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

Sunday, March 31, 2013

How to Reduce Minimum Payments on Credit Cards

How to Reduce Minimum Payments on Credit Cards

The average amount of credit card debt is nearly $16,000 per household as of August 2011, according to CreditCard.com. Reducing or eliminating your credit card debt can help you secure lower interest rates on loans, improve your credit score and give you peace of mind. Many people struggle to pay minimum payments and in turn, rack up interest charges and late fees. There are steps to make you pay off your credit cards as soon as possible.



    Get a lower interest rate. You may be able to negotiate a lower interest rate with your credit card company. Before you attempt this, make a few higher than minimum payments in a row to prove you are in good financial standing. Do not be late with any payments. If your credit card company will not negotiate a lower rate, try shopping around with other companies for lower rates. You can then transfer your balance to a new credit card, but be aware of high balance transfer fees.


    Apply for a debt consolidation loan. A debt consolidation loan is ideal to pay off moderate amounts of debt, usually not more than a few thousand dollars. These unsecured loans can provide you a lower interest rate than your credit card. Ideally, these loans should be paid off in a fairly short amount of time. To qualify for a debt consolidation loan, you should have a good credit score and be able to provide proof of steady income.


    Apply for a home equity loan. Assuming you have a good amount of equity in your home, a home equity loan can be a good choice to pay off your credit card debt, especially if it is a relatively high amount. Typically, the payments and interest rates are much lower for home equity loans than for credit cards. You must be in overall good financial standing to qualify for a home equity loan.


    Seek credit counseling. If you have poor credit, lack sufficient income or simply cannot make your minimum payments, seek a credit counselor. A credit counselor can help you devise a debt management plan based on your budget. The counselor can help you consolidate your minimum payments into one lump sum you will pay each month. Typically, this amount is between 10 and 60 percent lower than the combination of minimum payments you were paying previously.

Credit Help in North Carolina

Credit Help in North Carolina

Getting help for your credit challenges will remove some of the burden of attempting to fix a situation that you do not fully understand. There are various avenues to pursue for help in North Carolina. Understanding the reason you want to improve your credit now will direct you to the right resource for help.

Reasons for Help

    You may need to increase your credit score for a variety of reasons. Home buying, rate reduction for insurance, even the plan to apply for a higher paying job may encourage you to seek a higher credit score. Sometimes people just want to improve their credit to have more financial flexibility, especially in case of a crisis.

State Level Support

    When you have an unresolved dispute with a bank that provides credit to you, file a complaint with the North Carolina Commissioner of Banks. This office regulates most financial service providers and will facilitate a discussion between you and the institution in attempt to resolve the situation, especially if state laws have been compromised. Also, the North Carolina Housing Finance Agency and the North Carolina Department of Justice have resources to help guide you in dealing with your creditors or improving your credit situation.

Credit Counseling

    Many private organizations offer credit counseling and debt management services to citizens throughout the state. There are 46 credit counseling offices in North Carolina that are certified by the National Foundation for Credit Counseling, the largest financial counseling organization in the country. Several more financial counselors are certified by the Association of Financial Counseling and Planning Education including Raleigh-based Vision Credit Education Inc.

Financial Institutions

    Your bank or credit union may have a program to help you understand your credit, and manage and reduce your debt. For example, Charlotte-based Wachovia Bank has financial specialists that will provide guidance for helping you understand options for managing your credit. Raleigh-based Coastal Federal Credit Union has partnered with a financial management program, Accel Members Financial Counseling, to provide free comprehensive support for managing not only your credit but also your household budget. Speak to a relationship manager at your financial institution to understand your benefits as a customer regarding debt assistance and money management.

Can You Make Payments on Debt Settlement?

Can You Make Payments on Debt Settlement?

Debt settlement is an option available to a consumer who has significantly fallen behind on payments. Settlement arrangements typically occur once a consumer has reached the 90-day past due on an account, or when the account has been referred to a collection agency.


    Debt settlement options allow a consumer and creditor to come to an agreement settling debt for less than the balance. This can be as much as 50 percent less than the balance in some cases. Once paid in full, the creditor will mark the debt as paid in full and cease further collection activity on the remainder.

Payment Arrangments

    Payment arrangements for debt settlement are possible. In order to be able to make payments on an agreed upon settlement amount, a payment agreement must be written and signed by both the creditor and the borrower.

Failure to Pay

    If an agreement has been reached for payment arrangements and a borrower fails to maintain the payments, the settlement arrangement can be canceled and the creditor can resume collection activity for the entire amount of the debt.

Are Debt Consolidation Loans a Good Idea?

Debt consolidation has a number of advantages for consumers trying to get a handle on their debt. However, many factors should be weighed and lifestyle changes made before embarking upon a debt management program.


    Debt consolidation loans are obviously designed to consolidate all of your debt under one loan so you will only have to keep track of one payment each month. This is also intended to place high-interest credit card debt under a lower interest rate so you will end up paying less in the long run. Many people use home equity loans for this purpose so they can also deduct the interest from their income taxes---something you cannot do with most other types of debt.


    When you consider that you can end up paying a lot less interest by consolidating your higher-interest debts under one lower interest rate, debt consolidation sounds great. It's also more convenient to have only one debt payment to worry about each month, rather than a bunch of payments with different due dates. Plus, you may end up with a lower monthly payment for the combined debts than what you are paying each month now.


    The problem with debt consolidation, however, is that you are taking a number of unsecured debts and putting them into a secured loan. This means that, if your financial situation worsens, you lose your job or you have a major medical expense, you will still be responsible for paying the consolidated debt---even if you file for bankruptcy. If you have used a home equity loan to consolidate your debt and are later unable to pay, you could lose your home.


    Bankruptcy stays on your credit report for at least 10 years post-discharge. This can greatly complicate your ability to obtain credit at a reasonable interest rate, and a bad credit score can increase your car insurance rates no matter how well you drive and how few accidents you have had in your lifetime. This is why many people choose to consolidate their debt rather than file for bankruptcy.

Lifestyle Changes

    Those who consolidate their debts must be prepared to make changes in their lifestyle to prevent themselves from getting back into debt on top of what they have already consolidated. For instance, once you have consolidated your credit card debt, cut up all your credit cards so you won't be tempted to use them. If you feel that you must keep one for emergencies, keep it locked up or frozen in a block of ice so you will have to let it thaw before you can use it. This should help keep you from misusing it.

Saturday, March 30, 2013

Emergency Fund Vs. Paying Off Debt

Emergency Fund Vs. Paying Off Debt

When you are beginning to take control of your finances, you may need to choose between establishing an emergency fund and paying off your debt. It is important to have an emergency fund and to get out of debt as quickly as you can, but how do you choose which one to complete first?

Emergency Fund

    An emergency fund is money set aside to cover unexpected expenses, such as a car repair, a medical emergency or a job loss. As you become more proficient at budgeting and have more money available, you may be able to handle many of these issues by managing cash flow. An emergency fund can also be used when you lose your job and a fully funded emergency fund should have about six months of your living expenses set aside. This money will allow you to continue paying your bills while you are looking for a job and can prevent you from losing your home to foreclosure.

Getting Out of Debt

    The benefit of getting out of debt is that it frees up your income each month to go toward other things. You can begin to really build wealth once you are debt-free. Additionally, if you have fewer monthly obligations it is easier to cope with emergencies, such as a job loss or unexpected bills. However, getting out of debt may take time, depending on the amount of debt you have accumulated and your current income. You will need to sacrifice your current lifestyle and make cuts to find extra money to put towards debt.

Choosing Between an Emergency Fund and Getting Out of Debt

    Look at your current situation and determine which is more important for you. If your job is stable, begin getting out of debt as quickly as possible. If you feel that your job is not stable or that you may have large medical bills in the near future, you may want to build up your emergency fund first and then work on getting out of debt. In most cases, it is better to get out of debt first because you can build the emergency fund more quickly if you have no debt payments each month. You may compromise by contributing a set amount to your emergency fund and then putting extra money towards your debt.

Miniature Emergency Fund

    If you are going to pay off your debt before building your emergency fund, you should set aside $1,000 to $2,000 to cover the smaller emergencies you may face while trying to get out of debt. This money is important because it will prevent you from financing those emergencies with your credit card. If you tap into these funds, then apply the extra money you are paying towards debt until you have built up your emergency fund again. Then you can resume paying off debt.

How to Remove Collections From a Credit Report

How to Remove Collections From a Credit Report

Collection accounts on your credit report can significantly affect your credit score negatively. A good credit score is imperative today. If the collection account on your credit report is valid, technically, it "can't" be removed. However, with some clever negotiation, you may be able to remove collections from a credit report.



