Whether paying with a timely filed tax return, or filing late and paying late after receiving a bill from the IRS (and the bill is correct), taxpayers are encouraged to pay the taxes they owe in full.
If taxes are not paid, and no effort is made to pay them, the IRS can ask a taxpayer to take action to pay the taxes, such as selling or mortgaging any assets owned or getting a loan. If effort is still not made to pay the bill, or make other payment arrangements, the IRS could also take more serious enforced collection action, such as levying bank accounts, wages, or other income, or taking other assets. A Notice of Federal Tax Lien could be filed that may have a detrimental effect on a taxpayer’s credit standing. See information about Liens and Levies.
Haven't Filed a Tax Return? Here's What to Do
Taxpayers should file all required returns that are past due now to avoid additional penalties and interest. This section gives information on getting help and documents needed to prepare a return. It is never too late to file.
How Full Payment of Taxes Saves You Money
Paying your taxes in full ultimately saves you more money. Take action now or you may face additional interest and penalties.
Payment Options - Ways To Make a Payment
There are several different ways to make a payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, money order, cashier’s check, or cash.
Other Ways to Resolve Tax Debt That Could Save You Money
Taxpayers unable to pay all taxes due on the bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be lessened. Based on the circumstances, a taxpayer could qualify for an extension of time to pay, an Installment Agreement, temporary delay, or Offer in Compromise.
What Will Happen If You Don't File Your Past Due Return or Contact the IRS
The IRS will file a substitute return for you, which will not include any additional exemptions or expenses you may be entitled to and may overstate your real tax liability. Once the tax is assessed the IRS will start the collection process, which can include placing a levy on wages or bank accounts or filing a federal tax lien against your property.
http://www.irs.gov/businesses/small/article/0,,id=108326,00.html
Tuesday, May 31, 2011
Friday, May 27, 2011
Wanting What's Best for Your Children - Ensure Your Family's Future Happiness and Success
Remember, we all want the best for our children. In terms of the life path children will choose, this sentiment has two meanings for the parent. The first has to do with your children's happiness, and their ability to carve out a niche in a field that truly makes them happy. The second is your children's financial stability as an adult; the ability to make choices that will set them up for a relatively comfortable future.
What Makes Your Child Happy?
We've all heard that when it comes to happiness regarding one's chosen profession, it's all about getting paid for something you'd do for free. If you agree with this philosophy, then applying it to your children requires figuring out what they'd do "for free". What makes them tick? What are they drawn to? Where do they naturally excel? So often we can look at other parents and see them living vicariously through their kids. The really hard part is figuring out if we're doing the same thing.
Are your kids involved in every activity imaginable? Do they have somewhere to be (aside from school, of course) every day of the week? Take a step back and ask yourself not only if those questions apply, but does it sound like fun? So much of childhood is about fun experiences. Sometimes it's actually the "fun" part of life where kids learn their most valuable lessons, like kindness, team work, and self-esteem.
No one is saying extra-curricular activities are a bad thing. Actually, when handled correctly, they also teach the aforementioned lessons a child needs to learn. What's important, however, is to think less about where you want your kids to excel and more about where they're inclined and what they enjoy. If you're going to crack down on anything, make it schoolwork. That's something you can make a case for no matter where a child's interests lie.
This attitude, along with attentiveness to the child, is where to begin when trying to figure out how your child thinks. Take notice of the things they like. Are they an athlete or an artist; a musician or a mathematician; a teacher or a humanitarian? Or, do they show shades of a few things? Remember, it's not important that your child does everything with skill. Sometimes, it's more important they just have a good time doing it. Once you figure out the happiness part, guiding them in the right direction gets a little easier.
What Can Help Your Child Succeed Financially?
The second issue that's a part of wanting the best for our kids has to do with financial stability. Everyone's heard the adage, money can't buy happiness, but how many of us truly believe that – at least, to a certain extent? Truth be told, it's not the money that buys happiness as much as it is the peace of mind that comes from financial stability. So let's start there. Let's start with the idea that it's not important for your child to make a ton of money; rather, it's for them to become financially stable. How do we accomplish that?
For starters, it never hurts to begin teaching them about finances at an early age. Get them to understand the idea that money doesn't grow on trees. Rather, it's something you work for, oftentimes really hard. An allowance is a good place to start. Let them deposit their own money in the bank, and show them how to keep track of it. As they get older, don't be afraid to demonstrate things like how to balance a check book. Have discussions regarding some of the pitfalls of credit cards. The point is that it's important to address this stuff, and don't assume that your child is going to learn it on their own. Once a child has an understanding of how to make money, as well as how to hold on to it, you are well on your way.
The next step is helping them figure out what they'll do to earn a living. For this, go back to the first item we discussed, figuring out what makes them tick. If your child wants to be a doctor, chances are that as long as they get into medical school, they're going to be alright. But what if your kid is an artist or a musician – potentially lucrative professions, with the emphasis on "potentially"? This is where having a "Plan B" comes into play.
