How Long Can a Creditor Collect on Debt?

There are four categories of debt:

  1. Oral Agreements
  2. Written Contracts (medical debt, typical collection accounts)
  3. Promissory Notes (car loans, student loans, installment loans)
  4. Open-ended accounts (credit cards)

Each state has it’s own law that dictates how many years a creditor may collect. It’s also called the Statute of Limitations.

However, even if a debt is past the legal date, bottom-feeding collectors will persist in trying to get money out of you. That’s why it’s good to know the law in your state.

If you’re in Alaska, Arkansas, Mississippi, or Nevada, the limit for collecting on an Promissory Note is 3 years.

If you’re in Ohio, it is 15 years. Wow, what a big difference!

Here is a chart for each type of debt and the Statute of Limitations for each state.

Would you like to know how the certified credit repair professionals get the debt removed from credit reports? If so, then you’ll want to order a copy of Repair Your Credit Like the Pros here.

3 Credit Tips for a Higher Credit Score

Last month, I was recorded for an episode of “On Everyone’s Lips.” Today, I am sharing three of those credit tips with you.

O.E.L.’s goal is to teach techniques and strategies.

O.E.L.’s mission is to inspire listeners.

Here are 3 Tips from the show:

  1. What debts should be tackled first?

It’s best to pay down any and all revolving debts first. Credit cards have a higher negative impact on your credit because they continue to affect you for longer, as opposed to installment loans like student loans and auto loans that have an end date.

Pay down your credit card debt first. Generally, it’s best to start with the card that has the highest APR/interest rate. The more you pay on interest, the more money you wind up paying in the long run.

2. What are some ways to maintain good credit?

Never shut down all of your cards. Closing your credit card accounts means that nothing is actively reporting to the credit bureaus. Eventually, that closed account stops helping your score. When there is no score to report and you have no credit history, then you will pay more for a home loan and other financing.

If you use a credit card once or twice a year, then the creditor won’t shut down your card.

3. What is the best way to obtain your credit report?

The best way is to write a letter to the address below and request a copy of your free annual report. Avoid using the online credit report request, because in so-doing you agree to waive several of your rights when you check the box agreeing to the terms and conditions. It’s always best to put everything in writing. Use the good, old fashioned USPS mail, even though it takes longer than the online system.

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

For the complete podcast, see here.

Thank you, Mr. Khari Harrigan, podcast producer and manager, for inviting me on your show.

Thank you, O.E.L. team Lindsey J, Chelsea Jade, and Monique Knows aka Mo for the interview.


Announcement: I’m Giving Away All My Book Royalties

Very near the equator where the sun rises at 6 a.m. and sets at 6 p.m. 356 days a year, there are villages where people live in thatch and mud homes barely large enough to shelter a sleeping family. They cook by fire and farm by oxen. They gather sticks and carry 50-lb stacks on their backs to sell at market in order to survive. In this place, something wonderful has happened.

Ethiopians are telling other Ethiopians about a newfound joy, the joy of knowing Jesus in a personal way. Their lives are being changed from male-domineering-sometimes-abusive into compassion. One of these villages has been praying for a neighboring village for 10 years, and now those same villagers are finding faith in Christ.

In one village there are now 88 Believers who gather to worship. They sit on plastic jugs or on the ground under a tree. They have no protection from scorching heat or rain. They need a church. Moreover, in their culture, what makes a religion valid is a church. They are accustomed to prayers in a mosque. Socially, without a church, you are nobody. Friends have told them, “If you get a church, that is when I will come and pray with you and join your faith.”

To build a church, they need land. A prominent Ethiopian, an Influencer, has come to salvation—and he brought his family of 24 into the faith with him. This man has donated land for the purpose of a church. The problem is, there are no funds to build a church nor means to earn funds. How much does a church cost?

$7,000! That’s right, only $7K will build a church that will change the course of a village. Less than what most of us pay for our cars.

I am donating 100% of my royalty income for November and December from my two bestselling books to fund a church for these dear people. However, my current monthly is not enough. And this is where I need your help. I am asking you to hit Share on Facebook to pass on this information so that people who need the information will order a book.

Repair Your Credit Like the Pros has 412 reviews with an average of 5 stars. Everyone who needs to fix their credit can benefit. (See Amazon)

Build and Project Your Credit Like the Pros is for young people starting out, immigrants, and anyone else who wants to go from basic-to-expert and a 800+ credit score in record time.

