Debt Solutions Grants

Each year, millions of dollars are donated by the highest monetary class of people to foundations that offer federal grants. While many Americans are searching high and low for an answer to their debt relief and spending hundreds of dollars by hiring debt management companies or filing for bankruptcy, the solution actually lies within the government. It is a solution that is overlooked by most though, simply because they do not know it exists.

Significance

The government sets aside millions of dollars each year specifically for the purpose of providing debt relief to its citizens. It is not an advertised alternative, however, because if the money is not used, the government can utilize it for other purposes.

Purpose

The government offers these debt solution grants for one reason: to boost the economy by helping those who are at a financial disadvantage.

Applying

Applying can be done either online or through the mail. The first step in the process is to write a grant proposal that states how much money you need and what you need the money for.

Eligibility

You must prove that you are unable to repay your debts. The donor reviewing your application will decide this by looking at your monthly expenses and income versus the amount of debts you have; they will then determine if you can maintain your current bills while repaying the debts you owe.

Benefits

Government grants help you become debt free immediately versus waiting months or years with a bankruptcy or debt consolidation. In addition, you will not have anything to repay, nor will you have any up-front fees to contend with.

Considerations

If you have recently been approved for a government grant for any other reason, this may affect your eligibility for a debt solution grant.

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Top 10 Debt Relief Companies

If you're struggling with consumer debt, you may be considering using a debt relief company to help you regain control of your finances. These companies provide a wide range of services, including debt consolidation, debt management, debt settlement and credit counseling.

CareOne Debt Relief

CareOne provides individualized counseling for clients with unsecured debts of less than $10,000. The company's services include credit counseling, debt management, debt settlement and bankruptcy counseling. Its website also features a number of credit and debt resources such as calculators and budgeting tools.

CuraDebt

CuraDebt specializes in negotiating debt settlements for clients with $10,000 or more of unsecured debt. The company also offer debt management, debt consolidation and credit counseling services. CuraDebt's professional staff includes attorneys, credit counselors, credit arbitrators and financial advisors. The company offers one-on-one counseling for potential clients.

Credit Solutions

Credit Solutions offers help with debt settlement and management, debt consolidation and bankruptcy counseling. The company works with consumers to help resolve all debts within 12 to 36 months and also provides help in dealing with creditors.

Debt Consolidation Connection

Debt Consolidation Connection aids consumers in consolidating multiple debts into a single monthly payment as well as providing debt settlement services and bankruptcy counseling. The company also provides credit counseling and assistance with home equity loans.

Debt Options

Debt Options specializes in debt consolidation and debt settlement. It helps consumers reduce monthly payments and in some cases, the total amount owed.

Delray Credit Counseling

Delray Credit Counseling is a non-profit agency that specializes in debt consolidation, debt management and credit counseling. The agency offers a number of resources to consumers, including home buying advice, money management tips, budgeting advice, credit reports and educational financial information.

DebtConsolidation.com

DebtConsolidation.com's professional team of legal experts aids consumers in negotiating debt settlements. The company also offers financial counseling, budgeting resources and bankruptcy advice.

Debt Settlement USA

Debt Settlement USA aids consumers who owe $12,000 or more of unsecured debt to negotiate settlements for their outstanding balances. The company works with consumers to simplify monthly payments and guarantee resolution of debts within 36 months.

FH Financial Services

FH Financial Services helps consumers reduce their debts and/or consolidate monthly payments through debt management, debt consolidation and debt settlement services. It guarantees consumers can reduce debt by 40 to 60 percent and be debt free in 36 months.

Consolidated Credit Counseling Services

Consolidated Credit Counseling Services is a non-profit organization that offers credit counseling and debt management services. The company helps consumers combine unsecured debts into a single monthly payment and distributes payments on the client's behalf.

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Can Not Paying Off a Debt Be a Criminal Summons?

Not paying off a debt often creates serious problems, but usually does not lead to a criminal summons---unless the debt is the result of criminal fraud. Virtually all disputes about debt are treated as civil matters, with credit card companies and other creditors filing lawsuits in small claims court.

