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Dealing with Debt Collectors

credit cardsTips and tricks to dispute the accuracy of the items of the credit report with the debt collecting agencies.

You must be aware of the fact that your credit score may drop with erroneous entries on the credit report. You can dispute with the creditors or debt collectors if you find any inaccurate negative information on the credit report. Well, you need to know that inaccurate and positive information on your credit report can’t be removed from it. So, if you’ve erroneous entries on your credit report, you can manage to dispute the erroneous items with the debt collectors directly. If you’re unaware of the tricks to dispute erroneous entries on the credit report then you need to correspond with the debt collector to remove the incorrect entries.

Here are some of the important points that you need to consider when you plan to dispute the inaccurate information from the credit report:

1. Know your rights: Make sure you’re aware of your rights to remove the erroneous entries from your credit report with the debt collectors who reported the information. So, you need to send a dispute letter to the company that provided the information to the consumer reporting agency.

2. Debt collectors job to investigate: The debt collectors report the agencies in regards to credit information immediately. Make sure the time frame of response is same when you send a dispute letter to a consumer reporting agency. In most of the cases, the company has 30 days for investigation and the this period may get extended up to 45 days if you provide additional information. Make sure you get information in regards to the credit information within five business days of completion.

3. The debt collectors may not respond to your letter: Well, the debt collectors may not respond to your letter if you contact the credit reporting agencies to dispute erroneous information on the credit report. If the debt collectors have already responded to the dispute, then it may not respond to your letters any more unless you provide more information.

4. Liability of the debt collectors: According to the Fair Credit Reporting Act, if the debt collector provides information to the CRA, he has to follow certain liabilities.
• Finds out more about dispute reported information.

• Provides accurate and complete information if the reported information is incorrect.

• Informs the credit reporting agency if the consumer disputes information.

• Checks when the accounts are “closed by the consumers”

• Sends the credit report agency with the required details like the month and years of the delinquent accounts given to the collection agency or charged off.

• Needs to complete the investigation of a consumer dispute within 30 to 45 days time span, so that credit report agency can manage to complete the scrutiny.

Therefore, you’re required to keep the above mentioned points in mind when your plan to dispute the accuracy of the items on the credit report with the debt collectors.

***This article was contributed by Anjelica Cullin.

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Can credit card debt management help you to save dollars?

People in this part of the world are used to using credit cards rather than cash for their day-to-day expenses. The proportion of credit use is far more than their retirement savings. Credit cards have given them immense portability and convenience to make frequent purchases. However, this has given rise to several financial diseases which is affecting the fragile US economy. One of the major setbacks is the accumulation of credit card debt. This makes it imperative for the people to know the ways of credit card debt management to avoid getting into a financially sticky situation.

The ways of credit card management

Here are few methods of reduce credit card debt as well as save dollars:

  1. Transfer your credit card balances – This means transferring all your multiple credit card balances into a zero interest credit card. This may be for a year or so as offered by the credit card company. This creates a great opportunity to clear out all your outstanding bills within the promotional period. In this process, you’ll be paying for the principal balance and not for the interest. However, there is a transfer fee for this procedure which hovers around 3-5% of the balance amount. By this method, you’ll save a lot of money even after paying the transfer fee.
  1. Create a budget: Start developing the habit of spending less. Vow to start living a frugal life. This is because the more you spend on useless things, the less you save. Therefore, to fight back such irresponsible behavior, plan a budget that will be comfortable for you to follow. Keep in mind that this budget should not become a burden for you; instead it should motivate you to spend smartly and save money for the rainy day. Use those savings towards debt repayment and you’ll see a remarkable decrease in the number of outstanding bills.
  1. Lower your interest rates: This is one of the most effective steps in the credit card debt management plan. Be vigilant and do your market research to learn about the recent market offers which various creditors are making. After a getting a thorough knowledge of the market offers, contact your current creditors. Request them to lower your card’s interest rate. The creditors will welcome this sort of gesture from you and will readily oblige. If you’ve been a good customer who has been punctual in making the payments, then the creditors will surely consider your request.

