Do You Have to Pay a Bill That Has Been Charged Off As a Bad Debt?

After 180 days, most creditors will charge off any unsecured debt, such as a medical bill or credit card debt, that you leave unpaid. The creditor can then write off the debt on its taxes as a business loss. A creditor's willingness to charge off a debt, however, does not exonerate you from your responsibility to pay it.

Significance

Your charged-off debt doesn't cease to exist simply because your creditor claimed it as a loss on its taxes. You still owe the debt, and most charged-off debts are turned over to collection agencies. A collection agency will employ aggressive tactics when attempting to procure payment from you, such as making frequent telephone calls to your home or office and sending you collection letters through the mail.

Facts

Only debts that aren't secured by property are subject to being charged off by creditors. Because the debt you owe is unsecured, the collection agency that purchases the debt cannot force you to pay the outstanding balance without a court judgment. If the company sues you and wins a judgment, however, it can use legal force to garnish your wages, seize your bank accounts or place a lien against your home.

Time Frame

The statute of limitations for bad debt collection differs by state, but dictates the time any creditor has to file a lawsuit against you. Each state's statute of limitations begins 180 days from the date you last made a payment on the account in question -- approximately the same time the debt was charged off by the original creditor. If the statute of limitations in your state has already expired, no creditor can legally sue you and force you to pay off the bad debt.

Features

Although a creditor cannot force you to submit payment on your defaulted account without suing you, paying off a charge-off can prevent additional damage to your credit rating. Your credit score suffers significantly from missed payments, the charge-off itself and the resulting collection account. The Fair Credit Reporting Act notes that these items can linger on your credit report for up to seven years.

While paying off the charge-off doesn't remove the derogatory record of the debt, it does prevent a judgment. Judgments lower your credit score considerably and, depending on your state's laws, can remain a part of your credit history for longer than seven years.

Warning

Waiting to pay off your charge-off can result in the debt growing to unmanageable proportions. If your contract with the original creditor included periodic interest charges, as most credit card agreements do, any collection agency that purchases the charged-off debt can add interest to the balance. Even if your original creditor did not charge interest, any creditor with a judgment against you can legally add interest to the judgment each year that your debt goes unpaid.

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Is the Estate Responsible for the Deceased's Credit Card Debt?

Signing a contract with a credit card company makes you liable for the purchases you make using any credit cards the company provides. Upon your death, you can no longer make payments---but the credit card company remains legally entitled to collect the outstanding balance you owe. Credit card companies have the right to collect unpaid debts from the estates of deceased cardholders.

Probate Court

Upon your death, your assets and debts immediately fall under the jurisdiction of the probate court. Any assets left behind constitute your estate. Each creditor must file a claim against your estate with the probate court in order to get payment. The time frame for filing a payment claim varies depending on your state. After the credit card company files a claim for payment, the probate court and the individual designated to represent your estate pay your debts and distribute any remaining assets to your heirs. This occurs whether or not you left a will.

Joint Accounts

If you were not the sole user of your credit card account and instead shared a joint account with a loved one, that individual assumes full responsibility for paying off any debt you incurred on the card. Rather than each sharing responsibility for 50 percent of the debt, joint account holders are each responsible for 100 percent of the charges made against the account. In this case, the credit card company would pursue the remaining account holder for the debt rather than filing a claim against your estate.

Authorized User Debt

Your credit card company cannot file a claim against your estate for credit card debt you incurred but do not legally owe. Such is the case with authorized users. Similar to a joint account holder, an authorized user shares a credit card account with another individual. While joint account holders apply for the card together and obtain approval based on the credit rating and income of both parties, a cardholder adds an authorized user to his account after obtaining the card. Authorized users can then use their credit cards to incur debt, but are not legally responsible for payment. Thus, if you incurred debt as an authorized user, your credit card company cannot file a claim against your estate and will instead expect the primary account holder to pay off your purchases in full.

Insolvency

Carrying more debt than assets renders your estate insolvent and incapable of paying off all of the creditors you owe. Should this occur, your credit card provider has little recourse other than writing off your outstanding debt as a business loss. Although credit card companies sometimes hire collection agencies and attempt to collect a deceased consumer's debt from her surviving family members, family members have no legal obligation to pay off the debt.

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How to Settle Your Credit Card Debt for Pennies on the Dollar on Your Own

When you owe a large debt on a credit card but cannot pay the entire balance, settlement may be an option to consider. Settlement occurs by getting the creditor to accept a payoff of a portion of the balance and closing the account as paid in full. Negotiating the balance to the point that you only pay pennies on the dollar is possible through a series of phone calls with the creditor. Keep in mind that debt settlement affects your credit score negatively and you need to have the money available to make the payment you have negotiated. Also note that most credit card companies will not speak to you about debt negotiation until you have already missed several payments in a row.

Instructions

1

Call your creditor to negotiate the debt and suggest a settlement. If you have missed some payments, the creditor has likely already reached out to you by phone to discuss your situation and try to collect. The company will suggest payment options and may even offer a settlement. This initial settlement offer is usually close to the amount of your debt.

2

Explain why you cannot pay your credit card bill. If you have had job loss, illness or other circumstances that prevent you from paying, share this with the creditor. Don't share too much information, though. The creditor does not need to know how much money you have in the bank, if you are receiving unemployment or if your spouse is working. This may work against your cause. End the phone call if the settlement the creditor offers is not low enough.

3

Continue to negotiate your settlement on subsequent phone calls. Refuse each offer, then make a counteroffer that equals paying pennies of each dollar you owe. Offer to make a lump sum payment that may be enticing for the creditor. Creditors would rather receive some payment than none.

4

Ask for the negotiated settlement agreement in writing and wait to pay until you have received this documentation. After making the final payment, get a letter from the creditor that states you have "paid as agreed" and the balance of your credit card is zero.

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How to Find and Get Credit Card Debt Relief

In a tight economy, many people have been forced to use credit cards to make payments on bills. When the credit runs out and the payments along with the credit card debt is still there, you may find that you need to get credit card debt help to find relief. There are programs and companies that can help. Finding the right one to help your situation can be tricky. Here are some tips on finding help with credit card debt.

Instructions

1

Call a credit counselor. They are not the actual company that handles debt, but they can counsel you to help give you the options available and which may be best for your situation.

2

Visit an online website that gives credit counseling advice. You will need to have all of your credit card information along with balances due and payment amounts.

3

Sign up for a debt consolidation. If you only have unsecured debt that is hindering you, the interest rate can be cut and you still make payments that go towards the principle. This will help keep your credit rating good enough to use it again.

4

Take out a home equity line and pay off your credit card debt. This will only work if you destroy the cards and do not use them anymore. Do not cancel the cards since this can negatively affect your credit rating, but have self control and budget better.

5

Check with an attorney or credit counselor and see if bankruptcy is your best bet. Since you can only do this one every 7 years, make sure you can not find any other option to get help for credit card debt.

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How to Activate Your Walmart MoneyCard

A Walmart MoneyCard is a prepaid card you can purchase at any Walmart location. Load as much money on the card as you wish, and use it like a debit card at any Walmart store. You can purchase clothes, shoes, toys, house wares, gardening equipment, sporting goods and even groceries. Your card allows you to purchase anything you want, provided there are enough funds on it to cover the cost of your purchase. You can add funds to your card at any time.

Instructions

1

Go to the Walmart prepaid MoneyCard website (walmartmoneycard.com) to activate your card.

2

Enter the 16-digit number that appears on the front of your card into the required field on the web page. Then enter the three-digit code shown on the back of your card into the provided box. Read the code in the shaded box and enter it into the provided box. Click "Continue."

3

Enter the required information on the pages that follow and confirm your activation.

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How to Refinance a Home Equity Loan

There are many reasons why someone would want to refinance a home equity loan. One reason could be he needs more cash and that is the easiest way to get it. Secondly, the interest rate he is currently paying might be much higher than the current rates. Or third, maybe he would like to replace his variable rate for a fixed rate. That way he won't have to worry about escalating rates in the future. Whatever the reason, there are a few things he should be thinking about.

Instructions

1

Determine if you would be better off refinancing your first mortgage and including the amount currently outstanding on your home equity loan. An easy way to find out is to determine the fees you would pay if you refinanced your first mortgage, then compare them to the amount you would save. If interest rates are particularly low, you might end up with a reduced monthly payment, even with the addition of the loan from your home equity loan.