Summons and Complaint

Lawsuits for debt become official with the serving of a paper document called a summons and complaint. A summons is a notification of a lawsuit and the complaint is the actual lawsuit. Usually a sheriff's deputy or private courier delivers them in person. They deliver the documents to people at their homes, places of employment and other public locations. In some states, delivery is by certified mail or left at the last known address. The summons provides instructions responding to the lawsuit, such as appearing for a court hearing or filing a written response.

Differences

The process for serving lawsuits shows the differences in civil summons and criminal summons. A criminal summons often leads to an arrest, with the person taken to jail at least temporarily. That simply does not happen in lawsuits about debts such as credit cards. The credit card company or debt collector resorts to a lawsuit only as a last resort to collect the full balance on the account and isn't alleging criminal activity.

Default Judgments

Some people ignore lawsuits---with disastrous results. Failing to appear for a court hearing or respond in writing gives the debt collector an easy victory. The judge will automatically grant a default judgment to the debt collector, and that creates big problems. The judgment requires the person sued to pay a specific amount of money for the full balance of the debt plus court costs and attorney's fees. Some debt collectors regularly file lawsuits against hundreds of people, knowing a certain percentage won't show up in court to defend themselves, resulting in easy judgments.

Garnishment

A judgment allows debt collectors to move on to bank or wage garnishment. Bank garnishment gives the debt collector full access to a person's checking account. The debt collector can freely withdraw money from the account as many times as necessary to pay the judgment. Wage garnishment forces employers to make payroll deductions each pay period to send to the debt collector.

Legal Advice

Representation from a good attorney is important even though there is no risk of jail with a debt lawsuit. A reputable consumer affairs attorney can offer advice on avoiding judgments and settling debts out of court. Some debt lawsuits are settled for 20 to 70 percent of the balance, according to SmartMoney.

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When Your House Gets Repossessed, Are You Free & Clear of Your Debt?

If you default on your mortgage payments, your lender can repossess your home via court action. This process is known as foreclosing on the home. Once the lender has foreclosed on your home, it repossesses and resells the home to cover its loss. You no longer owe the debt, but the cost is the loss of your home and a negative credit rating. Thus, it's best to avoid foreclosure by selling the home or voluntarily giving it back to the lender.

Foreclosure Sale

If you default on your mortgage and don't make arrangements with your creditor to pay the arrears, the lender sells your home to recover its loss after the court orders a foreclosure. You no longer have to pay your debt at this point; however, you can no longer live in the home. In addition, if your lender forecloses on your property, it negatively affects your credit for at least seven years, according to Privacy Matters, making it difficult for you to get new credit, including a mortgage on another home.

Abandoning the Home

If you can't afford to pay your mortgage, you can voluntarily give up possession of the home rather than going through the foreclosure process. Contact your lender and inform it that you can't make your mortgage payments any longer and wish to turn the home back over to the lender. If you do this, you no longer owe any debt on the home. Voluntary repossession still appears as a repossession in your credit history; thus, it affects your credit similarly to if the bank repossessed your property, according to Bills.com.

Selling Home

If you can't afford to keep your home, you may be able to avoid foreclosure by selling the home. If you sell the home for more than your balance, you can pay off your lender; you then owe the lender nothing further and can walk away from the debt. If your sale doesn't pay off the loan, you may still owe money to the lender; certain lenders may forgive this amount of debt rather than go through foreclosure, according to MSNBC.

Warning

MSNBC says that it may be difficult to negotiate with your lender once you've gone into default. To avoid foreclosure, you may need to hire an attorney who specializes in real estate issues to negotiate on your behalf. If you can't afford an attorney, your state's legal aid society may be able to help you secure one for a low fee. In addition, the Department of Housing and Urban Development offers housing counseling during all stages of the foreclosure process; a housing counselor may be able to help you work out something with your lender before you lose your home.

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Can Credit Card Companies Garnish Wages in Michigan?

Just because a credit card company's headquarters are located in a different state does not mean they cannot garnish the wages you earn in Michigan. Credit card companies have to complete the proper legal process in Michigan before they can begin garnishing your wages. To begin this process, the credit card company usually hires a lawyer that practices in the state to file the lawsuit paperwork at your local county courthouse.

