How to Get Out of Debt With the Get Out of Debt Guy

The Seven Stages of Debt. Which Stage Are You In?

Steve Rhode — Sat, 19 May 2012 18:14:56 +0000

Many years ago I wrote my original Seven Stages of Debt, as modified from the Five Stages of Death and Dying by Dr. Elisabeth Kubler-Ross.

Both experiencing the emotional loss of a loved one and the emotional loss of your financial life are similar in some distinct ways. However, the emotional stages of debt also have two additional components that a mortal death does not. And these stages are almost magical as they can lead to a new and better life for you.

When I was going through my financial troubles I distinctly remember passing through all the stages below. And in helping thousands and thousands of people over the years to deal with their financial issues I’ve clearly witnessed them passing though these same stages as well.

But people don’t pass through these stages in necessarily an orderly fashion, they may jump back and forth but in the end the healthiest way to deal with any debt problem is to acknowledge each stage of debt and be aware of how you are emotionally feeling at the moment. It will help you to understand how your emotional state at the moment may be clouding your judgment about how to deal with your debt.

If you are living with financial problems right now I challenge you to identify what stage you are in right now.

The Seven Stages of Debt

Denial

Denial begins a long time before the financial problem rears its ugly head and gets in your face. Denial distorts reality like a street drug. It’s addictive. As an impartial observer, I’ve seen bad situations brewing time after time. But the person about to land in the sticky stuff often says the same thing, “It won’t happen to me.”

Whatever you are in denial about will wind up smacking you in the face like a cinder block on a rope. Even if you don’t know what that’s like from experience, I think you can imagine what kind of a mark it will leave.

Here are some things people have actually said to me while in the denial stage:

“I know I can’t pay my mortgage, but they won’t take my house.”
“I refuse to take my child out of private school just to pay my bills.”
“I didn’t know they’d sue me if I didn’t pay them back.”
“It’s not worth my time to get out of bed for a $12 an hour job.”
“How did I know a collector would call me? It’s not like anyone ever reads the fine print.”
“My creditors suck because they keep calling me for payments. I’ll pay them when I’m
good and ready.”

Yeah, I know they sound funny. But the people involved weren’t laughing, and I’m guessing you’re not laughing at your situation, either.

My role as the Get Out of Debt Guy is to get you through these initial stages as fast as possible and get you to where you want to be. Here’s all you need to know about denial.

If you think you’ve got money troubles, you do. Period.

Denial will just slow you up and, if you are having problems with money, time is your enemy. You have to take action as quickly as possible. The more time you spend in denial, the further you will circle down the bowl and, unless you can get past denial, you may actually go down the drain.

Anger

Anger is an emotional waste of time and energy in most situations, especially when it comes to money troubles. Remember what I said before? Your situation just is what it is. You can be angry all you want, but things will get better faster if you can turn that anger into a fire inside of you that creates intense motivation to properly deal with the underlying situation and take positive action to repair the situation.

Okay, so you want to get angry. Let’s get it out of the way.

Creditors — These are the folks you promised to repay when you took their money. You even signed terms and conditions that stated what would happen if you defaulted. You can be mad at your creditors all you want, but that’s not going to change the price of eggs in China, nor is it going to get you out of this mess.
Yourself — So you’re mad at yourself. At least that’s fair. After all, you’re the one that got you into this mess and probably through no fault of your own. So let’s have a quick pity party and then go for a walk and talk some sense into you. You think you’re a failure? So what? Everybody, I mean everybody, fails at some point in their lives at something. I certainly have. It’s part of life. Failures are great learning tools. They teach you what not to do. But unless you’ve developed a time machine, you aren’t going to be able to go back and change anything, so the best you can do is learn from the lesson and leave the anger in the past. If you screwed up, you screwed up. No need to beat yourself up over it. There’s no sense wasting a perfectly good mistake. Learn from it and let’s move forward.
Others — The “others” category is broad, vast and deep. “Others” falls into the same group as “Them” or “They.” There is no “They” and I still haven’t met “Them,” but they sure do get the blame for a lot of the world’s ills. If you are angry with others, stop it and forgive them. It’s not helping anything.
Yes, it’s possible that situations and experiences in your past led you to make some of the decisions that have gotten you where you are today. But no matter what those situations and experiences were, you always had a choice, every step of the way. Probably many choices. And for whatever reason you made the ones that got you here. Stop casting blame all around town. This is your life. At some point you’ve got to take responsibility and stop blaming others. Without personal responsibility, you’ve got no way to fix this so that you can get on with the life you always wanted.
External Events — There is no need to cast emotional blame on external events like a slow economy, accident, divorce, illness, relationship issues, etc. There is a never ending set of circumstances and events which can lead you to financial problems. Unless you can control them, sometimes you are just caught off guard. Life is just what it is.

Depression

There is no question that money troubles aren’t fun. They typically lead to some kind of loss and that makes us sad and/or depressed. The loss can be anything from cutting out the cleaning service to having to sell your home and moving to a cheaper area. There is no doubt that some of the things you might go through may be difficult, but rather than stew over them, let’s put them into perspective.

If you had your choice of either dealing with what you are going through right now or getting poked in the eye with a sharp stick, which would you do? It’s a no-brainer, right?

I remember one day, I was talking with a lady who was paralyzed with inaction, even though her mortgage company was about to foreclose on her home. She was so bitter about the situation, she was blaming a cast of characters and refused to see a way out. In fact, she had waited so long that it was pretty darn likely that her house was going to be sold at auction that week. She said that foreclosure was the worst thing to happen to her. I asked her, if she had a choice, would she rather lose her home to foreclosure or be set on fire? She laughed. That put it into perspective for her.

The lesson to be learned here is that no matter how bad the situation feels, it can always be worse. Even when it’s bad, there are still things to be thankful for. Try as hard as you can to look up and find the rainbow rather than stare down the well. That’s not just some “New Age” nonsense. Medical studies have shown that people who think positively live longer, have fewer health problems, experience less stress and, consequently, get the things done that they need to get done.

It may be hard to believe sometimes, but mood is a choice, just like most other things in life. Don’t believe me? Try this exercise. What kind of mood are you in right now? If you are feeling pretty good, think about the worst thing that ever happened to you. Close your eyes and put yourself back into that situation and live through it again in your mind. I bet that brought you down pretty quickly. Now try the reverse. If you are feeling down, angry or depressed, think about some of the good things in your life. Maybe you have a wonderful wife or husband. Perhaps you have great kids. Everyone has things to feel thankful for, even if it’s just the fact that you’re not on fire right now. Again, close your eyes and focus on those good things. If any bad thoughts creep in, push them out of your mind and go back to the good stuff. If necessary, pretend that you’re happy. Laugh out loud. Jump up and sing your favorite song at the top of your voice. Do whatever you would do if you were in a great mood. If you give this an honest try, you’ll find that pretty soon you start to feel better. Everyone feels down from time to time, but with practice, you can take control of your emotions and not let those down times run your life. Besides, as long as you think only sad thoughts, you’re going to be sad.

For some depression is rooted in an out of balance brain chemistry. No matter how hard you try to lift yourself up you may just need to talk to a psychiatrist or or doctor about medications to help you slip the cycle of depression. I’ve watch the miracle of recovery from depression in ones I love after they worked with a medical professional and were prescribed specific medications. It took a while to tune the dosage but the results were lifesaving for them.

Here is the easiest advice to give but the hardest advice to follow: Suck it up or take action and get medical help and let’s move on toward a solution. Bad things happen to good people. Life is unfair and sometimes cruel. It is what it is. Heard that before?

Bargaining

Typically, this is the stage when your higher power is brought into the mix.

“God, I promise I’ll make all the rest of the payments on time if you can help me get out of this jam.”
“God, if you can just bring my credit card payment current somehow, I promise I’ll go to church every Sunday/be nice to my kids/work really hard for the rest of my life/never buy a $500 pair of shoes again.”

I know all about this stage. In 1990, I filed bankruptcy. It was not the happiest time of my life, but out of that mess came my passion for helping other people find solutions to their financial problems.

When I was going through my troubles I searched all around and couldn’t find the kind of help I needed. Sure, there were a lot of companies out there who said they could help with debt, but all they do is collect your money and distribute it to your creditors. That might help a few people who just don’t have the discipline to make their payments on time, but if you’re in a real financial jam, like I was, you need a lot more advice and assistance. Unfortunately, it just wasn’t out there.

I now help many people through GetOutOfDebt.org to get their financial lives back on track by providing free help and advice. Strange how life works. My biggest failure turned into my greatest success. I would not be able to help as effectively unless I had lived through that situation.

You can bargain with your God (or the Devil) all you want, but you might as well go outside and look for a four-leaf clover or throw some coins in a fountain. Bargaining is nothing more than wishing and wishing is okay, so long as it’s not your only plan.

Bargaining also sets you up for trouble if you bargain the wrong way with debt collectors or creditors. Some people make bargains to resolve their debt by promising payments they can’t make. They feel if they tell them what they want to hear it will make everything better. It won’t. The first time miss a payment all bets and deals are off or you make a big payment thinking the balance of your debt will be eliminated. And speaking of deals, if you are bargaining with your creditors or debt collectors, get it in writing. If you don’t, any bargain they made with you is worthless and trust me, I’ve seen too many examples of creditors or collectors that later deny they made any such bargain.

Acceptance

You made it. Congratulations. I’ve been waiting for you. This is my favorite stage, even though the next two are where you start putting the pieces back together. I love the acceptance stage. It is so full of peace and leads people down the right path. Until now, you’ve been like a long-distance runner going round and round in circles, lost. Once you reach acceptance, you are turned in the right direction and now, instead of being tired and going nowhere, every step you take is in the right direction toward your new life, whatever that may be.

Once people reach acceptance, they know that what I said before is a fundamental law: Life just is what it is.

If you got your hours cut and you are not bringing home what you used to, it just is what it is.

If you bought a home that was too expensive and now you are struggling to afford the payment, it just is what it is.

If you’ve been unconsciously feasting at the all-you-can-eat buffet of debt for the past few years and now it’s caught up with you, guess what? It just is what it is.

Once you reach the acceptance stage, you are like a fertile field ready for me to sow the seeds of your brighter future. Up until this stage you are going to deal with some uncomfortable moments. Life just isn’t going to be much fun. It will be cloudy and uncertain. But when you reach acceptance, the clouds will part and a new day will dawn.

Acceptance does not mean that you aren’t going to suffer loss or pain. In fact, you probably will. But the good news is that if you can see your situation with clarity, you will understand that whatever loss you are going to experience will be temporary. Don’t let loss bury your hope for a better future.

Although I’ve talked a lot about what you may have to give up right now, it doesn’t mean that you’re going to have to live hard the rest of your life living off beans and water. It’s like being sent to your room. As much as I hated it as a kid, it passed, and I was soon outside place and each day is a step closer to a repaired and better life, if you let it happen.

The acceptance stage is the point where you can make the best decisions about how to deal with your debt. You can be clear of thought and inquisitive about what path may be best for you. It’s at this time that you may want to investigate credit counseling, debt settlement and even click here to talk to a local bankruptcy attorney to become better informed about solutions that may or may not be appropriate.

You should also read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Resurrection

Some time will pass after you take action and seek a way to intervene in your financial troubles, but slowly you will notice that you are starting to rebuild your financial life. You can even resurrect your good credit rating by following this guide.

If you are careful, you will be able to start saving money and buy a few luxuries again. It’s OK. If you lost your last home to foreclosure, you’ll be able to buy another. If your last car was repossessed, after you take care of that situation, you’ll be able to get another. (After my bankruptcy I drove a $500 used Postal jeep until I could save enough money to buy a better vehicle. That jeep was an accident waiting to happen. I held my breath every time I turned a sharp corner, praying the darn death trap wouldn’t overturn!)

Gradually, you will start to see that what I’m telling you is absolutely true. Now, you might not have as much stuff as you used to – you might not have the three-car garage and beautiful home on ten acres – but you’ll have what life wants you to have and you’ll find greater joy in it.

This stage is just like coming back from the dead. Your financial life was pronounced DOA, but now – “CLEAR!” – you’ve zapped it with a defibrillator and there’s a pulse again. Sure, it may be a faint pulse to begin with, but its regular and getting stronger every day. Let’s learn from whatever mistakes we made and move forward — smarter and sharper.

Rebirth

Your life will have changed noticeably once you reach this stage. The experience of surviving your financial problems will have made you a stronger person; a different person; a better person.

I firmly believe you can lead multiple lives within the one that exists between the time you were born and the time you die. We grow, evolve, learn and change. We grow apart, grow together and just plain grow old. Your life can be so much more than the struggles you are going through right now. You didn’t get into debt overnight and it’s probably going to take some time to be reborn, but trust me, you’ll be a better person for it, if you want to be.

The past does not have to predict the future. You don’t have to be saddled with your old mistakes. Others might not, but guess what? It’s as simple as being forgiven. I forgive you. Life just is what it is. If you need a hug, I’ll gladly give you one.

What others might not see, or reward you for, is that when you were faced with your money troubles, you did everything you could, gave it your best shot and survived. That’s pretty darn amazing. You will truly be a silent hero. But I’ve got a special place for you in my heart and, if you send me your picture and story of survival, I’ll frame it and hang it in my Debt Survivors Hall of Fame.

@GetOutOfDebtGuy

Mortgage Modification Company Former Owner Facing 80 years in Jail

Steve Rhode — Fri, 18 May 2012 21:00:09 +0000

From How to Get Out of Debt

Isaak Khafizov, a former owner of American Home Recovery (AHR), a mortgage loan modification business, was found guilty yesterday in Manhattan federal court of conspiracy, mail fraud, and wire fraud in connection with a scheme to defraud distressed homeowners and lenders. Khafizov was convicted after a ten-day jury trial presided over by U.S. District Judge George B. Daniels. He was remanded into the custody of the U.S. Marshals following his conviction.

“At the height of our nation’s financial and housing crisis, Khafizov and his conspirators defrauded homeowners desperate to save their homes,” said Christy Romero, Special Inspector General at SIGTARP. “Khafizov exploited the government’s response to the financial crisis by touting his operation’s purported affiliation with federal programs. He and his conspirators used the false comfort in those reassurances to dupe hundreds of victims out of hundreds of thousands of dollars while some victims fell into foreclosure and personal bankruptcy. Those exploiting TARP and the federal government’s response to the financial crisis will be brought to justice by SIGTARP and our partners in law enforcement.”

Manhattan U.S. Attorney Preet Bharara said: “Isaak Khafizov dangled false promises of relief to distressed homeowners who were trying to keep their homes, but instead, he repeatedly victimized them by stealing their money and forcing many of them into foreclosure. He will now face justice for the fraud that he committed against vulnerable and needy homeowners all over the country.”

According to the Superseding Indictment filed in Manhattan federal court, other court documents, and statements made during court proceedings:

In or about the spring of 2008, Isaak Khafizov, Jaime Cassuto and David Cassuto, founded American Home Recovery (AHR), a mortgage modification business that operated in Manhattan. As shown at trial, from the spring of 2008 through the summer of 2009, Khafizov used AHR to commit a systematic fraud that preyed on distressed homeowners. Khafizov and AHR’s salespeople fraudulently induced distressed homeowners all over the United States to pay AHR thousands of dollars in up-front fees, by falsely promising the homeowners that: (1) AHR could get them better interest rates and lower monthly fees, all within a short timeframe; (2) AHR would return the up-front fees if it did not succeed in getting the homeowners the mortgage modifications they desired; (3) the homeowners had been “pre-approved” for mortgage modifications by their lenders; (4) AHR was affiliated with government agencies and programs established by the Economic Stimulus Act of 2008; (5) AHR possessed special expertise in mortgage modifications, and (6) AHR had special relationships with lenders. After receiving up-front fees from the distressed homeowners, Khafizov and AHR did little or no work to try to renegotiate the homeowners’ mortgages. And on those rare occasions when Khafizov succeeded in getting a homeowner a mortgage modification, he typically did so by coaching the homeowner to lie about his or her income and assets on forms submitted to the mortgage-lender.

Because Khafizov and AHR did not do the work they had promised and because Khafizov specifically directed the distressed homeowners to stop paying their mortgages and to pay AHR its fees instead, many of AHR’s clients wound up in foreclosure. All told, Khafizov and AHR defrauded hundreds of customers across the country out of hundreds of thousands of dollars in fees.

Khafizov, 25 of Queens, New York, was convicted of one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and two counts of wire fraud. He faces a total maximum sentence of 80 years in prison and is due to be sentenced by Judge Daniels on September 6, 2012. Jaime Cassuto and David Cassuto each pled guilty to multiple counts of fraud on April 2, 2012. – Source

Women and Financial Insecurity

Gary Foreman — Fri, 18 May 2012 20:52:57 +0000

From How to Get Out of Debt

A recent article in the online version of the Wall Street Journal caught my attention. It was called “Clients From Venus.” Source

It began by pointing out that women are becoming increasingly involved in personal finance. “Women control $8 trillion in assets in the U.S., and by 2020 are expected to control $22 trillion, according to TD Ameritrade Institutional, a division of TD Ameritrade Inc.”

Naturally the financial services industry is trying to figure out how to capture their share of this market. And as part of that attempt they’ll study women to try to find out what works for them.

The same WSJ article provides an interesting glimpse on how women relate to money and personal finance. “A 2010 Boston Consulting Group study found that women globally identified financial services as the industry they are most dissatisfied with on a service and product level. Those surveyed said the industry doesn’t understand that women view money and wealth differently from men. For example, women don’t seek to accumulate money, the study reported, but see it as a way to care for their families, improve their lives and find security.”

As someone who has worked in the area of personal finance for decades I can verify that women do look at money differently than men. And that there are some tools that can make it easier for women to manage their financial affairs. So let’s look at some of those tools.

Begin by selecting your goals. For most of us this is easy. Providing for our ongoing monthly needs. Saving for a vacation, car, house or baby. Saving for a college education. Saving for retirement. Some are short-term. Others may be decades away.

But, they all have something in common. You can estimate how much money you’ll need and when you’ll need it. So you have a goal and you know how much time you have to achieve it.

There are a wide variety of online calculators to help you figure out how much money you’ll need and how much you’ll have to save to get there. Some of my favorites come from Bankrate.com/dls. They’ve been an unbiased research source for decades.

Why is it important to start with goals? Let’s state up front that not all women are the same. But, for many the study is right. Finances are about security. That means that the recognition of goals is especially important for them. Picturing their baby getting a diploma is the kind of motivation that will cause them to take the necessary steps to make it happen.

Working as a financial planner back in the 1980s I noticed that on average women weren’t much interested in the beating the market or having water cooler bragging rights for their latest stock pick. What women wanted was evidence that they and their families were financially secure (or at least becoming financially secure).

That meant that their investment style was different from men. Guys were much more willing to be aggressive. More willing to take risks if the possible rewards were big enough.

Women were much more likely to choose a slow but steady path. They were happy playing tortoise to the men’s hare. In fact, more than once I heard a wife suggest her husband’s investment ideas were ‘hare brained’!

As a financial planner I was always more comfortable with the ladies’ approach. There are fewer surprises and disappointments on the slow but sure road. To that extent I often encouraged them to use a strategy that’s commonly known as ‘asset allocation management.’ When used with mutual funds it becomes a two layer diversification strategy.

The concept of diversification is important to successful wealth accumulation. Diversification is a way of saying that all your investments are not the same. They’re diverse or different. The fact that they’re different is the key. Because they’re different they won’t go up or down together.

If you were a stock investor you might own ten different stocks. If one stock ran into trouble, the other nine would cushion the loss. One way to easily achieve diversification among stocks is to invest in a mutual fund that holds many stocks. So-called index funds are an excellent example.

Now while a fund protects you from one stock performing badly, what heppens when the whole stock market collapses? Something that we’ve seen twice in the last 15 years. In that case a stock mutual fund would drop.

That’s where the second level of diversification comes in. The asset allocation model. Different types of investments respond differently to changes in the economy. For instance, inflation is bad for cash and bonds. But it’s good for hard assets like real estate and metals.

By diversifying your investments in surprises. An example was the stock financial planner. Asset allocation year. While one type of mutual fund loss.

We don’t have space here to get into how to allocate between different asset classes. The Securities and Exchange Commission (SEC) has a pretty good explanation here.

You’ll want to adjust your allocation as your age and goals change. Economic different types you protect yourself from market crash of 1987. At the time I was a protected clients throughout that turbulent went down, another went up to offset the situations can also be a reason to tweak the allocation.

The approach is cautious, but one that works well. Especially over a number of years and in uncertain economic times.

Bottom line? Part of sound personal finance is understanding how you relate to money. And then tailoring a plan that works with your personality and the uncertainties of the world we live in.

Gary Foreman is a former financial planner with over 30 years experience in getting value for a dollar. He currently writes on personal finance and edits The Dollar Stretcher website. You can follow Gary on Twitter.

Precision Law Center – Consumer Complaint – 5-18-2012

Consumer — Fri, 18 May 2012 20:42:55 +0000

From How to Get Out of Debt

Consumer Statement:

We sent Precsion Law $4500.00 in Aug. 2011. We were joining a mass gender suit. We haven’t heard from them and my many calls to them have failed. I’m a 100% disabled marine corps veteran and my home is set up for my wheelchair with ramps and etc..I don’t know what to do.

Consumer Action Taken:

I’ve called many times to no avail. Thanks so much for any help or suggestion.

Date This Problem Happened: August 15, 2011

State You Live in: Colorado

Race/Ethnicity: White

Age Range: 66+

Total Amount of Fee Paid: $4,500

Company Name: Precision Law Center

Company Address:

6 Hutton Center Dr.
Suite 600
South Coast Metro, California 92707

Company Telephone Number: 800-813-5958

Website of Company: precisionlawcenter.com

Notice From precision Law Center Court Receiver

After a hearing on March 21, 2012, the Court entered a Preliminary Injunction as to Precision Law Center, LLC and Precision Law Center, Inc. Click here to read a copy of the Preliminary Injunction. Defendants Sameer Lakhany, The Credit Shop, LLC, Fidelity Legal Services, LLC, and Titanium Realty, Inc. had previously stipulated to a Preliminary Injunction on March 19, 2012. These Preliminary Injunctions continue the asset freeze and make the appointment of a Receiver permanent.

Operations at Precision Law Center and MyHomeSupport.org are still suspended after the Receiver’s conclusion, set forth in the Preliminary Report filed March 19, 2012, that these businesses could not be operated lawfully and profitably going forward.

Notice to Clients of Precision Law Center. All “mass joinder” lawsuits filed by Precision Law Center had been dismissed prior to the appointment of the Receiver. There are no pending cases. If you need immediate mortgage relief, we suggest that you contact your lender directly, contact a government-sponsored loan modification provider such as www.HopeNow.com, or contact a competent attorney with expertise in mortgage relief. If you have specific questions, please send them to info@precisionlawreceiver.com.

Notice to Clients of MyHomeSupport.org. MyHomeSupport.org cannot assist you in your loan modification efforts. You should contact your lender directly, contact a government-sponsored loan modification provider such as www.HopeNow.com, or contact a competent attorney with expertise in mortgage relief. If you have specific questions, please send them to info@precisionlawreceiver.com. – Source

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

Getting a Job or Finding a Job After Bankruptcy

Steve Rhode — Fri, 18 May 2012 20:33:50 +0000

From How to Get Out of Debt

A common conern I hear from time-to-time is if someone goes bankrupt will they be able to find a job or get a job. The answer will surprise you.