2

Make sure your credit rating has not been downgraded since you took out your loan. The interest rate that most lenders charge is first determined by current market conditions. The lender then will assess the borrower's credit rating, and if it is below standards, she will charge a higher rate of interest because of the additional risk. If you have suffered recent financial woes and have less than stellar credit, it's best to wait awhile before renegotiating your loan.

3

Refinance your home equity loan for whatever reason you may have because, in most cases, there will be much lower closing costs than if you were to refinance your first mortgage. Because most lenders sell mortgages they make, they must begin at the beginning when someone wants to refinance a first mortgage. They must have the property appraised, do a title search and other tasks, which are expensive and time-consuming. But that is not the case with home equity loans. In most cases, lenders will rely on estimated values of real estate. This lender needs far fewer safeguards than does a first mortgage lender. In fact, many lenders will charge no fees at all just to get your business.

4

Know the risks involved. If you intend to increase your loan and that requires that you renegotiate your home equity loan, meaning you will be making larger monthly payments, think about this. If you should suffer a job loss or have a debilitating health issue and are unable to make the monthly payments on your loan, since your home is security for the loan, your lender could be forced to foreclose on it. If you are uncertain of your financial future, choose a financing option that does not involve using your house as collateral.

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About Negotiating Credit Card Debt

If you have major credit card debt, you are paying hundreds of dollars in interest every month. You may be wondering how to reduce this commitment and begin to improve not only your credit rating, but your style and standard of living. With extremely high interest rates on most credit cards, it is the only way for many people to ever pay these lingering debts down.

Misconceptions

Credit card debt can be negotiated with your credit card company. However, you cannot reduce your own interest rates if you do not meet the requirements set forth by the credit card company. Debt consolidation companies can reduce your interest rate by paying off your credit cards with a loan, then offering you lower monthly payments or reduced interest charges; however, this does not eliminate your debt. You just pay less interest every month, and therefore pay it down faster.

The Facts

Credit card companies earn money by charging you interest on the money they loan to you through the extended credit. The interest rate they charge can be as high as 30 percent or more. Typically more than half of your monthly payment goes to interest. This means it could take years to pay off a simple $2,000 balance, with thousands spent on interest payments over the course of that time. If you cannot make your payments, you can apply for a hardship program, which allows you to pay off your credit card bills without interest in some cases. You can also refuse to make your payments, and let the entire account charge off. At this point you can negotiate with the credit card company to pay the entire account off for less than half the total balance. Instead of letting the account go to a collection agency (which pays pennies on the dollar to the credit card company for the right to collect the debt, and then tries to collect money from you), the credit card company will usually negotiate a price with you.

Risk Factors

When you let a credit card bill charge off, the credit card company reports it to the major reporting agencies as a charge-off, balance unpaid or settled. This mark remains on your credit history for seven years and can prevent you from getting low-interest credit cards, loans and other financial services.

Benefits

A single mark on your credit report may not be as harmful as the credit companies would have you believe. The extra cash you have in hand can help you pay off other credit cards and reduce your overall debt-to-credit ratio, which could actually help your score and make up for this single charge-off. Most times, these charge-offs can be easily explained to a loan officer, and as long as you have a good work history, they will give you the loan.

Significance

Negotiating credit card debt can be your path to more financial freedom. If you do not plan on relying on loans for a mortgage, or more credit cards, negotiating your way out of your credit card debt is a very smart move. It saves you from being strapped in to monthly payments, gives you more cash right in hand to pay other bills and might be more than worth the mark it leaves on your credit report.

Expert Insight

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How to Get Payoff Figures for Your Student Loans

If you accepted a federal student loan while attending a post-secondary educational institution, you will be required to begin repaying the loan six months after you graduate, leave school or drop below half-time status unless you qualify for a deferral or forbearance. If you are like most students, you may not know how much money you currently owe on your student loans. You can obtain your current balances on all federal student loans through the National Student Loan Data System, or NSLDS.

Instructions

1

Navigate to the NSLDS website.

2

Select "Financial Aid Review."

3

Acknowledge that you have read and accept the privacy policy by clicking on "accept." Choose whether you want 128-bit encryption on the next screen.

4

Input your Social Security number, the first two letters of your last name, your birth date and your PIN number on the following screen. If you do not remember your PIN number, or never received one, you may apply for one through the PIN website. Your accounts will be displayed on the following page along with your current balances.

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Who Can You Contact for Help If You're Being Hounded by Credit Agencies?

Most people who have owed a debt or have been late with a bill payment know the feeling of being harassed by phone calls and letters. Bill collectors have a large stake in trying to convince delinquent borrowers, credit card holders and even those late with utility bill payments to pony up money. The first thing you should do is become familiar with laws that regulate bill collector practices, including Federal Trade Commission guidelines. But if collectors continue to hound you after you've pointed out the error of their ways, there are options.

Collection Agency

Contact the collection agency directly. Assuming you've already asked the company (politely, of course) to stop contacting you, you may need to send a letter to the collection agency requesting that they cease all communications. In the letter, make sure to include any violations of the Fair Debt Collection Practices Act that you feel are being violated. Describe the violations in detail. Request that the collector cease all communication regarding the account, and include the account number and creditor name. There are sample letters available online.

FTC

The Fair Debt Collection Practices Act comes under the auspices of the FTC and is very precise and detailed about what actions credit agencies and bill collectors can take, and which behaviors constitute harassment. The Act is a statute added in 1978, as Title VIII, to the Consumer Credit Protection Act. The Act applies to personal debts and family and household debts, such as those incurred through the purchase of a car, medical bills, retail financing, mortgages and credit card account debts. The statute applies to both disputed and legitimate debts. There are limits on collectors' actions, when they may contact you, how they may contact you, and who they can contact. If you feel that you're being hounded in violation of any Fair Dent Collection Practices Act provision, contact the FTC. (See resources).

State Attorney General

Most states have their own collection laws similar to those of the FTC. Contact your state's attorney general even before contacting the FTC, or visit the attorney general web site to bone up on your state's laws concerning collectors

Better Business Bureau

Contact your state's Better Business Bureau. The company that's hounding you may have been reported by other consumers or may be in poor standing with the BBB. If nothing else, a volume of complaints against a particular company may spur the BBB to take action and possibly put the company out of business.

Phone Company

Depending on your local phone company, you may be able to place a block on your phone for incoming calls from certain phone numbers, including bill collectors. Of course, you should by all means contact the phone company if the credit agency is violating any FTC regulations, as well as contacting the state attorney general and/or the FTC.

Attorney

Sometimes having an attorney simply repeat the steps you've already taken---such as making a phone call or sending a letter to a collection agency---can have the desired effect. A letter that's written on a lawyer's stationary may do the trick where your own letter didn't.

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How to Ask for Hardship Help From a Creditor

Getting hardship help from a creditor can potentially save your credit rating. Some debtors skip payments if they don't have cash. However, skipping payments reduces credit scores, results in extra fees and can stop future credit approvals. Communication with a creditor and keeping the creditor alert to your economic situation may qualify you for hardship help.

Instructions

1

Request help before you default. Don't wait until you've missed a few payments before requesting hardship relief from a creditor. The creditor may readily recommend solutions if the account is current.

2

Disclose details about your situation. A vague description of your plight may not encourage help from your creditor. Creditors need details to assess if you qualify for hardship help. Information requested may include a list of your monthly debts and copies of income statements.

3

Propose a modification of your credit terms. A lower payment or interest rate on an account can increase affordability and ward off future defaults.

4

Talk about debt forgiveness. Get rid of balances fast with a debt settlement. Pay less than you owe to extinguish an outstanding balance.

5

Miss a couple payments with your creditor's consent. To assist the account holder who experience hardship, some creditors may temporarily eliminate payments on an account for several months. Deferments give debtors time to improve their finances in order to resume timely payments.

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How Do Credit Bureaus Work With Debt Collectors?

Collection agencies try many hardball tactics to get you to your debts. They may threaten to ruin your credit by making sure the long past due bill shows up on your credit reports with the Equifax, Experian and TransUnion credit bureaus. They may be able to do this, but only under certain circumstances. You can often fight it if you know exactly how debt collectors actually work with credit bureaus.

Role

The role of the three credit bureaus is to collect financial and demographic information about you with the help of your creditors. It puts this information together to make a credit report that can be purchased by lenders, insurers and even employers. They use it to make decisions about you when you apply for a loan, job or insurance coverage. The information is always up-to-date because the bureaus continually change it based on ongoing reports from your creditors.

