Janet wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I am totally helpless when it comes to understanding my credit report, and making a choice as to what to start paying back first. What do i need to do to get things straight? Janet” Dear Janet, The good news is that dealing with your credit report and developing a repayment plan can be a relatively straight forward and simple affair. I would recommend that you get a copy of your consolidated credit report . While there is a charge to get it I think the benefits far outweigh the cost. The special consolidated credit report will show you each of your credit items, as reported by all three major credit bureaus, side-by-side in an easy to read and color coded presentation. If you get your consolidated credit report with the credit score option it will also show you exactly why your credit score is what it is and how you can improve it. Armed with a comprehensive listing of who your creditors are from your new consolidated credit report you can then make some choices about who you are going to pay back first. While paying back the creditor that is charging you the highest interest rate makes the most mathematical sense, I think paying off the lowest balance creditors first makes the best motivational sense. If you follow the Debt Snowball approach to repaying your creditors, you’ll eliminate people you owe and stay excited about paying people off. Big hug. Steve Source: I Am Totally Helpless When it Comes to Understanding my Credit Report - Janet Other Related Articles to Read Sohail Wants to Pay Off Old Debts to Improve His Credit Judy Is Worried “Should I Save or Pay Off Credit Card?” Anne Has $25,000 of Credit Card Debt And Making Just Minimum Payments But She Wants to Get Out of Debt John Wants to Know “If I Consolidate My Debt On One Account Will It Hurt My Credit Score?” Robert Wrote “I Do Not Know Where To Start Other Than I Am in Debt”

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Frank wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, Recently divorced and trapped in an upside down mortgage. Living off credit cards to get by. I am recently divorced and bought out my ex wife during the up market for my current home. My mortgage is now upside down and I am not making enough money each month to even break even with my expenses. I have a FICO of 750 (was 810), but my debt in credit cards is nearing max. I have been using credit cards to keep up with the negative income hoping I would clear the divorce and start with a positive income by now. This has happened, but barely. I now make just enough money to make my expensive mortgage, make my child care payment, and pay a little over my minimums for my credit cards. I can’t go much longer like this. Any ideas? Frank” Dear Frank, I’m glad that you recognized that you’ve been using the cards to make-up for the shortage each month. Being aware of that is helpful. The reason that it is so hard to dig out of this kind of debt is that in order to have $X each month to repay on top of the minimums you’ve got to have an increase in income or a reduction in expenses. And when you are just getting by each month it is darn hard to find those extra dollars to use for the next six years, month-after-month, to get totally out of debt. There are some short-term things that you can do, like talking to your mortgage lender about giving the house back with a deed in lieu of foreclosure or finding a buyer and asking the lender to accept a short sale, a sale for less than is owed. You could also consider entering a debt management program ( click here for debt management information ) to consolidate your credit cards into one monthly payment that you might be able to afford. All of these things will hurt your credit and unless you can confidently make repayments in a debt management program for the next six years, then you might simply be entering a path that will lead you away from today but not out of debt. Any repayment strategy needs to fully repay the debt for you to be debt free. I know that sounds obvious but not everybody understands that. If you launch into a debt repayment program for the next year, you’re just getting by each month, and if an unexpected event happens that causes you to stop making payments then it could be argued that you’ve just wasted a year of payments and a year you could have used for rebuilding your credit. In that case bankruptcy might have been a smarter move for you. It would give you a fresh start and allow you to start over on what you can really afford today. Of course you’ll still have to pay the child support payment, you can’t get rid of that in bankruptcy . Frank, if you are not mentally prepared to think about bankruptcy then go into a debt management program and see if you can get some breathing room that way. But I would still suggest that you talk to a bankruptcy lawyer just to be fully informed about what bankruptcy would mean for you. Talking to a bankruptcy attorney does not mean that you are going to go bankrupt. It just means you’ll be better informed. With your credit cards nearly maxed out they are quickly turning into ticking time bombs. As you near your limits you become a greater risk and that puts you higher on the creditor radar. These days creditors are lowering limits or closing cards to minimize their credit exposure to people who might be risky. Also, maxing out your cards also lowers your credit score . If you get to be too big of a risk your creditors could significantly increase your interest rates and that will sink you for sure. The absolute fact is that unless you change something here, either increasing income, reducing expenses, or potentially going bankrupt, next month isn’t going to be any different than last month. You will never break free from this situation as long as you keep repeating the same thing over and expecting a different result. Big hug. Steve Source: I’m Recently Divorced and Trapped in an Upside Down Mortgage - Frank Other Related Articles to Read Crys Writes In And Asks “We’ve Been to Credit Counseling But Should We File For Bankruptcy?” Sally is Divorced and Ex-Husband Has Stopped Paying Mortgages Mortgage Lender List of Loss Mitigation Contacts That Can Help You Avoid Foreclosure Listen to the Story of Dan and Mary “They’ve Asked Me To Take a Pay Reduction. What Do You Think?”

