We all know that using White Out on your credit report won't really fix anything.

Here are a few tips on how to dispute errors on your credit report.

The Fair Credit Reporting Act (FCRA) is a federal agency that promotes the accuracy and privacy of information on consumer's information on the nation's credit reporting agencies.

We are entitled to a FREE CREDIT REPORT once every 12 months (or if you are rejected credit).

You can also call 1-877-322-8228 to order a Free Report or request it by mail:

Annual Credit Report Request Service

PO Box 105281

Atlanta, GA 30348-5281

If you find errors or want to dispute items, you must write or go on line to each credit reporting agency.  Going on line is the easiest and quickest method. Here are links to each of the major reporting agencies:

• Experian
• Equifax
• TransUnion

Basically, you must be able to prove that the information is inaccurate. For example, let's say that you had an old credit card account that was charged off and then wound up with a collection agency.

After being contacted by the collection agency, you were able to negotiate a settlement of the account. Even though you have settled the account, it is still showing a balance.

How do you dispute the error on your credit report?

You will need to provide a copy of the SETTLEMENT AGREEMENT.  Please don't tell me you didn't get the agreement in writing! 

Many consumers will agree to a settlement or repayment plan over the phone, authorize check-by-phone or other form of payment without a written agreement! If this is the case for you, all is not hopeless.  You should be able to find proof of payment from your bank.  So, you will need the SETTLEMENT AGREEMENT and PROOF OF PAYMENT.

The Credit Reporting Agency must contact the creditor or collection agency with the dispute, and you should be able to go online and check up on the progress.  This process will take 30 days or more, so you will need a little patience!

WHAT ABOUT OLD ITIEMS!

Even if you have legitimate, negative items on your report, those items can and should be removed after seven years (or shorter if the statue of limitations in your state is shorter). The same is true for judgments, however, a bankruptcy can stay on a report for up to 10 years.

If you have old, legitimate negative information that older than the statute of limitations in your state, you should dispute it and have it removed!

If all of this sounds like a "little to much" for you to handle, we can help!

Negotiating older, delinquent debts can save you THOUSANDS OF DOLLARS and improve your credit report and score.  Find out how by clicking the link below!

Finding out your identity has been stolen is tough. You’ll be angry and frustrated that this has happened to you. But worse than that will be the frustrations you encounter as you’re trying to clean up the mess.

Since identity theft tends to start as a financial crime in most cases, the most important part of clearing up the damage is fixing credit report errors or unauthorized charges and accounts opened in your name. The key to cleaning up your credit report is to move quickly and be patient.

The faster you catch and dispute errors, the easier it will be to clean them up. Just understand that even when errors are caught early, disputing a credit report entry will take time.

What are your rights when dealing with identity theft?

The Fair Credit Reporting Act (FCRA) of 1970 made it a law for credit reporting agencies such as TransUnion, Experian, and Equifax  to investigate disputes about the information contained on your credit report. Even so, they aren’t required to handle the disputes with a good attitude and a smile on their face. In fact, it’s not uncommon for the credit reporting agencies to claim that disputes are frivolous or even for them to claim that your request for dispute is illegal. That’s not true, which is why you need to understand your rights as a consumer.

You have the right to dispute inaccurate and unauthorized entries on your credit report. According to the FCRA, you’re also entitled to:

• A written explanation of the results of any investigation resulting from such a dispute
• A free copy of your credit report once any corrections have been made.

Once an investigation is complete and your credit report has been corrected, you also have the right to request that a copy of the updated report be delivered to every creditor that has pulled your credit in the last six month and every employer that has requested in the last two years. The catch is, you must request this services and must be done in writing.

What happens if the investigation finds you to still be liable for the debt?  

Sometimes an investigation doesn’t lead to an answer that’s in your favor. If an investigation finds that you’re still liable for an entry on your credit report, then you can request, in writing, that the dispute be noted on your credit report and that your dispute letter be included each time your full credit report is requested.

How long does the investigation process take?