    Let's assume the collection account on your credit report is yours, technically it has a right to be there. However, you will want to negotiate with the collection agency to get it removed. Write a letter to the collections agency stating you will make a payment on the debt for exchange of the item being completely removed from your credit report.


    In the letter, state that the item must be removed within 10 days of payment being received. You also want to request that they send a letter in writing back to you accepting the agreement. Do not make any payments until they have agreed in writing. In your letter, state you are requesting a letter on company letterhead with an authorized signature. They will also want to state the debt settlement amount and agree to the removal of the collection item on your credit report within 10 days of payment.


    You also want to check for multiple listings on your credit report for the same account but different collection agencies. Collection agencies usually sell accounts to other agencies after so many months. So it is possible that you may have some collection agencies on your credit report that aren't actively collecting on your account anymore. If this is the case, you will want to dispute with the 3 major credit bureaus to have those removed. Simply call the collection agency listed to see if they still have your account active or if it was sold to another company.


    If there is a collection item on your report that does not belong to you, you want to dispute with the 3 major credit bureaus to have it removed immediately. They are required to show validity of the accounts, they must remove it.

What Happens When I Walk Away From My Debt?

What Happens When I Walk Away From My Debt?

Debt burdens many of us. Sometimes it becomes so onerous that we feel like we don't have any options left. This feeling of hopelessness can cause excess fear and frustration. This clouds our judgment and sometimes causes us to make a bad situation worse and we throw up our hands and make the decision to walk away from our debts.

Debt is Sold to a Collection Agency

    When we stop paying our debts, several things can happen. In the case of unsecured debt (debt without collateral backing), after collection attempts have been made by the original debt holder, they have the option of selling that debt to a third-party collection agency. It is important to note that when this happens the collection agency is now the legal owner of the debt and has full legal rights to collect on it provided they do not violate the Fair Debt Collection Practices Act (FDCPA).

Collection Attempts

    Once a collection agency has taken ownership of the debt, they will begin attempts to collect on it. While they can contact you, they must abide by FDCPA regulations. They cannot contact you by phone before 8 a.m. and after 9 p.m. and they cannot contact you at your place of employment unless you give them permission to do so. They also cannot discuss your debts with anyone except you, your spouse or your attorney.


    If the collection agency has decided you are not willing to pay them, they have the right to file a lawsuit. When this happens, you will receive a letter from an attorney, and if you do not make contact with the attorney then you will receive a summons to appear in court. If you appear in court then you have the right to explain your financial situation to the judge and you can work out a repayment schedule. If you do not appear then you lose the lawsuit by default and the collection company, at this point, has the right to garnish your wages.

Garnished Wages

    According the Department of Labor, "Wage garnishment occurs when an employer is required to withhold the earnings of an individual for the payment of a debt in accordance with a court order or other legal or equitable procedure." Money is automatically taken from your paycheck and used to pay on the debt you owe. The amount of money that can be taken from your paycheck is "in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a) (1) of the Fair Labor Standards Act of 1938."

Know Your Rights

    Debt collectors have many legal avenues with which to collect the money owed to them. Making the decision to walk away from your debts is never an effective solution. Making contact with your creditors and knowing your rights under the FDCPA is a much wiser course of action than simply trying to ignore your debt issues.

Friday, March 29, 2013

How Can Collection Agencies Recover Debt?

Collection agencies work on behalf of creditors to recover debts that aren't secured by property. A collection agency either collects debt on behalf of the original creditor and retains a percentage of the amount collected, or purchases debts from creditors for less than what the consumer owes and profits by collecting the full amount from the consumer. Collection methods vary depending on company policy and the laws in the debtor's state of residence.

Telephone Calls

    A collection agency's primary collection tool is the telephone. Although the Fair Debt Collection Practices Act, or FDCPA, prohibits debt collectors from calling consumers so frequently that doing so constitutes harassment, collection agencies interpret harassment differently. This often results in repeated telephone calls from collection agencies. The hope is that, over time, you'll tire of your telephone constantly ringing and agree to a payment plan. A collection agency can only use telephone calls as a debt recovery method if you haven't requested, in writing, that the company stop calling you.

Credit Reporting

    Collection agencies report your accounts to the credit bureaus. Collection accounts negatively impact your credit score; the Fair Credit Reporting Act notes that such accounts can remain a part of your credit history for up to seven years.

    No law requires that collection agencies report consumer accounts immediately. Thus, debt recovery companies may use the threat of negative credit reporting to coerce debtors into making payment arrangements. In cases like these, the collection agency agrees not to report the account to the credit bureaus --- provided the consumer pays the debt as requested.

Settlement Offers

    By offering you the chance to pay less than what you owe yet still satisfy your obligations, the collection agency makes paying the debt less of a financial challenge. This process is known as "debt settlement." Collection agencies often utilize debt settlement offers to collect old debts that, due to the debtor's state's laws, the company cannot file a lawsuit over.


    A collection agency typically can't recover a debt unless you agree to make voluntary payments. Garnishment is an exception to this rule. If the company obtains a court judgment against you by winning a debt collection lawsuit, it can garnish both your wages and your bank accounts in an effort to recover the amount you owe without your consent.

Real Estate Liens

    A collection agency that holds a court judgment against you can place a lien against real estate you own. Although the lien doesn't force you to pay off the debt immediately, it does restrict you from refinancing your home without first paying off the full amount of the judgment. If you place your home on the market, you may also face difficulty selling the property without first paying off the lien. Unless you don't mind the presence of the lien and purchase your home using cash, you won't be able to obtain financing to purchase the property until the lien is removed from the property through payment.

Thursday, March 28, 2013

What If a Lender Files Suit Before I File for Bankruptcy?

What If a Lender Files Suit Before I File for Bankruptcy?

Facing a lawsuit filed against you as you contemplate seeking bankruptcy protection can leave you confused. You need to understand how a bankruptcy impacts a pending lawsuit as well as what impact that litigation has on a bankruptcy case.

Time Frame

    Although you don't have to rush to the bankruptcy court if someone files a lawsuit against you, do not unduly delay seeking bankruptcy protection either. Certainly file bankruptcy, if that is your intent, before the lawsuit is scheduled for trial.


    The bankruptcy court issues what is known as an automatic stay order when you file your case. The order brings the lawsuit to a halt pending a specific order of the bankruptcy court.


    The benefit of filing bankruptcy after a lawsuit is filed against you is that any claim being made by the plaintiff in that case becomes a part of your bankruptcy case.


    You have two primary bankruptcy options: Chapter 7 bankruptcy liquidates your debts, while Chapter 13 bankruptcy allows you the chance to pay off your debts through a payment plan overseen by the court.

Expert Insight

    Fully protect your interests in defending the lawsuit and pursuing a bankruptcy with the aid of legal counsel. An experienced bankruptcy attorney is in the best position to protect your rights.

Tuesday, March 26, 2013

Letter to Dispute Credit Report Information

Letter to Dispute Credit Report Information

If you see an error on your credit report from any of the three credit reporting agencies, you are able to dispute that error and ask for it to be changed. According to the Federal Trade Commission the reporting agencies must respond to a dispute within 30 days. (And they normally do.)


    You can dispute any of the information found on your credit report from the spelling of your name, to the account balance being reported on a closed credit card account.


    The Federal Trade Commission recommends backing up your argument with documented proof of your claim. Send copies of your original documents to the credit reporting agencies and keep your originals in a safe place.


    Your credit dispute letter should open with a paragraph declaring that you are disputing something on your credit report, and then offer a quick description of your claim. Include a copy of your credit report with the disputed information clearly marked for reference. The second paragraph should outline the exact nature of the error, and how you would like it addressed. The third paragraph should list whatever evidence you have included with your letter, and the final paragraph should ask that you be notified of the results of the investigation.


    A dispute letter should only deal with one issue. If you have multiple disputes, then write multiple letters.


    While the format of the letter can be the same for all three agencies, check with the individual agency websites to determine the exact information required and the format required for the information.

Is It Better to Pay Debt Collectors or Have Them Write Off Debt?

Is It Better to Pay Debt Collectors or Have Them Write Off Debt?

If you have accounts that have been charged off by your creditors and sold to a collection agency, think carefully before committing to a collector's debt repayment plan. Although you may find it morally reprehensible to ignore a collection agency, your priority should be to remake yourself in the mold of a financially responsible consumer. If you re-start the debt collection clock by making a payment, it may be years before you realize that dream.

