Welcome to our website credit and debt managementr.

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

Monday, November 30, 2009

The Warning Signs of Debt Problems

The Warning Signs of Debt Problems

Many people worry about going in debt and owing more money than they can afford to pay off. Sometimes, however, it's not immediately obvious that you're heading toward a dire financial situation, because it's easy to get caught up in borrowing and spending without realizing the dangers. You should remember a few things to watch out for in order to avoid debt distress.

Credit Card Relations

    If you're heading toward debt overload, your relationship with the credit cards you own will change. While many people find that they utilize their credit cards often but pay back a healthy amount when required to do so each month, individuals with looming debt problems often pay back only the absolute minimum they have to do on a monthly basis. Another warning sign is being consistently late with credit card repayments.

Borrowing Money

    Individuals with debt problems don't just have an over-reliance on credit, but also find themselves borrowing money excessively, creating an ever-increasing spiral of financial difficulty. If you've had to look to other methods of borrowing just to settle existing debts, or are borrowing money from a source without a set date by which the repayment will be made, you're likely to have a debt problem. A particular warning sign to watch out for is if you're asking for money from loved ones, such as family members, because such loans are likely to be easier to avoid repaying than loans from a bank, for instance.

Credit Spending Addiction

    For some consumers, the clearest warning sign of an approaching debt problem is an addiction to spending on credit. While there's no problem at all with using a credit card occasionally for shopping, especially for larger purchases, you should watch that you're not using credit for cheaper items such as everyday essentials, for toiletries and groceries for example. Another sign of an issue with credit spending is that you come to view your credit cards as a source of extra income, rather than a type of loan that eventually needs to be paid back. You might also find that you're constantly looking for more credit, leading you to take out more credit and store cards or to contact card issuers to check your credit levels.

Minimum-payment Syndrome

    Many people will get into a little debt during their adult lives, which isn't too much of a problem, as long as they can tell when such debt goes above a safe level. According to the MSN Money website, if your total debt equals more than 20 percent of your actual earnings, you may be looking at a problem.

Penalties for Breaking an Auto Lease

Breaking your auto lease may be a necessary evil if you're compact vehicle no longer comfortably meets the seating requirements of your family size. Terminating your lease contract early can present several problems for you, including financial penalties and damage to your ability to lease in the future. The benefits of lease termination should be weighed against its disadvantages before you make a formal decision.

Entire Lease Due

    If you break your auto lease, your lender may be within its rights to request prompt payment of the entire lease contract. This could cost you thousands of dollars depending on the balance remaining on the lease agreement. If you refuse to pay the amount outstanding on the lease agreement your leasing company may be able to sue you in an attempt to collect the debt. This is essentially a breach of contract lawsuit which could result in wage garnishment or the creditor obtaining a judgment for a lien on your home or other real property including a business. A lien entitles a creditor to a share of the profits from the sale of attached property before you receive payment.

Early Termination Fees

    Your lender may elect to allow you out of your auto lease contract but not before charging you a slew of early termination fees. These fines are meant to act as a deterrent to exercising any early termination clause which may exist in your lease agreement. According to Bank Rate's website, early termination fees associated with ending your lease before the contract terminates on its own can range in the thousands of dollars. Making normal monthly payments in accordance with your lease agreement may end up being cheaper than the cost of terminating the agreement.

Credit Score Damage

    When you elect to terminate a lease agreement you are effectively refusing to pay a creditor money that is owed. This can have a negative impact on your credit report if your leasing agency elects to report your contract default. An early lease termination on your credit report may make it very difficult to secure a new lease in the future and may even impact your ability to buy a new or used vehicle because of the overall lowering of your credit score.

Loss of Deposit

    If a deposit or down payment was required when you signed your lease contract, your leasing agency may claim the deposit when you terminate your agreement early. This could mean you lose several thousand dollars. You may also be required to pay additional amounts for repairs to the vehicle if the car is damaged or has wear and tear which falls outside normal parameters for its current mileage. You could also incur extra fees if the vehicle is over the mileage limit as identified in the previous lease agreement.

Sunday, November 29, 2009

Secrets to Getting Out of Debt

Secrets to Getting Out of Debt

We are all trying to get out of some type of debt, whether it be credit card debt, school loans, car loans or mortgages. According to Financial Planning, debt is a form of slavery that we usually entered into voluntarily and that keeps us from experiencing financial freedom. You should create a plan by listing all your debts and the minimum required payments each month. Also create a budget that includes all income as well as all monthly bills not considered debt, such as child care costs, food allowances and utilities. You must determine how much money you can put toward your debts after all required expenses. Determine the amounts you will pay toward each debt each month and then stick to the plan. If you find you can't afford to pay all debts, debt consolidation may be the best solution.

Pay as Much as Possible

    Pay as much as you can.
    Pay as much as you can.

    Always try to pay more than the minimum payment required. According to MasterCard, paying more than the minimum payment is critical to achieving your financial goals.

Pay Off the Smallest Bill First

    Pay smallest debt first.
    Pay smallest debt first.

    Do your best to pay off your smallest debt quickly, while still paying all other debts. Once that bill is paid off, take the money you would normally have paid to it and add it to the payment for the next smallest debt. This is called the snowball effect. You continue to pay the same amount to debt each month but you redirect the amounts once smaller bills are paid. This solution provides a greater sense of accomplishment as you are able to cross the paid debts off your list.

Stop Spending

    Stop spending.
    Stop spending.

    Stop using your credit cards and acquiring more debt. It doesn't make much sense to try to get out of debt while still accumulating more debt. Once a credit card balance has been paid off, consider closing the account. For all cards you keep, once the balance is paid down, lower the credit limit. Limit your spending to only essentials. Take your lunch instead of buying it. Don't buy things you really don't need. Try to save on spending so you can apply all extra money toward your debts.

Debt Consolidation

    Talk to a financial specialist.
    Talk to a financial specialist.

    Many people find debt consolidation a more manageable solution. With the aid of a financial consultant, you merge all your debts together and end up with only one large payment per month. The financial institution is, in essence, paying your debts and now you must pay the institution back, usually at a much lower interest rate than most credit card companies. Of course, when you do this, you should also close most of the paid accounts so as not to accumulate more debt.

Create More Income

    Make things to sell.
    Make things to sell.

    Most of us have a set income. I am not suggesting you go out and get a better paying job, unless that is a feasible option, but there are other ways to acquire more income. Get a part-time or seasonal job, if possible. Hold a yard sale or sell unneeded items on auction websites. Make or sew things to sell without acquiring more debt.

How to Settle Old Credit Card Debt

How to Settle Old Credit Card Debt

Unpaid debt can have a serious effect on your credit score. This is especially true if the account has been turned over to collections. Collection activity on your credit history can make securing new credit difficult. Consumers with unpaid debt face higher interest rates, difficulty securing housing and challenges landing a job (if the employer checks credit). Setting old credit card debt can help you clean up these problems.



    Contact the credit card company if you haven't paid your credit card in awhile. The creditor has likely turned the account over to collections. After an account has been turned over to collections, you'll need to settle with the collector instead of the original credit card company. Dig out old credit card statements, contact the creditor and ask for collection contact information.


    Crunch numbers to determine how much you can pay towards debt. Create a budget. List your monthly income and other debt obligations. Calculate the amount of money left over to pay off an old credit card. This will help you negotiate with lenders when determining the settlement amount or monthly payments on your debt.


    Decid how you want to settle the account. According to Bank Rate, paying the account in full will look better on your credit report than settling the debt. If you settle the debt, the collector agrees to accept less money than you owe.


    Request a letter from the collector. A collector doesn't have to provide this letter. The best time to ask for a letter is when you're negotiating repaying your debt. Without this letter, credit bureaus won't automatically remove the debt from your credit report.

Friday, November 27, 2009

How to Access the Credit Bureaus

In the United States, the three major credit reporting agencies are Equifax, Experian and TransUnion. Each company keeps records on people's financial transactions such as credit cards and loans. There may come a time when you need to access the credit bureaus: to see your report, to correct an error, or to notify them of a family member's death. Fortunately, the Fair Credit Reporting Act (FCRA) enables consumers who prove their identity to access the credit bureaus for a variety of possible needs.



    Write down why you need to access the credit bureaus. If you are just trying to view a copy of your credit report, move to Step 2. If your contact relates to trying to dispute a negative credit entry or informing the agency of a family death or identity theft, jot a few notes before proceeding.


