How to Improve a Credit Score With a Revolving Credit Balance

Your credit score can affect many aspects of your life, including employment, loan interest rates and your ability to buy a house. Knowing a few ways to improve your credit score can save you thousands of dollars a year in these areas. The balances you hold in your revolving accounts, such as credit cards, can have a major effect. According to the Federal Citizen Information Center, the most effective way to improve your credit score in this area is to pay down your revolving credit.

Instructions

Preparation

1

Visit Annual Credit Report, a U.S. government site, to receive your credit report. While this is not your credit score, you will be able to see any inaccuracies or false information that would affect your credit score.

2

Visit MyFico to obtain your FICO (Fair Isaac Corporation) credit score. According to the Federal Citizen Information Center, FICO is the most commonly used scoring system.

3

Review your credit score to determine where on the FICO range of 300 to 850 you fall. Also, review your credit report for any inaccuracies and to make sure it contains no unauthorized accounts, which could indicate identity theft.

Your FICO Score

4

Pay all of your accounts on time, or catch up as soon as possible. About 35 percent of your FICO score relates to payment history. Negative items such as late payments or bankruptcies can lower your score. When you have a revolving balance, it is especially important to current with your accounts. Each credit card may have a different due date, and you need to keep track so you don't miss a payment.

5

Limit the amount of money you owe. Roughly 30 percent of your FICO score pertains to how many accounts you have open, how many of those have balances, and how much credit you have available. According to a MSN Money article, it is important to keep your revolving balances at or below 30 percent of your limit.

6

Keep your accounts open. About 15 percent of your FICO score has to do with the length of your credit history. If you have old credit card accounts that are not used, do not close them as it will affect this area of your credit score.

7

Limit your new credit inquires, or limit the window of time in which you inquire. Ten percent of your FICO score has to do with new credit inquires and the length of time between inquires. If you are shopping for a good rate on a new loan, try to limit the window in which you shop for rates. This would also include applying for new revolving accounts, such as credit cards.

8

Mix your credit types to maximize your score. Several minor factors make up the last 10 percent of your FICO score, including your account mix. It's good to have a mix of accounts such as revolving accounts like credit cards, installment loans like auto loans, and personal lines of credit.

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How Can I Get Divorced When We Are Drowning in Debt?

The emotional devastation brought about by the breakup of a marriage becomes even greater when accompanied by the devastation of the parties' finances. A couple living paycheck-to-paycheck may not be able to pay all of their debts and still cover basic living expenses after a separation adds another set of living expenses such as rent and utilities but doesn't add more income. While you may experience significant financial difficulty if you're mired in debt and you want to separate, your bills don't have to trap you in an unhappy marriage.

Instructions

1

Familiarize yourself with the law in your state regarding the various issues that arise from separation and divorce. Pay particular attention to laws regarding the division of marital property and marital debt. The equitable distribution laws in effect in most states specify that all property and debt acquired between date of marriage (DOM) and date of separation (DOS) is marital regardless of whose name it appears in. Equitable distribution states also presume that a 50/50 division of marital property and debt is fair, or equitable, but allow for unequal distributions in some cases. Community property states apply similar definitions of marital property and debt but tend not to allow for unequal distributions.

2

Make a list of your marital assets and debts and also any separate assets and debts that may exist. Realize that a court may order you to share in the responsibility for debt in your spouse's name if he or she is carrying more than you are. On your list, include the creditor's name, account number, balance due and monthly payment amount.

3

List your expected post-separation living expenses and create a budget based upon your income alone. Prioritize your expenses, with basic necessities such as rent, utilities and groceries coming first. When prioritizing the payments on your recurring debt, satisfy secured debt -- debt that is attached to collateral such as land or a car -- first. Secured creditors can repossess their collateral and leave you homeless or without transportation. You may find yourself unable to pay all your debts after separation, and if you must let any bills go, let the unsecured ones go first.

4

Review your current, pre-separation budget to determine what, if any, debts you can pay off before separating. Question the wisdom of remaining together just to pay off debt; continuing in an unhappy marriage generally increases your spouse's entitlement to your retirement assets and increases the likelihood that your spouse will incur debt for which you will be responsible. Don't stay together just for money, because this can backfire.

5

Consult with a family law attorney in your state prior to leaving your spouse. Bring all your financial information to enable the attorney to make the most solid recommendation possible. The divorce process has serious financial consequences apart from debt management, and decisions you make without legal guidance could cost you thousands of dollars and extra time in court.

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Hardship Programs for Debt Relief

When individuals feel like they are drowning in debt, many begin to look into alternative payment options. While filing bankruptcy is an option for some, others would prefer to repay their debts. Choosing a debt relief program designed for financial hardship can benefit many. However, it is extremely vital to research programs beforehand to ensure that the debt management program is legitimate, as companies do exist that will take advantage of consumers looking for assistance.

CareOne Credit

CareOne Credit offers consumers a number of choices when selecting a debt management plan as well as ongoing support and services. CareOne Credit works with consumers and financial institutions to negotiate lower interest rates and payment amounts designed to fit individual budgets. The company also works with lenders to create settlement plans, paying off the debt for a portion of the total amount owed. Benefits of CareOne credit include lower monthly payments, the ability to pay off debts in three to five years, and resources to assist consumers with building money-management skills. Consumers make one monthly payment to CareOne Credit, and the company then sends payments to lenders on the consumer's behalf. As of 2010, CareOne Credit has an A+ rating with the Better Business Bureau.

CareOne Services Inc.

c/o 3C Incorporated

8930 Stanford Boulevard

Columbia, MD 21045

410-910-1735

888-888-CARE

careonecredit.com

InCharge Debt Solutions

InCharge Debt Solutions provides consumers with credit counseling services while working with consumers to determine which debt repayment program will best fit their needs. The company works with lenders to not only reduce interest rates, but also to eliminate late fees and over-limit fees. The company also provides suggestions for mortgage and student loan payments while also negotiating lump-sum payments to allow consumers to pay off their debts at a lower amount. Consumers participating in the debt management program send one monthly payment to InCharge. The company then submits payments to individual lenders per the agreements in place. As of 2010, the Better Business Bureau rates InCharge Debt Solutions with an A+ rating.

InCharge Debt Solutions

5750 Major Blvd, Suite 175

Orlando FL 32819

800-565-8953

incharge.org

Negotiating with Credit Card Companies

For individuals who have the majority of their consumer debt tied up in credit cards, the option to work directly with lenders to lower either interest rates or payment amounts is available. Many financial institutions, including Bank of America, Discover, Citibank and American Express, have in-house hardship programs designed to assist consumers who are struggling financially. Under the hardship program, most lenders will reduce the interest rate on the credit card account, which leads to a reduction in the total amount owed and monthly payment amount. Some lenders will also negotiate a lump-sum settlement with a consumer, accepting an amount less than the total amount owed. In order to qualify for a hardship program directly through a lender, most institutions require that consumers have become delinquent on their accounts. Consumers must also show financial hardship to qualify. A hardship program or settlement will often close the account in order to prevent any future charges and debt.

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How to Avoid Bankruptcy in Rhode Island

Avoiding bankruptcy in Rhode Island can be done with the help of competent professional advice and a strict commitment to debt management. Lawyers.com reports that causes of bankruptcy in Rhode Island are the same as in other states. A job loss or illness can create a financial crisis, especially if you were already overextended on credit. Seeking alternatives to bankruptcy can help you avoid ruining your credit while rebuilding your finances.

Instructions

1

Review your rights under the terms of the Rhode Island Fair Debt Collections Act. This act mirrors the federal government's Fair Debt Collections Practices Act and regulates what debt collectors can and cannot do when they attempt to collect from you. Some people begin considering bankruptcy as a debt management option simply because of constant harassment from collection agents. Knowing what agents can and cannot do can help you manage your stress as you try to avoid bankruptcy. Become knowledgeable about your rights in Rhode Island by reviewing the state statute on debt collection.

2

Schedule a meeting with a government-certified credit counselor in Rhode Island. Counselors approved by the U.S. Department of Housing and Urban Development are experts in debt management, including programs designed to avoid bankruptcy. Approved agencies, such as The Urban League of Rhode Island in Providence, and Money Management International in Warwick, can offer a free assessment of your financial situation and offer alternatives to bankruptcy. Find a counselor in Rhode Island by checking the HUD website.

