Welcome to our website credit and debt managementr.

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

Sunday, February 27, 2011

How to Refinance My Mortgage to Consolidate My Bills

How to Refinance My Mortgage to Consolidate My Bills

Refinancing a mortgage for debt consolidation enables you to combine a first and second mortgage or a home equity loan into one fixed-rate mortgage with a set lower payment for the entire term of the loan. According to Bills.com, consolidation does not only help lower payments, but it can reduce interest rates and ensure you do not miss out on any potential tax breaks. There are a few steps to take to refinance your mortgage for debt consolidation.

Instructions

    1

    Calculate the balances of all the loans that you are considering consolidating. In other words, total the amount you owe on all of the loans that you want to combine to have one payment.

    2

    Perform some research to find out how much your home is currently worth on the open market. This value is important because it is how much your house would be worth to the bank and it will help establish how much of a refinance that you will qualify for. According to Bills.com, if your total balance owed is less than 80 percent of the home's worth then you should be able to refinance. Further, Bills.com says a balance of more than 80 percent, but less than 100 percent could qualify you but it would likely be at a higher interest rate. If you owe more than 100 percent or you owe more than your home is worth, you are not likely to be approved for a refinance loan.

    3

    Apply for a refinance loan at two or three different banks. Bills.com suggests you review the rates, fees and costs carefully for each offer and make a decision about which bank offers the best options. The lowest interest rates and fees usually win out and saves you money.

Is There a Program for Credit Card Debt Relief?

Credit card debt relief is available through a variety of public and private programs. However, as of 2011 there are no government grants or bailout programs for credit card debt relief. The government does assist by offering complete or partial elimination of credit card debt through various forms of bankruptcy. The government also makes free credit counseling available through partnerships with credit counseling agencies.

Debt Management Plans

    Debt management plans are commonly used to provide relief from excessive credit card debt. Credit counseling agencies certified by the U.S. Department of Housing and Urban Development offer the plans for a monthly fee. The counselors arrange payment plans with credit card companies with a goal of greatly eliminating or paying off the debt in about five years. Participants in the plan send a check to the counseling agency each month, with the agency making direct payments to credit card companies. The benefit is that card companies agree to end other debt collection efforts, such as credit card lawsuits, while the borrower continues with the plan.

Debt Settlement

    Debt settlement is usually self-directed or managed by a for-profit firm. The Federal Trade Commission recommends debt settlement as an excellent alternative to bankruptcy. Credit card debt is a leading cause of bankruptcy, with some people facing lawsuits, monetary judgments and wage garnishment because of runaway spending on credit cards. Settlement resolves credit card debt by allowing debtors to pay off accounts for a fraction of the balance -- usually for around 50 percent. Settlements are available in lump sump agreements or installments. The FTC recommends people self-manage debt settlement to avoid abuses by some for-profit firms. Credit counseling agencies offer advice for people wishing to settle their debts.

Chapter 7 Bankruptcy

    Chapter 7 bankruptcy provides quick credit card relief by completely eliminating credit card debt in as little as three months. However, income limits, which vary by the state, prevent many people from qualifying. People with low incomes or those who have not worked for more than six months usually qualify. The filing fee for Chapter 7 is $299 as of 2011. The bankruptcy courts recommend that people filing do so with assistance from a reputable bankruptcy attorney, although it is not required. Fees for an attorney vary, starting at several hundred dollars and up.

Chapter 13 Bankruptcy

    Chapter 13 is similar to Chapter 7 with one major difference. Chapter 13 is much longer because of a payment plan lasting three to five years. Most people looking only for credit card relief choose Chapter 7 over Chapter 13 -- if they qualify for Chapter 7. There are no income eligibility limits for Chapter 13. During the payment plan Chapter 13 participants follow a court-ordered budget allowing for reasonable living expenses. Money left over is paid to credit card companies and other unsecured credits. Credit card debt remaining at the end of the payment plan is eliminated. The filing fee is $274 as of 2011.

Saturday, February 26, 2011

Can I Cosign If I Have Bad Credit?

Credit ratings matter when it comes to co-signing loans, since lenders and creditors use co-signing as a method to protect themselves from financial losses. People sometimes benefit from co-signed accounts. However, there are times when a co-signed account makes a bad credit situation worse.

Process

    People who have bad credit usually can't be co-signers on loans and credit cards for others. Co-signing for someone essentially means you're willing to take a financial risk that a professional lender refuses to take. People need co-signers because they can't meet a lender's criteria for a good credit risk. Therefore, the co-signer's creditworthiness and income serve as a guarantee for the repayment of a loan or credit card account. That's one reason co-signers need to have good credit histories themselves.

Credit Ratings

    You can benefit from a co-signed account if you have bad credit and someone with good credit is willing to co-sign for you. In such cases, you would be the primary borrower or cardholder who is primarily responsible for paying off a loan or credit account. You could use a co-signed account to build a better credit history by making all of the required payments on time. Otherwise, you put the co-signer's good credit rating at risk by making late payments, since the late payments will appear in the co-signer's credit file as well as yours.

Other Options

    A family member or friend who wants you to co-sign on a loan or credit card has other options if you don't have a good enough credit rating to be a co-signer. For example, some auto lenders provide loans to people who have low credit scores without requiring them to get a co-signer. However, borrowers usually have to pay higher interest rates for these types of loans. Secured credit cards are available for people who can't qualify for traditional credit accounts. Secured card issuers usually require customers to deposit a certain amount of money into a savings account, which secures the account and establishes a credit line for the cardholder.

Considerations

    You could make your financial situation worse by getting involved with a co-signed account if you already have bad credit. That's true even if payments on a co-signed account are never late. For instance, you may have a bad credit rating partly because you have a lot of debt that's lowering your credit score. Adding a co-signed credit card or loan to the mix may cause your score to drop more because of the additional debt. It may be better to avoid opening any new accounts until you pay down the debt you already have.

Friday, February 25, 2011

What Does a Black Mark Mean on a Credit Report?

What Does a Black Mark Mean on a Credit Report?

Your credit report can be a scary read. Seeing how much you owe all at once is bad enough, but trying to figure out all the special codes, such as a black mark, can make it even more frustrating.

Definition

    A black mark may appear on a credit report if a payment on an account is over 30 days late, you default on a loan, file for bankruptcy, don't pay taxes, have a judgment filed against you, or have an account go to a collection agency.

Multiple Black Marks

    You can have more than one black mark on a single account (depending on how late the payment is) and multiple black marks on your overall credit report (for multiple delinquent accounts).

Avoiding Black Marks

    A creditor may not send information that would add a black mark to your credit report to the credit reporting agencies. However, this is rare, so the only sure way to avoid getting black marks on your credit report is by making payments on time and keeping up with who and what you owe.

Impact

    Having black marks on your credit report can prevent you from getting additional credit and loans for cars and houses. Also, potential employers may check your credit report before they consider hiring you. Black marks might indicate you're not be reliable or organized.

Resolution

    It takes time and money to wipe away black marks on your credit report. On-time payments made consistently for six months to a year will help the accounts with past-due payments, but if you have accounts that have fallen to a collection agency or delinquent loans, you should work with the creditors and lenders to rectify those quickly.

Cashing Out Retirement Vs. Paying Off Debt

Cashing Out Retirement Vs. Paying Off Debt

People who use retirement funds to pay off debts can end up deeper in debt than they were before they withdrew money from their retirement accounts. One problem is that people who feel pressed to get out of debt don't consider whether they have enough cash in retirement accounts to change their debt situation.

Deep in Debt

    Some people are too deep in debt to use retirement funds to pay off loans and credit cards effectively. A 2011 MSN Money article titled "Are You Foolish to Pay Your Bills?" notes that some people pay debts with retirement funds in an attempt to avoid bankruptcy or a home foreclosure. Yet many ultimately declare bankruptcy or lose their homes because they don't have enough in their retirement accounts to pay off their debts. They even accumulate more debt from taxes they must pay on the funds they withdrew from their accounts.

Repayment Plan

    List all of the funds you have available to dig yourself out of debt, including retirement funds. The MSN Money article recommends that people make a plan to pay off credit cards, personal loans and other consumer debts if they can pay off those debts in five years or less. Otherwise, bankruptcy may be the only option. Creditors involved in bankruptcy filings usually can't confiscate people's retirement funds. Therefore, you may needlessly lose your retirement nest egg if you choose to cash out your retirement account and later declare bankruptcy.

401(k) Accounts

    Workers usually can borrow up to $50,000 from their 401(k) accounts. A Motley Fool article titled "9 Ways to Pay Off Debt" says borrowers essentially repay themselves with interest because payments on their 401(k) loans go back into their accounts along with the interest charges. However, account holders must repay their loans within five years, and the loan limit of $50,000 may be too small to solve some people's debt problems.

