Welcome to our website credit and debt managementr.

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

Saturday, March 31, 2012

What Happens When a Collection Agency Won't Accept Your Monthly Payment?

What Happens When a Collection Agency Won't Accept Your Monthly Payment?

Unpaid creditors often enlist the aid of collection agencies when attempting to recover delinquent consumer accounts. Collection agencies coerce debtors into paying by calling repeatedly, sending letters and sometimes threatening lawsuits. Most consumers who pay collection agencies do so via monthly payments.


    Debt collection agents often work on commission and receive a percentage of the money they collect. Therefore, it's in the financial interest of a debt collector to refuse low payments if he believes he can convince the debtor to make larger ones. Debtors can speak with a supervisor and explain their financial situation in an effort to negotiate more affordable monthly payments.

Time Frame

    Until a consumer makes a payment on the debt, the statute of limitations period on his debt is steadily elapsing. Once the statute of limitations, which varies by state, expires, the collection agency loses the right to sue the individual. Thus, refusing to accept a debtor's payment can result in the collection agency losing the ability to forcibly recover the debt. As soon as the company accepts a payment, however, the statute of limitations resets.


    If a collection agency believes a debtor can pay the debt in full and the statute of limitations period has yet to expire, it can file suit against the debtor in court. In most states, winning the lawsuit gives the collection agency the right to garnish the individual's wages and bank accounts.

Top 5 Credit Card Debt Relief Programs

Top 5 Credit Card Debt Relief Programs

Consumers who are looking for debt relief are wise to do advance homework. Many so-called "debt relief" organizations are nothing more than sham operations that take advantage of those who need help the most. The best debt relief companies are clear and up front about their services and fees, and don't promise more than they can deliver. The old maxim "If it sounds too good to be true, it is" was never truer than in debt relief.

The National Foundation for Credit Counseling

    The longest-running nonprofit consumer debt relief agency in the United States is the National Foundation for Credit Counseling. Counselors are certified in debt relief and offer free budget consultations to consumers. If necessary, the counselor will enroll the the consumer in a debt management program (DMP) with lowered interest rates, payments and fees. The counselor will also close the credit account. Debts are repaid in full within five years. Counseling and setup are usually free, but DMP plans may have a fee (rules vary by state). The NFCC partners with local agencies that can provide in-person counseling if necessary.

CareOne Debt Relief Services

    CareOne Debt Relief Services, accredited by the American Association of Debt Management Organizations, has been in business since 1998 and has a current "A" rating from the Better Business Bureau. The website is clear and easy to use. Loan calculators and other educational tools such as articles and blogs are readily available and updated frequently. Also, the website's "Debt Diva" offers tips for frugal living and saving money. CareOne does not provide housing or bankruptcy counseling services.

Money Management International

    Money Management International is accredited by the National Foundation for Credit Counseling and has been in operation since 1989.. It is a nonprofit. MMI members have budget calculators and financial worksheets at their disposal, in addition to counseling and management services. There are considerable educational resources as well, and bankruptcy and housing counseling programs are also available. Consumers can begin the debt management process online. Fees are not published openly.

AAA Fair Credit Corporation

    Educating consumers is the focus of AAA Fair Credit, rated "A+" by the Better Business Bureau. In addition to offering nonprofit credit card counseling and debt management services, AAA provides housing counseling services as well. Consumers who also need to focus their efforts on building assets won't be disappointed; there are programs and worksheets to help. The Tax Assistance Program provides free income tax preparation and financial advice to low-income families and individuals, and it's also accredited by several consumer debt relief agencies.

Springboard Nonprofit Consumer Credit Management

    Since 1974, Springboard has offered consumers educational tools and tips as well as provided counseling, debt management, bankruptcy, and housing counseling services. The website is clear and easy to use. Practical solutions for budgeting, living on cash instead of credit, and advice on beginning an emergency fund are part of the program for members. It earned an "A" rating from the Better Business Bureau and is accredited by the National Foundation for Credit Counseling.

Friday, March 30, 2012

How to Pay a Mortgage When You're Laid Off

Contacting your mortgage company is one of the first things you should do if you have been laid off and fear that you may start missing mortgage payments. Avoiding late notices while scrambling around for a solution could be a major mistake. Technically, you can default on your mortgage by missing just one payment. It's possible your mortgage company will be more understanding if you are open, honest and timely about your financial problems.



    Contact a nonprofit credit counselor in your area. A housing counselor approved by the U.S. Department of Housing and Urban Development, or HUD, will have broad knowledge about foreclosure avoidance programs -- including help for people like you who may have trouble making mortgage payments because of a layoff. Find a counselor by checking the HUD website (see Resources).


    Give the counselor complete information regarding your finances and the layoff. Tell her how much you can afford to pay on your mortgage each month.


    Authorize the counselor to contact your lender directly on your behalf. Take part in the three-way telephone call with the counselor and your mortgage company. Contribute to the discussion as the counselor asks the mortgage company to reduce or even suspend your mortgage payments while you look for work. Lenders have programs to address problems such as yours, including forbearance, which specifically allows for partial payments. HOPE NOW reports that forbearance agreements typically last for three months when approved and sometimes can be renewed. HOPE NOW is a consumer information website supported by mortgage companies and nonprofit counseling agencies.


    Pay for your mortgage by making reduced payments through a forbearance plan negotiated by your housing counselor. Follow the agreement to the letter as you seek a permanent solution.

Thursday, March 29, 2012

How to See Dave Ramsey Live for Free

Would you like to see Dave Ramsey live for free? It is possible! Follow the steps in this articles to attend a Dave Ramsey LIVE event free as a volunteer.



    Make sure you are the appropriate age. Dave Ramsey LIVE event volunteers must be at elast 18 years old.


    Decide on the city in which you would like to see Dave Ramsey live. Dave regularly appears in cities where his radio show airs. A list of cities that are currently scheduled for the Dave Ramsey LIVE event are listed at DaveRamsey.com. Click on the 'See Dave Live' link on the left side of the home page.


    In the 'See Dave Live' section of DaveRamsey.com, click on 'About This Event'. From those menu options you will see a choice for 'Volunteer @ an Event'. Click on this and you will see a list of cities under 'Request to Volunteer'. Once volunteer registration has opened for a certain city, you will be able to access it from here.


    Arrive at the event venue on the day of the event at the requested time. Event volunteers are required to be at the LIVE event several hours before the start time and they will stay after the event has ended. Volunteers will assist with registration, seating, product sales, and packing up of materials.


    Dress appropriately. Volunteers are requested to war nice, casual clothing and comfortable shoes. They are requested not to wear jeans. Volunteers will receive a free t-shirt that they can wear the day of the event.


    Enjoy the event. Dave Ramsey LIVE event volunteers will miss a small part of the event while they are carrying out their duties, but will get to see most of the event for FREE!

Debt Consolidation & Bad Credit History

Debt Consolidation & Bad Credit History

Debt consolidation has many advantages and disadvantages. There are many things to consider before deciding to consolidate owed debt into one lump sum. An advantage is that consolidating debt does help the debtor obtain a more affordable payment. On the other hand, a disadvantage is negative scores or credit ratings from the lending companies.

Bank Debt Consolidation

    Bank debt consolidation is always an option.
    Bank debt consolidation is always an option.

    Bank debt consolidation is a process where a debtor seeks a bank to assist in consolidating sums of owed money into one affordable monthly payment. Banks offer second mortgages and home equity lines of credit as debt consolidation solutions. These types of consolidation require the debtor to have some type of collateral in case the loan is defaulted or goes unpaid. The only way to get one of these credit lines is to have a bank appraisal of the house done or have a mortgage that is paid off or not underwater.

Debt consolidation companies

    Debt consolidation counselors help lower debt.
    Debt consolidation counselors help lower debt.

    The other option that exists for debt consolidation is to seek out a debt consolidation companies. There are many debt consolidation companies, but not all are reputable and trustworthy. Listed are a couple of things to keep in mind when looking for a reputable consolidation company. According to ftc.gov website, "Reputable credit counseling organizations can advise you on managing your money and debts, help develop a budget, and offer free educational materials and workshops." The site also states, "If possible, find an organization that offers in-person counseling such as universities, credit unions and branches of the U.S. Cooperative Extension Service."

Bad Credit History

    A bad credit history is a living nightmare.
    A bad credit history is a living nightmare.

    A bad credit history is a difficult hurdle to overcome. Anyone with a bad history can count on a few things to occur in life. Getting a new loan is costly, as the loan interest rate will be very high, if a loan is even an option, as many people with a bad credit history will not be able to get a loan at all. A bad credit history will prevent a person from getting things such as cell phones, a new car, a house, car insurance, credit cards, utilities, and many other essential things in life. Again, if these things are attainable expect extremely high interest rates and added charges.

