Improve Your Credit Score

When many people think of credit reports and credit scores, they see them as important if you want to apply for a loan. And of course they are important when you apply for a loan. But your credit report and score are also absolutely critical to getting rid of debt. With a good credit score, you qualify for lower interest rates that can help bring down your total interest charges. With bad credit, you’re stuck paying double digit rates. So let’s look at some tips and tools that can help you:

1. Understand the Importance of Your Credit Score: As noted above, your credit score is an important tool in getting out of debt as quickly as possible. To underscore this, check out these stats from myfico.com for individuals with a FICO score of 660 (fair credit) versus 760 (excellent credit):

   • Mortgage: The average interest on a home loan today is about 4.766% for excellent credit, but 5.379% for fair credit.

   • Car Loan: With a credit score of 760, you can expect a car loan interest rate of about 6.3%. With a score of 660, the rate increases to about 9.8%.

   • Home Equity: Excellent credit can expect a rate of around 8% or lower, while fair credit borrowers will pay as much as 11% or higher.

2. Get your Free Credit Report: The starting point is to get your free credit report and check it for errors.
3. Get your Free Credit Score: Next you should get your free FICO score. You can’t get this from annualcreditreport.com, but there are several sources that offer your real FICO score in exchange for signing up for a free trial of a credit watch program. You can always cancel before the end of the free trial if you don’t want to keep the service.
4. Pay Your Bills on Time: There are a number of factors that go into a credit score, but one of the most important is paying your bills on time. Do whatever is necessary not to forget a payment, and make sure you make the payment far enough in advance of the due date so that there is no chance it will be late.
5. Don’t Close Accounts: As a general rule, don’t close credit card and other revolving accounts. One of the factors in determining credit score is the amount of debt you have in comparison to the amount of available credit. The greater the available credit, the better. You can always cut up some of your cards if you don’t want to risk using them, but don’t cancel them. Here are some other tips to improving your credit score.

phot by: Horia Varlan

I received a summons for a credit card I cannot afford to pay.  Can my Social Security check be garnished?

If you are retired or disabled and your only income is from Social Security, that income cannot be garnished!

Debt collectors prey on elderly or retired people by using scare tactics.  It is not unusual to hear one of our clients report:

I got a call today and the collector told me that if I didn't send them money today they would garnish my monthly check or take all of my money out of my bank account!

According to the Federal Trade Commission and the Fair Debt Collection Practices Act, many federal benefits are EXEMPT from garnishment including:

• SOCIAL SECURITY BENEFITS
• SUPPLEMENTAL SECURITY INCOME (SSI)
• VETERANS BENEFITS
• CIVIL SERVICE and FEDERAL RETIREMENT and DISABLILTY BENEFITS
• MILITARY ANNUITIES and SURVIVOR'S BENEFITS
• RAILROAD RETIREMENT, MERCHANT SEAMAN WAGES
• LONGSHOREMAN'S and HARBOR WORKER'S DEATH and DISABLITLY BENEFITS
• FOREIGN SERVICE RETIREMENT and DISABILITY BENEFITS
• FEDERAL EMERGENCY MANAGEMENT AGENCY FEDERAL DISASTER ASSISTANCE

But, in certain cases, such as delinquent taxes, alimony, child support or student loans, federal benefits may be garnished.

Be very careful about your bank account!

As long as the funds in your checking or savings account only came from retirement accounts (such as above) and ARE NOT CO-MINGLED with income you may earn in addition, then your account cannot be levied.

If you have another job, make sure to either just cash that check or open another bank account, preferably in another bank for those funds.

Since most debt collectors are professionals, trained to say anything in order to get you to send them money, you should consider the services of a DEBT MANAGMENT COMPANY.

They may be able to:

• Limit or stop the harassing calls
• Negotiate a reduced settlement help lower your payments and fees
• Help improve your credit score as debts are paid off
• GIVE YOU PEACE OF MIND!

Did you recieve a Summons?  If so, we can help you.  Request more information or give us a call for a FREE consultation!

