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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..

Friday, September 27, 2013

How to Make a Debt Chart

If you want to manage your money wisely, learning how to keep track of personal debt is a worthwhile endeavor. It's easy to owe more than you make without realizing it if you don't have a system in place to manage your spending habits. One way to monitor your expenses is through visual means. You can make a debt chart to have a clear picture of how much you owe your creditors and how long it will take to bring your balances to zero. In addition to helping you stay organized, a debt chart can also provide a source of encouragement as you see your balance shrink with each payment. There are many ways to create a debt chart; choose the one you're most comfortable with and that visually resonates with you.



    Calculate how much debt you owe. Write down -- in a notebook or using your computer -- the name of the creditor, the amount of debt owed and the number of months you want to pay down the expense. This may (and, if possible, should) exceed the minimum amount required by the creditor. Calculate the amount of your monthly payment per creditor.


    Lay the poster board on the floor or on a table in front of you. Determine the number of rows you need to create a chart; use one row per creditor. Measure equal distance between the rows and draw a straight line across with your pencil.


    Cut the red and green construction paper into squares that number the amount of months you want to pay off your debt. Make sure the squares are of equal size by first measuring with your ruler and marking with your pencil. Write on each red square the words "Owe" followed by the monthly payment amount. Write on each green square "Paid" followed by the monthly payment amount, the name of the month and the year. Do this for each creditor.


    Label the top of each row with the name and brief description of the creditor. For example, "Main Street Bank credit card." Also include the total amount you owe, such as "$5,000. Glue the red squares along the corresponding rows until you have one continuous red line.


    Glue a green square over a red square with each payment you submit. If you pay more than the monthly amount you allotted in your budget, write the difference between the increase and the monthly payment below the regular payment line. Do this for each creditor each month to have a debt chart in which you can easily see your debt obligations disappear.

Annual Credit Report Laws

Annual Credit Report Laws

The website Annualcreditreport.com reports that a credit file disclosure---better known as a credit report--details all of your information held by consumer reporting agencies that may be provided to a third party via consumer report. Mortgage lenders, auto financing lenders or credit cards may request a copy of your credit report to see if you are a credit risk.
Your credit file also lists all companies who have received copies of your credit report, certain medical information, pre-approved credit offers and credit and insurance company reviews. (References 1)

Free Annual Credit Report

    Thanks to the Fair Credit Reporting Act (FCRA) , you are entitled by law to receive a free copy of your credit report from each of the three national consumer reporting agencies on an annual basis. The companies are Equifax, Experian, and TransUnion. You can obtain individual reports or all three reports at once by visiting the Annual Credit Report website. (References 2) Additionally, some states require credit reports be made available to consumers at no charge. These states are Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont. (References 1)

    The Federal Trade Commission says consumers should take advantage of the free annual credit report so they can fully understand their credit. You should review your report to ensure all information is correct, current and complete, especially if you plan to apply for a loan or a job. Credit reports also allow you to monitor if anyone has used your personal credit information illegally. (References 2)

Other Free Credit Report Requirements

    The FTC notes that according to federal law, consumers are eligible to receive a free credit report if a company denies your credit application, insurance application or your employment application on the basis of your credit. You must request the report within 60 days of receiving notice of such an action; the notice will have all contact information for the credit reporting agency involved.

    Other provisions entitling you to a free credit report include unemployment (as long as you plan to seek employment withing 60 days), reporting inaccuracies because of fraud or identity theft and being on welfare. (References 2)

Credit Report Disputes

    The FCRA requires consumer reporting agencies and information providers to correct any inaccurate or incomplete information listed on your credit report. If you see an error, it is your responsibility to inform both the credit agency and the information provider in writing and request a correction.

    Unless it can classify the dispute as frivolous, the consumer reporting agency must investigate your claim and submit its findings to the information provider. At that point, the information provider is obligated to investigate and review the information in dispute, then report back to the credit agency. If your dispute is successful, the information provider is required to notify all three consumer reporting companies. The credit reporting agency must then send you written results and a free copy of your credit report.

    If your dispute is not successful, you may request that a statement of your dispute be included in both your credit file and with your future credit reports. If you inform an information provider that an item is under dispute, it must include that information when it reports to a credit agency. (References 2)

Thursday, September 26, 2013

What Is Credit Card Debt Counseling?

If your credit card debt has gotten out of control, credit card debt counseling can be a beneficial alternative to more drastic actions, such as bankruptcy. Credit card debt counseling through reputable organizations helps you to understand your financial situation in detail, as well as what steps you can take to get and keep yourself out of debt in the future.

Choosing a Counselor

    Many different organizations offer credit card debt counseling services, but not all of them are working in your best interest. Even when they claim to be a nonprofit organization, some charge high fees that take money away from what you could be paying on your credit card bills each month. Look for credit card counselors that are certified in credit card debt counseling. Any counselor you choose should also be affiliated with a recognized professional organization, such as the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Getting Counseled

    Counseling may take place in person, via telephone or online. No matter which route you choose, a counselor will ask you for specific details about your income and expenses, and will help you draw a realistic budget. This will help you track where your money goes, as well as identify areas where you should concentrate on changing your habits. While a credit card debt counselor is not qualified to offer legal opinions, she will discuss your available options with you. Information discussed with your counselor is kept confidential, and counselors may suggest follow-up meetings in the future to track your progress.

Debt Management Plans

    One option that a credit card debt counselor may offer you is enrollment in a debt management plan (DMP). Under such a plan, a credit card debt counselor contacts creditors that hold your unsecured debt and negotiates waived fees, lower interest rates and sometimes different due dates for your payments. You then agree to make one lump sum payment to your credit card debt counselor each month, which the counselor then disburses to your creditors on your behalf. If you can stick to a strict budget, do not wish to negotiate terms with creditors yourself and do not wish to file for bankruptcy, a DMP can be a useful solution.


    As with other forms of counseling, you will get out of credit card debt counseling what you put into it. Additionally, as personal finance expert Liz Pulliam Weston notes, many people wait until they have gotten too far into debt to seek credit card debt counseling. Other options, including bankruptcy, may be faster ways to wipe out your debt and move on with your life. However, if you haven't waited too long and can stick to the advice your credit card debt counselor gives you, it may be the right solution for you.

Wednesday, September 25, 2013

How to Write a Pay for Delete Letter

Cleaning up your credit history can prove challenging if you have collection accounts or charge-offs on your credit file. Creditors and lenders report both items after nonpayment on an account after several months. Paying off these old bills doesn't result in an automatic deletion of the item. If you want to pay off the debt and improve your personal score, write a pay-for-delete letter. This involves a creditor or collection agency agreeing to delete a negative item upon receipt of full payment.



    Get the name of the company that owns the debt. Creditors and lenders tend to sell old debts to collection agencies. Contact your creditor or lender first to see if it owns the debt. If not, get the name and address of the collection agency that purchased the account.


    Check your finances. You can offer to pay the full balance in return for a deletion, or offer to settle the debt for less than you owe. The more you pay toward the debt, the better the odds of a creditor or collection agency granting your request.


    Draft your letter. Start the letter by mentioning your name and account number. Mention your plans to pay or satisfy the unpaid balance, if the company agrees to immediately remove the negative item from all three of your credit reports. State how much you can afford to send the company -- either the full amount or a settlement.


    Do not acknowledge owing the debt in your letter. Admitting that you owe a debt can restart the statue of limitations for creditors to collect on a debt. Mention in your letter that you're not acknowledging the validity of a debt. Rather, you're agreeing to pay in order to clean up your credit report.


    Ask for confirmation in writing: Conclude your letter by asking the company to agree to your terms and delete the negative item upon receipt of your payment. Ask the company to put the agreement in writing using a company letterhead and send it to you, signed.


    Send your letter by certified mail: To ensure that a creditor or collection agency receives your letter, use certified mail. Someone from the company must sign for the letter, and you will then receive a return receipt.

Tuesday, September 24, 2013

How Can I Break My Apartment Lease in a Medical Emergency?

How Can I Break My Apartment Lease in a Medical Emergency?

Medical emergencies can lead to bills totaling thousands of dollars, making it difficult or impossible to continue paying rent for an apartment. Breaking the lease and perhaps moving in temporarily with a friend or relative can help with finances. However, getting out of a lease because of a medical emergency is not easy. The lease is a contract that typically doesn't include early termination clauses for medical reasons. The New York Times reports that it is very difficult to break a lease without penalty unless you negotiate with the landlord. This is true, even in a medical emergency.



    Review your payment history with the landlord to confirm that your rent is current. Breaking the lease with the rent current could make for an easier negotiation.