Considerations

    People who choose to borrow from their 401(k) accounts to pay their debts must immediately pay off the amount borrowed if they leave their jobs. Otherwise, they can be required to pay taxes and penalty fees, which gives them more debt to pay. According to the MSN Money article, people can lose as much as $100,000 in future income each time they take $10,000 out of their retirement funds to pay debts.

Thursday, February 24, 2011

If I Am Insolvent in Paying My Debt, Do I Need to Report It on My Tax Return?

If I Am Insolvent in Paying My Debt, Do I Need to Report It on My Tax Return?

Most people take on debt with the best of intentions, but unexpected setbacks can push them off track. Lenders will call routinely when bills first stop getting paid, but after a while the calls will slow down or stop and the lender will charge off the debt. If a debt is canceled or forgiven, the U.S. Tax Code requires it to be included in income unless it meets one of the exceptions or exclusions, including insolvency.

Canceled Debt

    In general, canceled debts must be included in income if you are personally liable for the debt or it is secured by your property. When the lender charges off the debt, it will issue Form 1099-C, Cancellation of Debt. In the case of an unsecured debt, this will likely be for the entire balance. If the debt was secured by an asset that has been repossessed or foreclosed, the 1099-C will report the deficiency balance -- the difference between what the item was sold for and what was owed. It is the borrower's responsibility to determine to what extent he must include the canceled debt as taxable income.

Exceptions and Exclusions

    Canceled debts are not always required to be included in income. The code provides for exceptions and exclusions that limit the circumstances in which canceled debts are subject to income tax. Exceptions include canceled debts that are converted to gifts, certain student loans and debt that would have been deductible if it was paid. Exclusions include, among other things, debts discharged in bankruptcy or at a time the debtor was insolvent.

Extent of Insolvency

    Insolvency is a financial condition in which you have a negative net worth. The U.S. Tax Code permits taxpayers to exclude canceled debts from income to the extent their liabilities exceed their assets. Worksheets are provided in IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to help determine the amount of canceled debt that can be excluded from income due to insolvency.

Compliance

    Lenders are required to issue Form 1099-C for canceled debts in excess of $600. Taxpayers, however, are require to report all canceled debts as "Other Income" on their Form 1040, Individual Income Tax Return, regardless of the amount, unless they meet one of the exceptions or exclusions. If a taxpayer wishes to exclude some or all of his canceled debt from income, he must include a completed Form 982, Reductions of Tax Attributes Due to Discharge of Indebtedness, with his income tax return. This form is used to report the amount of canceled debt not included in taxable income and the reason it has not been included. The canceled debt is always reported one way or the other. It is either included in other income on the Form 1040 or excluded as canceled debt on Form 982.

Wednesday, February 23, 2011

Pros & Cons of Consolidation Vs. Debt Settlement

Pros & Cons of Consolidation Vs. Debt Settlement

Debt consolidation and debt settlement are options for people drowning in unsecured debt. Whether to roll debt into one big loan or settle with creditors and lower amounts owed is a financial decision that requires thoughtful consideration and careful research. It's important to understand how both options work and what the pros and cons are before trusting a credit repairman and signing on the dotted line.

Qualifications

    Before individuals decide to consolidate or settle their debts, they should get a copy of their credit report, make a list of all unsecured debts, contact legitimate companies and find out whether they qualify for debt consolidation. To qualify for a consolidation loan, a person must own his home and have enough equity to use as collateral, have a minimum FICO score and a steady job that meets minimum monthly requirements. To qualify for debt settlement, a person typically must be at least $7,500 in debt.

Advantages

    Debt consolidation lowers monthly payments by rolling all unsecured debt into one loan, and can be paid in full in as little as three to five years. Lower interest rates create long-term savings, interest can be deducted at tax time, and debts are noted on credit reports as paid in full. Debt settlement programs work directly with creditors to decrease the amount of debt from 40 percent to 80 percent, and debt can be paid off in as little as two to three years.

Disadvantages

    A debt consolidation loan becomes a secured loan. A person could lose his house if he defaults, and his credit score could temporarily suffer. Debt settlement can impair a person's credit rating for a longer time. Creditors can sue consumers for unpaid debt and collection agencies could continue to harass consumers long after a debt is settled. People might also owe taxes for settled debt over $600.

Considerations

    Debt consolidation is a home equity loan, so mortgage payments will be higher but the principal amount owed on unsecured debt stays the same. Debt settlement triggers the IRS to look at canceled consumer debt as a potential tax obligation. An insolvency rule applies, however, that states if a person's liabilities are more than his assets, he is considered insolvent and no taxes will be owed.

Warnings

    Debt consolidation companies can charge high fees to manage loans and interest rates can be exorbitant, costing a consumer more than he bargained for. Debt settlement can show up on a person's credit report for up to seven years and make it hard to get another loan. Debt settlement and consolidation companies should be checked with the Better Business Bureau for scams and complaints as most don't live up to promises and many people find themselves in more trouble than it's worth.

How to Load a Money Gram Card

MoneyGram has a prepaid card that lets you pay for purchases, a convenient option for people who have limited or reduced credit resources. Once the money is loaded on the prepaid MoneyGram card, the card can be used to make purchases up to the amount loaded on the card. Load the card by finding a participating MoneyGram location, completing the MoneyGram paperwork and paying the amount wanted on the card.

Instructions

    1

    Visit a MoneyGram participating location.

    2

    Select the card you want to use and fill out the MoneyGram Express Payment form.

    3

    Give the monetary amount you want added to the card. You may have to pay an activation fee in addition to the money you are adding to the card. Once processed, the money is available immediately.

Tuesday, February 22, 2011

Reliable Credit Counseling

Credit counseling firms run the full spectrum, from reliable to unscrupulous. Some advertise that they are not-for-profit to make them seem credible, but the Federal Trade Commission (FTC) website warns that this status does not guarantee legitimacy. Reliable credit counseling has certain characteristics relating to services, fees and counselor qualifications.

Training/Certification

    Reliable credit counselors should have formal training, preferably from an outside organization, according to the FTC. Legitimate counseling firms require their counselors to get training and certification from a professional organization. The firms themselves obtain licenses when required by the states in which they operate. Always ask about training and licensing before working with a particular counselor. The Better Business Bureau (BBB) advises that reliable firms are members of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

Services

    Legitimate credit counseling firms do not limit their services to debt management plans or bankruptcy advice. Reliable credit counselors work with people who have extremely challenging financial situations, but they can also help you if your problems are minor, according to the BBB. For example, if you are just starting to miss payments on your bills, your counselor can help you develop a budget and make suggestions such as getting your due dates moved to coincide more closely with your employer's payroll date. The counseling firm may also have financial management seminars to help you build your skills. You can always consider a formal payment plan or bankruptcy if your situation is too advanced for those options.

Methods

    Reliable credit counseling offers several different options. Counseling firms usually have offices, so you can speak with someone in person. Many also let you work with a counselor over the telephone or Internet through online chat or email, according to the FTC. These alternative methods give you access even if you cannot get to an office due to distance or your work schedule. You should receive the same quality of service, no matter which method you choose, as long as you provide accurate information to the counselor.

Fees

    Even nonprofit credit counseling firms usually charge fees for certain services. A reliable counselor tells you up front which services require payment, and the firm should be willing to put those costs into writing before you agree to anything. Good counseling companies have an array of free offerings, such as online educational materials. Charges should be limited to extensive help, such as setting up and administering a debt management plan.

Charged-Off Debts & Accounts

A charge-off is an unpaid debt that the financial institution has deemed not collectible. It then writes this debt off and it is considered income on their taxes as the cost of doing business. While the company may have said the debt is not collectible that does not mean the debt no longer exists. These companies have many options to either collect the money or negatively reflect on your credit report.

Checking and Savings Accounts

    Personal checking and savings accounts may become overdrawn by spending more than what is available in the account. Banks will cover these charges in some cases. If the accounts remain overdrawn for a period of time the account may be closed and the dollar amount is charged off. Opening new checking or savings accounts may be difficult as many financial institutions use Chex Systems which is a reporting system for unpaid overdrawn accounts. Financial institutions may refuse to open an account or limit you to opening saving accounts only depending on the situation, dollar amount involved and if the funds have been paid back.

Collections

    Just because a debt has been charged off does not mean that the debt is no longer owed. Many financial institutions will sell the debt to collection agencies after the debt has been charged off. While the financial institution will stop charging interest and fees when this happens, the collection agency may add their own fees on to this debt. Collection agencies must follow the Federal Fair Debt Collection Practices Act established by the FTC. Collection of debts also have a statute of limitations where the debt may legally be collected which ranges from three to six years depending on local, state and federal guidelines.

