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Thursday, December 31, 2009

How to Negotiate a Doctor's Lien

How to Negotiate a Doctor's Lien

Health insurance in the United States is often quite costly. According to CNN, 60 percent of bankruptcies in the U.S. are due to outstanding medical bills. Before bankruptcy, these bills will often show up as a judgment or a lien on your credit report. If you do not want to file bankruptcy, you can attempt to negotiate this debt with either the physician's collector or the collection agency.



    Find out who holds the medical lien. Sometimes doctors will use their own attorneys to collect on unpaid medical bills. Other times physicians or hospitals will sell the unpaid debt to a collection agency. You need to know with whom you'll be negotiating.


    Look at the most recent bill. The name of the collector may be on the bill. If not, pull a copy of your credit report at Annual Credit Report, listed in Resource 1. This is a free credit report. Look at the Public Record/Judgment section of your report. The medical lien, with the creditor name, will be listed.


    Calculate your debt-to-income ratio (DIR). You must prove to the creditor or collection agency that you are unable to pay the medical debt as it stands. To figure your DIR, divide the total of all monthly bills by your monthly gross income. Most collectors will not negotiate unless you can prove an economic hardship--as demonstrated by a DIR above 50 percent.


    Review your medical bills and history. In addition to income constraints, you will likely need to demonstrate a reason for the unpaid bills. In many cases, this is the cost of medical treatments. Pull together all recent bills and hospital statements showing expenses.


    Contact the collection agency. Ask for a specific repayment agreement. This will include a monthly payment amount (that you can afford based on your DIR). Ask for all fees to be waived (annual fees, late fees). Only ask for a debt settlement if you can absolutely not pay the entire amount. (Debt settlement will damage your credit for seven additional years.)


    Counter the collection agency's offer. Try to get some fees waived and increase the suggested monthly payment amount. You must come to a compromise with the collector. Be reasonable. Asking for drastic terms may encourage the lender to cease negotiations.


    Obtain any new repayment agreements in writing. Review the document fully before you sign it. You might also want to consult with an unbiased third-party, such as your accountant.

Wednesday, December 30, 2009

How to Choose a Debt Consolidator

How to Choose a Debt Consolidator

When you have too much debt and are looking for a way to reduce it, you may be considering debt consolidation to get your debt under control. There are plenty of debt consolidation companies out there that are happy to take your money, but how do you choose a debt consolidator that is legitimate and looking out for your best interests? Choose a debt consolidator who is willing to work as your partner to help you get out of debt once and for all.



    Research different debt consolidation companies. Retrieve their contact information so that you can call them. You can research companies by going to the website in the Resources section, and choosing your state to see the different companies that are available to you.


    Gather your debt information. You should have credit card statements, past due bills and any other correspondence from creditors. Add all of your debts together for a total amount that you are in debt.


    Call the first debt consolidator and speak with a representative. Give her your numbers as far as how many creditors you have and how much total debt you have. Ask for an estimate of how much your consolidated payments would be, how much interest the debt consolidator charges and the terms of that particular company's consolidation.


    Write down the information that the customer representative gives you as far as the terms of the agreement and the estimate. Then move onto the next debt consolidator on your list.


    Choose a debt consolidator once you've spoken to at least five companies. Choose the consolidator that not only gives the best estimate, but that you feel most comfortable working with in regards to terms and policies. Enter into an agreement with that consolidator to use them as your debt consolidator.

How to Remove Credit Report Judgments With Letters

Judgments are legal decisions reached in court and also are known as monetary judgments. Judgments are granted by a judge following a civil lawsuit, often for credit card debt. Judgment information is included on credit reports for seven years and is very damaging to credit scores. Removing judgments from credit reports with letters is not difficult -- if you can cite reasons within the Fair Credit Reporting Act for removing the information.



    Review the Fair Credit Reporting Act (see Resources) to determine a legal basis for removing judgments. Under the act, which is a federal law, credit bureaus must remove judgments if the information is outdated or wrong. No other legal challenges are available.


    Obtain free credit reports from the major credit bureaus -- Experian, TransUnion and Equifax. Get the reports from the Annual Credit Report website (see Resources). It's the only site authorized by the Federal Trade Commission to offer free credit reports under the terms of the Fair Credit Reporting Act.


    Review judgments on the report for accuracy and timeliness.


    Challenge a judgment that is outdated by noting the original listing date on the credit report and pointing out in your letter that the judgment is outdated for purposes of credit reporting. Confirm that a full seven years has passed since the judgment was posted. Mail your letter to each credit bureau posting the outdated information. Get addresses from the respective credit reports. Allow the credit bureaus 30 days to respond, as required by the Fair Credit Reporting Act. They must remove the judgment if it is outdated.


    Write letters to demand removal of judgment information that is wrong. Even if you received the judgment, you can challenge it if any of the information is incorrect, such as the date of the judgment or an amount. The credit bureau must investigate and may delete the entire entry if it cannot confirm accurate information. Send the letters to the credit bureaus at their respective addresses.

Tuesday, December 29, 2009

Credit Card Problems With College Students

Credit Card Problems With College Students

College students have incurred record rates of credit card debt since the 1990s, and every year the amount of debt that college students have on lines of credit rises. Credit card debt wreaks havoc among college students, who are often also in debt from student loans and have low-paying part-time jobs. While the credit information website Card Ratings states that increasing numbers of competent debt counselors specialize in student debt, larger numbers of indebted students and graduates feel hopeless.

Rising Rates

    All sources point to rising debt among college students. Card Ratings reports that student credit cards came with limits of several hundred dollars only after a parent cosigned until the 1990s. Student debt has gone up steadily with credit limits ever since, and college finance giant Sallie Mae reports that student credit card debt in 2008 was up to 44 percent from 2004 to average $4,138. Furthermore, nine out of 10 students report using a credit card to pay for school expenses but only 17 percent report paying off their credit card bills every month.

Campus Campaigns

    Articles in Card Ratings, USA Today and MSNBC all point to aggressive campaigns by credit card companies to sign up students as one factor behind ballooning student debt. Companies often pay colleges to let representatives onto their campuses and then try to attract students to high-interest cards with minor giveaways and an emphasis on free money. Card Ratings also notes that these campaigns work because most college students do not receive formal instruction on managing their money or even informal education from their parents about how to use a credit card responsibly.

Tuition and Fees

    College tuition and fees increase much faster than inflation, wages and even financial aid, according to MSNBC. Students increasingly cope by putting expenses such as books on their credit cards, and the amount that goes on the card has spiked. A 2004 study by Sallie Mae reported that students put $942 in school-related costs on their credit cards annually. When the study was repeated in 2008, the number had more than doubled to $2,200.

Last Resort

    USA Today reports that many students use credit cards as a last-resort source of funding to pay for school. Following the 2008 financial crisis, private loans became increasingly more difficult to obtain, college tuition continued to rise, and some students made up funding gaps by using credit cards. MSNBC reports that the one advantage of this strategy is that credit card debt can be forgiven through bankruptcy proceedings while student loans cannot.

If I Owe Property Tax, Can My City or County Government Garnish My Social Security Retirement Check?

Property taxes are generally due and payable twice a year by residents of a city or county. If you fail to pay your property taxes on time, the city or county government may have a number of legal options available to secure payment of the past-due amount. Garnishment of your Social Security retirement benefits, however, isn't an option available to either a city or county government for payment of past-due property taxes.


    Garnishment is a legal remedy available to a creditor when a debtor owes money to the creditor. Before a creditor may garnish a debtor's bank account or income, the creditor must obtain a judgment from a court. The creditor must file a lawsuit in the appropriate court and prove to the judge that the debtor legally owes the money to the creditor. If the court is convinced of the debt, then a judgment is entered against the debtor for the amount owed. Once the judgment has been entered, the creditor may attempt to enforce the judgment through any legally available method, such as garnishment.

General Rule for Garnishment of Social Security Benefits

    Individual state laws govern garnishment, as long as they don't interfere with any federal laws that relate to garnishment. Federal benefits, for example, are often exempt from garnishment. Social Security retirement benefits typically can't be garnished for debts incurred by the recipient of the benefits. If a creditor attempts to garnish your Social Security retirement benefits, it's usually a violation of the Social Security Act, Section 207.

Exceptions to General Rule

    Although federal benefits, including Social Security retirement benefits, usually can't be garnished for most debts, there are exceptions to the general rule. Child support or alimony payments, as well as certain civil penalties under the Mandatory Victim Restitution Act, may be the basis for a garnishment of your Social Security retirement benefits. In addition, the federal government may garnish your Social Security retirement benefits if you owe back taxes to the federal government. A city or county taxing authority, however, can't garnish your benefits for past-due property taxes.