    Consult with a real estate attorney. Take proof of your medical emergency, such as hospital bills, to the meeting. Ask the real estate attorney to write a letter to the landlord indicating that you are struggling financially because of a medical emergency and must break your lease. Instruct the attorney to ask that the landlord terminate the lease without penalty because of your medical problems.


    Write your own letter to include with the letter from the attorney. Indicate that because of your medical emergency you have no choice but to move out of the apartment in 60 days and that you are hoping for a fair resolution of the lease agreement.


    Send the letter by certified mail for impact and documented proof of notice to vacate. Giving the landlord 60 days notice gives the landlord time to find a new tenant. The letter from the attorney will indicate that you have thought this through carefully and that you are ready for a legal battle if necessary.


    Follow up in four days with a phone call to the apartment manager if she has yet to reach out. The letter is a tactical move to determine if the landlord plans to hold you to the terms of the lease agreement.


    Remind the landlord about the letter and tell her you are sorry that you must move out in 60 days because of issues stemming from the medical emergency. Ask the landlord if she is willing to let you out of the lease without penalty because of your special circumstances.


    Break the lease by negotiating with the landlord. Get your attorney involved if necessary to reach a settlement on the remaining months on the lease if necessary.

How to Stop Connecticut Unemployment Claims Online

The Connecticut Department of Labor processes requests and inquiries regarding unemployment benefits via the TeleBenefits Line and Connecticut Department of Labor website. If you are currently receiving unemployment benefits in Connecticut and secure a new job, you must stop your current unemployment claim. While this can be done by mail with your claim form, you may have already sent it in before you got the new job. If so, you can take care of stopping your Connecticut unemployment benefits on the Web.



    Visit the Connecticut Department of Labor's Unemployment Insurance Online Claim Center website (ctdol.state.ct.us). Click on "Perform Claim Inquiry."


    Click on "Create An Account" if you do not already have an account. You need to enter your name, address, phone number, date of birth, Social Security number, email address and security questions to create the account.


    Log into the account with your user ID and password.


    Select "Perform Claim Inquiry" from the available options once you are logged in. In the text box that appears, enter in your request to stop your unemployment claims benefits. Click "Send Inquiry" when you are done and it will be sent to the claims center. The processing time for inquiries is two to three business days. Once your request has been received and processed, you will get a response letting you know it has been taken care of.

Louisiana Garnishee Laws

Garnishment is the process by which a creditor obtains a court order to intercept part of an employee's paycheck and use it to satisfy an outstanding debt. Though federal law acts as the ultimate legal authority that provides Big Picture guidance to the garnishment process, Louisiana also has well-developed rules that function to make sure all parties are being served as fairly as possible. The process of garnishment begins when a creditor declares in court that he is owed a valid debt and has exhausted other options for collection.

Exempt Income

    While the creditor and debtor are the initial two parties to garnishment proceedings, there is a good chance that a third party, know as the garnishee, will be forced to become involved, especially if the debtor is employed. As garnishee, an employer is bound by law to collect and remit the portion of income earned by a debtor that is legally at risk. However, the garnishee should be aware that certain kinds of income, such as retirement benefits and pensions, as well as most types of accident, disability or health insurance payouts are not subject to garnishment.

Garnishment Limit

    Garnishees also should be aware of the legal limit, imposed by federal and state statutes, on the portion of paycheck that can be held by court order. There are two controlling limits in Louisiana. The employer should use whichever method results in a lessor payment. The first method states that 25 percent of an employee's paycheck can be taken, while the second method allows the harvest of any amount earned in a week that exceeds 30 times the federal minimum wage.

Court Order

    A garnishee should never begin taking earnings and remitting them to a creditor without having in his possession a Writ of Garnishment. For a garnishment to proceed in Louisiana, there first must be a judgment in place from the court that decrees the debt valid. After that, the creditor must ask for the issuance of a Writ of Garnishment. Only with such a writ in hand and believed to be valid should the employer begin holding back wages.

Legal Help

    The garnishee, unfortunately, finds himself stuck in the middle of what can be an uncomfortable situation, especially if he has a good working relationship with an employee who is being garnished. If at any point during the process he is unclear about his legal obligations, it would be a great idea to consult with an attorney who is familiar with the law and who could offer guidance.

Monday, September 23, 2013

Important Information About Your Credit Report

Credit reports contain important information about your credit-related activity. Creditors and debt collectors regularly provide information to the three major credit bureaus -- TransUnion, Experian and Equifax. Credit bureaus regularly share the information with your creditors and with other lenders when you apply for credit. A lender's credit decision is based in large part on information listed in the report, although other factors are considered as well. Potential employers may also review your credit report during the hiring process or make periodic checks while you are employed. Executives and employees in sensitive positions handling money are most likely to receive regular credit checks.

Negative Information

    Negative credit information such as late payments and charge-offs remains on credit reports for at least seven years, with bankruptcy information reported for 10 years. The Federal Trade Commission (FTC) reports that the information cannot be removed sooner, although creditors and debt collectors are allowed to make corrections or changes to information they provided to the credit bureaus. Some debt collectors may agree to remove negative information from credit reports in exchange for payments. However, the process, called "pay for delete," is not common. Generally all your credit accounts are listed on credit reports with detailed information about credit limits, type of loan, balances and minimum monthly payments.

Court Records

    Public record information from state and country courts, such as monetary judgments and tax liens, also appears on credit reports. Credit bureaus purchase court records through a third party and add the information on reports. Judgments are a legal decision ordering someone to pay money. Credit card lawsuits often result in judgments, although settlements out of court are possible. Debts resolved through settlement typically are listed on credit reports as "paid for less than the full amount owed," according to "Black Enterprise" magazine.


    Credit reports also include a list of companies requesting your credit report. There are two types of inquiries. So-called "hard" inquiries are initiated when you apply for credit and authorize the creditor to review your credit file. Excessive hard credit inquiries may result in a drop in credit score, because creditors fear you are loading up on credit for a spending spree or because you are desperate for funds. "Soft" credit inquiries occur when a current creditor or employer reviews your credit or when other lenders scan your report to consider you for "pre-approved" credit offers or when you check your own credit report. Soft inquiries do not affect credit scores.

Other Information

    Certain identifying information also appears on credit reports, including your full name and current and previous addresses. Current and past employers are also included, if applicable. Similar information on your spouse is included if you have joint credit accounts.

Free Reports

    The Fair Credit Reporting Act allows free access to your credit reports once a year from each of the three credit reporting bureaus. Free copies of the reports are available through AnnualCreditReport.com. The website is endorsed by the Federal Trade Commission and allows printing of credit reports. Viewing the reports online or ordering by telephone is also allowed.

Do it Yourself Debt Settlement and Negotiation Tips

Do it Yourself Debt Settlement and Negotiation Tips

Although attorneys and debt settlement and negotiation companies are options for working with your creditors, you also can negotiate and settle on your own. This typically is a good option if your debt situation is uncomplicated, and you feel confident in your knowledge of your rights. Following a few tips in do-it-yourself negotiation and settlement may help you get the result you want.

Statute of Limitations

    Laws regarding debt collection vary by state, but every state has a statute of limitations for how long a creditor can collect a bad debt. If the statute of limitations has expired for your state, you do not have to pay the debt, although some creditors still try to collect. Always check to see what debts you truly have to pay before you start contacting your creditors. Inform the creditors with whom you have expired debt that they legally cannot collect to put an end to hassling.

Credit Score and Report

    Before you negotiate, get a free copy of your credit report and score from each of the three major credit bureaus: TransUnion, Equifax and Experian. Debt settlement and negotiation can cause your credit score to drop, at least initially. You should know what your credit score is so you know approximately where a drop in your score may place you. The copy of your credit report also will show you what debts have given your credit score the most dings, which may influence the order in which you attempt to settle or negotiate.

Research and Specifics

    Every creditor has a history of debt negotiation and settlement, or they are aware of what other creditors are able to offer in settlement and negotiation. Write or call your creditors and ask to speak to someone in the debt collections or customer service department. Then ask about previous negotiations and settlements--for example, ask what percent of the principal balance the creditor has taken in previous settlements. Base your settlement and negotiations on their information. When you write your settlement and negotiation communication, show you've done your homework: Quote the specific figures representatives provided to you, along with the representatives' names and the dates of communication. The idea is to show the creditor has accepted similar offers in the past. Offer a specific percentage and be clear about how and when you will pay the remainder of your balance. Provide documentation that supports your plan.

Written Communication

    Always conduct all of your negotiations with a creditor in writing. Written communications make it easier to clear up miscommunications. They also give you evidence of what has transpired, which you can take into a court of law if necessary.

