Budgeting, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Money Management, Saving

Debt Collectors: Know Your Rights Against Wrong Practices

Doomsday Debt Collectors debt1

Debt collectors may be within their right to pursue repayment, but you should know how to protect yourself against doomsday debt collectors and their extreme tactics.

Fair Debt Collection Practices Act

First, you should be aware that there are laws in place that govern the practice of debt collection. The Fair Debt Collection Practices Act was written for your protection and is enforced by the Federal Trade Commission, our national consumer protection agency. This Act covers a variety of debts, including personal and household, but not business debt. Examples of covered debts are: home, auto, medical, and credit card debt.

The Facts about Debt Collectors

  • May not use abusive or deceptive tactics
  • Must send the debtor a validation notice within 5 days of initiating contact
  • Written validation notice must include: amount owed, the creditor to whom money is owed, and what to do if the debtor says they don’t owe
  • Must contact during reasonable hours (Ex. not earlier than 8 a.m. or later than 9 p.m.)
  • May not attempt contact at a person’s work (with a written or oral statement)
  • May contact third parties for a person’s contact info (often limited to one time)
  • Must contact your attorney, if you are being legally represented
  • May not discuss the details of the debt with those outside of the debtor, debtor’s spouse or representing attorney
  • Must stop contacting the debtor upon receipt of a written notice by debtor indicating the debt is not owed or seeking proof (within 30 days from date of validation notice)
  • May continue to contact the debtor once proof of debt has been provided

Putting a stop to Debt Collection

Your first conversation with a collector should be an attempt at resolution. Determine whether you owe the debt. Depending on the outcome of that initial conversation, decide how you will proceed. If you want to stop a collector from contacting you, provide it in writing. Be sure to make a copy of everything you send and mail the document by certified mail with a return receipt. From that point, the debt collector may tell you that there will be no further contact, or they may indicate their next step. If a creditor still wants to collect from you at this point, they may pursue legal action by filing a lawsuit.

In the event that you are sued by a debt collector, respond or have your lawyer respond by the date indicated in the lawsuit to stay within your rights.

Reporting Debt Collection Misconduct

Notify the Federal Trade Commission and the Consumer Financial Protection Bureau of a debt collector who doesn’t operate within the bounds of the law. Additionally, inform your state Attorney General’s Office, and inquire about the state laws that differ from the Fair Debt Collection Practices Act, as well as, your rights.

Christian Credit Counselors is a non-profit organization that was created to help individuals and families regain control of their finances through the use of educational tools, credit counseling and other resources. For more resources, visit www.christiancreditcounselors.org.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Car, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Personal Goals, Saving

    High Car Payments Can Drive You Over the Edge

    car

    High Car Payments

    It is an all too common story. Many people struggling with debt can trace the beginning of their debt problems to a new car purchase – a big monthly payment, financed for too long. Some households even have two vehicles with large payments in the $400 to $500 range. With the budget maxed out, you can see how this type of financial burden could lead to a crisis. It’s easy to start falling behind on your budget and ultimately turning to credit cards, cash advances or loans to make up where your cash flow is lacking.

    Test Drive the Monthly Payment

    You may think you’re getting a steal of a deal on that new SUV or speedster. After all, the dealer said he’d take $2,000 off the sticker price – how could you pass that one up! You know the saying: Buyer beware. Be aware of what you can afford, and go into the purchase with a plan. Find a comfortable monthly payment that allows room in your budget for maintenance, and possible gas and insurance increases. You want a vehicle that improves your lifestyle, not one that enslaves you to a high monthly expense.

    Car Payment Facts

    • Monthly payment

    Financial experts recommend spending no more than 15% of your monthly take-home pay on a car payment. If your budget is tight, a more conservative figure like 8% would be appropriate. Even though a lender may approve you for more than you have budgeted, you don’t need to spend it. Consider the future effects of your decision and your other lifestyle and financial goals. Balance is key to budgeting.

