify the owner that you intend to place a mechanic's or repairman's lien on the vehicle as a result of the unpaid invoice you prepared. You must notify the owner by certified mail at the address listed with the department of motor vehicles in most states. Notification must be sent a specific number of days before the scheduled auction. The required time frame will vary by state.

    7

    Publish the mechanic's or repairman's lien and pending auction in a local newspaper prior to the auction. Again, state laws will vary with regard to how many times you must publish the notice and how far in advance you must publish it.

    8

    Sell the vehicle at a public auction. Your lien will then entitle you to payment for the charges due out of the sale proceeds. You will need to comply with your state's laws regarding titling a vehicle with a mechanic's lien. Typically, you will need to provide the buyer with proof of the notice sent to the owner and publication as well as fill out an affidavit so the buyer can register and title the vehicle.

The Laws in the State of Texas if You Don't Pay Your Credit Cards

Texas laws are friendlier to debtors than many states. If you stop paying your credit card bills, the company has only a limited ability to impose a lien on your property or take your wages. Texas law also limits the methods credit-card companies and debt collectors can use to talk you into paying up. The federal government has similar restrictions but Texas applies them more broadly, affecting both debt collectors and the creditor company itself.

Judgments

    Credit cards don't come with collateral the company can seize. If you can't or won't pay your debt, the company can try collect by suing you for a court judgment stating you owe the money. Under Texas law, the judgment can include court costs and attorney fees on top of the original debt and interest. In most states, your creditor can then file a lien -- a claim -- on your house or try to garnish your wages. Texas law makes that much harder.

Liens

    Texas law doesn't allow creditors other than mortgage lenders to file a lien on your home, if it's under one acre in a town or 200 acres in a rural area. It also prevents credit-card issuers from garnishing your wages. The law also exempts up to a total $30,000 of property from seizure -- $60,000 if you're married -- including furnishings, pets, work tools and one vehicle per family member. Unless you have a second home or other vulnerable property, it may not be worthwhile for the company to get a judgment.

Communication

    If the company or a debt collection agency contacts you directly about your credit card bill, you can write a certified letter telling the company to stop calling or writing. The company can only contact you again to announce what action it's going to take. If you have a lawyer handling the matter, you can also tell your creditor to talk to your attorney instead of you. None of these actions makes the debt go away or stops the company taking you to court.

Tactics

    Creditors and debt collectors aren't allowed to lie: They can't pretend to represent law enforcement, can't overstate how much you owe and can't threaten to jail you or take your house if they have no right or intention to do it. Callers can't use foul or offensive language, call you at unreasonable times, or threaten you with violence. While credit card companies can and will notify credit bureaus of your default, they can't publicize it to your friends or employers or threaten to do so.

Monday, January 28, 2008

California Law on Bill Collecting

California Law on Bill Collecting

Taking the time to understand California's laws on bill collecting can teach you how to respond to collection agents when they contact you and help you recognize if an agency is using abusive or unfair tactics. The California Fair Debt Collections Practice Act prohibits bill collectors from threatening you with physical violence or adding excessive interest charges to a debt you owe. Report collection agencies who violate the law to the state Attorney General's Public Inquiry Unit and the Federal Trade Commission.

Contact with You

    Bill collectors may not harass you by making a high number of phone calls within a brief period or call you at inconvenient times such as before 8 a.m. or after 9 p.m. It is also against the law for them to call you at work if you tell them your boss does not permit such calls. You can stop the phone calls by requesting in writing that the collection agency cease all communication with you.

Abusive Tactics

    A collection agent is prohibited from using obscene or abusive language and cannot physically threaten you or remove or damage your possessions in order to collect a debt. A collection agency may not embarrass you by publishing your name and the amount you owe in a public place or send mail to your workplace that identifies on the envelope it is a collection agency. The agent telephoning you must identify himself to you and cannot trick you into accepting a collect call by claiming to be someone else.

False Representation

    According to California law, a collection agent cannot use a false business name or claim to be a representative of law enforcement or a credit reporting agency employee or suggest he is connected to the government. Collection agencies may not send you any document designed to look like it came from an attorney or courthouse. They also may not communicate false information to a credit agency such as failing to report your dispute of a debt.

Third-Party Communication

    A collection agency cannot contact other people to discuss the terms of your debt unless it is your spouse, a co-debtor or your attorney. Collectors may contact your employer in writing to verify your employment or business location or garnish wages if a judgment has been entered against you. If an agent has not heard from your employer within 15 days of the first contact, other means of communication can be used.

Unfair Practices

    It is illegal for a collection agent to add charges or interest fees of more than 10 percent to a debt unless stated in the original agreement with the creditor, according to California law. It is considered an unfair practice for an agency to accept a check postdated for more than five days unless you are notified within three to 10 business days in advance of when it is deposited.

Report Law Violations

    Report any law violations to the California Attorney General's office and file a complaint with the Federal Trade Commission if you believe your rights have been violated by an agent or the agency in the collection of a debt. If you can show documentation or have witnesses, you can sue a collection agency for harassment and for violation of the Fair Debt Collection Practices Act and may win up to $1,000 for any FDCPA violation.

How to Get Out of Debt Without Bankruptcy

How to Get Out of Debt Without Bankruptcy

When consumers are in dire financial straits, they will often consider filing for bankruptcy to alleviate their financial woes. However, a bankruptcy can have significant long-term impact on a consumers financial profile. In some cases, bankruptcy is unavoidable. However, researching all of your options is imperative to ensure that you will make the best decision for your situation. Understanding how to get out of debt without filing for bankruptcy will better prepare you for this decision.

Instructions

    1

    Open your spreadsheet program and list all of your debts. Create a column for the debt account name, account number, balance, minimum payment and payment address information. If you do not have a spreadsheet program (like Microsoft Excel) consider downloading an open source spreadsheet program like that found in Open Office. Open source software is free and community supported.

    2

    Organize your debt by type of debt. You will want to list secured debts at the top of the list and unsecured debt at the bottom.

    3

    Keep your mortgage or rent payment up-to-date. If you do not make enough income in a month to meet all of your monthly debt obligations, it is important to not let your home payment fall behind. You need to have a place to live. The same holds true for utilities.

    4

    Call your student loan lender if you have student loans as part of your debt load. If your financial situation is such that you are considering bankruptcy, it is likely that you will qualify for a hardship deferment of your student loans. If you do not qualify for a deferment, ask your student loan lender about a forbearance. This will allow you to forego making your monthly minimum payment on your student loans for a set period of time. The extra money you have per month may be just enough to prevent you from needing to file for bankruptcy.

    5

    Consider selling cars that have a high balance or a disproportionately high monthly payment. Although automobiles are a necessary in many situations, a car with a high payment is not. A $2,000 car will go a long way and the $500 a month you save by selling your financed car may prevent you from filing for bankruptcy.

    6

    Contact your credit card companies to ask about an interest rate deduction or other hardship plan. If you are unable to make your current monthly minimum payments, some credit card companies are willing to work with you. It is important to understand that the credit card company may close your account as a result so inquire about the effects of such an agreement.

