Source: Los Angeles Times

Kathy M. Kristof, Personal Finance
September 14, 2008

Everyone is afraid of identity theft. It seems as if every couple of days there are new reports of Social Security numbers and other sensitive information stolen, lost or leaked.

Just last week Countrywide Financial, which is now owned by Bank of America, said it would provide two years of free credit monitoring for customers whose confidential data were allegedly stolen by a former employee.

But should you spend money to buy services that promise to protect you from identity theft?

As in so many matters financial, it depends: on whether you don’t mind paying for something you could do yourself for free, and on whether the company offering the protection can really deliver on its promises.

Most identity theft protection services actually watch out for only one type of fraud — in which hackers or other thieves take out new credit in your name.

But there are seven types of identity fraud, said Avivah Litan, vice president and analyst at Gartner Research in Stamford, Conn.

They include abuse of an existing credit card account, abuse of an existing debit card account and checking account fraud, ranging from forgery to account takeovers.

New account identity fraud — the type monitored by most services — hits only about 1.45 million people each year, said Litan, who compiles industry statistics. “You have about a 1-in-200-million chance of it happening to you,” Litan said. “Is avoiding that chance worth $120 a year? If you are a statistically based person, probably not.”

But add in the other types of identity theft, she said, and the number of people affected goes up to between 9 million and 15 million annually.

Another problem, said Jay Foley, executive director of the Identity Theft Resource Center, a San Diego nonprofit organization that does not sell monitoring services, is that most companies that do claim to be preventive in fact are simply offering a way of detecting that you’ve already become a victim.

The service sold by another nonprofit, the similarly named Identity Theft Assistance Center, for instance, alerts you when new accounts have been opened in your name. The service is $10 to $18 a month and the center earns a fee whenever consumers buy it.

The group’s website warns consumers not to be taken in by services that promise more than they deliver — but the service offers little more than most of its competitors.

There are some identity theft services that aim at prevention rather than detection. Two such services — LifeLock and Debix — put a fraud alert on your credit file, which demands that merchants call you before issuing credit in your name. LifeLock Chief Executive Todd Davis widely publicizes his own Social Security number to show the effectiveness of his service, which charges $10 a month. However, Davis’ identity has been stolen once and he admits that a handful of his company’s customers have had problems too. But, he says, LifeLock works with them to fix anything that gets through.

Times of the Interenet

When you are thinking about filing bankruptcy there are many things that you need to think about. It is not a decision that should be taken lightly as it can negatively affect your life in a number of ways. So many people see bankruptcy as an easy way out of their debt problems, when in fact it can sometimes make their lives worse.

Before filing bankruptcy, it is important that you take the time to understand a little more about it. Do you know how it will affect your life? Do you know what the process involves and what you will still have to pay if anything?

There are two main types of bankruptcy and those are Chapter 13 bankruptcy and Chapter 7 bankruptcy. If you are aiming to eliminate all of your debts then you will need to file for Chapter 7. However, if you choose this option, it will have a negative effect on your credit report. It will make it more difficult to find credit in the future; including getting a mortgage and it will stay on your report for seven to ten years.

Chapter 13 bankruptcy is more like a payment plan where you repay your debts over a period of time. This will still have an effect on your credit report but it will look more favorable to creditors in the future. It makes your debts much more manageable but it does not wipe them out.

It is always advisable to look at all other alternatives before filing bankruptcy. Have you looked into debt consolidation or debt management? Are there other options that you have not yet investigated thoroughly? Look at every possible alternative as bankruptcy should always be a last resort. Depending on what types of debt you have, you need to know there are certain kinds of debt that bankruptcy cannot discharge. For example, if a big percentage of your outstanding debt is composed of things like tax liens or student loans, those items are not wiped out via any chapter of bankruptcy.

If you do have to file for bankruptcy then it would be a good idea to seek professional help in the form of a bankruptcy lawyer. They will be able to help you through the process and advise you of how to file for bankruptcy and the things that you need, as well as analyzing your situation to see if another option is better for you. As new bankruptcy laws have been unveiled, it is now quite a complicated procedure filing bankruptcy and so it would be safer to leave the process to a trained professional. Many people who have filed in the past said that they saved much more than the attorney’s fees in terms of what they were able to keep and retain, compared to if they had tried to do it themselves.

