“Get rid of your debt quickly! Call us now to get your loan approved!”? Advertisements by debt consolidation companies like these have become as common as chocolate ads. If you are already under heavy debt and large monthly payments are eating up a huge chunk of your income, the ad may seem welcome. It may appear as a panacea to your broken financial backbone.

In spite of all the wonderful claims made by these companies, debt consolidation isn’t a panacea. But some companies want to keep this truth from you and lure you into their trap. Is there a way to differentiate legitimate deals from the bogus ones? Here are a few tips to help you stay safe from such scammers.

Usual tricks used by scammers

Mostly, the cons are simple enough to be recognized, but your debt-laden eyes fail to identify them. When you call the companies (or they call you), they deliver a pretty interesting pitch that touches your fears and emotions. Soon they ask for an upfront fee before processing the loan. Once you pay their “advance fee”, you never get the loan.

Some other fraudulent companies use a different tact. They claim to be non-profits, but they secretly keep moving your money to for-profit businesses. Looking at their delusory names, many unsuspecting people easily trust them. The Federal Trade Commission (FTC) in USA has exposed several such scammers and charged them with hefty fees and penalties.

There are others who can’t exactly be called scammers. They don’t initially reveal anything about their immense fee that could push your total debt higher. Be warned if a company charges:

• A part of the money you save through debt consolidation (it may be up to 25%).
• Sign up fees.
• A part of your total debt amount (it can shoot up to 20%).
• Monthly service charges.

6 Tips for protection against these scams

1. Do your research

Getting a little investigation done before contacting any debt consolidation company can help avoiding major blunders. Do a Google search; type the company’s name with review. For example, “XYZ Debt Solutions review”. This way you’ll get to know what other customers have to say about the company.

Visit their website and have a look at their credentials. Legitimate companies boast of their credentials, testimonials, and they are members of various national and international associations. Additionally, call your creditors to know if they’ll agree to work with the company.

2. Compare fees

Yes, put the monthly payments aside for a while. Since creditors offer the same rate to every company, there shouldn’t be any big difference in the rates of debt consolidation companies. In case you are offered a lower monthly payment, it should be because the loan period has been extended, and you’ll end up paying more money in the long run.

3. Watch out for the extra fees

Some unscrupulous debt consolidation companies may bill you for analysis or a quote. Worse, I have met many people who complain to have been charged large sum of unexpected fees. And such hidden fees popped-up months, or years after they consolidated their debt.

4. Ensure that the proposal has been accepted

You should begin making payments to the finance company only after their proposal plan has been accepted by the creditors. Do not agree to pay a fee until the service has been performed. Of course, you should review the proposal plan as well.

5. Keep a vigilant eye on facts

Refuse to entertain any company that persuades you into a plan or guarantees any favor without looking into your financial details or specific needs. Many fraudulent companies do not reveal all the facts to you and keep you blindfolded over the details. On the other hand, legitimate ones will take interest in discussing about your current debts before making any offer.

6. Finally, a tip that is often overlooked: never ever make a deal without reading the fine print!

Now that you know of the various ways in which debt consolidation companies try to scam unsuspecting customers, are you frightened or feeling confident? I am curious to know all about it, so please share your thoughts with me.

Willie Rhoades is a finance analyst who enjoys writing about debt consolidation, debt management and other personal finance related topics on his website http://www.debtconsolidationloans.uk.com. He has written many articles over the years and enjoys authoring reports offering money saving tips that can be easily actioned.

Many auto insurance companies examine consumer credit information when deciding whether to issue or renew an insurance policy and how much to charge for vehicle coverage. Since bankruptcies can hurt a consumer’s credit history for up to 10 years, this means a person who has one on record is likely to see higher insurance prices.

The reason why credit information is used to help rate drivers is that many insurers and government organizations have found statistical links between individuals’ finances and their risk of being involved in an accident. Because premiums are largely based on the likelihood of someone filing a claim, a poor score could easily translate into higher costs.

