Posts Tagged ‘economy’

Original creditor settlement tips

February 19th, 2009

If your account has yet to be turned over to a collection agency theres still time to make the best with the original creditor. Original creditors have their own in house collection efforts but usually after 4 months, the account will be turned over to a third party debt collector.

If you have issues with the account, its best not to hide and hope for the best. You can negotiate with the original creditor to avoid the account being turned over to a collection agency.

Communication is key. The OC is not going to go away. They aren’t simply going to wipe away your balance because you’re hiding. You need to call them and explain your situation.

During these difficult times with our economy, OC are bending more and more. Where they used to refuse specialized payment terms and negotiating credit ratings, they now realize it’s in their best interest to work with you.

OC response varies from creditor to creditor but the simplest way to know where you stand is to pick up the phone and get a hold of your account manager. Everyone is hurting right now, people have lost their jobs all across the country so this needs to be relayed to your creditor.

Explaining your situation will get the ball rolling on working together. The OC may agree to cease late fees and put you on a payment plan to  help you temporarily. They understand that you have the right to file for bankruptcy or go into a credit counseling program so they are willing to help the majority of the time.

By contacting the OC you may be able to stop the collection process. They may agree to freeze the account or even lower your interest to make the debt affordable. They want to be paid and they also want to hold onto the debt if possible. It costs money to give the debt to a collection agency.

If the debt is secured such as a mortgage or auto loan, the options may be more limited but banks are doing loan modifications right now on secured loans, so make the effort to see what can be done. If the debt is unsecured like credit card debt, the creditor knows they have  no collateral on the loan so they will be more flexible in working with you.

You may be able to set up a 12 to 24 month plan with them for reduced interest, no late fees and smaller payments in addition to avoiding the dreaded turn over to a collection agency.

The OC may also be more willing to freeze the reporting to the credit bueaus while your on a modified plan. Your credit rating is an important part of the negotiation process to keep in mind. Again, it cant hurt to ask.

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Don’t let yourself be taken by shady credit repair offers

October 25th, 2008

This economy is causing consumers with credit issues to become more desperate and seek out quick fixes to their credit problems rather than do the real work needed to clean up credit issues. We’ve been educating consumers on line since 1995 about do it yourself credit repair, and more than ever, consumers should be very careful when choosing a credit repair company to help clean up their credit.

Credit repair agencies are legal but they must follow certain laws to make sure they comply.  A credit repair company who is promising all sorts of major changes to your credit reports should be avoided. A credit repair company has to follow the Credit Repair Organizations Act (CROA) and they cant charge you in advance for work they have yet to do, nor can they make exaggerated claims of guaranteed removals.

This week we told you about the latest crackdown by the FTC against these shady offers and according to the L.A Times, a credit repair company based in Woodland Hills California has been targeted by the FTC for violating such laws.  Success Credit Services was accused in an FTC civil suit of violating the Credit Repair Organizations Act by contending that it could quickly clean up credit reports by removing legitimate negative items, such as late payments, bankruptcies and tax liens.

You’d think by now, with all the crackdowns across the nation by the FTC, that credit repair companies would get a clue that they cannot get away with taking our money and doing nothing. They are sitting ducks for groups like the FTC and the Attorneys General. It’s a risk these companies should not be taking.

There’s a reason we decided in 1995 to bring credit education online to consumers nationwide. People were desperate for information about how to clean up their credit reports and not get ripped off in the process. By educating you to do the work yourself, you are going to not only save money but you’ll be sure to stay in control of exactly what is being done along the way. A shady credit repair company CAN make your credit worse.

We’ve never wanted to go into the business of fixing your credit for you and there’s a simple reason for that. We feel it’s very possible to do the work yourself by simply following some key educational steps. It’s that simple. Learn to understand the credit industry and how it works and you can take on the task of credit issues yourself. With what you learn, you could see dramatic improvements in your credit reports and spend next to nothing to do it.

