My husband and I have a lot of debt that we are trying to handle without filing bankruptcy or using a debt settlement agency because we are trying to improve our credit.However, We have a lot of credit card debt. two of them have been charged off, two have been turned over to collections, one has been closed but it has not been turned over to a collection agency and one is open but we are a little behind on it. Can we improve our credit if we get caught up on the open credit card and the closed credit card and make payments on time while at the same time we make payment arrangements to pay as much as we can afford on the others?

Mrs Kim Johnson

In order to figure out which accounts to pay and clear up the fastest to increase your credit score, it may be helpful to know exactly how the FICO score is calculated.

• 35% of the score is determined by payment history: payment information, late payments, adverse public records and collection items as well as number of accounts paid as agreed.
• 30% is amounts owed: in comparison to the credit that is available.
• 15% is the length of your credit history: Older accounts that you have paid and kept open reflect better.
• 10% is new credit: recently acquired credit, credit inquiries and reestablishment of positive credit following past credit problems.
• 10% is based on the types of credit used (mortgage, loans, credit cards).

As you can see, the largest factor in calculating your FICO score is your payment history, which includes your collection accounts and the charged off accounts, and possibly the account that is closed (not sure if that still has a balance) as well any late payments you may have on your open credit card.

In order to increase your credit score, you will need to clean up these accounts and establish a good payment history by making your payments on time and not missing any.

Here are some steps  you will need to take in order to increase your credit score:

1. Call the companies with the charge offs. An account that has been charged off means that the creditor has declared the account as a loss and usually occurs after less than minimum payments have been made for 180 days. Some people think this means that the account is closed and cancelled but the creditor can still pursue collection and you are still responsible for the debt. Contact the account holder and try to negotiate a settlement amount and if possible, pay them off in full. You may also be able to negotiate a removal of the charge off from your credit report when the account is paid in full. Either way, it looks better to have a “charged off paid” or “charged off settled” than just “charged off”.
2. Contact the collection agencies and negotiate the amounts owed as well. If you cannot get a pay off amount that works for you, set up a payment plan and work on paying these off.
3. Pay your minimum monthly payment on the open account at least until you clear up the other accounts. This keeps your account in good standing until you can possibly pay more, similar to the Snowball Method. Because of the new issues on your credit report, it may be difficult for you to get another reasonable credit card or financing for a while so you want to do your best to keep this account open and in good standing.

Hope this helps, and good luck!

Can credit card companies garnish or seize my wife’s income or accounts if she is not listed on the accounts. Also, if I file bankruptcy, does that affect her credit or have any adverse effect for her.
Mr. Bill Abramovic

ANSWER:

Bill,

These are two separate but similar questions, so I’ll answer the first one, first. No, companies or creditors cannot seize your wife’s income or bank accounts or any other property that belongs solely and is only in her name to cover your debt. If the bank accounts are held jointly, than a creditor may be able to take you to court and obtain a judgment. Alternatively, if the debt is in both names, then it doesn’t matter whose name is on the bank account and it is possible for her wages to be garnished. There are certain funds that are exempt and cannot be garnished or seized (Social Security benefits, for example) so keep that in mind as well. Otherwise it’s best to keep separate bank accounts if garnishment or seizure is possible.

The second part of your question is whether you can file bankruptcy without affecting your wife’s credit. Yes, you can. You can file an individual bankruptcy and your wife’s assets and property will be not be affected, nor will it affect her credit. If, however, you have any accounts that are jointly held and you include them in your bankruptcy, your wife will still be responsible for the debt. Another issue that may arise is if you and your wife want to obtain credit together in the future, the fact that you have a bankruptcy on your report could have a negative impact on any endeavor to purchase a home or vehicle later on. Bankruptcies where only one party files usually work out best if there are absolutely no accounts or property held together as the court and even creditors, may be able to seize anything of value that you own jointly.

Hope this helps!

One of the perks of my American Express Platinum Card is the International Airline Program where you can get a free business class companion ticket if you a qualifying ticket through American Express Platinum Travel Service. Recently, I was planning on a trip to Asia and since it is potentially such a long flight, I wanted to check if it made sense to make use of the International Airline Program. I called up Amex and had them research three airlines that would potentially take me to my destination – China Airlines. Jet Airways and Asiana Airlines. Prior to that, I checked out all of these airlines website. With the exception of Jet Airways, the websites for China Airlines and Asiana were not particularly user friendly. I managed to get a quick quote from a travel agent friend.

After a couple of email exchanges with Amex, they came back with various permutations and the cost of each. I would say that the business class fares were comparable to what I was quoted by another travel agent. Only this time, I could one and get one free.

But here is the kicker with this program. Mrs Credit Card is also allowed to make use of it. Because we have three kids, in theory, if we decided to travel business class for an international flight, we just have to pay for three tickets. I will make use of my card to get one free and Mrs Credit Card will make use of hers (which is just a supplementary card – ie authorized user and not her own card).

At the end of the day we decided not to bite the bullet, but instead spread out the trip and booked coach (really price difference). But I thought I should mention this an also update with their program partners for this year. And overall, I am pleased with their service and someday, I’m pretty sure I’ll make use of it and fly to Europe with Mrs Credit Card one of these days on business class!

But here are some screen shots of the program and their partners, which was taken from their 2010 partners guide.