October 2011 ~ Credit And Debt Management

Monday, October 31, 2011

Can Credit Card Collectors Freeze My Bank Account?

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Credit card debt collectors are allowed, by the Fair Debt Collections Practice Act, known as FDCPA, to use certain credit collecting techniques, within certain hours on certain days. They can call you, but not at work if you tell them not to. They can't threaten you with jail and they can't threaten to take any legal action that they are not authorized to take. A debt collector can freeze your bank account but he has to go to court first.

Garnishment, whether of wages or assets, is a court process. It requires first that a creditor get a judgment against you in your local court. The judgment defines the amount of money that the creditor is owed. Once the judgment is handed down the creditor can go back to court to get a garnishment. Typically, a creditor does an asset search to determine if you have any money or property that can be liquidated to satisfy the judgment. You may be served with court papers that require you to answer a series of questions regarding your assets, i.e., stocks, bonds, bank accounts, real property or cars. If you have a bank account, the bank may receive a garnishment notice, at which time it must freeze your account until further orders from the court.

Once a bank receives the garnishment notice, it must freeze funds in your account from withdrawal. If you have electronic bill payments coming through, they will not be honored nor will checks you have written. You will not be able to withdraw funds, though your funds can be deposited in your account. The bank can also charge you a fee for freezing the account. If you have any money being direct deposited into the account, you should stop the direct deposit to protect future funds from being frozen.

Certain funds are exempt from garnishment and if you have these funds in your account, you can direct the bank to unfreeze them, though you may have to go to court to do so. You must provide proof to the bank and the court, that the funds are exempt. Most federal benefits are exempt from garnishment and in some states, state benefits are exempt as well. If you receive a garnishment notice, pay close attention to any deadlines that appear, as these could impact your ability to stop or lift the garnishment in a timely manner.

Federal benefits that are exempt include Social Security pension and disability payments, Railroad Retirement, veterans benefits, military annuities and survivor's benefits, longshoreman and harbor workers death and disability benefits, military pay, all federal pensions, merchant seaman wages, student aid, FEMA disaster payments and U.S. contractor's injury, death or detention benefits. If you receive exempt funds, and also receive nonexempt funds, be sure you do not put them together in the same bank account. If you co-mingle these funds, their source is not clear-cut and you could lose the ability to lift or avoid the freeze. Some states require that a minimum amount of money in your account be exempted from a freeze so you aren't left with nothing. Check your state's laws regarding to see what the amount is, if any.

Debt Management Secrets

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Bad credit and overwhelming debt with high interest rates affects the quality of life for many Americans. In an age where people are often hired and given opportunities based on credit scores, having a good one makes life easier. If a bad credit score prevents you from getting a better-paying job, that only compounds the problem.

The proven, most efficient way of eliminating debt is to settle. Obtaining credit reports from all three major credit bureaus -- TransUnion, Experian and Equifax -- will provide comprehensive information. TrueCredit.com has free reports from each company. Settling provides the critical benefit of stopping interest payments from being added to your mounting debt.

While some individuals are natural-born deal makers, negotiation is a skill anyone can learn, according to Negotiationskills.com. Creditors do not have to settle for less than the original amount, but often do to recover a portion of funds owed.

You can also negotiate manageable payments. Earl Smith, from Illinois, negotiated to pay $15.00 monthly to each creditor until he found a job. He diligently paid. Once he was re-employed, he paid off each creditor, one by one. Use this low-payment tactic only if the debt amount is settled and the company or companies are not adding monthly interest.

Contact a credit counseling agency to assist with tackling the debt. Professionally-trained debt counselors help clients set reasonable goals. Not everyone knows what type of debt management they need or what works best. Counselors work with creditors daily. These agencies also refer clients to a bankruptcy or debt settlement attorney if that provides the best option for the client. Justice.gov provides a listing by state of reputable firms.

Only use a reputable program. Research the company fully and check for references or complaints on the Better Business Bureau website before signing on. Walk away from a company without a contractual guarantee or you may find yourself facing even more debt in the long run when you add their fees to your debts.

Debt consolidation takes out one loan with a consolidation firm to pay off unsecured lines of credit. This proves helpful for clients who obtain a lower interest rate. Tracking the balance becomes easier because the payment goes to one firm. Securing a fixed, lower interest rate is the key.

How to Find Out if a Creditor Wrote Off Your Debt

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Creditors sustain financial losses when consumers do not pay off their debts. In an effort to limit these losses, companies "write off" or "charge off" unpaid balances. After a write-off, the creditor can claim your debt as a tax deduction. You still owe any debts that creditors write off. This process merely transfers your outstanding debt from one accounting ledger to another. The company can provide you with information about your account's current status. Lenders often list write-offs on credit reports.

Instructions

Examine previous billing statements your creditor sent you. Locate your account number and the company's customer service telephone number. Write down both numbers.

Call the creditor's customer service number. Wait for the prompt asking for your account number. Enter your account number via the telephone keypad. The computer will automatically retrieve your account information and provide an update on your account status. If the creditor wrote off your account, the automated system may provide you with this information when disclosing your account's status.

Listen to the available options if the computer system does not immediately request your account number. Select the option for "Account Information" or "Account Status" if such an option is available. The automated system then provides you with up-to-date information about the status of your account.

Explain your situation to the customer service representative if the creditor does not have an automated system or the automated system does not answer your question. Provide the representative with your account number and ask that she inform you of whether or not the company has written off your debt.

Visit the only federally-approved website for free credit reports, AnnualCreditReport.com.

Request a free credit report by filling out the requested information and selecting the credit bureau whose report you want to review. You may choose a credit report from Equifax, TransUnion or Experian.

Print the credit report for your records.

Read the credit report information section by section until you find your creditor's trade line. Creditors who report consumer accounts to the credit bureaus must regularly update their reports. Thus, if the creditor's trade line shows up on your credit report, it must report a write-off if one occurred.

Credit Repair Services to Fix Bad Credit With Credit Repair Companies

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Becoming mired in credit card debt is a very helpless feeling. However, if you're in serious debt, the problem goes much deeper than owing a lot of money to your creditors. You must also consider the impact your debt is having on your credit score. If you think your credit is destroyed beyond repair, you can consider seeking the counsel of credit repair companies.

The damage you do to your credit while you're in debt can have long-lasting ramifications. Credit isn't just used these days to see what kind of interest rate you'd get on a loan or a credit card. Today, credit determines if you can buy a house, if you can get an apartment and even if you can get a job. Keeping on top of your credit is paramount to a successful future; if your credit has suffered in the past, you can try to rehabilitate your credit through credit repair.

Credit repair is, in effect, an attempt to undo the damage you've done to your credit. While the Fair Credit Reporting Act states that all negative information must stay on your credit report for seven years, credit repair tries to find ways to get this information removed. This is usually done through appeal letters stating reasons why the information on your credit report is invalid. The removal of these negative marks helps you increase your credit score and thereby get better interest rates in the future.

Fixing your credit report is a daunting process filled with lots of review, paperwork and waiting. You may not want to do this yourself, or you may want someone with more expertise to be handling your files. Credit repair companies are willing to help you, but be careful when it's time to pick a company. If you decide to work with a credit repair company, be sure to keep an eye out for scams or anything that doesn't look or feel quite right, such as a request for up-front payment before services are provided.

If you're wary of credit repair companies, you can always try to repair your own credit. In fact, since the major credit bureaus allow you to file disputes online, the process is now easier than ever. You can still mail letters with documentation if you'd like, but it's not necessary. The credit bureau has 30 days to review your request, and the item will either be removed from your report or verified as legitimate.

If you're having trouble getting results through conventional methods, you can try mailing a goodwill letter to your creditors. A goodwill letter asks the creditor to remove the negative information from your credit reports as a courtesy. There's no obligation for the creditor to comply with your request, but it's worth a shot.

Advantages & Disadvantages of Credit Counseling

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Credit counseling offers a variety of services to people who are overwhelmed by their current financial situation. While each company varies in its offerings, most provide basic financial budgeting advice and also will negotiate with your creditors to restructure debt for a nominal setup fee and then a monthly charge. However, there are some possible disadvantages to using even the most ethical credit counseling company.

One of the biggest advantages to using a debt management plan through a credit counseling company is avoiding bankruptcy. Bankruptcy can seriously hamper credit for 7 to 10 years.

The fact that you have used credit counseling usually stays on a credit report for up to 7 years, and some lenders consider it a negative credit event. Credit cards being managed by the credit counseling company will also show up as closed by credit grantor.

Many credit counselors can help debtors save money by getting late fees waived, interest rates lowered, and in some cases even the balance reduced.