Extra Fees and Charges

    Creditors often tack on fees and charges when you are late on payments. These payments generally aren't as much as your total principal. Start your negotiations by asking your creditor to forgive the extra fees and charges they've added. In some cases, this can make payment on the total debt more manageable, and many creditors are willing to waive fees if it means they get at least most of what you owe.


    When you negotiate, be as polite as possible. The more professionally you conduct yourself, the more likely it is that the creditor won't be inflamed by something you say and deny your settlement or negotiation request.

How to Absolve Debt

How to Absolve Debt

You can achieve a complete absolution of your debt through a variety of ways, the most extreme of which is bankruptcy. Absolving debt means eliminating it, and filing for personal bankruptcy can certainly accomplish that. Chapter 7 bankruptcy, which is for people with low-to-modest incomes, allows you to eliminate credit card debt and other unsecured debt in about four months. Chapter 13 bankruptcy, the other form of personal bankruptcy, requires a five-year payment plan to your creditors based on your income and expenses. Unsecured debt remaining at the end of the five years will be eliminated. Bankruptcy destroys your credit, but other less painful options for absolving debt are available.



    Find a nonprofit credit counselor. Ask your bank or credit union to refer you to a reputable counseling agency like those affiliated with Consumer Credit Counseling Service. Or seek a referral from community organizations such as The United Way or Red Cross.


    Make an appointment with the counselor to discuss your financial situation. Authorize her to pull your credit report for an analysis of your debt.


    Discuss various debt-elimination strategies with the counselor, including bankruptcy, debt settlement and debt management plans. Nonprofit counseling agencies generally help only with debt management plans, which require a four-year commitment and strong oversight of your finances. You will mail a check each month to the agency for all your debts, and the agency will send individual checks to your creditors. The agency will also negotiate better interest rates and ask your creditors to lower your balances by reversing some finance charges and fees. At the end of the four years, you should emerge with your unsecured debt eliminated or greatly reduced.


    Start debt settlement if you'd rather take a different course. Debt settlement allows you to eliminate your debts by paying less than the full balance. In 2009, at the height of a financial crisis in the United States, some card companies were settling delinquent debts for as little as 20 percent of the balance, according to The New York Times. Settlement offers are generally for about half the balance, however. Settlements usually are available from your creditor after you fall three or four months behind. Accounts are generally sold to debt collectors after six months. Contact your creditor directly to ask for a settlement agreement and try to settle for as little as possible.


    See a bankruptcy attorney if you prefer more drastic action. Initial consultations are usually free, and you should use that to your advantage by seeing three or four attorneys before making a decision.

What Is Interest-Free Credit?

When a person takes out a loan, he is generally required to pay interest on the principal of the loan. This interest is calculated as a percentage of the total loan amount and is assessed over a specific period of time. For example, a loan may carry an annual interest rate of 5 percent. "Interest-free" credit is a type of loan that does not carry any interest.


    When a person takes out a loan, he will generally agree to pay back the loan over a specific period of time. In most economies, money loses value over time due to inflation. To compensate the lender -- and often to allow him to earn a profit on the loan -- the lender will charge the borrower interest on the loan. Loans without interest, therefore, result in the lender losing money.

Zero Percent Interest

    Some parties will offer a loan at zero percent interest, meaning there is no interest charged on the loan at all. This can happen for various reasons. For example, a person may not charge his friend interest on a loan. Or, the lender may choose to charge the person a flat fee for the loan, meaning that, although the borrower is paying for the loan, he is not doing so in the form of interest.


    Many companies that advertise zero percent interest rates on loans may reserve the right to raise the interest rate under various circumstances. For example, on many credit cards, the finance company that issued to card is legally allowed to raise the interest rate on the card if the borrower defaults on a payment. In other cases, the loan is only temporarily free of interest.

Credit Cards

    Many times, zero percent interest is offered as an introductory rate on credit cards. For example, the company that issued the card may allow the person to pay no interest on his loans for a first year. However, the person will be required to make a minimum payment on the loan. And, after the introductory rate has expired, the person will be required to pay a much higher rate of interest.

Sunday, September 22, 2013

How to Know if Your Student Loan Is Delinquent

When you have a student loan that is approaching repayment status, your lender will send you an initial notice detailing a payment date as well as the amount that you must pay. The day after your payment is due, your loan becomes delinquent or late. If you are not sure if your student loan is delinquent, you need to take action before it goes into default and negatively affects your credit score.



    Verify the date of your payment on your student loan statements from your lender. Look for the words "Due Date." If you don't receive paper statements in the mail, look on the lender's website to find out your payment due date. Or you can call your lender and request the information.


    Look in your mail for past-due notices from your lender or be aware of calls from the lender. If you have Caller ID, you can look each day to see if you have received a call. During the 15 days after you miss your payment, the lender should send you a letter notifying you that your payment is late.


    Speak to the lender to make arrangements to bring your student loan account current. Ask about any penalties or late fees that you may have incurred.

Saturday, September 21, 2013

Will Food Stamps Affect When I Can File Taxes?

Food stamps, also called SNAP -- supplemental nutrition assistance benefits -- are government-provided vouchers that allow low-income people to purchase groceries. Although these benefits are administered by state governments, funding is provided mainly by the Social Security Administration, a federal agency. Federal agencies are financed primarily by federal tax revenues. Receiving food stamps, however, will not affect when you are required to file your taxes.

Food Stamps

    Food stamps are meant to help people buy groceries. These vouchers are provided only to individuals and families who, according to a set formula, would not have enough money to buy a sufficient amount of food. These stamps cannot be used to buy non-food products, such as household items, alcohol or tobacco. Food stamps are assigned based on a person's income, but will not be affected by when they file their taxes.

Tax Filing

    In most cases, taxes must be filed yearly -- although people will often pay taxes throughout the year. All people who make a certain amount of income are required to pay taxes. This limit varies depending on the kind of tax. However, in some cases, a person who is receiving food stamps will not be making enough money that he is required to pay income taxes.


    The deadlines for filing taxes vary depending on the kind of tax -- federal, state or local -- as well as the rules of the government assessing the taxes. In addition, many filers choose to get extensions on the deadlines. Many governments offer extensions for a number of reasons. It is not difficult to get an extension for the filing of federal taxes, although it is unrelated to the receipt of food stamps.


    The only way that the receipt of food stamps would affect when a person was required to file his taxes would be indirectly, if the person was suffering a sudden financial hardship that required him to be put on food stamps. In some cases, the IRS will allow for late payment of taxes due to unforeseeable occurrences. This can include, in some cases, events that can put the person onto food stamps.

How Does Being in a Debt Relief Program Affect Credit?

If you have fallen behind on paying back unsecured debts such as credit card bills, debt relief may be an option. Debt relief programs allow you to pay your debt management company a lump sum each month, which it then distributed to your creditors. You can pay off your debts using such a program, often at reduced interest rates; however, you must consider the effects of the program on your credit.


    Debt relief may negatively impact a person's credit in the short term. Credit reporting agencies note in the person's credit history that he is enrolled in a debt relief program. This may make some creditors hesitant to extend credit to the debtor because people generally enter debt relief only after falling far behind on their debts and damaging their credit.

Credit Score

    The debtor's credit score may go up over time. Debt relief allows debtors to pay off debts at reduced rates; often, debtors pay less than the full amount of the debt when they enter debt relief. This makes it more likely that the debtor will be able to make monthly payments and eventually pay off the debt. Paying back debts always positively impacts the debtor's credit score, and collections accounts are removed from her credit report once they are paid off.

Initial Credit Rating

    The effect of debt relief on your credit depends upon how good your credit was prior to debt relief. If you had good credit -- i.e. you only have one or two problematic debts but have paid everything else on time -- entering debt relief can devastate your credit rating. If your credit was poor, however, debt relief will initially have a negative effect but will improve their credit rating somewhat once the debt is paid off.


    Before deciding to enter debt relief, think about the potential effect on your credit. You may be able to settle your accounts on your own by talking to your creditors, which will not negatively impact your credit rating. You must also consider how likely you are to be able to make payments to your debt relief provider on time. If you have trouble doing this, you will not be able to clear the debts from your credit history and will have an additional black mark from entering debt relief.

Can I Write a Letter of Discrepancy for Everything on My Credit Report?

The federal government gives each person with a credit report the right to review and contest items found within it. If a person wishes to contest every item on her credit report, she's required to be meticulous in her documentation and provide sound evidence and reasoning why the information contained on the report is inaccurate. This is necessary for any credit bureau to take the claim seriously.

Your Guaranteed Rights

    The Fair Credit Reporting Act requires all three major credit reporting bureaus--Equifax, TransUnion and Experian--to deliver you a free copy of your credit report upon request every 12 months. This gives you the opportunity to review the information contained in your credit report and allows you to initiate proceedings to have any errors investigated. If you believe you've discovered massive discrepancies in your credit report, you should contact the credit reporting bureaus as soon as possible.

