6 Steps to Take If Your Debt Goes Into Collections

If you’ve fallen behind on your bills, there’s a good chance a debt collector may have contacted you or will be contacting you shortly. A debt collector works for a collection agency who bought a debt from a creditor to whom you owe money. Since their job is to collect the money, they may plague you with phone calls until the account is fully paid off.
Here are six steps to consider to get your debt out of collections.
1. Don’t Stress
Whether you’ve dealt with collection agencies in the past or you’re new to the process, receiving threatening calls and statements in the mail (more on this in a minute) can be stressful and scary. It is important not to stress or panic. You are not alone! Millions of debts have gone into collections before. However, it is also important to note that, unless you take action, the debt in collections will not go away. Avoiding the situation will only make matters worse. Failure to act can result in a judgement, which can lead to garnishment of your wages or a frozen bank account.
2. Know Your Rights
It is important to know your rights when it comes to dealing with debt collectors as, unfortunately, it is not uncommon for some to abuse their power. The Fair Debt Collection Practices Act states that debt collectors are not permitted to use abusive or obscene language, make any threats of violence or harm, repeatedly use the telephone to annoy and harass a debtor, call before 8 a.m. or after 9 p.m., or discuss your debt with a third party. They must also respect your request to not call you at work, if you have indicated that.
A debt collector may only contact other people regarding your debt that you have approved, such as an attorney or a family member. (Note: They can call other third parties, but only for local information and they can’t say they’re a debt collector.) If you feel a debt collector has violated your rights, you should file a complaint with the Federal Trade Commission.
3. Gather Information to Validate the Debt
Gathering all the information you have regarding the debt in question is a good start. Consider checking your credit report for any inquiries or anything that may seem like suspicious activity. (You can view two of your credit scores for free on Credit.com.) If the debt in collections is in fact yours, gather information regarding the original creditor who sold the debt, as well as any evidence of your payment history with that creditor.
Believe it or not, it’s quite common for collection agencies to make mistakes regarding debt they claim they are owed. You can verify a debt within 30 days after a collection agency has sent you a validation letter.
4. Pay in Full or Arrange a Repayment Plan
If your validation notice proves the debt is in fact yours, there are a few actions you can take. One option is to pay the debt in full. Many may decide to take this option to stop the collection calls and turn to fixing their credit. Unfortunately, this is not possible for everyone. If you are unable to pay your debt in full, consider negotiating a repayment plan with the collection agency. Creating a repayment plan that works for you can help you settle your debt while simultaneously improving your credit score.
5. Negotiate a Deal
If funds are tight and you find yourself to be a negotiator, you may be able to lower the amount you owe to the collection agency. While this may save you some money, it’s not always easy or possible. List any hardships you have that may have prevented you from making your payments. When negotiating, it’s important to be firm with your offer, keep notes of all conversations and take note of who you’ve spoken with. If you’re able to negotiate a deal, consider getting everything, including your payment schedule, in writing.
6. Seek Help
There’s no shame in asking for help. Before you take steps to pay your debt in full or negotiate a deal, consider hiring a debt-settlement law firm (Full Disclosure: I am one). These legal professionals have experience dealing with collectors and can negotiate on your behalf. Just make sure to do your research and find someone reputable.
Knowing what a debt collector can and cannot do will help protect you from unfair practices used by agencies to collect on the debt. You should also consider meeting with a financial adviser who can help you understand your financial situation so no future debts end up in collections. Understanding why your debt went into collections in the first place can prevent it from happening again.
Debt collector calling ad nauseam? You can find 50 ways to deal right here.

Image: MartinPrescott
The post 6 Steps to Take If Your Debt Goes Into Collections appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

Moving to One of These 9 States Could Save You Thousands

Each year, taxpayers pay trillions in income taxes. In fact, the government collected approximately $3 trillion last year. If you’re like most taxpayers, you owe both federal and state taxes, which means an even bigger chunk of your paycheck goes to the government.
When you’re carrying debt — whether it’s student loans or a credit card balance — it can be frustrating to see so much of your hard-earned money leave your hands. That’s why many people consider moving somewhere with no state income tax.
According to a new study by Student Loan Hero, taxpayers could save an average of $1,977 a year by moving to a state with no income tax. But before you pack your bags, find out what factors you should keep in mind.
States Without Income Taxes
States that collect income taxes use them to fund essential programs and services for residents. More than 50% of state tax revenues go toward education and healthcare initiatives, such as Medicaid. State agencies also use collected income taxes to pay for services, including transportation and law enforcement.
Residents in most of the country must pay federal and state income taxes. However, nine states don’t levy any state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Because you don’t have to pay state taxes, you can get a significant yearly savings.
How Much Could You Save?
How much you could save by moving to a state with no income tax depends on your income bracket and where you live now. For example, Oregon workers have a state income tax of 7.75%, the highest rate of any state in the country. Someone earning the median salary in the state — $49,710 — would pay $3,851 in addition to their federal taxes.
Moving to another state to save that kind of cash can be tempting. So tempting, in fact, that 30% of survey respondents would move to a state with no income tax to save money. Moreover, 38% of respondents said they’d use their tax savings to accelerate their student loan debt repayment. (To see how student loans are impacting your credit, check out your free credit report snapshot on Credit.com..)
Using Your Savings for Debt Repayment
The savings you get from not paying state taxes can save you even more money in the long run. Using that money to repay your loan helps you pay off the loans faster, cutting down on interest charges. It can also save you thousands over the life of your loan.
For example, say you had $35,000 in student loans with an interest rate of 6.31% (the current rate for Grad PLUS loans) and a minimum monthly payment of $400 a month. Now, take the average $1,977 you would save by moving to a state without income tax and divide it up over 12 months. That would give you an extra $165 in your pocket each month. If you put that additional amount toward your student loans, you could pay off your debt about three and a half years early and save more than $4,500 in interest.
Other Costs
Before packing up and moving to a new state, consider other costs that may eat into your savings. Between putting down a deposit on a new apartment, moving your belongings and registering your vehicle in a new state, you can spend thousands.
In addition, some states with no income tax make up their revenue through other means, such as sales tax. Florida has a 6% sales tax on goods and services, including essentials such as clothing or food. If you’re not used to paying taxes on groceries, the added sales tax can put a dent in your budget. That’s why it’s important to compare the cost of living when deciding if it’s worth it to move to a new state.
Moving to Save Money
Depending on your circumstances, moving to a state with no income tax can give you a substantial savings. You can use that money to pay off your student loans faster, boost your emergency fund or catch up on retirement savings. But before you make the leap, be sure you understand the added expenses of moving so your decision is financially sound.
Image: xavierarnau
The post Moving to One of These 9 States Could Save You Thousands appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

