How to Find All Your Debts: 4 Tips

Paying off your debts is a critical part of a healthy credit profile. Here’s what you need to know about how to find your debts.

It’s uncomfortable to admit, but it’s entirely possible that you have debts you didn’t even know about. Whether mail went missing or communication about medical debt got mixed up, it’s possible an account with your name on it is languishing somewhere in collections. Get some tips to find out all your debts so you can make educated decisions about how to clean up your credit history.


How to Find All Your Debts

Even if you keep meticulous records, it’s possible for some debts to have fallen through the cracks. And perhaps you know you owe a debt, but it’s been passed around between collection agencies so many times you’ve forgotten who currently owns the debt. Here’s how to find out which collection agency you owe or uncover debts you don’t know about.

1. Check Your Credit Reports

Our first tip for finding your hidden debts is to turn to your credit report. While not every debt is reported, many are. And if you’re in collections or have owed the debt for a while, chances are someone has placed a negative item on at least one of your credit reports.

The trick here is getting copies of all three of your credit reports from the major bureaus. Not all creditors report to all three, so TransUnion, for example, could have a detail that Equifax and Experian do not—and vice versa.

You can get one free copy of your credit report from each agency every year at AnnualCreditReport.com. (They’re available weekly for a limited time due to COVID-19.) But for those who really want to get a handle on who they owe and what’s on their report, a service such as ExtraCredit is a good choice.

ExtraCredit lets you see your credit reports from all three bureaus—anytime. The reports are pulled monthly. It also gives you regular updates on 28 of your FICO® scores, so you have a clear picture of what your credit history looks like to lenders. Plus, you can get rewards and offers for valuable credit services, including credit monitoring and credit cards.

2. Go Through Old and New Mail

Who among us hasn’t picked up the mail, only to put it in a stack by the front door and leave it there to languish for months? Life gets busy, and it can be tempting to slide unopened envelopes into a bin or drawer and forget about them. But mail can back up before you realize it, and you might miss a notice of a bill or debt.

Take some time to gather all the mail you have. Open it and sort it, carefully looking to see whether you need to take action on something or if you might owe someone money. Keep a notebook or computer nearby so you can make a list.

3. Listen to All Those Old Voicemails

Voicemail can back up just like snail mail. Many people never actually check their voicemail, assuming those who need them will call them back or text them.

Legitimate creditors and collections agencies should leave a voicemail, including contact information. They’ll also usually show up on your caller ID. 

Clear out your old voicemail, listening to each one and making notes about it. Compare that information with the notes you got from your mail and what’s on your credit report to compile a master list of debt you might owe. Keep an ear open for potential debt collection scammers and do your research before following up with anyone.

4. Contact Creditors You Think You Owe

In some cases, you know you owe someone, but it’s been a while. You can contact the last creditor you remember and find out if they still own the debt or if they wrote it off and sold it to a collection agency. They should be able to confirm your debt and give you the name and contact information for the agency that they sold the debt to, if applicable.

What to Do After You Find Your Debt

Once you go through a debt finder process and figure out who you owe money to, you have some decisions to make. Here are three tips for dealing with debt once you find it.

1. Decide Whether You Can—or Will—Pay

You might rush to pay off old debts thinking it will boost your credit, but that may not happen. Yes, the debt should then be marked as paid on your credit report. But the damage from the late payments and collection accounts could still linger.

So, you need to consider seriously how you can and will deal with old debt. If you simply can’t afford to pay, talk to a legal professional about your options, rights, and what consequences could come from paying or not paying old debt. For example, if you start making payments, the statute of limitations could restart and leave you at risk of lawsuits and legal collection activity much longer.

2. Consider Credit Repair Services

One result of digging through credit reports and chasing down old debt can be finding errors or collections you don’t actually owe. If you find inaccurate information on your credit reports, you might consider working with a credit repair service.

Credit repair services work on your behalf to dispute inaccurate information with the credit bureaus. You can actually do credit repair yourself, but if you don’t have time or just know you aren’t going to follow up, you might get more value by paying professionals to handle it for you.

3. Keep Up with Credit Reports and Debts in the Future

Finally, once you do the work to find your debt and clean it up, keep up with your credit reports in the future. While every single debt may not appear on your credit report—or appear right away—staying on top of your credit report ensures you’re aware of most of them. ExtraCredit gives you the access to your accounts that you need to keep track of your debts and your credit score.

Bonus Tip: Once you’ve found all your debts, use a debt management app like Tally to keep track of them moving forward so you’ll never have to wonder about them again.

TL;DR: ExtraCredit Could Help You Identify and Manage Your Debts

If you’ve lost track of your debts and what you owe to who, it can take some work and time to track everything down. But once you do, stay ahead of these things with help from ExtraCredit.


Source: credit.com

How to Deal with Debt Collectors When You Can’t Pay

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If you’ve fallen behind on your bills and are dealing with debt, don’t be surprised if you start hearing from debt collectors. Those collectors have a job—to get as much money out of you as they can. So, they’re probably not going share things that might make it easier for you to fight back or get out of paying.

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But don’t worry—you don’t have to do this on your own. If you’re wondering how to deal with debt collectors when you can’t pay, you’ve come to the right place. We’ve got a few tips and tricks debt collectors would never share.

1. First, Know That Debt Collectors Aren’t Quite as Fearsome as They Pretend

Debt collectors are trained to use scary and forceful language to coerce someone into making an immediate payment. If you arrange to pay the first time they talk to you, it’s less likely you’ll ask for verification of the debt or take other action that might slow down the collection effort.

Here’s an example of one of their tactics: collectors might threaten to mark you as “refusal to pay” in their files. They might say this if you say you can’t pay the bill—even if you would like to.

It might sound bad, but it’s actually meaningless. You’re alreadynot paying the bill. That’s why a collection agency is contacting you. Marking your refusal to pay doesn’t actually change the situation or make it worse for you.

