Everything you need to get out of debt and repair your credit.
Feeling overwhelmed by your debts? If you're ready to regain your financial freedom, this book is exactly what you need! Step by step, Solve Your Money Troubles shows you how to:
prioritize debts
create a budget
negotiate with creditors
stop collector harassment
challenge wage attachments
contend with repossessions
respond to creditor lawsuits
qualify for a mortgage
rebuild credit
To make the process easierSolve Your Money Troubles also includes sample letters to creditors, as well as worksheets and charts to calculate your debts and expenses and help you create a repayment plan.
The 11th edition now covers the latest bankruptcy laws, the Fair Debt Collection Act and the new credit-scoring system used by some credit bureaus.
Dreading that climax of all human ills, The inflammation of one's weekly bills.
-- George Gordon, Lord Byron, English poet, 1788-1824
A debt is an obligation to pay someone money. It may be a large obligation, such as a home mortgage or monthly rent, or a small obligation, like a newspaper or magazine bill. If you don't pay, you often suffer some consequences. At the serious end of the scale, if you don't pay your mortgage or rent, your house may be foreclosed on or you may be evicted. At the minor inconvenience end, if you overlook paying a subscription, it will be canceled and you will be sent letters demanding that you pay for copies you've already received.
The purpose of this chapter is to help you figure out the kinds of debts you have. You may think of your debts in several different ways, such as:
Debts to people you know, such as a loan from your Aunt Muriel or a bill you owe Angelo, the owner of the local grocery store -- versus debts you owe to impersonal creditors, for example, a credit card company.
Your regular monthly obligations, for instance, rent, phone bill, or gas bill -- versus debts you pay only when you buy something on credit.
Debts for goods or services you are currently receiving, for example, a newspaper subscription or credit card bill -- versus debts to repay money borrowed many years ago, such as a student loan.
Debts you'd rather not pay and wonder if you really owe, such as back taxes -- versus debts you don't have any reasonable grounds to object to paying, for example, your utility bill.
Groupings such as these may help you decide how and in what order you will pay your bills. Legally, however, these categories are irrelevant. Instead, the law puts debts into two primary groups: secured and unsecured. To understand your debts and to intelligently decide what to do about each one, you must understand the difference. You must also understand that the consequences of not paying a secured debt differ tremendously from not paying an unsecured debt. (These consequences are explained in Chapter 8.)
The importance of correctly distinguishing between secured and unsecured debts can't be overemphasized. If, after reading this chapter, you are still not sure you can tell a secured debt from an unsecured debt, reread the material.
A. Secured Debts
A secured debt means that a specific item of property (called "collateral") guarantees payment of the debt. If you don't pay, the creditor is entitled to take the collateral. If you've ever had property, such as a car, repossessed when you failed to make a loan payment, you already know how secured debts work.
These debts should be your highest priority. If you don't pay them, you will lose the collateral backing them up. Even if you don't hear from these creditors, don't assume they won't collect the debt. Because secured collectors have such a powerful weapon (they can seize the collateral if you stop making payments), they don't need to hound you the way that collectors with lower-priority debts do.
There are two types of secured debts: those you agree to and those created without your consent.
Security Interests: Liens You Agree To
A security interest is an agreement in which you specify precisely what collateral the creditor can take if you default. A security interest also creates a "lien": the creditor's legal right to take the collateral if you don't pay. There are two kinds of security interests:
Synopsis
Everything you need to get out of debt and repair your credit.
Table of Contents
Introduction
Being in Debt Is Not as Bad as You Think
1. Secured and Unsecured Debts
Secured Debts
Unsecured Debts
2. Figuring Out How Much You Owe
How Much Do You Earn?
How Much Do You Owe?
3. If You're Married, Divorced, or Separated
Who Owes What Debts in a Community Property State?
Who Owns What Property in a Community Property State?
What Property Is Liable for Payment of Debts in a Community Property State?
Who Owes What Debts in a Common Law State?
Who Owns What Property in a Common Law State?
What Property Is Liable for Debts in a Common Law State
4. Debts You May Not Owe
The Seller Breaches a Warranty
Do You Have an Extended Warranty?
Your Car Is a Lemon
You Are the Victim of Fraud
You Want to Cancel a Contract
Canceling Goods Ordered by Mail, Phone, Computer, or Fax
Canceling Goods Ordered From a Phone Solicitor
Miscellaneous Remedies
5. Prioritizing Your Debts
Essential Debts
Nonessential Debts
Review Your Lists
6. Negotiating With Your Creditors
Communicate With Your Creditors
Negotiating When the Creditor Has a Judgment Against You
Try to Pay Off a Debt for Less Than the Full Amount
Don't Write a Bad Check
Writing a Postdated Check Is a Bad Idea
Beware of the IRS If You Settle a Debt
7. Finding Money to Pay Your Debts
Increase Your Income
Sell Some Stuff
Cut Your Expenses
Withdraw Money From a Tax-Deferred Account
Apply for Government and Agency Help
Consider a Home Equity Loan
Use the Equity in Your Home If You Are 62 or Older
Borrow the Money
Get Your Tax Refund Fast
What to Avoid When You Need Money
8. The Consequences of Ignoring Your Debts
Eviction
Foreclosure
Repossession
Prejudgment Attachment of Unsecured Property Lawsuit
Lien on Your Property Jail
Bank Setoff
Collection of Unsecured Debts From Third Parties
Interception of Your Tax Refund Loss of Insurance Coverage
Loss of Utility Service
Take a Deep Breath
9. When the Debt Collector Calls Original Creditor or Collection Agency?
Original Creditors' Collection Efforts
When Your Debt Is Sent to a Collection Agency
Debt Collection Practices
10. Credit and Debit Cards
Credit Cards
Cash Advances
Automated Teller Machine (ATM) and Debit Cards
11. Consumer Loans
13. Child Support and Alimony
How Child Support Is Determined
Modifying the Amount of Child Support
Establishing Paternity
Enforcement of Child Support Obligations Alimony
Bankruptcy and Child Support/Alimony Debt
14. If You Are Sued
If the Creditor Gets a Judgment Against You
Stopping Judgment Collection Efforts
15. Bankruptcy: The Ultimate Weapon
17. Rebuilding Your Credit
18. Credit Discrimination
19. Help Beyond the Book
Glossary
Appendixes
A. State and Federal Agencies
Where to Complain About Credit Discrimination
State Consumer Protection Agencies
B. State and Federal Exemption Tables
C. Worksheets and Forms
Worksheet 1: Monthly Income
Worksheet 2: Your Debts
Worksheet 3: Property Checklist
Worksheet 4: Property Exemptions
Worksheet 5: Daily Expenses
Worksheet 6: Monthly Budget
Form 1: Letter to Collector or Creditor to Make Payment If Negative Information Removed/Account Re-aged
Index
Reviews
The New Orleans Times-Picayune...
"If you feel powerless under the weight of your bills, this book will give you strength and the skills needed to respond to bill collectors and to rebuild your credit and
-- just as important -- your self esteem."
Michael Pellecchia, syndicated columnist...
"This is one of the best books you can buy on all aspects of personal debt. It helps with all the strategies (including worksheets) necessary to get out of debt and rebuild your credit."
Los Angeles Times ...
"This book is a must-have, even for people who don't have debt problems."
About the Author
Robin Leonard is a former attorney who gave up the law to become a rabbi. She is the author of many Nolo books including Money Troubles: Legal Strategies to Cope with Your Debts and Credit Repair. She aslo helped write How to File for Chapter 7 Bankruptcy and A Legal Guide for Lesbian and Gay Couples.