Why Even Full-Time Workers Struggle With Expenses

Unemployment is low, inflation is historically low and even wages are perking up, leading many observers to believe the U.S. economy is humming along nicely. So why do many Americans say they are struggling?
A new book born of meticulous, years-long research offers a fresh insight into this burning question. Month-to-month swings in income, even for those with full-time jobs, are often the cause of Americans” financial anxiety, claim the authors of “The Financial Diaries: How Americans Cope in a World of Uncertainty.”
For a stunning number of American households, both income and expenses swing 25% or more in either direction on a regular basis, leaving many families scrambling on a month-to-month basis, even if things don’t look so bad annually, the authors argue in their book and a Harvard Business Reviews essay.
Economic data tends to examine broad movements; even at its most micro, it tends to identify years-long trends. Researchers Jonathan Morduch and Rachel Schneider had a sense government statistics were missing things, so they went nano. They spent 12 months getting 235 families to track every single dollar going in and out — 300,000 cash flow events in all. The product of their painstaking research offers perhaps the clearest view yet of why even middle-class Americans find themselves living with deep economic anxiety. The book even offers up a new term — “precarity,” or precarious economic volatility — to describe the plight of everyday Americans.
One of the more bold claims made in the book: Despite all the talk about income inequality, the authors say income instability has risen even faster and is the more immediate problem.
Lexington Law Credit Repair:
article aside.callout {
border: 1px solid #ccc;
}
div#cc-main-hero-lex-cr {
padding: 0 20px;
overflow: hidden;
width: 100%;
margin-bottom: 15px;
}
div#cc-main-hero-lex-cr div.cc-container {
color: white;
font-family: “Proxima Nova”, Arial, sans-serif;
line-height: normal;
max-width: 1170px;
margin: 0 auto;
text-align: center;
}
div#cc-main-hero-lex-cr div.cc-container div.content-cr {
max-width: 700px;
margin: 0 auto;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 30px;
line-height: 100%;
font-weight: 600;
color: #666;
margin-bottom: 5px;
}
div#cc-main-hero-lex-cr p.sub-cr {
color: #666;
font-size: 18px;
margin-top: 0px;
max-width: 420px;
margin: 0 auto;
line-height: normal;
}
div#cc-main-hero-lex-cr p.sub-cr span {
color: #5e87a5;
font-weight: bold;
}
div#cc-main-hero-lex-cr p.cta-cr {
margin-top: 20px;
color: #666;
font-size: 18px;
margin-bottom: 5px;
line-height: normal;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 33px;
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.phone-number-cr:hover {
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
margin-right: 5px;
width: 24px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
display: block;
font-size: 21px;
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.learn-more-cr:hover {
text-decoration: none;
}
div#cc-main-hero-lex-cr a.learn-more-cr span {
color: #c7a272;
}
div#cc-main-hero-lex-cr img.logo-lex-cr {
max-width: 400px;
margin-top: 20px;
width: 100%;
}
@media only screen and (max-width:767px) {
div#cc-main-hero-lex-cr {
padding: 0 10px;
margin-top: 0px;
margin-bottom: 0px;
}
div#cc-main-hero-lex-cr div.cc-container {
margin-top: 0px;
margin-bottom: 10px;
text-align: center;
}
div#cc-main-hero-lex-cr div.cc-container div.content-cr {
max-width: 500px;
display: inline-block;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 26px;
}
div#cc-main-hero-lex-cr p.sub-cr {
font-size: 18px;
margin-bottom: 15px;
}
div#cc-main-hero-lex-cr p.cta-cr {
font-size: 14px;
margin-top: 10px;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 24px;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
width: 18px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
font-size: 18px;
margin-top: 5px;
}
}
@media only screen and (max-width:400px) {
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 24px;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 21px;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
width: 15px;
}
div#cc-main-hero-lex-cr p.sub-cr {
font-size: 14px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
font-size: 16px;
margin-top: 5px;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 19px;
margin-top: 10px;
}
}

Need Credit Repair Help?Lexington Law can help you remove negative items on your credit reportsFREE consultation from the credit professionals.Call: 1.844.346.3296or learn more

$(‘aside:contains(Lexington Law Credit Repair:)’).css({‘padding’:’0px’,’color’:’#f7f7f7′});
$(‘strong:contains(Lexington Law Credit Repair)’).css(‘display’,’none’);

What’s Income Instability? 
Many readers are familiar with the idea that unexpected expenses — like a health scare or major auto repair bill — can derail many households. But the book establishes another reality that might be new to many: income volatility, even among those with full-time jobs.
The book’s opening anecdote cites a research subject who works as a truck mechanic in Ohio. While he works full time, his pay relies largely on commissions and can vary from $1,800 to $3,400 each month. In bad weather, trucks break down more often. That means in the spring and fall months, mortgage payments aren’t made, and the electricity bill goes unpaid. Later, for a fee, the family catches up. (You can see how any missed loan payments may be affecting your credit scores by viewing your free credit report summary on Credit.com.)
This same problem is repeated again and again among the families studied. Morduch and Schneider found that the term “average income” is a bit of a farce, as typical families lived through five months each year with income that swings either 25% above or below “average.”
“This is creating a lot of anxiety and uncertainty that is impossible to see in the usual data,” Morduch said in an interview. About five months out of each year, incomes “weren’t even close” to average.
“Often we see the (financial) problems as a discipline problem, a failure of personal responsibility. What we’re trying to say is there’s something else going on,” he said. “The underlying conditions are really hard. It probably isn’t just about self-discipline.”
Income swings are to be expected among families suffering job loss, the self-employed or those who rely on tips, like waiters. But the researchers found a stunning rate of income volatility even among those with traditional-sounding full-time jobs.
“This was the single biggest surprise (in the research),” Morduch said. “There’s insecurity that’s because you are going to lose your job, but that’s not what’s driving anxiety for these folks … What we see is that when paychecks bounce from month to month, people can be making good financial choices but are still struggling.”
As a result, even earners who are safely in the middle class spent a month or two living as poor or “near poor,” the book says. The problem for many is better described as a lack of liquidity — getting enough cash to pay the mortgage this month — than as insolvency, or a hopeless difference between income and expenses.
“Not balancing on a high wire, driving on a rocky road,” the book says. “(There’s a) distinction between not having money at the right time vs. never having the money.”
While economists might just be becoming aware of this month-to-month struggle, the financial industry has known about it for some time. That’s one reason there are more payday lending storefronts in America than McDonald’s restaurants. (You can find tips for escaping payday loan debt here.)
Trouble Saving for a Rainy Day
The volatility problem is closely related to Americans’ lack of emergency savings. Study after study shows a large percentage of Americans don’t have the recommended three months of living expenses stored in short-term savings. Some studies show even more dire data. A stunning 46% of Americans told the Federal Reserve in 2015 they could not cover an emergency $400 expense without selling something or borrowing the money. Income and expense volatility, combined with no savings, is a perilous combination.
“Households don’t have a big cushion. Into this mix is the reality that levels of income have not risen – the bottom 50% has seen no income growth since 1980 — then you are really squeezed,” said Morduch. As a result, even in good months, earners don’t have any extra left over to build a rainy-day fund – economists say their budgets have no “slack.”
“There is a knock-on effect of diminished slack so when the budget gets hit by a car repair or the house needs a new roof, it’s just that much harder,” Murdoch said.
How did this income volatility come to pass? The authors blame what they call “the Great Job Shift.” Employers are increasingly sharing risk with their workers. That means cutting back hours, often on the spot, when times are slow. Or basing a large portion of pay on commission, as in the case of the truck mechanic. In other cases, workers rely on tipping to top-up wages that otherwise aren’t livable. In one of the book’s more frustrating scenes, as casino blackjack dealer in Mississippi describes how her income relies on events as whimsical as the nearby college football team schedule.
The subjects in the book are anonymized. Their names changes and a few other personally identifiable data points have been obscured, but otherwise, their financial diaries are disturbingly real.
How Do We Fix it? 
When asked for policy recommendations, Morduch leaps to the defense of the Consumer Financial Protection Bureau, which he says is working hard to regulate many of the short-term lending products that have emerged to services workers with volatile incomes. He says there’s also been constructive conversations with large firms about making hourly wage worker schedules more predictable, and moving away from so-called on-call workers. The “Schedules That Work Act” that would have promised some workers two-weeks scheduling notices was considered but tabled by Congress under President Barack Obama.
Other changes would help, too. Many social benefits programs are cumbersome to apply for and don’t offer much help for families who are only occasionally “near poor,” and might need help one or two months per year.
Changes that could encourage saving for short-term events would help, too. Tax-advantaged products like 401K accounts help families plan for decades in the future, but families living on the margins are afraid to use them for emergency savings because of the severe early withdrawal penalties. (You can learn more about withdrawing from your 401K here.) More flexible rules would encourage greater use of retirement accounts, Morduch believes.
“A lot of Americans wisely don’t want to lock up their money,” he said. “There isn’t enough attention paid to shorter-term policies.”
In a larger sense, Americans should probably change the way they think about income and spending, Morduch said, and many could learn from research subjects described in the book.
“The families we got to know, they think a lot about liquidity. They have a lot to tell other Americans. Mainly, prepare for a life of ups and downs,” he said.
If you’re looking for ways to keep your finances in check, we’ve got a full 50 ways you can curb and stay out of debt here. 
Image: lovro77
The post Why Even Full-Time Workers Struggle With Expenses appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

