Debt Questions
and Answers

 
 
 

Debt Questions
and Answers

You Have Debt Questions. We Have Debt Answers. Let’s Chat.

Q: What are my options for getting out of Credit Card Debt?
A: Paying it off, bankruptcy, credit counseling, home equity loan, debt consolidation and debt settlement.

Q: What is Unsecured Debt?
A: Unsecured debt is debt that is not secured by an asset like a house, land or car. Unsecured debt is the type of debt where creditors did not require collateral before giving you access to the money. This typically includes credit cards, medical bills, department store cards and utility bills.

Q: How did my credit card debt grow so fast?
A: Credit card companies are experts at helping the amount of your credit card debt increase with tactics like minimum monthly payments, low introductory rate offers that balloon into very high interest rates, late fees and penalties. When you make minimum payments, the interest and fees add up quickly. Before you know it, you owe more than you originally charged on your card.

Little known fact: Young Charles Dickens, who wrote “A Christmas Carol,” “Oliver Twist” and “Great Expectations,” was sent to work at a boot blacking factory at the age of 12 because his father was sent to Debtors Prison.

Q: Can credit card companies take my house if I fail to pay?
A: No. Credit card companies are not allowed to take your house to pay off your debts. However, if you have taken out a home equity loan and you fail to pay or default on your payment, then lenders could foreclose on your home. If you have equity in your home, then the lender may want to get that equity back to pay off the loan. They usually don’t want to do this, but it is possible.

Q: Can credit card companies increase my interest rate?
A: Yes. If you are more than 60 days late on a credit card payment, then the issuer can impose a penalty APR as high as 29%. If this happens the issuer is permitted to apply the 29% APR to your outstanding balances. In most cases, the Credit Card Act prevents credit card companies from raising the interest rate on the balance you owe; however, in the case of a payment more than 60 days late they can. They can also increase your interest rate if you have had your card for at least a year. They are required to give you a 45-day advance notice. If your credit score has gone down significantly, then the issuer can also choose to raise your rate.

Q: Can a credit card company reduce my credit limit?
A: Yes. Without notice unless it’s going to create an over the limit fee and penalty.

Q: What does FICO stand for?
A: The name FICO comes from the company that developed the score. It comes from their original name, The Fair Isaac Company. It is not a credit reporting agency. It developed this score so lenders could understand their financial risk for individuals they are considering lending to.

Q: What affects my credit score?
A: Your FICO score is affected by five factors that are weighted based on certain criteria.

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • Credit Mix: 10%
  • New Credit: 10%

Q: How do I get my FREE credit report?
A: You are entitled to one free copy of your credit report every 12 months. You can get a free report from each of the credit reporting companies. The only authorized website for getting your free report is annualcreditreport.com. Or you can call and request your report at (877) 322-8228. This report is absolutely free from Equifax, Experian and Transunion. Be careful when signing up for services that charge you for these. It is truly a free report. It’s estimated that 20% of consumers have an error on their credit report that can bring down their credit score. So order your report and see if it’s accurate.

Q: How do I find free money?
A: You can find out if someone owes you money for free at www.missingmoney.com. Missingmoney.com is a database of governmental unclaimed property records. You might find money from things like:

  • Bank accounts and safe deposit boxes
  • CDs and trust funds
  • Stocks, mutual funds and dividends
  • Uncashed checks and wages
  • Utility deposits
  • Escrow accounts

This site will connect you to the unclaimed property from participating states and provinces. Searches and claiming are always free on this site. The site is updated weekly. You search by your name and it quickly pulls up any money owed to you.

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