3

Take a complete list of your debts and expenses to the meeting with the credit counselor. Have her look for ways to avoid bankruptcy, including reducing or eliminating discretionary spending so that you will have more money to pay your creditors. If that isn't enough, discuss other options, including debt management plans that you can direct yourself, debt management plans directed by the credit counseling agency or debt settlement through a debt settlement company.

4

Choose the bankruptcy avoidance strategy that you are most comfortable with. Self-directed debt management requires you to contact each of your creditors and seek lower monthly payments as you explain your financial problems and attempt to avoid bankruptcy. Take a matter-of-fact stance with creditors and debt collectors. Tell them you must work something out or you will file for bankruptcy, and they will receive much less, potentially. Credit counseling agencies in Rhode Island will handle this for you for a monthly fee. The agencies will require you to send in a lump sum payment each month that covers your bills, along with a management fee. You must agree to stay in the program for four years as the agency works with you and your creditors on a plan to pay them while helping you avoid bankruptcy.

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How do I Settle Credit Card Bills?

The Federal Trade Commission advocates a host of options for consumers in debt, including credit counseling, debt consolidation and debt settlement. Debt settlement can eliminate credit card debt completely but reflects poorly on credit reports. A settlement offer from your credit card company allows you to pay a fraction of your balance, and the entire debt is forgiven.

Instructions

1

Evaluate settlement letters. According to Bankrate, if there have been no payments on an account for more than 180 days, by regulation, credit card companies report the account as bad debt and charge it off. A credit card company or a collection agency will then send out debt settlement letters to defaulted account holders. These offers suggest debt reduction by paying cents on the dollar. Compare the proposed settlement amount with your income situation. Remember that most debt settlements require a lump-sum payment.

2

Request a formal, written settlement offer. A debt settlement has many ramifications on credit reporting. After deciding on the settlement amount, negotiate with the creditor about credit-reporting and obtain a written copy of the offer before making payment. While past delinquency and account charge-offs generally remain on credit reports for seven years, upon receiving debt settlement payment, the creditor is obligated to report to credit bureaus that the account has been paid as agreed or as settled. The credit report should then show a zero balance on the charge-off account, which can help your credit rating.

3

Check your credit report and follow up on the debt-settlement reporting. By settling your credit card bills, you honor the original contract to the extent of your financial ability. Try to preserve your credit rating to the extent that you can. If your creditor fails to update your account information with credit bureaus after the settlement, you can contact credit bureaus directly to explain the situation and request that your account information be corrected.

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How to Get a Credit Card Company to Accept a Lesser Payoff

Credit card companies make business decisions every day. To convince them to accept a lesser amount than the entire balance you owe, you will need to provide complete financial disclosure to aid the companies in their determination. This is not an easy process because the law is on the side of the credit card companies. They can, and will, sue you to recover what you owe.

Instructions

Getting Started

1

Contact the Customer Service Department. The information can be found on your credit card statement. Ask to speak to the Collection Settlement Department or the department that handles settlement matters. You will have to convince this department that long-term repayment of your debt is not possible.

2

Inquire about the criteria for reducing the debt by reaching a settlement.The company may not divulge this information on the first contact so be persistent. Some companies may recognize that the longer they wait, the less money they may ultimately receive from you. These companies will offer to settle for less money, earlier in the process. Other companies will hold out longer.

3

Send your financial statement and/or documents to the credit card collections department. Follow the instructions given to you by the customer service representative. Consider using email if you have several documents that could be cumbersome for you and for the recipient.

4

Follow up regularly with the credit card company. Answer any additional questions that are posed by the company so that any unresolved issues are settled quickly. Be forthright in your responses; failing to do so may result in the denial of any settlement agreement at all. You could also face legal collection action, depending upon the state in which you reside.

5

Send the settlement payment(s) as soon as a dollar figure is reached. You should send the funds in the format you agreed upon with the credit card company. If you fail to abide by the terms of the agreement, you will most likely render it null and void and risk owing the entire balance again.

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How to Request a Credit Check

Monitoring your credit is essential to financial health. As part of the Fair Credit Reporting Act, passed in 2003, consumers now have the ability to obtain free copies of their credit reports from all three credit bureaus -- TransUnion, Equifax, and Experian. A credit report contains valuable information about borrowing history and fiscal responsibility. Requesting a credit check on yourself or someone else is quite simple.

Instructions

Requesting a "Soft" Pull

1

Pull your own credit. A "soft" credit pull is one that does not generate an inquiry on your credit profile. An inquiry can remain on your credit report for as long as two years. Too many inquiries (usually more than five in a six-month period) and your score may drop. See Resources for a link to a free copy of your report.

2

Request a credit line increase from one of your credit card companies. In order to qualify you for additional credit, these companies must review your borrowing habits. This credit inquiry is also a "soft" pull.

3

Request a "soft" pull from one of your current creditors. This is best handled at a local bank or credit union where you have a credit account. A representative can pull a "soft" copy and then show you the details of that report.

Requesting a "Hard" Pull

4

Apply for a loan at a local credit agency -- like a bank. It's best to do this in person as you can then review the details of your credit report with the loan officer. You must apply for an actual credit program to generate a "hard" pull.

5

Open a new bank account at a bank. Most large banks now conduct credit checks with "hard" pulls for new customers. These reports will also contain your FICO score -- a three-digit number between 350 and 850. Scores above 700 are excellent, while scores below 600 are poor.

6

Apply for a new credit card using either an offer in the mail or online. Each new application for a credit card requires a "hard" credit pull. After a credit decision has been rendered, you'll receive a notice in the mail -- either granting a credit card or denying your application -- that will allow you to request a copy of the credit report used to render the credit decision.

Requesting Someone Else's Credit Report

7

Get a written authorization to check a credit report. While only a verbal authorization is required, it's best to get consent in writing -- both for your records and the applicant's. You cannot check someone's credit without their authorization.

8

Make sure you have enough money to conduct a tri-bureau credit check. A tri-bureau report gives information on the applicant from all three credit bureaus. This type of report is the most thorough. Most independent agencies will charge between $10 and $15 per score.

9

Contact a credit check service. The easiest way to check a credit score on an applicant is to use a landlord service. Visit the National Landlord Association (Resource 2) to find an agency to conduct the check.

10

Order the reports for all applicants. You will need a credit card to purchase these reports. You may be able to gain online access to the reports, or you can choose to have the reports mailed to you. Make sure to keep these reports private and shred the documents when you are through -- privacy is essential.

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Government Programs for Credit Card Debt

Although numerous advertisements can be found indicating that there are federal funds available for assisting people who have credit card debt, the fact is that there are no such programs. Even though some of the companies which claim to be able to assist the individual in relieving debt will use the word "federal" in their company name, they do not have any relation to the federal government, nor do they have funds available from the government.

Grants

Some companies will claim that there are government grants available to assist an individual in paying off credit card debt. There are no such grants available. However, in certain circumstances, government grants can be used to pay off an existing debt, providing that the debt falls within certain parameters. There will usually be an application process involved, but there will never be any fees associating with applying for a government grant. By doing a web search for "government grants," an individual can find the different websites dedicated to providing information on government grants. Many of the sites are part of the federal government, and can be identified with .gov in the web address.

Counseling

Credit counseling agencies are linked to various government sites, but there are no individual agencies endorsed by the federal government. In general, even if a government site leads to a credit counseling site, there is no implication that the government endorses that particular site. It is up to the individual to make a determination as to whether or not the site is reputable. If a site seems to be engaged in fraudulent activity, it should be reported to the Federal Trade Commission.

Loans

The federal government does provide individuals and organizations with low-interest loans. Application can be made for a small business loan, for example, and the money provided in the loan can, in certain circumstances, be used to pay off credit card debt. However, the loan must still be repaid to the government. The advantage to this is there is a much lower interest rate and there are no long-term penalties incurred.

State Agencies

While there might not be relief from the federal government, there may be funds available on a state level. Sites such as GovBenefits.gov and www.ftc.com can assist individuals on locating the appropriate state agencies. Doing a web search on "state agency credit funding" can also yield results.

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Is Credit Card Debt Enforceable?

Credit cards are a form of consumer loan or unsecured loan. While unsecured loans are valid, enforceable debts, they are not backed by any form of collateral, which can make collection difficult in the case of default. What it boils down to is that in many states, the credit card company has no recourse except to report your nonpayment to the credit bureaus (which will hurt your credit rating).

Secured Loans Vs. Unsecured Loans

A secured loan, like a mortgage or a car loan, is backed by some form of collateral, such as a car or house, but an unsecured loan (often also called a signature loan or consumer loan) is only backed by the reputation and credit rating of the borrower. Credit cards are the most common type of unsecured loans.

