And don’t think that the elite of American society were safe from these prisons. Two people that signed the Declaration of Independence, Robert Morris and James Wilson, were both later imprisoned for unpaid debts. Even Robert E. Lee’s father, Henry Lee III spent the better part of 1808 languishing in debtors’ prison. But around 1833, the United States stopped sending people to prison for debt, and passed a federal law abolishing such prison systems. Most states followed suit with their own laws.

So what’s with the recent news about the return of debtors’ prisons to the United States? Could your next unpaid phone bill really make you a neighbor to murderers and thieves, or is there a bit more to the story?

The Truth About Debtors’ Prisons

Many people that land themselves in debt do so for thousands of dollars, often as a result of a failed business. Even with the rough shape of the economy, many people are still attempting their own businesses. Sites like Prosperity Equation regularly offer such advice to beginning entrepreneurs, as well as tips on improving wealth.

But there’s no reason for you to fear prison if your business fails and you find yourself overwhelmed with debt. No reason, of course, unless you ignore court summons. Ignore the debt collectors all you want, but once the legal system gets involved, it’s time to start responding. If you fail to appear in court or respond to a summons issued by one, you can be sent to prison as a result for contempt of court, even if the case is concerning an unpaid debt. So you’re not going to prison for not having the money to pay your bills, but rather ignoring a court summons.

And this is the major detail that many are missing in the surge of stories about “people being thrown in prison for debts they don’t even owe.” CBS MoneyWatch, in fact, published a seemingly heartbreaking story about a woman that ended up bars after ignoring a $280.00 medical bill she insisted she didn’t owe. In truth, state troopers in Illinois (where the woman lived) arrested her when she failed to pay legal fees or respond to court hearings.

How Debt Collectors Are Responding to the Economy

At this time, you won’t go to jail for not paying your debts. If the debt is big enough, you’ll very likely eventually be summoned to court for a hearing and must attend to make a deal with your creditors. Until then, debt collectors might threaten criminal charges, but they’re lying. Debt collectors will use any tactic not illegal (and some illegal) to get the money you owe them, and often get a bit dirty in their tactics.

One collection company, in fact, called Accretive Health has been accused of allegedly planting debt collectors in hospitals (as employees) to enforce collections on recovering patients. According to some reports, like the New York Times, some of these employees may even advise patients to not seek emergency care if they find that they have unpaid medical debts.

Remember that, under today’s laws, most debt collectors will do everything in their power to avoid filing suit against a debtor, for fear that they will ignore a court summons and go to jail. After all, they truly can’t recover a debt once you’re sent to prison. They’ll be more likely to work with debtors to find a solution to the unpaid debt or work out a deal. If that’s not the case, you’ll likely end up working out a deal with a judge to pay the debt.

The world of guarantor loans is a fast developing market because there is an increasing demand for any available credit. People are also looking for an alternative to just rolling over expensive payday loans each month.

It’s not just new lenders coming to market but new hybrid products – not all guarantor loans are the same.

Originally guarantor loans were only for people who had a homeowner guarantor with a good credit history. The guarantor would have to repay the loan in the case where the borrower defaults (does not keep up repayments). Typically these guarantors were friends, family (not spouse) or employers.

There are new guarantor loan products that do not require that the guarantor is a homeowner. They can be non-homeowners. The guarantor will usually need to be on the electoral role, be in full-time employment and have good credit.

However, the downside is the amount that can be borrowed is usually only up to £1000 (as opposed to £5000), over a term up to 24 months. While the APR’s for these non-homeowner guarantor loans are much less than payday loans, they are considerably more than for their homeowner counterparts. The comparison would be around 200% APR versus around 50% APR for homeowner guarantor loans.

There is also a third category that has emerged over recent months – a new breed of unsecured (non-guarantor) loans. These are small (up to £1000 again) personal loans, which no not require a guarantor of any kind. These loans have been specifically developed to offer an affordable (longer term) alternative to payday loans. They have a maximum term of 12 months (sometimes only 12-month terms are offered) and even higher APR’s of around 280 percent. This is an interesting product and definitely has a place in today’s market. It is still profitable for the lender at a considerably lower APR than a payday loan because the term is much longer. It also makes the loan more affordable to the borrower, which is an important parameter when deciding whether to lend.