1-877-492-4109

 photo by: alfcio

The Fair Debt Collection Practices Act (FDCPA) provides the consumer with specific rights to protect from debt collectors.

If you have an account that has been charged off and sent to a collection agency, you most likely have experienced the efforts of an unscrupulous debt collector!

Basically, a debt collector cannot:

• Threaten or berate you
• Harass or intimidate you
• Call numerous times or during odd hours
• Make false statements or their intentions ("...we will sue you if you don't pay now!")
• contact neighbors, family or friends about the debt.  They can only state that they are trying to locate you.
• Contact your employer about your debt

How to stop the collection calls:

If you receive a letter from a collector, it will have the name of the company and address.

Write a brief letter stating that you demand that the collector stoop calling you at home (and work if employed) or you intend to report them to your state attorney general.

Date and sign the letter.

Mail by registered mail (you need a receipt proving that the collector received the letter).

Start a phone log and keep a clear record of all calls that come after the receipt of the letter. A collector may call one time after receipt to state they have received the letter and will not call you anymore.

Usually, the make one last threatening remark like, "now you have forced us to start legal action against you...".

Take good notes, because if they do not start legal action, you may have grounds to sue them!

Dealing with debt collectors is a very trying experience and you may need help.

We have been helping our customers for 8 years to:

• Stop the collection calls
• Lower the monthly amount they need to pay
• Negotiate the debt for a 50% or more reduction
• Improve their credit rating as debts are settled

If you need help dealing with your creditors, give us a call TODAY!

1-877-492-4109

What is a 1099-C?

If you or a Debt Settlement Company has helped you settle a debt for less than the balance, the difference is reported to the IRS by the original creditor as a loss.

The IRS looks at this settled or "forgiven" amount as if the money was returned to you, even though it wasn't. The IRS is thinking that you will have to include this amount as additional income and therefore pay additional tax on it!

Sadly, most tax preparers and/or accountants are not aware of how to EXCLUDE a settled debt from being included as additional income.

HERE'S WHAT YOU NEE TO DO IF YOU RECEIVE A 1099-C:

According to the IRS, the amount of forgiveness (for the sake of this article, we are talking about unsecured debt) IS EXCLUDED if at the TIME OF FORGIVENESS, you were INSOLVENT.

INSOLVENT means that your liabilities are more than your assets or in other words, you have a negative net worth.

Sounds terrible, but in reality, in this case, it is good for you.

Let's say that when you list all of your assets:

• Home equity
• Net value or current value of your car
• Home items (furniture, tools, stuff)
• Savings accounts (stocks, bonds, yeah...right!)

Now offset that by all of your debt:

• Mortgage
• Car payment
• Student Loan(s)
• Medical Bills
• Credit Cards
• Personal Loans
• Equity Line of Credit

Most likely, your net worth (Assets - liabilities) will be negative.

Using IRS Form 982, you will check the box in Part 1, on line 1-b that states Discharge of indebtedness to the extent of insolvency.

It is also helpful to write a brief (I said brief...don't say too much) explaining why you were insolvent.

Attach this with the Asset-liabilities Worksheet together with the Form 982 and send in with your tax return.

That should do it!  If you would like a more complete explanation of how the IRS treats forgiven debt and insolvency, click here.

Do you still have debts that need to be settled? We can help! Click the link -->> FREE DEBT ELIMINATION SUMMARY or give us a call!

1-877-492-4109

photo by: alancleaver_2000

Some great New Credit Card Rules were passed last year. Here's what you need to know:

In the old days (prior to 2-22-10) a credit card company could just increase your interest rate or other fees without letting you know.

Most consumers would just keep paying their minimum payments and not realize that of the $100 they paid, only $35-$40 was actually being applied towards the principal and the rest was interest and fees!

At this rate, it might take you the rest of your life (if you lived long enough!) to repay the original amount borrowed or charged.