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April wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, My husand over 10 years ago got appendicitis with no insurance. The hospital wasn’t happy with the small payments hubby was making, so they hired a law firm. The lawyer for the hospital wanted him to start paying $170 a week when he was only making like $260 a week in a factory. Hubby had no choice but to file bankrupcy because the lawyer won a suit to start garnishment. Well its been almost 10 years, and the bankrupcy is suppose to fall off his credit report Feb 2009 (it says that on the credit report). My hubby is currently deployed and my car died about 2 months after he left. I can’t obtain a car loan until the bankrupcy falls off (so the banks say). I’m hoping to get a car really soon since I have no transportation and we have 2 children. Any insight would be wonderful. Is there a specific day that the bureaus take these off of the credit reports? If not is it a general time frame like the beginning, middle, or end of a month? How is the credit report affected ater it falls off? April” Dear April, I know car lenders really tightened their standards recently but wow, waiting for the decade old bankruptcy to fall off the credit report seems very extreme. You have a couple of options. The first is a story I saw recently that might be able to help you. As a result of GMAC getting government aid to help bail them out they were requested to loosen their lending standards to help people that otherwise could not get a vehicle. General Motors Corp and its financing affiliate GMAC on Tuesday announced programs to make it easier for car and truck buyers to get financing, a day after GMAC agreed to sell the government a $5 billion stake. Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250. The move is a bid to capitalize on GMAC’s separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher. Many analysts consider borrowers with credit scores of 620 or lower to be “subprime.” Dealer wholesale financing is unchanged, GMAC said. Mark LaNeve, GM’s sales and marketing chief, said the lower financing costs will encourage customers to “get back into the game.” The second option would be for you to go to one of the local buy here, pay here lots. You’ll pay more for the vehicle but you are more likely to get one there than at a traditional lender. If you want to check your credit score before you head out to a GM dealer or another dealer, just use this credit score link. Using this advice, you should be able to get the wheels you need. Big hug. Steve Source: I Can’t Get a Car Loan Because of a Past Bankruptcy - April Other Related Articles to Read Lower Your Car Payment. Skip It, Lower Your Interest Rate and Get Cash Back Dave is in a CCCS Credit Counseling Program But Feeling Hopeless Kurt is Upside Down In His Mitsubishi Endeavor Car Loan And Wants Out Jerry Wants to Know How to Repay Debts He Can’t Afford James Wants to Know If Capital One Will Take His Car If He Stops Paying His Credit Card

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Anna wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I own a t-shirt printing/embroidery co. I used credit cards to expand because I couldn’t get the money I needed for cash flow. I was doing well and seem to be turning around but last year was difficult and I fell behind on a few payments & had late pays. I am collecting things to sell also making my lists of “to do”. We are changing our biz. strategy for 09. But I feel like I am going in circles just paying interest and late fees. I would liquidate my company but I have a lease obligation that I can not get out of (3 more years) and I have a great client base and staff. I’ve been paying at least the minimum and a few hundred more on each card when possible. I have mistakenly paid the wrong card at the wrong time (I have 3 AMEX cards) making 1 a late pay. I now only use 1 card and I pay it off each month. How can I lower my interest rates, and or eliminate or consolidate my credit cards, I am not behind but I’m paying high rates on a few cards. Anna” Dear Anna, Being a busy entrepreneur it is easy to mess up juggling the bills. It happens to a lot of people in the same position. Don’t beat yourself up over it. I’m wondering if you could sell your company and let the new owner take over the lease obligation, with the consent of the leasing company of course? A thought you might want to explore with them. Ask them if they will consider transferring the lease if the new owner qualifies with the leasing company. I’ve seen it happen before. Lowering your rates isn’t as easy today as it once was. In the past you could call up your credit card company and ask your current company to lower your rates, and they would. These days, in these uncertain economic times, the credit card companies appear to be doing more to turn customers away than want to retain them with lower rates. You can always call American Express and ask them if you are eligible for lower rates and see what they say. It won’t hurt. Now depending on your credit report and credit score , you can still get some decent balance transfer deals. Click here for credit card deals and see what is currently available. I just took a quick look and there are some interesting offers that will allow you to transfer the balance at 0% and then charge you a low rate of interest moving forward. Since your primary creditor is AMEX and they are usually the most difficult to deal with in a debt management program , I think you’re better of switching two of your cards over but keep the one AMEX that you’ve had the longest so the length of credit boosts your credit report . Big hug. Steve Source: How Can I Lower My Interest Rates or Eliminate or Consolidate My Credit Cards? - Anna Other Related Articles to Read Ed Is Scared But Courageous In The Face Of His Debt Fred Owes AMEX $40,000 And Can’t Pay American Express Back Bank of America Hit With Class Action Suit Over Credit Card Fees And Charges Chloe Ruins Credit of Daughter With American Express Valerie And Her Vanishing American Express Card Business Account

