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

Monday, August 31, 2009

How to Find Out Details About a Collection Agency

Details about a debt collection agency may be needed for a variety of financial matters, like settling a past-due debt, disputing a credit report entry and obtaining current debt information. You need information about a debt collection agency if you are trying to stop illegal collection activities or pursuing the agency in court. Some states have special licensing for debt collection agencies, while other states only require an agency to register to do business in the state.



    Review any communications you receive, like letters and notices, carefully. Debt collection agencies are required to identify their legal business name and disclose contact information. An attorney may be acting as a debt collection agency under an assumed business name; the information about the attorney who owns or runs the agency must be disclosed in letters sent to you.


    Visit the official website of your state corporation or business department; you may request details about the company found on a license, like the owner and the state where it mainly operates. Use the search tool or contact information found on the state department's website for collection agency license information.


    Contact a major credit-reporting bureau, such as Experian, Equifax or TransUnion, that has the collection account on your report. Request additional information about the collection agency.


    Visit the official website of the Better Business Bureau (BBB.) Click on "Check Out a Business or Charity" on the top-left side of the Web page (see Resource). Enter the business name and search. The BBB report may include details like contract information, complaint history, license requirements and business status.

Sunday, August 30, 2009

I Need Help to Get Out of Debt

Debt crushes your financial goals and causes overwhelming feelings associated with falling further behind. Burying your head in the sand won't solve your debt problems if you find yourself struggling to pay off your creditors. Take a proactive approach to resolving and paying off your debts. Some debtors are able to get the accounts under control by themselves while others need professional help.

Acknowledge the Problem

    Ignoring the collection calls and letters from creditors causes more problems for you and your debt situation. Gather all of your creditor statements and sit down to figure out where you stand. Knowing exactly how much you owe and to whom helps you break down the situation to handle the matter. List all of the creditors and the details of the debt, including the amount, payments and interest. This gives you a reference for prioritizing your debts for payoff.

Trim the Fat

    You feel like your budget is stretched thin, but most people have areas they can cut to save more money. Review your spending habits both at the store and on your monthly services. If you are falling behind on payments, cut out unnecessary things like a satellite radio subscription, cable, Internet and club memberships. Scale back your menus and stick with low-cost meals like pasta and soups until you get caught up. Many services and items people view as necessities are actually nonessentials that drain your bank account. Put any found money toward your debts to get them paid of.

Talk About It

    Debt carries a sense of shame for many people, especially if you can't keep up with your payments. Instead of reaching out and talking about the problem, the tendency is to act like everything is fine while you continue digging a deeper financial hole. Talking about your debt situation with family members or a trusted friend may take away some of the stress you're feeling. The person you reach out to might offer suggestions or advice on getting out of debt. She may even be struggling with a similar financial situation.

    Talking to your creditors is another way to get help with your debt. In most cases, creditors will work with you to set up a payment plan so you can get caught up and pay off your debts. The sooner you talk to your creditors, the more likely they will be able to help you.

Get Professional Help

    If your debts are long past due or you have no way of keeping up with the payments, contact a nonprofit credit counseling agency. The counseling session won't affect your credit, but it will help you look at your financial situation and come up with a plan to fix it. The counselor creates a budget for you with your help. He offers suggestions for cutting costs if necessary. In certain cases, a debt management plan makes sense. The plan will show up on your credit report, but it allows you to get a lower interest rate and lowered payments for your credit card accounts. You pay the credit counseling company who disperses the money to each of your creditors. Avoid companies that charge large fees for the service.

What Is the National Debt Relief Initiative?

What Is the National Debt Relief Initiative?

The National Debt Relief Initiative, also known as the National Debt Relief Program, purports to be an agency working with clients to reduce or eliminate debt accrued from credit cards, loans and mortgages. The initiative also purportedly offers bankruptcy assistance and other financial services. Though it makes itself out to be a nonprofit, charitable organization, the initiative is a private, for-profit company and, according to the Better Business Bureau, a scam.

What It Is

    The National Debt Relief Initiative, run by a Floridian financial solutions company called GHS Solutions, offers debt relief and consolidation services. While it appears on the surface that the company offers these services itself, the fine print reveals that the initiative purportedly acts as a middleman, connecting clients to a network of debt relief provides that do the actual work. As such, the National Debt Relief Initiative ultimately doesn't do anything other than assess a client's level of debt and suggest other companies that might help those clients reduce that debt, services for which it charges. Neither GHS nor the initiative hold accreditation with the Better Business Bureau.

How It Works

    The National Debt Relief Initiative follows a carefully thought out pattern. The first step includes either an email or letter sent out to those with outstanding debts describing the manner in which the initiative helps clients eliminate as much as 50 percent of their debt. GHS Solutions designs letters that it appear as though they come from a governmental agency. Potential clients contact the initiative by telephone or an online form, submitting personal information along with a fee. This fee purportedly covers the work the company does to assess and reduce an individual's debt. However, the initiative never actually does anything for these clients and simply keeps the fee.

    The fine print on the Initiative's website reads, "We do not guarantee that your debts will be reduced by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not ... provide tax, bankruptcy, accounting or legal advice or credit repair services."

Legal Action

    Idaho took legal action against GHS Solutions, LLC. According to the state's final ruling, GHS Solutions must refund all money paid to the company for debt relief assistance by state citizens since July 2008. Courts required GHS Solutions to make this amount, $303,218.23, available to the Idaho state government for dispersal to former clients of the company by June of 2011. The state included a fine of $15,000 in the judgment. GHS Solutions violated Idaho state law by providing unlicensed debt and credit counseling.

Debt Relief Assistance

    The National Debt Relief Initiative is but one debt consolidation scam in a network of similar programs. The Federal Trade Commission warns consumers against accepting or soliciting the services of any debt relief company without physical offices. According to the commission, a number of legitimate enterprises, such as those run by universities, military bases, credit unions, housing authorities and branches of the U.S. Cooperative Extension Service, offer nonprofit credit counseling. Because of this, no citizen should resort to contact a company based solely online or that conducts business exclusively over the phone. Such companies can destroy consumer credit, cause tax problems and even expose consumers to potential lawsuits.

Saturday, August 29, 2009

What Is a Credit Card Write Off?

If you have a credit card you have not paid for a while, your credit-card company will write off the account as uncollectible. The amount of time that passes before the account is written off can vary from company to company. After the account is written off, the account is sent to a collection agency for further collection activity and sometimes legal action.

Time Frame

    Most companies will write off your credit-card account as a bad-debt uncollectible item after six months without a payment. They have determined that this account is no longer an income-earning asset.


    When an account is written off as bad debt, the credit-card company will report this information on your credit file. The credit rating you receive is an "R-9." The "R" stands for "revolving" and the 9 is the charge-off rating code.


    Credit-card companies will show your bad debt account as a loss, and they will receive a tax break for it. Consumers are still obligated to pay these accounts.


    Accounts that have been written off will stay on your credit file for seven years. After that time has passed, the credit-reporting agency has to delete the account from your credit file.


    If your account is in near the charge-off, stage credit-card companies will contact you by phone and mail to let you know a payment is needed.


    If you have a write-off account, it can lower your credit score. A low credit score can cause other creditors to deny your request for credit or charge you a higher interest rate.

Friday, August 28, 2009

About Credit Reporting Agencies & Identity Alert

About Credit Reporting Agencies & Identity Alert

Credit history, credit bureaus and credit reporting are multibillion-dollar industries. Whenever someone applies for credit, he agrees that the information on the application, the decision concerning the credit and the history of the credit line are all subject to recording with various credit agencies. Additionally, these agencies are allowed to use the information to give other businesses information about the borrower. Whenever aberrant activity appears on a person's credit history, it is a marker that there may be misappropriation of credit. When this happens, borrowers can receive alerts concerning their credit.

Fair Credit Reporting Act

    In 1970, Congress passed the Fair Credit Reporting Act (FCRA). The FCRA dictates what a credit agency (or bureau) can do and cannot do and what it must provide for both borrowers and lenders. The FCRA also mandates how credit reporting agencies must provide security for clients (borrowers and lenders) and for all the information the agencies accumulate.

    Any illegal access to the information or attempts to misappropriate a person's credit is prohibited by the FCRA and subsequent amendments to the legislation.

