September 2012 ~ Credit And Debt Management

Sunday, September 30, 2012

Personal Credit Card for Business Problems

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Using a personal credit card for business usually doesn't create problems--unless you charge business expenses to the card and are not reimbursed. Some companies fail or file for bankruptcy while still owing expense reimbursements. In some instances the money is never paid, forcing the employee to personally pay business charges.

Personal credit cards can also be a problem when you own the business. Some entrepreneurs structure their businesses as separate legal entities responsible for their own debts. Theoretically the business could file for bankruptcy without the owner having financial liability. However, a personal credit card cannot be included in a business bankruptcy filing. As a result, a business owner with say, $20,000 in business expense on his personal cards remains liable for the debt even if his business files for bankruptcy.

Mixing personal credit cards with business expenses can also cause problems when you are sorting through through your credit card statement and preparing expense reports. You may find yourself spending extra time determining which charges on your card are your personal charges and which should be submitted on an expense report. Some people solve this by having one personal credit card that they use strictly for reimbursable business expenses. That makes the accounting much easier.

Some people want to use their personal card for business so that they can accumulate free travel awards and other perks because of all the business expense they are accumulating on the card,. However, this becomes an issue when the company mandates that all employees must use corporate-issued credit cards--with the company keeping all of the travel awards and perks.

Personal credit cards are commonly used in business and just a few precautions should keep you from developing problems. Turn in expense accounts regularly and avoid placing unusually large business expenses on your personal card. Business owners should avoid using personal cards for business, if possible. Instead, slowly build business credit in the company's name as the business grows.

Can I Settle Credit Card Debt If I Own a Home?

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Home ownership won't prevent you from settling your debts, though some creditors and bill collectors may pressure you to borrow against your home to pay your bills. However, if your settlement attempts fail, and your creditors take you to court, they may be able to get a lien on your home. By contacting your creditors in the early stages of your financial problems, or seeking outside help, you may be able to avoid court and get your debts settled.

Your credit card company isn't under any obligation to settle your balance for less than what you owe. However, if your financial situation is precarious, and your credit card company's collection specialists believe that you may file for bankruptcy, they may accept a settlement and write off your balance.

If a collection agency or creditor investigates your finances, it may discover that you own a home. In an attempt to collect your debt, the agency may suggest that you take out a home equity loan to repay what you owe. However, home equity loans are risky because your home serves as collateral. If you can't pay back the home equity loan, you can lose your house.

If a credit card company or collection agency successfully sues you, it can collect its judgment using several methods. It may garnish your wages or bank account and can get a lien on your home. If you try to sell or refinance your home while the lien is still in effect, your creditor can seize the proceeds to satisfy your debt. This can make selling your home or getting a new mortgage very difficult. A judgment and property lien can also appear on your credit report and cause significant damage to your credit score.

If your creditors refuse your settlement offers and you are concerned about the possibility of a lawsuit, seek outside help. A credit counselor may be able to intercede on your behalf and work out a payment arrangement with your creditors. You can also talk to an attorney about the possibility of filing for Chapter 13 bankruptcy. Chapter 13 bankruptcy allows you to keep your home while repaying creditors, at least in part, over a fixed period. Once you file for bankruptcy, your creditors have to stop their collection effort, which means that they can't take you to court. However, if a creditor already has a lien on your home, it may not be possible to remove it in bankruptcy.

How to Respond to a Debt Summons

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According to the Federal Trade Commission, if you owe a debt, the creditor has a right to sue you in court. You will receive a debt summons to notify you if a lawsuit has been filed. It is best to respond to the summons immediately. Don't ignore the summons, because your lack of response can cause the judge to rule against you before you can dispute your claim. If you have been summoned to resolve a debt, there are many steps that you can take to respond to it.

Instructions

Review the summons and gather the court's contact information listed on the document. Be sure to record your court date and appearance time.

Contact the court and verify the court date and the location. Ask for information about a court clerk or trustee who may be assigned to handle your case.

Determine whether your debt is valid. If you want to dispute the validity of the debt, gather all necessary documentation to verify your claim. Make copies of documents that prove your claim, such as canceled checks and payment receipts. In addition, prepare copies of all correspondence between you and the creditor.

If you decide dispute the claim, be prepared to show proof of your income and assets to the courts. You will also need to show proof of checking and savings accounts. This will be considered to determine whether you are financially able to repay the debt.

Contact an attorney. Ask about a free consultation and request advice regarding the summons. An attorney can possibly negotiate a settlement with your creditors if you decide to retain his services.

High Credit Card Balances & Refinancing Options

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A high balance on one or several credit cards can hurt you with high interest rates, so many people look to refinance the debt via some form of debt consolidation loan. There are usually plenty of options, but it is important to ensure you don't go into deeper debt after you consolidate. If you consolidate your debt and continue to borrow, you will be in an even worse mess.

The easiest way to refinance is to transfer the balance from one card to another. Most credit card companies allow and encourage this, but they often charge a balance transfer fee of up to 3 percent of the balance transfer. The terms of the balance transfer will be on your credit card offer or policy letter. Credit cards tend to have very high interest rates, so this isn't always the best route.

You could take out a home equity line of credit (HELOC) on your house that is very similar to a credit card, except that your house backs up the credit line as collateral, so your interest rate should be lower than your credit card(s). There are usually some expenses when it comes to borrowing against your home, so do the homework to figure out how much it will cost to do it.

Some banks and loan companies will offer to lend you money to pay off your credit cards. The interest rate probably won't be as good as a HELOC, but it will probably be lower than those on a credit card.

Can Your Wages Be Garnished in Texas if Your House Was Foreclosed On?

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Foreclosure can be a financially devastating event -- it can ruin your credit for up to seven years and force you to find a new place to live. Losing your home to foreclosure can also prevent you from buying another home for two to five years, or even longer if the lender foreclosed if you abandoned the home. However, if you live in Texas, your mortgage lender typically cannot garnish your wages for expenses related to a foreclosure.

Although federal law permits private creditors, including mortgage lenders, to garnish up to 25 percent of your earnings, it also allows states to provide greater exemptions than those provided by federal law. Texas is only one of four states, which also include South Carolina, North Carolina and Pennsylvania, which completely exempts wages from garnishment in most cases. Texas only permits garnishment in cases involving unpaid taxes and child support -- it does not lift the exemption for mortgage lenders.

Your wages may not be protected from garnishment if a mortgage lender obtained a foreclosure judgment against you in another state that permits wage garnishment. A foreclosure judgment is typically for a deficiency, which is the amount you still owe after the creditor sells your home. If you foreclosed on a home in another state and the lender sued you for a deficiency, you may still be subject to wage garnishment if you subsequently relocate to Texas.

If you live in Texas but derive earnings from an employer in another state, your mortgage lender may obtain a judgment against you in Texas and then seek redomestication of the judgment to the state where your employer is located. If the mortgage creditor successfully redomesticates a foreclosure judgment, it may garnish your wages to recover the money you owe under the judgment.

Although a mortgage lender's ability to execute wage garnishment in Texas is limited, a lender with a valid foreclosure judgment may use other strategies to collect from you. The judgment creditor may seize funds in your bank accounts to pay a deficiency under a foreclosure judgment. Subject to Texas exemptions, it may also seize and liquidate personal property to pay against the judgment balance.

The Best Way to Get Rid of Credit Card Debt

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It is not easy to get out of credit card debt, but it is well worth the effort in the long run. The best and only way to get rid of credit card debt is by making sacrifices, cutting back and being persistent. Dedicate yourself to getting rid of the debt. Once you are free from credit card debt, your credit score will improve, giving you more freedom to buy a house or car. You will also have more money each month since you no longer need to spend hundreds of dollars to pay credit card bills. Use the experience as inspiration to never get into credit card debt again.

Take an honest assessment of your debt. Dig through all your credit card statements and bills or look up your accounts online. Next, establish a budget. Designate as much money as you possibly can afford to your debt each month. Stop using credit cards and start using only cash for necessary expenses.

Cut your spending. Switch to a less expensive phone or cable plan, or cut those services altogether. Take steps to reduce electricity costs around your house. Search for cheaper car insurance or opt for public transportation to save money on gas and car costs. Avoid going out to dinner, spend less on groceries and take on free or low-cost hobbies to help pass the time you would normally spend eating or spending money.

If possible, add new income to your monthly budget. Look for a second job or ask for more hours at work. Try doing odd jobs around the neighborhood like mowing lawns, dog walking or babysitting. Try freelance work using any creative talents you have or hold a sale to sell some of your personal items you no longer want or need. Another option is to start your own small business on the side. Put all of your new income toward paying down your debt.