Creditor Gets a Judgment Against You — Now What?

It’s a scary prospect: a creditor securing a judgment against you — which is probably why we get so many reader questions about the issue. A judgment represents a legal obligation to pay a debt, meaning a creditor or collector sued you over an outstanding debt and won. But that court win isn’t necessarily written in stone. Judgments can be appealed, reversed, amended or, at the very least, settled for less, depending on the circumstances and what you do next. (First step: Consider visiting a consumer attorney. Some offer free consults —and many will represent you for free if they think a collector has broken the law.)
If you’re dealing with debt collectors and facing a judgment — or are already (perhaps unexpectedly) saddled with one — we’ve pulled together answers to all the major questions that may be on your mind and where you can go from there.
How Does a Creditor or Collector Get a Judgment Against You?
In order to get a judgment against you, the creditor or collector must take you to court. If you don’t respond to a summons, or if you lose, the court will issue a judgment in favor of the creditor or collector. The judgment will be filed with the court, and once that happens, it is public record. That means it will likely end up on your credit reports as a negative item. (You can check your credit for judgments by viewing your free credit report summary on Credit.com.)
How Are Judgments Collected?
One of the main reasons you want to try avoid getting a judgment against you is that creditors may have additional ways to collect once a judgment has been issued. As we mentioned earlier, depending on your state’s laws, they may include going after your bank accounts or other property, or trying to garnish your wages. But as the saying goes, “you can’t get blood from a stone.” As the National Consumer Law Center points out in its book, “Surviving Debt:”
Even if you lose a lawsuit, this does not mean you must repay the debt. If your family is in financial distress and cannot afford to repay its debts, a court judgment that you owe the money may not really change anything. If you do not have the money to pay, the court’s judgment that you owe the debt will not make payment anymore possible.
If you aren’t sure what a judgment creditor can do to collect from you, it’s a good idea to consult a bankruptcy attorney who can help you understand what may be at risk if you don’t pay. The attorney can explain what property you own is “exempt,” or safe from creditors. You can also check out this article on how to get out of debt.
Can a Judgment Be Reversed?
Yes. In certain circumstances, you can ask the court to re-open a judgment or you can formally file an appeal. t’s also possible to have the terms of a judgment altered. And, with a few exceptions, a judgment can be discharged in bankruptcy. However, laws (and the timelines for their implementation) vary by state, so, again, if a creditor secures a judgment against you, it can be in your best interest to consult a local consumer attorney. You can find more about your legal rights post-judgment here.
Can I Settle a Judgment?
The answer to this question is often “yes.” Most judgment creditors know it is often difficult to collect judgments, especially if the debtor doesn’t have wages that can be garnished or assets they can go after. If you are able to get a lump sum of money from, say a relative, you may be able to offer that to the creditor to pay off the judgment. Just make sure you get any agreement in writing before you pay. Make sure the agreement spells out all the terms of the settlement, including the fact that you will not owe any more money after you make the agreed upon payment.
Can I Avoid a Judgment?
Another option is to settle the debt before it goes to court. The creditor may be willing to settle for part or all of the money you owe. Of course that only works if you can manage to pull together money to pay them. If you can, make sure you have a written agreement from them that states they will not pursue the debt in court if you make the payment as agreed. Then check with the court to make sure the matter has been dropped.
How Long Can Judgments Appear on Credit Reports?
Unpaid, they can remain on your credit reports for seven years or the governing statute of limitations, whichever is longer. Once judgments are paid, they must be removed seven years after the date they were entered by the court. But soon those parameters are changing: Beginning in July, the credit bureaus will exclude judgments that don’t contain complete consumer details or have not been updated in the last 90 days. (Wondering how long other stuff stays on your credit report? We’ve got you covered here.)
How Long Can Judgments Be Collected?
There is a specific time period for collecting judgments, and it also varies by state. This “statute of limitations” is often 10-20 years long. In addition, in most states it can be renewed. For that reason alone, it’s best to try to avoid getting a judgment against you in the first place. And if it does happen, it’s best to try to resolve the debt.
Can Interest Accumulate on a Judgment?
Yes. In most states, interest may be charged on a judgment, either at any rate spelled out in state law, or at the rate described in the contract you signed with the creditor. In addition, the judgment may include court costs and attorney’s fees.
Anything Else I Should Know About Judgments?
A debt collector that threatens to get a judgment against you or to garnish your wages or seize your property may be making an illegal threat. Talk with a consumer law attorney to find out if that’s the case.
And just because you haven’t heard anything about a judgment in a while, that doesn’t mean you should assume it has gone away. It’s possible that the creditor could decide at a later time to try again to collect from you. Plus, an unpaid judgment may prevent you from buying a home or getting credit at a decent interest rate. So it’s a good idea to try to resolve the judgment, either by filing for bankruptcy or by paying off or settling the judgment when you are able to.
Remember, when dealing with debt collectors, it pays to know your rights. You learn more about them in our Managing Debt Learning Center.
Reminder: This post is meant as educational information, not legal advice. Please consult an attorney for legal advice.