Credit Reporting Bureaus

    There are three major credit bureaus reporting credit history to paying clients: Equifax, TransUnion and Experian. These agencies have vast data files on both borrowers and lenders. It's important, however, to remember these reporting agencies are money-making businesses. They exist to buy and sell information. Borrowers agree to provide information in return for having their credit applications processed at no charge. Businesses agree to provide transaction records in return for accessing the credit histories of borrowers. In the middle, the agencies charge money for supplying requested information. Each time someone "runs a credit check," the bureaus charge a set fee.

Credit Monitoring

    Credit monitoring is the practice of watching people's credit and making notifications when something unique or different occurs. Someone with a home loan and one credit card making $50,000 annually who tries to use good credit to buy a $200,000 automobile would send up a signal. By the same token, a credit history showing several small new accounts on several credit cards could indicate illegal credit access.

Identity Theft

    If the credit monitor notifies a borrower of the activity and the borrower denies any involvement, it can be a quick indication of identity theft. Someone else is using a person's personal information to access credit. Identity theft is a crime, and the FCRA dictates how the prosecution of the crime and restitution to the victims are administered.


    Credit monitoring alerts are not always indications of credit-related crime. In some instances, borrowers just decide to use their credit for several purchases or lines of credit. When the alert comes in (by email or phone call), the alerted party has the choice of acknowledging the credit activity or denying the credit problems and starting legal action.

Thursday, August 27, 2009

How to Negotiate Credit Card Debt Forgiveness

In hard economic times, credit card debt can be overwhelming. In some cases, creditors--just like the rest of us--are trying to take what they can get rather than hold out for full payment. If you have generally been a good and reliable bill payer but have recently faced financial hardship, you may be able to negotiate partial credit card debt forgiveness with your creditors. However, be aware that this may negatively impact your credit history and score.



    Familiarize yourself with your individual credit history with each credit card for which you want to negotiate credit card debt forgiveness. Make sure to keep notes on which cards, if any, have had late or missed payments, particularly in the last six to 12 months.


    Read your most recent credit card statements thoroughly. Make sure you know your current interest rates.


    Call the customer service numbers listed on each of your credit card statements. Speak calmly and politely to each customer service representative, and ask directly if there is any way your balance can be negotiated.


    Be prepared to provide evidence as to the reason for the financial hardship that is rendering it difficult for you to pay your credit card bills as agreed. Explain any recent job losses in your household, medical bills or other unexpected hardships that are impacting your ability to pay.


    Send supporting documentation by fax, e-mail or postal mail if your credit card companies request it. Make sure to use certified mail with a return receipt if you send documents via postal mail so that you have evidence for your own personal files.


    Stress your customer loyalty up to this point, as well as the positive credit history you have built with each creditor. Explain that you hope such loyalty can be looked upon mercifully since you have fallen on hard times.

Wednesday, August 26, 2009

How Do I Handle Debt Before Divorce?

How Do I Handle Debt Before Divorce?

Divorce takes an emotional toll on couples. However, it also takes a financial toll, according to Terry Savage. Handling debt before a divorce can seem complicated, even when both parties are ready to go their separate ways. Taking inventory of debt and creating a plan for managing it will help avoid future problems and credit issues.



    Take inventory of debt. This includes mortgages, credit cards, auto loans and any home equity loans. Having these numbers in front of you will make it easier to create a plan of action.


    Try to pay off debt. If possible, joint debts should be paid off in full before divorce. If the couple is strapped for cash, consider liquidating assets (extra furniture, vehicles or other items) to pay off the debt. Pulling money from a joint savings account, if you have one, to pay off debt is also a viable option.


    Transfer debt to individual credit cards. When it is unrealistic to pay off all debt, each individual should transfer their portion of the debt to a new credit card (which is only in their name). This will eliminate joint debt, and make each party financially responsible for their portion.


    Sell larger assets. If the couple owns a house or other large asset together, they may want to consider selling it. This can help with distributing mutual funds (and provide resources to payoff existing debt).


    Refinance assets. If one person wants to keep a specific asset (such as a vehicle), she needs to refinance the asset into her name alone. Lenders will not remove a person from a loan.

Tuesday, August 25, 2009

How to Get a Loan With a Late Payment on Your Credit History

A single late payment on your credit report should not hurt your chances to be approved for a loan -- if there are no other problems with your credit. The University of Minnesota reports that most creditors regard credit information as "a snapshot in time." That means the loan officer approving your application will be more concerned about your current payment history than a late payment from some time ago. According to the university, scores of 720 or higher represent excellent credit and scores below 650 are regarded as poor.



    Review your credit score and report. Order the credit report from annualcreditreport.com, a website established by the major credit bureaus (see Resources). It's the only site officially authorized by the Federal Trade Commission to offer free credit reports under the terms of the Fair Credit Reporting Act. Follow included instructions on your credit report to order your credit score separately for a fee.


    Review your score to compare it against the standards for good credit. Stop fretting about the late payment if your score is 720 or higher; chances are with a score that high that the late payment won't have any impact.


    Contact the creditor posting the late payment if your score is below 720 and you feel the late payment may be the reason. The MSN Money website reports that creditors will sometimes remove a single late payment from a credit report for loyal customers. MSN Money reports the process is called "goodwill." Ask for goodwill by calling the creditor and asking that the late payment be removed. Explain that the late payment was an oversight -- if that was the case -- and that you would like the negative entry removed from your credit report as a courtesy.


    Order a second credit report and score in about 60 days if the creditor agreed to remove the late payment. That will allow enough time for your credit report and score to be updated with the new information. You're entitled to three free reports a year from AnnualCreditReport.com, but you must pay for your credit score separately each time.


    Apply for your loan even if the creditor declined to remove the late payment. Apply for the loan in writing and attach a note explaining the late payment.

Lenders That Pull Only Equifax Reports

There are three credit reporting agencies: Equifax, TransUnion and Experian. Most lenders will check an individual's credit score from all three agencies before supplying the individual with a credit card or loan. If an individual has been in debt and has the highest credit score with Equifax, it is possible to find some lenders that only pull the Equifax report.

Justice Federal Credit Union

    The Justice Federal Credit Union has been serving customers throughout the United States for the past 75 years. The main website explains that the credit union specializes in providing a variety of credit cards and loans. The credit union does require individuals to become a member in order to receive financial assistance. However, the Justice Federal Credit Union only runs an Equifax report when reviewing an individual's credit score prior to issuing a credit card or loan. The Justice Federal Credit Union supplies Visa cards in addition to car loans, personal loans, and education loans. The intent of the Justice Federal Credit Union is to assist individuals in obtaining their goals through financial assistance.

Navy Federal Credit Union

    The Navy Federal Credit Union is designed to offer financial services and assistance to all military service members and their families. According to the main website, the credit union has been in business since 1933. With locations throughout the country, Navy Federal Credit Union is known for providing quality loans, banking options, and credit cards. The credit union only checks an individual's credit report from Equifax during the credit check process. Assuming that the individual's credit score is high enough, the individual will have access to quality service, financial assistance, and great rates. Individuals must become a member of the Navy Federal Credit Union before loans or credit can be supplied.

NASA Federal Credit Union

    The NASA Federal Credit Union was designed to directly assist NASA employees as well as their families. The specialized credit union works with NASA employees to ensure that they receive the financial service and assistance that is needed. The credit union offers credit cards, home loans, car loans, education loans, business loans, and retirement planning. Due to the select nature of the credit union, only the Equifax credit report is checked when an individual is applying for some form of financial assistance. The goal of the NASA Federal Credit Union is to supply customers with dependable and quality financial assistance at the lowest rates possible.

Monday, August 24, 2009

How to Cash in on the Trans Union Settlement

How to Cash in on the Trans Union Settlement

The TransUnion credit bureau lost a $10 billion settlement in a class action lawsuit. Virtually anyone who had ANY kind of loan or line of credit between January 1 of 1987 and May 28 of 2008 is eligible to receive compensation. This article will show you how you can cash in on your share of the settlement.



    Log on to listclassaction.com. You have until September 24, 2008 to do this. But be sure to sign up for only 6 months of free credit monitoring so that you're eligible to receive any cash payment that is made. You can also still sue Trans Union, yourself, if you like.


    The credit monitoring service can be very worthwhile and would allow you unlimited daily access to your credit report for 6 months, which normally would cost $60. You could also opt instead for a 9-month service which also includes scores calculated by insurance companies and a preliminary indicator of how a mortgage company would rate you.


    However, the 9-month plan won't allow you to receive a cash settlement or sue Trans Union later if you are eligible to. Call (866) 416-3470 for more information.