Support your child's dream with the utmost energy but encourage them to develop a back-up plan, utilizing the very same talents. Musicians, artists, and those with similar talents can teach these subjects, write about them, own businesses pertaining to them, and the list goes on. Whatever the case may be, it's your job as parent to point out the different options.
Good luck to everyone who's a parent, for your job is more difficult than any profession your child will ever choose.
-YOU Magazine, May 2011
What Makes Your Child Happy?
We've all heard that when it comes to happiness regarding one's chosen profession, it's all about getting paid for something you'd do for free. If you agree with this philosophy, then applying it to your children requires figuring out what they'd do "for free". What makes them tick? What are they drawn to? Where do they naturally excel? So often we can look at other parents and see them living vicariously through their kids. The really hard part is figuring out if we're doing the same thing.
Are your kids involved in every activity imaginable? Do they have somewhere to be (aside from school, of course) every day of the week? Take a step back and ask yourself not only if those questions apply, but does it sound like fun? So much of childhood is about fun experiences. Sometimes it's actually the "fun" part of life where kids learn their most valuable lessons, like kindness, team work, and self-esteem.
No one is saying extra-curricular activities are a bad thing. Actually, when handled correctly, they also teach the aforementioned lessons a child needs to learn. What's important, however, is to think less about where you want your kids to excel and more about where they're inclined and what they enjoy. If you're going to crack down on anything, make it schoolwork. That's something you can make a case for no matter where a child's interests lie.
This attitude, along with attentiveness to the child, is where to begin when trying to figure out how your child thinks. Take notice of the things they like. Are they an athlete or an artist; a musician or a mathematician; a teacher or a humanitarian? Or, do they show shades of a few things? Remember, it's not important that your child does everything with skill. Sometimes, it's more important they just have a good time doing it. Once you figure out the happiness part, guiding them in the right direction gets a little easier.
What Can Help Your Child Succeed Financially?
The second issue that's a part of wanting the best for our kids has to do with financial stability. Everyone's heard the adage, money can't buy happiness, but how many of us truly believe that – at least, to a certain extent? Truth be told, it's not the money that buys happiness as much as it is the peace of mind that comes from financial stability. So let's start there. Let's start with the idea that it's not important for your child to make a ton of money; rather, it's for them to become financially stable. How do we accomplish that?
For starters, it never hurts to begin teaching them about finances at an early age. Get them to understand the idea that money doesn't grow on trees. Rather, it's something you work for, oftentimes really hard. An allowance is a good place to start. Let them deposit their own money in the bank, and show them how to keep track of it. As they get older, don't be afraid to demonstrate things like how to balance a check book. Have discussions regarding some of the pitfalls of credit cards. The point is that it's important to address this stuff, and don't assume that your child is going to learn it on their own. Once a child has an understanding of how to make money, as well as how to hold on to it, you are well on your way.
The next step is helping them figure out what they'll do to earn a living. For this, go back to the first item we discussed, figuring out what makes them tick. If your child wants to be a doctor, chances are that as long as they get into medical school, they're going to be alright. But what if your kid is an artist or a musician – potentially lucrative professions, with the emphasis on "potentially"? This is where having a "Plan B" comes into play.
Support your child's dream with the utmost energy but encourage them to develop a back-up plan, utilizing the very same talents. Musicians, artists, and those with similar talents can teach these subjects, write about them, own businesses pertaining to them, and the list goes on. Whatever the case may be, it's your job as parent to point out the different options.
Good luck to everyone who's a parent, for your job is more difficult than any profession your child will ever choose.
-YOU Magazine, May 2011
Thursday, May 26, 2011
Managing your Credit - FAQs - brought to you by BBB
How does a potential credit issuer use a credit score?
Many lenders — and others — use your credit score to help determine whether or not to give you a line of credit. Your credit score can also affect your ability to get a job, rent an apartment, get a cell phone, and even find affordable car insurance.
What goes into creating a credit score?
The most commonly used score, called the FICO score, generally measures five key criteria:
o Length of credit history
o Types of credit lines
o Payment history on those credit lines
o Amounts owed on those credit lines
o New credit lines – how many and over what period of time
In addition to looking at a credit score, what do creditors look for on a credit report?
They look at several things, which ultimately come together to build a financial profile of you. This can include:
o Your monthly and annual income.
o Your monthly payment obligations…including rent, student loans, medical bills, car payments, utilities, telephone/cell/cable bills, etc.
o Are your financial obligations in line with your total income?
o Are your monthly payments in line with your monthly income?
o Do you pay your bills on time?
o Do you have outstanding traffic or parking tickets or other government issued citations?
o Do you have any kind of credit history?
o How many credit cards have you applied for in the last few months?
How do I know if what’s on my credit report is accurate? And what do I do if I find out there’s a mistake on it?