Contesting Items on Your Credit Report

    The major credit reporting bureaus are bound by federal law to investigate all claims of false information on a credit report. An exception to this rule occurs if the company views your request as "frivolous." To submit a request for a credit bureau to examine your entire credit report, you are required to include in writing your name, Social Security number, current address and the names of all your creditors. If your spouse is named on any of your accounts, her identifying information must be included. You are also required to include why you believe each creditor has reported incorrect information.

Credit Bureau Obligations

    The credit bureaus are required to investigate your claim within 30 days of receipt of your certified letter of discrepancy. The investigation includes formally contacting each creditor and asking the creditor to validate that the account in question belongs to you and to verify spending records and payments. If the creditor finds the information it provided is inaccurate, the creditor is required to immediately notify all three credit bureaus with the corrected information. You may also request the updated information be sent to any creditor who has viewed your credit report in the last six months.

Identity Theft and Fraud

    If any of the three credit reporting bureaus finds evidence of identity theft or fraud in its investigation of your credit report, it is required to move immediately to have creditors freeze the suspicious accounts and contact the local authorities. According to the Federal Trade Commission, your liability on accounts where identity theft has occurred is limited to $50. It is illegal for a creditor to tell you otherwise.

What Are the Advantages and Disadvantages of Credit Cards & Consumerism?

Credit cards and consumerism are closely linked. Often, people choose to purchase objects by borrowing money rather than by spending money they already have. This is often done through the use of lines of credit accessed via credit cards. Consumerism -- the creation of a desire to purchase goods -- often pushes people to use these cards. Consumerism and credit cards, examined together, have a number of advantages and disadvantages.

Credit Card Advantages

    One of the main advantages of credit cards is that they allow people access to money for a short period of time that they would not otherwise have access to. If money borrowed against a credit card is paid back immediately, the rate of interest applied to it is very low and perhaps non-existent. Therefore, these cards can allow people to make important purchases during periods in which they are temporarily short of cash.

Credit Card Disadvantages

    One of the main disadvantages of credit cards is that they can be easily misused. Typically, if a person is late paying back a credit card debt, he is charged late fees, as well as face a punitive rate of interest applied to the money he has borrowed. A person who does not handle money well can go deeply into debt by borrowing money and being unable to pay it back.

Consumerism Advantages

    Consumerism is a belief system that encourages the purchase of consumer goods. Consumerism's main advantage is that it helps boost the economy. When people buy more goods, businesses receive more revenues. With high revenues, these companies can afford to hire more workers and make new and better products. This tends to raise the quality of life for everyone and allows people to make more money.

Consumerism Disadvantages

    Consumerism -- particularly consumerism enabled by access to easy money, such as credit cards -- can push people deeply into debt. When a person is in debt, much of his income goes toward servicing that debt, rather than toward the purchase of goods and services. In addition, consumerism can distract people from more important goals and create a culture that celebrates materialism over moral values.

Friday, September 20, 2013

How Much Will Debt Consolidation Affect My Credit?

How Much Will Debt Consolidation Affect My Credit?

When debt looms, debt consolidation is just one of several solutions. Debt consolidation involves taking out an additional loan with which you pay off some or all of your debts. This doesn't necessarily reduce what you owe, but sometimes you can get better interest rates and monthly payment minimums that are more reasonable given your budget. However, consolidation is not without an impact on your credit. The amount of the impact depends on multiple factors.

The FICO Percentages

    To understand how consolidation impacts your credit score, you first must grasp the Fair Isaac Corporation (FICO) method of credit scoring. With this method, factors that impact credit are given a certain percentage, with some factors counting more toward your credit score than others. Your payment history, such as if you've given creditors their money on time, is the largest percentage of your score, comprising 35 percent. The amount you owe, such as $9,000 on a $10,000 card, comes next at 30 percent. The length of your history, which shows how long you've used credit, makes up 15 percent of your score. New credit accounts and the type of credit you use both make up 10 percent.

How FICO Translates Under Consolidation

    Consolidation impacts your FICO score primarily under the length of history category. When you get a consolidation loan, you use the money to terminate your debt with your previous creditors. If doing this closes your accounts, then you can truncate your history length. This can impact your credit history negatively. It's best to leave your oldest accounts active, even if you get the balance down to zero.

    The other area of FICO involved in consolidation is the new credit accounts, because you have to get a new loan in order to consolidate. Typically, a single new account shouldn't impact your score much, but if you consolidate while you're opening other credit lines, creditors may look at your score and wonder why you're needing so much credit.

Paying It All

    In general, paying off a debt in its entirety typically looks good on your credit history. This is what you end up doing with consolidation. For this reason, the more accounts you consolidate, the more consolidation will improve your score, provided you are able to leave the zero-balance accounts open and retain your credit history length.

Program Requirements

    Sometimes consolidation companies require you to complete debt management or debt education courses as a stipulation for getting a consolidation loan. They generally just want to make sure you understand the risks associated with the consolidation and have a plan to pay back what you owe the company -- the ultimate goal is to educate you toward better money management. These courses sometimes show up on your credit report. They don't always impact your credit score, but creditors sometimes frown on them, seeing the need for credit counseling as a bad sign. Other creditors see credit counseling as an indication that you've learned the skills you need to handle a debt responsibly.

The Bottom Line

    In general, consolidating debt shouldn't have a large impact on your credit, as new credit accounts and length of payment history comprise only 25 percent of your FICO score. Usually, consolidation helps your credit automatically by clearing outstanding debts. However, by the time you look to consolidation, your credit already likely will have dings from missed payments and other issues. Plan to walk a straight financial path after consolidating to preserve the score you have.

Thursday, September 19, 2013

How Does Slow or Non-Payment of Medical Bills Affect Your Credit?

Medical bills are a fact of American life. Whether you have insurance or not, the high cost of medical care means that most of us will eventually rack up medical bills that are difficult or impossible to pay. But if you are slow to pay medical bills, or do not pay at all, you may find your credit will suffer.

Reporting to Credit Bureaus

    Whether your credit will be affected by unpaid medical bills depends upon whether your medical provider reports to credit bureaus. Chances are the provider does, which means that nonpayment shows up on your credit report, sooner rather than later. And even if the provider does not report to credit bureaus, they likely work with a billing or collection agency that does, which means that it is almost inevitable that nonpayment or slow payment of a medical bill will damage your credit.

Slow Payment

    If you are slow to pay your medical bills, your credit may suffer not one, but two negative entries: initial nonpayment to the medical provider, and the medical provider's subsequent shuffling of your unpaid account to a collection agency. It may seem like double-dipping, but your credit report will show both incidences; first, your medical provider report failure to pay the bill, then the collection agency reports the amount owed. Both entries are recorded on your credit report, and the combination will reduce your credit score. While you can improve your score by paying the collection agency, the damage is done.


    It's unlikely that if you do not pay a medical bill, the only entity that will report this knowledge to the credit bureaus is the medical provider. When the account is turned over to a collection agency, the collection agency continues to report that you are not paying on the account. The agency can continue to report this until they charge off the debt, or report it as unrecoverable. What often happens, however, is that the debt is sold to yet another collection agency, which begins the process all over, and enters another negative item on your credit report.

Undoing Damage

    The best way to avoid the damage unpaid medical bills can do to your credit is to make some kind of payment arrangement with the medical provider as soon as you receive a bill. Many providers offer a discount for cash payment, or will offer you an affordable payment arrangement.

Wednesday, September 18, 2013

Is My Partner's Debt Mine?

You may have said "for richer or poorer" when you said your vows, but financial difficulties ruin many a marriage. Debt incurred before and during a marriage can be a point of contention, so it's smart to openly discuss responsibilities. You may not have a legal obligation to pay your partner's debt, but you might feel a moral obligation to help out.

Pre-marriage Debt

    When you marry, your partner's debt remains in his name and is still his responsibility. This doesn't pose a problem if he is actively making payments on it. However, in a case where he doesn't pay a loan back, the company can go after joint accounts or receive the money from a tax return that you filed jointly.

Debt During Marriage

    The debt that you incur during marriage becomes your responsibility as a couple. This is true even when one person buys a high-ticket item for her use only. This is why it's important to discuss any large purchases before you make them. Set your own limit for what you need to discuss before you buy -- for some couples, the limit might be $50, while for others it might be $1,000.

Debt and Divorce

    What happens to debt when you're going through a divorce depends on the state that you live in. Some states have "community property" laws, which means that all debt and assets incurred during the marriage will be divided equally at the dissolution of the marriage. In other states, you have to work with lawyers or mediators to determine a fair way to divide debt and assets. Once you know that you're getting a divorce, it's smart to close any joint accounts, so that you don't incur any more debt in the name of the couple.