According to Christine Saah Nazer, of the U.S. Equal Employment Opportunity Commission, “The use of credit histories in employment can have a disparate impact on a range of people, including people of color, women and people with disabilities. Many experts say that credit history is a poor predictor of job performance, and that credit reports are often filled with errors, and thus aren’t reliable sources of information about an employee’s financial history.”

And she’s right, there is no correlation between credit reports and job performance. In fact if we look at how employers report they use credit reports the results are not as daunting as people fear.

But Let’s Look at the Facts About Finding a Job After Bankruptcy

A survey of employers found that 85% of the time they looked to make sure the candidate was a good fit and that was the most important employment factor. And 82% of the time they wanted to make sure the person had previous work experience that related to the open job.

Only 9% of the time did employers look to make sure the applicant had good credit or used theta as the sole hiring decision.

When something did appear on a credit report, like bankruptcy, 87% of employers said it was not a factor or they would ask about the circumstances that led up to the bankruptcy so they could understand what happened.

If you’re contemplating filing bankruptcy and want to know more about how it might impact your ability to get a job, just click here and talk to a local bankruptcy attorney and get the facts. The consultation with the bankruptcy attorney is free.

As you can see, the common misconception is that bankruptcy will prevent you from getting a job all together, and that’s just not true. Your credit is a lesser factor than you might think and you are better off getting comfortable explaining what happened and let any future employer know why you found yourself in that situation. They will most likely understand.

@GetOutOfDebtGuy

IRS Yanks Nonprofit Status of Credit Counseling Agencies

Steve Rhode — Fri, 18 May 2012 18:59:40 +0000

From How to Get Out of Debt

The IRS has just posted a public update on the nonprofit credit counseling agencies that have recently lost their 501(c)3 tax status from the IRS.

The companies named lost their nonprofit status in April and early May, 2012. They include:

Budget Right Debt Management, Inc. Lake Mary, FL 4/9/12
Budget Right Debt Management, Inc. Maitland, FL 4/9/12
Consumer Advocacy Group, Inc. Beverly Hills, CA 4/16/12
CreditGuard of America, Inc. Boca Raton, FL 4/16/12
A Family Budget Counseling, Inc. Huntington City, NY 4/30/12
Freedom Debt Management, Inc. Boca Raton, FL 5/7/12

@GetOutOfDebtGuy

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Credit Reports, Credit History, and Credit Scores in Hiring and Job Performance. Is It Even Fair?

Steve Rhode — Fri, 18 May 2012 13:55:35 +0000

From How to Get Out of Debt

You hear all the time how credit history can impact your ability to get a job. In the debt relief world debt settlement and credit counseling companies claim bankruptcy prevents people from getting jobs and that’s why people need to use their services instead. But what is reality and what is the negative impact of alternative interventions like debt settlement in hiring decisions as well?

First we must look at the use of credit reports in hiring. Let’s start with the elephant in the room — There is no proof or evidence that there is any relationship or correlation between job performance and past credit history.

In 2010 the credit reporting bureau TransUnion allegedly made just such an admission at a hearing in Oregon, “… we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.” – Source

At a trade show once I asked a credit bureau executive why they pushed credit reports to employers as part of the job application process, his response was that it helped them to sell more credit reports. If that’s the only reason, that’s unfortunate for job seekers.

The use of credit history is receiving some attention and should get a lot more. The State of Illinois has even passed a law that makes job discrimination based on credit history, illegal.

According to a 2010 poll by the Society for Human Resource Management, 60 percent of surveyed employers conducted credit checks for some or all candidates as part of the hiring process but as you’ll learn the credit history is only a small part of the decision process to employ someone.

But do credit scores even make sense as a tool for exclusion for a job? Not so says a Louisiana State University research study.

Jeremy Bernerth, assistant professor in LSU’s E. J. Ourso College of Business Rucks Department of Management said their study of credit scores found that, “easy-going individuals actually have worse credit scores than disagreeable and rude individuals.”

However, contrary to what many employers consider common knowledge and practice, the researchers found no correlation between poor credit scores and bad behavior on the job.

“It was telling that poor credit scores were not correlated to theft and other deviant types of work behaviors,” said Bernerth. “Most companies attempt to justify the use of credit scores because they think such employees will end up stealing, but our research suggests that might not be the case.”

It appears this widespread practice of employers pulling credit histories can lead to discriminatory practices against otherwise qualified and preferred candidates for jobs.

One such case was brought by the Equal Employment Opportunity Commission (EEOC) against Kaplan Higher Education, Inc. In that ongoing 2010 complaint the EEOC alleged: “Since at least January, 2008 , Defendant has subjected a class of aggrieved Black job applicants and incumbents throughout the United States to an ongoing pattern or practice of discriminatory failure to hire such persons because of their race, Black, in violation of Title VII. In this regard, Defendant has used, and continues to use, a selection criterion for hiring and discharge, namely, credit history information, that has had, and continues to have, a significant disparate impact on Black job applicants and incumbents, is not job-related and consistent with business necessity, and for which there are appropriate, less-discriminatory alternative selection procedures.” – Source

It is logical that some groups of employees may be more susceptible to credit report problems and that could create a pattern of racial or gender discrimination.

In a unique irony, Kaplan discovered that the EEOC, through the Office of Personnel Management, uses background or credit checks in its own hiring of employees. – Source

According to the testimony of an EEOC employee, the credit reports that are utilized by them list “bankruptcy records, court records, consumer credit counseling, child/spousal support records, individual credit account records,” among other things. So apparently credit counseling can make an appearance as well and may have an impact.

And for people that run into money troubles during their course of employment the EEOC has a policy of no action as long as the employee has been honest about their bad debt problem.

From documentation issued by the government Office of Personnel Management it appears that which credit may be a factor, so are relationships with foreign family members, living arrangements, and sexual behavior.

The OPM guidebook however makes it clear that it is not the presence of credit problems that makes it an issue but the absence of proactive action to resolve the issues.

The guide says the following are examples of disqualifying issues surrounding credit history:

Unwillingness to satisfy debts
Indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt
A history of not meeting financial obligations
Consistent spending beyond one’s means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to-income ration and/or other financial analysis – Source

What is interesting to note however is that the issues that raise concern above are also addressed and handled with debt relief tools like credit counseling, some debt settlement approaches, and certainly chapter 7 bankruptcy and chapter 13 bankruptcy.

Other Positions on the Use of Credit in Hiring

In 2010 the EEOC held hearings on the employer use of credit history as a screening tool. A number of experts submitted testimony as part of those hearings.

“High unemployment has forced an increasing number of people to enter or re-enter the job market,” said EEOC Chair Jacqueline A. Berrien. “As a result, an ever increasing number of job applicants and workers are being exposed to employment screening tools, such as credit checks, that could unfairly exclude them from job opportunities.”

The Commission heard from a diverse set of experts. Chi Chi Wu of the National Consumer Law Center (NCLC) expressed grave concerns that the use of credit histories is mushrooming at the time of economic instability for many Americans, noting that the use of credit histories “create[s] a fundamental ‘Catch-22’ for job applicants,” especially during this period of high unemployment and high foreclosures, both of which have a negative impact on credit.” She observed, “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.” This view was echoed by several of the witnesses.

Sarah Crawford of the Lawyers’ Committee for Civil Rights Under Law and Dr. Avis Jones-DeWeever from the National Council of Negro Women, explained that the use of credit histories in the employment context can have a disparate impact on a range of protected groups, including people of color, women, and people with disabilities. While the use of credit checks as employment screens increases, Crawford cited studies that show credit history is a poor predictor of job performance. Additionally, she pointed out that many credit reports are riddled with errors or incomplete information, a view that was echoed by Wu of the NCLC, making whatever predictive value they might have even less reliable.

Representatives from the business community—Michael Eastman of the U.S. Chamber of Commerce, Christine V. Walters of the Society of Human Resources Management (SHRM) and Pamela Quigley Devata of the law firm Seyfarth Shaw, LLP—told the Commission that the use of credit histories is permissible by law, limited in scope, and predictive in certain situations of reliability.

Walters of Society for Human Resource Management said that “13 percent of organizations conduct credit checks on all job candidates … [and] another 47 percent … consider credit history … for select jobs,” but for those employers, “credit histories are but one piece of the puzzle.” It is the experience of SHRM member companies that very few utilize credit histories for every single job opening. Devata asserted that the use of credit histories is driven, in part, by the need for background information on potential employees in a current environment when it is difficult to obtain any but the most basic information in job references.

The Evidence Is That Credit Reports Are Worthless for Hiring

There seems to be more evidence that credit reports and credit histories are not a good guide for determining employment that there are to support it.

In 2003 the American Psychological Association found there is no correlation between credit history and job performance. When we include the statements made by the recent LSU study and even the words of TransUnion’s own representative it seems very compelling that credit reports do unfairly discriminate without any foundation of reality.

Additionally, there is a vast rate of credit report errors that could impact an employment decision regardless of the actual financial performance of a potential employee. Or even that financial issues might be easily created beyond the control of the individual, such as by unexpected medical bills or other event beyond the control of the person.

But not all companies, nor all positions result in a credit check being performed. According to the Society for Human Resource Management the overwhelming use of credit checks involved positions of fiduciary or financial responsibility.

The same study concluded that most organizations:

Do not conduct credit background checks on all job candidates
Employers place lower relative importance on credit background checks than other job-related factors in making hiring decisions.
Credit background check results are seldom used as a definitive hiring criterion. – SHRM Research Spotlight Credit Background Checks

Even after pulling a credit report and spotting something that drew attention, the study found that only 13% of the time was that an exclusion to employment without allowing the job candidate to have an opportunity to explain the circumstances.

In general the employment history is not the determining factor for employment. Many other factors are more important.

So Where Does This Leave Us?

Well if you have been one of the people that has potentially lost a job specifically due to your credit report, you are in a tiny minority. Even the military allows does not exclude people from high government security clearances for bankruptcy. – Source

It seems that rather than have a credit report that leaves a trail of debt without resolution, the more prudent course if to take some action to address your debt in a positive fashion that shows you did something to address the issue.

If that action results in comments or entires on your credit report you should be open and honest about the situation and explain the circumstances to make your past credit, little to no factor in deciding to employ you.

Of the three major debt relief tools it would appear that the credit report impact is varied:

Credit Counseling – May be reported on an employment credit report and serves as evidence that some financial concerns existed for the consumer to seek credit counseling assistance. Also impacts credit when included accounts are closed by creditors.
Bankruptcy – Bankruptcy remains to only legal tool that allows consumers to address and discharge their debt. It will be reported on the consumer credit report for seven years if a chapter 13 bankruptcy is filed or ten years of a chapter 7 bankruptcy is filed.
Debt Settlement – Depending on the approach taken for settling the debt the credit report impact can be significant. Accounts that are allowed to go delinquent or result in legal action against the consumer by the creditor may create a more damaging pattern of poor credit performance than an approach where the debt is settled quickly. Allowing outstanding debts to sit and fester while they are hopefully settled over a long period of time extends the credit impact and leave the issue unresolved. in that case what prospective employers may see is, well, just a mess.

From my personal experience and experience in working with many people over the years the most important thing you can do is take some action to address a current financial situation and explain that to future employers when asked. Your explanation is that you took some action to resolve the issue and that might even involve bankruptcy, which is a legal tool to get a fresh start.

Rather than fearing that your past credit problems may hold you back, just make sure the credit issues are in the past, your addressed them, and you’ve begun the process to rebuilding your credit. I even show you how to do that for free.

@GetOutOfDebtGuy

How Does Bankruptcy Work?

Steve Rhode — Thu, 17 May 2012 21:25:13 +0000

From How to Get Out of Debt

Bankruptcy is one of those things people are afraid of, but they really don’t know why. Once you learn the facts about bankruptcy and how it works, you’ll want to know more.

Bankruptcy is a legal process that is administered through the court. While people can technically file bankruptcy themselves, it’s not a smart idea. Mistakes happen and a mistake in bankruptcy can be costly.

Instead, people generally seek the advice and assistance of a local bankruptcy attorney to file bankruptcy. The bankruptcy attorney will be familiar with bankruptcy and the local variations in your area. If you follow this link I can help you to find a local bankruptcy attorney who can give you a free consultation.

So How Does Bankruptcy Work?

Once you meet with the bankruptcy lawyer you’ll have a much better idea if bankruptcy is right for you. You and your attorney will evaluate if you will file a chapter 7 bankruptcy or a chapter 13 bankruptcy.

In either case you will need to complete a pre-bankruptcy credit counseling session, otherwise known as a total waste of time. It’s mandatory however. You will also gather up information about your income and debts and give it to your bankruptcy attorney. They will probably ask for copies of your tax returns as well.

The bankruptcy attorney will complete the paperwork, called the petition, and that will be filed with the court. Once the paperwork is filed it will stop any lawsuits and wage garnishments. Once your creditors and debt collectors are notified it will stop all of that activity as well.

In the case of a chapter 7 bankruptcy you will have to meet with the bankruptcy trustee once and shortly thereafter you will receive a notice that your bankruptcy debt has been eliminated.

If you file a chapter 13 bankruptcy to protect your house or some other asset, the trustee meeting will be a confirmation of the monthly payment plan your attorney drew up. You will then make those monthly payment to the bankruptcy trustee each month.

If you want to learn more about bankruptcy in the context of getting out of debt I’d suggest you read How to Get Out of Debt.

And you may be surprised to learn that in a nutshell, that’s the entire bankruptcy process and how bankruptcy works.

Following the discharge of your debt you can then focus on quickly rebuilding your credit. Use my free guide to show you how.

Bankruptcy gives you a legal fresh start and a second chance to get out from under overwhelming debt so you can move forward with your life.

@GetOutOfDebtGuy

My Student Loan is Almost 30 Years Old and I’m In Collections. – Dawn

Steve Rhode — Thu, 17 May 2012 21:09:32 +0000

From How to Get Out of Debt

“Dear Steve,

I currently have a student loan that is 27 years old. I was 17 years old when I was offerred this loan, and really unaware of the rate of interest, penalties, etc. I divorced from my husband at the age of 19 (due to the fact that he was physically abusive), and in the divorce decree, it was ordered that he pay child support for my two children, and he pay half of my student loan.

The initial loan was for $5,000, and I just received a bill from Coastal Collections, requesting immediate payment in the amount of $22,000.!!!!!!!!! I actually offerred them the full principal amount of $5,000 and they counter-offerred @ $17,000. I am unemployed, have guardianship of my three grandchildren, and am starting an Ebay business. (struggling to keep our heads above water).

Long story short, they refused my payment, and have been harrassing myself and everyone in my family. Can this debt be forgiven after 27 years, if not, is there any way that I can pay just my half of the original loan, or even make an offer and comprimise? I realize that this is my debt, and it has been given to so many collection agencies over the years, that every time I make contact with the new agency, I get a different story, and more grief. Thank you for any advice you can give me.

Sincerely, Dawn”

The Answer:

Dear Dawn,

The most important issue is if this was a government backed student loan, which I believe it may be since the statute of limitations would most likely have expired on a private student loan long ago.

I would suggest you look into the Income Based Repayment Program to get your student loan payment down to as low as $0. The monthly payment will be based on your income and circumstances and it sounds as if you qualify. If you pursue this option and it is granted it will go a long way towards making this a less stressful situation for you since you’ll be out of collections.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

We Just Can’t Get Caught Up on Our Bills and Debts. – Beth

Steve Rhode — Thu, 17 May 2012 21:01:17 +0000

From How to Get Out of Debt

“Dear Steve,

Divorcee’ with one child, remarried, living in home that is mortgaged under my ex-husbands name only and the deed is in my name only (don’t ask how-lol). Remarried we both work full time jobs

My credit WAS descent, until the wedding, honeymoon, car issues and he got laid off. Now things are looking up, but my cards and payments are so far behind, which ruined my credit (499) and I cant get caught up. The house is mortgaged through PFHA and is reasonable. Being that the mortgage is in his name, it doesn’t help nor hurt my credit. The balance of the mortgage is about 30,000. The home would definitley appraise at least $130,000. I have worked for our county for over 4 years and make around 25,000.00/year and my husbands at about 50,000. I would like to take a personal loan out just to catch up the bills and pay off the credit cards. But because my credit is so bad, noone will even look at me/ or should I try to refinance/purchase the home? Im not even sure what that would be considered because of the whole mtg/deed thing. Please advise me.

Beth”

The Answer:

Dear Beth,

For me, the most important issue here is that you said in the current situation you can’t get caught up. That goes a long way to clarifying what I think we need to do.

You mentioned your credit is horrible, but is your husbands credit horrible as well or does he have a credit score above 700? If he doesn’t know he can find out for free from Credit Karma.

If his score is above 700 then he may just be eligible for an unsecured debt consolidation loan through Lending Club. If you do decide to get an unsecured debt consolidation loan through LendingClub.com let me know and I’ll gladly help to fund it for you.

If his credit is dinged as well then the house issue presents a bit of an issue if you were to go for a second chance solution and get this under control. It would be possible for you to force your creditors to take a lower payment and give you a fresh start but it would most likely have to be with a chapter 13 bankruptcy. Under that approach your monthly payment would be based on what you can afford to pay and after three to five years, any remaining balance due would be eliminated.

If you’d like to learn more about bankruptcy you can click this link to find a local bankruptcy attorney.

I’d suggest you first read How to Get Out of Debt.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Nonprofit Student Loan Debt Collector Makes About Half a Million

Steve Rhode — Thu, 17 May 2012 16:18:53 +0000

From How to Get Out of Debt

Bloomberg Businessweek is reporting that Educational Credit Management Corporation, an IRS educational charitable nonprofit group, paid Joshua Mandelman, a student loan debt collector for ECMC, nearly $500,000 in a single year.

ECMC’s debt collectors earn bonuses as a reward for extracting money from defaulted borrowers. In 2010, the bonuses for top performers amounted to as much as 10 times their base salaries, which ranged from about $33,000 to $46,000, according to the company’s tax return.

“By law, the organizations can receive as much as 37 percent of a borrower’s entire loan amount, half in collection costs and half in taxpayer-funded commissions. ECMC says it typically collects 31 percent, or $7,750 on a $25,000 loan. That’s 31 times what it can make for preventing the default through counseling.”

You can read the full article here.

According to the last publicly available tax return for the organization the company had $162,269,817 in revenue in 2010.

Additional collections staf, apparently labels as “Account Specialist” on the tax return made substantial amounts as well. Megan Howe – $254,339, Joshua Mandelman – $424,630, David Peterson – $357,064.

The tax return says that to earn this money, the debt collectors worked on average of 41 hours per week. I suspect someone isn’t telling the whole story here.

Heck, Carey Dubbs is reported as the V.P. working 12 hours a week and made $210,938. I want one of those jobs.

CEO Richard Boyle is reported to work 17 hours a week for this nonprofit charitable company and get paid over a million dollars a year. Even the other board members, who report working less than an hour a week, earn on average about $77,000 a year.

The tax return also lists grants the company received. They really took $25,000 from the Oakdale Police Explorer post? Seriously? What in the world is a police explorer post doing giving money to a student loan debt collection agency to provide them with “general support.”

But not to leave you with the impression this charity is totally heartless, they do list they gave a College Access Scholarship to one person for $2,575.

Their stated mission certainly sounds very similar to what credit counseling groups say.

ECMC SPONSORS PROGRAMS TO HELP STUDENTS AND FAMILIES PLAN AND PAY FOR COLLEGE WE WORK WITH SCHOOLS AND LOAN SERVICERS TO LOWER STUDENT LOAN DEFAULT RATES, PROMOTE FINANCIAL LITERACY AND PROVIDE RESOURCES TO SUPPORT STUDENT LOAN BORROWERS TO SUCCESSFULLY REPAY THEIR LOANS

In total, the tax return lists 29 people who made $160,000 to over $1,000,000 in 2010.

The company has a hand in a number of related for-profit companies as well. ECMC Group, ECMC Holdings, Oakdale Student Loan Funding, ECMC Technology Service, ECMC Credit Services, ECMC Records & Receivables Management, ECMC Solutions and Premiere Credit North America.

You can read the entire tax return here.

@GetOutOfDebtGuy

Bogus U.S. Embassy Email Asks for Money – Scam Alert

Steve Rhode — Thu, 17 May 2012 15:33:13 +0000

From How to Get Out of Debt

A reader sent in the email below that claims to be from a U.S. Ambassador. I wanted to use it to point out a number of warning signs.

Starting from the top:

The email address this is sent from is not a government address.
The reply to address is not a government address.
The flag shown is for the U.S. Embassy located in Oman, not Nigeria.
The link does not work.
Your personal information is requested in an email.

The U.S. Embassy official email address would end with state.gov and no U.S. Embassy would request any such information from a consumer. This is simply a ploy to extract a payment out of you in hopes you will receive a large sum of money. Which of course you will not.

This particular email really makes me mad, especially since as a child of a U.S. government representative I lived in Nigeria and spent a lot of time at the U.S. Embassy there.

Full Text of Scam Message

Greeting from U.S Embassy,

THIS MAIL IS ONLY FOR THE OWNER OF THIS E-MAIL ADDRESS

Form US Ambassador to Federal Republic of Nigeria
United States Consulate General Nigeria
No 7 Mambilla Street,Off Aso Drive
Maitama District Abuja Nigeria

Dear Beneficiary,

My name is Terence P. McCulley, the United States Ambassador to the Federal Republic of Nigeria. The United States Senate had confirmed my nomination on August 30. 2011 after being nominated for this position by U.S. President Barack Obama on June 28, 2011. My credentials as the new Ambassador appointed were presented to His Excellency Dr Goodluck Jonathan at the Presidential Villa in Abuja, Federal Republic of Nigeria, on November 2, 2011. I am a career member of the senior Foreign Service with the rank of Minister-Counselor whose diplomatic career has been spent mostly in Africa or working on African issues.

I served most recently as the Deputy Chief of Mission at the U.S. Embassy in Copenhagen, Denmark. Prior to this, I was the U.S. Ambassador to Mali, and I have served as Deputy Chief of Mission at the U.S. Embassies in Tunisia, Senegal and Togo. Other overseas postings include Federal Republic of Nigeria, West Africa, India and Chad. In Washington,My identity
can be verified by simply clicking on the URL link below:

http://nigeria.usembassy.gov/bio.html

However, following the resolution of the meeting held with His Excellency President Dr Goodluck Jonathan at the Presidential Villa in Abuja at end of the year meeting with some members of the Federal House of Senate, an agreement was reached that the sum of $500,000.00 USD must be paid out to you in the form of a compensation for all the years you have wasted in waiting for your funds to be released. Hence, the $500,000.00 USD compensation fund has been instructed to be paid out to you in the form of a CERTIFIED INTERNATIONAL BANK DRAFT drawn on Standard Chartered Bank. The said BANK DRAFT will be packaged inside a U.S Embassy Official Envelope to be sent to you via Postal Mail at no cost to your mailing address.

And the time frame for delivery is 24 hours, which is 2 days since it would be sent via a Postal Mail Service.
Meanwhile, a “Custom I.R.S” must be obtained from the Nigeria Customs Authority at a fee of $125.00 USD for a full clearance certification on the BANK DRAFT. Hence, the $125.00 dollar fee must be paid within 24 hours upon your receipt of this notification via western union or Money Gram, so that all necessary arrangement can be made ahead of time.

Make sure you re-confirm your full information as fellow
YOUR FULL NAME:———-
YOUR PRIVATE PHONE NUMBER:———-
HOME ADDRESS AND CITY:—— ———
SEX/OCCUPATION:——————-
AGE:————————–

The fee should be sent directly to the “Embassy Protocol Officer” with the below information:

Name:RAY IKEM,
Country – Lagos Nigeria
question: Present Year
answer: 2012
Amount: $125.00

Please take note that the “I.R.S” and the BANK DRAFT will be packaged together inside the U.S Embassy Official Envelope for immediate dispatch to your mailing address. Hence, you are advised to comply as requested to enable me discharge my official duty to your home accordingly.