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Jim wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I’m overextended and about to pay off approximately $30,000 in credit card debt and would like to negotiate with credit card companies. If I settle for a smaller amount owed to the credit card company - will this reflect negatively on my credit report?? Jim” Dear Jim, Will it hurt your credit, it sure will and here is why. When you settle a debt for less than what is owed you are breaking your original promise to repay. The creditor will show the part of the debt that you paid back as satisfied but the part that was forgiven will appear on your credit report as an uncollected debt. In fact this does accurately reflect the reality of your strategy. Just because the creditor agrees to accept part of the money as payment in full does not change the fact that all of the money was not received to repay your debt. This is important information that others creditors want to know about so they can avoid you in the future. Nobody wants to lend $100 to get back only $50. While some claim that you can negotiated that the entire account be reported as paid in full or satisfied, this is unlikely to happen with major creditors since the creditors have contractual obligations to report true and factual information to the credit bureaus. If one creditor was allowed to do this then no creditor would be able to make sound decisions based upon the information from the credit bureaus. This would hurt the sale of credit reports and falsify credit scores which would injure the credit bureau information reliability. In order to get the best debt settlement deals you really need to be at least 90 days behind on your payments and if you do that it will also damage your credit. There are times to settle debts but not just because you want to pay back half of what you owe. Want to know more about debt settlement ? Click here for debt settlement information . Big hug. Steve Source: Jim is Looking to Pay Off His Debt For Half of What He Owes Other Related Articles to Read Deepu’s Wife is Unemployed And is Looking for a Debt Consolidation Loan Lynn is Working With a Debt Settlement Company But Being Sued By Her Creditor Disjointed Use of Your Credit Score Can Leave You Unemployed or Dead Stop Debt Collectors - 100 Pages of Good Advice Double Standard For Debt Settlement. Not So Sleazy Now, Ask Hilary Clinton, John Glenn and the FEC.

