COMPLETE GUIDE TO

CREDIT AND CREDIT REPAIR

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PRE-APPROVED CREDIT CARDS

 

Pre-approved cards are the result of one bank who now has you as a customer, and sells

your name to another bank or a series of banks so they can offer you their credit cards.

Here's how it usually works:

Many smaller banks want to be credit card issuers but, because of limited facilities for

credit card processing, it is sometimes difficult for a smaller bank to cash in on the credit

card boom. What's been developed is an interconnect system where large banks will

process credit card applications and issue the credit cards for the little banks.

For example, let's say that Mini Savings & Loan wants to get in on the Plastic Pursuit.

However, Mini does not have the facility or the staff to process credit card applications

and issue credit cards. What Mini has to do is contract the service with Maxi Bank.

Since Maxi has several banks that they provide this service to, Mini Savings & Loan is just

a welcome addition to their roster of client banks for whom they process and issue credit

cards.

When you apply for a credit card at Mini Savings & Loan, your application is actually

forwarded to Maxim Bank who runs a credit check and, granting you have good credit,

issues you your choice of VISA or MasterCard with Mini Savings & Loan's name on it.

However, since Maxi is the issuing bank and since it has your credit on their file, they can

very well send you an application for their own credit card. They can also sell your name

to their other client-banks who can offer you their credit cards on a pre-approved basis.

Another source that sells your name is the credit bureau. Because they can program their

computers to search for names of existing credit card holders with clean and healthy files,

they can provide issuing banks with a premium mailing list of people to whom the banks

can send pre-approved credit card applications.

 

Don't Use a Credit Repair Clinic

 

Here's what credit repair clinics claim to be able to do for you:

 

Remove incorrect information from your credit file. You can do that yourself under the

Fair Credit Reporting Act.

Remove correct, but negative, information from your credit file. Negative items in your

credit file can legally stay there for seven or ten years, as long as they are correct. No one

can wave a wand and make them go away. One tactic of credit repair services is to try and

take advantage of the law requiring credit bureaus to verify information if the customer

disputes it. Credit repair clinics do this by challenging every item in a credit file--negative,

positive or neutral--with the hope of overwhelming the credit bureau into removing

information without verifying it. Credit bureaus are aware of this tactic and often dismiss

these challenges on the ground that they are frivolous, a right credit bureaus have under

the Fair Credit Reporting Act. You are better off getting your file and selectively

challenging the outdated, incorrect and ambiguous items.

Even if the credit bureau removes information that a credit bureau had the right to include

in your file, it's no doubt only a temporary removal. Most correct information reappears

after a 30-60 days when the creditor that first reported the information to the credit

bureaus re-reports it.

Get outstanding debt balances and court judgments removed from your credit file. Credit

repair clinics often advise debtors to pay outstanding debts if the creditor agrees to

remove the negative information from your credit file. This is certainly a negotiation tactic

you want to consider, but you don't need to pay a credit repair clinic for this advice.

Get you a major credit card. Credit repair clinics can give you a list of banks that offer

secured credit cards. While this information is helpful in rebuilding credit, it's not worth

hundreds or thousands of dollars--you can find it out for little or nothing.

Many states regulate for-profit credit repair clinics, or even prohibit them from carrying on

business. Some dubious credit repair clinics have tried to get around these regulations by

setting themselves up as nonprofits, but still take your money and provide poor results.

Before using any organization that claims to be a nonprofit, carefully check the company's

fees, claims of what it can do and its reputation. Call the Better Business Bureau or ask

for the names of satisfied customers.

 

Here's what credit repair clinics claim to be able to do for you:

 

Remove incorrect information from your credit file. You can do that yourself under the

Fair Credit Reporting Act.

Remove correct, but negative, information from your credit file. Negative items in your

credit file can legally stay there for seven or ten years, as long as they are correct. No one

can wave a wand and make them go away. One tactic of credit repair services is to try and

take advantage of the law requiring credit bureaus to verify information if the customer

disputes it. Credit repair clinics do this by challenging every item in a credit file--negative,

positive or neutral--with the hope of overwhelming the credit bureau into removing

information without verifying it. Credit bureaus are aware of this tactic and often dismiss

these challenges on the ground that they are frivolous, a right credit bureaus have under

the Fair Credit Reporting Act. You are better off getting your file and selectively

challenging the outdated, incorrect and ambiguous items.

Even if the credit bureau removes information that a credit bureau had the right to include

in your file, it's no doubt only a temporary removal. Most correct information reappears

after a 30-60 days when the creditor that first reported the information to the credit

bureaus re-reports it.

Get outstanding debt balances and court judgments removed from your credit file. Credit

repair clinics often advise debtors to pay outstanding debts if the creditor agrees to

remove the negative information from your credit file. This is certainly a negotiation tactic

you want to consider, but you don't need to pay a credit repair clinic for this advice.

Get you a major credit card. Credit repair clinics can give you a list of banks that offer

secured credit cards. While this information is helpful in rebuilding credit, it's not worth

hundreds or thousands of dollars--you can find it out for little or nothing.

Many states regulate for-profit credit repair clinics, or even prohibit them from carrying on

business. Some dubious credit repair clinics have tried to get around these regulations by

setting themselves up as nonprofits, but still take your money and provide poor results.

Before using any organization that claims to be a nonprofit, carefully check the company's

fees, claims of what it can do and its reputation. Call the Better Business Bureau or ask

for the names of satisfied customers.

 

 

How To Dispute Credit Report Errors

 

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Facts For Consumers, How To Dispute Credit Report Errors

Federal Trade Commission

 

Your credit report contains important information about you. It

generally includes facts about where you work and live and your

bill-paying habits. It also may state whether you've been sued or

arrested or have filed for bankruptcy. Companies called credit

reporting agencies or credit bureaus compile and sell your credit report

to businesses, which use it to evaluate your applications for credit,

insurance, employment, and other purposes allowed by federal law.

Therefore, it is important that your credit report contain complete and

accurate information.

Some financial advisors suggest that you review your report every

three or four years to check for inaccuracies or omissions. You also

may want to check your report sooner if you are considering a major

purchase, such as buying a home.

This brochure explains how to obtain a copy of your credit report

and how to dispute errors. It also provides resources for additional

credit information.

 

HOW TO OBTAIN YOUR CREDIT REPORT

If you have been denied credit, insurance, or employment because of

information that was supplied by a credit reporting agency, the Fair

Credit Reporting Act requires the report recipient to give you the name

and address of the credit reporting agency that supplied the

information. If you contact that agency to learn what is in your file

within 30 days of receiving the denial notice, your report is free.

If you simply want a copy of your report, call the credit reporting

agencies listed in the Yellow Pages under "credit' or "credit rating and

reporting." Call each reporting agency listed since more than one

agency may have a file on you, some with different information. You may

have to pay a reasonable charge for each report.

 

HOW TO CORRECT ERRORS

You have the right, under the Fair Credit Reporting Act, to dispute

the completeness and accuracy of information in your credit file. When

a credit reporting agency receives a dispute, it must reinvestigate and

record the current status of the disputed items within a "reasonable

period of time," unless it believes the dispute is "frivolous or

irrelevant." If the credit reporting agency cannot verify a disputed

item, it must delete it. If your report contains erroneous information,

the credit reporting agency must correct it. If an item is incomplete,

the credit reporting agency must complete it. For example, if your file

showed that you were late in making payments on accounts, but failed to

show that you were no longer delinquent, the credit reporting agency

must show that your payments are now current. Or if your file showed an

account that belongs only to another person, the credit reporting agency

would have to delete it. Also, at your request, the credit reporting

agency must send a notice of correction to any report recipient who has

checked your file in the past six months.

If a reinvestigation does not resolve your dispute, the Fair Credit

Reporting Act permits you to file a statement of up to 100 words to

explain your side of the story. The credit reporting agency must

include this explanation in your report each time it sends it out.

Credit reporting agency employees often are available to help you word

your statement.

Be aware, however, that when negative information in your report is

accurate, only the passage of time can assure its removal. Credit

reporting agencies are permitted by law to report bankruptcies for 10

years and other negative information for 7 years. Also, any negative

information may be reported indefinitely for use in the evaluation of

your application for:

- $50,000 or more in credit;

- a life insurance policy with a face amount of $50,000 or more; or

- consideration for a job paying $20,000 or more.

 

HOW TO REGISTER A DISPUTE

You must make your dispute directly to the credit reporting agency.

Although the Fair Credit Reporting Act does not require it, the Federal

Trade Commission staff recommends that you submit your dispute in

writing, along with copies (NOT originals) of documents that support

your position.

In addition to providing your complete name and address, your

letter should clearly identify each item in your report you dispute,

explain why you dispute the information, state the facts, and request

deletion or correction. You may want to enclose a copy of your report

with the items in question circled.

Send your dispute by certified mail, return receipt requested, and

keep copies of your dispute letter and enclosures. By doing so, you can

document what the credit reporting agency received.

 

ADDING ACCOUNTS TO YOUR FILE

Your credit file may not reflect all of your credit accounts.

Although most national department store and all-purpose bank credit card

accounts will be included in your file, not all creditors supply

information to credit reporting agencies. Those not reporting to credit

reporting agencies include, for example, some travel, entertainment, and

gasoline card companies, local retailers, and credit unions.

If you have been told that you were denied credit because of an

"insufficient credit file" or "no credit file" and you have accounts

with creditors that do not appear in your credit file, you can ask the

credit reporting agency to add this information to future reports.

Although they are not required to do so, many credit reporting agencies

will add other verifiable accounts for a fee.

 

Solving Credit Problems

 

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Facts For Consumers, Solving Credit Problems

Federal Trade Commission * May 1992

(#F002472)

[Graphic Omitted]

Solving Credit

Problems

fast facts

 

* Your credit report records your payments on credit cards, installing

loans, and other credit accounts. It helps creditors predict whether

you are likely to be a good credit risk.

* Be wary of ads that promise you "instant credit" or "a major credit

card regardless of your lack of credit history or past credit record."

* If you are rejected for credit, find out why. You can get a free copy

of your report if you request it from the credit bureau that provided

it, within 30 days of being turned down.

* Check to see whether the information in your credit report is accurate

and complete. You are entitled by law to correct inaccurate

information that appears in your credit bureau file.

Bureau of Consumer Protection

Office of Consumer & Business Education

(202) 326-3650

 

If you are having problems getting credit or paying your monthly

bills, you may be tempted to turn to businesses that advertise quick and

easy solutions to credit problems. But do not be misled. There are no

instant solutions. Although some credit counseling businesses "guarantee

results or your money back," you may find that there are hidden strings

attached or that the company is gone when you want your money back.

There are steps you can take to help solve your credit problems.

However, solving them takes time, patience, and some understanding of

the law. This brochure may help you. It explains why your credit history

is important, how to build a credit history and establish credit, and

what can be done to improve a bad credit history. It also suggests ways

to help deal with debts you may have, possibly by using a nonprofit

Consumer Credit Counseling Service.

 

Why Your Credit History is Important

 

Although creditors usually consider a number of factors in deciding

whether to grant credit, most creditors rely heavily on your credit

history. To learn how you have handled credit in the past, most

creditors obtain a report from your local credit bureau. Credit bureaus

gather and sell credit information about consumers and are a principal

source of information about your credit history. Your credit bureau

report is based on information supplied over time by your creditors. It

also provides information on where you live and work and may note other

matters of public record such as judgments or bankruptcies. Your report

records payments you have made on credit cards, installment loans, and

other credit accounts and helps creditors predict whether you are likely

to be a good credit risk. A history of timely credit payments helps you

get additional credit.

Some creditors are reluctant to grant credit to consumers-who have

not established a "track record" with other creditors first. In

addition, many creditors will not extend credit to consumers with a

history of delinquent payments, repossession, judgments, or bankruptcy.

If you are in either situation, be wary of ads that promise you "instant

credit" or "a major credit card regardless of your lack of credit

history or your past credit record." The fact is that all legitimate

creditors want to know whether you are likely to be a good credit risk.

Whether you get credit will depend on whether your qualifications meet

the creditor's criteria. No one can guarantee you credit in advance.

 

How to Build A Credit History and Establish Credit

 

Building a good credit history is important. If you have no

reported credit history, it may take time to establish your first credit

account. This problem affects young people just beginning careers as

well as older people who have never used credit. It also affects

divorced or widowed women who shared credit accounts that were reported

only in the husband's name. If you do not know what is in your credit

file, check with your local credit bureaus. Most cities have two or

three credit bureaus, which are listed under "Credit" or "Credit

Reporting Agencies" in the Yellow Pages. For a small fee, they will tell

you what information is in your file and may give you a copy of your

credit report.

If you have had credit before under a different name or in a

different location and it is not reported in your file, ask the credit

bureau to include it. If you shared accounts with a former spouse, ask

the credit bureau to list these accounts under your name as well.

Although credit bureaus are not required to add new accounts to your

file, many will do so for a small fee. Finally, if you presently share

in the use of a credit account with your spouse, ask the creditor to

report it under both names.

Creditors are not required to report any account history

information to credit bureaus. If a creditor does report on an account,

however, and if both spouses are permitted to use the account or are

contractually liable for its repayment, under the Equal Credit

Opportunity Act you can require the creditor to report the information

under both names. When contacting your creditor or credit bureau, do so

in writing and include relevant information, such as account numbers, to

help speed the process. As with all important business communications,

keep a copy of what you send.

If you do not have a credit history, you should begin to build one.

If you have a steady income and have lived in the same area for at least

a year, try applying for credit with a local business, such as a

department store. Or you might borrow a small amount from your credit

union or the bank where you have checking and savings accounts. A local

bank or department store may approve your credit application even if you

do not meet the standards of larger creditors. Before you apply for

credit, ask whether the creditor reports credit history information to

credit bureaus serving your area. Most creditors do, but some do not. If

possible, you should try to get credit that will be reported. This

builds your credit history.

If you are rejected for credit, find out why. There may be reasons

other than lack of credit history. Your income may not meet the

creditor's minimum requirement or you may not have worked at your

current job long enough. Time may resolve such problems. You could wait

for a salary increase and then reapply, or simply apply to a different

creditor. However, it is best to wait at least 6 months before making

each new application. Credit bureaus record each inquiry about you. Some

creditors may deny your application if they think you are trying to open

too many new accounts too quickly.

If you still cannot get credit, you may wish to ask a person with

an established credit history to act as your co-signer. Because a

co-signer promises to pay if you don't, this can substantially improve

your chances of getting credit. Once you have repaid the debt, try again

to get credit on your own.

 

What Can Be Done to Improve a Bad Credit Report

 

You are entitled by law to correct any inaccurate information that

appears in your credit bureau file. If a creditor rejects your

application because of negative information in your credit bureau

report, it must identify the credit bureau involved. At your request,

the credit bureau must disclose the contents of your credit file. If you

act within 30 days of being turned down, there is no charge for this

service.

Check to see whether the information in your credit report is

accurate and complete. You have the fight, under the Fair Credit

Reporting Act, to dispute the completeness or accuracy of any

information in your report. When you do so, it helps to tell the credit

bureau, in writing, why you think the information is not correct. Unless

your dispute is frivolous or irrelevant, the credit bureau then must

reinvestigate the matter. The credit bureau must correct any information

that it finds is not reported accurately. Information that cannot be

verified must be deleted. If you disagree with the results of the credit

bureau's reinvestigation, you may file a brief dispute statement

explaining your side of the story. At your request, the credit bureau

will note your dispute in future credit bureau reports.

Be aware that when negative information in your report is accurate,

only the passage of time can assure its removal. Credit bureaus are

permitted by law to report bankruptcies for 10 years and other negative

information for 7 years. There is nothing that you (or anyone else) can

do to require a credit bureau to remove accurate information from your

credit file until the reporting period has expired. Don't be misled by

ads aimed at people with bad credit histories, judgments, or

bankruptcies. Promises to "repair" or "clean up" a bad credit history

can almost never be kept.

 

How to Deal with Your Debts

 

A sudden illness or the loss of your job may make it impossible for

you to pay your bills on time. Whatever your situation, if you find that

you cannot make your payments, contact your creditors at once. Try to

work out a modified payment plan with your creditors that reduces your

payments to a more manageable level. If you have paid promptly in the

past, they may be willing to work with you. Do not wait until your

account is turned over to a debt collector. At that point, the creditor

has given up on you.

Automobile loans present special problems. Most automobile

financing agreements permit your creditor to repossess your car any time

that you arc in default on your payments. No advance notice is required.

If your car is repossessed you may have to pay the full balance due on

the loan, as well as towing and storage costs, to get it back. Do not

wait until you are in default Try to solve the problem with your

creditor when you realize you will not be able to meet your payments. It

may be better to sell the car yourself and pay off your debt than to

incur the added costs of repossession.

 

How to Evaluate Credit Repair Companies

 

If you are having trouble paying your bills, you may be tempted to

turn to a company that claims to offer assistance in solving debt

problems. Such businesses may offer debt consolidation loans, debt

counseling, or debt reorganization plans that are "guaranteed" to stop

creditors' collection efforts. Before signing up with such a business,

investigate it thoroughly. Be sure you understand what services the

business provides and what they will cost you. Do not rely on oral

promises that do not appear in your contract. Also, check with the

Better Business Bureau and your local consumer protection office. They

may be able to tell you whether other consumers have registered

complains about the business.

Consumers who turn to such businesses for help sometimes encounter

additional problems. For example, debt consolidation or other large

short-term loans may have high hidden costs and may require your home as

collateral. An unscrupulous company may misrepresent the terms of such

loan agreements; if so, you could end up losing your home.

Businesses offering debt counseling or reorganization may charge

substantial fees or a percentage of your debts, but fail to follow

through on the services they sell. Some may do little more than refer

indebted consumers to a bankruptcy lawyer, who charges an additional

fee. Businesses advertising voluntary debt reorganization plans or

"Chapter 13" relief may fail to explain that Chapter 13 debt adjustment

actually is a form of bankruptcy. To qualify for it, you must have a

source of regular income and a plan for repaying your creditors that

meets the approval of the bankruptcy court. Businesses that sell

bankruptcy-related services may not tell you all that is involved or

assist you through what can be a complex and lengthy legal process. Debt

problems can be distressing, but be careful when selecting a solution.

Some "solutions" may only add to your problems.

 

Where to Find Low-Cost Help

 

If you need help in dealing with your debts, you may want to

contact a Consumer Credit Counseling Service (CCCS). This is a

non-profit organization with more than 850 offices located in 50 states.

CCCS counselors will try to arrange a repayment plan that is acceptable

to you and your creditors. They will also help you set up a realistic

budget and plan future expenses. These services are offered at little or

no charge to you. You can find the CCCS office nearest you by checking

the White Pages of your telephone directory or by calling from a

touch-tone phone 1-800-388-2227 to get the telephone number. However, if

you have other questions, contact:

National Foundation for Consumer Credit, Inc.

8611 Second Avenue, Suite 100

Silver Spring, Maryland 20910

(301) 589-5600

In addition, non-profit counseling programs are sometimes operated

by universities, military bases, credit unions, and housing authorities.

They are likely to charge little or nothing for their assistance. Or,

you can check with your local bank or consumer protection office to see

if it has a listing of reputable, low-cost financial counseling

services.

 

Where to Find More Information

 

The Federal Trade Commission enforces a number of federal laws

involving consumer credit, including the Equal Credit Opportunity Act,

the Fair Credit Reporting Act, the Truth in Lending Act, the Fair Credit

Billing Act, and the Fair Debt Collection Practices Act. It also

provides free brochures explaining these laws. For these or related

publications, such as Building a Better Credit Record, Women and Credit

Histories, and Credit Billing Blues, write to: Public Reference, Federal

Trade Commission, Washington, D.C. 20580.

Although the Commission cannot solve individual problems for

consumers, it can act when it sees a pattern of possible law violations

develop. If you have a complaint that may involve a violation of

consumer protection law, write to: Correspondence B ranch, Federal Trade

Commission, Washington, D.C. 20580.

 

What's the first step in rebuilding credit?

 

To avoid getting into financial problems in the future, you must understand your flow of

income and expenses. Some people call this making a budget. Others find the term budget

too restrictive and use the term spending plan. Whatever you call it, spend at least two

months writing down every expenditure. At each month's end, compare your total

expenses with your income. If you're overspending, you have to cut back or find more

income. As best you can, plan how you'll spend your money each month. If you have

trouble putting together your own budget, consider getting help from a nonprofit group

such as Consumer Credit Counseling Service, which provides budgeting help for free or at

a low cost.

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Okay, I've made my budget. What do I do next?

Now it's time to clean up your credit report. Credit reports are compiled by credit

bureaus--private, for-profit companies that gather information about your credit history

and sell it to banks, mortgage lenders, credit unions, credit card companies, department

stores, insurance companies, landlords and even a few employers.

Credit bureaus get most of their data from creditors. They also search court records for

lawsuits, judgments and bankruptcy filings. And they go through county records to find

recorded liens (legal claims).

To create a credit file for a given person, a credit bureau searches its computer files until it

finds entries that match the name, Social Security number and any other available

identifying information. All matches are gathered together to make the report.

Non-credit data made part of a credit report usually includes names you previously went

by, past and present addresses, Social Security number, employment history, marriages

and divorces. Your credit history includes the names of your creditors, type and number of

each account, when each account was opened, your payment history for the previous 24-

36 months, your credit limit or the original amount of a loan, and your current balance.

The report will show if an account has been turned over to a collection agency or is in

dispute.

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How can I get a copy of my credit report?

There are three major credit bureaus--Equifax, Trans Union and Experian (formerly

known as TRW). The federal Fair Credit Reporting Act (FCRA) entitles you to a copy of

your credit report, and you can get one for free if you've been denied credit because of

information in your credit report and you request a copy within 60 days of being denied

credit.

If you weren't denied credit, you'll have to pay about $8 to obtain a report from Equifax

(P.O. Box 740241, Atlanta, GA 30374), Trans Union (P.O. Box 390, Springfield, PA

19064) or Experian (P.O. Box 949, Allen, TX 75002-0949).

Send the following information:

 

 

•your full name (including generations such as Jr., Sr., III) •your birth date •your Social

Security number •your spouse's name (if applicable) •your telephone number, and •your

current address and addresses for the previous five years.

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What should I do if I find mistakes in my report?

As you read through your report, make a list of everything out-of-date:

 

 

•Lawsuits, paid tax liens, accounts sent out for collection, criminal records, late payments

and any other adverse information older than seven years. •Bankruptcies older than ten

years from the discharge or dismissal. (Credit bureaus often list Chapter 13 bankruptcies

for only seven years, but they can stay for ten.) •Credit inquiries (requests by companies

for a copy of your report) older than two years.

 

 

Next, look for incorrect or misleading information, such as:

 

 

•incorrect or incomplete name, address, phone number, Social Security number or

employment information •bankruptcies not identified by their specific chapter number

•accounts not yours or lawsuits in which you were not involved •incorrect account

histories--such as late payments when you paid on time •closed accounts listed as open--it

may look as if you have too much open credit, and •any account you closed that doesn't

say "closed by consumer."

 

 

After reviewing your report, complete the "request for reinvestigation" form the credit

bureau sent you or send a letter listing each incorrect item and explain exactly what is

wrong. Once the credit bureau receives your request, it must investigate the items you

dispute and contact you within 30 days. If you don't hear back within 30 days, send a

follow-up letter. If you let them know that you're trying to obtain a mortgage or car loan,

they can do a rush investigation.

If you are right, or if the creditor who provided the information can no longer verify it, the

credit bureau must remove the information from your report. Often credit bureaus will

remove an item on request without an investigation if rechecking the item is more bother

than it's worth.

If the credit bureau insists that the information is correct, call the bureau to discuss the

problem:

 

 

•Experian: 800-392-1122 •Trans Union: 800-851-2674 •Equifax: 800-685-1111

 

 

If you don't get anywhere with the credit bureau, directly contact the creditor and ask that

the information be removed. Write to the customer service department, vice president of

marketing and president or CEO. If the information was reported by a collection agency,

send the agency a copy of your letter, too.

If you feel a credit bureau is wrongfully including information in your report, or you want

to explain a particular entry, you have the right to put a 100-word statement in your

report. The credit bureau must give a copy of your statement--or a summary--to anyone

who requests your report. Be clear and concise; use the fewest words possible.

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What else can I do to rebuild my credit?

After you've cleaned up your credit report, the key to rebuilding credit is to get positive

information into your record. Here are two suggestions:

 

 

•If your credit report is missing accounts you pay on time, send the credit bureaus a recent

account statement and copies of canceled checks showing your payment history. Ask that

these be added to your report. The credit bureau doesn't have to, but often will. •Creditors

like to see evidence of stability, so if any of the following information is not in your report,

send it to the bureaus and ask that it be added: your current employment, your previous

employment (especially if you've been at your current job fewer than two years), your

current residence, your telephone number (especially if it's unlisted), your date of birth and

your checking account number. Again, the credit bureau doesn't have to add these, but

often will.

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I've been told that I need to use credit to rebuild my credit. Is this true?

Yes. The one type of positive information creditors like to see in credit reports is credit

payment history. If you have a credit card, use it every month. (Make small purchases and

pay them off to avoid interest charges.) If you don't have a credit card, apply for one. If

your application is rejected, try to find a cosigner or apply for a secured card--where you

deposit some money into a savings account and then get a credit card with a line of credit

around the amount you deposited.

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How long does it take to rebuild credit?

If you follow the steps outlined above, it will take about two years to rebuild your credit

so that you won't be turned down for a major credit card or loan. After around four years,

you may be able to qualify for a mortgage.

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More Information About Rebuilding Your Credit

The Federal Trade Commission, 6th & Pennsylvania Ave., NW, Washington, DC 20850,

202-326-2222, http://www.ftc.gov, publishes free pamphlets on debts and credit,

including Building a Better Credit Record, Cosigning a Loan, Fair Credit Reporting and

Fix Your Own Credit Problems and Save Money.

The Federal Deposit Insurance Corporation, 550 17th St., NW, Washington, DC 20429,

202-393-8400, http://www.fdic.gov, publishes free pamphlets about credit, including Fair

Credit Reporting Act.

Consumer Credit Counseling Service has more than 1,100 offices, and is located in every

state. Look in the phone book to find the one nearest you or contact the main office at

8611 2nd Avenue, Suite 100, Silver Spring, MD 20910, (800) 388-2227.

 

Obtaining a Mortgage if You've Had Poor Credit

 

Copyright (c) 1996 Nolo Press

------------------------------------------------------------------------

For many years, conventional mortgage lenders wrote only "A" loans. An "A" loan was

available to a person with flawless credit--someone who had paid every personal loan,

student loan, credit card bill and existing mortgage payment on time. Occasionally, a

person with a minor credit blip, such as a one-time late payment on an otherwise perfectly-

paid loan, would still qualify for an "A" loan. "A" loans typically require as little as 5% to

10% down and charge the most favorable interest rate. Anyone who didn't qualify for an

"A" loan had only two choices: forego buying a home for several years (until all the

negative marks came off the credit report, or borrow from a lender who required a huge

down payment (35% or more) and charged near-credit-card interest rates.

Many mortgage lenders now write "B" and "C" loans for people with somewhat marred

credit histories. ("D" loans, which require a very large down payment and charge very high

interest rates, are still written for people with very bad credit histories.) The following

describes "B," "C" and "D" loans:

 

 

•"B" loans. Some lenders require clean credit for the previous 12 months but allow a few

missed payments before that. Others permit one or two late mortgage payments, one late

personal or student loan payment and few late credit card payments during the previous

year. (Late payments cannot be more than 60 days late.) "B" loans usually require 20% to

25% down; interest rates are usually one or two percentage points higher than "A" loans.

•"C" loans. Some lenders require clean credit for the previous 12 months but allow a

serious credit problem, such as a bankruptcy or foreclosure, several years before. Others

permit three or four late mortgage payments, five or six late loan or credit card payments

or late payments more than 60 days past due during the previous year. "C" loans usually

require 20% to 35% down; interest rates are usually one or three percentage points higher

than "A" loans.

•"D" loans. "D" loans are available to people with the worst credit histories--bankruptcy

or foreclosure in the past year, or habitual late payments on loans and bills. "D" loans

usually require 35% to 60% down; interest rates are usually at least 100% higher than

what they are for "A" loans.

 

Limit the Number of Credit Cards You Carry

 

Once you succeed in getting a credit card, you might be hungry to apply for many more

cards. Not so fast. Having too much credit may have contributed your debt problems in

the first place. Ideally, you should carry one or two bank credit cards, maybe one

department store card and one gasoline card. Your inclination may be to charge everything

on your bankcard and not bother using a department store or gasoline card. When

creditors look in your credit file, however, they want to see that you can handle more than

one credit account at a time. You don't need to build up interest charges on these cards,

but use them and pay the bill in full.

Creditors frown on applicants who have a lot of open credit. So keeping many cards may

mean that you'll be turned down for other credit--perhaps credit you really need. And if

your credit applications are turned down, your file will contain inquiries from the

companies that rejected you. Your credit file will look like you were desperately trying to

get credit, something creditors never like to see.

 

Credit Bureau Myths

by Horizon Unlimited Group's Insider Reports

 

------------------------------------------------------------------------

According to Consumer Reports magazine, 48% of consumers have errors in their credit

files, many severe enough to result in credit denial!

Unfortunately, widely held credit bureau myths derail most consumers from ever even

trying to set their record straight. (Much less doing so correctly!)

 

------------------------------------------------------------------------

 

Myth: The information on a credit report cannot be changed.

Fact: Exactly the opposite is true. The Fair Credit Reporting Act requires that items be

removed if they are not fully 100% accurate OR can not be verified within 30 days. Also,

anything a creditor is responsible for reporting and confirming, a creditor can change.

 

------------------------------------------------------------------------

 

Myth: Requests (inquiries) for credit reports can't hurt them.

Fact: At the end of each report will be a log of inquiries. An inquiry notation is made each

time someone requests a copy of your credit file from that credit bureau. Any company

that receives a copy of your credit profile will be listed under this inquiry section of your

report.

Lenders don't like to see a lot of inquiries on a credit report. Excessive inquiries can result

in a credit denial as easily as bad credit. But, not all inquires are viewed negatively. Your

personal requests (inquiries) for a copy of your own credit report do not count against

you.

 

------------------------------------------------------------------------

 

Myth: When I pay off a delinquent account such as a charge-off or collection account, it

will stop hurting my credit, because it will then be shown as "paid."

Fact: As hard as it might be to believe, sometimes paying off a debt can actually hurt you.

This is one of those occasions. These type of collection accounts are allowed to stay on

your credit for a "maximum" of seven years. See Old Delinquent Accounts for warning

and explanation of how you can unwittingly restart this clock.

However, this does not mean that you never pay these debts. While discussing negotiating

with creditors covered in Chapter 4, you will read how to include in your negotiated

settlement a provision for how it is to be reported. To not do so can severely hurt your

chances of restoring your good credit.

 

------------------------------------------------------------------------

 

Myth: Credit reporting agencies are empowered with governmental authority.

Fact: Absolutely Not! Rather, they must adhere to the government authorities and laws

overseeing their operations. Credit bureaus are like any other business. They buy and sell

products and services to turn a profit. No special authority exists.

 

------------------------------------------------------------------------

 

Myth: Bankruptcy is a "Fresh Start."

Fact: Unfortunately, many attorneys don't clearly explain the devastating effects to one's

credit when filing bankruptcy. This goes for all types of bankruptcy including Chapter 13,

wage earner.

Bankruptcy is not a clean slate. Every account included in the bankruptcy will be so noted

in your credit file. Additionally, there will be a court record generated that will also be

added. Avoid bankruptcy if at all possible. The time table and the odds of completing

credit restoration are greatly extended due to the number of negative entries that are

associated with such filings.

 

------------------------------------------------------------------------

 

Myth: Some types of credit information (such as bankruptcies, judgments and

foreclosures) are impossible to remove.

Fact: Although it is true that some types of information can be more difficult than others

to remove, each of these negative entries have been removed thousands of times, using a

multitude of creative methods.

 

------------------------------------------------------------------------

 

Myth: Credit repair is too complicated to do myself. I would have to hire an attorney.

Fact: In some cases involving a stubborn situation, an attorney can be of great assistance.

An attorney can also help with clarifying the finer points of your state's laws. However,

you can accomplish most if not all of the legal and negotiation-based methods in this

report yourself by becoming familiar with your federally given rights and how to enforce

them, as well as other creative methods employed by consumers.

 

------------------------------------------------------------------------

 

Myth: It is illegal to have truthful information removed from your credit report.

Fact: Congress has already set the precedent by making special provisions for the removal

of correct information from individuals' credit files by fulfilling certain criteria. Congress

realizes that dangling that carrot in front of college students encourages repayment of

defaulted student loans. It should come as no surprise that creditors in other financial

markets are hip to this. Let's face it; congress had to get the idea from somewhere. Right?

If you need more proof, read section 609(c)(2)(E) of the NEW Fair Credit Reporting Act

that President Clinton signed in September of '96.

"...a consumer reporting agency is not required to remove accurate derogatory

information from a consumer's file, unless the information is outdated under section 605 or

cannot be verified."

