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

Monday, May 31, 2010

How to Build Your Credit After a Job Loss & Bankrupcy

How to Build Your Credit After a Job Loss & Bankrupcy

Rebuilding your credit after a job loss and bankruptcy may be less difficult than you think. According to Microsoft Money, many people bounce back quickly after bankruptcy. They can get new credit cards almost immediately, and new car loans and even home mortgages after just a few years. If your bankruptcy was caused by a job loss, then the first key is getting back to work again. With most of your debts eliminated by the bankruptcy and a new job, you're in a perfect position for a fresh start.



    Apply for a secured credit card. Secured credit cards are Master Cards or Visas and require a deposit into a savings account. The money in savings serves as collateral, removing the risk for the lender and making approval easy, even for people emerging from bankruptcy. The cards look and work like any other Master Card or Visa. Ask about the cards at your bank or credit union or check credit card comparison websites (see Resources). Some secured cards are available with just a $200 savings deposit. Establish a new, positive payment history by keeping a small balance on the card and never missing a payment.


    Apply for a second secured card after a few months. Also, maintain a very small balance on this card and make timely payments.


    Get an installment loan from a bank. Use the same strategy as with the secured credit cards. Save say, $1,500 and buy a bank-issued certificate of deposit. Then take out an installment loan for the full $1,500 using the CD as collateral. Place the $1,500 in a savings account and direct the bank to withdraw from the account each month to cover the installment payments.


    Apply for unsecured credit after about a year. The positive payment histories from the two secured cards and the installment loan should make you a good candidate. Start with department store credit cards and gas station cards. Then move up to unsecured Master Cards and Visas. Continue making all your payments on time while not spending more than 30 percent of your credit line on revolving accounts. Complete your rebuilding by applying for a car loan or mortgage when the time is right.

Will a Secured Credit Card Help My Credit?

Secured credit card issuers require consumers to deposit a specified amount of money into a bank account to open a credit line. The amount of the deposit varies, but cardholders are allowed to charge up to a specified amount based on the amount of cash in their accounts. A secured card's impact on a person's credit rating is largely dictated by how the account is managed.

Credit Reporting

    The U.S. Federal Trade Commission recommends that consumers find out before they open an account whether a secured card issuer reports customers' account activity to credit-reporting companies. Your credit scores are based on information in your credit reports maintained by those companies. Therefore, a well-managed secured credit account can't help establish or rebuild a good credit history if the card issuer doesn't report your account activity to credit-reporting companies. It's particularly important that your account activity be reported to the national credit bureaus, which are Equifax, Experian and TransUnion.

Credit Management

    Good credit management is the most important factor in determining whether a secured account will improve your credit history. A Bankrate.com article titled "10 Questions Before Getting Secured Credit Cards" recommends charging a few items and paying off your balance each month to establish a good credit history with a secured card. In contrast, a Better Business Bureau article on secured credit cards suggests carrying a balance for several months, while making timely minimum monthly payments to build a positive credit history. In either case, late payments will defeat your efforts to improve your credit rating. Consumer credit-scoring models used by creditors and lenders usually place the most emphasis on whether consumers pay their bills on time.

Secured-Card Restrictions

    There are circumstances in which people can't qualify for secured credit accounts. According to the BBB article, most issuers won't approve accounts for consumers who have been convicted of credit-card fraud or who are filing for bankruptcy. Card issuers also may distinguish secured cards from regular credit cards on consumers' credit reports. The Bankrate.com article notes that some consumer advocates assert that distinguishing secured accounts on people's credit reports could hinder their efforts to build a good credit rating. Lenders and creditors could view secured cards on credit reports as a sign of a weak credit history.


    The FTC warns consumers to watch out for deceptive advertising by some secured card issuers. The FTC says some ads fail to give consumers important information about the cost of application fees, annual fees and interest rates. The required processing fees and account deposit for secured cards can add up to hundreds of dollars. Ensure you understand the total cost associated with a secured card before you apply for an account. The FTC also recommends finding out whether you will receive a refund for all the fees you're required to pay if you're denied a card.

The Effects of Delinquencies & Charge-Offs

When you are late paying a debt, this delinquency may be reported to the credit reporting bureaus that are responsible for putting together your credit report. This credit report provides the basis for your credit score. The effects of a delinquency can, therefore, be severe, as this may cause your credit score to drop, which can lead to you paying more in interest on loans, including large loans such as mortgages.

Credit Score

    Your credit score reflects your creditworthiness, as measured by whether you have paid back your loans in the past. When you pay back your loans, your score goes up. When you get a charge-off or a delinquency, then your score goes down. Lenders will often use this score when computing how much interest they will charge you when you take out a loan. So, paying bills late can cost you money.


    According to Yahoo! Finance, the amount that a person's credit score will drop after he is late paying a bill will depend on what the person's current score is. For example, if your score is 780, a notice that one of your debts is 30 days late will result in a drop between 90 and 110 points. If your score is 680, that same delinquency will drop your score between 60 and 80 points.

Time Line

    While you may see your score drop severely immediately after you are late paying off a debt, your score likely will not stay down, so long as you pay your debts on time. When you pay off your debts on time, then older late debts recede in importance to the score. In addition, if you pay off a recent late debt, then your score will rise.


    Not all delinquencies or charge-offs are reported to credit reporting bureaus. Therefore, you may not see your score drop simply because you did not pay off a debt. In addition, all delinquencies and charge-offs can remain on your credit report for a maximum of seven years, so long as there is no change in their status -- meaning that they can only drag down the person's score for this period of time.

How to Eliminate School Loans

How to Eliminate School Loans

Student loans can be both good news and bad news. Many students are able to go to college because of the financial help they receive. That's the good news. The bad news is that they must pay the loans back at a time when they can least afford to. Many graduates live paycheck to paycheck, at least until they can get on their feet financially, so they struggle to make payments on their college loans. However, there are ways they can reduce or eliminate what they owe.



    Teach for a minimum of five years at an elementary school or high school that serves families in a poverty-level community. Make a five-year commitment to teach either math or science at a secondary school. Or become a special-education teacher at either an elementary or a secondary school in a high-poverty area. If you do so, you'll receive up to $17,500 for payment on your Perkins or Stafford college loans.


    Work for the federal government. Under the Federal Student Loan Repayment Program, which is administered by the U.S. Office of Personnel Management, if you work for the federal government in any capacity, your student loans will be reduced by $10,000 each year that you work, as long as you commit to about three years.


    Volunteer for duty in the Peace Corps, VISTA or AmeriCorps. If you volunteer for the Peace Corps, during your first year the program will reduce your Perkins loans by 15 percent. If you serve longer, it will reduce your Perkins loans by 20 percent each year for the second and third years, or up to 70 percent of the entire loan amount if you volunteer for four years. If you volunteer for AmeriCorps or VISTA for one year, it will apply $4,725 toward your Perkins loans.


    Sign up with the Army National Guard while you are in college, and you'll receive up to $10,000 credit against your student loans. If you have a medical degree or are a trained health care professional, you can also reduce your student loans when you serve in the guard's health care division.

Sunday, May 30, 2010

How to Take Care of a Debt Settlement Yourself

Managing debt on your own isn't always easy, and many opt to seek help from a credit or debt counselor. Debt counselors charge their clients a certain amount of money to help them get their debt in order, but when you're facing financial hardships, every penny counts. Cutting out the middle man and taking care of debt settlement with creditors and collection agencies can save you money.


Settling Original Creditor Debt


    Obtain a copy of your credit report from one of the three free services offered by the Credit Bureau. You can get a copy from Equifax, Experian and Trans Union. You are entitled to one free copy from each service once a year.


    Examine your credit report to determine if your unpaid debt is still with the original creditor or has been turned over to collection. Dealing with original creditors and collection agencies are two very different processes.


    Collect mailing address and telephone contact information for each creditor, along with the amount of debt owed to each one.


    Set up a budget based on your monthly income earnings. Subtract current monthly expenditures to determine how much you have left over to pay creditors.


    Calculate your total debt and divide it by the number of creditors you owe. This will give you an equal payment average for each creditor. To avoid paying more than you can afford, refer back to your budget.


    Compose a letter explaining your current financial situation and offering payment. Include a paragraph informing the creditor that the same offer is being made to all of your creditors and those who accept will be the first ones paid. Some creditors may make a counter offer between 35 and 50 percent less than the full amount of your total debt, but only if you pay the amount in full. Keep your acceptance agreement letters from creditors on file.


    Make the agreed upon payments, including a request for receipt stating the debt has been paid in full. Keep the receipt on file in case the debt status is not updated on your credit report and you need to contact the credit bureaus to update the status.

Settling Collection Agency Debt


    Review your credit report for debts that have been turned over to collection. Write down the contact information, such as address and telephone number, of the original creditor and the collection agency handling the debt.


