Resource Guide Financially

8/14/2019 Resource Guide Financially

1/71

Educational Resources

The Tools You Need

To

Empower Yourself

Financially


2/71

Table of Contents

A1. Asset Allocation2. Automotive Expenses3. Autos: Buying vs. Leasing

4. Autos: New vs. UsedB5. Bad Checks6. Bankruptcy7. Budget- Money Saving Tips8. Budget Planning9. Budget Spending Percentages10. Budget - Worksheet

C11. Child Support12. Collections

13. College Education Savings14. Coping with Job Loss15. Co-signing for Credit16. Credit Cards Accelerate Your Pay-off17. Credit Reports18. Credit Report Disputes19. Credit Scores

D20. Debt Settlement21. Disputing Credit Charges

E

22. Educating Kids23. Education Expenses24. Emergency Fund25. Establishing Credit26. Eviction Process

F27. Fair Credit Billing Act (FCBA)28. Fair Credit Reporting Act (FCRA)29. Fair Debt Collection Practices Act (FDCPA)30. Foreclosures31. Frugal Living

G32. Garnishments

H33. Holiday Saving Tips34. Home Equity Refinancing35. Home Mortgages

I36. Identity Theft37. Identity Theft Prevention38. Insurance39. Interest-only Loans40. Investment Options

J41. Job Search42. Judgment

L43. Loan Calculator

M44. Marriage, Divorce & Debt45. Medical Savings Account

O46. Opt Out

P47. Payday Loans48. Prioritizing Debts

R49. Renting vs. Buying a home50. Repossession51. Retirement Savings52. Reverse Mortgages

S53. State Abbreviations Listing54. Student Loan Information - Repayment55. Student Loan Information - Types

T56. Tax Tips Charitable Donations57. Tax Tips - General58. Truth in Lending Act

U59. Unsecured Personal Loans60. Utilities

V

61. Vacationing on a budgetW62. Wants vs. Needs

Ctrl. 75 Rev. 3 1/31/05


3/71

Asset Allocation

Asset allocation refers to the way in which a person (an investor) chooses how to divide theirinvestments. An asset can refer to stocks, bonds, real estate, and cash. The division is determinedby the needs of the individual. The goal is to maximize investment return.

Investors who have an investment plan through their company, such as a 401(k), a 403(b) or a 457,may inquire with the plan administrator (usually a bank or stock broker) for information on allocationoptions. By anticipating the amount of desired return, the administrator will be able to advise how toallocate, based on past performance. For those with individual retirement accounts (IRAs) directlythrough a financial institution, inquire with the branch manager for assistance.

There is also the option of obtaining an asset allocation fund which is specifically designed toaccomplish the goal of allocation on its own. These funds invest in a variety of different areas toprovide the investor with the desired result of diversity, without the hassle of purchasing a hugeamount of funds separately.

Allocating assets is a complicated process requiring in-depth knowledge. The best course of actionwhen considering changing your allocation is to consult with a professional. Do not rely onpublications even if you feel they are from reputable companies. Financial information changesfrequently, and publications can be outdated even if new.

Websites that can provide additional information:

www.investorwords.comwww.investorhome.comwww.gofso.com

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is providedas a courtesy resource, and is not intended to replace consultation with an industry professional.


4/71

Automotive Expenses

Over the course of time, any car owner will be faced with automotive expenses. Some expenses areroutine and can be planned for oil changes, new tires, tire rotation/balance, etc. Double-checkyour warranty to see if some of these simple items are covered. Nonetheless, many expensescatch us by surprise -- the starter goes up, the air-conditioner quits working, a tire blows out andmust be replaced.

In the surprise instances, it is important to have money set aside for these occasions. By budgetingmoney each month in an emergency fund, you will be prepared when emergencies happen.

Consider adding rental insurance to your insurance policy to allow for an alternate transportationsource should the need arise.


www.frugalliving.about.com/library/weekly/aa060600a.htm

www.thestreet.com/funds/mutualfundmonday/10003078.htmlwww.bankrate.com/brm/news/financial-literacy/faq-emergency-savings1.asp



5/71

Autos: Buying vs. Leasing

When you are in the market for a new car, there are many options available to fit your financial situation. Tohelp you decide whether leasing or buying is best, review the list below for a comparison of different features

Buying

The vehicle is yours when payments are completed. Initial costs may include cash price or down payment, title, taxes, registration and other fees. Monthly loan payments are usually higher than lease payments. There are no mileage limits. There are no fees for excessive wear and tear on the vehicle. Selling or trading the vehicle is your responsibility. Value will be determined in part by mileage,

wear and tear, and depreciation.

Leasing

The vehicle is not yours. It must be returned at the end of the lease. Initial costs may include down payment, security deposit, first months payment, taxes, registration

and other fees. Monthly lease payments are usually lower than loan payments. There are limits to the number of miles driven per year. There may be fees if there is excessive wear and tear on the vehicle. At the end of the lease, you may renegotiate with the dealer to continue your lease, purchase the

vehicle, or lease a new vehicle. Selling or trading the vehicle is the responsibility of the dealer.

Things to consider:

Compare different lease offers and negotiate terms. A lower sticker-price can reduce your monthly payment. Ask for gap coverage in case the vehicle is stolen or totaled. Negotiate the mileage allowed and per-mile charges for excess miles. Be sure to get everything in writing before you sign.


www.federalreserve.govwww.leasesource.comwww.leaseguide.comwww.carclicks.com



6/71

Autos: New vs. Used

Purchasing a new vehicle can be a lot of fun. It is also a lot of responsibility. Before you make thatbig commitment, consider the pros and cons of buying a new vehicle versus a used one. It may turnout that buying a used vehicle will suit your budget and needs equally as well as, if not better than, anew one.

New Cars

Condition of vehicle is perfect New vehicles can be customized to suit buyers needs Vehicle will be more reliable Vehicle will have a full warranty or a variety of options Interest rates on a new vehicle are generally lower New vehicles will have a higher purchase price/monthly payment

Insurance premiums are higher Higher depreciation (about 40% of the cars value is lost in the first three years)

Used Cars

Condition of vehicle varies; choice will be limited Reliability varies - unless you buy a certified pre-owned vehicle Vehicle warranty will be limited Higher interest rates on loans

Used vehicles will have a lower purchase price/monthly payments Lower insurance premiums Lower depreciation Lower registration and license fees Possible maintenance costs such as replacing tires, brakes, etc.


www.bestautousa.comwww.creditoption.com/autosites.htm

www.auto-buying-tips.comwww.consumerreports.org



7/71

Bad Checks

Whether youve written a bad check or someone has stolen yours and used them, its important to know what to do.Its also important to understand how to keep from bouncing checks in the future, as it is a costly mistake.

If your checks have been stolen or misused, close the account and ask your bank to notify the appropriate check

verification service. While no federal law limits your losses if someone steals your checks and forges your signature,state laws may protect you. Most states hold the bank responsible for losses from a forged check, but they also requireyou to take reasonable care of your account. For example, you may be held responsible for the forgery if you fail tonotify the bank in a timely way that a check was lost or stolen. Contact your state banking or consumer protectionagency for more information.

You also should contact these major check verification companies. Ask that retailers who use their databases notaccept your checks.

TeleCheck 1-800-710-9898 or 927-0188

Certegy, Inc. 1-800-437-5120

International Check Services 1-800-631-9656

Call SCAN (1-800-262-7771) to find out if the identity thief has been passing bad checks in your name.

Its equally important to understand laws that may affect you as a consumer. A new law that went into effect October 282004 is Check 21 or Check Clearing for the 21

stCentury Act.

The aim of this law is to foster innovation in payments system and enhance its efficiency by reducing some of the legalimpediments involved with check processing.

Here are some other points to know about Check 21: You wont get your original paper checks back. Checks you write will clear sooner, possibly the same day you write it. You may not get access to funds from checks that you deposit any sooner. Only a substitute check (not regular copies of the original) can be the legal equivalent of the original and only a

substitute check triggers your rights to re-credit disputed funds.

