Debt Settlement Scams

On August 20, 2010 the credit card accountability, responsibility and disclosure also known as the Credit Card Act of 2009 goes into affect. The objective of the law is to protect consumers from unfair practices by banks and other credit card issuers. However, it may be a case of too little to late. The laws was passed in Frebruary of this year.. This has give banks and credit card issuers plenty of opportunity to raise rates and modify other terms before the law became enforceable.. The law does not address the biggest problems consumers have which is excessive debt and it merely may be a government attempt to quell public outcry over abuse practices by these companies..

Here is a summary of the new laws key features

? Retroactive rate increases – Issuers must wait for the promotional period to expire in order to raise interest rates. . Borrowers cannot be punished for non-related accounts under universal default or due anytime, and any reason clauses. When a cardholder shows that he has paid on time for the past 6 months, the issuer must restore the lower interest rate.
? Notice of Rate Hike ? establishes a 45 day period for key contract changes and rate hikes. This is not applicable to credit card limit changes.. The laws does not stipulate limit on interest rates. Your APR rate can still triple.
? Fee Restrictions ? Cardholders cannot receive overlimit fees unless they approve the overlimit transactions.
? Restrict Credit Cards to under 21 ? Students and other 21 must prove financial independence or have a co-signor over 21 to receive a credit card.
? Double billing cycle ? the practice were interest charges are based on current and previous balances or double billing is terminated.
? Fairer payment allocation ? int the current system payments are applied to lower interest balances than to the high one, the law reverses this procedure.
? More time to pay ? The period in which the statement is received prior to payment is extended from 14 to 21 days.
? Gift Card protections ? gift cards does not allow gift card from expiring for a minimum of 5 years.

The new law doe provide some protection for the consumer, although it could be argued that it does not go far enough. Additionally, credit card companies have had plenty of opportunity to raise rate and other fees favorably prior to the law becoming enforceable. Therefore, the effect it will have will be muted and credit card companies have position themselves well.

This law does not help those that cannot meet their monthly obligation or are having a difficult time with their debt. These individuals only real option is programs for reduce credit card debt, which offer the only real hope to be debtfree.

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Technorati Tags: Debt Reduction

Well I would like to begin by letting you know that debt settlement is a very sticky subject. There are a good amount of good things about debt settlement however, there are also a lot of horrendous things about it as well. In this article I will go over the good and bad and how you know if you should trust and take advantage of a debt settlement company.

I am going to begin with the good things. Debt settlement programs are a great way to get out of debt. Debt settlement companies are able to settle your credit card debt for a fraction of what you really owe. This fraction is usually somewhere between 50% and 60% of what you owe. Basically what I am trying to say through the good section here is that debt settlement companies have the ability to save you a ton of money on your credit cards.

Now for the bad. Unfortunately I can tell you that this section is going to be a great deal longer than the good section however I feel that it is imperative that you fully understand what you are getting yourself into when you choose to go with debt settlement. First and foremost, debt settlement ruins your credit. In most cases, the sales representative will try and make it sound like it is not all that bad and you will only take a minor hit on your credit but unfortunately that is not the case! If you have an excellent credit score now, within 6 months of working with a debt settlement company you will end up with a very poor credit report. Also, I want you to know that when you are paying a debt settlement firm to pay your debts, your money is actually going to end up in a trust fund as you build to the total amount of the settlement payoff. During all of this time, your credit report continuously slides down.

Should you work with a debt settlement firm? Well first off, if you are not considering bankruptcy, debt settlement is not the program for you. I know just as well as you do, times are hard right now, we are going through an economic melt down and have been for a couple years. Trust me I understand the facts. Even though times are hard money wise, there are still other ways you can go about getting help with your credit card debt! You should only use a debt settlement firm if no one else is able to help you. There are a lot of key facts to remember when choosing a process to follow with your debt however, if you are concidering debt settlement I urge you to contact Jem Credit Cards. They help with the step before settlement to try and pull you out of the debt without harming your credit! You can contact them:

By phone – (561) 355-0069
By email – Support@JemCreditCards.com
On the web – JemCreditCards.com

Just another small piece of information Discover card offers the best credit cards by far.

