Americans In Debt: Stories from the Hill

Property Taxes: Are you paying the right amount?

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 26 Sep 2007 04:38:00 +0000

Hi,
The majority of homeowners in this country have their property taxes paid by their mortgage company. The remaining homeowners pay their taxes biannually on October 30 and April 30. If the mortgage company has been paying the property taxes over the years, there is a very good chance that when the property assessment is sent in the mail, we pay little or no attention to it other than noticing the appreciation and value of our investment. It is more likely that the people who pay their property taxes every year will notice an unusual increase in the assessment on their home or land. No matter which way you pay your property taxes, it is important to periodically make sure that you are being assessed in line with other similar properties or homes in your neighborhood. In most major cities, this information is readily available online. If it isn't available online, it can be found at the office of the tax assessor. If you uncover a situation in which you believe that you are paying too much in property taxes, you are entitled to go before a committee generally comprised of volunteers, to have your case heard. Hearings that result in a successful reduction of property taxes may be for the following reasons:
1) Severe internal damage to the home that cannot be noticed by a property tax appraiser from the outside. This generally requires written bids estimating the cost of repairs to be submitted when the case is heard.
2) Similar properties and homes in the surrounding neighborhood are assessed significantly lower than your home.
3) For insurance purposes you had an appraisal done on your home, and the appraisal is significantly lower than the property tax appraisal.
One other area we tend to overlook in regards to our mortgage is private mortgage insurance (PMI). PMI is generally required on mortgages that have little or no down payment. When the equity in the home rises above 20% of the mortgage, we are entitled to cancel our private mortgage insurance as it is no longer required. This will result in significant savings to us over the term of our mortgage.
Until later,
Alan

Pre-Holiday Financial Check-Up

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Mon, 24 Sep 2007 03:29:00 +0000

Hi,
The fall is always a good time to take inventory of our financial affairs. Once the holiday season is in full swing, many people find themselves short of time to address financial matters. Here are some steps to take so that you can go into the holiday season with the peace of mind that you know your financial standing.
1) First look at your credit cards and and audit the following:
a) Make sure the current interest rate being charged is the same interest rate which came with the card when you applied for it. If it has gone up, contact the credit card company to ask why.
b) Make sure the due dates on your cards are the same as when the cards were obtained. Once again, if any were changed, make sure that you get clarification as to why.
c) Check for any unusual late fees or finance charges and if anything seems out of
the ordinary, immediately contact the credit card company.
d) Check your credit limit on all your cards and make sure to write down the limits so you are aware of them going into the holiday season. Exceeding your credit limit will cost anywhere between $35.00 - $50.00 per card plus the risk of increased interest rates.
e) Find out what extras each of your cards offer in the form of frequent flyer miles, service protection, life insurance etc., All cards are different and knowing which card benefits your situation might help you decide which card you want to use.
2) Audit your bank statements:
a) Make sure service charges haven't arbitrarily risen without your knowledge and that any interest on savings and checking accounts has been paid as agreed.
b) Look out for extraordinary items such as direct withdrawals that have been cancelled continuing to be debited.
Many banks are notorious for increasing fees for services without our knowledge. In some instances, notices are sent masquerading as junk mail, so as not to alert the customer of proposed charges.
3) Personal loans and car loans: It's a good idea to request a printout of all activity on any outstanding personal loans. It is important to check to make sure that all payments have been applied in an appropriate manner and that the financial institution has not added unwarranted late fees or other finance charges. By auditing personal loans, it will ensure that the interest rates have not increased and that your credit score is not being affected by any errors committed by the financial institution.
4) Cell phones and other telephone bills: Cell phone bills should be monitored on a monthly basis but in most cases, are not examined carefully each month. This allows cell phone companies to include unauthorized charges and third party billings on the bill of the consumer. If these charges are never questioned, they will never be corrected. Therefore it is imperative to catch them as soon as possible. Some examples unauthorized billings are ring tones, games, jokes of the week etc., If your cell phone bill includes a high number of calls, it is essential to make sure you are paying for calls you made and not mistaken charges. Last but not least, if you have had any new services added to your bill, you need to make sure all charges appear on your bill as agreed.
5) If you struggled with high utility bills last winter, take steps to avoid that problem this year. These steps could include contacting your local utility company to become enrolled in a monthly averaging program. This will allow you to budget the same amount for utilities every month of the year.
6) Get a printout of your past twelve month transaction history from your mortgage company. Make sure all payments have been applied correctly and that no extraordinary finance charges or late fees have been added. Check to see that all other mortgage terms are documented as agreed. If you have any questions, contact your mortgage company as soon as possible for clarification.
Until later,
Alan

Deficiency Balance Setttlement Offer

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Tue, 04 Sep 2007 18:10:00 +0000