You have the right to a reasonably speedy investigation of any dispute that you make. By law, that investigation should be complete within 20 business days of the date that the credit reporting agency receives your dispute letter. That usually means you can expect to see the results of their investigation within 30-45 days after submitting the dispute. If you don’t have results within that time frame, you can follow-up on your dispute and you may have the right to have the disputed entry removed from your credit report, regardless of the results of the investigation. Please note, however, this is an activity that needs to be handled by appropriately qualified legal counsel.

Don’t be a victim; know your rights, and stand up for yourself.

If you've been a victim of identity theft, you know how much work it can take to clear your name. In theory, identity theft should not have an ongoing impact on your credit reports or scores. But the reality can be much different.

Here are the top 3 ways identity theft immediately impacts your credit

#1 Higher balances on existing accounts

The fastest growing type of identity theft reported involves the use or misuse of an existing credit account, according to a report by the Department of Justice. If you aren't monitoring your accounts closely, you may not catch a sudden increase in the balance on your credit cards. Unfortunately, balances that are close to their credit limits can have a significant impact on your scores.

High credit utilization (balance/credit limit) can drop a high FICO score of 780+ by as much as 45 points! YIKES!

The good news here is that once those new charges are successfully disputed, your credit scores should no longer be impacted by those fraudulent charges.

#2 New accounts and late or missed payments

When a crook uses your personal information to open a new account, that account will typically appear on your credit report. New accounts added to your credit report will cause a slight drop in your score. The identity thief will often destroy the consumer's credit score by not making payments on the fraudulent accounts.

Most consumers don't learn that their information has been compromised until after the damage has been done. In this scenario, the thief opens new accounts, makes purchases, and pays the bills for a little while, and then they disappear. The damage can be severe. In fact, even a minor delinquency, such as a 30-day late, can cause a high FICO score of 780+ to lose as much as 100 points! Imagine how much your score would drop if you did not notice this for several months.

#3 Credit inquiries

Every time a scammer applies for credit using your personal information, that inquiry is recorded on your credit report as a hard inquiry or hard pull. While multiple inquiries don't typically have a significant impact on one's credit scores, they will start to add up.  This can be a hard thing to clean up.

When you start working to clean up the mess, not only will you have to clean up the fraudulent trade lines, you will also need to work to clean up the hard inquiries to make sure that any that have been made by the identity thieves are removed.

The Moral of the Story:

Now that I’ve scared you with all the things that can happen when you become a victim of identity theft, it’s important that start monitoring your credit report on a regular schedule.  You can get an absolutely free copy of each of your credit reports from TransUnion, Experian, and Equifax once per year by going to www.annualcreditreport.com 

Don’t wait, go ahead and take a look today.  If you find trade lines or balances that you believe to be fraudulent, there are steps you can take to clean up the mess and report the crime. 

Come back tomorrow to learn about your rights and how to recover after becoming a victim of identity theft.

If you have settled a debt or had a debt, you may receive an IRS Form 1099-C.  This doesn't necessarily mean that you will have to pay additional tax on the amount "forgiven".  Here's what you need to do:

You received this form because a Federal Government agency or an applicable financial entity (a lender) has discharged (canceled or forgiven) a debt you owed, or because an identifiable event has occurred that either is or is deemed to be a discharge of a debt of $600 or more.  If a creditor has discharged a debt you owed, you are required to include the discharged amount in your income, even if it is less that $600, on the "Other income" line on your Form 1040.

However, YOU MAY NOT HAVE TO INCLUDE ALL OF THE CANCELED DEBT IN YOUR INCOME (capitalization mine!).  There are EXCEPTIONS AND EXCLUSIONS, such as BANKRUPTCY or INSOLVENCY see Pub. 4681...for more details.

Most people who have had debts settled (forgiven) have gone through a very hard time, financially. And, most people who have had debts settled would fall into the catagory of INSOLVENCY, according to the IRS and several publications.

The bottom line is, if AT THE TIME OF SETTLEMENT your liabilites were greater than your assets, you were insolvent and therefore the amount of debt forgiven would be excluded.

We have helped hunderds of our clients to become DEBT FREE through DEBT SETTLEMENT, but we also have assisted them in AVOIDING (or paying very little) ADDITIONAL TAX after receiving a 1099-C.