Overall, it might seem like a quick fix or an easy option to get you out of debt. However, you could still end up losing your home if you have secured a loan on the property. It would go on your credit report and stay there for up to ten years. You would have extreme difficulties getting the credit that you need and generally, your life will be harder. So before filing bankruptcy always ensure that you have considered all of the possible alternatives first!

For more insights and additional information about things you should know before Filing Bankruptcy as well as getting a free bankruptcy evaluation from a qualified bankruptcy lawyer in your area, please visit our web site at http://www.bankruptcy-data.com

Article Source: http://EzineArticles.com/?expert=Jon_Arnold

Source: Redding.com

By Janet O’Neill (Contact)
Sunday, September 14, 2008
Protect your credit

• For Countrywide customers: Go to www.consumerinfo.com/countrywide. The activation code in borrower letters is required. Call 866-451-5895 for more information.

• Other useful sites: To learn more about placing a security freeze, go to financialprivacynow.org.

• To receive a free credit report, go to annualcreditreport.com.

• To learn more about how to how to deter and detect identity theft, go to ftc.gov/idtheft.

Letters hitting north state mailboxes from Countrywide Financial Corp. are offering free credit monitoring in the wake of an alleged theft of personal information from the mortgage lender’s computers.

Palo Cedro homeowner Carly Pickern signed up for the two-year service the lender is providing through www.consumerinfo.com, an Experian business unit.

“It’s actually a pretty neat system that they have,” said Pickern, who alerted friends via her MySpace page that the service was available. “If they’ve (Countrywide) had some sort of compromising situation I would rather sign up for it just for a safety net.”

In its letter, Countrywide advises its customers that a former employee may have sold information — including names, addresses, and Social Security and mortgage-loan numbers — to a third party. It says the free plan it’s offering includes daily monitoring from national credit-reporting companies Experien, Equifax and TransUnion.

The program also offers e-mail alerts to any major changes in credit reports.

For Countrywide customers at least the price is right, said Gail Hillebrand, senior attorney for Consumers Union in San Francisco.

“It isn’t worth paying for, but if it’s being offered to you for free you may as well sign up for it,” Hillebrand said Friday. “You should realize that it does have limitations.”

The nonprofit Consumers Union is the publisher of Consumer Reports.

Credit monitoring, which alerts consumers after the fact, is just one of three basic steps people can take to protect themselves, Hillebrand said. Those who buy it pay $60 to $180 a year, which Consumer Reports says is too much.

A second option is the fraud alert, which the major credit bureaus attach to a credit report. A potential lender or creditor is asked to contact the consumer during a transaction, but isn’t required to do so. It expires after 90 days.

“It’s like putting a sign on your door that says don’t break in,” Hillebrand said.

A third step is a security freeze, which she likened to “a dead bolt on your credit report.” It allows consumers to lock access to their credit files against anyone who might be trying to open a new account or get credit in their name, according to Consumers Union.

A person can unlock the file using a PIN number, Hillebrand said.

Joe Rodola, director of By Design Financial Solutions in Redding, agrees accepting Countrywide’s offer wouldn’t be a bad idea.

“At least it gives you notification when something happens,” he said. “Otherwise you’re forced to pull a credit report once a year.”

The Los Angeles Times last week reported that according to the FBI, as many as 2 million Countrywide loan applicants may have had data stolen.

A former company employee has been charged with illegally accessing its computers.

The paper also quotes a Countrywide spokesman as saying no financial harm has been reported as a result of the theft.

Bank of America Corp. acquired Countrywide on July 1.

Reporter Janet O’Neill can be reached at 225-8216 or joneill@redding.com.

Credit.com

FTC: Companies claimed to remove accurate but derogatory information

By Connie Prater

A Texas couple operating credit repair services has been charged with violating federal law by making false promises to repair consumers’ credit reports by wiping out derogatory but accurate information.