Judgments

    If the charged off debt is large, a financial institution may also take the step of filing a judgment against you. The institution sues you for the amount owed and if they will the suit, the court acknowledges the debt and orders you to pay. There are no statute of limitations on a judgment. The judgment can attach to your home as a lien. This can make selling or refinancing your home difficult as the lender may require the judgment be paid prior to completing the transaction.

Effects on Credit

    Charged off accounts can be shown on your credit report. The institution the debt was originally owed to can reflect the account as charged off. The collection agency trying to collect the debt may show the collection on the report also. These will have a negative impact on your credit score affecting whether you are approved for financing in the future and at what rate you obtain.

How to Shop for Free

How to Shop for Free

As fuel and milk prices approach $5 per gallon, many people are looking for new ways to cut-back on everyday spending. People who used to be convenience shoppers have now become bargain hunters. Many extreme bargain hunters have found ways to shop for *almost* free by coordinating the use of weekly store ads, coupons and frequent-shopper rewards cards. Read, sort and clip your way through the weekly shopping maze and start saving money today!

Instructions

    1

    First step: Make a list! American shoppers are drawn in by good "bargains" and impulse purchases. Steer away from the items that you "want" and stick to the items that you actually "need". Keeping a list of your needed items will help keep you on track, so when you get inside the store and see that item that you REALLY want, but do not need, you will be able to resist the temptation.

    2

    Second step: Clip coupons! Coupons aren't just for moms anymore. Anybody can use coupons- just get a copy (or five) of your local Sunday newspaper and clip to your heart's content. You will find some awesome products that offer coupons- and don't forget, manufacturer coupons can be used anywhere! There are also a plethora of online coupons- many websites require the installation of a coupon printer, but it is worth the install to get hundreds of dollars in savings when you're on a budget.

    3

    Third Step: Sign up for Rewards cards. Practically every grocery store or chain pharmacy has them. You can sign up for free by entering a little bit of personal information. The rewards cards offer discounts on specific items throughout the store, which typically change on a weekly basis. Many stores offer coupons on frequently purchased items, which get printed out on the end of your receipt or by using special a coupon printer / kiosk inside the store.

    4

    Fourth Step: Coordinate! Take your list, weekly ads, coupons and rewards cards, sit down and list which ones are going to help you in the weeks to come. Using a program such as Microsoft Excel or any spreadsheet program can help you organize your deals easily! List the best deals at specific stores on your spreadsheets so you know where you have to go the day of the big shopping trip.

    5

    Fifth Step: Prepare for your trip! Gather together your lists, coupons, ads and will-power and get ready to save a lot of money! Using a coupon organizer can help you be organized and efficient. Products like the Couponizer can help you sort your coupons and keep your list, receipts and coupons in one compact place. You will also want to go to different stores for the best deals on the items you want or need- so plan your trip accordingly.

    6

    Sixth Step: Go Shopping! Print your spreadsheet and map out your route. Go to the stores where you plan to purchase non-perishable items first, and save the perishable item stores for last. It is going to take some time to find the best bargains at first, so be patient and take your time while you get used to the procedure. Time yourself in each store and document it so you can monitor your progress on future trips. After a month or two, you will feel like an old pro.

    7

    Seventh Step: As a bargain hunter you have to remember that brand loyalty can no longer exist. You will need to focus on buying what is on sale. This is a difficult habit to break at first- I always use dandruff shampoo 1, but dandruff shampoo is free if I use this coupon- well, you're going to have to try 2. You might actually find that you like a different brand even better than your normal brand, but you never would have known if you weren't trying to be frugal!

    8

    Example of how to shop for *almost* free. One of the most popular stores that extreme savers have latched onto is CVS. CVS has the ExtraCare savings card and ExtraBucks (EBs) program. EBs are rebates that are offered by the store when you purchase certain products (marked by a special EB tag in the store and listed in the weekly ad). When you make EB purchases, the EBs print on your receipt at the end of your shopping trip. These EBs are as good as money that can be used on your next shopping trip! By planning your shopping list around weekly ads, finding coupons for the EB sales, then stocking up on the EB items, pretty soon you will find yourself shopping for practically nothing!

Georgia Credit Laws

Federal laws like the Fair Credit Reporting Act are the primary laws affecting state residents and their experiences with banks and other lending institutions, according to the Georgia Department of Banking and Finance. Most credit-related transactions reflect on consumer credit reports issued through credit bureaus like Equifax, Experian and TransUnion.

Credit Basics

    When people agree to repay loans or credit cards, a borrowing relationship is established. Most of these credit-related transactions reflect on consumer credit reports, according to the Georgia Department of Banking and Finance. Credit reports contain the customer's full name, current and past addresses, place of employment, date of birth and Social Security number. These documents also include information regarding whether or not a person pays his bills on time.

Relevant Time Frames

    All accounts you've had and paid on time within the last 10 years appear on your credit reports, notes the Georgia Department of Banking and Finance. But if you didn't pay your bills on time, the resulting negative credit rating usually lasts for seven years from the date of the missed payment. Exceptions include tax-related lawsuits and Chapter 7 bankruptcies, which report for 10 years from the date of filing, according to the book "How to File for Chapter 7 Bankruptcy."

Credit Report Access

    Only parties with a permissible business-related purpose can view your credit reports, according to the Georgia Department of Banking and Finance. Such parties include potential employers and landlords, as well as current and potential lenders. Collection agencies attempting to locate you for debt repayment can also legally view your credit reports. You are also entitled to view one free copy of your consumer credit report each year. The credit reporting agency will verify your identity through a series of multiple-choice questions about your past accounts and addresses, or through a copy of your government-issued photo identification. If you're denied credit or a job, you're entitled to an additional free credit report.

The Bankruptcy Option

    Federal credit-related laws allow people to file bankruptcy in Georgia when they can't pay their bills on time, notes the book "How to File for Chapter 7 Bankruptcy." People must complete pre-bankruptcy credit counseling and select Chapter 7 debt liquidation, or a partial debt repayment plan under Chapters 11, 12 or 13. Chapter 11 is designed for self-employed people and business owners, Chapter 12 assists family farmers and Chapter 13 helps working people partially repay their debts. As of 2011, it cost anywhere from $274 to $1,039 to file bankruptcy depending upon the type selected, according to the Georgia Northern Bankruptcy Court.

Monday, February 21, 2011

How to Apply for a Debt Relief Order

How to Apply for a Debt Relief Order

The debt relief order (DRO) was introduced in 2007 as a way to help residents of England and Wales who have a small amount of debt and no way to pay it. Cheaper than filing for bankruptcy, the DRO is in place for about a year. Your debts are listed in the DRO and, during the year, none of the listed creditors can take legal action against you. At the end of the DRO, the listed debts will be eliminated.

Instructions

    1

    Determine if you qualify for a DRO. To qualify for a DRO:
    Debts must be less than 15,000
    Disposable income must be less than 50 a month
    Total assets must be less than 300
    You did not have a DRO within the last 6 years

    2

    Contact an approved intermediary. You can find a list of intermediaries through your Citizens Advice Bureau, or check the Insolvency Service website for a list of competent authorities that can direct you.

    3

    Fill out the online application with the help of the intermediary, print it off, sign it and mail it to:

    The Debt Relief Order Unit
    The Insolvency Service
    1st Floor, Cobourg House
    Mayflower Street
    Plymouth
    PL1 1DJ

    4

    Obtain, from your intermediary, your unique bar-coded letter so that you can pay your fee.

    5

    Pay the non-refundable fee at a Payzone outlet. The fee must be paid in cash and, as of 2010, is 90.

What Changes a FICO Score?

What Changes a FICO Score?

The FICO score is a composite measure of a particular individual's credit strength. The score has a tremendous influence on the availability of credit, the necessity for collateral, and the overall cost of borrowing money. While the exact procedures for calculating the score are kept secret by the FICO company, there are five general factors that can change a FICO score.

Payment History

    Consumers who pay their bills on time enjoy a higher FICO score. Payment history commands a weighty 35 percent influence on the overall score. FICO scores also change negatively if payment deadlines are missed, particularly for expensive or valuable items. Every missed payment affects your credit score in a different way, depending on if the bill was eventually paid, the length of time since the deadline, and the cost of the bill.

Utilization

    Utilization is a ratio of the amount of credit you have used to the amount of credit available to you and accounts for 30 percent of your FICO score. For example, if you have a credit card with a $100 limit, and you have used $80 of that limit, your credit utilization is 80 percent. FICO scores improve when your credit utilization decreases, and scores fall when the ratio increases. Closing your credit card accounts also raises the ratio and therefore weakens your FICO score, while expanding your existing credit limits lowers the ratio, strengthening the score.

