Archive for Debt

What is Student Loan Default? Why You Should Care…

Student LoansMake no mistake about it – What you don’t know can hurt you! Every year millions of college students take out student loans to fund their college education. In fact, the average college graduate owes nearly $27,000 in student loan debt.

But do we really understand what it means to sign on the dotted line? Interest rates? Repayment plans? What if you default?

It can be confusing, when you have all of those loans to choose from. There are federal (Subsidized, Unsubsidized, Perkins) and private student loans. And many of us don’t take the time to read everything.

Some borrowers are only 17 years old when they start taking out student loans. So what’s top of mind is closing the tuition gap.

But you need to understand the terms of the loan before you borrow money. What will it cost(interest rate)? When do you have to start paying the loan back (repayment plan)?  How much will you owe?

This is important to know, especially with student loans.

You Can’t Escape Student Loans (more…)

New Book Shows You How to Get Your Money Right

Money is one of the leading causes of stress. And many people feel there’s no way out. Because they think it’s too complicated, they’re afraid to ask for help or feel it’s impossible.

After reading countless personal finance books, I felt there was a need to write one for everyday people that would be— easy to understand, inspiring, and informative. The wait is over! Get Your Money Right: The 7 Keys to Unlocking a Better Financial Future is that book. And it’s now available.

I wrote this book to help you:

  • Break free from financial stress
  • Change what you’re doing to get better results
  • Achieve your financial goals

Get Your Money Right Book

It focuses on the fundamentals of personal finance to help you change your money habits and transform your life. To find out more about my new book and get your copy, visit http://kembalaevans.com.

I encourage you to get a copy, so you can start living the life you deserve. It’s my greatest hope that my book will make a positive impact on your life.

Sincerely,

Kembala

5 Important Things You Need to Know Before Settling Debt

Debt SettlementAre you thinking about settling your debt on your own? While there may be debt settlement companies offering to do it for you, you can do it yourself and save money on fees. Plus, many creditors prefer working directly with you over the debt settlement companies anyway.

Here are 5 Important Things You Need to Know Before Settling Debt:

  1. Negotiate a repayment plan with your creditor before it goes into collections. Creditors are usually easier to work with than debt collection agencies, so contact your creditor to discuss a repayment plan that works best for you. Be upfront about any circumstances that are preventing you (e.g. unemployment) from paying as agreed.
  2. Settling your account may negatively impact your credit report. If your creditor agrees to accept less than the amount owed, it could be reported as settled and affect your credit score.
  3. The IRS may treat any reduced debt as taxable income. This means you could owe taxes on the amount of debt you were forgiven ($600 or more).
  4. Beware of creditors who ask for electronic access to your financial institution’s account in order to settle. Typically, creditors settle for an upfront lump sum cash amount only. For example, you may pay $400 (50 -60% off) in cash on an outstanding balance of $900.
  5. In the event they agree to a payment plan and request electronic access to your account for withdrawals don’t give it to them. If you allow them to automatically withdraw money from your account, you no longer have control of when or how much you pay them unless you close the account.

  6. Always get the settlement agreement (full terms) in writing before you settle your debt. Any agreement that you make should be received in writing to ensure your creditor’s commitment to the terms of your settlement.

The items above are some considerations to make before settling your debt. Ideally, it’s best to follow through on your commitment to pay your creditor in full. However, if you have extenuating circumstances preventing you from paying your account as agreed – I hope that you find this post helpful and wish you the best in settling your account.

CreditCards.com – 8 myths about settling credit card debt is a great read for those considering debt settlement.

Do you have any experience or tips to share on settling debt?

Photo: alancleaver_2000

Categories: Debt

New FTC Rules for Debt Settlement Companies in Effect

Are you tired of hearing those debt relief commercials that sound ‘too good to be true’? They tout irresistible offers to wipe away your debt fast and easy. In some cases, they even proclaim the government will pay your debt with bailout money. Sadly, many of these debt settlement companies leave customers with empty promises (no debt relief!) and in some cases worse off than before. As a result, the Federal Trade Commission (FTC) receives thousands of complaints and is now doing something to help protect consumers.

Starting today (September 27th) there’s good news for debt settlement consumers because new FTC rules go in effect. According to the FTC, the new rules:

  • require debt relief companies to make specific disclosures to consumers;
  • prohibit them from making misrepresentations; an
  • extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.

Click here to read more details about the new FTC rules for debt relief companies on FTC.gov.

What this means?

