People are often very frightened or intimidated by Debt Collection Agencies, often because they are not sure about the powers these companies have. It is fair to say that some of the less scrupulous debt collection agencies lead people to believe that they have greater powers than they actually do, which does not help the situation.
Debt Collection Agencies are organisations that are used by other companies to collect unpaid debts. Some larger companies actually have their own debt collection departments as part of their businesses, but most will farm such work out to specialist collection agencies. Using collection agents for this kind of work is usually done on a basis of either a fixed fee or a percentage of the outstanding debt. Some of these debt collectors will specialise in actually buying the unpaid debts outright. This means that if you owe money to a company and they sell your debt to a collection agency, you then legally owe that money to the collection agency instead.
When companies sell debts to debt collection agents they only get a small proportion of the amount owed. Whatever the agency can get above what they pay is their profit, and how they make their money. The company selling such debts will then write off the difference between what you owed and what they get from the agency. The fact that the only source of income for some collection agencies is what they can collect on debts leads to them being highly motivated to get that money, which has been known to result in some unfair practices.
Debt collectors cannot enter your home or take away your possessions. Essentially all a debt collector can do is ask you for the money. The problem is that they can do this over and over and over again, and some of the more dodgy ones have been known to sound threatening or intimidating. A good debt collector will actually try to establish a positive relationship with the debtor in order to begin discussing how the debt might be repaid. Such an agreement can even involve agreeing to write off a proportion of the debt.
Debt collection agents should not contact you at inconvenient times such as very early in the morning or late at night. They can call you at work, but must stop if you tell them that your employer does not permit you to take calls while at work. No debt collector is allowed to threaten you with violence or harm in any way, or to use obscene language. Neither are they allowed to make false claims about the amount you owe, lie about their official status or legal rights, threaten to take your property or have you arrested or have your wages garnished (known as attachment of earnings in UK).
In the US the Fair Debt Collection Practices Act regulates how debt collection agencies can operate. Many states also have their own laws relating to debt collection, and in general if the state law is considered to be more restrictive than the FDCPA regulations, then the state law is what counts.
In the UK, debt collection agencies are covered by the Office of Fair Trading, who set out guidelines on how they should operate, and list examples of unfair practices, such as harassment or pretending they have more powers and rights than they do.
Read reviews and recommendations for reputable debt management companies in the UK and US.
Saturday, 3 October 2009
Friday, 2 October 2009
Erasing Bad Credit Reports - Find Out The Truth About Promises To Erase Poor Credit History
I am forever surprised at the volume of sites and adverts on the internet claiming to wipe out bad credit reports. These appeal to the same desire in all of us as those adverts promising to give us the secret of getting rich quickly without having to work at it. Sadly, both such claims are scams and the only people likely to get rich are those taking money from you for something which cannot be done.
The only thing approaching legitimate credit repair are those handful of companies that will advise you on the things that anyone can do themselves to help improve their credit rating. If you have a bad credit rating because you have unpaid debts, or something similar, there is no-one on earth who has the power to remove that history. Steer well clear of anyone who claims to be able to do that.
There are things all of us can do to improve our credit rating, and you do not need to pay anyone else to do these for you. The first step is to check your own credit report for yourself. In the US, everyone is entitled to one free report per year, and in the UK, you can check it by taking a free trial with one of the credit agencies. The reason for doing this is so that you can examine your report for any errors. This can include things which are just plain wrong or things which were true, but should have by now been removed from your report. You need to challenge any such findings by writing to the credit agency concerned.
You must accept the fact that you cannot just erase a bad credit history, but there are things you can do to gradually improve your credit score. As well as the most important starting point of actually checking it for yourself, the other crucial thing to do is also the most obvious; make sure you keep up with any repayments you have on any loans, mortgage, etc. If you default or fall behind, you are never going to get a good credit score. You can start to build your rating back up by using credit cards sensibly. This is actually better than avoiding credit cards completely (and a lot better than using them badly!).
Cut up and cancel any cards you do not use (not using them is not enough, you must cancel them or the credit limit will remain on your credit rating). Use a card and make sure you set up a direct debt to pay off the balance in full every month. Don’t apply for lots of cards or other credit as every application affects your rating, so only apply for things for which are likely to be approved.