    Contact the original creditor by telephone and explain your current situation. Express your willingness to settle the debt with a lump sum payment or a monthly payment plan and ask them to pull your account out of collection. In the event that they don't accept the offer, begin negotiation with the collection agency.


    Contact the collection agency by telephone and set up monthly payment arrangements. Tell them how much you are able and willing to pay each month to settle the debt.


    Make monthly payments on time as agreed until the debt with the collection agency is settled.


    Request a written statement from the collection agency confirming the debt is paid once you make your final payment.

I Do Not Want to Be a Co-Signer Anymore; How Can I Get Out Legally?

I Do Not Want to Be a Co-Signer Anymore; How Can I Get Out Legally?

There are two problems with co-signing a loan: You become as responsible for the payments as the person who gets the money for the loan, and you remain responsible for the loan until it is fully repaid. Unfortunately, you cannot get out of being a co-signer once you've signed unless the lender lets you out. And the lender has absolutely no motivation to let you out.

You've Been Warned

    You may not have noticed it, but before you co-signed for the loan, you were provided with a notice that spelled out your responsibilities as a co-signer. It is required by federal law. The notice warned you to "think carefully" before co-signing because by doing so you become responsible for the loan. While the notice does not mention how long the responsibility lasts, implicit in the explanation is the understanding that your responsibility lasts as long as the loan.

Why the Lender Won't Let You Out

    You are free to approach the lender and ask if you can be released from the responsibilities of co-signer. The lender is under no obligation to release you from this responsibility. According to the Federal Trade Commission, studies have shown that as many as three out of four co-signers will repay a loan that has gone into default because the borrower did not make timely repayments. With those kinds of odds, a lender is motivated to maintain your responsibility.

Ask the Borrower to Refinance

    While the lender is unlikely to let you out of your co-signing responsibilities, the borrower might. After all, you did him a big favor by co-signing for the loan. Whereas the borrower was unable to qualify on his own when he took out the loan, if the borrower has made all required payments, he may be qualified for a loan of his own now. He may be able to refinance the existing loan without your help. Refinancing will effectively repay the loan for which you are responsible, getting you off the hook, and place the borrower as the sole liable party.

The Worst That Can Happen

    If the borrower defaults, the lender will come after you. Collection laws vary from state to state, so how that happens depends on where you live. Common collections practices include wage garnishment, bank account levies, and liens that in some cases can result in foreclosure. The lender will first need to obtain a judgment in court against you.

How to Dissolve Credit

Dissolving or eliminating credit is easy. However, a person should not confuse credit with debt. Digital Federal Credit Union defines credit as "confidence in a borrower's ability and intention to repay." Credit is available in a variety of forms, including credit cards that allow a person to make charges and pay the balance in a lump sum or through monthly payments. Debt occurs after a person uses credit to buy a car, pay for a vacation or for some other purpose.



    Dissolve credit by reducing or closing credit lines, such as on credit cards. For example, a person with a $5,000 limit on a credit card and no balance on the card can dissolve the credit line by contacting the bank. Call your bank by dialing the number on the back of the credit card. Tell the representative that you are dissolving or reducing your credit lines and would like the bank to reduce your credit line to a specific level. Tell the representative your desired new credit line, or close the account completely. Follow up in writing with a letter.


    Call other creditors and make the same request. Use this tactic to close credit lines entirely or reduce them to a level that is still above current balances. It's up to you to decide how much credit to dissolve.


    Dissolve debt in other ways. Dissolve delinquent credit card debt through debt settlement. Call credit card companies or debt collectors and offer to settle delinquent accounts for less than the full balance. Settlements can be reached for 20 to 70 percent of the balance, according to "The New York Times." Accounts past due by 90 days or more are often eligible for debt settlement. Get terms of debt settlement agreements in writing before making payment by cashier's check.


    File for bankruptcy to dissolve debt if your debt is excessive and you cannot afford daily living expenses as a result. Chapter 7 bankruptcy dissolves unsecured debt such as credit cards in just three or four months. Chapter 13 focuses on reorganizing debt but also helps eliminate debt through a payment plan lasting three to five years. Bankruptcy is an extreme form of debt management and is very harmful to your credit rating. Use it as a last resort for dissolving debt.

Saturday, May 29, 2010

Strategies for Creditors in Bankruptcy Proceedings

Strategies for Creditors in Bankruptcy Proceedings

Confronting debtors in a bankruptcy proceeding can be a draining exercise for creditors, who often wait months -- or years -- to collect a fraction of the amount owed. However, creditors can pursue different strategies to speed up the process. Creditors can try negotiating a settlement or join multiple parties to pressure a recalcitrant debtor. In extreme situations, creditors can ask for an administrative hold on the amount or challenge the bankruptcy petition itself.

Forming Creditor Alliances

    The presence of multiple players sometimes provides an opportunity to form alliances around common interests, according to an analysis posted by First American. For example, a second mortgage lender might enlist a first mortgage lender to pursue claims against a debtor. Also, when multiple parties and their lawyers get involved in a bankruptcy claim, their presence is likelier to result in a settlement that favors a creditor's interests.

Negotiating With Debtors

    Instead of imposing their will, creditors may be better off allowing the debtor some breathing space to recover. Financial setbacks happen for many reasons, such as illness or loss of a job. A creditor who appears willing to compromise stands a better chance of recovering at least part of the money. Trying to squeeze debtors can drive them to file for bankruptcy, which is generally not in a creditor's best interests.

Revocation of Discharge

    Debtors can be held liable for misstatements made under the U.S. Bankruptcy Code, such as failing to disclose relevant financial information. Creditors suspecting fraud can challenge a debtor's attempt for Chapter 7 bankruptcy relief. If the debts have already been discharged, the creditor can petition for the order to be revoked. Creditors must file the request within a year after the discharge is granted, or, in some instances, before the case closes.

Right of Setoff

    A 1995 U.S. Supreme Court ruling allows creditors to pursue mutual obligations. Creditors can ask the court to place an administrative hold on the money until the court resolves the issue, says bankruptcy attorney Kurt M. Carlson. This process is known as the right of setoff. A group of creditors successfully used this procedure during the 2002 Kmart bankruptcy case to claim $20 million in various accounts that were being held for the troubled retailer.

Settlement Versus Litigation

    In some instances, offering to settle the claim is more productive than running up collection and legal fees. As a rule of thumb, early resolution through arbitration or mediation is the least expensive route, according to an analysis from Turnaround Management Corp. Litigation costs are tied to the time spent pursuing a claim, so creditors need to study when it makes more sense to negotiate a settlement or take their chances in court.

What Documents Validate a Debt?

The Fair Debt Collection Practices Act provides the legal framework in which third-party debt collectors must work. The law requires debt collectors to follow certain procedures and provide information to ensure they are collecting debts fairly and accurately. Of the most important aspects of the FDCPA is debt validation. This is the requirement of all debt collectors to be able to prove they have the right to collect the debt. The FDCPA has strict documentation requirements for validation purposes.

Proof of Ownership or Assignment

    The debt collector must show the agreement or contract that it signed with the original creditor to collect the debt. The agreement must include the date the debt was assigned to the collector, the account number and the original debt amount.

Account Statements

    Debt collectors must give you copies of account statements or payment histories from the original creditor. This documentation must include your name, account number, debt amount and the dates of any payments.

Loan Agreement or Application

    If the debt collector cannot provide account or payment statements, it must give you a copy of the credit card application or loan agreement you signed with the original creditor. The application or agreement must have your name, your signature -- handwritten or electronic -- and the date.

Time Limit

    Debt collectors must respond to your request for the validation documents within 30 days of receiving it. If the collector does not respond in the required time frame or cannot provide the necessary documents, the debt collector cannot continue collection attempts and can no longer furnish information about the debt to the credit bureaus.

Friday, May 28, 2010

How to Help My Family Through Financial Crisis

When helping your family battle a financial crisis, it is best to show support and ask that each person be honest throughout the recovery process. For example, if you learn that a spouse has a secret credit card, thank him for acknowledging that the account exists and then ask him not to incur any new charges. This approach is the best and most effective way to create an environment in which you and your family can create solutions and work together as a unit. Work with your family to get back on track financially.



    Sit down with the adult members of your household. Plan the conversation in advance and select a time when each person can focus on the family's financial crisis and answer questions openly about spending. Avoid having the conversation at the end of a long work day or during mealtime.


    Take stock of the family's financial standing. Itemize each debt, line of credit, loan, judgment and collection. Compare the family's earned income against its liabilities and discuss ways to shore up spending. Reduce spending in areas such as entertainment, dining and travel first. If necessary, reduce spending to the bare minimum, which may include rental costs, health insurance, school fees, food, transportation and fuel, clothing and utilities.


    Contact each creditor and request a reduced interest rate for all household lines of credit. Write a letter or contact your creditors by phone. Explain that you cannot afford to pay the added fees associated with having a higher interest rate. A one to two point reduction can translate into savings each month.


