July 2010 ~ Credit And Debt Management

Saturday, July 31, 2010

Sound Financial Debt Ratio

11:56 PM No comments

Keeping debt within reasonable limits is the key to both financial freedom and a stellar credit score. However, it is sometimes difficult to know what the boundaries for spending are. Financial experts have created guidelines to assist consumers in determining when to stop spending so that they may be eligible for the best interest rates and financial opportunities down the road.

Debt utilization ratio refers to the amount of debt you have versus the amount of credit available to you. The more debt you accumulate, the less credit you have to spend. This figure plays largely into the calculation of your credit score, constituting about one-third of your overall score.

Since your debt utilization ratio weighs heavily on your credit score, it's important to keep your balances low. Finance experts at the Better Business Bureau recommend keeping balances to 25 percent of your credit limit. Keeping low balances demonstrates to creditors that you are a responsible consumer, capable of paying off your debts and restraining yourself from overspending. Those traits are then reflected in your credit score.

In addition to credit cards, the average American household has debts including a mortgage, home equity loan, auto loan, student loan and retail financing plan. The total percentage of debt should ideally be within the range of 36 to 40 percent of your income at most, according to the financial planning website Say Planning. Anything higher than that, and you should consider getting extra employment and seeking credit counseling.

Although it's important to keep your debt low, not using your credit at all may also damage your score. In an interview with Bankrate, FICO product specialist Barry Paperno explains that you should use each credit card at least once every six months. Pay off the balance, and you won't have to worry about affecting your debt utilization ratio -- or making monthly payments.

Credit Reporting of Bills Paid

7:38 PM No comments

Building your credit score takes time. During the building process, avoiding negative reporting is a must. Focusing on maintaining positive relationships with your creditors is your primary goal. As long as your creditors report your payment history to the three major credit bureaus, your score will increase each month you remain in good standing.

The three major credit bureaus compile consumer credit reports to track your history as a borrower. Credit reports contain a listing of your trade lines, personal information, inquiries and public records. The purpose of your credit report is to give creditors an idea of your risk as a borrower. The more negative items in your credit report, the worse your credit score becomes.

Paying your bills on time is reflected in your credit report. Each bureau formats information differently, but all have identifiers for 30-, 60-, and 90-day late payments. Late payments can be identified through color coding, using the numbers "30" or "60," or with an "X" on the late months. When you seek a new loan or credit account, the lender may ask the cause of your late payments during the months you were delinquent.

Your credit limit for each account is reflected on your credit score, if applicable. Many household bills do not have credit limits but do reflect past due balances. Creditors seek borrowers who can manage credit responsibly. Carrying large balances on your revolving accounts such as a credit card or line of credit is damaging to your score. The responsible use of credit includes keeping your balances below 30 percent of your available credit and paying household bills within your billing cycle.

Length of credit history is a major factor influencing your credit score. The longer you keep your accounts open, the stronger your credit score. The open and close dates of each of your bills are included on your credit report. Accounts closed in bad standing are reflected by a note from the creditor in the account description. Generally, the notes also include who initiated the closing of your account.

Not all creditors report to the three major credit bureaus. Some bills are only included on your credit report once they are closed or go into collections. If you are looking to use your bill payment history to raise your credit score, open credit accounts such as credit cards and car loans that will be reported monthly to the credit bureaus. Avoid overlooking small debts such as library fines, as these tiny bills can leave a negative impact on your credit if they go unpaid.

Can Debt Relief Take Care of Debt When the Account Has Been Turned Over to a Collection Agency?

12:26 PM No comments

A person must pay his debts or face the possibility of lawsuits. However, in some cases, rather than sue, creditors will sell an individual's debt to debt collection agencies, or they may hire these agencies to act on their behalf. Whether a person can receive debt relief after a debt has been turned over a collection agency will depend on several factors.

The term debt relief can refer to several kinds of debt management practices. One of these is debt consolidation, in which an alternate lender agrees to provide a loan that will pay off a person's existing debts, but provide the borrower with a new debt. In addition, debt relief can refer to debt settlement, in which a creditor agrees to accept less than the amount owed as full payment on the debt.

Debt consolidation usually is still available to a person after his debt has been turned over a collection agency. This is because a person can obtain a debt consolidation loan without the permission of his creditor. Therefore, whether the debt is controlled by the creditor or a collection agency is irrelevant in this case. However, the person must be able to qualify to receive a consolidation loan, which may be difficult if he owes money to a collection agency.

Whether a person can settle with the collection agency for a lesser sum depends on the collection agency's policies. In some cases, the collection agency is willing to settle for less money that the person owes. However, the collection agency is not required to accept partial payment and may choose to demand the full amount, in which case it would not be willing to negotiate a settlement.

Whether a collection agency is willing to provide debt relief also depend on whether the collection agency controls the debt or is collecting the debt on behalf of the original creditor. If the collection agency owns the debt, it can make decisions on its own. However, if it is working for a creditor, the creditor must decide whether a settlement is acceptable.

How to Reduce Your Debt Safely & Legally

8:20 PM No comments

If you're hesitant to answer the phone because of constant calls from debt collectors or afraid to check the mail lest you discover yet more bills you cannot pay, working with your creditors to reduce your debts through debt settlement or credit counseling may be your best option. Credit counselors can create a budget-friendly repayment plan for you to help you manage debt while debt settlement allows you to take control of your financial situation and negotiate on your own behalf. Both methods of debt reduction are perfectly legal, but it is important that to stay safe you avoid debt negotiation companies. The Federal Trade Commission warns against hiring a debt negotiation firm as the potential for scams is high (See References 1).

Instructions

Review past letters from your creditors for any settlement offers they may contain. It is important to know which creditors are prepared to settle with you and for how much.

Evaluate how much you can afford to pay toward a settlement each month. Make a list of your monthly bills and compare that list to your income. Any income left over each month after your primary needs are met is disposable income and can be directed toward paying off a settlement.

Call each of your creditors. Ask to speak to an account representative who is authorized to negotiate a debt settlement.

Tell the account representative that you want to discuss the settlement you were offered or ask if a settlement is possible. Explain your current financial situation and why you cannot pay the debt in full. Negotiate for a debt settlement plan that you can afford to pay.

Request the terms of the settlement in writing before sending payments to the company. To reduce your debt safely, you must protect yourself in the event that the company does not acknowledge your settlement agreement once the debt is paid.

Make payments toward your settlement agreement on time every month.

Check for a credit counseling agency in your area that is affiliated with the Association of Independent Credit Counseling Agencies or the National Foundation for Credit Counseling (See References 2).

Make an appointment to speak to a credit counselor. Bring copies of your bills and pay stubs to help the counselor review your financial situation.

Wait for the counselor to contact your creditors and attempt to negotiate a debt management plan (DMP) that fits your budget.

Review the proposed DMP. If you agree to the plan, pay the credit counseling service's fee and sign a contract agreeing to pay the requested amount every month.

Make regular payments to the credit counseling agency in accordance with your DMP until your debts are paid in full.

Can a Collection Agency Make You Appear in Court?

5:21 PM No comments

Collection agencies employ a number of different strategies to get you to pay the monies owed on your account. From making harassing calls to your home or job to sending threatening letters, it can be hard to know which methods are effective and which are just tactics being employed to get you to pay your bills. Particularly when it comes to legal action, you may wonder if, in fact, a collection agency can force you to appear in court.

Collection agencies may go through a number of steps to get you to pay up on your debt. From offering settlements at a fraction of the overall cost of your debt to harassing you daily with phone calls, emails, faxes, letters and text messages, the goal is to aggravate you enough to pay attention to the debt and take care of it. In addition to the aggravation, the collection agency may also sometimes pursue legal action.

If a collection agency acts on behalf of the creditor, it can bring a lawsuit against you in civil court to collect on the debt via a judgment. If this is the case, you don't have to appear in court, but know that if you don't, then the judgment will automatically fall in favor of the collection agency and you then become legally required to take care of the debt. There may also be additional legal fees tacked on to what you owe because the agency was forced to take you to court to collect.

If you are sued by a collections agency and a judgment is issued against you, you can generally set up a payment plan that works for your personal budget. However, you can also avoid going to court altogether by working out a payment plan with the collection agency before legal action is taken against you.

If you are dealing with a collection agency, get everything in writing, from the debt you owe to the actions they say they will take against you if you don't comply. If you are uncomfortable working with the collections agency, you may be able to re-approach the original creditor to pay off the debt if the debt isn't too old. The creditor may not be willing to do this, but it's worth a call.

Debt Payment Programs

1:56 PM No comments

Without making a plan to pay off your debt, you're likely to remain trapped in debt for the rest of your life. Buckling down can be difficult, but there is help available if you feel that you need it. Look for the debt payment program that fits best with your personal financial situation.