    Although the city or county tax authority can't legally garnish your Social Security retirement benefits, if you co-mingle those funds with other funds in a bank account, you may run into a problem if a bank garnishment is ordered. Although you may ultimately prevail when the court conducts a hearing on the garnishment, your bank account may be frozen until the hearing and any outstanding checks are returned unpaid. To avoid confusion, recipients of federal benefits often have the funds deposited into an account designated solely for their benefits.

Can I File Bankruptcy on My Negative Bank Account?

It is possible to file for bankruptcy on a negative bank account, but that's a high price to pay just because you're indebted to your bank for a few hundred dollars because of overdrafts. Theoretically, a person could owe a bank more than that for overdrafts. However, even if the amount is a few thousand dollars, the debtor should think twice about filing for bankruptcy for that reason alone. Others may file for bankruptcy if their bank account is showing a large negative balance because of bank garnishment for an unpaid debt.


    A negative bank account is a debt. Federal bankruptcy laws require people filing for bankruptcy to include all debts in the bankruptcy petition -- even a $25 overdraft. Filing for bankruptcy after a negative bank account makes more sense when the debtor is also struggling with excessive debt overall.


    Garnishment allows a debt collector to freeze a debtor's bank account and freely withdraw funds. The debt collector removes money from the account electronically, in a lump sum or installments. The action is possible after the debt collector wins a monetary judgment in court. If the defendant does not pay the judgment the judge may allow garnishment for the full amount due.


    Federal and state laws force banks to comply with garnishment, and they usually do not notify debtors about the action until it it begins. The debtor may tap into his account online and see a huge negative balance. The negative balance may represent a bank hold on the account representing the entire amount due from the judgment. That means someone losing a $15,000 credit card lawsuit could see a negative balance of $15,000 on his account because of garnishment.


    In most cases the garnishment order -- and the negative account balance -- remains in place until the debtor pays off the judgment either directly to the debt collector or by continuing to deposit money into the bank account.


    Some people elect to stop garnishment through bankruptcy. Filing for bankruptcy immediately ends all debt collection efforts while the debtor's finances are under review by the court. A special provision in bankruptcy called "the automatic stay" forces banks to stop garnishment, forcing an end to any negative balance caused by the debt collector. Some debtors feel they have no choice but to file for bankruptcy because of garnishment and other excessive debt. However, bankruptcy remains on credit reports for 10 years, and debtors should consider it only if there is no other option for resolving negative account balances or other debt.

Monday, December 28, 2009

The Impact of Credit Card Debt

Credit card debt is a problem that can be crippling financially in the short-term and lead to even bigger problems in the future. Because of its high interest rates, credit card debt can take a long time to pay off and make a lasting impact on your credit score as well.

Credit Score

    One way that credit card debt can negatively affect you is in your credit score. Carrying a small balance on your credit cards may not necessarily have any effect, but if you max out your card regularly, it can impact your score. You should strive to keep your credit card balances at less than 30 percent of the total credit limit on your card. If the balance is higher than that, the credit bureaus believe that you cannot handle your money effectively. Having a low credit score can make it difficult to obtain credit in the future.

Time Frame

    Credit card debt can turn into a long-term problem for many people. When you accumulate debt on your credit cards, the credit card company will only require a minimum payment to be made. If you only make this minimum payment every month, your debt could take many years to pay off. For example, if you had only $1000 in debt and only made the minimum payment on a typical credit card, it could take you over 20 years to pay off. (See References 4)


    Something else to consider with credit card debt is the amount of money that you pay in interest. The actual debt itself may not seem like that much money. When you add in the interest that you pay over the life of the debt, it becomes a much larger figure. Credit card companies regularly charge interest rates that are higher than 10 percent and some charge more than 20 percent. This type of interest could add thousands of dollars to your payments over the years.

Balance Transfers

    Credit card debt can lead consumers to try drastic measures. For example, one of the most common techniques is to transfer credit card balances around to different credit cards that have a zero percent introductory rate. This can provide you with a few months of no interest, but it can also increase your problems if you are not careful. Opening a new card just to transfer balances often results in accumulating a balance on the original card as well.


    There are several solutions that could be used to remedy the problem of credit card debt. Entering a debt management plan is an option that can help you lower your credit card interest rates and get a more affordable payment. With this type of plan, you would make a single payment to a debt management company and then they would make all of your payments for you. This can be beneficial, but you could also do the same thing yourself without having to pay a fee.

How to Fix Credit Fraud

Your credit history and score are an essential part of your financial identity. They determine everything about your major financial decisions, including loan approval or denial and interest rates. If your score is unusually low, you could be a victim of identity theft, in which a criminal uses your personal information to make fraudulent accounts and transactions. But don't worry, you can fix credit fraud if it's happened to you.



    Call one of the major credit bureaus (Equifax, TransUnion or Experian) and put a fraud alert on your account if you suspect illegal activity. All bureaus will then flag your account for 90 days, and require all creditors, such as banks, retail stores and places where your social security number is needed, to contact you for direct authorization before any transaction is made.


    Notify your banks and cancel all existing credit card accounts. While the fraud alert will help to stop illegal activity, the identity thief still has your account numbers.


    File a criminal complaint with your local police department. The Federal Trade Commission provides an identity theft affidavit form on their website that you must fill out as well. These forms will help make the process quicker if filled out promptly.


    Contest all suspicious and/or unauthorized activity on your account by filing a challenge with one or more of the credit bureaus. This may take up to one year to clear if approved.

Debt Forgiveness Rules

The only official form of debt forgiveness in the United States is the federal bankruptcy process, according to the book "How to File for Chapter 7 Bankruptcy" by Stephen Elias and others. Without formal debt forgiveness, creditors can legally sue debtors who did not pay their bills on time. Credit-related lawsuits also can lead to wage garnishments.

Ineligible Debts

    Some types of debt cannot be forgiven through the bankruptcy process. You must deal directly with the family court on any child support or alimony obligations. In many states failure to pay these can lead to license revocations and even jail sentences. If you owe tax bills incurred less than three years ago, you must work out a repayment plan directly with the taxation agency. Only in rare cases, such as a severe disability or a college committing an act of fraud or negligence, will a bankruptcy judge forgive federally issued student loans.

Basic Pre-Filing Requirements

    Before filing bankruptcy, you must complete a credit counseling session with a federally approved agency, notes the book "How to File for Chapter 7 Bankruptcy." You also must complete another financial counseling session before a judge will finalize your bankruptcy request. If you did not file your last four expected federal and state income tax returns, you must do so before filing bankruptcy.

Chapter 7 Information

    Chapter 7 bankruptcy eliminates many pre-existing debts, but the consumer risks losing some of his assets to offset creditor losses. Generally, a debtor must earn less than his state's annual median income level or successfully petition his local bankruptcy court to file Chapter 7. As of 2011, the yearly median income figure for a single Georgia resident, for example, was $50,664, while the annual median income level for a family of four in Arkansas was $54,401, according to the U.S. Trustee Program. While filing Chapter 7 eliminates many debts, it does not cover future debts, and filing Chapter 7 bankruptcy will damage a consumer's credit rating for 10 years.

Additional Bankruptcy Options

    Chapters 11, 12 and 13 bankruptcies offer partial debt repayment plans for struggling people, notes the United States Bankruptcy Court of the Western District of Michigan. Chapter 13 reduces personal debts into a partial repayment plan that takes three to five years to complete. Self-employed people or business owners can create a similar repayment plan for business and personal obligations under Chapter 11. Family farmers wishing to restructure their debts while keeping their assets can request a Chapter 12 bankruptcy. During all these plans, a consumer cannot obtain new credit without a judge's permission.

Sunday, December 27, 2009

Indiana Laws on Credit Freezes

Those living in Indiana may want to limit access to their credit files with credit freezes, which also are known as security freezes. People who request that credit bureaus place freezes on their files also need to manage their credit information to ensure it's available to lenders and creditors if they apply for new accounts. There are, however, situations in which credit freezes can be overridden.

Credit Reports

    Indiana residents have the right to prevent credit reporting companies from releasing information in their credit files to others by placing a credit freeze on their files. A freeze generally prevents the release of credit reports without the person's authorization, but there are circumstances in which freezes are invalid. For instance, your current creditors can view your credit information even if you place a freeze on your files. People who have delinquent accounts also can't keep a debt collection company from requesting their credit reports if the company is attempting to recoup money owed on a debt.

Fraud Prevention

    Some Indiana residents place security freezes on their accounts because they're victims of fraud or because they're trying to avoid becoming fraud victims. Security freezes can prevent a thief from getting credit and loan accounts in your name because new accounts can't be opened without your approval. Even so, the Experian credit reporting company notes on its website that security freezes also can delay the approval of new accounts you want to open yourself. People who request security freezes receive personal identification numbers (PINs) they can use to temporarily lift a freeze at credit bureaus prior to applying for new credit and loan accounts. It could take up to three days for a temporary credit freeze lift to take effect.