Understanding Charged-Off Accounts

    When a creditor charges off an account, a process that usually takes several months, it sells the debt for a fraction of the outstanding balance to a collection agency. The agency then attempts to collect the debt itself, earning a substantial profit. Although the lender most likely has quit adding interest and fees to the account, the debt agency may add penalties of its own. If a prolonged period of time has passed and the agency has stopped contacting you, be advised that there is a chance, albeit small, that the agency may attempt to take you to court to collect the debt.

Statute of Limitations

    Check with your State Attorney General's Office regarding the statute of limitations on debt collection. Limitations vary from state to state and range from three to as many as 15 years. After this time, the debt, usually applicable for unpaid credit card bills, is not legally collectible unless a judgment is obtained against you. Mortgage and auto lenders are more aggressive and will take steps to repossess the property long before your state's statute expires.

    Making a payment before the statute of limitations has expired may re-start the collection clock. For example, if your state's law provides a six-year window for a collector to sue you in court for the debt, and you make a payment on the debt after 4 years of non-payment, the clock starts again, and so do the collection efforts.

Your Credit Score and Other Considerations

    If you're having debt problems, it's always better to deal directly with the creditor before the account goes to collections. Even an account that's 150 days late may be brought current. Once it's sold to a collection agency, your credit score won't be helped by making further payments. Late payments and charge-offs appear on your credit history for 7 years, although older charge-offs and "lates" affect credit less than recent ones.

    At this point, look forward. Your credit history is just that: history. Focus on saving money, investing in a retirement plan if possible, and meeting basic expenses. Chances are, you didn't default on purpose, and sound planning for the future is the best medicine.

Know Your Rights

    If you are contacted by a collector and you believe the statute of limitations has expired, inform the agent that they are attempting to collect a debt that is no longer legally collectible, and you won't pay unless you're taken to court and a judgment is obtained against you.

    Notify the agency in writing as well. Be sure to inform them that you want them to stop contacting you.

    Finally, if you decide to pay your delinquent account, make sure you get the agreement in writing.

Laws on Unsecured Loan Defaults

Laws on Unsecured Loan Defaults

Unsecured loans are offered based solely on the borrowers creditworthiness. The lender receives no collateral or other security for the loan repayment other than the borrowers intentions to make good on the full principal and interest due. When a borrower defaults on an unsecured loan, the lender has little recourse to recover the debt. The lender must make a case to, in essence, convert an unsecured loan into a secured amount to seize assets equal to the full loan amount and the recovery costs (such as attorney and collection agency fees).


    Lenders can make every legal attempt to recover the loan amount through collection. The lender can report the loan default to all credit reporting bureaus and subsequently cause a serious lowering of the borrowers credit score. Lenders can also maintain contact with the borrower through accepted means such as the telephone, email and postal mail.

    Lenders are prohibited, however, to threaten or intimidate borrowers through false information. For example a lender cannot tell a borrower the house or other property are subject to liens or seizure if the loan is not paid in full. The loan was unsecured and attaching assets after the fact can only be accomplished through successful legal action.


    Lenders can pursue more vigorous collection action if there is any evidence of fraud on the part of the borrower to receive the loan. Fraud can consist of false income reports, employers or tax records indicating past income amounts.

    If the borrower received the loan under false pretenses, then the lender can more readily pursue legal recourse to acquire security for the unsecured loan. Lenders, however, cannot make assumptions concerning the borrowers character or personal information. Only verified evidence of the borrowers fraudulent intent is acceptable. Such efforts may involve contacting the tax agencies directly for legitimate tax information on file or contacting listed employers or income sources for additional verification of the borrowers status.

Time Limits

    Financial laws limit the time a lender can pursue borrowers for unpaid unsecured debt. With most unsecured loan types, seven years is the maximum time the loan is recoverable. Without a legal judgment, collection attempts and the veracity of the unpaid debt expires after 84 months from the time the loan was declared in default. Borrowers should know, however, this time line could start up to several months after making the last loan payment. Lenders may not immediately declare the loan in default until after all efforts to collect past due payments are exhausted.

    Civil judgments against borrowers can last up to ten years. If assets such as a home or automobile already have an existing lien, however, seizure of the assets are very unlikely. The lender would have to assume the full loan amount and pay off the debt in order to take title to the asset. The total costs incurred could far outweigh the amount of the initial loan. Again, however, the judgment and lien action can only occur if there is a successful argument to convert an unsecured debt to one secured with tangible assets.

Monday, March 25, 2013

How to Remove False Entries From a Credit Report

Your credit report is your pathway to obtaining auto loans, mortgages and credit cards--even employment or rental housing. The integrity of your credit report is very important, so ensuring that the information contained in it is accurate is critical. If you find incorrect information on your credit report, getting it fixed is a relatively pain-free process that can be done through the mail or from the comfort of your own home on your computer.



    Take note of all credit report items that you feel are incorrect or are unfamiliar with.

    Jot down all available information for these items: the creditor's name, account numbers, the balance that is reporting or other things that make the listing false. Take special care to notate accounts with which you are not familiar, such as credit card accounts that you do not recognize, if there are any.


    Mail in a dispute letter and supporting documentation to the credit report bureau.

    The dispute letter should include your full name, address and phone number. Let the bureau know that you are contacting them because you feel that there is false or incorrect information on your credit report. Include the names of creditors, account numbers, balances or other information that makes each item false. Tell the agency why you believe each item is false, as well as what the correct information is.

    Include with your letter documents that support the validity of your point. Copies of credit card statements, cancelled checks, letters from the creditor, bank statements or other documentation can help the bureau to investigate your report and clear or correct the incorrect information. At the bottom of the dispute letter, include a list of documents that you've included with the letter.

    Mail the envelope to the correct credit reporting agency:

    P.O. Box 740256
    Atlanta, GA 30374
    (800) 865-1111

    P.O. Box 2000
    Springfield, PA 19022
    (800) 888-4213

    P.O. Box 2014
    Allen, TX 75013
    (888) 397-3742


    File your credit report dispute online at the credit bureau's website.

    From the bureau's home page, click on "disputes". Each credit reporting agency has an online dispute application that can be used to file disputes online.

    Indicate the name of the creditor, balance and account numbers for accounts you are disputing. Enter text to explain why these items are incorrect and explain what would correct them, i.e. "Balance on Citi Mastercard from CitiBank, account number 4442123456780900, displays $1,212.32. The balance on the card should be $0.00, as I paid this card off six months ago."

    After filing the online dispute, take note of the confirmation number so that you can periodically check the status of your dispute. The credit reporting agency will contact you via email to tell you when your investigation is complete, in most cases.


    Await the amount of time allotted by the credit reporting agency to investigate your dispute(s). For online disputes, it can take up to 45 days to receive a response. Mailed-in disputes should be completed within 30 days of the bureau receiving your letter.

About the Fair Credit Reporting Act of 1968

The Fair Credit Reporting Act was the federal government's first law regulating the credit industry. The act was intended to protect individuals by regulating the way business gathers and uses credit information about them. The act also makes it easier for individuals to learn about errors in their report and correct those errors.


    The Fair Credit Reporting Act covers consumer reporting agencies such as credit bureaus. It defines reporting agencies as any individual or company that gathers and evaluates credit information in order to provide it to a third party for a fee; if a store you do business with shares your credit history with an agency, the store would not be covered by the act. The act applies to reports concerning your creditworthiness, access to credit and credit history, and also reports about your general reputation, lifestyle and character.


    It's become a common practice in business to check the credit reports on people who applies for a job, particularly if the job involves working with money or clients' accounts. The act requires that the employer obtain your permission if she hires someone to make a credit check; inform you if the information in the credit report costs you the job; show you the damaging information; and give you a contact number for the credit agency you can use to get inaccurate information corrected.


    The act requires that credit bureaus and reporting agencies have reasonable procedures in place to keep their information accurate. If there's a negative decision based on information in the report -- you're denied a job, an apartment or a credit card, for instance -- you're entitled to see the information on file. Agencies aren't required to provide a copy of the actual file, but they are required to tell you the information in it and the sources of the data. You have the right to get incorrect information removed.


    The act has loopholes. If an employer handles a background check in-house, rather than hiring an investigator, he has no obligation to get your permission or inform you of the results. Some states have passed laws that provide more protection: In California, for example, you can see your credit report after an in-house job screening, and even if the employer says the information didn't affect his decision.

Sunday, March 24, 2013

Can the IRS Seize a Checking Account?

The Internal Revenue Service can seize any of your property, including automobiles, personal property and your bank accounts, to pay your back tax debts. A bank levy on your checking account can grind your finances to a halt, causing checks to bounce and severe damage to your credit score. If you have received a notice of an impending bank levy, it's important to become proactive and make arraignments to pay your tax debt.

