Matt Schaub asked:


If you fall behind in repaying creditors, you may be contacted by a debt collector. Under the Fair Debt Collection Practices Act, debt collectors have a legal responsibility to treat you fairly.
Even if debt collectors treat you unfairly, of course, you are still required to pay any legitimate debt. And like any legal proceeding, it can be a hassle to put in motion the legal steps necessary to actually obtain legal relief from a debt collector who is harassing you in the first place. For these reasons and others, you may prefer to simply "kill two birds with one stone": begin a program of responsible Debt Settlement or Consumer Credit Counseling in order to begin to start taking action to lower your debt payments and help keep creditors from harassing you. ReallyGreatRate provides complete information on all the Debt Settlement options available to you, and offers a free consultation to discuss which option would work best for you.
The more knowledge you have the better. It is in this spirit that we want to inform you of some of your rights under the Fair Debt Collection Practices Act.
 How is term "debt collector" defined? In other words, who does the Act actually deal with?
Any person who regularly collects debts owed to others is how the Act defines "debt collector." Even an attorney who contacts you, if he collects debts on a regular basis, is a debt collector.
Which of my debts are covered under the Act?
 Personal, family, and household debts, are covered under the Act. Money you owe for the purchase of an automobile, for medical care, or for charge accounts are all covered.
 So just how exactly is a collector allowed to contact me?
 A collector is allowed to contact you in a variety of ways. It can be in person as well as by mail, by telephone, telegram, or by fax. A debt collector, however, may not contact you at inconvenient times or places. This would include before the hour of 8 a.m., or after 9 p.m. in the evening. That is – unless you agree. Also: debt collectors are not supposed to contact you at work if the collector knows your employer disapproves of such contacts.
 Can I actually stop a debt collector from contacting me unfairly?
 If you write a letter to the collector telling the collector to stop contacting you unfairly, the collector is supposed to stop. After that the collector is supposed to stop contacting you. That is: except to say there will be no further contact. Or, to notify you that the debt collector or the creditor intends to take some specific action.Remember, however: sending such a letter to a collector does not make any legitimate debt go away! You could still be sued by the debt collector or your original creditor.
 What must the debt collector tell you about the debt?
  The collector must, within five days of your first being contacted, send you a written notice telling you the amount of money you owe. The name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money must also be specified.
  May a debt collector contact anyone else about your debt?
 If you have an attorney, the debt collector must contact the attorney and not you. If you do not have an attorney, a collector may contact other people to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. The collector, under most circumstances, is prohibited from informing anyone – other than you or your attorney – that you owe money.
 Harassment
Debt collectors may not harass, oppress, or abuse you or any third parties they contact. Debt collectors may not: use threats of violence or harm, publish a list of consumers who refuse to pay their debts (except to a credit bureau), use obscene or profane language, or repeatedly use the telephone to annoy someone.
 May a debt collector continue to contact you if you believe you do not owe money?
 A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. A debt collector CAN renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
 What false statements must a debt collector refrain from making?
 Debt collectors may not: use any false or misleading statements when collecting a debt, falsely imply that they are attorneys or government representatives, falsely imply that you have committed a crime, falsely represent that they operate or work for a credit bureau, lie about the amount of debt owed, say that papers being sent to you are legal forms if, in fact, they are not, claim that you will be arrested if you do not pay your debt, state that they will seize, garnish, attach, or sell your property or wages (unless the collection agency or creditor intends to do so, and it is legal to do so), state that actions, such as a lawsuit, will be taken against you, (when such action legally may not be taken, or when they do not intend to take such action), give false credit information about you to anyone, including a credit bureau, send you anything that looks like an official document from a court or government agency when it is not, or use a false name.
What other unfair practices must a debt collector refrain from engaging in?
 Debt collectors may not: collect any amount greater than your debt, unless your state law permits such a charge, deposit a post-dated check prematurely, use deception to make you accept collect calls or pay for telegrams, take or threaten to take your property unless this can be done legally, or contact you by postcard.
What control do you have over payment of debts?
If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.
 What can you do if you believe a debt collector violated the law?
 You do have the right to sue a collector in a state or federal court within one year from the date the law was violated. Of course, you must go through proper legal channels to initiate the legal action. And if you lose, you will be incurring legal costs on top of any debt you legitimately owe.

