Credit ‘n’ Collections

I know that I moved credit cards over to the least important column (in this list). I did that for a reason and that is because if you don’t have money to pay your necessities first, then credit cards won’t matter.

Consider whether or not your situation demands that you try to consolidate your high interest debt into lower interest credit cards. This will ensure that the payments that you are paying, will go towards principle, not just interest.

Credit cards can be a trap if you let them be. Don’t fall into the credit card trap, where you’re borrowing more than you make and paying just the minimum payments. No one benefits from your minimum payments, except for the credit card companies.

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When crunching your bills down to something manageable, you have to consider what you can do without. Luxury items, such as online and console video games, are a luxury. Cell phones can be put on the back burner, as well, until you are financially afloat. Turning off your internet service may be something that you don’t want to do, but a probable necessity if you’re in over your head.

Entertainment items, such as music CDs or downloads, magazine subscriptions, and things of this nature can wait in life, until you can better afford them.

Fast food is another thing to cut out if you are trying to increase your expendable cash. You could buy three or four day’s worth of groceries with the money that you’d spend to feed a family of four at a fast food joint. Take that money and head to the grocery store, you’ll be happy that you did.

Fast food traps engulf a lot of consumers and increase the obesity epidemic. Why contribute to that? Buy healthy foods and you’ll be healthier personally and financially.

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If you’ve gotten behind on your car or lease payments, your car can be repossessed. This means that the lender can come to your house and put you through the embarrassment of repossessing the vehicle without your knowledge or consent.

The lender will usually send you a notice advising you of your past due status and amount to pay to get your loan out of delinquency. This is called a demand letter, and it also states that your vehicle can be subject to repossession if you don’t pay what you owe.

If your vehicle has been repossessed, in some states (check with an attorney), you can either pay the past due amount and do a reinstatement, or pay the balance in full to redeem the vehicle. Usually with reinstatements, the lender will ask you to show proof of income as well as six months proof of insurance.

Did you know? The lender can repossess your vehicle for lack of insurance coverage.

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In the attached Excel spreadsheet, you will see that I have arranged my bills according to their priorities:

spreadsheet

I consider the mortgage or the rent to be a top priority, primarily because no one is going to take care of you and let you live with them for free. You need a place to live. After that, if you have a car loan, then that and the insurance on the car, are both top priorities. Also, your utility bills and groceries are definite necessities. Household necessities, such as toilet paper, cleaners, personal products, and things of that nature, are must-haves. Gas, even though it’s becoming more and more expensive, is a necessity unless you want to ride a bike wherever you go.

Luckily for you and me both is that we won’t need to run out and buy clothes or shoes every other day. These are intermittent expenses and only need to be purchased on demand. Clothes, as well, are things that you can buy in spurts. Your son doesn’t need that new pair of Nikes and your daughter doesn’t need that expensive purse.
Also, when buying food, consider getting your local newspaper and clipping the coupons for the groceries that you normally buy. Remember that it is not a deal if it is something that you wouldn’t normally buy.

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If you haven’t heard of Dave Ramsey or his world famous “Total Money Makeover”, then you must have been hiding under a rock for the last decade. Dave Ramsey helps thousands of people rid themselves of the credit cards and become debt free:

Nationally syndicated radio talk show host and best-selling author, Dave Ramsey, can add television to his resume. Monday, October 15 at 8p.m. ET marks the debut of “The Dave Ramsey Show” on Fox Business Network. Contact the local cable provider or visit www.daveramsey.com to find the closest station carrying FBN. DirecTV will carry the network nationwide on channel 359.

Just like in his books, Dave Ramsey will be trying to help people build their financial futures without credit cards and debt hanging over their heads. He prides himself of helping ordinary people, like you and I, with their financial issues.

I say whether it’s repairing your credit or if you’re trying to get a low cost mortgage loan, then you will always need to look at your free credit score first to know what you’re dealing with. Only once you know what the problem is, can you really tackle it.

Look forward to hearing Dave Ramsey tonight on Fox, where he is going to help us turn our debt around! While I don’t believe in cutting up that Discover® More Card just yet, but trying to work out a budget and getting your financial affairs on track again, is the answer.

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Consumers call and request settlements on their accounts for various reasons, whether it be financial hardship, extenuating circumstances, or job loss, bill collectors can assist you.

However, if you haven’t tried debt consolidation or at least a monthly payment plan, then we don’t owe it to you to consider your settlement offer. Upon receipt of your settlement offer, we take into account your credit reporting, how well you’re paying others (if at all), and your likelihood to file for bankruptcy. If you are inclined to set up payment arrangements for what you can afford, then we are more likely to accept your settlement offer when you have acquired the necessary funds.