I will wait to hear from you now

Congratulations!!!
Respectfully yours,

Mr Terence P. McCulley
US Ambassador to Nigeria
Email: usembassynig1@ibibo.com

If you have had any experience with this program, please post your comments and feedback in the comments below.

SaveMore.com – Consumer Complaint – 5-17-2012

Consumer — Thu, 17 May 2012 15:05:03 +0000

From How to Get Out of Debt

Consumer Statement:

Purchased 2 Barnes & Noble gift cards in December 2011. Both were redeemed per instructions but cards never arrived.

Consumer Action Taken:

I have contacted the company numerous times each month since January by phone and email. Often being told the system can’t take my phone message and only one email received a generic response telling me the card was on it’s way (that was on Jan 13, 2012). Since then I have received NO response. I have filed complaints with the Texas BBB, the FTC, and the Texas Attorney General’s office. No positive response from any of them… company didn’t reply to BBB at all.

Date This Problem Happened: December 15, 2011

State You Live in: Maryland

Race/Ethnicity: White

Age Range: 36-50

Total Amount of Fee Paid: $15

Company Name: SaveMore.com

Company Address:

Company Telephone Number:

Website of Company: SaveMore.com

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

Debt Settlement Companies Suffer from Premature Representation

Guest Post — Thu, 17 May 2012 14:58:56 +0000

From How to Get Out of Debt

First, I’d like to say thank you to Steve Rhode for the invitation to make a guest post. Steve, I greatly appreciate you opening up your venue. Rather than focusing on what Debt Relief A La Carte offers, I’d like to take this opportunity to discuss why. It will be much more meaningful for all. I’ve been waiting for a podium such as this, to open up for debate, the premature aspects of debt settlement. I couldn’t have dreamt of a better place.

Here we go…

The year was 1999, I was working for a Collect America franchise in Denver, as a collector and soon to be floor manager. I remember this day as if it were yesterday. My encounter that day left my head spinning with intrigue. It was my first dance with a debt settlement company. In my mind, I dissected their approach, their plan, the reason for their existence. Conceptually, I thought the idea was amazing. I viewed their existence as a way for the consumer to level the playing field. It made so much sense.

However, encounter after encounter, I began to notice a trend. It was rare that these companies ever had any money to actually negotiate a settlement. Instead of the debt settlement company playing the role of advocate, their involvement was more like an obstruction. What could have been a mutually beneficial scenario for all involved, ended up impeding our collection efforts. It was an ugly business model that had so much potential, if just done right.

If you asked me what is the most important thing to me, in respect to our debt settlement service? I would tell you sustainability. What is the key to sustainability? A mutually beneficial outcome for all involved. In my mind, the model that involves premature representation doesn’t achieve this. It is very frustrating to the creditor and collection community when representation doesn’t lead to a potential timely resolution. Then, when you couple this with the fact, that real life challenges to consumers are almost certain to impact the length of time even further. It’s beyond ugly. It’s representation with no potential solution in sight. It forced the creditor and collection community to a position of defense, and it’s so unnecessary.

The FTC rule, the individual state legislation, it’s all great. Especially, the advance fee ban. But, it missed big time on the main reason and true source of the Debt Settlement industries core problem – premature representation. What other industry does this? In what other capacity does someone represent someone else, when the potential for execution doesn’t exist?

I get why debt settlement companies offer to do it. One of the most appealing elements to a consumer is a debt settlement companies engagement. They want that representation to occur. Consumers don’t know any better, and by now this industry should. Maintaining the appeal should be less important than the consumers best interest.

Some of you may be scratching your head questioning why this is. I’ll explain… The collection community is well aware that a typical debt settlement plan takes years, and that they may potentially have to wait that long before settling. They’re also well aware that the completion rates for debt settlement companies are low. Both of these items cause some creditors to become more aggressive in an effort to become the priority and collect. Simply because there is a great chance that if they’re not settled with first or second, they may never be settled with at all.

In my opinion, the chances of a consumer being sued when they’re representing themselves versus when they’re prematurely represented, are night and day. I’m not saying that people who represent themselves don’t get sued, I’m saying that it isn’t done by invitation.

One twist of a knob is all it takes to offer debt settlement in a successfully dependable form. We twisted it the day I started my company over 10 years ago. We did so by only offering our Debt Settlement service to consumers, who have the financial ability to settle their enrolled debts right away. That’s it. That’s all it takes.

Our typical Debt Settlement client has $42,000 in debt, owes 6 different creditors, and has roughly half of it available to them via a loan from family, a 401k, IRA, equity in an asset, life insurance, or an annuity. Our strategy since inception has been to help them to find a way to generate enough money to settle their delinquent unsecured debts, all at once.

By creating the opportunity for our client, to get out of debt for x instead of y, we create value for everyone involved. We help a creditor, collection agency, or attorney capture revenue from an account that they may otherwise wouldn’t. We help the consumer avert a possible bankruptcy when they possibly otherwise couldn’t. We minimize the “what if’s”, by negotiating simultaneously to produce an end result for all of our clients enrolled debts, before they pay anything to anyone, including us.

The worst case scenario is there may be some accounts that may not be low enough for our clients to be able to afford to settle. In this situation, we give them the choice of us continuing to negotiate the account to obtain a lower settlement, negotiate a payment plan, or they have the option to unenroll the account from our service.

What has this one difference of only representing consumers when they have the money to settle led to?

A successfully reliable debt settlement business model
94.2% of all enrolled accounts have been settled or entered into a payment plan. Disclosure: We have omitted accounts where our clients took our advice and paid the account in full to avoid the settlement designation on their credit report. All of the accounts had a balance of less than $1,200. The advice was based on the amount of savings versus a “paid in full” rating rather than a “settled” one.
Dramatic restructuring of the consumers monthly obligations – when a client uses a loan from their 401k for example, generally their loan payment is less than half of their previous related monthly expenses
Timely resolution – our Debt Settlement clients are with us for generally 30-90 days
Minimization to the possible exposures of debt settlement – we eliminate the need for a creditor or collection agency to pursue the consumer legally for the purpose of making their account the priority, since all enrolled accounts are negotiated simultaneously
Less exposure to interest and fees, since our clients generally settle their debts in 30 – 90 days
Client rehabilitation – again, since our clients generally resolve all of their delinquent debts in 30-90 days, their credit will begin to rehabilitate much sooner
Mutually beneficial outcomes for all involved – consumers resolve their issue within their capabilities. And, creditors benefit by liquidating an account that they may not liquidate normally, and from the time value of the settlement

You may say to yourself that this all makes sense, but what about the other 90% + that don’t have that ability?

We thought about this too. A lot. How could we achieve a more reliable debt settlement business model for the consumer that needs to settle over time? The answer was the same. We only offer to enroll accounts into our Debt Settlement service, when the funds to settle are available. It’s that exact same knob again. I’ll tell you how we accomplish this…

If a consumer can’t settle their debts right away, we offer to train them to settle their debts themselves. And, when they have the funds available to settle, we give them the option to hire us to negotiate their more challenging accounts. All of the potential exposures that premature representation brings upon the consumer are eliminated, because we don’t do it.

We teach them by…

Breaking down their finances to determine how much they can afford to accumulate monthly
Approximating how much money they will need and how long it should take them to settle their debts
Reviewing specifically who they owe and determine if they have any potentially legally aggressive creditors
Creating a debt settlement timeline, where we detail the order in which they should settle their debts and the approximation of when they will be able to do so. Example: Settle with ABC Bank at month 6 for approximately 50%, settle with XYZ Bank at month 11 for approximately 50%, and so on
Forming a strategy to submit offers to their creditors, by helping them figure out the best angle to take, and by creating a presentation that demonstrates the reasons why their creditors should settle with them
Discussing how to manage and communicate with their creditors while they’re accumulating funds
Teaching them what may happen to their accounts as they age and go through the collection cycle
Explaining how collector’s view their ability to pay, so our trainees will know how to act accordingly
Arming them with the information of what their creditors, collection agencies, or collection attorneys have settled for. We provide them with the lowest, the average, and the highest settlement percentages that we negotiated ourselves
Teaching them how to communicate and negotiate, by discussing what information to share, how to make their offer, when to make their offer, and how best to negotiate
And finally, by teaching them how to handle the transactions when paying their settlements, so they’ll know exactly what they need and what to do

When our trainees represent themselves, they maintain their anonymity. They’re just another account that moves through the currents of the collection cycle. Their accounts aren’t flagged or outright targeted for aggressive pursuit due to premature representation, because they aren’t represented. At least not until they have the funds available to settle, and then it’s an option at Debt Relief A La Carte.

Most of our Do-It-Yourself Debt Settlement clients are pleasantly surprised by random settlement offers that they receive. What they figure out, is that they really only need representation with the minority of their accounts, if any at all. This cost savings achieved by not having to pay a debt settlement fee, potentially enables them to settle their debts more quickly. Which further enhances their chances for success.

To make sure that our trainees achieve the highest success possible. As part of our suite of debt relief services, we make our Periodic Review service available. This gives our trainees [consumers] the option to inquire with us about their specific situation, whenever they have the need. Our trainees use this service to assist them with keeping on track, to inquire about recent communication they have had, to run their negotiations and offers by us, and to obtain our opinions and refinements to their strategies. A lot of empowerment is achieved by our trainees through this service, not just for debt settlement, but for everyday life.

We also offer a Role Playing service, where we pretend to be a bill collector, so our trainees can enhance their negotiating skills. This is a very powerful tool that helps prepare our trainees for their communication and negotiation strategies.

And then, if we offer our Debt Settlement service in the trainees state, and they have funds available to settle, we give them the option to hire us to negotiate their more challenging accounts. So, if they really need that professional help, they have the option to use it.

I’ve had a lot of fun with our DIY Debt Settlement services. It is really rewarding for me to hear my trainee, engulfed in a new found confidence when they negotiate their own settlement. It’s like watching the most beautiful thing you can imagine, become what it is.

They quickly learn that it isn’t anywhere near as daunting as they thought it would be. And, they benefit greatly by always being in the know, in regard to the status of their accounts.

If I could wish for just one thing, it we be for the general public to know that negotiating settlements is common place in the debt collection industry. Random settlement offers are generated as a matter of doing business as usual.

I want to commend the debt settlement companies that have taken the high road, and agree to only represent their clients when their funds to settle are available. I seriously applaud you, as it is an incredibly ethical move. We just offer our services a little differently, in order to give our trainees the option of minimizing their costs associated with settling their debts, so they may get out of debt as soon as possible. This is why I changed the name of my company about a year ago, to Debt Relief A La Carte. It is up to our trainees and their situations to decide just how much professional help they actually need. We just provide the outlet to make that possible.

* We were formally known as Strauss and Associates.

So, if you were to ask me for my opinion regarding what could clean up this industry for good, it would be a law that requires consumers to have the financial capacity to settle their enrolled debt prior to being able to gain representation from a debt settlement company. It is the only way to offer debt settlement in a successfully reliable fashion. There is no reason for representation to occur prematurely. It creates on obstructionist relationship with the collection industry, that in turn, makes success more difficult for a debt settlement companies clients. It stifles growth and prosperity for everyone involved. It’s just not good.

Steve, thank you for the soap box. I appreciate it.

Jared Strauss
Debt Relief A La Carte, Inc
www.avoidbk.com

HopeNow Modifications – Consumer Complaint – 5-17-2012

Consumer — Thu, 17 May 2012 14:07:35 +0000

From How to Get Out of Debt

Consumer Statement:

Well in Nov 0f 2008 Hope Now Modifications, L.L.C called my home claiming that they would help me with a modification loan. through my mortage company which was U.S Bank. I sign the contract in Nov 12 2008 they wanted 1500.00 to start the process. well I made several calls concerning how long would it take for them to competed the process. well they kept telling me they are wait on my mortage company to contact them well in March or 2009 I tried to call them but the phone kept ringing and ringing. to this day I am out of 1500.00 and I need to be included in that settlement I want my money back. rabdo@hopenowmod.com

Consumer Action Taken:

Well as I stated the company never returned my call after I contact them several times and ask them about my money but like I said in march I called them and the phone just ring,ring,ring,
never a response.

Date This Problem Happened: November 12, 2008

State You Live in: Michigan

Race/Ethnicity: Black or African American

Age Range: 36-50

Total Amount of Fee Paid: $1,500

Company Name: HopeNow Modifications

Company Address:

200 Lake Drive East
Suite 200
Cherry Hill, New Jersey 08002

Company Telephone Number:

Website of Company: hopenowmod.com

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

If You Rent It Could Help Build Good Credit

Steve Rhode — Thu, 17 May 2012 14:00:41 +0000

From How to Get Out of Debt

Experian today announced a new product to help renters convert their on-time rental payments into good credit. Up until now Experian had only really been adding rental history through its RentBureau product that is used by big apartment complexes. Now they’ve launched a new product for use by all landlords, big or small.

ClearNow allows for landlords to collect payments from tenants electronically and in turn passes that payment information on to the Experian credit report. The service also offers tenants the option to pay their rent monthly, biweekly, or semimonthly. A nice feature.

The ClearNow service reports payment performance to both Experian and the PRBC credit reporting agency. PRBC is an alternative credit reporting service that is designed for people with little to no traditional credit history. Here is a sample PRBC credit report.

According to the ClearNow website, tenant payment information is not reported to the credit bureaus until after four payments are received and then they will report on a monthly basis. – Source

“We’re thrilled to offer a simple way for many responsible Americans to get the credit they deserve by making their rental payments as agreed,” said Steven Wagner, president, Experian Consumer Information Services. “In the past year, we have led the industry in helping renters build credit history, and with the latest collaboration with ClearNow, we are achieving another major milestone.”

While this is a beneficial additional credit building method it is important to remember that it will not overcome the negative weight of current collection accounts or being overextended. But this is a tool that can be used to help those that are current on their bills or rebuilding their credit after tackling the past bills. There is also no indication of how much weight this reported item will have on the credit score. However any positive payment performance is a good thing.

If you are renting from a private landlord or small apartment complex it may be worth bringing this to their attention to give you the flexibility of making your rental payment and helping you to rebuild credit at the same time.

ClearNow also offers additional services that are interesting as well. The service will collect seller financing mortgage payments, condo fees, and home owners association dues. It does not appear that those payments report to Experian, yet.

@GetOutOfDebtGuy

SCAM ALERT – Financial Management Partners – Consumer Complaint – 5-16-2012

Steve Rhode — Wed, 16 May 2012 23:14:33 +0000

From How to Get Out of Debt

I normally do not post an investigation with a consumer complaint. However in this case there were a number of issues that concerned me, such as unregistered companies, fake testimonials, and offshore payment processing. I’ve labeled this consumer complaint as a scam alert because in my opinion these companies all create a pattern of what appears to be a scam. They appear to sell a debt relief product that is not worth much. My advice is to run away from these companies if you are pitched for any services. If you have purchased these services and have been dissatisfied with the services you’ve received, please complete this consumer report.

Consumer Statement:

I was called by a telephone solicitor, told that the company could help me lower my credit card interest rates, guaranteed, or will recieve savings of $2500 or my fee will be returned. There was no mention of a financial Advisor and that all of my credit card information required to give them. I fear I may have larger credit card debts if I provide all the data they require & am scammed.

Consumer Action Taken:

I tried almost daily to reach them by phone. I always got a message “leave my name and number, they would return my call or “All lines are busy now, please call later.” (repeatedly) I spoke to a woman on May 15. She stated they must listen to the recording and call me in 30 min. I never was called. I called & again I got message, “leave a message.”

Date This Problem Happened: February 21, 2012

State You Live in: Tennessee

Race/Ethnicity: White

Age Range: 21-35

Total Amount of Fee Paid: $897

Company Name: Financial Management Partners, Inc.

Company Address:

Financial Management Partners
1945 WEST CR 419
STE 1141-303
OVIEDO, FL. 32766
Telephone: +1.877.274.8238
financialpartners@earthlink.net – Source

The company is registered to do business in Florida but has a different business address listed. The director is listed as Betsy Valorose, 1315 N. indian River Drive, Sebastian, Florida 32958 – Source

Company Telephone Number: 877-274-8238

Website of Company: financialmanagementpartners.co

Steve Notes

I took a look at this company website and discovered they appear to be selling one product, a debt / financial management software program for between $699 to $999.

It appears that payment processing for this company is handled offshore, allegedly by Opus Global, Limited in Port-Louis Mauritas.

There are a number of other websites that are selling using the exact same messages. These sites include:

americansnumberonechoice.com – Americans Number One Choice
2603 Discovery Drive
Discovery Lakes Phase 1, Bldg 2
Orlando, FL 32826-3006 – Source

Not registered to do business with the state.
keyonesolutionsinc.com – Key One Solutions – Source (Product Info)
7650 S. McClintock Dr. #103-119
Tempe, AZ 85284
Telephone: +1.888.599.7112

Not registered to do business with the state.
financialmanagementpartnersinc.com – Financial Management Partners
315 West Elliot Rd. #172
Tempe, AZ 85284
Telephone: +1.888.229.2290 – Source

Not registered to do business with the state.

Address appears to be mail drop at mailbox store.
theeliteplanninggroup.com – The Elite Planning Group
Elite Planning Group
315 W. Elliot Road #107-166
Tempe, AZ 85284
Telephone: +1.888.355.2702 – Source

Not registered to do business with the state.

Address appears to be mail drop at mailbox store.
americasfirstsource.com – Americas First Source
24 Orange Ave and Wall St
Orlando, FL 32801, USA
Toll Free # 1-877-404-5786 – Source

There is a company named America’s First Source, LLC registered to do business in Florida. The manager of the LLC is listed as Marbel W. Rodriguez, 312 Redwing Way, Casselberry, FL 32707 – Source
purchasepowersolutionsinc.com – Purchase Power Solutions
3116 S. Mill Ave.
Tempe AZ 85282
Telephone: +1. 888.512.8881
FAX: +1.888.430.2542 – Source

Address appears to be mail drop at mailbox store.

The company is registered in Arizona and the managing member is Lisa Miller, 4050 W. Ray Road, Suite 17-155, Chandler, Arizona 85226. – Source
financialmanagementpartners.co – Financial Management Partners
nationalbankcardmonitorinc.com – National Bankcard Monitor
835 W. Warner Rd. #101-454
Gilbert, AZ 85233
Telephone: +1.800.871.0372 – Source

This is a registered company in Arizona to Gino Nicoli and Terry Duff at 1900 S Valley Drive, Apache Junction, AZ 85120. – Source

Address appears to be mail drop at mailbox store.
proactiveplanningsolutions.com – Proactive Planning Solutions
mpxdebtsolutions.com – MPX Debt Solutions
consumerreliefsolutionsinc.com – Consumer Relief Solutions
315 West Elliot Rd. #172
Tempe, AZ 85284 – Source

Address appears to be mail drop at mailbox store.

Not registered to do business with the state.
enhancedplanningsolutions.com – Enhanced Planning Solutions
1225 W. Main St. #101-431
Mesa, AZ 85201
Telephone: + 888-599-7116
FAX: + 888-430-2542 – Source

Not registered to do business with the state.

Address appears to be mail drop at UPS Store.
emgfinancialservices.com – EMG Financial Services
Credit Account Solutions

Big Scam Flag for Me

I could not help but notice that a number of the websites also used the same testimonials.

“The [Fill in Company Name] definitely took the stress off and allowed me to get my life going in a better direction. It’s great to have all my accounts being paid off and to move past that very difficult time in my life.”
- Jessica, Los Angeles, CA

“I thought it was too good to be true, but now you’ve saved me over $14,000 in only one year! A huge THANK you to the team at [Fill in Company Name]!”
- Elaine, San Jose, CA

“[Fill in Company Name] has gone above and beyond what I expected to get the creditors off my back and reduce the amount I owe. They even got one of my debts entirely eliminated!”
- Andrew, San Francisco, CA

“I had many questions and made many calls throughout this process. They always answered all of my questions in a manner that left me feeling assured and comfortable with this program.”
- Paula M. St Paul, Minnesota

Americans Number One Choice Testimonials, Key One Solutions Testimonials, Financial Management Partners Testimonials, Elite Planning Group Testimonials, Americas First Source Testimonials, Purchase Power Solutions Testimonials, National Bankcard Monitor Testimonials, Consumer Relief Solutions Testimonials, Enhanced Planning Solutions Testimonials

This appears to be nothing more than a ring of fake websites designed to fool consumers into paying money into an offshore account for a product that is darn near worthless. Consumers have been complaining about Purchase Power Solutions, click here to see those complaints.

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

Military Star Card / Military Star Rewards MasterCard / AAFES Card- What You Need to Know First

Steve Rhode — Wed, 16 May 2012 20:44:05 +0000

From How to Get Out of Debt

The Military Star Card is a credit card that is marketed and promoted to military personnel. In the past it was known as the AAFES card as well.

This card is limited to use at military Exchange stores or through the Exchange website. Only people who are active duty military, military retirees, reservists, National Guard personnel, Department of Defense employees or Department of State Officials stationed outside the U.S., and dependents may take advantage of military exchange shopping.

The Military Star Card is heavy on promotions and inducements to apply but light on details or terms.

Before people can learn what the Military Star Card terms are it appears they must first give up their social security number and date of birth online. Information may be supplied to web visitors by clicking the links shown below which results in the popup window shown which requests this information.

The Exchange Credit Program page provides minimal information to allow people to make informed decisions about the card terms. All it says about terms is: – Source

Competitive interest rate
No annual fees
No late or overage fees on the MILITARY STAR private label card

At one point the Military Star Card application was as shown below. This application may be one from 2004.

It is very interesting to uncover the lack of transparency offered by this credit card that is marketed to military personnel worldwide. It appears there is almost no transparency offered regarding the card and credit terms, nor anyway for someone to make an educated or informed decision about applying for the card without giving up personal information first.

If this product existed outside of a military environment it would not be acceptable.

Military Star Rewards MasterCard

It appears Chase Bank has a relationship with the Exchange and offers a Military Star Rewards MasterCard. This card may be used at an exchange and it states that “Eligible installation purchases go to the MILITARY STAR private label line of credit. All other purchases go to the MILITARY STAR Rewards MasterCard line of credit.” – Source

But the Chase Bank website doesn’t even show the card terms, at least not easily. It just directs you back to the same site above where you have to give up your social security number and date of birth for information. – Source

It wasn’t until I did a bit more digging that I finally uncovered what appears to be the terms of use for the Military Star MasterCard,

According to this document (source) the terms on the MasterCard are not that bad when compared to other cards. The interest rate is variable and calculated by adding 6.99% to the current Prime Rate.

One of the items that I found which concerned me in the terms is that the grace period is only 21 days. users of this card may have less than that to get their payment in full in to avoid any finance charges. The 21 day clock starts on the closing of each billing cycle and stops once the payment is received and posted to the account.

On a positive note there is no annual fee for the use of this card and the penalty fees are lower than compared to other credit cards.

I still have no idea what the terms are on the Military Star Card issued by the Exchange. There is no reason for them to be so obtuse in sharing the credit terms offered. In my opinion it leaves military members and eligible applicants at a disadvantaged in making good choices about applying.

It seems like an unnecessary way of potentially harming military service members through the lack of basic information. The military is concerned about making sure service members have access to financial counselors, how about access to the terms and conditions of the credit card directly marketed to members. Sure seems like a logical disconnect.

Military Star Card Terms Finally Reveled

After requesting the Military Star Card terms from the Army & Air Force Exchange Service I did get a copy from their public relations department and Judd Anstey. Thank you Judd.