Check your credit score rating free of charge now.
The only thing approaching legitimate credit repair are those handful of companies that will advise you on the things that anyone can do themselves to help improve their credit rating. If you have a bad credit rating because you have unpaid debts, or something similar, there is no-one on earth who has the power to remove that history. Steer well clear of anyone who claims to be able to do that.
There are things all of us can do to improve our credit rating, and you do not need to pay anyone else to do these for you. The first step is to check your own credit report for yourself. In the US, everyone is entitled to one free report per year, and in the UK, you can check it by taking a free trial with one of the credit agencies. The reason for doing this is so that you can examine your report for any errors. This can include things which are just plain wrong or things which were true, but should have by now been removed from your report. You need to challenge any such findings by writing to the credit agency concerned.
You must accept the fact that you cannot just erase a bad credit history, but there are things you can do to gradually improve your credit score. As well as the most important starting point of actually checking it for yourself, the other crucial thing to do is also the most obvious; make sure you keep up with any repayments you have on any loans, mortgage, etc. If you default or fall behind, you are never going to get a good credit score. You can start to build your rating back up by using credit cards sensibly. This is actually better than avoiding credit cards completely (and a lot better than using them badly!).
Cut up and cancel any cards you do not use (not using them is not enough, you must cancel them or the credit limit will remain on your credit rating). Use a card and make sure you set up a direct debt to pay off the balance in full every month. Don’t apply for lots of cards or other credit as every application affects your rating, so only apply for things for which are likely to be approved.
Check your credit score rating free of charge now.
Thursday, 1 October 2009
Where Can I Get A Loan Quick With Bad Credit - Borrowing Money When Your Credit Is Bad
The first thing I would advise anyone who wants a loan quickly is to make sure you are aware of the alternatives to borrowing money and think about whether getting a quick loan really is the best solution for your problem. It may be that your circumstances are such that a fast loan is in fact the thing that will best meet your needs, but many people experiencing debt problems turn to quick loans when there are other options that would be more beneficial in the long term.
I would first like to consider the practical difficulties in getting a loan when your credit rating is not so good. You will see lots of lenders marketing loans that say you can get them even if you have bad credit. Many of these, or similar adverts, may also say that loans are available to home owners. Chances are that the loans being offered here are secured loans.
Secured loans, or homeowner loans, are for money which is secured against your house. This is why you can only get them if you have your own house. You will still be eligible for such a loan if you have money left to pay on your mortgage, but not if you are renting. The main thing to remember about secured loans is that if you don’t keep up the repayments, the lender can have your house sold to get their money back. With such serious potential consequences, you should think very carefully before entering into an arrangement for a secured loan.
Anyone with bad credit is not a good bet for a lender, but if they are prepared to secure the loan against their house, they suddenly become a much safer option. This is why it is much easier to get a secured loan than an unsecured one if your credit rating is poor. So that is one option open to you, but I would advise caution before going down this route. You need to be very sure that this really is your only option, and even more certain that you can keep up with repayments.
Another alternative to a loan is of course a credit card, provided that what you want the money for is to purchase something (never use credit cards to get cash). The reason you should consider this option is that usually it is easier to get approval for a credit card application than for a personal loan application. Using credit cards responsibly can also be a good way to gradually build up your credit rating again.
In general, a poor credit rating will result in you paying more to borrow money than someone with good credit. This is because you are a higher risk to the lender (ie more likely to default on payments), so they need to charge you more. Loans designed for people with bad credit will therefore be at very high interest rates. The other thing you should always do if you know your credit rating is bad is to check your credit rating for yourself, to ensure there are no mistakes on it. You can do this free online.
The bigger question of course, is whether getting a loan is really the best option for you at all. If the loan is to help you with debt problems, then you may be better off finding out how to negotiate with your creditors instead. Detailed help with this is available free online. Borrowing to deal with debt can often just make matters worse because it just adds to the amount you owe.