In a self-payment plan, you simply look at your debts and budget your money to pay them off quickly. Personal finance author and speaker Dave Ramsey has popularized the "Snowball Method," in which you pay as much as possible toward the debt with the highest interest rate first, while paying the minimum monthly payment on other debts. Once you've paid off the first one, you roll all of your extra money into the debt with the next highest interest rate. "Laddering" your debt is a similar method, except that you pay off the smallest loans first. The hallmark of paying back debt on your own is tightening your belt---creating a budget to reduce your expenses and applying that extra money toward your debt.

In debt settlement, you work with your creditors to pay off your debt. Talk to a debt management company that will in turn contact your creditors to make arrangements. The debt management company may be able to persuade your creditors to reduce the principal balance, but creditors are more likely to reduce the interest payments. Using this option, you no longer have to deal directly with your creditors. You'll start making payments to the debt management company, which will pay the creditors on your behalf.

If you have equity in your home, you can use that to take out a debt consolidation loan. In doing this, you obtain the total amount of money that you owe on your loans and pay off each of them. Then, you only have one monthly payment toward the consolidation loan. This often decreases the total amount that you'll pay because it reduces the interest rate.

Under Chapter 13 bankruptcy, the federal courts will rearrange your debt to make it more manageable for you. You will get to keep your home for at least three years, during which time you can try to get back on your feet. The downside to this method is that it gets reported on your credit report and will decrease your credit score, making it very difficult to get credit in the future.

The Statute of Limitations on Unpaid Payday Loans

1:45 PM No comments

A payday loan is a short-term loan, generally lasting between several days and a month, in which the borrower is charged an exceptionally high rate of interest. If a borrower defaults on a payday loan, the lender is legally allowed to try to collect the money owed him. He can do this through a number of different means. However, he can only pursue collection before the expiration of the statute of limitations on a loan.

The statute of limitations on a payday loan will vary depending on the state in which the payday loan was issued. Each state has its own statute of limitations for different types of loans. For example, in Montana, a debt derived from a written contract -- from which virtually all payday loans are derived -- can only be pursued for 8 years, while in Missouri the debt can be pursued for up to 10 years.

As of December 2010, no state has a law regarding the statute of limitations for payday loans specifically. However, most states have laws that outline the statute of limitations for debts derived from written contracts. However, in some states, a payday loan may be classified as a different kind of contract. For example, in Ohio, the statute of limitations for written contracts is 15 years, while the statute for notes payable at a definite time -- which would correctly define a payday loan -- is only 6 years.

The exact time that the time period for the statute of limitations begins and ends depends mainly on how the law is written in a particular state. According to the law offices of Carreon and Associates, most statutes of limitations begin when the loan goes delinquent. However, in some cases, the time period can be extended. For example, in South Carolina, a partial payment automatically extends the statute of limitations, causing it to start over again.

After a statute of limitations has expired, a creditor can no longer take any actions to collect on the debt. While a creditor can technically sue a debtor after the statute has expired, a judge would be forced to throw out the case. However, a record of the unpaid debt will remain on a person's credit report for up to seven years, regardless of whether the statute of limitations has expired.

Massachusetts Laws on the Repossession of Auto Loans

10:19 AM No comments

In Massachusetts, auto lenders can recoup their losses from debtors who do not pay their loans by repossessing and re-selling their vehicles. Lenders must follow certain procedures, such as sending proper written notice and giving the debtor enough time to respond, before they can repossess vehicles. If you refuse to allow the lender to repossess your vehicle, the lender must get a court order to do so.

In Massachusetts, if a person defaults on a car loan, the lender must send him a written notice called a "right to cure" letter. This letter, which must be sent at least 21 days before repossessing the vehicle, informs the payee that his loan is in default and that he has 21 days to make payment arrangements. If the payee does not pay the balance he owes or make arrangements to do so with the lender, the lender may repossess the vehicle.

After the 21-day period has passed, the Massachusetts lender may "peacefully repossess" the vehicle. This means that the lender or the lender's agent repossesses the vehicle without a court order. The debtor must be present at the time of repossession and must consent to the repossession. If the debtor objects, the lender must go to court to get an order of repossession.

Once the vehicle is repossessed, the lender must send the debtor a written notice explaining how the debtor may redeem the vehicle. The debtor has 20 days to pay the balance required to redeem the vehicle. After 20 days, the lender may sell the vehicle or auction it off to settle the debt.

If the debtor owes more than $2,000 on the vehicle, the lender may seek a deficiency judgment against her in Massachusetts court after reselling the vehicle. The deficiency judgment requires the debtor to pay the difference between the sale price and the amount she still owes on the vehicle.

Loan Debt Problems

5:09 AM No comments

Someone who has too many loans without enough income can soon find themselves with serious debt problems. Once on the slippery slope of having too much debt, it can be hard to climb back up. However, there are solutions and options available to help people who find themselves in this predicament. It may take time and test your patience, but following some standard steps can help resolve loan debt problems.

To identify a problem, you need to figure out how you ended up there in the first place. If you were careless and racked up too many unnecessary loans, then you need to halt this practice. You must be vigilant with your money which means accessing your credit line to pay for unnecessary high-ticket items -- such as a new television -- may only plunge you deeper into debt.

To help get you out of the seemingly never-ending hold of debt, the first step you need to take is to create a monthly household budget. That means comparing your income to your expenses. When your expenses exceed your income, you are putting yourself in debt. Think of your budget like a business -- to make a profit, you must spend less than what you bring in. Cut your expenses, such as entertainment or groceries, to make a "profit" at the end of the month. Use your surplus to pay off your loans.

A common debt reduction strategy is compiling all of your debt in order from highest interest rate to lowest and then paying it off in that order. This is called the avalanche method -- starting from the top and moving down, like an avalanche. In essence, you are paying off the loans with the highest interest rate, saving you money. When you have paid off your first loan, you move on to the one with the next highest interest rate.

The snowball method of debt repayment is useful to gain momentum and confidence in paying off your loans. You start with your lowest outstanding balance -- regardless of interest rate -- and pay it off. Then, you move on to your next lowest and pay it off. You continue in this manner until you reach your highest. Like a snowball, you start small with more manageable debts and, once rolling, get bigger as time goes on.

What Kind of Information Is Required in Lending Loans?

4:10 PM No comments

When a person seeks to take out a loan, he will generally be required to furnish the lender with a significant amount of information before the lender will allow him to borrow the money. This lender uses this information to determine the borrower's creditworthiness -- the likelihood that he will pay back any money loaned to him. The lender will likely request that the borrower provide him with a number of documents attesting to various aspects of his financial history.

Most lenders will request that the borrower provide documents that speak to his current income. Lenders may request one or more documents, including check stubs from a recent date and tax forms such as W-2s, which indicate the amount of money that the person made within a given period of time. Self-employed people may need to seek other means of providing proof of income, such as bank account documents that demonstrate regular payments by clients.

Lenders often ask potential borrowers to show documentation related to their current assets and debts. This may include liquid assets, such as money in savings accounts and securities, as well as physical assets, such as houses and cars. Generally, statements from banks and financial brokerages will suffice. In addition, lenders will wish to see any documents indicating whether the loan applicant has any outstanding debts or pending creditor actions, such as liens on assets.

Most creditors will pull an applicant's credit report -- a dossier of information about her past loans -- as a means of determining her creditworthiness. This report, used as the basis for calculating a person's credit score, includes records of loans and other forms of credit that the person has taken out in recent years, as well as whether these loans were paid back. This information is particularly important in determining the terms a person receives on a loan.

Many lenders are unwilling to make loans to individuals without knowing the purpose of the loan. This is particularly true of business loans, but also for certain types of secured loans, such as loans used for houses and cars. In these cases, lenders will want to know the exact property or vehicle that the loan is being used to purchase. However, many lenders do not ask the loan's purpose.

How Do I Get a Free Annual Credit Score?

6:57 PM No comments

According to the Federal Trade Commission (FTC), the only official and legitimate website that offers a free annual credit report is Annual Credit Report. The FTC warns that other sites claiming to offer free credit reports typically entice consumers to sign up for free trials for financial services that quickly become paid subscriptions that may be difficult to cancel.

Instructions

Go to the Annual Credit Report website, select your state and click on the button to request a report.

On the next page, enter personal information and click the "Continue" button. Personal information will include name, birth date, Social Security number, current address and previous address if you have not lived at your current address for at least two years.

Select which reports you want to see. You can select any or all of the following reports: Equifax, Transunion and Experian. These are the major credit-reporting agencies.