Technorati Tags: Credit Card, Credit Card Debt, debt, Debt Consolidation, Debt settlement

Understanding terms.
When I talk about debt settlement, I tend to use financial terms that some people may not understand. So, before I get into debt settlement, the dos and don’ts I want to make sure you understand what I am talking about. Here are some terms that I will be using:

1.Charge Off – A charge off is when a credit card company deems the debt noncollectable. Once there is a charge off on your credit report it will stay there to harm your credit for up to 7 years.

2.Negotiated settlement – An amount of money that the creditor has been willing to accept as payment for a debt. This amount will be less than what is actually owed.

These terms are very important when considering debt settlement and I will explain why.

What is debt settlement and how does it work?
Debt settlement is a program that was designed to stop people from having to go into bankruptcy. When a bank deems that a credit card account will not be paid in full, they are willing to collect a negotiated settlement to clear the debt in most cases. It is only after several months of no payments or very minimal payments such as $5.00 that a bank or lending institution will be willing to accept a negotiated settlement.

Once a client is far enough behind on their payments, that client or someone representing that client using a legal power of attorney can call and speak with the collections department at that financial institution to negotiate a settlement. Once the settlement has been negotiated, the client will have a distinct amount of time (usually 45 to 90 days) to pay the settlement in full. If the settlement is not paid in full by the agreed upon date, the negotiated settlement will be voided and the process must begin again.

What can a debt settlement organization truly do for you and how much of what they say can you trust?

Personally, I think that debt settlement organizations are out there for good reason. However, I also believe that greed drives the majority of them to do things that they know they should not be doing. Before I get into what debt settlement companies can do for you, I want to make it very clear DEBT SETTLEMENT SHOULD ONLY BE USED AS A LAST RESORT BEFORE BANKRUPTCY! Now that I got that out in the open, I can explain what will happen.

In most cases, when you first speak to a debt settlement representative they are going to ask you many questions such as “how much money do you owe in overall credit card debt?” and “how many charge card accounts do you currently carry”. When you give the representative this information, they will do a few calculations and start figuring out how much they will need from you as a monthly minimum payment.

They will then explain the service in most cases leaving all of the bad things out. This is why I am going to explain the service in it’s entirety.
Once you agree to a minimum payment, the debt settlement representative will ask you for a checking account and routing number and explain to you that the payments for the debts will be automatically drafted from your checking account.

In most cases what they don’t tell you that the payments being drafted will not go to the credit card account companies they will go into a trust fund or some other type of savings account until the settlement is able to be paid in full. This is because they know just as well as I do that if you are making at least your minimum payments, the charge card account company will not negotiate a settlement. (by the way YES this does hurt your credit don’t let anyone lie to you and say it wont)
Once there is enough money in the savings account for the settlement, the debt settlement organization will start negotiating a settlement amount with the creditor.

This settled amount will usually be between 30% and 45% of what you actually owe. The creditor is wiling to accept this settlement because by this time, they have not received a payment in months or even years. Once there is an agreed upon negotiated settlement, the debt settlement organization will pay the lender and the debt will be gone.

So what does the debt settlement organization get out of all of this?
The debt settlement company will charge a monthly fee usually between $50.00 to $100.00 every month until the debt is settled. In most cases it takes about 36 months to settle a debt so, they will be charging you anywhere from $1,800.00 to $3,600.00 for the service just in monthly maintenance fees.

Also, in most cases, the first payment or two will be considered a consultation fee. Because payments will always range, I cannot tell you how much money this will turn out to be, it could be $400.00 or it can be $3,000.00 depending on the amount of debt that you have and the payment that you have agreed upon. Finally, when the debt settlement company quotes your settlement to you they will usually tell you they can settle the debt for about 60% of what you owe. In most cases, if they are able to negotiate a lower settlement they will keep the difference as another fee.