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Anne wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I am in credit card debt for $25k. I am making the minimum payments on each card, but it’s killing me. Should I focus on paying more on one card at a time and ignore the others? And then continue on the next card and so on? Or should I just continue to make the minimum payments even though I am getting no where with this method? Anne” Dear Anne, In order to start reducing your debt the secret is that you need to have enough money to send each month for the minimum payment plus some extra. Let’s say that all your minimum payments together equal $550 a month. If you want to start knocking down this debt then you’ll need to add an extra $100 a month on a consistent basis. With a total of $650 a month to use towards reducing your debt you can apply the extra $100 a month above the minimum payment to either the credit card with the highest interest rate or the card with the lowest balance. Many find that by paying off the lowest balance credit cards first they get great emotional satisfaction out of eliminating some of their creditors faster. Once the lowest balance creditor is paid off then you can roll that minimum payment plus the extra $100 to the next creditor. Using the debt snowball method will accelerate your debt elimination. The snowball method is a very effective way to get out of debt. The basic steps in the debt snowball method are as follows: List all debts in ascending order from smallest balance to largest. This is the method’s most distinctive feature, in that the order is determined by amount owed, not the rate of interest charged. However, if two debts are very close in amount owed, then the debt with the higher interest rate would be moved above in the list. Commit to pay the minimum payment on every debt. Determine how much extra can be applied towards the smallest debt. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off. Note that some lenders will apply extra amounts towards the next payment; in order for the method to work the lenders need to be contacted and told that extra payments are to go directly toward principal reduction. Once a debt is paid in full, add the old minimum payment (plus any extra amount available) from the first debt to the minimum payment on the second smallest debt, and apply the new sum to repaying the second smallest debt. Repeat until all debts are paid in full. In theory, by the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow (thus the name). The theory works as much on human psychology as it does on financial principles; by paying the smaller debts first, the individual, couple, or family sees fewer bills as more individual debts are paid off, thus giving ongoing positive feedback on their progress towards eliminating their debt. A first home mortgage is not generally included in the debt snowball , but is instead paid off as part of one’s larger financial plan. As an example, many financial plans pay off home mortgages in a later step, along with any other debt which is equal to or greater than half of one’s annual take-home pay. Simple Example An example of the debt-snowball method in action is shown below. A person has the following amounts of debt and additional funds available to pay debt (the debt is listed with the smallest balance first, as recommended by the method): Credit Card A - $250 balance - $25/month minimum Credit Card B - $500 balance - $26/month minimum Car Payment - $2500 balance - $150/month minimum Loan - $5000 balance - $200/month minimum The person has an additional $100/month which can be devoted to repayment of debt. Under the debt-snowball method, payments for the first two months would be made to debtors as follows: Credit Card A - $125 ($25/month minimum + $100 additional available) Credit Card B - $26/month minimum Car Payment - $150/month minimum Loan - $200/month minimum After two months (presuming the person has not added to the balances, which would defeat the purpose of debt reduction), Credit Card A would be paid in full, and the remaining balances as follows: Credit Card B - $448 Car Payment - $2200 Loan - $4600 The person would then take the $125 previously used to pay off Credit Card A and apply it as additional payment to the Credit Card B balance, which would make payments for the next three months as follows: Credit Card B - $151 ($26/month minimum + $125 additional available) Car Payment - $150/month minimum Loan - $200/month minimum After three months Credit Card B would be paid in full (the final payment would be $146), and the remaining balances would be as follows: Car Payment - $1750 Loan - $4000 The person would then take the $151 previously used to pay off Credit Card B and apply it as additional payment to the car loan balance, which would make payments as follows: Car Payment - $301 ($150/month minimum + $151 additional available) Loan - $200/month minimum It would take six months to pay the car loan (the final payment being $245), whereupon the person would then make payments of $501/month toward the loan (which would have a $2800 balance) for six months (with the last payment at $295). Thus in 15 months the person has repaid four loans, with two of them being paid in a mere five months and three within one year. The primary benefit of the smallest-balance plan is the psychological benefit of seeing results sooner. People with more financial discipline can get ahead quicker by paying off the credit cards and loans with the higher interest rates first. This will minimize costs to become debt-free faster than the smallest-balance approach. The Debt-Snowball method is only for those on high enough incomes to be able to meet all the minimum repayment requirements on their debts. This method could instead lead to problems for those who are struggling to meet these minimum payments demands. In this circumstance, an individual should not be advised to pay creditors differing amounts as this could count as non-equitable repayment, leading to problems (e.g. with going bankrupt, or with maintaining non-equitable repayments over longer periods). Big hug. Steve Source: Anne Has $25,000 of Credit Card Debt And Making Just Minimum Payments But She Wants to Get Out of Debt Other Related Articles to Read Bank of America Hit With Class Action Suit Over Credit Card Fees And Charges Jairo Wants to Stop Paying His Bank of America Clean Sweep Debt Consolidation Loan Credit Card Companies Are Coming For You. Protect the Wife and Children. Karen Writes In. “My Interest Rates Are Going Up. My Minimum Payments Are Going Up. Help!” Pam Asks “Does a Deferred Student Loan Lower Your Credit Score”

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Ben wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I read the book called Debt Cures by Kevin Treadeau. It was awesome and it has a lot of tips and help there. What I am trying to do is get an outstanding credit score and it needs to be improved. When you call the credit card company it is pretty darn hard to make them lower your interest rate like it says in the Debt Cures book. I would like to lower my APR and they would say all we can do is wait 6 months and try again. How can I speak them and get them to lower my APR without waiting for to be lowered. Help!!!! Ben” Dear Ben, I read the book by Trudeau as well and while it is filled with some interesting tips, many are outdated in this economic climate. While it is true that creditors used to easily lower your percentage rate by just calling and asking, these are different times. Credit card companies today are jacking the rates up on customers that have never been late, have not missed a payment and have not exceeded their limits. By all outward signs, credit card companies are running for profits in an otherwise horrible economy and are unlikely to reduce interest rates at this time. The six month advice that you got tells me one of two things. Either you have had some credit problems in the last year or the representative wanted you to call back at a latter time in hopes that the economy would improve and deals would be had again. The best way to get an outstanding credit score is not to guess at what needs to be fixed, but to know for a fact what is bringing your score down. Without a doubt the best way to do this is to get a consolidated credit report with a credit score and not only will it identify all of your lines of credit and show your credit history but it will specifically tell you what you need to do to improve your credit score . Click here to get your credit score specific information . While the Debt Cures book and certainly the infomercial about the book with the Playboy Playmate, make you excited about easily improving your credit score and lowering your interest rates it is really dependent on a few factors. Debt to Income Ratio - If your card balances are more than 33% of your limit you will find that can lower your credit score . These days with creditors reducing limits without notice or warning you can easily find yourself maxed out through no fault of your own. You can also get wounded when you carry a number of balances on cards and in total they are a risk based on your current income. How You’ve Paid Your Bills - If you’ve been sloppy or had issues that prevented you from paying your bills on-time then that will be reflected in your credit report . If you have accounts still showing up in collections, that hurts you as well. Creditor Policies - The book and books like it provide good tips but ultimately they can all be worthless if your creditor adopts a corporate policy and does not want to bend. Don’t lose sight of the fact that as long as you carry a balance on your credit cards the credit card company calls the shots. If you don’t like how they treat you then look into doing a balance transfer to another credit card . A credit card company does not have to value you as a customer or want to retain you if you no longer suit their target demographic. Outside of paying your debts off in full, no other trick or tip is going to get you lower interest rates without potentially damaging your credit report further. However, the best way to get the best rates is to pay your bills on time and follow the credit score improvement guide that will come with your consolidated credit report and tell you exactly what you need to do to legally boost your score. Thanks for the question. Steve Source: Ben Read the Book “Debt Cures They Don’t Want You to Know About” By Kevin Trudeau And Has Questions Other Related Articles to Read Bob Was Injured And Is Now Behind On His Credit Cards Rebecca And Her Husband Are Struggling to Keep The Business Going Lisa is Over Her Credit Limit, Unable to Pay the Minimum Payment, and Thinking of Bankruptcy Jay Got Sucked Down With The Falling Real Estate Market Disjointed Use of Your Credit Score Can Leave You Unemployed or Dead