Select "Next" to view the first report.

Review personal information on the next page and click the Continue button.

Answer a few personal and financial questions to verify your identity. Questions vary, but usually include questions about previous addresses, loan companies presently or previously used and the payment amount on mortgage or car loans. On the next page select Submit Order Now.

Click View and Print Your Online Report Online.

After viewing and printing the report, choose the button that says "Return to AnnualCreditReport.com" to go back to see the next report selected.

How to Get a High Credit Score

6:36 PM No comments

Most of us want to know our credit scores. But knowing your credit score and knowing how to improve it are two different things. A credit score is a number that provides a quick estimate of how good a credit risk you are. There are several credit score systems, but the one that is by far the most common ranges from a low of 300 to a maximum score of 850. This is the FICO score named for Fair, Isaacs &Co., who provide this credit score system to businesses. This guide will explain how your FICO score works and how to get a high credit score.

Instructions

Understand what makes up your credit score. There are five components, each of which counts as part of your score. These are 1) on-time payment history (35% of your FICO score), 2) Total debt you owe (30%), 3) how long you have used credit (15%), 4) recent account changes (10%) and 5) what types of credit you have (10%).

Make timely payments. This is the single most important thing you can do to get a high credit score. If you have had late payments in the past, dont be discouraged. There is no quick fix, but your recent payment history (1-2 years) is weighted more heavily. So if you make payments on time for a year or two, this will bring your credit score up. Another point to be aware of is that its not only whether you are late on a payment that counts, but how late. If you run into real trouble, contact creditors and do whatever you can to prevent going over 30 days past due.

Total up your outstanding debt obligations. If you have a lot of debt compared to your income this will lower your credit score more. The way to fix this problem is to pay down credit cards and pay off some other obligations. Home mortgages complicate this a little because the amount is large compared to most other debts but doesnt hurt your credit score. The main reason is this: when a person rents, the rent money is not available to service debt. However, when someone buys a home the rent money becomes available to pay the mortgage, increasing the total amount of income available to pay debts.

Raise your credit score simply by staying an active user of credit. The longer your credit history the more stable and reliable you look on a credit report. For this reason, even if you are fortunate enough to pay off everything you owe, keep at least 1 or 2 credit accounts open and make regular payments.

Dont open, close, or apply for a lot of credit accounts. This is how you can raise your credit score the fastest. How many credit accounts you open and close is factored into your credit score. However, only your recent history (6 months to a year) is counted here. Occasionally opening or closing an account wont count against you. Avoid opening a new credit account on impulse no matter how tempting a companys introductory offer may be.

Avoid junk debt. The final factor that your credit score takes into account is the mix of debt you have. Long term secured debt like a mortgage or a car installment loan is better debt to have, dollar for dollar. Credit card debt is not secured and usually has a short repayment period and should be kept to a fairly low level. The fact that you have a credit card isnt negative in and of itself. What counts off is having too large a proportion of your total debt as this type of debt.

How to Place a Judgment Lien on a Car

5:51 PM No comments

Collecting a debt that the debtor refuses to pay is a frustrating process for any creditor. Fortunately, the law allows you specific collection remedies if you hold a judgment against an individual who owes you money. A judgment holder has the right to attach a lien to the debtor's car title and use that lien to repossess the vehicle. The judgment holder can then sell the vehicle in an effort to collect the debt. Even if you have no intentions of actually seizing and selling the debtor's car, the fact that you have the legal right to do so gives you additional leverage to recover the debt.

Instructions

File a lawsuit against the individual who owes you money in the county where he lives. Serve the debtor with a summons and complaint form. Service laws vary by state, but most states dictate that the plaintiff must either hire a process service to serve the defendant or serve the defendant the documents via certified mail.

Gather evidence proving that the defendant owes you a debt that she did not pay. Come to court on the hearing date and present your evidence to the judge. The defendant also has the right to present evidence supporting her position. The judge will review both sides of the case and make a ruling. If the debtor does not appear at the hearing the judge will automatically rule in your favor -- making you a judgment holder by default.

Request a certified copy of your judgment from the court clerk.

Visit the Department of Motor Vehicles in the debtor's state. Request a title search form. The title of the form will differ depending on the state.

Fill out the title search form and return it to the DMV along with a copy of the judgment proving that you have the legal right to access the debtor's motor vehicle records. The DMV will then provide you with information about any cars the debtor owns, including the make, model and vehicle identification number.

Ask the DMV for a security interest form. Like the title search form, the official title and number of the security interest form will differ by state. Fill out the form and return it to the DMV. Doing so attaches a lien to the debtor's car. He cannot sell his car without first paying off the judgment and clearing the car's title.

How to Add Credit Lines to Your Credit Report

4:23 PM No comments

Each record of debt that appears within your credit report is called a "trade line". A trade line contains all important information about the debt such as the type of debt it is, how much you owe, the company making the report, and the payment history on the account. The trade line of each debt on your credit report must also reflect the contact information for the company reporting it. There are two types of trade lines that consumers may add to their credit reports: revolving debt, such as credit cards, and installment debt, such as loans. Because the types of debt you carry have a 10% effect on your credit score, adding trade lines can potentially be beneficial to you by creating a balance of debt and boosting your score. Carrying different types of debt also benefits you by making you appear well rounded to future lenders.

Instructions

Pull your credit reports from the credit bureaus, Experian, Equifax, and TransUnion. Not all creditors report to all three credit bureaus. By pulling all three of your credit reports you know which credit reports require new trade lines and which do not.

Review your credit reports for both revolving and installment debt. You can comfortably have up to five revolving trade lines for each installment trade line.

Contact any companies with which you currently have a positive debt record and ask if they are able to report your payment history to the credit bureaus. Not all companies are able to do this, but of those that are, some may be willing to oblige you. A positive trade line being added to your credit history is good for your credit score whether or not it helps your debt balance.

Apply for a credit card if you lack revolving debt. Only apply for one card at a time and only if you are reasonably certain your application will be approved.

Charge a balance on your credit card and make regular payments on that balance every month. This will cause a trade line and payment history to appear on your credit report. If you do not use the card, you may not receive a trade line at all since some credit card companies do not report accounts to the credit bureaus until the card is used.

Apply for a personal loan if you lack installment debt. Explain to your lender that your goal is to add a trade line to your report. This can sometimes help pave the way for loan approval if you do not have an extensive credit history. Borrowing against funds you already have in the bank will also increase your chances for approval. Installment loan trade lines will appear on your credit report within 30 days after you are approved.

Monitor your credit reports to be certain your new trade lines are reporting properly. If a new account does not appear on your credit history within 60 days, call the company and report the oversight.

How to Consolidate Secured Debt Into One Loan

12:36 PM No comments

Many times when you look over your finances, you realize you have more than one loan tied to your home. Looking closer, you may see a big difference between the rates on the first mortgage and second (and maybe even third). It's time to consolidate when you can combine the two loans into one and save money per month and in interest in the long run. A good rule of thumb: Consider consolidation when you get at least 1 percent difference in your monthly mortgage rate (not the APR). If you can get a 2 percent difference or more, definitely consolidate.

Instructions

Look over your mortgage loan statements. Figure out the interest rate on both mortgages and what your overall monthly payments are. Find your most recent tax bill and get your most recent assessed value from it.

Contact a local mortgage loan officer for advice. Find out what average interest rates are on a first mortgage on the day you call. Find out the average fees associated with refinancing. After providing the information collected above, ask the loan officer whether he believes refinancing would be a viable option for you.

If you and the loan officer agree that refinancing is the way you should go, bring all of the collected items to the loan officer (the tax bill, bank statements, tax returns and pay stubs) and fill out an application. The loan officer may require additional documentation based on your situation, but the list is a good starting point.

The mortgage loan officer will have your house appraised and your application will go through the underwriting process. At this point, your only responsibility is to provide any information requested from any parties involved in the process--be it the banker, the appraiser, the closing attorney or title company.

Once your mortgage is closes, start paying on this mortgage to ensure that your credit score stays intact and that you benefit from the consolidation. Take the extra money that you would have been spending on your mortgage, now that your payments are lower, and use it to reduce your other debts. Once those are gone, start placing those funds down on the principal of your mortgage payment and you will be debt free sooner than you imagined.

Debt Prevention

9:14 PM No comments

Debt includes monies owed to creditors and lenders. Buying a house or car often involves getting a loan due to the expensive nature of these items. Maintaining a good credit score calls for managing debt well. You can reduce your debt and prevent debt on credit cards with a few simple tips.

