How to Negotiate With Creditors Step by Step

In any negotiation, there has to be leverage. While credit agencies have reputations of being bullies, keep in mind that you have what they want -- money. Their entire existence centers around the thing that you have. With that in mind, you have more rights than you think and, with a cool head, a little preparation and knowledge, you can find a way to work with your creditors to reach a fair settlement.

Instructions

1

Evaluate your situation. Before you make any deals, get honest about your financial situation. Use budgeting tools to know how much money is coming into your bank account and be aware of how much you can afford to pay.

2

Learn the law. A debt collector cannot threaten you with arrest or misrepresent the amount you owe. You should be aware of what creditors can and cannot say. The Federal Trade Commission has valuable resources on the rights of the consumer. Also, learn the laws in your state regarding debt collection and statute of limitations on debt.

3

Contact your creditor. You might be able to contact your creditor directly, such as the credit card company or cell phone company, to make arrangements. They may have turned over the debt to a collections agency already, meaning you have to deal with the collections agency directly.

4

Make a plan. You can agree to make one lump payment or, depending on the nature of the debt, negotiate lower payments over a period of time.

5

Ask for a supervisor. When you are honest and fair in your attempt to negotiate a payment and the person on the other end of the phone is being obstinate, don't be afraid to ask for a supervisor. The supervisor may be able to make negotiations that the customer service agent can't.

6

Get all agreements in writing, especially when dealing with a collection agency. In fact, some experts suggest calling a collection agency only to get their mailing address. Don't feel pressured to make a payment until the terms of the agreement have been outlined in writing.

Read More

My Bank Accounts Are Getting Garnished, How Can I Stop This?

When a creditor is seeking payments for a debt that is in arrears, it may choose to file a lawsuit against the debtor who owes it money. When this happens, if the creditor wins, he may choose to petition the judge to take actions that allow him to seize the money owed him by force. This can include the garnishment of the individual's wages or the freezing and seizure of his bank account. Bank account seizure can be contested in several ways.

Garnishment

The term "garnishment" is generally applied to any forceful legal seizure of an individual's assets to incur repayment of a debt. When a bank account is garnished, this can be referred to as seizure or freezing, as the individual who holds the account no longer has access to it. A bank account can only be frozen with the permission of a judge. The exact process of seizure varies by state, but defenses against it are relatively similar.

Get An Attorney

If your bank accounts are being seized, then you should consult an attorney immediately if you can afford one. If you cannot afford a private attorney, you may wish to consider consulting a legal aid office. This attorney will be best equipped to determine your options, as he will be familiar with the relevant debt collection laws in your state. Pick an attorney that specializes in debt or personal bankruptcy law.

Appeal

There are several reasons that you may be able to appeal the seizure of your account. Many jurisdictions allow account holders to have a special hearing after their accounts have been seized. In some cases, people with low incomes are protected from having their accounts seized. In addition, a person may be allowed to claim that certain funds are not eligible for seizure by private creditors, as federal law deems them exempt.

Exempt Funds

There are a number of different types of funds that cannot be seized by creditors. While most laws related to bank account seizure and debt collection are made at the local level, federal law prevents several types of assets, including most federal benefits, from being seized by private creditors. If you point out to your bank or to a judge that a portion of your bank funds are ineligible for seizure, the bank may unfreeze them.

Read More

How to Counsel Debt With a Credit Council

With credit card debt at an all time high and the economy in a tough spot, many consumers turn to debt counseling services in order to get their finances in order. Consumers should be aware of the best steps to proceed in order to achieve the best results from credit counseling.

Instructions

Choosing a Debt Counseling Agency and Getting Started

1

Select a reputable debt counseling service. Find out whether the counseling agency belongs to any professional groups such as the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). These agencies are instrumental in aiding consumers to find dependable debt counseling services. Also, check the Better Business Bureau to find out whether they have any complaints on the agency. If complaints exist, see how many were resolved to the customers' satisfaction. The Better Business Bureau is an excellent tool to aid consumers.

2

Interview each agency. Find out the up-front costs, such as a monthly fee, that will apply to use the service. Also, request the qualifications of the debt counselors associated with the service. This will help you figure out the best agency to use.

3

Gather your most recent statements and provide them to the debt counseling agency you choose. The agency will then provide a detailed analysis of how long it will take to pay off and the estimated interest rate the agency can get from your creditors.

4

Determine whether working with the agency is an effective option for you. Using the statements you sent to the debt counselor, determine how long it will potentially take you to pay the debt off at the rate that you are paying it. Then, determine whether the lower interest rate and any applicable fees the debt counseling agency charges will be worthwhile in the long run.

5

Review the debt counselor's assessment. Read the proposal that the debt counselor provides and ask them questions so you can be clear on all terms prior to beginning the program.

6

Sign and return the debt counseling agreement along with any other items that your counselor may request.

Read More

Debt Validation & Credit Repair

For individuals whose credit rating suffers due to one or more collection accounts appearing within their credit reports, debt validation may be an effective method of credit repair. Debt validation allows an individual to request that the credit bureaus remove negative collection accounts if a collection agency cannot prove the legitimacy of the debt.

Facts

Debt validation is a method by which an individual can request proof from a collection agency that he owes the debt and that the collection agency in question is legally authorized to collect the debt. According to the Fair Debt Collection Practices Act (FDCPA), a collection agency may not continue collection activity until it provides the consumer with acceptable proof that the debt is legitimate and that it owns the debt. Collection activity includes, but is not limited to: Telephone calls, letters and credit reporting.

Significance

Consumers often use debt validation as a method of credit repair because if the collection agency cannot validate the legitimacy of the debt or its right to collect, the debtor may dispute the account with the credit bureaus. The credit bureaus will also request that the collection agency validate the debt. The assumption is that if the company cannot validate the debt to the consumer, it cannot validate the debt to the credit bureaus. Should this occur, the credit bureaus will remove the collection account from the individual's credit report and her credit score will improve.

Features

The FDCPA does not state what type of proof a collection agency must provide to a consumer in order to remain in compliance with the laws. Thus, most collection agencies use an automated debt validation system that sends computer generated printouts of the debtor's account information with the collection agency to the individual as a debt validation. Because these printouts often only contain the debtor's name, his account number and the amount he owes, many individuals argue that they do not serve as sufficient proof. Legally, however, the collection agency may resume collection activity after sending the consumer a computer generated debt validation.

Effects

If a collection agency fails to validate a consumer's debt upon the individual's request but verifies the accuracy of the debt to the credit bureaus during a dispute investigation, the consumer may file a lawsuit against the company for doing so. Communicating with a third party about the debt without validating the debt to the consumer is against federal consumer protection laws. Many collection agencies would prefer to simply remove the collection account from the consumer's credit record themselves rather than face the costs of defending themselves against an FDCPA lawsuit. In this way, debt validation--or lack thereof--can also be an instrumental tool in credit repair.

Considerations

When requesting a debt validation from a collection agency, consumers should take care to send their requests via registered or certified mail. Doing so allows the consumer to request a return receipt proving that the company received his validation request. Failure to obtain proof of delivery gives the individual little legal recourse in the event that the collection agency continues collection activity without providing the debtor with the proof he asks for. If the individual has no proof that the company received his letter, he has little chance of winning a lawsuit against the agency for violating his rights.

Read More

Can a Hospital Put a Lien on Property for Unpaid Medical Bills?

A lien is a legal right to a portion of an asset to satisfy a debt. Many creditors can put liens on your home or other property making the title to the property encumbered. You cannot sell the property without first satisfying the lien by paying the debt back. If you owe a hospital a substantial amount of money for uninsured medical expenses, it can pursue the debt, including placing a lien on your house.

Hospital's Collection Process

Every hospital has its own policies for collecting on unpaid medical bills. Many states also have limitations on what steps hospitals can take to satisfy the debt. Some of these limitations include how long a hospital must wait to turn over an unpaid bill to a collection agency and in what circumstances they are not allowed to seek a lien to satisfy a legal judgment. Most hospitals will first attempt to make a payment arrangement with you. You may be able to pay the bill in monthly installments over time. Making an arrangement that you can afford is your best option. If an agreement cannot be reached, the hospital will eventually turn the debt over to a collection agency that will likely aggressively pursue the debt. If those efforts are ignored, the hospital can take you to court and get a judgment against you for the debt, interest and other costs and fees. This judgment will be reported on your credit report and, in most states, the hospital can put a lien on your property in the amount of the judgment.