    Ask your creditors for help. If you cannot make an impending credit card payment, contact your creditors immediately. Provide supporting documents, if requested, and explain the financial reasons why you and your family cannot meet your financial obligations. Ask a credit specialist to waive your family's minimum balance for the impending billing cycling -- finance charges still apply and a waiver does not discharge the card balance owed for the month, it simply postpones when the payment is due.


    Create liquid assets. Examples include money that is deposited into a savings or checking account, certificate of deposit, bonds and mutual funds. Speak with a financial advisor about clearing out these and other liquid assets to obtain fast cash. Consider selling vehicles, downsizing your primary residence or auctioning jewelry if you cannot budget your family out of debt in five years. Avoid depleting retirement accounts and education funds for minor children.

For Each Collection Deletion on Your Credit Report How Much Will Your Score Rise?

Credit reports and the scores based on them serve a crucial role in your ability to get new forms of credit. Whenever you have debt collection appear on your credit report, this lowers your credit score and makes it harder to get a new loan. However, removing the record of the collections action will usually raise your score.

Credit Scores

    Different companies create and use credit scores. These scores give lenders and borrowers a numerical representation of how reliable a potential borrower has been with past forms of credit. These scores are based on your credit report, a collection of your prior credit transactions over the past seven to 10 years. While you have the right to view your credit report every year without charge, you do not have the same right to view your credit score for free as these numbers are proprietary information created by different companies.

Negative Impact

    The exact impact of a collections action, and any subsequent deletion, on your credit score is difficult to determine. At a minimum, it's reasonable to assume that removing a recent collections action will likely have at least as much impact as removing a 30-day late payment, as collectors typically do not get involved with a bill until well after payment delinquency. Yahoo Finance reports that a single 30-day late payment can lower your score from between 60 to 110 points.

Score Differences

    The impact deleting a collections action from your credit report has on your score also depends upon what your original credit score was. For example, if you settle one of your debts with your creditors and have a credit score of 780, the settlement lowers your score by between 105 to 125 points. On the other hand, a person who receives the same debt settlement, but who has a credit score of 680 has their score lowered by between 45 and 65 points.

Time Differences

    Creditors and credit scoring companies give greater weight to more recent credit transactions than they do to those that happened several or more years ago. If we assume that a credit collection lowers your score from between 100 and 120 points, new collections are more likely to have a higher impact, lowering your score by 120 points, for example, than old collections. Similarly, removing an old collections action will have less of an impact than removing a new record.

Thursday, May 27, 2010

How to Deal With Defaulted Payday Loans

Payday loans can be helpful for customers who have little or bad credit, and who need to get money fast. They are also known as cash advances, and can be found locally or on the Internet. However, these companies charge high fees for the privilege of lending money to higher-risk persons, and many times borrowers cannot pay them back. If you default on a payday loan, there are ways to take care of it, so you can start rebuilding your credit.



    Talk to the payday loan company that you originally received the loan through, if the company hasyet to turn you into a collections agency. Ask if you can set up some time of payment plan to pay off the loan that you owe. Often, the company will be willing to work with you to get back the money borrowed.


    Do not ignore the collection calls that you receive. Speaking to the company lets it know that while you are in default, you may still be open to a payment plan or negotiation. Remember, you are still a consumer that has rights, so do not let the collections agency harass or intimidate you.


    Discuss with the collection agency whether you can get a discounted rate if you offer to pay the whole amount off in one lump sum. With so many accounts in default every day, collection agencies are usually willing to settle for an amount lower than what you originally owed.


    Read up on the state laws regarding payday loans. Each state has different regulations for payday loans, and the company you defaulted with may have broken one of them. This can help you when you are dealing with your defaulted loans.


    Sign up with a debt consolidation company that can help you with your defaulted payday loans. This is especially helpful for those who may have more than one loan in default, or borrower's with particularly high finance fees to deal with. The company can consolidate all of your debt and offer you a payment plan that you can live with.


    Borrow money to pay off the defaulted loans, from your bank, credit union, family or friends. You may even get a cash advance on a credit card to pay off the defaulted loans. While you will then incur another debt, the default will be resolved, and you can work on rebuilding your credit.

Wednesday, May 26, 2010

Can a Judgment Stop You From Cashing Your Paycheck?

Can a Judgment Stop You From Cashing Your Paycheck?

Having a judgment filed against you does not mean that you are without the ability to cash your paycheck. Only a certain amount of your wages will get deducted from your pay as mandated by state and federal law, according to the Bureau of Labor Statistics.


    If you owe money for a past debt, creditors can choose to file a judgment against you. Wage garnishment happens when a creditor takes you to court for the purposes of receiving payment for the debt. This is usually a last resort for debt collectors. The only way collectors can issue a wage garnishment is by winning the court case.


    A court ordered wage garnishment allows the creditor to take out a certain portion of your paycheck each pay period, usually twenty five percent. Creditors can freeze your bank account by result of a court order. This happens two ways: If you cash your paycheck, the creditor can take the full amount from the bank; or, the creditor can seize money that's already set up in a savings or checking account.


    If you are behind on child support payments, the court can order you to pay up to fifty percent of your earnings.

What Happens If I Stop Paying a Debt Forever?

During times of financial stress, it may be tempting to stop sending payments to your creditors. The consequences of nonpayment vary slightly depending on the type of debt you default on, but can last for many years and cause you considerable problems in the future. Negotiating new payment plans or loan terms with your creditors is always preferable to ignoring your financial obligations.

Additional Charges

    Creditors add late fees to consumer accounts that remain unpaid past the due date. Although company policies differ, expect to incur numerous late fees the longer your debt remains unpaid.

    If you owe a credit card debt, additional charges will apply. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 restricts card issuers from raising interest rates during the first year an account is open -- provided the card holder pays all bills on time. As soon as your payment is 60 days late, the credit card company will raise your interest rate -- causing the balance you owe to grow rapidly.

Asset Seizure

    Secured debts, such as an automotive or mortgage loan, are directly tied to property that you own. Because your lender holds a security interest in your assets, it can and will repossesses those assets if you stop making regular payments.

Credit Damage

    Your lender reports your payment history to the credit bureaus. Missed payments affect your credit report negatively and cause your credit score to drop. The Fair Credit Reporting Act (FCRA) permits negative account information to remain on your credit record for up to seven years.

    Should you ever seek new credit or loans in the future, your new lender will see that your past credit history does not reflect responsible debt management skills and either turn down your application or charge you a higher interest rate -- costing you more money.

Collection Activity

    Unpaid debts that are not secured by property, such as credit card debts, are eventually referred to debt recovery agencies for collection. Debt recovery agencies will aggressively pursue you for payment using telephone calls, letters and emails to demand that you pay off your outstanding debt.

    If a debt recovery agency cannot collect the debt you owe, it sells your account to another agency. No legal limitations exist regarding how many times creditors can sell a debt. Thus, debt collectors can continue contacting you and attempting to collect on your account indefinitely.

Legal Action

    Either an original creditor or a collection agency can sue you for debts you leave unpaid. State laws regarding collection activity after a lawsuit vary, but typically grant the creditor additional options such as wage garnishment and attaching property liens. The court judgment that results from a debt collection lawsuit also appears on your credit report for seven years -- damaging your credit score even further.

Do I Have to Repay a Charge Off?

Do I Have to Repay a Charge Off?

A charge-off is a debt that is written off as a tax loss by a creditor after non-payment by a consumer---normally after six months of no payment. These charged-off accounts are reported on a consumer's credit file, and are often purchased by debt wholesalers who will attempt to collect on the debt from the consumer.


    According to Gerri Detweiler, author of "The Ultimate Credit Handbook," a charged-off debt is the common accounting term used by creditors when completing an annual profit and loss statement for the IRS. Charged-off accounts are a tax write-off for the creditor, but it does not limit the consumer's responsibility to repay the debt. Creditors and debt collection agencies can pursue all legal venues available in the consumer's state of residence to collect on the debt while it is valid under the state's statute of limitations. The statute of limitations will range from four to 10 years depending on the state, and the type of debt.

Time Frame

    While the debt is valid under the statute of limitations, the consumer is under a legal obligation to pay the charged-off debt. At times, the consumer can settle either with the creditor or the collection agency that purchased the debt for less than the total balance. However, once the statute of limitations has expired on the debt, the consumer does not have to legally repay it, but the debt can still be present on their credit report for up to seven years, which will hurt their ability to obtain new credit.


    According to an article on MSN Money, there are times that settling old charge-off accounts can damage a person's credit, even if settling the debt for less than the balance owed. The impact paying off a charge-off account has on a consumer's credit will depend greatly on whether or not it is paid or settled during or after the statute of limitations expires in their state.

Tuesday, May 25, 2010

What Can a Student Apply for to Take Care of Debt?