The U.S. Federal Trade Commission announced it has filed a complaint against Rudolph Joseph Strobel (aka Lee Harrison) and his wife Leanna Ruth Harrison in the U.S. District Court for the Eastern District of Texas. The court has frozen the couple’s assets and ordered a halt to the alleged business practices.

“The FTC seeks to bar the defendants from further violations and make them forfeit their ill-gotten gains,” according to the agency’s press release.

Authorities say the couple operates several credit repair services, including Lee Harrison Credit Restoration, Credit Restoration and Lee Harrison Associates Credit Restoration. All of the companies are located in Naples, Texas, but advertise in print and online classifieds, including USA Today, Thrifty Nickel and Common Cents. They also promoted their services on a Web site: http://www.lhcreditrepair.com/.

According to the FTC, the companies marketing statements included: “Have you had a bankruptcy? We will repair your credit so that this past event does not haunt your future.” When consumers called the companies with questions about the service, they were told: “Anything that hurts you, we’re going to get it off of [your credit report].”

The companies allegedly collected advance payments as deposits and then charged between $250 and $1,150 per person.

The FTC’s complaint alleges the couple violated the Credit Repair Organizations Act (CROA) and the FTC Act by “falsely representing that they can improve consumers’ credit reports by permanently removing negative information, even when the information is accurate and not obsolete.” Authorities also cited requiring advance payment for credit repair services as a violation of the CROA.

To comment on this article, write to: Editors@CreditCards.com.

Free Annual Credit Reports

At age 25, John Loconsolo, a paint contracting estimator from North Caldwell, N.J., still had to ask his father to co-sign on his first car lease. Loconsolo had gotten himself in a bit of debt during his post-college years, and his credit score was suffering. But the car incident motivated him to do something about it.

“The thought of not being able to buy a car or get a mortgage really scared me,” says Loconsolo.

Loconsolo pulled himself together, paid off his debt and, a few years later, he is now a proud homeowner. But if he hadn’t upped his credit score, he could still be renting.

The point of a credit score is to determine your “quality” as a money borrower depending on your past credit history. Basically, lenders hire credit agencies to rate you, and this rating is your credit score.

For example, before you apply for a mortgage from Chase (amex: CCF - news - people ) or Citibank (nyse: C - news - people ) or Bank of America (nyse: BAC - news - people ) or wherever, your bank may contact the credit bureau it works with to see whether or not it should give you a loan and, if so, how much interest it should charge. Usually, the worse your credit score is, the higher your interest rate.

You credit score is a number, commonly called a FICO score, which is an acronym for the Minneapolis-based Fair Isaac Corp. Your FICO score ranges between 350 (extremely high risk) and 850 (extremely low risk). Most other systems of credit scoring follow a similar range.

The reason there is more than one method of rating your credit is because there is more than one credit bureau that rates you. The three largest credit bureaus in the U.S. are Equifax (nyse: EFX - news - people ), TransUnion and Experian. Only Equifax uses an actual FICO score, while the others use similar rating methods that have been developed internally.

Don’t expect to get the same score from each of these agencies. In fact, your score may vary widely, and you might have three or more credit scores at one time.

photo credit: Sweet One

Georgia and North Carolina banned cash advance loans in May 2004 and December 2005. The legislators in these states say they were compelled to act for the public good because of the claims from public interest group adversaries that pay day loans are a “predatory debt trap.”

The debt trap critique against payday loan companies seems based on three allegations: payday loans are expensive (”usurious”), payday lenders locate near their customers (”targeting”), and most payday customers are repeat (”trapped”) borrowers. After documenting that the typical customer borrows 8 to 12 times per year, the CRL (Center for Responsible Lending) concluded: borrowers are forced to pay high fees every two weeks just to keep an existing loan outstanding that they cannot afford to pay off. This “debt trap” locks borrowers into revolving high-priced short-term credit instead of reasonably priced longer-term credit.

Although the amount and availability of longer-term credit that may be available to payday loan borrowers, and the precise sources of that alternative credit, was never discussed, the debt trap critique has influenced lawmakers at state and municipal levels to restrict cash advance payday loans in their jurisdictions or to ban them outright.