Sure, there are some people that just do not want to undertake the task themselves, and they have the right to hire someone to do it for them, but just realize you are hiring someone to do pretty basic tasks like letter writing and debt negotiating.  What you are paying for is a service to simply do “the steps” you don’t want to bother with. That’s fine. You are paying a “service fee”. Just make sure the company is reputable and I’d recommend checking their record with the BBB (Better Business Bureau), completely reading their terms before you sign anything, and most importantly research them online. You can uncover a lot by reading what past customers have to say about them.

You don’t have to fall victim to these credit correction scams. Choose wisely just as you would choose a bank, mechanic, or mortgage broker. If the service is offering all sorts of exaggerated promises then it’s a pretty sure bet that you are going to get taken. These types of so called “businesses” are just waiting for the desperate buyer.

There is no reason that all rational should fly out the window when choosing a credit repair company. Many of these crackdowns could be avoided all together if consumers would use great caution when dealing with credit repair companies and do their homework. Common sense should prevail and if it doesn’t feel quite right then trust your instinct.

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Is this financial crisis partly our fault

October 12th, 2008

Everywhere you turn you see the news talking of a plunging stock market, business bail outs and record number foreclosures.

Initially my thoughts are “What has this financial system done to us?” but on second thought, are we not intelligent enough as a society to have avoided financial collapse?

Just because a greedy bank tells you that you qualify for a mortgage ,did we not have enough sense of our own to know it was outside our budget? Did we consider the monthly payment for 30 years and factor in a slow economy or job loss?

These are the questions that one cant help but ask as it proves even more, now than ever- that we as a society are so undereducated in finances.  Financial literacy should be at the top of the governments list of things to do yesterday. If you cannot teach a person to be responsible with their finances then you should expect disaster.

Remember the term “Buyer beware? “That should not only go to avoiding scams, but the buyer also need be- aware. Aware of your finances, your family structure, your ability to manage your debt, retirement, your credit reports. Consumers often close their eyes and hope for the best and the result can be disastrous.

While it is the american dream to own a home, unfortunately, not everyone is capable of doing so. There is a huge responsibility that comes with homeownership that goes far beyond the application approval. We as consumers should have known better. We should have seen this collapse coming because of the sheer volume of sub prime loans that were being handed out to literally every Tom, Dick, and Harry. Default was inevitable. Couple that with an unstable economy and disaster was at our doorstep.

Now was must reap was we sow and work our way through this financial collapse. I have no doubt in the spirit of Americans and we will survive- but maybe this time around we will take responsibility for our own finances and not leave it in the hands of Wall Street and greedy lenders.

We need to take responsibility for our own future. Manage our jobs, our retirement, our credit reports, our debt. We cannot expect the government to take 100% of the blame in this financial mess. If it had turned out good, would we blame them then? If your home’s equity were up 10% would you be shaking your fist at the greedy bankers?

Did big brother charge up your credit cards and remodel your home for you? Did big brother tell you to buy two gas guzzling SUVs and eat out all the time? We all know there is a lot of blame to go around. No one got into this alone. People were in a feeding frenzy with easy loans and easy credit.

We helped  to get ourself into this mess and now we must help to get out. We cannot sit back and wait for handouts or for the market to fix itself. We need to start fresh and take inventory of our financial fitness and begin anew. Sure, we’ll see challenges all along the way but a slow and steady focus on the problem will win in the end.

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Google Quotes

September 24th, 2008

What will Google think of next. Thy have come up with Google Quotes where you can compare what the candidates, John McCain, Barrack Obama are saying about our economy, in quotes.

What this accomplishes, I don’t know but it’s yet another project by Google Labs. If you need a quote about finances, the economy or housing, head over.

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How this credit crisis will affect you

September 21st, 2008

I’m a credit expert by trade, so needless to say, I have pretty good credit. I’ve worked hard to build great credit and maintain it. No matter what happens with my finances, I’ve always made my credit a priority.

If someone told you, what you did today was going to affect you for the next seven years, would you think twice before doing it? I know I would but many people just don’t think of their credit in this way. They think about “now” and not “later”. Well, later is here!

With the recent credit crisis in the country, even those with really good credit are going to feel the pinch. Banks are tightening up their purse strings and for good reason. Major financial institutions are collapsing all around us. NINJA loans have ruined our economy and deregulation of big banks has collapsed the finance industry.

