If you’ve had a credit card charge-off or had another bank issued debt fall delinquent then you’re likely to be included in the millions of Americans that can expect to receive a love letter from the IRS.

The love letter will be entitled 1099-C. The “C” stands for Cancellation of Debt and any account that you’ve had with a bank (credit card, etc) that has fallen into the “collection” category is subject to a 1099-C from the IRS.

As many as 3 million customers can expect to receive a 1099-C for the 2011 tax year as the marriage between the banking industry and the government continues to provide painful results to the average American.

The premise behind a 1099-C is that the money you charged on the card, or otherwise had access to as a result of the relationship you had with a bank, is considered real income and therefore the IRS has the ability to charge you income tax on that amount. So the bank gets to write off the debt and receive tax benefits, you get the harmful reporting on your credit reports, and the IRS puts the screws to you on the back end for money you probably didn’t have to begin with. Sadly, THIS is the real American Dream for too many Americans.

Fortunately, there is a way you can minimize the impact of the 1099-C. If you can prove insolvency for all or part of the amount included in the 1099-C then that can eliminate some of your potential tax liability. Proving insolvency isn’t easy, especially with the convoluted IRS Form 982. But the simplest explanation for it is that insolvency, or solvency, is determined by your financial situation. You are insolvent to the extent that your liabilities exceed your assets and the point of insolvency is determined by the state of your financial position at the time the debts were forgiven by the creditor(s).

It’s important to do your research and find out all you need to know about proving insolvency if you’re the victim of a 1099-C. Whether you choose to seek out the help of a tax professional or seek the counseling of a company like ours, dealing properly with a 1099-C is an important step in the rebuilding of your credit scores.

It’s things like this that Pegasus Credit Repair helps you to work through and fully understand. To participate in the Pegasus Credit Repair program, visit us at http://www.pegasuscreditrepair.com/.

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Understanding credit scores shouldn’t be this difficult. But the system is set up such that it could not be more confusing.

Contrary to popular belief, and common sense, the Credit Reporting Agencies (CRAs) aren’t the companies that provide our credit scores as we know them. The CRAs simply track and store our payment history for the companies that pay to report it to them, and they then sell that information to companies that are willing to pay them for it.

Included in the list of companies that buy credit data from the Credit Reporting Agencies are the dozens of credit monitoring companies that millions of Americans pay on a monthly basis to have them tell them what they deem their credit scores to be. But the big problem is most of these 3rd party credit score resellers have their own proprietary scoring models that they use to generate their version of our credit scores and with so many various credit scoring models in existence, the discrepancy between the various credit scoring models can be flabbergasting. In fact, one of our new customers recently obtained her credit scores through 2 different credit scoring companies and she couldn’t believe that there was more than a 100 point difference between all 3 of her credit scores that the 2 companies were reporting. Unfortunately, this makes managing our credit reports even that much more challenging.

It’s things like this that Pegasus Credit Repair helps you to work through and fully understand. To participate in the Pegasus Credit Repair program, visit us at http://www.pegasuscreditrepair.com/.

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As we’ve discussed, an important factor of rebuilding and maximizing your credit scores is re-establishing credit tradelines. With the continuing tightening of lending standards that exist today, the most feasible way to go about re-establishing credit is by opening a secured credit card.

Historically there have been many attractive secured credit cards available but the bigger banks are starting to buy up those companies and impose their higher fees and higher interest rates on the cards.

There are 3 main things to consider when shopping for a secured credit card:

1. Make sure that the secured credit card is being reported to ALL three of the Credit Reporting Agencies. If they don’t report to all 3, there is no benefit to your credit scores for opening this card.

2. Fees. Some charge monthly fees while others charge annual fees. Whichever one you choose, make sure the fee structure is reasonable.

3. Interest rate. Some cards offer a lower introductory rate but then drastically raise the rate. Make sure you read all the fine print and know what you’re getting before you choose to open the card.

Also, as a reminder, remember to always keep your balance at less than 33% of the available credit limit.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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At the request of the Federal Trade Commission, a U.S. District Court has halted several debt operations that allegedly deceived and abused consumers.

The companies, operating as Rincon Debt Management, allegedly made bogus threats that consumes had been sued or could be arrested over debts they often didn’t even owe. The companies called consumers and their employers, friends, family and neighbors, posing as process servers seeking to deliver legal papers that was supposedly related to a lawsuit. These practices, which aren’t unique to this collection company, are blatant violations of the Fair Debt Collection Practices Act.

This is the 2nd consecutive month that a debt collection company has had their operations halted by the FTC’s investigations and actions.