Repercussions of Lien

When a lien is placed on your home or other property, it is registered on the property's title. This means that the property cannot be sold until the lien is satisfied, which usually happens with the proceeds of the sale. However, potential purchasers can be nervous about properties without clear titles and it may be more difficult to sell your house. Once the debt is paid in full, the lien is lifted and the title becomes clear. Check to ensure that the lien was lifted properly after you have satisfied the debt.

Can They Take My House?

In most states, a lien holder can force the sale of a home to satisfy the debt. Some states have consumer protections in place to halt such action in cases of low income or disabled debtors. A forced sale is rarely done in practice and it is more likely that the lien will simply remain until you sell the house. If you die, the lien will transfer to the beneficiary of the property and he will have to satisfy the debt before he can dispose of the property.

Working With Hospital

As with any other debt delinquency situation, it is always best to continue to communicate with the hospital and come up with a repayment arrangement that you can afford and can adhere to. Check with your state's consumer protection agency to see if there is any financial aid that you may be eligible for.

Read More

How Does Homesteading Your House in California Affect You?

Debt robs a person of the sense of security needed for peaceful living. In California, homestead laws help protect debtors from losing everything to creditors. The same laws protect creditors and other interested parties. How the laws affect a person or entity depends on the type of homestead law applied and the personal circumstances and characteristics of the homeowner/debtor.

Homeowner

California law provides homeowners with an automatic homestead exemption for their primary place of residence. The exemption applies to traditional homes, mobile homes, trailers, condos or boats. A homestead exemption protects the homeowner from total loss in the event the home is sold to pay off debts. Alternatively, the homeowner can file for a declared homestead. A declared homestead requires an application that is prepared, signed, notarized and then filed at the county recorder's office. It increases the number of protections afforded to the homeowner. For example, a homeowner in debt can sell his home and use the proceeds from the protected equity to purchase a new home. If the new home purchase is made within six months, the investment is protected from creditors.

Personal Circumstances

The amount of homeowner equity protected is dependent on family status and other personal factors. A married homeowner living with his spouse in the home is eligible for $75,000 in homestead protection. The same amount applies if the homeowner cares for a minor child or grandchild living in the home. The amount of protection decreases to $50,000 for a single person and increases to $125,000 for homeowners who are 65 or older. Other factors that increase the amount of protection for debtors include physical ability to work and income level.

Heirs

A declared homestead provides protections for heirs in certain circumstances. California law says an heir of the declared homestead property owner is protected against creditor liens if the property served as the heir's principal place of residence. This includes the spouse and other surviving family members. The rule applies regardless of whether the deceased was the sole owner or co-owner of the property.

Judgment Creditor

The judgment creditor who sues a homeowner for unpaid debts and wins is entitled to sell the homeowners' property to satisfy the debt obligation. When a home is forced into sale, the proceeds obtained from the sale are used to pay the mortgage holder first, the homeowner second (up to the amount of the homestead exemption) and the judgment creditor last. If there is no money left over after the first two are paid, the judgment creditor recovers nothing despite winning in court. In the event the homeowner voluntarily sales the property and there is no declared homestead, the judgment creditor is paid second and the homeowner/debtor is paid last.

Read More

Will My SSI Benefits Be Garnished If I File Bankruptcy Because of Credit Cards?

If you are receiving Supplemental Security Income (SSI) and are in debt, you should be aware that your SSI money can never be garnished, nor will you be required to give it up in bankruptcy. In fact, if SSI is your only income, talk to a lawyer about whether bankruptcy is right for you.

Supplemental Security Income

SSI provides cash benefits to elderly and disabled people with very low incomes and who own very little that is of value. Under federal law, SSI money cannot be seized or garnished by a creditor. Creditors may still be able to garnish other sources of income that you have, as well as file a lien on your home.

Bankruptcy

In bankruptcy, an individual either asks the court to wipe out her debts and give her a fresh start (Chapter 7) or, if the person is earning enough money, arranges a court-supervised repayment plan (Chapter 13). A person's income is never taken from them in bankruptcy.

Considerations

If your primary problem is that you don't want to deal with bill collectors, the federal Fair Debt Collections Practices Act gives you the right to send a letter to bill collectors demanding that they stop contacting you. On the other hand, if you are concerned about losing what income or assets you do have, bankruptcy may be a good idea.

Read More

Chapter 7 Recovery

Filing for chapter 7 bankruptcy can provide you with relief from the majority of your debts. At the same time, it can damage your credit score. While this process can hurt your credit, the damage is not irreparable. Taking the proper steps can help you bounce back from bankruptcy in a reasonable amount of time.

Function

Rebuilding your credit scores after bankruptcy is important so that you can be approved for credit in the future. When you have a bankruptcy on your credit report, lenders will be hesitant to lend you money. If they do lend you money, they will charge a higher interest rate than what they would charge another customer without a bankruptcy. Building your credit score to a higher level can help you be approved for financing and save money on interest.

Time Frame

A Chapter 7 bankruptcy judgment will remain on your credit report for as long as 10 years. That does not necessarily mean that your credit will be ruined for that long. You can start rebuilding your credit immediately after filing for bankruptcy. It may take two or three years to get your credit back to an average level, but you should start the process immediately after bankruptcy begins.

Types

To rebuild your credit score after a bankruptcy, it helps to have multiple types of credit accounts. If you can combine installment accounts with revolving credit accounts, this will help you boost your score quickly. For example, a car loan or a mortgage is considered to be an installment account. A revolving account is a credit card or a store account. You may not be able to get an unsecured credit card immediately, but you can get a secured credit card that reports to the credit bureaus.

Credit Use

When you are trying to rebuild your credit, use your credit accounts lightly. Many people who have filed for bankruptcy are scared to use their credit again because they believe they will get in trouble again. If you can make small, regular purchases with a secured credit card and then immediately pay off the balances, this will help your credit score significantly. The credit card company will report this action to the credit card bureaus.

Considerations

When you are rebuilding your credit score, the most important factor is making your payments on time. Many people who file for bankruptcy got in the habit of skipping payments on their accounts, which can significantly hurt your credit score. If you want to rebuild your score, making payments every month without fail will make a big difference. Pay your installment loans and your revolving credit accounts every month.

Read More

Information on My Debt Consolidation

Eliminating credit card debt and other outstanding loans may seem long and arduous. By means of debt consolidation, you can pay off your principal balances sooner. Debt consolidation doesn't eradicate debt. Instead, consolidation helps you acquire cheaper interest rates on debt. With cheaper rates, you can reduce the principal faster.

Debt Consolidation Loans

Acquiring a debt consolidation loan through your bank or credit union can result in a lower interest rate. For example purposes, your credit cards may charge an interest rate in the 20 percent range. However, a bank or credit union approving your debt consolidation loan may only charge a rate of 8 or 9 percent -- depending on your credit history. This lower rate can significantly reduce your monthly obligations; and because debt consolidation loans have fixed loan terms, you can pay off the balance within a few short years.

Credit Card Balance Transfer

Skip the application for a debt consolidation loan and apply for a low-interest credit card to transfer your balances. Balance transfers help with consolidation because these offers include lower interest rates and lower monthly payments. You can move all your credit card balances onto a single card, and only worry about one monthly bill. Depending on your credit history, you may qualify for an introductory 0 percent balance transfer offer. Thus, creditors apply your entire payment to the principal balance.

Home Equity Loans

Tap into your home's available equity and use this money to completely pay off your high interest credit cards and other loans. Home equity loans and lines of credit, or second mortgages, use your property as collateral. Lenders let you borrow up to a percentage of your home's equity -- usually 80 percent. Acquire funds in one lump sum, or ask your lender to set up a credit line and withdraw funds on an as-needed basis.

Debt and Credit Counseling

Understandably, not everyone fits the criteria for a debt consolidation loan, balance transfer or home equity loan. These options help people with good credit scores and those who own property. If you don't meet these requirements, or simply don't want to use these options, consider debt and credit counseling to help consolidate your debts. Rather than provide funds to pay off your debts, debt counseling combines your balances into one bill, and agencies work with creditors to help slash your interest rates.

Read More

How to Check Your Credit Status

Managing and maintaining credit is essential to improving financial health. Understanding both how credit works and how it can be monitored is a necessary skill for all consumers. Checking your credit status is fairly easy, if you know where to look.

Instructions

1

Collect your financial documents. This includes having your personal information handy (especially your social security number). Pay special attention to all credit card and loan statements, as these will be the accounts listed on your credit file.

2

Log on to Annual Credit Report's website (see Resources). The website, which is maintained and governed by the federal government, allows all consumers a free copy of their credit report from all three credit bureaus---Equifax, Experian and Trans Union.

