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dealing with debt Archives - Fair Debt Collection Help

30 Jan

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Debt May Be Harmful To Your Health

January 30, 2014 | By | No Comments

Debt is something that we may all have to deal with at some point, and it will never be pleasant. What many don’t know, however is that debt impacts more than your pocket book, it can actually put a huge strain on your mental and physical health.

While researchers have long connected the link between debt and stress, new studies have shown new links between debt and other psychological conditions. Researchers from the University of Southhampton found that conditions like neurosis and depression were significantly more common among those with debt compared to those without. The review of 65 studies, published in the journal Clinical Psychology Review, indicated that those who are in debt are three times more likely to face mental health problems, compared to those who aren’t.

The health effects of debt don’t stop there.

A recent study by Northwestern Medicine found that high financial debt is associated with higher blood pressure and poorer self-reported general health. The study was the first to focus on both mental and physical health, focusing on 8,400 young adults, aged 24 to 32.

The study found that young adults with higher debt had a 1.3 percent increase in diastolic blood pressure, which is extremely significant. For example, a 2 percent increase would lead to a 17 percent higher risk of hypertension and a 15 percent higher risk of stroke.

In addition to the effects mentioned, debt is also known to increase levels of anxiety and contribute to outbursts of anger. Many people with debt have reported feelings of worry and stress in other areas of their lives. Debt can put strain on your relationships with others, and most importantly yourself.

Understand that there are many stressors that come along with debt, but the most important thing is how we deal with it.

27 Jan

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If a debt collector calls me at work, are they violating the FDCPA?

January 27, 2014 | By | No Comments

The answer to this question isn’t simple and varies depending on your situation.

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from contacting consumers at an inconvenient place. Some workplaces are considered inconvenient by nature, which could include places such as hospitals (if the debtor is a nurse or a doctor), restaurants, retail stores, and schools.  If you’re not comfortable or it’s inconvenient for the debt collector to contact you at work, you must tell them.

According to the FDCPA, debt collectors are also prohibited from calling you at work if they already know your employer forbids this type of communication. Often times employers enact policies which forbid employees from taking calls for personal business. A policy such as this would prohibit an employee from taking a collection call.

For many occupations, the should already know that an employer won’t allow collection calls. An example could be if you are a police officer, a collector should know that you aren’t allowed to take a collection car while you’re at work. In these situations, it’s up to the debt collector to make the right call and avoid contacting you at work.

The FDCPA is a federal law that governs the behavior of debt collectors focused on consumer debts. Despite the regulations listed above, a debt collector may contact you at work if there is a court order allowing such communications or if you’ve given consent.

25 Jan

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Understanding Bankruptcy

January 25, 2014 | By | No Comments

If you’ve ever been shoulder-deep in debt you may have pondered the thought of filing bankruptcy. Sure, the idea of being debt-free sounds marvelous, but in reality filing bankruptcy isn’t a bed of roses. Before you actually consider making the move, take the time to learn what filing bankruptcy entails and whether it’s the right option for you.

What is bankruptcy?

Bankruptcy laws are a system of federal laws that relieves indebted people or entities of the debt they are unable to pay back. The idea is to give these bodies a fresh financial start, without pressure from creditors or debt collectors trying to collect prior debts.

What are the types of bankruptcies for people?

Often times bankruptcy can be split into two categories — reorganization and liquidation.

Chapter 7 bankruptcy, which falls into the liquidation category, requires the bankruptcy trustee to obtain and sell all of your non-exempt property to pay off creditors.

Chapter 13 bankruptcy, which is under the reorganization category, adjusts your debt using a monthly payment plan. This option allows you to hold on to your assets, but requires you to make monthly payments toward your debt, with the goal of paying it off in 3-5 years.

What are the benefits of filing bankruptcy?

The initial perks of filing bankruptcy are that it’s an immediate relief from debt collectors. Once you file, you’re on “automatic stay” which notifies your creditors of your status and prohibits them from contacting you. It also prohibits lawsuits from being filed against you and stops other court-sanctioned forms of collection, such as wage garnishment.

What are the negatives of filing bankruptcy?