Personal Decisions

    In many cases, whether you consider your partner's debt as your own is based on your feelings as a couple. Though you may not be legally liable for the debt, you may find that his debt is holding you back as a couple, lowering credit scores and taking up too much of your income. You may choose to work together as a couple to bring that debt down rather than taking a "yours and mine" approach. Additionally, some couples maintain separate accounts during their marriage, agreeing that any debt that your partner incurs should be his and his alone. Legally, however, you may have to pay up if he slacks off on his bills.

Tuesday, September 17, 2013

How to Answer a Summons for Breach of Contract on a Credit Card

How to Answer a Summons for Breach of Contract on a Credit Card

Failing to make payments as agreed on your credit card account may result in the card company or a debt collector suing you for breach of contract. You would receive a summons, which is a legal notification of the lawsuit. Generally summonses are hand-delivered to your home or place of business. A second document, called a complaint, is attached to the summons. The complaint is the actual lawsuit and explains why you are being sued. You must respond to the lawsuit with a legal document of your own, called an "answer."



    Review the summons to determine how much time you have to respond--generally 20 to 30 days, depending on the state. This information will be stated clearly on the front page of the summons along with the address of the Clerk of Court. Failing to respond by the deadline could result in a default judgment being awarded against you, according to the Judicial Branch of Georgia. A default judgment gives the credit card company a complete victory and the right to seek garnishment of your bank account and wages for the full amount due, plus legal fees.


    Write your answer. Your responses should be numbered to match the allegations in the lawsuit. Respond to each point by admitting that the allegation is true, denying that it is true, or indicating that you do not have enough information to know if the allegation is true or untrue. The exact wording you use is up to you, according to the Minnesota Judicial Branch. Sign your name at the end of your answer and also provide your address and telephone number and your case number, which is included in the summons.


    File your answer in person with the Clerk of Court in your town. Also send a copy to the credit card company attorney, whose address will be listed in the lawsuit. Send the copy certified mail with a return receipt requested. Filing the answer protects your rights and gives you time to create a defense for a trial date that will be set. Or use the time to contact the attorney for the credit card company and work out a settlement. Illinois Legal Aid reports that you are sure to lose in court if the credit card company proves that the debt is legal and you owe it. Illness, joblessness and an inability to pay are not legal defenses, according to Illinois Legal Aid.

Late on Payments Vs. Filing Bankruptcy

If you are unable to make payments on time for your credit cards, loans and other credit accounts, these delinquencies can have a bad effect on your credit report. Bankruptcy is an option to pursue if you are unable to make any payments, but it has its own effects on your credit.

Credit Score

    Your credit score contains information on each of your credit accounts as well as negative information, such as public records of bankruptcy. The numerical score is affected by the amount of time that you have had credit accounts, the amount of credit accounts, the balances on your cards and negative information on your credit account.

Late Payments

    A credit account does not get a late notation in its payment history until you are 30 days overdue with your payment. Your credit company may charge you late fees and penalties, but these are not shown on your credit report. Some credit companies may wait until your account is 60 or more days late before the late notation goes on your report. Late payments, especially multiple late payments, bring down your credit score greatly and stay on your report for seven years.


    Bankruptcy is a legal process that discharges debt or restructures it into a payment plan. A bankruptcy notation on your credit report decreases the score although a bankruptcy alone does not reduce your credit score as much as multiple late payments, collections or judgments, plus the bankruptcy. Because you must wait seven years to refile for bankruptcy, certain lenders may be more likely to lend to you with just the bankruptcy alone.


    If you are in a situation where you cannot make all of your credit payments on time, the method that least impacts your credit score is making sure that none of your payments is more than 30 days late and filing bankruptcy to discharge the debt. The bankruptcy alone does not have as large of an impact as many late payments, and it's more likely that you can find post-bankruptcy creditors if you need to finance purchases.

What Is a Settled Balance?

Bankruptcy is a legal method to deal with high debts and receive a fresh credit start. Unfortunately, filing bankruptcy has a snowball effect that starts with a drop in credit scores and could end in the inability to acquire new financing. As an alternative to filing bankruptcy to deal with debt, talk to your lenders or creditors about a debt settlement.

What is a Settlement?

    A debt settlement involves paying your outstanding debts. But instead of paying the full balance to satisfy the debt, you strike a deal with your creditors to pay a percentage of the money owed. For example, if you owe $10,000 on a credit card, and you're considering bankruptcy to erase this debt and other financial obligations, you can offer your creditor half the balance to completely satisfy the debt. Your creditor takes the money and agrees to stop future collection attempts.

Avoiding Bankruptcy

    Settling a balance -- as opposed to filing bankruptcy -- benefits you because you avoid tarnishing your credit report for 10 years. A bankruptcy can ruin your credit score, and fixing a low score after bankruptcy is no easy fix. With a debt settlement, you receive the opportunity to pay off your debts for less, and you avoid a major credit blunder.

Why Beneficial to Lenders?

    Understandably, lenders and creditors prefer full payment of outstanding balances. But when consumers consider filing bankruptcy, creditors and lenders realize that a discharge may wipe out the debt, wherein they're unable to recoup money owed. Settling the balance is more beneficial because lenders and creditors are given the opportunity to receive some of the monies owed to them, as opposed to nothing at all with a bankruptcy.

Consequences of Settling Balances

    Settling a balance isn't without consequences. Creditors and lenders typically include an explanation on credit reports that read "settled for less than the balance owed," or simply "settled balanced." Future creditors or lenders checking your credit file will see that you negotiated a debt settlement, and having a settlement in your past can affect future financing. A settlement could scare potential creditors and lenders. They may reject your application, request additional documentation before approving or charge a higher interest rate.

Pros and Cons of Credit Card Transfers

Pros and Cons of Credit Card Transfers

Just when you think you're drowning in a sea of debt, you get a life preserver thrown your way, or so you think. The life preserver comes in the form of an offer to open a new credit card account and transfer existing credit card balances to the new card. This new card may offer an attractive low or no-interest rate for an introductory period.
Depending on the terms and conditions associated with the balance transfer offer, you may be able to save money.

Assessing Your Debt Situation

    Balance transfers may help you reduce your monthly finance charges (APR), but only if you have a certain degree of self-discipline about using credit cards. Chances are, you may be challenged in this area if you're struggling with debt. But transferring balances from high APR credit cards to a no or low APR card can make sense if you can commit to paying off the amount you transfer before the introductory offer expires.

Understand the Difference between APR and Interest Rates

    Balance transfer promotions may offer "0% interest for six months" or a "low introductory rate for balance transfers for the first three months." If you're paying high interest rates on your existing credit card balances, it can seem like a no brainer to transfer, but don't be so hasty.

    APR (annual percentage rate) is the amount of interest, fees and other charges you pay on a particular account expressed as an annual percentage. By law, the APR appears on all credit card offers and on each monthly billing statement. When considering a balance transfer offer, you'll want to compare APR's rather than being tempted by low "teaser" rates.

Teaser Rates Can Get Your Attention--and Your Money

    Some teaser rates can be useful for managing debt. If you have a high APR debt that you plan to pay with a tax refund or other guaranteed lump sum, transferring to a card with a low initial rate can help you save on finance charges until you can pay off the balance.

Fine Print on Existing and Potential Credit Card Agreements

    Before you make a balance transfer, it's important to understand all costs associated with the offer. Balance transfer fees assessed by the new card company, and possibly your existing card company, can significantly reduce the benefits of transferring a balance.

Develop a Debt Management Plan

    Used under certain circumstances, credit card balance transfers can be a short term solution to reducing the costs of debt. If you're carrying a lot of debt on multiple credit cards, it's time to develop a strategy for paying off your debt and managing your budget on a cash basis. Financial advisors and non-profit credit counseling agencies can help.

Monday, September 16, 2013

Collection Agency Telephone Restrictions

Collection Agency Telephone Restrictions

If you have bills you are unable to pay, chances are a collection agency will acquire the debt and take steps to collect the money owed. While agencies have a right to attempt to collect the money, they do not have free reign to make harassing phone calls. Collection agencies must follow certain guidelines for making debt collection calls, which are detailed in the Fair Debt Collection Practices Act, or FDCPA. The FDCPA is enforced by the Federal Trade Commission, which protects consumers from abusive attempts to collect debts. Failure to operate within the guidelines can result in penalties for the collection agency.


