Non-Profit Organizations That Help Repair Credit

After going through a difficult financial time, many consumers find themselves with negative information on their credit reports. While removing negative information on your own is possible, it can be more time consuming and difficult than most people can tolerate. Choosing a non-profit organization to help repair credit can allow consumers to raise their credit scores without spending all their free time working on it.

Family Credit Management

Family Credit Management is a Christan organization licensed as a non-profit with a goal of helping consumers rid themselves of debt. The company has working relationships with many major banks, as well as institutions that back retail store cards and other financial products. To help consumers repair their credit, the company works with its customers to consolidate debts into one amount, with one equal monthly payment. The company works with lenders to lower interest rates and fees to lessen balances, reducing the total amount owed. Customers then make one payment to Family Credit Management, who then distributes the funds among creditors.

Family Credit Management

4304 Charles Street

Rockford, IL 61108

866-322-7247

familycredit.org

Money Management International

Money Management International is a non-profit organization and one of the largest credit counseling companies in the U.S. The company has been in business since 1958 and has a goal of helping its customers achieve financial freedom. Services offered by Money Management International include credit counseling, debt management assistance, financial education programs and bankruptcy filing assistance. In person workshops and counseling sessions are available throughout the year, as well as phone and online assistance. Through it's debt management program, the company works with financial institutions to establish reasonable and affordable repayment plans. Customers then make one payment to Money Management International, who then disburses it to the individual creditors.

Money Management International

4141 Southwest Freeway

Suite 1000

Sugar Land, TX 77478

866-889-9347

moneymanagement.org

Christian Debt Consolidators

Christian Debt Consolidators is a non-profit organization that provides customers with options to help rebuild credit and keep a positive credit rating. Each potential client works with a trained credit counselor to review his debts, monthly payment obligations and the past repayment history. The company then works with the customer's lending institutions in order to renegotiate terms, interest rates and monthly payment amounts. After negotiating agreeable terms, the customer will then make payments to Christian Debt Consolidators, who is then responsible for paying each creditor. Customers receive the benefit of having on time payments posted to their credit reports, with no indication that they are in a debt management program.

Christian Debt Consolidators

201 SE 15th Terrace

Suite 206

Deerfield Beach, FL 33441

866-958-3328

christiandebtconsolidators.net

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How to Deal With a Summons From a Collection Agency

A summons is a notification that you are being sued. If you receive a summons from a collection agency concerning a debt, there are several things you should do. In general, if you are so far along in dealing with a collection agency that you have received a summons, it means you have ignored previous communications with the agency or, at the very least, have not begun payments. Before you pay anything or contact anyone, several steps should be taken for your protection.

Instructions

1

Verify the summons is real. A true summons comes from a court, and will have all that information on the summons itself. Contact the court to make certain this is a legitimate summons and not a scam. If it does not have a courthouse name and address, then it is not a real summons.

2

Verify that the debt under review is in fact yours. There are many scams out there trying to frighten debtors into paying money or revealing personal finance information. Check the information provided with the summons. Your debts will be listed in order.

3

Go online to find the statute of limitations law in your state. Certain debts, once they reach a certain age, cannot be legally collected. If the debts involved are old and beyond the statute of limitations, your response will be clear: The agency has no right to collect this debt because it is too old.

4

Gather all your financial records. If you are going to verify the debt, you need to have your own paperwork to check against the collection agency's figures.

5

File for a validation procedure. In most states, this means a stay of any legal action. Unless the debt the agency is demanding is precisely correct, you can file for a validation. The collection agency must then research its own facts and figures and provide both the court and you, the debtor, with more detailed information in the debt.

6

Contact a credit counselor once you have verified the nature of the debt. He will be able to assist you with the nuts and bolts of your response.

7

Hire a lawyer if you must appear in court. Lawyers with experience in dealing with collection agencies will know precisely how to deal with the agency or its attorney. Assuming the debt is real and the suit legitimate, hiring a lawyer might be a necessary, albeit expensive, option to protect your rights and credit.

8

Respond. A summons will not necessarily require you to appear in court, but to give a written reply. This should be done carefully and normally with a credit counselor. The counselor's experience might be invaluable at this point. Explain your position in detail, and explain the legal reasons why you have not paid the debt. You cannot merely say "I did not have the money" or "I'm going through a divorce." These are not legal reasons. If you have no legal reason to contest the debt, then your only next step is to contact the agency to create a payment schedule or declare bankruptcy.

9

Appear in court if you need to. If you do not appear, the judgment will go against you no matter what. Do not miss court dates.

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What Does Your Credit Report Say About You?

It's important for consumers to check their personal credit reports frequently. Credit reports reveal your entire credit history, and lenders use this information as the basis for credit approvals. Based on the contents of your report, lenders, creditors, landlords and sometimes employers develop an opinion about your creditworthiness.

Spending Habits

Credit card companies routinely report updated data, including information about your outstanding balance, to the credit reporting bureaus. The amount you owe makes up 30 percent of your credit score, and potential lenders or creditors checking your report may not approve financing for you if they see high balances. High balances, when considered in connection with your income and credit limits, may indicate spending problems that could lead to default or bankruptcy. Keeping balances low by paying off credit cards each month and paying more than the minimum helps improve creditworthiness.

Payment Pattern

Credit scoring formulas takes your payment record into consideration, and it accounts for 35 percent of your score. Anyone checking your credit report can view information regarding your payment history, which could show a history of late payments, collections or judgments. Not every delinquency is caused by irresponsibility. However, even if you have legitimate reasons for default, lenders and creditors may view a history of late payments as irresponsible behavior. If it becomes apparent that you may have trouble making a payment, talk to your creditor or lender to determine whether you can work out a solution. Creditors may postpone payment for the month or permit a forbearance period in which you aren't required to make payments for a few months. These actions will avoid having negative items on your credit report.

Past Mistakes

Past credit mistakes can lead to a lower credit score. But with improved habits, you can raise a score. Past mistakes do not disappear quickly, and items such as collections, foreclosures, repossession and judgments can stay on your credit file for up to seven years. A bankruptcy stays on a credit report for 10 years. A period of perfect credit activity after a credit mistake can improve your financing opportunities, but creditors may take your past actions into account, which may result in higher interest rates on loans or requiring a co-signer for loan approval.

Credit Report Checks

Consumers who never check their credit report may be surprised when denied a loan or credit card. Credit report mistakes and inaccuracies can harm your score, and the sooner you correct such inaccuracies, the sooner you can improve your score. You can obtain a free copy of your credit report once each year from each of the three credit bureaus -- Experian, TransUnion and Equifax -- through AnnualCreditReport.com. If you detect a mistake on your credit report, you can dispute it with the credit bureau online or by mail, and the credit bureau is required to investigate your claim. If it cannot verify the validity of the disputed item, it must remove the item from your credit report. You also can dispute an inaccurate item directly with the creditor.

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How to Write Credit Card Companies to Lower Debt

If you are struggling with credit card debt and are barely able to make minimum monthly payments, you can try to negotiate a debt settlement with the lender. The credit card company may or may not be willing to work with you. But you do not have anything to lose. Just be polite and explain your situation clearly.

Instructions

1

Type the letter as opposed to handwriting it. It looks professional and will be more legible.

2

Write the date, your full name, address and telephone number, as well as your credit card name and account number. Below that, type the name and address of the credit card issuer.

3

Write the introduction. Explain that you are writing in regards to your credit card and your inability to pay the balance in full and/or meet the monthly obligation. Mention any financial difficulties such as job loss or illness, but do not be overly detailed.

4

State that you want to work with the company to pay a portion of the debt even though your funds are limited. Propose an amount you would be able to pay and the date you intend to pay it by. Ask that the lender waive any penalties and fees in exchange for making payments.

5

Write the conclusion and ask that the credit card company acknowledge receipt of your letter and agree to the terms in writing.

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About Debt Negotiation

With easy access to credit cards and home equity loans, and with medical bills spiraling out of control, American consumers are in more debt than ever. Debt collectors can be extremely aggressive, using harassment and other scare tactics to get what they're owed. But there are laws in place regarding debt collection to protect debtor's rights, and also plenty of effective negotiation methods that allow debtors to stop abusive collection practices and pay off their debts.

Identification

Debt negotiation is a bargaining process where a debtor attempts to reduce the amount of their debt or the interest rate on their debt, alter or extend the payment schedule or have late fees removed from their account in order to make their debt load more manageable. This can be accomplished through either verbal or written communication with the lender.