    7

    Get a second job. Depending on the hours that you work during your main job, getting a second job may be a great way to help you get out of debt more quickly and avoid bankruptcy. Naturally you will be tired but if you look at the second job as a temporary process that expedites your get-out-of-debt plan then it will make the extra hours a bit easier to handle. Delivering pizzas part-time can net some employees an easy $1,000 in a month.

    8

    Cut out luxury expenses. Expanded cable is a luxury and can run upwards of $50 per month with some carriers. If your financial situation is dire, this $50 per month will come in handy. Look through all areas of your life where you can cut out the extras.

    9

    Budget your money. Create a budget for every month and stick to it. If you budget $300 for groceries, do not spend extra. Plan your meals and bargain shop in order to stay within that $300 budget.

    10

    Stay focused. By following the steps detailed here, you will be able to get out of debt without having to file for bankruptcy.

How to Clean Up Your Credit Quickly

Making some key moves could help you quickly clean up your credit, but don't expect an instant makeover. The Federal Trade Commission reports that the passage of time is the best cure for past credit problems, and that no one can fix your credit overnight. While overnight success may not be possible, you can significantly improve your credit in about 30 to 60 days. That's roughly how long it takes for improvements in your credit to be updated on your credit report and to be reflected in your credit score.

Instructions

    1

    Get a copy of your credit report from Annual Credit Report--a website operated by major credit bureaus Experian, Equifax and TransUnion. The credit bureaus established the site to offer free credit reports as required by the Fair Credit Reporting Act. You're entitled to three free reports every 12 months--one from each of the bureaus. View and print your report from the website (see Resources).

    2

    Review your credit report for errors. Having wrong information removed from your report could result in a quick increase in your credit score. Write a letter to the credit bureau complaining about any errors. Mail the letter to the credit bureau at its address listed on the credit report. The Fair Credit Reporting Act requires the bureaus to remove wrong information after receiving a complaint from you.

    3

    Make payments to bring all open accounts showing as past due current. Also resolve any accounts sent to debt collection agencies. Contact the debt collector and offer to make payment in full in exchange for the item being deleted from your credit report.

    4

    Review your credit report in about 60 days to track your progress.

Damage to Credit Scores for Credit Card Debt

Damage to Credit Scores for Credit Card Debt

Your credit score is dependent upon numerous factors, and how you use your credit cards impacts many of them. While using a credit card wisely and responsibly can increase your credit score, using it irresponsibly is sure to lower your score. Knowing how a credit score is determined and what credit card actions will lower your score is important if you want to keep the best credit score possible.

Credit Score Factors

    A person's credit score is based on several factors, such as the number and variety of credit accounts she has, the average length of those accounts, the percentage of her available credit she has used and her history in paying debt payments on time. Different companies use different calculations to compute credit scores, but certain activities typically damage a credit score regardless of the calculation used.

Late Payment

    The largest factor, according to FICO, of any person's credit score is his history of bill payments. If you use a credit card and charge anything, even a small amount, and then later fail to pay the bill on time, this late payment will damage your credit score. Yahoo Finance reports that even a single late payment, regardless of the amount missed, can lower a FICO score by between 60 and 110 points.

Charging a Lot

    When you use a credit card, it's important to keep the amount of the balance as low as possible if you don't want to damage your score. Yahoo Finance reports that maxing out a credit card, meaning carrying a balance equal to your credit limit, results in a 10- to 45-point loss to your credit score. Kiplinger reports that keeping your balance below about 20 percent of your available credit is the best way to ensure you do no damage to your score by using your card.

Settlement

    While not paying back your bills is bad, agreeing with your credit card company to enter into a debt settlement program is even worse for your score. Yahoo Finance reports that any time you agree to a debt settlement, which is a situation in which the creditor agrees to accept less money than you actually owe, your score suffers dramatically. A person who agrees to a debt settlement can see her FICO score lowered by between 45 and 125 points.

Sunday, January 27, 2008

Does a Bankruptcy Affect a Potential Marriage Partner?

If you have become so deeply buried in debt that you cannot foresee ever restoring your finances, and creditors are calling and sending collection letters every day, bankruptcy may represent an option for a fresh start. Bankruptcy takes a severe toll on your creditworthiness; however, it can help relieve severe financial stress. If you plan to get married soon, though, keep in mind that bankruptcy not only affects you but also indirectly affects your potential marriage partner.

Credit Availability

    A bankruptcy can affect your personal credit for up to 10 years. Although the severity of a bankruptcy's impact on your credit score diminishes with time, you will likely be unable to obtain a credit card, auto loan or mortgage during the first two years after filing for bankruptcy protection. This means that you will have to rely on your spouse's credit to obtain loans and credit cards. Reliance on one spouse's credit can elevate her debt-to-income ratio, which can negatively impact her credit score.

Securing an Apartment

    Filing for bankruptcy protection may hinder your efforts to lease an apartment when you get married. Landlords and rental agencies commonly use credit information as part of the applicant evaluation process and may refuse to lease you an apartment, even if your spouse has a high credit score, or they may accept you with a higher security deposit. You may have to lease a less desirable apartment for the first two years after bankruptcy, which can put a strain on the marriage.

Household Income

    Creditors and landlords are not the only people who will use your credit information -- employers also commonly review credit files before deciding whether to hire an applicant. Although a potential employer cannot legally refuse to hire you solely because of a bankruptcy, the hiring manager can work around the law by finding another reason. Not having a job can definitely undercut marital bliss.

Considerations

    Although bankruptcy can affect your potential spouse in several negative ways, it may also offer him benefits. He will not have to deal with collection calls and letters after you get married. He will not have to deal with your debt, so he can save for purchases such as a car or a home, providing a larger down payment when your credit improves. Also, you can focus on your marriage instead of constantly worrying about debt.

How Long Can I Receive Unemployment Benefits Before I Have to Accept a Lower-Paying Job?

Often, when a person is fired from his present work, he will be eligible to go on unemployment. This means that the person receives a regular check from his state government, one that allows him to meet day-to-day expenses while he tries to re-enter the workforce. However, benefits are not meant to be permanent, and a person receiving them will generally be required to take a lower-paying job if it offered to him.

Unemployment Benefits

    Unemployment benefits are not meant to be a substitute for work, but are rather meant as a safety net to catch people who have lost their jobs and do not presently have any income coming in. When a person receives benefits, he must continue to look for work and he must take any job that he is offered for which the unemployment agency deems him qualified. Sometimes, this job will pay less than his previous job.

Searching for New Work

    A person must always be searching for new work when he is on unemployment. Many states actually required that a recipient of benefits record and submit a record of his search for work. In addition, the agency will require that a person not decline any job that he is offered as a result of this search, so long as he is qualified. However, the definition of qualification is not always consistent.

Accepting Jobs

    A person must accept a job for which he is qualified. This means that the person does not need to accept a job that is considered to be below his qualifications. For example, a person who has been trained as a doctor will not be required to take a job at a fast food restaurant if offered to him. However, what jobs a state believes a person is qualified for will vary.

Time Limits

    A person can only receive benefits for a limited amount of time. The amount of time that a person can be on unemployment will shift regularly depending on the current laws passed by Congress and state legislatures. As of April 2011, people in most states can receive unemployment benefits for a maximum of 99 weeks. However, workers who file in Michigan can receive benefits for only 93 weeks.

