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Archive for August 22nd, 2009

Statute of Limitations for Credit Card Debt

Aug 22

Posted by Kathy Cromwell in Credit | No Comments

by Kathy Cromwell

Different laws apply in each state in terms of the statute of limitations on credit card debt. The range could be anywhere from three years to ten years with a portion of the states maintaining a longer period for the statute of limitations on credit cards. The consumer is protected by the laws that are in effect, not credit card companies. This means the collection of credit card debt is not able to star the process of suing over the debt after the passing of a statute of limitations.

Now, this doesn’t mean that you can just ignore your debt. The credit card company can sell your debt to a debt collection agency and they can come after you then. But once the statute of limitations has ended, that credit debt collector cannot sue you for the balance owed.

Debt collection agencies will buy outstanding debts from credit card companies for next to nothing. By selling off the bed debt, the credit card company can try to get back some of the money they lost from the consumer. Then the collection company will come knocking at your door, wanting you to pay the full amount owed. The collection company then keeps all the money you send in since they have bought the debt from the original company.

There are federal laws that protect consumers from harassing phone calls and threatening letters from debt collectors, but if they work within the letter of the law, they can do whatever is necessary to get their money. And while there is a statute of limitations, the debtor will still owe the money no matter the time frame. Think about if you borrowed money from friends or family, you are still under a moral obligation to pay them. And you should think the same of credit card debt.

Many people think that the statute of limitations on credit card debt will pass and the debt will be erased from their credit history and credit report. There is no truth to this. Collection agencies are not authorized to sue you, but you still owe the debt. That is the only thing that the statute changes. Because many of the collection agencies purchase the debt you owe for a lesser amount, you should be able to make an account settlement for a significantly lower cost by settling with a collection agency.

About the Author:
Kathy Cromwell a renowned proficient in Credit card debt statute of limitations . Check this website credit card debt laws.net/ and get more information about it.

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Understanding Debt Settlement Information

Aug 22

Posted by Chris Blanchet in Credit | No Comments

by Chris Blanchet

When folks are heavily indebted to credit card companies and find they are unable to repay their entire debt, they will often seek debt settlement information as this not only provides an alternative to bankruptcy but can provide debt relief.

Debt Settlement Explained

Typically in debt settlement, the credit card company or collection agency will reduce the balance owing and the borrower will repay this amount (usually 35-50% of the original amount) instead of the original balance. Upon acceptance of the settlement, the borrowers will either have to provide a full payment up-front or will need to make regular monthly payments, much like a debt management system, to the creditor.

Debt Settlement Costs

Some companies who will negotiate on the part of the borrower will often charge a fee for their service. Some will charge up-front, some will include their fee in the monthly payment schedule, and others will take a lump sum only once the settlement has been approved by the creditor. Ideally, borrowers should look at companies who charge only a percent (20% is viewed as acceptable) of the reduced amount. So, if an individual has debt of $50,000 and the debt settlement company agrees to reduce the debt by $25,000, the borrower should pay $5,000.

Debt Management

Insofar as debt management is concerned, debt settlement is not a recommended debt management tactic. The reasons are abundant, namely that borrowers will suffer from reduced credit scores and settlement will only address credit card balances, not student loans, car loans or mortgages. With only credit cards eligible, borrowers are usually only addressing part of their debt problems, not the whole picture.

Tax Implications

When digging through debt settlement information, borrowers who decide to take this avenue should understand that there are tax implications to debt settlement. The bottom line here is that creditors will issue a 1099-C that the borrower will include when they file their taxes. The amount included as taxable income is the amount that the creditor agreed to reduce. As such, debt settlement may not be as attractive as bankruptcy options.

It should come as no surprise that there is an abundance of debt settlement information out there, especially now with the economic situation being what it is. In a few instances where credit card debt is the only (or almost only) type of debt, debt settlement makes sense. But as a debt management strategy, settlement is not all that great.

About the Author:
With more than 16 years of financial services experience, Chris has provided thousands of people with debt settlement information. His blog about debt management can be found at HowToRepayDebt(dot)com.

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Tips on Credit Score Repair

Aug 22

Posted by Rob Kosberg in Credit Repair | No Comments

by Rob Kosberg

Here are some basic tips and credit score repair tips that will allow you to maintain your credit report and protect your financial future.

Most of us have been told at one time or another that the credit report is something of extreme importance. What is reported on that paper will determine whether you get a loan that you need. Even if you have always paid your bills on time, you could be a victim of identity theft, which will affect your financial situation in one way or another. By learning what you will typically find on your credit report, you will be better equipped the look through it all.

The first thing you need to do is contact each of the three major reporting agencies. You can request one free copy, each year, from each of the reporting companies. You might also want to check out your Fico score but that generally requires paying a small fee. If there is a fee, it is worth it because the Fico score is another piece of information that creditors use to determine whether you are worth the risk of a loan.

The reports will have several sections. Know that there will not be personal or private information about your race, net worth, or salary included. There will be the usual identifiers such as name, address, and social security number in the first section. There will be a section related to any trade lines. These lines will include loans, mortgages, credit cards, gas and department store cards. It will give the date each trade line was opened, limits, payment history (including late payments), balances, overdrawn bank accounts, and unpaid child support.

If you have liens or judgments against you with the court system, this information will be found on your credit report as well. This would include taxes, divorces, judgments, and bankruptcies.

Any time you apply for a loan or charge card there will be an inquiry made to the reporting agencies. Your report will include not only these inquiries but inquiries by you. Inquiries normally remain for 2 years. Be aware of your inquiries as they can be a good early warning sign if someone is attempting to get credit in your name.

Of course, you want to do your best to keep your credit report clean. Every piece of negative information on your credit report will stay there for seven years. If you have a bankruptcy, it will stay there for ten years. .

Since there is so much that you have to watch for, including someone trying to steal your credit or incorrect reporting, you need to make sure that you understand how to view your credit report. Search your report and look for any errors that need to be addressed. It is completely your responsibility to monitor your credit report and fix errors as no one else is going to do it for you.

About the Author:
With never before seen challenges in the credit markets its more important than ever to have excellent credit. For more information check out Rob Kosbergs’ Detailed no cost Report on Maintaining and Repairing your Credit Score by going to Credit Score Repair for your no cost information. You may also visit Increase Credit Score for a Report on Raising your Credit Score.

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