    Decide which method you want to use to get in touch with each credit reporting agency. Most issues can be handled online, over the telephone or through the mail. A few transactions, such as death notification or informing the credit bureau of possible identity theft, should be handled exclusively by mail. No matter which method you select, you will give personal information such as your full name, current address, date of birth, Social Security number and nature of your request. If you are doing a death notification, have this information for the decedent as well as a photocopy of the death certificate. If you are a victim of identity theft, copy any supporting documents, such as a police report or court case file.


    Getting a credit report can be done for free once a year at annualcreditreport.com. If you already obtained a free credit report, then visit the Equifax, Experian and TransUnion websites. You will need a credit or debit card to purchase copies of your report, which costs $8 to $13 in 2009. Fill out the forms with your personal information as requested to view your credit report. If you do not have a credit or debit card or wish to request reports by phone, access the credit bureaus at the following telephone numbers: Equifax, (800) 685-1111; Experian, (888) 397-3742; and TransUnion, (800) 888-4213. You can dispute negative credit entries (as long as they are not really yours or otherwise incorrect) for free online or over the telephone.


    Write a brief letter explaining the issue if you want to dispute an inaccurate account entry by mail, inform the credit bureaus of a family member's death or report an identity theft. If you want to write a letter to Experian, first call them at (888) 397-3742 to get the appropriate address for your state. You may contact Equifax and TransUnion by mail at the following addresses:

    Equifax Credit Information Services Inc.
    P.O. Box 740241
    Atlanta, GA 30374

    P.O. Box 1000
    Chester, PA 19022

    Always use a traceable mailing method and keep at least one copy of any correspondence and/or documents for your records.


    Wait for a letter of response if you made a credit dispute or other notification beyond accessing a credit report. This can take up to 45 days. Keep any letters or updated credit report copies for your records. If your request is denied, be sure to write another letter explaining the situation. You may also want to add a statement to your credit report if your need to access the credit bureaus related to identity theft and/or incorrect accounts.

Debt Collection and Advice on Free Debt Consolidation for Bad Debt

Debt Collection and Advice on Free Debt Consolidation for Bad Debt

Falling into debt and not being able to pay your bills is a horrible experience that can leave you grasping for any help you can get. Unfortunately, there are many unscrupulous companies and individuals who are willing to prey on you because of your strong desire to get help. While you have options when facing debts collections, you must use care to carefully determine what your needs are and who can help you.

Debt Collections

    Dealing with aggressive debt collectors is often one of the most stressful, difficult experiences for anyone who has fallen behind on bills. A debt collector is a person who is there to try to convince you to pay a debt. Whenever you deal with a collector, you have the right to not be subjected to harassment, intimidation and other illegal tactics. A debt collector must comply with federal laws that limit what they can do or risk fines and penalties.

Debtor Rights

    As a debtor, you are protected by a variety of state and federal laws. You have the right, for example, to demand in writing that a collection agency stop calling you or contacting you at all, though the creditor can still sue you after. You also have the right to demand proof that a debt collector is actually entitled to receive payment from you for the debt. If the collector cannot provide proof, they are no longer allowed to try to collect it from you.

Free Debt Consolidation

    Debtors who've fallen behind on payments often look for outside help, and promises of "free" debt consolidation or "debt settlement" programs can seem too good to be true. Often, they are. When you consolidate your loans with a new lender, that lender may not offer you a service fee for the consolidation loan, but that doesn't mean the service is free. Consolidation loan companies will make money off of you from the interest and fees you pay over the course of the loan.

Help and Advice

    There is help available for people in need of debt help or considering debt consolidation. The Department of Justice maintains records of companies that are registered to provide credit counseling to consumers. You can also contact your state's Attorney General's office or an attorney in your area. If you are considering other methods, always research the company you are considering using and make sure they are trustworthy.

How to Update Credit Information

How to Update Credit Information

If erroneous information is reported by your creditors, you want to make sure it is corrected. Similarly, you want to ensure positive updates occur as soon as possible. Monitoring your credit reports regularly can keep you informed. While you cannot change credit information with the reporting bureaus yourself, contacting your creditors can ensure corrections are made. In some cases, a rapid re-scoring service might be able to help.



    Check your credit report with all three major reporting bureaus (Experian, Equifax, and TransUnion) to see their most current information about you. One free credit report per agency is available to you on a yearly basis by going to the Annual Credit Report website.


    Contact individual creditors if they have reported erroneous information about you. Make sure to get any assurances that they will correct errors in writing for your records.


    Contact the three major credit reporting bureaus to dispute erroneous information on your report. Provide them with copies of supporting documentation, such as letters from creditors stating that they made errors in reporting information.


    Talk with your mortgage lender or loan broker about the possibility of using a rapid re-scoring service if you are currently negotiating a mortgage or other loan. Provide them with supporting documentation regarding your claims that errors are lowering your credit score. They will provide this information to the rapid re-scoring service, which will contact the credit unions and update your information quickly.

Am I Liable for a Spouse's Debt During Separation?

Am I Liable for a Spouse's Debt During Separation?

One of the many tasks facing a couple at separation is what to do about splitting up property and debt. In an age where divorce is common and marriage occurs later in a person's life, many individuals come into a marriage already saddled with substantial debt. While her spouse will generally not be held responsible for her separate debt, it can affect the divorce case in several important ways.

Division of Marital Property and Debt In General

    All states divide marital property and debt according to the laws of equitable distribution or community property. Community property states divide the marital estate equally, while equitable distribution states presume that an equal division is equitable, or fair, but provide for an unequal distribution in the presence of one or more statutory factors. States generally define marital property and debt as that which either party acquires after date of marriage and before either date of separation or, in some states, date of divorce. These are the bookends for the marital estate, and the court can only divide marital property and debt.

Separate Property and Separate Debt In General

    Separate property and debt consists of that which a party incurred prior to date of marriage and after either date of separation or date of divorce. The separate debt of a party is that party's debt solely, and a court cannot assign responsibility for that debt in a later divorce case. As such, parties are not responsible for debt that the other party carried into the marriage, unless they refinanced it into an equity line or took a loan in their own or in both names to pay off the debt.

Distribution of Debt In Equitable Distribution States

    Although separate debt cannot be distributed, it can affect the division of the marital estate in equitable distribution states. The existence of a substantial separate debt load can serve as a "distributional factor" justifying the entry of an unequal division in favor of one party over the other. As such, a party with a substantial separate debt load may receive more marital property and less marital debt than the other. Conversely, the couple's use of marital income to pay down that party's separate debt during marriage can also serve as a distributional factor.

Effect Upon Spousal Support

    In addition to influencing the division of the marital estate in equitable distribution jurisdictions, a party's separate debt load can affect the outcome of an action for post-separation support and/or alimony. A party carrying a high debt load may have little or no income available to pay support, reducing his viability as a supporting spouse. Furthermore, the existence of the separate debt load probably meant that during marriage, the parties used marital funds to service the debt, which reduced their standard of living. On the dependent spouse's side, the existence of a substantial debt load reduces her available income for the payment of expenses, increasing her need to receive support from the other party in order to maintain her standard of living from the marriage.

Can They Take My Taxes if I'm Making Payments on a Defaulted Loan?

When a person owes money on a loan, he will generally face a number of actions by creditors seeking payment. Among the options available to many creditors is garnishment of the individual's wages. Garnishment is not available to creditors in all situations. And, garnishment of tax refunds is almost never available to a private creditor without a court judgment. However, the government may be able to garnish tax refunds.


    When a person owes money on a debt, he may face a civil suit filed by the party seeking repayment. If the judge rules that the person owes money on the debt, and the person doesn't pay according to the judge's terms, the judge may grant the debt collector the right to garnish the person's wages or seize funds from his bank account.

Debt Repayments

    If a garnishment order is placed, then the person must petition the court to have it lifted. If the person begins to make payments on the defaulted loan that led to the garnishment order, this may be enough to convince the judge to lift the order. However, starting payments will not automatically cause the garnishment to stop. An employer must receive an order from the judge before he can stop garnishing wages.

Tax Refunds

    Private creditors cannot garnish tax refunds from states except in Michigan, if the judge approves a creditor petition. However, governments are often able to garnish tax refunds, particularly if the debtor owes the government money in back taxes. If the person owes the government money from a defaulted student loan, then he could well face seizure of his tax refund by the Internal Revenue Service.

Taking Taxes

    Although a person could, in certain instances, have his tax refund garnished, a person will never have his actual taxes garnished. When a person pays taxes to the government, these payments will not be intercepted by anyone to pay off a debt. Neither the government nor a private creditor has a right to use tax payments to pay off another kind of debt, such as a defaulted loan.

