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Thursday, April 30, 2009

How Name Changes Affect Credit Reports

Legally changing your name, whether because of a marriage or divorce, or another legal reason, requires a significant amount of paperwork. Your driver's license, Social Security card, tax documents and utility and credit card accounts all need to be updated to reflect your new moniker. Failing to do so can cause major headaches, especially if your credit report is inaccurate.

Credit Reports

    In general, legally changing your name is not going to affect your credit report. When the major credit bureaus provide a report to you or a potential lender, landlord or other requestor, it includes information about your accounts, including balance and payment history. The report may also include a list of addresses where you lived and names that you've used to open accounts. Because the information on your credit report is linked to specific accounts using multiple identifiers, such as account numbers and your Social Security number, changing your name will not affect the information about the accounts listed on your credit report.

Notifying the Credit Bureaus

    When you change your name for any reason, you should notify the credit bureaus in writing of the change. Send a letter detailing your name change with a copy of your marriage license or court order changing your name to the three major credit bureaus. Wait several weeks, and request a copy of your report to confirm that the change has been made. Also, once your name change is official, be consistent in the name you use when you apply for credit. Using the same name, and not a variety of nicknames, abbreviations or middle initials, helps keep your report accurate and can help you detect fraud.

Disputing Incorrect Information

    In some cases, changing your name can lead to an inaccuracy on your credit report, such as a misspelling. While this is not likely to influence how creditors report information, or influence your credit score, it can lead to confusion. When you request a copy of your credit report, confirm that your name and other identifying information is reported correctly. You can dispute the incorrect information with the credit bureau. The bureaus generally require proof of your correct or new name in the form of a copy of your driver's license, passport or marriage license.

Social Security

    While changing your name is not likely to affect your credit report, failing to properly record your name change with the Social Security Administration can have some repercussions. If you don't update your information, it could prevent you from getting a tax refund. It could also prevent your wages and taxes from being properly credited to your record, which could affect your future Social Security benefits. When you change your name with the SSA, you'll need to provide proof of the change. Your Social Security number will stay the same, but you'll receive a new card reflecting the name change.

Indiana Laws on Payment of Dead Spouse's Debt

When a man passes away and leaves unpaid debt behind, collection agencies would have the widow believing she has to pay off her husband's debts. In some states with community property laws there may be validity in that claim, but it is complicated even then. Indiana is not a community property state, and a widow cannot inherit debt her husband left behind.

Estate Probate

    A probate process is the legal means of settling a decedent's debts and ensuring the terms of her will are carried out as desired. Any assets the decedent owned when she died -- such as real estate, investment accounts and personal property -- are her estate assets at death. The decedent's estate is legally responsible for paying off any outstanding debts. and the probate process takes care of this for her.

Estate Debt Payments

    An individual can personally name an estate executor in a will, or the probate court judge will assign one for the estate. The executor must inventory all of the estate's assets and outstanding debts, send death notifications to all involved parties, take care of paperwork or taxes required by Indiana state law, and pay off all debts of the estate before distributing assets to heirs and beneficiaries. By liquidating estate assets, the executor is able to pay off the estate's debts so that no heirs or surviving relatives acquire it.

Remaining Assets

    After the executor pays off all of the estate's bills and debts -- including funeral expenses, taxes and probate court fees -- he distributes remaining assets according to the terms of the decedent's will. If there isn't a will, the executor distributes assets according to the terms of Indiana law.

Joint Accounts

    In some cases, a surviving spouse can be financially liable for debts after her husband dies, because she was a joint signer on the debt in question. If a husband and wife held a joint credit card account, for example, and it was originally opened with both husband and wife signing as responsible for repayment, then the husband may continue owing that debt after his wife passes away. When in doubt about the legal liability of any debts your dead spouse held, consult with an Indiana probate attorney.

Defaulting on a Business Credit Card

Like a personal credit card, business cards allow you to make charges on behalf of your business during times when cash isn't flowing as freely as you'd like. It also offers rewards programs for business owners, including discounts on office supplies and services. But if you default on a business credit card you can still experience some of the same issues as a personal card.

What Is Default?

    In most cases, a default on a credit card is a failure to make full payment on the account within a certain period of time. When you miss the payment due date on a business credit card, the creditor may take adverse action against the account though the account might not be placed in default status immediately. In some cases the credit card company may not start taking action until the account is more than 30 days overdue. At 60 to 90 days overdue, an unpaid account commonly falls into default status.

Higher Rates

    One of the potential effects of defaulting on a business credit card is a higher interest rate. When the account hits default status, you could lose any special introductory rates and standard rates could rise as well --- sometimes as high as two and three times the original level. You could also lose access to business rewards points accumulated on the account.

Negative Information on Business Report

    Another result of defaulting on a business credit card is that the creditor may report the data to a business credit reporting agency, like Equifax Business or Dun & Bradstreet. When business credit reporting bureaus receive information about a default on the card, it could lower your business credit score (which usually ranges from about 0 to 100) and decrease the chance of getting more commercial credit in the future.

What About Your Personal Credit Report?

    In the past, information about business credit cards were only reported to business credit reporting agencies. But according to a 2009 BusinessWeek article, reporting to personal credit reports is more common. The final decision on this matter rests in the hands of each individual lender or creditor.

What Percentage of Wages Can Be Garnished in Illinois

The state of Illinois is one of many that allow creditors to garnish a debtor's wages. Many states adopt the federal withholding limit for ordinary wage garnishments, however, Illinois has its own maximum threshold. Furthermore, a debtor's wages can be garnished for child support and tax debts in Illinois.

Ordinary Garnishments

    Under Illinois law, an employer can garnish up to the lesser of 15 percent of the debtor's weekly disposable income or the total by which his disposable earnings exceed the greater of 45 times the federal minimum hourly wage or the state minimum hourly wage. This applies to ordinary wage garnishments, such as for debts owed to creditors. At the time of publication, the federal minimum hourly wage is $7.25 and Illinois' minimum wage is $8.25 per hour. Note that under federal law an employer can withhold up to the lesser of 25 percent of disposable wages or the total by which the disposable income is more than 30 times the federal minimum hourly wage.

    Disposable income in Illinois is the debtor's wages after federal income tax, state income tax, Social Security and Medicare taxes, and applicable local taxes and child support have been withheld.

Child Support

    Illinois adopts federal limits for child support withholding; an employer can withhold up to 50 or 60 percent of weekly disposable wages and an additional five percent for arrears payments. An employer should adhere to one withholding order for the same child. If it receives multiple orders on the same child, it should contact the issuing court to resolve the matter. If it receives multiple orders on the same employee for different children, each family must receive a part of the payment. In this case, the employer uses the child support service's allocation method to figure out the amount each family should receive.

Tax Debts

    The Internal Revenue Service and the Illinois Department of Revenue can garnish a debtor's wages for unpaid federal and state tax debts, respectively. The employer uses Publication 1494 to help figure out the amount to withhold for an IRS wage levy. The state can garnish up to 15 percent of the debtor's pay for a state tax debt.

Additional Costs

    A judgment in Illinois accrues interest at the rate of nine percent per year until it is paid off. An employer can deduct the greater of $12 or two percent of the garnished amount each time it withholds to compensate for performing the garnishment.


    An Illinois creditor must sue a debtor, win a judgment and apply for a wage garnishment with the court to garnish wages in the state. It has five years from the default date of the debt to seek a judgment for open accounts and ten years for written contracts. It has 20 years to enforce the judgment by wage garnishment. In Illinois, a child support withholding order takes priority over all wage garnishments except an IRS wage levy that was ordered before the child support order was established.

How Much Does Debt Consolidation Cost?

How Much Does Debt Consolidation Cost?

When you consolidate two or more existing loans, you take out a new loan to pay them off. You then make a single monthly payment. How much your debt consolidation loan costs depends on several factors that differ for each person.

Consolidation Options

    There are various consolidation options available for consumers. Home equity loans, credit card balance transfers and debt consolidation loans are the most common. Like all other loans, these come with their own terms, and each has different benefits, risks and associated costs. The only way to know how much each option will cost is to look carefully at the loan terms and calculate your outlay over the loan's lifetime.

Credit Card Transfers

    Credit card companies frequently make balance transfer offers to lure potential new customers. These offers generally come with terms such as low or no interest for a limited time, but they have conditions. The low interest rate usually applies only for a limited period and is not for new purchases you make with the card. Also, companies charge a transfer fee, usually a percentage of the amount transferred.

Home Equity Loan

    Another popular form of debt consolidation is the home equity loan. When you take a home equity loan, you use your home as collateral. While these can have the lowest interest rates of any consolidation loan, there are other costs involved. For example, you may have to hire an appraiser to determine your home's value. In addition, the lender might require you to purchase title insurance to assure there are no other claims against your property.