Some possible hazards to processing electronic images vs. the original:

A double payment could occur - one payment on the paper check and one on the electronic image. Check payment amounts might be changed in the process of transferring checks back and forth between paper

and electronic formats. It may be impossible to prove a check has been forged or altered without the original.

Websites that can provide additional information:http://www.federalreserve.gov/paymentsystems/truncation/http://www.aba.com/About+ABA/CheckTruncationAct.htm



8/71

Bankruptcy

There are two types of bankruptcy that affect consumers: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 completely absolves the consumer from unsecured debt. It allows almost all unsecured debts to becompletely discharged. The debtor loses all property except that which is exempt by law (varies by state). A consumershould seek the advice of an attorney to determine which items are exempt. Necessary items such as car and home are

usually exempt. Once the bankruptcy is discharged, the consumer will not have any debt from anything filed under thatspecific bankruptcy. *

Chapter 7 bankruptcy can only be filed once every seven years and remains on the credit report for a period of tenyears.

Chapter 13 Bankruptcy:

Chapter 13 is for individuals who wish to repay their debts and seek court protection while they negotiate a plan ofreorganization with their creditors. This is an alternative to Chapter 7 bankruptcy and is designed for wage-earners.The plan is usually for a period of three years, unless otherwise approved by the courts, but not to exceed five years.

Chapter 13 bankruptcy can be filed during any difficult financial situation. The information remains on the credit reportfor a period of seven years if discharged, ten years if dismissed.

Discharged: Once a debtor has satisfied the Chapter 13 payments, the court will order a termination of theproceedings, usually relieving the individual of the obligation. A discharge will remain on the report for seven years.

Dismissed: When a debtor fails to make payments on a Chapter 13 plan, the bankruptcy court will dismiss the debtor.All creditors will then have the same rights to pursue the debtor as before the filing of the Chapter 13. A dismissal willremain on the report for ten years.

Things to Consider

Before filing for bankruptcy, a consumer should consider all of the alternatives

Bankruptcy may not be necessary if the consumer has no attachable assets or if assets are exempt The cost of filing bankruptcy varies shop around just as you would for any other major purchase Get a second opinion and consider the negative effects of filing bankruptcy All creditors may be notified, including landlords or mortgage lenders Bank accounts may be frozen or closed Credit cards may be revoked Significant assets could be claimed, including life insurance policies, pensions or savings Psychological stress or depression may be experienced It may be difficult to gain employment Cost of insurance, both home and auto, may increase significantly It may be difficult to obtain meaningful credit Taxes, student loans, debt from prior bankruptcy, spouse/child support, criminal fines/penalties, and credit card

charges made within 40 days of filing, cannot be included in any type of bankruptcy


www.findlaw.com/01topics/03bankruptcy/index.htmlwww.bankruptcy-courts.net/www.thebankruptcysite.comwww.nolo.com


*Aiello, John et al. (2002). Credit counseling: keys for success. National Institute for Financial Counseling Education, 2nd

Edition.


9/71

Budget - Money Saving Tips

Housing Refinance your home Sell your home and buy a more affordable one Rent out an empty room or basement Move to a less expensive apartment Compare your insurance or bundle it with auto insurance

Transportation

Sell your car and buy a more affordable one Carpool to reduce gas expenses Shop around for less expensive car insurance Use regular gas instead of premium grade Do some maintenance yourself such as replacing windshield wipers and air filters Sell unnecessary items such as boats, RVs, or ATVs

Utilities

Eliminate unnecessary services such as extra telephone or fax lines, caller ID or other phonefeatures. In times of extreme financial hardship, terminating these services will provide extraincome for necessities.

Reduce usage. Turn off lights not in use. Turn off the water when brushing teeth or shaving. Make changes to your home to save on your bills:

Use an insulation blanket for your water heater Lower water heater temperature from 140 to 120 Adjust temperature settings to 78 in the summer and 70 in the winter Replace regular bulbs with compact fluorescent bulbs Use energy-efficient shower heads Use toilet dams or water savers Use faucet flow restrictors

Food

Use bonus cards and coupons Buy generic brands instead of name brands

Shop with a list Dont buy pre-packaged convenience items such as salads Buy fresh. Canned and frozen vegetables are less expensive than fresh ones


10/71

Budget - Money Saving Tips (contd)

Clothing

Buy only what you need Shop at less expensive stores Start a clothing swap with friends, church members or neighbors Shop at consignment stores For growing children, buy pants and dresses long and hem them. You can let out the hem as

they grow.

Medical

Ask for generic prescriptions Compare monthly prices on insurance including comparisons of co-pays and other out-of-

pocket expenses Use preventive medicine to reduce serious medical costs

Maintain a balanced diet and drink plenty of water Get plenty of rest and exercise

Miscellaneous Adjust or eliminate cell phone plans or pager services Reduce or eliminate internet services Reduce or eliminate cable TV Use cell phones during off-peak hours

Personal

Start a walking club in your neighborhood rather than paying expensive gym fees Smoke less or quit altogether Volunteer your time rather than donating money to charities Reduce or eliminate personal care expenses (hair, nails, salon) Do not pay for private school if you cant afford it

Recreation

Look for free activities and programs Go to the matinee show Eat at restaurants less often Use coupons for amusement parks

Reduce or eliminate media purchases (books, magazines, CDs)

Unsecured Debts

Pay your bills on time Ask for reduced interest rates Pay off high-interest rate cards first Purchase items with cash only


11/71

Budget - Planning

One of the most helpful tools for becoming debt-free is a budget. Here are some steps to help you get started as well asa sample budget worksheet:

Gather all the facts

Calculate your monthly income. Be sure to include all sources including child support, alimony, pensions, etc.

Record all expenses. Include fixed monthly expenses (housing, car payment, insurance, etc.) and varying expenses(utilities, groceries, etc.). Be sure to include items such as school supplies, snacks at work and membership dues. Forbills that you pay once or twice per year, such as car insurance or property taxes, be sure to allot sufficient funds eachmonth to cover that expense when it comes due.

Determine spending patterns

Identify where you are spending money. If you are having trouble determining where your money is going, keep anotepad and record each purchase.

Set temporary short-term goals

Short-term goals should be set to keep you motivated. Short- term goals may include paying off a credit card, saving fora vacation or purchasing a new appliance. Big ticket items should be planned out before the purchase is made with aspecific pay-off date. If the item cannot be purchased and paid off within three months, you should not buy the item atthat time.

Establish long-term goals

Long-term goals may include having a certain amount in savings, purchasing a home, or saving for a college education.

Monitor and record financial progress

Once a budget is created, it should not be set aside and forgotten. Revisit your budget and goals on a monthly basis to

keep yourself focused or make necessary adjustments. If you makea plan but dont stick to it, then it doesnt do you anygood.


www.betterbudgeting.comwww.moneyadvise.com

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided as a courtesy

resource, and is not intended to replace consultation with an industry professional.


