Welcome to our website credit and debt managementr.

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

Wednesday, December 31, 2008

Insufficient Credit References

Insufficient Credit References

Companies want to see how responsibly you use credit before they extend new credit lines to you. This policy makes opening accounts difficult if you do not already have some credit references. An insufficient credit history is problematic, but you can use certain account types to build up some references and increase your access to loans and major credit cards.


    Sufficient credit references are important because of the way in which your credit score is calculated. Scoring formulas use your credit lines, repayment history, account variety and the length of time in which you have used credit to determine a three-digit indicator of your creditworthiness, according to the Fair Isaac scoring website. Scores range from 300 to 850, with a low score being below 600.


    Whether you have sufficient credit references does not just depend on your total number of accounts. Lenders want to see how you handle both installment loans and revolving credit lines such as credit card accounts. Your credit score is lower if you do not have some variety in your accounts, like one or two major credit cards and a personal loan, car financing or some other type of installment account.


    Secured credit cards let you build up references with major card brands even if you do not qualify for traditional revolving accounts. A secured card issuer gives you a credit line, but you back it up with a bank deposit in the same amount. For example, you deposit $500 and get a Visa or MasterCard with a $500 spending limit. The credit card company has the right to take your deposit if you default. Your secured card information gets reported to the major credit bureaus and acts as a reference when you apply for other accounts. You can also build up your history by getting a credit card or loan with a co-signer.


    You may not have to use secured cards or co-signers to build up sufficient credit references. Apply for a revolving account with a specific retailer or chain of stores or gas stations. Store and gas cards usually have lower approval thresholds. The companies report your account data to the credit bureaus, allowing you to use these cards as credit references.


    Use secured credit cards and co-signed accounts carefully to avoid problems. Secured credit card issuers often charge for applications and impose higher annual fees and interest rates than regular cards. Some even add monthly service charges, so shop around for the best terms. You are equally responsible for a loan or credit card that you hold with a co-signer, and you hurt the other person's credit score if you pay late or default.

How Does a Credit Arrangement Affect Your Credit?

Credit arrangements, such as debt restructuring and debt arrangements, are plans your creditor may offer you if you are having issues meeting your financial obligations. The creditor is not obligated to create an arrangement for you, but in many cases the creditor prefers to work with you instead of losing the account to default entirely. Another credit arrangement, a debt management plan, is administered through a third-party company which works with your creditors directly to make a debt payment plan you can keep up with. Credit effects from credit arrangements depend on the type of arrangement you are involved in.

Debt Management Plan

    A debt management plan is a plan you set up with a debt management company. The company negotiates favorable terms with your creditors to enter you in a repayment program. You pay the debt management company directly. The company distributes your payments to each of the creditors for an agreed-on rate. You receive a notation on each account on your credit report included in a debt management plan, but you do not receive a direct negative credit mark from this. Generally you are not allowed to apply for new credit accounts while under a debt management plan, so you can get denied if a creditor sees that notation on your report.

Debt Restructuring

    A lender may restructure your debt completely if you are having problems meeting your debt obligations. A debt restructure may change your loan, or the lender may create a new loan entirely for the situation, similar to a refinancing process. The lender does not have to offer you a restructured debt, although it may in the interest of keeping your account around instead of going through the trouble of collecting on a delinquent account.

Debt Arrangement Schemes

    A debt arrangement scheme is used in several countries for debt management programs. The program helps consumers avoid bankruptcy if at all possible, mainly by providing additional time to meet debt obligations. The debt arrangement program does convey a negative mark on the debtor's credit report but stops other creditors from adding late payments, charge-offs and other negative information on the report. As a result, you have only one negative mark and not many at once.

Debt Consolidation Loan

    A debt consolidation loan is a loan you take out through a lender, such as your bank or a credit union, for the express purpose of paying off all of your smaller debts and making one single debt repayment. You may receive a negative credit mark for the inquiry used by the lender when checking if you were eligible for the loan. Adding a new account can have a positive or negative effect on your credit score depending on the rest of your credit profile, but the new account effect is temporary and should go away after a few months. A debt consolidation loan often has a lower overall interest rate than the average of your credit accounts, and you have the advantage of making a single payment instead of many smaller payments to different companies.

Monday, December 29, 2008

Legal Steps to Garnish Wages

Creditors often use wage garnishment as a final means to collect on an unpaid debt. The legal steps for creditor debt garnishments differ from those of federal and state agency debt. The exact procedures a creditor has to take before garnishing an individual's wages can vary by state laws.

Filing Suit

    A creditor has to file a lawsuit against an individual before a wage garnishment can begin. The creditor often hires a lawyer in the individual's state to carry out the lawsuit. The lawyer will file a Request and Writ for Garnishment at a courthouse local to the individual. They will then hire a court process server or pay a fee to the local sheriff's department to serve the individual with the lawsuit paperwork.

Court Date

    When filing the suit, the county clerk at the local courthouse assigns a court date, listing the creditor as the plaintiff and the individual as the defendant. If both parties fail to show up on the date of their trial, the judge will dismiss the case. If only the creditor shows up and the defendant does not, the judge will issue a default judgment in favor of the creditor. If both parties show up, the judge will listen to the merits of the case and then make a judgment.

Employer Answer

    Once a judge rules in favor of the creditor, the creditor sends a packet of garnishment forms to the individual's employer. This packet includes an Affidavit and Order for Wage Garnishment, an Affidavit and Answer of Garnishee and a garnishment worksheet. The employer completes all the requested information, sends the packet back to the creditor and makes a copy to send to the individual.

Garnishment Termination

    A garnishment terminates when the individual pays off the full balance of the debt plus any applicable fees. An individual can pay off the balance at any time before or after the garnishment begins. Typically, the individual would contact the lawyer representing the creditor to obtain a pay-off amount. Once the individual pays the debt, the lawyer files a satisfaction of judgment with the local court.

    If the individual pays off the debt through wage garnishments, the creditor sends a notice of termination of garnishment to the employer and the employer stops garnishment withholdings.

Christian Principles for Getting Out of Debt

Christian Principles for Getting Out of Debt

Getting into debt is something that can happen to anyone, Christian, or non-Christian. For Christians in particular, owing money, or being without is not a state that's encouraged by biblical principles. Debt is a trial, very much like other trials encountered in our walk with God. Gaining the right perspective on what it is, and how to handle it is an important aspect of our faith.


    Living as a Christian is a lifestyle, built on basic principles. Compassion, making right choices and faith are mindsets that apply within every area of life, including our finances. Debt is a consequence of making the wrong choices. More oftentimes than not, we're in the wrong mindset when these choices are made. Proverbs 21:5 says it this way:
    "The thoughts of the diligent tend only to plenty; but the thoughts of everyone who is hasty only to poverty."


    The steps needed to get out of debt are the very same steps we take everyday in our faith. The challenge remains the same -to stay grounded in God's principles that justice and fairness will always prevail in spite of the chaos that seems to rule in this world.
    "There is one who scatters, and yet increases all the more, and there is one who withholds what is justly due, and yet it results only in want. The generous man will be prosperous, and he who waters will himself be watered." (Proverbs 11:24-25, KJV)
    Hard work, tithing and making payment where payment is due are actions that coincide with our fundamental beliefs. And while life may seem like it's broken up into different areas, the basis for our actions within these different areas remains the same.


    It's no secret that having money is a requirement to survive in this world. Yet still, to merely survive is not the plan that God has for His children.
    "I am come that they might have life, and that they might have it more abundantly." (John 10:10, KJV)
    Learning how to manage money can be one of the most effective tools for growth a Christian has. To master the stronghold (money) that makes this life possible can only draw us closer to the abundance that Christ speaks of. As with any other strongholds we encounter, the same Christian principles apply.


    "But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you." (Matthew 6:33, KJV)
    As we grow within our Christian walk we realize that what is experienced here on earth is but a means to an end. Getting out of debt is a part of that means. The discipline required to manage our money responsibly works to develop the character traits that draw us closer to God. It is in the act of making good on our debt that our ultimate purpose is lived.


    Getting out of debt is only half the battle. Staying out of debt requires a lifestyle change. Managing money requires budgeting and planning and sticking to the plan. The book of Proverbs says it this way:
    " Through wisdom a house is built, and by understanding it is established; and by knowledge the rooms shall be filled with all precious and pleasant riches." (24:3-4, NIV)
    There are a number of Christian debt management agencies online that can help you put together a plan to get out of debt. Not all of them are reputable, so investigate each one before signing up.