Prepare for the unexpected medical bills, car repairs or other surprise expenses. Establish a healthy financial cushion for these uncertainties so you do not need to use your credit card to cover them. Try to stash away $50 or $100 each month if you can, until you reach at least $1,000. It might be hard at first, especially if you are not used to saving, but the financial cushion will give you peace of mind against surprise expenses as well as develop good saving habits for the future.

Tackle your debt with the money freed up by cutting expenses. Call each credit card company and ask if it is willing to lower your interest. Financial radio talk show host Dave Ramsey suggests paying off the smallest debt first, then using the money you were paying to the smaller debts toward paying off the larger debts. Another method is to pay down the cards in the order of highest interest rate to lowest. For motivation, make a list of all credit cards, including amounts owed, and update the list each month as you start to pay the debt down. After a few months, you will see progress, which can motivate you to keep working hard. If you have thousands of dollars worth of debt, it might take a few years, but with enough drive and dedication, anyone can be free of credit card debt.

How to Successfully Collect a Debt

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Employers both big and large have a huge issue when it comes to debt collection. If you have ever loaned anyone money of any amount, you know it is not an easy thing to get it back in a timely manner. However, if you follow a few steps, you will greatly increase your chances of recovering any past due funds.

Instructions

Contact your local small claims court. Contact the court in your area and request the paperwork you would need to begin a claims action. Make sure that the person or business who owes you money understands that they are being served, and then go to the court on the date of your hearing. Keep in mind that you can represent yourself without the assistance of a lawyer. However, make sure you know the specific laws of your state in this area by contacting a qualified lawyer. Fees in each state will vary, so be prepared to pay some type of fee during the process.

Hire a collection agency. If you are having trouble collecting on your debts, these agencies can assist you in the process for a fee. The fee that these groups charge can be quite sizable, and can be as high as 50 percent of the debt that is collected. The negative side of working with collection agencies is that many of them will only work with the cases they feel they can win. Interview several agencies and find out if they have a strong track record of collecting on any past due debt. Require them to provide you with references of previous clients so that you can see what kinds of results they normally get for their clients.

Consider contacting the credit bureau of your state. If the methods listed above do not enable you to collect on the debt that is owed to you, you should call the credit bureau of your state. Reaching them will give you the opportunity to have the bad debt of the person reflected on their actual credit report. Once the person finds out why they were denied credit in the future, they may contact you to pay their debt in full. After you contact the credit bureau, they will guide you through the entire process of placing the bad debt on the credit report of the individual.

Garnishment Solutions

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Garnishment is often a creditor's last resort when trying to collect a debt from a consumer who is unwilling to pay. In order to obtain a court order allowing it to garnish an individual's wages or bank accounts, the creditor must win a lawsuit against the debtor in a state that gives garnishment rights to private creditors. While a garnishment order is beneficial to a creditor, it may leave a debtor struggling financially and searching for garnishment solutions.

The Consumer Credit Protection Act limits garnishments to 25 percent of a debtor's disposable weekly pay or 30 times the minimum wage, whichever is less. Unfortunately for consumers, more than one garnishment can be in effect simultaneously. This can leave an individual unable to pay his current bills. The inability to make payments to his creditors can result in further lawsuits and additional garnishments--making it vital for a debtor to do whatever he can to solve his garnishment problem quickly.

The whole purpose of garnishment is to collect an unpaid debt. Should a debtor be able to pay off the debt in its entirety, the creditor will be forced to immediately release the individual from the garnishment. Some consumers choose to liquidate retirement funds, stocks or savings accounts in order to pay the overdue debt and stop the garnishment. For those who need time to accumulate the funds to pay the debt, changing employers can often stall a wage garnishment, since the creditor is forced to track down the new employer and return to court to obtain a new garnishment order.

Although most creditors prefer to negotiate with debtors rather than seek a garnishment, a creditor is unlikely to negotiate with an individual after a garnishment order is in place. A debtor who files for bankruptcy, however, is protected by the automatic stay. A bankruptcy automatic stay prevents creditors from taking legal action against a debtor until the court evaluates the debtor's income and assets and decides upon the appropriate course of action. Legal action includes garnishment. Thus, bankruptcy is a viable garnishment solution.

If an individual's creditor obtained a judgment against him without properly notifying him of the initial lawsuit, the debtor may be able to have the judgment overturned. If the judgment that permits the creditor to garnish the debtor's wages or bank account is overturned by the court, the garnishment will immediately stop. In some cases, debtors may also contest a judgment because of a debt being too old to collect or if the lawsuit was filed in the wrong courthouse.

Ending a wage garnishment does not mean that a debtor is free to ignore the debt or that the debt disappears entirely. Unless the debtor makes arrangements with his creditor to pay the debt, the creditor may use other methods, such as a property lien, to attempt to recover the unpaid amount. In addition, a creditor may return to court at any time to obtain a new garnishment order.

Debt Counseling Guide

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When you have a large amount of debt, there are a number of options you can pursue. One solution that many turn to is help from a debt counseling company. If you are considering using a debt counseling service to help get out from under your pile of debt, there are a few things to consider first.

A debt counseling company will provide you with a number of services to help you get out of debt. These are often nonprofit organizations that offer counseling and other solutions. Debt counseling companies may offer help over the phone, in person or online. Good debt counseling services generally have trained professionals who can help you figure out your options and then set up a plan to get out of debt over the long term. When you sign up for help with a debt counseling service, you will generally have to pay a fee if you decide to join its program.

One of the key features of a debt counseling service is the debt management plan. While you may not be required to join a debt management plan, it is usually one of the best options. With a debt management plan, you allow the debt counseling service to negotiate lower interest rates on your credit accounts. Then you make a payment to the counseling service once a month. At that point, the counseling service will pay all of your creditors on your behalf.

If you find the debt management payments are more than you can afford, ask the debt counselors instead about debt settlement or bankruptcy. Both these options will hurt your credit, but they can eliminate the debt quickly.

Although there are many legitimate debt counseling services, some are scams. The Federal Trade Commission tracks companies that try to take advantage of consumers, but there are always new companies being started. Before working with a debt counseling service, find out more information about it. Check with the Better Business Bureau to find out if the company has any complaints against it. If a company asks for a large upfront fee, be skeptical.

How to Handle Debt Collector Calls

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The federal Fair Debt Collections Practice Act regulates the behavior of debt collectors as they contact debtors by telephone. Knowing how the rule protects you makes handling debt collection calls easier. For example, debt collectors are prohibited from harassing you by calling at odd hours, such as very late at night or very early in the morning. Debt collectors also may not scream at you or attempt to intimidate you by suggesting physical harm. It's also important to note that you do not have to speak to debt collectors on the phone if you choose not to.

Instructions

Force the debt collector to verify the debt. Multiple collection agencies may call about a debt as it bounces from one agency to another. Most debt collectors work on commission and return the debt to the creditor if they are unable to collect. The creditor then assigns or sells the debt to another collector. By law, each debt collector must send you a written notice notifying you it is the collection agency of record. Federal law allows you to demand in writing that the debt collector provide proof that it is authorized to collect. Refuse to have telephone conversations with debt collectors until they provide this proof in the form of a credit application you signed or a copy of the most recent billing statement.

Write a letter to the debt collector instructing that the agency not contact you at work, if you do not wish to take the calls there. By law, the debt collector must abide by your request. In the letter, tell the debt collector that you are available only at home or on your cellphone, whichever is your preference.

Speak with debt collectors for just a few minutes over the phone, keeping the conversations focused. For example, tell the debt collector that you cannot afford to make a payment this month but you are willing to provide an update next month. If the debt collector protests, calmly tell him that's all the information that you have for now and that you are hanging up. Repeat the same information if the debt collector calls back. Never promise payments that you cannot make.

Inform the debt collector that you cannot discuss your assets, such as the number of cars you own, real estate or money in investments. An exception to this is when you are speaking with your original creditor about a hardship plan offering lower monthly payments or a loan modification. Other debt collectors, such as debt collection agencies, may use information about your finances to determine whether to file a lawsuit against you. Debtors with lots of assets and delinquent debts are sometimes targets for debt lawsuits. Debt collectors know that if they win a lawsuit, they can garnish the debtor's bank account or wages and possibly place liens on property.

Tell the debt collector you can make payments only by money order, cashier's check or debit card -- if you are agreeing over the phone to a payment plan or partial payment. Do not give your checking account information to the debt collector. A debt collector could use that information to garnish your bank account after a lawsuit. Ideally, make the payments using a prepaid debit card not associated with your bank account.