History

The Fair Debt Collection Practice Act (FDPCA) was established in 1978 as a part of the Consumer Credit Protection Act. The FDCPA outlines a code of conduct for debt collectors that is aimed at stopping abusive debt collection practices, such as incessant or late night phone calls, phone calls to a workplace, misrepresentation of debts, the use of profane language or threats of unintended legal action. However, the FDCPA applies only to third party collectors, so debts being collected by the original lender are not subject to these rules.

Types

Negotiating with a lender can be done verbally or in writing, although written communication is preferred for verification purposes. In general, lenders like credit card companies and mortgage companies will not reduce the debt load of customers whose accounts are in good standing, although hospitals and other medical service providers often will. Credit card companies will, however, reduce customers' interest rates, so calling the company directly and asking for an interest rate reduction is the first step for every consumer. Medical care providers are usually understanding about patients' financial situations and will nearly always set up a payment plan at a low interest rate.

Considerations

Once a debt has been transferred from the original lender to a debt collection agency, there is a great deal more leeway in the negotiation process. Debt collection agencies purchase debts for pennies on the dollar, so if they can convince debtors to pay even 25 percent of their original debt, they will make a profit. When negotiating with a debt collection agency, consumers should offer very low amounts and work their way up, and be prepared to pay the agreed-upon amount immediately. Promise of immediate payment will make a debt collector much more likely to accept your offer than a payment plan.

Warning

A consumer should never send a collection agency any money without a written agreement in hand. Debt collection agencies are famous for double charging customers, disputing anything that is not in writing and denying verbal agreements, so written evidence is paramount. All correspondence should be sent certified mail, return receipt requested, so that there is a written record of everything.

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What Can They Do on Credit Card Judgments?

If a credit card company or collection agency cannot obtain a payment for unpaid credit card debt from a debtor, it may attempt to force the individual to pay through a judgment. Should the creditor be successful in securing a credit card judgment against the debtor, not only will the creditor be able to collect the debt through legal force, the debtor's credit report will reflect that a judgment was issued. This may prevent the individual from being eligible for new loans or credit cards.

Facts

Before a creditor can obtain a judgment for an unpaid credit card debt, it must sue the debtor in the debtor's county courthouse. After the lawsuit is filed, the creditor must notify the debtor of the lawsuit. The individual may then choose to appear in court and defend himself or ignore the notification. Should the consumer fail to respond to the creditor or fail appear in court, the judge will rule in favor of the creditor by default. If the debtor defends himself in court but loses the case, this will also result in a ruling in favor of the creditor. This gives the creditor the right to collect using a judgment.

Features

After the judge issues a judgment to the creditor, it can request a writ of execution. The U.S. Marshal's Service states that a writ of execution may be used to force the debtor to pay the debt involuntarily. This may be accomplished either through wage garnishment, a bank levy or a property lien. State laws vary regarding the methods creditors are allowed to take to collect a judgment.

Time Frame

A creditor hoping to obtain a judgment must adhere to the statute of limitations in the debtor's state regarding debt lawsuits. Statutes of limitations for debt collection dictate the amount of time a company or individual has to file a lawsuit over a debt. Once a judgment is granted, however, the statute of limitations for debt collection no longer applies. Judgments expire, usually after seven years, but a creditor has the option to repeatedly renew the judgment if the debtor has yet to pay. Some states limit the number of times a judgment may be renewed.

Considerations

Individuals who do not own property and are unemployed or live solely on government benefits are "judgment proof." A creditor may still obtain a judgment against a judgment proof individual, but the judgment cannot be collected due to the fact that government benefits are exempt from garnishment by any entity other than the federal government. If a judgment proof debtor informs the creditor that he owns no property and lives on government benefits, the creditor may choose not to sue or to drop an already existing lawsuit because it cannot recover either the original debt or its legal fees from a judgment proof debtor.

Warning

Some states, such as Connecticut, allow creditors who hold a judgment the right to force a debtor's home into foreclosure. This is because property liens in these states can be called due immediately rather than waiting for the homeowner to sell or transfer the property. Thus, the creditor may sue, obtain a judgment, place a property lien on the debtor's home and immediately call the lien due to use a foreclosure to obtain immediate payment of the credit card judgment.

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Are Wage Garnishments Legal in Texas?

If a creditor successfully sues you in Texas for unpaid unsecured debt, the ways with which the creditor can enforce a judgment are extremely limited and prohibit wage garnishment. However, wage garnishment is still permitted in Texas if executed by a state or federal entity for other types of debt you owe, such as student loans, child support and taxes.

Writ of Garnishment

A "writ of garnishment" pertains to wage garnishment ordered by a court of law obtained by a creditor to enforce a judgment. Texas statutes, and those in other states, vary disparately when it comes to the amount that can be garnished. However, the maximum amount of garnishment a creditor can pursue is set forth in federal law, which exempts 75 percent of your disposable weekly income, or an amount 30 times the federal minimum wage, whichever amount is greater. States may choose to enforce statutory provisions that conform to federal law exactly, or they may impose less stringent garnishment laws. A state can also opt to prohibit creditors from using wage garnishment as a way to enforce a judgment.

Creditor Garnishment in Texas

In Texas, creditors who obtain a judgment against you for unpaid, unsecured debt cannot use wage garnishment to collect the judgment. State law expressly exempts 100 percent of your wages from garnishment for this purpose.

Other Types of Garnishment

The rules that apply to creditors do not apply to state and federal agencies. Like most states, Texas law permits your wages to be garnished for child support and spousal support. Your wages may also be garnished if you don't pay back a student loan. The federal Higher Education Act can require your employer to garnish 15 percent of your disposable earnings every pay period, or up to 25 percent, if you've defaulted on multiple student loans. If you fail to pay federal income taxes, the Internal Revenue Service may issue a "notice of "levy" on your paycheck, other income, bank accounts or non-exempt real or personal property.

Creditor Recourse

Creditors may find it difficult to collect a money judgment in Texas; not only are wages exempt from garnishment, most debtors own only property that is exempt from judgment, such as real property protected by the state's homestead laws. Such debtors are described as "judgment-proof." State law permits creditors to obtain a writ of execution to levy your nonexempt property, in which case the property may be seized and sold to satisfy the debt. Creditors may also obtain an abstract of judgment to place a lien against your nonexempt real property. Before the property is sold, the debt must be satisfied.

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The Pros and Cons of a Credit Card Debt Settlement or Negotiation

Debt settlement or negotiation is the process of requesting a lower pay-off balance from your credit card company. If you find that your debt is getting out of control, it would be easier to pay your debt if you could get the credit companies to agree to a lower balance. There are pros and cons to debt settlement that you should understand before you get started.

Lower Debt

The point of debt settlement is to lower your debt and reduce your financial obligation. You want to discuss the elimination of late fees and penalties, the lowering of your interest debt and the reduction of your principle. The credit card company is under no obligation to settle your debt with you, but if the company feels that getting something is better than nothing, they will work with you.

Representation

When choosing a debt settlement firm, you should look for a reputable law firm or financial organization to assist you, according to financial expert Leslie McFadden on Bankrate.com. When you use professional representation, you have an experienced organization looking out for your interests that will work to get you the best deal possible. It removes the feeling that you are alone in your credit issues.

Fees

Debt negotiation can be expensive if you hire a professional firm to do it for you. Some of the fees you can expect include a fee to set up your payment account, a monthly service fee to make your payments to the creditors for you, and an initial service fee for negotiating your settlement that could run into the thousands of dollars, according to MSN Money. Discuss fees with the debt settlement firm before signing an agreement.

Compounding Debt

A debt settlement organization will tell you that you should stop corresponding with your credit card company and only deal with the settlement associates, says McFadden. The settlement company will take their fees from your payments before they send anything to the credit card company. It could be months before your credit card company sees a payment and that can result in compounded penalties and late fees. Then there is interest added to your late fees and penalties, and suddenly your debt is much more than it was.

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How to Legally Erase Credit History

If you have bad credit and are looking for a way to erase your credit history, I totally feel your pain. Low credit scores can wreak havoc on all areas of our lives and can lead to frustration and low self esteem as well as having to pay higher interest charges or not being eligible for loans altogether. Although I wish I could wave a magic wand and erase your credit history, there is no legal way to do this. Yes, many companies claim that they can but they're lying to you. However, there are significant things that you can do to improve your credit score immensely. Things that will make a huge difference in your credit score and in this article, I'll teach you how. Let's begin.