Function

The main function of a collection agency is it get money from you to pay off a debt. The agency might be working on behalf of a creditor or it may have purchased the debt for much less than its actual value. It will do whatever it can to get you to pay the money, including notifying the credit bureaus. The debt will show up as a "collection" account, which will bring down your credit score, according to the FICO credit score company.

Time Frame

Most debts, including accounts that have gone to a collection agency, can only appear on your credits for seven years. The bureaus must remove them when that time frame is over, and they will no longer affect your credit score. You can challenge a collection account that still appears after seven years by filing a credit bureau dispute.

Limitations

A debt collector is free to report a collection account to the credit bureaus if it is a legitimate debt. They will then add it to your credit reports. However, you can dispute it and the bureaus are bound by the federal Fair Credit Reporting Act (FCRA) to remove it if it cannot be validated, the Credit Infocenter credit repair website explains. Collection agencies that have purchased a debt from the original creditor often do not have the proper paperwork to validate it. You can file a dispute with the credit bureaus and have a good chance of getting the account removed from your reports. You can sue for damages if the debt collector tries to put it back.

Warning

"Zombie" debt collectors will purchase old debts that are past the statute of limitations for collection in your state, MSN Money Liz Pulliam Weston warns. This means they can no longer take legal action against you to collect the debt, but some will make threats and try to trick you into paying. Unscrupulous collectors will threaten to put the account back on your credit report even though it has dropped off because it is so old. They cannot do this, and you can immediately dispute it if they try. The credit bureaus must remove it under the FCRA, and you may be able to take legal action against the collection agency if it persists.

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Credit Repair Success Strategies

If you are suffering from bad credit, it may take time to repair it and increase your credit score. There are, however, specific strategies for getting back on track for effective credit repair. It is important to periodically order a credit report and check it thoroughly for discrepancies. Dealing with negative activity quickly gives you the best chance at repairing your credit.

Dispute Inaccurate Activity

Federal law gives you the right to request an investigation of inaccurate activity that appears on your credit report. There is no charge to dispute activity, but some individuals choose to hire someone to handle this process on their behalf. When a company denies your application for credit or employment, you have up to 60 days to request a free credit report from the credit bureau used to determine your creditworthiness. You can use a form provided by the credit bureau or write a formal letter to dispute inaccurate activity on your credit report. State the facts and reasons you believe the information is inaccurate in your dispute letter. It is important to document all correspondence sent and received in relation to your disputes. Include any documentation that may prove the activity is inaccurate.

Pay Off Balances

Pay off old balances that are charged-off or sent to collections. You can often negotiate with collectors for reduced settlement amounts. Many debt collectors and creditors allow you to make monthly payments within your budget until the debt is paid off. When you have paid a debt or settled it in full, demand that any negative remarks be removed from your credit report. Obtain written agreement from the debt collector before sending your payments. If you have many unused, high-interest credit accounts that are paid off, slowly close them out over several months. Close the newest accounts first so that you do not lose your long-standing credit history.

Utilize a Credit Counselor

You may want to use a credit counselor if you're having difficulty paying debts. Many nonprofit credit counseling organizations offer services to help solve financial problems. Services provided by legitimate credit counselors include assistance with budgeting and providing free educational materials and debt and savings classes and workshops. It is best to choose a company that provides face-to-face consultation. A credit counselor may suggest you enter into a debt management plan if your financial situation hinders you from paying your bills entirely. Only sign up for a debt management plan after a credit counselor has spent time analyzing your financial situation and has exhausted all other options.

Re-establish a Stable Credit History

A large portion of your credit score is derived from your payment history. It is important to establish a new timely payment history after you have paid off old debts. Avoid getting too many credit cards when you're trying to reestablish your credit. Secured credit cards and unsecured credit cards with small credit limits and reasonable interest rates are good options for individuals seeking to repair their credit. Make sure that you make payments on time every month, even if it is only the minimum amount due.

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Debt Consolidation Vs. Home Equity

Paying off your credit cards can be a struggle. Even if you routinely make the minimum payment, you'll find that after several months you have hardly made a dent in the amount owing. There is a way out. If you have a credit score that satisfies the lending institution and enough home equity, you can take out a home equity loan and eliminate the credit card debt. For starters you need to understand what debt consolidation is.

Debt Consolidation

Debt consolidation is the process of taking two or more of your debts (such as credit card debt) and consolidating them into one loan. If you have two credit cards, one with $3,000 outstanding and one with $2,500 outstanding, you could borrow $5,500 and pay off the credit cards. This new $5,500 loan is a consolidation loan.

A debt consolidation loan may be secured or unsecured. Secured loans have better interest rates and less stringent credit requirements, but may have fees associated with them. Bankers sometimes call debt consolidation "debt refinancing".

Advantages of Debt Consolidation

A consolidation loan provides several benefits: The interest rate may be lower, the time to pay off all debt may be shorter and the monthly payment may be lower. A consolidation loan also has psychological benefits, giving a sense of relief from debt and control over your finances.

Understanding Home Equity

Home equity is the dollar amount of your house that you own, free and clear of your mortgage. You can determine your home equity by subtracting your mortgage amount from your home's market value. If your home is worth $250,000 and you have a $100,000 mortgage, you have $150,000 of home equity.

How Home Equity Helps With Credit Card Debt

Home equity can help you pay your debts through a home equity debt consolidation loan. This loan reduces your home equity by the amount of the loan. But securing the loan also reduces your other debt and probably reduces the amount of interest you are paying on that debt. You will gradually increase your home equity as you repay the loan.

How to Get a Home Equity Loan

Start first with the company that gave you your mortgage. This may save you money in fees. Then shop around and compare the rates and fees offered by other lenders. Fees associated with a home equity loan can include the cost of an appraisal and legal fees. Once you have a loan, consider keeping just one credit card account and reducing the limit on that card to only what you need for monthly spending. This could affect your credit score, however.

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How to Stop Garnishment of Wages on the Job

A debt collector or a creditor must obtain a court-ordered judgment to garnishee your wages. But a legal entity such as the U.S. Department of Education, state taxation agency or the Internal Revenue Service can garnishee without a court order as long as it sends you notification of the garnishment. The IRS refers to a wage garnishment as a wage levy. A wage garnishment can inconvenience you financially, since it requires your employer to withhold a certain portion of your pay to satisfy the debt. Still, there are ways to stop a wage garnishment.

Instructions

1

File a hardship claim, or a claim of exemption, with the court that issued the wage garnishment, if it is preventing you from affording basic necessities such as food, rent/mortgage and utilities. Once you file the claim, the court sends you a hearing date. Take proof of your earnings and monthly expenses with you. If the judge agrees with your claim, he can stop the wage garnishment until your finances improve.

2

Make a hardship claim if a legal entity besides the court ordered the garnishment. If a federal student loan is causing you hardship, for example, follow the U.S. Department of Education's procedures for claiming hardship. This includes completing the administrative wage garnishment request for hearing form and a financial disclosure form, and showing copies of income and proof of expenses. Mail your hearing request to the department's Hearings Branch.

3

Enter into a payment arrangement with the garnisheeing party. Once the wage garnishment has begun, the garnisheeing party may be reluctant to stop it. Still, it may be willing to set you up on an installment plan that allows you to repay the debt over time. If you enter into, and keep to, the installment arrangement, the garnisheeing party stops the garnishment.

4

Contact the issuing agency if you object to the wage garnishment. If you do not owe any monies or disagree with the garnishment amount, call the agency and explain the situation. You may be able to resolve the matter over the phone.

5

Pay off the debt in one payment, or let the wage garnishment continue until the debt is paid off in full. You can also contact the garnisheeing party and inquire about a settlement, which lets you repay the debt for less than you owe.

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Fair Credit Collection Guidelines

Creditors may relinquish delinquent accounts to third-party collection companies. Debt collectors work for the original lender prior to the creditor charging-off the account. Creditors may also sell accounts to debt buyers, after charge-off. A collection agency or debt buyer's primary objective is to prompt an account holder to remit the account balance. The Federal Trade Commission regulates debt collection guidelines, which are outlined in the Fair Debt Collection Practices Act---FDCPA.

Method of Contact

According to the FDCPA, collection companies and debt buyers may contact an account holder via phone, email, regular mail or fax. Collection agencies and debt buyers also have the right to contact an account holder's family, employers and neighbors in an effort to obtain current contact information on the account holder. The types of contact information these companies may seek includes the current address, phone number and employer. Collection agencies must respect the account holder's privacy and not divulge the specific reason for their call.