    • Term of the loan

    According to the Federal Reserve, the average auto loan term has been creeping up over the years. In 1998, the typical car loan was a 4-year term, and now, lenders commonly offer 6-year terms. It certainly lowers your monthly payment and may help you reach the 8% you budgeted for. However, it doesn’t come free of charge. Obviously, you’ll pay a lot more than you signed for because of the increase in overall interest. And, if you want or need to sell, chances are you’ll owe more than what the car is worth. It takes longer to build equity with a long-term loan. Consider what you can afford monthly and base a purchase on a four year loan. This doesn’t have to mean less car. Shopping used cars in your price range can offer a fleet of options.

    • Interest

    Do some investigating and shop around for the best interest rate before negotiating a purchase with a dealer. Check other dealerships and financial institutions. Dealerships and financial institutions often run promotions, offering incentives like lower interest rates, zero down and cash back. Also, if you can afford to send in payments above your monthly payment, it will pay down your premium faster, save on the overall interest and shorten the life of your loan.

    • Pleasure

    Don’t buy a vehicle that you don’t like or are embarrassed to drive. It is important that you are happy with your purchase for more reasons than simply the cost. The best car deal is one that you can afford, meets your lifestyle needs and that you enjoy driving.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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      Budgeting, Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Money Management, Personal Goals, Saving

      Credit – The Four Most Common Forms

      What is credit? art-credit-cards-620x349

      Credit is defined in a couple of ways. One is the amount of money you are approved to borrow from a lending institution. With this approval comes an agreement to repay the charges, any additional fees that can or will be applied, and to abide by time restrictions.

      Credit can also be classified as your borrowing reputation. It paints a picture of your payment history and provides the lender with information regarding the likelihood of your repayment, in other words, your risk factor.

      Use of Credit

      When used responsibly, credit can be a convenient and effective financial tool. From a simple credit card to an auto or home loan, credit is the American way of life. Cashless transactions are soon becoming the way of the future, and credit cards are among the most prevalent. Understanding credit is important in order to use credit to your advantage and to prevent the common financial pitfall – debt.

      Four Common Forms of Credit

      Revolving Credit

      This form of credit allows you to borrow money up to a certain amount. The lending institution sets a credit limit, or the most you can borrow. In revolving credit, the borrower revolves the balance by rolling from month to month until it is paid in full. Interest charges typically occur for any revolving balance. As the money is paid back, the difference between the maximum credit limit and the current balance is available to be borrowed. This is the most common form of credit issued by credit cards, such as Visa, MasterCard, and store and gas cards. Credit cards are considered unsecure credit because there is no collateral securing the amount borrowed.

      Charge Cards

      This form of credit is often mistaken to be the same as a revolving credit card. However, the major difference between a credit card and a charge card is the credit card can carry a balance, whereas the charge card must be paid in full each month. If the balance is not paid on time and in full, penalty fees will be added. American Express is an example of a well-known charge card. This form of credit is advantageous against accumulating credit card debt.

      Installment Credit

      Installment credit involves a set amount borrowed, a set monthly payment and a set timeframe of repayment. Interest charges are pre-determined and calculated into the set monthly payments. Common forms of installment credit agreements are home mortgages and auto loans.

      Installment credit is also typically secure. Secure credit requires security for the lender. The borrower must provide collateral, something of value pledge in order to guarantee loan repayment. If the borrower fails to repay, or defaults on the loan, the lender may confiscate the collateral. A home is an example of collateral on a mortgage, and a vehicle on an auto loan. If the borrower were to default, the home or vehicle would be repossessed.

      Non-Installment or Service Credit

      This form of credit allows the borrower to pay for a service, membership, etc. at a later date. Generally, payment is due the month following the service, and unpaid balances will incur a fee, interest, and/or penalty charges. Continued non-payment will result in service cancellation and can be reported to the credit bureau, affecting your credit score. Service or non-installment agreements are very common in our everyday life. Cell phone, gas and electricity, water and garbage are all examples of service credit.