How Can I Stop Creditors Without Filing for Bankruptcy?

Harassing creditors may move you to file for bankruptcy to get rid of your outstanding balances. Yes, a bankruptcy can erase debts and stop calls from creditors. But the consequences of a bankruptcy include possible credit rejections, a tarnished credit rating and higher interest rates on future loans. Rather than file for bankruptcy, consider ways to deal with creditors and stop harassment.

Resume Monthly Payments

    If you stopped making payments due to financial problems, review your personal finances to see how much you can afford to spend on debt payments each month to avoid a bankruptcy. Contact your creditors to explain your situation. Mention the reason for delinquencies, such as loss of employment or other issues. Speak with an accounts manager or someone who has authority to offer assistance. Ask for a monthly payment reduction or ask for a forbearance that lets you skip payments for a few months while you work to improve finances. Because collection agencies are less sympathetic to hardships, speak with your creditors directly and not the company handling the collection account.

Debt Settlement

    Satisfying debt by paying the debt off in full looks good on your credit report and improves your credit score. But if you owe $5,000 on a credit card, and know that you're unable to pay off the balance, offer to settle your credit card debt for less in order to avoid bankruptcy. Debt settlements involve negotiating with your creditors, wherein they agree to let you pay a percentage of the debt owed, and they stop all collection attempts on your account.

Know Your Rights

    The Fair Debt Collection Practices Act is a law that protects debtors. Some creditors and collections agencies employ various tactics to get a debt paid. They may ask for a bank account number in order to draft payments in monthly intervals, and then deduct the entire debt from your account, leaving you with a negative balance; or they may resort to verbal abuse or excessive phone calls. Know your rights, and threaten to report any creditor or collection agency that violates your rights.

Ask for Proof of Agreements

    Creditors that agree to monthly payments or a debt settlement should be willing to put the agreement in writing and send you a copy. Keep this copy on file. If the creditor doesn't fulfill its end of the deal or reverts to bad practices, you can complain and possibly file a lawsuit to stop creditor and collection agency harassment.

The Best Practices for Paying Off Credit Card Debts

It's no secret that credit card debt --- aside from more uncommon debts like payday or hard money loans --- are the most difficult to pay off, because of interest rates and ease of use. The best practices for paying off credit card debts may be subjective depending on whom you consult. However, some great practices, when followed, really work to help pay off your credit card debt.

Information Gathering

    To have a well-planned attack, you need to know exactly what you are dealing with. When it comes to credit card debt, this means you have to gather all the necessary information thoroughly. Grab all of your most recent monthly credit card bills and get a copy of your credit report from all three credit bureaus. Then, write down your monthly income from all sources. Be sure to include income from spousal or child support, as well as your income from your job.

Household Budget

    No one really likes to make a household budget, but if you want to pay off your credit card debt, you have to have one. Write down your necessary household payments --- for example, mortgage, utilities, necessary medical expenses, insurance payments, car payments and your average grocery bill. Do not include expenses like gym memberships or magazine subscriptions. Although you may like to read that trashy celebrity magazine while putting your time in on the treadmill, those expenses aren't necessary. Subtract your expenses from your income, and that amount is what you have to work with for paying off your credit cards.

Extra Payments

    Organize your credit cards, from high-interest to low-interest. The high-interest cards are the ones you want to attack first. The reasoning is simple: high-interest credit cards cost you more money than low-interest ones. You need to allocate as much extra money as you can, while still being able to make your other credit card payments, toward that high interest credit card debt. When you make extra payments, the creditor will apply that amount directly toward your principal balance. If you are concerned that your creditors will behave in a scurrilous manner and not apply the extra payment toward principal and not finance charges, give them a call to make sure they properly apply your payment.

Exponential Payment Increases

    Once you pay off one credit card, take the total amount of that payment and apply it to another credit card. For example, if you pay off credit card number one that had a $250 monthly payment, apply that $250 to credit card number two --- in addition to what you are already paying. To take it further, if you pay off credit card number two, take the $250 payment from credit card number one, the payment from credit card two, and apply it to your payment for credit card number three, in addition to your regular payment.

Sunday, August 23, 2009

Debt Negotiation Risks

Many companies offer debt negotiation services and claim they can settle your debts for significantly less than you owe. These offers may be appealing if you have more debt than you can handle, but this approach comes with risks. Debt negotiation companies encourage you to send your money to them instead of keeping up with your regular payments. They say they will save your money for lump sum pay-offs while they negotiate with your lenders. However, your lenders are under no obligation to negotiate with these companies.

Increased Debt

    Debt negotiation companies charge fees for their services. You will pay these fees regardless of whether the company succeeds in getting your debts reduced. Additionally, during the time you are saving and paying the debt negotiation company instead of making payments on your debt, your debt is still accumulating interest. You may also be charged additional missed payment fees by your lender. This means that if your lender doesn't negotiate you can end up facing a larger debt than when you started.

Legal Action

    Once your account is delinquent, your creditors have the right to sue you for the debt. Once they get a judgment from the court, they will have a variety of tools available to collect the debt. These include garnishing your wages, placing a lien against your home or property or even seizing your personal property to pay the debt, depending on the laws of your state.

Damage to Credit Score

    Your creditors will report your account as delinquent once you stop making payments. Having multiple accounts reported as late will quickly drag your credit score. Judgments against you will always have a significant negative impact on your credit score. Finally, if the debt negotiation company succeeds in getting your creditors to settle your debt the account will likely be reported as such, which is another mark against your credit score.

Scam Companies

    Some debt negotiation companies are actually scams and will take your money without negotiating with your lenders at all. The Federal Trade Commission (FTC) charged two companies in 2004 for fraudulent practices and warns consumers to be wary. Some companies make fraudulent claims about the amount of money they can save consumers and the risk involved. The FTC also reported that in some cases the companies did not even contact the consumer's lenders for negotiations.

Smart Way to Pay Off Credit Cards

Smart Way to Pay Off Credit Cards

Paying off your credit cards can help improve your credit score. And because you're spending less on debt payments each month, paying off credit card balances provide the opportunity to start saving your disposable income. Some consumers have a routine of only paying their minimum each month. However, getting rid of balances call for smarter, more effective methods.



    Increase payments to get rid of the debt faster. Stop paying just the minimum on your credit cards and begin forwarding larger payments -- whatever you can afford -- to knock down balances. If your credit card companies ask for $20 a month, increase payments to $50 or more. Higher payments reduce the new interest charges and a percentage of the principal.


    Pay less interest each month to reduce credit card balances sooner. Reduce how much you spend on interest payments by asking credit card companies to lower your interest rate. An interest rate reduction helps because creditors will apply a higher percentage of your monthly payment to the outstanding principal.


    Stop carrying a balance. Alleviate high credit card balances by paying off balances in full with each monthly statement. Only charge what you can afford to pay off within one month.


    Develop a cash-only attitude. Assist your debt elimination efforts by using cash and storing credit cards in a place other than your wallet. It's counterproductive to pay down balances and then accumulate new debt.


    Pay on time. Late payments or skipped payments result in additional fees, which can increase your outstanding balances. Always pay on time (before or on due dates) to avoid extra charges and higher balances.

Is a Prepaid Credit Card Good to Establish Your Credit?

Is a Prepaid Credit Card Good to Establish Your Credit?

A good credit report reflects a mix of credit use, including installment debt, such as a car payment, and revolving debt like credit cards, but getting unsecured credit like a credit card when can be difficult if you have no previous credit. Prepaid cards offer one option for establishing your credit, but another credit card option may be a better deal.

Prepaid Credit Cards

    Prepaid credit cards work similarly to gift cards---you purchase a card for a certain amount of money, say $50 dollars or even $200, and then use the card for purchases. Some cards allow you the option of adding more money to the card as the balance on the card is depleted, so that the card can be used again. Major credit card companies such as Visa and MasterCard offer prepaid credit cards.

How Prepaid Credit Cards Establish Credit

    Some prepaid cards can help you build credit by reporting your card use to credit bureaus, but there are often drawbacks. Some cards report to a second-tier credit bureau, PRBC, which is not often used by creditors. Others report to major credit bureaus, such as Experian and TransUnion, but report the account as an installment account rather than a revolving account. While installment loans are an important part of your credit report, revolving credit often scrutinized more closely by creditors, who figure you are a good credit risk if you have a good history of repaying what is essentially unsecured debt.