Fortunately, the FTC seems to be taking a much tougher stance on these sort of collection companies. Unfortunately, there are dozens more that are still operating in violation of many of the laws that apply to them.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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It’s no secret to most folks that our credit scores continue to play a more significant role in our lives every. And there doesn’t appear to be any reversing that trend in the foreseeable future.

One of the more impactful ways that low credit scores can cost you is by preventing you from being able to attain a job that may provide for a better life for you. More and more employers are using credit checks as part of their standard pre-employment procedures. Negative items on your credit report can prevent you from taking the next step in your career.

One of the more obvious ways that low credit scores will cost you is by preventing you from having the things you want and need for your quality of life. Mortgages, car loans, apartment complexes all hinge on your credit scores. Credit scores not only determine whether we’re able to obtain certain things in our lives. Even when we are able to qualify  for certain things, the lower our credit scores, the higher the interest rates that we pay for those things. Having lower credit scores can cost you thousands of extra dollars for the things you’re buying.

More of the “basics” of our lives are also now relying heavily on our credit scores to determine how much they charge us for those things. Car insurance, health insurance companies, city utility companies and cell phone companies are just some of the industries that are charging us more for lower credit scores. Oppressive security deposits and higher premiums are just some of the ways in which it cost you more when you have lower credit scores.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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One of the more confusing aspects of our credit reports and scores is why there is a difference, and sometimes a large one, between their 3 credit scores.

One of the first things to keep in mind is that most credit scores are being provided by 3rd party credit monitoring companies. Many of these companies use their own proprietary credit scoring models and this results in there being differences between credit scores even for the same Credit Reporting Agencies. For example, one credit monitoring company may show your Experian score to be at 600 while another credit monitoring company may show your Experian score to be at 630. Or 580. Or just whatever scores that their particular scoring model generates.

Specific to the differences between the 3 Credit Reporting Agencies, the differences are easier to understand. Any creditor or collection company that chooses to report accounts to any, or all, of the Credit Reporting Agencies, have to pay to do so. That’s just one of the ways that the Credit Reporting Agencies make their millions.

In addition, each of the Credit Reporting Agencies has certain requirements that include a creditor or collection company report at least a certain number of accounts (sometimes as many as 500 accounts) before being able to report even a single one. Therefore, some companies simply can’t qualify to report to all 3 or just choose to report only to 1 or 2 of the Credit for financial reasons. Consequently, this is also a major reason as to why many “Mom and Pop” size companies such as private landlords, tote-the-note car lots, etc aren’t able to report to any, or all, of the Credit Reporting Agencies.

For reasons such as these, it’s not uncommon to see scores vary between the 3 Credit Reporting Agencies of as much as 100 points. It’s also for reasons such as these that most lenders will obtain scores from all 3 of the Credit Reporting Agencies when making their lending decisions.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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One of the most important things we as Consumers can do is to take advantage of the opportunity we have to obtain a completely free copy of our credit reports once every 12 months.

There are lots of advertisements from credit monitoring companies and the like offering to charge you for your credit reports. But there is a way to obtain your credit reports directly from the 3 major Credit Reporting Agencies without any charge.

This website www.annualcreditreport.com will provide you with the options you can go through to obtain your reports. Your best bet is to print out the request form and mail it to the Atlanta address provided on the form. You can also go through their online system but will have to be careful not to get charged for any of the optional services.

When mailing in the request, make sure to provide 2 proofs of identity and address verification if you’ve lived at your current address for less than 2 years.

A growing common practice amongst Americans is to order a free credit report from each of the Credit Reporting Agencies every 4 months so that they can periodically take a look at what’s being reported for them, and against them.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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Are you tired of collection companies calling and harassing you?

The law allows you to STOP the verbal harassment that so many third party collection companies employ. A third party collection company is defined as any company that is attempting to collect from you on a debt that you allegedly owed to a separate business. This cease and desist order won’t necessarily prevent any further written correspondence from the collection company, but their verbal contact attempts MUST stop. If they don’t, you have the option of bringing civil action against that company. It’s not necessary to send the letter via certified mail with return receipt requested but that tracking may be useful should you find yourself pursuing civil options against the company.

This is an example of an effective cease and desist order:

Collection company name

Collection company address

Date

Re: Immediate Cease & Desist

Collection company account number

You are hereby notified under provisions of the Fair Debt Collection Practices Act and state law that verbal communication with and from you is no longer desired or allowed. Any further communication you choose to have with me should be done only through the mail.

Failure to comply with this request will result in my immediately filing a complaint with the Federal Trade Commission, and my pursuit of all criminal and civil recourse against your company.