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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        Making Money Matters Manageable in Your Marriage

        Mutual Money Management moneymarriage

        Is it love or money that makes the world go round? It’s both…Make money work for your marriage, not against it.  You need tips on strengthening your marriage through mutual management of your money.  This can be done and can even be fun!  Keep reading to find out how.

        Financial Honesty

        Have open, honest and non-confrontational discussions about your finances.  Set aside a regular time to talk about where you are, where you want to be and how you will get there…together.

        Budgeting and Strategic Spending

        Make budgeting a positive and fun project, rather than a chore.  Don’t view a budget as a way to plan spending out of your life.  News Flash: While you are alive, you will never stop spending money.  And, the ultimate goal is not to spend less, but to spend strategically and find ways to increase your income to continue to meet your financial goals.  Plan in the things you want and enjoy and work together to achieve them.

        Money Habits

        Be aware of your spouses habits and tendencies when it comes to finances.  Don’t eye one another to find fault, but look for opportunities to step in and offer encouragement or a listening ear.  Fear can lead people to hold onto finances tightly, or spend impulsively.  Find ways to help build faith and trust into each other, and encouraging one another daily.

        Reward Sacrifice

        Regardless of the roles you’ve decided upon in the area of finance, you are both working towards your mutual goals.  Look for opportunities to reward your spouse for their hard work.  Have they been making personal sacrifices to stay within the budget?  Acknowledge that in a way that will tell him or her: Thank you. I love you. I’m proud of you. I’m glad we are on the same team.

        Learn from Financial Freedom

        Get around other couples who are walking in financial freedom and learn from them.  Look for couples who are seasoned and successful in the area of mutual finance, and allow them to mentor you as a couple. They have been where you are and have insight into your success.

        The Three L’s

        Love much. Live well. Laugh often.  Always remember the love you have for your spouse.  Keep that as a forethought, prizing it more highly than anything money can buy.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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          Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Money Management, Personal Goals, Saving

          Money, Love, and Marriage

          il_570xN.417833387_htxl

          Marriage and Money

          Roses are red; violets are blue. No matter the cost, I’ll stand by you…

          Have you had the talk yet?…You know, the one about money, spending habits, future goals, budgeting…?

          If you haven’t, it should be a top priority for your relationship.  If you have, have it again.  Discussing finances should be a regular and healthy part of your lifestyle together.  Being on the same page in this area will protect your marriage (or future marriage) against the most common relational enemy.  You’ve heard the statistics.  Money and finances are the number one reason couples argue and ultimately divorce. Don’t let your marriage become a number.

          Make Finances a Joint Venture

          Regardless of you or your spouses accounting or investment skill set, planning out your financial future and implementing those strategies should be a mutual effort.  Coming together to decide matters in the area of finance will allow you both to be on the same page number…of the same book.  Couples drift away from each other day by day when they are not planning their future together.

          Relationships and matters of finance should not be left to one person alone, even if he or she is “better at it.”  This disconnects one partner from a key area and anytime one of the partners is left out of a major area of the relationship, it will lead to the two of them planning and living, by default, two separate lives.  We, as humans, are meant to be in relationship with each other, and drifters will eventually wash up on someone else’s shore.  So, make it a priority to come together and stay together in the area of financial planning.

          Tip for Financial Success

          Use this time of planning as an opportunity to build closeness into your relationship.

          Respect and Love

          The two greatest relational needs. Anytime you are communicating with your spouse, you are communicating either respect and love or their opposites.  Since the topic of finance can stir one or both of you up, be especially careful to communicate this respect, love and trust through words, tone and body language.

          Listen and Speak Lovingly

          Listen for his or her dreams, desires, goals, reasons.  Your partner has spending habits, as we all do.  Find out the why behind the what.  This will help you to understand your partner better and offer support when needed.

          Be a voice of encouragement. Speak highly of and to your spouse.  Build him or her up with your words. Remind your better-half how capable, intelligent and valued he or she is.  You have the power to build up or to tear down, and it starts with a simple comment.