Hi,
For various reasons, many people find themselves faced with a sizable deficiency balance from a car, camper, trailer home etc., loan. In most instances, deficiency balances could be settled for far less than the amount represented by the creditors, or, in many cases, third party collection agencies. The keys to negotiating a successful settlement on a deficiency balance are:
1) The length of time the deficiency balance has been owed. If the deficiency balance has been accruing interest for many years, the creditor will take substantially less money to settle.
2) The payment history on the loan prior to the deficiency balance being created factors into the willingness of the creditor to negotiate a settlement on the balance.
If only one or two payments have been made on the loan prior to repossession, it is unlikely that the creditor will be willing to offer much of a settlement.
3) When a creditor receives a settlement offer, one of the first things the creditor does is analyze what he or she believes to be a reasonable settlement offer and the ability of the debtor to repay the deficiency balance in full. It is necessary to give all the pertinent details as to why the settlement offer is legitimate and is the best that can be done by the debtor.
4)If the deficiency balance that is owed is being handled by a third party, and the third party refuses the settlement offer, be sure to contact the original creditor and offer the same settlement to the creditor. In most cases, the creditor will accept a reasonable settlement.
5) If it is not possible to come up with a lump sum settlement, offer a payment schedule that can be kept. Once again, if the third party refuses the payment schedule, contact the original creditor and explain why that is the only available solution to handling the deficiency balance.
When negotiating any deficiency balance, keep in mind that the creditor is entitled to 100% of the balance and will only accept a settlement if it is financially justified. As soon as a deficiency balance is created, be sure to get in touch with the creditor, as communication is the key. A Performance Bond guarantees the faithful performance of the contract and payment of materials and labor by the contractor to all subcontractors and material suppliers.
Until later,
Alan

Deficiency Balances: Auto Loans

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Tue, 14 Aug 2007 05:26:00 +0000

Hi,
One of the most unexpected major debt problems that occur today for consumers is when a deficiency balance is created on their auto loan. A deficiency balance is usually created when a car has to be repossessed by the lender. The lender is then required to sell the car for what is defined as "fair market value", deducting the expenses of repossession and any other liquidation fees, then applying the remaining proceeds from the sale of the car to the balance of the loan. In many instances consumers are unaware of the fact that they are responsible for the full payment on the loan, and that their vehicle is only collateral on the loan. If a consumer gets into a situation in which it becomes apparent that he or she is not going to be able to continue making vehicle payments, and that the lender can no longer extend any more time without payment, there are a few actions a consumer can take prior to repossession:
1) Make an agreement with the lender that the consumer will sell the vehicle for the lender. The reason is that because of the vested interest in the sale price for the vehicle, the consumer will get a higher sales price than the lender. Typically lenders are not particularly good at selling vehicles and don't care if a vehicle is sold for top dollar.
2) If repossession is imminent, take pictures of the inside and outside of the vehicle and get the Kelly Blue Book value of your vehicle. This information will assure you that the lender is getting "fair market value" for your vehicle in order to apply the proceeds against your loan. In some instances, to save time lenders will briefly advertise vehicles and then auction the vehicles at wholesale to dealers. If you feel that you have been a victim of this practice, you need to approach your lender with the figures you got from the Kelly Blue Book and ask the lender to explain why it was not sold for fair market value. In many cases, this will allow you the upper hand in negotiating a reasonable settlement of your deficiency balance. If the lender refuses, inform the lender that you will be sending pictures of your vehicle, plus the Kelly Blue Book value of your car to the office of the Attorney General to ask them to look into the matter.
3) When negotiating your deficiency balance, your lender is going to consider the following:
a) The age of the debt.
b) The amount of the debt.
c) The type of the debt: ie, was it a new or used vehicle.
d) Your ability to repay based upon your credit history.
e) How straightforward you have been in handling your loan from the outset.
In most cases, a lender will settle a deficiency balance if the settlement offer is reasonable. As in dealing with any other creditor, success or failure of negotiating a settlement might hinge upon how well you have communicated with the creditor throughout your history.
Until later,
Alan

Credit Counseling, Debt Consultants, Debt Negotiators: Do Debtors Need Their Services?

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Thu, 26 Jul 2007 23:53:00 +0000

Hi,
Credit counseling services are quite good at giving people an organized look at their financial situation. After that, their usefulness is limited due to the fact that they have absolutely no legal right to enforce their suggested remedies to any of the creditors. In general, the offers credit counseling agencies make to creditors are unrealistic and many times rejected outright by the creditors. Exploratory conversation is usually an effective way to initiate the process of finding solutions to problems. However, in most instances, credit counselors will only deal with creditors in writing. Therefore any successful re-negotiations of initial proposals are highly unlikely to happen. Additionally, in many cases, debtors are not informed by credit counseling agencies that they have no binding authority to get a creditor to accept a repayment proposal. Debtors may mistakenly assume that credit counseling agencies have more leverage and standing than they actually do when contacting creditors on their behalf. The information that debtors need is available from debt consultants and debt negotiators. These professionals charge either an hourly fee or a contingency fee based upon the money saved to the debtor. From the standpoint of a creditor, a long drawn-out repayment proposal is not a sensible solution to resolving the account of a debtor. Debt professionals have the ability to analyze various situations and offer solutions acceptable to creditors. Credit counseling services and debt negotiation companies tend to strike long-term relationships with debtors that are of little or no value to the people in debt. Most people who find themselves mired in debt have achieved this situation over a long period of time. A helpful solution for the debtor is a quick one. Not one in which the debtor is required to continue down the same road, repaying the debt over a long period of time, sometimes with the added cost of several thousands of dollars. Credit counselors have their place in the credit world, but are sometimes asked to do things they lack the experience or knowledge to accomplish, which can be a detrimental situation for the debtor.
Until later,
Alan