Notice the wording above, "is not required to remove." It is very interesting that the law

does not say that accurate information "can not" be removed, but only that the credit

bureau is not required to. Now, there is law that says a creditor can not knowingly add

wrong information to someone's file, but the subject of removing accurate information is

mysteriously avoided. The truth is the FTC and the bureaus themselves spend a lot of

money trying to convince consumers otherwise. Why? Lobbyists and money of course! It

makes more work for the credit bureaus, thus increasing their labor costs. Bureaus save

millions of dollars a year by convincing consumers that the consumer is virtually

powerless. But congress worded things to leave the door open, and in at least one case

drafted law allowing for it, specifically.

Fortunately, creditors make their profits by collecting from their customers, not reporting

negative credit information. Many creditors though, have an agreement with the credit

bureaus that they will not allow a negative listing to be deleted upon settlement. Larger

creditors, such as huge credit card companies or banks will require more pressure before

they will agree to delete a negative listing, but many will give in with the right amount of

convincing. Every creditor who reports to the credit bureaus can also change the

information they report. In most credit organizations, there are several managers with the

authority to make changes on the credit report.

Bottom Line: Anything a creditor is responsible for reporting and confirming, a creditor

can change.

 

Credit Bureau Myths

by Horizon Unlimited Group's Insider Reports

 

------------------------------------------------------------------------

According to Consumer Reports magazine, 48% of consumers have errors in their credit

files, many severe enough to result in credit denial!

Unfortunately, widely held credit bureau myths derail most consumers from ever even

trying to set their record straight. (Much less doing so correctly!)

 

------------------------------------------------------------------------

 

Myth: The information on a credit report cannot be changed.

Fact: Exactly the opposite is true. The Fair Credit Reporting Act requires that items be

removed if they are not fully 100% accurate OR can not be verified within 30 days. Also,

anything a creditor is responsible for reporting and confirming, a creditor can change.

 

------------------------------------------------------------------------

 

Myth: Requests (inquiries) for credit reports can't hurt them.

Fact: At the end of each report will be a log of inquiries. An inquiry notation is made each

time someone requests a copy of your credit file from that credit bureau. Any company

that receives a copy of your credit profile will be listed under this inquiry section of your

report.

Lenders don't like to see a lot of inquiries on a credit report. Excessive inquiries can result

in a credit denial as easily as bad credit. But, not all inquires are viewed negatively. Your

personal requests (inquiries) for a copy of your own credit report do not count against

you.

 

------------------------------------------------------------------------

 

Myth: When I pay off a delinquent account such as a charge-off or collection account, it

will stop hurting my credit, because it will then be shown as "paid."

Fact: As hard as it might be to believe, sometimes paying off a debt can actually hurt you.

This is one of those occasions. These type of collection accounts are allowed to stay on

your credit for a "maximum" of seven years. See Old Delinquent Accounts for warning

and explanation of how you can unwittingly restart this clock.

However, this does not mean that you never pay these debts. While discussing negotiating

with creditors covered in Chapter 4, you will read how to include in your negotiated

settlement a provision for how it is to be reported. To not do so can severely hurt your

chances of restoring your good credit.

 

------------------------------------------------------------------------

 

Myth: Credit reporting agencies are empowered with governmental authority.

Fact: Absolutely Not! Rather, they must adhere to the government authorities and laws

overseeing their operations. Credit bureaus are like any other business. They buy and sell

products and services to turn a profit. No special authority exists.

 

------------------------------------------------------------------------

 

Myth: Bankruptcy is a "Fresh Start."

Fact: Unfortunately, many attorneys don't clearly explain the devastating effects to one's

credit when filing bankruptcy. This goes for all types of bankruptcy including Chapter 13,

wage earner.

Bankruptcy is not a clean slate. Every account included in the bankruptcy will be so noted

in your credit file. Additionally, there will be a court record generated that will also be

added. Avoid bankruptcy if at all possible. The time table and the odds of completing

credit restoration are greatly extended due to the number of negative entries that are

associated with such filings.

 

------------------------------------------------------------------------

 

Myth: Some types of credit information (such as bankruptcies, judgments and

foreclosures) are impossible to remove.

Fact: Although it is true that some types of information can be more difficult than others

to remove, each of these negative entries have been removed thousands of times, using a

multitude of creative methods.

 

------------------------------------------------------------------------

 

Myth: Credit repair is too complicated to do myself. I would have to hire an attorney.

Fact: In some cases involving a stubborn situation, an attorney can be of great assistance.

An attorney can also help with clarifying the finer points of your state's laws. However,

you can accomplish most if not all of the legal and negotiation-based methods in this

report yourself by becoming familiar with your federally given rights and how to enforce

them, as well as other creative methods employed by consumers.

 

------------------------------------------------------------------------

 

Myth: It is illegal to have truthful information removed from your credit report.

Fact: Congress has already set the precedent by making special provisions for the removal

of correct information from individuals' credit files by fulfilling certain criteria. Congress

realizes that dangling that carrot in front of college students encourages repayment of

defaulted student loans. It should come as no surprise that creditors in other financial

markets are hip to this. Let's face it; congress had to get the idea from somewhere. Right?

If you need more proof, read section 609(c)(2)(E) of the NEW Fair Credit Reporting Act

that President Clinton signed in September of '96.

"...a consumer reporting agency is not required to remove accurate derogatory

information from a consumer's file, unless the information is outdated under section 605 or

cannot be verified."

Notice the wording above, "is not required to remove." It is very interesting that the law

does not say that accurate information "can not" be removed, but only that the credit

bureau is not required to. Now, there is law that says a creditor can not knowingly add

wrong information to someone's file, but the subject of removing accurate information is

mysteriously avoided. The truth is the FTC and the bureaus themselves spend a lot of

money trying to convince consumers otherwise. Why? Lobbyists and money of course! It

makes more work for the credit bureaus, thus increasing their labor costs. Bureaus save

millions of dollars a year by convincing consumers that the consumer is virtually

powerless. But congress worded things to leave the door open, and in at least one case

drafted law allowing for it, specifically.

Fortunately, creditors make their profits by collecting from their customers, not reporting

negative credit information. Many creditors though, have an agreement with the credit

bureaus that they will not allow a negative listing to be deleted upon settlement. Larger

creditors, such as huge credit card companies or banks will require more pressure before

they will agree to delete a negative listing, but many will give in with the right amount of

convincing. Every creditor who reports to the credit bureaus can also change the

information they report. In most credit organizations, there are several managers with the

authority to make changes on the credit report.

Bottom Line: Anything a creditor is responsible for reporting and confirming, a creditor

can change.

 

Credit Repair--Introduction

 

 

------------------------------------------------------------------------

If you've gone through a financial crisis--a bankruptcy, repossession, foreclosure, history

of late payments or something similar--you may think that you'll never get credit again.

Not true. Although, in general, a bankruptcy filing can be reported on your credit record

for ten years, and all other negative information can be reported for seven, in about two

years you can probably rebuild your credit to the point that you won't be turned down for

a major credit card or loan. Even in the limited situations in which negative information

can be reported indefinitely, if you successfully rebuild your credit, creditors will ignore

old, negative information.

 

 

When reviewing a credit application by someone with poor credit, most creditors look for

steady employment, a recent history of making and paying for purchases on credit and

maintaining a checking and savings account since the financial setback. And many

creditors disregard a bankruptcy discharge, often thought of as the most devastating of all

financial setbacks, after about five years.

 

Facts For Consumers, Choosing and Using Credit Cards

 

------------------------------------------------------------------------

 

 

 

Facts For Consumers, Choosing and Using Credit Cards

Federal Trade Commission

* February 1993 (#F024062)

[Graphic Omitted]

Choosing and Using

Credit Cards

 

fast facts

 

* Shop around for credit card terms that are best for you

* Make sure you understand the terms of a credit card plan before you

accept the card.

* Pay bills promptly to keep finance charges as low as possible.

* Keep copies of sales slips and promptly compare charges when your

bills arrive.

* Draw a line through blank spaces above the total when you sign

receipts.

* Keep a list of your credit card account numbers and the telephone

numbers of each card issuer in a safe place in case your cards are

lost or stolen.

Bureau of Consumer Protection

Office of Consumer & Business Education

(202) 326-3650

 

Chances are you have received offers in the mail asking if you

would like to open credit card accounts. Frequently, these offers say

that you have been "pre-approved" for the card, with a line of credit

already set aside for your use. Typically, these offers urge you to

accept quickly, "before the offer expires." However, before accepting a

credit card offer, understand the card's credit terms and compare costs

of similar cards to get the features and terms you want.

 

Choosing a Credit Card

 

Credit card offers may seem attractive, but remember a credit card

is a form of borrowing that usually involves a "finance charge" -- a

charge for the convenience of borrowing -- and often other charges as

well.

 

Credit Card Terms

 

Before selecting a credit card, learn which credit terms and

conditions apply. Each affects the overall cost of the credit you will

be using. Under the Fair Credit and Charge Card Disclosure Act, you can

compare terms and fees before you agree to open a credit card or charge

card (no interest) account. Be sure to consider and compare the

following terms that direct-mail applications and pre-approved

solicitations must reveal.

Annual Percentage Rate. The "annual percentage rate," or APR, is

disclosed to you when you apply for a card, again when you open the

account, and it is also noted on each bill you receive. It is a measure

of the cost of credit, expressed as a yearly rate. The card issuer also

must disclose the "periodic rate" -- that is, the rate the card issuer

applies to your outstanding account balance to figure the finance charge

for each billing period.

Some credit card plans allow the card issuer to change the annual

percentage rate on your account when interest rates or other economic

indicators (called indexes) change. Because the rate change is linked to

the performance of the index, which may rise or fall, these plans are

commonly called "variable rate" plans. Rate changes raise or lower the

amount of the finance charge you pay on your account. If the credit card

you are considering has a variable rate feature, the card issuer must

tell you that the rate may vary and how the rate is determined,

including which index is used and what additional amount (the "margin")

is added to the index to determine your new rate. You also must be told

how much and how often your rate may change.

Free Period. A free period -- also called a "grace period" --

allows you to avoid the finance charge by paying your current balance in

full before the "due date" shown on your statement. Knowing whether a

credit card plan gives you a free period is especially important if you

plan to pay your account in full each month. If there is no free period,

the card issuer will impose a finance charge from the date you use your

credit card or from the date each credit card transaction is posted to

your account. If your credit card plan allows a free period, the card

issuer must mail your bill at least 14 days before your payment is due.

This is to ensure that you have enough time to make your payment by the

due date.

Annual Fees. Most credit card issuers charge annual membership or

other participation fees. These fees range from $25 to $50 for most

cards, and from $75 on up for premium "gold" or "platinum" cards.

Transaction Fees and Other Charges. A credit card also may involve

other types of costs. For example, some card issuers charge a fee when

you use the card to obtain a cash advance, when you fail to make a

payment on time, or when you go over your credit limit. Some charge a

flat monthly fee whether or not you use the card.

Balance Computation Method for the Finance Charge. If your plan has

no free period, or if you expect to pay for purchases over time, it is

important to know how the card issuer will calculate your finance

charge. This charge will vary depending upon the method the card issuer

uses to figure your balance. The method used can make a difference,

sometimes a big difference, in how much finance charge you will pay --

even when the APR is identical to that charged by another card issuer

and the pattern of purchases and payments is the same. Examples of how

finance charges based on identical APRs can differ are shown on page 4.

Some of the ways card issuers figure balances for finance charges

are described on pages 4 and 5.

Average Daily Balance (including or excluding new purchases). The

average daily balance method gives you credit for your payment from the

day the card issuer receives it. To compute the balance due, the card

issuer totals the beginning balance for each day in the billing period

and deducts any payments credited to your account that day. New

purchases may or may not be added to the balance, depending on the plan,

but cash advances typically are added. The resulting daily balances are

added up for the billing cycle and the total is then divided by the

number of days in the billing period to arrive at the "average daily

balance." This is the most common method used by credit card issuers.

Adjusted Balance. This balance is computed by subtracting the

payments you made and any credits you received during the present

billing period from the balance you owed at the end of the previous

billing period. New purchases that you made during the billing period

are not included. Under the adjusted balance method, you have until the

end of the billing cycle to pay part of your balance and you avoid the

interest charges on that portion. Some creditors exclude prior, unpaid

finance charges from the previous balance. The adjusted balance method

usually is the most advantageous to card users.

Previous Balance. As the name suggests, this balance is simply the

amount that you owed at the end of the previous billing period.

Payments, credits, or new purchases made during the current billing

period are not taken into account. Some creditors also exclude unpaid

finance charges in computing this balance. If you do not understand how

the balance on your account is computed, ask the card issuer. (An

explanation of how the balance was determined must appear on the billing

statements the card issuer provides you and on applications and

pre-approved solicitations the card issuer may send you.)

The following are examples of how different methods of calculating

finance charges affect the cost of credit:

Average Daily Average Daily

Balance Balance

(including new (excluding new

purchases) purchases)

Monthly rate 1 1/2% 1 1/2%

APR 18% 18%

Previous

Balance $400 $400

New $50 $50

Purchases on 18th day on 18th day

Payments $300 $300

on 15th day on 15th day

(new balance = $100) (new balance = $100)

Average

Daily Balance $270 * $250 **

Finance $4.05 $3.75

Charge (1 1/2% x $270) (1 1/2% x $250)

* To figure average daily balance (including new purchases):

 

($400 x 15 days) + ($100 x 3 days) + ($150x 12 days)

----------------------------------------------------

30 days = $270

** To figure average daily balance (excluding new purchases):

 

($400 x 15 days) + ($100 x 15 days)

-----------------------------------

30 days = $250

Adjusted Balance Previous Balance

Monthly rate 1 1/2% 1 1/2%

APR 18% 18%

Previous

Balance $400 $400

Payments $300 $300

Average

Daily Balance N/A N/A

Finance $1.50 $6.00

Charge (1 1/2% x $100) (1 1/2% x $400)

 

Costs and Features

 

Credit terms differ among card issuers, so shop around for the card

that is best for you. Which one is best may depend on how you plan to

use it. If you plan to pay bills in full each month, the size of the

annual fee or other fees, and not the periodic and annual percentage

rate, may be more important If you expect to use credit cards to pay for

purchases over time, the APR and the balance computation method are

important terms to consider. In either case, keep in mind that your

costs will be affected by whether or not there is a grace period.

When shopping for a credit card, you probably will want to look at

other factors besides costs- such as whether the credit limit is high

enough to meet your needs, how widely the card is accepted, and what

services and features are available under the plan. You may be

interested, for example, in "affinity cards" -- all-purpose credit cards

that are sponsored by professional organizations, college alumni

associations, and some members of the travel industry. Frequently, an

affinity card issuer donates a portion of the annual fees or transaction

charges to the sponsoring organization, or allows you to qualify for

free travel or other bonuses.

 

Using a Credit Card

 

Federal law prohibits card issuers from sending you a credit card

that you did not request. (The issuer may send you a renewal or

substitute card without a request.) Card issuers are permitted to mail

you an application or a solicitation for a credit card or to ask you by

phone whether you want to receive a card -- and to send you one if you

say yes.

 

Credit Card Protections

 

Federal law protects consumers when they use credit cards. The

protections include the following items.

Prompt Credit for Payment. A card issuer must credit your account

on the day the issuer receives your payment, unless the payment is not

made according to the creditor's requirements or the delay in crediting

to your account does not result in a charge. To avoid delays that could

result in finance charges, follow the card issuer's instructions about

where to send payments. Payments sent to other locations could delay

getting credit for your payment for up to five days. If you lose your

payment envelope, look on the billing statement for the address for

payments or call the card issuer.

Refunds of Credit Balances. When you return merchandise or pay more

than you owe, you have the option of keeping the credit balance on your

account or requesting a refund (if the amount exceeds $1.00). To obtain

a refund, write the card issuer. The card issuer must send you the

refund within seven business days of receiving your request. (Also, if a

credit balance remains on your account for more than six months, the

card issuer must make a good faith effort to refund the credit balance.)

Errors on Your Bill. Federal law provides specific rules that the

card issuer must follow for promptly correcting billing errors. The card

issuer will give you a statement describing these rules when you open

the credit card account and, after that, at least once a year. In fact,

many card issuers print a summary of your rights on each bill they send

you.

You must notify the card issuer in writing at the address specified

for billing errors when you find an error, and you must do so within 60

days after the first bill containing the error was mailed to you. (For

this reason, keep your credit card receipts and promptly compare them

when your bills arrive.) In your notification letter, include your name,

your account number, the amount of the suspected error, and the reason

why you believe that the bill contains an error. The card issuer, in

turn, must look into the problem and either correct the error or explain

to you why the bill is correct. This must occur within two billing

cycles and not later than 90 days after the issuer receives your billing

error notice. During the period that the card issuer is investigating

the error, you do not have to pay the amount in question. (For further

information, write: "Credit Billing Errors," Public Reference, Federal

Trade Commission, Washington, D.C. 20580.)

Unauthorized charges. Under federal law, if your credit card is

used without your authorization, you can be held liable for up to $50

per card. If you report the loss before the card is used, federal law

says the card issuer cannot hold you responsible for any unauthorized

charges. If a thief uses your card before you report it missing, the

most you will owe for unauthorized charges is $50. This is true even if

a thief is able to use your credit card at an automated teller machine

(ATM) to access your credit card account. To minimize your liability,

report the loss of your card as soon as possible. Some companies have

toll-free numbers printed on their statements and 24-hour service to

accept such emergency information. For your own protection, you should

follow up your phone call with a letter to the card issuer. The letter

should give your card number, say when your card was missing, and

mention the date you called in the loss.

Disputes about Merchandise or Services. If you have a problem with

merchandise or services that you charged to a credit card, and you have

made a good faith effort to work out the problem with the seller, you

have the right to withhold from the card issuer payment for the

merchandise or services. You can withhold payment up to the amount of

credit outstanding for the purchase, plus any finance or related

charges. If the card you used is a bank card, a travel and entertainment

card, or another card not issued by the seller of the defective

merchandise, you can withhold payment only if the purchase exceeded $50

and occurred in your home state or within 100 miles of your billing

address. If these conditions do not apply to you, you may want to

consider filing an action in small claims court -- an informal legal

proceeding that can be used to settle disputes. While the maximum

amounts that can be claimed or awarded differ from state to state, most

small claims courts hear cases involving amounts ranging from $25 to

$2,000. Some states have recently raised their limits to $5,000. Check

your local telephone book under your municipal, county, or state

government headings for small claims court listings.

 

Some Suggestions

 

* Shop around for credit card terms that are best for you.

* Make sure you understand the terms of a credit card plan before you

accept the card. Review the disclosures of terms and fees that must

appear on credit-card offers you receive in the mail.

* Pay bills promptly to keep finance charges as low as possible.

* Keep copies of sales slips and promptly compare charges when your

bills arrive.

* Protect your credit cards and account numbers to prevent

unauthorized use. Draw a line through blank spaces above the total

when you sign receipts. Rip up or retain carbons.

* Keep a list of your credit card numbers and the telephone numbers

of each card issuer in a safe place in case your cards are lost or

stolen.

 

Where To Go For Help

 

The following federal agencies are responsible for enforcing

federal laws that govern credit card transactions. Questions concerning

a particular card issuer should be directed to the enforcement agency

responsible for that issuer.

 

State Member Banks of the Reserve System

Consumer and Community Affairs

Board of Governors of the Federal Reserve System

20th & C Sts., N.W.

Washington, D.C. 20551

National Banks

Comptroller of the Currency

Compliance Management

Mail Stop 7-5

Washington, D.C. 20219

Federal Credit Unions

National Credit Union Administration

1776 G St., N.W.

Washington, D.C. 20456

Non-Member Federally Insured Banks

Office of Consumer Programs

Federal Deposit Insurance Corporation

550 Seventeenth St., N.W.

Washington, D.C. 20429

Federally Insured Savings and Loans,

and Federally Chartered State Banks

Consumer Affairs Program

Office of Thrift Supervision

1700 G St., N.W.

Washington, D.C. 20552

Other Credit Card Issuers

(includes retail/gasoline companies)

Division of Credit Practices

Bureau of Consumer Protection

Federal Trade Commission

Washington, D.C. 20580

 

IMPROVING YOUR CREDIT BY PAYING BILLS LATER!

 

------------------------------------------------------------------------

 

Every business will get to the point where suppliers will offer terms on bills, rather than

requiring payment up front or on delivery. Their bills will probably be marked "2/10, net

30." This means you get a 2% discount if you pay within 10 days, and the bill is due within

30 days.

Many business owners will jump at the opportunity to save the 2% by paying early, and

rightfully so. However, believe it or not, they can help their credit rating by paying at the

end of 30 days.

How is this so? It's all a matter of your business' CREDIT HISTORY. All of the

companies who offer you terms will be reporting your history to various credit bureaus.

These bureaus are who gets consulted by banks when they decide whether or not to give

you a loan.

By always taking advantage of the 2% discount, a business establishes a paying pattern.

Thus, if you've been paying a company's bills in 5 days for the past year, this is what they

will expect from forthcoming bills. Now, say one month has a tighter cash flow than

normal, and you must take 20 days to pay that bill. This sends up a red flag for the billing

company.

You normally pay in 5 days, why are you now paying in 20? Even though you paid the bill

well within the deadline, you have given a sign that you had a cash flow problem. This

uneven paying pattern can show up on your credit rating. Even though all your bills are

paid on time, an uneven paying pattern can jeopardize your future chances for more and

larger credit limits.

Now, if you always pay your bills on the 25th day of the due period, even when you can

pay them early, that cash poor month won't look any different to the billing company.

Most companies would rather grant terms to a company that always pays on the 25th day,

than one that sometimes pays early, sometimes pays later, as this reflects an image of

disorganization and uneven cash flow.

Also, always paying toward the end of the due period will aid your cash flow. If you pay

your bills consistently, at the same time every month, you will not be surprised by a

sudden cash shortage. For example, say you decide to pay a bill early one month. Then,

the next week, your main supplier calls to tell you about a closeout deal he has that would

double your profits.

Only problem is he can't offer terms, it has to be cash. Because you paid that bill early, you

can't take advantage of the special deal. If you would have waited to pay it, your cash flow

would have allowed the purchase, and the resulting higher profit margin would have

yielded the cash to pay the bill.

So, you see, paying bills later, and not taking advantage of any early payment discounts,

CAN work to your advantage. You need to consider your future plans and decide if

saving 2% now is really worth it.

 

Consumer Handbook to Credit Protection Laws

 

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Consumer Handbook to Credit Protection Laws

[Graphic Omitted]

Board of Governors of the Federal Reserve System

Washington, D.C. 20551

12th Printing, April 1993

 

Contents

 

INTRODUCTION

THE COST OF CREDIT

Shopping Is the First Step

What Laws Apply?

The Finance Charge and Annual Percentage Rate (APR)

A Comparison

Cost of Open-end Credit

Leasing Costs and Terms

Open-end Leases and Balloon Payments

Costs of Settlement on a House

APPLYING FOR CREDIT

Discrimination

What Law Applies?

What Creditors Look For

Information the Creditor Can't Use

Special Rules

Discrimination Against Women

If You're Turned Down

CREDIT HISTORIES AND RECORDS

Building Up a Good Record

What Laws Apply?

Credit Histories for Women

Keeping Up Credit Records

OTHER ASPECTS OF USING CREDIT

What Laws Apply?

Billing Errors

Defective Goods or Services

Prompt Credit for Payments and Refunds for Credit Balances

Cancelling a Mortgage

Lost or Stolen Credit Cards

Unsolicited Cards

ELECTRONIC FUND TRANSFERS

Instant Money

EFT in Operation

What Law Applies?

What Record Will I Have of My Transactions?

How Easily Will I Be Able to Correct Errors?

What About Loss or Theft?

What About Solicitations?

Do I Have to Use EFT?

Special Questions About Preauthorized Plans

COMPLAINING ABOUT CREDIT

Complaining to Federal Enforcement Agencies

Penalties Under the Laws

GLOSSARY

SUBJECT INDEX

DIRECTORY OF FEDERAL AGENCIES

FEDERAL RESERVE BANKS

OTHER CONSUMER PAMPHLETS AVAILABLE

 

INTRODUCTION

 

The Consumer Credit Protection Act of 1968--which launched Truth in

Lending--was a landmark piece of legislation. For the first time,

creditors had to state the cost of borrowing in a common language so

that you--the customer--could figure out exactly what the charges would

be, compare costs, and shop around for the credit deal best for you.

Since 1968, credit protections have multiplied rapidly. The

concepts of "fair" and "equal" credit have been written into laws that

outlaw unfair discrimination in credit transactions; require that

consumers be told the reason when credit is denied; let borrowers find

out about their credit records; and set up a way to settle billing

disputes.

Each law was meant to reduce the problems and confusion surrounding

consumer credit which, as it became more widely used in our economy,

also grew more complex. Together, these laws set a standard for how

individuals are to be treated in their financial dealings.

The laws say, for instance:

-- that you cannot be turned down for a credit card just because

you're a single woman;

-- that you can limit your risk if a credit card is lost or stolen;

-- that you can straighten out errors in your monthly bill without

damage to your credit rating; and

-- that you won't find credit shut off just because you've reached the

age of 65.

But, let the buyer be aware! It is important to know your fights

and how to use them. This handbook explains how the consumer credit laws

can help you shop for credit, apply for it, keep up your credit

standing, and--if need be--complain about an unfair deal. It explains

what you should look for when using credit and what creditors look for

before extending it. It also points out the laws' solutions to

discriminatory practices that have made it difficult for women and

minorities to get credit in the past.

 

THE COST OF CREDIT

[Graphic Omitted]

Shopping is the First Step

 

You get credit by promising to pay in the future for something you

receive in the present.

Credit is a convenience. It lets you charge a meal on your credit

card, pay for an appliance on the installment plan, take out a loan to

buy a house, or pay for schooling or vacations. With credit, you can

enjoy your purchase while you're paying for it--or you can make a

purchase when you're lacking ready cash.

But there are strings attached to credit too. It usually costs

something. And of course what is borrowed must be paid back.

If you are thinking of borrowing or opening a credit account, your

first step should be to figure out how much it will cost you and whether

you can afford it. Then you should shop around for the best terms.

 

What Laws Apply?

 

Two laws help you compare costs:

TRUTH IN LENDING requires creditors to give you certain basic

information about the cost of buying on credit or taking out a loan.

These "disclosures" can help you shop around for the best deal.

CONSUMER LEASING disclosures can help you compare the cost and

terms of one lease with another and with the cost and terms of buying

for cash or on credit.

 

The Finance Charge and Annual Percentage Rate (APR)

 

Credit costs vary. By remembering two terms, you can compare credit

prices from different sources. Under Truth in Lending, the creditor must

tell you--in writing and before you sign any agreement--the finance

charge and the annual percentage rate.

The finance charge is the total dollar amount you pay to use

credit. It includes interest costs, and other costs, such as service

charges and some credit--related insurance premiums.

For example, borrowing $100 for a year might cost you $10 in

interest. If there were also a service charge of $1, the finance charge

would be $11.

The annual percentage rate (APR)is the percentage cost (or relative

cost) of credit on a yearly basis. This is your key to comparing costs,

regardless of the amount of credit or how long you have to repay it:

Again, suppose you borrow $100 for one year and pay a finance

charge of $10. If you can keep the entire $100 for the whole year and

then pay back $110 at the end of the year, you are paying an APR of 10

percent. But, if you repay the $100 and finance charge (a total of $110)

in twelve equal monthly installments, you don't really get to use $100

for the whole year. In fact, you get to use less and less of that $100

each month. In this case, the $10 charge for credit amounts to an APR of

18 percent.

All creditors--banks, stores, car dealers, credit card companies,

finance companies-must state the cost of their credit in terms of the

finance charge and the APR. Federal law does not set interest rates or

other credit charges. But it does require their disclosure so that you

can compare credit costs. The law says these two pieces of information

must be shown to you before you sign a credit contract or before you use

a credit card.

 

A Comparison

 

Even when you understand the terms a creditor is offering, it's

easy to underestimate the difference in dollars that different terms can

make. Suppose you're buying a $7,500 car. You put $1,500 down, and need

to borrow $6,000. Compare the three credit arrangements on the next

page.

How do these choices stack up? The answer depends partly on what

you need.

The lowest cost loan is available from Creditor A.

If you were looking for lower monthly payments, you could get then

by paying the loan off over a longer period of time. However, you would

have to pay more in total costs. A loan from Creditor B--also at a 14

percent APR, but for four years--will add about $488 to your finance

charge.

If that four-year loan were available only from Creditor C, the APR

of 15 percent would add another $145 or so to your finance charges as

compared with Creditor B.

Other terms--such as the size of the down payment--will also make a

difference. Be sure to look at all the terms before you make your

choice.

[Graphic Omitted]

Cost of Open-end Credit

 

Open-end credit includes bank and department store credit cards,

gasoline company cards, home equity lines, and checkoverdraft accounts

that let you write checks for more than your actual balance with the

bank. Open-end credit can be used again and again, generally until you

reach a certain prearranged borrowing limit. Truth in Lending requires

that open-end creditors tell you the terms of the credit plan so that

you can shop and compare the costs involved.

When you're shopping for an open-end plan, the APR you're told

represents only the periodic rate that you will be charged--figured on a

yearly basis. (For instance, a creditor that charges 1% percent interest

each month would quote you an APR of 18 percent.) Annual membership

fees, transaction charges, and points, for example, are listed

separately; they are not included in the APR. Keep this in mind and

compare all the costs involved in the plans, not just the APR.

Creditors must tell you when finance charges begin on your account,

so you know how much time you have to pay your bill before a finance

charge is added. Creditors may give you a 25-day grace period, for

example, to pay your balance in full before making you pay a finance

charge.

Creditors also must tell you the method they use to figure the

balance on which you pay a finance charge; the interest rate they charge

is applied to this balance to come up with the finance charge. Creditors

use a number of different methods to arrive at the balance. Study them

carefully; they can significantly affect your finance charge.

Some creditors, for instance, take the amount you owed at the

beginning of the billing cycle, and subtract any payments you made

during that cycle. Purchases are not counted. This is called the

adjusted balance method.

Another is the previous balance method. Creditors simply use the

amount owed at the beginning of the billing cycle to come up with the

finance charge.

Under one of the most common methods-the average daily balance

method--creditors add your balances for each day in the billing cycle

and then divide that total by the number of days in the cycle. Payments

made during the cycle are subtracted in arriving at the daily amounts,

and, depending on the plan, new purchases may or may not be included.

Under another method--the two-cycle average daily balance

method--creditors use the average daily balances for two billing cycles

to compute your finance charge. Again, payments will be taken into

account in figuring the balances, but new purchases may or may not be

included.

Be aware that the amount of the finance charge may vary

considerably depending on the method used, even for the same pattern of

purchases and payments.

If you receive a credit card offer or an application, the creditor

must give you information about the APR and other important terms of the

plan at that time. Likewise, with a home equity plan, information must

be given to you with an application.

Truth in Lending does not set the rates or tell the creditor how to

calculate finance charges--it only requires that the creditor tell you

the method that it uses. You should ask for an explanation of any terms

you don't understand.

 

Leasing Costs and Terms

 

Leasing gives you temporary use of property in return for periodic

payments. It has become a popular alternative to buying--under certain

circumstances. For instance, you might consider leasing furniture for an

apartment you'll use only for a year. The Consumer Leasing law requires

leasing companies to give you the facts about the costs and terms of

their contracts, to help you decide whether leasing is a good idea.

The law applies to personal property leased to you for more than

four months for personal, family, or household use. It covers, for

example, long-term rentals of cars, furniture, and appliances, but not

daily car rentals or leases for apartments.

Before you agree to a lease, the leasing company must give you a

written statement of costs, including the amount of any security

deposit, the amount of your monthly payments, and the amount you must

pay for licensing, registration, taxes, and maintenance.

The company must also give you a written statement about terms,

including any insurance you need, any guarantees, information about who

is responsible for servicing the property, any standards for its wear

and tear, and whether or not you have an option to buy the property.

 

Open-end Leases and Balloon Payments

 

Your costs will depend on whether you choose an open-end lease or a

closed-end lease. Open-end leases usually mean lower monthly payments

than closed-end leases, but you may owe a large extra payment--often

called a balloon payment--based on the value of the property when you

return it.

Suppose you lease a car under a three-year open-end lease. The

leasing company estimates the car will be worth $4,000 after three years

of normal use. If you bring back the car in a condition that makes it

worth only $3,500, you may owe a balloon payment of $500.

The leasing company must tell you whether you may owe a balloon

payment and how it will be calculated. You should also know that:

-- you have the right to an independent appraisal of the property's

worth at the end of the lease. You must pay the appraiser's fee,

however.

-- a balloon payment is usually limited to no more than three times

the average monthly payment. If your monthly payment is $ 200, your

balloon payment wouldn't be more than $600--unless, for example,

the property has received more than average wear and tear (for

instance, if you drove a car more than average mileage).

Closed-end leases usually have higher monthly payment than open-end

leases, but there is no balloon payment at the end of the lease.

 

Costs of Settlement on a House

 

A house is probably the single largest credit purchase for most

consumers--and one of the most complicated. The Real Estate Settlement

Procedures Act, like Truth in Lending, is a disclosure law. The Act,

administered by the Department of Housing and Urban Development,

requires the lender to give you, in advance, certain information about

the costs you will pay when you close the loan.