Credit History

    Your credit history has a 15 percent impact on your FICO score. The credit history metric incorporates the length of time that individuals have maintained their lines of credit. Each separate credit account has a credit history value associated with it, and the combination of these values forms the overall metric. Holding on to credit cards for long periods of time raises your FICO score, while opening a variety of new credit lines lowers the score. Opening new credit accounts lowers your score because the value number will shift to represent a younger, less-established credit history.

Credit Variety

    Credit can be used in a number of different ways and for a number of different purposes, from automobile loans to credit cards to mortgages to school expenses. Those who manage several different kinds of credit enjoy an elevated FICO score. Conversely, consumers with credit cards alone, or consumers who close existing accounts, have little credit variety, and therefore see a falling FICO score. Credit variety affects 10 percent of the overall score.

Credit Inquiry

    Credit inquiry measures the number of new credit lines that a consumer wishes to open. Obligating yourself to lots of new credit in a short time period is considered risky behavior, and causes your FICO score to fall. Searching for new credit can also affect the 10 percent impact this measure has on your FICO score. Taking careful and rational steps to acquire new credit will not normally affect your credit score.

Sunday, February 20, 2011

Can You Get a Free Credit Report Once a Year?

There are two important matters relating to personal finance that you must perform each year. The first is to file your income tax return, and the second is to review your credit report. Yes, reviewing your credit report is that important. Before the enactment of the Fair Credit Reporting Act of 1971, this task would be difficult, if not impossible to accomplish. However, FCRA Regulation 609 gives you the right to not only view the contents of your credit report, but to view the contents of your credit report once each year at no cost to you.

Warning

    The Federal Trade Commission strongly recommends you ignore marketing advertisements offering you a free copy of your credit report. There are specific procedures you must follow to get your free report, and the sites or advertisements you see provide misleading information and hidden fees. Most often, according to the FTC, these are credit monitoring companies, that, as a condition for receiving your free report, sign you up for their service and charge a monthly fee. Others use the offer of a free report to get your personal information. If you receive any such offers via email, the FTC recommends forwarding the email to spam@uce.gov.

Identification

    Regulation 609 requires Experian, TransUnion and Equifax, the three main credit reporting agencies, to provide you with a free, annual copy of your credit report if you ask for it. The report you receive contains credit facts, such as identifying information, credit and public records information and a list of recent inquiries. If your credit report contains errors, you have the right to file a dispute. If it contains out-of-date negative entries, you have the right to request their removal. Each agency must provide information on the process for filing a dispute. Although your free credit report does not include your credit score, each agency must provide information on the process and fee to get your score.

Process

    The only way to ensure the report you receive is free is to make your request through AnnualCreditReport.com. This is a central location the three major credit reporting agencies set up specifically for this purpose. You can make your request to each individual agency online, and view your report immediately, by providing your name, date of birth and social security number, as well as current and previous address information. Alternatively, you can make your request over the phone by calling 1-877-322-8228 or by printing a paper application and sending your request via postal mail. AnnualCreditReport.com states you will receive your report with two to three weeks of making your request via the phone or postal mail.

Considerations

    Rather than requesting a copy of your credit report from all three agencies at one time, consider spacing your requests so you make a request about every four months. This will, in effect, give you access to your credit report three times a year rather than once, making it easier to monitor your credit and correct inaccuracies in a timely manner.

What Happens to Debt When You Get Divorced?

What Happens to Debt When You Get Divorced?

Unless a previous agreement is in place before divorce proceedings start, couples getting divorced must reach an agreement on how property and assets get divided between the two of them. What many couples do not consider at first is that debts such as mortgages, loans and credit cards will also need to be divided if the debt is in both of their names. If debts go unpaid, creditors and lenders may go after both parties for payment.

Marital Debt

    While a couple is married, a number of debts such as mortgages and car loans may be taken out by one or both of them. Some debts are created by only one of the partners in the marriage, such as a credit card that is only in the husband's name and reporting on his credit history. Other debts fall on both partners, such as loans that were taken out with both the husband and the wife as co-signers and which report on both of their credit histories.

Single-Party Debts

    Single-party debts are unaffected by divorce since only one member of the couple is legally responsible for them. If the other member of the couple had been paying the bills for these debts, they no longer have to do so unless it is specified in the divorce agreement. Even if the court does require them to continue making payments on the other partner's debts, the creditor who holds the debt will only pursue the partner who legally owns the debt if it goes unpaid.

Dividing Mutual Debts

    Mutual debts generally must be divided between the members of the couple getting divorced, with one partner taking responsibility for some of the debts and the other partner taking responsibility for the others. The creditors who hold the debts are not a part of this agreement, however, and still hold both partners equally responsible for the debt; if they don't receive payments from the partner who agreed to be responsible for the debt, they will pursue payment from both of them. If this happens then the partner who wasn't supposed to pay the debt may be able to pursue legal action against the responsible partner.

Releasing Debts

    Some creditors are willing to release one of the partners from a debt after a divorce if the other partner contacts them and requests it. The partner needs to explain that they are in the process of getting a divorce from the other partner and that they will be taking over full responsibility for the debt. If the creditor releases the other partner, only the one who contacted them will be responsible for the debt's repayment. Not all creditors are willing to do this, however.

What Is Flat Net Debt in Financial Terms?

Net debt, a figure that describes the current outstanding liabilities of a firm, is used by managers to asses the solvency of a company both in the present and in the future. In seeking to make projections moving forward, managers may aim for a "flat" net debt projection, in which the firm takes on more debt only to the extent that it can offset that debt with cash on hand or cash equivalents in an effort not to worsen the financial situation of the firm.

Net Debt Defined

    Net debt is one of several figures and ratios used by managers to estimate and quantify their current business position. Specifically, net debt is equal to total liabilities and debt outstanding, minus any cash or cash equivalents. From an accounting perspective, this relates to the balance sheet and items on the balance sheet. The word "liabilities" is simply an accounting term for debt, or any entries on the balance sheet that are debt and, as such, quantify money that must be paid back to another party. "Cash equivalents" are things that can be easily turned into cash without high transaction costs, such as short-term bonds or money market funds, rather than other assets that may be salable but whose sale takes longer and may be subject to more transaction costs, such as factories, land and equipment.

Net Debt's Importance and other Debt Ratios

    Net debt is important as an indicator of the firm's financial health. Compared with companies with relatively low net debt, companies with relatively high net debt face the prospect of more financial risk. That is because if the debt comes due unexpectedly or if cash runs short for debt payments, the company will be unable to pay off the debt and may face insolvency (or, in more layman's terms, bankruptcy and the end of the company). Along with net debt, other figures and ratios can provide more detailed information about the company's current position and future solvency for managers.

Types of Debt Ratios

    Net debt is one of many debt figures and ratios that attempt to give managers an idea of the business's current position and possible future solvency. Other debt figures and ratios include the debt ratio (total debt divided by total assets), the "acid test" or quick ratio (cash plus marketable securities plus accounts receivable, divided by current liabilities), the debt-to-equity ratio (total debt divided by total equity), and others. These ratios attempt to describe a company's current position, and most debt ratios attempt to say something about the firm's solvency or ability to make payments on their debts.

Flat Net Debt and "Flat" Projections

    Managers may make goals or projections for "flat" net debt, which is simply keeping the figure of net debt at its current level, or possibly reducing it, for the next fiscal period. By aiming for a flat projection, managers implicitly recognize the firm is unlikely to be able to pay off its liabilities in the near future but are seeking to resist the urge to finance more expansion (or even current operating costs) by borrowing. In any figure or ratio, a "flat" projection, or reports after the fact of the figure/ratio being "flat", simply means no change in the figure or ratio.

Saturday, February 19, 2011

If I Owe Court Fees, Will They Take My Tax Return?

If I Owe Court Fees, Will They Take My Tax Return?

If you fail to pay court fees that you owe to a court for a trial you participated in or any other reason, the court may be able to appeal to your state tax commission requesting them to withhold your tax refund check. It depends on whether or not your state has passed a law allowing the courts to intercept your refund check.

Court Fees

    If you are arrested or sued, or if you sue someone else, there is a cost of going to court. Most courts charge fees that vary based on the type and length of your trial. Fees are used to offset the cost to the federal, state or local government where the trial is held. The fees you pay to your attorney are separate from court fees.

Tax Intercept Programs

    Many states now have tax intercept programs that allow the court to go directly to the state tax commission and request that your tax refund check be withheld to pay for any court costs you owe that are in arrears. For example, North Dakota allows the courts to take your state tax refund if you are behind on your court fees by 90 days or more. California courts can take your state tax return and any state lottery winnings you have won to pay for late court fees. You will need to check with your state to see if they have a tax intercept program if you are concerned about them taking your refund.

