Short Sale

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If you are faced with foreclosure, the bank or mortgage company may allow you to do a short sale.  In a short sale, you would sell the house for a lesser price than your mortgage.  For example, if you owe $100,000 on your mortgage and you sell the house for $75,000 that is a short sale.  What happens to the $25,000 difference?  The bank may issue you a 1099 for the $25,000 debt forgiveness you received.  Check with the bank to see how they handle the debt forgiveness.   Keep in mind that you will need to keep the bank informed as to almost every step involving the short sale.  And, the bank has to agree to the short sale.

Credit Card Terms

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When getting a credit card, there are some key pieces of information to know.  What is the annual percentage rate for the credit card?  Is the rate a fixed rate or is it variable?  If you are late on a payment, what is the penalty and late fee?  Is there a rewards program for the credit card?  How does the rewards program work?

Credit Reports

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You can obtain a free credit report once a year through  Try to get a credit report from each of the three major credit reporting bureaus – Experian, Transunion and Equifax.  Take some time to go through each credit report and verify the reports are accurate.

Automatic Debits

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An automatic debit allows a company to withdraw a certain amount from your bank account each month to pay towards a bill.  If you are going to stop the automatic debit, check your contract with the company to see if you are still liable for payments under the contract.  If you feel you must stop the automatic debits, contact your bank to see what the procedure is to stop the automatic debits.

Upside Down Value

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You may hear about your mortgage or your car loan being “upside down.”  What does this mean?  It means that your loan amount is greater than the value of the item.  For example, if your car is only worth $10,000 but your loan amount is $20,000 then you are “upside down” on the loan.  You owe more on the car than it is worth.

APR – Annual Percentage Rate

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APR is a term heard frequently when referring to consumer purchases.  APR is a term that has to be disclosed in nearly all consumer credit transactions.  A common example is the purchase of a vehicle.  APR is actually the cost of credit and it is not an interest rate.  APR has nothing to do with the state interest rate.  The APR could actually include costs such as a credit report fee or a loan origination fee.  Proper disclosure of the APR is very important so that the consumer knows what the actual cost of credit is.  For example, the APR should help you to understand how much you are actually paying to buy a car on credit.

Proceedings Supplemental

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The full name of this is Proceedings Supplemental to execution.  This is the name for a certain type of hearing that creditors use to collect money from debtors.  The hearing will occur after a judgment has been entered against a defendant.  Take this hearing seriously.  The next steps can include garnishment of wages and taking money from bank accounts.  The defendant is ordered to appear.  If the defendant misses this hearing, they risk having a bench warrant issued for them.  A defendant can testify about their exempt income and assets at the Proceedings Supplemental hearing.

Private Student Loans and Federal Student Loans

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It can be confusing trying to determine if your student loan is a private student loan or a federal student loan.  You can always ask the student loan company to clarify which type of student loan you have.

The difference between the two types of student loans is immense.  Federal student loans come with many more options for repayment.  Additionally, the companies who collect on federal student loans tend to have contracts with the United States Department of Education.  These debt collectors are required to follow certain procedures.  They also offer various options to borrowers under the aegis of the Department of Education.

Private student loans can be collected in almost any manner as any other private debt.  They do not have the options and protections of federal student loans.

Mortgage Servicers

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If you have a mortgage on your home, you may be dealing with a mortgage servicer, and not the original mortgage company. A mortgage servicer is the last person or entity that the borrower or homeowner has been instructed to send payments to on the mortgage. See the following Indiana law: IC 32-30-10.5-7.

Just because they are the mortgage servicer, it does not mean that the company cannot enforce the original mortgage. For example, your original mortgage may have been through Bank A. But now you may be dealing with mortgage servicer B because Bank A assigned their interests to mortgage servicer B.

Mortgage servicers will still keep track of your monthly payments, discuss loan modifications with you, and can even start the foreclosure process.

The Amount of Wages That Can Be Garnished in Indiana

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See the following Indiana law about wage garnishments: IC 24-4.5-5-105.

If a creditor gets a judgment entered against you in a court of law in Indiana, they can garnish 25% of your disposable earnings for each week. Disposable earnings is sometimes called “take-home pay.” Disposable earnings is the amount left over after legally required deductions. You can attempt to get the garnishment amount lower than 25% upon a showing of good cause. For a second calculation, you can see how much your disposable earnings for the week are over 30 times the federal minimum wage. If your second calculation is less than the 25% amount, the second calculation will be your garnishment amount.

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