3

Enter your personal information on the website under the sign-up page. Pay special attention to all forms, as there will be advertisements encouraging you to purchase other financial products (such as your FICO score, a number that is not free). If you wish to purchase extra items, check or uncheck the boxes accordingly.

4

Answer the security questions. This is why you need your financial paperwork. The security questions pertain to all open and closed accounts on your credit report. You must answer all questions correctly in order to proceed. Use your files as a reference. If you don't know an answer to a question, log out, do the research required to obtain the answer and log back in.

5

Review your credit status for inaccuracies. Corroborate all information on all three reports. If there is erroneous information on any or all reports, contact each bureau separately.

Read More

Can You Garnish a Self-Employed Person in Kentucky?

If you lend money under a signed contract in Kentucky, and the borrower fails to make payments, you may initiate collection efforts. In some cases, sending letters or emails and placing telephone calls may compel the borrower to bring payments current. However, if the borrower does not respond, you may opt for a more aggressive strategy, including garnishment. Kentucky law does not prohibit garnishing a self-employed borrower, but collecting from this type of borrower may be more difficult than executing a garnishment against a traditionally employed worker.

Obtaining a Judgment

Under federal law, you cannot garnish the wages of a borrower without a judgment. You must file a lawsuit against the borrower, typically with the circuit court in the county where the borrower resides, for the balance of the debt. The court will issue a summons containing a court date when both you and the borrower must appear to present your respective sides of the case. If the borrower does not appear, the court will award you a default judgment for the loan balance and court costs. The court will also issue a judgment if the borrower appears but cannot raise a successful defense. Upon award of a judgment, the court may set a due date by which the debtor must pay you.

Notice of Garnishment

You must wait 10 days after obtaining a judgment, or after the payment due date established by the court, to pursue earnings garnishment in Kentucky. After the 10-day period, you may apply to the court for a garnishment order. Traditionally, the court mails the order to the debtor's employer; however, if you have obtained a judgment against a self-employed debtor, the court will mail the order directly to the debtor. As a self-employed business owner, the debtor has 20 days to respond to the order.

Post-Judgment Interrogatory

Because garnishing a self-employed debtor's income does not involve compliance by a separate employer, the debtor may avoid answering the garnishment order to avoid paying the judgment. You may send the debtor a post-judgment interrogatory, which requires the debtor to disclose her assets, income and expenses. If the debtor does not respond within 30 days, you may petition the court to order the debtor to respond.

Limitations

Judgments for written contract debts have a 15-year statute of limitations in Kentucky. This means you can only continue an earnings garnishment against a self-employed debtor for 15 years after judgment unless you apply to renew the judgment. Also, Kentucky follows federal law, which limits garnishment to 25 percent of a debtor's earnings.

Read More

How to Repair Credit After a Student Loan Default

If you take out a student loan to finance your education, but fail to make payments on the loan, your student loan will fall into default. According to myFICO.com, your history of making timely payments on your debts is responsible for 35 percent of your credit score. Defaulting on your student loan damages your credit score substantially. Unfortunately, the only method available for repairing the damage done to your credit report after defaulting on a private student loan is time. However, if, like most students, you opted for a low-interest federal student loan, you have the option to rehabilitate your loan and repair the damage nonpayment has done to your credit history.

Instructions

1

Structure a budget that will allow you to make regular student loan payments for long enough to bring the loan out of default. If you are struggling financially, asking for deferral or forbearance to avoid paying the loan until you have more disposable income is an option----but only once the loan is no longer in default. If you must seek out financial assistance from friends and family members to bring your loan current, do so.

2

Call the U.S. Department of Education (DOE) and explain that you would like the opportunity to rehabilitate your student loan. You will be enrolled in the loan rehabilitation program. If your wages are currently being garnished by the government in an attempt to recover the loan, wage garnishment will end to give you the opportunity to rehabilitate. Use this opportunity to negotiate a monthly payment that is acceptable to the DOE, but not so expensive that you cannot comfortably pay your other bills while you are rehabilitating your loan.

3

Pay your student loan payments on time for a minimum of nine months. This requirement applies to Perkins Loans, Federal Family Education Loans (FFELs) and Direct Loans. Any money the government withholds from you during the rehabilitation process (such as withholding your income tax return) cannot be counted toward loan rehabilitation funds. The most important aspect of successful loan rehabilitation is to always pay on time, lest you forfeit all the progress you have made toward rehabilitation. You can opt to have the DOE draft payments from your bank account automatically every month if you are afraid of forgetting to make your payment.

4

Verify that changes have been made to your credit reports. Once you have successfully completed the loan rehabilitation program, the DOE will update your credit reports to reflect a "paid as agreed" notation in lieu of late payment notations. Rather than hurting your credit score, your student loan will now help your credit score. After the change is made, you may see a jump of 100 credit points or more, depending on your previous score.

Read More

How Does Debt Collection Work?

Debt Collection

Debt collection is the process by which debt collectors, anyone authorized by your creditor to demand payment on their behalf, recover a debt you owe. This includes mortgages, personal, student and auto loans, parking tickets and outstanding utility bills. Debt collectors are expected to follow fair debt collection practices stipulated by the Fair Debt Collection Practices Act, which is designed to protect consumers. Thus such acts as contacting you before 8 a.m. or after 9 p.m. are strictly prohibited. But debt collectors do not always comply.

How it Works

Creditors have different standards for deciding when to refer an account to a collection agency or debt collector. After the debtor has received a specified number of warnings the account is referred to collections, which could either be an internal department or an outside agency. If it is an outside agency the agency gets paid an agreed fee usually a percentage of the total amount of the debt they are able to collect. Within five days of a debt collector's first contact with you on the phone, you will be sent a notice in the mail stating how much you owe and how to make a payment. If you believe you do not owe the money, you have 30 days to respond in writing and the collection process should stop. However, if the debt collector has proof of your debt such as an outstanding bill, he may continue to contact you. If you do not respond, to the initial letter, it is assumed you owe the debt and the collection process will take its normal course.

Criticism of Debt Collectors

While debt collectors are barred by law from harassing debtors over the phone, falsely representing themselves or the information they are providing you, reports abound of them doing just that. Some debt collectors have threatened debtors over the phone. If you have been a victim of such acts you can report such collectors to your state's attorney general's office or the Federal Trade Commission. The law also provides for you to stop a debt collector from contacting you if that's what you want. You can write the debt collector a letter stating that and by law they are obligated to comply.

Read More

How to Protect Your Credit With a Security Freeze

The more time your credit report is requested by yourself or third parties, the more negatively it affects your credit rating. Put a security freeze on your account to restrict access. You can still get your free annual credit reports and your credit score won't go down, but this will severely hamper a thief's chance of opening an account under your name.

Instructions

1

Check out the laws for your particular state. Some states allow anyone to place a credit freeze, while others will only do so if you are a victim of identity theft. Costs vary depending on state and often it is free for identity theft victims. Check the link below your state for specifics on using the security freeze law.

2

Go to any or all of the three major credit unions and register online. They are TransUnion, Equifax and Experian. Fill out your personal information to put a security freeze on the account. If you have to pay a fee, have a payment source ready. If you are a victim of identity theft, you will need to include a copy of the identity fraud report or an identity theft passport.

3

You can also request a freeze by mail. Send a letter for the request to each credit union you wish to have an account freeze at the listed address. Include your full name, Social Security number, current and previous home addresses, a copy of the identity theft report, a utility bill in your name that can verify your current address, a copy of your birth certificate, and some other legal form of personal ID (such as passport or driver's license). You will be sent a confirmation through the mail, and will be given a security code to be able to remove the account freeze.

Experian Security Freeze
P.O. Box 9554, Allen, TX 75013

TransUnion, Fraud Victim Assistance Department
P.O. Box 6790, Fullerton, CA 92834

Equifax Security Freeze
P.O. Box 105788, Atlanta, GA 30348

Read More

Quick Ways to Improve Bad Credit

Bad debt is stressful and burdensome. Several quick steps can be taken to improve bad credit to the point where you can start to improve your credit. Take your time in beginning the steps because you do not want to make mistakes when improving your credit.

Stop Using Credit Cards

One of the first ways to improve bad credit is to stop using credit cards. When you stop charging, you will not accumulate more debt. It sounds simple, but it will take effort and determination to put those credit cards down. It is important that you take control of your situation and your money versus being controlled by credit and what you see. Put the card away but do not close the account. Old accounts that have a good record are significant when it comes to your credit score.

