Couple struggling with bills

Not All Debt Consolidation Companies are Equal – 5 Important Question

Whether you are looking for help with debt consolidation, credit counseling or debt settlement, it is important to know that not all debt consolidation companies are created equal.

What separates one company from another? Here are 5 important questions to ask when evaluating a debt consolidation company:

  • How long have you been in business? Let’s face it, you don’t want to trust your money to an overnight start up and be some company’s Guinea pig.  At Pacific Debt, we have been helping consumers since 2002 and have settled thousands of debts representing hundreds of millions of dollars.
  • Is the company highly rated by the Better Business Bureau? Do you really want to trust a company with an F rating and loads of complaints? Companies that are Accredited Members of the BBB make a commitment to marketplace ethics and are required to resolve consumer complaints to maintain their memberships. Remember, all companies get complaints, it is how a company responds and addresses those that separates the good from the bad. We are proud to say that Pacific Debt is an Accredited Member of the BBB of San Diego with an A+ rating.
  • Is the Company a member of any Industry Trade Associations? Trade associations often set many of the standards in the industry and their members are required to meet minimum requirements to maintain membership. For instance, in the debt settlement space, the American Fair Credit Council (AFCC) requires that each Accredited Member company undergo an audit once per year to ensure that member companies are not charging upfront fees and are complying with all AFCC standards. At Pacific Debt, we are one of only 13 Accredited Members of the AFCC.
  • Will you receive personal service? Some companies treat you like a number and basically have huge call centers designed to answer your calls, but rarely offer you any personal dedicated service. At Pacific Debt, we created a system where all of our clients get a dedicated Personal Account Manager who is there to guide them through the process from the first settlement until completion. Our Account Managers get to know our clients on a personal level so that you don’t have to deal with the aggravation of explaining your situation over and over again to a different call center representative each time you call.
  • What are others saying? If you scour the Internet you can find all sorts of review sites and comments on social media. If clients have a good experience, or a bad one, they like to talk about it online. In fact, due largely to our great client reviews, Pacific Debt is the #1 Ranked Company on BestDebtCompanys.com .  Our average user score of 9.7 on the BestDebtCompanys site is a direct reflection of our commitment to customer service and delivering value to our clients.

The bottom line is that you have a lot of choices when it comes to selecting the right debt consolidation company and the reality is that not all debt relief companies are equal. However, by asking the right questions and doing your homework, you can find the right option and company for you.

Your Guide to Debt Consolidation Loans

Many prospective customers call Pacific Debt in hopes of obtaining a debt consolidation loan to pay off their existing credit lines. During our initial consultation with clients, we review the fact that Pacific Debt is not a lender and therefore does not offer consolidation loans. Instead, we offer a program called debt settlement, which is a form of debt relief that does not require taking out a new loan. For more information, feel free to read and learn more about our debt settlement program.

Criteria For Obtaining a Personal Loan

For those of you who are looking for a loan, there are several factors that will determine what your options may be, here are a few of those factors:

  1. What is your credit score? Generally speaking, the higher your score, the better the rate you will be offered and the more loan options you will have. Typically the lowest rates are reserved for consumers with a FICO score of 720 and above. If you don’t know your score, financial websites such as CreditKarma.com now allow you to track and monitor your score for free.
  2. What is your capacity for repayment? In order to obtain a loan, you are going to be asked about your employment history and level of income. Lenders prefer to see stable income and will analyze your debt-to-income ratio when considering the risk involved with extending you a loan.
  3. Are you willing to use collateral to secure the loan? If you use your home or vehicle as collateral to secure the loan, lenders may offer you a lower interest rate or overlook less than perfect credit. Of course using your home or vehicle as collateral also puts those assets at risk in the event that you default, so you need to be extremely confident in your ability to repay the loan.

Types of Loans Available

Now that you have reviewed some of the major factors that lenders will consider on your quest for a consolidation loan, here are the types of loans that might be available to you:

Pay Day Loans: Designed as a short-term stopgap, payday loans are typically obtained with the understanding that the loan will be repaid on your next payday. These loans are typical $500-$1000 and come with huge interest – often 300% APR or higher. Be careful with these high-interest loans, as they can get you in serious trouble. In fact, regulators such as the CFPB, have serious concerns about payday loans and are taking action to curb abuses in the payday loan industry.

Personal Loans: A better alternative to payday loans are personal loans. Personal Loans can be either secured or unsecured and typically come with a fixed monthly payment and repayment term.