Credit Card Debt is Valid, Legally Enforceable Debt

Just because credit card debt is unsecured does not mean it is not a valid debt. Credit card debt is a valid and legally enforceable contractual obligation. However, in some states, there is no legal recourse other than reporting the nonpayment to the credit bureaus, as even if you get a judgment for the unpaid debt, you cannot garnish wages or seize real property or funds from a bank account for unsecured personal debt -- like you can for back child support, tax debt, student loans and certain other types of debt.

Getting a Legal Judgment Against a Debtor for the Amount Owed

In some states, it is legally possible for credit card companies to get a judgment for defaulted credit card accounts, and the judgment is enforceable with garnishment or seizure, but they rarely do this due to the expenses and the fact that most of the time the individuals involved have few to no assets to seize, making the whole process a waste of time and money.

Other Legal Issues Including Full Disclosure

In most countries, including the U.S. and U.K., credit card companies are required to fully disclose all fees and interest charges on consumer accounts. However, there have been cases in which credit card companies intentionally hid various charges from their account holders, and courts have generally ruled that accounts in which hidden fees were charged were not enforceable debt -- i.e., the account holder did not have to pay.

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How to Reduce Debt With Credit Counseling Information & Resources

Nonprofit credit counseling agencies can offer unbiased advice for reducing your debt. The agencies will discuss all your options, but may not endorse debt settlement or bankruptcy -- two debt elimination strategies for avoiding much or even all your unsecured debt at the expense of your creditors. Up to 80 percent of your credit card debt can be eliminated through debt settlement, according to SmartMoney.com, and bankruptcy can eliminate all your unsecured debt. The only way to reduce secured debt, such as a mortgage or auto loan, is to pay down the balance.

Instructions

1

Find a local nonprofit credit counselor via the U.S. Trustee Program website. The agency maintains a database of government-approved credit counseling agencies (see Resources). Make an appointment with a counselor and take a recent copy of your credit report. Get your credit report from Annual Credit Report, a website authorized to issue free credit reports under the Fair Credit Reporting Act (see Resources).

2

Show the counselor your list of debts from the credit report, and state that you wish to discuss every legal option for reducing the unsecured debt. In addition to debt settlement and bankruptcy, discuss options for lowering your interest rate through discussions with the card company. The savings on the finance charges could help you reduce your debt faster.

3

Talk to the counselor about debt management plans, which credit counseling agencies often recommend. The Federal Trade Commission (FTC) reports that the plans give the agencies control over your monthly budget. The agency will accept a lump sum from you each month and will use the money to make payments on all your credit card and other unsecured accounts. You must agree to pay a management fee each month and remain in the program about four years. During that period, the counseling agency will contact your credit card companies to request lower interest rates and even a reduction of the balance through a waiver of some finance charges.

4

Discuss other options, such as making changes to your budget so that you can devote more money to paying down debt. Consider all the strategies outlined by the counseling agency and then choose the right one for you to reduce your debt.

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Which Is Better: Bankruptcy Vs. Debt Negotiation

When the bills keep piling up and the minimum payments don't seem to make any dent at all, many consumers look for a way out of their debts. Two options consumers often consider are bankruptcy and debt settlement. While both are viable options, neither is without its drawbacks. What is right for each individual differs from case to case, so you need to carefully evaluate your options before choosing one over the other.

Settlement Positives

Debt settlement can be very helpful to consumers who are unable to pay their bills on time and who are constantly facing threats from collectors or creditors. By renegotiating your debt with your creditors and settling on terms acceptable to both parties, you can effectively restructure your debt and allow yourself a way out. Debt settlement can also result in having to pay back less money than you owe.

Bankruptcy Positives

The primary protection afforded to people who file bankruptcy is that you become shielded from your creditors. This means that your creditors cannot file a lawsuit against you to recover the money. Even creditors who are in the middle of a collections action, such as trying to garnish your wages, are stopped. The bankruptcy court decides the outcome of your finances, and your creditors have to make their cases to the court to collect.

Settlement Negatives

While a debt settlement seems ideal, it poses serious negative consequences. While it will not have as big a negative impact as a bankruptcy, a debt settlement appears on your credit report and makes it much harder to get credit or good loan terms. Also, your creditors can still come after you for the debts if you fail to meet the terms of the settlement or if they refuse to renegotiate the debt. Also, numerous companies that offer debt settlement services are unscrupulous and can lead to more problems than they solve.

Bankruptcy Negatives

While bankruptcy allows significant protections from creditors, it has a long-lasting effect on your finances. Any time you file for bankruptcy, it gets listed on your credit report for at least seven years. While this will not prevent you from getting a loan for that long, it will reduce your ability to get competitive terms. Bankruptcy can also cost you significant amount of money and leave you with few assets.

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What Does It Mean When a Creditor Threatens to Sue You?

Drowning in a sea of debt is bad enough, but getting incessant phone calls from creditors threatening to sue can send anyone over the edge. Although some collectors try to use strong-arm tactics to intimidate debtors into paying up, the Fair Debt Collection Practices act limits a collector's ability to make threats the collection agency has no intention of carrying out.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act prohibits third-party collectors in the United States from engaging in aggressive or deceptive techniques to secure payment from debtors. In general, the FDCPA requires collectors to open a 30-day dispute window so the debtor can challenge the validity of the debt, and to limit collection to reasonable times and in a manner that does not annoy (e.g., through repeated calling on the same day). In particular, section 807(5) of the FDCPA prohibits collectors from making a "threat to take any action that cannot legally be taken or that is not intended to be taken."

Cause of Action

If a debtor fails to dispute the validity of a debt, the creditor may assume the debt is valid and attempt to collect. However, before a collector can obtain an order of garnishment or levy, a court must agree that the debt is valid. This process is completed through a civil lawsuit. A collector may sue, but the FDCPA bars the collector from threatening to sue unless the collector intends to do so.

Lawsuit Process

If a creditor does sue, a lawyer for the collection agency will file a civil complaint in the local court where the debtor resides. The court will serve notice on the debtor, and both parties will present their evidence before the judge. If the judge agrees that the debt is valid, then the creditor will obtain a civil judgment and can then use the judicial process to garnish the debtor's salary or levy his bank accounts until the debt is resolved.

Considerations

The FDCPA does not restrict so-called in-house collectors for example, the collections department of a utility company calling about an overdue heating bill. The FDCPA only governs third-party debt collectors. If a collector does file lawsuit, or threatens to file one, it's helpful to retain a local attorney. Although the civil claims process is straightforward, retaining a lawyer will protect the debtor against unfair collection practices and improve the odds of working out an out-of-court settlement.

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Can I Consolidate Debt If Unemployed?

Some consumers turn to debt consolidation in an attempt to simplify their bill payments or lower their monthly bills. If you choose to consolidate debt or take out any loan when you don't have an income, you must be very careful. Lenders need to know that you can pay back the loan, and if they grant you a consolidation loan while you are unemployed, you are not likely to receive competitive interest rates or terms.

Loans

A debt consolidation loan is simply a specific kind of loan. With the money you get from a consolidation loan, you go on to pay off the debt you owe to other creditors. Like any loan, you have to apply for a consolidation loan and get approved by the lender. Each lender sets its own requirements about who is eligible to receive a consolidation loan, but all lenders take your income into consideration as part of the application process.

Unemployed vs. No Income

If you are unemployed but still have some form of income, you stand a much better chance at receiving a consolidation loan than you do if you have no money coming in at all. Creditors commonly require that you have some income before granting you a loan, though the income does not have to come in the form of a salary or wages. If you have no income at all, it will be very difficult if not impossible for you to receive a consolidation loan.

Household Income

Many debt consolidation creditors, such as credit cards companies that have balance transfer offers, ask for an applicant's total household income. Household income is all the income you and your spouse bring in. If you are unemployed but your spouse has a job, you can include your spouse's income in any application that asks for household income.

Consolidation While Unemployed

Consolidation loans offer borrowers the chance to simplify their payments and lower the amount of money they have to pay each month, which is why so many unemployed people look to them as potential solutions. However, they are not the only option available to you. If you are unemployed and are having trouble paying your bills, you should talk to a credit counselor or financial adviser. They can help you determine what the best option is for your situation. You may end up consolidating your loans, but you may also be able to settle your debts or file for bankruptcy protection.