Budgeting is key to preventing debt. Balances on credit cards increase when consumers use their cards to make everyday purchases. Credit cards are helpful in emergencies but they shouldn't be used to fulfill every desire. Plan out a monthly budget and decide how much to spend on items outside recurring expenses. Going over budget and spending too much on shopping, dining out and recreation can take money away from bills, thereby creating the temptation to use a credit card to meet basic needs.

There are good reasons to use a credit card, such as paying for an emergency car repair or medical bills. But when balances stay on a credit card for several months, interest incurs and it becomes difficult to pay down the debt. Resolving to pay off new charges each month helps prevent debt. If you can't pay off the balance completely, devise a payment plan to do so within the next few months.

Having a cash emergency savings is another effective method to preventing debt. With cash in your savings account, you can withdraw funds to meet emergency expenses so you don't have to rely on credit cards. Saving money can prove challenging, especially if you don't have a lot of disposable income. Start small and resolve to deposit a percentage of your pay into a savings account -- perhaps 10 percent. Rather than spend tax return money or work bonuses, put this cash into savings and save it for a rainy day.

Credit card companies often solicit new business by sending preapproved credit card offers in the mail. And retail cashiers may ask you to complete a credit card application to save on the purchase. Decline such offers for credit cards. The more credit cards in your possession, the more likely you are to use them. Also, leave your credit cards at home and carry cash to reduce and prevent new debt.

Will Any Payment on Debt Prevent Debt Collectors?

2:45 AM No comments

A payment on a debt can prevent debt collectors from taking further action against you, such as the filing of a lawsuit. Debt lawsuits can lead to court judgments and garnishment of your bank account or wages. Instead of ignoring debt collectors, communicate with them about your situation and negotiate a payment arrangement that you can afford.

Ignoring debt collectors and legal notices can result in a so-called "default judgment" in civil court. A default judgment is a legal decision signed by a judge after you fail to show up in court to respond to a lawsuit. In a debt lawsuit, the judgment orders you to pay a specific amount of money to a debt collector.

Bank garnishment allows debt collectors to freeze your bank account while withdrawing money to satisfy a judgment. A judge can sign a garnishment order after granting a judgment against you. While the account is frozen you are not allowed to use it except to deposit money. Garnishment is so challenging that some people are forced into bankruptcy, which lifts the garnishment order and releases the bank account.

Making one partial payment to a debt collector isn't going to end the collections process. Before contacting the debt collector you should create an overall strategy for resolving the debt. Settling the debt for less than the full amount owed---a process called debt settlement---is one strategy. The SmartMoney website reports that debt collectors will sometimes settle bad debts for 20 to 75 percent of the balance. Debt collectors can afford to offer the discount because they often purchase bad debts from original creditors for pennies on the dollar. A $5,000 credit card debt that you defaulted on may have been purchased by the debt collector for $500---or less.

A debt can be settled in a lump sum or in installments. If you're not ready to settle now, tell the debt collector you would like to make regular monthly payments as a show of good faith. Then when you have enough money to settle, call the debt collector to begin negotiations. By making regular monthly payments and staying in touch, it's likely that the debt collector will hold off on further collection efforts.

How to Apply for Government Funding for Bills

7:16 PM No comments

There are federal, state and local agencies available to help with your bill-paying problems. LIHEAP (Low Income Home Energy Assistance Program), for example, is a federal block program administered at the state level to assist people with their energy bills. Other agencies are available at the state and local levels. If you qualify, you can get help with utility bills, mortgage and rent payments and medical bills. The key is knowing where to look, who to call and how to apply.

Instructions

Call your local utility company directly if youre having trouble with a heating or electricity bill. Most utilities offer their own programs for low-income residents who qualify. DTE Energy in southeastern Michigan, for instance, offers help paying your heating bill, shut-off protection, credit counseling and medical emergency shut-off protection. If they cant help you directly, the company also will help you with state and federal government applications for programs such as the Earned Income Credit, Home Heating Credit and State Emergency Relief Program.

Contact LIHEAP. If youre having trouble finding or dealing with your local utility, call LIHEAP or go online. Not only does LIHEAP help with winter heating bills, the agency offers assistance in the hot summer months with cooling costs for those people deemed at risk. It also offers help relating to weatherization and energy-saving home repairs. The agency will direct you to an office in your area where you can apply for assistance. Youll need copies of your utility bills, proof of income (payroll stub), proof of other income such as social security or unemployment benefits, shut-off notices and documentation of household members.

Apply for help with mortgage or rent payments through federal and state agencies. Fannie Mae and Freddie Mac guarantee or own more than 30 million mortgages in the U.S. and the federal stimulus packages passed in 2009 and 2010 include funds to help homeowners. There are qualifiers. You must be three months or more behind on your mortgage payments and must still be living in your home. Programs include mortgage rate reduction to a level not more than 38 percent of monthly gross income or extending a mortgage from 30 to 40 years.

Contact your hospital or doctor if youre having problems with medical bills. They often will set up payment plans or even waive certain fees if youre eligible. The federal government and state agencies also offer health care and help with your bills, including free prescription drug programs. Medical billing advocates are available to help you negotiate with hospitals and doctors. Youll have to fill out applications for most services offered.

Get out of debt with debt consolidation and reduction services. Apply for help with credit card debt, taxes, auto loans and medical bills. You can apply for interest-free federal loans, credit card hardship programs and home equity loans.

What Is Fixable Credit?

6:01 PM No comments

Not everyone has perfect credit -- the type of Fair Isaac Corporation (FICO) scores that get you the best interest rates on everything from homes to cars -- but you can improve your credit scores over time. Your FICO score is comprised of your credit score from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. Those with the best credit have scores above 700 (850 is the highest score). At-risk consumers, those with scores in the 600 range, can take simple steps to improve credit ratings. Consumers with below-600 scores have the most work to do. Almost all credit problems are fixable over time if a consumer works to improve his credit rating.

Many factors can lead to a reduced credit score. Paying a bill late, even just one or two times, can affect your credit score. Too much debt is another credit blemish, especially if much of that debt is high risk, such as charges to credit cards. The largest credit problems though are bankruptcy, foreclosure and multiple delinquent payments, especially those that are more than 90 days late.

Credit scores in the 600 range are not too difficult to fix. In 2010, 9.5 percent of Americans had scores of 600 to 649 and another 11.9 percent had scores of 650 to 699. Although getting loans in this credit range is possible, rates may be higher. Consumers in this credit range should be extra diligent about paying bills on time and maintaining a clear credit record so that their credit continues to improve and not slide below 600.

Credit scores of less than 600 can be difficult to fix, and getting credit back on track can take years. Chapter 7 bankruptcy, for example, stays on your credit report for 10 years; foreclosure and Chapter 13 bankruptcy remain for seven years. Even consumers who have claimed bankruptcy can bring their credit back to the 600 range in three to four years by paying bills on time and keeping credit card balances low. The 15.9 percent of Americans with scores of 500 or less in 2010 have the toughest challenge. Sub-500 credit scores are difficult to overcome -- and getting loans can be nearly impossible -- but are fixable over many years of careful credit planning.

One of the best ways to fix a poor credit rating is to establish good credit habits. The Federal Reserve offers five tips for making the most of your credit score: Pay your bills on time, reduce your debt, establish a credit history, keep up with recent credit inquiries and diversify the types of credit you have open, but try not to keep to many unused accounts.

How to Cancel Joint Credit After a Divorce

12:32 AM No comments

Divorces typically involve the dividing of assets, the selling of property, the elimination of joint bank accounts and the cancellation of joint credit accounts. Canceling joint credit accounts after a divorce is imperative. Failing to do so can mean that one spouse remains liable for debt accumulated by the other spouse after the divorce -- which can spell trouble.

Instructions

Delete your spouse's name as an authorized user if you opened the account originally and had your spouse's name added simply as an authorized user. Contact the credit card company and request removal of your spouse's name and Social Security number.

Pay off credit card debts before dissolving any joint accounts and remember that, if both spouses are primary account holders of a credit account, both are liable for the balance -- even after canceling the account.

Contact the credit card company and ask the company to cancel the credit account. If one spouse wishes to retain the account in his name only, the credit card company is likely to request that he complete a new application and qualify as an individual account holder.

What Happens if You Have Credit Card Debt and You Don't File Bankruptcy?

7:54 PM No comments

Heavily reliance on credit cards can have a serious detrimental effect on your personal finances---as your credit card balances climb, you might find it difficult to make your minimum monthly payments. Eventually, over-the-limit fees, interest charges and late fees can drive your balances so high that bankruptcy may be an appropriate option. However, if you choose not to file bankruptcy, overwhelming credit card debt can still have serious consequences.