Credit at a Stiff Price

    The biggest drawback to using prepaid credit cards is the fact that you are charged dearly to use your own money. Prepaid cards often come with an array of unattractive fees, including an activation fee, a monthly maintenance fee, a fee for using the card as an ATM/debit card, and even fees for putting more money on the card. For instance, Bankrate.com notes one card that offers a six-month plan that costs $59.95 for the purchase fee, minimum deposit and monthly fee for the plan period. On top of this charge, fees also include $1.50 for ATM withdrawals, a $1 fee if the ATM withdrawal or point-of-sale transaction is declined, a $9.95 fee to replace a lost or stolen card and a cancellation fee of $6.

A Better Option

    Secured credit cards, which work much like prepaid credit cards, are a better option for establishing credit. Instead of purchasing a prepaid card, you put a deposit equal to the card's credit limit in the issuing bank. As long as you pay as agreed on the card, the deposit remains in the bank, untouched. Look for a secured card with reasonable fees, and use it lightly, making on-time payments each month. Within 12 to 24 months, you will have established credit, and if you've used your card wisely, you will likely graduate to an unsecured card.

How to Negotiate Personal Credit Card Debt

How to Negotiate Personal Credit Card Debt

There are numerous television commercials touting debt settlement companies. You also might have run across one of their ads in the newspaper or on the Internet. The truth is, you can negotiate your own credit card debt without the aid of a for-profit company. It does require time and patience, but with an organized plan, it can be done.



    Explain your situation. Write a letter to your creditor informing it why you are having trouble paying your bill. Debt collectors are more likely to work with you if you honestly lay out your problem. If you've recently suffered an illness, job loss, or gone through divorce, tell the creditor in the letter. Creditors receive thousands of hardship letters a year, so make your request stand out by eloquently presenting your case and sending copies of any supporting evidence. Tell the creditor that it is your wish to honor your obligations but that your current situation makes it impossible to do so. Send the letter certified mail with return receipt requested so that you have proof that your creditor received it. Keep a copy of everything you send for your personal records.


    Ask for a deferment or reduction in interest rate. If you can manage lower monthly payments, request an interest rate reduction. If you simply cannot make the payments but expect the situation to improve in the near future, ask the creditor to defer your monthly payments for a few months, giving you time to get back on your feet. Contact your creditor by phone after you have sent a letter. The personal touch gives the creditor a voice and a story to attach to an account number. Request that your creditor send you a written copy of your new agreement. Although your creditor may be recording the call, you have no way to verify anything you are promised by phone.


    Request a settlement plan. If you've reviewed your budget and realize that no matter how you rearrange things, you're not going to be able to make payments to this creditor, ask it to agree to settle the account by accepting less than you owe. Clearly tell the creditor your only other alternative is to file for bankruptcy. Creditors would rather receive something from you than nothing from the bankruptcy court. You can make this proposal by phone or in your initial letter, but you should obtain the creditor's written version of the agreement before sending any money.


    Tell the representative you would like to have everything in writing so that there are no misunderstandings. Wait to receive a letter in writing from your creditor stating it will accept the terms of your negotiations. If you're settling the account, make sure the letter states that the amount you're paying will settle the account in full. Request that the creditor report the matter to the credit bureaus as "paid in full" rather than "settled." The creditor often refuses to do this, but it is worth the effort of asking.


    Prepare for a hit on your credit report. While you're negotiating with creditors, develop a plan that will allow you to live on cash. Debt settlement, in particular, can damage your credit report for years, making it more challenging to secure a loan. By living on cash you give yourself time to find ways to rebuild your credit.

Saturday, August 22, 2009

How to Negotiate With Delinquent Home Depot Accounts

How to Negotiate With Delinquent Home Depot Accounts

Many people use credit cards to enable them to buy things they wouldn't otherwise be able to afford. As a result, when times get tough, big credit card bills and loans provide challenges to a consumer's monthly budget. To maintain your credit score -- the evaluation tool that is used by banks, landlords, mortgage companies and lenders to determine your creditworthiness -- it is important to make payments on your debts and credit cards.



    Call the Home Depot credit department. Being proactive can go a long way in staying in the good graces of the company. If you have a solid payment record and are experiencing a momentary blip, discuss your options with Home Depot. This could include a lower interest rate or the ability to miss a payment without penalty.

    Make regular payments on your credit cards.
    Make regular payments on your credit cards.

    Pay as much as you are able. If you can't pay the full amount owed make the monthly payments. If you can't pay the monthly amount make gestures that show your intent by paying what you can. This doesn't eliminate a "missed payment" from appearing on your record but does help reduce the amount owed and shows Home Depot you are trying.


    Explore a consolidation loan with your bank or a financial lender. Consolidation loans allow you create one loan -- and therefore one payment -- rather than several, usually at a lower rate of interest and with a lower monthly payment. You may be required to cut up or terminate your Home Depot credit card to access this loan, but your debt will be paid in full.

    Credit counseling can help you manage stress from debts.
    Credit counseling can help you manage stress from debts.

    Meet with a credit counselor. A credit counselor will work with you, and with your creditors, to reduce your payments and help you make a budget. Under the federal Credit Card Accountability Responsibility and Disclosure Act of 2009, Home Depot must include a number on your bill that you can call to access information about nonprofit credit counseling services.

    Debt settlement lets you pay your debt for less than you owe.
    Debt settlement lets you pay your debt for less than you owe.

    Settle your debt for a lower amount. Use this option only if you have already missed several months of payment. Debt settlement enables you to pay a lump sum -- or a series of fixed payments -- to settle the debt for less than the total amount. While this does pay off your debt at a lower amount -- perhaps 30 to 75 percent less -- it affects your credit score. Your debt will show as "Paid by Settlement" on your credit records and future lenders may consider you a risky prospect.

Statute of Limitations for a Credit File

The statute of limitations for a credit file refers to the amount of time that the credit bureaus can legally leave past credit and debt information within your credit history. The Fair Credit Reporting Act (FCRA) sets strict regulations regarding the reporting period for all credit information in order to provide lenders with only the most recent or pertinent information about your debt management skills.

Time Frame

    Most items reported to the credit bureaus only remain a part of your credit file for seven years from the date you or the credit grantor closed the account. For example, a credit card charge-off must be removed seven years from the date the account was charged off. Current accounts remain a part of your history until seven years from the date you cancel the account.


    Certain forms of derogatory information can appear within your credit history for longer than seven years. For example, the credit bureaus maintain a record of any past bankruptcies you filed for up to 10 years. A tax lien will continue to appear on your credit record for 15 years or until you pay it off -- at which point the standard seven year statute of limitations for removal goes into effect. One notable exception is unpaid federal student loans, which continue to appear on your credit report indefinitely until you pay them off. Once paid, student loans, like tax liens, adhere to the FCRA's seven-year reporting period.


    Many individuals confuse the statute of limitations for credit reporting with the statute of limitations for debt collection. The statute of limitations for credit reporting refers solely to the amount of time a given item can remain a part of your credit history. The statute of limitations for debt collection, however, refers to the length of time a creditor can legally sue you for an unpaid debt. While the credit reporting period for all items is federally regulated, the statute of limitations for debt collection varies by state.


    When calculating the reporting period of an account, the credit bureaus use information provided by the creditor concerning the date the account was originally opened or the date the account was charged off. Some collection agencies intentionally report incorrect dates to the credit bureaus in an attempt to leave their trade lines on consumers' credit reports for longer than federal law allows. If the Federal Trade Commission detects this activity, it will levy a fine against the company. The fact that the practice exists at all, however, should motivate you to regularly monitor your credit report.


    If, while monitoring your credit report, you discover old accounts that should no longer appear within your file, you can dispute the accounts with the credit bureaus. The credit bureaus accept disputes online, by phone or via mail. Each credit bureau will then evaluate your claim and remove any obsolete information from your credit history.

Eliminate Credit Debt

Eliminate Credit Debt

Eliminating your credit card debt will save you money in the long run and boost your credit score by lowering your debt utilization ratio. To take action, you must first develop a plan for your finances, then strategize the best way to attack your debt. By getting organized, you are more likely to stick with your plan until your debt is gone.


    To eliminate your credit card debt, you need to figure out how much money you can dedicate to paying it off. That means taking a good look at how you're spending your money. For one week, write down all of your out-of-pocket expenditures, then multiply the total by 4.3 to get a general idea of what you're spending each month. Then add in your regular monthly payments for things such as your mortgage, utility bills and car payments. The grand total may surprise you, and you must then look at the broad categories where you're spending the most. Would you be able to save money by using public transportation rather than paying for gas and parking? How much would you save by bringing your lunch instead of eating out? Keeping your ultimate goals in mind when looking for ways to cut back will likely make it seem like a less painful process.