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Can I Use Georgia Food Stamps in Michigan?

Many low-income people receive vouchers from the government to help them buy groceries. These vouchers, known as SNAP --- Supplemental Nutrition Assistance Program --- benefits or foods stamps, are provided on a monthly basis. While these benefits are issued on the state level, the program is a federal one. Therefore, benefits do not need to be used in the state in which they are issued. So, food stamps issued in Georgia can be used in Michigan.

Food Stamps

Although food stamps used to be issued as stamps, they are now issued in the form of a deposit on a card, similar to a debit card. Nearly all states use the same kind of card, called an EBT card. An EBT card, when used at a vendor that accepts it, will extract the money from an account that is refilled each month. EBT cards can be used at any vendor that accepts them, even if in a different state.

Georgia Food Stamps

When a person is issued food stamps in Georgia, the money is placed on his EBT card. If the person travels to another state that uses EBT cards, such as Michigan, then these vouchers will be able to be used there, too. However, to receive a card from the state of Georgia, a person must be a resident of Georgia. A Georgia resident can use his benefits in Michigan, but he cannot receive benefits from Michigan.

Limitations

A person from Georgia who wishes to use his food stamps in Michigan faces the same limitations on where he can use his card as he does in Georgia. In Michigan, people receiving food stamps can make purchases only from vendors authorized to receive payment from EBT cards --- called "Bridge" cards in Michigan. Likewise, in Georgia, vouchers in Michigan cannot be traded for any non-food item.

Considerations

According to the financial reference website Bill Eater, the only two states in which a person from Georgia might not be able to use his EBT card are Wyoming and Ohio. This is because these states do not use EBT cards --- they use another kind of card called a smartcard. Because these cards are different, a vendor which accepts smartcards would have no method of reading EBT cards.

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Can a Garnishment Keep Me From Getting a Job?

Garnishment allows regular deductions from your paycheck to satisfy a debt. The action is possible after a debt collector or someone else successfully sues you in court and wins a monetary judgment. A second legal order forces your employer to comply with court-ordered garnishment. Garnishments are embarrassing for employees and bothersome for employers. It is possible that a garnishment could keep you from getting a job, but no one can say for sure.

Background Checks

Employers generally do not disclose reasons for their hiring decisions---including the decision not to hire someone. That makes it difficult for anyone to know when garnishment kills a potential job offer. Employers prefer not to disclose reasons for not making a hire to avoid possible charges of discrimination based on age, race, sex or something else. Final hiring decisions usually are made after a background check, which could include a review of your credit. Garnishment activity usually serves as a red flag for employers.

Standards

Garnishments and credit problems are not always an issue, and not all employers check credit. A senior manager in charge of an entire department is more likely to undergo a credit check than an entry-level, hourly worker. Employers expect a senior manager to have sound financial judgment, and one way to determine that is to check credit and background files for signs of bankruptcies, judgments, garnishments and more.

Special Jobs

Garnishment may automatically rule you out for a job if you are working in certain fields such as insurance, financial services or banking. Some people working in those areas are expected to have excellent credit because of the nature of their jobs. In addition to possibly handling money, people in these fields are expected to advise customers about credit and financial decisions. Banks and other companies may feel the overall quality of their workers is tarnished if people with active garnishments are hired for important positions.

Exceptions

Employers realize that everyone is susceptible to credit and financial problems. People lose jobs through no fault of their own, become ill or are forced into a difficult divorce. All those issues can cause severe financial problems, including garnishments. A candidate who is a finalist for a job should disclose garnishment issues before agreeing to a background check. It is much better to tell the hiring manager or human resources representative about the problem than allow her to discover it during the review of your credit.

Ending Garnishment

The best solution is to end garnishment by paying off the debt or making other payment arrangements with the debt collector. The debt collector may accept an offer to pay by certified check each month if you are willing to pay an additional fee for the arrangement, equal to say, 20 percent of the remaining balance. Offer to pay the fee plus make three payments in advance in exchange for a written offer ending garnishment.

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How do I Put a Child's Name on a Credit Card?

Credit management is a vital part of financial security. With a great credit rating, you can qualify for advantageous loans and interest rates. This is, of course, true for credit cards. These revolving accounts, if poorly managed, can quickly overwhelm you with late fees, over-limit fees and high interest rates. Good credit management should start at a young age. If you have a child who has yet to establish credit, you can put him on your existing credit cards.

Instructions

1

Collect all the personal information for your child. This includes her Social Security number, date of birth, telephone number (if different from your number) and street address. You will need all this demographic info to put your child on your account.

2

Contact your credit card company. Make sure to speak with an account servicing representative. In most cases, customer service representatives cannot add authorized users on accounts.

3

Ask to place an authorized user on your account. Authorized users have access to the account credit line but are not responsible for making payments on the account. So long as you pay the account well, your child will reap the positive credit payment history under his Social Security number.

4

Give all the requisite demographic information about your child to the account servicing representative. If you actually want your child to use the card, too, then ask for a second credit card to be mailed to her (at her street address, if different from your address).

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How to Restore the Integrity of Your Credit Card Account

Credit card companies extend credit based on credit reports and a FICO score. The Fair Isaac Corporation formulated the FICO scale for creditworthiness. Outstanding consumer charges on credit cards amounted to $785 billion in March 2011, according to the U.S. Federal Reserve. Poor credit hurts your chances of obtaining part of these credit offerings, qualifying for additional credit cards and increasing your credit limit on your current cards. Restoring your credit integrity requires an organized effort to repair errors and improve your credit status.

Instructions

1

Order a copy of your credit reports (annualcreditreport.com) and request your credit score (myfico.com). Under the Fair Credit Reporting Act, the three largest national reporting companies, TransUnion, Equifax and Experian, must each provide one free report by request every 12 months, but obtaining your credit score requires a fee. Additional reports also require a fee per copy or online download.

2

Check the reports for accuracy. List your active credit cards and match the numbers with those on the report. Also check your monthly bills to make sure monthly payments and the amounts owed correlate with the stated figures on the credit reports. Highlight any discrepancies between your records and the official reports. Both the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act protect your rights to repair any mistakes or errors on your reports.

3

Telephone the credit companies listing unpaid, late or delinquent credit card payments. Use the credit report information page for telephone or Internet websites and file reports to correct errors. Take notes to record the person contacted, any identification number or department and the date and time of the conversation about your credit report. Support conversation topics with a follow-up letter and send this letter to the credit agency via registered or certified mail.

4

Contact the card companies listed as creditors to resolve credit card delinquency problems. Take notes when discussing your credit issues with the card companies. Send snail-mail letters and copies of receipts or paid checks for items erroneously reported as owing. Use certified or registered mail to document the date for your mailed responses.

1, 3 & Resource 1

5

Obtain letters showing accounts paid in full from credit card companies and update your credit report with the repaired credit actions. Send copies of the resolution letters and payment records to each of the credit reporting agencies. Allow four to six weeks for the new updates and obtain a new copy of your credit report from the three credit reporting agencies. Note any information still listed as past due or owing on charge cards and repeat the repair process, as needed.

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How to Get Child Support Reduced in Iowa

Iowa allows you to request a reduction in your child support amount. The Child Support Recovery unit uses Review and Adjustment to evaluate your reduction request if more than two years have passed since your order was entered. Administrative Modification is used if your order is less than two years old or has been modified in the last two years. The application process is the same for you no matter what designation your case falls under, but Administrative Modification requires special circumstances for approval, such as a drop of 50 percent or more in your income.

Instructions

1

Gather your documentation supporting your reason for the request. Include pay-stubs, income statements and copies of your household and medical bills. Obtain a certified copy of the birth certificate and paternity acknowledgment of any other children you are supporting to prove family expenses. Get a copy of the court order if you are paying support for other children besides the child whose order you are trying to reduce. Get proof of the other parent's income. Provide the address and name of the other parent's employer if you cannot locate documentation.

2

Get a "Request to Modify Child Support" form from the official website of the Iowa Department of Human Services. Visit the Child Support Recovery Unit near you to obtain a form in person, if needed.

3

Fill out the form entirely. Attach your documents and any other requested information. Sign and date the form. Mail or return the form to the support unit responsible for your support order collection within 10 days of completion to be considered.

4

Read the response from the collection unit carefully. You will receive a Notice of Intent if the unit is willing to reduce your order. Fill out the enclosed financial statement and return to the unit within 10 days; a notice of decision will be mailed to you.