Instructions

1

Obtain a copy of your credit report from the 3 major credit reporting agencies. Don't delay - do this now. Once you have the information in front of you, review the reports thoroughly to ensure that there are no mistakes. If you find any mistakes or discrepancies, you must report them to the reporting agency right away. If you're right, the reporting agency will have to conduct an investigation. If they find in your favor, the information will be erased from your credit report which will likely increase your credit score.

2

Contact your creditors. Stop hiding from your creditors. Give them a call and negotiate with them to get your debt paid off as quickly as possible. Oftentimes, they will settle your debt for a lower amount. However, if your creditor agrees to a settlement, get the debt settlement offer in writing before you send any money. In addition, make sure you send your scheduled payments in a timely fashion. Otherwise, you will be responsible for the original amount. In addition, make sure that your creditor reports your positive paying history and once your debt has been paid in full, ask them to update your credit report to show that it has been paid in full.

3

Pay your bills on time. Always pay your bills on time and try and pay more than the minimum payment which will help you eliminate your debt faster. By doing this, your reputation and your credit score will increase as you establish a positive paying history and your debt diminishes.

4

Rebuild your credit. Purchase small amounts on your existing cards and then pay them off completely each month. This demonstrates your ability to repay your debt obligations. In addition, derogatory information (like a bankruptcy filing or reporting from a paid off collection agency) is typically removed after 10 years.

5

Do not apply for more credit. Every time you apply for more debt, it is reported on your credit card and it lowers your rating. In fact, it typically takes 2 years for inquiries to be removed. Therefore, make sure that you don't apply for any more debt until after you have paid off the old debt. By lowering your debt-to- income ratio, your credit score will likely improve.

6

Keep your accounts open. Contrary to what many folks think, it isn't wise to close out your accounts. If you do, it may be negatively reported on your credit score. Instead, pay off the balances but don't use those cards any more.

7

In conclusion, you can't legally erase your credit history but you can improve it significantly. Simply pay your bills on time, do not apply for more credit, keep your accounts open, and rebuild credit. In no time at all, your poor credit score will improve significantly.

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Low Interest Credit Card Consolidation Help

Consolidating your credit card debt to one low-interest credit card can save you hundreds, if not thousands, of dollars in interest. All you have to do is open a 0 percent introductory or other low-rate credit card and transfer your other debts over. While, of course, you need to qualify for an ample spending limit to allow this, relief is almost immediate. However, there are some important things to consider before using low interest credit card consolidation.

Introductory Period

First, remember that the introductory period is only temporary; that 0 percent, or single digit, APR won't last forever. In fact, most introductory periods last for just 12 months. It is important that you understand when that introductory period will end and how much your interest rate will be afterward. After the introductory period, your interest rate will typically increase dramatically, especially if your credit is not excellent to begin with. You have to be prepared to pay off your debt during the introductory period, or be prepared to deal with it once the introductory period ends.

Minimum Payments

In order to take full advantage of low-interest credit card consolidation, you will also have to make sure that you are paying far more than the minimum payment your credit card company requires. If you are paying only the minimum payment, it could take you more than 90 years to pay off your credit card debt, provided you don't have any new charges.

Penalties

Further, the special introductory rate may only hold under specific circumstances. If you make a late payment, your interest rate could increase significantly even if you are still in your introductory period. It could only take one late payment to make this happen. Moreover, keep an eye out for hidden fees and charges that may increase your costs beyond what you already pay in interest.

Credit Score Consequences

Low-interest credit card consolidation can have important consequences with regard to your credit score. For one, when you use a low-interest credit card to consolidate your debt, you increase your credit utilization rate. This rate is used in calculating your credit score; it refers to the ratio of your credit card balance to your spending limit. The higher your credit utilization rate, the lower your credit score. You will end up with an even lower credit score if you keep opening a new credit card every few months to take advantage of a low introductory rate.

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Guidelines for Stimulus Checks

From time to time, the federal government will provide supplemental income to tax-paying citizens and residents, depending on the state of the country's economy. However, the process is often confusing, and you may be unsure of how to proceed without guidance.

Taxes

Fill out your tax forms completely and on time.

Send in your taxes to the Internal Revenue Service in a timely fashion to ensure receipt of any stimulus money coming your way. After the IRS has processed your information, the organization will send you a check based on whatever the national decree states at the time. If your tax information is incorrect or late, this will hold up the process.

Government

Stimulus checks are only available when the federal government approves them for all citizens or for certain groups of people. For instance, in 2008, two stimulus checks were sent out to all families or individuals meeting the guidelines. There are no stimulus checks slated for 2010, but there is legislation pending regarding checks to be sent out to veterans and senior citizens.

Returns

During years when there is no specific stimulus payout, the federal government will often include a special monetary supplement in regular tax returns through credits. In 2010, the credit is named "Making Working Pay" and will supplement tax returns by $400 to $800, according to Saving to Inve$t.

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How to Fill Out an ISR Student Loan

Income-sensitive repayment plans are useful for managing student loan payments for borrowers who are experiencing or expecting periods of lowered income. This method is available through lenders that service loans from the Federal Family Educational Loan Program. Qualified borrowers are given fixed, reduced monthly payments based on a percentage of their monthly income, generally between 4 percent and 25 percent. The maximum repayment term is 10 years, and payments are adjusted each year based on changes in the borrower's monthly income. Once you have reviewed your payment options and have determined the ISR plan is best for you, it is relatively easy to take advantage of this repayment option.

Instructions

Instructions

1

Go to the National Student Loan Data System to find out if you have FFEL student loans. At the homepage, click on "Financial Aid Review."

2

Accept the privacy notice and fill in the screens with the requested personal information. You will need your PIN from the U.S. Department of Education.

3

Examine the results of the review. Once you have determined that you have FFEL student loans, contact your student loan provider to begin the application process.

4

Fill out the loan application, following the instructions provided by the lender. Complete the required sections with your name, address and contact information. Your employment information, monthly income and monthly expenses must also be listed on the application.

5

Sign and date the application and return it to the lender. Submit all requested supplemental information such as pay stubs, W-2s or tax returns, as soon as possible, or it could delay the approval process.

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Debt Recovery Procedures by Agencies

Debt collection agencies recover large amounts of money each year from debtors, but because of the unethical practices of some agencies, confusion exists about what procedures agencies can use. Legally, you have some protection against unethical practices. Debt recovery agencies are limited on what they can do to recover debt. They sometimes use unethical and illegal practices, because not many people know the laws of debt recovery and are not aware of their rights.

Letters

A letter is the first mode of communication between the agency and the person owing money. This letter includes the amount owed, original creditor and its contact information. The agency may claim that "further collections efforts" will be initiated, which may mean more letters and phone calls are coming. Though the letters may contain threatening language, agencies typically cannot follow through with their threats.

Phone Calls

Should letters not get the desired result, agencies call you at home. They are not allowed to call between 9 p.m. and 8 a.m., and they cannot call your place of employment if it is against the company's rules. Their main goal for calling is to come up with a solution for resolving the debt---whether they get the payment in full or establish an agreement to a payment plan.

Negotiation

During this entire process, debt collection agencies' purpose is to collect a debt for their clients. They usually try to negotiate with you and have you repay the debt. Knowing your rights can help you negotiate payment terms.

Reporting

Credit bureaus receive reports of any communication attempts on this debt, which stays on your credit report for at least seven years. Any new credit applications could be denied depending on how you deal with this debt. However, agencies are not obligated to report any settlements on your credit history, which means you must take care of this. Review your credit report once a year, and contact the credit bureau to dispute any debts you have settled but do not show up on your report. If necessary, provide proof of settlement, such as a letter or cancelled check.

Limitations

Debt recovery agencies are limited in what they can do. For example, people may believe agencies can sue them for the amount they owe, which is not true. To create a lawsuit against someone, the agency would have to own the debt, or the debt must be $2,000 or more. They cannot threaten to have you arrested based on non-payment of debt, nor can they use false information to recover a debt. This is not intended as legal advice, and you should contact an attorney for legal advice.

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Four Danger Signs of Debt

Acquiring unexpected debt can cause stress, worry and anxiety. Sometimes, past due bills include late fees, and before you know it, you are struggling just to make ends meet. Taking hold of the situation before it gets to serious can save you from future financial troubles and prevent your credit score from dropping. By paying attention to your spending habits and analyzing your bills, you can look for dangerous signs of debt and prevent your financial situation from getting worse.