Just a separate note on APR’s; APR’s quite rightly provide a good way of comparing deals in the market because they factor in other (otherwise hidden) fees and charges. The total charge for credit (on which the APR rate is based) includes charges such as broker fees, which are paid by the lender (not the borrower). This ensures proper comparisons can be made at a glance. However, it is important to understand that although APR’s can seem high, the lender has to factor in the risk of not being paid back. After all that’s the definition of “bad credit” – people who default. At the end of the day the market will dictate what represents a competitive APR, not the politicians.

Purchasing a house is the biggest investment most people will make in their entire lifetime, so ensuring that it is  securely protected is essential. The single most inconvenient factor of home insurance is the price, with many households shying away from the cover to protect their financial interests in the here and now. However, those people will be sure to feel the pinch if and when an unfortunate and costly event happens to them and their home. Many other families will pay for low quality insurance, protecting their current financial state, only to find that the policy is void when they need to make a claim.

The type of coverage that will be provided depends on the area where the property is situated. Not all policies will include flood or earthquake damage, as they are not positioned in an area of danger. Deciding which type of coverage is needed to suit the needs of the household is vital before making any decision on which company to go with. Although flood and earthquake risk may be low, it may be worth the extra few pounds to ensure financial stability if that was to occur.

An insurance policy should, at least, total the amount that is left on the mortgage, as a homeowner will be required to pay the remaining balance on the loan, even after the insurers have paid out if the house were to become destroyed or substantially damaged.

It is important to remember that insurance providers are not regulated by the government, meaning that some scam artists will fail to pay out after a claim is made. Well established and recognised companies need to be targeted when gathering home insurance quotes, as well as those companies who have been recommended from friends and family.

The majority of providers will offer substantial discounts to those who have already taken out a different type of policy with them. Car and home insurance can be combined, resulting in a satisfactory 10-15% deduction on payments. As part of loyalty programmes, most insurers are sure to be rewarded for their commitment and trust.

Due to the competitiveness amongst companies within this sector, customers can see a huge variety of prices, policies and coverage. It is highly advisable for those who are wishing to purchase a policy to shop around and fully consider the needs of the house and those living there. Extra coverage may be needed to protect individuals against theft in case one is injured. Comparing different types of coverage between companies can help when attempting to obtain the best deal for a property and a household.

You’ve heard it so many times before. The global economy is heading for financial ruin and now is the time to guard your money like it’s your most precious possession. Tomorrow might be the day that the world’s financial system melts down and if you’re not ready, all you will be able to do is stand by and watch your financial situation implode.

The same well meaning people who give you this doomsday advice have some answers as to how protect yourself and one of those ways is to have an emergency fund. The logic goes something like this: Any debt that you have is a bet/wager/gamble on your future ability to pay back that debt. In addition, the fact that you’re alive means that you have expenses relating to food, shelter, water, clothing, etc. There is virtually no possible way to relieve yourself of having expenses but it’s exceedingly easy to find yourself in a position of no income.

You might be really good at what you do but if the global economy goes in to a recession you could lose your job. You might be a leader in your field but if you get sick or injured and lose the ability to work, your expenses will mount. You have to have an emergency fund, say the financial gurus. They’re absolutely right!

What do I need?

Here’s where the controversy starts. You’ll hear everything from enough money to pay your expenses for three months all the way to one year and more. Everybody has a different idea but here’s a better way to figure it out.

First, take a look at your financial picture. What do you pay out monthly that is a contractual obligation? Your home, your car, and your phone may be some of the contracts that you have to pay. Other contracts may have conditions that allow you to defer payments if something were to change with your financial situation. Those should ideally be factored in to your calculations but if needed, you could remove obligations later.

Once you understand the nature of your expenses, ask yourself what you could cancel in the event of an emergency. Cable TV? Gym membership? If you can quickly cancel these, they don’t have to be counted in to your emergency fund. Now, add up your monthly expenses and that is what you need to fund your life.