The monthly fees could exceed $20 per month, which might be more helpful toward debt repayment. This especially applies in smaller debt cases.

Credit counseling companies can often get creditors to work with them on repayment alternatives more effectively than consumers can do with their own resources.

How to Reduce Bad Debt

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Bad debt and poor credit affect many Americans. Thousands of consumers are faced with overwhelming debt. Bad debts, like charge-offs, judgments and collection accounts, can be reduced, but the process is often quite challenging. Cleaning up your bad debt will help you obtain lower-rate financing, better apartments and even secure more favorable employment.

Instructions

Obtain a copy of your credit report. You can get a free copy at Annual Credit Report. (Resource 1) However, you must pay for a copy of your FICO score. This three-digit number between 300 and 850 is your overall credit character. Scores above 720 are excellent, and scores below 600 are poor.

Review your credit report for bad debts, which may include: any account that is more than 30 days overdue, accounts in collections, any public records (judgments, bankruptcies, charge-offs) and liens (medical liens and tax liens).

Prioritize the bad debt. For example, say you have three accounts that are 30 days overdue, two charged-off accounts and three judgments. The judgments are the most damaging (since a court order can only approve a judgment), followed by the charge-offs and, finally, the overdue accounts.

Calculate your debt-to-income ratio (DIR). Divide all monthly credit-reportable expenses (including all bad debts) by your gross monthly income. If you have a DIR higher than 50 percent, creditors will likely be more willing to adjust a repayment schedule.

Contact the creditors who own your most serious accounts. Indicate your willingness to honor the account. Offer to fax income documents so a fair and realistic payment schedule can be arranged. Get all repayment offers in writing (either via email, fax or post).

Review repayment offers with a trusted advisor, such as a personal accountant or attorney. Some lenders may try to slip in extra fees and charges when negotiating repayment agreements. Make sure the agreement will help you repay and escape the bad debt, not push you further into trouble.

Repeat steps six and seven for all bad debts. Arrange equitable repayment schedules with all of your bad debt accounts.

Redesign your monthly spending budget. Look at your bank statements for previous months. You must eliminate all non-essential spending in order honor your repayment agreements.

Consider liquidating any savings or investment accounts, if applicable, to quickly reduce bad debts.

If You Get a Debt Consolidation Loan, Does it Count Against You When You Apply for a Mortgage Later?

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Consumers often will attempt to simplify their payment of debts by combining all or most of their outstanding debts into one. A finance company, called a debt consolidator, will buy up the unpaid portions of all of these debts and issue the debtor a new loan equivalent in size to these debts. Consolidating debts will usually not harm a person's credit rating and may even help in the long term.

A person will generally pursue debt consolidation for two reasons. First, consolidating debts makes paying them logistically simply. Instead of mailing checks to a number of companies each month, the debtor has only to write a single check to one finance company. Also, if the finance company structures the loan in a certain way, the debtor may end up paying less each month in debt payments than he did before.

A person's credit score depends in part on the amount of outstanding debt that a person has. If a person consolidates his bills, the debt he has after consolidation will be about the same size as the debt he had before consolidation. In some cases, it may be slightly larger, as the consolidator may charge a fee. However, as the size of outstanding debt will not change much, neither will the person's credit score.

When a person applies for a mortgage, the lender will examine personal information when determining what rate to charge the prospective lender. This includes the person's credit score. If a person's credit score is unchanged after consolidating debt, it will not count against him when he applies for a mortgage. This is unless the lender thinks the consolidation indicates a lack of creditworthiness not reflected by the rest of the person's credit report.

A person may actually improve his credit score by consolidating if he is able to pay back the loan on time for an extended period of time. If consolidating debts prevents the person from paying his bills late, which can harm a person's credit rating, debt consolidation can ultimately help the person get a better rate on his mortgage, as his credit score will improve.

Under What Circumstances Can Your Wages Be Garnished?

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If you default on any type of secured or unsecured debt, the creditor can garnish your wages for the unpaid balance on your account. Other circumstances that can lead to wage garnishments include unpaid federal and state back taxes, as well as court support orders for child or spousal support.

When lenders do not use any type of property as collateral against a debt, the lender considers it unsecured debt. Credit cards, private student loans and personal loans fall into this category. The creditor will file a lawsuit against you for the amount you owe, plus any applicable court and legal fees. The creditor usually files this suit at a courthouse local to you. If a judge finds in favor of the creditor, who is the plaintiff in this case, garnishment of your wages will begin shortly thereafter. If the judge does not find in favor of the creditor, she dismisses the case and there is no wage garnishment.

If you default on a secured debt, such as a car loan or any other loan secured by property, the creditor will repossess your property to sell at auction. Typically, you have a right of redemption after the creditor repossesses the property. To exercise this right, you must pay all the past-due payments plus repossession fees. If you don't exercise this right, the creditor sells the property at auction. If there is a balance remaining on your account after the creditor applies the auction proceeds, the creditor can garnish your wages for the remaining balance. The creditor must sue you, and the judge must find in favor of the creditor before the garnishment can begin.

If you have unpaid taxes from previous tax years, the IRS and your state can garnish your wages for the unpaid balance plus penalties and interest. Unlike creditors, the IRS does not have to sue you in court before the garnishment can begin. Instead, the IRS sends you a letter notifying you of the garnishment. The IRS will continue to garnish your wages until you pay off the entire balance of your taxes owed.

If you have a court order to pay child and spousal support and you are behind on your payments, the state may garnish your wages.

The U.S. Department of Education insures federal student loans such as Perkins and Stafford loans. If you default on a federally insured student loan, the Department of Education does not have to file suit against you before a garnishment can begin. However, the department will send you a notification of the default and its intentions to garnish your wages. On this notice, they list the contact number for the Administrative Wage Garnishment or AWG department. You can call this number and work out an installment-payment arrangement to prevent the wage garnishment.

How to Create a Debt Reduction Plan in Microsoft Money Plus

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Microsoft Money Plus is a popular personal finance software program available to consumers. The program allows consumers to keep track of all of their financial accounts in one place. Once a consumer has set up all of his credit and debt accounts, he can then choose to implement a debt reduction plan. Microsoft Money Plus will walk users through a debt reduction plan which will allow consumers to see how much debt they have, how best to optimize the debt repayment, a repayment schedule and a debt payoff date. Read on to learn how to create a debt reduction plan in Microsoft Money Plus.

Instructions

Launch Microsoft Money Plus. From the drop-down menus at the top, click on Planning. Select the Debt Reduction Planner.

Verify that all of your debt accounts are listed in the Accounts in Debt Plan section. If a debt is not included, but is shown at the bottom of the screen, click on the debt name and then click the Move Up button. This will move that account into the debt reduction plan. Alternately, if a debt is included in the plan that you would like removed, click on that debt and then click on the Move Down button. You may be prompted to enter additional information about debts included in the plan. If you are prompted to do so, enter the required information. Once you have all of your debts included in the plan, click on the Next button.

Define Your Payment Plan allows you to tell Microsoft Money Plus how you want to implement your debt reduction plan. If you click on the option that allows you to base your plan on what you want to pay each month, you will need to list an amount in the monthly allocation for debt section. You are also prompted to enter a one-time extra payment if you have additional funds available to jump-start your debt reduction plan.

Select the Date I want to be out of debt option if your monthly allocation can vary and you have an end-date in mind to be out of debt. Input the date that you would like to be debt-free and then enter any amount into the one-time extra payment field.

Read the Results section at the bottom of the page as well as the Status section in the menu bar to see where you currently stand. Click on Next to continue.

View the graph that depicts your debt payoff plan. By using the drop-down menu at the top, you can alternately select to view your payment schedule by month or by account. After you browse all of the options, click on Next.

Select any of the bills that you would like to enter as a recurring payment. Once you have set this up, click on Finish to complete your debt reduction plan.

About CCNA Consumer Debt Reduction

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Coface Collections North America (CCNA) provides a section in the online Debt Reduction Guide for consumers to learn how to deal with money issues. Many tips are provided depending on the debt reduction situation the consumer may be dealing with.

One tip the CCNA can step you through is consolidating all your debt into a single monthly payment and one single low interest rate. Your situation, particularly how many high-interest-rate accounts you have, will determine whether this is a viable tool for reducing your debt.

Communicating with your creditors and explaining your situation to them can help lower monthly payments required in some situations. The CCNA section of the Debt Reduction Guide can explain how to write letters to your creditors and keep records on all communication.

If you feel you need professional assistance, CCNA can direct you down that road. The CCNA portion of the Debt Reduction Guide also provides articles about debt reduction that is lawyer-assisted, how to find a professional credit counselor, and grants that are available to help with debt reduction.

