Helping You Pay Bills On Time Every Time!

Dudatez (pronounced do͞o-dāts) is now available in the app store.   

 

What can Dudatez do for you?

– Manage all your bills, bank and credit card accounts.

– Set reminders to pay your bills.

– Keep track of all your accounts and due dates in one place.

– Have a credit question?  Ask a credit expert a question right from the app!

Dudatez is the solution that can prevent people from ever

being 30-day delinquent again!

 

www.dudatez.com

Cancellation of Debt: Questions and Answers

It can feel like a vicious cycle and often is. Getting out of debt and having financial relief may feel like an impossible task. This is how many people get their debt cancelled.

What is Cancellation of Debt (COD)?
 
When someone’s debt is large compared to their income and they are under extreme financial hardship, it may be in the best interest of the borrower to negotiate a debt cancellation with their lender.  That is where a 1099-C form comes into play.
 
What is a 1099-C?
 
A 1099-C is a tax form that the IRS requires lenders use to report “cancellation of indebtedness income.” This form must be filed in certain circumstances where more than $600 in debt is cancelled, or goes unpaid for a certain period of time. This is how you report your cancelled debt on your tax return documents for the year the cancellation took place.
 
Will a 1099-C Hurt my Credit Score?
 
If you have received a 1099-C , chances are the damage to your credit has already been done.  Unpaid credit card debt, a foreclosure on your home, a vehicle repossession or other similar incidences where you did no pay a debt will have most likely been reported to your credit reports.
 
Are Lenders Supposed to Send 1099-C Forms?
 
When a debt is cancelled, your lender is supposed to send you a 1099-C. However, if you didn’t receive it, don’t assume you are in the clear. Whether or not you receive a 1099 document, count on the IRS having a copy.
 
How does the IRS Classify Cancelled Debt?
 
When your debt is cancelled the IRS sees the leftover amount as income you didn’t return. Why? Because you received a payment you didn’t return.
 
When you first borrow money, you don’t have to pay tax on the money you receive because you are bound by a contract to pay it back. Once that contract no longer exists, the money is yours to do with as you please. Since you essentially received income for free, the cancellation of your obligation to pay it back makes it taxable.
 
Are There Exceptions to Cancellation of Debt Income?
 
Yes, an example of this is student loans.  Certain loans have provisions that allow your loan to be forgiven after a certain period of time.
 
The way you deal with your debt can affect the amount you pay in taxes.  If you have questions or want to discuss your options, give us a call or email today.

-Erik Kaplan

Coming Soon!

Protect the Health of your Credit from Medical Collections

Did you know that your good credit score could drop by as much as 100 points, all because of medical collections that show up on your report? 
 
Whether an unpaid medical bill ends up on your credit report depends on if your doctor’s office or hospital reports a late payment or unpaid bill to the three major credit bureaus or turns it over to a collection agency.
 
The largest part of a credit score is payment history. It accounts for 35% of a credit score and shows if you’ve paid past credit accounts on time or missed payments. Not paying an account at all, such as a medical debt, counts as a negative mark on your credit history.
 
While the newest version of the FICO credit score, the FICO 9, and the VantageScore 3.0 weigh medical bills in collections less than other unpaid accounts, many lenders are not using these newer scoring models.  Therefore, a drop in your credit score can cause credit card companies and other lenders to deny your applications or can cause lenders to charge you higher interest rates.
 
Here are tips to protect your credit from medical debt:
 
1)  Call your insurance company and health care provider after receiving care to verify if you own a balance.  Don’t assume that everything will be handled by your insurance company.
 
2)  Request an itemized bill from your health care provider in order to verify the charges and possibly negotiate the payment terms.
 
3)  If a collection agency contacts you regarding a medical bill, ask if they will refrain from reporting the bill if you pay right away (assuming the debt is legitamet). If you don’t believe that you legitimately owe, then the Fair Debt Collection Practices Act gives you the right to dispute the debt with the collection agency and with the credit reporting agencies that the debt was reported to. 
 
If you have collections accounts I can save you up to 50% on the amount that was owed and stop all the harassing phone calls.  Call or email me today.

 

-Erik Kaplan

Coming Soon!

You might be a prime candidate for credit repair, and not even know it.

Have you been living with bad credit? Are you unsure of your credit standing but have a sneaking suspicion it’s not the best? Here are 5 signs you need credit repair:

 

You have a credit card balance

You typically make minimum payments and rarely pay attention to the overall balance. It’s easy to get stuck in this financial trap, and long-term debt can hurt your score. As your credit utilization ratio rises, so can your credit damage.

You were denied for a loan

Loan denial alerts you to a problem with your credit or your financial situation.  Use this opportunity to get the problem fixed. Your next step should be to take actions that will improve your credit score.