Bad Credit! No Credit!, Bankruptcy OK! Car Loans

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Fri, 20 Jul 2007 06:20:00 +0000

Hi,
A relatively new gimmick seems to have taken the credit world by storm: No credit, bad credit, bankruptcies all OK. We guarantee that you will get a car loan, credit card, new furniture etc., Let's look at the scenario that unfolds when a person buys a car under these terms. All "normal" avenues of exploring the best car, the best price, the most favorable interest rates and the most suitable loan term are non-existent. When the borrower approaches the car dealer, he or she is forced to choose among a small inventory of cars, and are at the mercy of the car lots financial department. One of the common ways these car lots hide their excessive interest rates and finance charges is to offer terms 24-48 months longer than conventional car loans. The borrower might believe that the car payment quoted by the dealer isn't all that bad without stopping to realize that he or she is paying an extra $300.00 a month for an additional 36-48 months longer than if he or she had a conventional loan. Another thing missing from financial departments on car lots is the ability of banks and credit unions to work with the customer in the case of problems. In general, these types of car lots have a very short fuse when it comes to repossessing a car, and will do so immediately at the first sign of a problem. Unlike established financial institutions that handle auto loans, car lots will not be concerned at realizing maximum dollars for the sale of the borrower's vehicle, leaving an excessive deficiency balance. In many instances, especially for young people, getting involved in these types of high risk car loans will result in the borrower digging such a deep hole with his or her credit scores, that he or she may not be able to recover for many, many years to come, if at all. The reason these loans are available is that even though there will be a high delinquency rate, the excessive terms on the loans, higher interest rates, finance charges and close monitoring of the loans allows the car lot to still make a nice profit. The other factor in the dealer's profit is that the used cars being sold usually have an extremely high profit margin built into the price.
Until later,
Alan

Merchant Cards Masquerading as Credit Cards

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 18 Jul 2007 05:03:00 +0000

Hi,
I ran across a mailer today, addressed to a 19 yr old, that I would like to share. First, let me describe the mailer as best I can. Attached on the top right hand corner is a card designed to look like a credit card. The only difference between a credit card and the attached card is that there is no magnetic strip. The mailer insert then goes on to describe the following:

Congratulations, your card has arrived. Call immediately to activate this card. Credit purchase limit: $6,500.00. Cash on demand approved: yes. Interest rate: none. No cash deposit required for security. By calling to activate your card today we'll offset our standard member card activation fee of $200.00 by giving you $200.00 in credit.

The above is what is described on the front page of the insert. On the back of the mailer is quite a bit of interesting small print such as:

The activation fee for the card is $199.00, the annual membership fee is $198.00, and the user is encouraged to purchase the "security guard feature" for $99.00. The customer is encouraged to sign up for rush processing which prioritizes the order for $29.99. This card may only be used for merchandise contained in the card issuer's catalogs. A more detailed description is given about the "cash on demand" advertised on the front of the mailer. Without getting into too much detail, the best way to describe the program for cash on demand is that the card issuer is allied with a payday loan company.

Let's examine some of the reasons a company would issue large amounts of credit by mail forgoing normal credit qualifying procedures:

The bulk of the merchandise in the catalog is clothing and/or shoes. The mark-up in these areas is usually a minimum of 500% and may go as high as 1200%. Let's look at a sample mailing of 10,000 cards. As the target audience is young people who would be attracted by the mailing, for discussion's sake, let's take a conservative estimate that out of 10,000 cards, 1,000 cards are activated.
Immediate cash flow to the card issuer:
$199.+$198.+$99.=$496.x1,000=
$496,000.
Let's assume that 1,000 cards utilize their $6,500. credit limit.
$6,500.x1,000=
$6,500,000. (6.5mil per 1,000!)
Due to the high risk of the borrowers, let's assume 25% of the card holders go delinquent on their cards for a total of $1,625,000. Let's assume the remaining card holders pay off their balances which would total $4,875,000. Now to calculate the profit of the card holder using this scenario, we need to make a conservative assumption that the merchandise is marked up 500%. That would put the cost of goods sold at $1,300,000. To calculate the card issuer's profit, let's take the $4,875,00 of the card holders who pay off their balance, subtract the cost of goods of $1,300,000 which equals $3,575,000 plus the instant cash flow of $496,000 from the various fees, for a total of $4,710,000 plus a very conservative estimate of a minimum of $400,000. from the collection effort on the 25% of accounts that were delinquent. This leaves the profit on issuing these so called credit cards in the neighborhood of $4,470,000. The ramifications of these merchant cards being sent to young people today are as follows:

1) They will ruin their credit before they even get a chance to establish credit.
2) In order to use their cards, they will only buy from the catalogs. They will not learn the frugal habits of comparison shopping for price and quality.
3) Due to the excessive credit limit, they will buy far more than they could afford to purchase on a cash basis.
4) A large percentage of card holders will enter the world of payday loans through the "cash on demand" feature of these merchant cards. There is neither time or space on this blog to list all the reasons why that is not a good idea.

