Archive for March 2016
If you have more than $5000 in credit card debt, you have the right to settle debt. That statement made in a debt help commercial will get your attention.
It sure made all of us in the 2 Wants to Know office stop and say, What?
The debt help company bought ads from WFMY – but that doesnt mean were not going to look into their claims and question how they do business.
Were fact checking the commercial piece by piece. First – You have the right to settle that debt for a faction of what you owe.
Is there something in the constitution that says credit card companies are required to settle with you…required to let you pay less than that you racked up? Nope. But debt expert JaNet Adams says this right is more like an option.
The question is if people are actually going to do the settling with you. So everybody has the right to do it. Right? They also have the right to refuse that settlement, says JaNet.
Heres how Credit Associates says theyre going to help you: Were offering you free information on you can virtually eliminate your credit card debt with a monthly payment you can afford.
Hhhmmmm. That didnt say *how* theyre going to eliminate the debt. The spokesperson goes on to say, Dont declare bankruptcy. Dont consolidate.
Thats because with either of these options, youre still going to owe quite a bit of money to credit card companies.
But the ad never spells out what the solution is. So we turned to CreditAssociates website. Here they use two words interchangably -debt settlement and debt resolution.
With both of these options, the company works with your creditors to whittle down what you owe. For example, if youve racked up $65,000 in credit card bills, they might get it down to $20,000.
Sounds good? Think about this: Youre going to pay hefty fees for this service. Plus..
They are putting it into a third-party bank account – basically saving up your treasure chest to pay these people off. But in the meantime, a lot of times they will tell you to stop paying these creditors so that the creditors will be more apt to basically negotiate with them, says JaNet.
Only attorneys can offer debt resolution and its not clear that CreditAssociates uses attorneys. So we called the company for a little clarification. And we havent heard back.
Bottom line you can probably get rid of your debt without this company or any other. The AGs office has some great information on their website about steps you can take if you need help with debt .
And one last thing if you do settle, negotiate or file bankruptcy be prepared to pay taxes on the amount of your debt that gets wiped away. The government sees that as income.
In all transparency here WFMY has run these ads in the past. WFMY is not airing them right now.
The rights and protections you enjoy as a debtor in the United States do not go away once you have
applied for or been accepted into a debt settlement program and had your settlement plan approved by
the creditor. In fact, your rights under the Fair Debt Collection Practices Act continue in force
and effect so long as a debt collector is attempting to collect a debt you owe (which may continue
while you are working your debt settlement program).
There are additional rights and protections that you enjoy once you have proposed a debt settlement
plan and had that plan accepted. Knowing these rights will help you be an informed and confident
debtor and protect you from abusive or dishonest tactics some creditors may try to engage in.
Specifically, your rights after you have had a debt settlement plan include:
The right to work the debt settlement program: Most debt settlement agreements contain a provision
stating that when the debt settlement plan is approved by all parties that the credit will not take
any further collection action unless and until the debtor fails to complete the plan. In other
words, the creditor must give the debtor an opportunity to work the plan to which the creditor and
debtor agreed. Implicit in these agreements is an understanding that the creditor will not take any
action that might undermine or interfere with the debtor’s ability to work the debt settlement
program. For example, a creditor is usually not permitted to refuse to accept payments under the
program or fail to post payments in a reasonable time simply so it can claim that the debtor did not
make timely payments.
The right to have the debt that was settled properly reported to the credit bureaus: Other posts
have discussed how you may be able to negotiate for a term in your debt settlement agreement that
requires the creditor to remove certain negative information from your credit report. However, even
if such terms do not make it into your final debt settlement agreement, your creditor must report
your debt accurately to the credit bureau. That is, the creditor must (at a bare minimum) report
that the debt has been settled and must report that you paid the debt settlement as agreed (once you
have done so). See more here.
The right to be free from further collection efforts: Once your debt has been settled per the terms
of your agreement, you are relieved from any further legal liability to pay the amount of the debt
that was written off as part of your agreement. A creditor is not permitted to agree to a debt
settlement plan, accept your payments under the terms of the settlement agreement, and then
thereafter pursue you for the remainder of the debt originally owed. If a creditor were to do this
or if a debt collector were to attempt to do this you would be entitled to produce a
copy of the debt settlement agreement along with records showing that you paid the agreed-upon
amount in accordance with the debt settlement agreement and have a court find that you cannot be
pursued for the remainder of the debt.