Just when we thought it had gotten as bad as it could with record breaking foreclosures, it got worse. Much worse. If you thought those feeling the pinch were people who got themselves into mortgage trouble and you were safe, think again.

People with good credit, even great credit are going to be affected by this downturn. Reports this week claim that getting even simple loans whether secured or unsecured is going to be much harder. Now, more than ever, you need to start thinking about the state of your credit. Even if you’ve always had pretty good credit, now you must shine.

This is especially true if you’ve got credit card debt. It wont be so easy to transfer balances to other lower rate credit cards to save some money. Lenders are going to proceed with great caution and that’s going to affect you personally.  Those with poor credit are really going to be in a bind. Even a simple payday loan wont be so simple. People are going to find there are few resources to turn to for their lending needs.

Now is the time to do an audit of your credit. Make sure you’re ready when the time comes to apply for a much needed loan, line of credit or refi.  The credit repair field is going to be booming! While the FTC gives us some great tips to fix our credit, unfortunately people don’t bother until they need credit. Now is the time to clean up your credit so it’s ready to roll when you need it.

Get your credit reports, grab a cup of coffee and start that audit. Look over all three credit reports and highlight any problems you see. Make a plan to send investigation letters to these questionable items and by all means, don’t apply for needless loans. Those hard inquiry’s will only lower your credit score further. Wait until you are in a good position before you apply for a loan. Don’t waste the inquiry, especially now.

Clean up your credit the best you can then make a solid plan to refi, get out of debt or purchase a big ticket item.

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Debt Collection firm violated FDCPA

September 19th, 2008

A collection agency called Anderson, Crenshaw Associates based in Texas has been accused of violating the Texas Fair Debt Laws. The agency allegedly sent out a bill to a consumer and when she didn’t recognize the debt and called the agency, a man on the other end refused to identity himself.

While it’s legal for debt collectors to use alias names for their business, it isn’t legal to mislead or harass a debtor, which the Texas AG claims happened in this case.

Over 71,000 complaints were filed with the Federal Trade Commission last year against debt collectors. As I told you yesterday in a related article, debt collection is up with our current economy situation, more consumers are going to fall prey to abusive tactics.

If a debt collector contacts you and you believe they have violated your rights, contact the AG or FTC and report the abuse.

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Need a job? Get into the best paying field in the industry right now

September 19th, 2008

And what is that industry you ask? Debt collectors. While the economy is whirling with bank collapses, record foreclosures and high gas prices, one thing remains solid. The debt collection industry. Even the IRS is advertising collection jobs on Google. Paid ads!

With over 969 billion in credit card debt across the country, the debt collectors are filling a supply and demand of bad debts.  A debt collector can earn up to 100k a year in salary and bonus. Think of the demand that’s out there right now.

80 million people are paying off medical debts, students can’t pay their credit card bills, and complaints about bill collectors are on the rise.

Everybody is affected by this looming recession and someone’s got to go after the debts. Banks are writing off record numbers of failed loans and with a tighter bankruptcy law, it isn’t so easy to escape your debts. With new bankruptcy provisions, debtors have to complete a debtors education course, prove they cannot pay their debts back and overall, go through a lengthy process. This causes pause with consumers, so they wait it out.

Eventually the debt collector comes knocking and you will be found. Just yesterday I had a friend call me and tell me her father, who is 70, received a note from his neighbor. The note said to call back Mr. Jones at ABC collection agency. She asked me if this was legal and if it violated his privacy. I explained to her that using a Haines Criss Cross guide to find a debtors “nearby” is a common tactic of debt collectors and isn’t illegal as long as the debt collector doesn’t reveal the nature of the call. In other words, the debt collector cannot discuss the debt with the neighbor but is allowed to leave a message. Humiliating in deed but affective. He was mortified and embarrassed and will probably now return their call to avoid further contact with his neighbors.

Debt collectors know this is a ripe time to cash in on all of our bad luck with this crushing economy and make a fortune in commission and bonuses. What’s frightening is that just about anyone can be a debt collector, and thus, be privy to your financial information. Take a look in your local classified ads. There are offers everyday for highly motivated people with no experience to make a career in debt collections. Imagine someone having access to your credit reports and checking account information along with your home address. I’m surprised there isn’t more identity theft in this field than there is.

