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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Mohamad 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, Our company closed by end of January and I’m behind with my bills. I’m struggling to pay my mortgage. I call other credit cards and some of them made payment plan and lower the interest but Capital One is giving me a hard time. I owe them $16,000 and the collection agency call me and the only deal they want to make I pay $5,000 now and when my company close they want me to take money from 401k to pay by April. I try to contact debt consolidation company but some of them are no good and last experience I had for my wife they did not represent New York. I’m confused and need help I told Capital One I want monthly payment plan but they refuse. Mohamad” Dear Mohamad, People find it hard to believe me when I say that often the hardest obstacle that people have to face is to get their creditors to take a monthly payment. If the collection agency may just be collecting the debt and is limited in what they can accept by instructions that Capital One has given them. In your situation a debt management plan may be a logical step to take and while you have had a hard time finding someone to work with, click here for debt management information and help. The advantage of working with a debt management company is that they have a better chance of slipping this debt back inside Capital one and out of the hand of the debt collector that won’t listen to you. This time, let’s get your Capital One debt into a debt management solution and see where we go from there. Big hug. Steve Source: Mohamad Wants to Pay His Creditors If Only They’d Let Him Other Related Articles to Read Banks Agree to Wipe Out Up to 40 Percent of Credit Card Debt But Watch Out. Lauren Went Crazy With Credit Cards And Now She is Maxed Out Deepu’s Wife is Unemployed And is Looking for a Debt Consolidation Loan Shellie Had Cancer And Is Now Slowly Dying From Terminal Debt Eva Has Heard Negative Things About CCCS

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Lauren 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 just started going crazy opening credit cards and maxing them out. Can you get me out of this hole? Lauren” Dear Lauren, Thank you for writing to me for help. The initial reaction of many that read your question will not be one of sympathy. The corner you have found yourself in today is one that you admit is of your own making. But there must be more to the story here. Rampant and binge buying is typically the symptom of underlying issues that lead to that end result. The roots of the underlying behavior are often intertwined with feelings of depression, bipolar issues , relation unhappiness or self-medicated shopping to fill a void or charge an emotional high. Can I help you to get out of debt? Well, yes and no. I can show you the path towards solutions that might work for you and/or have worked for others in the past but only you can take the steps necessary to implement those solutions. Until you can clearly identify what lead you into this financial swap and take action to not let that happen again I am afraid that the past may repeat itself again. And that’s not what either of us wants. If you are ready to examine those contributing factors and take a first step towards getting out of debt I would suggest that you work with someone that can put together a debt management plan to help get you on track. Click here for debt management information . Once you do that, and you are comfortable making that kind of commitment and changes, then come back and let’s talk about creating a more financially successful future for you. Big hug. Steve Source: Lauren Went Crazy With Credit Cards And Now She is Maxed Out Other Related Articles to Read Mohamad Wants to Pay His Creditors If Only They’d Let Him Deepu’s Wife is Unemployed And is Looking for a Debt Consolidation Loan Eva Has Heard Negative Things About CCCS April Wants To Know “As A Single Mom, How Do I Get Out Of Debt?” New Concerns About 40% Credit Card Debt Reduction Proposal

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In a terrible and unfolding tragedy in Chicago, or just another of the thousands of such similar stories around the nation, Bank of America has taken swift and specific action which has led to the firing of all employees and the closing down of the business with three days notice. Bank of America, (BoA) seems to be a little taken aback at the public outcry against them. In a statement, Bank of America said that it is “reaching out” to Republic management “to see what they can do to help resolve this issue.” But the bank noted that “When a company faces such a dire situation, its lender is not empowered to direct the company’s management how to manage its affairs and what obligations should be paid. Such decisions belong to the management and owners of the company.” What makes this issue almost publicly vomitous is that BoA was just handed $15 billon of taxpayer funds to help rescue it. The soul of banking today seems to be nothing but the pursuit of profit. Bankers will emotionally argue with you that their ethical responsibility is to their shareholders and company to generate as much profit as possible. But I ask you, at what cost? A local hometown bank or even a regional bank may have been more connected to the management at Republic and helped to cut things back sooner to help protect money owed to employees but as is the typical course of action today, large banks like Bank of America are cutting and running with limited notice which damages the average consumer. At the same time that some of the public is outrages by the actions of BoA in their actions which have left most employees without proper compensation, the very same sized large banks are terminating credit lines, raising interest rates and hurting their very own credit card customers as well. What we have here are American banks that feel it is appropriate to take federal funds, taxpayer money, and then turn around and harm taxpayers and consumers in their time or trouble, and their hour of needed consideration and compassion. The issue here is not that the banks are trying to find their profits and putting themselves first, the real issue is that we need to decide if it is acceptable for banks to be soulless or do we expect both compassion and profits from a bank at the same time. Or maybe banks should be given federal funds in accordance with their customer satisfaction, customer compassion, and fair treatment of customer quotient? Source: Bank of America Troubles With Republic Windows & Doors in Chicago Highlight ‘Banks Are Soulless’ Other Related Articles to Read I’m Afraid I’m Going To Get Laid Off. How Will I Pay My Bills? What Will I Do? Mortgage Lender List of Loss Mitigation Contacts That Can Help You Avoid Foreclosure 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.