Hiring a debt settlement
lawyer or a consumer law attorney to help you when you are attempting to sort out your debts and
affairs is a great way to help ensure that your legal rights are protected throughout the debt
settlement process. Your attorney will also know what actions can and need to be taken if a creditor
or debt collector violates these rights. Contact an attorney at Ariano amp;
Reppucci, PLLC for additional information.
Money Talk: Options for Building Credit Score
By Liz Weston – Mar 20, 2016
Question: I am selling my car to an old friend with no credit history. (The used car salesman wanted to charge her 6.5 percent interest.) Is there a way that I can report her timely payments to the credit reporting services to help her build her credit?
Answer: It’s not really practical for individuals to report payments, since subscribing to credit bureaus is expensive.
The rate your friend was quoted actually isn’t bad given her lack of credit history. If she kept the loan term relatively short (four years or less), she might be able to build up enough equity and credit history to refinance it to a lower rate in a year or two.
If she’d prefer not to take that route, you might suggest she explore credit builder loans. These loans, offered by credit unions, banks and some online lenders, are designed to help establish credit histories at the bureaus.
The lenders typically put the borrowers monthly payments, minus a small interest charge, into a certificate of deposit that is the borrowers’ to keep after the final payment.
Secured credit cards are another good way to build credit scores.
Borrowers make a refundable deposit with the issuing bank and get a credit line that’s typical equal to that deposit.
Question: My wife and I owe about $46,000 in credit card debt.
We are considering a debt consolidation plan in which our debt would be reduced to about $27,000. According to what I’ve read and what’s included in the paperwork, any reduction in our debt may be reported to the IRS as income. I’m assuming this would not only increase our tax burden but could result in the forfeiture of some of my Social Security benefits.
Am I correct in these assumptions?
Answer: What you’re considering is debt settlement, not debt consolidation.
With debt consolidation, you get one loan to pay off other, smaller debts in full. The right debt consolidation loan would offer a fixed interest rate and would allow you to pay off what you owe within three to five years.
Debt settlement, on the other hand, means you’re trying to get your creditors to accept less than what you owe.
Debt settlement typically requires that you stop making payments to your creditors, which will trash your credit scores and could lead to lawsuits. You typically accrue interest, late fees and penalties that could offset or even wipe out any savings the debt-settlement company is promising you.
And the fact that the company seems to be promising you specific results, such as a $19,000 reduction in your debt, is a red flag all on its own. Your creditors don’t have any obligation to settle with you, and a debt settlement company shouldn’t promise that it can make the debt disappear.
To answer your specific questions: Yes, any debt that is “forgiven” in a settlement is considered income that can be taxed. It isn’t considered earned income, however, and so doesn’t trigger the Social Security earnings test that can reduce your benefits.
You’d be wise to read what the Federal Trade Commission and the Consumer Financial Protection Bureau have to say about debt settlement on their sites. In the vast majority of cases, you’re better off avoiding this option.
Pay off what you owe if you can. If you can’t, explore a debt management plan offered by a nonprofit credit counselor and also make an appointment with a bankruptcy attorney so you understand all your options.
Question: You recently answered a question about gift taxes and mentioned gift tax returns.
Who is supposed to report the gift, the one giving or the one receiving the money?
It seems like the one receiving the gift should, but in the answer it seemed the one giving the gift was subject to taxes.
Answer: The giver would file the return.
The gift tax rules require people to report any annual gift over $14,000 to any one person, although the givers don’t owe gift taxes until those aggregate amounts exceed a certain limit (currently $5.45 million).
The gift tax rules are designed to keep wealthy people from circumventing estate tax laws by giving vast amounts to their heirs before they die.
Liz Weston is a personal finance columnist for NerdWallet. Questions may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form atasklizweston.com. Distributed by No More Red Inc.
Secured credit cards are another good way to build credit scores. Borrowers make a refundable deposit with the issuing bank and get a credit line thats typical equal to that deposit.
The hazards of debt settlement
Dear Liz: My wife and I owe about $46,000 in credit card debt. We are considering a debt consolidation plan in which our debt would be reduced to about $27,000. According to what Ive read and whats included in the paperwork, any reduction in our debt may be reported to the IRS as income. Im assuming this would not only increase our tax burden but could result in the forfeiture of some of my Social Security benefits. Am I correct in these assumptions?
Answer: What youre considering is debt settlement, not debt consolidation.
With debt consolidation, you get one loan to pay off other, smaller debts in full. The right debt consolidation loan would offer a fixed interest rate and would allow you to pay off what you owe within three to five years.