How to Dispute Government Debt

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The government takes debt collection very seriously. Whereas a debt owed to a private creditor may potentially have no consequences other than a tarnished credit record, government debts operate by a different set of rules. The government has the authority to withhold tax returns, garnish Social Security payments and levy your bank accounts in an effort to recover a debt. In addition, if your government debt is a tax debt, it will have no set reporting period on your credit report and can appear as a negative entry on your file indefinitely. If you discover a government debt reporting inaccurately on your credit report, it is imperative that you take immediate action to remedy the problem and have the debt removed before the government initiates aggressive collection efforts against you for a debt that you do not owe.

Instructions

Contact the branch of government that is reporting the debt and request the name of the individual or department that handles credit reporting.

Call the appropriate person or department and explain the error. Ask what documentation you need to provide to have the entry removed. Different government agencies will require different forms of documentation to exonerate you.

Send a copy of your credit report, along with copies of any paperwork that was requested, to the department. Include a short letter explaining that the debt is not yours, is damaging your credit score, and must be removed.

Check your credit reports in 30 days to ensure that the debt was removed.

Send another request to the agency to remove the government debt from your credit record. Point out that you have already provided the necessary documentation to prove that you never accrued the debt.

Dispute the debt with the credit bureaus if the government agency refuses to remove it from your credit report. The credit bureaus then each have 30 days to attempt to validate the debt. If the debt cannot be proven to be yours, it will be removed from your file.

Hire an attorney and file a lawsuit against the government agency that is reporting the debt if the credit bureau investigation comes back "verified."

How to Remove Account Charges From Your Credit Report

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If a credit card was charged incorrectly or was charged for a disputed item, the charge must be removed from the credit card account so that it does not reflect negatively on the holder's credit rating. Even if a charge was leveled unfairly or mistakenly, an individual's credit rating only shows that the charge wasn't paid on time if at all. Disputed credit card charges must be removed from the credit card report by the credit card company. This is done by negotiating with both the original creditor as well as the credit card company.

Instructions

Contact the vendor who billed the credit card. A written letter is preferable as this provides a paper trail in case one is ever needed.

Explain what the error is. Provide concise and accurate details.

Request that the credit card company be contacted to remove the charge.

If the vendor is not willing to correct the charge, contact the credit card company to file a dispute claim. Follow the procedure as outlined by the credit card company.

Check the next credit card statement to insure that the account charge was removed successfully. If an unpaid charge remains on the credit card, it becomes a "charge-off" and will lower a credit rating so the dispute must be resolved.

What Is Really Better: Debt Consolidation or Debt Settlement?

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Finding yourself mired in impossibly unmanageable debt may convince you to seek a solution fast. Two options available to you are debt consolidation and debt settlement. Knowing which is best for you can mean the difference between finding a resolution to your financial problems and getting deeper in debt.

Consolidating your debts means taking the majority of your large debts and paying them off with one new loan. The main purpose is to reduce your total payments by having one lower-interest loan, instead of many high interest rate loans. This can be accomplished by placing your debt on a low-interest credit card; applying for an equity, or second, loan secured by your house; taking a personal loan from your bank; or hiring a debt consolidation service. If you do the latter, you will give the service a check each month and they will pay your loan bills for you. However, ask what the fees and interest rate are before you sign a contract for a debt consolidation service. You may find when you take this approach that you're not saving money at all.

Settling your debt requires you to contact your creditors and ask if they will take a lump sum payment that is less than what you owe. You must have access to the amount agreed upon, so you can pay it off immediately. If you are not able to negotiate with your creditors, you can hire a debt settlement company to do it for you. These companies can charge high fees for something that you may be able to accomplish alone. It's important that your creditor send you a letter that outlines the amount settled upon and that the rest will be forgiven so that collection agencies do not continue calling and so the debt is removed from your credit history. Ask for a settlement amount of about 30 to 70 percent of what you owe. Depending on your situation, the creditors may feel that receiving something from you is better than nothing at all.

You may be able to settle and consolidate your debts. Once you negotiate with your creditors to lower your balances, you can pay them off with a low-interest loan that consolidates your debts and allows you to pay off the lower amount settled. If you are able to control your finances with a consolidation loan, your credit score won't be affected as much as a debt settlement. Taking out a new loan may negatively impact your credit score approximately eight to 15 points. However, a debt settlement agreement can bring your score down by 45 to 125 points, depending on what it was beforehand.

Paying excessive fees to debt settlement and consolidation companies doesn't help when you don't have enough money to pay your bills in the first place. Before you hire such a company, visit a reputable nonprofit credit counseling service. Your financial history will be reviewed and the counselor will give you options that are best for your situation. Look for a credit counselor who belongs to a trade association, such as the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. If you are unable to work out a plan to pay your creditors, filing bankruptcy is an alternative. This will give you relief from collection activities and, depending on the type that you file, you may be able to keep some or all of your assets.

Free Credit & Debt Counseling

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Legitimate credit counseling companies help you if you get buried in bills. Many have useful information on their websites to access at any time, according to the Federal Trade Commission (FTC) website, and some provide budgeting and debt-management courses at little or no cost. You may need more personal service in the form of counseling, but it is difficult to afford when you are already in financial distress. Fortunately, some counseling is free.

Credit and debt counseling means getting assistance from a trained counselor on handling current financial problems and avoiding them in the future. The counselor meets you in an office or you chat on the phone or Internet, according to the FTC. The session focuses on your debt and how best to handle it, which might mean making a budget, negotiating with creditors or entering into a structured payment plan.

You are free to seek credit counseling whenever you feel you need it, whether you are just starting to have problems paying your bills or are seriously delinquent. Early counseling may enable you to get back on track with something as simple as budget adjustments. You may require a formal debt-management plan administered by the counseling company if your bills are seriously delinquent. Counselors generally charge fees for certain services, but the FTC advises that legitimate firms do not turn away clients who cannot afford to pay. Ask the firm about its payment policies for destitute people before agreeing to work with it.

The court requires you to complete credit counseling before you are allowed to file bankruptcy, according to the FTC site, and additional debt-management counseling before your case concludes. The typical cost is $50 for pre-bankruptcy counseling and $50 to $100 for the final session, but the FTC advises that all fees are waived if you are unable to pay. Approved bankruptcy counselors are listed on the U. S. Department of Justice's U. S. Trustee Program website (see Resources).

Many credit counseling firms tout their non-profit status, but the FTC site warns that being a non-profit does not make them legitimate or mean they work for free. Screen firms carefully by asking about costs, services offered and whether they have a state license, if required, and if their counselors were trained and certified by a professional organization, the Better Business Bureau advises. Avoid firms that insist on high fees, that are not licensed or that have unqualified employees. The National Foundation for Credit Counseling, a professional organization, provides referrals to free and low-cost counselors (see Resources).

How to Stop Collection Agencies While Single & Unemployed

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Collection agencies are responsible for collecting money from debtors who have fallen behind on payments or appear likely to default on what they owe. People in high amounts of debt are often frustrated by being constantly annoyed by these agencies on a daily basis. This is especially a problem if the debtor is currently between jobs and unable to make any payments Though it is near impossible to do away with collection calls completely, there are some steps a debtor can take to reduce the amount.

Instructions

When the collection agencies call, inform them of your situation and ask if there was any way you can figure out a plan to repay your debt. If it is appropriate, mention that you are considering bankruptcy. Debt collectors simply want their money, so they are much more likely to deal with someone if they think there is a possibility they will actually get little to none of their money in bankruptcy negotiations.

If they are unwilling to make a deal or are being unreasonable, inform them that you no longer want them to call your home, and make it clear you do not have any ability or intention to pay for the time being. Sometimes this will work, as a company does not want to waste time pursuing a bad loan.

If the collection agency continues to call, send them a letter by certified mail that informs them you do not want them calling your phone. In most jurisdictions it is considered harassment if they ignore such a letter and continue to call, and can face prosecution for such behavior.

Consider filing a no-contact order to prevent further contact through phone. Agencies can continue to contact you through the postal service, but telephone service is legally protected from unwanted contact.

Consider using a debt consolidation program. These can offer consolidating all your debt into one simple payment, thus reducing many debt holders to one. At the very least this can limit the harassing phone calls to a single party.

Unemployment & Debt Settlement

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Unemployment is a key contributor to excessive debt, which can lead to debt settlement. Debt settlement is endorsed by the Federal Trade Commission as an alternative to bankruptcy. Settlement allows people to resolve debts by paying less than the full balance -- sometimes as low as 20 percent of the balance according to SmartMoney, although most settlement offers are for about half the amount due.