With the New Credit Card Rules, the credit card company must send you a notice at least 45 days before they can:

• increase your interest rate
• change annual, cash advance or late fees
• make other significant changes to the terms of your card

You then have the option to cancel the card before the changes take effect. However, if you cancel your card, the credit card company may close the account and increase the monthly payment.

For example, they may require you to pay the balance off in five years.

They may also double the percentage of your balance used to calculate your minimum payment which will increase your monthly payment!

The credit card companies are now using a few "legal loop holes" to get around this new law and they do not have to send you a 45 day advance notice if:

• if your card has a variable interest rate tied to an index and the index goes up your rate will increase
• your "introductory rate" expires and jumps to the "real" rate
• your rate increases because you have made arrangements because of late payments 

Your monthly credit card bill will now include information on how long it will take you to pay off your balance if you only make the minimum payments.

It will state the current balance and the minumum payment due.

It will give you a LATE PAYMENT WARNING that says that if they do not receive the minimum payment by the date listed, you will have an additional $35 late fee charged and your APRs may be increase up to the PENALTY APR OF 28.99%!

Even though the new rules may inform you of how you are about to be taken advantage of, they really don't help that much.

If your credit card balances is so hight that you can only make the minimum payments, YOU NEED HELP!

For FREE ADVICE with NO OBLIGATION, CLICK HERE or call

1-877-492-4109

photo by: Andres Rueda

Here are 5 tips that you can use to improve your credit score:

1. Check the accuracy of your credit report

Did you know that by law, you have the right to obtain a FREE credit report from each of the three national credit reporting companies every 12 months?

To have the best credit score possible, you must make sure that your credit report does not contain errors.  This is your responsibility!

To get your Free Credit Report:

• Go to Annual Credit Report and follow the instructions.

• Or, you can call 1-877-322-8228 to request that your report be mailed to you.

• Or, you can also complete the Annual Credit Report Request form and mail in your request.

2. Pay your bills on time

Although there are several factors in determining a credit score, one of the most important is making regular, on-time montly payments.  Most banks have automatic online payment, so take advantage of the service!

3. Understand how your credit score is determined

Basically, your credit score is base on how you answer these five questions:

• Do you pay your bills on time? If you are consistently late paying your bills, your credit score will suffer.

• How much outstanding debt do you have? If you have too much outstanding debt compared to your ability to repay (based on income, debt limits, etc.) then your score will suffer.

• Have you applied for several new accounts recently? Filling out several store card applications or trying to establish new credit with several charge cards in looked on as a negative for your credit report.

• How long is your credit history? Even thought you may never have had bad credit because you have never really had a loan or credit card, this is considered a negative on your credit report.  Try to establish one or at the most, two accounts and pay them on time and possibly pay them off in a few months.

•  What types of credit accounts do you have? Too many finance companies or high interest credit cards may hurt your score. On the other hand, a mix of installment loans (auto, home, etc.) and a credit card or two is much better for your score.

For more information, check out the Federal Trade Commission's website at Facts for Consumers.

4. Take the time and effort to legally improve your credit score

It is well worth the effort to improve your credit report and score!

Click on this link for step-by-step instructions on how to repair your credit report.

5. BEWARE OF CREDIT REPAIR SCAMS!

There might be a few legitimate credit repair companies, but I haven't ever found one!

You can find all you need to know about how to legally correct or repair your credit report at the FTC's site "Credit Repair: How to Help Yourself"

If you have some questions or need some more information, our Solutions Specialists are here to help.  Give us a call!

1-877-492-4109

OR, Click on the link below for a FREE PERONALIZED DEBT ANALYSIS!

photo by: kanonn

When you’ve got negative credit accounts all over your credit report, you’re going to want to do all you can to Repair Your Credit – especially if you believe the information reported is inaccurate.

Luckily, the credit bureaus understand that not all of the information they report is always correct, so they give you the option to dispute any credit account you think looks wrong via regular mail.