Identity Verification

    To verify identities before granting requests, credit reporting companies require personal information from those in Indiana seeking credit freezes. For example, Experian requires that people provide their current mailing address along with their previous addresses for the past two years. Applicants also must provide their Social Security numbers and date of birth. Experian notifies consumers when their security freezes have been issued and supplies them with PINs with which to temporarily lift or remove freezes. A person in Indiana who forgets his PIN has to resubmit all personal information to get a replacement PIN.


    Credit bureaus can charge consumers a fee to issue, lift or remove their security freezes. The website of the TransUnion credit-reporting company indicates, however, that all such services are free of charge in Indiana. In any case, consumers must submit their requests for freezes to the three national credit reporting companies separately. Those companies are Equifax, Experian and TransUnion.

Student Internet Activity & Identity Theft

Student Internet Activity & Identity Theft

According to the U.S. Department of Education, Office of Inspector General, identity theft is one of the fastest growing crimes in the U.S. Identity theft happens when someone uses your personal information without your knowledge to commit fraudulent or criminal acts. Students are particularly vulnerable to identity theft because their personal information is widely available online.


    Identity thieves use your personal information such as your name, address and phone number, and your bank account, credit card or social security numbers to get credit or employment, or to purchase services or merchandise in your name. Students who use their computer for online banking or making online purchases risk their identity.


    Identity theft is either casual or professional. A roommate who uses your account or password commits casual identity theft. On the other hand, professional identity theft involves organized criminals. Professional identity thieves target students because their personal information is frequently available and their credit records are often virtually blank.


    Students victimized by identity theft often lose their credit rating and reputation. You can be refused loans, housing or employment, which jeopardizes your future. It could take you months, or even years, to repair the damaged caused by identity theft.


    The College Student's Guide to Identity Theft suggest several tips for preventing identity theft when online. For example, never provide your full name in an online profile and be cautious when sharing where you live. If you make online purchases, be careful to only buy from reputable businesses, and protect your account information and passwords. Also, be sure you always log out of a website before closing it.

Saturday, December 26, 2009

Are Debt Management Companies Legitimate?

A wide range of quality exists when it comes to the debt management field. If you are in the market to use a debt management firm, you can find legitimate ones. However, if you aren't careful, you could wind up with a second-rate company that overcharges you or even one that is a plain scam. Disreputable companies are successful at ripping off consumers, which is why you might have to wade through a minefield before you find a legitimate debt management company to help you.

How It Works

    When you enter into a legitimate debt management plan, your counselor is supposed to try to negotiate a deal with your creditors. Typical negotiations might be to lower your interest rate or to waive all late fees. After that, you deposit money in an account set up with your debt manager. Your debt manager then pays your creditors. This process can take three or four years to complete.


    A bogus company tells you the same thing, namely that the counselor who works with you will use the money you deposit to pay your bills. Only it doesn't happen that way. A bogus company honors the first part of the agreement, taking your money, but not the second part -- distributing your money to your creditors.

Where to Look

    Your best bet in finding a reputable debt management company is to go through the Association of Independent Consumer Credit Counseling Agencies, also called the AICCCA, or through the National Foundation of Credit Counseling, also called the NFCC. Agencies that are members of these organizations charge low fees and usually offer educational and counseling services so that you don't wind up in trouble again.

Legitimate Companies

    Before you enter into a debt management plan, a legitimate agency interviews you to determine whether debt management is even your best option. With the NFCC, only about one-third of clients qualify for debt management, and only about one-fourth qualify with the AICCCA. A red flag should go up with you if a debt management firm tries to push or enroll you into a plan without determining whether debt management is the right course of action. If the first thing a company wants from you is authorization to take money from your account, this company is probably one that you should avoid.

Ask Questions

    Before you hire a debt management company ask some questions. Ask whether the organization can teach you money management and budgeting skills. Find out how you can make sure the company is paying your creditors on time. Ask what your monthly payment will be. Make it a requirement that you see detailed account statements. Finally, if you do sign up with a company, before you send any money; contact your creditors to confirm whether the debt management company did contact them and whether the creditor agreed to the plan.

Help for Credit Card Relief

Paying off credit cards and relieving debt can put you one step closer to debt-free living. Credit card balances increase your debt-to-income ratio, and if you owe an excessive amount, credit cards can lower your personal credit rating. Learn different tips for paying down these balances, and keeping balances within a reasonable range.

Debt Consolidation

    Debt consolidation can provide help with relieving credit card debt. Debt consolidation agencies can help you through the debt elimination process. They often contact your creditors to negotiate a better interest rate on your debts and work to get your minimum payments reduced. Through their consolidation method, debt consolidation agencies take your credit accounts and merge them into one bill. This one bill has one monthly payment that you send to your consolidation company; however, there typically is a fee for debt consolidation. Look around first and compare fees. Work with a nonprofit debt consolidation agency to avoid hefty fees.

Tap Into Home Equity

    Tapping into your home's equity is another method to relieve credit card debt and improve finances. There are three methods for borrowing cash from your home's equity. You can apply for a home equity loan and receive a lump sum from your lender; apply for a home equity line of credit and withdraw cash from a revolving credit limit as needed; or refinance your mortgage loan and take a cash-out option. The money from either option can pay off credit card balances and other debts. You'll then repay the mortgage lender at a much cheaper interest rate and monthly payment.

Use Disposable Income

    Take your disposable income and pay down your balances, and don't use this money for shopping, entertainment or vacations. Using your extra income to relieve credit card debt may inconvenience your life, but any inconvenience is temporary, and well worth paying off your balances. Start by assessing how much you have after paying bills. Cut out lunch trips, extra personal services and any other expense that takes a chunk of your income. Determine how much you have extra after paying your expenses, and aim to put this money toward eliminating your credit card balances.

Lower Interest Rate

    Get the best interest rate possible on your credit card debt and lower your balances even faster. There is a strong connection between high interest rates and debt. The higher the interest rate, the less money applied to your principal balance. Look at your statements to learn your rate, and then call your creditors and ask them to reduce your interest rate. This simple, quick request may get you a better interest rate over the telephone. With lower rates, your minimum payment drops, and creditors apply higher monthly payments to your principal balance.

Friday, December 25, 2009

Can I Call the Creditor and Settle My Debt if I Have a Judgment on Me for a Credit Card?

If you fall behind in payments on a large a credit card debt, you risk the possibility of being sued in civil court by the company that issued the card. If you lose, you will be legally ordered to pay a certain amount of money to the company in damages. However, you may be able to settle for a smaller amount of money out of court after the civil judgment has been issued.

Credit Card Debt

    When you take out a credit card, you must sign a legally binding contract to pay back the money borrowed against the line of credit. Although this contract is legally binding, you may refuse to pay it. To open up a greater number of options for the collection of the debt, the creditor may file a breach of contract suit against you in civil court.

Civil Judgment

    When a creditor sues you, the case will be heard by a judge, who will determine whether you in fact have a legal obligation. If a judge finds in favor of the credit card company, then the debtor's legal obligation to pay the debt is upheld in a court of law and a civil judgment for damages will be issued against you, usually in the amount of the debt, sometimes plus legal fees.


    After you have been the object of a civil judgment, you still have the option of settling with the creditor out of court if the creditor agrees to this settlement. There is no law that restricts the creditor from agreeing to receive less money from you than you owe, even after a civil judgment. The creditor may believe that you do not have sufficient funds to pay the full judgment and will therefore agree to only partial payment.


    While you could legally settle a debt after a civil judgment has already been issued against you, the creditor may be disinclined to settle. This is because receiving a civil judgment provides the creditor with a number of new legal avenues to receive payment. For example, the creditor now has the option of petitioning the judge to garnish your wages and freeze your checking or savings account.

Credit Consumer Rights Information

Establishing credit is a good thing, maintaining good credit is even better. When applying for a loan, credit card or any other form of credit, businesses inspect your credit file to determine if you will be offered a line of credit. To ensure all consumers are given an equal and fair opportunity at being awarded credit, the Federal Trade Commission (FTC) enforces credit laws for you.

Credit Report

    Businesses buy your credit file from credit reporting agencies for the purpose of evaluating your credit. Your bankruptcy filings, liens and your bill payment record is some of the information listed on your credit report. The Fair Credit Reporting Act (FCRA) gives a consumer the right to request a copy of his credit report at any time from all three credit reporting agencies (Equifax, Experian and TransUnion). If you were denied credit, you have the right to know the agency the creditor contacted for your credit report.


    Creditors may not refuse you credit based on marital status, gender, race, national origin, religion or receipt of public assistance under the Equal Credit Opportunity Act (ECOA). A creditor may ask you for information listed above (with the exception to religion) in some cases, but the info may not be used to discriminate against you when pertaining to extending you credit. Reliable public assistance may be considered the same as any other type of income. To determine if discrimination occurred, you have the legal right to know why you have been denied credit.

