Tips to Avoid the Rogue Debt Collectors

Posted on by
Reply

Debt collectors are constantly threatening consumers to retrieve monies owed. Recently, collection calls have increased as they are asking you to pay a debt that you might not even be sure that you owe. These collection agencies have been known to use abusive language and illegal collection practices. One solution, if you have insurmountable amount of debt, is to enroll in a credit card debt consolidation program to avoid the zombie debt collectors and attain financial liberty.

Avoid Debt Collectors

If you are receiving harassing phone calls from debt collectors, you may be able to put a stop to them.

Here are a few tips to safeguard from the threatening calls of the collection agency:

1. Ask for validation:
Annoying debt collectors can compel you to admit that you owe money that they are collecting. In this situation, ask them to validate the debt before you start paying it off. Remember that the Federal Trade Commission enforced FDCP Act to protect the consumers from the illegal collection practices. Make sure that the collector provides the necessary documents to validate that you owe the debt, the amount you owe, and the collector is authorized to obtain it from you.

2. Verify info about the company:
Try to get the collection agency’s phone number and postal address so that you can verify certain information about the company. There are many fraudulent collection agencies that threaten consumers, trying to extract money from them through illegal means. If you feel that you are the victim of one of these companies, you should lodge a complaint with the FTC.

3. Cease communication:
If you are confident that you do not owe the debt, then you can send a registered letter to the debt collection agency requesting that they not contact you any further regarding the matter. Make sure to mention that you are no longer liable for the debt. You should send the written letter within a month of receiving the debt collection letter.

4. Know your consumer rights:
If you are aware of Fair Debt Collection Practice Act implemented by the FTC then it will be easier to manage the rogue debt collector. Make sure that you acquire information about the law before dealing with a debt collection agency. This will help to protect yourself from the fraudulent debt collector. According to the FCDP Act, it prohibits collectors of any kind from practicing illegal collection methods.

5. Review your credit report:
Make sure that you review your credit report extensively otherwise you might end up paying for old debts that have been forgiven by the creditors or already paid off and not documented yet. Debt collectors can illegally report old debts to the credit bureau that you might have to pay for. Therefore, try to keep an eye on your credit report to avoid the harassing debt collection calls.

So these are the five essential ways to avoid the annoying debt collectors and make sure that you pay off the owed amount on time.

How To Get Out Of Debt Part IV

Posted on by
Reply

by o5com via Flickr

Back in 2009 we had a nice series of posts on how to get out of debt, ideas for how consumers could put their financial standing back in line and be comfortable once more. As a refresher, we first recommend that you go back and check out these 3 posts:

How To Get Out Of Debt Part I

How To Get Out Of Debt Part II

How To Get Out Of Debt Part III

Those 3 posts contained 7 great ways of getting out of debt. Here are 3 more:

8. Plan your shopping before you leave home. Studies have shown that people that go out to buy exactly what they want spend less money because they’re less susceptible to impulse buying. It’s also one of the reasons why it’s always recommended that you eat before you go out to the grocery store.

This can work wonders for your budget, especially if you also plan where you’re going based on your knowledge of how much things cost and how far you have to go. I tend to have a running list that’s kept in the kitchen and twice a week know exactly where to go to maximize my dollars.

9. Create a money jar for spare change and dollars. This sounds crazy on the surface but it works wonders. Almost every personal finance book or program you come across will tell you to not only pay yourself before paying anyone or anything else, but to put 10% away. The reality is that not everyone has the means to pop 10% of their income away all the time; it’s just not realistic.

What is realistic, though, is taking your change and tossing it into a jar or some other kind of container that you won’t be compelled to dip into all the time. I keep three containers on hand. One I put half the change I bring home into; one I put half of the quarters remaining into; and one where I put the remainder of my change. You’ll be amazed at how fast the container you don’t touch all that often will accumulate money, and it often comes in handy when you most need some additional funds, or if you want to use it for a fun night out here and there.