Federal Tax Returns

    At the time of this publication, courts cannot take your federal tax refund check to pay for court fees, according to the Ohio Society of CPAs. Current federal law restricts the withholding of federal tax refunds, called a tax refund offset, to paying only for certain narrowly defined debts. Any such withholding is done by the U.S. Treasury Department's Financial Management Service.

Treasury Offset Program

    Congress has authorized the U.S. Department of Treasury to manage the federal Treasury Offset Program. This program allows the Department of Treasury to withhold all or part of your federal tax refund to pay money you owe for state and federal taxes, certain federal debts, or unpaid child support if the debt has been has been filed with the Financial Management Service.

Friday, February 18, 2011

How Can I Put a Lien on an Aircraft?

How Can I Put a Lien on an Aircraft?

You can put a lien on an aircraft if you performed any service to or involving the aircraft or you provided any parts or other goods for the aircraft, and the owner of the aircraft did not pay you in return. The lien gives you the right to file a lawsuit in order to claim and sell the aircraft for payment. Aircraft liens involve state lien laws and Federal Aviation Administration -- FAA -- rules, making them particularly complicated. Strongly consider hiring a lawyer with experience in your state's lien laws.

Instructions

    1

    Look up your state's mechanic lien laws, preferably with a qualified attorney. Every state has different rules about lien documents, deadlines for filing and claiming, giving notice to the owner and other aspects of liens. The FAA requires that you submit documents in line with your state's regulations and according to your state's guidelines.

    2

    Draft the lien claim according to your state's rules, and give notice to the owner of the aircraft if and how your state requires it. All states require a lien claim to have both the service provider's and owner's full names and addresses, the service provider's signature, a description of the service rendered and the date, as well as the monetary value of the claim. However, many states require other types of information and a specific format for listing information.

    3

    Ensure that the lien claim forms include the value of the claim; the aircraft's N-number, manufacturer, model and serial number; dates of the service or goods provided and your original ink signature. The FAA requires all claims to list at least this information as part of or in addition to the information required by states.

    4

    Write a check or get a money order for $5, payable to the Federal Aviation Administration.

    5

    Mail the lien claim and your form of payment to the FAA's registration office in Oklahoma City. All liens should be mailed to: FAA Aircraft Registration Branch, AFS-750, P.O. Box 25504, Oklahoma City, OK 73125-0504.

Group Marketing Strategy for Investors

A financially shaky company formulates a group marketing strategy to reassure hesitant investors that its commercial debacle does not result from a poorly formulated tactical plan. Corporate management may draw up the blueprint to explain that the organization's woes primarily come from a bad economy. The corporate investor-relations department typically coordinates financier-oriented marketing tactics.

Definition

    An investor-relations strategy incorporates everything a company does to cultivate amicable relations with external financiers, reassure them about the organization's competitive prognosis and explain to the public the steps that management is taking to right the corporate ship. This outline targets a loose coalition of individuals and organizations that actively works to prop up the company's balance sheet and help it make more money. Any individual or business that pours money into an organization is a de facto investor, and financial commentators often distinguish between short-term and long-term investors. The former target a profitability window of 12 months or less, whereas the latter are in it for the long haul.

Relevance

    A company draws up an investor-related marketing strategy to make sure everybody is on the same page with respect to profitability management and marketplace dynamics. In essence, the business engineers the blueprint to narrow the gulf between how financiers think the company should go about making more money and producing top-quality items and how top leadership conducts corporate policy. For example, senior managers periodically may stage investor conferences to justify the tactical choices they've been making, to seek the approval on long-term foreign investments and to ensure that investors understand it might take longer to reap profits in specific sectors. The idea is to carefully pore over operational data and accept constructive criticism from investors, not to reflexively endorse and implement all proposals they make.

Geography

    Geography plays a role in how a company goes about formulating its group marketing strategy, especially if its financiers include foreign businesses and capitalists. To ease foreign financiers' doubts, the business may translate its investor presentations in major languages they speak or in which they conduct business. Alternatively, the organization periodically may schedule investor conferences overseas or dispatch corporate surrogates to appear on foreign media outlets and give fuller accounts of what the company is doing to trump the competition and make more money.

Staff Involvement

    Professionals who attempt to improve a company's relationships with investors include financial managers, corporate strategists and department heads. Investor-relations representatives and corporate treasurers also work diligently to help the company settle outstanding differences with financiers and paint a brighter picture of the organization's finances and long-term competitive standing.

Information on Debt Help Solutions

If you're swimming in debt, your options for help can be confusing. Debt consolidation, debt management plans and even bankruptcy have probably crossed your mind, but it's hard to know which is right for you without knowing how each of these debt help solutions work and how they affect your credit.

Hardship Programs

    Debtors whose income has dwindled because of unemployment, illness or another temporary setback may find that asking for hardship assistance from their creditors can help them dig out of debt.

    Many credit card companies and other creditors offer some type of hardship program that will temporarily reduce monthly payments, erase finance charges and/or reduce or eliminate interest on the account. The goal is to let you pay something while you're getting back on your feet, with the payments reverting to the agreed-on amount after the program expires.

Debt Consolidation

    If multiple high-interest debts are making it difficult to pay your monthly bills, consolidating your debt through a low-interest loan or credit card can relieve you, but only if you're smart about it.

    The home equity loan is the gold standard in debt consolidation loans, offering low rates that are possible because your home stands as collateral for the loan. However, if you fail to repay the loan, your home is on the line.

    If your credit is nearly flawless, two other options that are open to you are a personal debt consolidation loan, or a zero or low interest credit card. A personal debt consolidation loan may offer a rate that's low enough to save you significant money on interest, but research this carefully before signing on the dotted line. As for zero or low interest credit cards, remember that these are teaser rates that will eventually go up and that the rate will go up immediately if you make a late payment.

Debt Management Plans

    Anyone who is overwhelmed by their debt needs to make an appointment with a reputable credit counselor (see "Resources"), not only to determine where the money is going, but to get an idea of how to use credit wisely. As a part of credit counseling, you may qualify for a debt management plan. When you enroll in a debt management plan, the credit counselor works with you and your creditors to create a payment schedule you can live with, generally by reducing monthly payments and/or interest and other fees to make your payment affordable. Rather than paying each individual creditor, you instead pay the credit counselor, who makes payments for you. Debt management plans typically last three to five years.

Bankruptcy

    Bankruptcy should be your last resort financially. While bankruptcy can clear or reorganize your debts, it leaves a black mark on your credit that can take years to erase. Chapter 7, or liquidation bankruptcy, discharges all unsecured debts, with any assets being sold to repay your creditors. Chapter 7 takes several months to complete, and stays on your credit report for 10 years.

    Chapter 13, or reorganization bankruptcy, gives you three to five years to repay creditors some or all of your debt. A trustee appointed by the court oversees your finances, giving you a living allowance, while the remainder of your income goes to debt repayment. Chapter 13 bankruptcy stays on your credit report for seven years.

How to Dispute a Collection Letter

If you receive a letter from a collection agency requesting payment, there are steps you can take if you do not recognize the account in question, do not own the account or know that the amount requested is incorrect. Debt collectors are required, under law, to provide proof that a debt is valid if requested to do so by the consumer they have contacted.

Instructions

    1

    Gather any documentation you may have about the account, including receipts, invoices, bills, canceled checks, bank statements, credit card statements and any other correspondence you may have received.

    2

    Send a letter to the collection agency, requesting that they validate the accuracy of the debt in question. They will need to provide proof that they own or have been assigned the debt by the original creditor, complete payment history from the original creditor and a copy of any original loan agreements or applications signed by you. Make a copy of the letter you will be sending.

    3

    Mail the letter by certified mail with return receipt requested. Always keep a paper trail and a log of any collection phone calls you may have received as well. Store all correspondence, including original documentation, your letters to the debt collector and return receipts, in a safe place for later reference.

    4

    Allow 30 days for the collection agency to respond to your dispute. If you have received no response by then, send a second letter, including the original letter and a copy of the return receipt proving that they indeed received your first letter. In this letter, advise them that, due to their noncompliance with the Fair Debt Collection Practices Act, they will need to remove this listing from your credit report.

    5

    Report your dispute to the major credit bureaus. Send a copy of the correspondence with the collection agency and notify them that the collection agency has not responded to requests for validation of the debt. The credit bureaus will then conduct an investigation to determine the status of the debt.

    6

    Pay the debt or work out a settlement agreement with the collection agency, if it is found that the debt is indeed valid. Demand written confirmation of any settlement agreement before you make the first payment. Maintain the paper trail in case your payments are not properly posted during the course of the agreement.

Thursday, February 17, 2011

Financial Advice for the Young

Financial Advice for the Young

Some people wait until their adult years to get serious about their personal finances. But developing good money habits during youth or as a young adult can put you on the right path financially. Rather than make unwise decisions and spend money frivolously, change your personal habits and increase your personal wealth.