It is important for young people to be aware that these types of cards exist and to be warned to steer clear from them.

Until later,
Alan

Avoiding Maxed Out Credit Cards

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Sun, 15 Jul 2007 01:07:00 +0000

Hi,
This blog is not intended for any readers who pay off their credit cards without exception at the end of each month. For the rest of us, to maintain control over our credit card balances, it is a good idea to avoid the following:
1) Consistently charging groceries on a credit card. The reason is that statistics show people purchase food on credit which they otherwise wouldn't purchase if using cash.
2) Putting utility bills on a credit card. Utility bills should be part of the monthly fixed expenses and be paid on a cash basis each month.
3) Making a car payment with a credit card. There are many reasons for this, but a significant one is that it's a sign that "Peter is being robbed to pay Paul".
4) When traveling to places like Las Vegas, many people find it much safer if they leave the majority of their credit cards at home.
5) Avoid using credit cards for large purchases of stock or any other investment vehicles.
To maintain a handle on our financial health at all times, it is necessary to pay for our fixed monthly expenses on a cash basis. It is imperative to maintain the clarity of the difference between our cash position and our credit position. Using credit in lieu of cash is analogous to using chips in Las Vegas in lieu of cash.
Until later,
Alan

Questionable Bill Collection Techniques (continued)

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Tue, 26 Jun 2007 03:28:00 +0000

Hi,
In my last blog, I referred to a few questionable techniques employed by a small percentage of bill collectors. Some additional ones to be aware of are:
1) Bill collectors will often use the term "garnishee wages" as leverage to get a debtor to pay on an account. They often speak as though garnishment of wages will happen overnight. In reality, wages are only subject to garnishment after judgment has been rendered which takes 45-60 days minimum in most states.
2) Another form of leverage used by bill collectors is to mention highly inflated attorney fees that the debtor will be responsible for if a small balance isn't paid in full. For example, a debtor owes a bill of $400.00. The collector calls the debtor and tells him or her that the client is prepared to sue and the attorney fees will be $1,400.00-$1,500.00 to coerce the debtor into paying the bill. In reality, chances are the client will not sue for such a small balance. In addition, the attorney fees would not be as excessive as the collector claims, IE., four times the amount of the bill!
3) Another common form of leverage used is when a collector tells a debtor that a lien will quickly be placed on his or her house. Once again, in most instances, and for most debts, the only way a lien can only be placed on a house is after judgment is rendered and the judgment is registered in the county in which the property is located.
These are just a few more examples of inappropriate collection techniques that are highly illegal, and, if encountered repeatedly, should be documented and reported to the State Attorney General.
Until later,
Alan

Questionable Bill Collection Techniques

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 06 Jun 2007 02:25:00 +0000

Hi,
The majority of bill collectors that contact consumers and/or businesses are honest, hardworking reasonable people who want to resolve debts in a fair and equitable manner. Unfortunately, there is a small percentage of collectors that use questionable tactics to coerce people into paying their bills. Some of these tactics are as follows:
1) They throw the word "judgment" around, as though it is an action that is going to happen within a few days or weeks. In reality, from the time a bill collector calls, to the time approval is given by a client to proceed with a lawsuit, and the lawsuit is served on the debtor leading to a judgment rendered, on the average 45-60 days have elapsed. In most instances, when the collector indicates that judgment will be quickly rendered, the agency probably has no legal department at all, and likely does not have the ability to sue the debtor.
2) The statute of limitations on judgments varies from state to state ranging from as little as six years to as high as twenty one years. If a collector calls about an account on which judgment has already been rendered, make sure to get the date of the judgment and check to see if the statute of limitations in your state has expired. This information is available on the Internet.
3) If a collector calls, a reasonable offer to settle the debt in full is made by the debtor, and the offer is rejected due to a payment date that does not meet the collector's criteria, but rather the collector indicates that the file will be turned over to attorneys to proceed with a lawsuit prior to that date, simply contact the original creditor directly and tell the creditor your repayment proposal. It is not unusual for a creditor to become the mediator in a collection agency/client relationship.
If you get a call from a collection agency, the matter is serious and needs to be immediately addressed. If you feel as if the collection agency is not treating you fairly, contact the office of your State Attorney General for an appropriate referral.
Until the next time,
Alan

