How to Avoid Wage Garnishment

Posted by cmsadmin & filed under Tax & Bankruptcy Law Information.

How to Avoid Wage Garnishment

Wage garnishment is the process of deducting money from someone’s paycheck in order to satisfy debts, credit card debt, back taxes, or child support payments. Wage garnishment must be authorized by a court. Notices are sent to the individual whose wages will be deducted and to their employer.  If possible, it is definitely beneficial to avoid wage garnishment because a history of wage garnishment scares off future and potential creditors.

If you are having trouble keeping up with debt payments, follow these 5 steps to avoiding wage garnishment.

5 Steps to Avoiding Wage Garnishment

1. One of the keys to getting out of financial trouble is understanding exactly how much you owe and who you owe it to. List all your creditors and bills, how much you owe each, what day in the month the bill is due and a total amount you have to pay for all your bills. Knowing the total amount allows you to set that amount apart from your paycheck before you start spending it.

2. Know who owns your debt. Mortgages and student loan debts are often sold to third party companies and investors. By contacting your original creditor you can follow the chain and find out who currently owns your debt. If you are behind on your payments on several debts, prioritize them. Ask your creditors about grace periods. If you owe money to the government make a point of paying these debts off first.

3. Negotiate payment plans with your creditors. Wage garnishment and lawsuits are more effort than they really want to put forth. And getting some money from you over a longer period time is definitely more appealing to them than getting no money from you at all. Banks, credit card companies and the IRS are surprisingly willing to negotiate a new payment plan. For example, the IRS offers the Offer in Compromise plan. If you owe money in back taxes to the IRS certainly look into the Offer in Compromise.

4. Be as honest with your creditors. The more information you give them about your financial situation, the better chance you have of negotiating a payment plan that will work for you. Its almost human nature to avoid contact with people you owe money to, but in the case of creditors the more open and honest you can better chances you have of getting more time and better options. Creditors are people too, and communicating with them will surely benefit you more than ignoring their attempts to reach you.  If you talk with them honestly and often you will certainly improve your chances of avoiding wage garnishment.

5. Obviously keeping to your new payment plan agreements is crucial to avoiding having your wages garnished.  If you can see that you will start falling behind on payments, let your creditors know.

If you are facing wage garnishment, taking these steps to avoid it will not only get the creditors off your back, it will be the first step in taking control of your financial situation and turning your finances around. Being in debt is stressful, take these steps and start putting together a plan to get that weight off your shoulders.

10 Tips for Managing Your Student Loans

Posted by cmsadmin & filed under Private & Federal Student Loan Consolidation.

10 Tips for Managing Your Student Loans

Many college students wake up from their 4-5 year undergraduate daze in their old room at their parents’ house, covered in a cold sweat after a horrific nightmare in which they realize that the real world is upon them and they are buried under a mountain of debt and student loans.

As a student it’s easy to fall into a habit of taking on student loans. Their payment seems so far away and the future is sure to bring great wealth and prosperity. College students don’t realize that unless they immediately enroll into graduate school (which most don’t) there is a lag time between graduation and the high paying job. During this bump in the road it’s easy to lose control of your student loan debt.

Whether you’re still in school or you already graduated and you’ve found yourself in the situation that I just described, these 10 tips can help you manage and maintain your student loan debt.

1.    Know Your Loans: The most crucial step in keeping control of your student loans is to know the circumstances of all your student loans. How much you owe, who you owe it to, when payments are due, how much you pay per payment and when do the loans expire? Keeping careful and diligent records of your loans and payments is crucial to keeping your head above water. It is also important to know whether you have federal loans or loans from a private company as this will determine your repayment options.

2.    Know Your Loans’ Grace Periods:
The grace period of your loan is how long after you graduate before you have to start repaying the loan. If you have different loans they very well may have different grace periods. Again, knowing the terms of your loan, in this case how long before you must start paying it back, is crucial to avoiding fees and penalties.

3.    Consider Your Repayment Options:
Federal student loans will automatically come with a 10 year loan repayment plan. However, if this doesn’t suit your needs there are other options that you can switch to. Extending repayment will lower your monthly payment but greatly increase the amount you pay in interest in the long run.