Debt settlement companies are required to give customers more disclosure about the process and results when communicating over the phone. For example, they must disclose to you:

  • how long it will take to get out of debt
  • how much you will need to settle the debt
  • the negative consequences of going through their debt settlement process (e.g. impact to credit rating, lawsuits)

Still to come…On October 27, 2010, for-profit debt relief companies that sell their services over the telephone may not collect their fees upfront (No more advance fees!). They must settle, reduce or renegotiate at least one debt before collecting any fee.  In other words, they need to do some work before you pay them anything.

My Take on Debt Settlement:

Personally, I have no experience working with any debt settlement company, but I find the common debt settlement industry practices of preying on people who need help the most — deplorable. Especially when they make outlandish claims, collect hundreds and thousands of dollars in fees upfront, propose you don’t pay your bills and ruin your credit score.

The new rules are a good thing, because they provide consumers with more insight into the costs and process. (more…)

Categories: Debt

Know Your Rights and Stop Debt Collector Abuse

JusticeIn my post Are You Being Sued for Your Debt?, I started with “Forget about the phone calls and aggressive communication tactics…” After I wrote that post it seems like I was a magnet for a series of debt collector abuse articles online. Contrary to the way my post may have read, debt collector abuse should not be taken lightly whether you’re being sued or not.

Debt collector harassment is a serious matter. Know your rights and stop debt collector abuse.

What are your debt collection rights?

The Federal Trade Commission (FTC) has outlined your consumer rights as they relate to debt collectors. After all, the FTC receives the most consumer complaints for debt collector practices. The more you know about what they can and cannot do the better. Click here for the FTC’s Debt Collection Facts for Consumers.

If your debt collection rights have been violated:

Debt collectors gone wrong…

Here are some articles that highlight debt collector harassment and abuse tactics:

What are your thoughts about debt collector abuse tactics? Please share them using comments.

Photo: dbking

Categories: Debt

Are You Being Sued for Your Debt?

Forget about the phone calls and aggressive communication tactics – how would it feel to be subpoenaed by your creditor? Yes, it can happen. Your creditor can actually sue you to collect on debt owed.

With many Americans struggling to pay their bills, we have seen an increase in the number of debt collection lawsuits. The problem seems to have gotten so bad that the Federal Trade Commission (FTC) is seeking to reform the debt collection litigation practices. After all, the FTC says “Debt collectors generate more complaints to the FTC than any other industry group.”

Andrew Martin’s New York Times article Automated Debt-Collection Lawsuits Engulf Courts does a great job highlighting some of the major issues with debt collection lawsuits and the huge number of cases that are being filed against consumers today.

Here are a few tips if you’re being sued for debt collection:

  1. Verify the debt is actually yours. This one may sound easy, but I’ve heard of people paying it just because they were told that they owed it.
  2. Challenge any inaccurate information. This includes your account balance, interest rate and any additional fees.
  3. Appear in court. Appearing in court or having representation gives you a voice in the matter. According to the FTC, “courts frequently granting default judgments against consumers who do not appear or defend themselves.”

When it comes to debt collection, know your rights. Below is the FTC’s video that explains your consumer rights for dealing with debt collectors.

Do you have any thoughts on being sued for debt? How about any other tips to add?

Categories: Debt

Attention New Homeowners: Avoid the Debt Trap

With a new home comes lots of excitement. After all, home ownership has been deemed part of the American Dream. If you’re a recent homebuyer, congratulations on your new home! My financial message to new homeowners is Avoid the Debt Trap.

You may be asking yourself, what is a debt trap? Let’s take a closer look. According to Dictionary.com, here are the formal definitions of each:

  • Debt – a liability or obligation to pay or render something
  • Trap – any device, stratagem, trick, or the like for catching a person unawares

How do you Avoid the Debt Trap? Beware of going into debt to decorate, spruce up or beautify your new home. These home improvements/enhancements can really add up and before you know it you could find yourself in $15,000+ debt.

I remember walking into our first new home and picturing all of the things I wanted to do. You know like painting, landscaping, ceiling fans and more. Sound familiar?

We moved from a one bedroom apartment into a 3 bedroom and 2 bath single family home. By the time we moved in and unpacked, there was still an echo in the house when we talked. You know the kind of echoes you hear when the place is nearly empty. If you looked around, you’d see plenty of space and a lot of bare walls to do plenty of imagining.

This was fine for us because my husband and I are frugal and we decided to decorate our home  — one room at a time. We agreed that we’d pay cash for anything that we needed to buy. (more…)

Categories: Debt
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