10. Buy consumables in bulk. Every area has some kind of major discount store; in my area we have two. There are things we’re all going to use consistently, such as toilet paper, soap, paper cups, etc. If you have a place to store items like this you can save big money by buying things like this in bulk. I have saved as much as 50% off the cost of these types of products, and that’s without using coupons, which they accept. Also, these stores sell gasoline, usually at a reduction of between 5 and 10 cents off the cost of gas everywhere else, so it can be an economical trip in more ways than one.

Educational Debt Can Be Overwhelming

Posted on by
Reply

These days one has to ask themselves if the cost of getting a quality college education is worth it. A degree from a major university can end up costing more than 2 good homes, especially if the student decides to go for an advanced degree. One has to ask if it’s worth it and, if so, how they’ll be able to pay for it.

Unfortunately, college debt is one of two debts that you can’t erase if you declare bankruptcy; the other is tax debt. And college debt, though it can’t get you throw in jail or fined, will most often be higher and harder to deal with. This is because lenders don’t always work with you on how much you have to pay monthly, though most will work with you as to when you have to start paying on it.

At some point one has to figure out what’s worth it and what’s not worth it when going to college. For instance, is a bachelor’s degree from Harvard really worth more than one from a 4-year state school? In general no; if you went to college for theater who’s going to care? If you went to school for accounting, probably not. If you went for political science, with an intention on being a politician someday, sure. And if you’re looking to go for an advanced degree in law, absolutely.

And then there are the advanced degrees one has to think about. Is a master’s degree from Yale really all that much different than a master’s degree from UCLA? Aren’t both big name schools? And won’t the degree from UCLA not only cost thousands less, but you’ll also be in better weather?

In any case, if you’re still looking to go to a big name college, you need to have a plan for attacking the debt once you’re out of college and ready to go into the workplace. You also need to figure out early on your potential income ratio matched against how much it costs to go to school. In today’s economy, if you’re getting a master’s in education and you want to be an elementary school teacher, you’re probably not going to come close to earning enough to bail you out of your loan. If you’re going for a doctorate and hoping to land at a major university yourself, there’s a possibility, but nothing’s guaranteed.

The same goes for the medical field. If you’re looking to be a specialist such as a heart surgeon then you’ll easily be able to pay back your loan in good time. But if you’re hoping to be a general practitioner you’ll probably have to work 12 to 14 hours a day to have any chance of keeping up on your payments; so much for luxury living.

Parents and students need to be realistic in protecting the student from crushing debt after graduation. There are many good colleges that one can get a very credible 4-year degree from. Many of those same schools offer competitive pricing for masters degrees as well. It’s something to think about for your future.

Dealing With Tax Debt

Posted on by
Reply

Many Americans eventually run into a problem in paying their taxes when due. It can be because they didn’t have enough money taken out during the year or didn’t pay enough estimated tax, or even had the IRS discover that there was an error in figuring out amounts and finding that one suddenly owes a lot of money to the government.

Believe it or not, the government is one of the easiest groups to work with when it comes to getting assistance in setting up payment arrangements or even getting reductions in some fashion. What it takes, however, is overcoming the fear of the government, picking up the phone, and making the call.

The IRS is pretty easy to work with. The people they employ exhibit great customer service processes, as they know that many people are scared of them unnecessarily.

The first thing you have to do is either agree with the amount they say you owe or dispute it. No deal with start if you dispute the tax until they’ve investigated everything and sent you a letter, but you have to have a good reason for disputing the balance. It might be higher than you expected it to be because of interest and penalties; there’s nothing you can do about that for the moment.

Once you’ve come to grips with the fact that you owe the money, it’s time to set up a payment agreement. As long as your tax liability is less than $25,000, they are willing to work with you on some kind of amount. Don’t try making them look bad by offering to pay $10 a month on a high balance; they always have the right to demand that you pay it all in full, and they will garnishee your wages. Make a good faith effort in determining how much you hope you can pay them on a monthly basis, and then make sure you make that payment monthly. If your income changes and you need to lower the amount, you can always call them and make adjustments. And any time you can pay more, that’s always accepted.