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Deepu 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 was referred to you by the ARAG group . My wife has $13000 in credit card debt. she is unemployed. We are in a rough spot but things should get better March 1st, 2009. Is there anything you can do to help consolidate our payments to lower them and help pay the cards off faster?and if so can the first payment be due march 1st? Deepu” Dear Deepu, From what you have described, a credit counseling or debt management plan might be an appropriate solution to allow you to get back on track. However, without any income coming in, no experienced debt management plan is going to contact creditors until they get the first monthly payment from you. If you can’t afford to start paying till some time in March, then there is little that can be done now, except to deal with the collection pressure that will soon come. See “ How to Hide From Debt Collection, the Debt Collector, and Creditors ” for some tips. The only possible option for lowering your balances is going to involve some type of debt settlement . Again, that is not going to be a possibility until some income comes rolling in. In the meantime while you wait for March to arrive, I would go ahead and contact the debt management company now and get some specific information about the terms and reductions available, click here . Big hug. Steve Source: Deepu’s Wife is Unemployed And is Looking for a Debt Consolidation Loan Other Related Articles to Read Diana Is Struggling to Make Credit Card Payments And Afraid The Perfect Debt Assistance Program Robert Wrote “I Do Not Know Where To Start Other Than I Am in Debt” Free Get Out Of Debt Calculators Online Ginger Asks “I Started My Business On Credit Cards But It’s Hard to Make Payments”

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If you have a mortgage with one of the lenders below you can use the contact information to reach the person at the lender that should be able to direct you to the special terms or programs available to help you avoid foreclosure or to come to a solution regarding your delinquent mortgage . The contacts should be able to handle Short Sales, Foreclosures , Forebearances, Loan Modifications, Repayments, Deed-in-Lieu of Foreclosure arrangements, etc. Altegra Credit Co. Loan Services Loss Mitigation Department (Home Loan Services) Gary Fedoronko Gary_Fedoronko@HLS.ML.com 412-918-7552 American Home Mortgage Servicing fka Option One Loss Mitigation Department Donald Kelly Donald.Kelly@ahmsi3@oomc.com 904-996-1748 Ameriquest Mortgage Co. Loss Mitigation Department (Citi Residential Lending) Tess Hoo teresa.hoo@citi.com 714-634-2474 ext 38864 BancorpSouth Loss Mitigation Department Carla Hall carla.hall@bxs.com 662-620-3644 Bank of America Loss Mitigation Department LuAnne Polak luanne.polak@bankofamerica.com 716-635-2780 Cynthia Mech Loss Mitigation Department cynthia.mech@bankofamerica.com 716-635-2760 Boshwit Bros. Mortgage Co. Loss Mitigation Department Andrew Boshwit aboswhit@comcast.net 901-272-0100 Chase Manhattan Mortgage Co. Loss Mitigation Department (Chase Home Finance) No Certain Person 800-446-8939 Chevy Case Bank / B.F. Saul Mortgage Loss Mitigation Department Jeff Huston jrhuston@chevychasebank.net 301-939-4057 Jana Gantt jmgantt@chevychasebank.net 301-939-4054 Cimarron Mortgage Co. Loss Mitigation Department Ronnie Greenhagen ronnieg@ecimarron.com 601-899-1547 (voice) 601-899-1502 (fax) Citifinancial Mortgage Loss Mitigation Department Dianne Whatley dianne.whatley@citigroup.com 972-657-3090 Citimortgage Loss Mitigation Department John Godinet John.j.godinet@citigroup.com 301-696-5069 301-696-4473 (fax) Leann Luhn Leann.luhn@citigroup.com 301-696-4267 301-696-4473 (fax) Colonial Bank Loss Mitigation Department Gerald Banks Gerald_Banks@colonialbank.com 800-222-0661 Countrywide Loss Mitigation Department Kelly May kelly_may@countrywide.com 805-577-3011 Bobbi Hook bobbi_hook@countrywide.com 214-200-2594 Trent Thompson trent_thompson@countrywide.com 972-498-6206 Gentry LaFon gentry_lafon@countrywide.com 972-498-6117 Davison State Bank Loss Mitigation Department Lori Barton lorib@thestatebank.com 810-714-3940 EMC Mortgage Loss Mitigation Department Michael Brown 214-626-3689 Kristen Belmonte Kbelmonte@bear.com 214-626-5488 Fentura Mortgage Loss