A federal law allows you to request a FREE COPY of your credit report from EACH of the three major credit bureaus once every 12 months. The only free resource to get a copy of it is at http://www.annualcreditreport.com/. If you find mistakes on your credit report, you should contact each of the three credit reporting agencies to report the error/s, and start the process to correct them.
www.equifax.com
www.experian.com
I like having several credit cards to choose from – especially retail store cards. Is there anything I should be aware of with that?
Yes – two things to be aware of:
a) The number of credit applications you submit – even for retail store cards – may show up on your credit report and can be a “red flag” to potential creditors. Any red flag may cause them to deny your application or charge you a higher interest rate on your credit line.
b) Opening several lines of credit may also lower your credit score, because it will reduce the “average age” of your accounts — a key criteria in determining your credit score
What can I do if I have trouble qualifying for a credit card?
There are two possible things you can do:
a) Contact your bank and ask what you can do to get a credit card. One possible option the bank might suggest is to issue you a card with a low credit limit that you can gradually increase as you show that you can pay your bills on time.
b) Another possible option the bank might suggest it to apply for a Secured Card. This product requires you to deposit a certain amount of money into a savings account before you can use the credit card. Most banks who offer secured cards will then match your credit limit with the amount of money you’ve deposited into the account. As you build a strong track record with your bank over time, you can request an application for a general purpose credit card.
What can trigger the bank to increase my APR?
There are a number of things that can trigger an increase in the APR, but the most important one that you should guard against is missing a payment deadline.
What is a “Teaser” rate on a credit card?
A Teaser rate is the same thing as an “Introductory” rate, which is a lower APR designed to attract credit applicants. Teaser rates last for a set period of time (all must be honored for a minimum of six months), and then the rate will increase. Read the rules closely so you understand the agreement you are making with the credit issuer.
How can I protect myself from fraudsters attempting to trick me into divulging my bank or credit account information?
Your bank will never call or email you for the purpose of “veriyfing” your account information. They already have it. Also…ignore any threats or expression of urgency you receive by phone or email, indicating that your account will be de-activated if you do not respond immediately and “verify” your information.
I’m behind on my payments, and I’m uncertain if I can catch up on my own. What do you suggest?
o First, call your lender/s directly, by calling the issuing bank’s customer service line. Ask to speak to someone who can explore some repayment options with you. When you get the right kind of banking representative on the line:
Focus on what you can do. Be prepared to share some ideas. Sometimes a small change can make a big difference, such as asking to shift your due date to a better time of the month if you’re frequently struggling to make your payments just before your payday.
If your issuing bank tries to contact you – respond, and have this type of conversation. Don’t be afraid to talk with the bank, which may be able to make some changes that could make it easier to pay off the debt.
o Make an appointment with a reputable credit counseling agency, if your attempts to negotiate with your lenders have not been successful. There’s additional advice on this step in the next Q&A, immediately below.
How do I find and work with a reputable credit counseling agency?
Interview several agencies.
If you know someone who has used such an agency in the past, ask them for a recommendation. Or, ask friends relatives who they would consider if they needed budgeting advice. You can also find credit counselors in the Yellow Pages, by contacting the National Foundation for Credit Counseling (http://www.nfcc.org) or the Association of Independent Consumer Credit
Counseling Agencies (http://www. aiccca.org) for a list of members or by using an Internet search engine. Further, The CARD Act mandates that issuers provide three licensed and Government approved credit counseling agencies or a toll-free phone number that provides that information on each statement.
What are some good signs of a reputable credit counseling agency?
Here’s a list of seven (7) criteria to look for/ask about.
1. Recognized as a non-profit by the IRS.
2. Required to maintain all proper licenses.
3. Provides review of customers’ income and debts, along with a written plan for reducing and eliminating debt.
4. Disperses the proper payments to creditors at the proper times —typically twice a month.
5. Provides clients with written statements at certain intervals.
6. Offers various educational programs and other ways to help consumers overcome debt.
7. Audits accounts.
Tuesday, May 24, 2011
Managing Your Credit - Addendum: Credit Card Responsibility, brought to you by BBB
CREDIT CARD ACCOUNTABILITY, RESPONSIBILITY AND DISCLOSURE ACT OF 2009 –
(“Credit CARD Act”).
The Credit CARD Act represents a fundamental change for the credit card industry, marking the beginning of a new era of consumer empowerment. Signed into law in May 2009, the Credit CARD Act provides consumers with protections from unfair practices such as unexpected interest rate increases and ensures better disclosure of credit card terms and fees. Understanding these disclosures can make it easier for you to manage your credit wisely – helping you to meet your payment deadlines, avoid late fees, and know in advance if your interest rate will be increasing giving you plenty of time to plan ahead and make an extra effort to use cash and/or opt-out of certain terms.
