Bad Debt Reserve - Reduce Your Losses

When you start out your small business or ‘future’ big organization, you definitely leave room for losses. Losses are a part of our lives - while failure can be total or deferred success, a loss is most certainly a ‘loss’.

A start-up or even a small bistro might require funds to start off but sometimes debt cannot be repaid. Even after trying hard and using all your resources, sometimes failure is all that we get. Naturally to the lenders that have lent you the money, it becomes a bad debt as it is not collectible and is therefore of no value to the creditor. Is bankruptcy the only face-saving solution? Enter bad debt reserve. Read on to find how these 3 words can change certain things for the better… Read the rest of this entry »

Poor Credit Record: Have you seen bounced checks lately

Checks are meant to pay the bearer the amount written on them. The moment a check bounces, it can let the bearer assume that either the account holder does not have money or he does not want to pay. Whatever your reasons are, the lender in this case will assume the second one as it is the logical. Repaying a loan is the first commitment that any borrower makes and it displeases no lender greater to see bounced checks. Credit bureaus may keep a tab on your credit handling capabilities, but other agencies track the management of your declared accounts. If they get into action, even a single bounced check which is reported can make your new transaction account impossible.

Check reporting

These agencies are meant to protect the financial interests of the Financial Institutions (FI) and retail merchants like the ones who have grocery stores. With losses being the other name for bounced checks, these agencies report every single bounced check that is issued or reported against your name. The Fair Credit Reporting Act (FCRA) states that every single bounced check event can stay on your credit record for as many as seven years, if the check reporting services get into action. A good way to avoid mistakes like bounced checks is to frequently balance and monitor your checking account. Never close one checking account before you have established another one. Ensure that any or all outstanding checks have been cleared and account fees related to old accounts have been paid in full.

What can you do?

If a banking institution refuses to do business with you and turns you away citing a negative report about your banking account, get some facts in hand. You can get hold of the name of the institution, its address and the contact numbers so that you can verify whether such an event took place in reality or was a mistake. If it’s a mistake, then you can request a copy and correct the misleading information. Under certain circumstances like if you’re denied a new account at a financial institution despite having a clean credit report, you are entitled to a free report. May be the event happened only too recently and since you don’t check your credit report so often, it escaped your attention. With free credit reports and online credit reports, make sure you use them to your benefit.

No Matter what…Don’t Do these

• Be wary of services on the Internet that will tell you that they can ’solve’ the problem.
• Don’t pay for check history cleaning firms and organizations.
• Don’t discuss your situation with anyone who isn’t related to you and never divulge any personal or financial information to the person.

Bounced checks can be the proverbial nail in the coffin and are the worst forms of the negative items that can stick to your credit report for years. Be very sure before you write out a check or pay somebody in style. Your credit record is your responsibility and bounced checks can be irresponsible.

Is Your Debt Collector Threatening You - Know your rights

Debt collectors are not all bad. Some do it for living. They belong to agencies which adhere to rules and practice every law covering debt collection practices. They do a good job. But meet the Frankenstein of credit industry. Enter the bad agencies and the horrible debt collectors who break about 10 laws everyday and make your life a living hell. Abuse, harassment and fear are the tools that they use to get the money back. Under the federal Fair Debt Collection Practices Act (FDCPA) - you can actually dispute their behavior and seek redress. Read on to know more about how to take care off your threatening debt collector…

Very Common Threat

The most common lie such a debt collector uses is that they will get you arrested for failing to clear the dues. While “meet you in court” may be politically correct, arrest is not a legally certified way of asking for return of debt. As a debtor (and you are also a consumer) you have 30 days to contest the soundness of any debt. The FDCPA does not permit debt collectors to “overshadow” the validation or soundness of any debt and hence if you are late by 20 days - the debt collector cannot threaten you with arrest as it violates the FDCPA rule. Only after 30 days can he even claim that you have not paid the debt, provided such a debt is valid and also unpaid.

Spreading it in the family

Many debt collectors actually threaten people with consequences like telling about the debt to friends, family and even your employer. This violates the FDCPA rule which states that a collector may not disclose the existence of the debt, or any explicit information about the debt, to anyone other than the nonpayer. In some states it is illegal to disclose such information even to the debtor’s spouse! Debt does not mean you cannot stop earning better credit and debt collectors can never wash your dirty linen in public.

Garnish your wages

If your debt collector threatens you with garnishing your wages - the debt collector himself knows that it is not as easy as it may sound. To do this the collector must first file a suit against you in court, and then get a verdict against you. Now if the debt collector doesn’t intend to sue you, then he can never claim even a penny as a result of his garnishing your wages. In some states it is illegal to even garnish a borrower’s wages so the statement is in direct contravention with the law. FDCPA condemns such action.

Ruin your credit forever

Many debt collectors actually use this threat as it works better than others. Actually a debt collector may threaten to ruin your credit but the fact that your debt has been already filed under a debt collection agency means that your credit score has been already affected, negatively. There is no other way it can affect your credit as it will last on for 7 years. So the use of the term ‘forever’ is just a hollow sound in the air. The Fair Credit Reporting Act (FCRA) explicitly states that negative items may only be reported for 7 years.

You are not helpless

With most debt collectors going in for empty threats, there are some things you can do. If you feel that you are being subjected to insulting and pesky debt collection actions, you can file a complaint with your state attorney general’s office, the Better Business Bureau (BBB), and the state agency which gives out licenses to the debt collection agencies. Debt counseling can also be of great help, to fight off feisty debt collectors with a good plan to pay off your debt.