All November and December profits brought in by these books will go to build a church in Ethiopia. It is high time that prayers sent to heaven for 10 long years get answered!

If you know someone who could use it, why not purchase a book as a gift for them, knowing you will be helping families living far, far below the poverty line?

Thank you for considering being a co-partner with me in this worthy endeavor.

Thank You, Veterans, For Your Service

For our U.S. Veterans, we give you our respect and honor.

I would like to dedicate this verse to the men and women of the United States Military, both past and presently serving:

Be strong and courageous.

Do not be afraid;

Do not be discouraged,

For the Lord your God will be with you wherever you go.

~ Joshua 1:9

* * * *

Tomorrow, I will make a major announcement. Please come back or subscribe, because it is both important and interesting.
Thank you, Carolyn Warren

When Signing a Mortgage is Final

“After we signed escrow documents, we noticed that the fee was more than we were told. Can we rescind? Can we ask the lender to delete the fee? Can we choose a different lender?”

If your loan is a refinance, you have three days after signing to rescind or cancel. One of the documents you sign in a refinance explains this and even includes the date by which you have until midnight to cancel. Simply sign that rescission notice and scan/email/fax it to your lender. This cancels your loan completely and enables you to renegotiate or even go to a different lender.

If your loan is a purchase of real estate, then no, you cannot cancel after signing final loan documents. Nor do you have the legal right to ask for any changes in financing. Why?

Because you received the Closing Disclosure three days before signing. The law gives you that time ahead of signing to ask questions and request any needed changes.

This is a good lending law, because it gives time for corrections and still close on time, according to your Purchase Contract, and without negatively impacting the seller.

Additionally, when you are at the signing table, you can stop, pick up the phone and call your loan officer. If there are errors, the loan officer can get those pages corrected, often while you wait; or worse case, by the next day.

You can stop signing, stand up, and walk out. Don’t sign contractual documents with the wrong interest rate or incorrect fees.

Don’t sign without looking at what you are signing!

If you don’t understand something, call your loan officer and ask before placing your signature on the line. One of the pages you sign says you have read everything, agree to it all, and understand what you’re signing. So you cannot later claim you didn’t understand.

There is plenty of opportunity to read the documents and ask questions, and it is your right and responsibility to do so. Never let anyone bully you into signing something you don’t like or understand.

If you have any questions about this, please reply in comments. As always, thank you for reading.


Saved From Making a $115,720 Mistake!

This week, I saved some homeowners, a lovely couple in California, from making a financial mistake that would have cost them $115,720. Could you be making a similar mistake?

The wife asked my opinion on the Loan Estimate they received from a big national bank you would all recognize. It was a refinance to lower their interest rate and payment.

Her gut instinct said something was off; although, she wasn’t sure what. That’s when she reached out to me.

A close look revealed that the refinance was going to save them $47 per month. That adds up to $564 per year, and $16,920 over the life of the loan, 30 years. But wait!

They were already seven years into their loan. And most of the interest is paid in the first five years.

By going backward seven years, this “lower payment” was going to cost them $115,720 more!!!

And for what–to save a paltry $47 per month?

Mrs. Homeowner responded, “How can they do that to people?”

Good question. Her husband was a disabled U.S. Veteran, injured serving our country. How could they, indeed!

Before you jump into a refinance to lower your monthly payment, stop and consider what it will cost you to go backwards to the beginning of a 30-year term.

If you choose to go to a mortgage broker (rather than a bank or direct lender), you could get a customized loan term that won’t require you to go backward at all. That’s right! A mortgage broker can write a loan for 28 years, 27 years, 19 years, any term that makes the best financial sense for you.

If you are in CA or WA, I am licensed in those two states. If you are in AZ or OR, I have a colleague who is licensed there. Thank you.


How bad is it to have a credit card you don’t use?

Thank you, HGTV Magazine for publishing my credit tip in your October issue.

In case you can’t read the image from the magazine page, here is what it says:

How bad is it to have a credit card you don’t use?