When you set up a payment arrangement, you’ll get a monthly letter from them indicating how much you have to pay and how much tax, interest and penalties you still owe. If you’ve paid off the taxes and still have a balance due to interest and penalties, you can call the IRS and ask them if there’s something they can do for you. If you’ve consistently paid them without missing a payment, they’ll wipe out the penalties, which is pretty nice of them. I’ve never heard of them wiping out interest, but it doesn’t hurt to ask if they have any leverage on lowering it.

Should Couples Combine Their Debt Load?

Posted on by
Reply

Every once in awhile one member of the couple runs up a lot more debt than the other in a marriage, or even while just living together. This begs the question as to whether, in extreme circumstances, couples should define whether one or the other should get financial help or if they should go into it together.

There are times when couples don’t have a choice. If they purchased a home with both names on it, then both will always be responsible. If taxes were filed as a married couple both parties are responsible. In this day and age co-signing a car loan or any other type of loan means both parties are responsible as well.

Credit card debt is another story. It turns out that, unless one party passes away, the husband or wife isn’t responsible for their spouses debt. If the debtor gets sued and has their wages garnisheed, it only affects the person whose name is on the account. So, there are times when one party really has no responsibilities for the expenses of their spouse.

So, should couples combine their debt load? Truthfully, yes they should, but for two reasons. One, if you hope to remain a couple it’s probably the thing to do because it could cause resentment. Two, it helps because both parties in the relationship could get one blanket deal that could end up saving them money while getting the debts of both people paid off.

It’s also easier to get a loan from the bank if the household income is combined, as the higher the income the easier it is to get a loan of some type, even if it’s just a line of credit.

Of course, before getting married discussing the debts each person has is an imperative step. All debts should be out in the open before getting married because one or the other could find out that their relationship is a sham and based on financial needs, and that will just add a layer of complication that no one needs to deal with.

Is Debt Consolidation A “Woman” Thing?

Posted on by
Reply

There was an interesting study done by M&S Money that investigated why people might go for debt consolidation loans. The study concluded strangely enough that more women than men are willing to look into debt consolidation in general, and that women will file for debt consolidation loans more often than men. Their conclusion was that in most families it’s the women that are in control of the finances, and thus they’re the ones who know when it’s time to get a loan and get those bills taken care of.

Frankly I found that to be an interesting result and I’m not sure I agree with it. I’m not sure if I disagree because it’s a company in the UK or if it’s because I’m not of the belief that more women than men are in control of the finances.

Here’s the overall reality. Couples more than singles will go for debt consolidation because they have the credit to get it done more often. It’s easier to get a loan if you own a home, and more couples own homes. The possibility of being a 2-income family affords one a better chance to not only qualify for a home loan, but a loan at a rate that’s not punitive.

It’s possible that couples will talk about the possibility of getting a consolidation loan more than singles will think about it, but that’s probably as far as it goes. Either way, if anyone is having problems with debt, taking positive actions to address it makes a lot of sense. Determining what one’s bills are, whether they need help and then going to get that help is the same across the board, whether it’s men, women, singles or couples.

Should You Get A Debt Consolidation Loan?

Posted on by
Reply

Having too much debt is scary. Sometimes it seems like there’s nothing you can do to get out of debt. Sometimes it’s hard to put a finger on what’s going on because your debt is scattered all over the place.

That’s where getting a debt consolidation loan can sound like a good idea It gives you the opportunity to get all your debts figured out and paid off and only have one loan to worry about from that moment on. Yet, one still has to ask if getting a debt consolidation loan is the smart thing to do. Let’s look at the pros and cons.

