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9 Tips for Dealing with Debt Collectors

9 Tips for Dealing with Debt Collectors

It’s one of the most dreaded calls you can get – the debt collector. Make sure you don’t give up your rights or pay more than you have to by following these tips:

1. Get Verification of the Debt

The law requires the debt collector to send you a letter with the amount you owe, the creditor, and what to do if you don’t believe you owe the debt within five days after getting in touch with you. However, the debt collector will still try to get information and convince you to pay on that first contact. Before you say anything, ask for that letter.

2. Dispute the Debt If It’s Not Accurate

You can dispute a debt by sending a letter to the collection agency telling them that you don’t owe what is claimed. You must do this within 30 days of them providing written notice about the debt. Once you do this, the debt collector must provide proof of the debt before contacting you again.

3. Send Everything Via Certified Mail

If you mail a collection agency a letter, you’ll have no proof they received it. Cover yourself by paying a little extra to send your letter through certified mail.

4. Don’t Pay Anything If You’re Unsure About the Debt

Until you know that the debt is yours and is still valid, don’t make any sort of payment or even agree to a payment. Here’s why: the debt could be past the statute of limitations, in which case you’re no longer obligated to pay it. If you make any sort of payment, the statute of limitations resets and you’ll need to pay.

5. Keep Conversations Short and to the Point

Every time a debt collector talks to you on the phone, they’re trying to get as much information as possible about you. They want to find out if you have the capacity to pay and, if so, what is the best way to get you to pay up. Remember that the debt collector is not your friend and that you don’t need to provide them with any information. Answer the questions you want to answer, but keep those answers concise.

6. Negotiate a Better Deal

Obviously, the debt collector is going to attempt to collect the entire amount of the debt from you. It’s important to realize that collection agencies buy these debts for pennies on the dollar, and debts often go through multiple collection agencies. Use that knowledge to your advantage. Offer a very small amount of what you owe, such as 10 percent. The debt collector may not accept, but they will likely lower the amount they’re willing to accept. Haggle enough and you should be able to settle the entire debt for about 30 or 40 percent.

7. Get Everything in Writing

Never take a debt collector at their word. If you come to a state approved debt settlement agreement, get it in writing. You don’t want to agree to a settlement, only to have the debt collector later claim that the settlement was only your first payment on the debt.

8. Pay with a Money Order

One thing you don’t want a debt collector to have is your banking information, and they will if you send a personal check with your account number and routing number on the bottom. Instead, opt for a money order, which gives you proof of payment without having any of your information on it.

9. Know Your Rights

The law puts many restrictions on debt collectors and how they interact with consumers, but they may still cross the line. They can’t berate you with abusive language, they can’t call you at work if you tell them not to, and they can’t call you before 8 a.m. or after 9 p.m. if you don’t agree to it. They also can’t make any false claims or talk to anyone about your debt except you (and your lawyer, if you hire one).

Knowledge is power, especially when it comes to dealing with debt collectors. Educate yourself on how to handle debt collection calls so you can get the best results.

How Debt In Collections Can Affect Your Credit

How Debt In Collections Can Affect Your Credit

any people feel that if they ignore their debts long enough, they will simply go away. While this strategy can work for a few lucky individuals, most find that their debt finds its way to the surface eventually. This typically happens when debts go into collections.

If you’ve been ignoring your debts, your lenders may decide to give your debt to a collection agency to get. While this typically means additional steps will be taken to secure that money from you, you should also know how a debt going to collections will affect your credit score.

How Does Collections Influence My Credit Score?

Your credit score is a number that represents your financial health. When you sufficiently pay off the money that you borrow, your credit score will be high. If you frequently miss payments or default on your loans, your credit score may be low.

When a debt goes into collections, it means that you were not paying the money that you owe and that you were not responsive to attempts to try and get payments from you. In other words, you’re not financially healthy.

A debt going into collections typically will bring about a drop in your credit score. However, there are a few things that may influence how significant that drop is.