We have put together a complete 1099-C Kit that will show you (and/or your tax preparer) how to fill out and file the proper forms.

CLICK HERE to get you FREE 1099-C KIT

Just the word BANKRUPTCY sounds terrible! Before you decide if bankruptcy is best for you, here are 3 ways to avoid bankruptcy:

One of the most popular financial-advice gurus today is Dave Ramsey.  He has stated that BANKRUPTCY is one of the top five life-altering negative events a person can experience:

• Divorce
• Severe illness
• Disability
• Death of a loved one
• Bankruptcy

I'm not sure I totally agree, but most people will do whatever it takes to avoid bankruptcy. Bankruptcy basically means that you have taken on too much debt and cannot repay.

I have counseled hundreds of people in financial trouble for many years and it has been my experience that most people who are in serious financial debt got that way from circumstances beyond their control, such as:

• Loss of employment
• Illness or disability
• Death of a spouse or life partner
• Too little income after retirement

Here are 3 Ways To Avoid Bankruptcy

#1 Figure out where your money is going

The first thing you should do to avoid bankruptcy is to take time to complete a Budget or Financial Worksheet.  It sounds so simple, but most people I counsel have no idea what they are spending each month. All they know, is there is not enough money to pay for everything.

You have to know exactly where you stand, financially.  How much money is coming in and how much is going out each month.

I know it's very, very tight, but ask yourself if there are areas of your life or expenses that you could reduce or eliminate, such as:

• Do you have a large car payment? Maybe you could downsize or refinance to reduce your monthly payment.
• How about all those lunches, coffee, lattes?  Can you cut down to a couple times a week instead of every day?  Think of it as a special treat, not a necessity.
• Maybe now is a good time to quit smoking!  I know it's easier said than done, but at well over $100-$150 month it would be good for your budget and your health.
• Do you have to have that health club membership?  Could you work out at home instead to save $35-40$?

Have I made my point? You may be able to find a few hundred dollars each month that could possibly save you from bankruptcy!

#2 Consider enrolling in a Debt Management Program

If cutting your budget won't work, or you have already cut it as far as you can, then perhaps DEBT MANAGMENT (formerly called Credit Counseling or Debt Consolidation) may help.  Debt Management is a program whereby you can arrange repayment of your unsecured debts like:

• Credit Cards
• Store Cards
• Personal Loans
• Private Student Loans
• Medical Bills

You will have ONE MONTHLY PAYMENT which is divided and sent to each of your creditors per the agreement arranged with them by a DEBT MANAGEMENT COMPANY. The program is usually designed to repay 100% of your debt over 3-5 years.

The problem is that you may not be able to afford the monthly payment which is usually about 2.5%-2.7% of your total unsecured debt. Do a quick calculation to see if that fits into the budget you created in step 1.

Sometimes, the debt management payment may be higher that the very low (almost impossible ever to repay in your lifetime) minimum monthly payments that credit cards require! If you cannot qualify for Debt Management, then your next option is:

#3 Settle Your Debts for Less with a Debt Settlement Program

In a DEBT SETTLEMENT PROGRAM, negotiations are made with each of your creditors to accept much less (often 50% or less) of the balance.  You will be making a monthly contribution to a FDIC Reserve Bank Account where your funds accumulate for settlement offers.

Depending on several factors, you may able to not only GET OUT OF DEBT in 24-48 months or less, and you will avoid BANKRUPTCY.

Although you can negotiate with creditors on your own, it is not easy! We have been helping clients negotiate and settle debts for over 10 years.  Is DEBT SETTLEMENT FOR YOU? Find out today!

If cutting expenses, debt management or debt settlement will not help, then you should consult a qualified bankruptcy attorney. Bankruptcy is a way for you to get a fresh start and is not nearly as tramatic as you may think!

If you have received a 1099-C, DON'T PAY THE ADDITIONAL TAX until you know your rights!

If you or a debt settlement company negotiated a debt for less than the balance due and if that amount was more than $600, you most likely will receive a 1099-C.

NOW WHAT?

The 1099-C looks like you will have to pay 100% of the settled or forgiven amount, but this is simply NOT TRUE!