Unless you file bankruptcy or send a letter to your creditors stating that they should only communicate in writing, your creditors will continue to make telephone calls demanding payment. If you ignore their calls, they may also contact neighbors and family members to try to locate you. Your creditors will also continue sending letters demanding that you pay your account balances. They may also turn your accounts over to collection agencies.

Falling behind on your credit card payments can negatively impact your credit score---the father you fall behind, the more severe the impact on your creditworthiness. Creditors and collectors can file a report with credit bureaus each month your account is 30 or more days past due. Late payment reports stay on your credit file for seven years, and can reduce your chances of obtaining future credit.

Continuing to maintain past due balances on your credit cards in lieu of filing for bankruptcy protection can also put you at risk of legal action for your debts. A creditor or collection agency may file a lawsuit to obtain a money judgment against you, which the agency or creditor can then use to take money out of your wages and bank accounts in most states. A judgment also places a lien on real estate you own, preventing you from selling your home or land until you pay off the judgment debt.

In some cases, you may be able to avoid filing bankruptcy while minimizing the risk of lawsuits and other consequences of high credit card debt. Contact your creditors as soon as you realize that you will have trouble making your monthly payments---if you reach out to your creditors before your debt becomes unbearable, they may work with you to develop a repayment plan appropriate for your financial situation. Also, you may consider a credit counseling service, which works with creditors to lower interest rates, consolidate payments and stop creditor calls and letters.

When Do Negative Marks Drop Off Your Credit Report?

11:20 AM No comments

Your credit report is extremely important because it's used by lenders, landlords and even some employers to understand your level of financial responsibility. The best way to keep your credit score healthy is to avoid accruing negative marks. However, if you already have blemishes on your report, usually only time will eliminate them.

The two primary forms of personal bankruptcy, Chapter 13 and Chapter 7, stay on your credit report for 10 years. Both the date of your filing and the date of discharge are marked on your credit report. Chapter 13 bankruptcy is a repayment plan, which allows debtors to keep their assets in exchange for three to five years of debt payments. After that period, the government discharges certain debts. Chapter 7 is thought of as a straight bankruptcy, which includes the liquidation of non-exempt assets in exchange for discharges of certain debts. Neither type of personal bankruptcy generally eliminates child support, taxes, alimony or fines. Some student loan obligations are also not exempt.

Any other negative marks, such as accounts that have been settled or sent to collections, or late payments, will remain on your credit report for seven years from the original delinquency date. Some agencies exist claiming they can remove negative marks from your credit report through a loophole in the system; however, no such loophole exists. Also, according to finance writer Steve Bucci, even accounts you've paid off cannot be removed from your credit report. All accurate negative information will stick around for seven years. After 7 1/2 years, the negative information should automatically fall off your report. (See References 3)

After the seven-year period, you may still see old negative information listed. Often, if your account went into collections, the date of the original delinquency and the date the account went to a collection agency are reported separately. However, only the date of your delinquency with your original creditor should matter. To have the information of the collections agency removed, you must write a letter to the credit bureaus, including letters from the collection agencies regarding your accounts, to prove that they relate specifically to the account in question. Bankrate's bankruptcy adviser Justin Harelik recommends including proof of your identity (a copy of your driver's license), two proofs of address, a copy of your Social Security card, the relevant pages from your credit report and the corresponding letters from the collections agencies as documentation in support of your letters. Each negative mark that the credit bureau removes may bump your score up by 10 points.

While you cannot automatically eliminate negative marks before their seven-year due date, you can keep your credit score as healthy as possible by checking your credit report regularly. You are entitled to one free copy of your credit report from each of the three credit bureaus every year through the Annual Credit Report website. You may order all three reports at once, or space them out over the course of the year. Report any negative marks that have been made in error immediately to the credit bureau and reporting creditor. All discrepancies must be reviewed unless deemed frivolous, usually within 30 days.

How to Verify Financial Statements

5:12 PM No comments

Verifying financial documents is important for many reasons. For example, companies for sale may offer incomplete financial information for fear that a full disclosure could negatively affect the sales price. Or an entrepreneur applying for an unsecured loan could offer financial statements that inflate his income to qualify for the loan. Some people may also have reasons for under-reporting their income, especially in divorce or child support cases. Verifying financial statements is possible in several ways.

Instructions

Request audited financial statements signed by a certified public accountant. Further investigation of the financial statements is still necessary, but starting with audited statements offers initial verification.

Ask for bank statements to verify deposits. This is helpful for verifying income listed on financial statements. Also check bank statements for canceled checks and other payments to make certain actual expenses are in line with information included in the financial statements. This is important for preventing businesses from hiding expenses and making the business seem more profitable than it really is.

Ask for tax records in business deals. Also, ask for personal federal tax records for the owner, if applicable. Compare income and expenses listed on business tax returns against information in the financial statements. Obtaining the owner's tax returns is important if the business is a sole proprietorship. People with sole proprietorship businesses list business expense and income on their personal tax return.

Ask for W-2 forms from individuals, if necessary, to compare with personal information listed on financial statements. Also, ask individuals to provide more information about assets, such as the value of real estate they claim to own. Signed appraisals by licensed appraisers are helpful in verifying the value of assets.

Direct your accountant to review the audited financial statements, bank records and other supporting information for inconsistencies that you might have missed.

Order a forensic audit of the financial statements if your accountant finds inconsistencies.

Can You Be Discharged From Personal Private Student Loans?

8:41 PM No comments

Obtaining a private student loan can be as easy as calling a lender on the telephone or filling out an online application. While you can easily be approved for tens of thousands of dollars within minutes, the repayment obligation could potentially last a lifetime. There is no such thing as loan cancellation or loan forgiveness when it comes to private student loans.

Even though most other forms of consumer and personal debt such as car loans, credit cards and mortgages can be discharged through bankruptcy proceedings, bankruptcy laws restrict borrowers from discharging their private student loan debt. Under the law, exceptions are only made in cases of "undue hardship." Even then, only a portion of the debt can be shaved off. Bankruptcy judges have varying interpretations of what constitutes undue hardship.

To determine whether a student loan can be discharged based on undue hardship, most bankruptcy courts use a three-part assessment called the Brunner Test, which is named for an appeals court decision (Brunner v. New York State Higher Education Services Corp.). The three requirements of the Brunner Test are: The borrower cannot maintain, based on current income and expenses, a "minimal" standard of living for themselves and their dependents if forced to repay the loans. Second, additional circumstances exist indicating that this state of financial affairs is likely to persist for a significant portion of the repayment period of the student loans. Third, the borrower has made good faith effort to repay the loans, which includes striving to increase his income by going back to school for more job training and attempting to consolidate the loans. As of 2011, court interpretations of the three criteria have become increasingly stringent.

Private student loans were not always as difficult to discharge as they are in 2011. In the early 1970s, many people filed bankruptcy specifically to get rid of student loan debt. Congress took steps to prevent debtors from getting rid of student loan debts through discharge within five years of graduation. The bankruptcy code was changed in the 1990s to extend the discharge limit to seven years. In 2005, the law was changed again, making it nearly impossible to discharge personal private students loans by filing bankruptcy.

Although federally guaranteed student loans are not easily cancelled in bankruptcy filings either, they do offer fixed interest rates, flexible payment options and other consumer safeguards that make them a more favorable borrowing alternative for students. While many private lenders can, at their discretion, offer a deferment and sometimes a forbearance, they are not legally required to do so, as is the case with federal loans if borrowers meet certain requirements.

What Happens If Your Wages Are Garnished & You Are Laid Off?

4:18 PM No comments

Creditors use wage garnishment to recover debts that you do not pay voluntarily. If your creditor wins a civil judgment against you via a lawsuit, it uses its civil judgment as grounds for requesting a wage garnishment order that it subsequently delivers to your employer. Once it receives the wage garnishment order, your employer complies by withholding the maximum amount of your wages permitted under the law and remitting the funds to the creditor as partial payment for the debt. This process continues until you either pay what you owe in full or lose your job.

Regardless of whether you lose your job via a layoff or quit your job voluntarily, a wage garnishment order terminates when your employment terminates. When you leave your job, you stop receiving wages, and a creditor cannot garnish something that does not exist. When your creditor can no longer garnish your wages, it may pursue other debt recovery options after you lose your job, such as placing a levy on your bank accounts or executing a lien against your home.

If you receive unemployment after being laid off, your unemployment pay is exempt from garnishment under federal law. While your creditor cannot intercept a portion of your unemployment compensation before you receive it, it can seize the payments from your bank account unless you specify to your bank and to the creditor that the payments represent exempt income and are not subject to garnishment. The U.S. Department of the Treasury notes that consumers must fill out a bank exemption claim notice in order to protect exempt funds from seizure.