Credit Report Review and Disputing Misinformation

Get a copy of your credit report and begin to dispute information that does not belong to you. You would be amazed at how misinformation can bring your score down. Seize this opportunity to get your credit report, review it thoroughly and remove information that is incorrect. When you dispute information, it has to be corrected within 30 days and that is certainly a quick way to improve your credit if you detect incorrect information.

Old Debt Payoff Plan

If you have discovered small, old debt and you are now in a position to pay it off, then contact the creditor and share your situation. Find out if you can work together and arrange a pay off or if the creditor can settle the account with you for less than the amount owed if you have cash in hand today. This is a benefit in itself because it will free up money for other bills or accounts you want to focus on.

Delinquent Accounts Made Current

Another step you can take is to bring any delinquent account current and remain current. Contact the creditor and arrange to bring the account up to date. Discuss with the company your circumstances. If you make the account current, ask the company if it will work with you by lowering the payment amount or changing the due date. Bringing delinquent accounts current will influence your credit in a short amount of time. Payment history makes up 35 percent of your credit score.

Patience

Debt did not occur overnight. It will not be improved overnight. Use these ideas to make your own plan and stick to it. You could begin to see improvement in your bad credit within months. It requires you get involved and be determined to improve your credit situation and not fall into the traps of applying for more credit and buying on impulse.

Read More

Information on Credit Bureau Regulations

Anytime you request a new credit account, take out a loan or make a payment on your credit card, a credit bureau records that information. The credit bureau then uses that information to compile a credit report that creditors use to determine your eligibility for new credit cards, higher credit limits and interest rates on everything from car loans to retail store cards. The three major credit bureaus, Equifax, Experian and TransUnion, all follow a list of regulations set forth by the Fair Credit Reporting Act.

Information Reported on a Credit Report

The Fair Credit Reporting Act establishes what information a credit bureau can include on a consumer credit report and how long that information can remain on the report. Civil suits, judgments and arrest records may not appear after the governing statue of limitations has expired. Paid tax liens, accounts sent to collections or any other adverse action against the consumer cannot appear for more then seven years. Bankruptcies may not appear after ten years. A credit transaction or life insurance policy greater then $150,000, and an employment record with an annual salary of $75,000 or higher can remain on a credit report indefinitely.

Information Disclosed with a Credit Report

Credit card bureaus are required to include certain information with every consumer credit report. If a consumer initially files for bankruptcy but withdraws the claim before the final judgment, the bureau must report this information. If a consumer willingly closes a credit account, the bureau must list the account as closed by the consumer. If the consumer disputes information on their credit report, the credit bureau must include a record of the dispute in every report they deliver. In addition, if consumer's credit score is low due to a number of inquires on their credit report, the credit bureau must indicate that as the reason for the low score.

Access to Credit Reports

The credit bureaus may provide a credit report to any parties looking to offer credit to a consumer, including credit cards, mortgages and personal loans. The bureau may also provide a report to an insurance underwriter or for employment purposes. However, the consumer must agree to a credit check in writing before the prospective employer can request the report. State governments can also request a consumer credit report to evaluate child support payments.

Read More

Can a Debt Collector Garnish Wages After Writ of Garnishment on a Bank Account?

Creditors typically attempt to collect on delinquent accounts by sending demand letters and making telephone calls; however, if you ignore a creditor or refuse to make satisfactory repayment arrangements, a creditor may opt for more aggressive action. Ultimately, this may include freezing your bank accounts under a writ of garnishment. In some cases, a creditor may also garnish your wages, even if it has already frozen your bank account under a writ of garnishment.

Reasoning

A creditor usually either garnishes your income or freezes your bank accounts, but not both. This is because most debtors deposit their earnings in their bank accounts, so executing both types of garnishment effectively violates federal and state wage garnishment limitations. However, a creditor may opt for both actions if your bank account contains nonexempt funds not derived from your employment earnings. This prevents you from withholding funds that your creditor could legally apply toward your unpaid debt.

Garnishment Process

Creditors must take certain steps before legally garnishing your wages or your bank account balances. A private creditor must file a lawsuit, typically in the civil court of the county where you live, to obtain a money judgment against you. After obtaining a judgment, it must typically apply for a writ of garnishment, which allows the creditor to execute a bank account or wage garnishment. The creditor must then send your bank or employer a written order demanding withholding of funds not protected by federal or state law.

Wage Garnishment Exemptions

Regardless of whether a creditor has executed a bank account garnishment, federal and state laws mandate wage garnishment exemptions. Under federal law, 75 percent of your wages are protected from garnishment. If your weekly earnings are less than 30 times the federal minimum hourly wage, 100 percent of your wages are exempt. State laws may place additional restrictions on wage garnishment. North Carolina, South Carolina, Pennsylvania and Texas prohibit wage garnishment for debts except taxes, child support and alimony.

Debtor's Examination

Most states permit judgment creditors to request a debtor's examination, which is an informal deposition or a formal hearing during which the debtor must disclose all assets and sources of income. This can be useful for a judgment creditor to determine whether garnishing both a debtor's bank accounts and wages expedites payment of a judgment debt. A debtor's examination can also be useful for the debtor; it allows you to show that garnishment of both wages and bank assets would constitute a severe financial hardship, which may prevent the judgment creditor from taking both actions.

Read More

About In Charge Debt Solutions

In Charge Debt Solutions is a non-profit organization that offers in-person, telephone and Internet-based credit counseling to people all over the United States. It also provides debt management services to interested consumers to help them get out of financial trouble without resorting to bankruptcy. In Charge Debt Solutions is based in Florida.

Getting Started

In Charge Debt Solutions calls your creditors and arranges for a payment plan, often reducing interest rates and waiving late and over-the-limit fees.

Payments

The company takes one payment from the consumer each month and distributes it as agreed to the creditors.

Other Services

In Charge Debt Solutions also provides general financial counseling to those who may not want a debt management plan.

Memberships

In Charge Debt Solutions is a member of the Better Business Bureau and the Association of Independent Consumer Credit Counseling Agencies (AICCC). They are also approved by the federal government to offer required courses to those filing bankruptcy.

Counselors

Credit counselors working for In Charge Debt Solutions must be certified through the Association for Financial Counseling and Planning Education (AFCPE).

Evaluation and Costs

Getting a basic evaluation is free. Further costs for participating in a debt management plan through In Charge Debt Solutions are not disclosed on their website (see Resources).

Read More

Can My Income Tax Check Be Garnished for Credit Card Debt?

A garnishment can be initiated against any form of income you might receive, including a tax refund, subject to the laws of the state in which you reside. The mere fact that you owe money on a credit card debt does not necessarily mean that your tax check will be garnished. In fact, garnishment is a legal process that requires a court order.

Validity

After a debt has been determined valid by a court, a judgment is entered against the debtor. The court order may require that money owed to you be garnished and third parties will be ordered to divert your money to the creditor as partial payment of your debt. This judgment and any garnishment obtained to collect the award are subject to a statute of limitations that eventually will expire.

Statute of Limitations

A statute of limitations is a legal timeframe set by your state that dictates a limit on the period of time that a garnishment can remain in force. After that, the debt can no longer be collected. Visit the CardReport.com website for a state-by-state list of statutes of limitations (see Resources).

Considerations

In some states, the law stipulates that the debts of one spouse cannot be collected from the assets of the other. In those states, a tax return filed jointly would only allow for garnishment against the individual debtor, meaning only half the tax refund could be garnished. Check with your state tax department or attorney general's office for more information.

Solution

In some instances, a garnishment can be settled for less than the full amount owed. Communicating with the company or agency attempting to collect the debt is required.

Effects

The Internal Revenue Service cautions that any portion of a debt forgiven as the result of settlement negotiations is considered a form of income and therefore taxable. Failure to pay a debt normally allows interest and penalties to accrue, which may increases the cost of any settlement, so the sooner you act the better when it comes to debt resolution.

Read More

Failure to Pay a Debt

Although failure to pay a debt is not a criminal offense, it has many consequences depending on on the debtor's situation. A mortgage default will lead to foreclosure, and an unpaid car loan can result in repossession of the car. Wages may be garnished, tax liens imposed on property, and credit ruined, hindering future borrowing ability. In the event of failure to pay a debt, the debtor must understand the nature of the debt, prepare for likely consequences and seek out possible solutions.

Nature of Debt

A debt can be either secured or unsecured. A secured borrowing can be as large as a mortgage or a car loan or as small as pawning off a piece of jewelry for short-term cash needs. By failing to pay a secured debt, the borrower simply loses the security deposit -- the house, the car or the jewelry. An unsecured debt is granted against only the borrower's credit, an intangible. If a borrower breaks the promise to pay, the recourse for an unsecured debt may be problematic for both the lender and the borrower as it can involve collection, lawsuit or the seizing of personal property.