Using One Credit Card to Pay Another

When credit card bills become overwhelming, it can be tempting to use one card to pay the balance on another. Doing so, however, creates a situation where you are living off credit cards and accumulating debt on a permanent basis, even though you feel like you are making payments. If you are using one credit card to pay the balance on another, it is time to evaluate your spending habits and compare to your income. Confronting the problem is the first step toward solving it.

Hiding Purchases

Hiding purchases or lying about spending to your spouse is a serious sign that your finances are in trouble. Generally speaking, people do not feel the need to hide purchases if they think they are justified in spending money. When you buy something you know you can't afford, guilt sets in, and you feel the need to cover your tracks. More importantly, hiding purchases from your spouse signifies potential problems with controlling your spending.

Making Mininum Monthly Payments

Making minimum payments on a credit card bill once or twice is not a big deal. Making minimum payments on a regular basis could be a sign of a serious debt problem. Repeatedly sending in the smallest amount required per month, not only increases interest owed, but encourages you to keep spending above your means. While making minimum monthly payments could keep creditors off your back, it doesn't help you get out of debt.

Maxing Out Credit Cards

Like paying only the monthly minimum, regularly maxing out your credit cards can be a danger sign of debt. Reaching your credit card limit on a monthly basis means that you are spending to the maximum regardless of what you make, and you could be creating a situation that could be tough to get out of in the future. If you have a tendency to max out more than one credit card on a regular basis, it is probably time to analyze your finances.

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What Does Debt Management Do?

The majority of people dealing with debt are using next week's paycheck to pay last month's bills. Debt management helps you to get a hold of your spending as well as your saving. You must evaluate all monies coming in and going out before you will ever see your debt eliminated. Debt management does this and sets you on the right path to financial freedom.

Evaluate Finances

Before you can eliminate your debt, you must know exactly how much you owe. Debt management calculates your monthly expenses and compares it to your monthly income. The information gathered from this comparison gives you a tangible figure for your estimated debt. Debt management then categorizes your unsecured debt, secured debt and living expenses, along with your assets and current revenue. It evaluates all the facets of your finances, and guides you to the most appropriate course of action.

Create A Plan

Debt Management Plans vary depending on a person's financial circumstance. Individuals whose debt heavily outweighs their revenue may require other solutions, such as debt relief or consolidation loans. On the other hand, if your monthly income is more than your monthly expenses, then a Debt Management Plan is put into place. With a DMP, you deposit funds into an organization's account, and the organization works with creditors on your behalf. According to the Federal Trade Commission, a successful DMP requires you make regular payments on-time, and could take 48 months or more to complete.

Negotiate With Creditor

A big part of debt management is debt negotiation. Consumer debt negotiation is when the creditor and the debtor agree on reduction of current debt owed. Before you begin, consider if negotiating is an option. If you cannot regularly pay a percentage of your total outstanding debt, bankruptcy may be required. Collectors do not like when consumers file bankruptcy. If you file for bankruptcy, debt collectors get nothing, so use that information as a negotiating tool.

Increase Credit Score

Successful debt management raises your credit score. Although time consuming, if done correctly you can be debt free in under five years, according to the Federal Trade Commission. You make on-time payments to the creditor, and the creditors regularly report the activity to the credit bureaus. Over time your debt decreases and your score increases. The goal of debt management is to create a lifestyle that does not need debt relief.

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How to Get My SBA Disaster Relief Loan Cleared

For those who find themselves under-insured or without insurance following a disaster, a Small Business Administration (SBA) Disaster Relief Loan can provide recovery funds. These low-interest, 30- year loans fund re-building and re-locating, if necessary (See References 1). Erasing the debt seem challenging, but by knowing the SBA's rules, you can make it easier.

Instructions

1

Spend the funds only for allowed items. Misusing SBA disaster funds results in immediate repayment at one and a half times the original loan amount. Keep receipts of your expenses so you can show that you spent the funds properly (see References 1, 10).

2

Make your payments regularly. According to the SBA, your first payment will be due five months from the date of the loan issue (see References 2, 15).

3

Contact the SBA if you have trouble making your payments. Disaster relief loans have no minimum monthly payment, but are based upon your monthly income. If your incomes changes, let the SBA know so it can alter your monthly payment (see References 2, 15).

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How Much Will My Credit Score Go Down With a Tax Lien?

If you have unpaid taxes, the IRS may file a tax lien against you, which significantly affects your credit score and history. The amount of damage caused by a lien varies, but you can expect a significant decline in your score until you pay the debt or enter into a satisfactory payment arrangement with the IRS.

IRS Tax Liens

A tax lien is a public announcement by the IRS that it has a claim on your assets because you owe federal taxes. Following the filing of a tax lien, the IRS can take steps to seize your assets, such as your bank account, to satisfy your tax debt. An IRS tax lien is a matter of public record, and credit reporting bureaus often include tax liens on consumer credit reports.

Credit Score

Your credit score is a number used by some lenders, employers and landlords to make decisions about your creditworthiness. A high number is a sign of creditworthiness, while a low credit score can significantly impede your ability to get credit or secure employment. Companies that develop and sell credit scores compute your score using information available in your credit reports.

Tax Lien Damage

Tax liens have a significant negative impact on your credit score. The exact amount of damage to your score varies by the "scoring system" used to compute your score and by other information included in your credit report, according to Maxine Sweet, Vice-President of Consumer Affairs for Experian. Some people have reported noticing a 100 point reduction after the IRS filed a tax lien against them.

Lien Withdrawal

Until 2011, a tax lien remained on your credit report for seven years after you paid off your tax debt. The IRS changed its policies, however, and allows you to request a withdrawal of the lien in certain circumstances. These circumstances include having paid your debt in full or, if your debt is under $25,000, setting up an installment payment agreement with the IRS that allows the IRS to withdraw your payments directly from your bank account. Once the IRS withdraws the lien, the lien no longer appears on your credit report, nor does it continue to affect your credit score.

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How to Get Paid Collections Deleted Off Your Credit

Negative information on credit reports, like collections, can seriously impede your ability to get new financing, mortgages, or even a job. In order to achieve and maintain financial freedom, it's important to maintain a strong credit report. Deleting old collections accounts that have been paid in full is a significant step forward in the fight to regain good credit. There are several methods you can try to get these accounts paid, and each account will be reviewed on a case by case basis.

Instructions

Dispute the Credit Report

1

Pull a copy of your credit report. The government-mandated website in the Resources sections gives all Americans one free credit report each year.

2

Confirm the collection is both still on your credit report and reporting as paid in full. If the credit report is still reporting a balance, you'll need to dispute the information with the particular credit bureau---either Trans Union, Equifax, or Experian.

3

Pull a copy of your credit report from the particular credit bureau with whom you're filing a dispute. Find the ten digit confirmation number on the credit report. Log on to the homepage of the credit bureau to whom you plan to file a dispute. Use the online dispute form, and using the ten digit confirmation number provided on the credit report, file the dispute. It may take up to 6 weeks to receive a response.

4

Ask the bureaus to remove the debt. Call the general information line listed on the credit bureau's homepage. Once you're through to a human, ask to speak with an account services representative---this will be a person in charge of monitoring fraud alerts, identity theft, and updates to actual reports.

5

Ask this account services representative to remove the paid collections. Prepare to have your argument well-rehearsed as you may only have few minutes to plead your case. If turned down, ask to speak with a supervisor and repeat the same process.

Goodwill Letter

6

Write a goodwill letter to the credit bureaus if the above process doesn't work.

7

Research different types of goodwill letters. Most are simple and straightforward letters from consumers seeking an exception to policy with the removal of certain negative information.

8

Make the letter official. Use your own letterhead and do not write longhand. Be professional and courteous, but at the same time, plead your case passionately. Try to find common ground between yourself and whoever will be reading the letter.

9

Make the letter no more than one page long---preferably shorter. The simpler and more concise your argument, the better luck you'll have. Write several drafts and have a colleague edit for clarity, syntax, and structure.

10

Send the letter to the address listed on the credit bureau's website. Prepare to wait at least six weeks before receiving a response.

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Can a Mechanic Put a Lien on a Car That Is Not Paid For?

A lien is a powerful remedy available to recoup money owed for valid debts. If a person follows the relevant state procedures to establish a lien, the law allows the lien holder to sell the property and apply the proceeds towards the debt. A car mechanic can place liens on vehicles when she repairs them. The lien attaches even if the owner does not have full title to it (such as if it is under a lease or other finance agreement).

