Bankruptcy Court Online

Hopefully, they’re not one and the same.

We’ve done a lot of consulting work in the past, covering a wide range of topics in the realms of credit repair, debt relief, and personal finance as a whole.

Recently, we were approached by a dating website, Vali-date.net, asking us to consult on identity and profile verification.  The site, which should be launching by the end of the month, wants to make a name for itself by validating your dates.  That is, actually running background checks on its members before it sets them up to meet.  Nothing too comprehensive; the site claims they won’t be requiring a blood sample, just verification you are who you say you are and whether or not you really DO have that summer house in the Bahamas.

It’s an interesting concept for an online dating site, requiring validation from both parties before they attempt any sort of meaningful matchup, and one that makes perfect sense for today’s  scam-conscience society – where some couples go so far as to check each other’s credit histories before committing to a serious relationship.  

Now more than ever, you should protect your information – especially on Dating Websites

There was a time when you only had to worry about as far as identity protection was some ne’er do well stealing your ID and claiming it as their own long enough to empty your accounts into theirs.  Now we have to worry about potential significant others leafing through them before they get to know us better?  Hell, the first date could be over before the first course of a meal!

With your romantic future in mind, not to mention protecting your identity as well, here’s a list of steps you can take to insure your identity makes it past first base:

• Clean out your wallet.  Try to carry only one credit card, and leave your Social Security card at home.  • Don’t carry any pay stubs, shred your receipts when you’re done with them, and obviously don’t write your PIN number on a cocktail napkin and forget about it.  

• Reduce your paper bills and switch to banking and bill-paying online.  Doing so will result in your statements being sent to your email.

• Review your credit and bank statements every month – if anything on them looks off, contact your provider.  

• Always require photo ID verification.  Write “See Photo ID” on the back of all your cards to make sure anyone who wants to swipe your card makes sure it belongs only to you.

• Shred all credit card offers, bank statements, and anything with your personal information listed on it.  

• Check into software to set up firewalls and run checks every couple of weeks for spyware and viruses.

• Be very wary of where you shop online.  If a site looks particularly suspicious in any way, it’s probably best to find what you’re looking for elsewhere.

• Don’t leave your credit card information online, even on sites you may frequently shop at, like Amazon or Best Buy.  You’re better off taking the extra couple of seconds to enter your card numbers in from scratch whenever you wanna buy something.

• Limit access to your computer.  Put passwords on every one of your accounts, and keep them to yourself.

Keep these tips in mind and you’ll not only have gone a long way towards protecting your wallet, and even perhaps, scoring your way towards home plate.

One thing we always try and stress to our clients, especially when they first sign up for debt relief or credit repair services, is how important it is to have at least 3 open credit cards in good standing with the credit bureaus in order to maintain and build upon a good credit score.  If you don’t have at least one open, revolving credit account, you need to get one ASAP so you can start building a positive credit history.

The problem now becomes a choice of which type of credit card is best for the client to build their credit back up as quickly as possible.  More than a few immediately think to sign up for a retail credit card with their favorite shopping outlet. 

And why not?  Just about every one of these stores offers some kind of incentive to sign up for their credit card on the spot.  I was at Barnes & Noble the other day, picking up a couple of books, and was offered 15% off my purchase today if I signed up for their credit card.  A tempting offer to be sure, but I ultimately decided to pass, and the next time you’re presented with a similar offer, you might want to as well.  Why?

• High interest, low limits.  Most retail chains that offer their own credit cards try anything they can to get you to sign up on the spot, including offering to take as much as 20% off your in-store purchases then and there.  But while the immediate savings may sweeten the deal (especially if you’re already seriously considering the offer because you shop there a lot), you might be regretting the decision in the long run.

Store credit cards generally start you off with a ridiculously low credit limit – usually no more than $500, meaning if you got a Best Buy credit card and plan on using it to pay off that new LED TV you’ve been eyeing all year (I’m right there with you), you’ll drive your credit utilization ratio into the stratosphere, which will drive your credit score into the ground. 

They then follow that up with interest rates that can go as high as 30%, meaning if you make any big charges to your new account and don’t pay it off before the end of the “grace period” many retailers provide, you’ll be facing major interest charges, which can make saving a couple of bucks on your last DVD purchase seem a little less worth the effort.