What the Credit CARD Act Means for Consumers:
o Your interest rate will be honored for one year after you open an account. However your rate can be increased:
if your card has a variable interest rate (if the index goes up, so can your rate)
if you are more than 60 days late in paying your bill
if you are in a workout agreement and you don’t make your payments as agreed
o Introductory rates will be honored for at least six months, after that your rate can revert to the "go-to" rate (the rate must be clearly disclosed when you first get the card).
o Banks will not charge you a fee if you exceed your credit limit…unless you agree in advance to “opt-in” and pay the fee in return for the flexibility to exceed that limit.
o Banks will provide at least 45 days notice before increasing your interest rate, changing certain fees or making any other significant changes to the terms on fixed-rate cards.
o Banks will honor your interest rate on an existing balance, unless your minimum payment is at least 60 days overdue. If this occurs — and you pay on time for six months in a row — your previous rate will be restored.
o Banks will no longer charge interest on balances you paid on time the previous month. (No double-cycle billing)
o Banks will no longer raise your interest rate just because you missed a payment deadline with another lender. (No universal default.)
o Bills will be sent at least 21 days before the due date.
Friday, May 20, 2011
Managing Credit - Part V. Protect Yourself from Fraud - brought to you by BBB
You are your own best line of defense to protect yourself from credit card fraud. Here’s how:
- Sign your card immediately when you receive it in the mail.
- Carry only the cards you expect to use, and keep them secure.
- Secure — in your home — other cards you may not regularly use.
- Keep a list of account and telephone numbers for your card issuers in case your cards are lost or stolen. Once you report the loss or theft, you will not be liable for unauthorized charges.
- Keep a copy of this list both at home and at your work.
- Notify your card issuer/s in advance if you have a change of address.
- Notify your card issuer/s in advance if you plan to travel outside the US
- Be very cautious about giving anyone your account number.
-Do not give your cards to anyone.
- Keep your pass code and personal pin number secure. Do not put it in writing and do not share it with anyone.
- Use only reputable companies with secure websites for online shopping.
- Email is not secure. Never include your credit card number (or SOCIAL SECURITY Number) in an email.
- Shred all paper documents containing your personal identifiers (account number, name, address) before disposing.
- When you are expecting a new or replacement credit card or debit card, look for it in the mail.
- Report a lost or stolen credit card or debit card immediately.
BBB FRAUD Alert BBB FRAUD Alert BBB FRAUD Alert BBB FRAUD Alert
Card-issuers will never call or email you asking you to ‘verify’ your account Information. They already have it. Ignore any threats or expression of urgency you receive by phone or email indicating that your account will be de-activated if you do not respond immediately and ‘verify’ your information.
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Indicators of a Secure Web Site:
Look for well-known seals…and then roll your cursor over the seal to see if it’s active and clicks through to the seal-issuer.
Common online seals of authenticity or security include (among others)
• BBB Accredited Business
• Yahoo Merchant
• Verisign-secured
• TRUSTe
• McAfee-secured
Thursday, May 19, 2011
Managing Credit - Part IV Going Forward - How to Improve Your Credit Score (and Why it will Help You) --- brought to you by the BBB
While you’re focusing on lowering balances, it’s also important to make a few key moves to start improving your credit score, which may help you qualify for lower interest rates over time. Your credit score and credit report are key tools that measure your financial risk, giving lenders a way to predict how likely you are to pay your bills on time. Many lenders — and others — use your credit score to help determine whether or not to give you a line of credit, whether you’re applying for a credit card, buying a car or planning to buy a home. The higher the score, the lower the risk…and the more favorable account terms you’ll usually be offered. Your credit record may also affect your ability to get a job and find affordable insurance. So it’s always important to build — or rebuild — a good score…even if you aren’t about to take out a new loan.
How Your Score Is Calculated
There are several types of credit scores, but lenders often use the FICO score, which ranges from 300 to 850. Your FICO score measures five key criteria and can vary slightly, based on which credit reporting agency issues the score. The information that shapes these criteria comes from your credit report, and includes:
- Length of credit history
- Types of credit lines
- Payment history on those credit lines
- Amounts owed on those credit lines
- New credit lines — how many and over what period of time
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Credit Reports - Check your credit report for errors or potential fraud once each year.
You can order a free copy of your credit report from each of the three credit reporting agencies once every 12 months by visiting www.annualcreditreport.com. This site is run jointly by the three credit reporting agencies (Equifax, Experian, and TransUnion). It’s a good idea to stagger your requests for a copy of your credit report, requesting it from one bureau every four months. This will help you monitor your credit over the course of a year and detect potential fraud early.
Case Study - A High FICO Score Can Translate Into Big Savings
Let’s say the average lender was offering a 30-year mortgage at a 4.743% interest rate for borrowers with a FICO score between 760 and 850. But the average lender charged a 6.332% interest rate for borrowers with a FICO score between 620 and 639. Impact of FICO Score on Payment — On a $250,000 loan, that monthly payment for borrowers with the higher FICO score range would be $1,303…versus $1,533 for those in the lower FICO score range. That’s a difference of nearly $90,000 in interest payments over the 30-year life of the loan! For more information and a calculator to run your own numbers, visit FICO’s consumer web site at www.myfico.com
How to Improve Your Credit Score
1. Fix any errors on your credit report.
Get a free copy of your credit report at www.annualcreditreport.com. If you find any mistakes, contact each of the three credit reporting agencies:
www.equifax.com
www.experian.com
2. Pay your bills on time.
On average, more than one-third of a credit score is based on payment history. The later you are, the more points you lose. If you’ve missed payments, get current…and stay current.