Mitigation Department Lori Barton lorib@thestatebank.com 810-714-3940 1st Trust Bank for Savings Loss Mitigation Department (Magna Bank) Robin Terry robin.terry@magnabank.com 901-309-7999 ext 4413 First Horizon Loss Mitigation Department Leigh Ann Hammon Lhammon@firsthorizon.com 214-441-7329 Shantell Williams shtaylor@firsthorizon.com 214-441-6013 First Tennessee Loss Mitigation Department Carol Wilkerson cawilkerson@ftb.com 865-582-4030 Flagstar Bank Loss Mitigation Department Jerri A. Willis Jerri.A.Willis@flagstar.com 248-312-6690 (phone) 888-710-8130 (fax) GMAC Rescap Loss Mitigation Department Peggy Slattery peggy.slattery@gmacrescap.com 1-877-815-4622 (phone) 1-866-535-9471 (fax) Shalini Parker Shalini.Parker@gmacrescap.com 214-874-6125 Homecomings Financial and GMAC Loss Mitigation Department Roshum A. Austin roshun.austin@homecomings.com 901-276-0079 Erin Drummer erin.drummer@gmacrescap.com 214-874-6652 Litton Mortgage Loss Mitigation Department Randy Reynolds rreynolds@litton.c-bass.com 713-966-8985 John Crandall John.Crandall@littonloan.com 713-561-8211 (phone) 713-793-4304 (fax Litton Mortgage c/o Prommis Solutions Loss Mitigation Department Brad Norwood Bradly.Norwood@Prommis.com 770-643-7288 Tel. 1-866-480-4949 Fax MB Financial Bank Loss Mitigation Department Nannette Makarzyk Nmakarzyk@mbfinancial.com 847-653-2840 (phone) 847-653-0099 (fax) M & T Bank Loss Mitigation Department Judith Palmer JPalmer@mandtbank.com 716-635-4008 Tel. 716-635-4070 Fax National City Mortgage Loss Mitigation Department 1-800-367-9305 Ext. 57153 Ocwen Loss Mitigation Department Cindy White cindy.white@ocwen.com 404-737-5544 PHH Mortgage Loss Mitigation Department 800-750-2518 MBSLMReferrals@mortgagefamily.com Real Time Resolutions Loss Mitigation Department Angela Jump Angela_Jump@rtresolutions.com 214-599-6376 direct 877-469-7325 ext 6376 214-599-6388 Fax Resurgent Capital Services Loss Mitigation Department General Contacts Jessica Gullick jgullick@resurgent.com 864-248-8664 Escalated Contacts: Sherrie Emerson semerson@resurgent.com 800-365-7107 ext 8615 Karen Gearhart kgearhart@resurgent.com 800-365-7107 ext 8355 Michael Keaton mkeaton@resurgent.com 800-365-7107 ext 8756 SunTrust Mortgage, Inc. Loss Mitigation Department Ann Oley ann.oley@suntrust.com 804-291-0843 Select Portfolio Servicing Loss Mitigation Department Joann Goldman joann.goldman@spservicing.com 801-594-6338 The State Bank Loss Mitigation Department Lori Barton lorib@thestatebank.com 810-714-3940 Washington Mutual Home Loans Loss Mitigation Department David Whitman 904-886-6113 Julie A. Mathis 904-886-1305 Chrissy Lopez 904-886-1313 Shalonda C. Anderson shalonda.anderson@wamu.net 904-462-2237 Wells Fargo Financial Loss Mitigation Department Pam Gross Pam.Gross@wellsfargo.com Wells Fargo Financial Bank Loss Mitigation Department 515-331-9130 or 866-533-2108 Wells Fargo Home Mortgage Loss Mitigation Department Kimber Dehning Kimber.Dehning@wellsfargo.com 815-577-9008 Wilshire Credit Corporation Loss Mitigation Department Jodi Seits jodi_seits@wcc.ml.com 503-223-5600 Tricia Patterson tricia_patterson@wcc.ml.com 503-223-5600 Source: Mortgage Lender List of Loss Mitigation Contacts That Can Help You Avoid Foreclosure Other Related Articles to Read Bankruptcy Judges Should Have the Power to Modify Mortgages 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 Jason Has Not Paid His Mortgage in 10 Months And Wants to Keep His House Worth Reading - New Tack in Default Battle: Cutting Mortgage Principal

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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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Jairo 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 opened that Bank of America Clean Sweep six months ago and I keep paying every month a little more than the minimum but the amount is almost the same and they reduce my credit card from $7000 to $500. My wife’s job is giving her less hours every month and she is the head of household, we barely can pay this account. If we stop paying the clean swip from BA how this can affect us? Jairo” Dear Jairo, Bank of America extended credit to you with enthusiasm and encouragement and if you stop paying it they will pursue you with vengeance and hostility. Chances are very good that they will sue you for the debt and you will certainly