Consolidation Loans

    A pure debt consolidation loan is just like any other loan from a lender. You receive the money and agree to pay it back over a specified period. Loan companies tout the convenience of making a single payment instead of several, and a lower monthly outlay. However, over the long run, these loans cost you more money than paying off the individual loans. Though you pay less each month, you pay longer and pay more interest than you would on the original debt.

Wednesday, April 29, 2009

How to Overcome Bad Credit

How to Overcome Bad Credit

Bad credit can cause major complications in your life for many years. Negative marks such as late payments can remain on your credit report for seven full years, and a Chapter 7 bankruptcy will follow you for 10 years. While the effect of your bad credit history will diminish over time, as long as these derogatory marks stay on your report you may have difficulty obtaining credit, be it a credit card, a car loan or a home mortgage. Overcoming your bad credit history typically involves taking a series of proactive steps.



    Correct credit report mistakes that are making your credit worse. While you cannot remove valid information from your credit history, you do have the right to correct mistakes. For example, if you file Chapter 7 bankruptcy, you should confirm that all accounts with your former creditors are listed as being included in your bankruptcy and show a zero balance owed.


    Compare all three of your credit reports. There are three main credit-reporting agencies, Experian, TransUnion and Equifax. Often, the information in your report will vary from agency to agency, and correcting misinformation at one agency does not necessarily lead to correct information at all three.


    Do whatever you can to improve your credit in the short term. If you are in a position to, pay off any past-due accounts and attempt to settle any accounts that are in collection. Pay down debt if you can and keep all your existing accounts current.


    Get new credit if you don't have any. One of the best ways to overcome bad credit is to improve your credit score. While this takes time, obtaining new credit is one of the necessary steps to show lenders that you can be responsible with new credit. If you are not in a position to obtain a loan or an unsecured credit card, talk to a bank or credit union about a secured credit card, in which you make a deposit as collateral for your new credit line.


    Explain your situation. A bad credit history may prevent you from getting certain jobs. If you are upfront about your situation and inform your potential employers before they find out on their own, you may be able to neutralize the negative effects of your bad credit. For example, if you lost your last job due to medical reasons and have not yet been able to pay off your debts, you may be able to put a human side to your bad credit and overcome any hesitancy on the part of the hiring manager. You can also have this information included in your credit report.


    Find a co-signer. If you have someone close to you who is willing to accept financial risk, you can have that person act as a co-signer on any loans that you obtain. A co-signer is legally responsible for the debt you incur, even if you willingly choose to avoid payment, so many lenders will accept a co-signer with good credit.


    Offer more money upfront. Most lenders will require a down payment from all borrowers, let alone those with bad credit. If you are willing and able to put up a larger down payment, whether you are taking out a car loan or a home mortgage, you may find lenders are more willing to deal with you, even if you have bad credit. Since not all lenders are the same, your mileage may vary, but generally the larger the down payment, the more likely you will be able to overcome your bad credit.

How to Send Checks

How to Send Checks

Despite electronic banking and debit services, there are times when sending a paper check is more appropriate. When a long distance relative has a birthday or an unexpected bill occurs, sending a check may be the best option. However, you want to send your check safely and securely without drawing the attention of thieves and swindlers. If you know how to mail checks properly, you will reduce the chances of losing a check or missing an important payment.



    Look at your check. Review the details of your check to verify you have written it for the right amount and the correct date, and that you have signed it. You may also wish to review the address line to insure you have written the check to the correct party.


    Verify that you have recorded the check number and information in your checkbook.


    Fold a piece of notebook or copy paper into three sections. Place the check inside the paper folds. This will shield your envelope's contents from prying eyes.


    Place the folded paper with the check inside a security envelope. Security envelopes are slightly thicker than plain envelopes and may have small blue lines printed inside it.


    Peel of the adhesive backing from the flap or lick the flap if there is no adhesive. If you prefer not to lick the flap, then dampen it by sliding a damp sponge across it.


    Press down on the fold to insure that it remains in place. Place the envelope on a table with the flap facing the back side.


    Stick a return address label in the upper, left-hand corner or print your address there neatly. This will give the post office an address to return the check to if it is undeliverable.


    Write the name of the person or business you are sending the check to in the center of the envelope about two inches from the top edge. Add the address on the next line. The city, state and zip code goes under the address.


    Place a stamp in the upper, right-hand corner of the envelope. Press down on the stamp. Put your envelope in a US Postal Service mailbox.

How to File a Lawsuit for Money Owed

How to File a Lawsuit for Money Owed

Creditors and service providers often settle financial disputes out of court through options like refinancing, settlement and reworking of payment amounts and schedules. When these options fail, lawsuits are the next step to collect money owed. This requires formally filing paperwork with the court clerk, as no creditor or service provider, with the exception of government agencies like the IRS, may collect money from someone else without a formal judgment. Filing a lawsuit for money owed doesn't guarantee you will get paid, but the likelihood of payment increases if you follow the protocols dictated by current regulations.



    Hire a competent attorney experienced in small claims cases.


    Get the contact information for the person or organization you intend to sue. At a minimum, you will need the defendant's full name and mailing address, as well as the defendant's phone number and county of residence or operation.


    Collect the evidence you have that proves the defendant owes you money. Examples include letters or email correspondences, bank statements and contracts.


    Go with your attorney to the courthouse and talk to the small claims court clerk. Ask for the forms necessary in your jurisdiction to file a small claims lawsuit. The clerk may have several forms available for small claims suits, so specify you want the form to collect money owed, not the ones to collect property or to initiate a rental eviction.


    Fill out the form or forms the clerk gives to you and your attorney. You must indicate the exact amount you are trying to collect on this paperwork, including any interest. The amount allowed for collection in a small claims lawsuit varies by state, but can be up to $10,000, according to the Nolo website.


    Give the completed complaint forms to the clerk.


    Give the forms to your attorney or the sheriff to serve the defendant with copies of the lawsuit complaint.


    Watch for a letter from the court that indicates the hearing date for the lawsuit. If the defendant requests a change in the date and time for the hearing, work with the defendant and court to reschedule if necessary.


    Attend your lawsuit hearing. Present copies of your evidence to the judge for review and have your attorney make a concise, to-the-point case as to the amount owed.


    File an appeal to the judgment if you lose your lawsuit.

How to Give Up a Car to Reduce Debt

How to Give Up a Car to Reduce Debt

Giving up a car to reduce a debt can be a smart move for someone struggling with a tight budget -- or for a person who simply wants to reduce expenses to pay down debt. A car payment, gasoline, oil, repairs and insurance for a car can easily total hundreds of dollars a year. Someone with a car payment of $400 or $500 could spend more than $1,000 a month on the vehicle with the added expenses. However, not all cars are easy to get rid of, and careful planning is necessary to make for a smooth transition.



    Create a plan for managing your life without the car you plan to get rid of. Talk with your spouse or partner, if applicable, if you are getting rid of a second car. Create alternate plans for commuting to work or school by contacting local transportation agencies or transit authorities. Consider travel by bus or subway. Get cost information to determine the monthly expense of getting around without the car.


    Review monthly expenses for the vehicle you're planning to get rid of. Estimate the cost of gasoline for a month or check records from your credit card or gasoline card. As an alternative, drive the car for another month or two and record all expenses. Also set a monthly projection for insurance and repairs based on annual costs.


    Compare the current expenses for the car vs. what you'll spend without the car on commuting costs and similar expenses, such as an occasional rental car or taxi. Make sure the savings are significant enough to offset the loss of convenience.


    Sell the car if you own it free and clear. Advertise in a local newspaper or on free online classified sites after determining the fair market value. Determine a reasonable price for the car by contacting local dealers and describing the vehicle or by checking free online car appraisal sites such as kellybluebook.com.


    Contact the lender if you are still making payments on the car and obtain the payoff amount on the loan. Sell the car to someone for the fair market value or a higher price. Take money from your checking account or savings account to make up any difference between the sales price and the balance remaining on the loan.


    Surrender the car in a so-called "voluntary repossession" if you owe money on it but cannot sell it. Do this only if your debt situation is desperate and you can no longer make the payments. Negotiate a payment plan or settlement with the lender to pay off any loan balance remaining after the lender sells the car at auction.


    Apply money that you are saving -- or will save -- from getting rid of the car to other debts.

Tuesday, April 28, 2009

How to Pay Bills at AXS Machines With Diners

How to Pay Bills at AXS Machines With Diners

Located in Singapore, AXS stations are interactive terminals that resemble ATM machines. Instead of dispensing money, like an ATM, however, the AXS accepts money for bill payment and payment of fines. AXS users can also top off prepaid cards, purchase movie tickets, pay for resort packages, purchase magazine subscriptions, book an NParks barbecue pit and make credit card payments. Diners Club International is one of many credit card processors that accept payments via AXS stations.