Lower Interest Rates

    Your overall debt will take longer to eliminate with high interest rates. Lowering your interest rates may be as easy as making a phone call to your creditors. Prepare by collecting any credit card solicitations you may have received in the mail, so that you know what range of interest rates you should aim for. Call the customer service department and ask for a lower interest rate---if you have been a customer for a long time and you're in good standing, you may use this to support your request. If at first you are denied, try again another day. You may mention that you're considering closing your account and transferring your balance because you've received better offers in the mail.

Debt Snowball Plan

    Once you're prepared to begin paying down your debt, you need to choose the method you'll use to do it in an organized way. For those who need the psychological kick of seeing their payments actively impacting their debt, the debt snowball plan may be the best course of action. By paying off the smallest debt first, you will see your higher payments bring down the balance faster than if you applied them to a large debt. For example, if you have a credit card with a $500 balance with a 15 percent interest rate and you pay $125 per month, you'll pay it off within five months; however, on a credit card with the same interest but a balance of $2,000, the same $125 payments will take 18 months to eliminate the balance. The debt snowball plan may help to keep you motivated as you start the process of eliminating your debt.

Highest Interest Plan

    Others don't need to see their payments in action if they know that they're saving money by paying off their debt in the most efficient way possible. For these individuals, paying off the debt with the highest interest rate is likely to be a better choice. Debts only accumulate more interest over time, so paying off the debt with the highest interest rate saves money by cutting the amount of time that the balance exists.

Friday, August 21, 2009

How to Survive With a Job That Pays Less Than Your Expenses

How to Survive With a Job That Pays Less Than Your Expenses

Surviving with a job that pays less than your expenses will require diligent attention to how you spend your money. Job layoffs and reduced hours can hurt your ability to make ends meet each month. Some people file bankruptcy to eradicate debts and stay afloat. But if trying to keep your credit intact, simple lifestyle changes can help you survive on less money.



    Request assistance from your mortgage lender or landlord. Attempt to reduce how much you spend on housing each month by talking to your mortgage lender about a modification to decrease your payment or ask your landlord for a discounted rent payment.


    Eliminate household services. Cut expenses wherever possible to survive on less money each month. Cancel your house phone if you have a cellular phone, get rid of cable or expanded cable packages and stop professional lawn services.


    Learn how to do certain tasks yourself. Paying someone to wash your car, dry clean your clothes and do your hair is convenient, but not economically wise when trying to survive with a job that pays less than your expenses.


    Clip coupons. Thumb through coupons before doing your weekly grocery shopping to save on food costs. Plan to shop on days when grocery stores have double coupon days to save the most money.


    Apply for a consolidation to lower the interest rate on outstanding balances and save money. High rates on credit cards and installment loans can trigger higher monthly payments. Consolidate to a lower rate with a home equity loan or personal loan to help slash your rates and save on your payments.


    Plan free or cheap entertainment. Living on less money doesn't necessarily mean skipping recreation or entertainment. The key is checking the local paper for free or low-cost activities. Host friends in your home and ask everyone to bring a dish, go to a fair, spend the day at the beach or check out your state parks.

How to Delete Negative Items From My Credit Report

Credit is one of the most important aspects of your financial portfolio. It is almost impossible to make large-scale purchases without it, particularly when it comes to your most valuable assets like a home or car. Therefore, making sure your credit report is as clean as possible, free of errors and negative listings is paramount for every consumer. Removing negative items requires patience, persistence and an understanding of the removal process. However, once the goal is reached, the elimination of negative items can have a powerful impact on your credit score.



    Obtain a copy of your credit report. Go over it carefully, noting any errors and negative information. Highlight all the negative items as well as contact numbers and addresses for each of the companies reporting the information.


    Dispute any of the negative items that you believe to be errors. Contact the consumer reporting agency, which is likely to be Equifax, Experian or TransUnion, as well as the company reporting the debt. Send a dispute letter to both, stating why the information is wrong and providing proof, such as a payoff letter or receipt. Request the information be promptly removed from your credit report.


    Contact the companies in question for legitimate negative items. In many instances, companies may be willing to change the status of an item on your credit report from a negative listing to "current" or "up to date," or something similar to let those looking at your report know the account is not in arrears. The company may do this in exchange for a payment plan or some other form of payment. If you can pay the bill in full, request that the company change your credit report to reflect your status, taking the listing from a negative rating to "paid."


    Wait it out, if necessary. Unless your company is one that continues to sell your debt to various collection companies to keep it on your credit report, the negative items will be gone within seven years. The exception is bankruptcy, which takes 10 years to be removed from your report.

The Effects on Credit by Settling an Account

Debt settlement is excellent for eliminating excessive debt. The strategy is recommended by the Federal Trade Commission as an alternative to bankruptcy, and often results in a significant discount off the full balance due. The disadvantage is that debt settlement is guaranteed to hurt credit scores, although it is not as bad for credit overall as bankruptcy.


    Damage to credit scores with debt settlement starts before accounts are settled. Creditors consider settlement offers only on delinquent accounts, and sometimes the most attractive settlement offers are available for accounts that are about six months past due and scheduled for charge-off. Charge-off is an internal accounting term used by creditors when closing an account for lack of payment. It does not end the account holder's responsibility for paying the debt. Debt settlement offers range from 20 to 70 percent off the balance due, according to SmartMoney.

Skipping Payments

    Not everyone choosing debt settlement is behind on payments. This means some people must intentionally stop making payments to qualify. This damages credit scores each month a payment is missed. All credit situations are different, and no one can precisely predict how missing payments will affect a person's credit score. However, someone with good credit scores possibly could lose 50 to 100 points or more while missing payments to qualify for settlement.

Credit Updates

    The actual settlement hurts as well, with credit reports updated to show that the account was "settled for less than the full balance," according to Black Enterprise magazine. One settlement on credit reports is bad, and multiple settlements are worse. Someone with fresh settlements on their credit reports may find it impossible, at least for a while, to qualify for new credit at standard interest rates. Creditors will see the settlements and immediately know that the person is suffering from serious credit issues.

Credit Repair

    Repairing credit after debt settlement takes time. Late payment and settlement information remains on credit reports for seven years. This could hold down credit scores for two or three years while credit is rehabilitated through on-time payments on existing accounts while keeping any remaining balances low. Some people recovering from debt settlement decide to live without unsecured credit, such as credit cards. This helps keep them out of debt, but may make it difficult to build a high credit score, as the credit scoring system rewards people who have a variety of well-paid accounts on their credit report.

Secured Credit

    Some people add secured credit accounts after debt settlement. Secured accounts require deposits into bank savings accounts that are held as collateral. Credit lines on secured credit cards equal the amount on deposit. Secured installment loans also are available. Approval on secured credit is usually easy because of the collateral.

Help to Pay Bills and Credit Cards

If you have recently lost your job or are no longer making as much money as you used to, you may find yourself unable to pay your bills. Some debtors ignore debts they cannot pay; this practice leads creditors to take action against them to collect the debt and damages their credit. However, many creditors will work with debtors to resolve unpaid bills, and low-income debtors can also receive help with vital services.

Payment Arrangements

    Many creditors are willing to make payment arrangements with debtors who are experiencing financial trouble. If you are having difficulty paying your bills, contact your creditors as soon as possible. Explain the situation and ask to make arrangements. For example, you may be able to pay a certain amount every week or pay period until your debt is paid back. Making payment arrangements works best if you do not incur any new charges until your account is current.


    If you cannot pay a debt back, you may be able to negotiate with creditors to settle your account. Through negotiation, you may be able to pay back part of your debt in exchange for the creditor discharging the rest of your debt. You can negotiate with creditors on your own; however, you may wish to retain an attorney for negotiation proceedings, as attorneys lend credibility to negotiations and can often get better deals than you could obtain on your own.

Credit Counseling

    Credit counseling can help you set up a realistic budget, so that you can afford to pay your debts back, and teach you financial skills to help you avoid incurring new debts. In addition, many credit counseling agencies offer debt management programs. Debt management allows you to consolidate all your debts and make one lump-sum payment each month to reduce the amount of debt. You can often settle debts for less than you owe through debt management.