  • Unsecured: Over the past few years unsecured personal loans have become very popular. Traditionally, these loans have been offered by major credit card issuers and carry interest rates of 10-25% typically. Recently, peer-to-peer lenders such as Prosper and Lending Club have sprouted up in the marketplace, giving consumers more options than ever before with regards to consolidating their debts. The downside to most of these loans is that the interest may be just as high as what you are paying on your credit card debt. In fact, a quick review of Lending Club’s website shows that a consumer with poor credit, looking to borrow and repay a loan over 60 months, could face an APR of 35%!
  • Secured: If you use your home or a car to secure a loan, you may be able to snag a lower interest rate on your personal loan. However, the catch is that if you default on your payments, the lender is now entitled to your property and that can put you in a very serious financial predicament. If you are considering a title loan to your vehicle, check the interest rate, as they are often just as bad as payday loans.

Changing Financial Behavior

Once you have obtained a loan and paid off your other debts, it is important to change the behavior that led to accumulating the debt in the first place. At Pacific Debt, we frequently speak to consumers who previously obtained a consolidation loan to pay off their credit cards, but now have a large personal loan and also carry large balances on their credit cards. The bottom line is that unless your financial behavior changes, a personal debt consolidation loan is really just a method of transferring your debt from one creditor to another.

We encourage consumers to do their due diligence and research your options. If you are not comfortable with the loan being offered (remember many personal loans have interest rates over 20%), feel free to give us a call at Pacific Debt. One of our professional and courteous counselors can review with you all of your options and can explain how debt settlement may be an appropriate alternative. The call and consultation are free, and unlike getting a new loan, we actually work to get you out of debt for less than you owe right now – not more.

How to get out of your debt quickly

How do I get out of debt quickly without hurting my credit?

Each day our enrollment counselors at Pacific Debt are posed with this question: “How do I get out of debt quickly without hurting my credit?” The answer, unfortunately for most, is that there is no easy way out, and depending on the option you select, as well as your prior payment history, your credit may be impacted. The reality is that it took a long time to accumulate the debt in most cases, and it generally takes even longer to dig yourself out, due to the interest and fees charged by credit issuers.

One of the fastest ways to get yourself out of debt, is to enroll in a debt settlement program, which is an alternative to bankruptcy. For those struggling with over $10,000 in unsecured debt, it can be a turning point in their financial lives and put them on a path to a debt free future. Unfortunately, many individuals and families don’t get the financial relief they need because they are paralyzed by the fear of their credit score dropping. This relates back to the original question posed in this post, which is that most consumers are looking for a solution that is “quick” but that will also not “hurt their credit”.

For the record, your credit score is important. Individuals with a FICO score of 720 or higher generally can borrow money at the lowest rates available, meaning car loans, mortgages and credit cards will carry lower rates of interest. If you own a television or surf the web, you have been exposed to countless advertisements and financial gurus all espousing the virtues of a high credit score. The fact is, credit is important.

However, I would argue that for most individuals struggling with excessive unsecured debt, their low credit score is not what keeps them up at night. Nor is their credit score what prompted them to call us for help.

No, just about everyone that picks up the phone to call Pacific Debt for the first time is concerned with their actual debt. Clients often have a combination of credit cards, high interest personal loans and payday loans. We often hear stories of clients borrowing from one creditor to pay another. For some, this is a cycle that they have been trapped in for years, possibly decades. Many of the people we consult with are excellent candidates for debt settlement; however, many still opt to not get the help – even when the problem involves over $40,000 in credit card debt. The primary reason cited for not proceeding is “affect on credit”.

For those of you who are stuck on the fence with your decision, here are three points to consider when weighing your DEBT versus YOUR CREDIT:

  1. How much is your “good credit” costing you? The reality is, your good credit is probably what enabled you to accumulate the debt in the first place. Now, consider how much interest you are paying each month. Are you making any progress on the debt? If you are paying $400 per month in interest and seeing little to no progress, that translates to $4800 per year, $19,200 over four years, and you will STILL likely be in debt! If the above situation resembles your own, it’s clear to see that maintaining your “good” credit is a cost that you simply cannot afford. Alternatively, if you choose to stop throwing away your money, you could be DEBT FREE in as little as 3-4 years. Upon completing Pacific Debt’s program, that $400 per month could then be used to fund a retirement account, college savings or down payment on new home or car.
  2. Have you had any recent late payments? Are you close to being maxed out on your cards? Do you have collection accounts? If you have answered “yes” to any of these, your credit score probably isn’t as good as you think it is. Pacific Debt has a relationship with Experian and can actually run your credit and pull your score for free to let you know where you stand. Once your debt is resolved, you can then begin focusing on improving your credit score by borrowing and using credit wisely.
  3. If you are struggling with debt, the last thing you probably need is MORE debt! The primary reason people maintain good credit is so that they can borrow money at favorable interest rates. While enrolled in a debt settlement program, your score will be negatively affected and you should avoid borrowing more money. Like all things, time heals all wounds and your score will improve through proper credit management. With that said, one of the many benefits to debt settlement is that our clients learn to live without relying on credit. Upon completing their programs, our clients have spent two to fours years budgeting and managing their finances without depending on credit cards to finance their monthly expenses. As a result, our clients have learned new financial behaviors to avoid falling into the debt trap in the future.

As with all decisions concerning your finances, it’s important to weigh all of your options. One of our professional staff members would be happy to complete a thorough budget analysis with you, and review your debt situation. Based on this information, we are happy to review your options and help you to decide if debt settlement is right for you. Please call us directly at 1-877-722-3328 for a free, no obligation consultation.

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Debt Crisis Relief:  Changing Bad Spending Habits

Getting into debt is one of the easiest downward spirals any person can get caught up in. Everything in the western world is geared toward getting people to spend money and promotes consumerism. Furthermore, the ease of acquiring credit cards steers individuals toward spending money they do not have. The deck is stacked against consumers who cannot withstand the onslaught of credit cards, financing offers, and sales on expensive merchandise. Simply put, it is amazingly easy to get into an enormous amount of debt.

On another token, one of the hardest things to do in today’s world is to get out of debt. Sure there are classes, books, DVDs, and seminars galore meant to teach people how to climb out of the hole of debt, but in truth all of these are useless if the habits of the individual debtors are not changed. Five of the most common habits that should be changed to help a person get out of debt are listed below, but a look at one’s spending habits could reveal many, many more. Use the list below as a starting point in determining what bad spending habits you have. You might come to realize that you’re able to regain control of your debt situation much more easily than you think.

Eating Out

One of the leading causes of debt in the United States arises from the desire to eat great food. Many people think it is more convenient and less expensive to get great food by going to a restaurant. However, this perception is incorrect. For a family of four, the average bill at a sit-down restaurant such as T.G.I. Friday’s, Olive Garden, or Ruby Tuesday is somewhere between $45-60. This amounts to about a third of the average weekly grocery bill for a family of six!

The money spent on one meal at a restaurant could go toward paying one third of a grocery bill, high interest credit cards, or student loans. Reducing restaurant dining experiences from one or two per week to one or two per month would amount to enormous savings and a quicker climb out of debt.

Downloading Music on Your Phone or iPod

Although song downloads cost $0.99 or $1.29, the ease with how they download leads to overspending and feeds the “click and buy” mentality, increasing your amount of debt. Downloading ten songs may only cost $10 but over time it adds up and trains you into fulfilling your instant satisfaction desires. This leads to little or no concern about how the songs will be paid for in favor of being satisfied.

The actual downloading of music might not affect your budget all that much but the act of downloading anything off the internet or anything utilizing the “click, buy, and pay later” mentality sure does. The key here is to train yourself into not buying things with one click. Break the habit of downloading and paying later and watch your debt slowly decrease. You will be surprised how much more you pay attention to what you are buying when you break this small habit.

Paying With a Credit Card

Perhaps the hardest habit for anyone to break when trying to get out of debt is using their credit card. A lot of people state they are using their card to get bonus points or cash back and they will pay it off at the end of the month. Unfortunately, most people do not actually pay off the card at the end of the month and their bills skyrocket because of it. If you are one of the good folks out there that actually does follow through, either you need to keep doing that or get rid of your cards so you do not charge something you cannot pay off.

A good way to get yourself out of debt is to get rid of your credit cards. That is right, cut them up and get rid of them. Of course when you cut them up your debt remains, but getting rid of the cards will keep you from adding more debt to your total and will get you out of the habit of using them. The best way to pay for things is cash but if you do not like carrying money around, the only card you should have in your wallet or purse is a debit card which automatically withdraws money from your checking or savings account.

You will quickly learn that if you do not have any money in your wallet or in your bank account, you cannot buy something. If it is absolutely necessary that you buy the item you are looking at, then you need to adjust your budget so you can afford it. Not paying with a credit card will not only lower your debt and teach you to only spend the money you have, it will also make you think about those “must have but unnecessary” purchases and get the “need” purchases instead.