Negative Effects

In addition to losing security, failure to pay a secured debt affects the borrower's creditability for future borrowing. Lenders may charge higher interest rates if they ever approve a borrower with tainted credit record. Failure to pay an unsecured debt presents many uncertainties for the debtor, as lenders and collection agencies may pursue different courses of action. In general, the last collection resort for lenders is filing a lawsuit and, if a court judgment is granted, the lender can garnish a portion of the debtor's wages, which may force an eventual bankruptcy filing.

Possible Solutions

When facing with a debt-collection lawsuit, a borrower's options become very limited. It is helpful for the borrower to seek out solutions with the creditor after failing to pay a debt. Many times, lenders of unsecured debt such as credit card debt are willing to negotiate with the borrower for a reduced payment to resolve the debt. By doing such a debt settlement, the borrower tries to limit any negative remarks on his credit report.

Statute of Limitations

Laws governing debt collections, such as the federal Fair Debt Collection Practices Act, afford consumers certain rights with regard to how debt can be collected. For example, debt collection agencies cannot make collection calls during certain hours of the day. Statutes of limitations allow lenders to sue only within a specified period, which can be as short as three years in some states for some debts. The failure to pay a debt would normally stay on a credit report for seven years and then be erased on the assumption that a credit report, negative or positive, should be aged off as it becomes irrelevant over time.

Other Consequences

Failure to pay a debt not only has direct financial impact on the borrower but can also bring other unintended consequences. For example, it can affect employment, both for the existing job and future career. When repeated court judgments are placed against the borrower for wage garnishment, the employer could potentially fire the employee because of concern that the lack of credit could translate into an issue of character. Certain professions, such as financial services, may require a credit check at the point of hiring, and an unsatisfactory credit history might hurt the job seeker.

Read More

How to Improve Your Credit Report

A credit report is a record maintained by a credit reporting company that contains information about your personal credit history. How good (or bad) your credit report looks is the main factor that determines your ability to get a mortgage, finance a car, or borrow money for just about anything. As important as a credit report is, many people dont know much about how credit reports are evaluated or what factors lenders take into account when deciding whether or not to extend credit. One reason for this is that its only in the last few years the three major credit reporting companies (Equifax, TransUnion and Experian) have been required to give consumers access to the contents of their credit reportsand they still are reluctant to discuss how the information is used by potential lenders. This article takes you through the items lenders consider important and explains what you can do to improve your credit report.

Instructions

1

Get a copy of your credit report from each of the three major credit reporting companies. They are required by law to give you a copy free of charge once a year. The link below will take you to the official website where you can request your credit report. You do not have to purchase anything to get this report free once a year.

2

Check your credit report for errors. If you find mistakes contact the credit reporting company and have the error corrected. You can also identify fraudulent applications for credit or other forms of identity theft that can cause you problems.

3

Use your credit report to identify each of the items that can reflect badly on you or lower your credit score (your credit score is that much talked about number that summarizes the information in your credit report). Once you have identified weak spots in your credit history you can take action to improve your credit report. The remainder of this article explains the things potential lenders consider most important and what you can do to strengthen your credit history in those areas.

4

Pay particular attention to your payment history. This is the single most important thing to lenders. If you have a record of making payments on time it will reflect favorably on you. If a situation arises where you cannot avoid missing a payment due date, contact the company and tell them when the payment will be sent and get it in as soon as you can. If you do this, many lenders wont report an occasional late payment especially if youve been a customer for a long time.

5

Avoid making overdrafts (bouncing checks). We all can make a mistake and banks will usually cover you if this happens only rarely (but will charge you a stiff penalty fee). Ideally, though, you should have no overdrafts at all.

6

Keep your total debt and payments within your ability to pay. If you have to spend too much of your monthly income servicing your debt obligations it will make lenders reluctant to extend more credit. A good rule of thumb is that you should keep your total monthly payments low enough that you can put at least a little aside in a savings account each month.

7

Dont constantly apply for new credit accounts or close accounts. This looks bad on your credit report because to a lender it indicates you may be over extended or likely to borrow more than you can afford to pay.

8

Get help fast if you run into financial problems. Most lenders are willing to work with you if you take the initiative to contact them and make a good faith effort to pay what you owe. This is in their interestthey want to get their money! But one of the advantages is that they will usually minimize any negative information that gets passed along to credit reporting companies. Doing this also minimizes the risk of ending up in bankruptcy, which will ruin your credit report for years to come.

Read More

Can I Turn in a Leased Car Early?

Leasing a car is seen as an advantage for someone looking for a lower monthly payment on a new vehicle than financing the vehicle would precipitate. Lease customers who want to terminate car lease contracts are subject to the terms of the lease agreement. There are options for breaking car leases that do not harm a customer's credit.

Rollover

Any car dealer that offers vehicle leasing will terminate car lease agreements for customers who sign a new lease. Dealers hold customers accountable for lease terms including the mileage allotment and excessive wear-and-tear clause. The dealer then receives the vehicle and pays off the remainder of the lease. The customer's new lease will have the dollar amount of all remaining payments from the old lease written into the new lease financing.

Lease Transfer

Some lease contracts include an option for car lease transfer. This allows the lease customer to find a person willing to take over the car lease under the current agreement. The new lease customer will naturally be subject to the same credit evaluation as the original customer for the dealer to approve the transfer in most cases. The original lease customer is listed as fulfilling the contract on credit reports.

Purchase

The car lease will have a buy-back fee listed for the purchase of the vehicle after the lease is fulfilled over the agreed time. Customers breaking car leases to purchase their vehicles must make an agreement with the dealer on purchase fees which usually includes the remaining payments from the lease. The purchase generally costs more before the lease is fulfilled. Remaining payments may be absorbed into the purchase financing arrangements.

Options

One of the factors that cause car dealers to forgive car lease termination includes customers moving to states that don't allow the lease. Not all lease terms are approved in every state. Some dealers will recognize certain financial hardships as valid reasons for breaking car leases. Customers who are not able to make lease payments are encouraged to meet with dealers to make arrangements for reduced or deferred payments to preserve good credit ranking.

Read More

Characteristics of Debt

The characteristics of debt are largely based on your financial situation and your financial goals. Debt is often characterized as a bad thing in an economic downturn when unemployment rates and home foreclosures rise. Yet there are times when taking on debt can work in a person's favor. In any case, using debt to your advantage requires examining your financial situation and having specific reasons for accumulating debt.

Good and Bad Debt

The difficulties in characterizing debt become evident when comparing advice from people in the financial industry. In a Bankrate.com article, a chief executive officer asserts that good debt includes business and mortgage loans because they can create value as the worth of a business or home rises. That's in contrast to an auto loan in which the purchased vehicle quickly loses value. A finance professor also recommends assuming debts that are tax-deductible, such as the tax-deductible interest of a mortgage. Yet an article on the U.S. News and World Report website advises forgetting about trying to define good debt and bad debt. For example, credit-card debt is often characterized as bad debt because it usually comes with high interest rates. Yet credit cards also can help you get ahead when they're used for important business or school expenses, but the cards still should be paid off as soon as possible.

Low-Interest Debt

Determining whether debt should be paid off also can be affected by a person's financial situation and goals. For instance, you might choose to keep low-interest debt instead of paying it off if you're planning to buy a house. This would allow you to put more cash into your savings account for a down payment on your home instead of using your cash reserves to pay off debts with low interest rates. Some low-interest debts can be an investment in your future, which will ultimately bolster your finances. That includes a low-interest student loan that helps you get training for a job with higher pay.

Debt Versus Income

Your creditworthiness determined by mortgage bankers and others can be impacted by how much debt you have. Generally, your total monthly debt payments shouldn't exceed your monthly income before tax deductions. Yet not taking on any debt also can hamper your financial situation if being debt-free means you won't be able to set aside cash for emergencies. In such cases, you might consider good debt as any necessary expense you can't afford to pay for without wiping out your cash reserves.

Read More

What Is the Quickest Way to Repair Your Credit?

Bad credit can leave you with few or no options for getting a credit card, mortgage, a loan, a good job, or even a decent apartment. Before succumbing to the promise of "quick credit repair" services, check out the laws and rules that let you repair your own credit at little or no cost.

Request Your Credit Reports

You have the right to request a copy of your credit report from all three major credit bureaus. While they can charge for this service, federal law requires them to provide you with one free report each year. Visit annualcreditreport.com to request your free reports.

