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Debt Consolidation in Virginia

Are you a Virginia resident, with too many high interest loans? Are your creditors harassing you with constant collection calls and threatening letters? If that's the case, then it's high time that you seriously consider some debt management options and make your way out of your financial crisis. Debt consolidation could be the ideal solution.

How Debt Consolidation Programs work in Virginia

Virginia Debt Consolidation offers you a solution to multiple debt problems, bad credit, and creditor harassment. All you need to do is take out a low interest loan to pay off your current creditors.

Consolidation loans can be divided into:

• Secured loans:A secured loan requires that the borrower puts down an asset as collateral, such as a house or car. Using a secured loan carries a less of a risk for the lender, and therefore these loans carry lower interest rates and borrowers are allowed to take out more money than with an unsecured loan.
• Unsecured loans:Unsecured loans do not involve any collateral provision, and usually carry higher interest rates.

Home Equity Lines of Credit as consolidation loans

Home Equity lines of credit (HELOCs) are one of the best types of secured loans to use as consolidation loans. HELOCs are also called second mortgages. The following are some advantages of Home Equity Line of Credit:

• APRs are generally not more than 9%
• HELOCs offer revolving credit, which allows you to use the money at any time.
• It allows you to spread repayment out over a long period.
• HELOC loans usually have a low default rate.

It is always better to borrow against your home than to apply for new credit cards repeatedly for the lower introductory rates. Moreover, revolving credit ensures that you do not need to take out new loans every time your finances go a little tight!

Enrolling in a debt consolidation program

If you are nervous about trying to find a consolidation loan on your own, seeking the debt consolidation services of a Better Business Bureau (BBB) accredited Debt Consolidation Company in Virginia is the solution.

When you enroll with a consolidation service, the company's lawyers thoroughly evaluate your situation. Then the company contacts your creditors and gets them to stop communicating with you. Next, they negotiate with the creditors regarding lowering interest rates and curtailment of late-fees and over-limit charges.

All you need to do is pay an upfront fee to start the consolidation process, and pay the company every month according to the consolidation plan. The consolidation company uses your payment to disburse the monthly installments to your individual creditors.

Debts ideal for consolidation

The following are the debts which are ideal for debt consolidation.

• Credit Cards Debts.
• Student Loans.
• Personal Loans.
• Medical bills.
• Payday Loans.

Effects of Virginia Debt Consolidation on your Credit Score

In a Debt Consolidation program you take out a loan. This causes your credit score to temporarily decrease. As you pay off your debts with the loan, your score recovers, and leaves you only with a single loan to pay on.

And as you pay off the consolidation loan your credit score improves even more!

Things you should keep in mind when in a consolidation program

There are several things you should do to keep your credit score from decreasing while in a debt consolidation program:

• Do not close your credit card accounts as soon as you pay them off: Doing this hurts your credit score. Take care to keep your oldest accounts open.
• Do not to take out any new loans, while on a consolidation program, as it will lower your credit score.
• Make your payments on time, as timely payments always increase your credit score.
• Avoid resorting to balance-transfers, especially if you apply for a new credit card in order to use the introductory interest rate. If you fail to pay off within the trial period, your interest rates will return to normal, increasing your debt burdens.
• Do not apply for credit cards,while in a consolidation plan. Applying for a new credit every six months opens up possibilities for new defaults.

Handled properly, debt consolidation could pave the way to a vastly improved credit score in your future.

Debt Settlement in Virginia

Debt settlement is the ideal solution for someone who has a lot of credit card debt. Debt settlement is where your creditors agree to accept less than the full amount of your debt as payment in full.

You can settle your debts by directly negotiating with the creditors on your own or by enrolling with a debt settlement company.

How to negotiate with creditors

If you want to avoid the costs of hiring a debt settlement company, all you need to do is follow a few simple steps to get your debts effectively settled. First, contact your creditors and convince them that you are having trouble making the monthly payments, and tell them that you want to settle your outstanding debts. Creditors prefer debt settlement to bankruptcy as getting their money during bankruptcy is a time-consuming process.

When making an offer, offer your creditor as much as you can. Creditors are more likely to agree to a settlement, if they are sure of getting back most of what you owe. If a lump sum payment is beyond you means, try and get your creditors to agree to an installment plan.

Finally, make sure your creditor reports your settlement as "paid" or "settled" to the Credit Bureaus, as soon as the settled amount is paid off.

How a debt settlement company in Virginia can help you

If you feel that the debt settlement process to difficult for you to carry out on your own, don't worry! Virginia debt settlement companies are at your service!