Judgments

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 23 May 2007 04:22:00 +0000

Hi,
The purpose of this blog entry is to take some of the mystery out of judgments. A creditor's last option in collecting a debt is very often done by obtaining a judgment. When a creditor obtains a judgment, it means that a court grants the creditor an order containing multiple remedies to collect an unpaid debt.
To obtain a judgment, a creditor must do the following:
1) Creditor files a lawsuit in the jurisdiction where the debtor lives for the amount of the debt.
2) The lawsuit must be served on the debtor. This is usually done by a process server. If the debtor is successful in avoiding the process server for a period of time, sometimes the creditor may obtain service through publication in a local paper.
3) In most states, the debtor has 21 days to respond in writing to the lawsuit.
4) If no response is given, a default judgment may be granted to the creditor by the court.
5) If, after service, the debtor disputes any part of the amount that the creditor is claiming, he or she may do so through the courts. The matter will be resolved through the courts before judgment may be entered.
Following are some of the remedies available to a creditor if a judgment is obtained against a debtor:
1) Any real property owned by the debtor in the county that the judgment is entered will automatically have a lien placed against it. The creditor also has the right to register the judgment in any county in the state in which the judgment was granted in which the debtor might own property.
2) The creditor may garnish the wages of the debtor.
3) The creditor may garnish the debtor's bank accounts.
4) The creditor may seize any assets that are free and clear of liens or encumbrances.
5) The creditor may have the debtor brought in for examination and deposed of any other assets.
6) If the debtor moves out of state, the creditor may register the judgment in the debtor's new state of residence and proceed against the debtor.
This list of actions is not all inclusive, but gives an idea of liabilities which a debtor may incur if a creditor is awarded a judgment.
Until the next time,
Alan

Caught In The Minimum Payment Trap

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Fri, 18 May 2007 18:27:00 +0000

Hi,
The last two blogs set the table for how one can get caught making minimum payments on credit cards. Today I am writing about being caught in the trap. After the cardholder receives an additional credit card he or she gets some instant gratification from being able to cover monthly expenses. Thirty days later two credit card bills arrive and once again, due to lack of cash, only the minimum payments are made. Before long, the card holder has maxed out the second credit card. In many instances this scenario will continue over a one to two year period resulting in the individual maxing out seven to ten bank cards to the tune of $40,000-$50,000. The last resort that some borrowers choose is to transfer the balances from existing maxed out cards to new cards. This is a perfect example of "robbing Peter to pay Paul". Once the borrower has exhausted all means of generating cash from credit cards, he or she might resort to tapping into his or her home equity. By the time the borrower applies for a home equity loan, the borrower's credit score has declined considerably and he or she will only be able to borrow on a non-conventional high interest mortgage. The result of the home equity loan is that the borrower has access to cash covering expenses for a few months, but without substantial income, falls behind and soon finds himself or herself in financial chaos. This scenario has unfolded around the country on numerous occasions over the past thirty years. I have written the last three blogs for the purpose of letting new credit card holders some of the pitfalls of using credit cards.
Have a good weekend!
Alan

The Minimum Payment Trap Part 2

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Fri, 18 May 2007 00:52:00 +0000

Hi,
Yesterday, I discussed the simple version of the minimum payment trap. Today I'm going to discuss a more complicated and common minimum payment trap. This is how a more complex version of the minimum payment trap unfolds:
A relatively new cardholder uses his or her card for a couple of years and pays off the balance faithfully every month. At the end of two years, the cardholder's credit limit has been quadrupled. In addition, he or she has received numerous additional solicitations to obtain other money cards from different banks. Two and a half years into activating the first card, the cardholder has an emergency that requires him or her to use most of the credit limit on the card. He or she does not have the financial resources to pay it off at the end of the month, as he or she has been doing for the previous thirty months. When the bill arrives, he or she does the right thing, and pays every available dollar on the credit card, but still leaves a substantial balance. The following month, the cardholder's car breaks down. The card holder needs to max out the credit card to get the car fixed. Once again, when the bill arrives, the cardholder does the honorable thing and sends every dollar he or she can to reduce the balance, however a substantial balance remains. The next month, the card holder gets laid off from his or her job. Due to the amount of money put on the credit cards over the last two months, his or her savings have been almost wiped out. When the next bill arrives, the card holder succumbs to the infamous box in bold letters saying "minimum payment due" because he or she needs all the cash on hand. Over the next two months, the cardholder realizes that gainful employment is not coming as soon as he or she expected. During this time, the cardholder is still receiving solicitations for more credit, and due to his or her need for immediate cash, takes advantage of the offers. I will continue "part 2"
tomorrow.
Until then,
Alan