Sunday, December 28, 2008

How to Repair Your Credit in 30 Days

How to Repair Your Credit in 30 Days

Maybe you have more medical bills than you can handle, or you have been laid off. Whatever the reason, you may have been late with your payments and that has damaged your credit score. That may have hurt your chance to new credit because it is a major factor that most lenders use to make credit available. However, there are several ways to repair your credit in only 30 days so you'll have a higher credit score, which will probably enable you to borrow what you need at a fair interest rate.



    Assess the damage. Obtain credit reports from Equifax, TransUnion and Experian, the three national credit bureaus. You can get a credit report from them once each year; and for about $10, you can also get your credit score, also known as a FICO score. From those reports, you will be able to see how much damage you have done.


    Thoroughly review your credit reports. For example, see that the bureaus are aware of accounts that you have paid off. You'll need to contact those that aren't. Also, look for errors such as a report that contains another person's information, or a particular account that is reported as going to collection when it hasn't. That error alone can lower your credit score by as much as 100 points. This can improve your credit in as little as 30 days.


    Pay off as many debts as you can immediately, and at the same time request your credit card companies to consider raising your credit limit. The credit bureaus are interested in the percentage of your total credit limits that you use. People with stellar credit rarely use more than a third of their credit limit so that should be your goal. Paying off your credit cards is important if you are to repair your credit in 30 days.


    Pay your bills on time. Pay your creditors when their bills hit your mailbox, not when they are due because the credit bureaus like to see you pay your bills early. Because of the high interest charged by credit cards, it's best to pay as much as you can on them to reduce the amount you owe. An added benefit will be that you have reduced your dependence on them, which is favorably viewed by the bureaus and that action alone will most likely help in your quest to repair your credit in 30 days.

Saturday, December 27, 2008

What Does a Credit Report Tell You?

Your credit score is one of the most important numbers to your personal finances regardless of whether you know your score or not. Individuals can order one credit report for free each year from each of the three major credit reporting agencies, Experian, Equifax and TransUnion. A credit report is a record of your credit activities.

Personal Information

    Credit reports contain personal identifying information such as your name, previous names, address and previous addresses. The personal information included in a credit report is compiled from credit applications you have filled out, so information may also include your Social Security number and birth date as well as information about your current and previous employers. Lenders can use personal information to help determine whether a potential borrower has a steady job and living situation.

Credit Information

    A major component of your credit report is a list of credit information and events. The credit information includes all of your credit cards accounts and other loans such as student loans, mortgages, auto loans and personal loans. The report includes the amount of the loans, your credit card limits and your recent payment history on your debts. Lenders use credit information to assess how risky it is to lend you money. For instance, if you carry a high amount of debt and have missed payments recently, it may be harder for you to get a loan.

Requests for Credit

    A credit report includes a list of recent requests that you have made for new credit accounts. The three credit reporting agencies also record inquiries whenever your report is shown to some other party, such as a lender, insurance agent, landlord or other type of service provider. These types of inquiries typically remain on your credit report for up to two years. If you have made many recent inquiries for credit and have opened new credit accounts recently, it may lower your credit score.

Public Information

    Credit reports include relevant public information related to your finances. Information typically includes any state and county court records on bankruptcy, tax liens or monetary judgments. Overdue child support can also be listed on a credit report.

Credit Score

    A credit score--also called a FICO score or credit rating--is a number calculated from the various information included in a credit report that signifies the risk you pose to lenders. Lenders use credit scores to decide whether to issue loans and what interest rates to charge.

Short Sale Exit Strategy

A short sale is one way out of a home you no longer wish to own. It can be an effective exit strategy, but does present some risks. You could end up owing your bank or mortgage company tens of thousands of dollars for the balance remaining after the short sale, and your credit score could drop if you missed payments waiting for the short sale to be approved. Despite that, many people consider a short sale preferable to foreclosure, and it should be considered if you must leave your home and have no other exit strategy available.


    A short sale is the selling of a home for less than the balance remaining on the mortgage. People who owe more on their mortgage than the home is worth are considered to be "upside down" on their mortgage. Many people find themselves in this situation after home values decline because of an economic downturn or recession.

Negative Equity

    It doesn't take much for a homeowner to become upside down. Some people start out with small down payments of as little as 3.5 percent for FHA-insured loans, and when values drop, they find themselves in a precarious situation. Other people drive down the equity of their homes by taking out home equity loans to finance everything from medical bills to vacations. They also become vulnerable when home values fall. Some people fall victim to simply having paid too much for their homes, and are shocked to see them lose a third or even half of their value when a housing bubble bursts.

Financial Problems

    A decline in home values generally isn't an immediate problem if the homeowner can continue making the monthly payments. However, a job loss or an illness can create a catastrophe, making it impossible for the homeowner to continue paying the mortgage. That often leads to a short sale as an exit strategy.

Making Up the Difference

    A short sale can be a perfectly fine exit strategy if you have the money to pay the shortfall at closing. The Washington Post reports that it is common for people to pay considerable sums of money out of their own pockets to sell a house through a short sale. Example: The balance on your mortgage is $240,000 but the house is appraised for just $215,000 -- and that is all your buyer is willing to pay. The bank reviews your financial situation and discovers that you have assets that can be turned into cash, such as retirement accounts. As a result, the bank refuses to allow the short sale to proceed unless you pay the $25,000 difference between the buyer's offer and the balance left on the mortgage. You then agree to take money from your 401K to make up the difference.

Foreclosure Threat

    Some people who clearly cannot make up the difference in a short sale may settle for foreclosure -- if the bank isn't willing to make a deal. The Post reports that some banks may offer an arrangement rather than foreclose. The Post reports about one homeowner who was short by $30,000 in a short sale, but the deal was allowed by the bank with the former owner agreeing to make payments of $1,000 a month until the $30,000 was paid. In rare situations, the bank may forgive the remaining balance, or it may elect to allow the deal to proceed but file a lawsuit against the former owner later for the balance.

Written Agreement

    If you feel a short sale is right for you, use a real estate attorney to negotiate the best deal that he can, and get all the details in writing. It's especially important to negotiate a deal that allows you to walk away without the threat of a future lawsuit.

Debt Servicing Ratio

The debt service ratio, also known as debt service coverage ratio, is a figure used by investors and lenders to ascertain a company's ability to handle debt. An analyst reviews the company's balance sheet and income statement and uses the information to calculate the ratio. If the ratio is unfavorable, the company is a higher financial risk.

The Formula

    Calculate the ratio by dividing income by expenses. The income portion includes the sum of net profit, interest expense, depreciation and amortization. The expenses portion includes the sum of interest expense, prior fiscal year end (FYE) current maturities of long-term debt and new loan obligations. This figure is your debt service ratio.

Income Calculations and Definitions

    Net income is the amount of money the company made after it deducts its expenses. Use the figure "net income per the books" located on line one of Schedule M-1 of the balance sheet. Interest expense is located on line 18 of the income statement and represents interest paid to the company's financiers. Depreciation is line 20 of the income statement. It is a deduction for declining value of assets. Amortization is the difference between the cost of acquisition and the current value of assets. If a company claims amortization, it is located on one of the statements attached to the tax returns, usually Statement 1.

Expense Calculations and Definitions

    Interest expense is the same figure as mentioned in the income calculations. Add it back on the bottom half of the equation unless you are underwriting a new loan that includes that figure. Current maturities of long-term debt are any loans, notes or other obligations that must be paid within the current fiscal year. This figure is located on the balance sheet. A new loan obligation is only added if you are underwriting a request for new money. If this is the case, calculate the monthly payment, multiply it by 12 and add it to the other figures.

Acceptable Ratios and Testing Frequency

    To stay up on the financial health of a company, calculate the debt service ratio at several junctures. Calculate the ratio upon initial investment or loan application and again upon receipt of updated financials. An acceptable debt service ratio is 1.20:1. This means the company's income is enough to pay its debt 1.2 times. The higher the ratio, the better off the company is. If the ratio drops below 1:1, the company represents a riskier venture.

Is a Student Loan Debt Consolidation Loan Right for You?

Student loan consolidation is a way to combine more than one existing student loan into a single loan that is handled by one lender and carries one interest rate. This provides convenience for the borrower and might also lower the monthly payment amount, which can prove helpful for budgeting purposes. Whether or not student loan debt consolidation depends on a combination of whether or not you meet the criteria to receive such a loan and if the new terms of the consolidation will fit within your financial plans.