Also realize that you probably have a lot of expenses you can cut out. You could forgo eating at restaurants and instead, eat at home. You could clip coupons and take advantage of many other frugal ideas that could drop your living expenses considerably.

Before you decide what your monthly expenditures entail, figure out how lean you could realistically live. That number is drastically different than blindly looking at your bank account and calling that your monthly outflow.

How do I Save?

It’s easy for financial gurus to write an article and tell you to save one year’s worth of expenses for an emergency fund. How are you going to save up what is probably close to your entire year’s salary for an emergency fund. Sound unrealistic? It is…kind of.

The way you save for an emergency fund is by not calling it an emergency fund. Just save money. Make sure that every paycheck involves putting money in to a savings account or even better, an investment account. Some financial experts will tell you that you should never invest your emergency fund money because it has to be easily accessible. It does need to be accessible but appropriate investing can meet those needs.

There are bond ETFs, preferred stocks, bonds, and even low volatility common stocks that pay a healthy dividend that can help you amass your emergency fund. If you feel uncomfortable with that, put the money in a bank account and contribute as much as you can each month. Once the balance gets sizeable, find a financial adviser that you trust and have them help you put it to work in a safe way.

This isn’t an emergency fund. It’s just you saving money and if an emergency happens you have cash reserves. Over a period of 10 or 20 years you’ll have enough money in your account to live on for more than one year and if the emergency never happens, it’s going to be there for you when you retire.

Let’s Get Real

If you have no savings right now, it’s probably going to take you a long time to build up an adequate emergency fund and it would be irresponsible for somebody to tell you to stop everything and have a singular goal of putting enough money in to this fund. Do it gradually but understand that if you have no savings, cutting a luxury out of your life in order to amass a savings is not only responsible, it’s imperative.

Andy writes about comparing credit cards at CreditCardCompare.com.au. He is also the editor of their blog and can be followed on Twitter via @thecreditletter.

Several years back I was forced to re-locate as my employer began to cut back work hours, leaving many of us with bills to pay and no way to do it. We needed a change.

It was time to move, relocate where the living is easy and the cotton is high.

We had planned our move carefully. Knowing that both our kids were interested in attending college, we figured it was a chance to get in-state tuition at a high caliber school. Our current state of residence provided no such opportunity.
Considering the inevitable tuition expense and potential employment opportunities, we settled on North Carolina as a destination.

While I was able to find new employment (albeit at a lower salary than before), the lower cost of living offered us some amenities we had not previously enjoyed. For example, we went on a family vacation.

My eldest son, the one who would carry the family torch, would soon be attending college. He had performed well in high school, well enough to give himself numerous quality, in-state schools to choose from. And so, after careful deliberation he chose…an out-of-state school. With out-of-state tuition costs.

Apparently it’s the cotton that was easy and my wife and I who were high. We would have to borrow.

Here’s the good news. We found that there were options, even for middle class folks like us. I had used a free tax prep service a few months back with the caveat that I open an account with a local credit union. I went to the credit union looking for answers.

If we borrow the wrong way, my son the torch carrier could end up burning down the village from around us. But if we’re smart, we could actually have something left over after he graduates in four years. Here are our two best options:

Use the equity in our home

Interest rates are at an all time low. Really. And the interest expense is tax deductible up to a point. So long as your
total borrowed of all mortgages does not exceed the total value of your home, the interest from your home equity loan can be written off on your 1040.

Early Withdrawal from our Roth IRA

Few of us knew that the real estate market would collapse like a lawn chair on the set of “The Biggest Loser”. If you can no longer borrow against your home but you have a Roth IRA, you may have another option. We’ve all been warned of the early withdrawal penalty associated with this investment product, but did you know that there are exceptions made for
college tuition expenses? Consult a professional, but be aware that this is a very real option for many of us.

Glad I got that out of the way. I think I’ll sit out on my back porch with a cold beer and look out over the cotton fields. They’re kinda pretty this time of year.

Richard Rossi is a guest blogger, published humor writer and children’s book illustrator from Greensboro, North Carolina. You’ll find his work at his website, www.rossibook.com.

