A statute of limitations is the duration of time which debt collectors have to file a lawsuit to recover a debt. It is a rule restricting how long a creditor can sue you for the payment on that debt. All consumer debts, from credit card balances to medical bills, have limitations on the time or rather a specific number of years for which the creditors have a legal right to sue you for payment.

The statute of limitations doesn’t apply to certain kinds of debts, but on those that it does apply to, you can accidentally restart the clock by taking certain actions.

You ought to be very careful if the debt collectors are hounding you because even one payment on an expired debt can result in a reset of the statute on that debt.

This of course opens you up to potential lawsuits and further collection action. In addition, the statute of limitations resets. When we first discussed this topic, most of us were unaware of it ourselves. Making it feel even more important to write about. Collectors use this to their advantage, knowing one small payment can reopen that debt for legal collection actions.

The statute of limitations protects from lawsuits brought to settle old debts.

What if you don’t pay back the money you owe? Creditors may report the delinquent debt to the credit bureaus, namely TransUnion, Experian, and Equifax. This can show up on your credit reports and your credit score may be damaged as a result.

Your debts may also be sent to collections in dire consequences, where debt collectors may also file a lawsuit and get a judgment against you. But thanks to the limitations on debt, there is a window collectors must work within to accomplish their jobs. On the expiry of the statute of limitations, the debt collector cannot sue you for collection of the debt as their case would be “time-barred.”

For a debt collector, it becomes paramount to collect a debt before the statue has taken effect. Without the ammunition of a lawsuit, collecting an expired debt can be extremely challenging.

How does the statute of limitations on debt work?

Each state sets its own statutes for the collection of debt. Usually, the state law where a person lives determines the statute of limitations on specific debts, even if he/she incurred the debt somewhere else. In a few states, the statute of limitations for credit card debt is 3 years, while it’s up to 10 in other states. So, the rules can vary significantly from state to state.

The time clock for the statute of limitations starts ticking on the date of the first missed payment. In some states, the clock restarts if you make a new payment. Even a partial payment on debt could restart the clock on the statute of limitations and give debt collectors more time to pursue legal action.

If the statute of limitations is expired but the debt collector keeps harassing you, you can send a letter to the collector requesting that they stop communicating with you.

Statute of limitations and the credit-reporting time period.

If the statute of limitations passes and claims become time-barred, it doesn’t mean you’re rid of that debt. A reminder of the unpaid credit stays on your credit reports despite the statute of limitation.

The reason is that a credit-reporting time period is entirely different from the statute of limitations. Derogatory marks — details about late payments and the debt you never repaid — typically highlight on the credit reports for seven years or longer.

It’s important to understand a debt outside its statute of limitations is not a forgiven debt. You still owe it, collection attempts can continue, and it will continue to show on your credit report.

Statute of Limitation on Secured and Unsecured Debts.

• A debtor cannot chase to take advantage of a limitation period for
• Secured debts like mortgages.
• Unsecured debts owed to the government (this includes student loans)
• Debt that cannot be discharged (child support payments, fines, and civil judgments that involve fraud.)
• The bait and switch by collectors.

If a collector sees a debt approaching its statute, they may pull out some less than scrupulous tactics to renew that debt. Remember, ANY payment made towards this debt resets the statute of limitations. Collectors may call and offer a seemingly “too good to be true” offer. Well, it is.

They may say, to avoid legal action, you just need to make a single small payment. Even if this debt is just days away from expiring, that small payment starts the whole time frame over, whatever it may be.

Bottom line

This may be one of the least understood factors related to debt and collections. The majority of Americans do not know there’s a statute of limitations for most types of debt. More importantly, they don’t know that even a partial payment of this debt resets the statute clock.

The post Is there a statute of limitations on debt? appeared first on Consumer Debt News.

Wage garnishment is a judgment by the court making it mandatory that a portion of your income be applied to your debt balance. More than 90% of people who are sued by creditors simply do nothing. Of course, this is probably the worst thing you can do when faced with a judgement. Often this results in wages garnished, and little recourse for the consumer.

Before going any further, let’s discuss what a garnishment judgment is. You have a while, usually 20-30 days depending on your jurisdiction, after you are served with a lawsuit to respond. If you still don’t submit an answer to the lawsuit, the court can enter a default judgment giving the debt buyer everything they are asking for.

You didn’t respond, or appear to defend yourself so you have no way of winning. If you haven’t responded or appeared, the creditor wins the case by default. Once this happens, they can legally garnish your wages and pursue additional legal action.

It goes without saying that you should respond promptly and accurately.

How much of your wages can be garnished?

The extent of wage garnishment depends upon the disposable income. A garnishment is determined based on income and disposable income. There are limits to these garnishments, of course. The limits vary state by state and are affected by the type of loan being collected.