First, your credit score will actually influence how many points you lose. If you have a high credit score, you have a much further drop. Because it is very easy to ruin a good credit score, a debt going to collections can actually cause a relatively strong credit score to drop.

Lower scores will also take a hit if debts go into collections, but because there are not as many points left to take away, the hit may be smaller. However, a lower credit score getting even lower can be extremely difficult to raise.

Another factor that will influence how the credit score is influenced by a debt going into collections is the size of the debt. If the debt is small, meaning if it is under $100, your credit score may not move at all. While it will still show up on your credit report that you had a debt go to collections, you won’t need to worry about a drop to your credit score.

On the other hand, if the debt is large, you may find that your credit score has dropped significantly. This is typically because you had been trusted to repay a large amount and did not uphold that responsibility.

Finally, your credit score may be influenced by the kind of debt that goes to collection. Certain debts, such as medical debts, can appear differently on your credit report. This means they will have a different affect on your credit score.

How to Save Your Credit Score from Collections

To prevent your credit score from dropping because a debt went to collections, always pay your debts in full and on time. Respond to lenders appropriately when they try to contact you about the money that you owe and consistently make at least the minimum payment.

If you are notified that a debt has gone to collection, contact the collection agency immediately. As the agency to verify your debt, proving that you actually owe the money that they are saying. If they are unable to validate your debt, you may not be responsible for paying it.

If the collection agency can validate your debt, pay it if you are able. The sooner you pay it off, the sooner you can get on your way to rebuilding your credit score. If you’re not able to pay the debt off in full at that time, work with the collection agency to create a payment plan that fits your needs.

You should also always check your credit report to look for loans or debts that are incorrect or you did not take out. Because incorrect debts can still go into collections, you will want to get them straightened out as soon as you can. To avoid the headache of needing to solve a false debt after it has gone to collection, find the issue before it becomes a real problem.

5 Simple Steps To Saving For A New Car

5 Simple Steps To Saving For A New Car

Saving for a new car is fun and exciting. With each dollar that you save, you can imagine your hair blowing in the wind while driving down your favorite avenue. Impressing your friends, helping beloved family members and neighbors, or just simply getting to work in one peace may be reasons for this conquest. Whatever the motive may be, putting your funds aside does not have to be difficult. You learn discipline and the importance of money. If you are buying it yourself, you can appreciate the value in knowing about down payments, monthly payments, standard features and add-ons.

Select the time that you will purchase.

According to experts, car prices are reduced a the end of the month. Many car associates benefit greatly when they meet the monthly sales quota. In order to meet this number, they might be open to negotiations that they would not consider any other time. Whether it is working with a credit issue or lowering a down payment, the car associate may actually hear you out. Use this time to find the vehicle at a few different stores and even online. Then you can manage your negotiations at the end of the month.

Consider Buying Last Year’s Model.

Buying a car that is a year or two older can help you significantly. You can still buy a new car off of the lot, with all of the bells and whistles ,and at a fraction of the cost. You might even find that the older model has more features like a longer warranty, free gifts or gas cards, free servicing, etc. You can still look cool without breaking the bank. Car makers might be more willing to negotiate with customers in order to get the stock off of the lot. And, the prices will be lower.

Bargain with dealers

Another idea is to pit dealers against each other is a great way to find a deal on a car. They suggest that you contact different dealers about the same car and see which one will give you the best rate. If there is one type of car that has more features, tell the associates about your other bids to see if they can get the price reduced. The dealer with the lowest price can be the one that you go with. Be sure to discuss down payment and monthly payment plans during this time.

Shop online

Online sites are a handy tool to use when shopping for a car. Kelly’s Blue Book is the car buying staple that many people use to sell their cars and look up the value of a car. Other sites include edmunds.com and truecar.com. You can find local dealers, build a model that you are looking for and check out all of the features that a car has such as performance, safety and engine specifications. Carmax is a good site to find out the history of a car. If you are going to buy a certified used car, it is best to use a site like this to make sure you are not buying a lemon.