Justin V. Cecil asked:


We are going to go through this step-by-step with a hypothetical scenario. Joe Smith will be our hypothetical debt-ridden participant. We will show Joe step-bystep how to eliminate his debt so just imagine you are in Joe's shoes and applythe same techniques.
Joe's efficient budgeting has saved him an extra $50 per month. He has these debts at these monthly payments:
Debt 1 – $800 @ $90 per month
Debt 2 – $1,200 @ $110 per month
Debt 3 – $5,300 @ $202 per month
Debt 4 – $10,000 @ $280 per month
STEP 1
Joe will pay the minimum balances on all his debts except the smallest (Debt 1).He will use all of his extra money ($50 per month) to payoff his smallest debt first(regardless of interest rates). Thus, Joe will be paying $140 per month on Debt 1($90 original payment + $50 additional from budgeting). Joe will continue payingthe minimum payments on Debts 2, 3 and 4.
• This technique is recommended because Joe can quickly payoff thesmallest debt of $800. Once he does, Joe will feel GREAT because hehas accomplished his first step to debt freedom. This will give Joe theconfidence and drive to continue paying off all his debt.
• Though not recommended, Joe may be disciplined enough to take on alarger debt balance first which carries a larger interest rate. Joe could goahead and do this, but he needs to be careful not to become discouragedand quit.
• If Joe had two debts with similar balances, then he should pay off the onewith the highest interest rate first.
STEP 2
Joe has paid off Debt 1. He should now use the monthly amount he was payingon Debt 1 and begin eliminating Debt 2 of $1,200 (which is actually lowerbecause he has continued paying the minimum payment). Here's how it works:
• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus theminimum payment of $110 for Debt 2.
• Joe will be paying a total of $250 per month on Debt 2 until it is paid in full.
• He will continue paying the minimum payments on Debts 3 and 4.
STEP 3
Joe has paid off Debt 2. He should now use the monthly amount he was payingon Debts 1 and 2 and begin eliminating Debt 3 of $5,300 (which is actually lowerbecause he has continued paying the minimum payment). Here's how it works:
• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus $110from Debt 2, plus the minimum payment of $202 for Debt 3.
• Joe will be paying a total of $452 per month on Debt 3 until it is paid in full.
• Joe will continue paying the minimum payment on Debt 4.
STEP 4
Joe has paid off Debt 3. He should now use the monthly amount he was payingon Debts 1, 2 and 3 to begin eliminating Debt 4 of $10,000 (which is now lowerbecause he has continued paying the minimum payment). Here's how it works:
• Joe will apply $50 extra from budgeting, plus $90 from Debt 1, plus $110from Debt 2, plus $202 from Debt 3, plus the minimum payment of $280for Debt 4.
• Joe will be paying a total of $732 per month on Debt 4 until it is paid in full.
STEP 5
JOE IS DEBT FREE! He has paid off $17,300 in debt and now has an extra$732 per month including:
• $50 effective budgeting
• $90 Debt 1
• $110 Debt 2
• $202 Debt 3
• $280 Debt 4
So what should Joe do with the extra $732 per month, blow it? No way. Now itis time for Joe to become a millionaire. Visit PeskyDebt dot net to learn how to turn the extra $732 per month into $2,594,263.39 over time.

Jo Ann LeQuang asked:


While debt is a common problem in our culture today, it is not always discussed in a productive way. In fact, it is often not discussed at all. That means that most of us worry a lot about debt, but few of us really learn about it.

In that kind of climate, a lot of wrong beliefs can spring up. While some mistaken ideas about debt may be academic matter or of not much consequence, some can be serious.

In fact, to really tackle your debt problem you have to understand it. Part of that means understanding your own spending habits and personal situation. I can't help you there.

But the other part means understanding debt and how it works.

Here are seven common myths people believe about debts.

The first: debt is a recent phenomenon.

Many of us think that it is our modern, overextended lifestyle that contributes to debt and that in ancient times, people just did not have the same problem with money that we do. That's not true. Provisions for bankruptcy protection appear in the United States Constitution (1763).

Debtors' prisons were common in the industrial revolution. And in Biblical times, people who were in debt might sell themselves into slavery to appease a creditor. The truth is debt has been around about a half hour after the creation of money.

The second myth: debt shows a lack of character.