Time Period

    If you are currently in a grace period -- the six-month period of time after you graduate from college, which precedes the repayment phase -- or you are in the repayment phase, you can apply for a consolidation loan. You can also apply for consolidation if you have at least $5,000 in student loans and you attend school at least half-time. Yet, you will lose certain benefits such as in-school subsidized interest and the benefit of a 6-month grace period before repayment once you graduate. Instead, you will be required to begin immediately repaying your consolidation loan once you graduate.

Types of Eligible Loans

    Eligible loans for consolidation include subsidized and unsubsidized Stafford loans, Federal Direct Stafford and Parent Loans for undergraduate Students. Other eligible loans are the Federal Direct PLUS; Perkins; Health Profession Student Loans; Loans for Disadvantaged Students; Nursing Student Loans; Federal Consolidation Loans and and Federal Direct Consolidation Loans

Interest Charges

    Be aware that the interest rate -- which cannot exceed 8.25 percent -- may be higher on a consolidation loan than the rate on some individual loans. Also, consolidation loans often are on extended repayment terms, so you will pay more in interest of the life of the loan.

Payment Flexibility

    When you consolidate your student loans with a lender, they will offer you the option of several different payment plans. Examples are lower payments for the first few years after you graduate from college, equal monthly payments or a graduated payment scale. You can often choose the payment option that best suits your financial situation.

Things to Think About

    If your students loans total around $5,000, you may not want to hassle with a consolidation, which will extend the life of the loan and probably cost you more in interest. If the total amount of your existing loans is low, then you can probably manage the payment and achieve repayment much faster than if you consolidated. Deciding to consolidate can also affect the total amount you're expected to repay due to a change in interest rates. You also could lose your right to have your Perkins Loan -- if applicable -- reduced or forgiven.

Friday, December 26, 2008

Am I Liable for My Mother's Debt?

As a general rule, children are not liable for the debts their parents incur. Thus, in most cases, creditors cannot legally pursue you for payment of accounts your mother defaulted on--even if she cannot afford to pay. If you and your mother share accounts and financial obligations, however, creditors can sometimes hold you responsible for paying off your mother's debts.

Co-signed Debts

    If you co-signed a loan for your mother and your mother stops making payments on the account, the lender will come to you demanding payment. Individuals with poor credit or who lack sufficient income to qualify for loans or lines of credit can often qualify using a co-signer. The downside to this agreement is that if the primary account holder does not meet the payment obligations the lender requires, the co-signer holds full legal responsibility for paying off the debt.

Credit Card Accounts

    Sharing a joint credit card account with your mother allows both of you to use the account without the prior permission of the other. When the bill arrives, you both also share legal responsibility for making the payments. If your mother cannot or will not pay her portion of the bill, you are legally responsible for paying off the full credit card balance regardless of whether you actually made any of the purchases. The same holds true if your mother is an authorized user on your credit card account. As an authorized user, she holds the right to make charges to the account without being legally responsible for making the payments. You must, therefore, pay off any debt your mother incurs as an authorized user. If you are the authorized user on her account, however, you are not legally responsible for the debt that either of you incurs--she is.

Joint Bank Accounts

    Sharing a joint bank account with your mother provides you both with the convenience of being able to transfer money quickly without paying a fee or waiting for funds to arrive from point A to point B. If you mother's bank receives an order from a creditor directing it to garnish her bank accounts, however, the bank will freeze and garnish all accounts in your mother's name, including the one that you share. So, even if you are not legally liable for your mother's debt, the creditor can seize your money as compensation if you share an account. Joint bank account garnishment laws and exemptions vary by state.

Collection Accounts

    Debt collectors often employ unethical tactics when collecting debts, including contacting family members and incorrectly informing them that they are responsible for paying off the debt. Unless you shared the original debt with your mother, you are not responsible for any debt she owes to a collection agency. The practice of collecting debt from family members occurs most frequently when the original debtor dies. If your mother passes away, you do not inherit her debts and you are not responsible for paying them.

How to Make Money from your Debit Card

How to Make Money from your Debit Card

Almost everyone has credit cards however most people do not make money using them. I will give you tips to make money using your debit card.



    Debit cards are as much a part of life as credit cards, most people do not use cash anymore. You might as well take advantage of your debit card usage and make some money from it.


    Many debit cards will pay you a percentage cash back when used in stores to buy items. Most pay between 1-5% and some pay a fixed figure like 10 cents per use. If you take advantage of this feature and use your debit card instead of a credit card, check or cash you can make quite a nice sum of money within a years time. Many debit cards also have rewards programs that issue points.


    Taking advantage of the loopholes and getting paid cash and reward points can quickly add up. Always sign up for these features and take advantage of them to put cash in your pocket.

Wednesday, December 24, 2008

Debt Solutions to Reduce Debt

With a volatile credit market it is hard to know when exactly you may run into debt problems. It can happen to almost anyone, no matter how large an individual'income may be. There are several ways to recover from bad debt or to make monthly payments more manageable.


    Consumer credit counseling (CCC) is a form of debt counseling that helps educate consumers on how to avoid debts that can no be repaid. Having CCC guidance can help you lower your monthly payment as well as lower your interest rates and remove late fees from your account. CCC usually gives you a payment program that requires you to pay back a monthly amount of about 2.5 percent to 3.5 percent of your debt balance. Although this may not be lower than your current monthly payment, obtaining lower interest rates through a CCC may allow you to pay off your credit debt faster than was previous possible with high interest.

Debt Negotiation

    Obtaining help through a third0party debt settlement agency is a way to negotiate better pay-back options for the consumer as well as lowering the amount required to pay back. Debt settlement agencies can negotiate a much lower monthly pay-back plan than a CCC, which usually allows the consumer to pay off their debt in a three-year period. Unlike a CC however, debt settlement will hurt your credit report, but getting the debt off your records will allow you to rebuild your report quickly.


    Bankruptcy is a last resort for debt management. Bankruptcy allows you to erase your debts completely by legally stating that you cannot ever pay back your debt. Bankruptcy requires that you disclose all of your finances, debts and a record of your assets to the court. Chapter 7 completely wipes out your debts and all of your assess are liquidated to pay off as much of the debt as possible. Chapter 13 requires you pay back the debt over a long-term period and reorganizes your finances. Bankruptcy completely ruins your credit report, which takes years to recover from. Only consider bankruptcy under the guide of an accountant.

Letters to Fix Your Credit

Damage to your credit report from negative trade lines, missed payments and other derogatory information can haunt you for years -- leaving you subject to application denials and high interest rates. Fortunately, you can mitigate the credit damage you suffer and improve your credit score by working to rid your report of the information causing the damage.

Dispute Letter

    The Fair Credit Reporting Act notes that consumers who disagree with the information within their credit reports can dispute that information with the creditor that originally made the report and the credit bureaus.

    When writing a dispute letter, the Federal Trade Commission recommends that consumers provide as many details as possible concerning which information is inaccurate. Back up your claims with copies of documents that support your position. Both the original creditor and the credit bureaus must conduct an investigation into your dispute and both have the ability to amend or delete derogatory information that they cannot verify as accurate.

Debt Validation Letter

    The FCRA notes that collection accounts marring your credit record will remain in place for seven years. Fortunately, the Fair Debt Collection Practices Act requires collection agencies to validate information not only to the credit bureaus but to consumers as well. A debt validation letter is a request for a collection agency to validate the accuracy of its information to you. If the company cannot provide you with proof that you owe the debt it inserted into your credit history, it must remove its trade line from your credit report.

Goodwill Letter

    A goodwill letter does not make threats or demands but can prove an instrumental weapon in the war on bad credit. Goodwill letters combat missed payment notations on your credit report. On the Fair Isaac Corporation's website, MyFICO.com, it notes that, because your payment history is responsible for 35 percent of your credit score, missed payments to creditors can significantly damage your credit rating.

    Your goodwill letter should state the reason behind your missed payment and make a solid vow never to do so again. It should then request that the creditor modify your credit records as a gesture of goodwill. Goodwill letters are most effective when removing a single missed payment rather than a series of financial mistakes.

Inquiry Removal Letter

    Lenders must review your past credit information before awarding you a new loan or credit card. Unfortunately, lenders, creditors and collection agencies conduct hard credit inquiries when accessing your information. Hard credit inquires adversely affect your score.

    The FCRA does not allow companies to conduct hard inquires if they do not have permissible purpose under the law for doing so. Thus, if you did not fill out an application for credit or the collection agency in question does not own your debt, the company cannot legally pull your credit report and lower your credit score in the process.