You are also entitled to a free credit report under a few other circumstances: If a potential creditor, landlord, or employer takes an "adverse action" against you (such as denying you credit, requiring a co-signer, or withdrawing an offer of employment), it must give you the name of the credit bureau that provided the credit report. You can then request a free copy of the report from that bureau within 60 days of the adverse action. If you are unemployed and planning to look for a job, or on welfare, you can also request an additional free credit report.

Dispute Information

After you get your reports, look them over carefully. Keep an eye out for creditors that you don't recognize, balances that seem too high, or negative information that is more than seven years old. Pay special attention to any "public records" listed: Credit bureaus search courthouse notices for information about judgments and bankruptcies. If you have the same name as someone with legal troubles, his court case can end up on your credit report. Contact the credit bureaus, either online or through the mail, with your findings. By law, the credit bureau must investigate your claims and report their findings to you. If the credit bureau cannot verify what is on your report, it must delete it.

Negotiate With Creditors

Accurate credit report information is trickier to remove, but some people have success by asking a creditor to remove negative information in exchange for paying off the account. If you make such an arrangement with a creditor, be sure to get your agreement in writing before sending them any money.

Responsible Behavior

Your credit will improve over time if you demonstrate responsible credit behavior with your other accounts. If you have a credit card, student loan, or other debts that require ongoing payments, be sure to make your payments on time. If possible, pay down any balances on the credit card accounts that you do have: Fully 30 percent of your credit score is determined by how much of your credit limits are actually in use, according to MyFICO.com. The lower your balances in comparison to your limits, the higher your score will climb.

Common Mistakes

Never close your credit card accounts while you are trying to repair your credit. This will reduce the amount of available credit to you, making your debt to credit limit ratio higher. If you are afraid of temptation, ask a trusted family member to hold your cards for you or lock them up yourself in a bank safe deposit box.

Avoid taking a shotgun approach to getting new credit. While getting a secured or low-balance credit card can help you rebuild credit, too many credit applications can lower your score. Research your options carefully and select a card that you know that you qualify for to avoid having submit multiple applications to different credit card companies.

Read More

Getting Free Credit Reports By Mail

Getting a copy of your free credit reports is one thing you need to do if you want to improve your credit score, apply for loans or check for identity theft. Trans Union, Experian and Equifax are the three credit agencies that have detailed records of your financial history. These three agencies determine your credit score which affects many areas of your life. The government legally requires all three credit reporting agencies to provide you with a copy of your credit report each year at no charge. All you have to do is request the credit reports and there are a few ways to do this.

Instructions

1

Call the credit report agencies. If you just want a credit report from Trans Union, Experian or Equifax, you can use the toll-free numbers to request the free copies. This is the easiest way to get your credit report. The number for Trans Union is (800) 888-4213. Call Experian at (888) 397-3742. The number for Equifax is (888) 202-4025.

2

Visit the websites of the credit agencies. Each of the three credit reporting agencies has a website (see Resources list). By checking out the websites you will get more information about credit, improving your credit score and how the credit agencies work. Experian, Equifax and Trans Union all have easy to use online forms for requesting free copies of your credit report. (If you want you also have the option of seeing your credit report online immediately which you can then print out.) Be warned that sometimes online requests aren't accepted. If you have moved since the last time you got a credit report from a company, you have to prove the change of address by providing a copy of your phone bill or utility bill.

3

Mail the request for free copies. This step is necessary if you also need to submit copies of a bill to show your new address. All the credit agencies allow you to print out a request form, fill it out and then mail it to the company. If you have to show proof of change of address, it is probably best to submit all the paperwork at one time to simplify matters. Making a request by mail is also an option for people who are not comfortable putting personal information on the Internet.

4

Contact Annual Credit Report if you need all three reports. Annual Credit Report is the only company authorized by the Federal Trade Commission (FTC) to provide consumers with free copies of their credit reports each year. The website provides useful information about the credit reporting agencies and credit monitoring services. There is an easy to use form for requesting your credit reports. Once you fill out the online form and submit it, you will receive copies of you credit reports through the mail within 15 days. Another option is to call the company at (877) 322-8228 and use the automatic system. Still another choice is to print out the request form and then mail it to American Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Read More

How to Write a Payment Plan

Before you implement any type of deal, you need to get it in writing, and that includes a payment plan arrangement, no matter how informal. Oral agreements are enforceable by law, but it is much more difficult to prove the terms of the agreement in court. When you are setting up a payment arrangement with a friend, colleague or company, be sure to write the agreement in clear language that is understood and accepted by both parties.

Instructions

1

Format your payment plan as either a letter or a contract. For a letter, start off with a greeting and list the name and address of the person who you are making the agreement with at the top. For a contract format, write in the full name or business name of each party at the top of the sheet along with full addresses.

2

Enter information about the debt to be repaid. That includes the amount of the debt, the account number if applicable, the date it was initiated. If this is a request in letter form, state that you have every intention of repaying this debt. Include information about why you need to set up the payment plan (financial issues, job loss, other debts).

3

Set out the proposed payment plan information. Include the length in months of the payment plan, the amount that will be paid each month (or week), and any interest that will be built into the payment agreement. To figure the monthly interest charge, divide the rate by 12 and multiply it by the agreed upon (or proposed) monthly payment. Figure the interest using a compounding formula (setting up the payment plan as a loan) (see Resources).

4

Write in the exact day of the month (or week) that payments will be due. Detail late fees that will be assessed to the payment plan if the payer does not pay on time and the course of action if the payer does not live up to his or her part of the agreement.

5

Include as part of the agreement a condition that the payee will not pursue collections activities or place negative information on the payer's credit report as long as payments are made on time per the payment plan.

6

Have the payment plan signed---both a printed name and signature should be at the bottom of the contract---before a notary and assure that both parties have a copy of the agreement. If this is a contract, both parties should sign, if a payment plan request letter, the requester will be the only signature.

Read More

How to Take a Nonworking Spouse Off Credit Cards to File Bankruptcy

There are many reasons you and your spouse may share a credit card account. Paying household bills automatically on a credit card both of you share simplifies the process and improves cash flow. However, when one of you needs to file for bankruptcy and the other is not working, it is easier to separate all of your accounts. Removing your spouse to prepare for filing for bankruptcy takes a straightforward conversation with your credit card company over the phone.

Instructions

1

Call the customer service number on the back of your credit card. Follow the prompts to get to a live representative. Answer any security questions to verify your identity.

2

Ask to remove your spouse from your credit card account. If your spouse is only an authorized user on your account, removing him or her should go smoothly. If it is a joint account where both your incomes and credit scores determine your interest rate and credit limit, you and your spouse may have to fill out and return paperwork to change the account. This is different with every credit card company, so follow the procedures outlined by the company's representative.

3

Return any filled out and signed paperwork, if required. Note the reference number of the user removal in a safe place along with the date and name of the representative who helped you.

4

Repeat Steps 1 through 3 for each credit card from which you wish to remove your nonworking spouse.

5

Have your spouse check his credit report four to six weeks after being removed from the credit account to verify it has been dropped off his current accounts.

6

Call the credit card company if the account has not been removed from your spouse's credit report. Offer the reference number and date you requested the removal for their reference.

Read More

How to Negotiate Settlement With a Collection Attorney

Collection attorneys specialize in the collection of past due and delinquent accounts. Businesses, collection agencies, banks and credit card companies hire collection attorneys to negotiate with consumers on their behalf. The negotiation process between a consumer and a collection attorney is similar to the negotiation process between a consumer and a creditor or collection agency. In some cases, a collection attorney may request the creditor's final approval on the terms of the settlement agreement before saying "yes."

Instructions

1

Calculate your debt-to-income ratio. Subtract your liabilities from your earned income. Based on this result, determine the dollar amount at which you can reasonably afford to settle the debt without overextending your finances. Only enter negotiations with a collection attorney will full knowledge of your financial standing.

2

Contact the collection attorney in writing or by phone. Inquire about settling the delinquent account. You can start as low as one to three cents on the dollar, depending on the age of the account. However, expect the collection attorney to push the settlement rate as high as 50 cents on the dollar or more. Ignore such pressure and keep the rate in line with what you budgeted.

3

Calculate the final settlement amount. For a settlement of one cent on the dollar, multiply the debt amount by one percent or ".01." This result is your payoff amount.

4

Request a settlement agreement in writing. Specify if you will pay the settlement in a lump sum or over time and when that lump sum or one-time payment is due. Specify the delivery options. Common delivery options include electronic transfer and phone payments.