Since these terms are not easily available I’m going to include them below and provide my feedback and observations about each part.

This Exchange Credit Program Agreement (‘Agreement’) governs the Military Star Private Label Revolving Credit Account and the TAKE IT HOME TODAY!SM Private Label Revolving Credit Account (each, an ‘Account’) available through the Exchange Credit Program and administered by the Army and Air Force Exchange Service (‘AAFES’), P.O. Box 650410, Dallas, TX 75265-0410. Your Account application and other documents we provide to modify or supplement this Agreement are incorporated into and made a part of the Agreement by reference. Please read the entire Agreement carefully before you use or permit the use of the Account and keep it for your records.

1. Definitions and General Terms: In this Agreement, the terms ‘we,’ ‘us,’ and ‘our’ mean the Account creditor to which you applied for an Account or from which you obtain Account credit (AAFES, the Navy Exchange Service Command, the Marine Corps Exchange or the Coast Guard Exchange System), and any entity to which your Account or its unpaid balance may be assigned. The terms ‘you’ and ‘your’ refer to the individual Accountholder who applied for and accepted an Account and the terms of this Agreement (see Section 2). The term ‘Authorized User’ is defined below in Section 5. Any reference to a ‘Card’ means any card we issue to you or an Authorized User that is used to access your Account. Other capitalized terms used below are explained in the context of their first use.

Whenever this Agreement states that we may take certain actions, it means we are authorized to take those actions in our sole discretion. Whenever this Agreement requires or allows you to provide us with a written notice or request related to your Account, you must send that notice or request to Army and Air Force Exchange Service, Exchange Credit Program, P.O. Box 650410, Dallas, TX 75265-0410, unless we have instructed you otherwise in this Agreement, a periodic Account statement, or another document we might provide after this Agreement becomes effective.

2. When Agreement Is Effective: You understand and agree that this Agreement is effective as of the first date you or an Authorized User use a Card or the Account.

3. Your Promise to Us: You agree to the terms and conditions in this Agreement and promise to do everything this Agreement requires of you. You agree to pay us for all purchases charged to the Account by you and any Authorized User. You agree to pay the Interest Charges (see Section 10 below), Account Fees (see Section 11 below), and all other fees, charges, costs, and expenses as provided in this Agreement, including, without limitation, those described in Section 16 below (‘Default and Remedies’).

This is why cardholders should have access to the terms without needing to give up personal information. Only by reading the terms and conditions will people be able to review the terms and determine if they are acceptable since they will be bound by them.

4. Account Eligibility: Eligible Exchange patrons who satisfy our creditworthiness standards may open and maintain an Account with us. After you separate from active duty military status, you remain eligible to use the Account if you maintain Exchange privileges. You and your Authorized Users may not make purchases with the Account after your applicable ETS/EAOS date. You must immediately notify us: (a) about any changes to your ETS/EAOS date; and (b) when you are no longer eligible for military Exchange privileges.

You may not use this card, even if you are in good standing, if you are no longer eligible for Exchange privileges.

5. Authorized Users: You may authorize family members who are 18 years or older, with current Exchange privileges, to use the Account as an ‘Authorized User.’ To do so, you must identify the Authorized User in the Account application or in a written request you send to us after the Account is opened. Any request you make to remove an Authorized User must be sent to us in writing. No one other than you may add or remove the authority of any Authorized User to use a Card or the Account, even if that person has been designated to act for you through a Power of Attorney.

Any charges by the Authorized User will be the sole responsibility of the account holder. Allowing someone to use the card does not limit your responsibility.

7. Eligible Account Purchases: You and each Authorized User may use the Account to purchase qualifying goods and services from us, subject to the terms and conditions of this Agreement. Depending on the Account we maintain for you under this Agreement, you and each Authorized User may use the Account to purchase qualifying goods and services from us under our Retail Plan, Military Clothing Plan (if you qualify), and any Special Promotion plan we may offer from time to time. If your Account is a TAKE IT HOME TODAY! Account, then the Retail Plan and Special Promotion purchases you and Authorized Users may make with the Account are limited to items that a participating Exchange facility has identified as eligible for a TAKE IT HOME TODAY! purchase, and at least one of those eligible items must have a purchase price of $299 or more. We may permit you to combine your purchase of a qualifying TAKE IT HOME TODAY! item with the purchase of other complimentary items that you make on the same day and at the same Exchange facility. Any Account purchases returned to us will result in a credit to your Account, not a cash refund, and may be subject to a restocking fee. Account purchases are subject to the terms of our Retail Plan, unless we determine that those purchases qualify for different treatment under the Military Clothing Plan or a Special Promotion. Terms that apply to a Special Promotion are described in this Agreement, except to the extent those terms are changed by promotional disclosures that modify or supplement this Agreement. Account purchases that qualify for the Military Clothing Plan (formerly UCDPP) are limited to the following: Defense Supply Center Philadelphia (DSCP) procured issue military clothing items and footwear; DSCP organizational clothing and individual equipment (OCIE) items; AAFES commercial uniform clothing, undergarments, insignia and footwear items to be worn with the uniform. Military clothing and equipment offered by other vendors are not eligible for the Military Clothing Plan.

No cash refunds are available for purchases made on this account and returned. You may also have to pay an additional restocking fee.

7. Credit Limits and Available Credit: The Credit Limit of your Account is the maximum amount you may owe us at any time. The Available Credit of your Account is the amount of credit that remains available to you, up to the amount of your applicable Credit Limit. We may restrict or delay the Available Credit of your Account for risk management purposes, to protect you and us against actual or potential fraud or unauthorized transactions, and for other legitimate reasons. We may establish separate Credit Limits for the Retail Plan and the Military Clothing Plan. When you do not have enough Available Credit to complete a purchase under the Military Clothing Plan, we may allow you to complete that purchase under the Retail Plan (subject to the Available Credit, Interest Charges, Account Fees and other terms and conditions that otherwise apply to Retail Plan purchases). Your Credit Limits will be shown on your monthly Account statements (‘Periodic Statements’). You must ensure that your Account balances do not exceed the Credit Limits we set for your Account from time to time, even if we electronically or manually authorize an Account purchase. If your Account balance is more than your applicable Credit Limit, we can still charge you for any and all Account purchases, Interest Charges and Account Fees, and require that you immediately pay any amount exceeding your Credit Limit, without giving up any of our rights under this Agreement. We may increase or decrease your Credit Limits at any time without advance notice to you, subject to any requirements or limitations of applicable law.

Your credit limit may be reduced or restricted if you are deemed to be a credit risk.

8. Purchase Authorizations: We may ask that you or any Authorized User provide identification documents to confirm eligibility for an Account purchase. We may decline to authorize any purchase requested on your Account. If the system we use to authorize Account purchases is not working, we may not authorize a purchase, even if your Available Credit is sufficient for that purchase. We will not be liable to you if this occurs. We may not authorize a purchase if you are in Default (see Section 16 below), if the Available Credit under the Account has been suspended or cancelled for any reason, if you have not followed our procedures for requesting a purchase, or for other reasons. You will be bound by any policy we disclose, such as ‘no returns,’ ‘no refund,’ ‘no return or credit without receipt,’ ‘as is,’ ‘store credit only,’ ‘all sales final,’ or similar statements.

Some purchases using the card may not be returned or refunded.

9. Periodic Statements; Billing Cycles: We will, as required by law, send a Periodic Statement to you or your designee after the end of each Billing Cycle. Each Periodic Statement will show the ending date of the most recent Billing Cycle (the ‘Closing Date’). A Billing Cycle refers to the number of days between Closing Dates. Each Periodic Statement will show the total amount you owed as of the Closing Date of your prior Periodic Statement (the ‘Previous Balance’), and the amounts added to and subtracted from the Previous Balance to determine the total amount you owe as of your most recent Closing Date (the ‘New Balance’).

The Periodic Statement will show the minimum amount you must pay (the ‘Total Minimum Payment Due’) and the date on which your payment is due (the ‘Payment Due Date,’ which will be at least 25 days after the Closing Date). See Section 12 below for more information about how your Total Minimum Payment Due is determined. Only one Periodic Statement will be sent each month to the address of record for your Account (see Section 15 below). Your Billing Cycle may be changed at any time and for our convenience, as permitted by law.

You should review each Periodic Statement carefully. Subject to any limitations or requirements of applicable law, you may be bound by what the Periodic Statement shows if there is a billing error on your Periodic Statement and you do not advise us of the error within 60 days after we mailed it to you. For more information about billing disputes and your rights, read the section below called ‘Your Billing Rights.’

You will note that the billing grace period using this card is 25 days as opposed to the Military Star Rewards MasterCard which is only 21 days.

10. Interest Charges:

A. Daily Periodic Rates; Index for Variable Rate Adjustments. The Daily Periodic Rate used to determine your periodic rate finance charges (‘Interest Charges’) is determined by dividing the corresponding Annual Percentage Rate by three hundred sixty five (365) or, in a leap year, by three hundred sixty six (366). The resulting Daily Periodic Rate is carried five places past the decimal point, and the last digit is rounded. The Daily Periodic Rates and Annual Percentage Rates applied to Retail Plan and Special Promotion balances may vary from monthly Billing Cycle to monthly Billing Cycle, based on published changes in the index rate that applies to your Account. If your Account balances become subject to the Penalty APR as described below in Section 10(G), the Daily Periodic Rates and Annual Percentage Rates we apply to all of your unpaid Retail Plan, Special Promotion, and Military Clothing Plan balances may vary from monthly Billing Cycle to monthly Billing Cycle, based on published changes in the index rate that applies to your Account. Each variable Daily Periodic Rate and corresponding Annual Percentage Rate is based on the value of a published index rate plus the Margins described below in Section 10(D), in Section 10(G), or in separate documents that modify or supplement this Agreement. The index rate used for variable rate adjustments will be the highest bank prime loan rate published in ‘Money Rates’ section of The Wall Street Journal on the Closing Date of your previous Billing Cycle or the business day immediately before that Closing Date (the ‘WSJ Prime Rate’). Changes in an index rate will be effective as of the first day of a monthly Billing Cycle. An increase in the index rate will result in increased Interest Charges and an increased Total Minimum Payment Due.

B. How We Calculate Balances Subject to Interest Rate. We figure the Interest Charges for your Account by applying the Daily Periodic Rate to the ‘Daily Balance’ of your Account (including new purchases) for each day in the Billing Cycle. We calculate a separate Daily Balance for each of the different categories of your Account (for purchases made under the Retail Plan, the Military Clothing Plan, and any Special Promotions). To get the ‘Daily Balance’ for each Account category, we take the beginning balance of your Account each day in each category, add any new purchases, and then subtract any unpaid Interest Charges, unpaid Account Fees, unpaid costs and charges of collection, payments and credits. This gives us the Daily Balance for each category of your Account.

C. Grace Period. The Periodic Statement for the Billing Cycle with the most recent Closing Date is your ‘Current Statement.’ New purchases shown for the first time on your Current Statement will begin to accrue Interest Charges from the date of the purchase, except as provided in this Agreement or as otherwise required by law. New purchases shown for the first time on your Current Statement will not begin to accrue Interest Charges until the first day of the following Billing Cycle if: (a) there is no Previous Balance or there is a credit balance for the Billing Cycle shown on your Current Statement; or (b) the sum of payments and credits we received during the Billing Cycle shown on your Current Statement was at least equal to the Previous Balance shown on that Current Statement. To avoid additional Interest Charges, you must pay the full New Balance shown on the Current Statement by the Payment Due Date shown on the same Periodic Statement. We will give you the benefit of a grace period for certain partial payments you make, in those limited circumstances and to the extent required by law.

D. Interest Charges for Retail Plan Purchases. The variable Annual Percentage Rate used to determine the Interest Charges for Retail Plan purchases will be based on the WSJ Prime Rate plus a Margin of 6.99%. The Account Opening Disclosures provided with this Agreement disclose the Annual Percentage Rate and Daily Periodic Rate in effect for Retail Plan purchases on or near the date your Account was opened.

E. Interest Charges for Military Clothing Plan. The non-variable Annual Percentage Rate for purchases qualifying for the Military Clothing Plan is 0.00% (a Daily Periodic Rate of 0.00000%).

No interest for military clothing plan purchases. Nice perk.

F. Interest Charges for Special Promotions. The Interest Charges and other terms and conditions for any Special Promotion will be described in separate promotional disclosures that modify or supplement this Agreement.

G. Penalty APR. A ‘Penalty APR Triggering Event’ will occur if you have not paid a Total Minimum Payment Due within 60 days of its applicable Payment Due Date (in other words, within 90 days after the Closing Date of the Billing Cycle for which we determined this minimum payment was due). If a Penalty APR Triggering Event occurs, we may apply an increased Annual Percentage Rate (a ‘Penalty APR’) on an indefinite basis to the unpaid Account balances for all of your Retail Plan, Special Promotion and Military Clothing Plan purchases and any new Account purchases we permit, except as otherwise provided in this Agreement or required by law. In addition to applying this Penalty APR, we may close your Account to future purchases and exercise other remedies related to this event of Default as provided in this Agreement (see Section 16 below). The Penalty APR is a variable Annual Percentage Rate determined as of the date we first apply it, based on the WSJ Prime Rate plus a Margin of 14.99%. The Account Opening Disclosures provided with this Agreement disclose the Penalty APR in effect on or near the date your Account was opened. If we receive six consecutive payments of your Total Minimum Payment Due by their Payment Due Dates, beginning with the first Total Minimum Payment Due that is due immediately after the Penalty APR takes effect, then we will stop applying the Penalty APR to the unpaid Account balances and any new Account purchases made on and after the date we provided you with notice about the APR increase. An increase to the Penalty APR will result in increased Interest Charges and an increased Total Minimum Payment Due

A penalty APR is not triggered if you make the full minimum payment due within 60 days of the applicable due date. That’s a better policy than many credit cards offer. The card also offers a formula for eliminating the penalty interest rate after six consecutive on-time monthly payments of at least the minimum amount. It’s a great benefit to know exactly what you need to do to eliminate the penalty interest rate.

H. Minimum Interest Charge. A minimum Interest Charge (a Finance Charge) of $0.50 will be assessed in any Billing Cycle in which an Interest Charge is due, but is less than $0.50.

I. Temporary Reductions in Interest Charges. Your Interest Charges may be temporarily reduced based on military activation or deployment. At the end of your activation or deployment, the Interest Charges will return to the rates then in effect under this Agreement.

If you are on active duty or deployed your interest rates will be reduced.

11. Account Fees.

A. Returned Payment Fee. If your check, payment instrument, or any form of electronic payment to us is dishonored by your depository institution or returned to us unpaid for any reason, we will assess and add a Returned Payment Fee of $25.00 to your Account.

B. Document Copy Fee. On non-disputed matters and matters unrelated to a Billing Error, and subject to any limitations or restrictions of applicable law, we may require that you pay us a fee of $5.00 each time you request photocopies or reprints of Account and transaction documents.

12. Payments; Total Minimum Payment Due; Pay-Ahead Feature. You may pay your New Balance in full any time without penalty or pay it in monthly installments. Paying your entire New Balance or paying more than your Total Minimum Payment Due will help you reduce or avoid Interest Charges. To pay the New Balance in installments, you must pay us at least the Total Minimum Payment Due for each Billing Cycle by the Payment Due Date shown on each Periodic Statement. Your Periodic Statement will disclose the Total Minimum Payment Due after each Billing Cycle.

Unless the Pay-Ahead Feature applies to your Account as described below, your Total Minimum Payment Due will be the sum of items 1 through 4 below:

1. The greater of:

a. $10.00 (or the entire New Balance if it is less than $10.00); or

b. 2.777% of the unpaid balance of your Retail Plan and Special Promotion purchases including accrued Interest Charges for such purchases (or any different percentage of Special Promotion purchases including accrued Interest Charges separately disclosed to you in documents that modify or supplement this Agreement), based on the unpaid balance of such purchases as of the Closing Date for the Billing Cycle during which you made your most recent Retail Plan and/or Special Promotion purchase; plus

2. 12.5% of the unpaid balance of any Military Clothing Plan purchases (if applicable), based on the unpaid balance of these purchases as of the Closing Date of the Billing Cycle during which you made your most recent Military Clothing Plan purchase; plus

3. All past due payments; plus

4. The amount by which your Account balance exceeds any applicable Credit Limit.

We may automatically apply a promotional Pay-Ahead Feature to your Account while your Account remains open and in good standing, if you pay more than the Total Minimum Payment Due by its Payment Due Date. When this promotional Pay-Ahead Feature applies, the amount by which your Account payment exceeds the Total Minimum Payment Due for a Billing Cycle will be treated as your advance payment of part or all of the Total Minimum Payment Due that would otherwise be due in a later Billing Cycle. Any promotional Pay-Ahead Feature we apply will remain in effect until the earlier of: (a) the Billing Cycle in which we determine that the Account payment that made you eligible for the Pay-Ahead Feature will not pay the full amount of the Total Minimum Payment Due otherwise due for that Billing Cycle; (b) the sixth Billing Cycle after we first apply the Pay-Ahead Feature to your Account; (c) the date your Account is closed to further purchases; or (d) the date we determine that your Account is no longer in good standing or otherwise in Default under this Agreement. We reserve the right to determine whether and when to offer this promotional Pay-Ahead Feature. We will not automatically extend, renew or restart any Pay-Ahead Feature that applies to your Account, based on the Account payments you make while the Pay-Ahead Feature is in effect. Account purchases that you make after the Pay-Ahead Feature is first applied affect how long the Pay-Ahead Feature applies to your Account. Interest Charges and Account Fees accrue on all purchases and Account balances as provided in this Agreement while the Pay-Ahead Feature applies to your Account. Paying more than the amount of your required payment while the Pay-Ahead Feature is in effect will help you reduce your Interest Charges. After the Pay-Ahead Feature no longer applies to your Account, you must immediately resume making payment of the Total Minimum Payment Due in the time and manner described in this Agreement and as shown on your Periodic Statements.

If you pay more than the Total Minimum Payment Due shown on a Periodic Statement and this promotional Pay-Ahead Feature does not apply, we may still require that you pay at least the Total Minimum Payment Due shown on each subsequent Periodic Statement.

It is important to note that if you pay more than the minimum payment it does not eliminate the need to make the minimum payment in future months. A minimum payment may still be due regardless of the amount of your last payment.

13. Method of Payment; Check Endorsements. You may make payments on your Account by sending personal checks, money orders or other negotiable instruments, payable in U.S. dollars, to the Payment Address shown on your Periodic Statement. Any payments received there will be promptly credited to your Account as specified on your Periodic Statement. Include your payment stub and do not send cash. Your Available Credit may not immediately show a payment has been applied to your Account if any payment you make is not received at the Payment Address shown on your Periodic Statement or is not accompanied by the payment coupon portion of your Periodic Statement. We may also permit you to make Account payments at your local Exchange or online at Exchange Credit Central on www.milexch.com.

You must not send us any check marked ‘payment in full,’ or with similar terms or other conditions, unless both you and one of our authorized representatives have agreed in writing to resolve a dispute in that manner. We can accept such checks or late or partial payments without losing our right to receive the full amount you owe for your Account under this Agreement.

Nice. Does address the trick some try by marking a payment in full and sending a partial payment hoping the balance will be eliminated. They make it clear that any such terms are not binding unless the creditor and cardholder agree.

When you provide a check as payment, you agree that we may use information from your check to make a one-time electronic fund transfer from the deposit account at the financial institution identified on the check or process the payment as a check transaction. When we use information from your check to initiate an electronic fund transfer, funds may be withdrawn from your deposit account as soon as the same day we receive your payment. The electronic fund transfer will be the same as the amount shown on your check, without including any additional amounts. Electronically processed checks (and checks presented electronically) are not returned to you by your depository institution. We will retain an image of your electronically processed check as required by law. In the ordinary course of business, your check will not be provided to you with your deposit account statement, but you can retrieve a copy of your check by contacting your depository institution. Please notify us at the address provided above in Section 1 if you want to learn about other payment options and you prefer not to have your check used in this way.

14. Application of Payments. We have the right to apply payments to the Total Minimum Payment Due for your Account in the order and manner we determine in our sole discretion. We will apply payments that exceed your Total Minimum Payment Due in the manner required by law, which generally means that any such excess payment amounts will be applied to your Account balances in descending order, beginning with Account balances subject to higher APRs. Special rules may apply if we offer certain deferred interest or similar programs as a Special Promotion or if we agree to apply payments in a specific manner at your request.

They determine how your payment is applied. It’s interesting that they keep referencing the law that governs the transaction but I have seen which state they are claiming governs it.

15. Account Documents We Send to You; Change of Address. You agree that any Account notices, Periodic Statements, and correspondence (together, ‘Account Documents’) we send will be effective notice to you if sent to the most recent address we maintain for your Account in our records (your Account ‘address of record’). Initially, your address of record will be the address you provided on your Account application. If any address of record we maintain changes for any reason, you must give us written notice of any new address of record. To update your address of record, you must submit an Account update form to us through your local Exchange, online at www.milexch.com, or using the address provided above in Section 1. You understand and agree that we may update your address of record by using information we receive from national change of address service providers. Account Documents will be deemed given to you when they are hand delivered to you or deposited in the mail using your address of record. If you do not receive any Periodic Statement after you attempt to change the address of record, it is your responsibility to contact us again and verify that any such address of record has been updated.

16. Default and Remedies. Subject to any limitations or notice requirements under applicable law, we may declare your Account in default if any of the following occur (each, a ‘Default’): (a) you do not make any Total Minimum Payment Due by its applicable Payment Due Date; (b) you do not, upon our request, pay the full unpaid balance of your Account after the date your Exchange privileges are terminated or you voluntarily ask us to cancel your Available Credit and close your Account as provided in Section 19 below; (c) you do not do anything this Agreement requires of you; (d) you die, are adjudged incompetent or become the subject of a bankruptcy or insolvency proceeding; (e) you have supplied us at any time with misleading, false, incomplete, or incorrect information; (f) you or an Authorized User attempt or make any fraudulent use of the Account, before or after it is suspended or closed; (g) a purchase in which we retain a security interest is transferred, stolen or significantly damaged; (h) we have suspended your check presentation privileges; (i) you default or become delinquent in satisfying other obligations you owe us; or (j) you attempt or authorize an Account payment knowing that the funds needed to pay are insufficient or unavailable for any reason.

You may be asked to pay your account in full if you become ineligible for Exchange privileges. Your account may also be terminated if it is found you provided a “repaired” credit report which contained misleading or missing information. If you buy an item and sell it or it is stolen before the account is paid in full, it may be closed.