Saturday, January 26, 2008

How to Find Out Your Debt to Income Ratio

The debt-to-income ratio is your total monthly debt and housing payments divided by your gross monthly income, expressed as a percentage. It tells you how easily you can make your monthly payments. A high ratio may indicate that your monthly expenses are becoming unmanageable, which may discourage lenders from lending you any more money.

Instructions

    1

    Add your monthly debt payments, such as credit card bills, car loan or lease payments, student loan payments and minimum payments on lines of credit.

    2

    Add your monthly housing expenses. Start with your monthly rent payments or mortgage payments (principal, interest and insurance), depending on whether you rent or own your home. Add applicable condo fees and property taxes. Do not include expenses for food, clothes or travel.

    3

    Calculate your total monthly payments by adding the debt payments and housing expenses. For example, if your debt payments are $100 and housing expenses are $75, your total monthly payments are $175.

    4

    Calculate your gross monthly income, or income before taxes. Add your annual gross income from all sources. Divide that number by 12 to get your gross monthly income.

    5

    Calculate your debt-to-income ratio. This equals the debt and housing payments divided by the gross income, expressed as a percentage. To conclude the example, if your monthly income is $500, the ratio equals $175 divided by $500, expressed as a percentage, or 35 percent.

    6

    Monitor this ratio regularly. Take steps to lower it if it's 40 percent or higher. Increase the monthly debt payments. Avoid taking on more debt. Maintain as close to a zero balance on your credit cards as possible. Postpone major purchases until you have built up some savings.

Does Negotiating Down Your Credit Cards Hurt Your Credit?

Sometimes, when a person owes a large debt to a creditor, rather than pay off the debt, he will attempt to settle with the creditor for a lesser amount. If the creditor accepts, the debtor will only be legally obligated to pay a portion of the amount he originally owed. This agreement is often preceded by a period of negotiation. While the negotiation itself does not harm a person's credit rating, receiving a settlement often does.

Credit Reports

    A person's credit score is determined using all of the data listed in that person's credit report. This information is reported by creditors, such as credit card companies, that have extended the person credit. The report only contains information about the size of a person's debts and their disposition, such as whether the person has paid back the loan on time. A failure to pay back a loan in full will harm a person's score.

Negotiation

    Negotiating with a credit card company about a settlement does not, by itself, harm a person's credit score. The credit reporting bureaus that maintain a person's credit report will have no knowledge of this negotiation. If the individual has already missed a payment on the credit card debt, her score will have been negatively affected. The person's credit score is only harmed if, after the negotiations, the debt is settled.

Write-Offs

    When a person negotiates a settlement with a credit card company, the credit card company reports the settlement to a credit reporting bureau as a write-off. This means that the individual paid back only a portion of the debt that he owed the creditor. Any time that an individual fails to pay back less than the full amount of the debt, his credit score will be harmed, although exactly how much will depend on the size of the debt.

Credit Reporting

    Although a credit card company will usually report the debt as a write-off to credit reporting bureaus, it is not legally obligated to. If it wished, the company could report the debt as having been paid off in full, which would do no harm to the individual's credit score. For this reason, some individuals may make it a condition of the settlement that credit card companies report the debt as paid in full rather than partially written off.

How to Settle Your Debt for Free

How to Settle Your Debt for Free

Consumers oftentimes find themselves in a situation where they have more debt than they can afford. The good news is that many consumers are responsible and would rather find a way to honor their debts if they can. The bad news is that many have been led to believe that the only way to settle a debt is to pay someone to do it. The truth is, you can settle most debts yourself for free by making one simple phone call.

Instructions

    1

    Order a copy of your credit report. The Fair and Accurate Credit Transactions Act (FACTA) entitles you to one free report every year from each of the three major credit bureaus: Experian, Transunion and Equifax. On the report, look for accounts that have been charged off or referred to a collection agency.

    2

    Send a Debt Validation Letter (DV) to each account held by a collection agency. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are required to provide proof that the debt actually belongs to you and they must cease collection of the debt until they do so. They are not allowed to report the debt to the credit bureaus until they have completed validation. A DV request must be made within 30 days from the date the collection letter was initially sent to you.

    3

    Calculate how much you owe each creditor. Make sure you use the correct balance, including late fees, interest and any other miscellaneous charges that are still outstanding. Write this amount down on a sheet of paper next to the creditor's name for easy reference.

    4

    Determine the highest dollar amount that you are able to pay towards each of these debts. This will be the amount that you offer to the creditor as settlement in full.

    5

    Call each creditor and request to speak to someone in a position of authority. Most customer service reps don't have permission to accept offers, but their supervisors do. Inform the supervisor of your intent to settle. Direct calls to the original creditor if they still own the debt; if not, call the collection agency.

    6

    Offer a partial payment initially and not the full amount. If you can pay two hundred dollars on a three hundred dollar debt, start the discussion at one hundred. You want to leave room to negotiate. The company may accept your initial offer, or they may provide a counteroffer; this is why it's important to begin with a lower dollar amount.

    7

    Request written confirmation of the agreement from the creditor. Do not give out your checking account information over the phone. Once you receive the letter, send a cashier's check or U.S. Postal Money Order to them via certified mail. Include a copy of the letter along with your payment. Repeat this process for each of your debts.

Friday, January 25, 2008

How to Build Great Credit

How to Build Great Credit

A credit score is the representation of how much of a risk you are to the credit industries based on your past history of credit-based purchases and payments. If you have strong credit, you are more likely to receive school and car loans, mortgages and credit cards. Building up a credit score can take several years and it may take longer if you have late payments and bills on your credit history.

Instructions

    1

    Sign up for a gas or retail company credit card. When you are just starting at trying to build your credit, it may be tough to get accepted for credit cards at all. Gas and retail company cards tend to be less restricted. Obtain these cards at your local gas station or at a store that you shop at frequently. The company should be a well-known chain gas or retail company as they are more likely to report your on-time payments to the credit bureau.

    2

    Purchase items using this new card and pay off the balance in full every month. After about six months, you should have the credit established to apply for a card from a reputable company such as Discover, MasterCard, Visa or American Express. Apply to one of these companies for a credit card. Do not apply to more than one as too many applications can affect your credit score. If you are not accepted, continue to pay off your monthly balance on your gas or retail card and try again in six months.

    3

    Purchase items with your new credit card and pay off the balances every month. Every few months, request that your card have a higher credit limit. This will increase your credit and it will reflect positively on your credit score. Do not use more than 30 percent of your credit card for purchases as the credit companies consider it high credit utilization.

    4

    Apply for a new credit card every six months to a year and repeat step three, paying off the balances each month. Once you have five cards, you can stop applying for additional cards. If you are rejected at any point, wait at least one year before applying for a new card.

    5

    Take out a loan from your local bank. The bank will typically only let you take out a loan if your credit score is high enough and if you have a large enough amount of savings in your account at that bank. Paying off the loan every month will improve your credit score and it will improve your relationship with the bank for future loan needs.