How to Sell a Classic Car in Arizona

If you have a classic car that you no longer want to keep in Arizona, you can sell the vehicle on your own. The classic car market is slightly different from selling a regular car as classic cars are typically worth a bit more. As a result, when selling a classic car in Arizona or any other state, you must do things somewhat differently from when you are selling a regular vehicle, such as first getting an appraisal of the vehicle.



    Take your classic car to an auto appraiser in your area of Arizona so that you can get a written appraisal of the car. If you don't know any area appraisers, you can use the directory on the Auto Trader Classics website (see Resource section).


    Check the sales prices for similar classic cars in your area of Arizona by looking up the classified ads of your local newspaper or going online to the Classic Cars website (see Resource section) or the Auto Trader Classics website. This will help you know how to price your car in relation to its appraised value.


    Take some photos of your car. Create ads to sell the car on sites such as the Auto Trader Classics website, Craigslist and eBay. Prices for posting the ad vary. You can also post an ad in the classified section of your local Arizona newspaper.


    Place your car in some of the classic car shows in Arizona as this is a good way to get the car in front of potential buyers. The Cruisin' Arizona website (see Resource section) has a directory of all the classic car shows in Arizona.


    Remove your license plate and sign over the title of your car when you have a buyer. According to the Arizona Department of Transportation, you are required to sign over the title in the presence of a notary.

Thursday, November 26, 2009

How to Read Credit Report Numbers

How to Read Credit Report Numbers

There are three major credit-reporting bureaus in the U.S.: Experian, Equifax and TransUnion. While each has a slightly different format for its credit reports, the numbers on those reports mean the same thing for all three: They show how current you are with your payments. The numbers are contained in the credit history section of your report, which also contains information about your lenders, the account numbers and how long you've had the accounts.



    Locate the credit history section of your credit report. This section is usually in a table format, with the lender name, account number, date opened, last activity and other pertinent information. Most of the information contained in the table is self-explanatory. For example, "date opened" will have the date you opened the account, and "date reported" is the date the credit bureau last received information about your report.


    Find the "Past due" column. This is the amount (in dollars) of your past due payment.


    Locate the "High credit" column. This is the highest amount that you have charged on the card, or it could be your credit limit. If you have an installment loan, this figure will show the amount of the loan.


    Look at the number in the "Terms" column. A number will appear only if the item is an installment loan. The number could be the amount of the monthly payment or the number of payments you agreed to make.


    Locate the "Months Reviewed" column. This column represents how long the account has been reported to the bureau.


    Find the number in the "Status" column. A "0" or "1" in this column is good: It indicates paid as agreed or current. Larger numbers indicate that the account is past due. The larger the number, the more delinquent the account is.


    Check every number in every column for accuracy. Even the slightest error could seriously dent your credit historyfor example, a "9" in the Status column instead of a "1."

What Are the Tax Implications of Abandoning a Home Mortgage?

When you walk away from a home mortgage and allow the lender to take the home in a foreclosure, you may have tax implications to deal with afterward depending on how much of a deficit you owe. In most cases, the lender is not able to sell the house for the full amount of the mortgage, especially if you owe more than what the house is worth. With an 'underwater' house, money is still owed to the lender following the foreclosure and sheriff's sale.


    Once a debtor gets behind on his mortgage payment, after several late payments, the lender files for a foreclosure action in court. The foreclosure transfers ownership of the home from the homeowner to the creditor, who may then choose to sell the home to make up for the money defaulted by the homeowner.

Abandoning Mortgage

    When a debtor abandons a mortgage, sometimes called walking away from the mortgage, the lender sells the house through a sheriff's sale. The sheriff's sale does not always match the amount of the mortgage defaulted on, particularly if the mortgage was for more than the value of the house.

The Mortgage Forgiveness Debt Relief Act of 2007

    The Mortgage Forgiveness Debt Relief Act of 2007 prevents many homeowners from being hit with tax penalties if they do choose to walk away from a mortgage. This act applies to home mortgages defaulted on between 2007 and 2012. Types of mortgages excluded include mortgages on vacation homes and rental property.


    Single tax filers have a limit of $1,000,000 that is forgiven, or $2,000,000 for married filers. Any mortgage amount that is canceled or forgiven by the original lender is considered income for the filer. The amount that the house is sold for after the foreclosure is deducted from the total mortgage amount. Anything left over is considered taxable income for that year.

Wednesday, November 25, 2009

Credit File Reporting

Your credit file is the key to your credit history. A good or a bad mark on your credit file can mean all the difference between getting that car loan or the mortgage interest rate that puts home ownership in your grasp. Many people aren't aware of how credit file reporting works. Armed with knowledge of the procedure, you can defend yourself against unfair reports on your file.

What's Inside

    Credit file reporting applies to a limited area of information. The file contains personally identifying facts, such as your name and Social Security number. The file will also show material from public records like bankruptcies, judgments and secured loans. Any information about companies that have made credit inquiries and third-party collection agencies currently seeking to collect a debt will be there, too. The system lists and scores your credit accounts on a scale of R0 to R9, with R1 being the best, R9 being the worst and R0 being a new, unrated account.

Disputing Your File

    Sometimes false or otherwise inaccurate information goes on your credit report. While the road out of an inaccurate credit file report can be long and arduous, it's not impossible. You must send a certified, registered letter to the reporting bureau in question, which must respond within 30 days. Send another certified, registered letter to the reporting agency demanding proof of the negative information. If the information remains on your credit file, you have the right to add a 100-word statement about the issue. Consider consulting with an attorney as well.

Getting a Copy

    Under the Fair Credit Reporting Act, you have the right to one free copy of your credit report from each of the three major credit bureaus every year. You have to request a copy -- the credit agencies will not supply you with one otherwise. You can write directly to one of the three agencies or utilize a website specifically designed to show you your credit report (see Resources). If you write to the credit bureau, include your name, address, Social Security number and any previous addresses where you lived in the last two years.

Credit Scores

    A single number -- your credit score -- sums up your file. Creditors use this to determine whether to give you credit, how much they will give you, and the interest rate they'll charge. Credit bureaus determine your credit score using a complex mathematical formula based on how much debt you have, how old it is and the timeliness of your payments.

Monday, November 23, 2009

Can I Settle a Debt Before I Go to Court?

An enforceable debt is a legal obligation to pay a creditor. If the debtor does not pay her debt or otherwise comply with the contractual obligations between herself and her creditor, the creditor can sue her to collect. A lawsuit does not necessarily mean the case will go to trial. Settlement outside of court may be possible.

Settling a Case

    Settlement is generally always an option right up until the judge issues his final order. Parties do not have to settle, however, and before a settlement is effective or even viable, both parties must agree to the settlement terms. Settling a debt before going to court may be more likely when there is no genuine dispute about the debt, no applicable defenses and when both parties want to resolve the matter quickly and efficiently. Before considering a settlement, however, the parties must carefully analyze their case and seek legal assistance as necessary.

Settlement Pros and Cons

    Settling before trial saves time and money, factors which are generally advantageous to both parties. Settling outside of court often keeps the agreement private and, according to MFY Legal Services, there is no judgment that shows up on the debtor's credit report. However, by settling a case, the debtor gives up any applicable defenses. Further, certain debtors, such as those who are unemployed and are receiving government benefits, may be uncollectible anyway, meaning that the court may actually absolve the debtor of the debt.

Collection Lawsuit Defenses

    When a person is sued for a debt, the creditor, as plaintiff in the case, must prove that the debt was valid. According to the Crowder Law Center in California, this means that the creditor must present valid proof in court; debtors may be able to defend the case if there is not enough admissible evidence to prove the case. The timing of the lawsuit can be a factor; old debts may be subject to a statute of limitations defense, but the time period varies by state. Actions taken by the creditor may reveal additional defenses, including fraud.

Other Issues

    While settling a debt outside of court is possible, it is not always the best route to take. Defenses and the facts and circumstances of each case may warrant taking the lawsuit to trial. Each debtor's situation is different. Seek legal assistance when contemplating settling or proceeding with any type of lawsuit, such as a debt collection lawsuit.

How to Remove a Co-Buyer's Name From a Car Loan

How to Remove a Co-Buyer's Name From a Car Loan

A co-buyer is a someone who purchases a car with you and shares the financial responsibility for repaying the loan on time. There are a number of reasons why a co-buyer would want to remove his name from the loan, including a divorce or separation. In some cases, the lender will cooperate with just a phone call, but in general, you will need to refinance the loan.



    Call the lender and ask if you can remove the co-borrower from the loan. In the case where the main borrower has made prompt, full payments, the lender may be willing to drop the co-signer from the loan without further action.


    Visit the lender's local branch and ask to refinance the loan in your name only. Refinancing means that you would be taking out a new loan in your own name, without the co-buyer. You will need to refinance if the lender will not remove the co-buyer from the loan.


