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OVLG Blog

24
June
2010
Tax debts could be a real cause of worry when you default on your tax payments. Escaping the clutches of the IRS is not quite easy. Now if you are wondering how to deal with your mounting tax debts amidst your crippling finances, then an installment agreement would solve your problem.
ovlg-payoff tax debt
An installment agreement is by far the best and easiest way to deal with your tax debts. All it includes is a monthly repayment plan that helps you to pay off your taxes owed to the IRS quite comfortably. Installment agreement offers you 4 options for tax debt relief that are tailored to suit your individual situation and need: 1.GUARANTEED INSTALLMENT AGREEMENT Under this installment plan the IRS is required to agree to an installment plan if you owe a tax debt of $10,000 or less. Tax liens damage your credit score significantly and negatively impact your credibility as a debtor. The chief advantage of Guaranteed Installment Agreement is that under this program the IRS will not file a federal tax lien against you and also the IRS will not ask you to fill out a financial statement (Form 433-F) for analyzing your current financial situation. However, in case of Guaranteed Agreements, you must file all your tax returns on time and pay your taxes on time in the future. Overall, Guaranteed Installment is quite a safe option for consumers willing to protect their ability to procure credit. 2.STREAMLINED INSTALLMENT AGREEMENT If your tax due is $25,000 or less, then you can consider a Streamlined Installment Agreement. The IRS will consent to a repayment plan under this scheme provided you agree to pay off the balance within 5 years. If your balance expires within this 5 year-period due to the 10-year Statute of Limitations on collections, then the IRS will require full payment within rest of the Statute of Limitations. The minimum payment you must make to the IRS is the total of your outstanding balance (interest and penalties included) divided by 50. Streamlined Installment too like Guaranteed Installment, does not require a federal tax lien. It also exempts you from filling out a financial statement (Form 433-F). 3.PARTIAL PAYMENT INSTALLMENT AGREEMENT If the payment schemes for both guaranteed and streamlined installments seem far beyond your budget, then a Partial Payment Installment Agreement would be the right thing for you. This scheme allows you to have a repayment plan based on what you can afford every month after putting aside your living expenses. A partial payment installment plan comes with a mix of advantages and disadvantages. On one hand, it covers a longer repayment term. On the other hand, the IRS may file a federal tax lien to protect its interests in collecting the debts under this plan. You will also be required to fill out a financial statement (Form 433-F) to report your average income and living expenses for the past three months, along with other required documents. Moreover under this, the IRS evaluates the terms of the installment agreements every two years to check if you are able to pay more. 4. NON-STREAMLINED INSTALLMENT AGREEMENT If your owed tax debt is over $25,000 or if you need a repayment term longer than 5 years, or if you do not meet the requirements for the a guaranteed or streamlined plan, then you can go for a Non-Streamlined Installment Agreement plan. Under this, you will negotiate the agreement directly with an IRS agent. Thereafter, the agreement will be sent to the IRS for assessment and approval. It is known as Non-Streamlined Agreement, as it does not come within the IRS guidelines for automatic approval of agreements. This plan too like the Partial Payment plan will require you to submit your financial statement to the IRS, so that it can review your financial situation and assess how much you can afford towards your monthly payment of tax. Also the IRS might suggest you to sell off some of your assets or get a HELOC so that you can easily pay off your owed balance easily. Besides that, the IRS is also likely to file a federal tax lien under this agreement. Although Installment Agreements offer you the best options for tax payment, there are also several other tax payment plans, you might want to know about. Therefore, it is always advisable that you seek advice of a reputed licensed tax debt attorney, whenever you set out to manage your tax issues. Since, a tax lawyer knows the right tricks to deal with the IRS, he is the best person to recommend the best payment option suitable for you. Besides, the lawyer will also help you determine your consumer rights and effectively pull you out of your debt problems.

