May 2011 ~ Credit And Debt Management

Tuesday, May 31, 2011

Why Wouldn't I Pass a Background Check?

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Both employers and potential landlords commonly run background checks on applicants to evaluate them in advance of establishing a relationship. If you have recently submitted an application and have a concern regarding what the background check entails, there are several possible reasons why you would not pass this test.

It commonly takes up to a few days for a company to pull a full background check. As the name suggests, it is a comprehensive view of your background as far as public records. The results include credit, vehicle, property, employment, licensing and general court records. The inquiring organization needs your social security information, previous addresses and full legal name to initiate the check. You can also run a background check on yourself to get an idea of what the company sees using an online screening service.

One issue that could cause you to fail a background check is a number of unpaid court judgments. These judgments are a matter of public record, and can include unpaid traffic tickets, debts, property liens and bankruptcy filings. If the organization evaluating your application sees many of these items, it may indicate a level of irresponsibility and cause a denial.

Certain criminal records could also cause an applicant to fail a background check. Again, this is a potential indicator of the character of an individual. In particular, if the organization retrieves a record of theft or violence, that commonly would send up immediate red flags -- especially if it is a position that calls for working closely with money, customers or children. Landlords commonly seek tenants with a clean record as well.

If the background check reveals that you told an untruth on the application or your resume, that could disqualify your application as well. For instance, claiming to have a clear record or making statements regarding your educational history on your resume that conflict with the background check could prevent you from passing the application process. For this reason, it is important to tell the truth when the inquiring organization asks questions about your working, living or employment history.

Can a Creditor Put a Lien on Your Land Under Bankruptcy Law?

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Whether a creditor can put a lien against your property under bankruptcy law depends on the timing and nature of the lien. If you are facing a lien as a debtor, bankruptcy may or may not protect you. While bankruptcy can be an effective tool in getting out from under debt, a lien can often stand independent of a debt and need to be satisfied even if you file bankruptcy.

Although a creditor may ultimately have the right to put a lien on your property, a series of legal events need to occur before such a lien is permissible. Typically, a creditor has to file a lawsuit against you and get a judgment from the court before a lien is allowed. However, if you have already filed bankruptcy, your creditor's right to put a lien on your property is postponed. Bankruptcy law affords debtors the right of the automatic stay, which prevents all collection activities. Since a lien is by definition a collection action, a creditor can neither pursue nor enforce a lien once you file bankruptcy.

If a lien is not yet in force at the time you receive a bankruptcy discharge, your creditor may be out of luck. Your bankruptcy discharge will wipe out your obligation to pay back your creditor, and it will also create a permanent injunction against your creditor from pursuing legal action against you. If you have a bankruptcy discharge, your creditor generally loses the right to file a lawsuit and get a lien against your property.

If your lien survives bankruptcy, you may still be able to void it if you can use your state's bankruptcy exemptions. A lien can only survive bankruptcy to the extent that it does not violate your bankruptcy exemptions. For example, if a creditor puts a $5,000 lien on your land, but your state exempts land or a homestead to $10,000 in bankruptcy, you can petition the court to remove the lien.

Tax liens are among the most difficult to eliminate. If you don't pay your tax bill, the Internal Revenue Service (IRS) will generally allow you to pay your taxes in installments. If you refuse or are unable to pay, the IRS will usually file a lien against your property, without having to go to court. Although even a tax lien is subject to the automatic stay of bankruptcy, your tax lien will typically survive your bankruptcy discharge. Unless the IRS agrees to void your lien, or if the 10 years associated with a statute of limitations expire, the only way to get rid of your tax lien will be to pay the debt.

How to Make a Car Payment Using Mastercard

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Making a car payment using Mastercard is easy with a phone or Internet connection, or you can make the payment through the mail. While you might want to evaluate the financial wisdom of charging a car payment on a credit card, in a cash-strapped situation it could keep you from incurring a late fee and damaging your credit rating.

Instructions

Call the finance company that holds the title on your car and give the customer service representative your credit card number and expiration date. You will be asked to verify your identity, usually by providing a current address and the last 4 digits of your social security number.

Set up an electronic payment plan online by visiting your lender's website and following the instructions to create an account so you can make car payments over the Internet.

Mail your bill to the lender with your credit card number, the card's expiration date and your signature.

Determine whether you have other options for making a car payment before adding the payment to your credit card. Chances are, the interest rate on your car loan is lower than the rate you pay to carry a balance on the credit card. If you make a habit of paying loans with credit cards, you will go deeper into debt and end up paying more for the car, in real dollars, than if you had made the payments directly to the car lender.

How to Garnish Tax Returns

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Garnishment is a legal procedure where a creditor can automatically collect a percentage of a debtor's wages or his tax return to satisfy a debt. In many states, garnishment is used to fulfill support orders, such as court-ordered child support and alimony payment. Many states also permit creditors, such as credit card companies, to garnish a debtor's tax return and wages.

Instructions

The creditor must send a letter to the debtor's last known address stating the amount of debt owed while specifying that the creditor intends to apply for a garnishment order from the court if the debt remains delinquent. Creditors typically give debtors 30 days to appeal the debt, deny debt liability, pay, or make arrangements to pay the debt owed.

Apply for a court-ordered garnishment by filing a request with the court. Typically, the creditor files the petition at the nearest courthouse located to the creditor. However, creditors can also elect to file the request for garnishment in a court where the debtor resides.

Collect money to satisfy the debt. Once a judgment is made by the court, the debtors bank accounts will be frozen, preventing the debtor from removing any money. The creditor will then be entitled to collect any money in the debtor's bank account, garnish future tax returns and garnish a portion of the debtor's wages to satisfy the debt owed.

How to Choose a Debt Relief Agency

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When a credit crunch affects thousands of people worldwide, many individuals look for debt relief. There seems to be a helping hand around every corner, but not all debt relief agencies are created equally. It's important to know the facts about how to choose the right debt relief agency for you in order to maintain your good name and credit rating.

Instructions

Research debt relief agencies online. When selecting debt relief agencies, take your top three choices and check out the Better Business Bureau website to see how many complaints have been filed and how they have addressed those complaints. If an agency is complaint-free, you can rest assured that you are selecting a reputable company.

Ask questions of the agency representatives. For example: Do they have full time credit attorneys or do they have credit advocates? There is a big difference between the two. Attorneys are required to maintain continuing education in the credit and debt laws, whereas credit advocates receive the same amount of training as customer service representatives.

Review the agencies' fees completely. The fees that agencies charge will vary based on the services you require. Credit clean up in addition to debt consolidation can run from $40 to $140 per month, depending on the needs that you have. Don't select an agency just because they are inexpensive. In this line of work, the old adage that you "get what you pay for" holds true nearly 100 percent of the time.

Research the companies' claims on being seen on national networks. Sometimes debt relief agencies will have been featured on major syndicated networks, but they might not have been featured in a positive light. Make sure you visit the network sites that they claim to have been featured on, do a site search for the companies and find out the facts.

Make a list of the pros and cons for each company. This will give you a side-by-side comparison of what each company offers and helps you decide which services are most beneficial to you and your unique situation.

Can Unsecured Debt Be Garnished From a Bank Account?

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When you fail to pay a secured debt, such as a mortgage loan, your lender has the option to lay claim to the collateral you used to qualify for the loan or line of credit. Unsecured debts, however, do not require collateral. To recover the debt a creditor will sometimes seek a bank account garnishment, often referred to as a "bank levy."

Private creditors must secure a legal judgment against you in court before a levy can be placed on any of your bank accounts. If you owe a government debt, such as back taxes, no lawsuit is necessary for your bank accounts to be garnished.

You have 21 days to contest an impending bank account garnishment. During this time period, your accounts will be frozen.

If your bank account is frozen in lieu of a garnishment, you will have no access to the funds. Any checks you have written will not clear and any automatic payments you have set up will be denied by the bank due to non-sufficient funds. This can result in high bank fees after the garnishment takes place.

If you receive a bank account garnishment notice, this does not necessarily mean that the creditor you owe will be able to confiscate all of the money in your account--even if you owe more than your account contains. Certain income you receive, such as Social Security and some types of retirement pensions, cannot be levied by private creditors.

Holding a joint account with someone else does not exempt that account from garnishment. If one joint account holder has a court-ordered bank levy against him, all of his bank accounts are fair game--including those that may contain someone else's money.