During the negotiation phase with your creditors, tell them that you are considering balance transfer as an alternative to lowering the interest rate. This will give them the necessary nudge to accept your terms.

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This article was written by Grace Ruskin.  Grace is a financial writer and is associated with DebtCC Community.

A Financial Resolution for 2011

Happy New Year!  New Year’s resolutions often accompany the celebrations and revelry.  A majority of resolutions are related to personal health and fitness, which is understandable following a season dominated by parties and indulgent eating.  Christmas is also the time of year when people spend more money than expected.  The stress of the bills coming due can also lead to financial resolutions. 

January 1 is a great time to lose weight, get in shape and stop smoking.  It’s also a fantastic time to get your financial affairs in order.  What is one financial objective that you would like to achieve for 2011?

I won’t be surprised if your answer involves reducing debt, saving more money or living by a budget.  While these are common financial goals, they are not an exclusive list.  You can also include things like giving more money away, drafting a will, reviewing your insurance policies or buying a new home.

Whatever your objective, here are a few principles that will help to ensure your success.

  • Be Reasonable: If the goal is unreasonable, you’ll quickly become frustrated and discouraged.  It may not be reasonable to get out of debt in one year.  Instead, set a goal to reduce your debt by $__ or pay off certain credit cards.
  • Be Specific:  Vague goals like eating healthier or being a better money manager are hard to evaluate.  Your goals should be quantifiable and measurable.
  • Develop a Plan: Whatever you want to achieve isn’t going to miraculously happen.  Think about the steps needed to accomplish your goal. Your plan should also include a timetable.  Identify the actions and the dates for completion.
  • Write it Down: It’s easy for the urgent things of the day to overtake the important. Writing down your goals and plan will help keep you on track.
  • Measure Progress:  Don’t wait until December 31 to determine success or failure.  Periodically evaluate your advancement.  You may need to adjust your plan in order to still achieve your goals.
  • Be Accountable: Behavioral changes are not easy, and being accountable to someone can be the difference between success and failure.  You must have enough of a relationship to trust the person, be honest with them, and listen to their feedback.  They must also be willing to ask you the tough questions.
  • Reward Yourself: Develop appropriate rewards as you accomplish your interim goals.  It doesn’t have to be big or lavish.  It just needs to be something that motivates you.

I know it’s kind of morbid, but by December 31, 2011 you’ll either be dead or one year older. Assuming that you expect to be alive, would you rather have accomplished your financial goal or not?  If so, then develop a plan and have the resolve to see it through to completion.

If you do… it will truly be a Happy New Year… for the entire year and not just one day.

Paying for Christmas

The most wonderful time of the year is quickly followed by the most miserable time of the year. Not because of the winter doldrums, but because of the credit card bills appearing in your mailbox.  If you’re like many Americans who used credit cards to purchase gifts for the holidays, financial stress quickly replaces the joy and happiness of Christmas.

You may have the unfortunate realization that it’s going to take you months to pay off your Christmas gifts.  Don’t feel alone.  According to Consumer Reports, 13 million Americans (nearly 6% of the population) are still paying off last Christmas.   If you’re only making minimum monthly payments on your credit cards, chances are you’ll be paying it off for several more years.

Do you know that there is another way to pay for Christmas?  I will even go so far as to say that it’s a better way.

The best time to start paying for Christmas 2011 is right now.  I’m not talking about taking advantage of all those after-Christmas sales to stock up on gifts.  Instead, you can start saving money now to pay for your Christmas shopping next year. 

The first step is deciding how much you want to spend for Christmas.  If you’re married, you need to discuss this with your spouse and come to some reasonable agreement.  You may have different families, traditions and expectations, so expect to compromise.