OVLG Blog

17
June
2010
There are often misconceptions regarding the effects of your innumerable accounts on your credit score. It has been seen that a relation certainly exists but it is not that far fetched as reported by the experts. There are no written records specifying the fact altogether. It actually depends on various other factors and circumstances as well. If you have any doubt whether you should cancel out your credit cards in order to score well just stop to think. It may not be that important!
ovlg-Credit Card Hurt
The credit score specified by financial bureaus may not be the same as your FICO score. Equifax may have certain restrictions regarding the number of credit card accounts that you hold but it is not necessary that your FICO score will be exactly similar. The lenders also have their own specifications for lending money. Some may not care about the number of account that you hold and the other may even reject you just on the basis of that. Generally it is a common norm that the lenders check out your FICO scores and not the other scores before lending. Therefore it is more important that your FICO scores always have a positive bending. In fact the lenders are more concerned about the usage manner of the credit card than the number of cards. If you have many credit cards but use it well with no defaults and borrowing, then the effects may not be noticeable. Therefore there can be no specified rules as to what extent your credit score may be affected. In case you want to close down some of your accounts then it is better to close the recent ones. The effects with new accounts are much less than the accounts those are old. The best way to restore them is to leave them open and not borrow against them. The accounts get back on track with time if you have no defaults on your account. If at all you are in a severe situation and want to settle credit card debt for your accounts then you can easily do so with the help of a reputed debt settlement company. The company usually appoints debt attorneys who work with your creditors to get your debts settled so that you get the best possible deal. You should always try to figure out the difference between the amount that is available for borrowing and the amount you owe. This keep you informed about your current financial status. The next step is to calculate the difference. If the difference is below ten percent then your scores will shoot up regardless of the number of accounts you have open. There are again few more factors that you can consider:- One of these is the capacity to which the credit card is used. It is also known as the utilization ratio. If there are a number of cards then it means that the availability of credit is more. If you are maxed out on all your cards, that would hamper your score certainly. The prudent utilization of the cards depends upon an individual’s consideration and therefore cannot be predicted. The other is the length of credit history and past credit applications. This caters to the fact that not only the length of your oldest account matters but also the average age of all your accounts matter as well. If you keep on opening new credit lines your credit score is bound to get hampered. If you can balance them with your older cards then you can easily balance your average and your credit score as well. The best way suggested is that if you already possess quite a number of credit cards; try to carry them forward without any borrowings. Adding another new credit card would only add to your woes. In these circumstances opting for credit card debt settlement will be fruitful as it will reduce your debt amount and also the rate of interest. On a whole the process will help you save quite a few dollars by reducing your original debt amount. Sometimes even having a certain number of cards acts as an advantage as the credit availability is more. Closing them down is advisable only when it is profitable to do so. It is advisable that you limit to about 3-5 credit cards per rolling 6-month period and avoid any debts on that accounts. If you are not in debts your scores can be excellent no matter how many cards you have. It is just that when you have too many cards in your possession the temptation to buy more can prove disastrous. But the fact that having too many credit cards by itself lowers your credit scores has no specified groundings as of yet. Therefore there is no reason that you hack your brain for a solution. The solution is pretty simple. You just need to handle it the right way in order to procure the best results.