Debt settlement destroys credit!

What are the dangers of debt settlement?
When you speak to the debt settlement representative, they will in most cases tell you that this program will harm your credit while you are in the program, but once you pay your debts your credit will go back to normal or even get better. While this may be the case in some rare cases, in most cases this is a blatant lie to get the sale! In fact, in most cases debt settlement leads to charge offs on your credit report which can harm your credit for up to 7 years. You will need to pay for everything cash. This is because, while building up the settlement, all of the funds you are saving are not being paid to the lender. The lender is now reporting to your credit that the debt has gone bad and it does not take long before your credit score goes in the dumps. It is very hard to build credit but very easy to destroy it.

Another danger you may want to consider when dealing with debt settlement companies is the fact that it takes so long to actually settle the debt. A great organization could be great today but can go out of business in 2 years. If the debt settlement organization that you are working with files bankruptcy you may have just thrown all of your money into a savings account and will never see it again,.

So when is debt settlement truly a good thing for the client?
Debt settlement should be a last resort. Like I stated above, debt settlement is a program that was designed for people who are at the breaking point of bankruptcy. If you are struggling I understand we have all been there, but you can get past it with a proper budget and the struggle will not last for ever. Don’t destroy your credit to make thing easier. Destroying your credit can only make things harder in the long run and you will be jeopardizing your financial stability. There are other things you can do to make things easier it just takes a little bit of brain work.

What are your options?
There are many ways to get out of a tough situation without going to debt settlement companies for help. Here are a few options for you:

1.Create and stick to a budget – Every household should have a budget, unfortunately most of them don’t. When creating a budget, figure out how much money comes into your home each month and figure out how much money leaves your home each month for necessities. Necessities include loans, food, gas, insurance, ect… Once you have this figured out give yourself an allowance. I know you are not a 12 year old child but still, allowances are always a good thing. Don’t spend any more than your allowance amount on anything that is not necessary.

2.Negotiate with your creditor – Some times it takes nothing more than a simple call to your lending institution to ask for help. I know most people look at lending institutions as an all mighty corporation that doesn’t want to help and will do nothing for you. Although, I would love to say I agree with that, in most cases it is not the truth. Tell the creditor your situation and move forward from there to see what they will do for you.
3.Create a constant payment plan – As you pay credit card account bills, the minimum payment goes down incrementally. Never send in anything less than what you are sending in now and watch as the balance drops drastically.

If you need help with all of this, contact me personally I will be more than happy to help you and I won’t charge you thousands to do it!
By phone – (561) 355-0069
By email – Support@jemcreditcards.com
On the web – Go to my credit card debt help website www.JemCreditCards.com

Technorati Tags: Credit Card Debt

The last 5 years is nothing but breaches of all different types of laws including TILA, RESPA and HOEPA by all categories of lenders along with the giant loaners. A known bad list of lenders include Countrywide, WAMU, and of course Citi. Citi has already consumed up 40 billion of federal funds, and is still teetering on the brinks of a catastrophe. They are also at the same most commanding and reluctant lenders. Many of the foreclosure mess is constructed by these bankers, along with of course many small bankers. They over stipulated individuals who could not handle the burden of loan. These people should not have been property buyers in the first place. an example that relates and can be better understood is “My son is 10 years old and is in 5th grade. I give him one dollar every day for his allowance. Imagine if I start giving him $100 instead every day for his pocket allowance. It would spoil him in less than one month and show him how to be financially irresponsible. It is another thing if I open a saving account and put $100 in his account every day. Of course that would be a fantastic idea for his college education and bright future.”

There is No More delaying Required. You Waited extensive Enough.

The foreclosure process is arranged so that you have time to get back on your feet and keep your home. However that does not mean it is safe to stall with payments. The longer you hesitate, the harder it it will be to get you out of that position. As soon as you decided that you need mortgage help, call for a loan modification help and get started.

Who Else But a Qualified lawyer?