    A collection agency is prohibited from using harassing tactics to collect a debt. This includes obscene language, threatening language and threats of bodily harm. They can't make false statements to scare you into paying the debt. Some collection agencies pretend to be an attorney, accuse you of breaking the law or lie about the amount you owe. None of these practices are allowed. The collection agency cannot threaten arrest, nor can it threaten legal action it is not authorized to take or doesn't intend to take.

Inappropriate Calling

    Collection agencies cannot call you before 8 a.m. or after 9 p.m., times when you might be asleep. They can only call outside of these hours with your permission. They can't contact you at work if you advise them either by phone or in writing that you are not allowed to receive calls on the job. Violating either of these guidelines is inappropriate behavior.

Sharing Your Information

    A collection agency may contact your family or friends only to find out your address, phone number or work location. They are not allowed to make excessive calls, and are usually limited to calling only once. They are not allowed to discuss your debt with a third party unless it's your spouse or attorney. Your debt is a private matter between you and the collection agency. They cannot use your family and friends to try to intimidate you.

Your Options

    Whether you owe the debt or not, you can request in writing that the collection agency stop contacting you. After receiving the letter, the collection agencies can only contact you either to advise you of legal action they plan to take against you, or to advise you that they will no longer contact you. If you take this route, you are still liable for the debt, but you don't have to speak with the collection agency.

What Happens If the Co-Signer Dies on a Private Student Loan and You Have Been Paying?

A private student loan is one in which the borrowing student obtains through a private lending institution, such as a bank or credit union. If the borrower has a co-signer who later dies, the borrower is still responsible for repaying the loan, though the details of the loan agreement largely determine the repayment terms. Talk to a local attorney for advice about the impact a co-signer's death has on your private student loan.


    When a borrower takes out a student loan, that borrower sometimes uses a co-signer to act as a co-guarantor of the loan. If the borrower ever fails to repay the loan on time, the lender can hold the co-signer responsible for the payments. The co-signer, therefore, is responsible for all of the duties of paying back the loan and does not gain the benefit of receiving the loan funds.

Loan Terms

    When a private student loan is taken out, what happens to the loan responsibilities when the co-signer dies depends upon the loan agreement. Typically, the surviving borrower is still responsible for the loan and must continue to make payments. If the borrower then fails to make the payments, the borrower is solely responsible to the lender without having the co-signer to rely upon. Because the terms of the loan often dictate what happens in the event a co-signer dies, it is important to carefully read the details of the loan.


    In the event the loan agreement states that the borrowers must pay back the loan in full upon the death of either co-signer, this also raises the issue of the co-signer's estate. The estate is all of the property the co-signer owned at the time of her death. Once she dies, any creditor to whom the co-signer owed an unpaid debt can file a claim against the estate to recover the amount owed. Such claims and the process involved are dependent upon the probate laws of the state in which the co-signer lived. However, as a remaining co-signer, you may still be liable to repay the debt in this situation if the estate is unable to do so.

Other Considerations

    Each student loan situation is different. Not only do the terms of the loan agreement differ, but the laws governing these loans can differ and change with new legislation. A private student loan lender may, for example, include a requirement that the deceased co-signer is liable for repaying the entire loan upon death, but it may also release the co-signer's estate from liability. In the reverse situation in which the borrower dies and the co-signer survives, the co-signer may still be responsible for repaying the loan even though he did not benefit from the loan.

Saturday, September 14, 2013

Can I Consolidate a Sallie Mae Loan Into a Federal Direct Loan?

Consolidating your student loans can not only simplify your finances by allowing you to make just one payment each month, but it can also lower your monthly payment by lengthening your repayment term. When you have a Direct Loan issued by the federal government and a loan through Sallie Mae, you might be able to consolidate them depending on what type of Sallie Mae loan you have.

Types of Loans

    Sallie Mae loans come in two major varieties, and the type you have will affect whether you can consolidate your Sallie Mae loan with your federal Direct Loan. The first type of loan is the private student loan from Sallie Mae. This is not a Stafford Loan from the federal government, but rather a loan that you got from Sallie Mae on your own initiative. The second type of loan is a loan through the Federal Family Education Loan program. This is a Stafford or PLUS loan issued with funds from Sallie Mae but backed by the federal government. These loans were issued only until June 30, 2010.

Federal Direct Consolidation Loans

    You can only consolidate Sallie Mae loans issued through the FFEL program into a Direct loan. This is because the federal government only consolidates federal loans, not private loans. You can consolidate multiple Sallie Mae FFEL loans together or you can consolidate at least one Sallie Mae loan with at least one federal Direct Loan. After consolidating, you will make all of your payments directly to the federal government, not to Sallie Mae.

School Status

    None of the loans that you are consolidating together, including your Sallie Mae FFEL loan and any federal Direct Loans, can have an in-school status. You must wait until after your graduation date to consolidate loans through the Direct consolidation program. The one exception to this rule is that between July 1, 2010, and July 1, 2011, borrowers could consolidate two or more loans if they fell into at least two of three major categories: Direct Loans, FFEL loans and FFEL loans bought by the federal government.

Private Loan Options

    If your Sallie Mae loans are private student loans instead of FFEL loans issued by Sallie Mae, you must use consolidation options other than the federal Direct consolidation loan. You will need to apply for a consolidation loan with a private lender, which could be Sallie Mae or a different lender. Your interest rate for the consolidation loan will be based on your credit score and, if applicable, your co-signer's credit score. If you own a home, you could consolidate student loans by taking out a home equity loan, which generally has a low interest rate. However, this adds the risk of losing the home if you fail to repay your loan.

Debt Collection Laws for Kentucky

Debt Collection Laws for Kentucky

Sometimes when people are struggling with debt a debt collection agency gets involved. A debt collector is hired to try and recoup an unpaid amount of money to a third party and sometimes it can be a stressful experience dealing with the process of debt collection. Unlike most states, Kentucky doesn't have state laws dealing with debt collection. Kentucky debt collection practices are governed by the Fair Debt Collection Practices Act.

Debt Collector Contact

    Debt collectors are only able to contact a debtor between 8 a.m. and 9 p.m. local time. Debt collectors can also contact your place of employment to verify you are employed but are not permitted to reveal the details as to the debt. If collectors are attempting to garnish wages, a judgment must be in place and the garnishment must be in writing.

Expired Debts

    In the state of Kentucky, debts have an expiry date. This means if the debt has not been recovered within a specific time period, it is not collectible. The Kentucky Debt Statutes of Limitation is the guiding document for expired debts. For recovery of real property, court judgments, bonds, and written contracts the expiry date is 15 years. In the case of verbal contracts, checks and NSF fees, unpaid bills, receipts, and fraud the expiry date is five years. When there is a breach of sales contract the debt expires after four years. All other debts not specified in the Statute of Limitations on debt expire after 10 years. If the time period has lapsed, the debt is expired and cannot be collected on.

Ceasing Contact

    In Kentucky, a debtor is able to stop debt collectors from contacting them. The debtor has to put in writing that the debt will not be paid or that the debt collector has to stop contacting the debtor at home and work. When a debt collector receives this notice, contact can be made with the debtor to indicate that the debt collection has ceased, or that the collection agency if taking legal action.

Harrasment Laws

    Certain actions are illegal when collecting on a debt. Abusive and threatening language is prohibited, as is misrepresenting the debt collection firm, for example if the debt collector left a voice mail saying the debtor had won something, in an attempt to establish contact.

    Debt collectors are forbidden from contacting third parties aside from the debtor, and the debtor's attorney, unless it is in regards to a judgment. This means that debt collectors cannot contact family members, friends, or an employer unless the debt collector is trying to serve a garnishment order.

Friday, September 13, 2013

Can I Become a Home Buyer Even if I've Had Bad Credit?

Can I Become a Home Buyer Even if I've Had Bad Credit?

At one time, a lackluster credit score was not much of a barrier to homeownership. Subprime mortgage lenders were willing to extend a mortgage, even under questionable circumstances. Underwriting standards have tightened up considerably, however, since the housing market shakeup that started in 2008. As a result, your creditworthiness must be stronger than before.

Minimum Credit Scores

    Most lenders won't even consider you if your credit score is below 620, as of 2011, according to the Bankrate website. If you are around that level, you will be considered for a loan, but you will probably have to contend with a high interest rate. In addition, you may have to pay points and provide a large down payment. To qualify for the best rates on a 30-year, fixed-rate mortgage with no points, you will probably have to have a score of at least 760, according to the same source.

In the Past

    If you've had bad credit in the past but have improved in recent years, you may be surprised to find a favorable reception from many lenders. Lenders will take note of your mistakes in the past, but as of 2011, they're much more concerned with your recent record and your current score. If you can show at least three years of improving credit and a good payment record, you should be fine, according to Bank of America's Mortgage Education program.