It is always advisable that you enroll with a company with Better Business Bureau (BBB) accreditation, in order to avoid a scam.

BBB affiliated firms offer you the best combination of debt reduction, late-fee elimination, and credit management. Their unique debt settlement programs are designed to satisfy the specific needs of their clients.

When you enroll with a debt settlement company, one of the company's lawyers analyses your situation and creates a personalized debt settlement plan for you. Then the lawyer contacts your creditors and asks them to stop all communication with you, and that all payments will be forwarded to them through the company. Finally, the lawyer negotiates with your creditors to find a settlement amount you can pay, along with a suitable repayment plan for you.

All you pay is an upfront fee to initiate the settlement procedure and a small monthly payment to a trust account for the company to make your monthly payments until all your debts have been repaid.

Duration of the debt settlement process in Virginia

Both the time and cost of debt settlement in Virginia depends on your outstanding debt amount, the kind of debts you have, and the number of debts you intend to settle.

It typically takes a credit card debt settlement case in Virginia 3-9 months, while other kinds of debt can take 1-3 years to get settled.

How Virginia Debt Settlement affects your Credit Score

Improving you credit score is the primary aim of any debt management program. The effect of debt settlement on their credit score is not the same for everyone. The extent of the impact depends on your current credit score and how delinquent your payments are.

Debt settlement aims at boosting your credit score in the long run. By going through settlement you cut down on the amount of your debts which in turn increases your credit score.

If you already have a good credit score, debt settlement will put you in a better position than someone who is already past due.

If you settle accounts that are already delinquent, it will increase your credit score immediately, as these accounts would appear as "paid off" or "settled" on your credit report. If you choose to settle accounts that are current, your credit score decreases as your accounts go delinquent during the negotiation process. Over time your score will bounce back as your accounts start getting settled.

How Virginia Debt Settlement benefits you

A good debt settlement program in Virginia gives you the following benefits:

• You get rid of your debts by just paying the qualifying amount.
• You save a lot of money in the process.
• Avoids the hazards of bankruptcy and paves way for an improved credit score.

Tax consequences of debt settlement

The IRS regards any amount forgiven by a creditor in as part of a settlement as taxable income to you, unless you can show you were insolvent on the day before the debt was forgiven. Once the debt has been forgiven your creditor must report the amount of the original debt and the amount forgiven to the IRS and Virginia's state taxing authority. The creditor must also mail you a 1099-C before April 15th of the year in which you must report your income taxes. For example, if the debt was forgiven in June of 2010, the creditor must mail you the 1099-C before April 15th, 2011.

Other options you can consider

Getting out of debt is so very essential for securing your financial standing. And choosing the right path to make your way out is all the more essential! So, if you feel that Debt settlement is perhaps not the apt thing for you, there is no need to feel dejected. You still have other options! You may consider a genuine debt consolidation program in Virginia or file for bankruptcy, as per your need!

Bankruptcy in Virginia

Has every other form of debt relief not only failed, but brought you to the brink of a severe financial crisis? Then perhaps it is time you considered filing for bankruptcy.

How to file for bankruptcy in Virginia

Bankruptcy is governed by Title 11 of the Federal Code. Most consumers file bankruptcy under Chapter 13 or Chapter 7.

Chapter 13 Bankruptcy is also known as "wage earner's bankruptcy". During Chapter 13, a court appointed trustee works out a repayment plan with your creditors. Chapter 7 is the sale of your non-exempt assets, which are then used to pay off your debts.

In order to file under Chapter 7 bankruptcy, you pass the Means Test. Under the means test, you may file for Chapter 7 if you make less than the median income in your state.

The following is the state's median income as of the 2008 census:

Under the new changes to the Bankruptcy code enacted in 2005, any debtor seeking to file for Chapter 7 must qualify under a Means Test. In order to qualify, the debtor must make less than the median income than other families of the same size according to the IRS and the most recent census. Below are the most recent median income standards for Virginia:

If you fail the Mean Test, you may file for a Chapter 13 bankruptcy.

Exemptions available during Bankruptcy in Virginia

Like the other states, Virginia exempts certain property from being sold during Chapter 7. Listed below are a few of Virginia's exemptions:

• Homestead: Your home, if you do not have more than $5,000 equity ($10,000 if householder is age 65 years or older) plus $500 per dependent in equity in the house (today's value less costs of sale less payoff balances on all liens and mortgages); A burial plot and any pre-need funeral contracts up to $5,000 in total value.
• Personal Items: One motor vehicle, if you do not have more than $2,000 in equity (today's value less costs of sale less payoff balances on all liens and mortgages). Wedding and engagement rings, family portraits and heirlooms, up to $5,000 in total value, the family bible, clothes to $1,000, household furnishings up to $5,000, the family pets.
• Retired Assets: ERISA pensions to the extent they are non-taxable.
• Other: Tools of trade up to $10,000; farmers' equipment, including a pair of plow animals with gear; a wagon or cart; a tractor, up to $3,000 in value; two plows, one drag, one harvest cradle, one pitchfork, one rake and two iron wedges; fertilizer and fertilizer material, up to $1,000 in value. At least 75% of your earned but unpaid wages.