Discover it® Secured Card – No Annual Fee

Apply Now
on Discover’s secure website

Card Details

Intro Apr:
N/A

Ongoing Apr:
24.24% Variable on purchases & balance transfers

Balance Transfer:

Intro: 10.99% for 6 months

Annual Fee:
$0

Credit Needed:
Poor-Bad-No Credit

Rates and Fees

Snapshot of Card Features

No Annual Fee, cash back on every purchase, and helps you build your credit with responsible use.Your Secured Credit Card requires a refundable security deposit up to the amount we can approve of at least $200 which will establish your credit line. You will need to provide your bank information when submitting your security deposit.We will automatically begin reviewing your account starting at 8 months to see if we can transition you to an unsecured line of credit.Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases.Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.

Card Details +

This article was updated. It originally ran on January 25, 2012. 
Image: walknboston, via Flickr.com

The post Creditor Gets a Judgment Against You — Now What? appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

7 Things You Need to Know About the Statutes of Limitation for Debt

You may not know this, but, yes, debt does technically have an expiration date. It’s subject to a statutes of limitations, which limits how long a creditor or collector has to sue to recoup an unpaid balance. Statutes of limitations (SOL) vary by state and debt type. They’re usually between 3 to 6 years, but some longer windows do apply. Of course, you shouldn’t treat the SOL as a solution to your money woes. For starters, those expiration dates have nothing to do with how long a unpaid debt can appear on your credit report (that’s generally around 7 years — more here) and it’s possible for a court to award a judgment to a creditor on time-barred debt if you don’t show up to raise the issue. Plus, there are ways to unwittingly restart the SOL clock. Having said all that, if you have old unpaid debts, it can be helpful to know the statutes of limitation that applies to them. (You can check your credit for outstanding accounts by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your free credit report summary on Credit.com.)
Here are the seven most common questions we’ve received from readers about the statutes of limitation for debt.
1. How Long Is the Statute of Limitation for my Debt?
The time period typically either starts when you fall behind on a debt, or from the date of your last payment, and the length of time depends on state law for that type of debt. This chart is a guide to state statutes of limitation. Unfortunately, it is not always clear-cut. So it’s a good idea to check with your state attorney general’s office, a consumer law attorney or legal aid, especially if you are being threatened with legal action.  
2. Can a Debt Collector Try to Collect After the SOL Has Expired? 
In many cases, yes. However if you tell the debt collector not to contact you again, they must stop. It’s a good idea to put your request in writing. Once they’ve received it, they can contact you only to confirm that they have received your request or to notify you of legal action they are taking to collect. In some states, however, trying to collect a time-barred debt is illegal and a creditor who attempts to do so is breaking the law. 
3. If the SOL Has Expired Can I Still Be Sued? 
It is not uncommon at all for consumers to be sued for time-barred debts. If you are sued for an old debt and the statute of limitation has expired, you can raise the expired statute of limitation as a defense against the lawsuit (here are some other debt collection defenses you can use, too). However, many consumers do not appear in court and therefore the creditor or collector gets a judgment against them. That is why you should not ignore a legal notice about a debt, even if you think the debt is too old. A consumer law attorney or bankruptcy attorney can help you figure out how to respond. 
4. Should I Pay an Old Debt? 
That’s something only you can decide. However, keep in mind that if you pay anything — even a small amount — on an old debt, you may restart the statute of limitation. That’s why it can be risky to pay an old debt if you can’t afford to pay it in full. You could open yourself up to collection efforts, or even a lawsuit, for the entire amount the collector says you owe. 
5. Can a Debt Still Appear on my Credit Reports After the SOL Has Expired? 
In many cases, the answer is yes. The length of time that negative information may be reported is governed by the federal Fair Credit Reporting Act. Most negative information can be reported for seven years. The statutes of limitation for most consumer debts, on the other hand, is four to six years. So you could have a situation, for example, where the statute of limitation expired on a debt in four years but the related collection account still appears on your credit reports for another three years after that. And, yes, collection accounts can do serious damage to your credit scores.
6. I Took Out a Debt in One State but Moved. Which State’s SOL Applies? 
That can be a difficult question to answer. Consumers can generally be sued in the state where they took out the loan or the state where they currently live. Sometimes the statute of limitation will be based on the laws of the state described in the contract (in the case of credit cards, that will be spelled out in the credit card agreement). 
When it’s not clear which state’s SOL applies, it is often up to the court to decide. In a number of court cases, the statute of limitation that was shortest was applied. But that’s not true in all cases. That’s why it is helpful, if you are being sued for a debt, to consult with a consumer law attorney who can help you understand whether the statute of limitation has likely expired.
7. What Is the SOL for Court Judgments? 
If a creditor or collector has obtained a court judgment there is often a separate statute of limitation that applies to judgments. (Tip: If you have unresolved debts, be sure to at least get your free annual credit reports, as we mentioned, to see if any judgments are listed.) In many states, that time period is 10 years or longer, and judgments may be renewed. Learn more about how about judgments work here.

Discover it® Secured Card – No Annual Fee

Apply Now
on Discover’s secure website

Card Details

Intro Apr:
N/A

Ongoing Apr:
24.24% Variable on purchases & balance transfers

Balance Transfer:

Intro: 10.99% for 6 months

Annual Fee:
$0

Credit Needed:
Poor-Bad-No Credit

Rates and Fees

Snapshot of Card Features

No Annual Fee, cash back on every purchase, and helps you build your credit with responsible use.Your Secured Credit Card requires a refundable security deposit up to the amount we can approve of at least $200 which will establish your credit line. You will need to provide your bank information when submitting your security deposit.We will automatically begin reviewing your account starting at 8 months to see if we can transition you to an unsecured line of credit.Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases.Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.

Card Details +

Dealing with debt? if you’ve got questions about how to best manage those burgeoning balances, ask away in the comments section below and one of our experts will try to get back to you. In the mean time, feel free to check out of Managing Debt Learning Center. 
This article has been updated. It originally ran on April 20, 2015.
Image: iStock
The post 7 Things You Need to Know About the Statutes of Limitation for Debt appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