    6

    Buy or sign-up for your credit report using websites like Annual Credit Report or My FICO. Check the report for inaccuracies such as accounts that aren't yours, false late payments or negative information older than seven years. Use the contact information on the credit report to call and fix these errors. The problems may take several months to be removed from your report and it is good practice to check a new report every few months to make sure.

How to Settle Credit Cards That Are Left When a Spouse Dies

How to Settle Credit Cards That Are Left When a Spouse Dies

The death of a spouse is a horribly painful experience, which is often compounded by the stress of managing the deceased's financial affairs. If your spouse died leaving behind credit card debt, it is important to know that you may not always be personally liable for these debts. By going through your spouse's credit card statements, you can take steps to secure his accounts against identity theft, stop additional fees while the estate is settled, get the debts paid, and, if you are personally responsible for any of the debt, work toward an amicable settlement with the credit card companies.

Instructions

    1

    Gather your spouse's credit card statements together and compare them to the credit cards that he had in his wallet. By doing this, you can ensure that you don't miss contacting a creditor while you attempt to settle the bills. Make sure that the executor of the state, if someone other than yourself, gets copies of these bills so that they can be paid.

    2

    Determine, with your attorney's help if necessary, if you are in any way responsible for paying off these credit card bills. If you were a joint holder of a credit card account, you are indeed responsible for continuing payments. However, if you were simply an authorized user, or not on the account at all, you are generally not responsible for personally paying the credit card charges. One exception to this is if you are living in a community property state, in which case you may be responsible for all of your late spouse's debts, regardless of who signed for them.

    3

    Write to each of the credit card companies and explain that your spouse is deceased. Attach a copy of the death certificate and include the name and address of the executor of the will and the attorney who is handling the estate. This step serves three purposes: The first is that it can help prevent identity theft, as there are some unscrupulous people who will use the identity of a dead person to obtain credit. The second is that credit card companies must refrain from adding fees to an account during the settlement of an estate, according to Jonathan Pond of AARP.com. The credit card companies may then submit their claims to the executor, who can pay them from the estate.

    4

    Contact credit card companies to work out a settlement if you are personally responsible for the debt, the estate does not have enough assets to pay the charges and you are not able to manage the payments yourself. If the credit card companies are unwilling to work with you, ask your attorney for advice, or consider seeking credit counseling.

Thursday, January 24, 2008

How to Rebuild Credit Loans

How to Rebuild Credit Loans

Using new loans to rebuild your credit can be smart. Your biggest challenge will be getting approved for new credit while your credit scores are still poor. However, it can be done, even if means taking out a few small loans over 12 to 24 months.

Instructions

    1

    Open a savings account with a bank or credit union that offers secured credit cards. Secured credit cards require you to maintain money in a savings account that is used for collateral for the card. The amount on deposit generally becomes your credit limit. You can't withdraw the money while it is being held. That makes the secured cards easier to qualify for--even after bankruptcy. Keep putting money into the savings account until you have enough to qualify for the secured card--typically a minimum of $300. Apply for the credit card, which for rebuilding your credit, is just like a loan. After all, the credit limit represents an approved loan. Rebuild your credit by making a few charges on the card each month, but stay well below your credit limit and never miss a payment.

    2

    Open a second secured credit card, perhaps with another bank in your area. Or find banks online offering secured credit cards. Check credit card comparison websites (see Resources) to find cards online. Carefully manage the second secured credit card by making timely payments and staying well under the credit line.

    3

    Contribute more money to your bank savings account until you have accumulated say, $2,000. Then apply for an installment loan using the additional savings as collateral. Installment loans require you to make fixed monthly payments. Place the proceeds from the loan into your savings account and direct the bank to draft the account each month for your monthly payment. Continue managing your new accounts as you rebuild your credit.

    4

    Apply for an unsecured card after about 12 months, or a department store credit card. Getting approved will show that your credit rebuilding efforts are working. If you're declined, simply continue with your plan using the secured credit cards and loan.

How Can I Stop From Being Sued on Credit Card Debt?

Being sued for a credit card debt is a serious matter, and you should try to avoid a court case. The "New York Times" reported in 2010 that credit card companies and debt collectors were much more likely to seek legal action than in previous years. The Times reports that credit card companies used to be content with the tax breaks they received for writing off bad debts. However, as of 2010 that has changed, with the card companies filing scores of lawsuits across the country. Illinois Legal Aid reports that the credit card companies are guaranteed to win in court if they can prove that you legally owe the debt.

Instructions

    1

    Contact your credit card company before the account is closed and charged off. Credit card companies will often close your account after you fall behind by six payments.

    2

    Ask the credit card company to settle the account for less than the full amount owed -- an accepted debt management tactic called debt settlement. SmartMoney reports that credit card companies will often settle for 20 to 75 percent of the balance after you have fallen at least three months past due. This will prevent a lawsuit.

    3

    Get a settlement agreement in writing and pay the terms as agreed to avoid being sued.

What Can I Do to Redeem My House After Foreclosure in Georgia?

If you do not make your mortgage payments on your Georgia home, your lender will likely contact you to resolve the delinquency. If the lender's attempts are unsuccessful, it may issue a notice of default, which requires you to pay all past due amounts by a specified date. Failing to catch up your mortgage loan after a notice of default can result in foreclosure. Georgia does not provide a statutory right of redemption, which means that you cannot reclaim the home by paying the loan balance after the sale. However, you can use several strategies to bring your account current and avoid foreclosure.

HomeSafe Georgia

    HomeSafe Georgia provides mortgage payment assistance to borrowers who meet specific criteria. Assistance is in the form of a forgivable loan used to pay your mortgage lender directly. You must be currently unemployed or have experienced a significant reduction in income, must have been current on your payments before losing your job or experiencing income reduction and must be no more than six months behind on your mortgage. The HomeSafe Georgia website contains complete eligibility requirements and provides an online application for assistance.

Mortgage Modification

    Call your lender to inquire about a mortgage modification. This plan can help make your mortgage loan payments on your Georgia home more affordable by lowering your interest rate, rolling your past-due balance to the end of your loan or extending the length of your loan. Your lender will need documentation of your income and expenses, as well as a hardship letter explaining your reason for needing a mortgage modification. You must successfully make three payments under the plan before your lender will consider you for a permanent modification.

Repayment Plan

    Your lender may consider a repayment plan to help you prevent foreclosure on your Georgia home. A repayment plan spreads out your past-due balance over several payments usually up to six months to bring your account current. The portion of the past-due balance you pay each month is in addition to your regular mortgage payment. For this reason, a repayment plan is only appropriate if you have the income available to pay a higher mortgage payment for the duration of the plan. Also, a repayment plan does not lower your interest rate or forgive late fees.

Deed in Lieu

    If you cannot obtain assistance from your lender or another entity to prevent foreclosure on your Georgia home, you might consider a deed in lieu of foreclosure. This strategy involves voluntarily giving your home to your mortgage lender in exchange for release from your loan obligations. Your lender will only entertain this option if you do not have the income to make your monthly mortgage payments. In some cases, the lender may be willing to rent or lease the property back to you to keep you in the home.