Bad Credit Solutions

    A secure credit card helps rebuild credit.
    A secure credit card helps rebuild credit.

    There are ways to try and fix bad credit. One way is to pay off any current debt and apply for a secured credit card at the local bank or credit union. A secured credit card is a prepaid credit card; the cardholder pays a collateral sum of money or uses a personal item for collateral. The card is given a limit and the holder is free to use it at will. The purpose of the card is to buy something and either pay it off at the end of the month or carry a very low balance to try and rebuild the damaged credit history and score. Credit repair can take months to years, so don't expect any changes in your credit rating overnight.


    Be careful when consolidating as companies may take advantage of your situation.
    Be careful when consolidating as companies may take advantage of your situation.

    When seeking any type of debt consolidation be careful with the company chosen. According to the ftc.gov website, "be aware that, just because an organization says it's 'nonprofit' there's no guarantee that its services are free, affordable, or even legitimate. In fact, some organizations charge high fees, hidden fees, or urge customers to donate money for the received services." Further, any form of debt negotiation is reported by credit agencies and shows up on a debtor's credit history negatively. Just because a consolidation occurred don't think every party involved is happy, as the credit company is losing a lot of interest money. Research a company before starting any debt consolidation program. Look the company up on the Better Business Bureau.

What Is Mastercard RPPS?

Mastercard Remote Payment and Presentment Service (RPPS) is a payment processing and presentment hub.


    Mastercard introduced the Mastercard Remittance Processing Service in 1987. The name of the service was changed to Remote Payment and Presentment Service (RPPS) in 2000 when Mastercard added electronic bill payment and presentment (EBPP) to the service.

Electronic Bill Payment and Presentment

    Mastercard claims the RPPS service is connected to 95 percent of the providers in the EBPP industry. The features that RPPS offers, Mastercard says, include routing and settlement within 24 hours, risk management procedures and automatic editing of customer accounts to correspond to the needs of the biller.

Online Bill Payment

    Mastercard promotes the usefulness of RPPS for online bill payment systems, noting the efficiency of payments transmitted with Mastercard RPPS, rather than with paper checks. Mastercard claims that 32 million households pay bills online at bank websites.

Electronic Payments Maximizer

    Mastercard points to value-added features of Mastercard RPPS, including the Electronic Payments Maximizer. This service examines a check file to see if payments earmarked as check payments can instead be converted to electronic payments.

Account Conversion Technology

    Mastercard states the Account Conversion Technology aspect of Mastercard RPPS helps prevent routing issues that stem from incorrect account information. Mastercard RPPS notes payments that require conversion to a new account number, executes the conversion and reroutes the payment.

Electronic Exceptions Service

    According to Mastercard, the Electronic Exceptions Service feature of Mastercard RPPS reduces the number of payments that cannot be handled electronically and that instead need to be paid by paper check. With this service, Mastercard says, exception payments are posted more quickly and the cost of processing exception payments is reduced.

Wednesday, March 28, 2012

How to Handle Short-Term Debt

When you have short-term debt--debt that you must repay within a year--the clock is ticking on making your payments. Because you don't have much time to pay it off, your payments probably will be much larger than if they would be if you were paying off the debt over a longer period of time. You might need to tighten your belt a bit, but you can handle short-term debt with basic financial management. Focus on your financial goals in order to pay off short-term debt.



    Set up a payment plan. Your creditor sometimes will do this for you, but in some cases--such as when you make a large purchase at no interest for the first year--you'll have to set the payments yourself. Decide whether you want to distribute the payments evenly or whether you want to pay more at the beginning or end.


    Reduce your expenses. With a short-term loan, you want to apply as much money as you can toward paying it off. To do this, you should try to reduce your expenses for the duration of the loan. For example, you could cook meals at home instead of eating out or find free activities to do instead of going to the movies.


    Apply all extra money to paying off the debt. When you cut back on your costs, be sure that you use the extra money to pay off the debt. This will decrease the time that it takes to repay your loan.


    Consider whether you should consolidate your debts into one payment. If you have several short- and long-term loans that you are trying to repay, it might make sense to consolidate your loans. This allows you to make one easy payment and might spread out the loan over a longer term.


    Consider whether you should refinance your home to include the short-term debt. If you're worried that you won't be able to pay off the short-term loan on time, you might be able to refinance your home to get the money that you need. If you use your home equity to pay off the short-term debt, the money will become part of your mortgage payments.

Is Revolving Debt or Installment Debt Better for Your Credit Score?

Is Revolving Debt or Installment Debt Better for Your Credit Score?

While reviewing your credit report, you may notice some debts marked as "revolving" while others are labeled "installment". Although these types of accounts are very different, having both on your credit report is crucial to maintaining the best possible credit score.


    Neither revolving debt nor installment debt is better for your credit score, yet both are required on your credit report for you to demonstrate a balanced debt profile.


    Revolving debts allow you to make purchases on a line of credit and then pay down the line of credit in order to use it again in the future. Credit cards are an example of revolving debt. Installment debts include any loans you finance that possess a set payment amount and date that the debt will be paid in full.


    The types of debt that you carry account for 10 percent of your overall credit score.


    You can close revolving debt accounts voluntarily and then paid them off but you cannot voluntarily close installment debts. Because the length of your credit history is taken into consideration when your score is calculated, closing an old revolving account may cause your credit score to drop.


    Both installment debts and revolving debts must be paid on time. Because your payment history on your debts is 35 percent of your credit score, making a late payment on either type of account will damage your credit rating.

Tuesday, March 27, 2012

The Best Debt Help Program

Finding help to get out of debt isn't as easy as it seems. There are myriad scams online vying for your business, but they are costly and will often leave you in a worse financial situation than when you started. Being debt free can become a reality if you can develop and implement new and healthy financial habits with help from trusted and reliable sources. Whether you want to work toward paying your debts in full or you need help managing your creditors and debt, consider two top programs with different options.

Debt Reduction & Payoff

    Nationally syndicated radio show host, Dave Ramsey, teaches people all aspects of sound personal finance through numerous tools available on his website, DaveRamsey.com. Ramsey's counsel focuses on aggressively paying off debt, giving up credit cards and being free of debt.

    Adults and kids can pay to attend Financial Peace University, a 13-week in-depth personal financial course. Or, listen and watch for free, as Ramsey hosts a three-hour live radio show on weekdays and a live television show in the evenings on the Fox Business network. True to his personal convictions, credit cards are not accepted for purchases on his website.

    The Lampo Group
    1749 Mallory Lane
    Brentwood , TN 37027
    (888) 22-PEACE

Debt Management

    Consumer Credit Counseling Service (CCCS) is a nonprofit, nationally recognized debt management program. Each location operates independently within a community, usually located in major cities. CCCS is a division of Money Management International (MMI) and together it makes up the largest nonprofit full-service credit counseling agency in the United States operating for over 50 years.

    MMI provides clients with professional financial guidance, credit counseling, debt management solutions, housing counseling assistance, bankruptcy counseling and education services by phone, Internet, and in-person sessions with competent financial counselors. According to MMI's website there is no fee or obligation for clients engaging in a counseling session, but if a client chooses to establish a Debt Management Plan, there is a one-time set up charge and monthly fee that contributes toward the cost of administering the plan.

    Consumers use debt management counselors to negotiate with creditors in reducing interest rates, waiving late fees, lowering monthly payments and eliminating collection calls.

    Money Management International
    9009 West Loop South, 7th Floor
    Houston, TX 77096-1719
    (866) 889-9347

Other Considerations

    Whether you are on the path of debt reduction or debt management consider some additional ideas that may help improve your financial condition. There are many free and reputable resources online to help you manage your debt. Start a budget, pay off your debts from smallest to largest, make extra payments on your credit cards. Don't even consider debt consolidation loans, especially if they are secured by a mortgage on your home. If you default you could lose your home. Use only debit cards and cut up your credit cards, or keep a few in the freezer for limited access. Call your creditors and negotiate lower rates and terms. Before you know it you can live a life free of burdensome financial stress.

Is Debt Consolidation Bad for My Credit?

There are several ways that you can consolidate your debts. Some of the methods to consolidate your debts are definitely bad for your credit, while some will not harm your credit. In fact there are some methods that can help to improve your credit by increasing your credit score. There are many advantages of consolidating your debts. You can receive a lower interest rate in some situations, and your payments can be lowered.