This event is called settlement or closing, and the law helps you

shop for lower settlement costs. To find out more about it, write to:

Deputy Assistant Secretary for Housing Attention:

RESPA Enforcement U.S. Department of Housing and Urban Development

451 Seventh Street, S.W. Room 5241

Washington, D.C. 20410

Should you need to phone:

(202) 708-4560

A Federal Reserve pamphlet, entitled "A Consumer's Guide to

Mortgage Closing Costs," also contains useful information for consumers.

 

APPLYING FOR CREDIT

[Graphic Omitted]

Discrimination

 

When you're ready to apply for credit, you should know what

creditors think is important in deciding whether you're creditworthy.

You should also know what they cannot legally consider in their

decisions.

 

What Law Applies?

 

EQUAL CREDIT OPPORTUNITY ACT requires that all credit applicants be

considered on the basis of their actual qualifications for credit and

not be turned away because of certain personal characteristics.

 

What Creditors Look For

 

The Three C's. Creditors look for an ability to repay debt and a

willingness to do so--and sometimes for a little extra security to

protect their loans. They speak of the three C's of credit-capacity,

character, and collateral.

Capacity. Can you repay the debt? Creditors ask for employment

information: your occupation, how long you've worked, and how much you

earn. They also want to know your expenses: how many dependents you

have, whether you pay alimony or child support, and the amount of your

other obligations.

Character. Will you repay the debt? Creditors will look at your

credit history (see chapter on Credit Histories and Records): how much

you owe, how often you borrow, whether you pay bills on time, and

whether you live within your means. They also look for signs of

stability: how long you've lived at your present address, whether you

own or rent, and length of your present employment.

Collateral. Is the creditor fully protected if you fail to repay?

Creditors want to know what you may have that could be used to back up

or secure your loan, and what sources you have for repaying debt other

than income, such as savings, investments, or property.

Creditors use different combinations of these facts in reaching

their decisions. Some set unusually high standards and other simply do

not make certain kinds of loans. Creditors also use different kinds of

rating systems. Some rely strictly on their own instinct and experience.

Others use a "credit-scoring" or statistical system to predict whether

you're a good credit risk. They assign a certain number of points to

each of the various characteristics that have proved to be reliable

signs that a borrower will repay. Then, they rate you on this scale.

And so, different creditors may reach different conclusions based

on the same set of facts. One may find you an acceptable risk, while

another may deny you a loan.

 

Information the Creditor Can't Use

 

The Equal Credit Opportunity Act does not guarantee that you will

get credit. You must still pass the creditor's tests of

creditworthiness. But the creditor must apply these tests fairly,

impartially, and without discriminating against you on any of the

following grounds: age, gender, marital status, race, color, religion,

national origin, because you receive public income such as veterans

benefits, welfare or Social Security, or because you exercise your

rights under Federal credit laws such as filing a billing error notice

with a creditor. This means that a creditor may not use any of those

grounds as a reason to:

-- discourage you from applying for a loan;

-- refuse you a loan if you quality; or

-- lend you money on terms different from those granted another person

with similar income, expenses, credit history, and collateral.

 

Special Rules

 

Age. In the past, many older persons have complained about being

denied credit just because they were over a certain age. Or when they

retired, they often found their credit suddenly cut off or reduced. So

the law is very specific about how a person's age may be used in credit

decisions.

A creditor may ask your age, but if you're old enough to sign a

binding contract (usually 18 or 21 years old depending on state law), a

creditor may not:

-- turn you down or offer you less credit just because of your age;

-- ignore your retirement income in rating your application;

-- close your credit account or require you to reapply for it just

because you reach a certain age or retire; or

-- deny you credit or close your account because credit life insurance

or other credit-related insurance is not available to persons your

age.

Creditors may "score" your age in a creditscoring system, but:

-- if you are 62 or older you must be given at least as many points

for age as any person under 62.

Because individuals' financial situations can change at different

ages, the law lets creditors consider certain information related to

age--such as how long until you retire or how long your income will

continue. An older applicant might not qualify for a large loan with a 5

percent down payment on a risky venture, but might qualify for a smaller

loan--with a bigger down payment--secured by good collateral. Remember

that while declining income may be a handicap if you are older, you can

usually offer a solid credit history to your advantage. The creditor has

to look at all the facts and apply the usual standards of

creditworthiness to your particular situation.

Public Assistance. You may not be denied credit just because you

receive Social Security or public assistance (such as Aid to Families

with Dependent Children). But--as is the case with age--certain

information related to this source of income could clearly affect

creditworthiness. So, a creditor may consider such things as:

-- how old your dependents are (because you may lose benefits when

they reach a certain age); or

-- whether you will continue to meet the residency requirements for

receiving benefits.

This information helps the creditor determine the likelihood that

your public assistance income will continue.

Housing Loans. The Equal Credit Opportunity Act covers your

application for a mortgage or home improvement loan. It bans

discrimination because of such characteristics as your race, color,

gender, or because of the race or national origin of the people in the

neighborhood where you live or want to buy your home. Nor may creditors

use any appraisal of the value of the property that considers the race

of the people in the neighborhood.

In addition, you are entitled to receive a copy of an appraisal

report that you paid for in connection with an application for credit,

if a you make a written request for the report.

 

Discrimination Against Women

 

Both men and women are protected from discrimination based on

gender or marital status. But many of the law's provisions were designed

to stop particular abuses that generally made if difficult for women to

get credit. For example, the idea that single women ignore their debts

when they marry, or that a woman's income "doesn't count" because she'll

leave work to have children, now is unlawful in credit transactions.

The general rule is that you may not be denied credit just because

you are a woman, or just because you are married, single, widowed,

divorced, or separated. Here are some important protections:

Gender and Marital Status. Usually, creditors may not ask your

gender on an application form (one exception is on a loan to buy or

build a home).

You do not have to use Miss, Mrs., or Ms. with your name on a

credit application. But, in some cases, a creditor may ask whether you

are married, unmarried, or separated (unmarried includes single,

divorced, and widowed).

Child-bearing Plans. Creditors may not ask about your birth control

practices or whether you plan to have children, and they may not assume

anything about those plans.

Income and Alimony. The creditor must count all of your income,

even income from part-time employment.

Child support and alimony payments are a primary source of income

for many women. You don't have to disclose these kinds of income, but if

you do creditors must count them.

Telephones. Creditors may not consider whether you have a telephone

listing in your name because this would discriminate against many

married women. (You may be asked if there's a telephone in your home.)

A creditor may consider whether income is steady and reliable, so

be prepared to show that you can count on uninterrupted

income--particularly if the source is alimony payments or part-time

wages.

Your Own Accounts. Many married women used to be turned down when

they asked for credit in their own name. Or, a husband had to cosign an

account--agree to pay if the wife didn't--even when a woman's own income

could easily repay the loan. Single women couldn't get loans because

they were thought to be somehow less reliable than other applicants. You

now have a fight to your own credit, based on your own credit records

and earnings. Your own credit means a separate account or loan in your

own name--not a joint account with your husband or a duplicate card on

his account. Here are the rules:

-- Creditors may not refuse to open an account just because of your

gender or marital status.

-- You can choose to use your first name and maiden name (Mary Smith);

your first name and husband's last name (Mary Jones); or a combined

last name (Mary Smith-Jones).

-- If you're creditworthy, a creditor may not ask your husband to

cosign your account, with certain exceptions when property rights

are involved.

-- Creditors may not ask for information about your husband or

ex-husband when you apply for your own credit based on your own

income--unless that income is alimony, child support, or separate

maintenance payments from your spouse or former spouse.

This last rule, of course, does not apply if your husband is going

to use your account or be responsible for paying your debts on the

account, or if you live in a community property state. (Community

property states are: Arizona, California, Idaho, Louisiana, Nevada, New

Mexico, Texas, Washington and Wisconsin.)

Change in Marital Status. Married women have sometimes faced severe

hardships when cut off from credit after their husbands died. Single

women have had accounts closed when they married, and married women have

had accounts closed after a divorce. The law says that creditors may not

make you reapply for credit just because you marry or become widowed or

divorced. Nor may they close your account or change the terms of your

account on these grounds. There must be some sign that your

creditworthiness has changed. For example, creditors may ask you to

reapply if you relied on your ex-husband's income to get credit in the

first place.

Setting up your own account protects you by giving you your own

history of how you handle debt, to rely on if your financial situation

changes because you are widowed or divorced. If you're getting married

and plan to take your husband's surname, write to your creditors and

tell them if you want to keep a separate account.

 

If You're Turned Down

 

Remember, your gender or race may not be used to discourage you

from applying for a loan. And creditors may not hold up or otherwise

delay your application on those grounds. Under the Equal Credit

Opportunity Act, you must be notified within 30 days after your

application has been completed whether your loan has been approved or

not. If credit is denied, this notice must be in writing and it must

explain the specific reasons why you were denied credit or tell you of

your right to ask for an explanation. You have the same rights if an

account you have had is closed.

If you are denied credit, be sure to find out why. Remember, you

may have to ask the creditors for this explanation. It may be that the

creditor thinks you have requested more money than you can repay on your

income. It may be that you have not been employed or lived long enough

in the community. You can discuss terms with the creditor and ways to

improve your creditworthiness. The next chapter explains how to improve

your ability to get credit.

 

Lost or Stolen: Credit and ATM Cards

 

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Lost or Stolen: Credit and ATM Cards

Facts for Consumers from the Federal Trade Commission

Lost or Stolen: Credit and ATM Cards -- August 1992

A joint production of the Federal Trade Commission

and Citibank

N.A.

Increasingly, people find it convenient to shop with credit cards

or to bank at automated teller machines (ATMs) with ATM cards. But the

ease with which these cards can be used also makes them very attractive

to thieves.

Loss or theft of credit and ATM cards is a serious consumer problem.

However, two federal laws, the Fair Credit Billing Act (FCBA) and the

Electronic Fund Transfer Act (EFTA), establish procedures for you and

your creditors to follow to resolve problems with credit cards and

electronic fund transfer accounts. This brochure explains what to do if

any of your cards are missing or stolen, suggests how to protect your

cards, and explains what you can expect from a credit card registration

or protection service.

Limiting Your Financial Loss

There are at least two good financial reasons for you to report the loss

or theft of your credit and ATM cards quickly. First, the sooner you

report the loss, the more likely you will limit your liability if

someone uses your card without your permission. Most card fraud occurs

within the first 48 hours after a card is stolen.

Second, the sooner you report any loss, the more card costs in general

can be kept down. You pay higher interest rates and annual fees because

card fraud costs issuers hundreds of millions of dollars each year.

If any of your cards are missing or stolen, report the loss as soon as

possible to your card issuers. Some companies have toll-free or WATS

numbers printed on their statements and 24-hour service to accept such

emergency information. For your own protection, you should follow up

your phone calls with a letter to each card issuer. The letter should

give your card number, say when your card was missing, and mention the

date you called in the loss.

You may wish to check your homeowner's insurance policy to see if it

covers your liability for card thefts. If not, some insurance companies

will allow you to change your current policy to include protection for

card losses.

Credit Card Loss. If you report the loss before these cards are used,

the FCBA says the card issuer cannot hold you responsible for any

unauthorized charges. If a thief uses your cards before you report them

missing, the most you will owe for unauthorized charges on each card is

$50. This is true even if a thief is able to use your credit card at an

ATM machine to access your credit card account.

However, it is not enough simply to report your credit card loss. After

the card loss, review your billing statements carefully. If your

statements show any charges not made by you, send a letter to the card

issuer describing each questionable charge on your account. Again, tell

the card issuer the date your card was lost or stolen and when you

reported it to them. Be sure to send the letter to the address provided

for billing errors. Do not send it with a payment or to the address

where you send your payments unless you are directed to do so.

ATM Card Loss. If you report an ATM card missing before it is used

without your permission, the EFTA says the card issuer cannot hold you

responsible for any unauthorized withdrawals. If unauthorized use occurs

before you report it, the amount you can be held responsible for depends

upon how quickly you report the loss to the card issuer. For example, if

you report the loss within two business days after you realize your card

is missing, you will not be responsible for more than $50 for

unauthorized use.

However, you could lose as much as $500 because of an unauthorized

withdrawal from your bank account if you do not tell the card issuer

within the two business days after you discover the loss. And, you risk

unlimited loss if, within 60 days after your bank statement is mailed to

you, you do not report an unauthorized transfer or withdrawal. That

means you could lose all the money in your bank account and the unused

portion of your maximum line of credit established for overdrafts.

If any unauthorized transactions appear on your bank statement, report

them to the card issuer as soon as you can. As with a credit card, once

you have reported the loss of your ATM card you cannot be held liable

for additional amounts, even if more unauthorized transactions are made.

Protecting Your Cards

The best protections against card fraud, of course, are to know where

your cards are at all times and to keep them secure. For ATM card

protection, it is important to keep your Personal Identification Number

(PIN) a secret. Memorize this number. Statistics show that in one-third

of ATM card frauds, cardholders wrote their PINS on their ATM cards or

on slips of paper they kept with their cards.

The following suggestions may help you protect your credit and ATM card

accounts.

For credit cards:

Be cautious about disclosing your account number over the phone unless

you know you are dealing with a reputable company.

Never put your account number on the outside of an envelope or on a

postcard.

Draw a line through blank spaces on charge slips above the total so the

amount cannot be changed.

Do not sign a blank charge slip unless absolutely necessary.

Rip up carbons from the charge slip and save your receipts to check

against your monthly billing statements.

Open billing statements promptly and compare them with your receipts. If

there are any mistakes or differences, report them as soon as possible

to the special address listed on the billing statement for "billing

inquiries." Under the FCBA, the card issuer must investigate billing

errors if you report them within 60 days of the date your card issuer

mailed you the statement.

Keep in a safe place (away from where you keep your cards) a record of

your card numbers, expiration dates, and the telephone numbers of each

credit-card company for the emergency of reporting losses.

Carry only those cards that you regularly need, especially when

traveling.

 

For ATM cards:

Select a PIN (personal identification number) that is different from

other numbers noted in your wallet, such as your address, birthdate,

phone, or social security number.

Memorize your PIN.

Do not write your PIN on your ATM card or carry your PIN in your wallet

or purse.

Never put your PIN on the outside of a deposit slip, an envelope, or on

a postcard.

Examine all ATM receipts and bank statements as soon as possible.

Buying a Card Registration Service

Many companies offer card registration and protection services that will

notify all companies where you have credit and ATM card accounts in case

your card is lost or stolen. With this service, you need make only one

phone call to report all card losses instead of calling each card issuer

individually. Also, most services will request replacement cards on your

behalf. Registration services usually cost $10 to $35 yearly.

Purchasing a card registration may be a convenience to you, but it is

not required by card issuers. The FCBA and the EFTA give you the right

to contact credit card companies and ATM card issuers directly in the

event of loss or suspected unauthorized use.

If you do decide to buy a registration service, compare offers and look

for one that will best suit your needs. Read the service contract

carefully to check the company's obligations and your liability. For

example, will the company reimburse you if it fails to notify charge

card loss promptly after you report the loss? If not, you could be

liable for unauthorized charges.

For More Information

For additional information about credit or ATM card fraud or credit card

billing problems, send for: Credit and Charge Card Fraud; Fair Credit

Billing; or Credit Billing Blues. These brochures are available free.

Write to: Public Reference, Federal Trade Commission, Washington, D.C.

20580. The following federal agencies are responsible for enforcing

federal laws that govern credit and ATM card transactions.

Questions concerning a particular card issuer should be directed to the

enforcement agency responsible for that issuer.

State Member Banks of the Federal Reserve System

Consumer and Community Affairs

Board of Governors of the Federal Reserve System

20th & C Sts., N.W.

Washington, D.C. 20551

National Banks

Comptroller of the Currency

Compliance Management

Mail Stop 7-5

Washington, D.C. 20219

Federal Credit Unions

National Credit Union Administration

1776 G St., N.W.

Washington, D.C. 20456

Non-Member Federally Insured Banks

Office of Consumer Programs

Federal Deposit Insurance Corporation

550 Seventeenth St., N.W.

Washington, D.C. 20429

Federally Insured Savings and Loans, and Federally Chartered

State Banks

Consumer Affairs Program

Office of Thrift Supervision

1700 G St., N.W.

Washington, D.C. 20552

Other Credit Card Issuers

(includes retail/gasoline companies)

Division of Credit Practices

Bureau of Consumer Protection

Federal Trade Commission

Washington, D.C. 20580

 

Using Plastic--Introduction

 

Copyright (c) 1996 Nolo Press

------------------------------------------------------------------------

Credit cards can amount to nothing other than very expensive loans made by banks,

gasoline companies and department stores. The credit card issuer gives you a card. You

use the card to pay for items and services up to a certain total amount--your credit "limit."

The store merchant or service provider collects what you owe from the card issuer, who

you repay. You're allowed to pay off what you owe little-by-little each month, as long as

you pay a minimum amount each time. You're charged interest on the balance you owe (as

high as 22% a year) at the end of each period unless you pay the full balance when your

bill arrives.

Credit cards yield high profits to their issuers for several reasons. The most important is

the high rate of interest--interest on credit cards alone accounts for 75% of the profits

earned by banks that issue credit cards. Also, many companies charge an annual fee for

issuing a credit card, and most companies charge late fees, over-the-limit fees and other

miscellaneous charges. Finally, the companies profit by charging merchants and service

providers a fee each time a customer uses the company's credit card in the merchant's

establishment.

Charge cards, also called travel and entertainment cards, are a little different from credit

cards. Charge cards, such as American Express and Diners Club, have no credit limit. You

can usually charge as much as you'd like, but you are required to pay off your entire

balance when your bill arrives, with one exception. If you charge air fare, cruise fees or

hotel fees for a hotel room booked through a travel agent on an American Express card,

you can pay off your balance over 36 months. You'll be charged between 19% and 21%

interest and will have to make minimum monthly payments of $20 or 1/36 of your balance,

whichever is greater.

If you don't pay your charge card bill in full (and haven't charged travel expenses on an

American Express card), you'll get one month's grace, when no interest is charged. After

that, you'll be charged interest in the neighborhood of 20%. If you don't pay after about

three months, your account will be closed and your bill sent to the collections department.

The charge card company makes its profit by charging very high annual fees--up to $100--

and by charging merchants fairly high fees each time a customer pays using the company's

charge card.

Many people use their credit or charge cards to obtain cash advances. Similarly, many card

issuers send cardholders convenience checks to use--the amount of the check appears on

your bill as a charge. Card issuers usually treat these checks like they treat cash advances.

Cash advances are generally more expensive than standard credit card charges. Most

banks charge a transaction fee up to 4% for taking a cash advance. Most banks charge

interest from the date the cash advance is posted, even if you pay it back in full when your

bill comes. Finally, the interest rate is often higher on cash advances than it is on ordinary

credit card charges.

ATM cards are issued by banks, essentially to give bank customers flexibility in their

banking hours. In most areas, with an ATM card you can withdraw money, make deposits,

transfer money between accounts, find out your balance, get a cash advance and even

make loan payments at all hours of the day or night.

Debit cards combine the functions of ATM cards and checks. Debit cards are issued by

banks, but are used at stores, not at the banks themselves. When you pay with a debit

card, the money is automatically deducted from your checking account. Many merchants

accept ATM cards as debit cards.

Until the early 1990s, technological disagreements between merchants and banks meant

that the use of debit cards was very limited. More and more merchants, however,

especially grocery stores, convenience stores and gasoline stations, now accept debit

cards. Many consumers prefer them over checks for two reasons:

 

 

•They don't have to carry around their checkbook and present identification, but are still

able to make purchases direct from their checking account.•They are paying their bills

immediately, unlike when they use credit cards and get the bill later.

Still, there is consumer resistance to using debit cards. In general, consumers prefer having

20-25 days to pay their credit card bills. Also, consumers don't have the right to withhold

payment (the money is immediately removed from the account) in the event of a dispute

with the merchant over the goods or services paid for. Finally, many banks charge

transaction fees every time you use an ATM or debit card at locations other than those

owned by the bank.

 

Fresh Start: The Authoritative Guide To Credit Repair

by Horizon Unlimited Group's Insider Reports

 

------------------------------------------------------------------------

INTRODUCTION

 

Fresh Start is intended for those who have either been denied credit or anticipate being

denied credit for any of the following reasons:

A creditor has inaccurately or misleadingly reported information to a credit bureau about

you.

A credit bureau has mistakenly entered information into your credit file that is inaccurate,

erroneous, not yours, or otherwise false.

Fresh Start is also intended for those who have negative remarks in their credit file that are

mostly, if not wholly, accurate and desire to pursue alternative methods not specifically

spelled out by law with the goal of improving their overall credit rating.

This report will walk you through EVERY legal remedy available to remove negative

credit, those spelled out by law as well as those that may be applied through negotiations

and other creative strategies.

HOW THE CREDIT REPORTING SYSTEM WORKS

 

 

Out Of The Loop

The credit reporting system is a business relationship between two parties: 1) independent

agencies that collect credit information called credit bureaus; and 2) merchants who pay

for a copy of this credit information on an as-needed basis. Credit bureaus refer to these

merchants who pay a fee for their service as subscribers. As with any business, the main

focus of the bureaus is to meet the needs of their customers, the merchant subscribers (not

you).

When you apply for credit with a local merchant, the merchant turns to a credit bureau to

obtain a copy of your "credit reputation" to help him evaluate the risks in extending credit

to you. The bureau doesn't actually approve or deny your credit, but rather supplies the

merchant with your payment history as reported by other subscribers with whom you have

received credit. However, the bureau will use a closely guarded secret formula to assign a

credit score to each individual based on the information in the file. This information is the

most significant factor in the merchant's decision regarding your "ability and willingness"

to meet your future financial obligations. The merchant is counting on the credit bureau's

information to serve as a filter to help separate good credit risks from poor risks.

The shortfall of this system is that the product, you, has little clout in this relationship. The

merchant's primary motivation is to avoid bad credit risks, and the bureau makes a profit

by charging the merchant for helping him do that. The consumer has no positive financial

impact on the bureau. Thus, while you are out of the loop, you are surrounded by it.

If that weren't enough, you also have to compete against human nature. Without

documentation of errors, the bureaus are inclined to report information as reported by

subscribers--assuming the negative. After all, the merchant/subscriber is not going to

complain because he didn't like what he saw on your file and thus didn't extend credit and

didn't lose any money. Any losses for not taking a risk are speculative and argumentative,

certainly not tangible. The only decisions that might draw criticism from the merchant are

the losses as a result of the bureau omitting some negative information that would have

caused the merchant to have declined extending credit.

This is not intended to make the credit bureaus appear the great "evil empire" that some

have made them out to be. They are huge bureaucratic companies whose policies have

evolved from simple business economics and human nature. Every credit bureau desires to

maintain as accurate information as financially feasible, but at the same time they realize

the quality control limitations dictated by competition and operating costs. And they

realize that if they do err, it is better to err on the negative side rather than the positive--if

they are going to serve their subscribers' best interest. Although they want to develop as

truthful a portrait of your credit history as possible, human nature compels them to give

highest priority to recording any remarks that might be true and might keep their

customer-base from entering into a risky credit arrangement. After all, that is their service,

and nothing directly impacts their bottom line any greater.

It's much like having a mechanic check out an automobile before you make a decision to

purchase it. The mechanic is put on the spot. If he tells you it's a good car, and it breaks

down on you, then he looks bad. He'll never be burdened with your complaints about the

three he blackballed, only the one he okayed--if it should break down on you.

Human nature compels him to go into the situation looking for what's wrong, not what's

right. You are about to make a major financial decision based mainly on the information

your mechanic gives you. Similarly, the merchant may be making a comparable investment

based on the information provided by the bureau.

RAMPANT MYTHS ABOUT CREDIT REPORTING

Whether you realize it or not, there is a tremendous battle going on aimed at shaping your

opinion. On one side you have the credit bureaus with a massive public relations campaign

to discourage consumers from attempting to restore their credit by telling them it is

impossible. They do this by limiting their acknowledgment to those methods strictly

outlined in the Fair Credit Reporting Act, such as the dispute method and the consumer

statement.

On the other side you have consumer rights groups pushing for more reform. And

sometimes in the middle, but most often leaning toward the side of the bureaus, you have

the Federal Trade Commission. If that weren't enough, you still have outside voices

(attorneys and credit repair services) whose motives are purely financial and at time such

motives and ignorance add more fog to an already cloudy landscape.

The result is a lot of conflicting and confusing information. It is very easy to get bogged

down in this information glut. But you don't have to muddle in the mire. This resource

strives to shine a bright beam of truth to dissipate this fog of misinformation--so that you

can begin pursuing a clear path, able to discern the good and the bad offered you from

both sides.

As evidence of this ongoing credit war, consider these great myths about the credit

reporting industry. Each of these statements below is false. Nonetheless, almost every

consumer still believes that one or more may be true.

Myth: The information on a credit report cannot be changed.

Fact: Exactly the opposite is true. The Fair Credit Reporting Act requires that items be

removed if they are not 100% accurate or cannot be verified within 30 days.

Myth: When I pay off a delinquent account such as a charge-off or collection account, it

will stop hurting my credit, because it will then be shown as "paid."

Fact: As hard as it might be to believe, sometimes paying off a debt can actually hurt you.

This is one of those occasions. These type of collection accounts are allowed to stay on

your credit for a "maximum" of seven years. See Old Delinquent Accounts for warning

and explanation of how you can unwittingly restart this clock.

However, this does not mean that you never pay these debts. While discussing negotiating

with creditors covered in Chapter 4, you will read how to include in your negotiated

settlement a provision for how it is to be reported. To not do so can severely hurt your

chances of restoring your good credit.

Myth: Credit reporting agencies are empowered with Municipal authority.

Fact: Absolutely Not! Credit bureaus are like any other business. They exist for one

reason: to turn a profit. No special authority exists. Rather, they must adhere to the

government authorities and laws overseeing their operations.

Myth: Bankruptcy is a "Fresh Start."

Fact: Unfortunately, many attorneys don't clearly explain the devastating effects to one's

credit when filing bankruptcy. This goes for all types of bankruptcy including Chapter 13,

wage earner.

Bankruptcy is not a clean slate. Every account included in the bankruptcy will be so noted

in your credit file. Additionally, there will be a court record generated that will also be

added. Avoid bankruptcy if at all possible. The time table and the odds of completing

credit restoration are greatly extended due to the number of negative entries that are

associated with such filings.

Myth: Some types of credit information (such as bankruptcies, judgments and

foreclosures) are impossible to remove.

Fact: Although it is true that some types of information can be more difficult than others

to remove, each of these negative entries have been removed thousands of times, using a

multitude of creative methods.

Myth: Credit repair is too complicated to do myself. I would have to hire an attorney.

Fact: In some cases involving a stubborn situation, an attorney can be of great assistance.

An attorney can also help with clarifying the finer points of your state's laws. However,

you can accomplish most if not all of the legal and negotiation-based methods in this

report yourself by becoming familiar with your federally given rights and how to enforce

them. Many opt to use an attorney as a final source of leverage when their own efforts

have not produced the desired result.

Myth: It is illegal to have truthful information removed from your credit report.

Fact: Congress has already set the precedent by making special provisions for the removal

of correct information from individuals' credit files by fulfilling certain criteria. Congress

realizes that dangling that carrot in front of college students encourages repayment of

defaulted student loans. It should come as no surprise that creditors in other financial

markets are hip to this. Let's face it; congress had to get the idea from somewhere. Right?

If you need more proof, read section 609(c)(2)(E) of the NEW Fair Credit Reporting Act

that President Clinton signed in September of '96.

"...a consumer reporting agency is not required to remove accurate derogatory

information from a consumer's file, unless the information is outdated under section 605 or

cannot be verified."

Notice the wording above, "is not required to remove." It is very interesting that the law

does not say that accurate information "can not" be removed, but only that the credit

bureau is not required to. Now, there is law that says a creditor can not knowingly add

wrong information to someone's file, but the subject of removing accurate information is

mysteriously avoided. The truth is the FTC and the bureaus themselves spend a lot of

money trying to convince consumers otherwise. Why? Lobbyists and money of course! It

makes more work for the credit bureaus, thus increasing their labor costs. Bureaus save

millions of dollars a year by convincing consumers that the consumer is virtually

powerless. But congress worded things to leave the door open, and in at least one case

drafted law allowing for it, specifically.

Fortunately, creditors make their profits by collecting from their customers, not reporting

negative credit information. Many creditors though, have an agreement with the credit

bureaus that they will not allow a negative listing to be deleted upon settlement. Larger

creditors, such as huge credit cards or banks will require more pressure before they will

agree to delete a negative listing, but virtually every creditor will give in with the right

amount of convincing. Every creditor who reports to the credit bureaus can also change

the information they report. In most credit organizations, there are dozens of people with

the authority to make changes on the credit report. Bottom Line: Anything a creditor is

responsible for reporting and confirming, a creditor can change.

TIER ONE DEFENSE - A SMART START

 

 

The Subject Of Inquiries

At the end of each report will be a log of inquiries. An inquiry notation is made each time

someone requests a copy of your credit file from that credit bureau. Any company that

receives a copy of your credit profile will be listed under this inquiry section of your

report.

Lenders don't like to see a lot of inquiries on a credit report. Excessive inquiries can result

in a credit denial as easily as bad credit. Thus, you will need to verify the type of inquires

made and take steps to remove any unauthorized inquiries. Not all inquires are viewed

negatively. In fact several types of inquires will not appear on any copy of your file except

for the copy you receive.

*There are six origins of inquiries:

 

 

•Your Existing Creditors (okay)

Your existing creditors may do a periodic review of your account for many reasons. These

inquiries are not viewed negatively.

•Yourself (okay)

A notation may be made each time you request a copy of your own file. This notation

does not appear on the copy that goes to your potential lender and does not count against

you.

•The Bureau (okay)

The bureau may compile mailing lists for its subscribers based on the criteria that the

lender specifies. Your report may be reviewed as a candidate for a particular mailing list.

Again, these internal inquiries do not appear on the copy that goes to your potential

lenders and therefore do not reflect negatively.

•Potential Lenders (negative)

Lenders do not have to have your permission to obtain a copy of your credit file. The law

only requires that they reasonably expect to use the information in a credit transaction.

Any member of the bureau can obtain your file. All they need is a social security number

or a name and address. You should be cautious about giving out any such information

until you're serious about doing business.

•IRS (negative)

•Anyone who has a judgment against you (negative)

 

 

The most common inquiries are those by lenders with whom you have applied for credit.

A banker will look at them in one of two ways. If they are recent, they are looked at as

potential debt pending approval. Lenders have no way of knowing the status of these

other pending applications and are likely to take the safest action by denying your

application. If they are more than a couple of months old, it looks as if they turned you

down. If there are several previous declines, the banker has to wonder why.

 

 

Although inquiries will remain on your file for up to 2 years, those in the last 6 months will

count most heavily against you. Therefore, you should review the log to make certain that

each inquiry was done with "permissible purpose" as explained in Section 604 of the Fair

Credit Reporting Act (FCRA). (See Appendix R)

The FCRA defines the "permissible purposes" for which consumer credit profiles can be

provided to others. A credit report may be supplied if it's to be used for:

 

 

•Credit granting considerations

•Review or collection of an account

•Employment considerations

•Insurance underwriting

•Application for a government license

•With your written permission

•Or in response to a court order

•*FBI investigation

 

 

So unless someone fits these categories, they should not be viewing your credit file.

Anyone who knowingly and willfully obtains a credit report under false pretenses may be

fined under title 18, United States Code, and imprisoned up to two year.

 

 

*The new FCRA, enacted in 1996, allows the FBI to access consumer credit reports in

connection with an investigation of issues such as counterintelligence.

Use the sample letters in Appendix D and Appendix E as a guide to dispute any

unauthorized inquiries into your credit file so that they can be deleted form your report. If

you don't have a lot of items to dispute, go ahead and send your letter to the credit bureau.

However, if you know you are going to be sending the bureau several letters on other

items over the next few months, you should try to take care of this with the creditor who

requested your file. If you can take care of it by having them contact the bureau directly

and deleting the request, then it is just one less letter you will have to send to the bureau

yourself.

Your letter of course will argue for the removal of the inquiry based on the assertion

that...

NEGOTIATING WITH CREDITORS

 

 

As effective as [Tier One Methods] may be, they do have their limitations [text

omitted]...In cases where your story conflicts with the reporting creditor, the bureau is

going to side with the creditor--unless you have strong documentation of the error. The

bureau will inform you that their reinvestigation is complete and if you disagree with the

outcome, you can record a 100 word statement telling your side. You are a long way from

done, however. Such a statement is to concede defeat. You still have a few more punches

to throw.

Tier Two of your defense system is to aim directly at the source, the reporting creditor.

These methods are disclosed with two assumptions: a) the reader is a person of integrity

and would not use these methods to commit fraud, and b) the reader is working with very

limited financial resources, and must get the maximum return in exchange for dispersing

those resources to numerous creditors.

VITAL ASSESSMENT OF YOUR SITUATION

If you have a little cash to throw at your credit problems, you should be able to make

good progress with negotiations. Negotiating with the original creditor creates a win-win

situation where the creditor gets a good chunk of the principle back, and you get an

improved reporting of the debt in your file, plus a reduced settlement in many cases.

NOTE: You must negotiate with the firm that reported the item on your credit file, be it a

collection agency or the original creditor. Only they can change the reported status of the

account. To negotiate with the collection agency is a waste of time unless they are the

name on your file.