    Select "Bills" key on the right side of any AXS station.


    Select "Credit Card." Select "Diners Club International."


    Select "Insert Credit Card," "Scan Barcode" or "Manual Entry," whichever method is applicable to the method you would like to use to bring up your account.


    View the account details to ensure the system accessed the correct account. Press "Confirm."


    Select "Proceed to Pay" to make a payment. A payment summary screen will appear. Confirm the account information again.


    Follow the prompts to complete the payment.

Legal Implications of Unpaid Credit Card Bills

Legal Implications of Unpaid Credit Card Bills

Individuals cannot be sent to prison for failing to pay their credit card bills. Just because prison is not a consequence of overdue debt, however, that does not mean that refusing to pay credit card bills won't have significant legal implications. Credit card companies have the right to take legal action when attempting to collect overdue debt.


    When a consumer applies for a credit card, the credit card company requires him to sign his application before approving the new account. By signing the application, the individual agrees to the terms and conditions of owning the card--including the repayment schedule he must uphold. The credit card company then supplies the card and a full disclosure agreement containing the "fine print" credit card companies are famous for. The credit card company considers use of the card acceptance of its contract. By leaving his credit card bills unpaid, the consumer is violating the credit card contract he agreed to and leaving himself open to legal action.


    A credit card company may attempt to collect a debt a variety of ways. The most common ways credit card companies collect debt are through telephone calls and letters to consumers whose payments are late. If the company cannot collect using these collection methods, however, it has the option to sue the debtor for her unpaid credit card bills or turn her debt over to a collection agency which may sue her. In addition to the bills themselves, the creditor may add late fees, interest charges and its attorney fees to the amount requested in the lawsuit.


    The court will notify the debtor of the impending lawsuit via a summons. The debtor has the right to either attend a hearing and defend himself or ignore the summons. If the individual ignores the summons, the creditor wins the lawsuit by default. Once a creditor wins a debt lawsuit against an individual, it may request a writ of garnishment from the court. Through a writ of garnishment, the creditor can force the individual's employer to garnish his wages or force his bank to seize the full amount of the debt from his bank accounts.

Time Frame

    Although a creditor has the right to legally enforce unpaid credit card bills, it has a limited amount of time to do so in each state before the state's statute of limitations for debt collection goes into effect. Once the statute of limitations passes, the debtor may use the fact that the debt is "time-barred" as a defense against future lawsuits. If an individual does not know the statute of limitations in his state and is not aware of the fact that his unpaid credit card debt is time barred, the creditor may still obtain a judgment against him and take legal action to recover the debt.


    If a debtor is unemployed and lives on a limited income, a creditor's lawsuit may not be effective in forcing the debtor to pay. Title III of the Consumer Credit Protection Act limits wage garnishments to 25% of a debtor's disposable income. If the individual only works part time or is living below the poverty level, he may not have any disposable income for the creditor to legally seize. In addition, unpaid credit card debts cannot be garnished from exempt funds such as Social Security payments, child support, retirement funds and unemployment benefits.

Can a Non-Active Corporation File Lien Against Homeowner?

Can a Non-Active Corporation File Lien Against Homeowner?

Where corporations are concerned, non-active does not mean dead. In fact, with the exception of conducting business, there is very little an non-active corporation cannot do. This means that even though a corporation is non-active, it still may place a lien on your home. Fortunately, once a corporation moves from non-active to terminated status, the threat of it placing a lien on your home should cease to exist.


    A corporation may file a lien on a homeowner even though it is inactive. Dissolution is the process of terminating a corporation's existence. Dissolution does not happen instantaneously, it is a process. Dissolution may come about voluntarily or involuntarily. While every state has its own laws governing corporations, voluntary dissolution generally comes about when a corporation files articles of dissolution or similar documents with the Secretary of State. Involuntary dissolution, on the other hand, occurs administratively. Administrative dissolution happens when, among other things, the corporation fails to pay annual fees or becomes involved in fraud.

Winding Up

    An inactive corporation may file a lien on a person's home during the winding up process. The winding up process is the stage of corporate dissolution where the corporation's officers liquidate the corporation's assets and distribute the proceeds to the corporation's owners. The right to sue and recover money owed may be considered an asset. Accordingly, some inactive corporations may file suit and obtain judgment liens on people's property during the winding up process. Winding up occurs after the corporation files Articles of Dissolution with the Secretary of State.

Judicial Lien

    A lien allows the inactive corporation to sell the attached property, thereby turning it into more cash for its owners. However, the corporation typically would have to sue to obtain a lien. Lawsuits involve hiring and paying lawyers, as well as paying court costs and filing fees. Since the corporation is no longer operating, it is unlikely that it will incur the expense of pursuing a lien on a person's home unless the numbers justify it.

Certificate of Termination

    Once the Secretary of State issues a certificate of termination, the threat of a lien being placed on your home generally will no longer exist. The certificate of termination is like the corporation's death certificate. The Secretary of State's issuance of the certificate signals the end of the corporation as a legal entity. Corporations generally must file their state's equivalent of a request for termination after the winding up process is complete. By completing the winding up process, the corporation effectively says that all its affairs are complete and there is nothing left to be done.

Monday, April 27, 2009

Importance of Good Credit

The need to maintain a good credit rating is a fact of life. In order to get things that we need to survive, we need credit. Read on to learn the importance of maintaining a good credit rating and how it could affect your finances.


    Teetering on the line between moderate and good credit could cost tens of thousands of dollars. As the applicant's credit score goes lower, the interest rate on a mortgage goes higher.


    Employers are pulling more credit reports than applicants think. They view a potential employee's credit report as a reflection of your character.


    Utility companies check credit reports for financial history before agreeing to provide you with their services. Any sign of financial trouble could cost you a huge security deposit.

Personal Loans

    Those who are lucky enough to find an approval for a personal loan with less than perfect credit will pay high payments and huge interest rates.


    Potential landlords will often check your credit. If your credit is less than stellar, you may be denied that dream apartment you were planning on renting.

Sunday, April 26, 2009

Can I Pay on My Student Loans Before I Need To?

The typical student graduates about $20,000 in debt, so it makes sense to want to pay it off as soon as possible, but this is not always the wisest choice for wealth management. Student loan debt is usually viewed as a beneficial debt to have, because you invest in your education and earnings potential. If you have disposable income, however, it might prove wiser to pay off other debts first -- you may even avoid fines.


    All federal student loans carry no prepayment penalty. You can pay them off at once and the lender will close the account and report it in good standing.

    Private student loans often come with loan prepayment penalties because they earn profit from interest. Penalties can equal the amount of interest the bank loses on your advanced payment, and they sometimes charge even more to discourage prepayment.


    In the United States, lenders almost never charge a prepayment penalty fee to compete with federal loans and other lenders, according to Financial Web. If, for some reason, the lender does include prepayment penalties in your contract, prepaying would also ruin your credit because it is considered a contract violation.

Prepaying Student Loans

    Students usually have some of the lowest interest rates of any type of loan, especially federal loans which have a capped interest rate. If you have other debt, such as on a credit card, you would do better making minimum payments on your student loan and tackling the credit card debt and any other loan with a higher interest rate first, suggests MSN MoneyCentral.


    Calculate the interest rate on your student loan and the return on potential investments. If you have student loans at a rate of 4 percent, it would be wiser to put that money into an investment with a rate of return 5 percent or higher. It is not uncommon to see savings accounts that pay a better return than the interest on a federal student loan.

    There are downsides to keeping student loans. When shopping for a mortgage, you want a little debt as possible. If your student loans linger, you could damage your credit by missing a payment. Also, having extra income could entice you to live beyond your means. (ref 2)

How to Fix a Bad Credit File

How to Fix a Bad Credit File

Having a bad credit file can be worrisome. We all need access to a credit line of credit at some point. There are many reasons why your credit file is bad. It could simply be an error on your credit file. Maybe there was a late or missed credit card payment. It could be the bank didn't pay your regular monthly loan. Perhaps, your credit cards are up to or even over their limit. All of these can be contributors to a negative credit file. Fixing a bad credit file may take a little time and effort, but is moderately easy to achieve.



    Get all three credit reports: Experian, Equifax and TransUnion. Apply online to AnnualCreditReport.com, the official website sponsored by the three credit reporting companies. You can get your reports free once a year. The online application procedure is simple and fast. In less than 20 minutes you can view your reports online. Viewing your reports will let you see ways to fix a bad credit file.