    An inquiry removal letter notifies the company that you are aware of its inquiry, informs the establishment that it did not have permissible purpose under the FCRA to review your credit information and demands that the company immediately remove its inquiry from your credit history.

Tuesday, December 23, 2008

How to Handle Being Sued for Old Credit Card Debt

How to Handle Being Sued for Old Credit Card Debt

America's total consumer debt is more than $2.44 trillion, according to creditcards.com, which adds that the credit card default rate as of May 2010 stood at more than 11 percent. Individuals who default on credit agreements run the risk of poor credit ratings and eventually lawsuits. If you are being sued for old credit card debt, there are steps you can take to protect yourself and achieve the best possible outcome.



    Check the statute of limitations for credit card debt in your state. If the statute of limitations has passed, you cannot be legally sued for the debt. You may have obligations to pay back the debt, but you cannot be sued in court.


    Write a letter to the collection company that holds the debt. Explain that you wish no further contact with it. If the debt has passed the statute of limitations, state that the debt is time-barred and you cannot be sued for it. The company must leave you alone or be in violation of the Fair Debt Collection Practices Act.


    Offer no payment if the debt has passed the statute of limitations. Doing so can make an old debt new and reinstate the credit card company's right to sue.


    Consider negotiating a lump-sum payment if the debt is still within the statute of limitations. There is a good chance the company will accept the offer and mark the debt as settled.


    Contact a consumer attorney. An attorney can advise you on the best course of action if your debt is still within the statute of limitations. The National Association for Consumer Advocates is a resource for finding an attorney near you (see the Resource section for a link).

How to Stop Consumer Credit Card Offers

Information gathered from the three national credit reporting bureaus (Equifax, Experian and Transunion) results in credit card offers being sent to you in the mail. If you want to stop it, you will need to notify the national credit reporting bureaus that you no longer wish to receive such offers. The FTC has provided authoritative information on how you can do this, but you should be aware that it may take as many as 60 days before you stop receiving these credit card offers.



    Call the Opt Out Prescreen Hotline at 1-888-5-OPTOUT. Be prepared to give all requested personal information over the phone, including your social security number. Alternately, visit their website at OptOutPrescreen.com and follow the website's directions to begin processing your request.


    Write the senders of any other credit offers you receive after the initial 60 day period to notify them that you no longer wish to receive such offers. Be aware that the Opt Out Prescreen service only affects credit card applications sent to you by companies using lists assembled by the national credit reporting bureaus. Simply opting out with them may not cover every company trying to solicit your business with offers of credit. Use the contact information provided in the materials these companies have sent to you in the mail to opt out of their offers.


    Follow up with OptOutPrescreen after a few weeks have passed to ensure that your request has been processed and entered into their system. Call them and politely ask the customer service representative to check that your information is securely in their system and accurate.

Monday, December 22, 2008

What Is Consumer Collections?

Consumer loans consist of auto, boat, credit cards and signature loans. If you have loans of these type, and they fall past due, they could go to the consumer collection department, which is responsible for the collection of overdue consumer loans.


    Consumer collections can consist of a department within the original lender's facility. This would be an in-house collection department, which will send letters and make phone calls when you are behind on your consumer loans.


    When an in-house collection department is unable to collect on your account, it will forward your account to a third-party debt collector, also known as a collection agency, which continues with collection efforts.


    Collection agencies will begin legal action if they have tried unsuccessfully to get you to pay your account using the usual methods of letters and phone calls.


    A third party debt collector could get a judgment against you and garnishee your wages. The money taken out of your paycheck would be applied against your past-due debt.


    Collection agencies must abide by the laws outlined in the Fair Debt Collection Practices Act, (FDCPA). This is a law put into effect by Congress that governs the activities of third-party debt collectors. In-house collection departments are not bound by these laws, but most comply with them.

How to Better Your Bad Credit

Like a rain cloud over your head, bad credit can follow you everywhere. It can affect your ability to find employment or buy a home, and may even lead to wage garnishment. However, you can climb out of the debt trap with firm determination and strong willpower. You must stop spending on frivolous items, but if you can stay firm, you could soon find yourself living a life free of debt stress, maybe even in the home of your dreams.


Know What You Owe


    Remove your credit cards from your wallet and place them in a plastic container. Add water to the container and put it in the freezer. Leave out one card for emergency use (that sale item is not an emergency).


    Grab a calculator and all your credit card statements. Find the total amount due on each bill and add all the numbers together to find your total amount of credit card debt. Repeat the process with the monthly minimum payment amounts. Write down the total for both.


    Look at the interest rate for each credit card. List the cards with the highest interest rate on top and the lowest at the bottom. Devise a plan to make extra payments on one card at a time until each balance is paid off.


    Review your car loan, student loan and any other monthly debt payments. Add the amounts to your total debt and to your monthly payments total.


    Review your credit history. Navigate to the annualcreditreport.com website. Download your free credit report from the three credit bureaus. Do this each year. Check each report for errors. If you find mistakes, dispute them with the reporting bureau.



    Make timely payments on your car loan. Pay the bill online at your loan company's website or send the payment in before the due date.


    Pay your credit card bills seven business days before the due date to avoid the risk of late payment penalties. Send the full amount of the payment and, if possible, send more than the minimum payment. Set a goal to pay double the minimum payment on the highest interest card.


    Reduce the amount of credit you owe. Stop charging new items on credit cards or applying for new credit accounts. Pay the credit cards and loans off instead of transferring the balances from one card to another.


    Keep bills current to avoid collections or delinquencies. This includes the rent or mortgage, cellphone bill, cable bill, utilities and any other payments you may have. Pay them on time and in full.

Sunday, December 21, 2008

How to Read a Credit Report in Canada

Having a credit report is one thing, but interpreting it correctly is another. Everyone should be aware of the current state of their financial affairs, and much of that information is contained in the reports from the three bureaus in Canada that receive a gigantic amount of information about you: Equifax Canada, Trans Union Canada and Experian Canada. To get a complete picture of your finances, you must look at your reports from all three bureaus. These reports divide your information into four parts: identification, history of your credit, information from public records and inquiries from creditors.



    Check the accuracy of the identifying information. First, check the spelling of your name and your Canadian Social Security Number. Then see if your current and previous addresses are correct along with your birth date, employer, the name of your spouse and your age. Report any inaccuracies to the respective credit bureaus.


    Carefully look at your credit history because that area is prone to more errors than the remaining sections combined. That section will show the names of your creditors, the date your account was opened and the type of account and the loan total or the highest balance if it is an installment account. The report shows how much you owe, the amount of the monthly payments and how well you have paid them. Hope for a report that says you are never late. However, it might say "charged off" or "default," which indicate problems to prospective creditors.


    Expect problems with obtaining credit in the future if there are items contained in the report that the bureau received from public records. Financial items such as tax liens, monetary judgments against you or bankruptcy will negatively affect your ability to get credit in the future.


    Pay attention to the fourth section of your credit report--inquiries from creditors--because it can affect your credit going forward. The bureaus record any inquiry they receive about you, not only from creditors but even that you have asked for a report. The "inquiries" section is broken down into "hard" and "soft" inquiries. An example of a "soft" inquiry would be one the bureau receives from a credit card company that prescreens you before it mails out promotional information. On the other hand, a "hard" inquiry results from you making a written request for credit, or you trying to rent an apartment and the lessor making a credit check. "Hard" inquiries received by the bureaus can affect your credit, particularly if there have been several over a short span of time.

Saturday, December 20, 2008

Can a Joint Bank Account Be Garnished in Texas?

Bank garnishment is an aggressive method a creditor can use to recover unpaid debts that you owe. It involves contacting your bank to demand that the account be temporarily frozen, which means that you can deposit money into the account but cannot withdraw funds. The bank then forwards any nonexempt funds to the court to pay your creditor. Although Texas law prohibits the garnishment of your wages unless you agree in writing, a creditor can garnish your bank account in Texas without your consent. In some cases, it can even garnish funds held in a joint bank account.

Communal Property

    In Texas all property that you accumulate after marriage is considered communal property -- that is, it is owned by both spouses. Likewise, both spouses are responsible for all debt accumulated after marriage. This means that a creditor may garnish funds in a bank account jointly held by spouses, regardless of which spouse owns the funds in the account, and regardless of which spouse accumulated the debt.

Exempt Property

    Funds accumulated by one spouse before marriage may be exempt from garnishment in Texas. Also, certain funds, such as those derived from disability compensation, Social Security benefits, alimony and child support payments, veterans' benefits and civil service retirement benefits, are exempt from garnishment. If a creditor has frozen your joint bank account, you may petition the court that granted the judgment to prohibit garnishment of these funds within 30 days. You must also provide proof that these funds are exempt from garnishment.