What is a Bank Levy?

    A bank levy is a hold the Internal Revenue Service may place on any bank account you have in your name. This includes your checking account. The IRS may only levy your bank accounts to settle your delinquent federal tax debt. A levy is different from a lien because a lien only places a claim on your property, while a levy actually takes it out of your possession. Unfortunately, it is legal for the IRS to levy your bank accounts if you owe back taxes.

Bank Levy Procedures

    Your bank and the IRS are required to inform you in writing of the impending bank levy, though you will not be allowed to withdraw money from the account once the written notice is issued. From the moment the bank receives the notice from the IRS, your account is effectively frozen. You have 21 days from the receipt of the written notice to prevent the bank levy.

How Much Money May Be Seized

    The Internal Revenue Service can completely empty your checking and other bank accounts in an attempt to settle your tax debt. According to the IRS, banks usually charge fees to service a bank levy, though they may not reduce the amount given to the IRS to satisfy your debt. This means that you may end up owing your bank additional fees on top of having every cent stripped from your accounts.

Stopping a Bank Levy

    If you have the money to pay your IRS tax debt in full before the 21-day waiting period expires, pay it. This can prevent the extra fees associated with a bank levy, which can lead to you paying more than you owe. If you are experiencing an economic hardship, your income may be exempt from a bank levy. It is very important to contact the IRS immediately with documentation of your financial hardship or the hardship seizing the money in your accounts will cause for others. For example, if the money in your accounts is intended as your employee payroll, you may be able to get the levy for that account lifted.

How to Write a Cash Advance Check From a Mastercard

How to Write a Cash Advance Check From a Mastercard

MasterCard Worldwide is one of the world's largest brands of credit cards, but the multinational company also offers a wide variety of financial services and products. MasterCard licenses financial institutions such as banks and private lenders to offer several types of MasterCard-branded credit card accounts: Standard, Gold, Platinum, World and World Elite, each with its own set of benefits, rules and privileges. Depending on the financial institution issuing the card, some MasterCard accounts allow you to write convenience checks against your card's available balance, allowing you to pay for purchases using your credit card balance for purchases that don't allow credit card payment.



    Call your card issuer to obtain the details of your account's cash advance check features. Whether your MasterCard account includes the ability to write cash advance checks may depend on the type of MasterCard it is. Some card issuers only offer the service to Gold or Platinum accounts and above.


    Request convenience checks from your MasterCard issuer. Typically, if the card issuer offers this service to your account, it will mail you a single checkbook. Some card issuers include blank convenience checks with your monthly credit card statement.


    Write the date on the check in the "Date" field. You may write this by spelling out the month, day and year, such as "May 4, 2011," or by writing their respective numerical representations, such as "5/4/2011."


    Write the name of the recipient of the check on the "Pay to the Order of" row. This row may have a slightly different name, but you can identify it by locating it just above the amount field. Write the full business name if you're writing a check to a business, or write the full first and last name, as well as any titles such as "Dr." or "DDS" if you are making the check out to an individual.


    Write the full amount of the check in the "Amount" field. Include the dollar amount in complete words, and include any cents as a hundredth fraction. For example, if your check is for $1200.25, you would write "One thousand, two hundred dollars and 25/100."


    Write the numerical amount if there is a separate field next to the "Amount" field reserved for this information. Most convenience checks require that you write the check amount both numerically and spelled-out, to reduce the likelihood of clerical error.


    Include details about the payment in the "Memo" section. Details can include the reason for the payment, an account number, or a note to the recipient.


    Sign the check. The recipient can fill in the name, date and even dollar amount without invalidating the check, but won't be able to deposit or cash the check without your valid signature.


    Fill in any remaining blanks on the check that apply to your transaction, then turn the check over to its recipient.

How to Get Defaulted Student Loans Back on Track

Difficulty finding a job after graduation can hinder timely payments to your student loan lender. Unfortunately, insufficient funds or unemployment isn't a valid reason to ignore student loan payments, and getting behind can trigger credit problems and other fees. But if you're already behind, you can get your student loan back on track.



    Talk to your lender to see if you qualify for loan deferment. Severe economic hardship triggered by unemployment or other issues may qualify you for a student loan deferment. This process postpones repayment and interest does not accrue on the loan. Submit an application to see if you meet the criteria.


    Complete an application for forbearance. Borrowers who do not meet the criteria for deferment may qualify for a student loan forbearance. Like deferment, lenders postpone repayment -- or accept a lower monthly payment -- but interest does accrue monthly. A forbearance approval will postpone payments for up to 12 months, and borrowers can reapply for another extension if necessary.


    Contact your student loan lender to work out a new payment arrangement, which will repay the delinquent balance in order to get the student loan out of default.


    Consolidate your student loan debt. Apply for a consolidation loan to get your student loan back on track. By consolidating, the funds from the new loan pay off your old student loan debt, which gives you a fresh start and a clean record with your previous lender.

Saturday, March 23, 2013

What Is Included in Personal Debt?

What Is Included in Personal Debt?

Personal debts are the obligations for which you, as an individual, are responsible for repaying to your creditors. Any loan, credit card or lease that you filed in your individual name qualifies as a personal debt. These debts impact your FICO score and play a key part in a lender's decision to extend you credit. You should be aware of each item that comprises your personal debt.

Credit Cards

    The most common personal debt is unsecured credit cards. These vary in limits, fees, usage and rates. It is important to note several key aspects of having credit cards that can affect your credit score. A high balance, specifically one that is close to the limit will lower your score. Balances that grow too fast can also be detrimental. It is also important to keep monthly payments low, as these will factor in to debt-to-income calculations

Mortgages/Home Equity Loans

    Personal debt includes any loan secured by your home. Commercial properties owned by business entities will not be included. First and second mortgages and home equity loans, however, are always included. It does not matter if the loan is on your primary residence or not, as vacation and investment properties that are in your name are also included.

Auto Loans

    Auto loans are another common personal debt item. The monthly payment and the remaining balance will show up each time your credit report is run. Also, be aware that leases count as much as purchases. Even if you have co-signed on an auto loan, you are obligated to that debt as well; although someone else is making the payments, you have essentially guaranteed the loan.

Student Loans

    Student loans are included in your personal debt and will show on your credit report. The deferred status, however, is what will determine if the loan amount is used in debt calculations. If you are currently enrolled in an education program and your payments are deferred until completion of your schooling, the loan is still listed on your credit report. The only difference is that no monthly payments are indicated yet.

Liens and Judgments

    Personal debt is not just inclusive of the obligations you've entered into voluntarily. You must include any liens and judgments against you. These include tax liens, sewer liens, lawsuits and other judgments levied by a court of law -- whether you are currently in a dispute is irrelevant. If you have been told that you must satisfy the lien or judgment, it must be included in your personal debt.

Debt Relief Agreements

There might come a time when you find yourself overburdened with debt and looking for relief. While there are reputable agencies available to you, you need to be careful of unscrupulous businesses attempting to take advantage of you. By exercising a little caution and doing a little digging, you should be able to avoid the less savory debt relief agencies.

Tax Agreements

    If the debt you find yourself in has to do with taxes, there are approaches you can use in order to get some relief. One way to help relieve your tax debt is to hire a professional and get an Offer of Compromise, or OIC, set up. The way it works is that the Internal Revenue Service sits down with your representative to find out how much you can pay. The IRS then draws up an agreement that offers you a reduction in your bill, assuming that you accept the offer. While this is effective, you must meet some conditions --- one is that you really do not have the financial means to pay your tax bill and the other is that the tax bill was excessive to begin with. If you can't get an OIC, you can have a payment plan set up with the IRS, in which you pay down your debt on a monthly basis.


    In your search to get a debt relief agreement drawn up, you need to be careful of the various scams out there. When an economy has a downturn, there are possibly people out there looking to take advantage of the vulnerability of others. The most common way that the scammers try to take advantage of you is by telling you there is an upfront fee before they can help you. Before you sign any agreement with anyone, do some basic research on the company, either by consulting the Better Business Bureau or by seeing if there is any information on the company posted on the Internet.


    In September of 2010, certain protections were put in place to help consumers. The new rules applied only to telemarketers, however, and wouldn't allow any telemarketer to ask for an upfront fee before doing any work for the client. While the new rules were greatly needed, they don't apply to companies that are operating over the Internet or are doing their business with you in person. Again, make sure that you do some background checking before signing any agreements with a company.