In general, either 25% or the amount by which your weekly income exceeds 30 times the federal minimum wage which is currently $7.25 an hour. Whichever of these figures is less is garnished from your paycheck. This garnishment goes directly to the creditor who’s placed it, which could represent credit card and medical bills, personal loans and most other consumer debts.

For example,

• If the weekly disposable income is $290 or more, 25% is collected towards wage garnishment.
• If the disposable income is between $289.99 and $217.51, the amount above $217.51 can be ripped off.
• If it’s $217.50 or lower, the garnishment is restricted.

What to do when you get a garnishment judgment? Is there any recourse?

The first thing to do is to read the judgment carefully to verify the information to ensure that it’s, in fact, your debt and not something you already paid. If it is, calculate the amount which will be garnished and how it will impact the financial situation. If it seems difficult, consult a consumer law attorney or local legal aid to determine the best option for your situation.

If you are facing the garnishment, you should resort to the following:

Contact the creditor or collection agency to validate any debt you are asked to pay and ask for proof of the obligation.
You should be ready to respond to any court summons. Failure to turn up at the court hearing will likely treat a garnishment judgment against you.
To avoid wage garnishment, explore all available alternatives including debt settlement and debt consolidation.

Wage garnishment generally continues until paused by the court order or until the debt is paid in full. It is indeed better to be proactive and try to avoid garnishment by working out a repayment plan with the creditors. It should be noted that if a written answer to the lawsuit is not submitted, it will result in a default judgment for the creditor.

To do list when you actually face a writ lawsuit for wage garnishment:

You actually have a few alternatives when there is no slip-hole and you face the writ lawsuit for wages garnishment judgment.

• You can ask the court to set aside the default judgment and give you an opportunity to challenge it.

If you believe that there is seriously some mistake done by entering a default judgment against you, you can fight the lawsuit stating any of the below 6 genuine reasons of Rule 60.

• Excusable neglect
• Freshly discovered evidence
• Fraud
• Void judgment
• Discharged judgment
• Any other specific reason which justifies release from the default judgment.

You can settle the debt with the creditor for an amount less than what the default judgment is for.

You actually lose the leverage of settling the debt once the judgment is entered. So, now prepare and establish a budget of whatever you are able to do to settle the debt in a lump sum or on a monthly basis.

Finally, you can opt to eliminate the default judgment completely by filing for bankruptcy.

While bankruptcy affects your credit score negatively, sometimes it’s the only option left if the lawsuit being dealt with is only the beginning. It will eliminate most of the debts, as well as the judgment.

The post Are your wages garnished thanks to a past due debt? appeared first on Consumer Debt News.

Have a few bucks in hand and want to invest? For many of us, we wouldn’t even know where to begin. The traditional thinking is that you need thousands of dollars to begin your investing journey. The fact is, you can start your investment with as little as $50! This is called “Budget Investing”. Investments in even very small amounts can potentially reap big rewards.

Budget Investing requires wise decisions, selections, and planning of the investment. It becomes a more critical affair when youngsters want to build a portfolio out of their small savings. However, you’d be surprised how much you can save when put even a small percentage aside each month.

In order to take the first steps in investment, you have to know where to start. This can be the most intimidating part of the process. To ease the pain, we’ve put together the list below to help you get started.

Before Investing, evaluate Your Debts, if any.

Before you kick-start investment, assess your debts. Things like credit card debt, student loans, etc. should be paid off first so you aren’t burdened in the future. This is especially true if the debt is unsecured, or carries a high interest rate.

Realize the Compounding superpower.

At an early age, you have the advantage of time on your side which creates a ‘Compounding Superpower’. The earlier you start investing, the higher your earning potential will be. Eventually, this can lead to saving handsome figures for retirement. Investing for short gains can be effective, but we’re talking about long term investments currently.

Tips to start as a new investor at $1000 or less:

As a young adult, you likely won’t have much to invest. So, with a little money, it’s more important that you invest it wisely.

Kick-start investing with an interest yielding savings account.

Spend less, save more and cut down over-spending. Start by creating a budget. Chalk out all your monthly expenses and any irregular expenses. Once you’ve determined how much you can afford to save, seek out a high interest savings account.

Automate the Savings.

Plan savings from your monthly salary. If you use direct deposit, you can usually split your check into multiple accounts. This is a great way to automate your savings. They say 10% is the magic number to route to savings. This may not be possible for everyone, but it’s a good goal. In the meantime, you should save whatever percentage of your income you can. The key is to be consistent with whatever amount you choose.

Investment in Stocks.