Smoking and Drinking

Regardless of what your stance on the issue is, a smoking and/or drinking habit is expensive. The truth is there is no cheap way for a person addicted to alcohol or nicotine to get the drug they crave. The good news is kicking either habit will have major implications for your health and your debt. If you have been trying to find a reason to quit either of these habits, take a look at the receipts from the liquor store or the tobacco shop and you will begin to see where a significant portion of your income is going.

Quitting cold turkey will have the greatest and quickest effect on your budget and your debt issues, but requires the most effort. Alternatively, weaning yourself off of tobacco or alcohol takes more time and causes strain on your budget to continue, but is easier to do from an addiction standpoint. Saving over $100-150 a month because you do not smoke or drink will dramatically change your fiscal standing.

Leasing (Not a House)

Renting an apartment or a home should not be looked at in a negative light unless you are spending above your means. As a matter of fact, many Americans are switching back to renting because owning a home is just too costly in the current economy. Keeping living accommodations out of this, leasing or renting anything is a big, bad, ugly, no-no for people looking to get out and stay out of debt.

If you take a moment to think about it, why do you want to pay $350 a month to lease a car when you can pay $250 for a car that you will own after all your payments are done? On the lease, you will have to turn the car in after three to five years; after you followed all the strict rules that go with a lease, and then you have to start renting all over again! On the other hand, you can buy your car, finance it, and in three to six years you will own it with no payments left to make.

The renting and leasing mentality can be applied to almost everything these days. You do not need to rent a television or a couch for two months from places like Rent-A-Center. Instead, save the money you need to buy one and be done with it. Leases are convenient little scams that cause you to pay out money each week or month for something that you can get yourself. If that television you want costs $50 a week to rent, save the $50 each week until you have enough money to buy the television.

Of course it could take a while to get the television if you only save $50 a week but it will teach you to pick and choose the things you really want to have and will actually make you appreciate the items you buy when you actually get them. Who knows, after two months of saving, one of your neighbors will be getting rid of their flat screen television and the $400 you have saved up will take it off their hands.

Get out of your debt by saving money every month

5 Ways to Save Money Every Month

Most people spend far more than they need to on things that don’t actually make any noticeable difference to their quality of life. Of course, there are obvious ways to start saving, such as eating out less, spending less on your hobbies and going on fewer vacations, but not everyone wants to sacrifice the things that they love most in order to start saving a bit of money for the future. Provided that you are not in a desperate state of debt already, now is a great time to start putting some money aside by cutting your monthly outgoings without having to lower your standard of living. Following are five money-saving considerations that you might be overlooking:

1 – Change Your Utility Providers

Things like heating, electricity, water, city tax and various other bills are things that everyone has to pay, but most people also pay more than they need to for the exact same services. Given that most utility industries are so competitive, it shouldn’t come as any surprise that there are many other options out there, some of which may be much more attractive to you. Thanks to price comparison websites, it only takes a matter of minutes to find out how much you could be saving by switching to a new utility company. However, don’t be attracted only by a short-term deal, and instead think of the longer term saving possibilities when choosing a new utility company.

2 – Change Your Phone Provider or Plan

Many people pay far more than they need to for their mobile phones, and consumers are often fooled by the lure of expensive new phones offered for free in return for an overpriced contract that is difficult to get out of. However, being another competitive industry, the cost of mobile calls, text messages and even mobile Internet, has dropped drastically in recent years, so there’s no need to be paying more than absolutely necessary. Unless you are a heavy mobile user, you will likely find it preferable to go for a prepaid plan so that you are not bound by any contracts or likely to fall victim to any surprise bills.

3 – Stop Paying Interest

Unless they are in the process of being paid off, most debts continue to cost you money in interest to the extent that the monthly payments can put a huge dent in your income. Irresponsible use of credit cards, overdraft, loans and other lines of credit can quickly lead to you spiraling deeper into debt. To avoid paying interest, pay off your debts as soon as possible, but if your income is not great enough to pay them off within a few months, you may want to consider consolidating your debts and transferring them to an interest-free balance transfer credit card or debt consolidation loan. This way, you’ll have to pay a one-time fee (on the balance transfer card), after which you’ll have a certain amount of time (typically six to 36 months) to pay off the debt without paying any more interest.