    Fill out the necessary paperwork to refinance. This will include your employment history and financial status. Wait for the lender to perform a credit check and approve you for the new loan.

Sunday, November 22, 2009

How to Negotiate a Successful Agreement

How to Negotiate a Successful Agreement

Embroiling yourself in a lawsuit can quickly turn into one of life's most expensive experiences. Between lost time from work and attorney fees, many litigants see the price of being right quickly exceed what they would have paid out in a settlement. This is not to say that you should accede to every demand, however; employing smart negotiating principles can lead to the achievement of an agreement that will be satisfactory to both parties.

Mind Your Manners

    Although negotiations can sometimes become heated, maintaining civility is key if you wish to reach an acceptable resolution of any debt or problem. A creditor, attorney or settlement agent will always be more likely to go to bat for you with his clients or superiors if he has a positive impression of you as a person. Look at it this way: Who is it more fun to hang up on, a screaming bill collector or one who tries to be your friend? Be firm in your position and don't be afraid to advocate for yourself, but avoid yelling and profanity -- even if the other side doesn't.

Show Your Best Cards

    Just as trial by ambush is disfavored in the civil procedure code of every state, it should be disfavored in your negotiations, as well. You will gain nothing by hiding your strongest points from the other side. While ambushing an opponent -- especially a mouthy collection agency -- may feel great, it makes no business sense to hold back evidence that could convince the other side to settle with you. If you really want to negotiate a successful agreement, don't just tell the other side how strong you are; show them.

Keep Your Promises

    Any agreement you reach with the other side in a negotiation boils down to a promise by both sides to do or not do certain things. As such, credibility of the parties is key. When you tell an attorney, creditor or agent that you will do something by a certain time, do it. Call when you say you will call, produce documents by agreed-upon deadlines and return forms and questionnaires as agreed. Consider how the other side can trust you to live up to a negotiated agreement if you can't even honor a simple deadline.

Be Willing to Walk Away

    While working together toward a mutually acceptable compromise is critical to negotiating a successful agreement, your negotiations may reach a stage where you can concede no more. You may find yourself unable to maintain your self-respect if you give in beyond a certain point, or your capabilities and finances may fall short of the other side's best offer. When you have reached that place where you cannot give any more or accept any less, be willing to walk away from the table. A successful agreement is one that each side can live with even if they want more out of the experience than they're getting; if you can't deal with the other side's best offer, sometimes walking away is the only option.

What Do I Need to Know About Home Equity Line of Credit?

What Do I Need to Know About Home Equity Line of Credit?

A home equity line of credit or HELOC is a loan with your house as collateral. If you use a HELOC to pay off your credit cards, you are trading unsecured debt for secured debt. Experts at Illinois Legal Aid and Michelle Singletary at PBS suggest that this places your home at unnecessary risk. The HELOC can work to your benefit if you need money and available sources are limited.

How It Works

    The home equity line of credit is a contract; the interest rate and terms may be different from one lender to another. You will need a home appraisal, and to know the total amount owed on the home. If you have equity in the home, you can determine how much equity is available by subtracting the total owed on the loan from the appraisal value. This is your actual equity. Your lender will not make a loan for the total equity, but may offer 75 percent of your equity in a HELOC. For example, if your home is valued at $100,000 and you owe $60,000, you have $40,000 in equity. The lender may offer 75 percent, or $30,000, in a HELOC loan.


    Your costs for the HELOC are similar to a home mortgage. You owe an application fee and appraisal costs, along with any points or upfront expenses. You also owe closing costs including title search, attorney's fees, mortgage preparation, filing fees, property insurance and title insurance. You may also have to pay membership or maintenance fees. The lender charges a transaction fee every time you draw on the line of credit. Costs are substantial. Make sure it is worth it to you. If you need a small amount of cash, the HELOC is not a good source.

Draw Period

    Your loan sets a period of time or "draw period" for you to use the line of credit. Ten years is common. You may have to draw some of the loan funds when the lender gets the HELOC set up. The interest rate is variable, so it depends on when you borrow money that determines the interest rate. A lender can freeze or reduce your line of credit if the value of the home decreases or if it appears that you may not be able to repay the loan.

Repayment Terms

    You may have 10 years draw period and 10 more years for payback. You may make payments every month that cover all of the interest and some of the principal, or you may pay interest only, depending on the terms. When the HELOC plan ends, you have to pay it all back, no matter how much is still outstanding. This is a "balloon payment" and may cause you to lose your home if you do not plan for it. If you sell your home, you must repay the HELOC at the closing.


    Second mortgages are usually for a set interest rate, and payback is for the entire loan and interest. This loan is easier to understand with less risk if you need equity from your home. If you are a senior citizen, you may qualify for a reverse mortgage with similar risks to the HELOC. The reverse mortgage does not require payback during your lifetime, but accrues interest and fees over the life of the loan. You may lose your home if you do not maintain the taxes and insurance, or if you do not live in the house for an extended period of time. Always attempt to borrow money with the least risk to you. Use credit cards for unsecured loans instead of risking loss of your home.

What Is Better: Filing for Bankruptcy or Paying Off Debt?

There are several options for paying off and eliminating debt. While filing bankruptcy is an option, it has many serious repercussions. Paying off debt can give you a feeling of success and achievement, helping you to learn more about sound financial management. However, if you have exhausted all other options, then bankruptcy is a viable strategy for getting out of debt and reclaiming your financial future.

Different Ways to Pay Off Debt

    Consulting with a debt counselor can help you to create a plan for paying off and eliminating your debt. Many communities have free resources for helping people in debt and educating individuals about money management. Different strategies for paying off debt include paying off more than the minimum payments, snowballing payments so that you pay off the smaller debts first, cashing out your savings account, borrowing against life insurance or 401K plans, getting a home equity loan, or borrowing money from family or friends.

Last Resorts for Paying Off Debts

    If you have exhausted all of the above options, try to renegotiate terms with your creditors. If you contact your creditors and tell them about your situation and that you might be forced to file for bankruptcy, your creditors may be willing to find better terms for repayment. Ask for a new or lower payment schedule, lower interest rates, or appeal to their desire to receive payment. If contacting creditors seems too daunting, then there are organizations that will do it for you.

Bankruptcy Benefits

    By filing for bankruptcy, creditors are barred from debt collection, stopping the telephone calls and harassment. Payments on cars and mortgages cease, at least temporarily. Lawsuits against you for debt collection are prohibited during this time. Your car cannot be repossessed, although you may be required to liquidate it if you file for Chapter 7 bankruptcy. Another benefit is the discharge of most credit card and medical debts.

Drawbacks of Bankruptcy

    Declaring bankruptcy remains on your credit score for 10 years. If you plan on taking out a loan for a car or house over this span of time, then it will be much more difficult than if you had not declared bankruptcy. Having a wrecked credit score can also affect which credit cards you may qualify for in the future as well. You will only be able to attain those with higher interest rates. Other drawbacks include attorney and court fees that could amount to several hundreds of dollars in order to declare bankruptcy. Chapter 7 bankruptcy may require you to liquidate your property to repay some of the debt owed. Chapter 13 bankruptcy allows you to keep your assets, but the court will be in control of your finances and will construct a repayment plan for all or part of your debt over the next three to five years.

Saturday, November 21, 2009

How Long Is a Debt Legally Enforceable?

The United States has laws that limit the amount of time a creditor can collect a delinquent debt. However, some debt-collection companies attempt to skirt those laws to force consumers to pay delinquent debts that could be several years old. Consumers who aren't aware of their rights can easily be taken advantage of by those companies.

Statute of Limitations

    Each state has a statute of limitations or a set time in which legal action can be taken over a debt. For example, California allows a company up to four years to file a lawsuit in an attempt to collect credit-card debt. A Bankrate article titled, "State Statutes of Limitations for Old Debts" reports that a debt collector who threatens to sue a consumer to recoup debt beyond a state's statute of limitations is violating the U.S. Fair Debt Collection Practices Act. Yet, an MSN Money article titled, "Zombie Debt is Hard to Kill," notes that some companies specialize in buying old debts to try to profit from collecting them. The article reports that debt buyers are using new technologies to track down debtors who are most likely to pay off old debts.

Court Judgments

    New York City's Neighborhood Economic Development Advocacy Project says its mission is to promote community economic justice. The NEDAP notes on its website that New York allows companies six years from the date of default to file debt-collection lawsuits. Yet the NEDAP says the date of default is about 30 days after the last payment was made. Therefore, a consumer who made his last payment on an old credit card in December 2010 could be sued by a debt collector until January 2017. Furthermore, the NEDAP says if the collector wins a court judgment against the consumer within the original six-year time frame, the statute of limitations to collect on the court judgment is 20 years.