People suffering from unemployment are often forced to reduce expenses, especially if the unemployment is long-term. Depending on the industry, a person laid off from a job during a deep recession could need a year or more to find another job with comparable pay. Some people with low debt and significant savings survive unemployment with few financial problems. Others living paycheck to paycheck with little savings and lots of credit card debt face an immediate crisis. Some are forced to stop paying credit card companies so that they can focus on food, shelter and other necessities.

Ignoring credit cards leads to accounts that are eventually charged off and sent to debt collection agencies. Eventually, some credit card companies may sue, leading to possible money judgments in court and garnishment of bank accounts or wages. Some people who are unemployed resort to debt settlement to avoid lawsuits and eliminate debts they simply cannot afford. The Federal Trade Commission recommends self-directed debt settlement, although many people turn to for-profit debt settlement companies. Some debt settlement companies engage in unethical business practices, according to the FTC, leaving some people in worst financial shape than before settlement.

Reduced income because of unemployment makes debt settlement difficult. Credit card companies and other unsecured creditors prefer lump sum payments for settlements, although installments are possible. However, the creditor may offer less of a discount if the settlement is stretched over several months. The challenge for the debtor is finding money for settlement while unemployed. Some people who have savings dip into the funds to settle, especially if they are facing a lawsuit.

All credit card companies understand unemployment and may offer special arrangements that could lead to restoration of delinquent accounts later or settlement when the borrower can afford it. The card company may suspend payments for a while through a special "hardship" program, for example. Or for charged off accounts the card company may agree to keep the account within its internal collections department if the borrower agrees to make small monthly payments. The payments allow the bank and the borrower to stay in contact with a goal of settling the account when the borrower's unemployment ends and money is available.

Where Can I See or Check My Credit?

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You should make it a habit to review your credit report at least every six months. It's important that you check your credit report for discrepancies and errors. Your credit report plays a significant role in determining your ability to buy a car or a home. Here's where you can go to check your credit report.

There are three major credit bureaus: Equifax, Transunion and Experian. Each gives you a different credit score. You may have certain creditors who report information to one credit bureau but not the others. You can contact each credit bureau separately, by going to their respective websites. Websites such as AnnualCreditReport.com and MyFico.com allow you to order reports from multiple bureaus at one time. In some cases, it may be better to check your credit report with each credit bureau individually. If you see problems on your credit report, you can dispute them directly on a bureau's website.

It's important to check all three of your credit reports for errors. Name misspellings and other creditor inaccuracies should be disputed immediately. You can dispute online, by mail or on the phone. Putting your disputes in writing, making copies and mailing them to the proper credit bureau is probably the best way to file a credit dispute. Experian handles disputes only on its website, Experian.com. When you file a credit dispute, be prepared to have evidence to support your claim. That may include receipts containing payment information or settlement letters.

After you've checked your credit and resolved any disputes or claims, you should monitor your credit closely. After resolving a dispute, order another credit report from the corresponding credit bureau. Verify that your resolved dispute is reflected accurately on your report. All three credit bureaus offer credit-monitoring service, for an additional fee. The service provides customers with email updates of changes to your credit report, such as when a potential lender makes a credit inquiry.

Can a Judgment Creditor Garnish Minor Banking Accounts?

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When a person owes a large debt, then the creditor may seek to claim the money using various methods provided him under the law. One of the most popular methods is the seizure sometimes referred to as the "garnishment" of a bank account. While bank account garnishment is legal in many states, a minor's bank account cannot generally be seized unless it is being used to hold an adult's money.

A bank account can only be garnished when a person owes a debt to a creditor and the creditor receives permission from a judge to garnish the debtor's account. This garnishment will only be granted if the creditor has filed a lawsuit in civil court and won. When this happens, the creditor can only garnish funds owned by the debtor, not funds controlled by another party, such as a child.

Legally, minors children under the age of 18 cannot take on debts in the U.S. This is because minors are legally forbidden from signing contracts before the age of 18. Therefore, any contract that a minor signs must be endorsed by his parents. Any debt that a minor took on would, in fact, be his parents' debt. This means a child cannot be named in a debt lawsuit.

A creditor could not seize a bank account held by a minor because the minor cannot legally take on any debts. Therefore, a creditor cannot receive a garnishment order against the minor because the creditor can only receive an order against someone who owes him money. Under U.S. law, creditors can only seek payment from the debtors themselves, not from relatives or associates of the debtor.

The only way that a creditor could conceivably garnish money from a minor's bank account would if it could show that the bank account was in fact being used to shelter money for the debtor. Even if the account was nominally controlled by the minor, it could be garnished if the court could be persuaded that the debtor was using the account to hide funds that were actual his own.

How to Stop Payday Loans from Garnishment

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A payday loan is a short-term loan designed to temporarily cover a borrowers expenses until his next scheduled paycheck. Many people utilize payday loans to pay for important items, such as rent, utilities, car repairs and medical bills. However, as with other types of loans, a payday loan must be repaid. If you fail to repay your payday loan, the lender may sue you and receive a judgment to garnish your wages, freeze your bank account or seize other assets. If you are currently behind on your loan payments, there is way to stop a garnishment from occurring.

Instructions

Contact the payday loan lender to discuss your options. Try to negotiate a reasonable settlement offer with the lender. If you are unable to make a settlement offer with the lender, then perhaps you can set up a monthly payment plan on your account. Make sure the payment plan is affordable for your budget.

Get the agreement in writing. Ask the lender to send you a formal confirmation letter outlining the terms of the payment agreement. The letter should include details about the current amount due (including late fees and other penalties) and your payment due dates.

Submit your payments to the lender. It is important that you submit your payments in a timely manner--by the scheduled due dates. If you fail to abide by the payment agreement, the payday loan lender may choose to proceed with a lawsuit and garnishment.

Confirm that your balance is paid in full. Once you make your final payment to the lender, you will no longer have to worry about a garnishment. Ask the lender to send you a paid-in-full letter stating that you paid off your balance according to the terms of the payment agreement.

Check your credit report for the appropriate updates. It may take the payday loan lender up to 30 days to update your account information with the credit bureaus. You can order a free copy of your credit report by visiting AnnualCreditReport.com. You will need to request your credit report from the three major credit bureaus--TransUnion, Equifax and Experian. If the lender has not updated your account information in an appropriate amount of time, submit a dispute form to each credit bureau.

Quickest Way to Build Up Your Credit Report

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Having a good credit report is important, however, many times it is hard to establish credit if you are just starting out. If you are just starting out and are finding it difficult to get approved for financing, there are steps that you can take to establish new credit. Once you establish credit, work hard to keep your accounts current and avoid a negative effect on your credit score.

Borrow someone else's credit. A good way to build your credit report is add yourself as a joint account holder on someone else's account. If you have someone that is willing to let you use them as a co-signer, get a loan with their help. This can help you get approved for a loan that you may not have been able to get on your own. Not only will this help to build up your credit report, it will boost your credit score. Be sure that you pay the loan on time because the co-signer's credit will also be affected if you make late payments.

Apply for a school loan. If you are taking college courses, applying for a school loan is an easy way to build your credit report. Students can get approved for school loans without their credit status or credit score being a factor. Once you start paying on the loan, it will add points to your credit score and give you good credit history.

Apply for a secured credit card. Most people can get approved for a secured credit card even if they don't have previous credit history. A secured card requires that you deposit money into an account and this amount determines your spending limit. A secured credit card lender is willing to approve the card because the deposit is collateral. Payments made on the card are reported to the credit reporting company and can help to build your credit report.

Avoid late payments once you have obtained credit. With most creditors, a payment is considered late if it is 30 days past due. One late payment can lower your credit score more than 50 points. If you want to build your credit report, make payments on time. If you think you may need more time, contact the creditor and ask for an extension on the due date. Many times a creditor will grant an extension without reporting the payment to the credit reporting agency as late.

The Best Way to Handle Debt When Newlywed

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According to North Carolina State University, approximately 20 percent of divorces happen within the first five years of marriage. Money is a top reason couples fight. Handling debt in the early years is very important, according to Smart Money. Developing positive habits such as creating a budget and managing debt together (instead of separating money) can help.

According to Smart Money, newlyweds may be tempted to split their debts. This is especially true if one partner has more debt than the other. Smart Money cautions against dividing debt. Unfortunately, your partner's debt affects your credit score, which means you should forge a partnership to pay it off.

Try creating a debt payoff plan. This allows couples to agree on a specific amount of money to pay towards debt each month. Make sure to also discuss cutting back on spending. Otherwise, your monthly payments won't be paying down the debt balance.