Since you have time on your side, one wise decision would be to get involved in the stock market, even though it is highly volatile and is subjected to market risks. On and off, you can simply invest the money in the stocks and react only when there is a boom to harness the full rewards.

Index funds.

The index does not involve stock picking but it mimics different market indices. It also charges only low maintenance fees. Statistics show that these Index funds almost always outperform the actively managed funds. An index is a group of stocks that are bought and sold together.

Investing with online assistance.

There’s some great new technology out there to help with investing. Many of these new services even specialize in micro investments; with their marketing geared towards average consumers investing small amounts.

Fundrise – Invest money into a real-estate portfolio. It pays returns ranging from 8.7% to 12.4% in their various fund options. You can choose between income-oriented or growth-oriented investments.

ETrade – Offers a full suite of investment tools from small to large. Build your own portfolio or use their core service to have recommendations made for you.

ALLY – Another full suite of tools to invest from the comfort of your own home.

With increasing technology, more online apps and platforms which require little investment or knowledge will appear. The yield can be beyond expectation if the right nerve is hit.

Final Word

As a young person, you’re in a particularly strong position to get a head start on wealth building. While your peers are spending every penny on luxuries and going out every night, you can start building a fortune for yourself.

The post Budget Investing: How much do I really need to start? appeared first on Consumer Debt News.

What’s the average debt of retired Americans today?

The biggest threat to retiring Americans today may not be saving money, but owing too much. For many people, debt is emerging as a serious problem to a peaceful and planned retirement.

Debt and loans are a constant hammering of stress on a retirees’ ability to retain their homes and pay necessary expenses. Some seniors find their debt has forced them into independent or assisted-living facilities.

The Statistics of Average Retirement Debt.

According to a survey by the Consumer Financial Protection Bureau, 8 out of 10 middle-income Americans currently have some form of debt. 3 out of 10 allocate more than 40% of their monthly income to loans. And, a quarter have a mortgage with more than 20 years left on it. Most people plan on entering their retirement comfortably, but only one-quarter of retired Americans are actually debt-free.

A survey by ValuePenguin in 2019 reveals that the average credit card debt for American households is $5,700. But, when the numbers are fragmented down by age, the average for people aged 65 and older jumps to a whopping $6,351.

That means the average credit card debt load exceeds by double the maximum monthly Social Security payment of $2,687. When the credit card balances are compared to the average monthly Social Security benefit of $1,342 per month, the situation is even worse.

Do they still have student loan debt that late into life?

Statistically, many seniors dealing with student loan debt are the result of co-signing for a family member. The CFPB report reveals that 73% of elderly student loan borrowers said co-signed loans for their child or grandchild. Only 27% were reported obtaining loans for themselves or for their spouse.

We’ve discussed the sensitive nature of co-signing a loan, and this is a common scenario for seniors today. While the retiree may not be the one using the loan funds, they are still responsible for the debt if it defaults. In addition, this loan does show on the retirees credit report, which can also become a detriment if payments are not maintained.

Why student loan debt is the most difficult.

Student loan debt is a very difficult type of debt to recover from. Specifically because debt relief programs, even bankruptcy in most cases, can’t touch it. While there are federal options for repayment plans, forbearances, etc. these are only offered for so long.

This lands seniors in bigger financial risks leading to a variety of potentially unfavorable consequences. Retirees with student loan debts are often forced to work longer before retiring. Many work part-time during retirement to meet their basic living expenses.

Lost Retirement Savings.

A joint report by the Association of Young Americans (AYA) and AARP reveals that 31% of fresh retirees (54 to 72 years old) said student loan debts forced them to stop saving for their retirement. Or, utilize existing retirement savings to clear their student loan debts.

Delayed Health Care.

About 9% of retirees in the AYA/AARP study confessed that student loan debts prevented them from claiming the health care they needed.  Fresh retirees with student loan debts had household debt that averaged 48% as compared to 15% for those with no student loan debts.

Credit Issues.

According to Credit Sesame, many retirees can’t qualify for new loans to make needed repairs, buy a new car or deal with other unforeseen expenses.

The AYA/AARP studies reveal that 32% of retirees sadly confirmed that lingering student loan debts either prevented or delayed their purchase of a new dream home.

Inability to Help Family.

More than 1 in 4 retirees confessed that student loan debts prevented them from helping their own family members in need. Oddly enough, the debt itself accumulated from helping their child or grandchild for their education.

To wipe out all your worries about defaulting on your student loans, reach out to your lenders quickly. They will offer options for managing your loans in the short or long-term.

Retiring with student loan debt.

Remember, the goal is to enjoy your retirement years, ideally without the stress of creditors and collectors. While student loan debt is a problem for many Americans currently, there are steps we can take to combat this.