2. Settlements Are Rarely a One-Time Deal

Collection agents want to get your money while they’re on the phone with you. They might actually get a bonus for doing so. When an individual collection agent says that a settlement offer is a one-time deal or won’t be available after a certain amount of time, that’s usually not the case.

The older a debt is, the less likely someone is to collect it. Which means older debts might even be easier to negotiate.

That doesn’t mean you should avoid paying if you can just bring the total down. That could lead to dealing with lawsuits and other issues. But it does mean you don’t have to jump just because the collector says to.

3. You Can Demand That Collectors Stop Calling You at Work

Do you have collectors calling you at your job? You can tell them to stop. The Fair Debt Collection Practices Act makes it veryclear. Once you tell a debt collector your employer doesn’t allow you to talk with them while you’re at work, they must stop calling you there.

4. Your Debt May Be Too Old to Collect

Your debt might be past the statute of limitations. However, a debt collector either might not know that or not want you to know that. It’s up to you to be aware of your own debts and double check how old they are.

If you discover that your debt is beyond the statute of limitations for the state where you borrowed it, then you know the collector cannot successfully sue you. But you do have to be careful not to accidentally reset the clock on your debt.

In most states, the statute of limitations runs three to 10 years from the date you last made a payment. If you make a payment because you feel pressured by a collector, you reset the clock. The collector might have another decade for collection.

It’s also important to realize that a collector can continue to try to collect the debt from you without suing you. Old debt might also still be dragging down your credit score.

5. Debt Collectors Are Under Pressure to Collect

Collectors have to meet performance requirements at their jobs like everybody else. This means they might need to collect a certain amount each month or close a certain number of accounts every quarter.

That means you might have better bargaining power at the end of the month. For example, if you owe $3,000 and can only pay $1,000, the collector probably won’t be okay with taking that lesser amount. But if you reach out at the end of the month, and the collector needs $900 for their monthly quota, they might be more willing to settle on your $1,000 payment.

In the meantime, by not paying immediately, you buy time to request verification of a debt. You might even have time to come up with more money to be able to cover the debt.

6. If They Really Want to Play Hardball, They Will Have to Sue You

If you owe unsecured debt such as credit card debt, collectors must typically sue you before they can go after your property, including money in your bank accounts, or try to garnish your wages. But threatening to take such actions before they have sued you and won a judgment may be illegal. Even threatening to sue you to collect a debt may be illegal if the collector has no intention of doing so.

Keep a notebook and write down each time a debt collector contacts you and what they say. You may be able to report them to the Consumer Financial Protect Bureau if they aren’t following the Fair Debt Collection Practices Act.

7. Paying Off This Debt Won’t Help Your Credit Ratings

Under the Fair Credit Reporting Act, a collection account will remain on your credit reports for seven years from the date you fell behind with the original creditor. Collectors may make it sound like paying off collections accounts will improve your credit by telling you that they will update your credit report to “paid in full” status. But this probably won’t help your credit score. Collection accounts are negative, regardless of whether they are paid or not, though some newer credit scoring models do not factor in paid collections.

On the other hand, paying the collection account may stop the creditor or collector from suing you. That lets you avoid a judgment on your credit report that could hurt your credit score even more. Additionally, some mortgage lenders may require you to pay or settle collection accounts before giving you a loan.

Working Toward Better Credit

Whether you’re being hounded by collectors for debt that isn’t even yours or you’re ready to take a stand and take back control of your credit, credit repair is an option. You can manage the process on your own or work with a professional service such as Lexington Law or CreditRepair.com. These firms help you remove inaccurate information from your reports and provide some guidance on how to improve your credit score over time.

Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.

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Source: credit.com

What is a Judgment?

June 4, 2020 &• 6 min read by Gerri Detweiler Comments 737 Comments

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A judgment is an order issued by a court of law. When you borrow money, you are legally required to repay the debt. This includes opening a credit card account, getting a line of credit from your bank and obtaining financing for a big purchase.

You can also become indebted to service providers. This can include utility companies, medical professionals, cell phone service providers and auto mechanic shops. They provide a service to you and then bill you, similar to a credit extension.

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So, what happens when you don’t pay a bill or repay a debt? The company, creditor or collection agency has legal ways to pursue payment. One of those options is to sue you. If they are successful, the court issues a judgment against you.

What Happens After a Judgment Is Entered Against You?

The court enters a judgment against you if your creditor wins their claim or you fail to show up to court. You should receive a notice of the judgment entry in the mail. The judgment creditor can then use that court judgment to try to collect money from you. Common methods include wage garnishment, property attachments and property liens.

State laws determine how much money and what types of property a judgment creditor can collect from you. These laws vary. So, you need to look to your own state for the rules that apply. A consumer law attorney can help you understand your state’s laws on judgment collections.

What Is a Judgment on Property?

Your property includes both physical items and money. That means judgment creditors can seek debt payment from more than your wages and bank accounts. They may also take back a car you financed or other personal property. Another option is placing a lien on some of your property, such as your home.

What Property Can Be Taken to Settle a Judgment?

Creditors must follow the law when applying a judgment to take, or seize, your property. Some things are exempt—which means they can’t touch those items or properties. Some examples include the home you live in, the furnishings inside it and your clothes. State laws identify these items and set limits based on their value.

Non-exempt property can be taken to help meet a judgment debt. Your creditor can take or leverage these possessions in the following ways:

  • Wage attachments. This is known as wage garnishment. When your employer receives the proper legal notice, they must withhold a percentage of your wages. These payments are sent to the judgment creditor until your debt is paid.
  • The Consumer Credit Protection Act caps these types of garnishments. The limit is 25% of your disposable weekly wages or the amount you earn that’s above 30 times the minimum wage. The lessor of these two amounts applies. Some states set the cap even lower.
  • Nonwage garnishment. If you’re retired, unemployed or self-employed, your bank account may be garnished instead. Here, too, there are exemptions. Veterans payments, social security and disability benefits are not eligible for nonwage garnishment. Some states add even more restrictions to the garnishment of bank funds.
  • Property liens. If you own real estate, your judgment creditor may file a legal claim against it. These liens notify lenders of the creditor’s rights to your property. That way, if you sell your real property, the debt must be paid out of the proceeds. In many states, liens are placed automatically when a judgment is entered.
  • Property levies. Judgments may also allow some of your non-exempt personal property to be taken through a levy. Law enforcement may seize things like valuable collections or jewelry to be sold at auction. Sales proceeds are applied to your debt.