Repair Liens

A repair lien, also called a repairman's lien, provides payment security to mechanics who make improvements or repairs on personal property. Repair liens often involve cars but can be applied to most types of personal property. Under the lien, if a mechanic makes repairs on personal property, the law allows the repairman to retain the vehicle until he is paid for the work. Eventually, the repairman can sell the property to satisfy the debt.

Priority of the Lien

Priority of a lien refers to who has the first right to enforce the lien and take the proceeds first. Repair liens typically take priority over all other liens until the debt is paid. For example, if a bank lent money to a borrower to purchase a car, the bank likely took a security interest in the car. If the lender does not repay his debt, the bank can take the car. If the borrower takes that car in for repairs, the mechanic obtains a repair lien on it that usually has a higher priority than the bank lien. If the bank wants the car, the bank must pay the repair bill in order to take possession of the car.

Process

State laws vary with regard to how a repair lien arises and how it can be enforced. For example, Texas law requires the repairs to be authorized by the owner or agent, for the work to be complete and for the charge to be reasonable. A person could defend against the lien by arguing one or more of the elements for the lien were not met. Additionally, states usually require a specific amount of time to pass before the mechanic can enforce the lien. In Maryland, for example, the debt must go unpaid for at least 30 days.

Other Issues

Obtaining and enforcing a repairman's lien involve legal processes and principles. The legal issues vary depending on who the party is. A mechanic, for example, needs to worry about whether she has a valid right to the lien and must avoid fraudulent claims. The owner and other lien holders may wonder about the priority of the claim. To resolve specific issues, seek independent legal advice.

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Is Salary Garnished for Debt in Missouri?

Failing to pay a debt as agreed typically results in collection actions by the creditor or debt collector, including collection letters and telephone calls. If you ignore your creditor and continue allowing your account to remain delinquent, the creditor may decide to sue you for the entire amount of the debt, plus interest, court costs and attorney fees. In Missouri, if a creditor obtains a judgment, it may garnish your wages.

Judgment Process

In most cases, a creditor cannot garnish your wages in Missouri without obtaining a judgment against you for a debt. A creditor obtains a judgment by filing a civil lawsuit against you with the county court and submitting proof to the court that you owe the debt. Unless you can show that you've already paid the debt, the court will enter a judgment in the creditor's favor. However, the Internal Revenue Service doesn't have to obtain a judgment before garnishing your wages for a past due tax liability.

Garnishment Process

After a creditor obtains a valid judgment against you in a Missouri court, it may apply to the court for a writ of garnishment. A writ of garnishment authorizes the creditor to contact your employer and demand that a portion of your wages be withheld and sent to the court for payment against your debt. A garnishment can last for 10 years or until the judgment is satisfied; however, a creditor may renew a judgment for an additional 10 years if necessary to continue garnishment.

Money Limitations

Missouri adheres to federal law regarding wage garnishments. If you make less than 30 times the federal hourly minimum wage per week, the creditor cannot take any of your wages. If you make more than this amount, the creditor can garnish up to 25 percent of your wages after taxes have been taken out. Missouri law places an additional restriction on garnishment -- if you support your household, garnishment is limited to 10 percent of your post-tax wages.

Other Exemptions

Several types of income are exempt from garnishment under Missouri and federal law. Missouri law exempts Social Security income from garnishment, even if the garnishment is for child support or a tax liability. Worker's compensation, unemployment benefits and veteran's benefits are also exempt. Missouri law also protects child support and alimony payments up to $750 per month. Retirement payments and pension garnishments are limited to amounts above what you need to support yourself. If you're a retired teacher, state or municipal employee, these payments are completely exempt.

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Comsumer Debt Laws

Consumer debt is taken on by individuals to buy homes, cars, higher education and for personal spending. The borrower has a legal obligation to repay their debt unless they go through bankruptcy. However, consumer debt laws focus equally on the consumers rights and the debt collectors obligations.

Validation of Debts

Consumer debt laws state that the collector must send the consumer a validation notice. If the consumer does not reply within 30 days of receiving the validation notice, a court will assume the person is not disputing the debt, which makes it valid. The consumer must dispute the validation notice in writing within 30 days to be able to challenge it in court.

Communication Limitations on Collectors

Federal and state consumer debt laws state that collectors must send a validation notice to the debtor stating how much is owed and to whom within five days of contacting the consumer. They must also provide a full listing of the amount due, fees, interest and penalties to the consumer upon request. Collectors can send unlimited letters to the consumer regarding the debt. However, they cannot contact family members or neighbors to pressure the consumer to pay. Collectors are not allowed to threaten violence or criminal penalties for non-payment of debt. Consumers can report harassing or illegal conduct by collectors to the Federal Trade Commission.

Laws on Contact by Collectors

According to the Fair Debt Collection Practices Act, the debt collector cannot call the debtor before 8 a.m. or after 9 p.m. The debt collector cannot call them at work if the consumer has said their employer does not permit personal calls. The consumer can request to stop receiving any collection calls at all. However, the collector can still continue to send collection letters if all phone contact ends.

Consumer Debt Laws on Marriage and Divorce

After marriage, both individuals are liable for debt taken out by either spouse or both spouses jointly. After divorce, the debt taken on during marriage can be collected from either or both former spouses. The Equal Credit Opportunity Act or ECOA states that if a divorced individual seeks a loan and lists alimony in their income on which they can repay the debt, the lender can ask for divorce forms that prove the alimony amount. However, if alimony is not listed as income for loan purposes, that paperwork cannot be required by the lender. Furthermore, if one individual of a divorced couple applies for a new loan, the former spouse is not liable for their debts.

Rights of Lenders

Consumer debt laws also protect the rights of lenders. If a consumer fails to make payments on their loan, the lender with a secured loan can repossess the collateral. For example, the bank holding the auto loan can repossess the car. The mortgage lender can file for foreclosure after several months of nonpayment. If the borrower has requested that all debt collection contact cease, the debt collector still has the right to sue for the unpaid debt.

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How to Avoid Foreclosure in Las Vegas

The city of Las Vegas was hit hard by a recession and housing crisis, with the city ranking number one in the nation in foreclosures in 2009, according to the "Las Vegas Sun." The Sun reported that in April 2010, one of every 28 housing units in Las Vegas received a notice of foreclosure. The flood of mortgage defaults prompted city and state officials to make available a variety of resources for people trying to avoid foreclosure in Las Vegas.

Instructions

1

Contact your lender immediately if you are behind on your mortgage. Inform the lender that you are seeking counseling in Las Vegas from a government-approved counselor and that you will provide the lender with an update within several days.

2

Call the StopNVForeclosures.org hotline operated by the city of Las Vegas. Call 877-488-4692. Housing counselors certified by the U.S. Department of Housing and Urban Development will analyze your foreclosure situation. The counselors are trained in all legal and ethical solutions for avoiding foreclosure and will offer immediate advice while also giving you contact information for a more detailed, face-to-face visit.

3

Meet with a HUD counselor recommended by StopNVForeclosures.org. Possibilities include Consumer Credit Counseling Service of Southern Nevada, Nevada Legal Services and Southern Nevada Regional Housing Authority--all in Las Vegas. Fully describe your foreclosure situation and ask about potential remedies including the lender's possible approval of a hardship plan giving you time to make up for missed payments. Authorize the HUD counselor to call the lender to negotiate a solution.

4

Ask the counselor to arrange for official mediation if you have received a court-ordered foreclosure notice known as a "Notice of Default and Election to Sell." As of July 2009, mediation was available to qualifying residents of Las Vegas and the rest of Nevada. Mediation stops the foreclosure process and requires the owner and the lender to discuss possible solutions for stopping the foreclosure permanently. To qualify you must reside in the home and must not have filed for bankruptcy or surrendered the home to the lender. Ask the counselor--with you on the line--to call the Foreclosure Mediation Hotline at 702-486-9380 to begin the process.

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Tips On Getting Out of Debt

Being in debt can be a real burden. All those monthly payments can tax the monthly budget. The interest on debt can significantly increase the amount of an item's original cost, and, by paying only the minimum payments, those debts will be around for a long time. Maybe the debt was used for investment purposes, such as funding a business, investing in real estate or buying stocks. Perhaps it was used to buy a home or to fund a college education. It could have even been used to buy "toys," such as a new boat, Christmas presents or jewelry. More people are in debt than ever before. However, there are ways to lessen this burden and get out of debt.