Lots of debt collectors are shady characters to say the least. Sure, there are many professional debt collectors with a college education who decided to go into this recession proof industry, but there are also a lot of really bad people taking on jobs to collect debts and those people will stop at nothing to make a fortune off collecting debts.

I know this firsthand, being a debt collector myself for 10 years. I worked with some really shady characters when I took on jobs at local collection agencies. These people would harass debtors nonstop and some went as far as taking the debtors phone number home with them to continue the harassment after work!

There’s very little internal regulation of these actions because debt collection firms roll employees in and out at a constant pace and cannot control what a debt collector does after hours or in private. To someone like me, who knows how some of these employees operate, it’s a frightening scenario.

Now with a failing economy we are going to see a sharp rise in complaints about debt collectors to the Federal Trade Commission and local Attorney General offices. I’m sure there are many lawsuits on the horizon.

If you plan to go into debt collections, remember, these debtors are people just like you and me who have fallen on hard times. I think a diplomatic approach with sensitivity is a much stronger practice to follow while collecting debts. I know it worked for me.

The majority of people not paying their bills aren’t doing so simply because they’re deadbeats. They can barely fill their gas tanks, buy groceries and pay their mortgage. We are all impacted by this economy so I hope collection agencies are enforcing stricter practices and offering good solid education to their debt collectors on how to collect debts in a legal, ethical manner.

If you do find that you’re being harassed, you need to take action quick to stop it. I’ll talk more about that in my next post.

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bad credit means you’re a bad driver

September 3rd, 2008

Most of us are aware that lenders check our credit and consider our credit score but more and more insurance companies are doing it as well. Insurance companies tend to assume that a bad credit report may also indicate that you’re a bad driver.

According to Esurance Over 90% of U.S. insurance companies, including Esurance, use credit-based insurance scores to establish eligibility for payment plans and to help determine insurance rates. (In case you’re wondering, credit-based insurance scores predict how likely you’ll pay your bills in the future.) Actuaries and research analysts have found that the scores help predict your accident potential. If you have a high credit score, you can generally expect lower auto insurance rates than someone with a low credit score.

People with bad credit pay up to 50% more for car insurance! That’s nothing new however, as insurance underwriting has been using credit scoring to determine rates for some time. On the flip side, people with good credit are going to benefit from lower premiums. That’s great news for the percentage that have good credit but considering that almost 70% of credit reports contain errors, even those who think they have good credit may not.

Do it yourself credit repair and an annual audit is definitely worth your time whether you have good credit or not. Since one out of four credit reports contain errors, you may be paying more than you should, regardless.

Hiring a credit repair company may not be a wise investment for a few minor blemishes. In that instance, do it yourself credit repair is financially beneficial. It’s cheaper and it makes more sense if you’re just questioning a few items. Paying up to 39.00 a month wont make much sense for a few blemishes. Your trying to lower your car insurance premium so another monthly expense makes little sense.

The DIY method can payoff big and could cut your car insurance rate by up to 50%. That’s a substantial savings worth your time By taking a look at your credit reports, you can identify any potential issues that may affect your credit history.

It’s not clear whether the insurance company you are with uses a FICO credit header or a different  type of score but the bottom line is, they are interested in your credit score and not how much debt you have or home loans outstanding. They care about overall credit history and the score gives them that.

many people feel that using a credit score to determine car insurance rates is discrimination because people with low income or prior credit issues are targeted for the higher premiums. The jury seems to still be out on whether the insurance industry will come up with something more fair and balanced for all.

It just goes to show that taking care of your credit is becoming more important and affecting more aspects of your overall financial health. It’s a task worthy of undertaking to save some money. If you haven’t taken a look a t your credit in at least a year, you need to review all three credit reports to make sure they are in deed accurate. If you do have bad credit, take DIY steps now to remedy those issues and hopefully lower your car insurance premiums.

Be sure to get at least three insurance quotes before you settle on one. Ask the insurance company if they use your credit to determine what rate you’ll pay. You can also find out more about your state insurance laws at http://www.iii.org/media/companies/state_org/insur_departments/

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