Unlike unemployment compensation, any severance pay you receive after your employer lays you off is considered wages and subject to garnishment. Federal garnishment laws allow commercial creditors, such as collection agencies and credit card companies, to seize up to 25 percent of your severance package. If your garnishment was for unpaid child support, your creditor can seize up to 65 percent of your severance package, depending on your current economic situation and whether or not your child support is more than 12 weeks in arrears.

When you find a new job, your creditor can garnish your wages with your new employer, but only if it returns to court and files for a new wage garnishment order and has the order served on your new employer. If the judgment permitting the creditor to garnish your wages expires in the time between being laid off from your old job and finding a new job, you sill owe the debt but the creditor can no longer seize your pay via a wage garnishment.

Getting Out Of Debt: Know Your Alternatives

7:18 PM No comments

Alternatives are available to help you erase your consumer debt and improve your finances. Excessive debt can take a large percentage of your monthly income, and high debts can result in a reduced FICO credit rating. Low ratings hinder your ability to buy homes and cars, and to get a credit card. However, debt elimination is possible, as long as you know your options.

Getting out of debt doesn't necessarily require the help of a professional. Many people have paid off their debts by simply changing the way they manage credit and understanding how bad habits can bring on new debts. For starters, rein in credit card use. Pulling out credit cards to buy items increases your balances. Once you've put a stop to credit card use, start making bigger payments to knock down the principal. Minimum payments are pointless at this stage, and often only reduce the new interest charges for the previous month.

Consolidating your debts makes it easier to pay off your balances. Combining all your outstanding balances into one loan, and then paying a low interest rate on such loans, reduces monthly payments, and pays off the principal quicker. Depending on your credit rating, you can apply for a debt consolidation loan with your bank, or use your home's equity to consolidate debt. Discuss options with a loan officer and weigh the pros and cons of home equity loans. Equity loans are easier to acquire if you have adequate equity in your property, but if you are unable to pay the loan, you risk losing your property.

In reality, unless you come across a huge lump sum of cash, you may never pay off excessive credit card debt. Rather than make minimum payments for the next 20 or more years, talk to your creditor about a debt settlement. Ask about eligibility, and then offer a settlement amount to satisfy the debt and remove the obligation. Debt settlements do offer a quick fix. However, settling debt can result in a damaged credit rating because creditors often report the settlement to the credit bureaus.

Debtors often do whatever possible to avoid bankruptcy, and some creditors work with debtors to help them avoid bankruptcy. Bankruptcy should be a last resort because the consequences are long lasting. Once a bankruptcy court eliminates your debts, creditors will report debts as "included in bankruptcy" to the credit bureaus. Bankruptcies stay on credit reports for 10 years. Seeing this entry may prompt future creditors to deny a credit application or charge an enormous interest rate.

What Credit Checks Are Done For a Credit Card Application?

1:48 PM No comments

A credit card application is a very common financial activity, and credit card companies are well versed in dealing with these applications. As part of the process, the company will order a basic credit check for the borrower in question, which yields pertinent financial information and shows the FICO score, the common credit score referred to by many financial institutions. This credit check is one of the most important parts of the application, but even borrowers with bad credit can often find a way to get cards.

Credit checks for FICO scores and other basic information are relatively the same. The most important factor is a soft check versus a hard check. A soft check is conducted for only basic information and rarely affects the credit score it. A hard check is more detailed and is the type of check required for a credit card application, and has the potential to drop a credit score by a few points. Multiple credit card applications will drop scores even further and make getting credit unlikely.

A credit check looks at several basic credit factors. The actual calculations to create the FICO score are protected and what credit card companies look at in the credit report can vary, but both past and present accounts play a factor. Present account balances are very important, and credit card companies prefer to see a history of payments made reliably and accounts that have been held for several years but have incurred relatively few late fees.

Credit card companies will not only search for credit. Borrowers also give income information in their application that can help them qualify for cards. Of course, income levels will not be as important to the companies as the credit history, and may not have as much of an impact as they would in a mortgage application, but they do play a part and may be able to tip the scales.

Most credit card companies offer a selection of "bad credit" credit cards, cards that are available even if borrowers only have minimal credit scores or little credit history. Sometimes credit companies do not even run a credit check at all for these cards. However, they come with a cost. These easy-to-get cards come with very low balance limits and very high interest rates, which can put an extra burden on borrowers.

Does Unemployment Count as Creditable Income for a Car Loan?

6:33 AM No comments

A person who loses his job may still need to purchase an automobile. Rather than spend cash to buy the car, the person may wish to take out a loan to help with the purchase. However, this may be difficult, as many lenders prefer that people who take out car loans have a steady income. Unemployment benefits may count as income in some contexts, but because they are temporary, lenders may or may not consider them creditable.

When a person applies for a car loan, the lender will want to be reassured that the person is capable of paying them back the money that they borrow. The potential buyer will be asked to present a number of different documents related to their financial health and credit history. People with more money and higher credit ratings are generally offered more loans at lower rates of interest.

Income counts as one of the primary determinants of whether a person is eligible to receive a loan. This is because a steady source of income is considered critical to helping a person pay back a loan. If a person lacks a steady source of income, he is more likely to have to pay higher rates of interest, as the loan is considered riskier, or he will be denied a loan entirely.

A person who receives unemployment benefits is likely earning an income that is only a portion of what he was making prior to losing his job. In addition to this income being relatively small, lenders may be wary of lending to someone who is surviving on employment, as unemployment benefits can only last -- as of April 2011 -- a maximum of 99 weeks. Most car loans last longer than this.

While lenders may be wary of lending to someone who is surviving on unemployment benefits, the risk that goes with a small, temporary source of income may be offset by various other factors. For example, a person may have an extremely high credit rating, a large bank account or other assets that he can cite as proof of his ability to pay back the loan. This may make the loan less risky and qualify him for a lower rate of interest.

How to Get Approved for a Credit Card With Bad Credit by Paying a Deposit

1:11 AM 1 comment

If you are struggling with debt or simply just bad credit, your options for financing are limited. Most major lenders will not lend to consumers with poor credit, and nearly all local credit unions and banks only finance those with excellent credit. However, you do have one guaranteed option: a secured credit card. To obtain a secured credit card, you need to make an initial deposit.

Instructions

Check your credit first. You may have the scores to qualify you for a no-deposit credit card. Visit the website in the Resource section. This will give you a free copy of your report. Pay for a FICO score also. This is a three-digit number between 300 and 850. If your score is above 600, you may have a chance with some finance companies.

Check your bank account. Most secured credit cards require an up-front deposit of at least $200. Your deposit will be the credit line on the credit card. Your money will be securing the credit you use on the account. Without a deposit, you cannot open a secured credit card.

Research secured credit cards. Only consider those that report to the credit bureaus. This is the biggest benefit of the secured credit card. If the card does not report to the bureaus, it is simply a glorified prepaid debit card. Most major banks offer some form of credit-reportable secured card.

Choose the card that most appeals to you. Some cards have retail discounts, others can earn you miles, some are fee-free; the account should reflect your priorities.

Pay the creditor the initial deposit either online or with a check. You cannot use your card until these funds have cleared. Most creditors set up a "collateral" account--a savings account specifically used to secure your card.

How to Get Help With Computer Financing With Bad Credit

5:18 AM No comments

When you have bad credit, it may seem impossible to get enough money to finance a computer. But just because you have bad credit, you don't have to put your dreams of entering the technological world on hold. There are several options available to get your computer financed, even while having a bad credit score.

Instructions

Rent to own the computer. Although you could possibly end up paying twice as much in interest fees, virtually anyone can get a computer by renting to own it. These companies don't do a credit check so they absorb the risk by raising the interest fee. Rent A Center offers both laptops and desktops, and you can start your order online.

Additionally, when you rent to own a computer, the company is responsible for any repairs during the term of your agreement. If your hard drive crashes six months after the purchase, the rental center will replace it at no cost to you.

Finance through a computer firm. Choose a company that specializes in providing computers to individuals with bad credit, such as Blue Hippo. You make an initial down payment and then pay a fee each week for the next year. After six to 13 weeks of consecutive payments, Blue Hippo will finance the remaining balance and ship the computer to you. The term is only for one year, and you will own the computer outright after the term is up. You can even pay the computer off sooner if you choose.

Take out a personal loan through a bank or loan company. A bank might not approve you with bad credit, but you can almost always get a personal loan through a loan company. Most loan companies are designed to help people with bad credit, although the interest rate will be higher than going through a traditional bank.

Apply for a credit card. For a list of the top credit cards available to people with bad credit, visit the Credit Cards Assist website. If the credit limit you are offered isn't high enough to cover the entire cost of the computer, consider saving up some cash or combining this with one of the other options listed. Make the monthly payments on time to avoid late fees or a spike in interest rate.