[text omitted]...Negotiations will take some cash to accomplish, but the good thing is it's a

permanent fix. And it is the most ethical if there is money still owed.

When evaluating your options and the firmness of your negotiations, there are several

factors that you need to consider.

1) Accuracy and Proof

First, look at the accuracy of the information. If you can prove the information is incorrect

with your documentation, then you can afford to be very firm in what you demand.

On the other hand, even if the information is incorrect, but you can not document that

fact, then you must take basically the same negotiating position as you would if you were

attempting to remove accurate, yet negative, information. That would be to posture

yourself as an amicable, good person trying to overcome the aftermath of negative

circumstances through negotiations. In other words, you are trying to go back and, to the

best of your ability, historically undo a very difficult time in your life.

2) Type

Is the debt secured or unsecured?

If secured, that means that the creditor has possession of an asset, or title to an asset

belonging to you. In matters such as this, you have less leverage--with the exception of

disputing inaccurate information. But in situations where you are attempting to link the

size and haste of your payoff to "how the creditor will report it on your file," you have

virtually no leverage. The creditor can just seize and sell your asset in most cases.

If the debt is unsecured, then it's a whole different ball game. Most consumers

overestimate the risk involved with overdue debts. They worry about possible

repercussions such as wage garnishment and property seizure by their creditors. The fact

is very few creditors will push all the way to a garnishment on a small unsecured debt.

Garnishments and seizures are most often used as mental leverage to gain an emotional

edge over the debtor using fear to help collect past due debt. The reality for creditors is

they are expensive and time-consuming. Even if the creditor went all the way to recover

the debt, they probably wouldn't be able to recover enough to offset their collection costs.

At the same time, you need to be aware that the creditor does have the right to pursue

these remedies there are some risk of financial reprisals when a debt goes unpaid. It just

doesn't happen very often.

U.S. bankruptcies are being filed in record numbers, and often for relatively small amounts

of debt. Many consumers, strained by the fear of an unknown future, perceive bankruptcy

as a way of relief.

These consumers are so intimidated by their creditors, that they flee to bankruptcy, even

though bankruptcy can bring total financial devastation for at least the next ten years...

NOTE: If you are in the midst of a financial crisis and are contemplating bankruptcy,

please read HUG Insider Report #107, Cash Now: The Uncommon Sense Guide To

Raising Cash Fast & Rapid Debt Reduction. Money magazine a while back reported that

90% of all personal bankruptcies could be avoided with just an extra $250 in monthly

income. That's nothing! The 7-step recovery plan outlined in this report has helped

thousands avoid bankruptcy and turn things around. You will not find a better resource for

someone in a "cash crunch."

3) Size

Consider the size of the debt. The smaller the outstanding balance, the greater your odds

for success because it becomes less cost effective for a creditor to pursue. Most creditors

will not devote a lot of effort to collecting just a few hundred dollars.

However, if the amount is less than two hundred dollars, a creditor may not even devote

the effort to negotiate.

4) Age

You also must consider the age of the debt and its status. Eventually, a creditor will give

up an attempt to collect on a debt, and in order to gain some financial benefit will write it

off as a loss and take a tax deduction. This is referred to as a charge-off or a profit & loss.

If this is an old debt that was charged off by the creditor, it doesn't mean that you no

longer owe the debt; it simply shows that they have given up hope of collecting it. The

creditor may then collect on the debt themselves, sell or assign the debt to a collection

agency, press for a judgment and garnishment, or temporarily ignore the debt. Most often

this is the end of it.

However, a recent delinquency will be treated with urgency and pressure by the creditor.

It is helpful for you to understand the motivation of the original creditor to settle.

If they turn the account over to their collection agency, there are certainly no guarantees

that the amount will be collected; and even if it is, they will have to share it with the

agency.

They may get considerably less than what you're offering now if you file bankruptcy. If

they don't work with you, and you're in a critical situation, let them know that they are

going to force you into bankruptcy.

If they take legal action and get a judgment, they risk getting nothing, or it may take years

before they get a penny.

Most creditors would much rather have something guaranteed than pursue the expense of

legal action with a risk of getting nothing. A few states won't even allow anyone to garnish

wages which means they would have to wait until you sold a major asset and had to clear

the title before they could enforce their judgment. This is referred to as a debtor's state,

meaning the debtor is at an advantage. For this reason, and the daunting cost, the majority

of creditors just charge off a bad account as a business loss after a few months in the

hands of a third-party collection agency. They then report it on your credit as such and

leave it at that.

Occasionally, a beginner in the collection agency industry may offer to purchase their

charge-offs. So it is possible that an agency may call you after a year or even two years of

silence. Realize then that they are not collecting on behalf of your original creditor; they

simply took a gamble by purchasing a batch of old bad accounts dirt cheap to try to make

some money.

5) Recent Payment History

It may sound strange at first, but if you have been paying your bills on time recently, the

creditor will be less inclined to settle for less. The logic being that they are getting their

money now anyway. If you have been chronically late and it looks like you could go belly-

up any day now, then they will sense a real potential for loss and be much quicker to

accept a reasonable offer.

This is by no means meant to imply that you should stop paying your bills so that your

creditors will be more likely to settle with you. This is merely to help you access your

negotiating position as affected by your most recent payment record.

6) Also, major considerations are things such as the laws of your state, as well as your

prognosis of your ability to repay the debt at some point in the future. Will you have more

money to put toward the problem in the near future, or is this as good a shot as you're

likely to get?

[text omitted] ...The point for you to remember is that you don't have to (and you won't)

win them all. Just a portion agreeing to a settlement will allow you to turn things around.

And the truth is that most types of unsecured accounts will change the way a debt is

reported and treat a partial payment as a full settlement. This includes: department store

cards, credit cards, medical bills, personal loans, collection accounts, student loans,

amounts remaining after foreclosure or repossession, and bounced checks.

 

A Guide to Business Credit for Women, Minorities, and Small Businesses

 

------------------------------------------------------------------------

 

 

A Guide to Business Credit for Women, Minorities, and Small Businesses

[Graphic Omitted]

 

The need for financing is a critical and perennial concern for the

owners of small businesses. Indeed, few things are as crucial to the

health of a small business operation. Many small businesses are launched

by the personal resources of their owners. But they can quickly reach

the stage where the owner must look to the credit market for financial

help in expanding operations. The banking industry is an important

source of working capital. However, entrepreneurs may not realize that

applying for commercial credit is a more customized process than

obtaining consumer credit, and requires a great deal of preparation by

the business applicant. This brochure may help to de-mystify the process

and improve your chances of getting the credit you need.

 

Types of Loans

 

Banks and other financial institutions can assist you by providing

funds through personal or commercial credit. Examples of personal credit

include automobile loans, credit cards, and home mortgages. Commercial

credit includes business loans; here are some of the options:

Short-term loans are one of the most common types of business loans

and are usually for less than one year. They can provide interim working

capital for a business temporarily in need of cash, and are typically

repaid in a lump sum when inventory or accounts receivable are converted

into cash.

Intermediate-term loans are often used for a business start-up, the

purchase of new equipment, expansion, or an increase in working capital.

The maturity dates range from one to three years.

Long-term loans generally are made for major capital improvements,

acquiring fixed assets, or business start-ups. The term of the loan runs

for periods of three to five years and is usually based in pan on the

life of the asset financed. Repayment is usually made in monthly or

quarterly installments.

A line of credit offers you the ability to borrow money repeatedly,

up to your credit limit, without having to reapply. A line of credit is

particularly important to businesses that experience seasonal

fluctuations. The lender generally will perform a review once a year, at

which time the borrower is asked to provide updated financial

statements.

 

The Credit Application Process

 

Applying for commercial credit can be tedious. It calls for more

documentation than you might initially have expected and certainly a lot

more than when you apply for consumer credit. For lenders, extending

credit to an entrepreneur usually means customizing the loan to suit the

credit needs of that business. So don't be disheartened by the amount of

paperwork needed to accompany the application. Instead, be prepared!

Among the best assets you can bring to the lender is a well

thought-out and documented business proposal. You need to clearly state

the purpose of the loan (will the money be used for temporary working

capital, buying equipment, or expanding facilities); the amount of funds

needed and for how long; and a repayment schedule. Your business

proposal should include the following information:

* business description that tells the nature of the business,

describes the product and its market, identifies its customers and

competition.

* personal profile that outlines the background and experience of

each of the principals in a resume.

* proposal that states the type of loan requested and its purpose.

* business plan that outlines your corporate strategy. for the next

three to five years; it will aid you and the lender in determining

whether the business will generate the cash flow needed to repay

the loan.

* repayment plan that tells how you propose to repay the loan or

outlines a repayment schedule. The lender will be expecting you to

repay the borrowed funds from the profits produced by the business.

As a contingency, you might need to develop a plan on how you would

repay the loan if the profits alone turned out to be inadequate.

* supporting documentation will include copies of pertinent papers

that support the information contained in your loan proposal--for

example, a lease, certificate of incorporation, partnership

agreement, letters of reference, contracts, invoices or vendor

quotes.

* collateral that you will use to secure the payment of the loan.

Collateral can include business and personal assets such as

inventory, equipment, and accounts receivable or real estate,

stocks, bonds, and automobiles.

* financial statements, both personal and for the business. The

business financial statement should be provided for the last three

to five years of operation including a year-to-date interim report.

It should contain a balance sheet showing business assets and

liabilities, and a profit-and-loss statement showing revenues and

expenses. The lender uses this information to calculate a

debt-to-worth ratio for the business. Be prepared to provide copies

of tax returns for the business for this same period.

The personal financial statement should list your assets and your

liabilities. Identify the names in which title to each asset is

held and its fair market value. You should be prepared to provide

copies of your personal tax returns. You may be asked for a list of

credit references. Lenders will check your personal as well as your

business credit rating.

Lenders will carefully examine your financial statements and

business projections. As a borrower, you must be fully prepared to

answer questions about them.

* personal guarantees of the owners or other principals usually are

required, even from an established business. The lender also may

request another party's guarantee such as a cosigner or a surety,

or may request a government guarantee from the U.S. Small Business

Administration or other government agency.

In addition to the personal guarantee that you give, under the

Equal Credit Opportunity Act the lender is allowed to require

another person's guarantee should your application fail to meet the

lender's standards of creditworthiness. If all or most of the

assets listed on your personal financial statement are owned

jointly with your spouse, or with someone else, the lender is

likely to require such a guarantee, But the lender may not require

that your spouse be the guarantor,

In the case of secured credit, the lender is allowed to obtain a

spouse's signature on certain documents when the applicant offers,

as security for the loan, property that the two own jointly, In

this case, the spouse or other co-owner may be asked to sign

documents--such as a mortgage or other security agreement--that

would be necessary under applicable state law to make the property

available to satisfy the debt.

 

Sources of Technical Assistance

 

Before you approach a lender, you might want to seek the advice of

another, more experienced "set of eyes" to review your business

proposal, particularly if you are a first-time borrower. By doing so,

you'd be getting the loan package in shape to make it easier for the

lender to reach a favorable credit decision. There are some business

support groups whose members could counsel you on how your package

looks. A qualified counselor might even discover that you really don't

need more money, and instead suggest better inventory control, improved

marketing techniques, or other changes that could actually solve your

growth problems. One source of counseling available to small businesses

is the Service Corps of Retired Executives (SCORE), which is sponsored

by the U.S. Small Business Administration. Others might include

accountants and financial advisers.

Once you are satisfied that your proposal is in good shape to

present to a lender, set up an appointment to discuss your application.

You will find that the lender can also be an excellent source of

business and financial counsel.

 

If Your Application Is Not Approved

 

Most lenders, banks especially, are conservative in granting

business loans. Given the obligation to their stockholders and

depositors, they need to be sure there's a good chance the loans they

make will be repaid.

If your application for credit is not approved, find out the

reasons why. Some of the reasons that lenders often give for denying a

business loan include, for example, insufficient owner's equity in the

business; lack of an established earnings record; a history of slow or

past-due trade or loan payments; or insufficient collateral. Finding out

the reasons may help you qualify the next time you apply.

The lender will keep you informed about the status of your

application. If you are considered a "small business" (when your

business revenues are $1 million or less, or when you are applying to

start up a business), a lender has 30 days to let you know, either

orally or in writing, whether or not you get the loan. The 30-day period

begins after the lender has received all of the information needed to

evaluate your credit request. If your application is denied, the lender

must give you either:

* a written statement of the reasons for denial, or

* a written notice telling you of your right to obtain the reasons in

writing. This notice may be given to you during the application

process or at the time of the denial.

The lender also will keep for one year the records relating to your

application.

Different rules apply for larger businesses (those with more than

$1 million in revenues}. Within a reasonable period of time after

getting all the necessary information on which to base a decision, the

lender must decide and let you know whether or not you get the credit.

Then you'll have 60 days in which to ask for a written statement of the

reasons why you were denied credit; this is important to remember

because the lender need not notify you of this right. The creditor will

keep records of your application for at least 60 days after telling you

of the credit decision. If you request that records be kept longer, or

ask for a written statement of the reasons for denial, records will be

kept for one year.

 

Equal Credit Opportunity Act

 

Obtaining credit can be a difficult process for any business owner

and especially for first-time borrowers. But keep in mind that different

lenders have different standards; if you did not meet the standards of a

particular restitution, you may still qualify elsewhere. If you have a

full understanding of why the initial lender didn't approve your

application, with time and more attention to these areas, you can

improve your proposal as a result and may succeed the next time you

apply.

Women and minority applicants may be concerned that they have

received less favorable treatment which is unrelated to their

creditworthiness. All business applicants have certain protections

against unlawful discrimination under the Equal Credit Opportunity Act.

The Act makes it illegal for lenders to deny your loan application,

discourage you from applying for a loan, or give you less favorable

terms than another applicant because you are a woman or a minority group

member.

 

Under the law, a lender may not take factors such as sex, race,

national origin, or marital status into account.

 

In addition, the lender may not ask for information about your

spouse unless your spouse has some connection to the business, or unless

you are relying on your spouse's income to support your credit

application or relying on alimony, child support, or separate

maintenance payments to establish creditworthiness. But the lender may

ask you for information about your spouse if you are living in, or you

are relying for security on property located in, a community property

state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,

Washington, or Wisconsin).

 

Whether your business is large or small, if you are not granted the

credit, be sure to discuss any questions you may have with the lender.

 

If You Need Help

 

If you are not granted credit by the lender and you believe the

lender may have acted unlawfully, you can seek further assistance from

the regulatory agency that supervises the institution. A list of some of

the agencies is contained in this brochure for your reference. If it

becomes necessary to seek legal assistance, the Act provides some

remedies. If you have been denied credit because of unlawful

discrimination and are able to prove it, courts may award actual damages

and in some circumstances may impose punitive damages against the

lender. If a lawsuit alleging discrimination is successful, the court

also may award court costs and attorney fees.

 

Federal Enforcement Agencies

 

All creditors are subject to the Equal Credit Opportunity Act

(ECOA) and Regulation B (issued by the Federal Reserve Board), which

contains specific rules governing credit transactions. The following is

a list of the federal agencies that enforce the ECOA and Regulation B

for particular classes of financial institutions. Any questions

concerning a particular financial institution should be directed to its

enforcement agency.

State Member Banks of the Federal Reserve System

Division of Consumer and Community Affairs

Board of Governors of the Federal Reserve System

20th & Constitution Avenue, NW

Washington, D.C. 20551

(202) 452-3946

Non-Member Federally Insured Banks

Office of Consumer Affairs

Federal Deposit Insurance Corporation

550 Seventeenth Street, NW

Washington, D.C. 20429

(800) 424-5488

(202) 898-3536

National Banks

Compliance Management

Office of the Comptroller of the Currency

250 E Street, SW

Washington, D.C. 20219

(202) 874-4428

Federal Savings Association

Consumer Programs Division

Office of Thrift Supervision

1700 G Street, NW, Fifth Floor

Washington, D.C. 20552

(202) 906-6237

Small Business Investment Companies

U.S. Small Business Administration

409 Third Street, SW

Washington, D.C. 20416

(202) 205-6751

Federal Credit Unions

Office of Consumer Programs

National Credit Union Administration

1776 G Street, NW

Washington, D.C. 20456

(202) 682-9640

Finance Companies and Other Creditors Not Listed Above

Division of Credit Practices

Bureau of Consumer Protection

Federal Trade Commission

Washington, D.C. 20580

(202) 326-3224

 

Alternative Sources of Capital

 

The U.S. Small Business Administration (SBA), the federal agency created

specifically to assist and counsel small businesses, suggests the

following sources of capital in addition to banks:

Friends, Relatives, Individuals

Savings and Loan Associations Insurance Companies

Finance Companies

Mortgage Companies

Small Business Investment Companies

Venture Capital Firms

State Government Financing Sources

Pension Funds

Government Agencies (such as SBA)

Private Foundations

 

To request additional copies of A Guide to Business Credit for

Women, Minorities, and Small Businesses, please send your name, address,

and the number of copies requested to Publications Services, Board of

Governors of the Federal Reserve System, Washington, D.C. 20551.

 

My credit card debt is consuming my life. How can I cut credit card costs?

 

If you have more than one card, pay down the balances with the highest interest rates and

then use (or obtain) a card with a low rate. Because there is great competition among

credit card issuers, you might get a rate reduction simply by calling your current bank and

asking.

I can't afford the minimum payment required on my statement. Can I pay less?

Most card companies insist that you make the monthly minimum payment, which is usually

2%-2.5% of the outstanding balance. If you can convince the card issuer that your

financial situation is desperate, the issuer may cut your payments in half. In some cases,

the issuer may waive payments altogether for a few months. This courtesy is usually

extended only to people who have never been late with payments.

Bear in mind that paying nothing or very little on your credit card should be a temporary

solution only. The longer you pay only a small amount, the quicker your balance will

increase due to interest charges.

My checking account and credit card are from the same bank; can the bank take money

out of my checking account to cover my missed credit card payments?

No. A bank that takes money out of a deposit account to cover a missed credit card

payment violates the federal Truth in Lending Act. You can sue for damages--the amount

taken out of your account and any other damages you suffer, such as lost interest or

bounced check fees.

I plan to cancel all my credit cards but one. Any advice on which one to keep?

If you don't carry a monthly balance, keep the card with no annual fee, but make sure it

has a grace period. If you carry a balance each month, get rid of the cards that come with

the worst of the following features:

•High interest rates.•Unfair interest calculations. Avoid cards that charge interest on the

average daily balance, not the balance due. Here's why. Let's say you pay $1,200 of your

$1,500 balance in January. A bank using the average daily balance will charge you in

February interest on the $1,500 average daily balance from January, not on the $300 you

still owe.•No grace periods. This means you pay interest from the time of purchase until

the time of payment even if you pay your balance in full.•Nuisance fees. Get rid of cards

with late payment fees, over-the-limit fees, inactivity fees, fees for not carrying a balance

or for carrying a balance under a certain amount, or a flat monthly fee that's a percentage

of your credit limit.

 

 

My wallet was stolen. Will I have to pay the charges the thief made using my credit cards?

No. Federal law limits your liability for unauthorized charges made on your credit or

charge card after it has been lost or stolen. If you notify the card issuer within a reasonable

time--usually 30 days--after you discover the loss or theft, you're not responsible for any

charges made after the notification, and are liable only for the first $50 for charges made

before you notified the card issuer. Rarely will a card issuer even charge you the $50.

I purchased an item using my credit card and it fell apart. Can I refuse to pay?

Maybe. Under federal law, you must first attempt in good faith to resolve the dispute with

the merchant. If that fails, you can withhold payment only if the purchase was for more

than $50 and was made within the state you live in or within 100 miles of your home.

(This limitation applies only if you used a card not issued by the seller, such as a

MasterCard. There is no $50, 100-mile or in-state limitation if you use the seller's card,

such as your Sears card.)

The 100-mile limitation is easy to calculate when purchases are made in person. But if you

order through the mail or over the telephone, the law is unclear as to where the purchase

took place. You can claim that the purchase was made in the state in which you live (even

if the catalogue company is on the other side of the country) because you placed the order.

You have to hope the seller doesn't fight you.

My credit card billing statement has an error. What should I do?

Immediately write a letter to the customer service department of the card issuer. Give your

name, account number, an explanation of the error and the amount involved. Enclose

copies of supporting documents, such as receipts showing the correct amount of the

charge. You must act quickly--the issuer must receive your letter within 60 days after it

mailed the bill to you.

Under the federal Fair Credit Billing Act, the issuer must acknowledge receipt of your

letter within 30 days, unless it corrects the bill within that time. Furthermore, the issuer

must, within two billing cycles (but in no event more than 90 days), correct the error or

explain why it believes the amount to be correct. If the issuer does not comply with these

time limits, you don't have to pay $50 of the disputed balance.

During the two-billing-cycle/90-day period, the issuer cannot report the amount to credit

bureaus or other creditors as delinquent. The issuer can charge you interest on the amount

you dispute during this period, but if it later agrees that you were correct, it must drop the

interest accrued.

Must I give my phone number when I use a credit card?

Several states, including California, Delaware, Georgia, Kansas, Massachusetts,

Minnesota, Nevada, New Jersey, New York, Oregon, Pennsylvania, Rhode Island and

Wisconsin, bar merchants from recording personal information when you use a credit card.

Furthermore, merchants agreements with Visa and MasterCard prohibit them from

requiring a customer to furnish a phone number when paying with Visa or MasterCard.

Nevertheless, many still ask.

 

About ...Bankruptcy

 

------------------------------------------------------------------------

 

 

About ...Bankruptcy

This Life AdviceSM pamphlet about Bankruptcy was produced by

the MetLife Consumer Education Center and reviewed by the American

Bankruptcy Institute and the Executive Office for United States

Trustees, U.S. Department of Justice. Editorial services provided

by Meredith Custom Publishing.

Each year more than 800,000 Americans file for protection under

the federal bankruptcy laws, according to the American Bankruptcy

Institute. Some are credit abusers or are financially irresponsible.

But average working families who try to pay all of their bills can find

themselves in financial trouble, too. The sudden loss of a job, medical

bills, a divorce or even a natural disaster can quickly wipe out a life's

savings. For many, bankruptcy provides a second financial chance.

Bankruptcy is usually used as a last resort, after other attempts

to solve a financial crisis fail. You may want to talk with a credit

counselor or an attorney to see if you really need to file bankruptcy,

or if an agreement can be reached with your creditors.

What Is It?

Bankruptcy can relieve the honest but unfortunate debtor from

the pressures of excessive debt by providing a fresh start. It allows

you to discharge much of your debt or allows you time to get back on

your feet without harassment by creditors. The bankruptcy laws also

benefit creditors by providing a method for them to obtain at least partial

payment of a debt.

For many, making the decision to file for bankruptcy is difficult.

You may think bankruptcy is a sign of failure and an indication that

you can't manage your own affairs. In truth, most people who file for

bankruptcy intend to pay their bills but can't. By filing for bankruptcy,

you can start again with a clean slate, free of the stress and depression

that result from being just one step ahead of the bill collector.

At the same time, the decision to file bankruptcy should be carefully

considered. It is a Federal court proceeding which can affect your legal

right to keep or to use your property. Once you start a bankruptcy case,

it may be impossible to stop.

There are two main types of bankruptcy available to individuals.

In Chapter 7, your nonexempt assets are sold to pay creditors while

most of your debts are discharged. In Chapter 13 or Chapter 11, you

prepare a reorganization plan to pay off creditors. Once you file a

bankruptcy petition, an automatic stay prevents creditors from starting

or continuing most legal proceedings against you.

Chapter 7

In Chapter 7 bankruptcy, many of your assets are sold by an

appointed trustee, who then makes partial payments to your creditors.

You have the right to retain an interest in certain partially exempt

assets, such as your residence, car, clothing, household appliances

and furnishings, life insurance, pensions and tools of your trade. You

may usually choose either the exemptions provided for in the Bankruptcy

Code or those allowed under your state law. Creditors do retain the

right to any collateral you have pledged to secure a loan.

The first step in bankruptcy is to file a petition and schedules at

the clerks office of the federal bankruptcy court. Your petition must

include a list of all creditors, the sources of your income, a list of all

real and personal property, and a detailed list of your living expenses.

Some of the documents you will need include the following.

* Deeds, mortgages, contracts on your home and mortgage statements.

* Any papers relating to past bankruptcies.

* Copies of tax returns for the past two years.

* All legal papers, summonses, complaints and notices of attachment,

execution or garnishment.

* Credit card bills, medical bills and any other documents regarding

outstanding debt.

* Statements and passbooks for savings or checking accounts for the

past year.

* Student loan papers.

You can obtain the forms to file for bankruptcy from the court clerk.

You'll find the number of the local bankruptcy court in the federal government

listings in the white pages of your phone book. You must pay the appropriate

fee (about $175) at the time you file your petition. Under certain

circumstances, the court may allow you to pay the fee in installments.

In all but the most basic of cases, it is usually advisable to hire

an attorney. Fees may range from $400 to $1,000 or more, depending on

the complexity of your case. Be sure to discuss an attorney's fees up front

and ask whether you can pay in installments.

In a straightforward proceeding, the entire procedure usually takes

four to six months. You can file for Chapter 7 bankruptcy only once every

six years, and notice of the filing will usually remain on your credit

report for at least 10 years. Also note that although your debt may be

discharged, anyone who has co-signed a loan with you will remain responsible

even after your bankruptcy.

Chapter 11

Chapter 11 bankruptcy is generally used to reorganize a business, although

individuals are also eligible. This type of bankruptcy allows a business to

continue operating while repaying creditors through a court-approved plan.

Chapter 13

If you have a regular income, Chapter 13 bankruptcy provides a method

for repaying your debt over a period of time, according to a court-approved

plan. The period of time allowed ranges from three to five years. Only an

individual with unsecured debts of less than $250,000 and secured debts

of less than $750,000 is eligible.

To file Chapter 13, you must file the appropriate schedules and

petitions with the bankruptcy court and pay the filing fee. You must also

file a proposed plan of repayment with your original petition or within

the next 15 days. A trustee will be appointed to supervise your

performance, to make regular payments to your creditors and to provide

the court and other parties with information about your finances.

Nondischargeable Debts

Certain debts cannot be discharged through a bankruptcy proceeding.

These include most taxes, alimony and child support, student loans and

some property settlements. Other nondischargeable debts result from fraud,

willful or malicious injury, certain fines or penalties, and claims

incurred from driving under the influence of alcohol or drugs.

Will It Ever End?

A bankruptcy filing stays on your credit record for seven to 10 years,

but it need not be a permanent handicap. In fact, there are laws that

forbid discrimination against persons who have declared bankruptcy. For

example, you may not be denied a job, be denied or evicted from public

housing or be denied a drivers license just because you filed for bankruptcy.

The emotional impact on you and your family may take some time to heal.

You may want to seek emotional support by contacting a professional

counselor or clergy member or discussing your problems with a friend or

family member.

Making a Fresh Start

Bankruptcy has indeed tarnished your credit report, but it is still

possible to gain renewed confidence from creditors. You can typically

obtain credit if you demonstrate a consistent employment record and signs

of financial rehabilitation. Start by opening a savings account and

obtaining a secured credit card. Make the payments on time to build a

positive credit profile.

During your rebuilding period, it is important to check your credit

rating often to make sure you are getting credit for your good deeds.

Credit bureaus are required to provide a free copy of your credit report

if you are denied credit. Some credit bureaus also provide a free copy

once a year. Be prepared to provide relevant information, including your

Social Security number, date of birth and addresses for the past five years.

Contact the following companies to order a copy of your credit report:

Experian (previously TRW)

National Consumer Assistance Center

P.O. Box 2104

Allen TX 7501-2104

Credit Bureau, Inc. Trans Union

831 S. Main St. P.O. Box 390

Salinas, CA 93901 Springfield, PA 19064-0390

Once you receive your credit report, look it over carefully. Are your

name, address and Social Security number correct? Do the lines of credit

listed belong to you? If you find errors, notify the credit bureaus in

writing and include any backup materials such as canceled checks.

A Final Word

Again, before declaring bankruptcy you may want to seek credit

counseling or talk with an attorney and try to reach out-of-court

agreements with your creditors. For more information see the Life

AdviceSM pamphlet Having Credit Problems.

 

 

This pamphlet, as well as any recommended reading and reference

materials mentioned, is for general informational purposes only. It is

issued as a public service and is not a substitute for obtaining professional

advice from a qualified person, firm or corporation. Consult the appropriate

professional advisor for more complete and up-to-the-minute information.

Metropolitan Life Insurance Company

New York, NY

HOW TO GET A VISA/MASTERCARD WITH NO CREDIT CHECK

 

------------------------------------------------------------------------

 

SHAPING YOUR APPLICATIONTO FIT THE RIGHT PROFILE

Creditors approve credit to those people who most closely match the right profile. They

arrive at those conclusions by assigning point values to various items of information that

are included either on your credit application or in a credit report.

Credit card companies like scoring systems because as a large volume creditor, they can

replace trained credit personnel with a relatively few employees who can quickly total

number columns and determine if an applicant's point values add up to the right score.

Scoring, of course, is done for one reason. A creditor just wants to know that the odds are

high he will get his money back. Scoring systems are fine for those people who fit right

into the right profile, but what about those who don't but could pay off their monthly

obligations just as easily and reliably as the next person? If you are one of those people

who just doesn't "fit the mold," you'll simply have to make a few adjustments in your

application so that you do fit the scoring profile of what a creditor is looking for in a final

total.

HOW CREDITORS RATE AN APPLICATION

The first thing you should know is that every system is different. That in itself can work to

your advantage. You could be rejected by one company's scoring system and approved by

another. One creditor's system will give you many points for a good ancwer, and totally

ignore a question that gives a negative answer. Another creditor can simply reverse the

process.

Keeping in mind that creditors use different scoring systems, we will list only the most

important questions and briefly review how a response can affect your total score. The

following categories are listed from the highest to lowest points awarded each response.

RESIDENCE - The longer you have lived in one place the better. Stability is given high

points.

HOME OWNERSHIP - The best possible housing situation is to own your own home,

even if itt is mortgaged. The worst is: renting an unfurnished apartment, living with

parents, living in a trailer or motel.

FHA ASSUMABLE HOME LOANS

President Bush signed legislation making credit checks for home mortgages mandatory

after December 1989. Prior to that date however, all loans are fully assumable without a

mandatory credit check. There are four important factors that will allow you to purchase a

home without a credit check and with a minimal down payment:

1) As a home buyer, your application can be pre-approved and your loan without a credit

check provided: a) The original VA loan was granted March 1988, or b) The original FHA

loan was granted prior to December 2) If the original home buyer made a small down

payment on the sale price which was used primarily for closing costs and consequently did

not buy any equity at that time. 3) If most of the payments made by the original owner

were applied to interest during the first 4-5 years and very little went towards the

principal. In that event, very little equity would result from making payments. Or, if there

was any equity it would probably have been reduced by depreciation or other home

market conditions. 4) The last factor would be low- or no-equity conditions that resulted

from low inflation and other economic conditions that can decrease the value of property.

UNDERSTANDING WHAT EQUITY MEANSAS A BUYING FACTOR

In order to understand the buying significance of equity you must understand what it

means. Equity is the difference between what real estate sells for (market value), and the

payoff amount of the loan to a lender on that property. In other words, if you own a home

with a market value or $100,000, but you owe the bank $99,000, your eequity is $1,000.

In tens of thousands of cases, VA and FHA homes can be purchased with little or no

down payment because no equity has been built up.

TENS OF THOUSANDS OF HOMESARE AVAILABLE - INCLUDING YOURSS!

If you have been dreaming about owning your own home someday, Dream No More!

Right now at this very moment there are tens of thousands of homes for you to choose

from that can be purchased with no credit check and no down payment. or with a very

modest down payment.

Sounds incredible doesn't it? But remember, the only reason any seller requires a down

payment in the first place is usually to recover the equity in their home. A small amount of

equity requires a small down payment. No equity means no down payment!

DEAL WITH MOTIVATED SELLERS

Your objective as a smart buyer should always be to buy real estate with little or nothing

down. Even if a seller has equity, you can work out an arrangement that is to your benefit.

For example, a seller may agree to carry all the paper on the transaction. This doesn't

mean that the seller will receive no down payment where there is an equity consideration.

What it does mean is that you shouldn't have to come up with cold cash out of your

pocket.

Extending credit to customers is the way creditors make money. If you convince them you

are a good risk they will give you what you want. Basically, there are two ways you can

achieve that goal.

1) You can bypass the normal scoring methods that are used by impressing the person

processing your application that you are sincerek reliable, stable, and have the ability to

make monthly payments on a loan or credit card account. 2) You can tailor your answers

to the application's questions and in that manner fit into the right scoring mold of what a

good credit risk is, according to the formula they are using.

That doesn't mean you should lie on your application. It simply means you should be

aware that being compatible with certian sterotypes will work in your favor. Remember, a

creditor can still verify the information you list in an application. Still, many people will

twist the truth to put themselves in a favorable position. For example:

1) Some applicants will list their parent's, a friend's, or a relative's address as their own

residence and indicate they have lived there for years, knowing it probably won't be

checked. 2) Provided an applicant has a friend or employer who will go along with them,

they can list a position and salary they don't really receive. Then when the creditor calls to

verify employment the friend will support what the applicant has claimed to be true. 3)

Another way applicants instantly increase their salary is to set up their own corporation.