If you undertook a bachelor's or master's degree, it is likely that you also graduated with some debt. No one enjoys being in debt, and in these tough economic times, debt worries are exacerbated by high unemployment. However, those who are having trouble with their current student debt burden have some options.


    If you are struggling with your monthly payments, and your loans are part of the government's Family Federal Education Loan Program (FFELP), you may consolidate your loans to reduce your monthly payments. These programs are designed to extend the term of your loan. So if the original term of your student loan was 10 years, you may extend it to 25 or even 30 years if the size of the loan is large enough. Note, however, that although your monthly payments may decrease, the overall cost of the loan will be higher as you will end up with more accrued interest. But if you anticipate that your earnings will substantially increase in the future, this could reduce some of your short-run worries.


    Deferment is available for students who are experiencing economic hardship. Again, your loan must be part of the FFELP program. You must also prove to your student loan originator your current financial status. Many people take out deferment during periods of unemployment or internship. However, it is also available for those who are returning to school and who attend the military. Deferment delays the earliest date of repayment, usually by six months to a year. Only a limited number of deferment options are available for each category of economic hardship.


    Forbearance is usually available to those who have exhausted their deferment options. Unlike deferment, where interest is not accrued, interest does accrue during forbearance. Periods of forbearance are usually offered at the discretion of the loan company. Like deferment, forbearance is only granted to those who are experiencing financial hardship and are finding it difficult to make the monthly payments on their outstanding student loan.

Volunteer Programs

    Two volunteer programs, sponsored by the government, offer assistance in the repayment of student loans. AmeriCorps is a loose confederation of volunteer opportunities designed to help Americans in need. In exchange for a minimum number of months in service, you may have some of your federal student loan reduced in the form of an AmeriCorps Education Award. Alternatively, the Peace Corps, which organizes international volunteer opportunities, has a similar program for student loan reduction.

Monday, May 24, 2010

How to Negotiate With Third-Party Credit Card Debt Collectors

How to Negotiate With Third-Party Credit Card Debt Collectors

Credit cards are a part of daily life. Consumers use them for minor purchases, such as groceries, dining out and movie rentals. They also use them for larger purchases like vacations, airline tickets and Christmas gifts. The downside is that credit card usage can lead to unmanageable debt. If a consumer fails to pay a credit card debt, the creditor may turn that debt over to a third-party collection agency.



    Write a Debt Validation (DV) letter. Under the Fair Debt Collections Practices Act (FDCPA), bill collectors are required to prove that you actually owe the debt. By law, you must request validation within 30 days of receiving the initial collection notice.


    Mail the DV request to the collection agency via certified mail return receipt requested. Save your postal receipts in case you need to prove that the debt collector actually received your request.


    Wait to receive the DV materials, which may include copies of sales receipts, statements from the original creditor or a signed contract. The agency must cease collection efforts until they provide you with validation. Collectors who are operating illegally may stop collection efforts at this stage. Legitimate agencies are usually willing to negotiate.


    Review any materials sent to you and decide how much you owe in total. Decide on an amount that you are able to pay towards the debt, either in a lump-sum payment to settle the debt in full, or in installment payments.


    Send your written offer to the collection agency by certified mail, return receipt requested. Leave room to negotiate. If you are able to pay $800 of a $1,000 credit card bill, then initially offer $300. The agency may accept your offer outright, thereby saving you $500, or they will make a counteroffer. If you need to make payment arrangements, clearly indicate the amount you can pay each month.


    Wait to hear back from the agency, either in writing or by phone. If someone from the agency phones you and makes an acceptable offer, request a letter confirming the deal. Never make any payments over the phone. Until you have confirmation in writing, the settlement terms are not valid ,since the collection agency can renege.


    Send payment to the collection agency once you have a written agreement in hand. Make payment by cashiers check or U.S. Postal money order. Do not send a personal check. Repeat this process for each of your credit card debts.

Help With Credit Card Debt in Florida

If you cannot pay your credit card bills as promised, you have several options to find debt relief, according to the Florida Attorney General. Failure to pay your credit card bills can lead to disastrous financial consequences, including lawsuits and credit rating damage. Whether you can renegotiate your debts or must file bankruptcy depends upon the severity of your financial situation.

Financial Management Tips

    You can sometimes get yourself out of credit card debt with discipline, notes the Florida Attorney General. Stop charging up your cards and pay as much as you can each month. You should pay higher-interest debts first. In some cases, a certified credit counselor can help you rearrange your budget so you get out of debt while taking care of your basic needs.

Debt Management Plans

    Nonprofit organizations such as the Consumer Credit Counseling Service of West Florida offer debt management plans. Be careful how much you pay for this service, warns the Florida Attorney General. Credit counselors usually charge about $20 per month for debt management services. You pay the fee plus a lump sum payment that is distributed to your creditors. A good credit counselor can renegotiate the terms of your credit card debt. You cannot get any new credit while participating in a debt management plan.

Chapter 7 Bankruptcy

    Chapter 7 bankruptcy allows you to completely eliminate your obligations to pay existing credit card debts and similar bills. But you must qualify to file. As of 2011, single Florida residents earning less than $40,029 per year could automatically file for Chapter 7, according to the U.S. Trustee Program. The income guideline for a couple was $50,130, while the annual figure for a family of four was $65,135. If you earn more money, you can request Chapter 7 relief only if you prove you cannot reasonably repay your creditors while supporting your financial dependents.

Chapter 13 Bankruptcy

    Chapter 13 bankruptcy allows you to partially repay your credit card debts under court supervision; it usually takes three to five years to complete Chapter 13, according to the book "How to File for Chapter 7 Bankruptcy." If you have lived in Florida for at least two years, you can keep all of your primary residence real estate equity and up to $1,000 in motor vehicle value regardless of your bankruptcy status, according to Bankruptcy Action. But you risk losing some assets such as stocks and cash on hand and cannot use any bankruptcy to eliminate child support, alimony, court fines or recent tax bills.

Impact of Debt Relief on a Credit Rating

One of the top concerns from people who are deep in debt and considering a debt-relief program is how their credit rating would be affected. With a debt-relief program, you stop paying your creditors and start paying a credit-counseling service or debt-management firm. Most creditors will start reporting negative information on your credit history after 30 days, so what will happen to your credit rating if you join a debt-management plan?


    When you apply for a debt-relief program, your debt counselors or lawyers are supposed to contact all of your creditors to notify them that you are on a debt-management program so you can avoid a bad credit rating. This doesn't always work.


    Some creditors will report your account as "on a debt-relief program," while others will continue collection activities and report negative information to your credit report, which will reduce your score.


    Enrolling in a debt-relief program could potentially increase your debt load and increase your interest rates over time, if your creditors are not paid on time and in full as promised by the program.


    New creditors might look at your participation in a debt-management program as a risk, even if your credit rating doesn't decrease.


    Most creditors would prefer that you first come to them to manage your debt before going to a debt-relief program to save money and your credit score.

Sunday, May 23, 2010

How to Build a Good Credit Score in College

How to Build a Good Credit Score in College

College students have traditionally been a target for credit card lenders, with students receiving numerous offers designed to entice them into incurring debt. Thanks to the Credit CARD Act, instituted in 2009, consumers younger than 21 must have a co-signer, or prove their ability to repay a credit card loan, before they incur credit card debt. This bill can help young people protect their credit while working toward a degree. Students can also work to build a good credit score in college, so that after graduation they are in a financially sound position.



    Pay your bills on time and in full each month. Keep meticulous track of bill due dates. Avoid late fees, because creditors report these charges to credit-reporting companies.


    Choose one credit card with a low interest rate, and apply for it. Resist the temptation to reply to every card offer that arrives in the mail. The offers appear enticing, but you could easily overextend yourself and damage your credit.


    Use your one credit card wisely. Each month, charge no more than you can pay back in full with the next statement from the credit card company. Try not to carry a balance on your card.


    Consider a secured credit card if you do not qualify for regular credit. A secured credit card requires a deposit into a savings account, and you must keep that money in the account to secure the credit card. You must pay in full any charges you make to the card. Over time, this payment history will help you build credit.


    Check your credit reports annually to make sure they accurately reflect your financial activity. Contact the three credit-reporting agencies to correct any errors you find.

Can Debt Be Collected From My Inheritance?

Can Debt Be Collected From My Inheritance?

If you're lucky enough to receive an inheritance, the property you receive becomes yours and can be used by you in any way you see fit. Estates -- the property a person leaves behind after death -- are subject to various laws and taxes that affect how an inheritance is determined and distributed to beneficiaries. In general, if you receive an inheritance, your creditors are allowed to try to collect it to satisfy a debt, just as they can with any other asset.

Inheritances and Taxes

    If you inherit property, you may be required to pay an inheritance tax, which you must pay after receiving any inherited property. This is different from an estate tax, which is charged upfront on the estate and must be paid before property is given to heirs. In general, a state can file a tax lien against the estate to ensure that any inheritance taxes get paid before the estate is closed.