wind up in collections and get calls and letters from bill collectors. I previously reviewed the Bank of America CleanSweep offer in detail and pointed out all the “gotchas” in that offer. But your situation brings up another point. You see credit is granted in absolutes, as in you must absolutely repay this debt in accordance with the terms you agree to when you sign a contract for credit. But life is anything but absolute. We have no idea what is going to happen to us at any point in the future, like hours being cut. Frankly, it looks to me as if you simply got sucked in to the negative terms and conditions associated with the credit offer; they have reduced your line of credit down to the minimum, your interest rate will probably go up and the minimum payment is making little to no progress in actually reducing the balance. All of those negative consequences and more are part of the CleanSweep and other offers. Some solutions to consider would be a debt management program if the reduction in hours was temporary and likely to go back up in the near future. But bankruptcy is always a legal option to discharge legal debt you can’t pay anymore. You should consult a local bankruptcy attorney and ask for a free bankruptcy review for more information about how bankruptcy might help or hurt you. Steve Source: Jairo Wants to Stop Paying His Bank of America Clean Sweep Debt Consolidation Loan Other Related Articles to Read Credit Card Companies Are Coming For You. Protect the Wife and Children. Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up. Karen Writes In. “My Interest Rates Are Going Up. My Minimum Payments Are Going Up. Help!” BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call John Wants to Know “If I Consolidate My Debt On One Account Will It Hurt My Credit Score?”

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Jairo 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 opened that Bank of America Clean Sweep six months ago and I keep paying every month a little more than the minimum but the amount is almost the same and they reduce my credit card from $7000 to $500. My wife’s job is giving her less hours every month and she is the head of household, we barely can pay this account. If we stop paying the clean swip from BA how this can affect us? Jairo” Dear Jairo, Bank of America extended credit to you with enthusiasm and encouragement and if you stop paying it they will pursue you with vengeance and hostility. Chances are very good that they will sue you for the debt and you will certainly wind up in collections and get calls and letters from bill collectors. I previously reviewed the Bank of America CleanSweep offer in detail and pointed out all the “gotchas” in that offer. But your situation brings up another point. You see credit is granted in absolutes, as in you must absolutely repay this debt in accordance with the terms you agree to when you sign a contract for credit. But life is anything but absolute. We have no idea what is going to happen to us at any point in the future, like hours being cut. Frankly, it looks to me as if you simply got sucked in to the negative terms and conditions associated with the credit offer; they have reduced your line of credit down to the minimum, your interest rate will probably go up and the minimum payment is making little to no progress in actually reducing the balance. All of those negative consequences and more are part of the CleanSweep and other offers. Some solutions to consider would be a debt management program if the reduction in hours was temporary and likely to go back up in the near future. But bankruptcy is always a legal option to discharge legal debt you can’t pay anymore. You should consult a local bankruptcy attorney and ask for a free bankruptcy review for more information about how bankruptcy might help or hurt you. Steve Source: Jairo Wants to Stop Paying His Bank of America Clean Sweep Debt Consolidation Loan Other Related Articles to Read Credit Card Companies Are Coming For You. Protect the Wife and Children. Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up. Karen Writes In. “My Interest Rates Are Going Up. My Minimum Payments Are Going Up. Help!” BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call John Wants to Know “If I Consolidate My Debt On One Account Will It Hurt My Credit Score?”