Merging money is tough. Creating a family budget right from the start can help, according to Smart Money. This will rein in spending and make each partner accountable for spending. Take a look at the budget every month.

The document should be flexible enough to accommodate new expenditures and scale back when times get tough.

Newlyweds should create a "rainy day" fund right away, according to Smart Money. This way, if unexpected expenses come up (like car repairs), the couple can tap into savings instead of using a credit card.

Try setting up an automatic transfer program with your bank. Each month, the bank will transfer the elected amount directly to a savings account. This will help the couple save, even when financial times get tough.

If debt seems unmanageable, the Federal Trade Commission (FTC) recommends contacting a credit counselor for help. These organizations are non-profit, and can be found at universities, military bases and credit unions. Find reputable companies by contacting the FTC.

Another option for debt help are Debt Management Programs (DMPs). These programs help families negotiate debts with creditors and set up monthly payment plans. The couple will deposit an agreed upon amount each month to the DMP company, and they pay the creditor.

Ways to Consolidate Debt

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Consolidating debt can be a useful part of a debt repayment program. Consolidation is useful for people with debt from a number of different sources, usually several credit cards. Consolidating debt can help people who are unable to manage their monthly payments by giving them the opportunity to have one lower monthly payment instead of several higher ones. This usually costs more money in the long run because more interest is paid. Consolidating debt can also result in paying back less over time, if debt is consolidated at a lower interest rate.

Debt consolidation refers to any situation in which you borrow money from one source in order to pay off multiple debts. It is often done for student loan debt or credit card debt. One method of consolidating debt is to take a personal loan, or a consolidation loan. Personal loans from banks can be used to pay off credit cards and other higher interest personal loans. Special loans, called consolidation loans, are also available from banks, private companies and the government to consolidate student loan debt. Personal loans can either lower your payments by stretching out the term of repayment, or lower the amount you pay by offering you a lower interest rate than you are paying on your debts. Typically, you have to apply for and be approved for a personal loan. Then once you receive the money, you can pay all of your other creditors (although with student loan consolidation, the money you borrow is usually paid directly to the other loan companies).

Balance transfers involve transferring the balance from one credit card or loan to another. This can be advantageous because often creditors will offer incentives to transfer balances to their company. These incentives usually take the form of special introductory rates for a set period of time, e.g. a company might offer 0 percent for six months or 1.99 percent for the life of the balance. Usually, a fee is associated with transferring a balance, which is a percentage of the amount transferred. The fee usually is capped (there is an upper limit). After the promotional period, the interest rate is usually high, so it is important to pay off the balance transfer within the promotional period. If you miss a payment, typically, you lose the promotional rate, so it is essential to pay on time. In addition, as of August 2009, payments are applied to lower interest debt first with most credit card companies. This means if you make a standard purchase at the standard annual percentage rate, or APR, any payments you make will not be applied to that purchase until the entire balance transfer is paid off, so the purchase will be accruing interest for the duration of that time.

It is also possible to consolidate debt by borrowing against the value of your home, increasing the amount you owe on your house, but eliminating your other debts. You can consolidate debts using the equity from your home by taking out a second mortgage or a home equity loan or line of credit. The interest rates on these types of loans are usually lower than personal loans, and the interest may be tax deductible. However, these are secured debts. Credit card debt is unsecured, which means if you fail to pay the debt, the lender can take your home. This is relatively risky unless you are confident you can pay off the debt.

How to Negotiate With the Original Creditors After an Account Has Been Turned Over to Collections

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Negotiating with an original creditor after an account has been turned over to collections can possibly save you money. Debt negotiating involves proposing a settlement offer to settle a debt for less than you owe. Some creditors sell bad debts to third-party debt collectors, wherein you're unable to negotiate a settlement with the creditor. But if the creditor still owns the debt, and it hired a collection agency or transferred the debt to a collections department, you can speak with the creditor to negotiate the balance.

Instructions

Request current account information. The original creditor can provide information on how much you presently owe. Contact the company with your name and account number to acquire this information.

Prepare before approaching creditors with your offer. Don't start negotiating with creditors until you know what you can afford to spend on the debt. You'll need to offer a lump sum for creditors to consider your settlement. According to Military Money, a creditor may accept a settlement that's only 70 percent of the balance. If you owe $5,000, prepare to spend around $3,500 to settle the balance.

Talk to your creditor and expound on why you're negotiating the debt. A sound reason might include having several debts that you're incapable of paying off in full. Disclose that negotiating the balance can potentially avert a personal bankruptcy. Mentioning a bankruptcy can perhaps impel a creditor to negotiate since the company may suffer a financial loss if you file.

Maintain all records from your creditor, such as any written confirmation acknowledging the debt negotiation and final agreement. Photocopy your payment before sending and keep this copy with your records as well.

How to File a Garnishment Exemption in Missouri

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Missouri forbids the use of federal garnishment exemptions unless they are general nonbankruptcy exemptions on wages, Social Security benefits, civil service benefits or veterans benefits. However, most residents of Missouri subjected to wage garnishment have access to state exemptions that prevent certain assets from being seized. When Missouri residents file for exemption, bankruptcy trustees and creditors cannot claim the property to resolve a debt and the debtor may commence a fresh start after bankruptcy.

Instructions

Contest any seizure of jointly-owned property or bank accounts due to the debt of only one spouse, or any seizure of property under $146,450 due to the single owner's debt: Missouri automatically grants these exemptions.

File a state wage exemption for 75 percent of your wages, or 90 percent if you are a head of household. Request 30 times the federal minimum hourly wage if that amount is greater. Use state forms to file for this exemption.

Request two exemptions if you and your spouse are both eligible for the state wage exemption: Each spouse may claim an exemption separately if the couple is filing together.

How to Relieve Credit Card Debt

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Facing your debt and acknowledging the mistakes you've made is key to relieving or paying off credit card debt. Credit cards make it easy to attain material possessions. When short on cash, having a credit card is extremely useful during emergency situations. But oftentimes, lack of self control may motivate you to satisfy every want, wherein you use a credit card for frivolous spending. Fortunately, there are ways to conquer debt and relieve financial burdens.

Instructions

Give yourself a realistic time frame to pay off debt. Set goals to help you become debt-free faster. For example, if you owe $2,000 in credit card debt, determine how much you can afford to spend on your debts each month and, based on this number, give yourself a payoff date.

Stop shopping alone. Talk to a trusted friend or relative and ask them to assist your effort to eliminate debt. Give this person possession of your credit cards and ask them to accompany you when shopping. They can encourage you to stop spending and offer reminders.

Get rid of your credit cards. Physically damage credit cards by cutting them in half to control unnecessary spending.

Pay more than the recommended minimum. The minimum payment on your credit card may only pay off the new interest charges for the month. Make higher payments to see a significant drop in your balance.

Search for ways to bring in extra income. Increase your monthly income to relieve credit card debt fast. Offer to mow lawns in your neighborhood, tutor neighborhood kids, work part time during the evenings or sell personal belongings.

How to Dispute Negative Items on Your Credit Report

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If you find that one of your credit reports contains inaccurate information, you do have recourse to have the issue investigated and corrected. It is simply a matter of following the course of action each credit bureau stipulates. If your claim is warranted, you can indeed have your record reflect reality.

Instructions

Order a copy of your credit reports from each of the major credit bureaus: Experian, TransUnion and Equifax at 877-322-8228 or at annualcreditreport.com. You are entitled to one free credit report from each once a year.

Review the reports carefully and decide which items need disputing. Follow the instructions that the credit bureau provides. Provide a brief explanation as to why you are disputing the negative entry. Mail in your dispute.

Allow up to 30 days for the credit bureau to investigate. It has that time period by law to correspond back. You will find out the bureau has either removed the entry or that it was verified. If the latter, proceed to step 4.

Write the bank, creditor or collection agency reporting the negative entry. Ask for verification the debt is yours. Ask for a copy of the agreement you had and ask how the amount owed was calculated. Inform them they need to either prove you owe this debt or remove the entry from your credit report. Mail your letter. The creditor has 30 days to respond.

Send a follow-up letter, if you receive no response within the 30 days. Indicate that they are reporting invalidated information to the credit bureau. At this point, you can threaten to write the Federal Trade Commission as well as threaten legal action, if they don't comply. If the creditor did respond to your note, proceed to step 6.

Check the information carefully for discrepancies, if the creditor provided proof that you indeed owe the debt. For example, if an apartment complex responds that you owe $300 for a cleaning bill but does not provide a copy of a receipt for the services provided, you should write back and ask for the missing information. Explain that the proof provided was insufficient and ask the creditor to provide the information you requested or remove the entry from your credit report. Kindly remind them they are in violation of the Fair Debt Collection Practices Act if they don't comply. If you wish, you can threaten to file a lawsuit as well.