One pro is that often the interest rate on a debt consolidation loan is far less than the interest you might be paying on some of your outstanding bills, especially credit cards. If you can get a bank loan sometimes the rate is between 6 and 10%, which is easily lower than a 19.8% credit card rate.

Another pro is that it’s easier only making one payments instead of multiple payments. You’ll either get one bill or have a ticket where you can make a monthly payment, and it will always be the same amount. Doing it this way also helps you pay your debt off quicker.

Of course there are downsides to everything, and in this case the downsides need to be seriously considered. For instance, it’s possible that wherever you get your loan they’ll request an automatic withdrawal from your bank account. That’s not the worst thing in the world, but many people have to try to learn discipline in making sure that money is in their bank accounts at the time, and that’s a hard lesson to learn.

Another bad thing concerns that discipline thing again, this time the discipline in not to continue using those credit cards. It’s hard for some people to look at a paid off credit card and just put it away when there’s so much good stuff out there. It doesn’t do any good to continue adding more debt while trying to pay it down.

Whatever course you decide, be ready to make some serious changes in your life. Debt consolidation loans could be just what you need, or it could be the beginning of even more problems.

How Debt Actually Affects You

Posted on by
Reply

We talk about debt all the time, in different ways. The country talks about debt as well, as we hear about the debt President Bush left us in and the debt that President Obama has allowed to increase. Yet, when you look at it, debt isn’t bad across the board. Let’s take a look at it.

by Alan Cleaver

Having some debt is actually a good thing, if you trust credit reports and credit scores. Both seem to like individuals having debt, aka outstanding credit, and making payments on that credit. Strange as it seems, if you pay off all your outstanding debt and have none left over, suddenly your credit score starts going down. It seems like idiocy to me, yet it’s one reason why so many financial experts will tell people to never cut up their credit cards, no matter how bad the terms end up being.

It works the same for the federal government. While no one wants the debt to be as high as it is, the truth is that countries trade in debt all the time. it seems that the country loves getting things done on the debt load of someone else. Think about it; every building that gets built is being built by a company that had to assume a certain amount of debt to build it. The stock market works on the premise that they play with other people’s money, and most of the trading is done not with real money, but perceived money, which is this case if a form of debt.

So, it’s not always bad. When it’s bad is when the owner of the debt can’t pay on the outstanding debt. That’s when things start to cave in and the pressure builds For nations that end up in this predicament, some of them just print more money, which leads to its devaluation. For the rest of us, doing that would put us in jail, so we then have to find other ways to work through the debt that we’ve accumulated.

The best way for anyone to handle their debt, at least up front, is to never spend more than one can afford to pay on. People need to set limits on how much they’re going to allow their credit card balances to get up to in total. People need to set limits on how much “fun” spending they’re going to allow themselves to do when they have bills to pay. And people need to learn how to save some of their money for those times when they need an extra boost of some kind.

How good are you at managing your debt?

Balance Transferring Your Way Out Of Debt

Posted on by
Reply

Some people who have access to new credit cards have given thought to using the process of transferring debt as a way to get out of trouble. Can it work? Let’s talk about it.

Any time you can get your debt into a lower interest rate, it’s a good thing. Although you don’t see as many cards these days with 0% interest rates for six months, it does still happen, as well as lower interest rates under 10%.

The benefit of transferring debt to a lower interest rate card is that the amount of overall debt you owe will go up at a much reduced rate. If you have the capability of paying more on your credit card than the minimum, you could reduce your debt load much faster. If your debt is high you’re probably not going to pay it off, but you end up in a much better debt position overall.

Of course, if it were all so simple everyone would be doing it, and there are a lot of people who are doing it. What often happens is that people transfer to a lower interest rate card and also end up with smaller payments up front. That’s so enticing that people will feel they’ve gotten a second bonanza and only pay the minimum amount, using the extra cash for other things instead of paying down debt. The credit card companies are counting on this because they want to build your debt up as much as possible.