4 – Buy in Bulk

Buying in bulk, whether shopping for groceries, stationary, cleaning products or anything else that you use on a daily basis, is invariably cheaper than any other option. However, many people are put off spending a large amount of money in one hit, failing to take into account the long-term savings in the process. Instead, consider doing your grocery shopping at a discount supermarket, Costco, or other such venues that primarily cater to businesses seeking wholesale prices. You might need a membership card, but they are usually not difficult to get, and you can often borrow one from a friend without any problem. Saving money by buying in bulk also applies to things like subscriptions, whereby you can purchase things like computer software and prepaid mobile cards that will last you for a year or more.

5 – Change Your Banking Habits

Many people spend more than they need to on their day-to-day banking, either in overdraft interest fees, withdrawal fees, poor exchange rates abroad, money transfer fees or even monthly fees just to keep the account open. Your requirements will vary depending on your lifestyle and your priorities, but there are some tips that apply across the broad. For a start, if you use a credit card, make sure you only use it for emergencies, and be sure to pay the bill off in full every month so that you avoid paying interest. You should also consider opening a savings account if you don’t have one already, since you’ll be able to earn a small amount of interest on what you save, and it’s always wise to set aside some money for a rainy day. As is the case with just about anything else, you can compare bank accounts and other financial services online until you find something that better suits your particular requirements.

Saving money and getting control over your financial affairs is more about making a few changes to your spending habits rather than sacrificing the things you love. By taking time to more closely examine your outgoings, you could be surprised by just how much extra cash you can put aside each month.

Erase credit card debt forever

“Erasing” Credit Card Debt

Since the great recession of 2008 many of us have had to rely on credit cards and other forms of unsecured debt just to get by. The heavy burden of too much debt can be overwhelming. Although it may seem that debt is a mountain too high to scale, it can be overcome. By following a few simple rules anyone can “erase” credit card debt forever.

The first step on the road to debt freedom is to reduce one’s consumption by evaluating and changing your spending habits. It is a concept that is almost too obvious. Many people get into debt because they spend what they do not have. Of course, there are many people who make less than their bills add up to. So how can these people reduce their expenses? The obvious answer is to find a way to lower the amount of money you owe every month by cutting expenses down to the bare necessities, or by finding a way to supplement your income.

Most of the time, it is not because bills are higher than income that cause people to start relying on credit cards. Most of the time, people simply cannot seem to wait for that big ticket item which they want so badly. It may be a television, a computer, a gaming system. The truth is, most people who find themselves in credit card debt are not using their cards to cover their bills. So to come full circle, it’s imperative to stop spending money on the things you want, and instead only leverage a line of credit out of necessity.

The second step is to pay more than the minimum monthly payments, which are designed to keep the cardholder in debt for as long as possible so that the balance can keep accruing interest. Three years is a long time to wait to pay off a small sum like $300. There are credit card calculators online which can be used to figure out exactly how long it will take to pay off the card if the minimum due is paid each month. They also show how much is ultimately spent on paying off the card.

A good rule of thumb is to pay as much as possible each month. If bills are cut to the bare minimum and paying off the card is set as a top priority, it will be easier to pay the card off quickly. The faster a card is paid off, the less interest is accrued. This is true with all interest related debts such as mortgages and car payments as well. Once the card is paid off, a person can still use the card responsibly on occasion. In fact, some credit card companies will charge a fee if the card is not used unless the account is closed. The best way to continue to use the card without going further into debt is to make sure that any items bought with the card are in the budget and the statement balance is paid in full. Any rewards that are offered for use of the card can be taken advantage of this way without falling back into debt. The card may also be used in emergencies provided the debt is paid off quickly.

The last thing to remember about credit card debt is to make payments on time and never exceed the limit. Falling behind or exceeding the limit on a card will normally trigger huge increases in the APR. The default rate may be as high as 29.9%. To make matters worse, there are often fees for both and it is easy to keep maxing out the card if one keeps spending after each payment.

If you’ve already tried pushing yourself to do the things mentioned above and are still struggling with your debt, it may be a good idea for your to speak with a debt relief professional about your options. If you’re interested in how Pacific Debt can help you, please review the details on our debt reduction program.

Check your credit card report regularly

Why you need to check your credit report regularly

If you are in the market for a new home or a car loan, chances are you have already checked your credit report and credit score. You know how important good credit is to getting the lowest rate on those loans, but do you realize how important a good credit score is to other aspects of your life?

The truth is it is important to keep regular tabs on your credit history and credit score, even if you are not in the market for a new home or car. There are a number of reasons why checking your credit report should be a regular part of your financial life.


