What is Debt Consolidation
Credit Card Debt Consolidation
Medical Debt Consolidation
7 Tips About Debt Consolidation
Common Debt Consolidation Mistakes
Debt Consolidation
Risks of Debt Consolidation, Types of Debt Consolidation Loans, Pros & Cons
Balance Transfer or Debt Consolidation?
Debt/Credit Calculators
Discussion Forum
Credit Counseling and You
Non-Profit Credit Counseling
Consequences of Credit Card Default
Effects of Credit Card Default
9 Common Credit Card Mistakes
Eliminate Credit Card Debt in 90 Days
Credit Card Debt
10 Expenses You Can Not Afford If You Have Credit Card Debt
Truth About Credit Card Companies
Should I Tear Apart My $300 Limit Credit Card - The Worst Credit Card Ever?
Disputing Credit Card Debt
401k vs Credit Cards: Where to invest?
Debt Settlement Letters
Sample Letters
Write a Powerful Debt Validation Letter
Reputable Debt Settlement Agreement
Debt Settlement vs. Debt Consolidation
Dangers of Debt Settlement
Avoid Debt Settlement Pitfalls
Debt Relief Tools/Debt Management Programs
Debt Settlement FAQs
Is Debt Settlement Money Taxable?
Reduce Medical Debt
Free Bill Consolidation: Does it exist?
Budgeting to Stay Debt Free
10 Debt Reduction Mistakes
Should I Pay Off my Debt or Save Up for a Down Payment on a House?
Bill Consolidation
Three Secrets to Lowering Your Debt
Tips To Lower Your Bills
Government Debt Help
Debt Help During Recession
Debt Relief During a Recession
What Debt Relief Means
Pay Off $50,000 Debt
Worried About Bills?
Money & Debt Videos
Report Illegal Collection Activity
Managing Medical Bills
Medical Debt & Bankruptcy
The Facts on Debt
Debt Quotations
Drowning In Debt?
Who to pay first?
Managing Debt FAQs
Medical Debt Solution
12 Hot Tips for Eliminating Debt
7 Debt Elimination Mistakes
2 Ways to Achieve Debt Elimination - Debt Snowball Elimination Method
Payday Loan Consolidation
Payday Loan Debt Consolidation
Payday Loan Relief
Default on a Payday Loan?
Payday Loans | Consumer Information
Problems with Payday Loan Stores
Bad Credit Loan Relief
How Payday Loans Work
What is Loan Consolidation?
How to get a $50,000 loan
Get an $80,000 Loan
$100,000 Loan for Debt Repayment
Veteran's Home Loan Refinance Options
Government Loans vs. Private Loans
Finding a Government Loan
Student Loan Consequences
Reputable Debt Consolidation Companies
Debt Consolidation Company Reviews
Reputable Debt Management Companies
List of Debt Companies in USA
Debt Companies By City
How Debt Affects Your Credit
What is shown on my credit report?
Improve Your Credit Score
Correct Credit Report Errors
Can Debt Settlement Ruin Credit?
Can Debt Negotiation Ruin Your Credit?
401k Limits
Safe CD Rates
Financial Planning
Banks versus Credit Unions
AMEX Horror Stories
IRS Tips For Audit
Choosing a Tax Preparer
American's not planning for long term care
Understanding Usury Laws
Unemployed During A Recession
FREE Government Grants
Where does money really come from?
About Us
Contact Us
6 Payday Loan Debts Owe
Borrow a Loan to Pay Off Payday Loan?
My husband was out of his job and Payday Loans were rolling over

Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Credit Card Facts

Credit card companies have default clauses that allow them to charge you late fees, over-the-limit fees and increase your interest rate when you do default.  Many, though, are now including something called a universal default clause.

Universal Default Clause

credit card defaultThe most disastrous effect of defaulting on your credit card is related to a universal default clause.  Is a universal default clause written into your agreement with your credit card company?  If so, this clause gives your creditor the right to increase your interest rate should you be late on a payment.  Unfortunately, it also gives this creditor the right to increase your interest rate should you default on any account. 

Once you agree to a credit card with the universal default clause, it is typical for your credit to be monitored.  It is monitored to see if you default on any account – e.g., your electric bill, your car payment, your mortgage payment, or any payment to any creditor.  You can even trip triggers with this creditor if you have too much credit.

If anything occurs that is considered a default, then the creditor of the credit card with the universal default clause can increase your interest rate.  Your rate can lawfully be raised to the default interest rate indicated in your agreement.  Sometimes that is two or three times the original interest rate.

Video: Suze Orman - Universal Default - Credit Cards

Credit Reporting

credit card defaultCredit card companies can influence your credit report in a positive or a negative way.  They have the ability to insert information and initiate activity on your credit report without you even knowing it.  By law, though, you are allowed one free credit report per year from each of the three major credit reporting bureaus.  You should take advantage of this to ensure your credit report reflects accurate information.

Reporting from credit card companies can hinder you or exclude you from being considered for a car loan, a mortgage loan or any loan.  The same reporting can also set you up for the best interest rates if you are reported as paying on time consistently.  The way you treat your credit cards will reflect on your credit report and your credit rating used for future loans.  Respect and protect your credit and your credit will open doors for you that, otherwise, would not have been opened.

Collection Agency Practices

There are legal practices that a collection agency may conduct to collect on your account, and there are illegal practices that some agencies attempt in order to collect.  You need to understand your rights under the Fair Debt Collection Practices Act (FDCPA).

Legal Practices 

Collection agencies are allowed to pursue collection for household, personal and family debts.  They are to abide by the legal practices laid out by the FDCPA.  Some general activities they are allowed to initiate are as follows:

  • Call you between the hours of 8:00 a.m. and 9:00 p.m. your time zone.
  • Call others to obtain your contact information, but only to find out your phone number, your place of work and where you live.
  • Pursue collection through the courts.
  • Close your accounts, and note them as unpaid on your credit report.
  • Report a gamut of negative information on your credit report if you fail to pay on accounts, as long as it is accurate.
  • Inform you of all aspects of your debt.  This is required by law.

Video: Illegal Debt Collection Tactics (ABC)

llegal Practices

There are illegal practices that the FTC has prosecuted certain collections agencies for in the recent past.  Don’t fall prey to these predators.

  • Harassing you with repetitive phone calls throughout the day.
  • State or imply that they are attorneys when they are not.
  • Accuse you of committing a crime.
  • Threaten to send you to jail.
  • Misrepresent the amount you owe.
  • Threaten to seize and sell your property or garnishee your wages, unless they actually intend to do so.
  • Report false information about you to anyone or on your credit report.
  • Contact you via postcard.
  • Deposit a post-dated check before the agreed-upon date.
  • Trying to collect on a debt you do not owe.

Know your rights

If credit reporting agencies are acting illegally, file an online complaint with the FTC to immediately notify them of the specific illegal activity.  Notify the credit agencies committing the illegal practices that you have filed the online complaint form and reported the activity to the FTC.  Also inform them that you will report every additional incident from that point forward.  It will be more effective if you notify the representatives calling, and send a letter of your intent to the company.  Make sure you mail it Certified Mail Return Receipt Requested.  You will be armed with evidence to assist the FTC, should a decision be made to take action against the agency.