Wednesday, 30 September 2009
Settlement Letters To Creditors - Advice on Writing To Your Creditors To Settle Debts
When you are in debt, knowing how to deal with your creditors properly can make the difference between being able to find your way out of debt and sinking deeper into it. It really is a vital skill and something that is far too frequently overlooked. Many people with money problems turn to consolidation loans or debt management plans, but these are rarely a better solution than negotiating with your creditors. Unlike the other two, negotiating with creditors costs you nothing.
There is a well established system for dealing with all types of debt problems, no matter how serious. Go to any unbiased debt counsellor who has nothing to gain personally from advising you, and they will in most cases guide you through a process of negotiation with your creditors to reach an agreement for settling your debts on terms you can afford. Any other solution will almost certainly involve borrowing more money (consolidation loans) or spending money on fees for someone else’s help (debt management plans, IVAs, etc).
The tried and tested system for dealing with your debts properly is to communicate honestly with your creditors to explain your situation, put your debts in priority order, work out your exact financial situation and then make offers to your creditors to agree repayment terms. So the first step is to write to all your creditors to tell them why you are in the predicament you are in and why you are not in a position to pay them back on the terms you originally agreed. Being upfront like this is crucial. Whatever your relationship with creditors has been up to this point, now is the time for you to take the lead in being honest and professional in all your dealings with your them.
In your letter, tell each of your creditors that you are seeking help to address your situation and that you will be writing to them again with offers of payment and a personal financial statement. Ask each creditor to confirm exactly how much you owe and get them to list any penalties or arrears that have also been applied. It is sensible to also ask them whether any insurance policy is in place with regard to the debt.
When you get your replies back from creditors, make sure you have an organised system for keeping track of all correspondence. The paperwork could become quite substantial over a period of time, and you need to keep absolutely everything and know where to find it quickly and easily. Check the letters to receive back and see if there are any penalty charges or extra interest listed. If there are, it is worth contacting the creditor to see if they will at least waive these extra charges and stop accruing any further ones while you try to reach a settlement. You may be surprised how often this works, and there is nothing to be lost by trying.
The next stages in negotiating your settlement involves separating your debts into priority creditors and secondary creditors, creating a financial statement, then writing to your creditors again with offers of settlement. It is a process that is proven to work, and all that is required is some guidance on the process.
Read advice on how to negotiate debt.
There is a well established system for dealing with all types of debt problems, no matter how serious. Go to any unbiased debt counsellor who has nothing to gain personally from advising you, and they will in most cases guide you through a process of negotiation with your creditors to reach an agreement for settling your debts on terms you can afford. Any other solution will almost certainly involve borrowing more money (consolidation loans) or spending money on fees for someone else’s help (debt management plans, IVAs, etc).
The tried and tested system for dealing with your debts properly is to communicate honestly with your creditors to explain your situation, put your debts in priority order, work out your exact financial situation and then make offers to your creditors to agree repayment terms. So the first step is to write to all your creditors to tell them why you are in the predicament you are in and why you are not in a position to pay them back on the terms you originally agreed. Being upfront like this is crucial. Whatever your relationship with creditors has been up to this point, now is the time for you to take the lead in being honest and professional in all your dealings with your them.
In your letter, tell each of your creditors that you are seeking help to address your situation and that you will be writing to them again with offers of payment and a personal financial statement. Ask each creditor to confirm exactly how much you owe and get them to list any penalties or arrears that have also been applied. It is sensible to also ask them whether any insurance policy is in place with regard to the debt.
When you get your replies back from creditors, make sure you have an organised system for keeping track of all correspondence. The paperwork could become quite substantial over a period of time, and you need to keep absolutely everything and know where to find it quickly and easily. Check the letters to receive back and see if there are any penalty charges or extra interest listed. If there are, it is worth contacting the creditor to see if they will at least waive these extra charges and stop accruing any further ones while you try to reach a settlement. You may be surprised how often this works, and there is nothing to be lost by trying.
The next stages in negotiating your settlement involves separating your debts into priority creditors and secondary creditors, creating a financial statement, then writing to your creditors again with offers of settlement. It is a process that is proven to work, and all that is required is some guidance on the process.
Read advice on how to negotiate debt.
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