All 3 have since expanded their dispute departments to cover requests being made online, so you don’t even have to worry about your queries getting lost in the mail, or having to wait longer than a month for a response.  Simply sign onto the appropriate credit bureau’s website, check off which accounts you want disputed, leave an explanation for why you’re disputing the account and you’re done.

When something seems too good to be true, it usually is.  This is no excption.

The problem with keeping your disputes online only is that the process is so overly simplified that it almost completely cuts out the follow-up options you normally have available to you had you sent your dispute letters via regular mail.  Problems with the online-only approach don’t stop there; we also recommend you keep your disputes to regular, certified mail because:

You don’t get a copy of the dispute

Again, the credit bureaus’ online dispute page simply consists of you disputing an account, leaving a note on why you’re disputing it, and pushing Submit.  Once that’s done, you’re given no physical copy of the disputes for your records – something that can be easily avoided by sending the disputes via certified mail, and keeping copies for yourself.

You give up some of your rights by disputing online

If you take the time to read the Terms & Conditions of using the credit bureau’s online dispute service, you’ll see that by doing so, you’re entering into a binding arbitrary agreement with the credit bureaus that prevents you from taking them to court over your disputes.

If it comes down to it, you don’t want to give up your right to take the credit bureaus to court should they persist in reporting information that you know is inaccurate.

Once you have reviewed your credit report for innacuracies, chances are pretty good that there will be some debts left that you actually do need to re-pay.  There are great programs available to you such as Debt Consolidation and Debt Settlement that can help you eliminate your debt quickly and save you money.

Our Solutions Specialists can help you decide which program fits your situation best.  Give us a call!

1-877-492-4109

photo by: stephanie in love

What is a 1099-C?

A 1099-C is a statement from the IRS that you may need to include the amount of a forgiven or settled debt as income.

Let's say you are going through a very tough time financially and cannot keep up with the payments on your credit cards or personal loans.

At some point, you (or a Debt Settlement Company), may be able to negotiate a settlement on the debt you owe for less than the balance.

If the amount forgiven is over $600, the creditor may claim that as a loss to the IRS and you would then receive a form 1099-C.

At first glance, it looks as though you have no choice but to include the amount forgiven as additional income and therefore, you may have to pay additional income tax!

According to IRS Form 4681, you DO NOT HAVE TO INCLUDE the amount forgiven or settled if at the time of the forgiveness you were INSOLVENT.

Sadly, most accountants or tax preparers are unaware of how to avoid this additional tax.

How to prove you were INSOLVENT:

List all of your assets.  Your assets include:

Equity in your home. (What your home would sell for today less what you owe.)

Cash, stocks, bonds, mutual funds. (Come on...most people who are in a financial crunch don't have extra money laying around!)

The net or current values of your "things":

• Car (it's probably not worth as much as you think!)
• Boat, Four-Wheeler, Motorcycle, etc.
• Furniture, tools, (get the idea?)


Now, you are going to offset this by the debt you owe:

• Mortgage (don't forget the 2nd or equity line of credit
• Student loans
• Auto loan
• Personal loans
• Credit cards
• Store cards
• Back taxes!
• Medical bills

This should show that at the time of forgiveness, you were insolvent (you owe more than your worth).

You will submit this financial worksheet along with IRS Form 982 with your tax forms.

If your tax preparer is not aware or does not seem competent dealing with this procedure, let us help!

In over 8 years of helping people reduce their debt, we have not had a client pay any additional income tax as a result of a settlement!

Need More Info? Give us a call today!

1-877-492-41096

 photo by: Stefan Baudy

Dealing with Debt

As the economy has declined, many consumers have been relying on credit sources such as credit cards and home equity loans for everyday spending.

But we’ve come to realize that the days of free-flowing credit are over. Banks and lenders are lowering credit limits on credit cards and scrutinizing new borrowers. If you’ve been living above your means, addicted to credit of any kind, consider this your personal financial intervention!