What Can You Do to Avoid a Judgment?

Heading off a lawsuit is the best way to avoid a judgment. To do so, don’t ignore calls and correspondence from your creditor. Reach out to learn if they’ll accept suitable payment arrangements. Educate yourself on smart ways to pay debt collectors, and consider using the services of a debt management agency.

What if the loan company or debt collector has already started the lawsuit? Don’t skip court. Show up and fight. You may win if the statute of limitations has expired.

If you haven’t made a payment on an old debt for many years, you may have a successful legal defense. Most states set the time frame between four to six years. Collectors often still file suit because they win by default if you don’t show up. So, it’s important that you go to court with proof of your last date of payment.

If you successfully defeat or avoid a judgment, don’t stop there. Take some sensible steps to help you get out of and stay out of debt. Adopting these smart financial habits can also help prevent future judgment actions.

How Long Can the Judgment Creditor Pursue Payment?

The answer depends on where you live, since state laws differ. Some states limit collection efforts to five to seven years. Others allow creditors to pursue repayment for more than 20 years. With the right to renew a judgment over and over in many states, it may last indefinitely.

Judgment renewals may be repeated as often as desired or limited to two or three times. This is another state-specific issue. Judgments can also lapse or become dormant. The creditor must then act within a specific time frame to revive it.

What Happens When You Can’t Pay a Judgment Filed Against You?

If you own a limited amount of property, it may all be exempt from judgment collection efforts. Also, you may not work or only work part-time. With the CCPA cap, that may mean you don’t earn enough for garnishment.

This inability to pay your debt is called being judgment proof, collection proof or execution proof. While these circumstances exist, the judgment creditor has no legal way to collect on the debt. It’s not a permanent solution. The creditor may revisit collection efforts periodically for many years.

For a more permanent solution, you may want to consider filing bankruptcy. This process can discharge or eliminate most civil judgments for unpaid debt. Exceptions apply for things like child support, spousal support, student loans and some property liens. Speak with a bankruptcy lawyer to learn whether this will help your situation.

Can You Settle a Judgment?

If you can afford to pay a decent lump sum, you may be able to negotiate a settlement. The judgment creditor may be willing to settle if they fear you will otherwise file bankruptcy. Get the terms and settlement amount you agree upon in writing. Be sure the creditor agrees to file a satisfaction of judgment with the court after they receive your pay off.

Can a Judgment Be Challenged or Reversed?

Challenging and overturning a judgment is difficult, but not always impossible. This is the case if there were errors. Perhaps you weren’t notified of the suit or it was never your debt to begin with. Consult with an attorney to find out whether you have grounds to challenge the decision.

If you want to challenge a judgment, act fast. If you received prior notice of the case, you may have up to six months to reopen it. If you weren’t notified, you likely have up to two years to appeal. By reopening the case, you have the opportunity to fight the claim anew.

Do Credit Reports Still Include Judgments?

For many years, credit reports included judgment information. But that changed in 2017. The National Consumer Assistance Plan is responsible for creating more accurate credit data requirements. These changes resulted in the removal of civil debt judgments from credit reports.

Judgments are still a matter of public record. But the NCAP now requires that there be identifying information on these records for more accuracy. That data includes a social security number or date of birth along with the consumer’s name and address.

Public records cannot include this type of identifying information. It would violate privacy laws. This is the reason these judgments are no longer reported on credit files.

How Do You Find Out if You Have Any Judgments Against You?

You should receive a summons when you’re being sued. So, you can expect a default judgment will follow if you don’t show up in court. You can also expect a notification when a judgment is entered against you.

Mistakes happen, though. You may have missed the notice or moved to a new address. If that happens, you may not learn of the judgment until collection actions start.

What if You Find a Judgment on Your Credit Report?

Take action if you learn that judgments are still being reported by Equifax, Experian or Trans Union. The NCAP eliminated this practice. So if there’s a judgment on your report, this is definitely something that you should dispute. Credit repair services, like Lexington Law, can help you dispute the error and correct your report.

If you’d like a more in-depth look at your credit score, give ExtraCredit, our newest product, a try. It has five killer features that all work together as a solution to your credit troubles. Plus, you’ll be able to see all 28 of your FICO credit scores. 

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Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.

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Debt Relief & Credit: What You Need to Know

January 15, 2020 &• 9 min read by Gerri Detweiler Comments 56 Comments

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There’s no single way to get out of debt that’s best for everyone. Each individual case is as unique as you are.

It’s important to consider your situation when deciding which debt relief plan is the best option for you. To help you weigh those options, we have provided an overview of some of the major options here:

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  • Debt avalanche and debt snowball
  • Debt consolidation
  • Credit counseling
  • Debt management plan (DMP)
  • Debt settlement and debt negotiation
  • Bankruptcy

How Debt Relief Programs Affect Credit

The debt that you carry (your credit utilization rate) makes up roughly one-third of your overall credit score. When you pay off debt, your credit score typically improves. This is especially true with revolving credit lines—such as credit cards—where your balance is approaching or hovering around the maximum limit. You want to keep your utilization rate below 30% to avoid negative effects to your credit score.

However, reducing your debt can also lower your credit score—even when it’s a good thing! For example, paying off a loan and closing that account may reduce your credit age or mix of accounts, which account for about 15% and 10% of your credit score, respectively.