Contact Restrictions

Collection agencies and debt buyers may not call an account holder before 8:00 in the morning or after 9:00 at night, local time, without prior permission. Collection agencies and debt buyers may not contact an account holder at work if they have already been requested not to do so orally or in writing. The Telephone Consumer Protection Act---TCPA---stipulates that debt collectors and debt buyers may not contact account holders' cell phones using an auto dialer without the account holder's prior written consent.

Account Holder Rights

Consumers have the right to stop debt collection calls and/or written communication. According to FDCPA guidelines, debt collection agencies and debt buyers must stop all personal contact once an account holder submits the request to do so in writing. The collector may contact the account holder once more in writing to advise that there will be no further contact or that they have filed a lawsuit or other legal action relating to the account. Account holders also have the right to contest credit accounts that the collectors claim they owe by filing a dispute. Timing is important when filing a dispute; account holders have 30 days from the date of the original written communication from the collector to contest credit accounts. Once an account holder files a dispute, collectors must stop collection activities on the account. The collector has 30 days to provide proof of the validity of the account.

Credit Reporting Guidelines

Third-party debt collectors and debt buyers can report a delinquent account differently on a consumer's credit report than the original creditor. Collectors are not allowed to alter the original date of the delinquency, but they may list the account separately as a collection account. The original creditor may list the account as a charge-off. Debt collectors may also report an outstanding balance that is different from the original creditor's account listing due to accumulating interest and other fees. After seven years, delinquencies, charge-off accounts and other negative account entries must be removed from a consumer's credit report.

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How Do I Ask Credit Card Companies for Debt Cancellation?

You can cancel a debt with a credit card company through a process called debt settlement. This allows you to resolve credit-card debt for less than the full amount owed. The remaining balance will be cancelled by the card company and your account will be permanently closed. Debt settlement is a good option when you are suffering from financial problems. It is considered by some to be a viable alternative to bankruptcy, which is the most extreme method of cancelling debt.

Instructions

1

Review your billing statement or call customer service to find out how far behind you are on your payments. Generally, card companies will consider debt settlement options only after your account has fallen at least three months behind. At six months--and sometimes sooner--the card companies will close your account for nonpayment and turn it over to a collection agency.

2

Call your credit card company once you have fallen three months behind. Explain your financial situation and tell the representative that you would like to discuss a settlement. Negotiate the settlement amount by making a very low initial offer--say 20 percent of the balance. The customer service representative may counter with 90 percent, or inform you that your account isn't currently eligible for settlement. Continue haggling if an agreement seems possible, or politely end the discussion and hang up. The Federal Trade Commission says you should keep trying for a settlement even if you're initially turned down.

3

Write a letter asking for reconsideration if the card company said your account wasn't eligible for a settlement. Or if you weren't able to come to an agreement on terms, use the letter to increase your offer. Follow your letter with a phone call after about two weeks. Stay in touch by telephone or mail until you have an agreement.

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How to Dispute a Claim on Your Credit Report

Credit reports provide a history of how well consumers manage credit privileges. Lenders, insurance companies and even employers use the reports as a basis for determining character and risk. Reviewing your credit report ensures there is not any inaccurate or incomplete information. Claims on your credit report that are wrong should be disputed, as they may have a negative effect on your report and borrowing ability. Disputing credit report claims requires contacting the credit agency and notifying them of the error.

Instructions

1

Write the credit bureau or agency that furnished the credit report. In the letter, state the information that is inaccurate or incomplete.

2

Mail your letter certified, return receipt. This provides you with proof the agency received it. According to federal law, the credit agency has 30 days to investigate the dispute.

3

Await the results of the investigation. If any change is made as a result of the investigation and the information you provided, the credit agency must furnish you with a notice stating such. You are also entitled to receive a free copy of your credit report. If the credit agency cannot verify the information, they must, by law, remove it.

4

Contact the credit agency if you do not hear from them within 30 days. Inquire as to its receipt of your letter and the status of the investigation. If you do not receive a satisfactory response, you can file a complaint against the agency.

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How Much Do You Pay on a 1099 for Settlement?

Settlement of a debt, such as a line of credit or a credit card, can allow you to end your obligation to make future debt payments without paying the full balance on your account. Lenders will sometimes accept a lump sump payment that is less than the account balance, particularly if you are behind on your payments and facing potential legal action for your debt. However, you may have to pay tax on debt amounts forgiven under a debt settlement.

1099-C Issuance

In most cases, after you have paid a reduced settlement amount to clear a debt under an agreement with a creditor, the creditor will send you a 1099-C form that shows the debt amount that was forgiven. The creditor must also send a copy of the 1099-C form to the Internal Revenue Service. The 1099-C form serves as evidence of the settlement for tax purposes.

Taxable Amount

When you settle a debt, the difference between the amount you owed at the time of settlement and the amount the creditor accepts as payment is taxable. The amount you pay under the settlement is nontaxable. For example, if you owe a creditor $12,000 in credit card debt, and the creditor accepts a lump sum payment of $8,000 under a settlement agreement, you will be responsible for paying tax on $4,000.

Taxable Rate

Amounts reported on a 1099-C form pursuant to a debt settlement are taxable at the standard rate for your income bracket. However, the forgiven amount listed on the 1099-C form increases your taxable income and may place you in a higher tax bracket. This means that you may be taxed at a higher rate than if you had not agreed to the debt settlement.

Exception

A creditor is not required to issue a 1099-C form to you or the Internal Revenue Service if the forgiven amount is less than $600. A debt settlement that forgives less than $600 will not increase your tax liability. For example, if you owe $2,500 in credit card debt and the creditor accepts a settlement of $2,000, the $500 you saved is not taxable. However, you must still include forgiven debt of less than $600 as miscellaneous income on your 1040 tax return form. Although you will list income amounts as an entry on the "Other Income" line on your 1040 form, you or your tax preparer will not count this entry when calculating your total taxable income.

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How to Calculate Debt Consolidation

Debt consolidation sounds like a promising option to many people struggling with consumer debt, mortgage payments, student loans, and car payments. Guarantees of lower interest rates and lower monthly payments entice many people to seek out services that combine all of their existing debts to yield a new single monthly payment. However, debt consolidation may not always be advantageous for the average consumer. Hidden fees, higher interest rates, and a lower credit rating may end up making your debt management situation worse than before. However, it is possible to calculate how to use debt consolidation methods to your advantage.

Instructions

Calculating Credit Card Debt Consolidation

1

Create a cash-flow plan. Write down all of your income and expenditures and determine how much you are currently paying toward your debts each month. Use this plan to determine if you can afford to make higher monthly payments.

2

Check your recent credit card statements to find your current APR. Call your credit card companies to see if they will reduce your interest rate. Customer service representatives may offer you a lower rate over the phone. After doing what you can to lower your interest rates yourself, record your new interest rates as part of your financial planning.

3

Calculate how long it will take to pay off your credit card debt with your current rates and monthly payments. There are several online financial calculators, such as through CNNMoney.com, that can find this information if you simply input monthly payments and interest rates.

4

Evaluate the terms of various debt consolidation services by calling them for consultations. Do not necessarily trust what they might tell you about how long it will take you to pay off your debt without their services. Only ask what the fees, interest rates, monthly payments, and length of repayment would be using their plan. Many debt consolidation services charge a monthly fee that amounts to a certain percentage of your payments toward your debt. Given that you have already taken measures to negotiate superior terms, it is unlikely that they will be able to reduce your total interest rates much.

5

Find information about taking out a home equity loan if you are a homeowner. You may be able to borrow money against your home for a lower interest rate than credit card companies, use the loan to pay off your debts, then make payments on the low-interest loan instead. Furthermore, interest payments toward a home equity loan are tax deductible. Take into consideration any fees or extra expenses this would require, then calculate how long it would take to pay the debt using this scenario.

6

Consider refinancing your home or car, then using the reduced monthly payments to pay more towards your consumer debt. Home and car loans offer lower interest rates than credit card companies, so extending your home or car repayment plan in order to reduce your credit card repayment plans may be financially advantageous. Contact your lenders to research different terms that they can offer you, then calculate how much more this would allow you to pay toward your debt. Compare the potential new terms with your old debt repayment plan to determine which one would result in lower overall debt.

7

Research personal bank loans to consolidate your debt. Most banks offer far lower interest rates than credit card companies. Set up a consultation with a bank to see what you might be approved for, and compare the terms of the possible loan to your old debt repayment plan.

8

Determine which debt consolidation option is the best given the various terms you have researched and repayment plans you have calculated. You may find debt consolidation services, a home equity loan, refinancing, a personal loan, or simply not consolidating to be the most feasible for your particular financial situation.