Something else that people don’t pay attention to is what the interest rate will be after those six months, and some of the terms that come along with it. At least the federal government has put regulations into place that says these companies can’t jack up the interest rate on the outstanding balance… at least immediately. If you’re behind on your payment just once, even by a day, they then have the right to jack up the interest on everything, and these days the going rate is 30%.

To make this type of thing work, it takes discipline, and if you don’t have it then you could end up in a worse position than you initially were. You need to have a plan, and that plan has to include:

1. A faster way to pay down a big portion of your balance.

2. A way to pay down other debt so it doesn’t grow while you’re concentrating on this one.

3. A budget to stay on track with your spending.

4. Realizing that without changes, you’ll be in the same boat, only worse, in due time.

Just these 4 things can help you go a long way; unfortunately, they’re not easy for everyone to do.

Looking At Your Outstanding Debt

Posted on by
Reply

The process of debt consolidation first begins by taking a look at your outstanding debt. This is something every person or couple should do first before considering going for some kind of debt consolidation loan or other debt relief.

There are three ways you can do this, but each way will initially use the same steps towards helping you determine what your debt load is. These three are:

* Consumer Credit Counseling – Every large community in America has free credit counseling where you can get help in taking a look at all of your debt to help you determine what you need to do next

* Budget Manager – there are people who will help you with your budget and give you a plan that not only helps pay down bills, but helps you learn how to build up your bank accounts if possible

* You do it yourself – this is a viable option if you have any confidence in your own abilities, and you can go to sites like the National Foundation for Credit Counseling, which has budget calculation sheets and consumer tips to help you out.

If you’re going to do it yourself, either using pre-made sheets or formats or just creating something in a program like Excel, there’s certain information you’re going to want to take a look at. Using Excel or a calculator will help you with some of it.

The first thing you want to take a look at it your income. For most people, this will be the same dollar amount every week or two weeks. You want to look at what you actually bring home, not your gross amount before taxes. Multiply it by two, since most months you get paid twice. Twice a year you actually get an extra payment if you budget this way, but you don’t want to look at that initially.

The second thing you want to take a look at are any bills that are monthly, that don’t have an associated interest rate. These would include things like utility and phone bills, cable, and car insurance, possibly rent.

The third thing you want to look at are those bills that do have interest rates associated with them. These would be things like credit cards and mortgage bills. This is the one where Excel will come in handy later on, mainly for credit card debt, because you not only want to look at what your monthly payments are, but you’ll want to calculate your interest rate as it pertains to your outstanding balance to determine how long it would take you to pay off each card if you only made minimum payments.

The fourth thing you want to look at are those bills that aren’t monthly, yet are bills you need to pay when they come due. This could be things like car insurance if you don’t pay it monthly, or water bills, which usually come quarterly. They don’t fit within your initial budget plan, but you need to note them because they’ll be expenses to be considered at a later date.

What all of these steps do is help you determine what your outstanding debt is, and how it relates to your income. There’s no reason to begin debt consolidation processes without this step, whether you do it yourself or with help.

The main thing you want to see is if your pay comes in higher than your bills. If it does, even a little bit, then you’re ahead of the game, and you may not have to do anything overly drastic. All you might need is a part time job where you can earn an extra $50 to $100 a week for awhile, put yourself on a budget so that it’s all you need for food and weekly gas, pay your bills, and look for ways to pay off some of your bills, especially your credit cards, so that you can have some extra money. Maybe cut down what you get on cable, or change your phone plan. With creativity, you’ll find ways to help cut expenses while bringing in more money.

If you’re behind, this is where someone like Consumer Credit Counseling can help. If you don’t know how to do it yourself, they can help you negotiate lower payment rates on some of your outstanding debt, which will leave you money to play with. Of course, in these instances, your credit cards are totally frozen.

The most important thing about looking into your debt consolidation options is taking the action to find out where you are. It’s always better to know what your situation is because you then have the chance to correct your problems and ease your mind.