Our remedies under applicable law include, without limitation, those available to us under the federal Debt Collection Improvement Act of 1996 (Pub. L. 104-134), the Deficit Reduction Act of 1984 (Pub. L. 98-369), the Debt Collection Act of 1982 (Pub. L. 97-365), and the Federal Claims Collection Act of 1966 (Pub. L. 89-508), each as codified in the United States Code and as amended from time to time, and as implemented by the federal Claims Collection Standards, 31 C.F.R. Parts 900 through 904 and other implementing regulations promulgated by the Department of Defense and other federal agencies, each as amended from time to time. Regardless of anything in this Agreement to the contrary, you understand and agree that we may pursue any one or more of the following remedies after a Default, subject to any notice requirements and other limitations of applicable law. In doing so, we may: (i) close your Account to future purchases and require immediate payment of your entire Account balance; (ii) arrange for garnishment or deduction from your military, retired, or civilian pay of the maximum amount allowed by applicable law to pay amounts you owe under the Account; (iii) arrange for an offset or deduction of the maximum amount allowed against any federal payment due to you (including a federal income tax refund or a federal salary); (iv) refuse to honor any further attempts by you to purchase from us using a Card, the Account, checks, or any other form of payment; (v) reduce your Credit Limit and cancel or suspend all Available Credit connected with your Account; (vi) terminate any Special Promotion and transfer all related Account balances to the Retail Plan for your Account; (vii) bring an action to collect all amounts owed; (viii) repossess purchases in which we retain a security interest and otherwise seek self-help or judicial remedies available to us as a secured creditor; (ix) notify your unit commander about our Account collection efforts; (x) close and transfer your Account for collection by the AAFES Collections department, a commercial collection agency, or a law firm, in accordance with applicable law; and/or (xi) take any other action allowed by law. Our rights and remedies under this Agreement are cumulative and we may pursue them in any order or combination we consider appropriate. If we refer your Account for collection by a commercial collection agency or law firm, submit your Account for offset through the U.S. Department of the Treasury, or arrange for garnishment or deduction from your military, retired, or civilian pay through your current or former employer, you shall be liable and responsible for paying any and all costs, fees and expenses that these parties charge and that you or we incur in connection with the collection of your Account after Default, except as limited by applicable law. We will tell you in advance and/or give you an opportunity to cure your default only if applicable law requires us to do so.

If you default on this account you can have your military pay garnished, your tax refund intercepted, repossess items purchased under the card, Notify your unit commander about your default, and/or sue you.

17. Lost or Stolen Card; Unauthorized Use. Each Card we issue remains our property and you must surrender it to us upon our demand. You must sign your Card before its first use. If you notice the loss or theft of your Card or a possible unauthorized use of your Card, you should write to us immediately at Exchange Credit Program, P.O. Box 650410, Dallas, TX 75265-0410 or call us at the customer service numbers listed at the end of this Agreement. You will not be liable for any unauthorized use that occurs after you notify us. You may, however, be liable for unauthorized use that occurs before your notice to us. In any case, your liability will not exceed $50. You agree to cooperate with us while we investigate any unauthorized use. You must identify for us the unauthorized charges from which you received no benefit. We may require that you provide us information in writing to help us find out what happened. We may also require that you comply with certain procedures in connection with our investigation. If you orally give us notice about any loss or theft, you agree to confirm it in writing. You agree that unauthorized use does not include use by a person whom you have given authority to use a Card or the Account and that you will be liable for all use by any such person.

If you call the creditor about unauthorized use of the card, you must notify them in writing as well.

18. Separation. Clearing the Exchange during the base or post clearing process does not result in a forgiveness of your Account balance. Even after any separation from service, you remain responsible for all purchases made with the Account and all related Interest Charges, Account Fees and other fees and charges, as provided in this Agreement. If you are an AAFES employee who separates voluntarily or involuntarily, we may offset your final AAFES pay in an amount up to the full amount needed to satisfy the entire balance owed for the Account.

Discharge from the military does not eliminate your balance.

19. How You May Close Your Account. You may ask us to cancel your Available Credit and close the Account at any time and for any reason (including when you lose your Exchange privileges).We may ask that you send a cancellation request to us in writing, to the extent permitted by law. We may also ask that you collect and destroy all Cards held by you, an Authorized User, or any other person to prevent any further use of the Account. No one other than you may instruct us to cancel your Available Credit and close the Account, even if they are designated to act for you through a Power of Attorney. You must still pay us the full amount you owe us for the Account under this Agreement, including amounts due for Interest Charges, Account Fees, other authorized fees and charges, and any purchases you or an Authorized User make after the date of your request to close the Account or cancel a Card, except to extent expressly prohibited by applicable law. If you ask to cancel your Available Credit and close the Account, we may require that you pay the full unpaid balance of the Account no later than 30 calendar days from the date of your cancellation request, except as prohibited by law. If you elect to cancel your Account when exercising rights you may have to reject certain changes we propose to make to the terms of your Account or this Agreement, we will not require that you cancel your Account in writing or immediately pay the full unpaid balance of the Account solely because you are exercising these rights (see Section 27 below).

Your account may be closed at any time and for any reason at your request. Remaning balances will still be due.

20. We Have the Right to Close or Suspend your Account. We may close your Account and cancel or suspend your Available Credit and use of the Account and Cards at any time, with or without cause, and for any reason, subject to any requirements or limitations of applicable law. You and any Authorized Users must not use or attempt to use a Card or the Account after we cancel or suspend your Available Credit or close your Account. We will send written notice to the address of record for your Account (see Section 15 above) notifying you if we have cancelled or suspended your Account and Cards. You must collect Cards held by you, an Authorized User, or any other person, and cut those Cards in half to prevent their further use. Our reasons, among others, for closing your Account and cancelling or suspending your use of the Account or Cards may relate to your loss of Exchange privileges, the length of time in which the Account has been inactive, your failure to notify us of an address change, or any event of Default under the Agreement. You must still pay the full amount you owe us under this Agreement if your Account is closed and your Available Credit is cancelled or suspended, including accrued Interest Charges, accrued Account Fees, other fees and charges provided for in this Agreement, and amounts due for any purchases you or an Authorized User make after the date we attempt to cancel or suspend use of the Account or a Card. You agree to pay us the outstanding balance, Interest Charges, Account Fees and all other fees, charges, costs, and expenses due on your Account under the terms of this Agreement, even if we have closed your Account and cancelled or suspended your use of the Account and Cards. If you are not in Default under this Agreement, we may allow you to pay the amount you owe as otherwise provided under the terms of this Agreement. After an Account is closed and its balance paid in full, you must submit an application to us for a new Account at an Exchange where the Card is accepted or online at www.milexch.com.

The creditor may close your account at anytime and for any reason as well.

21. Credit Investigation and Credit Reports. You authorize us to investigate your credit record and verify your income, employment, and other related information with third parties. You understand and agree that your credit report may be requested in connection with processing your initial credit application. You also understand and agree that your credit report may be requested in connection with any subsequent extension of Account credit, request to increase your Credit Limit, renewal or update of your Account, Account collection action, or an investigation of an Account dispute.

You also understand and agree that we may furnish information about the status and payment history of your Account to credit reporting agencies and other creditors as permitted or required by applicable law. We may report information about your Account to credit reporting agencies and others who may properly receive that information. Late payments, missed payments, or other defaults on your Account may be reflected in your credit report.

If you believe that we have reported inaccurate information about you to a credit reporting agency, notify us in writing at: Exchange Credit Program, P.O. Box 650410, Dallas, TX 75265-0410. In doing so, identify yourself, your Account, the information you believe is inaccurate, and tell us why you believe the information is incorrect. If you have supporting documents or information, such as a copy of a credit report that includes information you believe is inaccurate, send us the supporting documents and information as well.

Here is the process for disputing and any incorrect information on your credit report that is reported on this account.

22. Telephone Calls. You agree that you and we have an established business relationship and authorize us to contact you by telephone about your Account. You agree that we may place such telephone calls using an automatic dialing-announcing device and that such calls will not be unsolicited calls for purposes of applicable law. You agree that we may, from time to time, monitor and/or record telephone calls between you and us to assure the quality of our customer service and for other legitimate business reasons. If you provide a mobile or cellular phone number to us, or if you call us using a mobile or cellular phone, you agree that we and our agents and representatives may make Account collection and servicing calls to your mobile or cellular phone.

23. Governing Law. This Agreement and your and our rights and responsibilities related to the Account are governed solely by applicable federal law.

Ah, OK. Federal law, not state law.

24. No Waiver by Us. You agree that we may, without notice to you, waive or refrain from enforcing our rights under this Agreement without losing any of those rights. You agree that we may waive one or more of our rights under the Agreement without affecting any of our other rights. If we waive any right at a particular time, you agree that we are not also waiving the same right in other circumstances or at another time.

25. Severability. If any provision of this Agreement is finally determined to be void or unenforceable under any law, rule, or regulation, you agree that all other provisions of this Agreement will still be valid and enforceable.

26. Assignment of Account. We may sell, assign or transfer your Account or any interest we hold in your Account at any time, without notice, and without your consent. You may not sell, assign or transfer any of your rights or obligations under this Agreement or the Account, except with our express written consent.

27. Change in Terms. Subject to any required notices and other requirements and limitations of applicable law, we may, at any time, change any term of this Agreement, including the Interest Charges and Account Fees that apply to your Account. Unless we explain otherwise in any change in terms notice you receive, the changes we make to this Agreement and your Account will take effect automatically on the date we specify in the notice, even if you do not make any further Account purchases or otherwise agree with the changes. If required by law, our change in terms notice will explain whether there are changes you may reject and, if so, how you may do so and what may result from any decision you make to reject these changes. Except as limited by applicable law or as otherwise provided in our change in terms notice, any change in terms will apply to: (a) all Account purchases made after the effective date of the change; and (b) all unpaid Account balances. No one has the authority to change this Agreement without our express written consent.

These terms may be changed at will by the creditor.

28. Security Interest. You grant us and we retain a security interest in each Retail Plan and Special Promotion purchase you or an Authorized User make with the Account. To the extent permitted by applicable law, you grant to us and we shall retain a purchase money security interest under the Uniform Commercial Code in each Retail Plan and Special Promotion Plan purchase you make with your Account, as shown on sales slips or other evidence of the sales transaction, until the unpaid balance of that purchase and any related Interest Charges and Account Fees are paid in full. For purposes of determining at any time which Retail Plan and Special Promotion Plan purchases remain subject to our security interest, payments on your Account will be applied in accordance with any mandatory provisions of applicable law and, absent such provisions, shall be applied as follows: first, to Interest Charges, then to any Account Fees, then to pay that portion of the Total Minimum Payment Due for purchases made under the Military Clothing Plan, then to each Retail Plan and Special Promotion purchase in the order that each such purchase was charged to your Account, beginning with the oldest purchase. Retail Plan and Special Promotion purchases made on the same day will be paid off by allocating your payments to the lowest price purchase(s) first. You understand and agree that we may, at our option, record financing or security documents as permitted by applicable law that evidence our security interest in Retail Plan and Special Promotion purchases made with the Account. It is expressly agreed that no security interest is or will be retained or acquired by us in any consumer’s principal dwelling or household goods other than those you or an Authorized User purchased with the Account. This does not apply to a lien created by a court judgment. In the event of default, we shall have all the rights of a secured party under applicable law, including, to the extent permitted by applicable law, the right to repossess items that remain subject to our security interest.

Your Billing Rights: Keep This Document For Future Use.

This notice tells you about your rights and our responsibilities under the Fair Credit Billing Act.
What To Do If You Find A Mistake On Your Statement

If you think there is an error on your statement, write to us at:
Exchange Credit Program
P.O. Box 650410
Dallas, TX 75265-0410

In your letter, give us the following information:

Account information: Your name and account number.

Dollar amount: The dollar amount of the suspected error.

Description of problem: If you think there is an error on your bill, describe what you believe is wrong and why you believe it is a mistake.

You must contact us:

Within 60 days after the error appeared on your statement.

At least 3 business days before an automated payment is scheduled, if you want to stop payment on the amount you think is wrong.

You must notify us of any potential errors in writing. You may call us, but if you do we are not required to investigate any potential errors and you may have to pay the amount in question.

What Will Happen After We Receive Your Letter

When we receive your letter, we must do two things:

1. Within 30 days of receiving your letter, we must tell you that we received your letter. We will also tell you if we have already corrected the error.

2. Within 90 days of receiving your letter, we must either correct the error or explain why we believe the bill was correct.

While we investigate whether or not there has been an error:

We cannot try to collect the amount in question, or report you as delinquent on that amount.

The charge in question may remain on your statement, and we may continue to charge you interest on that amount.

While you do not have to pay the amount in question, you are responsible for the remainder of your balance.

We can apply any unpaid amount against your credit limit.

After we finish our investigation, one of two things will happen:

If we made a mistake: You will not have to pay the amount in question or any interest or other fees related to that amount.

If we do not believe there was a mistake: You will have to pay the amount in question, along with applicable interest and fees. We will send you a statement of the amount you owe and the date payment is due. We may then report you as delinquent if you do not pay the amount we think you owe.

If you receive our explanation but still believe your bill is wrong, you must write to us within 10 days telling us that you still refuse to pay. If you do so, we cannot report you as delinquent without also reporting that you are questioning your bill. We must tell you the name of anyone to whom we reported you as delinquent, and we must let those organizations know when the matter has been settled between us.
If we do not follow all of the rules above, you do not have to pay the first $50 of the amount you question even if your bill is correct.

Your Rights If You Are Dissatisfied With Your Credit Card Purchases

If you are dissatisfied with the goods or services that you have purchased with your credit card, and you have tried in good faith to correct the problem with the merchant, you may have the right not to pay the remaining amount due on the purchase.

To use this right, all of the following must be true:

1. The purchase must have been made in your home State or within 100 miles of your current mailing address, and the purchase price must have been more than $50. (Note: Neither of these is necessary if your purchase was based on an advertisement we mailed to you, or if we own the company that sold you the goods or services.)

2. You must have used your credit card for the purchase.

3. You must not yet have fully paid for the purchase.

If all of the criteria above are met and you are still dissatisfied with the purchase, contact us in writing at:
Exchange Credit Program
P.O. Box 650410
Dallas, TX 75265-0410

While we investigate, the same rules apply to the disputed amount as discussed above. After we finish our investigation, we will tell you our decision. At that point, if we think you owe an amount and you do not pay, we may report you as delinquent.

@GetOutOfDebtGuy

Non-Profit Housing Counseling Agencies to be Focus of IRS Examinations

Steve Rhode — Wed, 16 May 2012 15:59:40 +0000

From How to Get Out of Debt

The report below comes from Venable law firm. All I can say to my credit counseling friends is they better learn the meaning of the phrase BOHICA (Bend Over Here It Comes Again).

Earlier this year, the Internal Revenue Service’s (“IRS”) Exempt Organizations (“EO”) division unveiled its annual work plan. The plan highlights EO’s priorities for the year and is the best indicator of what the staff will be focused on in its determinations and examinations activities. These areas of focus were recently reiterated in remarks at a tax-exempt organizations conference attended by IRS EO staff.

One of the plan’s six general work areas is of special interest to credit and housing counseling agencies.

The plan calls out the increasing challenges confronted by the IRS, as residential foreclosures have mounted and the number of exempt organizations involved in foreclosure assistance activities has increased.

Mortgage Foreclosure Assistance

As residential foreclosures have mounted, the IRS has seen the number of exempt organizations involved in foreclosure assistance activities rise, as well. In FY 2012, both Determinations and Examination will focus on the activities of these organizations to determine whether they are fulfilling their exempt purpose, and whether they are complying with the requirements of section 501(q) of the Code. – Source

According to the report, in FY 2012, both EO’s Determinations and Examinations offices will focus on the activities of mortgage foreclosure assistance organizations to determine whether they are fulfilling their exempt purpose, and whether they are complying with the requirements of section 501(q) of the Internal Revenue Code (the “Code”).

Section 501(q) of the Code, added by the Pension Protection Act of 2006, establishes additional standards that a credit counseling organization must satisfy to qualify for exemption under section 501(c)(3) or 501(c)(4). Of particular relevance, in 2010, the IRS Office of Chief Counsel issued a memorandum concluding that organizations that engage in housing counseling may be subject to Code section 501(q).

The FY 2012 Work Plan and recent off-the record comments by IRS staff confirm that the IRS will be closely reviewing applications of would-be exempt organizations and the ongoing operations of existing groups that provide mortgage foreclosure assistance services.

Beginning in 2004, the IRS began scrutinizing tax-exempt credit counseling agencies in a manner and scope it never had previously. Since then, the IRS has initiated over 254 audits of credit counseling agencies. While the credit counseling compliance project is nearly complete and many organizations survived the process with their tax-exempt status intact, the IRS is now poised to focus on the activities of housing counseling agencies. Many of the same organizations that were audited as part of the credit counseling compliance initiative may be scrutinized all over again, along with several that escaped scrutiny due to their non-involvement in areas related to debt management plans for repayment of unsecured credit card debt.

In an audit, the IRS examines Form 990 returns to verify the correctness of the income or gross receipts, deductions, and credits, and to determine that the organization is operating in the manner stated and for the purposes set forth in its application for recognition of tax exemption.

Fortunately, a well-informed housing counseling agency can go a long way toward preparing for an IRS audit. While the advice and guidance of counsel is recommended in formulating and implementing an audit response and ongoing compliance with the Code, existing IRS-provided guidance in this area – which is quite extensive – and the lessons learned during the credit counseling compliance initiative can help a mortgage foreclosure assistance service provider conduct a “mock” IRS audit to identify areas of weakness from a tax-exemption perspective, as well as to suggest corrective measures.

This alert comes from the great folks over at Venable who specialize in non-profit credit counseling issues.

For more information, contact Jonathan L. Pompan at 202.344.4383 or jlpompan@Venable.com, or Matthew T. Journy at 202.344.4589 at mtjourny@Venable.com.

They are really smart guys who provide expert legal assistance for the credit counseling industry.

@GetOutOfDebtGuy

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Realty Law Center – Consumer Complaint – 5-16-2012

Consumer — Wed, 16 May 2012 15:46:11 +0000

From How to Get Out of Debt

Consumer Statement:

they called me constantly before all the money was sent but now im not receiving even a simple phone call from anyone

Consumer Action Taken:

i have made numerous phone calls every day and mrs gomez was supposed to be handling my case and she has not got back with me at all.

The manager of this section is francisco salvat he stated that he would have mrs gomez call me back within 25 minutes on that day of may 2012. however i called today may 15,2012 and supposivly he no longer works for the company. i have been calling them numerous times and just gettting a voice mail and they would call back within 24 hours and i have got not even a simple phone call.

Date This Problem Happened: February 20, 2012

State You Live in: Maryland

Race/Ethnicity: White

Age Range: 51-65

Total Amount of Fee Paid: $2,500

Company Name: Realty Law Center

Company Address:

6b liberty suite 215
Aliso Viejo, CA 92656

Company Telephone Number: 949-600-9961

Website of Company: realtylawcenter.com

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

Credit Card Delinquency Rates Continue Decline

Steve Rhode — Wed, 16 May 2012 15:18:46 +0000

From How to Get Out of Debt

What spells good news for American consumers, spells more bad news for the debt relief industry. According to TransUnion, the national credit card delinquency rate for people more than 90 days past due has dropped to 0.73% from last quarters 0.78%.

In addition the average credit card debt per borrower decreased by $242 to $4,962.

While total credit card originations increased in 2011, about 24% of those new cards went to subprime borrowers.

“The influx of sub-prime lending we saw from previous quarters continued in Q1 2012, but demand for new card originations also picked up among prime and super-prime consumers,” Ezra Becker from TransUnion said. “The good news is that increased lending, particularly to non-prime borrowers, hasn’t affected delinquency rates, which have remained unchanged over the past year. Bank cards are one of the most important assets for consumers, and it is evident consumers have been working hard to stay current on their cards and to maintain access to this important financial tool.”

Currently the highest credit card delinquency rates are in Mississippi, Georgia, Alabama, and Arkansas. The highest credit card debt per borrower is in Alaska, Colorado, North Carolina, Connecticut.

These facts appear to demonstrate that the demand for debt relief services will continue to be flat or decreased moving forward until consumers begin to load up on easy credit again.

@GetOutOfDebtGuy

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Can I Get Into the UK if I Have An Old Debt There? – Manish

Jon Emge — Tue, 15 May 2012 19:09:52 +0000

From How to Get Out of Debt

“Dear Jon,

my name is manish.i have lived in UK for 5 years and have some debts.i have come back to my home country because my student visa was running out..it has been 2 years since i have come back from UK.

can i travel back to UK, if i had some old UK debts?is UK immigration relate to my UK debts?

Manish”

The Answer:

Manish,

Just by having debts left in the UK is not a reason to be denied entry back into the country. There is no cooperative relationship between the banks or money lenders and the Home Border Agency.

So you should be fine coming back to the UK.

Now if you decide to live back in the UK, and owe money, the creditors you owe may begin the process of trying to collect the debts if they find out you are back in the UK. If this were to occur you do have options with the debts such as setting some form of repayment plan or insolvency.

Let me know if you have any additional questions or concerns.

Regards,

Jon Emge is an experienced UK debt advisor who has helped thousands and thousands of people in the UK to deal with problem debt. Jon specialises in finding good solutions for problem debt using a variety of UK specific techniques.

If you have a question you’d like to ask about how to get out of UK debt, just use the online form. I’m happy to help you for free.

The Credit Repair Company Seems Out of Control

Steve Rhode — Tue, 15 May 2012 19:08:02 +0000

From How to Get Out of Debt

A Craigslist ad came to my attention for a credit repair company called “The Credit Repair Company.” It appears that someone is running an advertisement claiming:

“WE HAVE BEEN HELPING OTHERS ALL THROU THE UNITED STATES WITH THE BAD CREDIT ISSUES SINCE 1995 WE HAVE AN A+ RATING WITH THE BETTER BUSINESS BUREAU WE CAN HAVE REMOVED JUDGEMENTS, BANKRUPTCIES,CHILD SUPPORT, TAX LIENS, LATE PAYMENTS, COLLECTIONS, CHARGE OFFS, STUDENT LOANS REPOSSESIONS, FORECLOSURES, ETC.

The ad lists the same telephone number associated with The Credit Repair Company that operates out of Florida. – Source

What is a Consumer to Do?

If someone saw the ad for this company they would think they might have found a great deal to remove bad credit from their credit report. But not so fast.

The company seems to be promoting advanced fee credit repair which is not permitted under the Credit Repair Organizations Act. And a quick check in Florida show a company called The Credit Repair Co is not authorized to conduct business.

The State of Florida says The Credit Repair Co. was administratively terminated for not filing an annual report and since September 23, 2011 the company is not authorized to conduct business. The president for this company is listed as Haskell Mackowski and located at 6350 NW 201st, Miami, Florida, 33015.

Despite the claims made in the ad and Facebook posts, I’ve been unable to verify if this company has an A+ BBB rating as they claim.

Problems all around for sure.

If you are a consumer and you’d like to checkout a company before using their services, read How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off.

@GetOutOfDebtGuy

Truly Free Credit Scores and Daily Credit Monitoring

Steve Rhode — Tue, 15 May 2012 18:07:51 +0000

From How to Get Out of Debt

When it comes to free credit reporting products, I mean really free, the services are hard to find. Sure, there have been all sorts of teaser products offered that then signed you up for paid services but where does someone go to find their actual credit score?

Until a year or so ago the online credit score offered by services was a bit of a fudge. I was told the credit bureaus didn’t want to tell you your real credit score so they could sell the accurate one to you. But that fudge factor has been eliminated I am told and you can now see your credit score online for free using the service provided by Credit Karma.

CreditKarma.com also provides members with free daily monitoring of your single bureau credit report to alert you about any activity. This can be invaluable.

In addition, the CreditKarma.com free service also displays your TransRisk score, VantageScore and TransUnion Auto Insurance Risk Score.

The VantageScore is a new credit scoring model created by America’s three major credit reporting agencies to support a truly consistent and accurate approach to credit scoring. This new score provides lenders with nearly identical risk assessment across all three credit reporting companies.

One very cool feature of the Credit Karma free service is the ability to simulate how changes to your balances, payments, or credit extended will impact your score. The credit simulator will give you an idea about what you can do to bring up your score by modeling different scenarios.