However, a lot of tax preparers and even CPA's don't understand this law and how exemptions are calculated.

According to IRS Form 4681, there are several exemptions to including forgiven amounts back into taxable income. On page 4 of IRS Form 4681, there is an explanation of "INSOLVENCY". 

Basically the rule states:

If at the time of the settlement or forgiveness you were INSOLVENT, then the amount of the forgiveness IS NOT INCLUDED as additional taxable income.

How do you determine if you were insolvent?

At the time of the settlement, you need to show that your liabilities were only equal to or greater than your assets.

You need to complete a basic budget showing all of your income, outgo, and assets:

• Equity in your home
• Net value of your automobile(s), boat, etc.
• Net value of jewelery, stocks, bonds, etc.
• Savings or investment accounts
• Net furniture value, coin collections, etc.

For most people who have negotiated a settlement of their credit card or cards, they usually do not have any real assets and therefore the amount forgiven is not included as additional taxable income.

You will need to complete IRS Form 982. You will check a couple of boxes and sign, and along with the Budget Worksheet, turn in with the 1099-C and your normal tax return.

Once again, don't be surprised if your tax preparer or accountant is not really up on this procedure! You might want to download IRS 4681 for them to review.

If you have already filed your taxes for the last two years and if you paid additional tax on the additional income added back into your adjusted gross income, you should file an AMENDED RETURN.

If you are still unsure of what or how to deal with a 1099-C, please let us help.

We have helped dozens of tax preparers and accountants deal with the 1099-C issue and would be glad to assist.

Got Questions? We've got ANSWERS!

877-492-4109

Your getting calls from a debt collector, but you do not believe you owe the debt. 

Learn how to stop debt collectors with debt validation.

First, you need to understand a little about debt collection and the process a creditor may use (and many time abuses) to collect that debt.

You have a credit card with a balance of $5000, but you have been unable to pay the minimum payments because you lost your job or have some other financial hardship.

• The creditor  sends your account to their internal collections or recovery department.
• You start getting calls and letters trying to get you to pay up!
• If they are unsuccessful, they will most likely “assign” or “sell” the debt to a collection agency.
• Now the collection agency starts to call and call and call (HOW TO STOP COLLECTION CALLS) and send letters demanding immediate payment.

Since you know that you owe the debt, this is not the time to use DEBT VALIDATION in order to stop the collection efforts.

You only have a few options at this point:

• Agree to a repayment program (HARDSHIP PLAN)
• Enroll in a Debt Management Program (used to be referred to as Credit Counseling)
• Enroll in a Debt Settlement Program
• Seek Bankruptcy Protection

But, for the purpose of this article, let’s say that you believe one or more of the following:

• Do not believe that you owe the debt the debt collector claims.
• Believe the statue of limitations has run out on this debt
• Not sure if you owe the debt and want to make sure it is valid
• Think you paid this debt off a long time ago and don’t owe anything now
• Ran a credit report and saw this debt listed and you think it should not be as you paid it in a settlement.

Here’s what you can do to Validate your Debt:

The Fair Debt Collection Practices Act (FDCPA) gives us the legal authority to request a validation of a debt claimed by a collection agency.

Send a certified letter (so you have proof of receipt) demanding validation of the debt to the collection agency within in 30 days of receiving the letter from the collector.

Sample Letter:

Reference your name, address, etc. and the name of the collection agency, address, etc. at the top.

Reference your account and account number.  If the collection agency has assigned as special account number, reference that as well.

To whom it may concern:

I received a letter dated (date on the letter) from you demanding payment of the above debt.

I do not believe I owe this debt and pursuant to the Fair Debt Collection Practice Act, 15 USC 169g Sec. 809 (b), I am requesting a validation of this debt.

Please provide the following:

• Produce copies of any papers that show that I agreed to pay what you say I owe as well as a copy of my signature and date on those documents.

•  Provide a verification or copy of any judgment if this applies to this alleged debt.

•  Provide proof that your agency is registered in my state.

If you can provide the above documentation, I will need at least 30 days to determine if this information is correct and again, according to the FDCPA, all collection activity must cease.