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This weeks personal finance brain trust question was: Is having and using a credit card a right or a privilege? WC - A 27-year-old writer living in Chicago and writing about personal finance through The Writer’s Coin . This one’s easy: this is a service. So if I had to pick I would say it’s a privilege. When I was a kid I couldn’t understand the logic behind credit cards. My dad explained it to me and I was shocked: why would a company front you the money for something you don’t have the cash for? Well, because they’re going to make money off it, that’s why. No one owes you a credit card and you shouldn’t expect that. It is NOT a right. Antisay - This blog is mainly about finance and self-improvement; I am in a constant race to become a better me and this blog is all about that sort of lifestyle. Visit this site . In my opinion, owning a credit card is a privilege. By definition, a privilege is, “a right or immunity granted as a peculiar benefit, advantage, or favor.” Credit cards are grated only to those who qualify - in theory, anyway. I remember applying for a Victoria Secret store card when I was 18 and being declined because I had no credit history. Once I had a credit history, I was able to get a card with them, but with very high interest rates because I really hadn’t proved my financial self to the world yet. Having a credit card is a privilege granted when we show that we can be responsible with money. The fact that the credit card companies have lowered their standards significantly in the last decade or so doesn’t change the fact that it’s a service they provide to those who qualify - not a service that they provide to anyone who wants it. If you have a credit card, it is still a privilege to use it - not a right. If you go over your limit, it is not your “right” to spend more than you’re allowed, and you will get a penalty as a result. And if the credit card company decides they no longer want to lend to you, they can terminate your line of credit. If you abuse the privilege, it will be taken away or you will suffer the penalties. As a privilege, it is something that should be treated carefully and respected - just like the privilege of recess in elementary school. If you abused the privilege by punching the kid next to you, it was taken away… and so we learn not to punch other kids. And just the same, we have to learn not to overspend or rely on credit too much - lest we find ourselves with a severe penalty. The card might not be taken away from us (unfortunately), but we’ll suffer all the same with late fees, interest, and hassling calls all the time. I don’t really know how to conclude this - I’m left with final thoughts somewhat unrelated to the topic. Except to say that I wonder what is going through the minds of people who demand credit cards when they don’t qualify? Do they think that the card is their right? I am happy when people are rejected for cards - because I know that they won’t be able to hurt themselves more by overspending themselves into oblivion and then suffering debt misery for the rest of their lives. Steve Rhode - A personal finance blogger and founder of the Myvesta Foundation, a global social enterprise that helps people find solutions for money troubles. You can ask Steve your debt related question through GetOutOfDebt.org and he’ll help you for free. I believe that getting a credit card is a privilege since it is something that you must apply for and be awarded or granted access to by another entity. I think that, rightly or wrongly, many people treat their credit card as a right. So if having a credit card is a privilege then how much weight can we place in the screams of consumers that feel abused by creditors when the consumer put themselves in that position to begin with? And if it is a privilege and it is issued to generate revenue then isn’t it the banks ethical responsibility to use that tool to maximize revenue for the bank in any way legally possible, even at the expense of the financial well-being of their customers? But then again, aren’t consumers eligible for fair treatment and regulatory compliance by banks. If they are, then once you get and use a credit card it comes with some rights. J. Money - You’ll enjoy the blog Budgets Are Sexy for a look inside the life of one blogger and how money impacts it. It’s a privilege baby! A privilege 99% of us Americans have, but it sure as hell isn’t a right. If it were EVERYONE would be able to have (and keep) one - and these days that’s simply not the