Successful Outcomes

    Despite bad companies being out there, people are still able to find debt relief when they sign agreements with reputable agencies. This takes place when the debt relief counselor has you undertake an aggressive plan of attack, usually consisting of having your personal finances completely overhauled, as well as having your debts consolidated into one payment. In addition, a good debt relief company engages in debt negotiation with your creditors and attempts to have some of the debt amount lowered. Consult with friends and acquaintances who have had successful outcomes and contact the agencies they used.

Friday, March 22, 2013

The Best Way to Pay Off Credit Cards

The Best Way to Pay Off Credit Cards

For many, paying off credit cards is the first step in becoming debt free. You'll never pay off your debt by paying the minimum monthly payments, and so you must use an effective strategy. Paying off your credit cards takes dedication, and perhaps surrendering a few extras, but the feeling of being debt-free at the end is worth the sacrifice.

Facing Your Debt

    Often, the scariest thing about paying off credit cards is taking a good look at what you do owe. If you've never done this, you may not understand how much debt you have and how much you're really paying.

    Go through your credit card statements thoroughly. Write down how much you owe on each one and what the interest rate is. If you can, transfer the debt with the highest interest rates to other cards with lower interest rates.

The Snowball Effect

    The Snowball Effect, described by author Dave Ramsey in his book "The Total Money Makeover," involves paying the minimum balance on all of your cards except one. You apply additional money to that one card until you have paid it off. Then, you focus all of the money that you would have paid towards that card on the second credit card until it is paid off. Eventually, when you get to the final bill, you are paying enough to pay it off quickly.

    There are two theories to the Snowball Effect. One is to pay off your credit cards in the order of highest interest rate to smallest. This makes financial sense, but if your debt with the highest interest is the largest, it can take time to pay off. The other theory states that you should pay off your debt in order from lowest balance to highest. This may not make as much financial sense, but it often gives you a better feeling to completely pay off one of your debts.

Increasing Your Income

    While this seems an obvious step, this doesn't have to be in the form of a pay raise. You can take a second part time job, do odd jobs from home or even sell some of your unused items. When doing so, apply that new-found income towards your debt.

Decreasing Your Spending

    Being frugal is another way to quickly pay off debts. Create a monthly budget and stick to it. Look for ways that you can save money, such as eliminating the cable bill or switching to a slower Internet connection. Then, use the money that you save to increase your Snowball Effect.

    Remember though, that some expenses actually help you to spend less. For example, a slightly higher grocery bill may mean that you spend less money eating out.

Explanation of Credit Debt Ratios

A credit-to-debt ratio and credit utilization ratio are important figures to understand when examining your financial health. The two ratios, which are opposite calculations of the same thing, often indicate whether you are financially secure, and they can impact your ability to get approved for a mortgage loan, a car loan or some other loan. You can calculate your credit utilization ratio periodically to note how it changes, and you can make changes in your personal lifestyle to improve the ratio if needed.

What is a Credit-to-Debt and Credit Utilization Ratio?

    A credit-to-debt ratio is the amount of available credit you have relative to the amount of debt you carry. The credit-to-debt ratio is more often expressed as credit utilization or the credit utilization ratio or the debt-to-credit ratio. However, credit utilization and debt-to-credit ratios compare credit and debt in the opposite way, by measuring the amount of your debt relative to the amount of available credit. Therefore, you typically want a high credit-to-debt ratio or a low debt-to-credit or credit utilization ratio to maximize your credit worthiness. Both indicate you have not used much of your available credit or have paid off most of your balance. People who have low balances on credit cards have high credit-to-debt ratios and low credit utilization ratios. People with maxed out credit cards have low credit-to-debt ratios, but high debt-to-credit or credit utilization ratios. These ratios are different from your debt-to-income ratio, which determines the percentage of debt you owe relative to the money you earn.

How to Calculate Your Ratio

    To calculate your credit utilization ratio, divide the total debt you owe by your total available credit. For example, if you have a credit card with a $5,000 limit and currently owe $500 on it, your debt-to-credit or credit utilization ratio is 10 percent (500 divided by 5,000 equals .10, or 10 percent). This credit utilization ratio is the percentage most often used by creditors, lenders and credit reporting agencies when discussing the relationship of your debt to your available credit. A credit-to-debt ratio involving the same factors would be 90 percent, because you still have 90 percent of your credit available. This percentage is used less often in credit discussions. A maxed out card with zero available credit provides a 100 percent credit utilization ratio, because you have used all of your available credit. The lower your credit utilization ratio is, the better off you are financially.

Effects of the Ratio

    A high credit utilization ratio has a negative impact on your financial life. It gives you negative marks on your credit score, especially if your balance is high and your payment history is not perfect. These negative marks impact your ability to secure a loan to buy a house or car, or borrow money from banks and lenders in general. However, if you lower your credit utilization (debt-to-credit) ratio, that reflects positively on your credit score, which improves your chances of being approved for a loan.

Ways to Improve Credit Utilization Ratio

    A direct way to improve your credit utilization ratio is to pay down your debt without accumulating more. Reducing the amount of debt decreases your credit utilization ratio. Also, you can acquire more credit without increasing your debt to decrease the ratio. Once you pay off a credit card, your credit utilization ratio for that account is 0 percent. However, you may not want to close that account, as closing the account eliminates the history from your credit report, including the positive direction the account went as you paid it off. Perhaps more important, closing a credit card account erases the available credit from the card from your credit report, which, therefore, increases your credit utilization ratio. For example, if you owe $1,000 total on three cards that have a combined available credit of $10,000, your credit utilization ratio is 10 percent. But if you close a card that had a credit limit of $5,000, thus leaving you with $5,000 of available credit, you just increased your credit utilization ratio to 20 percent, even though the amount you owe did not change. Depending on your situation, it may be more advantageous to carry a small amount of debt that you pay off each month than to close an account.

What Is No FICO Financing?

What Is No FICO Financing?

Getting credit is an important part of overall financial planning. Purchasing a home or a car is much more feasible by getting a loan. However, lenders do not just give away their money. Most loans require a credit check that includes your credit score. That credit score lets the lender know at a glance what your credit history looks like. But, what if you don't have a credit score, or if yours is too low? No FICO financing might be an option for you.


    Traditionally, getting a loan meant having a good long-term relationship with a local bank. However, that left a lot of people without access to credit. It also left a lot of lenders without enough quality borrowers to lend money too. Credit reports and credit scores changed all of that by allowing lenders to see a borrower's credit history from an unbiased third-party. Recently, though, banks and lenders have seen that there can be some value in lending to those without well established credit scores.


    No FICO financing occurs when a lender offers a loan or credit card without first obtaining the credit score of the borrower. Such loans are often either secured by property or other deposits, or they may require that the borrower satisfy other conditions such as having an account with the bank.


    The most common type of no FICO financing is also known as no credit check financing. For these loans the lender allows the borrower to get credit without checking the credit history or credit score at all. However, no FICO financing also takes place when the lender pulls a credit report, but does not order a credit score. Doing credit reviews by hand like this is typically done for customers with unusual or non-traditional credit history that might translate well when scored in the usual manner.


    The primary benefit of no FICO financing is that it allows customers without well established credit to get loans. Often, this is the case for young borrowers who may literally have no credit because they have never had a loan before. This can also be the case for recent divorcees whose credit was always in the spouse's name. Lenders benefit by charging higher interest rates for loans that they did not do a FICO check on.


    No FICO financing is ripe with fraud. Many people with bad credit in desperate situations believe offers that are too good to be true. Beware of no FICO score loans or no credit check offers that have wide open terms.

    Due to the higher possibility of loss from lending without a credit check, lenders are typically careful about who qualifies.

Thursday, March 21, 2013

Can Federal Taxes Be Taken for a Garnishment?

When you have a judgment issued against you, the court that issues the judgment has no authority to order the collection of the judgment. To ensure that he will receive payment, your creditor must go back to court. He has several options when he returns -- he can request a discovery of your assets and seize your property, garnish your wages or freeze your bank account. He cannot seize your federal taxes.

Wage Garnishment

    If you have a judgment issued against you, and your creditor wants to enforce the judgment, he can request that the payments be garnished from your wages. If the judge grants the order, a notice of garnishment will be delivered to your employer, and he will be required to withhold the maximum amount allowed by your state's laws. He must comply or he will be charged with violating a court order. When you return to court, you can fight the garnishment or request a reduction.