Oakland and San Francisco limit the number and location of payday stores. Oregon and Pennsylvania recently joined Georgia and North Carolina in banning payday loans. New York, New Jersey, and most New England states have never allowed payday lending. By contrast, some western states (Washington, Idaho, Utah, and until recently New Mexico) have kept their laissez-faire policies toward payday lending.

The national patchwork system of payday loan regulation means that millions of people use payday loans repeatedly in some states, while their counterparts in other states must go without this often only legal source of bad credit loans. However one sees payday credit-as helpful or harmful-the patchwork regulations mean that millions of households are being wrongly treated by payday loan regulations.

The national adversarial controversy continues. Jane Bryant Quinn (financial columnist in Newsweek) recently warned that “payday loans can be a debt trap” (October 8, 2007).

The Federal Reserve Bank of New York Staff* tested the debt-trap claim of the payday advance loan by researching how households in Georgia and North Carolina have fared since those states banned payday loans. Their research investigated patterns of returned (bounced) checks at Federal Reserve check processing centers, complaints against tradional “approved” lenders and debt collectors filed by households with the FTC (Federal Trade Commission), and federal bankruptcy filings.

The monthly complaints data are new to this study; these data were obtained them from the FTC under the Freedom of Information Act. Changes in complaints within a state to identify changes in household welfare (well-being), a distinct advantage compared to the ambiguous measures (interest rates and repeat borrowing) emphasized by critics of payday lending. How do we know when credit is so expensive or burdensome that households are better off without it? The real test should be whether household welfare is higher with or without payday credit, and complaints are a measure of welfare.

Cutting to the chase, FRBNY Staff concluded that compared with households in states where payday lending is permitted, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about approved lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate.

This negative correlation between reduced payday credit supply and increased credit problems, and decline in the general welfare in Georgia and North Carolina contradicts the debt trap critique of payday lending. The official citation to the referenced study is:

*Payday Holiday: How Households Fare after Payday Credit Bans
Federal Reserve Bank of New York Staff Reports, no. 309
November 2007; revised February 2008

Clovis Community College

By Sandra Taylor Sawyer: Guest columnist

photo credit: Casey Serin

For the small business owner who is seeking financing it sometimes seems to come as a shock when a lender requests a copy of a personal financial statement and signing a release for a credit check.

Most small businesses operate as sole proprietorships or partnerships and as such the owner(s) are responsible for the liabilities that may be incurred by the business. It is therefore routine procedure to include a personal finance statement as part of any business plan and loan application.

The personal finance statement will list the assets of the individual including such items as cash (checking and savings account balances), notes (owed to the individual), certificates of deposit, life insurance (if it has a cash value), securities (stocks, bonds, etc.), real estate (market value), vehicles (market value), individual retirement plan account value and household goods.

Liabilities that must be listed include current bills owed (usually credit card balances), mortgages on real estate, outstanding loans and unpaid taxes. The difference between assets and liabilities is called net worth, which is what the lending institution will look at as potential collateral to secure the loan granted to the business.

What all of this means to the business owner is that if he or she wants to get financing for starting, acquiring or expanding a small business, he or she must first look inward and get their personal finances in order and increase net worth. Banks and other lending institutions will not allow commercial loans to be used to pay off personal debt items such as credit card balances. It is wise to pay off credit cards prior to requesting a business loan (guaranteed or not).

It is prudent to obtain a copy of a personal credit report months before requesting a loan. Many times these reports contain incorrect and damaging information that will diminish the chances of getting a loan. It is imperative to have these items removed and it takes time to do this. The federal government mandates that every citizen can obtain a free copy of their credit report annually. Contact Annual Credit Report Request Service at P.O. Box 105281; Atlanta, GA 30348-5281 or www.anuallcreditreport.com, to obtain free credit reports.

Sandra Taylor-Sawyer is director of the Small Business Development Center at Clovis Community College. Call the center at 769-4136 or visit www.nmsbdc.org/clovis. Jim Casey, retired business counselor, contributed to this article.