American families have an unprecedented $252.3 billion invested in 529 college savings plans, according to a new report published by the College Savings Plans Network. This represents a growth in assets of $5.3 billion.
The total number of 529 accounts increased almost 4 percent over the past 12 months, from 12.1 million in December 2014 to 12.54 million in December 2015. Contributions last year grew by $25 billion. As of the end of last year, the average balance in a 529 college savings plan account was $20,190, down 1.4 percent from the previous year, which, the report states, is attributable to the performance of the financial markets during the second half of 2015.
Education is second only to hard work as the factor to which Affluent households are most likely to attribute their financial success, Spectrem Group research finds. More than eight-in-10 indicate they believe a college education is necessary to succeed in todays workplace. The Bureau of Labor Statistics reports a 5.9 percent unemployment rate for American high school graduates, but only 2.6 percent for those with at least a bachelors degree.
But saving for college is a challenge, especially among non-Millionaires, 38 percent of whom indicated it was a primary financial concern. Published in-state tuition and fees (including room and board) at public four-year institutions averaged $198.548 in 2015-205 according to College Board data cited in the College Savings Plans Network report.
A 529 college savings plan, named after Section 529 of the Internal Revenue Code of 1986, is a tax-advantaged investment plan created to encourage saving for the college education of a designated beneficiary or any other individual investing for their own higher education. Earnings from the funds are not taxed as long as those funds are used to pay for college expenses. Any family member, including aunts, uncles and grandparents, can contribute to the accounts.
Investment in a 529 college savings plan increases with net worth, according to Spectrem Group research. Eleven percent of non-millionaire households with a net worth of at least $100,000 (not including primary residence) are invested in a 529 college savings plan, compared with 19 percent of Millionaires with a net worth up to $5 million, and one-fourth of Ultra High Net Worth households with a net worth between $5 million and $25 million, according to the Spectrem Group report, Asset Allocation, Portfolios and Primary Providers.
Tech Goes Home Chattanooga enables digital literacy countywide
“We, like all cities and counties, have an issue of a digital divide,” says Kelly McCarthy. “People throw the term around all the time, but I’m not a huge fan of the term.” And while some people dismiss the idea of a digital divide because so many have Internet access on a smart phone, McCarthy says the issue is much deeper than lack of Internet access.
“Think about everything you do in a day that requires a computer or a smart phone or Internet access, then think about what you would do if you had none of those things every single day of your life,” she says.
“Generational poverty, socioeconomic status, educational disadvantages–there are so many things that go into that. You’re not just going to help someone get a computer and Internet access and their whole life is going to change. But you can’t expect their lives to change if they don’t have these things. That’s the reality.”
Twenty years into the age of Internet it’s difficult, if not impossible, to compete educationally or in the job market if you lack Internet access and the knowledge of how to use the resources you could find there.
McCarthy is the program director of Tech Goes Home Chattanooga, a digital literacy program of The Enterprise Center designed to help people in Chattanooga and Hamilton County cross that divide. They are working to change the lack of access and knowledge by offering a program of hands-on training, subsidizing the cost of a Google Chromebook or iPad mini and helping people understand their options for connectivity.
“This is very much a program aimed at people who don’t have any of these things and helping them catch up and move forward,” she says.
Participants go through a 15-hour course that teaches the basics of how to use the computer by walking them through 25 curated web resources in topics like money management, saving for college, health care, and Internet safety for children. Trainers tailor their instruction to the needs and interests of participants at different sites, serving both children and adults in urban and rural settings. Through a partnership with La Paz de Dios, some classes are taught in English and Spanish.
“We’re trying very hard to disperse the sites we work with, because part of the program is about going to people where they are. “
For many people, there is a psychological barrier to overcome in stepping outside of their comfort zone. That’s why classes offered in churches are some of the most successful.
“When we started, our first six sites had to take a huge leap of faith because we were brand new,” says McCarthy. “We were saying, ‘you can learn all these great skills, you’re going to become super comfortable using the computer, you’re going to get a brand new computer for $50 and we’ll help you sign up for Internet.’ It sounds too good to be true, I recognized that. We had some very brave souls that tried it.”
Just over a year later, the program has grown rapidly through word of mouth. The current round of classes, under way at 18 sites throughout Hamilton County, is reaching 335 individuals. So far, 729 individuals in 497 families have been through the program, and 483 subsidized devices (either a Chromebook or an iPad Mini for younger students) have been provided.