3. Keep your credit card balances low.
Generally another one-third of your credit score is based on the amounts you owe, often expressed as your “credit utilization ratio,” which is the percentage of your credit limit that you’ve actually used. If you’re close to the limit, it’s a flag to potential lenders that you’re maxing out your cards. It’s a good idea to keep your purchases to less than 25% of your credit limit at any time, even if you pay off your bill in full every month.
4. Limit the number of credit cards you open….including retail store cards.
Generally, the length of your credit history accounts for 15% of your credit score. Opening several new cards within a short period of time can hurt your score, because it lowers the average age of your accounts. Lenders worry that you plan to borrow money you may not be able to repay. It’s usually a good idea to keep open old cards with a long credit history, which also helps your credit score, because they contribute to your “credit utilization ratio.” If you determine you want to close old cards, close them one at a time over a period of time. But, choose carefully, because the oldest may be important to a better credit score.
5. Promptly pay any traffic or parking tickets or library fines.
If the bill ends up going to a collection agency, your credit score could drop by as much as 100 points. Pay these bills on time, and keep records of the payment.
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Automatic Electronic Payments- Consider activating an automatic electronic payment schedule with your bank, so you’ll never be late for a payment.
NOTE – Some lenders have recently increased their minimum payment requirement from 2% of the outstanding balance to 5%. If you’re only paying the minimum balance due, make sure your lender has not increased its minimum payment requirement. It’s a good idea to have the automatic payment pay much more than the minimum. You’ll owe less in interest and can pay down your balance much faster.
Tuesday, May 17, 2011
Managing Credit - Part III. By the BBB
III. Some Advice about ‘Quick and Easy’ Solutions
A. Debt “Settlement, Negotiation, Consolidation, or Elimination” Services
Numerous companies offer services such as debt settlement/negotiation or debt elimination. Consumers should be wary of any company that promises something that seems to be too good to be true, and should be cautious in to any service that requires fees to be paid up front. Some companies offering such services can actually worsen your financial situation.
- Debt “Settlement/Negotiation,” Debt settlement/negotiation companies promise they will negotiate with consumers’ creditors to reduce the amount owed…in most cases for an upfront fee. As a general rule, debt settlement/negotiation should be considered only as a “last resort” before filing bankruptcy.
- Many consumers complain that debt settlement/negotiation companies take their money but don’t deliver promised results. Consumers may be liable for late fees and penalties that accrue while payments are not being made during the debt settlement / negotiation process, and may be sued with respect to any debts owed. Also, failure to pay debts during debt settlement/negotiation will likely have an adverse effect on the consumer’s credit report.
- Debt “Elimination” Companies that advertise debt elimination rely on many different schemes that all hinge on the incorrect notion that credit lines are illegal. Debt elimination companies typically provide, for an upfront fee, a document for the lender that supposedly absolves the consumer of the debt. The document generally has no validity whatsoever. Consumers paying for such “services” have found they’ve wasted money that would have been better spent on actually paying back their debts.
BBB Alert BBB Alert BBB Alert BBB Alert BBB Alert
BBB advises caution with any company that makes any of these statements:
● We can remove your debt
● Do not communicate with your creditors
● Pay us and we’ll pay your bills
● Pay us a percentage of the bills we eliminate
● We can eliminate negative marks on your credit report
● Use our system and you’ll avoid Bankruptcy
B. Other Loan and Balance Payment Scenarios
- Collections. Collection agencies are separate companies that are used by creditors to collect a delinquent debt. The agency may be collecting the debt on behalf of a creditor, or they may have purchased the debt and are now attempting to collect the debt directly. Collection agencies will contact you frequently until you either pay the debt, or make payment arrangements. Having an account in collections may appear on your credit report and may negatively impact your credit rating. If you have an account in collections, communicate with the collection agency. Putting off debt collectors will not make the problem go away. When you receive a collection call, see if they are able to work with you on a payment plan. Consumers can stop communications from debt collection agencies if the consumer notifies the agency in writing to stop. Federal law requires that debt collection agencies honor such written requests.
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Fair Debt Collection Practices Act. Collection agencies must abide by the FDCPA, which prohibits debt collectors from harassing you, calling you at unreasonable times, using abusive language, using false statements, adding unauthorized charges to your account, and other practices. Depending on your state, different rules may apply for your creditor’s collection departments. You may wish to contact a lawyer if you feel the terms of the FDCPA have been violated.