Inform debt collectors to contact you only in writing, if you would prefer not talking with them on the phone at all. This provision is available to you under federal law. After the debt collector receives the letter, the agency may call you only once more -- to notify you it will not be calling again.

Consequences of Debt Relief

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Sometimes, when a person finds himself behind on several debts or in imminent danger of defaulting, he will negotiate with his creditors to pay only some of the total money that the borrower originally agreed to pay. Settling for less than the person originally owed is known as debt relief or debt settlement. Although debt relief can provide a person some financial breathing room, it can have long-term repercussions.

Many companies are willing to accept only partial payment by a debtor on an outstanding debt. This is because the companies believe that it is better to receive some payment on a debt than to have an uncollected sum remain on their books with the possibility that none will be paid. This may help the debtor in the short-term, but settling a debt hurts a person's credit rating.

The main effect of debt settlement is that a person will be allowed to reduce their total debt load. In some cases, a person's debt may be wiped out entirely. However, whenever a person agrees to pay only a portion of the debt that he originally agreed to pay and this decision is reported to a credit reporting bureau, the person can expect his score to drop.

A drop in a person's score can make a person ineligible to take out lower interest loans. If the person needs to borrow money again, this can put him deeper into debt. However, a person may be able to rebuild his credit rating after getting out of debt, so debt settlement can, in some cases, help a person regain a financial foothold in the long-term.

Due to the damage it does to a person's credit rating, debt settlement is often considered a near last resort (with bankruptcy being the true last resort). However, in some cases, a company will not report the debt settlement to a credit reporting agency or will report the debt as paid in full, often at the request of the debtor. This can make debt settlement less of a painful option.

Will I Get Sued for Credit Card Debt?

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The answer to the question "Will I get sued for credit card debt?" proves complex. Federal laws, state laws and the debt collection options available to creditors weigh heavily on whether a credit card company or debt collection agency sues an individual over unpaid debts. Considerations affecting a creditor's decision to sue a debtor include state wage garnishment laws and insolvency and bankruptcy options. The amount of credit debt involved also impacts a creditor's decision regarding legal action.

Credit card companies possess the legal right to sue individuals over unresolved debts. Many companies threaten debtors with lawsuits as a scare tactic or means of extracting payment. However, lawsuits are costly endeavors, and credit card companies generally don't sue debtors if the amount the company would spend during the process exceeds the amount of money the company stands to gain from a lawsuit. Creditors prefer negotiating payment schemes to lawsuits given the high cost of the latter.

Almost all states permit creditors to garnish wages in the event of unpaid credit card debt. Wage garnishment constitutes the process by which a creditor obtains a writ of garnishment through filing suit and gains the legal right to take wages directly from a debtor's paychecks as a means of collecting outstanding debts. Federal law only permits garnishment on wages exceeding 30 times the federal minimum wage -- some states have even stricter garnishment limits. As of 2011, four states do not permit wage garnishment for credit card debt. These states are North Carolina, Pennsylvania, South Carolina and Texas.

In the United States, United Kingdom and British Commonwealth nations such as Australia and South Africa, debtors may initiate bankruptcy proceedings by filing a suit claiming insolvency. Insolvency arises when an individual possesses insufficient assets to pay debts or make payments as they come due. Bankruptcy results in the liquidation, or sale, of a debtor's assets. Depending on state law, assets run the gamut from automobiles to furs and jewelry. Bankrupt individuals are generally allowed to keep their homes. Bankruptcy only arises in cases of extreme debt and entails a measure of last resort.

Statute of limitation laws are important for those facing legal action at the hands of creditors. In many cases, creditors assume that debtors don't understand the extent of the law regarding credit and attempt to exploit that presumed ignorance for financial gain. In most states, the statute of limitation on credit card debt is less than six years. In Texas, it is four years. This means that credit card companies do not possess the right to attempt to claim debt after the statute of limitations has lapsed on that debt. In the event of bankruptcy, creditors must legally stop attempting to collect debt; this includes all phone calls and mailed notices. Creditors who contact debtors after bankruptcy proceedings are in violation of federal law.

How to Sue a Person Within an LLC

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A Limited Liability Company (LLC) is a type of business structure that offers its owners limited protection against liability. In general, you can sue an LLC member as an individual, but if the LLC is structured in a way that protects its members from liability, you may not see a dime of the LLC proceeds in the settlement. Recent changes in the law preclude the liability protection in some instances, so there is a chance you may be able to recover some money.

Instructions

Contact your secretary of state's office or division of corporations office to get a copy of the LLC's articles of organization. The LLC's articles of organization will tell you how many members are in the LLC and provide addresses and other identifying information for the business and registered owners.

Check the law for the legal status of single-member LLCs in your state. If it's a single-member LLC, you may be able to successfuly sue the owner for access to the LLC funds. Two states have already removed liability protection for LLCs -- Florida and Colorado -- and more are expected to follow suit. If you intend to sue a member of a multi-member LLC, you won't have any luck gaining access to the company's funds due to the liability protection afforded by the LLC.

File your claim in your jurisdiction's courthouse. Depending upon the size of the claim, you may be able to file a suit in small claims court. Otherwise, you may be required to sue the LLC's member in civil court. Check with your county clerk for the correct place to file the claim.

Debt Consolidation & Credit Rating

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Credit scores are used to determine everything from loan interest rates to employment. Falling behind on credit payments negatively impacts your credit score and chances for applying for new loans and credit. One option borrowers can use to pay off debt is a debt consolidation or debt management program. These programs are offered through lenders and credit counseling agencies. Debt management plans usually show up on credit reports, but have minimal impact on credit ratings, according to Bankrate.com.

Whereas lenders offer consolidation loans for paying off credit card debt, credit counseling agencies consolidate consumer debt from multiple accounts into one monthly payment. Unsecured debt such as credit cards, retail store cards and personal loans qualify under consolidation programs. In addition to consolidation services, credit counselors handle borrowers' payments by disbursing them to creditors directly. Since credit counselors act on the borrower's behalf, they receive commission on a percentage of the client's payments from credit card companies.

A May 2010 CNNMoney article stated approximately 65 percent of adults had not checked their credit reports during the past year and more than 30 percent of adults were unaware of their credit score. Credit ratings factor into everything from finding and landing a job to purchasing a new home. Moreover, a January 2010 Society of Human Resource Management survey reported that 40 percent of companies conducted credit background checks on all job candidates, and 47 percent conducted credit checks on selected job candidates. Consolidating credit card debt helps borrowers reduce their credit-to-debt ratio and improve their chances for competitive interest rates on loans.

Some of the benefits of debt consolidation include reduced interest rates and lower monthly credit card payments. Usually, credit counseling agencies stipulate that clients are not allowed to open new credit to prevent further damage to their credit rating. Debt management agencies also act as liaisons between the borrower and the credit card company. In addition to consolidating debt into one single monthly payment, credit counseling agencies help negotiate agreements with credit card companies on late fees, letters and calls from creditors. According to LendingTree, consumers who take out debt consolidation loans can eventually improve their credit score by paying the loan consistently for at least one to two years.

Borrowers should choose a credit counseling or debt management agency that is responsible and on time with monthly payments. For instance, if the debt management agency is late or misses a payment, the borrower's credit rating can be adversely affected. Additionally, there are fees for enrolling and participating in programs that consolidate and help consumers manage credit card debt. Besides consolidating debt through debt management and credit counseling agencies, borrowers can opt for a consolidation loan. Although this means taking on additional debt, credit agencies will note that the borrower's outstanding debt has been reduced or paid off completely. Consumers can also attempt to renegotiate interest rates and lower monthly payments with creditors directly.

Is There a Consolidation Loan to Pay Off Payday Loans?

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Payday loans can create a cycle of borrowing over and over. The fees for the loans are quite high and make it difficult to catch up and break free of the payday loan cycle. Consolidating your payday loans into one loan with a set monthly payment may be one way to break free of the payment cycle.

A consolidation loan is a loan that gives you money to pay off several smaller loans. These loans will have set terms with a monthly payment amount, and generally have a set interest rate. The payment amount will be lower than the total you have to pay each payday. This can give you the opportunity to break out of the payday loan cycle and budget so you can afford the smaller monthly payment.

Some payday loan businesses may be willing to offer a consolidation loan, buy you should consider all options before choosing one. Apply for a loan at a bank or a credit union. These places usually have better terms than the payday loan offices. The interest rate will not be as high. You can apply for a signature loan, a loan with no collateral, or use a car title as collateral to qualify for the loan. Take the proceeds from the loans and pay off all of your payday loans immediately.