Think hard about co-signing on student loans for family. We know this is a difficult decision, but it does need to be mentioned. If you’re young and paying down debt, focus on your high interest debt first. That’s the debt that costs you the most. Focus on maintaining your normal student loans payments, and try your best to make a few extra payments towards the principle if possible.

The post Retired Americans still have student loan debt appeared first on Consumer Debt News.

It’s not at all unusual to have no money left over at the end of the month. By the time payday comes around, many of our accounts are in dire need of a replenish. Most of us live like this and it’s really concerning. More than income or investment returns, your personal saving rate is the biggest factor in building financial security.

According to the rule, you should be spending no more than 43 percent of your before-tax income on all your debt payments. So, if your gross income per month is $4,000, your total debt including mortgage, auto loans, credit card payments, and student loans should be less than $1,720.

Let’s discuss in detail as to where the expenses can be managed to increase the percentage of that band. Or, how to efficiently park the money in savings to get maximum yields after settling all essential and non-essential expenses.

Order of priorities – Money left over doesn’t mean you have to spend it.

If you have no savings account and you’re paying the minimum on your credit card balances, you’re heading towards a non-sustainable lifestyle. Possibly even bankruptcy, eviction, and other major life hazards. Any extra expense like car trouble, interruption in income, medical emergency, marriage, etc. can throw a big monkey wrench in your budget.

So, in order of priorities, this is where any money left over should be going:

• Inevitably, pay off your credit card balance (if you are carrying a balance)
• Start an emergency fund with a goal of 3 – 6 months of living expenses
• Start a retirement account with the goal of saving 10% of your income
• Then you can start saving for intermediate goals: a home, a cruise, or your kids’ college fund.

Essential and Non-Essential Expenses.

Debt-to-Income Ratio

Most households spend a considerable portion of their housing budget on their mortgage which includes charges for both the principal on your loan and the interest. If you have an escrow account associated with your mortgage, your payment may also include charges for property taxes, home-owners, and title insurance.

Homeowners’ Association Fees

Many residential societies require you to be a member of a property association. Homeowners associations charge a monthly fee that pays for maintenance, landscaping and upkeep of the community and common areas. Common areas usually include areas like swimming pools, parks or parking spaces.

Hidden Costs of Owning a Home

You will also need to cover the cost of maintenance and repairs. A good rule on how much you should spend annually is 1 to 2 percent of your home’s value. You should also plan an emergency fund to pay for unexpected expenses, like a car-repair or plumbing issues.

Discretionary Income

Discretionary income is what is left over from disposable income after the income-earner pays for fixed essential expenses like: Rent/mortgage, transportation, food, utilities, insurance and other essential costs

For most consumers, discretionary income gets depleted first when a pay cut happens. For example, if a person makes $4,000 per month after taxes and has $2,000 in essential costs, he has $2,000 in monthly discretionary income. If his pay gets cut to $3,000 per month, he can still meet his essential costs but only has $1,000 left over in discretionary income.

Whether or not you choose to budget, at least find out how much you’re gaining, or losing, every month.

What is 50/30/20 Budget Rule?

It’s hard to define how much should be left over each month after paying all your personal finances as they are different for everyone. But to generalize it, the 50/20/30 rule is applicable to most of us. According to this rule, up to 50% of your income goes to fixed spending, 20% would go to savings. The last 30% should go to other expenses.

For example, you earn $1,200 every two weeks. After all taxes, it’s $1,000. Your savings goal should be 20 percent of net (after-tax) income or $200 from every paycheck.

On the other hand, if saving 20 percent of your income seems to be implausible, or even impossible at the moment, don’t feel frustrated. Saving something is better than nothing. If you are presently not able to make up to 20% for savings, plan and start from a smaller amount and when the figures in your account show up enough, increase the savings accordingly.

So, how much money left over completely depends on the situation.

The answer is, it completely depends on the person’s situation. We’ve given you some ways to asses, and even improve your discretionary income. The reality is, many people have little to nothing left over each month. Some people choose to allocate all of their money to a specific use, even if that is savings. We’ve known people who make $40k a year manage their money expertly, and enjoy a healthy financial lifestyle. We’ve also known people making six figures that could barely make it to their next paycheck.

The better you manage your money, no matter what you make, the better chance to have money left over every month.

The post Do you have money left over each month after paying bills? appeared first on Consumer Debt News.

To purchase something with the assurance that you will pay in the future is what’s called “Credit”. Generally in this situation, the form of credit will be credit cards. Actually, credit depends on what you buy and where you shop from. This is the reason why marketing executives and businessmen try to attract people who may not fit into their income requirements. They know that, like most Americans, they likely have credit of some kind. Credit gives the average consumer the ability to live beyond their means.