12/71

Debtscape Budget Worksheet

Name: ________________________________________________________ SSN: ___________-___________-___________

Debtscape can assist you with creating a budget that is realistic and easy to maintain. Fill out all applicable categories, and your DebtscapeCertified Credit Counselor will review your budget with you along with any necessary changes. *Note: If an item is deducted from your paycheck,

such as health insurance, do not list it again as a monthly expense.*

Monthly Miscellaneous Expenses

Cellular Phone/Pager $_____________Internet Service $_____________Cable Television $_____________Personal Care (Hair/Nails) $_____________Education (Training/Supplies) $_____________Tobacco/Alcohol $_____________Alimony/Child Support $_____________Donations (Religious/Charity) $_____________Child Care (Day Care/Sitters) $_____________Club Dues or Fees (Health or other) $_____________Magazines/CDs/Movies/Books $_____________Childrens Activities (Sports, etc.) $_____________

TOTAL MISC. EXPENSES $____________

Monthly Income All Sources

(For wages, use amounts after taxes, insurance and

medical are deducted)

Salary/Wages $_____________Salary/Wages (spouse) $_____________Social Security Income $_____________Pension Plan/Retirement $_____________Military Income $_____________Interest Income $_____________Real Estate Dividends $_____________Investment Dividends $_____________Unemployment Income $_____________Disability Income $_____________Alimony/Child Support $_____________

TOTAL MONTHLY INCOME $_____________

Monthly Food Expenses

Groceries $_____________School/Work Lunches $_____________Snacks/Other $_____________

Dining Out $_____________

TOTAL FOOD EXPENSES $_____________

Monthly Clothing Expenses

Clothing $_____________Dry Cleaning/Laundry Service $_____________

TOTAL CLOTHING EXPENSES $_____________

Monthly Housing Expenses

Mortgage Payment 1 $_____________Mortgage Payment 2 $_____________Rent Payment (Apartment) $_____________Rent Payment (Other) $_____________Insurance (Homeowner/Renter) $_____________Fees (Homeowner/Condo) $_____________Utilities (Oil/Gas/Elec/Telephone) $_____________Water/Sewer $_____________Trash Removal $_____________Alarm/Security Service $_____________

TOTAL HOUSING EXPENSES $_____________

Monthly Transportation Expenses

Automobile Loan 1 $____________Automobile Loan 2 $____________Automobile Loan 3 $____________Automobile Lease $____________Boat/RV/ATV Loan $____________Automobile Insurance $____________Gasoline $____________Repairs/Maintenance $____________

TOTAL TRANSPORTATION

EXPENSES $____________

Monthly Medical Expenses

Prescriptions $____________Co-Payments $____________Life & Disability Insurance* $____________Health & Dental Insurance* $____________

TOTAL MEDICAL EXPENSES $____________

Monthly Savings Expenses

Savings Account Deposits* $_____________

TOTAL MONTHLY SAVINGS $_____________

Monthly Unsecured Debts

Credit Card $_____________Credit Card $_____________Credit Card $_____________Personal Loan $_____________Student Loan $_____________

Collections/Judgments $_____________

TOTAL MONTHLY

UNSECURED DEBT $_____________

BUDGET SUMMARY

TOTAL MONTHLY INCOME $_____________

(Subtract your)TOTAL MONTHLY

EXPENSES (total all boxes) $_____________

TOTAL LEFTOVER (+/-) $_____________

The goal is to have leftover income that equals 5-10% ofour total take-home income.


13/71

Budget Spending Percentage Guide

The following are national averages to help you determine where your client is overspending. Toobtain the average for the client, take the monthly payment amount, and divide that by the totalamount of monthly income. For example:

Total Spent on Housing: $750.00Total Monthly Income: $1920.00$750.00 divided by $1920.00 equals: 39%

This client spends 39% of the monthly income on housing. This is over the recommendednational average. See below for details:

Housing 25-35%(Mortgage, Rent, Insurance, Fees)

Transportation 10-15%

Utilities 5-10%(Oil, Gas, Electric, Water/Sewer, Phone, Trash, Alarm/Security)

Food 5-15%

Clothing 2-7%

Medical/Health 5-10%

Savings 5-15%

Miscellaneous 2-5%(Cell/Pager, Internet, Cable TV)

Personal 5-10%(Personal Care, Education, Tobacco/Alcohol, Alimony/Child Support,Donations, Child Care)

Recreation 5-10%(Club Dues, Magazines/CD/Movies/Books, Childrens Activities)

Unsecured Debts 5-10%


14/71

Child Support

Many families are suffering due to divorce. Single parents are trying to care for their children withonly one income. This is a difficult and stressful situation. If you have a client who mentions thattheir ex-spouse or childs non-custodial parent is not paying child support, here are some links tohelp them get the money that is owed.


www.childsupport.com/index.asp

www.acf.hhs.gov/programs/cse/

www.supportkids.com/



15/71

Collection Agencies

When an account is past due, and the creditor has exhausted all efforts to collect this debt from the consumer,the creditor will then hire a third-party collection agency to attempt to retrieve the debt. The creditor mayeither hire the agency to work on their behalf or sell the account to the collection agency.

Most consumers find dealing with a collection agency both aggravating and difficult. Collection agents tend

to be more aggressive as compared with the original creditors. From the perspective of the creditor, this is fair a consumer has borrowed money and the creditor wants to be repaid. When we accept a credit card andspend someone elses money, we also accept the responsibility for repayment at the creditors terms.Furthermore, because most collection agents are paid by commission, the payment amounts are determined bythe drive to earn more money, not to work out an affordable repayment plan for the consumer. However, dueto over-aggressive behaviors and deceptive tactics, Congress passed the Fair Debt Collection Practices Act(FDCPA) in 1996 to protect consumers from undue abuse from third party collectors. This law does notapply to original creditors. While some feel that even one phone call per day is abusive, that would be anincorrect assessment. The collection agency does have rights, but so does the consumer. The following itemstaken from the FDCPA are very important to remember when dealing with a third-party collection agency:

Collection agents surprise consumers by calling them by their first name Hello Bill, how ya doin?Consumers, caught off guard will then identify themselves. The FDCPA states that a collection agentMUST identify themselves by name and company. If the caller will not identify themselves, hang upthe phone.

Collection agents try to control calls by refusing to disclose full information about the debt. Theyattempt to bully and scare consumers into making payments without even knowing what is being paid!They push consumers into a check by phone payment. Often, consumers are afraid and do whateverthe agent tells them to do. Consumers are entitled to FULL disclosure - including the originalcreditors name and balance. It is your right under the FDCPA to receive full disclosure in writingprior to payment. Request the information in the mail. If they refuse, ask to speak with the

supervisor or compliance officer.

Collection agents will often threaten to take legal action against the consumer, or threaten to garnishtheir wages. Although some creditors DO hire lawyers to represent their interests, the collection agentmay notbe a lawyer, and may not be authorized to take any such action. It is against the law for acollection agent to identify themselves as a lawyer, if in fact, they are not. That is why it is vital toknow to whom you are speaking. If you are actually being sued by a creditor, you will receive acertified or hand-delivered summon to appear in court.


www.ftc.govwww.ustreas.gov

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided as a

courtesy resource, and is not intended to replace consultation with an industry professional.


16/71

College Education Savings

There are many options available to those who are trying to finance a college education.

529 Plans are education savings plans operated by a state or educational institution. Itallows you to establish an account on behalf of a designated beneficiary (the student) andprovide some tax benefits to you (the plan participant).

The Coverdell Education Savings Act (ESA) was formerly known as the Education IRA.This investment option is a tax-advantaged savings account designed to help pay for eligibleeducation expenses.

Government Series EE Savings Bonds can be purchased at your local bank or directlyfrom the U.S. Treasury for as little as $25.00.

UGMAs (Uniform Gifts to Minors Act) and UTMA's (Uniform Transfers to Minors Act) allow you to establish a savings account on a child's behalf. Current laws allow you to giveup to a maximum of $11,000 per year to any person without tax penalties.

Hope & Lifetime Learning Credits are tax credits available to a parent or child who paysout of pocket for qualified tuition expenses.

Student Loan Interest Deductions may allow you to deduct student loan interest. Loansmust be for your dependents, and must be for qualified education expenses.

Scholarships can vary depending on certain factors. Some can be applied to any school,while others are school-specific.

Financial Assistance is available in the form of loans, grants, and work-study programs.

The Reserve Officer's Training Corp (ROTC) has full and partial scholarships plus aspending allowance for those who make a commitment to military service. The US MilitaryAcademies are four-year colleges that are tuition free. They also require a commitment toserve in the military.

Grandma and Grandpa (and other relatives) should make the check(s) payable directly tothe school. Tuition payments made directly to the school are not subject to a federal gift tax.