The type of debt relief program you use can also positively or negatively affect your credit score. Debt settlement, for example, utilizes some tactics that generally have a more negative effect than other types of debt relief programs. Keeping in mind your current credit standing, the program itself and your credit needs will help you make the best choice.

Start by signing up for the free credit report card from Credit.com. This handy tool provides a letter grade for each of the five key areas of your credit for a quick snapshot of where you stand. You can also dig deeper into each factor to monitor what’s happening with your credit and find areas for improvement.

→ Sign up for the free Credit Report Card now.

The Main Approaches to Debt Relief

Once you have a clear picture of your credit history, you can choose one of the six main approaches to debt relief to help you get out of debt. These include the snowball/avalanche option, debt consolidation, credit counseling, debt management plans, debt negotiation/debt settlement and bankruptcy. Each option has its own advantages and drawbacks as well as its own impact on your credit score, both short term and long term.


Debt Snowball and Debt Avalanche

  • Immediate Credit Impact: None
  • Long-Term Credit Impact: Reliably Positive

The debt snowball and debt avalanche approaches are simply methods of repaying your debts. The choice between snowball or avalanche often comes down to a matter of personal choice.

The debt snowball is when you pay off your debts one at a time, starting with the ones that have the lowest balance. This eliminates those debts from your credit record quickly.

The debt avalanche is when you pay off your debts one at a time, but you start with those that have the highest balances instead. While it takes longer to clear debt from your credit history, the debt you clear takes a larger chunk out of your overall balance owed.

As long as you stick to the minimum payments needed on all of your other credit accounts while you work to pay down your debt, this method has little immediate impact on your credit report and a reliably positive one long term.

Debt Consolidation

  • Immediate Credit Impact: Small (positive or negative)
  • Long-Term Credit Impact: Minimal

Debt consolidation loans and balance transfer credit cards can help you manage your debt by combining multiple lines of credit under one loan or credit card. While this helps by making one payment out of several, it’s not a strategy that actually gets you out of debt. It’s more like a tool to help you get out of debt faster and easier.

Consolidation loans often offer lower interest rates than the original credit lines themselves, which enables you to pay off your debt faster. In addition, having one lower monthly payment makes it easier to avoid late or missed payments.

Balance transfer credit cards let you transfer debt from other cards for a minimal fee. These cards sometimes require that you pay off the balance transfer balance within a certain timeframe to avoid being charged interest. If you choose a balance transfer card, be sure you choose one with terms favorable to your situation and needs.

This form of debt relief has its own set of pros and cons. While it can improve your credit utilization ratio by paying off balances that are close to the credit limit, simply moving balances from one creditor to another doesn’t do a lot for your immediate scores. Transferring multiple debts to one balance transfer card may make your utilization rate higher, which could drop your score as well.

At the same time, opening a new account will require a hard inquiry, which will slightly negatively impact your credit score. A debt consolidation loan adds a new account to your credit report, which most credit scoring models count as a risk factor that may drop your score in the short term as well. On the other hand, adding a loan or credit card to your credit history could improve your credit mix. You’ll need to keep all these factors in mind when determining whether a debt consolidation loan or balance transfer credit card is right for you.

Credit Counseling

  • Immediate Credit Impact: None expected
  • Long-Term Credit Impact: None expected

A credit counselor is a professional adviser that helps you manage and repay your debt. Counselors may offer free or low-cost consultations and educational materials. They often lead their clients to enroll in other debt relief programs such as a debt management plan, which generally require a fee and can affect your credit (see below for more information). Bes ure you fully understand the potential impact of any debt relief program suggested by a credit counselor before you sign up. They’re here to help, so don’t be afraid to ask your counselor how a new plan could affect your credit.

Credit counseling can also help you avoid accumulating debt in the first place. By consulting a credit counselor about whether or not a line of credit is advisable given your current situation, for example, you can avoid taking on debt that will affect you adversely. Choosing a good credit counselor for your situation is essential for positive results.

Debt Management Plan

  • Immediate Credit Impact: Moderate (positive or negative)
  • Long-Term Credit Impact: Minimal

A Debt Management Plan is typically set up by a credit counselor or counseling agency. You make one monthly payment to that agency, and the agency disburses that payment among your creditors. This debt management program can affect your credit in several ways, mostly positive.

While individual lenders may care that a credit counseling agency is repaying your accounts, FICO does not. Since FICO is the leading data analytics company responsible for calculating consumer credit risk, that means a DMP will not adversely affect your credit score. Of course, delinquent payments and high balances will continue to bring your score down even if you’re working with an agency.

When you agree to a DMP, you are required to close your credit cards. This will likely lower your scores, but how much depends on how the rest of your credit report looks. Factors such as whether or not you have other open credit accounts that you pay on time will determine how much closing these lines of credit will hurt your score.

Regardless, the negative effect is temporary. In the end, the impact of making consistent on-time payments to your remaining credit accounts will raise your credit scores.

Debt Negotiation or Settlement

  • Immediate Credit Impact: Severe damage
  • Long-Term Credit Impact: Slow recovery

Some creditors are willing to allow you to settle your debt. Negotiating with creditors allows you to pay less than the full balance owed and close the account.

Creditors only do this for consumers with several delinquent payments on their credit report. However, creditors generally charge off debts once they hit the mark of being 180 days past due. Since charged-off debts are turned over to collection agencies, it is important to try to settle an account before it gets charged off.

Debt settlement companies negotiate with creditors on your behalf, but their tactics often require you to stop paying your bills entirely, which can have a severe negative impact on your credit score. In general, debt settlement is considered a last resort and many professionals recommend bankruptcy before debt settlement.

Bankruptcy

  • Immediate Credit Impact: Severe damage
  • Long-Term Credit Impact: Slow recovery

Filing for bankruptcy will severely damage your credit score and can stay on your credit report for as long as 10 years from the filing date. However, if you are truly in a place of debt from which all other debt relief programs cannot save you, bankruptcy may be the best option.