“It could actually work in your favor. Credit bureaus calculate credit scores in part by comparing the total balance across a person’s credit cards with total available credit. So if you have two active cards with low balances and a dormant one with zero balance, that makes you look good because the ratio of total balance to total credit limit is lower than if you had only two active cards, says Carolyn Warren, author of Repair Your Credit Like the ProsJust know that issuers can cancel inactive cards without warning. “When a card gets closed, your credit score might take a hit since your available credit will go down,” Warren says. That may be an issue if you plan to apply for a mortgage. If so, pull out the unused card on occasion for, say, birthday dinners, and pay it off on time. But if there’s an annual fee that’s higher than the cash back or travel rewards you’re recouping and a credit dip isn’t an issue, close the card — one less fraud risk.”



Thinking of Becoming a Mortgage Loan Officer?

Are you considering a career in mortgage lending? Would you like to become a licensed mortgage broker?
If so, this is my suggested path to follow.


There is not a college degree in mortgage lending, nor is a college degree required. However, to be a licensed mortgage broker, the National Mortgage Lending System requires that you take a 20-hour class by an approved provider. Depending on your state(s) for originating business in, there may be additional hours pertaining to that state. Then you must pass the NMLS exam with a score of 75% or higher.

The 20-hour class, however, will not train you to do your job. The exam is about ethics and lending law, so the classes are aimed toward people who already know how to originate and process loans.

How, then, does a person learn how to do the job of a mortgage loan officer?

This is the way most of us have done it, and the way most of us recommend.

1) Get hired at a bank, credit union, or other direct lender first.
Why? Because you don’t need to be licensed with that type of lender and because many provide on-the-job training. They will teach you how to read a mortgage credit report, how to complete an application, what documents are required, how to input into the system, and all the other basic steps.
Also, this type of lender requires much less knowledge on your part, because you only need to learn their loan programs. (As opposed to being a broker who works with 30+ wholesale lenders!)

2) Learn everything you can about the mortgage business and become a stellar employee so that you earn a top recommendation when you are ready to move up in your career.

3) In two years, you should be ready to move your career up. You don’t want to stay stagnant for too long. But believe me, literally every day in that first year, you will learn something new. Every loan is different and has its own unique challenges.

4) Take the NMLS 20-hour class and state class, and pass your exam.

5) Apply with a good mortgage broker so that you can get your clients the BEST loans at the BEST pricing. You will want this ability if you do loans for family and friends, and to grow your career.

Being a mortgage broker takes ambition, drive, determination, tenacity, knowledge, creative thinking, communication skills, intelligence, and persistence. It’s not for people who can’t handle stress. It’s not for people who are looking for an easy income.

But once you become a mortgage broker, it gets in your blood, and it is hard to think of ever doing anything else. The reward of helping people with their financing to achieve The American Dream of homeownership is truly a blessing in itself.

Beware of Student Loan Forbearance (what you don’t know could cost you)

If you are a college graduate with student loans, but you are unemployed or cannot afford your student loan payments, you can request forbearance.

Forbearance is permission from the student loan provider to temporarily suspend your payments. That sounds good, and it can be; but did anyone tell you this comes at a price?

Your loan continues to accrue interest while it’s in forbearance, which means the balance continues to go up every month.

Navient, the largest student loan servicer, is currently being sued by the U.S. Consumer Finance Protection Bureau (CFPB) for pushing students to forbear when they could have received lower monthly payments instead — among other offenses. There is a public memo from the top brass at Navient that fairly shouts at employees to “FORBEAR THEM!”

Forbearance is better than non-payment or default, which severely hurts your credit score. But before you request it, ask if you can get a payment plan based on your income. That way, you might be able to get affordable payments and avoid extra interest charges.

The main take-away here is that forbearance can be expensive. So only use it when you have no other option.

You can read more about the Navient lawsuits here.

Read This Before You Sign Up For the New Ultra FICO Score

You may have seen the ad on TV or the Internet, the new credit score model called Ultra FICO. Supposedly, if you allow Experian to have access to your banking information, you can get a higher credit score. But wait! It’s not what you think.

The higher credit score FICO will give you for having a good banking history is nothing more than a vanity score. I call it a fake score, because no lenders will ever see it, use it, or accept it.

You might feel better by seeing your score go up, but you will be the only one.

It’s a useless score.

So what’s the point? Hmmm, why does Experian want access to your banking information? They already have a list of all your credit accounts and payment history. What little privacy you have left, they want you to give that up as well.

Don’t be seduced by the hope of an instant higher score via the Ultra FICO score. It won’t help you get a better home loan.

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