Home Equity Loans allow you to tap into the value of your home. Although this is anavailable option, it may not be your best option. Taking out a home equity loan can seriouslyaffect your retirement plans. You may be making second mortgage payments well into your

eighties.

Retirement Funds like 401(k) plans, allow borrowing at favorable rates to pay for college.One potential problem with funding all or part of your child's education with your retirementfund is that you risk having to fund your retirement all over again. Also, the potential for long-term growth is interrupted when you withdraw funds.(continued next page)


17/71

College Education Savingspage 2

All of these options are viable, and may be used in combination with one another. The age of yourchild will determine the best option. If you have a newborn or young child, 529 plans and EducationIRAs are great options with plenty of time for your investments to grow. Savings bonds are goodoptions if you have limited amounts of money to invest. Although they will not fund all tuition costs,they can be purchased $25.00 at a time. If your child is already a teenager, you might have fewer

options available. Check into scholarships, ROTC, financial assistance, or a home equity loan. TheHope and Lifetime Learning credits do not require advanced planning; however, you will need toremember to take advantage of this at tax-time. The best advice for college planning is to start asearly as possible.


www.fastweb.monster.com/cpt/www.fafsa.ed.gov

For websites and toll free numbers for state plans, visit www.collegesavings.org

To compare 529 plans for each state, go to www.savingforcollege.com

For the Hope and Lifetime Learning Credits, see IRS publication 970.



18/71

Coping with Job Loss

There are two aspects to consider when dealing with job loss: emotional stress and financial stress.Everyone deals with job loss differently. For some, it can be similar to a death in the family. For others, self-image and self-worth may be affected. Others may become depressed. Its OK to have these feelings. Seeksupport from friends and family, or a professional.

The financial aspect of job loss can create a lot of stress and an overwhelming sense of hopelessness. It isimportant to create a plan and restructure your finances. The main goal is to minimize hardship and damageuntil you are back on your feet.

Evaluate your finances. Make a list of assets and debts. Calculate your monthly expenses.

After adjusting the budget, contact the creditors. Explain your situation and ask if they offer a hardshipprogram or temporary repayment plan.

Reduce your expenses. In times of severe financial distress, non-essentials such as cable TV, cellphone, bowling leagues, etc., are not necessary.

Check with your employer for information on COBRA, which allows you to retain your insurancecoverage even after you leave.

Some serious changes to consider:

Sell a second car to eliminate car payment, insurance payment, gas, repairs.

Look for extra sources of cash such as items that can be sold.

Sell your house and rent until you can afford another mortgage.

Use a 401(k) or home equity loan if the situation is temporary.

Perhaps a spouse can obtain a second job.

Look for a job outside of your profession. Draw upon other skills you have.

If jobs in your profession are not available in your area, consider relocating.

You may also seek assistance from a non-profit credit counseling organization. They will be able to provideinformation on several options including a debt management plan, possible home equity refinancing andeven bankruptcy. A certified, professional credit counselor can advise you of your best options.


www.extension.umn.edu/distribution/businessmanagement/DF6499.html



19/71

Co-signing for Credit

Co-signing for someone else is a big responsibility and potentially a big liability. The co-signerlends their name and good credit history to the primary borrower (or maker). If the primary borrowerdies, loses a job or just decides not to pay, the co-signer is legally responsible for the debt.

Co-signers beware! Here are some points to consider before making a decision to help someone inneed.

If the borrower defaults, the creditor will come after you for repayment. You could have yourproperty seized or your wages garnished even though you are only the co-signer.

Official documents and statements are only sent to the primary borrower. Protect yourself byasking the lender to provide notification to you in writing should the borrower default on apayment.

Be sure to get copies of all documentation from the lender. Keep them in a safe place untilthe loan is repaid.

Although this is usually a transaction between friends or relatives, treat this like a businesstransaction.

Obtain a notarized written agreement with the borrower.

Define the expectations of both parties. Will the primary borrower be responsible for theentire debt? What responsibilities does the co-signer have?

If it is a secured debt, whose names will appear on the title?

If the loan balance is paid down to a certain amount, will the co-signer be released from theresponsibilities to the lender in case of default?

How will this affect the co-signers credit? Will future lenders consider this a risk to the co-signers credit rating? The co-signer may need to show documentation that he/she are notmaking payments toward this debt at all.

When there is a default on the loan, the creditor can demand payment from the co-signerrather than trying to collect from the primary borrower.

When in doubt, dont co-sign.


www.bankrate.comwww.moneycentral.msn.com/content/Banking/Yourcreditrating/P38054.asp



20/71

Credit Cards Accelerate Your Pay Off

So, youve decided to handle your bills on your own. With the high interest rates on your creditcards accruing monthly, a debt consolidation loan may be tempting; however, you may not want totake on another debt payment. Or, maybe you cant get approved for another line of credit. ThatsOK. Here are some steps to take for getting rid of your debt without mortgaging the house.

1. Ask your creditors for an interest-rate reduction. This may seem to be an obvious actionto take, but surprisingly, many people overlook this option. The worst they can do is say no.

2. Discontinue using your credit cards. Most people have great intentions of paying off theircards, but continue using them for emergencies.

3. Create a budget. Determine how much you can afford to spend to pay off your debt and howsoon you would like to be debt-free.

4. Always send more than the minimum payments. Choose how much you can pay towardseach card and consistently send that amount until the debt is paid off. Even an extra $10each month will make a big difference.

5. Roll payments into remaining accounts payments. When an account has been paid off,put that payment towards your other accounts, increasing pay-off time.

Some people like to pay off the card with the lowest balance first (reducing the number of accountsyou have), while others prefer to pay off the account with the highest interest rate (saving youmoney in interest). Regardless of the plan you prefer, the key is to stick with it!

Here is a calculator to help you determine how much to pay and how long it will take. http://extension.usu.edu/cooperative/powerpay/

If you are really committed to getting out of debt, examine your budget. Look for unnecessaryexpenses that you can reduce or eliminate. Use the extra money to pay off your credit cards.

Examples include:Cable Services

Cell Phone ServicesSnacksEntertainmentUn-needed vehicles (boats, ATVs, etc.)Dry-cleaning

There are other ways to reduce your spending in order to put more money towards yourbills. Ask your counselor for more information.



21/71

Credit Report Disputes

According to a recent study, 70% of consumers who order their credit reports find errors. Errors can include incorrect

spelling of name, incorrect address, name changes, incorrect place of employment, incorrect date of birth, or unknownaccounts. Even the simplest of mistakes can prevent a consumer from obtaining the credit they deserve. Furthermore,the prevalence of identity theft creates an additional need for consumers to maintain accurate credit files. Each creditreport ordered will arrive with a form to dispute any incorrect items. It is important to order reports from all three of thecredit bureaus due to the fact that some creditors do not report to each one.

In order to dispute an item on the credit report, you mustfirst obtain a copy of the report from the credit reportingagencies. If your credit report has been pulled by a third party (for example a mortgage broker or automobile financecompany), you must still obtain a report directly from the credit reporting agencies. In order to dispute an item, youmust have your credit report in hand.

Due to changes made to the Fair Credit Reporting Act (Fact Act of 2003), it is now possible to dispute credit reportitems directly with the source of the information (i.e. creditors). To have information corrected, you must notify thecreditors in writing. The credit bureaus may be notified either in writing or via their website. Utilize the form that isprovided with the credit report, or visit the website of the credit reporting agency for their online dispute form. Youmust include your name, current address, date of birth, and Social Security number. Be sure to include as muchinformation as possible regarding the error. In most cases of incorrect personal information, you will be required toprovide documentation with the correct data. This could include a copy of your marriage license, drivers license, paystub, etc.