Good Credit Can Lower Your Car Insurance Rates

You may think that your car insurance rate is only influenced by your driving records and how many claims you have filed, but that is not necessarily the case. Many car insurance companies also look at the credit profile of drivers before setting their premium rates.

If you are shopping for a new car insurance policy, it is a good idea to pull your credit report first. A mistake on your credit report could results in higher premiums and wasted money.

You Can Recognize Identity Theft Before it Can Hurt You

Identity theft is a growing problem, and the results can be quite serious. Falling victim to an identity thief could leave you thousands of dollars in debt – and cost you thousands more as you try to clear your name and regain your reputation.

A careful review of your credit profile is one of the best defenses against identity theft. If someone is opening accounts in your name or taking out loans, that information will show up first on your credit report. Notifying the credit reporting agency – and the police – of any unauthorized activity is the best way to nip identity theft in the bud.

Bad Credit Could Cost You Your Dream Job

You already know that the local mortgage lender will check your credit report carefully, but what about your future boss? Many companies routinely screen the credit reports and credit scores of job seekers – and what they find could cost you the job.

Be sure to check your credit report carefully before you enter the job market. Check for any potential errors that could lower your credit score and cause a potential employer to look unfavorably at your job application.

As you can see, your credit report affects much more than your ability to get a loan. Knowing how your credit report is used, and how to check it, can help you fight identity theft, save money on car insurance or even land a great new job.

If you haven’t already done so, be sure to pull a free credit report over at annualcreditreport.com.

Options for debt in a marriage

Debt in a Marriage: What Are My Options?

Marriage is supposed to be a beautiful thing, but sadly, so many newlyweds don’t know each other’s finances before tying the knot. If one spouse is entering the new courtship with a newfound debt from their partner, there are probably a lot of questions that need to be answered.

To help you understand debt that comes from a partner after marriage, here’s what you need to know:

Is it Mine, Yours or Ours?

Every state has their rules when it comes to who owns what debt. One of the first questions that newlyweds have when it comes to debt is: Who the heck is responsible for this debt?

The first thing that you need to look into is if your state is a community property state. In a community property state, such as Arizona, Idaho and more, the spouse may be liable for the debt upon marriage. However, in anon-community state, the spouse won’t be liable for any debt they didn’t sign up for. A quick search for your state laws can let you know where your state falls.

Combining Debts

Regardless of what your local state laws are, many couples often want to combine their debt to pay it down fast. If this is the route that you want to take, there are many options that you can take advantage of.

For instance, many credit card companies offer balance transfers for zero percent interest for a limited time period. This is a great way to combine your debts all under one account. If you’re going to take this route, just make sure that your balances aren’t too high, because if you don’t pay your bills off in time, you may be stuck with an interest rate that is higher than 20 percent.

If you don’t want to take the credit card route, consider talking with a reputable debt resolution company. A good debt resolution company will be accredited with the American Fair Credit Council (AFCC), have at least an A BBB rating and never charge you upfront fees. Generally, they will be able to save you around 50% on your original account balances, if not more. To learn more about how Pacific Debt can help, check out the details on our debt settlement program.

Lastly, if most of the debt is coming from student loans, look into various federal programs to help consolidate the loan. This is a route that should be taken if the student loans are in the tens of thousands.

Separating Finances

If you believe your spouse should pay for the debt they created, that’s fine. However, keep in mind that a successful relationship works on teamwork.

When going this route, it’s best to wait on a joint bank account or combining any other accounts until the debt is entirely paid off. Aside from the debt, also make sure that you put in your fair share to the bills that have to be paid every month, such as the utilities, rent, cable and so forth. Try to find that happy medium that works for your relationship

In the long run, debt is going to take time to pay off. As long as you work as a team, create a budget and motivate yourself to pay off these debts, there’s no reason the debt will ruin the newfound marriage.

Three Things You Absolutely MUST Know About Credit Card Debt

Legislation has tightened the rules that creditors have to play by in recent years. However, even with these new laws on the books, debt collectors still regularly exploit consumers who don’t know their rights. If you’re carrying credit card debt, it’s important to know what the rules are regarding credit bureau reporting, interest and collections practices.

1) Debts Older Than Seven And A Half Years Should Not Be On Your Credit Report

Under the Fair Credit Reporting Act, an account that has been charged off can only appear on a consumer’s credit report for seven years and 180 days from the original date of delinquency.