Lawsuit Objection

Once a credit card company files a lawsuit against you for an unpaid debt, you have the right to object to the suit. In Michigan, you have two weeks to file an objection with your local county courthouse. You should only consider filing an objection if your wages are exempt from garnishment or you currently have a wage garnishment that exceeds 25 percent of your disposable income. Federal law does not allow for the garnishment of specific types of income and 25 percent of your after-tax or disposable income is the maximum garnishment amount allowable by law.

Exempt Income

The specific types of wages exempt from garnishment are regular social security payments, unemployment benefit payments, military retirement pay, worker's compensation payments and retired state and federal employee benefits. If you earn regular wages, the amount that is equal to 30 times the federal minimum wage is also not subject to garnishment. To calculate this amount, you multiply the current federal minimum wage by 30. If you subtract this amount from your disposable income, the remainder of you paycheck is the amount that is subject to garnishment.

Installment Plans

Contacting the creditor listed on the lawsuit and working out a payment arrangement can prevent you from having a wage garnishment. You can also choose to work out a payment arrangement when you go to court. It is important to note however, that there are no laws in Michigan that force a credit card company to work out a payment arrangement with you. If you do not show up in court, the judge will enter a default judgment on behalf of the creditor and garnishments will begin shortly after.

Garnishment Expiration

A Request and Writ for Garnishment expires in 91 days in Michigan. This means the credit card company can garnish your wages for 91 days to attempt to collect the full amount of your outstanding balance. If the credit card company does not collect enough money to pay off your outstanding balance in that time, it has to file a new Request and Writ for Garnishment to continue the wage garnishment.

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How to Acknowledge Debt

Some type of catalyst often triggers the need to acknowledge the degree of debt you have. It might be the loss of a job, a marriage or the birth of a child. Other times, it is debt collectors calling and pressuring you to pay off a debt. Debt can spiral out of control rapidly whether it is caused by medical bills or drug, alcohol or spending addictions. In the vast majority of cases, it just sneaks up on people, one small purchase at a time. Acknowledging you have the debt is the first step in eliminating it.

Instructions

1

Acknowledge your debt by understanding exactly how deep in debt you are. This means an honest assessment of your financial situation. You cannot acknowledge your debt if you are in a state of denial.

2

Gather all your bills together and sit down with a pencil and paper. In one column write down all credit card debts and loans, along with the minimum payment amount.

3

Write down your monthly bills in another column along with the average payment.

4

List your income in a third column.

5

Add together the first two columns and compare them to the third column. This will allow you to determine the degree of your debt.

6

Look at the cold hard facts of what you owe compared to your income. This should force you to acknowledge the your debt.

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Can Requesting a Credit Reduction Affect a Credit Score?

Reducing your available credit usually has a negative rather than positive effect on your credit score, but it can be an effective tool for financial self-discipline. Requesting credit line reductions if you have outstanding debts will increase your debt to credit ratio, which harms your credit score. On the plus side, creditors can sometimes count it against you if you have large amounts of unused credit, as it means you could quickly take on a lot of debt and default on some of your accounts.

When to Request Credit Reduction

Request a credit reduction if you have trouble controlling your spending and fear you will allow your debt to mount to a point at which it will be difficult to service. As long as you maintain good credit, you will be able to request increases in your credit lines should you ever need them. If you have a great deal of available credit and aren't using most of it, closing some of your accounts can save you money on fees and make it easier for you to apply for alternative loans, credit cards, mortgages and other financial products.

Credit Reduction and Credit Score

Your credit-to-debt ratio is an important component of your credit score. The more debt you have relative to your available credit, the lower your score will go and the less willing lenders will be to grant you additional loans. If they are able, they may increase your interest rates, reflecting the added risk that they see in you. Reducing your available credit without commensurately reducing your standing debt will worsen your ratio.

Effects of Closing Credit Account

Closing a credit account makes the good record of that account no longer count for your credit score. In most cases, this will have a damaging effect on your score, as your good credit behavior will no longer be an active component of your credit report.

Involuntary Credit Limit Reduction and Credit Score

When a company reduces your line of credit unilaterally, it usually acts based on its belief that you are more of a credit risk than you appeared when you first were granted the line of credit. Usually, this is done in response to a decrease in your credit score due to late payments, delinquencies or collection notices. This prevents you from getting into even more debt, but reduces your financial flexibility.

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