case….plus look around at the rest of the world - not even close to what we have going on here. I have not way of backing this up, of course, but i’m sure it’s true. So if you’re lucky enough to get your hands on a GOOD credit card (like with low interest rates), then cherish it and use it wisely my friend. If you get caught dicking around, it may haunt you for years to come - and that’s no fun for anyone. Marcus - The creator of the CreditMattersBlog, this blogger has a deadly sharp point of view when it comes to consumer debt issues. Visit his blog . If anyone says that it’s a right, I’ll be shocked. Of course, it’s a privilege. But before you can earn the privilege, you must first be approved for a card. Indeed, we all started out with a clean slate. None of us could prove our creditworthiness from the get go. Therefore, our first card is typically granted without us having to prove a thing. Beyond our first card, though, it is a privilege to get additional cards. No one is guaranteed the right to get approved for a credit card. Indeed, we must earn that privilege by demonstrating that we can handle additional credit. Still, even if we’ve shown that we’re capable — and responsible — there are no assurances that the card companies will continue to extend credit to us. For whatever reason, a card company could withdraw our credit lines (in the form of credit-limit decreases or closures). If that happens, you’ll then realize that it was always a privilege to have the card in the first place. Fact is, if it was a right, the card companies wouldn’t be allowed to take the credit away. That’s my two cents on the topic. Dawn - Iowa Hippie Chick blogs about money love and marriage and offers so very insightful posts on personal finance that involve emotional insight and awareness. Vist her blog . This question is a no-brainer … Having a credit card is a privilege! It is a privilege that we earn by handling our personal finances responsibly. I suppose, it’s similar to the privilege of driving - If not handled with care it should be taken away. Thus keeping the rest of us safe from irresponsible users! Patrick Bryan - Living in Northern Ireland, Patrick helps people in a very different environment and economy but yet, much is universal and much is the same. Visit Patrick’s Northern Ireland blog on debt . Until the constitution is amended to include ‘the right to get into debt’ I feel you would have to describe a credit card as a privilege rather than a right. It is a commercial decision for a credit card company to issue someone with a card – in essence they decide if they are a good risk to repay the money lent, and if there is a profit to be made from the relationship. For many of us credit cards are a great benefit providing convenience, reduce the risk of carrying cash and provide interest free credit for up to 56 days. Until debit cards came along nothing could beat the benefit of having a credit card in your wallet, and if you use them ‘responsibly’ then I believe that we should still consider it a privilege to own one. Unfortunately it is when people fall behind with credit cards that the dark side of our flexible friends is revealed. High interest charges, late payment fees, retroactive application of interest charges, two-cycle billing – I could go on. It is for this reason the Credit Cardholders’ Bill of Rights was proposed. The capricious nature of credit cards is that even though they are inanimate pieces of plastic they can assume magical powers, transforming themselves from a helping hand which pulls you out of trouble into a shove in the back when you are teetering on the edge of a financial precipice. So, rather than defining a credit card as a ‘privilege’ or a ‘right’ I would prefer people to regard them as a form of ‘luxury debit card’ – a way of spending money in a safe and convenient manner, but which has to be paid back when the bill arrives each month. And if you can’t trust yourself to do this on a regular basis then it is probably best if you just use a regular debit card instead, and keep your credit cards at the bottom of your sock drawer, or locked in a high tower and guarded by a dragon. Source: Is a Credit Card a Right or a Privilege? - Personal Finance Bloggers Question of The Week Other Related Articles to Read Bob Was Injured And Is Now Behind On His Credit Cards Your Credit Card Company Is Waking Up After A Bender Ed is Disabled and Falling in Debt Fast. What Can He Do? More Bad News For Nordstrom and Target Credit Cards Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up.