Having an available line of credit can be a safety net against disaster when you need it the most. Owning a credit card can help offset the cost of emergency medical bills, stacking utility bills, and starting a business. However, there are also dangerous ways to use credit that can financially hurt you more than they help. Whether they will get you deeper into debt, or can get you into legal trouble, the following three things should be avoided when you reach for your credit card.

Never Withdraw Cash from an ATM Using a Credit Card

Fees vary based on your credit card company, but most credit card cash advances carry an up front fee of 2% to 4%, which is added to the amount you withdraw. In addition, you are charged a fee by the bank that owns the ATM where you made the withdraw. Most credit cards carry a much higher interest rate on cash advances than on purchases you make using the card and no grace period, meaning you begin to pay interest on the cash immediately after withdrawing it from the ATM. However, the potentially most damaging aspect of using a credit card for a cash advance comes later in the month.

Most credit card companies will not apply any payments you make on your balance to the cash advance until you have paid back every purchase you make. So, let’s assume that your credit card carries an 8% interest rate on purchases, but a 20% rate on cash advances, and you have $200.00 in purchases and a $100.00 cash advance on your account. Until you have paid off the $200.00 in purchases, none of your payments will be applied towards the cash advance. So, you’ll be paying more interest every month on the $100.00 cash advance than you will on double that amount in purchases.

Always use your debit card to get cash from an ATM. If you have a debit and credit account with the same bank, be careful that you don’t accidentally withdraw cash on your line of credit, especially if you use the same PIN on multiple cards.

Never Gamble on Credit

Despite the fact that most online gambling sites no longer accept credit card deposits, and major credit card players like Visa backed out of the online gambling market years ago, some financial institutions still allow you to process credit card deposits at gambling sites. But far more common is the practice of obtaining a cash advance at a brick and mortar casino, and using the funds to gamble. Hopefully, you already know the dangers of withdrawing cash on your credit card for any reason. However, gambling with a credit card carries many other potential dangers.

Gambling on credit is, of course, making wagers with money that you might not be able to afford to lose. Doing so is also what many experts claim as being one of the many signs that you might have a gambling problem.

It’s far too easy to think that you can recover from a losing streak with just a few hundred dollars more, and the 20% interest rate on a $500.00 cash advance certainly doesn’t seem as bad as the interest on $2,000.00. However, if you choose to gamble, do so responsibly with money that you can afford to lose, not a card that you might later need for an emergency.

Avoid Using Your Credit Card at Unsecured Online Sites

Nearly everyone that uses a credit or debit card regularly at online sites will, at some point in their life, be the victim of a scam or online identify theft ring. While many sites offer a safe and secure payment processor, there are also sites that exist only to steal your information – and these scammers thrive on credit card transactions.

There are several ways to check to make sure that a site accepting credit card payments is safe and secure. For example, check to make sure the address bar includes https instead of http, like the following:

• https://google.com/, instead of
• http://google.com/

The added “s” means that the site is secure, and is present on all major eCommerce sites that accept credit card payments. Many sites also include a small security padlock in the bottom right corner or near the address bar. Finally, avoid purchases at online sites that do not have certification from a security company like Thawte or VeriSign.

While credit cards are an excellent way to build your credit and help when you need some extra cash during the month, there are several ways that using a credit card can damage your finances. Credit card companies typically benefit when you take out a cash advance, but have no way of determining whether you needed the cash for an emergency or a late night trip to the bar. In other words, it’s up to you to use your credit card safely and responsibly – and avoid the dangerous activities that can leave you deeper in debt than you can handle.

Posted by Alicia Lyttle

One of the latest developments that is likely to change the status of medical bills and free credit reports in the country is that of the Medical Debt Responsibility Act passed this year. In simple terms, the Act states that the major federal credit bureaus would be bound to eliminate the entries for medical collection items which have been cleared by an individual. The range of the amount is 2500 dollars for very collection.