          Give Financial Grace

          If this is a new process for your relationship, a new way of doing things financially.  Give yourselves grace to get through the transition. Old habits may die hard, but building new and healthy patterns into your relationship is definitely worth the initial investment!

          Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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            Budgeting, Kids & Money, Loans, Saving, Student Loans

            Student Loans: A Necessary Evil?

            Student Loans and Debt

            More than ever before, a college degree has become a necessity.  But many parents and students wonder how they are going to pay for college.  With a high number of students graduating college with student loans, the average debt will likely hit a record $28,700, projected by Mark Kantrowitz, publisher of Finaid.org.  It is important to have the necessary information on student loans before signing on the dotted line.

            Government and Private Student Loans

            There are two types of student loans – government and private.  Government student loans have flexibility with programs to help students pay back the loan because they can change the rules whenever.  This can work towards the advantage of the borrower but can also hurt the borrower.  If the student will take out multiple loans, a government loan is better because it provides continuity.

            Private loans are provided by traditional banks and they do not have as many programs to help students repay their loans.  These loans come with a low interest rate but can hurt the borrower because it accumulates over time.  Also, most of these loans include a clause that does not allow the signer to file for bankruptcy.  After graduation, you get a six-month grace period during which you don’t have to pay back your loans giving you time to find a job.

            Financial Respoinsibility

            If you decide you need a student loan, you must decide who will be signing for it.  There are two options, the student, who must be at least eighteen years old, or a (step) parent.  If a step parent or parent decides to sign he or she is now responsible for the full payment of this loan.

            For example, if a step parent signs and afterwards gets a divorce, the step parent is still held responsible for the full payment.  Also, if a student signs for a three year loan for $30,000 but he or she drops out of school after the first semester he or she must still pay the full amount of the loan.  The result is parent and child is equally stuck.

            Budgeting for the Loan

            Ideally, the student should work while going to school and open a savings account.  This way the student will have a cushion for after graduation.  This cushion should include living money and money to make loan payments.  Proper budgeting and planning when a student begins school will be more beneficial than starting to plan after graduation.

            However, if there was no proper budgeting or planning there are ways you can receive help.  Keep in communication with the lender, there are consolidation programs and government programs that can help.  Consolidation programs are for students who took out multiple student loans throughout their school career.  For example, John has four $100 monthly payments to different banks.

            Loans and Credit Consolidation

            With consolidation, his overall payments will be lowered and he will have the benefit of simplicity which will help him track the progress of his student loans.  With government loans, a student can work for a nonprofit organization or public agency for ten years which will reduce the amount owed on the account.  Also, if you are willing to commit a year volunteering for AmeriCorps, you get $4,725 to pay off your college debts, and a stipend up to $7,400.  For more information visit their website.

            In addition you can work for 27 months with the Peace Corps.  If you travel with the Peace Corps, you will get to defer most of your student loans until after you leave the program, and may get some of your loans reduced by as much as 70%. Visit their website for more details.  If you decide one of these programs is beneficial to you, make sure you have it approved before hand, know the rules, and always get it in writing.

            Other options for repayment include: pay in full, standard payment, graduated payment, income-based payment, and long-term payment.  In the majority of cases paying in full is never an option.  Standard payments are monthly payments with interest over a period of 10 years.  It gives you a great interest rate but high monthly payments.  For graduated payments, the payments will start low but increase every couple years for a 10-30 year period.  With income-based payment, your monthly payments are decided proportionate to your income and you get 15 years to pay it off.  The long-term payment method is a monthly payment plus interest for 30 years.

            Regardless of whether you decide student loans are for you or not, you now have the knowledge to make the right decision.

            Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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              Budgeting, Saving

              Budget Tips for Your Vacation

              Summer Vacation and Your Budget

              Summer is quickly approaching, and if you haven’t planned a vacation yet, you have at least thought about it. With the current state of the economy and the rise of gas prices, you may think you won’t be able to afford a vacation this year. But, there are a few ways you can take some time off and relax without overspending.