How to Dispute a Creditor's Letter

How to Dispute a Creditor's Letter

Creditors are businesses or individuals who await outstanding financial obligations. If you spent $2,000 on your credit card, the credit card company remains a creditor until you pay off the debt. Creditors can communicate with debtors by telephone or mail, but they must comply with federal and state laws, including the Fair Debt Collection Practices Act. Some original creditors sell debts to third-party collection agencies.

Instructions

    1

    Create an organization method, such as a journal or notebook, so you can maintain records throughout the dispute process. For example, take notes each time a creditor calls you and highlight the time and the callers name.

    2

    Identify the reason for your dispute. A creditor may have sent you a letter regarding a debt created by an entirely unknown person who shares your name. If you ignore the letter because you did not incur the expense, you risk damaging your credit.

    3

    Prepare a letter that informs the creditor about your dispute and clearly asks for an investigation. Include account numbers, amounts and creditors. Attach proof of payment, such as a cancelled check, if you have already paid the debt. Send the letter via certified mail so you have evidence that you mailed it and, more importantly, that the creditor received it.

    4

    Review the progress of your dispute. If the creditor reported your debt, contact the three major credit reporting agencies (TransUnion, Equifax and Experian) to notify them about the dispute. The creditor, whether original or third party, must stop contacting you until the debt is verified.

    5

    Reconcile the dispute results. If the dispute does not generate any changes or resolutions, or if the debt is accurate, consult with a nonprofit credit-counseling agency or a licensed attorney. You have a right to sue the original creditor for various reasons, including threatening behavior and harassment.

Wednesday, January 23, 2008

PrivacyGuard Information

PrivacyGuard Information

PrivacyGuard is a comprehensive online member-based service providing highly secure and confidential access to credit reporting, credit protection and monitoring, and identity theft resources and services to help consumers control their financial and personal information. PrivacyGuard offers state-of-the-art financial and credit-related tools, calculators, forms and personal services all in one user-friendly website.

    Check your credit card statements regularly to detect fraud.
    Check your credit card statements regularly to detect fraud.

Benefits

    PrivacyGuard's benefits include daily credit reporting and monitoring, access to a credit information hotline, dispute information and printable forms, auto loan, loan payoff and mortgage calculators, access to neighborhood reports, Social Security reports and medical information bureau files, driver's record reimbursement, card and document registration, identity theft insurance, and identity fraud support services. Members also receive around-the-clock customer support.

Features

    PrivacyGuard offers a Triple-Bureau Credit Report with Triple-Bureau Credit Score package, which enables a member to keep close tabs on his credit report from all three major reporting agencies: Experian, Equifax and TransUnion. Another feature called Single-Bureau Daily Credit Monitoring monitors a member's credit report daily through one of the top reporting agencies. The CreditXpert "What-If" Simulator shows consumers how their financial actions affect their score. A Single-Bureau Quarterly All Clear Notice is sent to members when their credit report has had no changes.

Identity Theft Services

    PrivacyGuard offers its members up to $10,000 in identity theft insurance to help them recover losses and expenses if they become victims of identity theft. Members can also get professional assistance from PrivacyGuard staff to help them call creditors, work through paperwork, and get legal help. Victims of identity fraud are assigned their own PrivacyGuard caseworker to help them sift through the maze caused by identity theft, and receive a binder of information to use to get their identity back on track.

Advantages

    A newly enrolled member receives instant access to PrivacyGuard's tools and features, and receives one free credit report every 30 days. Nonmembers can order copies of their credit reports for a fee through the PrivacyGuard website. PrivacyGuard offers online security and complete confidentiality as it meets the security requirements of both the VeriSign and Cybertrust seals. PrivacyGuard offers personal, confidential and hands-on assistance from a live person when needed.

Enrollment

    A person can join PrivacyGuard by completing its online application at www.privacyguard.com or by calling (877) 202-8828. A monthly membership fee is billed automatically to his credit card, and membership can be canceled at any time. PrivacyGuard offers a 30-day trial period for a reduced fee, and can be canceled during that period by calling its 800 number without having to pay more. Members must agree to the terms and conditions before their application is approved.

Monday, January 21, 2008

Debt Relief Help Information

When you have a significant amount of debt to deal with, you might be interested in pursuing one of several options. You could try a debt management plan, debt settlement or even bankruptcy, depending on the severity of your circumstances. Working with a debt relief company could help you with this endeavor, but you have to be careful which one you choose.

Debt Relief Companies

    Many companies advertise that they can offer you a substantial amount of debt relief. They make promises of being able to cut your debt by a certain percent or save you thousands of dollars. While some companies in this industry are legitimate, many are scams. The Federal Trade Commission has set up specific rules to try to prevent consumers from being taken advantage of by companies in this industry. When considering working with a company, it is important to check them out first.

Debt Management Plan

    When working with a debt relief company, one of the options that they might present you is a debt management plan. This is a type of payment plan that they help you set up with your creditors. The debt relief company will take a payment from you every month and then turn around and distribute the money to your creditors. The debt relief company will negotiate lower interest rates for you on your debt and can help you pay off the debt sooner. The debt relief company will also collect a fee for their services on a monthly basis.

Debt Settlement

    One of the most common tactics that debt relief companies use is debt settlement. With this type of procedure, your company will negotiate a one-time settlement with your creditors. You will have to pay a lump sum of money and the creditors will then agree to settle your account for less than the total balance. This has the potential to save you a great deal of money, but it can also negatively impact your credit.

Bankruptcy

    Another option you may have to consider to get relief from your debts is bankruptcy. By filing Chapter 7 bankruptcy, you can eliminate the majority of your debts at one time. If you file for Chapter 13 bankruptcy, you will set up a payment plan with the help of your bankruptcy trustee. If you are working with a debt relief company, they might recommend debt settlement or a debt management plan so that they can earn money from you. In that case, you might want to consult a bankruptcy attorney to see if bankruptcy is in your best interest.

Do I Have to Pay for a Credit Card With My Husband's Name on It When He Passes Away?

The death of a spouse is a difficult enough event without worrying about how your spouse's debts will affect you. If your husband has racked up credit card debt, your responsibility for servicing this debt after his death will often depend upon when the credit cards were issued, who used the cards and the state where you reside.

Pre-Marriage Debt

    If your husband's credit card debt was contracted prior to your marriage, you will not be responsible for paying off the debt after his death. Debts contracted by one spouse prior to marriage do not become the responsibility of the surviving spouse unless the surviving spouse's name was added to the account after the marriage. So, if your name was never added to the credit card account before your husband's death, you are not responsible for repayment of the debt.

Debt During Marriage

    Debts such as credit card bills incurred during the marriage that are contracted in only one spouse's name are generally only the responsibility of the contracting spouse, with certain exceptions. If your husband applied for and used the credit card without your cooperation or knowledge, you are likely not responsible for the debt. However, if you were listed as a co-signer or user on the card, you may have to repay the debt.

Community Property States

    In states that recognize community property laws, you may be responsible for your deceased husband's credit card debt even if your name was not on the card and even if you did not know about it. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, your husband's creditors can come after you for repayment of the debt even though you were not a party to the contract for the debt.