Don’t be fooled by the dream of living a debt-free life, bankruptcy also has serious disadvantages. Bankruptcy doesn’t usually discharge debts from student loans, taxes, mortgages, child support, or alimony. In addition, there is a possibility that even your non-exempt assets could be liquidated.

Proclaiming bankruptcy can also wreck whatever credit score you have. Once you file bankruptcy it is shown on your credit report for up to 10 years. Regardless of whether you ever go into debt again, having bankruptcy on your credit report can affect more than your ability to take out a loan, it can lead to higher insurance rates, increased security deposits and — in the worst case scenario — destroy your chances of getting a good job.  Even if someone does loan you money with the knowledge that you have filed for bankruptcy, it is likely the loan will be at a very high interest rate.

Bankruptcy laws are very specialized and unique.  There are many issues which can affect whether filing for bankruptcy protection is the best option for you, or whether you even qualify.  It is impossible to discuss all of those variations here.  As always, you should consult with an experienced attorney before making such an important decision.

17 Jan

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How to handle your first interaction with a debt collector

January 17, 2014 | By | No Comments

If you’re late on your bill payments, there’s a chance that a debt collector may contact you. Before you receive that phone call, it’s a good idea to understand just how you should handle the situation.

First, know that in the first five days after contacting you (or before), a debt collector must send you a written “validation notice” explaining how much money you owe and the name of the creditor. If you don’t think you owe money, the notice will also include information on how you should proceed.

If you doubt whether you actually owe debt, you have the option to send a letter to the debt collector stating that you don’t owe the money they’re requesting or requesting verification. The letter must be sent within 30 days after you receive the validation notice. The debt collector must stop contacting you, until they send you the written verification of the debt.

When in the midst of dealing with a debt collector, it’s important to know what to say and what not to say. While debt collectors can be annoying, you should try to refrain from using vulgar language with them. It is also a good idea to refrain from releasing certain personal information to them such as:

-       Your social security number, bank account number or credit card information (unless you want to pay the debt).

-       Information about your employment situation or your assets

-       And never agree that you owe a debt if you think you do not, without having it verified.

While we would like to believe that everyone who contacts us as a debt collector is honest, scams do happen. It’s always a good idea to get written proof of the collector’s identity and verification of who they are before you release your personal information. Also, make sure to maintain thorough records of your interactions with the collector.

Marriage and Debt

December 26, 2013 | By | No Comments

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Two things you should know before tying the knot

As unromantic as it sounds, marriage is a contract. While many couples enter into a marriage with existing personal debt, others experience debt issues during the course of their marriage. While there are ways to avoid inheriting your spouse’s debt, you could be held accountable in the future. If you’re in debt or are preparing to marry an indebted person, here are two things you should know before you tie the knot:

The difference between Common Law and Community Property States:
Whether you take on your spouse’s debt is determined by which state you live in. Nine states have “community property” laws, which holds a couple jointly responsible for debt incurred by either party during the marriage. However, community property law does provide you with the option to sign an agreement with your spouse stating that your debts are treated separately. Community property states include California, Nevada, Washington, Idaho, Louisiana, Arizona, New Mexico, Wisconsin, and Texas. The rest of the states are  “common law” states. Common law states only hold the person whose name is tied to the debt liable. You are not liable for your spouse’s debt. Neither law holds you liable for debt incurred by your spouse before marriage.  However, regardless of whether you live in a community property or common law state, you could still be held responsible for your spouse’s debt if it is considered a “necessity” – for example, medical expenses, mortgage payments and food bills.  Because there are so many variations in these laws from one state to another, it is important to consult with a lawyer who practices law in the state where you live for concrete answers.

Signing on to indebted accounts
Regardless of whether you live in a community property or common law state, opening a joint account with your spouse makes you liable for that debt. This holds true if you sign on to your spouse’s personal account as a joint holder, and the account goes into default. If you and your spouse refinance your pre-wedding debt together under joint names, you are also responsible for the debt incurred.

Photo By: Scott Shaefer

17 Dec

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When a Paid-debt Resurfaces

December 17, 2013 | By | No Comments

You were certain you paid off that old credit card, yet you’re still receiving calls from the debt collector. How do you prove to a debt collector debtthat you’re in the clear?

You were certain you paid off that old credit card, yet you’re now receiving calls from the debt collector. To make matters worse, you’re unable to locate the payment information and have little record of the transaction. How do you prove to a debt collector that you’re in the clear?