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Jasmina 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 $46,000 in debt. Three are personal loans and four are credit cards (reason: in last two years I had four deaths in my family, funeral expenses). I don’t have any late payments and all my accounts are current. Is there anyone who offer consolidation loan for so high amount of debt for nonhomeowners. Also, all of these debts are on my and my husband name. Annual income $72.000. If I can put them all in one I can save a money in 6 months for a downpayment to buy a house. Right now we pay for rent $650. I am from Bosnia and live here for eight years only, so I don’t know a lot about this and any advice will be helpfull. Thank you Sincerely, Jasmina, Saint Louis “ Dear Jasmina, I’m so sorry that you’ve had to deal with so much loss, both emotionally and financially. Your situation and story is sad, but sadly not all that uncommon. I understand your desire for a debt consolidation loan. It is the solution that many think about when trying to get out of debt. The honest reality and chances of you finding a reputable lender to give you an unsecured debt consolidation loan are slim to none. Especially in this economic climate, lenders are more nervous and skittish than usual. They went from being really loose to now, really tight and stingy with their money. The only guaranteed debt consolidation loan out there would be to claim a massive number of tax exemptions on your withholding, you’ll get more in your paycheck that you can use to pay down debt and then at the end of the year you’ll owe the IRS money for all the taxes you didn’t pay. If you’ve never had a defaulted repayment plan with the IRS or a current payment plan now, they’ll let you pay the tax back over time at a low interest rate. I’m not sure how reasonable that approach is since you’d now owe the IRS, that can’t be discharged in a bankruptcy , instead of unsecured creditors, that could. But as I sit here and think about this approach I can’t help but chuckle that for many people it is a low cost way to consolidate debt and pay it off, with some risks. I’m not sure why I never thought of this before. Thank you. Even if you don’t get the free debt consolidation loan from the IRS, you can still start to payoff your debt with what money you have by following the debt snowball approach. The only other options would be to explore a debt management program that will allow you to make one monthly payment, but it is not a loan, and it can impact your credit report . Big hug. Steve Source: Jasmina Wants a Debt Consolidation Loan After Paying For Four Funerals Other Related Articles to Read John Wants to Know “If I Consolidate My Debt On One Account Will It Hurt My Credit Score?” Government Handing Out Secret Bailout Money to Pay Off Credit Card Debts New Scam Aimed At Desperate Consumers Looking For Government Loan or Free Government Money Banks in the UK Force The Sale of Homes Over Credit Card Debts How to get out of debt with Citibank

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Dayna 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 an upside down auto loan that I owe about $27,000 on a Mazda car and my monthly payments are $500 per month for 7 years with about 12.45 percentage interest rate. I am unable to refinance my auto loan because my credit is not that good and I owe too much debt. I am trying to figure out options on how to lower this car payment or get rid of the car - since I am upside down- selling the car is probably not going to help. If I did not have the car, I think I would have enough money to get myself out of other credit debt I have. Do you have any suggestions or can you help? I have no savings either and it is getting check to check for myself and my family. What can I do to either lower my car payment or get rid of it without heavy penalties and repossessions? Dayna” Dear Dayna, Sadly your situation is experienced by thousands and thousands of people each day. It is a sad and unfortunate situation for which there are only a couple of good solutions. One solution is to do an auto loan refinance . But this depends on credit being available and you having a reasonable credit score and good credit. Doing an auto loan refinance in that situation can lower your car payment by extending your auto loan out for a longer period of time, but then again, your loan is already fairly strung out so it is doubtful if a lender would go further than seven years. At this point it is not going to do any more damage to your credit to see if you qualify for an auto loan refinance so click on the link and see what they’ll offer you. The other solution is to sell the car and take cash that you have in the bank to pay off the remainder of the loan, after the sales price, to get a clean title to then transfer the car to the buyer. But then again, you don’t have any extra cash and that isn’t really a possibility for you either. So what are we going to do here? You probably need the car to get back and forth to work so we’ve got to prioritize your other credit debts. If those debts are credit cards or unsecured loans then the most logical thing to do is to look into a debt management program to see if they can reduce your payments on that credit, or stop paying it altogether. If you stop paying it and you think your financial situation is going to improve in the next few months, you can then go back and make a plan to repay your debt. If you don’t think you will be able to repay anything then you can consider bankruptcy now or wait until the collection pressure gets to be intolerable and then consider bankruptcy . I wish i had better news for you but it is a tough situation to be in with few good options. Big hug. Steve Source: Dayna Can’t Afford to Keep Her Car Or Get Rid Of Her Car, Even By Repossession Other Related Articles to Read Lower Your Car Payment. Skip It, Lower Your Interest Rate and Get Cash Back Josy Writes “My Real Estate Business Is Going Down The Drain” April Wants To Know “As A Single Mom, How Do I Get Out Of Debt?” Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up. Bob Was Injured And Is Now Behind On His Credit Cards