Now it is true that a disreputable person can easily get himself or herself into debt, but debt is not in and of itself a character flaw. Debt occurs because of a convergence of unfortunate financial circumstances. This may be avoidable or unavoidable. However, the resulting debt is no reflection on the character of the debtor.

Debt is a problem, but it's not evidence you are a failure.

The third myth: debt is just something you have to live with.

This myth is particularly dangerous because it's like a long, slow illness. You really cannot afford to leave it untended too long.

I sometimes think that debt is a lot like obesity. If that is your problem, you have to fight it. It is foolish to ignore the problem or pretend it will somehow magically go away on its own.

Debt robs you of your future prosperity; it drains the resources you and your family need.

The fourth myth: everybody is in debt.

It's easy to see why people believe this, because so many people are massively in debt. But do you know what? A good many people have no debt. In fact, the majority of people in the U.S. have manageable amounts of debt in proportion to their incomes. Overwhelming debt is not something most people deal with.

That's good news if you have overwhelming debt. Do you know why? This means that you absolutely can live in a different way than you're living now. In fact, most people do. If they can do it, so can you!

The fifth myth: it takes forever to get out of debt.

That myth is true if you just wish you were out of debt or you have some lackadaisical approach to it. Do you know that there are coaches who can take an unfit person and train him or her to complete a marathon in six months? People can lose 100 pounds in a year. Some people can make a fortune or complete a degree in four years. The point is that great things can be accomplished even in unlikely individuals if you do two things: get a plan and follow the plan.

People have paid off very large debts in fairly short amounts of time with the right plan and coaching.

The sixth myth: debt doesn't matter.

Fortunately, this one is not as common as some of the others. However, it's very destructive. Typically, people who buy into this myth grew up in households that were very comfortable with high amounts of debt. This does not always create the proper perspective for future financial security!

Debt wastes large amount of your money and can cause your family to burn up high amounts of income on average-levels of lifestyle.

The last myth that people believe about debt is that you can't handle debt (you need to hire an expert to help you).

It is true that there are lots of people and businesses who specialize in helping people with debt. But be very careful. To enjoy good financial health, you have to learn how to take care of your own money.

This means that handing over a large amount of money to a debt company that promises to take care of your problems (so you can walk away) may be a dangerous decision. Here's why. If you don't understand what they're doing with your money, you are giving them a good opportunity to rip you off. It can be the financial equivalent of handing your wallet to a stranger and saying, "Take what you want."

Second, if you don't know how you wound up in debt, you won't be able to get out.

Debt consolidation is an approach to handling debt but it's a term that is frequently used carelessly online. Technically, debt consolidation just repackages or reorganizes debt in a way that makes it more favorable.

However, many companies who offer to settle or negotiate your debt (get your creditors to take less than you owe) call their services debt consolidation. There are a lot of myths out there about debt and how to manage your debt. An education can be the best defense!

Geoff Hibbert asked:


Many people think debt consolidation is the answer to all their financial problems. Just think… you get one loan to pay off all your debts. Then, you only have to deal with one company and one payment. You have to admit, it sounds very good. But not necessarily a key to ending bad debt management.

Getting a debt consolidation loan will not always resolve existing financial problems until or unless one learns how to manage debts properly. Bad debt management can get out of control. It can become additive just like drugs or alcohol. Often, bad debt mismanagement occurs because of lack of understanding. Good debt management advice is therefore essential to recovery

Some blame easy credit as the source of their problems. Although it is easy to obtain easy credit, that does not determine how people choose to spend their money. Financial responsibility and accountability is the path to a debt free life.

Bankruptcy causes more stress, wipes out your credit and haunts you for years to come. With determination, education and application of correct money principles, you can regain control of your financial life and quickly get on the road to a debt free life.

Five debt management keys to success managing ones debt are critical. Debt management teaches you how to handle your personal finances. Here are five important principles to use in learning how to best manage your finances.

Key 1 to overcomming bad debt management

Meet with a good debt management counselorsometimes we cant see the forest for the trees. This idea is particularly true with respect to our personal finances. Getting an outside, objective view of your current financial status is very important.

A good debt management counselor will review your current financial circumstances and help you develop a plan to pay off your debts. You can expect honest and frank feedback. Anything less would not help you.

Your relationship with a debt counselor is important. If you feel at ease in talking, youre more likely to openly discuss your needs and personal problems. However, keep in mind that you probably wont like everything you hear. Nevertheless, when you know he/she has your best interest at heart, youre more likely to follow the advice you get.