4.    Early Payment:
If you are in the position that you can pay extra towards your student loans then you should definitely aim to pay off the most expensive student loan first. Don’t pay a little more towards each of your loans, put all extra resources towards paying the most expensive loan off and pay the regular amount for all your other loans. The most expensive loan will carry the highest interest, so by paying it off quickly you will save what you would have had to pay in interest. In general, the quicker you pay the more money you will save.

5.    Lower Your Principal:
If you are able to pay more than is required towards your student loans you should look into lowering your principal. The principal is the total amount you owe. Unless you specifically request to lower your principal any extra you pay will simply be put towards your next payment. By lowering your principal you will lower the amount you will owe in interest.

6.    Having Trouble Making Payments? If you get into financial trouble and you’re looking for solutions it’s important to understand your options. First of all, if you are struggling to make payments due to unemployment, health problems or any of a variety of unexpected pitfalls, know that you can temporarily postpone payments on your federal student loans. If you are considering filing for bankruptcy it is important to know that this will not wipe out your student loan debt.

7.    The Consequences of Defaulting on Student Loans:
Defaulting on your loans can have dire consequences. After nine months of non-payment you are in default of your student loans. At this point your credit score will drop dramatically, your entire loan becomes due and the total amount you owe will increase. The government may begin garnishing your paychecks and seizing your tax refunds to pay off your loans. For private company loans default will kick in much sooner and any co-signer on your loan is also at risk of repercussions.

8.    Loan Forgiveness: There are various options available for loan forgiveness. However, this only applies for federal loans, not those issued by a private company. Loan forgiveness plans will kick in after a considerable time has elapsed, usually 10 years or 20 years. If you qualify, whatever you still owe after the 10 or 20 year period will be forgiven. These plans are offered to specific professions like government employees, teachers, nurses and Peace Corps volunteers, for example.

9.    Pros and Cons of Loan Consolidation: Student Loan consolidation allows you to combine all your loans so you have only one monthly payment with a fixed interest rate. As of 2006 all federal loans come with fixed interest rates. If your loans are from before 2006 you may have a variable interest rate in which case you might benefit greatly from consolidating your loans and having the fixed rate. The down side of loan consolidation is that it will extend the period of repayment thus you will be paying more in interest in the long run. However, if you are struggling to make your payments consolidating your loans will lower the amount you pay monthly.

10.    Communicate with Your Lender: If you move, change jobs, or change phone numbers let your loan lender know. It is your responsibility to make sure they can find you. If you’ve moved without having your mail forwarded to your new address a missed payment will result in a penalty fee. Don’t treat communications about your student loans like junk mail or telemarketing calls. You have a lot of money at stake in your loans and whoever is trying to contact you might have a problem with your loan or perhaps has an offer to somehow save you money.

Keep in mind that your student loans can be flexible. They are more fluid than set in stone. Understanding your situation, knowing the terms of your loans and being aware of your options will allow you to manage your student loans in the most financially efficient way possible.

Comparing Secured Credit Cards and Prepaid Debit Cards

Posted by cmsadmin & filed under Credit Card Debt Consolidation Information.

Comparing Secured Credit Cards and Prepaid Debit Cards

Armed with new technology and faced with a financial recession and a landscape moving towards plastic and away from print money, banks have begun creating specific and specialized products to meet any consumer’s goals or needs. Secured credit cards and prepaid debit cards offer alternatives to typical credit cards for people who have poor credit. Initially, secured credit cards and prepaid debit cards might seem similar, if not synonymous. However, their differences are essential to choosing the right option for you.

Secured Credit Cards
If you have recently filed for bankruptcy, or have amassed late payments that have caused your credit score to drop significantly, a secured credit card is one of the first steps to rebuilding your credit. Debit cards, on the other hand, don’t use credit, so they will have no bearing on your credit rating. By making consistent and timely payments on your secured credit card you will begin to establish positive credit lines to help improve your credit score.

Unlike a regular credit card where you pay the balance off at the end of the pay-period, a secured card requires you to put down an initial security deposit as collateral. The deposit can range from $200 and up. The amount of your security deposit will also be the limit for your card. If you happen to miss a payment the amount due will be withdrawn from your security deposit and your credit score will not be negatively affected.