Moreover, by working diligently to rebuild your credit after bankruptcy you have a good shot at improving your credit scores. Depending upon which type of bankruptcy you file for—Chapter 7, Chapter 11 or Chapter 13—you will pay back different amounts of your debt and it will take varying timelines before your credit can be restored.

Learning the difference between the three main types of bankruptcy can help you choose the right one. A qualified consumer bankruptcy attorney can help you evaluate your options.

Getting Debt Free

Whichever method of debt relief you choose, the ultimate goal is always to pay off your debt. That way, you can save and invest for your future goals. For some, taking a hit to credit temporarily is worth it if it means being able to finally get their balances to zero.

By monitoring your credit with tools like our free Credit Report Card and keeping your financial situation in perspective, complete debt relief is not only possible but within reach.

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Negotiating a Collection Agency Payment Plan: What You Need to Know

March 16, 2020 &• 4 min read by Deanna Templeton Comments 3 Comments

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Having a debt in collections can be nerve-wracking, especially when you’re trying to do the right thing and make every effort to pay your debt. It can be even more stressful when the debt collector refuses to work with you. Learn what you need to know about collection agency payment plans below.

Can a Debt Collector Refuse a Payment Plan?

It’s important to know that collection agencies aren’t legally obligated to accept or agree to payment plans. Debt collectors don’t have to work with you or agree to any payment schedules based on what you’re reasonably able to afford. Their goal is to collect as much of the debt as they can as quickly as they can.

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  • I need that peace of mind in my life. What else do you get with ExtraCredit?
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Collection agencies don’t often work out extended or long-term payment plans. They are collectors, not lenders. They aren’t interested in slowly collecting monthly payments.

Is My Debt Past the Statute of Limitations?

The statute of limitations for creditors/collectors to file a lawsuit is based on the date of the last payment on the debt. The statute of limitations, which varies by state, restarts when you make any payment to a creditor. If you have attempted to make small monthly payments because you assumed the collector would ease up if they saw any money coming in, then you might simply have extended the collector’s ability to file a lawsuit on the debt.

Best Step: Pay Off a Debt in Collections

You can take some actions to validate the debt and ensure it’s accurate and truly owed. Make sure you understand your rights and stand up for them. But once you know you owe the money, the best step is often to pay off the debt. Even if you can’t pay off all of your debt, try to pay as much as you can.

What About Collection Agency Payment Plans?

If you can’t afford to pay the debt with cash on hand and can’t manage to restructure debt or loans to cover the balance, then you may need to make arrangements with the collection agency. You typically have two options: a settlement or a payment arrangement.

What Is a Settlement?

A settlement occurs when you pay part of the total owed, and the collector agrees to consider the account paid in full. Debt collectors are more likely to negotiate a settlement, often at much lower amounts, if they think there’s a chance that they may not be able to collect at all. You may be able to settle a debt for 50% or less of the total balance, for example.

In many cases, collection companies purchase these debts from creditors for pennies on the dollar. Obviously, they want to collect as much as possible. But as long as they collect more than they paid for the debt, it’s still a profit for them.

To negotiate a settlement, you’ll need some cash immediately to pay the agreed-upon amount. You may also owe taxes on the amount that is forgiven. The IRS considers forgiven debt as income for that year.

Do Collection Agencies Do Payment Plans?

Some collection agencies do consider payment plans. However, they are not legally obligated to agree to a payment plan. And in some cases, even if they agree to a payment plan, they may change the agreement later or file a lawsuit for the remaining amount owed. When entering into a payment agreement with a collection agency, make sure you get everything signed and in writing.

What Happens If You Don’t Pay a Collection Agency?

If you don’t pay a collection agency and you do owe the money, the collection agency may eventually file a lawsuit against you. If the agency gets a judgment in that lawsuit, it can seek repayment of the debt via legal methods such as wage garnishment or freezing your bank accounts.

What to Do if a Debt Collector Won’t Accept a Payment Plan

If you can’t pay the original creditor for any reason and the debt collector won’t work with you on a payment plan, you may need to find another way to make good on this debt. Luckily, you might have some options for other types of debt relief.

Consider a balance transfer card or consolidation loan to pay off the debt and make it “new” again. While you’ll still owe the money, you’ll owe it to a new creditor that has agreed to an account setup that lets you make monthly payments. It keeps you in debt a little longer, but if you make regular agreed-upon payments, it could raise your credit score in the long-term to make up for any hit you took on the collection

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Source: credit.com

This Gift Really Will Last a Lifetime

A woman opens a magical holiday gift
Photo by Subbotina Anna / Shutterstock.com

Want to give the perfect gift? Give something that will last a lifetime: the gift of understanding money.

There are few things more important than financial knowledge, because it’s something that can alter the path of your life. It can make the difference between getting rich and just getting by.

Hyperbole? Not at all. For example, if you save $500 a month over your 40-year working life and earn 5% on it, you’ll end up with a nice nest egg: about $725,000. But if you can double that return to 10%, you’ll retire with about $2.7 million.

Would an extra $2 million change your retirement?

Or consider credit. As I write this, a person with a credit score in the highest range can borrow money for a 30-year mortgage at 2.376%, on average. A person with a score in the lowest range would pay 3.965%. Not much of a difference, right?

Well, if you borrow $300,000, getting the lower rate would mean paying about $94,000 less over the life of the loan. That’s enough to put your kids through college, start your own business or retire earlier. And all you had to do was have good credit.

These are simple examples of how learning leads to earning.

Skills like managing debt, building credit, developing a spending plan, buying a house, investing for retirement, planning your estate, financing college and reducing your tax bill will do more than just make you, or your gift recipient, richer.

They’ll also lead to making solid decisions and realizing goals, which reduces stress and enhances confidence.

Feeling in control means feeling better about life.

In short, financial knowledge will change your life — physically, financially and emotionally.

All of which begs the question: If knowledge of personal finance is critical, why do so few of us take the time to learn it? I think there are three reasons.