The credit score part of this free service also breaks down your individual grades for:

Open Credit Card Utilization
Percent of On-Time Payments
Average Age of Open Credit Lines
Total Accounts
Hard Credit Inquiries
Derogatory Marks

So what’s the catch? How can they offer you all of this for free? The answer is simple, Credit Karma presents financial offers to you that may save you money. If you decide to signup for any of those products to save money they earn money from the company. These offers may be fore a new bank account, credit cards, auto insurance or auto refinance.

It’s a Cool Free Service

I’ve used CreditKarma.com for some time now and find the service is enjoyable and informative. And did I mention it’s free as well? It’s worth signing up just to monitor your credit score for free as well.

@GetOutOfDebtGuy

Can I Get a HAMP Modification if I Have a Second Mortgage? – Jim

Steve Rhode — Tue, 15 May 2012 17:16:15 +0000

From How to Get Out of Debt

“Dear Steve,

Residence is underwater

Can I acquire a “HAMP’ loan modification if I have a first mortage with GMAC and a second mortage (Equity line with Wells Fargo). GMAC balance $71,000 and Wells Fargo equity balance $99,500. Zillow value is $123,400.

Please advise as Wells Fargo could not accomodate with loan or GMAC due to second mortage.

I do not want to be scamed by utilizing internet sources.

Thank you for your courtesy reply.

Jim”

The Answer:

Dear Jim,

First off we need to start with the understanding that no lender is required to give anyone a modification.

The base eligibility requirements for a HAMP modification are:

You may be eligible for HAMP if you meet all of the following criteria:

You occupy the house as your primary residence.
You obtained your mortgage on or before January 1, 2009.
You have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income.
You owe up to $729,750 on your home.
You have a financial hardship and are either delinquent or in danger of falling behind.
You have sufficient, documented income to support the modified payment.
You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

You have not given me enough information to determine if you meet those minimum requirements. If you are able to get your first mortgage modified under HAMP you may be eligible to get your second mortgage modified under the Second Lien Modification Program 2MP.

If your first mortgage was permanently modified under HAMPSM and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage as well, through MHA’s Second Lien Modification Program (2MP). 2MP works in tandem with HAMP to provide comprehensive solutions for homeowners with second mortgages to increase long-term affordability and sustainability. If the servicer of your second mortgage is participating, they can evaluate you for a second lien modification.

According to the HAMP website, Wells Fargo is currently participating in this program.

I would suggest you call 888-995-4673 or talk to a local HUD Housing Counselor, for free, to determine your eligibility.

Of primary concern is that you appear to owe more than 125% of the estimated market value of your home but if only the first mortgage is considered you would meet the criteria. According to the HAMP website, “You may only refinance your first mortgage. If that mortgage is less than 125 percent of the value of the property, you may qualify.” Modification rules are a bit different.

You also need to realize that a Zillow value is not market value. That can only be determined by an appraiser or after the review of comparable sales of homes similar to yours.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Debt Collectors Halted From Collecting Debts Consumers Don’t Owe

Steve Rhode — Tue, 15 May 2012 16:58:22 +0000

From How to Get Out of Debt

Consumers Were Subjected to Collection Efforts for Magazine Subscription Debts They Did Not Owe, FTC Alleges

Defendants in a debt collection operation that allegedly sought payment for bogus magazine subscription debts have settled with the Federal Trade Commission.

The FTC alleged in its complaint that the defendants knew, or should have known, that some of the magazine subscription debts they were collecting were not valid. The defendants, who handle collection of hundreds of thousands of accounts each year, violated the FTC Act, the Fair Debt Collection Practices Act, and the Telemarketing Sales Rule, according to the complaint.

The proposed settlement order, filed by the Department of Justice on the FTC’s behalf, bars Luebke Baker and Associates, Inc., Kevin Luebke, and other defendants from representing that a consumer owes a debt without having a reasonable basis to do so, and from making any other misrepresentations when collecting debts or selling goods and services. It also requires the defendants to conduct a reasonable investigation when a consumer disputes a debt or when the defendants otherwise have reason to question whether the debt is valid.

Under the proposed settlement order, when the defendants attempt to collect debts, they must provide consumers with disclosures about their rights under the Fair Debt Collection Practices Act. The proposed order also requires the defendants to inform their collection employees of their personal obligations under the Act.

The Luebke defendants allegedly collected on debts for magazine subscriptions despite the fact that the FTC had successfully sued the company that originally sold the magazine subscriptions for deceptive marketing. The defendants were notified of a 2003 federal court order against Cross Media Marketing Corp. that placed special requirements on anyone attempting to collect payment for these magazine subscriptions.

The FTC alleged that the Luebke defendants ignored these requirements and repeatedly told consumers the debts were due and payable.

The complaint also alleges that the Luebke defendants:

illegally masked their identity and sent false information over caller ID, falsely posing as Ed McMahon, attorneys from a law firm, and other entities;
falsely told consumers that magazine subscription debts are exempt from the statute of limitations; and
illegally threatened to garnish wages and take other unintended legal actions.

The defendants also marketed a credit repair CD titled “Credit Solutions,” allegedly collecting an up-front fee before providing any goods or services, in violation of the Telemarketing Sales Rule, which bans advance fees imposed by companies selling credit repair goods and services, according to the complaint.

The complaint and proposed settlement against Luebke Baker and Associates, Inc. and Kevin Luebke also name as defendants Leslie M. Farrar, Matthew T. Scott, and Joel P. Ferguson. They also name Kevin Luebke’s wife, Julissa Luebke, as a relief defendant.

The proposed settlement imposes monetary judgments totaling $3.1 million – $2.3 million in civil penalties for violations of the Fair Debt Collection Practices Act, $730,000 in disgorgement for collecting Cross Media Marketing Corp. accounts in violation of the FTC Act, and $45,000 in restitution to consumers for charging an advance fee for a credit repair product in violation of the Telemarketing Sales Rule. In addition, a judgment is imposed against relief defendant Julissa Luebke for $420,000. The judgments will be suspended, based on most of the defendants’ inability to pay, when Farrar pays $20,000. If it is later determined that the financial information the defendants provided was false, the full amount of the judgments will become due. – Source

Executives at Debt Collection Agency Face Jail Time In Attempt to Defraud Bank. Face Jail Time.

Steve Rhode — Tue, 15 May 2012 16:53:19 +0000

From How to Get Out of Debt

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and United States Attorney for the District of Connecticut David B. Fein today announced that Richard Pinto, 68, of Wellington, Fla., and Peter Pinto, 37, of East Quogue, N.Y., each pleaded guilty late Friday, May 11, before United States District Judge Stefan Underhill in Bridgeport to one count of conspiracy to commit wire fraud, bank fraud, and money laundering and to one count of wire fraud stemming from a $10 million fraud scheme they executed while executives at Oxford Collection Agency.

“No one was safe from these predators,” said Christy Romero, Special Inspector General at SIGTARP. “The Pintos defrauded clients, investors, and TARP recipient Webster Bank in a $10 million scheme in which they collected debts on behalf of clients, concealed what they truly owed those clients in return for their work, and used Webster Bank to fund their fraud. Individuals committing fraud against TARP banks will be held accountable and brought to justice by SIGTARP and our law enforcement partners.”

“These defendants carried out a significant fraud scheme through which they stole millions of dollars from their company’s clients, lenders, and investors,” stated U.S. Attorney Fein. “We are committed to working with IRS-Criminal Investigation, the FBI, and SIGTARP, and the other members of the Connecticut Securities, Commodities and Investor Fraud Task Force, to root out these schemes and prosecute responsible individuals.”

According to court documents and statements made in court, Oxford Collection Agency was a private financial services company that engaged in accounts receivables management, primarily debt collecting, with offices in New York, Pennsylvania, and Florida. Businesses and other entities contracted with Oxford Collection Agency to collect debts on their behalf. Between approximately January 2007 and March 2011, Richard Pinto served as the Chairman of the Board and was the de facto head of Oxford Collection Agency, and his son, Peter Pinto, served as the President and Chief Executive Officer,overseeing Oxford Collection Agency’s daily activities.

During that time, the Pintos collected debts on behalf of various clients, including Washington Mutual Bank, Dell Financial Services, Cogent Communications, Labcorp, and others under the pretense that they would report all such collections to their clients. Instead, the Pintos and others caused Oxford Collection Agency to routinely withhold collected debts from certain clients, running up what was referred to internally as a client’s “backlog.” The Pintos and others then diverted various funds from their client remittances and used them for their own ends.

Starting in April 2007, the Pintos secured a line from credit from Connecticut-based Webster Bank, a bank that received funds through the Troubled Asset Relief Program (TARP), without informing Webster Bank about its significant client backlogs or outstanding payroll taxes. The Pintos and others sent falsified financial statements to Webster Bank, eventually increasing the credit line to $6 million, and laundered funds from the credit line to promote the ongoing fraud scheme against their clients. During that same period, the Pintos also solicited millions of dollars in investments from various investors, without ever disclosing to their investors the existence of their backlogs. The Pintos also transferred some of the investor funds into Richard Pinto’s personal bank account without investor knowledge.Victims lost more than $10 million as a result of this scheme.

Judge Underhill has scheduled sentencing for September 13, 2012, at which time Richard and Peter Pinto face a maximum term of imprisonment of 35 years and a fine of up to approximately $20 million.

The Financial Expert Group Says for a Fee They Can Make My Bad Credit Go Away. – Carol

Steve Rhode — Tue, 15 May 2012 15:38:19 +0000

From How to Get Out of Debt

“Dear Steve,

I made some bad credit decisions back in 2008 or 2007. A company called The Financial Expert Group, Inc
26650 The Old Road, Suite 110,Stevenson Ranch, CA 91381 is telling me if I pay them $5400 they can make this debt go away for every.

Carol”

The Answer:

Dear Carol,

Save your money.

If you think you can pay $5,400 a have bad debt magical disappear without any consequences, you would be mistaken.

I agree, inaccurate information can be removed from a credit report. That’s something you can do yourself for free. All you have to do is get a copy of your consolidated credit report and notify the credit bureaus of information that appears on each credit report that is not accurate.

I did visit the Financial Expert Group website and found what I consider to be some misleading statements. For example, “Our Credit Restoration service is the most popular. It permanently removes derogatory accounts from your personal credit reports such as (Late Payments, Charge-Offs, Collections, Judgments, Bankruptcies, Tax Liens, etc.).” – Source

That gives people the impression that this company has some way to remove accurate but negative information from your credit report. If you actually did that and then went and applied for credit using a false credit report you are committing credit fraud.

Additionally, any company that charges you in advance for credit repair services is in violation of the Credit Repair Organizations Act. No advance fee may be charged. And from their website it looks like an advanced fee may be charged since they say, “Our clients pay on a per-item basis. In the case that we are unable to delete an item by the time your contract expires, you will receive a full-refund* for that item, should you choose for us to stop working on it.” – Source

The company website seems to indicate their approach is to reportedly dispute items in hopes they go away.

The problem with that approach is while the credit bureaus may miss a review date and remove an item, there is nothing to prevent it from being re-reported by the original creditor.

If you want to clean up your credit of inaccurate information and rebuild a better credit score you can do that almost for free just by following the advice below.

Get a Copy of Your Consolidated Credit Report

Get a copy of your consolidated credit report. It is the type of report that includes all the major three credit reports in one report. I only use a consolidated credit report to check my credit and the link will take you to the credit report I use.

Your credit report is like a report card of sorts. You need to look it over and make sure that all the accounts listed on your credit report are yours. If they were not, you need to write to the credit bureaus that are reporting them and tell them they are not your and ask to have them removed. It’s like you looked at your school report card and it listed classes you did not take. They should not be there.

If the rest of the accounts belonged to you but you had a bad track record with them, that information stays on the report just as if you got a D in a class you took. Just because you got a bad grade does not mean the class is removed from a report card.

After seven years the bad credit items will no longer be reported on your credit report. When you look at your consolidated credit report if any of them list negative information longer than the seven year period, then when you write to the credit bureaus to point out any incorrect information, you can tell them about the old items.

Generally the credit bureaus are good about automatically removing the old items.

While you are at it, look for any delinquent accounts that may be younger than seven years old. If you have any, pay them off. The contact information for the creditor will be on your credit report.

I also recommend you get a free account on Credit Karma so you can use the free credit simulator to see how changes to your balances or accounts will improve your credit score. This way you can plan what actions to take first to get the maximum improvement.

Credit Karma will also provide free daily credit report monitoring and free credit scores but only for one credit bureau. Still, it’s a free service that can be very beneficial.

Boosting Your Credit Score With Good Credit Using a Secured Card

Using the report card analogy, if you wanted to bring up your GPA you would need to earn some better grades to do it. It is the same with your credit report. If you want to bring your score up you need to start having new and good credit reported about you.

The best way to do this is to get and use a secured credit card. In fact get two different ones. I put together a section of the site that lists reviews for secured cards. Look at the secured cards here.

The advantage of getting a secured card is that you will get the credit card and not get a rejection on your credit report that will further hurt your credit. A rejection can be easily spotted by looking at the inquiry section of your credit report and seeing there is not a corresponding card opened. And with your current bad credit, if you applied for an unsecured card, you would get rejected.

The reason you will get the secured credit card on the first attempt is because you need to put up a deposit with the bank that is equal to your credit limit. The deposit will earn you interest and in the unfortunate event you were unable to pay your card and defaulted, the bank would use your deposit to pay the debt.

When looking for a secured card you want one that will report to all three credit bureaus. This is key. We need your new good payment history reported.

Now when I say use the card, you do not need to carry a balance from month to month. Just use the card for regular purchases and pay the card off either immediately or at the end of the month.

Also, if you get a secured card with a $300 limit, never have more than 35% of the limit on the card. Even though your initial limits may be low, you don’t want to max them out. You can always increase your limits by increasing your deposits. You can increase your credit limit by increasing your deposit with the card company.

I suggest getting more than one card so you can get as much good juice flowing to your credit report without having too many credit cards open. You could actually go with three if you wanted to, but no more than that.

Just make sure the card will report to the credit bureaus.

Heck, if you want to see what your credit score looks like and what you can do to improve it you can just go to CreditKarma.com and do all of that for free.

Who is The Financial Expert Group?

The website for the company (financialexpertgroup.com) says the company is:

The Financial Expert Group is a team of experienced credit experts, knowledgeable support staff and professional customer service representatives who’s only goal is to assist you in improving you credit. – Source

They also list their address as 26650 The Old Road, Suite 110, Stevenson Ranch, CA 91381. An online search using this address identified multiple companies. I have no way to confirm independently that this is not a mail drop or shared address.

The company is a registered California corporation since 2002.

Interestingly the owner and administrative contact of the domain name is listed as:

Claudia Jawher
claudia_aguileraz@hotmail.com

Sunshine World Services
18501 Calle Vista Cir
Porter Ranch, California 91326

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

We Don’t Make Enough Money to Repay Our Debt. What Do We Do? – Melody

Steve Rhode — Tue, 15 May 2012 14:39:28 +0000

From How to Get Out of Debt

“Dear Steve,

I started out with nothing graduating from a private christian home. However I have accrued a $3,000 or more student loan. The first college I tried going to was a big money racket but i didn’t know that, now I do. I have about a $1,500 credit card debt that is already in collections. I have about a $500 checking account debt from a bank. I had issues with getting an id to get a job and i had to acquire a car to maintain a job plus i had to eat and pay rent and electricity and gas to get to and from work. I have a $400 debt with Direct TV (early cancellation!).

I recently married in December and my husband had 2 large $600 a piece medical bills from the same hospital and a $500 one from his previous doctor who conveniently forgot to bill the insurance and by the time we found out it was too late!

He also tried to help a friend with electricity and put a bill in his name. Now he owes over $550 to debt collections for the electric since his friend moved out and now has no job! My husband and I both work 40 hours a week at $9 an hour. We barely make ends meet! Are credit shows out collections so no one wants to give us loan. All I want is a loan for about $7000 to pay all of this off! I would rather make payments on the loan then make our credit sink lower and lower! But everyone we know automatically declines us as soon as they see collections on our credit reports! I try making little payments but everyone wants payment by a certain day and i get late charges plus they all keep accruing with these stupid apr rates!

Your Question(s)

1)Can you help us? If so what can we do?

2) Is there any way to get a loan for the $7,000? (I will pay it off I just want to consolidate it)

3) If the loan is not the answer what can I do? (I do not want to file bankrupt I want to fix our credit.)

Melody”

The Answer:

Dear Melody,

Thank you for your question.

The root cause of the current situation is insufficient income. I know the two of you are doing the best you can. I understand that and I’m certainly not casting any blame about your current earnings.

It is obvious that you have the desire to meet your obligations and outside of your new husband wanting to do a good thing for a friend and put the electricity in his name or guarantee the bill, everything else looks like normal life stuff. It’s the type of debt I typically see with people in similar situations.

You’ve learned some important lessons here I’d like to recap so you never have to repeat them.

Medical Insurance – Most people get this wrong. Insurance is there to essentially reimburse you. You are responsible for the bill. The insurance company pays the doctor out of common practice but if you turn your back on making sure the insurance company processes the claim, well, you see what happens.
Cosigning for a Friend – Ya, don’t do that unless you are willing to accept full responsibility for any bill your friend may incur. While you are trying to do a good thing to help a friend you are really doing a bad thing for yourself. Not only are you on the hook for the debt but it will most likely appear on your credit report as well. I know it’s tough to say no but that’s what you need to say.
A year or so ago I went in with a friend to a car dealer and somehow the salesperson got around to asking me if I would cosign for my friend. I couldn’t help busting out laughing. I’m the champion of never cosigning. Never, ever,ever,ever,ever cosign. Once I stopped laughing I told my friend, “I love you, but no.”
Early Termination Fees – Be aware that many services have early termination fees. Sometimes the cost of the fee is less than continuing a service you don’t need. Contracts for things like mobile phones have termination fees, as well as DirectTV apparently. Rather than think twice about terminating a contract early, consider if the termination fee is an expense you are willing and ready to pay before you signup for the service. If not, don’t get the service.

I would suspect from what you’ve shared that your credit sucks. That’s understandable based on your income and the amount of collection accounts. It’s the result that naturally occurs. We can focus on improving your credit once you clear the decks of this debt and increase your income. I even wrote this guide to show you how to do it.

And here is where some may be critical of my point of view. What I’m about to say will seem counterintuitive to some. Even though you have $7,000 of debt, bankruptcy is a real option. There, I said it.

People that have more income and money floating about may initially feel you don’t owe enough to go bankrupt. Some incorrectly think you have to owe a lot to think about bankruptcy.

But the reality in your situation is that $7,000 might as well be $70,000. It might not be a big number but it’s out of your reach. And if you don’t do something to remedy this situation the possible outcomes are not that great.

So let’s say you do nothing. It is possible for a creditor to sue you and even go for a judgment or wage garnishment. Depending on where you live your low income may be somewhat or totally protected from garnishment but risking any income to a garnishment can send you further over the financial edge. It’s a risk that seems unreasonable.

There are places to get unsecured debt consolidation loans, like LendingClub but I suspect your income and credit score would disqualify you at this point. Besides, with your current credit score the interest rate would probably be huge. That approach seems not logical.

The most logical approach seems to be a multi-step affair.

Use the public benefits finder to identify any public benefits you are eligible for. Every dollar of public help is a dollar you don’t have to earn so your current income will go further to pick you up out of the pit you are in. You may be eligible for food or energy assistance. Just use the online tool and see what programs might be available to you.
You should click here to find a local bankruptcy attorney and discuss your situation with them. There is no obligation to talk to a bankruptcy attorney and learn more about what bankruptcy would mean for you. Only armed with the facts can you make an educated and informed decision about what is best for you.
Seek additional employment. Maybe one of you can find an additional part time job to bring in some extra money to relieve the financial stress. This will become important when we get to the next step.
Save money. Bankruptcy will clear the decks of the financial obligations that are not permitting you to start saving money in an emergency fund. You need to have $2,000 or more saved up in case of an emergency so you are not left in collections again. If you have to dip into the emergency fund, replace the money to keep your balance up.
Rebuilding your credit after all of this is going to be important to do. I gave you the link to my guide above. The importance of having a good credit score is so when that day comes when you want to buy a house or a car you won’t have to pay through the nose for bad interest rates. Your new good credit will save you a lot in your lifetime and you can have good credit without going into debt to get it.

Overall I think this is a positive outcome to a very unfortunate situation. There’s no sense wasting a perfectly good mistake, I always say. We might as well learn from it and do better moving forward.

This approach will help you to deal with the old debt and move forward and create the best chance of future financial success.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Superior Marketing / Streamline Online – Consumer Complaint – 5-15-2012

Consumer — Tue, 15 May 2012 13:45:56 +0000

From How to Get Out of Debt

Consumer Statement:

A company called Superior Marketing also known as Streamline Online LLC called me on 10/31/2011. Talked me into paying them $255.00 for online shopping mall and referral site, $5.00 for administration fee. Next I was charged for $400.00 for Pre-fabricated 30 second television commercial – gratis, Television Air Time Slot (30 Seconds Each) quantity 100, rate $50.00 equaling $5,000.00. This was backed up by guaranteed targeted visitors 3,500. Today is May 14th, 2012 and I have not received one cent.

This website called sallysamazingdiscounts.net is a link to Amazon.com which in my opinion is a reputable company. The man I spoke with first was Miles (Mike) Peterson he was going to be my personal coach. That never happened. He isn’t even man enough to take my phone calls. He’s on facebook so I did a search and found him.

He would not acknowledge the message I sent him on face book. I’ve spoke with two other people in this operation but it was of no help. Miles (Mike) Peterson promised me 25% of everything sold through my website.

Some of my friends did make purchases through my website but the percentage for each item has been 6% or less and Amazon does not send any checks until the amount of $100.00 is reached. I feel ashamed I allowed this to happen, betrayed, and resentful that no one will help me right this wrong. I actually agreed to this to make up for another stupid mistake I made on line that cost me $1,000.00. I thought I could make my $1000.00 back and make extra cash. Enough cash to pay my credit card bill every month and maybe buy a few groceries.

My husband became ill in March of 2011 and has not worked since. I truely thought I was doing the right thing. I needed to make extra cash and do it from home because my husband requires 24 hour care. So that’s my excruciating story. My hope is that it helps at least one person out. That they do not repeat my mistake.

Consumer Action Taken:

I tried to resolve this by contacting Amazon to no avail and several phone calls to both companies Superior Marketing and Streamline Online.So far I have not received any positive feedback from any of the companies mentioned above.

Date This Problem Happened: October 31, 2011

State You Live in: Georgia

Race/Ethnicity: White

Age Range: 51-65

Total Amount of Fee Paid: $5,260

Company Name: Superior Marketing / Streamline Online

Company Address:

1928 E Highland Ave
Ste F104-450
Phoenix, AZ 85016-0645

Company Telephone Number: 866-247-0954

Website of Company: superiormarketinggroup.biz

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

Noteworld Could Not Settle My Discover Account and I Now Think It’s Expired Under the Statute of Limitations. – Mary

Steve Rhode — Mon, 14 May 2012 20:27:05 +0000

From How to Get Out of Debt

“Dear Steve,

I was with Note World Settlement for a long time. After them not being able to settle with Discover after 7 year. They told me Discover could NOT do anything to me any more (staute of limiation law) I live in WI. Now I got a bill from Discover for the full amount do now!! what do I do??
thanks

Mary”

The Answer:

Dear Mary,

It seems we are dealing with some misinformation.

Noteword is a third party escrow company and holds funds on behalf of a consumer. They do not do debt settlements. You most likely worked with a company that did sell you debt settlement services and used Noteworld as the escrow company.

The only way to know for certain if the statute of limitations has expired on a debt would be to get a specific legal opinion from an attorney licensed in Wisconsin. These are not necessarily simple deductions. Often time there are other factors which can come into play.