Secured Credit cards come with high interest rates, and once you reach the pre-established limit you will be unable to use the card until the following pay-period. Once you have established good standing with the card company you will be able to increase the limit on the card.

Secured credit cards are reported to credit bureaus exactly the same way as normal credit cards. So any activity on it is sure to affect your credit score. If you’re looking to improve your credit score, this is the way to go.

Prepaid Debit Cards
A prepaid debit card will have absolutely no bearing on your credit score. A debit card is essentially an ATM card that you can also use to make purchases. When you make a purchase with your debit card it will automatically and instantly withdraw from the account. There are no interest rates or monthly payments involved.

“Prepaid” obviously means that you load money into the account first and then withdraw from it as you make purchases. A prepaid debit card will be accepted anywhere that regular credit cards are.

Since prepaid debit cards don’t involve credit issuers are not concerned with whom they extend cards to. Most don’t ask for employment, credit history or even address information.  This is ideal for people who are not regularly employed or that don’t have a permanent address.

Obviously the bank has to make money somehow, and they do so in the form of fees: transaction fees, activation fees, transfer fees, over-the-limit fees, among others.

If you have been denied by credit card companies for one reason or another, rest assured that there is a plastic option available that will fit your needs. Whether you need to rebuild your credit, or if you’d rather remain anonymous, a secured credit card or prepaid debit card can give you the payment flexibility you seek without the dangers or qualifications of credit cards.

How to Rebuild Your Credit After Bankruptcy

Posted by cmsadmin & filed under Tax & Bankruptcy Law Information.

How to Rebuild Your Credit After Bankruptcy

Most people feel that bankruptcy is the end of the line, and that their financial life is doomed to mediocrity or worse from there on. However, this is not the case. Bankruptcy is only a bump in the road – okay, maybe more like a car accident blocking both lanes of traffic – but it is surmountable, and by taking steps to show credit companies that you are responsible you can turn your credit around in just a few years. It is a fact; credit repair is possible, and you can return to financial success after filing for bankruptcy. Here are some tips on how to do it:

10 Tips for Repairing Your Credit

1.    The first step to rebuilding your credit is to open a checking or savings account and to manage it responsibly. Showing credit companies and banks that you are trustworthy is absolutely crucial.
2.    You should begin depositing around 1/4th of your paycheck into your savings account, and hopefully, after several months the bank will agree to grant you a secured credit card. With secured credit cards you must first put down a security deposit which will be deducted if you default on payments. The security deposit also sets your limit on the credit card. A debit card does not reflect on your credit report, activity on your secured credit card will. Therefore making responsible payments on your secured credit card is absolutely crucial to rebuilding your credit.
3.    Obviously pay all your bills on time. Consistently paying rent and utility bills on time is a great way to build trust with credit companies.
4.    Applying for store or gas cards are simple and low-risk ways to show the credit companies that you can manage money and make timely payments.
5.    Make sure all your open and delinquent accounts are closed. This may be a chore as the people who you owe money to can “sell” your debt to debt collection companies. So you have to use your credit reports to track down your delinquent accounts and make sure the owners of your debt receive your bankruptcy information and close the account. Also make sure your credit report is correct.
6.    To build up good credit you will need a variety of good credit lines. If it makes sense for you, try purchasing a used car. You may need a cosigner, but car loans are relatively easy to get – especially through dealerships who advertise that they negotiate with people with bad credit.
7.    Of course, don’t live beyond your means. Don’t go opening four of five cards, take out a loan, and find out you can’t afford to make payments on all of them. This will only make your credit problems worse. It is crucial that you live within your means and make regular, on time payments on all your accounts in order to build up good credit. You probably will have to be frugal for a while in order to rebuild your credit.
8.    Don’t spend on frivolous luxury items that you don’t need. Any money that you can save is a plus. Make sure that you can make all your monthly payments and then put the rest of the money in the bank.
9.    After several months of being in good standing with your secured credit cards try applying for an unsecured credit card. Again, it is absolutely crucial that you live within your means and make your payments on time. Just because it’s an unsecured card doesn’t mean you can go buy up the store. It’s important to show the credit companies that you can live responsibly within your budget.
10.    Do not resort to payday loans. Cash advance loans can be disastrous to your credit, especially if you get caught in a cycle of extending the loan.