Is credit all the same?

The answer is “NO”. The different kind of purchases effect drastically on your credit score and hence your financial status.

Today, it is very common to pay for anything from big purchases to small items and groceries. With the introduction of the credit card, even those people with meager funds purchase items on credit, and they pay off their bill each month.

Side Note: This is an excellent way to build and maintain credit. Determining a fixed spend amount on a particular purchase each month, then putting it on your credit cards.

How is credit viewed differently based on what you’re purchasing?

The type of purchase on credit reflects whether you are holding a sound position in your business or not. For example, if you use your credit cards for second-hand clothing or retired tires, bail bond services, massages or casino gambling, your credit card issuer makes a note of these purchases as it will give a measure of your creditworthiness. In fact, it measures your financial distress, indicating your efficiency to repay the credit amount!

Here’s a list of few items which might generate a good or bad credit score depending on the type of interest payment.

• Interest rate you will pay when purchasing a car
• Your ability to lease an apartment
• Whether or not you get that new job, if you have to pay a security deposit when setting up utilities

How is your credit score calculated?

Following factors effect on the calculation of your credit score. Each of their weightage contributes differently to your overall credit score. For a more detailed review, see this article.

• Different types of credit
• Payment history
• Credit utilization
• Number of inquiries
• Credit age
• Revolving credit

It is useful for individuals or entities that experience sharp fluctuations in cash flow or face unexpected expenses in which the customer pays a commitment fee to a financial institution when he needs to borrow money. He is then allowed to use these funds when needed.

How is it that I can get approved for an auto loan but not a credit cards?

A good credit report in your arsenal helps you to borrow more money at affordable interest rates. Why? Because based on your credit history, the banks are assured that you are good at handling credit.

On the other hand, Bad credit ratings happen when money borrowed is not paid back on time or when it is simply not paid back at all. This is the reason why a person may be approved for an auto loan but not a credit card. You can purchase an Auto which has fewer interest rates on Auto Credit but to get a credit card, you need to furnish different assurances for repayment of credit card debts.

Why are my FICO Scores different for the 3 credit bureaus?

In the U.S., there are three national credit bureaus (Equifax, Experian and TransUnion) that compete to capture, update and store credit histories on most U.S. consumers. Nevertheless, there is only little difference in the information they collect from the consumers for calculation of the credit scores. But, collection of some unique information by one bureau might lead to calculation of a different score from the other two!

Equifax offers numerical credit scores that range from 280 to 850. The bureau uses similar criteria and input information as FICO to calculate these scores, while Experian does not deploy the exact formula and hence its credit score differs from the other two. This is the reason why these credit bureaus have different credit scores.

Conclusion:

Maintaining low debt levels (especially credit card debts) and paying them off on time are important measures to ensure a good credit score. Having a proper proportion of credit, such as revolving credit and installment credit, can also help your credit scores. Staying on top of your payments regardless of credit type can make you eligible for any type of credit.

Obviously when life throws a curveball, it’s not as simple as just paying your bill on time every month. This is why it’s so important to build a small savings. This savings floats you through tough times so you don’t miss a beat in your debt free plan.\

The post From credit cards to auto loans, credit is viewed differently. appeared first on Consumer Debt News.

While some of our expenses are naturally more vital than others, some are by our own choices. Most people, especially the younger generation, constantly complain that they don’t have enough money. If you see their income and bank accounts, this really isn’t the case. It’s just they fail to keep track of their expenses, and hence don’t understand where their income vanishes away.

Though it’s perfectly fine to spend on a few luxuries once in a while, the priority should always be ‘needs’ rather than ‘wants’. In managing your budget and your income, you have to learn to differentiate between the two. To prioritize your expenses, start with needs and secured debts and transition towards wants and unsecured debts.

Setting priorities for your income.

Wants and needs

The best way to get started is to enlist your personal definitions of wants and needs. This way, you’ll have a guideline to review when your mind starts convincing you to make a purchase. Always try to be as objective as you can.

Prioritize your finances

Ideally, the differentiation between your wants and needs is the foundation of your income management. This will help to prioritize and differentiate which expenses are really necessary and which can be omitted from your list.

Budgeting

One of the important steps in prioritizing your income is to create a workable budget. List down all the “needs” and ensure they can be covered by your income. The balance amount can be used for your “wants”, or saved.

Now, that doesn’t mean that you need to suppress all your wants. For example, if you wish to own a car or a bike, you can plan to save from your income for them. This is completely reasonable, and quite healthy. If you work hard, you should reward yourself once in a while. As with many things in life, this comes down to moderation.

Determining necessities from luxuries.