Your loaners policies have hurt you too much. Your broker (former) and loan officer along with mortgage bankers and all the other associated people have hurt you; so in reality, this foreclosure downfall was caused primarily by union of all these companies and their unlimited craving for greed. Don’t allow them to continue with this game. We all are hurt by this collective falsified practice. So let us work together and stop it. Here’s how.

Don’t file for bankruptcy, unless you really have to.

Filing for bankruptcy is not a breakthrough; at the most it would hinder the course. In a few cases, it would jeopardize your loan adjustment process. Keep in mind Automatic remain under bankruptcy and then you are in acceptance of debts. They are time exhausting things. You dissolve the leverage and deterrence of bankruptcy to utilize in your loan modification. Because of the information of bankruptcy, foreclosure, and loan modification: an attorney can be uniquely stipulated to acknowledge all these areas not forgetting that they have the knowledge within all these areas and, would be very assisting. Just don’t file bankruptcy at the very outset. It may give some time but it is not the solution. Also, please do not file bankruptcy just for your home loan unless you have lots of unsecured debts

Why Do Lenders Prefer Loan Mod Over Foreclosure?

-Loan Modification abides a temporary help. Get qualified for this. There is nothing to be embarrassing in all this issue. Lots of these things had happened out of our control.

-Your lenders are still complex to work with; they have built fireballs around which you must to cross. The secret is that by doing loan modification they are helping themselves. On a cost benefit analysis, they lose more money in a foreclosure. It saves money, and this is a time tested factor that lenders save money on loan modification and lose money in foreclosure.

Let us calculate the situation here in greater details.

Loan modification is cheaper. They only handle and deal with one borrower and not a plethora of individuals like the default agencies, governmental agencies, and the auctioneer and furthermore a new person in the entity who is stills an unknown commodity.
A loan modification takes place in 30 or 60 days while the foreclosure process is longer and it has its statutory limitations.
The paperwork is less detailed in loan modification in comparison with foreclosure process. In foreclosure, your lender will assess all kinds of late payments, expenses and attorney deposits, and of course a repair for the property to make it at least presentable. All these add up in the cost to lender.
Your lender is tired of foreclosing home. They have a high list of REO acquisitions, and no one is purchasing them.
A loan modification process can slow down your foreclosure process but it is not a safe guarantee against the foreclosure.
but, as long as borrower is talking, communicating with their lenders, they would not or at least hesitate to send their home to the auction block. Ideally speaking, don’t sit and endure for this time to arrive.
Do something immediatly. It is the time. It is your property. Find someone who is professionally qualified to help you. It is your local attorney who has a local office, easy to find and communicate and licensed.

1. Note everything on paper. It’s not uncommon for lenders, especially smaller ones, to lose track of your application process. To prevent constraints and delays, make sure all your efforts are documented and kept on file. This includes all the calls you make and receive, both from your lender and loan modification attorney. Keep receipts of all your transactions, and make copies so you don’t have to let go of the original content.

2. Do your own financial statements. Part of every home loan modification is a financial worksheet, which will be your main basis for qualification. Most lenders have their own forms, but it won’t hurt to make your own as well. If your lender insists on using their worksheet, at least you’ll have all the information ready.

3. Be as detailed as possible. Too much information is better than too little, and it limits the chances that they’ll keep calling you for additional information. A typical worksheet for a mortgage home work modification will include the following:

-Your contact information (which includes your address, home phone and work phone, fax and email)
-Information about your property, including the estimated value
-Your current income rate
-Any additional income you may have such as welfare, child support, etc.
-Your estimated total value of incoming and out-going income including other assets such as real estate, savings and checking accounts, IRAs, 401(k), stocks and bonds.
-Liabilities, for example as existing loans monthly bills, medical expenses, and tax lines

4. Keep all your bills. Keep track of all of your bills in a methodical order. Make sure you compose down your grocery bill, your utilities, including water, power, gas, and trash charges. Now, add on your monthly bill of HOA, any other community charges, your insurance charges, your child support, and other alimony issues or legal expenses. Possibly, a positive cash statements would be an ideal one to work with banks.