Payday loans are dangerous because they demand immediate full payment at the time of your next paycheck. This means that you start the next month or week with less money than you normally would have. If you are barely making it from paycheck to paycheck, you will likely need to get another payday loan. The fees associated with the loans are high and if they are converted to an interest rate you will be paying that are often much higher than a credit card. Using credit cards may be a better option than taking out a payday loan.

Many people who use payday loans have a poor credit history and may have a difficult time qualifying for a consolidation loan. If this is the case for you, you may need to use something as collateral for the loan. You may also need to do something else to solve the problem such as getting a second job until the loans are all caught up and paid off. Consider visiting a credit counseling service for help on creating a budget.

Can a Lender Garnish My Wages If I Am Head of Household in Indiana?

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Indiana's laws governing wage garnishment are codified in the Indiana Code Section 24-4.5-5-105. Indiana law allows creditors to garnish the same amount as that prescribed in Title III of the Consumer Credit Protection Act. Multiple garnishments are allowed as long as the combined amount does not exceed 25 percent of an employee's disposable income.

According to the Internal Revenue Service, an individual can file as head of household if he was unmarried on the last day of the calendar year, paid over half the cost of maintaining his home all year and lived with a "qualifying person" for more than half the calendar year. Qualifying persons include minor children or parents. As of 2011, Florida is the only state with a head of household exemption. As such, a Florida resident who qualifies as head of household can successfully overcome a garnishment judgment. Although Indiana has no such exemption, Indiana law still sets limits on the percentage of wages a garnisher can collect.

Indiana's law -- not unlike Title III -- allows creditors to collect up to 25 percent of an employee's disposable earnings or "the amount by which his disposable earnings for that week exceed thirty times the federal minimum wage," whichever is less. Disposable income is whatever wages are left after involuntary deductions, such as taxes and Social Security, are withheld.

Title III makes it illegal for an employer to fire an employee for a first creditor's garnishment. However, employers may terminate an employee after a second creditor's garnishment. Whether an employer decides to do so typically depends on company policy. If indeed two separate creditors obtain garnishment judgments, the combined amount withdrawn cannot exceed 25 percent of the employee's disposable earnings.

Where an employee owes child support, child support withholdings can exceed 25 percent of disposable earnings. Additionally, if child support is owed, other creditors must wait to collect on garnishment judgments. Although Indiana has no head of household exemption, a judge can order garnishment amounts lowered if a debtor can prove extreme financial hardship, procedural error or that the statute of limitations has passed.

How to Know That a Debt Buyer Owns Your Account

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When an account is delinquent, it is normally sent to a collection agency that will attempt to collect the past due amount. If it can't collect, the debt is usually charged off. Sometimes, during this process, the debt may be sold to another company that can continue to try to collect on it. Normally, the debtor will be notified by mail of the change but, in many cases, the company may have an old address and be unable to reach him.

Instructions

Pull your most recent credit report. The best way to find out who owns your debt is by looking at your credit report. You are allowed one free report from each credit reporting agency per year. You can get all of these for free by visiting the Annual Credit Report website as listed in the Resource section.

Find your delinquent accounts. Your credit report is divided into sections. Your positive credit accounts are listed in one section and the negative accounts in another. Locate the negative accounts.

Find the contact information for the creditor. Each listing will include the original amount of the debt and the current amount. This amount is usually higher to account for collections fees and interest. Each listing will also include the name, address and phone number of the company that owns the account. You can get in touch with them to make payment arrangements this way. Just make sure to make a note of your account number. You can also dispute inaccurate credit listings right on the credit reporting agency website.

Is a Lien or a Bankruptcy Worse?

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Your credit report is like a snapshot which can show lenders and potential employers what your current financial situation looks like and how responsible you have been in handling financial obligations. Any negative report on your account can be detrimental to your financial health, but a long-term inability to meet your financial obligations could result in liens or bankruptcy. Determining which is worse between a lien and bankruptcy is subjective.

A lien is a legal claim against property you own, and liens are typically assessed when you owe money because of an unsettled debt or credit account, in addition to unpaid bills such as taxes, water bills, or home renovations. Just about anyone can place a lien against you if you owe him money. You may be sued if you fail to pay, and if the court deems you responsible for the financial claim against you, a lien may be placed against your home, automobile or other real property. You may be prevented from selling the property without satisfying the lien, or your property may be sold at a sheriff's auction in order to satisfy the debt.

Bankruptcy is a legal process by which you legally declare that you are unable to meet your financial obligations as they currently exist. Bankruptcy involves an in-depth examination of your current debts and income to determine whether you are financially insolvent. Depending on the type of bankruptcy you file for in bankruptcy court, you may be able to completely wipe out all of your financial accounts to a zero balance.

According to pelleylaw.com, a lien can have disastrous effects. If the lien is not satisfied, the size of the debt can continue to grow because of additional interest charges, penalties and other fees. In some cases, filing for bankruptcy may be the only way to get rid of a lien when you are unable to pay it off. Additionally, if you are applying for credit, a lien on your credit report can negatively impact your ability to get approval. Some lenders may consider a lien as a debt that reduces your disposable income and ability to repay a loan or credit account.

Bankruptcy can be devastating to those who have no other choice, but filing for bankruptcy can also allow you the opportunity to have a fresh start. Once your accounts have been resolved through bankruptcy court, you can begin rebuilding your credit almost immediately. Nationwidecreditrestoration.com indicates that some lenders may even see you as a more viable applicant for credit when you have no more debt and greater disposable income.

When Will Unpaid Debts Leave Your Credit Report?

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Your credit report serves as a thorough record of your financial past. Prior creditors you held accounts with, how much you currently owe and any balance you previously left unpaid all show up in your credit report for future lenders to see and all affect your credit scores. Unpaid debts are particularly detrimental to your credit but do not remain on file with the credit bureaus forever.

The reporting period for debts represents the amount of time the credit bureaus can leave a given entry within your credit report. The standard reporting period for most varieties of unpaid debt as stated by the Fair Credit Reporting Act (FCRA) is seven years. For example, if you default on a credit card, the credit card account and its subsequent collection account appear on your credit report for seven years. After seven years pass, the credit bureaus remove the credit card account and any collection accounts connected to the original debt from your credit record. Once removed, these entries no longer negatively affect your credit rating.

Some unpaid debts can legally show up on your credit report for longer than seven years. One example of this involves bankruptcy petitions. If your unpaid debts were discharged through a bankruptcy, an entry noting the bankruptcy can appear on your credit file for up to 10 years. Judgments are yet another example. Unlike other reporting periods, the length of time a judgment appears on your credit report depends on how your state governs judgment enforcement. California, for example, dictates that money judgments from creditors are enforceable for 10 years. Thus, your credit report would reflect a California judgment for 10 years.

The standard seven-year reporting period does not begin on the day your account first becomes delinquent. Rather, the FCRA notes that the reporting period begins 180 days from your most recent payment. This date is often known as the "date of last activity."

If the unpaid debt is a credit card account, the date of last activity is usually the day your creditor charged off the account. Credit card companies typically write off defaulted accounts after 180 days. The company then notes the charge-off date on your credit report.

The credit bureaus and your creditors alike have the ability to modify your credit records. If an unpaid debt that is not yours shows up within your credit history, the FCRA gives you the right to contest the item's validity with the credit bureaus. You also have the right to file a dispute with the creditor that initially reported the incorrect information.

Even if the unpaid debt is legitimately yours, you can dispute any aspect of the debt's tradeline that is incorrect. If, for example, your creditor made an error when reporting the amount you owe or the date your account was opened or closed, you can demand that the credit bureaus investigate and either correct the error or remove the entire tradeline from your credit report.

Do It Yourself Debt Negotiation

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Debt negotiation involves making an arrangement or agreement with creditors to pay a debt for less than what it is owed. Debt settlement negotiation is often associated with reducing credit card debt, but it is also possible with mortgage debt when the borrower and the bank agree to do a "short sale" in which a house is sold and the proceeds, which are less than what is owed on the mortgage, go to the lender to satisfy the debt.

The first step to debt negotiation is usually to stop paying your debts. Most creditors will not reduce the amount you owe until your debt is nearing collections. While you can speak to your creditors and let them know you will be having problems making payments, and they may in some instances lower your monthly payment, that type of arrangement is not typically considered "debt settlement" because you are not reducing the amount of money you pay back, you are just stretching out the time it takes you to pay back the amount you owe, and often paying back more in the long run.

Debt settlement, on the other hand, is an option that creditors offer when they feel that they are unlikely to collect on the debt and that the debt may have to be sent to collections. Debts are usually sent (sold) to collection agencies after six months of nonpayment. So, once you have stopped making payments, creditors will usually be willing to begin negotiating a settlement sometime between 30 days and six months after your last payment, depending on the creditor.