Fair Debt Collection Practices Act

    Violations of the Fair Debt Collection Practices Act aren't uncommon. Therefore, consumers should know the statute of limitations for debt collection in their state. A collection agency's legal actions are limited if someone contacts you about a debt on which the statute has expired. You could try to negotiate a settlement to avoid a lawsuit if the statute hasn't expired, but you may want to seek an attorney's advice to avoid further problems. For instance, another collection agency could try to recoup the rest of what you owe if you settle a debt with a collector by paying less than the full amount owed. Attorneys experienced in debt-collection cases are listed on the National Association of Consumer Advocates website.


    The NEDAP notes that delinquent debt information can only remain on your credit report for seven years, despite the number of times an old debt is purchased by debt buyers. Some debt buyers try to re-age old debts by reporting them to credit bureaus on the basis of the date they bought them, rather than report the original date of delinquency. Re-aging debt in that way is illegal, and causes a delinquent debt to remain in your credit files longer than it should if you don't dispute it.

Is Taking Out a Personal Loan to Pay Off Credit Card Debt Smart?

When you have a lot of credit card debt, one option is to pay the balance with a personal loan. You should not think of this as paying off the credit card, but rather as transferring the balance to a different type of loan. You still owe the same amount, but to a different lender and hopefully with better terms. In some cases, this can be a smart choice, but it also has its pitfalls.

Interest Rate Comparison

    Using a personal loan to pay off one or more credit cards can be smart if the personal loan has a lower interest rate than the credit cards. For example, if your credit cards have a high interest rate of 18 percent and you can qualify for a personal loan at just 12 percent interest, this move can result in significant savings, because less of each payment goes toward interest and more of it can go toward paying down your debt.

Monthly Payment

    The monthly payment on a personal loan can be either greater than or less than your credit card minimum payment. It depends on the repayment terms for the personal loan. If you are trying to lower your monthly payment, you should get a personal loan with a long repayment term to stretch out the payments. However, this has the drawback of charging you more money on interest overall. A shorter repayment period provides the advantage of getting out of debt more quickly and paying less interest, but the higher monthly payments could put a stress on your budget.


    When you use a personal loan to pay off a credit card, the credit cards are left with no balance and a lot of available credit. The biggest danger is that you will not be disciplined enough and will accumulate balances on your cards again. This will put you in a situation of not only having to pay your personal loan bills, but also having to pay credit card bills again. If you don't trust yourself to avoid using a card with available credit, you may choose to leave the balance on your card instead of taking out a personal loan, or you may close the card immediately after you pay it off.

Other Options

    Although a personal loan can be a suitable choice for disciplined people who know they will not run up their credit card balance again, there are a few alternatives. Home equity borrowing typically has lower interest rates than personal loans, so a home equity loan could help save money. However, it is risky because it puts the home at risk of foreclosure if you miss payments. Another option is to call the credit card company and request a lower interest rate to help save money. Transferring the balance to a new credit card with a zero percent promotional interest rate can help for a period of time, but transfers usually involve fees, and missing a payment could trigger very high interest rates.

Can Settlement Money From a Car Accident Be Garnished?

Sometimes, a person involved in a car accident will be compelled to settle with the other party involved in the accident, or his insurance company, for a set sum of money. The party that is financially responsible for the accident will be required to make payment to the other party. If the financially responsible party fails to do so, the other party may sue her in court and, if necessary, have her wages garnished.

Car Accident Settlement

    After a car accident has occurred, the insurance companies representing the drivers will attempt to determine who caused the accident and who is legally responsible for the expenses arising from the accident. While this may be decided in court, more often the parties involved in the crash will settle outside of court, with one party agreeing to make restitution to the other, either verbally or through a written contract.

Civil Suit

    If the party that has agreed to pay money stemming from the accident fails to do so, he may be sued in court. This suit will likely be a breach of contract suit, as the person failed to uphold his end of the legal agreement to make a payment to the injured party. If the plaintiff wins, he may be awarded damages. If the defendant refuses to pay them, the judge may order a garnishment.


    When a defendant's wages are garnished, it means that money is extracted from his paycheck by his employer and given to the plaintiff. In most states, garnishments can be ordered for the collection of damages from civil suits. However, the judge must first receive a petition from the plaintiff for garnishment and, upon agreeing to it, issue an order of garnishment to be presented to the defendant's employer.


    Certain types of individuals are exempt from garnishment. For example, many states forbid low-income individuals from having their wages garnished. In addition, some income streams cannot be garnished. For example, federal benefits, such as Social Security payments, cannot be forcibly seized by private creditors. So, in some cases, a plaintiff may not be able to issue a garnishment order against a person who has failed to make good on a settlement.

Friday, November 20, 2009

Credit, Foreclosure and Mortgage Refinance

If you are struggling to make your mortgage payment each month, you are likely concerned about the possibility of losing your home through the foreclosure process. In addition to losing your home, you will also damage your credit. Foreclosure can be avoided, in many cases. Refinancing the loan can provide the relief you need to stay above water. It is important to explore all possible options when trying to save your home.


    When you default on your mortgage loan, the lender initiates the foreclosure process to legally repossess your home. A foreclosure is carried out either judicially or nonjudicially. Some states laws specify which method is allowed, while other states allow the lender to decide. Typically, if the mortgage deed contains a "power of sale" clause, the lender has permission to sell the home without filing a lawsuit against the homeowner. The length of time a foreclosure takes also depends on the state's laws. A foreclosure generally ends with the sale of the home through a public auction. If your state has a right to redemption law, you may be able to purchase back the home by paying the entire loan balance plus fees. The redemption period can range from a few days to a year, depending on the state. If you are facing foreclosure, it is important to communicate with your lender. Foreclosure can be avoided in many cases.


    Refinancing can often be a way to avoid foreclosure. If you are struggling to pay your mortgage, consider refinancing at a lower interest rate to reduce your payments. In most cases, you must be current on the loan, which means you cannot be more than 30 days behind on your payments. Your home will need to appraise at the purchase price of the home or higher. Your credit score and employment will also affect your ability to refinance.

    The Making Home Affordable Program features a more forgiving refinance option for homeowners with less than perfect credit and homes that have declined in value. Through the program, homeowners with a loan guaranteed by either Fannie Mae or Freddie Mac are eligible as long as the mortgage does not exceed 125 percent of the current market value of the home. Homeowners who do not qualify may be eligible for a loan modification through the program. A loan modification also reduces the interest rate and will extend the length of the loan to bring down the payment to less than 31 percent of your monthly income. Homeowners interested in refinancing can contact their lenders or call the HOPE Hotline at 888-995-HOPE.


    Foreclosure will have a significant impact on your credit. According to MyFICO.com, payment history accounts for 35 percent of a credit score. As soon as you fall behind on your payments, you may feel the impact even before the foreclosure process has begun. A foreclosure will remain on your credit report for at least seven years from the date of sale. Some states allow deficiency judgments for the difference between the sale price and amount remaining on the loan. If your lender pursues a judgment, the lender can collect the money owed by any legal means, including property seizure and wage garnishment. Chapter 7 bankruptcy is a foreclosure alternative that allows you to avoid liability. If you choose to file bankruptcy, ownership rights to the home are given back to the lender and the debt is forgiven. Your credit score will suffer for at least 10 years from the date of filing the bankruptcy petition.


    Housing-counseling agencies approved by the U.S. Department of Housing and Urban Development (HUD) can help you avoid foreclosure and answer any questions you have about the process or solutions. Counselors specialize in preventing foreclosure and preserving credit. After the counselor assesses your case, all possible options are explored. Saving your home may be as simple as creating a budget or prioritizing your spending. Other homeowners may qualify for state or federal assistance to reduce their payments. In some cases, you may not be able to keep the home and would benefit from a short sale or deed in lieu of foreclosure. Find a nonprofit agency near you that provides HUD-approved housing counseling by visiting the HUD website (see Resources).

How to Stop Credit Card Debt in Texas

How to Stop Credit Card Debt in Texas

The state of Texas does not have specific laws to help stop credit card debt, but there are plenty of resources in the state for getting credit card debt problems under control. In most states runaway credit card debt can eventually lead to lawsuits and wage garnishment. Texas law does not allow wage garnishment, taking away one powerful weapon from debt collectors.