Authorization of Garnishment

    A debt does not automatically give a creditor the right to garnish your joint bank account in Texas. The creditor must first file a civil suit, typically in your county's court, to obtain a judgment for the amount owed. Because obtaining a judgment is costly and lengthy, creditors typically only file suit after exhausting all other collection efforts. After obtaining the judgment, the creditor may file for the court's authorization to locate and garnish your joint bank account. If the creditor cannot locate your account, it may request a hearing in which you must disclose your bank account information under oath.


    Texas law does not just give a creditor a single opportunity to garnish funds from your joint bank account. A judgment is valid in Texas for 10 years, meaning that if you do not have sufficient funds to satisfy the debt when the creditor initially orders the account freeze, it may garnish your account for 10 years or until the debt is fully paid. Also, a creditor may file for the renewal of a judgment at the end of the 10-year period, which gives the creditor an additional 10 years to collect funds from your joint bank account.

    In Texas, you cannot be imprisoned for failure to pay a judgment debt. However, if the court orders a discovery hearing to obtain your bank account information and you do not show up, you may be arrested and imprisoned for contempt of court.

Friday, December 19, 2008

South Carolina Default Judgment Laws

South Carolina Default Judgment Laws

Judgments are granted when creditors or individuals you owe request monetary relief if you have not paid your debt to them. Judgments are sometimes handled in civil court and can even be granted if you do not answer the creditor's complaint to the court.

Term of Judgment

    In South Carolina, judgments are effective for 10 years. Once a judgment is filed, the judgment attaches to your property and name and must be paid to purchase or refinance real estate property.

Judgment Interest Rate

    In 2010, South Carolina has the judgment interest rate set at 8.75 percent per year on money owed. If the money is owed through a court ordered decree, a 14 percent interest rate can be charged in South Carolina, as of 2010. The interest rate may change yearly.


    In filing a judgment in South Carolina, you are allowed up to $5,000 in value in property without a judgment attaching to your property. For any property you have over the $5,000 value, creditors are able to file a judgment on and even repossess property to pay the judgment in South Carolina.

What to Do When an Unauthorized Debit Is on an Account?

What to Do When an Unauthorized Debit Is on an Account?

Most Americans know that monitoring their credit reports is important for financial health. However, the same can be said for your own personal accounts. Whether you complete online banking or receive statements each month, it's critically important to be cognizant of all transactions and debits on your savings and checking accounts. If you do find an unauthorized debit, you must know the process for rectifying that charge.

Catch It Early

    Most banking institutions want you to monitor your accounts. They will not do all of the work for you. As such, many banks will impose penalties for failing to notify them of an unauthorized debit. This can cost you dearly. Most banks want to you to file a report with them within two days of the unauthorized charge. This will leave you liable for perhaps about $50 of the charge (if the debit is substantial). If, however, you wait a month or more, you could be liable for as much as $500 of the lost funds (or all of it, in extreme cases). Log on to your banking account as often as possible to keep on top of your transactions.

Contact Fraud Prevention

    The first call you need to make is to the fraud prevention department at your bank. These representatives are the ones who sometimes will freeze your funds if there is suspicious activity on your account (like charges out of state). Print out a copy of the statement showing the fraudulent charge, circle the activity, and make a copy for yourself. Once on the phone with the representative, ask for the fax number so that you can fax the proof (this may not be necessary as they will have the same information, but keep a copy for your records). Tell the representative exactly how much was debited and ask him or her to freeze your account for the time being.


    Most banks give themselves at least 20 days to investigate fraudulent debits. They will track down the transaction history, look at time stamps, and sometimes even call retailers for information. This process can take longer, so you will need to be patient. In the meantime, pay special attention to the account in question (daily monitoring) and report any other suspicious activity immediately. If the unauthorized debits continue, it would behoove you to close the affected account and open a new one.

Thursday, December 18, 2008

How to Compare Secured vs Prepaid Credit Cards

How to Compare Secured vs Prepaid Credit Cards

People who are unable to get it a traditional credit card look to either a secured or prepaid credit card as an alternative. Although some people use them interchangeably, consumers must be aware that there are differences between a secured credit card and a prepaid credit card. Here are a few things to consider when comparing secured and prepaid credit cards.



    Compare the funding mechanisms. A prepaid credit card is also known as a debit card or some people call it a reloadable credit card. Most commonly they're attached to a bank account and the limit is equal to the amount of money you have in the account (subject to a maximum daily withdrawal).

    Secured credit cards, on the other hand, have an initial funding which becomes the limit on the credit card. Therefore, if you initially fund the secured credit card with $500, your limit is then a $500. You may not increase the limit. The limit remains the same throughout life of the credit card.


    Look at interest charges. Prepaid credit cards do not carry interest charges on the outstanding balanced. You're basically withdrawing money from your own bank account using the card.

    Secured credit cards charge interest on the outstanding balance. Therefore, if you have a $500 secured credit card and you use it to purchase $250 worth of items, you are charged a pretty hefty interest rate on the $250 outstanding balance.


    Consider monthly billing. Prepaid credit cards or reloadable credit cards don't have a monthly billing cycle. You may get a monthly statement from your bank, but it only shows what the amount of money you have in your account. It is not a monthly bill.

    You do, however, receive monthly credit card bills for the secured credit card. The bill should outline the amount of the principal owed plus monthly interest charges and/or applicable fees.


    Review the fee structure. Prepaid credit cards are usually subject to the fees customary to your bank account. If you use it at an ATM other than your own bank you're charged ATM fees. Review the fee structure for your bank account to find out any and all outstanding fees.

    Secured credit cards have set of fees also. They may charge an activation fee to initiate the credit card, an annual membership fee for the privilege of having the actual card, late payment fees if you're late in paying and over the limit fee if you inadvertently attempt to charge more than your limit.

    Be aware that some secured credit cards also charge a fee if you speak to a bank teller, call customer service and some secured credit cards charge a per transaction fee. It's best to read the fine print before signing up for a secured credit card.


    Determine if the financial institution reports to the credit bureau. Prepaid credit card activity is not reported to a credit bureau. Since it is actually a debit card, the bank does not report banking deposits and withdrawals to the credit reporting agencies.

    Credit card activity on a secured credit card is reported to the credit reporting agencies. For individuals looking to establish or rebuild credit, this is a viable, although expensive way to begin. It is extremely important to remain within the limit of the credit card and pay the monthly bills on time.

What Happens During a Credit Check?

A credit check can be an intimidating experience even for those with excellent credit. No matter what your credit score may be, it's natural to worry if you have some negative mark that can keep you from getting the house or car you want. Understanding the importance and the process of a credit check can help you to understand what you need to do in order to pass credit checks.

Importance of Credit Checks

    Your credit history is one of the most important pieces of your adult life. With a solid history, you can access the best offers from creditors. If your credit is spotty, though, you may have trouble acquiring the things you want in life. Items such as cars, apartments and houses routinely require credit checks. In addition, employers are increasingly looking toward credit checks to make determinations about the responsibility levels of prospective employees.

What Gets Reported

    Your credit score is determined by five main factors. The most important factor is your payment history, which is followed by your amount of outstanding debt, the age of your credit accounts, the number of recent attempts you have made to obtain new credit and the mix of credit accounts you currently have. Your credit score is a snapshot of how your credit compares to others at that specific moment, so your score constantly changes as your credit activities change.

How Decisions Are Made

    While your credit report is full of information about your credit history, most lenders will only look at your overall credit score. Your score may be used with other factors, such as your income in relation to your current debts, but your credit score is the main determining factor for a credit check. Just one late payment can significantly damage your credit score, even if the rest of your credit file is spotless; however, the loan officer just sees the score and not the impressive history of credit management.

How to Beat a Credit Check

    If your credit score is less than perfect, it doesn't mean you're doomed to a lifetime of high interest rates and poor living spaces. Obtain a copy of your credit report and review it for errors; since nearly 80 percent of credit reports contain inaccurate information, according to CBS News, you may be able to significantly repair your credit score through this one step alone. In addition, be sure to pay your bills on time, as this is the most important factor of your credit score. Improving your credit will likely take time, but the next time your credit needs to be checked, you'll have a much better chance of passing the test.

What Happens If I Use a Credit Card While Enrolled in a Debt Management Program?

What Happens If I Use a Credit Card While Enrolled in a Debt Management Program?