Why we don’t learn financial fundamentals

First, traditionally, personal finance hasn’t been taught in schools, so few develop a foundation. Thanks to organizations like the JumpStart Coalition and the National Endowment for Financial Education, this is starting to change, but that does little good for those of us long past school age.

Second, too many of us don’t understand the impact that small amounts of money can make over long periods of time, so we don’t bother to learn the fundamentals.

Finally, there are those who simply think studying money is like studying medicine: too complicated to easily grasp. When the subject comes up, their eyes glaze over. They develop a mental block that lasts a lifetime.

Sound familiar?

How to master money

The ultimate solution for personal finance education is for everyone to take “Personal Finance 101” in high school, then perhaps “201” in college. But until that’s an option, it’s up to you to master money on your own and help those around you do the same.

One way to get educated is to do what you’re doing now and regularly check out sites like Money Talks News. (Sign up here for our FREE newsletter for great info daily!) Another, more direct, route is to take a course specifically designed to teach you everything you need to know.

That’s why I created one. It’s called Money Made Simple.

Money Made Simple is an online course — no waiting for books in the mail! — with lessons on 13 key financial topics featuring short, easy-to-watch videos, as well as jargon-free articles and worksheets. The chapters cover everything you need to know about:

  • Setting and achieving goals
  • Organizing your finances
  • Budgeting
  • Living more while spending less
  • Banking
  • Destroying debts
  • Credit
  • Buying and owning cars
  • Income taxes
  • Real estate
  • Estate planning

Money Made Simple isn’t the only “personal finance 101” course out there, but I think it’s one of the best. And it’s the perfect gift, since, for a limited time, it’s also one of the least expensive courses out there.

You can now purchase it for yourself or as a gift for only $9.99: That’s 90% off the usual $99 price! (Note: This is a limited-time offer that can change anytime.) The course is also guaranteed: If you’re not happy, let us know within 30 days, and we’ll refund you — no questions asked.

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But whatever you do, do yourself and your loved ones a favor: Learn financial fundamentals. Turn your doubt into confidence. Win your retirement. Realize your goals. Know where you’ve been, where you’re going and how to get there.

In short, take control of your money. I absolutely, positively guarantee you’ll be glad you did. And if you know someone who could use some knowledge — and don’t we all? — here’s the gift that will keep giving for a lifetime.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

What to Know About Medical Bills Sent to Collections

May 20, 2020 &• 8 min read by Gerri Detweiler Comments 328 Comments

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If you think you’re immune to damage from a collection account on your credit report because you pay your bills on time, think again. Medical bills that you don’t know about could be hurting your credit—and the odds are not in your favor.

In fact, the Consumer Financial Protection Bureau reports that around 31.6% of adults in the United States have collections accounts on their credit reports. That’s almost one in three Americans! Medical bills account for over half of all collections with an identifiable creditor. Chances are good that you too have a medical bill in collections.  

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  • I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
  • Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
  • I need that peace of mind in my life. What else do you get with ExtraCredit?
  • It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
  • It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.
  • …we live in Oklahoma.

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Many times, medical bills hit collections because you didn’t even realize you owed anything. Here are four common medical bill myths that can cost you dearly and the truth you need to manage your credit and medical expenses more proactively.

Your Insurance Won’t Cover Everything

It’s a consumer’s obligation to know what they’re responsible for paying. A lot of people are under the impression that their insurance will cover all medical costs, so they don’t owe anything. Due to how a visit or procedure is billed with insurance, this isn’t always the case. It’s always best to be prepared for the worst to prevent anything from being sent to collections.

Insurance companies usually send out an Explanation of Benefits (EOB) before you receive a bill from the provider. Be sure to go through these important documents carefully to ensure you understand what your estimated out-of-pocket costs are. If you have questions about why something wasn’t covered, reach out to the provider and your insurance company.

Your Medical Bills Can Be Sent to Collections, Even If You’re Paying

Making payments on a medical bill doesn’t necessarily keep it out of collections. If you’re making small payments—or if you make your payment a few days late when you’re under a payment arrangement—you might discover the provider has turned the bill over to collections.

Protections under the Affordable Care Act give patients at nonprofit hospitals time to apply for financial assistance before any “extraordinary collection measures” are taken. But for the most part, any unpaid balance is fair game.

To prevent medical bills from going to collections while you’re making payments, set up a payment arrangement with the provider and get it in writing. If you make an arrangement to pay off a debt in six months and the provider agrees to it, they shouldn’t send you to collections as long as you make payments as agreed.

Medical Collection Accounts Are Treated Differently

This one is good news for you. Medical bills are treated differently than other bills sent to collections—at least as far as your credit report is concerned.

  • Medical Debts Are Given Less Weight: Newer scoring models such as FICO 9 and VantageScore 4.0 weight medical collections less than other types of collections so that they don’t impact a score as much. However, not all creditors use these new scoring models, so medical collections could still hurt your ability to get credit in the future.
  • Medical Debts Are Given a Grace Period: The three credit bureaus now wait 180 days before listing medical debt on your credit reports. This grace period gives you time to figure out payment options before the debt affects your credit scores.
  • Medical Debts Are Removed Once Paid: While most collections remain on your credit report for seven years, medical debt is removed once it has been paid or is being paid by insurance. Unpaid medical debt in collections will still remain on your credit report for seven years from the original delinquency date.

Tips for Dealing with Medical Bills

Any time you are contacted by a collection agency, you have the right to written confirmation of the debt as well as the right to dispute it. That’s your right under the federal Fair Debt Collection Practices Act. If you know your rights, you’re in a better position to stand up for them.

Under the federal Fair Credit Reporting Act, you also have the right to dispute inaccurate information on your credit reports. But you have to know how to properly dispute an item on your credit report to get results.