When someone is in poor financial standing, affordable auto protection is often harder to find. In sample premiums for 17 companies provided by the Nevada Division of Insurance (DOI), policy costs for a 30-year-old female motorist living in Las Vegas skyrocketed when credit quality went down. In the DOI’s example, when the motorist shifted from having the best possible score to the worst possible score, the premiums offered by the 17 companies increased an average of 103 percent, rising from $1120 to over $2204 for the same policy.

Restrictions on credit scoring

Credit scoring (or insurance scoring) is a standard practice in nearly every state, but there are limitations to the practice. Under federal law, motorists are entitled to a free report if any company takes action against them, which includes denying their application for vehicle coverage. In many states, such as Missouri, insurers are required to inform motorists if their credit information has lead to an adverse action, such as higher costs or non-renewal.

In other states, financial information cannot be used as the sole reason to cancel or non-renew someone’s existing policy, or as the only factor when deciding whether to issue a policy. Often, insurers are required to explain how a policyholder’s fiscal info has been used.

Over time, as motorists’ financial situations improve, they usually have the ability to request a re-rating from their insurer once a year if their credit information was used in the rating process. In Oregon, consumers can ask for a re-rating without the risk of having premiums increased if their score has actually gotten worse.

What to do if you’ve filed for bankruptcy

After filing for bankruptcy, it may be difficult to find inexpensive coverage. One of a motorist’s best options involves going online to compare auto insurance quotes from as many sources as possible. While many insurers will use credit scoring when setting rates, some don’t. And those that do use credit scoring will still weigh the risk differently. Gathering sample rates from a wide range of sources may help bankrupt drivers find affordable auto protection.

If a blemished financial record is making it difficult to find adequately priced vehicle coverage, motorists should remember to remain patient. Although bankruptcy can stay on a person’s credit report for 10 years, there are many other qualities that are used to set insurance rates. Developing a practical budget, speaking with a financial counselor, and working hard to improve one’s financial situation can help motorists improve their financial standing over time.

In the meantime, avoid automobile accidents and moving violations, and keep a good driving record to stop insurance costs from skyrocketing. Periodically taking the time to shop around for cheaper options can also help motorists avoid higher coverage costs that are the result of having filed for bankruptcy.

Written by Staff Writer at OnlineAutoInsurance.com which provides free, fast, unbiased auto insurance quote comparisons to consumers and helps people save the hassle of getting quotes individually without requiring any personal information or lengthy procedures to find cheap car insurance rates.

Here are few things that you must surely consider in terms of options (some or all might be applicable to your situation):

• If you already own a car, then consider continuing using it till the time you can. If it requires some minor repairs that won’t cost much, then go for these repairs and postpone the purchase of car as much as possible.
• If you don’t already have a car, then consider using the bus or public transport. It might work out well for you and you would also save on running costs.
• See if it is possible to borrow a friend’s car. Maybe a friend has a spare car which he/she can easily lend to you for some time.

Think it over and see if the car purchase bill fits in your overall financial plan. And if you have not yet made your financial plan then chalk it out immediately with due consideration to your long-term/short-term/medium-term financial goals, your debt, your income, expenses, assets and your emergency fund requirements.

How to buy a car after bankruptcy?

If, after evaluating all the alternatives for avoiding the purchase of a car after bankruptcy, you still find it a financially feasible option for you, then consider the following:

• Look for an inexpensive car that will address your travel issue. Basic functionality is what you should focus on and not the bells-and-whistles.
• Instead of buying a new car, go for a used one that will still do the job for you but will cost much less.

In any case, your focus should be on getting a car that is in good working condition but doesn’t cost you a lot of money. Both things are important – ‘condition of the car’ and ‘its price’. If you buy a used car that is not in good condition then you will end up spending more money in its maintenance and repairs. And if you try to spend too much money on buying a car then you would be making yourself more vulnerable (financially). Your focus after bankruptcy should be on building your credit score and on ensuring that you have a financially secure future.

Getting a car loan would be really difficult for you (and almost impossible if your bankruptcy is not fully discharged yet). However, there are lenders who do grant car loans to people with bad credit. But while hunting for such a lender, do not compromise on reliability (of the lender). It is important to note here that car loans offered to you would be at higher interest rates as compared to those offered to people with good credit history. Even the terms, fee etc. would not be as favorable for you as for people with great credit scores.