If you are wondering about the expenses which remain uncleared, read on. These expenses will form a part of another medical collection, which, would be taken into account during the submission of the total unpaid bill to the credit bureaus. Therefore, these items would be reported to the concerned credit agencies. It goes without saying that these entries of a credit report are sure to hamper the credit score. The rate, at which the credit score is affected, of course, depends on the information of the medical collection and also on the related credit report entries. Like a bankruptcy, the medical entry remains on the report for up to 7 years.

The Stance Of the Public

There have been a lot of conflicting opinions since the passing of such an Act. There are a lot of complex decisions that are involved in relation to medical expenses and payments. Thereby, a large percentage of the population believes that it is not exactly the best decision to generalize credit reports and leave that to the decisions of a particular policy making institution.

The Downsides

It has been seen that decisions regarding the appearance or removal of any data on the credit reports must be based on the analysis of the data and also on the degree of risk it poses to the individuals. Most lenders consider individuals with medical collection entries on the reports as high risk. Moreover, it has been observed that those without the presence of medical collection item are likely to clear the dues than those who have entries.

Consider a situation where the uncleared medical bills are not highlighted on the report. In such a case, despite being high risk borrowers, the individuals may not appear so. This leads to accumulation of more credit than that the individuals can actually payback. Naturally, arrears and missed payments follow. This affects the overall hike in the consumers’ cost of credit. The latter arise because of higher interest rates that lenders keep for recovery of losses due to failure of few individuals to pay what they borrowed.

What If there is incorrect Medical Collection Entry?

As in all other types of entries, the incorrect entries in this category too can be disputed. The concerned authorities are bound to investigate and cooperate to rectify this error. Sometimes, a complete removal is not feasible and an improvement in the same is a prudent choice.

Till a thorough decision regarding the entries are made, the FICO and leading credit authorities have declared that the medical collection dues are not to form a high percentage on the credit report that affects the score. Research is still on and some more study shall lead to a solid decision about the same. Consumer Finance Protection Bureau (CFPB) is an important body that is involved in the research and findings.

Posted by, Anya Bennett

When you are having problems repaying your debts, a credit counselor is a helpful source of information. The most important thing that a credit counselor fixes for you is your budget. Without a proper budgeting any debt relief plan, whether it is a debt management or a debt consolidation, won’t work for you. If you don’t know your earnings and spending, you are less likely to succeed in your debt relief endeavor. Further, if you don’t undertake a planned budgeting for your household, you are likely to repeat the same financial mistakes as you did before.

Research

Before you procure any credit counseling service, make an extensive research to know about the credit debt counseling organizations in your local area. According to the Federal Trade Commission (FTC), a credit counseling agency always provide free information regarding the kind of debt elimination services available to you. Further, try to know if the credit-counseling agency employs National Association of Certified Credit Counselors (NACCC) accredited credit counselors. Moreover, any communication between you and representative of the collection agency does not mean that you have to provide personal, financial, or such other data.

Questions to Ask

Make sure you clarify all your queries so that you can select the best possible counselor to resolve your situation. For instance, you may ask if an agency has the required license to offer credit the counseling services within your state. Moreover, ask how they pay the employees. If counselors are paid based on the number of clients they manage to sign up, the impulse of the counselor then is not in your financial health.

Fraud

Be cautious as fraudulent credit counseling activities are very common these days. The FTC warns about such agencies that enroll consumers without discussing their budget or income. If any credit counseling agency appears as a non-profit, be careful of the techniques that compel you to make charitable contributions to such organizations. Again, avoid such companies those who claim to repair your credit and erase the negative informations from your credit report.

Sources of Help

Though credit counseling organizations usually offer their services through many mediums including the Internet, phone and in person, you should avoid counseling through phone and the Internet and instead search for those counselors who offer services in person. You can also shop around for credit counseling organizations via your bank, community colleges, local universities, military bases and other neighboring consumer protection agencies.

Posted by, Guest Post

Considering the growing unrest throughout the market it is becoming a lot more necessary for businesses to reduce their expenses in order to survive amongst the growing uncertainties. In this post I’ll be giving five helpful ways that may help you save some essential money.