Short-term Loans
- Payday loans. Often referred to as “quick cash” or “check cash” loans, payday loans are easy to obtain because no credit check is required. CAUTION: They carry steep interest rates, and consumers may find they are trapped in a cycle of debt if they cannot pay back the loan by their next payday. Many states have banned payday loans or limited the interest that can be charged, and federal law limits the interest that can be charged by payday lenders to military service members and their dependents. An FTC alert on payday loans can be found at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt060.shtm
.
- Car Title Loans. You offer your car as security when you apply for a car title loan. You must provide your car title and a set of car keys to the lender, who holds them until the loan is repaid. CAUTION: Like payday loans, car title loans carry a high interest rate, can trap you in a cycle of debt, and you risk losing your automobile if you fail to pay.
- Pawnshops. Pawnbrokers take a consumer’s possession (a piece of jewelry, for example) as collateral for a loan that usually carries a high interest rate. CAUTION: If you do not repay the loan with interest by a certain date, the pawnbroker can sell your possession.
Bankruptcy
Bankruptcy is a legal procedure that permits an individual (or business) to obtain relief from most or all of their unsecured debts. It enables people to seek a solution to their financial problems through the federal court. Bankruptcy is typically viewed as a “last resort” when other options to solve financial problems have failed, and there is impending financial disaster…such as losing a home to foreclosure, losing an automobile to repossession, or wage garnishment.
- Chapter 7 (liquidation). Allows you to eliminate most, if not all, of your unsecured debt. This may include medical bills, credit card debt, unsecured loans, utility payments, etc. Any property of value may be sold or turned into money to pay your creditors. You may be able to keep some personal items and possibly your house, depending on the law of the state where you live. Chapter 7 is typically filed by people who have few assets, little income, and a heavy burden of debt.
- Chapter 13 (debt adjustment). Reorganizes your debt into an affordable payment plan. A trustee is appointed and will collect the payments from you, pay your creditors and make sure you abide by the terms of your repayment plan. Your bankruptcy is not complete until you pay off all your creditors according to the terms of the plan. You are usually able to keep your property, but you must earn wages or have some other source of regular income and agree to pay part of your income to your creditors. This plan allows you to catch up on past due auto or home loan payments and temporarily halts foreclosures and collection actions. It can also help you pay off past due taxes, child support and loans.
Steps to take when considering bankruptcy
- Review the potential benefits. Bankruptcy can provide legal protection from creditors and take care of all or much of your debt.
- Know the consequences. There are no guarantees that bankruptcy will cure all of your financial problems. There are certain debts that cannot be wiped out by bankruptcy. A bankruptcy filing may also have a significant negative impact on your credit rating, which could have implications for housing, employment, and obtaining future credit.
- Seek assistance from a professional. Consult an experienced bankruptcy attorney to review your options
Monday, May 16, 2011
Managing Credit - Part II. Provided by BBB
Part II – Good Ways to Get Help NOW
If you are having trouble making your payments or feel like you might have trouble qualifying for a balance-transfer offer ask for help now. Many people have found themselves in this situation for a wide variety of reasons. What matters now is how to get on the road to recovery.
Signs You Need Help
- You’re struggling with multiple forms of debt, such as credit cards, home mortgage, auto loan, utilities and/or medical bills.
- You cannot make the minimum payments on all your credit cards and other bills, or are making late payments.
- You’re using your credit cards to pay other bills, such as utilities.
Strategy 1 – Call Your Lenders Directly
Lenders want to work with their customers and have hardship programs to assist cardholders who have difficulty making their payments. If you’re having trouble making your payments, they probably know this and may have already tried to reach out to you to start a conversation about how to work together in a way that works for both the bank and for you.
Here are some ways to start this kind of conversation.
Call your issuing bank’s customer service line. Tell them why you’re calling, that you want to take responsibility for your finances, but you cannot do it under the current terms. Ask to speak to someone who can explore some options with you.
Focus on what you can do when you begin a detailed conversation with the right kind of banking representative. When you’ve initiated the contact, they already know you’re having trouble with the current plan and terms. At this point in time, they’re most
interested in what you can suggest as possible new plans and terms, so be prepared to share some ideas. Sometimes a small change can make a big difference, such as asking to shift your due date to a better time of month if you’re frequently struggling
to make your payments just before your payday.
If your issuing bank tries to contact you — respond, and have this type of conversation. Don’t be afraid to talk with the bank, which may be able to make some changes that could make it easier to pay off the debt.
Strategy 2 – Make an Appointment with a Reputable Credit Counseling Agency
(SEE Emergent Funding’s April , 2011 blog about Scam Warnings for Debt Consolidation Settlement Services)
If your attempts to negotiate with your lenders have not been successful, then a credit-counseling agency may be helpful. These organizations can review your overall financial and credit situation, discuss your options with you, help you prioritize your bills, and may ultimately negotiate with your creditors to stop the finance charges and late fees and
develop a repayment plan that will work for you.