Remember that savings should be included in the “needs” portion of your budget. You can cut down your luxury overspending like entertainment, dining, movies, etc. and redirect some of that spending into your savings account. You’d be surprised how micro-transactions can add up to large savings over time. Inculcate money-spending habits to spend wisely on necessities rather than luxuries.

Don’t bust your budget on overspending.

There are so many things that people are not able to decide if they need or want. In the moment, they feel they need them and so they spend more money rather than sparing. In retrospect, they realize what they felt was want, not need.

They fail to draw a line between their needs and their wants. They bust their budget on overspending expenses, from holidays to new clothes, from meals out to shiny cars. This is perfectly fine if they are affordable. However, if you have a goal to become free of debt, if you are saving towards your retirement or want to focus your efforts on a house deposit, you need to set priorities for your income.

Getting started right away.

Most people have wonderful excuses for not starting any planning for their financial life. Eventually, these people end up scrambling at the eleventh hour for a plan.
If you’re waiting for the “right time” to start saving, stop. There is no right time. It will always be a challenge, even if you make plenty of money. It’s funny how our wants tend to grow with our income.

The sooner you can start saving the better. It will begin to add up but can’t do so until you get it started.

Determine your Financial Priorities.

When you are trying to shape a financial plan or reach a certain financial goal, it is vital to have an idea of your financial priorities. After all, without setting priorities, it’s impossible to decide what you should do with your money.

So, with a little introspection, figure out what actions you ought to take to reach your financial goals. Determining your financial priorities can be a tedious task and might take a little bit of time. The good news is that once you figure out what your priorities are, it becomes significantly easier to get your finances on track.

Prioritizing expenses in order of necessity enables you to meet basic needs, protects your credit, and lowers your financial stress. This, eventually, allows you to focus on finding ways to cut unnecessary costs or increase your income. So, you can pay all of your bills, loans, and debts every month and even start saving for a wonderful future.

The post Setting priorities for your money. Understanding need from want. appeared first on Consumer Debt News.

When your debt becomes out of control and you don’t know what to do, the best option may be to seek a credible debt relief company. It’s a given that debt settlement may affect your credit, but most people would agree that it’s a better option than bankruptcy.

Now the question is, how can you determine the legitimacy of a debt settlement company? A bad choice may lead to further debt issues, or worse, hefty fees that you can’t afford. Luckily for consumers, heavy regulations have been imposed on the debt relief industry. This certainly doesn’t mean you’re safe, but it does make it easier to find a credible relief company.

While there’s regulations, it’s our job as consumers to find a credible debt relief company.

Let’s discuss the do’s and dont’s of choosing a debt relief company. These questions will help consumers determine if they are legitimate and trustworthy. But, before we get to “how” to choose a company, ask yourself…

Do I need a debt relief program?

If you find yourself struggling with unsecured debt such as credit cards, unsecured loans, medical bills, etc. – debt settlement is a good option for you. Generally speaking, you’ll get the most benefit from a settlement program if your overall debt amount is high. The higher the debt, the better the opportunity for reductions.

The advantage of these companies is that they have trained professionals who negotiate the settlements strategically, to satisfy both parties.

The negotiators have resources to achieve a maximum reduction on your debt.

Because of high interest rates, unsecured debt specifically takes a VERY long time to pay off. And, you end up paying significantly more for credit. Debt settlement offers a quick, interest free path to eliminating this type of debt.

Research about Company’s Credibility and Reputation.

There are a number of companies who are eagerly waiting to trap customers by their false promises. Make sure you are not the one to fall into such pits by ensuring to check the reputation and credibility of these debt settlement companies.

You can achieve this by doing a bit of research and checking their licensing. Credible debt relief companies should be licensed with the Department of Consumer Services and accredited through The American Fair Credit Council.

Terms and Fees charged.

Debt settlement companies are prohibited from collecting any type of up front fees or charges before they settle your first debt. So, you can eliminate any company from your list right away if they ask for a fee up front.

Be sure that the company explicitly specifies the fees they charge and the conditions they apply during the settlement of your debts. Most legitimate settlement companies will charge a percentage of the settled amount. The payment is not additional to you, it’s factored into your single monthly payment in your settlement program.

Beware of the shady procedures and requests.

A settlement company might ask you to keep your funds in a separate bank account. Always bear in mind that these funds are still yours and you are solely entitled to any interest. You can also access and maintain this account at any time. In other word, if a settlement company doesn’t give you full control of your settlement account, look elsewhere.

A settlement company should always contact you before completing a settlement. Remember, they are working on your behalf, so always be notified before a settlement is agreed upon.

