New Tax Law Change Helps Borrowers

President Bush has signed The Mortgage Forgiveness Debt Relief Act of 2007. It provides a temporary, three-year change to the tax code to eliminate any taxes home owners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage debt. It applies only to primary residences and is capped at $2,000,000.

Said President Bush “Under current law, if the value of your house declines and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as money that can be taxed. And of course, this makes a difficult situation even worse. When you're worried about making your payments, higher taxes are the last thing you need to worry about. So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. And it's a really good piece of legislation. The provision will increase the incentive for borrowers and lenders to work together to refinance loans -- and it will allow American families to secure lower mortgage payments without facing higher taxes.”

The Act also makes mortgage insurance premiums tax deductible. According to the National Association of Home Builders president Brian Caltalde "By enabling mortgage insurance premium payments to be deducted, homeownership is made more affordable for thousands of families who now will be able to buy a home without having to resort to more costly sub-prime or predatory alternatives."

Tips to Trim Your Waistline and Your Debt

Sometimes, someone expresses an idea better than you can. This is the case with this blog post. As I have spent the past year helping people get out of debt and improve their credit, I have realized the similarity between getting out of debt and losing weight. Both require consistency on a daily basis. Also, when broken down to their simplest terms, both involve lifestyle changes and simple math. If you use more calories than you consume, you will inevitably lose weight. If you earn more than you spend, you will be able to get out of debt.

There are many weight loss and financial programs out there. What works for one person may not work for others. Some people will prefer trying to earn more money, others would rather spend less, while another group may want to try a hybrid approach. Whatever approach you choose, as long as you are consistent and the math works in your favor, you cannot fail.

Here's to a happy, healthy and prosperous 2008.

URL: Tips to Trim Your Waistline and Your Debt

Let Sleeping Dogs Lie – Don’t Pay Your Ancient Debts

If a creditor waits for too long to collect and old debt, you may not have to pay it. All states have statutes of limitations – laws which require that a creditor sue to collect a debt on or before a certain date. If they do not file a lawsuit in time, then they are forever barred from suing to collect the debt. A lawsuit is filed when the complaint been filed with the proper court, and a filing fee has been paid. A complaint is the document where the creditor states to the court that you owe them money and provides the reasons for that claim.

Each state has statutes of limitations for certain types of debt. There are four types of debt. Oral Contracts are those where you verbally agreed to pay the debt. Written Contracts are those where you agreed in a signed writing to pay your debt. A Promissory Note is a written document you sign where you agree to pay the principal and interest on a debt according to a schedule. Finally an Open Account a rotating line of credit with a changing balance. Some states have the same statute of limitations for all types of debt, others have different ones.

When does the statute of limitations start? It starts when you miss your first payment. You can check the date of last activity on an account by obtaining a copy of your credit report.

Some collection companies specialize in buying debts whose statute of limitations has expired and trying to collect them. They try to get you to agree to make payments on the debt. By agreeing to make the payments, and making them, they create a new debt with a new statute of limitations. In a sense, they revive the old debt.

If you notice old debts on your credit report, or if a collector contacts you, before deciding to pay them or settle with the collector, talk with a lawyer in your state to see if you really owe the money. If you get sued on an old debt, make sure to claim the statute of limitations defense in your answer. If you don’t file an answer or don’t claim the statutes of limitations as a defense, you will lose your case.

Here is a table showing the Statute of Limitations in all 50 States. Most states have laws that stop the statute of limitations from running out if you are outside of the state or country. Also, some contracts have a provision that says that any lawsuit will be governed by the laws of another state. If you are sued, you should check with a lawyer to see if the statute of limitations defense applies to your debt.

State	Oral Agreement	Written Agreement	Promissory Note	Open Account
Alabama	6	6	6	3
Alaska	6	6	6	6
Arizona	3	6	5	3
Arkansas	3	5	6	3
California	2	4	4	4
Colorado	6	6	6	6
Connecticut	3	6	6	6
Delaware	3	6	6	3
D.C.	3	3	3	3
Florida	4	5	5	4
Georgia	4	6	6	4
Guam	4	4	4	4
Hawaii	6	6	6	6
Idaho	4	5	10	4
Illinois	5	10	6	5
Indiana	6	10	10	6
Iowa	5	10	5	5
Kansas	3	5	5	3
Kentucky	5	15	15	5
Louisiana	10	10	10	3
Maine	6	6	6	6
Maryland	3	3	6	3
Massachusetts	6	6	6	6
Michigan	6	6	6	6
Minnesota	6	6	6	6
Mississippi	3	3	3	3
Missouri	5	10	10	5
Montana	5	8	8	5
Nebraska	4	5	6	4
Nevada	4	6	3	4
New Hampshire	3	3	6	3
New Jersey	6	6	6	6
New Mexico	4	6	6	4
New York	6	6	6	6
North Carolina	3	3	5	3
North Dakota	6	6	6	6
Ohio	6	15	15
Oklahoma	3	5	5	3
Oregon	6	6	6	6
Pennsylvania	4	6	4	6
Puerto Rico	15	15		3
Rhode Island	15	15	10	10
South Carolina	10	10	3	3
South Dakota	6	6	6	6
Tennessee	6	6	6	6
Texas	4	4	4	4
Utah	4	6	6	4
Vermont	6	6	5	6
Virginia	3	5	6	3
Washington	3	6	6	3
West Virginia	5	10	6	5
Wisconsin	6	6	10	6
Wyoming	8	10	10	8
Virgin Islands	6	6	6	6

Garnishment: Facts You Need To Know

Garnishment: Facts You Need To Know

Garnishment permits a creditor to take your wages or bank account balances collect your debt. It works like this. The creditor gets a judgment against you from a court. A judgment is an order from the court telling you to pay the creditor. The creditor then gets a Writ of Garnishment from the court. That is an order from the court requiring your bank, or your employer, to pay your account balance or wages to the court. The court then turns the money over to your creditor. Before the court pays the money to the creditor, they give you a chance to show why the money shouldn’t be paid.

Before a creditor can garnish your account, they must have a judgment against you. There are two exceptions to this rule. First, tax authorities such as the Internal Revenue Service can garnish your accounts without first obtaining a judgment. Also, in some states, your wages and accounts may be garnished to collect unpaid child support.

Even if your paycheck or bank account is garnished, you may be able to get back or keep some of the money. Each state has different rules regarding exempt property --property that your creditors cannot touch. The most famous example of exempt property is O.J. Simpson’s $25,000 per month NFL pension. Even though he has judgments against him in excess of thirty million dollars, his victims’ parents cannot take any of Mr. Simpson’s pension payments.

In some states, all or, or a part of your wages are exempt. Most retirement plans are also exempt. Also, social security, SSI and disability payments are exempt. If you can prove to the court that the money in your account comes from these sources, you may be able to have it returned to you.

If you learn that a creditor is trying to garnish your paycheck or bank account, you should contact a lawyer immediately. If you did not have notice of the lawsuit, or if you are not the person named in the lawsuit then the judgment can be set aside. Also, if you file for bankruptcy, the garnishment will be stopped.