5

Negotiate concessions and include this information in your settlement agreement. A common concession is the way in which a settlement is documented on your credit reports. Make your payment contingent on the debt collector agreeing to report the debt to the credit bureaus as "paid in full" instead of "settled." Set a deadline by which the report must be complete.

6

Instruct the attorney and the creditor to sign and date the settlement letter. Because the attorney prepared the document and acted on behalf of the creditor, who ultimately approved the final settlement offer, both signatures are necessary.

Read More

Grants and Scholarships for People Over Age 50 for College

College educations are not reserved for teens and twenty-somethings. Non-traditional students, such as senior citizens, are becoming a commonplace sight in many colleges and universities. The financial departments at schools recognize this fact, and you can find scholarships and grants available for elderly students as well as those for general non-traditional students.

Pell Grant

The Pell Grant is a federal grant program available to students of all ages, based on their financial need. The Pell Grant does not have to be paid back and can be applied for by using the Free Application for Federal Student Aid (FAFSA) form. A student can receive up to $5,550; the exact amount is based on how much the student can contribute to his education expenses, the amount of credit hours he is going for and the cost of the school.

Auditing

Many schools offer senior citizens the chance to audit classes for a much lower cost than taking the courses for credit. Although a senior would not be able to apply these classes toward a degree, she does get the exact same experience as the rest of the students for a much lower cost. Course audits can be requested through a college's admission office.

Senior Adult Scholarship Program

Alabama offers a state scholarship program that completely waives the tuition costs for seniors 60 or above at two-year colleges. Several other states, such as Arkansas and Maryland, also offer tuition waivers that allow senior citizens to attend college for little or no cost. Unlike auditing, the courses taken under a tuition waiver do count toward a degree, if the senior is in a specific degree program.

AARP Scholarship

The American Association of Retired Persons (AARP) offers a senior scholarship program for women over the age of 40. This scholarship is need-based, focused on providing older women with job skills and educational opportunities. The scholarship funds can be used in two- and four-year schools, as well as any vocational or technical schools that an elderly woman may be interested in. The scholarship amounts range between $500 and $5,000, with the specific amount calculated based on the woman's financial need as well as the total cost of the school she is attending.

Read More

Can Anyone Garnish My Disability Check?

Government agencies such as the Social Security Administration and the Veteran's Administration issue disability checks each month. Recipients usually receive the checks through direct deposit in checking accounts at banks or credit unions. In general, federal law protects the checks from garnishment unless a government agency such as the Internal Revenue Service is garnishing the account. However, there are also loopholes that allow other debt collectors to garnish disability checks.

Considerations

The Social Security Administration reports that it is possible to stop a non-government debt collector from garnishing disability checks. But the agency places that burden on the disability income recipient. Social Security and other government agencies do not cooperate directly with debt collectors, meaning they will not send payments directly to debt collectors. However, the agencies have no control over disability checks after direct deposit into bank accounts.

Process

Garnishment begins with authorization from a judge in civil court. A judge may grant a debt collector the right to garnish a debtor's bank account because of a delinquent credit card bill or some other debt. The debt collector must first file a lawsuit and receive a monetary judgment after the judge rules in favor of the debt collector. After that, the debt collector can request garnishment of the debtor's checking or savings account. The debt collector sends the garnishment order to the debtor's bank, and by law, the bank must comply with the request, which gives the debt collector access to all the money in the account.

Responsibility

Banks realize that disability payments are exempt from garnishment, but they are caught in the middle. The law requires them to comply with garnishment orders, and in most instances they can't determine if the money in a customer's account is exempt from garnishment. For example, a bank customer may receive a direct deposit of a disability check, spend or withdraw that money, and add other money to the account, which the debt collector would have access to. The possible co-mingling of funds makes it difficult for a bank to determine the presence of exempted funds such as a disability check.

Solutions

People seeking to protect disability payments from garnishment should open checking or savings accounts just for their disability check and deposit no other money into the account. Then they should notify the bank in writing that the account holds funds only from disability checks and the bank should not allow release of the money through garnishment except for the IRS or similar government agencies. The Social Security Administration reports that checks it issues are protected from garnishment by the Section 207 of the Social Security Act. Disability check recipients should also consult with a consumer affairs attorney if they fear garnishment. The attorney can write the debt collectors letters warning them against garnishing disability funds.

Read More

Is it a Good Idea to Consolidate Credit Card Debt Into a Consumer Loan?

A lot of people would rather consolidate all their credit card debts in one place to do away with multiple due dates, interest rates, minimum payments and other hassles. If you qualify for a consumer loan, this could prove to be a good move for your sanity as well as for your credit score. But there are potential drawbacks.

Interest Rates

Depending on your credit, consumer loans can have much lower interest rates than credit cards, especially if you've missed a payment or two and your card rate has hit the default rate, which can be as high as 29 percent. On the other hand, if you've missed many payments, your credit score might not enable you to get the lowest rates. Find out the range of loans at a bank or credit union you do business with and calculate what the difference in interest rate might be. If the difference is negligible, moving your debt won't cost you and still might give you peace of mind.

Credit Ratings

The Fair Isaac Corp., which calculates credit scores, uses a complex mathematical matrix of information about the kinds of credit you use, the length of your credit history, your payment history and your credit utilization --- meaning the size of your balance vs. the amount of credit you've been extended. According to MSN Money, it looks more kindly on debt owed through an installment loan than it does credit card debt. So moving your debt to an installment loan could help. On the other hand, since old credit is considered more favorable than new loans, it could hurt.

Benefits

With a consumer loan, you owe one amount with one interest rate and it's due every month at the same time. Therefore it's easier to budget that payment every month. There's no variable rate like there is with some credit cards and you know exactly by what date it will be paid off. So there's more peace of mind.

Risks

If you consolidate your credit card debt onto an installment loan, however, you should cut up your cards, or at least put them away where you won't easily access them. Don't cancel your accounts, because that can hurt your credit rating. Just make sure that once you've freed up those cards and added a consumer loan, you don't get tempted to use them before the loan is paid off.

Read More

Advantages & Disadvantages of Credit Risk

Credit risk is the risk that a borrower will be unable or unwilling to pay back a lender as agreed. When making loans, lenders of all types attempt to analyze the advantages or disadvantages of lending to particular borrowers by attempting to determine their credit risk and overall creditworthiness. The field of credit analysis is huge, and firms continue to spend large amounts of money to try to determine where to invest their money without taking on undue credit risk.

Credit Risk Defined

Credit risk is an investor's risk of loss, which arises from a borrower who does not make payments as promised. This can be a consumer who doesn't make a payment on a loan, credit card or mortgage; a business that doesn't pay an employee's wages or doesn't pay an invoice when due; or even a government that does not make a payment on a bond. Analyzing credit risk is an important part of many investing decisions, and complex programs and significant resources are often used to determine whether an investor can pay back his obligation or whether he will "default" on the obligation. As such, credit risk is sometimes referred to as "default risk."

Types of Credit Risk

Many types of credit risk exist, which sometimes are referred to in specific terminology. Any increase in costs associated with a borrower not making payments as agreed can be loosely classified as credit risk. For example, even if a credit card customer does end up paying his bill, if the lender has to make collection calls or resort to a collection agency, this increase in cost is a version of credit risk. More specifically, "default risk" is the risk that the party does not and cannot pay as agreed (over and above a simple increase in collection cost) and is sometimes referred to as "counter-party risk." When the borrower is a government, credit risk is often referred to as "sovereign risk."

Credit Analysis: Advantages and Disadvantages

Firms, governments and all types of creditors engage in credit analysis to determine to what extent they face credit risk associated with their investments. In weighing the advantages and disadvantages of making a certain type of investment, firms utilize in-house computer programs to advise on reducing and avoiding risk (or transferring it elsewhere) or use third party help, like examining rating agencies' estimations of creditworthiness from companies like Standard & Poor's, Moody's, Fitch Ratings and others. After lenders use their own models and the advice of others to rank customers according to risk, they apply this knowledge to reduce credit risk.

Methods to Reduce Credit Risk

Lenders use a variety of means to reduce and control credit risk. One way lenders reduce credit risk is by using "risk-based pricing," in which lenders charge higher rates to borrowers with more perceived credit risk. Another way is with "covenants," whereby lenders apply stipulations to a loan, such as borrowers must periodically report on their financial condition, or such that borrowers must repay the loan in full after certain events (like changes in the borrower's debt-to-equity ratio or other debt ratios). Another method is diversification, which can reduce credit risk to lenders as well as a diversified borrower pool is less likely to default simultaneously, leaving the creditor without hope of recovery. Besides these, many firms utilize credit insurance or credit derivatives, such as "credit default swaps," in an attempt to transfer risk to other firms.