Contacting the creditor and opting to enter into a repayment plan can prevent your bank account from being garnished as long as you fulfill your agreement to pay the debt. Filing for bankruptcy will also stop a garnishment from occurring.

Can Sallie Mae Garnish Wages in the State of Texas?

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In Texas, wages are considered nonexempt property and cannot be garnished. However, Texas law makes exceptions for defaulted federal student loans, non-wage income such as rental income, bank accounts and child support. Therefore, if you took out a federal student loan through the Federal Family Education Loan Program (FFLEP), Sallie Mae can garnish your paycheck. If you have a loan through Sallie Mae's private loan program, it cannot garnish your paycheck according to Texas law.

While wages are consider nonexempt property in Texas, a creditor may still be able to file for a judgment to garnish your wages if you live in that state. This can happen if you receive your wages out of state. In this case, a creditor can file to lift the judgment from Texas and move to an out-of-state jurisdiction where wage garnishment is permitted.

Default is defined by the promissory note you filed when you signed for your student loan. Until March 2010, Sallie Mae was able to originate federal and private loans. Under Texas law, federal student loans are not exempt from wage garnishment. Therefore, Sallie Mae can pursue wage garnishment as a remedy to force you into paying your federal student loan no matter where you live, but it cannot do so if you took out a private student loan. According to Sallie Mae, you are considered in default if you fail to make payments in nine consecutive months.

Federal student loans cannot be discharged in bankruptcy. The federal government cannot forgive a debtor who owes a student loan under a federal loan program. The interpretation of private student loans is slightly different. A private student loan is considered a consumer debt, which may be discharged in bankruptcy. However, it is difficult to have your private student loan discharged in bankruptcy unless you can prove undue hardship.

Federal rules place a cap on the amount of money that can be garnished from your paycheck to 25 percent of disposable personal income (DPI) or the amount that your DPI exceeds 30 times the federal minimum hourly wage, whichever is less. For example, using 30 times the federal minimum hourly wage of $7.25, Sallie Mae can only garnish 25 percent above $217.50 of your weekly paycheck.

Avoid defaulting on your Sallie Mae loan if possible. Sallie Mae provides certain alternatives for students facing hardship. You can contact them to ask for a reduced payment plan. You also can ask for a deferment or forbearance, which suspends your payments for a period of time. A forbearance lasts up to one year. During that time you have the option of paying interest. In a forbearance, unpaid accrued interest continues and is capitalized. You will have to provide financial proof to qualify for Sallie Mae's alternative payment plans.

How to Write Off a Debt Via a Statute of Limitations

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State usury laws all have statutes of limitations. This means that after a certain period of time, a debt becomes unenforceable. Any judgment on your credit report that has passed the statute of limitations, as determined by your state, can be overturned and removed from your credit report. This process is relatively simple, but you may need to retain an attorney to successfully overturn a judgment.

Instructions

Pull your current credit report by going to www.AnnualCreditReport.com for a free copy. You need this to confirm that the debt is still on your credit report.

Find the original contract you signed for the loan. This document is essential. Without it, you cannot prove how old the debt is. Contact your original lender for a copy if you don't have it. You may also need to get a certified letter from the lender (notarized) if they cannot locate the contract.

Review the statute of limitations for debts in your state. (See resources for a chart.) Confirm that your debt has passed the statute of limitations.

Hire an attorney if the debt is reported as a judgment on your credit report. This means that a court has found you liable for the debt. Your lawyer will need to file the appropriate paperwork (Vacate a Judgment) with the court at which the judgment was originally filed. Obtain a copy of the Release of Judgment.

Send a copy of the Release to all credit bureaus reporting the judgment. It may only be reporting on one or two; you can access a free copy of your credit report from each of the three credit bureaus. The court will not handle this for you. (See resources for the contact information for all credit bureaus.) Pull another copy of your credit report three months after you send the Release of Judgment. The debt should be gone.

What Is the Charge-Off of a Credit Card Account?

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A charge-off includes any amount of a customer's balance due on a credit card that the bank writes off as uncollectible. This may be the entire balance or, in the case of debt settlement, a portion of the balance. The bank may require the reduced balance to be paid in one lump sum or over several months. Once the lower balance is paid in full, the debt is considered closed by the lender.

In cases where customers have gotten over their head in debt, a partial charge-off can reduce their credit card debt to a manageable amount. A monthly payment option can help the customer get back on track. Charge-offs for the full balance due mean an end to creditor calls.

Charge-offs can only be done on delinquent accounts--and delinquencies will drop credit scores. When the lender writes off part of the balance due, "the notation on your credit report that the account is settled (rather than paid in full) could further depress your credit score and look bad to future lenders," says Leslie McFadden at Bankrate. In addition, most banks will close the account--further harming credit scores.

When discussing a charge-off, ask the lender how to reduce negative impacts to your credit score. According to Equifax, late payments are one of the most common negative impacts to credit scores. Banks may honor a request to re-age the account--a process that wipes late payments off your record. Ask the bank to allow you to close the account, which does not harm credit scores.

The Internal Revenue Service (IRS) requires the lender to report the amount charged off and send a tax form 1099-C to the customer in time to include that amount as income on the next year's taxes. In the case where $10,000 is owed to a lender, if a settlement is agreed upon for $4,000, then $6,000 is considered gross income by the IRS. For a 15 percent tax rate, the federal amount owed is $900. On a full charge off, the tax bill would be $1,500.

When the debt settlement requires an up-front payment in full, it can be tempting to withdraw funds from qualified retirement accounts. This will incur additional tax penalties. "It's an incredible hit," says Elizabeth Mance, founder of Accountability Services, a Seattle-based accounting firm serving small businesses. "If you're under 59-and-a-half, you have to pay taxes on that money. Then you get hit with a 10 percent penalty."

How to Eliminate Credit Card Debt to MBNA

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If you have an MBNA credit card with a dramatically high interest rate or a large balance, you may be wondering how to get yourself out of debt or, at the very least, improve your payment situation. MBNA has recently gained a reputation for decreasing responsible cardholders's credit limits in an effort to decrease their exposure to credit risk. This action has left many account holders feeling sour toward MBNA, wanting to pay their remaining debts and move on to a bank or credit company that puts customers first.

Instructions

Pay off your MBNA credit card the old-fashioned way. Most people are looking for a quick fix to get out of credit card debt; however, paying a few dollars more than the minimum payment each month may be the best thing for your credit score and your wallet. For example, if you have a $2,500 balance on your MBNA credit card at a 27% interest rate, you are probably making monthly minimum payments of approximately $85. If you continue to pay the minimum each month, it will take you 25 years to pay off the card. However, if you paid $105, a mere $20 extra each month, you would have the card paid off in three years with a total savings of $4,300 in interest payments.

Transfer your balance to a card with a lower rate. The quickest way to "pay off" a credit card that you are dissatisfied with due to service or high rates is to move your balance to a different company. The process is relatively simple. Check your current cards to see whether you have enough available credit to absorb your MBNA balance. If so, contact your card company and inform them that you wish to transfer a balance. They will either process your request over the phone or send you paperwork to complete and send in. If your other cards are maxed out (or you simply do not have any), shop around for a low-interest card and apply for it. Check the Web sites of the four major credit card providers--Visa, MasterCard, Discover and American Express--for more information on current rates and promotions. When your transfer is complete, your MBNA card will no longer carry a balance, and you can choose to close the account or leave it open.

Settle your MBNA account balance by working with a debt settlement agency. You should approach this option only if you are on the verge of bankruptcy and are unable to make minimum monthly payments on a number of bills. A debt settlement agency is a company that leverages their long-standing relationships with credit card companies to reduce your debt payoff amount by as much as 80 to 90%, depending upon your financial situation. The downside to this option is that it ruins your credit and should therefore only be used as a last resort to the debt management techniques listed above.

Credit Card Options to Build Your Credit

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When you're first establishing credit or rebuilding after a financial meltdown, you may become frustrated with the credit card companies because you usually need to have credit to apply for credit. The key to getting in to the credit cardholder's club is to know what kind of credit card you're most likely to qualify for. By handling your credit cards carefully from the start, you'll build a solid foundation for a healthy credit standing.

Often, those who haven't yet established credit don't immediately qualify for a major credit card, but qualifying for a store or gas card usually is easier. It's vital to ask whether the creditor reports to the credit bureaus each month, otherwise it won't help you to build credit. Such cards help you to create a good payment history, which major creditors view as a sign that you'll pay reliably when they extend credit to you.