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Jessica wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, My husband is applying for full disability because he has MS and he is not able to work anymore. We have fallen behind on every credit card payment, but we are paying the car, mortgage and utilities, to make it day by day. I am currently unemployed but i could never make enough to cover all our debt. I can barely make enough for our essentials. I am dead worried about our future, it’s more than enough with his chronic illness and we can never have a future if i decide to pay all our debt. I am currently unemployed because i got laid off. I am collecting unemployment and desperately looking for a job. But when i get it, are they going to take my wage? my house? that’s all i have. Should i go to a bankruptcy lawyer? please help Jessica” Dear Jessica, The good news here is that you have already prioritized your payments to those people that you should be paying first; shelter, transportation, and utilities. The right decision in this situation comes down to expectations. Is there a reasonable expectation that with your current situation that you will be able to resume regular payments in the near future, I don’t think so. The only exception is if you were able to land a new job that paid you enough to easily make ends meet. But living through these issues and times is only 10% about the money and how it adds up and 90% about how you are feeling, coping and managing in these turbulent and scary days. I’ve lived through dark financial problems and bankruptcy but I have not had to add chronic medical disabilities and unemployment into that mix. From a more holistic point of view I think you need to look at the proper solution for you as one that improves the quality of your life and firmly resolves the money troubles at the same time. I think you’d agree with me that if we can eliminate some of this money stress you are living under that it would have a positive impact on your day-to-day life, your outlook, and your husbands ability to deal with his illness. The only way that we can achieve this goal is through the use of bankruptcy . By going bankrupt you will most likely be able to keep your home and car, eliminate your credit card debt and then we can focus on rebuilding your credit report and credit score latter, after you’ve had an opportunity to decompress from all this pain and stress. I think you should click here for bankruptcy information or contact a local bankruptcy attorney for specific information about going bankrupt. Do you agree? Does this seem like a logical plan of action to you? Big hug. Steve Source: Jessica is Unemployed, Her Husband Has MS And She is Barely Making It From Day-to-Day Other Related Articles to Read Janet is Fighting Dark Depression, Debt, Disability and Despair Shellie Had Cancer And Is Now Slowly Dying From Terminal Debt Tanisha Wants to Cash Out 401K To Get Rid Of Debts. Good News - Post Office to Layoff Only 40,000 Workers. Bad Time to Be In Delivery Business. Thu Wrote Me And Said “I’m Really Struggling, My Husband is Disabled, How Can I Get Out Of Debt?”

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Lorena wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I have three bank accounts. Does opening more than one bank account affects my credit score? What can I do to fix this? Lorena” Dear Lorena, I am not aware of any reason why having multiple bank accounts would negatively impact your credit score or credit report at all as long as they are all in good standing. A bank account is rarely reported on a credit report but almost always listed on a bank credit report like those from ChexSystems . A bounced check or overdrawn account could appear as a negative mark on that type of credit report . Having multiple bank accounts makes it more likely that something might fall through the cracks as you try to juggle keeping all the accounts in good standing. A good reason for maintaining separate accounts at different banks used to be to make sure that your total deposits at each bank were protected under the FDIC protection in case the bank failed. If you no longer have a specific reason for maintaining all these different accounts you might just consolidate them into one account and that would simplify your life and just make things easier to manage. Thanks for the question. Steve Source: Lorena is Worried That Having Multiple Banks Accounts Will Hurt Her Credit Other Related Articles to Read Bre Wonders Why Her Credit Report Still Shows Negative Items That She Thought Should Have Been Removed By Going Bankrupt John is Worried His Debt Will Scare Away His Fiancee Bob Was Injured And Is Now Behind On His Credit Cards Soon, Where You Shop Will Control Your Credit Credit cards face bad debt