Outsourced workers

The first thing that you might need to check out is paying for freelancers. There are plenty of activities in your company that you can outsource to many other places in order to help you save money. For instance graphic design, payroll along with production can all be outsourced abroad where wages are less costly. Online websites like Freelancer.com and Vworker are filled with freelancers that are searching for work. Just make sure that you just take time to do the research adequately to find the most appropriate person for the task.

Open-Source/Free Software

As far as possible ensure that you utilize free software in your enterprise. Who requires Microsoft Office presently when you’ve got alternate options such as Open Office or Google Documents? This change by itself can allow you to make some considerable savings on licenses and assist you to free some funds for investment decision. Some other software consists of Gimp as an alternative to Adobe photoshop and Vtiger for Crm.

Computer printer Sharing

If you have a lot of printers that remain idle then it may well be a great idea that you simply contemplate printer sharing. There are a lot of tools and also software that are available which will assist you to set your ink jet printers on a network. By doing this you simply have to purchase a few high-quality printers and persuade your workers to share them. This can permit you to save cash not just on the hardware but also on servicing fees in the long run.

Marketing Sharing

It might be advisable that you find a marketing partner if you wish to decrease cost on your expenditures. For instance if you are selling an aquarium tank cleanup service you might like to team up with a pet shop with regards to advertising and marketing. The pet shop can advertise your expertise to their own clients in exchange of a commission rate. The real key here is to make sure that the collaboration is a win-win scenario and that every party is happy.

Purchasing Alliance

It might be a great idea that you simply get another business which are inside a related field and forge a purchasing alliance. This will present you with some good cost savings on the subject of bulk purchasing. This does not only pertain to your raw materials but additionally to other items for example printer ink, paper and even toilet paper. Over time these small items can quickly tally up and grow into a big component of your budget.

Nowadays it is important that businesses find ways to cut down their cost if they want to succeed in the midst of the current economic turmoil. By making use of the tips given above you should be able to make some interesting savings on your business expenses and allow you to survive in the midst of this difficult time.
Elijah is a contributor for Credit Cards Canada where you can get some interesting information on Credit Cards and other financial information.

Posted by, CUD Staff

A Consumer credit union does not operate for profit; it is a cooperative and also a saving and loan institution. The consumer credit union is a licensed entity and is insured by NCUA (National Credit Union Administration). The process for joining a consumer credit union is a simple one as it can be joined by people who transact business or everyday activities in or around the location of the credit union. You would have to visit the location to become a member, but an application form would still be required. The minimum deposit for opening this account is $5 and the membership is a lifetime one.

In order to assist the government in the fight against terrorist funding and the laundering of money, there are some very important procedural information to be obtained regarding the opening of a new account. It is required by law that every financial institution should gather, obtain and verify as well as record their account holders. The process of opening an account involves total disclosure regarding the account holder’s name, date of birth, address and any other relevant information which can be used for identification purposes. The requirements may or may not include a photo identification issued by the government or any other means of identification.

Consumer credit unions also have savings accounts which you can use to accumulate your funds. Their smallest savings account attracts a daily interest rate which allows the interest to be posted to your account at the end of each quarter. They offer a no charge option for your checking account. This enables you to check the balance on your checking account which attracts no fees and no minimum balance is required for it. There are no charges to dread each month, and you will have the option to write multiple checks with no limit on the amount you choose to write. The only cost associated is for the actual checks.

They have different options for Christmas and other holiday savings. With this option you will be restricted to withdraw your funds only once per annum, this is between the 1^st of November and the end of December. This type of account attracts interest on a daily basis and is the ideal account for you to save for a vacation or holiday. In addition to the daily interest, there is also the fact that you can only withdraw your funds once per annum. IRAs (Individual Retirement Accounts) are also available both in traditional and Roth. The accumulated amounts on these accounts also earn interest daily which are added to your account quarterly.

There is no requirement of a minimum amount and there is also an option to save for children’s educational needs and this is tax free savings. Some of the accounts offered by a consumer credit union are: bill payment, online banking, payroll deduction, investment services, money orders, you can do night deposits or send wire transfers, investment services and a wide variety of other services which are offered.  Consumer credit unions are fully capable and equipped to take care of your financial needs, all you have to do is make that first step into one of their offices.