    If you decide to consolidate your debts by using a debt management company, this will affect your credit history in a negative way. Your credit score can be lowered.


    Another way to consolidate your debts is with a home equity line of credit. It will not affect your credit negatively.

Balance transfer

    You can also do a balance transfer and pay off all of your credit cards. This will not harm your credit report.


    Another way to consolidate your debts is by refinancing your first mortgage loan. Once you pay off your credit cards and other debts your credit file will not be harmed.

Second Mortgage

    Taking out a second mortgage to consolidate your debts will not affect your credit in a derogatory manner unless you charge new balances on the credit cards.

Monday, March 26, 2012

Can You Get Credit Shortly After a Bankruptcy?

Can You Get Credit Shortly After a Bankruptcy?

It's possible to qualify for new credit just months after a bankruptcy, according to Microsoft Money. However, the wait may be significantly longer for really big purchases, such as a house.


    Certain kinds of credit, such as secured credit cards and secured installment loans, are available virtually immediately after bankruptcy. You're required to place money in a savings account, which acts as collateral and makes approval easy.

Time Frame

    The time frame on being approved for other types of credit after bankruptcy can vary. Microsoft Money said on its site in February 2009 that mortgage lenders generally want people emerging for bankruptcy to reestablish good credit for at least two years before applying for a home loan. Auto loans may be available almost immediately, with a significant down payment and interest rates of 21 percent or higher.


    Microsoft Money says some of your old debts may still be showing on your credit report although they were discharged through the bankruptcy. The site recommends you review your credit report before applying for credit. Write letters to the credit bureau to dispute any errors.

Sunday, March 25, 2012

What is Your Credit Card Debt Responsibility in a Divorce?

What is Your Credit Card Debt Responsibility in a Divorce?

A lot of property division law amounts to debt division for many American couples. Illnesses, layoffs and poor purchasing decisions can leave you and your soon-to-be-ex mired in debt. Since many people turn to credit cards to pull them through lean times, you may find yourself facing credit card issues in the property division phase of your divorce. How this plays out will depend upon how your state divides marital property and debt.

Debt Division

    States divide marital debt under the laws of either community property or equitable distribution. The main difference is that community property states mandate an equal division of your estate, whereas equitable distribution states seek a division that is equitable, or fair. Since fair and equal aren't always the same, equitable distribution laws allow for an unequal division under some circumstances. Therefore, if you live in an equitable distribution state, you may find yourself receiving more debt and less property than your spouse even though many of the credit cards you end up with are in the other spouse's name.

Marital Versus Separate Debt

    Not all credit card debt is subject to division in your divorce case. One thing both equitable distribution and community property states have in common is that they allow family courts to divide only marital debt, not separate debt. The definition of marital debt varies from state to state, but as a general rule, it consists of all debt acquired by either party between the date of marriage and either the date of separation or some other end date set forth in state law. Everything you racked up before marriage and after that critical end date is exclusively your problem. The same rules apply for your ex.

Effect Of Your Ex's Credit Card Debt

    If your ex incurred credit card debt during the applicable time period set forth in your state's property division laws, you could be ordered to share in it. You may succeed in having it classified as separate if he racked up the debt in bad faith, but if it arose in that critical time period, the burden will be on you to show why the court shouldn't include it as part of your marital estate. His debt may have the additional effect increasing your alimony exposure. Alimony in most states depends partially upon the dependent spouse's need for support. Debt service obligations increase that need.

If Your Ex Files Bankruptcy

    Depending upon the facts, your ex's bankruptcy could help you; it lowers your alimony exposure, and if she doesn't properly serve you with notice of the bankruptcy, your property division claim could survive discharge. If she includes joint accounts in bankruptcy, however, the creditors will now look to you for payment. If she files Chapter 13 and serves you with notice, you may be out of luck; your case will be better if she files for Chapter 7. Regardless, don't try to go it alone; if your ex files bankruptcy, see a lawyer immediately.

Saturday, March 24, 2012

How to Improve Slow Credit

If you have "slow credit," it means that your credit report shows that you regularly pay your bills late, according to ABC affiliate 13WHAM News. This will lower your credit score, which is a three-digit number ranging from 300 to 850. With low credit scores, you may pay more for all forms of credit, including automobile loans, mortgages and credit cards. Improving your score will require time and patience. The Federal Trade Commission (FTC) says that bad credit cannot be fixed in just a few months, despite claims made by some credit repair firms.



    Pay your bills on time. Never missing a payment is an effective way to increase your credit score. The myFICO website says that more than a third of your credit score is determined by your payment history, which is the most important category in the FICO scoring model. Any other move you make to improve your credit could be offset, at least temporarily, by one missed payment.


    Pay down your debt. Maxing out your credit cards can cause your credit score to drop. MSN Money says you should pay down your revolving credit balances to below 30 percent of the credit limit on each account. Keep the balances below the 30 percent threshold as you continue to make timely payments. Examples of revolving credit include credit cards, some signature loans and home equity lines of credit.


    Review your credit report for mistakes that could be pulling down your score. The Fair Credit Reporting Act requires the credit bureaus to remove any inaccurate information on your credit report if you notify them. Get a free annual copy of your report from all three reporting agencies at AnnualCreditReport.com (see the Resources section).


    Write a letter to the credit bureau at its address on the credit report disputing any inaccurate information. If you have proof of the error, the information must be removed within about 30 days of the credit bureau receiving it, explains the FTC website.


    Open a secured credit card if you are turned down for a regular, unsecured card. Secured credit cards require you to place money in a savings account that is held for collateral. The amount on deposit becomes your credit line. Unsecured credit does not require collateral beyond your signature. Using your secured card regularly, while staying within your balance on account, may help to boost your credit score.

What Is Judgment Proof Regarding Credit Cards?

What Is Judgment Proof Regarding Credit Cards?

Any time you owe a credit card debt that is still within your state's statute of limitations, the creditor may sue you in an attempt to get a legal judgment levied against you. If you are judgment-proof, however, a lawsuit and subsequent judgment are much less likely to occur.

The Facts

    The term "judgment-proof" is used to refer to an individual who, due to a lack of income or assets, is unlikely to be sued by a creditor for a debt.


    A creditor will often sue for a debt in the hopes of being awarded a wage garnishment, bank levy or property lien against an individual. If the individual's income is exempt from garnishment or levy and he owns no property on which a lien may be placed, paying court costs and attorney fees for a lawsuit is not in the creditor's best interests.

Time Frame

    If you know you are judgment-proof, yet you receive a court summons, you have a limited amount of time in which to file a response notifying the plaintiff and the court of your current financial status. This often results in the creditor dropping the lawsuit. The amount of time you have to respond to a summons varies by state.


    Forms of income that are exempt from garnishment and thus help make an individual judgment-proof are Social Security, government assistance, state retirement pension, unemployment payments or low-paying employment that does not leave enough disposable income to legally garnish.


    Just because you are considered judgment-proof does not mean that a creditor cannot sue you. It simply means that the odds of a lawsuit are greatly reduced.

Friday, March 23, 2012

Section 1681 of the Fair Credit Reporting Act

Enactment of the Fair Credit Reporting Act brought consistency to the business of consumer credit reporting. Significant portions of the act and its subsequent amendments deal with consumer protection and the guarding of citizens' rights involving the escalating crime of identity theft. FCRA's in-depth treatment of consumer privacy issues effectively safeguards a person's credit report from unauthorized examination. The text and amendments to the Fair Credit Reporting Act exist as a part of U.S. Code, Title 15, Subchapter III, Sections 1681 through 1681x.

FCRA History

    The Fair Credit Reporting Act, enacted on Oct. 26, 1970, became effective on April 25, 1970. The FCRA was considered and passed by the House of Representatives on May 25, 1970, and considered and passed in the Senate on Sept. 18, 1970. Minor amendments tweaked the credit legislation over the years until a major revision, signed by President George W. Bush on Dec. 4, 2003, implemented the Fair and Accurate Credit Transactions Act as a part of the FCRA.


    The Fair and Accurate Credit Transactions Act authorized federal preemption of language contained in the original legislation, precluding individual states from adopting separate laws governing credit reporting, and initialized laws allowing consumers free access to a copy of their credit report. FACT also made significant changes to FCRA, addressing increasing consumer protection anxieties, focusing primarily on identity theft.

Other Protection

    Besides the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act, other consumer protection laws permeate the U.S. Code. Chapter 41, Subchapter I, Sections 1601 through 1667f, deal with consumer credit cost disclosures; Subchapter II, Sections 1671 through 1677, address restrictions on the garnishment process; Subchapter II-A, Sections 1679 through 1679j, announce rules and regulations regarding credit repair organizations; Subchapter IV, Sections 1691 through 1691f, quantify equal credit opportunities; Subchapter V, Sections 1692 through 1692p, regulate debt collection practices; and Subchapter VI, Sections 1693 through 1693r, set parameters for electronic fund transfers.