Another option for those who don't qualify immediately for major credit cards is to use a secured card. These cards are "secured" by money set aside in an account, which the lender may take if you don't pay your debt. For example, if you put $300 into your account, your credit limit will be $300. Like with retail or gas cards, it's important to ask whether the creditor reports to the credit bureaus each month. Also, look for a company that will allow you to upgrade to an unsecured card after establishing a good payment history. Curtis Arnold, founder of the website CardRatings.com, says that these types of cards usually transition within 18 months.

Some banks offer credit cards specifically for those who are establishing a credit history. Bankrate recommends picking a bank and applying, but not applying for more than one card at a time, which may appear to creditors as signaling desperation. Keep your balances below 30 percent at all times; even if you plan to pay a purchase off in full at the end of the month, as creditors may report to the credit bureaus at any point.

While it's best not to carry a balance on your credit cards, you do need to use them so that their activity is reported to the credit bureaus. Activity signals that you know how to handle your money responsibly. Use your cards at least once every few months, then pay off the balance so that you don't have to pay interest on it.

Can a Bank Close Home Equity Line of Credit When One Spouse Dies?

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Most home equity line of credit (HELOC) agreements give the bank the right to close the credit line when it suspects the borrower can no longer afford the loan. Such a move is possible if a spouse dies and if the spouse was a signer on the loan and provided income to support the payments. The death is unlikely to effect the HELOC in situations in which the surviving spouse is solely responsible for the loan.

The Federal Reserve Board reports that most HELOCs contain clauses allowing the bank to freeze or reduce a credit line if the lender "reasonably believes" that the account holder is unable to make payments because of a "material change" in finances. That could mean losing the income of a spouse. To gain the most protection, the bank will close the credit line or freeze it at its current balance. No further charges are allowed if the credit line is closed, while freezing the line allows additional charges as the balance is paid down.

There usually is little recourse if the bank exercises its right to close the credit line. The surviving spouse can make a case for keeping the account open based on information the bank may not have, such as increased wealth because of payouts from life insurance companies. The bank may require an updated loan application based entirely on the surviving spouse's income and assets.

The Federal Reserve Board also recommends shopping around at other banks for a line of credit to replace the HELOC if the bank declines to restore the line of credit or issue a new loan based on the financial qualifications of the surviving spouse. The new HELOC will pay off the existing loan if there is a balance and provide the surviving spouse with a new credit line.

Bankrate suggests seeking legal advice from an attorney after the spouse's death. The attorney may advise that it is proper to notify the bank of the death. Some people may assume that nothing may change if the bank is not notified of the death and payments on the HELOC are made on time. That is a possibility, but the safer strategy often is to notify the bank of the spouse's death if the spouse was a signer on the loan. Taking some time to discuss the death with an attorney and perhaps a financial adviser allows for presenting the bank with a plan for keeping the account open.

Debt Collectors Vs. Creditors

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Having debt means dealing with a creditor, and in some cases, a debt collector as well. A debt collector is not the same as a creditor, although both may try to get you to pay what you owe. The differences between creditors and debt collectors make a difference in regard to whom you pay, as well as the rights you can exercise.

The primary distinction between a creditor and a debt collector is that a debt collector does not offer a line of credit the way a creditor does. You cannot appeal to a debt collector to get a loan, for example, because it does not have the money to lend. It is a debt collector's job to get money back, not to give it out.

By law, no person or business can seek to collect on a debt it does not own -- that is, it cannot ask for money it didn't give you, unless it has purchased your debt. Creditors provide money, so they have a right to collect. With a debt collector, your debt may be assigned or purchased. If the debt is assigned to the debt collector, the debt collector keeps a percentage of whatever it collects, but does not actually own the debt. This means you legally should pay the creditor, not the debt collector, if debt is assigned, unless the credit contract states you also agree to pay companies or individuals to which the debt is assigned. If the creditor sells your debt, however, then the ownership of the debt transfers to the collector, and it has a right to 100 percent of all of the payments you make. In this case, you pay the collector, not the original creditor.

You make initial contact with a creditor in hopes of a positive financial relationship any time you'd like a new line of credit -- you do not have to be financially unstable to do this, and, in fact, creditors extend the best terms to those who pose the lowest risk of default. In some cases, the relationship you create lasts for many years. By contrast, contact with a debt collector usually starts off when you're financially struggling. The relationship tends to be tense from the beginning due to the demand for payment. It ends as soon as you've proven you don't have to pay, whenever you reduce the owed balance to zero or when the statute of limitations on the debt expires.

Both creditors and debt collectors are able to collect debts, but knowing the difference between the two is a crucial part of debt defense. For example, if you know your debt has been sold, you also know your original creditor shouldn't be sending you collection notices. If you are ever unsure of who is dealing with your debt, call the creditor and ask. Both collectors and creditors should be able to validate the debt -- that is, prove that you owe. If they can't do this, you likely won't need to pay. Don't be afraid to hire legal aid if necessary to assert your rights under the Fair Debt Collection Practices Act with either party.

How Do I Settle a Judgement?

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A judgment occurs when a court of law finds on behalf of either the plaintiff or defendant. If a judgment has been entered against you, the plaintiff has the legal right to garnish your wages, pull money out of your bank accounts and recover property to pay the debt owed. Attempting to settle a judgment is possible but should be carefully considered. If your creditor is not pressing you for payment, making contact may awaken interest in your case and could result in aggressive collection efforts. If you decide to attempt to settle a judgment, a few pointers will help you successfully negotiate a settlement.

Instructions

Review your finances carefully and determine the amount you can pay toward the debt. If you have the resources to pay the debt in full, you can still attempt to negotiate the debt.

Contact the company that holds the judgment. If possible, record the phone call. Provide your account information and advise the representative that you would like to see if you can arrange a settlement on the account. Explain that you wish to settle the debt but are unable to pay it in full. Always remain polite.

Hold your ground. Expect the representative to deny a settlement and possibly threaten garnishment or property seizure. Legally, the creditor can garnish your wages, so this is not a lie, but the threat of garnishment is often used as a scare tactic to get you to agree to pay more. It costs money for the lienholder to pursue these routes, however, and his bottom-line goal is to receive some money.

Convince the representative that you can only pay a certain amount. If you can convince him you are doing the best you can, the representative is more likely to accept a settlement. If you are borrowing the funds, explain this and let him know it is the most you can possibly arrange.

Never disclose your bank account information. Explain that you will pay the creditor with a money order or certified check upon written confirmation of acceptance of settlement. If you are unable to reach a settlement agreement, try again at a later date. It often takes more than one attempt to settle.

After payment has been made, get the creditor to sign a release and satisfaction of judgment. File this document with the court.

How to Eliminate Debt Using The Debt Snowball Method

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This article will describe what a debt snowball is and how you can use it to get out of debt for good.

Instructions

First you should accumulate a $1,000 emergency fund. You may be thinking to yourself shouldn't I be paying this money towards my current debt, and the answer is no. You need to have some money set aside to protect yourself if something unexpected should arise. That way you're protected from having to go further in debt. Now, needing a flat screen tv because the Super Bowl is coming up does not constitute an emergency. The most important part of being able to get out of debt is having self control. There's no way you'll ever get out of debt if you can't control your spending.

Next, you need to make a list of all your current debts in order from smallest payoff to largest. It wouldn't hurt to put the interest rates on each of those debts on the list also. Some people say you should pay off the debt with the highest interest rate first, but Dave Ramsey says to pay off the smallest debt first. I personally look at both aspects and make the best decision for me. Ramsey says "paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan". If you have trouble committing to things, then definitely follow his advice.

Once you've created your list and decided which debt you want to tackle, start throwing any extra money you can to get that debt paid off as quickly as possible. You may want to take on a second job until you get your debt under control. If you don't have time for a second job, look around the house and see if there's anything you could sell. We all have things around the house that are just collecting dust, why not sell them and let them collect dust in someone else's house. Also during this time try your best to cut back your spending on any unnecessary things like new clothes and fast food.

Once you pay off the first debt, take the extra money you now have available and start paying on the next debt on the list. Just keep repeating this process until all your debts are eliminated. If you will stick to this plan, you'll be surprised at how fast you can get out of debt.

What Happens if I Default on a Payday Loan in Kentucky?