50 Things Anyone Dealing With a Debt Collector Should Know

Getting a debt collection call is never fun. Even in a best-case scenario — it’s your debt and you can pay — that outstanding account can cause a headache or two. And if the debt’s contentious, not yours or just too darn high, the situation can become (or at least feel) a lot more dire. But knowledge is a superpower when it comes to dealing with a debt collector in any shape or form.
Here are 50 things anyone who’s gotten a debt collection call should know.
1. You Have Rights
Yes, a debt collector has every right to collect on a debt you legitimately owe, but there are rules and restrictions — formally known as the Fair Debt Collection Practices Act (FDCPA) — that govern how they can go about their business.
2. Old Debts Expire
Each state also has laws specifying how long collectors have to sue you over a debt. In most states, these time limits last for four to six years after the last payment made on the account. You can consult this chart to determine your state’s statutes of limitations (SOL) — and if you get a call about a very old debt, you should really consult this chart, because …
3. Zombie Debts Are Real …
Collection accounts get resold all the time, and it’s not uncommon for someone to get a call about a debt that’s outside the SOL or no longer owed. The latter is illegal, but the former may not be: The SOL applies to how long a collector has to sue you over a debt, but, in many cases, they can still try to get you to pay.
4. … & You Can Wind Up Reanimating Them
If the old account is legit, you can unwittingly restart the clock on the SOL by paying part of the debt or even agreeing over the phone that it’s yours. If you get a call about a debt, be sure to get all the details before saying you owe. That due diligence is doubly important because …
5. There Are a Lot of Scammers Out There
That’s not to say you’re talking to one, but you’ll want to stay on guard. “Ask the caller for their name, company, street address, telephone number and if your state licenses debt collectors, a professional license number,” writes the Consumer Financial Protection Bureau (CFPB), which has more tips for spotting a debt-collection scam on its website.
6. You’re Entitled to Written Verification
In fact, FDCPA requires a collector to send a statement outlining the specifics of the debt within five days of contacting you. That notice — which is basically step one in determining whether a debt’s legit — must include the amount of money you owe, the name of the original creditor and what actions to take if you believe the information is wrong.
7. You Can Dispute the Debt
Debt collectors must investigate a debt so long as you file a dispute in writing within 30 days of their initial contact — and they’re to cease contact until they verify (again in writing) that you owe the amount in question.
8. Collectors Can’t Just Inflate What You Owe
Regarding that amount: A debt collector can charge interest, but only up to the amount stipulated in your contract with the original creditor. Most states also cap the amount of interest and fees a debt collector can charge.
9. You Can Ask Them to Stop Calling 
Per FDCPA, a collector must cease contact if you send a letter requesting they do so. That letter won’t absolve you of a legitimate debt, but it can curb incessant and heated phones calls, which is important because …
10. Too Many Calls Are Illegal
Another facet of FDCPA: Collectors can’t call you too early in the morning (before 8 a.m.), too late at night (after 9 p.m.), too many times a day or at work once you tell them not to. They’re also not allowed to use abusive language — no cuss words or name-calling.
11. Collectors Can Contact Friends & Family 
But only to locate you. They can’t identify themselves as a debt collector, and there are limits on the number of times they can contact a third party.
12. You Can’t Inherit a Debt
Speaking of family, you can’t inherit a loved one’s debt after they die — unless, of course, you cosigned on the loan in question. Debts owed by the deceased are generally paid out of their estate, not by friends or family, so don’t panic if you’re an executor. You can learn more about dealing with a loved one’s debt after death here.
13. Ignoring a Debt Can Have Big Consequences
It can be tempting to cut off communication with debt collectors, particularly if they’re stepping out of line. But doing so won’t make that debt go away. And a debt collection account can just lead to a whole lot of phone calls. For one …
14. That Account Can Appear on Your Credit Report …
Debt collectors can report outstanding accounts to the consumer credit bureaus. You can check for one by pulling your free annual credit reports or viewing your free credit report summary on Credit.com.
15. … But Only if They’re Accurate
You can dispute an erroneous debt collection account or an error on a legitimate one, like an inaccurate balance or payment status, with the credit bureaus.
16. Resale of the Debt Won’t Restart the Reporting Clock
If your debt changes hands, as collection accounts often do, that sale does not restart the seven-year credit reporting window. If the new collector re-ages the account, you can dispute the date with the credit bureaus. And if the same account is being reported by multiple collection agencies, that’s a violation of the Fair Credit Reporting Act (FCRA), and you can dispute the accounts listed by the agencies that no longer own the debt, too.
17. You’ll Soon Get Extra Time to Settle Medical Debts
Thanks to a settlement brokered by state attorney generals back in 2015, the credit bureaus will soon wait 180 days from the time a medical debt was first reported before adding it to your credit file, giving you more time to address bills with your insurance and health care providers. (The settlement gave the bureaus a little over three years to implement these changes.)
18. Not All Collectors Report Right Away
Some collectors will hold off on notifying the bureaus so they can use credit reporting as leverage to get you to pay. This practice is important to note, because it means …
19. You Can Owe a Debt That’s Not on Your Credit Report
Checking your credit can help you verify a debt or track down a debt collector you’re looking to pay, but don’t take an account’s absence as absolute proof you don’t actually owe. The collector just may not have reported it to the bureaus yet.
20. Many Collectors Are Willing to Negotiate 
Collectors often buy debts for pennies on the dollar, so they don’t need to recoup the full amount to turn a profit — and yes, that means one may be willing to let you settle for less. You can find tips for negotiating with collectors (and creditors) here.
21. It’s Important to Get an Agreement in Writing
If your negotiation tactics work, be sure to get the terms the collector is agreeing to in writing — particularly if they involve skipping further adverse action against you.
Lexington Law Credit Repair:
article aside.callout {
border: 1px solid #ccc;
}
div#cc-main-hero-lex-cr {
padding: 0 20px;
overflow: hidden;
width: 100%;
margin-bottom: 15px;
}
div#cc-main-hero-lex-cr div.cc-container {
color: white;
font-family: “Proxima Nova”, Arial, sans-serif;
line-height: normal;
max-width: 1170px;
margin: 0 auto;
text-align: center;
}
div#cc-main-hero-lex-cr div.cc-container div.content-cr {
max-width: 700px;
margin: 0 auto;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 30px;
line-height: 100%;
font-weight: 600;
color: #666;
margin-bottom: 5px;
}
div#cc-main-hero-lex-cr p.sub-cr {
color: #666;
font-size: 18px;
margin-top: 0px;
max-width: 420px;
margin: 0 auto;
line-height: normal;
}
div#cc-main-hero-lex-cr p.sub-cr span {
color: #5e87a5;
font-weight: bold;
}
div#cc-main-hero-lex-cr p.cta-cr {
margin-top: 20px;
color: #666;
font-size: 18px;
margin-bottom: 5px;
line-height: normal;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 33px;
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.phone-number-cr:hover {
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
margin-right: 5px;
width: 24px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
display: block;
font-size: 21px;
color: #5e87a5;
}
div#cc-main-hero-lex-cr a.learn-more-cr:hover {
text-decoration: none;
}
div#cc-main-hero-lex-cr a.learn-more-cr span {
color: #c7a272;
}
div#cc-main-hero-lex-cr img.logo-lex-cr {
max-width: 400px;
margin-top: 20px;
width: 100%;
}
@media only screen and (max-width:767px) {
div#cc-main-hero-lex-cr {
padding: 0 10px;
margin-top: 0px;
margin-bottom: 0px;
}
div#cc-main-hero-lex-cr div.cc-container {
margin-top: 0px;
margin-bottom: 10px;
text-align: center;
}
div#cc-main-hero-lex-cr div.cc-container div.content-cr {
max-width: 500px;
display: inline-block;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 26px;
}
div#cc-main-hero-lex-cr p.sub-cr {
font-size: 18px;
margin-bottom: 15px;
}
div#cc-main-hero-lex-cr p.cta-cr {
font-size: 14px;
margin-top: 10px;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 24px;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
width: 18px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
font-size: 18px;
margin-top: 5px;
}
}
@media only screen and (max-width:400px) {
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 24px;
}
div#cc-main-hero-lex-cr a.phone-number-cr {
font-size: 21px;
}
div#cc-main-hero-lex-cr a.phone-number-cr img {
width: 15px;
}
div#cc-main-hero-lex-cr p.sub-cr {
font-size: 14px;
}
div#cc-main-hero-lex-cr a.learn-more-cr {
font-size: 16px;
margin-top: 5px;
}
div#cc-main-hero-lex-cr div.cc-container p.cc-headline {
font-size: 19px;
margin-top: 10px;
}
}