FHA-Backed Products

    If you don't have a stellar long-term credit record, consider a government-backed loan. The Federal Housing Administration, or FHA, can act as a guarantor to your loan, making you more attractive to private lenders. An FHA-backed loan also requires a smaller down payment. To be considered for an FHA-backed loan, you must have at least one year of acceptable credit with a good payment record.

Improving Your Credit

    A mortgage is probably the biggest debt you'll ever take on, and it's worth spending time preparing for it by improving your credit. Plan at least a year out. Take steps to repair your credit before you go loan shopping. The first step, according to MSN Money, is to order your credit reports and see if all the information on them is accurate. Dispute any errors. Set up automatic payments for as many of your accounts as you can to avoid missing any deadlines. Focus on paying down any unsecured debt such as credit card balances. Don't open any new credit card accounts.

Thursday, September 12, 2013

How to Get Rid of Upside-Down Car Payments

Being "upside down" on your car payment means that you owe more for the car than what it's worth. For example, perhaps you purchased the car for $10,000 and paid little or no money down. Now, after depreciation, the car is worth just $7,500 but you still owe more than that on the car loan. That makes the car difficult to sell, yet you may just want to get rid of it --- along with the car payment. Unfortunately, your options are limited. Automotive website Edmunds.com reports that you may be better off sticking it out and keeping the car.



    Sell the car for what it's worth. Then pay the bank the difference to get out of the loan. Let's say, for example, the balance is $10,000, and you find a buyer willing to pay you the fair market price for the car, which is $7,500. You and the buyer complete all the required paperwork; the deal is consummated when you pay the bank the remaining $2,500.


    Trade the car in when there are rebates available for a new car purchase. Choose this option if you would rather not sell the car outright. Edmunds reports that new car manufacturers may offer rebates as an incentive for buying a car. Rebates can exceed $5,000, depending on the car being purchased. A $5,000 rebate could be enough to cover your negative equity and get you into another loan that isn't upside down.


    Ask that the car be repossessed. This is an extreme tactic that should only be used as a last resort, but it may be worthwhile to resort to what the banking industry calls a "voluntary repossession." This process is usually undertaken when you can't sell the car because of the negative equity and haven't been able to sell it or trade it in. Arrange for a voluntary repossession by calling your lender. Keep in mind, however, that this is very damaging to your credit report and that you could be held liable for the "deficiency balance" --- the difference between the balance on the loan and the amount the lender receives when selling the car at auction or to a private buyer.

How Long After a Bill Payoff Does It Take to Show on a Credit Score?

How Long After a Bill Payoff Does It Take to Show on a Credit Score?

Not paying off your bills will damage your credit score. Negative information on your credit report will raise red flags with lenders and credit card companies. This could result in unattractive interest rates and denial of credit due to the risk you present. However, paying off your bills will help to restore your credit score. After paying off a delinquent bill, you can see changes on your credit score as soon as after one billing cycle.

Billing Cycles

    Most billing cycles are one month, whether it be your cable, credit card, cell phone or Internet bill. If you are delinquent on any of these accounts, that information is passed on to credit reporting agencies. You are considered delinquent after 30 days of non-payment. When your bill is paid off, your account is updated. This new information is shared with the credit bureaus. Your previously delinquent account will be updated to state that the account is paid. It also will include a notation about how long the bill was past due. Your credit score will be updated as a result of this new information.

Credit Report and Score

    You can get a free copy of your credit report through annualcreditreport.com to confirm that your accounts have been updated. However, the report does not reveal your score. A variety of companies provide access to your credit score for a fee. Your score is based upon your credit history. Under the heading of "Potentially Negative Items," your credit report will list the delinquent account and that it has been paid off. If it was paid off through a settlement with the company or a collection agency, this also will be noted. Furthermore, this information will stay on your credit history for seven years under the Fair Credit Reporting Act. Your score will improve even more after that time if you do not accumulate additional negative marks.

Impact on Score

    Your bill payment history accounts for 35 percent of your credit score. The amount of debt you carry is another 30 percent. If you pay your bills in a timely manner, your credit score will improve because you are demonstrating your financial ability and responsibility. If you pay off late bills, you can repair some of the damage. How much your score improves depends on how many other bills are late and how much outstanding debt your are carrying, among other factors. Your credit score falls between 350 to 850, with the higher mark being better.

Error-Free Reporting

    You are entitled to a free credit report from each of the three credit bureaus every year by visiting annualcreditreport.com. Request a copy to ensure that it is up to date and accurately shows your bill payments. Take the opportunity to ensure all other information is accurate. If your bill payoff has not been reported to the credit bureau, report the error right away so that your credit score is updated as well. The Federal Trade Commission's website has details on reporting errors.

Tuesday, September 10, 2013

How to Sell a Personal Loan

How to Sell a Personal Loan

Personal loans are traditionally small, unsecured loans that are revolving or closed-end. The most common type of personal loan is the credit card. However, smaller banks offer small closed-end loans--those which have an expiration date and a standard monthly payment. For loan officers, these are often the easiest products to sell to a potential borrower. There isn't too much risk on either side of the table, but loan officers must be able to effectively close the deal.



    Confirm the customer's eligibility. You do not want to waste your or their time with an offer for which the customer cannot qualify. Calculate the debt-to-income ratio (DIR) by dividing the sum of all monthly credit-reportable bills by their gross monthly income. A good DIR is below 40 percent. Look at the credit report and score, and make sure it meets your company's lending guidelines.


    Listen attentively. The customer will tell you exactly why he is applying for a personal loan. The first mistake amateur brokers and loan officers will make is to try to sell cookie-cutter loan products to all consumers. Instead, try to tailor a personal loan package to the customer's wishes.


    Present options. Do not assume that the customer will want one specific personal loan. Present different loan amounts with different corresponding payments and different loan types (closed-end, revolving). Fully explain the differences inherent in each program.


    Ask which of the products will best suit her needs. Ask for a commitment. This is when salesmanship will come into play. Describe the features of your service and your company, not just the features of the loan. Many customers will respond to personalized service over competitive programs.


    Respond to any objections with courtesy and empathy. You want to show that you understand his hesitation and that you'll work to overcome certain barriers, such as fees and rate. Speak with your manager or have a sit-down with all parties to iron out any hang-ups.


    Set a closing once you've agreed to the terms. Before the closing, call or sit down with the customer and re-review all the final terms of the loan. This will make for a smooth closing and will help solidify trust in you as a loan officer.

Online Debt Management Tips

The Internet can be used as resource to help you manage your debt. There are many different ways you can use the services provided online to reduce your debt and to find better loan options to help you gain control of your debt. Since it is online, you will need to make sure you are using reputable and secure sites to handle your finances.

Monitor Accounts

    Monitoring accounts can save you time and reduce the amount you worry about your debt. You can switch to online statements, which can prevent identity theft from having your statements stolen in the mail. You can compare your current transactions to your receipts at any time and check for suspicious account activity without waiting for a monthly statement to come out. This makes it easier to stop fraud and deal with problems before they become big.

Online Payments

    Online payments cut back on the lag time between when you make a payment and when it is credited to your account. They also cut back on the worry of having the payment become lost in the mail or delivered late. It is easy to track online payments, because the financial institution will give you a tracking number you can record on your statement or in your money management software.

Track or Create Debt Payment Plan

    There are online websites and tools you can use to set up a debt payment plan. Debt payment calculators can show you how quickly you can be out of debt if you pay a set amount extra towards the debt each month. This may motivate you to focus on getting out of debt. Additionally, there are sites that will record your payments and track your progress as you work on getting out of debt. They may also send payment reminder emails if you sign up for them.

Look for Better Loans and Offers

    You can look for better credit card offers with lower interest rates or find a good consolidation loan online. These accounts can reduce your payment amounts and lower your interest rates, which can make it easier to get out of debt. Before applying for a credit card or consolidation loan online, make sure you are at a legitimate site that is secure. Do not sign up for an account with a bank you do not recognize or that you cannot verify as being legitimate. Check with the Better Business Bureau where the bank is founded to be sure there are no complaints filed.

Monday, September 9, 2013

Does Credit Counseling Hurt My Ability to Get Credit?

Enrolling in a credit counseling plan by itself generally has no negative impact on your credit score or creditworthiness and should not directly affect your ability to borrow money. However, sometimes the subsequent activity that comes with enrolling in a credit counseling program may damage your credit report and restrict your overall ability to borrow money.

High Balances/Bad History

    Credit counseling enrollees may already be experiencing problems on their credit reports due to late payments, high debt utilization ratios and over-the-limit fees. Those who are effectively managing credit usually do not benefit from credit counseling. If you are finding your debt load unmanageable and have to turn to credit counseling, your creditworthiness may already be suffering to a point that would make it difficult, if not impossible, to obtain credit.

