House Foreclosure Help

Facing a foreclosure on your home is serious business. Not only is it a major blow to your credit and your future, but it is taking away your home, the most precious and valuable thing you and your family own. Hard times happen, and they don't just happen to you. In this time of economic crisis, many people are facing horrible problems they never dreamed of even five years ago. Knowing what to do in case a foreclosure is imminent can help you keep your home.

Talk to your lender

It is very important to talk to your mortgage company. Most people are afraid to call, or are ashamed. This is a mistake for many reasons. Almost every bank or lender will work with a borrower to avoid foreclosure. When a bank forecloses on a property, everyone loses money, including the bank. Lenders want the borrowers to get back on their feet and be able to resume paying their debt. Calling and speaking with a loan officer and working together to find a solution is the best way to avoid a bank foreclosure. So get your bill out and call that customer service number.

Government Help

There are programs in place through the U.S. government to help struggling homeowners. Most mortgage companies are aware of these programs and can direct you to them online, or give you a phone number for government self-help programs. There are refinancing options, temporary stays on loans, and other options, depending on what you might qualify for.

Keep Fighting

Don't just give up when you receive the foreclosure notice. Banks are required to send out those notices after a certain amount of delinquency. It does not mean that foreclosure is going to happen right away. Even when you have received the final notices, keep working with your lender to do whatever it takes to buy you more time to get back on your financial feet. Don't give in -- fight for your home and chances are you will be able to keep it.

Bankruptcy

If all else fails, file for bankruptcy. Bankruptcy laws can protect you from losing your home, and even if that is impossible, it can delay the loss for several months. Contact a lawyer concerning your options for bankruptcy.

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How to Choose a Credit Counseling Agency

When consumers realize that they do not make enough money to cover their monthly debt obligations, they may think that bankruptcy is their only option. Bankruptcy is a pretty serious step to make and consumers may be better served by seeking the assistance of a credit counseling agency. The benefits of credit counseling have become so apparent that it is now a required step for individuals to take if they are choosing to file for bankruptcy. If you are currently feeling the stress of paying your bills, consider consulting with a credit counseling agency to help alleviate the stress, relieve the burden of your debts and repay your obligations without filing for bankruptcy.

Instructions

1

Launch your internet browser and go to the National Foundation for Credit Counseling (NFCC) website.

2

Click on Take the First Step and then fill out your zip code and how far you would like to travel. Select whether you would like results for all agencies or only those who provide online counseling. It is suggested that you meet face-to-face with a credit counselor at an agency. Online-only should really be reserved for individuals without a credit counseling agency in their immediate area. Once you enter your information, click on the Go button.

3

Call the first agency on the list, or the one with the location that you prefer. Explain to the representative that you obtained their information from the NFCC website and that you would like to ask a few questions about their services. If they suggest a face-to-face meeting, explain that you are pre-screening agencies first and then after you make your selection you will then call back for a meeting.

4

Ask the agency what type of services that they offer. Do they only arrange for debt repayment at lower rates or do they also help with budgeting and debt management so that you do not end up in the same situation in the future? Write down all of the information you receive on a piece of paper with the agencys name and contact number listed so that you can refer back to it in the future.

5

Verify the fee schedule that the agency uses. Ask what the fees are used for and whether they have the possibility of going up or down in the future.

6

Find out if the agency is licensed or accredited and through which organizations. Follow-up with the organizations that they list to confirm that they are in good standing.

7

Inquire as to how their employees are compensated. You do not need to know what they are compensated, rather you want to know whether they are paid based on how many clients they sign up or what services they sell. If they do receive additional compensation based on sales, you may think twice about the organization as it is likely they do not have the consumers best interest in mind.

8

Thank the representative for his time and then follow up and contact others listed on your NFCC results page. Ask the other agencies the same questions and take comprehensive notes.

9

Compare and contrast all of the notes that you have taken and select an agency.

10

Call the credit counseling agency back and make an appointment for a face-to-face meeting.

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Does Paying on a Collection Account Reflect on Your Credit?

According to the Fair Isaac Corporation, collection accounts can negatively affect your credit. If you pay one off, though, it shows as a paid collection on your credit report, changing its date from the past to the date of payment. When you know to whom you should speak and how to pay off a debt that has gone to collections, you can avoid the potentially undesirable impact of keeping it on your report longer than necessary.

Talk to the Debt Collector

Try to negotiate with the collection agency.

A collection account on your credit report appears as a negative element, so you must pay it off to improve your score. Before you do, contact the collection agency and inform them that you wish to pay the amount you owe. Stipulate that you will do so provided they withdraw the account from the credit bureaus. Request that they send you this agreement in writing prior to your payment. Not all agencies will agree to this concession, so be prepared to negotiate and speak to someone in management.

Be Prepared to Pay

Get ready to hand over the money.

Make sure you have the full amount available when you contact the collection agency. Knowing that you are willing and able to pay the past due account in full gives you leverage and increases the likelihood that they will be willing to work with you. Avoid paying a lesser settlement amount, if you are offered this option. While it might sound like a good deal, this will appear on your credit report as "Settled for less than full amount," which is still a negative factor.