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Fred wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I own a home based business (S corporate in CA). Since the begining of the year, I’ve been make less than previous year. Hoping it would change, I used my AMEX to make up for the difference….You can figure out the rest. My bill of 40K+ is due in a couple of days and I have made next to zero in the past 40 days. I just can’t pay Amex which is due in full. My credit score of over 765 is about to go down the drain. But what concerns me most is what Amex is gonna come after and how they’ll possibly make life miserable for me. Can I come to an agreement with them to let me make a reasonable monthly payment without making life hell for me and my family? Fred” Dear Fred, Obviously you recognize that this is not a good situation. American Express (AMEX) can be real bastards when it comes to debt collection efforts. You might want to read my article “ How to Hide From Debt Collection, the Debt Collector, and Creditors ” for some tips on dodging the AMEX debt collectors if you just can’t deal with them right now. While hiding might give you a bit of peace it will not change the underlying issue that you used money from American Express that you can’t pay back. Even if you were to make payment arrangements, I’m not quite sure what you can promise since you have no income coming in. AMEX is certainly not going to take a hope or prayer agreement to satisfy your $40,000 worth of debt. Really, they will only make your life as hellish as you let them. If you are honest with your family and let them know the situation then everyone will know what to do when American Express debt collectors call, be nice and say good bye. Without any money to pay, that is the best you can do. American Express will chase you for $40,000 and after six months or so they may even sue you for the debt. What you can do now is to: Focus on bringing in income. If you can’t seem to make money then we’ll look at other options. Hide from the American Express debt collectors if you just can’t deal with them right now. it is often easier to be positive and fight to change things when you don’t have 15 calls a day asking you for money you just don’t have. Draw a line in the sand and say that if things don’t improve in 60 days then you’ll have to look at other options, like bankruptcy . ( Click here for bankruptcy information .) While I understand the emotional need to hide from creditors it is always better to speak to the creditor and let them know what the situation is. I prefer for people to try to make a friend out of the collector rather than running in fear. Bottom line with the AMEX collectors, don’t promise to make a payment you can’t afford, they hate that. Big hug. Steve Source: Fred Owes AMEX $40,000 And Can’t Pay American Express Back Other Related Articles to Read Stop Debt Collectors - 100 Pages of Good Advice Valerie And Her Vanishing American Express Card Business Account BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call American Express to Cut 7,000 Jobs. Experience The Freedom Of Joblessness. ML Writes In, “I Can’t Pay My American Express Card.”

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Rebecca wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, My husband and I own our own business but have been struggling lately. I work a 9-5 job while he stays at home to run the business. We owe a lot of debt in credit cards from working to get the business up and going - and we’re just a few hundred dollars a month from breaking even. It’s so frustrating! So we rely on the credit cards to keep us a float for the time being, which I hate. We already owe almost $19,000 in credit card debt. Is the government going to intervene with the way the credit card companies are gouging interest rates? The banks (Citi in particular) are getting bailouts with our tax money and then turning around and raising our interest rates. I can barely afford my minimum payments as it is. If they keep doing this to me I’m going to have to declare bankruptcy. I’ve had 3 cards already tell me they’re raising my APR to a MINIMUM of 19.99% or more by February. The government is quick to help the big companies, but what about the small businesses? What are we to do? Rebecca” Dear Rebecca, Sadly your situation is not all that unusual. A bit of the perfect storm I guess. You’ve just happened to start a business and financed part of it on credit cards at a time when the economy has fallen apart and lenders are freaking out. The reason that your credit card companies are raising your rates is because they can. As long as you carry a balance on those cards you will be subject to whatever your creditors choose to give you. But there is a potential solution here. If you don’t wish to accept the new terms and conditions the term update will give you instructions about what to do to opt out. Generally this will mean that your account will be closed and you will no longer have access to the card and it will show as closed on your credit report , potentially lowering your credit score as you move forward. There is nothing on the table about any sort of government intervention. Government resists intervening to help consumers and in fact has done just the opposite. They government recently announced that they wish to make it easier for consumer lenders and credit card companies to get access to money to lend but there has been not a single peep about giving consumers any new rights or legislation to help them deal with problem credit card debt. No bailouts of funds have been tied to the way the bank treats their customers or operates. I’m afraid there will be no lifeline coming for you from the federal government. Your situation just reinforces what I have seen for years, banks do things that lead more people into failure than success. They have policies in place that force people into bankruptcy and then the banks get little back and blame the consumer for being casual or careless with credit. Big hug. Steve Source: Rebecca And Her Husband Are Struggling to Keep The Business Going Other Related Articles to Read Soon, Where You Shop Will Control Your Credit Expect Tidal Wave Of Limit Reductions and Credit Card Closures to Hit Before Christmas Daniel Writes In - “How Can I Get Out of Credit Card Debt?” Tina Says “My CPA is Under Investigation For Fraud” John is Worried His Debt Will Scare Away His Fiancee