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How to Get Countrywide to Reduce the Principal Owed on a Home Loan

Mortgage lenders like Countrywide will reduce the principal on distressed mortgages if they believe it will prevent the account from entering foreclosure. Use this to your advantage when trying to make your mortgage more affordable. Negotiating your Countrywide mortgage to a lower rate may involve allowing payments to become late, damaging your credit rating, but may allow you to get a better deal on your mortgage.

Instructions

1

Gather all of your important financial documents to bring to your Countrywide loan officer. This includes payment stubs, bank records, bills and credit reports. If you require assistance preparing for the loan modification process, contact the Federal Home Affordable Modification Program through the link in the resources below. Call the telephone hot line for free advice.

2

Contact your Countrywide loan officer and tell him that you are having difficulties making your loan payments. Inquire about whether Countrywide would be willing to reduce your principal, interest rate or both. It may be particularly willing to negotiate with you if there are many foreclosures in your area, even if you yourself are not in danger of foreclosure and can comfortably make your current payments.

3

Consider contacting a nonprofit loan modification assistance company to assist in your negotiations. Some of these companies will take on only those mortgage holders who are in danger of entering foreclosure, but most will take on anyone who comes to them. Be wary of for-profit companies offering loan negotiation services. Some of these will charge exorbitant fees for a service that could be performed by a layman or through a free nonprofit service.

4

Wait until your mortgage payments become one to two months late, if you are willing to take a substantial hit to your credit rating in return for a stronger negotiating position for lowering your mortgage principal with Countrywide.

5

Send a letter of forbearance to your Countrywide lender if you are in imminent danger of entering foreclosure. Such a letter details your current financial situation and your plans to remedy it so that you will be able to become current with your mortgage payments again. If your plea is accepted, you may gain months of additional time to negotiate your mortgage and improve your financial situation.

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Do They Garnish My Wages if I Don't Pay the Mortgage in Florida?

A wage garnishment allows a creditor to collect on a judgment against a debtor. Mortgage lenders in Florida must foreclose to get a judgment against the owner-debtor. The mortgage lender needs to specifically obtain a mortgage deficiency judgment to seek a wage garnishment from the owner-debtor. Florida and federal law provide certain exemptions from wage garnishment.

Mortgage Default

Mortgage lenders in Florida are required to file a judicial foreclosure procedure to seek relief on a defaulted mortgage. By successfully foreclosing, the lender can seize the property and sell it. If the property sells for less than the defaulted mortgage balance, the lender can seek to obtain a deficiency judgment for the difference. The debtor can legally challenge the request for a deficiency judgment by demonstrating to the court that the lender sold the foreclosed property for less than fair market value. If the the lender obtains the deficiency judgment, the lender can seek to collect on the judgment by garnishing the debtor's wages.

Wage Garnishment

Wage garnishment is legal in Florida, but is subject to exemptions found in federal and state law. The federal Fair Consumer Credit Act excludes all weekly net wages below 30 times the hourly minimum wage, and 75 percent of net wages above that amount are also exempt from garnishment relating to a mortgage debt. Net wages are considered to be all gross earnings less any legally required payroll deductions. The Act also protects the debtor from being fired due to the garnishment action. Florida state law provides 100-percent exemption from wage garnishment for certain debtors, as detailed below.

Head Of Family

Florida state law providers debtors who are considered a head of family a 100-percent exemption from wage garnishment. The law considers any person who provides over 50 percent of the financial support of a child or other dependent to be a head of family. The first $750 of net weekly earnings are fully exempt, and any earnings over that can be garnished only by the agreement of the debtor. Such an agreement must be in writing and conform to the law's specified form and language.

Other Provisions

A lender can seek a deficiency judgment for up to five years from the date of the foreclosure sale, and such judgment is valid for up to 20 years. The debtor challenging a request for a deficiency judgment is entitled to a legal hearing where he can present evidence regarding the value of the home at the time of the foreclosure sale. If the court agrees to that value and it is higher than the defaulted mortgage balance, no deficiency judgment will be given. The federal Act's exemption is based upon earnings after legal deductions such as taxes and FICA and does not include deductions for things such as medical insurance or retirement funds. If the debtor has filed for bankruptcy, a wage garnishment will not be instituted.

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How to Relocate When Upside Down on Mortgage

Relocating when you are upside down on your mortgage can be challenging. The upside down nature of your mortgage means you owe more on the loan than the house is worth. That makes selling the house difficult, yet you may need to relocate for a job offer or other reasons. It's important that you carefully consider all the pros and cons before you leave the house behind. Otherwise, you may discoverer that your budget in your new city is insufficient to cover both your new living expenses and the mortgage on the house.

Instructions

1

Learn how much your house is worth by asking a real estate agent. Have an agent compare your house to similar homes that have recently sold in your area. Subtract the current fair market value from the balance on the loan to show how far underwater your mortgage is.

2

Gather financial information needed to create a monthly budget for your new life after you relocate. Make some judgments on the new cost of living based on personal research. Also gather billing statements on all current debts, and make a list of other recurring expenses such as child care, groceries and utilities. Looking at your current budget and a potential new budget after the relocation will help your decision making about what to do with the current mortgage.

3

Solicit advice from a housing counselor approved by the U.S. Department of Housing and Urban Development. The counselors have experience working with homeowners who are upside down on their mortgages. Ask the counselor to review your finances and budget to suggest changes that might make the relocation easier. Also ask for the counselor's professional advice on what to do about the upside down mortgage. Find a counselor near you by checking the HUD website (see Resources).

4

Rent the house. Consider hiring a local property management company to handle the process. Renting the house will allow you to receive at least a portion of the monthly mortgage payment. Be sure to account for all expenses, such as the management fee and maintenance as you decide on this option. Check your budget to determine if you have the flexibility to make up the monthly difference between the rental income and expenses and the mortgage payment.

5

Ask your lender for permission to sell the house through a short sale if renting it is not a viable option. Short sales allow for the house to be be sold for less than the amount remaining on the loan. However, the lender must agree. Have the housing counselor contact the lender directly to negotiate on your behalf. Then hire a real estate agent with experience handling short sales.

6

Get details of the short sale agreement with the lender in writing, including a stipulation that you will not be held responsible for a deficiency balance -- the amount remaining after the house is sold for less than the balance due to the mortgage company.

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Can I Get Money Back From an Account Levy?

Not all creditors are honorable about levying or garnishing the bank account of someone who owes them money, although the law restricts them to some extent. A creditor cannot seize certain types of income, but that doesn't always stop it from trying. If a creditor takes money from your account that it has no right to, you do have some recourse.

The Levy Process

A levy can't happen without warning. The creditor would first have to get a judgment against you. Since this involves a lawsuit and a court appearance, you'd receive a copy of those documents in the mail. If you default and don't respond to the lawsuit, or if you lose in court, you'll have a judgment against you, allowing your creditor to levy against your account. The simplest way to prevent this is not to place any money in that account once you have warning of the judgment. This doesn't relieve you of responsibility for paying the debt, but it at least allows you to repay the debt on your own terms.

Joint Accounts

Assuming that there is money in the account, if it's not all yours, you can sometimes prevent the creditor from levying the portion that doesn't belong to you. A joint account with someone else is vulnerable if your Social Security number appears on it and a creditor can legally garnish it. However, the creditor cannot take money deposited into the account if it's placed there by someone with a different Social Security number.

Exempt Funds

Depending on the source of your income, the money you contribute to the account might also be exempt from levy. For example, a creditor cannot levy funds from Social Security, veterans' benefits, welfare income or unemployment payments. It can't take workers' compensation income from you, or child support you receive for your dependent children. Several other exemptions exist, as well, so if you find yourself in this predicament, consult an attorney as immediately as possible to find out if any apply to you.

What To Do

You have a limited amount of time to try to get your money back. In most states, when a levy takes effect, the bank "freezes" the money in your account. This means it's still there, but you just can't use it. This might be the status quo for up to two weeks or more, allowing you time to object to the levy. Collect all evidence you have that the levy is illegal, such as evidence of someone else's deposits to a joint account, or proof of the nature of your income that makes it exempt. Copy everything and submit the proof to both the creditor and your bank, along with a written explanation of why those funds should be released from "frozen" status. Ideally, the creditor will agree and give the bank the authority to "unfreeze" that portion of the money. If this doesn't work, you'll have to seek a refund of the money through the court. Generally, before the bank can release your money to the creditor, the creditor must file for court approval of the transaction. You can then file an exemption claim with the court, objecting to the transfer. In this case, you'll also need adequate proof of why the creditor should not have the money it has levied.