Interview several agencies. If you know someone who has used such an agency in the past, ask them for a recommendation. Or, ask friends or relatives who they would consider if they needed budgeting advice. You can also find credit counselors in the Yellow Pages, by contacting the National Foundation for Credit Counseling (http://www.nfcc.org) or the Association of Independent Consumer Credit Counseling Agencies (http://www.aiccca.org) for a list of members or by using an Internet
search engine.
Signs of a reputable credit counseling agency
- Recognized as non-profit by the IRS.
- Counselors are required to maintain all proper licenses.
- Provide reviews of customers’ income and debts, along with a written plan for reducing and eliminating debt.
- Disperse the proper payments to creditors at proper times, typically twice a month.
- Provide clients with written statements at certain intervals.
- Offer various educational programs and other ways to help consumers overcome debt.
Questions to ask before you make an appointment
- Is this agency a non-profit organization?
- Is your agency accredited? By whom?
- Are your counselors certified? By whom?
- Are your services confidential?
- Will I be notified — in advance — of any fees associated with services being offered?
- Will you develop a plan that’s customized to fit my financial circumstances?
- Will my funds be protected? How?
- Are budget and credit education opportunities offered?
Saturday, May 14, 2011
Managing Credit - Made Simpler ... Provided by the BBB
You knew that credit cards could be great tools to help you manage your money, but now your outstanding balances are over whelming. The bills keep coming but you’re missing payments because your cash flow does not meet your payment obligations. Perhaps creditors are now trying to reach you and you just don’t know what to do next.
Emergent Funding wants to help you get out of this mess and will post solutions provided by the Better Business Bureau.
This is entitled TWO STRATEGIES TO PAY OFF BALANCES FASTER:
Strategies to reduce your interest payments can help you reduce your balances faster, even if you’re nowhere near able to pay your balance in full at this point.
- Make the highest possible payment you can each month.
The faster you pay off your balance, the less you’ll pay in interest charges. Increasing your monthly payments by even a few hundred dollars can help you get out of debt much faster (see the case study below).
- Find a lender that will give you a lower APR.
A lower APR translates into lower interest charges as a percentage of your outstanding balance. Switch to a lower rate card and benefit from balance transfer offers. Introductory or “Teaser” rates must last for at least six months and the rules must be clearly disclosed.
BBB Tip
“Teaser” Rates
Watch the calendar carefully, and pay as much of the balance as possible
in the first few months. Most “teaser rates” last only six months, and then the interest rate will jump after the introductory offer expires.
Case Study
How to Pay Less in Interest
Situation — You have a $5,000 credit card balance and your lender requires
a minimum monthly payment of 4% of your balance. This translates to a $200 minimum payment in the first month.
Problem — If your card charges 18% interest and you make only the minimum
monthly payments, it will take you 11+ years to pay off the balance. By that time, you will have paid the card company more than $2,800 in interest even if you never make any new charges on the card. That means that $5,000 balance actually cost you $8,000.
Solution 1 — Pay more than the minimum each month and pay off your balance faster. Even if you can’t pay a huge chunk of the bill, you can still accelerate the payoff process, which will minimize your out-of-pocket costs from interest charges.
Solution 2 — Transfer your outstanding balance to a card company that will offer you a lower interest rate, and boost your monthly payment a bit. If you switch to a card that gives you a 6% interest rate and increase your monthly payments to $500 each month, you’ll pay off your balance in 11 months and pay only $142 in interest — that’s a whole lot less than the $3,000 interest out-of-pocket described above!
As soon as you stop paying those high interest rates, you’ll free up a lot of money to cover your other expenses!
http://www.bbb.org/credit-management/Managing-Credit-Made-Simpler_Overwhelming-Obligations.pdf
Monday, May 9, 2011
Protecting Consumers at the Pump: The Oil and Gas Price Fraud Working Group
The following post appears courtesy of Attorney General Eric Holder
Over the past few years, American businesses and families across the country have suffered the effects of the worst financial crisis in generations. Today, although our economic recovery is gaining steam, it remains critically important that we continue to use every available tool and resource to safeguard consumers against additional – and unnecessary – financial burdens.
For many, rapidly rising gasoline prices pose a serious concern. And while some factors – like regional variations and other lawful reasons for increased prices – may be beyond our control, it is imperative that we take action to identify and address potential cases of fraud and manipulation that may harm families and businesses.
Yesterday, I announced the formation of an Oil and Gas Price Fraud Working Group to help identify civil or criminal violations in the oil and gasoline markets, and to ensure that American consumers are not harmed by unlawful conduct. Since last month, at President Obama’s request, I have been directing efforts to increase cooperation between the Department of Justice and other groups with relevant authority, including federal agencies and state attorneys general. I am proud to say that this Working Group will enable us to formalize these partnerships, share monitoring information, and exchange ideas about what works – and what doesn’t work – at the state and federal level.