Don’t get me wrong, turning your bad credit around won’t be easy, and it will take patience and dedication. But by taking these steps, and as I’ve said multiple times, paying your bills on time, you can turn your credit around. Studies have shown that after 18-24 months of consistent and good credit history you can qualify for a loan again, so start making strides now to show the credit companies that you are punctual and reliable.

How Consolidating Loans Can Get You Out of the Debt Cycle

Posted by cmsadmin & filed under General Debt & Loan Consolidation Information.

How Loan Consolidation Works

The process of loan consolidation brings all your loans and outstanding bills under one bill with a low interest rate. People with various over drafted or unpaid credit cards, or loans that they are struggling to pay, can negotiate to bring these expenses together, lower the amount due and have an interest rate that is more reasonable and manageable. You might be thinking that this is impossible, why would a credit card company or loan lender agree to accept less money? The simple answer is that receiving less money from a struggling client is better than receiving no money. A client who goes bankrupt will not only be unable to pay their bill, but will end up discontinuing the relationship, resulting in a net loss for the company. As you can see, it is in the loan lender or credit card companies’ best interest to keep you out of debt as well.

Tips for Choosing the Right Debt Consolidation Option

Instead of paying several different creditors interest on these outstanding payments, a consolidated loan only has one interest rate, thus possibly saving you hundreds or even thousands of dollars in interest payments.  Many debt consolidation companies offer a free counseling session with a professional counselor. The debt counselor will be able to look at your finances and direct you to the loan option that is best for you and your specific situation. Just because you attend the free counseling session doesn’t mean you have to sign a contract with that company. Research several options, and read all the fine print and hidden fees. Make sure the lender you sign with is responsible, respected, and most importantly, the right company to meet your specific needs.

Using a debt consolidation company is a great option for anyone struggling to make payments on their debts or bills. They will be able to negotiate with the credit card company, or the loan company to lower the amount of money you owe. With financial expertise, and ample resources, a debt consolidation is much more capable of standing on equal footing with creditors than the average person.

Most secure debt consolidation options involve collateral. You will have to up something of value – like a home or car – against the loan. Rest assured, this does not mean that they get your property in return for the loan, it simply protects the loan lender in case the recipient of the loan is unable to pay. Depending on your specific situation there are many different options available for consolidating debt, like refinancing, or (for credit card debts specifically) reducing the usage of the credit card. While banks and credit card companies offer debt consolidation options, online companies often offer lower interest rates. Another benefit to using an online debt consolidation company is that it allows you to step outside of your local lending market. For example, if you live in a town in Florida your loan is specific to the lending market in your area. By using an online company you can explore loans anywhere, allowing you to choose the best loan from a much wider range of options.

State-based Student Loan Consolidation

Posted by cmsadmin & filed under Private & Federal Student Loan Consolidation.

Each State Has Different Options Regarding Student Loan Consolidation

A perusal through a comprehensive list of state-based student loan programs will reveal a wide variety of options available to students who need to borrow to finance their education, including both federal loans and private loans. What students may not know, however, is that many of these programs also offer special student consolidation loans. After graduation, many students are disillusioned to face the harsh reality of having to deal with student loan repayment. For most, student loan consolidation can prove a helpful way to manage one’s finances in an easier and more responsible manner after college. Consolidating several different loans into one convenient loan will typically result in a lower interest rate, which will lower your monthly payment and give you some slack in repaying it. Sometimes, you may end up with a higher interest rate, which will raise your monthly payment, although it will also shorten the lifespan of the loan, allowing you to take the financial burden off your shoulders sooner than later.


Benefits of Student Loan Consolidation


Student loan debt consolidation can present many benefits to students struggling to pay back their loans. For instance, those taking out student loans in North Carolina will be pleased to learn that the College Foundation of North Carolina offers an interest rate reduction of 0.25% for borrowers who consolidate their loans and make their payments automatically via a debit system. In addition, the interest rate drops by 0.5% after 24 consecutive on-time payments, another 0.5% after 36 consecutive payments, and 1% after 48 consecutive payments. This means that after 48 consecutive on-time payments using the automated debit system, a recent college graduate from Durham or Chapel Hill will have had his or her interest rate reduced by 2.25%!