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Technorati Tags: Bankruptcy

Are you one of the thousands of people that cringes when you open a new credit card statement? Are you aggrevated with the interest that you are paying on your credit card accounts? Well, there is a way around these rates! Many people refer to banks as all mighty corporations that refuse to help people. As much as I would like to agree with this, I have to say that it is not a fact. Banks are a lot like a mom and pop store in a sence. Without clients, they will not survive. You can take advantage of this fact to obtain lower interest rates on your credit card accounts. There are a couple steps that you will want to follow during these negotations:

1. Know the facts! – Don’t start calling credit card companies until you have figured out the facts about the account in question. Grab your last bill and figure out exactly what the APR is on the account. Also, it is a good thing to figure out what your balance on the account is and how close you are to your line of credit. This will prove to be helpful when negotiating if you are not too close to your credit limit.

2. Contact your credit card company – When contacting credit card companies it is very important that you are polite! Being rude will get you no where especially when you take into account that the banker is not obligated to do a thing for you. So once again I can not stress it enough, be polite! When you first call, in most cases you will have to enter some information in an automated system that allows the credit card company to make sure to transfer you to the right department. Go ahead and answer the questions on the automated system. Once you get to the representative, very politely say “I was looking over my credit cards and I noticed that this credit card account has the highest apr. I like the charge card, and I like working with this credit card company but of course I am a little upset about the interest rate on this account. Is there anything that you can do to make this rate a bit more competative?”. After you say this, the representative is most likely going to put you on hold. When they come back they are most likely going to let you know that there are now lower interest rates that can be placed on the account at the moment. This is OK don’t get angry don’t start being rude just move on to the next step.

3. Get to the retention department – Just about every bank has a retention department. This is a department specifically created to do what ever possible to retain the customer including the ability to reduce interest rates. To get there just simply ask “ok I understand but I have balance transfer offers coming in the mail and I don’t want to go through the hassel of going to another bank can you please transfer me to the retention department?”. The representative will most likely gladly transfer you. Once you get to that department use the same line with them that you used with the customer service rep “I was looking over my credit cards and I noticed that this credit card account has the highest apr. I like the credit card, and I like working with this credit card company but of course I am a little upset about the interest rate on this account. Is there anything that you can do to make this apr a bit more competative?”. Once again you will be put on hold, but this time when the rep comes back, you will most likely get a lower rate.

If you don’t get a lower rate, I know of a company that is by far the best and a very reasonable price called Jem Credit Cards you can contact them:

By phone – (561) 355-0069
By email – Support@JemCreditCards.com
On the web – www.JemCreditCards.com

Just a good piece of information, if you don’t have one already, Discover card is the best credit card as far as rates, rewards, and customer service is conserned. To find the best one for you go to www.JemCreditCards.com

Technorati Tags: charge card, charge cards, Credit Card, credit card interest, Credit Cards

The main aims of bankruptcy should be to discharge certain money owed to offer a sincere personal debtor the possibility start a new life with a clean slate. Usually the discharge has the benefit of relinquishing the debtor’s personal responsibility on dischargeable debts.

There are a lot of regulations of bankruptcy. Submitting bankruptcy involves many obligations as well as legal process that should be strictly followed.

Chapter 7 of the United States Bankruptcy Code is the Bankruptcy Code’s liquidation chapter. It is applied largely by those who desire to absolve them from debt, easily as well as cheaply.

In order to qualify for help under chapter 7, the debtor must be a person, a partnership, or a company. Relief is obtainable under chapter 7 no matter the amount of the debtor’s obligations or whether the debtor is insolvent or solvent.

A chapter 7 case starts off with the debtor’s filing a petition with the bankruptcy court. This petition need to be filed with the bankruptcy court serving the area where the individual resides or where the debtor has the main place of business or main assets. Along with the petition, the debtor is also obliged to file with the court, many schedules of assets and liabilities, like schedule of present incomes and expenditures, a statement of financial transactions and a schedule of agreements and unexpired leases. Official Bankruptcy Forms can be purchased at a legal stationary store. They aren’t sold in the court.