Function

Debt is a tool to help a person leverage their money; he can buy more--with less upfront money. If someone wanted to purchase a car, for instance, it is sometimes hard to come up with the full purchase price at once. This is where debt comes in. A bank will loan that person money to buy the car, with an agreement that the person will pay back the money over time, with interest added onto the monthly amounts. By the time you've paid back the loan, this interest will have significantly increased the amount of the original loan--especially if you only paid the minimum payments. This is one reason why it is important to get out of debt as quickly as possible.

Types

There are different types of debt including credit cards, mortgages, student loans and car loans, to name a few. Some types of debt, such as debt for investments are secured debts. This means that if you are unable to pay back the loan, the lender can receive its payment through your asset. For instance, if you used the loan to buy a house, the lender can take the house as payment. Unsecured debt, such as credit card debt, has nothing that will insure that the lender will receive its money back. In return, you pay high interest rates. When making a plan to get out of debt, get rid of the debt with the highest interest rate first.

Identification

Identify all your debts. Make a list of creditors on a piece of paper in order from the highest interest rate to the lowest. Write down the amount of monthly payments and the loan balance next to the name of the creditor. The goal is to focus on paying down one debt at a time, starting with the one with the highest interest.

Prevention/Solution

The method used to eliminate debt is sometimes called the "snowball," or "pyramid" method. Look at the first debt on your list. Put as much money as you can toward your monthly payment of this debt. If you can only make the minimum payment, that's okay too--it will just take longer to pay off. Continue to make minimum payments on the rest of your loans. After the first debt is paid off, put all the money that you were paying monthly on that bill and apply it toward the monthly payment on the next debt on your list, including the minimum payment that you had been paying. Continue this "snowball" method until all the bills are paid off.

Benefits

The benefits of being debt free are many. You don't have the burden of trying to make the minimum payments every month. There isn't the stress of knowing that if you are unable to meet your obligations, you could lose something of great value--such as your home. You don't have the frustration of knowing that you ended up paying double or triple the amount for something because of the interest on your loan. Perhaps, most importantly, you have a sense of freedom.

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How Does Paying Debt Every 14 Days Save Money?

Mortgage Payments

Many banks are now offering consumers a new way to pay off their debts. While a traditional mortgage payment is made monthly, you can make your mortgage payment every 14 days. While this is seemingly the same cost to you, paying your debt every 14 days can save money in the long run.

If you pay $1,000 a month on your mortgage,you will pay a total of $12,000 each year. In 30 years,you will have paid a total of $360,000 for a home worth approximately $150,000, depending on the local taxes and percentage rate. Now consider paying $500 toward your mortgage bi-weekly. There are 52 weeks in a year. This means that in a year, you will make 26 smaller payments and pay $13,000 toward your home loan. Not only will this knock years off your loan, you will also save thousands of dollars in interest charges. Paying off your loan 5 years early will save you nearly $50,000.

Car Loans

While most banks are only advertising a 14-ay payment schedule for home loans, consider your car loans as well. If you pay $300 a month toward your car loan, you will pay $3,600 a year or $21,600 in 6 years. If you decide, instead, to pay $150 every 14 days, you will pay $3,900 a year. This will knock 5 months off the length of your loan and save you about $750 in interest payments over the length of the loan.

Other Debts

This principle can be applied to student loans, credit cards, store cards, medical debt and any other type of debt that accrues interest over time. Making an additional payment toward your debt each year is a great way to painlessly save a little money in the long term. Consider talking with your bank and credit card companies to work out a new payment schedule. Paying all of your debts every 14 days will likely save you thousands of dollars and is well worth the one extra payment a year that you will make.

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The Effects of Debt Settlement

Debt settlement involves the process of debt reduction. Typically, debtors negotiate agreements with their creditors that allow debtors to repay a part of their balance; the payments are accepted by the creditor as "paid in full." Some debtors handle the own negotiations with creditors. However, most choose to work with an attorney or debt-settlement firm. The settlement agreement may call for the debtor to make a large one-time payment or a series of affordable payments over time.

Settlement methods

Debt settlement begins with an analysis of your personal finances to determine the amount of your debt load and to create a debt management plan you can afford. People who negotiate their own settlements tend to offer creditors a single payment or a series of lump-sum payments. In exchange, the creditors agree to accept a portion of the outstanding balance as "paid in full" as long as the terms of the new agreements are met. Debtors who do not have money to offer such a settlement can work with debt-settlement companies to pay off the debt over an extended period---sometimes as long as five years. Typically, the debtor is required to deposit a monthly payment into a savings account. The settlement company then divides the payments between the creditors. Most settlement companies charge an upfront or monthly fee for this service; others receive payment in the form of 20 percent of the amount save by the negotiated settlement.

Debt management plan

A debt management plan is intended to help consumers get out from under an overwhelming amount of debt. It is commonly put together by debtors who are working with debt settlement or credit counseling firms. An effective debt management plan is based on a person's current finances; it is an affordable strategy for repaying unsecured debts in five years or less. The consumer who takes this path realizes a few immediate effects of debt settlement, including lower interest rates, reduced payments, elimination of fees and penalties and fewer collection-agency calls.

Reduce payments

Some states have financial hardship laws that permit consumers to lower the amount of money they owe if they can prove that they cannot afford to pay the full amount of their debt. Some people are able to negotiate with creditors to get the outstanding balance reduced from 25 to 65 percent. Other people use the tactic of bargaining for a reduction in the interest rate.

Penalties and fees

If you are having difficulty making your payments on time or exceed your credit limit, most creditors will automatically charge late fees and other fines. These fees can add a substantial amount to your outstanding balance over time. Consumers who stop paying on their accounts face penalties, fees and interest that continue to inflate the account balance. Negotiating a debt settlement with your creditors can significantly reduce, and in some cases eliminate, the additional charges.

Improve credit

Each month, your pattern of paying creditors is usually reported to the three major consumer credit reporting agencies. A history of late payments, defaults and charged-offs will drastically lower your credit score. Even if you are able to secure credit in the future, it is usually at a much higher interest rate. One of the effects of debt settlement is that you can immediately move toward paying off the accounts and improving your credit score. Usually the creditor will add a comment to your credit report indicating that you are making payments by a debt settlement organization. This information generally remains on the report until the debt is paid.

Tips

One of the emotional effects of debt settlement is the peace of mind it brings once you have your financial life back under control. In debt settlement, you should know what your rights are and get every agreement in writing, no matter if you're negotiating the debt settlement agreement yourself or having a third party do it for you. For example, if the creditor agrees to accept a single lump-sum payment as fulfillment of your debt, send a follow-up letter to the company detailing the agreement. In addition, you should write on the check "Cashing this check acknowledges payment in full." If you are working with a debt settlement company, monitor what they do. If they agreed to pay your bills, make sure the payments are paid according to the agreement.

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What Is the Average Interest Rate for Student Loans?

A range of student loans are available for those studying for an undergraduate or graduate degree. Such loans may be funded or backed federally while others are financed privately. The interest rate on a student loan will often depend on how it is funded as well as what type of student the loan is intended for.

Perkins Loans

Perkins Loans are federal loans designed for students who come from financially needy families. The financial need of the student is assessed using the Free Application for Federal Aid (FAFSA). The maximum amount available is $4,000 for those undertaking a first degree, such as a bachelor's or associate's, and $6,000 for those enrolled in a graduate programs, such as a master's or doctorate. The annual interest rate of Perkins Loans is 5 percent. Students who take advantage of Perkins Loans may have some or all of their loans canceled if they enter the public sector or enter the military.

Stafford Loans

Like Perkins Loans, Stafford Loans are guaranteed by the federal government. Unlike Perkins Loans, they are not limited to those from low-income families. There are two types: Federal Family Education Loan Program (FFELP) loans, which are provided by banks and federally guaranteed; and Federal Direct Student Loan Program (FDSLP), which are provided directly to the student from the U.S. government. Furthermore, Stafford Loans may be subsidized or unsubsidized. For the 2011-2012 academic year, subsidized Stafford loans had an interest rate of 3.4 percent, while unsubsidized loans have an interest rate of 6.8 percent. The total amount available for borrowing varies depending on whether the student is a freshman, sophomore, junior or senior.

PLUS Loans

If the maximum amount of Stafford Loans is exhausted, a student may take advantage of a PLUS loan, which is also guaranteed by the government. PLUS loans assess the creditworthiness of the student's family or, in the case of graduate students, the borrowers themselves. The credit check only seeks out borrowers who have an adverse credit history. The interest rate of PLUS loans are variable and will fluctuate each year, however they are capped at 7.9 percent.