You occasionally forget to pay bills

Forgotten or late bills can send your credit score plummeting. You might think or hope that a small unpaid bill wouldn’t matter. Sadly, you’re probably wrong.

You have no credit history

If you’ve never had credit and don’t have a credit score, that doesn’t mean you have a zero credit score. You have the absence of a score: You’re “credit invisible.”  THD Credit can help you begin your journey of establishing your credit.

You don’t know your credit score

If you subscribe to the “out of sight, out of mind” mantra just know it isn’t sustainable when it comes to credit health. This magical number says a lot about your credit worthiness. It can either save you money or cost you money. Keeping track of your scores is essential to the process of repair and maintenance.

Realizing you need credit repair is not a negative.  In fact, consider the benefits and how it will positively impact your financial health in the future.

 

-Erik Kaplan

Coming Soon!

Understanding Your Rights: Debt Collection

If your bank or lender thinks you are falling behind on payments, you may be receiving calls from a debt collector. These persistent calls can make a challenging financial situation even more stressful. 

Understanding your debt collection rights is the first step in gaining control when you are on the receiving end of these calls.

Who is a Debt Collector?

A collector might be an individual, an attorney or a company, who typically receives a payment from your creditor for collecting on your overdue payments. This third party collector collects debts owed to your creditor.

What are Your Debt Collection Rights?

  • Debt collectors may not call you numerous times a day about an unpaid debt. This is considered a form of harassment by the Federal Trade Commission (FTC)
  • A debt collector may not use threats or profane language.
  • Debt collector must send a written statement outlining the specifics of your debt in collections.
  • A debt collector must cease contact with if you send a letter requesting that they do so. If you believe you do not owe the money, state this in your letter. Be aware that a legitimate debt will not go away simply because the collection calls stop.

What is the Statute of Limitations on a Debt?

Every state has a statute of limitations that limits how long a creditor or debt collector can successfully collect a debt. Typically, the statute of limitations starts when you miss your first payment with the original creditor, not when the account was placed for collection.

If a debt collector tries to sue you after this time period has expired, you can raise the SOL as a defense against the lawsuit. 

Can you Sue a Debt Collector? 

Yes, debt collectors can be liable for trying to collect old debts.  In 2011, in the case of Gonzales v. Arrow Fin. Servs., LLC, a $225,500 judgment was upheld against a debt collector who sent collection letters implying that payment would affect a consumer’s credit report.  However, the debts were more than 7 years old, which by law cannot be reported on a credit report. 

Additionally, a debt collector violates the Fair Debt Collection Practices Act by threatening to sue on a consumer debt after the statute of limitations has run and bars the suit.  

Accounts in collections will affect your credit, which will impact any future loans or lines of credit you attempt to get.  If you need help settling debts and putting a stop to harassing phone calls, give me a call or email me today.

-Erik Kaplan

Coming Soon!

3 Common Credit Report Mistakes

The Federal Trade Commission (FTC) claims, one in four people have errors on their credit reports that could lead to lower scores and credit mistakes. Credit mistakes ending in merged reports is a whole other mess, that you definitely want to avoid.

Let’s look at the most common mistakes you are most likely to see on your credit report, and what they can mean for your financial security.

Inaccurate Personal Information

Your name, address and social security numbers are used to identify you to the “big three’ credit bureaus. Something as simple as a transposed or incorrect number on your social security number or having a similar name as a family member could result in you having a merged report. 

A merged credit report is a report that has someone else’s information reported on your credit file.  It is typically a mistake by the credit reporting agency or your creditors causing your information to merge with that of another.

This situation can lead to a handful of consequences including, costing you a mortgage, a job, or to pay higher interest rates.

Missed Loan and Credit Card Payments

A late payment could erase anywhere from 60 to 110 points, depending on your credit score.  A common cause of inaccurate reporting happens when loan or credit card payments are mistakenly applied to the wrong account. Once disputed, late payments can be deleted by the original creditor.

Mortgage or Loan Listed Twice

Duplicate entries, or instances where a particular situation shows up more than one time, on your credit report can make it look as though you have more debt or credit issues than you really do, which can negatively affect your chances of getting a loan.  This mistake often occurs when loans are serviced or sold.

Any of the above errors can create the appearance of a consumer having “too much” credit available, being over-extended, or not having been a responsible payer of his or her obligations. 

As soon as you spot an inaccuracy on your credit report, gather documentation that proves the information is wrong and submit it to the credit bureau(s). 

Fixing errors can be a tedious task that requires time and patience.  If your not confident in your ability to take on this burden, call for a free consultation. 

Working with THD Credit is a great idea to ensure your disputes are handled correctly and in a short amount of time.

-Erik Kaplan

Coming Soon!