Not paying your debts will have an adverse impact on your credit score, so you should be aware of this. During this time period, you should be saving the additional money that you are not sending to your creditors, so you can offer your creditors a lump sum payment. Many creditors are more willing to settle a debt if the payment comes in the form of a lump sum.

Once you have fallen behind on your payments, creditors will begin to be willing to negotiate a settlement with you. This can be done via letter, or over the telephone with a supervisor. Usually negotiating a settlement over the phone is quicker and more effective, but some people prefer to communicate by mail. Ensure that you are speaking to someone in the collections department who has the authority to make decisions. Explain to them that you are unable to pay the amount owed, but that you are willing to offer a settlement. Understand upfront exactly how much you are willing to offer them. There usually will be some negotiation involved, so you may not want to start with your maximum offer. You can offer as a settlement either a lump sum payment or a series of monthly payments.

Typically, most credit card companies will settle for between 30 and 50 percent of the amount owed, but it depends on the creditor, how much you owe and how likely the creditor believes that the account will get sent to collections. When you make a settlement offer, the creditor will either accept it, deny it or make a counteroffer. Once you come to an agreement, make sure that the creditor and you both understand the full terms of how the settlement will be paid and how the settled debt will be reported on your credit report.

Whether you negotiate a settlement, it is essential that you get the complete terms of the settlement in writing. This written document should specify exactly what debts are being settled, exactly how much you will pay and exactly how you will pay it. There should be language in the letter that says something to the effect of, "This settlement is considered full payment on the debt."

The letter should be specific and list account number(s) as well as detailed information about how much you will pay. You should only send payment after you have a signed document from the creditor that contains all of this information. You should send payment in the form of a check or money order: Do not give creditors access to your bank account. Send the payment registered mail, accompanied by a note or letter stating that the check constitutes full payment or full satisfaction for the debt. You may be charged taxes on the amount of the forgiven debt (as this constitutes income) so be prepared to receive a 1099 form.

Can Bankruptcy Stop a Garnishment on Bank Account?

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Debts leading to bank garnishment are a primary reason some people choose to file for bankruptcy. All forms of bankruptcy stop garnishment, including Chapter 7 bankruptcy, which eliminates unsecured debt in just months. Chapter 13 bankruptcy reorganizes credit obligations over a period of three to five years.

An automatic stay is a court order in bankruptcy requiring debt collectors to end all collection efforts, including bank garnishment. Federal law prohibits banks and debt collectors from continuing with garnishment after a judge issues the order. It is possible for a debtor to file for bankruptcy and end garnishment in as little as one business day.

Bankruptcy ends garnishment but presents other problems. Federal law requires a debtor to list all debts in a bankruptcy petition. That makes it impossible for a debtor to file for bankruptcy simply to end a single bank garnishment. That could create problems for some people who have the rest of their fiances relatively under control but are suffering financially because of one garnishment. Bank garnishment allows debt collectors to freeze a debtors bank account. That limits the debtors access to the account except to make deposits. The bank restricts the debtors debit card to deposits only and will return checks written against the checking account because of insufficient funds.

The debtors credit rating suffers as well. Major credit reporting agencies such as TransUnion, Equifax and Experian monitor court records and will list the bankruptcy on credit reports for 10 years. The Federal Trade Commission reports that it is impossible to remove the information sooner, despite claims by some credit repair agencies. Bankruptcy makes it difficult to qualify for new credit at low interest rates for several years. Some people filing for bankruptcy may find it hard to qualify for any major credit loans for two or three years. For example, mortgage companies may require down payments of around 20 percent.

Bank garnishments are sometimes negotiable, although debt collectors can refuse to accept alternative payment arrangements. Garnishment gives debt collectors exceptional leverage, and most are unlikely to surrender the advantage without significant incentive. That could include offering the debt collector a one-time fee for ending the garnishment and accepting monthly installment payments. For example, a debt collector garnishing a bank account for $5,000 may agree to end the garnishment for an up-front payment of $1,000 and 12 monthly installments totaling $5,000 -- with the first three payments due in advance. Debtors who cannot negotiate payment arrangements can stop using the garnished bank account. That means moving direct deposits, such as paychecks, to another bank or a prepaid debit card. However, the debt collector has the right to garnish the new bank account if it can obtain the banking information. Bankrate reports that some debt collectors with garnishment orders call around to different banks in a debtors city to find account information.

Can Creditors Garnish a Prepaid Debit Card?

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A borrower is subject to a garnishment action when she is delinquent on a loan, is taken to court by the creditor or debt collector and has assets or wages confiscated by the court. Usually, back taxes and child support make a consumer liable for garnishment, but credit card companies may attempt to collect this way, too. Borrowers who attempt to circumvent a garnishment by purchasing a prepaid debit card may be unpleasantly surprised.

Prepaid debit card garnishment is predicated upon the creditor knowing that the borrower has such an account. If you used your Social Security number when establishing a prepaid account, creditors and debt collectors will be alerted to its presence, and the possibility of garnishment exists. When an account is garnished, the assets are frozen and aren't available to the consumer. This becomes particularly problematic when the assets on the prepaid card are protected government payments, such as Social Security income.

Federal law prohibits the garnishment of Social Security, disability or veteran's payments, according to Fox Business, unless the creditor attempting to collect is the government (for state or federal back taxes). Prior to May 1, 2011, it was the consumer's responsibility to prove that funds were payments protected from garnishment. As of May 2011, however, electronically deposited funds are "tagged" as such and protected against garnishment. However, consumers must be sure to save proof that protected funds deposited into a prepaid debit account are, in fact, protected.

When you purchased your prepaid debit card, you received along with it a consumer rights and policy statement that includes language about what can and cannot be garnished. If you're unsure whether your prepaid debit card fund can be garnished, read your card agreement carefully. Rules about garnishment are likely to be included in the "privacy" or "legal" section. For example, Chase prepaid debit cardholders are informed quite clearly that the possibility of garnishment exists: "yes . . . funds [are] treated the same as any other funds."

Many borrowers ignore collection notices and phone calls. However, you are better served contacting your creditor or collector directly immediately. Explain your situation -- be prepared to provide documentation -- and try to work out a payment arrangement. You also can consider filing for bankruptcy if you face extreme financial problems. Alternatively, a credit counseling agency such as the National Foundation for Credit Counseling may be able to negotiate on your behalf. Do not ignore the issue. Getting your debts resolved will help you move on and rebuild your finances.

What Incomes Cannot Be Garnished?

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Garnishment allows debt collectors to take money from a debtor's bank accounts or wages to satisfy a court judgment or government tax levy. Garnishment has such a potentially devastating effect on finances that it forces some people into bankruptcy. However, protection from garnishment is available on certain incomes.

Income from retirement pensions is usually exempt from garnishment, and the U.S. Department of Treasury reports that certain income from the government is also usually exempt. Federal law exempts garnishment of Social Security benefits, Veteran's Administration payments, Supplemental Security Income benefits, benefits from the Office of Personnel Management and Railroad Retirement benefits.

Although certain incomes have protection from garnishment, there are loopholes allowing garnishment on all incomes. For example, the Internal Revenue Service can garnish any income for delinquent income taxes, and child support enforcement agencies can also garnish all incomes for past due child support payments. In addition, banks and credit unions are not required to give debt collectors information about money on deposit in a debtor's account. A bank receiving garnishment orders usually will grant full access to the debtor's account. The debtor could have pension benefits or Social Security payments in the account but at least initially, that may not prevent the garnishment. It's the debtor's responsibility to inform both the bank and the debt collector about the presence of protected funds in an account.

Some people facing garnishment may choose to open checking or savings accounts specifically for the deposit of Social Security payments and other types of income protected from garnishment. This allows them to inform their bank and debt collectors that the money in the account is off limits for garnishment. The Social Security Administration advises Social Security recipients to inform creditors that garnishment of Social Security benefits violates Section 207 of the Social Security Act. However, the agency reports that the benefits must be identifiable as Social Security income, and that is why some people set up special accounts for income protected by garnishment.

Bankruptcy is an extreme strategy managing garnishment, but it does work by immediately ending all types of garnishment. However, bankruptcy should be avoided if possible because of its effects on credit. Other solutions are available. For example, debt collectors may agree to end all garnishment efforts in exchange for a debt settlement agreement paying off the account or a payment plan allowing installments.

How Do Debt Consolidators Work?