After issuing themselves private stock with an inflated value, they list the stock as part of

their salary.

MORE HOT TIPS ON HOW YOU CANSTACK THE ODDS IN YOUR FAVOR!

1) If you don't have a telephone get one installed. The alternative is to make an

arrangement with the telephone company and a friend or relative, to have your name listed

with their phone. 2) If you have more than one job, list the one that provides you with the

greatest income. 3) Add up your income from all sources and place the total in your gross

income listing. Be prepared to submit a supplement to your application if they want to

verify your income with your employer.

4) Many banks will have a list of "good" and "bad" reasons for borrowing money. Unless

you are applying for a secured loan, you don't have to spend the money for the reason

specified. "Good" reasons include home improvement, education, loan to establish credit,

medical treatment for you or your family, and secured loans for a home, car, boat, and

other properties. "Bad" reasons include loans that create another obligation such as that

created when you borrow money for a down payment and then have two payments to

make; money to pay aa fine or penaltly; money to consolidate debts, unless you are doing

it to get lower interest rates; an unnecessary luxury item; money to finance politics; and

money that you will loan to someone else. Use a little common sense in determining what

type of loan a creditor may consider bad.

5) Banks use dependent figures to determine what your living costs are. If you have more

than two dependents you should indicate how they earn their own way or are self-

supporting.

6) If you don't own your own home, counteract this by showing how stable you are. For

example, even though you have only rented in a new location for a relatively short time,

you lived at your last residence for many years. You moved to improve yourself in some

way.

7) Even job changes can be counteracted if each change increased your salary and

improved your position.

8) Don't ever let a creditor guess as to whether or not you can afford the extra obligation

you are asking for. Make it obvious by the amount of your income. If you have more

income sources than just your salary, include those amounts.

ALWAYS BE PERSISTENT AND NEVER GIVE UP!

If you complete an application and are still rejected, the very first thing you should do is

be persistent and never give up. There are many reasons why a person may be turned

down for credit, but whatever the reason, you have a legal right to ask a creditor what

their reason was.

By knowing what some of the main reasons are for denying credit you can put yourself in

a position whereby you can make necessary adjustments and avoid negative effects in

advance. If you are turned down, you can then of course concentrate on those points

when you reapply.

When you are dealing with creditors you will know who is the cooperative sort, and who

is not. If an unsecured loan does not appear imminent, turn the conversation to a secured

loan. Then all you do is deposit an amount into savings account to serve as collateral for

the amount of credit you want to secure. In some cases the creditor may take personal

property as security. If you go to one creditor and it's clear he has no imagination to deal,

go to another who is willing.

CONSIDER ASKING SOMEONE YOU KNOW TO CO-SIGN

A co-signer is soneone who generall has better credit than the person he is co-signing for.

He is also the person a creditor will go after first in the event you do not pay off you debt.

Why? Because the know that co-signers don't want their credit ratings ruined and will

quickly settle the obligation.

If you are trying to establish or rebuild credit, co-signers can help you achieve that goal.

Naturally you wouldn't need a co-signer every time you apply for credit. After paying off

one obligation with a co-signer, it should be much easier to acquire more credit on your

own.

Co-signers are usually friends or relatives. When you find someone willing to help they

should be offered some compensation agreeable to both of you. Your application for

credit will be approved primarily on the strength of your co-signer's credit.

HOW TO GET A VISA OR MASTERCARD

The tips and techniques described in this report are meant to increase the odds for anyone

who is absolutely certain they cannot get a Visa/Mastercard through normal channels. You

should make every attempt to clean up your credit report by removing negative items and

replacing them with positive items. If you have no credit at all, open an account at a local

department store. After a few months apply for your bank card. If you are rejected, find

out why and correct the problem. If that doesn't work, cultivate a relationship with your

banker. Open other accounts that are easier to obtain. Increase your income. Buy a home.

Make yourself a better credit risk on your credit report. Ask a friend or relative to co-sign.

After paying off that debt, reapply on your own. Or, the fastest and easiest way to open a

Visa or Mastercard account in your own name, is through a secured account.

SECURED CREDIT CARDS

Secured Visa and Mastercard bank cards are issued by savings and loan associations

throughout the U.S. The lender will ask you to open a savings account. The funds placed

into the savings account are frozen as long as there is an outstanding balance on the credit

card. The savings account acts as security against non-payment of charges made against

the credit card. Then, in the event a cardholder doesn't pay, funds from the frozen account

can be used to pay off the debt. This method completely reduces any risk to the lender.

Requirements are often lowered by lending institutions that have this program. So if you

couldn't obtain a card through your regular bank, chances are you will receive one through

a secured credit card program without a credit check.

 

The Card You Pick Can Save You Money

 

------------------------------------------------------------------------

 

 

 

 

Shop, The Card You Pick Can Save You Money

[Graphic Omitted]

The Card You Pick Can Save You Money

CONTENTS

Introduction 1

Definition of Terms 2

Variables and Impact 3

Survey Results 8

as of January 31, 1995

Board of Governors of the Federal Reserve System

To obtain additional copies of this or any other brochure

published by the Federal Reserve System, contact:

Publications Service, Board of Governors of the Federal

Reserve System, Mail Stop 127, Washington DC 20551.

INTRODUCTION

SHOP. Smart consumers do comparison shopping when looking for

credit such as a mortgage or an auto loan. It is also a good practice

to engage in when shopping for a credit card plan, because the choices

you make could save you money.

SHOP among the various plans of credit card issuers contained in

this brochure. Compare them with cards you already have and with offers

you receive in the mail for the terms that best suit your spending and

repayment habits. The costs and terms of the plan or plans can make a

difference to how much you pay for the privilege of borrowing.

In the disclosure form from the credit car issuer, key credit terms

to consider are the annual percentage rate (APR), annual fee, and grace

period. Also consider credit terms such as cash advance fees, late

payment charges, and over-the-limit fees.

Take these items into consideration along with how you pay your

bills each month, whether in full or only partially. You could save

yourself some money.

 

DEFINITION OF TERMS

ANNUAL FEE A flat, yearly charge similar to a membership fee.

ANNUAL A measure of the cost of credit that

PERCENTAGE expresses the finance charge, which includes

RATE (APR) interest and may also include other charges, as a yearly

rate.

FINANCE CHARGE The dollar amount you pay to use credit. Besides

interest costs, it may include other charges associated

with transactions such as cash advance fees.

GRACE PERIOD A time, about 25 days, during which you can pay your

credit card bill without paying a finance charge. Under

almost all credit card plans, the grace period only

applies if you pay your balance in full each month. It

does not apply if you carry a balance forward. Also,

the grace period does not apply to cash advances.

INTEREST RATE Interest rates on credit card plans change over time.

Some are explicitly tied to changes in other interest

rates such as the prime rate or the Treasury Bill rate

and are called variable rate plans. Others are not

explicitly tied to changes in other interest rates and

are called fixed rate plans.

VARIABLES AND IMPACT

Calculation of Finance Charge

It is helpful to know how the credit card issuer will calculate the

finance charge on your credit card bill. To determine the finance

charge, an issuer will apply a periodic rate to a balance. Card issuers

use different balance calculation methods such as: the average daily

balance method, the previous balance method, and the adjusted balance

method.

With the average daily balance method (the most common method), the

issuer calculates the balance by taking the amount of debt you had in

your account each day during the period covered by the billing statement

and averages it. With the previous balance method, the issuer uses the

balance outstanding at the end of the previous period--that is, the

period prior to the one covered by the billing statement. With the

adjusted balance method, the balance is derived by subtracting the

payments you've made from the previous balance.

 

Combinations to Consider

Smart consumers find the best deal for their budgets and repayment

style. For example, if you always pay your monthly bill(s) in full, the

best type of card is one that has no annual fee and offers a grace

period for paying your bill without paying a finance charge.

No annual fee + grace period = best deal [Graphic Omitted]

If you don't always pay off the credit card balance monthly, be

sure to look at the periodic rate that will be used to calculate the

finance charge.

[Graphic Omitted]

Credit card issuers that offer variable interest rate plans derive

the rate to be charged to the consumer by using a formula.

Two of the most common formulas are:

+ Margin Index or

= Variable rate

[Graphic Omitted]

x Multiple

Some of the more common indexes used by credit card issuers are the

prime rate, the one-, three-, or six-month Treasury Bill rate, the

federal funds or Federal Reserve discount rate. Most of these indexes

can be found in the money or business section of major newspapers. Once

the interest rate corresponding to the index has been identified, the

issuer then adds a number of percentage points, the "margin," to this

index rate to calculate the rate charged.

In some cases, the issuer might elect to use another formula to

determine the rate to be charged to the consumer. The issuers multiply

the index or index plus the margin by another number, "the multiple," to

calculate the rate charged.

Possible Savings

The following is an example of the annual savings you could achieve

by switching to a credit card plan with a lower interest rate and no

annual fee.

ASSUMPTION In this example, the average monthly balance carried

forward equals $2,500, which is about the national average for consumers

with credit card debt.

PLAN DESCRIPTIONS:

Terms Plan A Plan B

Average monthly balance $2,500 $2,500

APR x .18 x .14

 

Amount paid in finance charges

annually $450 $350

Annual fee + $ 20 + $ 0

Total cost $470 $350

In this example, the total possible savings each year achieved by

selecting a credit card plan with a lower interest rate and not annual

fee is ($470 - $350) $120.

Credit Card Owner's Checklist

If you are applying for your first credit card or have several

cards already, here are some helpful tips you might want to follow in

shopping for a credit card.

1. Review all of the information about the plans.

2. Draft a list of desired features that best fit your needs and

rank them according to how you plan to use the card.

3. Call the institutions you've selected to verify the information

and to see if they have any other plans available.

4. If you are a current card holder and have a good credit rating,

see if the institution that your card will lower you current

rate...NEGOTIATE. [Graphic Omitted]

SURVEY RESULTS

Every six months the Federal Reserve System collects and published

a report on the terms of credit card plans offered by financial

institutions. This report includes information supplied by the largest

card issuers in the country, as well as any other financial institutions

that indicate to the Federal Reserve System that they would like to

participate in the report and submit information about their credit card

plans. The credit terms listed in this report are as of the date

indicated below and are subject to change. Consequently, readers are

encouraged to contact the credit card issuer for current rates and to

learn about their other credit card plans.

CODES USED IN THE CREDIT CARD PLAN LIST:

Availability Refers to availability of card to consumers

N = national

R = only in selected states

State abbreviation = only in state specified

Type of F = fixed

Pricing V = variable

T = tiered pricing, with different periodic rates

applying to different levels of the

outstanding balance. The rate shown applies

to the lowest of the balance tiers. 8

Grace Period Indicates that no finance charge will be imposed

for credit extended on purchase if

payment in full is received by the payment due

date after the end of the billing period in which

the purchase was made. Generally, a grace period

allows customers to avoid finance charges on

purchases if they always pay their credit card

bill in full by the due date of the bill. Grace

periods usually do not apply to cash advances,

which begin accruing interest from the day of

transaction.

Other Features Credit card issuers may automatically add

enhancements or other features in the plan without

charging extra fees. Enhancements can include

cash rebates, purchase protections, warranty

guarantees, travel accident or automobile rental

insurance, discounts on goods and services

purchased, and usage incentives such as frequent

flyer miles.

1 = rebates on purchases

2 = extension of manufacturer's warranty

3 = purchase protection/security

4 = travel accident insurance

5 = travel related discounts

6 = automobile rental insurance

7 = nontravel related goods or services

8 = credit card registration

9 = other

N.R. = not reported

Date of Survey The credit terms shown in this brochure were as of

January 31, 1995 9

INSTITUTION, Ann. Type Grc

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

ABBOTT BK

Mastercard,N 17.40 V 1 25 0 2,3,4,6 (800)288-6844

AFBA IND BK

AFBA Industrial

Bank Visa, Master

card,N 14.50 V 1 25 0 N.R. (800)776-2265

AMALGAMATED BK

CHICAGO

Gold Mastercard, 2,3,4,5,

N 13.00 V 1 25 0 6,7,8,9 (800)365-6464

AMERICAN EXPRESS

CENTURION BK 2,3,4,6,

Optima,R 15.50 V 1 25 25 9 (800)635-5955

AMERICAN GEN FNCL

CTR

The More Card

(Visa),N 19.80 F * 25 0 N.R. (800)828-6673

ASMOUTH BK OF AL

Classic Credit

Card,R 19.50 F * 25 15 N.R. (800)231-7493

ASSOCIATES NB DE

Mastercard & Visa,

N 19.80 F * 25 20 N.R. (800)533-5600

BANK IV KS NA

Visa,R 15.90 F * 25 25 1,8 (800)333-5221

BANK OF AMER NA

Visa Classic,R 11.65 V 1 25 18 N.R. (800)243-5562

BANK OF CA NA

Standard Master

Card,R 16.80 F * 30 15 4 (800)544-2920

BANK OF HI

Visa Classic

Card,HI 16.50 F * 25 15 2,3,4,6 (800)543-9611

BANK OF HOVEN

Bank of Hoven-

Visa,N 21.00 F * 25 39 N.R. (800)339-0128

BANK OF MISSISSIPPI

Mastercard,MS 18.00 F * 25 0 N.R. (800)680-2123

BANK OF NY DE

Mastercard,N 13.50 V 1 0 0 N.R. (800)942-1977

BANK ONE OF AKRON NA

Visa,OH 18.40 V 1 25 0 N.R. (216)372-1322

BANK ONE OF AZ NA

Standard Master

Card and Visa,R 16.25 V 1 25 25 2,3,4,9 (800)862-2427

BANK ONE CINCINNATI NA 10

Bank One Visa,OH 18.40 V 1 25 20 N.R. (513)985-5706

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

BANK ONE CLEVELAND NA

Visa,OH 15.15 V 1 25 20 N.R. (216)352-5993

BANK ONE COLUMBUS NA

Visa/Mastercard

Classic Credit

Card,N 18.40 V 1 25 20 N.R. (614)248-3412

BANK ONE OF DAYTON NA

Visa Classic,N 18.40 F * 0 20 N.R. (513)443-2240

BANK ONE YOUNGSTOWN NA

Visa,R 16.90 V 1 25 0 N.R. (216)742-5018

BARNETT BK OF

BROWARD CITY NA

Classic Visa,R 14.40 V 1 25 0 4,9 (800)323-6276

BARNETT BK OF TAMPA

Classic Visa, FL 16.80 V 1 25 0 4,9 (800)323-6276

BAYBANK

Mastercard

Classic,N 16.80 V 1 25 21 3,4,8 (800)221-3393

BOATMENS CREDIT

CARD BK

Mastercard,R 17.80 V 1 25 0 4 (800)466-6420

BRANCH BKG&TC

Mastercard,R 18.00 F * 25 15 4 (800)476-4228

BROADWAY NB

Visa, TX 13.92 V 4 0 0 N.R. (210)283-6552

CAPITAL ONE BK

Visa,R 14.90 V 1 25 20 9 (800)933-5182

CENTRAL BK

Visa,R 18.00 F * 25 12 N.R. (318)362-8466

CENTRAL CAROLINA B&TC

Mastercard

Gold,N 9.00 V 1 25 20 4,6.9 (800)334-1073

CENTRAL FIDELITY NB

Mastercard,VA 15.60 F * 25 15 N.R. (800)388-5634

CHASE MANHATTAN BK USA

Classic Visa &

Classic Mastercard, 2,3,

N 19.80 F * 30 20 4,7,9 (800)441-7681

CHEMICAL BK

Standard Master 2,3,4,

Card/Visa,N 17.80 F * 25 20 5,7,9 (516)648-3355

CHEVY CHASE BK FSB 11

Visa/Gold,N 14.33 V 1 25 40 1.4 (800)937-5000

INSTITUION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

CITIBANK SOUTH DAKOTA NA

Citibank Classic 2,3,

Card,N 17.90 V 1 25 0 4,5,7 (800)950-5114

CITIZENS TC

Citizens Visa

Classic,N 14.50 F * 0 0 N.R. (800)455-5000

COLONIAL NB USA

Visa,N 13.26 V 1 25 30 3.4,6 (800)544-2028

COLORADO NB

Visa,R 17.40 V 1 25 12 N.R. (800)933-4433

COLUMBUS B&TC

Visa Classic,N 17.90 F 8 25 0 N.R. (800)487-5391

COMERICAN BK-DETROIT

Comerica Classic

Card,N 16.75 F * 25 15 4 (800)841-0012

COMMERCE BK NA

Special Connections

Visa/Mastercard,

R 16.50 V 1 25 0 4,9 (800)645-2103

COMMERCE BK OF OMAHA NA

Special Connections

Visa/Mastercard,

R 16.50 V 1 25 0 4,9 (800)645-2103

COMMERCE BK OF

SPRINGFIELD NA

Special Connections

Visa & Mastercard,

R 16.50 V 1 25 0 4,9 (800)645-2103

COMPASS BK

Mastercard,R 18.00 V 1 30 20 N.R. (800)239-5175

CORESTATES BK OF DE NA

Visa,R 17.80 V 1 25 20 N.R. (800)833-3010

CRESTAR BK

Visa Classic,N 15.90 F * 25 20 4,9 (800)368-7700

DIAL BK

Mastercard/

Visa,N 19.80 T * 25 20 N.R. (605)336-3933

EUROPEAN AMER BK

Visa,NY 17.70 V 1 25 0 N.R. (516)296-6028

FCC NB

First Card Visa 2,3,

Gold,N 18.40 V 1 25 0 4,6,9 (800)368-4535

FEDERAL SVG BK 12

Visa,N 9.72 V 8 25 33 N.R. (800)285-9090

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

FIDELITY NB

Visa

Consumerscard,N 15.90 F * 25 25 9 (800)753-2900

FIDELITY TC

Mastercard, 2,3,4,

Visa,N 17.65 V 1 25 0 5,6,8 (800)323-5353

FIFTH THIRD BK

Select Visa,R 14.40 V 1 30 18 9 (800)972-3030

FIRST AL BK

Mastercard

(Classic),R 19.50 F * 25 15 N.R. (800)828-0893

FIRST BK SD NA

Visa,N 17.90 V 1 25 20 N.R. (800)285-8585

FIRST CITIZENS B&TC

Mastercard,NC 18.00 F * 25 15 4 (919)779-8540

FIRST CITIZENS B&TC OF SC

Mastercard,SC 14.88 F * 25 20 4 (803)733-2050

FIRST CONSUMERS NB

Mastercard,N 18.90 V 1 30 39 2,3,4 (800)876-3262

FIRST DEPOSIT NB 2,3,

Visa Gold,R 14.90 V 1 25 0 4,6,9 (800)227-6886

FIRST FIDELITY BK NA

Visa,R 17.30 V 1 25 15 1 (800)338-0644

FIRST FNCL BK FSB

First Financial 1,2,3,4,

Visa,N 17.80 F * 25 15 5,6,9 (800)472-7708

FIRST HAWAIIAN BK

Mastercard,HI 16.50 F * 25 15 4.6.7 (*00)847-4444

FIRST INTRST BK OF AZ NA

Visa Standard

Card, AZ 17.90 V 1 25 20 N.R. (800)955-5050

FIRST INTRST BK OF CA

Mastercard-

Standard,CA 17.50 V 1 25 20 N.R. (800)955-5050

FIRST INTRST BK OF NV NA

Mastercard-

Standard,NV 17.90 V 1 25 15 N.R. (800)955-5050

FIRST INTRST BK OF OR NA

Visa Standard

Card,OR 19.50 V 1 25 25 N.R. (800)955-5050

FIRST INTRST BK OF WA NA

Visa Standard

Card, WA 17.90 F * 25 18 N.R. (800)955-5050

FIRST NB OF ATLANTA

Wachovia Bank 13

Visa, N 11.40 V 1 25 39 4 (800)842-3262

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

FIRST NB OF CMRC

Visa/Mastercard,

N 16.90 V 1 25 12 N.R. (800)826-3390

FIRST NB OF OMAHA

Visa,N 19.75 V 9 0 0 4,5,9 (800)688-7070

FIRST NB SD

Visa,SD 19.75 V 9 0 0 4 (800)688-7070

FIRST NH BK

Mastercard,R 16.90 V 1 25 20 4 (800)852-3719

FIRST OF AMER BK-IL-NA

National Gold

Mastercard/Visa,

N 15.40 V 1 25 0 2,3,4,6 (800)423-3883

FIRST OF AMER BK-MI NA

Classic Variable Rate

Mastercard/Visa,

N 16.90 V 1 25 0 N.R. (8000423-3883

FIRST OMNI BK NA

Visa/Mastercard, 2,3,4,

N 17.20 V 1 25 0 5,6,8 (800)441-8026

FIRST SECURITY BK OF ID NA

Visa,ND 17.40 V 1 25 0 4,6 (800)445-2689

FIRST SECURITY BK OF NM NA

Visa Classic,R 18.00 V 1 25 0 N.R. (800)445-2689

FIRST SECURITY BK OF UT NA

Visa, UT 17.40 V 1 25 0 4,5,6 (800)445-2689

FIRST TENNESSEE

BK NA NMPHS

Visa,R 16.40 V 1 30 0 N.R. (800)234-2840

FIRST UNION NB OF GA

Standard Visa,N 13.90 F * 25 0 4,9 (800)359-3862

FIRST USA BK

First USA Bank

USA,R 14.65 V 1 25 0 3,4,6 (800)955-9900

FIRST VA BK

Visa,R 16.98 F * 25 15 4,8 (800)634-8803

FIRST WESTERN BK NA

Visa,N 15.40 V 1 25 0 4,9 (412)652-7146

FIRSTAR BK MILWAUKEE NA

Elan Mastercard

and Visa,R 18.00 F * 25 15 4 (800)558-3424

FIRSTIER BK NA LINCOLN 14

Visa,R 18.00 F * 25 18 4 (800)432-3209

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

 

FLEET BK

Fleet Visa,N 16.15 V 1 25 20 4 (800)537-3777

GE CAPITAL CONSUMER

CARD CO

GE Rewards

Preferred,N 19.80 F * 25 0 N.R. (513)677-6736

GREENWOOD TC

Discover,N 17.40 V 1 25 0 1,9 (800)347-2683

HARRIS T&SB

Mastercard & Visa

Classic,N 18.40 V 1 25 0 N.R. (708)520-6550

HOUSEHOLD BK NV NA

Regular Visa/

Mastercard,N 17.90 V 1 25 25 4,9 (800)477-6000

HUNTINGTON NB

Mastercard,R 16.40 V 1 25 0 N.R. (614)480-2719

IDAHO FIRST BK 3,4,5,

Classic Visa,R 17.67 V 5 25 20 6,8,9 (208)387-3640

INTEGRA BK PITTSBURGH

Mastercard,R 14.90 V 3 25 15 2,3,4,6 (412)644-7554

INTRUST BK NA

Mastercard/

Visa,N 16.80 F * 25 12 N.R. (800)222-7458

J C PENNEY NB

Visa,N 19.50 F * 25 15 N.R. (800)247-4714

KELLY FIELD NB

Visa,TX 13.92 F * 25 0 N.R. (210)681-5100

KEY BK OF NY 2,3,4,

Mastercard,NY 14.11 V 3 25 20 5,6 (800)444-4539

KEY FSB 2,3,4,

Secured Visa,N 18.90 F * 25 35 8,9 (800)539-5398

LEADER FED BK FOR SVG 2,3,4,

Visa,R 14.90 F * 25 20 8,9 (800)874-8771

LIBERTY NC&TC OF KY

Mastercard,R 18.00 F * 30 20 4 (502)589-3111

MAGNA BK OF ILLINOIS 1,2,3,

Mastercard,R 17.90 V 1 23 20 4,6 (800)624-6211

MANUFACTURERS &

TRADERS TC 15

Visa,NY 15.75 V 1 25 25 4,6 (800)724-3222

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

MARINE MIDLAND BK

Mastercard,N 19.80 F * 25 20 4,5,9 (800)962-7463

MBNA AMERICA BK NA

Mastercard,N 16.90 F * 25 0 N.R. (800)847-7378

MELLON BK DE NA

Interest Back

Mastercard,N 20.40 V 1 25 0 4,5,8 (800)753-7011

MERCANTILE BK OF IL NA

Mastercard,R 17.90 F * 25 20 4 (800)755-4070

METROPOLITAN NB

Visa Classic,N 9.24 V 8 25 25 N.R. (501)570=1021

NATIIONAL BK OF COMMERCE

Mastercard,R 19.80 V 1 25 0 4 (901)529-6259

NATIONAL BK OF SC

Mastercard,SC 16.92 F * 0 0 4 (803)778-8498

NATIONAL CITY BK

Mastercard

Classic,OH 17.90 T * 0 0 9 (800)282-7541

NATIONAL CITY BK

Mastercard 2,3,4,

Gold,N 14.90 V 1 25 0 5,6 (800)727-8686

NATIONAL CITY BK COLUMBUS

Mastercard

Classic,N 17.80 V 1 25 0 N.R. (614)863-8129

NATIONAL CITY BK IN

Mastercard,IN 17.80 F * 25 15 N.R. (800)774-2424

NATIONSBANK OF DE NA

Visa Classic,N 17.90 F * 25 18 4 (800)274-5060

NATWEST BK NA

Visa,N 18.40 V 1 25 20 4,5,6 (800)677-6677

NBD SKOKIE BK NA

Standard Mastercard

& Visa,R 16.90 V 1 25 0 4 (800)766-4623

NORWEST BK IA NA

Norwest Mastercard,

N 17.50 V 1 25 20 1,4 (800)247-8101

NORWEST BK NE NA

Norwest Mastercard,

N 17.50 V 1 25 20 1,4 (800)247-8101

OAK BROOK BK

Prime for First

Year,N 8.50 V 1 25 17 4,5,7,9 (800)666-1011

OHIO SVB BK

Visa/Mastercard, 16

R 14.75 V 1 25 0 4 (216)622-4163

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

OLD KENT B&TC

Variable Rate

Mastercard &

Visa,N 12.30 V 1 25 38 4,9 (800)245-5353

ONE VALLEY BK NA

Mastercard,WV 16.75 F * 0 12 N.R. (800)342-7343

PEOPLES BK

Visa,N 11.50 F * 25 25 N.R. (800)426-1114

PNC BK DE

Visa/Mastercard,

N 13.99 V 1 0 0 N.R, (800)762-2273

PNC BK OH NA

Visa/Mastercard,

N 13.49 V 1 0 0 N.R. (302)791-2073

PNC NB

Visa/Mastercard,

N 13.99 V 1 0 0 N.R. (800)762-2273

PROVIDIAN NB 2,3,4,

Visa Gold,R 14.90 V 1 25 0 6,9 (800)227-6886

PRUDENTIAL B&TC

Visa Gold,R 16.90 F * 30 29 2,8,9 (800)322-2369

S&T BK

Visa,PA 9.96 F * 0 0 4 (412)479-5030

SEATTLE-FIRST NB

Regular Mastercard/

Visa,WA 18.00 V 4 21 18 4,5 (800)522-7300

SECURITY NB&TC 2,4,5,

Visa,R 15.25 V 3 25 18 6,7 (800)356-8085

SIGNET BK VA

Visa,N 19.80 F * 25 18 9 (800)955-7070

SIMMONS FIRST NB

visa,N 9.75 F * 25 35 4,8 (800)636-5151

SOCIETY NB

Visa,R 15.14 V 4 25 20 2,3,4,6 (216)689-7770

SOUTHERN NB OF NC

Mastercard,R 12.40 V 1 25 18 1,4 (800)289-6404

SOUTHTRUST BK OF AL NA

Visa Classic

Card,R 18.90 V 1 25 15 5,9 (800)292-6538

STAR BK NA

Visa,R 17.00 V 1 25 20 2,3,5,8 (513)762-8836

STATE SVG BK 17

Visa,OH 14.63 F * 25 0 N.R. (800)421-9543

INSTITUTION, Ann. Type Grc.

Credit Card Plan % of In- per. Ann. Oth.

and Availability Rate Prcg dex days fee Ftrs. Telephone

SUNTRUST BANCARD NA

Suntrust Bankcard,

R 17.90 V 1 25 21 N.R. (800)432-4932

TOWN NORTH NB

Mastercard-

Visa,N 14.0 V 4 0 0 4,5 (214)991-9733

TRAVELERS BK

Gold 2,3,4,

Mastercard,N 16.25 V 1 25 0 8,9 (800)772-7775

TRUSTCO BK NY

Mastercard,NY 17.90 F * 25 12 N.R. (518)381-3843

U S BK NA

AAA Visa,N 16.90 V 1 25 0 8 (800)872-2650

UNION BK

Mastercard,Ca 19.80 F * 25 15 1,4 (619)496-5355

UNION PLANTERS NB

Gold Mastercard,

N 13.50 V 1 25 0 2,3,6 (800)339-2121

UNITED MISSOURI BK USA

Mastercard,N 17.15 V 1 25 18 N.R. (800)821-5184

UNITED NB

Visa,R 16.49 V 1 25 0 9 (800)242-7600

UNITED STATES NB OF OR

Classic Visa/

Mastercard,OR 17.90 V 1 25 15 4 (800)291-6687

UNIVERSAL BK NA

Mastercard

Classic,N 17.90 v 1 25 20 2,3,4,6 (800)423-4343

USAA FSB

Mastercard,N 12.50 V 4 25 0 N.R. (800)922-9092

WELLS FARGO BK NA

Visa,N 19.80 F * 25 18 N.R. (800)642-4720

WEST ONE BK ID 3,4,5,

Classic Visa,R 16.67 V 5 25 20 6,8,9 (208)387-3640

WILMINGTON TC

Mastercard,N 17.75 V 4 25 18 4,5,8,9 (302)652-2378

1ST FINANCIAL BK SD 18

Visa,N 19.50 V 1 25 20 N.R. (800)733-1732

FRB-50000-395

BOARD OF GOVERNORS OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON,DC 20551-0001

OFFICIAL BUSINESS

 

Trouble Spots

 

You can find yourself dealing with some unusual problems when you let a third party,

your bank, pay your bills for you. If your bank doesn't make automatic mortgage

payments on time, for example, it will be you who suffers the consequences: late fees and

a blemish on a credit report.

And what if payments aren't made at all? One man whose life insurance premium was

deducted monthly from his checking account had no idea that the bank, due to a systems

error, had stopped making payments. The policy lapsed, but the family didn't find out until

the man died. They had to fight hard to collect their benefits.

Next | Back

Side Bar--Automatic Debit Scams

Fraudulent telemarketers have caught on to automatic debiting, too. The scams usually

start with a phone call offering a prize. The telemarketer asks for your checking account

number, saying it's needed to make sure you're "qualified" for the offer.

Your checking account information is put on a "demand draft," which is processed by

your bank just like a check, but doesn't require a signature. The bank will pay the

telemarketer's bank, and poof! ....your money is gone.

To reduce this type of fraud, a new federal law requires a telemarketer to obtain a

customer's authorization, in writing or on tape, before debiting an account. So beware if a

telemarketer tells you the call is being taped. You may unknowingly be authorizing an

automatic debit. And never give out your bank account number over the phone.

Back | Top

How to Solve Problems

You have the right to halt unauthorized and most pre-authorized deductions at any time. If

you're having trouble stopping an automatic debit, the fastest way to get results is to

contact your bank, not the business that's receiving payments.

Under federal law, you must call or write your financial institution requesting a "stop" at

least three days before the scheduled debit. If you make an oral request, the bank may

require you to confirm it in writing within 14 days of your call.

If you've been hit with late fees because the bank was tardy, don't just pay up. A mortgage

lender may drop the late fee if you explain what happened. If not, remember that the

penalty was triggered by the bank's mistake, and if you insist firmly enough, you'll

probably get them to pay.

If you fear your credit history has been tarnished because the bank was late or missed

payments, get a copy of your credit file from one of the big credit bureaus (Experian,

TransUnion or Equifax). If you've been labeled an unreliable debtor, demand that the

misleading items be changed. And remember that you always have the right to add a 100-

word statement to your file, explaining anything that might cause lenders to shy away from

you.

 

Americans learn almost from birth that it's a good thing to buy all sorts of goods and

services. A highly paid army of persuaders surrounds us with thousands of seductive

messages each day that all say "buy, buy, buy." Easily available credit makes living beyond

one's means easy and resisting the siren sounds of the advertisers difficult. But we're also

told that if we fail to pay for it all right on time, we're miserable deadbeats. In short, much

of American economic life is built on a contradiction.

If for some reason, such as illness, loss of work or just plain bad planning, our ability to

pay for the goods or services we need is interrupted, fear and guilt are often our first

feelings. We may even feel we've fundamentally failed as human beings.

Nonsense. There's lots more to life than an A+ credit rating, and lots of better things to

feel guilty about than the failure to pay for a snowmobile or a summer vacation on time.

The importance we have for our families, friends and neighbors should never be forgotten.

Nor should the fact that the American economy is based on consumer debt. In the age of

$50 billion bailouts for poorly managed financial institutions, you really shouldn't feel too

guilt-ridden about the debts you've run up. Remember that large creditors expect defaults

and bankruptcies and treat them as a cost of doing business. The reason so many banks

issue credit card is that it is a very profitable business, even with so many bankruptcies.