Plans call for more than doubling those numbers in 2016. Students range in age from 4 to 84. About 72 percent are female, 76 percent are African-American or Latino, nearly 40 percent are unemployed and at least 65 percent earn less than $30,000 per year.
Tech Goes Home Chattanooga was adapted from a successful program created in Boston. The curriculum is used in other locations around the country, but ours is the first countywide program and the second largest implementation of the program outside Boston, according to McCarthy.
For information on volunteering as a teacher or establishing a class site, visit techgoeshomecha.org
Rich Bailey is a professional writer, editor and (sometimes) PR consultant. He led a project to create Chattanooga’s first civic website in 1995 before even owning a modem. Now he covers Chattanooga technology for The Pulse and blogs about it at CircleChattanooga.com
Morgan Drexen, a Costa Mesa-based debt settlement company, was ordered to pay roughly $173 million in restitution and penalties by a federal judge. The firm charged fees to customers who were made to sign contracts for both debt relief and bankruptcy services, when many only sought debt relief services, according to the Consumer Financial Protection Bureau. MICHAEL GOULDING , ORANGE COUNTY REGISTER
Growing income inequality is a hot topic during the presidential primaries, particularly among anti-establishment voters on both the right and left, but candidates and voters should look harder at the growing problem of wealth inequality.
In North Carolina today, 51.5 percent of the households are considered “liquid asset poor,” which means they do not have enough cushion to live at the poverty level for just three months if faced with a job loss, medical emergency or other major income loss. The picture is even bleaker for households of color. More than two-third (68 percent) of African-American households are liquid asset poor in our state.
In addition to providing a little something to fall back on during hard times, wealth means having enough saved to send your kids to college without tapping out your retirement fund. Wealth is what you need for a down payment on your first home or to start your own business. Whether we have a lot or a little, wealth equals opportunity – and it is increasingly unfairly distributed.
The wealthiest 0.1 percent of Americans today own about as much wealth as the bottom 90 percent combined. The racial wealth divide is especially egregious. Median wealth for white households is almost $112,000 compared with a little more than $8,000 for African-American households.
How did the richest country in the world end up like this? The answer lies not only in a sad legacy of racial discrimination, but also in our nation’s “upside-down” federal tax system. Under this system, a millionaire in the top 0.1 percent gets tens of thousands of dollars every year from tax deductions, credits, deferrals and other lopsided tax programs, many of which support wealth creation in the form of homes and retirement savings. By contrast, a typical working family gets little or nothing at all.
These tax programs could be expanding financial security, boosting retirement security or increasing homeownership and college savings for working class families. Instead, they are helping the richest households get even richer.
One part of the solution to wealth inequality lies in comprehensive federal tax reform. But there are also wealth-building ideas that we can adopt right here in North Carolina. One is endowing all children with nest-egg savings accounts as early as birth.
A 529 for all
Several states offer a useful model for North Carolina. For example, Maine establishes a 529 college savings account with a $500 deposit for every newborn in the state. In addition, the state encourages families to continue saving for their children by providing a 50 percent match on savings of up to $300 a year, with no lifetime maximum. The only stipulation is that funds provided by the state be used for qualified education expenses. Other states, such as Nevada, have followed Maine’s lead. Last year, Vermont passed legislation to establish a higher education savings account for every child born or adopted in the state, with special benefits for low-income kids. Each child will receive $250 at birth, with low-income children receiving an additional $250. Similar legislation has been introduced or is pending in Washington, Colorado, Wisconsin and Maryland.
Building wealth through even small investments early in life can have a huge impact later on. Research shows that low- and moderate-income students with just $500 or less in an account are three times more likely to enroll in college and four times more likely to graduate. Another recent study found that a large-scale, nationwide children’s savings program could reduce the racial wealth gap by as much as 50 percent.
The problems of growing inequality and stagnating opportunity demand solutions at both the federal and state levels. I hope presidential candidates will tell us how they intend to help all families build wealth and how they might turn America’s pro-inequality, anti-opportunity federal tax programs right-side up.
This may come as a surprise, but you dont need a perfect credit score to buy a home or get a mortgage.
In some cases, your credit just needs to be sufficient. Good, bad, ugly or indifferent, as long as your credit score matches the criteria of the mortgage size and property type you are looking for, you may be able to get financing.
Heres a quick cheat sheet of the top three most commons mortgages and their basic credit score requirements.
- Conventional loans. You generally need a credit score of 620. However, anyone with a 620-679 credit score should expect to pay higher interest rates and fees.