5

Read the Notice of Decision from the support unit. The reduced support amount will be shown. If you agree with the new amount and the other party does not challenge the decision, the unit will have the modification finalized and you will receive a copy in the mail.

6

Attend all conferences or hearings if the other parent objects to the reduction. Bring your financial documentation with you to prove your reason for the reduction. Prepare for a court hearing at which the judge will decide the outcome.

7

Ask for a second review if your reduction request is denied outright by the unit. Write the collection unit to request a second review. Include your reason and any additional proof you have.

8

Write the support unit to request a hearing if you are denied after a second review. Bring your financial documents with you to court.

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About Debt Reduction Services

Your debt loads decrease the moment you start spending less than you earn and commit the additional funds to paying down your credit cards. You may experience frustration and withdrawal as you eliminate the perks you were enjoying by running up your credit cards, but ultimately, you gain control over your finances. There are ways to make a plan for yourself or to enlist the aid of services to assist you in your financial goals.

Credit Counseling

A credit counseling agency negotiates lower interest rates on credit accounts that you enroll in the program. The agency collects a single payment from you each month and disburses it out to the creditors. The agency also provides a series of educational tools and workshops to help you better manage your finances. Agencies usually don't assess fees for service. Enrolling in a credit counseling program doesn't hurt your credit score, but the creditors you enroll may close your account. You also may be unable to obtain new credit accounts while enrolled in the counseling program. The lower rates and inability to take on new debt quickly aids you in reducing your outstanding debt.

Debt Consolidation

A bank or specialty lender may offer a debt consolidation loan program to help you reduce your debt. In this approach, you take out a new loan at a lower interest rate to pay off higher-rate credit card balances. The lender may charge origination fees or administrative fees as part of the loan. The lower rate and single monthly payment often proves effective at lowering rates. A risk, however, is that you'll reload your paid-off credit cards with new balances and then have two significant piles of debt.

Debt Settlement

Debt reduction services often suggest that they can reduce your debt by 30 to 70 percent. These firms work on your behalf to reach a settlement agreement with your creditors. These groups typically charge contingency fees expressed as a percentage of the amount of money their settlement efforts saved you; there may also be administrative or ongoing program fees. Each month you send in an agreed-upon amount to the settlement firm to build up your escrow until the amount is high enough to offer a settlement on one or more of your accounts. You often end up paying less overall, even with the fees, but settlements reflect negatively on your credit report --- they remain for up to seven years --- and you may have additional income tax liability from canceled debt.

Bankruptcy

Often a last resort, firms and attorneys can help you file bankruptcy. You submit a plan of repayment of debts in a bankruptcy court for review and approval by your creditors and the court judge. There are legal fees associated with filing bankruptcy, and the end result is significant, long-term damage to your credit report that may make it difficult to obtain a loan of any form over the next 10 years --- the length of time the bankruptcy remains on your report. The plan you submit proposes a realistic repayment plan based on your assets and income; the total amount to pay can be much less than the total amount currently owed. Bankruptcy is never a process that wipes the slate clean, and there are other requirements, such as enrolling in financial management courses.

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Debt Consolidation Explained

Debt consolidation is often presented as a saving grace for an overburdened consumer. The thought of replacing numerous high-interest debts with a single low payment can appear too good to be true. Unfortunately, that's often the case. Too often, people will jump at the chance to consolidate their debt without fully understanding the situation.

Secured vs. Unsecured

Unsecured debt is the most common factor in seeking consolidation. Secured debt is backed by collateral such as real estate or other assets. The higher your debt, the more difficult it will be to obtain unsecured consolidation such as a personal loan. If you have equity in your home, you may be able to refinance your mortgage or apply for a home equity loan. There are two downsides to this method. First, it may be difficult to get approved if you credit has suffered as a result of your debt. Second, you will be decreasing the equity in your home. However, this may be a small price to pay, especially if you are overwhelmed with debt.

Payments

The primary draw of debt consolidation is converting many payments into one. Ideally, the payment will be lower than the combined sum of all current payments. Alternatively, those who can afford it may opt for higher payments. This will pay off the consolidated debt quicker. An individual contemplating debt consolidation should read all terms and conditions of the deal. If he is basing his decision to consolidate on the lower fixed payment, he should ensure that the payment remains fixed. If he is raising his payment to eliminate debt faster, he should ascertain how much of the payment reduces principal and how much is allotted for fees and interest.

Interest

Another major draw of debt consolidation is combining multiple high-interest debts into a single low-interest obligation. If an individual chooses to go this route, he must carefully read all documentation pertaining to the rate. Many rates start low, but, if not paid off by a certain time, can shoot up past the original rates. This is especially prevalent with balance transfers. A consumer may receive 0 percent interest for 18 months on balance transfers. At the end of that period, however, the rate will increase, usually to a rate higher than the standard purchase annual percentage rate (APR). For example, a card may charge 13.99 percent for purchases, but 24.99 percent on balance transfers after the promotion ends. Know what you are getting into or you may end up worse off than before.

Outside Agencies

Toward the end of first decade of the 2000s, the United States was in a deep recession and debt consolidation agencies began springing up. Their claims sound good. Hire them and they will negotiate with your creditors to reduce your payments, interest and even principal balance. In return, you make your payments directly to them and they remit the funds to your creditors. What they do not tell you is that they charge a fee for this service, which is lumped into your monthly payment. Additionally, the principal reduction they promise is not guaranteed. Ultimately that decision lies with the creditors themselves. Always research a debt settlement agency thoroughly and only do business with it as a last resort.

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How to Fix a Negative Line of Credit

A negative line of credit is a credit account with late payments. The negative payment information is listed on your credit report and with the creditor. The negative credit information may prompt the creditor to reduce your credit line or even close the account. Fixing this problem is simple, but it may take some time. The Federal Trade Commission suggests that you can do this yourself by working directly with your creditor. The agency advises against using credit repair firms, because some have been known for shady business practices.

Instructions

1

Order a copy of your credit report from the Annual Credit Report website. It's the only site specifically authorized by the federal government to offer free credit reports under the terms of the Fair Credit Reporting Act. View and print the report from the website (see Resource).

2

Review information on your credit report about the line of credit. Make special note of late payments listed on the report. Check your records to confirm that the payments were indeed late. Use your bank records or canceled checks to make the determination. Write a letter to your creditor if any of the information is wrong, and ask that the late payments in question be removed. Send the letter to the creditor at its address listed on your billing statement.

3

Contact the creditor to ask that your account be "re-aged" to eliminate the late payments from showing on your credit report. Some lenders will agree to delete late payments if you promise to make a number of consecutive on-time payments, according to MSN Money. For example, your creditor may agree to erase your negative credit information if you pay on time for a year. Although that seems like a long time, it is not unusual for legal and ethical credit repair to require patience, the Federal Trade Commission points out.

4

Request details of any agreement with your creditor in writing. Also, make more than the minimum payments on your line of credit to reduce the balance. You should keep your balance to less than 30 percent of your credit line, MSN Money advises.

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How to Build Credit History in the USA

Primarily used in the past for lending, your credit history is now utilized by employers evaluating job candidates, landlords looking to lease apartments, and even insurance companies deciding whether to extend auto or health insurance. Creditors use your history of financial responsibility, i.e., your credit score and credit report, in determining whether to lend you money. Establishing good credit is a matter of learning what to do before you get started, then maintaining good money habits. "It's much easier to start with good habits than to repair black marks later on", says Liz Pulliam Weston of MSN.com's Money.

Instructions

1

Begin by checking your credit report. Even if you've never before applied for credit, there may be a credit file on you. According to the Federal Trade Commission, even applying for auto insurance creates a credit file in your name. You unknowingly may be a victim of identity theft or there could simply be someone else's information erroneously placed on your report.

Your credit report will provide you with your credit, or FICO, score, the names of all creditors who report to the credit bureaus, current account balances and payment history, your available credit and any negative data, like late payments, lawsuits, judgments and bankruptcies. Contact the three main credit bureaus---Experian, Experian, Transunion, and Equifax---to get your report. If you find mistakes, you should address them before you seek to establish any new credit.

2

Open a checking and a savings account. If you are under 18, you may need to open a joint account with an adult, but first, search around. There may be a bank willing to open accounts solely for you. Try smaller, local or regional banks as well as credit unions in addition to larger, well-known banks. Examine and compare account requirements and fees to get the best deal for you.

3

Create a budget for yourself. Are you seeking credit for a specific reason, or to simply begin your credit history? Know how much you can afford to pay each month in total before agreeing to any installment debt or creating any credit card balances.

