How To Claim Exemptions From Garnishment

November 9th, 2011

More and more people are getting into debt these days. From bad decisions when purchasing a home to overusing a credit card to buying too much “stuff”, the more of these impulse buys we make the more we are going to lose in the end.

Creditors can almost reach into your bank account and take your money without your approval. This is called garnishment and it is a lawful tool for creditors to get the money you own them. It is often the last thing they want to do because they have to take you to court and this includes court fees and a lot of time wasted for all parties involved.

The most common garnishments are for child support, defaulted student loans and unpaid taxes. There are certain ways to avoid this and the process in which money is taken from your bank account or even your paycheck has certain exemptions.

The government limits the amount allowed to be taken so the debtor has enough money left to survive. Different states have different restrictions so depending on where you live, more or less will be taken. The maximum that can be garnished is 25% of your paycheck and your employer has to comply with the order. If it is for child support than up to 50% can be taken. One way or another they are going to get a good chunk of your money so the best thing to do is to avoid this all together.

If you don’t want this to happen, file a motion with the court and they should grant you an exemption you can bring to the bank. A special form to claim the exemption is available at the court that has sent you the writ of garnishment.

What about social security benefits, are they exempt from garnishment? It depends. If you place that money into a regular savings or checking account in your bank, they have the right to take it out. As long as the money is liquid in your bank, it’s liable to be used to pay off your debts.

There are other ways to stop garnishment from happening at all. You will receive more than one notification before it happens so obviously the best thing to do is just to pay it off on time. If you can’t for whatever reason, you need to forget about being afraid and either go meet with your creditors or give them a call and figure out how you can come to an agreement for a new payment plan.

Sometimes working with a debt relief agency can help you organize your credit and see how it can be fixed. Many of them don’t charge much and it’s not as difficult as you think.

Posted in Debt Relief

Choosing Secured Credit Cards to Strengthen Limited Credit Histories

November 6th, 2011

Consumers who are looking to boost a very low credit score after debt settlement may want to consider the benefits of applying for a secured credit card account. Secured credit cards are typically easier to get than traditional unsecured credit cards but there are some guidelines for selection and use. Not all secured credit cards offer the same benefits and if you are trying to strengthen your credit score, it is important to make the right financial decisions for your spending habits and your lifestyle.

Understanding Secured Credit Cards

Secured cards differ from traditional cards in that consumers are required to make an initial cash deposit into an account with the card provider. That deposit amount varies by provider but will become the credit limit for the cardholder. When purchases are made, account holders will receive a statement in the mail similar to traditional statements. The balance should be paid in full within each billing cycle to ensure you have full spending power.

Choosing the Right Card

There are several things you should look for in a new secured credit card to make it advantageous to your current financial situation and future credit goals. These considerations include:

Credit Reporting

A very important term of a secured credit card for the cardholder trying to improve a weak credit history is to ascertain whether or not the card provider will report account activity back to the consumer credit reporting bureaus. Secured cards from providers who do not report account data to these agencies are not beneficial to your credit improvement goals. If there is not evidence of the provider reporting credit data to consumer credit bureaus, contact the company directly to inquire before selecting a card.

APR Terms

Since secured credit cards are often offered to those who may be a credit risk to card providers or those who have a limited credit history, the annual percentage rate on this type of card will generally be higher than APRs on traditional credit cards for consumers with good credit ratings.

Fees and Penalties

Again, secured cards are often used by those not yet proven to be creditworthy to traditional lenders. As a result, many secured card providers tack on fees for multiple services including monthly account maintenance. Secured cards may also have stiffer penalties for late payments or for overextending your credit card’s spending limits. These fees and penalties will be outlined in the fine print of the card agreement so be sure to read it thoroughly and carefully.

Deposit Requirements

While many secured credit card providers will require between $300 and $500 in upfront deposits, some providers may insist on more. Find a card that has a deposit requirement that is reasonable for your personal budget but will also give you some spending power after monthly account fees have been deducted.

Using a Secured Card

Secured credit card use is the same as using a traditional credit card. You should be careful to never exceed your limits and that you have the financial capabilities to repay what you have spent. Even though money was deposited into the account beforehand, you still have an obligation to pay back what you have charged on a secured card. Additionally, you should make a point to pay the bill on time and in full each and every month if you expect it to boost your credit rating.

Using your card regularly for specific purchases like gas and groceries can allow you to better track your spending and stay in control of your personal budget at all time while on the road to a better credit score. After using a secured card for several months or for as long as a year with good management of your account, you may improve your credit history enough to qualify for a traditional card with a good interest rate.

Posted in Credit Card Debt