    Besides protecting a consumer's identity with strict penalties for identity theft, 2003's Fair and Accurate Credit Transactions Act directed the big three credit reporting agencies, Experian, Equifax and TransUnion, to implement procedures whereby consumers could take advantage of the directive to allow free access to their individual credit reports. As a result, consumers may call 877-322-8228 to arrange for a copy of their credit report; request their credit report by accessing anualcreditreport.com on the Internet; or by mailing a request for their credit report to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The Federal Trade Commission, which oversees the Fair Credit Reporting Act and interprets its content, says consumers should not contact the three consumer reporting companies individually as they all provide the free annual credit report only through the aforementioned website, telephone number and common address.

The Best Credit Report Score

The Best Credit Report Score

That all-important credit score varies between 300 and 850, with the latter number representing a spotless credit history. In the 1980s, the Fair Isaac Corporation came up with the scoring system and what is now the most common method of calculating it. The major credit-scoring agencies -- Experian, Equifax and TransUnion--all use the FICO method, as it is known. The score weighs several different factors in an attempt to predict the chances of a debtor meeting the obligations of a loan or a revolving line of credit.

Payment History

    A perfect credit score of 850 is exceedingly rare. In fact, spokesperson Maxine Sweet of Experian said to MoneyCentral, a financial website, that "I've never seen it." To approach that number, you have to have excellent payment history, as the FICO system considers this to be the most important factor, giving it a weight of 35 percent. If you pay late, or don't pay at all and force the account to a collection agency, your repayment history is affected. Bankruptcy can also affect this factor, depending on how recently the bankruptcy occurred.

Loan Rates

    The most important reason to strive for a high credit score is to save money on loans. In general, the higher your score, the lower your interest rate on mortgages, auto loans, other consumer loans and credit cards, and the lower your monthly payments. Most experts agree that a perfect score of 850 is not necessary, however, and that people scoring between 775 and 850 get the same rates.

Utilization and History

    The utilization ratio--amount of outstanding debt as a percentage of total credit available--weighs 30 percent in the FICO calculation. If your utilization ratio is high, you are close to the maximum available credit you have. That tends to lower your score, as does having an increasing number of cards. Your past history and how long you've been using credit accounts also has something to do with the FICO score. The longer you've been paying down balances, the better a credit rater can predict your future history. "Credit scores love stability," according to an article on NASDAQ.com. "To earn the perfect 850 score, the scoring formula would like to see that all of your credit and loan accounts have been open for 10 or more years." If you've just begun using credit cards, your score will be lower than someone whose had accounts for many years--everything else being equal. This factor weighs 15 percent.

New Credit

    Applying for new credit accounts affects your credit score by 10 percent. The FICO scorers make the difference between hard inquiries made by potential lenders and soft inquiries made by you. The more new accounts you're trying to open, the greater the negative impact on your score. Any time you have a hard inquiry, your perfect score of 850 falls out of reach, as this has a temporary negative impact on the score.

Account Types

    The final 10 percent factor in the FICO score is an evaluation of the kind of accounts you have open. A mix of installment loans and revolving credit accounts is positive. A single type of high-interest account, such as a credit account without any installment loans, is negative. A perfect score of 850 can only be achieved if you have at least one of each type of account, keep them open and active, and pay them on time every month.

How to Negotiate Settlements With Creditors

When an individual ends up owing a large amount of money to creditors, it is generally in his interest to negotiate a settlement for a payment plan. This settlement has a number of benefits for both the borrower and the creditor. It allows the borrow to break free of harassment from his creditors and to begin to put his financial life back together without sinking deeper into debt. It gives the creditor assurance that the borrower is committed to paying back at least a portion of what he owes.



    Outline your financial resources. Before beginning negotiations with creditors, explain to them clearly and truthfully what you are able to pay. Outline all your sources of income as well as your monthly expenses. This will allow creditors to know exactly what they can demand that you pay without trying to squeeze blood from a stone or place you deeper into debt.


    Make an offer. The creditor will generally begin negotiations as he entered them -- by demanding you pay what you owe. In response, you should make a counter offer, one in which you offer to devote a significant portion of your spare income to payments on the debt. In your offer, state a specific time period over which the debt will be paid and a specific rate of interest.


    Make a counteroffer. After you have made your first offer, the creditor will generally come back with a counteroffer of some kind. For example, the creditor may ask that you pay more of the debt or that you pay it over a quicker period of time. Make a second offer in response to his offer. Repeat this process until you have come to an agreement you can live with. Remember: you should always know the most that you can possibly pay in a single month. Do not agree to pay more than this amount, or you will only end up deeper in debt.


    Ensure that the settlement doesn't hurt your credit. When you've reached a tentative point of agreement with creditor, demand that he report the settlement to the credit bureau in one of two ways: he should report it as paid in full or ask that it be deleted entirely. If the credit reports that some of the amount owed was written off, this will pull down your credit score for up to seven years.


    Settle on an agreement and get it in writing. After you have reached an agreement, demand that the creditor send you a copy of it in writing. If he does not, send him a letter outlining the terms of agreement with a note stating that you consider these terms confirmation of a verbal agreement. Keep a copy of this letter for your files.

Thursday, March 22, 2012

Am I Responsible for My Dead Husband's Medical Bills Under Texas Law?

Am I Responsible for My Dead Husband's Medical Bills Under Texas Law?

If you are under the assumption that your spouse's debts will disappear after death, you might want to check your address. Texas, along with Arizona, California, Idaho, Louisiana, New Mexico, Washington and Wisconsin, is a community property state. Thus, since medical bills are considered an estate debt shared by both spouses, it is very possible that the responsibility for paying the medical bills may fall on you.

Community Property

    In general, the term community property applies to any purchases or debts acquired during marriage. Community property does not need to be in both parties' names, as debts incurred by either party are considered the responsibility of both spouses. For example, if a spouse accumulates $50,000 in medical bills before passing away, the responsibility of that debt is then passed on to the surviving spouse, even if the name of the surviving spouse does not appear on any of the bills.

Outside of Marriage

    An exception to the community property law in Texas states that property obtained outside of marriage is considered separate property, and thus not the responsibility or asset of the surviving spouse. Thus, if a husband owed $150,000 worth of medical bills from extensive surgeries that occurred prior to marriage, the wife of the husband does not legally assume that debt through marriage. In such cases, if the assets are not available to pay the incurred debt after death, it is the creditors who lose out on the ability to claim payment.

Gifts and Inheritance Exception

    Texas law permits gifts and inheritance, even when acquired during times of marriage, to remain separate property. This means that in the event that your spouse dies and creditors have come to collect the debt, they cannot access property in your name only as a means of paying community property bills.

Legal Counsel

    Given the complex nature of probate and property law in the State of Texas, it is highly recommended that you seek professional assistance before proceeding with any debt payments. In some cases, especially those with exorbitant medical bills, it might be in your best interest to explore bankruptcy options. Attorneys who specialize in Texas property can also provide insight with regard to any local or district laws that might work in your favor. When seeking legal advice, be sure request an attorney with a specialized background in property law and one with experience in situations similar to yours.

The Statute of Limitations in Massachusetts on a Contract

A contract in Massachusetts is a legally binding agreement, but it is not enforceable forever. There are three types of contracts one can enter into: oral contracts, written contracts and promissory notes.

Time Frame

    All three types of contracts have a statute of limitations (SOL) of six years in Massachusetts. This is the time period these debts may legally be collected. If you default on a contract within this time, the lender can take you to court.


    If you are taken to court before the six year SOL has passed and are successfully sued for the debt, the judgment resulting from that lawsuit has a SOL of 20 years in Massachusetts. The judgment is not renewable after this SOL has passed.


    There is a $125 a week wage garnishment exemption in Massachusetts, which means you will be able to keep a minimum of $125 a week from your wages if they are garnished.

How to Stay Afloat During a Recession

How to Stay Afloat During a Recession

We're living in recessionary times. But that doesn't mean that you can't get ahead. This article gives a few tips on how you can profit from the financial fallout.



    One of the most obvious defensive strategies that you can practice is to keep your credit score high. Use your bank or credit union's automatic bill payment feature to avoid late payments. Opening a new credit card account can add points to your FICO score. Keeping your total revolving debt below 35 percent of your credit limit can add as much as 50 points to your score as well.