To be able to complete the Official Bankruptcy Forms, which encompass the petition and schedules, the debtor(s) will need compiling these information:

* A listing of all creditors as well as the amount of money and nature of the claims.

* The source, amount, and frequency of the debtor’s income.

* A record of the debtor’s possession.

* A detailed record of the debtor’s month to month living expenditures, i.e., food, clothing, shelter, utilities, taxes, transportation, treatments, etc.

The filing of the petition under chapter 7 “automatically stays” with most actions against the debtor or the debtor’s property. This stay occurs by function of law and requires no legal measures.

One of the schedules that could be submitted by individual debtor is a schedule of “exempt” asset. Fed bankruptcy law states that an individual debtor can prevent some asset from the claims of creditors either as it is exempt under federal bankruptcy law or because it is exempt under the regulations of the debtor’s home state.

Therefore, whether a number of property is exempt and may even be set aside by the debtor is usually a question of state legislation. Legal lawyer ought to be conferred with to ensure the law of the state in which the debtor resides.

If you’re filing for Chapter 7 Bankruptcy, you should definitely check out Chapter 7 Exemptions since it could actually help you minimize the loss of your asset. The Bankruptcy procedure should stay the same.
FTS-2801

Technorati Tags: bad credit, Bankruptcy, debt, Finance

Don’t ever underestimate the harm that money worries can cause to an individual or a family. The only way out of this situation is by learning how to control your money. How you obtain your debt relief will depend on how you decide to control your financial problem .

Many people do not think clearly when this is going on around them but it is imperative you keep your head. While many loans can end up giving you huge debts you need to plan to pay them off judiciously.

Step one is to sit down and list all your monthly expenses and place them into columns of those that must be paid and those that you can live without. The hardest part for anyone in these circumstances is reducing the use of their credit card which is often considered a lifeline but paying for goods in cash highlights how much money is leaving your account and will result in you being more careful.

Often saving money for your debt relief ; even small amounts has a beneficial psychological effect that should not be ignored. By reducing the amount of entertainment you have on a regular basis will allow even more money to go into your fund and your debts will disappear faster.

Although the option of refinancing your mortgage may sound a great way to lower your monthly outgoings and pay off your debts, this is not always the best way so biting the bullet and paying of your immediate debts can be more beneficial. Although this is a great way to raise spare cash in the short term you may not think that way a few years later so consider if this is really right for you.

Some people draw out cash on their cards to pay for the monthly repayments thereby increasing their cash flow situation and aid their debt relief but this can only be done for short periods. If your debt is so high that you have to file for bankruptcy because a re-mortgage option hasn’t worked then you should consult a bankruptcy attorney for the best advice.

Unfortunately, some people in debt avoid bankruptcy and resort to using their individual retirement account to help pay their debts but you are on a slippery slope if you take this route. There is far too much to lose with this option so you would be better advised to find alternative answers and learn debt relief methods that are more fiscally responsible.

You can use cash to pay for your credit card debts and so reduce the monthly payments and help with your debt relief and although your cash flow will increase, so will the amount owed on the credit card. If none of these options can work, including the mortgage refinance then you may have to consider bankruptcy but take advice from a bankruptcy attorney first.

Technorati Tags: Business Debt Management, Debt Help, Debt Management, debt tips

Ok, so you have $30,000.00 worth of credit card debt. You’ve heard of debt settlement companies that say that they can reduce not only your rates but they can reduce your overall balance on the charge cards. Wow, is this for real they will be able to reduce your balance, really? Well yes and no.

Debt settlement programs are a great thing for a select few types of consumers. Yes your balance can be paid off at a settled amount but the actual balance on the charge cards is never actually lowered. What really happens when you enroll in a debt settlement program is, you go very late and when the settlement institution feels that the bank is desperate enough they will offer a settlement. It is something you can do on your own with a savings account.