I would advise you to contact a local consumer attorney.

Just because a debt may have expired under the statute of limitations does not mean the debt owner can’t still pursue you. It just means they can’t sue you. They can attempt to collect on the debt until you die and if you admit you owe the debt or make a payment the statute of limitations can begin again.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

FTC Stops Deceptive Home-Based Internet Business Opportunity

Steve Rhode — Mon, 14 May 2012 18:57:32 +0000

From How to Get Out of Debt

The Federal Trade Commission halted an operation that allegedly lured consumers into spending thousands of dollars for Internet websites and advertising by misrepresenting that they could make lots of money by linking the sites to major retailers. The court ordered a stop to the defendants’ allegedly deceptive practices and froze their assets pending further litigation. The action is part of the FTC’s ongoing efforts to protect consumers in financial distress.

The FTC alleges that these actions had continued from 2006 and attempted to sell consumers home-based internet business opportunities to people win the United States and Canada.

According to the FTC’s complaint against North America Marketing and Associates LLC, for fees ranging from $100 to $400, the defendants promised to build and host websites for consumers, who would earn commissions when Internet users clicked through the consumers’ websites to make purchases from “Fortune 500″ retailers such as Wal-Mart, Best Buy, and Starbucks. The defendants also claimed consumers would get free, full-time marketing expertise to help them make substantial profits.

Instead of the free marketing help they were promised, consumers got a follow-up sales pitch from the defendants, who tried to get them to pay even more money for an advertising package that typically cost from $5,000 to $20,000, the FTC alleged. The defendants claimed the package would help generate sales of $3,000 to $20,000 per month, depending upon the size of the package consumers bought. However, according to the agency, the advertising packages did not generate any significant sales commissions, and some consumers who complained to the company were sold thousands of dollars in additional advertising services. When consumer complaints mounted, the defendants shut down operations and renewed the deceptive business opportunity under new business names.

The corporate defendants are North America Marketing and Associates LLC, NAMAA LLC, TM Multimedia Marketing LLC (Nevada), TM Multimedia Marketing LLC (Arizona), National Opportunities LLC (Nevada), National Opportunities LLC (Arizona), World Wide Marketing and Associates LLC, Precious Metals Resource LLC, Guaranteed Communications LLC, Superior Multimedia Group LLC, and Wide World of Marketing LLC, also doing business as WWM LLC. The individual defendants are Kimberly Joy Birdsong, Tracy Jerome Morris, Sarah Lynne Stapel, Alyisse Maloi Tramel, and Daniel Vigil, and Joseph Wayne Lowry, also known as Joey Lowry and Joey Lowe.

The defendants are charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule (TSR) by misrepresenting that consumers who bought and used websites and advertising packages would earn substantial income, and that experts would help them operate their business. Sheila Ann Lowry, Carl Edward Morris, Jr., and Marketing Strategies LLC are named as relief defendants for allegedly profiting from the illegal practices. – Source

Student Loans Today are Akin to Debt Slavery. It’s Real and a Life Killer.

Steve Rhode — Mon, 14 May 2012 18:50:36 +0000

From How to Get Out of Debt

I grew up in an era where we were taught to go to college and get a degree. You would better your life I was told. That was the 1970s. At that time the majority of my peers were headed off to college and the majority would graduate without student loan debt. They had a degree and new hope for the future.

Today that’s not the case. Today more is owed in student loan debt than on all the credit card balances combined. About 94 percent of graduating students now have student loan debt and it is a noose around their neck they begin life with.

The New York Times just published a wonderful article and looked into the impact of student loan debt. You can read that article here.

The article revels that almost all students now have to borrow to pursue a degree. “As prices soar, a college degree statistically remains a good lifetime investment, but it often comes with an unprecedented financial burden.”

The average student loan debt in 2011 is $23,300. And while that might not sound like a lot, try just starting out from college, pursuing a job in your field, and saddled with unforgiving debt.

“If one is not thinking about where this is headed over the next two or three years, you are just completely missing the warning signs,” said Rajeev V. Date, deputy director of the Consumer Financial Protection Bureau.

This explosion in student loan debt began after my peers graduated from college. It was not until the 1980s when college tuition began to outpace inflation and become more and more expensive at both public universities and private colleges as well. Then in the 1990s we witnessed the growth of for-profit online colleges that heavily marketed their product but charged even higher rates to students that enrolled.

People that promote the enthusiastic borrowing of student loans to attend college forget that the majority of people that take out student loans, actually never graduate. It is estimated that less than 75 percent of student loan holders never achieved their degree.

Moreover, among students seeking a bachelor’s degree, only 22 percent succeed within six years, compared with 65 percent at nonprofit private schools and 55 percent at public institutions.

In that situation all you are left with is debt and no degree that advances your income potential.

Student loans pay off when you graduate. Not everyone graduates.

Unless Congress acts soon to prevent student loan interest rates on government backed loans to increase, the interest rate on those loans will double.

I agree that college should not be absolutely free but students are now paying the price of unbridled expansion and college passing on growing expenses to students. I’m not aware of any college that reduces rates each year and works hard to limit services to keep college affordable.

There once was a time when states helped to fund state universities so state residents could excel and get an affordable education. Budget cuts and crises have led to states reeducating the amount they now contribute towards funding their state schools.

According to Ohio State, state funding accounted for 25 percent of the cost of the university in 1990 and only seven percent today. That reduction in funding gets passed on to the students and much of it results in student loans.

Those student loans are not dischargeable in bankruptcy. Since 2005, private student loans are prevented from a bankruptcy discharge as well. This protects the lenders but sacrifices the future financial lives of all student loan holders and eliminates their rights under bankruptcy law. Essentially for student loan debt, as long as you owe it your pay may be garnished and tax returns intercepted for life if you owe government loans. You can even have your social security income garnished if you are still caring student loan debt.

Back in Ohio, state expenses now pay for almost as much for incarcerating residents as it does for educating them. It was much different forty years ago. In the 1970s Ohio spent about 17 percent on higher education and four percent on prisons.

A college education continues to be the mantra of parents like me. It is what was instilled in us when we were growing up. The consideration for school back in the 1970s was if you could get in. Today the consideration needs to be if you can graduate without the debt money on your back. It’s just no longer good enough to say a college education needs to be the goal.

College admissions and financial aid offices are not there to assist parents and students to make good financial decisions. They are there to admit students and fill seats.

There really isn’t a sound third party involved in the transaction to help parents and students make the best decisions. The college game is rigged against students and sets them up for student loan debt.

What little required counseling there is by schools regarding student loans becomes not much more than a DUI class that someone must take. The online courses have shown little impact in turning students away from taking on the student loans. They just tick the box of a requirement associated with federal student loans.

@GetOutOfDebtGuy

James Dimon, CEO – JPMorgan Chase Scam Email Alert

Steve Rhode — Mon, 14 May 2012 15:14:33 +0000

From How to Get Out of Debt

An email is being sent out to consumers purporting to be from James Dimon, CEO of JP Morgan Chase Bank. The email asks consumer to send $200 in order to receive $5 million dollars. It is a scam email. Don’t fall for it.

The email says:

From: “Mr. James Dimon CEO”
Date: May 10, 2012
Subject: Re: Confirm

Chase.com
From the Desk Of:
Mr. James Dimon CEO
JP Morgan Chase Bank
528 E. 42nd Drive City: Terre Haute
Date: 05/10/2012

Legitimate Entitled Owner Of: Usd$5,000.000.00

RE: ABSOLUTE LEGAL CERTIFICATION: FINAL CONFIRMABLE REMITTANCE

Thank your for your mail, regarding your mail, note that is very vital that you pay for the opening of account on your behalf as to enable us proceed.

To set up an Account There in Our Bank will Cost YOU Only $200.

Below is the Payment Information:

My information is: Larry Tomey
Address is: 528 E. 42nd Drive
City: Terre Haute
State: Indiana
Zip code: 47802
Amount: $200

NOTE: THAT ONCE THIS PAYMENT IS BEEN SETUP IN THE NEXT 24 HOURS YOUR ACCOUNT WITH JP MORGAN CHASE BANK WILL BE CREDITED WITH THE SUM OF USD $5,000.000.00 .ALSO BEAR IT IN MIND THAT THIS IS NOT A SCAM AND WILL NEVER BEEN A SCAM.

Thanks for your Co-operation.

Best Regards.

Mr. James Dimon CEO
JP Morgan Chase Bank
528 E. 42nd Drive City: Terre Haute
E-mail: mr.jamesdimonceo@yahoo.com

The first thing I did was to lookup the address to see if it belonged to Chase Bank. It appears to be part of an apartment complex.

My favorite line of the email has to be, “ALSO BEAR IT IN MIND THAT THIS IS NOT A SCAM AND WILL NEVER BEEN A SCAM.” Yea, it’s a scam.

If you have had any experience with this program, please post your comments and feedback in the comments below.

My Husband Runs His Business Off Credit Cards. Now We Need to Get Out of Debt. – Megan

Steve Rhode — Mon, 14 May 2012 14:26:47 +0000

From How to Get Out of Debt

“Dear Steve,

My husband owns a successful family owned small business. He however had been taught from an early age, how to run it off of credit cards. We are at the point of 4 Credit Cards, with total of 100 K, and a line of credit of 85,000. He has committed to stop using Credit Cards to pay the Vendors, with a goal of building our cash flow, so we no longer have to “pay peter to rob paul.”

My question is, should we attack on Credit Card at a time, with the goal of paying all 4 off.( Some months, we can only make a minimal payment. If we land a big job, we are able to apply anywhere from 5-15K to a card. and most have a high APR) OR would it be a better idea to get a small business loan, or Debt restructure? I am weary about restructure/consolidation. We are however, committed to get these CC paid off and run the business debt free/

Megan”

The Answer:

Dear Megan,

Thank you for contacting me for advice.

One bit of clarity we need to get straight off the bat is how successful the business really is. The reality is that it seems that your apparent success came at a cost of $185,000. The reason the debt is so insidious with a small business is that I’m sure your husband felt things were going along great as he generated business that resulted in income but the cost to vendors was off loaded onto credit and not paid in full when it was incurred. This results in a false impression about how the business is actually doing. One example that comes to mind was a couple that was running a successful pizza shop in a small town. They put all their supplies on credit cards but once these were eliminated they were unable to survive on a cash basis.

Now we are faced with digging out of that hole and running the business on a cash business moving forward. I’m rooting for you to succeed but this is probably going to be a tough awakening.

Getting this back under contrail is going to require focus on several fronts.

You need to make at least your minimum payment each month to keep the debt at least current.

If you have additional funds that come in that allow you to tackle the debt I’d rather see you get $10,000 into a business savings account first to cover your business emergencies so expenses don’t need to wind up on credit again. You can use the cards, just pay them off in full at the end of the month. In case of a financial surprise you may need to dip into the emergency fund to do it. Then focus on building the emergency fund back up.

On tackling the debts, while it makes the most mathematical sense to tackle the highest interest rate debt first, it can often be better to knock out smaller balance debts first. If you can give me an idea of the balance and interest rate of each I can give you a more detailed plan of attack.

I think we can get you out of this hole without a loan as long as your husband is committed to making the business successful on a cash basis.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

My Daughter Was an Authorized User and Ran Up My Debt. I Have Cash to Settle. – Sharon

Steve Rhode — Mon, 14 May 2012 13:55:49 +0000

From How to Get Out of Debt

“Dear Steve,

23K on credit card debt. I am retired and do not make enough to pay these credit card bills any longer.

I let my daughter be an authorized user on 2 credit cards. She and her husband both lost their jobs and just recently broke up. I have been able to make the minimum payments for over 6 months, but have just about ran out of savings which I have used for this.

My income is $1397 per month on Social Security Diasbility). The credit card payments are $375 per month. I can make ends meet with this but it is soooo difficult. I don’t want to go bankrupt because I do have joint ownership on some property with my husband.

We live separately (for over 6 years). My name is on both of our homes, along with his. We don’t divorce because of the children. I am 62years old. If I continue to pay the minimum payments on the Credit cards that my daughter ran up (I never used them) it will take 44 years to pay them off. I have another daughter who can lend me $10,000 If I can settle with the credit card companies.

Sharon”

The Answer:

Dear Sharon,

Sadly, the debt your daughter ran up is your debt and your responsibility. As an authorized user she has no responsibility for the debt, except to you.

I’m glad you contacted me before you were stone cold broke. As you can see the approach of draining the savings to make the payment is not a great approach. Typically the only thing that happens here is you wind up broke but still with the remaining debt.

Your situation is a great example of a time when settling the debt is a reasonable and logical approach. You have cash on hand to settle the debt and you have assets that would be in jeopardy if you filed bankruptcy.

Settling the debt has consequences and potential tax implications for you. You should discuss this with the settlement advisor you decide to work with. If you wanted to try to settle this debt and pay the least amount for professional advice to do this I’d suggest you contact Consumer Recovery Network or ZipDebt.

I know you tried to do a nice thing by allowing your daughter to use your card but please don’t do that again. She can easily get her own secured card even if she has bad credit and she should probably do so any to build her credit.

This is not the end of this issue for you either. This unfortunate episode will leave a deep scar on your credit and we are going to need to get your credit back on track again.

It’s obvious that you are a generous and caring person but at 62 you can no longer afford to make financial mistakes that will rob you of your future. It’s time for your daughters to lookout for you.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Will Our IRS Tax Liens Prevent Us From Opening a New Business? – Donna

Steve Rhode — Mon, 14 May 2012 13:40:21 +0000

From How to Get Out of Debt

“Dear Steve,

We have an IRS lien against or business that we are attempting to sell, and an IRS lien against our home.

My husband and I have successfully ran a small biz for 11 years with the exception of 2010 when some taxes weren’t paid. Weare looking to sell our current location to pay the IRS business lien. However a lien remains on our personal property. We have an investor to help us open a new location but we are wondering how the liens on our credit will effect negotiations with a new landlord. Donna

Donna”

The Answer:

Dear Donna,

Is your personal property part of the sale of the business? With the limited information you provided it’s tough to give you any definitive answer on anything.

How your liens will impact your ability to lease a new location is a matter between you and the landlord. Some might not care at all if they are struggling to lease space. Others might be picky if it falls within their exclusion criteria.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Zombie Debt 1099 Style. And You Thought Your Old Debt Was Dead. LOL.

Guest Post — Mon, 14 May 2012 13:22:51 +0000

From How to Get Out of Debt

THE KING OF ZOMBIE DEBT: THE 1099-C. WHAT TO DO WHEN COLLECTION CONTINUES AFTER RECEIVING A 1099-C

By Gregory M. Fitzgerals, Esq.

Most folks who get a 1099-C accept that it is a good news/bad news thing. The bad news is you must include the 1099-C as income on your taxes. The good news is you no longer owe the creditor. Not so fast says the creditor. Creditors and their collectors are telling consumers that a 1099-C does not release the debt. This approach by creditors is becoming more prevalent and I suppose I shouldn’t be surprised. Courts are struggling with conflicting laws/regulations and seem to have dodged the central issue: is the debt cancelled or not? The failure to provide clear direction has allowed creditors to misinterpret court opinions, often misleading consumers. In my view, even consumer advocates have incorrectly applied fact specific rulings and appear to accept a general rule that collection can continue after a 1099-C. I strongly disagree.

First, let’s be clear what we are talking about. If you settled your debt for less than the full balance and the creditor sent you a 1099-C for the amount they “forgave” or “cancelled”, there should not be a problem. I say should because if you are getting collection contacts in this situation, you have a different zombie debt problem: collection of a debt paid or satisfied in full. No less a problem to be sure, but not the problem I am addressing here. Another important clarification is that terms such as “charge off” and “written off” is not synonymous with “cancelled” or “forgiven”.

What I am reviewing in this article is the circumstance where a consumer gets a 1099-C, generally for the entire account balance, and then gets collection contacts trying to collect the debt. Many times the 1099-C is the first and only indication the consumer receives that the debt has been cancelled by the creditor. This means the creditor is reporting to the IRS that it has cancelled the debt, thus creating taxable income to the consumer (taxable income does not automatically equate to a tax liability). Nor is this an article about the tax implications of a 1099-C. Rather it is about the status of the debt and whether a debt is owed after receiving a 1099-C.

On the 1099-C in big bold letters at the top it says: Cancelation of Debt. When consumers get a 1099-C the second question they generally ask is: do I still owe the money? (The first is do I have to include it in my taxes). People inherently understand that it can’t be both. After all, how can you still be responsible for the debt when you are supposed to claim it on your tax return? You can’t be on the hook for both right? Unfortunately, many creditors will have you believe you are still responsible for the debt. They are wrong. You as the consumer cannot be forced to both pay a debt and show the debt as income. But be prepared to fight as this debt zombie is particularly resilient.

The creditor’s argument is basically one or both of the following: The fact that IRS regulations require them to issue a 1099-C under certain circumstances does not modify the consumer’s financial obligation to them. The underlying contract with the consumer has not been altered by the “mere filing of a 1099-C”. Stated differently, the creditor believes that the IRS reporting regulation does not eliminate your duty to pay the debt. An alternate theory is that they issued the 1099-C by mistake. Creditors and their surrogates like to tell consumers only half the story and hope you will fail to look further.

What the creditor neglects to tell you is that all courts have understood the obvious issue that the debt cannot be both: 1) cancelled and 2) still due. That is, you can’t still owe 5K on your Discover account and also be forced to claim 5K as income. I don’t know of a single case where the court has allowed the creditor to collect after issuing a 1099-C without also requiring the creditor to issue an amended 1099-C. An amended 1099-C is essentially a corrected 1099-C that states no debt was cancelled. This basically allows the creditor to “unwind” or retract the 1099-C they previously sent to you.

Most judicial opinions have focused on what factual evidence supports the creditor’s true intent in determining if the debt was canceled or not. That is, was the 1099-C, in fact, issued by mistake? Did the creditor never intend to give up their rights and only issued the 1099-C because IRS regulations required them to? My personal view is that the IRS regulation requiring a 1099-C be issued is more than just a reporting function. The IRS is compelling the creditor to report what has in fact occurred- the debt has been cancelled, either in fact or by operation of law. It is illogical to say one must report a cancelation of debt to the government and the debtor, but if you don’t really want to cancel it, you have not cancelled it. That is an article for another day and a thorough review of the IRS regulations will be enlightening (fun stuff). For now, let’s review the existing cases, learn what they really stand for, and see how they can assist the consumer today.

In the Indiana case of Leonard v. Old National Bank Corporation, 837 N.E. 2d 534 (2005) the consumer had filed for bankruptcy and the bank then issued a 1099-C thinking they were required to do so because of the bankruptcy filing. However, IRS regulations require the 1099-C upon bankruptcy discharge (as opposed to the mere filing). The bankruptcy was actually dismissed prior to discharge. The trial court found that this error showed the bank did not intend to cancel the debt and only issued the 1099-C because they mistakenly thought they had to.

In Zilka v. Bayer Employees Federal Credit Union 407 B.R. 684 (2009) [a U.S. Bankruptcy Court case in the Western District of Pennsylvania] the court held: “Bayer obviously filed and issued the four forms 1099-C in response to its charging off of the outstanding indebtedness of the four loans… therefore, Bayer filed and issued the four Forms 1099-C … in error which can be corrected”. The court then ordered Bayer to issue to the debtor four corrected forms 1099-Cs. Again, the issue was mistake. An unpublished opinion (not to be cited as a legal authority) is the California case of Far East National Bank v. Nolan Financial Corporation (2005 Cal. App. Unpub. LEXIS 9584). Here, the bank issued a 1099-C, then filed suit, and then filed an amended 1099-C. As a factual matter, the court found there was “substantial evidence of a mistake” in issuing the original 1099-C. Thus it is clear that in order for a creditor to claim mistake in issuing a 1099-C, the creditor must prove with facts that it made a mistake and must issue a corrected 1099-C before they can pursue the debt. Further support for the requirement that an amended 1099-C be issued before a creditor can pursue a debt is the Kansas U.S. Bankruptcy Court case of In re Crosby, 261 B.R. 470. The court wrote: “the Credit Union contends that it filed the 1099-C’s with the IRS under a mistaken interpretation of the agency’s regulations, and that its mistake does not affect its right to collect from the debtors, even though it has made no effort to file corrected 1099-C’s…The Court cannot agree”. The Court concluded “Until the Credit Union corrects or withdraws the 1099-C it mistakenly filed about each debtor, it cannot enforce its claim against that debtor”.

In Amtrust Bank v. Fossett, 224 P.3d 935 (Ariz. App. 2009) the court ruled: “We hold that while issuance of a Form 1099-C may be prima facie evidence of cancellation of a debt, the lender may rebut that evidence by showing that when it issued the form it did not intend to forgive the obligation…” In this case the appellate court sent the case back to the trial court for a factual determination of intent. Another often cited case to support the proposition that just because the IRS requires a 1099-C does not mean the debt cannot be enforced is Debt Buyers’ Association v. Snow 481 F. Supp. 2d 1 (2006). This was a case brought by the Debt Buyers Assn. which sought an injunction to prevent the Secretary of the Treasury and the IRS from enforcing the IRS regulations regarding 1099-Cs. This was prompted by creditors issuing 1099-Cs on accounts purchased by debt buyers. Debt buyers made the sensible argument that by issuing 1099-Cs on sold accounts, creditors were, in effect, selling accounts that could not be collected on and therefore rendered the purchased accounts worthless. The court refused to determine the case on the merits, finding the case brought in the wrong court. The court did opine that the IRS regulations had nothing to do with whether or not the debt could be collected on and debt buyers could, to avoid any FDCPA violations, issue to consumers an “instructional guideline” or “disclosure” stating why the 1099-C was issued, despite the debt still being due. Therefore the consumer would get conflicting information.

It seems to me that we have somehow gotten to the point where “cancelation of debt” does not actually mean “cancelation of debt” anymore. If the creditor doesn’t want it to mean that, apparently they don’t have to. That is why I call the 1099-C the King of the Zombie Debts: you can receive a government mandated “cancelation of debt” on a government mandated form, and under threat of government force must declare it as income, AND STILL THE DEBT IS NOT DEAD! What bigger zombie debt can there be than government required (IRS) and government approved (courts) zombies? Amazing.

One final case to note is the US Tax Court case of is Sims v. Commissioner , T.C. Summary Opinion 2002-76 (T.C. 2002).This is another unpublished (and should not be cited as authority, although it often is) case wherein the IRS wanted the consumer to pay additional taxes because the 1099-C was not on their tax return. Sims argued that they never got the 1099-C and for various reasons there was no proof the debt was ever actually cancelled by the creditor. The Court agreed stating: “Based on the record before us, we find that the petitioners did not have discharge of indebtedness income during 1998″. Creditors cite this case as supporting their belief that the mere issuing of a 1099-C does not extinguish the debt. That is not the ruling. The ruling was that there was insufficient evidence to conclude the requisite intent by the creditor to discharge the debt ever happened. Again, a factual determination.

Amending the 1099-C when in fact the original 1099-C was sent in error is fair enough I suppose. But the question remains was the original 1099-C actually sent in error? Although this is a factual question, creditors would have you believe that they can, as a matter of right, file an amended 1099-C and all is well. I contend that until such time as the amended 1099-C is issued, any collection effort on that account is unlawful because until such time as the corrected 1099-C is issued, there is no valid legal obligation to be pursued. It is common for a collector to not even know a 1099-C was issued until the consumer tells them.