For starters, if you’re one-hundred percent certain you’ve already paid the debt then you are not required to do anything. It’s your choice whether to provide the debt collector with information confirming your payments. However, doing so may get them off your back and avoid further collection efforts, such as lawsuits.

If you don’t have the documentation of your payments or letters proving you paid the debt, you should contact the creditor or your bank to request the information. All creditors should have this information on file for several years following the date of the transaction. While you are not required to provide the collector with this information, it may be in your best interest to avoid any future contact.

When you’re responding to the debt collector, it’s recommended that you do it in writing and keep a copy for yourself. Send all communications by certified mail, return receipt or some other method that provides proof of delivery. If you have questions regarding the debt, feel compelled to ask the collector. By law, debt collectors who claim consumers owe money are required to provide certain information about the debt in writing within five days of their first contact with you. This information includes the amount owed, the name of the creditor and an explanation of how to request verification and/or dispute the debt.

Photo By: Images of Money

 

Dealing with College Debt

December 13, 2013 | By | No Comments

It’s not an easy time for college graduates in their 20-something’s. According to a recent survey published by the American Institute of CPA’s, recent graduates prioritize paying off college debt higher than other milestones. The survey showed that about 40 percent have postponed buying a 401(k)2013car, 15 percent pushed back marriage, and 29 percent said they delayed the purchase of a new home because of their debt.

Like many, you may not have fully understood the future financial strains when you decided to take out a student loan. But now you’re stuck with it and the only way to move forward is to pay it off. Below are three tips for combating your college debt and easing the financial burdens along with it.

Understanding what you owe and where you owe it
There are several types of student loans, and many students take out more than one. It’s important for you to understand the conditions under which you will need to repay your loans. Some loans require immediate monthly payments, while others present options to defer payments or assist with interest. In a perfect world you would want to focus on high-interest-rate loans first.  However, you should consider grace periods, as they aren’t the same for each loan. Also, make sure to confirm your address to ensure that you will receive all notices, so you don’t suffer the consequences of late payments.

Learn more about forgiveness programs
One option for dealing with student loan debt is to take care of it in its entirety. You may consider taking part in a Public Service Loan Forgiveness program which helps alleviate student debt in exchange for public service work. Examples include taking part in the Peace Corp, volunteering for AmeriCorps, working in public-interest law or joining the military. Although these programs don’t always take care of debt, their contributions tend to be significant. While this isn’t an option for everyone, it is something to consider.

Be hesitant about consolidations
While consolidating your loans can help reduce your monthly payment, it also extends the period during which you’re repaying your loans. It may seem like a great idea right now when you’re tight on cash, but consolidating loans can leave you with debt for years. If you choose to go down this route, make sure to protect options like deferment on loans to avoid losing repayment flexibility.

Photo by: 401 (k) 2012

11 Dec

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Spending Strategies

December 11, 2013 | By | No Comments

If you are in process of paying off debt, you’re not alone. The first step to paying off debt is coming up with a budget that fits your lifestyle and income. Use the following steps to help create a monthly budget that you can stick to, as you travel down the road to a debt-free life.
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Write it out
Write a list of everything you spend money on during the month. This should include everything from utilities to entertainment. It’s okay to estimate if you aren’t sure exactly how much you spend in a specific category, but we recommend aiming at a higher amount rather than lower. Once you have written all of your expenses, create a new category and record your net monthly income.
Then, create a separate list outlining all of the debt you owe from the lowest amount to the highest. Make sure to note the minimum payment due for each item and the percent of interest. This will help you to better gauge the total you owe and the amounts in which you should plan your payments.

Evaluate your monthly expenses
Once you have all of your expenses in front of you, identify which are luxuries and which are necessities. For example, the $6 latte you treat yourself to every morning is a luxury, whereas your monthly mortgage payment is a necessity. While it’s okay to occasionally give in to your vices, these little expenses really add up. You will be surprised at how much money you can save each month just by packing your lunch or taking the train to work.