How this works: if you don’t pay your charge card bills, all the creditor can do is sue you and even if they win that doesn’t mean that you will pay them back. Because of this, charge card companies will accept a settlement for a debt that they feel will not be repaid to try to recooperate at least a portion of the losses. This DOES affect your credit score in a negative way and if there is a institution that is telling you different they are lying.

Why debt settlement [spin]processes affect your credit in a negative way: Well, what happens is, the debt settlement institution will calculate all of your debt, lets say that you have $30,000.00 in credit card debt. They will use this number and multiply it by the usual settled amount for that state, for this example I am going to use 50%. They explain to you that you will be able to pay off the balance with a total of $15,000.00 and they explain to you that you won’t be paying any interest in the process. Well, this is the case, you won’t be PAYING interest but it will be accumulating on your account along with late fees and other finance charges. They then explain to you that your monthly payment will be $497 for 36 months which is a lot less than you are used to paying and it excites you. However, hidden in that $497 per month there is a monthly fee of $81.00 which after the 36 months grows to a total of $2916.00. Once you agree to the terms, the settlement institution sets up payments directly to them and does not pay the creditors instead, they put this money into a savings account and when you accumulate enough funds they then offer the settlement payment to the banks. This is something you can do on your own. Please however, do not do this if you have good credit because it will put a huge scar on your credit report!

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Technorati Tags: Credit Cards

Do it yourself debt settlement is a very rewarding but tedious process and can end up saving you thousands of dollars. Using iSettledit.com’s free resources,tips and tools will significantly you through the ups and downs of debt negotiation. Below are a few steps you will need before making the phone call to your creditor.

Here are some of the risks of not paying your creditors whether it’s for debt settlement, bankruptcy, etc.:

(This is for educational purposes only and does not constitute tax or legal advice. For information about your individual situation, please consult with a licensed tax or legal professional.)

Wage Garnishment

The most common type of garnishment, is the process of deducting money from an employee’s monetary compensation (including salary) as a result of a court order. Such payments are limited by federal law to 25 percent of the disposable income that the employee earns. Wage garnishments continue until the entire debt is paid or arrangements are made to pay off the debt.

At present four U.S. states ? North Carolina, Pennsylvania, South Carolina and Texas ? do not allow wage garnishment at all except for debts related to taxes, child support, federally guaranteed student loans, and court-ordered fines or restitution for a crime the debtor committed. Several other states observe maximum thresholds that are lower than the 25 percent maximum provided by federal law. States may also prohibit garnishment altogether in certain circumstances. For example, in Florida the wages of a person who provides more than half the support for a child or other dependent are exempt from garnishment altogether. Loans and negotiations with creditors can also help debtors to avoid wage garnishment.

Right of Offset

The right of offset means that a bank has the legal right to seize deposited funds to cover a loan that is in default. For example, if you have a credit card with Chase and you are delinquent, Chase has the right to go into your checking account and seize any funds to help pay your debt. If you have a credit card with Wells Fargo and a checking account with Bank of America the funds cannot be seized because their is no association between the bank and creditor.

Judgement

A judgment lien is a court ordered lien that is placed against the home or property when the homeowner simply fails to pay a debt. When the homeowner has a judgment lien against his or her home and wants to sell it, the judgment lien has to be paid in full before the home or property can be sold. This process is started by the creditor issuing you with a summons (order to appear in court). A judge will hear the creditors argument and either grant or deny the judgement. Again, if communication is ongoing with the creditor this is less likely to happen.

Risks when you reach a settlement

1099-C

In the event that you settled a debt for less than the balance owed, the creditor is allowed to report the amount of the balance they compromised as a loss on their income statement. Since you never paid the full debt back, the IRS treats the amount you did not pay as income. For example, let?s assume you settled a $10,000 debt for $4,000. The IRS expects you to report the difference, or $6,000, on your income tax return for the year in which the settlement occurred, even though you never actually received the money.

What if I haven?t received a 1099-C form?