• They’re really only good in that store.  Yeah, you’re probably not going to be able to pay your cable bill with your Barnes & Noble store credit card, or book a cruise with your JC Penny card.  Store credit cards are only really useful in the one store, and once you step outside they tend to lose their worth.

• They don’t even have as much influence on your score.  While it’s true that having a positive payment history looks good on your credit report no matter what, store credit cards don’t have as much influence on your credit report as other credit cards.  Combined with the high interest/low limits structure, and the fact that they’re essentially glorified gift cards, you can certainly find better options when you’re looking for a good credit card to fill out your history.

Having worked in the field of debt relief and credit repair services for as long as I have, there isn’t much I haven’t seen or heard when it comes to people’s credit.  And now that the economy itself is in as bad a shape as a lot of people’s credit, it seems that our past deeds have finally caught up with us.

While it’s true that everyone’s situation is different and you can’t really pin the blame for any one person’s financial strains on a universally-applying cause, there are at least a few main factors we can all point to as a reason our wallets all look a little too thin these days.

Cuz we are living in a material world…

Ah, consumerism.  Many people like to point out money itself as the root of all evil, but that same hive mind is posting that on their new iPad while sitting comfortably on their faux leather couches, watching their new 60” LED TVs and downloading apps on their new iPhone 4 before they head outside to wash the car they picked up last week to replace the one they leased two years ago.

My point is, the money itself isn’t so much a problem as is the culture of consumerism we’re funding it with.  Every time some hot new product launches, especially a new cell phone, people line up to be among the first to purchase it.  Apple fans know a thing or two about consumerism – just look at every product Apple has launched since the iPod.

Consumerism by itself isn’t necessarily bad, if kept in check.  However, when it’s taken to the extreme – when people start dreaming far beyond their means, buying their dream houses and cars without a thought of how they’ll actually pay for them – well, that’s when we all run into a huge financial roadblock.  But not all our problems can be pinned on the fact that we’re all lemmings, can it?

You lack discipline!

People may buy an iPhone 4 because they’re told it’s the best thing to happen to us as a species, but you can’t solely lay the blame for that on Apple’s marketing department; after all, they’re not holding a price gun to your head and forcing you to buy it.  

No, the problem here lies in our completely frivolous spending habits.  When was the last time you were out running errands, and decided to pick something up that you didn’t need, just for the hell of it?  I’m not talking about a major purchase (although those certainly apply).  I’m talking about driving past a McDonald’s and pulling into the drive-thru for a Frappé, or stopping to grab a Starbucks coffee every morning, or snatching up a movie off the shelf at Best Buy because you want something to watch tonight.

These kinds of purchases seem miniscule in our day-to-day lives, but as anyone who’s made too many of them and then felt the sting hit them hard when they get their bank statement at the end of the month knows, those purchases do come back to bite (and yes, that’s a bit of personal experience talking).  A little discipline, along with the ability to make our own coffee and pack our own lunches, could go a long way towards getting our finances back on track.

You gotta spend money to make money!

And now even the US government is encouraging our spend-thrifty ways!  After all, the only way to dig our economy out of the pit we put it in (though they won’t put it like that), is to fuel it back up with our money.  So don’t hold onto your money in a mattress or in the crawl space in your attic, spend it!  After all, who better to tell us how to turn our economic and financial hardships around than a bunch of people who have never actually run companies in their lives and who, whenever the subject comes up in the news or on talk shows, dance around the subject like a man with two left feet dragged out to salsa dance classes?  

These people demonstrate on an almost nightly basis they have no clue how to get us back in the black.  Hell, just look at the fact that you can deduct mortgage interest from your taxes, and then having to turn around and pay taxes on the interest.  Don’t save it, spend it!  It’ll make you money and save the economy somehow!

You don’t need to conform to the same lack of discipline that got us into this mess though.  If you’re personal finances aren’t where you’d like them to be, and your credit is suffering for it, give one of our specialists a call on that brand new 4G phone.

I remember the week following my 18th birthday, going out to the pick up the mail for the day, and finding the majority of my mailbox packed with a bunch of credit card offers from all the major CC companies – from Visa to American Express.  I didn’t think much about them; these kinds of offers were a dime a dozen, and my parents usually tore them up and threw them out as soon as they saw them.