Save, Save, Save.

If you need to make money to buy the car, you must save. After you know which type of car you want to buy, find out how much you will need for a down payment. If you can, try to save for the monthly payments as well. Your down payments can be for a small amount or a large amount depending on which car you are buying. Setting aside ten percent of the amount each month, can help you reach your goal in no time. It is also good to know if you would like to consider financing or paying for the car from your own financial resources.

Decide when you want to get the car.

Whether you need a car within the next month or the next year, it is important to plan. The longer amount of time that you plan, the more successful you will be in getting exactly what you want. If you plan right, you might be able to put a down payment on a car and the dealer will hold it for a certain amount of time.

Debt Settlement Advantages And Disadvantages

Debt Settlement Advantages And Disadvantages

A debt settlement company is a company that takes all of your debt information and negotiates the lowest possible payments with your creditors. These types of companies charge a fee. They act as a liaison between you and your creditors. When you hire a debt settlement company, you will not have to speak with your creditor anymore. They will take the money and pay the bills for you. When the debt has been paid, you will no longer be liable for the monies owed to the creditors, and you can walk away with a clean slate.

Saves Money – The biggest advantage of using a debt settlement company is that they can consolidate all of your debt into one monthly payment. They can work with creditors to get your debt down to more than half of the original amount. They negotiate the deal, and if the offer is accepted, you will only have to pay the negotiated amount. This is not the case all of the time, but it does happen often. This can reduce the stress of paying the money back, and it can reduce the stress that you might have about becoming financially free.

It can damage your credit – If you have a good credit standing, it is not a good idea to work with a debt settlement company. Even if they negotiate an attractive rate with creditors, the paid off account will be listed as settled for less than it was due and will stay on your credit report for the next seven years. This can have an adverse effect on your credit card standing too. It is best to contact creditors directly if your credit is not poor. This way you can keep your good credit score and manage your debt.

Watch out for Scam Artists – Even though you will get a lower rate to pay back to the creditors, many debt settlement companies will not tell you the amount. You will pay the money without knowing how much is going towards the debt and how much is going to the company as a fee. Some ways to protect yourself against scammers is to use a company that you have contacted. Try not to use one that has called your home as a telemarketer. Many companies offer a free consultation. During this time, you can ask all of the relevant questions to your case and even discuss the contract. Read all of the small print before signing any documents.

Consider your Loses – When you use a debt settlement company, your accounts usually have to be at least three to four month delinquent. When the debts are settled, you will still have to pay taxes on the settled amount. The debt collectors do not have to settle your account. They have no obligation to get it down to a payment that is suitable for you. You face the risk of being in a worse financial situation if they decide not to negotiate with the debt settlement company.

Avoid Bankruptcy – The reason why debt settlement is so attractive to consumers is that it keeps you from filing for bankruptcy. Bankruptcy can have a negative impact on your credit for the rest of your life. Every time that you have to make an important financial decision, you have to bring it up, and banks will eventually find out about it. Some will even hold it against you, no matter how long it has been. A debt settlement will stay on your credit report for seven years and then it will go away. There is also no public record of you having a debt settlement like there is for bankruptcy.

Save Money – Creditors know that if you file for bankruptcy they might not get any of the money back. This is why many of them are so willing to negotiate with debt settlement programs. By using a debt settlement, you can pay off the debt in less time. For large amounts of debt, it usually takes about two to three years to pay if off completely. You can do this while paying a much smaller amount per month. You might even be able to start a savings for emergencies.

How to Save for a Down Payment When Buying a New House

How to Save for a Down Payment When Buying a New House

Saving for a new home has become easier by the day. Though conforming loans are now easier to access owing to reduced down payments, you still need to save not only for a down payment, but also for closing costs and other expenses that come along owning a home. Saving huge amounts may seem a huge hurdle, but an increasing number of individuals are purchasing houses with ideal down payment saving tips.