About.com

photo credit: TheTruthAboutMortgage.com

In July, consumers increased their credit card debt 4.8%, lower than the 7% growth rate of last year. Consumers owe $970 billion, which is $3,180 of credit card debt per person, or $8,255 per household. (Source: Federal Reserve, G.19 Release, August 7, 2008)

The Federal Reserve’s G-19 Consumer Credit report also stated that non-revolving debt, like mortgages and auto loans, only grew .5%, an indication that credit restrictions are tightening again. Non-revolving debt is still $1.618 trillion, or $5,304 per person or $13,793 per household. Note: This estimate is based on 305 million people in the U.S., an average of 2.6 persons per household, and 117 million households. (Source: U.S. Census, Population Clock; Average Household Size)

The declining housing market has caused many families to switch from home equity loans to credit cards to finance purchases. In addition, the Bankruptcy Abuse Prevention Act of October 2005 has prevented many indebted families from filing for bankruptcy, further inflating the debt figures. The availability of credit for personal consumption drives 70% of the U.S. economy. Now that it seems credit is returning to normal, this will support GDP growth.

MarketWatch
By Rex Nutting, MarketWatch
Last update: 3:06 p.m. EDT Sept. 8, 2008

WASHINGTON (MarketWatch) - U.S. consumer debt grew at an annual rate of 2.1% in July, the slowest growth since December, the Federal Reserve reported Monday.
Consumer debt — including credit cards and auto loans but not including mortgages - increased $4.6 billion to $2.59 trillion, the Fed said. It was the slowest growth in credit since the 1.9% growth rate in December.

June’s growth was revised down from 6.7%, or $14.3 billion, to 5.1%, or $11 billion.
Growth of credit card debt accelerated to 4.8%, or $3.9 billion, in July from 3.5% in June. Growth of nonrevolving debt - largely auto loans - slowed to 0.5%, or $678.1 million, the slowest since December.

The average interest rate for a new-car loan plunged to 3.31% from 5.49%; it’s the lowest rate since September 2006. The maturity of the average loan widened to a record 67.2 months from 63.5 months in June.

Despite the low interest rate for auto loans, auto sales dropped in July to the lowest pace in 16 years.

The Fed’s consumer credit figures do not include any debt backed by real estate.
Rex Nutting is Washington bureau chief of MarketWatch.

Money Savvy

There are many people who find themselves in emergencies. The situation dictates a certain amount of cash but seems to be impossible to acquire. Many of them usually approach payday loans, which will easily tell them that it is quick and easy to borrow; just write a post-dated check and they will provide the case on the spot.

They will hold the check and will not cash it until the next payday. However, what they are not telling is that these people are actually paying outrageous amounts of the loan and might render them unable to look for means on how to get out of payday loan debt. What payday lenders know is that if some of these people do not have enough money during payday, then they would not probably be able to pay their bills, including the loan when the next payday comes.

Payday loan counts on the borrowers to roll the loan over and over and over. The small fee will eventually add up to create a larger sum compared to the original loan. Unfortunately, most, if not all, of these lenders always say that rollovers are very infrequent, which is very far from reality.

How to Get Out of Payday Loan Debt: Pay Them Quickly

In order to know how to get out of payday loan debt, it is very important for you to realize that these kinds of loans, though easily available, are only meant to answer your little and pressing short-term monetary needs. If you are planning to avail a payday loan, you must have an objective to repay the same amount the next payday.

The payday lender might offer you flexibility over the payment terms by allowing you a maximum of two one-month extensions. If so, then this can be beneficial if you are not going to be able to pay off the loan on the next payday. However, it is important to know that extensions will cause a substantial amount to serve as penalty.

How to Get Out of Payday Loan Debt: Consolidate

If, unfortunately, the cash advance debts happen to be too expensive to be paid off through your current income, consolidating these overdue amounts can be a solution; this is probably the best way on how to get out of payday loan debt. It is important, though, that you take action during the right moment; the longer you delay, the deeper your problems will be.

For the process of consolidation, you may only need to pay lower consolidated monthly installment to the debt company. The company will also take further repayments to your lenders. In this way, the consolidation of the debt will bring the ultimate financial peace for you and provide you plenty of time to put your life back together.

If you are looking on ways on how to get out of payday loan debt, then look no further than available payday loan debt consolidation services. You will find this as a solution to all kinds of debts.