Face the Debt Music

Debt management is not a one-size-fits-all topic, because every debt-holder is unique. Your debt could be the result of many different circumstances such as overspending, job loss, or medical bills. You have to gauge your own situation and face up to your ability or inability to help yourself.

Bankruptcy

If you’re seriously drowning in debt, the worst case scenario is to declare bankruptcy. This is the debt management option of last resort. Because a bankruptcy can stay on your credit report for up to ten years it will affect many aspects of your life for a long time. If you’re considering this option, you’ll need to consult a bankruptcy attorney for help with some tough decisions. 

Credit Counselors

Anyone who intends to declare bankruptcy must get pre-filing credit counseling from an approved agency within six months before the filing. The agency must be approved by the U.S. Department of Justice in the judicial district where you plan to file bankruptcy. You must also complete a pre-discharge education course in order for debts to be officially satisfied.

Debt Settlement

Debt settlement is another option if you want to avoid bankruptcy. The debt negotiation industry is growing rapidly. These companies are not low-fee, non-profit counselors, but representatives who aggressively work with your creditors on your behalf to reduce debts by 50% or more!

This is an effective strategy that could result in a deep discount on the debt.

Debt Consolidation Programs

You may be eligible to enroll in a debt consolidation program. These are also called one-pay plans, because the agency collects one monthly payment from you. They distribute the money to your creditors after negotiating lower payments and interest rates on your behalf.

Correct Bad Habits

In the best case debt scenario, you’re credit rating is still good, but you’re simply living above your means (you know who you are!). Debt is usually the symptom of saving too little and spending too much, a deadly combination. There is no magic formula to make debt disappear. The solution is to permanently change your financial behavior by becoming more disciplined with your money. Is it easy? Absolutely not. But the rewards of living life without a credit addiction include much less stress and better sleep.

Last week I discused the first two parts to getting out of debt FAST!

Tips to Get Out of Debt FAST: part 1

Tips to Get Out of Debt FAST: part 2

Now it is time to move on to part 3:

Get the Lowest Interest Rates Possible on Your Debt

While you are working to improve your credit, it’s important to be on the lookout for ways to reduce the interest rate on your debt. Whether the debt is a home loan, car loan, credit card or some other debt, getting the lowest possible interest rate will help speed up the time it takes to eliminate your debt. Here are some tips and tools to help you lower your rates:

1. Refinance Your Mortgage: The general rule is that you should refinance if you can lower your interest rate by 1%. While that’s a good starting point, it is important to also consider how long you plan to stay in the home and whether you need to convert from an adjustable rate mortgage to a safer fixed rate loan. Interest rates are still at historic lows, and it is easy to compare mortgage rates online.
2. Negotiate Lower Interest on Home Equity Lines of Credit: If you have a home equity line of credit, compare your interest rate with current market rates. If you think you can do better, step one is to call the mortgage company and request a lower rate. While there are no guarantees, it can’t hurt to try.
3. Lower the Interest on Credit Cards: Debt Consolidation Programs allows you to consolidate all of your unsecured debt into ONE LOW MONTHLY PAYMENT and offer the following benefits:

• PAY LESS: Better repayment terms are offered by most creditors. Most will lower interest rates, wave late and over the limit fees AND bring your accounts back to current without making up those missed payments. This can save you thousands over the life of the debt!
• PAY OFF YOUR DEBT FASTER: You’ll be able to pay off your debt in three to five years rather than the average 25 years it could take without our program.
• REDUCE YOUR STRESS: Our customer’s are relieved when the collection calls disappear.
• ONE EASY LOW MONTLY PAYMENT: Your credit cards and other unsecured debts are consolidated into one monthly payment so you don’t have to juggle payments.

Although getting to know your debt and creating a plan are two very important steps in gettin out of debt FAST, this third step is the most important one.  Getting your interest rates lowered will make the money you are paying towards your debt go further, and you simply can't beat that!

Would you like to know how we can help you Get Out of Debt FAST?  Click the link below for a FREE Debt Elimination Summary or simply give us a call:

1-877-492-4109