A Word of Caution About The Minimum Payment Trap for New Cardholders

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 16 May 2007 19:22:00 +0000

Hi,
One of the biggest risks for new credit card holders is falling into the minimum payment trap. The minimum payment trap can be described as the following:
The card holder is very careful in making purchases that he or she can pay off with their monthly paychecks. The minimum payment trap begins when a cardholder purchases an item or items that that exceed his or her ability to pay off with the end of the month paycheck. The majority of the time, the purchases are prudent and made financial sense. A good example is when he or she comes across a sale of needed office attire that is significantly reduced in price. When the credit card bill arrives, the card holder is aware that there will be a large balance due. He or she usually has the best intentions of paying a significant amount of money on the bill and getting things back on track over the next few months. When the bill arrives, the number that jumps out on the statement is next to the phrase "minimum payment due." It is, of course, substantially lower than the card holder had anticipated he or she would have to pay. In many instances the minimum payment is no more than interest on the credit card with just a small principal reduction included. A portion of new card holders might succumb to only making the minimum payment each month. These card holders will find, on an annual basis, that the balance on their credit card might very well remain the same, even though they have made twelve payments over the year. For these credit card borrowers, after a year of making minimum payments, a very interesting phenomenon takes place. The credit card company increases the borrowers credit limit "for making timely" payments. Many times this scenario is repeated on a year by year basis until such time as the borrower is buried in a mountain of debt with no chance of getting out from under it. Tomorrow I will talk about "the minimum payment trap- part 2!!!".
Until then,
Alan

Young Adults: First Credit Card

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 16 May 2007 03:00:00 +0000

Hi,
When young adults apply for their first credit card, they need to be aware of hidden costs and fees, interest rate fluctuations, and the minimum payment trap. If ever it's the time to read the small fine print on the back of forms, applying for a credit card is when to do it. No one should feel embarrassed if he or she does not understand all the verbiage on the back of one of those forms. It's important to ask someone who does understand to explain all the terms and conditions to the prospective card holder. Here is a list of some of the items typically included in the small print:
1) If payment is late, by even one day, the interest rate may rise to the maximum allowed by state law in which the card is issued. For example, if the card is offered at 6% and the payment is one day late, the credit card holder reserves the right to reserve the interest rate to 19.9%+.
2) Most credit cards assess a $35.00 additional fee for any payment that is late.
3) If the credit limit is exceeded by even a penny, a $35.00 fee is assessed.
4) On many cards, when only the minimum payment is made, the principal is not reduced at all and only interest is being paid. Paying only the minimum payment is the start of falling into the minimum payment trap.
Tomorrow I will write more about the minimum payment trap.
Until then,
Alan

Using Credit

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Mon, 14 May 2007 17:30:00 +0000

Hi,
Credit only became a common financial instrument available to virtually anyone over the last thirty years. Before credit cards were made so widely available and marketed aggressively, applying for credit had a sense of seriousness to it which is lost in our current culture of debt. When my father started using credit, his intention was to consolidate purchases into one monthly bill and pay it at the end of each month. The thought of carrying a balance would have been appalling to him. Now we accept credit card balances and interest as a way of life. The barrage of credit card applications that students receive is unbelievable. It's possible that one reason many of them start early adulthood as indentured servants to the credit industry is that they were bombarded with credit card applications and applied for and received credit they were ill equipped to repay. Many of them started using credit without understanding how the credit agreements they signed even work. Over the next week, I'm going to write about how to make decisions regarding how to use credit, how to maintain and protect a good credit score, and how to get back on track if credit use is getting out of hand.
Until then,
Alan

Customer Service: Communicating about Problems With Products

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Fri, 11 May 2007 17:13:00 +0000

Hi,
At one time or another we have all face the task of calling a customer service department to complain about a defective product ranging from cell phones to washers and dryers. Before contacting customer service it is to determine what we want. Do we want the product fixed, replaced, or do we want our money back? We need to know in advance of the call whether a warranty exists, what the terms are, and if it is still valid.
When calling customer service about a problem with a product, consider the following:
1) Get the customer service representative's full name and ID number, if applicable.
2) Clearly state the problems you have had with the product.
3) Tell the customer service representative exactly what you would like done to resolve the issue.
4) Hopefully the matter will be resolved at this point. However, if a satisfactory solution has not been reached, you may talk to the customer service representative's supervisor. In many instances the customer service representative does not have the authority to resolve certain issues, but the supervisor does have such authority.
As always, keep a written record of the arrangement and reiterate it with the customer service representative at the end of the call.
Have a good weekend.
Alan

Customer Service: Communicating About Services

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Thu, 10 May 2007 19:50:00 +0000

Hi,
At one time or another we all have problems with our telephone service, cable TV, or high speed Internet. Our problems may be caused by services which are intermittent or do not function at all. This is a common scenario during the winter months. In most cases, we are entitled to a large reduction in our monthly bill due to the problems. For example, cable companies and telephone companies will give you a negotiated credit for the time your service was unavailable. But, this credit is not automatic, it needs to be negotiated with customer service. Here are some things to consider when you call customer service:
1) Prior to the call, determine what you will be requesting from the company and why. Have you facts available at the time you place the call: for example, the times and dates of interrupted service. Don't be vague in your complaint.
2) If the problem has been reoccurring, make sure the customer service representative is aware of the frustration you have experienced, and for how long it has happened.
3) If the service interruption has been over a substantial period of time, do not be afraid to request two or three months free service.
Negotiation is an art form, but with practice anyone can do it. Many times people are entitled to compensation in the form of three or four months free service, but are afraid to ask for it. If your situation warrants this type of compensation, all you can do is ask and hope that the company is invested in maintaining the good will of its customers.
Tomorrow I'm going to write about calling customer service regarding product dissatisfaction.
Until then,
Alan