If you have any questions on Virginia's bankruptcy exemptions, or want to see what else Virginia allows you to keep, consult a bankruptcy lawyer in your area.

Eligible for the Virginia exemptions

You may use Virginia's bankruptcy exemptions if:

You have been living in Virginia for at least 2 years prior to filing for bankruptcy.

OR

If you have not lived in any other state in the previous 2 years but you spent the majority of the 180 day period preceding the 2 year period in Virginia

If you do not qualify for the Virginia exemptions, you will use the federal exemptions.

Debts that are not released by Virginia Bankruptcy

Filing for bankruptcy does not wipe out all of your debts. The following are the debts the Federal Government does not allow to be released by bankruptcy:

• Alimony and Child Support.
• Student Loans.
• Debts accrued as a result of deceit.
• Taxes.
• Any fines you owe to government agencies.
• Recent Cash Advances.
• Purchases of luxury items bought within 90 days of filing for bankruptcy.

Consulting a Bankruptcy Attorney in Virginia

Consulting an established bankruptcy lawyer can be of the utmost importance, when it comes to filing for bankruptcy. Your decision to file bankruptcy should be made with the advice of a bankruptcy attorney in Virginia.

A reputable Virginia bankruptcy law firm is the best place to get hold of a bankruptcy lawyer, who can guide you through the bankruptcy procedure, safeguard your interest, and suggest the fittest legal options for you.

Payday Loans in Virginia

Payday lending in Virginia is regulated by the Bureau of Financial Institutions. Virginia law specifically exempts payday lenders from the usury laws which are otherwise applicable to other lenders. To keep payday lenders under control, Virginia has enacted a separate set of rules that apply to payday lenders.

The following are the regulations pertaining to Virginia payday loans:

• Maximum loan amount: The maximum amount that you can borrow is $500
• APR:A maximum of 36% interest is permissible.
• Finance Charge:A payday lender in Virginia can charge you at the most 20% of the total loan amount (or $20 per $100 borrowed) in finance charges.
• Extensions:Virginia law does not allow renewal or extension of payday loans.
• Number of loans:You are allowed to take out only 1 payday loan at a time in Virginia.
• Rollovers:Rollovers are prohibited by Virginia payday loan law.
• Repayment & Collection Charges: If you are unable to repay your payday loan by the due date, the lender can declare your loan in default and start charging you 6% annual interest on the unpaid balance until you pay off the loan. Also, if the lender finds it necessary to take legal action against you, they may add collection charges and attorney's fees to your loan balance.

It is important to be familiar with your state's payday loan laws before taking one out. A sound knowledge of payday loan laws will prevent you from falling prey to fraudulent payday lending schemes. If you get entangled in payday loan scam, consult a collections lawyer in Virginia without delay.

Debt Collection Laws in Virginia

The state of Virginia follows the federal Fair Debt Collection Practices Act (FDCPA) without modification. Under the FDCPA, debtors are protected from harassment and abusing collection practices by creditors.

In Virginia, creditors can only contact debtors between the hours of 8am - 9pm Eastern, and cannot contact debtors at work once the creditor has been informed them that the debtor's employer does not permit personal calls. Creditors cannot use harassing or abusive language toward debtors and cannot make false or misleading statements, including but not limited to threats of imprisonment if the debtor does not pay. Imprisonment for debt was outlawed in the US in 1833. In addition, every debtor should be aware that not paying on their debts is not check fraud.

If any creditor violates these provisions, debtors should report the creditor to their state Attorney General and the Federal Trade Commission immediately. Any violation of the law is penalized with federal penalty of up to $1,000 per violation, in addition to the debtor's legal fees.

Statute of Limitations, Virginia

A statute of limitations (SOL) is the maximum amount of time a creditor has to take a debtor to court in order to collect on the debt. You become delinquent from the day after the debt has become past due.

The following are the different Virginia SOLs for debts:

So, if your rights have been violated by illegal and abusive tactics, consult a collections attorney about taking proper legal actions and safeguarding your rights!