    Review each credit file separately. The information may be different. Print off copies so you can make written notes. Check each line of credit for errors and highlight them. Write down the correct information, and then contact the credit reporting bureau in writing. Visit the Federal Trade Commission's website for the best way of correcting errors. Credit reporting bureaus aim to get errors rectified in 30 days.


    Check each credit file for late or missed payments. The reports list payment histories for each lender you have credit with. Identify any that have been missed or are late. Pay the lenders as quickly as you can afford to. Set up automatic payments for credit cards to pay at least the minimum each month. Once the arrears are paid and a few monthly payments are made on time, your reports will be updated. Your bad credit file is being fixed.


    Check to see how much credit you have used on your credit cards. Lenders like to see a good margin of credit available. Cards up to, or close to, their limit cause lenders to be cautious. Your report gets flagged and your credit file is affected. Pay off as much as you can, as quickly as you can, to bring card balances down. The faster you achieve this, the quicker a bad credit file gets fixed.


    Pay your monthly cell phone bill on time, if you have a contract. Cell phone companies report monthly to credit reporting bureaus for customers who are on a contract. This is a simple way to help ensure that once your bad credit file is fixed, it stays fixed. Apply the same rules for other utility companies. They all report to the bureaus.

8 Things You Must Know About Credit Card Debt

8 Things You Must Know About Credit Card Debt

Your credit card debt can seem like Mount Everest if you are unaware of the laws and debt techniques that directly benefit consumers. Conquering your debt takes planning and strategic spending coupled with communication between you and your credit card company. Sticking to your financial plan will prevent calls from collectors and negative credit marks on your credit report.

Credit Necessity

    Having some sort of credit is necessary to obtain a number of items, ranging from housing to vehicles to utilities for your home. Using your credit card to take on debt that you will later repay is necessary to bolster your credit score. Making payments on your credit card debt shows companies you are a reliable debtor.


    You must create a budget when you have credit card debt. Your budget should divide your monthly income into percentages for food, housing, miscellaneous expenses and debt payments. If you do not have a budget for your finances, you may struggle to repay your credit card debt at the end of the month.

Credit Amount

    Your credit card debt should equal no more than about 35 percent of your total available limit on your credit cards. For example, if you have two credit cards, each with a credit limit of $1000, you should keep the total debt under $650 for the two combined. Debt above this percentage could negatively affect your credit score. You can always obtain an additional credit card that you do not use in order to keep your debt ratio low.


    If you continually have problems paying your credit card debt, you may be able to negotiate a settlement with your credit card company. When a credit card company must choose between you not paying at all and defaulting, or accepting a settlement for lower than your actual debt, the credit card company will usually go with the latter. Ask for the settlement details in writing to prevent legal matters later.


    Monitor your credit report and credit card statement to prevent the unwanted consequences of unpaid debt or credit card theft. When you have high credit card debt, you may not notice if there is an additional charge that you did not make. Credit card theft occurs when someone illegally uses your card to pay for an item. Check your credit card statement weekly, and use your yearly free credit reports to see if other lines of credit have been opened in your name.


    During times of financial hardship, contact your credit card company to renegotiate the terms of your repayment, if possible. For example, if you cannot make the minimum payment for the next three months, inform your credit card company so it is aware of the situation. Using negotiation agreements can prevent bombardment from the collection department regarding your debt.

Minimum Payment

    Paying the minimum amount per month on your credit card debt does not affect your credit score. As long as you maintain the minimum payment, your credit card company will not report your account negatively to credit agencies. However, paying the minimum amount usually only covers the interest accrued on the credit card debt.

Legal Repercussions

    You cannot go to prison for failing to pay your credit card debt. Credit card companies can, however, file a civil lawsuit against you requesting that the debt is paid in full. A civil court can request for wage garnishment in some states but not for incarceration under any circumstances.

How to Consolidate Mortgages & Credit Cards

One way to eliminate credit card debt is to roll it into your mortgage loan. To do this, you'll need good credit, equity in your home and a loan that works for you. Just keep in mind that by adding your credit card debt into your mortgage loan could reduce the amount of money you make when you sell the home. The consolidation of your debts will use a portion of the equity in your home.


Consolidation Process


    Tell your mortgage lender you want a consolidation loan. A loan officer will take an application and examine your credit report to get a picture of your financial condition.


    Tell the loan officer which credit cards you want to roll into your mortgage. The lender will review your debt-to income-ratio.


    Choose a loan term that works and understand your interest rate. A fixed interest rate will make ensure your payment does not change. A variable rate could be lower but could rise in the future. A combination of a fixed and variable rate is also a possibility. Those rates are usually fixed for a set number of years, and then become variable.


    Review all fees. If you are offered a loan, make sure you understand costs such as points, title search and an appraisal fee. An appraisal will determine if there is enough equity to consolidate your debt.


    Let the lender pay your credit cards directly. Don't close your credit card accounts after they have been paid off.

How Debt Collectors Can Find Personal Bank Accounts

How Debt Collectors Can Find Personal Bank Accounts

Debt collectors have several options for collecting financial judgments. If the debtor refuses to pay the judgment voluntarily, the debt collector will need to find ways to access the debtor's assets, including bank accounts. Debt collectors use a variety of methods to find these accounts, including subpoenas, public record searches and a review of the original creditor's records.

Getting a Judgment

    Collection agencies cannot garnish wages, file property liens or take money out of a debtor's bank account without getting a court judgment against the debtor. If a debtor does not voluntarily pay the judgment, the collection agency can forcibly seize the debtor's assets, including his wages and bank accounts.

Attaching a Bank Account

    To attach or levy a debtor's bank account, the creditor or collection agency must first locate the account and then ask the local sheriff to seize the money in that account. A creditor or collection agency cannot take the money from an account on their own; only the sheriff can ask the bank to turn over any money in the account.

Court Examination

    If a creditor or debt collector takes a debtor to court, the creditor can question the debtor under oath about the location of any of his accounts. With this information, the debt collector can then attach the bank account and claim any money owed.

Public Records

    Divorces, evictions and bankruptcies are a matter of public record. An inquisitive collection agency employee can search these records which may include details of a divorce or bankruptcy settlement. If the documentation mentions the name or names of the debtor's bank, previous landlord or other creditors, the collection agency representative can use this information in his search for the debtor's assets.

Checks, Creditor Records and Subpoenas

    Checks contain both the name of the writer's bank as well as the account number. If a debtor wrote a check to a collection agency or the original creditor, either organization can use this information to attach the debtor's bank account. A debt collector may also subpoena banks and other creditors in hopes of gaining access to their files on the debtor. Credit applications often include the name or names of the creditor's banks and investment brokerages, which gives the debt collector the information it needs to proceed with an attachment.

Saturday, April 25, 2009

What Could Legally Happen if Cash Advances Are Not Paid?

What Could Legally Happen if Cash Advances Are Not Paid?

A cash advance is a type of loan typically provided by credit card companies to customers in which the company provides cash to the customer through an automatic teller machine or similar system. Like any other kind of loan, failing to repay cash advance can lead to significant legal troubles. Consult an attorney if you have taken out a cash advance loan and need specific information about the potential consequences in your state.

Interest and Fees

    When you use a credit card to make a purchase, your credit card issuer typically charges you interest on that purchase at a certain percent per year, known as APR. If you use your card to take out a cash advance, these typically have APRs associated with them that are significantly higher than the standard purchase APR, according to Bankrate.com. Further, unlike the interest rates on purchases, cash advance interest begins accruing immediately once you take the money, and may also be accompanied by a fee equal to a small percentage of the amount you withdrew, typically between 2 and 4 percent.


    If you fail to pay back a cash advance loan by failing to make your regular credit card bill payments, your credit card company can refer or sell the unpaid debts to a collections agency. A collections agency can then try to convince you to repay the loan to them by calling you, writing newsletters and generally pursuing you until you satisfy the debt. Federal law offers you some protections against aggressive or harassing debt collectors, but they can continue their efforts as long as the debt is unpaid.


    In the worst-case scenario, failing to pay back your cash advance loan can result in your credit card company suing you for the unpaid debt. Credit card companies do not require you to give up some form of collateral when you get your credit card. Because of this, credit cards are known as unsecured debt. With unsecured debt, the only way the creditor can ensure it recovers the unpaid money is if it sues you in court and wins. When this happens, the creditor may be able to garnish your wages, seize your property or take money directly out of your bank account.

Credit Score

    When you fail to pay back your cash advance on time, your late payment gets recorded on your credit report and lowers your credit score. Though credit score calculations differ widely, when the largest factors that makes up your score is your history of payments. When you fail to make a payment on time this lowers your score, and the longer you go without making the payments, the greater the impact.