The original date of delinquency is the date that the first payment became overdue directly priorThree things about Credit Card Debt to the account being closed. For example, if someone had credit card payments due on the first of each month, and missed their February payment and all subsequent payments until the card was closed, Feb. 1 of that year would be the original date of delinquency. If they missed their payment on Feb. 1, but then later brought the account back into good standing, Feb. 1 would not count as the date of original delinquency. In other words, it’s the date of the first missed payment that started the chain of missed payments that eventually led to account closure.

In the past, the date could be changed when one collections agency sold the debt to another. This is no longer legal, but some of the shadier collections agencies still try to get away with “re-aging” the debt by simply reporting incorrect dates to the credit bureaus and hoping the consumer doesn’t notice or isn’t aware of their rights. A debt can be re-aged legally only if the consumer agrees in writing with the current debt holder to make payments on the account.

The date of original delinquency should be listed on credit reports under a “tradeline” bearing the original creditor’s name; sometimes, however, these don’t appear. If the original tradeline isn’t available on one credit report, check the other two for it. If it isn’t on any of your credit reports, you’ll need to dig up your old statements from the credit card company to determine the true date of original delinquency. If you don’t have these, you can usually get them from the original creditor without any trouble, though they may charge a fee for them.

If you’ve been a victim of re-aging, you should first contact the current debt holder and inform them that they are reporting an incorrect date of original delinquency in violation of FCRA Section 605. If they do not voluntarily change the date, the next step is to report them to the FTC using the “Complaint Assistant” tool at their website. You can also contact each of the credit bureaus directly about changing the entry, though this method is less sure. You’ll have the best chances of getting through to them if you hand-write a polite letter with any supporting documentation that is necessary.

One important thing to note is that debts aren’t cancelled after seven years, they simply can’t be reported to the credit bureaus any longer. Owners of the debt may still attempt to collect it from you by contacting you directly.

2) There Are Legal Limits On Interest That Can Be Collected

The original creditor is allowed to continue collecting interest and late fees that were specified in the original contract until they charge the debt off and sell it to someone else. From there, the law gets a lot more complicated and fuzzy. The Fair Debt Collection Practices Act limits debt buyers to collecting interest and fees that were specified by the original contract, in essence putting them in the shoes of the original creditor.

Some debt collectors go above and beyond, of course. As with illegal re-aging, they’re hoping the consumer doesn’t know their rights or challenge them on it. State law comes into play here. legal limits of debt collection practicesEach state has its own statute of limitations on how long a debt collector has to sue a debtor, usually four or five years. The state where the debt originated is the one that matters for this time limit — it doesn’t matter if a collection agency in a different state purchases it. Once that statute of limitations is up, the debt collector has no legal recourse whatsoever to collect on the debt. All they can do is pester the debtor with letters and phone calls in the hopes that they’ll capitulate. State law may allow them to continue adding interest at this point, but they have no means of collecting on that amount unless you agree to pay them.

When debts are sold, they are sometimes only sold with the name and last known contact information of the debtor. If the original contract was lost at some point while the debt was changing hands, the debt holder no longer has any legal basis on which to charge interest or fees.

Collections agencies will often present a staggering amount of interest and fees to the debtor in the hopes of convincing them to “settle” for a substantial reduction. But the reason they’re always so willing to settle is that they originally purchased the debt for much less than its actual value, and they know that if they’re taken to court over it, they’ll likely have a hard time justifying the extra amount they’ve tacked on.

3) Many Common Collections Practices Are Illegal

The Fair Debt Collection Practices Act lays out a set of rules regarding what debt collectors can and can’t do. Of course, some will take calculated risks in violating these laws, with the expectation that the relative few consumers who catch them in their wrongdoing and get them fined will be outweighed by the many they can intimidate and harass into paying.

A debt collector isn’t allowed to contact third parties about your debt. They can only communicate with the original creditor, the credit bureaus, and an attorney that yolimitations of common debt collection practicesu specify. They are given more freedom to contact other people solely for the purpose of determining your whereabouts, but they can only contact each third party once and cannot reveal that they are collecting on a debt.

If a collector has gotten hold of your phone number, there are limitations on when they can call you. Calls earlier than 8 a.m. and later than 9 p.m. are forbidden. If you can demonstrate that you work a late shift and sleep during the day, you can also prevent them from calling during that time. They are allowed to contact you at work, unless your workplace has a policy preventing personal calls or collections calls. If you have appointed an attorney to represent you and they have the attorney’s contact information, they may no longer contact you directly.