    Enroll in a debt management plan with the help of a nonprofit credit counselor. Agencies such as Consumer Credit Counseling Service (CCCS) of greater Dallas can act as an advocate in talks with credit card companies. Authorize the agency to act on your behalf in seeking lower interest rates, reductions in fees and reversal of some finance charges on credit card accounts. These actions will help stop credit card debt as an individual commits to a required four-year repayment plan through the counseling agency.


    Make one lump some payment to the agency each month covering all bills and the agency will send out checks to all creditors. The goal is for an individual to emerge from the program with credit card and other unsecured debt eliminated or greatly reduced. There are CCCS agencies throughout Texas; check the telephone directory for listings or search online. Seek referrals for other counseling agencies from community organizations such as the Houston Urban League or the United Way of San Antonio and Bexar County.


    Begin debt settlement. Numerous for-profit companies in Texas specialize in debt settlement, but the Federal Trade Commission says an individual should manage this because firms are often unreliable. Debt settlement allows a person to pay off credit card debt for less than the full amount owed. Generally, credit card companies will entertain settlement offers once a person has fallen four or five months behind. At six months, these companies usually close accounts, list them as charged off and sell them to debt collection companies. Before that the credit card companies often will settle for less than the full amount. According to The New York Times, card companies will sometimes accept as little as 20 percent of the balance--an 80 percent savings and an ideal way to stop credit card debt.


    File for bankruptcy. Bankruptcy is an effective but extreme tactic for stopping credit card debt. With Chapter 7 bankruptcy, eliminate all credit card debt within just a few months. Another option is Chapter 13, which is better for homeowners because it allows people to keep homes during a five-year repayment plan to all creditors. At the end of the five years any remaining credit card debt will be discharged or eliminated. File for bankruptcy in Texas, seek the advice of a private bankruptcy attorney or seek free or discounted legal help by contacting organizations such as the Dallas Bar Association or Legal Aid of Northwest Texas.

Thursday, November 19, 2009

Collection Agencies and the Debt Collection Legal Process

All collection agencies serve as third-party debt collectors that either work under contract recovering unpaid debts for other companies or purchase and collect on delinquent accounts from the original creditor. Any debt collector with the legitimate right to recover a debt you owe reserves the right to sue you. When doing so, however, the company must closely adhere to both state and federal regulations regarding the debt collection legal process.

Formal Notification

    Any collection agency that files a lawsuit against you must provide you with formal notification of the suit based upon your state's laws. A formal summons and complaint serves as adequate notification of the impending lawsuit and informs you of the company's complaint against you and the lawsuit's court date. Collection agencies must deliver the summons and complaint according to your state's guidelines.

Informal Notification

    A debt collector's threat to sue a consumer is only legal if the collection agency has the right to file a lawsuit and the company actually intends to follow through with legal recourse. Threatening legal recourse in an effort to frighten a debtor, if the company cannot or will not sue, is illegal in every state under the Fair Debt Collection Practices Act. Informal notification of a lawsuit does not meet the legal requirements for service. The collection agency must either serve the debtor a summons and complaint or prove that it exhausted every effort in its attempt to locate the debtor.

Time Limit

    The statute of limitations in the consumer's state determines the collection agency's legal right to file suit against the consumer. The statute of limitations begins 180 days from the date the individual made his most recent payment on the debt -- regardless of whether that payment was to the collection agency or the debt's original creditor. State statutes of limitations for debt collection are based on specific state laws and, as such, vary by state. Although collection agencies can file lawsuits against consumers once the statute of limitations has passed, doing so is not legal. Should such a lawsuit occur, the debtor can use the expired statute as his court defense.

The Court Judgment

    A collection agency's goal in pursuing legal action against a debtor is to win a judgment. The court will award a judgment in the collection agency's favor if the debtor does not respond to the company's summons and complaint and does not argue his case in court or if the debtor answers the summons and complaint, appears in court yet argues the case ineffectively.

Post-judgment Collection

    Like the statute of limitations regulating debt collection lawsuits, the laws surrounding a collection agency's additional rights, once it receives a judgment, vary by state. In general, the company will move to garnish the individual's wages or levy her bank accounts. Certain forms of income, such as child support, unemployment, Social Security and other forms of retirement benefits, are exempt from seizure by collection agencies following a court judgment.

Wednesday, November 18, 2009

How to Handle Collection Agencies if You Are Not Working

Handling collection agencies if you are not working requires you to take control of the situation. Paying debts in a timely way is important, but providing for necessities such as food, shelter, and clothing usually is more critical when you are out of work. This means you must clearly communicate your situation to the debt collector, offer to pay only what you can, and stay with that plan until your financial situation improves. It's imperative that you show the debt collector that you are sincere about wanting to pay your debts, but that you will not submit to intimidation.



    Create a monthly budget for all your expenses. List necessities first, followed by bills you must pay, such as your mortgage. Make projections for monthly income, such as unemployment benefits or withdrawals from savings accounts. The amount you have left is what you can afford to pay to debt collectors, even if that amount is just $20 a month for each collection agency.


    Call each agency attempting to collect from you, or wait for their next phone call. Explain that you want to pay your debt but you simply cannot make significant payments currently because you are not working. Tell the agency you can afford only a small monthly payment until you return to work. Tell the representative what you can afford to pay, and ask if the agency will accept such an agreement. Keep the conversation short and to the point.


    Send letters to each of the collection agencies recapping the conversations. Make it clear in your letter that your offer is a take-it-or-leave-it proposal, and that you cannot move off of your position because of your unemployment. Request a payment agreement from the debt collector in writing.


    Consult with a consumer affairs attorney if a debt collections agency refuses to cooperate and files a lawsuit against you. A lawsuit is the only way for the debt collector to force you to pay. Without a lawsuit the debt collector cannot garnish your wages or take money from your bank account. However, a lawsuit may be less likely after you have explained your unemployment situation to the debt collector and offered to pay what you can each month until you are back to work. Don't panic if the debt collector does file a lawsuit. An attorney can file various legal motions stalling a debt lawsuit for months or even longer. That will give you time to focus on finding a job and settling the lawsuit later.

Why Is Checking Your Credit Report Important?

Why Is Checking Your Credit Report Important?

Each year, all American consumers are entitled to one free credit report. The reason you are entitled to this free credit report is to promote consumer examination of their personal credit reports. If you had to pay for it, you may be less inclined to check your report. There are a variety of reasons why you should check your personal credit report.

Your Credit Report

    AnnualCreditReport.com is the only site that offers the free annual credit report provided under federal law. When you log onto the site, you are asked to fill out your information and you are then asked a series of questions that only you would know. These questions are designed to verify your identity. Your credit report contains your personal information, any potential negative accounts, accounts in good standing, any requests made for your credit history, any messages from the credit bureaus and the credit bureau's contact information. All of the accounts on your credit report contain the name and address of the business you transacted with and the date and the amount of the transaction. If you had a loan or credit card, the report shows the dates of your payments, if the payments were late and if they were late payments, how late the payments were made (i.e., 30 days or 60 days late).

Accuracy of Information

    Checking your credit report ensures the accuracy of the information on your report. The companies you are transacting with have thousands, even millions of other customers. Although unlikely, it is possible that your information could be reported inaccurately. If you know that your credit card payment was on time in June of 2009 and your report shows the payment as 30 days late, you can contact the credit card company and attempt to fix this error. If you have proof, such as a bank statement or a receipt of your payment, this will help correct the error.

Your Identity

    You should always check your credit report is to ensure your identity has not been stolen. If you see there are errors on your credit report, it may be more serious than a reporting mistake. If you see a variety of purchases made around the same time period, or any purchases that you did not make, your identity may have been stolen. If your identity has been stolen and the thief has made purchases, the FTC advises you take four steps. First, review your credit reports from all three bureaus---TransUnion, Experian and Equifax---and place a fraud alert on your credit reports. Second, close all of the accounts that you believe the thief has accessed. When you call and close the accounts, let the companies know that your identity has been stolen. Then, file a complaint with the FTC. Finally, file a police report.

Debt and Credit Management

    Another reason to check your credit report is to manage your credit and your debt. Your credit report serves as a summary of all of your old and outstanding debt, all of the payments you have made to your accounts and any credit inquiries. Instead of going through all of your accounts separately, you can check your credit report and have all of the information in one place. This way, you will know where you stand and where you need to focus your time and resources if you want to eliminate your debt and improve your credit.

Pitfalls of Debt Relief Agencies

For some people drowning in debt, debt relief agencies are an ideal way to get back on financial track and pay off some old debts. However, if you are not careful, debt relief agencies can cause more harm than good.

Credit Score

    Using a debt relief agency to pay your bills negatively impacts your credit score.


    Debt relief agencies often charge you a fee for providing the service of negotiating rates and payments with your creditors. However, you can often negotiate similar rates yourself for free.