Rights When Credit Debt Cannot Be Paid

The Fair Debt Collection Practices Act is a federal law clearly outlining what debt collectors can and cannot do as they attempt to collect from you on credit cards and other debts. The intent of the law is to allow debt collection without the use of fear and intimidation. Debtors have several important rights.


    People pursued by debt collectors have the right to choose how they wish to communicate with the debt collector. The law forbids calls from debt collectors at odd hours, such as before 8 a.m. your local time or after 9 p.m. Debtors also have the right to demand, in writing, that the debt collector not call at all, and place all communication in writing. Also, debt collectors contacting a debtor at work cannot tell the person's employer what the call is about unless the employer asks.

Legal Advice

    Everyone has the right to hire an attorney when facing debt problems, and debt collectors must communicate only with the attorney if told to do so in writing by the debtor. This is one reason why hiring an attorney is often helpful. Collection agencies work on commission and love easy targets such as frightened debtors unaware of their rights. The presence of an attorney makes the debt collector's job much tougher and usually guarantees that all the debtor's rights are protected.


    Debt collectors cannot threaten an action unless they intend to follow through. That means a debt collector cannot threaten to file a lawsuit unless it intends to do so. The same is true for threatening to garnish wages, repossess autos or harm credit ratings. The Fair Debt Collections Practices Act does not allow debt collectors to issue any false threats in an attempt to collect.


    The law requires that a debt collector filing suit do so in the county that the debtor resides. The debt collector cannot create an unreasonable burden on the debtor by filing suit in a court far away from the person's residence. The debtor also cannot attempt to intimidate the debtor by sending counterfeit or false letters that appear to come from a court or judge.


    Debt collectors, upon request, must verify that they have a legal right to collect a debt. Debt collectors must notify people in writing as they start collection efforts. Usually the debtor makes phone contact first and follows up in writing. The debtor then has 30 days to request in writing that the debt collector verify the debt by sending a copy of the last statement or a copy of the original contact. Federal law prohibits the debt collector from continuing collection efforts until verifying the debt.

How to Get Credit Card Companies to Reduce Interest Rates

Reducing interest rates on your credit cards can help you pay off debt faster. But convincing credit card companies that you deserve a reduction in interest rates can take some time. The better your credit score, the more likely you will qualify for a reduction. If you make timely payments and carry a low balance, your chances of a reduction are even better. When contacting a credit card company, use your credit history and payment history as leverage. Ask to speak with a supervisor if the customer service representative cannot help.



    Obtain a free credit report to determine if your credit score is good enough to warrant a reduction in interest rates on your credit cards. If your score is over 700, you don't carry a large balance (should be less than 35 percent of the maximum limit) and you make timely payments, you may be eligible for an interest rate reduction.


    Research other credit card companies to learn more about their interest rates and what you could qualify for. Even if you decide not to apply for a new credit card, use this information when contacting your existing credit card company. Mention that you may switch to the competitor because of the lowered interest rates you would receive.


    Contact credit card companies by phone or send a letter outlining your request. Mention how long you've been a customer and why you feel you deserve a reduction in the interest rate.


    Be persistent when speaking to a customer service representative. Ask if there are special offers for loyal customers. Ask for specific reasons why you don't qualify for an interest rate reduction.


    Apply for a credit card with lower interest rates if your credit card company will not reduce your interest rates.

Is There a Time Limit for Payday Loans?

When a person takes out a payday loan -- a loan that charges him a high rate of interest and is meant to be paid back in a short time -- he will be given specific conditions for repayment. Generally, he must pay back the loan within several days to a month. If he defaults, then he likely will be hit with punitive rates of interest and fees.

Payday Loans

    Payday loans command extraordinarily high rates of interest, up to 400 percent in a single year. Yet, for people who do not have access to short-term credit, they can present a means of bridging a cap in income. The two time limits that exist on these loans are the time limit on repayment and the time limit on the collection of the debt if it is not repaid.


    When a person takes out a payday loan, the lender will tell her exactly when the loan is due. More often than not, the lender will require that she offer a form of payment up front, either a postdated check or a checking account number. If she doesn't pay by the date on which payment is required, money will be take out from her account by the lender.

Debt Collection

    If a person misses the deadline for repayment, he can expect to be forced to pay additional fees on the loan. These fees may be for missing the deadline to pay or, if his account was drawn on but did not have enough money in it, for causing a check to bounce or a transaction to not go through. Under some payday loan schemes, these fees will be reapplied each month and snowball in size.

Statute of Limitations

    If a debt collector comes after the debtor for payment of the debt, then she will have a certain time within which she can file suit for collection of the debt. Technically, the debt collector can pursue collection of the debt forever. However, the debtor will not have many means of getting paid without suing first. Each state has its own statute of limitations on filing lawsuits for debt.

What Is the Statute of Limitations for Collecting a Debt in Oregon?

Statutes of limitation are time limits imposed on creditors and debt collection agencies for collecting on a delinquent debt by the courts. The statutes of limitation on debts vary from one state to the next. If you live in Oregon and are being hounded by debt collectors, knowing when it's no longer legal for them to try to collect can empower you to take action against such harassment.

Maximum Years

    In Oregon, debt collectors cannot pursue you for more than six years. Oregon has a simple statute of limitations on debts, meaning that the six-year maximum applies to all debts, such as those created by written contracts, oral agreements and even promissory notes. However, federally backed educational debt is exempt from this limitation.

When the Clock Starts

    The time toward the expiration of a date typically begins on the date of last activity, such as a last payment or when the original debtor wrote off the account. This information can be found on your credit report.

What to Do

    You may inadvertently restart the clock on unpaid debts when talking to debt collectors, essentially extending the amount of time they have to collect from you. Activities that do can include admitting that you owe the debt or agreeing to send any money. Thus, when speaking to debt collectors, avoid admitting that the debt is indeed yours, according to BCS Alliance. Rather, ask them to furnish proof, via mail, that the debt truly belongs to you.

What to Expect

    During the years a company has to try to collect on a debt, it may contact you via phone or mail. However, you can legally stop collection calls or letters by writing to the collection company asking that they seize communications. Despite that, a company can take you to court to try to force you to pay the debt through a judgment. A judgment will stay on your credit report for 10 years. In Oregon, 75 percent of your earnings are protected from court-ordered wage garnishment.

Friday, April 24, 2009

The Consumer Credit Act Explained

The Consumer Credit Act Explained

The Consumer Credit Act was passed in the United Kingdom in 1974. The Act was then amended in 2006. The Consumer Credit Act applies to financing, including credit cards, personal loans and hire purchase agreements.

Extending Credit

    The Consumer Credit Act requires any business that provides loans, credit cards or extends credit to customers for goods and services to register with and be licensed by the Office of Fair Trading.


    The Consumer Credit Act requires lenders to disclose the terms of the loan including the loan amount, interest rates, monthly payments, loan fees and cancellation options.

Payments in Arrears

    Under the Consumer Credit Act of 2006, if a consumer falls behind by at least two payments, the creditor will send a notice within fourteen days and may only send notices at a maximum of every six months. If the creditor fails to give notice to the consumer, the consumer is not liable for any interest accrued during the time when notices were required to be given.

Unfair Relationships

    The Consumer Credit Act of 2006 prohibits unfair relationships between creditors and consumers. For example, creditors may not change the terms of the agreement.


    The Consumer Credit Act does not apply to credit extended for business purposes that exceeds 25,000 or hire agreements in which payments exceed 25,000.

Thursday, April 23, 2009

What Can Creditors Do to You?

Don't think that a creditor is powerless when you default on an account. Creditors have rights to recover money owed to them. If you fall behind on payments due to financial hardship, communication can keep your credit rating in good standing. If not, creditors can take various actions to obtain delinquent funds.

Collection Agency

    If creditors do not receive a payment after a few months, they will most likely refer your account to a collection agency and notify the bureaus of the collection account. This notation lowers your credit rating and the collection account remains a part of your credit history for the next seven years. Paying a collection account does not remove it from your credit history.

Court Hearing

    Creditors give debtors plenty of time to pay a collection's account before filing a lawsuit with a court to collect the debt. Going before a judge in a hearing can bring on further credit damage because the verdict may result in a judgment on the debtor's credit report. Like collection accounts, judgments remain for seven years and decrease credit ratings. Attending a court hearing can serve a debtor's advantage if he does not owe the creditor and can provide evidence of this. The judge listens to both sides and then makes an informed decision based on evidence presented.

Wage Garnishment

    Debtors with previously bad credit may express little concern over a credit judgment, and make no plans to settle the judgment. Given the circumstance, creditors can submit a petition to enforce a credit judgment and obtain a wage garnishment order. A wage garnishment helps creditors recover monies owed from a judgment verdict. A sheriff serves employers with the order from the court, and employers subtract a specific amount from the debtor's paycheck.