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Many consumers desiring to be debt-free turn to debt consolidators for help. A debt consolidator's first step will be to set up a consultation with you. At that time, the consolidator will look at your debt and provide you with a free analysis and rate quote. As a rule, reputable debt consolidators will offer this consultation for free, so be skeptical if asked to pay for an initial consultation. It is also important to remember that "nonprofit" does not mean free. Many nonprofit debt consolidation service providers must charge some type of fee in order to cover their costs, so do not be surprised when you are given a rate quote by a nonprofit agency.

If you agree to work with a debt consolidator, his initial task will be to contact your creditors and negotiate lower interest rates and the waiving of late fees and other charges. If a creditor is being contacted by a professional debt consolidator he will know that you are having some financial difficulties. If you alleviate these difficulties by filing bankruptcy, the creditor may not be able to collect any of the money you owe. As such, creditors are often willing to give up some fees or interest in lieu of losing the entire amount owed.

After negotiating with your creditors, the debt consolidator will come up with a payment plan to get you out of debt. The consolidator will formulate this payment plan with you, taking into account what you can afford, your personal goals and the needs of the creditors as per the previous negotiations. This plan will consolidate all of your monthly payments into one payment to be made to the consolidator. The consolidator will then divide this payment out among your creditors as per the plan. Make sure you understand the debt consolidation plan: Some consolidators will manage your payments for you while others will actually pay off all of your debt and issue you a debt consolidation loan. It is important that you understand exactly what is happening. The consolidator should be able to tell you exactly what your monthly payments will be and how long it will take until you are debt-free. Once the plan is in place the debt consolidator should be able to stop any collection calls you may have been receiving.

A good debt consolidator will help you formulate and follow a plan for getting out of debt. They will also provide you with credit counseling. Credit counseling will help you to better understand how credit and debt work and how they affect your credit score. Counseling will also help you to learn how to make good spending choices and avoid being overwhelmed by debt again in the future.

The Definition of a Deferred Mortgage Balance

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A deferred mortgage balance is a portion of your mortgage principal that your lender moves to the end of your loan. A lender can sometimes defer a portion of your mortgage when you refinance; however, this practice is most commonly associated with loan modifications, which are used to help financially distressed homeowners avoid foreclosure.

The primary purpose of a deferred mortgage balance is to reduce the portion of your mortgage principal that is subject to interest under your primary mortgage loan. It also reduces your primary mortgage payment by spreading out a smaller amount of your balance across your payments for the life of your primary loan. Reduced interest and principal can translate to lower monthly payments, making these payments more affordable.

When a lender defers a portion of your mortgage balance as part of a loan modification, it creates a subordinate mortgage. The subordinate mortgage is typically interest-free, meaning that it does not accrue interest while you are paying against your reduced primary loan principal. A balance deferral made as part of a standard mortgage refinance may or may not be subject to interest charges over the life of the loan, depending on the rules imposed by your lender.

You do not have to pay against the deferred mortgage balance held as a subordinate mortgage while you are making loan payments on your primary mortgage. However, you will typically have to make a single balloon payment at the end of the primary mortgage to cover the deferred balance. Because it can be difficult to pay off a deferred balance in a single lump sum, consider this option carefully before agreeing to a mortgage balance deferral as part of a mortgage modification or refinance. If you sell your home before you pay off your mortgage, the deferred balance is due at the time of the sale.

The Federal Housing Administration places limits on the amount of your mortgage that your lender can defer as part of a mortgage modification. Your lender may only defer up to 30 percent of the balance of your primary mortgage at the time of the modification agreement. No established limits exist for mortgage balance deferrals made as part of a standard refinance agreement.

The Difference in Debit Cards & Prepaid Credit Cards

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Just like a credit card, you can use a debit card or a prepaid credit card to buy services. However, with debit cards and prepaid cards you do not pay interest on charges made with the card. In some cases, this makes debit and prepaid credit cards an attractive, less costly alternative than a traditional credit card. The primary difference between debit or prepaid cards and traditional credit cards is that debit and prepaid cards require you to deposit money into an account prior to use.

Banks link your debit card to your checking or savings account. Therefore, when you buy something with a debit card, the bank withdraws the money from your checking account. Instead of signing a receipt and showing a photo ID to the seller, you insert your personal identification number to complete the payment. You can use debit cards in many countries around the world. Today, you can also use many debit cards on either the Visa or MasterCard network. Cards with this feature effectively become prepaid credit cards. However, banks still deduct the funds to pay for these Visa or MasterCard transactions from your checking or savings account.

Prepaid credit cards, also known as secured credit cards, are linked to a prepaid account. Before you can use the prepaid account, you deposit a certain amount of money into it. Every time you purchase something, the prepaid credit card issuer will deduct the money for the transaction from your prepaid account. As with traditional credit cards, when buying an item, you have to sign a receipt. Prepaid credit card issuers in many cases charge a monthly fee and a separate transaction fee for every charge made.

Debit cards allow you to avoid carrying cash or a checkbook. Furthermore, by using a debit card, you will not need to carry traveler checks while staying abroad, because you can pay with debit cards in many countries around the world. Additionally, sellers sometimes will not accept checks, but they will accept debit cards. Finally, many merchants allow you to return merchandise and receive a credit back to your debit card.

Prepaid credit cards can help you avoid getting into debt. Additionally, federal law limits your liability for unauthorized transactions made on a prepaid credit card. Generally, sellers who accept credit cards will also take prepaid credit cards. In some cases, you can also use prepaid cards to help you rebuild your credit history. Not all prepaid credit card issuers report to the credit bureaus, so if you want to use the card to build credit, make sure your credit card issuer reports to the credit bureaus.

What Are the Dangers of Using Non-Profit Consumer Credit Counseling?

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The term "nonprofit" can lull consumers into a false sense of security about a credit counselor, but some nonprofit credit counselors are fronts for fraudsters or companies trying to gouge customers. As long as you do your research and use a reputable counselor, the benefits of using a nonprofit credit counselor can far outweigh the disadvantages.

Some credit counselors claim to be nonprofit, but are really just using this status to avoid regulation, according to Nolo, an online legal resource. A nefarious "nonprofit" credit counselor might charge you exorbitant upfront fees or try to sell you services you might not need, such as a secured credit card to rebuild your credit. Thus, you should stick with a registered nonprofit and research customer complaints filed with the Better Business Bureau on the company.

Despite their best efforts, credit counselors, even ones from a nonprofit organization like the National Foundation for Credit Counseling, might not help in your situation. About one-third of all consumers who go to a NFCC counselor, for example, have problems that are beyond the assistance of counseling, such as people who do not make enough money or diseases like alcoholism and gambling, according to Liz Weston in her 2009 MSN Money Central article "Why Credit Counseling Often Fails."

Even nonprofit credit counselors might charge a monthly fee to help pay for administrative services when ultimately, you can do most of the services of a credit counselor for free. You can, for instance, call your credit card company, ask for a lower interest rate and receive it most of the time. The money you pay to a counselor could go to paying off debt instead.

Any legitimate nonprofit credit counselor will register with the Council on Accreditation (COA) or the International Organization for Standardization (ISO). You should also look for counselors who are members of respected agencies, such as the NFCC or Association of Independent Consumer Credit Counseling Agencies. Also, consider options other than counseling. In some cases, bankruptcy is the best way to handle your finances.

How to Settle Collections & Debts

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When you are unable to pay your bills and debts, a collection agency may acquire the debt. A collection agency collects a debt on behalf of the original creditor. An agency may have contacted you by letter or by phone in an attempt to collect a debt. Perhaps you ignored their calls or letters, but now you realize that ignoring a problem does not eliminate it. Paying your debts is essential if you want to buy a house or obtain other types of loans. There are steps you can take to settle collections and debts.

Instructions

Determine how much you can afford to pay. Plan to pay the debt in full if it is a legitimate debt and you have the money to do so. If you cannot afford to pay the balance in full, figure out what you can afford before talking with the agency. Do not feel pressured into making promises that you cannot keep.

Contact the agency to discuss the terms of repayment. If you cannot pay the debt in full, negotiate a lower payment. The agency will often accept a reduced amount to settle the debt. Determine whether you will make a lump sum payment or set up a payment plan.

Negotiate your credit report listing. It is possible to obtain a more favorable credit listing, though this is not guaranteed. Ask the agency to remove negative entries from your credit report. If you settle the debt for less than you owe, ask the agency to list the account as "paid" rather than "settled." A "paid" entry looks better on your credit report because it shows that you are diligent about paying your debts.

Put the terms in writing. If the agency does not do this, draft an agreement letter that stipulates the terms of the settlement. State the time and date of the conversation, the amount that you agreed to pay, the payment time frame, the method of payment and any special stipulations such as adjustments to your credit report. Specifically state in the letter that the debt is considered paid in full once you make the agreed upon payment. Sign and date the letter. Make a copy for your records.