Some best practices to consider when dealing with medical debt include:

  • Never assume that you won’t owe. Ask your provider for details about costs, and follow up with your insurance company and provider even if you don’t get a bill.
  • Always ask for proof of what you owe. If a medical provider or its billing entity sends you a statement, it’s probably not going to contain a detailed breakdown of all the charges. You have a right to receive that information, though. Request it in writing, and then review all the charges to ensure that they reflect the services you received.
  • Compare bills to insurance EOBs. Your insurance explanation of benefits breaks down each charge. Typically, an EOB should tell you how much the provider charged, how much the insurance disallowed, how much the insurance paid and how much you owe. Make sure what you’re billed for doesn’t exceed what the insurance said you owe.
  • Make payment arrangements as soon as possible. It’s never too early to talk to your provider’s billing department. Even if they aren’t sure exactly how much you owe, start asking about payment arrangements. Many providers have processes in place to create payment schedules or discount portions of your bill if you pay in advance.
  • Ask to make monthly payments on medical bills. You may be able to make monthly payments, but you will need documented proof that the provider or collector has agreed to this. That way, if they report a negative item on your credit report, you can dispute it showing they agreed to the payments you’re making.

Dealing with Medical Bills in Emergency Times

The only certainties in life are death and taxes—and the COVID-19 pandemic has shown us that not even taxes are certain. During emergency times, rules and regulations around medical bills might change. Government interventions and hospital policies right now are making it easier for many people to seek much-needed health care during this time if they have COVID-19.

At a time when your personal finances might also be strained by loss of income or other factors, facing medical bills might seem daunting. But even during a crisis, you shouldn’t ignore this aspect of your health care. Instead, discuss options as early as possible with your provider, and let them know if you don’t think you’ll be able to pay. If you speak up proactively, medical providers can act early to help you access any assistance that might be available.

Any time you’re facing financial pressure because of medical bills, you might consider a personal loan. Personal loans let you spread out a large expense over time, and they might be a good option if you can’t get a medical collector to agree to a payment plan.

Medical Debt and Your Credit Score

If you’re concerned about how your medical debt could be impacting your credit, you can typically check your three credit reports for free once a year, but currently under the accommodations for COVID-19, you can check weekly until the end of April 2021.

If you’d like to monitor your credit more regularly, Credit.com’s free Credit Report Card provides you with an easy-to-understand breakdown of the information in your credit report using letter grades. It also includes a free credit score that’s updated every 14 days.

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Source: credit.com

How Much Does a Charge Off Affect Your Credit Score?

September 30, 2020 &• 4 min read by Gerri Detweiler Comments 1 Comment

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Because 35% of your credit score relates to paying your debts in a timely manner, becoming so late on payments that the account is charged off can have a significant negative impact on your score. It also looks bad to future creditors because it indicates you might not pay all your bills. Find out more about charge offs and how they affect your credit score.

What Is a Charge Off?

A charge off occurs when a business writes debt off their books. It’s an accounting procedure that occurs for a specific reason.

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When you owe a business money, the company counts that debt as an asset. The older the asset becomes, the less valuable it is because older debt is less likely to be collected. Eventually, the company has to take the asset off its books because the IRS doesn’t allow it to count this asset forever. That’s when a charge off occurs.

A charge off doesn’t mean that you don’t owe the debt. It only means that the company is no longer listing it as an open asset.

How Do Charge Offs Impact Your Credit History?

Companies report charge offs to the credit bureaus. When that happens, the applicable account is listed as charged off. Because you have to miss a large number of payments to have an account charged off, your credit score is likely already lowered due to a poor payment history. The charge off may lower it a bit more.

In addition to bringing your credit score down, a charge off looks bad to any future lenders that review your credit history. Lenders that might be willing to offer funds even though you have a lower credit score might balk if they see the charge off. That’s because a charge off demonstrates that you did not make any effort to pay the debt for some time.

How Long Does a Charge Off Stay on Your Credit Report?

Charge offs can stay on your credit report for up to seven years.

The older an item is on your credit report, the less impact it has on your score. That means you can raise your score even after a charge off if you manage finances and credit responsibly going forward. However, an unpaid charge off still looks bad to potential creditors and can limit your options when it comes to loans such as mortgages.

Can Creditors Attempt to Collect Charged Off Debt?

Charge offs don’t mean your debt was forgiven. You still owe the debt, and the company can still attempt to collect the debt.

In many cases, the original lender considers charged off debt to be “bad debt.” That means the lender doesn’t believe it has a good chance of collecting the debt and it’s not worth continuing to use internal resources to do so. Common actions taken by lenders at this point include selling the debt to a collections agency or contracting with a collection agency to collect the debt for them. Creditors can also take legal actions to collect these debts, including judgments.

Should I Pay Charged Off Amounts?

Making arrangements to pay a charged off account removes you from the collections process. That means you don’t have to worry about collectors or legal collection activity in the future. But it might also provide a positive impact for your credit report.

In some, admittedly rare, cases, you may be able to negotiate with a creditor to remove the charge off from your credit report if you pay the balance owed. Even if that’s not the case, though, it could be worth making payment arrangements.

Once you pay a charged off account, the creditor changes the item on your credit report so it shows up as a charge off that was paid. It’s still a negative item as far as timely payments go, but it demonstrates that you do attempt to pay all your debts. That can make you appear to be a less risky borrower in the eyes of some lenders.

Should I Pay a Charge Off in Full or Settle?

In some cases, creditors will agree to accept less than the amount you current owe in payment for a charged off balance. Many times, the balance is inflated by finance fees, late charges, and other expenses, leaving the creditor room to accept a lower amount. Plus, if it comes down to partial payment or no payment, creditors may be willing to accept what you can pay.

However, this can come with one disadvantage. The amount the creditor agrees not to collect from you is considered forgiven debt. Many forgiven or canceled debts are considered income by the IRS, which means you may owe taxes on them come tax time. Consult with an attorney or tax adviser before agreeing to partial debt forgiveness.