Bank Lien

    If a creditor does not have information on the debtor's employer, but has banking information for the debtor, creditors can skip wage garnishment and petition the court for authorization to seize or put a lien on the debtor's bank account. Bank liens freeze the account, and creditors can lay claim to funds deposited into the account. Some funds, such as unemployment compensation, alimony and child support, are exempt from bank liens. However, debtors must deliver evidence of exempted funds to have a lien released by the creditor.

How to Get a Loan to Clear Up My Debt

If you owe money to many different creditors, you may find yourself paying only the minimums on all your accounts each month, so your total debt load never decreases significantly. Taking out a large loan to clear up or consolidate all your debts would allow you to make just one monthly payment, as opposed to many smaller ones. Finding a loan with a lower interest rate than you have on your existing debts can also mean that you can pay down more debt each month so that your debt will be paid off faster.



    Talk to close relatives and friends about extending a personal loan to you. Someone who understands your financial situation and has the means to help may be willing to lend you the money to clear your debts without charging you interest. This means that everything you pay the person each month will go directly to paying off your debt, not interest.


    Seek out a personal loan with a low interest rate if you can't get a no-interest personal loan from a friend or relative. Credit unions or the bank where you have an account may be willing to offer you a loan with good terms. Shop around rather than taking the first offer that sounds good to ensure you get the best loan possible.


    Fill out the required loan documents and the loan officer necessary documentation, such as proof of income, proof of residence and valid identification. Because personal loan lenders typically run credit checks, it's wise to check your credit report and dispute inaccuracies that may be dragging down your score before applying for a personal loan. This will ensure you get the best rate possible.

Wednesday, April 22, 2009

How to Find Out How Much I'm in Debt

One of the first steps in creating a debt management strategy for your household is to know what kind of problem you are dealing with. Your debts probably include a few different types of loans or credit accounts, ranging from a mortgage to student loans, car loans, personal loans, home equity loans, credit cards, medical bills, accounts in collection, retail store credit lines, loans from family members or even payday loans. Adding up all of your debts can be sobering, but it will help you develop a repayment strategy that is financially best for you.



    Gather all of your bills from the past month. If you have online billing for any of your debts, sign into the accounts online to obtain information from your most recent bill.


    Look up the remaining balance listed on each of the bills. This also may be listed as "amount owed" or "principal balance" in some cases. Subtract the amount of the payment you made on that bill, if you have already sent in your payment for the month.


    Write down the name of each debt and the amount owed on a piece of paper.


    Obtain a free copy of your credit report from each of the three credit bureaus through the Annual Credit Report website. If you have already received your free report this year, you will have to pay for the report.


    Compare the amounts owed on each of the accounts listed on your credit report to the list you made from your bills. Some of the amounts may be different if your lenders have not yet updated the credit bureau on your payments or charges from the current month. If the amounts are radically different and you do not know why, call your lender and ask for an explanation of the discrepancy between your bill and your credit report.


    Identify any accounts listed on your credit report that you did not already have on your list. If you are aware of the account, find the current bill by looking through your household paperwork or logging into the online account. If you were not aware of the account, look up the lender's phone number and call to find out what the debt is from and what the current amount owed is.


    Add up the total amounts owed from all of the debts on your list. This is how much you are in debt.

6 Reasons Why Credit Reports Are Important

As you obtain and manage credit, your creditors report information to three credit bureaus in the United States: Experian, Equifax and Transunion. These agencies compile credit histories that contain information about the types of debt you owe, the timeliness of your debt payments, and the length of time you have held debts. As a consumer, you should periodically check your credit report for six important reasons.

Purchasing Power

    Obtaining your credit report can give you an overview of your creditworthiness, which can help you determine your credit purchasing power. A credit report that reflects a history of late payments or charge-offs may prevent you from obtaining credit cards, obtaining a mortgage loan or buying a car. If a lender is willing to accept you as a risk, it may charge higher interest rates if you have a poor credit history.

Rebuilding Credit

    By reviewing your credit report, you can identify areas that need improvement in order to raise your credit score. If you have a history of late payments, for example, you can focus on making your payments on time to rebuild your credit. If you score suffers because you have no credit history, obtaining a credit-card with a limit of $500 or less and paying the balance each month may increase your creditworthiness.

Identifying Errors

    Although most consumers assume that items appearing on their credit reports are valid, mistakes happen. A credit bureau may erroneously report another person's debt under your name, or a creditor may neglect to report a debt you have paid off. Reviewing your credit report can help you identify areas so you can file an investigation request with the credit bureau.

Identifying Identity Theft

    Inaccurate entries on your credit report may also be indicators of identity theft, which occurs when another person uses your identification to obtain unauthorized credit. If you find debts on your credit report that you did not initiate, you can file a dispute with the credit bureau to begin an investigation. If the credit bureau agrees that you did not initiate a debt, it will typically remove it from your credit file.

Public Records

    Credit reports contain information about public records, such as bankruptcy filings, judgments and liens. Although most people are aware of bankruptcies, some incur money judgments or property liens without their knowledge. Obtaining your credit report can help you identify liens and judgments, allowing you to contact creditors to reach a resolution.

Employment, Renting and Insurance

    Creditors are not the only entities that use information from your credit report. Some employers review your credit file to determine your level of financial responsibility; if you have a poor credit history, the employer may not offer you a job. Rental agencies, landlords and insurance companies also commonly use credit information to evaluate applicants.

Can I Be Sued for an Unpaid Judgment?

Cleaning up your credit history may involve satisfying old judgments. An unpaid judgment on your credit report can reduce your score, and this can look bad when applying for other loans or credit cards. Failing to pay a judgment can prompt a response from your creditors. It is prudent to take steps to avoid the repercussions of an unpaid judgment. However, a creditor cannot sue you for an unpaid judgment.

What is a Judgment?

    Credit judgments are orders by a court to pay a creditor. Judgments are one type of negative item that can appear on your credit report, and judgments can blemish credit reports for a period of seven years. Reduced credit scores, credit rejections and higher interest rates are common results of a judgment on your credit report.

Process of a Judgment

    Creditors and collection agencies receive a judgment order against you after filing a lawsuit and suing you in court. The court hearing provides you and the creditor the opportunity to go before a judge and address the situation. You can challenge the lawsuit and show evidence as to why you don't owe the creditor. The judge rules after hearing both sides, and if found liable for the debt, you're ordered to pay the creditor.

Ignoring a Judgment

    After a judgment, you're given 30 days to pay the balance or satisfy the debt. Options include paying the outstanding debt in full or paying the debt with installment payments. If a judgment goes unpaid, the creditor or collection agency will not file another lawsuit or sue you again. However, the creditors can return to court and notify the court of the unpaid judgment. Returning to court gives creditors the opportunity to collect the debt in other ways.

Recovering an Unpaid Judgment

    Creditors can apply to collect an unpaid judgment using several different methods. They can approach the court for an order to seize or place a lien on your bank account, whereby the bank freezes all funds in the account. Creditors can also collect an unpaid judgment through a wage garnishment, where your employer withholds a percentage of your pay each check, and then forwards this money to your creditor as repayment for an unpaid debt.

Tuesday, April 21, 2009

Do Debt Relief Agencies Work?

Do Debt Relief Agencies Work?

If you are drowning in debt, online offers of consolidation and management programs can seem like a mirage in the desert. However, only reputable debt relief agencies provide a valuable service to consumers in need of assistance who wish to avoid bankruptcy. They all claim to be legitimate; the trick is finding the organizations that are telling the truth.

How Debt Management Relief Works

    First, you need to contact a reputable agency and provide the representative with your personal background and creditor information, including account numbers and balances. The agent then contacts the creditors and negotiates a lower interest rate, payment or both. In exchange, the credit line is closed. Payments are made on a monthly basis, and the debt typically is eliminated within five years. You may combine many loans into one payment, but you must already be behind or about to fall behind on your payments to qualify. Home loans are not eligible for this program.

Management vs. Settlement

    Debt relief agencies use management and settlement solutions, but do not provide loans. If you do not have the means to pay on a monthly basis, settlement may be an option. However, you must be willing to satisfy the settlement, usually about 40 percent of the balance, in cash at the end of the waiting period. This usually takes about six months. You must also be willing to tolerate many calls from the collections department.

Best Debt Relief Agency

    Contact the National Foundation for Credit Counseling. This nonprofit agency is "the nation's largest and longest serving" organization devoted to helping consumers get out of debt. The agent will give you a free consultation and help you determine which path toward debt relief works best for you. The NFCC does not provide loans, but they can assist you with management or settlement options. The services aren't free, but they are legitimate and effective.