Need Credit Repair Help?Lexington Law can help you remove negative items on your credit reportsFREE consultation from the credit professionals.Call: 1.844.346.3296or learn more

$(‘aside:contains(Lexington Law Credit Repair:)’).css({‘padding’:’0px’,’color’:’#f7f7f7′});
$(‘strong:contains(Lexington Law Credit Repair)’).css(‘display’,’none’);

22. A Collection Account Will Hurt Your Credit Score …
If it hits your report, a single collection account can cause your credit score to drop 50 to 75 points or more. The better your score, the harder the fall.
23. … For Quite Some Time …
Collection accounts, paid or unpaid, can be reported to the credit bureaus for seven years, plus 180 days from the date the original account went delinquent, though its effect on your score will lessen over time. (We’ve got more on how long stuff stays on your credit report here.)
24. … Even if You Pay …
You read that right: Paying a collection account won’t guarantee removal from your credit reports. In fact, thanks to their contracts with the credit bureaus, most collection agencies will continue to report the account for that full seven-year timeframe — though there are signs that’s changing.
25. … But There Are Reasons to Settle
If the account is sticking around, make sure it’s at least (correctly) reported as paid. Paid collections carry less weight than unpaid ones, and some newer credit scoring models even ignore them entirely. Beyond that, settling a debt can stop a collector from taking further action against you. Don’t panic, though …
26. The Debt Itself Won’t Land You in Jail
You can’t be arrested just because you owe someone money, so if a debt collector keeps talking jail time, they’re seriously out of line.
27. No Threats Allowed
In fact, they’re illegal. FDCPA prohibits dire threats of arrest, violence or even a lawsuit if the collector doesn’t intend to file one. Having said that …
28. You Can Be Sued
So long as the statute of limitations in your state haven’t expired and you legitimately owe, though there’s no guarantee a collector won’t try to get a court ruling on a debt you’re contesting or otherwise unable to pay.
29. Small Payments Won’t You Spare You
A debt collector can still move to sue you for the outstanding balance so long as it’s legit and within the SOL. That’s why, as we mentioned earlier, it’s important to get a payment agreement in writing. A signed agreement not to sue could hold up in court, but even if you have one don’t ignore a court summons.
30. Skipping a Court Date Can Cost You
Failure to appear in court could result in a warrant for your arrest, which is why confusion persists as to whether an unpaid debt can land you in prison. It’s more likely your absence will net a default judgment for the collector, which can lead to garnishment.
31. Garnishment Lets a Collector Seize Funds …
Usually they’ll garnish your paycheck or levy your bank account. In most cases, however, the collector can’t do this without a court order. (The exceptions are back taxes, outstanding federal student loans and unpaid child support.)
32. There Are Limits to How Much They Can Take
Garnishment caps are established by federal law and state law, meaning they can vary, depending on where you live. Some states don’t allow garnishment on certain types of debt at all. You can consult a local consumer attorney or call your state Attorney General’s office to get an idea of the laws in your area.
33. Certain Assets Are Safe From Garnishment
Those assets include Social Security, disability and retirement accounts, though things get tricky once those funds hit your bank account, and there are exceptions here, too, that usually involve unpaid federal debts.
34. A Judgment Isn’t Always Final
In certain circumstances — say you weren’t properly served papers notifying you of the lawsuit — you can ask the court to re-open a judgment or formally file an appeal.
35. It Can Also Be Settled
Since it can be difficult to collect on a judgment, especially if your wages or assets can’t be garnished, a collector may be willing to accept a lump sum payment to put the debt to bed. Again, just make sure you get an agreement in writing before forking over any funds.
36. A Judgment Can Blemish Your Credit …
Technically, unpaid judgments can remain on your credit reports for seven years or the governing statute of limitations, whichever is longer. Once paid, a judgment must be removed seven years after the date it was entered by the court.
37.  … But It’s Getting Harder 
Starting July 1, the credit bureaus won’t list a judgment on your credit report unless it includes, at a minimum, your name, address, Social Security number and/or date of birth. Plus, judgments will be removed if public records aren’t checked for updates at least every 90 days.
38. Judgments Can Involve Interest
But, again, only at the rate specified in the contract you signed with the creditor. There are state-level caps and restrictions at play here as well.
39. Judgments Can Expire
The collector has a set time in which they can collect on a judgment. This SOL varies by state but is often 10 to 20 years long, and in most states it can be renewed. That’s why …
40. Judgments Are Best Avoided
It can be tempting to try to ride out your state’s SOL, but unless you’re very near or past that due date, it’s not really worth chancing a lawsuit, judgment and subsequent garnishment (with interest!), not to mention the big damage an unpaid account can do to your credit. If you do have a judgment against you, you may want to consider settling.
41. You Can Sue a Debt Collector …
Not simply as a means to get out of a debt you do owe, but if a collector is in clear violation of FDCPA, you can file a claim against them so long as it’s within one year of the date the law was violated. You’ll need proof that the collector broke the law, though, so it’s important to catalog your communications with a debt collector — even before things potentially take a turn for the worst.
42. … Even if They Have the Wrong Number
A collector shouldn’t be bothering you about a debt you don’t actually owe, so if they continue to harass you after you’ve made it clear you’re not the person they’re looking for, that’s grounds for a lawsuit.
43. Robocalls to Your Cell Are a Big No-No …  
Thanks to the Telephone Consumer Protection Act (TCPA), those are illegal. Per TCPA, companies, not just collection agencies, can’t call you on your cellphone using an automated telephone system or pre-recorded message without your consent. 
44. … Unless They’re on Behalf of Uncle Sam
One big exception to the rule: Debt collectors working on behalf of the federal government can autodial you, but they’re currently limited to three robocalls a month, unless you give them permission to call more.
45. Hiring a Lawyer May Not Cost You …
Attorneys specializing in debt collection cases typically offer a free consultation — and many will often represent you for free if they think a collector has broken the law. (They’ll collect their fees from the plaintiff.)
46. … & Should Cease Communications
In general, a debt collector can’t contact you if you tell them you have an attorney and that attorney is handling your debts.
47. You Can Report Rule-Breakers …
Debt collection agencies fall under the purview of the CFPB, so if you’re dealing with a debt collector who’s way over the FDCPA line, you can file a compliant with the bureau.
48. … & Scammers, Too
If they’re trying to scam you, there’s a good chance they’re trying to scam others, too. That’s why it’s important to file a complaint with the Federal Trade Commission and your state Attorney General’s office so they can investigate the callers.
49. Bankruptcy Is an Option
Collectors can’t try to recoup a debt discharged in bankruptcy, but that doesn’t mean you should rush to file. For starters, not all debts are dischargeable. Plus …
50. It’ll Wreck Your Credit
Bankruptcy is a major credit score killer. It can cause your score to drop as much as 200-plus points when it hits your file. And you’ll be stuck with the big, old blemish for quite some time. Some bankruptcies can stay on your credit for up to 10 years and can affect your ability to get a loan that entire time. If you’re considering bankruptcy, be sure to consult with a consumer attorney.
Remember, there are ways to keep a debt from going to collections. If you fall behind on your payments, contact your creditor immediately to see if you can work out a payment plan or refinance. And keep an eye on your mail: Sometimes bills, particularly medical debts, go to collections simply because you don’t know you owe.
Want to make sure you don’t go in the red? We’ve got 50 ways to stay out of debt right here. 
Image: wundervisuals

The post 50 Things Anyone Dealing With a Debt Collector Should Know appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

Americans Are Dying With an Average of $62K of Debt

You’re probably going to die with some debt to your name. Most people do. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875.
The data is based on Experian’s FileOne database, which includes 220 million consumers. (There are about 242 million adults in the U.S., according to 2015 estimates from the Census Bureau.) To determine the average debt people have when they die, Experian looked at consumers who, as of October 2016, were not deceased, but then showed as deceased as of December 2016. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%).
These were the average unpaid balances: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391.
That’s a lot of debt, and it doesn’t just disappear when someone dies.