Get a savings account

  • Get a savings account

Opening a savings account with the same credit union or bank is a good idea. Having the account with the same institution has the advantage of convenience. You can transfer funds from your other accounts electronically. What this means is that you can transfer money from your checking account to your savings account without having to visit the branch.

Know how much you need to save

  • Know how much you need to save

Most mortgage lenders require up to 20% or more for a down payment. However, you can get other options where you are required to put down much less. However, this option may come with a mortgage insurance cost. This is a protection to the lender just in case you default. If a mortgage insurance is not required, be ready to meet upfront and other ongoing charges. Therefore, you need to know such information before you apply for a loan.

Here are some low-down-payment loan programs you can apply for:

FHA. The Federal Housing Administration may offer as little as 3.5% down-payment home loans. You can easily access the FHA loans and have low rates as compared to conventional lending.

GSE-backed Loans. Some government sponsored loan enterprises such as Freddie Mac and Fannie Mae are now backing 97% loan-to-value loans. This allows lenders to give up to 3% down payment home loans to eligible borrowers.

USDA. Investors and home buyers in suburban and rural areas are eligible to apply for mortgages provided by the US Department of Agriculture. These are low rate loans and 100% financing is guaranteed.

  1. VA. Veterans and active service members qualify for Veteran Loans. The best thing is that a VA loan requires no mortgage insurance or a down payment.

Set up a budget

  • Set up a budget

Every financing is properly done through a budget. Set up your budget using a spreadsheet. Include your monthly gross income on income tab then subtract all your payables, for starters, taxes, student loan payment, credit card bills, and utility bills from the pay tab. The difference gives you your net monthly income.

The next part is interesting. You need to know how much you’re left with every month. Keep track of your spending on items such as utilities, parking, gasoline, and entertainment. If possible, keep their receipts. This will help you match up your income and expenditure. A thin margin between the two implies that you should change your spending habits. Also, look for alternative saving sources.

Review interest rates

  • Review interest rates

Check interest rates on saving accounts, credit cards, car title loans among other accounts. Check every account and bill and the amount of interest imposed on each. You can do better on some of these accounts. For example, if you have been making upfront payments on your credit card, ask for a lower rate from the credit card company. Prepay your simple interest car loan for reduced interest rates.

Check your credit

  • Check your credit

Your loan limit and the rate you pay depend on your credit worthiness. Some lenders will be willing to originate a mortgage if your credit score is high even with little savings and down payment. Your credit score is calculated from your actual borrowing, total debt and other late or missed payments.

Use windfalls

Spending less to save is a good idea, but think of those occasions that bring your extra money. Think of tax refunds, bonuses, and birthdays. While it might be tempting to splurge these windfalls, this is what should be used to increase your savings without having to dip into your monthly income.

  • Use windfalls
7 Best Ways to Manage Debt

7 Best Ways to Manage Debt

The first step to managing debt is to figure out who you owe and how much you owe them. If life has been a bit hectic, one of the best things that you can do is pull your credit report to find out which creditors are asking for money. Your credit report will assist you in figuring out your financial standing and credit score. The list can show if there are some creditors that should not be asking for money and you can dispute the charges if they are not valid. This list can give you a birds eye view of who you have to pay.

The next step is to find out which bill to pay first. Some bills such as student loans may be too large to tackle all at once. The amount alone can be discouraging if it is too high. Starting with the lowest number is a great way to get into the bill paying mindset to help you feel like you are bringing down the Goliath. If you have more than one small bill to pay, you can contact the creditors and try to negotiate a smaller payment if you can pay it within a certain time frame.

Try to schedule your payments. After you figure out which ones to pay, pick a day each month to have the money taken out of your account. This will help your accounts stay active and in good standing with the creditors. This schedule can become a part of your monthly budget along with expenses like housing and food. Getting out of debt is one of the best things that you can do for yourself. If you schedule with some creditors, they might offer a reduction in the interest rate and it can lower your monthly payments.