Start Saving

    Saving money may be the last thing on your mind. However, the earlier you begin a personal savings or retirement account, the sooner you can stop working and start enjoying life. Treating yourself with the occasional luxury is OK. But don't get into a habit of spending all your extra money on clothing or entertainment. Make saving money your goal. Put aside a percentage of each paycheck. Take advantage of 401(k) programs or other retirement plans offered by your employer.

Keep Debts Low

    Young people tend to fall prey to the debt trap due to uncontrolled spending. Credit cards make it possible for you to establish a credit history. However, misuse of credit cards can lower your credit rating and result in massive debt that takes years to pay down. Start on the right foot and use credit cards only if you can afford to pay off charges within a month.

Build Strong Credit

    Select major banks offer credit cards to young adults to help them establish credit. Take advantage of this easy approval process and create a credit file. Of course, acquiring a credit line doesn't instantly result in a good credit rating. The way you use credit determines your credit score. Creditors expect you to make on-time payments every month, and doing so results in a gradual credit score increase. Continue to pay debts as agreed, while keeping balances to a minimum and you'll score a high credit rating. The better your rating, the easier it will be for you to attain a future mortgage loan.

Don't Overspend

    There is no job guarantee. You can have a job today and face a layoff tomorrow. Planning and preparing for unexpected financial mishaps can help you get through tough economic times with your head above water. It's tempting to spend when your income source appears reliable and consistent. However, overspending can impair your ability to save, and when money problems arise, you may not have enough emergency funds. Transportation and housing can take a large percentage of your monthly income. Make wise choices and choose an apartment or home and automobile that give you a financial cushion, and put away money for a rainy day.

How to Get a Chapter 13 Off Credit If It's Dismissed

How to Get a Chapter 13 Off Credit If It's Dismissed

A Chapter 13 bankruptcy allows an individual to "reorganize" his debts so he has some time to pay them off. In cases where the bankruptcy filing was rejected or removed, it is important to make sure it does not appear on your credit report. If it shows up on your credit report, you may not be able to borrow money from lenders. Insurance companies and employers who see the information may reject your applications. Removing the Chapter 13 bankruptcy requires contacting the credit bureaus and notifying them the filing was dismissed.

Instructions

    1

    Contact the major consumer credit bureaus in writing. The major credit bureaus include Experian, Equifax and TransUnion. Compose a letter notifying the credit bureaus that there is inaccurate information on your credit report related to a Chapter 13 bankruptcy. Include copies of any documents you may have showing the bankruptcy dismissal.

    2

    Mail your letter to the credit bureaus via certified, return receipt. The credit bureaus will conduct an investigation to the information in your letter. They have 30 days to complete the investigation. You will know when the credit bureaus received the letter with the return receipt.

    3

    Receive notification. If the credit bureaus were able to verify your information regarding the dismissed Chapter 13 bankruptcy, they must notify you and provide a free credit report reflecting the change. You may also request the credit bureaus provide corrected copies of the report to any party that requested your credit report within the previous six months.

Help With Secured Debt

Secured debts are financial obligations tied to real assets and include mortgages and auto loans. Other secured debts, such as federal student loans, carry a guarantee of payment from the federal government. When a debtor defaults on a secured loan, the creditor has the right to seize any property tied to the debt. Preventing default on secured loans begins with a debtor being as proactive as possible. The longer he waits, the less options are available.

Contact the Lender

    Contacting your lender should be the first step in obtaining help for your secured debt. Keeping your lender apprised of your financial situation can allow some breathing room in making up for missed payments before collection practices begin. Your lender may also be able to temporarily suspend your payment obligations if you meet financial hardship requirements or allow you to miss a monthly payment by adding to the end of your loan agreement. This could provide you with enough time to get your finances in order and allow you to begin making normal payments again.

Consolidation Loans

    A consolidation loan may be a smart financial move for some forms of secured debt including federal student loans. A consolidation loan pays off multiple loans of the same type and combines the debt under a single loan. This decreases the number of payments a debtor is required to make each month. In the case of student loans, a consolidation loan usually lowers his monthly payment obligations and locks in the loan's interest rate. This could save the debtor thousands of dollars over the life of the loan. Other forms of secured debt, including mortgages and auto loans, may not be eligible for consolidation.

Loan Modification

    If you are in danger of falling behind on your mortgage payments, you may qualify for loan modification through the Making Home Affordable Modification Program. Loan modification can lower the interest rate as well as adjust the balance of your mortgage if you owe more than the home is currently worth. According to the Federal Trade Commission's website, you may qualify for a mortgage adjustment if you owe less than $729,750 on your first mortgage, your mortgage was created before January 1,2009, your payments on your first mortgage are more than 31 percent of your current gross income and you are currently experiencing financial hardship due to the loss of a job or excessive debt.

Chapter 13 Bankruptcy

    Chapter 13 bankruptcy is often a consumer's last available option to find help with secured debts and retain possession of property including a home or business. This form of bankruptcy allows a debtor to restructure his financial obligations under a court-approved debt management plan. As long as the debtor makes timely payments in accordance with the plan, he retains possession of his property and his creditors are legally barred from pursuing collection practices against him. Once the plan is completed, his mortgage payments and other secured debt obligations may resume payment as normal.

Wednesday, February 16, 2011

How to Make a Counteroffer for a Judgment

A counteroffer for a judgment is actually an attempt to resolve the issue by paying the judgment in whole or in part. Judgments are legal orders signed in court by a judge after a lawsuit. A judge issues a judgment after deciding that the defendant failed to pay a debt or is liable for monetary damages for other reasons. The judgment becomes a public record and appears on the defendant's credit report for seven years.

Instructions

    1

    Get a copy of the judgment order from the county courthouse, if necessary. A clerk can assist in locating the judgment in the court's database. Also, the information may be accessible on the Internet. Contact the court to ask for the Web address for the county's public records website. Visit the website to enter your name and view the judgment.

    2

    Note the telephone number for the party winning the judgment after receiving a copy online or at the court house. Also note the amount of the judgment. Review your finances to determine how much money you can offer as payment.

    3

    Call the party holding the judgment with hopes of settling the judgment for less than the full amount due - a process called debt settlement. Offer a lump-sum payment for about half the amount due as an opening offer. Although debt settlement is common, the judgment gives the debt collector a huge advantage. If you refuse to pay or fail to make payment arrangements, the debt collector can request garnishment of your wages or bank account. The debt collector is not required to accept a settlement offer and can demand full payment. Starting at 50 percent gives you room to negotiate.

    4

    Ask for a settlement payable in installments if you cannot afford a lump sum. Offer to pay less than the full amount over several months. Negotiate until you reach an agreement on the amount and the number of payments.

    5

    Offer to pay the full amount through monthly payments if you cannot reach agreement on a settlement for less than the full amount.

    6

    Get the terms of any agreement in writing before making payments by cashier's check. Keep copies of the checks. Make payments as agreed to prevent additional collection activity.

How to Settle with Credit Cards Companies Due to Hardship

How to Settle with Credit Cards Companies Due to Hardship

The U.S. credit card debt amount, reported by Nilson Reports (April 2009) is a staggering $972.73 billion. In the Javelin Strategy & Research, "Credit Card Issuer Profitability in a Difficult Economy," July 2008 issue, 28 percent of those surveyed reported difficulty in making credit card payments. Negotiating a settlement with the creditor when faced with difficulty can be the best option.

Lump Sum

    Creditors will most likely agree to a more drastic reduction in debt if you offer a lump sum amount in lieu of monthly payments. The Wall Street Journal reports that in tough economic times, a credit card company is more likely to forgive up to 70 percent of the owed amount. The company can agree to these amounts because they would rather receive something rather than charging off your entire debt amount due to nonpayment.

Lower Interest Rate

    As of December 2009, Index Credit Cards reports that the average consumer credit card interest rate is 16.35 percent. Call the credit card company and negotiate a lower interest payment for the duration of the loan, or at least for as long as you expect your hardship to last. Incidentally, the same report shows that reward cards (i.e., airline, points, store rewards) have the highest interest rate of 17.09 percent. Negotiating the interest rate can reduce your monthly payment drastically.

Decreasing Minimum Payment

    With the current economic conditions in 2009, Capital One bank reported in March that the charge-off rate had reached an all-time high of nearly 10 percent. Due to these conditions, many of the larger banks like Citibank, Bank of America, Chase, and Capital One have implemented hardship programs, enabling consumers to make a small payment equal to 1.75 percent of their existing balance to repay their debt.

Deferred Payments

    If your situation is temporary (i.e., job loss, medical bills), the credit card company may be able to defer payments for a predetermined amount of time. In most cases, deferred payments will be an option that your credit card issuer will offer; deferred payments is usually not granted if requested by the consumer.

