Putting Your Financial Life Back on Track

Now that the COVID-19 pandemic is beginning to show signs of slowing, things are beginning to open back up, and many of us are going back to work, getting our lives back on track, and starting to plan for the future.  If you’re one of the ones who was furloughed, laid off, or even terminated, your credit may have suffered… So, where do you start at putting your financial life back on track once you have a regular paycheck coming in again?

Obviously, if your credit has taken a hit, the very first thing that you need to do is study your complete credit report.  Credit Bureaus are required by law to supply one credit report per year free of charge. So, by contacting each one separately, you can get your free copy.  This will give you a file number that you can use to dispute anything on your report that you believe is incorrect.  You can also sign up for any of the free services online that help you to monitor your credit score.  (Study each one carefully, figure out which credit bureau they are reporting for, then sign up for three different companies so you can access all three credit bureaus for free!)

Once you have your credit information in hand, study your report very carefully, then consider contacting your creditors directly.  You may find they will be willing to negotiate a settlement of your debt for less than is owed. Don’t wait until your accounts have been turned over for collection by a debt collector. At that point, your creditors have given up.

Charge offs, liens and past due balances on your record within the past 24 months will do the most damage your credit score, so those are the ones you want to concentrate on first. If you have both charged off and collection accounts, but limited funds available, first pay past due balances.  Then, pay the collection agencies that will agree to remove all reference of the delinquency from your recordIf an agency says all they can do is report the debt delinquent, then thank them for their time, but explain you are concentrating your efforts to work with those creditors who will work with you.

If you have older debts on your credit report, the statute of limitations in your state may prevent debt collectors from being able to sue you.  After that, your unpaid debts are considered “time-barred.”  According to the law, a debt collector cannot sue you for not paying a debt that’s time-barred.  Of course, the statute of limitations varies from state to state and for different kinds of debts, so check your state’s laws first.  Also, also under certain circumstances, the debt “clock” can be reset.  This starts the statute of limitations anew, so be very careful.  If you admit to the debt, or even if you pay any amount on the old debt, the clock resets and a new statute of limitations period begins.  That means the collector may be able to sue you to collect the full amount of the debt, which may include additional interest and fees.

A critical factor in negotiating a settlement is a letter from the creditor that explicitly states their agreement to delete the account upon receipt of your payment. This letter will remove the item from your credit report completely, as if it never existed.  Normally, your credit score will quickly rise by 20-30 points once this is removed from your file. Ask that the letter be sent directly to you by fax or email, then personally send it to the Credit Bureaus to ensure that it is processed to your file quickly and accurately.

If your credit cards are behind, most will work with you to pay down your balance, set up a payment plan, maybe lowering the interest rate, or even discounting the amount owed if you agree to pay it all at once.  Remember, you will need the cards to help rebuild your new payment record, so don’t close out the account once you have paid off the old balance.

Whatever you do, keep at it. It takes effort, time, and patience to repair your credit but the results are worth it.  Do not take no for answer, if your initial contact tries to put you off insist on talking with someone who can make the decisions you require.

Using Credit Cards to Survive the Corona Virus Shutdowns

Over the past few days, as we’ve watched industry after industry getting hit by closures, slowdowns, and collateral damage because of worldwide efforts to stop the spread of COVID-19, we’ve also watched the economy tank in nearly every country.  We’ve heard of “temporary” shutdowns, pauses, and already, many, many layoffs.  And, while the government’s new economic relief package is supposed to help in cases where people lose their jobs, where they’re sick, or where they are taking care of someone who is, how long will it take for that “help” to actually funnel itself down to those of us who literally don’t have the money to miss work?  Days?  Weeks? Months?

credit cardsWhere does that leave you?  How do you pay the car payment?  The house payment?  Buy medicine?  Groceries?  How do you live day to day until the “relief” is made available or until the virus is contained?  And, since they’re only really talking about 2/3 of your normal salary, where do you get the extra third?  Your normal bills aren’t going to just magically drop by a third, are they?  So what do you do?

One thing that we’ve noticed in all this panic buying at the stores is that people are using credit cards to get those items that they’re buying that are out of the norm.  Is this a smart way to handle the extra expense that all of this self isolation is creating?  And what of the long term expenses?  Is it smart, if you are one of those affected by the crashing economy, to utilize credit cards to make ends meet?

The answer is not nearly as simple as you might think.  First off, how much credit do you have available?  You might want to take stock of your available credit first off.  Then, once you have that information, consider your circumstances.  Are you in an industry that will likely be affected long term?  If so, how will you pay back any of the charges that you create while we’re all in panic mode?  Will your job reappear?  Do you have savings to rely on?  Are the things that you’re using those cards for directly related to actually surviving the financial crisis created by this virus or are they something that you wouldn’t normally buy, but you’re only buying now because you’re in panic mode?

These questions and the answers are very personal to each and every one of us, but they are things that you MUST consider.  This virus will not last forever, but the financial decisions you make now will have an effect on your life long after this crisis has passed.  And those of us here at Fresh Start Card Offers want to make sure that everyone is using common sense as we navigate through a worldwide pandemic, something that has never happened in our lifetime, and will likely not happen again soon.

Remember this, if you remember nothing else. The choices you make right now will have long term financial consequences, so make them wisely.