Create a plan and pay it off
Once you’ve determined where you can cut back, write out your monthly budget. Include the information you wrote down in the first step to ensure that your monthly payments are part of it. Then, take your debt-spending money and apply it towards your highest priority debt. Depending on your situation this could be your smallest debt or the debt with the highest interest rate. Start paying off the extra amount in addition to the minimum payments each month toward the other debt. Continue making the payments until that debt is completely paid off, and then continue to apply the same method to the other debt on your list.

However, it is very important that you always make at least the minimum monthly payment on every one of your debts. If you do not, you may find your accounts being sent to debt collectors and you will likely suffer damage to your credit scores. You also could be sued if you stop paying on an account.

Photo courtesy of 401(K) 2012 – via Flickr

Which Debt Should I Pay Off First?

November 27, 2013 | By | No Comments

Is there a best debt to pay off first in order to get the most of your credit score?

If you’re preparing to combat a mountain of debt you have one of two goals: you’re simply looking to get out of debt, or you also wish to increase your credit score in the process. If you’re one of those who is concerned about improving their credit score, approaching your debt can be even more overwhelming. Here are a couple of tips for paying off your debt while trying to improve your credit score.

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Pay Off Past-Due Accounts
If you have accounts that are past due but haven’t quite made it into collections, pay them off first. For example, if you missed a month’s installment on your car loan payment and your account is reported as late, you should take care of the payment as soon as possible to ensure that your account is reported as current. By bringing all past-due accounts up to speed you could improve your credit score. Keep in mind that some loans, such as car loans, are hypersensitive to missed payments. If you have an outstanding balance for a lengthy period your car has the potential to be repossessed, which will take a toll on your credit score. Make payment arrangements for accounts that will soon be turned over to collections, for example accounts that have an outstanding balance over 90 days. The more you can avoid any additional collection accounts, the more it will probably help your credit score.

Take On Accounts with the Highest Annual Percentage Rate
Many people pay debt with lower balances first because it makes them feel like they’re making progress. In reality, it may make more financial sense to combat debt with the highest annual percentage rate first. You might want to start by paying debt with the highest interest rate. Keep in mind that the amount you owe could be insignificant if you’re paying off a high amount of interest on top of it.

18 Nov

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Debt is a Downer

November 18, 2013 | By | No Comments

Debt is ranked as one of the most stress-inducing life events. Check out these tips for coping with the stress that comes along with debt.

It’s no surprise that debt influences your daily life, but did you know that it is ranked as one of the most stress-inducing life events? According to the WebMD article titled The Effects of Stress on Your Body, stress can contribute to poor physical health, causing symptoms such as headaches, high blood pressure, heart problems, diabetes, asthma, anxiety, and even depression. To ensure that your physical and emotional health doesn’t suffer, check out these simple tips to better cope with debt-related stress.

Be Honest: The first step in dealing with debt-related issues is to be honest with yourself and your loved ones about your debt. The more you push the issue away and pretend it isn’t there, the more anxiety you will feel. Take the time to sit down with your loved ones and explain your situation to them. This will not only help you to accept your debt, but it will help you to move forward in dealing with it.

Stop Spending: According to the TIME article “Psych Study: When You’re Bummed, You’re More Likely To Buy,” a 2010 study in the Journal of Experimental Social Psychology showed that people are more likely to shop when they’re feeling insecure about themselves. Through a series of studies, researchers found that people consume also to help feel better about themselves when they’re experiencing emotional pain. While there’s nothing wrong with feeling a little self pity, shopping with debt is one of the worst actions to take. The more you shop, the more debt you accumulate. Eventually it becomes a never-ending cycle. It’s important to find other activities that distract you from your stress – hopefully ones that are free.

Be More Active: Exercise and physical activity is a positive way to escape the stress you may be experiencing. Regardless of whether you choose to run, do yoga or go on a bike ride, all exercise increases your endorphins, which make you happy. Exercise is also a great technique for escaping negative thoughts and focusing on something more positive, such as bettering your health.

Pay It Off: While it is obvious, it is also important — develop a plan for paying off your long-term debt. It’s easy to say, “Oh, I will pay it off,” but actually taking the steps to do so requires organization and patience. By creating a payment plan that is attainable with your current income, you can eventually pay off your debt. Once you put it down in writing, you will soon be able to see the light at the end of the tunnel.

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Photo Courtesy of David D, via Flickr