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Alex wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I have Federal Student loans dating back to ‘94/95. My situation was unusual. I first attended MBA school and left after a semester because I also got accepted to Law School at a different university. I went to Law School for a year and a half only to realize it wasn’t what I wanted to do so I left. I returned to MBA school and all the while I had been using student loans for both business school and my short term in Law school. When I graduated from MBA school, I deferred my student loand until I could afford to make my monthly payments. I have deferred and used forbearance until today. I have no deferment elegibility left so I have to forbear. Unfortunately, the $680 monthly payment is too much for me to pay. I now owe approximately $108,000 in student loans. I need help on how to takle this. I cannot afford that payment because I have a mortgage and other monthly bills. What can I do? I would greatly appreciate your insight and guidance. Sinking deeper into student loan debts, Alex” Dear Alex, I worry more and more about student loans as the years go by. It used to be that college was the preferred route to take to provide you with the skills necessary for a richer future, in many ways. But now, college loans are getting to be so expensive and such a noose around the neck of students, especially those like you that seek advanced degrees, that I’m no longer as supportive. The graphic above is from a great New York Times article, “ College May Become Unaffordable for Most in U.S. ” that everyone should read. It challenges our old assumptions that college is within reach of young students now. As I write this, your student loans are already 13 years old and you really have not even begun to start to repay them. This is a horrible problem. But your story is not unheard of. I’ve met many people that began law school, only to realize that it was not something that they wanted to do and so they quit or switched focus. Unfortunately that does not relieve you of your obligation to repay loans used for studies. Since your student loans are not eligible for discharge in bankruptcy , you’ve really got one option, make suitable repayment arrangements. The ICRP (Income Contingent Repayment Plan) plan is probably going to be your best opportunity. See “ Tiffany is Behind in Student Loans, Late On Other Payments, And Looking For Hope ” for a more in-depth look at student loan repayment options. Steve Source: Alex is Buried in Student Loan Payments Other Related Articles to Read Jake Wants His Transcript But He Defaulted On His Student Loan Debt C Wants to Defer Student Loans Without Hurting the Credit Report Do You Think You Are A Failure When You Break Your Budget? Pam Asks “Does a Deferred Student Loan Lower Your Credit Score” Pam Is Out Of Cash And Out Of Time

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Sally wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, Hi, I am hoping for some help. I have read some stuff already on your website regarding this, but my situation is a bit different. My ex-husband and I are divorced for a year, separated for 2 yrs prior to that. In our separation agreement it states that he is responsible for 2 investment properties we have in another state. He has paid on them up until last month Nov. 2008. He is claiming that he cannot afford the homes even though he makes 150K/yr and has a 450K home. I just signed over the martial home to him Sept 2008 and he just paid me the money out of my house. I cannot buy a new home right now because I lost my job, typically I make 80K a year. So now he wants both homes to go into foreclosure. We could not refinance the homes because the loan value is worth more than market value of the homes. So in a court order it is stated that he is taking over the homes until he can refinance them and that he will pay any of my legal fees or losses incurred if he forecloses. Since he has showed that he has paid on the properties himself since the separation will this matter to a credit company (FICO)? What do I do with the money I was finally given for my marital home. My credit score went from an 815 to 640 in the divorce already. Is it best to declare bankrupcy now or foreclosure. I would like to buy a home of my own by 2010. Please advise. Thank you! Sally” Dear Sally, In all my years of helping people, financial problems in divorce are always traumatic. There is so much weight, emotion, and anger placed around these issues that there is never a winner. Sadly, whatever it says in the separation agreement is a deal between you and your ex-husband and not you and your creditors. As long as you jointly signed for those mortgages, the lenders will still hold you jointly liable for those debts. If the properties go to foreclosure , the fact that he made a promise to you to cover your liability and costs will not make a bit of difference to your FICO credit score or to the lenders. Again, that is an agreement between you and your spouse, not you and the lender. What the lender will report to the credit bureaus and your credit report , which will impact your credit score , is that you failed to pay on a timely basis and lost the property to foreclosure . Your options are limited right now. I think you should assume that the other homes will be lost to foreclosure , your ex-husband will not have money to cover your liabilities for those homes and that the lenders will come after you. You should immediately go and speak with a bankruptcy lawyer as soon as possible to do some planning to prepare yourself if all of this dumps on you. The most important question you need to ask is if the money you received is protected at all from the mortgage lenders or can they go after that to repay some of the money owed on the soon to be defaulted homes. Seek legal advice, now! Big hug. Steve Source: Sally is Divorced and Ex-Husband Has Stopped Paying Mortgages Other Related Articles to Read Karen Writes In “Ex-Husband Isn’t Paying The Bills and He’s Trashed My Credit. What Can I Do to Repair It?” Bankruptcy Judges Should Have the Power to Modify Mortgages Jason Has Not Paid His Mortgage in 10 Months And Wants to Keep His House Ed is Disabled and Falling in Debt Fast. What Can He Do? Listen to the Story of Dan and Mary