Estate Woes

    Even if you live in a state that does not recognize community property laws, or you did not know about your husband's debt, you may have to repay the debt through your husband's estate. If your husband left money in his estate that is not encumbered to you or another heir, the creditor may attempt to recover the debt from the estate. It's advisable to speak to an estate attorney in situations where the deceased spouse has outstanding debt and has left his estate unencumbered.

Am I Responsible for a Relative's Debt?

Your responsibility regarding a relative's debt depends on the account type, your state of residency and your relationship to the account holder. Generally, you are not liable for debts you did not incur or sign for. Additionally, your rights are protected from illegal or unethical debt collection tactics. If you feel a debt collector violated your consumer rights---including protection from harassment---contact the Federal Trade Commission or your State Attorney General to file a complaint.

Community Property

    If you live in a community property state, you may be responsible for your spouse's debt. Excluding premarital contracts and state debt exceptions, creditors can and will contact both the husband and wife, take them to court and even garnish joint accounts. Community property states consider couples jointly responsible for assets and liabilities incurred during the marriage. Additionally, creditors may target community assets in the event an indebted spouse dies.

Join Accounts

    If you are a co-signer or joint account holder, you are equally liable for debt with the other account member. This may include credit cards, store credit, mortgages, car loans and any other secured or unsecured debt. Authorized users on an account are not responsible for the debt as they did not sign an agreement or otherwise apply for the credit. Adversely, if you authorize a relative to use a credit card in your name, you are liable for the debt.

Children

    Dependent on state laws, you may or may not be responsible for your underage child's debt. Most states require parental permission when a child acquires credit. If the credit is extended without parental consent, creditor collection actions may be limited. Adversely, if your child applied for credit fraudulently by lying about their age, they may face penalties.

Concerns

    Unfortunately, some debt collectors try to collect from relatives regardless of their responsibility to pay. Not only is this practice unethical, in some cases, it is illegal. The Fair Debt Collection Practices Act prohibits creditors from contacting anyone but the account holder, credit-reporting agencies, legal representatives and sometimes the spouse regarding the debt. Creditors may contact relatives in an attempt to find the account holder, but they are forbidden from making false claims in an attempt to collect.

Options

    If a debt collector attempts to collect on a relative's debt, ask for proof of the debt and your liability. Under the Fair Debt Collection Practices Act, creditors must provide proof of the debt and your responsibility if you ask for it or dispute the claim. Disreputable collectors rely on the fact that you do not understand your consumer rights. If the creditor has no legal grounds for collection, asking for proof will often stop future attempts. You may also request---in writing---that a creditor stop contacting you and they must comply. The only time a debt collector may contact you after you tell them to stop is to inform you of further legal action.

Sunday, January 20, 2008

What Are My Debt Resolution Options?

Debt is a problem with many potential solutions, and one of them is not necessarily the best option for everyone. When you look at ways to handle your debt, you have to evaluate how they will affect your credit and how quickly they will help you get out of debt.

Managing Your Debt With a Plan

    One option that many people turn to when facing a large amount of debt is a debt management plan. With a debt management plan, you work with a credit counseling company. The credit counseling company negotiates lower interest rates with your creditors on your behalf. Then you make a monthly payment to the credit counseling service, and it pays all of your creditors for you. The advantage of this system is that you can save a substantial amount of money on interest, but it does take some time. It also should not negatively affect your credit score.

Negotiating Your Debt Away

    Another alternative to consider is negotiating your debt away. This is also referred to as debt settlement, and it is a way to pay less than the full amount you actually owe creditors. You can negotiate the settlement by yourself or you can work with a debt settlement agency. With this process, you agree to pay the creditor a lump sum in exchange for closing out your account and forgiving the rest of the debt. This will hurt your credit score, but it helps you get out of debt very quickly.

Roll Your Debt Away

    Some people use an approach called the debt snowball to get rid of debt. With this approach, you pay as much money as you can on your smallest debt account and then pay the minimum payment on all of your other accounts. This helps you pay off your smallest account first. Then you move onto the next account and put as much money as you can on it. This allows you to pay off your accounts and create momentum as if a snowball was rolling down a hill.

Have Your Debt Discharged

    When you are desperate to get out of debt, another option that you may want to turn to is bankruptcy. With bankruptcy, you can have most of your debts discharged immediately. When you file for bankruptcy, your creditors can no longer come after you to try to collect the money from you. Bankruptcy will devastate your credit score, but it will also get you out of debt without actually having to repay any of it.

Riskiest Places to Use a Debit Card

Thieves are always hard at work trying to figure out how to bilk consumers. Therefore, every debit-card transaction consumers make presents some risk. Debit-card users need to be on alert each time they use their cards to avoid having their account numbers stolen. Yet in some cases, cardholders' account numbers may be at risk without their knowledge.

Retailers

    The security of your debit card may be at risk when you make a store purchase using your card's personal identification number. That's because your PIN may be stored in temporary software files that can be stolen by hackers. According to an MSNBC article titled "Debit Card Thieves Get Around PIN Obstacle," customers' PINs can be unintentionally stored in temporary files by retail credit and debit systems, even though storing the numbers is against system rules.

ATM Skimmers

    Skimming scams raise the risk of using debit cards at automatic-teller machines. Thieves apply skimmers to the section of the machine where ATM users insert their debit cards. The skimmers collect debit card data and wireless cameras are usually used to swipe card PINs. Thieves can use the data to create duplicate debit cards that they sell. You should examine an ATM before using it. A "New York Times" blog post on recognizing ATM skimmers says thieves often attach the devices with glue, so you may see glue marks around the area of the machine where you insert your card if a skimmer has been attached to it. Find another machine if any part of an ATM looks loose of otherwise suspicious.

Signature-Based Cards

    Signature-based debit cards can be risky to use at any time because transactions with those cards are authorized with the cardholders' signatures just like credit cards. Therefore, anyone can use these cards simply by forging signatures. The biggest problem with debit-card fraud is that the cards are usually linked to people's checking accounts. A thief who cleans out a cardholder's account may be taking all or most of the money that person depends on to pay bills.

Considerations

    Malls, airports and gas stations can be some of the riskiest places to use debit cards. Unlike bank ATMs, machines in those places aren't closely monitored by employees, so it's easier to attach skimmers and other devices thieves use to steal debit-card data. You also might consider using a credit card, not a debit card, at restaurants and other places where your card might be taken out of your sight to complete transactions, especially if you have a signature-based debit card. Fraudulent credit-card transactions can have less of an impact on your finances since they're not tied to a checking account. Credit card users generally can be held liable for only $50 worth of fraudulent transactions made with their cards.

How to Remove a Fraud Alert From Equifax

If you have a fraud alert on your credit report, it can serve a valuable purpose. Whenever someone tries to apply for credit using your personal information such as a credit card or automobile loan, the creditor must notify you with a phone call before the account can be opened. You get the opportunity to speak with the creditor and verify if the account should or should not be opened. This keeps criminals and identity thieves from ruining your credit history.

Instructions

Process

    1

    Contact Equifax fraud department in writing. Your letter should contain all of your personal information such as name, Social Security Number, present address and previous address, telephone number and your date of birth.