Then I noticed something quite odd about the name on the envelope.  It wasn’t addressed to either of my parents at all – it had MY name in the box.  My first credit card offer!  Forget being able to legally vote, buy a pack of cigarettes, or getting into an R-rated movie without parental supervision; NOW, finally, I knew I had “arrived.”  I was all growed-up.

And I’d be damned if I was going to ignore all these nice companies who were tripping over themselves for the chance to give me a credit card.  

Even my parents were beside themselves.  When they stopped laughing long enough for me to ask what was so funny, they simply said, “Don’t spend it all in one place.”  I didn’t, and I had the credit card debts to prove it….

Just sign on the dotted line

You’d think that, to an average 18-year old kid who doesn’t know jack about credit, a simple credit card offer would be more than enough to make their day – especially if they’re still asking their parent’s to pay for something by check or card when they say they don’t have the money on hand for it because, “it’s like free money anyway, right?”

But banks and credit card companies won’t just stop there; they’ll do anything they can to get you in their pocket, including offering bonuses for simply signing up.

If you’ve received any credit card offers in the last few years, you know how awesome (read: superfluous) these offers can be, especially to an 18 year old kid with no real money in the first place.  I mean seriously, it seems like every other credit card offers airline tickets or miles with each $1000+ purchase.  Who’s really going to cash that in during times like these?

Not all offers are created equal

But I digress.  You see, not everyone gets the same credit card sign-up bonus that you might be offered.  Banks are kinda sneaky like that – they’ll offer the exact same card to two different people, but with completely different rates, terms, and bonuses.  One man’s lower interest rate is another man’s airline miles, so to speak.

To illustrate this point, let’s take a look at a couple of credit cards and compare their sign-up bonuses:

• Discover More Card.  In addition to receiving an extra $75 (up from the previous $50) for your first $500 in purchases – within the first 3 months, or no money for you – you also get 0% APR for six months on purchases (after six months, the APR can go anywhere from 12% to as high as 20%) and no annual fee.

• Citi Dividend Platinum Select MasterCard.  Instead of a cash bonus of $75 dollars after your first $500 in purchases, this ridiculously-named card offers 5% cash back on restaurants, car rentals, and hotels (but only until Sept. 30, 2010) as well as additional cash back bonuses on select purchases.  0% APR for 15 months (after which point it falls between 13% and 20% as well) and no annual fee round out this card’s list of features.

That’s just two of the many credit cards out there offering sign-up incentives.  As you can see, both cards offer similar interest rates, but where you fall in that spectrum could be wildly different depending on where the offer is coming from.  A mail offer may promise a free airline ticket at the cost of a higher rate, while an online bid for the same card may come with no plane ticket, but lower interest as well.

The moral of the story

Don’t immediately rush for a pen or hit the “auto fill” button the next time a credit card offer comes in the mail or pops up on your screen.  Take the time to research all the card’s features beyond just airline miles or cash back bonuses that run out in a few months.  Choosing the wrong card could backfire if you’re just as careless with your money, and then you’ll end up in need of serious debt relief.  Then you might not feel quite so “growed-up” anymore.

Good news in the realm of consumer credit card debt is something of a rarity; unless it involves the person getting out of debt completely, there’s generally not a lot of cause for celebration when the subject of debt comes up.

Well here’s a little bit of good news for those of you searching for debt relief or a chance at credit repair: the New York Federal Reserve recently released their quarterly report  detailing the nation’s household credit and debt and it seems that there’s some good news hidden in there – not much, but some.

The Good

According to the report, a greater majority of Americans are actually current on their debt payments rather than behind.  Auto loans are up by 25%, and while many consumers closed rather than opened credit card accounts in the last year, the amount of credit account inquires rose for the first time since 2007.  

The Bad

Unfortunately, the report came with less than cheery news as well.  More and more people have foreclosures weighing their credit reports down – close to 500,000 people according to the report, nearly a 9% increase from the first quarter.  Bankruptcies rose as well – up 34%, meaning 621,000 consumers have a BK on their reports.