Thank you,

Your name

Your address

Your signature

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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With today’s habit of using debit and credit cards for everything, many folks find themselves in the situation of not knowing where all their money is going. One of my favorite quotes from Dave Ramsey is “Tell your money where to go instead of looking up at the end of the month and wondering where it went”. To that end, the first step towards setting a budget is to begin tracking your expenses.

Track expenses -

Take the next month or two and keep a record of every expense that you have. From gas to groceries to eating out, keep your receipts and write down on a sheet of notebook paper every night what money you spent that day and what you spent it on.

If your experience through this tracking process is anything similar to mine and my wife’s when we went through it, you may find yourself sick to your stomach when you evaluate the month’s expenses. During the chaos of everyday life, it’s all too easy to simply lose sight of how out of whack our expenses can be. Tracking your expenses will help bring these issues to light.

Manage expenses -

Once you’ve identified what your expenses are, it’s time to set some limits and begin to manage these expenses. Like Dave says, tell your money where to go. Although many of our expenses are fixed, there are typically a number of discretionary items that we can influence. One of the biggest areas for us was groceries and restaurant spending. We found that we were spending a lot of money for groceries, but we were also then spending almost the same amount of money at restaurants. Sometimes after a busy day it just seemed easier to hit a drive thru as opposed to going home and preparing a meal that we had already bought the ingredients for at the grocery store. That usually led to us letting some groceries go to waste which was nothing more than money going to the trash. By doing nothing more than planning our meals in advance and buying deliberately at the grocery store, we were able to cut our food related expenses IN HALF the very first month of managing our expenses! From there we began using coupons at the store and taking advantage of restaurant specials and we were able to lower our food expenses even more! That’s when the fun of budgeting really began! We began challenging ourselves to find the best values and figuring out how we could get more for our money.

Lower expenses -

Once we began seeing the benefits of identifying and managing our expenses, we became infatuated with lowering our expenses. We started shopping our car and home insurance rates between different companies. We began calling many of our service providers such as cable, phone, internet, etc and requested lower rates from them or promised that we would change to one of their competitors. This sometimes resulted in us lowering our expenses for some of these services by up to 50%! By doing nothing more than making a phone call!

The bottom line is that no matter what your credit scores are, you must live within a well established budget. Those that do have a budget are better prepared to make career decisions and also are much more likely to be able to accumulate significant savings and be overall better prepared for the unexpected life events that most of us endure along the way. You don’t have to need credit repair before you need to begin budgeting.

Pegasus Credit Repair helps to repair your credit reports and improve your credit profile. To learn more about how you can begin repairing your credit reports, visit us at http://www.pegasuscreditrepair.com/

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From time to time we allow guest posts on our blog. This one is especially informational for anyone considering hiring a debt settlement company. Steve X worked in the debt settlement industry for over 5 years and witnessed the happenings within the industry from the top to the bottom. Here are some observations from Steve X…

If you are considering a debt settlement service to clear up your past due credit balances, I can tell you from personal experience working for a very large debt settlement agency that you should not go this route unless you enjoy paying large upfront fees to these agencies while you are receiving threatening phone calls from your creditors. The folks at the debt settlement agency will tell you to avoid these calls and to keep saving your money.
Let’s go through this process.
#1. You call for help and get a sales pitch from a full commission rep who will gloss over the details to make it sound like a consumer credit counseling program.

#2.They take upfront fees based on a percentage of the debt that you owe leaving you very little to save to take advantage of a settlement.

#3. They do not negotiate with your creditors upfront. You have to endure the calls and wait until it goes to collection status. You might be asking surely they send letters to my creditors don’t they? Here is the kicker, when they send a letter telling your creditors you are in a program to settle their debt the creditors escalate it to an attorney who will really come after you.

#4. The debt settlement agency does not want you to communicate with your creditors, because you can get the same settlement that they can. The creditors would rather settle with you and take the money you have been paying out in fees to a middleman.

I will stop here. I can go on and on. The good news is that you can settle your own debt for 30 cents to 60 cents on the dollar depending on the creditor and where it is at in the collection process. You don’t need one of these agencies to do this for you. Your credit will take a hit, but in a few months of settling your debt you can start to rebuild. Many creditors will still send you credit offers even while you are delinquent. Even if you settle an account for 30 cents on the dollar they have already made hundreds of thousands of dollars off of you in interest and penalties. The bottom line is that your creditors will settle if you could weather the harassing calls that will continue for up to 6 months. Keep in mind most settlements are made between 90-180 days of the account being past due. One other very important thing to remember is that no form of debt settlement will improve your credit scores.

Steve X.

Former Debt Settlement Agent

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