10:34 AM 3 comments

When a person takes out a payday loan, he is legally required to pay back the money he took out, as well as any additional interest or fees charged to him. If he doesn't, the lender can take actions to collect on it. However, payday lenders in Kentucky actually have few options to collect, as they cannot sue a borrower for payment of the money in civil court.

When a person takes out a payday loan, he must generally sign a contract with the lender in which he agrees to pay back the loan and agrees to pay any additional charge, such as late fees and interest. If the borrower violates this contract, then the lender can usually sue -- at least in most states. However, Kentucky prohibits payday lenders from suing borrowers for money that they don't pay back.

In Kentucky, a lender is allowed to charge only up to 15 percent annual interest on a cash loan. So, for example, if a person takes out a payday loan of $400, the most money that a lender can charge the person in interest in a year is $60. This interest also includes all late fees on default. This makes payday lending an unprofitable business in Kentucky compared with other states.

Although a lender cannot sue a borrower for the nonpayment of a loan in Kentucky, it can take other actions to collect on the debt. This includes contacting the borrower repeatedly and reminding her of her debt obligation. In addition, the lender can report this debt to a credit reporting agency, causing the person's credit rating to drop. This can place pressure on the borrower to pay, so as to improve her credit score.

A person who defaults on a payday loan cannot be prosecuted in Kentucky for failing to do so. In fact, all payday lenders are legally required to post a sign that states "No person who enters into a post-dated check or deferred deposit check transaction will be prosecuted or convicted." However, while a person cannot be prosecuted for defaulting on a payday loan, he may be prosecuted for other crimes. For example, the person may potentially be prosecuted for fraud if he provides false information when securing the loan.

Can the Department of Education Garnish a Veteran's Disability Pension?

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Veterans disability benefits, like most other federal benefits, are typically exempt from garnishment to repay creditors. However, because the U.S. Department of Education can sometimes garnish certain federal benefits to recover debts, you may wonder if your veterans benefits are safe from garnishment for defaulted student loans.

When a creditor garnishes your wages or other income, he intercepts a portion of the funds before you receive them. He applies these funds toward your unpaid debt. In most cases, the creditor can continue garnishing your income until you have paid the debt in full. While most creditors require a judgment and court order to garnish your wages, the U.S. Department of Education can garnish your income without filing a lawsuit.

The Department of Education can take up to 10 percent of your disposable income to repay your student loan debt. Disposable income includes all earned wages and non-exempt unearned income you receive after your employer deducts taxes and other withheld amounts. The Department of Education may also intercept your federal or state income tax refunds to apply toward your debt. If you are entitled to a tax refund less than or equal to the debt you owe to the Department of Education, it can garnish 100 percent of the refund.

The Department of Education can garnish all sources of income that a regular creditor can garnish. It can also garnish certain federal benefits, such as Social Security disability. However, the Department of Education can't garnish your veterans disability pension or veterans disability compensation payments, nor can they remove these funds from your bank account after you deposit them.

Though the Department of Education can't garnish your veterans disability pension, it can still report your defaulted loans to the major credit bureaus. It can also take the non-exempt funds in your bank account, garnish non-exempt sources of income and obtain judgments against you to seize your personal property. There is no statute of limitations on student loan debt, and you can't typically discharge it in bankruptcy.

How Can I Get a Real Loan to Pay Off Debt If Credit Is Bad?

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If your credit-card debt is rising quickly, don't be ashamed. You're far from alone. According to an April 2009 publication by The Nilson Report, the average credit-card debt for households that owned at least one credit card stood at $10,679 at the end of 2008. Fortunately, you can help pay down this debt with a home equity loan, even if you have bad credit.

One of the main benefits of owning a home is that you build up equity as you make your mortgage payments over the years. You can then use this equity to pay for home renovations, cover your children's college education or, of course, pay down your credit-card debt.

The reason this makes sense is that home equity loans typically come with far lower interest rates than do credit cards. In November of 2009, Index Credit Cards reported that the average interest rate on consumer credit cards stood at 15.94 percent. Home equity loans, though, usually come with interest rates in the 6-percent to 7-percent range.

However, if you have bad credit, you may pay higher interest rates. That's because mortgage lenders will view you as a higher risk.

If you do take out a home equity loan to pay off your debt, don't make the mistake of running up your credit-card debt again. Many consumers do this. And once they've taken out a home equity loan, they have few options to help pay down their new debt.

You'll have to determine if taking out a home equity loan to pay off your debt is worth it. Most times, even with bad credit pushing your interest rates up slightly, it will be.

However, if you don't own a home or if you haven't built up enough equity in your home, you won't be able to go this route. In this case, you may consider a debt-consolidation loan. Under this process, a debt-consolidation service will provide you a loan that eliminates all or part of your outstanding debt. The goal is to take your multiple high-interest debts and consolidate them all into one single payment with a lower monthly rate.

You can usually obtain these loans even if you have bad credit. Be aware, though, that taking out debt-consolidation loans may further weaken your credit score. Many debt-consolidation services will also charge high commissions, sometimes as much as 10 percent of the loan. Be careful when working with these companies.

If you can't take out a home equity loan, and you don't want to take the credit-score hit of a debt-consolidation loan, there are some steps you can take to pay down your debt without taking out a loan. In the process, you'll also improve your bad credit.

First, always pay more than the minimum payment required on your credit card. If you don't, you'll end up paying significantly more money in interest payments over the life of your debt. Secondly, make extra payments on your credit cards every time you come into unexpected money. These additional payments, even if they are small, will also cut down on the amount of interest you'll pay over the years.

Finally, stop adding debt to your cards. If you can't afford to buy something with cash, don't purchase it. You'll never pay down your outstanding credit-card debt if you don't stop adding to it.

How Much of My Credit Card Balance Should I Pay Each Month?

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When you get your credit card bill, you should make sure to pay at least the minimum. By doing so, your creditor will report the account as being current, and you will avoid interest rate hikes that would result from missing your payments.

Credit cards have very high interest rates because the debt is unsecured. As long as you pay the entire balance, no interest will be charged on your account. In addition, your credit score would benefit because you would have a lower ratio of debt to available credit.

You should pay as much of your credit card as you can, to avoid paying interest. However, you should always pay at least the minimum payment, to keep your credit score high and your interest rates down.

Can Financial Aid Be Seized for a Judgment?

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A judgment lien is a ruling used to seize funds in order to pay off a debt. When a judgment lien is granted, few funds are protected from the lien, especially for liens filed by state and federal government agencies. However, the lien is not designed to remove a person's ability to pay for living expenses, and will typically affect only extra income. Some types of financial aid, especially governmental aid, are usually protected during the process.

A lien is a claim that a creditor holds against an asset in order to claim a debt owed. A judgment lien, however, is a claim formally created and approved by a court of law and is made in combination with an order to seize an asset and force repayment. There are many types of judgment liens, which are often constricted based on the individual state laws they followed. Judgment liens can seize houses, wages and money in bank accounts, among other things, but some financial aid is protected.

First, homeowners should be aware of the difference between money that is received as financial aid and money that is stored in a bank account. The judgment lien applies to money in an account; it does not differentiate based on where that money came from. This means that the money may have been safe when it was still a check being sent as financial aid, but once deposited with a bank that money can still be seized. Exceptions are certain retirement accounts and certain government benefits.

Generally, federal government benefits are exempt from judgment liens. This means that Social Security benefits and veterans benefits cannot be touched. Also exempt is money given through government student assistance and U.S. contractor compensation outside the United States. In addition to protect disaster assistance as well, the regulations also protect benefits received from specific jobs, such as civil service, railroad work, merchant seaman work and harbor worker positions.

There are some exceptions to these protected benefits. When a federal debt meets a federal benefit, the debt tends to win, which means that a lien for student debt or federal taxes can seize nearly any benefit. Also, exemptions for the amounts seized from bank accounts and state benefits can vary based on the state laws, although many states have limits in place to protect at least some funds.

Student Debt Recovery

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Getting a college degree is a wonderful thing that can open a thousand doors that would otherwise be closed. Unfortunately, it can also lead to the accumulation of burdensome debt in the form of student loans. These debts can become overwhelming in many instances, leading many students to seek outside help.

If you're facing a student loan that is getting ready to go into default because you aren't making enough money to pay it down, there are several options available to you. This is especially true of federal loans. One option includes applying for an economic hardship deferment. If you are accepted into the plan, the monthly payments on the loan can be suspended for some time. The downside is that while you won't have to make these payments, the interest will continue to accrue.