Government Programs

    Both federal and state governments offer low-income customers assistance with paying utility bills. Some utility services offer lowered rates to customers whose income falls below a certain level; in addition, the Low Income Home Energy Assistance Program (LIHEAP) assists low-income customers who are threatened with disconnection because of nonpayment of electricity bills. Apply for government assistance with utility bills through your local Department of Human Services office.

How to Reduce or Stop Garnishments in Michigan

How to Reduce or Stop Garnishments in Michigan

If you have an outstanding balance with a creditor and neglect to work out a payment arrangement or fail to make payments as agreed, the creditor might sue you in the Michigan court system and obtain a "writ of garnishment." This means, if the court sees fit, the judge may award your creditor to garnish your wages up to 25% in Michigan. The writ of garnishment, however, only stands for three months in Michigan and requires renewal thereafter, every three months until the act of garnishment satisfies your debt. The law does provide the opportunity to reduce or in some cases even stop the garnishment of your wages. This will require you to appear in court.



    Go to the court where your creditor originally filed the case for judgment against you and file a "Claim Exemption." The court will provide you will the forms you will need to fill out and file. You will need to provide proof of your income, a documentation of all or your expenses and obligations and the reasons why you are requesting a reduction or elimination of wage garnishment. According to federal law if you make only minimum wage or close to it, the law does not permit garnishment of wages. If you only make minimum wage, you will need to demonstrate this to the court. Once you file a claim exemption, the court will set a hearing date and hear your case.


    Challenge the creditor's claim to the alleged debt when the writ of garnishment expires after three months. Upon expiration, your creditor must file for the writ of garnishment again. They must also serve you notice for the hearing. Attend the hearing and challenge the creditor claims or propose a reasonable payment plan to the court that does not require garnishment of wages or seeks a reduction in the original garnishment order.


    File for bankruptcy, either a Chapter 7 liquidations or Chapter 13 reorganization, which will automatically stop any garnishments. You will need to notify your creditors and your payroll department as soon as your file. In some cases, you might be able to recover funds already garnished. Bankruptcy might seem like a drastic step, but if you have multiple creditors seeking wage garnishments, this might be your only option and likely your best option. Bankruptcy will provide you with the breathing room you need to re-establish yourself financially, while protecting your basic living needs.

Unsecured Debt Reduction

Unsecured debts are those accounts, such as credit cards, that don't have any collateral pledged as security for the loan. When your credit card debt becomes unmanageable, you might need the services of a debt-reduction company. Or you might want to work on reducing your debt on your own before it becomes too unwieldy.

Debt Relief Programs

    There are a number of debt-relief organizations that will assist you with managing your debt. They can help you reorganize, reschedule, make payment arrangements, get late charges waived, interest amounts reduced and monthly payments lowered. These programs will generally consolidate your unsecured debt. Credible debt-relief companies work to set up a plan tailored specifically to your individual situation.

Credit Use

    When you enroll in a debt-relief program, your creditors might not allow you to continue to use your credit cards, which can have an adverse affect on your credit report.

Balance Transfers

    You often can pay off all of your credit card debt with a lower promotional rate by performing a balance transfer to a credit card that offers that option. You also will be able to reduce your debt faster because more of your payments will go toward principal instead of interest.

Settlement Offer

    Another option is to call your creditors to see if you can negotiate a settlement offer. Once the account has been paid it will read as, "paid", or "paid settlement" on your credit report. Other creditors will know that you settled your debt which is an indication that you had financial problems. Creditors will be reluctant to extend you credit in the future.

Lower Rate

    Contact your creditors about lower rates of interest on your unsecured debt. When you make payments more money will go toward the balance and help pay your accounts faster. Lower interest rates will help you save money by paying less in finance charges.


    When you settle your debt, some creditors will send you a form 1099-C, which is a cancellation of debt form. In some cases you will be required to report settled debt as taxable income when you file your income taxes. If you receive a 1099-C, contact your tax adviser or tax attorney to see what your options are.

How to Finance & Consolidate Debt

How to Finance & Consolidate Debt

Financing and consolidating debt are two techniques to aid consumers in their eventual goal of debt elimination. The simple solution is that a person or company must re-engineer their budget to spend less than they earn, and in time, debt will be consolidated and eliminated. If consolidating debts through a company, it is important to understand fees and how the service works.



    Analyze your budget. Eliminate non-essentials such as going out for dinner, new clothes and entertainment. If you can't cut expenses, you need to increase your income. You must get a raise or look for another job. Financing your debt means creating additional income for you to pay your debt off. Loans or bankruptcy are temporary solutions to the underlying problem of poor money management.


    Begin cutting costs with small steps. Simply cutting out an expense such as eating out, may save you hundreds of dollars per month. This money can then be used to pay off your debt quicker.


    Consolidate your debts by yourself. Debt consolidation companies use the same techniques any person can, only they will charge you for it. Call your banks and credit card companies to see if there is a way they can put all your debts under one payment. For example, if you have a few credit cards, a personal loan and a home loan through one bank, they may be able to accept one payment for all the services.


    Use automatic payments to pay off your debt faster. If you have a few credit cards, see if you can set up automatic bill payment for all of them (more than the monthly minimum) directly from your paycheck.


    Avoid financing debt with further loans. Many people who use a debt consolidation-company and get a new credit card or personal loan will have to do so again. They are still not managing their money correctly. To successfully finance your debt, you must not add to your debt.


    Pay your bills immediately when they arrive. Do it before breakfast or before anything else you consider a priority. Missed or late payments are a large source of fees and push consumers even further into debt. Making a ridged schedule to pay off your loans is a sure-fire way to finance your debts to elimination.

Thursday, August 20, 2009

Who Can Garnish Your Wages & Accounts?

You are responsible for paying off debts you incur to a variety of creditors. Creditors you do not pay have the option to collect the debt by filing for a wage or bank garnishment through your local court system. Through wage garnishment, your employer gives the creditor a portion of the income you earn each pay period, while bank account garnishment requires your bank to turn over the contents of your checking and savings accounts to the creditor. State laws vary regarding the amount creditors may garnish from your paycheck or bank accounts.

Credit Card Companies

    Credit card companies can garnish both your bank accounts and wages -- but the company must win a lawsuit against you before it can seize these assets without your consent. Lawsuits require time and effort on the part of the credit card company. Because of this, not all unpaid credit card accounts result in a lawsuit and garnishment order. New York's Neighborhood Economic Development Advocacy Project notes that credit card companies are more likely to sue you if the amount you owe exceeds $1,000.

Collection Agencies

    Like credit card companies, collection agencies must win a lawsuit against an individual before seizing his bank accounts or wages. Collection agencies purchase defaulted debts from other creditors. Because of this, collection agencies sometimes collect debts that are 10 years old or older. Each state sets limitations on the amount of time a creditor has to file a lawsuit against a debtor. Thus, if a collection agency wishes to sue you, it must do so before your state's statute of limitations for doing so expires.

Private Individuals

    One common misconception consumers hold is that individuals to whom they owe debts have no recourse should they refuse payment. This is not the case. A private individual can sue you for an unpaid debt the same as a corporation. Should the individual then obtain a judgment through the court, she has the same garnishment rights as any other judgment creditor.

Federal Government

    The federal government can garnish your wages without winning a lawsuit against you. This occurs frequently with tax debts that consumers owe to the Internal Revenue Service. Defaulted federal student loans are an example of yet another government debt for which you may face garnishment.

    The federal government has yet another advantage over private creditors. It has the right to garnish income that is generally exempt from garnishment by private and commercial creditors, such as Social Security payments and any federal tax refunds you receive.

Child Support Enforcement

    Your state's child support enforcement agency has the right to garnish both your paychecks and bank accounts. Not only can your state's child support enforcement agency seize funds, it can seize a greater amount than other creditors.

    Title III of the Consumer Credit Protection Act restricts creditors to only seizing 25 percent of your disposable income. If you owe back child support, however, your state's enforcement agency can seize up to 65 percent of your wages -- depending on whether you currently support any additional children and if your child support payments are more than 12 weeks in default.

What Happens to My Debt in Pennsylvania After I Die?

When you pass away in the state of Pennsylvania, your estate is supposed to pay for all of the debts you left behind. Your estate is a combination of probate assets that have value. Most probate assets are real property items such as a home or a car, but a bank account that does not have a joint owner, the contents of a safety deposit box and even valuable personal items, such as a set of rare collectibles, can all be used as estate assets to pay off your debts as well.