Options for States without Their Own Consolidation Programs

Depending on your state, there is a variety of both federal and private student consolidation loans from which you can benefit. State consolidation programs, like most other programs, will consolidate various different federal student loans, including Direct Loans and Stafford Loans, while private programs may allow you to merge federal and private loans in some cases.

Nevertheless, not every state has its own federal consolidation program. These states are serviced by companies such as United Student Aid Funds (USA Funds), which is the official national guarantor for student loans and the designated guarantor for several states. Indiana student loans and Arizona student loans, for instance, are consolidated through USA Funds.

Secured vs. Unsecured Debt

Posted by cmsadmin & filed under General Debt & Loan Consolidation Information.

by Brent Barnhart

Secured vs. Unsecured Debt: What’s the Difference?

The subject of debt can seem somewhat overwhelming to understand. That said, being familiar with the different types of debt is essential for those looking to borrow. Without such knowledge, one could easily find themselves in a financial hole. The difference between secured and unsecured debt is substantial, meanwhile student loan debt is a whole other ballpark. By learning about the diversity of debt, one can figure out how to borrow smartly, meanwhile knowing what to expect when it’s time to pay back, especially while seeking a credit score loan.

Secured debt implies debt that usually involves some form of collateral. Such collateral could include a home in the case of a mortgage loan, or perhaps a car in the case of an auto loan. Additionally, secured debt usually has a lower interest than that of unsecured debt. The reason for this is the existence of the aforementioned collateral, because banks can simply keep possession of collateral if a borrower can’t make payments.  Secured debt should always be the first debt that one pays off when addressing their loans, as lenders can easily hold on to your collateral property if you fail to pay accordingly.

Unsecured debt is a different animal than secured debt in the sense that the former entails no collateral whatsoever. What it does entail, however, is a very specific contract or some sort of documentation that guarantees your ability and intent to pay back the loan. These loans are a much bigger risk to lenders due to the lack of collateral, and therefore interest rates are often relatively high. Student loan debt can be viewed as a type of unsecured debt (there is no physical collateral involved), although it is technically “secured” by the government in the sense that the government ensures lenders that the loan will be paid. While failing to make payments on unsecured debt won’t see the immediate loss of your home or car, you will see your credit score suffer immensely. With that in mind, unsecured debt should be paid off after secured debt, as losing your house is easily more traumatic than harming your credit score, although both are obviously undesirable.

Those looking for credit score loans or loans to improve their credit should look into having debt that’s both secured and unsecured. Doing so speeds up the process of improving your credit score and helps in rebuilding your credibility as a legitimate borrower.

Marrying Someone With Bad Credit

Posted by cmsadmin & filed under Credit Card Debt Consolidation Information.

Can Marrying Someone With Bad Credit Affect Your Credit Score?

While finances may not be on the top of one’s list when they’re considering their marriage partner, it’s still something to dwell on. While some wonder if they’re marrying the love of their life, others wonder if they’re simply marrying bad credit. Thankfully, one doesn’t necessarily need to panic if they find that their partner has a bad credit score. In fact, credit scores remain completely separate within a marriage unless a joint loan is filed. There are some instances, though, where seeking a joint loan is beneficial.

Joint loans are issued to multiple people as opposed to ordinary loans issued to a single borrower. Both domestic partners and married couples have the ability to receive a joint loan. Lenders lay down specific guidelines to make sure that s/he is protected in case the joint borrowers split up or have some sort of miscommunication. Joint loan amounts have the potential to far exceed that of a single-borrower loan, therefore making them popular among married couples. Such loans are also a common way for couples to financially share the weight of a debt.

Credit scores only come into play during a joint loan to the primary borrower (the person with the larger income). Since those with higher incomes typically have a better credit score, this works out in the favor of most couples. Thanks to this rule, a loan isn’t out of one’s reach due to the bad credit of their partner. There are instances, however, where the larger earner has the lower credit. What then?

There are still options for those couples whose higher earner has bad credit; taking a different approach to applying for a joint loan is all that it takes. A fairly obvious solution would to be to attempt to improve the poor credit score (how much time this takes to do is completely relative). Another option is to simply have the higher earner apply for a single-borrower loan and have the lower earner save accordingly. Short-term secured loans are also a viable option, as they don’t put as much emphasis on credit scores as most loans do.