Fortunately, for thousands of years it's been recognized that debts can get the better of

even the most conscientious among us. From Biblical times to the present, sane societies

have discouraged debtors from falling on their swords and have provided sensible ways for

debt-oppressed people to start new economic lives. In the United States, this is done

through bankruptcy.

Bankruptcy is a truly worthy part of our legal system, based as it is on forgiveness rather

than retribution. Certainly, it helps keep families together, reduces suicide and keeps the

ranks of the homeless from growing even larger.

If you suddenly find yourself without a job, socked with huge, unexpected medical bills

you can't pay or simply snowed under by an impossible debt burden, bankruptcy provides

a chance for a fresh start and a renewed positive outlook on life.

Bankruptcy can also have its down sides-economically, emotionally and in terms of your

future credit rating. So before you race into bankruptcy court, take some time to

understand what bankruptcy is all about and what your alternatives are.

 

HOW TO PURCHASE YOUR "DREAM HOME" WITH NO CREDIT CHECK

 

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Most real estate salespeople will tell you without hesitation that no-one can purchase real

estate without a down-payment or credit check. They will tell you that a credit check is an

essential part of the process and that you better have a fistful of cash before you evxer

think about buying a home. Of course, nothing could be further from the truth!

Everyday throughout America, tens of thousands of people are acquiring homes without

being subjected to a credit check or spending a cent of their own money as a down

payment.

The reason why real estate salespeople don't even want to consider real estate transactions

that are creatively packeged and don't require cash is obvious! They receive their

commissions only when there are cash transactions.

No one should deny a real estate salesperson commisssions. In many cases it is their

expertise in the reaal estate field that can help a person find great buys. They know the

market in their areas and deserve the commissions they earn. However, in times of high

interest rates when money is tight, many are increasingly willing to be creative by allowing

their commissions to be paid via a note or by deferred payment. Still, there are even better

ways if you want to avoid down payments and credit checks.

HOW A DREAM HOME CAN BEPURCHASED WITHOUT A CREDIT CHECK

The Vererans Administration(VA) and the Federal Housing Administration (FHA), a

division of Housing and Urban Development (HUD) have been encouraging and

promoting home ownership through their agencies for years. When people are denied a

home loan by a bank or other lending institution, FHA will insure a home mortgage loan

by giving the lending institution a 100% guarantee against any losses that may be incurred

if the buyer does not repay the loan. Another benefit of getting a FHA loan is that the

interest rates are usually lower than the standard bank rates for home mortages.

The VA will also guarantee a home loan up to 100%, which also allows a buyer to receive

a home loan through a bank or other lender. A credit check is required on the "original"

buyer of the home, but here's the loophole!

While it is true that from March 11988 onward, all asumbble VA loans require credit

approval, the good news is that these changes in credit check approval only apply to those

loans that were made "after March, 1988," ALL VA LOANS MADE BEFORE MARCH

1988 ARE STILL ASSUMABLE BY ANYONE REGARDLESS OF THEIR CREDIT!

GEOGRAPHIC LOCATION - Scoring systems are adjusted for differences in geographic

locations,. For example, home owndership may not score high in an area where there is a

high incidence of credit problems, reoccurring employee/employer differences, low

income, etc.

EMPLOYMENT - The longer you have been on a job the better.

OCCUPATION - Occupationss can be divided into many categories with a high to low

score within each category for different occupations.

AGE - Older is not considered better until you pass age 40. Under 25 to the end of your

30's receive the lowest scores. The rational is that people under 25 haven't proven they are

a good credit risk. People in their 30's are still raising a family, buying a home, and tied

down with emormous expenses. This is also the time most people declare bankruptcy

INCOME - The higher your income the more points you will receive.

TELEPHONE - Having a telephone is an indication of stability. Give yourself more

points.

AGE OF AUTOMOBILE - No auto is a low score, but the newer the vehicle the higher

the score.

DEPENDENTS - One to three indicates responsibility and stability. After three, points

drop rapidly.

CITIZENSHIP STATUS - Non-citizens receive negative points.

BANK ACCOUNTS - You receive high points if you have a checking and savings

account.

CREDIT REFERENCES IN-HOUSE RECORDS - A good payment record will earn you

more points.

CREDIT CARDS - The more major credit cards you have the better.

BANK LOANS - A current bank loan will increase your score.

FINANCE COMPANY LOANS - You will receive negative points for each finance

company loan.

TWO POWERFUL STRATEGIES THAT CANGET YOUR APPLICATION

APPROVED

Credit checks are requested by banks, lenders, and other creditors to see if there are

negative items in your file. The more negative items you have, the less your chances of

credit will be. As we have seen, creditors look for stability and reliability in an applicant. A

steady source of income will receive a high score, but even more important than an income

amount is a creditor's belief and perception that you are both willing and able to pay back

a debt.

In other words, even if you fail to pass certain criteria or formulas, your application can

still be approved on another level that will get you the credit you want no matter what a

scoring system profile says.

Motivated sellers are the best kind to deal with, because they will want to help themselves

by helping you. Lack of money or credit shouldn't be your primary concern when

purchasing a home. Creative negotiating and positive thinking will get you what you want.

CREATE A DEAL THAT BENEFITSBOTH YOU AN THE SELLER

Creative negotiating can lead to financing arrangements that benefit both the buyer and the

seller. There must be a willingness, however, by both the buyer and seller to give and take,

before the most favorable environment for a creative financing situation can be created.

For example, if you want to purchase your dream home with nothing down, you might

consider paying a little more.

On the other hand, if you are investing money out or your pocket on a down payment,

then the sale price and terms should be favorable to you. A smart, yet flexible home buyer

can often afford to pay a premium price provided it's not too far out of line with the

market value, and he can get attractive terms and no down payment.

FIND OUT WHAT THE SELLER WANTS

Many sellers want a steady income and don't need front money in the form of a down

payment. Most buyers never consider asking a seller what they want! If you can guarantee

a nice monthly income to someone who prefers a steady check, you can have yourself a

nothing-down deal. Find out what the seller really wants!

BUYING WITHOUT CASH MEANSBECOMING A SUPER NEGOTIATOR

Sometimes you will require super negotiating skills if you decide to buy a home without

using your own money. After you have found your dream home, you and the seller will

have to sit down and negotiate a final agreement. The following three rules should be

followed to enable you to ge the best possible deal:

1) Get the selling price as low as possible.

2) Negotiate a very low down payment, or no down payment agreement.

3) Be aware of all the methods available to you in buying real estate whereby you would

pay some cash, or no cash up front.

The first five of the following options involve some cash up front, the remaining seven do

not. At the top of the list the buyer buys out the sellers full equity. At the bottom of the

list the buyer pays nothing down and doesn't secure the debt. Somewhere in-between you

should be able to agree on a compromise that benefits both parties involved.

BUYING OPTIONS AVAILABLETO REAL ESTATE BUYERS & SELLERS

1) Cash to existing mortage

2) Cash to down and refinancing 3) Cash down with seller taking bacy the contract,

second mortage, etc.

4) Some cash plus equity in other property

5) Cash plus mortgage on other property

6) No cash but equity in other property

7) No cash, equity plus mortgage on purchased property

8) No cash, equity plus mortgage on othe property

9) No cash, moortgage on purchased property

10) No cash, mortgage on other property

11) No cash, wrap-around where seller carries paper with or without a promissory note.

12) No cash, unsecured note for complete equity

NEGOTIATE "LOW" & "LONG" TERMS

Always think in terms of 1) Low Interest; 2) Low Monthly Payments; and 3) Long-Term

Payoffs as you develop home buying transactions. Make a transaction benefit you by

negotiating hard all the way. Decide ahead of time what your "No-Deal"! cut-off point is.

Be prepared to walk away from any deal that goes beyond your low-interest and low-

payment cut-off. And remember, the longer the payback terms the better off you will be.

High interest rates, high payments, and short-term payoffs can destroy a fledgling financial

situation.

INCREDIBLE BARGAINS ARE EVERYWHERE!

It only requires a simple search to find great real estate buys that require no down

payments or credit checks. You can start your search by picking up newspapers in and

around the area you are interested in. Then carefully review the classified real estate ads

and begin contacting both home owners and real estate agents. Don't be afraid to call

agents! They might provide the lead that leads you to your dream home. Keep a list of

your contacts and note the results. Make a minimum of 3-4 contacts every day. You will

know who the really motivated sellers are through conversation. Then, if you are

interested, take advantage of the situation and follow through.

HOW YOU CAN PROFIT BY OBTAINING OPTIONS

Obtaining an option to purchase real estate can make you some fast and easy profits.

When it comes to real estate, options favor a buyer over the seller 10 to 1!

Here's how an option to buy can make you huge amounts of money:

To begin with, find a piece of property that is priced to sell at under market value. Let's

say that the property you decide on is priced at $99,000 but the actual market value is

$125,000. And remember, these kinds of bargains are available everywhere! Your next

step is to tie up the property with an option, which may or may not require a modest

options fee.

Let's say that the property increases in value by only 10% during the period of time you

hold your option, which in many parts of the country might be a very modest increase.

Now you would have an option to buy property that is now worth $137,500, still for

$99,000. Now you have and incredible opportuunity to make a $38,500 profit!

Options are favorable to the buyer over the seller because at the end of the option period,

the potential buyer can exercise his option if conditions are favorable and make a

tremendous profit from the transaction. On the other hand, he can also walk away from

the deal if conditions appear unfavorable.

USE CONTINGENCY CLAUSES WHEREVER NECESSARY

Contingency clauses can give you many advantages when you are ready to make a deal.

Contingency clauses can stack real estate agreements in your favor. What you are doing in

effect, is specifying certain conditions that allow a contract agreement to be valid.

Basically, there are two reasons for using contingency clauses:

1) The contingency clause is of great importance to the deal; and

2) You simply want more time and are using a contingency clause to get it.

Some of the typical reasons for these clauses include statements such as:1) Contingent on

buyer arranging suitable financing; 2) Contingent on buyer selling his property before the

deal is valid; 3) Contingent on appraisal; 4) Contingent on the buyer's accountant or

attorney inspecting all records; or, 5) Contingent on the seller agreeing to your specific

terms, etc.

DELAYED DOWN PAYMENT CONSIDERATIONS

If the seller absolutely demands all or part of the down payment in cash, don't exclude the

possibility of agreeing on a "Delayed Down Payment." This tactical move should at least

be considered, especially if you have already lined up a buyer for a fast resale

DON'T OVERLOOK SELLERSAS A SOURCE OF INVESTMENT CAPITAL

The same person you are buying property from may also act as your lender. Today, sellers

are lending money to buyers in almost half of real estate transactions. The borrowed

equity is secuured by either a personal note, or a second or third mortgage. This method

amounts to lending money to the buying party.

USE FIRST AND SECOND NOTES INSTEAD OF CASH

When you are ready to purchase your dream home, think in terms of non-cash ways to

obtain it. First and second notes can easily serve as the equivalent of cash money. The

advantage of using notes in place of money is that you receive 100% of the value of the

note. If you wanted to convert a note to cash by selling the note, chances are you would

have to accept a discount price on it. This discount could range anywhere from 10% to

30%, depending on the time left on the note, interest, and the history of payments. When

buying real estate, it is wise to substitute notes for cash. In this way you can receive 100%

value for your paper.

 

Managing Your Debts

 

------------------------------------------------------------------------

 

Managing Your Debts: How to Regain Financial Health

Can't pay your bills?

You're not alone.

Today, millions ofAmericans are having difficulty paying their debts.

Most of those infinancial distress are middle income families with jobs who want to payoff

what they owe.

But it is important for you to act. Doing nothing can lead to muchlarger problems in the

future-even bigger debts, the loss of assets suchas your house, and a bad credit record.

The good news is that there are solutions.

The remedies providedin this brochure can help improve your relationships with

creditors,reduce your debts, and help you manage your money.

In brief, thesesolutions can help give you a new, fresh start.

ARE YOU IN FINANCIAL TROUBLE?

If bill collectors are calling you, you know you're in financialtrouble. But what if you're

just having difficulty stretching yourpaycheck to pay monthly bills?

If you answer yes to any one of thefollowing questions, you should act.* Do you routinely

spend more than you earn?* Are you forced to make day-to-day purchases on credit?*

Are you able to make only the minimum payments on monthly credit card debts?* If you

lost your job, would you have difficulty paying next month's bills?" With budgeting

guidance, we now have peace of mind.

We have learned amost valuable lesson about money management. Our future

looksbrighter." Linda R.

WHAT YOU CAN DO FOR YOURSELFReview your specific obligations that creditors

claim you owe to makecertain you really owe them.

If you dispute a debt, first contact thecreditor directly to resolve your questions.

If you still havequestions about the debt, contact your state or local consumerprotection

office or state Attorney General.Contact your creditors to let them know you're having

difficulty makingyour payments.

Tell them why you're having trouble- perhaps it'sbecause you recently lost your job or

have unexpected medical bills.Try to work out an acceptable payment schedule with your

creditors.Most are willing to work with you and will appreciate your honesty

andforthrightness.The Fair Debt Collection Practices Law prohibits a debt collector

fromshowing what you owe to anyone but your attorney, harassing orthreatening you,

using false statements, giving false information aboutyou to anyone, and misrepresenting

the legal status of your debts.Remember that under other federal laws to collect debts,

creditorscannot seize most government assistance and can only garnish a portionof wages

to collect debts.Budget your expenses.

Create a spending plan that allows you to reduceyour debts. Itemize your necessary

expenses (such as housing and healthcare) and optional expenses (such as entertainment

and vacation travel).Stick to the plan.Try to reduce your expenses.

Cut out any unnecessary spending such aseating out and purchasing expensive

entertainment. Consider takingpublic transportation rather than owning a car. Clip

coupons, purchasegeneric products at the supermarket, and avoid impulse purchases.

Aboveall, stop incurring new debt. Consider substituting a debit card foryour credit

cards.Use your savings and other assets to pay down debts.

Withdrawingsavings from low-interest accounts to settle high-rate loans usuallymakes

sense. Selling off a second car not only provides cash but alsoreduces insurance and other

maintenance expenses.Look for additional resources from governmental and private

sources forwhich you may be eligible. Government assistance includes

unemploymentcompensation. Aid to Families with Dependent Children (AFDC),

foodstamps, low-income energy assistance, Medicaid, and Social Securityincluding

disability. Other resources may be available from churches andcommunity groups.

Often these sources are listed in the Yellow Pages ofyour phone book."Looking closely at

our options helped us realize that we still neededto try self-budgeting before taking more

extreme measures. We think thatperhaps we were giving up too soon."

Alicia A.WHAT OTHERS CAN DO FOR YOUCredit Counseling. If you are unable to

make satisfactory arrangementswith your creditors, there are organizations that can help.

Anorganization that you can call is a Consumer Credit Counseling Service(CCCS) agency.

These local, non-profit organizations affiliated withthe National Foundation for Consumer

Credit (NFCC) provide education andcounseling to families and individuals.For consumers

who want individual help, CCCS counselors withprofessional backgrounds in money

management and counseling can providesupport.

To promote high standards, the NFCC has developed acertification program for these

counselors. A counselor will work withyou to develop a budget to maintain your basic

living expenses andoutline options for addressing your total financial situation. Ifcreditors

are pressing you, a CCCS counselor can also negotiate withthese creditors to repay your

debts through a financial management plan.Under this plan, creditors often agree to reduce

payments, lower or dropinterest and finance charges, and waive late fees and over-the-

limitfees.

After starting the plan, you will deposit money with CCCS eachmonth to cover these new

negotiated payment amounts. Then CCCS willdistribute this money to your creditors to

repay your debts. With morethan 1,100 locations nationwide, CCCS agencies are available

to nearlyall consumers. Supported mainly by contributions from communityorganizations,

financial institutions, and merchants, CCCS providesservices free or at a low cost to

individuals seeking help. To contacta CCCS office for confidential help, look in your

telephone directorywhite pages, or call 1 (800) 388-2227, 24 hours a day, for an

officenear you."I cannot tell you how happy I am to finally to able to control myfinances

now that I have followed a budget.

So far, so good. I actuallyhave a balance in my savings account!" Rodney O.Personal

Bankruptcy. Bankruptcy is a legal procedure which can givepeople who cannot pay their

bills a fresh start.

A decision to file forbankruptcy is a serious step.

You should make it only if it is the bestway to deal with financial problems.

There are two types of bankruptcy available to most individuals.Chapter 13 or

"reorganization" allows debtors to keep property whichthey might otherwise lose, such as

a mortgaged house or car.Reorganizations may allow debtors to pay off or cure a default

over aperiod of three to five years, rather than surrender property.

Chapter 7 or "straight bankruptcy" involves liquidation of allassets that are not exempt in

your state.

The exempt property mayinclude items such as work-related tools and basic

householdfurnishings, among others. Some of your property may be sold by acourt-

appointed official or turned over to your creditors.

You can filefor Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts (thosewhere creditors have no

rights to specific property), and stopforeclosures, repossessions, garnishments, utility

shutoffs, and debtcollection activities. Both types also provide exemptions that permitmost

individual debtors to keep most of their assets, though these"exemption" amounts vary

greatly from state to state.

Bankruptcy cannot clean up a bad credit record and will be part ofthis record for up to ten

years.

It can, for example, make it moredifficult to get a mortgage to buy a house. It usually does

not wipeout child support, alimony, fines, taxes, and some student loanobligations. Also,

unless under Chapter 13 you have an acceptable planto catch up on your debt, bankruptcy

usually does not permit you to keepproperty when the creditor has an unpaid mortgage or

lien on it.

Bankruptcy cases must be filed in federal court.

The filing fee is$160, which sometimes may be paid in installments.

This fee does notinclude the fees of your bankruptcy lawyer.

Choosing a bankruptcy lawyer may be difficult.

Some of the leastreputable lawyers make easy money by handling hundreds of

bankruptcycases without adequately considering individual needs. Recommendationsfrom

those you know and trust, and from employee assistance programs,are most useful.

Some public-funded legal services programs handle bankruptcy caseswithout charging

attorney fees. Or these programs may provide referralsto private bankruptcy lawyers.

Keep in mind that the fees of theseattorneys may vary widely."Our bills have been a source

of worry to us. After bringing ourproblem to credit counselors, we have begun to feel

there is a way tocope with it.

We are feeling more confident now." Nelson M.POSSIBLE PITFALLSCredit counselors

who aren't helpful.

Often for-profit or non-credentialed counseling organizations make promises that they

cannot ordo not keep.

Be especially careful when asked for a large sum of moneyin advance.

To check the organization's reputation, contact your stateAttorney General, consumer

protection agency, or Better Business Bureau."Credit repair" clinics and "credit doctors"

have been frequentlycriticized for promising that they can remove negative information

fromyour credit report. But accurate information cannot be changed.

If information is old or inaccurate, you can contact a credit bureauyourself and ask that it

be removed. Risky refinancing options.

When already in financial trouble, secondmortgages greatly increase the risk that you may

lose your home.

Bewary of any loan consolidations or other refinancing that actuallyincrease interest owed

or require payments of points or large fees.

A Final Word: Don't lose hope, even if you despair of ever recoveringfinancially.

You can regain financial health if you act. Pursuing the options presented in this pamphlet

can put you on the road to financialrecovery. "It feels great to be getting my life (and

credit) in order!" Robyn H.The following organizations and individuals worked together in

thepreparation of this pamphlet and endorse its content.

American Association of Retired Persons

Consumer Action

Consumer Federation of America

National Consumer Law Center staffers

National Foundation for Consumer Credit

U.S. Consumer Information Center

U.S. Office of Consumer Affairs

Visa U.S.A..

 

 

 

 

 

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<Picture: [Thousands of FREE Small Business Reports, Legal Forms, Letters, etc..]>

 

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ATM Card

 

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A Consumer's Guide To the Expanding Uses of ATM Cards

Shopping

With Your ATM Card

 

Which Of The Following Can Happen With An ATM Card Today?

A shopper in Wisconsin pulls up to his bank's drive-through ATM. In

minutes, he deposits his pay check, withdraws cash, and verifies the

balance in his savings account.

Upon landing in London, a traveler from Maine gets a hundred dollars'

worth of British pounds at an airport ATM just as easily as she uses her

ATM card to withdraw cash at her local bank branch ATM near home.

While visiting friends in the next county, a Tennessee resident stops at

an unfamiliar bank's ATM to check her balance and withdraw cash. She

then proceeds to a gas station to fill her tank and pays for it by

sliding her ATM card through the card slot on the pump and punching in

her PIN.

A California school teacher's ATM card also has the logo of a major

credit card company on the front, allowing him to make purchases at any

of the millions of stores that accept that brand of card for payment. He

signs a receipt, and his purchases are automatically paid for out of his

checking account.

Answer

All Of The Above:

Since its introduction over 20 years ago, the ATM (automated teller

machine) card has become part of everyday life, and people are using

these cards millions of times each day. Today, changes in technology

are allowing people to use the now-familiar ATM cards in new ways that

are reshaping the way we handle our money.

ATM Cards Can Give You More Control If Used Wisely:

With an ATM card and a PIN - or personal identification number -

you can virtually set your own "branch hours,"depositing and withdrawing

money from your accounts whenever you wish at your bank or credit union.

What's more, most ATM cards already give you access to your money at

ATMs located not only at all of your bank's locations, but also at other

banks and in stores, airports, office buildings, and street corners

across the United States and worldwide.

Your ATM Card Is Becoming Even More Useful:

But wide access to ATMs is just the beginning. Technology is

enabling banks and credit unions to introduce new services that allow

you to pay for things by making your ATM card work like a check. This

latest improvement can offer conveniences and money management benefits

over cash and checks.

This Brochure Can Help Make You Smarter About ATM Cards:

As you read this brochure, you'll gain a better understanding of

how to take advantage of the conveniences and features of shopping with

your ATM card. And you'll find the information you need to use this new

service wisely. If you have one of the more than 200 million ATM cards

in circulation today in the United States, you may want to take it out

of your wallet and refer to it as you read along.

THE EVOLUTION OF ATM CARD SERVICES

The Beginning - Getting Cash At ATMs:

The first ATM cards gave consumers access to their checking,

savings, and share draft accounts only at teller machines owned by their

bank, credit union, or savings and loan. People commonly call this kind

of card an ATM card, cash card, or banking card, or they use the name

that their bank, credit union, or regional network has given to the

card.

When "regional ATM networks" were created, they linked together the

ATMs of different institutions and offered consumers access to their

money in other neighborhoods and nearby cities, towns, and states. (A

list of many of these ATM networks' names and where they operate appears

near the end of this brochure.) At the same time, two national networks

Cirrus_ and Plus_ emerged, expanding ATM card access to cash, first

nationwide, then around the world. Currently, these are the only two

brands that offer a full range of ATM services worldwide.

ATM cards provide a convenient way of getting cash, making deposits

and transfers, and verifying account balances. It is also easy to tell

where you can use the card by simply matching the logos on your ATM card

with those displayed on the ATM itself.

The Next Step - Paying With ATM Cards:

More recently, many ATM cards have been enhanced so that you can

shop with the cards at merchants that sign up with the same networks

that give the cards wide access to ATMs. (A list of many of these

shopping service networks also appears near the end of this brochure.)

Currently there is only one international service, called Maestro_, that

lets cards work at participating merchants both in the United States and

in more than 50 countries.

Grocery stores and gas stations were among the first retailers in

the United States to install the small number pads, also called PIN

pads, that you may have noticed at the checkout counter or on the gas

pump. It is these devices that make shopping with many ATM cards

possible.

The Latest News - Shopping Wherever Some Major Card Brands Are Accepted:

Another ATM card service makes ATM cards more useful by greatly

expanding the number of retail locations that accept the cards for

payment. ATM cards with the logo of one of two of the major card brands

MasterCard or Visa can be used to make purchases anywhere these cards

are accepted. Today, these kinds of cards are accepted at some 3

million places in the United States and 9 million more worldwide.

Currently, these are the only two major card brands that offer this

service.

If you have the logo of one of these card brands on your ATM card

and want to use it for shopping, your ATM card basically works like a

check. This kind of card is often called a money card, cash-and-check

card, check card, or debit card, or it can have a special name given to

it by your bank or credit union. Regardless of its name, this kind of

card is still also your ATM card. Typically, this kind of card does not

require the use of a PIN to make a purchase. You may already carry one

of these cards. Look at your card to find out.

USING YOUR ATM CARD TO SHOP

Matching The Logos:

Just as the various logos that appear on ATM cards tell you where

they can be used to get cash or make banking transactions at ATMs, they

also indicate where your card can be used to make purchases. Simply

match the logos on your card with those you see displayed at the

entrance to the store or at the cash register. Or just ask whether the

store accepts your ATM card.

Depending on which logos you find on your card and whether the

store has installed PIN pads, your purchases can be handled in one of

two ways: either you will punch in your PIN, just as you would at an

ATM, or you will sign for the purchase, as you would with a credit card.

Making A Purchase:

Let's say you've planned to buy a desk lamp. You need all your

cash for other things and don't have your checkbook with you. At the

entrance to the store, you notice an ATM network logo that matches the

logo on your card. You decide to use your ATM card to pay.

When you present the lamp to the cashier, you will be asked how you

would like to pay for the purchase. You offer your ATM card. The

cashier will confirm that your card is accepted by the store, and if it

is, the following will occur: 1) You will be asked to slide your card

through a slot that reads the information contained in the magnetic

stripe on the back of your card; 2) the cashier will then enter the

amount of the purchase; 3) you will punch in your PIN, or secret code;

and 4) the cashier will press a key that initiates an automatic phone

call to your bank or credit union. This confirms that the money is

available in your account. Once confirmed, your bank or credit union

automatically deducts the purchase amount from your account, just like a

check. You will receive a receipt of the transaction, if you want one,

when the sale is completed. Make sure you record and subtract this

amount from your account immediately.

When A Major Credit Card Logo Is On Your ATM Card:

If you have an ATM card that also has on it one of two of the major

credit card logos mentioned previously, your purchase will be handled as

if you were using a credit card, except for three important differences:

* First, the purchase amount will be deducted automatically from your

account like when you write a check rather than being billed to

you at the end of the month.

* Second, typically, you'll pay no interest charges, since you're

using your own money on deposit, not borrowing it. (However, there

may be other fees associated with using this card, an issue

addressed later in this brochure.)

* Third, you will usually sign for the purchase instead of punching

in your PIN. However, since this is your ATM card, if a store has

installed PIN pads to accept your PIN, and it accepts one of the

other logos on your card, the store clerk may ask you to use your

PIN instead of signing.

LIMITS ON YOUR SPENDING WITH THE CARD

You Can Only Spend What You Have:

When you use your ATM card, whether to withdraw cash or make

purchases, you are using your own money that is on deposit at your bank

or credit union. Naturally, you can only use as much money as you have

available. If you have an overdraft line of credit attached to your

account and your purchase with the card exceeds the amount available on

deposit, your bank or credit union will charge interest on the amount

you borrow from your overdraft.

There May Be Daily Spending & Withdrawal Limits:

Many banks and credit unions set daily limits on ATM purchases and

cash withdrawals, as a deterrent to the use of stolen or fraudulent

cards. Often, these two limits are different and each may vary widely,

from a few hundred dollars a day to the entire amount available in your

account. You should ask your bank or credit union whether your ATM card

will have daily withdrawal and spending limits and, if so, what they

will be.

While limits of this kind may seem like an inconvenience, they are

there to safeguard you and your money from unauthorized use of your

account. They can also serve to govern your daily spending, helping you

to be more disciplined in managing your money and your spending habits.

 

So Keep Track Of Your Spending:

Always make sure to keep your receipts, and record your purchases

in your checkbook immediately to prevent overdrawing your account. It's

important to remember that regardless of whether you use your PIN or

sign your name, all of your withdrawals and purchases will be

automatically deducted from your account.

HOW TO GET A BASIC ATM CARD & ONE YOU CAN USE TO SHOP

If It's Not Offered Automatically, You Can Ask About It:

Most banks and credit unions across the country offer ATM cards.

They are usually connected to a checking or share draft account. When

you open an account, you may automatically be given an ATM card. But if

you haven't been offered a card, you can ask for one.

You may also want to ask about any additional services available on

the card.

For example, most ATM cards can be used for cash withdrawals and other

transactions at ATMs in the United States and around the world. Your

bank or credit union may offer with your account the additional service

that allows you to use your ATM card to make purchases by using your PIN

or signing a receipt. You May Need To Apply For Some ATM Cards:

In the case of an ATM card with a credit card logo on it, your

ability to obtain this card will depend on the practices of the

individual bank or credit union. The list below contains the kinds of

things a bank or credit union considers to determine whether you qualify

for this kind of service. You may be required to provide additional

information on an application and undergo a credit check.

The length of your relationship with the bank or credit union

The average balance and status of your account

The number of times per year, if any, you overdraw your account

The number of banking products and services you use

Your credit history

COSTS INVOLVED IN USING ATM CARDS

The use of ATM cards naturally involves costs to provide the

services. As a result, there may be fees associated with your use of

the card. These vary, depending on your relationship with the

institution and whether you are withdrawing cash or making purchases.

If a fee is charged at all, it can vary widely. For example, you

could be charged a few cents, such as a dime, every time you use the

card, or you could be charged a flat monthly fee, such as one dollar per

month, or a combination of such fees. In some cases, fees are waived

based on the amount you keep on deposit at your bank or credit union.

But, keep in mind that fees can be higher or lower than those cited

here. Check with your bank or credit union.

Fees Must Be Disclosed To You:

Along with knowing your available balance, you should be aware of

any charges for using the card. Fees are established and charged by the

banks and credit unions that issue the ATM cards. If a fee is charged,

your bank or credit union must fully detail these fees when you get your

card. Every time a fee is charged by the bank or credit union issuing

the card, the fee will appear on your monthly statement.

When an ATM card is used to make purchases, a retailer may add a

fee to your purchase total. If this happens, the store is required by

law to disclose this to you in a display at the checkout counter. In

this case, the fee is added to your purchase amount, not listed

separately on your statement. Questions To Ask When You Sign Up For A

Card:

Before you use your ATM card to withdraw cash or shop, you should

ask your bank or credit union about the costs associated with ownership

and use of the card. Here are some questions you might ask:

What are the monthly or annual fees for this card?

What are the "per use" fees when using this bank's or other banks'

or credit unions' ATMs?

What are the "per use" fees when using the ATM card to shop?

How can I avoid any of these fees?

 

SAFEGUARDS THAT PROTECT YOUR CARD AND ITS USE

Two features can make using ATM cards safer than cash and checks.

First, their use is covered by federal regulations that protect both

consumers and the institutions that issue the cards. Second, technology

protects the information about your account.

It's smart to be aware of these regulations and protections. Here's

a brief summary of the safeguards that come with your ATM card and what

you must do to take advantage of them. You're Protected If Your Card Is

Lost Or Stolen And If Someone

Uses Your Card Fraudulently:

If you report a lost or stolen ATM card within two business days of

discovering the loss or theft, and report immediately any unauthorized

uses of your ATM card that you find on your monthly statement, your

liability is limited by federal regulations to $50. If you do not

report the loss or theft within two days, you could be responsible for

up to $500.

If you suspect that your ATM card has been used fraudulently, you

must report it to your bank or credit union within 60 days of receiving

the statement on which the questionable activity appears. If you don't

act promptly, you could be liable for the full amount that the

unauthorized user was able to withdraw.

You're Protected From Bookkeeping Errors:

Federal regulations also protect you against errors that may occur

in your bank account during or as the result of an electronic transfer

of funds. Such errors could include:

 

Omission of a transaction on your statement. For example, a

deposit you make at an ATM does not appear on your next statement.

Incorrect amount deducted from your account. For example, you

discover that a $14.25 purchase that you made last month with your ATM

card appears on your monthly statement as $142.50.

Bookkeeping error. You pay for your $36 grocery order with your

ATM card and find that the total amount has been deducted from your

account twice.

Receipt of incorrect amount. You request $100 from your checking

account at an ATM, but receive only $90.

If you suspect that a mistake has been made in your account,

immediately call the bank or credit union where you have the account.

You may be asked to follow-up your phone call with a written report of

the suspected error.

Resolving Disputes With Retailers:

When you shop with your ATM card, it is important to remember that

your rights relating to refunds and returned merchandise are the same as

when you pay with cash or a check. You must resolve issues of this type

directly with the retailer or store. It is the store's own policy on

refunds and returns that generally governs these transactions.

Retaining your purchase receipts can be important if you do need to

exchange or return any items that you purchased with your ATM card.

(Many stores print their return policies right on the receipts, so this

can serve as a record of the item you purchased.) If your efforts to

resolve these types of issues with the retailer are not successful, you

may be able to obtain help from your bank or credit union. Ask your

bank or credit union if they can help you, and if they can, be sure to

document your discussions. Technology Protects Your Card:

There is a magnetic stripe on the back of your ATM card. This

magnetic stripe contains your account number and other information about

your account. All this information is encoded by your bank.

When you use your ATM card to withdraw money or make purchases at

stores, the entire transaction is also electronically safeguarded to

keep the information about your account completely confidential.

Anytime you use your PIN, it is scrambled electronically and only your

bank or credit union can decode it.

Use A Toll-Free Number To Speed Your Protection:

Many financial institutions provide a toll-free number on the back

of their ATM card. Write it down and keep it in a handy but separate

place, not in your wallet where you keep your cards and other valuables.