Negotiating a Past Due Bill

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 09 May 2007 19:23:00 +0000

Hi,
When faced with the scenario of calling a bill collector about a past due bill that you can't afford to pay in the foreseeable future, there are several things to consider to successfully negotiate an acceptable solution. Before making the call, it is important to realize that the bill collector would love nothing more than to resolve your account in one telephone call. Some thoughts to consider:
1) Ask the bill collector for his or her name and write it down.
2) Disclose your financial situation to the bill collector in an honest and factual way. Do not sensationalize or editorialize any part of it. Chances are that the bill collector has already pulled a credit report and is aware of your payment history and outstanding debt structure.
3) If full payment is not available for the particular bill, there are two alternatives: The first is to offer a lump sum reduced amount to settle the bill.
The second is to offer payment arrangements over a long period of time. Collection agencies are not in the business of making long term commitments, so many times they would rather the lump sum settlement. If the offer is reasonable, chances are that it will be accepted.
4) If a lump sum payment is not available and you wish to propose payments, make sure that your proposed payment schedule is one you can keep.
5) If you have no financial resources available to pay your bill, explain that to the bill collector and explain that you are investigating alternatives. Tell the collector that when your situation changes you will immediately inform him or her. But, until then, there is nothing you can do.
Remember that bill collectors deal with all types of people, including professional deadbeats. They have heard every story and stalling tactic in the book. These are suggested ways to negotiate in good faith with a bill collector. Stalling or manipulating a bill collector could result in making your financial situation much worse for you, not better. Tomorrow I'm going to write about negotiating with a customer service representative.
Until then,
Alan

Collections: Customer Service- The Importance of Documenting Communication

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Tue, 08 May 2007 19:19:00 +0000

Hi:
When an individual or a business finds it necessary to contact a collection department or customer service department, here are some tips on documenting the phone call:
1) Get the full name, ID number, if applicable, of the person representing the company during the phone call.
2) If it's a payment arrangement that is being requested, communicate it to the collections person and document his or her response. Most reasonable requests will be accepted, and it is important to put down everything in writing to validate the agreement.
3) If the collector offers an alternative arrangement that is acceptable, document it the same way.
4) If the initial payment arrangement is denied, but is reasonable, ask to talk to a supervisor. Make sure to get the supervisor's name and ID number as well.
5) After a suitable payment arrangement has been hammered out, make sure to read it back to the collector, informing him or her that you've documented the call.
6) If the payment arrangement extends over a long period of time, it is a good idea to have the creditor put the arrangement in writing and send a signed copy to you.
If you are calling a creditor because the company has made a billing error on your account, the call should be carefully documented in the same manner. Since corporations have so many customer service call centers located all over the country, it is extremely important to document the name and ID number of whomever handled your call in the event that your call needs to be referenced in a future conversation. Generally speaking, documenting phone calls and creating a phone log about each problem or issue will allow you to remedy disputes in a more efficient manner. Tomorrow I'm going to start writing about collection negotiation.
Until then,
Alan

Documenting Credit Inquiries

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Mon, 07 May 2007 20:53:00 +0000

Hi,
When a small business owner or individual shops for financing, these are some important points to consider for every phone call to financial institutions:
1) Write down the full name, phone number and extension of the individual with whom you communicated.
2) Write down everything related to the particular financing that is being inquired about.
3) If applicable, inquire about the cost of insurance and service agreements.
4) If the purchase is subject to warranty, write down the specifics of the warranty. This will allow you to compare warranties among financial institutions and/or manufacturers.
5) Request that the individual email you a copy of your conversation.
By writing down all communication with financial entities, it will enable a more expeditious and prudent decision to be made. It will eliminate the unscrupulous salesperson, who does not disclose the full terms and conditions of various financial instruments until the customer is ready to close the document, to railroad you into signing for financing you don't feel comfortable about.
It is a good idea at the close of all conversations to reiterate what has been written down in order to prevent future misunderstandings.
Tomorrow I'm going to write about documenting collection calls.
Until then,
Alan

Loans For Equipment Purchase: Some Thoughts To Consider

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Fri, 04 May 2007 21:44:00 +0000