Check the highlights of the debt relief program

Before trusting any company to shoulder the settlement tasks, make sure you review the minimum checkpoints listed below. Never fall trap to the debt settlement companies who:

• Boast a “new real debt settlement program” and asks you to pull out your personal credit card. (this is not to be confused with verifying your bank account, which is a common practice of settlement companies to ensure they can open the debt savings account for you.)
• Guarantees that your unsecured debt will be paid off by a specific date.
• Suggests to stop communication with your creditors without fully explaining why this is necessary and how it will affect you.
• Guarantees the payment of your unsecured debts for excessively low rates. A good settlement company will get you a good reduction on your debt. But, if a company tells you you’ll pay $100 of a $10,000 debt, you can rest assured they are not being honest.

Ensure availability of Guidance whenever needed.

So you’ve decided on a settlement company. A good first inquiry is the guidance they provide in case of any disputes or settlements with creditors. The consultants of such companies should be able to guide you and provide clear advice on what to do. They should also educate you about the negative consequences, including potential credit score impact. If a debt relief company tells you your credit score will absolutely not be affected, it’s a  red light.

Responsibilities and procedures of the company.

The debt settlement company should calculate an affordable monthly payment amount needed for successful debt settlement. They’ll analyze your entire financial situation. The process can be tedious, but it’s necessary to be sure it works for your budget, and also allots enough funds for them to do their jobs.

Struggling with tensions of debt payments is no doubt an overwhelming affair. It need not be one. By making yourself equipped with thorough and clear knowledge of settlement procedures you can ensure better financial decisions for your future.

The post How do I find a credible debt relief company? appeared first on Consumer Debt News.

At the dawn of a new economy, the 21st century Unicorn termed as ‘Cryptocurrency’ is a side product of Digital cash. While it is being accepted by the overwhelming community of people; even the bankers, consultants, developers, scientists are ignorant of its features.

In simple words, Cryptocurrency is a virtual currency, most notably Bitcoin, a decentralized digital blockchain cash system. It is based on Peer-to-peer network technology. Let’s understand its monetary properties.

Controlled supply of tokens.

The supply of tokens or Bitcoins gradually reduces with time which means the future monetary supply of cryptocurrency can be roughly calculated in the present!

It’s a Bearer and not a Debt.

The numbers appearing on the ledgers in traditional bank accounts are nothing but debts whereas Cryptocurrencies represent themselves and are as hard as gold coins.

Having understood the basics of cryptocurrency, now the question in debate is with the rise of cryptocurrency, will we ever be paying our debt with it, or creating a new form of debt – crypto-debt? Let’s discuss.

The International Monetary Fund (IMF), led by crypto friendly Christine Lagarde, published a global debt report which highlighted a massive ticking debt bombing number! — $182 trillion worth of pay debt with Cryptocurrency exists worldwide.

The situation is present because the governments and central banks kept printing additional money to pull the economy out of recession. To handle this burst of the inflated bubble, Cryptocurrencies, more particularly Bitcoins or ‘Digital Gold’ and Ether were invented.

Main flaws in Central Banking:

• Lack of transparency
• Politicization of money supply due to centralization

Features of Cryptocurrency:

• Transparent
• Rapidly evolving Crypto debt markets are transparent, open and most importantly, decentralized.
• Generate yield

With its feature of censorship-resistant borrowing from a Central bank, lending the assets or earning interest to secure the blockchain, these systems promise to give investors new opportunities to generate yield.

Nominal Transfer cost

If the conventional money is converted into Crypto-coin and then transacted using this crypto coin, it will reduce the pressure of inflation.
Easy secured maintenance

Crypto money does not require any additional expenses for maintaining security unlike the processing fee in transferring the conventional money.

Myths about cyber currencies:

Every coin has two faces. This is sarcastically true with Bitcoins as well. Along with the advance features of Cryptocurrency, there are some vital myths that need to be clarified in its context.

Abnormal Liquidity

Every holder wants to earn interest on their crypto-assets, creating a large market imbalance and unattractive interest rates.

Decentralized debt markets still cannot outsmart before they reach the maturity and sophistication of the existing financial system. They have flaws in both price discovery and liquidity. Interest rates vary widely across each market and orders are relegated to order books.

Cybersecurity issues

The cybersecurity breaches in modern digital technology are costing investors huge amounts which may not be recoverable once fallen into the hands of hackers.

The vital mitigation measures in virtual currencies are not available like in traditional banking sectors.

Volatile nature and lack of inherent value

Bitcoin is not without its problems added to their lack of inherent value. The Cryptocurrency needs to be linked directly to the tangible and intangible assets to overcome its extent of volatility.

As the Bitcoin or Ether ecosystem develops and price discovery takes shape, Crypto-debt markets will play an increasing role in helping the ecosystem grow, allocate risk, and offset protocol inflation. As would be the case with anything new, to decide whether the Cryptocurrency is boon or a bane depends upon the multi-altitudes it might take in different directions of the emerging technology.