Debt Collection

    Sometimes a consumer is unable to pay his debt, and it ends up in collection. A creditor has the right to collect the debt, or sell it to a debt collecting agency. Creditors and collectors have guidelines set under the Fair Debt Collection Practices Act (FDCPA) that must be followed when collecting the debt. Collectors may only call a debtor between the hours of 8 a.m. and 9 p.m. in his time zone. Collectors may contact you at work unless you notify the collector that your employer does not allow personal calls. At no time is a collector to lie about who he is, or harass, threaten or abuse you.

Identity Theft

    Monitor your credit regularly. Make sure that everything listed on your credit file is correct, and that no one has opened a lined of credit in your name without your consent. A creditor typically reports your debts for up to seven years or until the statue of limitations run out (the longer of the two), and 10 years for any bankruptcy information. You have the right to dispute any fraudulent charges with the credit reporting agency and the creditor. An investigation must be made to determine if the debt actually belongs to you.

Maintaining Credit

    Although credit laws are established to protect your right to get, use and maintain credit, the laws do not guarantee everyone will be awarded lines of credit. Paying accounts on time and not overextending yourself is helpful. It is a good idea to contact your creditors to discuss a repayment plan on a debt to prevent damage to your credit file and score.

How to Increase a Credit Score After Maxing Out a Card

Raising your credit card debt can have a substantially negative impact on your credit score. However, there are some things you can do to help your score rebound. Common sense and discipline are the real keys, but some specific strategies can also help.



    Make your payments for all of your debt on time without fail. A history of late payments can damage your score as much as excessive debt balances.


    Make more than the minimum payment each month if at all possible. Again, this can work for any debt balance you have, but start with your higher-interest debts first. A few months of principal reduction can get your score heading back up.


    Pay off any small balances first. For example, if you just ran $10,000 up on one card and owe $800 on another, then pay off the latter card to reduce the number of outstanding accounts you have. Then use the money you would have spent making the payments on the smaller card to help pay off the other.


    Refrain from pulling your credit score on a regular basis, as this lowers your score by five points each time you do so. Pull your score every six months and then keep close track of your debt in between.


    Make sure that any unused accounts are closed by studying your report when you pull it. Too many old open accounts can hurt your score as well. Close any accounts that you know you won't ever use again.

Thursday, December 24, 2009

How to Get a Job When You Have Garnishments

How to Get a Job When You Have Garnishments

Wage garnishment forces an employer to send a percentage of your paycheck to a debt collector. By law the employer must make payments each pay period until an unpaid debt you're responsible for is resolved. Wage garnishment is time-consuming for employers and it is an embarrassment for employees. Getting a job when you have garnishments is difficult because of the stigma. However, there are ways to manage garnishment and get the job you want.



    Negotiate with the debt collector to end the garnishment as you begin to close in on a new job. Remain purposely vague about your job search and do not answer questions about your current employment, if you are employed. The best-case scenario for you is to end the garnishment through a payment plan.


    Offer the debt collector a deal. Offer to pay your current balance and an additional five percent in exchange for payments by certified check or money order instead of wage garnishment. Tell the debt collector that garnishment makes life difficult for you as an employee and you would like to find a better solution that works for both parties. Repeat this strategy on all of your garnishment accounts if can afford to.


    Mention the garnishments to potential employers only if you are offered a job or receive an offer contingent on passing a background check. Standard background checks sometimes include a credit review, which would show the garnishment. However, there's simply no reason to reveal your credit problems before being offered a job.


    Talk to the hiring manager about your garnishments before agreeing to the background check. It is important that you tell the hiring manager about the garnishments before they are spotted on credit reports. Explain what happened to cause the garnishments and how you are working to resolve them through alternate payment plans. Also acknowledge that your efforts at other payment arrangements may not work and the garnishments could continue.


    Convince the potential employer that the garnishments are isolated events because of a hardship such as divorce, job loss or illness and that you are working diligently with creditors to repair the damage. Tell the employer that you want the job and that the garnishments will not affect your performance.


    Sign paperwork allowing for the background check. Meet with the employer again after the background check to negotiate a formal job offer.

Why Does a Company Do Credit Checks?

Getting a job has become increasingly challenging in recent times. Not only do you need a stellar resume and solid references, but you now need pristine credit. Credit checks have become commonplace in the screening process of applicants, even for jobs that don't involve dealing with money. Along with your resume and cover letter, your credit report is a document used by employers to make assumptions about your character and work ability.

Importance of Credit

    Once upon a time, your credit score only measured what kind of interest rate you'd get on a loan or a credit card. However, those days are long gone. These days, your credit score determines if you can get an apartment or even how much you'll pay for your auto insurance. In short, credit is now seen as a reflection of your overall risk level, and a credit check as part of an employer's screening process is further evidence of credit's importance.

Risk Factor

    Just as auto insurance companies believe someone who is reckless with credit will be a dangerous driver on the road, employers may believe that you can't be trusted on the job if you can't manage your own credit. Fair or not, employers can make assumptions about your level of responsibility by looking at your credit report. For example, if you've been late on bills in the past, it might indicate that you're forgetful or are unable to plan ahead.


    Another reason why employers run credit checks is so they can identify people who might potentially steal from the company. According to MSN Money, some employers believe that people who have a high amount of debt may be more inclined to steal in order to pay off their debts. In addition, if an employee steals a customer's money or property, that customer may end up suing the company, exposing the company to huge losses.

Financial Matters

    If you're applying for a job that requires you to manage money, a credit check is a critical source of information for your potential employer. A good credit rating shows you're capable of managing your resources and, by extension, those of the company. On the other hand, if your credit history is spotty, it might convince the company that you'd hurt their financial strength. No matter how strong your resume might be, being in this situation will put you at a serious disadvantage if you're competing with other candidates who have good credit.

How to Eliminate Your Growing Credit Card Debt

How to Eliminate Your Growing Credit Card Debt

Too many credit card users have lived in debt so long, they regard debt-free living as virtually impossible. Adding to the hopelessness is an average interest rate of 10 to 30 percent and income that cannot keep pace, forcing consumers to make only minimum payments a clear prescription for long-term debt. If this is your situation, realize that a strategy does exist that will enable you to corral your debt and eventually eliminate it completely.



    Try to get your interest rates lowered. As you embark upon this strategy, call the credit card companies and request an interest rate reduction. Some credit lenders will and some will not. Any reductions will hasten the elimination of your debt.


    Rank your cards from highest interest rate to lowest. You want to tackle the highest first and pay off your cards in descending order. The card with the highest interest rate costs you the most money; thus, it is wise to work on eliminating this one first.


    Pay as much as you can above the minimum on the high-interest card while paying exactly the minimum on all your other cards. Continue this tactic until the high interest rate card is paid off. Also, never make a late payment because the resulting fee will set you back to square one.


    Repeat the process. When you have paid off the highest-interest card, follow the same process for the card with the second-highest interest rate while continuing to pay the minimum on the others. Do this card-by-card until all are paid in full.

Wednesday, December 23, 2009

Will Paying a Settlement Rather Than the Total Balance on a Credit Card Hurt Your Credit Report?

You've probably heard the expression---you can't have your cake and eat it, too. You can apply the same thinking to settling your credit card debt. You can certainly save money if you settle, but you won't keep your credit report golden if you do.


    Debt settlement is negotiating with your creditor to pay less than what you owe. You can negotiate yourself or you can hire a debt-settlement firm to negotiate for you. If you hire a debt-settlement company, be aware that many such firms are fraudulent. Some charge upfront fees and then disappear with your money, according to MSN Money. If that happens, you lost money that you probably couldn't afford to lose. This could eventually affect your credit score, if the loss makes it difficult for you to pay your bills.


    The good news is that debt settlement is a legal way for consumers who cannot pay their debts to avoid bankruptcy. The bad news is that the credit-card companies will report to the credit bureaus that you settled, which hurts your credit score.


    Typically, in order to get a credit-card company to settle with you for less than what you owe, you need to be delinquent on your payments. Otherwise, the credit-card company will have no incentive to settle with you. You generally have to be three to six months behind before a creditor will negotiate, says Gerri Detweiler, author of "The Ultimate Credit Handbook," on the SmartMoney website. Once you become delinquent, your credit score will nose-dive. Payment history accounts for 35 percent of your FICO score.


    If your credit is already shot, then debt settlement won't make your credit much worse. On the other hand, if you have good credit and have avoided delinquencies and charge-offs in the past, debt settlement will hurt your credit. MSN Money illustrates just how this works. FICO scores range from 300 to 850. If your score is 680, for example, and you choose debt settlement, your score will drop 45 to 65 points. If your score is 780, your score with a debt settlement on your record will drop 105 to 125 points. These scores assume you only missed one payment. In reality, with debt settlement, you probably will miss more than one payment, with each missed payment further lowering your score.