    Don't be fooled by a scam debt relief agency that wants you to pay high fees up front. Also, be advised that it's illegal to establish a new taxpayer identification number, or EIN, for the purposes of obtaining a "new" or "clean" credit report. It also is illegal to hire someone to convince the creditor that you don't owe the debt.

    Also, be advised that both management and settlement options can negatively affect your credit. A lender may report to credit bureaus that you've entered a debt counseling program, and a settlement will show as "settled' instead of "paid in full." However, late payments cause the most harm to your credit, and you may have those already. In that case, debt relief may be just what you need.

How to Avoid a Financial Judgment

A financial judgment can takes its toll on your personal budget. This is a court-ordered payment that you must make to a debtor, and cannot only wreak havoc on your credit, but also land you in legal hot water if you don't pay the amount of the judgment in a timely fashion. Your best bet is to avoid a judgment at all costs; even if the court date has been set, it may not be too late for you to work something out with your creditor.



    Look over your monthly budget and figure out what you can offer your creditor to satisfy your debt. Even if you cannot pay it in full, some creditors will settle for a percentage of what you owe. Be realistic and don't offer an amount you know you cannot pay or that will put you further in the hole with other debtors.


    Contact your creditor and try to set up a last-minute payment arrangement . They might not want to hear what you have to say because they likely tried to pursue this avenue previously; however, it is at least a show of good faith on your part that you are trying to make things right. Ask if you can have a payment plan and explain what you can offer. They might want to pursue a judgment anyway, just to be sure you actually pay.


    Show up to your court date if your creditor does not want to negotiate. You may be able to negotiate in the court room if you have a solid reason for not paying your debt. In most instances, if your debt is legitimate, the court will side with your creditor but may show you leniency in terms of your repayment conditions. Either way, avoiding the court date or dismissing it altogether only shows further carelessness on your part.


    Ask your local legal aid office for assistance. Bankrate.com suggests bringing legal counsel to court with you to help you navigate what is a very complicated process. Not only can an attorney help to negotiate with the courts on your behalf, but they can help you follow proper procedures in the courtroom. You can also ask your local bar association if there are attorneys in the area that do this kind of work pro bono.

Monday, April 20, 2009

Statute of Limitations on Federal Debts

Generally, there is a 10-year statute of limitations that applies to federal tax debt. The clock starts ticking not when the tax is due, however, but from the date on which you file a federal tax return. It behooves you, then, to file the return as soon as possible. Further, there is a three-year statute of limitations that applies to audits.

Applicable Law

    The law that governs the statute of limitations on federal tax debt is Section 6501(a) of the Internal Revenue Code, entitled Limitations on Assessment and Collection. This law also requires any taxes to be assessed within three years of any return being filed. However, fraudulent returns may not qualify for the three year statute. If the IRS determines the return was fraudulent it can assess the tax at any time.

Exceptions to the Statute of Limitations

    If you file a fraudulent return, the statute of limitations does not apply. The Internal Revenue Service may come and assess the tax, along with interest, penalties and even criminal charges at any time.

Applicability to Collection Efforts

    Occasionally, the IRS will reach an agreement with a taxpayer to accept past due taxes spread out over time, according to a payment schedule. When this is the case, the IRS will typically require that all taxes due be paid before the 10-year statute of limitations ends.


    If the effort to repay your debts has become hopeless, bankruptcy may be an option. However, federal debt is not always subject to bankruptcy relief. Generally, in order to qualify for discharge in bankruptcy, debts owed to the IRS must be at least three years old. Some debts, such as those incurred as a result of defaulted student loans, are not subject to bankruptcy discharge at all, except in cases of severe personal hardship.

Will Paying Off Delinquent Debt Improve My Credit Score?

Eliminating Deliquent Debt

    Delinquent debt follows a debtor for seven years or more, depending on the type of debt it is. Paying off the delinquent debt decreases the amount of debt and stops late payment marks from being added to the credit report. Certain loans, such as mortgage loans, may require delinquent accounts to be brought current.

Updating Deliquent Accounts

    Collectors and creditors may not update an old delinquent account until a payment or other type of account activity is made. When a delinquent account has a recent activity date it can have adverse effects on the credit report. Old collections that have fallen off the credit report may reappear due to payment.

Bottom Line

    Paying off delinquent debt improves the credit report in most cases. Creditors look more favorably on reports with paid collections and delinquent debt than those ignoring their credit obligations. A recent activity date on older collections may cause a slight credit score drop but the drop is usually balanced out by the increase from paying off the delinquent debt.

Is a Reposession Worse Than a Foreclosure?

When an individual has an asset repossessed by a creditor or undergoes a foreclosure, the financial damage sustained by the individual goes beyond the loss of property. In many cases, the individual may face additional debts related to the costs incurred by the creditor in the course of the repossession and the foreclosure. In addition, the individual may see a drop in his credit score, making it harder for them to take out loans at reasonable rates.


    Generally, a person will only have a piece of property repossessed if he has placed it as collateral on a loan, usually one to pay for the purchase of the property, and then defaulted on the loan. The most common item to be repossessed is a vehicle. After a creditor repossesses a vehicle, he will generally sell it. If the amount the creditor receives for the vehicle is not enough to pay the costs incurred by the creditor in repossessing the vehicle and the amount outstanding on the loan, the debtor must pay the difference.


    When a person takes out a mortgage on a home or other real estate, he will generally put up the property as collateral on the loan. If the person does not pay back the mortgage on time, the lender may attempt to foreclose on the home, meaning that the lender takes possession of the property and the tenants are forcibly evicted. If the outstanding debt on the mortgage exceeds the value of the home, the mortgage holder may owe the creditor additional money.


    In financial terms, the damage sustained by a person when he loses a home is usually worse than when a piece of property is repossessed. The average cost of a home is higher than the average cost of a vehicle. However, the total loss sustained by an individual will depend on how much money he put into the home as compared to the vehicle, and how much he is left owing after the property has been seized.

Additional Costs

    In terms of an individual's credit score, the relative damage of a foreclosure and repossession will depend on the amount of debt that was written on by the creditor. Generally, the more debt that a credit writes off on a loan, the more damage the write-off does to an individual's credit report. However, according to U.S. law, both foreclosures and repossessions can stay on an individual's credit report for a maximum of seven years.

How to Cancel a Debit With RBS Digital

How to Cancel a Debit With RBS Digital

The Royal Bank of Scotland, commonly referred to as RBS, is headquartered in Edinburgh and has branches across the United Kingdom. This bank provides various types of services including loans; saving and investment opportunities; life, travel, car and home insurance; and banking. Checking account holders are provided with a debit card to pay for goods or services without using cash or checks. You can schedule direct debits with RBS through your online account (RBS digital). If you wish to cancel a debit, you can also accomplish this by accessing you account online.



    Log in to your checking account at RBSDigital.com


    Click "Payments" -- displayed on the left menu of your online banking page.


    Click the option for "View or cancel existing Direct Debits" -- displayed beneath the section with the heading "Direct Debits."


    Click the debit you want to cancel from the list of upcoming debits, then click the button labeled "Cancel Direct Debit." Follow the prompts that follow to confirm you wish to cancel this debit.

How to Pay off Debt Using the Power of Amortization

How to Pay off Debt Using the Power of Amortization

Amortization is the term used to indicate the end of a debt or the process to reach the end of a debt, typically through regularly scheduled payments of principal and interest. Like the word mortgage, its root comes from the French word "mort," meaning "death." Most people welcome the death of debts and mortgages, and you can speed up the process of eliminating them in a number of fairly painless ways. The longer you take to pay off your debts, the more interest you pay on them and the more they cost you.



    Make as large a down payment as possible when you first take on a mortgage. The more you pay up front, the less you owe and the more quickly you are able to reach the point of amortization for your mortgage.


    Refinance debts and mortgages if interest rates and conditions become advantageous to you. Most fixed rate mortgages have designated renewal periods. If interest rates are lower at the time for renewal than they were when you first took out the mortgage, refinance your debt and pay less interest on it. Consult with your banker about options for reducing the interest rates on any debts you have.


    Apply the money that was going to one debt to the next debt as soon as you amortize the first one. By doing this, you can budget a consistent amount of money for paying off debts over time. The rate at which debts are amortized increases as you apply the same amount of money to fewer and fewer debts.


    Shorten the date of your mortgage amortization by making payments every two weeks rather than monthly. This simple act reduces the amount of interest you pay, because you pay additional principal every year.


    Prepay as much as possible on mortgages and other debts with set payment schedules. While scheduled payments are applied to both principal and interest, 100 percent of a prepayment is applied directly to the principal of a debt. Making a prepayment at the beginning of every year can substantially shorten the length of a debt or mortgage and accelerate amortization.