If you are disputing a listing on your report, give as much information about yourself or the account as possible. It maybe a good idea to contact the creditor to obtain documentation to support your claim. For example, a letter stating thatyour account is closed, and paid in full, may be sufficient documentation to correct an error. In other words, if yourecognize the account as yours, you may contact the creditor directly for supporting details. If you do not recognize thecreditor listing, you may contact them to obtain whatever documentation that they can provide, and then forward that tothe credit reporting agency so that they may open an investigation. If the creditor is unable to provide documentation,initiate an investigation with the credit reporting agency.

By law, the credit reporting agencies (CRAs) must investigate your claim and respond within 30 days. Be sure to sendyour correspondence via certified mail, return receipt requested, and keep copies of everything for your files. Once theinvestigation is completed, you should receive an additional copy of your credit report from the CRAs to review


www.equifax.comwww.experian.comwww.transunion.com




22/71

Credit Reports

A credit report is a record of your payment history to companies that have lent you money. All payment activity isrecorded both positive and negative generating a credit score. Your score is then used by creditors to determinehow much credit to extend, and at what interest rate credit will be offered. Generally, activity remains on the report fora period of seven to ten years.

It is important to order reports from all three of the credit bureaus due to the fact that some creditors do not report toeach one.

In accordance with the FACT Act of 2003, every consumer is entitled to free credit reports from each credit bureau onceeach year. You are also entitled to a free copy of your credit report if any of the following conditions apply:

You have been denied credit, insurance, employment or other benefits within the last sixty days. You can certify that you are unemployed and seeking employment. You are a recipient of public welfare assistance. You believe that your file contains inaccurate information due to fraud and can provide supporting details. You reside in California, Colorado, Georgia, Massachusetts, Maryland, New Jersey or Vermont.

If the above conditions do not apply or if you have already received your free reports for the year, the state in which youreside will determine your fee. Most states charge $9.00; however, residents of Connecticut pay $5.00, while residents

of Minnesota and Maine pay $3.00.

Note: To obtain your free credit reports, you must request them through www.annualcreditreport.com. In otherinstances, the credit report will only be free, or at the above price structure, if ordered directly from the Credit ReportingAgency via telephone or letter. Online reports are not free, regardless of circumstance.



Credit Bureaus

Equifax www.equifax.comTo order your report, call: 1-800-685-1111

or write: P.O. Box 740241, Atlanta, GA 30374-0241To report fraud, call: 1-800-525-6285

and write: P.O. Box 740241, Atlanta, GA 30374-0241

Experian www.experian.comTo order your report, call: 1-888-EXPERIAN (397-3742)

or write: P.O. Box 2104, Allen, TX 75013To report fraud, call: 1-888-EXPERIAN (397-3742)

and write: P.O. Box 9532, Allen, TX 75013

TransUnion www.transunion.comTo order your report, call: 1-800-916-8800

or write: P.O. Box 1000, Chester, PA 19022.To report fraud, call: 1-800-680-7289

and write: Fraud Victim Assistance DivisionP.O. Box 6790, Fullerton, CA 92834-6790


23/71

Credit Scores

The most widely utilized scoring system is FICO, created by Fair, Isaac and Company. The score represents the creditrisk associated with lending to the consumer. Your credit score is made up of several different factors. Lets look at abreakdown of these factors.

Approximately 35% of your score is based on payment history.

Approximately 30% of your score is based on the amounts owed and the types of accounts to which you owe. Approximately 15% of your score is based on the length of your credit history. Approximately 10% of your score is based on new credit and recent credit inquiries. Approximately 10% of your score is based on the variety of types of credit you have.

Payment HistoryAmounts/TypesLength of HistoryNew Credit &InquiriesMix of Credit

Tips for Raising your Credit Score

Pay your bills on time! Delinquent payments have a negative effect on your score.

Pay off collection accounts!Paying off a collection account will not remove it from your credit report, but theaccount will be shown as paid which is a positive reflection.

Keep revolving credit card accounts low. The amount of available credit, compared to the amount of credit beingused on the account, is a factor that determines your score.

Pay off debt instead of moving it around. Transferring balances from one card to another will not pay off thedebt and creditors do not view this method of payment favorably.

Avoid opening new accounts that you do not need. Focus on successfully managing the cards that you alreadyhave. Opening new accounts will not drastically increase your score and may actually decrease it.


www.experian.com

www.equifax.com

www.transunion.com

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided as a courtesyresource, and is not intended to replace consultation with an industry professional.

Credit Scoring

Above 730 Excellent Credit

700-729 Good Credit670-699 Average Credit585-669 Below Average Credit

Below 584 Poor Credit


24/71

Debt Settlement

Debt settlement is an alternate solution if you have tried a credit counseling service, do not wish to filebankruptcy, and cannot afford your payments. With a debt settlement, you pay the creditor a percentage ofwhat you owe. There are generally two ways to arrange a debt settlement. One way would be dealingdirectly with the creditor or collector; the other way would be through a debt settlement company.

Here are some things to keep in mind:

Any forgiven debt or settled debt in excess of $600 is considered income by the Internal RevenueService (IRS). You will receive IRS form 1099-C. You will be taxed $350 for every $1000 that isforgiven. It is wise to check with a certified public accountant for details.

Settling a debt is not the same as filing bankruptcy. In bankruptcy, debts are either fully discharged,or repaid at an alternate schedule with court protection. Your credit report shows that you filed forbankruptcy. With a debt settlement, you will pay back a fraction of the original amount that you oweand the credit report shows account paid as settlement. While this is not viewed as bankruptcy, itmay still carry a negative effect for future credit.

Bankruptcy is a public record and settlements are not. When you settle, you can still answer No tothe question Have you ever filed bankruptcy?

You need to be quite delinquent before you can settle, usually about six months or more.

When a settlement amount is offered, it may be more cost effective to accept repayment terms earlierin the process. Holding out for a better offer may result in hundreds of extra dollars in late/over-the-limit fees and finance charges added to the balance.

(Example: If your balance due is $1000.00, and you are offered a settlement of 75% of that balance -$750.00, it may be wise to accept. If you hold out for a better offer, for example 50%, you may accruelate fees, over-the-limit fees and additional finance charges while you are waiting. That may very well

total MORE than the $250.00 you were attempting to save).

You are allowed to handle the negotiating yourself you do not need to pay a company thousands ofdollars to do this.

Even if you are in the process of settling, the creditor still retains the right to pursue you in court.

Never disclose where you work or bank. If the company obtains a judgment against you, it makestheir job that much easier to garnish your wages.

Be sure that the creditor agrees to indicate paid in full in your credit report. Ask for this in writing aspart of your settlement.


www.credit.about.comwww.nolo.com



25/71

Disputing Credit Charges

Each month, your creditor is required to send you a bill. It is your responsibility as a consumer, todouble-check the bill for errors. The Fair Credit Billing Act protects your rights if you do find an error.It also defines your obligations for getting the error corrected.

According to the FCBA of 1974, in order to preserve your rights, you must do the following:

Write to the creditor at the address given for billing inquiries. Include your name, address,account number, and a description of the billing error.

Send the letter so that it reaches the creditor within 60 days of receiving the first bill thatcontained the error.

Send your letter by certified mail, return receipt requested to ensure that it was received.Include copies, not originals, of sales receipts or other documents to verify your claim.

The creditor must respond to your inquiry within 30 days, in writing, unless the problem has beenresolved. The dispute must be resolved within two billing cycles after receiving your letter.

You will still need to make payments on the undisputed portion of your bill. The creditor may not take legal action to collect on the disputed amount during investigation. Your account cannot be closed or restricted, but the disputed amount may count against your

available credit. The creditor must explain any corrections in writing. If crediting your account, the creditor is

required to remove all finance charges, late fees or other charges related to the error. If you owe a portion of the disputed amount, you are entitled to receive a written explanation. If the bill is correct, you must be notified promptly in writing about the amount that you owe

and why. You will owe the amount in dispute plus any charges that accrued while the amount

was in dispute. You may request copies of any documents that the creditor is using to prove its decision. Any collector who does not follow proper procedures may not collect the amount in dispute,

or the related finance charges (up to $50), even if the bill turns out to be correct.


www.ftc.gov

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided

as a courtesy resource, and is not intended to replace consultation with an industry professional.