You should talk with several different counselors. Learn as much as you can. Find someone that really listens. If possible, talk with someone that has worked with the counselor. Get information on what the counselor has done to help other people. Dont be afraid to ask specific questions: What will the counselor will do? What will you be expected to do? How much it will cost? How long will it take?

Once youve found a good debt management counselor with a proven track record, commit yourself to listening to and applying the advice you receive.

Key 2 to overcomming bad debt management

Make debt reduction as a priority every debt is different. You have different amounts to pay. The interest rates vary. It may not make any difference on how you decide to tackle your debt. The most important point is that you focus on paying off your debt.

Once youve gotten some good advice from a debt management counselor, together you can determine the best way to pay off your debts. You should feel good about your financial plan. Each time you pay off a debt, you will feel better. Each time you pay a debt, you are one step closer to financial freedom.

Make paying off your debts the biggest priority and you will soon be on the road to a debt free life.

Key 3 to overcomming bad debt management

Follow your budget plan one major key to success in debt management is establishing and following a budget. Your budget should allow you enough money to pay your debts and still have your necessary living expenses. The closer you follow your budget, the more likely you will succeed in becoming debt free.

Success comes by consistently paying your debts. If you pay your debts first, then you know exactly how much money you have to live on.

Be sure to record and document each transaction. It doesnt matter what method you use to keep track of your payments. You can write them in a checkbook ledger, put money in envelopes for each budget category or enter each transaction into a computer program. The real key is to know exactly how much you spend in each of your allocated budget categories. When youve spent all the money for a given category, youre done for the month.

Key 4 to overcomming bad debt management

Tear up all your credit cards one of the biggest reasons people accumulate so much debt is the use of credit cards. Its easy to charge something. You dont have to pay cash. Its like the old saying 'Out of sight, Out of mind'. If you dont see the money going out, youre not as aware of you spending.

Your debt management counselor has many more resources than you do. They can make financial arrangements with your creditors to lower your payments and interest rate. In most cases, you will have to agree not to accumulate any more debt.

Tearing up your credit cards takes away the temptation to increase your debt. Its easy to say something doesnt cost that much, so a little charge here and there wont hurt. Dont deceive yourself. Thats how people get into financial problems in the first place… Get rid of the credit cards. Pay cash or pay nothing.

Key 5 to overcomming bad debt management

Become more conscious of your expenditures when you become acutely aware of where your money goes, you can begin to reduce or eliminate unnecessary expenditures. Youll begin to develop new and improved spending habits. Ask yourself. What is my most expensive bill? Is it heating? Is it air conditioning? Is it water?

Next, become aware of what you do each day. Do you leave the lights on when you leave a room? What do you do when you leave the house for several hours? You may think that turning down the heat or turning up the air doesnt save much. That is true. Nevertheless, if you do it everyday, those little savings begin to add up. Just think of it as your personal savings plan. The less you pay, the more you have to spend in other places.

Small expenditure reductions over time add up to big savings. Become more conscious of where your money is going.

Learning and applying good debt management skills will make all the difference in your life. Once you have paid off your debts, youll be in total control again. Youll never want to repeat the experience again. Say goodbye to bad debt management forever.

Jo Ann LeQuang asked:


Most people facing growing debt and limited resources have probably looked around for financial solutions and heard a little bit about debt consolidation. Debt consolidation is a great financial option to overcome overwhelming debt, but it is not right for everyone. But before you can figure out if it is right for you, you have to realize that some of what you may have thought about debt consolidation … is wrong.

Of all the financial plans available for people dealing with overwhelming debt, debt consolidation is probably the most valuable and the least understood. In fact, you may already believe some of these common myths about debt consolidation. Find out the truth!

Myth #1 Debt consolidation is the same or similar to debt management, debt settlement, and bankruptcy.

Truth Debt consolidation is nothing like those other programs. In truth, it is not so much a "program" (you can even do it on your own, if you know enough) but more of a strategic approach.

In debt consolidation, you lump all of your debts together and repackage them. Debt settlement and debt management typically involve dealing with a company or counselor and the object is to reduce the amount you owe. Bankruptcy is a legal proceeding that involves a date with a judge.

Myth #2 Debt consolidation reduces your debt.

Truth No, it doesn't. If you owe a total of $80,000 on several credit cards and loans and you consolidate that debt, you still owe $80,000.