As to the mistake issue, I’m sure this sometimes happens. I’m also sure that many times the mistake was not in issuing the 1099-C but rather the collection of an account after issuing the 1099-C. The creditor always alleges a mistake as a way to avoid liability for collecting on a debt they cancelled. In my experience, the vast majority of mistakenly issued 1099-Cs are caught by the creditor close in time to its issuance, not years later. I am always leery of a creditor who issues a 1099-C in 2009 and in 2011 says it was a mistake. Particularly when they discover the mistake after trying to collect. Also, mistakenly issued 1099-Cs are usually in bulk. That is, it is not some lone account that somehow got screwed up. It’s usually a whole portfolio or class of accounts that were treated improperly.

If in fact the creditor has made a mistake, parameters should be established as to how long the creditor has to correct it and how. As it stands now, a consumer cannot really rely upon the 1099-C. The fact is consumers are being forced to pay increased taxes only to later discover that the creditor made a “mistake”. Sure, you can pay a professional to amend your return, and sure Uncle Sam is supposed to give you a refund, but why is the consumer, who made no mistake, carrying the burden of mistakes by creditors?

Another problematic issue is what if the amended 1099-C is issued more than 3 years after the initial 1099 so that the consumer can no longer amend their tax return? The truth of the matter is that cancelation of debts and the attendant tax consequences (if any) is not something creditors should be allowed to treat so cavalierly. If required to cancel the debt by the IRS, the debt should be cancelled, regardless of the intent of the creditor.

If the creditor makes a mistake, the creditor, not the consumer, should bear the responsibility. A consumer (and the taxing authorities) should be able to rely on a 1099-C and, at a minimum, absolutely no collection efforts should be allowed until any “mistake” is rectified.

To conclude, if you received a 1099-C and now someone is trying to collect the debt, don’t be afraid. Don’t believe everything you are told. Your IRS obligations have nothing to do with whether the debt has been cancelled or not. As between you and the creditor, the only issue is: has the debt been cancelled by the issuance of a 1099-C? I say yes. This is undeniable. Zombies are not real. It is the creditor’s burden to establish otherwise. If you are told the 1099-C was issued by mistake, do not accept this at face value. Demand to know what the mistake was. If you are told there was no mistake but the IRS required the 1099-C, demand to know which IRS code they are relying on. And by all means, demand that an amended 1099-C be issued before you pay anything. Even the King of Zombie debts can be contested and defeated.

This article is not legal advice and should not be interpreted as such. It is provided for informational purposes only. You should consult legal counsel about your specific circumstances and law before making any decisions about your legal rights and how to protect them.

Gregory M. Fitzgerald is a California licensed attorney located in Fontana CA (Bar #153082). For over 20 years he has represented consumers with a particular emphasis in consumer rights in the field of unsecured debt and collection harassment. He is employed by The Seideman Law Firm, P.C. and manages the firm’s national consumer protection collection harassment division. He is admitted to practice before all California State Courts and all Federal District Courts within California. He is a member of the Western San Bernardino County Bar Association. He formerly sat regularly as Judge Pro Tem for the Orange County Superior Court. He can be contacted at (909)581-7354, gfitzgerald@seidlaw.com or via the web at seidemanlaw.com

If you would like to contribute a guest post like this one, click here.

Had Cancer, Retired, But Want to Avoid Bankruptcy. – Jack

Steve Rhode — Sun, 13 May 2012 15:55:08 +0000

From How to Get Out of Debt

“Dear Steve,

Cancer forced retirement at age 65 (two yrs ago). Have no income except Soc-Sec and Sm-Pension ($3,000 total). I’m current on mtge (PITi $2300/mo) and on Credit Cards (4ea, w/$50K balance, paying $1300/mo). Yes, spending everything including ‘extra’ from wife’s $350/wk take-home pay. (She’d like to retire next year if she can–assuming we rid ourselves of the unsecured Credit Card debt)

1. Can we avoid bankruptcy? 2. Consolidation isn’t an answer since we need everything to live on…barely. 3. Would love to refinance but afraid since I’m retired & wife is almost!!!

Thanks in advance for your BEST answer to our dilemma.

Jack”

The Answer:

Dear Jack,

Congratulations on beating the cancer back. My Mom died this year from ovarian cancer so I’m very aware of what the possible consequences of cancer are.

Can you avoid bankruptcy? Yes, just keep repeating what you’ve been doing.

But without bankruptcy I really don’t see a way for you to continue to service your debt and make it unless your wife has some amazing and incredible retirement plan or assets you have not disclosed.

The most logical thing to do is to click here and find a local bankruptcy attorney. At face value, bankruptcy makes the most sense since it would discharge your debt in months, give you a fresh start and allow you to be better able to make ends meet moving forward.

I can’t imagine your goal would otherwise be to keep on the current path or face being sued when you default on your debt.

I’m worried your credit card debt is the result of using the card to get by. If so then as you continue to use the cards the balances will increase to the point where this will all implode in on you if you don’t take action now.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Owed Debt in New Zealand But Want to Move Back. – Steve

Steve Rhode — Sun, 13 May 2012 15:40:49 +0000

From How to Get Out of Debt

“Dear Steve,

Hi there, I left New Zealand 2005 with I believe bad credit record ( credit card debt, left small phone bill ). I was in a rush, because of my wife and kid’s condition. It was not very moral thing to do…….I admit it, but sometimes we make bad choices. I am planning to go back to NZ as I divorced my wife and want to start all over again. Meantime I won DV lottery now and was wondering if this could be a reason for a visa denial as they want police and court records. I have already sent over all the papers to NZ to check out what the situation is with my credit record. Any advise will be helpful.
Thanks Steve

Steve”

The Answer:

Dear Steve,

The underlying problem here is that we don’t know what you are dealing with. It seems you may be blind as to what debts you may still owe and what legal cases may have been filed against you in New Zealand.

I’m assuming you want to clear the way to move back so you should invest in a local attorney in New Zealand who can represent you and act on your behalf. The attorney could contact your creditors and workout a settlement or repayment of your debt. They could also help you to understand if you have a criminal or court record that may be discovered and impact your visa application.

As much as I’d like to wave a wand and help you with this it seems what you need first is more information.

Let me know what you find out regarding your New Zealand credit report.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

American Express Sued My Dad But He Doesn’t Live in the U.S. – Skylar

Steve Rhode — Sun, 13 May 2012 15:34:34 +0000

From How to Get Out of Debt

“Dear Steve,

My Dad got sued by American Express. They filed it in a court in CA. He doesn’t live here in the US, not a US citizen. He visits here in the US for like every 2 years and resides outside of US. He will be turning 70 yrs old and is not employed.

What can I do to help him?

Skylar”

The Answer:

Dear Skylar,

Does your father own any assets in the U.S. or maintain any bank accounts with money in them?

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Looked Into Living Free and Clear and I’m Confused. – James

Steve Rhode — Sun, 13 May 2012 15:31:39 +0000

From How to Get Out of Debt

“Dear Steve,

My wife and i owe about $20,000. credit cards debt. We have adjustable mortgage that we owe more than the house is worth. We bought the house for $280.000. We owed more than $320,000. The current market value is about $160,000. We would like to pay off our debts sooner. I looked into “Living Free And Clear ” and really confused on what to do. Please give us advise and get rid of this debts!
Thank you. God Bless.

James”

The Answer:

Dear James,

You’ve got a house that is way underwater and some credit card debt. You don’t need any expensive program to help you to deal with that situation.

The way you dig out of a hole like that and to get out of debt sooner without negatively hurting your credit is to pay more than you owe every month until the debt is extinguished. There, I just saved you a bunch of money.

But can you or do you want to pay back $320,000+ on a house that is worth $160,000? Can you afford to do that and at what cost to your future?

I agree that we have an obligation to meet our promises but are you willing to sacrifice your future financial health just to do that?

What I mean is that it might just be that it makes better financial sense for you to walk away from your current home, discharge all of your debt, and get a fresh start than any “debt reduction” plan.

At what point do you need to do what is best for you as a couple over what is best for the lender? What would the lender do if they were in your shoes?

The idea of handing back the house is a strategy called a strategic default. It will slam your credit, the lender will foreclose and you will need to follow it all up with a bankruptcy. But once you file bankruptcy and discharge your debt you can get a second chance and a fresh start. You can even rebuild your credit quickly.

Before we can decide if “Living Free and Clear” is for you, I need for you to get clear on what the goal is you are trying to achieve. Is the goal that you need to address the debt and move ahead in a better way or that you just want to continue your regular payment plus a bit extra each month to pay off your current debts sooner.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Was Told to Just Throw the Hospital Bill in the Trash. – Paul

Steve Rhode — Sun, 13 May 2012 15:17:29 +0000

From How to Get Out of Debt

“Dear Steve,

i am from Charlotte NC my name is Paul

i don’t have medical insurance because i cant afford payment

i am just student

my question is what happen if i don’t pay hospital bills ?

what happen if i don’t pay doctor bills?

what happen if i don’t pay my credit card death?

here in NC lots of people don’t have insurance and they went to ER and they don’t pay bills … they told me we just throw in trashcan

can u help i need good suggestion for hospital bails and doctor bills and credit card bills payment

Paul”

The Answer:

Dear Paul,

First off, you should use my public benefits finder tool to see if you are eligible for any public benefits, such as Medicaid, that may cover your health bills.

If you run up financial obligations, like a hospital bill or credit card debt and can’t pay, in North Carolina your wages can’t be garnished. But you can still be sued and your bank account could be levied. Additionally, will you always live in North Carolina?

To summarize, you will either need to deal with the accumulated debts now, or in the future. If you leave those debts unresolved it will hurt your credit report and your future chances to get ahead, buy a house and get credit.

How much debt do you have?

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Should I File Chapter 13 Bankruptcy Now and Then Chapter 7 Later? – Deb

Steve Rhode — Sun, 13 May 2012 15:09:07 +0000

From How to Get Out of Debt

“Dear Steve,

I was long-term unemployed for 3 years, last one with no UI as it ran out. Finally got a part-time job in February this year. During the 3 years I got 2 judgments against me by Capital One and Chase for credit card debt. Since they could not garnishee my UI they got nothing. Now only 2 months after starting this job I get sent a letter from the attorneys for CO giving me 15 days to respond or my income will be garnisheed. It’s been over a month now, I did not respond, but consulted an attorney who is advising ch 13 bankruptcy. (I can do ch 7 if I hold it off until Feb. 2013). I owe almost 30K, including back rent and loans to family and friends after all of this. Meanwhile I live in fear of the judgment order garnisheeing my wages, seizing my bank account (paycheck only), or sending the sheriff out to my rental property to seize personal belongings. In addition, I have to come up with $1300 to pay the attorney before they will file BK for me. Timing of all of this stinks! I wanted to be able to pay back personal loans and the rent and utilities, but feel that ch. 13 will put me in a straight jacket of a budget for 5 years after I just came out of 3 years of financial hell. Also, the attorney advised me to try to find a better car before the filing and amazingly I did get financed for a newer used car as I was driving a “gift” beater that was nickle and diming me to death with repairs (I drive for my job all day).

I am inclined to wait until end of January and go for the ch. 7 rather than face the 5 year “constraints” of a ch. 13 and take my chances with the judgment order. That is, let them garnishee my wages if it comes to that. (I tried to see if they would do a payment plan with me and they refused to talk to me, saying I had retained an attorney when I went for a consult, which I told them.) I am afraid of them seizing my bank account as I could not do my job or survive if that happens and I might lose my job. I am afraid of them seizing my property (only thing I own of any value is a 2 year old 125cc Yamaha scooter) as I don’t want to lose that. What would be the best avenue to protect me overall? A chapter 13 now then convert to a ch 7 next year OR hold off and do the chap 7 next year and ride it out with possible garnishment now?

Deb”

The Answer:

Dear Deb,

Congratulations on getting the new job. That’s wonderful news.

I’m assuming the reason you can’t go for a chapter 7 bankruptcy now is you filed a chapter 7 bankruptcy before and need to wait for the eight years to expire.

While filing the chapter 13 bankruptcy now is an additional cost it will prevent those nasty potential consequences you might otherwise face.

If you wanted to get the maximum protection the chapter 13 bankruptcy now and convert to a chapter 7 bankruptcy when you can is the most comprehensive solution.

Waiting and rolling the dice is always an option but certainly one without any guarantees. If you were months away that’s one thing but you would be gambling that at some point in the next nine months they would not sue you, win a judgment, garnish your wages, or levy your accounts.

For me, I’m not that much of a gambler.

Enjoy your scooter. I love to ride as well.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

I Can Make My Payments But Want to Get Out of Debt Faster Before I Propose. – Joshua

Steve Rhode — Sun, 13 May 2012 14:59:54 +0000

From How to Get Out of Debt

“Dear Steve,

So here is my question. I’m 32 years of age. I’m in credit card debt of about $25,000.00 with nothing to show but painful memories. I own no home, my vehicle is paid off, I have no kids.

I am however planning on asking my beautiful girlfriend to marry me this summer with a wedding date to be a year, 2 years off from now.

My problem is although I have a wonderful job in a gorgeous little village I don’t make that much. Actually after taxes and insurance comes out I bring home $10.00 an hour. So with that said I’ve looked into help with debt relief and I don’t make enough and or my debt to income is too high. My only asset is my vehicle. I do get side work from time to time but that is just extra money to sock into savings. In which I do have savings but it’s never enough correct…?

Last but not least my credit score is outstanding almost to the tune of 800 points that is. I owe no one, I mean no one money other than my credit card company. Advice on as to what direction I should head and or fall into so my credit stays good, without filling for bankruptcy??? PLEASE HELP!!!

Joshua”

The Answer:

Dear Joshua,

Congratulations on your upcoming proposal. How exciting!

Frankly this is an issue of income, not debt. It sounds as if you have a good grasp on what you need to do but lack the income to implement your plan.

The best way to deal with this without negatively impacting your credit would be to repay the debt rapidly with something like the free service provided by ReadyForZero.com, video below.

You could also inquire if an unsecured debt consolidation loan through someone like LendingClub would give you both a lower interest rate and lower monthly payment.

If those approaches don’t work for you, since you can afford your regular monthly payment you could try a credit counseling approach. You can click here for credit counseling information.

A credit counseling approach will impact your credit a bit since the accounts you include in the program will be closed by the creditor.

If you’ve been open and honest with your bride to be about your financial situation you might just find that by jointing together you will have lower overall expenses and more income as a couple to use to tackle the debt.

With a bit of research and inquiry on your part there can be a way to achieve your goal and dig out of this hole over time. Checkout the above options and then come back and post a comment for me.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

The Creditor Could Not Validate My Debt and Dropped The Suit. Will They Sue Again? – Beth

Steve Rhode — Sun, 13 May 2012 14:48:04 +0000

From How to Get Out of Debt

“Dear Steve,

I was married for 17 years and we always had awful credit scores/debts. I basically “robbed Peter to pay Paul.” I got divorced in 2002, left with just what I could haul.

Continuing my survival strategy, I used my credit cards (none with more than $2000 limit) to purchase necessities. I fell into the old paying-the-minimum-but-the-late-fees-put-me-over-my-limit, which in turn caused me to accrue over the limit fees.

At one point, I sold what little amount of jewelry I had for $52 just to make it for a week or so.

I finally just couldn’t pay anymore and the collections began. In about 2004 or so, I contacted ACCC, (forget what it stands for) and they contacted my credit card companies, all of which agreed to a payment plan, Sears, Citibank and a local department store. At about the same time this all came about, Sears charged off my debt and declined to participate in the consolidation plan.

At the time, I thought if they didn’t want to participate and the debt had been “charged off”, then I wouldn’t worry about it. It took me about three years but I paid off what I owed, but for the Sears account. I ran my credit reports, closed old accounts, took the little course in debt management offered by ACCC.

Then, I began receiving letters from NCO. I didn’t even open them for a long time because I had no idea what they were. At some point I figured out it was the same amount as the Sears debt, but still refused to acknowledge because I hadn’t made any debt with them and was under the false assumption that Sears had “charged it off” and I didn’t owe it anymore.

So, about three years ago, I received a court summons, saying I was being sued by NCO and they were being represented by Buffaloe and Associates in Nashville (I’m in Knoxville). I appeared in court and spoke with the attorney representing them. I advised him I didn’t owe this company anything because I never made any agreement with the and that Sears had “charged off” the debt. (This is when I began learning about junk debt buyers and how they can do this!) Since I refused to acknowledge the debt, he rescheduled the court date.

I appeared again, after praying, praying, praying. When I arrived, he told me that NCO had not provided proper paperwork and that the case was being dismissed, but that it could be “reopened at anytime in the future.” I thanked the Lord and skipped out of the courthouse.

Finally, my questions!

1. If they dismissed the case, can it really be reopened at anytime?

2. They are re-aging the debt on my credit score every month or so. If I refuse to acknowledge the debt, can they do this indefinitely? The original debt is about seven years old now.

Sorry for such a long post!

Beth”

The Answer:

Dear Beth,

It appears you got lucky and the debt owner identified they could not properly validate the debt at the time. That doesn’t mean they won’t be able to if they get the appropriate records to confirm their chain of title and details on the account.

Until the statute of limitations expires on the account they could sue you and after that time they could attempt to collect from you, forever. If you make a payment or acknowledge the debt it can start the statute of limitations over again.

What I suspect may happen is that the current debt owner my package it up with a bunch of other debts they want to dump and this process may start over again with a new debt buyer. But it sounds like you know what to do to handle it. If you go to ask for validation again, here is a recent article that will help to know what to ask for.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Credit Counselor or Debt Collector? Midland Credit Management Applies Clever Approach.

Steve Rhode — Sun, 13 May 2012 14:21:30 +0000

From How to Get Out of Debt

I just had an opportunity to look at the website for Midland Credit Management and I must say, for a collections agency they certainly appear more like a credit counseling group.

Don’t get me wrong, it appear they provide full and apparent disclosure they are a debt collector, “Please understand that this is a communication from a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose,” but the primary message reads like a debt relief company.

For example:

Midland Credit Management is a national financial services company that helps consumers resolve past-due debt obligations. By providing customers with education and payment plans, we help our customers start down the path toward improving their credit and reinstating their borrowing power.
Midland Credit Management has helped over two million customers eliminate outstanding debts.
We have more than a thousand agents around the world working to help consumers like you.
Take advantage of our easy payment options to gain control of your outstanding financial obligations.
Midland can partner with you to create a better economic future for you and your family.

And those are just the messages on the front page. If you didn’t know better you would think you landed on the website of almost any debt relief provider, even a debt settlement company.

“…helping people like you settle outstanding debt obligations.”

Before you start to flame up that there are differences between a debt collector and a credit counselor, I agree. But from the point of view of a typical consumer in a panic the messaging appears to be the same kind and gentle messaging as one might see on a credit counseling or other debt relief company site.

Who is Midland Credit Management

“Midland Credit Management (MCM) is a national financial services company that helps consumers resolve past-due financial obligations. We empower our customers through education and payment plans, and help them return to a path toward improved financial health.” – Source

According to their website:

Midland Credit Management is a subsidiary of Encore Capital Group, a leader in the consumer debt buying and recovery industry. Through Encore Capital Group and its affiliates we offer customers the tools and options they need to resolve their past due debt obligations. In addition to our affiliate companies we will often use third parties to service accounts. Below is a brief list of Encore Capital Group and MCM affiliate companies. – Source

Ascension Capital Group, Inc.
2201 East Lamar Boulevard, Suite 200
Arlington, TX 76006

Encore Capital Group
3111 Camino Del Rio North, Suite 1300
San Diego, CA 92108

Midland Credit Management, Inc. (MCM)
8875 Aero Drive, Suite 200
San Diego, CA 92123
800-265-8825

Other Affiliates:
Midland Funding LLC
Midland Funding NCC-2 Corporation
MRC Receivables Corporation
Midland Recovery Corp

If the company can deliver solutions that fit within a larger plan for a consumer to get out of debt and they are flexible and understanding this kinder and gentle approach may work well for them as a debt collector.

However, based on this consumer complaint, hanging up on the consumer is not the best practical approach.

MCM appears to be a debt buyer and does sue consumers in their effort to recover. Pursuing their legal rights as the debt owner is an appropriate way to collect. – Source

Watch Out Credit Counselors

Based on messaging alone this debt collector is doing a great job of beating you at your own game.

@GetOutOfDebtGuy

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Midland Credit Management – Consumer Complaint – 5-13-2012

Consumer — Sun, 13 May 2012 13:53:33 +0000

From How to Get Out of Debt

Consumer Statement:

I had payed the account in full 7 years ago in 2005 I have not not used T-mobile service since I find on my credit report that a collection agency midlund llc has it on their saying i owe 228.00 but when you call them to find whats going on they send to me someone else… and they want paid or show them proof that i have paid it once it has been 7 years how do i attempt to do that this is not right

Consumer Action Taken:

I have called t-mobile they say i owe nothing to them I have called midlund llc they pass me off to some one else i have told them repeatedly that i had payed this i have not had t-mobile services since 2005 they tell me to pay it and are extremely rude about then hangup on me

Date This Problem Happened: May 12, 2012

State You Live in: Wisconsin

Race/Ethnicity: White

Age Range: 51-65

Total Amount of Fee Paid: $228

Company Name: Midland Credit Management

Company Address:

8875 aero drive
suite 200
san diego, ca 92123

Company Telephone Number: 800-265-8825

Website of Company: midlandcreditonline.com

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

BBC Lottery Scam Email – Consumer Complaint – 5-13-2012

Consumer — Sun, 13 May 2012 13:46:17 +0000

From How to Get Out of Debt

Consumer Statement:

I have read and understand this is a scam.

And they can receive the award only if paying the fee before.

I have not paid anything but I got to send my details without personal identification number.

I hope not too big a problem and hope to resolve quickly. I do not want to go to other problems.

You could give me advice what to do please??

Consumer Action Taken:

Claims Manager,
Scott Mills
E-mail: bbcl25@aol.com

http://www.bbc.co.uk/lottery/

Respectfully
Scott Mills
BBC LOTTERY
Tel: +44-870-1284-6762

http://www.bbc.co.uk/lottery/

and

Regards,
Magret Walter(Mrs),
Director Of Customer Services
Email:- customerservices@ozledim.net
Phone Number:- +448712846762

Date This Problem Happened: May 10, 2012

State You Live in: Romania

Race/Ethnicity:

Age Range: 21-35

Total Amount of Fee Paid:

Company Name: BBC Lottery

Company Address:

Company Telephone Number:

Website of Company:

If you feel you’ve been financially hurt by a debt relief company and deserve a refund, read these step-by-step instructions on how to proceed to attempt to get your money back.

If you do get your money back, come back and leave a comment about it. I’d love to praise companies that step-up and do the right thing for people.

Scam reports are submitted by consumers like you. If you would like to file a scam report, please click here.

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

How Do I Convince My Husband We Don’t Need to Keep Up With the Joneses? – Keli

Steve Rhode — Fri, 11 May 2012 22:31:24 +0000

From How to Get Out of Debt

My husband and I have debts on our credit reports that are long outstanding. Plus we have a car loan and utilities that need to be paid now. We live payday to payday and shut off notice to shut off notice

I want to get these past debts paid in full and I want to cathc up on our car loan and utilities and keep them caught up. I believe my husband does too but he thinks he has to keep up with the Jones’ when it comes to material things. How do I convince him that he doesn’t need all the latest things and that we should put more money on the bills and debts? Like I said, I think he does want to but for some reason he just doesn’t. What can I do?

This is your chance to be a hero and help out this person by providing your feedback and answer to the question in the comments section below.

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Precision Law Center – Consumer Complaint – 5-18-2012

Notice From precision Law Center Court Receiver

If you are the company named in this report and you want to respond, please read How to Handle a Consumer Complaint Like a Pro And Come Out Smelling Like a Rose

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