26/71

Educating Kids

Children dont need to be accountants by the age of ten, but it is important to teach them the value of a dollar when they are young.We live in a consumer-driven economy wherein it is vital to learn how to manage money, spend responsibly, and save for the futureby planning ahead. The earlier we address these issues with our children, the more likely lessons will be retained.

For the youngest children (ages 3-5)

Introduce them to money by playing shopkeeper. Label some items around the house and have them purchase the items.Keep the revenues in the bank. Trade roles so that they can see both sides.

Let children handle coupons at the grocery store. You can foster a fun environment by allowing them to match coupons toproducts, and then allow them to keep the savings for the items that they have matched correctly. This is a concreteexample of how saving a few pennies here or there can add up.

Teach them why sale items are cheaper and how buying in bulk affects the price. Let them handle coins and bills. Teachthem how the different sizes have different values. Let them trade in their pennies for quarters.

For young children (ages 6-8)

It is time to start an allowance. Children this age should begin handling money and counting it. Let them hand over money toa cashier. Allow them to keep the change if they choose the correct bills.

Compare name brand and bargain brand items for taste or quality versus price. Make it a game to find markdown or sale

items.

Start setting limits on what you, as a parent, are willing to spend on clothing, toys or sporting events. If the child wants more,then they need to make up the difference with their allowance. This will help teach children how to live within their means.

For older children (ages 9-12)

It is time for them to supplement their allowance. Allow them to do chores around the house for extra income. Perhaps apaper route or lawn-mowing job would be appropriate.

If your child is constantly asking, Why cant I have it? they may require a visual example. You can either cash yourpaycheck or use play money. Put the money into stacks that represent housing expenses, utilities, auto insurance, food,savings, etc. Also, show what is leftover after all bills are paid. This will show that you are not made of money and why wecannot always have what we want, unless we save.

Teach your pre-teen to set short-term goals. Create a plan and a schedule. Allow them to make the deposits into yoursavings account and help them to keep track.

Teenagers

Teens can begin to earn extra money by picking up a part-time job. Their primary job should be as a successful studentso dont allow the paying job to interfere with study time.

Teenagers should open their own savings account. Also, opening a checking account and learning to keep thecheckbook balanced will be very valuable.

Introduce them to the idea of credit. Teen credit cards are available and teen mathematical skills are sufficient tounderstand the concepts of finance charges and annual percentage rates.

If your teen is interested, investing in the stock market may be a good tool for teaching them about investment and risk.The newspaper lists the trading information daily this is a good place to start learning.


www.moneyinstructor.comwww.msgen.com



27/71

Education Expenses

When we think of education expenses, we usually think of college expenses. While we realize there aremany plans available to those attending college or university, there are also plans available for use at anyschool, for a variety of expenses.

Coverdell Education Savings Act (ESA), formerly known as the Education IRA-this investment option is atax advantaged savings account designed to help pay for eligible education expenses.

Assets withdrawn to cover educational expenses are tax-free.

Principal and earnings can be used to cover K-12 costs such as tuition, tutoring, computer equipmentroom and board, and uniforms. You may contribute until the child is eighteen unless he/she has qualifying special needs. You may contribute up to $2000.00 per year. Contributions do not affect eligibility to contribute to the full $3000.00 traditional IRA Contributions are not tax-deductible Contributions can be made until April 15th for the current tax year. Contributions must be made in cash. You cannot use stocks or bonds to supplement the IRA.

If you are planning on sending your child to private school for any portion of their schooling, the ESA wouldbe a good option. Begin this plan when the child is a newborn. If there is any money left after they graduatefrom high school, it can then be applied to college expenses.

Government Series EE Savings Bonds You may buy bonds for small amounts of money. You only need a minimum of $25.00 to invest. You may buy them at your local bank or directly from the US Treasury Department. There is a lower risk than most investments since principle and interest are guaranteed by the US

government Lost, stolen, or destroyed bonds can be replaced. Bonds are exempt from state and local tax; tax can be postponed until you cash in your bond or until

it reaches maturity at thirty years. Money invested directly helps finance our nations borrowing needs. Because these carry a lower risk, the return on your investment is not as aggressive. The interest rates are generally lower than other options available.

UGMA's (Uniform Gifts to Minors Act) and UTMA's (Uniform Transfers to Minors Act) Allows you to establish a savings account on a child's behalf. Current laws allow you to give up to $11,000.00 per year to another person without any tax penalties. This type of account may lower the family annual tax bill because earnings on the account are taxed

at the child tax rate which is lower. When the child reaches the age of majority, he/she has full control of the account. This type of

account does not have to be for educational expenses.

Grandma and Grandpa (and other relatives)Sometimes relatives are willing to help pay for nieces, nephews or grandchildren. Rather than giving moneydirectly to the student or parent wherein the gift tax may apply, have the relative make the check payabledirectly to the school. Tuition payments made directly to the school are not subject to a federal gift tax.


www.ustreas.govwww.entrustadmin.com/open_an_account/open_education_IRA.htmlwww.principal.com/investment/ind/coverdell.htmwww.invest-faq.com/articles/tax-ugma.html

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is providedas a courtesy resource, and is not intended to replace consultation with an industry professional


28/71

Emergency Fund

Emergency savings should be those that are specifically for emergencies. Money that you set asideshould not be used for random purchases or luxury items. There are two types of emergencysavingslong-term and short-term.

Short-term savings

In the event that your car breaks down, the refrigerator dies or a pipe bursts, you should have thepeace of mind knowing you can just write a check or hand over some cash. Most people rely on acredit card for emergencies, but paying cash ensures you pay only once, rather than paying for itseveral times over due to interest and fees on credit.

Long-term savings

In the event that you lose your job, face a legal situation or major medical expense, it will beimportant to have money set aside. The general rule suggests that three months worth of livingexpenses in the bank should be sufficient. This may take some time to build up, but there is no timelike the present to start. Even if you begin with only $10.00 per month or per pay check, its betterthan nothing at all. Over time, you may be able to increase the contributions to your EmergencyFund.

The key to building your savings is to treat it as if it were a bill. When you decide how much you canafford to save each month, pay your bill before having fun. Once youve reached your goalamount, you will have become accustomed to not having that extra money and will be able to put ittowards your retirement fund or other investments.


www.frugalliving.about.com/library/weekly/aa060600a.htmwww.thestreet.com/funds/mutualfundmonday/10003078.htmlwww.bankrate.com/brm/news/financial-literacy/faq-emergency-savings1.asp



29/71

Establishing Credit

Having credit is important in todays society. It is required for major purchases such as automobilesand homes. If you have good credit, you will receive better interest rates and more favorablerepayment terms, meaning you will pay less for the money that you borrow. But how do youestablish credit in the first place? Here are several ways to establish credit, and some Dos andDonts.

Co-signing allows you to use someone elses credit history in order to obtain a loan or lineof credit. By paying the bills on time, you are then establishing your own credit history.However, defaulting on the payments will affect the co-signers credit as well.

Secured credit cards allow you to have a credit line reported to the credit bureau. With thismethod, opening a savings account is required, and purchases with the credit card arepermitted up to the amount in the savings account.

Department and gasoline credit cards are also relatively easy to obtain and can be a goodstart to establishing credit.

There is a process for establishing meaningful credit. Once a debt is created, wait for the initialstatement to arrive, and pay it on time and in full. If payment in full is not possible make paymentsuntil it is paid off. Do not make more purchases! Repeat the process until your score is sufficient toobtain unsecured credit. Remember a very important part of maintaining and establishing goodcredit is to always make payments on time.