Remember: the faster your report a problem, the better your protection.

SOME BENEFITS OF USING YOUR ATM CARD

An ATM Card Is Safer To Carry Than Cash:

If your card is lost or stolen, you can get your card replaced and

prevent the loss of your money by making a simple phone call.

There's No Need To Show Various Forms Of ID:

The common hassles and procedures involved in getting a check

approved at a store are eliminated when you use an ATM card to make

purchases.

An ATM Card Will Be Accepted Far More Readily Than An Out-Of-State

Check:

When you use an ATM card to make purchases, it's easy to tell where

it is accepted just by matching the logos on your card with those at

stores that accept the cards. And the number of locations that accept

ATM cards is constantly expanding, enabling you to shop in more and more

places without cash and checks.

Using An ATM Card Can Give You The Tools To Be A Smarter Money Manager:

All ATM card purchases and transactions appear as line items on the

monthly account statement you receive from your bank or credit union.

You'll find the date of purchase, the transaction total, and the

merchant's name. When combined with the receipt that accompanies each

purchase, these clear and complete records make it easier to track your

spending than when you use cash alone.

ATM Card Purchases Can Offer Convenience Without Interest Charges:

If you use your ATM card to shop, you can get all the convenience

of using a card for purchases, but without being charged interest.

However, if you have an ATM card that's attached to a checking account

with an overdraft line of credit and you overdraw your account using the

card, your bank or credit union will charge interest on the amount you

overdraw, just as they would with a check. If your overdraft protection

is provided by a link to your savings or other account, you may not

incur interest charges. Check with your bank or credit union.

Whether You Use Your PIN Or Sign A Sales Slip, You're Assured

Confidentiality:

The only information provided to the store by your bank or credit

union when you make a purchase with your ATM card is whether or not the

transaction is approved and the amount of the purchase. The store does

not have access to your account information, address or telephone

number, or any other information that may be printed on your check.

SOME CAUTIONS AND TIPS ON USING YOUR ATM CARD SAFELY

Memorize Your PIN, Or Secret Code:

It's usually only a four-digit number. If your bank or credit

union allows you to select your own PIN, pick a number that's easy to

remember. Unfamiliar numbers can be difficult to recall when you're

tired or under stress. But don't choose a number that's easily

associated with you like your birth date, social security or telephone

number, or part of your address. Also avoid using consecutive numbers or

repeating the same number. Your PIN is an important secret code and

should be chosen carefully. Never write that number on your ATM card or

on anything you carry with your card. Only you should know your PIN, so

no one else can use your card.

Protect Your ATM Card From Damage So That It Will Always Work When You

Need It:

Keep it in a place where it won't be bent, scratched, or

overheated. It's important to protect the magnetic stripe on the back

of the card. Should it become damaged, the card may fail to work in an

ATM or at a store. If your place of employment provides magnetic

cardkeys for access to your workplace, never put your cardkey near your

ATM card. Magnetic cardkeys can erase the information in your ATM

card's magnetic stripe, making it useless.

Make Sure The Transaction Or Purchase Amount Is Recorded Correctly:

Before you authorize any transaction with your PIN or signature,

double check that the purchase amount is correctly entered by the store

clerk.

Deduct The Purchase Amount From Your Checking Account Balance

Immediately:

This will ensure that you always know how much money you have

available in your account. Save All Of Your Receipts:

Keep the receipts from every ATM card purchase, deposit,

withdrawal, and transfer you make, and compare them against the

information on your monthly statement. This will help you to verify the

accuracy of your statement, as well as to identify any unauthorized

transactions.

When Using An ATM, Be Aware Of What's Going On Around You:

Have your card ready and be prepared to use it immediately. At

unattended terminals or outdoor ATMs, observe your surroundings before

beginning your transaction. Try to select terminals and ATMs in

well-lighted, busy areas. If you must use an ATM or terminal in an

isolated place, ask a friend to go with you, especially at night.

Prevent Others From Getting Information About Your ATM Card:

Always take your receipts with you to prevent anyone from obtaining

information that could help them access your account. When at an ATM,

always shield the screen and keyboard to keep onlookers from learning

your PIN or the transaction amount as you enter them. If you become

suspicious during a transaction, cancel it, take your card, and leave.

Check Periodically To Be Sure That You Have Your ATM Card:

Report a lost or stolen ATM card and any unauthorized transactions

to your bank or credit union immediately.

SMART MONEY MANAGEMENT HABITS

Your ATM card can be a useful tool in helping you develop good

money management habits if you follow these five simple steps:

* Establish a monthly budget.

* Stick to your spending limits and track your expenses routinely and

carefully.

* Save your sales and ATM receipts and immediately deduct purchases

and other transactions from your checkbook or your account

register. Be sure to note any fees.

* Promptly balance your checkbook against your monthly account

statement, which lists all of your purchases and fees.

* Use your monthly itemized statement as a systematic way to manage

your spending habits and determine whether your budget is

realistic.

MORE INFORMATION ABOUT ATM CARDS

For a copy of "Lost or Stolen: Credit and ATM Cards," write to the

Office of Consumer and Business Education, Federal Trade Commission,

Washington, DC 20580.

Call (800) 999-5136 for free copies of "The ATM Cash Card Quiz," a

brochure developed by MasterCard International in cooperation with the

National Coalition for Consumer Education.

The "Consumer Handbook to Credit Protection Laws" provides

information on your rights when using an ATM card, and how to complain

to federal enforcement agencies. For a copy, send 50 cents to the

Consumer Information Center, Department 340A, Pueblo, CO 81009.

If you have a complaint or dispute that cannot be resolved by your

bank, savings and loan, or credit union, one of the following government

agencies may be able to help you:

* Office of Consumer Affairs,

Federal Deposit Insurance Corporation,

550 17th Street, N.W., Washington, DC 20429.

Phone: (800) 934-3342.

* Office of the Comptroller of the Currency, Compliance

Management Division, 250 E Street, N.W., Washington, DC

20219.

Phone: (202) 874-4820

* Federal Reserve System, Division of Consumer and Community

Affairs, 20th Street and C Street, N.W., Washington, DC

20551.

Phone: (202) 452-3693.

* Office of Thrift Supervision's Consumer Affairs Office, 1700

G Street, N.W., Washington, DC 20552.

Phone: (800) 842-6929.

LISTING OF ATM NETWORKS & Shopping Service Networks

This list will help you become acquainted with ATM and shopping

service networks available in your area. It represents a complete

listing of all networks, to the best of the preparer's knowledge, as of

the publication date of this booklet.

ALABAMA

ALERT

AFFN (Armed Forces Financial Network)

Cirrus

Maestro

MONEY BELT

MPACT

MPACT

Plus

Interlink

SCS Money Center

SCS

ALASKA

Alaska Option

Alaska Option

Cirrus

Maestro

FIServ Shared

Plus

Interlink

SCS Money Center

SCS

THE EXCHANGE

Accel

ARIZONA

Cactus

Cirrus

Maestro

Day & Night Tellers

FIServ Shared

Instant Cash

MAC

MAC

Money Network

Money System

MPACT

MPACT

Plus

Interlink

QUEST

QUEST

Rocky Mountain Bankcard

SCS Money Center

SCS

STAR SYSTEM

EXPLORE

ARKANSAS

ACCESS

Cirrus

Maestro

Express Net

FIServ Shared

GulfNet

GulfNet Point of Sale

MAC

MAC

MONEY BELT

MoneyMaker

MOST

MOST

MPACT

MPACT

Plus

Interlink

PULSE

PULSE PAY

SCS Money Center

SCS

SHAZAM

CALIFORNIA

Cirrus

Maestro

Clover Network Teller

Day & Night Teller

Deputy Teller

FIServ Shared

Instant Cash

Instant Teller

Instant Teller

MAC

MAC

Max Money Center

MOST

MOST

MPACT

MPACT

Plus

Interlink

QUEST

QUEST

Rocky Mountain Bankcard

SCS Money Center

SCS

STAR SYSTEM

EXPLORE

The CO-OP

THE EXCHANGE

Accel

24 Hour Convenience Teller

24 Hour Teller

COLORADO

Cirrus

Maestro

Day & Night Teller

Fastbank

FIServ Shared

Fleet 24

Instant Cash

MAC

MAC

MINIBANK

Money Network

Money System

MPACT

MPACT

NetWorks

Plus

Interlink

PULSE

PULSE PAY

Rocky Mountain Bankcard

SCS Money Center

SCS

STAR SYSTEM

EXPLORE

Transaction

CONNECTICUT

Cirrus

Maestro

Fleet 24

MAC

MAC

NYCE

NYCE

Plus

Interlink

Timeless Teller

XPress24

Yankee 24

Yankee 24 QuickPay

DELAWARE

Cirrus

Maestro

FIServ Shared

MAC

MAC

MOST

MOST

MPACT

MPACT

NYCE

NYCE

Plus

Interlink

SCS Money Center

SCS

FLORIDA

AmBank 24

Bank Atlantic

Cirrus

Maestro

Credit Union 24

Dadeland Bank

Deputy Teller

1st American 24

FIServ Shared

Freedom Machine

HONOR

HONOR

MAC

MAC

MoneyLine 24

MoneyMaker

MPACT

MPACT

Plus

Interlink

Presto

SCS Money Center

SCS

Sun Bank 24

24 Hour Teller

GEORGIA

Cirrus

Maestro

Easy Banker

FIServ Shared

HONOR

HONOR

Instant Banker

Link 24

MAC

MAC

MONEY BELT

MoneyMaker

MOST

MOST

MPACT

MPACT

Plus

Interlink

Presto

P24

Push Button Banker

SCS Money Center

SCS

T24

24 Hour Banker

HAWAII

Bank of Hawaii

IslePay

Cirrus

Maestro

First Hawaiian

OTTO

FIServ Shared

MPACT

MPACT

Plus

Interlink

SCS Money Center

SCS

STAR SYSTEM

EXPLORE

IDAHO

Award

Cirrus

Maestro

Day & Night Teller

FIServ Shared

HandiBank

Instant Banker

MAC

MAC

MINIBANK

MPACT

MPACT

Plus

Interlink

Rocky Mountain Bankcard

SCS Money Center

SCS

STAR SYSTEM

EXPLORE

THE EXCHANGE

Accel

ILLINOIS

BankMate

BankMate

Cash Station

Cash Station

Cirrus

Maestro

Credit Union 24

Easy Answer

EFT Illinois

EFT Illinois

Evergreen Network

FIServ Shared

Instant Cash

MAC

MAC

Magic Line

ML Pay

Money Center 24

Money Network

Money System

MoneyMaker

MOST

MOST

MPACT

MPACT

Plus

Interlink

Shazam

SHAZAM

SCS Money Center

SCS

INDIANA

Access 24 Teller

Bank Machine

Cash Station

Cash Station

Cirrus

Maestro

Day & Night Network

EFT Illinois

1st Place

FIServ Shared

Instant Cash

Inteller

Jeanie

Jeanie

MAC

MAC

Magic Line

ML Pay

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SCS

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How To Use The Law To Instantly Stop Creditor Harassment

by Horizon Unlimited Group's Insider Reports

 

------------------------------------------------------------------------

INTRODUCTION

 

"What is your boss going to think when he finds out you don't pay your bills?"

- Big Bubba's Collection Crew

"If you get a check in the mail postmarked today, then I won't have to mess up your credit

for the next seven years."

- Pay Today Agency

"I think I can still stop the summons from being served at your job tomorrow if you will

send me a postdated check right now."

- Precision Pressure Services

Pinning "Bully" Bill Collectors To The Mat

Mark and Susan are heads of a typical American family. Three children, two cars and a

mortgage require thoughtful budgeting of their two incomes in order to live

"comfortably." Last September, Susan lost her job resulting in an immediate 40% drop in

household income. Shortly afterward their oldest son, Jason, was seriously injured in an

automobile accident. Compounding this tragic loss is the $8,000 in related medical

expenses added to a list of bills already 60-90 days delinquent. Unfortunately, the

Petersons found no mercy in a system that measures success only in terms of results and

looks only at the bottom line. The Petersons were on their own to work out of this terrible

situation and the thing they needed more than anything else was knowledge. They needed

to know their options. They needed to know the laws that have been enacted to protect

them from harassing creditors. The same information that eventually empowered the

Petersons to take some resemblance of control of their situation may also help you today

or at some point in your future.

If you haven't had the unfortunate experience of falling seriously behind on your monthly

commitments, if you haven't found yourself to be occasionally over billed for products or

services, if you have never felt as though you were mistreated by a creditor, then you are

in the minority, so far.

This resource is all about law. The reality is few people begin to drool with anticipation

when they find out that they are going to read a law book. Let's face it. Plucking eyebrows

may rate higher on the preference list than reading law.

But, when you find yourself in a situation where you need to know-must know-the facts-

your rights-a reference such as this will prove itself to be invaluable in the returns that it

will provide. Reading and learning for yourself what laws were enacted to protect your

rights will bring you peace of mind; it will give you confidence to take action with surety.

At the same time, one who remains ignorant of his rights is no better off than he who has

no rights.

You will find yourself referring to this reference again and again as those occasional

situations arise where, in the past, you knew you weren't treated fairly but lacked

knowledge of the facts to take any meaningful action. You'll also see numerous

opportunities where friends and relatives could benefit from your knowledge gained here,

also. And as further encouragement, you will also find that, other than the occasional

paragraph, most of the law text reads pretty straight forward.

If read in a quiet relaxed atmosphere, without interruption, you will find comprehension to

be surprisingly high. To further assist you with understanding and planning, you will find

explanations of critical subjects in everyday language throughout the text.

Virtually everyone, regardless of name, occupation, or surprisingly even income is bound

to experience encounters of the 'harassing kind' at least once in a lifetime. If it's not part of

maturing as a young adult, it's part of a divorce. If it's not part of a dream gone bad, it's

the result of an illness, hurricane or business failure. Financial hardship comes with many

faces, but it stems from two primary sources. It can be the result of mismanaged credit and

not integrating sound principles into one's financial planing, or it can result from a personal

calamity. The bottom line is that financial hardship is not a respecter of persons or

positions. A couple earning $80,000 a year can actually be just as vulnerable as a single

parent earning $25,000 a year. Unexpected, and often undeserved, circumstances can

leave both vulnerable to the harassment of collection agencies.

Before trashing the collection industry, it is important to note that the debt collection

business is very much needed in a free enterprise system. You could call it a necessary evil

if you like. Without it we would all be paying much higher prices for everything we buy as

businesses tried to recoup their losses from all the "deadbeats" who didn't pay. The debt

collectors are the deterrent to see that "deadbeats" do pay their bills. And there are a lot of

them out there, as anyone who accepts checks or extends credit can attest. The "Gripe"

with the system is that it has no way to distinguish a "deadbeat" from an upstanding

individual who has just had an unfortunate turn of events and is eager to rectify their

situation. Thus, everyone gets thrown into the same pile; everyone gets treated as a

"deadbeat".

Add to this the fact that most third party bill collectors get paid a percentage of everything

they collect and you have a formula for real abuse. The lure of big profits in the debt

collection industry has attracted a few unethical agents. There are more than a handful of

bill collectors that will go to any length to collect a debt and earn their commission. They

make their living skillfully applying the techniques of deception and fear tactics to those

who are often most vulnerable emotionally and least prepared knowledge wise .

Fortunately the U.S. Congress has passed laws to limit the tactics bill collectors can use to

extract money from a debtor.

If you are currently experiencing the discomfort of threatening phone calls and letters, or if

you ever do in the future, you can take comfort in the knowledge that you have the

authority to put an immediate end to such harassment. Every citizen has this authority.

The problem is that most don't know it, and as a result they are having their emotions

"played like a string" by unscrupulous seasoned debt collectors.

Your authority was first delegated to you by the U.S. Senate and House of

Representatives in the Fair Debt Collection Practices Act of 1977. This law was

strengthened in 1986 with the Consumer Credit Protection Act Amendments. This piece

of legislation placed strict regulations on the methods creditors and their agents can

employ in an effort to collect a debt. The following is a layman's summery of some of the

key sections of this law. (If you are in a business that extends credit, you should also

become familiar with this information so that you don't unknowingly break the law.)

THE FAIR DEBT COLLECTION PRACTICES ACT

 

 

Layperson's Summary: False Or Misleading Representation

A creditor may not use deceptive or misleading means in an effort to collect a debt.

That could include the following:

1) Falsely implying that he is an attorney or government representative.

2) Falsely implying that you have committed a crime.

3) Representing correspondence as being from an attorney when it is not.

4) Implying that nonpayment of any debt will result in loss of personal property, wages, or

arrest unless (a) it is lawful and (b) the creditor intends to follow through with such action.

5) Threatening to take action that is not legal or that the creditor does not intend to take.

6) Implying that the transfer of interest in the debt to someone else will result in any of the

actions in number four.

7) The false representation that you committed a crime in an effort to disgrace you.

8) Misrepresenting your credit or failing to communicate that you are disputing a debt.

9) The use of written communication which simulates or is falsely represented to be a

document authorized, issued or approved by any court, official or agency of the U.S. or

any state, or which creates a false impression as to its source, authorization, or approval.

10) The use of any false or deceptive means to attempt to collect a debt or obtain

information about a consumer.

11) Failure to disclose clearly in all communication that the debtor is attempting to collect

a debt and that any information obtained will be used for that purpose.

12) The false representation or implication that accounts have been turned over to

innocent purchasers.

13) The false representation or implication that documents are part of the legal process.

14) The use of any business, company, or organization name other than the actual name of

the debt collector's business.

15) The false representation that papers being sent to you are not legal process forms

when they are.

16) The false representation that a debt collector is employed by a consumer reporting

agency.

Layperson's Summary: Unfair Practices

1) A creditor may not collect any interest, fee, or charge unless (a) it is legal and (b) it was

expressly authorized in the original agreement creating the debt.

2) If a creditor accepts a check that is more that 5 days postdated, he must notify the

consumer in writing a minimum of 3 days and a maximum of 10 days before depositing the

check.

3) A creditor may not solicit a postdated check for the purpose of threatening or

instituting criminal prosecution.

4) A creditor may not deposit or threaten to deposit a postdated check before its intended

date.

5) A creditor can not cause charges to be incurred by you for the sake of communication

such as a collect phone call or telegram fees.

6) A creditor may not threaten nonjudicial action to take property if (a) there is no right to

the property or (b) he does not intend to take such action or (c) the property is exempt

from such action.

7) A creditor may not use any means of mail that might be embarrassing to you such as a

post card or an envelope with a symbol or wording that indicates that it is a debt collection

letter. He may use his business name on the envelope if it doesn't indicate that it is a debt

collection business.

8) A creditor may never give false credit information about you to anyone.

HOW TO INSTANTLY STOP HARASSING CALLS AND LETTERS FROM THIRD

PARTY BILL COLLECTORS

 

 

They say you owe money that you don't think you should owe. Or maybe, you owe the

money but due to financial circumstances you just can't pay it right now. In the meantime,

you've got third party collection agencies harassing you and your family by phone and by

mail. It's gotten to the point that you're losing sleep worrying about it. What do you do?

Options

Well, one option is to make them go away. Yes, you can instantly stop unwanted phone

calls and letters by invoking Public Law 95-109 Section 805-C. It provides that once

notified in writing to cease further communication, a third party bill collector may only

contact you one last time in order to inform you of what action they intend to take on

behalf of their client. Normally, this will be a phone call telling you that they are going to

recommend that their client file a lawsuit to recover the debt and additional fees. That may

sound real scary, but the truth is that the majority of the time the collection agency will

then return your file to the original creditor who often reports the debt as a charge off on

your credit file--The End.

If you invoke the law very early (as soon as you get the first letter from a third party

collection agency) you may prevent an inquiry from a collection agency even showing up

on your credit file or a note indicating that the account was turned over to outside

collections. In other words, they may send it right back to the original creditor without

spending the money to pull your credit file. This is good damage control for your credit

history since either notation on your report would be considered very negative by a

potential future lender.

Even with the slim chance the creditor does file a law suit, it's not the end of the issue by

any means. There is always room to negotiate. The reality for creditors is that judgments

are costly and difficult to enforce in most states, thus unsecured loans such as credit cards,

medical service, etc. are often written off as uncollectible. This may be one viable option

for you to explore in order to get creditors "off your back" until you can settle the debt.

Invoking the Law

1.) Make a copy of the most recent correspondence from the collection agency.

2.) Write or type a letter expressing your desire for #1) the bill collector to cease

communication with you #2) your willingness to deal only with the original creditor and

#3) that you are giving proper notification in accordance with PL 95-109. Include the

account number assigned to you by the collection agency.

3.) Make a copy of your letter.

4.) Mail your letter and the copy of the letter they sent you in an envelope via Certified

Mail - Return Receipt Requested. You must send it certified mail to prove it was received

by them.

5.) Within a couple of weeks maximum you should receive a green card as your receipt for

delivery. File it with your copies of the other letters in case you ever need to take legal

action.

Of course there are other options to get bill collectors off of your back. You may consider

retaining an attorney. Once your debtor is notified that you have an attorney, they may not

contact you or your family further unless your attorney doesn't respond to them in a

reasonable period of time. It is important to note that this method is effective for the

original creditor also and not just third party agents as covered above.

The best and most honorable option in most cases would be to negotiate a settlement. Of

course you don't have the money to pay them in full or you would have already done it.

Try offering 10 or 20% of the total balance as payment in full. Most creditors would

rather have something guaranteed than holding out for the entire balance and risk getting

nothing. Make sure you have everything in writing including how it will be reported on

your credit. Don't agree to their reporting it as a "paid collection account". Instead, you

insist that it say "Account closed- paid in full". Don't allow them to con you into thinking

that they can't do that. They may tell you that they can't change credit history; and legally

this is true. But you are not demanding them to change your payment history; you are

demanding that they report the actual status of the account, "Account closed- paid in full".

The attractiveness of this method is to keep your credit file as clean as possible.

Again the answer is in knowing the law and the facts. When evaluating your options,

consider the legitimacy of the debt, the size, age and type of debt, as well as your

prognosis of your ability to repay the debt at some point in the future.

Also notice that bankruptcy was not listed as an option here. Yes, it is one--probably the

most common option today. Many lawyers are making BIG money selling the idea of

bankruptcy as the solution to everyone's financial problems. Just open a local TV guide or

shoppers news and you'll see dozens of ads, "Stop Creditor Harassment". The reality is

that the majority of bankruptcies are avoidable and bankruptcy is not as painless as it first

appears. Bankruptcy should be a last resort in extreme cases where vital assets are in

jeopardy. A wise negotiator can do far more good than a greedy attorney.

NEGOTIATE!!! Or find an attorney who is willing to negotiate!

 

LEGAL WAYS TO GET THE BILL COLLECTORS OFF YOUR BACK

 

------------------------------------------------------------------------

 

 

 

How To Use The Law To Instantly Stop Creditor Harassment

by Horizon Unlimited Group's Insider Reports

 

------------------------------------------------------------------------

INTRODUCTION

 

"What is your boss going to think when he finds out you don't pay your bills?"

- Big Bubba's Collection Crew

"If you get a check in the mail postmarked today, then I won't have to mess up your credit

for the next seven years."

- Pay Today Agency

"I think I can still stop the summons from being served at your job tomorrow if you will

send me a postdated check right now."

- Precision Pressure Services

Pinning "Bully" Bill Collectors To The Mat

Mark and Susan are heads of a typical American family. Three children, two cars and a

mortgage require thoughtful budgeting of their two incomes in order to live

"comfortably." Last September, Susan lost her job resulting in an immediate 40% drop in

household income. Shortly afterward their oldest son, Jason, was seriously injured in an

automobile accident. Compounding this tragic loss is the $8,000 in related medical

expenses added to a list of bills already 60-90 days delinquent. Unfortunately, the

Petersons found no mercy in a system that measures success only in terms of results and

looks only at the bottom line. The Petersons were on their own to work out of this terrible

situation and the thing they needed more than anything else was knowledge. They needed

to know their options. They needed to know the laws that have been enacted to protect

them from harassing creditors. The same information that eventually empowered the

Petersons to take some resemblance of control of their situation may also help you today

or at some point in your future.

If you haven't had the unfortunate experience of falling seriously behind on your monthly

commitments, if you haven't found yourself to be occasionally over billed for products or

services, if you have never felt as though you were mistreated by a creditor, then you are

in the minority, so far.

This resource is all about law. The reality is few people begin to drool with anticipation

when they find out that they are going to read a law book. Let's face it. Plucking eyebrows

may rate higher on the preference list than reading law.

But, when you find yourself in a situation where you need to know-must know-the facts-

your rights-a reference such as this will prove itself to be invaluable in the returns that it

will provide. Reading and learning for yourself what laws were enacted to protect your

rights will bring you peace of mind; it will give you confidence to take action with surety.

At the same time, one who remains ignorant of his rights is no better off than he who has

no rights.

You will find yourself referring to this reference again and again as those occasional

situations arise where, in the past, you knew you weren't treated fairly but lacked

knowledge of the facts to take any meaningful action. You'll also see numerous

opportunities where friends and relatives could benefit from your knowledge gained here,

also. And as further encouragement, you will also find that, other than the occasional

paragraph, most of the law text reads pretty straight forward.

If read in a quiet relaxed atmosphere, without interruption, you will find comprehension to

be surprisingly high. To further assist you with understanding and planning, you will find

explanations of critical subjects in everyday language throughout the text.

Virtually everyone, regardless of name, occupation, or surprisingly even income is bound

to experience encounters of the 'harassing kind' at least once in a lifetime. If it's not part of

maturing as a young adult, it's part of a divorce. If it's not part of a dream gone bad, it's

the result of an illness, hurricane or business failure. Financial hardship comes with many

faces, but it stems from two primary sources. It can be the result of mismanaged credit and

not integrating sound principles into one's financial planing, or it can result from a personal

calamity. The bottom line is that financial hardship is not a respecter of persons or

positions. A couple earning $80,000 a year can actually be just as vulnerable as a single

parent earning $25,000 a year. Unexpected, and often undeserved, circumstances can

leave both vulnerable to the harassment of collection agencies.

Before trashing the collection industry, it is important to note that the debt collection

business is very much needed in a free enterprise system. You could call it a necessary evil

if you like. Without it we would all be paying much higher prices for everything we buy as

businesses tried to recoup their losses from all the "deadbeats" who didn't pay. The debt

collectors are the deterrent to see that "deadbeats" do pay their bills. And there are a lot of

them out there, as anyone who accepts checks or extends credit can attest. The "Gripe"

with the system is that it has no way to distinguish a "deadbeat" from an upstanding

individual who has just had an unfortunate turn of events and is eager to rectify their

situation. Thus, everyone gets thrown into the same pile; everyone gets treated as a

"deadbeat".

Add to this the fact that most third party bill collectors get paid a percentage of everything

they collect and you have a formula for real abuse. The lure of big profits in the debt

collection industry has attracted a few unethical agents. There are more than a handful of

bill collectors that will go to any length to collect a debt and earn their commission. They

make their living skillfully applying the techniques of deception and fear tactics to those

who are often most vulnerable emotionally and least prepared knowledge wise .

Fortunately the U.S. Congress has passed laws to limit the tactics bill collectors can use to

extract money from a debtor.

If you are currently experiencing the discomfort of threatening phone calls and letters, or if

you ever do in the future, you can take comfort in the knowledge that you have the

authority to put an immediate end to such harassment. Every citizen has this authority.

The problem is that most don't know it, and as a result they are having their emotions

"played like a string" by unscrupulous seasoned debt collectors.

Your authority was first delegated to you by the U.S. Senate and House of

Representatives in the Fair Debt Collection Practices Act of 1977. This law was

strengthened in 1986 with the Consumer Credit Protection Act Amendments. This piece

of legislation placed strict regulations on the methods creditors and their agents can

employ in an effort to collect a debt. The following is a layman's summery of some of the

key sections of this law. (If you are in a business that extends credit, you should also

become familiar with this information so that you don't unknowingly break the law.)

THE FAIR DEBT COLLECTION PRACTICES ACT

 

 

Layperson's Summary: False Or Misleading Representation

A creditor may not use deceptive or misleading means in an effort to collect a debt.

That could include the following:

1) Falsely implying that he is an attorney or government representative.

2) Falsely implying that you have committed a crime.

3) Representing correspondence as being from an attorney when it is not.

4) Implying that nonpayment of any debt will result in loss of personal property, wages, or

arrest unless (a) it is lawful and (b) the creditor intends to follow through with such action.

5) Threatening to take action that is not legal or that the creditor does not intend to take.

6) Implying that the transfer of interest in the debt to someone else will result in any of the

actions in number four.

7) The false representation that you committed a crime in an effort to disgrace you.

8) Misrepresenting your credit or failing to communicate that you are disputing a debt.

9) The use of written communication which simulates or is falsely represented to be a

document authorized, issued or approved by any court, official or agency of the U.S. or

any state, or which creates a false impression as to its source, authorization, or approval.

10) The use of any false or deceptive means to attempt to collect a debt or obtain

information about a consumer.

11) Failure to disclose clearly in all communication that the debtor is attempting to collect

a debt and that any information obtained will be used for that purpose.

12) The false representation or implication that accounts have been turned over to

innocent purchasers.

13) The false representation or implication that documents are part of the legal process.

14) The use of any business, company, or organization name other than the actual name of

the debt collector's business.

15) The false representation that papers being sent to you are not legal process forms

when they are.

16) The false representation that a debt collector is employed by a consumer reporting

agency.

Layperson's Summary: Unfair Practices

1) A creditor may not collect any interest, fee, or charge unless (a) it is legal and (b) it was

expressly authorized in the original agreement creating the debt.

2) If a creditor accepts a check that is more that 5 days postdated, he must notify the

consumer in writing a minimum of 3 days and a maximum of 10 days before depositing the

check.

3) A creditor may not solicit a postdated check for the purpose of threatening or

instituting criminal prosecution.

4) A creditor may not deposit or threaten to deposit a postdated check before its intended

date.

5) A creditor can not cause charges to be incurred by you for the sake of communication

such as a collect phone call or telegram fees.

6) A creditor may not threaten nonjudicial action to take property if (a) there is no right to

the property or (b) he does not intend to take such action or (c) the property is exempt

from such action.

7) A creditor may not use any means of mail that might be embarrassing to you such as a

post card or an envelope with a symbol or wording that indicates that it is a debt collection

letter. He may use his business name on the envelope if it doesn't indicate that it is a debt

collection business.

8) A creditor may never give false credit information about you to anyone.

HOW TO INSTANTLY STOP HARASSING CALLS AND LETTERS FROM THIRD

PARTY BILL COLLECTORS

 

 

They say you owe money that you don't think you should owe. Or maybe, you owe the

money but due to financial circumstances you just can't pay it right now. In the meantime,

you've got third party collection agencies harassing you and your family by phone and by

mail. It's gotten to the point that you're losing sleep worrying about it. What do you do?

Options

Well, one option is to make them go away. Yes, you can instantly stop unwanted phone

calls and letters by invoking Public Law 95-109 Section 805-C. It provides that once

notified in writing to cease further communication, a third party bill collector may only

contact you one last time in order to inform you of what action they intend to take on

behalf of their client. Normally, this will be a phone call telling you that they are going to

recommend that their client file a lawsuit to recover the debt and additional fees. That may

sound real scary, but the truth is that the majority of the time the collection agency will

then return your file to the original creditor who often reports the debt as a charge off on

your credit file--The End.

If you invoke the law very early (as soon as you get the first letter from a third party

collection agency) you may prevent an inquiry from a collection agency even showing up

on your credit file or a note indicating that the account was turned over to outside

collections. In other words, they may send it right back to the original creditor without

spending the money to pull your credit file. This is good damage control for your credit

history since either notation on your report would be considered very negative by a

potential future lender.

Even with the slim chance the creditor does file a law suit, it's not the end of the issue by

any means. There is always room to negotiate. The reality for creditors is that judgments

are costly and difficult to enforce in most states, thus unsecured loans such as credit cards,

medical service, etc. are often written off as uncollectible. This may be one viable option

for you to explore in order to get creditors "off your back" until you can settle the debt.

Invoking the Law

1.) Make a copy of the most recent correspondence from the collection agency.

2.) Write or type a letter expressing your desire for #1) the bill collector to cease

communication with you #2) your willingness to deal only with the original creditor and

#3) that you are giving proper notification in accordance with PL 95-109. Include the

account number assigned to you by the collection agency.

3.) Make a copy of your letter.

4.) Mail your letter and the copy of the letter they sent you in an envelope via Certified

Mail - Return Receipt Requested. You must send it certified mail to prove it was received

by them.

5.) Within a couple of weeks maximum you should receive a green card as your receipt for

delivery. File it with your copies of the other letters in case you ever need to take legal

action.

Of course there are other options to get bill collectors off of your back. You may consider

retaining an attorney. Once your debtor is notified that you have an attorney, they may not

contact you or your family further unless your attorney doesn't respond to them in a

reasonable period of time. It is important to note that this method is effective for the

original creditor also and not just third party agents as covered above.

The best and most honorable option in most cases would be to negotiate a settlement. Of

course you don't have the money to pay them in full or you would have already done it.