4




Cell phone payments can add to your credit history

Start with service payments. These might be for cell phones, utilities, cable or Internet. Many of these providers of these types of services report to credit reporting agencies. Be sure to pay on time every month to establish a good history of payment.

5

Apply for a major credit card. Consider starting with a single secured credit card. For a small amount, usually up to $500 that potentially remains on deposit for the life of the card, you can establish good credit by using less than the full amount of your credit limit, usually the amount on deposit, and paying your card balance off in full each month. The risk for the creditor is low because your deposit guarantees payment. These cards tend to have lower credit limits, higher fees and higher interest rates, but once you've established good credit, you can approach your creditor about lowering your fees and interest, increasing your credit limit---with or without additional deposits---and/or converting your card to an unsecured one. Make sure that you get a card from a lender who is reporting to the credit bureaus or it won't help you in establishing your credit history.

If you seek an unsecured card, get one with a low annual fee and low interest, if possible. Analyze credit card terms very carefully before deciding which card to go with. Online sites will help you compare credit cards. Bankrate.com, Creditcards.com, CardTrak.com, Lowcards.com are just a few sites that will help you identify and evaluate secured credit card options.

Credit card issuers are particularly willing to give new credit cards to college students, according to Erin Burt of Kiplinger.com. But remember that the credit extended is not free money. Failing to pay the bills in a timely manner can have long-term repercussions. Ideally, charge only what you know for certain you can pay when the bill is due. The best credit score comes from keeping your balance at or below 30 percent of your available limit, and paying that off as soon as it becomes due.

6

Use retail credit if unable to obtain a major credit card. Retail credit includes store or gas credit cards, which are sometimes easier to get than a major credit card, especially if you are in the process of making a retail purchase. They count less toward your overall credit score, but they can still demonstrate a pattern of responsible credit handling through good use of available credit and timely payment that may entice a bank to issue an unsecured card.

7

Add an installment loan. Installment debt might include personal loans, store-financed purchases, like new furniture, or student loans. Your payments work toward paying your balance down to zero, upon which your account typically is closed. Good credit comes from a mix of revolving (credit cards or open lines of credit) and installment accounts.

8




A co-signer helps but comes with risk

Piggyback on someone else's credit when you are unable to obtain any credit in your own name. Have a person with established credit add you as a joint owner to a credit account or get a loan with a co-signer. Keep in mind, however, this approach comes with higher risk. Just as you share in the credit, you also share the credit history. Being an authorized user of an account is not enough; you must be a co-owner of the credit. If you are added to an account, that person's credit history, good or bad, can be imported into your credit report. If you get a co-signer and you do not pay as expected, the black marks on your credit will be shared by you and the co-signer.

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About Wage Garnishment and Collection

Most creditors will attempt to collect consumers' debts amicably via telephone calls and letters before proceeding to other collection methods. If an individual ignores a creditor's attempts to elicit payment from him on his overdue account, the creditor may request a wage garnishment order from the courts.

Facts

Before a court will grant a creditor the right to garnish an individual's wages, the creditor must file a lawsuit against the consumer. Either the court or the creditor, depending upon the state, will notify the consumer of the creditor's intention to sue. If the debtor does not acknowledge the lawsuit or submit a defense to the court, the court will grant the creditor a judgment. Unsecured creditors, such as collection agencies and credit card companies, must obtain a court judgment before they can garnish an individual's paycheck. According to the U.S. Department of the Treasury, however, some government agencies may garnish consumers' wages without first obtaining a legal judgment.

Significance

Once a creditor obtains a court order allowing it permission to seize payment for the debt from the debtor's paycheck, it must deliver a copy of the order via a writ of execution to the individual's employer. The employer will then direct a portion of the individual's paycheck each pay period to the creditor until the debt is satisfied or the debtor ceases to work for the employer. If an individual under a wage garnishment order switches employers, the creditor must find out where he works and request a new garnishment order from the court before garnishing his pay through the new employer.

Features

Title III of the Consumer Credit Protection Act limits the amount that an employer may withhold from an employee's paycheck when cooperating with a wage garnishment order. Creditors can only seize disposable earnings. An individual's disposable pay is the amount left over after taxes and other legally required deductions. A creditor may garnish either 25 percent of the individual's disposable earnings or any earnings each pay period that exceed the federal minimum wage when multiplied by 30. Up to 60 percent of a debtor's total wages may be garnished if the garnishment is a result of a child support order.

Effects

A wage garnishment order creates extra work for the debtor's employer since the employer must calculate the correct amount to withhold from the individual's paycheck each pay period, adjust the individual's paycheck and is responsible for submitting timely payments to the creditor. The employer may not fire the employee solely because he receives a wage garnishment. Subsequent wage garnishments against the employee, however, are cause for legal termination of employment.

Considerations

If the debtor's employer terminates him, he may receive unemployment which is exempt from garnishment. Other forms of income that are exempt from garnishment by a private company are Social Security benefits, child support payments, any form of welfare and tax returns. If the creditor garnishing the individual's paychecks is the federal government, however, his otherwise exempt benefits may be garnished.

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Credit Management Analysis

A company needs to have an effective credit management system to be successful. This helps determine how efficient a company will be achieving its goals and objectives. The other side of credit is collections. An collection department that operates effectively will help a company limit the losses it incurs, which can also increase profit and help the shareholders earn a return on their initial investment.

Ability

When a company starts extending credit, it needs to have policy for credit that allows it to maximize profits. There are several criteria a company will look at when it extends credit to consumers. The first is ability. The company wants to make sure a customer or client has the ability to pay, doing credit and debt ratio analysis to make sure someone is not overextended or cannot pay it back.

Credit History

The second criteria is willingness to pay. A potential customer's credit history is inspected to see how she paid her debts in the past. If someone has a number of past due debts, he could be disqualified from receiving a loan. Some companies might extend you credit if your credit is bad, but they will price the product accordingly. You will receive a higher rate of interest, which means you pay more finance charges over the term of your loan. As a way to offset risk, companies will also add non-standard fees to the account.

Stability

The company wants to know how long the consumer has lived at his current address and how long he has had his job. These factors help a company decide about extending credit. A homeowner is looked at in a more positive light than a renter. Homeownership, to a lender, is a sign of stability.

Collection Department

After credit has been extended, the collection department makes sure payments are on time. If someone falls past due, the collection department must call the debtor or send letters. The collection department must do its job efficiently and effectively to help limit the amount of losses incurred. Sometimes, high delinquency could be the result of a recession or other economic factors. Another cause of high delinquency could be the result of the credit department having very lenient credit granting criteria.

Delinquency

If delinquency is too low, it could mean the credit department is not being aggressive enough lending money. Low delinquency usually means there are a lot of customers being rejected when they should be approved. A company will loose money and potential customers to its competitors if it is too strict with its lending policy.

When it comes to credit extension, there has to be a fine balance.

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How to Settle Judgments

In a difficult economy, even responsible people can find themselves buried in debt. At the same time, creditors often are desperate for cash and might be willing to settle debts, even valid judgments, that they might not have been willing to negotiate before. If you can settle a judgment, you can save money, possibly improve your credit score, and have the peace of mind that comes from being free of onerous debt.

Instructions

Make an Offer

1

Determine who your creditor is by examining the court ordered judgment. You should have been provided with this when you were subpoenaed and/or when the judgment was entered against you. The original creditor might have sold the debt to a third party, so it is important to double check to whom the judgment is owed.

2

Determine the amount that you can reasonably pay at the time you make your settlement offer and make sure that you have the money on hand to pay immediately upon acceptance of your offer. You might want to offer slightly less than what you can actually afford to pay in case your first offer is rejected.

3

Draft a letter to the creditor explaining that while you do not expect to be able to pay the full amount of the judgment anytime soon, you can pay a certain amount, in certified funds, now, if they agree to settle the debt and not hold you liable for the rest of the judgment.

4

State in your letter that you will not negotiate nor will you communicate with the creditor over the phone. To protect yourself, insist that all communication be in writing.

5

Make a copy of the letter for yourself and for your attorney, sign the letter, and send it certified mail, return receipt requested.

Follow Up

6

Give the creditor a reasonable amount of time to respond to your offer. If you don't hear from the creditor within 30 days of sending your letter, send another letter.

7

Respond to communications from the creditor promptly. If they agree, in writing, to settle the judgment, send them the money via cashier's check through some traceable means (such as certified mail, registered mail, overnight mail or priority mail with delivery confirmation). If they want more money, and you can settle for a higher amount, do so.