Expert Insight

    Debt settlement could save you money, but it may not be as much as you think. If you do settle your debt, the amount that your creditor forgave you in the settlement becomes taxable income. In addition, if you use a debt settlement firm, the fees are usually high. Some companies charge 14 to 18 percent of the debt you want settled, according to MSN Money.

How to Stop Harassing Phone Calls From Creditors And Collectors

Federal law allows U.S. consumers to stop collection calls from credit card and debt collection companies. However, a verbal request to stop such calls isn't sufficient. Consumers need to submit such requests in writing. It's also important to understand that calls from creditors and collectors don't automatically qualify as harassment. The behavior of creditors and collectors affects whether they're harassing consumers under the terms of debt collection laws.



    Ask the person who contacts you about a debt for his company's phone number and address. Get the account number for the debt he claims you owe, as well as the name of the original creditor if a debt collection agency is contacting you. Tell the collector to send you all of the information about the debt in writing.


    Write a letter to the collection agency or the creditor that includes your name, address, debt amount and the account number associated with the debt. Ensure that your letter clearly states that you want the debt collection calls to stop. For example, you can write "This letter is to inform your company to immediately stop all debt collection calls associated with the account number included in this letter."


    Keep a copy of your letter. Send the original by certified mail to the collection agency or creditor, and have a receipt returned to you after delivery of the letter. Use the correspondence address on the back of your credit card bill when sending a letter to a creditor. Store the certified mail receipt with the copy of your letter because it verifies the date the collector or creditor received your request to stop making collection calls.


    Be realistic about whether a creditor or collector is actually harassing you with phone calls or annoying you, because harassment on their part is against the law. Document whether calls from a collector or creditor include threats of violence, obscene language or other abusive behavior. Such acts of harassment violate the U.S. Fair Debt Collection Practices Act. File a complaint with the Federal Trade Commission if a creditor or collector is harassing you under the terms of the act.


    Think about suing a collector or creditor to stop abusive calls and potentially collect damages based on any harm you prove you suffered because of illegal collection practices. The Federal Trade Commission indicates that consumers can collect as much as $1,000 and their attorney's fees even if they're unable to prove that harassing collection calls harmed them.

Tuesday, December 22, 2009

How to Stop Receiving Collection Agency Calls

How to Stop Receiving Collection Agency Calls

Collection agencies often call morning, noon and night, making it difficult to complete common tasks due to these constant phone calls. Even if you do owe the debt, you should not be harassed by credit agencies, and you can take steps to stop the harassing phone calls. According to the Federal Trade Commission (FTC), collection agencies are not allowed to call before 8:00 a.m. or after 9:00 p.m. local time; and if they do, they are in violation of the Fair Credit Act.



    Inform the collection agency, during the phone conversation, that you no longer wish to receive collection calls at work, home or on your cell phone. Request that the only communication you receive from the company will be in writing. Ask for the agent's name and the company contact information when you talk to the collection agency so that you can record whom you talked to.


    Tell the next agent who calls from the same collection company that you are keeping track of this further violation of your rights.


    Ask the caller for her name, and record the name and time she called. Ask for a company address so that you can put your request in writing. According to the FTC, once you tell the collection company to stop calling and that you are sending a notice in writing, the company is required to stop calling. Make detailed notes in the letter that you write, documenting how many times they called in a day, the agents who called you and the information they gave you in the letter.


    Write the collection agency and state that they need to stop the harassing phone calls at work, home and on your cell phone. According to the Privacy Rights Clearinghouse website, if you state that all communications from the collection companies should come in writing or you will refuse to communicate with them, the agencies are required to comply.


    Advise the collection agency in your letter that you plan to document any violations of this request and that you will take the matter to your lawyer if they do not cease and desist from calling you. According to the FTC, the collection company is required to agree to your desired form of communication once you have sent it in writing.


    Send the letter via certified mail and keep a copy for your records. Write down each time the agency calls after you have sent the letter and file a complaint with the Federal Trade Commission.

Statute of Limitations on Internet Payday Loans

Internet payday loans are like regular payday loans, only instead of visiting a physical retail location, borrowers take out the loan on a website. Also, instead of providing the lender with a postdated check, the borrower will generally provide an Internet payday lender with a checking account from which the lender can withdraw money at a later date. The statute of limitations applied to this loan will usually depend on the laws of the state in which it was issued.

Internet Payday Loans

    Internet payday loans are issued over the Internet, making the question of what laws apply a tricky one. Although Internet payday loans may be available to people all over the world, lenders always have a physical presence in a particular state. In all cases, the lender will be required to have taken out a business license. Therefore, legally, an Internet loan can be regarded as identical to a loan that a person took out in person at the lender's location.

Statute of Limitations

    All states have statutes of limitations on the collection of debts. After a certain period of time has elapsed, the lender can no longer seek collection of the debt. So, for example, if a loan has a statute of limitations of three years, then the lender no longer has a right to collect the debt after three years have passed. Each state has its own set of statutes for various kinds of debts.


    Generally, the state that has jurisdiction over a loan is the state in which the loan was issued. In most cases, an Internet loan is issued in the state in which the lender is located. So, if a lender was located in Texas and made a loan to a resident of Massachusetts, the loan could be collected for as long as Texas' statute of limitations allowed the lender to pursue collection.

State Payday Loan Laws

    Some states have specific laws related to Internet payday loan companies designed to prevent these lenders from skirting state usury laws. These laws state that an Internet lender making a loan to a resident of the state must abide by the laws of the resident's state, regardless of the state in which the Internet lender is based. In this case, the relevant statute of limitations would be from the state in which the borrower lives. Individuals wishing to check their state's internet payday loan laws should consult their state attorney general's office or consumer protection agency.

What Can Happen When You Default on a Credit Card?

Since credit card debt is unsecured debt, you may be tempted to simply walk away from your accounts if you are having a difficult time paying your bills. But walking away can cause many problems, because the creditors usually won't go away, even if they stop bothering you for a while. Eventually, the unsecured debt may result in creditors placing liens against your property to collect the debt.

Phone Calls

    Get behind on your credit card bills, and the phone will start ringing several times per day. The Fair Credit Debt Collection Act prohibits certain types of calls, or abusive behavior by collectors, but legitimate attempts to collect debt are allowed. Many credit card companies use phone dialers that will call you automatically and transfer you to a human when you answer the call. If you don't answer phone calls from the credit card company, they may sell the account to another collector who will continue to call you several times per day.

Rising Costs

    If you default, or get behind on a credit card, you can expect your interest rates on the card to skyrocket. The rates could go as high as 25 to 30 percent, with some accounts charging even more. The credit card company will add on late payment fees, which can be substantial over time. In addition, if the increased interest rates and late payment fees cause your account to go over its limit, you will get another fee tacked on for this as well.


    If you continue to default on your credit card bills, the credit card company may sell your debt for pennies on the dollar to a junk debt buyer. The debt buyer has little to lose by taking you to court. You will be served paperwork from the court by the sheriff's office, and you will need to appear and defend the lawsuit or you will lose the case by default. If the debt is legitimate, you will probably lose the lawsuit anyway, and the judge will award the creditor a judgment for the outstanding debt and any damages that the creditor has suffered.


    If you have a judgment issued against you and you live in a state that allows garnishment, the creditor may go back to court to ask the judge to enforce the judgment. The judge may issue an order allowing the creditor to garnish your wages. Depending on the state, the creditor may be able to have your employer withhold up to 25 percent of your salary to pay the creditor. A creditor may also garnish your bank accounts or other assets as well. This can leave you extremely cash-strapped.

Monday, December 21, 2009

Can You Really Get Grant Money to Pay Off Debt?

Can You Really Get Grant Money to Pay Off Debt?

In tough economic times, consumers welcome virtually any help getting out of debt. A grant is a sum of money that an agency --- usually a non-profit or a government agency --- awards to fund a project. The most commonly awarded grants are those that fund educational or scientific research. Grants are also often awarded to fund philanthropic or charitable work. Generally speaking, no grants are available to help individuals pay off consumer debt.

No Federal Grants

    The Federal Trade Commission has made it clear that the federal government does not fund grants for consumers to use to pay personal expenses, or pay off debts. When it comes to government grants for debt relief, the old adage is true: if something sounds too good to be true, it probably is. According to the FTC, that is the case with grant money to pay off debt.

FTC Enforcement

    The rumor that you can get grant money to pay off debt has been proliferated by dishonest companies that target cash-strapped consumers. The FTC has shut down several companies that duped individuals into providing their credit and debit card account information, to pay a nominal fee in exchange for information about grants. The information the company provided to consumers was worthless, and the company charged additional fees ranging from $19 to $95 to the consumers' credit and debit cards.