Friday, April 17, 2009

How To Pay Debts on Disability

Social Security Disability is a supplemental income plan extended to individuals who are unable to work and maintain an acceptable standard of living due to a terminal medical condition or one that is expected to last longer than one year. Disability benefits are typically minimal, and many individuals living on disability payments alone find it challenging to meet their monthly bills. Although being on disability does not alter your legal obligation to repay your debts, it does alter the methods most creditors may utilize to collect from you.



    Make a list of all your current debts, including mortgage or rent payments, your car payment, utilities and credit cards. Add up the average cost of all of your debts over the course of the month.


    Compare the cost of your monthly bills to the amount of money you receive in disability benefits. If your debts exceed your benefits amount, or are so high that you have reason to believe you may not be able to pay each debt satisfactorily, you will need to prioritize which creditors you will pay.


    Set aside money to cover your rent or mortgage payment, car payment, and utilities first. Not paying these debts can result in dire consequences, such as the repossession of your property or the discontinuation of necessary household services, such as electricity.


    Pay debts that you owe to the government after your primary bills are paid. Some examples of government debts are student loan payments, child support payments and tax debts. Not paying money that you owe to the government can result in the withholding of any tax refund you expect to receive and garnishment of your disability payments.


    Allocate funds to pay unsecured creditors last. Common unsecured debts are credit cards and personal loans. Private creditors to whom you owe an unsecured debt cannot repossess any property in the event that you fail to make payments as agreed. Although these creditors have the option to sue you for the debt, collecting from you after a successful suit may prove impossible unless you submit payment voluntarily. Private creditors do not have the legal right to garnish your disability payments.


    Keep a record of each bill that you pay, the date it was paid and much money you have left to pay other bills. Proper money management techniques will help you pay as many debts as possible while living on a limited income.

Thursday, April 16, 2009

How to Find a Debt Management Company

Debt management companies are usually nonprofit credit counselors, such as those affiliated with Consumer Credit Counseling Services. The agencies specialize in debt management plans, which allow you to restructure much of your debt with the cooperation of your creditors. The counseling agency develops a plan for paying off or greatly reducing much of your unsecured debt -- such as credit cards -- over a four-year period. You are charged a monthly management fee, and must also send a lump-sum payment to the counseling agency each month. The agency uses that money to pay your unsecured creditors.



    Find credit counseling agencies in your area approved by the U.S. Department of Housing and Urban Development. Get phone numbers by visiting the HUD website (see Resources).


    Conduct telephone interviews with several agencies. Ask questions about fees, possible pitfalls and the agency's overall success rate in helping customers with the plans. See a complete list of questions to ask at the FTC website (see Resources).


    Choose a counseling agency offering debt management plans after conducting your telephone interviews.

What Is the Best Way to Pay Off My Credit Card Debt?

What Is the Best Way to Pay Off My Credit Card Debt?

The best way to pay off credit card debt isn't drawing from your home equity or borrowing from your 401(k) savings. Rather than liquidating your personal assets to pay down debt, the Federal Trade Commission and other credit experts recommend you do it the old-fashioned way: form a budget and stick with it, limit card use and devise a repayment plan with the help of a certified credit counselor.

Restrict Card Use

    Avoid adding more debt onto existing credit cards. Use cash to pay for most routine purchases to prevent buying unnecessary items. Make it difficult to access your credit cards. Doing so helps reduce your temptation to use them. For example, freeze your cards in ice or store them in a safety deposit box at your bank. Keep one card available for emergencies.

Form a Budget

    Create a realistic budget. Track all your expenses for at least two months and subtract these expenses from your income. Reduce your variable costs by 10 percent and direct those savings toward paying down credit card debt. For example, take your lunch to work rather than eat out, carpool with a friend or co-worker to save on gas, shop at discount stores for food and clothing and subscribe to a DVD mail service for entertainment instead of going to the theater.

Choose a Method

    Choose a method to pay down your credit cards. Select either the card with the highest interest rate or the card with the lowest balance to pay off first. Apply the savings gleaned from your new budget to pay down the selected card's balance. When the card has a zero balance, continue this method to pay down the next card. Pay the minimum balance on all your cards to avoid accumulation of late fees and other penalties.

Seek Outside Help

    Consult a nonprofit credit and debt counseling agency to design a debt repayment plan for you if you cannot meet your minimum payments or need help negotiating with creditors. A certified counselor can assess your debt, determine what you can afford to pay and often can get creditors to waive late fees and stop future interest charges, giving you more time to pay off your debt. Find a reputable counselor through your local university, military base, housing authority, church or synagogue.

Manage Your Credit

    Limit the number of credit cards you use. Set one card aside for financial emergencies. Rotate your other cards using them for small purchases only once or twice a year to keep them active. Avoid allowing fees to accumulate on your cards and resolve to pay off the balances each month. Doing so will help you avoid paying interest charges and keep you from falling back into debt.

Garnished Wages Laws in Portland, Oregon

Garnishment of wages is a legal action that compels the employer of a debtor to pay some of the debtor's wages to a creditor. The creditor can be a private party, business or government entity. Wage garnishment is regulated by state and federal laws. These laws address the amounts that can be garnished and procedural rules.

Wage Garnishment

    Wage garnishment is a legal action that creditors use to collect money from debtors that owe them money. It legally compels the employer of the debtor to pay some of the debtor's wages directly to the creditor. Garnishments are used by private, commercial and government creditors. The most common types of debts involved are for child support payments, student loans and taxes. Private and commercial creditors usually need to have a valid judgment against the debtor to use a garnishment. Government entities most often need to follow certain administrative procedures to use garnishment, without needing a judgment.

Federal Law

    The federal Consumer Credit Protection Act regulates the amount of money that can be garnished from the debtor's wages. The act limits the amount that can be garnished based on the type of debt involved. Garnishments for collection of debts from private creditors is limited to 25 percent of the debtor's weekly net pay or the amount of weekly pay that exceeds 30 times the hourly minimum wage, whichever is less. For court orders regarding support payments, garnishment can be up to 60 percent of the net pay. Student loan garnishments are limited to 10 percent of net pay. Garnishment amounts regarding taxes or bankruptcy proceedings are regulated by the taxing entity or bankruptcy court.

Oregon State Law

    Procedural issues regarding wage garnishment are controlled by Oregon state law in Portland, Oregon. A wage garnishment can only be applied by properly serving a legal order called a writ on the debtor's employer. A copy of this writ must be given to the debtor-employee, who has between 30 and 120 days to legally challenge the writ. The employer must start paying the allowed amount of garnishment, even if there is a filed challenge by the debtor-employee. Writs from private creditors expire in 90 days or until paid in full or cancelled. Writs from other creditors do not have an expiration date.

Other Provisions

    The federal act considers net wages to be the gross amount of wages less all legally required deductions. This includes all taxes and Social Security. It does not include deductions for things like retirement contributions or medical insurance. The maximum garnishment amount as stated in the act applies to the total for all garnishments. State law allows an expired garnishment writ to be reissued if the debt is still present and valid. Both federal and state law prohibit an employer from firing an employee because of a garnishment.

How to Pay Off a Debit Card Before It Can Be Activated Again

How to Pay Off a Debit Card Before It Can Be Activated Again

A debit card is tied to your checking account and can be used to make purchases or withdraw money from an ATM. If your checking account goes into the negatives, you owe money to the bank, and you won't be able to use your debit card until you repay the money. The bank can also close your account if you don't repay the money within a certain time, which makes it even more difficult to reactivate your debit card.



    Call your bank and ask if your bank account is still open. Most banks will close your checking account within 30 to 60 days if you do not repay the amount owed. Ask the bank how much you owe. Whether your account is still open or not, you'll need to know how much you need to pay to get it back in good standing.


    Visit your bank. If your account is still accessible, you can simply go to the bank and place the necessary funds into your account; afterward, your debit card can be used again. If your bank account is closed, talk to the branch manager. Explain why your account fell into the negatives and why you couldn't pay it until now. The bank is under no obligation to reopen your account, but if this is your first offense, the manager will often reopen your account.


    Pay back the amount owed in cash. Unless you're depositing an inheritance check or paycheck to pay back the amount owed, there's no reason not to use cash. Do not take out a cash advance on your credit card or from a payday advance company; you'll put yourself in grave danger of falling behind on your finances again. Many banks will not reopen your checking account unless you pay in cash; they want to know that you're financially stable and that you won't have a reoccurring problem with your account.


    Test your debit card to ensure it works. Try to take money out of an ATM or attempt to make a small purchase. Have cash as a backup in case your debit card doesn't work at first. Call your bank's customer service number if the debit card does not work correctly after you pay back the amount owed on your account.