Debt management plans are effective ways for consumers to get back on track financially. Although card accounts that are included in a DMP are closed upon enrollment (and rejected when presented for payment), a borrower may still need to use credit. Usually, all debts must be included in a plan, but exceptions can be made.

How Debt Management Plans Work

    In exchange for reduced interest and fees, borrowers who participate in a DMP must agree not to make further charges, and the accounts are closed. There are a couple of reasons that lenders agree to debt management plans. First, accounts are paid in full instead of settled or eliminated in a bankruptcy (and a subsequent loss is mitigated). The lender is also reducing the risk that you'll incur more debt and fall further behind. Therefore, using a card that's enrolled in a DMP will result in the transaction being denied.


    Credit counseling agencies will want to include all of your debts in a debt management plan, including a card that's used for business purposes. However, one card may be maintained for business use; for example, if you must travel on behalf of your employer, you may be permitted to leave one account open. Also, you may not be required to include a card in a DMP if the card has a zero balance. Remember that participation in a DMP is voluntary. The National Foundation for Credit Counseling states that "for the most effective and equitable treatment of your debts, we need to include all debts in your DMP."

If You Need a Credit Card

    If you absolutely must have a credit card, your only option may be to purchase a prepaid, secured card. You'll be required to pay the entirety of the credit line as a security deposit. You may also be subject to stiff annual or monthly fees, as well as interest charges if you don't pay the balance in full every month. However, they're easy to obtain and, as long as you pay the balance in full every month, offer little downside.

How to Get an Unsecured Card After a DMP

    If you successfully complete a DMP, you'll be eligible to participate in a credit repair program that's provided by the agency who sponsored your plan. The creditor may be willing to re-open your credit line. If not, you can try opening a new account on your own. Capital One and Orchard Bank offer cards for people who are trying to rebuild their credit. Fair Isaac Corporation's "My FICO" website provides a great deal of information on credit scoring and rebuilding credit, as well as links to cards that fit your credit score profile. You can also order your credit reports and scores; be sure to cancel the subscription before the trial period ends.

Tips on How to Reduce Debt Quickly

Many people find getting into debt easy, but getting out exceptionally difficult. While paying off your debt may seem like an uphill battle, with careful planning and goal-oriented saving, you can reduce your debt rapidly and achieve this enviable debt-free financial status more quickly. While paying off your debt will never be an easy process, it is something that you can accomplish.

Cut Housing Costs

    For many, housing costs represent the bulk of their monthly bill obligation. If much of your monthly earnings are already tied up in paying for your residence, consider downsizing or selecting a less expensive housing option. Apply the money that you save by moving to a less-expensive home or apartment to the paying off of your debts. Once your debt obligation is reduced, you can always move back into the pricey housing to which you were accustomed.

Trade In Your Pricey Ride

    While an expensive car may look shiny and make you the envy of others, it doesn't necessarily accomplish the task of getting you from point A to point B any better than a less expensive vehicle would. Save money on your ride by trading it in for a gently used car or one with a few less bells and whistles. Apply the money you save to your debt reduction efforts.

Obtain a Second Job

    The formula for debt reduction is quite simple; you must pay more than the minimum each month. To make this possible, consider seeking out additional employment. While you will likely not be keen on venturing off to another workplace after a long day at your primary job, doing so may give your income the boost that it needs to make your debt reduction dreams come true.

Pay Off Debt With Savings

    While it is always nice to have some cash in savings, keeping a large amount of money in savings instead of applying it to an outstanding debt is often not a logical financial move. If the interest accruing on your debt is greater than the money you are earning by keeping the cash in savings, pull it out and pay off your debts. You may still want to keep a small amount in savings for emergencies, but take the rest and use it for debt pay-down.

Send the Kids to Public School

    If your kids currently matriculate at a pricey private school, consider modifying this practice to reduce your debt. While you likely don't want to uproot your children, depending on the severity of your debt-reduction needs, doing so may be the best choice. If you send your child to public school in place of their current pricey institution, you could likely save thousands a year and apply this saved money to debt reduction.

Wednesday, December 17, 2008

Can a Debt Collector Buy a Debt That Has Been Charged off?

A charge-off is an internal accounting term that lenders use to describe loan accounts they consider noncollectable. Credit card companies usually take the action after accounts are about six months behind, but other lenders may act earlier. After charge-off, lenders may agree to sell charge-offs to debt collectors. Some debt collectors purchase charge-offs in a bundle for cents on the dollar. After purchasing a charge-off, the debt collector can seek payment in full from the debtor.


    Original creditors will not negotiate with the debtor after a debt collector purchases a charge-off. The original creditor takes a tax write-off after selling the debt and no longer can discuss the debt except to provide the debtor with contact information for the new debt collector. In some instances, charge-offs lie dormant with the original creditor for months or even years before a debt collector purchases them.


    A debt collector purchasing a charge-off must send a written notice to the debtor indicating the change in status. The debt collector may refer to the purchase of the charge-off in the letter and will ask for full payment immediately. However, the Fair Debt Collections Practices Act, a federal law, allows debtors to challenge the debt collector's legal right to collect on a specific debt. The law allows debtors to request that the debt collector show legal proof of the right to collect on a specific debt such as a charge-off. A debt collector can provide legal proof by sending the debtor documentation, such as the original loan application or the most recent statement. The debtor must request this documentation by sending a letter to the debt collector. Federal law requires the debt collector to suspend collection efforts on the charge-off until providing proof of the debt. The debtor must request the information within 30 days of receiving the first written notice from the debt collector.


    Some debt collectors are unable to verify that charged-off debts are valid because records are sometimes lost or misplaced as creditors sell the accounts, which does not end the debtor's legal responsibility for the debt, but it can make collection difficult for the debt collector. Without valid proof of the debt, the debt collector may not have information needed to win a lawsuit, which is the debt collector's most powerful weapon.


    Debtors sometimes can resolve charged-off accounts by negotiating settlement agreements. A settlement allows the debtor to pay less than the full amount of the charge-off. The exact amount depends on how well the debtor negotiates and how much the debt collector is willing to accept. Paying a charge-off may have minimal effect on credit score, however. Debtors risk incurring significant harm to their scores when they begin missing payments, leading to the charge-off. Paying the charge-off does not erase that damage, but it does end the debt. Credit bureaus update credit reports to show a charge-off as a paid charge-off after the debtor makes payment.

Monday, December 15, 2008

Credit Report Interpretation

Credit Report Interpretation

Knowing you should monitor your credit report and actually doing it are sometimes two different things. This is especially true if you are looking at your credit report for the first time and it seems to make little sense. However confusing your report may look, it is essential that you take the time to learn the fine art of credit report interpretation, both to ensure the accuracy of the information it contains, as well as protect yourself from fraud or identity theft.


    Although each of the major reporting agencies may format information differently, all include five to six major sections. These include personal or identifying information, credit account information, public record information, employment history and a listing of recent credit inquiries. If at any time you add a personal statement to your credit file, such as an explanation of a negative item, either a portion or all of the statement will appear in a consumer statement section. While it is important to review and understand each of these sections, your credit account information is often where much of the confusion lies.

Credit Account - Creditor/Account General Information

    Each entry in the credit account information section will start with the name of your creditor, as well as your account number, and from that point include a variety of letter and/or number codes, each of which has a different meaning. First are a group of letter codes that identify the type of account, such as I for an individual account, A for authorized user or C or cosignor. Next come a group of dates and numbers that identify the month and year you opened the account, the number of reporting months and the date of your latest payment or charge. You may also see another set of letters that identify the account as an open, revolving or installment account using the letters O, R and I.

Credit Account - Financial/Payment Status Information

    Financial information comes next, with numbers that identify the credit limit or loan amount of your account as well as the highest amount you charged to the account, if applicable, and finally, the current balance. Numbers next to the balance, usually ranging from zero to nine, identify the payment status. Zero usually represents a new account with no activity or balance and one represents "paid as agreed." All remaining numbers identify a degree of late payment history, with a nine usually representing a charge-off.

Other Information

    If you have no public record information, such as past due child support, judgments, a bankruptcy or tax liens, this section will be blank. Information on your employment comes from your creditors rather than employers and this section may additionally contain previous address information. The final section will contain a list of any company or individual requesting a copy of your credit report within the last 24 months.


    It is important to review your credit report at least once each year, verify all information and notify the reporting agency if you see any discrepancies. You can access a free copy of your report once every 12 months at AnnualCreditReport.com.