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How Does Credit Counseling Hurt Credit?

Consumers who run up too much debt might find it necessary to visit a credit counseling agency to discuss their use of credit, their card balances and how they want to handle their debts. If this describes you, understand that credit counseling itself does not hurt your credit.

What is Credit Counseling?

Credit counseling is a session allowing you to discuss your credit and debt situation, develop a balanced budget, identify your financial strengths and weaknesses and develop a plan to improve your credit. The counselor might discuss ways of handling any debt you have, according to the Stop CC Debt website, and help you obtain a free copy of your credit report so you can talk about your accounts and their status.

What Does Hurt Your Credit Score

Out of control credit card debt and its effects on your credit history can cause more harm than visiting a credit counselor, says Stacy Johnson of Money Talks News. If your use of credit cards is out of control, the counselor may recommend that you enter into a debt management plan, where the credit counseling agency interacts with your creditors, much as a middleman would. The credit counseling agency works to develop a payment plan, probably with lowered interest rates and waived fees and penalties, making it easier for you to afford your monthly payments. After your creditors have come to an agreement with the credit counseling agency, you must agree to close any credit accounts you have open and send one monthly payment to the agency, which is then divided between your creditors.

Debt Management Plan

When you enter into a debt management plan, this shows up in your credit history, but should not have a negative impact on your credit score. Johnson of Money Talks News includes a portion from the Fair Isaac website that says using the services of a credit counseling agency doesn't have an impact on your FICO score. Some creditors might view your participation in a debt management plan in a negative light, but overall, it should not hurt your credit score.

Credit Counselor Recommendations

If your credit counselor makes recommendations that affect how you settle your debts, this could have a negative impact; however, settling for less than the full amount on an account or making partial, rather than full, payments will have more of an impact. If you make late payments after you enter a debt management plan, this can affect you negatively, as well.

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How to Pay Off a Court Judgment

Paying off civil judgments against you should be a top priority. Court judgment can affect your credit score and credit report for up to seven years. Ignoring a court judgment doesn't resolve the problem. Rather, delaying payment makes it difficult for you to acquire different types of financing, such as mortgage and business loans. Fortunately, there are a couple of ways to pay a civil court judgment and possibly have it removed from your credit report.

Instructions

1

Send a check for the full amount of the judgment. If you want to resolve this issue quickly and have the available cash to do so, contact the court and request the payment information of the plaintiff. Retain a copy of the check for your own records. If you mail the check, send it via certified mail or overnight it. This gives you proof that the check was delivered to the correct address.

2

Establish an arrangement to pay your court judgment monthly if you don't have the cash to make a one-time lump-sum payment. Look over your finances and determine how much you can budget each month or week toward the judgment. Negotiate a payment plan with the plaintiff. Once an agreement is reached, create a contract that outlines the terms. Each party should sign this agreement and adhere to its terms. Submit your payments on time until you have paid off the entire judgment against you.

3

Submit a judgment satisfaction letter to the court once full payment has been made and cleared from the bank. You and the plaintiff should both notify the court that payment is complete. Until the court is notified, the judgment can't be removed from your credit report. Request in writing that the plaintiff notify the court of judgment satisfaction.

4

Request from the court or credit card company that the judgment be removed from your credit report. These are the only two entities that have the power to remove a civil judgment from your credit report. It's very challenging to convince a court or credit bureau to remove a judgment because they both recognize it as a valid legal debt. If it isn't removed, the judgment will stay on your credit report for seven years.

5

File for bankruptcy, if necessary. In most cases, an individual who files for bankruptcy has his court judgments dismissed, meaning he doesn't have to pay them. Consult a bankruptcy attorney before taking this step.

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How Much to Offer for a Debt Settlement?

Creditors are willing to take settlement offers because they understand that they might not receive anything if a debtor files for bankruptcy. The average settlement amount is 47 percent of the balance. The amount you settle for depends on your negotiating skills and your comfort level.

Percentage

Creditors have accepted settlements between 20 percent and 75 percent of your outstanding balance, so 20 percent might be a good place to start. Most creditors will not accept a settlement offer if you are not past due at least 90 days. If a creditor counteroffers, don't hesitate to make a counteroffer of your own or tell the creditor you need a couple of days to think the offer over.

Once you agree to a settlement offer, make sure the creditor or debt collector sends you the offer in writing, because some debt collectors might try to collect the remaining balance years later. Your written documentation is proof that the debt has been settled and paid in full according to the established terms.

Tax Consequences

When you settle some debts, there are tax consequences; you might have to report the forgiven debt as taxable income. If the creditor sends you a 1099-C, which is a debt-cancellation form, contact a tax professional for advice.

There are two exceptions to taxation. If you are insolvent, which means your liabilities exceed your assets, or if you filed a petition for bankruptcy, you may not have to report the settled debt as income.

Credit Report

A settled debt can remain in your credit file for seven years, and your credit score can be lowered as a result. As part of the settlement offer, you may want to negotiate with the debt collector and see if the derogatory information can be removed from your credit file. Make sure this part of the agreement is in writing as well.

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Tips on Settling Debt

Debt can be a very pressing issue for many people. Owing a ton of money to credit card companies or banks can put a damper on anything else you have going on in your life and settling such debt can alleviate a lot of personal stress. There are several creditors that offer loans and other debt relief programs and there are several tips you can use that may make things a little less painful along the way.

Offer Less

Debt collectors offer plans that will pay off all your debts and close your accounts, resulting in you having to pay off a fixed sum of money every month. A debt collector will decide how much you have to pay usually based on how much you can pay. When negotiating with a debt collector, figure out how much you can pay, then offer less to the collector. Even if the collector disagrees and makes your payments higher than you offered, you still should have enough to cover it.

Spend What You Have

When paying a debt settlement plan, don't pay with money you don't have by offering postdated checks or agreeing to automatic deductions from your checking account. If you do, and then it turns out you don't have the money in your account, not only will the check be bad and your payment not made, but you may be slapped with insufficient funds fees and other penalties from your bank.

Don't Give Out Private Information

When talking to a debt collector, don't give out personal information that he or she may be able to use against you, like your checking account number, your place of business or your bank.

Keep Records

Keep records of all bills and letters from the debt collection company and even keep records of all of their phone calls, including the dates and times, the name of the collector and everything he said. Documenting everything can be very important and can act as proof of deals made with debt collectors.

Wait Until the End of the Month

Most debt collectors work off commission on a monthly basis. By negotiating at the end of the month, collectors may be more anxious to make deals that will go toward their monthly quota, which could land you a very good deal.

Debt Settlement is the Last Resort

Remember to only use debt settlement if it is the only option available other than bankruptcy. It, like bankruptcy, will go on your record and possibly keep you from getting loans in the future.

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How to Handle Debt Stress

If you can't keep up with a growing financial burden, odds are it's causing you some measure of stress. Stress doesn't only have a psychological impact, but a physical one as well. It can leave you suffering from illnesses such as high blood pressure and ulcers. From 10 million to 16 million Americans suffer from physical ailments directly connected to their stress levels, according to a 2008 survey commissioned by the Associated Press and AOL Health. Thus, learning how to handle your debts and the stress they cause is a crucial factor in maintaining your health.

Instructions

1

Make an appointment with your doctor to address any physical symptoms of stress you suffer from. You could be suffering from a legitimate medical condition that your doctor can treat, possibly easing some of your physical discomfort.

2

Exercise regularly. Exercise releases endorphins that fight anxiety and depression -- two common side effects of stress. Exercise has been shown to decrease the amount of norepinephrine in the bloodstream, lowering the odds that stressing over your debts will leave you with high blood pressure.

3

Talk to a qualified financial counselor. If you cannot find a solution on your own, a financial counselor can evaluate your debts, your income and your current budget to help you find a way out of debt. Taking action and working to remedy your financial problems can help you feel better about the situation as a whole, and may reduce the stress you feel because of your debts.

4

Practice relaxation techniques such as yoga, meditation or a structured deep-breathing exercise. When performed properly, relaxation techniques improve your alertness and focus -- helping you work through your debt problems constructively rather than simply worrying.

5

Replace negative thoughts with positive ones. For example, when you find yourself thinking about your overwhelming debt, banish that thought and replace it with a positive thought about eliminating your financial problems. Positive thinking improves your psychological health. In turn, this lowers your stress levels and helps you maintain your physical health during particularly stressful times in your life.