Looking forward to clearing this matter,

Your signature

Print your name

Date

There are several other demands that can be made, but at this time, your goal is to verify the debt.  If you do not get a receipt of delivery of your registered letter, call the collection agency to verify the address and send again.

• It will most likely take the collection agency 30 days or so to get back to you.

• If they do not get back to you, then this most likely will be the end of it.

• You should wait a couple of months and then check your credit report to see if this debt is listed (or still listed).

If the calls and letters have stopped and it is still listed, you can request the credit bureaus to remove the listing by providing copies of your letters, no response, etc.

I’ll write more about the debt validation process and more options in later blogs, but in the meantime, if you need help, let us know.  (1-877-492-4109)

Getting several calls from harassing debt collectors?

Here are a few tips on how to stop illegal debt collection practices:

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using illegal, abusive or deceptive practices to collect money!

You need to know your rights and what to do if you think they have been violated.

The FDCPA is enforced by the Federal Trade Commission (FTC) or the Federal Bureau of Consumer Protection.  They have a very helpful website that would be worth your time to visit.

The FDCPA covers all personal or family debts including:

• Credit Cards
• Auto loans
• Medical Bills
• Mortgages
• Personal Bank Loans
• Store Cards
• Pay Day Loans
• Private Student Loans

A debt collector CANNOT CALL YOU AT ANY TIME OR PLACE! They can only call between 8am (your time) and 9pm (your time).

Collectors may not contact you at work after they are told (by phone or in writing) that you are not allowed to receive calls at work!

A debt collector cannot “harass” you.  Now, harassment can take many forms, but specifically, a debt collector is prohibited from:

• Using threats of violence or harm
• Using obscene or profane language
• Making many, many calls per day (if you are getting several calls, keep a log for future reference)
• Making false statements:
  • Claiming to be attorneys if they are not
  • Claiming to be a government representative
  • Claim that you will go to jail
  • Claim that they are going to pursue legal action (if in fact they do not)
  • Make false claims of the amount you owe
  • Threaten to garnish your wages or sell property to pay your debt

The first time a collector or creditor calls, talk with them.  Don't get angry or yell at them, but be strong and don't act weak.  Simply explain your situation and ask them to give you some time.  

To stop future calls, send a letter that states that you intend to repay the debt, but cannot at this time due to (reason for hardship).  Request that they stop calling you immediately or that you will file a complaint with your state’s attorney general’s office and the Federal Trade Commission.

Send the letter by registered mail and keep the receipt that they received it.

The calls should stop, and if they don’t, follow through with your report of collection abuse! The worst thing you can do when you are behind on your payments is to ignore them.

You may be able to Settle Your Debts

If your debts are behind 3,4 or 5 months or more, you may be able to negotiate a settlement for less than you owe!

For example let's say that you have a delinquent credit card with a balance of $5,000.  Unfortunately, you are unemployed or have some other financial hardship, so you just can't keep up with the minimum payments.

• It may be possible to negotiate a one-time settlement of 50% or less of what you owe.

• If the collector or creditor agrees, GET THE AGREEMENT IN WRITING before making a payment!

• If you do not have a lump sum (most people don’t), you may be able to negotiate a settlement paid over several months.

We arranged term payment settlements all the time, some as long as 24 months!

If all of this just sounds like too much for you to handle, let us help.

If you have received wage garnishment due to a judgment issued on your unpaid credit cards or other personal loans, it may be possible to stop it.

But, you need to know your rights.

Certain types of income are exempt from wage garnishment:

• Social Securtiy
• SSS or Supplemental Security Income
• Veteran's benefits
• Civil Service and Federal Retirment and Disability Benefits
• Military Annuities and Survivor's benefits
• Merchant Seamen Wages
• Longshoremen's and Harbor Worker's Death and Disablity benefits
• Compensation for Injury, Death, or Detention of Employees of U.S. Contactors outside the U.S.
• FEMA (Federal Emergency Management Agency) benefits

Also exempt from wage garnishment:

• Retirement income (pension and personal retirement plans)
• Public Employee Retirement System (PERS) benefits
• Income you may be receiving from a Reverse Mortgage
• W-2 Income that is less than $936 net after tax per month( your state's exempt amount )

But, you also need to be aware that these incomes MAY NOT BE PROTECTED from:

• Delinquent Federal and/or State taxes
• Federal Student Loans
• Child Support
• Alimony

If you receive a notice of garnishment, you should immediately contact the attorney representing the plantiff (creditor).