Collectors may never use threats, insults or obscenity in any communication with you. They are also not allowed to publicize your debt in any way. They are allowed to verify your name when you pick up the phone, but then must immediately identify themselves as a debt collector. As with re-aging, complaints about violations can be directed to the FTC through their online “Complaint Assistant” tool.

Debt collectors will continue to skirt rules as long as they think it’s profitable and not too risky for them. The only answer is consumer vigilance. At a minimum, everyone should take advantage of their free annual credit reports to ensure that the information in them is accurate.

The Dollars and Cents of Bad Habits

frustrated with credit card billsYou know all of the compelling health reasons to quit smoking, drinking, or overeating, but somehow always manage to put it off “until next month” or “after the holidays.” In fact, if you’re like most people, you always have a reason to postpone taking a positive step toward improving your health. Instead of procrastinating, why not take a dollars and cents approach to cutting back? You’ll see immediate financial rewards which can be more motivating than you may think. By looking at your bad habits from a financial viewpoint, you’ll soon have more money in the bank – and improved health!

First, take an honest look at your bad habits. Whether it’s smoking, drinking, overeating, impulse buying, or anything else that adversely affects any part of your life, honestly appraise the behavior. Take a piece of paper and quantify the cost of the bad habit in terms of dollars and cents as well as its impact on your life.

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For example, if you drink two cases worth of beer per week at $18 per case, you’ll have several considerations including cost ($144 per month and $1872 per year), weight gain, family problems, and other alcohol-related concerns such as driving restrictions, long term liver damage, and even hangovers. By giving up your beer habit, you’d save nearly $2000 per year, with an immediate payoff of $144 in your pocket within the first month. In addition, in this example, you could even lose about a pound and a half per week without dieting or starting an exercise regime. That’s assuming an average of 100 calories per beer. Less drinking also means less conflict and improved health.

No matter which habit you’re trying to kick, look at the financial costs involved as a motivating factor. You’ll be surprised at how quickly those $5 daily lattes and $12 restaurant lunches add up. For instance, if you drink a $5 latte each day at work, you spend $25 per week, $100 per month, and $1300 per year on this indulgence. Likewise, if you eat out during the workweek and spend about $12 each time, you spend $60 per week, $240 per month, and $3120 per year on calorie-heavy lunches.

These are just the obvious costs. Smokers pay for cigarettes but are also charged higher insurance premiums. In addition, when it’s time to sell a car or house, smokers may have to pay to have their cars professionally detailed or replace carpets and draperies in the home where non-smokers may not.

Once you’ve calculated the cost of your habits, prioritize them and determine which ones may need professional help to kick. Many social drinkers can stop drinking on their own while others may need counseling, rehab, support, or some other form of intervention. Don’t be afraid to seek the help you need, even if it may cost you money upfront. In addition, don’t let the enormity of the problem stop you from taking positive steps right now to get back in control. Taking small steps forward will eventually get you where you want to be while doing nothing does absolutely nothing.

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Next, commit to kicking your habit one month at a time. It’s commonly cited that it takes about
27 days to break a habit, or just under one month. If you have several costly habits, don’t try to
kick them all at once. Pick one to start with. Once you’ve successfully gone an entire month and feel as though the habit is in the past, move on to the next one.

Let’s say that you want to give up your $5 lattes on month one and then cut back on your alcohol consumption on month two. Buy a calendar and a set of beautiful stickers and use them to track your progress. Write your monthly goal across the top of the calendar in large bold text so that you see it every day. This written reminder will help reinforce the habit that you are attempting to break while holding you accountable at the same time. Post the calendar in a prominent place where others can see it, too. This shows others what you are accomplishing and may even encourage support or inspire others.

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While you’re at it, write yourself a check for the amount of money you would have spent or put that money in a piggy bank. By the end of the first 27 days, you may not even realize that it’s time to go out for coffee as your habit could very well be in your past!

Don’t let a relapse get you down or derail your efforts. If you break down one day, consider it a mistake and move on, making sure not to relapse on the next day. If you find yourself falling back too often, consider professional help, especially if you’re addicted to nicotine, alcohol, or drugs.

At the end of the first month, total up your savings and congratulate yourself on a job well done. Your job is not over yet as this is a month-to-month bad habit cutting plan. Continue with your first bad habit and move on to the next one.

If you stick with this dollars and cents approach, you’ll find that kicking your bad habits makes financial sense. Best of all, you’ll find that this strategy yields many dividends including better health and improved relationships.

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