    If you owe debts, your creditors may use the property you inherit to pay off those debts, although in only certain circumstances. For example, if you have credit card debts, your creditors cannot simply take your property. The credit card company must sue you and win in court before it can levy your bank accounts or garnish your wages. If you received an inheritance in the interim, your creditors may be able to take the inheritance to satisfy the debt.

Using Inheritances

    If, for example, you inherit a home and later use that home as collateral for a secured loan, your creditors can foreclose on the home if you fail to pay back your debt. Also, if you enter into a secured-loan agreement with the home, your creditors have the same right to foreclose, regardless of the property's inheritance status. Receiving the home as an inheritance has no effect on subsequent loans to which you agree.

Inherited Debts

    Many people wonder what happens to a debt after the owner dies. In general, you cannot inherit debt. For example, if your parents die with credit card debts, you are not responsible for paying those debts. Your parent's estate is responsible for paying all debts before distributing the remaining estate property to heirs and beneficiaries. You may be able to assume a mortgage after the original mortgage holder dies, but you cannot be forced to do so.

How to Add Tradelines to a Credit Report

The absence of credit report tradelines often proves to be an obstacle in the path of obtaining credit. This is especially salient within the realm of younger consumers who face the Catch 22 of not being able to qualify for a loan until they have established sufficient tradelines on their credit bureau report. According to Maxine Sweet of Experian, one of the big thee credit bureaus, adding quality tradelines will help convince potential creditors that you are a good credit risk.




    Apply for department store credit cards with low balance limits. Take advantage of offers which give a substantial discount on your first purchase if you use a newly issued store card.


    Qualify for a gas station affinity card. Focus on gas cards which provide for a discount or cash back on your purchases.


    Apply for a student program major credit card if you currently are in school. Ensure that the cards you apply for report to all three major credit bureaus.


    Convince a family member or friend to cosign for a low-balance-limit major credit card in your name. Remove the cosigner from the account after you have established sufficient payment history.


    Elect for a secured credit card if all else fails. Review closely all fees and terms attached to the secured credit card you select.

Saturday, May 22, 2010

Information to Get Out of Bad Debt Legally

Information to Get Out of Bad Debt Legally

If you have numerous looming debts and you're having trouble digging yourself out of debt, you have several legal options available to you. Debt consolidation, credit counseling and, as a last resort, bankruptcy provide assistance in getting rid of your debt--but they have various levels of negative repercussions on your credit report.

Credit Report

    Before you take any action on resolving your debt issues, you must know where you stand financially. Under the Fair Credit Reporting Act, you are entitled to a free copy of your credit report from each of the three credit reporting agencies each year. Once you know your credit score, you will be able to choose the best course of action for getting yourself out of debt. You may order your credit report from the Annual Credit Report website.

Debt Consolidation Loan

    One option for getting yourself out of debt legally is to take on a debt-consolidation loan. Using your house or some other type of collateral, the debt-consolidation loan wipes out your current balances so that you make one monthly payment rather than multiple payments to your various debts. You must be fully committed to paying off your debt and keeping it paid off, however. According to Bankrate, 70 percent of people who take on a consolidation loan end up with the same amount or more debt within two years. Also, it's vital to make sure that you're getting a better deal with a consolidation loan. Oftentimes the rock bottom interest rates advertised are only for those with extremely good credit.

Credit Counseling

    If you can't seem to get yourself out of debt alone, a credit counselor may be able to help you get a financial plan in order. Credit counselors help their clients to create budgets and limit their spending to dig themselves out of financial ruin. If you have defaulted on your debt payments, a credit counselor may suggest a debt-management plan, which involves your counselor negotiating lower interest rates and/or payoff balances with your creditors so that you may pay off your debt over a specified period of time. You may have difficulty obtaining new credit after taking on a DMP, since you creditors see that you weren't able to pay back your full debt.


    The last legal resort for those who need to get out of debt but cannot make payments is to declare bankruptcy. However, it's important that you understand that declaring bankruptcy means that when your debt is wiped out, so is your credit history. The bankruptcy stays on your credit report for up to 10 years. You will have to rebuild your credit from scratch and you will have trouble obtaining new credit to do so.

How to Improve a Credit Rating Quickly

How to Improve a Credit Rating Quickly

Your credit score is one of the most important numbers in your life. It can play an instrumental role in your approval for a personal loan, car loan or home mortgage. Unfortunately, many are unaware how credit scores are calculated, and this can make it difficult to fix scores quickly. The two quickest methods for turning your credit score around are correcting errors on your credit report and increasing your available credit. Armed with a plan to tackle these two tasks, you can turn your credit around in a short time with little effort or stress.


Clean Your Reports


    Obtain a copy of all three credit reports. There are three major credit-reporting agencies: Equifax, Experian and TransUnion. Each is required to provide you with one free copy of your credit report every 12 months.


    Examine your credit reports for errors. If you see any debts that look unfamiliar, or that you know you did not incur, make a note. Call the reporting agency and notify them you believe a debt has been incorrectly reported to your account. Send them a letter stating the same. They will open an investigation, and if they determine the debt does not belong to you, it will be removed. This will instantly raise your score.


    Dispute any listed debts more than three years old. Just send a note to the credit reporting agency claiming the debt is not yours and requesting an investigation. Even if the debt is indeed yours, the lender who reported it must still provide verification at the credit reporting agency's request. If they do not, the agency will delete it from your report.


    Request the removal of debts or negative marks more than seven years old. This should happen automatically by law, but it is not uncommon to find one lingering. If you make the credit reporting agency aware, they will get it removed.

Boost Available Credit


    Pay down your credit card balances as much as you can. Your credit score depends heavily upon available credit. People who "max out" their cards are viewed as poor credit risks, which their ratings reflect. You should use no more than 20 percent of your available credit; thus, if your card limit is $1000, try to keep the balance below $200.


    Apply for another credit card, if you have only one. Having several helps demonstrate creditworthiness. If you already have multiple cards, simply focus on managing your existing cards.


    Utilize infrequently-used credit cards. This may seem counterintuitive, but it's much smarter than getting rid of those cards. If you rarely use a card, that company might stop reporting to the credit bureaus, which can damage your credit score. Use the card to make a small, recurring monthly payment and pay in full each month. This will boost available credit, and bring your neglected card back into "active account" status with the reporting bureaus.


    Request a credit limit increase on one of your credit cards. The key to this step is keeping the balance low, despite your newly-extended limit. Having more credit is only helpful in improving your rating quickly if most of the credit is available, so don't rack up your bill.

What Steps Do I Take to Order a Dispute Form for My Credit Report?

Before the Fair Credit Reporting Act was passed in 1970, consumers not only lacked the right to review their own credit history but also lacked the ability to dispute and correct errors. This caused problems for both individuals and lenders as lenders had no way to determine a borrower's actual lending risk. The FCRA gives you the right to dispute reporting errors in an effort to maintain your good credit rating and ensure that lenders see only accurate credit-related information when evaluating your financial history.

Pull Credit Reports

    Before you can dispute information your credit report carries, you must know exactly which errors your report contains. Unfortunately, since creditors sometimes report to different credit bureaus, each report could contain different errors.

    You have the right to access one credit report from each credit bureau each year by visiting the only website approved by the Federal Trade Commission for issuing annual free credit reports, AnnualCreditReport.com (see Resources).

Disputing by Mail

    There is no specific form for those who wish to dispute their credit information by mail. When disputing via mail, you must write a letter to each credit bureau whose report contains errors and point out which entries are inaccurate. Each credit bureau will then investigate the supposed errors after receiving your dispute.

Online Disputes

    Each credit bureau maintains an online dispute option for consumers. Should you opt to file your dispute online, you must visit each credit bureau's website, download the form required for online disputes, fill it out and submit it electronically. Because the credit bureaus' dispute forms are all available online, you do not have to order the form and wait for it to arrive.

Merchant Disputes

    Federal law provides you with an alternative to the more traditional credit bureau disputes by permitting you to contest inaccurate information directly with the merchant that originally filed the report. The FCRA stipulates only that merchants must honor consumer disputes. It does not prevent merchants from requiring consumers to file their disputes in a certain way.

    Because of this, merchants are free to require consumers to file disputes however they wish. Depending on the creditor, you may need to download and print a credit dispute form the company's website or call and request that the creditor send you a blank dispute form by mail. Some companies do not require dispute forms and allow consumers to request an investigation into the accuracy of a certain item by phone or through a letter.

Thursday, May 20, 2010

Garnishment Information

Garnishment Information

Creditors usually use garnishment as a last resort to collect debts. It's a process by which a creditor---a credit card company, for example---files a lawsuit against a debtor and secures a judgment, after which a percentage of a debtor's earnings are deducted from his paycheck and paid to the creditor. This wage garnishment process---sometimes called an attachment---is the most used form of garnishment. Property garnishments, such as car repossessions, also exist, but usually are handled through lien proceedings. Each state has its own garnishment laws, although federal garnishment regulations supersede state laws.