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All I’ve got to say is, Good ! The plan would have done more damage than good and while some people might have hoped that the government would accept the creditor based plan, it was shallow and not enough to make a real difference to help people avoid bankruptcy and get out of debt. Recently I wrote an article, New Concerns About 40% Credit Card Debt Reduction Proposal and Banks Agree to Wipe Out Up to 40 Percent of Credit Card Debt But Watch Out where I laid out my concerns over this plan. Well as of today, the proposed 40% debt elimination plan is dead. Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt. The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40 percent of credit card debt to be forgiven for consumers who don’t qualify for existing repayment plans. An agency official said the government objects to allowing banks to defer losses for several years on the forgiven debt, as would occur in accounting by lenders under the special program. The agency “does not consider any plan that defers the timely recognition of loss as prudent, and any such proposal cannot be viewed favorably by us,” Timothy Long, senior deputy comptroller for bank supervision policy, said in a letter to the two groups dated Monday and made public Wednesday. “The timely identification, reporting and management of credit losses, along with adequate loan-loss reserves and capital levels, provide the public with … confidence” in the banking system, Long wrote. The Financial Services Roundtable, which represents more than 100 large banks, brokerage firms and insurance companies, will “continue to look for ways to help consumers in these extraordinary times,” said the group’s senior vice president, Scott Talbott. Forgive me for being cynical but this plan was never designed to “help consumers”. The plan helped creditors by making the plan non-binding on all creditors, letting banks not report huge losses in a timely manner, and punish the consumer with huge tax bills for the debt forgiven. It was a stinker from the word go and I’m glad it’s dead. Maybe now we can get to work on putting together some real solutions that truly are designed to help consumers. Source: Government Kills Debt Write Off And 40% Debt Elimination Plan Other Related Articles to Read New Concerns About 40% Credit Card Debt Reduction Proposal Banks Agree to Wipe Out Up to 40 Percent of Credit Card Debt But Watch Out. Searching For a Debt Consolidation Loan or Credit Card Counseling Service Tanisha Wants to Cash Out 401K To Get Rid Of Debts. April Wants To Know “As A Single Mom, How Do I Get Out Of Debt?”

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BB 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 in approximately $80,000 of credit card debt with an unfortunate and sudden drastic change in finances due to situations beyond my control. I owe American Express $40,000 along with other credit card debt. I have never been late on my payments except this month. American Express along with a few more creditors has already begun to call me. I have not as of yet returned the calls. I’m pondering bankruptcy or perhaps some sort of credit counseling or debt consolidation plan? Do I just write each creditor explaining my situation? At this point I only have approximately $500 dollars a month and just one of my American Express accounts requires a monthly payment of $516. Please help, I’m desperately awaiting your advice. What would you suggest I do? I inquired about bankruptcy and was advised I’d need to wait perhaps 3-6 months as bills are behind. Suggestion????? BB” Dear BB, It is amazing how people are really as good to creditors as their last payment. Whatever has caused this sudden and drastic change was not expected or planned for but it has now left you in a very difficult situation. American Express is a difficult company to deal with and their bill collectors have limited tools to use to really help you to get out of debt. The pressure they apply and approach to their debtors actually does more to drive people into bankruptcy as crazy as that sounds. There really isn’t any reason to write to your creditors. If you have been late on a payment, they already know that. Besides a preemptive letter to your creditors seems to go nowhere and vanish into the ether. You are much better off explaining your situation, nicely, to the collector on the phone when they call. If your situation is temporary and you will be able to return to your previous financial standing in a couple of months then you’ve got some other options but from the way I interpret your question it sounds as if this is not a temporary reduction in income and it is more dire and long-term. I am surprised that you were told to hold off on bankruptcy unless you were using your American Express cards up to recently. It would not be the best scenario for you to use credit cards you include in bankruptcy within 90 days of going bankrupt. I would seek a second opinion from another bankruptcy lawyer in your area and ask for a free bankruptcy review . In the meantime you should consider not sending any more payments to the credit card accounts you can’t afford to pay. This will damage your credit report and lower your credit score but there is no upside in draining any money that you may have currently on hand that may be needed to make necessary ends meet or to pay for bankruptcy when you file. With credit card debts of $80,000, your monthly minimum payment on those accounts is about $1,600, and that $500 is not going to be enough to please all of the creditors. Any repayment plan at that level is almost certainly to fail. If bankruptcy is really in your future then throwing good money after bad is not going to accomplish a thing. But that does not mean you can go out and party with that extra cash. Save it up to go bankrupt. Big hug. Steve Source: BB Owes American Express $40,000, She Can’t Pay It, Bill Collectors Are Starting to Call Other Related Articles to Read American Express to Cut 7,000 Jobs. Experience The Freedom Of Joblessness. ML Writes In, “I Can’t Pay My American Express Card.” Bank of America Offers “Clean Sweep” Debt Consolidation Loan Up to $50,000. Let’s Look at The Facts And See Who Is Really Cleaning Up. Diana Is Struggling to Make Credit Card Payments And Afraid Gift Cards, The Gift That Can Stop Giving

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