Probate Process

    Whether you leave behind a legal will or not, the state of Pennsylvania requires that a probate court case be opened. If you leave behind a will, your surviving relatives can simply take that documentation, along with any information related to your assets and debts, to an attorney who will help them file the appropriate probate paperwork. The probate process is specifically set up to ensure that your surviving family members cannot inherit your debt and that all appropriate property is put into each heir's name legally, if applicable.

Creditor Notification

    Upon the opening of the probate case for your estate, an executor or personal administrator will begin sending death notifications to your creditors. Each creditor must list its claim against your estate in order to receive payment as the estate is closed.

Asset Liquidation

    Your estate executor must use assets from your estate to pay estimated inheritance taxes, funeral expenses, legal and court costs and any outstanding debts you leave behind. If needed, the executor may sell some of your assets to raise enough funds to cover all of the debts. Once all debts and taxes are paid from the assets in your estate, if there are remaining assets, they will be distributed to your heirs and beneficiaries according to the terms of your will.

Insolvent Estates

    If you do not own enough real or personal property assets -- or the things you own do not have enough value to cover all of your debts -- the probate court will declare your estate insolvent. When an estate's assets are not worth enough to cover their outstanding debts, an order of priority is established for debt payments. Court and funeral costs, a family allowance, recent medical bills and a grave marker all take priority over miscellaneous debts such as credit card debts. Once all priority debts are paid, any remaining estate assets are divided equally amongst remaining creditors and claims against the estate.

Third Party Liability

    The only time a surviving relative, spouse or other third party might be liable for your debts after you die is if your account executor makes a mistake when handling the estate, someone holds a joint debt account with you or you received assistance payments from the state.

Rhode Island Wage Garnishment Laws

When you get into debt, it's easy for that debt to become unmanageable. You can then be sued by a creditor. If the judge rules against you, you may then see your wages garnished for the purpose of repaying this debt. Those in the state of Rhode Island facing garnishment and judgment should prepare themselves by learning about the state's wage garnishment laws.

Monetary Limits

    State law limits the amount that a creditor may garnish your wages. Rhode Island law sets this limit at 25 percent of your disposable income. The state defines disposable income as everything left over after paying for basic necessities such as transportation, shelter and utilities.

Time Limits

    The state has statutes of limitations on the enforcement of debt. This means that there is a certain time limit for your creditors to get a judgment. After this time period has passed they can no longer collect on the debt. In Rhode Island, credit card debts and other open accounts, as well as written contracts, have a 10-year statute of limitations. Domestic and foreign judgments have a time limit of 20 years.


    Anyone who has collected state assistance is exempt from all wage garnishments for one full year after getting off of assistance. There are also a number of types of income that are off-limits for garnishment. Most state and municipal employee pensions cannot be touched, nor can income received from public assistance. Other wages off-limits for garnishment include wages paid from charitable organizations to persons in need, wages owed to seamen and some types of military wages. Some protections, such as those on pension plans, only apply to people whose wages are being garnished for debt, not those being garnished for child support.

Wednesday, August 19, 2009

What Is the Minimum Balance for a Student Loan Rehabilitation?

Student loan rehabilitation allows you to rehabilitate your defaulted federal student loans through a structured payment plan. If you complete the plan, your loan is taken out of default, which stops collection activity on the loan and allows you to participate in the various borrower benefits and protections offered by federal student loan servicers. As of 2011, your minimum balance at the end of the payment plan must be $500 for the loan to be rehabilitated and purchased by a new lender.

Student Loan Default

    If you don't make your monthly student loan payments for 270 days (nine months), your student loan goes into default. A defaulted student loan negatively affects your credit, and you may be subject to wage garnishment and seizure of your federal tax refunds and other federal benefits. You won't be able to take out any additional student loans while your loan is in default, and you won't be eligible for deferments or forbearances as you are when your account is in good standing.

Student Loan Rehabiltation

    Unfortunately, federal student loan rehabilitation is available only for federally guaranteed loans, not private student loans. If you are in default on private loans, contact your lender to find out if it has any options for bringing your account current. It may suggest that you rehabilitate the loan. Student loan rehabilitation allows you to set up a payment plan with payments that you can afford. If you complete the payment plan successfully, and you have a balance of at least $500 at the end of the plan, a new lender can purchase your loan and you can begin one of the standard repayment plans offered by federal lenders. Student loan rehabilitation is a one-time opportunity: If you default on your loan or loans after rehabilitation, you cannot rehabilitate your loan a second time.

Completing the Payment Plan

    To qualify for rehabilitation of your student loan, you must complete a payment plan. For the rehabilitation of most federal loans, you must make nine payments within 20 days of their due dates over a period of 10 months. (If you have defaulted on Perkins Loans, the rules are stricter: You must make nine on-time payments over the next nine months.) After you complete the payment plan, the remaining balance on your loan is eligible to be purchased by a new lender.

Avoiding Default

    Student loan servicers offer several options to help you avoid defaulting on your loans: If you don't default, you won't need to go through the rehabilitation process. Federal law obligates student loan servicers to work with you to come up with a repayment plan that you can afford. If your income is very low or you currently are in school or unemployed, you may qualify for a forbearance or deferment, which means you won't have to make any payments on your loans for a period of time. Contact your loan servicing company when you realize that you may miss a payment and ask for information about your options. After your account goes into default, you won't have these options, so acting quickly is the best way to protect yourself from student loan collection actions.

Tuesday, August 18, 2009

What Are Outstanding Loans?

If you've filled out a loan or credit application, you've probably seen a reference to outstanding loans on the application. Outstanding loans themselves are not significant if you can afford the monthly loan payment, but they can have a significant and potentially negative effect on your credit.


    An outstanding loan is the remaining principal amount of the loan. The principal amount is the remaining balance of the loan itself, which excludes interest payments and fees. For example, if you took out a loan for $25,000 and you paid $10,000 toward that loan balance, the principal amount and outstanding amount would be $15,000. An outstanding loan is not the same as a delinquent loan. A delinquent loan is a loan that is past due.

Outstanding Loans and Credit

    Outstanding loans have a significant effect on the Fair Issac Corporation (FICO) credit score. Your FICO credit score usually is considered by financial institutions, especially mortgage lenders, when they determine whether to issue a loan and what interest rate to charge. Your FICO credit score is determined by five pieces of data. Amounts owed, such as outstanding loans and credit card debt, amounts to 30 percent of your FICO credit score. Amounts owed is the second largest determining factor for your FICO score, just behind payment history. Generally, the more outstanding loans you have, the less willing lenders are to approve you for loans. Having a lot of outstanding loans tells lenders you have a lot of monthly payments to make, and adding one more may be more than you can handle.


    Outstanding loans, along with credit card debt, account for your debt when calculating your debt-to-income ratio. Your debt-to-income ratio is determined by adding up your total debt per month (loans and credit card debt) and dividing it by your total gross income. If your outstanding loans and credit card debts are small relative to your income, your debt-to-income ratio is low. Your debt-to-income ratio affects both your personal finances and your ability to obtain a loan. A debt-to-income ratio that's too high may cause a lender to deny your application for credit. According to the Lendingtree website, mortgage lenders usually will not issue a mortgage loan to applicants who have a debt-to-income ratio higher than 40 percent.

Cars and Outstanding Loans

    When you finance a car, the title belongs to the lien holder or financial institution that approved you for the loan. You cannot sell a car to a private buyer if the car has an outstanding loan, because the car technically belongs to the financial institution. To sell a car with an outstanding loan, you may need to schedule an appointment with the private buyer to meet at the financial institution. The buyer can either pay the loan off and have the title released to him, or you can transfer the loan to the buyer.

What to Do If a Collection Agency Did Not Pick Up a Certified Dispute Letter

What to Do If a Collection Agency Did Not Pick Up a Certified Dispute Letter

Section 809 of the Fair Debt Collection Practices Act (FDCPA) states that any individual who is contacted by a debt collector concerning a debt has the right to dispute the claim in writing. The collection agency is then legally required to provide the consumer with proof of the debt before any collection activity may resume. If you mailed a dispute letter to a collection agency via certified mail and the letter was refused, you have other options.

Request a Signature Card

    Although most businesses have a courier that picks up and delivers mail from the post office, not all do. In this case, your letter simply may have been disregarded. Collection agencies receive a high volume of disputes and may neglect to pick up certified mail for this very reason. It is legal to refuse mail.