When are Wages Garnished?

    There's no hard and fast rule that triggers a company or the government to start garnishment proceedings. No set amount of debt or the passing of a certain number of days automatically kicks off a garnishment. The same debt that causes garnishment for one person may not be the death knell for you. Maybe you've got a long-standing relationship with a creditor and have kept in touch during a financial downturn in your life. You may be able to work things out short of garnishment, whereas another person who simply stops paying his bill will be a target for garnishment. Seriously overdue debts---three months is typical---are candidates for garnishment. The larger and more delinquent the debt, the more likely garnishment becomes. One thing is certain: Creditors will notify you by mail, phone, e-mail or all three methods when your account becomes delinquent. They want their money and would rather avoid court proceedings. Even the IRS will attempt to contact you about delinquent taxes in an effort to collect debts before garnishing your wages---which they can do without receiving a court judgment.

Who can Garnish Property?

    Any legal creditor or debt-collection company can sue you for garnishment of wages. The federal government can garnish your wages without receiving a court judgment against you and without informing you of the garnishment action. You'll simply notice money missing from your paycheck. This occurs frequently when people owe back taxes. State governments can garnish your wages without notice for overdue alimony and child support payments. Credit card companies, utilities, retailers, car-repair shops---any legitimate business can bring a garnishment suit. Car dealers may even repossess your car and sell it, then sue for garnishment based on the difference you still owe.

What can be Garnished?

    Property can be garnished, such as houses or cars, but these situations normally are handled through liens or foreclosures. Money, your paycheck in particular, is the typical target of garnishment proceedings. Bank accounts also can be garnished, typically by the government. "Earned income" is what can be legally garnished. There are, however, limits to the amounts that can be taken out of your check.

How does Garnishment Work?

    Private businesses that sue you for garnishment must first receive a judgment stating the amount owed, including interest. A supplemental hearing is usually scheduled, at which you must appear to answer the judgment. If you don't appear, a default judgment will be awarded to the creditor. If the court rules in favor of the creditor, the court may grant garnishment of your wages (if you can't make the payment in full). The creditor must notify you of garnishment authorization, the amount owed, any exemptions the creditor can't touch (such as social security benefits), and the steps for an appeal or challenge to the ruling.

Garnishment Limits

    Federal law limits the amount that can be garnished to the lesser of 25 percent of your weekly disposal income or an amount equal to 30 times the federal minimum wage ($7.25 in 2010). For example, 30 x $7.25 = $217.50. If your weekly disposable income is higher than four times $217.50, the garnishment will be $217.50. If your income after taxes is less than $217.50, the garnishment will be 25 percent of your take-home pay ($50 on $200 disposable income). The IRS can seize nearly unlimited amounts of money and property to satisfy tax debts, governed only by guidelines that require them to leave you enough money to live. Garnishments totaling 30 to 70 percent of paychecks are not uncommon. The IRS also will garnish bank accounts (they like to receive bulk payments) and homes. State courts can garnish 50 percent for alimony and child support debts.


    Some money is exempt from garnishment, although child support and alimony cases may not protect even these assets. Social security benefits, SSI and SSDI income, VA benefits, some unemployment benefits, certain public assistance income (food stamps and aid to children, for example), alimony and child support received, and some survivor and retirement benefits are among exempt income.

Is Bankruptcy the Answer If I Am Collecting Unemployment?

Unemployment is a leading cause of bankruptcy and is often the right answer for people struggling to pay bills while collecting unemployment. However, the Federal Trade Commission recommends that people try to avoid bankruptcy if possible. Bankruptcy ruins credit for years, making it tough or impossible to qualify for new credit at favorable rates. It could also make finding a new job difficult if the employer has rules against hiring new employees with serious credit issues.

Chapter 7 Bankruptcy

    Some people collecting unemployment benefits find that it is a perfect time to file for Chapter 7 bankruptcy. Chapter 7 is the simplest form of bankruptcy because it eliminates unsecured debt such as credit cards in as little as three months. The biggest barrier to qualifying for some is income. Income limits are set by individual states, and usually only those with very low incomes qualify. People collecting unemployment benefits may qualify however, because their earnings are low. Bankruptcy officials use the previous six months of income to determine eligibility.

Chapter 13 Bankruptcy

    Chapter 13 bankruptcy is not a possibility while collecting unemployment. Chapter 13 requires a payment plan lasting three to five years based on income. Unemployment benefits are temporary, generally lasting less than a year, even with extensions. As a result, the bankruptcy court will not accept temporary unemployment benefits as the basis for a Chapter 13 payment plan lasting up to five years.

Hardship Plans

    People on unemployment should consider hardship plans before filing for bankruptcy. Hardship plans are available from various lenders and allow lower payments and interest rates over a temporary period. It is usually best to contact the lender about the hardship before missing payments, as the early notice shows a proactive stance on addressing financial problems.

Debt Settlement

    Debt settlement is another alternative to bankruptcy for people collecting unemployment. Settlement allows resolving unsecured debts for around half the balance. People who can't afford settlements can try negotiating very small monthly payments with the card company or debt collector. In return for the regular payments, the debt collector agrees not to pursue legal action and offer a settlement when the debtor can afford it.


    Credit counselors approved by the U.S. Department of Housing and Urban Development can also help with unemployment and debt. The counselors are available in most communities, with referrals available from local charities such as the United Way or a local chapter of the National Urban League. The counselors specialize in debt management plans that require a commitment of about four years. During that time the agencies will negotiate with unsecured creditors and make monthly payments on the debtor's behalf. The plans require a monthly management fee.

Definition of the Accrual of the Right of Action for Credit Card Debt

Accrual of the right of action for credit card debt is a concept used to determine when the clock starts ticking for purposes of computing the statute of limitations period for a civil action filed by a creditor.

Statute of Limitations

    The statute of limitations is a legal principle that precludes a plaintiff from filing suit against a defendant after a specified period of time has elapsed from the date on which the controversy arose. Each state determines its own statute of limitations periods for various legal causes of action, whether it is for fraud, personal injury or breach of contract.

Starting Clock

    Most statute of limitations provisions prohibit filing a civil action in court after a designated number of years has passed from the date the cause of action accrued. For purposes of credit card debt, a creditor's cause of action accrues on the date the account first went into default or became delinquent.


    Any lawsuit filed in court by a credit card company that is outside the specified statute of limitations period is said to be time barred and must be dismissed by the court. Once dismissed, a credit card company cannot use the legal system to enforce payment of the credit card debt.

Christian Debt Relief Programs

Christian Debt Relief Programs

Becoming debt free can be challenging for anyone regardless of religious affiliation but Christians may find it even more worrisome. The Bible says to owe nothing except for love. Unfortunately housing troubles and credit debt escalation make it difficult to follow this divine rule. Christians seeking to climb out of debt can turn to a number of debt resolution organizations with Christian values at their core. Working with a company that understands their spiritual values is very important to a number of Christians.

Credit Counseling

    There are many debt counseling organizations that label themselves as Christian or non-profit. It is best to do your homework before signing up with a program. Most reputable companies will not charge an upfront fee and the monthly fee will be minimal. Christian debt counselors help develop budgets and work with clients to build a debt management program. They do this with spiritual principals as their guide. Christian Debt Solutions has a website that offers many links to reputable companies as well as links to free budgeting applications.

Debt Consolidation

    Debt consolidation is not the necessarily the same as debt management although they both reduce your overall monthly payment. Christian debt consolidation means taking on a new loan which pays off your creditors and leaves you with one monthly payment. This option is best for those with high debt but good to average credit. The key is to not take on a payment with a higher interest rate then you are already paying. Americas Christian Credit Union supplies personal loans for Christians seeking debt consolidation. One advantage of debt consolidation through a separate loan is that your credit accounts stay open unless you choose to close them. It is always best to have some revolving credit in order to help your overall credit score.

Christian Ministries

    Christian churches offer finance classes, many of which are based on the teachings of Crown Financial Ministries. Crown offers financial and debt management advice through articles, study guides and online tools. The site offers resources for Christians seeking debt management. The Debt Free Christian website is also a resource for Christians seeking debt management advice from a company with a spiritual focus.


    Although many programs promote themselves as Christian organizations, some may not be legitimate. Research is important before deciding on a program. Consumers should search the better business website or the consumer affairs website to find out if companies have experienced customer complaints. Reports of companies taking payments and not passing them to creditors are common on the internet. Non-profit credit counselors also may pose some risk especially if they are working for the creditors. Christians should inquire at their churches about the availability of credit management classes within their own communities. Local banks and churches sometimes offer financial seminars or classes, check your local newspapers to see if there are any in your community.

Tuesday, May 18, 2010

What Are the Assets of a Judgment Debtor?