The Future

While the news of rises in foreclosures and bankruptcies isn’t exactly a sight for sore eyes (or wallets), the news of a rise in auto loans and credit inquires is a clear sign that the majority of consumers are ready to test the financial waters again, albeit pretty cautiously.  

Most people are in fear of joining the growing unemployment ranks, and so will keep their credit and checkbooks on lockdown unless absolutely necessary.  But they can only curb their spending enthusiasm for so long before they have to break out the cards for something, and that will be the key to kicking the economy back into gear – even before companies start hiring again, according to economists.  

And with our national debt slowly (and I mean slowly) declining, consumers may be ready to take their wallets for more than just a financial necessity.

I just wrote a test post about credit repair services.

Test post abotu credit repair

this is a debt test

One question that’s been posed by some of our customers deep in credit card debt and in need of credit score repair concerns the different types of debt and whether there’s such a thing as a good debt (that is, something worth being in the financial hole for) versus the obvious bad debts that seem to pop up on some many of their credit reports.

Today, I thought I’d briefly touch on what might be considered a “good” debt over all the bad ones – kind of the same as good vs. bad cholesterol – and how to avoid the bad ones so you don’t fall too far into a money pit and wind up in need of serious debt relief.  

Bad debt

Let’s start with the obvious: debts that you don’t want to find yourself in.  Most people will probably tell you that any type of credit card debt is automatically bad, and they’re not necessarily wrong, but that doesn’t mean they’re right on the money either.  

Think about what you use your credit card(s) for.  If you’re like a lot of people these days and tend to break out the plastic for every purchase you make, from gas to clothes to a night at the movies and don’t pay off the balance in full each month, you’re already making a lot of headway on the highway to bad credit.  Before you know it, you’ll end up with a bill upwards of $600 for a bunch of items you could have SWORN didn’t add up to that; it’s gotta be a problem with their math, that’s all.

Bad debt doesn’t just stop at the checkout counter though; many people get into bad debt when they decide to use their credit cards to fund even something that might be good for them, like a vacation.  Now, I’m not about to say you shouldn’t take a vacation – God knows I could use one.  What I am saying is that you shouldn’t rely solely on your credit cards to carry you through that Caribbean cruise or Eurotrip without first planning for the trip and what you’ll be spending on it.  

Simply put, if you can’t afford a big vacation like the ones I listed (hell, even something like going to Disneyland for a SoCal resident can drain your available funds faster than you can say “I think we’re parked in the Goofy lot”) with your available budget, consider dreaming a little smaller, or at least putting it off until you have the funds for it.

Good debt

These are all obvious examples of debt that’s gone wrong, but what about a good debt?  Is there even such a thing as owing money for a good cause?  A good debt can also been seen as something of an investment; one that you can actually expect a return on.  The most immediate example of a good debt is a student loan.  Higher education is always important and can usually lead to higher paying jobs, meaning you’ll be able to take care of your student loans over time.

You could also consider buying your home a good debt or investment.  And with the market in the slump it’s in now, it can be easier to get in at the ground floor and wait for the property to appreciate.

How do you tell the difference?

If you noticed the Bad section outweighs the Good portion of debt, that’s because it can be incredibly easy for a debt taken out with the best intentions to go sour real quick if you don’t keep an eye on it.  If you just skimmed the rest of the article, I’ll lay it all out for you here:

A good debt is something of long-term value, like a house or an education.  A bad debt is anything you buy that you basically can’t afford to pay for then and there, and won’t see an appreciation in value.  If you find the majority of your debts are falling into the “bad” crowd and you’re in need of credit repair services, give one of our specialists a call to set the record straight.

This Sunday, August 22, marks the day the final provision of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 goes into effect, helping you get that much closer to finding debt relief from your credit cards.

Originally signed into law by President Obama last year, the new laws were designed to end many of the not-so-customer-friendly practices in the credit card industry, enhance consumer disclosures, and provide some added protection to cardholders under 21. The law was scheduled to roll out in 3 phases, this Sunday being the last installment.

Here’s what the final phase of the CARD Act means for you:

• Any and all penalty fees that you may incur are now required to be “reasonable and proportional to the omission or violation.”

• Creditors must now periodically review all interest rate increases starting in January 2009, and must work to reduce rates when “warranted.”  (What warrants a warrant?  Currently it seems that’s open to interpretation, so if you’re looking to try your hand at fixing credit, make sure you’re up to date on your accounts.)