Try offering 10 or 20% of the total balance as payment in full. Most creditors would

rather have something guaranteed than holding out for the entire balance and risk getting

nothing. Make sure you have everything in writing including how it will be reported on

your credit. Don't agree to their reporting it as a "paid collection account". Instead, you

insist that it say "Account closed- paid in full". Don't allow them to con you into thinking

that they can't do that. They may tell you that they can't change credit history; and legally

this is true. But you are not demanding them to change your payment history; you are

demanding that they report the actual status of the account, "Account closed- paid in full".

The attractiveness of this method is to keep your credit file as clean as possible.

Again the answer is in knowing the law and the facts. When evaluating your options,

consider the legitimacy of the debt, the size, age and type of debt, as well as your

prognosis of your ability to repay the debt at some point in the future.

Also notice that bankruptcy was not listed as an option here. Yes, it is one--probably the

most common option today. Many lawyers are making BIG money selling the idea of

bankruptcy as the solution to everyone's financial problems. Just open a local TV guide or

shoppers news and you'll see dozens of ads, "Stop Creditor Harassment". The reality is

that the majority of bankruptcies are avoidable and bankruptcy is not as painless as it first

appears. Bankruptcy should be a last resort in extreme cases where vital assets are in

jeopardy. A wise negotiator can do far more good than a greedy attorney.

NEGOTIATE!!! Or find an attorney who is willing to negotiate!

 

Will Bankruptcy Discharge Enough of Your Debts?

 

Certain categories of debts cannot be discharged in Chapter 7 bankruptcy. These are

called non dischargeable debts, and it doesn't make much sense to file for Chapter 7

bankruptcy if your primary goal is to get rid of them. The main ones are:

 

 

•back child support and alimony obligations, and debts considered in the nature of

support, such as an obligation to pay attorney's fees for a child support hearing, or an

obligation to pay marital debts in lieu of alimony

•student loans that first became due fewer than seven years ago (plus any time you

received a deferment or forbearance or were in an earlier bankruptcy case)

•court-ordered restitution

•income taxes less than three years past due

•condominium and cooperative association dues, and

•court judgments for injuries or death to someone arising from your intoxicated driving.

 

 

The bankruptcy judge may rule any of the following debts non dischargeable if the creditor

objects in the bankruptcy court:

 

 

•Debts incurred on the basis of fraud, such as lying on a credit application or writing a bad

check.

•Debts from willful or malicious injury to another or another's property, including assault,

battery, false imprisonment, libel and slander.

•Debts from larceny (theft), breach of trust or embezzlement.

•Debts arising out of a marital settlement agreement or divorce decree (that aren't

otherwise automatically non dischargeable as support or alimony), such as credit card

debts you agree to pay or payments you owe to an ex-spouse to even up the property

division. The court won't let you discharge these debts unless you prove that you need the

money for basic support or to continue the operation of a business or that the benefit

you'd receive by the discharge outweighs any detriment to your ex-spouse or children.

 

 

 

 

As a general rule, if more than 50% of your debts are non dischargeable, Chapter 7

bankruptcy's disadvantages probably outweigh the advantages. If you can discharge more

than 50% of your debts, however, Chapter 7 bankruptcy may make sense; after your

discharge, you should be in a better position than before to pay off the non dischargeable

debts.

Even if the bulk of your indebtedness is from debts that are nondischargeable only if the

creditor files an objection with the court, it may still make sense to file for bankruptcy and

hope your creditors don't object.

How Much Property Will You Have to Give Up?

Whether or not you decide to file for bankruptcy may depend on what property will be

taken to pay your creditors (nonexempt property) and what property you will keep

(exempt property).

Certain kinds of property are exempt in almost every state, while others are almost never

exempt. The following are items you can typically keep (exempt property):

 

 

•motor vehicles, to a certain value•reasonably necessary clothing (no mink

coats)•reasonably needed household furnishings and goods (the second TV may have to

go)•household appliances•jewelry, to a certain value•personal effects•life insurance (cash

or loan value, or proceeds), to a certain value•pensions •part of the equity in your

home•tools of your trade or profession, to a certain value•portion of unpaid but earned

wages, and•public benefits (welfare, Social Security, unemployment compensation)

accumulated in a bank account.

Items you must typically give up (nonexempt property) include:

•expensive musical instruments (unless you're a professional musician)•stamp, coin and

other collections•family heirlooms•cash, bank accounts, stocks, bonds and other

investments•second car or truck, and •second or vacation home.

 

Turning the Tables on a Bill Collector

Copyright (c) 1996 Nolo Press

------------------------------------------------------------------------

Many bill collectors sit at their desks with pre-written scripts of what to say to you. Nine

out of ten debtors respond with the same, predictable statements. Often, these are

employment excuses, promises to pay and general admissions of guilt. None of this will

get you anywhere--the collector has heard it all before and is ready to hurl the next

accusation at you. To help the collectors respond to your predictable answers, one

collector wrote a color-coded guide. If you respond with answer X, the bill collector flips

to the green page. If you respond with answer Y, he turns to the blue page.

The key to your success with a bill collector is to be the one in ten who unpredictably

turns the table on the collector. Your goal is to get the bill collector to hang up, tongue

tied with frustration. And engaging the collector in conversation may even be to your

advantage, especially if you have a witness pick up the extension and listen in on the

conversation. (It's illegal for you to tape any conversation without the other party's

consent, however.) If the bill collector says something illegal, you can report the violation

to the federal government, your state government and the creditor. The creditor may be

willing to drop the whole thing.

Here is a made up dialogue between a bill collector ("Betty Collins") and a debtor,

("Donald Drake") that shows you how to turn the tables.

BC: Hello, this is Ms. Collins. Is Donald Drake there?

D: This is Donald Drake.

BC: Mr. Drake, I work for Collins Collection Agency and I'm calling about your Apex

charge account. Your balance of $1,744 is six months overdue. I know you have money

and will send us the full amount today. [At this point, the bill collector will pause. Bill

collectors are trained to outlast debtors--they hope that the debtor will break the silence

and tell the collector something the collector doesn't know. Many debtors are

uncomfortable with the silence and offer to pay.]

D: I can't.

BC: Why not, Mr. Drake? Are you having employment or health problems?

D: Quite frankly, it's none of your business.

BC: Mr. Drake, I am here to help you. Not paying your bill is unacceptable. We need to

receive some payment from you. Perhaps you can take out a personal loan to pay us.

D: What are you, crazy?

BC: Now Mr. Drake, like I said, I only want to help. Have you considered refinancing

your home, or taking a second job in order to raise some cash?

D: Ms. Collins, you have some nerve. I am doing all I can to support my family--it just so

happens that I just can't pay your bill right now. It's awfully insulting of you to tell me how

to manage my financial affairs.

BC: Mr. Drake, we'll be happy to take a post-dated check from you.

D: But Ms. Collins, I don't know when I will have the money to pay. If I write you a post-

dated check, it may bounce. I hope you aren't suggesting that I get into trouble for

bouncing a check.

BC: Mr. Drake, you realize that I will have to report your nonpayment to a credit

reporting agency. Good credit should be your most valued asset, but now your credit

rating will fall.

D: My credit is already damaged and I don't care. I have no interest in buying more things

on credit. In fact, I'd really appreciate it if you report this to a credit bureau--certainly it

would help decrease the amount of junk mail I now receive.

BC: I know you want to do the right--the moral--thing and pay your bill.

D: Yes, and I have a moral responsibility to feed and clothe my family before I pay my

Apex account. I guess you do too or you wouldn't be spending all this time trying to earn

a commission.

BC: You know we can attach your wages and other property.

D: Yes, but not until you get a court judgment and that takes a lot of time. Of course,

threatening to do it before you get a court order is illegal.

BC: Mr. Drake, we can send our lawyer to court in 15 minutes.

D: Oh, I doubt that, Ms. Collins. If your lawyer is any good he probably has other

priorities. Anyway, before you can do much to me you must first serve me with papers,

wait for my response, have a trial and get a court judgment. And that usually takes many

months. Even if you get a judgment, you can attach only my nonexempt property. [Much

of your property is exempt from your creditor's taking, even if the creditor has a court

judgment. This includes most of your wages, public benefits, your clothing and household

furniture and some of the equity in your car.]

BC: Mr. Drake, I will have to call your employer.

D: Contacting my employer would be illegal. You can only call my employer to try and

find me. You have obviously found me.

BC: How did you know that? Oh (mumble, mumble). Well, I'll call you later...

D: Wait, Ms. Collins. Don't hang up. I know you are busy and make most of your money

when people send you payments for their bills. Just because I have no money now and

know my rights is no reason for you to get huffy and hang up on me.

BC: Listen, Mr. Drake, I'm going to get you.

D: Not legally you can't. Ms. Collins, I've had enough of your threats. May I have your

address? I plan to send you a letter telling you to stop communicating with me. I know

this is my right under the federal law.

BC: Collins Collection Agency, P.O. Box 19044, Portland, Maine 00011.

D: And your supervisor's name? I'd like to report this conversation to your boss and the

Federal Trade Commission.

Click--the bill collector hung up.

The bill collector tried to frighten and shame the debtor by mentioning his credit rating,

moral obligation, wages being attached and employer. But none worked. And when the

debtor threatened to report the collector to the FTC, the bill collector hung up.

 

Chapter 13 Bankruptcy--Introduction

 

Copyright (c) 1996 Nolo Press

------------------------------------------------------------------------

Most people think of bankruptcy as a process in which you go to court and get your debts

erased. But in fact, there are two types of bankruptcies: the more familiar liquidation

bankruptcy, where your debts are wiped out completely (Chapter 7 bankruptcy) and

reorganization bankruptcy, where you partially or fully repay your debts. The

reorganization bankruptcy for individuals is called Chapter 13 bankruptcy. (There are two

other kinds of reorganization bankruptcy: Chapter 11, for businesses and for individuals

with debts over $1 million, and Chapter 12, for family farmers.) The names come from the

chapters of the federal Bankruptcy Code.

Chapter 13 bankruptcy lets you rearrange your financial affairs, repay a portion of your

debts and put yourself back on your financial feet. You repay your debts through a

Chapter 13 plan. Under a typical plan, you make monthly payments to someone called a

bankruptcy trustee, who is appointed by the bankruptcy court, for three to five years. The

bankruptcy trustee distributes the money to your creditors.

Chapter 13 bankruptcy isn't for everyone. If your total debt burden is too high or your

income is too low or irregular, you may not be eligible. You may be better off handling

your debt problems in another way--such as filing for Chapter 7 bankruptcy, seeking help

from a nonprofit consumer counseling group or negotiating with your creditors on your

own.

Here are some important features of Chapter 13 bankruptcy:

 

 

•Chapter 13 bankruptcy is very powerful. You can use it to stop a house foreclosure,

make up the missed mortgage payments and keep the house. You can also pay off back

taxes through your Chapter 13 plan and stop interest from accruing on your tax debt.

•Filing your papers with the bankruptcy court stops creditors in their tracks. When you file

for Chapter 13 bankruptcy (or any other kind of bankruptcy), something called the

automatic stay goes into effect. It immediately stops your creditors from trying to collect

what you owe them. At least temporarily, creditors cannot legally grab (garnish) your

wages, empty your bank account, go after your car, house or other property, or cut off

your utility service or welfare benefits.

•Some people use Chapter 13 bankruptcy to buy time. For example, if you are behind on

mortgage payments and about to be foreclosed on, you can file Chapter 13 bankruptcy

papers to stop collection efforts, and then attempt to sell the house before the foreclosure.

•Chapter 13 bankruptcy requires discipline. For the entire length of your case (three to five

years), you will have to live under a strict budget; the bankruptcy court will not allow you

to spend money on anything it deems nonessential.

•The majority of debtors never complete their Chapter 13 repayment plans. Although most

people file for Chapter 13 bankruptcy assuming they'll complete their plan, only about

35% of all Chapter 13 debtors do. Many drop out very early in the process, without ever

submitting a feasible repayment plan to the court. If you can come up with a realistic

budget and stick to it, however, you should have no trouble completing your Chapter 13

plan.

•Payments may be deducted from your wages during your case. If you have a regular job

with regular income, the bankruptcy court will probably order that the monthly payments

under your Chapter 13 plan be automatically deducted from your wages and sent to the

bankruptcy court.

•Bankruptcy rules vary from court to court. Bankruptcy law comes from the federal

Congress and is meant to be uniform across the country. But when disputes arise about

the bankruptcy laws, bankruptcy courts make the decisions--and they don't all decide the

issues in the same way. The result is that bankruptcy law and practice vary significantly

from court to court and from region to region. This book highlights the different ways

courts have ruled on major issues in Chapter 13 bankruptcy. But this book can't possibly

address every variation. If you research a question yourself or hire a bankruptcy lawyer,

you'll need to be sure the information you get applies in your bankruptcy court.

•Chapter 13 bankruptcy can stay in your credit file for up to ten years from the day you

file your papers, although rarely are Chapter 13 bankruptcies reported for more than seven

years. After your case is over, however, you can take steps to improve your credit. In fact,

some Chapter 13 bankruptcy courts have established programs to help you do just that. In

such a program, if you have paid off around 75% or more of your debts, you may attend

money management seminars and apply for credit from certain local creditors.

 

Do Nothing

 

Surprisingly, the best approach for some people deeply in debt is to take no action at all. If

you're living simply, with little income and property, and look forward to a similar life in

the future, you may be what's known as "judgment proof." This means that anyone who

sues you and obtains a court judgment won't be able to collect simply because you don't

have anything they can legally take. (As a famous song of the 1970s said, "freedom's just

another word for nothing left to lose.") Remember, except in unusual situations (being a

tax protester or willfully failing to pay child support) you can't be thrown in jail for not

paying your debts. Nor can a creditor take away such essentials as basic clothing, ordinary

household furnishings, personal effects, food, Social Security, unemployment or public

assistance.

So, if you don't anticipate having a steady income or property a creditor could grab,

bankruptcy is probably not necessary. Your creditors probably won't sue you, because it's

unlikely they could collect the judgment. Instead, they'll simply write off your debt and

treat it as a deductible business loss for income tax purposes. In several years, it will

become legally uncollectible under state law (called the statute of limitations). And in

seven years, it will come off your credit record.

Negotiate With Your Creditors

If you have some income, or you have assets you're willing to sell, you may be a lot better

off negotiating with your creditors than filing for bankruptcy. Negotiation may simply buy

you some time to get back on your feet, or you and your creditors may agree on a

complete settlement of your debts for less than you owe.

Get Outside Help To Design A Repayment Plan

Many people can't do a good job negotiating with their creditors. Inside, they feel that

their creditors are right to insist on full payment. Or, their creditors are so hard-nosed or

just plain irrational that the process is too unpleasant to stomach. In any case, the ability to

negotiate is an art, and involves a number of skills.

If you don't want to negotiate with your creditors, you can turn to a lawyer, a non-lawyer

bankruptcy typing service or a nonprofit credit counselor, such as Consumer Credit

Counseling Service.

Pay Over Time With Chapter 13 Bankruptcy

Chapter 13 bankruptcy lets you discharge most debts by paying all or a portion of them

over a three- to five-year period. In most situations, Chapter 7 bankruptcy is a better

approach to debt problems than is Chapter 13.

If you have steady income and think you could squeeze out a steady amount each month

to make payments on your debts, Chapter 13 bankruptcy may be a good option for you.

Instead of having your nonexempt assets sold to pay creditors (which is what happens in

Chapter 7 bankruptcy), you keep your property and use your income to pay all or a

portion of the debts over three to five years. The minimum amount you must pay is

roughly equal to the value of your nonexempt property. In addition, you must pledge your

disposable income (net income less reasonable expenses) over the life of your plan. The

income you use to repay creditors need not be wages. You can use benefits, investment

income or receipts as an independent contractor or business person.

To file for Chapter 13 bankruptcy, you fill out the same forms as in a Chapter 7

bankruptcy, listing your money, property, expenses, debts and income, and then file them

with the bankruptcy court. In addition, you must file with the court a workable plan to

repay your debts, given your income and expenses. You make payments under the plan

directly to the bankruptcy trustee, who in turn distributes the money to your creditors. As

in Chapter 7 bankruptcy, the act of filing immediately stops your creditors from taking

further action against you.

Usually, the plan is designed so that you make regular payments on your secured debts

and reduced payments on your unsecured debts for three years, at which time any

remaining unpaid balance on the unsecured debts is wiped out. In some cases, a five-year

repayment period is allowed.

You can file for Chapter 13 bankruptcy at any time, even if you wound up a Chapter 7

bankruptcy the day before or just completed another Chapter 13 repayment plan. If you

file more than once, however, you'll be required to pay back a large percentage of your

debts. You cannot file for Chapter 13 bankruptcy, however, if your secured debts exceed

$750,000 or your unsecured debts exceed $250,000.

If for some reason you cannot finish a Chapter 13 repayment plan-for example, you lose

your job six months into the plan and can't make the payments-the trustee may modify

your plan. The trustee may give you a grace period (if the problem looks temporary),

reduce your total monthly payments or extend the repayment period. As long as it looks

like you're acting in good faith, the trustee will try to be accommodating and help you

across rocky periods. If it's clear that there's no way you'll be able to complete the plan

because of circumstances beyond your control, the court might let you discharge your

debts on the basis of hardship.

If the bankruptcy court won't let you modify your plan or give you a hardship discharge,

you have two options:

 

 

 

 

•You can convert your case to a Chapter 7 bankruptcy unless you received a Chapter 7

discharge within the previous six years.

•You can have the bankruptcy court dismiss your Chapter 13 petition, which would leave

you in the same position as you were in before you filed your petition, except you'll owe

less because of the payments you made. Also, if your Chapter 13 bankruptcy is dismissed,

your creditors may add to their debts any interest that was abated during your Chapter 13

petition case.

 

 

What Chapter 7 Bankruptcy May Not Help You

 

1. You Previously Received a Bankruptcy Discharge

 

You cannot file for Chapter 7 bankruptcy if you obtained a discharge of your debts under

Chapter 7 or Chapter 13 in a case begun within the past six years. If, however, you

obtained a Chapter 13 discharge in good faith after paying at least 70% of your unsecured

debts, the six-year bar does not apply. The six-year period runs from the date you filed for

the earlier bankruptcy, not the date you received your discharge.

Chapter 13 bankruptcy has no such restriction; you can file for it at any time. So if you are

barred from filing Chapter 7, and you want to file for bankruptcy quickly (for instance, to

stop creditors' collection efforts), Chapter 13 may be an option.

Also, you cannot file for Chapter 7 bankruptcy if a previous Chapter 7 or Chapter 13 case

was dismissed within the past 180 days because:

 

 

•you violated a court order, or•you requested the dismissal after a creditor asked for relief

from the automatic stay.

 

 

2. You Want to Stop Bill Collector Abuse and Harassment

Usually, it isn't necessary to file for bankruptcy just to get annoying collection agencies off

your back. Under federal law, they cannot threaten you, lie about what they can do to you

or invade your privacy. Under this law, you can also legally force collection agencies to

stop phoning or writing you simply by demanding that they stop, even if you owe them a

bundle and can't pay a cent.

Creditors collecting their own debts (except those that create their own collection

agencies and operate them under a different name) are not governed by this law. While

they cannot harass you, they don't have to stop contacting you because you write them a

letter demanding that they leave you alone.

3. A Friend or Relative Cosigned a Loan

A friend, relative or anyone else who cosigns a loan or otherwise takes on a joint

obligation with you can be held wholly responsible for the debt if you can't pay it. If you

file for Chapter 7 bankruptcy, you will no longer be liable for the debt, but the cosigner

will be left on the hook. If you don't want to subject a cosigner to this liability, explore

paying off the debt over time.

4. You Could Pay Your Debts Over Three to Five Years

A bankruptcy judge who decides that you have enough assets or income to repay your

debts can dismiss your Chapter 7 bankruptcy petition or convert your case to a Chapter 13

bankruptcy. If the value of your nonexempt property exceeds the amount of your debt,

you're at risk of having your case dismissed or converted if you file.

A judge may seriously consider dismissing or converting your case if all of the following

are true:

 

 

•a substantial majority of your debts are consumer (not business) debts •you have an

adequate and steady income or other property, and•with little modification of lifestyle, you

could pay off all or most of your debts over three to five years.

Even if a bankruptcy judge wouldn't throw out your case, if you can repay your debts over

time you may be better off negotiating with your creditors or filing for Chapter 13

bankruptcy than filing for Chapter 7 bankruptcy.

5. You Want to Prevent Seizure of Wages or Property

You may not need to file for bankruptcy to keep creditors from seizing all your property

and wages.

Normally, a creditor's only legal means of collecting a debt is to sue you, win a court

judgment and then try to collect the amount of the judgment out of your property and

income. A lot of your property, however, including food, clothing, personal effects and

furnishings, is probably protected by law (exempt) from being taken to pay the judgment.

And, quite likely, your nonexempt property is not worth enough to tempt a creditor to go

after it, as the costs of seizure and sale can be quite high.

Creditors usually first go after your wages and other income. Here too, however, laws

protect you. Only 25% of your net wages can be taken to satisfy a court judgment (up to

50% for child support and alimony). And often, you can keep more than 75% of your

wages if you can demonstrate that you need the extra amount to support yourself and your

family. Income from a pension or other retirement benefit is usually treated like wages.

Creditors cannot touch public benefits such as AFDC, unemployment insurance, disability

insurance or Social Security.

6. You Defrauded Your Creditors

Bankruptcy is geared towards the honest debtor who got in too deep and needs the help of

the bankruptcy court to get a fresh start. A bankruptcy court does not want to help

someone who has played fast and loose with creditors or tries to do so with the

bankruptcy court.

Certain activities are red flags to the courts and trustees. If you have engaged in any of

them during the past year, do not file for bankruptcy until you consult a bankruptcy

lawyer. These no-nos are:

 

 

•unloading assets to your friends or relatives to hide them from creditors or from the

bankruptcy court•incurring debts for non-necessities when you were clearly

broke•concealing property or money from your spouse during a divorce proceeding,

and•lying about your income or debts on a credit application.

 

 

7. You Recently Incurred Debts for Luxuries

If you've recently run up large debts for a vacation, hobby or entertainment, filing for

bankruptcy probably won't help you. Most luxury debts incurred just before filing are not

dischargeable if the creditor objects. And running up unnecessary debts shortly before

filing casts a suspicion of fraud over your entire bankruptcy case.

Last-minute debts presumed to be nondischargeable include:

 

 

•debts of $1,000 or more to any one creditor for luxury goods or services made within 60

days before filing, and•debts for cash advances in excess of $1,000 obtained within 60

days of filing for bankruptcy.

To discharge luxury debts, you will have to prove that extraordinary circumstances

required you to make the charges and that you really weren't trying to put one over on

your creditors. It's an uphill job. Judges often assume that people who incur last minute

charges for luxuries were on a final buying binge before going under and had no intention

of paying.

Creditors, too, are getting aggressive about crying "fraud." Visa and MasterCard lose an

estimated $1.5 billion a year from people who filed for bankruptcy, and Visa claims that

30% to 40% of the losses came from fraudulent debts. In an effort to minimize the number

of last-minute debts that may be discharged, Visa challenges nearly one-half of all

bankruptcy cases filed by people who made large luxury charges or cash advances shortly

before filing for bankruptcy.

 

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Side Bar--Credit Card Fraud

Bankruptcy courts look to the following factors to determine fraud:

•short time between incurring the charges and filing for bankruptcy•consulting an attorney

before incurring more debt•recent charges over $1,000•many charges under $50 (to avoid

pre-clearance of the charge by the credit card issuer) when you've reached your credit

limit•charges after the card issuer has ordered you to return the card or sent several "past

due" notices•changes in your pattern of use of the card (for instance, much travel after a

sedentary life)•charges after you're obviously insolvent (no job, income or savings); you

could probably defeat a claim of fraud because of no job if you diligently sought

employment•charges for luxuries, and•multiple charges on the same day.

Visa and MasterCard customers may especially find their credit card charges challenged in

bankruptcy. Most banks that issue these cards have recovery programs to attempt to get

some of the money that otherwise would have been discharged in bankruptcy.

These programs are quite aggressive. Bank employees review bankruptcy filings to discern

the date of insolvency, and then challenge credit card charges made after that date. The

banks claim that insolvency is evidenced by any of the following:

 

 

•A notation in the customer's file that the customer has met with an attorney.•A rapid

increase in spending, quickly followed by 60-90 days of quiet.•The date noted on any

attorney's fee statement, if the customer consults a lawyer for help with a bankruptcy.

 

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8. You Expect Debts for Necessities

If you expect to incur more debts for necessities, you should consider delaying filing for

bankruptcy. Most debts you incur before you file will be discharged, but debts incurred

after you file will not. Waiting until after you incur these debts to file will let you include

them in your bankruptcy petition.

A go-slow approach works best in the case of debts for necessities, such as additional

medical costs you anticipate because of an existing illness, the cost of buying your children

new school clothes or substantial heating costs during the upcoming winter.

 

Federal Trade Commission, Fair Debt Collection

 

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Facts for Consumers from the Federal Trade Commission, Fair Debt Collection

Fair Debt Collection -- September 1992

 

If you use credit cards, owe money on a personal loan, or are

paying on a home mortgage, you are a "debtor." If you fall behind in

repaying your creditors, or an error is made on your accounts, you may

be contacted by a "debt collector."

You should know that in either situation the Fair Debt Collection

Practices Act requires that debt collectors treat you fairly by

prohibiting certain methods of debt collection. Of course, the law does

not forgive any legitimate debt you owe.

This brochure provides answers to commonly asked questions to help

you understand your rights under the Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This

includes money owed for the purchase of an automobile, for medical care,

or for charge accounts.

Who is a debt collector?

A debt collector is any person, other than the creditor, who regularly

collects debts owed to others. Under a 1986 amendment to the Fair Debt

Collection Practices Act, this includes attorneys who collect debts on a

regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or

FAX. However, a debt collector may not contact you at unreasonable times

or places, such as before 8 a.m. or after 9 p.m., unless you agree. A

debt collector also may not contact you at work if the collector knows

that your employer disapproves.

Can you stop a debt collector from contacting you?

You may stop a collector from contacting you by writing a letter to the

collection agency telling them to stop. Once the agency receives your

letter, they may not contact you again except to say there will be no

further contact. Another exception is that the agency may notify you if

the debt collector or the creditor intends to take some specific action.

May a debt collector contact any person other than you concerning your

debt?

If you have an attorney, the debt collector may not contact anyone other

than your attorney. If you do not have an attorney, a collector may

contact other people, but only to find out where you live and work.

Collectors usually are prohibited from contacting such permissible third

parties more than once. In most cases, the collector is not permitted to

tell anyone other than you and your attorney that you owe money.

What is the debt collector required to tell you about the debt?

Within five days after you are first contacted, the collector must send

you a written notice telling you the amount of money you owe; the name

of the creditor to whom you owe the money; and what action to take if

you believe you do not owe the money.

May a debt collector continue to contact you if you believe you do not

owe money?

A collector may not contact you if, within 30 days after you are first

contacted, you send the collection agency a letter stating you do not

owe money. However, a collector can renew collection activities if you

are sent proof of the debt, such as a copy of a bill for the amount

owed.

What types of debt collection practices are prohibited?

Harassment. Debt collectors may not harass, oppress, or abuse any

person. For example, debt collectors may not:

use threats of violence or harm against the person, property, or

reputation;

publish a list of consumers who refuse to pay their debts (except to a

credit bureau);

use obscene or profane language;

repeatedly use the telephone to annoy someone;

telephone people without identifying themselves;

advertise your debt.

False statements. Debt collectors may not use any false statements when

collecting a debt. For example, debt collectors may not:

falsely imply that they are attorneys or government representatives;

falsely imply that you have committed a crime;

falsely represent that they operate or work for a credit bureau;

misrepresent the amount of your debt;

misrepresent the involvement of an attorney in collecting a debt;

indicate that papers being sent to you are legal forms when they are

not;

indicate that papers being sent to you are not legal forms when they

are.

Debt collectors also may not state that:

you will be arrested if you do not pay your debt;

they will seize, garnish, attach, or sell your property or wages, unless

the collection agency or creditor intends to do so, and it is legal to

do so;

actions, such as a lawsuit, will be taken against you, which legally may

not be taken, or which they do not intend to take.

Debt collectors may not:

give false credit information about you to anyone;

send you anything that looks like an official document from a court or

government agency when it is not;

use a false name.

Unfair practices. Debt collectors may not engage in unfair

practices in attempting to collect a debt. For example,

collectors may not:

collect any amount greater than your debt, unless allowed by law;

deposit a post-dated check prematurely;

make you accept collect calls or pay for telegrams;

take or threaten to take your property unless this can be done legally;

contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to

the debt you indicate. A debt collector may not apply a payment to any

debt you believe you do not owe.

What can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within

one year from the date you believe the law was violated. If you win, you

may recover money for the damages you suffered. Court costs and

attorney's fees also can be recovered. A group of people also may sue a

debt collector and recover money for damages up to $500,000, or one

percent of the collector's net worth, whichever is less.

Where can you report a debt collector for an alleged violation of the

law?

Report any problems you have with a debt collector to your state

Attorney General's office and the Federal Trade Commission. Many states

also have their own debt collection laws and your Attorney General's

office can help you determine your rights.

If you have questions about the Fair Debt Collection Practices Act, or

your rights under the Act, write: Correspondence Branch, Federal Trade

Commission, Washington, D.C. 20580. Although the FTC generally cannot

intervene in individual disputes, the information you provide may

indicate a pattern of possible law violations requiring action by the

Commission.

To obtain a free copy of Best Sellers a listing of all the FTC's

consumer and business publications write to: Public Reference, Federal

Trade Commission, Washington, D.C. 20580.

 

Businesses Can't File for Chapter 13 Bankruptcy

 

A business, even a sole proprietorship, cannot file for Chapter 13 bankruptcy in the name

of that business. Businesses are steered toward Chapter 11 bankruptcy when they need

help reorganizing their debts.

If you own a business as a sole proprietor, however, you can file for Chapter 13

bankruptcy as an individual. You can include in your Chapter 13 bankruptcy case

business-related debts you are personally liable for.

There is one exception: Stockbrokers and commodity brokers cannot file a Chapter 13

bankruptcy case, even if just to include personal (nonbusiness) debts. (11 U.S.C. §

109(e).)

You Must Have Stable and Regular Income

You must have stable and regular income to be eligible for Chapter 13 bankruptcy. That

doesn't mean you must earn the same amount every month. But the income must be

steady--that is, likely to continue and it must be periodic--weekly, monthly, quarterly,

semi-annual, seasonal or even annual. You can use the following income to fund a Chapter

13 plan:

•regular wages or salary•income from self-employment•wages from seasonal

work•commissions from sales or other work•pension payments•Social Security benefits

(although one court has ruled that Social Security payments do not constitute regular

income to fund a Chapter 13 plan)•disability or workers' compensation

benefits•unemployment benefits, strike benefits and the like•public benefits (welfare

payments)•child support or alimony you receive•royalties and rents, and•proceeds from

selling property, especially if selling property is your primary business.

 

 

You Must Have Disposable Income

For you to qualify for Chapter 13 bankruptcy, your income must be high enough so that

after you pay for your basic human needs, you are likely to have money left over to make

periodic (usually monthly) payments to the bankruptcy court for three to five years. The

total amount you must pay will depend on how much you owe, the type of debts you have

(certain debts have to be paid in full; others don't) and your court's attitude. A few courts

allow you to repay nothing on debts, that legally, don't have to be repaid in full, as long as

you repay 100% of the others. Some courts push you to repay as close to 100% of your

debts as possible. Most courts fall somewhere in between.

To determine if your disposable income is high enough to fund a Chapter 13 plan, you

must create a reasonable monthly budget. If you are not proposing to repay 100% of your

debts and the court, the trustee or a creditor thinks your budget is too generous--that is, it

includes expenses other than necessities--your budget will be challenged.

Your Debts Must Not Be Too High

You do not qualify for Chapter 13 bankruptcy if your secured debts exceed $750,000. A

debt is secured if you stand to lose specific property if you don't make your payments to

the creditor. Home loans and car loans are the most common examples of secured debts.

But a debt might also be secured if a creditor--such as the IRS--has filed a lien (notice of

claim) against your property.

In addition, for you to be eligible for Chapter 13 bankruptcy, your unsecured debts cannot

exceed $250,000. An unsecured debt is any debt for which you haven't pledged collateral.

The debt is not related to any particular property you possess, and failure to repay the debt

will not entitle the creditor to repossess property. Most debts are unsecured, including

bank credit card debts, medical and legal bills, student loans, back utility bills and

department store charges.

 

In this technological age, it's easy to run but hard to hide. Collectors use many different

resources to find debtors. They may contact relatives, friends, neighbors and employers,

posing as long-lost friends to get these people to reveal your new whereabouts. In

addition, collectors often get information from post office change of address forms, state

motor vehicle registration information, voter registration records, former landlords and

banks. To avoid being found, follow these rules:

•Don't reveal your new address, city or state to anyone except a few trusted people who

won't tell anyone else.•Don't send the post office a change-of-address form; instead,

directly write to the people who need your new address.•Keep your new phone number

unlisted.•Don't re-register to vote if you are required to provide a previous address.•Close

your old bank accounts; open new ones at different banks--not at the banks closest to

where you work or live. It's best to pick a bank clear across the other side of town.•Don't,

under any circumstance, apply for new credit.