Government Debt Relief

    The government does offer some debt relief programs. Student loan repayment options are one example. Consumers who have student loan debt can apply for military service deferment, economic hardship deferment, forbearance or consolidation programs that postpone repayment but do not forgive the debt. Mortgage loan assistance is another government debt relief program. Consumers who are unable to make mortgage payments because of divorce, unemployment or illness may qualify for federal aid to homeowners in the form of loan modification.

Avoiding Scams

    As a consumer, you should be skeptical of any organization that claims it can secure grant money for you to use to pay off your debt. Scammers may use high-pressure tactics and celebrity endorsements to try to trick you into giving them your credit and debit card account information. Beware of any program that requires you to buy information.

Sunday, December 20, 2009

Credit Card Debt Collections Limitations In Florida

Floridians who are contacted by debt collectors have the right to limit collectors' contact with them or cut off contact altogether if they don't believe they owe the debt in question. In any case, debt collectors must provide consumers with legitimate information about collection accounts and turn over documentation on credit card accounts that debtors dispute.

Statute of Limitations

    Florida's statute of limitations on credit card debt is four years. That means a creditor has four years to sue a consumer to collect money owed on a credit card account. A card issuer or debt collection company that sues or threatens to sue a Floridian to collect a debt, after the statute of limitations expires, is violating the U.S. Fair Debt Collection Practices Act.

Collector Contact

    Florida also limits collectors' contact with consumers. For example, a collector may not contact a debtor before 8 a.m. or after 9 p.m., local time, unless the debtor agrees to be contacted earlier or later. Floridians also can write a letter to a collection company to tell the company to stop contacting them. However, the company may then pursue other actions to recoup a debt, which could include filing a lawsuit.

Debt Validation

    According to the Florida Attorney General's Office, debt collectors are required to send debtors a written notice within five days of their initial contact with them to clarify the money owed. The notice must show the name of the creditor linked to the debt along with the credit card account number and other account information. Floridians who believe they do not owe the debt should inform the collection agency of that in writing within 30 days of receiving their first collection notice. The agency may not contact a debtor afterward, unless it sends a copy of a bill or other documentation that proves its information on the debt is accurate.

Consumer Complaints

    Debt collectors are also prohibited from misrepresenting themselves or a debt obligation to Floridians to pressure them to pay off a credit card account. For instance, a collector may not falsely claim to be an attorney or inflate the amount that a debtor may owe. Residents can file complaints about debt collection companies with Florida's Department of Financial Services or with the U.S. Federal Trade Commission. Floridians also can file lawsuits against companies for violating debt collection laws. Debtors who prevail in court may be awarded damages and recoup attorneys' fees and court costs associated with filing their suits.

Can You File Chapter 13 Bankruptcy When Buying a House?

You can file for Chapter 13 bankruptcy when buying a house, but it is an unlikely scenario. People file for Chapter 13 to reorganize excessive debt through a court-ordered payment plan lasting three to five years. Excessive debt makes most people ineligible for mortgage loans, making it virtually impossible to buy a house on credit while filing for Chapter 13 bankruptcy. The only other method of buying a house is to pay cash, but the federal bankruptcy court is unlikely to allow that once the debtor files for Chapter 13.


    Chapter 13 and all other bankruptcy types require debtors to list all assets and debts. Assets include cash available to purchase a home. Bankruptcy exemptions, which vary by the state, allow debtors to keep some cash in certain situations. The bankruptcy court is serious about debtors listing all of their assets. Failing to report cash while using the money to secretly purchase a home could result in allegations of fraud. Fines and prison time are possible for some instances of bankruptcy fraud. At a minimum, the bankruptcy court may dismiss the Chapter 13 bankruptcy case if the court discovers the debtor has hidden assets.

Legal Advice

    A debtor wanting to buy a house while filing for Chapter 13 should consult with a reputable bankruptcy attorney for legal guidance. The attorney is likely to advise buying the house well before the bankruptcy filing. Doing so eliminates any possibility of fraud charges. However, buying the house before the bankruptcy also requires the debtor to have credit scores suitable for a mortgage loan, or available cash.


    Debtors thinking of buying a house and filing for bankruptcy at the same time could also benefit from financial counseling from a nonprofit credit counselor. A counselor may advise forgetting about buying a house until the debtor's financial situation greatly improves. The counselor may suggest paying down debt instead to avoid bankruptcy. Some people lose homes to bankruptcy in Chapter 13 if they cannot make the payments. Also, bankruptcy information remains on credit reports for 10 years.


    Debt settlement and debt management plans are alternatives to bankruptcy and could help a person eliminate debt to later purchase a home. Debt settlement resolves credit card and other unsecured debt by allowing the debtor to pay less than the full balance. Debt management allows a counseling agency to manage a debtor's unsecured debts through negotiated payment plans with lenders. Charitable organizations such as the United Way and Salvation Army can recommend nonprofit credit counselors.

Saturday, December 19, 2009

How to Obtain Federal Housing Grants

If you're trying to get a federal housing grant to help you out of a difficult situation, it can be frustrating. Individuals rarely know where to look for grants and sometimes end up getting scammed by the many con-artists out there ready to charge for the same information you can get completely free. Below, you're going to learn how to obtain federal housing grants.



    Check HUD. HUD or the US Department of Housing and Urban Development is a government organization that is designed to help low-income families and others find housing. Although HUD does not give grants directly, they work closely with private organizations and government organizations that do. By visiting your local chapter of HUD or their official website at www.HUD.org, you can learn about the available HUD grants for housing.


    Check out Grants.gov. A very helpful way to find applications for federal housing grants is www.Grants.gov. This website keeps an up to date listing of available grants for all different needs, including housing. Type in 'housing grants' using the keyword search option on their site and you'll be given a list of grants related to that search. You can find out the details of each grant and obtain applications on this website as well. Choose the grants that you feel you would be eligible for.


    Fill out the applications. The next thing you'll need to do is fill out the applications for the grants you have chosen. Although it seems self-explanatory, this is a very important step. Have someone close to you read over the applications after you have filled them out to ensure that there are no typos, grammatical errors or mistakes. This will save time and help the reviewers examine your application easier. You may also need to fill out a grant proposal, which you can learn how to do by visiting http://www.ehow.com/how_2285001_fill-out-government-grant-application.html.


    Pay attention to the grant deadlines. Depending upon the kinds of grants you have applied for, the application process may vary. Some grants work on a first come first serve basis while others are competitive and reviewers will select the individuals who need it most. Either way, you need to make sure that you have your grant in before the deadline or you will have only wasted your time. You should receive information about the deadline in the same place you received the application. Also, don't fold the grant application; place it in a manila envelope and ensure that you have put enough postage on the envelope.


    Fill out multiple applications. There is no law that says you're not able to fill out more than one grant application. In fact, doing so may help ensure that you get a grant. Search for more than one housing grant application and fill out all the ones you may be eligible for. This will increase your odds of getting approved for one of the grants.

    By following the steps above, you can get federal grants for housing to help you get your life together.

Friday, December 18, 2009

What is a Debt Recovery Program?

What is a Debt Recovery Program?

Businesses use debt recovery programs to collect past due money owed to them. The debt recovery process includes two parts: negotiating repayment and actual recovery of the money owed. Negotiation may include working out a payment plan with the company or individual in debt or, if needed, reducing the amount owed. The second step of a debt recovery program, recovery, includes the actual collection of the money owed.


    Contacting the delinquent individual or business is the first step in a debt recovery program. Since initial contact is relatively simple, the business owed the money, rather than a collection agency, may choose to initiate the initial contact. Contact through letters or phone calls regarding the money owed may be all that is necessary to prompt someone to pay. The contact is most often firm and to the point, and spells out the specific amount owed and a deadline for receipt of payment.


    Rather than immediately using a debt recovery agency, some businesses opt to use debt recovery software. Debt recovery software ties in with the other company records. It includes information on each client, including contact information, money owed and payment due dates. The debt recovery software can generate letters to debtors and, if desired, can automatically turn customers over to a collection agency. Although debt recovery software can work well for inexperienced business owners, it requires a basic level of technical knowledge and expertise.

Service Selection

    Some debt repayment agencies have a reputation for harassment and unethical practices, or on the other extreme, they may have a reputation as pushovers. Though debt recovery services are separate entities from the company owed the money, choosing to work with a reputable debt recovery firm helps protect the reputation of the company owed the money. The ideal debt recovery agency works well with both the business owner and the debtor. Many debt repayment companies have legal teams that ensure all practices are handled legally and ethically.


    Considered as a last resort, a delinquent business or individual should only be taken to court when all other options to collect money owed have failed. Due to high court costs, in most cases, if the amount owed is less than $2,000, a business may choose to simply write off the money owed. Debt recovery agencies can work with the attorneys for the company owing the money and may find it beneficial to settle out of court.