• Card issuers are no longer allowed to charge a penalty fee of more than $25 for late payments or any other violation of the card’s terms unless the consumer has “engaged in repeated violations or the issuer can show that a higher fee represents a reasonable proportion of the costs it incurs as a result of violations.”  So, don’t be late on your bills if you want to avoid slipping into credit card debt.

• Your credit card issuer is also no longer allowed to charge penalty fees that outweigh the dollar amount associated with the consumer’s violation.  So if you’re late on a $50 payment, your card company can no longer charge anything above $50 as a late fee.

• Finally, the new CARD Act wipes out any service fees on gift cards that have remained inactive, and requires to the cards stay active for no less than 5 years.  That means that McDonald’s gift card your favorite aunt or uncle sends you every year for your birthday is probably still good to go.

Here’s a quick rundown of what was included in the first two phases of the CARD Act:

• Card issuers are now required to give 45 days’ notice before they roll out any significant changes to your account or interest rate.  They’re also no longer allowed to impose any arbitrary increases to your interest rate.

• The CARD Act also prohibits creditors from charging fees for going over your credit limit unless they allow you to complete those over-the-line transactions.  One more reason to keep your card balance below 30% of the available amount.

• Any payments you make to a card that’s above the minimum required payment for the month must be applied to whichever credit card carries the highest interest rate.

• Any time your card company plans on raising your annual percentage rate, they must now notify you as to why they’re doing so.

• If you’re under 21 and want to get your hands on that shiny new piece of plastic, plan on bringing along a parent or guardian willing to take responsibility for any outstanding debt you may well (read: probably will) accrue if you can’t pay it off yourself.  Either that, or prove that you’ve got the means to take care of the card on your own (i.e., proof of employment) and that card is yours.

These are your rights under the Credit CARD Act, designed to better inform of and protect you from those dastardly credit card companies.  If you find you’re still in need of credit repair services, give one of our specialists a call.

Related Reading:

credit repair | vantage score vs. fico | credit card debt and college students | financial discipline

I suppose a more positive way to spin this would be, “Credit Card Debt No Longer Our #1 Financial Concern!”

Yes, you read that headline right – our student loans have finally managed to surpass our credit card bills in outstanding debt.  According to figures from the Federal Reserve in June of 2010, consumers collectively owe $826 billion in revolving credit.  That’s billion, with a B.  If that doesn’t prove Americans are in desperate need of debt relief, I don’t know what will.

Not to be outdone, outstanding student loans both federally and privately funded now ring up to a total of $829 billion, according to FastWeb.com.  And I thought I was overcharged for textbooks when I was in college.

Textbooks vs. checkbooks

So how did student loans manage to surpass credit cards as Americans’ biggest running tab?  You might blame the fact that unlike credit cards – where what you see on your statement is what you get, and too many bad decisions can leave you scrambling to fix bad credit – student loans are slow to burn, accruing over many semesters and trips to the bookstore and financial aid building, until you finally are ready to graduate and you’re left with a gigantic bill to go with that sheepskin.

It could also mean a shift in priorities for many students trying debt management by concentrating on paying off their credit cards first as a means of getting out of debt quicker.  Because most credit card companies continue raising their minimum monthly payments, and credit cards tend to carry higher interest rates than student loans, many consumers who are stuck with both bills are choosing to focus more on their credit card bills, lest their scores fall lower than their grades and they wind up in need of credit repair services. 

Paying with more than just your lunch money

People are also more willing to borrow money for their education than they are to spend on their credit card.  With tuition at both private and public 4-year universities going as high as $26,000 as of last year, many students and parents are taking out loans in droves.

Student loans are also very difficult to include in a bankruptcy; they typically can’t be discharged because of the wealth (no pun intended) of repayment options.  According to FastWeb.com, only 29 out of 2,880 borrowers who tried to discharge their loans through bankruptcy were successful, and of those many only had a part of the loan discharged, not the whole bill.

So whether you’re about to send your kid off to college or you’re thinking about taking some classes again yourself, be careful how much you’re willing to borrow.  It may be a slow burn when compared to the sting of your credit card bill, but it’s a burn nonetheless.