Refinancing Auto Loans Tips

Posted by cmsadmin & filed under Auto Refinance Information.

Some Useful Tips on Refinancing Your Auto Loan

While there are many reasons to refinance your auto loan, there are also some factors to consider in approaching a refinance. Be familiar with the following tips to make sure you take the proper steps towards auto loan refinancing, meanwhile avoiding common mistakes and pitfalls of the process.

Most people attempt an auto loan refinance in order to save some money. Paying off a car loan to refinance the loan can lead to a lower APR. Your interest-rate varies depending on your current credit rating, but improving your credit opens up the possibility of refinancing a car loan and paying less interest. It’s also possible to pay off your car loan quickly by keeping your payment amount the same despite receiving a lower rate. Refinancing at an interest rate of one percent less than what you currently pay can save lots of money over time, however, this may require you to apply for a loan with a different lender. Fortunately, a different lender will most likely be keen on your credibility if you’ve been making payments for at least six months.

Be aware of the fact that many lenders won’t consider you for a loan that’s worth more than your vehicle. You can figure out the value of your car through sites such as Kelley Blue Book. Remember, auto loans aren’t based on the value of your car, but instead on how much you owe on your original loan. If you had poor credit prior to financing your vehicle, don’t panic. Improving your credit score should enable a lower APR that what you’re currently paying. It may not be the lowest possible payments, but you still manage to save.

Don’t approach new lenders without talking to your current one. A good payment history can result to a lower interest rate on your loan. Before switching lenders, however, make sure that your current lender doesn’t charge any prepayment penalties or else you could find yourself deep in the red trying to pay off a penalty. Be cautious when approaching loan and make sure to be familiar with their policies. Although interest rates for used car loans can indeed exceed those of a new car, refinancing can get you a lower rate than those who don’t qualify for the typical zero-to-three percent interest rate offered by manufactures. If you pay attention the numbers and follow the aforementioned refinance tips, you can relieve your debt and find yourself paying less on your auto loan.

Before a Student Loan Consolidation, Consider These 5 Drawbacks

Posted by cmsadmin & filed under Private & Federal Student Loan Consolidation.

When considering student loan consolidation, there are a number of variables to consider. The process has both its advantages and disadvantages, all which should be reviewed before jumping into consolidation. The following list contains five potential drawbacks of student loans that students should be familiar with to get some help with debt.

Fixed Interest Rate
When consolidating student loans, you’re automatically given a fixed interest rate. This could be seen as either an advantage of disadvantage. It’s an advantage in the sense that your rate never goes up, yet puts you at a disadvantage when variable rates drop. Fortunately, such drops won’t have a huge financial impact on those paying back their loans, but should still be considered.

Discharge and Deferment Benefits
Certain loan programs provide discharge benefits which provide you with money after graduation. This money is used to pay off the loan. Deferment allows you to delay payments on a loan until the loan ends, and sometimes these benefits won’t remain after consolidation. Therefore you may want to reconsider consolidation so that you can retain these benefits. A viable option would be to leave these loans out of the consolidation process.

Loss of the Grace Period
After graduating, you normally have a six-month grace period in which you don’t have to make loan payments. The idea of this period is to give you an opportunity to find work and relocate if necessary. Consolidating your loans too early causes you to potentially lose this period. That’s not to say, however, that you should completely avoid consolidating during that time. If you consolidate during the grace period you have the potential to get a 0.5% interest discount on your new loan. This is a great way to save some money.

Payment Schedule
Be sure to make a payment schedule that isn’t too long but still remains realistic. Stretching out payments causes your loan take longer to pay off, which in turn means paying even more interest. This is probably one of the most common ways that those in the student loan debt consolidation business capitalize on those who don’t know any better. Be smart about your schedule and pay it off as quickly if you realistically can.

Eliminating Loans
Without consolidation you pay off your loans one by one, meaning that when a loan’s gone it’s gone forever. When you see your loans consolidate, however, they’re all lumped together. Therefore you’ll continue paying until it’s all gone. This is a serious point to consider for those paying off their debt.

In the end, it’s your choice entirely. Weigh the advantages against the drawbacks and determine if loan consolidation is the right path for you.