Keeping an Eye on Your Credit Report and Score

Whether you’re dealing with a current charge off or you’re working to continue raising your credit score years after a charge off, knowledge is important. When you know what’s going on with your credit history, you can work smarter to improve your score. Sign up for ExtraCredit from Credit.com to get 28 FICO scores and a detailed look at how you’re doing across the five factors that feed your score.

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Source: credit.com

Can a Debt Collector Collect After 10 Years?

December 15, 2020 &• 6 min read by Gerri Detweiler Comments 108 Comments

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Whether you have medical debt, credit card debt or unpaid student loans, getting calls or letters from debt collection companies can be frustrating. But it’s especially frustrating if your debt is several years old. If you have debt on your credit reports or are getting calls from a collection agency, you might wonder how long a debtor can try to collect these debts—and how long it can affect your credit score. Can a debt collector collect after 10 years? 15 years? 20 years?

The simple answer is: It depends. Here’s an overview of the timelines for debt collection and what to do if you’re contacted about an old debt.

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Can a Debt Collector Collect After 10 Years?

In most cases, no. However, it depends on when you made the last payment. The statute of limitations for most debts starts when you go into default. If a debt is 10 years old but you were making payments under an agreement with the lender until 3 years ago, the debt is likely still within the statute of limitations and can be pursued by a debt collector.

How Long Can a Debt Collector Pursue an Old Debt?

Each state has a law referred to as a statute of limitations that spells out the time period during which a creditor or collector may sue borrowers to collect debts. In most states, they run between four and six years after the last payment was made on the debt. This means that even a debt that is older than that may still be able to be collected on if you’ve made a payment sometime in the last four to six years.

In some states, a collection agency cannot try to collect at all once a debt is past the statute of limitations. In other states, they cannot sue you, but they may still try to collect the debt, which can include calls and written requests.

Some debt buyers—companies that buy and try to collect very old debts—still go after borrowers and even take them to court. This is because they know that most borrowers who are sued for old debts won’t show up in court, and the judge will issue a default judgment.

Judgments may give collectors additional collection powers, such as access to the money a debtor has in his or her bank account or the ability to garnish wages to collect the judgment. To prevent this, all a borrower has to do is appear in court at the appointed time and explain that they have a time-barred debt. If that is correct, the lawsuit will be dismissed.

It’s important to note that the statute of limitations is not the same as how long the debt appears on your credit report. The timeline for debt to stay on your credit report is 7.5 years, but again, this depends on your activity with the debt. If the debt was sold by the original lender at 6 years, and you made a payment with the new debt buyer, it could restart the clock.

Can a Bill Collector Collect After Seven Years?

Most debts have a statute of limitations that runs between four to six years. However, it’s still possible for a debt to be within the statute of limitations at seven years, depending on the debt, when the last payment was made and where you live. In general, if you owe the debt, the collector can attempt to contact you to get payment but may not be able to pursue a legal case against you.

Can I Be Chased for Debt After 10 Years?

In most cases, the statute of limitations for a debt will have passed after 10 years. This means that a debt collector may still attempt to pursue it, but they can’t typically take legal action against you. If you notify them that the debt is past the statute of limitations and request that they not contact you again, they likely won’t.

What to Do If You Are Contacted About an Old Debt

If you are contacted about an old debt, it doesn’t mean you should automatically pay it. Remember, agreeing to terms and providing a payment can restart the clock on an old debt, and it’s important to be aware of your rights as a consumer. Instead, take the steps below to see if you need to pay the debt and what your options are.

1. Ask the creditor to send you written notice of the debt.

This is required under the federal Fair Debt Collection Practices Act even if you don’t ask, but asking is a good first step. Scammers will say they aren’t allowed to send a notice or will try to email instead, which helps you weed out the illegitimate callers. By keeping the initial phone conversation to a minimum, you may avoid saying or doing something that could hurt you later on with legitimate collectors.

2. Validate the debt.

Once you receive written notice of the debt, you have 30 days to request validation of the debt. Mail your request to the creditor with a certified letter and ask them to validate the debt. You don’t have to give a reason for your request. You can simply say, “I dispute this debt. Please validate it.”

3. Confirm that the debt is within the statute of limitations.

While you’re waiting for the response from the bill collector, contact a consumer law attorney or your state attorney general’s office to confirm the statute of limitations for the debt. Consumer law attorneys who regularly represent consumers in cases against debt collectors often provide a free consultation.

4. Decide on an action.

Once you receive validation of the debt and confirm that it’s outside the statute of limitations, you have three main options.

  • Pay it. If you know you owe the debt and you now can to pay it, you can do so. Make sure you keep written records of the amount due and your payment. Sometimes these old debts get sold to more than one collection agency, and if you get another call about this debt, you want to have proof you have paid it.
  • Settle it. If you know you owe the debt and want to try to make good on it, but you can’t pay the full amount—or if the debt has been inflated by fees— you may want to negotiate to settle it for less than the full amount due. This is tricky, though, because once you start negotiating, you could reset the statute of limitations and end up being sued for the entire debt. If you want to go this route, your best bet is to talk with an attorney first.
  • Send the collector a letter telling them to leave you alone. You have the right to ask a debt collector to stop contacting you. Once you do that, they are only allowed to contact you to tell you if they are taking legal action against you. If you know the debt is outside the statute of limitations, state that in your letter and tell them not to contact you again.

How Long Do Collections Affect My Credit?

According to the Fair Credit Reporting Act, the length of time that collection accounts may remain on credit reports is seven years and 180 days from the date the consumer first falls behind on the original account. Even if one of these bills remains unpaid, it cannot be reported after that 7.5 years is up.

The date an account was placed for collections doesn’t matter, just the date of the first missed payment. If an account remains on your credit report past this time, you may be able to take steps to have it removed.

Call: 1.844.346.3296or learn more

The only scenario where an old collection account can affect your credit is if you are sued and the collector gets a judgment against you. That new judgment would have its own seven-year reporting period. You can get your free annual credit reports to see if you’re facing a judgment. You can also see the impact that judgment is having on your credit scores for free on Credit.com.