Deferment plans are good if you know that there is a specific point in the future where you will be more financially capable of paying off the loan. If this isn't the case, you may want to get with the lending institution and work out a long-term alternative payment plan. This could include extending the life of the loan while reducing the monthly payments. While this may be the best choice to avoid default, it will increase the total amount of interest you pay on the loan substantially.

Many students these days are getting much of their funds from private loan agencies. Private loans can be consolidated if they come from more than one institution. Many times, this consolidation can lead to a better interest rate and an easier way to handle the monthly payment. Your interest rate could also be improved if your credit score has improved since the time you originally took out the loan.

It is important to do anything you can to keep in contact with your lending institution, whether it is the federal government or a private loan agency. Letting a loan go into default can have disastrous consequences for your financial stability. With federal loans, if 270 days pass without a payment, the government has the legal right to begin garnishing your wages. With private loans, you could be sued for the full amount after only a 30-day grace period. Even bankruptcy will often not be enough to get rid of a student loan.

There is no better way to stay out of debt recovery than to make good choices early. If you're still in college, now is the time to take advantage of any possible funds that can keep you from swimming in debt later on. Make sure and fill out the FAFSA form, which will let you apply for grant money from the state and federal government. Check your school for any potential scholarship opportunities. Don't sink yourself in loans if you know your career opportunities aren't going to bring in enough income to stay on top of the regular future payments.

Can Wages Be Garnished in North Carolina for Lawsuits?

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When a person is deeply into debt with creditors, he may face a number of actions designed to secure the collection of the money that he owes. These tactics can range from the relatively innocuous -- contact by phone and email -- to the aggressive -- the attempted garnishment of the debtor's wages. In North Carolina, creditors are allowed to seek garnishment if they have been awarded damages in a civil case, but only for certain types of debts.

In order to secure the garnishment of a debtor's wages, a creditor must first file a lawsuit against the debtor in a civil court. Often, creditors will file lawsuits for the breach of the loan contract. If a court awards a party damages in a case, the party is granted a number of new legal options in securing payment of the money. For some types of debt, garnishment is available.

In North Carolina, only garnishments that have been authorized by a judge are legal. Even if a party has been legally awarded damages in a lawsuit, he cannot attempt to garnish the debtor's wages unless a judge has given him permission to do so. In North Carolina, an employer is required to set aside money from a debtor's paycheck if he is presented with a garnishment order. However, orders will be issued only for damages arising from certain types of debts.

According to the North Carolina Department of Labor, wage garnishment is an option only if the judgment for which a person is seeking payment stems from a particular type of debt. The only kinds of debts that are eligible for garnishment are debts from taxes, student loans, alimony, child support and the use of county ambulances. Judgments stemming from other types of debts or judgments cannot be collected through garnishment.

These limitations placed on the collection of debts apply only to debts that have originated in North Carolina and in which the suit has been tried in a North Carolina. If a person is employed by a North Carolina employer and is served a garnishment order that originates from out of state, the order can be applied regardless of what type of debt the civil judgment derived from.

Bank Accounts That Cannot Be Garnished or Frozen

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If an individual fails to back a loan or another extension of credit, then creditors may try to take back the debt forcibly. Creditors have a number of legal means of doing this. Among them is the garnishment of the individual's wages and the freezing and seizure of his bank account. However, in some cases, money deposited in a bank account cannot be taken by legal force.

Garnishment is when an individual has his wages or other form of income seized before they can be given to him. This is done after the creditor has been awarded damages in a civil court and presented the debtor's employer or other provider of income with a order of garnishment. An account is frozen in much the same way: An individual's bank is presented with an order to freeze the account and, sometimes, to let the creditor take out funds.

Some bank accounts cannot be frozen, nor can some individuals have their wages garnished. In many states, to have a person's wages garnished or to have his account frozen, the individual must first pass a means test. This will measure the size of the person's income and assets. If the person does not make enough relative to his expenses, particular those related to the care of dependents, he may not be subject to garnishment or account freezing.

Certain types of income cannot be garnished or frozen in a bank account. Foremost among these are federal and state benefits, such as Social Security payments. Not only is a creditor forbidden from taking this money through garnishment, but, after it has been deposited in an account, a creditor cannot freeze it. If he does, the debtor can have the freeze order reversed by explaining to a judge that the frozen funds are derived from federal benefits.

A bank is only obligated to comply with a freeze order if the judge who orders the freeze has legal jurisdiction over the banks actions. Offshore banks -- banks headquartered in foreign countries -- are not obligated to comply with freeze orders issued by U.S. judges, as U.S. law does not apply to other countries. So, certain accounts held with foreign banks cannot be frozen.

Debt Negotiation & Repair

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When debt becomes unmanageable, many people seek out ways to reduce or settle their outstanding debt. There is a lot of information on debt negotiation or settlement, but much of the information is not reliable. It is important to do thorough research on methods you may be interested in pursuing. In addition, it is necessary to get tips and advice on what approach to debt negotiation is right for you and your particular situation.

The goal of debt negotiation is to lower the amount of outstanding debt owed, decrease interest rates on outstanding debt and/or reduce the length of time left on payments. There are services and/or companies available to assist you with debt negotiation or you can negotiate on your own behalf. Some nonprofit credit counseling agencies can assist you with debt negotiation by either providing useful negotiation strategies or contacting creditors on your behalf. For-profit companies or services handle the total negotiation process with creditors. However, many may not be as reputable as they claim to be.

The cheapest way to handle debt negotiation is to do it yourself. However, the process can be time-consuming. In addition, you must be persistent and organized. First, you need to determine the extent of your outstanding debt. Also, you should take inventory of your finances to see if there are any expenses that can be cut and how much available income is available to contribute to debt payments. Next, you need to contact all your creditors to come up with a payment plan. The negotiation may involve an interest rate reduction, reduction in the balance owed or deferred payments for a set period. For the best results, it is important to arrange a payment plan with all your creditors, as you are able to.

Credit counseling companies, operating on a non-profit basis, often offer Debt Management Plans (DMPs). With a DMP, you usually make one payment to the agency, which in turn pays your creditors. Credit counseling companies that use DMPs often work with your creditors to reduce the interest rate on your outstanding debts. As a result, more of the money you pay goes to paying down the actual debt instead of the interest. It is a common misconception that non-profit equates to free; however, there is usually a fee charged for this service.

Debt settlement is usually a more aggressive strategy to debt reduction that may prove useful to many consumers. Debt settlement often involves reducing the principal of the debt and not just the interest rates as with the debt management plans. In addition, debt settlement companies charge you a fee to handle the debt negotiation with your creditors. The fee is generally significant, so it is important to make sure you are dealing with a reputable company. All things being equal, debt settlement can result in a quicker reduction of debt vs. debt management plans because debt settlement often involves a reduction in the overall principal owed.

When considering a debt negotiation solution, it is imperative that you do your research. There are many companies, profit and non-profit alike, that charge hefty fees and make claims they can't support and promises they don't keep. They may leave you in a worse position than when you started. Look for consumer reviews to find reputable services and companies. In addition, check the Better Business Bureau to see if the company has unresolved complaints.

How to Pay Off Student Loans Quicker

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Every year millions of college graduates find themselves up to their ears in student loan debt. Today, it is easier for kids to attend school than it was decades ago, but the huge bill after graduation can come as a shock. Repaying student loans can be challenging, especially if you have other expenses like rent, utilities and other debt. However, if you pay off your loan quicker, you could save thousands of dollars in interest and improve the way you live.

Instructions

Join Teach for America or AmeriCorps. According to Kiplinger, if you join either Teach for America or AmeriCorps, you will be eligible for specific grants that will help you pay off your loans quicker. The grants may even pay the loans off for you completely, depending on how much money you owe.

Teach in a low income school. According to Kiplinger, teaching in these schools may qualify your for loan forgiveness. To find low income schools, look at the Teacher Cancellation Low Income Directory.

Join the military. According to FinAid, if a student joins the Army National Guard, he may be eligible for a Student Loan Repayment Program. The program will give a student up to $10,000 to pay off student loans.

Join public interest or non-profit positions. According to FinAid, law schools forgive loans if students work for public interest or non-profit. For more information, contact the National Association of Public Law, also known as Equal Justice Works

Take out a home equity line of credit. Go to your mortgage lender to discuss using your home for a line of credit. According to MSNBC, you can use a home equity line of credit to pay off loans quicker because you may get a much lower, but variable interest rate.