Continue to Improve Your Credit

Work on other aspects of your credit to improve your overall rating, whether you are able to negotiate a deletion of your collection account. Experian, one of the three major credit reporting bureaus, suggests paying current bills on time, lowering open credit account balances and paying off debts as primary ways to increase your credit score. Check your credit reports regularly as well. Contact the credit bureau in writing if you find any errors so that they can investigate and remove them.

Time Is on Your Side

Before you know it, your credit will look great.

Know that this blemish won't be there forever, even if the agency refuses to remove the account from your credit report. According to the Federal Trade Commission, most negative accounts can only appear on your credit report for seven years. Maintain your efforts to avoid any further dings and your rating will continue to improve as the years go by.

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Consolidating Debt Procedures

You may consolidate your debt in two ways: by taking out a consolidation loan or by using a credit counselor to create a debt management plan. The processes for these two consolidation types are very different. With a consolidation loan you must have good-enough credit to qualify for the loan, while on a debt management plan you must be in a dire-enough position that credit counselors see you as a bankruptcy risk. Both plans, if used correctly, may help you to get out of debt, but it's important to understand their risks as well.

Credit Report

The first step in the process of consolidating your debt is gaining an understanding of where you stand creditwise. You may order your credit report for free on the Federal Trade Commission-approved Annual Credit Report website. Consolidation loans usually require collateral, such as your home, as well as fairly good credit. By reviewing your credit report, you know of any errors, which you can report, in writing, to both the creditor and credit bureau. By improving your credit score, you may be able to qualify for lower interest rates on your consolidation loan. Understanding your credit is also important in developing better financial management and understanding your circumstances if you want to take on a debt management plan.

Consolidation Loan

A consolidation loan wipes out your current balances, so you make one monthly payment to the loan instead of making payments to your multiple debts. Applying for a consolidation loan requires the lender to make an inquiry to your credit report, which creates a negative effect on your score because it means that you are potentially getting more credit. After you've been approved for a consolidation loan, your balances are zeroed out --- this is where people run into trouble. You must be committed to keeping your debts paid off and paying down your loan to be successful with a consolidation loan. If you begin using your newly freed credit, you may spiral further into debt.

Debt Management Plans

The first step to obtaining a debt management plan, or DMP, is to meet with a credit counselor. Only a credit counselor has the power to decide whether or not you should be on a DMP. You must have already defaulted on your payments and/or be having difficulty making payments to qualify for a DMP, which is seen as a last resort before bankruptcy. After you've been approved, your credit counselor consults with your creditors to attempt to negotiate lower interest rates and/or balances. Then the counselor prepares a time frame over which you pay off your debt. Each month you make payments to the credit counseling company, which then pays your creditors. If the counseling company is late on payments to your creditors, your credit score could be severely damaged, so it's important to check with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation of Credit Counseling to make sure your counseling company is legitimate.

Considerations

Prior to applying for a consolidation loan or a debt management plan, it's a good idea to see if you can work out your debt on your own. Both consolidation types are seen as dark marks on your credit report. With a consolidation loan, you may have difficulty obtaining new credit over the life of the loan, as it demonstrates to lenders that you've had trouble with your finances in the past. On a DMP, you may be prohibited from obtaining new credit while on the plan; afterward, you may continue to have difficulty getting lenders to have faith in your ability to pay your debts. By asking for lower interest rates on your credit cards, you may find that you have the ability to pay off your debts independently.

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What Is the 28/36 Rule of Debt Ratio?

The 28/36 rule of debt ratio is a simple measure that relates your monthly housing expenses and your monthly debt payments to your income. It is one of the factors lenders use to determine your eligibility for loans. Each number represents the maximum percentage of your monthly income that should be allocated to that expense category.

28: The Front-End Ratio

The number "28" in this ratio is also called the front-end ratio. This amount is calculated by multiplying your monthly gross income by 0.28. According to Bankrate, this figure is then compared to either your monthly rent or mortgage payment. Lenders generally want to see your housing expenses below 28% of your gross monthly income. So if your gross monthly income is $3,500, your house payment or rent should be less than $980.

36: The Back-End Ratio

The second number, 36, is also called the back-end ratio. It refers to the percentage of your monthly gross income that should be allocated to all debt, including your mortgage. If your gross income is $3,500, multiply that by 0.36. The result is $1,260. If your mortgage payment is $700, that leaves $560 for all other debt payments, including credit cards and vehicle loans.

If Your Debt Exceeds the 28/36 Ratio

Not all lenders will refuse to grant you a loan if your income exceeds the 28/36 ratio. Bankrate notes that some home loan programs will allow as much as 41% of your income to go to your total debt. Credit unions sometimes offer more favorable underwriting than conventional banks. However, the higher your debt-to-income ratio, the lower your credit score. This means that no matter what lender you apply with, your interest rate on a loan or credit card is likely to be higher.

