Minnesota Debt Consolidation

Debt Help in Minnesota

Before you decide that bankruptcy is the only way to deal with your debt or assume you have no help available, you need to look into the many debt help options available to those living in Minnesota. You may find a program that fits your situation and can help you get control of your debt.

Minnesota Credit Counseling and Debt Consolidation

One of the first steps to take when dealing with a debt problem in Minnesota is talking with a Minnesota credit counseling firm. These companies come alongside consumers and offer the help and support they need to learn about money, how to budget, and how to pay down debt. The state of Minnesota recommends working with credit counseling companies registered with the National Foundation for Credit Counseling (www.nfcc.org) or the Association of Independent Consumer Credit Counseling Agencies (www.aiccca.org). Also, the Minnesota Department of Commerce licenses some debt counselors, so check with them to see if the company you are considering holds a valid state license.

One option some credit counselors endorse to help those struggling with debt is using a debt consolidation loan. These loans give consumers the ability to get one loan to pay down all debts. This loan, which sometimes comes in the form of a home equity loan, has a lower interest rate than the other debts and allows consumers to focus on one monthly payment rather than several. Make sure you can save money with your consolidation loan, and do not sign up for this option if you feel you will continue to add to your debt problem. It will only benefit you if you stop creating more debt after consolidating the debt you have.

Minnesota Debt Relief Programs

Sometimes Minnesota debt relief programs offer a little bit more help to consumers. These programs will go a step beyond basic budgeting and debt repayment. Sometimes they will help consumers negotiate with their creditors for better rates and terms. Other times they will actually help to negotiate a debt settlement, or a situation in which the consumer pays much less than what is owed in return for a lump-sum payment sent to the creditor.

If you are considering the help of a debt relief firm, make sure you do plenty of homework. These companies are not well regulated, and they do charge for their services. you may find that you are being charged too much for the services you receive. Keep in mind that the negotiations the company will do on your behalf are negotiations you can do yourself.

Minnesota Debt Collection Laws

Minnesota follows the rules outlined in the Fair Debt Collections Practices Act, a federal law that dictates the way in which debt collectors can interact with consumers in an attempt to collect money. Under the FDCPA, debt collectors may not do the following:

• State that your creditors will sue when this is not the creditor’s intent
• Send documents that look like government documents.
• Provide a false company name.
• Try to collect interest or fees unless the contract allows.
• Present false information, such as stating that someone will come and throw you into jail.
• Harass, use threats of violence, abuse you, use obscene language, or call repeatedly with the intent to annoy.
• Call at inconvenient hours, such as before 8 or after 9.
• Call you personally when you are working with an attorney. Be sure to tell the debt collector about your attorney.

If you are contacted by a debt collector and feel that the debt is not actually yours, you can dispute it. However, you must send a letter stating your dispute within 30 days of the debt collector’s first contact. Send the letter by certified mail with a return-receipt. The debt collector must send proof that the debt is yours or stop contacting you.

If you feel that you no longer want the constant calls and pressure from the debt collector, you can ask them to stop. If you send a written letter to them requesting that they stop, they must comply. At this point the only time they can contact you is when something changes with your account. For instance, if your creditors decide to sue you, they can send a letter to tell you of this fact.

The state of Minnesota also operates under a statute of limitations. Under the current law, creditors have a set period of time in which they must file for legal action against debtors. If they do not file within that time frame, they cannot sue you. The time starts the month after your debt becomes delinquent. The statute of limitations is as follows:

• Oral agreements – Six years
• Promissory notes – Six years
• Open accounts, like credit cards – Six years
• Written contracts – Six years

In addition to these regulations, debt collectors are limited to charging no more than six percent for their interest rate. Also, Minnesota’s wage protection law protects 75 percent of weekly wages.

Minnesota Mortgage Assistance

The Minnesota Housing Finance Agency (www.mnhousing.gov) operates several programs to help homeowners who are looking to buy a home or stay in the one they have through tough financial times. The Minnesota Mortgage Program loan, for instance, is a low fixed-rate loan for those with acceptable credit who make below a certain income level. The benefit of the loan is the low interest rates as well as the potential for down payment and closing cost assistance through the Minnesota Housing Finance Authority. More information about these programs is available at 1-800-710-8871.

In addition to this first-time home buyer program offered through the state, lenders throughout Minnesota participate in the Federal Housing Administration loan program. This loan program works well for those with slightly damaged credit. Because the loans have federal backing, borrowers can get them even with a slightly tarnished rating.

For those already in a home who face foreclosure, the Minnesota Home Ownership Center (www.hocmn.org, 1-866-462-6466) offers information and access to Foreclosure Prevention Specialists who can help you do all you can to keep your home. The earlier you contact them, the better your chances for keeping your home will be.

Minnesota Debt Assistance Programs

Minnesota does not offer many other debt assistance programs. However, some state aid programs, like the food stamps program, can help those in low income categories save money to use toward paying down their debts.