    Many debt relief agencies offer loan consolidations to help you pay off your debts immediately. Over the life of the loan, however, you would pay more than if you just made the payments to your creditors as scheduled.

Credit Problems

    When enrolled in a debt relief program, it may be impossible to take out any more lines of credit. This means that, if you want to apply for a new apartment, car loan or mortgage, you will be unable to get accepted while in the debt relief program.


    A debt relief agency offers a solution to a problem, but it does not change your behavior. In order to remain debt free, you must realize your spending problems and find a way to change your behaviors when it comes to money.

Tuesday, November 17, 2009

What Happens If a Payday Loan Is Defaulted?

What Happens If a Payday Loan Is Defaulted?

Payday loans are short-term loans targeted toward people with bad credit. A payday loan is called this because the duration of these loans are only until the borrowers next payday, typically two weeks. This differs from a standard loan, which may be borrowed for a year or more. A payday loan also does not require collateral, as do many standard loans. However, it can be easy for a payday loan to go into default if the borrower does not have the money to pay back the loan. When this occurs, there are a few things that can happen.


    When a payday loan is defaulted, the company will turn it over to a collection company. A loan will go into default usually after the first missed payment, although many companies will attempt to work out a payment plan with the borrower first before they turn the account over. They may also offer the choice of extending the loan until the next pay period.


    If you have defaulted on a payday loan, you can still settle it with the collection agency. Talk to the company that contacts you to make arrangements to pay on the loan.


    A common theory is that a payday lender cannot sue for their money. However, in most states, the courts may allow a lender to garnish the wages of a borrower who has defaulted on the loan.


    A payday loan default will affect your credit score negatively. It may also keep you from receiving any other payday loans that you apply for in the future, unless it is paid off.


    Talk to a debt consolidation company if your loans are in default if you need help with paying your bills. You may also speak to the payday lender before you default on your loans to try and arrange a payment plan.

How to Avoid Collection Agency Scams

With all of the old debts floating around out in "credit limbo," it can be hard to tell which bill collectors are going after legitimate debts and which ones are just going after a random buck. Use these steps to judge whether a credit caller is actually due any money from you, and act accordingly.



    Verify information. When a creditor comes calling out of the blue, ask specifically what debt it is they are trying to collect, on whose behalf, and what the delivery date was for services provided. Also get details about interest or other penalties. If the representative balks, it is probably a scam.


    Check your credit report. If you have a debt that is affecting your credit, it has to be reported on one of the three big credit databases (see Resources for Transunion, Experian, and Equifax) that monitor consumer credit. If it isn't, something is wrong. Either the collector is scamming, or the debt has fallen under the radar. Either way, you need to evaluate whether it is a legitimate collection if the judgment doesn't show up on your credit report.


    Refer to the statute of limitations for your state. Collectors can't contact you after several years to reopen an old debt. Under statute of limitation laws, a debt is declared clean if it doesn't get follow-up communications within a set number of years.


    Don't accommodate credit callers who ask you to go after your neighbors. Even someone who once rented in the property you are renting or buying is not your concern. Some consumers with land-line telephones say creditors are asking them to connect them with neighbors or other non-family associates. This is not legitimate. Creditors can't ask you for help doing their leg work. Report these kinds of calls to a business bureau or chamber of commerce.


    Don't give out personal information to a credit company until negotiations are complete. Otherwise, you might find that their calls were just a front to get enough information to leverage against you.

Monday, November 16, 2009

Which is Best: Credit Counseling or Debt Settlement?

If you have debt problems, you have an array of possible strategies you can try to get your finances back in order. Credit counseling and debt settlement are two options available to you, though neither is a guaranteed solution. Every debt situation is different, and you should always evaluate your finances carefully before choosing what strategy you use to get out from under your debt problems.

Credit Counseling

    Credit counseling services come in a variety of types, many offering quality advice and planning to people with financial problems. While many credit counselors are part of nonprofit groups, it doesn't necessarily mean the credit counseling services they offer are free. Credit counseling can be an invaluable part of your debt strategy, and counselors can provide you with a lot of assistance, especially if you are not comfortable dealing with difficult financial problems.

Debt Settlement

    When you try to settle your debts, you and your creditors negotiate new terms that let you more easily deal with the debts you've incurred. For example, you might be able to get a creditor to agree to take a reduced payment plan that lets you pay a debt off over a longer period of time, or one in which you make a single large payment to pay off a larger debt.

Settlement or Counseing

    Debt settlement and credit counseling are not mutually exclusive. You can, for example, talk to a credit counselor and determine that trying to settle your debts is the best option for you. Alternately, a credit counselor may advise you that settling your debts is not a good option, and that a better plan would be to develop a strict budget that lets you pay off your debts without settling or even filing bankruptcy so you're protected from your creditors.


    Debt settlement, though it often lets you pay off your debts for less than the amount you owe, negatively impacts your ability to get new credit in the future. Whenever you settle a debt, that information gets recorded on your credit report, and future creditors will see it as a sign that you are not a reliable creditor.

Proof of Contract Debt Elimination Strategies

Proof of Contract Debt Elimination Strategies

Under the Fair Debt Collection Practices Act (FDCA), debt collectors and creditors are required to provide a consumer contractual proof--documents bearing their signature--to be able to prove a debt valid. Without this evidence, a debt can be disputed successfully.


    When entering into a binding agreement with a creditor, you must sign paperwork accepting the terms of the loan and subsequent payments. Without a contract, the creditor does not have a legal leg to stand on when attempting to collect a debt. When a debt goes into default and placed with a collection agency, the burden of providing contractual proof of the original debt falls on them.

Time Frame

    You have the right to dispute the debt within 30 days of the original notice from a creditor or debt collector. You do so by contacting the creditor or debt collector and demanding proof that the debt belongs to you. Under the FDCA, the creditor or debt collector must reply within 30 days and provide contacts bearing signatures of the consumer as well as a payment history. Failure to do so means that the debt cannot be proven valid, thus cannot be reported to credit reporting agencies or attempt to be collected.


    A statute of limitations is the amount of time a creditor or debt collection agency has to legally collect a debt. The statute differs from one state to another. Once the statute of limitations has expired, the agency can no longer attempt to collect the debt; however, they can continue to report the unpaid debt on a credit report if they can provide the contractual proof that it is a valid debt.

Sunday, November 15, 2009

How to Have Clear Judgment

How to Have Clear Judgment

Judgments can certainly impact your life; their negative effects keep you from being able to borrow money or if you do get financing, judgments will cause you to pay a higher interest rate. Time is the only thing that will clear judgments from your record, however if the judgment has not been satisfied, you will have to wait much longer than if you simply paid off your debt and let time do the rest. The statute of limitations on judgments is 20 years in the majority of states, whereas credit reporting agencies reflect paid judgments for only seven years.



    Pay off outstanding judgments or liens in full. Give the creditor about one month to file a satisfaction of judgment with the court. The judgment will remain on your credit report, however the creditor should notify the credit bureau the debt has been paid in full. Your credit report will be modified to show the judgment as paid.


    Request a copy of your credit report to verify the payment status. If the creditor has not updated the record to show the payoff, contact him immediately. Document all conversations and correspondence between you and the creditor. Ask him if he will update the records to show the debt has been paid in full. If he won't, advise him that you will send him a blank judgment form for him to complete.


    Locate a blank satisfaction of judgment form from an office supply store or your county clerk's office. Fill out the information on the form, such as your name and address, and the creditor's name and address as reflected on the judgment. Deliver the form to the creditor either by mail or in person. After he has filled out the appropriate information on the form, file the original in the same county and state courts that the judgment first appeared. Pay any additional costs necessary to obtain a certified copy for yourself.


    Contact the credit bureau to find out where to send a copy of the satisfied judgment. Send a copy to the credit bureau, together with a request for an updated credit file. Send all documentation by certified mail. Allow for about a month for the changes to be made.

How to Send Money to a Debt Collector

How to Send Money to a Debt Collector

Always use caution when sending money to a debt collector. Though most are legitimate, with no bad intentions, the debt collection and litigation process is complex, requiring considerable paperwork. To protect yourself and your credit history, be sure to request the correct paperwork and send money in a way that leaves a paper trail in case you ever have to prove you indeed made a payment. It's also important to get the terms of your repayment in writing before you ever send money at all.



    Find your debt collector on-line and do some research to verify the collector and company are legitimate. If the collector initiated the call, you want to verify the phone number before releasing any personal information. Thus, call back at a number you found through your research.


    Write down the collector's name, address, telephone number and company affiliation while still on the phone together.


    Write down the amount of debt you are told you owe.