Pay your bills on time. It might be a good idea to cut back on a few things each month until the bill is paid. If you pay on time, your credit score increases and your ability to get credit can heighten. If you are consistently paying your bills on time, creditors will take note of it and be more lenient if you need to refinance. If you happen to fall behind on a payment, make sure that you pay it as soon as possible. Paying late can often result in fees. With too many fees, you might sabotage your own progress.

Try to create an emergency fund. Many experts say that you should have at least a half of a year’s salary in savings to be safe. The average person does not have this option and is usually living from paycheck to paycheck. A way to get this savings started might be to put a certain percentage of your earnings aside each month in a separate account. This will allow you to save what you can if an emergency occurs. After a year, you will have a nest egg to keep building on. Paying your debts and creating a savings can make you financially solvent.

Make the minimum payment. For those bills that seem scary to look at, find out what the minimum monthly payment is and try to make it on time. You can talk to creditors if you have faced a financial crisis and they will try to help you figure out an amount that you can pay to keep the account in good standing. Paying off the interest sometimes does not seem like it is doing enough but it will pay off in the long run. Find out what kind of loan you have and what kind of interest it carries. Paying it down can seem like a long time, but doing it smart can cut the time.

Get help when you need it. Some of us need a lot of help paying our bills. The best legal credit repair companies will help you figure out the best options for you. Options such as deferments, bankruptcy, selling your home, etc can be figured out with the help of a qualified professional. Tackle the small things first and try to save as much as you can. Then seek help for those things that are too hard to handle.

Structured Settlements vs a Cash Lump Sum

Structured Settlements vs a Cash Lump Sum

Most small claim court cases will be settled with a lump sum agreement, allowing you to get the full amount of what the judge ordered. Larger claims or settlements that may require future compensation, such as an injury or disability case, may result in a structured settlement. You may even receive funds from a life insurance plan or 401K in the form of either a structured settlement or lump sum.

A structured settlement is where you get regular payments that go towards the larger sum of what you’re owed. A lump sum refers to receiving all of that money upfront. Fortunately, you are in full control over which option you’d prefer. Some people find that lump sum payments help them pay off debts and bills that have accumulated and others find structured settlements are helpful for routine monthly bills. A recent study has found that most claimants prefer structured settlements because of its tax-free and flexible status.

Understanding Structured Settlements

Structured settlements are often found in the shape of an annuity, being sold to you by a third party company, such as a life insurance provider. The annuity may even be vested in the U.S. Treasury, providing a tax-free flow of cash that is available at both federal and state level. The structured settlement works to extend the output given to you to handle your compensation. Oftentimes, you will wind up having more money if you choose to go with a structured settlement agreement as opposed to a lump sum.

Structured settlements can also be flexible to those who receive this form of payment. You can choose to receive a small lump sum if you have bills to pay upfront, but you can extend those additional payments monthly, semi-annually or annually. How you receive your money is totally up to you, further improving your case outcome. Keep in mind that if you deduct a larger portion of your annuity, you will pay tax on this amount. This is the only instance when tax is found in a structured settlement contract.

The only true downfall to taking out a structured settlement is that once you sign all necessary paperwork, you cannot change it. You will only be receiving your money as an annuity and if you should need a lump sum of money from the settlement, you won’t be able to obtain it. Once agreed upon, you cannot change how much money you receive and how frequently you get your checks in the mail. You also cannot change the amount you collect according to inflation of the economy.

Understanding the Lump Sum Cash Agreement

The lump sum settlement provides you with all of the money you are entitled to upfront. There is no waiting period, no annuity payments and no menial checks. If you have a substantial amount of money you owe right now or are planning to make a large investment, such as buying a home, the lump sum option is the right one for you. The biggest dilemma with a lump sum agreement is the amount of tax you pay to receive your money. Federal tax indicates that 20 percent of the amount of your lump sum be taken for withholding. This does not even include what your state will charge in tax, with some states taking just as much as warranted federal guidelines. This large tax could hurt you financially because you are getting almost half of what you’re actually owed.