The Effects of Credit Card Debt Counseling or Consolidation

Credit counseling and debt consolidation are two methods a consumer may use to develop strategies to get out and stay out of debt. Each has different effects on the consumer's life. Credit consolidation streamlines his finances by creating a single monthly payment to his creditors and credit counseling teaches him ways to budget and manage debt on his own.

Credit Score Impact

    According to debt management company Consumer Credit Counseling Services, a popular misconception about debt consolidation is that it hurts your credit score. Consolidation through a debt management program does not have a negative impact on your credit score. A consumer who enters into a debt management plan may already have a significantly damaged credit score. When a credit card company reports a consumer's participation in a consolidation program to a major credit reporting bureau it may actually help his credit score because lenders view such a program as a responsible step in credit management.

Better Financial Planning

    Credit counseling sessions administered by a licensed credit counselor or bankruptcy attorney may have a positive impact on the way a consumer views and uses credit. According to MSN Money Central, approximately one-third of people who used a licensed credit counseling service in 2009 were better equipped to handle finances alone after the counseling session. This number is low because of the difficulty associated with clearing out the financial clutter. A consumer may feel too overwhelmed by the process to know where to begin.

Financial Honesty

    Credit counseling sessions or debt consolidation forces a consumer to get honest about her financial health and what it may take to pay down her debt. This level of financial honesty may show her that consolidation and counseling alone may not be enough to tackle her financial troubles. According to MSN Money Central, approximately one-third of all Americans who used a credit counseling service in 2009 were in too much debt for the service to be of adequate help. These consumers were referred to other programs like those offered through social services to better deal with the root cause of the debt problem such as a gambling problem.

Budgets and Bankruptcy

    If your debt problems are still in a range where a consolidation service can help you, you may be required to come up with a monthly budget to help plan your expenses and get the most out of your income. This allows you to still keep food in the house while having enough left over to make your debt consolidation payments. If your finances are too far gone for consolidation help, bankruptcy may be recommended. If you have little or no assets, Chapter 7 liquidation may be the best option. If you own a home or business, Chapter 13 debt restructuring can allow you to keep your home while making payments to the court.

Saturday, December 13, 2008

How To Pay a Civil Judgment?

How To Pay a Civil Judgment?

Because a civil judgment can reduce your credit score and remain on your credit report for up to seven years, paying the judgment is likely a top concern. Ignoring a judgment doesn't remove the problem. Rather, this negative remark can make it harder for you to acquire different types of financing. Fortunately, there are several ways to pay a judgment and restore your credit rating.



    Write a check for the full amount. If you have the money, and you want to alleviate this headache, contact the person or court system and make plans to pay off the civil judgment with one lump-sum payment. For your records, retain a copy of the check. If you decide to pay in full, skip to Step 3.


    Establish a monthly payment arrangement. Review your finances and determine how much you can afford to pay on a weekly or monthly basis. Next, contact the individual and negotiate a payment arrangement. Once you're reached an agreement, create a terms of agreement contract. Adhere to the agreement and submit timely payments until you pay off the civil judgment.


    Submit a letter of judgment satisfaction to the court system. Until you or the plaintiff notifies the courts, the judgment remains on your credit report. Once you've satisfied the debt, ask the plaintiff to submit a letter of judgment satisfaction to the court system handling the case. They must submit this letter within two weeks of your request.


    Check your credit report. Depending on the court system, you may receive notification once the court removes the judgment from your records. If not, order a copy of your credit report after one or two months. Check the report closely. If the civil judgment remains on your report, contact the court system and check the status of your case.

Can Debit Cards Establish Credit?

Perhaps you are considering using a debit card. Many people use debit cards to make all sorts of purchases every day. Debit cards are quite popular because you can use them to buy clothes, food and other essential items. Read on to learn more about debit cards and to find out whether debit cards can affect your credit history.


    Many people today use debit cards to make purchases, pay bills and to access money from an ATM (Automated Teller Machine). However, it is important to realize that debit cards do not operate in the same manner as regular credits cards. If you are interested in establishing credit, you must be aware that debit cards cannot be used to improve or build your credit history. According to Clear Point Financial Solutions, debit card transactions are not reported to any of the 3 major credit bureaus: Equifax, Experian and TransUnion. As a result, there is no possible way to establish credit in your name by using a debit card.


    Debit cards look very similar to credit cards. In fact, many types of debit cards even have the MasterCard or Visa logo imprinted on the card. As with credit cards, debit cards have the person's name, card number and expiration date engraved on the front of the card. However, to distinguish debit cards from credit cards, a debit card will have the word "debit" or "ATM card" written somewhere on the front of the card.


    Some people may believe that debit cards are the same as credit cards because you can use both types of cards to make purchases online or in stores. Many people also use debit cards to make hotel reservations and to rent vehicles. However, you can only use a debit card to access funds that are already available in your bank account. When using a credit card, the financial institution lends you the money and extends you a line of credit. Basically, if you want use a debit card, the funds must be available in your account in order for the transaction to be approved. The funds are normally withdrawn from your account immediately once the transaction is complete. Since you are not required to make monthly payments on your debit card, your bank or financial institution has no information to report to the credit bureaus.


    Although you cannot use debit cards to establish credit, there are other benefits for using debit cards. First of all, according to College Board, Inc., there are no interest or late-payment fees associated with debit cards. However, depending on your financial institution, you may be responsible for monthly service charges and transaction fees for your debit card. Also, you cannot accumulate a lot of debt with debit cards. The money is automatically taken from your account with each transaction. In addition, practically everyone qualifies for a debit card as long as you already have an active bank account with funds in that account.


    If you want to establish credit, you should apply for a MasterCard, Visa, Discover or American Express card. You may also choose to apply for credit card with a retail or jewelry merchant; or perhaps you can apply for a gas credit card. Many banks, credit unions and merchants offer a variety of credit cards to suit your needs. If you still have no luck with establishing credit in your name, maybe you should consider opening a secured credit card. Secured credit cards are similar to debit cards because you must have funds available in your bank account to make purchases. However, financial institutions usually report secured credit card accounts to the major credit bureaus, and this can help you establish credit in your name.

How to Follow Up a Dispute Letter

How to Follow Up a Dispute Letter

If it has been thirty days since you disputed a debt and you still have not received a response from the creditor, then you should follow-up with that creditor as soon as possible. It is common for creditors to become overwhelmed with disputes, and sometimes dispute letters get overlooked. However, sometimes creditors simply ignore dispute letters because they do not want to spend time trying to validate a debt. Learn the proper way to follow-up a dispute letter.



    Locate the original dispute letter that you sent to the creditor. You will need this letter as part of the follow-up process. Also, if you sent your dispute letter via certified mail, locate the receipt you received from the post office or mail center.


    Prepare a formal follow-up letter. In your follow up letter, remind the creditor of your dispute and give them the exact date that you mailed the first dispute letter to their office. Be sure to remind the creditor that you are requesting them to validate the debt in question and to supply you with valid proof of the debt. You should also inform the creditor that if they fail to respond to your dispute letters in a timely manner, you will contact the Federal Trade Commission, the Better Business Bureau and your State Attorney General's office.


    Attach a copy of the first dispute letter to your follow-up letter. It is a good idea to submit both letters together, so the creditor can immediately refer to your first letter without having to waste time looking for it. Be sure to also attach a copy of your receipt from the post office


    Send your follow-up letter to the creditor. Be sure to send your letter via Certified Mail and request a Return Receipt at the post office--the green postcard with the recipient's signature.


    Wait for a response. If you have not received a response from the creditor within two weeks, then you should give the creditor a call. If you are still unsuccessful and cannot reach the creditor by phone or email, then you should contact the major credit bureaus for assistance--Experian, Equifax and TransUnion--or seek legal advice.

Friday, December 12, 2008

I Need Help for Me to Payoff My Debt

I Need Help for Me to Payoff My Debt

Debt is problematic financially because it reduces the amount of disposable income you have for necessities, saving for the future and emergencies. Typically, individuals and organizations won't pay your debt off for you, but it's possible to get financial assistance in other areas like utilities so that you can put more of your own money into debt payments. Debt counseling and negotiation also helps restore your financial footing.


    Help with paying off debt starts with your creditors and lenders. Many will give you a lower interest rate if you call and ask, depending on your credit score and payment history. Some companies also let you work out a payment plan, although they may freeze your account until you've brought it current. If you can show it is in the creditor's or lender's best interest, they may agree to put your debt into forbearance or may settle and forgive some or all of what you owe. Creditors and lenders often offer debt counseling and debt management programs. These programs are just as much of a benefit to them as they are to you. Once you are back on track, you can keep making payments and spending, and the company keeps making interest.