    Discuss a repayment agreement that works for both of you. Do not agree to terms you cannot truly afford. Explain your circumstances and try to find a mutually acceptable solution.


    Request a letter detailing your repayment agreement. Explain that until you have the letter, you cannot make a payment. You can also accept this letter via email or fax, if the collector needs to finalize the arrangements more quickly.


    Read the letter and ensure it properly states the terms of your agreement.


    Pay the debt collector as agreed. Only use check, debit card or credit card. Money orders are not easy to track, so if you have to later verify a payment, it will be easier if you use one of the foregoing methods.

Government Help for Debt Relief

The United States government offers several ways for struggling individuals and business owners to get out of debt. The type of debt relief program someone is eligible for depends upon the nature of the debts as well as his annual income level and ownership of assets such as a home.

(References 1, 3, 4, and 5)

Tax Assistance

    Most types of federal, state and local income tax bills are ineligible for bankruptcy debt relief programs, warns the Internal Revenue Service. Unless the tax bills were incurred at least three years ago, you must work out payment arrangements with the involved taxation agency. Failure to pay taxes can lead to liens against your property and wage garnishments. As of 2011, people owing less than $25,000 in federal taxes could apply online for an installment payment plan.

Chapter 7 Bankruptcy

    People with few assets to lose and earning less than their state's annual median income level can potentially discharge many of their debts through Chapter 7 bankruptcy. As of 2011, the annual median income figure for a single Florida resident was $40,029, while the yearly income level for a family of four in Rhode Island was $88,593, according to the U.S. Trustee Program. State asset exemption laws may enable some Chapter 7 filers to keep their homes and at least some of their cash.

    (References 1 and 2)

Chapter 13 Bankruptcy

    If you earn more than your state's annual median income level and did not successfully prove your inability to repay debts and support your family, you must file Chapter 13 bankruptcy. Chapter 13 creates a partial debt repayment plan that typically lasts between three and five years. You cannot include child support, alimony, court fines or most federal student loans, warns the book "How to File for Chapter 7 Bankruptcy." Also, you must have consistent income to qualify for Chapter 13 and cannot get new credit without a judge's approval during your repayment plan.

Corporate Bankruptcy

    Corporation owners and self-employed people can request a Chapter 11 debt repayment plan, notes the U.S. Securities and Exchange Commission. Chapter 11 allows people to keep business and personal assets while partially repaying all corporate and personal debts. Business owners who wish to cease operations can apply for corporate Chapter 7. This type of bankruptcy liquidates all corporate assets, distributes the proceeds to creditors and absolves the business owners of all corporate debts.

Saturday, November 14, 2009

What Are the Pros and Cons of Consolidating Debt?

What Are the Pros and Cons of Consolidating Debt?

Debt consolidation refers to the act of taking out a loan to pay for a series of debts (most likely other loans). If a large loan can be obtained, the person can then pay all other debts with that money and then only have to worry about repaying the single loan taken last. If a large loan cannot be obtained from a bank or financial institution because of bad credit, a loan consolidation company may take over the debts and offer the loan, at usually a higher interest rate.


    The main benefit of debt consolidation is the lower monthly payments. When the debt consolidation company refinances your debt, it secures an agreement with your debtors to save you money and reduce your interest rates. From that moment on, you are only obligated to make a single monthly payment to the debt consolidation company, who in turn will pay your debtors. As long as your payments are on time, the numbers will always be lower than you would pay if you were to cover each debt separately.


    Another important benefit of debt consolidation is simplicity. If you are handling numerous debts, you are more likely to get confused, miss a payment or forget to account for a bill, especially if payments come at different times throughout the month. When you consolidate debts, you write a single check every month and the consolidation company takes care of the money distribution for you.


    Some types of debt consolidation qualify you for tax breaks. This is especially true of home consolidation loans, which allow you to use your house as a collateral for the loan and in return allow for tax deductions over mortgage. On the other hand, any loan tied to your house presents a risk, as you can lose the property if you default on payments.

Expert Insight

    Experts believe the major risk of debt consolidation is that it provides you with an apparent easy way out, which teaches you nothing about handling your money and may put you in even larger debt if you don't pay the consolidation loan on time. If you take a credit card loan to pay your debts, you will be paying higher interest rates. Still, it is easy to default on payments and start accruing new debt.


    Debt consolidation may seem cheaper at first sight, but it will end up costing you more in the long run. For starters, when you combine debts, you get an average percentage for all of them. If you have large debts that only have a small percentage, it would actually be cheaper to pay those on your own rather than combining them with debts that have a higher percentage. Also, you will now be paying for a debt consolidation loan, which can have a lower or higher interest rate depending on your credit history.

Friday, November 13, 2009

Tips on Talking Down a Creditor to Pay Off the Debt

If you find yourself drowning in debt, you may not have to resort to hiring a debt settlement company or even filing for bankruptcy. Instead, your first course of action should be to contact your creditors directly to negotiate a settlement. You may be able to reduce the amount you owe or your monthly payments. Be sure that your creditor for your protection puts any settlement agreement you reach into writing.

Prepare Your Case

    Improve your negotiating position by preparing for your contact. Prepare a simple financial statement that shows your income and expenses and mail it to your creditor in advance of your phone call. Once the creditor sees that your financial situation is such that making the required payment may be impossible, he may be more willing to work with you. Creditors would rather receive at least some money than none at all.

Make the First Offer

    Don't wait for the creditor to make the first offer or ask how much he will accept. Instead, tell the creditor how much you can afford to pay. You should ultimately be able to settle on a lower amount by negotiating up from your lower figure than trying to negotiate down from a creditor's higher initial offer. If you've done your homework in advance, your creditor is be able to see how much financial wiggle room you have, if any.

Stay Positive

    Let your creditor know from the outset that your goal is to reach an agreement that is beneficial for both you and the company and maintain this approach during your conversation. Try to put yourself in the shoes of the person on the other end of the line and don't hesitate to express your appreciation for his willingness to discuss the matter with you. By becoming defensive or hostile, your conversation is sure to end quickly without you making any progress.

Be Persistent

    Keep in mind that the person you speak to initially may be a customer service representative with limited negotiating authority. If you feel you are not making significant progress in your negotiation, politely ask to speak to a supervisor. In addition to having more decision-making authority, a supervisor often has a better understanding of the "big picture" and the advantages of reaching an agreement. If necessary, repeat the process until you find someone who is able to help you.

Spouse Debt Obligation

Spouse Debt Obligation

When you marry somebody, you marry not only that person and his family, but also his debt load. Although the nondebtor spouse generally has no obligation to the debtor spouse's creditors, the existence of this separate debt can complicate the financial lives of both parties. This remains true throughout the marriage and into divorce.

Nondebtor Spouse's Obligation

    Although the nondebtor spouse has no personal liability on the other's separate debt, the presence of that debt affects her financial life in several important ways. First, having a lot of debt drives down a person's credit score, so the couple will have difficulty qualifying for loans that other couples may get easily. The debtor spouse's credit may be so maxed out that the couple can qualify for mortgages and car loans only in the nondebtor's name. Furthermore, creditors can proceed against the debtor spouse's share of jointly-titled property, although this is mitigated in states where a husband and wife can hold real property as tenants by the entirety. Finally, a party's separate debt load will tie up that party's income, leaving little for contribution toward marital expenses.

Getting It Under Control

    Although the debt may exist only in one party's name and may represent expenditures he made before the parties even met, the existence of that debt is an issue for both parties. Dealing with it effectively will require reducing the couple's standard of living to free income for use toward payment of that debt. Going forward, the parties will need to maintain an honest dialogue about how the debtor spouse incurred so many bills and what both partners can do to keep it from happening again.

Effect on Property Division in Divorce

    A short-lived marriage may result in a situation where one or both parties is still paying on premarital debt after separation. Although states vary on the specifics of property and debt division pursuant to a divorce, it is uniformly recognized that premarital debt is separate debt and not subject to division. In equitable distribution states, however, the existence of a significant separate debt load can influence whether the court enters an unequal distribution in favor of one party over the other. A spouse with significantly more debt than the other party may need an unequal division to help address his greater economic weakness.

Effect on Alimony in Divorce

    In all states, once a court determines that an alimony award is necessary, the amount of alimony to be paid is based upon the standard of living the parties enjoyed during the marriage, the supporting spouse's ability to pay and the dependent spouse's need for support. A separate debt load affects all of these things; the existence of separate debt siphons money away from a couple during marriage and effectively lowers their standard of living. Separate debt on the part of the supporting spouse affects his ability to pay, and debt on the dependent spouse's part places her in greater need of alimony in order to survive.