How Does Debt Consolidation Affect Your Credit Report?

How Does Debt Consolidation Affect Your Credit Report?

Debt consolidation may have a severe impact on your credit report if you aren't educated on making the right choices and managing your money during the consolidation process. It's vital that you create a plan prior to taking on consolidation loans, debt management plans and balance transfers to avoid falling into traps that get you further and further into debt. However, if used properly, these methods may get you out of debt faster and for less money.

Consolidation Loans

    Since consolidation loans are new credit, your lender must make a hard inquiry into your credit report, which creates a small negative effect on your credit score. Thereafter, the consequences of a consolidation loan are based on how responsible you are in repaying it. Since a consolidation loan effectively wipes out your previous balances, you must resist temptation to continue contributing to your debt. Giving into using the newly freed credit is one of the biggest pitfalls for people using consolidation loans. The appearance of a consolidation loan on your credit report may also make it difficult to obtain new credit, since lenders will see that you've had problems managing your money in the past.

Debt Management Plans

    The only way to get on a debt management plan (DMP) is if a credit counselor recommends one for your specific financial situation. It's viewed as the last stop before bankruptcy, and you must be behind on payments and having trouble making payments to qualify for one. Your credit counselor will work with your creditors to negotiate lower interest rates and/or lower payoff balances. A DMP is viewed as a negative mark on your credit report, since it indicates that you weren't able to pay back the full amount of your debt. Also, if your credit counseling company doesn't pay your creditors on time, your credit score will plummet. It's vital to check with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling before choosing a credit counseling company.

Balance Transfers

    Balance Transfers may have the worst effect on your credit. For one thing, when you open a new credit card account, the creditor must make a hard inquiry into your credit report. Also, the credit bureaus don't differentiate between a high balance that comes from a transfer and a high balance resulting from a large purchase; therefore, the transfer may weigh on your credit score. It also appears on your credit report as an additional debt. Also, if you keep opening new accounts to take advantage of low introductory rates, your credit score will be negatively impacted. Closing old accounts further impacts your credit score in a negative way.


    Debt consolidation methods decrease your chances of qualifying for new credit and getting good interest rates in the future, so it's best to explore your other options first. Often, the rates advertised for debt consolidation loans are only for those with stellar credit, and you may actually save more money by requesting lower interest rates with your current credit cards.

Thursday, December 17, 2009

Things You Must Have on the Debt Settlement Offer to Fix Your Credit

If you are paying or settling outstanding debts, try repairing your credit at the same time. Contact your creditors and offer to repay what you owe. Ask creditors to update or remove negative information from your credit report. When negotiating a settlement, be sure to get the details in writing. And make sure that it specifies the way in which your creditor reports your account status to the credit bureaus.

Settling a Debt

    If you have a past-due debt that you would like to pay, while at the same time improving your credit, it may be possible to negotiate with a creditor or collection agency. Offer to pay the entire debt, or a percentage of the debt, if the collector or creditor agrees to remove derogatory information from its report to the credit bureaus, and reports your account as "paid as agreed.". You may also persuade the creditor or bill collector to simply remove the account from your credit report.

Credit Report Language

    Some creditors or debt collectors may offer to report your account as "paid in full" or "settled for less than balance due," even if you pay your debt in full or settle for less than what you owe. Although it is better to have a report of a paid account than an outstanding debt,, these entries still reflect a negative payment history. During your negotiations, ask that your creditor report your account as "paid as agreed" in exchange for your full payment or an agreed-upon settlement.

    You can also ask the creditor to simply remove the account from your credit report. However, this can potentially harm your credit score, writes author Dana Neal in "Best Credit." Fifteen percent of your credit score is based on the length of your credit history, and a longer history improves your credit score, according to MyFICO.com, a credit scoring service. Removing an old account that contains only mildly negative information, such as a few late payments, can do more harm than good.

    Neal recommends leaving accounts that include mildly negative information, such as a payment that is less than 90 days late, to avoid further damage to your credit report.

Get it In Writing

    Do not agree to settle a debt, or actually pay any money, until you have an offer in writing from your creditor or its collection agency. This offer should explicitly state that the creditor or collection agency will remove the account, or report it as "paid as agreed," to each of the credit bureaus, provided that you pay the settlement amount by its due date. If you don't get a written settlement agreement from your creditor, its representative or collector may simply claim no such agreement was made to remove or modify credit report information. Request a signed, dated settlement agreement on company letterhead before you send any money in debt payment.


    If you begin settlement negotiations a debt, your creditor will assume that you have some assets. This can motivate a creditor to take you to court if you can't come to a mutually-agreeable settlement, according to Steve Bucci, president of Consumer Credit Counseling Service of Southern New England and a columnist for Bankrate.com. A lawsuit can cost you far more than paying the debt in full since a judge may order you to pay court costs and legal fees (n addition to satisfying the full amount of the debt). Plus, a court judgment will show up on your credit report, severely harming your credit.

    Some credit bureaus, such as Experian, monitor credit reports for signs that a consumer's financial situation is improving. When this happens, the credit bureau notifies other creditors to let them know that you have money to pay your bills. If you settle or pay a debt in full, and your creditor reports this to the credit bureaus, other creditors may renew their debt collection efforts.

Wednesday, December 16, 2009

Can You Close an Account That Is Pending Garnishment?

In most states, if a creditor wins a lawsuit against you for a delinquent debt, it can apply to the court that awarded judgment against you for a writ of garnishment. This document gives the creditor the legal right to garnish funds in your bank account, subject to federal and state limitations. If a bank account is pending garnishment, you cannot close the account.

Legal Judgment

    Before a private creditor can execute a bank garnishment, it must obtain legal authorization to do so. The creditor begins the process by filing a lawsuit in a civil court, most commonly in the county where you live. The court will issue a summons and provide you with an opportunity to challenge the suit in a court hearing or in writing, depending on your state's laws. If you do not provide a response or the court does not determine that the lawsuit was filed in error, it will grant a judgment to the creditor.

Garnishment Authorization

    A judgment alone typically does not give the creditor authorization to garnish bank account funds. After receiving a valid judgment, the creditor must obtain a writ of garnishment in most states. A writ of garnishment enables the creditor to contact your bank to order garnishment of funds that are not exempt under your state's laws.

Account Freeze

    Once your bank receives a garnishment order from the creditor, the order creates a pending garnishment on your account. A pending garnishment requires the bank to freeze the account, which means that you do not have the authorization to withdraw funds or close the account. This gives the bank time to determine the amount of assets in your account that are eligible for garnishment so it can send the funds to the court for payment to the creditor.

Avoiding Bank Garnishment

    Contacting a creditor before it decides to file a lawsuit against you can be an effective way to avoid bank garnishment. If you are behind on your debt payments, the creditor may offer a variety of solutions to avoid the expense of filing a lawsuit and executing a bank garnishment order. It may waive late fees, spread your past-due balance over several payments or reduce your interest rate to help you catch up. The creditor may also accept a settlement, which involves paying part of the account balance in a lump sum.

Monday, December 14, 2009

Budget Credit & Counseling

Budget Credit & Counseling

Credit counselors review money management and budget plans with clients to provide practical assistance with managing their money. Often, clients believe they just need more money in order to survive when they may just need to examine their spending patterns. Sometimes, financial emergencies such as health issues create budget issues, but these can be avoided through good financial planning

Budget Planning

    Many credit counseling companies assist clients with budget planning if an individual does not know how to do it himself. The client needs to total all income, including yearly payments such as bonuses, taxes or interest. Next, the client lists and totals all expenses in three separate categories: fixed, flexible and discretionary. Fixed expenses remain the same from month to month, such as a house payment, loans or insurance. Flexible expenses must be spent each month but can be increased or decreased as needed. Utilities, groceries and gas fall into this category. Discretionary expenses are wants that are not needed, such as Internet, cable or cell phones. If the client cannot balance his budget, this category should be reduced until he is able to do so.

    If there still seems no possible way to equalize income and spending, companies such as Consumer Credit and Budget Counseling offer a debt management plan and work with creditors to reduce payments and lower interest rates. This may impact credit reports negatively, although it will not impact credit scores.

Spending Less

    Credit counseling agencies often recommend that clients find as many ways as possible to spend less money. Resources from the Federal Deposit Insurance Corporation indicate that in addition to making a budget, additional ways to decrease spending include reducing banking costs and reviewing insurance policies. Refinancing, careful monitoring of bank accounts and credit cards and updating insurance information once every six to 12 months contribute to better budgets.