The savings in interest will allow you to put more money on the principal amount of the loan (the amount of money borrowed excluding the interest), thus making it easier for you to pay off the loan quicker. Of course to do this, you'll need to own a home. However, if your parents own a home, they can take out the line of credit, and you can just pay them each month what you owe.

Pay more than the minimum payment. Each month, pay more than the minimum amount owed on the loan. If you pay more than the minimum you will decrease the length of time it will take to pay off your loan. Sometimes the decrease in the time can be very dramatic, especially if your loans have a high interest rate.

What Happens If You Don't Pay an Unsecured Debt?

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The difference between a secured debt and an unsecured debt is simple. A secured debt is one that is backed by actual collateral. This collateral can be a dwelling or a car or anything that has definite value. On the other hand, an unsecured debt is one that is contractual. The borrower simply signs a document that says that the debt will be paid back within a certain time and within certain conditions.

There are three kinds of unsecured debts. The first is an unsecured business debt, in which the business is responsible for repaying the loan. . The second is a private unsecured debt, which means that the person taking out the loan is responsible for repaying the loan. Lastly, there is an unsecured business debt with private assurance. If the business cannot repay the loan, the individual who took out the loan is responsible for the repayment.

Unsecured debts function as short-term loans based upon an individual's creditworthiness. They are not designed for a long-term payback, and if an individual does not have good credit, the interest rate might be higher, since there is a greater likelihood that the debt might not be paid back. On the other hand, a secured loan will have a longer payback period, since the borrower has a physical asset that can be used to pay off the debt if the borrower does not meet the terms of the contract. The most common example of an unsecured debt is using a credit card.

If an unsecured debt is not paid back or if the payments are late, the lender can increase the interest rate and charge penalties, if those conditions are spelled out in the contract. In addition, the late payment or the debt default can be reported to credit bureaus, affecting an individual's credit rating.

Declaring bankruptcy will not necessarily absolve an individual from having to repay an unsecured debt. A court can order assets to be sold to pay off the unsecured debt, depending upon the circumstances. On the other hand, the court can find that the lender does not have to pay back the debt, depending upon the circumstances.

If an unsecured debt is not paid back, the lender has the right to take the borrower to small claims court, where the borrower might be found liable for the debt and required by the court to pay it back to the borrower.

If an unsecured debt is not paid back, the lender will sometimes engage a collection agency to retrieve all or part of the debt. When a debt is turned over to a collection agency, it is usually reported to credit reporting agencies.

How to Get a Credit Report for a Minor Child

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Credit reports for minors typically do not exist except in cases of identity theft. Credit bureaus do not deliberately keep records on minor children. If you suspect that your child may be a victim of identity theft, it is possible to obtain credit reports on his behalf to rectify the situation.

Instructions

Write a letter to each of the three credit bureaus: Equifax, Experian and TransUnion. You may write one letter and send it to all three to save yourself time. Explain that you are concerned that your child may be a victim of identity theft; request that an investigation be performed to determine if a credit report exists under your child's name.

Include copies of your driver's license, proof of address such as a bank statement or utility bill and copies of your child's birth certificate and social security card. Provide a list of any other addresses you've lived at for the past two years; make sure to include the child's full name in the letter. Do not under any circumstances send any original documentation; only send photocopies.

Mail each letter via certified mail, return receipt requested. This is important because you are mailing very personal identifying information and you need proof of its delivery. Credit bureau addresses are as follows:

Equifax
P.O. Box 740256
Atlanta, Georgia 30374

Experian
P.O. Box 9554
Allen, Texas 75013

TransUnion
P.O. Box 6790
Fullerton, CA 92834

Within 30 days you should receive a response from each of the credit bureaus. When no proof is found of identity theft, no credit report will exist for your child. If the investigation proves that your child is a victim of identity theft, the credit bureau will mail you a copy of the credit report. Contact your local police department to file a report in these cases.

What Happens With Student Loan Debt if You Move to Another Country?

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Higher education comes with a price. Each year, hundreds of thousands of students take on debt to finance their education. While some of these debts may be relatively small, others can reach over $100,000. Compounding the difficulty of paying these loans off, these debts are generally immune from statutes of limitations on debt collection and cannot be discharged in bankruptcy. To escape a crushing debt loan, some students relocate to other countries.

In the United States, the vast majority of student loans are underwritten by the government. While being issued a loan by the government has its advantages -- for example, the student will often receive lower rates than he would in the private market -- it also has drawbacks. Unlike private debts, federal debts don't expire and cannot be easily discharged. Also, the federal government can use collection methods unavailable to most private creditors.

In an effort to escape their debt burden, many student loan debtors choose to leave the United States and relocate overseas, CNN reports. Of the $60 billion in defaulted student loan payments, between 2 percent and 4 percent is owed by students located overseas. In some cases, the student may relocate overseas to take a higher-paying job. However, in other cases, students will move to another country to avoid creditors seeking repayment of the loan.

When a person moves overseas, his debt doesn't disappear -- it just becomes more difficult to collect. Seeking payment of a debt in another country is often an expensive, complicated prospect for a debt collector. In addition to the difficulty of negotiating another country's laws, the debt collector may have to hire a local surrogate to collect the debt for him. Also, students who relocate abroad may be more difficult to find, complicating collection.

In lieu of fleeing the country, a student loan debtor has several alternatives. If the debtor faces an unexpected financial obstacle, she may be able to apply for a hardship deferment or forbearance from the government. In addition, she may be able to change the size of his payments so that the life of the loan is extended. By paying less money each month, she has lessened the burden on her paycheck.

How to Calculate the Last Payment Due Date

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When you take on a new loan or make a big purchase on your credit card, it's a good idea to calculate the last payment due date. Calculating your last payment due date helps you realize the true cost of only paying the minimum amount due each month and lets you see just how much money you can save by making extra payments when possible. It also tells you just how long you can expect to include the loan payment in your monthly budget.

Instructions

Locate an online loan payoff calculator. The quickest way to calculate your last payment due date is to find an online loan payoff calculator. If you would prefer to do it yourself, you can use a spreadsheet to record each payment due date, subtracting the payment from the starting balance for each month. When you reach a zero balance, you have determined your last payment due date.

Enter your loan details into the loan payoff calculator. Enter your current loan balance, interest rate and your monthly payment. If you're thinking about making a higher payment than the minimum, some online payoff calculators will allow you to enter the additional payment as well so you can determine the last payment due date with a higher monthly payment.

Calculate your last payment due date. If using a loan payoff calculator, it will tell you how long it will take to pay off the loan in question, so consult a calendar to determine the last payment due date. For example, if you use the loan payoff calculator to find the last payment due date for a $15,000 loan with a 9.9 percent interest rate and a $350 regular monthly payment, you will discover that it will take you 4 years and 6 months to pay off. If you make your first payment in November of 2010, you will need to count forward by 4 years (to November 2014) and then 6 months to May 2015. You now know your last payment due date at the current interest rate and monthly payment.

Explanation of Interest Bearing Debt

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Interest bearing debt seems like a contradiction in terms---and often it is. Millions of American consumers are swimming in non-interest-bearing debt. However, there are a small percentage of market-savvy consumers taking advantage of interest-bearing debt. The process of earning while in debt is called arbitrage, or, for the average citizen, credit card arbitrage.

Credit card arbitrage is not for the faint of heart. The process involves taking on huge sums of credit card debt and investing it. Before engaging in this process, make sure you are well capitalized---so that you'll be able to cover your debts in the event of a loss---and well versed in market trends.

Practitioners of arbitrage follow this process: first, acquire several high-limit, low-interest credit cards; second, take massive cash advances off each account; third, invest the capital into interest-bearing accounts---often money-market accounts; fourth, cash out the investments; fifth, repay the debts and collect what profit remains.

For those who are market savvy, arbitrage is an easy way to make profit from interest. For example, if you were to place $40,000 in credit card funds into a standard money market account---most have interest rates of between 1 percent and 3 percent---and then withdraw the funds one year later, you would have made between $600 and $1,200. If you seek a higher return, you can invest in the stock market.

It's important for those interested in arbitrage to know how interest is compounded. Many money market accounts work differently, but the most common compound their interest on a monthly basis---which means if you add more to the account before the compounding takes place, you'll maximize your earnings.

In true arbitrage, there is zero risk if you use only money market accounts---which will never reduce your initial contribution---and use long-term strategies to earn profit. However, the longer you keep debt in an account, the longer you need to make minimum payments on your credit cards.