Maximum Amount

    When you are subject to a wage garnishment, not all of your income can be garnished. Federal law restricts the amount that can be garnished, as well as income that is exempt from garnishment. Some states have enacted laws regarding garnishments, and their laws differ from federal law. As long as the state law favors the employee more than the federal law, the state law prevails. Federal law states that if the garnishment is not for child support, federal taxes, state taxes or bankruptcy, a creditor can garnish no more than 25 percent of your disposable earnings, or the amount by which your disposable earnings exceed 30 times the federal minimum wage, whichever is less. For child support, up to 50 percent can be taken if you support another family, otherwise up to 60 percent is allowed.

Disposable Income

    Disposable income is the amount of money you have left after deductions that are required by law. Federal law requires that you exempt certain income when you calculate the wage garnishment -- federal taxes; state taxes; local taxes; FICA taxes; other court ordered garnishments, and pension contributions that are required by law, for example railroad Retirement; required union dues; or any other deduction required by law. A wage garnishment will not prevent your federal taxes from being deducted and paid.

Federal Tax Refund

    A common creditor cannot garnish your federal income tax refund. However, your federal tax refund can be garnished by your state or the federal government under certain circumstances. It can also be garnished for child support. If your state has an agreement with the Treasury Department, it can notify Treasury that your income taxes are uncollected and it will intercept your federal refund to pay your state taxes. If you owe money to federal agencies, such as the Department of Education for student loans, you can lose your federal tax refund without prior notice. The Treasury Department has the authority to garnish your federal refund without going to court.

Wednesday, March 20, 2013

How to Divide Marriage Debt

When going through a divorce, you'll have to divide the debt you incurred during marriage as well as the property your purchased together. Dividing up debt from marriage is often stressful, particularly if one member of the couple primarily benefited from the debt--such as student loans--or if one person will have a more difficult time repaying the debt. Despite this, you need to work together to fairly divide marriage debt.



    Take stock of your debts. Order a copy of the current debt statements from all of your lenders. Make a note of which debts were incurred by one party--such as student loans, business expenses or hobby-related expenses--and which debts benefited the family--such as home loans and purchases related to the home.


    Use assets to pay down joint debts. If possible, it's easiest to use your assets--such as money in a savings account or from selling a vacation property--to pay down or eliminate the debt that you hold jointly.


    Come to an agreement about the best way to divide debt. This will vary widely from couple to couple. One way is to divide things evenly, fifty-fifty. Another way is to divide based on a percentage of income. For example, if one person makes 60 percent of the total income, that person would receive 60 percent of the debt. You should also look at who is to receive the assets from the marriage. You may decide that the person receiving more assets should take on a higher percentage of the debt.


    Allow the courts to divide the debt if you cannot reach a decision. Some states have community-property laws, which means that the debt will be divided evenly. Others have equitable-distribution laws, which means that the courts will use a number of factors--income, assets received, reason for the debt, among others--to determine a fair distribution.


    Open accounts in each individual's name. Transfer balances to the new accounts based on the agreement.


    Close all joint accounts. You do not want to leave these accounts open, because one spouse might use the account for credit, causing the other to be responsible for paying it back.

The Statue of Limitations for Collecting in Pennsylvania

The statute of limitations for collecting debt in Pennsylvania varies by debt type. Once the statute expires, a debtor gains a legitimate defense in civil court if her creditor sues her to force payment. The debt collection laws in Pennsylvania also limit how a creditor may force a debtor to repay money owed.

Open Accounts

    An open account is an extension of credit without a fixed term of repayment like a credit card or line of credit. The borrower may use the credit available in the open account as long as the account remains in good standing with the creditor. The debtor must make minimum monthly payments on the account and avoid routinely spending over the account's assigned credit limit to properly maintain the account. The state of limitations for debt collection involving an open account in Pennsylvania is four years.

Written Contracts

    A written contract is an agreement between two parties to provide a service in exchange for a certain fee. A written contract may take several forms including a lease agreement, independent contractor agreement or bill for medical services. The statute of limitations for debt collection involving a written contract in Pennsylvania is four years. Once this statute expires, a creditor may no longer pursue a debtor in civil court to force the debtor to repay the debt.

Domestic Judgments

    A domestic judgment is a decision handed down from a Pennsylvania court compelling a debtor to repay a debt owed. A creditor in Pennsylvania has up to five years to pursue a debtor to satisfy a judgment rendered from a state court. A creditor may appeal to the court that entered the judgment to renew the claim by filing a Praecipe for Revival or an Agreement to Revive the Judgment. This renews the statute of limitations on the debt giving the creditor more time to pursue the debtor.

Foreign Judgments

    A foreign judgment is a decision from an out-of-state court or an international court regarding the repayment of a debt. A creditor in Pennsylvania has four years to collect on a judgment obtained from an out-of-state or international court. Pennsylvania permits a creditor to place a lien on a debtor's real property, including a home or automobile, as a means of collecting a debt. A lien is a claim made against the value of the property, which allows the creditor to claim proceeds from the sale of the property before the debtor gets any of the money. Wage garnishment is illegal in Pennsylvania for all debts except back taxes, alimony and child support.

Can Debt Collectors Take Your Social Security Disability Payments?

Social Security disability payments are payments made by the Social Security Administration to individuals who have suffered debilitating injuries that prevent them from working. These payments are meant to help a person pay for living expenses while unable to work. If a person on disability incurs a debt, the debt collector may attempt to garnish or seize money from his bank account. In nearly all cases, however, Social Security benefits are immune from garnishment and seizure.

Social Security Disability Benefits

    There are two types of Social Security disability benefits. The first is Supplemental Security Insurance payments, also known as SSI, which are granted to low-income people with disabilities. The second is Social Security Disability payments, which are paid, like Social Security retirement benefits, to people who have previously been in the workforce but who are now incapacitated. Both kinds of benefits, like most government benefits, are unavailable to private creditors.

Debt Collection

    Creditors and debt collectors can take a number of actions to receive payment of an outstanding debt, including garnishment and bank account seizure. When a creditor garnishes a person's income, a portion of the income is directly diverted from an employer or other income provider to the creditor. When a bank account is frozen, a creditor can take money out of it to recover money owed him.

Garnishment and Bank Account Freezing Laws

    Both garnishments and bank account seizures are regulated by state and federal law. Under federal law, all federal benefits, including Social Security benefits, cannot be seized by private creditors. This means that a creditor can neither garnish a person's benefits by taking them before the person has received them nor remove benefits from a person's bank account after deposited.


    Private creditors are totally barred from seizing Social Security benefits for payment of a debt. There is, however, an exception for the federal government. Federal law allows the federal government to garnish Social Security benefits from a debtor if the debtor owes money to the federal government. Such debts will usually be incurred through a failure to pay back taxes, student loans or child support payments.

Filing for Bankruptcy Vs. Credit Repair

Excessive debt and poor credit scores tend to go hand-in-hand because when you fail to make payments on your debt, that causes more debt by making your interest rates rise while it places a negative item on your credit report. In such a situation, you may be able to benefit from bankruptcy, credit repair or both. Each has advantages and disadvantages.

Basics of Bankruptcy

    Individuals who file for bankruptcy generally file for either Chapter 7 or Chapter 13. Chapter 7 will wipe most of your debts clean, but it may require you to forfeit any valuable property you may have that is not a necessary part of your daily life, such as a second house, a second car, stocks, bonds or expensive jewelry. Chapter 13 helps you by restructuring your debt payments and lowering interest rates so that you can pay back your debts in full in a period of three or five years. Both types of bankruptcy have a very heavy negative effect on your credit score.

Aspects of Credit Repair

    The purpose of credit repair is to rebuild your credit score after it has become low due to negative influences such as failure to make required payments. The first method of repairing your credit score is getting incorrect negative items removed from it. If you feel that anything on your credit report is incorrect, you may contact your credit bureau and contest that item. If your creditor fails to prove that the item is correct within a certain amount of time, the credit bureau will remove that item from your report.

    Another method of repairing your credit score is by reorganizing your finances and negotiating with creditors in such a way that you can repay your debts. Credit counselors can often help you to make a careful budget such that you can meet your debt service requirements. If this is not enough, you may benefit by getting a debt consolidation loan. Such a loan will pay off your existing debts and set you up with a low recurring payment. However, it will require you to make these recurring payments for a long time, increasing the total amount of money that you end up paying in interest. In paying off your debts through this process, though, negotiate with your creditors. They often can remove negative items from your credit report if you pay the debt that you owe them. Make sure that removal of the negative item is part of your deal with your creditors.