Private Loans

Private student loans tend to originate from banks or other loan-lending institutions. They are not federally guaranteed in case of default, and therefore the interest rates on such loans tend to be considerably higher. Furthermore, private student loans may have low interest rates but very high fees, which are paid back during the lifetime of the loan. Interest rates vary depending on the lending institutions, but they may be as high as 14 percent annually.

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What Might Be Done to Reduce Debt?

Several effective methods are useful for reducing your debt. Consumer debt can include credit card balances, student loans, auto loans and other types of installment loans. If you're not careful, you could acquire excessive debt and have difficulty making your payments. Learn ways to pay off or pay down your debt, an ultimately improve your personal credit rating.

Cash Policy

Develop a debt elimination plan that involves paying cash for items and reserving credit cards for emergencies. Credit helps when you're short on cash, or need funds until your next payday. However, relying on credit to buy things you don't need or living off credit can quickly increase your debt balances. Decide at the beginning of each month what you plan to spend on recurring expenses and extras such as dining out and entertainment. Stay within a modest budget, and stop spending once you've met your established budget.

Monthly Payment

The way you pay creditors affects the rate at which you pay down your outstanding balances. For starters, get out of the habit of only giving creditors the minimum payment each month. If you make a $100 purchase on a credit card, aim to pay off the new charge completely or at least half the new charge to start reducing the debt. This method is doable when you limit charges to what you can afford to pay off within a month. Also, making bi-weekly payments (every two weeks) helps bring down debt faster because this method reduces the amount of interest you pay on credit and loan accounts.

Lower Interest Rate

Paying less interest each month can reduce debt faster because the bulk of payments apply to the principal. Methods to reduce your interest rate on existing debt include speaking with your creditors and simply requesting a cheaper rate. You can also explore other credit card offers, and then submit an application to see if you qualify for a low-rate balance transfer.

Modify Life

Lifestyle modifications can also help reduce debt. The less money you spend on monthly expenses, the more cash you have to put toward debt elimination. Huge balances may call for a complete modification that can entail moving into a cheaper apartment, financing a less expensive car or eliminating monthly services that take a chunk of your income. Consider getting a roommate to cut your monthly expenses in half, and use this cash to make higher debt payments. Postponing vacations and other expensive purchases also puts you on the path toward reducing or paying off your debt.

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Household Budget Bill Payment Planning

Having a household budget is important, but making sure you are paying your bills on time is equally as important. Use money-spending and bill-paying tips to pay off your debt, and save money for future expenses.

Get the Family Involved

If the only personcommitted to the household budget is the person trying to balance the checkbook, the budget is in trouble. Get the whole family involved in understanding how the budget works, and what needs to be done to keep the bills paid on time. It may be that certain weeks of the month require more money to pay bills than others. Get the household to understand that and know that on those weeks there will not be as much spent on entertainment as there will be on the other weeks.

It is important that each person affected by the budget understand that the income coming in to the household must always be more than the bills going out. If you have budgeted a certain amount each month for groceries and entertainment, then that money is already spoken for. Do not allow new bills to come into your household budget unless there is more income to account for them. Do not tighten your budget with extra payments you do not need.

Tips to Save Money

Paying the bills is always easier when there is extra money available. There are some techniques you can use to make saving money easier. Limit yourself to one or two ATM withdrawals a week, and only withdraw money from checking. If you have a pre-determined entertainment budget then transfer that from savings to checking and only use that money. When you get direct deposit for your paychecks have the money go into your savings account. That way, when it is time to pay the bills you only transfer what you need from savings to checking. If you made plans to go out but then decided against it, take the money you were going to spend and put it into your savings account. Have a change jar somewhere in the house that is accessible to everyone. Make a habit of throwing loose change in the jar, and when it is full deposit the money into your savings account. Do not fall prey to impulse purchases.

If you see something you want but do not need, wait a day or so and then if you still want it go back and buy it. The waiting period may cool your desire for the product and save you the expense of purchasing it.

Paying Your Bills

Always pay your utility, mortgage, car payment and insurance bills first and on time. Losing your car is much more traumatic than losing the ability to lose a credit card. Try to pay your credit account bills on time as often as possible. If you consistently pay your credit accounts late then you are paying extra late charges that you should avoid. Pay the minimums on each of your credit accounts and add an extra $10 or more if you can. This will pay your credit cards off a little quicker, and it is not a lot of money unless you have a lot of credit card bills.

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Can Debt Be Inherited?

Broadly speaking, the debt of your parents, spouse or anyone else who might have designated you as the beneficiary of an estate is not directly inheritable. The debt usually will diminish the net proceeds you may receive from the estate, but your existing assets typically are beyond the reach of estate-related debts.

Inheritance Basics

When an individual dies, the assets he leaves behind are passed to immediate family members, even if there is no written will. These beneficiaries always have the right to refuse the assets, in which case other beneficiaries who are further removed in the lineage will be contacted. If no suitable party can be found to receive the assets, they will be transferred to the government. Most people, however, have debts as well as assets, which can complicate the situation.

Estate Liquidation

When the deceased person has debt as well as assets, the usual procedure is to sell the assets, pay off all creditors and distribute the remaining cash or property to the beneficiaries. Sometimes, the beneficiaries prefer to pay the creditors themselves to prevent the liquidation of inherited property. If you inherit the family home, for instance, and your dad owes $10,000 in credit card balances, it might make more sense to pay the $10,000 out of pocket and keep the home instead of selling the home to pay $10,000 in credit card bills.

Should the debt of the deceased exceed the value of inherited assets, the beneficiaries usually have to do nothing at all. Typically, the assets are sold, creditors paid with the proceeds and the shortfall simply is written off. In this case, beneficiaries would receive nothing.

Marriage

If the deceased is not a parent or a more distant relative but is instead a spouse, slightly different rules may apply. If you live in a joint-property state and the debt was accumulated during the marriage, it is the responsibility of both the wife and husband. Certain exceptions do apply, however. Business debt may not be a joint responsibility depending on the type of business entity it is attached to, and the "innocent spouse" rule may exempt the surviving wife or husband from certain types of financial responsibilities.

Other Exceptions

If you are a cosigner on the debt of the deceased, the entire amount due will be your financial responsibility. An even more complex and potentially devastating situation may arise if you were the cosigner on the debt and the person's will excludes you from the estate. In this case, you may have to pay the debt without receiving access to the inheritable properties or cash.

You also may be impacted by the deceased person's debt without directly inheriting it in some other cases. Such situations can arise if you are an active user of the person's property. For example, if you are living on the family farm, which is taken by the bank following the death of a parent, you may be evicted.

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How to Make a Payment to Nordstrom

The department store Nordstrom, known for stylish women's and men's clothing, boots and accessories, offers its customers who qualify a Nordstrom credit card. The card offers customers a convenient way to pay when shopping in the store or online. Additionally, Nordstrom card customers receive perks like discounts, advance notice of sales and enhanced customer service. Nordstrom also makes it easy for its customers to make payments on their Nordstrom credit cards.

Instructions

1

Enroll in Nordstrom's autopay option, which allows you to pay your bill online using your checking or savings account. Log onto the Nordstrom account webpage, which is listed in the Resources section. Enter your account number and name in the Enroll Now box and click submit. Choose a user name and password. Then choose the account that you would like to register -- checking or savings. Enter your bank account information and click "submit." When it is time to make your monthly payment, go back to the same account page and enter your user name and password to log in. Choose the amount of money you would like to pay and submit the information.

2

Call Nordstrom's credit card services telephone line in order to pay your bill by phone. Enter your account number when the auto attendant answers the phone. Enter the last four digits of your social security number. Then choose the option to pay your bill.

3

Mail your Nordstrom payment in order to pay your bill. Write a check for the amount that you would like to pay. Make the check out to Nordstrom and be sure to write your account number on the check so that it gets credited to the proper account. Put the check into an envelope and address it to: Nordstrom credit card payments, P.O. Box 79134, Phoenix, AZ 85062-9134. Write your return address in the upper left hand corner of the envelope, attach a postage stamp and place it in the mailbox to be mailed.

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How to Write a Business Letter for Proof of Owner Financing

Owner financing, also called seller financing, allows a home buyer to purchase a home on credit and make monthly payments to the seller instead of a mortgage company. The arrangement is popular with sellers who use it as an incentive to sell a house that is proving difficult to sell because of the price, neighborhood or condition. Many buyers that are are unable to qualify for standard loans because their credit scores are poor are attracted to owner financing. Writing a letter to prove owner financing is a straightforward task.