Read More

How to Reduce the Total Debt Ratio by Selling Stock

You don't have to know what a debt ratio is to know that freeing up capital and paying off your creditors will improve the ratio. There are several ratios used to measure debt including debt to equity and debt to assets. In both cases, a ratio of more than 1 indicates that a company has more debt than equity or assets, respectively. In fact, most banks will accept stock for collateral on a loan and will sell the stock should the company default on the loan.

Instructions

1

Review the formula for calculating debt to assets. Debt to assets is a ratio that indicates what proportion of debt a company has relative to its assets. The exact formula is "Total Debt" divided by "Total Assets."

2

Review the formula for calculating debt to equity. Debt to equity is calculated by dividing "Total Liabilities" by "Total Stockholder's Equity." Both of these line items can be found on the balance sheet. Investors use that information to understand how much debt is being used to finance assets.

3

Determine how much stock must be sold in order to improve the ratio. The ideal debt ratio depends on the industry. Look up the average industry ratio on an investment research site on the Internet. This will give you a basis for comparison.

4

Determine a dollar amount, then divide the current share price of the stock into the dollar amount in order to determine how many shares you will need to sell in order to bring the debt ratio down.

5

Contact your broker and make a trade to sell this number of shares. Use a limit order (instead of a market order) in order to guarantee your price.

Read More

How to Avoid Identity Theft When Renting an Apartment

When you start your apartment search, you'll notice that many apartment landlords ask you to fill out an application to evaluate your creditworthiness. On the application you must provide your Social Security number, current address and other very personal information. It is natural to have concerns about identity theft.

Instructions

1

Collect a complete listing of apartments that you want to visit when you proceed with your search.

2

Research each apartment complex that you're interested in before you visit. You can use an online service like Apartment Ratings, Apartment Reviews or the Better Business Bureau to find out the reputation of the apartment management company or landlord before you continue your inquiry. Check specifically for any complaints of identity theft by past applicants or renters. Narrow down your list of apartments to look at based on the information you gather.

3

Visit the remaining apartments on your list and narrow the list down yet again to two or three final options. Only submit your information to the rental companies at the top of your list to minimize the number of rental applications containing your private data.

4

Ask each landlord for his policy for storing and destroying private data before you submit an application. The Disposal Rule of the Fair and Accurate Credit Transactions Act requires landlords to safeguard the information and dispose of it when no longer needed. Get a copy of the landlord's policy in writing and if the landlord refuses, move onto the next option on your list. Some landlords could mismanage or keep the information on file indefinitely, which puts your identity at risk. If you do not get the apartment or choose another company, visit the complex again to retrieve your application from the landlord.

5

Hire a rental agent to look for an apartment on your behalf as another option if you have identity theft concerns. You have to pay an additional fee for this service, but in many cases the agent is familiar with reputable apartment rental agencies and landlords in the area.

Read More

Forms for Voluntary Forbearance

Forbearance is a source of relief during financially difficult times. Most of the time, forbearance is sought for student loan payments. The lender will agree to a reduction in payment amount or a brief interruption in payments while the debtor gets back on his feet. Forbearance should be used carefully, because the debtor is still responsible for accruing interest on the debt. This is a voluntary process, started by filling out a simple form.

Types of Forbearance

Before you apply for forbearance, you need to know what kind you will need. One factor is whether the loans are federal or private. You will deal with different lenders and different forms if you borrowed from the government rather than a bank. One difference is that private lenders may want to negotiate an extension of the time for repayment, or make arrangements for smaller payments. With federal loans, the forbearance process is more structured and involves a break from payments.

Eligibility

The cause for the forbearance also matters. Some commonly accepted causes include enrollment in school, poor health problems and financial problems; in some cases there is excessive debt forbearance. All of these are widely accepted reasons for eligibility. Other reasons include active duty military service and, in some cases, entering the Peace Corps or Teach for America.

Where to Find Forms

The first place to go for forbearance forms is your lender. Many times they are located on the lender's website. Federal loan forbearance forms can be found on the Department of Education Federal Student Aid program website, and at larger federal lenders like Sallie Mae and Access Group. In most cases you can download the form and fax or email it back to the lender.

Other Types of Forbearance

There is another type of forbearance, in the real estate arena. It is meant to save homeowners about to default on their mortgages. With this type of arrangement, the lender may consent to delay foreclosure if the borrower agrees to catch-up his payment schedule within a certain amount of time. The best way to take advantage of this forbearance option is to negotiate with your lender.

Read More

Do I Need a Foreclosure Lawyer?

You absolutely should have a lawyer when negotiating a foreclosure. A competent real estate attorney with a reputable background and experience in foreclosures can offer much-needed legal advice. It is important to be informed whether you are trying to save your house from foreclosure or are voluntarily walking away in a strategic default.

Scam Artists

The Federal Trade Commission strongly recommends against so-called "foreclosure rescue firms." The firms are sometimes headed by foreclosure lawyers. Various state attorney generals have filed lawsuits against foreclosure rescue companies after learning that they charged homeowners large up-front fees and never delivered any real services. Some homeowners have been evicted while believing the foreclosure rescue firm was successfully negotiating with the bank when in fact nothing was happening.

Realistic Expectations

A reputable foreclosure attorney can help protect your rights but may be unable to stop foreclosure unless you are willing to file for bankruptcy. The attorney can file frivolous lawsuits aimed at slowing down the foreclosure process, but should be focused more on avoiding the foreclosure through discussions with the lender if that is what you want. If you are voluntarily walking away, the attorney's chief responsibility is warning you about the consequences.

Alternatives to Foreclosure

A good attorney can tell you about various alternatives to a forced foreclosure, such as loan modification. Loan modification allows all the terms of the loan to be changed to make the mortgage more affordable. The interest rate can be dropped and the monthly payment lowered. Missed payments can be tacked onto the end of the loan, and the term of the loan can be switched from adjustable to fixed so that the payments never increase.

Strategic Default

The attorney also can help you avoid financial repercussions from a strategic default. Some people who are able to make their mortgage payments simply decide to walk away when their home dramatically declines in value because of a recession or housing bust. The value of a home can drop by a third or even half if the home was purchased at an inflated price. That and minimum down payments leave some people owing more for their homes than they are worth.

Deficiency Judgment

Lawsuits and judgments are possible in strategic defaults and other types of foreclosure. An attorney can warn about this during the foreclosure process. CNN reports that in many states lenders can file lawsuits to collect money lost when your home is foreclosed and sold at auction. The lender can sue you for any remaining balance after the auction, resulting in a deficiency judgment signed by a judge. The judgment is a court order requiring you to pay the difference in a lump sum or installments. An attorney negotiating your foreclosure should request a written promise from the lender not to file suit against you after the foreclosure is completed.

Read More

How to Apply Utility Payments to Improve Credit Rating

Utility payments are usually not factored into credit reports unless the bills become delinquent. This is because the utility companies don't bother reporting customers to the credit bureaus because of the hassle of doing so. Despite this, if you request it from the utility company, you can get a current account reported to the bureau. It's just a matter of making it worth the company's time to report your account. Such accounts in good standing can improve your credit rating, but only if the utility company consents to report to the bureaus.

Instructions

1

Request copies of your credit report from the three major credit bureaus (Transunion, Equifax, and Experian). You can acquire your credit report either online or on paper by visiting the websites of the credit bureaus and following all posted instructions. You're also entitled to one free credit report per year from each bureau so long as you have a valid social security number. Follow the link to the Annual Credit Report web page in the resources below for more information on how to get it. Look at your credit reports to determine if your utility accounts have already been reported. Utility accounts in good standing can build up your credit history, improving your chances of winning approval for loans and credit cards.

2

Contact your utility company using the phone number on your bill and request that it begin reporting your current account to the credit bureaus. All utility companies have accounts with the credit bureaus, so it doesn't necessarily cost them anything extra to do so. Some companies will provide the service as a courtesy to an existing customer, while others will request a fee for reporting the account. You can get electricity, water, heating, and other utility bills reported to the agencies. There are some third-party companies that can perform this service for you, but it's relatively simple to make the reporting request yourself.

3

Monitor your credit report for the new account by ordering a new report at least 30 days after your request for utility bill reporting has been accepted. Check to make sure that the bill payments have been reported accurately. Utility bills in good standing will not have a massive affect on your credit score, but the information builds the length and quality of your credit history. If you have a "thin" credit history (approximately less than 10 credit entries on your report), this technique can make you more attractive to lenders.

Read More