It will foster increased cooperation between investigators and government officials, so we can vigorously enforce state and federal laws against collusion, manipulation and other forms of wrongdoing. It will also allow us to evaluate significant market developments, including the activities of speculators and index traders, so we can anticipate and aggressively pursue cases of suspected illegal activity.
We’ve already proven that this kind of approach can be effective. Our new Working Group will report to me through the Financial Fraud Enforcement Task Force (FFETF), a partnership formed in late 2009 between agencies, regulators, state attorneys general, and local law enforcement organizations, which has already brought a powerful array of tools to the fight against financial fraud. By building on this work, the Justice Department and its partners can help promote a competitive and fraud-free marketplace – and can do so both efficiently and effectively.
As we work to determine if any laws have been violated and, if so, to swiftly bring those wrongdoers to justice, I am confident that the new Oil and Gas Price Fraud Working Group will help protect American consumers from unnecessary pain at the pump due to illegal activity. My colleagues and I at the Justice Department and across the administration are committed to stopping criminals who would take advantage of others for personal gain.
Learn more about at StopFraud.gov.
Over the past few years, American businesses and families across the country have suffered the effects of the worst financial crisis in generations. Today, although our economic recovery is gaining steam, it remains critically important that we continue to use every available tool and resource to safeguard consumers against additional – and unnecessary – financial burdens.
For many, rapidly rising gasoline prices pose a serious concern. And while some factors – like regional variations and other lawful reasons for increased prices – may be beyond our control, it is imperative that we take action to identify and address potential cases of fraud and manipulation that may harm families and businesses.
Yesterday, I announced the formation of an Oil and Gas Price Fraud Working Group to help identify civil or criminal violations in the oil and gasoline markets, and to ensure that American consumers are not harmed by unlawful conduct. Since last month, at President Obama’s request, I have been directing efforts to increase cooperation between the Department of Justice and other groups with relevant authority, including federal agencies and state attorneys general. I am proud to say that this Working Group will enable us to formalize these partnerships, share monitoring information, and exchange ideas about what works – and what doesn’t work – at the state and federal level.
It will foster increased cooperation between investigators and government officials, so we can vigorously enforce state and federal laws against collusion, manipulation and other forms of wrongdoing. It will also allow us to evaluate significant market developments, including the activities of speculators and index traders, so we can anticipate and aggressively pursue cases of suspected illegal activity.
We’ve already proven that this kind of approach can be effective. Our new Working Group will report to me through the Financial Fraud Enforcement Task Force (FFETF), a partnership formed in late 2009 between agencies, regulators, state attorneys general, and local law enforcement organizations, which has already brought a powerful array of tools to the fight against financial fraud. By building on this work, the Justice Department and its partners can help promote a competitive and fraud-free marketplace – and can do so both efficiently and effectively.
As we work to determine if any laws have been violated and, if so, to swiftly bring those wrongdoers to justice, I am confident that the new Oil and Gas Price Fraud Working Group will help protect American consumers from unnecessary pain at the pump due to illegal activity. My colleagues and I at the Justice Department and across the administration are committed to stopping criminals who would take advantage of others for personal gain.
Learn more about at StopFraud.gov.
Friday, May 6, 2011
Rental Costs Are About to Takeoff
We are often asked whether it is better to rent or buy in the current housing market. The answer to that question is: "It all depends."
There are certain situations where renting short term probably makes sense. It may make sense if you are retiring to a different region of the country and are not yet sure where you want to set down roots for the next 25 years. It may make sense if you have a one-year employment contract that will probably require a move to another place upon termination.
However, in most other cases, renting right now makes little sense for several reasons.
At the same time, the supply of rentals is rapidly decreasing.
Apartment vacancy has dropped significantly since the recession, which ultimately drives up rental rates.
When supply is rapidly decreasing and demand is quickly increasing, prices have only one place to go – and that is UP! That is exactly where rental prices are headed.
Reprinted with permission. All Contents ©2011. Steve Harney
There are certain situations where renting short term probably makes sense. It may make sense if you are retiring to a different region of the country and are not yet sure where you want to set down roots for the next 25 years. It may make sense if you have a one-year employment contract that will probably require a move to another place upon termination.
However, in most other cases, renting right now makes little sense for several reasons.
- Even though prices may still soften, waiting to buy wouldn't make sense as the cost of owning a home may still increase.
- Mortgages may soon become much more expensive than they are right now.
- Owning a home is less expensive than renting a home in 72% of major
U.S. - Rental costs are about to explode.
At the same time, the supply of rentals is rapidly decreasing.
Apartment vacancy has dropped significantly since the recession, which ultimately drives up rental rates.
When supply is rapidly decreasing and demand is quickly increasing, prices have only one place to go – and that is UP! That is exactly where rental prices are headed.
Bottom Line
Is now a good time to rent? We think not. You can buy a home today at a discounted price and get a 30-year mortgage at a historically low interest rate. You can set your housing expense for the next thirty years. On the other hand, rental costs are poised to increase for years to come. Reprinted with permission. All Contents ©2011. Steve Harney
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