    Recessions usually mean buyouts and corporate mergers in the financial industry, therefore, your investment or insurance accounts may suddenly become the property of a new broker and/or company. If you suddenly find your accounts under a new advisor's name, then you need to check that person's regulatory history either at finra.org (see Resources below) or with your state insurance commissioner.


    The recent mortgage fallout has created some buying opportunities in the financial arena. Banks and other lenders who have maintained strict, conservative lending standards have seen their share prices take a beating. However, the underlying companies are still solid. Bank of America is a prime example of this.


    Conversely, those seeking investment alternatives outside the stock market may want to consider becoming mortgage lenders themselves. Find a borrower that you feel is financially reliable and trustworthy, and make them a loan (properly documented and enforceable in court) at slightly above-market rates. You can get a guaranteed return on your investment and have the home as collateral to boot. For more information on this, see my eHow article: "How to Profit From an IRA Mortgage Investment."

If I Am Being Sued by a Credit Card Company, Can It Take My Child Support Money?

If a person owes money on a credit card and carries the balance for long enough without paying on his bill, he may eventually face lawsuits from his creditors. The creditors will usually follow a prescribed legal process in order to attempt to collect their debt, which may eventually end with the garnishment of income sources and the possible attachment of assets of the debtor. Different types of income are treated differently in lawsuits.


    Child support income is exempt from collections in a lawsuit from a creditor. This money is for the support of a minor child, and courts will not award that money to a creditor in order to satisfy a judgment. If the only income that a debtor receives is from child support, or from other exempt sources such as federal disability benefits, the debtor is considered to be "judgment-proof."

Attachment of Bank Accounts

    A common way that a creditor attempts to collect from a debtor is to search for any assets that the debtor may own. This includes real estate or personal property, such as vehicles, that the creditor can ask the court to allow it to take a lien against. Attachable assets also include bank accounts, such as checking and savings accounts. If a creditor finds an account that is in the debtor's name, the creditor can petition the court to allow it to levy the account and take any money in it. This creates special problems for child support income.

Co-mingling of Funds

    Since child support income is exempt from attachment by a creditor, any child support money that is in a bank account cannot be taken by creditors. This is a problem when money is in the account from several different sources, such as child support and employment income, or money belonging to a spouse. The creditor will probably attach and take all money in the bank account, unless the debtor proves that the money in the account is exempt. Co-mingling creates problems because the sources of the funds are difficult to determine.

Protecting Your Money

    If a debtor believes that he is going to be subject to a judgment and has income that is not exempt, in addition to child support, he can take steps to protect his money from attachment by creditors. He can open a separate account to deposit child support funds into and file the paperwork that the court requires to show that these funds are exempt from judgment. It is up to the debtor to prove the source of funds in the account. If the debtor co-mingles the money with other income sources, it becomes difficult to know where the money came from. If collections have escalated to the point of bank account levies, a debtor should consider filing for bankruptcy.

Wage Garnishment Rules by State Section 125

Wage Garnishment Rules by State Section 125

Businesses that pursue garnishment of wages are not given unlimited control of your earnings. They are bound by certain rules determined by the state government in your state of residence, including IRS Section 125. Your employer is regulated under the federal Consumer Credit Protection Act (CCPA) too, so states also follow those rules. States' rules can vary from the federal rules, but some basics are consistent: limited garnishment amount, pretax deductions and protection eligibility.

Limited Garnish Amounts

    Creditors seeking to receive large garnishment amount percentages find they are limited in obtaining more than the maximum of 25 percent of disposable income allowed by the federal garnishment rules in Title III of the CCPA. But some states, which elect to implement their own garnishment amount maximums--as they can, provide creditors less of a disposable income percentage than the federal government's ratio.

    States such as Massachusetts, limit garnishment amounts to a flat fee ($125) per week. Other states, such as New Jersey, prohibit garnishment altogether if wages are $154.50 or less per week. And, North Carolina only allows wage garnishment under three conditions: ambulance fees, child support or taxes. These limited garnishment amounts are then legally deducted from your paycheck based upon the state section rules, also known as IRS Section 125.

Lesser Amount Prevails

    Once a wage garnishment has been approved legally, your employer will follow your specific state section to determine if the state law or the federal law will apply in your case. For example, if your state is like Massachusetts, with a flat rate of $125 maximum that can be garnished by an employer per pay check, but the federal government would approve 25 percent of your $600 weekly paycheck ($150.) for garnishment, the lesser (the state's flat rate) will prevail and be used for garnishment purposes. That lesser amount will then be recorded for payroll purposes under the IRS Section 125 known commonly as the "cafeteria plan." The cafeteria plan was originally implemented to offer states a financial incentive to encourage employees to choose to withhold monies for expected medical and other anticipated expenses, giving the employee and the employer a cost break from paying taxes due to advanced planning. In regard to wage garnishment, this plan provides an incentive to the employer by eliminating their burden of calculating or reporting tax on the garnished wages.

Pretax Deductions

    The Section 125 plan dictates that this wage garnishment amount will not be taxed by the state or federal government. Instead, your employer will post this amount under the "before tax" category known as IRS Section 125 on your paycheck stub. This allows them to deduct it before computing your paycheck earnings taxes. This rule helps the employer, as he doesn't have to compute the tax on the garnishment wages, per the IRS Section 125 rule, also known as voluntary payroll deductions or the state Section 125.

Can a Creditor Take a Home of a Surviving Spouse?

Can a Creditor Take a Home of a Surviving Spouse?

When an individual dies, he may owe debts from his final illness, as well as from transactions he made throughout his life. In some cases, there may not be enough assets in his estate to repay all of his debt. Though creditors may try to make a surviving spouse pay her deceased husband's debts, they can't usually take her home.

Debts After Death

    When an individual dies, his estate representative must inform his creditors of his death, and the creditors can file claims against the estate for debt repayment. The estate administrator must pay debts in order of importance as determined by the state. If there aren't enough assets in the deceased individual's estate to cover all of the debts, the court will designate the estate as insolvent, and the remaining creditors won't receive payment.

Surviving Spouse's Home

    If the surviving spouse owns her own home, it won't go into probate with the rest of the estate. In most states, the home will be exempt from probate even if she owned it jointly with her husband. However, in some states, the deceased spouse's interest in the home may become part of his estate if the deed doesn't provide the surviving spouse with the right of survivorship. If the deceased spouse's interest in the home does pass into the estate, creditors may be able to attach to it.

Joint Debts

    If creditors are attempting to collect a debt that both spouses owed and the deceased spouse's estate is insolvent, the creditors can continue to take action against the surviving spouse after the completion of probate. If the couple pledged their home as collateral for a debt, creditors can take possession of it. However, other creditors must obtain a judgment before they can put a lien on the home or force its sale.


    Though creditors may be able to attach to a deceased spouse's interest in a jointly owned home, they can't typically force the sale of the home unless the surviving spouse was also responsible for the debt. If she was responsible for the debt, she can file a homestead exemption to protect a portion of her equity.

Information on National Credit Systems

National Credit Systems is a collection agency whose primary aim is to help apartment landlords secure past-due monies from tenants, according to the company's official website. Ninety-eight percent of the agency's business is derived from apartment community managers and landlords.


    National Credit Systems opened in 1991, according to the company's website.


    The company headquarters is in Atlanta, according to the National Credit Systems website.

BBB Standing

    The Better Business Bureau has issued a "F" rating against National Credit Systems as of 2010, according to the BBB website. The "F" rating was issued as a result of the company's representatives allegedly not addressing consumer complaints regarding unfair collection practices.

Contact Information

    Potential clients as well as tenants needing to reach National Credit Systems representatives can call 404-629-9595 or 800-367-1050, send a fax to 404-344-3627 or send postal mail a letter to the following address:

    National Credit Systems, Inc.

    P.O. Box 312125

    Atlanta, GA 31131

Non-Wage Garnishment

A non-wage garnishment is a way for creditors to collect unpaid debt balances from individuals who do not earn regular employment wages. People earn regular employment wages through regular pay, salaries, tips, bonuses and commissions. Income earned by self-employed individuals such as independent contractors does not count as regular wages.


    A non-wage garnishment is when a creditor and state or federal agencies collect money from an individual through means other than garnishing their regular wages. Federal laws limit wage garnishments to 25 percent of an individual's disposable income. With wage garnishments, federal laws limit the amount to 25 percent of an individual's disposable income, but there are no such limits for non-wage garnishments. Laws only limit non-wage garnishments to the total amount of an individual's unpaid debt plus any applicable fees such as penalties and accrued interest.