Let’s assume that you decide you want to spend $2,000 for Christmas gifts next year.  Starting in January, take $200 and save it (that’s $50 per week). Open a separate savings account if you need to, or find a bank that offers Christmas Club savings accounts just for this purpose.  With meager interest rates and bank fees, you might just stuff the cash under your mattress.  The key is that you save it the money and don’t touch it until Christmas.  It’s not an emergency fund or quick spending money; it’s for Christmas.  If you put $200 aside each month, you’ll have $2,000 in cash by the end of October just waiting to be spent on great Christmas bargains.

But wait… what about the debt from this year?  Wouldn’t I be better off using the $200 each month to pay off my credit cards? 

That may sound like a good idea, but I say don’t do it.  Reducing your existing debt and paying off your credit cards is a different discussion.  Chances are this is the cycle you’ve been operating under for years.  You charge it.  You work all year to pay it off.  When Christmas rolls around again, you haven’t saved any money for Christmas, so you charge it again.  If you want to break the cycle, you’ve got to do something different.

I’m all for paying off credit cards and getting out of debt. However, you probably won’t achieve either of these without learning how to live within a budget and saving money to pay for future purchases.   Even if you’re still paying for this Christmas next year, think of how great you’ll feel next year when Christmas is fully paid before Christmas.  The stress and agony of opening bills in January will be history.

When it comes to paying for Christmas, you can pay now or pay later.  If you start paying for next Christmas now, I think you’ll experience a lot more peace, joy and holiday cheer next year.

Budget Basics #2 – Starting a Budget

First step to budgeting… do something.  You can finesse the process as you go along, but you have to begin somewhere.Like many tasks in life, one of the hardest things is getting started, especially if it’s something you prefer not to do.  How many diet, exercise and financial plans have been delayed until tomorrow?  So let’s get started. 

For your first step, my recommendation is tracking your current spending.  It can be difficult to budget how you’re going to spend your money if you don’t know where your money is going.   Relax; this isn’t as difficult as you may think. 

In the present electronic age you probably buy a lot of things with your debit or credit card, and you may pay some of your bills online.  Copies of your recent bank and credit card statements will probably capture the bulk of your expenditures.  If possible, I would recommend using the past three months’ statements.  By averaging out multiple months, you should reduce the impact of atypical expenses.

Create a simple four-column Excel spreadsheet; a column for each month, and the fourth column for the three-month average.  Next… decide on some income and expense categories.  The advantage of using Excel or something similar is the easy ability to add or eliminate categories.

A common question is how many categories should I have?  It all depends upon how tightly you are trying to manage your finances.  If you’re on a very tight budget, then I recommend more detail.  The more detail you have, the more you can assess your spending.  Be honest with yourself and your situation.  Unnecessary information can actually reduce the effectiveness of your budget.

Consider utilities as an example.  If you have no intention on altering your behavior no matter what your utilities cost, then simply group everything together as utilities.  However, if want to explore ways to reduce your electrical, heating, water or cable bills, then you should segregate them into different categories.

The next task is pouring through your statements to see where your money went.  It may seem like an arduous process, but I think you’ll find it can go rather quickly.  Depending upon your financial institution you may be able to download your transactions into a spreadsheet or a program like Quicken (I’ll talk more about tools and software later).  Even if you can download the info, I suggest you compare the downloaded information with your statements.  The software may classify things in a manner that is not helpful to you.  I encourage you to take your time with this step.  It may seem tedious, but in the end, it will help provide you with a clearer picture of how you’re spending your money.

The next step for this exercise is calculating the average expense for the number of months you input information.  Unless you like running a calculator, the average function in your spreadsheet should make this an easy task. 

Take a look… any surprises?  I would be amazed if you did not look at a category or two and say, “Wow.  I didn’t realize I spend that much on____.”  It happens to best of us.

Congratulations!  You did it.  You got started.  Slap yourself on the back.  High five yourself.  There is more to do, but you just performed a critical step to creating a budget.

In Budget Basics #3, we’ll consider some of the tools and technology that you can use to help you create and monitor your budget.