OVLG Blog

13
June
2010
A sudden increase in FDCPA lawsuit filing against unfair practices of debt collection has been noted in recent times. Over 850 different debt collection agencies and creditors were named in about 950 distinct consumer statute lawsuits in May 2010. And the figures are estimated to shoot up even higher by the end of 2010.
ovlg-FDCPA Law
Most of the consumer complaints relate to FDCPA violations and harassment inflicted by the creditors and the collection agencies. Some of the common charges that consumers repeatedly bring against creditors and debt collectors are use of abusive language, threats of violence or of sending debtors to jail, third-party disclosure etc. Among other things there are attempted forced payment on time-bound debts, debts discharged in bankruptcy and debts not owed by the individual contacted. The statistics seem shocking indeed! More shocking is the fact that despite the “stringent” provisions established by the FDCPA and the other creditor harassment laws set forth by the individual state governments, debt collection agencies grab every scope for advancing illegal collection practices. Illegal collections continue to grow with leaps and bounds. At least the soaring figures of lawsuit filings speak so! One of the very probable reasons behind this is perhaps the archaic nature of the FDCPA. Many consumer complaints are related to violations of FDCPA provisions that are not significantly different today than when they were enacted in 1977. The FDCPA was enacted way before the emergence of cell phones, e-mail and auto dialers. Therefore, it remains unclear as to how and whether the law is applicable in cases of collection abuse that involve such technological innovations. As such the FDCPA laws prohibit the creditors/debt collectors from repeatedly contacting debtors for payment procurement, and also from placing calls without meaningful disclosure of the callers’ identities. However, the concept of auto-dialing and cell phones have added a brand new dimension to these debt collection processes. In fact, emergence of information technology has more boldly underlined the FDCPA loopholes. Usage of cell phones, e-mails, auto-dialing have led to excessive and redundant communication initiated by the debt collector for the purpose of debt procurement. In some cases, the creditors even go to the extent of imposing a per call charge on the debtor’s cell phone number. All of these often amount to acute harassment and compel thousands of debtors to lodge complain with the Federal Trade Commission. But the dubious overtones of the FDCPA leave the debtors baffled in such cases with legal twists. Illegal debt collection also sprouts from the debt collectors’ ignorance. Often the original creditors are found to sell off the “written off” accounts to the collection agencies without informing the debt collector about the real nature of the account. It leaves most debt collectors into a maze of ignorance even about the legitimacy of the debt. And it further results in attempts of collecting debts which are legally not subject to collection. Lack of up-gradation has thus proven the most gaping crack in the law. And the worst part is that the fissure has developed into a great escape route for debt collectors indulging in con collection activities. Various consumer advocacy groups opine that it is imperative to upgrade the FDCPA provisions in compliance with the temporal and technological progress. Besides, tougher enforcement procedures and stricter penalties for law violation also need to be implemented right now, in the interest of the consumers. But most importantly, consumers too need to be aware of the host of rights that protects them under the state and federal law. After all, a legally conscious and responsible consumer can make the law implementation procedure all the more easy and can effectively keep the rising collection agency abuses at bay.

OVLG Blog

11
April
2010
One of the average debtor’s greatest fears is that they will lose all of their treasured possessions along with their home and car simply because their financial situation has led them to face the possibility of Chapter 7 bankruptcy. However, this is not the case.
ovlg-Chapter 7 Bankruptcy
In the United States, Federal law controls most of the laws dealing with any type of bankruptcy, the law of each state determines the procedure used in each of the different Federal Court Districts where each bankruptcy court is located, and most of the assets a debtor can keep. Some states, Rhode Island, Arkansas, Connecticut, the District of Columbia, South Carolina, Hawaii, Massachusetts, Michigan, Texas, Vermont, Washington, Wisconsin, Minnesota, New Mexico, Pennsylvania, Kentucky, and New Jersey, allow a debtor to choose the federal or their own state’s exemptions when going through Chapter 7. However, all of the other states require that a debtor in Chapter 7 follow their own exemptions, with the interesting exception of California, which allows a debtor to choose between one of two exemption schemes. All of these different state and federal schemes permit the same basic exemptions. They all allow a debtor to keep all or part of the equity in their home and car, provided the debtor confirms the loan or mortgage within 45 days after the statutory meeting with creditors. Every state also allows a debtor to keep all or part of their pension and social security along with other state and federal government benefits such as disability. Many personal items, family heirlooms, and other necessities such as clothing can also be kept up to certain limits depending on the state. Some states have what is called a “wild card” provision where the debtor can choose to keep other items or additional equity in their home within limits. Many other states that do not have a “wild card” provision allow the debtor to take an extra exemption for their home, provided the debtor hasn’t used the exemption to keep their burial plot. There are other exemptions permitted to the debtor facing Chapter 7 bankruptcy than are enumerated here. The basic idea behind all of the federal and state exemptions is to see that creditors are repaid as much as possible while making sure the debtor can recover. One thing all those considering bankruptcy Chapter 7 should remember is to contact an attorney in the state they live in. For a more complete listing of the allowed exemptions, and for more information about Chapter 7 and Chapter 13, please visit http://www.ovlg.com/bankruptcy/ or call (800) 530-OVLG to speak to a customer service representative.