Debt consolidation does not re-negotiate, settle, write off, or reduce any of your debt. What possible advantage is re-organizing your debt like that?

If you have a lot of loans at high interest rates, repackaging those higher-interest debts into one larger loan at a lower rate reduces your interest and the amount you have to pay. This means you can either pay less a month or (even better) pay the same amount but get the debt paid off sooner.

Myth #3 Debt consolidation will hurt my credit score.

Truth Done properly, debt consolidation will not impact your credit score or credit report negatively. In fact, debt consolidation may even improve your credit score! That's because you'll be paying off a bunch of smaller loans and any time a loan is paid in full, that helps your credit score.

Myth #4 Debt consolidation requires getting help from an outside agency or a lawyer.

Truth While there are companies that specialize in debt consolidation programs, you do not have to use them to consolidate your debt.

Of course, if you want to consolidate your debt on your own, you have to know a bit about how to do it and what the options are. But it can definitely be a do-it-yourself project for people good with money (or who are willing to learn enough to get good with money).

Debt consolidation is also not necessarily visible to outsiders. Your bank, the credit bureau, and other parties may not even be aware that you have consolidated debt.

Myth #5 Debt consolidation is something for financial losers and lightweights, not for people who know how to manage money.

Truth This is the most far-out myth about debt consolidation. Debt consolidation is a principle that is used in business and by the super-wealthy all of the time. It is a way of organizing and structuring your debts in a way that is most advantageous to you.

Myth #6 Debt consolidation is just robbing Peter to pay Paul; you're just getting more debt!

Truth Debt consolidation is indeed a way for you to pay off one debt by getting another debt. But not all debts are equal.

As an example, let's say that you owe $10,000 and the loan is set up so that you have to pay 22% interest. For example, let's suppose that I go to my credit union and work out a deal to borrow $10,000 at 12% interest. While both debts are still in the amount of $10,000, the debt at 12% interest is a better deal for me. I won't have to pay as much per month or, if I make the biggest payments I can, I can pay it off sooner.

Myth #7 Debt consolidation requires you to be a homeowner.

Truth There is a grain of truth to this, in that owning a home definitely offers an advantage to anyone who wants to consolidate debt. (It doesn't matter if your home is paid for or not, but you do need some home equity.) However, you can consolidate debt without owning a home, too.

Myth #8 Debt consolidation will make it harder for me to get future loans.

Truth In most cases, it is unlikely that anyone but a forensic accountant could figure out that you consolidated your debt (unless you go through a debt consolidation companythat might leave a paper trail).

If you borrow money in one loan and then take out another, more advantageous loan to pay off the first one, you're more likely to leave a paper trail of somebody who pays off debt responsibly. It is more likely to make you a desirable creditor.

Myth #9 People who consolidate debt just wind up digging themselves in deeper in debt!

Truth It is absolutely possible to consolidate your debt and then keep spending and get yourself in a big mess. That's why you need good information and a plan to pay off your existing debt, manage your finances now, and start planning for your financial future.

There is no reason that debt consolidation cannot work to get you out of debt for good, but you have to have a plan.

Myth #10 Debt consolidation will allow me to write off some of my debts and it will stop bill collectors from calling.

Truth Let's take these one at a time.

Unlike bankruptcy, debt consolidation will not allow you to write off any of your debtnot a penny of it. Whatever you owed as a debt before debt consolidation is the amount you'll owe after debt consolidation.

The advantage is just that you structure it in a more favorable loan. You do not get existing debts cancelled or decreased! Now it's true you can work that out in other debt management solutions (debt settlement lets you reduce debt, bankruptcy will let you write some debt off) but they come at a very high price. Both of these approaches will have a negative impact on your credit score, will make it hard for you to get future loans, and stay on your record for quite a while. Bankruptcy, in particular, is an extreme solution that involves an actual court proceeding and a judge who has the authority to make certain decisions about your financial situation (including forcing you to sell some items to pay off debts).

Debt consolidation can only stop bill collectors indirectly. Here's how: let's say you have six debts and you're getting calls all of the time. If you consolidate your six debts into one large debt consolidation loan at more favorable terms, you'll pay off all of those debts. Bye-bye, bill collectors!

However, if you don't pay off your new debt consolidaiton loan on time, the bill collectors will start calling again.