Moreover, the lenders would make several additional checks on you and your finances before actually approving your car loan. Such checks would include checking your sources of regular income and your credit history after your bankruptcy discharge (whether you have been making all your payments on time and in full or not).

Once your car loan is approved, make sure that you make all your monthly car loan payments in time. This will prevent you from unnecessary late fees and at the same time help improve your credit score over a period of time.

In any case, you should seek advice from a well reputed professional/lawyer who deals in matters relating to buying a car after bankruptcy.

How does bankruptcy affect foreclosure?

Some people are under this wrong notion that bankruptcy will help them avoid foreclosure altogether or bankruptcy is a better option than foreclosure. It is better to have complete and correct information and then take the decision lest you are regretful of your decision later.

So, you need to clearly understand the effect of bankruptcy on foreclosure and not jump to conclusion that bankruptcy is a means to avoid foreclosure. It would be best to consult a real estate lawyer of repute in order to completely understand/discuss the options available to you and finalize the one that best suits your situation. And let’s remember that bankruptcy has to be always treated like the last resort.

Filing for bankruptcy has to be a carefully thought out decision. You have to evaluate your financial position and look for options to avoid bankruptcy (e.g. through selling your assets or through renegotiating terms with your creditors or through refinancing etc.).

If you feel that your financial problem is temporary and, with your current sources of income/job etc., you would be able to tide over the financial crisis in a few months… and would be back to making timely payments on your mortgage, then you should talk to your mortgage lender about the situation and try to work out an arrangement which would help you continue with your mortgage in the tough time. Since lenders too don’t prefer foreclosures or bankruptcies they would be willing to work out a solution with you (it will help the cause if you have had a good repayment history in the past). In such a case you would not need foreclosure or bankruptcy. Also try out debt consolidation and explore other options with professional debt consultants.

If bankruptcy still turns out to be the only option, you must evaluate which type of bankruptcy to file. Again, the nature of your financial problems (temporary/permanent) would be a crucial input in deciding this.

The most common types of bankruptcy are – Chapter 7 bankruptcy and Chapter 13 bankruptcy. In Chapter 7 bankruptcy, you would get rid of all unsecured debts but secured debts like mortgages might be exempt. In Chapter 13 bankruptcy, your debts would be reorganized to enable you to make monthly payments which are used to make payments to your creditors as per the payment plan decided through bankruptcy proceedings.

Since bankruptcy means settlement/reduction/reorganization of your debt, your total monthly payments (if any) after bankruptcy would be reduced quite a bit. So, you might be able to manage the monthly installments on your mortgage loan and hence prevent foreclosure after bankruptcy. This is an important factor that you must consider when doing your calculations.

Does bankruptcy stop foreclosure?

When you file for bankruptcy, you get temporary relief (legal term for this ‘automatic stay’) from collection calls from your creditors (including collection activities by your mortgage lender). This temporary relief is only for a short period of time i.e. till the time your bankruptcy case is settled. However, mortgage lender might approach the court and get permission from the court to start foreclosure proceedings on your mortgage loan even during the automatic stay period.

Once the automatic stay period is over, the mortgage lender doesn’t need to approach the court to get permission to move foreclosure proceedings against you. The mortgage lender can immediately proceed with foreclosure. So, bankruptcy doesn’t really stop foreclosure and it might just delay it a bit. In many cases the foreclosure might be done during the process of bankruptcy itself.

In any case, you should seek advice from a seasoned real estate professional/lawyer that deals in such matters as foreclosure after bankruptcy.

However, there are two interesting questions around seeking credit after bankruptcy:

1. Do you really need credit?
2. If you do not really need credit, then should you avoid it?

Analyze your financial situation and draw up your financial plan

This is an absolute must for everyone and if you have been through bankruptcy then it becomes even more necessary that you create a financial plan and stick to it. Your financial plan should include your assets, liabilities, income, expenses, long/short/medium term financial goals and emergency fund needs. You might want to get a new car or buy your own home or buy some latest gadgets or dresses… but if your financial plan does not allow it then you should avoid such expenses and move them further into future when you are financially stronger. Getting loans for car, home etc. should be avoided and it should all be governed by financial discipline and your overall financial plan.