Hardship Letter

    To begin the process of negotiating the debt, you will need to write a hardship letter describing your situation. Mail to to the company address (not billing address intended for payments only), and send it via registered mail to track correspondence. Usually, the mention of bankruptcy consideration will yield more cooperation from the credit card companies.

Tuesday, February 15, 2011

Are Victims of Identity Theft Liable for Debt?

When you become a victim of identity theft, someone could use your information to accumulate debt in your name. The thought of having to pay for someone else's debt can be frightening, but there are laws in place that will limit your personal liability if this happens to you.

Credit Card Charges

    One of the most common ways that identity theft occurs is with fraudulent credit card charges. When this happens, you will not be held liable for most credit card charges. In most cases, the most that you could have to pay for is $50. As long as you tell your credit card company within 60 days that the charges are fraudulent, it will be reversed and removed from your account. If you wait longer than 60 days to tell the credit card company, you might have to pay for the charges.

New Accounts

    Another way that you could become a victim of identity theft is if someone opens a new account in your name. For instance, someone could get in your mailbox and use a credit card offer to open a new account. This person could then use the credit card to rack up thousands of dollars of charges in your name. When this happens, most state laws allow you to get out of paying the debt. When you find out about the charges, you need to report them to the credit card company immediately.

Debit Cards

    Many people now use debit cards that can be used as a debit or credit card. If you lose one of these cards and someone uses it to make fraudulent charges, you need to act quickly to limit your personal liability. If you report the loss to the bank within two days, you will only be responsible for maximum of $50. If you wait beyond two days but fewer than 60 days to report the loss, you will be liable for up to $500 of charges. Beyond 60 days, you have unlimited liability for any fraudulent charges.

Checks

    When you use checks, there is always a chance that someone could try to pass fraudulent checks on your account. If this happens, most states will not require you to pay for the debts incurred. While you may initially be charged for the checks, if you report the incident to your bank immediately, it will generally reverse the charges. Most checks take a few days to clear both banks, and while this is happening, you can report the loss. This makes it important to look at your online bank statement frequently so that you can avoid this situation.

Does Capital One Garnish Wages on Repossessions?

Does Capital One Garnish Wages on Repossessions?

You never want to leave your house, keys in hand, only to discover that your car is no longer sitting where you parked it the night before. For many consumers who miss a car payment or two -- intending to catch up on payments when they can -- this scenario is a sad reality. Unfortunately, the hardship doesn't always stop with the repossession itself. If you took out an auto loan with Capital One, you could find yourself facing a wage garnishment order not long after losing your vehicle.

Capital One Repossession

    While Capital One is a household name in the credit card industry, the bank corporation offers other financial services, such as auto loans, to consumers. Capital One will aggressively pursue borrowers who take out vehicle loans and stop making payments. If you hold an auto loan with Capital One, you can expect the company to contact you by phone and by mail as soon as you miss your first payment. If you stop making payments on your auto loan altogether, Capital One will repossess your car.

Loan Deficiency

    You can get your vehicle back by paying Capital One the remainder of the balance you owe in addition to any fees the company incurred repossessing the vehicle. If you do not wish to or cannot afford to redeem the vehicle, Capital One will sell it -- typically at an auction. If the amount the company receives through the sale meets or exceeds your auto loan balance and any repossession fees you owe, your dealings with your lender are complete.

    If, however, Capital One sells the car for less than you owe, it will notify you of the new balance and demand that you pay off the difference -- often referred to as the "deficiency." Even though you no longer have the car, you are still legally responsible for any loan deficiency that remains after the sale.

Wage Garnishment

    If you do not make arrangements with Capital One to pay off your remaining debt, the company has the right to sue you. If Capital One wins the lawsuit, it can request that the court issue your employer an order requiring him to garnish your wages. Federal garnishment laws dictate that a commercial creditor, such as Capital One, can garnish no more than 25 percent of your pay or the amount you receive in excess of 30 times the minimum wage each week.

Limitations

    Although Capital One's headquarters are in Virginia, the company must abide by the laws in each debtor's state when recovering post-repossession debt. Four states -- North Carolina, South Carolina, Texas and Pennsylvania -- do not allow commercial creditors to garnish residents' wages. If you live in one of the four states that prohibit wage garnishment, that does not mean Capital One cannot still collect the debt you owe by force. If the company cannot garnish your wages, it has the option to freeze and levy your bank accounts or attach liens to your home or other personal property.

Laws on Payday Loans for Not Paying

Although payday loans generally carry higher interest rates than other consumer loans, the rules that attend borrowing them are similar to the rules applied to other loans. A borrower who takes out a payday loan must pay the loan back in the amount and in the time period specified by the contract he signed when he took out the loan. Otherwise, he may face civil and, in rare cases, criminal penalties.

Payday Loan Contracts

    All states have laws that guarantee the sanctity of business contracts. If a person fails to uphold his end of the contract, then the other party can seek damages. So long as the contract is written legally -- meaning it adheres to all state laws -- it is legally valid and the lender can collect the money owed him. However, if a payday loan contract is not valid -- say, for example, the interest rate charged by the lender is too high -- a judge may nullify it.

Civil Suits

    If a contract is valid, then the lender can sue the borrower for his breach and attempt to collect the money owed on the contract with the aid of a judge. If the judge rules in favor of the lender, most states will allow the lender to petition a judge to garnish the borrower's wages or seize the borrower's bank account if the money is not forthcoming.

Hot Check Laws

    Some states have so-called "hot check" laws designed to prosecute people for fraud if checks that they write do not clear. However, hot check laws can only be applied to individuals who knowingly and maliciously wrote a bad check. While a payday lender may wish to charge a borrower who writes her a bad check, prosecutors will not charge a borrower unless there is compelling evidence he wrote the check knowing that it wouldn't be paid.

Other Charges

    Under U.S. law, a person will not go to jail for his failure to pay back a debt. However, he may go to jail for fraud or for crimes related to this failure to make good on a debt. For example, if a debtor fails to comply with an order of the judge hearing a civil case, the judge may find the debtor in contempt of court and sentence him to jail time.

Monday, February 14, 2011

Credit Card Delinquency & Creditor Lawsuit Risks

Credit Card Delinquency & Creditor Lawsuit Risks

Credit cards are the most common form of unsecured debt. If you do not pay an unsecured debt, your creditor cannot place a lien on your home or take your belongings to cover the balance you owe. You can, however, be sued. A lawsuit can result in a judgment being levied against you. Your wages also may be garnished, depending on the laws in your state. You can minimize the risk of being sued for a delinquent debt by taking advantage of your right to debt validation and keeping up with the age of your debt.

The Facts

    When your credit card debt goes 180 days without a payment, your credit card company will "charge off" the debt. This means that the credit card company is writing the debt off as a tax loss. The debt will then be sold to a collection agency. It is the collection agency that is most likely to file a lawsuit against you--not the credit card company. Unless your debt is incredibly high, your credit card company gains more of a benefit from the tax exemption than from suing you. If you are sued for a debt and you do not show up in court, the creditor suing you receives a default judgment.

Debt Validation

    The Fair Debt Collection Practices Act (FDCPA) grants you the right to request that any third party debt collector prove to you in writing that you owe the debt. This is important because few collection agencies have the resources to maintain copies of the original credit agreements for each account they manage. Outside of a copy of the original credit agreement, any form of debt validation a collection agency sends to a consumer can be discredited in court. When you request a debt validation, you are sending the message that you are an informed consumer who is willing to take advantage of the rights afforded to you by the FDCPA. Consumers who request validation are more likely to show up in court to fight a lawsuit--and more likely to win. Collection agencies do not want a court battle, they want a default judgment. Thus consumers who demand validation of their debts are less likely to face a lawsuit later on.

Statute of Limitations

    Every state has a statute of limitations (SOL) regulating the amount of time a creditor can sue for a debt. The average SOL in most states is three to five years. The SOL begins 180 days after the last payment made on the debt. Once the debt passes the SOL, it becomes "time-barred." Although lawsuits over time-barred debts do occur, they are much less likely. In the event that you are sued, this gives you an airtight defense in court. Notifying the petitioner of the lawsuit prior to the court date that the debt has passed, the SOL will usually result in the lawsuit being dropped.

Considerations

    The higher a debt is, the higher your chances are of a lawsuit being filed on the debt. Demonstrating your status as an informed debtor may not be enough to save you from being sued if you have a $10,000 debt. It is rarely worth a creditor's time to attempt to sue for any debt less than $1,000. Regardless of the amount of the debt itself, creditors frequently use the threat of a lawsuit to coerce debtors into making a payment. This is a common tactic and does not increase your risk of actually being sued. Lawsuits over debts are more likely to get filed just prior to the expiration of the SOL.