Saving More

    In addition to spending less, consumer credit counselors encourage clients to save more. Further information from the FDIC indicated that this can be done in several ways. An emergency savings account acts as a "back up" in case of unforeseen expenses. Planning for short- and long-term goals such as college, retirement and vacation helps prepare for the future. Setting aside even a small amount of money, from $10 to $25 per month, begins the habit of saving. Saving a financial windfall instead of spending it also helps build up a financial reserve. Comparison shopping for all purchases helps stretch money further.

Borrowing Wisely

    Budget counselors advise consumers to borrow money wisely. The FDIC further recommends that clients review credit scores periodically. Careful shopping for credit products, such as banking services, loans and credit cards, helps defray costs. Avoiding short-term but costly solutions such as car title loans or payday loans will save additional expenses.

Managing Credit Payments

    Credit counselors advise clients to manage credit payments wisely. The FDIC further recommends that client speak with lenders if they foresee issues making payments. Proactive solutions such as initiating contact with loan holders to coordinate a solution should result in the most optimal outcome for all.

Sunday, December 13, 2009

The Legal Amount to Take From a Paycheck for Garnishment in Virginia

Virginia law allows creditors to take legal action to recover unpaid debts -- if your debt account becomes severely delinquent, usually six months or more, your creditor may take steps to garnish a portion of your paycheck. This means that your employer will withhold part of your earnings to apply toward your debt. However, a creditor cannot take your entire paycheck -- Virginia places restrictions on amounts a creditor can legally garnish.

Garnishment Limitation

    Virginia adheres to federal law regarding the percentage of your wages that a private creditor can legally garnish. A creditor can take up to 25 percent of your disposable earnings, which is the portion of your wages after required taxes are deducted. Retirement plan payments, health insurance premiums and other voluntary deductions do not reduce your wages for the purpose of determining disposable income.

Alternative Limitation

    Virginia imposes additional restrictions on wage garnishment. If you earn less than 30 times the federal minimum hourly wage each week, your creditor cannot garnish your income. For example, if the federal minimum wage is $7.25 per hour, you can earn up to $217.50 per week without fear of garnishment from a private creditor. If you earn more than this amount, the creditor may garnish the lesser of 25 percent of your wages or the amount you earn above 30 times the federal minimum wage each week.


    The standard garnishment limitations in Virginia do not apply to federal or state tax debts, child support or alimony. If you owe unpaid alimony, child support or taxes, the creditor garnish up to 50 percent of your disposable income if you currently support a spouse or dependent who is not the intended beneficiary of the unpaid child support or alimony. If you do not currently support a spouse or dependent, the creditor can take up to 60 percent of your disposable earnings.

Garnishment Authorization

    Under Virginia and federal law, a private creditor cannot execute wage garnishment without obtaining a valid judgment against you for your debt. The creditor must file a lawsuit against you for the debt and receive a judgment from a Virginia court, typically in the county where you reside. However, garnishments for tax debts, child support and alimony can be executed without a court judgment.

How to Remove Lines of Credit From a Report

Removing items from your credit report is difficult and takes perseverance. It is important to make sure your credit report is accurate, since its contents can have a great impact on your life. Lines of credit often appear on your credit report as fully funded, even if they are not. Also, if you've refinanced your line of credit, it might appear as numerous debts when it is one and the same debt. While accurate credit cannot be removed form your credit report, consider a few steps to take to request the removal of duplicate or incorrectly reported lines of credit.



    Order an all-in-one credit report from all three credit reporting agencies online at AnnualCreditReport.com, or write to each credit bureau. Provide a copy of your identification, along with your name, addresses and employer information for the past five years, Social Security number and birth date.

    Equifax Inc.
    P.O. Box 740241
    Atlanta, GA 30374
    (888) 685-1111

    2 Baldwin Place
    P.O. Box 2000
    Chester, PA 19022
    (800) 888-4213

    P.O. Box 9595
    Allen, TX 75013
    (888) 397-3742


    Examine all three credit reports for repeat entries or incorrect accounts. Make sure your line of credit is not being reported as a fully funded loan if you haven't drawn the balance to the maximum. Also, if your line of credit has been refinanced, check to ensure that it is not being reported as separate accounts. This could reduce your credit score.


    Report disputes using the online dispute process from each credit-reporting agency. Disputes will trigger an investigation of your account, and credit bureaus have a window of 30 days to make contact with your creditor and validate your claim. If the 30 days pass without a resolution or verification, the account must be removed from your credit report. If changes have been made to your credit report, you will receive a free, updated report.


    Ask your lender to cease reporting your line of credit to all three credit bureaus. If you have handled your account responsibly, your line has been paid in full, or your account has been reported incorrectly, your lender may consider your request.

What Are the Benefits of Bank of America Visa WorldPoints?

What Are the Benefits of Bank of America Visa WorldPoints?

In essence, credit cards are like always-ready loans---often with very high interest rates. But some banks offer credit cards with attractive benefits that make using the card quite advantageous. The Bank of America Visa World Points Reward program offers such a credit card with premium services, benefits and rewards.

Annual Perentage Rate

    As of March 2010, the Bank of America Visa World Points credit card offers a zero percent introductory APR for the first 12 months on all balance transfers and cash advance checks. After the first 12 billing cycle, there is a relatively low fixed APR rate for all purchases using the card. There is a 7.9 percent APR for regular and platinum plus accounts and a 13.99 percent APR for preferred accounts. Additionally, there is no annual fee for using the card.

Rewards Program

    There is a point-earning program for every dollar spent in net retail purchases which can be redeemed for cash, gift certificates, merchandise, travel, dining certificates and more. Furthermore, the customer has access to a service called "MyConcierge" which acts as a personalized assistant, providing help and advice on a variety of things from gift ideas to planning a party.


    Customers are assured of worry-free service as any unauthorized charges are taken care of. In fact, the card offers complete fraud protection so someone's crime does not become your expense.

Saturday, December 12, 2009

How to Negotiate With JC Penney on Late Fees

Resolving problems with a store credit card company usually begins when you notice inaccuracies in your bill or some other type of problem. When payments are received late often late fees can snowball into a bigger addition to your bill. In order to resolve the problem of late fees you may look into negotiating with JC Penney to lower your late fee charge or come up with some other repayment schedule that will better enable you to timely pay any bills due in the future.



    Check your account status. Read through and verify if your most recent statement is accurate as to any purchases or credits you may have had in that period. Determine the late fee assessed on your account.


    Analyze your budget for a month's time and determine how much you have to pay out for necessary expenses and the dates payments are due. Come to a total on this amount and then determine how much that leaves you for emergency use and other expense payment.


    Contact the Customer Service representative for JC Penney using the phone number indicated on your bill or write a professionally worded letter explaining your situation in short detail and what your goal is in reducing the late fees on your account.


    If yours is a re-occurring situation you may be able to speak to a supervisor and negotiate for a lower late fee rate or no late fees for a short time frame to allow you to pay down your debt.


    You may also want to extend your payment date to another time of the month. If your payments are currently scheduled during a time of the month when your finances are normally tighter, try to have the payment date moved up or back to accommodate when you will have more funds to work with.

Friday, December 11, 2009

Can I Be Responsible for a Debt if It Was Incurred While I Was a Minor?

A minor may enter into a contract, including obtaining a loan for various items. Whether or not you are responsible for settling an old debt you agreed to as a minor depends on any action you took concerning the loan contract while you were still a minor, and the purpose of the debt.

Minors and Contracts

    A minor may void a contract at any time, with a few exceptions. Minors who enter into contracts that provide necessities to their health and safety may not void the contract. Contracts for necessities may include housing, clothing, food and even a mode of transportation. A minor may not choose to try to enforce select parts of a contract on the other party if the minor chooses to void any portion of the contract. If a minor decides to void a contract, the minor may not void only parts of the contract, but must void the contract in its entirety.

Voiding the Contract

    A minor must take certain actions to void a contract, which makes the contract unenforceable. While still a minor, the person must file suit against the other party named in the contract and argue that the contract should not be enforced because of the person's age. If the minor is sued by the other party named in the contract, the minor may raise a defense against the suit based on the minor's age and move to void the contract and have the lawsuit thrown out of the court. The minor may be required to return any property, including money, that was included in the loan to the other party for the loan to be voided.

Time Frame

    To void a contract, a minor must act within a certain time frame, otherwise the contract will stay valid and enforceable so long as the contract adheres to the law. Once a person turns 18 years old and is no longer considered a minor, that person may not void any contracts. Depending on local laws, a person who has turned 18 may be given a certain amount of time after becoming a legal adult to void any contracts he entered into as a minor.

Ratifying a Contract

    If you entered a contract involving a loan and you did not void the contract while you were a minor, or within a reasonable period after becoming an adult, you have ratified the contract you entered into. Ratification means that you have forsaken your legal right to void the contract, choosing instead to keep the contract enforceable. As an adult who has ratified a contract involving a debt, you are responsible for satisfying that debt as if you originally entered the contract as an adult.