How to Improve a Poor Debt-To-Income Ratio

Sonya Stinson of Bankrate recommends that you begin by cutting expenses, starting with your nondebt living and discretionary expenditures, and applying the extra money to paying down debt. If that does not create enough cushion in your budget, you may need to find a way to increase your income. Financial expert Dave Ramsey recommends paying off your bills one at a time, starting with the bill that has the smallest balance. This helps you to gain momentum as you apply the extra money created by paying off each bill to the balance owed on the next one.

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Salary Garnishments in Ohio

An employee's salary is the amount her employer agreed to pay her each payday. Though salary is usually a fixed amount of pay that the employee can count on, it is not exempt from a wage garnishment. Many states allow creditors and debt collectors to garnish salaries and wages; Ohio is one of those states.

Procedure

To garnish salary in Ohio, a creditor must first file a lawsuit against the debtor. If the judge decides the debtor owes the money, the creditor can ask the judge to deduct the payments from the debtor's paychecks; this process is known as a wage garnishment. Once the judge grants the creditor a judgment declaring that the debtor owes the money, the creditor has 15 to 45 days in which to send the debtor a letter demanding payment. If he fails to pay, or at least respond to, the judgment, the debtor's employer will him give a copy of the garnishment notice it received from the court, which lets the debtor know that the salary deduction will take place. The debtor must request a hearing within five days of receiving the garnishment notice if he does not agree with the deduction amount.

Withholding Calculations

Ohio follows federal garnishment withholding laws, which require an employer to deduct no more than 25 percent of the debtor's weekly disposable income for an ordinary wage garnishment. Disposable income is the employee's salary after tax deductions. Federal law also applies to child support withholding, which requires no more than 50 to 60 percent of disposable income and an extra 5 percent for support payments over 12 weeks late.

Exemptions

Certain cash payments cannot be garnished in Ohio, such as disability assistance, worker's compensation, veterans' benefits, unemployment compensation, Ohio Works First cash assistance payments, and alimony and child support payments.

Avoiding Garnishment

The debtor can avoid a salary garnishment by contacting the agency that she owes and negotiating a payment plan if she cannot pay the amount due in full. If the creditor files a lawsuit, the debtor should respond to the notification and try to pay off the amount due before the court proceeding. Instead of being subject to an actual wage garnishment, the debtor can apply for the appointment of a trustee from his local courthouse. The trustee collects the amount that would be garnished from the debtor's salary and distributes it among the creditors she owes until she satisfies the full balance. Another option is for the debtor to partake in a debt counseling program, which enables her to adjust her debts and make installment payments to the counseling service.

Considerations

If a creditor obtains a wage garnishment against a debtor in Ohio, another creditor has to wait until 30 days thereafter before it can request to garnish more of the debtor's salary. An employer cannot discharge an employee in Ohio because he received one wage garnishment against her. However, the employee is not safe from termination if the employer receives multiple garnishments against her in a 12-month period.

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Can I Be Sued for My Husband's Medical Bills?

Medical bills can push a family into bankruptcy. According to a study cited by the Associated Press, about half of personal bankruptcy filers cited high medical expenses as the debt that forced them to file. When your husband needs medical care, you typically get the care for him and worry about paying for it later. It can be an unpleasant surprise when a medical creditor sues you for your husband's medical bills under a legal theory known as the "doctrine of necessaries."

Traditional Doctrine of Necessaries

The traditional doctrine of necessaries required a husband to provide for his wife's support in exchange for her domestic services. For example, if a wife charged food and household goods with the village grocer, the grocer could require the husband to pay the wife's debt because the goods were "necessary for the household. Creditors used the doctrine of necessaries to enforce the debt of one spouse, usually a wife, against the other spouse, usually the husband.

Modern Doctrine of Necessaries

The U.S. Supreme Court held that the common law doctrine of necessaries violated the Equal Protection Clause of the Constitution because it was based on gender. State legislatures responded to the Supreme Court's decision by enacting legislation to cover household debts incurred by one spouse. Legislation has resulted in three different positions: the doctrine is abolished altogether; the spouse who incurs the debt is primarily liable for repayment and the other spouse is only secondarily liable or both spouses are equally liable.

Medical Bills

Medical bills are considered a necessary expense, so whether you can be sued for your husband's medical bills depends on how your state treats the doctrine of necessaries. If your state abolished the doctrine, your husband's medical creditors cannot sue you. If your state's law holds the spouse who incurred the debt primarily liable for repayment, your husband's medical creditors may be able to sue you only after they exhaust their remedies against your husband. If your state's law holds both spouses equally liable for necessary expenses, your husband's medical creditors can sue either of you.

Legal Advice

If your husband has medical bills that he can't pay, consult a lawyer in your state as soon as possible to find out how your state treats marital debt under the doctrine of necessaries. You may be able to take action to protect your assets from your husband's creditors if you get legal advice before the creditors begin serious collection efforts against you.

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