Your employer cannot do anything for you.  In fact, your employer must fulfill the writ of garnishment or could be subject to a hefty fine!

In most cases, the attorney for the plaintiff will agree to a reasonable repayment plan instead of enforcing the garnishment.

But I said REASONABLE!

If the garnisment is going to be 25% of your net income (most states), and that comes to $500 per month, they are not going to agree to a $100 a month!

But, they may be open to say, $250-$350 for a STIPULATED AGREEMENT (SA).

You may also be able to settle the amount you owe for less than the full balance.  If you have any funds available, make an offer of approximately 50% fo the balance.

Since the judgment has been entered, and the writ of garnishment has been presented to your employer, the creditor will not be as willing to discount the balance as in a normal DEBT SETTLEMENT AGREEMENT.

If this sounds like too much for you to deal with us, please contact us.

There are many false assumptions when it comes to credit scores. Here are five credit score myths that you should understand:

Myth #1: A low credit score means I will not get credit.

This is not true in all situations.  Whether or not a lender will extend credit to you depends on a number of factors:

Your score is important, but they also look at:

• Income
• Total Amount of Debt
• Type of Debts
• Payment history

Based on the lenders underwriting policy, they may or may not extend credit or they may offer you credit at an extremely high interest rate (Pay Day Loans, Finance Companies, etc.)

Many times, a person has a reasonably high credit score, but may not be extended credit because of the factors above.

Myth #2: A poor score will stay with me for a long time.

Not if your take the proper steps to improve your credit score.

A credit score is really just a picture of your risk at a point in time.  If you have had a financial problem in the past, had late or missed payments, then you score will have declined.

However, as you "get back on track" and or pay off or settle debt, your credit score will improve.

Myth #3: Credit Bureaus are unfair to minorities.

This myth is not true at all! Your race, religion, sex and many other things are not part of the credit score process.

Myth #4: My credit score will go down if I apply for new credit.

This has always been a myth about credit scores to most people.

Don't apply for several credit cards in a short time frame.  Making many requests for new credit will show as "inquiries" on your report.

So the next time your checking out and the clerk asks if you'd like to save an extra 15% today by applying for their store card...think again.

However, if you are shopping for a new car and visit several dealerships, they each may request a credit report on you but this is interpreted by the bureaus as basically a single inquiry and will not hurt your score.

Myth #5: Closing or canceling a credit card or account will improve your credit score.

Although not having access to "easy credit" may help you not abuse your available credit, as far as the credit reporting agencies are concerned, you may hurt your credit score by closing accounts.

Why? 

The credit bureau has a term called "credit utilization ratio".  Basically, this is the amount of debt you have in relation to the amount of credit you could have.

For Example:

Let's say you have 5 credit cards.

• One has a balance of $1,000 on a $2,500 limit.

• The second has a balance of $1,500 with a limit of $1,500 (maxed out).

• You have $0 balances on cards 3,4 and 5, but the total available credit limit on those is $7,500 ($2,500 each).

To the credit bureaus, you have:

• Total outstanding balances = $2,500

• Total available credit limit   = $11,500

• Your credit utilization ratio is $2,500/$11,500 or 22% (not bad!)

If you decide to cancel the 3 cards that have $0 balances, your credit utilization ratio will look like this:

• Total outstanding balances   = $2,500

• Total available credit limit     = $4,000

• Your credit utilization ratio is not $2,500/$4,000 or 62.5%

Your credit utilization ration went from 22% to 62.5% and this will probably lower your credit score!

As you can see, there are a lot of things that are used to determine your credit score.  Some thing you have control over and some you will have to work on over time.  If you would like to know how you can elimnated your debt for abut HALF of what you owe with reduced monthly payments, click on the link below or give us a call at 1-877-492-4109.

photo by: rosmary