Contact the credit bureau when a debt comes back "verified" and ask how this was done. This is called asking for the "method of verification." Most credit bureaus do not make a thorough investigation due to costs and the large amount of disputes they receive. You can use this against the credit bureaus if they report your debt without sufficient proof.

How Outstanding Student Loans Look on a Credit Report

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Any time a student borrows money to pay for tuition or educational expenses, the loan appears on his credit reports from the three major credit bureaus. How a potential creditor views an outstanding student loan depends on several factors. Understanding these factors will help you better manage your accounts and may improve your chances of credit approval.

When a lender approves a student loan, the loan appears on the borrower's credit reports. At minimum, the credit reports list the lender, type of account, balance on the account and the status on the account. The report also has a section for comments, making it possible for lenders to give details about the status of an account. How an outstanding student loan looks to potential creditors depends on the account balance and status.

When you apply for credit, lenders consider several factors before approving or denying your application. The myFICO website explains that the formula for determining your FICO credit score uses information about the amount of money you owe creditors. A student loan with an account balance of several thousand dollars or more increases your total amount of debt, making you more of a risk to lenders who want to know that you will have enough money to make scheduled payments on your loans or credit cards.

Lenders will look at the status of your student loan accounts to determine your creditworthiness. A student loan account in good standing indicates that you pay your debts on time. A student loan account with late or missed payments makes you more of a risk for creditors. Lenders want to know that borrowers will repay what they owe, and having late or missed payments shows that you have not managed your accounts properly. Lenders may deny applications from borrowers who have student loan accounts in poor standing.

Student loan consolidation also affects your credit report and credit score. If a borrower uses federal loans for education expenses, his credit report will show several accounts. Subsidized and unsubsidized loans appear on separate account lines, making it look like a borrower has several outstanding loans. When you consolidate these loans, it effectively "pays off" the loans listed on your report. The new lender reports all of the consolidated accounts as one loan, making it appear that you have fewer open accounts. How consolidation affects your score depends on how you handle the new loan account. Late and missed payments on a consolidated student loan will hurt you just as much as late and missed payments on your original student loan accounts. Because student loan consolidation affects each borrower differently, consult a financial counselor to determine if consolidation would help you or hurt you.

If you lose your job or experience other financial difficulties, contact your student loan lender to discuss forbearance and deferment options. These options allow you to delay making your student loan payments without the lender reporting missed or late payments. This will keep your loans in good standing so potential creditors do not see negative items on your credit report.

How Does Credit Card Debt Consolidation Work?

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If you're feeling overwhelmed by credit card debt, you might be wondering what your best option is for paying it down. Depending on your circumstances, you might be thinking of debt settlement, debt management, debt consolidation or even bankruptcy. Debt consolidation offers several advantages over other methods for eliminating debt. There are several things to consider before beginning the process of consolidating credit card debt.

The primary function of credit card debt consolidation is to combine multiple credit card payments into a single monthly payment. In doing so, you are typically able to pay less each month in interest and fees. Consolidating your credit card debts also can help you to pay your debts down at a faster rate. Credit card consolidation is typically a good solution if you want to get rid of your debt while preserving your good credit.

There are several ways to consolidate your credit card debt. You can take advantage of zero or low-interest credit card balance transfers to move debt onto a single account. If you're a homeowner and have equity in your home, you can take out a home equity loan or line of credit to consolidate your credit card debt. You also can apply for a personal loan or unsecured line of credit to pay down credit cards.

Once you've established your method for consolidating your debts, the next step is to contact your creditors to determine the payoff balance owed for each account. You then can draw from your loan or line of credit to pay each creditor in full. If you're transferring balances, you will need to provide your creditor with the billing information, account number and account balances of the account you're transferring. Once you've paid each account in full, you then need to decide whether to close the accounts or leave them open.

Many consumers tend to think of debt consolidation, debt management and credit counseling as the same process. Typically, debt management and credit counseling involve consolidating your debts through a third-party company. You make one payment to the credit counselor or debt management company, which then distributes it to your creditors. The third-party company might negotiate a waiver of fees or a lower interest rate, although your creditors are not required to do so. Debt management companies also might charge an upfront fee as well as a monthly service fee for their services.

If you're planning to use the equity in your home to secure a line of credit, you should be aware that if you fail to repay the loan, you risk losing your home. The same applies if you're using the equity in your vehicle to back a loan. You also should consider the implications that shifting your debt and closing credit card accounts might have on your credit score. In addition, if you plan on using your credit cards again, consolidating them could lead you further into debt.

Information About Credit for Teenagers

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Teens are not too young to learn about establishing and maintaining good credit scores. They should be aware that credit cards, loan payments, apartment rent and utility payments all affect credit scores, and a negative mark on a teenager's credit score will follow him into adulthood.

Teens need credit to get better interest rates on car loans, to rent an apartment and establish utility services, and to apply for certain jobs in law enforcement and financial services.

Teens can open "secured" credit card accounts to start establishing credit. These accounts require an initial deposit and a credit card that can be used for up to the deposited amount.

A teen can be an "authorized user" on a parent's credit card. However, teens should not use this method if the parent has bad credit because the parent's credit will negatively affect the teen's, and if the teen is delinquent on payments, it affects both the teen's and parent's credit.

Banks and credit unions--especially those located near college campuses--may offer "beginner" cards to students. These cards offer low limits--$200 to $500 for example--for teens over 16 who have an adult cosigner.

Teens should open their own checking and savings accounts. Both help establish a credit record.

The number of teens using credit cards has more than tripled since 1999. The average college freshman owes about $1585 in credit card debt. Today, even teens in high school are being targeted by credit card companies.

Debt Compliance

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Debt compliance refers to practices used by collection agencies to get people to make good on their debts. The total U.S. consumer debt is $2.4 trillion, according to the website Money-Zine. This works out to almost $8,000 per person. With such high debt figures, you are likely one of the people in debt. Knowing about debt compliance will allow you to be prepared and know what creditors can do -- and what they can't.

Debt compliance doesn't have to be the domain of a private business. Individuals, governments and even non-profit organizations may employ debt compliance practices. Debt compliance often begins with an in-house collection agency making phone calls and sending out letters. Your debt may then be sold to another, third-party collection agency that may or may not use more aggressive tactics. Regardless of who owns your debt, there are still legal limits on what a debt collector can do to enforce compliance.

Federal law provides you with a number of protections against unethical debt compliance practices. Most of these are under the Fair Debt Collection Practices Act. For example, a debt collector can contact a third party only once and only to find out your contact information. A collection agency must provide you with a debt validation notice, including how much you owe and how to dispute it within five days of contacting you. Harassment, false statements and other unfair practices are prohibited under the law.

One potential consequence of failing to comply with your outstanding debts is damage to your credit. This generally follows you for seven years. You can also have a judgment levied against you in civil court. This is an official recognition by the courts that you owe the money in question. Garnishment is the next step, with a court issuing a writ of garnishment. This is a legal order to deduct a portion of your wages to pay down your debt.

The simplest and best way to deal with debt compliance is to pay your bills on time. This will avoid dealing with collection agencies -- inside or otherwise. After this, you can speak with your creditors to see if a mutually beneficial payment plan can be worked out. If not, or if you feel that you have been the victim of unscrupulous or illegal practices, you may want to consult a lawyer. Bankruptcy is an extreme and last resort.

How to Negotiate Cash Payoffs for Credit Cards

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Your credit card company may readily negotiate a cash payoff for your credit card if you're experiencing financial trouble and contemplating bankruptcy. Called a debt settlement, credit card companies don't negotiate payoffs with everyone. Creditors lose money with settlements. However, since a bankruptcy discharge might eliminate the debt, some creditors are prepared to negotiate a cash payoff to recover a percentage of money owed.

Instructions

Prepare your negotiating strategy before calling your credit card company. Check your available cash and determine what you can spend on a cash payoff. Creditors may only accept your settlement if you have accessible cash to pay the debt in one payment.

Call your credit card company. Ask the person who answers the phone to transfer your call to someone who's authorized to negotiate cash payoffs or debt settlements.

Convey your plans to settle your credit card balance for less than you owe with a cash payoff. State how much you're willing to pay to satisfy the balance.

Discuss terms and compromise to reach a settlement agreement. If your credit card company recommends a higher, but affordable payoff amount, accept the offer to satisfy the balance. Do not agree to a settlement that you cannot afford.