You become a judgment debtor when you owe a debt and a court orders that you pay the judgment. You can work out an arrangement with the creditor and pay the judgment in court-ordered installments, you can have your wages garnished or your assets can be seized. All non-voluntary payments you make must first be ordered by a court. Simply having a judgment against you is not sufficient for a creditor to seize your assets.

Discovery of Assets

    Before a creditor can seize your assets, he goes to court and files a discovery of assets. This discovery asks you to list your assets, including those held jointly with another person or those held for you by someone else. When the judge approves the discovery, you are sent a copy of the form and you must complete it within the time prescribed or you can be charged with contempt of court. You will also receive a court date. Always go to court, or you may lose by default judgment.

Financial Assets

    Financial assets are not just the cash in your pocket or the money in your bank account, but be aware that a judge can issue a turnover order and require you to turn over all the cash you have in your pocket in court. The order includes your credit union account, stocks, bonds, certificates of deposit, treasury bills and any other investment instrument that is not retirement-related, such as in an IRA or 401(k) plan. Certain pensions are exempt income, such as Social Security, Railroad Retirement and military pensions. Many federal benefits are considered exempt income, such as student aid and Supplemental Security Income, though these benefits can be garnished if you owe certain federal departments money, such as the IRS.


    Your property is also considered an asset. This includes real estate, such as your house, but also cars, trucks, boats, motorcycles and any other type of property that can be sold to pay your debt. Also included is anything of value that you own except furniture, home furnishings, clothing and appliances. You also must declare if you have transferred assets within the last 60 days.

Miscellaneous Provisions

    If your primary residence is ordered to be sold, there must be a hearing to determine if you have enough equity in your home, less the costs of the sale, mortgage and the amount of equity you are allowed to keep in your home as guaranteed by law. If your equity won't satisfy the judgment, it won't be sold. Each state has its own laws regarding types of income that can be seized or garnished and also what can't. As examples, until 2009, public assistance payments in Oregon could be garnished to pay a debt; further, if you have an exempt pension, and that is the only source of deposits into your bank account, your bank account cannot be frozen. It's important, therefore, to research the laws in your state.

Who Can Collect Debts in Virginia?

The state of Virginia does not have a debt collection act of its own and therefore complies with the Federal Fair Debt Collection Practices Act. The federal law, however, puts no real restrictions on who can collect a debt. It only places restrictions on how debt can be collected to ensure that debtors aren't unduly harassed or treated unfairly. As a general rule, anyone who is owed money can attempt to collect it, or he can have agents or agencies attempt to make collection for them.

Offset Program

    The state of Virginia itself, before issuing state tax refunds or other programs, submits information to the U.S. Department of Treasury's Offset Program. This program was put in place to attempt to collect money owed to the Internal Revenue Service or other federal agencies. Under the program, the federal government can deduct money owed to it from state tax returns before those returns are issued to taxpayers.

Debt Collectors

    The Fair Debt Collections Practices Act imposes restrictions on debt collectors and provides a definition of what it means by debt collectors. According to the act, a debt collector is an employee or officer of a creditor; any person attempting to collect a debt to which she is a party; or any officer or employee of any company that performs credit counseling services or obtains debt as part of a commercial transaction.


    Anyone attempting to collect a debt is required to notify the debtor and verify the debt. Within five days of initial contact, a creditor or debt collector must present the debtor with written notice stating the amount of the debt and the creditor to whom the debt is owed. The statement must give the debtor 30 days to dispute the debt. The debtor has 30 days to notify the debt collector that the debt is disputed. If the creditor does not dispute the debt or any part of it, it is considered validation of the debt by the debtor.


    The Fair Debt Collection Practices Act places severe restrictions on how debt collectors can communicate with debtors or attempt to make collections. Debt collectors cannot threaten debtors with the use of violence or other physical harm. They also may not threaten the person's reputation or property, use obscene, profane or abusive language or make public any list of debtors. For a list of other restrictions on debt collectors, read the Fair Debt Collection Practices Act (see Resources).

Monday, May 17, 2010

Can You Get a Creditor to Report a Settled Debt As Paid in Full?

Owing money to a creditor and then defaulting on the bill can trigger a collection account or a charge-off on your credit report. Both items harm your score, but settling the debt with your creditor can help repair damage. And, if you're fortunate, the creditor may report the debt as "paid in full."

What Is a Settlement?

    A debt settlement involves paying an old debt that's owed to a creditor. But instead of giving creditors the full amount, you negotiate paying a percentage or less than what you owe. Creditors often agree to debt settlements because something is better than nothing. Creditors can either accept your settlement offer or risk never recovering funds owed to them.

Settlements and Credit Scores

    After negotiating a settlement offer and receiving your payment, creditors tend to update credit reports. They'll include an entry next to the previously delinquent account that reads, "settled," or "settled for less than balance owed." While taking the initiative to pay an old debt shows a measure of responsibility, settling a debt looks bad on your credit report, and this move can turn off future lenders. For this reason, you should negotiate with creditors and ask them to report the debt as "paid in full," or "paid as agreed."

Negotiating With Creditors

    Creditors aren't obligated to update your credit report with "paid," "paid as agreed," or "paid in full." But this shouldn't stop you from negotiating with them. Before sending a payment to settle your past due debts, talk with creditors directly and inquire as to how they will report the account upon receipt of your payment. As part of the negotiating, offer to settle the debt only if they will report the balance as "paid," or "paid in full." Creditors may comply to recover funds.

Get Agreements in Writing

    To alleviate creditors from not upholding their end of the bargain, get all settlement offers in writing, which protects you if the creditor decides to send your account to collection or files a lawsuit to recover the balance. Also, maintain copies of canceled checks as proof of payment. If the creditor agrees to report the settled account as "paid in full," get this agreement in writing as well.

Sunday, May 16, 2010

How to Settle a Deficiency Balance on a Repossession

A deficiency balance on a repossession occurs after a credit agency seizes the property and sells it at a private sale or auction. The lender subtracts the sales price from the loan balance to calculate the deficiency balance, if any. Repossession of automobiles often leads to deficiency balances because cars lose value so quickly. For example, a car owner with an automobile worth $10,000 may owe $14,000 on the car at the time of the repossession. That could result in a deficiency balance of $4,000 or even more, depending on what the car sells for at auction. Settling a deficiency balance is a straightforward process but may require extensive negotiation.



    Read correspondence from the lender to determine the deficiency balance following repossession of your property. Or contact the lender and ask for an updated statement. Getting the deficiency balance in writing is important as you prepare to settle.


    Consult with a consumer affairs attorney with experience settling deficiency balances. You can settle the debt on your own, but an attorney may save you money by using her experience to negotiate a better deal than you would reach. Settlement allows for debtors to resolve debts for less than the full balance, but there is no exact standard for what lenders will accept on a deficiency balance. That means an experienced negotiator, such as an attorney, may have the best chance to forge a reasonable deal when matched against a negotiator from the lending company.


    Send a request to the lender in writing asking to negotiate a settlement if you would rather not hire an attorney. A deficiency balance is an unsecured debt, the same as credit cards. Unsecured debt is sometimes settled for 20 to 70 percent of the balance, according to "The Wall Street Journal's" SmartMoney.com. In your letter offer to settle the deficiency balance for 20 percent of the balance. Continue negotiating through letters if the creditor balks at your initial offer, or call the lender if you're comfortable negotiating over the phone.


    Increase your offer once a month until you have a deal. Get details of the agreement in writing.

How to Build Credit with No SSN

Social Security Numbers (SSN) were first issued in 1936. This nine-digit number is assigned to all American citizens, permanent residents and temporary working residents. The primary purpose of an SSN is to track individuals in relation to income taxes. Although an SSN is an essential piece of identification, you can build credit history without one.



    Open a bank account. Credit applications require you to provide your bank information. Call the bank beforehand and ask what identification and deposit amount is required. Sometimes a driver license or utility bill in your name is all you need. Some banks offer free checking with no deposit required.


    Apply for a secured credit card. This type of card requires you to pay a security deposit so apply, pay the deposit and obtain a secured credit card from your bank or credit union. Do not miss payments, default on payments or max out the card--all of which result in a poor credit score.


    Open a student credit account if you are a full-time student. These accounts are easier to open without a credit history. You can find application forms at a campus registrar's office.


    Apply for a car loan to help build credit if you are in the market to purchase or finance a vehicle. Auto loan dealers sometimes give no-credit loans at a higher rate of interest. Car payments or lease payments are reported monthly to credit reporting agencies and can help establish a good credit score for you as you make timely payments.

Can You Still Deal With the Credit Card Company If You're Being Sued?

Credit card lawsuits are serious matters and sometimes lead to court judgments and even wage garnishment. A lawsuit is usually a last resort for collecting debt after months or even years of other efforts including telephone calls and letters sent by postal mail. At this point the account is usually managed by a debt collector working for the credit card company. Or the debt collector may own the account after purchasing it from the card company. Either way, the chances of dealing with, or communicating directly with the credit card company are not good.