Improving your credit score after bankruptcy is very important

So, if you don’t really need credit should you avoid it? – Answer is both ‘Yes’ and ‘No’. ‘Yes’ because you should avoid loans and ‘No’ because it is recommended that you get a secured credit card and use it as a means for improving your credit score.

Since getting any kind of unsecured loans after bankruptcy is very difficult, most people are left with the option of getting a secured credit card. Here it is important to mention that in any case you should not be treating the secured credit card as a credit line for serious borrowing. It has to be strictly treated as a credit history improvement mechanism. So, you should use it to such an extent that you are able to make full payment every month on your secured credit card. Also, ensure that the payment is made well in time.

Similarly, you should be paying all your other bills and taxes etc. in time and in full amounts too. All these will add to your credit history and will help you rebuild your credit score.

Getting loans after bankruptcy

As mentioned earlier, it is almost impossible to get any kind of loan after bankruptcy. However, if you are able to get any sort of loan after bankruptcy, it would have very harsh interest rates and terms. Also, getting loans would be particularly tough for first 2 years that follow your bankruptcy discharge. Moreover, the lenders would have an even stringent list of qualification criteria for people with bad credit history.

Where to get a loan after bankruptcy?

Since getting a loan after bankruptcy is very difficult, a lot of people ask this question – ‘Where to get a loan after bankruptcy’. This is important also because you will need to find reliable lenders who are ready to lend to people with bad credit history. The best way to find such lenders would be through references from friends and family members who have had any experience (good experience) with these lenders. After that it would be a tough negotiation for you. But make sure that you carefully go through and understand all the terms and conditions before agreeing to them.

In any case, you should seek advice from a seasoned credit advisor/lawyer that deals in such matters as getting credit after bankruptcy.

If there is one thing that investors today can take full advantage of that investors in the past could not, it is the information that used to be given only to the elites of the financial world. Nowadays, the financial information that you need to make money or break out of debt is all freely available online for the average person to access and use as he or she pleases. What this means is that you can get the information that you need to do these things from the Internet without having to call anyone or go through any type of bureaucracy or financial hierarchy.

One of the more helpful types of information sites that you can find online is the price comparison site. The first thing that most individuals and families have to do in order to break out of debt is to somehow find a way to cut back on expenses. The easiest way to do this is to find the lowest price on things that you would think are untouchable, such as car insurance, property insurance and many other bills that companies would prefer you not negotiate.

The truth of the matter is that many bills that seem like rock-solid, nonnegotiable items, are actually quite negotiable if you use price comparison sites. For instance, if you look at an automobile insurance price comparison website, you might find that there are many different types of ways to lower your car insurance payment each month without giving up any type of service.

Price comparison sites give you an overview of the market

In the example with automobile price comparison websites, accessing information that allows you to see what kind of price and service you can get for your particular driving record from all the reputable companies in your area gives you a powerful advantage. No longer are you subject to the whims of the agents of individual companies that are trying to hard-sell you on their programs without you having the benefit of a side-by-side comparison. Not only can you compare one company to another with the right price comparison site, you can also compare your current company to the market as a whole, giving you the right perspective when it comes to knowing exactly what you can and should be getting for your money.

Price comparison sites give you the lowest price at any given moment in time

In the auto insurance industry, one of the most competitive industries in the world, the lowest price for the best value does not stay at the same company all of the time. As a matter of fact, many independent third-party watchdogs of the automobile insurance industry recommend that you compare your premium payments to what you’d pay competitors at least twice a year, which not so coincidentally coincides with auto insurance periods.

The company that has the best price today might not have the best price tomorrow, and you should not be ashamed to switch in a hurry if someone else has a better deal. This is a way to keep from paying too much for services that you can receive for a lot less.

Price comparison sites keep you doing business with reputable companies

Price is not the only concern when it comes to breaking out of debt. When it comes to insurance, you definitely want to deal only with reputable companies that have policies that actually protect you in case of an emergency. If you do not, you may end up paying much less as a monthly premium, but you will possibly be completely unprotected in the event that something bad happens. For most people, it would take only one emergency to completely destroy their financial plans, which makes finding a reputable insurance company one of the highest priorities for those who are trying to seriously break away from debt.