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Who Will Give Me a Credit Card With Bad Credit?

Good credit can enable you to purchase a home, car, and other material goods. Also, having a solid credit history can make it easier for you to obtain a credit card. However, possessing bad credit doesn't mean that you cannot utilize the benefits that a credit card offers. There are companies that will help you to get a credit card even if you have an unsatisfactory credit rating.

FICO Rating

Determine if your credit is bad according to the rating system used by credit card companies; this is also known as your FICO score. To find out your FICO score, obtain a free credit report from one or all three of the major credit reporting agencies. These agencies are Equifax, Experian, and TransUnion (see resources). The number 300 is the lowest FICO score you can have and 800 is the highest. A FICO score of 619 and below is considered to be in the bad credit range.

Problems

Getting a credit card with a poor credit rating is going to cost you. You will pay the price in higher APR rates, higher annual fees, increased late payment fees, lower credit limits, and a one-time processing fee that will usually be at an inflated price. These negative features may or may not be included with the terms for your particular credit card but if they are make sure that you can realistically handle these types of terms before you accept the card.

Identification

There are quite a few companies that offer credit cards to people with bad credit. One organization that has offices in most cities throughout the country is the Debt Consolidation & Credit Card Debt Counseling Services. Check the Federal Trade Commission's Bureau of Consumer Protection as well, to make sure that any company that you decide to work with is a legitimate organization that will help you with your bad credit situation and not exploit you because of it.

Considerations

Deal with only one credit card company at a time because your situation probably won't allow you to receive two or more credit cards. Even if you are offered a credit card from two or more different sources still only take one offer. You don't want to risk getting further in debt by taking on more credit than you can manage. Having too many cards can also do further damage to your FICO score.

Apply

Decide which credit card company is best for your circumstances then apply for the card. You will need to meet some basic requirements, including having a stable employment history and an adequate income. You may also be required to have a co-signer on the card. If you are rejected by a credit card company, do not re-apply unless your situation has changed since your first application (e.g., you have a higher paying job).

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Scholarships Available to GED Recipients

The General Educational Development (GED) tests measure the skills and knowledge equivalent to a high school curriculum. The test consists of six subject areas, which include math, language arts, reading comprehension, writing, science and social studies. In order to pass, individuals must acquire a combined score of 2,250 with a score of 410 or greater for each test subject area. Passing the tests and receiving the GED credential provides individuals with the opportunity to continue their education, while GED scholarships provide the means to pay for that education.

Robert C. Byrd Honors Scholarship Program

The Robert C. Byrd Honors Scholarship is a federally funded and state-administered program that pays for tuition and college-related expenses. Applicants must provide proof they earned a GED and have been accepted to a postsecondary institution. The scholarship awards $1,500.

Southeast Missouri State University GED Scholarship

Southeast Missouri State University awards 20 GED scholarships to individuals who have not attended college and have completed their GED with a combined test score of 3,000 or above. Scholarships are awarded to applicants with the highest scores who are residents of Missouri and have been accepted for admission to Southeast Missouri State University. The GED Scholarship pays for tuition for 30 credit hours per academic year. Recipients of the scholarship must complete those 30 credit hours and maintain a 3.5 GPA.

Texas Association for Literacy and Adult Education Program

The Texas Association for Literacy and Adult Education (TALAE) offers a college scholarship to students who have earned their GED. Applicants must have a GED test score of 450 or above, completed a minimum of 24 class contact hours and enrolled in a vocational training, state college or university degree program. The recipient of the award receives $800 per semester, which is used toward college-related expenses.

St. Charles Community College GED Scholarship

The St. Charles Community College awards a $500 scholarship to GED recipients who scored at least 2,700 on the GED tests and attended at least 12 hours of St. Charles Community College GED preparation classes.

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What Happens if You're Late Paying a Bill?

A bill is a legal financial obligation. Neglecting to pay your bills, or even failing to pay them on time, can lead to serious legal and financial consequences. You will be charged late fees, interest and other penalties. Also, your bad payment records will be reported to credit agencies, causing a negative impact on your credit score. In extreme cases, you could even lose your home, car or other property.

Late Fees and Penalties

Incurring late fees and penalties is one of the most immediate consequences of paying a bill late. The Internal Revenue Service (IRS), for example, charges a daily interest fee on overdue taxes. Credit-card companies and utilities also typically add a late fee when bills are past due more than 30 days. Late fees and penalties increase your debt obligation and lengthen the time it takes to pay off the bill in full.

Impact on Credit Rating

Late payments may affect your credit score. According to "The Real Impact of Late Payments," an article by Dayana Yachim on "The Motley Fool," the effect may not be immediate and your creditor may not immediately report a late payment -- some creditors grant a little leeway. Nonetheless, if a bill is 90 days late or more, the impact on your credit is substantial. According to Yachim, the damage may be as harmful as a bankruptcy or a tax lien, and the information remains on your credit report for seven years.

Collections and Other Legal Proceedings

Creditors do not wait for your payment indefinitely. Eventually, they will seek legal recourse to collect on their debts. Late payments may be subject to collection actions and other legal proceedings that the debtor will have to pay for in addition to the amount of the original bill. If you fail to pay your mortgage on time, the lender may eventually seek to foreclose on the property.

Other Issues

Poor credit scores hurt your chances of securing loans and other financing in the future. Collections and foreclosures could result in garnishments, liens and even the loss of title to your property. If you experience financial trouble, you should inform your creditors immediately and seek financial assistance from a professional.

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How to Settle Debt with Credit Card Companies

With the recession and rising unemployment, it comes as no surprise that many people are in trouble with their finances. If you are having trouble making your credit card payments each month, you may want to consider settling your debt with the credit card companies. It is really not hard to negotiate debt settlement with your credit card companies, but it can be nerve wracking. Here are some tips to get you started.

Instructions

1

First, you need to have money to negotiate your credit card debt settlement with. Perhaps you are expecting a tax refund this year or maybe you have a 401K that you can withdraw or borrow funds from. Maybe you could sell something on Craigslist.org or eBay. Whatever you do, don't borrow more money from another credit card to pay off your current debt.

2

Now that you have the funds to start your negotiation, you need to call your credit card company. Ask to speak to a supervisor and tell that person that you would like to settle your credit card debt. They will want to know why. There is no reason to make up a grand story, just tell the truth about your current financial situation and how you plan to pay off your settled debt.

3




Your first offer will more than likely be counter-offered by your credit card company, so make sure to give a low offer. Start with 25%. So, if you owe $10,000, offer them $2,500. More than likely you are going to end up somewhere around $5,000, or half, but every case is different.

4

Once you have come to an agreement with your credit card company on a debt settlement amount, you will want to request that agreement in writing. Do not pay off your credit card until you receive this agreement in the mail.

5

Once you receive the agreement in writing, pay off your credit card as soon as possible. You can pay with a check or money order, but I would suggest using a cashier's check from a bank. Make sure to keep a record of your payment.

6

You will receive a 1099-C tax form at the end of the year that you will need to include with your tax filings. The forgiven amount of the debt will need to be recorded as income.

7

This debt settlement with the credit card company will remain on your credit report for 7 years. So, only use debt settlement as a last resort.

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Do Debt Relief Programs Work?

Debt relief programs offer help to those who feel like they are drowning in debt. When you find yourself in a position with a large amount of debt, the promises made by many debt relief companies can sound attractive. While some of these companies can help, others might be scams.

Debt Settlement

Many of the debt relief companies on the market offer debt settlement as their main benefit. With these programs, you allow the company to negotiate with your creditors on your behalf. They get the creditors to agree to take less than you owe if you will pay a lump sum. You then give the debt relief company a lump sum of money to pay the creditor. The debt relief company will keep a percentage of the money and use the rest to pay the debt.

Debt Management Plan

Credit counseling companies often offer help through a debt management plan. With a debt management plan, you allow the credit counseling service to negotiate lower interest rate on your accounts. Then you set up a monthly payment that goes directly to the credit counseling service. The credit counselor then sends the appropriate amount of money to each of your creditors. The debt management plan takes a fee from each one of your payments for this service. With this kind of plan, you pay off your debts over several years.

Credit Score Damage

When signing up with a debt relief company, you may want to think about the impact that it can have on your credit. When you use a debt settlement company, it can have a negative impact on your credit. Settling a debt involves breaking the terms of your original agreement with the creditor. The creditor will report this on your credit report and it will drop your score. With a debt management plan, you will not have any ill effects on your credit score, although you may be prevented from taking on additional credit while in the program.