Misconceptions

    Perhaps the most common misconception about debt lawsuits is that once the SOL of the debt has passed, the court system will disregard any lawsuits to collect the debt. A judge, however, has no way of knowing that a debt is too old to be sued over. If you receive a summons for a time-barred debt and do not respond or show up in court, a creditor can still win a default judgment against you.

How to Start Store Credit

How to Start Store Credit

Store credit cards are usually either revolving accounts or charge cards that, when used, offer discounts on store products. These cards are also usually affiliated with top-name credit agencies, such as Visa and MasterCard. If you want to open a store credit card, you first need to make sure that you'll qualify. Submitting applications for credit and getting denied could possible harm your credit score.

Instructions

    1

    Pull a copy of your updated credit report first. Visit the Annual Credit Report website. While this website was created by the three main credit bureaus--TransUnion, Equifax and Experian--it exists as a result of the updated Fair Credit Reporting Act. It gives all American consumers access to a free copy of a credit report. Pay for a copy of your FICO score, too. This three-digit number between 300 and 850 represents your overall creditworthiness. Scores above 720 are excellent; scores below 600 are poor.

    2

    Work on improving your credit score if it is below 600. While this may not automatically disqualify you from a store credit account, it is considered poor. Look for any of the following negative items: delinquent accounts, collection accounts, over-limit credit cards, judgments and liens. To clean up your credit, these accounts need to be paid off or brought under control.

    3

    Apply for store credit when you are purchasing a big-ticket item. The appeal of store credit is often store discounts. You'll be able to maximize this discount if you open your account to purchase a large item, such as an appliance or piece of furniture.

    4

    Fill out the application with a co-borrower, if you have a significant other. Two sources of income and credit may help get the application approved. You'll need your names, income, Social Security numbers, phone number and email addresses.

    5

    Ask for a specific credit line, if approved. Most store credit accounts are revolving. This means that a credit limit is set at a certain amount. If you want to reuse the account for more purchases, make sure the credit line will be high enough.

How to Calculate Interest Paid on Credit Cards

Each month that you do not pay off the balance on your credit card, the credit company charges you a monthly interest amount based on the ending balance for the month represented in your latest billing statement.

While your monthly statement does not include the formula, you can calculate the amount of interest accrued for the month and determine how much interest you have paid in the previous billing period.

Instructions

    1

    Plug the total balance shown on your credit card statement as well as your interest rate into the following formula. Move the decimal point on the interest rate two places to the left.

    (balance) x (interest rate in decimal point form) =

    For example if you have a $20,000 balance and a 15 percent interest rate:

    20,000 x 0.15 = 3,000

    2

    Multiply the resulting number from Step 1 by the number of days in the month represented on the bill. If the month has 30 days in it:

    (3,000) x (30) = 90,000

    3

    Divide the result from Step 2 by 365 (number of days in the year).

    (90,000)/(365) = $246.57

    This number represents your interest accumulated on the balance since the last bill.

    4

    Go back to previous statements and repeat Steps 1 through 3, plugging in the numbers represented on these statements to see the amount of interest you accumulated on past balances.

    5

    Stop making new purchases on the card, and look at the next statement. The statement will reflect the new lower balance and the interest owed on the lower balance. Your payment on the last bill went toward the interest first, then the balance.

    6

    Find out the total interest paid on a credit card balance using a credit card payoff calculator. (Check the Resources section for a calculator for payoff amounts and time frames.)

    In this example, the card holder has a $20,000 balance with 15 percent interest rate snd no new purchases made on the card. The goal entails paying off the card in 24 months.

    Accomplishing this goal will take a monthly payment of $1,000 for 24 months. The total amount paid will add up to $23,158.94, with $3,158.94 in interest paid.

Saturday, February 12, 2011

Should I Refinance My Mortgage & Consolidate My Debt?

When a person falls into debt, he has options as to how he can manage this debt. If the person has a home loan, he may be able to refinance the loan into one with terms that are more manageable. If the person has multiple outstanding debts, he may also be able to trade these debts to a finance company, which will issue him a single, large loan. These options have various advantages and disadvantages.

Refinancing

    Generally, an individual will seek to refinance her mortgage to get better terms on it. In some cases, the individual may be able to get a loan with a lower rate of interest, which can save her a large amount of money over a long period of time. In addition, the individual may be able to restructure the loan so she pays less each month, making the loan more manageable.

Debt Consolidation

    When an individual consolidates his debts, he is essentially combining multiple debts into one single debt. The company that issues this new loan will generally seek to make a profit off it. However, in exchange for taking on more debt, the person may be able to pay a smaller amount each month. This can, as with certain kinds of refinancing, make his debt load more manageable in the short term.

Advantages

    Refinancing a mortgage can be beneficial if it saves a person money. In addition, if the person is struggling to pay the mortgage each month, then reducing the size of monthly payments may be able to save her from falling behind on her payments. The same is true of some debt consolidation loans, which may allow a person to pay less. Also, debt consolidation loans can make debt payment simple, as the person is paying a single creditor rather multiple creditors.

Disadvantages

    The chief disadvantage to refinanced mortgages is that the person may not save money. For example, if the person takes out a new loan in which he pays less per month, the total size of the loan may increase. In addition, it costs additional money to refinance a loan, in the form of fees paid to the new lender. Similarly, debt consolidation companies may charge an individual a higher rate of interest than he was paying before, as well as additional fees.

Friday, February 11, 2011

How to Find a Debt Collection Agency by Telephone Number

Collection agencies work on their own behalf---they do not work for original creditors or banks. They simply purchase delinquent debts from banks and finance companies at a lesser value than the outstanding amount, then they attempt to make a profit by collecting on the entire balance due. These collectors are often obscure and, therefore, difficult to track down. But there are methods available to pinpoint information about them.

Instructions

    1

    Start with the original creditor. For example, if the loan originally was with Bank of America, call BoFA's customer service line (or collection line, if available) and ask which collection agencies they use. Some creditors will be forthcoming, some will not. At the very least, get the original account number for the delinquent debt, as it will simplify and hone your search.

    2

    Pull a copy of your credit report. Go to Annualcreditreport.com or a similar site for a free copy, then print it out. Locate the delinquent account on the credit report (refer to the account number that you previously obtained). There should also be an assigning collection agency listed on the report.

    3

    Do a Web search to find the company. Often, these companies will have websites where you can contact a collections representative to make payment arrangements. There should also be a "Contact Us" tab where you can obtain at least a 1-800 number.

    4

    Contact the Federal Trade Commission if you still cannot find contact information about a particular collection agency. (See "Resources" in this article for more information.) Contact a representative with expertise in debt management, who can guide you to the right resource or person to investigate a collection agency.

Free Credit Reports that Do Not Require Credit Card Information

Credit reports provide a complete listing of your personal credit history. They include information on every credit account that you've maintained over the years -- opened and closed. Creditors reviewing your report can see how many accounts you presently hold, the balances and credit limits. But oftentimes, mistakes on credit reports can take points off your credit score. To ensure the best rating possible, it's imperative to check your own report at least once a year.

Annual Credit Report

    The Federal Reserve says that Annual Credit Report is the only company authorized to give each consumer a free copy of their credit reports each year. This company does not charge a fee or ask for credit card information. With this said, consumers should beware of other companies that promise to provide a free report. Oftentimes, free reports are subject and dependent on enrollment in a program such as credit report monitoring or credit counseling, and consumers may have to pay a monthly enrollment fee that requires a credit card number upon applying. These companies bill consumers a monthly fee for services, and in turn, consumers can access their credit report.

Review Reports Online

    Annual Credit Report has an official website that allows you to request a copy from one or all three credit bureaus (see Resource section). Requesting reports is simple, and Annual Credit Report will ask for personal information to verify your identity. This includes your full name, address and Social Security number. To stop another person from pulling your credit file, Annual Credit Report will also ask a few detailed questions about the contents of your credit report in the form of a multiple-choice test. Choosing the correct answers gives you instant assess to your online report.

Telephone Inquiries

    The Internet gives you quick access to your personal credit history. But if you prefer speaking with a representative from Annual Credit Report directly, you can request your free credit reports by dialing their toll-free customer service number: 877-322-8228. As with the online request forms, Annual Credit Report will verify your personal identity before issuing free reports.

Mail-in Request

    A third and final way to acquire your free credit report without supplying credit card information involves downloading a credit report request form from Annual Credit Report's website, completing the form and mailing the form to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Importance of Knowing Credit History

    Requesting a report from each of the bureaus at least once a year is key to keeping your credit score in good shape. Identity theft can result in numerous fraudulent accounts in your name and a reduced credit score, and creditor mistakes can limit your finance options. Don't hesitate to dispute errors on your report. Each report includes the address of each bureau to dispute a claim, and if you're viewing your report online, there's a link to dispute a credit report mistake.