However, profit-hungry investors sometimes choose risky stocks---which can fluctuate wildly---and lose part of the money that was invested. If you are playing with borrowed money in the stock market, you MUST be a seasoned investor with a track record for solid returns.

What Happens When Being Sued for Credit Card Debt in Texas?

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Credit card debt is unsecured debt, meaning that the creditor cannot take away your home or other property if you do not pay the debt. In Texas, credit card companies can sue delinquent debtors for the amount of the debt plus attorney costs. However, under most circumstances, creditors cannot garnish debtors' wages and must reclaim the debt another way even if they get a judgment in court. Consult your attorney about your options if your credit card company sues you for nonpayment of debt.

Texas is one of three states that does not allow creditors to garnish wages. The court does have the authority to order the garnishment of assets such as your bank account, but not your paychecks. If a creditor sues you in court and wins a judgment against you, he cannot ask the court to order your employer to withhold a portion of your wages to pay the debt. If you owe child support payments, that debt is an exception to this rule.

If you are sued by a creditor, you have the right to appear in court and defend yourself. If you can prove that you do not owe the debt or that the creditor did not follow the law when attempting to collect the debt, the court may dismiss the case. If you do not attend the court hearing, the court automatically finds in favor of the credit card company.

If you cannot afford to pay the entire debt, you may be able to negotiate a settlement out of court with your creditor. You may want to consider hiring an attorney to assist you with this, as attorneys often have greater bargaining power than private individuals. In any case, if you settle out of court, your creditors might agree to accept a partial repayment in exchange for dropping the case against you. Get the agreement in writing and make sure to follow it so that your creditors don't return to court.

Fair Debt Collection reports that some Texas creditors have gone out of state once they received a judgment against a Texas debtor and been able to get the out-of-state court to order a wage garnishment. If you are a Texas debtor who owes credit card debt, don't ignore a court summons on the presumption that you can avoid wage garnishment once a judgment is entered against you.

The Best Methods of Paying off Debt

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Debt elimination efforts can fail without a solid strategy. Consumer debt can decrease your disposable income and reduce your FICO credit score. Several factors contribute to high debts, such as overspending or income issues. But by employing a few effective methods, you can successfully eradicate your personal debts.

An expensive lifestyle can play a role in huge debts because there's less money to pay down debt each month. Spending less and living within your means can increase your extra income and provide money to pay down debts. This can include trading in your expensive car for one with a cheaper payment or re-evaluating your housing options and getting a place that's more affordable. Reduce your monthly expenditures by $500 a month and you could pay off a $3,000 credit card debt in about six months.

Even if you don't take extreme measures, you can pay off debt with higher payments each month. Making small $25 minimum payments on a credit card each month is hardly enough to pay off a huge balance. If anything, you'll pay off the new interest charges for the month and perhaps a tiny percentage of the actual principal balance. Increase your minimum payments each month by at least half. Whenever you have extra money, put these funds toward your debt.

You can't pay off a credit card if you constantly add new charges to the account. Change the way you spend money, and instead of reaching for your credit card, use cash to pay for items. Benefits to using cash include avoiding higher balances, and paying for things with cash often requires self-discipline and saving up first. If you must use a credit card to meet an emergency expense, don't leave the new charge on your card for several months. Aim to pay off new charges each month to avoid hindering your debt elimination efforts.

Speaking with creditors to negotiate the terms of your agreement can help pay off debt faster. You can negotiate the interest rate on credit cards to pay less in interest charges each month. This helps because your monthly payments will go toward a larger percentage of your principal. And if you're on the verge of filing bankruptcy, discussing debt settlement with your creditors may help eliminate the debt for less than what you owe. Creditors may forgive a percentage of what's owed in order to avoid having the entire debt wiped out in a bankruptcy filing.

How Do I Get Out of Medical Debt That I Can Never Afford to Pay Back?

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For people without health insurance who face a major illness or a serious accident, the bills for medical treatment can quickly grow to the point that they are impossible to pay. Even for the insured, the co-payment amounts may be high enough to cause severe financial problems. You end up with more medical debt than you will ever be able to pay. In these cases, you may have no other choice but to try to eliminate these debts without paying them in full.

Instructions

Contact the hospital and other medical providers as soon as possible to talk about the situation. If you are suffering from a chronic, or ongoing, illness this is even more important, as you will continue to incur bills as you undergo treatment. Try to get the hospital and your doctor's offices on payment plans as soon as possible to keep everyone at bay until you are at a point health-wise where you can begin to work your way out of these debts.

Schedule an appointment to speak with the hospital administrator. It may be best to bypass the billing department, especially if your bill is exceptionally large. Gather any assets that you may have available to put towards the bill. Approach the administrator with a spirit of thankfulness, not entitlement. If the hospital has helped you or a family member, you want to show your appreciation for their help. After this, make an offer to the administrator to settle the debt for whatever assets you can commit to the payoff. The administrator may accept the offer, even if the offer is just a small portion of the total bill.

Approach the doctors to whom you owe money in the same way that you approached the administrator of the hospital. Let them know that you appreciate their services, and that these services are worth more than the doctor's fees. In spite of this, make the doctor aware of the realities of your financial situation. A doctor may be willing to work with you as well to reach a solution that you can afford, perhaps negotiating a large discount on your bill.

Negotiate a payment arrangement with the hospital and doctors if they will not accept a discounted lump sum settlement. Prepare your own budget and determine exactly what you can allocate to payments. Share this budget with the doctors and hospital administrator, then offer this amount in monthly payments to your providers in proportion to the debt that you owe. If you owe the hospital 80 percent of your medical debt, and 20 percent to a doctor, split your payment up appropriately. Of a $200 per month payment, you would offer the hospital $160 and the doctor $40.

File for bankruptcy if you are unable to negotiate either lump sum settlements or acceptable payments. Chapter 7 bankruptcy may be your best option if you do not have many assets, or all of your assets are exempt from bankruptcy. This will discharge all of your unsecured debt, including medical debt. If you have assets to protect, a Chapter 13 bankruptcy will allow you to work out a court-supervised repayment plan that will pay a portion of your debts over a five-year period, and discharge any remaining balance.

Will My Bad Credit Affect My Husband?

8:27 AM No comments

Husbands and wives typically apply for financing together. But if one party, such as the wife, has a bad credit history, getting the credit a couple needs can prove challenging. Everyone has their own credit score and history. But oftentimes, the credit habits of one spouse can affect the other.

Its common for two married people to have individual or separate credit accounts. They may have acquired these accounts before marrying, and continue to manage these accounts on their own. If a particular account only has the personal information of a wife, this account will not appear on the husband's credit report. The wife could miss payments or stop paying the account altogether, and the creditor will not seek payment from the husband or report the delinquency on the husband's credit report. This does not apply if you live in a community property state where all property, assets and debts accumulated during the marriage become the responsibility of both spouses.

The problem arises when couples share credit accounts. For example, the husband or wife may have a credit card or loan and then decide to add the spouse's name to the account. The account switches from an individual account to a joint account. Instead of the account affecting only one party, both husband and wife are responsible for the account; and missing or skipping payments can affect both credit histories and scores.

Applying for a mortgage loan or auto loan with a spouse is an effective way to increase approval odds and increase purchasing power because lenders take the combined income of both spouses when considering the application. But if the husband has good credit and the wife has poor credit or vice versa, this can affect whether the couple gets approved for financing. Bad credit applicants are risky to lenders, and while some lenders will approve the application as long as one borrower has a good credit reputation, the lender can charge a higher interest rate on the loan or approve the borrowers for less money.

Several methods can help couples get around credit issues when one party, such as the wife, has bad credit. Until the wife improves her credit score by paying bills on time and paying down debt, the couple could refrain from acquiring joint accounts together. And if the husband is an authorized user on the wife's credit card, removing his name from the account alleviates the credit card company coming after him for payment. Depending on the husband's income, he can apply for mortgage loans and auto loans without his wife to avoid a possible rejection and higher interest rate.

What Happens After Eight Years on My Debt?

6:55 PM No comments

Sometimes, debts go away and sometimes they linger for a longer period of time. Depending on the laws of the state in which a debt is issued, an old debt may still be collectible by creditors. However, in many cases, an old debt will no longer be eligible for collection, as it will have passed the state's statute of limitations. However, an eight-year-old debt will likely not be listed on a person's credit report.