Your Bank

    Financial institutions like banks have trained debt counselors and loan officers on staff. Many of these workers will sit down with you free of charge to look at your situation, although it's best to have an account at the bank first. Your bank can provide refinancing or consolidation help or set up automatic deposits and withdrawals with your creditors and lenders so you don't miss debt payments. You may need to pay higher interest or use collateral if you apply for a loan with poor credit, but your credit score may improve if you can use the loan to pay off credit accounts in full.

Available Aid

    The government has programs available that address debt planning and budgeting, such as those available through the Federal Trade Commission. These are free in most cases. You also can go to your local Department of Health and Human Services (sometimes listed as Family Services) and apply for relief programs like food stamps. Representatives will gather basic information about your income and debts to determine the programs for which you are eligible, so you can set up an appointment even if you aren't sure what type of aid to ask about. If you aren't working, you may qualify for unemployment or disability benefits. Your local Chamber of Commerce also can give you a list of charities and nonprofit businesses that will counsel you or provide donations that can relieve your financial burden. Churches and hospitals also know of community programs that help. There even are attorneys who will give you free legal advice and represent you in debt-related issues. You can find these attorneys by contacting your state bar association. Friends and family may also be willing to loan you some money or other supplies.

Consolidation, Debt Management and Debt Settlement Companies

    Consolidation companies may help your debt situation by giving you a new loan to pay off your debts. This doesn't reduce your debt-to-income ratio, as you still owe the consolidation company, but you usually can get a lower interest rate or a loan term with lower monthly payments. Debt management companies take the money you'd pay creditors and pay on your behalf, usually for a fee. This may be a good option if you have trouble staying organized about your debt. Debt settlement companies work with your creditors to negotiate lower interest rates, forbearance or debt forgiveness. Settlement can hurt your credit score because you don't pay according to your original agreement, but it reduces what you owe.

Grants for People in Debt

Grants for People in Debt

Grants are available for a variety of purposes, from government agencies, to nonprofit and for-profit businesses. The general intention of a grant is to pay for work that's used to improve the common good. Although it's tempting to believe that there are grants available for the purpose of repaying personal debts, unfortunately, it's not the case. Don't despair; there is help available for those in need.

Risky Business

    Borrowers should not attempt to secure a grant for the purpose of repaying a personal loan. In fact, businesses that claim to be able to secure a grant for you for this purpose may be attempting to steal your identity.

    Legitimate grant applications never ask you for your personal information, such as your social security number, credit card number or bank account number. There's no charge to apply for a grant, either; if you are being asked to pay a fee or provide this information, the business may be operating illegally.

    The newest scam that these companies operate with is to use this personal information to establish new credit accounts in your name. Of course, the bills never get repaid and your credit is trashed. Don't hesitate to order a free credit report at AnnualCreditReport.com. If you notice unusual activity, report it immediately. Also file a complaint with your state attorney general.

Mortgage Debt

    The housing market's downturn in 2007 was a domino reaction that affected the entire economy. As a result, the federal government launched the Making Home Affordable program. HAMP and HARP, the two most popular programs, are intended to bring the housing downturn to a screeching halt and help more Americans manage their monthly mortgage payments.

    HARP is restricted to those who have FHA-backed loans. This program is a "streamline refinance" and can save you hundreds, maybe thousands, of dollars a year with little paperwork. HAMP is open to those who have conforming loans and whose lenders are participating in the program -- most are. HAMP aims to reduce the homeowner's payment to 31 percent of pretax income. This is accomplished through a variety of techniques, each specific to the homeowner's loan and predicament.

    Both programs require that the homeowner apply directly through the lender, not the government.

Opportunities for Small Businesses

    Small businesses have traditionally had longtime support from the federal government. Those who are getting a new business off the ground or who need a hand taking the next step can apply for a microloan or a small business loan. They're available up to $2,000,000. Remember that these aren't grants -- they're loans -- and must be repaid. Borrowers may need to meet certain credit and income criteria to qualify, and must also apply through a participating lender.

Help for Debt Problems

    Real debt help comes from nonprofit credit counseling agencies that charge little in the way of fees, are top-ranked members of the Better Business Bureau and offer educational programs for consumers. There are several good debt relief agencies, but the best is the National Foundation for Credit Counseling (NFCC). The NFCC doesn't provide loans (or grants), but it can enroll you in a debt management plan to help you repay your loans in full. Debt management plans can only be used for unsecured debt. However, the NFCC provides housing counseling, too (and bankruptcy counseling, if you need it).

    A good resource for those who need help with debt is the Federal Trade Commission. The FTC is a government agency that protects the rights of consumers and provides general advice and information for a variety of topics. The FTC has issued many warnings about debt relief grants. It's also provided a great deal of valuable information that consumers can use if they're deep in debt.

How to Negotiate a Debt Lump Sum

Lenders view delinquent debt --- especially debt that's over 120 days late --- as bad debt and charge it off for tax purposes. This debt is then sold to a collection agency that tries to collect the debt. Unpaid debt and charge-offs leave a stain on your credit report that lasts for seven years. However, settling the debt for a percentage of the amount owed --- before or after a charge-off --- can soften the blow to your credit report and eliminate the harassing collection calls and letters.



    Order a copy of your credit report from all three credit bureaus (TransUnion, Experian and Equifax) to see the exact amount that the lender or collection agency reports as outstanding.


    Calculate how much you are willing or able to pay on the debt. For example: If the debt is $2,000, you might offer to pay 50 to 75 percent of the debt.


    Call or write the creditor or collection agency with your settlement offer. Phone calls with creditors or collection agencies are intimidating, especially if they turn down your initial settlement offer. The representative might claim that the counter-offer is the best the agency can do, though that is rarely the truth.

    Collection agencies typically purchase charged-off debt for pennies on the dollar, so they are trying to maximize their profit on your debt. However, they also want you to pay the bill; the agency will not make money if you refuse a settlement deal. Stand your ground and do not agree to pay more than you can afford. Instead, end the phone call and call back; a different representative might find your settlement attractive. If that does not work, call another day and stand firm on your offer until they agree; it will happen eventually.

    With letters, you may have to write back and forth until an amicable agreement is reached. The process is the same as over the phone: It is possible you will have to send letters back and forth until you reach an amicable agreement.


    Ask for a debt-settlement agreement in writing from the creditor or collection agency. This agreement should state the settlement amount and any other terms of the agreement, like deadline for payment. Failure to meet this deadline will void the agreement.


    Make the payment via a cashier's check or money order. Only send it through a traceable method, like certified mail with a return receipt. This gives you proof that the payment arrived at their location.


    Review your credit report to ensure that the creditor or collection agency updates the entry to the agreed-on terms.

List of Credit Report Companies

List of Credit Report Companies

Creditors make regular reports about their customers to the credit report agencies. These reports include everything from timely payments to missed payments and charge-off accounts. The credit bureaus compile this information into a single report about an individual and use it to determine a credit score. Other lenders looking to extend credit, employers and landlords request this score from the credit reporting company to determine a person's credit worthiness. Individuals can also request this information and the three major credit reporting companies offer products to help consumers monitor or improve their credit.


    Equifax is a publicly trade credit reporting company headquartered in Atlanta, Georgia. They employ thousands of people across North America, Europe and Latin America. In addition to creating consumer credit reports, the company offers tools for people looking to monitor or improve their credit rating. Their identity protection service, Equifax ID Patrol, offers credit monitoring and notification alerts for a monthly fee. For customers wanting to pay down personal debts, the Debt Wise monthly program combines the customer's credit score and report with an automatic payment plan wizard to help pay down debts. Equifax also offers two monthly programs that allow customers to view their credit reports and scores from the major credit reporting companies.


    Experian prepares and delivers personal credit reports. They also offer one-time credit report and score purchases from their own company as well as the other credit report companies. Experian's Triple Advantage credit monitoring service gives consumers a copy of their Experian credit report and score as well as monthly credit monitoring. The Experian website offers free credit advice to consumers. Consumers can review information about credit scores, credit reporting, fraud prevention and general credit questions. They also offer an online credit dispute form for people who wish to dispute information on their credit report.


    According to TransUnion, they monitor credit histories for nearly 500 million people. The reporting company, with headquarters in Chicago, provides credit reporting services to businesses and individuals. The company offers single credit report orders for individuals or consumers can join the monthly credit monitoring service, Truecredit. The monthly monitoring services gives the consumer three credit reports and scores from the major monthly bureaus and then updates those scores every 30 days.