    It is possible that the refusal of your certified dispute letter was a legitimate mistake on the part of the collection agency. Attempt to send the letter again via certified mail, but this time request a return receipt. When a letter is delivered return receipt requested, the recipient must sign for the document. The signature card is then delivered to the sender as proof that the mail was received.

Wait for a Response

    The FDCPA does not place any time constraints on a collection agency when responding to a dispute letter. The collection agency cannot, however, conduct any collection activity such as calling you, sending you letters demanding payment, updating the debt with the credit bureaus or selling the debt until the dispute is acknowledged and proof has been sent.

    If you do not receive a response to your initial dispute, you must monitor your credit reports and document any illegal collection activity that takes place during this time frame. Should the collection agency fail to respond to your dispute yet continue attempting to collect from you, you have the right to sue it for violating the FDCPA.

Examine the Validation

    When and if you receive your validation from the collection agency, it is likely to be a simple printed document containing your name, the account number and the amount you supposedly owe. Although this serves as validation in the sense that the company responded to your dispute, it does not serve as legal proof that you owe the debt.

    Rule 1002 of the Federal Rules of Evidence states that when requesting proof of a document, only the original document is legally sufficient. If the collection agency mails you a copy of the initial agreement that you signed with the original creditor, the debt has been fully validated and will stand up in court. If, however, you receive a mere printout, you can send a second dispute letter to the collection agency. Notify the company that you want legitimate proof of the debt and if legitimate proof is not received, you expect the debt to be dismissed and any negative entries on your credit report from the collection agency to be removed.

Sunday, August 16, 2009

What to Do With Your Credit After a Divorce?

What to Do With Your Credit After a Divorce?

Divorces can be messy -- throw finances into the mix and they can be downright miserable to experience. Usually, during marriage, people intertwine their assets and debts, having both their name and the name of their spouse on accounts. This makes preserving or building credit on your own after divorce difficult. Fortunately, you can protect yourself and get your own credit footing by taking specific actions.

Assess Your Finances

    To really protect your credit, you have to know about every account you and your spouse have. Make a list of each account that indicates whether the account is single or joint, along with the balance due. If you live in a community property state -- a state in which you and your spouse legally are responsible for each other's debts -- you'll have to assume that creditors may pursue you for your spouse's balances.

Separate and Pay Off Accounts

    Once you know exactly what you and your spouse have, sell whatever marital property you can. Use the proceeds to pay off account balances. Because accounts may be reopened if they have a balance, don't assume that simply closing the account has taken care of a potential problem; pay off the balance first and then close the account. Divide the money you have in joint accounts and transfer your portion into an account that only has your name on it.

    If you have major joint debt like a mortgage, getting a divorce doesn't change your legal obligation to that debt. The only real way to remove yourself from the financial obligation is to refinance. If you and your spouse have agreed you should have the property associated with a debt, don't remove your name from the title if your spouse refinances. This removes ownership, not your debt obligation. If desired, you may refinance in your own name. This way, you have control over payments and know your spouse won't use the account to trash your credit.

Contact Creditors and Lenders

    Even if you live in a community property state, contact your creditors and lenders and alert them of the divorce so they at least know that collection may take some time. If you are in a separate property state where you're not liable for non-joint debts, this contact should stop creditors from hassling you and asking you to pay what your spouse owes.

Get New Accounts

    You may not have much of a credit history or score if your spouse handled most of the household finances. Apply for credit, savings and checking accounts in your own name. A bank account is important because banks report to ChexSystems, a consumer reporting agency similar to credit bureaus. Creditors and lenders review ChexSystems reports just like credit reports. Without a good ChexSystems history, you may have trouble getting a bank loan later. Get a cosigner if necessary.

Get Your Credit Report

    Getting a copy of your credit report lets you monitor whether your spouse is hurting your credit by not paying on joint accounts as agreed. It also lets you identify areas of your credit that need some TLC and refute incorrect information.

Pay Bills on Time

    A major part of your credit score is your credit history, which details how you've paid on your accounts. Be ruthless about paying everything you can on time. If needed, use refinancing, consolidation, credit counseling and other techniques to reduce what you owe and get your budget to a manageable point. When you pay off a balance, keep the account open if it contributes significantly to your credit history length.

Saturday, August 15, 2009

Laws on the SOL of Credit Card Debt

Laws on the SOL of Credit Card Debt

A statute of limitations (SOL) is the amount of time legally allowed to sue in either criminal or civil court. After this time period has expired, no legal prosecution for the offense is allowed to take place. Credit card debt is no exception. Laws establishing the SOL for defaulted credit card debt vary state to state.


    Creditors may have trouble finding a debtor who has moved.

    Statute of limitations laws concerning debt serve to protect consumers from the threat of an indefinite lawsuit. Over time, debtors change residences and old creditors cannot always keep up with the new information. Not all states require a court summons to be hand delivered, therefore a creditor could feasibly file a lawsuit against a debtor, win the suit by default, and the debtor would remain unaware of the process. This directly infringes upon the debtor's right to a defense. The Fair Debt Collection Practices Act (FDCPA) stipulates that all debtors be given proper notification of a lawsuit--something that would be very difficult if there were no SOL.

Time Frame

    The amount of time available for a creditor to sue a consumer varies. On average, most states allow three to five years for a creditor to file a lawsuit. The SOL of a debt begins on the date that the original creditor either charges off the debt or 180 days have passed without the consumer making a payment.


    Lawsuits tie up the court system.

    An established SOL for debt collection provides benefits not only to consumers but to state governments as well. While an uncontested lawsuit over a debt is as simple as a judge signing off on the court judgment, a previously oblivious debtor can easily bring the suit back to court in order to fight the judgment. This, in addition to lawsuits contested by debtors, ties up court systems. By restricting a creditor to file only within the SOL, the state government is able to cut back on the costly amount of suits and counterclaims that could occur over debts.


    The SOL of a debt is commonly confused with the debt's reporting period. The reporting period is the amount of time information may remain on a consumer's credit report. The Fair Credit Reporting Act defines this amount as seven years for credit card debt. The reporting period of a defaulted debt begins 180 days after the consumer stops making payments. The SOL usually times out several years before the debt is removed from the debtor's credit reports.


    Making a payment can reset the SOL.

    It is possible to reset the SOL on a debt in most states by making a payment after the debt has gone to collections. Some states take this even further, allowing a verbal agreement to pay the debt to reset the SOL. In addition, many creditors will knowingly file lawsuits on debts that are beyond the SOL in the hopes that the debtor will not respond to the suit. If the debtor does not respond, the creditor can receive a default judgment on the debt. The reason for this is that a state court system has no way of knowing that the debt is no longer within the SOL unless the debtor responds to inform them of that fact. Although this violates one of the very reasons the SOL was created, it is a far less common practice than it would be without the state guidelines.

Can I Be Sued for Not Paying Medical Bills?

With escalating health care costs, many people find themselves in a significant amount of medical debt after seeking treatment. If you cannot afford to pay these medical bills, you could face several consequences. The medical provider has the right to sue you to try to collect any unpaid balance that you may owe.


    When you accumulate medical debt, the medical facility has the same rights as any other creditor. You owe them money and you guaranteed to pay it when you signed their paperwork. If you do not pay the balance or make arrangements to provide payments over time, they can file a lawsuit against you. When this happens, you will receive a summons from your local county courthouse. This document will request that you show up in court on a specific date.

Court Date

    When you are given a court date on the document, you need to do your best to appear in court on that day. If you do not appear in court, the judgment will still be made against you. If you appear in court, the judge will typically be more lenient on you and could help you set up a repayment plan to pay off the debt. You could choose to get professional help from a lawyer or you could do this on your own.

Wage Garnishment

    One of the potential consequences of a medical debt lawsuit is a wage garnishment. When you have a judgment issued against you, the creditor can then take the necessary steps to have your wages garnished. With this process, the medical facility uses the judgment to get a writ of execution from the court. With this order, the creditor can then work with your employer to get part of your wages garnished every time you get paid, until the debt is gone.


    If the creditor gets a judgment against you and you are faced with a garnishment or some other payment arrangement that you cannot afford, you might consider filing for bankruptcy. Many people are led to bankruptcy from excessive medical bills. This will stop any wage garnishment or debt that you owe the medical facility. When in this situation, you should consult with a bankruptcy attorney to determine if this is the best option for you. If the debt is not that significant, the attorney may recommend other measures.