My name is Nisha Sharma. I represent a site called CompareLogbookLoans.co.uk. I love to write, especially about travel, finance and offer business advice.

The reasons for bankruptcy can be many but it hurts most when it has been forced on you because of some event taking place that is beyond your control. This is why you should take all possible precautions to prevent you finding yourself in a position where you can’t pay back all the debts you owe. Of course the first thing to ensure is that you never borrow more than you can comfortably repay but what would happen if you suddenly lost your means to earn your income through no fault of your own, and your creditors demanded their money? If you didn’t have some backup system at your disposal you would be in trouble and bankruptcy would be hard to avoid, that’s where income protection insurance comes in.

Besides enabling you to keep food on the table while you are unable to work, income protection insurance can also enable you to keep paying your debts and therefore avoid any bankruptcy action being taken against you.

In this day and age many of us tend to live from pay day to pay day and many small businesses are run on the basis of income coming in on a continuous basis. Anything that happens to this income stream can cause concern among creditors and as soon as one takes action to get their money, the others soon follow. Once again adequate income protection will prevent such action being instigated in the first place.

Income protection therefore has an important role to play in our everyday lives. No one can confidently predict our futures as even the best laid out plans can run amok at any time. Those of us with proper income protection policies in place can avoid such a disaster occurring and get to live another day. Income protection insurance can therefore save you from bankruptcy, and should you encounter any of the following financial disasters:

• Suffering from an illness that prevents you from working for a prolonged period of time.
• Redundancy through no fault of your own (as long as this is stipulated in the policy).
• Depression disorder that prevents you from working.
• An accident that has left you injured whereby you can’t continue earning your usual income.
• Temporary unemployment (as long as this is stipulated in your policy).

Any of these occurrences can affect your ability to continue meeting your ongoing financial obligations and eventually lead to bankruptcy if you have failed to adequately protect yourself, either through savings, or through income protection insurance.

Self-employed small business owners can also benefit

If you are a small business owner you will know what could happen to your business if you were not there to keep the work going as usual. In fact statistics have shown that one in three small business operators become unable to work for at least 90 days each year because of an accident or illness. This means the business has to survive for three months with no earnings although the business overheads would remain. There are only two solutions to such a problem:

1. Structure your business so that your presence is not absolutely tied to your business succeeding. This might mean the employment of another person and that might not be financially possible.
2. Taking out a suitable income protection insurance policy that will ensure you get 75 percent of your average taxable income. In doing this you will ensure you are protected from running the risk of bankruptcy while at the same time claim your premium payments as being tax deductible.

Sickness benefits through superannuation are often short lived

Most workers, if not all, are for sickness benefits. This means your pay will be continued for a certain period after you find you can’t continue on the job after becoming ill or injured. This protection is often part of your superannuation but the problem here is that it often doesn’t last for long. In many workplaces the workers are only entitled to two weeks sick pay, after that they are on their own. If you are employed it will pay you to find out how long you will be paid sick pay and if you feel your finances would be insufficient to pay your ongoing living expenses after that time, you should look to taking out income protection insurance that can take over when your sick pay is discontinued.

Check for cover regarding loss of employment

Although some insurers will cover you for compensation should you become temporarily unemployed or even retrenched from your regular job, this is not commonplace. If you are looking for this type of protection you must make certain that the policy you are contemplating taking out makes provision for this type of cover. Policies that do cover you for loss of employment will not pay out if you have been fired from your job because of some illegal or criminal activity.

Before taking out any income protection policy don’t be afraid to ask many questions of exactly what you are covered for and what the circumstances are that would prevent you from getting a payout. It is of no benefit if you pay all your premiums regularly and on time only to find out that you are not covered for a particular event when you come to make a claim.

Kristy Ramirez writes for Life Insurance Finder where she helps people keep their income protected with salary protection insurance.