    MSN Money reports that credit card companies generally close accounts after payments fall six months behind. They list the account as charged-off for accounting purposes but still expect full payment from you. An internal collections team may manage the account for a while, with the account eventually assigned or sold to an outside debt collection agency. The credit card company no longer has any interest in the account if it is sold and will not talk to you about a lawsuit initiated by the debt collector.


    Debt collectors assigned defaulted credit card accounts are working on consignment from the credit card company, meaning they are paid only if they collect the debt. Usually the debt collector enters into a written agreement with the card company giving it the exclusive right to collect the debt. Some debt collectors are law firms or have attorneys on staff. Filing a lawsuit is an option they can use at their discretion. Credit card companies that have assigned accounts to debt collection agencies generally will not discuss the account with the customer, even during a lawsuit.

Debt Settlement

    Attempting to deal directly with the credit card company is worth a try although it may not yield good results. The worst that can happen is that the card company will refer the call to the debt collector. However, resolving the issue with the debt collector is possible through a process called debt settlement. Card companies and debt collectors sometimes will settle old debts for 20 percent to 70 percent of the balance.


    The lawsuit gives the debt collector enormous leverage in debt settlement talks, meaning a huge discount is unlikely. The debt collector is likely to ask for say, 90 percent of the balance, with negotiations continuing from there. Settlements for about half the balance are more likely. An installment plan with monthly payments is also a possibility.

Saturday, May 15, 2010

Missouri Statute of Limitations for Unsecured Debt

Unsecured debt typically arises from transactions involving credit cards, revolving credit accounts and installment agreements. If a debtor fails to pay an unsecured debt, the only legal action the creditor can take against the debtor is to file a lawsuit and obtain a civil judgment. In Missouri, as in all states, the law sets a time limit---called the statute of limitations---by which the creditor must file a lawsuit to collect an unsecured debt. If the creditor does not file a collection lawsuit before the statute expires, the debtor can defeat the lawsuit.

Missouri Law

    The statute of limitations on unsecured debt in Missouri depends on how the debt was incurred. For example, if the debtor signed an installment agreement for a major appliance, the debt is based on a written agreement. Missouri law gives the creditor 10 years from the date the debtor defaulted in payments on a written agreement to file a lawsuit. For unsecured debts based on an oral agreement or an open-ended account, such as a credit card account, the law only gives the creditor five years to file.

Asserting the Statute

    When the statute of limitations on an unsecured debt expires, the debtor has a valid legal defense against a lawsuit filed to collect the debt. However, this does not mean that the debt is automatically extinguished. The debtor must be vigilant in asserting his rights under the statute. For example, a creditor can file a lawsuit on an expired unsecured debt and serve the debtor with the lawsuit. If the debtor fails to respond to the lawsuit and raise the statute defense in court, the creditor can obtain a default judgment on the debt. In this situation, the debtor's inaction amounts to a waiver of the statute of limitations defense and effectively revives the debt as a court judgment.


    Civil judgments in Missouri are also subject to a statute of limitations, which is 10 years. As a practical matter, when a creditor obtains a judgment on an unsecured debt, this reset the limitation period to 10 years. However, unlike the statute of limitations on filing a lawsuit to collect the debt, the creditor with a judgment can extend the statute to collect the judgment. Missouri law permits a judgment creditor to file a motion with the court to revive the judgment before the 10-year period expires. If the court grants the motion, the judgment is collectible for another 10 years.

Debt Collection

    A creditor or debt collector is not prohibited from engaging in collection activity on unsecured debt that is expired under the statute of limitations. So long as the creditor or debt collector acts reasonably in calling or writing to the debtor requesting payment, the fact that the statute has expired does not make such action impermissible. However, a debtor must be cautious when communicating with a creditor or debt collector about an expired debt. If the debtor acknowledges the validity of the debt, makes a promise of future payment or makes a partial payment---no matter how small---the statute of limitations on the debt may be revived.

Help for Medical Bill Debt

According to a 2009 report in "The American Journal of Medicine," 61 percent of individuals who filed for bankruptcy in 2007 did so in response to medical debt. Of these individuals, 92 percent had over $5,000 in medical debt. Medical debt affects the insured as well as the uninsured, as 75 percent of the individuals interviewed for the report had some form of health insurance.


    Uninsured, low-income individuals with medical debts can apply for Medicaid through their local Department of Health and Human Services. Eligibility criteria may vary by state. However, if an applicant is eligible for benefits, Medicaid may pay for medical services a patient received as long as three months before receiving health insurance coverage.


    Larger churches often provide assistance to their own parishioners and members of the community through a benevolence program. If a church does not have a benevolence program, the pastor may have a discretionary account that he can use to help individuals pay for medical bills. The process to request funds to help pay for medical debts vary by church -- some require applicants to fill out an application, while others only ask for copies of the medical bills. If a patient does not attend a church, she can ask her friends about benevolence programs at their churches or call local pastors to see if the church can offer medical debt assistance.

NonProfit Patient Assistance Organizations

    An individual with a rare, serious or chronic condition might be able to find medical bill debt help through a disease-specific organization. As an example, those with cryopyrin-associated periodic syndromes (CAPS) can apply for co-pay assistance from the CAPS Premium & Co-payment Assistance Fund. In addition to providing assistance with medical debt, a disease-specific organization may also help a patient get free or low-cost medications. Medical social workers, case managers, doctors and hospital resource centers can help a patient learn more about disease-specific organizations and local agencies that provide assistance with medical debt.

Medical Practices

    Hospitals and clinics sometimes offer discounts for medical services provided to low-income patients. To find out if a medical service provider offers a financial assistance program, a patient should call the provider's billing department or speak to the office receptionist. If the provider does have a financial assistance program, a patient may need to fill out an application and provide proof of income. If a medical provider cannot offer a discounted medical bill, or the adjusted amount is still too expensive, a patient can set up a monthly payment plan to help minimize the immediate financial impact of the bill.

Friday, May 14, 2010

My Ex-Spouse Is Not Paying Marital Debt in Nevada

My Ex-Spouse Is Not Paying Marital Debt in Nevada

When a former spouse disregards the terms of his divorce, the refusal to pay debts or transfer property as previously agreed may significantly impact the other party's finances. An individual who needs to enforce the terms of a divorce should understand the financial rights and obligations of spouses. The ex-spouse seeking enforcement may wish to consult with a Nevada attorney regarding the relevant divorce and bankruptcy laws.

Asset and Debt Division in Divorce

    As part of a dissolution of marriage in Nevada, the couple must assign its assets and debts to one spouse or the other through property division. The spouses may negotiate a settlement agreement to divide their property and to explain which spouse has responsibility for each debt. Alternatively, a couple without a settlement agreement receives orders regarding property division from the divorce judge. Under Nevada's divorce laws, the court may assign each separate debt to the spouse who incurred the debt. The court may also assign responsibility for payment of community debts incurred during the couple's marriage by either requiring one spouse to pay a particular debt or dividing responsibility between the two spouses.

Enforcement of Property Settlement

    After the Nevada court has finalized a couple's divorce, one ex-spouse may seek to enforce the terms of the divorce if the other party does not comply. Section 125.240 of the Nevada Revised Statutes explains the enforcement procedures allowed under state law. The ex-spouse seeking enforcement may ask the court to garnish the other party's wages for payment of court-ordered support or to issue an order for the seizure and sale of property as required by the divorce. Nevada law also permits the court to place an ex-spouse in contempt of court for non-compliance with the financial requirements of a finalized divorce.

Enforcement of Debt Payments

    When the divorce agreement or judgment includes the assignment of debts to each ex-spouse, non-payment of those obligations may result in financial difficulties or problems with credit history, especially if both individuals' names remain attached to the debts. Creditors may still be able to seek payment of a community debt from either spouse, even if assigned to one spouse in the divorce. An individual may seek to enforce the terms of the divorce through section 125.240 of the Nevada Revised Statutes and request that the court place the non-paying spouse in contempt of court. Additionally, the individual seeking enforcement may also be able to request a court order for modification of other financial obligations related to the divorce, such as payment of increased alimony, to compensate for payment of debts assigned to the other party in order to prevent penalties or defaults.

Divorce Terms and Bankruptcy

    Even though a couple's divorce may legally divide its assets and debts, each ex-spouse should understand the consequences of one or both individuals filing for bankruptcy. The effect of bankruptcy on marital debts often varies between Chapter 7 and Chapter 13 filings. Depending on the language of the couple's divorce judgment, payments owed to one ex-spouse by the other may or may not be dischargeable in bankruptcy. If a bankruptcy court discharges a debt owed to a creditor, the other ex-spouse may be able to seek compensation in Nevada family court due to the change from agreed-upon terms in the divorce. Each spouse may wish to obtain personalized advice from a bankruptcy lawyer regarding the effect of one party's bankruptcy on community debts held in both former spouses' names.