Pay the debt. Do not give the agency a post-dated check or electronic access to your bank account. This increases the risk of unauthorized transactions after the debt has been settled. Obtain a money order for the amount due. Include the agreement letter with your payment. On the money order, write that the agency's acceptance of the payment indicates acceptance of the enclosed terms. Send the payment and letter by certified mail and request a return receipt.

Oklahoma Alimony Garnishment Rules

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In Oklahoma, if you do not pay court-ordered alimony to your former spouse, your spouse can ask the court to garnish your wages. If the court agrees, your employer must withhold a portion of your wages each pay period to give to your former spouse until you have caught up with alimony payments. However, if you receive alimony rather than owing it, creditors may not garnish your alimony payments when collecting debts.

If a debtor owes money in Oklahoma, including back pay for alimony payments, a creditor may garnish up to the lesser of two amounts: 25 percent of the debtor's disposable income or 30 times the federal minimum wage for that pay period. The debtor's disposable income is all income he takes home after required deductions such as payroll taxes. If other creditors are already garnishing 25 percent of the debtor's income, no new creditors can garnish her income until one of those garnishments is finished.

Creditors in Oklahoma, including people who are trying to collect past-due alimony, must file a lawsuit with the court before the statute of limitations expires. In Oklahoma, the statute of limitations for written contracts such as alimony agreements is five years from the date of default. After the statute of limitations expires, debt collectors cannot use the court system to collect debts, although they may still use collections agencies to attempt to recover the debt.

Certain types of income are exempt from garnishment in Oklahoma. Alimony payments, child support payments, pension and retirement benefits, some public assistance benefits and veteran's benefits are exempt. This means that creditors cannot garnish these payments when attempting to collect a debt, even if they have a court order to garnish a debtor's income.

If a creditor requests garnishment, the debtor has the right to defend himself in court. If the debtor can show the garnishment request is wrongful -- i.e. someone with the same name owes alimony and he doesn't or his payments were not posted when they should have been -- the court will dismiss the garnishment. Other defenses against garnishment include proving procedural errors such as the debtor not receiving proper notice or demonstrating that the debtor does not have garnishable income or is already subject to the maximum amount of garnishment permitted.

What Does FAD Mean on a Credit Report?

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Your credit report is a history of your significant financial activities, and it provides a snapshot of your present financial status as well as behavioral patterns. In the United States, three main credit reporting agencies keep track of such data. The term FAD is used only by one of the agencies and refers to the date your file was last updated.

A credit report is essentially your financial score card. It includes your credit and loan histories, credit checks by lenders, defaults, bankruptcy filings, your credit limits and other information. Credit reports include most information for seven years and are updated periodically. The information in your credit report comes from financial institutions such as credit card issuers, lending institutions, banks and public records. The information is updated electronically once a month or sometimes more often, depending on the credit reporting agency.

Only three companies produce comprehensive credit reports in the United States: TransUnion, Equifax and Experian. If the amount of money you wish to borrow is relatively small, a lender may only check a report issued by one of these credit reporting bureaus. Most established lenders, such as major banks or financing arms of auto manufacturers that provide car loans, obtain a copy of your credit history from all three agencies and may study them in detail before approving a loan.

FAD is an abbreviation used by Equifax, one of the three major credit bureaus, and identifies the last date your file was updated. Ordinarily, this information is next to your name and starting date. The starting date refers to the date your file was established by Equifax. FAD, which stands for file activity date, simply shows the last update. You may also see an FN number on the same page. This is the Equifax internal file number and can be useful when trying to obtain copies of your credit report from Equifax.

Because your credit reports influence when you can borrow, how much you can borrow and what interest rate you will pay, it is important to check them periodically. Even if there have been no major financial events in your life in the recent past, you should review your credit reports from each of the three agencies at least once a year. You can obtain a free copy of your credit report from each bureau once a year through the AnnualCreditReport.com website. Should you detect an error, contact the appropriate bureau as soon as possible. Also, do not share your vital personal information unless necessary. The more often people and institutions needlessly access your records, the more opportunity there is for mistakes. Do not send your Social Security number and date of birth over unsecured Internet connections.

Debit Card Rules

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There are a lot of rules and regulations when it comes to using your debit card. Adhering to the terms outlined in your agreement can help you avoid fees and limit your liability if you were to be the victim of fraud or identity theft. If you lose your card, contact your bank immediately so a representative can cancel it and issue you a new one with a different card number.

You can use a debit card to make purchases at retail outlets that accept Visa or MasterCard. When purchases are made, you have the option of making a debit or credit transaction. Debit transactions require a four-digit personal identification number (PIN), and the funds are deducted immediately from your checking account. Some banks charge a fee, typically 25 cents to 50 cents, for each debit transaction.

Your debit card allows you to make credit transactions as well. These transactions don't come out of your checking account immediately; they remain in a pending status for one to three days. The money is removed from your available balance during this time. There are no fees with credit transactions, and you don't have to enter your PIN.

Many people use debit cards because of the convenience. They offer an alternative to paying cash or writing a check, and you can conduct bank transactions 24 hours a day, seven days a week via an ATM (automated teller machine). ATMs can be found in a variety of locations, and if you can't find one from your bank, you can use the ATM of another bank, but you usually will be assessed a fee, typically in the range of $1.50 to $3.50.

If you lose your debit card, you must notify your bank no later than two days after you discover your card is missing to limit your liability to $50. A delay in notifying your bank could increase your liability to $500 or more. If there are unauthorized transactions on your account, you must report the charges no later than 60 days after you receive your statement. If the transactions involved were performed using the four-digit PIN, a zero-liability policy is in effect, meaning that most major banks won't cover all unauthorized charges or withdrawals completed with a PIN.

If you don't have sufficient funds in your account to pay for a purchase, the charge will still go through, and you are charged a fee for each transaction that goes through under those conditions. The fee, which varies by bank, typically ranges from $35 to $39.

When you make a purchase with your debit card, merchants usually give you a receipt. However, legislation has changed, and merchants have been given some leeway with this practice. If you make a debit card purchase that totals less than $15, merchants are no longer required to provide a receipt. The decision regarding whether to give a receipt will be up to the merchant.

How to Request a Permanent Fraud Alert for the Deceased

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The increase in identity theft and credit card fraud has led the credit-reporting companies to develop several methods of consumer protection. One of these methods is called a fraud alert. The company places a fraud alert on a credit report when there has been some fraudulent activity involving the credit cards or Social Security number of the person. Fraud alerts are notations on the account that alert potential new creditors to an increased chance of fraud. Although fraud alerts typically only last for 90 days, they become permanent in the case of a deceased person.

Instructions

Locate and write down the deceased person's full name, address, date of birth and Social Security number.

Obtain the official death certificate for the deceased person and make a photocopy of it.

Write a letter to one of the three main credit reporting companies (Experian, TransUnion or Equifax) explaining that the person is deceased and that there has been fraudulent activity on the account. Include the required personal information about the deceased as well as a copy of the death certificate.

Request a copy of the deceased person's credit report from the agency and verify that the report bears a fraud alert as well as the word "deceased" written on it.

How to Find the Right Prepaid Credit Card

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Prepaid credit cards have a number of uses. One-time use prepaid cards are typically used as gift cards. Reloadable cards function as substitutes for unsecured credit cards, and if you don't have a bank account, a reloadable card can also function like a checking account. You can have your paycheck directly deposited to the card, then withdraw it as cash or use it to make purchases. Some cards offer online account management, and others can receive wire transfers or be reloaded at convenience and grocery stores.

Instructions

Plan how you want to use a prepaid credit card. If you're planning to use a card occasionally for online purchases, a one-time use card makes sense, for example. With one-time use cards, each time you purchase a new one, you would use a new number, and there aren't significant ties to your identity. If you're looking for a card to use because you don't have a checking account and are tired of carrying cash, a reloadable card makes sense.

Research prepaid cards. You can research in person at grocery stores, convenience stores and department stores. Look at the back of the prepaid card package. Find the fee for the card and whether it's reloadable. Look for information on how you reload the card, and if you can check the balance online.

Select your prepaid card. Base your decision on the card with the lowest fees (fees should be $5 or less to purchase your card and $5 or less to add money your card) and most convenient reloading options. For example, GreenDot cards can be reloaded at 7-Eleven stores, grocery stores, drug stores and Wal-Mart stores. A Western Union Prepaid MasterCard can be reloaded at any Western Union location. If it's a one-time use card, choose the card with the lowest fees.