Another predicament that people find when choosing a lump sum payment is how easy it can be to blow through all of the money at once. It’s easy to say that you’ll be responsible with the money once it’s received, but having all of that cash at your disposal is another story. Similar to how many lottery winners go bankrupt years after winning, lump sum recipients often find themselves staring at an empty bank account well before the money should have been gone. If you choose a lump sum settlement, it’s vital that you work with a financial expert to help manage that money so that it does not get blown on bad investments, frivolous purchases and poor financial decisions.

When receiving any type of settlement from court, 401K earnings, life insurance policies or death benefits, you need to weigh the good with the bad. Both structured settlements and lump sums have their advantages and disadvantages. Your decision depends on your current financial situation, your level of responsibility with large sums of money and an ability to foresee future issues involving finances.

The Process of Getting a Business Loan in the New Year

The Process of Getting a Business Loan in the New Year

Starting a business is a thrilling endeavor that over 543,000 people do every single month. People often start their own businesses because they want to either put their passion to use, make more money than they could working a nine-to-five job, or have the ability to set their own hours and work time. Creating a company name and establishing a brand requires money, and this is where a business loan comes into play. Business loans are specifically designed for new company owners who need financial help with getting their ideas off the ground. Understanding the overall process for taking out a loan will make it easier for you and provide you with a loan you can afford.

Understand the Reasons Behind Getting a Loan

In order for the loan to be successful, you need to have a clear game plan for using that money. If you take out a business loan and don’t have a plan for how to use the cash, you might find yourself wasting the funds on frivolous things and not having enough to actually help the new business. For example, if you take out a $50,000 business loan, you need to know where all of that $50,000 is going before any of it is spent.

Know that a Loan Might Not Be Possible for Brand New Owners

Lenders often see brand new business owners as a liability risk factor. The reason behind this is due to the undeniable fact that 8 out of 10 new businesses fail within the first 18 years of opening. While no new business owner wants to think about failure, it’s an indisputable circumstance that banks do not take lightly. If you’ve only owned your business for a couple of months or are still within your first year of opening, don’t be surprised if you get denied your much-needed business loan. Banks deny these cases to protect their own assets.

Find the Best Lender

If you are well into owning a business and are able to apply for a loan, you need to go with a reputable long-term company. There are tons of banks, loan firms and financial institutions that are willing to give out loans to successful business owners. However, no two loan companies are created equal, and one might charge a ridiculous interest rate on their loans while another is more reasonable. You should only take out a loan if you have collateral that can be used, have a good credit score and don’t need the cash overnight. Loan approvals often take weeks to finalize, so the money you need will be slow to come in.

Have All of the Necessary Documents

Banks that offer business loans require a certain amount of documentation before they can approve your case. As a company owner, you’re going to need to provide more than your credit score and identification cards. You need to bring receipts, business tax forms, income information, sales inquiries, expenditures on the business and bank account information. The bank uses all of this information to determine your eligibility to receive the loan.

Don’t Get Discouraged If You’re Denied

Many factors come into play if you’re denied a business loan. If your business is too new, too risky or isn’t pulling in a lot of money, banks can choose to deny the loan. You have several options if this should happen to you: apply at a different bank or improve your business before going back for a loan. Marketing and advertising can help improve your company’s traffic flow, bringing in more sales and revenue. This is what banks like to see and they may notice this change and be willing to give out the loan. If your credit score is the issue, you should think about having someone else with a good score sign for the loan.

Your business loan can take your new company to great places and provide you with the funds necessary to pull it all together and be a true success. While taking out your own business loan is quite a process, it is always worth it in the end when it comes to having an effective brand because you had the funds to grow.

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