Creditor Debts

    Creditors will typically file a Writ for Garnishment (Income Tax Refund/Credit) for a non-wage garnishment of an individual's state income tax refund. Creditors have to file this writ within the individual's state and usually file it in the county in which the person lives. Once a judge approves the writ, a state's department of treasury will use the individual's state income tax refund check to pay the garnishment order. The state's treasury department refunds any money left after paying the garnishment back to the individual.

State Agency Debts

    The state can garnish an individual's state tax refund if he owes money to a state agency for things such as unpaid traffic tickets, court fines or state income taxes or if he is behind on his court-ordered child or spousal support payments. The state deducts the total amount owed for these debts from his tax refund check. If the state tax refund check exceeds the amount of his debt, the state will refund this amount to him.

Federal Tax Refunds

    The IRS can use non-wage garnishments to collect on unpaid federal taxes. The U.S. Department of Education can also file a request for non-wage garnishment with the U.S. Department of Treasury's Financial Management Services, or FMS, to collect on unpaid federally insured student loans such as Perkins or Stafford student loans. Creditors cannot garnish federal tax refunds. FMS pays federal tax refund garnishments in the order it receives the request or, in other words, on a first-come first-served basis.

Wednesday, March 21, 2012

Debt Collection & Purchasing Outstanding Judgments

A judgment against a debtor is the result of a lawsuit levied by one of the debtor's creditors. The judgment legally allows the creditor to perform a variety of legal actions to compel a debtor to pay an outstanding delinquent credit obligation. Occasionally, a debtor's financial situation may prohibit a creditor from executing a judgment. Selling the judgment to a collection agency allows the creditor to recoup at least a portion of the debt owed.

Credit Judgment Definition

    A credit judgment is an order of a court after a creditor or collection agency sues you to recover a debt. A judgment enables a creditor to garnish your wages from working or place liens on your assets, depending on the nature of your debt. Each state also assigns a statute of limitations to the judgment, ranging from 10 to 20 years. This is the amount of time a creditor or collection agency has to act on the judgment and collect the debt in full. After the statute expires, the creditor or collection agency may bring no further legal action against you in relation to the debt, unless the state you live in allows the creditor to apply for renewal of the judgment.

Limits on Income Garnishment

    Federal and state law protects certain income, including retirement pay, child support and Social Security disability payments, from garnishment to pay all debts except those related to back taxes, unpaid alimony, outstanding child support and unpaid student loans. A creditor winning a judgment against a debtor who only receives income from one of these sources will have a very difficult time forcing the debtor to pay on the judgment because her income is exempt from attachment under the law. Impatience may cause the creditor to sell the debt to another agency willing to wait the debtor out in the hopes she secures eligible employment before the statute expires.

Creditor Losing Money

    A creditor selling a debt judgment to a collection agency is losing money on the initial investment. The prospect of receiving equal to or less than 50 percent of the original loan or credit line may make a creditor receptive to discussing a settlement amount with the debtor. A creditor may be willing to accept a discounted settlement proposal enabling the debtor to settle for less than he owes, while still allowing the creditor to secure a higher return than selling the debt to a collection agency would net.

Debt Settlement Consequences

    Settling a judgment with a creditor or newly appointed collection agency may relieve a debtor of the obligation to pay the remainder of a debt, but it also carries several important consequences. Settling a debt for less than a debtor owes reflects negatively on her credit report, making it more difficult to secure new lines of credit and personal loans. If the forgiven debt amount exceeds $600, at the time of publication, the debtor must also claim the amount as earned income on her federal tax return.

Can a Lender Go After Personal Assets in a Foreclosure?

A foreclosure occurs when the lender takes possession of a piece of property, usually due to the borrower's lack of payment on the corresponding note. If you are in foreclosure or anticipating one, you should understand that foreclosure will allow the lender to go after your personal assets as a result.


    When a lender takes possession of a piece of property due to non-payment of the note by the borrower, this is called a foreclosure. Based upon the signed contract between the lender and the borrower, the lender has the right to pursue foreclosure since the property is the collateral for the loan. Even a significant down payment made when entering the loan does not prevent a foreclosure. A foreclosure will appear on a credit report as a public record for up to seven years.


    Depending upon the state where the property is located, the lender may be able to gain access to your personal assets. If your state allows for recourse loans, which means you are personally responsible for the debt, then even if the property is foreclosed upon, once the lender sells it, you are responsible for the difference between the amount owed on the loan and the amount the property sold for. This is called a deficiency.


    If you owe a deficiency, the lender may decide to sue you in court to obtain a deficiency judgment against you. The judgment will specify the amount that you owe. Depending upon the laws in your state, with a judgment, the lender can garnish your wages, seize funds in your bank account and place a lien on other property that you own, including your vehicle and may be able to force you to sell that property to satisfy the judgment.


    If you owe a deficiency debt, even if the lender doesn't sue you for it, that lender may decide to hire a collection agency to collect that debt or sell the debt to the agency. If so, the collection agency will place a collection account on your credit report that will remain there for up to seven years. The agency can pursue collection activity against you including calling you and suing you in court to obtain a judgment.

Delinquent Mortgage Questions

Delinquent Mortgage Questions

The possibility of losing your home to the bank is a frightening prospect that many Americans have had to face in recent years. In fact, the Mortgage Bankers Association reported record-breaking numbers of homeowners were behind on their mortgage payments in the third quarter of 2009, reaching nearly 10 percent. By seeking answers to delinquent mortgage questions you can prepare yourself with proactive solutions to foreclosure.

How Many Payments Can I Miss?

    Your mortgage lender can legally begin foreclosure proceedings when you have missed one mortgage payment, but typically a lender will not take this step until you have failed to make three monthly payments. The catch is that most mortgage companies require you to bring your loan current at this point to forestall foreclosure. So if you find yourself 90 days behind, you will need to come up with the full three-month amount, plus any fees your bank chooses to assess. If you are less than 90 days delinquent, you may be able to negotiate an agreement in which your lender allows you to continue to make payments one month at a time provided you bring your mortgage current by an agreed-upon date.

What Are the Effects of a Delinquent Payment?

    The first consequence of a delinquent payment is the late fee your mortgage company will automatically assess to your account after the grace period--typically 15 days past the due date. If your payment is over 30 days late, it will almost certainly appear on your personal credit report, not only lowering your credit score but making any attempt to refinance your existing mortgage more expensive in terms of the finance fees. In addition, once you have missed a monthly payment on your mortgage, you are in the position of having to catch up, paying a double payment plus fees. Before your delinquency progresses, you should call your lender to discuss a payment plan that you can work with.

Where Can I Turn for Help?

    Banks, housing authorities and lawmakers have developed programs designed specifically to assist delinquent borrowers in catching up on mortgage payments to avoid foreclosure. Banks and mortgage lenders are generally ill-equipped to own and sell private properties, so you might find your lender eager to help you keep your home. You can discuss such options as setting up a repayment plan for the delinquent amount. Your bank might negotiate a temporary modification or suspension of your mortgage if you have recently lost your job. Your lender also might cooperate with you on refinancing your loan to lower monthly payments.

    The United States Department of Housing and Urban Development--HUD--will work with your lender on a loss mitigation program before foreclosure proceedings begin. Provided you have experienced a loss of income through employment or an increase in your living expenses, you may qualify for this type of HUD assistance.

    Legislation passed by Congress in 2009 offers further assistance to delinquent borrowers. If you are behind in your mortgage, federal guidelines that require banks to reduce monthly payments might provide assistance.

Tuesday, March 20, 2012

The Responsibility of Unsecured Debt

Unsecured debt might seem like free money to some, but this line of thinking couldn't be further from the truth. In fact, unsecured debt might take even more discipline and responsibility to manage than secured debt. While you know what you stand to lose with secured debt, getting into trouble with unsecured debt can sometimes be an even bigger headache.

Unsecured Debt

    Simply put, unsecured debt is debt that doesn't have any collateral attached. While the most common types of secured debt are mortgages and car loans, the most frequently seen type of unsecured debt is credit cards. Because there are no immediately evident strings attached to unsecured debt, it can become tempting to use in an irresponsible manner.

Use of Unsecured Debt

    By and large, secured debt is used for material things that are necessary, such as cars and houses. Unsecured loans, on the other hand, are not tied to a tangible asset, nor are they particularly necessary. While you may need to use unsecured debt in the form of a student loan to pay your way through college, other types of unsecured debt are not as critical to your future. These types of unsecured debt include personal loans and credit cars. However, it's important to note that you will have a hard time obtaining secured debt until you build a solid credit history by using unsecured debt, so responsibility with unsecured debt is critical.