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On November 24, 2008 a class action lawsuit was filed against Bank of America, for deliberately engaging in a course of action that led to credit card customers to be intentionally penalized even though payments were made by the due date. The suit cites, as an example, the case of Bruce Trombley who received a credit card statement with a closing date of October 2, 2007 that indicated that a minimum payment of $248.00 was due by Saturday, October 27, 2007. Mr. Trombley went into a Bank of America branch on Saturday, October 27, 2007 at 11:44 am and made a payment of $250. Bank of America subsequently notified Mr. Trombley on his November 2007 credit card statement that he was to be charged a late fee of $39.00 and his promotional interest rate would no longer apply even though Mr. Trombley made his payment by the due date. The second example in the suit involves the case of Ryan Sukaskas who was charged a $15 pay-by-phone fee for making his payment on the due date. He had attempted to make the payment via the Bank of America website but the site indicated that since it was the date due that a payment could not be made via the site. It is alleged that consumers have been made to pay fees, charges and higher interest rates due to breaches of MBNA, FIA Card Services, and Bank of America credit card agreement and violation of the Truth in Lending Act. The plaintiffs in this case state that Bank of America has profited from the charging of fees, other fees, charges and/or additional finance charges for payments on accounts received on the due date. The primary issue here is if Bank of America failed to apply payments made on the day made without the imposition of additional fees and charges. Additionally it is stated that Bank of America is intentionally taken actions that are designed to increase the amount of finance charges, late fees, and other charges that customers must pay. The other issue is that Bank of America appears to be out of compliance with the Truth in Lending act and Regulation Z of the Consumer Protection Act of 1968 that says that “A creditor shall credit a payment to the consumer’s account as of the date of receipt, except when a delay in crediting does not result in a finance or other charge…” If you feel that you have been unfairly charged a late fee, a fee to make your payment on the due date, or have received an increase in the interest rate, even though you made your payment on the due date, you might want to contact the attorney in this case: Peter N. Wasylyk 1307 Chalkstone Avenue Providence, Rhode Island 02908 Telephone: (401) 831-7730 Facsimile: (401) 861-6064 E- Mail : pnwlaw@aol.com Photo: James Callan Source: Bank of America Hit With Class Action Suit Over Credit Card Fees And Charges Other Related Articles to Read Jairo Wants to Stop Paying His Bank of America Clean Sweep Debt Consolidation Loan Credit Card Companies Are Coming For You. Protect the Wife and Children. Pam Asks “Does a Deferred Student Loan Lower Your Credit Score” Mortgage Lender List of Loss Mitigation Contacts That Can Help You Avoid Foreclosure Karen Writes In. “My Interest Rates Are Going Up. My Minimum Payments Are Going Up. Help!”

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Carolyn wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Income from the GetOutOfDebt.org site advertising is used to help alleviate poverty . If you would like to help me to help others, there are easy and free things you can do, click here to learn how you can help . “Dear Steve, I built a new home using credit card cash advances. I now have $85,000 in credit card debt and the interest rates average 25%. I can make up to $2500/month in credit payments but the interest rates are killing me. I had great credit before this issue. I have a good job and predictable income. What is the best solution for me to get these credit card interest rates below 10%? I don’t want to hurt my credit long term. Carolyn” Dear Carolyn, I think it is far too late to worry about hurting your credit. With rates like 25% it leads me to believe that you are already showing signs of being a credit risk. What in the world were you doing building a home using cash advances from credit cards . That is a horrible way to finance a home. That is what mortgages are for. First off, I never recommend that anyone get a cash advance as long as they carry any balance on a credit card . When you do have a balance and take a cash advance the interest rate on the cash advance will be much higher but the creditor won’t apply your payments towards the cash advance until you pay off the entire purchase balance first. Carolyn, the only way to lower these rates is going to be to get a mortgage . Even if you found a balance transfer deal for $85,000, which I seriously doubt, the 3% transaction fee to do that would be huge. Contact a local mortgage broker or Big hug. Steve Source: Carolyn Built Her New Home Using Credit Card Cash Advances Other Related Articles to Read Archeologists Finds 3,000-Year Old Credit Card Bill Easy Come, Easy Go: Prosper.com Hits Regulatory Hurdle American Express Customers: Don’t Try This At Home Jeff Asks About Trick To Boast Credit Score. “Will It Work?” Payday Loans and Cash Advances

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