Instructions

1

Read the contract or promissory note detailing the owner financing arrangement. The agreement should detail all the key points in the financing, including the principal amount, or amount financed, interest rate, schedule of payments and consequences of default.

2

Make copies of canceled checks for your most recent three payments.

3

Write the letter. In the first paragraph, write that the letter is serving as official proof of owner financing for your residence. Identify the name of the owner providing the financing, along with her address and telephone number. In the second paragraph list the amount financed, monthly payments and current balance.

4

Finish the letter by noting that you are providing additional documentation of the owner financing by providing a copy of the official agreement, along with copies of the canceled checks for your most recent payments.

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General Debt Issues

Debt is a problem that millions of people have to deal with on a daily basis. When you feel like you are trapped under a mountain of bills, it can be a particularly intimidating experience. There are several areas of your life that debt can affect in one way or another.

Credit Impact of Debt

When you have a large amount of debt, it can negatively affect your credit score. If you apply for a loan, your lender will look at the total amount of debt you have in relation to how much credit you have available. This is known as your credit utilization ratio, and it makes up a big percentage of your credit score. The more credit you have available, the more it helps your credit score.

Impact on Financing

When you try to get financing, it may be difficult to do so if you have significant debt. Your lender will use your debt-to-income ratio to determine if you can qualify for a loan. This will apply when you try to get a mortgage, a car loan or any other type of loan. Even if you are approved for financing, you may have to pay a higher interest rate for the money.

Eliminating the Debt

When you have a large amount of debt, you may be focused on trying to get rid of it as quickly as possible. In this situation, paying more than the minimum payment required can help you get out of debt quicker. You may also choose to enter a debt-management plan which involves negotiating lower interest rates with your creditors and paying your debts off quicker. Some also turn to debt settlement which involves settling your debts for less than what you owe. If you choose this option, you need to be careful, because it will hurt your credit score.

Consolidating Debt

Many people who are in debt consolidate their loans into a single loan to make things easier. This approach can work because it could save you money on interest. It also allows you to focus on a single payment instead of making several debt payments every month. On the other hand, this is not a solution to your debt, but only a tool to help you pay it off. If you accumulate more debt after consolidating, it can hurt you in the long run.

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What to Do About School Loan Garnishment?

Garnishment of your wages for nonpayment of student loans is more difficult to deal with than many other wage garnishments, since you can't bankrupt government-backed student loans the way you can credit card debt. Nevertheless, most people can quickly and easily stop the garnishment and set up affordable payment arrangements after a nine-month loan rehabilitation program. It is to your advantage to work with the creditor and arrange payment as soon as possible; waiting results in higher payments during the rehabilitation period and more of your wages being garnished, as well as income tax being seized.

Instructions

Interrupt the Garnishment

1

Gather all documentation relevant to your student loan and ability to pay, as well as contact info for your student loan administrator and the collection agency. This includes your last three years of tax returns, your last month's pay stub, and a detail of your monthly necessary bills. Especially note bills you would be unable to pay due to garnishment.

2

Contact the collection agency named on the garnishment forms and tell them you want to formally dispute the garnishment. Get a dispute or mediation office contact name and address from the customer service representative you speak to, and note the representative's name, as well as the date and time you called.

3

Contact the dispute or mediation office and explain your situation. Find out exactly what you need to send them in writing to get the garnishment stopped; this should be the data you gathered about your financial situation in Step 1. Send them this information in writing via postal mail, and send a copy via email as well if they provide you with an email address. Keep file copies of everything.

Rehabilitate Your Loan

4

Contact the person the collection agency sent you to for loan rehabilitation. Make arrangements to pay the loan. You must pay nine sequential nondiscounted loan payments on time in order to rehabilitate your loan. The amount of these payments will be equal to what you'd pay if you were making regular full loan payments on your loan. The amount named as a payment is non-negotiable.

5

Stick to your repayment schedule scrupulously, sending payments on time; early payments will not be counted, and late payments will cause your rehabilitation to start over. Stay in contact with the garnishment office as well, ensuring they receive all the paperwork necessary to remove the garnishment with proof of your good-faith repayments.

6

Call the student loan office about a week after you have made your ninth payment to arrange an affordable payment plan; the loan rehabilitation office will have all the contact information you need. If you are paying multiple student loans off, ask whether it would also be in your benefit to consolidate all your loans.

7

Maintain the payment plan you set up, keeping the student loan office current when you have any changes in your situation, in order to avoid falling back into default and garnishment.

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How Long Can a Debt Be Owed Before Suing?

Filing a lawsuit is both costly and time-consuming, so many creditors prefer to stay out of court unless they think a debtor won't pay his bill. Different creditors have their own policies on filing lawsuits against defaulted debtors, so unless a creditor discloses its policy, a debtor won't know when he is vulnerable to a lawsuit. If a creditor does file a lawsuit, it must be within the state's statute of limitations for debt collection.

Unpaid Debts

Once a debtor fails to pay a bill on time, individual and business creditors have the right to begin collection efforts, which usually consist of calls, letters or even turning the debt over to a collection agency. Court systems often have their own guidelines on steps a creditor must take before filing a lawsuit, which may include making a good faith effort to collect a debt before going to court.

Statute of Limitations

Creditors have a limited amount of time to file a lawsuit after a debt becomes past-due. In many states, this can be as little as two or three years. If a creditor files a lawsuit after the statute of limitations period is up, the debtor can ask the judge to dismiss the case, making the debt uncollectible. In states that have a short statute of limitations, some creditors may file a lawsuit soon after a debtor defaults.

Court Judgments

Once a creditor wins a judgment against a debtor, the creditor is given the right to use additional collection methods, such as asset seizure and, in most states, wage garnishment. Court judgments are a matter of public record and do show up on debtor's credit reports, where they can stay for up to seven years if paid, and even longer if they remain unpaid.

Judgment Collection Limits

There is a statute of limitations on judgment debt collection, but it is usually much longer than the time period allowed for filing a lawsuit. For example, in Illinois, the statute of limitations on filing a lawsuit for debts secured by a written contract is 10 years, while the statute of limitations on collecting a judgment is 20 years. In many states, it is possible for a judgment creditor to renew the statute of limitations on a judgment, giving the creditor decades to collect payment.

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Debt Relief Counseling

Debt relief counseling services consolidate your overdue bills into one monthly note that is generally lower than your individual payments would be if you continued to pay them separately. Therefore, debt relief counseling services might lighten your monthly debt load. However, when you elect this debt-eradication alternative, you still need to educate yourself about the drawbacks of this type of arrangement before you agree to pay a company to settle your legally binding contractual obligations for you.

Function

Debt relief counseling agencies work with your creditors to custom-design a reduced payment option for your outstanding bills, such as unpaid loans, credit cards and doctors bills. Under this type of arrangement, you give the debt relief company a predetermined amount each month that the agency distributes to your creditors until all of your consolidated debts are paid in full. Some debt relief counseling services are free. Others charge you a significant fee for their services. However, these fees are usually spread out over the debt relief repayment term, says the U.S. Better Business Bureau's official website, BBB.org.

Benefits

Debt relief counselors usually get your credit cards companies to lower or eliminate the interest on your unpaid balances. They can generally also get your creditors to waive late fees associated with your account. Additionally, some debt relief agency representatives teach you credit-maintenance and budgeting techniques, and help you construct individualized financial plans that might help you improve your financial situation over time.

Drawbacks

Although using a debt relief counseling service might help you pay off your bills, it won't erase your bad credit history. Furthermore, your creditors can still report your consolidation contributions as missed payments if they are less than the original amount due each month, says the BBB.

Requirements

Some debt relief counseling services require that you do not use any of your existing credit cards or apply for any new loans or lines of credit during your debt consolidation program. Furthermore, you probably have to make timely monthly payments for 48 months or longer to remain in a debt counseling program, says the BBB.

Considerations

You should thoroughly investigate potential debt relief counseling agencies before you sign a binding contract. Contact your state Attorney General's office and your state's BBB office to find out if your potential debt relief counseling company has any consumer complaints on file. Also, do not deal with companies that tell you to stop communicating with your creditors or promise that your debts can be paid off for much less than what you owe, says the Federal Trade Commission's Money Matters report. Reputable debt relief counseling companies should send you free information about their business without asking you for any personal information, says the BBB, who adds that you should disregard working with any company who won't promise you confidential counseling services.

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