Dos

Open a bank account and use it responsibly Pay utilities on time

Pay loans and credit accounts on time each month Review your credit report annually to ensure accuracy

Donts

Dont overdraw your account Dont make late payments to loans and credit accounts Dont let other people use your accounts Dont leave utilities in your name if you move


www.beginnersinvest.about.com/cs/establishcredit/?terms=secured+creditwww.credit-land.com/establish.phpwww.credittalk.com



30/71

Eviction Process

There are several steps that will occur before you are evicted from your rental property or yourhome is foreclosed upon.

For Renters:

If you do not pay your rent, your landlord has certain rights, including taking you to court or evictingyou from the property. This can take as little as two weeks or as much as two or three months,depending on the state in which you live.

The first step to eviction is a Notice to QuitorNotice to Vacate. This tells the renter to pay up ormove out. It is a warning to the renter that he can stay put only if he pays his back-rent andbecomes current on the payments.

After the time has expired on the Notice to Quit, the landlord can file an eviction order with thecourt. The renter will receive a summons to appear in court. If you do not attend the hearing, adefault judgment is entered, and the sheriff will serve the eviction notice. If you have not vacated thepremises by the date stated on the notice, your belongings can be removed and put on the street.

For Homeowners:

After missing one or two payments, the lender will contact you by phone and letter. After sixty toninety days, you will receive a notice in the mail, called a Notice ofDefault. This is the first step inthe foreclosure process. From this point, you have 90 days to cure the debt (bring the accountcurrent).

If you do not make up your missed payments, or contact the lender for payment arrangements, youwill receive a Notice of Acceleration. At this point, the full amount that you owe is due

immediatelyto avoid foreclosure.

After that there will be a Notice of Sale. This gives the date and time that the foreclosure will takeplace. The foreclosure process can take anywhere from six to eighteen months depending on thecircumstances of the case.


www.911tenant.netwww.consumeraffairs.com

www.expertlaw.com/library/pubarticles/Real_Estate/evicted_tenant.htmlwww.nolo.com



31/71

Fair Credit Billing Act

The Fair Credit Billing Act (FCBA) was created to protect consumers from improper billing practices. It designates a fairsystem to which creditors must adhere when crediting payments and correcting mistakes. It ensures payments arecredited promptly, and provides protection to consumers in cases of defective goods, or services that were incomplete.It applies to open-end accounts like credit cards or department store cards. It does not cover items paid by fixedmonthly installments, such as personal loans or car loans.

According to the Fair Credit Billing Act of 1974, your rights include protection from billing errors resulting from: unauthorized charges;

charges that list the wrong date or amount; charges for items that you didnt accept or that werent delivered as agreed; mathematical errors; failure to promptly post payments, credits, etc.; failure to send bills to the current address (Consumers are responsible for providing address changes in writing,

at least 20 days before the billing period ends); charges for which you ask for an explanation, or written proof of purchase along with a claimed error or request

for clarification.

According to the FCBA of 1974, in order to preserve your rights, you must do the following: Write to the creditor at the address given for billing inquiries. Include your name, address, account number,

and a description of the billing error. Send the letter so that it reaches the creditor within 60 days of receiving the first bill that contained the error.

Send your letter by certified mail, return receipt requested to ensure that it was received. Include copies, notoriginals, of sales receipts or other documents to verify your claim.

The creditor must respond to your inquiry within 30 days, in writing, unless the problem has been resolved. The disputemust be resolved within two billing cycles after receiving your letter.

You will still need to make payments on the undisputed portion of your bill. The creditor may not take legal action to collect on the disputed amount during investigation. Your account cannot be closed or restricted, but the disputed amount may count against your available credit. The creditor must explain any corrections in writing. If crediting your account, the creditor is required to remove

all finance charges, late fees or other charges related to the error. If you owe a portion of the disputed amount, you are entitled to receive a written explanation. If the bill is correct, you must be notified promptly in writing about the amount that you owe and why. You will

owe the amount in dispute plus any charges that accrued while the amount was in dispute.

You may request copies of any documents that the creditor is using to prove its decision.

Any collector who does not follow proper procedures may not collect the amount in dispute, or the related financecharges (up to $50), even if the bill turns out to be correct.

This act covers billing errors only. It does not allow the consumer to dispute the qualityof the goods or services.These disputes can be handled directly with the credit card issuer if the purchase was made in your home state, orwithin 100 miles of your current billing address. You must have also made a good faith effort to resolve the issuewith the seller.

The FCBA also states that businesses offering open end credit must also: provide written notice that describes your right to dispute billing errors; provide a statement for each billing cycle in which you owe more than one dollar;

send your bill at least 14 days before the due date; credit all payments to your account on the date they are received; promptly credit or refund overpayments owed to your account;

You can sue a creditor if they violate the FCBA.


www.ftc.gov



32/71

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) was created to protect the consumer. It promotes accuracy, fairness, andprivacy of information regarding an individuals credit file. The FCRA provides guidelines for the Credit ReportingAgencies (CRAs) defining their obligations to report and maintain accurate information.

The Fair and Accurate Credit Transaction Act (FACTA or FACT Act) of 2003 amends the FCRA by adding provisionsto prevent identity theft, improve resolutions for consumer disputes, improve accuracy of consumer records, makeimprovement in the use of, and consumer access to credit information (www.ftc.gov).

Our credit reports are viewed not only when we attempt to obtain new credit, but also when we apply for insurance, andsometimes even employment. According to the FCRA, if your credit report is used to make a negative decision, you areentitled to an explanation in writing stating which CRA report was utilized. You have the right to then obtain a free creditreport, if you request the report within 60 days of being denied. You must be given the name, address, and phonenumber of the CRA where the report was obtained. In addition:

You have the right to request an investigation if you think information on your report is inaccurate. At your request,the CRA is required to investigate your claim within 30 days. If it is inaccurate, it must be removed or corrected. Ifthe dispute is not resolved, you have the right to add a statement to your file.

Consumers are also entitled to a free report every 12 months, and additionally, if one of the following applies:o You are unemployed and plan to seek employment within 60 dayso You are receiving public assistanceo You have reason to believe there is fraudulent activity on your report

You have the right to review your file and be given a list of anyone who has recently requested your file.

The CRA must remove or correct inaccurate or unverified information. The CRA is not required to remove accuratedata unless it is outdated.

If an item is in dispute with a creditor, the CRA must report the account information along with a notice of thedispute.

CRAs must not report negative information that is older than seven years (ten years for bankruptcies).

A CRA must not disclose information, without your written consent, to an employer or prospective employer.

You may sue a CRA if they violate any portion of the FCRA.

All Credit Repair companies are now regulated under the FCRA. It is illegal for them to make promises that theycan change your social security number to hide a negative credit background. Furthermore, a consumer can workdirectly with the CRA for resolution, free of charge, without outside assistance.

Additionally, the FACT Act requires the following:

Creditors must notify you prior to adding negative information to your credit file, reducing the number of inaccuraterecords going into the file.

Restricted access to private health information Allow consumers to place fraud alerts on their file. A one-call-for-all protection against identity theft by requiring the credit bureaus to share consumer calls.

Creditors must take extra precautions before extending credit to consumers with fraud alerts in their files. Merchants may only print the last 5 digits of a credit card on an electronic receipt.

Websites that can provide additional information:www.fair-credit-reporting.com/www.pueblo.gsa.gov/cic_text/money/fair-debt/fair-dbt.htmwww.ftc.gov

The websites listed are for informational purposes only. Debtscape Inc. does not endorse nor promote these companies. This information is provided

as a courtesy resource, and is not intended to replace consultation with an industry professional.


33/71

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) was created to provide theconsumer rights and privileges with regards to debt collectors.

According to the FDCPA, collection agencies may not:

Give misleading or false information about the debt to others; Call before 8am or after 9pm within the clients time zone; Interrupt the work flow at the clients place of employment; Make excessive phone calls as a method of harassment; Send a letter in a format that appears to be an official government document; Threaten to take legal action unless such action is imminent or underway; Imply that any physical harm may come to the client or the clients property; Deposit a post-dated check before the date on the check; Misrepresent themselves as a government agency or a law practice; Continue to harass the client after being notified in writing to stop. Refuse to identify themselves and their employer and relate the reason for the call.