Free Credit Consultation – Call 844-346-3296
Repairing Your Credit With Lexington Law Can Help You Save Money
Get Help Now
Privacy Policy
What Does Happen to Debt After You Die?
For the most part, your debt dies with you, but that doesn’t mean it won’t affect the people you leave behind.
“Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might.
That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. (For example, federal student loan debt is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.)
There are lots of ways things can get messy. Say your only asset is a home other people live in. That asset must be used to satisfy debts, whether it’s the mortgage on that home or a lot of credit card debt, meaning the people who live there may have to take over the mortgage, or your family may need to sell the home in order to pay creditors. Accounts with co-signers or co-applicants can also result in the debt falling on someone else’s shoulders. Community property states, where spouses share ownership of property, also handle debts acquired during a marriage a little differently.
“It’s one thing if the beneficiaries are relatives that don’t need your money, but if your beneficiaries are a surviving spouse, minor children — people like that who depend on you for their welfare, then life insurance is a great way to provide additional money in the estate to pay debts,” Rayndon said.
How to Avoid Burdening Your Family
One way to make sure debt doesn’t make a mess of your estate is to stay out of it. You can keep tabs on your debt by reviewing a free snapshot of your credit report on Credit.com, in addition to sticking to a budget that helps you live below your means. You may also want to consider getting life insurance and meeting with an estate planning attorney to make sure everything’s covered in the event of your death. If you’re worried about leaving behind debt after death, here’s more on how protect your loved ones.
Poor planning can leave your loved ones with some significant stress. For example, if you don’t have a will or designate beneficiaries for your assets, the law in your state of residence decides who gets what.
“If you don’t write a will, your state of residence will write one for you should you pass away,” said James M. Matthews, a certified financial planner and managing director of Blueprint, a financial planning firm in Charlotte, North Carolina. “Odds are the state laws and your wishes are different.”
It can also get expensive to have these matters determined by the courts, and administrative costs get paid before creditors and beneficiaries. If you’d like to provide for your loved ones after you die, you won’t want court costs and outstanding debts to eat away at your estate.
Remember, estate planning can involve more than just drafting a will. Here are 7 documents you’ll need to fill out before you die. How do you deal with your debt and its effect on your plans for the future? Join the conversation on Facebook or in the comments section below.
Image: monkeybusinessimages

 
The post Americans Are Dying With an Average of $62K of Debt appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

Here’s Why You May Want to Talk to That Debt Collector Before Tax Season Ends

Here’s something your may not know: Tax season is like Christmas for debt collectors.
In fact, as a past-president of a national debt collection company, I can tell you some agencies will collect as much money from February through May as in the remaining eight months of the year. Why?
Well, the first reason is a bit obvious: Many consumers in debt will receive a tax refund and go on to use that money to pay off their delinquent debt. Second, many debt collectors are good at what they do and want to help consumers resolve their outstanding liabilities. They’re willing to work out or negotiate a payment plan the consumer now has the ability to repay. (And, yes, that means the debt collector who’s been contacting you may be willing to settle up for less than what you owe.)

Free Credit Consultation – Call 844-346-3296
Repairing Your Credit With Lexington Law Can Help You Save Money
Get Help Now
Privacy Policy
So who has the upper hand when it comes to getting debt repaid during tax season? If the cards are played right, both the consumer and the debt collector come out ahead.
During this time of year, consumers are generally going to come across two types of debt collectors. The first is a debt collector who understands a consumer has access to a limited tax refund — and is potentially trying to pay off a multitude of debts. This collector will be looking to help the consumer resolve as many debts as possible with the funds they receive back from Uncle Sam. The other type of debt collector will hold their ground, knowing the consumer has funds to pay off a singular debt, and will ultimately refuse to negotiate payment for a lesser amount. Odds are consumers will run across both types of debt collectors during this time of year.
What Drives a Debt Collector’s Settlement Stance?
If you have an outstanding debt, it is important to understand the delicate balance collectors face during tax season. Several factors determine what debt collectors ultimately are able to do for consumers looking to settle a debt for less than what is owed.
The main factor is the client whose behalf they are collecting on. Settlements live and die with the requirements of a client; either they authorize the debt collector to offer a settlement or they do not. If the client allows for settlements, it is dependent upon the agency as to when, where and/or how they offer one. Some agencies may only offer settlements for accounts on file for 60 days or more, whereas other companies will offer settlements on the first day the account gets to their office.
The Odds Are in Your Favor
It is more probable than not that during tax season a debt collector has the ability to offer a settlement. Contrary to popular belief, debt collectors do not like to turn away money, especially this time of year. While one may hold firm for a while, when approached with a reasonable settlement offer, they will generally do what is in their power to get it approved. They may be willing to waive excess interest, late fees and other non-principal-related charges before tax season is up as well.
On the flip side, consumers should not expect a debt collector to take “pennies on the dollar” to settle accounts. Even if their agency did directly purchase the debt — which happens less frequently these days — the debt collector you’re dealing with isn’t the person who directly bought the debt, and they are going to be required to follow the guidelines set forth by their employer. You can find more tips for negotiating with a collector here.
The Bottom Line
Tax season can be a mutually beneficial time for the consumer and the debt collector, so if you’re hoping to shore up an outstanding account and/or are looking to strike a deal, now may be the right time to do so.
Just keep in mind, if one side tries too hard to “game” the other, an opportunity to resolve a bad debt will likely fall through and that bill will remain delinquent. At the end of the day, if consumers and debt collectors engage in a professional and respectful dialogue, it’s likely they’ll reach a resolution that benefits all parties.
[Editor’s Note: A collection account can wind up hurting your credit score. To see where yours stands, you can view your free credit report snapshot, updated every 14 days, on Credit.com.]
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.
Image: filadendron

The post Here’s Why You May Want to Talk to That Debt Collector Before Tax Season Ends appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

3 Rules to Live by If You Want to Get Out of Debt

When you’re so good at saving money that you can retire at age 31, people understandably want to hear your money tips. That’s how Clark Howard ended up with his own radio show, where he takes consumers’ questions about all things personal finance.
As it often is, debt has been a popular topic recently, and Howard has a few tried-and-true tips he likes to share with consumers. Whether you’re committed to paying down huge credit card balances or simply want to avoid ending up in debt, here are three things Howard recommends you do.