    2

    Forward your information to the Equifax Credit reporting agency fraud division at the following address:
    Equifax Consumer Fraud Division
    P.O. Box 740241
    Atlanta, GA 30374-0241

    Sending this letter certified will allow you to keep tabs on it since it has all of your personal information enclosed.

    3

    Call Equifax in seven to 10 days at 1-800-525-8265 to verify that the fraud alert has been removed. You can also follow up by mail if you are not able to speak with a representative by phone.

    4

    Wait 90 days and the fraud alert will fall from your credit report automatically without you doing anything. You can have the fraud alert reactivated.

    5

    Make a credit purchase and you can also determine if the fraud alert has been removed from your credit file. You could run into a delay if the alert is still on your credit file. To make a purchase, the creditors will need to call you from your home phone or work phone to verify everything is okay.

Saturday, January 19, 2008

Can I Be Sued on a Charged Off Credit Card?

If you fail to make your credit card payment, your credit card issuer may "charge off" your account. Not only are charge-offs the No. 1 reason why creditors get denied new loans, according to Steve Bucci of Bankrate, but your lenders can still sure you to recover the unpaid debt. Talk to a lawyer if you need legal advice about credit card lawsuits and your liability as a debtor.

Charge Off

    A charge off is an accounting term used to describe a creditor who no longer considers a debt an asset. When your creditor lent you money, it counted on you to make timely payments and, because of those regular payments, counted you and your loan as an asset. Once you fall behind payments, the creditor is still out the money it gave you but is no longer collecting money from you. If you go long enough without paying, the lander no longer considers your account an asset and changes it to a liability by listing it as a charge off.

Debts

    All a charge off does is change how a lender views a debt. If a lender charges off your debt, this in no way affects how much money you owe or eliminates your responsibility for paying back the debt. You borrowed the money and are still a debtor. Unless you pay back the lender for the money you took, your lender can still sue you to recover.

Lawsuits

    If your lender sues you to recover an unpaid debt, it has to follow the laws that govern civil lawsuits in your state. For example, the lender has to tell you that it filed the lawsuit through a procedure known as service of process. Typically, a company meets service of process requirements by sending you a certified letter containing a copy of the lawsuit, by having someone personally deliver a copy to you or by having the county sheriff serve the suit on you personally.

Effects

    A charge off is not only devastating for your chances of obtaining new credit, but a creditor who sues you and wins can take actions against you that can damage your finances. If you get sued for a unpaid and charged-off debt and the creditor wins, it may be able to garnishee your wages or seize your property. For example, a creditor can take out a percentage of your paycheck each week or seize funds in your checking account until the debt is paid.

Can State of Florida Retirement Income Be Garnished?

Can State of Florida Retirement Income Be Garnished?

When you owe money and don't repay it, your creditor can take you to court and obtain a judgment against you. With a judgment in hand, your creditor has a number of options for collecting the debt. One option is to garnish your wages and other income, subject to certain restrictions. The state of Florida not only protects retirement income from garnishment, it shields all the income earned by a head of household.

Head of Household

    All wages and other earned income of a head of household are protected from garnishment in Florida. Florida defines "head of household" as someone who provides at least 50 percent financial support to a person he's legally obligated to support, such as a child, spouse or parent. The lone exception to the head of household rule is when the debtor's net wages are more than $500 per week and he has agreed in writing to allow his income to be garnished.

Social Security

    Under federal law, Social Security income can only be garnished for child support, alimony and federal tax debt. Florida takes the protection a step further, exempting Social Security income from garnishment no matter the source of the debt.

Pensions

    Pensions for government employees such as teachers, firefighters, police officers and state workers are also shielded from garnishment by creditors. Retirees who collect pension benefits from private employers are protected, too, as are residents who receive income from annuities purchased in Florida.

Qualified Retirement Plans

    Florida exempts income from qualified retirement plans, such as 401k's and 403b's from garnishment, as well as IRA income. This is true for all types of individual retirement accounts, including rollover and inherited IRA's.

Statutes of Limitations

    A creditor must win a lawsuit against you before it has the right to collect a debt without your consent. In Florida, a creditor has four years to sue you to collect on an open account such as a credit card, and it has five years to sue you for a debt based on a written contract. Once a creditor has a judgment against you from a Florida court, state law gives it 20 years to collect.

Friday, January 18, 2008

Can a Collection Agency Collect From Your Paycheck Without Taking You to Court First?

A wage garnishment involves a creditor taking money directly out of your paycheck before you receive it from your employer. While this can be an intimidating thought for a debtor, a collection agency cannot garnish your wages without going through the court system. Understanding how this process works can help you avoid it.

Collection Actions

    Before a wage garnishment is pursued, a collection agency will try to collect money from you. Once the debt is turned over to a collection agency, you will start to get phone calls and letters from the agency. This may go on for several weeks or months before anything else happens. After failed attempts to collect the debt, the collection agency can pursue further action.

Civil Court

    After collection attempts are unsuccessful, a collection agency may then file a lawsuit against you in civil court. You will be served by your local civil court, and you will be required to appear on the court date. On the court date, the collection agency will prove that you owe the debt. At that point, the judge will typically issue a judgment in favor of the collection agency. Once you have a judgment against you, you usually have a certain amount of time to pay it.

Garnishment Order

    After a judgment is issued against you, the collection agency will then need an order to garnish. This is also sometimes referred to as a writ of execution. The collection agency will have to apply for the order with the court. Once the order is received, the collection agency will take it to the local sheriff's office. The sheriff will then contact your employer and notify him of the garnishment. At that point, your employer will have to take out a certain percentage of your paycheck until the debt is paid.

Percentage of Check

    The collection agency can only take a certain amount out of your paycheck. The federal maximum for wage garnishment is 25 percent of your pay. Each state also has rules that apply to this amount. In some cases, the state maximum is less than 25 percent. The collection agency will then only be able to take that amount from your check during each pay period.

Debt Payoff Strategy

Developing a debt payoff strategy can quickly reduce your consumer debt and fix your finances. Debt accumulates because of reasons such as overspending or cash flow issues. But just because you have a lot of debt doesn't mean you're stuck with these balances forever. Consider strategies to help payoff your debt fast.

Know Your Totals

    Start your debt payoff strategy by first calculating the amount you owe on credit cards and other loans. Knowing your balance provides indication of how long it will take to reduce or payoff these balances altogether. On a sheet of paper, write down the names of your present creditors and your current balances. Also, take note of the interest rate that you're paying on each account.

Review Personal Budget

    Next, determine if you have disposable income each month, and if so, how much disposable income. Debt payoff strategies typically involve making higher payments to your creditors, which involves putting your extra income toward debt elimination. Subtract recurring monthly expenses such as housing, minimum debt payments and other household expenses from your monthly take-home pay.

Use Extra Income Wisely

    Rather than spend your extra money on non-essentials such as clothing, jewelry, entertainment or recreation, resolve to payoff your debt with this money. Let's say you have an extra $150 a month after paying your bills. Use this money to payoff a $1,000 credit card balance in approximately 10 months. Increase the payment to $200 a month and payoff the balance in half the time.