Financial factors to consider when buying a house after bankruptcy

As mentioned earlier, bankruptcy gives you a fresh lease of life. So, you need to plan well and make the best use of this opportunity to start afresh. The answer to “Can I buy a home after bankruptcy” is “Yes”. However, buying a home should not be at the top of your list really. It is very obvious that you have to first ensure that you have a regular source of income which will allow you to meet your basic needs and also provide some savings for building an emergency fund. If you are still left with money, then you could consider using it towards paying your monthly mortgage installments and accordingly fix a budget for buying a home in bankruptcy.

Another important factor to consider is the type of bankruptcy you were granted. This will determine whether your entire debt was settled right away (as in Chapter 7 bankruptcy) or was your debt reorganized (as in Chapter 13 bankruptcy). In the latter case, you will still have your debt obligations to fulfill… so, you will need to take a call on whether you will be able to take on the additional burden of home loan installments (and more importantly, how will you muster enough money for the down payment). Also note that it is almost impossible to get a loan if your bankruptcy is not fully discharged.

Finally, you need to decide on when exactly you can afford to buy a home after bankruptcy; and what are the financing options available to you for buying a home in bankruptcy.

How to buy a home after bankruptcy? What are the available options?

The obvious option that comes to mind is getting a bank loan. And it will translate into a mortgage loan i.e. a secured loan against the home that you buy. Other secured-loan options could be possible too but in most cases they will not be available to you (a person who has just gone through bankruptcy).

Even for home mortgage loan, you must qualify as per the criteria defined by the bank in order to get the loan. Generally, the banks will consider your home mortgage loan application only after certain period of time (mostly 2 years) has elapsed since your bankruptcy. The bank will make the usual checks (including your credit report) and will additionally look at various factors like – do you have a regular source of income since last 1-2 years, whether you have been paying all your bills on time (and in full) and your credit history for the time period after your bankruptcy.

Another option that you could consider is “Land contracts” or seller financing. In this option, the seller acts as the lender for you. You enter into an agreement with the seller to make a down payment and pay the remaining amounts in installments over a period of time. There are various ways in which land contracts are drafted and it is best (both for the seller and buyer) to seek advice from a real estate lawyer for getting the land contract drafted. Since you will find it tough to qualify for home loans from institutional lenders you might resort to land contracts. Moreover, land contracts generally offer more favorable loan terms and interest rates for the buyer.

In any case, you should seek advice from a seasoned real estate professional/lawyer that deals in such matters as buying home after bankruptcy.

As we come to the far end of 2011, the economists give a retrospective glance at the economy to check where we stand. Though individual bankruptcies are falling, yet that doesn’t speak much about the improving financial behavior of the US consumer, who is still being supported by the record federal stimulus. With the record high unemployment rate, people are suffering from lack of cash and spurring personal credit card debt level. The consumer bankruptcy level plummeted 9% in the first half of the year 2011 as compared to 2010. The American Institute said that roughly 707,000 Americans have declared bankruptcy in 2010 but 2011 saw a declining rate of credit card delinquencies and falling missed payments on loans. Does this suggest that the consumer finance is improving?

The life-saving option for the debtors – Is debt consolidation the ultimate choice?

As the Americans are misusing their credit cards and accumulating debt on their accounts, most of them are desperately looking for some option to give their financial life a fresh new start. When you approach financial consultants, most of them will recommend you to the debt consolidation option as this is perhaps the best way to repay your debts effortlessly and also boost your credit score at the same time. Though the ads and pitches for debt consolidation are everywhere, yet hardly all of them are true to their services. Misinformation prevails in this particular industry and if you have to complete a successful debt consolidation process, you have to stay informed about the exact information of such companies.

Some debt consolidation facts you can’t do without

If you’re up to your eyeballs in debt and you’re still not aware of the actual facts of debt consolidation, then you’re perhaps lagging behind. Don’t believe in all the myths that are usually circulated within the industry as this may lead to a soup. Here are some debt consolidation facts that you can’t do without.