Unsecured Debt Penalties

    Defaulting on a mortgage or car loan yields an obvious result---you lose the asset that you're paying off. However, with unsecured debt, the lender cannot take anything from you because you've failed to make good on your payments. Instead, the damage will come through late fees, negative marks on your credit report and potentially higher interest rates. These are items you may be prepared to deal with if you're having financial difficulty, but you shouldn't act as though there are no consequences for missing payments on your unsecured debt.

Paying Unsecured Debt

    When you take out a car loan or a mortgage, you have a specific schedule of payments that takes into account your interest rate, the amount borrowed and the term of your loan. This can help you stay on track and get your loan paid off in a reasonable period of time. However, with credit cards, you're only obligated to pay the minimum, an amount that is often significantly less than you should pay if you're carrying a balance. It's up to you to do the right thing to get your balances lowered, even if the immediate pressure to make proper payments is decreased.

Monday, March 19, 2012

How to Stop Payday Collectors

How to Stop Payday Collectors

If you have been in a financial bind, you may have taken out a payday loan. Payday loans are high interest loans because they have no credit requirement. Depending on the term of the payday loan, interest rates can be exorbitant, such as almost 400% in Cleveland in 2008, according to CNN. While you may have gotten the payday loan because you were in financial trouble, paying back a payday loan debt can oftentimes strain you financially. If payday debts are not paid, you may be contacted and harassed by a payday collector.



    Send a cease and desist letter. Under the Federal Trade Commission, you have a right to stop collection harassment from lenders. In your letter, write that you wish for no more verbal communication from the lender. Indicate that you will accept only written communication but do state your intentions on paying the debt. If not, the payday lender may decide to take you to civil court. The letter should be sent by certified mail with a return receipt by the U.S. postal service so you have proof that the payday lender received your letter.


    Contact a consumer credit counseling agency to get your debt consolidated. Consumer credit counseling agencies focus on working with unsecured creditors directly to get you out of debt. You can include all unsecured debts, including payday loans, in your debt consolidation. In finding a consumer credit counseling agency, check with the Better Business Bureau to ensure the agency is legitimate. The agency and you will work together in putting your payday loans into one payment for you that you will send to the agency. The agency will then disburse payments to your payday lenders. This consolidation will help keep you on track so you do not fall behind on payday debts.


    Consider bankruptcy. Bankruptcy is a reorganized payment plan that is provided by the bankruptcy court in the state in which you live. There are a few different types of bankruptcy filings, including Chapter 13 and Chapter 7. Under Chapter 13, you are able to keep secured property, such as automobiles and your home, and debt is repaid through a three to five year payment plan. Under Chapter 7, you will liquidate all of your assets but do have an option of exempting your automobiles, household property and work-related necessities. Other property under lien may be sold or given back to creditors under the Chapter 7 plan, according to the Federal Trade Commission. Work directly with your attorney to determine which bankruptcy filing is best for you financially. Under bankruptcy, no creditor can contact you, including payday lenders. Bankruptcy gives you an opportunity to resolve delinquent accounts and start over financially.

Credit Default Repair

Defaulting on a credit account can be a damaging situation for your credit score. While this can set your credit score back, you can recover from it with the right actions. Taking steps like making regular payments and paying down your other balances can help the recovery effort.

Pay the Balance

    When you default on a credit account, this does not necessarily mean that you should give up on trying to pay the debt. If you come up with the money to make payments, you should still try to repay the credit account that you defaulted on. This will show creditors an act of good faith on your part and it shows them that you are willing to repay your debts, even if you are a little late.

Payment History

    Besides paying the balance on your defaulted account, you should also place an emphasis on your future payment history. Even though you may not have been in the habit of always making your payments on time in the past, making it a priority to do it from this point forward can make a big difference in improving your credit score. Focus on all of the accounts that you have in good standing and make your payments on time. Eventually, your credit score will start to improve.

Credit Report

    During this process, it can be beneficial to get a copy of your credit report. If you do not know what your credit report says, it can be difficult to build up your credit score again. You need to see which accounts are in good standing and which accounts have negative reports on them. You can get a free copy of your credit report every year from each of the three major credit bureaus, TransUnion, Experian and Equifax.


    When you repay your defaulted accounts, you may be able to negotiate with the creditor to help your credit. In some cases, they are willing to remove any negative statements on your credit report if you pay your account within a certain amount of time. While they may not be able to completely build your credit back up, this step could definitely help.


    There are companies in the market that sell credit repair services. These companies promise to take care of everything for you and get your credit back on track. While some credit counseling services are legitimate, many of them are scams. When choosing a company to help, you should check with the Better Business Bureau as well as other online reviews so that you do not sign up with an illegitimate company.

Sunday, March 18, 2012

Does Breaking a Contract Affect Credit History?

Before making the decision to ignore and break a legally binding contract, understand the consequences of such behavior. Contracts between two people protect the interest of the person or business that provides a service or funds. Contracts are common with rental leases and when borrowing money from a bank. These legally binding documents detail how much a person will pay and for how long. But when individuals decide to end a contract prematurely, the credit consequences are often devastating.

Collection Account

    Anything negative reported on your credit report by a collector has a negative impact on your credit history. Collection accounts are standard after breaking a contract because companies and lenders are likely to refer your name and personal information to a collection agency. Agencies take over collection attempts after a broken contract and after original creditors write-off the debt. Collection agencies can call or write to recover money, and some even pursue a lawsuit. A collection account can affect your credit history for seven years.

Legal Action

    The words "broken or breach of contract" may not appear on your credit report. But if a bank or company sues for a broken contract and the judge concludes that you're guilty of this breach, a credit judgment is most likely to tarnish your credit record and influence how future creditors view your loan applications. Judgments, like collection accounts, remain on reports for seven years. Even if you previously had an acceptable credit history and score, the reporting of a judgment can knock points from your rating and make you an undesirable candidate for financing.

Protect Credit History

    Avoidance of any credit problems with a contract involves fulfilling your contractual agreements and refraining from legal actions. Understandably, situations can prevent the fulfillment of such agreements. But rather than shrug of your commitment, talk with the company that holds your contract to see if you can resolve the situation amicably and avoid credit and legal troubles. An explanation of your situation may generate help from a company or lender. For example, a rental landlord may dismiss your lease agreement if you lose a job, and your mortgage company may agreeably modify your home loan to help you keep the property.

Rebuilding Credit

    Realistically, you can't avoid credit damage with every broken contract; and some companies and banks aren't prepared to offer assistance. If you can't fulfill the contract, and a collection's account or judgment is inevitable, understand that the damage from either isn't permanent. Credit repair after a serious ding on your report is doable. This involves wise future credit moves to slowly replace negative actions with positive actions. Paying off your other obligations in a timely manner and keeping minimum debts helps restore your score.

Friday, March 16, 2012

How to Settle Credit Card Debt at a Reduced Amount

Generally speaking, creditors are more likely to lower your interest rate or alter your payment terms rather than reducing the amount of debt you owe. Since you make a legal agreement to pay your debt when you open a credit card account, creditors have various legal means to enforce your repayment of the debt. Ironically, the more you fall behind on your payments, or otherwise show an inability to pay, the more likely your creditors are to settle your debt for less than you owe. Of course, debt settlement damages your credit score and could result in adverse tax consequences.



    Research the ramifications. Before you act, realize that settling a debt for less than you owe could have a serious negative effect on your credit report. The credit reporting agencies will show your settlement for seven years, during which time creditors may be more reluctant to offer you credit. Additionally, the federal government usually considers forgiven, canceled or settled debt to be taxable income. For example, if you negotiate your credit card debt down from $50,000 to $30,000, you must report the $20,000 in canceled debt as taxable income.


    Stop paying your bills. Your creditors are unlikely to negotiate with you if you show a perfect payment history, reflecting an ability to pay. Only if you fall behind in your payments will your creditors feel that they are less likely to receive payment.


    Call your creditors. Tell them you are having financial difficulties and cannot keep up with your payments. Your creditors may ignore you, or they may offer you a basic settlement plan.


    Wait for a better offer. As with any negotiation, the first offer you receive from your creditors is unlikely to be the best deal you can get. As time goes by, and your creditors still are not receiving payments from you, they may be more likely to attempt to get at least some money out of you.


    Make another offer after a few months. Typically, a credit card company will charge off debt as not collectible after six months of non-payment. As this date approaches, your creditor may be more receptive to settlement offers, particularly if you are willing to make a lump sum payment. After charge off, you still owe the debt, but your original creditor is more likely to consider your debt a tax loss and sell off the rights to collect to another agency.