Collection agents may:

Ask for personal information. However, the client does not have to reply. Offer partial payments or other incentives to motivate the client to pay.

File a claim against the estate of a deceased debtor. Ask if the client can be called at work. If the person answering the phone gives permission,

the agent may proceed and call the debtor at that number.


www.ftc.govwww.nolo.comwww.credit.about.com



34/71

Foreclosure

If you are facing a situation in which your mortgage payments are going to be late, contact your creditor immediately.They are more willing to work with you before there is a problem rather than after the problem has already occurred.

If you have already fallen behind, there are several short-term solutions that may be available to you.

Reinstatement occurs when you can afford to make a lump sum payment to bring your mortgage current by aspecific date.

Forbearance allows the homeowner to delay payments for a short period of time, with the understanding thatanother option will be used to bring the account current in the future.

A Repayment Plan may be established allowing you to add a portion of your past due amount to your currentpayments until you bring the account current.

Recasting is another solution that some lenders offer. This allows you to add the late payments to the back endof your mortgage.

If these options are not available to you, or are not applicable to your situation, you may need to look at long-term

solutions.

Mortgage Modification allows you to extend the length of your loan, or take other steps to reduce yourpayments.

Selling your home may be your best option. The lender may be willing to delay foreclosure in order to provideyou time to sell your home.

Deed in lieu of foreclosure is when you give back the property in return for debt forgiveness. The bankaccepts the deed, and does not pursue official foreclosure proceedings. The former homeowner may beresponsible for a deficiency balance. The lender may require that you attempt to sell the home prior toaccepting this arrangement. This option may not be available if there are other liens on the home.

For FHA loans, you may be able to apply for a one-time payment from the FHA Insurance Fund. You mayqualify if your mortgage is between four and twelve months past due. The funds must be repaid, usually whenyour mortgage is paid off or if you sell the property. HUD will ask you to sign a promissory note and place a lienon your home. The loan is interest free.

For VA loans, you can contact the VA Regional Loan Center at 1-800-827-1000 for financial assistance orcounseling.

HUD-approved counselors are available if you do not wish to contact your lender first. Call 1-800-569-4287 tofind an approved agency. They may be able to negotiate payment arrangements on your behalf with the lender.


www.hud.govwww.drfg.com

For approved HUD counseling offices:www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

For foreclosure laws in your state:www.drfg.com/info.php



35/71

Frugal Living

The word frugalis often viewed as a negative word. Consumers may think that if they are on abudget or trying to live more frugally, that this is somehow boring or restrictive. Well, that is true - itcan be! However, it is OUR attitude towards the topic that makes it positive or negative. It is our

job to learn to be content with what we have, and to understand that more stuff does not equalmore happiness. Living a simpler, more frugal lifestyle will ultimately help a consumer save more

money, identify the difference between necessities and desires, and realize long-term financialgoals. Regardless of economic status or financial wealth, a frugal lifestyle will also benefit societyas a whole. Reducing our consumption of natural resources will ensure that those resources areavailable for future generations.

Create a budget and stay focused. We must know how much money is coming in andhow much money is being paid out before we can accomplish financial goals.

Grocery shopping should be a planned event. Prepare a list, clip coupons, and be sureto sign up for any bonus card programs. Avoid impulse purchases at check-out.

Bring your lunch to work! The cost of constantly buying meals adds up!

Make a romantic dinner at home rather than dining out the internet is filled with recipesthat require no more than the ability to read and count! Your dinner will be a fraction ofthe cost, and the dining environment will be more private!

Reduce utility bills by paying more attention to consumption. Turn off lights when not inuse. Do not run water while brushing teeth or shaving. A little effort creates moremoney in your pocket.

Create your own crafts and gifts and cards for birthdays and holidays. We mustunderstand that just because something is purchased, it does not necessarily have morevalue than a hand-made gift. Visit your local craft store for more ideas.

Attend movies during the matinee hours when prices are lower.

Check your local newspaper for free weekend events.

Websites that can provide additional information:www.coolsavings.comwww.frugalvillage.com/www.frugalliving.about.com/www.frugalcorner.com/www.allthingsfrugal.com/www.frugalfamilynetwork.com/www.frugalhomemaker.com/



36/71

Garnishment

Once a creditor has exhausted all other avenues to collect a debt, wage garnishment is the final step. Once the creditorhas obtained a judgment from the courts, garnishing a consumers wages is a legal and equitable process. Thearrangements are made through the consumers employer, and the employer is responsible for withholding anddistributing the designated amount to repay the debt. Most garnishments require a court order; however, debts owed tothe federal government can be repaid via administrative garnishments for non-tax debts, or by levies for IRS and taxcollection.

The Consumer Credit Protection Act (CCPA) limits the amount of earnings that can be garnished, and protects anemployee from being fired if pay is garnished for only one debt. The law designates earnings as wages, salaries,bonuses, commissions, and distributions from a retirement fund or pension. Tips are not considered earnings for thepurposes of wage garnishment. The law also allows for disability and social security income to be garnished, if the debtis owed to the Federal Government.

The amount of pay subject to garnishment is called disposable earnings. This is the amount of earnings remainingafter deductions are made for taxes, Medicare and Social Security. This does notinclude deductions for life/healthinsurance, union dues, or retirement funds.

The law determines the amount that may be garnished, regardless of the number of garnishment orders the employerreceives. A wage earner must be left with at least $154.50 per week. This amount is equal to the Federal minimumwage ($5.15) times thirty hours. Consumers who earn less than this are exempt from garnishment.

Generally, consumers have one garnishment at a time deducted from their paycheck. However, the judge decides howmuch a creditor is allowed to garnish, up to the maximum allowed by law. If the maximum is not utilized, then there isroom for another creditor to garnish.

For ordinary garnishments, the government specifies that a person must be left with at least $154.50 per week. If awage earner earns at least $206.00 per week, the amount garnished will be up to 25% of the total earnings. (If the wageearner earns more than $154.50 weekly, but less than $206.00 weekly, the garnishment can equal the differencebetween the two. Example: $203.00 minus $154.50 equals $48.50)

For example, if an employees paycheck shows $400.00 per week for gross pay and has deductions for federal andstate income tax, Medicare tax, and Social Security tax equal to $100.00, disposable earnings would equal $300.00.25% of $300.00 is equal to $75.00. The debt would be repaid at $75.00 per week, leaving the wage earner with$225.00 per week.

For child support and alimony, the law is different. If a worker is supporting only one ex-spouse or child, the lawallows up to 60% of a workers disposable earnings to be garnished. If the worker is supporting more than one ex-spouse or child, the law allows up to 50% of the earnings to be garnished. An additional 5% may be garnished forsupport that is in arrears.

For debts owed to the Federal Government, collection agencies acting on their behalf are authorized to garnish 15%of earnings for debts defaulted to the Federal Government.

For defaulted student loans, the Department of Education guaranty agencies can garnish up to 10%.

Check your state garnishment laws to see if they vary from Federal laws. If there is a difference, the lesseramount will be applied. These laws change frequently.


www.carreonandassociates.com/articles/collectionlaws.htmwww.carreonandassociates.com/articles/garnishments.htmwww.overdue.com/Garnishment_Statutes/



37/71

Holiday Saving Tips

The best way to prepare for the holidays is to make an early commitment to remaining organizedand focused throughout the year. Most people will leave shopping to the last minute, battling thecrowds of disorganized, panicked bargain hunters at the mall all the while promising that NEXTyear will be different. By planning ahead, you can avoid that stress and strain, and even have extragifts handy, just in case.

Create a budget. Stay within your limits! Figure out how much you have to spend and adjustgift selection acco

Documents

Resource Guide Financially