Choosing Between the Two

    Because of the negative effect that bankruptcy has on your credit score, it should come only as a last resort. Exhaust all of your credit repair options first. One very important thing you may be able to do to help repair your credit and keep from filing for bankruptcy is to renegotiate your payment requirements with your creditors. You may be able to negotiate a lower interest rate or lower required payments in exchange for a higher interest rate. If you tell them that you are considering bankruptcy, they may be willing to cancel your debt in exchange for a payment of a fraction of what you owe. Reaching this sort of settlement with your creditors will help your credit score by eliminating outstanding debt and by preventing future delinquencies on the payments for those debts.

Credit Repair After Bankruptcy

    If you do decide to file for bankruptcy and your credit score suffers as a result, you can do various things to help rebuild your credit. First, you can make sure to make full, timely payments on any debts that your bankruptcy did not discharge, such as student loan debts. Second, you can rebuild your credit by using credit cards. While having a bankruptcy on your record may make it hard to qualify for some types of credit, various institutions offer credit cards specifically for people who have gone through bankruptcy. These cards come at a high interest rate, but you may be able to avoid paying interest if you pay off the full balance of the card every month. Every time you make a payment on such a card, it will raise your credit score.

How to Cleanup Your Derogatory Credit

How to Cleanup Your Derogatory Credit

Derogatory credit can create problems if you approach a lender for a loan or apply for another type of credit. Lenders and creditors view credit reports beforehand, approving only applicants with proven track records. Maintaining good credit habits betters your chances of being considered creditworthy by a lender. Even if you have made serious mistakes and ruined your credit, you still can clean up your history and rebuild your score.



    Ordering your free credit reports from AnnualCreditReport.com. Challenge derogatory information, such as delinquencies, charge-offs and collection accounts reported by mistake. Removal of this information can boost your score. Write creditors to contest the debt or file a complaint online at AnnualCreditReport.com.


    Reverse damage caused by late or skipped payments. Pay your bills, for credit cards and loans, prior to the due date to mend your bad payment history with creditors. Reports of regular timely payments can increase your score and improve your creditworthiness.


    Broaden the gap between your credit limit and what you owe creditors. Maintaining credit-card balances that are near the limit hurts your score. Add points to your credit score by paying down balances.


    Pay any past-due balances. Do not disregard charge-offs and collection accounts by leaving unpaid accounts on your credit report. Paid charge-offs, collections and judgments are better for your credit score. Speak with the creditor that controls the account and propose a pay plan to settle outstanding bills.

Tuesday, March 19, 2013

How to Get a Creditor to Mark a Credit Report Paid As Agreed

Creditors want to get their money when you are late paying a debt. They will pursue you for about six months before writing off the money for tax purposes and selling your account to a collection agency. Your credit records are hurt as soon as the payment moves to 30 days delinquent, and the damage worsens as you continue to ignore the bill. You can sometimes undo that harm if the creditor is willing to negotiate in exchange for repayment.



    Evaluate your finances to see if you can realistically pay off the delinquent account. Creditors are more likely to negotiate credit report entries if you can pay them in a lump sum and can afford the whole balance. They might be willing to negotiate repayment rather than charge off the account if you cannot afford the entire amount.


    Call the creditor and offer to settle the delinquent account. Negotiate for what you can afford, and do not let the agent talk you into agreeing to an unrealistic amount. Otherwise you will end up not sending the payment and the bad information will remain on your credit reports.


    Tell the creditor that you want the account marked "Paid as Agreed" rather than "Settled" once you agree on a mutually acceptable payoff amount, columnist Steve Bucci advises on the Bankrate.com. A settled delinquent account lowers your credit score.


    Ask the creditor to send you a letter stating the agreed-on payoff amount and promising to change the credit report entry to "Paid as Agreed" when you send the money. You cannot enforce oral promises, so get written proof of the agreement before you send your settlement payment.


    Review all three of your credit reports after making your payment to ensure the account status is changed to "Paid as Agreed." Equifax, Experian and TransUnion all give you one free report per year through annualcreditreport.com, according to the Federal Trade Commission.

Debt Consolidation Companies & Some of the Pitfalls

Debt Consolidation Companies & Some of the Pitfalls

Job loss, divorce, a lawsuit or another major event can turn your financial situation upside down. Debt can quickly become overwhelming when creditors tack on late charges and other fees to the outstanding balance. The resulting damage to your credit may disqualify you from getting a debt consolidation loan to pay off the creditors. Some people turn to debt consolidation companies believing it will solve their problems. However, there are pitfalls when choosing this path.

Increase in Debt

    Debt consolidation companies charge hefty fees for their services, frequently thousands of dollars. You actually increase your debt load by choosing to pay through these companies rather than personally working out a payment plan with your creditors. This results in a longer period of indebtedness.

Prioritizing Debt

    The debt consolidation company chooses how to prioritize the bills. Many debt consolidators put their own fees first. The debt consolidator will not make any payments to your creditors until it collects its fee in full. Your creditors may pursue court action against you for defaulting on your loans and credit card bills, especially if they have not received any payments in six months or longer.

Choosing Debts

    Some people make the mistake of putting all of their debts into the consolidation program. However, if you only owe a few more payments to some creditors, then there is no reason for those accounts to go into default. Continuing to make monthly payments to these short-term debts will lessen the damage on your credit report, as these creditors will report your loans as paid off. Carefully choose which debts you want consolidated.

Career Implications

    If the debt consolidation company allows your loans and other bills to go into default, then you may suffer the consequences in your career, especially if your creditors proceed with court action and wage garnishments. Your employer may reassign you to a lesser position or deny a promotion based on your credit. This problem may extend throughout much of your career. For example, if you agreed to a seven-year repayment plan with the debt consolidation company, then the defaults and court actions will stay on your credit report for 14 years. The seven-year credit reporting period starts with the final payment on the account. You may avoid court action and wage garnishments by working directly with your creditors, and then honoring your payment plan with them.

What Is the Best Way to Get Rid of Delinquent Debt From My Credit?

What Is the Best Way to Get Rid of Delinquent Debt From My Credit?

Delinquent debt on a credit report will drop a credit score (also known as a FICO score) extremely fast. Delinquencies are weighed very heavily when the three main credit bureaus--TransUnion, Experian and Equifax--calculate credit scores. Removing delinquencies can be challenging. Time can also be a factor. However, with diligence and patience, you can clear up your credit.



    Obtain a current copy of your credit report from annualcreditreport.com. This is a site mandated by the U.S. government. It will allow you to pull three copies of your credit report--one from each of the credit bureaus. Review all delinquencies, charge-offs, judgments, liens and medical judgments. All of these are delinquent debts.


    Corroborate any and all delinquent debts. This can be done with old account statements, bank statements, old credit reports, any correspondence with the company and paid-in-full letters. Make sure that any outstanding debt is in fact legitimate.


    Pay off any legitimate, outstanding debt. If you have serious debt (like a large tax lien), you will need to restructure your budget, make cuts to things like entertainment expenses, and create more disposable income to use to pay down these debts.


    Dispute any illegitimate debts on your credit report. This can be done by drafting a letter to the credit bureaus, specifically pointing to the error, corroborating your claim with photocopied documents, and sending it to all three credit bureaus. These agencies must respond to all inquiries within 30 days and correct errors within 90 days.


    Wait for paid debts to fall off your credit. Most debts--even paid ones--remain on your report for at least seven years. You can request that one or many be removed, but this is at the discretion of the credit bureau.

Do I Report Adjustable Gross Income or Taxable Income on a FAFSA?

Do I Report Adjustable Gross Income or Taxable Income on a FAFSA?

Going to college is exciting and can result in getting an education that leads to a career path of your choice. The negative part about going to college is the expense. Depending on the school and your degree path, the costs can vary from a few thousand a year to tens of thousands per year. Grants, scholarships and student loans can help pay for your college expenses but you must complete a FAFSA form to start the process.


    A FAFSA is the Free Application for Federal Student Aid and is used to determine if a student qualifies for a Federal Pell Grant. Additionally the FAFSA must be filled out for students to apply for student loans. The FAFSA form requires a student to enter information from his tax return, or in the case in which a student is a dependent, information from his parents' tax return is used.

Adjusted Gross Income

    The FAFSA form requires you to include your adjusted gross income. The adjusted gross income (AGI) is the amount of money you have earned minus the deductions that are withheld from your pay checks. The deductions are generally Social Security, health insurance, 401k deductions, federal and state income taxes.

Taxable Income

    Taxable Income is the amount of money you have earned that you will be required to pay taxes on. Upon filing out your taxes you will deduct your exemptions and deductions allowed from your adjusted gross income. The remaining amount is your taxable income. This number is not used on the FAFSA form.