              There are many sites that now offer discounts toward the purchase of a vacation. Check out Jetsetter and Living Social to see what they offer. You can get email alerts from these sites so you are always up-to-date with the latest travel deals.

              A Vacation vs Staycation

              Do your research and pick a destination that is not over populated with tourists. These popular vacation spots are generally overpriced, and you will end up spending more money than you think.

              Consider a staycation to save money. Visit local attractions you have never seen by researching reviews on local restaurants, spas, and museums. Also research to find out if there will be any events going on in your city.

              If you are going to be staying at a hotel, try and upgrade to get a room with a kitchen. The room cost may be a little more, but you will save a lot of money by cooking your own meals instead of eating out at restaurants.

              These are just a few tips to help trim some costs during your summer vacation. What do you do to try and save money during vacation?

              Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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                Holiday Tips, Money Management, Saving

                Budgeting for a Festive St. Patrick’s Day

                Happy St. Patrick’s Day!

                Another holiday means more temptation to go out and spend money to celebrate. Whether you are Irish or not, people like to take the opportunity today to wear green, eat some corned beef, and wash it down with an Irish brew. There are many other ways to celebrate today as well. Here are some budgeting ideas for you to save some green this St. Patrick’s Day.

                1. Check out a local parade and get into the Irish spirit. This is great for the whole family and will most likely be free of charge.
                2. If you want to decorate a little bit around the house, don’t go to expensive craft stores. Opt to go to the Dollar Store to find great St. Patty’s decorations, and save some green.
                3. If you wish to celebrate by eating some traditional Irish food, instead of going out to a restaurant, find an easy recipe online and try to make it yourself. Visit Allrecipes.com or foodnetwork.com and filter the search to meet your needs. If you are planning on making tonight a date night, cook the meal together and have fun with it!
                4. Rent a movie inspired by the Irish. 411mania.com offers a list of the top 10 movies to watch on St. Patrick’s Day. Make an Irish coffee and bundle up on the couch for a relaxing evening.
                5. If you do not want to celebrate St. Patrick’s Day, that is okay! Today is the start of the NCAA’s March Madness. So kick back and watch some basketball. You can still enjoy an Irish brew if you like, I won’t tell.

                I hope you all have a Happy St. Patrick’s Day! Most importantly, even if you are feeling the luck of the Irish, be safe.

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                  Budgeting, Holiday Tips, Saving

                  Your Mardi Gras Budget

                  With tomorrow being Fat Tuesday, I thought it would be beneficial for you to know how to celebrate Mardi Gras on a budget. Check your local newspapers for free events and parades that are in your area. If you plan to celebrate at home with family and friends, here are a few tips to having a fun night on a budget.

                  If you are having a party at your house, don’t feel like you have to provide all of the food and beverages. Make it a pot-luck, and have everyone contribute. It will be less stressful for you, and you will save time and money. Don’t feel weird about asking people to help out, most of the time people want to bring something to a party anyways, so it is a win-win!

                  Don’t fret on having tons of decorations. Places like Party City have inexpensive decorations, but don’t go crazy and think because it’s cheap, you can buy more. Make sure you go in knowing how much you want to spend, so you don’t go over budget. Get some colorful beads, masks, and Mardi Gras color streamers and balloons and you will be good to go.

                  If costumes are going to be a part of your event, don’t go spending an outrageous amount of money on an outfit you probably won’t wear again. Go to a thrift store to find funky colorful clothes at great prices. Just because you don’t have a lot of money to spend on creating a Mardi Gras themed costume, doesn’t mean you can’t find great items to wear for your party.

                  If you are not celebrating Mardi Gras, then you are saving the most by not spending any money on another “holiday.” But if you do want to celebrate, I hope these few suggestions will help you to have a memorable celebration, without breaking the bank.

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