Each state has its own laws regarding how long a creditor can go after a debtor for the payment of a particular debt. Generally, this length of time is dependent on the type of debt that the person owes. For example, a state may have a different statute of limitations for a debt that is tied to an open account than for one tied to a written contract. This statute could be longer or shorter than eight years.

After a statute of limitations has expired, a creditor is legally prohibited from pursuing collection of the debt. This means that the creditor must immediately stop all collection actions. However, if a case against the debtor is currently being pursued in court, then the case can continue so long as the lawsuit was filed before the statute expired. However, the creditor can no longer even contract the debtor about the debt.

There are many ways in which a statute of limitations can be extended. For example, if a creditor has been awarded a civil judgment against the defendant, a judge can order that the statute be renewed or extended. In addition, a statute may be automatically reset if there is a change in the debt's payment status. Generally, if a debtor makes a new payment on a debt, the statute will restart from the beginning.

Just because a statute of limitations has expired, this doesn't mean that a record of the debt has been removed from the individual's credit report. This credit report contains a record of all of an individual's recent debts. However, negative information, which includes unpaid debts, may be listed on a credit report for a maximum of seven years. If they are still listed after eight years, an individual can demand that the credit reporting bureau remove them.

How to Compose a Sample Hardship Letter

12:43 PM No comments

Writing a sample hardship letter to a mortgage company could avoid foreclose to your home. If you find yourself behind on your mortgage a hardship letter sample asking for a modification could help.

Instructions

The first step to composing a sample hardship letter is to understand your goal which is to avoid foreclosure on your home.

Second, realize your hardship explanation must be clear and concise in your sample letter because it is being received along with thousands of similar hardship cases to avoid foreclosue.

A mortgage company will take into consideration several hardship situations like loss of job, failed business, health related, student loan, and even military so research your situation as to how to best explain it in your sample letter.

When explaining your current situation in your sample hardship letter to a mortgage company be accurate with dates it started, and probable length of continuation.

Use your sample hardship letter to avoid foreclosure by explaining to the point how this is affecting your payment situation and note your intentions to continue payment until payed in full.

Your sample modification hardship letter should ask specifically what you want in terms of a modification, adjustment, or a sample short sale hardship letter for your house and why. Give reasonable options and give the reason is to avoid a foreclosure on your family's house.

Tell the mortgage company in your sample hardship letter you look forward to resolving this situation and continuing payment as soon as possible.

Include respectfully in your sample hardship letter salutation as well as a borrowers (and if possible a co-borrower) signature.

The Best Ways to Get Rid of Small Debts

6:25 AM No comments

Most people carry around some amount of debt, such as car loans, credit cards or even late fines on overdue library books. Debt can rack up quickly, leaving you feeling overwhelmed. Fortunately, if you have a few small debts, there are easy and painless ways to get those paid off quickly, leading you well on your way to being debt-free.

The snowball method, invented by Dave Ramsey, involves paying off all your debts starting with the smallest, effectively getting rid of small debts quickly. To follow this method, make a list of all of your debts starting with the smallest and progressing to the largest. Write the minimum monthly payment down on each debt. Figure out your budget and decide on any extra money you can put toward your debt each month. Then, on the due dates, pay the minimum amount due on each debt and apply the extra income towards the smallest debt.

For small debts with a recurring monthly payment, such as a credit card, the quickest way to pay them off is to pay more then the minimum monthly payment each month. If you are already paying more then the minimum monthly payment on several cards, reallocate that money to the smallest debt to get it paid quickly. Simply reduce the amount you pay toward your other credit cards, and then apply that monthly income to your smallest debt.

You can pay off a small debt by raising some additional money. Calculate how much you owe on the debt and make that your goal, then find a way to bring in additional income. You could have a garage sale, sell some belongings you no longer have use for at an online auction site, or even take on a part-time job such as babysitting or dog walking.

Another easy way to pay off a small debt is to save money by cutting back on your luxury expenses. You likely have a monthly expense or two that you could cut back on temporarily, such as a gym membership, daily coffee run or online shopping. By cutting these extras out for a month or two, you can earn enough money to pay off the debt without having to sacrifice your essential budgeting items, or fall behind on your other payments.

Does Paying a Credit Card on Time Improve Your Credit Score?

7:02 AM No comments

Getting your credit score as high as possible means handling your finances responsibly in a number of ways, including paying your credit cards on time. Making payments on time reflects your ability to handle your borrowing wisely. However, other factors also play into the ultimate calculation of your credit score.

The timeliness of your payments accounts for the largest chunk of your credit score, at 35 percent. Paying your credit cards -- and all your bills -- on time is vital to keeping your credit score healthy. One way to make sure your credit card payments are on time each month is to set your accounts up with automatic payments. Most automatic payment systems allow you to select the amount you would like to pay each month.

Paying on time is essential, but it's also essential to pay early if you want to save money on interest and you carry a balance from month to month. Each day you carry a balance, it accumulates interest, so paying toward the beginning of the cycle means that you pay less each month. The savings are small, but over time they add up. Bankrate writer Marcia Passos Duffy points out that a cardholder with a $10,000 balance with a 29 percent interest rate saves about $96 per year by paying on day two of the billing cycle rather than at the end of it. If possible, pay off your entire balance each month.

Since timeliness of payments makes up such a large portion of your credit score, making late payments can be catastrophic. According to MSN Money writer Liz Pulliam Weston, a single payment made more than 30 days late may lower your score by as much as 110 points. Such devastating drops in your score take months, or even years, of rebuilding.

To get your credit score as high as possible, you also need to consider the other variables that make up your score. After timeliness of payments comes debt utilization, which accounts for roughly one-third of your credit score. To maximize your debt utilization, you need to keep your credit card balances under 30 percent of their limits at all times. Another 15 percent of your score goes to your credit history -- the longer you've had accounts open, the better. Credit expansion gets 10 percent. For this category, it's best to open a few new accounts over time to prove that you have the ability to handle new credit responsibly; however, applying for lots of new credit at once actually lowers your score. The last 10 percent is allocated to credit diversity. Having a mixture of installment and revolving loans will boost your score in this category.

How to Put a Security Freeze on a Credit Account

8:53 AM No comments

Every year, identity theft strikes millions of new people in the U.S. A security freeze allows you to lock your credit report, preventing anyone from opening up a new account. Because the information is not accessible to creditors, the thief will not be able to obtain a new credit line. It is very important that you freeze your credit report at all three major credit bureaus: TransUnion, Experian and Equifax.

Instructions

Check the Consumers Union's Guide to Security Freeze Protection to find out if your state has fee requirements (see Resource). You will need this information for filing a security freeze with any of the three major credit bureaus.

Submit your security request online to TransUnion's website (see Resources). Register for a new account if you do not have one. Log on and supply the requested information. You will need your name, address and Social Security number, date of birth and a method of paying the fee, if any. Have ready a six-digit number to use as a personal identification number (PIN) if you need to contact TransUnion again about your freeze.

Request the freeze by telephone from TransUnion by calling 888-909-8872. You will need the same information from Step 2, plus a way to pay the fee and your PIN if you need to contact TransUnion again about your freeze.

Mail your written request by certified mail to TransUnion at:

TransUnion
Fraud Victim Assistance Department
1561 E. Orangethorpe Ave.
Fullerton, CA 92831

Include your name, address and Social Security number and the required fee, if any. Include an official copy of proof where you live, such as your driver's license.

Go to the Experian website to submit your request online (see Resources). After you select your state, the Experian site will provide details on your state's fee requirements. To freeze your account, you will need to give your name and address, date of birth, Social Security number and previous addresses if you have lived at your current address for less than two years.

Send a written request for a security freeze to Experian using certified mail. The address is:

Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

Include your full name, current mailing address and previous addresses for the past two years, Social Security number, date of birth, one copy of a government-issued identification such as a driver's license and one copy of a utility bill or bank statement. Include any fee, if necessary.

Write a letter to Equifax for your security freeze and include the following information: complete name (be sure to include any middle name or initial and any suffixes like Jr.), complete address, Social Security number and date of birth.

Mail your written request using certified mail to:

Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348

Include any fee, if required.

Welcome to our website credit and debt managementr.

Tuesday, May 31, 2011

Pulling a Background Check

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Monday, May 30, 2011

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Sunday, May 29, 2011

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Saturday, May 28, 2011

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Wednesday, May 25, 2011

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Tuesday, May 24, 2011

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Monday, May 23, 2011

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