8

Check your credit report. Make sure that the judgment is listed as settled. If it isn't, dispute the information with the credit bureaus.

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What Are the Negative Ramifications of a Debt Consolidation Loan?

Although a consolidation loan is seen as a dark mark on your credit report, the negative impact that may come from obtaining a consolidation loan comes more from how you use the loan. If you are dedicated to paying off your balances and keeping them paid off, the effect of the loan on your credit score -- and your life -- may be positive. However, many people in need of a consolidation loan have deep-rooted issues with money that end up luring them into using the credit freed by a consolidation loan.

Credit Score

Whenever you apply for new credit, the lender must make an inquiry into your credit report. That inquiry has a negative effect on your credit score. However, if you remain committed to paying off your debt and keeping it paid off, the positive effect will far outweigh the impact caused by an inquiry.

Obtaining New Credit

Other than the inquiry, the consolidation loan itself doesn't weigh down your credit score; however, having a consolidation loan listed on your credit report may make it difficult for you to obtain new credit while you're paying off the loan. It demonstrates that you have had trouble with your finances in the past, which may make creditors hesitant to lend to you. The consolidation loan may stay on your credit report for up to seven years.

Using Freed Credit

The biggest negative impact comes not from the consolidation loan itself but from abuse of the loan. According to Bankrate.com, 70 percent of people who take on a consolidation loan end up with the same or more debt within two years. The loan pays off your former balances, freeing up that credit -- and you must be absolutely committed to keeping it free. If you continue to contribute to your debt, you'll increase your debt-to-credit ratio, which is one of the largest factors in determining your credit score.

Considerations

Since it's difficult to obtain new credit when you take on a consolidation loan, and because of the temptation you may experience once the loan pays off your balances, it's wise to consider your other options first. Often, the low rates advertised for consolidation loans are available only to those with exceptionally good credit. Talk to your creditors to see if you can lower your interest rates. You may find that you get a better deal by lowering your credit card rates than by taking on a loan.

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How to Write a Paid-in-Full Statement

A paid in full statement is a letter to your creditor that explains the details of the debt owed and how and when you will pay this amount. Write a paid-in-full statement as a formal letter. You may want to consider typing the letter so there is no confusion over the language in the letter. Often this letter is written before you write a check for the final payment in order to give the creditor time to look through your account and agree to the paid in full statement. However you can send a check with your statement with a stipulation that if the check is cashed than the creditor has accepted your terms for the paid in full amount.

Instructions

1

Write today's date at the top of the letter.

2

Write your name, address and phone number underneath the date. Write each on its own line.

3

List your account number under your personal information.

4

Write your introduction under your account number. An example of this would be "Dear Corporate Creditor."

5

Write your reason for sending the letter in the body of the letter. This should include an explanation of the debt you owe, the amount of the debt, and the date you will pay the agreed upon amount in full. The agreed upon amount and the actual amount due are not always equal. Many credit companies will reduce the amount owed to help clear a debt faster.

6

Reveal to the creditor that you will be sending a check or money order that is marked "paid in full." Let the creditor know that if the check is cashed, the creditor is agreeing to the amount paid and this matter has come to an end. Include this in the body of the letter.

7

Complete the letter by signing your name and listing your phone number.

8

Make a copy of your letter and your check.

9

Send the letter by certified mail and ensure that you ask for a return receipt.

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Can Cell Phone Companies Hold Minors Liable for Their Phone Bills?

Although they may not yet be old enough to vote or to drive, many minors have their own cell phones. Some of these kids pay for the phones themselves, while others have parents or significant others help them financially. However, regardless of who pays for these phones, a contract for a cell phone must be signed by an adult of legal age, or it is not valid and the cell phone company cannot collect on the debt.

Cell Phone Contracts

When a person takes out a cell phone plan with a company, he is usually required to sign a contract with that company that lays out the terms under which he can use the phone. Generally, this contract will lay out the fees for which the person will be responsible for using the phone. The cell phone company is allowed to collect these fees as a company would any outstanding debt.

Contracts With Minors

According to U.S. federal law, a minor is not legally allowed to sign a business contract without the consent of a parent or guardian. While the age at which a person can legally sign a contract varies, no one under the age of 18 can legally take out a cell phone contract on her own. Instead, she must have someone else take out the contract for her.

Contract Law

If a minor runs up a cell phone bill, the phone company is legally allowed to hold the person who signed the cell phone's contract liable for the debt. However, if a minor signed the contract, the contract was never valid; therefore, the company cannot hold the minor liable for the bill. However, if a legal adult signed the contract, the company can seek payment of the outstanding debt from the adult. No one other than the adult who signed the contract may be held liable for the contract's outstanding debt.

Considerations

Minors cannot legally take out credit or incur legal debts such as cell phone bills. Therefore, if a minor succeeds in signing a cell phone contract, several legal issues are raised. For example, if the minor committed fraud in signing the contract, he may found liable in a civil or criminal case.

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How to Remove Outdated Credit Information

Nearly every aspect of your life is governed by your credit report. Information contained in your credit report can be used to determine whether you get approved for health or life insurance, get a loan to buy a house or even if you get hired for a job. Fortunately, credit mistakes don't affect you forever, and most information is eventually eliminated from a person's report. Sometimes, though, credit reports contain outdated information and it becomes necessary to file a dispute to have that information removed.

Instructions

1

Order copies of your credit reports from the three major credit bureaus. By law, U.S. citizens can obtain a free copy of their credit per year from each of the three major credit bureaus. In most cases, you can order copies of your free annual credit report online, although in some cases you may be required to do so by mail. The credit bureaus have set up a website, AnnualCreditReport.com, through which consumers can order copies of their free annual credit report. You are also entitled to receive a free copy of your credit report if a potential lender used information contained in the report to deny your application for credit. You may also purchase a copy of your credit report for a fee, typically ranging from $8 to $15.

2

Check for outdated information on your credit report. Creditors typically report items for seven years from the date of last activity, or 10 years in the case of a bankruptcy. In the case of items not paid as agreed, creditors may define the date of last activity as 180 days from the time the account first became delinquent. In the case of items paid as agreed, the date of last activity is generally the date when the consumer made the last payment or paid off the account.

3

File a dispute to have the credit bureau remove any outdated information. The websites of the three credit reporting agencies outline the manner in which you may file a dispute. In most cases, you can file a dispute online, although in some cases the credit bureau may require you to download a form and file a dispute by mail. The credit bureaus are required by law to investigate your dispute within 30 days, and remove the outdated information or explain why they have not done so.

4

Ensure that a creditor or collection agency has not tried to re-age an outdated account. In some cases, disreputable collection agencies will falsify the date of last activity to keep it on your credit report longer than is allowed by law. If the date of last activity of an account listed on your credit report is incorrect, file a dispute with the credit bureau and demand the incorrect information be removed.

5

If a credit bureau refuses to remove outdated or incorrect information, file complaints with the Federal Trade Commission as well as the attorney general in the state where the company is located, and notify the credit bureau that you have done so. In most states, you can file a complaint with the attorney general via the state government's website.

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The Debts That Debt Settlement Can't Solve

Sometimes in life people find themselves so far in debt that they do not see how they will ever be able to get out. The circumstances surrounding the debt can be from a variety of reasons from overspending to loss of a job. Some people decide that debt settlement is their best option, meaning they pay an agreed-upon amount that is less than the actual debt. You cannot settle every type of debt.

Student Loans

Student loan debt cannot be settled. If you are having problems paying your student loan, call the loan holder to discuss this. The organization will probably be willing to make payment arrangements, reduce your monthly payment or even defer a few months of payments if necessary. Your interest rate on student loans is usually much lower than credit cards, and the people holding the notes are usually much nicer and willing to work with you as long as you hold up your end of the bargain.

IRS

If you owe back taxes and plan on trying to settle, do not bother. The IRS will work with people as far as setting up payments plans and are usually fairly open to what you can afford to pay each month, especially if you call them right away and explain your situation. Depending on the amount of taxes you owe, they may let you pay only $25 per month if that is all you can afford at the moment.

Mortgage

Since a mortgage is a secured loan, you cannot settle this debt. Here again, many times your mortgage holder will work with you to help you make your payments. They might defer your interest and tack it on at the end of your debt. Or they might defer a certain number of payments if you are out of work but know for a fact that you will go back after a certain amount of time, such as with a seasonal layoff. You will probably have to give them a lot of information, including all the money you spend on everything in your household each month, even things like groceries and gas.