Declare your plans to file bankruptcy if you can't agree to a payoff amount. Creditors may agree to your terms and accept your cash payoff if you're filing bankruptcy.

Ask for a written statement to confirm the payoff agreement. The creditor can send the confirmation letter by postal mail or fax.

Debt Negotiation Self Help

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If your debt is running out of control, negotiating with your creditors puts on the brakes. There is no need to pay a debt settlement company to face your creditors on your behalf. With a little patience, you can renegotiate your payment terms on your own and tackle your debt problems head-on.

To be successful at debt negotiation, timing makes all the difference. Contact your creditors as soon as you know you won't be able to make your payments. If you fail to make payments and don't communicate with your creditors, they may turn your account over to a collection agency. Once a collection agency has your account, negotiating a settlement will be more difficult.

Before you attempt to negotiate your debts, know where you stand. Make a list of all your creditors, how much you owe, your current monthly payment and your interest rate. Considering your monthly income, decide how much you can reasonably pay on each account. When you make an offer to your creditor, it is crucial that you can live up to it. If you negotiate a debt settlement and then miss payments, your settlement may become null and void, and additional fees may be assessed to your accounts.

There are a few ways you can make your debt more manageable. The obvious solution is to lower your monthly payment. Your creditor may be willing to consider this solution, if you have a good reason why you can't meet your current minimum payment, like a job loss, salary reduction or illness. Lower payments mean it will take you longer to pay off your debt, and that it will be more expensive, since interest will add up, but it will also preserve your credit score.

If your lender won't lower your payment, ask them to reduce your interest rate. A lower interest rate will reduce your payments and will make the debt cheaper in the long rung. The downside is that the payment reduction will usually not be as great as it would if your creditor simply reduced your payments. If cash flow is a problem, a reduced interest rate may not be sufficient.

If you think you can make a one-time, lump sum payment for a portion of your debt, request a debt settlement and see if your creditor will accept that money as full payment on your account. A debt settlement will wipe away your debt, but beware of its effect on your credit. Unless you can negotiate with your creditor so that they report your account as paid in full to the credit bureaus, it will show up on your credit report as a settlement. This designation indicates that you paid off the account for less than you owed and can be as damaging as a bankruptcy.

When you call your creditor, know exactly how much you can pay on your account each month. Be specific about what you want, such as a reduced payment or reduced interest rate. Stay calm and ask to speak a supervisor if you are not making any headway. Get all agreements in writing.

What Is the FICO Credit Scoring Range?

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Many transactions are based on a three-digit number assigned to you based on how you handle debt. That number is your FICO score. It is used to determine mortgage interest rates and car loan rates. It can also affect how much you pay for car insurance. It is important to know what each organization that uses the FICO score considers to be good credit.

Your FICO score will be a number somewhere between 300 and 850. The higher the number, the more creditworthy you are considered to be by potential creditors and the easier time you will have borrowing money. Your score can vary depending on a number of specific factors, such as if your debt payments are current, and your remaining available credit. Your score can also vary slightly by the day, since the information on your credit report can change daily.

The criteria used to calculate your FICO score is a closely guarded secret. Computer software looks at multiple pieces of information in your credit report and assigns values, figuring your FICO score. Some of the elements used in this calculation are your payment history and the amount you owe on your accounts. These factors each figure into about 30 percent of your score. Length of credit history and new credit, as well as types of credit that you have in use make up the rest of the criteria used in the calculation.

The actual FICO number that marks the beginning of prime credit also varies depending on the type of loan that you are seeking. A FICO score of 720 or above is considered to be a prime score by most lenders, and people with this score or above don't have problems getting many different types of loans at the best rates. Scores between 620 and 720 are considered "B" grade credit. People with these scores still often qualify for a loan, but usually at slightly higher rates to reflect the increased risk. Credit below 620 will usually place you in the sub-prime category. Again, you can probably still get credit, but at a much higher rate of interest. These numbers may vary slightly as the economy changes.

Since the interest you can save on a loan by moving from sub-prime to prime status can be substantial, it is worth it to try to increase your FICO score. Generally if you make good financial decisions over time, your score will increase. Try to keep your balances on your revolving debt at 30 percent of the credit limit or lower. FICO scores seem to be quite sensitive to this number. Pay all of your payments on time. And don't just apply for credit for the sake of applying. Too many of these applications will decrease your score.

What Is Credit Scoring?

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Credit scoring is an important tool for lenders to use in evaluating potential customers. Many factors go into a credit score. It is important for consumers to understand credit scoring and its determining factors, as well as their own individual scores and what they can do to manage their credit record in a positive way.

Credit scoring is a way for creditors to decide your eligibility for credit. The credit scoring system is used by lenders to determine interest rate and payment terms for mortgages, credit cards and auto loans. Whenever a credit score is mentioned, it is usually what is commonly known as the FICO score, which was developed by the Fair Isaac Corporation.

FICO scores are the most commonly used credit scoring system today, with scores ranging from 300 to 850. Higher scores are better, and most consumers have credit scores in the range of 600 to 700.

Your FICO score is made up of different components. Each one of these is factored in at different percentages. The following three are specific to your credit accounts and payments.

1. Payment history -- 35 percent of FICO score

Looks at how timely your credit accounts have been paid. You can hurt your credit score by having late payments or bankruptcies. Prompt payments, on the other hand, can improve your score.

2. Total debt -- 30 percent of FICO score

The number of open accounts with balances is considered, as well as how much of your available credit is being used. The less available credit you have, the lower your score will drop.

3. Length of credit history -- 15 percent of FICO score

A longer history of credit usage will raise your score; however, a high score can be achieved with a shorter history, as long as the credit report shows you have managed your credit responsibly.

The following are two other key components that factor into your FICO score calculation:

4) Newly opened accounts -- 10 percent of FICO score

If your credit report shows newly opened accounts or recent account applications, this can factor into your score. If searching for a loan, avoid lowering your credit score by choosing a short time frame, such as 30 days, to do your loan shopping. FICO will regard multiple inquiries in a short time frame differently from many inquiries stretched out over time, which could have a negative impact on your score.

5) Other factors -- 10 percent of FICO score

There are other minor factors that can affect your score. For people with longer credit histories, a mix of different types of credit accounts such as credit cards, personal lines of credit, auto loans or a mortgage can slightly raise scores.

The Fair Credit Reporting Act gives individuals the right to get credit scores from the national credit reporting agencies. These agencies are allowed to charge a reasonable fee, usually about $8, to send you your score. Often, you will also receive information on how to improve your score.

According to the Federal Trade Commission website, consumers are entitled to get one free copy of their credit report from the three large national reporting agencies, Experian, Equifax and Transunion, once per year. There is a central website set up at Annualcreditreport.com that will assist you in getting your free reports. Many imposter sites will have offers of "free" reports, but will have a requirement for you to sign up for a paid service in order to get your report.

You may also order your free annual credit reports by phone at (877) 322-8228, or by completing the Annual Credit Report Request Form that can be completed after printing it from the website (see Resources).

Does a Low Credit Limit Affect Your Credit?

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While credit cards provide needed funds in a hurry, some people dont manage the use of the credit cards efficiently, running up to the maximum amount they can use. The amount of debt you have in relation to your credit limits has a significant impact on your credit scores, regardless of whether you have high or low credit lines. Bolster you your credit rating just by restricting the amounts you charge to your credit cards.

The scoring models used to evaluate consumers' creditworthiness focus on the amount of credit people use more than the amount of credit they have. A low limit may even serve you well with some lenders. Some lenders consider unused portions of high credit lines as potential sources for large amounts of new debt. Therefore, high credit lines could work against consumers who have them. Lenders might approve those consumers loans, but they may pay higher interest rates due to a potential risk for debt accumulation.

The amount of debt you have affects your FICO credit score, regardless of how low your credit limit is. The Fair Isaac Corporation created the FICO scoring model. Fair Isaac's "My FICO" website indicates that the "Amounts Owed" category of its scoring model impacts 30 percent of a credit score, and the category partly focuses on the proportion of your credit lines used. Paying down credit card balances and keeping them low is one of the most effective ways to improve your FICO score, according to Fair Isaac.

Credit card companies can lower cardholders' credit limits at their discretion. Creditors may decrease cardholders' limits for several reasons, which include making late payments. Some creditors decrease limits to an amount equal to customers remaining balances. That can be particularly harmful to cardholders' credit scores, because it will appear to scoring models that customers make so many charges that they consume their entire credit line.