Closure of Accounts

    When a creditor accepts your account into a credit counseling program, they will often close the account. Per their agreements with the credit counseling agencies, the creditors usually lower your interest rates and waive any fees. The card issuer is sacrificing some or all of its profit and therefore decides you are not a valued customer. Closed accounts can mean lower total available credit and higher debt utilization ratios. Both of these things can reduce your credit score and negatively impact your ability to borrow money.

Agreement to Not Establish New Credit

    Creditors require consumers to not establish new credit as a condition of accepting an account into the credit counseling program. If you agree to these terms, you will not be able to obtain new credit while part of the credit counseling program. Obtaining new credit may prompt your creditor to remove your account from the counseling program and revert back to the old interest rates.

Credit Reporting of Counseling

    Some creditors will make a note on your credit report that you are participating in a credit counseling program or mark your account as paid, but not as agreed. These remarks generally do not hurt your credit score, but other creditors may see these comments and decide that you may be struggling with debt and are not a good borrower. Also, as previously noted, a new lender may realize that you are disallowed from opening new credit while participating in credit counseling. A creditor may see this and automatically reject any new credit applications based on this logic.

Debt Settlement

    Sometimes, credit counseling involves aggressive negotiation to reduce your total outstanding balances. When an account is settled for less than it is owed, the remainder of the amount is charged off and this is a serious delinquency on your credit report and score. A charge off indicates to prospective lenders that you were unable to pay your previous commitments in full and will hinder your ability to obtain financing on favorable terms, if at all.

How to Write a Debt Settlement Letter

Credit card and loan debt plague millions of Americans every year. Whether it's due to poor choices in your younger years or unexpected situations such as an injury or loss of work, the inability to repay financial debts can hinder you for life. Unsettled debts destroy your credit score, making it nearly impossible to recover. While it can be overwhelming once you are able to pay these debts, writing a debt settlement letter can assist you in settling your debts without burdening your current financial position.



    Question the debt. Before you attempt to settle your debts, make sure you owe them. There are numerous cases of identity fraud reported, so if you question a debt or know you yourself did not incur this debt, request that the creditor validate that the debt is actually yours to pay.


    Know your rights. When you compose your letter to your creditors, ask them to consider removing your negative debt from your credit report. Explain that according to the major credit bureaus, creditors must report only what they want to report. If you have the intention of paying your debt to them, they may be willing to help you by removing the negative information beforehand.


    Be up front with them. If bankruptcy is something you have been considering, let them know this, but refrain from using a threatening tone. Let them know that you are still willing to pay them if they are willing to settle for a reduced amount. By telling them that you are considering bankruptcy, it may encourage them to work with you so that they don't lose out completely.


    Make your offer once you have decided upon what is financially feasible for you. Explain that you can either pay X amount in a certain time frame or you can make a one-time payment of X amount of dollars. Also ask them to sign the letter if they are in agreement with your offer and send it back to you. This signed letter will be a measure of protection for you if they decide in the future they want to collect the remainder of the debt.


    Request a letter of settlement from them, stating that you want a copy of the debt having been paid in full according to the terms of your agreement. You must send this to the credit bureaus to have it cleared from your records.


    Check with the credit bureaus after 2 or 3 months of paying your debt in accordance with the agreement established between you and your creditor. Request a removal of the debt you have just paid. Include copies of the agreement between you and your creditor and the receipt from the money order or a copy of the check you sent the creditor, proving they have cashed it and received the payment you promised.

Sunday, September 8, 2013

Is There Real Help With Credit Card Debt?

Is There Real Help With Credit Card Debt?

Many consumers find themselves deep in credit card debt. With most credit cards charging high interest rates, a large portion of most monthly payments goes to interest, making it difficult to pay down the debt. However, there are a number of ways that consumers can find help to reduce their credit card debt and get their finances back under control.

Credit Counseling

    Credit counseling is a service that may help a consumer in credit card debt in many ways. Credit counselors can negotiate with lenders to reduce the amount of the monthly payment as well as the interest rate on the credit card. Both of these can help the consumers to better manage their debt. In addition to negotiating with the credit card issuer, credit counselors also offer a number of educational services to consumers on topics including developing budgets and avoiding other debt.

Refinancing the Debt

    Another option for paying off credit card debt is to use equity in a home. Consumers may use a home equity loan, a cash-out refinance or a second mortgage to tap the equity in a home to pay off the credit card debt. Though the loan against the home will remain, the interest rates on these loans are typically much lower than credit card interest rates. By paying a lower interest rate, consumers will be able to pay off the debt much more quickly. Consumers who may have trouble paying the loan should use caution using a home equity loan or similar method to pay off the credit card debt as the loan will create a secured loan, which exposes the consumer's home to risk.

Debt Settlement

    Debt settlement is another process that a consumer can use to pay off credit card debt. In debt settlement, the credit card issuer agrees to accept a lump sum payment of less than the amount owed on the card to settle the account in full. Typically lenders will only accept a settlement offer from consumers who are behind on their credit card payments. Consumers can negotiate a debt settlement themselves or choose a company that will negotiate the settlement. When choosing a debt settlement company, consumers should research the company with the Better Business Bureau and their state's attorney general for complaints.


    Bankruptcy should be the last option used by consumers to deal with credit card debt. Although debt settlement will damage a consumer's credit, the effect of bankruptcy on a credit score will be worse. In bankruptcy, a court will look at a consumer's financial situation and determine the proper course of action to take, which may include the discharge of credit card debt. Courts may allow consumers to make reduced payments on debts, and many consumers are able to keep their homes during a bankruptcy.

Saturday, September 7, 2013

How to Fix Your Credit in Canada While Living in the USA

How to Fix Your Credit in Canada While Living in the USA

The major credit reporting agencies in Canada are Equifax Canada and Transunion Canada. Although these companies have sister companies in the United States, they don't necessarily share information across the border. This means that you most likely won't carry poor records into the U.S. unless your Canadian lenders decide to pursue legal action across the border. Fixing your Canadian credit score while living in the United States will most likely require some dedication, time and patience. You may not be able to make it perfect, but you should be able to improve your overall score.


Contacting Credit Bureaus


    Order a personal credit report from Equifax Canada by phone. The phone number is 1-800-465-7166.

    You may be charged a fee for ordering a copy of your credit report.


    Order a personal credit report from Transunion Canada online or by phone. The phone number is 1-800-663-9980. You may be charged a fee for ordering a copy of your credit report.


    Review reports for any inaccuracies. Although most of the information should be the same, study and compare both reports.


    Contact agencies to report and/or dispute inaccuracies. For Equifax Canada, call the Customer Relations Department at 1-800-465-7166. For Transunion Canada, call 1-800-663-9980.

Contacting Lenders


    Call the owner of your largest debt first and work your way down. The more you owe, the more likely it is that the company will pursue legal action in chasing you across country lines. By contacting your lenders with a willingness to pay, you will be exhibiting good faith.


    Work out realistic payment schedules with your financial institutions or debt collection agencies. Most lenders will be flexible with repayment schedules if they see that you are willing to make an effort.


    Stick to the agreed upon payment schedule. It is important to be consistent in making payments to avoid more negative credit marks and potential late fees.

How to: Credit Clean Up

How to: Credit Clean Up

Consumers and business stakeholders rely heavily on business and personal credit records to secure financial assistance in the form of loans or advances. Small businesses or start-ups may not yet have an established business credit history with vendors or other companies and must rely on personal credit for business purposes. Lenders typically require high credit scores before offering loans from banking or investment institutions, and credit cleanup becomes necessary when borrowers have less-than-sterling histories.



    Visit AnnualCreditReport.com to obtain a credit report for personal or business accounts. Provide a Social Security number for personal accounts or a federal employer identification number for businesses. The Federal Trade Commission authorizes this site and the company does not require sign up for "protection" services or unrelated information.


    Contact credit reporting agencies to dispute any discrepancies in the credit report. Each of the three major reporting agencies offers dispute resolution through their websites. Experian, TransUnion and Equifax manage all major credit report transactions.


    Develop a budget for finances that indicates how to pay off existing creditors and reduce the likelihood of any future negative credit report entries. Managing current creditors reduces negative entries from existing accounts and frees additional resources for rebuilding credit.


    Take loans or secured debt and make regular payments to rebuild and enhance business or personal credit. Secured debt requires collateral, such as a car title or home mortgage, and offers a higher rate of acceptance than unsecured debt that relies entirely on credit history.


    Monitor credit reports regularly for incorrect entries. Free annual reports and purchased additional reports allow users to track updates to their credit scores and histories. Careful monitoring helps prevent errors in the future.