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Monthly Archives: April 2018

Rules for Credit Protection

Credit safety: lock down with credit freeze or place a fraud alert

If you consider identity theft as a serious threat to your finances and you want to ensure that no shady activities are going on without your knowledge, you can opt for a credit freeze or fraud alerts. Credit freeze works by freezing your credit reports, which means that creditors cannot extend credit to you unless you “unfreeze” your account. Fraud alerts, on the other hand, are automated notifications that alert you when someone is using your credit or is making inquiries about you. It can be requested from your financial institutions or the major credit companies. So, if you don’t want to have a tarnished record and be vigilant with your credit, fraud alerts and credit freezes are a good choice.

Consider credit monitoring

A credit monitoring service is a more advanced way of checking your credit files. It’s like an early warning signal that alerts consumers whenever there are changes in their accounts. The most common reasons that trigger an alert include changes in address, opening a new account or updates in major loan interests. Whether the inquiry is done by you or a criminal, credit monitoring can help you spot it immediately. This service comes at a cost, but it’s affordable since most companies that offer credit monitoring also provides insurance coverage, which is very beneficial in the event of a theft.

Use some inexpensive techniques

Minimizing the accessibility of your personal information is one good way to safeguard your identity. You can do this in a number of ways.

  • Invest in a cross-cut shredder that you’ll use to destroy bills and mails with your financial information on them. This is worthy considering there are thieves known to “dumpster dive” through your waste baskets just to obtain any information about you.
  • If necessary, you can also invest in a cheap household safe where you can keep all your important documents locked at home. Important identification documents that you shouldn’t always bring, like SS numbers and passports, can be stored in the safe.
  • Minimize the number of cards you regularly use. Aside from the fact that your spending pattern can go out of control because of owning too many credit cards, this can also cause some serious damages and inconvenience if in case they get lost or stolen. Also, keep a list of the contact numbers of your credit card companies, because you’ll need this in case of emergency.
  • Always think about the consequences of sharing information over the internet. Not all websites are safe places to hang out and this includes your favorite social media platform. Be extra careful about what you share online and, as much as possible, limit the personal details you give out to others.

Avoid Bad Credit

If you ask them whether they want to be free from this bondage, be able to live to a standard that doesn’t give them sleepless nights with repayment stress – they are likely to say YES PLEASE where do I sign. But if that journey began with them cutting up their prized possession – the card – you would literally hear them gag on their saliva.You see regardless of the x amount of pounds they owe, the FEAR of not having this piece of plastic and the access it gives to funds far outweighs the mountain of debt it represents.

I know this because I’ve been there. It’s that fear of ‘not having enough’ of ‘being ‘caught short’ of ‘ needing something’ that my card would buy and which puts fear in your heart. And that’s really what the system relies on. Money is handed out freely, the more you borrow, the more you spend. A vicious but highly lucrative venture (for the lender), but a surefire way of losing everything for the borrower.

The question is how do you beat this FEAR? I would love to say that there’s a support circle you could attend that would help you to go cold turkey, or a drug you can take to medicate your issues – but there isn’t – it’s a bit like ripping the plaster off a wound, in order for it to heal properly you have to rip the plaster off; you have to expose it to air and allow the natural process of regeneration to begin. Yes I know it hurts, yes I know it’s not comfortable – but hey what’s the alternative?… You keep spending money you don’t have; you keep waking up in a cold sweat; you panic at the sight of a demand letter and you almost pass out every time there’s a knock on the front door.

In order to start the healing process you have to rip the plaster off… you have to RIP THE PLASTIC UP. There’s a book I once read and the title has served me well on numerous occasions – Feel the Fear and do it Anyway. There has to come a time when YOU have to make the decision to ‘Feel the Fear and do it Anyway’ and move towards financial freedom.

About Commercial Debt

The business debt is collected through forced sale or auction of assets like building, land, equipments and even business accounts. Situation of corporate veil is applied when a company or business is viewed as a detached legal unit than the organization’s stakeholders and owners. The company or business is then legally responsible for its debt and not the persons who own it.

LLC only provides liability and monetary protection when the corporate veil is not penetrated. Corporate veil is actually pierced if a person uses limited liability corporation to pay personal expenses or does not have complete and valid LLC papers. The limited accountability of LLC can be challenged by creditors. These creditors can easily sue private individuals for outstanding commercial debt. Business debt cannot be remunerated through garnishment of wages when compared with personal debt. Though, creditors can put liens against the company’s land, property or equipments.

The overall debt collections are controlled by Fair Debt Collection Practices Act. Debt collectors looking for payment should provide complete billing of the arrears owed in order to avoid any type of confusions or errors. At the same time, full interest and applicable fees must be included in the final bill. Debt collectors should have valid authorization to collect the debt.

In an economic world where outstanding debt can make the difference between a successful business and bankruptcy, it has become very important to pursue debtors for sums owed. Most businesses are unable to recover the lost income at a profitable margin, spending too much time and money on the recovery process

Debt recovery specialists take away the risk by removing the company’s name from the debt collection effort up front. There is less chance of negative press affecting the bottom line, and at the same time, these agencies are more aggressive in their recovery, which allows them to collect the majority of outstanding debt for the business.

Be Money Smart

Credit card and personal loan consolidation into your home loan can certainly take the sting off monthly repayments, but careful! You can find yourself actually paying more interest in the long term, if you’re not money smart about how you do it.

Let’s use a credit card which is maxed out at $10,000 as an example, so we can compare some numbers:

  • The maxed out card would cost you approximately $175 per month in interest alone (at a 21% credit card interest rate) let alone trying to pay back the $10,000!
  • If consolidated into a home loan at say 6.3%, your monthly interest cost plummets to $52.50!
  • If you simply lump it in with your home loan & make principal & interest payments, it adds $62 per month to your costs

Great!!! Let’s do it, you say! But not so fast…

It’s all very well to save on interest & lighten the burden on your pocket, but how much will it actually cost you in the long run?

Do you realize that if you do the latter & simply pay $62 per month, it will cost you over $12,000 in interest alone over a standard 30 year home loan term? Plus the $10,000 principal!

However all is not lost! It’s just a matter of being a bit money smart. Have a look:

You can consolidate into your home loan & save on interest charges, but choose to pay the $175 it would have cost you in credit card interest towards it. That means the $10,000 is erased in just under 6 years and cuts your interest charges down to about $1,900 You’ve just saved $10,000!! The credit card company wouldn’t just let you pay the interest either. Monthly minimum payments would’ve been approx $250. If you choose to pay that amount towards the consolidated debt, you’ve paid it out in under 4 years and saved $11,000 in interest!

Some helpful hints:

  1. Consider consolidating debts, but only as a means to help you pay them off faster
  2. When consolidating, keep up the same repayments as you were making before
  3. Never just ‘consolidate and let it sit’ • Get Money Smart & learn how to plan ahead!

Incidentally, we see this all the time and people sometimes complain how long it will take to pay back a ‘measly’ $10,000 credit card debt when they already have a home loan to worry about.

Isn’t it interesting how quickly we’re prepared to spend it, without giving consideration to long it may take us to pay it back?

$10,000 is no ‘measly’ amount. It’s a lot of money! This example is very common in our office and unfortunately we often see it compounding – a person will consolidate $5,000 now, another $5,000 in 6 months, maybe another $10,000 in a year’s time.