Hi,
When a business owner makes the decision to purchase a piece of equipment, he or she needs to consider the following:
1) Is it imperative that it is new? Due to depreciation, most used equipment can be purchased at a significant discount. For certain used equipment, such as for restaurants, buying used equipment can save the purchaser as much as 50%-60%.
2) Do your homework. The Internet is a very good source when looking for new/used equipment.
3) Set up the financing for equipment prior to actually purchasing the piece of equipment. Your negotiation ability is much greater if it is a cash deal rather than relying on the dealer financing your equipment. The financial institution that has your business account should be more than willing to finance a piece of equipment.
4) If buying used equipment, inquire about transferring any or all servicing agreements or warranties on the equipment at the time of purchase.
5) If the business owner is not familiar with the type of equipment that is being purchased, check the Internet to find out whether or not the equipment maintains its value. This will also give the business owner knowledge as to what is an appropriate price for the equipment.
6) Before purchasing any piece of equipment, talk to your insurance carrier to make sure it is covered. If not, make arrangements for insurance coverage. This is especially important for equipment which carries a high degree of liability.
As always, make sure that the terms and conditions of the loan agreement are satisfactory to your needs, and that the obligation can be met on a timely basis.
Have a good weekend!
Alan

Equipment Leases

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Thu, 03 May 2007 17:45:00 +0000

Hi,
Equipment leases are available in a multitude of places ranging from commercial leasing companies, private leasing companies and many equipment manufacturers. The cost of leases varies considerably from one place to the next. In determining the lease best suited for your business consider the following:
1) Determine the term of the lease before calling leasing companies.
2) Have a general idea of the amount of monthly payments the business can afford before calling leasing companies.
3) Ask if first, last and security payments are required with lease inquired about.
4) If the equipment being leased depreciates very quickly, and has a high residual value at the end of the lease, do not use it as a factor to determine whether or not that particular lease is suited for the business needs.
5) Ambitious lease salespeople often have very creative payment streams on leases to entice prospective customers to sign the lease. It is important to get full disclosure on any lease to make sure there are no hidden surprises down the road.
6) If the equipment being leased is for a highly speculative business such as a restaurant, inquiring about whether or not the lease is assumable is not a bad idea.
7) The cost of insurance is a consideration when determining the cost of leasing and needs to be factored into the decision.
8) Before signing the lease, determine who is responsible for servicing equipment.
Leasing is ideal for businesses that have to worry about cash flow. Lease rates are generally figured at a cost per thousand dollars rather than a specific interest rate.
Tomorrow I'm going to write about shopping for loans to purchase equipment.
Until then,
Alan

Rentals: How To Shop For the Right Financing-

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 02 May 2007 18:24:00 +0000

Hi,
Once a business owner has determined what method of financing he or she needs for a purchase IE., to rent, lease or buy, there are many factors to consider:
Rentals:
1) First determine if it's a short term rental or a long term rental.
2) Many equipment suppliers have both short and long term rental agreements available in house. For example, if an equipment supplier has a piece of equipment returned, and is unable to quickly sell it, many times it will be made available on a short or long term rental basis. Also, inquire about their price breaks as determined by rental periods.
3) Check with all local equipment rental companies to obtain quotes for the piece of required equipment.
4) It is worthwhile to check equipment rentals within a 100 mile radius, as sometimes the rental prices are lower in small towns and rural areas.
5) Decide whether it's the type of equipment, or brand which is important, as it may be worthwhile to check with various competitors to see what types of rental programs are offered.
6)Inquire about the insurance requirements with each obtained quote, as they can vary dramatically from company to company. In some cases, the business owner's insurance company will cover the insurance on rental equipment.
When obtaining rental quotes, be consistent in your request to each supplier, so that you are comparing apples to apples.
Tomorrow I'll write about leasing.
Until then,
Alan

Buy, Lease, Rent: Some Thoughts To Consider

noreply@blogger.com (Alan from Olympic Debt Specialists, LLC) — Wed, 02 May 2007 01:11:00 +0000

Hi:
In my years in the credit business I have come across numerous instances involving farms to construction companies, medical offices to restaurants in which the type of financing did not suit the particular business. In the restaurant business, where the profit margin is very slim, in many instances, the restaurateur should have been leasing the equipment instead of buying it. There are several reasons for this: the first one is how quickly restaurant equipment depreciates. Restaurant equipment has little or no value once it is removed from the restaurant and almost no resale value. By leasing the equipment, the restaurateur frees up more operating capital which is sorely needed in the business. In farming there is usually one major problem with equipment purchases. Farming equipment is incredibly expensive, and in some instances farmers get railroaded into buying more equipment than they need to run their operation. They are then saddled with servicing a debt they can ill afford. Due to the lack of depreciation on farming equipment compared to other things, buying farming equipment is generally a good idea. In the construction industry, all three types of financing are appropriate in certain situations. I have run across construction companies that have a piece of equipment worth $300,000. that generated tremendous cash flow when being operated on a job, but was sitting dormant for two years with $5,000. per month payments. In this instance, a short term rental agreement would have been a better alternative for the company. Although construction equipment maintains its value, in this situation it's an unnecessary drain most companies can ill afford. In many instances when medical professionals set up their practices, they are sold unnecessary equipment by an overly ambitious salesperson. In some situations a workable alternative is to pay more by leasing equipment than buying it. As a practice flourishes, the ability to upgrade office equipment is fairly easy. It's very important when considering a form of financing, to factor in the cash flow from a particular piece of equipment and go with financing which best fits that particular scenario.
Tomorrow I'm going to write about how to shop for financing.
Until then,
Alan