What does it mean when the Federal Reserve increases interest rates and how will it affect your overall financial well-being?
Rate increases by the Federal Reserve may impact auto loans, mortgages, savings accounts, credit cards and refinanced loans. Unfortunately, if you carry a balance on that credit, you’ll most likely see your monthly payments increase. Paying off your credit balance with each statement will not only help you avoid an increase in monthly payment amounts, it will also help to improve your overall credit score.
If you can’t afford your monthly payments and your account goes into default, it may be sent to a third party debt collector. Debt collectors must follow specific guidelines when they contact you about your debt. The Fair Debt Collection Practices Act is the federal law that outlines violations to a consumer’s rights by abusive debt collectors. You may request the collector provide validation of the debt and a detailed itemization of the amount claimed.
Negotiate a Payment Plan
You may also be able to negotiate a payment plan with the collector. Charges like interest and late fees could be removed from the balance when negotiated. If the collector is willing to agree to a payment plan, be sure to get the agreement in writing. This letter should detail payment terms including the monthly payment amount, payment due date, total of payments and total balance owed. Be sure to make your payments as agreed.
Settled Debt and Tax Implications
If you settle a debt consisting of $600 or more in principal — the actual loan amount, not interest or fees — for less than the full balance owed, there could be income tax consequences. If you have questions concerning tax on a settled debt, be sure to seek advice of an accountant or tax advisor.
Seek Legal Help
Flitter Milz is a nationally recognized consumer protection law firm that represents victims of abusive debt collection tactics. Contact Us for a free evaluation of collection letters and phone calls that you have received. Whether or not you owe the debt, the collector must follow the law.