Ask The Money Coach

Posts Tagged ‘credit bureaus’

Image via Wikipedia

Question: My Husband Has a Motorcycle Loan in My Name That I Did Not Sign For. I Have Knowledge of the Loan But Did Not Sign For It. We are Having Marital Problems Now. I Have Disputed This Loan With Equifax and They Will Not Remove It. He is Not Making Payments On Time. What Can I Do?

Answer: This is a very unfortunate situation because it sounds like even though you didn’t personally sign for the motorcycle loan, you knew that you husband was getting the loan in your name (i.e. using your credit in order to get the loan). Even if you didn’t know what he was doing, your recourse and options are going to be limited because I assume that many months (maybe years) have passed since he originally got the loan. The time for you to speak up about it – or to let creditors or the credit bureaus know that you did not authorize the loan – would have been immediately after you learned of this. If he took out a loan without your knowledge, authorization or consent, then that is identity theft. If you can prove that it was fraud, perhaps by showing that it was not your signature on the loan contract, then you may have an outside chance at getting this loan off your credit. However, that may be a long shot. Weren’t the statements coming to your house each month and didn’t you see them? Doesn’t your husband live in the same home with you and didn’t you ask how he got a motorcycle? How long has it been that he’s had that motorcycle? I know these questions may sound harsh. But from the financial community’s perspective, it may seem like you are complaining about being on the loan now that you and your husband are having marital problems and he is not making the payments.

Under the law, if your name is on a credit account with your husband, (such as a mortgage, credit card or car loan), then you are both liable for that debt – even if you divorce. Right or wrong, that’s the law – and not just in community property states either.

Evaluating Your Other Options

Since your husband is not making timely payments, you have a handful of other options:

a)      make the payments yourself – and preserve your credit rating;

b)      try to convince him to pay on time

c)      see if you can work out a voluntary repossession, where he would turn the motorcycle back into the lender/finance company (but your credit would be impacted)

d)      consider whether a financially responsible family member or friend can take over the payments and use the motorcycle, which will relieve your husband of paying each month and may also keep your credit intact

What to Do With the Credit Bureaus

Additionally, if you think that divorce is likely, I would start closing out all joint accounts and notifying your creditors of your impending or actual separation. You should also put a credit freeze on your credit files so that no new credit can be obtained in your name. Lastly, pull your credit records from Equifax, Experian and TransUnion, and sign up for a good credit monitoring service for the next year or so. You want to make sure there are no other accounts opened by your husband of which you may not have been aware.

Related articles by Zemanta

• 5 Loan Options for Those With Good Credit (wisebread.com)
• Perfect Credit: 7 Steps to a Great Credit Rating (askthemoneycoach.com)

Question: I am a 23-Year-Old College Student with a Bad Debt of About $12,000 With American Express. I Believe the Statute of Limitations in Maryland is 3 Years. I Do Not Remember the Last Time I Made a Payment to Them. I Found a Receipt Showing a Payment in December 2006. But When I Called American Express, Their Records Don’t Go Back That Far. What Should I Do? And How do I Find Out When My Statute of Limitations Has Been Reached?

Answer: It’s kind of odd that American Express wouldn’t be able to track down this old debt that you had – especially considering it wasn’t chump change. It’s very likely, though, that the $12,000 was assigned to a collection agency or simply written off as uncollectable – especially since it was apparently more than three years ago and you were just 20 years old. As you were/are a college student, I’m assuming you weren’t making big bucks back then (or now) and Amex may have known that their chances were between slim and none, in terms of getting you to pay back what you owed. What to do now? Pull each of your credit reports from Equifax, Experian and TransUnion. You can get them online free of charge via www.annualcreditreport.com. See if that Amex debt shows up on your credit reports as a collection account, charge-off, judgment, or anything else negative. If not, do nothing. If so, contact the creditor/collection agency listed only if you are financially prepared to begin a repayment plan to pay off what you owed. Otherwise, do nothing.

The Statute of Limitations on Credit Card Debt

Lastly, here are a few ways to check the statute of limitations in your state. Each state has different statutes of limitations for past-due debts, depending on if the debt was based on a written contract, an oral contract, a promissory note, or an open account. Credit cards are usually categorized as open accounts. The statute of limitations for credit card debt ranges from 3 to 10 years, based on where you live. You can click the following link for a state-by-state list of statute of limitations. themoneycoach1.wordpress.com/2009/09/14/statute-of-limitations-on-debt/.

Alternatively, to check the statute of limitations on debts in your state, contact your State Attorney General’s Office or go to www.naag.org and click “The Attorneys General”. I checked for Maryland, since you mentioned that state and I believe that is where you live. You are correct that the statute of limitations there is three years. All the more reason, as I suggested, to just do nothing about that debt. Chances are no one is contacting you about it because the statute of limitations has expired and the debt is no longer legally enforceable.

Your Credit Rating

This does not mean, of course, that it can not still appear on your credit report. That’s another matter entirely. Negative information, such as late payments or collection accounts, can stay on your credit report for 7 years. If this info is on your credit report, rest assured knowing that because it is more than 2 years old, it is likely doing far less damage to your credit rating than it probably did more than three years ago when the account first went delinquent.  So if I were you, I wouldn’t worry excessively about it.