Check your credit reports at the national credit-reporting companies, which are Equifax, Experian and TransUnion. Your credit limits on those companies' reports may not be up to date, especially if your limits have increased since you first opened your accounts. As a result, you may have lower scores because you appear to have less available credit than you do. Contact your creditors, and ask them to report your limits correctly if you find errors. Dispute such errors with the credit bureaus reporting them if your creditors don't correct them.

Can a Creditor Garnishee My Paycheck if I Am Paying Him?

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When you owe a debt, a creditor may be able to file a lawsuit against you and obtain permission to garnishee your wages. If the creditor obtains permission for garnishment, he can submit paperwork to your employer that allows the creditor to receive up to 25 percent of your disposable income. In most cases, however, a creditor can't do this unless you fall behind in your payments.

Most states allow a creditor to garnish your wages only if he obtains a judgment allowing him to do so. To obtain a judgment, the creditor must file a lawsuit against you. The court will inform you of the lawsuit, and you will have the opportunity to defend yourself. If the court determines that you owe the debt and have failed to pay, it will grant the creditor a judgment. The court won't grant the creditor a judgment if you aren't behind in your payments.

Before a creditor garnishes your wages, most states require him to send you a final notice of the debt. To prevent garnishment, you can pay off your debt. You may also be able to prevent the garnishment by proposing a payment plan to your creditor. However, you must obtain proof in writing that your creditor won't garnishee your wages to prevent him from doing so.

Once a garnishment order is in place, making payments won't prevent the creditor from continuing the garnishment. However, the creditor must stop garnishing your wages if you pay your debt in full. He must also stop if you file bankruptcy. Some creditors may be willing to end the garnishment if you agree to a payment plan, but the law doesn't require them to do so.

Creditors can't garnishee certain types of income, such as Social Security benefits. Creditors also can't garnishee more than 25 percent of your wages after taxes. If you believe your wages are exempt from garnishment or that the creditor is taking too much, you can request a hearing to contest the order. Though the law doesn't prevent them from doing so, most creditors won't seek a judgment against you as long as you are making an effort to pay.

How to Make Credit Card Debt Disappear

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If you let your credit card debt climb out of control, you might want to make it disappear. Because such unsecured loans often include high interest rates, your finances may incur more damage due to credit cards than to any other type of debt. It's not fast or easy to eliminate all of it. Therefore, making these high payments disappear requires the creation of a plan of attack and the financial discipline to meet your goals.

Instructions

Put your credit cards away and stop using them. If the temptation to pull them out at the cash register persists, then cut them up into little pieces and throw them away.

Make a list of all of your credit card debt. Look at each of your statements and determine which card has the highest interest rate. This information usually is listed at the end of your bill.

Compare your monthly expenses with your income. Calculate your monthly expenses including rent, car loans, food, gas, clothing, entertainment, utilities, cell phone and any other recurring bills that you have. Add these expenses together to determine your total monthly needs. Next, calculate your monthly income, including money from your job, contract work you do and any extra payments you receive each month from other sources. Add your income figures together to determine the total. Subtract your tally of monthly expenses from your monthly income. The amount you have left over will be used to make your credit card debt disappear.

Increase your income by taking on a second job during the time that you are working to reduce your credit card debt. Add your extra income to the total amount that you calculated in Step 3.

Pay the minimum monthly credit card payments on all of your accounts, except the one that you determined to have the highest interest rate in Step 2. You will pay off as much as possible on that card (minimum payment plus anything you have left over after paying your other bills). Continuing to keep your other accounts current saves you money in fees and helps your credit rating, too.

Pay as much as possible each month toward your credit card account with the highest interest rate until that balance is down to zero. You will save the most money in interest payments after this bill disappears.

Repeat Steps 2 through 6 until all of your credit card account balances have been paid off.

How to Get an Apartment With a Broken Lease

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Evidence of a broken lease can count against you when you look for a new rental. After all, no one wants a prospective tenant who might break a lease again. When deciding whether to approve an applicant, business administrators and landlords place heavy emphasis on past rental records. However, some companies or landlords understand that issues such as failed expectations, unavoidable emergencies or economic distress do occur. You'll find alternatives to finding an apartment even if you have a broken lease on your rental history.

Instructions

Emphasize the reason for the broken lease. In some cases, issues of apartment violence or military deployment dictate exceptions. Offer verification of such information with legitimate paperwork, such as police reports, military orders or insufficient repairs, which will justify the reason for severing a lease. Or contact previous leasing professionals or public officials who can vouch for your story.

Consult with an apartment locator office in your area. Agents know the rental criteria of surrounding apartment complexes. Inform the agent of your broken lease before the consultation begins. An agent should be able to pull a list of communities that will approve someone with a broken lease.

Low vacancies may cause rental terms to loosen up.

Find areas with a high surplus of available apartments. Most of these apartment communities compete against each other to fill long vacancies. Also, search for new apartments because sometimes manager specials offer discounts and less stringent requirements on the approval process.

Ask a cosigner, such as a friend or family member, to go apartment hunting with you. Most times, apartments will accept a co-signer pending credit approval even with your rental history.

What Happens to Debts in Collections?

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If you do not pay a bill, it may go into collections. This process can involve a collections department of the original creditor, whether it is a credit card company, doctor's office, day care center, utility company or other business. However, many debts deemed "uncollectable" are turned over to an outside firm known as a collection agency. In the United States, bill collectors must follow specific processes under federal law, according to the Federal Trade Commission. However, as a delinquent debtor you can also be legally subject to a number of potential financial penalties.

If you took out a debt honestly, you cannot go to jail. Some unscrupulous debt collectors may try to scare you by threatening jail, but this is illegal under the Fair Debt Collection Practices Act (FDCPA). The FDCPA is enforced by the Federal Trade Commission as well as your local civil court, but you must report such incidents.

Any creditor to whom you owe past due funds can legally report this to your credit reports, according to the Federal Trade Commission. This includes the original creditor and/or any collection agency that company might hire to pursue debt repayment. The primary credit reporting agencies in the United States are Equifax, Experian and TransUnion. The Fair Credit Reporting Act (FCRA), also governed by the Federal Trade Commission, regulates the actions behind negative credit reports.

You can be sued in your local court for an unpaid debt that is in the collections process. However, this cannot automatically happen; a representative of the creditor or its collection agency must first file papers in your local court. A sheriff's deputy or process server will then serve you the papers, requesting that you go to court on a certain date. You don't have to show up, but if you don't a default judgment may be entered against you. This fact can also be noted on your credit reports.

A portion of your wages can be garnished to repay past due debts. However, this too cannot automatically happen. The creditor or collection agency must first win a lawsuit against you. Then its representative must petition the case judge to order your wages garnished to repay the debt. If a garnishment is granted, this is another matter of public record that can negatively affect your credit credit.

Most past due "negative" debts are noted on your credit reports for seven years from the date of initial delinquency or court action, according to Experian. This includes late payments, judgments and garnishments. Even if you pay the debt that was in the collections process, your file will simply report that a "bad debt" was eventually paid in full. It will still take up to seven years from the initial delinquency date for the information to be purged from your credit files.

Welcome to our website credit and debt managementr.

Monday, October 31, 2011

Garnishment

Frozen Funds

Exempt Funds

Exempt Funds

Settle

Negotiate Lower Debt Owed

Negotiate Lower Payments

Credit Counseling

Program Guarantees

Debt Consolidation

Sunday, October 30, 2011

Instructions

Call the Creditor

Check Credit Report

Importance of Credit

Credit Repair

Credit Repair Companies

Doing it Yourself

Saturday, October 29, 2011

Credit Advantages

Credit Disadvantages

Financial Advantages

Financial Disadvantages

General Advantages

Instructions

Debt Consolidation

Credit Score

Mortgage

Considerations

Friday, October 28, 2011

Unsecured Debt Default

Secured Debt Default

Back Taxes and Support Orders

Federal Student Loan Default

Thursday, October 27, 2011

Instructions

Consolidation

Negotiation

Paid Help

Wednesday, October 26, 2011

Instructions

Instructions

Tuesday, October 25, 2011

Debt Consolidation

Debt Settlement

Considerations

Alternatives

Definition

Voluntary Counseling

Bankruptcy Counseling

Warning

Instructions

Job Layoffs

Charge Offs

Challenges

Considerations

Monday, October 24, 2011

Getting Started

Checking for Errors

Monitoring Credit

Sunday, October 23, 2011

Garnishment

Child Debts

Minor Bank Accounts

Considerations

Instructions

Joint Credit

School Loan

Secured card

Timely Payments

Saturday, October 22, 2011

Don't Split Up Debt

Develop a Family Budget

Start an Emergency Savings Account

Get Help For Serious Debt

Personal Loans

Balance Transfers

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