For settled debts less than $600, you will not be liable to report the forgiven portion on your taxes. Otherwise creditors are responsible for sending you a 1099-C by the 31st of January before that year?s taxes are due. Creditors must send a 1099-C to the IRS by February of that tax year.

What should I do if I receive a 1099-C for a settled debt?

You need to report the forgiven portion of the balance as income on your tax returns. The amount shown in box 2 of the 1099-C is the portion you are expected to report as income. It is possible, however, that you are not liable to actually pay taxes on the settled debt.

When are taxpayers not liable to pay taxes on forgiven debts?

There are five situations when a taxpayer is not responsible for paying taxes on the forgiven balance:

1. When the debt was discharged through filing bankruptcy.
2. When the debtor was technically insolvent at the time of settlement. (insolvent: when their debts exceed their assets)
3. When the debt was due to a qualified farm expense.
4. When the debt was due to certain real property business losses.
5. When the discharge of the debt was treated as a gift.

To learn whether you qualify for these circumstance, you may want to consult a licensed tax professional.

I was insolvent at the time of my debt settlement. What should I do?

If you were insolvent at the time of settlement, you will need to either fill out IRS form 982 or attaching a letter to your tax return that details your total debts and assets.

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Technorati Tags: Credit Card Debt

I was amazed to read the following statistics from Families USA about responsible individuals facing overpowering credit debt because of circumstances beyond their control:

“Who is Medically Bankrupt?”
60 percent: attended college
66.4 percent: owned a home
20 percent: were veterans or on active duty
80 percent: had health insurance at onset of illness
38 percent: lost income due to illness
866,000: estimated medical bankruptcies filed 2009
2.3 million: individuals in medically bankrupt families, 2009
Source: Families USA

Judgments and stereotypes about debt don’t work in this recession. People can work very hard and still experience negative circumstances from factors they had no control over (illness, unemployment, divorce, wage earner disability or death, economic downturns, foreclosures, etc. ). To add insult to injury, the credit card companies have had it all their own way with recent legislation severely curtailing the consumer’s ability to recover from bankruptcy.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was anything but what it was named. This bill was a delight for the creditors and banks. It essentially ensures that anybody but the completely destitute (and large corporations) will eventually have to pay off their debt, with any increase in your financial circumstances going right to the credit institution. If there is anything to learn here, bankruptcy is just not a valid alternative any more.

Other issues to be aware of, especially when contacting your creditors, is the matter of universal default. If a credit company has any reason to believe you might have difficulty making your payments, if only that you have another credit source that reports your having repayment problems, they can and are:
1. Raising your interest rate to as much as 39 percent.
2. Raising your minimum monthly payment from 2 to 5 percent (so a monthly bill of $500 is now over $1200).
3. Capping your credit limit to the amount that you currently owe.
So be very careful when talking to creditors that you don’t give them any reason to think you are having difficulty making payments, as they will slap you down just like that.

Just so you know that not everything is doom and gloom, there is only 1 method that works – primarily because it uses the banks own legal techniques to create prompt and lasting credit debt relief for you. This strategy has been working wonderfully over the last 6 years for thousands of individuals. What else would credit debt relief look like except to have your harassing phone calls answered for you, your creditors given a legally crafted response to their correspondence, having an impenetrable barrier placed between you and your creditors, getting your debts resolved for as little as 10 cents on the dollar (or even nothing), and having your credit profile restored to even better than it was before the debt occurred? credit relief is possible and you must consider this alternative as you pursue true debt relief.

Regardless of why you are in debt or how you got there, we can help you keep your home, pay rent, feed and clothe your family, and provide adequate medical care by helping you avoid bankruptcy with this Program.

And when you are back on your feet, there’s even greater hope with various high return passive income systems that we have separated from the unverified, unproven, and falsely advertised income systems floating around the internet!

Wishing you a peaceful, abundant, and prosperous future,
ConsumersDebtHelp.com

Technorati Tags: Bankruptcy, Credit Card, credit relief, Debt Relief, Debt settlement