Debt and Interest Rates

    The interest rate that you're currently paying on your consumer debt determines how fast you're able to payoff the balance. Talk with your creditors and ask for a lower interest rate on your credit cards. Mention your plans to apply for another card and take your business elsewhere. Card companies may offer on-the-spot reductions to keep you as a cardholder with the company.

Home Equity Loan

    Clear your credit card debt with one check by means of a home equity loan. Discuss options with a home loan lender. You can apply for a home equity loan and get funds in one lump sum, or take out a home equity line of credit, HELOC, and pull cash from a revolving line of credit on an as-needed basis. These funds use your house's equity as collateral, and you can use money for debt consolidation.

What Are Promissory Notes & How Do They Work?

When you borrow money, you make an agreement to pay the money back to the lender. When the agreement is in writing, it is called a promissory note. The promissory note details the agreement between the lender and the borrower, such as how much interest the borrower will pay and what happens if the borrower does not pay as agreed.

Documenting a Loan

    With informal loan agreements between family or friends, it is a good idea to document the terms of the loan. A promissory note, in this case, can be an informal hand written document. It clearly defines the expectations and responsibilities of all of the involved parties, and can save confusion and bad feelings later on, particularly if one person thinks that the loan is a gift. Documenting the fact that a loan was made is also good for income tax purposes, as the Internal Revenue Service may believe that the money from the loan deposited into your checking account is income and try to collect taxes on it.

What They Include

    Most promissory notes can be written by one of the parties involved, particularly if the terms are simple. You may also find online templates for writing promissory notes. The note includes the name of the person borrowing the money, or the maker, as well as the person lending the funds, or the holder or payee. The amount borrowed should be clearly written in both numeric and word form, like writing a check. The date of repayment and amount of periodic payments are defined, as well as any interest rate that will be paid on the loan.

Type of Repayment

    An amortized payment is when you make the same payment during a certain period of time, weekly, for instance, and the payment is divided between principal and interest. A promissory note can also specify that you will pay the interest on the loan each period, with a final payment, or balloon payment, to be made at the end of the loan on a specified date. Another option is to pay a specified amount on a certain date that includes all principal and interest on the loan.

Security and Default

    The promissory note also specifies any security interests, or collateral that the borrower gives to the lender to guarantee that he will pay back the loan. This borrower may give the lender a formal lien, or just promise to turn over property if he defaults on the note. The promissory note may also define what other steps the borrower must take in case of default, such as to pay extra fees or interest. The conditions in a promissory note are a legal agreement and may be enforced by a court.

Thursday, January 17, 2008

How to Challenge Information on an Equifax Credit Report

How to Challenge Information on an Equifax Credit Report

Your credit is your financial lifeline and keeping your credit mistake-free is essential to maintaining a good credit score. Creditors sometimes make mistakes and you have to step up and take care of the mistake before it lowers your credit score. Even the credit reporting agencies such as Equifax can make mistakes by not entering in the information properly or by leaving out information on your credit report. You can dispute your credit report and generally have the mistakes fixed and removed from your credit report.

Instructions

    1

    Get a free copy of your credit report by going to the free annual credit report website.

    2

    Look over the Equifax credit report and find the information errors in question and circle the errors.

    3

    Go to the online Equifax dispute form (https://www.ai.equifax.com) and begin the online dispute application. You will need the 10-digit confirmation number found on your Equifax credit report to complete the online dispute form.

    4

    Describe the information errors found on your Equifax credit report in detail and submit the online dispute form. You should be contacted by a Equifax representative within a couple of days, but it can take up to a week for a response.

How to Answer a Lawsuit for Debt Collection in Texas

Many people are overwhelmed when they are served with a notice that a creditor is filing a lawsuit against them and choose to ignore it rather than defend themselves. However, in Texas, failing to answer the lawsuit within 20 days of receiving the notice usually causes the court issue a default judgment in favor of the creditor. This means you lose your right to defend yourself and must pay what the creditor requests. You must prepare your own lawsuit answer because Texas courts do not have standardized answer forms.

Instructions

    1

    Review the lawsuit notice. Read each to determine the truthfulness of the allegations against you. If you are unsure of any information in the notice, contact an attorney that has experience defending against Texas debt collection lawsuits.

    2

    Open your computer's word processing program. Put your name, address, phone number and the date on the first four lines of the left side of the page.

    3

    Skip a line and copy the header information from the top of the lawsuit notice on the next four lines. This includes the court name, such as the Texas district or justice courts, depending on where the suite was filed, your name as the defendant, the creditor's name as the plaintiff and the case number.

    4

    Skip another line and make a numbered list that admits or denies each paragraph allegation on the lawsuit notice. Use the same allegation numbers as the notice and answer each one honestly. Simply type "Admit" or "Deny" next to each number and a brief explanation such as, "This is not my name" or "I do not owe this amount." Type your name at the bottom of the page.

    5

    Print three copies of the answer and sign them. Mail one copy to the lawyer listed on the lawsuit and one copy to the courthouse. The notice provides the addresses you must send the answer to. Use certified mail so you have a record of the delivery date.

Chapter 13: What Happens to Debts Paid Before Dismissal?

In a Chapter 13 bankruptcy, the debtor does not have any debts discharged immediately. Instead, the court appoints a trustee that closely examines the debtor's current revenues and how much money they can afford to pay. The trustee then creates a payment plan that can last up to five years and requires the debtor to pay off at least a portion of the various debts. At the end of the plan, the rest of the debts are discharged. The debts paid are permanently removed from consideration even before the plan is finished, but a dismissal can complicate the issue.

Dismissal

    A dismissal is not a discharge, although the two terms can be confusing. A discharge is a court removal of any remaining debts that have not been paid off by the end of the plan, usually unsecured debts that ranked low in important. A dismissal, however, occurs when a debtor is unable to continue making payments on the plan and the court ends it early, leaving debts. This is unfortunately common as debtors see reduced income or fall even further into debt. However, the past payments of the plan still affected the debt held.

Fully Paid Debts

    Fully paid debts are those that the debtors has already completed paid off during the plan. This is common for smaller debts that the trustee attributes a large portion of each monthly installment toward, in order to pay them off as quickly as possible. Credit card debt may be one type that is fully paid, or an auto loan with only part of the payments still due. When these debts are paid off by the plan, the creditor has no more claim on the debtor for repayment, and the accounts are closed.

Partially Paid Debts

    Partially paid debts that have not been fully dealt with by the time the plan has been dismissed are more problematic. In this case the debt continues and creditors can typically take additional legal actions and sue for repayment. Sometimes a creditor will be promised only 10 to 20 percent repayment by the plan, and receive that amount, but if the plan is dismissed early will try to collect the rest of the debt as well. Secured creditors can often get permission to foreclosure on houses or seize other assets to recover the money they are due.

Conversion

    Because Chapter 13 dismissals are so common, there is a key option that debtors use when it occurs, known as a conversion. This conversion is a plea that the court switch the Chapter 13 plan to an immediate Chapter 7 bankruptcy. This bankruptcy discharges all current debts, but allows the trustee more freedom in taking and selling debtor assets to pay off key creditors. It is typically a much better solution than allowing unpaid creditors to sue for money still owed.