Register your card. This is especially important for a reloadable card, as the card company will send you a personalized card to reuse. Generally, the card you initially purchase is a dummy card that can't be reloaded, but your personalized card can be reloaded. If it's a one-time use card, registration is optional. The advantage to registering is that if you lose your card, you don't lose your money; the card can be canceled and reissued. The disadvantage is a loss of anonymity.

How to Deal with Bill Collectors when they Call

10:24 PM No comments

Best ways to handle bill collectors when they call.

Instructions

When bill collectors start calling you, first thing is to be polite. Learn to be polite to the person calling from the collection agency. They are just doing their job and if you giving a nice reaction most of the time will make the bill collector more understanding and they will be nice back. Do not answer the phone with angry because and angry reaction will only fuel the anger from both side.

Try setting up a payment plan, most bill collectors are willing to except a payment plan. Since chances are they have purchased the debt for a lesser amount and are trying to collect on it so they will not lose money. The debt collector needs to collect on the debt and just wants their money. Pay what you can on a payment plan. This will help them get off your back.

Ask the collections agency to only contact you by mail this should stop your phone from ringing of the hook. Do not let the debt collector bully you. Some of these place are ruthless and rude and their tactic are against the law. Know the fair debt collecting law in your state and the moment one violates the law report them.
Some debt collectors are nice and understanding and will to work with.

How to Repair Credit Reports With the Bureaus

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Your credit report determines your credit score, which in turn determines whether or not lenders will be willing to loan you money at a reasonable interest rate. Even if you do not intend to take out a loan in the near future, it is vital that you regularly monitor your credit report for errors. Credit reporting errors may remain on your report for seven years or longer and can have an significant negative impact on your score. In addition, credit reporting errors can result in your current creditors raising your interest rates. If you notice errors on your credit reports you can dispute those errors with the credit bureaus in order to have them corrected.

Instructions

Order a credit report from each of the three major credit bureaus; TransUnion, Equifax and Experian. If you have not already pulled your credit report for the current year, you may pull one copy of each credit report for free.

Scrutinize each credit report for errors. Check account numbers, the amount you owe on each account, your payment history to each creditor, your name and your birth date. Verify that all public records and past addresses are correct.

Underline or highlight any inaccuracies that you find on your credit reports.

Make a copy of each credit report that contains errors. Also make a copy of a picture ID and your Social Security card to prove your identity to the credit bureaus.

Write a letter of dispute to each credit bureau whose report reflects errors. Include details of what information is inaccurate and why. If you have documents that support your dispute, include copies of them with your letter.

Mail your dispute letters and copies of your credit report, picture ID and Social Security card to each credit bureau that is reporting errors within your file. Once your disputes are received, the credit bureaus will conduct an investigation within 30 days and inform you via mail of the actions that were taken to remedy the errors within your credit report.

What Percent Will Collection Agencies Settle For?

8:37 AM No comments

When a debtor doesn't pay his bill, the creditor pursues him for money at first, but eventually it will assign the debt to an outside collection agency. If you still do not pay the bill, the account will probably be sold to a debt buyer or another collection agency. A collections company will work to collect at least a percentage of the money owed.

A collection agent is paid a commission for collecting the debt that is listed with them. If the original creditor still owns the account, but is using a collection agency to help collect the debt, the agency can only settle for a lower amount if the creditor allows it. If a debt buyer has purchased the account, it may be more likely to settle for a percentage of the balance. This is because the debt buyer has bought the account, probably at a large discount.

If you are current on a bill, the creditor will not settle that bill for less than the amount that you owe. Creditors only settle bills that they don't believe that they will receive payment any other way. If you are current, the creditor has no incentive to settle. If you are up to 90 days behind, the creditor may make some concessions on interest or late charges, or accept a lower payment, but it still will believe that since you paid recently, you will pay again soon.

When enough time has passed since the last payment, the creditor will write the account off its books. This is strictly an accounting term, and does not refer to your obligation with respect to the debt; you still owe the money. This usually happens at around six months since your last payment. A creditor is more likely to settle for a percentage off at this time than it was before. At this stage, you can try to settle the debt for between 50 and 70 percent of the original balance, depending on the creditor and your negotiating skills.

Once a debt passes the second anniversary of no payments, many collectors and debt buyers look at it differently. At this stage, creditors view the debt as nearly worthless. A junk debt buyer may purchase this debt for literally pennies on the dollar. It will buy many of these accounts in a batch from different creditors and collection agencies. The buyer will try to reach people who owe these accounts, or even people who might owe on one of these debts, and try to get them to pay. When debt is at this stage, you can often negotiate settlement in full for as low as 25 percent of the original balance.

Is Credit Card Settlement Bad?

12:46 AM No comments

If you're having difficulty making credit card payments, the promise of drastically reducing your payments through debt settlement may be alluring. However, debt settlement can do serious damage to your credit rating. Unless delinquency has already severely damaged your credit score, and you are on the road to bankruptcy, another option may be preferable.

Credit card settlement, or debt settlement, is an arrangement in which a company works on your behalf to get creditors to reduce the amount of money you owe them. Usually, creditors agree to debt settlement only if they believe you are a candidate for bankruptcy. Debt settlement means they will receive at least some of what you owe, whereas with bankruptcy they may receive nothing.

If you are delinquent on your credit card payments, and have already damaged your credit score to the point where you are seriously considering bankruptcy, you may be a good candidate for debt settlement. If you are still making minimum payments on time each month, your creditors are unlikely to consider debt settlement as an option.

Here's how debt settlement usually works: The settlement company collects a deposit from you, along with a monthly payment, which it holds for three to six months. During that period, you make no payments to your credit card company while the debt settlement company works to negotiate the settlement amount. Your creditors will report this delinquency to the credit bureaus, which will negatively affect your credit score. If you have been delinquent for some time, the negative impact will not be dramatic. If the delinquency is new, however, the additional delinquency will have a very harsh impact on your score.

Instead of debt settlement, many financial advisers recommend credit counseling. Credit counselors work with your creditors to lower your interest rates, monthly payments or both. You pay the counseling company one lump sum each month, and it uses the money to pay your creditors. The Federal Trade Commission provides recommendations for choosing a credit counseling service on its website (see Resources). The FTC warns that even if a company calls itself a "nonprofit" credit counseling service, they may still charge high fees. Therefore, it's important to protect yourself by researching all the terms of such agreements before signing any papers.

Although some debt settlement companies are legitimate, consumers must also be aware of the abundance of fraudulent firms, which often charge exorbitant fees to perform debt settlement actions. As of October 27, 2010, a new rule by the Federal Trade Commission mandates that companies offering debt settlement services can no longer ask for an upfront fee before settling a consumer's debt. Before working with a debt settlement company, it's important to ask for their success rate, an estimate of how much money you'll need to save, and the name of the financial institution that will hold your account. According to the FTC ruling, your account must be with a non-affiliated, insured financial institution.

Welcome to our website credit and debt managementr.

Sunday, September 30, 2012

Liability

Bookkeeping

Policy

Carefulness

Settling Credit Card Debt

Home Equity Loan

Judgment Liens

Alternatives

Saturday, September 29, 2012

Instructions

Balance Transfers

Home Equity Loans

Debt Consolidation Loans

Friday, September 28, 2012

Wage Garnishment Exemption

Judgments from Other States

Redomestication

Considerations

Thursday, September 27, 2012

Assess Debt and Budget

Cut Spending

Increase Income

Start Saving

Attack Debt

Instructions

Significance

Considerations

Facts

Prevention/Solution

Warning

Debt Counseling Companies

Debt Management Plan

Other Options

Caution

Instructions

Wednesday, September 26, 2012

Debt Settlement

Short-Term Effects

Long-Term Effects

Considerations

Credit Card Companies and Lawsuits

Wage Garnishment

Insolvency and Bankruptcy

Statute of Limitations and Consumer Rights

Instructions

Function

Significance

Benefits

Considerations

Consolidation Loan

Finding a Consolidation Loan

Danger of Payday Loans

Alternatives to a Consolidation Loan

Tuesday, September 25, 2012

Head of Household Exemption

Indiana Garnishment Limits

Multiple Garnishments

Additional Considerations

Instructions

Lien Definition

Bankruptcy Definition

Effects of Liens

Effects of Bankruptcy

Seven-Year Standard

Exceptions

Calculating Reporting Periods

Removal Through Dispute

Monday, September 24, 2012

Stop Paying Your Debts

Negotiate a Settlement

Get Everything in Writing

Considerations

Disadvantages

Effects

Alternatives

Sunday, September 23, 2012

Knowledge of the Prepaid Account

Nonwage Garnishment and Protected Funds