Finance through the computer company. Some companies, such as Dell or Gateway, offer financing options for their computers. It works much like a credit card, as you will receive a statement monthly by mail or e-mail. The interest rate is usually high, but they sometimes offer plans that offer no interest if the computer is paid off within nine months.

How to Reinstate My License After Suspension Due to Back Child Support in Georgia

9:40 PM No comments

Having your license suspended in Georgia due to back child support makes routine activities difficult, such as getting to work or school. Your license can be suspended in Georgia if you pay court-ordered support and are behind in payments by the equivalent of two month's worth of normal or back-owed amounts. You are not legally allowed to drive while your license is suspended and are subject to arrest, fines and imprisonment if caught driving.

Instructions

Contact the Georgia child support office that is handling your case. Check letters from the office for the phone number and worker's name. Ask how much support you currently owe and write the answer down.

Collect the money you need to pay the child support if possible. Get a check or money order in the amount of support due. If you are not able to afford the total amount, Georgia allows for repayment agreements to lift license suspensions under certain circumstances such as financial hardship. Write your $TARS number on the payment method; $TARS is Georgia's Support, Tracking, Accounting and Reporting System, and you should have received a $TARS case number for your support account. Gather your financial documentation such as pay stubs, bills and proof of other income and expenses to document why you cannot pay the full amount due.

Visit the child support office. Pay the child support in full if possible. Request a repayment agreement to bring you into compliance with the order if you cannot pay in full. Give the worker the amount you were able to afford along with your supporting financial papers. Ask for a signed Notice of Compliance and Request for Release Form as required under Georgia law to lift your suspension if you are going straight to the DMV.

Send the reinstatement fee to the Georgia Office of Child Support handing your case, if you do not need your license reinstated immediately. The fee is $25 as of 2010. Write a check or money order made out to "DMVS." Write your $TARS number on the payment method. Mail the payment to Child Support Unit, DPS; P.O. Box 105182; Atlanta, GA 30348.

Visit your local Department of Motor Vehicle Safety (DMVS) if you need the license suspension removed the same day. Ask to speak to a customer service representative about lifting a license suspension. Give the representative the original Notice of Compliance and Request for Release Form. Fill out the form given to you by the representative; the fee to have your suspension lifted immediately is $35 as of 2010.

Request an administrative hearing on your suspension if you cannot pay in full, establish an agreement due to extenuating circumstances, such as bills from a medical illness, or if you believe the suspension was invalid. Submit your request in writing to the appropriate Georgia Child Support Office. You'll receive a hearing notice from the Georgia Office of State Administration Hearings (OSHA). Attend the hearing and bring any documents that support your case, such as proof of hardship or proof of support payment. Ask the support agent for instructions for reinstating your license if you win your hearing; the agency may handle reinstatement for you.

File for bankruptcy if you cannot get your suspension lifted via traditional means and need your license back. Your license will be reinstated once the Georgia Child Support Enforcement Office notifies the DMV. Note that you are still liable for most support payments during bankruptcy proceedings.

Is There Consumer Credit Counseling for Senior Citizens?

1:10 PM No comments

Anyone who is having debt management problems, including senior citizens, can take advantage of credit counseling. Seniors are often on fixed incomes, which adds an additional challenge to their debt issues. Legitimate nonprofit credit counseling companies tailor their services to individual clients, including seniors, and offer various options based on the client's specific financial resources and obligations.

Consumer credit counseling means contacting a counseling firm to discuss your financial situation and get suggestions for managing your debt problems. The counselor's advice might include helping the client make a budget, referring the person to financial management seminars or even negotiating with the creditors to make and administer a multi-year debt management plan, according to the Federal Trade Commission. Counselors often get concessions from creditors, like suspension of late payment fees and lower interest, and their payment plans take a senior's income limitations into account. Most plans are geared to wipe out the debt completely in three to four years.

Credit counselors typically meet with clients in person, but many firms deliver services in a variety of ways, including Internet chat and telephone calls, the FTC advises. This variety makes credit counseling readily available to senior citizens who have health or mobility problems or other issues that keep them home-bound. Such people can discuss their issues over the phone or online rather than having to make the trip to an office.

Seniors can find credit counselors through two professional organizations, the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies, according to the Better Business Bureau. Professional association membership, counselors trained by an outside agency and proper state licensing are all signs of a legitimate counseling company. Many firms tout their nonprofit status, but the BBB warns that this does not automatically mean they are reputable. Check their BBB rating and note the number of recent complaints and whether they were resolved satisfactorily. Ask about the cost up front because many counselors are affordable or provide free services, while some impose excessive fees.

Credit repair companies and debt settlement firms offer help to people with bill problems, but Sid Kirchheimer of AARP Bulletin advises senior citizens to use credit counselors instead because repair and settlement services are costly and often ineffective. Settlement companies negotiate for lower bill payoff amounts and charge a percentage of the money saved by the client. Credit repair companies dispute questionable negative data on credit reports. but they often challenge items without an appropriate reason, which causes them to be dismissed. Counseling is low-cost and effective compared to these other methods.

How to Pay Off Debt in Three Steps

3:06 PM No comments

This is a simple three-step guide to paying off debts based on your financial personality.

Instructions

Make a list of all of your debts, including the name, balance, minimum payment amount, and interest rate.

If meeting small, incremental goals or milestones keeps you motivated, divide each balance by the minimum payment, then sort the list from the lowest result to the highest. If you are good at keeping your eyes on the prize no matter how far off it seems, sort the list from highest interest rate to the lowest.

The first method will cost more in the long run, but gives you an almost immediate sense of accomplishment and momentum since it knocks out accounts quicker. The second method saves you the most money in the long run, but since the focus is on the most expensive debt, not the fastest to pay off, it may feel like its taking a while to get anywhere.

Take the first debt on your list, and for every month until its paid off, pay the minimum due plus anything else you can afford to put towards it. Just pay the minimum on all of the other debts. When the first debt is paid off, take the amount you were paying on it (the minimum + the extra you could afford), and add it to the minimum balance for the next debt on the list. Pay this new amount on the second debt until it is paid off, continuing to just pay the minimum on all other debts. Lather, Rinse, Repeat. Do this for all of your debts until everything is paid off.

Can You Refinance Your House With Your Car Payment Included?

1:34 PM No comments

There are many options when it comes to debt consolidation, including refinancing your auto loan in your home mortgage. This not only reduces the number of bills you pay on a monthly basis, it also has other benefits.

Refinancing your house to include your car payment may reduce your overall expenses for the month. You may also choose to reduce your insurance coverage and lower this expense as well.

Many people choose to pay off car loans by refinancing their house because home mortgage interest rates are so low. If you originally financed your auto loan at a higher rate of interest, you may see a significant savings in shifting this debt to your home mortgage.

For most tax payers, home mortgage interest is tax deductible. This is another benefit to refinancing your home to include your car payment, as interest on car loans do not carry a tax benefit.

Can a Credit Card Company Place a Lien in Texas?

7:46 AM No comments

If you fail to pay back credit card debt, your creditor can file suit against you in a court of law. Texas is one of a few states that prohibits creditors from seeking wage garnishment as a way to enforce a judgment. However, a creditor can plain a lien against your nonexempt property, as defined by Texas statute.

If you don't pay back credit card debt in Texas, a credit card company cannot place a lien against your nonexempt property or otherwise forcibly collect the money you owe without going through the litigation process. A creditor who wants to file suit against you for credit card debt must adhere to the state's statute of limitations. A statute of limitations, which can apply to both civil and criminal actions, imposes certain time limits after a cause of action occurs during which a suit can be filed. In Texas, creditors have four years in which to bring suit against you for credit card debt.

Before a creditor places a lien against your nonexempt property, it must first go through Texas' civil litigation process and prove to a court of law that you rightfully owe the debt. When a creditor files suit against you, they must give you legal notice in the form of a citation, delivered to you by a process server. The court may render a decision without your case actually going to trial; for example, if your creditor produces convincing evidence that you owe credit card debt and you have no defense, a court may issue a summary judgment in the favor of your creditor -- or in your favor, if the creditor has no grounds in which to file suit. Also, if you fail to respond to the notification, the court may issue a default judgment in favor of your creditor. If the court finds in favor of your creditor, this in itself doesn't automatically put a lien against your nonexempt property or otherwise force collection of the debt. The court's decision simply gives your creditor express permission to enforce the judgment in the manner it chooses. In the state of Texas, putting a lien against your nonexempt property is an option your creditor may choose.