Related articles by Zemanta

• How can I remove items from my credit report? (askthemoneycoach.com)

Well, under the Fair Credit Reporting Act, the original lender is the one that is supposed to be noted on your credit report because that’s the creditor with whom you had a deal. Credit card companies and banks do have the right to sell uncollectable debts to bill collectors, and that is apparently what’s happened in your case. In fact, the debt appears to have been sold multiple times. I don’t think you’ll ever be able to get a credit reporting agency to change the creditor listed. But that shouldn’t really worry you because, frankly, it has absolutely no impact whatsoever on your credit rating or your credit score. Focus instead on the $525 debt that you’re trying to get cleared – or the $800 they’re trying to get you to cough up. Read this column and askthemoneycoach.com/2010/03/i-received-a-notice-from-a-lawyer-representing-a-credit-card-company-citibank-who-is-suing-me-for-a-delinquent-debt-i-took-your-advice-and-paid-off-all-my-delinquent-debts-unfortunately-this-is-m/” target=”_blank”>this one too about how to negotiate with bill collectors.

Image by alancleaver_2000 via Flickr

I’m sorry to hear about your bitter divorce and the financial problems you’ve been experiencing. I sympatize with you on both fronts – having been through both ordeals myself. Moreover, I also know from firsthand experience – as an entrepreneur too – how difficult it is to pay those dreaded estimated quarterly taxes.

As you may know, as a self-employed individual you are obligated under the law to pay federal income tax, along with Medicare and Social Security taxes, more commonly called self-employment tax. How much you pay in federal taxes is based on your adjusted gross income. The current rate for self-employment tax is 15.3% on the first $106,800 you earn. Of course, you also have to factor in any required state and local taxes, depending on where you live.

The deadlines for filing and paying your quarterly estimated taxes are: April 15, June 15, September 15 and January 15 (or the next business if those days fall on a Saturday, Sunday or legal holiday).

If you can’t pay your quarterly taxes, don’t make the mistake of not filing at all or ignoring your situation. That will just worsen the problem. A failture to file taxes and pay what you on on time could result in late penalties and interest of 25% or more.

So if you simply don’t have the money, try one of these options:

1) Request an extension of time to pay
Extensions are usually granted for 30 to 120 days. You still get socked with penalties and interest, but they’re usually less than what you pay in an installment plan.

2) Ask for an installment agreement
With an installment agreement, you request a payment plan with the IRS for the most recent tax year. You can get a payment plan for as long as 24 months and not have it impact your credit rating, in terms of the IRS putting a lien against you or reporting you as delinquent to the credit bureaus. If you owe $25,000 or less, just go online to the IRS website and fill out the Online Payment Agreement.

3) Consider a loan to pay your tax bill
A bank loan or home equity loan (if you can get either) will carry a much lower interest rate than paying the IRS off over time under and installment agreement.

4) Ask the IRS about an offer in compromise
The IRS usually only grants these when:
a) a person can show that they have severe economic hardship; or
b) it’s doubtful that the taxpayer could pay what’s owed over the time the IRS has to collect the debt

Start by asking your accountant for which path he/she would recommend, since that individual is likely to be very familiar with your situation. Or, if you don’t use a CPA, call the IRS directly at 800-829-1040.

I’m sorry to hear that you are in a financial bind. But you’ve definitely taken the first step to turn things around financially, which is to recognize that you do indeed have a big problem. Maybe you were in denial in the past, or maybe your economic fortunes simply changed recently for some reason. Whatever the case, you seem to acknowledge that things can’t go on the way they have been. Not with you living $400 in the red each month.

If you’ve had a home for 22 years without missing any payments, I would hate to see you lose your house, so I hope you’re not talking about skipping payments on the home. Probably not. Since it sounds like you’ve reached out to your mortgage lender and received at least some support. I assume you are considering not paying other creditors, like credit card companies or perhaps your auto lender, that kind of thing.

I would suggest you take two steps. The first is to do an honest assessment and overhaul of your budget. Even if you get some relief from your creditors, it won’t do you any long term good if you are deficit spending. Go over your spending with a fine-tooth comb and see where you can cut back. Surely there are some areas/expenses you are willing to sacrifice or slash in order to keep your home, maintain your very good credit rating, and have financial peace of mind. Read this post about how to create a proper budget and this article on overhauling your budget too.

Additionally, before you simply stop paying creditors, contact each one directly and see what options, if any, might exist. Perhaps some of them are willing to put you on a deferred payment plan. You suggested in your email that a six-month reprieve from certain payments would give you some breathing room. Tell that to your creditors. If you make small token payments, that may show a “good faith” effort on your part, and it may keep bill collectors and creditors from hounding you. But those partial payments won’t necessarily stop creditors from reporting you to the credit bureaus. Anytime a debt is not paid as originally agreed, the creditor has the legal right to report that information to the major credit reporting agencies: Equifax, Experian and TransUnion.

If your creditors won’t offer any relief, and there’s nothing else in your budget to cut, yet you find yourself still in the red, then yes, it’s time to “cry Uncle.” At that point, I would make strategic decisions about what bills get paid first and which are second and third-tier obligations. See this TV interview in which I explain how to prioritize bills when you can’t afford to pay everything. Good luck!