Scams

Some of the companies that promise to help customers with their debt are nothing more than scams. These companies charge large upfront fees and then do not deliver on the promises later. When you are considering signing up with a debt relief company, you need to make sure that you are dealing with a legitimate business. You can check with the Better Business Bureau to make sure that they do not have a large number of complaints against them.

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How to Survive in Hard Times

We all are feeling the hard times, but there are steps we can take to help alleviate the pain. I wrote this ehow to try to help you with that.

Instructions

1

Cut back on the unneeded thing, like name brand foods, the cheap stuff is just as good. Many times you will find that the generic brands are even made by the name brand products. The packaging may be different the product inside doe not change.

2

Try not to cut down on driving, if you can walk to the store then do it. If just took one day off from driving you could save a lot of money over a year. Car pooling and even combining trips can also be beneficial.

3

Find a cheaper phone service. You can get a cheap phone service like Vonage or another digital phone service. This will cut your phone bill in half if not more. Another great option is to reduce bills by cutting the home phone and using your cell phone as your primary phone.

4

Try to eat at home more. You could save a lot of money if you stop eating out so much. For the cost of a diner out you can cook at home for the entire week and even have leftovers for lunch.

5

Turn off lights if you are not in the room. This is a no brainer. You can cut the cost of electrical bills by simply reducing how much electricity you use. Another great addition to this is to use energy efficient bulbs; they give off the same amount of light for more than half the cost of electricity.

6

Take one shower a day to save on your water bill. You can make this one even fun by sharing a shower with a loved one. It is also a good idea to set a timer to reduce the amount of time you spend in the shower. Many people find that they spend a longer time in the shower than they might think. This will help reduce water and sewer bills as well as the cost of fuel or electric to heat the water.

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How to Recover From Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a process that can help you pay off your debts through the use of a payment plan set up by the courts. While it can be a beneficial process for helping you eliminate your debt, it can wreak havoc on your credit score. After going through Chapter 13 bankruptcy, you may have trouble getting approved for financing. There are some steps that you can take to help rebuild your credit rating.

Instructions

1

Get a copy of your credit report for review. You are entitled to one free copy per year, which can be obtained from one of the three major credit bureaus: Equifax, Transunion or Experian. According to the credit bureaus, accounts are often incorrectly reported, so the credit report could say that your accounts are overdue. If this is the case, you need to contact the credit bureaus and let them know that those accounts were included in your bankruptcy plan. You should periodically review your credit report so you can scan it for mistakes.

2

Obtain a secured credit card from a credit card company. It may seem that using a credit card could hurt you financially, but it is actually one of the best tools for rebuilding credit. Getting an unsecured card would be ideal, but if you are unable to qualify, you should be able to get a secured card with collateral. When you make purchases and then pay your bill on time, the credit card company reports this to the credit bureaus which strengthens your rating.

3

Make all of your payments on time or before the due date. When you are trying to rebuild your credit, making timely payments is one of the most important things you can do. This applies not only to debt payments on your credit card but to utilities, car payments and any other type of payment that you have. Even if you cannot afford to pay your entire balance off each month, you need to make the minimum payment on time.

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Can a Garnishment for a Debt Be Taken Out of My Federal Return?

Only in rare cases will the IRS turn your refund over to a creditor. Unless your debt is for child support, payments to government agencies, taxes or defaulted student loans, the IRS sends your refund directly to you. However, your creditor can attempt to freeze and levy your back accounts after you deposit your tax refund check.

Judgment Collections

Most creditors, or their collection agencies, must take you to court before using aggressive debt collection tactics such as the seizure of assets or wage garnishments. Your creditor must prove to the court that you owe the debt, and only after a judge decides the case in your creditor's favor can it attempt to levy your bank accounts or garnish your wages. These creditors cannot seize your federal tax return before you receive it.

Exceptions

The IRS does cooperate with government agencies by "offsetting," or paying, tax refunds directly to these agencies for the purpose of debt collection. If you have defaulted on your student loan or owe back taxes or child support, the agency responsible for collecting your debt can contact the Department of Treasury's Financial Management Service and make a claim against your tax refund. These agencies can request the offsetting of your funds each year until you pay off your debt.

Chapter 13 Bankruptcy

Some Chapter 13 bankruptcy trustees insist that debtors turn over their tax refunds. The trustee then uses these funds to compensate the debtor's creditors. Policies differ by jurisdiction, so if you are in Chapter 13, ask your trustee about his policy.

Bank Levies

Once you deposit your federal tax refund into a bank account, a judgment creditor can levy those funds and apply them to your debt. You should receive a notice of any attempts to levy your bank accounts from either your creditor or the court with jurisdiction over your judgment. If the levies cause you significant financial hardship, you can go to court and ask the judge to reduce the amount of money your creditor can seize.

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How to Request Student Loan Deferment

Student loan deferment is an option that's available if you're worried about becoming delinquent or defaulting on private or federal student loans. Economic hardship is one of the qualifying reasons. Deferment means that you won't have to make payments on your student loan for a certain number of months, depending on the reason for deferment. During that time, if your loan is a government-subsidized loan, no interest will accrue. If it's not subsidized, interest will continue to accrue and will be added to the principal due, once the student loan deferment period ends. Economic hardship isn't the only reason you may qualify for student loan deferment. There are many reasons, which vary slightly depending on when you originally received your student loan, but they include such things as: unemployment, temporary disability or in rehabilitation training, taking part in a medical or non-medical required internship or residency program, on active duty with the military, on parental leave for pregnancy or childcare, teaching in a public or nonprofit primary or secondary school or working full-time for the Peace Corps or a tax-exempt nonprofit organization.

Instructions

1

Get a record of the student loan that you want to apply for deferment on. You'll need to apply for a deferment for each one individually and the procedure may vary slightly. If you need to see a record of all your Title IV loans, you can access the National Student Loan Data Systems website.

2

Contact the appropriate person to request student loan deferment. For FFEL, Stafford or PLUS loans, contact the lender who made the loan. For Perkins loans, contact the school that originally issued the loan. For direct loans, see the list of deferment forms in the "References" link called "Federal Student Aid Forms" and scroll down to "Managing Your Student Loans." When you make contact, ask for the specific requirements that you believe may qualify you for student loan deferment, and request the forms to apply for deferment.

3

If you believe you qualify, fill out the forms along with proof of your situation and send them in for each loan you want to defer. While you're waiting for approval, you must continue to make payments on your loans or you'll be considered delinquent. If you request deferment of non-subsidized loans, you may want to continue paying interest during the deferment period if possible, to prevent the balance of the loan increasing, since interest will continue to accrue.

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Can a Credit Union Freeze Your Accounts If One Party Dies?

A credit union could freeze your account after the death of a spouse -- if the account is a joint loan account such as a home equity line of credit. Deposit accounts such as joint checking or savings accounts are not frozen when a spouse dies. Spouses on joint deposit accounts have equal rights to the accounts, with access continuing for the surviving spouse.

Considerations

Credit unions aware of a spouse's death may freeze credit lines to protect the credit union. The credit union may fear the surviving spouse does not have the income to afford credit lines based on the incomes of both spouses. This is especially true with a home equity line of credit (HELOC). Depending on the equity in a home, a couple may have a credit line of $50,000 or more in a HELOC. When one spouse dies, the credit union may freeze the credit line to prevent further spending. The Stanford Federal Credit Union -- for Stanford University faculty, students and others -- reports that terms of HELOC agreements allow the credit union to reduce or freeze credit lines "under certain circumstances." Credit Unions share some of the same lending standards as banks. The Federal Reserve Board reports that banks may freeze or reduce credit lines if they believe there is a "material change" in the borrower's finances.

Differences

Credit unions adhere to the same sound financial practices as banks but are usually willing to discuss major account issues with the credit union member before making a final decision. Credit unions considering freezing accounts because of a spouse's death may simply need an update of the surviving spouse's credit and financial information. After the review, the credit bureau may lower the credit limit some or not at all.

Disclosure

Credit unions are not automatically notified of a spouse's death, raising the possibility that the credit union will take no action on credit accounts if payments are made on time and balances are kept low. However, a spouse may decide to voluntarily disclose the death to avoid potential problems with the account.

Alternative

There are no options for overturning a decision by the credit union to freeze a credit account because of a spouse's death. The surviving spouse can seek loans from other banks or credit unions as an alternative. For example, a competing bank or credit union may offer a HELOC to replace the current line. However, the new lender would likely consider the same credit guidelines as the current credit union.

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