    File bankruptcy. If you cannot negotiate your creditors down to the level you would like, you can always file bankruptcy. In some cases, bankruptcy may even be a better option. By the time you consider bankruptcy, your credit score is probably already severely damaged, so filing bankruptcy will not make it much worse. In fact, bankruptcy may allow you to discharge the total value of your debt without requiring any payment at all. Additionally, any debt you discharge in bankruptcy is non-taxable, unlike any negotiated settlement you reach with your creditors outside of bankruptcy.

New Jersey Wage Garnishment Rules

New Jersey Wage Garnishment Rules

If a debtor is unable to pay a creditor, the creditor may seek a court order to recover the money owed. These judgments can often be enforced by a garnishment, which is a court order that allows the creditor to take money directly from the debtor's income or paycheck. New Jersey allows for garnishments as long as the creditor follows specific rules.

Money Limits

    New Jersey allows creditors to garnish up to 10 percent of a person's gross salary. If the debtor earns less than $154.50 a week or $309 every two weeks, no garnishments can be withheld. For any debt owed, the creditor can also charge the debtor interest up to 6 percent per year. New Jersey courts can generally allow garnishments of earned income, but creditors cannot garnish welfare or unemployment benefits, Social Security benefits or income or veterans' benefits.

Time Limits

    Depending on the kind of debt for which the garnishment is sought, the creditor may be limited in the amount of time they have to collect. New Jersey differentiates between four different kinds of debts and limits the amount of time a creditor has to collect on them accordingly. The limits are six years for open accounts and written contracts and 20 years on domestic and foreign judgments.

    Generally, open accounts are those that have no set limit, like a credit card. A written contract is a debt incurred because of written agreement between the parties, like a line of credit or loan. Domestic judgments are court orders entered by a New Jersey court. Foreign judgments are those issued by courts outside New Jersey.


    If a creditor wants to garnish wages in New Jersey, she must petition the court for a writ of execution. This is a legal order that requires the debtor's employer to pay the garnished funds directly to the court officer. The writ must state the amount of debt, the damages actually done, the amount of interest charged, the names of the parties and the creditor's basis for the garnishment (usually the judgment issued by the court). Once the writ is granted, the court orders the debtor's employer to pay the funds to the court, bypassing the debtor. The court then pays the creditor.

Thursday, March 15, 2012

Borrowing Against the Equity in Your Home

Borrowing against the equity in your home could be an effective way to finance a child's education, cover unexpected medical bills or create a cushion for major emergencies. However, the Federal Trade Commission (FTC) warns against tapping the equity in your home to pay off credit card debt, take vacations or go on shopping sprees. The agency warns that you could lose your house to foreclosure if you take a second loan against the equity in your home and you are unable to make the monthly payments.



    Order an appraisal of your house or use some other method to determine its approximate market value. A real estate agent can put you in touch with a home appraiser. Or get this information for free by comparing your house to others that have sold recently in your neighborhood. The real estate website Zillow and others can offer free purchase price information on houses sold in your area. Once you apply for a loan the lender will order a more formal appraisal, but doing some homework on your own will help you determine if a home equity loan is even possible for you.


    Check your mortgage billing statement or call your lender to find the current balance on your mortgage. Determine the equity in your home by subtracting the balance owed from the fair market value. Example: The fair market value of your home is roughly $175,000. You owe $100,000 on the home, leaving you with $75,000 in equity. Lenders may allow you to borrow up to 85 percent of your equity, according to the FTC.


    Get unbiased advice about the pros and cons of borrowing against the equity in your home. Ask for a free consultation with a nonprofit credit counseling agency in your area, such as those affiliated with Consumer Credit Counseling Service. Get a referral for a counselor by calling a local charitable organization such as the United Way or Urban League. The counselor will explain the difference between a home equity loan, which allows you to borrow a lump sum against your equity, and a home equity line of credit (HELOC). The home equity loan requires regular monthly payments just like your mortgage. The HELOC is an approved line of credit that works like a credit card--you'll be required to make monthly payments only if you access the line and carry a balance.


    Review your credit report and score. Simply having equity available in your home isn't enough to qualify for a loan or line or credit. Get a free copy of your credit report from the website Annual Credit Report. The site was established to offer free credit reports as required by the Fair Credit Reporting Act. Follow instructions included with the report to order your score separately for a fee. The credit score needed for approval can vary with the lender. According to the website Bank Rate, the cutoff for a "good" credit score is 620--but some lenders will approve real estate loans with lower scores. Whatever your score you should make sure all your current bills are up to date before applying. Also address any delinquent accounts that may have been sent to collect agencies.


    Apply for a home equity loan or HELOC from your bank or credit union.

Wednesday, March 14, 2012

Problems with Debt Elimination

Problems with Debt Elimination

Debt relief is a completely different concept than debt elimination. Each year, countless consumers are lured into believing that debt elimination will solve all their credit woes, only to find that they have been scammed out of money they could have put into actually paying down their debt. Consumers approached by debt elimination companies should instead investigate their options for debt relief.

Debt Elimination

    Debt elimination companies tell people with high debt that they have access to paperwork that will force their creditors to make their debt go away. These companies use the explanation that the credit system contains loopholes, which the paperwork is meant to take advantage of. Although a debt elimination company may make a lot of promises to attack your debt in a variety of different ways, according to the Better Business Bureau, all debt elimination companies make their promises on the basis that credit lines are illegal.


    Most people have never heard of a document that proves credit lines are illegal, and that's because this document doesn't actually exist. Rather than drawing you out of debt, debt elimination companies actually drown you with large up-front fees, and when the debt doesn't magically disappear, consumers find themselves with more debt in the end.

Credit Score

    Those who choose to use a debt elimination company may end up with more debt and, in turn, increasing their credit utilization ratio, which is one of the biggest factors in determining your credit score. Consumers who stop making monthly payments to their debt will see an even bigger negative impact on their credit score, as creditors will report the delinquency to the credit bureaus. With promises of debt elimination, consumers expect their credit scores to bounce back once their balances have disappeared; however, they will see no reduction in their debt, which will result in further pressure on their credit scores.


    Instead of putting money into a so-called debt solution that doesn't work, consider using a reputable credit counseling company. With the help of a credit counselor, you will develop a budget and get to the root of your financial problems so that you don't make the same mistakes in the future. In addition, if you have defaulted on payments in the past and you're having trouble making the minimums each month, your counselor may put you on a debt management program, DMP, in which the counselor works with your creditors to lower your interest rates or payoff balances. Find a reliable credit counseling company through the National Foundation for Credit Counseling website, which is recognized by the Federal Trade Commission.

Laws on Installment Loans in Illinois

Banks, credit unions and other lenders offer installment loans in Illinois. Installment loans are for a variety of purchases ranging from automobile loans to appliances. The state refers to standard installment loans as consumer installment loans to separate them from other types of loans, including payday loans. In 2010, the state adopted new laws on installment loans as part of new regulations on payday loans


    The state of Illinois defines consumer installment loans as loans for six months or longer. That places the loans in a different category in Illinois than payday loans, which must be repaid between two weeks and 120 days in Illinois. Usually, installment loans are for 12 months, increasing to 60 months or longer for automobile and recreational vehicle installment loans.

Interest Rates

    Illinois state law caps interest rates at 99 percent on consumer installment loans for less than $4,000, according to the Chicago Tribune. The interest rate cap is 36 percent for installment loans of $4,000 or more. The Chicago Tribune reports that before 2010, Illinois did not have a cap on interest rates on installment loans. As a result, some borrowers were paying interest rates as high as 700 to 1,000 percent, according to the office of the governor. Illinois made changes to laws after consumer advocacy groups and others complained about loans with such high interest rates.

Balloon Payments

    Illinois laws on installment loans also prohibit so-called "balloon payments." A balloon payment allows a consumer to take out a loan with low monthly payments and a lump sum at the end (the "baloon payment"). The low monthly payments help consumers afford the loan initially, but some people struggle to make balloon payments. For example, an installment loan for an automobile could feature $99 payments for 47 months, with a $5,000 balloon payment due on the 48th payment. Under that scenario, people in Illinois unable to pay the balloon payment could face repossession of their vehicle or would have to refinance the balloon payment at possibly a higher interest rate. The state prohibited balloon payments as part of 2010 legislation.

Income Verification

    Illinois loan firms must verify that people can afford loans that they are applying for. Illinois prohibits lenders from issuing a loan if the monthly payments would exceed 22.5 percent of the borrower's gross monthly income. People applying for loans can verify their income by showing pay stubs or W-2 forms.