If you haven’t paid on your loan in three or four years and request a settlement because you’re looking to get new credit, then I wouldn’t count on it. If you are refinancing a mortgage or trying to purchase a new home, then we know that our loan can be rolled into the refinance or mortgage, so we expect to get paid off.

It’s always easier for all of the parties involved to have a rapport already established. If you keep in good communication with the collectors and pay regularly, then when the time comes, it would be more likely for us to work something out with you.

I would highly suggest obtaining a free copy of your credit report using the following link, just to see what you are dealing with. See what we see and ask yourself, would you lend you money, if you were in our shoes?

Get your FREE credit score and more!

Also, when looking for a mortgage loan company, consider looking online to a reputable company, such as LendingTree.

They can make refinancing, purchasing a new home, or debt consolidation easy for you and your family. Just click on the banner and lenders will compete for your business, the way it should be. If you’ve dug yourself out of debt, then you deserve to get a good mortgage loan, with a great interest rate.

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Not all credit and/or debt is bad. Creditors look at your available balance to determine whether or not they are willing to lend you money for future purchases.

If you use credit wisely, it can be very useful to you. You don’t need to cut up your credit cards, because that does not teach you financial responsibility.
However, making a realistic budget and sticking to it, can teach you that responsibility as well as your limits, financially. Also, consider repairing your credit using debt relief companies as well as CCCS.

Considering Consumer Credit Counseling

If you’ve fallen behind on your bills, you may need to evaluate your budget. In doing so, you will find out exactly where all your money is going and where you could cut down. In making a budget, start off by writing down what your bills and expenses are.

Most budgets include (but aren’t limited to) this list:

Mortgage/Rent
Auto Loan(s)
Auto Insurance
Gas Bill
Electric Bill
Phone Bill
Cable Bill
Water Bill
Groceries
Household Necessities
Clothes/Shoes
Luxury Items
Entertainment Items
Furnishings
Gas (For your car)
Credit Card Bill(s)
Cell Phone Bill
Internet Service

Prioritizing them may include making a grid or an Excel spreadsheet determining what is the most important bills that you have and what are the least important ones.

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If you have obtained a copy of your credit report from one of the three major credit reporting agencies, and have noticed a discrepancy, you can do something about it.

Creditors have a credit disputes area designated to handle this sort of issue. Call the creditor and ask for address and telephone number of the department that handles their disputes.

Then you can craft a letter to that department to address the dispute as well as ask them to correct it. The creditor usually has 30 days to respond and correct any discrepancies. If they feel that there are no discrepancies, then they will send you a letter dictating that.

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This post is a part of Blue Jar’s Group Writing Project.

If your car or boat, referred to as the collateral, has been repossessed, you may have options.

If you can present your financial picture to the collector, along with whatever funds necessary to get the collateral back, you may be able to do a redemption. Also, a possible requirement would be proof of six months of insurance prepaid.

A redemption is where you are able to take the collateral back, after a repossession occurs.

If your account is seriously delinquent, then the creditor may ask for the balance in full, to get the collateral back.

If your collateral has been repossessed, creditors will update your credit report to reflect that.

If you are not able to redeem the collateral, it will usually go to auction. The creditors try to get the most for the collateral at sale. The new buyer may pay higher or lower depending on the mileage and condition of the collateral at the time of sale. So, if the motor is shot, your car may not bring in what you owe on the balance of your account.

What’s left on the loan is referred to the deficiency balance. After the sale, collectors will resume necessary collection efforts to get payment or a payoff on the loan. Make sure you can possibly get a mortgage loan or a home equity loan to pay this off. If you are working and have a bank account, then you may be subject to legal action.

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When all attempts have been exhausted to collect a debt from customers, creditors engage legal remedies to resolve their balances.

If you own any property and are working, then you may be subject to review for litigation, if your account is delinquent. This is why it is always important to keep in communication with your creditors, even if you aren’t able to pay regularly.

Contacting them lets them know that you haven’t forgotten about your debt. Perhaps the collector would be able to assist you in working out a temporary payment plan.

Never, under any circumstances, tell a creditor to go ahead and sue you. This is especially important if you own property. They can place a lien on your home, garnish your wages, or place a judgment on your credit report.

To prevent legal action, try to work it out with a collector, before it gets that far. Litigation on accounts is a bit of work in itself, so we’d prefer if we could help you, as opposed to litigating against you.

Also of note is the fact that any attorney fees that are accrued in litigation are tacked on to your account. So, you will be paying that, as well, if your wages are garnished. Nevermind trying to sell your home with a lien on it. Creditors will be paid.

If these tips are useful, buy me a beer to say thanks.

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