If your creditor opts to enforce a judgment with a lien against your property, the creditor must again go through the required legal steps. A creditor who opts for a judgment lien must file an abstract of judgment in the property records in every county where you currently hold nonexempt real property or where you may own real property in the future. Before the property is sold and/or the property deed transferred, the lien must be paid.

It's very difficult for creditors to collect a money judgment in Texas simply because so much property is considered nonexempt. State statute generously exempts real property that's defined as a homestead -- a house and 1 acre in an urban area or a house and up to 200 acres of land in a rural part of the state. Certain personal property, such as motor vehicles, heirlooms, furniture, farm animals and equipment, is also exempt from lien or seizure and sale if valued at no more than $60,000 if you're married or $30,000 if you're not.

Even if you have only nonexempt property against which a credit cannot file a lien, a judgment can still create problems for you. A judgment, a type of public record, endures on your credit report for at least seven years. A judgment negatively affects your credit rating and may make it difficult for you to get new credit or a loan. Consult an attorney if a credit card company has filed suit against you. If you cannot afford an attorney, seek help from low-cost or pro bono legal aid services in your area.

How to Remove a Lien on a Property

10:44 PM No comments

Discovering a lien when youre trying to sell or refinance a home or other piece of property can be unsettling. But it doesnt have to be a deal breaker. Here are steps you can take to prevent the problem--or address it when it occurs.

Instructions

Obtain a copy of your credit report and check it for liens.

If any lien results from outstanding debt, pay it off.

In either case--after the debt has been repayed, in the second--provide written proof that you have satisfied the debt and ask the lender to remove the lien. Be sure to request that they file written documentation that you have met your financial obligation. This is often called a release deed or release of lien.

Store your copy of the document in a safe place. You may need to furnish it in the future to prove that you have made reconveyance, which means you have satisfied the terms for removal of the lien.

Especially if you are dealing with a large lending company that may be overwhelmed with similar lien release requests, you may ask to have the release prepared for recording. When your copy of the document arrives, you will have to take it to the local recorder of deeds yourself to ensure that it becomes part of the public record.

How to Pay Off Credit Cards Sooner

7:47 PM No comments

Credit card debt can be very intimidating. Whether you had to make a large purchase by credit or your spending simply got out of hand, it can seem like you will never be able to pay more than the minimum payments on every account. This can leave you paying hundreds, if not thousands, of dollars in interest over the years. According to financial experts such as Dave Ramsey, there is an effective way to pay off your debts quickly while remaining psychologically and financially focused on the final goal.

Instructions

Make a list of all your credit card debts from the smallest balance to the largest. If you have more than one card with the same balance, you should give precedence to the one that has the higher interest rate.

Make all of your minimum payments to each card every month except the one with the lowest balance. To this card, you should pay the minimum balance as well as all the available funds you have. Do this each month until the lowest balance is paid off and move on to the next lowest one.

Continue to employ this method when you pay your bills each month. As you pay each balance off, add the minimum payment amount from the previous balances paid off to the payment for whatever card you are focusing on. Since you have already budgeted for that amount from the beginning, it will go further if you continue to apply it to your debt. Don't think of every balance paid off as one less payment per month, but as that much more than you can contribute to your debt. As you eliminate your debt, you will be able to take larger chunks out of the remaining balances.

Transfer balances whenever possible to any cards that offer a better interest rate while you are in the process of paying off your credit cards. The lower your interest is, the less you will ultimately pay and the faster you will be free of your debt.

How to Recover Bad Debts

11:23 AM No comments

Bad debts are accounts that a business has reported as a loss to the Internal Revenue Service (IRS) because they have been unable to collect the balance. This process is done for accounting purposes. The account is removed from the companys receivable listing. An account is considered a bad debt when there has not been a payment received in 180 days. Many businesses forward their bad debt accounts on to collection agencies for further collection activities. Recovering bad debts can be difficult, but it can be done. There are specific strategies than can be used.

Instructions

Locate the debtor. A collection agency sometimes has to locate a debtor, which is a process called skip tracing. Sometimes a debtor has relocated several times without leaving a forwarding address. Collection agencies will use every available resource to try and locate a past-due debtor. They can call a previous employer, landlord, personal references, neighbors and even credit references. Credit reports are obtained and the collection agency will call some of the other creditors to see if they have any information about the debtor. A collection agency can also use online resources such as a reverse phone number look-up.

Offer a settlement to the debtor. Many collection agencies will offer settlements to the debtor for a certain percentage of the balance. Settlements can range from 20 to 75 percent of the outstanding balance according to MSN's Money Central. If a debtor is looking to save money, they may come up with the funds to pay the settlement offer. A significant amount of money can be saved by the debtor if they accept the offer.

Make payment arrangements. Whenever a debtor has not paid on an account for 180 days they may be have experienced some type of financial difficulty such as losing their job. This and other situations can cause an extreme hardship. A collection agency may have to make payment arrangements that the debtor can pay assuming they have some source of income. Later on the payments can increase if the debtor's situation changes.

Take the debtor to court. If all else fails, the collection agency can go to court and file the appropriate legal documents to set up a court trial. The debtor will be notified and needs to attend. When ever a debtor fails to attend the trial the court will award a default judgment to the creditor which means the creditor is awarded the court decision, wins the case, and they receive a judgment against the debtor.

Execute the judgment. Once the judgment is awarded the collection or creditor is responsible for executing the judgment which means they have to try and collect the money due. A judgment permits a collection agency to achieve certain acts such as wage garnishment. Collection agencies can also freeze a bank account and collect the funds in the account. The court can assist with filling out the forms.

Can a Creditor Garnish a Joint Bank Account?

2:38 PM No comments

One of the harshest, yet most effective, ways in which a creditor can obtain the repayment of a debt is by garnishing funds from the bank account of an individual who owes it money. This is done by suing the debtor in court and winning. If a debtor refuses to pay the damages awarded the creditor, the creditor can petition the judge to seize the damages from the debtor's bank account. Joint bank accounts can be garnished, but only funds of the person who owes the money.

When a creditor is seeking payment of money from a legally certified debt, he has a number of options, depending on the state in which the debt is owed. Some states allow private creditors to garnish the wages of an individual or to seize money directly from the individual's bank account. In all cases, however, the creditor has to obtain the explicit permission of a judge to freeze someone's account.

To seize a bank account, the creditor must receive permission from the judge, who will issue an order of seizure. This order will be presented to the bank with which the debtor holds an account. The bank must comply with the order. However, the judge can only legally order an account to be frozen if it can be shown that the person named in the civil suit controls the account.

A judge can grant the seizure of a joint bank account if the debtor is one of the parties who holds it. However, this does not mean the creditor can seize money controlled by the other party who holds the account if that party is not named in the debt lawsuit. Rather, this money is exempt from seizure, provided the party can show the money is his and not the debtor's.

When and how money can be taken from a joint bank account depends in large part on state law. It also depends on the person with whom the debtor holds the bank account. For example, in a community-property state, a creditor may be able to seize all the funds held in an account controlled by a debtor and his wife. However, other states may forbid this.

Welcome to our website credit and debt managementr.

Saturday, July 31, 2010

Debt Utilization Ratio

Credit Card Limits

Debt to Income Ratio

Considerations

Credit Report

Timely Payments

Amounts Owed

Length of History

Considerations

Types of Debt Relief

Debt Consolidation

Debt Settlement

Considerations

Friday, July 30, 2010

Instructions

Debt Settlement

Credit Counseling

Thursday, July 29, 2010

Collection Efforts

Lawsuit

Resolutions

Considerations

Tuesday, July 27, 2010

Self-Payment Plans

Debt Settlement

Debt Consolidation

Chapter 13 Bankruptcy

State Laws

Payday Loans

Considerations

Effects

Written Notice Requirement

Peaceful Repossession

Notice of Redemption

Deficiency Judgment Law

Identify Problem

Budgeting

The Avalanche Method

The Snowball Method

Monday, July 26, 2010

Income

Assets and Debts

Credit History

Use of Loan

Saturday, July 24, 2010

Instructions

Instructions

Instructions

Instructions

Instructions

Assess Your Situation and Consolidate Your Debts

Friday, July 23, 2010

Budgeting

Managing New Charges

Emergency Savings

Avoid Temptation

Thursday, July 22, 2010

Default Judgments

Bank Garnishment

Negotiating Debt

Making An Offer

Wednesday, July 21, 2010

Instructions

Credit Blemishes

Fixable Credit

Difficult-to-Fix Credit

Steps to Improve Credit

Instructions

Sunday, July 18, 2010

Continued Collection Activity

Credit Damage

Legal Action

Alternatives

Bankruptcy

Other Negative Marks

Errors

Considerations

Saturday, July 17, 2010