• The teaser rates and the prime rates: Usually lenders advertise various teaser rates for the home equity loans, balance transfer cards and the personal debt consolidation loans but the prime rates are always reserved for those who have exceptionally good credit score and the rates that sound far from being true are offered for a short period of time.
• DMP and credit counseling are not synonyms: A credit counseling agency is more like a teaching institution that preaches debtors to get out of their red through budgeting and personal finance management techniques. A debt management plan is usually one of the many debt relief options that the credit counseling agency chooses to help the debtor get out of debt.
• Consolidating through a program may not be the best choice: Not always it is seen that repaying debt through a debt consolidation program is the best choice for a debtor. Sometimes, a debt consolidation loan with a drastically low rate can also work well with your present financial status.

Is debt consolidation the ultimate panacea for the debtors?

Are you relieved to enroll yourself within a program or by taking out a loan? If answered yes, then you have to probably change your attitude towards money. We all know that changing our bad financial habits are often tough but when it comes to consolidating our debts, taking the plunge without bringing about any noticeable change in personal finance management will become disastrous. Remember that debt consolidation is not just a way to delay the inevitable. You have to manage money and make the timely payments on time so that you can live a debt free life.

If the consumers continue to reduce their spurring debt level by getting help from debt consolidation firms, they can improve the growth of the economy too. While the federal debt level is also ballooning with time, you have to make sure that you don’t keep on raising your personal debt ceiling without any change in the spending floor.

Kavin Matthews is a financial writer with a vast knowledge on financial articles. He contributes his financial write ups to various blogs, communities and websites so that the visitors can go through the content and educate themselves on getting out of debt. Some topics covered by him are debt consolidation myths, effect of debt settlement on your credit score and many more. To know more on various other financial topics, you may visit http://www.ovlg.com/debt-consolidation/

While writing credit repair letters (or credit repair dispute letters) you must ensure that you follow these guidelines:

1. Credit reporting companies are the ones to contact: Since credit reporting companies are the prime source of information for the lenders to judge your credit worthiness, it is important to send your credit repair dispute letters to these credit reporting companies/bureaus. However, this doesn’t mean that you should not send the dispute information to the erring creditors in question. In fact, it is a good practice to send all the dispute information and documents to the creditors as well… it might help speed up the process and the creditors cannot claim that they didn’t receive complete information on the dispute from credit bureaus.

2. Identify the incorrect items in your credit report: You must clearly mark the items that you feel are incorrect in your credit report. You might want to encircle such items in your credit report and assign some sort of reference number to each such item… for easy reference in your credit repair dispute letter. You must then include a copy of your credit report (with the items marked) together with your credit repair letter.

3. Supporting documentation: For each incorrect item, you must mention why it is incorrect and furnish supporting proofs (only copies, NO Originals) towards this. You must also clearly mention what you think should be the correction e.g. correcting amounts/dates or deletion of the item altogether.

Note: You will find sample credit repair letters all over the Internet. Whatever sample credit repair letter you use, you must cover the points mentioned here in order to ensure that your letter is effective.

4. Ensure correct address: This is an error that can cost you a lot. Do not use the address of credit reporting bureau/creditor that you had noted long time back somewhere… get the latest address by calling them up. Also check that the address you get is the one to which the complaints/credit repair letters should be addressed. At the same time, it is also important to ensure that you specify your own address correctly especially if you have recently moved to a new address.

5. Keep a record of all communications: For credit repair dispute letters, it means that you should send them with “return receipt requested” so that you have a record of what was received by the credit reporting company. Similarly, if you have had discussions with them over phone/email etc. then keep a record of such discussions too i.e. date/time, person talked to and a short note of the discussion/conclusion.

6. Send it to all 3 credit bureaus: It would be a good idea to send the dispute letters to all the 3 credit bureaus (Equifax, Experian, and TransUnion) at the same time. This will help you ensure that corrections are reported to and made in all your credit reports.

Note: It is expected that if a disputed item is corrected, the information provider must send the correction to all three credit bureaus. Also, it is expected that the credit bureaus must send the corrected credit report to everyone with whom they have shared your credit report in past six months (or, in case the reports were shared with your prospective employers, in past 2 years).

However, in case you don’t get a resolution, hire a good lawyer… and your communication records/proofs will come in handy to get you a resolution.