The post Cryptocurrency – will we ever pay our debt with it? appeared first on Consumer Debt News.

Bankruptcy is an authorized process supervised by national bankruptcy courts. It’s intended to help individuals and businesses remove all or part of their debt and can also help them save a share of what they are in debt of. Most business or individuals that make this decision, understand that afterwards, they’ll have to recover from bankruptcy. Two main objectives of filing are:

• Fair payment of the legal claims of the creditors done by a reasonable distribution of debtor’s possessions
• To provide the insolvent a chance for a fresh start.

Types of Bankruptcy:

Voluntary bankruptcy: It can be brought upon itself by an insolvent debtor.

Involuntary bankruptcy: It can be forced by court order on the request of creditor’s petition.

Bankruptcy might help you become free of your debt, but it’s significant to understand that declaring bankruptcy has a serious, long-term effect on your credit.

Not to mention, it will persist on your credit report for a minimum 7 to 10 years, affecting your chances of opening new lines of financing or credit. When you are approved for new lines of credit, usually the interest rate will reflect the bankruptcy.

How it affects your credit

The chief matter that discourages most individuals from filing bankruptcy is the damaging effect it has on their credit. It’s 100% true that a bankruptcy can stay on your credit report for up to ten years and it hurts your credit score. Though, not filing for bankruptcy and letting your debts to go further into collections will also destructively impact your credit.

Liable on the kind of bankruptcy you file, Chapter 7 or Chapter 13 bankruptcy, your credit score will decline anywhere from 150 to 230 points. This is sufficient to take a good credit score down to a reasonable or deprived one. Meanwhile, most lenders choose whether or not to extend you credit based on your credit score. A bankruptcy will make it much harder initially in obtaining a home loan, auto loan or credit cards.

The main remedy for this is time; however, there are extra actions you can take to absolutely improve your credit report and score. Eventually, if you succeed to manage your new debts well, your score will progressively increase. And, in time you’ll be running your financial life effectively, even if the bankruptcy is still visible on your report.

How long will it take to recover from bankruptcy?

Most people are worried about Bankruptcy as they feel it will take 7 years or more to improve from the wounds done to one’s credit. The truth is it can take a number of years for credit to recover. If you are extremely diligent with rebuilding your credit, it could be significantly shorter.

Traditionally, people who file for bankruptcy need to sustain themselves without the use of credit cards or loans. For many, this is difficult and what got them to this point in the first place. The first types of offers you’ll qualify for are high interest, bad/no credit loans and cards. The interest rates on these offers make it very difficult to keep up with, and can lead right back to square one.

First, if you think that you are going to declare bankruptcy, there are few initial actions which will be very helpful.

Step-1:

If your credit cards are open and working, it’s suggested to pay one or more off and leave it/them out of Bankruptcy. If you own a car which is being funded then it would be best to keep it away from Bankruptcy. These things can be your positive trade lines in order to get out of Bankruptcy.

Step-2:

After you receive your discharge papers, you should follow a few more steps. You can get a secured credit card from a major bank. If they refuse then get one through First Premier or Capital One.

Why not just try to get a normal credit card?

Well, in short, you can’t for a while following bankruptcy. If you do by chance get an offer, the interest rate will be high enough to put you back in bankruptcy. To rebuild credit, sometimes you have to suffer the downsides of a secured card for a brief time.

Unhappily these cards have a high upfront fee such as $200. But the benefit they yield is rebuilding credit quickly. After this, consider enrolling into a credit repair program which will help get your score back up faster than alone.

When your credit score reaches around 700, the mainstream offers will start rolling in. Your goal must be moving from a secured card to a standard, unsecured credit card. By this point, you will have rebuilt using a secured credit card, so this new unsecured line of credit should have a significantly better interest rate.

After achieving the unsecured card, keep your consumption low. Make your payments on time every month. If you can’t follow these few rules for having unsecured debt, it’s best to avoid it altogether. One bankruptcy on your report is bad enough, and remember, you generally can’t file again for another 8 years.

Advantages and Disadvantages of Bankruptcy

Declaring bankruptcy can aid in relieving you of your legal responsibility to pay your debts. It also can help secure your home, car, business or skill to function monetarily, liable on what kind of Bankruptcy petition you file.

But, as we learned, it is a major detriment to your credit rating, making it more problematic to get a mortgage, loan or low-rate credit card, or buy a car, home, apartment or business.

If bankruptcy is your only option, be sure to use the methods discussed to rebuild your credit. Getting out of debt is one thing, staying out of debt is another.

The post How long does it take to recover from Bankruptcy? appeared first on Consumer Debt News.