OVLG Blog

22
February
2010
Did you know, on an average, each American has a credit card debt of around $8,000? And this burden is growing bigger in every minute. Life is very frustrating once you are knee deep in debt. So, how to get out of this problem? Some may say that bankruptcy is the best way out of debt while others may say that consolidating debt is a better option. Or should you go for debt settlement? Which one is actually better? Let’s find out. As far as bankruptcy is concerned, it is the worst of all options. Once bankruptcy gets into your credit report, it stays there for around 10 years. This will even effect your ability to get jobs leave alone credit. With credit card consolidation, however, the consequences are not so terrible. You will suffer a hit on your credit record initially. However, once you pay off all the debts, your credit scores will eventually recover. There is no doubt that credit cards are necessary evils. The problem worsens when people start paying for the basic necessities such as food, electricity etc with credit cards. This practice eventually leads to high credit card bills with ridiculously high rate of interest and fines.

Credit card debt consolidation or debt settlement?

Debt consolidation means, you are offered a lower monthly payment based on a lower interest rate. Whereas, a debt negotiation means that the debt settlement firm will negotiate with your creditors for a low payment, thereby reducing your debts by around 40 to 60% or more (yes, it is possible also beware of debt settlement scams). Listed below are 3 popular benefits of credit card debt consolidation.
  1. When you have multiple credit cards with debts accumulating on all of them, they will have varying repayment dates. For some people it is tough to manage. Credit card debt consolidation eases these complexities as all your debts are accumulated to one single debt and one repayment per month.
  2. All your credit cards have different annual fees. These amounts may add up to quite a sum. Credit card debt consolidation helps you to get rid of these annual fees, thereby saving you a good amount of money.
  3. In case, you have had any payment defaults, your credit ratings have already suffered. Credit card debt consolidation will prevent further damage.
If you are unable to manage a good debt consolidation program, debt negotiation may be a good option to get out of credit card debts. The downside of a debt negotiation program is that it may hit your credit score. If you are concerned about your credit rating, consolidating debt may be a better option.

How to go about Credit Card debt consolidation?

Most debt consolidation firms guarantee debt elimination within 5 years. What they do is, they simplify and lower your monthly payments by combining all your balances into a single loan. They negotiate with your creditors on your behalf and design an affordable monthly repayment plan. For this, they charge an application fee.

There are various ways of consolidating credit card debt.

  • You can take a secured loan to pay off your credit card bills. However, if you are unable to pay the equity loan, you may lose the collateral.
  • You can transfer all your balances to the card with lowest APR.
  • You can take a low interest unsecured loan if possible. This will reduce your monthly payments drastically.
In case, acquiring a loan is difficult due to poor credit scores, you can opt for debt settlement.

Once you sign up a credit card debt consolidation program, make sure to follow these tips:

  • Avoid using your credit cards for a while: If you just keep aside your credit cards while you are in a credit card debt consolidation program, you will not be incurring further debts. This will eventually help you eliminate your debts faster. Also, try to reduce the number of credit cards.
  • Set up an emergency fund: Emergencies can happen anytime. We are not always prepared for such emergencies like health problems or natural disasters. Keeping aside around 10% of your budget for an emergency fund will help.
  • Most important of all is to keep a track of your expenditure. So plan a budget first and follow it religiously.
Take help from an expert who will assess your debts, financial status and help you in selecting the right option.
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