Child Support

Back child support is another debt that you cannot settle since this is a court-ordered payment. If you are having trouble keeping up with your child support (or alimony) payments, hire a lawyer to go to court with you and explain exactly why you cannot pay. The result may be a lower amount for future payments, but you will still have to pay what you already owed.

Utilities

Utility company debts cannot be settled. Call and make payment arrangements with the particular utility company that you are having trouble paying. If you have a utility bill that greatly fluctuates, ask about a payment option that allows you to spread your payments out over the entire year. For example, if you heat your home with natural gas and the winter payments top 500 dollars a month in the winter, but drop to 50 dollars in the summer, ask for the monthly payment plan to even out your payments over the year. Often the last month of the year will be very small or actually give you some credit for the next month.

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How Does Loan Forgiveness Work?

The average undergraduate student has more than $20,000 of debt when he graduates, and after going on to get a higher degree, most students have even more debt. Thankfully, there are a wide variety of loan forgiveness programs that free borrowers from some of the burden of making student loan payments.

Premise

Loan forgiveness is a process by which students have all or part of their remaining student loan balance canceled. After having that part of the loan forgiven, the borrower does not ever have to repay that portion or pay any more interest on it. Loan forgiveness makes it easier for borrowers to work important but low-salary positions because they do not have to worry as much about making money to pay off educational debt.

Types

Most loan forgiveness programs work only on federal student loans. Some apply only to Perkins loans, others only to Stafford loans and some work on any type of loan, including federal consolidation loans and PLUS loans for graduate students. In general, loan forgiveness programs require that the borrower work in a particular field. Some are for teachers, others are for public service employees and some are for graduates who give at least one year to volunteer work through Peace Corps or Americorps. The military also offers student loan forgiveness programs for those who enlist.

Conditions

Each loan forgiveness programs specifies the conditions that the borrower must fulfill to qualify. For example, the Public Service Loan Forgiveness program requires that borrowers make 120 monthly payments while working in full-time public service position. After that point, the remaining balance is forgiven. Loan forgiveness for teachers often requires that the teachers work in high-need positions or in schools that serve low-income neighborhoods. In general, the borrower must complete the term of service before receiving any loan forgiveness, although sometimes the borrower can defer loan payments while working.

Application

After fulfilling all of the conditions for a specific loan forgiveness program, the borrower should download and print the application from the website of the institution that forgives the loan. In general, this is a federal government website, although some state agencies and private companies also offer loan forgiveness. Fill out the application, get the required documentation that you have met the conditions for forgiveness and submit the completed application to the lender. Continue making loan payments as scheduled until you have received confirmation that your loan has been forgiven. If it was only a partial loan forgiveness, you will have to keep making payments until your balance is fully paid off.

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Debt Counseling Information

When you get yourself into a large amount of debt, you may be looking for any alternative that you can find besides filing for bankruptcy. One option that many choose is debt counseling. Debt counseling is a program in which a trained counselor helps you evaluate your options and possibly set up a debt management plan.

Evaluate Situation

When you set up an appointment with a legitimate debt counseling service, one of the first things that you will do is evaluate your current situation. Your debt counselor will sit down with you and look at your financial circumstances. You will provide information about your debts as well as how much money you bring in. The debt counselor will look at your options and then try to help you come up with the best solution.

Debt Management Plan

One of the most common aspects of debt counseling services is the debt management plan. Most of these companies offer a debt management plan as an alternative to bankruptcy. With this kind of plan, the counselor talks to your creditors and negotiates lower interest rates on your behalf if possible. You then agree to send money to your debt counselor every month and the counseling agency sends it to your creditors. In this way, you can usually pay off your debt in around five years.

Fees

Even though using a debt management plan can help you save money on interest and eliminate your debt, it is not free. These services often charge a monthly fee for processing your payments through the debt management plan. While this fee may not seem like much, it can add up over the course of five years. You could instead negotiate the terms of the plan directly with your creditors and avoid paying the debt counseling service.

Scams

Unfortunately, this industry is filled with scam companies posing as legitimate help. These companies advertise that they can help you eliminate your debt quickly and easily. Then they charge you a large upfront fee and never provide the services that they promised. Before you choose a debt counselor to work with, it is important that you do a thorough amount of research about the company first. Make sure that you are dealing with a legitimate company instead of a scam.

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Financial Help for Debt Consolidation

When you have several debt accounts that are maxed out, it may feel like you have a mountain of debt that can never be overcome. While it can be discouraging, you can explore options to get past it. One option that many people choose to pursue is debt consolidation. Debt consolidation can be beneficial, but you have to be careful with the process.

Debt Consolidation

The process of consolidating your debt involves putting all of the debt from multiple accounts into one place. This can be done with a variety of techniques, including taking out a loan or transferring all of your balances to a single credit card. Putting all of the debt into one account allows you to make only one payment every month. One of the primary goals of debt consolidation, though, is to lower the interest rate.

Home Equity

One way that many people consolidate their debts is to take out a home-equity loan or a home-equity line of credit. With both of these approaches, you borrow money from the equity in your house to pay off all of your debt accounts. Then you make the one monthly payment to your home equity loan. The benefit of using this technique is that you can deduct the interest that you pay from your taxable income. The drawback of this strategy is that you are risking your home for short-term debt.

Debt Relief Companies

If you are interested in getting help with your debt consolidation, you may consider consulting with a debt relief company. Many companies advertise that they will be able to help you consolidate your debt and get one low monthly payment. While some of these companies can be helpful, many of them are not providing what they claim. For example, some of them use a debt management plan for this service. This involves paying the credit counseling company one payment every month and then they pay all of your creditors for you. While you are only making one payment per month, this is not actually consolidating your debt.

Risky Solutions

If you do not qualify for a traditional home-equity loan, you may be attracted to some alternatives to get the job done. If this is the case, you need to be careful with which options you consider. For example, transferring all of your accounts onto a single credit card can be very risky. Even if you have a low introductory rate, you may not be able to get all of the balance paid off by the time it runs out. Another mistake that some people make is to take out a hard-money loan. This is a loan from a private lender at a very high interest rate. Even though you may be able to consolidate your debt with this type of loan, you will have to pay a great deal of interest on it.

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How to Become an Effective Counselor

To be an effective counselor, you must do more than take the required classes or complete your service requirement. You must be able to establish rapport with your clients. Practice counseling techniques aimed at making your clients feel accepted and understood to establish a proper counseling relationship.

Instructions

1

Practice active listening. Active listening requires looking at and listening to the person and reflecting back his feelings. For example, you might rephrase what the person has said or say something like, "I imagine that must really hurt."

2

Avoid giving advice. Effective counseling helps the other person figure out for herself what the best solutions for her problems are. Instead of advice-giving, ask open-ended questions or share your own experiences.

3

Point out negative thinking patterns or behavior patterns that may contribute to the client's distress. Direct your client towards new ways of thinking in an accepting manner. Use statements such as "I wonder if..." or "Would you be willing to consider..." to give the client a sense of freedom rather than the feeling that you expect him to follow your directives.

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Can You Negotiate With Credit Card Companies to Lower Payments?

If you find yourself with large amounts of credit card debt that you do not believe you can reasonably repay, you may attempt to negotiate a deal with your credit card company to reduce your monthly payments and ease your financial strain.

Facts

You can negotiate with a credit card company to lower the interest rate on an account, lower the account balance or eliminate fees. This may, in turn, reduce your monthly payments.

Time Frame

If 180 days pass without a credit card company receiving a payment from you, the company is likely to charge off the debt for tax purposes. Once this occurs you can no longer attempt to negotiate with the credit card company because it cannot accept payment from you for a debt that has already been considered a tax loss by the IRS.

Considerations

If you opt to work out a deal with your credit card provider, you should get all agreements in writing before you submit a payment. This prevents a mistake being made in which the company honors the agreement now, but does not acknowledge it later.

Misconceptions

Many individuals believe that they must hire a company to negotiate with a creditor on their behalf. This is not necessary. Consumers can work out payment plans and debt settlements with creditors on their own without having to pay a third party (See References 1).

Warning

Negotiating for a lower balance will adversely affect your credit rating. Once the account is paid off, your credit report will reflect that the balance was "settled" rather than "paid in full." Having a settled account on your credit report will make you a higher risk for lenders in the future and may result in your being forced to pay higher interest rates (See References 2).

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