Reducing your AGI

    Your AGI, in addition to other factors on the FAFSA form, establish your estimated family contribution (EFC). The EFC helps determine the amount of financial you may receive in the form of a Federal Pell Grant. The amount of AGI you can have and still qualify for the pell grant will vary based on the other factor such as the number of people in your family. You can reduce your AGI by paying more into your 401k, health plans, or putting money into an IRA.

Sunday, March 17, 2013

How Do Thieves Get Information to Use Your Credit Card or Steal Your Identity?

Identity theft occurs when someone steals your personal information, such as credit card numbers or Social Security numbers, and then uses this information to open accounts or make purchases in your name. Going undetected, identity theft can result in a damaged credit rating. You can prevent theft of your personal information. But first you have to know the techniques used by thieves to acquire your information.

Trash Bins

    Some people have a bad habit of throwing old credit card statements and other documents, including their personal information, in trash bins that are easily accessible to thieves. While throwing away these documents helps clear clutter, there is a method to safely discarding your personal files to avoid having your credit card information and identity stolen. For starters, always use a shredder so that documents are beyond recognition. If using a Dumpster to discard documents or if leaving trash bags on the side of a street, avoid clear bags. And if working in an office, remove trash bags from your personal trash bin daily to prevent anyone from accessing your information.

Computer Security

    Smart thieves know techniques to hack into computers and swipe information, such as credit card numbers and expiration dates. You can protect your credit cards by installing a firewall on your computer, which is software to stop unauthorized access to your computer files and information.

Safe Shopping

    Be extremely cautious when shopping online. Reputable websites install security software to keep your information private. Before buying online and entering any personal information, check the website for security logos. Common logos include a padlock symbol near the fields that ask for your credit card number and expiration date.

Be Suspicious

    Do not trust unsolicited emails or telephone calls from banks, mortgage companies or credit card companies that ask for your personal information. Often, these emails and phone calls are attempts to steal your personal information.

Monitor Accounts Online

    Creditors and lenders often send monthly statements using the traditional mail. Sometimes, statements become lost in the mail or delivered to the wrong mailbox. This increases the risk of having your credit card and identity stolen. For this reason, it's imperative to watch for statements in the mail, and if a statement doesn't arrive, notify your creditor and monitor your account closely for signs of fraudulent activity. Opting for paperless statements and receiving statements through email can help alleviate this problem.

How to Set Up an AA Checking Account

The Citibank/AAdvantage debit card works in conjunction with a Citibank checking account. Once you've enrolled in the program, you'll earn a certain amount of AAdvantage bonus miles for every dollar you spend with the card. Depending on which plan you select, you can save up to either 60,000 or 100,000 bonus miles which can then be used to fly to various destinations serviced by American Airlines. Setting up the AAdvantage debit card is a fairly straightforward process.



    Visit the American Airlines website via the link provided in Resources and enroll in the AAdvantage Program. To do this, you will need to enter your personal information into the form and click "Submit."


    Navigate to the Citibank Checking Accounts website using the provided link and decide on which account works best for you. Citibank offers three different checking accounts each with their own fees, benefits, and features.


    Open a checking account with Citibank. You can do this either in person at a nearby Citibank branch, or via their online enrollment forms. Click "Open an Account" to begin.


    Contact Citibank customer support at 1-800-374-9700. Verify your account information with the telephone representative and request that your account be upgraded to an AAdvantage rewards account. You will need your AAdvantage account information to complete the upgrade process.

Tips on Increasing My Credit Card Limits

Tips on Increasing My Credit Card Limits

Credit card companies impose credit limits, which set the maximum balance a cardholder can maintain at any given time. Credit bureaus calculate credit scores based on several factors, each with its own importance. Nearly 30 percent of your credit score depends on the ratio of debt compared to your available credit, essentially the amount of debt you owe, according to MyFico.com. Raising your credit card limits can reduce the available-credit to debt ratio, or utilization ratio, and subsequently improve your credit score. However, understand that an increased credit limit often comes with higher over the limit fees, and an increased desire to spend beyond your means.

Exhibit Good Financial Habits

    Demonstrating you are a responsible spender is the number one way to convince your credit card company they can trust you with a limit increase. Pay all of your bills on time to repair and maintain a positive credit rating. Payment history makes up 35 percent of your credit rating, says MyFico.com. Your credit card company will take note of how you manage your payments not only with them, but with other companies as well. Keep your utilization ratio below 30 percent because a higher ratio communicates that you are living beyond your means, and increasing your credit limit could be a risky move for the credit card company.

Request a Credit Increase

    The easiest method to get a credit card limit increase is to simply ask, says MSN Personal Finance Writer Stacy Johnson. Call the number on the back of your credit card or on your credit card statement and request an inquiry for a credit limit increase. The credit card company may send you a form to complete, but most credit card companies will go ahead and run a credit check to determine if you are a viable candidate for an increase. The credit card company will send you a written notice of the increase in your credit limit, if they grant one.

Request all Limit Increases within 14 Days

    Note that requesting a higher credit card limit does prompt a credit inquiry, which can briefly lower your credit score. If you plan to make requests to increase credit card limits from multiple companies, this could have a larger impact on your score. Offset this issue by making all of your limit increase requests within a 14-day timeframe. Like mortgage or auto inquiries, multiple credit card limit increase requests made within a 2-week period count as one inquiry. Avoid opening new credit accounts or closing old ones during this time to keep your credit rating as high as possible.

Avoid Too Much Credit

    Not only can too little credit affect your future credit, having too much credit could communicate a risk as well. A higher credit limit could lead to an increased annual percentage rate (APR) and monthly fees. In the event a higher credit limit poses a problem, you can ask your credit card company to reverse the limit increase.

Saturday, March 16, 2013

How To Get a Credit Card With a Low APR With Bad Credit

Bad credit will follow you not just in your finances, but also when you are applying for jobs and seeking housing. Improving a credit score can be challenging, but it is essential. If you currently have a poor credit score, you can still get a low-interest credit card to begin improving your credit history. It can be difficult--especially if you are relying only on your credit report.



    Pull a recent copy of your credit report. Visit this website: www.annualcreditreport.com. This will give you access to a free credit report. You should also pay for your credit score, also called a FICO score. This is the three-digit numbers lenders use to assign rates and fees on credit accounts. Scores above 720 are excellent, but scores below 600 are poor. In general, the higher your score, the lower your credit card interest rate. Regardless of your credit score, however, if you pay late companies will almost invariably raise your rate.


    Look at the programs offered at your bank. Some lending institutions will look favorably on credit applications if you already do business with them. If you have a long banking history with a checking or savings account at your local bank or credit union, ask a loan officer about low-limit, low-interest cards for current customers.


    Apply for a secured credit card. These accounts are secured with your own money in a separate savings account. The credit limit is determined by the amount of money in this "collateral" account. While fees and rates on these accounts are traditionally high, you may be able to negotiate a lower rate once you make several consecutive, on-time payments.


    Ask a friend, family member or colleague to be a cosigner on a credit card. This must be done delicately. A cosigner is as obligated to a credit account as is the primary signer. If you fail to make the payments, your cosigner must pay or suffer the same credit consequences.


    Ask a family member or friend if you can be an authorized user on a credit card. As an authorized user, you will not be obligated to the credit account but will have access to funds. The credit history on the card is reflected on the credit reports of both the primary signer and authorized user. If you become an authorized user, you can enjoy the benefits of a low-interest credit card account (presuming the co-signer has good credit).

How to Make a Payment on a Credit Card for a First Premier Card

First Premier Bank issues the First Premier credit card, which is a traditional card you can use to make a purchase from any vendor that accepts MasterCard. Like all credit card issuers, First Premier Bank sends card users a statement each month. While you can elect to follow the instructions on the statement and mail your payment, you can also choose more convenient payment options.



    Print the Premier Pay form. Fill it out in its entirety. The form asks for your name, First Premier credit card information, address and bank account information. Indicate if you want to automatically deduct the minimum monthly payment or a fixed payment amount, or to pay the balance in full each month. Place the form and a voided check in an envelope. Mail the form to:

    First Premier Bank:

    Settlement Department

    PO Box 5514

    Sioux Falls, SD 57117-5514


    Visit the First Premier website. Click "Cardholders Enroll Now." Follow the step-by-step enrollment process, which includes entering your card information and Social Security number and choosing a user name and password. You must also include your bank routing number and checking account number. After you confirm your information, you can pay your bill online.


    Call 1-800-987-5521 to pay by phone. Elect to pay via your checking account or debit card. You must have your checking account and routing number handy if you wish to pay with your bank account. Know your debit card number, security code and expiration date if you're paying by debit card.