Get Your Free Credit Score & Monitoring
Plus Weekly Updates From Our 50+ Experts
Get It Now
Privacy Policy
1. Always Save Some Money
Saving money is Howard’s primary approach to getting out of debt. Shoot for a savings rate of a dime per dollar earned (or 10%), but if you’re not saving anything right now, start by setting aside a penny per dollar (1%) and increase your savings rate every six months, he said.
“Now you may wonder, what does this have to do with eliminating debt in your life?” he said. “You have to start off by learning to live on less than what you make.”
Unless you can find a way to make more money, that means you need to cut things from your budget and put that extra money toward your debt (or a savings account, so you don’t have to turn to a credit card in an emergency).
2. Pay More Than the Minimum
“A lot of people pay the minimum payment because that’s what the bill says,” said Alex Sadler, managing editor of Clark.com. Doing that could leave you in debt for a very long time, so make it a priority to budget for more than the monthly payment. Credit card bills also include a section that says how much you need to pay each month in order to get out of debt in 36 months (three years), which can help you figure out how much room you need to make in your budget to get out of debt.
When you have multiple debts to pay off, Howard recommends using the “laddering method” to save the most money. That means focusing on the debt with the highest interest rate first.
“Keep throwing money at it, and [on] all the others pay the minimum,” Howard said. “Methodically, step by step, work your way to zero debt.”
It helps to make a list of all your debts and their interest rates. In fact, most people who call Howard don’t know how much debt they have, so sitting down and getting a sense of the numbers is a great place to start.
“If you ever want to get out of debt … the first thing you have to do is figure out how much debt you owe, and then you can make a plan,” Sadler said.
3. Find a Cheaper Alternative
One of the most common kind of questions Howard gets these days is about student loan debt, particularly from older consumers who borrowed or cosigned on behalf of children or grandchildren. As with all kinds of debt, the best thing to do is avoid it in the first place, because once you’re in debt, there’s usually not much you can do to get rid of it other than pay it off. (This is especially true of education-related debt, because it’s rarely discharged in bankruptcy.)
“The reality with anybody approaching college is the cost of college needs to be the highest priority,” Howard said. “You may have your favorite, but if your favorite would put you into very heavy debt or your family into very heavy debt, you need to go with a different school.”
Though he’s talking about education, that approach applies to anything that could put you in debt. You can’t always avoid going into debt, but if you save up as much as you can and opt for more affordable things (like a vehicle with fewer options or a home with most but not all of the things on your wish list), you’ll end up borrowing less and spending less money on interest.
As you work to pay down and stay out of debt, keep an eye on your credit scores. Not only will good credit help you qualify for better terms on things like an auto loan or mortgage, it can also make it easier to get everyday necessities like a cell phone or utility accounts. You can see two of your credit scores for free, with updates available every 14 days, on Credit.com
Image: FangXiaNuo

The post 3 Rules to Live by If You Want to Get Out of Debt appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1

5 Ways to Avoid a Ridiculously High Medical Bill

Of all the things that are stressful about personal finance, medical bills might be the worst.
The events leading up to medical bills are difficult if not impossible to predict. On top of that, healthcare pricing is inconsistent, medical bills are often inaccurate and a lot of people have trouble understanding their health insurance coverage. And if you think it’s something you don’t need to worry about, consider this: About a quarter (26%) of people ages 18 to 64 said they or someone in their home had trouble paying medical bills in the last 12 months, according to a nationally representative survey conducted by the Kaiser Family Foundation and the New York Times from Aug. 28 through Sept. 28, 2015.
Medical expenses are undeniably burdensome and difficult to plan for, but that’s exactly why it’s important to try. We asked some medical billing experts to share their top tips for consumers who want to be prepared for whatever their healthcare providers send them in the mail.

Free Credit Consultation – Call 844-346-3296
Repairing Your Credit With Lexington Law Can Help You Save Money
Get Help Now
Privacy Policy
1. Know Your Coverage — & Prioritize Health Savings
Managing medical expenses starts before you get sick or injured. The first place to direct your attention is your health insurance.
“Know your insurance policy inside and out,” said Sarah O’Leary, founder and CEO of ExHale Healthcare Advocates. “The best way to avoid getting overcharged is to know your coverage! Demand 100% of the coverage you’ve paid for – nothing less.”
Even with insurance, you’re likely to have some responsibility for the bills. You can work healthcare costs into your monthly budget, allocate some of your savings for unexpected medical bills or use a tax-advantaged tool like a flexible spending account (FSA) or health savings account (HSA) to cover such bills. (You can find a everything you need to know about HSAs right here.) 
Remember to re-evaluate your coverage and review your health insurance contributions (noted in your paycheck) during open enrollment to make sure your policy suits your needs and your budget. A thorough understanding of your insurance coverage and what you need to save to cover the gaps can make it much easier to absorb the costs of any future medical bills.
2. Get Everything in Writing
When it comes time to actually go to the doctor, ask a lot of questions and get as many details as possible before receiving any treatment. Just like anything else you spend your money on, getting quality, affordable healthcare requires some legwork on the part of the consumer.
“Shop around the cost of your care,” O’Leary said. “An MRI on one side of Main Street might be $3,000, and on the other $300. You can save thousands by shopping around all aspects of your care – doctor visits, lab work, tests, and the costs of non-emergency procedures. Even shopping prescription drug costs can save you money. Negotiate the price with your healthcare provider(s) and get the agreed upon amount in writing.”
Adria Goldman Gross, who runs MedWise Insurance Advocacy in Monroe, New York, also emphasized the importance of written estimates: “Whatever agreed fee amount you have with your medical provider, make sure you have it in writing.”
And as important as it is to get as much information as possible from potential providers, don’t forget to run things by your insurance company. “Make certain you have all necessary pre-approvals from your insurer prior to the test/procedure,” O’Leary said. “If you don’t get proper approvals, the insurer may refuse to pay the claim.”
3. Double Check the Bill
Once you’ve gotten treatment, pay close attention to the paperwork.
“About 80% of all medical bills have errors,” Gross said. (O’Leary said about 60% to 80% of bills have errors.) “I recommend people examine them thoroughly and make sure that they’re not overcharged. On the internet, with some research, people can find usual, reasonable and customary charges for the procedure codes of which they are being billed.”
4. Ask for a Payment Plan
The minute you get an accurate medical bill and realize you can’t afford it, reach out to the healthcare provider.
“In most cases, the healthcare provider will be open to setting up a monthly payment plan with the patient,” O’Leary said. “It doesn’t do them any good to have a patient file for bankruptcy, nor is it to their advantage to hand it over to a debt collections agency.”
5. Make a Backup Plan
If for some reason you can’t work out a payment plan or your budget or emergency savings aren’t enough to help you cover a medical expense, you could consider using a balance-transfer credit card to cover the bill. These cards tout 0% introductory annual percentage rates (APRs) that let you skip the interest for a set period of time. Another emergency funding option? A low-interest personal loan. You can learn more about their pros and cons in our loan learning center. 
Image: didesign021

The post 5 Ways to Avoid a Ridiculously High Medical Bill appeared first on Credit.com.
Source: Ramsey Debt Relief Feed 1